¨£ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 xS ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 20102012¨£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ¨£ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report
011-31-77-320-8409 Spoorstraat 50, 5911 KJ Venlo, The Netherlands(240) 686-7700,011-31-77-320-8400, Fax: (240) 686-777219300 Germantown Rd., Germantown, Maryland 20874
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The number of outstanding Common Shares as of December 31, 20102012 was 233,114,715.
234,543,793.
| ý | U.S. GAAP |
| ¨ | International Financial Reporting Standards as issued by the International Accounting Standards Board |
| ¨ | Other |
| ¨ | Item 17 |
| ¨ | Item 18 |
€1. The 2010, 2009 and 2008 amounts for working capital, total assets and total long-term liabilities, including current portion, have been adjusted to correctly reflect deferred taxes as current or non-current and to net deferred tax positions within the same tax jurisdictions. These balance sheet reclassifications had no effect on total equity at December 31, 2010, 2009 and 2008. Consolidated Statement of Income Data: (amounts in thousands, except per share data) Net sales Cost of sales Gross profit Operating Expenses: Research and development Sales and marketing General and administrative, integration and other costs Acquisition-related intangible amortization Purchased in-process research and development Total operating expenses Income from operations Other (expense) income, net Income before provision for income taxes and noncontrolling interest Provision for income taxes Net income Less: Noncontrolling interest Net income attributable to QIAGEN N.V. Basic net income attributable to QIAGEN N.V. per Common Share (1) Diluted net income attributable to QIAGEN N.V. per Common Share (1) Weighted average number of Common Shares used to compute basic net income per Common Share Weighted average number of Common Shares used to compute diluted net income per Common Share Consolidated Balance Sheet Data: (amounts in thousands) Cash and cash equivalents Working capital Total assets Total long-term liabilities, including current portion Total shareholders’ equity Common Shares, par value Shares outstanding management policies and procedures and embodied in our corporate governance, code of ethics and financial reporting controls and procedures. A variety of functional experts evaluate these business risks, attempting to mitigate and manage these risks on an ongoing basis. operations, liquidity or capital resources. areas. in Germantown, Maryland, for research, production and administrative space, and assimilation of new products, technologies, operations, sites and personnel; application for and achievement of regulatory approvals or other clearances; diversion of resources from our existing products, business and technologies; generation of sales to offset associated acquisition costs; implementation and maintenance of uniform standards and effective controls and procedures; maintenance of relationships with employees and customers and integration of new management personnel; issuance of dilutive equity securities; incurrence or assumption of debt; amortization or impairment of acquired intangible assets or potential businesses; and exposure to liabilities of and claims against acquired entities. otherwise availability, quality and price relative to competitive products; the timing of introduction of the new product relative to competitive products; opinions of the new product’s utility; citation of the new product in published research; regulatory trends and approvals; and general trends in life sciences research, applied markets and molecular diagnostics. its significant benefits in better identifying women at risk for cervical cancer than test.15, 2011,1, 2013, was $1.3884$1.3000 per EUR 1.PART I Page Item 1. Item 2. Item 3. Item 4. 21Item 4A. 36Item 5. 36Item 6. 51Item 7. 60Item 8. 61Item 9. 62Item 10. 63Item 11. 80Item 12. 81PART II Item 13. Item 13. 82Item 14. 82Item 15. 82Item 16A. 83Item 16B. 83Item 16C. 83Item 16D. 84Item 16E. 84Item 16F. 84Item 16G. 84Item 16H. Item 17. 87Item 18. Item 19. 87Item 19.Exhibits8789Item 1. Identity of Directors, Senior Management and Advisors Item 2. Offer Statistics and Expected Timetable Item 3. Key Information 2010, 20092012, 2011 and 20082010 and the consolidated balance sheets at December 31, 20102012 and 20092011 of QIAGEN that have been audited by an independent registered public accounting firm, and are included in this Annual Report. The selected data from the consolidated statements of income presented for the years ended December 31, 20072009 and 2006,2008, and the consolidated balance sheets as of December 31, 2008, 20072010, 2009 and 2006,2008, is derived from audited consolidated financial statements not included in this Annual Report.“Operating"Operating and Financial Review and Prospects.” Years ended December 31, 2010 2009 2008 2007 2006 $ 1,087,431 $ 1,009,825 $ 892,975 $ 649,774 $ 465,778 371,869 342,752 293,285 216,227 147,303 715,562 667,073 599,690 433,547 318,475 126,040 107,900 97,331 64,935 41,560 267,484 244,814 227,408 164,690 115,942 110,009 115,933 113,936 87,178 56,087 23,492 18,221 14,368 7,711 2,085 — — 985 25,900 2,200 527,025 486,868 454,028 350,414 217,874 188,537 180,205 145,662 83,133 100,601 (15,416 ) (7,875 ) (26,376 ) (7,407 ) 5,467 173,121 172,330 119,286 75,726 106,068 28,810 34,563 29,762 25,555 35,529 $ 144,311 $ 137,767 $ 89,524 $ 50,171 $ 70,539 — — 491 49 — $ 144,311 $ 137,767 $ 89,033 $ 50,122 $ 70,539 $ 0.62 $ 0.67 $ 0.45 $ 0.30 $ 0.47 $ 0.60 $ 0.64 $ 0.44 $ 0.28 $ 0.46 232,635 206,928 196,804 168,457 149,504 240,483 213,612 204,259 175,959 153,517 Years ended December 31, 2012 2011 2010 2009 2008 Net sales $ 1,254,456 $ 1,169,747 $ 1,087,431 $ 1,009,825 $ 892,975 Cost of sales 430,432 419,938 371,869 342,752 293,285 Gross profit 824,024 749,809 715,562 667,073 599,690 Operating Expenses: Research and development 122,476 130,636 126,040 107,900 97,331 Sales and marketing 343,549 307,332 267,484 244,814 227,408 General and administrative, integration and other 152,068 185,507 110,009 115,933 113,936 Acquisition-related intangible amortization 36,117 26,746 23,492 18,221 14,368 Purchased in-process research and development — — — — 985 Total operating expenses 654,210 650,221 527,025 486,868 454,028 Income from operations 169,814 99,588 188,537 180,205 145,662 Other expense (24,661 ) (3,376 ) (15,416 ) (7,875 ) (26,376 ) Income before provision for income taxes 145,153 96,212 173,121 172,330 119,286 Provision for income taxes 15,616 1,263 28,810 34,563 29,762 Net income $ 129,537 $ 94,949 $ 144,311 $ 137,767 $ 89,524 Net income (loss) attributable to noncontrolling interest 31 (1,089 ) — — 491 Net income attributable to QIAGEN N.V. $ 129,506 $ 96,038 $ 144,311 $ 137,767 $ 89,033 $ 0.55 $ 0.41 $ 0.62 $ 0.67 $ 0.45 $ 0.54 $ 0.40 $ 0.60 $ 0.64 $ 0.44 Weighted-average common shares outstanding Basic 235,582 233,850 232,635 206,928 196,804 Diluted 240,746 239,064 240,483 213,612 204,259 (1) See Note 319 of the “Notes to Consolidated Financial Statements” for the computation of the weighted average number of Common Shares. As of December 31, 2010 2009 2008 2007 2006 $ 828,407 $ 825,557 $ 333,313 $ 347,320 $ 430,357 $ 976,181 $ 957,940 $ 441,180 $ 482,215 $ 566,660 $ 3,913,995 $ 3,796,464 $ 2,885,323 $ 2,775,174 $ 1,212,012 $ 1,125,070 $ 1,183,182 $ 1,197,088 $ 1,220,084 $ 536,738 $ 2,476,353 $ 2,291,169 $ 1,453,844 $ 1,391,575 $ 566,165 $ 2,724 $ 2,711 $ 2,212 $ 2,175 $ 1,535 233,115 232,074 197,839 195,335 150,168 As of December 31, 2012 2011 2010 2009 2008 Cash and cash equivalents $ 394,037 $ 221,133 $ 828,407 $ 825,557 $ 333,313 $ 725,752 $ 293,753 $ 1,003,489 $ 972,183 $ 446,117 Total assets $ 4,087,631 $ 3,729,685 $ 3,878,478 $ 3,769,219 $ 2,810,789 Total long-term liabilities, including current portion $ 1,101,550 $ 725,874 $ 1,118,932 $ 1,171,065 $ 1,128,301 Total equity $ 2,724,363 $ 2,557,798 $ 2,476,353 $ 2,291,169 $ 1,453,844 Common shares, par value $ 2,769 $ 2,739 $ 2,724 $ 2,711 $ 2,212 Common shares outstanding 236,487 234,221 233,115 232,074 197,839 Note Regarding Forward-Looking StatementsFactorsfuture operating results may be affected by various risk factors, manycorporate governance structure is based on a strong framework of which are beyondthe responsibilities of our control. Certain statements includedManaging and Supervisory Boards (discussed in more detail in Item 10 of this Annual ReportReport) and the documents incorporated herein by reference may be forward-looking statements within the meaning of Section 27Afunction of the U.S. Securities Act of 1933, as amended, and Section 21EAudit Committee of the U.S. Securities Exchange ActSupervisory Board (discussed in more detail in Item 6 of 1934,this Annual Report). We maintain an adequate internal control over financial reporting to ensure the integrity of financial reporting as amended,described further in Item 15 of this Annual Report. Additionally, we maintain a Compliance Committee under the leadership of the Chief Financial Officer, who is also a member of the Managing Board. The Compliance Committee consists of senior executives from various functional areas who are responsible to ensure compliance with legal and regulatory requirements in addition to overseeing the communication of corporate policies, including statements regarding potential future net sales, gross profit, net income and liquidity. These statements can be identified byour Code of Ethics as described further in Item 16B of this Annual Report.Risk Types Base Business Risk Business Growth Risk Underlying Business Risk use of forward-looking terminology such as “believe,” “hope,” “plan,” “intend,” “seek,” “may,” “will,” “could,” “should,” “would,” “expect,” “anticipate,” “estimate,” “continue” or other similar words. Reference is made in particular to the descriptionorder of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements. Such statements are based on management’s current expectations and are subject to a numberview of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. We caution investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Factors which could cause such results to differ materially from those described in the forward-looking statements include those set forth intheir expected significance. Describing the risk factors below. Asin order of significance does not imply that a result,lower listed risk factor may not have a material adverse impact our future success involves a high degreeresults of risk. When considering forward-looking statements, you should keep in mind that the risk factors could cause our actual results to differ significantly from those contained in any forward-looking statement.Risks Related to the Growth of Our Business$1,087.4 million$1.25 billion in 20102012 from $465.8 million$1.01 billion in 2006.2009. We have made several acquisitions in recent years, including AmniSure in 2012 and Cellestis Ltd. and Ipsogen S.A. in 2011. Other acquisitions include SABiosciences in December 2009;and DxS Ltd. in September 2009; Corbett Life Science Pty. Ltd., or Corbett, in July 2008; and Digene Corporation, or Digene, in July 2007. We intend to identify and acquire other businesses in the future that support our strategy to build on our global leadership position in molecular technologies.Sample & Assay Technologies. The successful integration of acquired businesses requires a significant effort and expense across all operational areas, including sales and marketing, research and development, manufacturing, finance and administration and information technologies.is expected to continue through 2011.was completed in early 2012. In addition, we began a project in June 2010 to expand our facilityitthis project is expected to continue into 2012.2014. These expansion projects increase our fixed costs, resulting in higher operational costs in the futureshort term that will negatively impact our gross marginprofit and operating income until we fully utilize the additional capacity of these planned facilities. We also continue to upgrade our operating and financial systems and expand the geographic presence of our operations, which has resulted in the reallocation of existing resources or the hiring of new employees as well as increased responsibilities for both existing and new management personnel. The rapid expansion of our business and the addition of new personnel may place a strain on our management and operational systems.productsbusinesses that complement our internally developed product lines. In the future, we mayexpect to acquire additional technologies, products or businesses to expand our operations. Acquisitions expose us to new operating and other risks, including risks associated with the: future success will depend in part on continuous, timely development and introduction of new products that address evolving market requirements. We believe successful new product introductions provide a significant competitive advantage because customers make an investment of time in selecting and learning to use a new product and are reluctant to switch thereafter. To the extent that we fail to introduce new and innovative products, or such products suffer significant delays in development or are not accepted in the market, we may lose market share to our competitors, which will be difficult or impossible to regain. An inability to successfully develop and introduce new products, for technological or other reasons, could reduce our growth rate or Important programs underway include the development and global rollout of our modular medium-throughput QIAsymphony platform, our next generation high throughput molecular testing QIAensemble platform and related sample and assay technologies. In the past, we have experienced delays in the development and introduction of products, including regulatory approvals, and we may experience delays in the future.Therefore,large amountsignificant portion of revenues in a single product group and a small number of customers for that product groupproducts related to HPV testing increases our dependence on that product group’sgroup's success, our reliance on our relationshiprelationships with eacha relatively small number of those customers particularly in the United States, and our reliance on a diversification strategy.We believe that contributionsstrategy to increase sales in other product areas.product group mayproducts represent as much as 25%approximately 13% of our total net sales. While the ultimate decision to order this test is made by a physicianphysicians in consultation with their patient,patients, in the U.S. the test analysis is generally performed by reference laboratories, who in turn are the customers of QIAGEN in terms of ordering tests and related equipment. At present, a limited number of reference laboratories in the U.S. account for the majority of our sales for this product group. A significant reduction in sales of this product group may have a significant adverse impact on our results of operations.HPV test sales. In times of economic hardship or high unemployment as was the case in 2010, patients may decide to forego or delay routine tests. Further, the cost of HPV testing in the U.S. is reimbursed to reference laboratories by insurance providers and healthcarehealth maintenance organizations. If these insurance companiesplans decide to limit the availability of payments for our test to their members, it could have a significant adverse impact on our results of operations. It is possible that our dependence onGrowth in other areas through diversification and new product launches has reduced the proportion of total net sales coming from this product group will continueHPV tests in the future. IfU.S., but if we fail to further diversify, our product line grouping, we will continue tocould be at risk that the loss or under-performance of the HPV line or loss of a single product, product group or customer maycould materially affect our results of operations.and our growth will be effectedaffected by the level of acceptance of and the market for HPV screening by physicians and laboratories.molecular diagnosticMolecular Diagnostics products anddepend upon our ability to increase sales of this product group, depend upondevelop greater acceptance by physicians and laboratories of the clinical benefits of HPV screening as a necessary part of the standard of care for screening women for risk of cervical cancer.cancer, either alone or in conjunction with cytology-based tests (Pap tests). This applies to the U.S. as well as Europe and variousother markets around the world. In particular, a key element of future sales growth includes greater adoption of HPV test products as a primary cervical cancer screening method, either alone or in conjunction with cytology-based tests (Pap tests). Pap tests have been the principal means of cervical cancer screening since the 1940s. The introduction of ourOur HPV test has beenis supported by majorextensive clinical data showingto those who were only given a Pap test alone, and prevailing standards of care in the U.S. have been adopted to recommendnow include HPV tests in conjunction with Pap tests. (TheseIn the U.S. approximately half of cervical cancer screening includes co-testing of molecular HPV tests along with Pap smears. These standards are also being adopted in other countries around the world.) However, technological advances designed to improve quality control over sample collection and preservation, as well as to reduce the susceptibility of Pap tests to human error, may increase physician reliance on the Pap test and solidify its market position as the most widely used screening test for cervical cancer. Approximately 60 million Pap tests are currently performed annually in the United States, and an estimated 60 to 100 million additional Pap tests are performed annually in the rest of the world. technology and testing approach that is different from the cytology-based approach (reviewing cells under a microscope) of the Pap test. Significant resources are required to educate physicians and laboratories about the patient benefits that can result from using HPV test products in addition to the Pap test, and to assist laboratory customers in learning how to use our HPV test products. The addition of our HPV test products to the Pap test for primary screening in the United States may be seen by some customers as adding unnecessary expense to the generally acceptedtraditional cervical cancer screening methodology.screening. As a result, we must provideour ability to continue to grow revenues from HPV testing in the U.S. and around the world depends on providing information to counteract these types of impressions on a case-by-case basis. If we are not successful in executing our marketing strategies, which focus on the proven significant benefits of HPV testingusing our molecular technologies to identify women at risk for cervical cancer we may not be able to maintain or continue to grow our market share for HPV testing.We are working with physician and laboratory customers, and also with patient advocacy groups, to develop and establish the benefits of HPV screening to women. If we are not successful in this endeavor, we may not be able to maintain or grow the market for HPV screening or maintain or increase our HPV test revenues.these markets.Outside the U.S., third-partyhealthcare market.outside the U.S., third-party reimbursement may not be consistent or financially adequate to cover the cost of our products. This could limit our ability to sell our products or cause us to reduce prices, which would adversely affect our results of operations.A significant portionfromused in the Academia customer class by researchers at universities, government laboratories and private foundations, and whose funding is dependent upon grants from government agencies, such as the U.S. National Institutes of Health (NIH). Although the level of research funding has been increasing in recent years, we cannot assure you that this trend will continue in particular in the U.S. given federal and state budget constraints caused by challenging economic conditions.constraints. Government funding of research and development is subject to the political process, which is inherently unpredictable. Future sales may be adversely affected if our customers delay purchases as a result of uncertainties regarding the approval of government or industrial budget proposals. Also, government proposals to reduce or eliminate budgetary deficits have sometimes included reduced allocations to the NIH and government agencies in other countries that fund life sciences research and development activities. A reduction in government funding for the NIH or other government research agencies in other countries could have a serious adverse impact on our results of operations.non-stanardizednon-standardized manner to perform sample and assay processing. We are also aware that a significant number of laboratory organizations and competitor companiescompetitors are developing and using their own internally developed molecular assay tests. Some competitor companies may seek regulatory approvals from the U.S. Food and Drug Administration (FDA) or similar non-U.S. regulatory authorities and bring to the market alternative products that could limit the use of our products. The success of our business depends in part on the continued conversion of current users of “home brew” methods to our standardized sample and assay technologiesSample & Assay Technologies and products. There can be no assurance, however, as to the continued conversion of these potential customers. in various segments of our business from companies that provide competitive pre-analytical solutions and also other products used by our customers. The markets for some of our products are very competitive and price sensitive. Other product suppliers may have significant advantages in terms of financial, operational, sales and marketing resources as well as experience in research and development. These companies may have developed, or could develop in the future, new technologies that compete with our products or even render our products obsolete. The development of products offering superior technology or a more cost-effective alternative to our products could have a material adverse effect on our results of operations.solutions andsample technologies as well as for assay technologies display a significant amount of loyalty to their initial supplier of a particular product, in particular given the time and expense required by customers to properly implementintegrate these products into their operations. As a result,, it may be difficult to convert customers who have purchased products from competitors, and our competitive position may suffer if we are unable to be the first to develop and supply new products.Global economic conditions could adversely affect our business, results of operations and financial condition.Our results of operations could be materially affected by adverse general conditions in the global economy and global financial markets. In times of economic hardship or high unemployment, patients may decide to forego or delay routine tests, in particular for our HPV test used to screen women for risk of cervical cancer. Changes in the availability or reimbursement of our molecular diagnostic testing products by insurance providers and healthcare maintenance organizations could also have a significant adverse impact on our results of operations.Access to financing in the global financial markets has also been adversely affected for many businesses during the recent challenging economic times. Our customers may face internal financing pressures that adversely impact spending decisions and the ability to purchase our products. A severe or prolonged economic downturn could result in a variety of risks to our business that would adversely impact our results of operations, including the reduction or delay in planned improvements to healthcare systems in various countries, the reduction of funding for life sciences research, and intensified efforts by governments and healthcare payors regarding cost-containment efforts.As is the case for many businesses, we face the following risks in regard to financial markets:severely limited access to financing over an extended period of time, which may limit our ability to fund our growth strategy and could result in delays to capital expenditures, acquisitions or research and development projects;further failures of currently solvent financial institutions, which may cause losses from our short-term cash investments or our hedging transactions due to a counterparty’s inability to fulfill its payment obligations;inability to refinance existing debt at competitive rates, reasonable terms or sufficient amounts; andincreased volatility or adverse movements in foreign currency exchange rates.Risks Related to the Development, Manufacture and Distribution of Our ProductsWe depend on suppliers for materials used to manufacture our products, and if shipments from these suppliers are delayed or interrupted, we may be unable to manufacture our products.We buy materials to create our products from a number of suppliers and are not dependent on any one supplier or group of suppliers for our business as a whole. However, key components of certain products, including certain instrumentation components and chemicals, are available only from a single source. If supplies from these vendors are delayed or interrupted for any reason, we may not be able to obtain these materials timely or in sufficient quantities or qualities in order to produce certain products, and this could have an adverse impact on our results of operations.We rely on collaborative commercial relationships to develop some of our products.Our long-term business strategy involves entering into strategic alliances as well as marketing and distribution arrangements with academic, corporate and other partners relating to the development, commercialization, marketing and distribution of certain of our existing and potential products. We may be unable to continue to negotiate these collaborative arrangements on acceptable terms, and these relationships also may not be scientifically or commercially successful. In addition, we may be unable to maintain these relationships, and our collaborative partners may pursue or develop competing products or technologies, either on their own or in collaboration with others.Some of our customers are requiring us to change our sales arrangements to lower their costs which may limit our pricing flexibility and harm our businessSome of our customers have developed purchasing initiatives to reduce the number of vendors from which they purchase products to lower their supply costs. In some cases, these customers have established agreements with large distributors, which include discounts and direct involvement in the distributor’s purchasing process. These activities may force us to supply large distributors with our products at discounts in order to continue providing products to some customers. For similar reasons, many larger customers, including the U.S. government, have requested, and may request in the future, special pricing arrangements, which can include blanket purchase agreements. These agreements may limit our pricing flexibility, which could harm our business and affect our results of operations. For a limited number of customers, and at the customer’s request, we have
conducted sales transactions through third-party online intermediaries to whom we are required to pay commissions. If sales grow through these intermediaries, it could have an adverse impact on our results of operations, particularly a negative impact on our gross margin.
The time and expense needed to obtain regulatory approval and respond to changes in regulatory requirements could adversely affect our ability to commercially distribute our products and generate sales.
Additionally, we may be required to incur significant costs to comply with laws and regulations in the future, and changes or additions to existing laws or regulations may have a material adverse effect upon our business, financial condition and results of operations.
women for cervical cancer, which adds to our marketing expenses and increases the degree of regulatory review and oversight. The expense of submitting regulatory approval applications in multiple countries, as compared to our available resources, will impact the decisions we make about entering new markets.
Further, some of our products are used in “Laboratory-Developed Tests” (LDTs), where laboratories use our materials for assays manufactured, validated and performed in house. We do not promote these products for clinical diagnostic use.
Risks Related to Our Operations
employees critical to our success on acceptable terms. Our initiativesInitiatives to expand QIAGEN will also require additional employees, including management with
The integrated nature of our worldwide operations enables us to reduce the effective tax rate on our earnings since a portion of our earnings are taxed at more favorable rates in some jurisdictions.
The Additionally, changes in other laws, such as the U.S. health care reform law could affect our business, profitability and stock price.
