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Note 2 - Acquisitions | 12 Months Ended
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Jun. 30, 2015
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | Note 2. Acquisitions: Bionostics Holdings , Ltd.: On July 22, 2013, the Company acquired for cash all of the outstanding shares of Bionostics Holdings, Ltd. (Bionostics) and its U.S. operating subsidiary, Bionostics, Inc. Bionostics is a global leader in the development, manufacture and distribution of control solutions that verify the proper operation of in-vitro diagnostic devices primarily utilized in point of care blood glucose and blood gas testing. Bionostics is included in the Company’s Clinical Controls segment. In connection with the Bionostics acquisition, the Company recorded $14.4 million of developed technology intangible assets that have an estimated useful life of 9 years, $2.7 million of trade name intangible assets that have an estimated useful life of 5 years, $2.4 million related to non-compete agreements that have an estimated useful life of 3 years, and $41.0 million related to customer relationships that have an estimated useful life of 14 years. The intangible asset amortization is not deductible for income tax purposes. The goodwill recorded as a result of the Bionostics acquisition represents the strategic benefits of growing the Company’s product portfolio and the expected revenue growth from increased market penetration from future products and customers. The goodwill is not deductible for income tax purposes. Transaction costs of $0.5 million and $0.6 million were included in the Company’s selling, general and administrative costs during fiscal 2014 and 2013, respectively, related to the Bionostics acquisition. Shanghai Prime G ene Bio-Tech Co. : On April 30, 2014, the Company acquired all of the ownership interest of Shanghai PrimeGene Bio-Tech Co. (PrimeGene). PrimeGene manufactures recombinant proteins and is included in the Company’s Biotechnology segment. The Company paid approximately $6.0 million at closing, with the remaining purchase price payable over fiscal years 2015 to 2017. The note payable is due to individuals who are currently employed by PrimeGene. In connection with the PrimeGene acquisition, the Company recorded $2.2 million of developed technology intangible assets that have an estimated useful life of 9 years, $3.0 million of trade name intangible assets that have an estimated useful life of 11 years, $0.3 million related to non-compete agreements that have an estimated useful life of 3 years, and $9.1 million related to customer relationships that have an estimated useful life of 9 years. The intangible asset amortization is not deductible for income tax purposes. The goodwill recorded as a result of the PrimeGene acquisition represents the strategic benefits of growing the Company’s product portfolio and the expected revenue growth from increased market penetration from future products and customers. The goodwill is not deductible for income tax purposes. Transaction costs of $0.4 million were included in the Company’s selling, general and administrative costs during fiscal 2014, related to the PrimeGene acquisition. Novus Holdings LLC: On July 2, 2014, the Company acquired all of the issued and outstanding equity interests of Novus Holdings LLC (Novus). Novus broadens the Company’s antibody offerings by being a supplier of a large portfolio of both outsourced and in-house developed antibodies and other reagents for life science research. Novus is included in the Company’s Biotechnology segment. In connection with the Novus acquisition, the Company recorded $5.0 million of developed technology intangible assets that have estimated useful lives of 4-12 years, $5.3 million of trade name intangible assets that have an estimated useful life of 20 years, and $14.4 million related to customer relationships that have an estimated useful life of 15 years. The majority of the intangible asset amortization is not deductible for income tax purposes. The goodwill recorded as a result of the Novus acquisition represents the strategic benefits of growing the Company’s product portfolio and the expected revenue growth from increased market penetration from future products and customers. The majority of the goodwill is not deductible for income tax