N~~ote~~ 2. ~~Selected Balance Sheet Data~~:

~~Available-For-Sale Investments:~~customer at an amount that approximates the value to the customer and the performance completed to date.

The ~~fair value~~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 were not material as of March 31, 2020.

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 ~~Company's available-for-sale investments~~transaction price is determined at the contracts’ inception.

Payment terms for shipments to end-users are generally net ~~December~~ 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 March 31, 2020 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 March 31,, ~~2017~~2020 and June 30, ~~2017~~2019 were ~~$40~~.9approximately $14.8 million and ~~$66~~.1$10.4 million, respectively. ~~The fair value~~Contract liabilities as of ~~the Company’s investment in ChemoCentryx, Inc (CCXI) decreased~~ ~~$21.7~~ ~~million from~~ ~~$59.6~~ at June 30, ~~2017~~2019 tosubsequently recognized as revenue during the quarter period and ~~$37.9~~nine month period ended March 31, 2020 were approximately $1.1 million at ~~December 31, 2017.~~ ~~The remaining decrease was caused by the maturities~~and $7.0 million, respectively. Contract liabilities in excess of $2.1one ~~million~~year are included in ~~corporate bond securities held by Advanced Cell Diagnostics (ACD) and~~ $1.4 ~~million in certificate of deposits held in China. The cost basis of~~Other long-term liabilities on the ~~Company's investment in CCXI at~~ ~~December 31, 2017~~ ~~and~~ ~~June 30, 2017~~ ~~was~~ ~~$29.5~~ ~~million.~~balance sheet.

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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:

	Quarter Ended				Nine Months Ended
	March 31,				March 31,
	2020		2019		2020		2019
Consumables	$	161,958	$	153,783	$	462,660	$	429,340
Instruments		16,405		16,104		53,381		51,116
Services		11,426		9,565		32,917		27,027
Total product and services revenue, net	$	189,789	$	179,452	$	548,958	$	507,483
Royalty revenues		4,891		5,409		13,899		14,858
Total revenues, net	$	194,680	$	184,861	$	562,857	$	522,341

Revenue by geography is as follows:

	Quarter Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
United States	$	109,797	$	98,228	$	311,815	$	281,585
EMEA, excluding United Kingdom		39,108		42,339		115,993		116,018
United Kingdom		9,166		10,737		24,619		26,703
APAC, excluding Greater China		17,193		14,943		46,982		39,990
Greater China		13,781		12,993		49,655		42,727
Rest of World		5,635		5,621		13,793		15,318
Total revenues, net	$	194,680	$	184,861	$	562,857	$	522,341

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Note 3. Selected Balance Sheet Data:

Inventories:

Inventories consist of (in thousands):

December 31,

June 30,

2017

2017

Raw materials
$ 25,401 $ 22,074
Finished goods
42,879 38,077
Inventories, net
$ 68,280 $ 60,151

	March 31,		June 30,
	2020		2019
Raw materials	$	47,263	$	40,913
Finished goods⁽¹⁾		56,059		53,376
Inventories, net	$	103,322	$	94,289

(1) Finished goods inventory of $3,649 and $3,239 is included within other long-term assets in the respective March 31, 2020 and June 30, 2019, consolidated balance sheet. The inventory is included in long-term assets as it is forecasted to be sold after the 12 months subsequent to the consolidated balance sheet date.

Property and Equipment:

Property and equipment consist of (in thousands):

December 31,

June 30,

2017

2017

Land
$ 6,270 $ 6,270
Buildings and improvements
167,486 158,495
Machinery and equipment
101,903 98,596
Property and equipment, cost
275,659 263,361
Accumulated depreciation and amortization
(137,198
)
(128,237
)
Property and equipment, net
$ 138,461 $ 135,124

	March 31,			June 30,
	2020			2019
Land	$	7,561		$	7,065
Buildings and improvements		182,300			175,019
Machinery and equipment		141,506			124,233
Property and equipment, cost		331,367			306,317
Accumulated depreciation		(166,355	)		(152,278	)
Property and equipment, net	$	165,012		$	154,039

Intangible Assets:

Intangible assets consist of (in thousands):

	March 31,			June 30,
	2020			2019
Developed technology	$	434,367		$	435,679
Trade names		146,428			147,296
Customer relationships		209,651			214,320
Patents		2,377			2,133
Intangible assets		792,823			799,428
Accumulated amortization		(262,490	)		(219,999	)
Intangible assets, net	$	530,333		$	579,429

December 31,

June 30,

2017

2017

Developed technology
$ 283,226 $ 276,959
Trade names
87,859 87,092
Customer relationships
207,230 204,243
Non-compete agreements
3,277 3,264
Patents
1,032 633
Intangible assets
582,624 572,191
Accumulated amortization
(144,264
)
(120,149
)
Intangible assets, net
$ 438,360 $ 452,042

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Changes to the carrying amount of net intangible assets for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 consist of (in thousands):

Beginning balance	$	452,042		$	579,429
Acquisitions		5,520			-
Other additions		586			214
Amortization expense		(22,675	)		(45,625	)
Currency translation		2,887			(3,685	)
Ending balance	$	438,360		$	530,333

The estimated future amortization expense for intangible assets as of ~~December~~March 31, ~~2017~~2020 is as follows (in thousands):

2018	$	22,887
2019		45,089
2020		44,385
2020 remainder			$	15,423
2021		44,015		59,545
2022		42,263		57,335
2023				55,469
2024				53,008
Thereafter		239,721		289.553
Total	$	438,360	$	530,333

Goodwill:

Changes to the carrying amount of goodwill for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 consist of (in thousands):

	Biotechnology		Protein Platforms		Diagnostics		Total		Protein Sciences			Diagnostics and Genomics			Total
Beginning balance	$	254,930	$	220,826	$	103,270	$	579,026	$	377,407			355,260		$	732,667
Acquisitions (Note 3)		5,991		-		-		5,991
Acquisitions (Note 4)										-			-			-
Prior year acquisitions/adjustments (Note 4)										(326	)		-			(326	)
Currency translation		1,692		2,392		-		4,084		(6,424	)		(86	)		(6,510	)
Ending balance	$	262,613	$	223,218	$	103,270	$	589,101	$	370,657		$	355,174		$	725,831

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 ~~possib~~lepossible impairment. The Company performed a ~~quantitative~~goodwill impairment assessment for all~~three~~ of its reporting units during the fourth quarter of fiscal ~~year~~ ~~2017.~~2019. ~~The quantitative assessment indicated that all~~No indicators of ~~the reporting units had substantial headroom~~impairment were identified as part of ~~June 30, 2017.~~our assessment.

No triggering events were identified during the ~~quarter~~nine months ended ~~December~~March 31, ~~2017.~~2020. There has been no impairment of goodwill since the adoption of Financial Accounting Standards Board (“FASB”) ASC 350 guidance for goodwill and other intangibles on July 1, 2002.

~~Other Assets:~~

Ot~~her Assets consist~~

Table of ~~(in thousands):~~

December 31,

June 30,

2017

2017

Investments
$ 40,385 $ 40,385
Other
3,029 3,617
Other assets
$ 43,414 $ 44,002
Contents

~~As of~~ ~~December 31, 2017,~~ ~~the Company had~~ ~~$43.4~~ ~~million of other assets compared to~~ ~~$44~~.0 ~~million as of~~ ~~June 30, 2017.~~ ~~Investments include a~~ ~~$40~~.0 ~~million investment in Astute Medical, Inc. made during the~~ ~~second~~ ~~quarter of fiscal year~~ ~~2017.~~ ~~This investment is accounted for under the cost-method as we own less than~~ ~~20%~~ ~~of the outstanding stock and we concluded that we do~~ ~~not~~ ~~have significant influence. Under the cost-method, the fair value is~~ ~~not~~ ~~estimated if there are~~ no ~~identified events or changes in circumstances that~~ ~~may~~ ~~have a significant adverse effect on the fair value of the investment.~~ No ~~such events or changes in circumstances were identified in the period ended~~ ~~December 31, 2017~~.

Note 34.. 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 beare included in our consolidated statements of comprehensive income from their respective dates of acquisition. Acquisition costs are recorded in selling, general and administrative expenses as incurred.

~~Trevigen Inc.~~B-MoGen Biotechnologies

On ~~September 5, 2017~~June 4, 2019, the Company acquired the ~~stock of Trevigen~~remaining interest in B-MoGen Biotechnologies, Inc. (B-MoGen) for approximately ~~$10.6~~$17.4 million, net of cash ~~received.~~acquired, plus contingent consideration of up to $38.0 million, subject to certain product development milestones and revenue thresholds. The Company ~~has had~~previously held an investment of $1.4 million in B-MoGen and recognized a ~~long-standing business relationship with Trevigen~~gain of approximately $3.7 million on the date of the transaction representing the adjustment of our historical investment to its fair value as ~~a distributor of its product line.~~previously disclosed in our 10K/A. The goodwill recorded as a result of the acquisition represents the strategic benefits of growing the Company’s product portfolio and the expected revenue growth from increased market penetration. The goodwill is not deductible for income tax purposes. The business became part of the ~~Biotechnology~~Protein Sciences reportable segment in the ~~first~~fourth quarter of fiscal year 2019. Purchase accounting was finalized during the third quarter of fiscal ~~2018.~~2020.

~~Certain estimated~~ ~~fair values are~~ ~~not~~ ~~yet finalized and are subject to change, which could be significant. The Company expects to finalize these during fiscal year~~ ~~2018~~ when our valuation models for acquired intangible assets are completed, including the determination of related estimated useful lives. Amounts for acquired inventory, intangible assets, and related deferred tax liabilities, and goodwill remain subject to change. The preliminary ~~estimated~~and final fair values of the assets acquired and liabilities assumed are as follows (in thousands):

Preliminary
Allocation at
Acquisition Date

Adjustments to
Fair Value

Updated Opening
Balance Sheet
Allocation at
December 31, 2017

Current assets, net of cash
$ 1,662 $ 1,662
Equipment and other long-term assets
154 (101
)
53
Intangible assets:

Developed technology
3,800 1,300 5,100
Trade name
1,400 (1,240
)
160
Customer relationships
1,900 (1,640
)
260
Goodwill
4,595 1,396 5,991
Total assets acquired
13,511 (285
)
13,226
Liabilities
92 295 387
Deferred income taxes, net
2,785 (590
)
2,195
Net assets acquired
$ 10,634 10 $ 10,644

Cash paid, net of cash acquired
$ 10,634 10 $ 10,644

~~As summarized in the table, there have been adjustments totaling~~ ~~$1.4~~ ~~million to goodwill during the measurement period. These~~ ~~adjustments primarily relate to refinements made to acquired intangible asset cash flow models, and updates to opening balance sheet deferred tax assets and liabilities upon completion of the~~ ~~December 31, 2017~~ ~~income tax return.~~

	Preliminary Allocation at Acquisition Date			Adjustments to Fair Value			Adjusted Final Allocation at March 31, 2020
Current assets, net of cash	$	504	$	-		$	504
Equipment and other long-term assets		269		-			269
Intangible assets:
Developed technology		14,000		-			14,000
Customer relationships		400		-			400
Goodwill		16,457		(326	)		16,131
Total assets acquired		31,630		(326	)		31,304
Liabilities		211		-			211
Deferred income taxes, net		3,377		(326	)		3,051
Net assets acquired	$	28,042	$	-		$	28,042

Cash paid, net of cash acquired	$	17,448	$	-		$	17,448
Fair value of contingent consideration		5,500		-			5,500
Fair value of historical investment in B-MoGen		5,094		-			5,094
Net assets acquired	$	28,042	$	-		$	28,042

Tangible assets and liabilities acquired ~~net of liabilities assumed,~~ were recorded at fair value on the date of close based on management's assessment. The purchase price allocated to developed technology ~~trade names, and customer relationships~~ was estimated 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 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. ~~Amortization expense related to trade names, and customer relationships~~The amortization period for developed technology is reflected in selling, general and administrative expenses in the Consolidated Statement of Earnings and Comprehensive Income. The preliminary amortization periods for intangible assets acquired in fiscal ~~2018~~ ~~are~~ estimated to be 13 ~~years for developed technology,~~ 11 ~~years for customer relationships, and~~ ~~1.5~~ ~~years for trade names.~~14 years. The net 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~~as intangible asset amortization, ~~both of~~ which ~~are~~is not deductible for income tax ~~purposes.~~purposes offset by the deferred tax asset for the calculation of acquired NOLs.

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Note 4.5. Fair Value Measurements:

The Company’s financial instruments include cash and cash equivalents, available for sale investments, derivative instruments, accounts receivable, accounts payable, contingent consideration obligations, 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.