Comprehensive healthcare reform legislation that was signed into law in the U.S. in 2010. Although we cannot fully predict the many ways in which this healthcare reform might affect our business, the law imposes a 2.3%2010, may subject us to additional excise tax on certain transactions, including many sales of medical devices, which we expect will include the U.S. sales of our assays and instruments. This tax is scheduled to take effect in 2013.taxes. The increased tax burden as a result of changes in law may adversely affect our results of operations.
make it difficult for us to make required payments on our debt;
make it difficult for us to obtain any financing in the future necessary for working capital, capital expenditures, debt service requirements or other purposes;
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and
make us more vulnerable in the event of a downturn in our business.
marketing, sales and customer support efforts; research and development activities; expansion of our facilities; consummation of possible future acquisitions of technologies, products or businesses; demand for our products and services; and repayment or refinancing of debt. earnings and our results of operations could be adversely affected. valuations of the investments are indicated, conditions, exchange rate fluctuations and general economic conditions. Our expense levels are based in part on our expectations as to future sales trends. As a result, sales and earnings may vary significantly from quarter to quarter or from year to year, and actual sales and earnings results in any one period will not necessarily be indicative of results to be anticipated in subsequent periods. Our results may also fail to meet or exceed the expectations of securities analysts or investors, which could cause a decline in the market price of our Common Shares. announcements of technological innovations or the introduction of new products by us or our competitors;However, asAs of December 31, 2010,2012, we had outstanding long-term loan facilities of approximately $425.0$847.0 million, of which $75.0$0.9 million will become was current and due in July 2011, and $350.0 million will become due in July 2012. As of December 31, 2010, we also had additional long-term debt obligations of $445.0 million, of which $145.0 million will become due no earlier than July 2012, and $300.0 million will become due in November 2012 as well as long-term debt of $3.0 million which is due in June 2019 with repayments starting in 2011.2013. Furthermore, as of December 31, 2010,2012, we havehad capital lease obligations, including the current portion, of $26.9$19.9 million, that expire in various years through 2018. We may need to refinance all or part of these liabilities before or atthe existing liabilities or for the ongoing funding of our business may not be available or, if available, not on terms acceptable to us. If adequate funds wereare not available, we may be required to reduce or delay expenditures for research and development, production, marketing, capital expenditures and/or acquisitions, which could have a material adverse effect on our business and results of operations. To the extent that additional capital is raised through the sale of equity or convertible securities, the issuance of any securities could result in dilution to our shareholders.2010,2012, our consolidated balance sheet reflected approximately $1.4$1.8 billion of goodwill and approximately $753.3$853.9 million of intangible assets. Goodwill is recorded when the purchase price of a business exceeds the fair market value of the tangible and separately measurable intangible net assets. U.S. Generally Accepted Accounting Principles,generally accepted accounting principles (U.S. GAAP) generally requires us to test goodwill for impairment on an annual basis or when events or circumstances occur indicating that goodwill might be impaired. Long-lived assets, such as intangible assets with finite useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment review often cannot be done at the level of the individual asset and it must instead be applied to a group of assets. For the purpose of our annual goodwill impairment testing based on the current circumstances of how we manage our business, this group of assets is the Company as a whole. If we determine that any of our goodwill or intangible assets were impaired, we wouldwill be required to take an immediate charge to earnings. complementary businesses as opportunities arise. We periodically review the carrying value of these investments for impairment, considering factors that include the most recent stock transactions, book values from the most recent financial statements, and forecasts and expectations of the investee. The results of these valuations may fluctuate due to market conditions and other conditions over which we have no control.itwe could require abe required to write-down of the investment. This could result in future charges on our earnings that could materially adversely affect our results of operations. It is uncertain whether or not we will realize any long-term benefits from these strategic investments.Risks Related to Our Global Operationsregulations, and longer accounts receivable payment cycles in certain countries.regulations. Other risks associated with international operations include import and export licensing requirements, trade restrictions, exchange controls and changes in tariff and freight rates.rates, as may occur as a result of rising energy costs. As a result of these conditions, an inability to successfully manage our international operations could have a material adverse impact on our business and results of operations.createscreate the risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents or distributors that could be in violation of various laws, including the FCPA, even though these parties are not always subject to our control. It is our policy to implement safeguards to discourage these practices by our employees and distributors. However, our existing safeguards and any future improvements may not prove to be effective, and our employees, consultants, sales agents or distributors may engage in conduct for which we might be held responsible. Violations of the FCPA and other laws may result in criminal or civil sanctions, which could be severe, and we may be subject to other liabilities, which could negatively affect our business, results of operations and financial condition.Exchange rate fluctuations may adversely affect our business and operating results.Since we currently market our products in over 40 countries throughout the world, a significant portion of our business is conducted in currencies other than the U.S. dollar, our reporting currency. As a result, fluctuations in value, relative to the U.S. dollar, of the currencies in which we conduct our business have caused and will continue to cause foreign currency transaction gains and losses. Foreign currency transaction gains and losses arising from normal business operations are charged against earnings in the period when incurred. We hedge a portion of the anticipated cash flow that we expect to exchange into other currencies, subject to our short-term financing needs. Due to the number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates, we cannot predict the effects of exchange rate fluctuations upon future operating results. While we engage in foreign exchange hedging transactions to manage our foreign currency exposure, there can be no assurance that our hedging strategy will adequately protect our operating results from the effects of future exchange rate fluctuations.new risks.We have recently expanded our business intoin Asiaare Brazil, Russia, India, China, South Korea, Mexico and South America,Turkey and we expect to continue to focus on expanding our business in these or other fast-growing markets. In addition to the currency and international operation risks described above, our international operations are subject to a variety of risks that include those arising out of the economy, political outlook and language and cultural barriers in countries where we have operations or do business. In many of these emerging markets, we may be faced with several risks that are more significant than in other countries in which we have a history of doing business. These risks include economies that may be dependent on only a few products and are therefore subject to significant fluctuations, weak legal systems which may affect our ability to enforce contractual rights, exchange controls, unstable governments, and privatization or other government actions affecting the flow of goods and currency. In conducting our business, we move products from one country to another and may provide services in one country from a subsidiary located in another country. Accordingly, we are vulnerable to abrupt changes in customs and tax regimes that could have significant negative impacts on our results of operations.Japan. We may experience temporary shortages of these components due to disruptions in supply causedJapan, which experienced a severe earthquake followed by the earthquake anda tsunami that hit Japan in March 2011. As a result, toTo the extent that our suppliers are impacted by these events,a natural disaster or other disruption, we may experience periods of reduced instrumentation production. TheseAny unexpected interruptions in our instrumentation production capabilities may lead to delayed or lost sales and may adversely affect our results of operations for the affected period.If the recovery of our suppliers in Japan does not occur in a reasonable time frame, we may be forced to procure sourced products or materials from alternative suppliers, and we may not be able to do so on terms as favorable as our current terms or at all. Material increases in the cost of components would have an adverse impact on our operating performance and cash flows if we were unable to pass on these increased costs to our customers. We are currently evaluating the potential impact of Japan’s earthquake and tsunami on our local and global sales.Risks Related to our Intellectual Property2010,2012, we owned 169193 issued patents in the United States, 130143 issued patents in Germany and 653767 issued patents in other major industrialized countries. In addition, at December 31, 2010,2012, we had 975972 pending patent applications, and we intend to file applications for additional patents as our products and technologies are developed. The patent positions of technology-based companies including our company, involve complex legal and factual questions and may be uncertain, and the laws governing the scope of patent coverage and the periods of enforceability of patent protection are subject to change. In addition, patent applications in the United States are maintained in secrecy until patents issue, and publication of discoveries in the scientific or patent literature tends to lag behind actual discoveries by several months. Therefore, no assurance can be given that patents will issue from any patent applications that we own or license or if patents do issue, that the claims allowed will be sufficiently broad to protect our technology. In addition, no assurance can be given that any issued patents that we own or license will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide us competitive advantages. Further, as issued patents expire, we may lose some competitive advantage as others develop competing products and as a result, we may lose revenue.in nature or, in some cases, termination of the license, and as a result, we may lose some competitive advantage and experience a loss of revenue.the performance of these collaborations.separationsample and purification of nucleic acidsassay technologies that are closely related to those we use. From time to time, we receive inquiries requesting confirmation that we do not infringe patents of third parties. We endeavor to follow developments in this field, and we do not believe that our technologies or products infringe any proprietary rights of third parties. However, there can be no assurance that third parties will not challenge our activities and, if so challenged, that we will prevail. In addition, the patent and proprietary rights of others could require that we alter our products or processes, pay licensing fees or cease certain activities, and there can be no assurance that we will be able to license any technologies that we may require on acceptable terms. InRisks Related to Product Liability Issuesamount, but that we believe is currently appropriate for us.amount. There can be no assurance however, that we will be able to maintain this insurance at a reasonable cost and on reasonable terms, or that this insurance will be adequate to protect us against any or all potential claims or losses.We do not expect compliance with such laws to have a material adverse impact on our capital expenditures, results of operations or competitive position. Although we believe that our procedures for the handling and disposal of hazardous materials comply with the standards prescribed by applicable regulations, theThe risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we could be held liable for any damages that result, and any such liability could have a material adverse impact on us.Risks Related to Our Common Sharessubsidiaries.subsidiaries, intercompany receivables and other financial assets such as cash and short-term investments. As a result, QIAGEN N.V. is dependent upon payments, dividends and distributions from the subsidiaries for funds to pay operating and other expenses as well as to pay future cash dividends or distributions, if any, to holders of our Common Shares. Dividends or distributions by subsidiaries in a currency other than the U.S. dollar may result in a loss upon a subsequent conversion into U.S. dollars.common sharesCommon Shares since our initial public offering in September 1996 has increased significantly and been highly volatile. In the last two years, the price of our Common Shares has ranged from a high of $24.00$22.20 to a low of $14.32$12.47 on NASDAQ, and a high of EUR 17.87€15.25 to a low of EUR 11.12€9.07 on the Frankfurt Stock Exchange. In addition to overall stock market fluctuations, factors that may have a significant impact on the price of our Common Shares include:
developments in our relationships with collaborative partners;
quarterly variations in our operating results or those of our peer companies;
changes in government regulations, tax laws or patent laws;
developments in patent or other intellectual property rights;
developments in government spending budgets for life sciences-related research;
general market conditions relating to the diagnostics, applied testing, pharmaceutical and biotechnology industries; and
impact from foreign exchange rates.
In countries outside the U.S., other or similar tax regimes may apply and result in unfavorable tax treatment for any dividends received.
issuances under our stock plans as of
December 31,| Item 4. | Information on the Company |
a gene. Academia. QIAGEN began operations in 1986 by introducing to the emerging biotechnology sector a novel method that standardized and dramatically accelerated the extraction and purification of nucleic Since the introduction of that first ready-to-use kit, Net sales of commercial applications into routine analysis of those diagnostic clues from the human body. Profiling Personalized Point of world’sworld's leading provider of innovative sampleSample & Assay Technologies, based on independent market studies of United States and assayEuropean market shares for our products and technologies. Our automated systems and consumable products and systems are playing a pivotal role in the molecular biology revolution by empoweringempower customers to transform raw biological samples into valuable molecular information. QIAGENSample technologies allow healthcare providersare used to detect diseaseisolate DNA (deoxyribonucleic acid), RNA (ribonucleic acid) and make treatment decisions, scientistsproteins from any biological sample, such as blood or tissue. Assay technologies are then used to exploreamplify, enrich and provide results for analysis of biomolecules, such as the secretsDNA of life, and other professionals to apply advanced tools for a diverse rangevirus or a mutation of needs that include human identification, veterinary medicine and food safety.molecular diagnostics, pharmaceuticalMolecular Diagnostics, Applied Testing, Pharma and academic research, and applied testing.Biological samples contain millions of molecules, but only a small portion of this material is typically of interest for specific medical or other applications. Sample technologies are used to collect biological materials and stabilize, extract and purify the molecule of interest. Assay technologies are then used to amplify and enrich this small amount of isolated material to make it readable and ready for interpretation. Sample and assay technologies operate in a highly synchronized manner.acids—biologicalacids-biological molecules such as DNA (deoxyribonucleic acid) and RNA (ribonucleic acid) that are essential for life as carriers of genetic information. which provided all the materials needed for simple, efficient and safe preparation of nucleic acids in bacteria, QIAGEN has expanded to become the global leader with a broad offering of sample and assaymolecular technologies, as well asincluding related automated systems.Net sales of $1.1 billion in 2010 came from revenues including sample and assay kits (86% of sales) and from automated systems and instruments (14% of sales). QIAGEN has achieved five-year compound annual growth rates of approximately 22% in net sales and 18% in net income through 2010, as reported under U.S. GAAP.researcherscustomers to obtain exciting insights with products that are considered standards for quality and reliability. More than one billion biological samples are estimated to already have been prepared or analyzed using QIAGEN technologies in laboratories around the world.thisits leadership position in sample and assay technologiesSample & Assay Technologies to build a strong global position in molecular diagnostics.Molecular Diagnostics, now our largest customer class, accounting for 49% of net sales in 2012. The commercial applications of molecular technologies isare transforming healthcare by providing highly specific genetic information to guide prevention and treatment strategies. Molecular diagnostics accounted for 47% of net sales in 2010. Our products also are increasingly used in applied testing—areas of molecular testing not related to human healthcare or research that include human identification (including forensics), food and water safety, and veterinary testing. now markets more than 500 core products that are distributed in manythousands of variations and combinations. WeInnovative products are continually introduce innovative productsbeing introduced to address new market opportunities or extend the life of existing product lines. In 2010, we launched 86 new products. Our objective is to expand our leadership position in all markets we serve.QIAGEN hasWe have made a number of strategic acquisitions to focusenhance our technology and product offerings. We have funded our growth through internally generated funds as well as through debt offerings and private and public sales of equity securities. QIAGEN shares are listed on the NASDAQ exchange under the ticker symbol “QGEN” and on the Frankfurt Prime Standard as “QIA.”world, including Europe, Japan, Australia, Americas and East Asia.world. Further information about QIAGEN can be found atwww.qiagen.com. By referring to our website, we do not incorporate the website or any portion of the website by reference into this Annual Report.• • • sample and assay technologies.Sample & Assay Technologies. We offer more than 500 core sample and assay kitsconsumable products (known as “kits”) as well as a number of instrument solutions to fully automate the processing of almost all QIAGEN products used for sample preparation and the subsequent analysis. The terms “sample”“Sample” and “assay” technologies“Assay” Technologies define two phases of the process of unlocking valuable molecular information from raw biological materials, oftenpredominantly in digital form:Open assay technologies includeLaboratory-Developed Test (LDT) assays enable the customer to target molecules of interest for detection using reagents that, when applied to a purified sample, allowin the detection of molecules so targeted by design of the customer. Closed assay technologieskit on platforms such as polymerase chain reaction (PCR). Commercially approved assays are preconfigured by QIAGEN to test for specific infectious disease targets such as genetic mutations, gene expression levels, influenza, human papillomavirus (HPV), tuberculosis (TB), hepatitis and herpes viruses, HIV or HPV.human immunodeficiency virus (HIV). 86% of sales in 2010.:business.net sales. To maximize customer convenience and reduce user error, these kits contain all necessary reagents and buffers, and a manual including protocols and relevant background information. Each kit is sufficient to support a number of applications, varying from one to more than 1,000 tests.polymerase chain reaction (PCR)PCR amplification; reverse transcription; DNA cleanup after PCR and sequencing; DNA cloning and protein purification. Our validated PCR assays enable detection of viral or bacterial pathogens and parasites in humans and animals, as well as pharmacogenomic testing and genotyping.the human papillomavirus (HPV),HPV, the primary cause of cervical cancer in women.A small part ofWe also have revenue comes from custom services, such as whole genome amplification services, DNA sequencing, and non-cGMP DNA production on a contract basis.Automated systemsAutomation platforms and instruments, 14% of sales in 2010.instruments:sample and assay technologiesSample & Assay Technologies into efficient solutions for low-, medium- or high-throughput scale laboratories.a broad range of laboratory needs. These systemsplatforms, which account for approximately 10-15% of net sales, enable customers to perform reliable and reproducible nucleic acid sample preparation, assay setup, target detection and other laboratory tasks. QIAGEN systems are highly flexible, but customers often use QIAGEN consumables for sample processing and molecular testing with our instruments.systemsplatforms for all phases of testing, from sample to result. Among them:QIAsymphony is an innovative, easy-to-use modular system offering, an integrated system that setshas started a new standards for molecular testingera of integrated workflow consolidation and incorporateslaboratory automation, covering all workflow steps from initial sample processing to detection.final result. QIAsymphony RGQ gives customers access to the broadesta broad menu of commercially available assays andwhile also allowsallowing them to run their own PCR-based laboratory-developed tests.Rotor-Gene Q, the world’s first rotary real-time PCR cycler system, was developed by Corbett,LDTs, which QIAGEN acquired and integrated into its operations in 2008. Real-time PCR reactions are assay technologies that make specific sequences of DNA and RNA in targets visible through amplification and quantifiable through real-time measurement. This system enhances QIAGEN’s options to offer sample and assay technology solutions spanning from sample to result, and is an important modular addition to the QIAsymphony system.PyroMarkis a high-resolution detection platform based upon the Pyrosequencing technology acquired by QIAGEN in 2008. Pyrosequencing allowsaccount for the real-time analysis and quantification of genetic mutations and DNA methylation patterns down to the single base pair level, allowing users to identify even previously unknown mutations or variations in targeted DNA regions. This technology also can be employed in multiplex analysis for genetic and pathogen detection. Pyrosequencing plays a pivotal role in epigenetic research and also can be of great value to diagnostic laboratories running personalized healthcare and profiling assays.QIAcube, a sample processing instrument incorporating novel and proprietary technologies, allows users to fully automate the use of almost all of our products originally designed for manual processing of samples. The QIAcube received the New Product Award (NPA) designationmore than half of the Association for Laboratory Automationvolume of tests performed in 2007.QIAxcel, designedmany molecular diagnostic laboratories. In 2012, the installed base of QIAsymphony systems increased to take the place of traditional slab-gel analysis, can replace tedious and time-consuming methods of nucleic acid separation in low- to high-throughput laboratories. QIAxcel is characterized by an unprecedented sensitivity and time to results for analysis of DNA fragments and RNA.ESE-Quant Tube Scanners are portable, battery-operated optical measurement devices based on technology developed by ESE GmbH, a privately held company that QIAGEN acquired in January 2010. These UV and fluorescence detection systems enable point of need testing in healthcare and applied testing markets. The ESE technology permits low-throughput molecular testing in physician practices, emergency rooms, remote field areas, and other settings where a laboratory infrastructure is not accessible and fast turnaround is required.CustomersQIAGENwe believed that sample and assay technologiesSample & Assay Technologies for nucleic acids would play an increasingly important role in cutting-edge biology—andbiology-and that major new commercial uses would develop for information extracted from DNA and RNA. WeSince 1986, we have been supplying customers since 1986 with innovative proprietary products for the analysis of nucleic acids.QIAGEN focuses on four principal customer classes fortechnologies:kits known as consumables and automated instrumentation platforms using those technologies, to four major customer classes:diagnostics—enabling hospitals, physiciansDiagnostics-healthcare providers supporting many aspects of patient care including prevention, profiling of diseases, personalized healthcare and other providers to save lives and fight disease. The commercial usepoint of sample and assayneed testinghuman healthcare has grown to provide approximately halffields such as forensics, veterinary diagnostics and food safety testing QIAGEN net sales.Pharma—supporting gene-based drug discovery and development by pharmaceutical and biotechnology companies includingdevelopmentsecrets of companion tests that can evolve into commercialized molecular diagnostic products.Academia—providing tools for life sciences research, including major academic institutions and governmental laboratories, such as the National Institutesmechanisms and pathways of Health (NIH)diseases, and in the U.S. and major research-based universities and institutes around the world.Applied testing—unlocking the potential of molecular information in testing fields not related to human healthcare, such as forensics, food and water testing, veterinary medicine, environmental testing and biosecurity.The majority of QIAGEN technologies, whether automated platformssome cases translating that research into drug targets or consumables, are used by more than one of these customer classes. QIAGEN focuses on meeting the needs of customers across these markets with any or all of the technologies in our product portfolio.polymerase chain reaction (PCR)PCR and other amplification technologies has made the prospect ofbrought nucleic acid-based diagnostics feasible.sequences—sequences or to characterize previously unknown DNA sequences related to human diseases. To prove whether a disease is present in a patient, the unique sequence of the target nucleic acid causing the disease must be known, and either the sequence in the sample must be amplified (target amplification) or the signal from the DNA must be amplified (signal amplification) to facilitate detection. Potential commercialCommercial applications for molecular diagnostics include—among others—infectiousare multiplying as researchers identify new biological markers for disease and develop novel technologies for detection in biobanks, HLA (human leukocyte antigen) typing for bone marrow and organ transplantation, and genetic testing for predisposition to cancers and other diseases.ofestimated by industry experts at approximately $4.5$5 billion in 2009,2013 is still a small part of the globalin vitro diagnostics market, but it is the fastest growing segment at a projected compound annual growth rate of approximately 10-15% from 2009 through 2014.10% or more. Market penetration is still low—only an estimated one in 10 hospitalslow in the United States currently conduct molecular diagnostics in their own laboratories,U.S., other developed countries and adoption is even lower in many other geographicemerging markets. GivenHowever, given the advantages of precise genetic information over traditional tests—and the transformative benefits of applications such as personalized healthcare—tests, QIAGEN expects the molecular diagnostics market to provide significant growth opportunities over the long term.molecular diagnostics marketMolecular Diagnostics customer class is built upon four strategies for fighting disease, and QIAGEN is targeting each of these fields with a range of dedicated products and tailored marketing:Prevention—using molecularPrevention-using advanced technologies for screening into screen non-symptomatic patients as a preventive strategy, such as testing women for the viral DNA of human papillomaviruses (HPV) as a preventive medicine strategyHPV to protect women from cervical cancer.cancer or screening patients for latent TB infection to guard against active TB disease.—screening-screening symptomatic patients to profile the precise type of disease, for example testing patients with flu-like symptoms to confirm or rule out dangerous strains such as the influenza type A (H1N1) swine flu.healthcare—determiningHealthcare-determining which patients are most likely to respond positively to particular therapies, such as a landmark QIAGEN testtests for mutationstesting the mutation status of thegenes such as KRAS, geneEGFR, BRAF and others that influence the effectiveness and safety profile of novel medicines for treatment of colorectal cancer.various cancers.need testing—enablingNeed-enabling on-site diagnosis in physician practices, emergency rooms, remote field areas, and other settings where a laboratory infrastructure is not accessible and fast turnaround is required.
QIAGEN offers
QIAGEN markets
QIAGEN's GeneGlobe online portal (www.geneglobe.com) offers scientists an industry-leading source of information with searchable data on 60,000 genomic technologies for disease pathways, including annotations and references, to guide research and to enable ordering from this broad portfolio of assays.
TheAcademia.
Applied Testing
Demand is growing in applied testing—our term for the use of molecular sample and assay technologies outside of human healthcare and research applications. Industry and government organizations use standardized sample preparation and assay solutions for human identification, food and water safety, and veterinary testing. The value of genetic “fingerprinting” has been shown in criminal investigations involving DNA analysis, public policy compliance for food safety and genetically modified organisms (GMOs) and the use of these technologies to prevent or reduce the spread of pathogens in commercial livestock. Molecular testing can be performed by well-trained researchers in fully equipped laboratories, and increasingly also by less-trained personnel provided with easy-to-use, reproducible and standardized methods for point-of-need testing. Our manual DNA and RNA purification methods and the automated solutions on QIAsymphony, QIAcube, EZ1 Advanced, BioRobot EZ1 and other products, as well as our amplification enzymes and quantitative assays, address the needs in these markets.
| (in thousands) | 2010 | 2009 | 2008 | |||||||||
Net Sales | ||||||||||||
Americas: | ||||||||||||
United States | $ | 472,682 | $ | 446,151 | $ | 418,556 | ||||||
Other Americas | 50,912 | 47,995 | 34,861 | |||||||||
Total Americas | 523,594 | 494,146 | 453,417 | |||||||||
Europe | 398,029 | 363,949 | 321,225 | |||||||||
Asia Pacific and Rest of World | 165,808 | 151,730 | 118,333 | |||||||||
Total | $ | 1,087,431 | $ | 1,009,825 | $ | 892,975 | ||||||
| (in thousands) | 2012 | 2011 | 2010 | ||||||||
| Net Sales | |||||||||||
| Americas: | |||||||||||
| United States | $ | 518,130 | $ | 466,502 | $ | 472,682 | |||||
| Other Americas | 42,921 | 55,137 | 50,912 | ||||||||
| Total Americas | 561,051 | 521,639 | 523,594 | ||||||||
| Europe | 459,321 | 444,441 | 398,029 | ||||||||
| Asia Pacific and Rest of World | 234,084 | 203,667 | 165,808 | ||||||||
| Total | $ | 1,254,456 | $ | 1,169,747 | $ | 1,087,431 | |||||
See Note 20 toand Taiwan, further expanding our consolidated financial statements includedpresence in “Item 18. Financial Statements” for additional information on operations by geographic region.
Asia.
QIAGEN believesInitiatives
Address high-growth markets (particularly molecular diagnostics)
Capitalize on industry-leading innovation
Execute on product pipeline
Expand geographic presence
Further improve operational efficiency
QIAGEN will continueDrive platform success. We develop innovative instruments that enable our customers to leverage our global leadership in sample and assays technologies to expand in molecular diagnostics and the life sciences. Our strategies for the future are guided by the QIAGEN vision of making improvements in life possible through the use of innovative sample and assay technologies in a growing number of applications.
Recent Developments
QIAGEN achieved a number of strategic milestones in the development of our business in 2010:
In January, QIAGEN acquiredESE GmbH, a German developer and manufacturer of portable, battery operated, “ultra-fast time to result,” multiplex UV and fluorescence optical measurement devices. ESE’s fluorescence detection systems for point of need testing in healthcare and applied testing (veterinary, food, forensics, environmental, biodefense) enable low-throughputefficiently perform molecular testing in practices, emergency rooms, remote field areas,a wide range of applications. Expanding the installed base of our instruments, particularly the QIAsymphony automation platform, also leads to growing sales of our consumable test kits.
In February, QIAGENexpand our presence in attractive markets around the world, especially high-growth emerging markets. We help developing countries bring state-of-the-art capabilities into their healthcare andCelera Corporation announced an agreement research infrastructures. We also develop molecular technologies to meet specific needs in medicine or other applications for QIAGEN to distribute a Celera molecular multiplex assay. The assay is the next-generation version of QIAGEN’s ResPlex II assay for detection of respiratory pathogens. Multiplex assays allow testing for multiple different pathogens in a single run.
In April, QIAGEN acquired rights to 70 molecular food safety tests developed by the Berlin-basedInstitute for Product Quality (ifp), a specialized laboratory center for food analysis, and further strengthened the applied testing business. The tests acquired from ifp are based on widely used real-time PCR technology and cover a broad range of molecular targets that include genetic, bacterial, viral and other contaminants of foodstuffs. The tests can be fully automated using instrumentsemerging markets such as QIAsymphony RGQ.China.
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In September, QIAGEN launched its highly flexible automated solutionQIAsymphony RGQ. This novel,Grow efficiently and effectively. We pursue sustained growth and improved profitability through operational improvements and a culture that encourages focus, accountability and entrepreneurial decision-making. Our R&D, regional marketing and sales teams are integrated system sets new standards for molecular testinginto the Molecular Diagnostics and incorporates all workflow steps from sampleLife Sciences business areas to detection. The QIAsymphony RGQ offers many features that create exceptional flexibility, such as continuous loading, random access, open channels for user-developed tests, the broadest menuconnect our innovation and commercial activities directly with growing markets.
