UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) (Zip Code) | (Registrant's telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Non-accelerated filer | ☐ | Smaller reporting company | |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b- 2).
At October 31, 2024,
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
Bio-Techne Corporation and Subsidiaries
(in thousands, except per share data)
(unaudited)
Quarter Ended | |||||||
September 30, | |||||||
2024 | 2023 | ||||||
Net sales | $ | | $ | | |||
Cost of sales |
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Gross margin |
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Operating expenses: |
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Selling, general and administrative |
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Research and development |
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Total operating expenses |
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Operating income |
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Other income (expense) | | ( | |||||
Earnings before income taxes |
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Income taxes |
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Net earnings | $ | | $ | | |||
Other comprehensive income (loss): |
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Foreign currency translation income (loss) |
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Unrealized gains (losses) on derivative instruments - cash flow hedges, net of tax amounts disclosed in Note 8 |
| ( |
| ( |
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Other comprehensive income (loss) |
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| ( | |||
Comprehensive income | $ | | $ | | |||
Earnings per share: | |||||||
Basic | $ | | $ | | |||
Diluted | $ | | $ | | |||
Weighted average common shares outstanding: |
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Basic |
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Diluted |
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See Notes to Condensed Consolidated Financial Statements.
1
CONDENSED CONSOLIDATED BALANCE SHEETS
Bio-Techne Corporation and Subsidiaries
(in thousands, except share and per share data)
| September 30, | |||||
2024 | June 30, | |||||
(unaudited) | 2024 | |||||
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Short-term available-for-sale investments |
| — |
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Accounts receivable, less allowance for doubtful accounts of $ |
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Inventories |
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Current assets held-for-sale | | | ||||
Other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use assets |
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Goodwill |
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Intangible assets, net |
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Other assets |
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Total assets | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Trade accounts payable | $ | | $ | | ||
Salaries, wages and related accruals |
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Accrued expenses |
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Contract liabilities |
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Income taxes payable |
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Operating lease liabilities - current |
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Other current liabilities |
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Total current liabilities |
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Deferred income taxes |
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Long-term debt obligations |
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Operating lease liabilities |
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Other long-term liabilities |
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Bio-Techne’s Shareholders’ equity: | ||||||
Undesignated capital stock, |
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Common stock, par value $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
| ( |
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Total Bio-Techne’s shareholders’ equity |
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Total liabilities and shareholders’ equity | $ | | $ | |
See Notes to Condensed Consolidated Financial Statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Bio-Techne Corporation and Subsidiaries
(in thousands)
(unaudited)
| Quarter Ended | ||||||
September 30, | |||||||
2024 | 2023 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net earnings | $ | | $ | | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
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Depreciation and amortization |
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Costs recognized on sale of acquired inventory |
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Deferred income taxes |
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Stock-based compensation expense |
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Fair value adjustment to contingent consideration payable |
| — |
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Fair value adjustment on available-for-sale investments |
| — |
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(Gain) Loss on equity method investment | ( | | |||||
Asset impairment restructuring | | — | |||||
Leases, net |
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Other operating activity |
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Change in operating assets and operating liabilities, net of acquisition: |
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Trade accounts and other receivables, net |
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Inventories |
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Prepaid expenses |
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Trade accounts payable, accrued expenses, contract liabilities, and other |
| ( |
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Salaries, wages and related accruals |
| ( |
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Income taxes payable |
| ( |
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Net cash provided by (used in) operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from sale of available-for-sale investments |
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Additions to property and equipment |
| ( |
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Acquisitions, net of cash acquired |
| — |
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Distributions from (Investments in) Wilson Wolf | | | |||||
Investment in Spear Bio | ( | — | |||||
Net cash provided by (used in) investing activities |
| ( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Cash dividends |
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Proceeds from stock option exercises |
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Borrowings under line-of-credit agreement |
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Repayments of long-term debt |
| ( |
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Taxes paid on RSUs and net share settlements | ( | ( | |||||
Net cash provided by (used in) financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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Net change in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period | $ | | $ | | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for income taxes | $ | | $ | | |||
Cash paid for interest | $ | | $ | |
See Notes to Condensed Consolidated Financial Statements.