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 Inputs Considered as						Total carrying value as of		Fair Value Measurements Using Inputs Considered as
	December 31, 2017		Level 1		Level 2		Level 3		March 31, 2020		Level 1		Level 2		Level 3
Assets
Equity securities ⁽¹⁾	$	37,867	$	37,867	$	-	$	-	$	70,172	$	64,587	$	5,585	$	-
Certificates of deposit ⁽²⁾										34,700		34,700		-		-
Total assets									$	104,872	$	99,287	$	5,585	$	-

Liabilities
Contingent Consideration	$	53,300	$	-	$	-	$	53,300
Contingent consideration									$	7,850	$	-	$	-	$	7,850
Derivative instruments - cash flow hedges										18,725		-		18,725		-
Total liabilities									$	26,575	$	-	$	18,725	$	7,850

	Total carrying value as of		Fair Value Measurements Using Inputs Considered as
	June 30, 2019		Level 1		Level 2		Level 3
Assets
Equity securities ⁽¹⁾	$	38,219	$	38,219	$	-	$	-
Certificates of deposit ⁽²⁾		26,928		26,928		-		-
Total assets	$	65,147	$	65,147	$	-	$	-

Liabilities
Contingent consideration	$	12,600	$	-	$	-	$	12,600
Derivative instruments - cash flow hedges		12,458		-		12,458		-
Total liabilities	$	25,058	$	-	$	12,458	$	12,600

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Total carrying
value as of

Fair Value Measurements Using
Inputs Considered as

June 30, 2017

Level 1

Level 2

Level 3

Assets

Equity securities ⁽¹⁾
$ 59,616 $ 59,616 $ - $ -
Corporate bond securities ⁽¹⁾
2,057 - 2,057 -
Total Assets
$ 61,673 $ 59,616 $ 2,057 $ -

Liabilities

Contingent Consideration
$ 68,400 $ - $ - $ 68,400

	(1)	Included in ~~available-for-sale~~available-for-sale investments on the condensed consolidated balance ~~sheet~~sheet. The cost basis in the Company's investment in ChemoCentryx Inc (CCXI) was $7.6 million and $18.8 million as of March 31, 2020 and June 30, 2019, respectively. The Company has a warrant to purchase additional CCXI equity shares which was valued at $5.6 million as of March 31, 2020. The fair value of the warrant as of June 30, 2019 was not material.
	(2)	Included in available-for-sale investments on the condensed consolidated balance sheet. The certificates of deposit have contractual maturity dates within one year.

~~Our~~Fair value measurements of available for sale securities

Available for sale securities excluding warrants are measured at fair value using quoted market prices in active markets for identical assets and are therefore classified as Level 1 assets. ~~We value our~~The Company's warrant to purchase additional shares at a specified future price was valued using a Black-Scholes model with observable inputs in active markets and therefore was classified as a Level 2 ~~assets using inputs~~asset.

Fair value measurements of derivative instruments

In October 2018, the Company entered into forward starting swaps designated as cash flow hedges on outstanding debt. The forward starting swaps reduce the variability of cash flow payments for the Company by converting the variable interest rate on the Company’s long-term debt described in Note 6 to that ~~are~~of a fixed interest rate. Accordingly, as part of the forward starting swaps, the Company will exchange, at specified intervals, the difference between floating and fixed interest amounts based on $380 million of notional principal amount. The change in the fair value of the instrument is reported as a component of the other comprehensive income and reclassified into interest expense over the corresponding term of the cash flow hedge. As further described in Note 8, the company reclassified $1.3 million and $2.1 million out of other comprehensive income into interest expense during the quarter and nine months ended March 31, 2020, respectively. The liability related to the derivative instrument was recorded within Other long-term liabilities on the Consolidated Balance Sheet. The instrument was valued using observable market ~~indices of similar assets within an~~inputs in active ~~market.~~ ~~All of our~~markets and therefore classified as a Level 2 ~~assets have maturity dates~~liability.

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Fair value measurements of contingent consideration

In connection with the Exosome Diagnostics, Inc. (Exosome), QT Holdings Corporation (Quad), and B-MoGen acquisitions the Company is required to make contingent consideration payments of up to $325.0 million, $51.0 million and $38.0 million, respectively. The contingent consideration payments are subject to Exosome achieving certain EBITA thresholds, Quad meeting certain product development milestones and revenue thresholds, and B-MoGen meeting certain product development milestones and revenue thresholds. The preliminary fair value of the liabilities for the contingent payments recognized upon the acquisition as part of the purchase accounting opening balance sheet totaled $14.6 million ($3.8 million for Exosome, $5.3 million for Quad, and $5.5 million for B-MoGen). The preliminary fair value of the development milestone payments was estimated by discounting to present value the probability-weighted contingent payments expected to be made. Assumptions used in these calculations were probability of success, duration of the earn-out, and discount rate. The preliminary fair value for the EBITA and revenue milestone payments was determined using a Monte Carlo simulation-based model discounted to present value. Assumptions used in these calculation included units sold, expected revenue, expected expenses, discount rate and various probability factors. The ultimate settlement of contingent consideration could deviate from current estimates based on the actual results of these financial measures. This liability is considered to be a Level ~~one~~3 ~~year.~~financial liability that is re-measured each reporting period. The change in fair value of contingent consideration for these acquisitions is included in general and administrative expense.

The following table presents a reconciliation of the liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarter and nine months ended March 31, 2020 (in thousands):

	Quarter Ended			Nine Months Ended
	March 31, 2020			March 31, 2020
Fair value at the beginning of period	$	12,555		$	12,600
Change in fair value of contingent consideration		(705	)		(605	)
Payments		(4,000	)		(4,145	)
Fair value at the end of period	$	7,850		$	7,850

The use of different assumptions, applying different judgment to matters that inherently are subjective and changes in future market conditions could result in different estimates of fair value of our securities or contingent consideration, currently and in the future. If market conditions deteriorate, we may incur impairment charges for securities in our investment portfolio. We may also incur changes to our contingent consideration liability as discussed below.

~~In connection with the Advanced Cell Diagnostics~~ ~~(ACD) acquisition (fiscal~~ ~~2017~~~~), as well as the Zephyrus and CyVek acquisitions (fiscal~~ ~~2016~~~~), we are required to make contingent payments, subject to the entities achieving certain sales and revenue thresholds. The contingent consideration payments were up to~~ ~~$75~~.0 ~~million,~~ $7.0 ~~million and~~ ~~$35~~.0 ~~million related to the ACD, Zephyrus and CyVek acquisitions, respectively.~~ ~~The fair value of the liabilities for the contingent payments recognized upon each acquisition as part of the purchase accounting opening balance sheet totaled~~ ~~$78.5~~ ~~million (~~~~$37.0~~ ~~million for ACD,~~ ~~$6.5~~ ~~million for Zephyrus and~~ ~~$35.0~~ million for CyVek) and was estimated by discounting to present value the probability-weighted contingent payments expected to be made. Assumptions used in these calculation units sold, expected revenue, discount rate and various probability factors. The ultimate settlement of contingent consideration could deviate from current estimates based on the actual results of these financial measures. This liability is considered to be a Level 3 ~~financial liability that is re-measured each reporting period. The change in fair value of contingent consideration for these acquisitions is included in general and administrative expense.~~

~~As of~~ ~~June 30, 2017~~ ~~the remaining contingent consideration payments were up to~~ ~~$50~~.0 ~~million,~~ ~~$3.5~~ ~~million and~~ ~~$35~~.0 ~~million related to the ACD, Zephyrus and CyVek acquisitions, respectively. During the~~ ~~first~~ ~~quarter of fiscal~~ ~~2018,~~ ~~a cash payment of~~ ~~$35.0~~ ~~million was made towards to the contingent consideration liability relating to the CyVek acquisition. During the~~ ~~second~~ ~~quarter of fiscal~~ ~~2018,~~ ~~the Company determined that certain sales and revenue thresholds were met for ACD. The Company expects to make a~~ ~~$50.0~~ ~~million cash payment towards this liability in the~~ ~~third~~ ~~quarter of fiscal~~ ~~2018.~~

~~The following table presents a reconciliation of the liability measured at fair value on a recurring basis using significant unobservable inputs (Level~~ 3~~) for the~~ ~~six~~ ~~months ended~~ ~~December 31, 2017 (~~~~in thousands):~~

Quarter Ended

Six Months Ended

December 31, 2017

December 31, 2017

Fair value at the beginning of period
$ 40,900 $ 68,400
Payments
- (35,000
)
Change in fair value of contingent consideration
12,400 19,900
Fair value at the end of period
$ 53,300 $ 53,300

Fair value measurements of other financial instruments – The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate fair value.

Cash and cash equivalents, certificates of deposit, accounts receivable, and accounts payable – The carrying amounts reported in the consolidated balance sheets approximate fair value because of the short-term nature of these items.

Long-term debt – The carrying amounts reported in the consolidated balance sheets for the amount drawn on our line-of-credit facility approximates fair value because our interest rate is variable and reflects current market rates.

Note5.6. Debt and Other Financing Arrangements:

~~In fiscal~~On ~~2017,~~August 1, 2018, the Company entered into a new revolving line-of-credit ~~facility~~and term loan governed by a Credit Agreement (the Credit Agreement) ~~dated~~ ~~July 28, 2016.~~ . The Credit Agreement provides for a revolving credit facility of ~~$400~~$600.0 million, which can be increased byby an additional ~~$200~~$200.0 million subject to certain ~~conditions.~~conditions, and a term loan of $250.0 million. Borrowings under the Credit Agreement may be used for working capital and expenditures of the Company and its subsidiaries, including financing permitted acquisitions. Borrowings under the Credit Agreement ~~for base rate loans~~ bear interest at a variable ~~rate equal to the greater of (i) the prime commercial rate, (ii) the per annum federal funds rate plus~~ ~~0.5%,~~ ~~or (iii) LIBOR +~~ ~~1.00%~~ - ~~1.75%~~ ~~depending~~rate. The current outstanding debt is based on the ~~existing~~Eurodollar Loans term for which the interest rate is calculated as the sum of LIBOR plus an applicable margin. The applicable margin is determined from the total leverage ratio of ~~Debt to Earnings Before Interest, Taxes, Depreciation~~the Company and ~~Amortization (as defined in the Credit Agreement).~~updated on a quarterly basis. The annualized fee for any unused portion of the credit facility is currently 2520 basis points.

The Credit Agreement matures on ~~July~~August 1, 2023 ~~28,~~~~2021~~and contains customary restrictive and financial covenants and customary events of default. As of ~~December~~March 31, ~~2017,~~2020, the outstanding balance under the Credit Agreement was ~~$362.5~~$420.1 million.

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Note 6.7. Leases:

As a lessee, the company leases offices, labs, and manufacturing facilities, as well as vehicles, copiers, and other equipment. The Company adopted ASU No.2016-02 and related standards (collectively ASC 842,Leases), which replaced previous lease accounting guidance, on July 1, 2019.

The Company recognizes operating lease expense on a straight-line basis over the lease term. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company’s incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region. During the quarter and nine months ended March 31, 2019, the Company recognized $0.8 million and $2.7 million in variable lease expense, respectively, in the Condensed Consolidated Statements of Earnings and Comprehensive Income. During the quarter and nine months ended March 31, 2020, the Company also recognized $3.2 million and $9.5 million, respectively relating to fixed lease expense in the Condensed Consolidated Statements of Earnings and Comprehensive Income.

The following table summarizes the balance sheet classification of the Company’s operating leases, amounts of right of use assets and lease liabilities, the weighted average remaining lease term, and the weighted average discount rate for the Company’s operating leases (asset and liability amounts are in thousands):

	Balance Sheet Classification	As of: March 31, 2020
Operating leases:
Operating lease right of use assets	Right of Use Asset	$	73,751

Current operating lease liabilities	Operating lease liabilities current	$	9,544
Noncurrent operating lease liabilities	Operating lease liabilities		69,491
Total operating lease liabilities		$	79,035

Weighted average remaining lease term (in years):			8.89

Weighted average discount rate:			4.39	%

The following table summarizes the cash paid for amounts included in the measurement of operating lease liabilities and right of use assets obtained in exchange for new operating lease liabilities for the nine months ended March 31, 2020 (in thousands):

	Nine months ended March 31, 2020
Cash amounts paid on operating lease liabilities⁽¹⁾	$	9,643

Right of use assets obtained in exchange for lease liabilities		1,640

(1) Total cash paid for the Company's operating leases during the nine months ended March 31, 2020 include cash amounts paid on operating lease liabilities and variable lease expenses. Cash flow impacts from right of use assets and lease liabilities are presented net on the cash flow statement in changes in other operating activity.

The following table summarizes the fair value of the lease liability by payment date for the Company’s operating leases by fiscal year (in thousands):

	Operating Leases
Remainder of 2020	$	2,362
2021		9,405
2022		9,332
2023		8,918
2024		8,320
Thereafter		40,698
Total	$	79,035

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Certain leases include one or more options to renew, with terms that extend the lease term up to five years. The Company includes option to renew the lease as part of the right of use lease asset and liability when it is reasonably certain the Company will exercise the option. In addition, certain leases contain fair value purchase and termination options with an associated penalty. In general, the Company is not reasonably certain to exercise such options.

Disclosures related to periods prior to adoption of new lease standard:

At June 30, 2019, aggregate net minimum rental commitments under non-cancelable leases having an initial or remaining term of more than one year are payable as follows (in thousands):

	Operating Leases
2020	$	13,707
2021		13,469
2022		13,154
2023		12,716
2024		11,392
Thereafter		51,895
Total	$	116,333

Total rent expense was approximately $12.9 million, $10.8 million, and $9.8 million for the years ended June 30, 2019, 2018, and 2017, respectively.

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Note 8. Supplemental Equity and Accumulated Other Comprehensive ~~Income:~~Income (Loss):

Supplemental Equity

The Company has declared cash dividends per share of $0.32 and $0.96 in both the three and nine month periods ended March 31, 2020 and 2019, respectively.