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QIAGEN invests more in research and development—$126 million in 2010, or nearly 12% of sales—than most companies in our industry.
Sample & Assay Technologies. Our strategy for managing innovation focuses on addressing the most significant unmet medical and scientific needs. We target our resources to develop the most promising sampletechnologies for use by our customers in Molecular Diagnostics, Applied Testing, Pharma and assay technologies in molecular diagnostics, pharmaceutical R&D, academic research and applied technologies—Academia – and to meet the needs of healthcare professionals and scientists in key geographic markets.
Creating new systems for automation of workflows—workflows – platforms for laboratories, hospitals and other users of these novel molecular sample and assay technologies.
Expanding our broad portfolio of “content”— – in particular, novel assays to detect and characterize molecular structures and biomarkers for disease or genetic identification.
More than
QIAGEN islife science research into widespread use in healthcare and clinical research. We plan a phased market entry of this platform in 2013.
influenza. Development is set to beginother customer classes. U.S. regulatory submissions made in 2011 for assays involving the infectious diseases HIV-1, HBV and HCV. In October 2010, QIAGEN gained access to HIV-1 and HCV, among the most frequently performed molecular2012 include a companion diagnostic tests in the U.S., through an agreement with Abbott. In 2011, we expect to complete the U.S. submission in 2010 for a breakthrough KRASnew cancer drug targeting EGFR (epidermal growth factor receptor) and our pre-molecular assay for usecytomegalovirus infection (CMV) in selecting the most appropriate therapytransplant patients. In Applied Testing, QIAGEN continues to develop new content for colorectal cancer patients.human identification, food safety and veterinary diagnostics. We are also expanding our extensive portfolio of products for disease pathway research by Pharma and Academic customers. In addition, we are developing assays for specific applications in key markets such as China and Japan. The total combined addressable markets for QIAGEN’sour current assay development portfolio total more thanapproach $1 billion in potential annual sales.
importers in many markets.
To enhance the knowledge base
investigation.
We
methods through our innovative technologies and products, which offer a comprehensive solution for nucleic acid collection, pre-treatment, separation and purification needs and provide significant advantages in speed, reliability, convenience, reproducibility and ease of use.
intensify, but our leading position in the HPV market is supported by our marketing efforts and the data supporting our
digene HPV Test. We believe we have a competitive advantage driven by the fact that close to 90 million of these tests have been distributed worldwide as well as a multitude of clinical trials encompassing more than one million women. These clinical trial results, many of which have been published in peer-reviewed journals such as the New England Journal of Medicine, have validated that our HPV test products, used alone or in conjunction with the Pap test, demonstrate high clinical sensitivity and high negative predictive value for diagnosis of cervical disease and cancer. In addition to the industry-leading clinical performance of our assay, our automation systems offer other competitive benefits, for the high-volume HPV testing market, including performance and reliability, ease of use, standardization, cost, proprietary position and regulatory approvals. TheRegarding our HPV test products, we believe we have a competitive advantage as a multitude of clinical trials, encompassing close to one million women, have validated that our HPV test products, used alone or in conjunction with the Pap test, demonstrate high clinical sensitivity and high negative predictive value for diagnosis of cervical disease and cancer. In addition to the industry-leading clinical performance of our assay, considering the high-volume needs of the HPV testing market, other competitive factors relate to automation, including performance and reliability, ease of use, standardization, cost, proprietary position and regulatory approvals.
Applied Testing.
was not required. A device is substantially equivalent to a predicate device if it has the same intended use and technological characteristics as the predicate, or has the same intended use but different technological characteristics, where the information submitted to the FDA does not raise new questions of safety and effectiveness and demonstrates that the device is at least as safe and effective as the legally marketed device. Most 510(k)s do not require clinical data for clearance, but a minority will. The FDA is supposed to issue a decision letter within 90 days of receipt of the 510(k) if it has no additional questions or send a first action letter requesting additional information within 75 days. Requests for additional data, including clinical data, will increase the time necessary to review the notice. If the FDA does not agree that the new device is substantially equivalent to the predicate device, the new medical device is automatically classified as a Class III device for which a PMA will be required. However, the sponsor may petition the FDA to make a risk-based determination that the device does not pose the type of risk associated with Class III devices and down-classify the device to Class I or Class II.
QIAGEN’s
QIAGEN has
Our production capacity is increased through our manufacturing and research facilities in the United States. QIAGEN Sciences, Inc.LLC owns a 27-acre site in Germantown, Maryland. The 200,000285,000 square foot Germantown facility consists of several buildings in a campus-like arrangement and is intended to accommodate over 250500 employees. There is room for future expansion of up to 200,000300,000 square feet of facility space. We lease a facility in Gaithersburg, Maryland, comprising a total of 150,000 square feet and 40,000 square feet in Frederick, Maryland for manufacturing, warehousing, distribution and research operations.
| Item 4A. | Unresolved Staff Comments |
| Item 5. | Operating and Financial Review and Prospects |
Forward-looking and Cautionary Statements
This report contains forward-looking statements that are subject to risks and uncertainties. These statements can be identified by the use of forward-looking terminology, such as “believe,” “hope,” “plan,” “intend,” “seek,” “may,” “will,” “could,” “should,” “would,” “expect,” “anticipate,” “estimate,” “continue” or other similar words. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. We caution investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the following: risks associated with our expansion of operations, including the acquisition of new businesses; variability in our operating results from quarter to quarter; management of growth, international operations, and dependence on key personnel; intense competition; technological change; our ability to develop and protect proprietary products and technologies and to enter into and maintain collaborative commercial relationships; our future capital requirements; general economic conditions and capital market fluctuations; and uncertainties as to the extent of future government regulation of our business. As a result, our future success involves a high degree of risk. For further information, refer to the more specific risks and uncertainties discussed under the caption “Risk Factors” in Item 3 and throughoutof this Annual Report.
QIAGEN is
or a mutation of a gene.
QIAGEN markets
2011.
QIAGEN has
| • | In May 2012, we acquired AmniSure International LLC, including the AmniSure® assay for determining whether a pregnant woman is suffering rupture of fetal membranes (ROM), a widespread cause of premature delivery and neonatal complications. This product, which is approved in the U.S. and many other markets, is expected to be catalytic for our Point of Need portfolio. |
| • | In August 2011, we acquired Cellestis Ltd., an Australian company that created the proprietary “pre-molecular” QuantiFERON® technology. The early-warning QuantiFERON®-TB Gold test, which detects latent tuberculosis (TB) infection as a strategy for the prevention of active TB disease in vulnerable populations, has become an important growth driver in 2012. Also in 2012, we submitted the QuantiFERON®-CMV test to the FDA for use in diagnosing cytomegalovirus (CMV). |
In January 2010, we acquired ESE GmbH, now QIAGEN Lake Constance GmbH, a German developer and manufacturer of portable, battery-operated, “ultra-fast time to result” multiplex UV and fluorescence optical measurement devices. ESE’s fluorescence detection systems for point of need testing in healthcare and in applied testing enable low-throughput molecular testing in physician practices, emergency rooms, remote field areas, and other settings where a laboratory infrastructure is not accessible and fast turnaround is required.
In December 2009, we acquired SABiosciences Corporation, based in Frederick, Maryland. SABiosciences holds a leading position in the design and commercialization
In September 2009, we acquired DxS Ltd, a pioneer in development and marketing of companion diagnostics that enable physicians to predict patient responses in order to make cancer therapies more effective. Headquartered in Manchester, U.K., DxS brings QIAGEN a portfolio of molecular diagnostic assays and related intellectual property, as well as a deep pipeline of companion diagnostic partnerships in oncology with leading pharmaceutical companies. With the acquisition, we believe we can take a leading position in personalized healthcare and strengthen our overall strategic position in molecular diagnostics.
In August 2009, we acquired Explera s.r.l., a leading supplier in molecular diagnostics and personalized medicine in Italy.
In March 2009, we acquired a molecular diagnostics distribution business in China.
In October 2008, we acquired all assets of the Biosystems business from Biotage AB, a developer, manufacturer and distributor of products for genetic analysis and medicinal chemistry headquartered in Uppsala, Sweden. The transaction included purchase of the remaining 17.5% of the outstanding stock of Corbett Life Science Pty. Ltd. (Corbett).
In July 2008, we acquired 82.5% of Corbett, a developer, manufacturer and distributor of life sciences instrumentation headquartered in Sydney, Australia. Corbett is best known for developing the world’s first rotary real-time PCR cycler system, the Rotor-Gene™, used to detect real-time polymerase chain
|
In July 2008, we also acquired the minority interest of our Brazilian subsidiary, QIAGEN Brasil Biotecnologia Ltda.
In May 2008, we established QIAGEN Mexico via the acquisition of certain assets of our former life science distributor, Quimica Valaner.
In February 2008, we acquired a business unit from Diagnostic Technology Pty. Ltd., located in Belrose, Australia, which relates to the distribution of products in Australia, New Zealand, Singapore and Malaysia.
Our financial results include the contributions of our recent acquisitions from the date of acquisition, as well as the costs related to the acquisitions and integrations including costs related toof the acquired companies, such as the relocation and closure of certain facilities. Our results also reflect the benefits of our previous restructuring efforts, which have contributed to improved profitability as we continue to manage our operating costs.
During 2010, weWe determined that QIAGEN operateswe operate as one business segment in accordance with ASC Topic 280, Segment Reporting. Our decision-making process has evolved as a result of our continued growth, restructuring and streamlining of the organization, and revised internal budgeting and reporting approaches.Reporting. Our chief operating decision maker (CODM) has now transitioned to makingmakes decisions on business operations and resource allocation based on evaluations of the QIAGEN Group as a whole. With revenues derived from our entire product and service offerings, it is not practicable to provide a detail of revenues for each group of similar products and services or for each customer group, as full discrete financial information is not available. Accordingly,Considering the acquisitions made during 2012, we determined that we still operate as one reportingbusiness segment. However, we do provide certain revenue information by customer class to allow better insight into our operations. This information is estimated using certain assumptions to allocate revenue among the customer classes.
On March 30, 2010, the U.S. President signed the Health Care and Education Reconciliation Act of 2010, a reconciliation bill that amends the Patient Protection and Affordable Care Act that was signed by the President on March 23, 2010 (collectively, the “Acts”). As a result of the Acts, a 2.3% excise tax will be imposed on the sale, including leases, of any taxable medical devices by the manufacturer, producer or importer of such devices. A “taxable medical device” is any FDA regulated device intended for human use. The excise tax will apply to U.S. sales of all taxable medical devices occurring after
Year Ended December 31, 2010, Compared to 2009
Net Sales
In 2010,represent 13% of net sales, increased 8% to $1.1 billion compared to $1.0 billion7% in 2009. The increase in net2012. Instrument sales includes organic growth (4%) and salesbenefited during 2012 from demand for a broad range of QIAGEN instruments. We exceeded our recently acquired businesses (4%). Our 2010 and 2009 net sales include the results of operations2012 goal for as well as the effectsmore than 200 new placements of the acquisitionsQIAsymphony automation platform, reaching an installed base of DxS Ltd, acquired in September 2009, and SABiosciences, acquired in December 2009.
The increase in sales was the result of growth for our consumable products, which represented approximately 86%more than 750 platforms. Approximately 70% of total salesQIAsymphony placements as of the end of 2012 have been with Molecular Diagnostics customers, primarily through reagent rental agreements where revenues are recognized over a multiyear period. Demand also has been strong among Applied Testing customers.
revenues from nonmonetary exchanges; and for instrumentation products, which represented approximately 14% of total sales. Sales of sample and assay technologies,our top emerging markets which include consumablesIndia and instrumentation, experiencedKorea. Results in the Europe / Middle East / Africa region (+2% growth, rates33% of 8%sales) advanced on higher sales in northern European countries and 7%, respectively,growth in 2010 compared to 2009.
The net sales growth was spread across all customer classes. The Americas (+8% growth, 47% of sales) rose on higher contributions from Molecular Diagnostics and Applied Testing, more than offsetting lower HPV sales in the region.
We expect further growth building upon the introduction of new consumable products
A significant portion2012. Funding
The continuing uncertainties of the current global economy represent a risk for us, and while we expect continued growth in our consumables and instrumentation businesses, future growth could be adversely affected and may be lower than our historical growth.
2013.
An increase in milestone payments from companion diagnostic co-development arrangements in 2011 negatively affected the 2011 margin since the gross margin on these services is significantly below the margin on product sales. Gross margin in 2011 also was negatively impacted by costs related to the relocation of production facilities, including moving into newly constructed production space in Hilden, Germany; costs incurred following the Japanese earthquake and other natural disasters; and costs related to the restructuring announced late in 2011.
In addition, during 2010,
business combinations.
growth over the long term.
we improve efficiency in general and administrative operations.
2012, amortization expense on acquisition-related intangibles within operating expense increased to $36.1 million, compared to $26.7 million in 2011. The increase in expense is the result of an increase in amortized intangibles acquired in our recent business combinations. We expect acquisition-related intangible amortization to continue to increase as a result of our acquisitions.
in 2011.
Our provision for income taxes is based upon the estimated annual2011 and 2010, our effective tax rates.rates were 1% and 17%, respectively. Our operating subsidiaries are exposed to effective tax rates ranging from zero up to more than 40%. Fluctuations in the distribution of pre-tax income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the consolidated financial statements. Our operating subsidiaries are exposed to effective tax rates ranging from zero up to approximately 42%.
In 2010 and 2009, our effective tax rates were 17% and 20%, respectively. The effective rate for 2010 is2011 was impacted by restructuring charges, including impairments, that lowered the mix of earnings in our higher taxing jurisdictions. In addition, we realized a higher percentage of pre-tax book income earned in the U.S. and partially offset by the substantial impact of discrete events of (8.4%) for 2010. In 2010, as a result of internal restructuring related to the foreign subsidiariesfull-year benefit of the former Digene Corporation, a one-time deduction for bad debt and worthless stock was realized which resultedtax planning implemented in a $12.0 million tax benefit.
Year Ended December 31, 2009, Compared to 2008
Net Sales
In 2009, net sales increased 13% to $1.0 billion from $893.0 million in 2008. The increase in total sales included organic growth (13%) and sales from our recently acquired businesses (4%), partially offset by the negative impact of foreign currency exchange rates (3%) and the third-quarter divestiture of our subsidiary in Austria (1%). Our 2009 net sales included the results of operations for the full year of Corbett, which was acquired in July 2008, as well as the acquisitions of DxS Ltd, acquired in September 2009, and SABiosciences, acquired in December 2009.
Net sales are attributed to countries based on the location of the subsidiary recording the sale. In 2009, net sales in Asia increased by 39%, primarily driven by China, Japan and Singapore; net sales in Germany increased by 24%; net sales in the Americas increased by 9%; and net sales in all other countries increased by 5%, which includes the results of Corbett and DxS. The increase in sales in each of these regions was the result of an increase in sales of our sample and assay technologies, which represented approximately 86% of total sales, and instrumentation products, which represented approximately 14% of total sales. Sales of sample and assay technologies, which include consumables and instrumentation, experienced growth rates of 10% and 37%, respectively, in 2009 compared to 2008.
A significant portion of our revenues is denominated in Euros and currencies other than the United States dollar. Changes in exchange rates can affect the growth rate of net sales, potentially to a significant degree. Net sales were negatively impacted by $28.8 million of currency exchange effects for the year ended December 31, 2009, compared to 2008.
We continually introduce new products to extend the life of our existing product lines as well as to address new market opportunities. In 2009, we launched 79 new products in the area of sample and assay technologies including the PAXgene Blood miRNA kit for use in cancer, biomarker and miRNA research and the QIAamp Circulating Nucleic Acid kit for sample preparation in prenatal or other circulating nucleic acid research. In addition, QIAGEN launched a number of assay technologies including two multiplexed, PCR-based CE-marked digene HPV Genotyping Tests, a next-generation CE-marked mutation profiling KRAS test,2010, as well as a BRAF test for use in cancer treatments and a test for epigenetic methylation analysis based on pyrosequencing technology.
Gross Profit
Gross profit was $667.1 million, or 66% of net sales, in the year ended December 31, 2009, as compared to $599.7 million, or 67% of net sales, in 2008. The dollar increase in 2009 compared to 2008 was attributable to the increase in net sales. Our consumable sample and assay products have a higher gross margin than our instrumentation products, and fluctuations in the sales levels of these products can result in fluctuations in our gross margin between periods.
Amortization expense related to developed technology and patent and license rights acquired in a business combination is included in cost of sales. The amortization expense on acquisition-related intangibles within cost of sales increased to $53.6 million in 2009partial benefit recognized from $48.7 million in 2008. The increase in amortization expense was the result of an increase in intangibles acquired in our recent business combinations.
In addition, during 2009 a total of $7.4 million was expensed to acquisition-related cost of sales for the write-off of inventories made obsolete following an acquisition as well as to the write-up of acquired inventory to fair market value as a result of business combinations. In 2008, this expense was $1.4 million. In accordance with purchase accounting rules, acquired inventory was written up to fair market value and subsequently expensed as the inventory was sold. Additionally, in 2009, we recognized a charge of $2.5 million to cost of sales related to the impairment of developed technology, which was triggered by the acquisition of DxS and the discontinuation of certain products.
Research and Development
Research and development expenses increased by 11% to $107.9 million (11% of net sales) in 2009, compared to $97.3 million (11% of net sales) in 2008. Our business combinations, along with the acquisition of new technologies, have resulted in an increase in research and development costs. As we continue to discover, develop and acquire new products and technologies, we expect to incur additional expense related to facilities, licenses and employees engaged in our research and development efforts. Additionally, our research and development costs are expected to increase as a result of seeking regulatory approvals, including U.S. FDA Pre-Market Approval (PMA), U.S. FDA 510(k) and EU CE approval of certain assays or instruments. The increase in research and development expense was partially offset by $2.8 million of currency exchange impact in 2009.
Sales and Marketing
Sales and marketing expenses increased by 8% to $244.8 million (24% of net sales) in 2009 from $227.4 million (25% of net sales) in 2008. Sales and marketing expenses are primarily associated with personnel, commissions, advertising, trade shows, publications, freight and logistics expenses and other promotional
expenses. The increase in sales and marketing expenses in 2009 as compared to 2008, was primarily due to our 2009 acquisitions, as well as the acquisition of Corbett which occurred in July of 2008, and thus is only included for part of 2008. In addition, the sales and marketing expenses included the costs of maintaining separate sales organizations addressing customers in industrial and academic research, applied testing and molecular diagnostics. The increase in sales and marketing expense was partially offset by $6.9 million of currency exchange impact in 2009.
General and Administrative, Integration and Other
General and administrative, business integration, restructuring and related costs increased by 2% to $115.9 million (11% of net sales) in 2009 from $113.9 million (13% of net sales) in 2008. The increase in these expenses in 2009 was partly the result of general and administrative expenses related to newly acquired businesses. Also, during 2009 an expense of $1.6 million was recognized in connection with our acquisition of DxS Ltd in September 2009. We have continued to incur integration costs for businesses acquired, totaling approximately $21.5 million in 2009, compared to $30.9 million in 2008. Included in these costs are $7.5 million in 2009 and $8.1 million in 2008 for legal costs related to litigation assumed in connection with the acquisitions of Digene and Corbett. In connection with the integration of the acquired companies, we aim to improve efficiency in general and administrative operations. Additionally, general and administrative, integration and related costs decreased by $2.1 million due to currency exchange impact in 2009, compared to 2008.
In October 2009, we started the closure of our facilities and relocation of our activities in Brisbane and Sydney to other locations of the Company, primarily to QIAGEN Instruments AG in Switzerland. These restructurings follow the acquisition of Corbett in 2008 and consolidate our instrument manufacturing activities. The closure and relocation were completed in 2010 at a total pre-tax cost of approximately $4.2 million, of which $2.3 million was incurred in 2009.
Acquisition-Related Intangible Amortization
Amortization expense related to developed technology and patent and license rights acquired in a business combination is included in cost of sales. Amortization of trademarks, customer base and noncompete agreements acquired in a business combination is recorded in operating expense under the caption “acquisition-related intangible amortization.” Amortization expenses of intangible assets not acquired in a business combination are recorded within either cost of sales, research and development or sales and marketing line items based on the use of the asset.
During 2009, the amortization expense on acquisition-related intangibles within operating expense increased to $18.2 million, compared to $14.4 million in 2008. The increase in expense was the result of an increase in amortized intangibles acquired in our recent business combinations.
Purchased In-Process Research and Development
Purchased in-process research and development costs represent the value assigned to research and development projects which were commenced but not yet completed at the date of acquisition, whose technological feasibility has not been established and which have no alternative future use in research and development activities or otherwise. In connection with 2009 acquisitions, we have capitalized $3.1 million of purchased in-process research and development as an indefinite-lived intangible asset. Prior to January 1, 2009, in-process research and development was expensed. In connection with our 2008 acquisition of Corbett, we recorded charges of $985,000 for purchased in-process research and development. Beginning in 2009, purchased in-process research and development costs are capitalized and no longer expensed. For further information, see Note 4 of the Notes to Consolidated Financial Statements included in Item 18.
Other Income (Expense)
Other expense was $7.9 million in 2009, compared to other expense of $26.4 million in 2008. This decrease in expense was mainly due to lower interest expense, a gain from the sale of a cost-method investment and the impairment of a cost-method investment. During the fourth quarter of 2009, we sold our investment in a privately held company and realized a gain of $10.5 million. During the third quarter of 2008, in connection with the acquisition of Corbett, we recorded a $4.0 million impairment of a cost-method investment based on an assessment of the recoverability of the investment amount. Following the acquisition of Corbett, we anticipated a change in our purchasing pattern of the investee’s products, which was expected to negatively impact the forecasted financial condition of the investee. Accordingly, we believed the known impact to the investee’s financial condition, absent other evidence indicating a realizable value of the investment, indicated that the recoverability of the asset through future cash flows was not considered likely enough to support the carrying value.
For the year ended December 31, 2009, interest income decreased to $3.5 million from $9.5 million in 2008. The decrease in interest income was primarily due to a decline in interest rates.
Interest expense decreased to $29.6 million in 2009, compared to $37.5 million in 2008. Interest costs primarily relate to our long-term debt discussed in Note 15 in the accompanying notes to the consolidated financial statements. The decrease in interest expense was primarily due to a decrease in the interest expense on our term loan as a result of a decreasing LIBOR rate, as well as a $25.0 million decreased debt balance.
Provision for Income Taxes
Our provision for income taxes is based upon the estimated annual effective tax rates. Fluctuations in the distribution of pre-tax income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the consolidated financial statements. Our operating subsidiaries are exposed to effective tax rates ranging from zero up to approximately 42%.
In 2009 and 2008, our effective tax rates were 20% and 25%, respectively. In 2009, the mix of earnings was more heavily weighted in the lower tax rate jurisdictions versus higher tax rate jurisdictions in 2008. Also, a number of discrete events during 2009 resulted in favorable tax benefits being recognized in the income statement. These discrete events include but are not limited to post-merger internal restructuring initiated to better align our businesses which led to favorable tax benefits; sale of our Austrian business and a cost-method investment on almost an entirely tax-free basis; tax planning and reductionswhere implementation began late in certain purchase-accounting-related deferred tax liabilities due to tax rate changes and step-up in tax basis. Certain of these items are non-recurring in nature and will not have a future tax rate impact.
2011.
such derivative instruments is to minimize the risks and/or costs associated with global financial and operating activities. We do not utilize derivative or other financial instruments for trading or other speculative purposes. All derivatives are recognized as either assets or liabilities in the balance sheet and are measured at fair value with any change in fair value recognized in earnings in the period of change, unless the derivative qualifies as an effective hedge that offsets certain exposures. In determining fair value, we consider both the counterparty credit risk and our own creditworthiness. To determine our own credit risk we estimate our own credit rating by benchmarking the price of our outstanding debt to publicly-availablepublicly available comparable data from rated companies. Using the estimated rating, we quantify our credit risk by reference to publicly traded debt with a corresponding rating.
invested in short-term investments, $79.7$102.0 million of in cash paid for purchases of property and equipment, primarily in our ongoing construction projects in Germany and the U.S., as well as cash$26.1 million paid for acquisitions and intangible assets. During 2010, cashCash paid for acquisitions, net of cash acquired, totaled $37.0of $132.0 million was used primarily in the acquisitions of AmniSure and includedIntelligent Biosystems and includes $1.1 million of cash paid for acquisitions made in 2010 as well as milestone payments from previous acquisitions. In 2010, cash paid for intangible assets totaled $44.2 million, including amounts in connection with our next generation HPV platform, QIAensemble, and related products.acquisition milestone achievements. As of December 31, 2012, we also had made an investments of
2012
.We have credit lines totaling $160.8 million at variable interest rates of which insignificant amounts were utilized as of December 31, 2010.2012 had repurchased 1.9 million common shares at a total price of approximately $35.7 million. Other cash payments of $6.0 million were related to milestone payments from previous acquisitions.