3
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Bio-Techne Corporation and Subsidiaries
(unaudited)
Note 1. Basis of Presentation and Summary of Significant Accounting Policies:
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, 2024, included in the Company's Annual Report on Form 10-K for fiscal 2024. A summary of significant accounting policies followed by the Company is detailed in the Company's Annual Report on Form 10-K for fiscal 2024. The Company follows these policies in preparation of the interim unaudited condensed consolidated financial statements.
During the quarter ended September 30, 2024, the Company operated under
Investments: In July 2024, the Company paid $
In December 2021, the Company paid $
Since the first part of the forward contract has been triggered, the second part of the forward contract will automatically trigger, and requires the Company to acquire the remaining equity interest in Wilson Wolf on December 31, 2027 based on a revenue multiple of approximately
The investment in Wilson Wolf is accounted for as an equity method investment under ASC 323. The Company initially records its equity method investments at the amount of the Company’s investment and adjusts each period for the Company’s share of the investee’s income or loss and dividends paid. Distributions from the equity method investee are accounted for using the cumulative earnings approach on the Consolidated Statement of Cash Flows. For the quarter ended September 30, 2024, there was $
4
Restructuring actions: Restructuring actions generally include significant actions involving employee-related severance charges, contract termination costs, and impairments and disposals of assets associated with such actions. Employee-related severance charges are based upon distributed employment policies and substantive severance plans. These charges are reflected in the quarter when the actions are probable and the amounts are estimable, which typically is when management approves the associated actions. Asset impairment and disposal charges include right of use assets, leasehold improvements, and other asset write-downs associated with combining operations and disposal of assets. Other charges include consulting fees and expenses for changes to supporting IT systems that are enabling the Company to complete the restructuring activities.
Fiscal Year 2025 Restructuring Actions:
In the first quarter of fiscal 2025, the Company announced enterprise-wide restructuring focused on recovering operating margins and optimizing our manufacturing footprint. The Company is expecting to incur costs related to these actions through fiscal 2026, which will be recorded when specified criteria are met. The restructuring and restructuring-related charges for periods presented were recorded in the Consolidated Statements of Earnings as follows (in thousands):
Quarter Ended | |||
September 30, | |||
2024 | |||
Cost of sales | $ | | |
Selling, general and administrative(1) | | ||
Total | $ | | |
(1) Restructuring actions impacting research and development are not material to separately disclose and have been included within Selling, general and administrative costs.
Restructuring and restructuring-related costs by segment are as follows (in thousands):
Three months ended September 30, 2024 | |||||||||
Employee | Asset-related | ||||||||
severance | and other | Total | |||||||
Protein Sciences | $ | | $ | | $ | | |||
Diagnostics and Spatial Biology | | — | | ||||||
Corporate | | — | | ||||||
Total | $ | | $ | | $ | |
The following table summarizes the changes in the Company’s accrued restructuring balance, which is included within Other current liabilities in the accompanying balance sheet. Other amounts reported as restructuring and restructuring-related costs in the accompanying statements of income have been summarized in the notes to the table (in thousands):
Employee | Asset | ||||||||
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| Total | ||||||
Expense incurred in the first quarter of 2025 | $ | | $ | | $ | | |||
Cash payments | ( | — | ( | ||||||
Non-cash adjustments | — | ( | ( | ||||||
Accrued restructuring actions balance as of September 30, 2024 | $ | | $ | — | $ | |
(1) Relates to impacted employees’ final paycheck, separation payments, outplacement services, legal fees, and retention packages related to the closure or relocation of certain manufacturing sites.
(2) Primarily relates to impairment of intangibles and inventory as a result of the closure and relocation of certain manufacturing sites.
