The interim consolidated financial statements of Bio-Techne Corporation and subsidiaries, (the Company) presented here have been prepared by the Company and are unaudited. They have been prepared in accordance with accounting principles generally accepted in the United States of America and with instructions to Form 10-Q and Article 10 of Regulation S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto for the fiscal year ended June 30, 2016, included in the Company’s Annual Report on Form 10-K for fiscal 2016. A summary of significant accounting policies followed by the Company is detailed in the Company’s Annual Report on Form 10-K for fiscal 2016. The Company follows these policies in preparation of the interim unaudited condensed consolidated financial statements.

 

 

The Company’s available-for-sale securities are carried at fair value using Level 1 inputs. The fair value of the Company’s available-for-sale investments at September 30, 2016 and June 30, 2016 were $52.4 million and $31.6 million, respectively. The increase was caused by the addition of $5.7 million in securities held by Advanced Cell Diagnostics (ACD), and the investment of $5.2 million of available cash in China into certificates of deposit. The remaining $9.9 million is due to the change in the fair value of the Company’s investment in ChemoCentryx, Inc. (CCXI). The amortized cost basis of the Company’s investment is CCXI at September 30, 2016 and June 30, 2016 was $29.5 million.

  

 

Inventories consist of (in thousands):

 

 

The increase from June 30 is primarily due to $12.8 million of additional inventory at ACD, which is adjusted to its fair value as of the date of acquisition. At both September 30, 2016 and June 30, 2016, the Company had approximately $24 million of excess protein, antibody and chemically-based inventory on hand which was not valued.

 

 

Property and equipment consist of (in thousands):

 

 

Intangible assets consist of (in thousands):

 

 

Changes to the carrying amount of net intangible assets for the quarter ended September 30, 2016 consist of (in thousands):

 

 

The estimated future amortization expense for intangible assets as of September 30, 2016 is as follows (in thousands):

 

 

 

Changes to the carrying amount of goodwill for the quarter ended September 30, 2016 consist of (in thousands):

 

 

In May 2014, the FASB issued guidanceaddressing how revenue is recognized from contracts with customers and related disclosures. This standard supersedes existing revenue recognition requirements and most industry-specific guidance. This standard was initially expected to be effective for us beginning July 1, 2017, and provides for either full retrospective adoption or a modified retrospective adoption by which the cumulative effect of the change is recognized in retained earnings at the date of initial application. In July 2015, the FASB approved the deferral of the effective date of this standard by one year, and allows for adoption either at July 1, 2017 or July 1, 2018. We intend to elect the deferred adoption date of July 1, 2018. We are currently evaluating the requirements of this guidance, and have not yet determined the implementation method nor the impact on our consolidated financial statements.

 

In February 2016, the FASB issued guidance which requires recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for us beginning July 1, 2019, with early adoption permitted. The provisions of this guidance are to be applied using a modified retrospective approach, which requires application of the guidance for all periods presented. We are currently evaluating the impact that this guidance will have on our consolidated financial statements.

 

In March 2016, the FASB issued guidance which simplifies several aspects of the accounting for share-based payment transactions, including certain income tax consequences, classifications on the statement of cash flows, and accounting for forfeitures. The guidance is effective for us beginning July 1, 2017, and early application is permitted. We are currently evaluating the adoption date and the effects this standard will have on our consolidated financial statements.