Consolidated Changes in Equity (amounts in thousands)

													Accumulated
							Additional						Other
	Common Stock						Paid-in			Retained			Comprehensive
	Shares			Amount			Capital			Earnings			Income(Loss)			Total
Balances at June 30, 2019		37,934		$	379		$	316,797		$	931,934		$	(83,521	)	$	1,165,589
Cumulative effect adjustments due to adoption of new accounting standards and other											(879	)					(879	)
Net earnings											14,398						14,398
Other comprehensive income (loss)														(8,106	)		(8,106	)
Common stock issued for exercise of options		94			1			7,854									7,855
Common stock issued for restricted stock awards		50			0			(0	)		(1,926	)					(1,926	)
Cash dividends											(12,169	)					(12,169	)
Stock-based compensation expense								8,267									8,267
Common stock issued to employee stock purchase plan		6			0			1,096									1,096
Employee stock purchase plan expense								99									99
Balances at September 30, 2019		38,084		$	381		$	334,112		$	931,358		$	(91,627	)	$	1,174,224
Net earnings											119,622						119,622
Other comprehensive income (loss)														13,275			13,275
Common stock issued for exercise of options		195			2			18,293									18,295
Common stock issued for restricted stock awards		4			0			(0	)								0
Cash dividends											(12,197	)					(12,197	)
Stock-based compensation expense								10,017									10,017
Common stock issued to employee stock purchase plan
Employee stock purchase plan								112									112
Balance at December 31, 2019		38,283		$	383		$	362,534		$	1,038,783		$	(78,352	)	$	1,323,348
Net earnings											36,432						36,432
Other comprehensive income (loss)														(25,105	)		(25,105	)
Share repurchases		(279	)		(3	)		0			(50,109	)					(50,112	)
Common stock issued for exercise of options		100			1			10,026									10,027
Common stock issued for restricted stock awards		1			0			(0	)		(114	)					(114	)
Cash dividends											(12,279	)					(12,279	)
Stock-based compensation expense								7,745									7,745
Common stock issued to employee stock purchase plan		8			0			1,216									1,216
Employee stock purchase plan								110									110
Balance at March 31, 2020		38,112		$	381		$	381,632		$	1,012,713		$	(103,458	)	$	1,291,268

												Accumulated
							Additional					Other
	Common Stock						Paid-in		Retained			Comprehensive
	Shares			Amount			Capital		Earnings			Income(Loss)			Total
Balances at June 30, 2018		37,608		$	376		$	246,568	$	876,931		$	(44,814	)	$	1,079,061
Cumulative effect adjustments due to adoption of new accounting standards and other										25,276			(24,682	)		594
Net earnings										17,403						17,403
Other comprehensive income (loss)													(1,136	)		(1,136	)
Common stock issued for exercise of options		166			2			15,609								15,611
Common stock issued for restricted stock awards		24			0					(2,405	)					(2,405	)
Cash dividends										(12,066	)					(12,066	)
Stock-based compensation expense								11,327								11,327
Common stock issued to employee stock purchase plan		5			0			842								842
Employee stock purchase plan expense								238								238
Balances at September 30, 2018		37,803		$	378		$	274,584	$	905,139		$	(70,632	)	$	1,109,469
Net earnings										17,556						17,556
Other comprehensive income (loss)													(12,379	)		(12,379	)
Share repurchases		(95	)		(1	)				(15,404	)					(15,404	)
Common stock issued for exercise of options		24						2,408								2,408
Common stock issued for restricted stock awards		3			0											-
Cash dividends										(12,086	)					-
Stock-based compensation expense								6,784								6,784
Common stock issued to employee stock purchase plan		0			0											-
Employee stock purchase plan expense								77								77
Balances at December 31, 2018		37,735		$	377		$	283,854	$	895,205		$	(83,011	)	$	1,096,425
Net earnings										44,654						44,654
Other comprehensive income (loss)													3,378			3,378
Share repurchases																-
Common stock issued for exercise of options		73			1			7,336								7,337
Common stock issued for restricted stock awards		1			0											-
Cash dividends										(12,086	)					(12,086	)
Stock-based compensation expense								5,640								5,640
Common stock issued to employee stock purchase plan		4			0			834								834
Employee stock purchase plan expense								84								84
Balances at March 31, 2019		37,813		$	378		$	297,748	$	927,773		$	(79,633	)	$	1,146,266

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Accumulated Other Comprehensive Income

The components of other comprehensive income (loss) consist of changes in foreign currency translation adjustments and changes in net unrealized gains (losses) on derivative instruments designated as cash flow hedges entered into in the second quarter of fiscal 2019. During the 9 months endedMarch 31, 2020, the company reclassified $1.6 million, net of taxes, from comprehensive income into income relating to cash payments made on the cash flow derivative instrument. The Company did not reclassify any gains (losses) from accumulated other comprehensive income (loss) to earnings during the nine months ended March 31, 2019.

The accumulated balances related to each component of other comprehensive income (loss), net of tax, ~~for~~are summarized as follows:

	Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balance as of June 30, 2019	$	(9,537	)	$	(73,983	)	$	(83,521	)
Other comprehensive income (loss), net of tax before reclassifications		(6,413	)		(15,138	)		(21,551	)
Reclassification of loss on derivatives to interest expense, net of taxes ⁽³⁾		1,614			-			1,614
Balance as of March 31, 2020⁽¹⁾⁽³⁾	$	(14,336	)	$	(89,121	)	$	(103,458	)

	Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balance as of June 30, 2018⁽²⁾	$	-		$	(69,496	)	$	(69,496	)
Other comprehensive income (loss), net of tax before reclassifications		(5,769	)		(4,368	)		(10,137	)
Balance as of March 31, 2019 ⁽³⁾	$	(5,769	)	$	(73,864	)	$	(79,633	)

(1) The gain (loss) on the interest rate swap will be reclassified into interest expense as payments on the derivative agreement are made. Approximately ($7,487) of the ($14,336) will be reclassified into earnings in the ~~six~~12 months subsequent to March 31, 2020.

(2) As previously disclosed in our 10-K/A, unrealized gains of $24,682 on available-for-sale investments with readily determinable fair vales were included in the June 30, 2018 Consolidated Balance Sheet and were reclassified into retained earnings at the beginning of fiscal 2019 upon our adoption of ASU 2016-01 and ASU 2018-02. The amounts presented in accumulated other comprehensive income as of June 30, 2018 exclude these unrealized gains subsequently reclassified into retained earnings.

(3) The Company reclassified ($2,102) to interest expense and a related tax benefit tax of $488 during the nine months ended ~~December~~March 31, ~~2017~~2020. ~~consists~~The Company had deferred tax benefits of ~~(in thousands):~~$4,390 and $1,792 included in the accumulated other comprehensive income loss as of March 31, 2020 and March 31, 2019, respectively.

Unrealized
Gains
(Losses) on
Available-
for-Sale
Investments

Foreign
Currency
Translation
Adjustments

Total

Beginning balance
$ 18,989 $ (67,924
)
$ (48,935
)
Other comprehensive income (loss)
(16,374
)
8,492 (7,882
)
Ending balance
$ 2,615 (59,432
)
$ (56,817
)

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Note 7.9. Earnings Per Share:

The following table reflects the calculation of basic and diluted earnings per share ~~(in~~(in thousands, except per share amounts):

	Quarter Ended						Six Months Ended						Quarter Ended						Nine Months Ended
	December 31,						December 31,						March 31,						March 31,
	2017			2016			2017			2016			2020			2019			2020			2019
Earnings per share – basic:
Net income	$	48,847		$	7,467		$	64,710		$	26,309		$	36,432		$	44,654		$	170,451		$	79,612
Income allocated to participating securities		(41	)		(7	)		(50	)		(22	)		(26	)		(35	)		(126	)		(66	)
Income available to common shareholders	$	48,806		$	7,460		$	64,660		$	26,287		$	36,406		$	44,619		$	170,325		$	79,546
Weighted-average shares outstanding – basic		37,449			37,308			37,412			37,294			38,303			37,772			38,167			37,745
Earnings per share – basic	$	1.30		$	0.20		$	1.73		$	0.70		$	0.95		$	1.18		$	4.46		$	2.11

Earnings per share – diluted:
Net income	$	48,847		$	7,467		$	64,710		$	26,309		$	36,432		$	44,654		$	170,451		$	79,612
Income allocated to participating securities		(41	)		(7	)		(50	)		(22	)
Income allocated to participating securities														(26	)		(35	)		(126	)		(66	)
Income available to common shareholders	$	48,806		$	7,460		$	64,660		$	26,287		$	36,406		$	44,619		$	170,325		$	79,546
Weighted-average shares outstanding – basic		37,449			37,308			37,412			37,294			38,303			37,772			38,167			37,745
Dilutive effect of stock options and restricted stock units		477			170			404			181			1,132			1,089			1,187			1,068
Weighted-average common shares outstanding – diluted		37,926			37,478			37,816			37,475			39,435			38,861			39,354			38,813
Earnings per share – diluted	$	1.29		$	0.20		$	1.71		$	0.70		$	0.92		$	1.15		$	4.33		$	2.05

The dilutive effect of stock options and restricted stock units in the above table excludes all options for which the aggregate exercise proceeds exceeded the average market price for the ~~period~~.period. The number of potentially dilutive option shares excluded from the calculation was 1.61.1 million and ~~2.0~~1.3 million for the quarter ended ~~December~~March 31, ~~2017~~2020 and ~~2016,~~2019, respectively and ~~1.7~~1.2 million and ~~2.0~~1.3 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 and ~~2016,~~2019 respectively.

Note 8.10. Share-based Compensation:

During the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 and ~~2016,~~2019, the Company granted ~~1.0~~0.8 million and ~~1.1~~0.9 million stock options at weighted average grant prices of ~~$118.97~~$190.80 and ~~$107.4~~0$173.89 and weighted average fair values of ~~$21~~~~.58~~$37.01 and ~~$18.13,~~$34.66, respectively. During the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 and ~~2016,~~2019, the Company granted ~~35,674~~30,858 and 64~~,931~~56,403 restricted stock units at a weighted average fair ~~values~~value of ~~$125.02~~$192.08 and ~~$109.36,~~$170.96, respectively. During the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 and ~~2016,~~2019, the Company granted ~~20,106~~15,398 and ~~23,965~~14,887 shares of restricted common stock shares at ~~grant date~~a weighted average fair ~~values~~value of ~~$125.05~~$193.48 and ~~$104.94,~~ ~~respectively.~~$177.93.

Stock options for 70~~,069~~398,320 and ~~23,145~~263,995 shares of common stock with total intrinsic values of $2.8$48.6 million and ~~$1.0~~$22.3 million were exercised during the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 and ~~2016,~~2019, respectively.

Stock-based compensation expense of $5.0$7.6 million and ~~$4.1~~$5.7 million was included in selling, general and administrative expenses for the quarter ended ~~December~~March 31, ~~2017~~2020 and ~~2016,~~2019, respectively. Stock-based compensation expense of ~~$8.8~~$26.1 million and ~~$7.2~~$24.2 million was included in selling, general, and administrative expenses for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 and ~~2016,~~2019, respectively. Additionally, the company recognized $0.5 million and $1.4 million in cost of goods sold in the quarter and nine months ended March 31, 2020 respectively. As of ~~December~~March 31, ~~2017,~~2020, there was ~~$40~~.2$30.1 million of unrecognized compensation cost related to non-vested stock options, non-vested restricted stock units and non-vested restricted stock. The weighted average period over which the compensation cost is expected to be recognized is ~~2.5~~2.0 years.

Note 9.11. Other Income / (Expense):

The components of other income (expense) in the accompanying Statement of Earnings and ~~Comprehensive~~Comprehensive Income are as follows:

	Quarter Ended						Nine Months
	March 31,						March 31,
	2020			2019			2020			2019
Interest expense		(4,486	)	$	(5,113	)		(14,580	)	$	(16,110	)
Interest income		144			84			486			299
Other non-operating income (expense), net⁽¹⁾		3,372			10,816			110,937			1,585
Total other income (expense)		(970	)	$	5,787			96,843		$	(14,226	)

(1) The changes in other non-operating income (expense) were driven by changes in the fair value of our CCXI investment as further described in Note 5 above.

Quarter Ended

Six Months

December 31,

December 31,

2017

2016

2017

2016

Interest expense
$ (2,331
)
$ (1,921
)
$ (4,574
)
$ (3,321
)
Interest income
68 89 144 138
Other non-operating income (expense), net
(154
)
(861
)
(1,050
)
(881
)
Total other income (expense)
$ (2,417
)
$ (2,693 ) $ (5,480
)
$ (4,064
)

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Note ~~10.~~12. Income Taxes:

The Company’s effective income tax rate ~~was (~~~~124.7~~~~) % and~~ ~~50.8%~~for the ~~second~~third quarter of fiscal ~~2018~~2020 and ~~fiscal~~ ~~2017,~~2019 ~~respectively~~was 22.2% and (~~44.8~~~~) %~~10.5% of consolidated earnings before income taxes, and ~~38.8%~~20.7% and 10.8% for the first ~~six~~nine months of fiscal ~~2018~~2020 and ~~fiscal~~ ~~2017,~~2019, respectively. The ~~changes~~change in the company’s tax rate for the ~~second~~quarter and ~~first~~~~six~~nine months ~~of fiscal~~ended ~~2018~~March 31, 2020 compared to ~~second~~the quarter and ~~first~~~~six~~nine months ended March 31, 2019 were driven by changes in the composition and amount of the Company’s taxable income in fiscal ~~2017~~2020 ~~are due primarily to recording~~resulting from the ~~items attributable to the new tax legislation in the U.S. as described below. Also included in the~~ ~~2018~~ ~~effective tax rate is~~ gain on our CCXI investment and discrete tax ~~benefit~~items.