5
Fiscal Year 2024 Restructuring Actions:
In the second quarter of fiscal 2024, the Company announced enterprise-wide restructuring focused on recovering operating margins, optimizing our distribution footprint, and enhancing our organization efficiency. These actions impacted approximately
As part of these actions, certain assets and liabilities associated with a disposal group in our Protein Sciences segment were classified as held-for-sale as of December 31, 2023, including $
The restructuring and restructuring-related charges, including the impairment of assets held-for-sale, for periods presented were recorded in the Consolidated Statements of Earnings as follows (in thousands):
Quarter Ended | |||
September 30, | |||
2024 | |||
Cost of sales | $ | — | |
Selling, general and administrative(1) | | ||
Total | $ | |
(1) Restructuring actions impacting research and development are not material to separately disclose and have been included within Selling, general and administrative costs.
Restructuring and restructuring-related costs by segment are as follows (in thousands):
Three months ended September 30, 2024 | |||||||||
Employee | Asset-related | ||||||||
severance | and other | Total | |||||||
Protein Sciences | $ | | $ | | $ | | |||
Diagnostics and Spatial Biology | — | — | — | ||||||
Corporate | ( | | | ||||||
Total | $ | | $ | | $ | |
6
The following table summarizes the changes in the Company’s accrued restructuring balance, which is included within Other current liabilities in the accompanying balance sheet. Other amounts reported as restructuring and restructuring-related costs in the accompanying statements of income have been summarized in the notes to the table (in thousands):
Employee | Asset-related | Impairment of | ||||||||||
Total | ||||||||||||
Expense incurred in the second quarter of 2024 | | | | | ||||||||
Incremental expense incurred in the third quarter of 2024 | | | — | | ||||||||
Incremental expense incurred in the fourth quarter of 2024 | | | | | ||||||||
Cash payments | ( | ( | — | ( | ||||||||
Non-cash adjustments | — | ( | ( | ( | ||||||||
Adjustments(3) | | — | — | | ||||||||
Accrued restructuring actions balance as of June 30, 2024 | $ | | $ | | $ | — | $ | | ||||
Incremental expense incurred in the first quarter of 2025 | — | | — | | ||||||||
Cash payments | ( | ( | — | ( | ||||||||
Accrued restructuring actions balance as of September 30, 2024 | $ | | $ | | $ | — | $ | |
(1) Relates to impacted employees’ final paycheck, separation payments, outplacement services, legal fees, and retention packages related to the closure or sale of certain distribution and manufacturing sites.
(2) Primarily relates to impairment of right-of-use-assets, lease termination fees, consulting fees, and expenses for changes to supporting IT systems that are enabling the Company to complete the restructuring initiatives.
(3) Relates to the refinement of the accrual recorded in the second quarter of fiscal 2024.
Protein Sciences realignment
In December 2022, the Company informed employees it would undertake certain actions to strategically reallocate operations resources to high growth areas of the business. Additional actions were taken in June 2023 primarily related to the sales organization. The actions impacted a limited number of employees and were completed in the fourth quarter of fiscal 2024. As a result of the realignment, a pre-tax charge of $
Employee | |||
severance | |||
Accrued restructuring actions balance as of June 30, 2023 | $ | | |
Fiscal year 2024 cash payments | ( | ||
First quarter fiscal year 2024 adjustments(1) | | ||
Second quarter fiscal year 2024 adjustments(1) | | ||
Accrued restructuring actions balance as of June 30, 2024 | $ | |
(1) Fiscal year 2024 adjustments relate to the refinement of the accrual recorded in fiscal year 2023.
