XML 21 R9.htm IDEA: XBRL DOCUMENT v3.24.3
Fair Value Measurements
 3 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements
2. FAIR VALUE MEASUREMENTS

We determine the fair value of an asset or liability based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction between market participants at the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value
measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritizes the inputs into three broad levels as follows:

•Level 1: Quoted prices in active markets for identical instruments
•Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments)
•Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments)

Financial assets and liabilities carried at fair value and measured on a recurring basis as of September 30, 2024 are classified in the hierarchy as follows (in millions):
Level 1Level 2Level 3Total
Financial assets carried at fair value:
Cash equivalents:
Time deposits— 43.2 — 43.2 
Money market funds110.9 — — 110.9 
Total cash equivalents (a)110.9 43.2 — 154.1 
Restricted investments (b)7.1 — — 7.1 
Equity securities (c)5,701.4 — — 5,701.4 
Loan under the fair value option (d)— — 343.5 343.5 
Available-for-sale investments:
Corporate debt securities— 543.8 — 543.8 
U.S. government sponsored agencies— 147.0 — 147.0 
Foreign government obligations— 2.6 — 2.6 
Municipal obligations— 6.7 — 6.7 
Asset-backed securities— 433.2 — 433.2 
Total available-for-sale investments (e)— 1,133.3 — 1,133.3 
Forward foreign exchange contracts (f)— 2.2 — 2.2 
Total financial assets carried at fair value$5,819.4 $1,178.7 $343.5 $7,341.6 
Financial liabilities carried at fair value:   
Forward foreign exchange contracts (g)$— $0.9 $— $0.9 
Contingent consideration (h)— — 18.3 18.3 
Total financial liabilities carried at fair value$— $0.9 $18.3 $19.2 
Financial assets and liabilities carried at fair value and measured on a recurring basis as of December 31, 2023 are classified in the hierarchy as follows (in millions):
Level 1Level 2Level 3Total
Financial assets carried at fair value:
Cash equivalents:
Commercial paper$— $12.5 $— $12.5 
Time deposits— 36.6 — 36.6 
U.S. government sponsored agencies— 7.0 — 7.0 
Money market funds28.0 — — 28.0 
Total cash equivalents (a)28.0 56.1 — 84.1 
Restricted investments (b)7.1 — — 7.1 
Equity securities (c)7,399.3 — — 7,399.3 
Loan under the fair value option (d)— — 325.7 325.7 
Available-for-sale investments:
Corporate debt securities— 531.6 — 531.6 
U.S. government sponsored agencies— 255.9 — 255.9 
Foreign government obligations— 12.7 — 12.7 
Municipal obligations— 12.1 — 12.1 
Asset-backed securities— 323.7 — 323.7 
Total available-for-sale investments (e)— 1,136.0 — 1,136.0 
Forward foreign exchange contracts (f)— 4.1 — 4.1 
Total financial assets carried at fair value$7,434.4 $1,196.2 $325.7 $8,956.3 
Financial liabilities carried at fair value:
Forward foreign exchange contracts (g)$— $11.7 $— $11.7 
Contingent consideration (h)— — 17.5 17.5 
Total financial liabilities carried at fair value$— $11.7 $17.5 $29.2 

(a)Cash equivalents are included in Cash and cash equivalents in the condensed consolidated balance sheets.

(b) Restricted investments are included in the following accounts in the condensed consolidated balance sheets (in millions):
September 30, 2024December 31, 2023
Restricted investments$5.6 $5.6 
Other investments1.5 1.5 
    Total$7.1 $7.1 

(c) Equity securities are included in the following accounts in the condensed consolidated balance sheets (in millions):
September 30, 2024December 31, 2023
Short-term investments$78.7 $67.2 
Other investments5,622.7 7,332.1 
        Total$5,701.4 $7,399.3 

(d) The Loan under the fair value option is included in Other investments in the condensed consolidated balance sheets.
(e) Available-for-sale investments are included in Short-term investments in the condensed consolidated balance sheets.

(f) Forward foreign exchange contracts in an asset position are included in Other current assets in the condensed consolidated balance sheets.

(g) Forward foreign exchange contracts in a liability position are included in Other current liabilities in the condensed consolidated balance sheets.

(h) Contingent considerations in a liability position are included in Other long-term liabilities in the condensed consolidated balance sheets. The changes in the fair value of contingent consideration included in Research and development expense amounted to $0.4 million and $0.8 million in the condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2024, respectively. No conditions triggering payment of the contingent consideration were met as of September 30, 2024.