The Company recognized total net benefits related to discrete tax items of ~~$0.3~~$1.4 million and ~~$0.7~~$8.1 million ~~for~~during the~~second~~ quarter and ~~first~~~~six~~nine months ~~of fiscal year~~ended ~~2018~~March 31, 2020, respectively, compared to $6.2 million and $11.4 million during the quarter and nine ~~for the~~months ended March 31, 2019, respectively. Share-based compensation excess tax benefit ~~of stock option exercises offset by a~~contributed $1.5 million and $8.5 million in the quarter and nine months ended March 31, 2020, respectively, compared to $1.1 million and $4.8 million in the quarter and nine months, ended March 31,2019, respectively. The Company recognized total other immaterial net discrete tax expense of ~~$2.9~~$0.1 million and ~~$3.8~~$0.4 million ~~for~~in the~~second~~ quarter and ~~first~~~~six~~nine months ended March 31, 2020, respectively, compared to other net discrete tax benefits of ~~fiscal~~ ~~2018~~ ~~related to~~$5.1 million and $6.7 million in the ~~revaluation of contingent consideration, which is~~ ~~not~~ ~~tax deductible. Discrete tax expense for the~~ ~~second~~ quarter and ~~first~~~~six~~nine months ~~of fiscal~~ended ~~2017~~March 31, 2019, ~~included~~ ~~$4.6~~ ~~million of expense related to the revaluation of contingent consideration.~~respectively.

On ~~December 22, 2017,~~ ~~the U.S. government enacted comprehensive tax legislation commonly referred~~The Company continues to asmonitor changes in interpretations, assumptions guidance, and additional regulations regarding the Tax Cuts and Jobs Act (the “Tax Act”)~~. The Tax Act makes broad and complex changes to the U.S. tax code which will impact our fiscal year ended~~ ~~June30,~~~~2018~~ ~~including, but~~ ~~not~~ ~~limited to (~~1~~) reducing the U.S. federal corporate tax rate, (~~2~~) requiring a~~ ~~one~~~~-time transition tax on certain unrepatriated earnings of foreign subsidiaries that~~ ~~may~~ ~~electively be paid over~~ ~~eight~~ ~~years, and (~~3~~) accelerated~~ ~~first~~ ~~year expensing of certain capital expenditures. The Tax Act reduces the federal corporate tax rate from~~ 35 ~~percent to~~ 21 ~~percent effective~~ ~~January 1, 2018.~~ ~~Internal Revenue Code Section~~ 15 ~~provides that our fiscal year ended~~ ~~June 30, 2018.~~ ~~We calculated a blended corporate tax rate of~~ ~~28.1~~ ~~percent for fiscal year~~ ~~2018,~~ ~~which is based on a proration of the applicable tax rates before and after effective date of the Tax Act. The statutory tax rate of~~ 21 ~~percent will apply for fiscal~~ ~~2019~~ ~~and beyond.~~

~~The Tax Act also puts in place new tax laws that will impact our taxable income beginning in fiscal~~ ~~2019,~~ ~~which include, but are~~ ~~not~~ ~~limited to (~~1~~) creating a Base Erosion Anti-abuse Tax (BEAT)~~, which ~~is a new minimum tax, (~~2~~) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (~~3~~) a new provision designed to tax currently global intangible low-taxed income (GILTI), which allows for the possibility of utilizing foreign tax credits and a deduction equal to~~50 ~~percent to offset the income tax liability (subject to some limitations), (~~4~~) a provision that could limit the amount of deductible interest expense, (~~5~~) the repeal of the domestic production activity deduction, (~~6~~) limitations on the deductibility of certain executive compensation, and (~~7~~) limitations on the utilization of foreign tax credits to reduce the U.S. income tax liability.~~

~~Shortly after the Tax Act~~ was enacted ~~the SEC staff issued Staff Accounting Bulletin~~ ~~No.~~~~118,~~ ~~Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB~~ ~~118~~~~) which provides guidance~~ on ~~accounting for the Tax Act’s impact. SAB~~ ~~118~~ ~~provides a measurement period, which in~~ no ~~case should extend beyond~~ ~~one~~ ~~year from the Tax Act enactment date, during which a company acting in good faith~~ ~~may~~ ~~complete the accounting for the impacts of the Tax Act under ASC Topic~~ ~~740.~~ ~~In accordance with SAB~~ ~~118,~~ ~~the Company must reflect the income tax effects of the Tax Act in the reporting period in which the accounting under ASC Topic~~ ~~740~~ ~~is complete.~~

~~To the extent that a company~~’s accounting for certain income tax effects of the Tax Act is incomplete, the Company can determine a reasonable estimate for those effects and record a provisional estimate in the financial statements in the ~~first~~ reporting period in which a reasonable estimate can be determined. If a Company cannot determine a provisional estimate to be included in the financial statements, the Company should continue to apply ASC ~~740~~ based on the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted. If a Company is unable to provide a reasonable estimate of the impacts of the Tax Act in a reporting period, a provisional amount must be recorded in the ~~first~~ ~~reporting period in which a reasonable estimate can be determined.~~

~~We have recorded a provisional~~ ~~net tax benefit of~~ ~~$33.5~~ ~~million related to the Tax Act in the period ending~~ ~~December 31, 2017.~~ ~~This provisional net benefit primarily consists of a net benefit of~~ ~~$37.0~~ ~~million due to the remeasurement of our deferred tax accounts to reflect the corporate rate reduction impact to our net deferred tax balances and a net expense for the transition tax of~~ ~~$3.5~~ ~~million.~~

~~Reduction in U.S. Corporate Rate: The Act reduces the U.S. federal statutory corporate tax rate to~~ ~~a blended~~ ~~28.1~~ ~~percent in fiscal year ending~~ ~~June 30, 2018~~ ~~and~~ 21 ~~percent for fiscal year ending~~ ~~June 30, 2019~~ and beyond. While we are able to make a reasonable estimate of the impact of the reduction in corporate rate, we are continuing to analyze the temporary differences that existed on the date of enactment, the temporary differences originating in the current fiscal year prior to ~~December 22, 2017,~~ ~~and the temporary differences we expect will reverse prior to~~ ~~June 30, 2018.~~

~~Transition Tax: The transition tax is a tax on the previously untaxed accumulated and current earnings and profits (E&P) of certain of our foreign subsidiaries as of~~ December 22, 2017. ~~In order~~The Company recognizes potential changes to ~~determine the amount of the Transition Tax, we must determine,~~these items could have a material impact on our effective tax rate in ~~addition to other factors, the amount of post-~~~~1986~~ E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. E&P is similar to retained earnings of the subsidiary, but requires other adjustments to conform to U.S. tax rules. We are able to make a reasonable estimate of the transition tax and recorded a provisional transition tax obligation of ~~$3.5~~ ~~million which theCompany expects to elect to pay, net of certain tax credit carryforwards, over~~ ~~eight~~ ~~years beginning in fiscal year~~ ~~2019.~~~~$0.3~~ ~~million of this liability is recorded as current with the remaining~~ ~~$3.2~~ ~~million classified as a long-term liability within our~~ ~~December 31, 2017~~ balance sheet. However, we are awaiting further interpretative guidance including information regarding state income tax implications and continuing to gather additional information to more precisely compute the amount of the transition tax. We expect that our estimate will be finalized in advance of the filing of our ~~June 30, 2018~~ ~~Form~~ 10~~-K.~~

~~Global intangible low-taxed income (GILTI): The Tax Act includes a provision designed to currently tax global intangible low-taxed income starting in fiscal~~ ~~2019.~~ ~~Due to the complexity of the new GILTI tax rules, we are continuing to evaluate this provision of the Tax Act, the application of ASC~~ ~~740,~~ ~~and are considering available accounting policy alternatives to adopt to either record the U.S. income tax effect of~~ future ~~GILTI inclusions in the period in which they arise or establish deferred taxes with respect to the expected future tax liabilities associated with future GILTI inclusions.~~ ~~In addition, we are awaiting further interpretive guidance in connection with the computation of the GILTI tax. For these reasons, we are~~ ~~not~~ ~~yet able to reasonably estimate the effect of this provision of the Tax Act.~~

~~As of~~ ~~June 30, 2017,~~ ~~our practice and intention was to reinvest the earnings in our subsidiaries outside of the U.S., and~~ no ~~U.S. deferred income taxes or foreign withholding taxes were recorded. As of~~ ~~December 31, 2017~~ ~~we continue to assert that we plan to reinvest these earnings. The transition tax noted above will result in the previously untaxed foreign earnings being included in the federal and state fiscal~~ ~~2018~~ taxable income. We are currently analyzing our global working capital requirements and the potential tax liabilities that would be incurred if the non-U.S. subsidiaries distribute cash to the U.S. parent, which include local country withholding tax and potential U.S. state taxation. Therefore, we are ~~not~~ ~~yet able to reasonably estimate the effect of this provision of the Tax Act and have~~ ~~not~~ ~~recorded any withholding or state tax liabilities.~~periods.

~~We are also currently analyzing other provisions of the Tax Act that come into effect for tax years starting~~ ~~July 1, 2018~~ to determine if these items would impact the effective tax rate. These provisions include BEAT, eliminating U.S. federal income taxes on dividends from foreign subsidiaries, the new provision that could limit the amount of deductible interest expense, the limitations on the deductibility of certain executive compensation, and state tax implications of this federal tax legislation.

Note ~~11.~~13. Segment Information:

The Company's management evaluates segment operating performance based on operating income before certain charges to cost of sales and selling, general and administrative expenses, principally associated with acquisition accounting related to inventory, amortization of acquisition-related intangible assets and other acquisition-related expenses. The Protein Sciences and Diagnostics and Genomics segments both include consumables, instruments, services and royalty revenue.

The following is financial information relating to the Company's reportable segments (in thousands):

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net sales:

Biotechnology
101,411 85,953 $ 196,487 $ 172,740
Protein Platforms
29,388 21,548 54,028 41,121
Diagnostics
23,429 24,330 48,415 48,563
Intersegment
(75
)
(24
)
(164
)
(36
)
Consolidated net sales
154,153 131,807 $ 298,766 $ 262,388
Operating income:

Biotechnology
$ 46,210 $ 39,474 $ 90,813 $ 81,594
Protein Platforms
6,119 1,843 9,175 2,052
Diagnostics
3,777 5,801 9,606 12,104
Segment operating income
$ 56,106 $ 47,118 $ 109,594 $ 96,110
Costs recognized on sale of acquired inventory
(264
)
(789
)
(582
)
(2,133
)
Amortization of acquisition related intangible assets
(11,296
)
(11,627
)
(22,675
)
(21,815
)
Acquisition related expenses
(13,150
)
(12,056
)
(22,683
)
(15,588
)
Stock based compensation
(5,044
)
(4,055
)
(8,839
)
(7,245
)
Corporate general, selling, and administrative expenses
(2,204
)
(710
)
(4,636
)
(2,293
)
Consolidated operating income
24,148 17,881 $ 50,179 $ 47,036

	Quarter Ended						Nine Months Ended
	March 31,						March 31,
	2020			2019			2020			2019
Net sales:
Protein Sciences	$	145,509		$	137,935		$	428,021		$	399,787
Diagnostics and Genomics		49,411			47,134			135,808			123,144
Intersegment		(240	)		(208	)		(972	)		(590	)
Consolidated net sales	$	194,680		$	184,861		$	562,857		$	522,341
Operating income:
Protein Sciences	$	65,046		$	62,256		$	185,456		$	175,821
Diagnostics and Genomics		7,062			3,579			8,937			5,061
Segment operating income	$	72,108		$	65,835		$	194,393		$	180,882
Costs recognized on sale of acquired inventory		-			(935	)		-			(2,804	)
Amortization of acquisition related intangible assets		(15,459	)		(14,400	)		(45,467	)		(43,678	)
Acquisition related expenses		322			-			(107	)		(2,973	)
Stock based compensation		(8,088	)		(5,725	)		(27,505	)		(24,151	)
Corporate general, selling, and administrative expenses		(1,092	)		(685	)		(3,205	)		(3,821	)
Consolidated operating income	$	47,791		$	44,090		$	118,109		$	103,455

~~Note~~ ~~12.~~ ~~Subsequent Events:~~

On ~~January 2, 2018,~~ ~~Bio-Techne acquired Atlanta Biologicals, Inc. and its affiliated company, Scientific Ventures, Inc for approximately~~ ~~$50~~ million. The transaction is financed through available cash on hand. Atlanta Biologicals fetal bovine serum (FBS) product line strengthens and complements our current tissue culture reagents offering and furthers our efforts to provide more complete solutions to our research customers~~. The purchase accounting for this acquisition is in progress.~~

On ~~February 1, 2018~~ ~~Bio-Techne acquired Eurocell Diagnostics SAS a company based in Rennes, France for approximately $~~~~7.5~~ ~~million. Eurocell sells directly to the laboratory markets in the French region as well as servicing the EMEA markets via a network of distributors.~~ ~~The transaction was financed through cash on hand. The purchase accounting for this acquisition is in progress.~~

Note 14. Subsequent Events:

None.

Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following management discussion and analysis (“MD&A”) provides ~~informati~~oninformation that we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative information about the material sales drivers including the effect of acquisitions and changes in foreign currency at the corporate and segment level. We also provide quantitative information about discrete tax items and other significant factors we believe are useful for understanding our results. The MD&A should be read in conjunction with both the unaudited consolidated financial information and related notes included in this Form 10-Q, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended June 30, ~~2017.~~2019. This discussion contains various “Non-GAAP Financial Measures” and also contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statements entitled “Non-GAAP Financial Measures” and “Forward-Looking Information and Cautionary Statements” located at the end of Item 2 of this report.

OVERVIEW

Bio-Techne ~~Corporation~~ and its subsidiaries, ~~operate worldwide~~collectively doing business as Bio-Techne Corporation (Bio-Techne, we, our, us or the Company) develop, manufacture and sell biotechnology reagents, instruments and services for the research and clinical diagnostic markets worldwide. With our deep product portfolio and application expertise, we strive to provide the life sciences community with ~~three reportable~~ ~~business~~innovative, high-quality scientific tools to better understand biological processes and drive discovery of diagnostic and therapeutic products.

Consistent with above, we have operated with two segments ~~Biotechnology,~~– our Protein ~~Platforms~~Sciences segment and our Diagnostics and Genomics segment - during the fiscal year 2020. Our Protein Sciences segment is a leading developer and manufacturer of high-quality purified proteins and reagent solutions, most notably cytokines and growth factors, antibodies, immunoassays, biologically active small molecule compounds, tissue culture reagents and T-Cell activation technologies. This segment also includes protein analysis solutions that offer researchers efficient and streamlined options for automated western blot and multiplexed ELISA workflow. Our Genomics and Diagnostics ~~all~~segment develops and manufactures diagnostic products, including FDA-regulated controls, calibrators, blood gas and clinical chemistry controls and other reagents for OEM and clinical customers, as well as a portfolio of ~~which service~~clinical molecular diagnostic oncology assays, including the ~~life science and diagnostic markets. The Biotechnology reporting~~ExoDx®Prostate(IntelliScore) test for prostate cancer diagnosis. This segment ~~develops,~~also manufactures and sells ~~proteins, antibodies, immunoassays, flow cytometry products, intracellular signaling products, as well as biologically active chemical compounds used in biological~~advanced tissue-based in-situ hybridization assays (ISH) for research and ~~ACD’s~~ ~~in situ~~ hybridization detection products. The Protein Platforms reporting segment develops and commercializes proprietary systems and consumables for protein analysis. The Diagnostics reporting segment develops, manufactures and sells a range of controls and calibrators for various blood chemistry and blood gas clinical ~~instruments, as well as quality controls, diagnostic immunoassays and other bulk and custom reagents for the~~ ~~in vitro~~ ~~diagnostic market. The Diagnostics segment also provides bulk purified proteins, enzymes, disease-state plasmas, infectious disease antigens and processed sera to the clinical diagnostic industry.~~use.

R~~ECENT~~RECENT ACQUISITIONS

A key component of the Company's strategy is to augment internal growth at existing businesses with complementary acquisitions.

On ~~September 5, 2017 the Company acquired Trevigen Inc. for approximately $10.6 million, net of cash received.~~ The Company ~~has had a long-standing business relationship with Trevigen as a distributor of its product line.~~did not make any acquisitions in the nine months ended March 31, 2020. Refer to the prior year Annual Report on Form 10-K for additional disclosure regarding the Company's recent acquisitions.

RESULTS OF OPERATIONS

Operational Update

Consolidated net sales increased ~~17%~~5% and ~~14%~~8% for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017, respectively,~~2020 compared to the same prior year periods. Organic growth ~~was 14% and 11%~~ for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2020 was 6% and 8%, respectively, compared to the same prior year ~~periods, with acquisitions contributing 1% and foreign~~periods. Foreign currency translation ~~having a positive~~had an unfavorable impact of ~~2%.~~1% in both comparative periods while acquisitions contributed an immaterial amount in the three months ended March 31, 2020 and 1% in the nine months ended March 31, 2020.

Consolidated net earnings ~~increased 554% and 146%~~decreased to $36.4 million for the quarter ~~and six~~ended March 31, 2020 from $44.7 million due to approximately $12 million in gains on available-for-sale investments in the prior year. Net earnings increased to $170.5 million for the nine months ended ~~December~~March 31, ~~2017, respectively,~~2020 compared to $79.6 million in the same prior year ~~periods~~period due to approximately a $110 million gain recorded on available-for-sale investments in the current year.

COVID-19 Business Update

The Company is impacted by the COVID-19 pandemic and accordingly, updated its risk factors in Item 1A "Risk Factors" of this form 10-Q.

COVID-19 negatively impacted sales growth during the third quarter of fiscal year 2020 due to numerous customer site shutdowns that occurred in our academia and Bio-Pharma end-markets, particularly in the last several weeks of the quarter. We estimate these customer site shutdowns negatively impacted our third quarter fiscal year 2020 sales by approximately 3%. Customer site shutdowns will continue to have a negative impact on sales while they remain in effect, and we are currently unable to forecast the impact given uncertainty over the duration of the COVID-19 pandemic. Longer term, we are anticipating a positive outlook for future sales growth resulting from expected future funding increases within life-science research in response to the current pandemic.

The Company has responded to COVID-19 by developing resources for SARS-CoV-2 detection, cytokine monitoring, and drug discovery, all which provide critical support in understanding the mechanisms of infection and developing effective treatments. The Company continues to pursue available opportunities to partner in the fight against COVID-19, which may partially offset the impact of our customer site closures.

Earnings per share (EPS) and Adjusted EPS was negatively impacted by COVID-19 by an estimated $0.07-$0.09 in the third quarter of fiscal 2020. The COVID-19 impact on EPS and adjusted EPS was primarily due to the ~~net tax benefit~~sales impacts described above. We anticipate the short- and long-term impacts of ~~$33.5 million related~~COVID-19 on EPS and adjusted EPS to be similar to that of sales growth.

The Company remains in a strong financial position with sufficient available cash to meet its current obligations as well as access to additional funding, if necessary, through our long-term debt agreement. We did not experience any material changes to our March 31, 2020 Balance Sheet resulting from COVID-19 for items such as additional reserves or asset impairments resulting from the ~~Tax Act in~~pandemic.

The Company remains fully operational as we abide by local “stay at home” orders across the ~~period ending December 31, 2017. This net benefit primarily consists of~~world. To achieve this, the Company is utilizing a ~~net benefit of $37.0 million due~~remote workforce where possible. For employees who are unable to work remotely, the ~~remeasurement~~Company adopted significant protective measures at our sites, including staggered shifts, and distancing and hygiene best practices recommended by the Center for Disease Control (CDC). In addition, the Company has taken additional steps to monitor and strengthen our supply chain to maintain an uninterrupted supply of our ~~deferred tax accounts to reflect the corporate rate reduction impact to our net deferred tax balances~~critical products and ~~a net expense for the transition tax of $3.5 million.~~

services.

Net Sales

~~Consolidated~~Consolidated net sales for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 were ~~$154.2~~$194.7 million and ~~$298.8~~$562.9 million, respectively, an increase of ~~17%~~5% and ~~14%~~8% from the same prior year periods. Organic growth for ~~quarter and six months ended December 31, 2017 was 14% and 11%, respectively. Reported net sales for~~ the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017 included growth from acquisitions~~2020 was 6% and 8%, respectively, compared to the same prior year periods. Foreign currency translation had an unfavorable impact of 1% ~~and a positive impact from foreign currency translation of 2%.~~

~~Sales by geography f~~orin both comparative periods while acquisitions contributed an immaterial amount in the three months ended ~~December~~March 31, ~~2017 grew in mid-teens~~2020 and 1% in the ~~U.S., with strong~~nine months ended March 31, 2020. For the quarter and nine months ended March 31, 2020 the Company experienced broad based revenue growth in ~~both~~North America and China across end markets despite the ~~BioPharma and Academia end-markets. Europe organic sales growth was~~COVID-19 impacts discussed in the high-teens, with comparable contribution from both the BioPharma and Academic end-markets. China sales grew nearly 30% organically, with our Western brands growing 30%. Sales growth in Japan grew in the low-teens, while the restupdate above.

Table of the Asia-Pacific region grew over 15%. For the six months ended December 31, 2017, sales in the U.S. grew in high-single digits, with strong growth in both the BioPharma and Academia end-markets. Europe organic sales growth was in the mid-teens, with comparable contribution from both the BioPharma and Academic end-markets. China sales grew over 20% organically, with our Western brands growing 30%. Sales growth in Japan grew in the mid-teens, while the rest of the Asia-Pacific region grew over 20%. Note that all references made to growth rates by region and end-market exclude OEM sales, which primarily occur in our Diagnostics segment.

Contents

Gross Margins

Consolidated gross margins for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 were ~~66.1%~~66.8% and ~~66.8%,~~65.7% respectively, compared to ~~66.9%~~67.4% and 66.1% for the same prior year periods. ~~The decreases~~Under purchase accounting, inventory is valued at fair value less expected selling and marketing costs, resulting in ~~consolidated~~reduced margins in future periods as the inventory is sold. Excluding the impact of acquired inventory sold, stock compensation expense, and amortization of intangibles, adjusted gross ~~margin~~margins quarter and nine months ended March 31, 2020 were 71.5% and 70.6% , respectively compared to 71.3% and 71.3% for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2019, respectively. Both consolidated gross margins and non-GAAP adjusted gross margins were ~~driven primarily~~negatively impacted by unfavorable product ~~mix.~~mix and foreign exchange rates as compared to the prior year.

A reconciliation of the reported consolidated gross margin percentages,, adjusted for acquired inventory sold and intangible amortization included in cost of sales, is as follows:

	Quarter Ended						Six Months Ended						Quarter Ended						Nine Months Ended
	December 31,						December 31,						March 31,						March 31,
	2017			2016			2017			2016			2020			2019			2020			2019
Consolidated gross margin percentage		66.1	%		66.9	%		66.8	%		66.9	%		66.8	%		67.4	%		65.7	%		66.1	%
Identified adjustments:
Costs recognized upon sale of acquired inventory		0.2	%		0.6	%		0.2	%		1.0	%
Costs recognized upon sale of acquired inventory														-			0.5	%		-			0.5	%
Amortization of intangibles		3.9	%		3.5	%		4.1	%		3.1	%		4.5	%		3.4	%		4.7	%		4.7	%
Stock compensation expense - COGS														0.2	%		-			0.2	%		-
Non-GAAP adjusted gross margin percentage		70.2	%		71.0	%		71.1	%		71.0	%		71.5	%		71.3	%		70.6	%		71.3	%

~~Consolidated~~ non-GAAP adjusted gross margins for the quarter and six months ended December 31, 2017, were 70.2% and 71.1%, respectively, compared to 71.0% for the same prior year periods. Consolidated non-GAAP adjusted gross margins for the quarter ended December 31, 2017 were negatively impacted by unfavorable product mix.

Selling, General and Administrative Expenses

Selling, general and ~~administrative~~administrative expenses increased $1.3 million (2%) and $7.7 million (4%) for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017 increased $6.8 million (11.9%) and $19.7 million (19.2%)~~2020, respectively, from the same prior year periods.

Th~~e increase~~ Selling, general, and administrative expense for both the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 was ~~driven~~impacted by additional investments in global commercial resources and administrative infrastructure, including increased stock based compensation. The remaining increase was driven by additional acquisition-related expenses, including a $19.9 million change in the fair value of contingent consideration relatedemployees to ~~ACD, compared to a $12.4 million change in the fair value of contingent consideration for the same prior year period.~~scale our businesses.

Research and Development Expenses

Research and development expenses increased $0.4 million (3%) and $2.3 million (5%), for the quarter and ~~six months~~nine month periods ended ~~December~~March 31, ~~2017 increased $0.6 million (5%) and $1.4 million (5%)~~2020, respectively, from the same prior year periods. The increases were driven by recent acquisitions.

Segment Results

~~Biotechnology~~Protein Sciences

	Quarter Ended						Six Months Ended						Quarter Ended						Nine Months Ended
	December 31,						December 31,						March 31,						March 31,
	2017			2016			2017			2016			2020			2019			2020			2019
Net sales (in thousands)		101,411			85,953		$	196,487		$	172,740		$	145,509		$	137,935		$	428,021		$	399,787
Operating income margin percentage		45.6	%		45.9	%		46.2	%		47.4	%		44.7	%		45.1	%		43.3	%		44.0	%

~~Biotechnology~~’sProtein Science’s net sales for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 were ~~$101.4~~$145.5 million and ~~$196.5~~$428.0 million, respectively, with reported growth of ~~18%~~6% and ~~14%~~7% compared to the same prior year periods. Organic growth for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 were ~~14%~~6% and ~~10%~~7%, ~~respectively,~~respectively, with acquisitions contributing 1% and currency ~~translation~~exchange having ~~favorable impacts~~an unfavorable impact of ~~3% and 2%, respectively. Segment~~1%. Overall segment growth for the quarter and six months ended December 31, 2017 was broad-based regionally, by region and by product, with Proteins, antibodies, and assays all contributing to growth. The ACD product category also contributed substantially, with over 40% growth for the quarter and six months ended December 31, 2017 that was driven by ~~rapid research market adoption~~strong Bio-Pharma sales in North America and strong overall performance in China, despite dealing with COVID-19 impacts for the majority of ~~its RNA-ISH technology.~~the quarter.