purposes. Transaction costs of $0.1 million were included in the Company’s selling, general and administrative costs during fiscal 2015 related to the Novus acquisition. Protein Simple: On July 31, 2014, the Company acquired ProteinSimple. ProteinSimple expands the Company’s solutions that it can offer its customers by developing and commercializing proprietary systems and consumables for protein analysis. The Company opened a line-of-credit (Note 7) to partially fund the acquisition. The purchase price of ProteinSimple exceeded the fair value of the identifiable net assets and, accordingly, the difference was allocated to goodwill. ProteinSimple is included in the Company’s Protein Platform segment. In connection with the ProteinSimple acquisition, the Company recorded $40.5 million of developed technology intangible assets that have an estimated useful lives of 9-10 years, $35.8 million of trade name intangible assets that have an estimated useful lives of 18-20 years, $100.6 million related to customer relationships that have estimated useful lives of 14-16 years, and $0.2 million related to non-compete agreements that have an estimated useful life of 3 years. The intangible asset amortization is not deductible for income tax purposes. The goodwill recorded as a result of the ProteinSimple acquisition represents the strategic benefits of growing the Company’s product portfolio and the expected revenue growth from increased market penetration from future products and customers. The goodwill is not deductible for income tax purposes. Transaction costs of $0.8 million were included in the Company’s selling, general and administrative costs during fiscal 2015 related to the ProteinSimple acquisition. CyVek Inc. : On November 3, 2014, the Company acquired CyVek, Inc. (CyVek) through a merger. CyVek has developed a transformative immunoassay technology which integrates an innovatively designed microfluidic cartridge with a state-of-the-art analyzer to deliver the most advanced and efficient bench top immunoassay system. In fiscal 2014, the Company entered into an Agreement of Investment and Merger (the Agreement) with CyVek. Pursuant to the terms of the Agreement, the Company invested $10.0 million in CyVek and received shares of Common Stock representing approximately 19.9% of the outstanding voting stock of CyVek. Between the time of the Company’s initial investment and November 3, 2014, CyVek met certain commercial milestones related to the sale of its products, which obligated the Company to acquire CyVek through a merger, with CyVek surviving as a wholly-owned subsidiary of the Company. The Company made an initial payment of approximately $62.0 million to the other 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 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 June 30, 2015. In addition, at November 3, 2014, the Company re-measured its previous investment in CyVek to acquisition-date fair value, resulting in a gain on the investment of $8.3 million which is included in Other income on the Condensed Consolidated Statements of Earnings and Comprehensive Income. The purchase price of CyVek exceeded the fair value of the identifiable net assets and, accordingly, the difference was allocated to goodwill, substantially all of which is not tax deductible. CyVek is included in the Company’s Protein Platforms segment. In connection with the CyVek acquisition, the Company recorded $20.2 million of developed technology intangible assets that have an estimated useful life of 15 years, $0.1 million of trade name intangible assets that have an estimated useful life of 1.5 years, and $0.6 million related to customer relationships that have an estimated useful life of 10 years. The intangible asset amortization is not deductible for income tax purposes. The goodwill recorded as a result of the CyVek acquisition represents the strategic benefits of growing the Company’s product portfolio and the expected revenue growth from increased market penetration from future products and customers. The goodwill is not deductible for income tax purposes. Transaction costs of $0.1 million were included in the Company’s selling, general and administrative costs during fiscal 2015 related to the CyVek acquisition. The aggregate purchase price of the acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The estimate of the excess of purchase price over the fair value of net tangible assets acquired was allocated to identifiable intangible assets and goodwill. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of the acquisitions (in thousands):