Level 1 Fair Value Measurements

As of September 30, 2024, we own 12,987,900 ordinary voting shares and 9,588,908 preference shares of Sartorius AG ("Sartorius"), of Goettingen, Germany, a process technology supplier to the biotechnology, pharmaceutical, chemical and food and beverage industries. We own approximately 38% of the outstanding ordinary shares (excluding treasury shares) and 27% of the preference shares of Sartorius as of September 30, 2024. The Sartorius family trust (Sartorius family members are beneficiaries of the trust) holds a majority interest of the outstanding ordinary shares of Sartorius. We do not have the ability to exercise significant influence over the operating and financial policies of Sartorius primarily because we do not have any representative or designee on Sartorius' board of directors and have tried and failed to obtain access to operating or financial information necessary to apply the equity method of accounting.

The change in fair market value of our investment in Sartorius for the three and nine months ended September 30, 2024 was a gain of $761.1 million and a loss of $1,711.0 million, respectively, and are recorded in our condensed consolidated statements of income (loss).

Level 2 Fair Value Measurements

To estimate the fair value of Level 2 debt securities as of September 30, 2024 and December 31, 2023, our primary pricing provider uses Refinitiv as the primary pricing source. Our pricing process allows us to select a hierarchy of pricing sources for securities held. If Refinitiv does not price a Level 2 security that we hold, then the pricing provider will utilize our custodian supplied pricing as the secondary pricing source.

Available-for-sale investments consist of the following (in millions):
 September 30, 2024
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Estimated
Fair
Value
Short-term investments:    
Corporate debt securities$536.6 $7.5 $(0.3)$543.8 
Municipal obligations6.6 0.1 — 6.7 
Asset-backed securities430.3 3.7 (0.8)433.2 
U.S. government sponsored agencies145.9 1.3 (0.2)147.0 
Foreign government obligations2.6 — — 2.6 
 $1,122.0 $12.6 $(1.3)$1,133.3 
The following is a summary of the amortized cost and estimated fair value of our debt securities at September 30, 2024 by contractual maturity date (in millions):
Amortized
Cost		Estimated Fair
Value
Mature in less than one year$120.5 $120.4 
Mature in one to five years702.9 711.8 
Mature in more than five years298.6 301.1 
Total$1,122.0 $1,133.3 

Available-for-sale investments consist of the following (in millions):
 December 31, 2023
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Estimated
Fair
Value
Short-term investments:    
Corporate debt securities$534.1 $0.8 $(3.3)$531.6 
Municipal obligations12.2 — (0.1)12.1 
Asset-backed securities325.7 0.7 (2.7)323.7 
U.S. government sponsored agencies257.4 0.1 (1.6)255.9 
Foreign government obligations12.8 — (0.1)12.7 
Total$1,142.2 $1.6 $(7.8)$1,136.0 

As of September 30, 2024, there were no significant continuous unrealized losses greater than 12 months.

Our evaluation of credit losses for available-for-sale investments included the extent to which the fair value is less than the amortized cost basis, adverse conditions specifically related to the debt security, an industry or geographic area, and any changes in the rating of a security by a rating agency. Credit loss impairments are limited to the amount that the fair value of an instrument is less than its amortized cost basis.

At September 30, 2024, we have concluded that all payments related to our available-for-sale investments are expected to be made in full and on time at par value. The diminution of value in the intervening period is due to market conditions such as illiquidity and interest rate movements and not due to significant, inherent credit concerns surrounding the issuer. As a result, we have no allowances for credit losses on our available-for-sale investments portfolio as of September 30, 2024.
Included in Other current assets are $11.1 million and $11.9 million of interest receivable as of September 30, 2024 and December 31, 2023, respectively, primarily associated with securities in our available-for-sale investments portfolio. Associated interest on these securities is typically payable semi-annually. Due to the short-term nature of our interest receivable asset, we have made an accounting policy election not to measure an allowance for credit losses for accrued interest receivable. We consider any uncollected interest receivable that is overdue greater than one year to be impaired for purposes of write-off. For the nine months ended September 30, 2024, we have not written-off any uncollected interest receivable.

As part of distributing our products, we regularly enter into intercompany transactions. We enter into forward foreign exchange contracts to manage foreign exchange risk of future movements in foreign exchange rates that affect foreign currency denominated intercompany receivables and payables. We do not use derivative financial instruments for speculative or trading purposes. We do not seek hedge accounting treatment for these contracts. As a result, these contracts, generally with maturity dates of 90 days or less, are recorded at their fair value at each balance sheet date. The notional amounts provide one measure of foreign exchange exposures as of September 30, 2024 and do not represent the amount of Bio-Rad's exposure to loss. The estimated fair value of these contracts was
derived using the spot rates and forward points from Refinitiv on the last business day of the quarter. The resulting gains or losses from foreign exchange contracts offset gains or losses from foreign currency remeasurement of the related receivables and payables, both of which are included in Foreign currency exchange (gains) losses, net in the condensed consolidated statements of income (loss).