In July 2007, we signed a Syndicated Multi-Currency Term Loan and Revolving Credit Facilities Agreement with Deutsche Bank AG, Deutsche Bank Luxembourg S.A., and the lenders named in the syndication agreement. The lenders made available to us an aggregate amount of $750 million in the form of (1) a $500.0 million term loan, (2) a $100.0 million bridge loan, and (3) a $150.0 million revolving credit facility. Under the agreement, the $500.0 million term loan will mature in July 2012 with an amortization schedule commenced in July 2009. In July 2010 and July 2009, $50.0 million and $25.0 million were repaid, respectively. The $150.0 million revolving credit facility also will expire in July 2012. The $100.0 million bridge loan was utilized and repaid within the third quarter of 2007. We used the proceeds of the term loan and the bridge loan to pay the cash component of the Digene acquisition consideration and the fees and expenses of the Digene offer and the merger. The revolving credit facility is available for general corporate purposes. The interest due on the $500.0 million term loan and the $150.0 million currently undrawn revolving credit facility is tied to the LIBOR benchmark and therefore variable. A $100.0 million portion of the $500.0 million term loan has been swapped into a fixed interest rate.
Contractual obligations (in millions) | Payments Due by Period | |||||||||||||||||||||||||||
| Total | 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | ||||||||||||||||||||||
Long-term debt | $ | 873.0 | $ | 75.8 | $ | 796.7 | $ | 0.5 | $ | — | $ | — | $ | — | ||||||||||||||
Capital lease obligations | 26.9 | 3.6 | 3.9 | 4.1 | 4.3 | 4.6 | 6.4 | |||||||||||||||||||||
Operating leases | 60.5 | 14.0 | 12.1 | 9.3 | 7.9 | 6.2 | 11.0 | |||||||||||||||||||||
Purchase obligations | 101.4 | 54.8 | 17.0 | 15.1 | 13.9 | 0.4 | 0.2 | |||||||||||||||||||||
License and royalty payments | 10.9 | 1.1 | 1.2 | 1.4 | 1.4 | 1.4 | 4.4 | |||||||||||||||||||||
Total contractual cash obligations | $ | 1,072.7 | $ | 149.3 | $ | 830.9 | $ | 30.4 | $ | 27.5 | $ | 12.6 | $ | 22.0 | ||||||||||||||
Included in the purchase obligations of $101.4 million is approximately $45.0 million in purchase commitments through 2014 related to our next-generation HPV platform as well as commitments for development agreements.
Contractual obligations (in thousands) | Payments Due by Period | ||||||||||||||||||||||||||
| Total | 2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | |||||||||||||||||||||
| Long-term debt | $ | 1,166,591 | $ | 29,179 | $ | 28,653 | $ | 28,932 | $ | 28,312 | $ | 28,340 | $ | 1,023,175 | |||||||||||||
| Capital lease obligations | 22,846 | 5,396 | 5,304 | 5,290 | 3,998 | 1,429 | 1,429 | ||||||||||||||||||||
| Operating leases | 54,454 | 16,309 | 11,389 | 9,834 | 5,879 | 3,234 | 7,809 | ||||||||||||||||||||
| Purchase obligations | 60,369 | 54,754 | 4,124 | 1,339 | 152 | — | — | ||||||||||||||||||||
| License and royalty payments | 21,261 | 9,224 | 3,762 | 1,773 | 1,798 | 1,799 | 2,905 | ||||||||||||||||||||
| Total contractual cash obligations | $ | 1,325,521 | $ | 114,862 | $ | 53,232 | $ | 47,168 | $ | 40,139 | $ | 34,802 | $ | 1,035,318 | |||||||||||||
The utilization of NOLs is not assured and is dependent on generating sufficient taxable income in the future. Although management believes it is more likely than not that we will generate sufficient taxable income to utilize substantially all NOL carryforwards, evaluating the NOLs related to our newer subsidiaries requires us to make estimates that we believe are reasonable, but may also be highly uncertain given that we do not have direct experience with suchthese subsidiaries or their products. Thus the estimates may be subject to significant changes from period to period as we gain that experience. To the extent that our estimates of future taxable income are insufficient to utilize all available NOLs, a valuation allowance will be recorded in the provision for income taxes in the period the determination is made, and the deferred tax assets will be reduced by this amount, which could be material. In the event that actual circumstances differ from management’s estimates, or to the extent that these estimates are adjusted in the future, any changes to the valuation allowance could materially impact our financial position and results of operations.
event that our estimates of projected future cash flows were too high by 10%, there would still be no impact on the reported value of goodwillgoodwill. We concluded that no impairment existed at October 1,
2012
.We
| Item 6. | Directors, Senior Management and Employees |
Name | Age | Position | ||||
Peer M. Schatz | 47 | Managing Director, Chief Executive Officer | ||||
Roland Sackers | 44 | Managing Director, Chief Financial Officer | ||||
Dr. Joachim Schorr(1) | 52 | Managing Director, Senior Vice President, Research and Development | ||||
Bernd Uder(2) | 55 | Managing Director, Senior Vice President, Global Sales and Service Solutions | ||||
Supervisory Directors:
| (1) | Dr. Joachim Schorr was a member of our Managing Board until April 30, 2012. |
| (2) | Bernd Uder was a member of our Managing Board until December 31, 2012. |
Name | Age | Position | ||||
Prof. Dr. Detlev H. Riesner | 71 | Chairman of the Supervisory Board, Supervisory Director and Chairman of the Selection and Appointment Committee | ||||
Dr. Werner Brandt | 59 | Supervisory Director and Chairman of the Audit Committee | ||||
Dr. Metin Colpan | 57 | Supervisory Director | ||||
Erik Hornnaess | 75 | Deputy Chairman of the Supervisory Board, Supervisory Director, Chairman of the Compensation Committee, Member of the Audit Committee and Member of the Selection and Appointment Committee | ||||
Prof. Dr. Manfred Karobath | 71 | Supervisory Director and Member of the Compensation Committee | ||||
Heino von Prondzynski | 63 | Supervisory Director | ||||
| Elizabeth E. Tallett | 63 | Supervisory Director and Member of the Audit Committee and Member of the Compensation Committee | ||||
Compensation Committee. These equity grants are predominantly made in the form of Restricted Stock Units (RSUs) with a staggered vesting period typically over three (40%), five (50%) and 10 years (10%) and stock options, which have a staggered vesting period typically over three years.
stock options or other equity-based compensation and pension plans.that were awarded based on individual performance. Stock options granted to the Managing Board members must have an exercise price that is higher than the market price at the time of grant. Restricted Share Units granted to the Managing Board members, as is the case with all grants to employees, vest over a 10-year period. Some of these grants contain vesting hurdles related to the achievement of specific operational and financial goals that are not disclosed due to confidential reasons. The variable part of the compensation islong-term vesting periods are designed to strengthen the Managing Board members’members' commitment to QIAGEN and achieving its objectives.
Year ended December 31, 2010 | Annual Compensation | |||||||||||||||
Name | Fixed Salary | Variable Cash Bonus | Other (1) | Total | ||||||||||||
Managing Board: | ||||||||||||||||
Peer M. Schatz | $ | 1,219,000 | $ | 502,000 | $ | 1,000 | $ | 1,722,000 | ||||||||
Roland Sackers | $ | 522,000 | $ | 179,000 | $ | 43,000 | $ | 744,000 | ||||||||
Dr. Joachim Schorr | $ | 341,000 | $ | 124,000 | $ | 23,000 | $ | 488,000 | ||||||||
Bernd Uder | $ | 345,000 | $ | 134,000 | $ | 14,000 | $ | 493,000 | ||||||||
| Year ended December 31, 2012 | Annual Compensation | |||||||||||||
| Name | Fixed Salary | Variable Cash Bonus | Other (3) | Total | ||||||||||
| Managing Board: | ||||||||||||||
| Peer M. Schatz | $ | 1,226,000 | 168,000 | 5,000 | $ | 1,399,000 | ||||||||
| Roland Sackers | $ | 540,000 | 60,000 | 34,000 | $ | 634,000 | ||||||||
Dr. Joachim Schorr (1) | $ | 113,000 | — | 635,000 | $ | 748,000 | ||||||||
Bernd Uder (2) | $ | 344,000 | 85,000 | 20,000 | $ | 449,000 | ||||||||
| (1) | Dr. Joachim Schorr was a member of our Managing Board until April 30, 2012. |
| (2) | Bernd Uder was a member of our Managing Board until December 31, 2012. |
| (3) | Amounts include, among others, separation payments, inventor bonus and relocation costs. We also occasionally reimburse our Managing |
Year ended December 31, 2010 | Long-Term Compensation | |||||||||||
Name | Defined Contribution Benefit Plan | Stock Options | Restricted Stock Units | |||||||||
Managing Board: | ||||||||||||
Peer M. Schatz | $ | 86,000 | 120,903 | 339,470 | ||||||||
Roland Sackers | $ | 89,000 | 39,564 | 106,179 | ||||||||
Dr. Joachim Schorr | $ | 33,000 | 18,665 | 50,091 | ||||||||
Bernd Uder | $ | 54,000 | 8,992 | 54,296 | ||||||||
| Year ended December 31, 2012 | Long-Term Compensation | ||||||||||
| Name | Defined Contribution Benefit Plan | Stock Options | Restricted Stock Units | Performance Stock Units | |||||||
| Managing Board: | |||||||||||
| Peer M. Schatz | $ | 84,000 | 134,109 | 465,181 | 50,540 | ||||||
| Roland Sackers | $ | 86,000 | 44,945 | 155,901 | 17,213 | ||||||
Dr. Joachim Schorr (1) | $ | 10,000 | — | — | — | ||||||
Bernd Uder (2) | $ | 52,000 | 19,549 | 45,207 | 66,384 | ||||||
| (1) | Dr. Joachim Schorr was a member of our Managing Board until April 30, 2012 |
| (2) | Bernd Under was a member of our Managing Board until December 31, 2012. |
| € | 30,000 | ||
| ||||
| € | 20,000 | ||
| € | 5,000 | ||
| € | 15,000 | ||
| € | 10,000 | ||
| € | 7,500 | ||
| € | 5,000 | ||
Name | Fixed Remuneration | Chairman/ Vice- Chairman Committee | Committee Membership | Meeting Attendance | Subcommittee Meeting Attendance | Variable Cash Remuneration | Total | |||||||||||||||||||||
Supervisory Board: | ||||||||||||||||||||||||||||
Prof. Dr. Detlev H. Riesner | $ | 40,000 | $ | 26,500 | — | $ | 8,000 | $ | 2,500 | $ | 6,500 | $ | 83,500 | |||||||||||||||
Dr. Werner Brandt | $ | 40,000 | $ | 20,000 | — | $ | 8,000 | — | $ | 6,500 | $ | 74,500 | ||||||||||||||||
Dr. Metin Colpan | $ | 40,000 | — | — | $ | 8,000 | $ | 2,500 | $ | 6,500 | $ | 57,000 | ||||||||||||||||
Erik Hornnaess | $ | 40,000 | $ | 20,000 | $ | 10,000 | $ | 6,500 | — | $ | 6,500 | $ | 83,000 | |||||||||||||||
Prof. Dr. Manfred Karobath | $ | 40,000 | — | $ | 6,500 | $ | 6,500 | $ | 2,500 | $ | 6,500 | $ | 62,000 | |||||||||||||||
Heino von Prondzynski | $ | 40,000 | — | $ | 10,000 | $ | 6,500 | $ | 2,500 | $ | 6,500 | $ | 65,500 | |||||||||||||||
BoardBoard.
| Name | Fixed Remuneration | Chairman/ Vice- Chairman Committee | Committee Membership | Meeting Attendance | Subcommittee Meeting Attendance | Variable Cash Remuneration | Total | ||||||||||||||||
| Supervisory Board: | |||||||||||||||||||||||
| Prof. Dr. Detlev H. Riesner | $ | 38,500 | 25,750 | — | 6,500 | 3,750 | 6,500 | $ | 81,000 | ||||||||||||||
| Dr. Werner Brandt | $ | 38,500 | 19,250 | — | 6,500 | — | 6,500 | $ | 70,750 | ||||||||||||||
| Dr. Metin Colpan | $ | 38,500 | — | — | 6,500 | 3,750 | 6,500 | $ | 55,250 | ||||||||||||||
| Erik Hornnaess | $ | 38,500 | 19,250 | 9,500 | 6,500 | — | 6,500 | $ | 80,250 | ||||||||||||||
| Prof. Dr. Manfred Karobath | $ | 38,500 | — | 6,500 | 6,500 | 2,500 | 6,500 | $ | 60,500 | ||||||||||||||
| Heino von Prondzynski | $ | 38,500 | — | — | 5,000 | 2,500 | 6,500 | $ | 52,500 | ||||||||||||||
| Elizabeth E. Tallett | $ | 38,500 | — | 16,000 | 5,000 | — | 6,500 | $ | 66,000 | ||||||||||||||
Year ended December 31, 2010 | Grants | |||||||
Name | Stock Options | Restricted Stock Units | ||||||
Supervisory Board: | ||||||||
Prof. Dr. Detlev H. Riesner | 1,649 | 4,424 | ||||||
Dr. Werner Brandt | 1,649 | 4,424 | ||||||
Dr. Metin Colpan | 1,649 | 4,424 | ||||||
Erik Hornnaess | 1,649 | 4,424 | ||||||
Prof. Dr. Manfred Karobath | 1,649 | 4,424 | ||||||
Heino von Prondzynski | 1,649 | 4,424 | ||||||
| Year ended December 31, 2012 | Grants | ||||
| Name | Stock Options | Restricted Stock Units | |||
| Supervisory Board: | |||||
| Prof. Dr. Detlev H. Riesner | 1,563 | 10,000 | |||
| Dr. Werner Brandt | 1,563 | 10,000 | |||
| Dr. Metin Colpan | 1,563 | 10,000 | |||
| Erik Hornnaess | 1,563 | 10,000 | |||
| Prof. Dr. Manfred Karobath | 1,563 | 10,000 | |||
| Heino von Prondzynski | 1,563 | 10,000 | |||
| Elizabeth E. Tallett | 1,563 | 10,000 | |||
Name | Total Vested Options | Total Unvested Options | Expiration Dates | Exercise Prices | Total Unvested Stock Awards | |||||||||||||||
Peer M. Schatz | 2,424,009 | 236,955 | 3/2011 to 2/2020 | $ | 4.590 to $22.430 | 1,182,900 | ||||||||||||||
Roland Sackers | 62,425 | 77,521 | 3/2011 to 2/2020 | $ | 16.340 to $22.430 | 377,885 | ||||||||||||||
Dr. Joachim Schorr | 109,091 | 36,731 | 10/2011 to 2/2020 | $ | 12.546 to $22.430 | 180,054 | ||||||||||||||
Bernd Uder | 53,474 | 26,176 | 3/2011 to 2/2020 | $ | 16.340 to $22.430 | 179,658 | ||||||||||||||
Prof. Dr. Detlev H. Riesner | 82,180 | 3,404 | 3/2011 to 2/2020 | $ | 6.018 to $22.430 | 16,508 | ||||||||||||||
Dr. Werner Brandt | 1,571 | 3,404 | 4/2018 to 2/2020 | $ | 16.340 to $22.430 | 13,276 | ||||||||||||||
Dr. Metin Colpan | 775,663 | 3,404 | 3/2011 to 2/2020 | $ | 6.018 to $22.430 | 16,508 | ||||||||||||||
Erik Hornnaess | 91,513 | 3,404 | 3/2011 to 2/2020 | $ | 6.018 to $22.430 | 16,508 | ||||||||||||||
Prof. Dr. Manfred Karobath | 85,513 | 3,404 | 3/2011 to 2/2020 | $ | 6.018 to $22.430 | 16,508 | ||||||||||||||
Heino von Prondzynski | 1,571 | 3,404 | 4/2018 to 2/2020 | $ | 16.340 to $22.430 | 13,276 | ||||||||||||||
27, 2013:
| Name | Total Vested Options | Total Unvested Options | Expiration Dates | Exercise Prices | Total Unvested Restricted and Performance Stock Units | |||||||
| Peer M. Schatz | 1,975,214 | 249,512 | 4/1/2013 to 2/28/2022 | $6.02 to $22.43 | 1,666,950 | |||||||
| Roland Sackers | 99,363 | 83,343 | 2/28/2018 to 2/28/2022 | $15.59 to $22.43 | 547,408 | |||||||
| Bernd Uder | 62,202 | 33,649 | 2/28/2017 to 2/28/2022 | $15.59 to $22.43 | 257,336 | |||||||
| Prof. Dr. Detlev H. Riesner | 46,818 | 3,017 | 4/1/2014 to 2/28/2022 | $11.985 to $22.43 | 24,945 | |||||||
| Dr. Werner Brandt | 4,876 | 3,017 | 4/29/2018 to 2/28/2022 | $15.59 to $22.43 | 24,407 | |||||||
| Dr. Metin Colpan | 346,818 | 3,017 | 4/1/2013 to 2/28/2022 | $6.02 to $22.43 | 24,945 | |||||||
| Erik Hornnaess | 46,818 | 3,017 | 4/1/2014 to 2/28/2022 | $11.985 to $22.43 | 24,945 | |||||||
| Prof. Dr. Manfred Karobath | 46,818 | 3,017 | 4/1/2014 to 2/28/2022 | $11.985 to $22.43 | 24,945 | |||||||
| Heino von Prondzynski | 4,876 | 3,017 | 4/29/2018 to 2/28/2022 | $15.59 to $22.43 | 24,407 | |||||||
| Elizabeth E. Tallett | — | 1,563 | 2/28/2022 | $15.59 | 10,000 | |||||||
Name of Supervisory Director | Independent | Member of Audit Committee | Member of Compensation Committee | Member of Selection and Appointment Committee | |||||
Prof. Dr. Detlev Riesner | Ÿ | Ÿ (Chairman) | |||||||
| Dr. Werner Brandt | Ÿ | Ÿ (Chairman) | |||||||
|
| ||||||||
| Erik Hornnaess | Ÿ | Ÿ | |||||||
Ÿ (Chairman) |
| ||||||||
Prof. Dr. Manfred Karobath | Ÿ | Ÿ | |||||||
| Heino von Prondzynski | Ÿ | ||||||||
| |||||||||
| Elizabeth E. Tallett | Ÿ | Ÿ | Ÿ | ||||||
Name and Country of Residence | Shares Beneficially Owned (1) Number | Percent Ownership (2) | ||||||
Peer M. Schatz, Germany | 1,550,684 | (3) | 0.67 | % | ||||
Roland Sackers, Germany | 0 | (4) | * | |||||
Dr. Joachim Schorr, Germany | 0 | (5) | * | |||||
Bernd Uder, Germany | 0 | (6) | * | |||||
Prof. Dr. Detlev H. Riesner, Germany | 1,752,068 | (7) | 0.75 | % | ||||
Dr. Werner Brandt, Germany | 6,000 | (8) | * | |||||
Dr. Metin Colpan, Germany | 4,538,703 | (9) | 1.95 | % | ||||
Erik Hornnaess, Spain | 11,255 | (10) | * | |||||
Professor Dr. Manfred Karobath, Austria | 1,590 | (11) | * | |||||
Heino von Prondzynski, Switzerland | 0 | (12) | * | |||||
| Name and Country of Residence | Shares Beneficially Owned (1) Number | Percent Ownership (2) | |||
| Peer M. Schatz, Germany | 1,771,128 | (3) | 0.75 | % | |
| Roland Sackers, Germany | — | (4) | * | ||
| Bernd Uder, Germany | — | (5) | * | ||
| Prof. Dr. Detlev H. Riesner, Germany | 1,654,993 | (6) | 0.70 | % | |
| Dr. Werner Brandt, Germany | 8,377 | (7) | * | ||
| Dr. Metin Colpan, Germany | 4,540,961 | (8) | 1.92 | % | |
| Erik Hornnaess, Spain | 14,180 | (9) | * | ||
| Professor Dr. Manfred Karobath, Austria | 9,015 | (10) | * | ||
| Heino von Prondzynski, Switzerland | 2,377 | (11) | * | ||
| Elizabeth Tallett, United States | — | (12) | * | ||
| (1) | The number of Common Shares issued and outstanding as of January |
| (2) | Does not include Common Shares subject to options or awards held by such persons at January |
| (3) | Does not include |
| (4) | Does not include |
| (5) | Does not include |
| (6) | Does not include |
| (7) | Does not include |
| (8) | Does not include 348,341 shares issuable upon the exercise of options now exercisable or that could become exercisable within 60 days from the date of this table having exercise prices ranging from $6.018 to $22.430 per share. Options expire in increments during the period between |
| (9) | Does not include |
| (10) | Does not include |
| (11) | Does not include |
| (12) | Does not include |
Region | Research & Development | Sales | Production | Marketing | Administration | Total | ||||||||||||||||||
Americas | 188 | 503 | 245 | 64 | 132 | 1,132 | ||||||||||||||||||
Europe | 522 | 464 | 504 | 148 | 248 | 1,886 | ||||||||||||||||||
Asia Pacific & Rest of World | 30 | 335 | 92 | 39 | 73 | 569 | ||||||||||||||||||
December 31, 2010 | 740 | 1,302 | 841 | 251 | 453 | 3,587 | ||||||||||||||||||
| Region | Research & Development | Sales | Production | Marketing | Administration | Total | ||||||||||||
| Americas | 139 | 553 | 219 | 60 | 123 | 1,094 | ||||||||||||
| Europe | 478 | 585 | 695 | 168 | 240 | 2,166 | ||||||||||||
| Asia Pacific & Rest of World | 53 | 462 | 86 | 61 | 77 | 739 | ||||||||||||
| December 31, 2012 | 670 | 1,600 | 1,000 | 289 | 440 | 3,999 | ||||||||||||
Our success depends, to a significant extent, on key members of our management and our scientific staff. The loss of such employees could have a material adverse effect on QIAGEN. Our ability to recruit and retain qualified skilled personnel to perform future research and development work will also be critical to our success. Due to the intense competition for experienced scientists from numerous pharmaceutical and biotechnology companies and academic and other research institutions, there can be no assurance that we will be able to attract and retain such personnel on acceptable terms. Our planned activities will also require additional personnel, including management, with expertise in areas such as manufacturing and marketing, and the development of such expertise by existing management personnel. The inability to acquire such personnel or develop such expertise could have a material adverse impact on our operations.
specified jurisdictions) as it may deem necessary or appropriate. The Compensation Committee or the Supervisory Board may at any time amend the plans in any respect, subject to Supervisory Board approval, and except that (i) no amendment that would adversely affect the rights of any participant under any option previously granted may be made without such participant’sparticipant's consent and (ii) no amendment shall be effective prior to shareholder approval to the extent such approval is required to ensure favorable tax treatment for incentive stock options or to ensure compliance with Rule 16b-3 under the United States Securities Exchange Act of 1934, as amended (the Exchange Act) at such times as any participants are subject to Section 16 of the Exchange Act.
| Item 7. | Major Shareholders and Related Party Transactions |
Name and Country of Residence | Shares Beneficially Owned Number | Percent Ownership (1) | ||||||
FMR LLC, United States | 19,566,784 | (2) | 8.39 | % | ||||
| Name and Country of Residence | Shares Beneficially Owned Number | Percent Ownership (1) | ||||
| BlackRock, Inc., United States | 14,198,775 | (2) | 6.00 | % | ||
| (1) | The percentage ownership was calculated based on |
| (2) | Of the |
We have a consulting agreement with Dr. Metin Colpan, our former Chief Executive Officer and current Supervisory Board member, pursuant to which Dr. Colpan is paid a fee of EUR 2,750 per day for scientific consulting services, subject to adjustment. During each of the years ended December 31, 2010 and 2009, we paid approximately $0.3 million and $0.2 million, respectively, to Dr. Colpan for scientific consulting services under this agreement.
During 2007,
certain milestones.