|  | Novus |  |  | Protein - Simple |  |  | CyVek |  |  | Bionostics |  |  | PrimeGene |
Current assets |  | $ | 10,739 |  |  | $ | 19,660 |  |  | $ | 1,206 |  |  | $ | 9,605 |  |  | $ | 1,272 |
Equipment |  |  | 1,266 |  |  |  | 1,983 |  |  |  | 971 |  |  |  | 2,180 |  |  |  | 546 |
Other long-term assets |  |  | 40 |  |  |  | 554 |  |  |  | 19 |  |  |  |  |  |  |  |  |
Intangible Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Developed technology |  |  | 5,010 |  |  |  | 39,200 |  |  |  | 20,200 |  |  |  | 14,400 |  |  |  | 2,200 |
Trade name |  |  | 5,300 |  |  |  | 36,100 |  |  |  | 100 |  |  |  | 2,700 |  |  |  | 3,000 |
Customer relationships |  |  | 14,400 |  |  |  | 101,600 |  |  |  | 600 |  |  |  | 41,000 |  |  |  | 9,100 |
Non-compete agreements |  |  | - |  |  |  | 200 |  |  |  | - |  |  |  | 2,400 |  |  |  | 322 |
Goodwill |  |  | 28,408 |  |  |  | 134,074 |  |  |  | 91,658 |  |  |  | 56,349 |  |  |  | 5.518 |
Total assets acquired |  |  | 65,163 |  |  |  | 333,371 |  |  |  | 114,754 |  |  |  | 128,634 |  |  |  | 21,958 |
Liabilities |  |  | 2,166 |  |  |  | 11,644 |  |  |  | 1,965 |  |  |  | 3,007 |  |  |  | 887 |
Deferred income taxes, net |  |  | 2,875 |  |  |  | 21,674 |  |  |  | (438 | ) |  |  | 22,478 |  |  |  | 2,310 |
Net assets |  | $ | 60,122 |  |  | $ | 300,053 |  |  | $ | 113,327 |  |  | $ | 103,149 |  |  | $ | 18,761 |
Less fair-value of previous investment |  |  | - |  |  |  | - |  |  |  | 18,300 |  |  |  | - |  |  |  | - |
Net assets acquired |  |  | 60,122 |  |  |  | 300,053 |  |  |  | 94,927 |  |  |  | 103,149 |  |  |  | 18,761 |
Cash paid, net of cash acquired |  | $ | 60,122 |  |  | $ | 300,053 |  |  | $ | 59,927 |  |  | $ | 103,149 |  |  | $ | 6,031 |
Contingent consideration payable |  |  | - |  |  |  | - |  |  |  | 35,000 |  |  |  | - |  |  |  | 12,730 |
Net purchase price |  | $ | 60,122 |  |  | $ | 300,053 |  |  | $ | 94,927 |  |  | $ | 103,149 |  |  | $ | 18,761 |
Tangible assets acquired, net of liabilities assumed, were stated at fair value at the date of acquisition based on management’s assessment. The purchase price allocated to developed technology, trade names, non-compete agreements 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 Consolidated Statement of Earnings and Comprehensive Income. Amortization expense related to trade names, the non-compete agreement and customer relationships is reflected in selling, general and administrative expenses in the Consolidated Statement of Earnings and Comprehensive Income. The deferred income tax liability represents the estimated future impact of adjustments for the cost to be recognized upon the sale of acquired inventory that was written up to fair value and intangible asset amortization, of which are not deductible for income tax purposes, and the future tax benefit of net operating loss and tax credit carryforwards which will be deductible by the Company in future periods. The Company’s Condensed Consolidated Financial Statements include the following from the above acquisitions:
|  | Novus |  |  | Protein - Simple |  |  | CyVek |
Net sales |  | $ | 21,092 |  |  | $ | 65,512 |  |  | $ | 735 |
Net income (loss) |  |  | (610 | ) |  |  | (3,624 | ) |  |  | (4,196 | )
Amortization expense |  |  | 1,898 |  |  |  | 11,364 |  |  |  | 981 |
Costs recognized on sale of acquired inventory |  |  | 1,946 |  |  |  | 1,444 |  |  |  | 64 |
The unaudited pro forma financial information below summarizes the combined results of operations for Bio-Techne and the above acquisitions as though the companies were combined as of the beginning fiscal 2014. The pro forma financial information for all periods presented includes the purchase accounting effects resulting from these acquisitions. The pro forma financial information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal 2014.
|  | For the Year Ended June, 30 |
|  | 2015 |  |  | 2014 |
Net sales |  | $ | 457,270 |  |  | $ | 433,034 |
Net income |  |  | 104,132 |  |  |  | 100,958 |
See Note 15. Subsequent Events. for information regarding the Company’s acquisition of Cliniqa Corporation in July 2015.

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