The following is a summary of our forward foreign currency exchange contracts (in millions):

Contracts to sell foreign currency:
September 30, 2024December 31, 2023
Notional value$673.7 $873.5 
Unrealized gain/(loss)
$1.3 $(8.1)
Contracts to purchase foreign currency:
 
Notional value$44.4 $133.6 
Unrealized gain/(loss)
$— $0.5 

Included in Other investments in the condensed consolidated balance sheet are investments without readily determinable fair value measured at cost with adjustments for observable price changes or impairments. The carrying value of these investments was $8.0 million and $6.5 million as of September 30, 2024 and December 31, 2023, respectively.

Also included in Other investments in the condensed consolidated balance sheet are our equity method investments, for which our share of the equity method investees earnings is included in Other income, net in our condensed consolidated statements of income (loss). The carrying value of these investments, net of impairments, was $26.8 million and $32.3 million as of September 30, 2024 and December 31, 2023, respectively.

The carrying value and fair value of our long-term debt were as follows (in millions):

September 30, 2024December 31, 2023
Carrying Value
Fair Value
Carrying ValueFair Value
Senior notes
$1,190.8 $1,119.9 $1,189.5 $1,102.5 
Other long-term debt
9.3 9.3 9.6 9.6 
Total
$1,200.1 $1,129.2 $1,199.1 $1,112.1 

The fair value of our long-term debt was determined based on quoted market prices and on borrowing rates available to the company at the respective period ends, which represent level 2 measurements.

Level 3 Fair Value Investments

During the fourth quarter of 2021, we extended a collateralized loan to Sartorius-Herbst Beteiligungen II Gmbh ("SHB"), a private limited company incorporated under the laws of Germany, with a principal amount of €400 million due on January 31, 2029, subject to certain events which could trigger payment prior to maturity (“Loan”). SHB used the Loan proceeds to partially finance the acquisition of interests under the Sartorius family trust (“Trust”) from a beneficiary of the Trust. The Loan is collateralized by the pledge of certain of the Trust interests, which upon termination of the Trust in mid-2028 represent the right to receive Sartorius ordinary shares. Interest on the loan is payable annually in arrears at 1.5% per annum, and the entire principal amount is due at maturity. In addition to contractual interest, we are entitled to certain value appreciation rights associated with the acquired Trust interests, which upon termination of the Trust represent the right to receive Sartorius ordinary shares, that is due upon repayment of the Loan. We elected the fair value option under ASC 825, Financial Instruments for accounting of the Loan to SHB to simplify the accounting. The fair value of the Loan and value appreciation right is estimated under the income approach using a discounted cash flow, and option pricing model, respectively, which results in a fair value measurement categorized in Level 3. The significant assumptions used to estimate fair value of the Loan
include an estimate of the discount rate and cash flows of the Loan and the significant assumptions used to estimate the fair value of the value appreciation right include volatility, the risk-free interest rate, expected life (in years) and expected dividend. The inputs are subject to estimation uncertainty and actual amounts realized may materially differ. An increase in the expected volatility may result in a significantly higher fair value, whereas a decrease in expected life may result in a significantly lower fair value. All subsequent changes in fair value of the Loan and value appreciation right, including accrued interest are recognized in (Gains) losses from change in fair market value of equity securities and loan receivable in our condensed consolidated statements of income (loss). The overall change in fair market value reflected in (Gains) losses from change in fair market value of equity securities and loan receivable during the three months ended September 30, 2024 was a gain of $25.2 million, which includes a $18.1 million gain from change in fair market value of the Loan and a $7.1 million gain from change in fair market value of the value appreciation right. The overall change in fair market value reflected in (Gains) losses from change in fair market value of equity securities and loan receivable during the nine months ended September 30, 2024 was a gain of $14.7 million, which includes a $33.1 million gain from change in fair market value of the Loan and a $18.4 million loss from change in fair market value of the value appreciation right. The increase in the fair market value of the value appreciation right was due to an increase in the value of the Sartorius ordinary shares. As of September 30, 2024, the €400 million principal amount of the loan is still due on January 31, 2029.

The following table provides a reconciliation of the Level 3 Loan measured at estimated fair value (in millions):

December 31, 2023$325.7 
Change in estimated fair market value, net
$14.7 
Foreign currency exchange losses, net
$3.1 
September 30, 2024$343.5