O~~perating income~~The operating margin for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017 was 45.6%~~2020 were 44.7% and ~~46.2%~~43.3%, respectively, compared to ~~45.9%~~45.1% and ~~47.4%~~44.0% for the same prior year periods. ~~The decreases in operating~~Operating income margin iswas negatively impacted for both comparative periods by sales mix and the ~~result~~acquisition of ~~lower margin acquisitions made~~B-MoGen in ~~this segment, namely ACD, unfavorable product mix, as well as additional investments in global commercial resources and administrative infrastructure.~~Q4 of FY19.

~~Protein Platforms~~

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net sales (in thousands)
29,388 21,548 $ 54,028 $ 41,121
Operating income margin percentage

20.8
% 8.6
%
17.0
%
5.0
%

Table of Contents

~~Protein Platforms~~’Diagnostics and Genomics

	Quarter Ended						Nine Months Ended
	March 31,						March 31,
	2020			2019			2020			2019
Net sales (in thousands)	$	49,411		$	47,134		$	135,808		$	123,144
Operating income margin percentage		14.3	%		7.6	%		6.6	%		4.1	%

Diagnostics and Genomics’ net sales for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 were ~~$29.4~~$49.4 million and ~~$54.0~~$135.8 million, respectively, ~~with reported growth of 36%~~compared to $47.1 million and ~~31% compared to~~$123.1 million for the same prior year ~~periods.~~period. Organic growth for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 was ~~33%~~5% and ~~29%~~10%, respectively, with currency ~~translation~~exchange having ~~favorable impact of 3%~~an immaterial impact. Overall segment revenue growth was driven by strong growth in our ExoDx Prostate Test, RNA scope, hematology, and ~~2%, respectively. For the quarter and six months ended December 31, 2017, growth~~glucose products lines.

The operating margin for the segment was ~~broad-based both by region~~14.3% and ~~by product, with the Biologics, Simple Western, and Simple Plex product lines all contributing.~~

O~~perating income margin~~6.6% for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017 was 20.8% and 17.0%,~~2020, respectively, compared to ~~8.6%~~7.6% and ~~5.0% for the same prior year periods. The increases in operating income margin were driven by strong volume leverage and operational productivity.~~

~~Diagnostics~~

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net sales (in thousands)
23,429 24,330 $ 48,415 $ 48,563
Operating income margin percentage
16.1
%
23.8
%
19.8
%
24.9
%

~~Diagnostics’ net sales~~4.1%, respectively, for the quarter and ~~six~~nine months ended ~~December~~March 31, 2017 were $23.4 million and $48.4 million, respectively, representing a decrease of 4% decrease from the quarter ended December 31, 2016. The lower sales were due to timing of large orders from OEM customers.

O~~perating~~2019. Operating income margin ~~for the quarter and six months ended December 31, 2017~~ was ~~16.1% and 19.8%, respectively, compared to 23.8% and 24.9% for the same prior year periods. The decreases~~favorably impacted in ~~operating income margin were driven~~both comparative periods by ~~decreased~~ volume leverage ~~margin mix of product sales~~ and ~~additional investments in facilities and administrative infrastructure.~~Medicare reimbursement for our ExoDx Prostate Test.

Income Taxes

Income taxes ~~for the quarter ended December 31, 2017~~ were at an effective rate of ~~(124.8)%~~22.2% and 20.7% of consolidated earnings ~~before income taxes~~for the quarter and nine month period ended March 31, 2020, respectively, compared to ~~50.8% to the same prior year period. Income taxes for the six months ended December 31, 2017 were at an effective rate of (44.8)% compared to 38.8%~~10.5% and 10.8% for the same prior year ~~period.~~periods. The ~~changes~~change in the ~~company’s~~Company’s tax rate for the ~~second~~ quarter and ~~first six~~nine months ~~of fiscal 2018 compared to second quarter and first six months of fiscal 2017 were~~ended March 31, 2020 was driven by the ~~tax rate~~composition and amount of net income across periods and the impact of discrete tax items of $1.4 million and $8.1 million, respectively, compared to prior year discrete tax items ~~primarily due to the net tax benefit~~ of ~~$33.5~~$6.2 million ~~related to the Tax Act~~and $11.4 million as further discussed in the period ending December 31, 2017. This net benefit primarily consists of a net benefit of $37.0 million due to the remeasurement of our deferred tax accounts to reflect the corporate rate reduction impact to our net deferred tax balances and a net expense for the transition tax of $3.5 million.Note 12.

The annual forecasted tax rate as of the ~~second~~third fiscal quarter of ~~fiscal 2018~~2020 before discrete items is ~~24.7%~~26.2% compared to the prior year forecasted tax rate ~~as of the second quarter of fiscal 2017~~ before discrete items of ~~28.1%~~23.6%. ~~The 3.4% reduction in the rate is due changes in the U.S. tax law under the Tax Cuts and Jobs Act of 2017 and jurisdictional mix of earnings.~~ Excluding the impact of discrete items, the Company expects the consolidated income tax rate for the remainder of fiscal ~~2018~~2020 to range from 24% to ~~26%~~28%.

Net ~~Earnings~~Earning

Non-GAAP a~~djusted~~adjusted consolidated net earnings are as follows:

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016⁽²⁾

2017

2016⁽²⁾

Net earnings
$ 48,847 $ 7,466 $ 64,710 $ 26,309
Identified adjustments:

Costs recognized upon sale of acquired inventory
264 789 582 2,133
Amortization of acquisition intangibles
11,296 11,627 22,675 21,815
Acquisition related expenses
13,236 12,144 22,855 15,731
Stock based compensation
5,044 4,055 8,839 7,245
Tax impact of above adjustments
(4,244
)
(5,153
)
(8,644
)
(10,351
)
Tax impact of discrete tax items and other adjustments (1)
(35,589
)
(514
)
(35,941
)
(832
)
Non-GAAP adjusted net earnings
$ 38,854 $ 30,412 $ 75,076 $ 62,050
Non-GAAP adjusted net earnings growth
27.8
%
-7.4
%
21.0
%
-3.3
%

~~(1)~~

~~The fiscal 2018 non-GAAP adjusted net earnings~~ for the quarter ended December 31, 2017 have been normalized for the tax rate impact of the tax reform changes by recasting the first quarter results using the Company’s effective tax rate for the first six months of fiscal 2018.

~~(2)~~

~~The fiscal 2017~~ net earnings, costs recognized upon sale of acquired inventory, acquisition related expenses, and tax impact of above adjustments line items have been updated for the revisions discussed in Note 1. There was no impact to the total previously reported non-GAAP adjusted net earnings.

	Quarter Ended						Nine Months Ended
	March 31,						March 31,
	2020			2019			2020			2019
Net earnings	$	36,432		$	44,654		$	170,451		$	79,612
Identified adjustments:
Costs recognized upon sale of acquired inventory		-			935			-			2,804
Amortization of acquisition intangibles		15,459			14,400			45,467			43,678
Acquisition related expenses		(228	)		100			389			3,263
Stock based compensation, inclusive of employer taxes		8,088			5,725			27,505			24,151
Restructuring		87			-			87			-
Realized (gain)loss on investments and other		(410	)		(12,279	)		(110,458	)		(2,907	)
Tax impact of above adjustments		(3,027	)		(323	)		14,123			(12,683	)
Tax impact of discrete tax items		(1,431	)		(6,152	)		(8,086	)		(11,439	)
Non-GAAP adjusted net earnings	$	54,970		$	47,060		$	139,478		$	126,479
Non-GAAP adjusted net earnings growth		16.8	%		2.0	%		10.3	%		4.3	%

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Depending on the nature of discrete tax items, our reported tax rate may not be consistent on a period to period basis. The ~~Company~~Company independently calculates a non-GAAP adjusted tax rate considering the impact of discrete items and jurisdictional mix of the identified non-GAAP adjustments. The following table summarizes the reported GAAP tax rate and the effective Non-GAAP adjusted tax rate for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2020 and ~~December~~March 31, ~~2016.~~2019.

Quarter Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Reported GAAP tax rate
(124.8
%)
50.8
%
(44.8
%)
38.8
%
Tax rate impact of:

Identified non-GAAP adjustments
(14.2
%)
(23.6
%)
(11.0
%)
(9.7
%)
Discrete tax items and other adjustments (1)
163.7
%
3.4
%
80.5
%
1.9
%
Non-GAAP adjusted tax rate
24.7
%
30.6
%
24.7
%
31.0
%

~~(1)~~

The fiscal 2018 non-GAAP adjusted net earnings for the quarter ended December 31, 2017 has been normalized for the tax rate impact of the tax reform changes by recasting the first quarter results using the C~~ompany’s effective tax rate for the first six months of fiscal 2018.~~

	Quarter Ended						Nine Months Ended
	March 31,						March 31,
	2020			2019			2020			2019
Reported GAAP tax rate		22.2	%		10.5	%		20.7	%		10.8	%
Tax rate impact of:
Identified non-GAAP adjustments		(4.0	)%		(2.9	)%		(2.8	)%		(2.5	)%
Discrete tax items		3.1	%		12.3	%		3.8	%		12.8	%
Non-GAAP adjusted tax rate		21.3	%		19.9	%		21.6	%		21.1	%

The difference between the reported GAAP tax rate and non-GAAP tax rate applied to the identified non-GAAP adjustments for the quarter ~~and six months~~ ended ~~December~~March 31, ~~2017 as well as the quarter and six months ended December 31, 2016~~2020 is primarily a result of discrete tax items, including the ~~discrete income~~ tax ~~expenses recorded for the revaluation~~benefit of ~~contingent consideration which is not tax deductible.~~stock option exercises.

LIQUIDITY AND CAPITAL RESOURCES

As of ~~December~~March 31, ~~2017,~~2020, cash and cash equivalents and available-for-sale investments were ~~$162.4~~$261.1 million compared to ~~$157.7~~$166.0 million as of June 30, ~~2017.~~2019. Included in available-for-sale-investments as of ~~December~~March 31, ~~2017~~2020 was the fair value of the Company's investment in ChemoCentryx, Inc. (CCXI) of ~~$37.9~~$70.2 million. The fair value of the Company's CCXI investment at June 30, ~~2017~~2019 was ~~$59.6~~$38.2 million.

The Company has a ~~revolving line of credit~~line-of-credit and term loan governed by a Credit Agreement dated ~~July~~ ~~28, 2016.~~August 1, 2018. See Note 56 to the Condensed Consolidated Financial Statements for a description of the Credit Agreement.

The Company has contingent consideration payments of up to ~~$50.0~~$325 million, $51 million, and ~~$3.5~~$38 million ~~related~~relating to the ~~ACD~~Exosome, Quad, and Zephyrus, respectively. During the second quarter, the Company determined that certain sales and revenue thresholds were met for ACD. Cash payments totaling $35.0 million were made during the first six months of fiscal 2018.B-MoGen acquisitions. The fair ~~values~~value of the remaining payments ~~are $50.0~~is $7.9 million ~~and $3.3 million, respectively,~~ as of ~~December~~March 31, ~~2017. The Company expects to make a $50.0 million cash payment towards the ACD contingent consideration liability in the third quarter of fiscal 2018.~~2020.

Management of the Company expects to be able to meet its cash and working capital ~~requirements~~requirements for operations, facility expansion, capital additions, and cash dividends for the foreseeable future, and at least the next 12 months, through currently available cash, cash generated from operations, and remaining credit available on its existing revolving line of credit.

Cash Flows From Operating Activities

The Company generated cash of ~~$83.9~~$160.4 million from operating activities ~~during~~in the ~~first six~~nine months ~~fiscal 2018~~ended March 31, 2020 compared to ~~$67.9~~$125.7 million ~~during~~in the ~~first six~~nine months ~~of fiscal 2017.~~ended March 31, 2019. The increase from the prior year was primarily due to ~~decreases~~increases in earnings and timing of cash payments on operating assets ~~driven by strong collections of trade accounts receivable~~ and ~~increases in operating liabilities, net of acquisitions.~~liabilities.

Cash Flows From Investing Activities

We continue to make investments in our business, including capital expenditures. ~~Cash paid~~During the nine months ended March 31, 2020, the Company received $78.7 million related to selling a portion of our CCXI shares and $42.1 million from the maturities of certificates of deposit compared to $17.2 million from proceeds from the maturity of certificates of deposit in the nine months ended March 31, 2019. Additionally, the Company did not make any cash payments for acquisitions ~~was~~ ~~lower during~~in the ~~first six~~nine months ~~of fiscal 2018~~ended March 31, 2020 compared to $272.3 million paid in the ~~first six~~nine months ~~of fiscal 2017 with net cash paid of $10.6 million~~ended March 31, 2020 for the ~~Trevigen acquisition during the first six months fiscal 2018 compared to $255.9 million for the ACD~~Quad and ~~Space acquisitions, which occurred during the first six months of fiscal 2017.~~ExosomeDx acquisitions.

Capital expenditures for fixed assets for the ~~first~~ ~~six~~nine months ~~of fiscal 2018~~ended March 31, 2020 and ~~2017~~March 31, 2019 were ~~$11.6~~$34.3 million and ~~$5.3~~$13.7 million, respectively. ~~Capital expenditures for the first six months of fiscal 2018 were mainly for facility expansion as well as laboratory and computer equipment.~~ Capital expenditures for the remainder of fiscal ~~2018~~2020 are expected to be approximately ~~$11.7~~$13 million. Capital expenditures are expected to be financed through currently available funds and cash generated from operating activities.

