Quarterly report pursuant to Section 13 or 15(d)

Note 2 - Acquisitions

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Note 2 - Acquisitions
 9 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Business Combination Disclosure [Text Block]
Note 2. Acquisitions:
 
The Company's acquisitions have historically been made at prices above the fair value of the acquired identifiable assets, resulting in goodwill. The goodwill is due to strategic benefits of growing the Company's product portfolio, expected revenue growth from the increased market penetration from future products and customers, and expectations of synergies that will be realized by combining the businesses. Acquisitions have been accounted for using the purchase method of accounting and the acquired companies' results have been included in the accompanying financial statements from their respective dates of acquisition. Acquisition costs are recorded in selling, general and administrative expenses as incurred.
 
On March 14, 2016, the Company acquired Zephyrus Biosciences, Inc. (Zephyrus). Zephyrus provides research tools to enable protein analysis at the single cell level. Addressing the burgeoning single cell analysis market, Zephyrus’s first product, Milo™, enables western blotting on individual cells for the first time. The acquisition was funded with cash on hand. The purchase price of Zephyrus exceeded the preliminary estimated fair value of the identifiable net assets and, accordingly, the difference was allocated to goodwill, substantially all of which is not tax deductible. Zephryus is included in the Company’s Protein Platforms segment.
 
 
   
On July 8, 2015, the Company acquired all of the issued and outstanding equity interests of Cliniqa Corporation (Cliniqa). Cliniqa specializes in the manufacturing and commercialization of quality controls and calibrators as well as bulk reagents used in the clinical diagnostic market. The acquisition was mostly funded through our line-of-credit facility. The purchase price of Cliniqa exceeded the estimated fair value of the identifiable net assets and, accordingly, the difference was allocated to goodwill, substantially all of which is not tax deductible. Cliniqa is included in the Company's Clinical Controls segment.
 
The estimated fair value of the assets acquired and liabilities assumed, pending final valuation of intangible assets, are as follows (in thousands):
 
 
 
Zephyrus
 
 
Cliniqa
 
Current assets
   $ 86     $ 11,926  
Equipment
     32       1,436  
Other long-term assets
     0       58  
Intangible Assets:
                
In process research and development     2,500       0  
Developed technology
     0       18,000  
Trade name
     0       27,000  
Customer relationships
     0       1,100  
Goodwill
     8,966       42,669  
Total assets acquired
     11,584       102,189  
Liabilities
     54       1,509  
Deferred income taxes, net
     0       17,793  
Net assets acquired
     11,530       82,888  
                 
Cash paid, net of cash acquired
     8,030       82,888  
Contingent consideration payable
     3,500       0  
Net purchase price
   $ 11,530       82,888  
 
Tangible assets acquired, net of liabilities assumed, were stated at the preliminary estimated fair value at the date of acquisition based on management's assessment. The purchase price allocated to developed technology, trade names, in process research and development and customer relationships was based on management's forecasted cash inflows and outflows and using a relief-from-royalty and a multi-period excess earnings method to calculate the fair value of assets purchased. The developed technology is being amortized with the expense reflected in cost of goods sold in the Condensed Consolidated Statement of Earnings and Comprehensive Income. Amortization expense related to trade names, and customer relationships is reflected in selling, general and administrative expenses in the Consolidated Statement of Earnings and Comprehensive Income. The amortization periods for intangible assets acquired in fiscal 2016 are estimated to be approximately 18 years for developed technology, 20 years for trade names and 4 years for customer relationships. The deferred income tax liability represents the net amount of the estimated future impact of adjustments for costs to be recognized upon the sale of acquired inventory that was written up to fair value and intangible asset amortization, both of which are not deductible for income tax purposes.
 
 
The Company's Condensed Consolidated Financial Statements for the quarter ended March 31, 2016, include Cliniqa net sales of $10.1 million and income before tax of $3.4 million. Included in these results were amortization of intangibles of $0.7 million and costs recognized on the sales of acquired inventory of $0.1 million. For the nine months ended March 31, 2016, Cliniqa contributed net sales of $20.1 million and income before tax of $3.7 million. Included in these results were amortization of intangibles of $2.0 million and costs recognized on the sales of acquired inventory of $0.9 million
.
 
The Company's Condensed Consolidated Financial Statements for the quarter and year ended March 31, 2016, include zero net sales from Zephyrus and a loss before tax of less than $0.1 million. Included in these results were amortization of intangibles of less than $0.1 million.