Year ending December 31, (in thousands) | 2010 | 2009 | ||||||
Net sales | $ | 2,605 | $ | 1,783 | ||||
Loans receivable | $ | 1,560 | $ | 1,427 | ||||
Accounts receivable | $ | 2,400 | $ | 2,062 | ||||
Accounts payable | $ | 1,755 | $ | 902 | ||||
Year ending December 31, (in thousands) | 2012 | 2011 | |||||
| Net sales | $ | 7,068 | $ | 6,287 | |||
| Accounts receivable | $ | 2,651 | $ | 3,606 | |||
| Accounts payable | $ | 3,699 | $ | 4,642 | |||
| Loans receivable | $ | 1,674 | $ | 1,539 | |||
| Item 8. | Financial Information |
| Item 9. | The Offer and Listing |
| High ($) | Low ($) | |||||||
Annual | ||||||||
2006 | 16.26 | 11.56 | ||||||
2007 | 23.83 | 15.22 | ||||||
2008 | 23.53 | 12.52 | ||||||
2009 | 23.58 | 14.32 | ||||||
2010 | 24.00 | 16.86 | ||||||
| High ($) | Low ($) | |||||||
Quarterly 2009: | ||||||||
First Quarter | 18.23 | 14.32 | ||||||
Second Quarter | 18.68 | 14.79 | ||||||
Third Quarter | 23.35 | 17.20 | ||||||
Fourth Quarter | 23.58 | 20.46 | ||||||
| High ($) | Low ($) | |||||||
Quarterly 2010: | ||||||||
First Quarter | 23.71 | 20.26 | ||||||
Second Quarter | 24.00 | 19.17 | ||||||
Third Quarter | 20.80 | 17.56 | ||||||
Fourth Quarter | 20.02 | 16.86 | ||||||
Quarterly 2011: | ||||||||
First Quarter (through March 15, 2011) | 21.00 | 18.02 | ||||||
| High ($) | Low ($) | |||||||
Monthly | ||||||||
September 2010 | 19.22 | 17.72 | ||||||
October 2010 | 19.11 | 16.86 | ||||||
November 2010 | 19.60 | 17.96 | ||||||
December 2010 | 20.02 | 18.39 | ||||||
January 2011 | 20.02 | 18.02 | ||||||
February 2011 | 20.79 | 18.08 | ||||||
Since
| High ($) | Low ($) | ||||
| Annual | |||||
| 2008 | 23.53 | 12.52 | |||
| 2009 | 23.58 | 14.32 | |||
| 2010 | 24.00 | 16.86 | |||
| 2011 | 22.20 | 12.47 | |||
| 2012 | 19.20 | 14.16 | |||
| High ($) | Low ($) | ||||
| Quarterly 2011: | |||||
| First Quarter | 21.00 | 18.02 | |||
| Second Quarter | 22.20 | 18.45 | |||
| Third Quarter | 19.75 | 13.05 | |||
| Fourth Quarter | 15.09 | 12.47 | |||
| Quarterly 2012: | |||||
| First Quarter | 16.97 | 14.05 | |||
| Second Quarter | 17.31 | 14.78 | |||
| Third Quarter | 19.11 | 15.90 | |||
| Fourth Quarter | 19.20 | 17.16 | |||
| Quarterly 2013: | |||||
| First Quarter (through February 28, 2013) | 22.20 | 18.44 | |||
| High ($) | Low ($) | ||||
| Monthly | |||||
| September 2012 | 19.11 | 17.62 | |||
| October 2012 | 19.41 | 17.14 | |||
| November 2012 | 18.90 | 16.98 | |||
| December 2012 | 18.89 | 17.57 | |||
| January 2013 | 21.31 | 18.44 | |||
| February 2013 | 22.20 | 20.30 | |||
| High (EUR) | Low (EUR) | |||||||
Annual | ||||||||
2006 | 13.09 | 9.52 | ||||||
2007 | 16.44 | 11.45 | ||||||
2008 | 15.77 | 10.04 | ||||||
2009 | 15.98 | 11.12 | ||||||
2010 | 17.87 | 12.06 | ||||||
| High (EUR) | Low (EUR) | |||||||
Quarterly 2009: | ||||||||
First Quarter | 14.18 | 11.12 | ||||||
Second Quarter | 13.56 | 11.12 | ||||||
Third Quarter | 15.98 | 12.36 | ||||||
Fourth Quarter | 15.81 | 13.84 | ||||||
| High (EUR) | Low (EUR) | |||||||
Quarterly 2010: | ||||||||
First Quarter | 17.62 | 14.67 | ||||||
Second Quarter | 17.87 | 15.94 | ||||||
Third Quarter | 16.25 | 13.12 | ||||||
Fourth Quarter | 14.95 | 12.06 | ||||||
Quarterly 2011: | ||||||||
First Quarter (through March 15, 2011) | 15.25 | 12.85 | ||||||
| High (EUR) | Low (EUR) | |||||||
Monthly: | ||||||||
September 2010 | 14.90 | 13.12 | ||||||
October 2010 | 13.79 | 12.06 | ||||||
November 2010 | 14.47 | 12.50 | ||||||
December 2010 | 14.95 | 13.88 | ||||||
January 2011 | 15.18 | 13.28 | ||||||
February 2011 | 15.06 | 12.85 | ||||||
| High (EUR) | Low (EUR) | ||||
| Annual | |||||
| 2008 | 15.77 | 10.04 | |||
| 2009 | 15.98 | 11.12 | |||
| 2010 | 17.87 | 12.06 | |||
| 2011 | 15.25 | 9.07 | |||
| 2012 | 15.05 | 10.69 | |||
| High (EUR) | Low (EUR) | ||||
| Quarterly 2011: | |||||
| First Quarter | 15.25 | 12.85 | |||
| Second Quarter | 14.97 | 12.95 | |||
| Third Quarter | 13.74 | 9.65 | |||
| Fourth Quarter | 11.20 | 9.07 | |||
| Quarterly 2012: | |||||
| First Quarter | 12.81 | 10.69 | |||
| Second Quarter | 13.49 | 11.31 | |||
| Third Quarter | 14.73 | 13.04 | |||
| Fourth Quarter | 15.05 | 13.11 | |||
| Quarterly 2013: | |||||
| First Quarter (through February 28, 2013) | 16.55 | 13.75 | |||
| High (EUR) | Low (EUR) | ||||
| Monthly: | |||||
| September 2012 | 14.73 | 14.02 | |||
| October 2012 | 15.05 | 13.11 | |||
| November 2012 | 14.54 | 13.31 | |||
| December 2012 | 14.50 | 13.41 | |||
| January 2013 | 15.69 | 13.75 | |||
| February 2013 | 16.55 | 15.15 | |||
| Item 10. | Additional Information |
observe in relation to one another. A listed company should either comply with, or if not, explain in its annual report why and to what extent it does not comply, with the best practice provisions of the Code. The Code has been taken into account in the summary below. Supervisory Director must excuse him or herself in the case of any conflict of interest. If all Supervisory Directors have a conflict of interest, the relevant resolution shall be adopted by the General Meeting. Decisions to enter into transactions under which a Supervisory Director would have a conflict of interest that are of material significance to QIAGEN and/or to the Supervisory Director concerned, require the approval of the Supervisory Board. amount (or the call) must be equal for each Preference Share. The Managing Board may, subject to the approval of the Supervisory Board, resolve on which day and up to which amount a further call must be paid on Preference Shares which have not yet been paid up in full. The preferred dividend rights attached to Preference Shares are described under “Dividends” below. the Annual Accounts for Fiscal Year 2011. at December 31, 2011. including our financial statements for such year prepared under International Financial Reporting Standards and accompanied by a report of an Independent Registered Public Accounting Firm. The annual report is submitted to the annual General Meeting for adoption. 2012. may determine the method of payment of cash distributions, provided that cash distributions in respect of Type II shares will, subject to certain exceptions, be paid in the currency of a country where our shares are listed or quoted for trading, converted at the close of business on a day to be determined for that purpose by the Supervisory Board. Distributions in cash that have not been collected within five years and two days after they have become due and payable shall revert to QIAGEN. federal income tax purposes in the income of a U.S. Holder as ordinary dividend income in an amount equal to the sum of any cash and the fair market value of any property that we distribute, before reduction for Netherlands withholding tax. Common Shares held for more than a year. For U.S. federal income tax purposes, capital losses are subject to limitations on deductibility. Gain realized by a U.S. Holder on the sale or other disposition of our Common Shares generally will be treated as income from sources within the United States for purposes of the foreign tax credit limitation. fails to provide an accurate taxpayer identification number; is notified by the Internal Revenue Service that the individual has failed to report all interest or dividends required to be shown on the Federal income tax returns; or in certain circumstances, fails to comply with applicable certification requirements. not have materially impacted our financial statements. not have materially impacted our financial statements. (in thousands) Audit fees Audit-related fees Tax fees All other fees Total least a two-thirds majority of the votes cast, if such majority represents more than half the issued share capital. Managing Directors are appointed annually for the period beginning on the date following the General Meeting up to and including the date of the General Meeting held in the following year. The remuneration of management is determined in accordance with a remuneration policy which has been approved by QIAGEN’s shareholders at the General Meeting on June 14, 2005. The remuneration of the members of the Managing Board will, with due observance of the remuneration policy, be determined by the Supervisory Board based on a proposal by its Compensation Committee. QIAGEN is exempt from NASDAQ’s quorum requirements applicable to meetings of ordinary shareholders. In keeping with the law of The Netherlands and generally accepted business practices in The Netherlands, QIAGEN’s Articles of Association provide that there are no quorum requirements generally applicable to meetings of the General Meeting. QIAGEN is exempt from NASDAQ’s requirements regarding the solicitation of proxies and provision of proxy statements for meetings of the General Meeting. QIAGEN does furnish proxy statements and solicit proxies for meetings of shareholders. Dutch corporate law sets a mandatory (participation and voting) record date for Dutch listed companies fixed at the twenty-eighth day prior to the day of the shareholders’ meeting. Shareholders registered at such record date are entitled to attend and exercise their rights as shareholders at the General Meeting, regardless of a sale of shares after the record date. QIAGEN is exempt from NASDAQ’s requirements that shareholder approval be obtained prior to the establishment of, or material amendments to, stock option or purchase plans and other equity compensation arrangements pursuant to which options or stock may be acquired by directors, officers, employees or consultants. QIAGEN is also exempt from NASDAQ’s requirements that shareholder approval be obtained prior to certain issuances of stock resulting in a change of control, occurring in connection with acquisitions of stock or assets of Articles of Association as confirmed by notorial deed as of Dated: March /s/ Peer M. Schatz /s/ Roland Sackers Note Assets Current Assets: Cash and cash equivalents Short-term investments Accounts receivable, net of allowance for doubtful accounts of $3,227 and $3,402 in 2010 and 2009, respectively Income taxes receivable Inventories, net Prepaid expenses and other current assets Deferred income taxes Total current assets Long-Term Assets: Property, plant and equipment, net Goodwill Intangible assets, net of accumulated amortization of $312,326 and $219,731 in 2010 and 2009, respectively Deferred income taxes Other long-term assets Total long-term assets Total assets Note Liabilities and Shareholders’ Equity Current Liabilities: Accounts payable Accrued and other liabilities (of which $6,296 in 2010 and 2009 due to related parties) Income taxes payable Current portion of long-term debt Deferred income taxes Total current liabilities Long-Term Liabilities: Long-term debt, net of current portion (of which $445,000 in 2010 and 2009 due to related parties) Deferred income taxes Other Total long-term liabilities Commitments and Contingencies Shareholders’ Equity: Preference shares, 0.01 EUR par value, authorized—450,000 shares, no shares issued and outstanding Financing preference shares, 0.01 EUR par value, authorized—40,000 shares, no shares issued and outstanding Common Shares, 0.01 EUR par value, authorized—410,000 shares, issued and outstanding—233,115 and 232,074 shares at December 31, 2010 and 2009, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total shareholders’ equity Total liabilities and shareholders’ equity Note Net sales Cost of sales Gross profit Operating Expenses: Research and development Sales and marketing General and administrative, integration and other Acquisition-related intangible amortization Purchased in-process research and development Total operating expenses Income from operations Other Income (Expense): Interest income Interest expense Other income, net Total other expense Income before provision for income taxes and noncontrolling interest Provision for income taxes Net income Less: Noncontrolling interest Net income attributable to the owners of QIAGEN N.V. Basic net income per common share attributable to the owners of QIAGEN N.V. Diluted net income per common share attributable to the owners of QIAGEN N.V. Shares used in computing basic net income per common share Shares used in computing diluted net income per common share Net income Gains (losses) on cash flow hedges, before tax Reclassification adjustments on cash flow hedges, before tax Cash flow hedges, before tax Available-for-sale short-term investments, before tax Gains (losses) on pensions, before tax Foreign currency translation adjustments, before tax Other comprehensive income, before tax Income tax relating to components of other comprehensive income Other comprehensive income, after tax Total comprehensive income Note BALANCE AT DECEMBER 31, 2007 Net income Unrealized loss, net on hedging contracts Realized loss, net on hedging contracts Realized gain, net on short-term investments Unrealized gain, net on pension Translation adjustment Stock issued for the acquisition of eGene Inc. Stock issued for the acquisition of Corbett. Common stock issuances from conversion of warrants Common stock issuances under employee stock plans Tax benefit of employee stock plans Share-based compensation Proceeds from subscription receivables BALANCE AT DECEMBER 31, 2008 Net income Unrealized loss, net on hedging contracts Realized loss, net on hedging contracts Unrealized gain, net on pension Translation adjustment Common stock issuance from public offering. Common stock issuances from conversion of warrants Common stock issuances under employee stock plans Tax benefit of employee stock plans Share-based compensation Proceeds from subscription receivables BALANCE AT DECEMBER 31, 2009 Net income Unrealized gain, net on hedging contracts Realized gain, net on hedging contracts Unrealized loss, net on pension Translation adjustment Common stock issuances under employee stock plans Tax benefit of employee stock plans Share-based compensation Proceeds from subscription receivables BALANCE AT DECEMBER 31, 2010 Note Cash Flows From Operating Activities: Net income Adjustments to reconcile net income to net cash provided by operating activities, net of effects of businesses acquired: Depreciation and amortization Amortization of acquisition-related intangible assets Purchased in-process research and development Non-cash acquisition related costs Share-based compensation: Share-based compensation expense Excess tax benefits from share-based compensation Deferred income taxes Gain on sale of investments Other including sale from non-monetary exchange Net changes in operating assets and liabilities: Accounts receivable Inventories Prepaid expenses and other Other assets Accounts payable Accrued and other liabilities Income taxes Other Net cash provided by operating activities Cash Flows From Investing Activities: Purchases of property, plant and equipment Proceeds from sale of equipment Purchases of intangible assets Proceeds from sale/(purchases) of investments Purchases of short-term investments Sales of short-term investments Cash paid for acquisitions, net of cash acquired Loan to related party Net cash used in investing activities Cash Flows From Financing Activities: Proceeds from debt Repayment of debt Principal payments on capital leases Proceeds from subscription receivables Excess tax benefits from share based compensation Issuance of common shares Other financing activities Net cash (used in) provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental Cash Flow Disclosures: Cash paid for interest Cash paid for income taxes Supplemental Disclosure of Non-cash Investing and Financing Activities: Equipment purchased through capital lease Intangible assets acquired in non-monetary exchange Issuance of common shares in connection with acquisitions 2012 requirements for reporting net income or other comprehensive income in the financial statements. ASU 2013-02 is effective for us on January 1, 2013. When there is a portion of equity in an acquired subsidiary not attributable, directly or indirectly, to the Company, we record the fair value of the noncontrolling interests at the acquisition date and classify the amounts attributable to noncontrolling interests separately in equity in the consolidated financial statements. Any subsequent changes in the Company's ownership interest while the Company retains its controlling financial interest in its subsidiary are accounted for as equity transactions. certain customer locations. Revenues for the consumable products which are consigned in this manner are recognized upon consumption. We generally allow returns of consumable products if the product is returned in a timely manner and in good condition. Allowances for returns are provided for based upon the historical pattern of returns and Management’s evaluation of specific factors that impact the risk of returns. 3 to 5 years. The costs to maintain these instruments in the field are charged to cost of sales as incurred. Revenue from these reagent rental agreements is generally recognized as the consumable products are shipped. The delivered items have value to the client on a stand-alone basis; The arrangement includes a general right of return relative to the delivered items, and BALANCE AT DECEMBER 31, 2008 Provision charged to income Usage Adjustments to previously provided warranties, net Currency translation BALANCE AT DECEMBER 31, 2009 Provision charged to income Usage Adjustments to previously provided warranties, net Currency translation BALANCE AT DECEMBER 31, 2010 asset and recognized over the same period that the related asset is depreciated. Our policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties within the income tax provision. period. We use a combination of the historical volatility of our stock price and the implied volatility of market-traded options of our stock to estimate the expected volatility assumption input to the Black-Scholes-Merton model. Our decision to use a combination of historical and implied volatility is based upon the availability of actively traded options of our stock and our assessment that such a combination is more representative of future expected stock price trends. Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or market and include material, capitalized labor and overhead costs. Inventories consisted of the following as of December 31, Raw materials Work in process Finished goods Total inventories 2011: earnings. For the years ended adverse financial conditions of a specific issuer, segment, industry, region or other variables; the length of time and the extent to which the fair value has been less than cost; and the financial condition and near-term prospects of the issuer. For the year ended During the years ended Weighted average number of Common Shares used to compute basic net income per Common Share Dilutive effect of stock options and restrictive stock units Dilutive effect of outstanding warrant shares Weighted average number of Common Shares used to compute diluted net income per Common Share Outstanding stock options and restrictive stock units having no dilutive effect, not included in above calculation Outstanding warrants having no dilutive effect, not included in above calculation $44.0 million through 2016. applications. The systems utilize unique, high-performance and award-winning fluorescence detection technologies integrated into compact modules. We have demonstrated that ESE’s fluorescence detection systems can be used to measure signals generated by our existing testing technologies, including the HDA and tHDA isothermal assay systems. We also acquired the food market business of the Institute for Product Quality (ifp), a Berlin-based company which sells food, veterinary and environmental quality control assays. The transaction was an asset purchase of primarily patents, know-how, intellectual property rights and customer data related to the business. We have entered into license and contract manufacturing Purchase Price: Cash Fair value of milestones Final Allocation: Working capital Fixed and other long-term assets Product technology and know how Purchased in-process research and development Customer relationships Tradename Goodwill Deferred tax liability on fair value of identifiable intangible assets acquired Liabilities assumed intangibles for the next five years is expected to be approximately: Purchase Price: Issuance of restricted shares Cash, including transaction costs Cash acquired Cash for 17.5% interest in Corbett Final Allocation: Working capital Fixed and other long-term assets Developed IP Customer relationships Tradename Goodwill Purchased in-process research and development expense Deferred tax liability on fair value of identifiable intangible assets acquired Liabilities assumed generated under the assets, and future costs associated with product development, production, and distribution under the patents, in order to determine an exit price from the perspective of a market participant that holds the assets. As a result of nonmonetary transactions, we recorded intangible assets of , net sales of $11.0 million and deferred revenues of $19.3 million. In Net unrealized loss on cash flow hedging contracts, net of tax of $0.7 million and $2.7 million in 2010 and 2009, respectively Net unrealized gain (loss) on pension, net of tax of $4,000 and $50,000 in 2010 and 2009, respectively Foreign currency translation effects from intercompany long-term investment transactions, net of tax of $4.4 million and $1.9 million in 2010 and 2009, respectively Foreign currency translation adjustments Accumulated other comprehensive income December 31, 2012 and 2011 consist of the following: hedging instruments. Derivative instruments designated as hedges Interest rate contracts Foreign exchange contracts Total derivative instruments designated as hedges Undesignated derivative instruments Foreign exchange contracts Total derivative instruments Cash-flow hedges Interest rate contracts Foreign exchange contracts Total $ (8,874 ) Undesignated derivative instruments Foreign exchange contracts Cash-flow hedges Interest rate contracts Foreign exchange contracts Total Undesignated derivative instruments Foreign exchange contracts We value contingent consideration liabilities using Level 3 unobservable inputs, applying the income approach, such as the discounted cash flow technique, or the probability-weighted scenario method. Contingent consideration arrangements obligate us to pay the sellers of an acquired entity if specified future events occur or conditions are met such as the achievement of technological or revenue milestones. We use various key assumptions, such as the probability of achievement of the milestones and the discount rate, to represent the non-performing risk factors and time value when applying the income approach. We regularly review the fair value of the contingent consideration, and reflect any change in the accrual in the consolidated statements of income in the line items commensurate with the underlying nature of milestone arrangements. Assets: Short-term investments Foreign exchange contracts Liabilities: Foreign exchange contracts Interest rate contracts proceeds provides additional resources to support QIAGEN's longer-term business expansion. Prepaid expenses Amounts held in escrow in connection with acquisitions Value Added Tax Other receivables Land Buildings and improvements Machinery and equipment Computer software Furniture and office equipment Construction in progress Less: Accumulated depreciation and amortization Property, plant and equipment, net Company (in thousands) PreAnalytiX GmbH QBM Cell Science QIAGEN Finance QIAGEN Euro Finance Pyrobett Dx Assays Pte Ltd Amortized Intangible Assets: Patent and license rights Developed technology Customer base, trademarks, in-process R&D and non-compete agreements Unamortized Intangible Assets: Goodwill Years ended December 31: 2011 2012 2013 2014 2015 BALANCE AT DECEMBER 31, 2008 Goodwill acquired during the year Goodwill written off during the year Earn-out and milestone payments Purchase adjustments Effect of foreign currency translation BALANCE AT DECEMBER 31, 2009 Earn-out and milestone payments Purchase adjustments Effect of foreign currency translation BALANCE AT DECEMBER 31, 2010 Income before provision for income taxes for the years ended Pretax income in The Netherlands Pretax income from foreign operations Current—The Netherlands —Foreign Deferred—The Netherlands —Foreign Total provision for income taxes Income taxes at The Netherlands statutory rate Earnings of subsidiaries taxed at different rates Tax impact from permanent items Tax impact from tax exempt income Purchased in-process research & development Tax contingencies, net Taxes due to changes in tax rates Restructuring Other items, net Total provision for income taxes Balance at December 31, 2008 Additions based on tax positions related to the current year Additions for tax positions of prior years Settlements with taxing authorities Reductions due to lapse of statute of limitations Increase from currency translation Balance at December 31, 2009 Additions based on tax positions related to the current year Additions for tax positions of prior years Settlements with taxing authorities Reductions due to lapse of statute of limitations Increase from currency translation Balance at December 31, 2010 table above. Current deferred tax asset Current deferred tax liabilities Non-current deferred tax asset Non-current deferred tax liabilities Net deferred tax liabilities retained earnings. The components of the net deferred tax liability at Net operating loss carry forwards Accrued and other liabilities Inventories Allowance for bad debts Currency revaluation Depreciation and amortization Tax credits Unremitted profits and earnings Capital leases Intangibles Equity awards Other Valuation allowance Net deferred tax liabilities Accrued expenses Payroll and related accruals Preacquistion contingencies assumed in acquisition Accrued earn-outs and milestone payments Swaps and forwards Royalties Deferred revenue Accrued interest on long-term debt Capital Lease obligations Total accrued liabilities $500.0 million term loan paying interest at LIBOR plus a variable margin ranging in aggregate from 0.629% to 0.754%, and 0.631% to 1.068% at December 31, 2010 and 2009, respectively, due on July 12, 2012, with payments commencing in 2009 Notes payable to QIAGEN Euro Finance bearing interest at an effective rate of 3.97% due in November 2012 Notes payable to QIAGEN Finance bearing interest at an effective rate of 2.16% due no earlier than in July 2012 R&D-related loan bearing interest at 3.50% due in June 2019 with repayments commencing in 2011 Total long-term debt Less current portion Long-term portion Year ending December 31, 2011 2012 2013 Stock price volatility Risk-free interest rate Expected life (in years) Dividend rate Forfeiture rate Outstanding at January 1, 2010 Granted Exercised Forfeited and cancelled Outstanding at December 31, 2010 Exercisable at December 31, 2010 Vested and expected to vest at December 31, 2010 Restricted Stock Units Outstanding at January 1, 2010 Granted Vested Forfeited and cancelled Outstanding at December 31, 2010 Vested and expected to vest at December 31, 2010 Cost of sales Research and development Sales and marketing General and administrative Acquisition and integration related Share-based compensation expense before taxes Income tax benefit Net share-based compensation expense Contingencies 2011 2012 2013 2014 2015 Thereafter Less: Amount representing interest Less: Current portion Long-term portion 2011 2012 2013 2014 2015 Thereafter 2012 We maintain various benefit plans, including defined contribution and defined benefit plans. Our U.S. defined contribution plan is qualified under Section 401(k) of the Internal Revenue Code, and covers substantially all U.S. employees. Participants may contribute a portion of their compensation not exceeding a limit set annually by the Internal Revenue Service. This plan includes a provision for us to match a portion of employee contributions. Total expense under the 401(k) plans, including the plans acquired via business acquisitions, was We have a certain milestones. Net sales Loans receivable Accounts receivable Accounts payable Year Ended December 31, 2008: Allowance for doubtful accounts Year Ended December 31, 2009: Allowance for doubtful accounts Year Ended December 31, 2010: Allowance for doubtful accounts 2010July 2, 2008,June 30, 2011, or the Articles, and Dutch law, where appropriate. The Dutch Corporate Governance Code, or the Code, that was published on December 9, 2003 (and revised on December 10, 2008) contains principles of good corporate governance and best practice provisions. The Code contains the principles and concrete provisions which the