The interim consolidated financial statements of Bio-Techne Corporation (formerly 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, 2015, included in the Company's Annual Report on Form 10-K for fiscal 2015. A summary of significant accounting policies followed by the Company is detailed in the Company's Annual Report on Form 10-K for fiscal 2015. 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 and Level 2 inputs. The fair value of the Company's available-for-sale investments at March 31, 2016 and June 30, 2015 were $18.9 million and $56.4 million, respectively. The cost basis of the Company's available-for-sale investments at March 31, 2016 and June 30, 2015 were $29.5 million and $33.6 million, respectively.

  

 

Inventories consist of (in thousands):

 

 

At March 31, 2016, the Company had $57.1 million of inventory compared to $50.0 million as of June 30, 2015. The increase is primarily driven by the acquisition of Cliniqa Corporation in July 2015. At both March 31, 2016 and June 30, 2015, 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 nine months ended March 31, 2016 consist of (in thousands):

 

 

The estimated future amortization expense for intangible assets as of March 31, 2016 is as follows (in thousands):

 

 

 

G

Changes to the carrying amount of goodwill for the nine months ended March 31, 2016 consist of (in thousands):

 

 

 

The Company made an initial payment of approximately $62.0 million to the stockholders of CyVek on November 3, 2014. Such purchase price was adjusted after closing based on the final levels of cash, indebtedness and transaction expenses of CyVek as of the closing. The Company will also pay CyVek’s previous stockholders up to $35.0 million based on the cumulative revenue generated by CyVek’s products before May 3, 2017 (30 months from the closing of the Merger). The Company will also pay CyVek’s previous stockholders 50% of the amount, if any, by which the revenue from CyVek’s products and related products exceeds $100 million in calendar year 2020. The Company has recorded the present value of these contingent payments as a long-term liability of $35.0 million at March 31, 2016.

 

The Company made an initial payment of approximately $8.0 million to the stockholders of Zephyrus on March 14, 2016. Such purchase price was adjusted after closing based on the final levels of cash and transaction expenses of Zephyrus as of the closing. The Company will also pay Zephyrus’ previous stockholders $3.5 million if and when $3.0 million of cumulative revenue is generated by the sale of Zephyrus products before September 14, 2020 (4 years and 6 months from the closing of the Merger). The Company will also pay Zephyrus’ previous stockholders another $3.5 million if and when 10 Zephyrus instruments are sold prior to March 14, 2019 (3 years from the closing of the Merger) resulting in a total potential payout of $7.0 million. The Company has performed a preliminary estimate and recorded the present value of these contingent payments as a long-term liability of $3.5 million, at March 31, 2016.