Legal Matters: The Company and its affiliates are involved in a number of legal actions from time to time involving product liability, employment, intellectual property and commercial disputes, shareholder related matters, environmental proceedings, tax disputes, and governmental proceedings and investigations. With respect to governmental proceedings and investigations, like other companies in our industry, the Company is subject to extensive regulation by national, state, and local governmental agencies in the United States and in other jurisdictions in which the Company and its affiliates operate. The Company’s standard practice is to cooperate with regulators and investigators in responding to inquiries. The outcomes of legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the enforcement agencies or private claimants seek damages, as well as other remedies (including injunctions barring the sale of products that are the subject of the proceeding), that could require significant expenditures, result in lost revenues, or limit the Company's ability to conduct business in the applicable jurisdictions.
7
The Company records a liability in the consolidated financial statements on an undiscounted basis for loss contingencies related to legal actions when a loss is known or considered probable and the amount may be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. When determining the estimated loss or range of loss, significant judgment is required. Estimates of probable losses resulting from litigation and governmental proceedings involving the Company are inherently difficult to predict, particularly when the matters are in early procedural stages with incomplete scientific facts or legal discovery, involve unsubstantiated or indeterminate claims for damages, potentially involve penalties, fines or punitive damages, or could result in a change in business practice. The Company classifies certain specified litigation charges and gains related to significant legal matters as certain litigation charges in the consolidated statements of income.
In August 2024,
During the first quarter of fiscal 2025, the Company recognized $
Recently Adopted Accounting Pronouncements
There were no accounting pronouncements adopted in the quarter ended September 30, 2024. Refer to the Form 10-K for accounting pronouncements adopted prior to June 30, 2024.
Relevant New Standards Issued Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280), which requires incremental disclosures on reportable segments, primarily through enhanced disclosures on significant segment expenses. The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2025 for our annual report and for interim periods starting in fiscal year 2026. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which requires incremental annual disclosures on income taxes, including rate reconciliations, income taxes paid, and other disclosures. The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2026 for our annual report. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.
Other than the items noted above, there have been no new accounting pronouncements not yet effective or adopted in the current year that we believe have a significant impact, or potential significant impact, on our unaudited Condensed Consolidated Financial Statements.
Note 2. Revenue Recognition:
Consumables revenues consist of specialized proteins, immunoassays, antibodies, reagents, blood chemistry and blood gas quality controls, and hematology instrument controls that are typically single-use products recognized at a point in time following the transfer of control of such products to the customer, which generally occurs upon shipment. Instruments revenues typically consist of longer-lived assets that, for the substantial majority of sales, are recognized at a point in time in a manner similar to consumables. Service revenues consist of extended warranty contracts, post contract support, and custom development projects that are recognized over time as either the customers receive and consume the benefits of such services simultaneously or the underlying asset being developed has no alternative use for the Company at contract inception and the Company has an enforceable right to payment for the portion of the performance completed. Service revenues also include laboratory services recognized at point in time.
8
We recognize royalty revenues in the period the sales occur using third party evidence. The Company elected the "right to invoice" practical expedient based on the Company's right to invoice a customer at an amount that approximates the value to the customer and the performance completed to date.
The Company elected the exemption to not disclose the unfulfilled performance obligations for contracts with an original length of one year or less and the exemption to exclude future performance obligations that are accounted under the sales-based or usage-based royalty guidance. The Company’s unfulfilled performance obligations for contracts with an original length greater than one year were not material as of September 30, 2024.
Contracts with customers that contain instruments may include multiple performance obligations. For these contracts, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis. Allocation of the transaction price is determined at the contracts’ inception.
Payment terms for shipments to end-users are generally net 30 days. Payment terms for distributor shipments may range from 30 to 90 days. Service arrangements commonly call for payments in advance of performing the work (e.g. extended warranty and service contracts), upon completion of the service (e.g. custom development manufacturing) or a mix of both.
Contract assets include revenues recognized in advance of billings. Contract assets are included within Other current assets in the accompanying balance sheet as the amount of time expected to lapse until the Company's right to consideration becomes unconditional is less than one year. We elected the practical expedient allowing us to expense contract costs that would otherwise be capitalized and amortized over a period of less than one year. Contract assets as of September 30, 2024 are not material.