persons involved in a listed company (including Managing Board members and Supervisory Board members) and stakeholders shouldwe are representedon a certain matter, that Managing Director shall not participate in the discussions and voting on that matter. If all our managing directors have a conflict of interest, such resolution shall be adopted by the Supervisory Board. However,If all Supervisory Directors have an conflict of interest as well, the General Meeting should at all times in an event of a conflict of interestwill be given the opportunity to appoint a person who is authorized to represent QIAGEN inresolve on such event.matter. According to the Code, any conflict of interest or apparent conflict of interest between the company and Managing Directors should be avoided. Decisions to enter into transactions under which Managing Directors would have conflicts of interest that are of material significance to the Company and/or to the relevant Managing Director require the approval of the Supervisory Board.Towardstowards QIAGENprovideprovides that we shall indemnify every person who is or was a Managing Director or Supervisory Director against all expenses (including attorneys’ fees) judgments, fines and amounts paid in settlement with respect to any threatened pending or completed action, suit or proceeding as well as against expenses (including attorneys’ fees) actually and reasonably incurred in connection with the defense or settlement of an action or proceeding, if such person acted in good faith and in a manner he reasonably could believe to be in or not opposed to our best interests. An exception is made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of his or her duty to us.SPAQ.SPAQ which was most recently amended on June 4, 2012. Pursuant to the Option Agreement, SPAQ was granted an option to acquire such number of Preference Shares as are equal to the total number of all outstanding Common Shares minus one in our share capital at the time of the relevant exercise of the right. TheSPAQ may exercise its right to acquire the Preference Shares in all situations that it believes that our interest or our stakeholders is granted subjectat risk (which situations include but are not limited to (i) receipt of a notification from the Managing Board that a takeover is imminent and (ii) receipt of a notification from the Managing Board that one or more activist shareholders take a position that is not in the interest of QIAGEN, our shareholders or our other stakeholders), provided that the conditions referred tomentioned in the previous paragraph.paragraph have been met. Due to the implementation of the EC Directive on Takeover Bids in Dutch legislation, the exercise of the option to acquire Preference Shares by SPAQ and the subsequent issuance of Preference Shares to SPAQ needs to be done with due observance and in consideration of the restrictions imposed by the Public Offer Rules.July 20, 2007,June 27, 2012, the General Meeting resolved to authorize the Supervisory Board until December 27, 2013 to issue Common Shares and Financing Preference Shares or grant rights to subscribe for such shares, the aggregate par value of which shall be equal to thosethe aggregate par value of all shares for a periodissued and outstanding in the capital of 5 years commencing on October 11, 2007 and for a maximum of Common Shares and Financing Preference Sharesthe Company as at December 31, 2011 as included in our authorized share capital (as included in our Articles). of shareholders subsequently resolved to grant the authority to exclude or limit any pre-emptive rights.rights until December 27, 2013. However, the General Meeting has limited this authority in a way that the Supervisory Board can only exclude or limit the pre-emptive rights in relation to no more than 50%20% of the aggregate number of Common Sharesall shares issued and Financing Preference Shares available to be issued or rights to subscribe for those shares available to be grantedoutstanding in the capital of our authorized but unissued share capitalthe Company as of October 11, 2007. The authority to exclude or limit pre-emptive rights covers a period of 5 years commencing as of October 11, 2007.30, 2010,27, 2012, the General Meeting resolved to extend the authorization of the Managing Board in such manner that the Managing Board may cause us to acquire shares in our own share capital, up to 10% of the outstanding shares, for an 18-month period beginning June 30, 2010, or27, 2012 until December 30, 2011,27, 2013, without limitation at a price between one Euro cent (Euro 0.01) and one hundred ten percent (110%) of the price for such shares on the NASDAQ Global Select Market for the five trading days prior to the day of purchase, or, with respect to Preference and Finance Preference shares, against a price between one Euro cent (Euro 0.01) and three times the issuance price and in accordance with applicable provisions of Dutch law and our Articles.30, 2010,27, 2012, our shareholders appointed Ernst & Young Accountants to serve as our Independent Registered Public Accounting Firm for the year ending December 31, 2010.(i) given in such manner as shall be authorized by law including but not limited to the shareholdersan announcement published by advertisement in at least one national daily newspaper published in The Netherlands and (ii) published on QIAGEN’s website, bothelectronic means no later than the forty-second day prior to day of the general meeting. The notice will contain the agenda for the meeting or state that the agenda can be obtained at our offices.provided that it is not detrimental to the vital interest(this 1% or EUR 50,000,000 threshold will be amended into a 3% threshold, irrespective of the company.value represented by such interest, pursuant to a bill entering into force as per the first July 1, 2013). No valid resolutions can be adopted at a General Meeting in respect of subjects which are not mentioned in the agenda.Meeting:Meeting in any event:(i) the transfer of our enterprise or practically our entire enterprise to a third party; (ii) (iii) one-tenthone-hundredth of our issued capital, or EUR 225,000,20,000,000, in nominal amountmarket value of our shares may inform the Managing Board and the Supervisory Board of their objections as to our policy or the course of our affairs and, within a reasonable time thereafter, may request the Enterprises Division of the Court of Appeal in Amsterdam to order an inquiry intobonds)bonds - see also below) are subject to notification obligations under Chapter 5.3 of the Dutch Financial Markets Supervision Act, or the FMSA. (a bill is being considered that would add a threshold of 3%), 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95% (as per July 1, 2013, a bill will enter into force adding 3% threshold) of the voting rights or capital interests in the issued capital of QIAGEN. A notification requirement also applies if a person’sperson's capital interest or voting rights reach, exceed or fall below the above mentioned thresholds as a result of a change in our total share capital or voting rights. Such notification has to be made no later than the fourth trading day after the AFM has published our notification as described below. We are required to notify the AFM immediately of the changes to our total share capital or voting rights if our share capital or voting rights changes by 1% or more since our previous notification. We must furthermore quarterly notify the AFM within eight days after the end of the relevant quarter, in the event our share capital or voting rights changed by less than 1% in that relevant quarter since our previous notification. (a bill is being considered that would add a threshold of 3%) or more of our share capital or voting rights whose interest at December 31 at midnight differs from a previous notification to the AFM, as a result of certain acts (including but not limited to the exchange of our shares for depository receipts and the exercise of a right to acquire our shares) must notify the AFM within four weeks.weeks (as per July 1, 2013, a bill will enter into force reducing this threshold to 3%). Controlled entities, within the meaning of the FMSA, do not have notification obligations under the FMSA, as their direct and indirect interests are attributed to their (ultimate) parent. Any person may qualify as a parent for purposes of the FMSA, including an individual. A person who has a 5% (a(as per July 1, 2013, a bill is being considered that would reducewill enter into force reducing this threshold to 3%) or larger interest in our share capital or voting rights and who ceases to be a controlled entity for these purposes must immediately notify the AFM. As of the date of that notification, all notification obligations under the FMSA will become applicable to that entity. For the purpose of calculating the percentage of capital interest or voting rights, among other metrics, the following interests must be taken into account: (i) our shares or voting rights on our shares directly held (or acquired or disposed of) by a person, (ii) our shares or voting rights on our shares held (or acquired or disposed of) by such person’sperson's subsidiaries or by a third party for such person’sperson's account or by a third party with whom such person has concluded an oral or written voting agreement (including a discretionary power of attorney), and (iii) our shares or voting rights on our shares which such person, or any subsidiary or third party referred to above, may acquire pursuant to any option or other right held by such person (or acquired or disposed of, including, but not limited to, on the basis of convertible bonds). Special rules apply with respect to the attribution of our shares or voting rights on our shares which are part of the property of a partnership or other community of property. A holder of a pledge or right of usufruct (vruchtgebruik) in respect of our shares can also be subject to the notification obligations of the FMSA, if such person has, or can acquire, the right to vote on our shares or, in the case of depository receipts, our underlying shares. The acquisition of (conditional) voting rights by a pledgee or usufructuary may also trigger the notification obligations as if the pledgee or beneficial owner were the legal holder of our shares or voting rights on our shares. A holding in certain cash settled derivatives (such as cash settled call options and total equity return swaps) referencing to our shares should also be taken into account for the purpose of calculating the percentage of capital interest.General. A non-resident Shareholder will not be subject to Netherlands income tax or corporate income tax with respect to dividends we distribute on our Common Shares or with respect to capital gains derived from the sale or disposition of our Common Shares, provided that:;, or, in case of a corporate Shareholder, such interest is a "business asset" or not held with the main purpose or one of the main purposes to avoid Dutch income tax or dividend tax for another person; andFor tax years beginning before 2013, suchSuch dividends will be eligible to be treated by U.S. Holder individuals, trusts and estates as “qualified dividend income” subject to a maximum tax rate of 1520 percent (plus possibly an additional 3.8 percent on net investment income), if the shareholder receiving the dividend satisfies the holding period requirements, and if we are not treated for our taxable year in which the dividend is paid, or our preceding taxable year, as a passive foreign investment company (see “Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Status”). To the extent that such distribution exceeds our current or accumulated earnings and profits, it will be treated as a non-taxable return of capital to the extent of the U.S. Holder’s adjusted tax basis in our Common Shares and thereafter as taxable capital gain. Dividends generally will be treated as income from sources outside the United States and generally will be passive income (or, in the case of certain holders, “financial services income”) for purposes of the foreign tax credit limitation. Dividends we pay will not be eligible for the dividends received deduction allowed to corporations in certain circumstances under the United States Internal Revenue Code of 1986, as amended (the Code). A U.S. Holder may elect annually to either deduct The Netherlands withholding tax (see “Taxation—Netherlands Tax Considerations—Dividend Withholding Tax”) against their income (in which case, the election will apply to all foreign income taxes such U.S. Holder paid in that year) or take the withholding taxes as a credit against their U.S. tax liability, subject to U.S. foreign tax credit limitation rules. If the dividends are qualified for the lower applicable capital gains rate (as discussed in the above paragraph)above), the amount of the dividend income taken into account for calculating the foreign tax credit limitation will in general be limited to the gross amount of the dividend, multiplied by the reduced rate, divided by the highest rate of tax normally applicable to dividends. The rules governing the foreign tax credit are complex. We urge you to consult with your own tax advisors regarding the availability of the foreign tax credit in your particular circumstances.15%20% for tax years beginning before 2013 for our20092011 and December 31, 20102012 and do not expect to be a PFIC for the current taxable year. No assurances can be made, however, that the IRS will not challenge this position or that we will not subsequently become a PFIC. Following the close of any tax year, we intend to promptly send a notice to all shareholders of record at any time during such year, if we determine that we are a PFIC.Pursuant to recently enacted legislation, effective for tax years beginning after March 18, 2010, individualsinformation.information (Form 8938). An individual who fails to timely furnish the required information may be subject to a penalty, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in the event a U.S. Holder does not file such a report, the statute of limitations on the assessment and collection of U.S. federal income taxes of such U.S. Holder for the related tax year may not close before such report is filed. Under certain circumstances, an entity may be treated as an individual for purposes of the foregoing rules. U.S. holder (including entities) should consult their own tax advisors regarding their reporting obligations under this legislation.Item 11. Quantitative and Qualitative Disclosures About Market Risk usehave used interest rate derivative contracts on certain borrowing transactions to hedge fluctuating interest rates. We havepreviously entered into interest rate swaps in which we agreeagreed to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.We make use of ‘economic hedges’, i.e. These interest rate derivatives that do not have a formally designated hedging relationship as well as ‘accounting hedges’. All derivatives that qualify for hedge accounting are ‘cash-flow hedges’. matured in 2011.613 to the accompanying consolidated financial statements.2010,2012, we had $828.4$394.0 million in cash and cash equivalents as well as $106.1$90.5 million in short-term investments. Interest income earned on our cash investments is affected by changes in the relative levels of market interest rates. We only invest in high-grade investment instruments. A hypothetical adverse 10% movement in market interest rates would decrease 2010 earnings by approximately $0.3 million.insignificantno amounts outstanding against our lines of credit at December 31, 2010.2012. A hypothetical adverse 10% movement in market interest rates would not have materially impacted our financial statements.2010,2012, we had $873.0$847.0 million in long-term debt, none of which $325.0 million was, taking existing cash flow hedges into considerations, effectivelyis at a variable rate. A hypothetical adverse 10% movement in market interest rates would decrease 2010 earnings by approximately $0.2 million, based on the period-end interest rate.Payment forWe use an in-house bank approach to net and settle intercompany purchases of inventory is required within 30 days from invoice date. The delay betweenpayables and receivables as well as intercompany foreign exchanged swaps and forward contracts in order to centralize the date the manufacturing subsidiaries record revenue and the date when the payment is received from the purchasing subsidiaries exposes us to foreign exchange risk. Torate risk to the extent practicable, such exposures are offset by operational measures, which include intercompany factoring transactions.possible. We have entered into in the past and may enter into in the future into foreign exchange derivatives including forward contractsforwards, swaps and options to manage the remaining foreign exchange risk.exposure.Item 12. Description of Securities Other than Equity Securities Item 13. Defaults, Dividend Arrearages and Delinquencies Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds Item 15. Controls and Procedures 2010,2012, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Managing Directors, as appropriate to allow timely decisions regarding required disclosure.2010.2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.2010,2012, our internal control over financial reporting is effective.Securities and Exchange Commission guidelines permit companies to exclude acquisitions from their assessment of internal control over financial reporting during the first year following an acquisition.forhas audited the year ended December 31, 2010, has issued an attestation report on management’s assessmenteffectiveness of ourthe Company's internal control over financial reporting whichas of December 31, 2012. Their report is included in this Annual Report on Form 20-F. This report appears20-F on page F-2.20102012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Item 16A. Audit Committee Financial Expert Item 16B. Code of Ethics Item 16C. Principal Accountant Fees and Services 20102012 Annual General Meeting of Shareholders held on June 30, 2010,27, 2012, our shareholders appointed Ernst & Young Accountants to serve as our auditors for the year ended December 31, 2010.Young. Set forth below are the total fees billed (or expected to be billed), on a consolidated basis, by Ernst & Young and affiliates for providing audit and other professional services in each of the last two years: 2010 2009 $ 947 $ 1,905 813 607 82 66 963 120 $ 2,805 $ 2,698 (in thousands) 2012 2011 Audit fees $ 1,211 $ 906 Audit-related fees 739 372 Tax fees 560 158 All other fees 1,398 233 Total $ 3,908 $ 1,669 Item 16D. Exemptions From the Listing Standards for Audit Committees Item 16E. Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Not applicable.Period (a)Total Number of Shares Purchased (b)Average Price Paid per Share (in $) (c) Total Number of Shares Purchased as Part of Publicly Announced Plans and Programs (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under these Plans and Programs October 10/1/2012 - 10/31/2012 544,242 $18.62 544,242 $89,864,000 November 1/1/2012 - 11/30/2012 619,459 $18.21 619,459 $78,586,000 December 12/1/2012 - 12/31/2012 779,090 $18.28 779,090 $64,347,000 Total 1,942,791 $18.35 1,942,791 Item 16F. Change in Registrant’s Certifying Accountant Item 16G. Corporate Governance Item 16H. Mine Safety Disclosure Item 17. Financial Statements Item 18. Financial Statements F-42F-39 included herein.(A) The following financial statements, together with the reports of Ernst & Young thereon, are filed as part of this annual report: Item 19. Exhibits 1.1 July 2, 2008June 30, 2011 (English translation) (Filed as Exhibit 4.1) (8) 2.3 2.3 Indenture between QIAGEN Finance (Luxembourg) S.A., QIAGEN N.V., Deutsche Trustee Company Limited, Deutsche Bank AG and Deutsche Bank Luxembourg S.A. dated August 18, 2004 (3) 2.4 Agreement In Connection With The Delivery Of Ordinary Shares In The Share Capital Of QIAGEN N.V. Pursuant To Convertible Notes Due 2024 Issued By QIAGEN Finance (Luxembourg) S.A. dated August 18, 2004 (3) 2.5 Amendment to Agreement In Connection With The Delivery Of Ordinary Shares In The Share Capital Of QIAGEN N.V. Pursuant To Convertible Notes Due 2024 Issued By QIAGEN Finance (Luxembourg) S.A. dated July 1, 2006 (5) 2.6 Indenture between QIAGEN Euro Finance (Luxembourg) S.A., QIAGEN N.V., Deutsche Trustee Company Limited, Deutsche Bank AG and Deutsche Bank Luxembourg S.A. dated May 16, 2006 (5) 2.7 Agreement In Connection With The Delivery Of Ordinary Shares In The Share Capital Of QIAGEN N.V. Pursuant To Convertible Notes Due 2026 Issued By QIAGEN Euro Finance (Luxembourg) S.A. dated May 8, 2006 (5) 2.8 Amendment to Agreement In Connection With The Delivery Of Ordinary Shares In The Share Capital Of QIAGEN N.V. Pursuant To Convertible Notes Due 2026 Issued By QIAGEN Euro Finance (Luxembourg) S.A. dated July 1, 2006 (5) *2.9 $400 Million Note Purchase Agreement dated as of October 16, 2012 2.9 Term Loan and Revolving Credit Facilities Agreement, dated July 13, 2007, between QIAGEN N.V. and Deutsche Bank AG (filed as Exhibit (b)) (6) 2.10Syndication and Amendment Agreement, dated September 25, 2007, between QIAGEN N.V. and Deutsche Bank AG (7)4.1 Lease Between QIAGEN GmbH and Gisantus Grundstuecksverwaltungsgesellschaft mbH, dated January 13, 1997 (the “Max-Volmer-Strasse 4 Lease”) (Filed as Exhibit 10.3) (1) 4.2 The “Max-Volmer-Strasse 4 Lease” Summary (Filed as Exhibit 10.3(a)) (1) 4.3 Lease, dated as of March 2, 1998, by and between Digene and ARE-Metropolitan Grove I, LLC (7)(6) 4.4 4.4 Fourth Amendment to Lease, dated November 15, 2005, between ARE-Metropolitan Grove I, LLC and Digene Corporation (7)(6) 4.5 Consultancy Agreement between QIAGEN GmbH and Dr. Metin Colpan dated December 4, 2003 (Filed as Exhibit 4.23) (3) 4.6Amendment No. 1 to the Consultancy Agreement between QIAGEN GmbH and Dr. Metin Colpan dated February 11, 2004 (4) 4.7Amendment No. 2 to the Consultancy Agreement between QIAGEN GmbH and Dr. Metin Colpan dated March 23, 2009 (9) 4.84.5 QIAGEN N.V. Amended and Restated 2005 Stock Plan (Filed as Exhibit 99.4) (2)99.1) (8) 4.9 4.6 Digene Corporation Amended and Restated Stock Option Plan (Filed as Exhibit 99.3) (2) *8.1*8.1 List of Subsidiaries *12.1 Certifications under Section 302; Peer M. Schatz, Managing Director and Chief Executive Officer *12.2 Certifications under Section 302; Roland Sackers, Managing Director and Chief Financial Officer *13.1 Certifications under Section 906; Peer M. Schatz, Managing Director and Chief Executive Officer and Roland Sackers, Managing Director and Chief Financial Officer *15.1 Consent of Independent Registered Public Accounting Firm †*101 XBRL Interactive Data File * Filed herewith. † Pursuant to Rule 406(T) of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. (1) Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on March 31, 2000. (2) Incorporated by reference to Registration Statement of QIAGEN N.V. on Form S-8 filed with the Securities and Exchange Commission on August 7, 2007. (3) Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on April 19, 2005. (4) Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on April 3, 2006. (5) Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on April 2, 2007. (6)Incorporated by reference to Amendment No. 2 to Schedule TO of QIAGEN N.V. filed with the Securities and Exchange Commission on July 18, 2007.(7)(6)Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on March 20, 2008. (8)Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on March 25, 2009.(9)(7)Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on March 17, 2010. (8) Incorporated by reference to Registration Statement of QIAGEN N.V. on Form S-8 filed with the Securities and Exchange Commission on November 17, 2011 QIAGEN N.V. 18, 2011 By: Peer M. Schatz, Chief Executive Officer Roland Sackers, Chief Financial Officer Page 20102012 and 2009,2011, and the related consolidated statements of income, comprehensive income, shareholders’changes in equity and cash flows for each of the three years in the period ended December 31, 2010.2012. Our audits also included the financial statement schedule listed in the Index at Item 18A.18(A). These financial statements and schedule are the responsibility of the Company’sCompany's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.20102012 and 2009,2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2010,2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.Subsidiaries’Subsidiaries' internal control over financial reporting as of December 31, 2010,2012, based on criteria established in Internal Control—IntegratedControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 18, 20111, 2013 expressed an unqualified opinion thereon.March 1, 2013 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Düsseldorf, Germany /s/ Hendrik Hollweg /s/ Ernst & Young GmbHTobias SchlebuschWirtschaftsprüfer Wirtschaftsprü fungsgesellschaftferMarch 18, 2011[German Public Auditor] Mannheim, Germany[German Public Auditor] Subsidiaries’Subsidiaries' internal control over financial reporting as of December 31, 2010,2012, based on criteria established in Internal Control—IntegratedControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). QIAGEN N.V. and Subsidiaries’Subsidiaries' management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report of Management on Internal Control Overover Financial Reporting. Our responsibility is to express an opinion on the company’scompany's internal control over financial reporting based on our audit.company’scompany's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’scompany's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’scompany's assets that could have a material effect on the financial statements.2010,2012, based on the COSO criteria. also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of QIAGEN N.V. and Subsidiaries as of December 31, 20102012 and 2009,2011, and the related consolidated statements of income, comprehensive income, shareholders’changes in equity and cash flows for each of the three years in the period ended December 31, 20102012 of QIAGEN N.V. and Subsidiaries and our report dated March 18, 20111, 2013 expressed an unqualified opinion thereon.March 1, 2013 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Düsseldorf, Germany /s/ Hendrik Hollweg /s/ Ernst & Young GmbHTobias SchlebuschWirtschaftsprüfer Wirtschaftsprü fungsgesellschaftferMarch 18, 2011[German Public Auditor] Mannheim, Germany[German Public Auditor] ASSETS As of December 31, (dollars in thousands) 2010 2009 (2) $ 828,407 $ 825,557 (8) 106,077 40,000 (2) 197,418 193,737 10,920 12,907 (2) 126,633 130,851 (9) 64,402 96,893 (13) 30,731 33,525 1,364,588 1,333,470 (10) 345,664 317,467 (12) 1,352,281 1,337,064 (12) 753,327 752,296 (13) 37,182 26,387 60,953 29,780 2,549,407 2,462,994 $ 3,913,995 $ 3,796,464 As of December 31, Note 2012 2011 Assets Current assets: Cash and cash equivalents $ 394,037 $ 221,133 Short-term investments (7) 90,451 54,577 Accounts receivable, net of allowance for doubtful accounts of $5,221 and $4,315 in 2012 and 2011, respectively (3) 250,729 230,770 Income taxes receivable 39,150 19,009 Inventories, net (3) 135,293 132,236 Prepaid expenses and other current assets (8) 55,363 59,055 Deferred income taxes (16) 27,598 28,609 Total current assets 992,621 745,389 Long-term assets: Property, plant and equipment, net (9) 418,932 371,792 Goodwill (11) 1,759,898 1,733,722 Intangible assets, net of accumulated amortization of $532,006 and $417,430 in 2012 and 2011, respectively (11) 853,872 819,487 Deferred income taxes (16) 2,323 3,141 Other long-term assets 59,985 56,154 Total long-term assets 3,095,010 2,984,296 Total assets $ 4,087,631 $ 3,729,685 LIABILITIES AND SHAREHOLDERS’ EQUITY As of December 31, (dollars and shares in thousands) 2010 2009 $ 47,803 $ 43,775 (14), (19) 209,054 252,116 25,211 10,727 (15) 75,835 50,000 (13) 30,504 18,912 388,407 375,530 (15), (19) 797,171 870,000 (13) 200,667 212,690 51,397 47,075 1,049,235 1,129,765 (17) — — — — 2,724 2,711 1,648,985 1,622,733 759,890 615,579 (5) 64,754 50,146 2,476,353 2,291,169 $ 3,913,995 $ 3,796,464 As of December 31, Note 2012 2011 Liabilities and equity Current liabilities: Current portion of long-term debt (15) $ 948 $ 1,617 Short-term loans (15) — 142,329 Accounts payable 51,311 59,848 Accrued and other liabilities (of which $7,008 and $7,383 in 2012 and 2011 due to related parties) (12) (23) 196,447 213,769 Income taxes payable 14,863 31,211 Deferred income taxes (16) 3,300 2,862 Total current liabilities 266,869 451,636 