Cash Flows From Financing Activities

During the ~~first~~ ~~six~~nine months ~~of fiscal 2018~~ended March 31, 2020 and ~~2017,~~March 31, 2019, the Company paid cash dividends of ~~$23.9~~$36.6 million and $36.2 million, respectively, to all common shareholders. On ~~February 6, 2018,~~April 30, 2020, the Company announced the payment of a $0.32 per share cash dividend, or approximately ~~$12.0~~$12.3 million, will be payable ~~March 2, 2018~~May 22, 2020 to all common shareholders of record on ~~February 16, 2018.~~May 11, 2020. During the nine months ended March 31, 2020, the Company repurchased $50.1 million of outstanding common stock.

Cash of $~~6.7~~$38.5 million and ~~$2.1~~$27.0 million was received during the ~~first six~~nine months ~~of fiscal 2018~~ended March 31, 2020 and ~~2017,~~2019, respectively, from the exercise of stock options.

During the ~~first~~ ~~six~~nine months ~~of fiscal 2018,~~ended March 31, 2020, the Company ~~drew $25.0~~made payments of $125.4 million ~~under~~towards the balance of its ~~revolving~~ line-of-credit facility ~~to fund its acquisition of Atlanta Biologicals Inc.~~ and ~~made repayments~~term loan and withdrew $40.0 million on the line-of-credit ~~of $6.0 million.~~facility. During the ~~first six~~nine months ~~of fiscal 2017,~~ended March 31, 2019 the Company ~~paid~~made payments of $339.0 million towards the balance of its previous line-of-credit facility, ~~in an amount of approximately $116.5~~borrowed $330.0 million and ~~drew $368.4~~$250.0 million under its new ~~revolving~~ line-of-credit facility ~~to fund operations~~ and ~~its acquisition~~term loan, respectively. The Company also made payments of ~~ACD.~~

~~During~~ ~~the first six months of fiscal 2018, the Company made $35.0~~$48.0 million ~~in cash payments~~and $9.4 million towards the ~~CyVek contingent consideration liabilities. The Company made no payments towards contingent consideration liabilities during~~balance of its new line-of-credit facility and term loan, respectively in the ~~first six~~nine months ~~of fiscal 2017.~~

~~In accordance with the terms of~~ ~~the purchase agreement, during the first quarter of fiscal 2018, the Company made the final $2.3 million payment for the Space acquisition. This payment is included within other financing activities.~~ended March 31, 2019.

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OFF-BALANCE SHEET ARRANGEMENTS

The Company has no reportable off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

CONTRACTUAL OBLIGATIONS

~~There~~Other than the contingent consideration associated with the Exosome, Quad, and B-MoGen and acquisitions, there were no material changes outside the ordinary course of business in the Company's contractual obligations during the quarter or nine months ended ~~December~~March 31, ~~2017.~~2020.

CRITICAL ACCOUNTING POLICIES

The Company's significant accounting policies are discussed in the Company's Annual Report on Form ~~10-K~~10-K/A for fiscal ~~2017~~2019 and are incorporated herein by reference. The application of certain of these policies requires judgments and estimates that can affect the results of operations and financial position of the Company. Judgments and estimates are used for, but not limited to, valuation of available-for-sale investments, inventory valuation and allowances, valuation of intangible assets and goodwill and valuation of investments in unconsolidated entities. There have been no significant changes in estimates in the ~~first~~ quarter ~~of fiscal 2018~~or nine months ended March 31, 2020 that would require disclosure nor have there been any changes to the Company's policies.

~~NON-GAA~~PNON-GAAP FINANCIAL MEASURES

This Quarterly Report on Form 10-Q, including ~~“Management~~’s“Management’s Discussion and Analysis of Financial Condition and Results of Operation” in Item 2, contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP measures include:

~~• Adjusted gross margin~~

~~• Adjusted net earnings~~

~~• Adjusted~~ ~~effective tax rate~~
•
Organic Growth
•
Adjusted gross margin
•
Adjusted net earnings
•
Adjusted effective tax rate

We provide these measures as additional information regarding our operating results. We use these non-GAAP measures internally to evaluate our performance and in making financial and operational decisions, including with respect to incentive compensation. We believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations and that these measures are useful for period-to-period comparison of results.

Our n~~on-GAAP~~non-GAAP financial measure of organic growth represents revenue growth excluding revenue from acquisitions within the preceding 12 months as well as the impact of foreign currency. Excluding these measures provides more useful period-to-period comparison of revenue results as it excludes the impact of foreign currency exchange rates, which can vary significantly from period to period, and revenue from acquisitions that would not be included in the comparable prior period

Our non-GAAP financial measures for adjusted gross margin and adjusted net earnings exclude the costs recognized upon the sale of acquired inventory, amortization of acquisition intangibles, and acquisition related ~~expenses.~~expenses, inclusive of changes in the fair value of contingent consideration. The Company excludes amortization of purchased intangible assets and purchase accounting adjustments, including costs recognized upon the sale of acquired inventory and acquisition-related expenses inclusive of the changes in the fair value of contingent consideration, from this measure because they occur as a result of specific events, and are not reflective of our internal investments, the costs of developing, producing, supporting and selling our products, and the other ongoing costs to support our operating structure. Additionally, these amounts can vary significantly from period to period based on current activity.

The ~~Company~~’sCompany’s non-GAAP adjusted net earnings also excludes ~~stock based~~stock-based compensation expense, which is inclusive the employer portion of payroll taxes of those stock awards, restructuring, impairments of equity method investments, gain and losses from investments, other non-recurring assessments and certain adjustments to income tax expense. ~~Stock based~~Stock-based compensation is excluded from non-GAAP adjusted net earnings because of the nature of this charge, specifically the varying available valuation methodologies, subjective assumptions, and the variety of award types. Impairments of equity investments are excluded as they are not part of our day-to-day operating decisions. Additionally, gains and losses from other investments that are either isolated or cannot be expected to occur again with any predictability are excluded. Costs related to restructuring activities and other non-recurring assessments, including reducing overhead and consolidating facilities, are excluded because we believe they are not indicative of our normal operating costs. The Company independently calculates a non-GAAP adjusted tax rate to be applied to the identified non-GAAP adjustments considering the impact of discrete items on these adjustments and the jurisdictional mix of the adjustments. In addition, the tax impact of other discrete and non-recurring charges which impact our reported GAAP tax rate are adjusted from net earnings. We believe these tax items can significantly affect the ~~period-over period~~period-over-period assessment of operating results and not necessarily reflect costs and/or income associated with historical trends and future ~~results~~results.

The Company periodically reassesses the components of our non-GAAP adjustments for changes in how we evaluate our performance, changes in how we make financial and operational decisions, and considers the use of these measures by our competitors and peers to ensure the adjustments are still relevant and meaningful.

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FORWARD LOOKING INFORMATION AND CA~~UTIONARY~~CAUTIONARY STATEMENTS

This quarterly report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those regarding the Company's expectations as to the effect of changes to accounting p~~olicies,~~policies, the amount of capital expenditures for the remainder of the fiscal year, the source of funding for capital expenditure requirements, the sufficiency of currently available funds for meeting the Company's needs, the impact of fluctuations in foreign currency exchange rates, and expectations regarding gross margin fluctuations, increasing research and development expenses, increasing selling, general and administrative expenses and income tax rates. These statements involve risks and uncertainties that may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company's actual results: integration of newly acquired businesses, the introduction and acceptance of new products, general national and international economic conditions, the potential impact of the COVID-19 pandemic, increased competition, the reliance on internal manufacturing and related operations, the impact of currency exchange rate fluctuations, ~~economic instability in Eurozone countries,~~ the recruitment and retention of qualified personnel, the impact of governmental regulation, maintenance of intellectual property rights, credit risk and fluctuation in the market value of the Company's investment portfolio, and unseen delays and expenses related to facility ~~improvements,~~construction and ~~the success of financing efforts by companies in which the Company has invested.~~improvements. For additional information concerning such factors, see the Company's Annual Report on Form 10-K for fiscal ~~2017~~2019 as filed with the Securities and Exchange Commission and Part II. Item 1A below.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of ~~December~~March 31, ~~2017,~~2020, the Company held an investment in the common stock of CCXI. The investment was included in short-term available-for-sale investments at its fair value of ~~$37.9~~$70.2 million. As of ~~December~~March 31 ~~2017,~~2020, the potential loss in fair value due to a 10% decrease in the market value of CCXI was ~~$3.8~~$7.0 million.

The Company operates internationally, and thus is subject to potentially adverse movements in foreign currency exchange rates. For the quarter ended ~~December~~March 31, ~~2017,~~2020, approximately ~~28%~~44% of consolidated net sales were made in foreign currencies, including ~~15%~~17% in euros, 4%6% in British pound sterling, 4%7% in Chinese yuan and the remaining 5%12% in other currencies. The Company is exposed to market risk mainly from foreign exchange rate fluctuations of the euro, British pound sterling, the Chinese yuan, and the Canadian dollar, as compared to the U.S. dollar, as the financial position and operating results of the Company's foreign operations are translated into U.S. dollars for consolidation.

M~~onth-end~~Month-end average exchange rates between the British pound sterling, euro, Chinese yuan and the Canadian dollar, which have not been weighted for actual sales volume in the applicable months in the periods, to the U.S. dollar were as follows:

	Quarter Ended				Six Months Ended				Quarter Ended				Nine Months Ended
	December 31,				December 31,				March 31,				March 31,
	2017		2016		2017		2016		2020		2019		2020		2019
Euro	$	1.18	$	1.10	$	1.18	$	1.10	$	1.10	$	1.14	$	1.11	$	1.15
British pound sterling		1.33		1.52		1.32		1.28		1.28		1.30		1.27		1.30
Chinese yuan		0.15		0.15		0.15		0.15		0.14		0.15		0.14		0.15
Canadian dollar		0.81		0.75		0.79		0.76		0.74		0.75		0.75		0.76

The Company's exposure to foreign exchange rate fluctuations also arises from trade receivables, trade payables and intercompany payables denominated in one currency in the financial statements, but receivable or payable in another currency. The effects ofof a hypothetical simultaneous 10% appreciation in the U.S. dollar from ~~December~~March 31, ~~2017~~2020 levels against the euro, British pound sterling, Chinese yuan and the Canadian dollar are as follows (in thousands):

~~Decrease in translation of earnings of foreign subsidiaries (annualized)~~	$	3,~~523~~
~~Decrease in translation of net assets of foreign subsidiaries~~		~~38,907~~
~~Additional transaction losses~~		~~674~~

Decrease in translation of earnings of foreign subsidiaries (annualized)	$	2,583
Decrease in translation of net assets of foreign subsidiaries		43,648
Additional transaction losses		(870)

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ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

The Company maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). The Company's management has evaluated, with the participation of its Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered in this Quarterly Report on Form 10-Q. The material weaknesses in internal control over financial reporting identified in connection with the Company's consolidated financial statements for the year ended June 30, 2017 and described in the Company's Annual ReportBased on Form 10-K for the year ended June 30, 2017 were not fully remediated as of December 31, 2017. Management has prepared a detailed action plan and continued on-going remediation efforts during the second quarter of fiscal 2018. However, further testing of the effectiveness of the Company's controls occurring during the remainder of fiscal 2018 is necessary to validate the completion of the remediation plan. Accordingly, based upon theirthat evaluation, ~~the Company's~~our Chief Executive Officer and Chief Financial Officer ~~have~~ concluded that, ~~the Company's~~as of March 31, 2020, our disclosure controls and procedures were ~~not effective as of December 31, 2017.~~effective.

(b) Changes in internal controls over financial reporting.

~~The~~ ~~Company commenced its on-going remediation efforts to address~~There were no changes in the ~~material weaknesses in~~Company's internal control over financial reporting ~~described in~~during the ~~Company's Annual Report on Form 10-K for~~third quarter of fiscal year 2020 that have materially affected, or are reasonably likely to materially affect, the ~~year-ended June 30, 2017.~~

~~As previously announced, we acquired~~ ~~Trevigen on September 5, 2017. We have not fully evaluated any changes in~~Company's internal control over financial reporting associated with this acquisition and therefore any material changes that may result from this acquisition have not been disclosed in this report. We intend to disclose all material changes resulting from this acquisition within or prior to the time of our first annual assessment of internal control over financial reporting that is required to include this entity.

~~The results reported in this quarterly report include those of~~ ~~Trevigen.~~reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of ~~February 8, 2018,~~May 11, 2020, the Company is not a party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company's business, results of operations, financial condition or cash flows.

ITEM 1A. RISK FACTORS

~~There~~Other than additional risks identified below related to the COVID-19 pandemic, there have been no other material changes from the risk factors ~~previously disclosed in the Company's Quarterly Report on Form 10-Q~~ for the quarter and nine months ended ~~December~~March 31, ~~2017 and the risk factors~~2020 found in Part I, Item 1A, "Risk Factors," of the Company's Annual Report on Form 10-K for the year ended June 30, ~~2017.~~ 2019.

We are subject to financial, operating, legal and compliance risk associated with global operations, including global public health crises such as the current COVID-19 pandemic.

We engage in business globally, which subjects us to a number of unpredictable or unexpected risks and factors outside our control, including risks associated with public health crises such as epidemics and pandemics. The current pandemic resulting from a novel strain of coronavirus (COVID-19) that has spread globally has led to disruption and volatility in the global capital markets while increasing overall economic uncertainty. It is likely that the pandemic will cause a significant economic slowdown and possibly a global recession while also adversely impacting access to and the cost of capital markets.