Contract liabilities include billings in excess of revenues recognized, such as those resulting from customer advances and deposits and unearned revenue on warranty contracts. Contract liabilities as of September 30, 2024 and June 30, 2024 were approximately $
Any claims for credit or return of goods must be made within 10 days of receipt. Revenues are reduced to reflect estimated credits and returns. Although the amounts recorded for these revenue deductions are dependent on estimates and assumptions, historically our adjustments to actual results have not been material.
Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenue. Amounts billed to customers for shipping and handling are included in revenue, while the related shipping and handling costs are reflected in cost of products. We elected the practical expedient that allows us to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost, and we accrue costs of shipping and handling when the related revenue is recognized.
The following tables present our disaggregated revenue for the periods presented.
Revenue by type is as follows (in thousands):
| Quarter Ended | |||||||
September 30, | ||||||||
| 2024 |
| 2023 | |||||
Consumables | $ | | $ | | ||||
Instruments |
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Services |
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Total product and services revenue, net | $ | | $ | | ||||
Royalty revenues |
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Total revenues, net | $ | | $ | |
9
Revenue by geography is as follows (in thousands):
| Quarter Ended | |||||||
September 30, | ||||||||
| 2024 |
| 2023 | |||||
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United States | $ | | $ | | ||||
EMEA, excluding United Kingdom |
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United Kingdom |
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APAC, excluding Greater China |
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Greater China |
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Rest of World |
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Net sales | $ | | $ | |
Note 3. Selected Balance Sheet Data:
Inventories:
Inventories consist of (in thousands):
| September 30, | June 30, | |||||
| 2024 |
| 2024 | ||||
Raw materials | $ | | $ | | |||
Finished goods(1) |
| |
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Inventories, net | $ | | $ | |
(1) Finished goods inventory of $
Property and Equipment:
Property and equipment consist of (in thousands):
| September 30, | June 30, | |||||
| 2024 |
| 2024 | ||||
Land | $ | | $ | | |||
Buildings and improvements |
| |
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Machinery and equipment | | | |||||
Construction in progress |
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Property and equipment, cost |
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Accumulated depreciation and amortization |
| ( |
| ( | |||
Property and equipment, net | $ | | $ | |
10
Intangible Assets:
Intangible assets consist of (in thousands):
September 30, | June 30, | ||||||
2024 | 2024 | ||||||
Developed technology | $ | | $ | | |||
Tradenames |
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Customer relationships |
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Patents |
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Other intangibles |
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Definite-lived intangible assets |
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Accumulated amortization |
| ( |
| ( | |||
Total intangible assets, net | $ | | $ | |
Changes to the carrying amount of net intangible assets for the period ended September 30, 2024 consist of (in thousands):
| September 30, | ||
2024 | |||
Beginning balance | $ | | |
Other additions |
| | |
Amortization expense |
| ( | |
Restructuring impairment | ( | ||
Currency translation | | ||
Ending balance | $ | |
The estimated future amortization expense for intangible assets as of September 30, 2024 is as follows (in thousands):
Remainder 2025 |
| $ | |
2026 |
| | |
2027 |
| | |
2028 |
| | |
2029 |
| | |
Thereafter |
| | |
Total | $ | |
Goodwill:
Changes to the carrying amount of goodwill for the period ended September 30, 2024 consist of (in thousands):
|
| Diagnostics and |
| ||||||
Protein Sciences | Spatial Biology | Total | |||||||
June 30, 2024 | $ | | $ | | $ | | |||
Currency translation |
| | | | |||||
September 30, 2024 | $ | | $ | | $ | |
We evaluate the carrying value of goodwill in the fourth quarter of each fiscal year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. The Company performed a qualitative goodwill impairment assessment for all of its reporting units during the fourth quarter of fiscal 2024. No indicators of impairment were identified as part of our assessment.
