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Announcement:

Moody's affirms Bio-Rad's Ba1 CFR; changes outlook to positive

05 Apr 2012

Approximately $725 million of debt affected

New York, April 05, 2012 -- Moody's Investors Service affirmed the Ba1 Corporate Family Rating and Probability of Default Rating of Bio-Rad Laboratories, Inc. ("Bio-Rad; NYSE: BIO") and changed the outlook to positive from stable. Concurrently, Moody's assigned a Speculative Grade Liquidity rating of SGL-1, reflecting our expectation for very good liquidity over the next 12 months.

The positive outlook reflects the potential for an upgrade if Bio-Rad continues to achieve stable operating performance and maintain conservative financial policies. The company's significant cash balance gives it financial flexibility to make investments in the business and make acquisitions which over time will expand the company's scale and diversity and add to EBITDA and cash flow. While 2012 operating performance will be constrained by a number of headwinds --including costs associated with the launch of its new quantitative PCR product as well as a new ERP system-- the positive outlook reflects Moody's view that longer-term the company will benefit from these investments. The change in outlook is unrelated to the recent passing of Bio-Rad's co-founder and Chairman, which Moody's does not believe will result in any immediate changes to financial policies.

Ratings affirmed/LGD point estimates revised:

Corporate Family Rating, Ba1

Probability of Default Rating, Ba1

$300 million Senior Unsecured Subordinated Notes, due 2016, Ba2 (LGD5, 87%)

$425 million Senior Unsecured Notes, due 2020, to Ba1 (LGD4, 50%) from Ba1 (LGD3, 48%)

Ratings assigned:

Speculative Liquidity Rating of SGL-1

The outlook is positive.

The Ba1 Corporate Family Rating reflects Bio-Rad's leading competitive position within its core, niche markets. The ratings are further supported by the recurring nature of roughly 70% of revenues and Bio-Rad's diversified geographic, and customer base within its niche markets. The ratings are also supported by the company's creditor-friendly financial policies (i.e., no share repurchases or dividends) and strong financial metrics. The ratings are constrained by the company's significant concentration of operating profit in a single market (clinical diagnostics) and its modest size, both on an absolute basis and relative to competitors. Moody's believes Bio-Rad could face a more challenging operating environment over the next year or so given its significant exposure to government funding, both in Europe in the diagnostics business and in the US in the life science business.

Moody's could upgrade the ratings if the company continues to demonstrate steady organic revenue growth and makes continued progress in remediating its reporting and control deficiencies. If Moody's believes Bio-Rad will maintain its conservative financial policies such that adjusted debt to EBITDA will be sustained below 2.5 times and retained cash flow to debt will be sustained above 30%, the ratings could be upgraded.

If increased competition, adverse economic conditions or government funding trends negatively impact Bio-Rad's revenue and cash flow generation in a meaningful way, Moody's could downgrade the ratings. Specifically, if Moody's believes leverage will be sustained above 3.5 times and free cash flow to debt will be sustained below 10%, the rating agency could downgrade the ratings.

The principal methodology used in rating Bio-Rad was Moody's Global Medical Products & Device Industry methodology, published in October 2009 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

Bio-Rad Laboratories, Inc. ("Bio-Rad"; NYSE:BIO), based in Hercules, California, operates in two industry segments, Life Science and Clinical Diagnostics. The Life Science segment includes products for research, drug discovery and food pathogen testing, primarily in the laboratory setting. The Clinical Diagnostic segment includes tests used to detect, identify and quantify substances in blood or other body fluids and tissues, primarily used in hospital and reference laboratories. Bio-Rad reported revenues of $2.1 billion for the twelve months ended December 31, 2011.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Jessica Gladstone
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Peter H. Abdill, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's affirms Bio-Rad's Ba1 CFR; changes outlook to positive
No Related Data.
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