Long-term liabilities: Long-term debt, net of current portion (of which $445,000 in 2012 and 2011 due to related parties) (15) (23) 846,044 446,005 Deferred income taxes (16) 191,609 210,365 Other liabilities 58,746 63,881 Total long-term liabilities 1,096,399 720,251 Commitments and contingencies (20) Equity: Preference shares, 0.01 EUR par value, authorized—450,000 shares, no shares issued and outstanding — — Financing preference shares, 0.01 EUR par value, authorized—40,000 shares, no shares issued and outstanding — — Common Shares, 0.01 EUR par value, authorized—410,000 shares, issued and outstanding— 236,487 and 234,221 shares at December 31, 2012 and 2011, respectively 2,769 2,739 Additional paid-in capital 1,718,163 1,673,733 Retained earnings 985,434 855,928 Accumulated other comprehensive income (17) 43,991 15,904 Less treasury shares, at cost—1,943 shares at December 31, 2012 (18) (35,653 ) — Equity attributable to the owners of QIAGEN N.V. 2,714,704 2,548,304 Noncontrolling interest 9,659 9,494 Total equity 2,724,363 2,557,798 Total liabilities and equity $ 4,087,631 $ 3,729,685 Years ended December 31, (in thousands, except per share data) 2010 2009 2008 (2) $ 1,087,431 $ 1,009,825 $ 892,975 371,869 342,752 293,285 715,562 667,073 599,690 (2) 126,040 107,900 97,331 267,484 244,814 227,408 (2) 110,009 115,933 113,936 23,492 18,221 14,368 — — 985 527,025 486,868 454,028 188,537 180,205 145,662 4,457 3,522 9,511 (27,815 ) (29,641 ) (37,527 ) 7,942 18,244 1,640 (15,416 ) (7,875 ) (26,376 ) 173,121 172,330 119,286 (2), (13) 28,810 34,563 29,762 $ 144,311 $ 137,767 $ 89,524 — — 491 $ 144,311 $ 137,767 $ 89,033 $ 0.62 $ 0.67 $ 0.45 $ 0.60 $ 0.64 $ 0.44 (3) 232,635 206,928 196,804 (3) 240,483 213,612 204,259 Years ended December 31, Note 2012 2011 2010 Net sales (3) $ 1,254,456 $ 1,169,747 $ 1,087,431 Cost of sales 430,432 419,938 371,869 Gross profit 824,024 749,809 715,562 Operating expenses: Research and development (3) 122,476 130,636 126,040 Sales and marketing 343,549 307,332 267,484 General and administrative, restructuring, integration and other (3) (6) 152,068 185,507 110,009 Acquisition-related intangible amortization 36,117 26,746 23,492 Total operating expenses 654,210 650,221 527,025 Income from operations 169,814 99,588 188,537 Other income (expense): Interest income 2,382 6,128 4,457 Interest expense (23,452 ) (25,358 ) (27,815 ) Other (expense) income, net (3,591 ) 15,854 7,942 Total other expense (24,661 ) (3,376 ) (15,416 ) Income before provision for income taxes 145,153 96,212 173,121 Provision for income taxes (3) (16) 15,616 1,263 28,810 Net income 129,537 94,949 144,311 Net income (loss) attributable to noncontrolling interest 31 (1,089 ) — Net income attributable to the owners of QIAGEN N.V. $ 129,506 $ 96,038 $ 144,311 Basic net income per common share attributable to the owners of QIAGEN N.V. $ 0.55 $ 0.41 $ 0.62 Diluted net income per common share attributable to the owners of QIAGEN N.V. $ 0.54 $ 0.40 $ 0.60 Weighted-average common shares outstanding (in thousands) Basic (19) 235,582 233,850 232,635 Diluted (19) 240,746 239,064 240,483 Years ended December 31, (in thousands) Note 2010 2009 2008 $ 144,311 $ 137,767 $ 89,033 (6 ) 14,636 (12,741 ) (6,010 ) (6 ) (8,874 ) 8,367 567 5,762 (4,374 ) (5,443 ) — — (900 ) (184 ) 300 93 10,920 42,001 (64,046 ) 16,498 37,927 (70,296 ) (1,890 ) (2,936 ) 10,427 14,608 34,991 (59,869 ) $ 158,919 $ 172,758 $ 29,164 Years ended December 31, Note 2012 2011 2010 Net income $ 129,537 $ 94,949 $ 144,311 Gains on cash flow hedges, before tax (13) 305 5,417 14,636 Reclassification adjustments on cash flow hedges, before tax (13) 781 (3,961 ) (8,874 ) Cash flow hedges, before tax 1,086 1,456 5,762 (Losses) gains on pensions, before tax (863 ) 180 (184 ) Foreign currency translation adjustments, before tax 27,639 (51,383 ) 10,920 Other comprehensive income (loss), before tax 27,862 (49,747 ) 16,498 Income tax relating to components of other comprehensive income (loss) 416 (1,174 ) (1,890 ) Total other comprehensive income (loss), after tax 28,278 (50,921 ) 14,608 Comprehensive income 157,815 44,028 158,919 Comprehensive (income) loss attributable to noncontrolling interest (222 ) 3,160 — Comprehensive income attributable to the owners of QIAGEN N.V. $ 157,593 $ 47,188 $ 158,919 SHAREHOLDERS’CHANGES IN EQUITY Common Shares Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total
Shareholders’
Equity (in thousands) Shares Amount 195,335 $ 2,175 $ 925,597 $ 388,779 $ 75,024 $ 1,391,575 — — — 89,033 — 89,033 — — — — (3,920 ) (3,920 ) — — — — 533 533 — — — — (780 ) (780 ) — — — — 65 65 — — — — (55,767 ) (55,767 ) 17 1 301 — — 302 219 3 4,231 — — 4,234 395 5 4,995 — — 5,000 1,873 28 13,427 — — 13,455 — — (662 ) — — (662 ) — — 9,791 — — 9,791 — — 985 — — 985 197,839 $ 2,212 $ 958,665 $ 477,812 $ 15,155 $ 1,453,844 — — — 137,767 — 137,767 — — — — (9,005 ) (9,005 ) — — — — 5,841 5,841 — — — — 210 210 — — — — 37,945 37,945 31,625 462 623,109 — — 623,571 — — 1 — — 1 2,610 37 26,883 — — 26,920 — — 3,363 — — 3,363 — — 9,747 — — 9,747 — — 965 — — 965 232,074 $ 2,711 $ 1,622,733 $ 615,579 $ 50,146 $ 2,291,169 — — — 144,311 — 144,311 (5) — — — — 9,807 9,807 (5) — — — — (6,125 ) (6,125 ) (5) — — — — (129 ) (129 ) (5) — — — — 11,055 11,055 1,041 13 11,228 — — 11,241 — — 445 — — 445 (16) — — 13,592 — — 13,592 — — 987 — — 987 233,115 $ 2,724 $ 1,648,985 $ 759,890 $ 64,754 $ 2,476,353 Note Common Shares Treasury Shares Equity Attributable to the Owners of QIAGEN N.V. Non-controlling interest Shares Amount Shares Amount 232,074 $ 2,711 $ 1,622,733 $ 615,579 $ 50,146 — $ — $ 2,291,169 $ — $ 2,291,169 Net income — — — 144,311 — — — 144,311 — 144,311 Unrealized gain, net on hedging contracts — — — — 9,807 — — 9,807 — 9,807 Realized gain, net on hedging contracts — — — — (6,125 ) — — (6,125 ) — (6,125 ) Unrealized loss, net on pension — — — — (129 ) — — (129 ) — (129 ) Translation adjustment, net — — — — 11,055 — — 11,055 — 11,055 Common stock issuances under employee stock plans 1,041 13 11,228 — — — — 11,241 — 11,241 Excess tax benefit of employee stock plans — — 445 — — — — 445 — 445 Share-based compensation — — 13,592 — — — — 13,592 — 13,592 Proceeds from subscription receivables — — 987 — — — — 987 — 987 233,115 $ 2,724 $ 1,648,985 $ 759,890 $ 64,754 — $ — $ 2,476,353 $ — $ 2,476,353 Acquisition of Ipsogen S.A. — — — — — — — — 42,437 42,437 Acquisition of Ipsogen S.A. shares from non-controlling interests — — — — — — — — (29,783 ) (29,783 ) Net income — — — 96,038 — — — 96,038 (1,089 ) 94,949 Unrealized gain, net on hedging contracts — — — — 3,707 — — 3,707 — 3,707 Realized gain, net on hedging contracts — — — — (2,825 ) — — (2,825 ) — (2,825 ) Unrealized gain, net on pension — — — — 126 — — 126 — 126 Translation adjustment, net — — — — (49,858 ) — — (49,858 ) (2,071 ) (51,929 ) Common stock issuances under employee stock plans 1,106 15 8,763 — — — — 8,778 — 8,778 Excess tax benefit of employee stock plans — — (4,565 ) — — — — (4,565 ) — (4,565 ) Share-based compensation — — 19,539 — — — — 19,539 — 19,539 Proceeds from subscription receivables — — 1,011 — — — — 1,011 — 1,011 234,221 $ 2,739 $ 1,673,733 $ 855,928 $ 15,904 — $ — $ 2,548,304 $ 9,494 $ 2,557,798 Acquisition of Ipsogen S.A. shares from non-controlling interests — — — — — — — — (57 ) (57 ) Net income — — — 129,506 — — — 129,506 31 129,537 Unrealized gain, net on hedging contracts (17) — — — — 209 — — 209 — 209 Realized loss, net on hedging contracts (17) — — — — 553 — — 553 — 553 Unrealized loss, net on pension (17) — — — — (598 ) — — (598 ) — (598 ) Translation adjustment, net (17) — — — — 27,923 — — 27,923 191 28,114 Purchase of treasury shares (18) — — — — — (1,943 ) (35,653 ) (35,653 ) — (35,653 ) Common stock issuances under employee stock plans 2,266 30 16,549 — — — — 16,579 — 16,579 Excess tax benefit of employee stock plans — — 1,489 — — — — 1,489 — 1,489 Share-based compensation (21) — — 25,356 — — — — 25,356 — 25,356 Proceeds from subscription receivables — — 1,036 — — — — 1,036 — 1,036 236,487 $ 2,769 $ 1,718,163 $ 985,434 $ 43,991 (1,943 ) $ (35,653 ) $ 2,714,704 $ 9,659 $ 2,724,363 Years ended December 31, (in thousands) 2010 2009 2008 $ 144,311 $ 137,767 $ 89,033 57,511 48,575 42,618 85,268 71,819 63,086 — — 985 — 10,030 5,869 (16) 13,592 9,747 9,791 (1,976 ) (5,942 ) (1,775 ) (13) (19,942 ) (10,609 ) (2,563 ) — (11,501 ) — (12,113 ) 1,907 (843 ) (2) (6,884 ) (25,213 ) (19,078 ) (2) 2,348 (21,534 ) (30,371 ) (9) 6,431 (9,364 ) (396 ) (2,965 ) (8,213 ) 4,975 3,482 (9,076 ) 5,753 (14) (26,983 ) 23,859 19,081 (13) 13,639 12,473 (13,536 ) (4,967 ) 2,270 369 250,752 216,995 172,998 (79,666 ) (52,179 ) (39,448 ) 3,474 869 1,233 (44,243 ) (17,178 ) (18,469 ) 7,985 1,476 (4,175 ) (8) (110,076 ) (40,000 ) — (8) 44,000 — 2,313 (4) (36,985 ) (234,732 ) (150,531 ) — — (1,441 ) (215,511 ) (341,744 ) (210,518 ) (15) 3,016 — — (15) (50,000 ) (25,000 ) (5,000 ) (3,262 ) (2,991 ) (2,995 ) 987 965 985 1,976 5,942 1,775 11,241 650,492 18,455 814 (210 ) (451 ) (35,228 ) 629,198 12,769 2,837 (12,205 ) 10,744 2,850 492,244 (14,007 ) 825,557 333,313 347,320 $ 828,407 $ 825,557 $ 333,313 $ 25,557 $ 27,662 $ 36,460 $ 33,781 $ 36,003 $ 39,475 $ 1,185 $ 376 $ 141 $ 30,341 $ — $ — $ — $ — $ 4,536 Years ended December 31, Note 2012 2011 2010 Cash flows from operating activities: Net income $ 129,537 $ 94,949 $ 144,311 Adjustments to reconcile net income to net cash provided by operating activities, net of effects of businesses acquired: Depreciation and amortization 197,892 167,377 142,779 Non-cash acquisition, impairment and restructuring related costs 16,909 43,029 — Share-based compensation expense (21) 25,356 19,539 13,592 Excess tax benefits from share-based compensation (1,489 ) (4,153 ) (1,976 ) Deferred income taxes (16) (22,767 ) (31,861 ) (19,942 ) Changes in fair value of contingent consideration (14) (11,463 ) 253 — Other (5,227 ) (1,437 ) (12,113 ) Net changes in operating assets and liabilities: Accounts receivable (3) (14,289 ) (28,203 ) (6,884 ) Inventories (3) (20,376 ) (15,945 ) 2,348 Prepaid expenses and other (8) 3,456 (10,082 ) 6,431 Other assets 7 (4,183 ) (2,965 ) Accounts payable (9,945 ) 7,261 3,482 Accrued and other liabilities (12) (13,255 ) 19,577 (26,983 ) Income taxes (16) (35,328 ) (6,244 ) 13,639 Other 5,862 (5,098 ) (4,967 ) Net cash provided by operating activities 244,880 244,779 250,752 Cash flows from investing activities: Purchases of property, plant and equipment (101,996 ) (86,805 ) (79,666 ) Proceeds from sale of equipment 1,312 2,020 3,474 Purchases of intangible assets (26,089 ) (34,583 ) (44,243 ) Proceeds from sale / cash paid for investments (8,173 ) (19,284 ) 7,985 Purchases of short-term investments (7) (39,942 ) (186,817 ) (110,076 ) Sales of short-term investments (7) 5,999 242,630 44,000 Cash paid for acquisitions, net of cash acquired (5) (131,997 ) (457,483 ) (36,985 ) Net cash used in investing activities (300,886 ) (540,322 ) (215,511 ) Cash flows from financing activities: Net repayment/proceeds from short-term debt (15) (143,311 ) 142,329 — Proceeds from debt (15) 400,000 44,000 3,016 Repayment of debt (15) (1,607 ) (469,857 ) (50,000 ) Cash paid for debt issuance costs (15) (2,084 ) — — Principal payments on capital leases (3,780 ) (3,703 ) (3,262 ) Proceeds from subscription receivables 1,036 1,011 987 Excess tax benefits from share based compensation 1,489 4,153 1,976 Proceeds from the exercise of stock options 16,579 8,778 11,241 Purchase of treasury shares (18) (35,653 ) — — Acquisition of noncontrolling interest (57 ) (29,783 ) — Other financing activities (6,008 ) (7,558 ) 814 Net cash provided by (used in) financing activities 226,604 (310,630 ) (35,228 ) Effect of exchange rate changes on cash and cash equivalents 2,306 (1,101 ) 2,837 Net increase (decrease) in cash and cash equivalents 172,904 (607,274 ) 2,850 Cash and cash equivalents, beginning of year 221,133 828,407 825,557 Cash and cash equivalents, end of year $ 394,037 $ 221,133 $ 828,407 Supplemental cash flow disclosures: Cash paid for interest $ 17,298 $ 20,760 $ 25,557 Cash paid for income taxes $ 61,586 $ 41,494 $ 33,781 Supplemental disclosure of non-cash investing and financing activities: Equipment purchased through capital lease $ 492 $ 545 $ 1,185 Investment acquired in non-monetary exchange $ 3,842 $ — $ — Intangible assets acquired in non-monetary exchange $ 5,658 $ — $ 30,341 20101.Description of the Business and Basis of PresentationsampleSample and assay technologies.Assay Technologies. These technologies—consumable products such as sample and assay kits and automated instrumentation systems—empower customers to transform raw biological samples into valuable molecular information. We serve four major customer classes: molecular diagnostics laboratories, academic researchers, pharmaceutical research and development groups, and applied testingMolecular Diagnostics laboratories; Applied Testing customers in fields such as forensics, veterinary diagnostics and food safetysafety; Pharmaceutical research and biosecurity.development groups, and Academic researchers. We market our products in more than 100 countries.Basis of PresentationConsolidated Financial Statementsconsolidated financial statements were prepared in conformityaccordance with U.S. generally accepted accounting principles (GAAP) and all amounts are presented in U.S. dollars rounded to the nearest thousand, unless otherwise indicated.ReclassificationsCertain reclassifications of prior year amounts The consolidated financial statements have been madeprepared on a historical cost basis, except for derivative financial instruments, contingent consideration and available-for-sale financial instruments that have been measured at fair value.conformAchieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, to amend FASB ASC 820, Fair Value Measurement, to improve comparability of fair value measurements in both U.S. GAAP and IFRS financial statements. Under these amendments, the FASB does not intend to cause any change in the application of the requirements under Topic 820. Some amendments provide clarification on the application of existing fair value measurement requirements, while other amendments change a particular principle or requirement for measuring fair value, or change disclosure requirements about fair value measurements. This guidance became effective for us on January 1, 2012, and the adoption had no effect on our financial position, results of operations or cash flows.year presentation.2.Summary of Significant Accounting PoliciesConsolidated Financial Statementsconsolidated financial statements include the accounts of QIAGEN N.V. and our wholly ownedits wholly-owned subsidiaries other than those that are not considered variable interest entities for which we are not the primary beneficiary.entities. All significant intercompany accounts and transactions have been eliminated. Investments in companies where we exercise significant influence over the operations but do not have control, and which we have determined thatwhere we are not the primary beneficiary, are accounted for using the equity method. All other investments are accounted for under the cost method.functionalreporting currency is the U.S. dollar and our subsidiaries’ functional currencies are generally the local currency of the respective countries in which they are headquartered. All amounts in the financial statements of entities whose functional currency is not the U.S. dollar are translated into U.S. dollar equivalents at exchange rates as follows: (1) assets and liabilities at period-end rates, (2) income statement accounts at average exchange rates for the period, and (3) components of shareholders’ equity at historical rates. Translation gains or losses are recorded in shareholders’ equity, and transaction gains and losses are reflected in net income.income as a component of other income, net. Realized gains or losses on the value of financialderivative contracts entered into to hedge the exchange rate exposure of receivables and payables are also included in net income.income as a component of other income, net. The net gain (loss) on foreign currency transactions in 2010, 20092012, 2011 and 20082010 was $2.6$(7.2) million $5.6, $12.4 million, and ($0.2)$2.6 million, respectively, and is included in other (expense) income, net.In connection with recent acquisitions and internal restructurings, weWe determined that we operate as one operating segment in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 280,Segment Reporting. Our chief operating decision maker (CODM) makes decisions based on the Company as a whole. In addition, we have a common basis of organization and types of products and services which derive revenues and consistent product margins. Accordingly, we operate and make decisions as one reporting unit. Certain reclassifications of prior year amounts have been made to conform to the current year presentation, including reclassifications related to reporting as a single segment under ASC Topic 280,Segment Reporting.andor determinable; and (4) collectability is reasonably assured.Related revenue includespayments.payments and typically account for approximately 1-3% of our net sales. License fees from research collaborations include payments for technology transfer and access rights. Non-refundable, up-front payments received in connection with collaborative research and development agreements are generally deferred and recognized on a straight-line basis over the contract period during which there is any continuing obligation. Revenue from intellectual property and patent sales is recognized when earned, either at the time of sale, or over the performance period. Payments for milestones, generally based on the achievement of substantive and at-risk performance criteria, are recognized in full at such time as the specified milestone has been achieved according to the terms of the agreement. Royalties from licensees are based on reported sales of licensed products and revenues are calculated based on contract terms when reported sales are reliably measurable, fees are fixed andor determinable and collectability is reasonably assured.contracts.contracts and typically account for approximately 10-15% of net sales. Revenue from instrumentation equipment is generally recognized when title passes to the customer, upon either shipment or written customer acceptance after satisfying any installation and training requirements. Forequipmentvia reagent rental agreements which place instrumentation with customers without requiring them to purchase the equipment. Instead, we recover the cost of providing the instrumentation in the amount charged for Sample and Assay Technology consumable products. The instruments placed with customers under a reagent rental agreement are depreciated and charged to cost of sales that contain other obligations, such as providing consumables, advanced training, separately-priced extended warranty services or separately-priced extended maintenance contracts, revenue is first allocated to separately-priced extended warranty or maintenance contracts based on the stated contract price, then the remaining contract value is allocated to the remaining elements based on objective, verifiable evidence of the fair value of the individual components. The price charged when the element is sold separately generally determines its fair value. Revenues for extended warranty services or extended product maintenance contracts are deferred and recognized on a straight-line basis over the contract period.estimated life of the instrument, typically There is objective and reliable evidence of the fair value of the undelivered items; and deliveryIf there and reliable evidence of fair valueselling price, if it exists; or otherwise (b) third-party evidence of selling price. If neither vendor-specific objective evidence nor third-party evidence of selling price exists for all unitsa deliverable, then the best estimated selling price for the deliverable is used. Prior to January 1, 2011, only the vendor-specific objective evidence of accounting in an arrangement, theselling price was used. The arrangement consideration is allocated to the separate units of accounting based on each unit’s relative fair value. Revenue is then recognized using a proportional-performance method, such as recognizing revenue based on relative fair value of products or services delivered, or on a straight-line basis as appropriate. If these criteria are not met, deliverables included in an arrangement are accounted for as a single unit of accounting and revenue and costs are deferred until the period in which the final deliverable is provided.(in thousands) Total $ 2,724 1,347 (759 ) (93 ) 249 $ 3,468 3,678 (3,258 ) (477 ) 29 $ 3,440 (in thousands) Total BALANCE AT DECEMBER 31, 2010 $ 3,440 Provision charged to cost of sales 4,376 Usage (3,649 ) Adjustments to previously provided warranties, net (198 ) Currency translation (59 ) BALANCE AT DECEMBER 31, 2011 $ 3,910 Provision charged to cost of sales 4,631 Usage (4,099 ) Adjustments to previously provided warranties, net (213 ) Currency translation 134 BALANCE AT DECEMBER 31, 2012 $ 4,363 asset.2010, 20092012, 2011 and 2008,2010, shipping and handling costs totaled $19.9$23.4 million $17.5, $24.0 million and $17.1$19.9 million, respectively.incurred.incurred and are included as a component of sales and marketing expense. Advertising costs for the years ended December 31, 2010, 20092012, 2011 and 20082010 were $7.6$6.6 million $10.6, $6.3 million and $21.5$7.6 million, respectively. purchase business combinations. These costs represent incremental costs that we believe would not have been incurred absent the business combinations. Major components of these costs include payroll and related costs for employees remaining with the Company on a transitional basis; public relations, advertising and media costs for re-branding of the combined organization; and, consulting and related fees incurred to integrate or restructure the acquired operations. Other costs include relocation and restructuring costs incurred in connection with a restructuring which was not contemplated at the time of acquisition.costs. These costs are expensed as incurred. only for hedging purposes. The purpose of the derivative instruments is to minimize the variability of cash flows or income statement impact associated with the anticipated transactions being hedged or to hedge fluctuating interest rates. As changes in foreign currency or interest rate impact the value of anticipated transactions, the fair value of the forward or swap contracts also changes, offsetting foreign currency or interest rate fluctuations. Derivative instruments are recorded on the balance sheet at fair value. Changes in fair value of derivatives are recorded in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction.and the expected life of the award.award and forfeiture rate.restricted stock units granted and the fair market value of our shares on the grant date. The fair market value at the time of the grant, less an estimate for pre-vesting forfeitures, is amortized torecognized in expense ratably over the vesting period.11)10).2010, 20092012, 2011 and 2008,2010, write-offs of accounts receivable totaled $0.8$0.2 million $0.6, $0.6 million and $0.7$0.8 million while provisions for doubtful accounts which were charged to expense totaled $1.4$1.0 million $1.7, $2.1 million and $0.8$1.4 million, respectively. For all years presented, no single customer represented more than ten percent of accounts receivable or consolidated net sales.Inventories20102012 and 2009: As of December 31, (in thousands) 2010 2009 $ 23,738 $ 33,172 33,043 39,856 69,852 57,823 $ 126,633 $ 130,851 As of December 31, (in thousands) 2012 2011 Raw materials $ 29,755 $ 26,645 Work in process 34,231 33,757 Finished goods 71,307 71,834 Total inventories $ 135,293 $ 132,236 (one(one to 40 years). Amortization of leasehold improvements is computed on a straight-line basis over the lesser of the remaining life of the lease or the estimated useful life.life of the improvement asset. We have a policy of capitalizing expenditures that materially increase assets’ useful lives and charging ordinary maintenance and repairs to operations as incurred. When property or equipment is disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in other income (expense).permanent decline in value below the carrying amount has occurred.2010, 20092012, 2011 and 2008,2010, goodwill has not been impaired.identifiedidentifiable cash flows that are largely independent of the cash flows of other groups of assets. We deem an asset to be impaired if a forecast of undiscounted projected future operating cash flows directly related to the asset, including disposal value, if any, is less than its carrying amount. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds fair value. Wevalue which is determined by applicable market prices, when available. When market prices are not available, we generally measure fair value by discounting projected future cash flows.flows of the asset. Considerable judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could differ from such estimates.Recent Authoritative PronouncementsDecember 31, 2012Adoption and 2011, in connection with our internal restructuring we recorded asset impairment charges of New Accounting StandardsIn January 2010, the FASB has issued Accounting Standards Update (ASU) No. 2010-06,Fair Value Measurements$13.6 million and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This ASU requires new disclosures$42.1 million, respectively, in general and clarifies certain existing disclosure requirements about fair value measurements. The FASB’s objective is to improve these disclosuresadministrative, restructuring, integration and thus, increase the transparency in financial reporting. Specifically, ASU 2010-06 amends Codification Subtopic 820-10 to now require a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; andother expenses in the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity is now requiredaccompanying consolidated statements of income related to present separately information about purchases, sales, issuances, and settlements. In addition, ASU 2010-06 clarifies the requirements for previously required disclosures. For purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities; and a reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. We adopted these updates in 2010 without any impact.In February 2010, the FASB has issued ASU 2010-10,Consolidation (Topic 810): Amendments for Certain Investment Funds. The amendments in the ASU defer the effective dateabandonment of certain amendments toprojects. There were no material impairment losses recognized for long-lived assets during the consolidation requirements ofyear ended December 31, 2010.810,Consolidation,resulting from the issuance of FASB Accounting Standard No. 167,Amendments to FASB Interpretation 46(R). Specifically, the amendments to the consolidation requirements of Topic 810 resulting from the issuance of Standard No. 167 are deferred for a reporting entity’s interest in an entity that has all the attributes of an investment company; or for which it is industry practice to apply measurement principles for financial reporting purposes that are consistent with those followed by investment companies. The ASU does not defer the disclosure requirements in the Standard No. 167 amendments to Topic 810. The amendments in this ASU are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009, and for interim periods within that first annual reporting period. Early application is not permitted. We adopted these updates in 2010 without any impact.280, In February 2010, the FASB issued ASU No. 2010-09,Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure RequirementsSegment Reporting. The amendments in the ASU remove the requirement to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised asAs a result of either correctionour continued restructuring and streamlining of an error or retrospective applicationthe growing organization, our chief operating decision maker (CODM) makes decisions with regards to business operations and resource allocation based on evaluations of U.S. GAAP. The guidanceQIAGEN as a whole. Accordingly, we operate as one business segment. Summarized product category and geographic information is shown in the ASU was effective immediatelytables below.all financial statements that have not yet been issued or have not yet become available to be issued, except for guidancethe product categories are attributed based on those revenues related to sample and assay products and similarly related revenues, and revenues derived from instrumentation sales.