COVID-19 is having, and will continue to have, an adverse impact on our employees, operations, supply chains, and sales and distribution systems, including as a result of impacts associated with protective health measures that we, other businesses and governments are taking. Many employers in our primary locations of business are closing sites and requiring their employees to work from home or not work at all. These site closures have included our customers, which have caused and will continue to cause customers to delay or forego purchases of our products. During the pandemic, we have experienced, and will continue to experience, significant and unpredictable reductions or increases in demand for certain of our products. As the pandemic continues, we will continue to experience a decline in sales activities and customer orders in most of our businesses, and it remains uncertain what impact these declines will have on future sales and customer orders once conditions begin to improve. In addition to existing travel restrictions, countries may continue to close borders, impose prolonged quarantines, and further restrict travel, which may impact our ability to support our sites and customers in the future while also significantly limiting the ability of our products from moving through the supply chain. As a result, given the rapid and evolving nature of the virus, COVID-19 will negatively affect our revenue growth, and it is uncertain how materially COVID-19 will affect our global operations, which generally will become more severe over an extended period of time. Any of these impacts would have an adverse effect on our business, financial condition and results of operations, and at this point, the extent of the impact of COVID-19 remains uncertain.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~There was no~~

The Company repurchased 26,000 shares in February at an average share ~~repurchase activity by~~price of $186.99 and repurchased 253,381 shares in March at an average share price of $178.58. In total, the Company inpurchased 279,381 shares during the third quarter ~~ended~~ ~~December~~of fiscal 2020 for $50.1 million at an average share price of $179.37. During fiscal 2019, the Company repurchased 95,000 shares for $15.4 million at an average share price of $162.15. As of March 31, ~~2017. The maximum approximate dollar value~~2020, we have authorization of approximately $7 million to purchase additional shares ~~that may yet be purchased~~ under the Company's ~~existing stock~~previously disclosed share repurchase plan, ~~is approximately $125 million. The plan does not have an expiration date.~~which grants management the discretion to mitigate the dilutive effect of stock option exercises by authorizing repurchase of shares up to the amount of stock returned to the corporation through stock option exercises subsequent to June 30, 2018.

ITEM ~~5. OTHER INFORMATION~~3. DEFAULT ON SENIOR SECURITIES

None.

ITEM ~~6. EXHIBITS~~ 4. MINE SAFETY DISCLOSURES

~~See "exhibit index"~~ ~~following the signature page.~~Not applicable.

ITEM 5. OTHER INFORMATION

None.

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~~SIGNATURES~~ITEM 6. EXHIBITS

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly~~ ~~authorized.~~

						~~BIO-TECHNE CORPORATION~~
						~~(Company)~~

~~Date:~~ ~~February 8, 2018~~						~~/s/ Charles R. Kummeth~~
						~~Charles R. Kummeth~~
						~~Principal Executive Officer~~

~~Date:~~ ~~February 8, 2018~~						~~/s/ James Hippel~~
						~~James Hippel~~
						~~Principal Financial Officer~~

EXHIBIT INDEX

FORM 10-Q

BIO-TECHNE CORPORATION

Exhibit # Number	Description	~~Description~~

3.1	Amended and Restated Articles of Incorporation of the Company--incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q dated February 9, 2015*

3.2	Third Amended and Restated Bylaws of the ~~Company, incorporated~~Company--incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K dated February 6,1, 2018*

~~10.1~~ 10.1**	Management Incentive Plan--incorporated by reference to Exhibit 10.13 of the Company's Form 10-K for the year ended June 30, 2013*

10.2**	Second Amended and Restated 2010 Equity Incentive Plan--incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated October 26, 2017*

10.3**	Form of Restricted Stock Award Agreement for Second Amended and Restated 2010 Equity Incentive Plan--incorporated by reference to Exhibit 10.6 of the Company's Form 8-K dated October 26, 2017*

10.4**	Form of Restricted Stock Unit Award Agreement for Second Amended and Restated 2010 Equity Incentive Plan incorporated by reference to Exhibit 10.4 of the Company’s Form 10-K dated August 28, 2019*

10.5**	Form of the Performance Unit Award Agreement for Second Amended and Restated 2010 Equity Incentive Plan incorporated by reference to Exhibit 10.5 of the Company’s Form 10-K dated August 28, 2019*

10.6**	Form of Incentive Stock Option Agreement for Second Amended and Restated 2010 Equity Incentive Plan-- incorporated by reference to Exhibit 10.6 of the Company’s Form 10-K dated August 28, 201*9

10.7**	Form of Employee Non-Qualified Stock Option Agreement for Second Amended and Restated 2010 Equity Incentive Plan--incorporated by reference to Exhibit 10.7 of the Company’s Form 10-K dated August 28, 2019*

10.8**	Form of Director Non-Qualified Stock Option Agreement for Second Amended and Restated 2010 Equity Incentive Plan--incorporated by reference to Exhibit 10.2 of the Company's Form 8-K dated October 26, 2017*

10.9**	Employment Agreement by and between the Company and Charles Kummeth--incorporated by reference to Exhibit 10.11 of the Company's Form 10-K dated September 7, 2017*

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Exhibit Number	Description
10.10**	Form of Employment Agreement by and between the Company and Executive Officers of the Company other than the CEO--incorporated by reference to Exhibit 10.12 of the Company's Form 10-K dated September 7, 2017*

10.11	Credit Agreement by and among the Company, the Guarantors party thereto, the Lenders party thereto, and BMO Harris Bank N.A., as Administrative Agent, dated August 1, 2018--incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated August 2, 2018*

10.12**	Form of Indemnification Agreement entered into with each director and executive ~~officers~~officer of the Company*Company--incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q dated February 8, 2018

10.13	Agreement and Plan of Merger by and among the Company, Aero Merger Sub Inc., Advanced Cell Diagnostics, Inc. and Fortis Advisors, LLC as the Securityholders’ Representative, dated July 6, 2016--incorporated by reference to Exhibit 2.1 of the Company's Form 8-K dated July 7, 2016*

10.14	Agreement and Plan of Merger between the Company, Enzo Merger Sub. Inc., Exosome Diagnostics, Inc. and The Securityholders Representative, dated July 25, 2018--incorporated by reference to Exhibit 2.1 of the Company's Form 8-K dated June 25, 2018*

10.15**	Form of Amendment No. 1 to Executive Employment Agreement.

21	Subsidiaries of the Company - incorporated by reference to Exhibit 21 of the Company's Form 10-K dated August 28, 2019*

31.1		Certificate of Chief Executive Officer pursuant to section 302 of the Sarbanes Oxley Act of 2002

31.2		Certificate of Chief Financial Officer pursuant to section 302 of the Sarbanes Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant toto section 906 of the Sarbanes Oxley Act of 2002

101		The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter and nine months ended ~~December~~ March 31, ~~2017,~~2020, formatted in Inline Extensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Earnings and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to the Condensed Consolidated Financial Statements.

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~________~~

-------------

* Incorporated by reference; SEC File No. 000-17272

** Management contract or compensatory plan or arrangement

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

*	~~Incorporated by reference; SEC File No. 000-17272~~	BIO-TECHNE CORPORATION
**	~~Indicates management contract or compensatory plan, contract or arrangement.~~	(Company)

Date: May 11, 2020		/s/ Charles R. Kummeth
		Charles R. Kummeth
		Principal Executive Officer

Date: May 11, 2020		/s/ James Hippel
		James Hippel
		Principal Financial Officer

Minnesota	41-1427402
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

614 McKinley Place N.E. Minneapolis, MN 55413	(612) 379-8854
(Address of principal executive offices) (Zip Code)	(Registrant's telephone number, including area code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, $0.01 par value	TECH	The NASDAQ Stock Market LLC


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)		1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		1519

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		2225

Item 4.	Controls and Procedures		2326

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings		2427

Item 1A.	Risk Factors		2427

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
		24
Item 3.	Defaults Upon Senior Securities	28

Item 4.	Mine Safety Disclosures	28

Item 5.	Other Information		2428

Item 6.	Exhibits		2429

	SIGNATURES	31	25

	Quarter Ended						Six Months Ended
	December 31,						December 31,						Quarter Ended March 31,						Nine Months Ended March 31,
	2017			2016			2017			2016			2020			2019			2020			2019
Net sales	$	154,153		$	131,807		$	298,766		$	262,388		$	194,680		$	184,861		$	562,857		$	522,341
Cost of sales		52,319			43,664			99,064			86,901			64,617			60,251			192,977			177,110
Gross margin		101,834			88,143			199,702			175,487			130,063			124,610			369,880			345,231
Operating expenses:
Selling, general and administrative		63,775			56,981			122,064			102,405			66,318			64,968			203,358			195,622
Research and development		13,911			13,281			27,459			26,046			15,954			15,552			48,413			46,154
Total operating expenses		77,686			70,262			149,523			128,451			82,272			80,520			251,771			241,776
Operating income		24,148			17,881			50,179			47,036			47,791			44,090			118,109			103,455
Other income (expense)		(2,417	)		(2,693	)		(5,480	)		(4,064	)
Other (expense) income														(970	)		5,787			96,843			(14,226	)
Earnings before income taxes		21,731			15,188			44,699			42,972			46,821			49,877			214,952			89,229
Income tax expense (benefit)		(27,116	)		7,721			(20,011	)		16,663
Income taxes														10,389			5,223			44,501			9,617
Net earnings	$	48,847		$	7,467		$	64,710		$	26,309		$	36,432		$	44,654		$	170,451		$	79,612
Other comprehensive income:
Other comprehensive (loss) income:
Foreign currency translation adjustments		1,524			(10,066	)		8,492			(13,301	)		(19,403	)		5,232			(15,138	)		(4,368	)
Unrealized gain (loss) on available-for-sale investments, net of tax of $799, $(1,889), $5,375, and $(2,060), respectively		(8,582	)		6,778			(16,374	)		16,486
Derivative instruments - cash flow hedges														(5,702	)		(1,854	)		(4,798	)		(5,769	)
Other comprehensive (loss) income		(7,058	)		(3,288	)		(7,882	)		3,185			(25,105	)		3,378			(19,936	)		(10,137	)
Comprehensive income (loss)	$	41,789		$	4,179		$	56,828		$	29,494
Comprehensive income													$	11,327		$	48,032		$	150,515		$	69,475
Earnings per share:
Basic	$	1.30		$	0.20		$	1.73		$	0.70		$	0.95		$	1.18		$	4.46		$	2.11
Diluted	$	1.29		$	0.20		$	1.71		$	0.70		$	0.92		$	1.15		$	4.33		$	2.05
Cash dividends per common share:	$	0.32		$	0.32		$	0.64		$	0.64
Weighted average common shares outstanding:

Weighted average common shares outstanding:
Basic		37,449			37,308			37,412			37,294			38,303			37,772			38,167			37,745
Diluted		37,926			37,478			37,816			37,475			39,435			38,861			39,354			38,813

	December 31, 2017 (unaudited)			June 30, 2017			March 31, 2020 (unaudited)			June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	121,458		$	91,612		$	156,216		$	100,886
Short-term available-for-sale investments		40,927			66,102			104,872			65,147
Accounts receivable, less allowance for doubtful accounts of $905 and $696, respectively		98,498			116,830
Accounts receivable, less allowance for doubtful accounts of $970 and $980, respectively								117,452			137,466
Inventories		68,280			60,151			99,673			91,050
Prepaid expenses and other		16,923			13,330
Other current assets								13,715			18,058
Total current assets		346,086			348,025			491,928			412,607

Property and equipment, net		138,461			135,124			165,012			154,039
Right of use asset								73,751			-
Goodwill		589,101			579,026			725,831			732,667
Intangible assets, net		438,360			452,042			530,333			579,429
Other assets		43,414			44,002			12,167			5,668
Total assets	$	1,555,422		$	1,558,219		$	1,999,022		$	1,884,410
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	11,318		$	16,856		$	19,735		$	16,210
Salaries, wages and related accruals		26,537			26,602			23,426			28,638
Accrued expenses		14,508			18,518			9,696			26,389
Deferred revenue		6,016			5,968
Contract liabilities								13,556			9,084
Income taxes payable		-			2,478			10,378			5,764
Operating lease liabilities - current								9,544			-
Contingent consideration payable		53,300			65,100			6,150			3,400
Current portion of long-term debt obligations								12,500			12,500
Total current liabilities		111,679			135,522			104,985			101,985

Deferred income taxes		74,103			120,596			96,178			89,754
Long-term debt obligations		362,500			343,771			407,348			492,660
Long-term contingent consideration payable		-			3,300			1,700			9,200
Operating lease liabilities								69,491			-
Other long-term liabilities		9,321			5,403			28,052			25,222
Shareholders' equity:
Common stock, par value $.01 per share; authorized 100,000,000; issued and outstanding 37,469,896 and 37,356,041, respectively		375			374
Undesignated capital stock, no par; authorized 5,000,000 shares; none issued or outstanding								-			-
Common stock, par value $.01 per share; authorized 100,000,000; issued and outstanding 38,122,138 and 37,934,040, respectively								381			379
Additional paid-in capital		214,697			199,161			381,632			316,797
Retained earnings		839,564			799,027			1,012,713			931,934
Accumulated other comprehensive loss		(56,817	)		(48,935	)		(103,458	)		(83,521	)
Total shareholders' equity		997,819			949,627			1,291,268			1,165,589
Total liabilities and shareholders’ equity	$	1,555,422		$	1,558,219
Total liabilities and shareholders’ equity							$	1,999,022		$	1,884,410

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