11
Other assets:
Other assets consist of (in thousands):
| September 30, | June 30, | ||||
| 2024 | 2024 | ||||
Equity method investment in Wilson Wolf | $ | | $ | | ||
| | |||||
Long-term inventory | | | ||||
Investment in Spear Bio | | — | ||||
Other |
| |
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Other assets | $ | | $ | |
Note 4. Acquisitions:
We periodically complete business combinations that align with our business strategy. Acquisitions are accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at fair value as of the acquisition date and that the results of operations of each acquired business be included in our consolidated statements of comprehensive income from their respective dates of acquisitions. Acquisition costs are recorded in Selling, general and administrative expenses as incurred.
There were no acquisitions in the first quarter of fiscal 2025.
Fiscal year 2024 Acquisitions
Lunaphore Technologies SA.
On July 7, 2023, the Company acquired all of the ownership interests of Lunaphore Technologies SA (“Lunaphore”) for $
The allocation of purchase price consideration related to Lunaphore was completed in the fourth quarter of fiscal 2024.
Final allocation at June 30, 2024 | ||
Current assets | $ | |
Equipment and other long-term assets |
| |
Intangible assets: | ||
Developed technologies |
| |
Tradenames |
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Customer relationships |
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Goodwill |
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Total assets acquired |
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Liabilities |
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Deferred income taxes, net |
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Net assets acquired | $ | |
Cash paid |
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Tangible assets and liabilities acquired were recorded at fair value on the date of close based on management's assessment. The purchase price allocated to developed technology and customer relationships was based on management’s forecasted cash inflows and outflows and using a multiperiod excess earnings method to calculate the fair value of assets purchased. The purchase price allocated to trade names was based on management's forecasted cash inflows and outflows and using a relief from royalty method. The amount recorded for developed technology is being amortized with the expense reflected in cost of goods sold in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The amortization period for developed technology is
Note 5. Fair Value Measurements:
The Company’s financial instruments include cash and cash equivalents, available for sale investments, derivative instruments, accounts receivable, accounts payable, and long-term debt.
Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. This standard also establishes a hierarchy for inputs used in measuring fair value. This standard maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available in the circumstances.
The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable for the asset or liability and their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 may also include certain investment securities for which there is limited market activity or a decrease in the observability of market pricing for the investments, such that the determination of fair value requires significant judgment or estimation.
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The following tables provide information by level for financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):
| Total |
| |||||||||||
carrying | |||||||||||||
value as of | Fair Value Measurements Using | ||||||||||||
Balance Sheet Location | September 30, | Inputs Considered as | |||||||||||
2024 | Level 1 | Level 2 | Level 3 | ||||||||||
| |||||||||||||
Assets |
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|
|
|
|
|
| |||||
Derivatives designated as hedging instruments - cash flow hedges | Other current assets | $ | | $ | — | $ | | $ | — | ||||
Derivatives designated as hedging instruments - cash flow hedges | Other assets | | — | | — | ||||||||
Total assets | $ | | $ | — | $ | | $ | — | |||||
Liabilities |
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|
|
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|
|
|
| |||||
Derivatives designated as hedging instruments - cash flow hedges | Other long-term liabilities | $ | | $ | — | $ | | $ | — | ||||
Derivatives designated as hedging instruments - net investment hedge | Other long-term liabilities | | — | | — | ||||||||
Total liabilities | $ | | $ | — | $ | | $ | — |
| Total |
| |||||||||||
carrying | |||||||||||||
value as of | Fair Value Measurements Using | ||||||||||||
Balance Sheet Location | June 30, | Inputs Considered as | |||||||||||
| 2024 |
| Level 1 |
| Level 2 |
| Level 3 | ||||||
Assets |
|
|
|
|
|
|
|
| |||||
Certificates of deposit(1) | Short-term available-for-sale investments | $ | | $ | | $ | — | $ | — | ||||
Derivatives designated as hedging instruments - cash flow hedges | Other current assets | |