(in thousands) 2012 2011 2010 Net Sales Consumables and related revenues $ 1,085,596 $ 1,011,863 $ 937,714 Instrumentation 168,860 157,884 149,717 Total $ 1,254,456 $ 1,169,747 $ 1,087,431 date throughlocation of the subsidiary generating the sale. QIAGEN operates manufacturing facilities in Germany, Switzerland, China, the United Kingdom, France and the United States that supply products to other countries. The sales from these manufacturing operations to other countries are included in the Net Sales ofconduit bond obligors should evaluate subsequent events (i.e.the manufacturing locations are based. The intersegment portions of such net sales are excluded to derive consolidated net sales. No single customer represents more than ten percent of consolidated net sales. Our official country of domicile is the Netherlands, which reported net sales of $23.7 million, $23.9 million and $21.5 million for the years ended 2012, 2011 and 2010, respectively, and these amounts are included in the line item Europe as shown in the table below.(in thousands) 2012 2011 2010 Net Sales Americas: United States $ 518,130 $ 466,502 $ 472,682 Other Americas 42,921 55,137 50,912 Total Americas 561,051 521,639 523,594 Europe 459,321 444,441 398,029 Asia Pacific & Rest of World 234,084 203,667 165,808 Total $ 1,254,456 $ 1,169,747 $ 1,087,431 (in thousands) 2012 2011 Long-lived assets Americas: United States $ 131,689 $ 98,717 Other Americas 2,196 2,579 Total Americas 133,885 101,296 Europe 272,227 259,220 Asia Pacific & Rest of World 12,820 11,276 Total $ 418,932 $ 371,792 (in thousands) AmniSure acquisition Purchase price: Cash consideration $ 101,415 Fair value of contingent consideration 4,530 $ 105,945 Allocation: Working capital $ 5,297 Fixed and other long-term assets 267 Developed technology, licenses and know-how 28,941 Customer relationships 25,520 Tradenames 2,692 In-process research and development 4,522 Goodwill 44,369 Deferred tax liability on fair value of identifiable intangible assets acquired (5,202 ) Long-term liabilities assumed (461 ) $ 105,945 were issued)of income. Acquisition-related costs for 2012 acquisitions amounted to $4.5 million.adopted these updatesmade contingent purchase price payments totaling $7.1 million in 2010 without any impact.In February 2010, the FASB issued ASU No. 2010-08,Technical Corrections2012 for acquisitions completed prior to Various Topics2012. The ASU is the resultcontingent purchase price payments were contractually due upon achievement of certain performance criteria of the FASB’s reviewacquired business.standardsproprietary QuantiFERON® technology. The technology provides information on the activity of the cell-mediated functions of the immune system from whole blood samples. By tapping into the body’s memory system, this approach allows diseases to determine if any provisions are outdated, contain inconsistencies, or need clarificationsbereflectlook even deeper than with DNA-based molecular testing and thereby strive to feed and drive our DNA-based molecular franchise. QuantiFERON® is a trademark of Cellestis, Ltd.FASB’s original intent.preliminary estimates other than the recognition of approximately $6.2 million of additional customer relationships, $0.3 million of additional developed technology, $3.9 million decrease of long-term deferred tax liability and an additional $1.6 million of other opening balance sheet adjustments. The FASB believescorresponding impact for these adjustments was a decrease to goodwill of $12.0 million. These changes to arrive at the amendments dofinal purchase price allocation were not fundamentally change U.S. GAAP. However, certain clarifications on embedded derivativesmaterial to the consolidated financial statements. As of December 31, 2012, the final purchase price allocation for Cellestis is as follows:(in thousands) Cellestis acquisition Purchase price: Cash consideration paid $ 372,452 $ 372,452 Allocation: Working capital $ 18,465 Fixed and other long-term assets 1,112 Developed technology, licenses and know-how 67,500 Customer relationships 48,800 Tradenames 12,000 Goodwill 258,886 Deferred tax liability on fair value of identifiable intangible assets acquired (34,079 ) Liabilities assumed (232 ) $ 372,452 hedging (Subtopic 815-15) may causebased in Marseille, France, that is a changeglobal leader in molecular profiling and personalized healthcare diagnostics for a broad range of applications in the applicationfield of hematology. The acquisition of Ipsogen provides QIAGEN access to a broad range of assays covering 15 biomarkers used worldwide for the diagnosis, prognosis and monitoring of patients with various blood cancers. Many of these assays also are used as companion diagnostics in personalized healthcare to make and guide treatment decisions. Many of Ipsogen’s assays have CE-IVD Marking in Europe and have been developed for use on QIAGEN's Rotor-Gene Q real-time PCR system. This has the potential to enable the smooth and rapid transfer of these unique products onto QIAGEN's QIAsymphony RGQ, a novel integrated sample-to-result laboratory automation platform that Subtopic and special transition provisions are providedincludes the Rotor-Gene Q system. On July 12, 2011, we paid €40.9 million ($57.4 million) for those amendments. The ASU contains various effective dates. The clarificationsthe initial 62.6% of Ipsogen outstanding common shares. On the acquisition date, the fair value of the guidancenoncontrolling interest was $42.4 million and the fair value of all Ipsogen outstanding shares and other equity instruments was approximately €70.2 million ($99.9 million). The fair value of the noncontrolling interest was based on embedded derivatives and hedging (Subtopic 815-15) are effective for fiscal years beginning after December 15, 2009.reference to quoted market values of Ipsogen stock. The amendments toassignment of the guidance on accounting for income taxes in a reorganization (Subtopic 852-740) apply to reorganizations for whichtotal consideration including the fair value of the noncontrolling interest as of the date of the reorganizationacquisition is on or aftershown below. Since the beginningacquisition we have paid an additional total of $29.8 million and hold 89.4% of the first annual reporting period beginningIpsogen shares on or after December 15, 2008. All other amendments are effectivea fully diluted basis as of the first reporting period (including interim periods) beginning after the date this ASU was issued. We adopted the update in 2010 without any impact.Recently Issued Accounting StandardsDecember 31, 2012In October 2009, the FASB issued new authoritative guidance regarding“Revenue Recognition—Multiple Deliverable Revenue Arrangements.”This update provides amendments.separating consideration in multiple deliverable arrangements and removes the objective-and-reliable-evidence-of-fair-value criterionIpsogen did not differ from the separation criteria usedpreliminary estimates other than the recognition of approximately $9.0 million of additional long-term deferred tax assets related to determine whether an arrangement involving multiple deliverables contains more than one unitnet operating losses, $8.1 million of accounting, replaces referencesadditional developed technology, $2.8 million of additional long-term deferred tax liability related to “fair value” with “selling price”the developed technology and a net change of $0.3 million to distinguish fromother intangible assets. The corresponding impact for these adjustments was a decrease to goodwill of $14.6 million. These changes to arrive at the fair value measurements required underfinal purchase price allocation were not material overall to the “Fair Value Measurementsconsolidated financial statements. As of December 31, 2012, the final purchase price allocation is as follows:(in thousands) Ipsogen acquisition Purchase price: Cash consideration paid $ 57,436 Fair value of remaining shares 42,437 $ 99,873 Allocation: Working capital $ 15,284 Deferred tax asset of acquired NOLs 8,997 Fixed and other long-term assets 2,429 Developed technology, licenses and know-how 44,500 Customer relationships 11,000 Tradenames 1,400 Goodwill 37,500 Deferred tax liability on fair value of identifiable intangible assets acquired (19,325 ) Liabilities assumed (1,912 ) $ 99,873 Disclosures”guidance, provides a hierarchy that entities must use to estimate the selling price, eliminates the use of the residual method for allocation, and expands the ongoing disclosure requirements. We will adopt this standard beginning January 1,Ipsogen are included in our consolidated results through December 31, 2011 and do not expect any impact.In April 2010, the FASB issued ASU No. 2010-17,Revenue Recognition—Milestone Method (Topic 605): Milestone Method of Revenue Recognition. The ASU codifies the consensus reached in Emerging Issues Task Force Issue No. 08-9,“Milestone Method of Revenue Recognition.” The amendments provide guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if themilestone is judged to meet certain criteria to be considered substantive. Milestones should be considered substantive in their entirety and may not be bifurcated. An arrangement may contain both substantive and nonsubstantive milestones, and each milestone should be evaluated individually to determine if it is substantive. The amendments in the ASU are effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. We will adopt this standard beginning January 1, 2011 and do not expect any impact.In April 2010, the FASB issued ASU No. 2010-12,Income Taxes (Topic 740).The ASU codifies an SEC Staff Announcement relating to accountingNet sales for the Health Carecombined companies totaled $28.6 million and Education Reconciliation Act of 2010 and the Patient Protection and Affordable Care Act. On March 30, 2010, the U.S. President signed the Health Care and Education Reconciliation Act of 2010, which is a reconciliation bill that amends the Patient Protection and Affordable Care Act that was signed by the President on March 23, 2010 (collectively, the “Acts”). Questions had arisen about the effect, if any, of the two different signing dates. The SEC has concluded that the two Acts, when taken together, represent the current health care reforms as passed by U.S. Congress and signed by the U.S. President and therefore would not object to the view that the two Acts should be considered together for accounting purposes. As a result of the Acts, a 2.3% excise tax will be imposed on the sale, including leases, of any taxable medical devices by the manufacturer, producer or importer of such devices. A “taxable medical device” is any FDA regulated device intended for human use. The excise tax will apply to the sales of all taxable medical devices occurring in the U.S. after December 31, 2012. While we continue to evaluate the impact of the Acts, at the present time, we expect a net positive impact from the legislation due to the expected increase in net sales resulting from increased healthcare coverage, which will be partially offset by the excise tax.3.Net Income per Common ShareWe present basic and diluted earnings per share. Basic earnings per share is calculated by dividing the net incomeloss attributable to the owners of QIAGEN N.V. bywas $1.7 million as of December 31, 2011. Acquisition-related costs for Cellestis and Ipsogen for the weighted average numberyear-ended December 31, 2011 amounted to $5.8 million and $5.6 million, respectively.shares outstanding. Diluted earnings per share reflectwould have been $0.38 and $0.58, respectively. These unaudited pro forma results are intended for informational purposes only and are not necessarily indicative of the potential dilutionresults of operations that would occurhave occurred had the acquisitions been in effect at the beginning of the periods presented, or of future results of the combined operations.all “innecessary, until the money” securitiessettlement or expiration of the contingency occurs. The total fair value of the milestone payments of approximately $6.9 million, determined as of the acquisition date, has been recognized as purchase price. The fair value of the milestone payments of approximately $5.5 million was determined using a discount rate of 1.70% and a probability regarding the accomplishment of the milestones of 90% to issue common shares were exercised or converted.100%. The following schedule summarizesfair value of the information usedmilestone payments of approximately $1.4 million was determined using a discount rate of 3.25% with the assumption that only the first milestone will be met based on the assumptions of the business plan. Under the purchase agreements at the time of acquisition, we could be required to compute earnings per common share: Years ended December 31, (in thousands) 2010 2009 2008 232,635 206,928 196,804 2,843 2,717 3,122 5,005 3,967 4,333 240,483 213,612 204,259 2,152 2,627 2,149 21,462 22,500 22,430 4.make additional contingent cash payments totaling Acquisitions, Divestiture and Restructuring has pioneered the development and manufacturing of optical measurement systems for medical and industrialagreementagreements with ifp under which ifp will perform the production for QIAGEN.$22.7$22.7 million and an amount of $2.9$2.9 million was retained in an escrow account to cover any claims for breach of any representations, warranties or indemnities. During 2010, $1.6Furthermore, the purchase agreements for both acquisitions included aggregate milestone payments of up to $8.1 million.fundsrestructuring costs. At December 31, 2012 and 2011, restructuring accruals of $4.9 million and $26.9 million, respectively, were released, and as a result $1.3 million is included in prepaid expenses and other in the accompanying consolidated balance sheets. Correspondingly, we have recorded preacquisition contingencies of $1.3 million which are included in accrued and other liabilities in the accompanying consolidated balance sheets. Furthermore,(in thousands) Personnel Related Facility Related Contract and Other Costs Total Balance at December 31, 2011 $ 19,228 $ 443 $ 7,238 $ 26,909 Additional costs in 2012 5,456 3,055 152 8,663 Payments (21,301 ) (1,032 ) (6,036 ) (28,369 ) Release of excess accrual (1,084 ) — (1,217 ) (2,301 ) Foreign currency translation adjustment 22 — — 22 Balance at December 31, 2012 $ 2,321 $ 2,466 $ 137 $ 4,924 Purchase Agreementsabove table do not include consulting costs associated with third-party service providers that are assisting with executing the restructuring. We accrue for both acquisitions include aggregate milestoneconsulting costs as the services are provided.of up to $8.1 million, of which $0.2 million was paid in 2010.Final Allocation of 2009 AcquisitionsDxS Ltd. AcquisitionOn September 21, 2009, we acquired 100% of the outstanding shares of DxS Ltd. (DxS), a privately-held developer and manufacturer of companion diagnostic products headquartered in Manchester, United Kingdom. With this acquisition, we believe that we have taken a strong leadership position in personalized healthcare (PHC). The transaction was valued at $94.5 million in cash, plus up to an additional $35.0 million in contingent consideration. The acquisition date fair value of the total consideration was $112.1 million, which consisted of $94.5 million in cash and $17.6 million for the acquisition date fair value of the contingent consideration. A portion of the purchase consideration was depositedare not quoted in an escrow account withactive market and are carried at fair market value, which is equal to the cost. These loans consist of paying agent to cover any claims for breach of representations, warranties, covenants or indemnities or failure to satisfy certain conditions. As a result, $8.7 millionquarterly basis. Interest income is included in prepaid expenses and otherdetermined using the effective interest rate method. These loans are classified as current assets in the accompanying consolidated balance sheets. Correspondingly,sheets since we have recorded preacquisition contingenciesmay put the loans at our discretion.$8.7 million whicheach quarter without penalty and are included in accrued and other liabilitiestherefore classified as current assets in the accompanying consolidated balance sheets.The contingent considerationup to $35.0short term investments totaled $6.0 million relates to specific commercial and $242.6 million, respectively. There were no realized gains or losses during 2012 or 2011.milestones, which, if met, will be paid. During 2010, contingent considerationcurrent assets are summarized as follows as of $5.5December 31, 2012 and 2011:(in thousands) 2012 2011 Prepaid expenses $ 30,354 $ 27,832 Amounts held in escrow in connection with acquisitions 7,521 7,026 Value added tax 10,221 9,488 Other receivables 7,267 14,709 $ 55,363 $ 59,055 (in thousands) 2012 2011 Land — $ 15,907 $ 15,686 Buildings and improvements 2-40 283,173 275,529 Machinery and equipment 3-20 206,871 176,662 Computer software 1-10 86,280 65,344 Furniture and office equipment 1-13 80,343 76,809 Construction in progress — 79,402 51,827 751,976 661,857 Less: Accumulated depreciation and amortization (333,044 ) (290,065 ) Property, plant and equipment, net $ 418,932 $ 371,792 paid.$13.7 million, $12.9 million and $11.8 million in 2012, 2011 and 2010, respectively. For the year ended December 31, 2012 and 2011, construction in progress includes amounts related to ongoing software development projects and the construction of new facilities in the United States. For the years ended December 31, 2012, 2011 and 2010, interest capitalized in connection with construction projects was not significant.preliminary total fairmethod of accounting for an investment depends on the level of influence. We monitor changes in circumstances that may require a reassessment of the level of influence. We periodically review the carrying value of milestones is approximately $17.6 million which,these investments for impairment, considering factors such as of the acquisition date, has been recognized as purchase price.most recent stock transactions and book values from the recent financial statements. The fair value of the milestone payments was determined using a discount rate of 3.25%cost and a probability regarding the accomplishment of the milestones of 90 to 95%.SABiosciences AcquisitionOn December 14, 2009, we acquired 100% of the outstanding shares of SABiosciences Corporation, locatedequity-method investments is estimated when there are identified events or changes in Frederick, Maryland (USA). SABiosciences holds a leading position in the design and commercialization of disease- and pathway-focused real-time PCR-based assay panels, which are widely utilized in biomedical research and in the development of future drugs and diagnostics. At closing, the purchase price was $97.6 million in cash. As of December 31, 2010, wecircumstances that may have $5.9 million of the consideration in an escrow account with a paying agent to cover any claims for breach of representations, warranties, covenants or indemnities or failure to satisfy certain conditions. This amount is included in prepaid expenses and other in the accompanying Consolidated Balance Sheet. Correspondingly, we have preacquisition contingencies of $5.9 million which are included in accrued and other liabilities in the accompanying Consolidated Balance Sheet.As of December 31, 2010, the final allocation of the purchase price and transaction costs for the acquisitions of DxS and SABiosciences are follows:(in thousands) DxS
Acquisition SABiosciences
Acquisition Total $ 94,823 $ 97,586 $ 192,409 17,599 — 17,599 $ 112,422 $ 97,586 $ 210,008 $ 263 $ 10,153 $ 10,416 2,199 2,215 4,414 16,400 26,400 42,800 1,400 1,700 3,100 54,900 8,400 63,300 4,100 1,900 6,000 56,935 62,178 119,113 (23,040 ) (15,360 ) (38,400 ) (735 ) — (735 ) $ 112,422 $ 97,586 $ 210,008 The weighted-average amortization period for the intangible assets acquired with DxS is 15 years and with SABiosciences is 10 years. The goodwill acquired in these acquisitions is not deductible for tax purposes.Other 2009 AcquisitionsOn August 6, 2009, we acquired Explera s.r.l., a leading supplier in molecular diagnostics and personalized medicine in Italy. The transaction is valued at $7.5 million, with a fixed purchase price of $5.0 million and milestone payments of $2.5 million. With this acquisition, we expanded the size of our molecular diagnostics sales channel in Italy and added several activities in the area of personalized medicine and access to a suite of CE-IVD pyrosequencing assays.On November 12, 2009, we acquired 100% of the outstanding shares of a developer, producer and distributor of PCR-based technologies for forensics, kinship and paternity analysis, and other human identity testing applications located in Germany. Upon closing of the transaction, an upfront payment of $23.3 million was paid to the sellers, less an amount of $13.1 million which was originally retained in an escrow account to cover any claims for breach of any of representations, warranties or indemnities. The escrow funds were partially released to the sellers during 2010. Another $1.6 million was paid to the sellers in 2010.Our acquisitions have historically been made at prices aboveimpact on the fair value of the acquired netinvestment. A summary of these equity method investments, which are included in other assets, resultingis as follows: Company (in thousands) 2012 2011 2012 2011 2010 PreAnalytiX GmbH 50.00 % $ 18,182 $ 15,723 $ 1,972 $ 390 $ 2,969 QBM Cell Science 19.50 % $ 406 $ 395 $ 11 $ (10 ) $ 11 QIAGEN Finance 100.00 % $ 374 $ 252 $ 122 $ 103 $ 131 QIAGEN Euro Finance 100.00 % $ 931 $ 622 $ 309 $ 266 $ 273 Pyrobett 19.00 % $ 3,515 $ 3,749 $ (234 ) $ (178 ) $ (73 ) Dx Assays Pte Ltd 33.30 % $ — $ — $ — $ — $ — Scandinavian Gene Synthesis AB 40.00 % $ — $ 15,714 $ (23 ) $ 23 $ — Peak-Service 40.00 % $ 20 $ 20 $ — $ — $ — goodwill, duea joint venture company, PreAnalytiX GmbH, for which each of the joint venture partners participates 50/50 in all decision making activities and therefore we are not the primary beneficiary. Thus, the investment is accounted for under the equity method. PreAnalytiX was formed to expectationsdevelop, manufacture and market integrated systems for the collection, stabilization and purification of synergies of combining the businesses. These synergies include usenucleic acids for molecular diagnostic testing. At present, our maximum exposure to loss as a result of our existing infrastructure, such as sales force, shared service centers, distribution channelsinvolvement with PreAnalytiX is limited to our share of losses from the equity method investment itself.customer relations, to expand salesQIAGEN Euro Finance (Luxembourg) S.A. (Euro Finance), companies established for the purpose of issuing convertible debt in 2004 and 2006, respectively. In August 2004, we issued $150.0 million of 1.5% Senior Convertible Notes (2004 Notes) due in 2024 through QIAGEN Finance. In May 2006, we completed the offering of $300.0 million of 3.25% Senior Convertible Notes (2006 Notes) due in 2026 through Euro Finance. The proceeds of the acquired businesses’ products; use2004 and 2006 Notes were loaned to subsidiaries within the consolidated QIAGEN N.V. group. QIAGEN N.V. has guaranteed all of these Notes, and has agreements with each of QIAGEN Finance and Euro Finance to issue common shares to the investors in the event of conversion of any of the infrastructureNotes. QIAGEN Finance and Euro Finance are variable interest entities. We do not hold any variable interests in QIAGEN Finance or Euro Finance, and we are not the primary beneficiary, therefore neither of the acquired businesses to cost-effectively expand sales of our products;entities is consolidated. Accordingly, the 2004 and elimination of duplicative facilities, functions and staffing.These acquisitions have been accounted for using the purchase method of accounting, and the acquired companies’ results have beenaccompanyingconsolidated statements of operationsQIAGEN N.V., though QIAGEN N.V. does report the full obligation of the debt through its liabilities to QIAGEN Finance and Euro Finance. QIAGEN N.V. accounts for its investments in QIAGEN Finance and Euro Finance as equity investments and accordingly records 100% of the profit or loss of QIAGEN Finance and Euro Finance in the gain or loss from their respective datesequity method investees. At present, our maximum exposure to loss as a result of acquisition. Acquisition-related costs are expensed when incurredour involvement with QIAGEN Finance and Euro Finance is limited to our share of losses from the equity method investments. 2012 2011 (in thousands) Amortized Intangible Assets: Patent and license rights 11.7 $ 304,380 $ (134,688 ) $ 294,854 $ (115,310 ) Developed technology 10.0 678,888 (270,575 ) 605,847 (210,022 ) Customer base, trademarks, and non-compete agreements 10.3 391,388 (126,743 ) 336,216 (92,098 ) 10.4 $ 1,374,656 $ (532,006 ) $ 1,236,917 $ (417,430 ) Unamortized Intangible Assets: In-process research and development $ 11,222 $ — Goodwill 1,759,898 1,733,722 $ 1,771,120 $ 1,733,722 accompanying consolidated statementsin-process research and development will begin in 2013 as the projects are completed.income. (in thousands) Amortization Years ended December 31: 2013 $ 125,722 2014 $ 124,836 2015 $ 124,117 2016 $ 121,195 2017 $ 117,332 Final AllocationsThe changes in the carrying amount of 2008 Acquisitionsgoodwill for the years ended On July 1, 2008, we acquired an 82.5% interestDecember 31, 2012 and 2011 are as follows:(in thousands) Total BALANCE AT DECEMBER 31, 2010 $ 1,352,281 Goodwill acquired during the year 402,575 Earn-out and milestone payments 1,122 Purchase adjustments 615 Effect of foreign currency translation (22,871 ) BALANCE AT DECEMBER 31, 2011 $ 1,733,722 Goodwill acquired during the year 82,599 Earn-out and milestone payments (36 ) Purchase adjustments (70,034 ) Effect of foreign currency translation 13,647 BALANCE AT DECEMBER 31, 2012 $ 1,759,898 Corbett Life Science Pty. Ltd. (Corbett), a developer, manufacturer, and distributorthe carrying amount of life sciences instrumentation headquartered in Sydney, Australia, with an option to acquiregoodwill during the minority interest. On October 1, 2008, we acquired all assetsyear ended December 31, 2012 resulted from the 2012 acquisitions, purchase price adjustments primarily related to the Biosystems Business2011 acquisitions, foreign currency translation and changes in the fair value of contingent consideration as discussed in Note 14. During 2011, changes in goodwill resulted primarily from Biotage AB, a publicly listed developer, manufacturer2011 acquisitions and distributorforeign currency translation. Accumulated goodwill impairment totaled $1.6 million as of products for genetic analysisDecember 31, 2012 and medicinal chemistry headquartered in Uppsala, Sweden. This business division contains Pyrosequencing systems for genetic analysis, PyroMark products for methylation, sequence and mutation analysis and Pyro Gold reagents. Additionally, the transaction included the acquisition of Biotage’s 17.5% shareholding in Corbett.Following the finalization of the fair-value of acquired pre-acquisition contingencies, deferred taxes, and certain milestone payments, the final allocations ofprice and transaction costs for the acquisitionssale, or licensing of Corbett Life Science Pty. Ltd. (Corbett) and the Biosystems Business from Biotage AB as of December 31, 2009, is as follows:(in thousands) Corbett
Acquisition Biosystems
Business
Acquisition Total $ 4,234 $ — $ 4,234 130,318 52,024 182,342 (7,075 ) — (7,075 ) 21,071 (21,071 ) — $ 148,548 $ 30,953 $ 179,501 $ 8,537 $ 3,030 $ 11,567 4,204 234 4,438 35,000 12,600 47,600 17,400 1,800 19,200 3,600 900 4,500 96,214 14,662 110,876 1,000 — 1,000 (16,433 ) — (16,433 ) (974 ) (2,273 ) (3,247 ) $ 148,548 $ 30,953 $ 179,501 The weighted-average amortization period for all intangible assets acquired in 2008 is 10 years. The goodwill acquired in these acquisitions is not deductible for tax purposes.Other 2008 AcquisitionsIn 2008, we acquired a business unit from Diagnostic Technology Pty. Ltd., located in Belrose, Australia, which relates to the distribution of products in Australia, New Zealand, Singapore and Malaysia. The purchase price consisted of an upfront payment in the amount of Australian dollars (AUD) 0.9 million and a milestone payment amounting to AUD 0.4 million, which was paid in 2009. Additionally in 2008, we established QIAGEN Mexico via the acquisition of certain assets of our former life science distributor Quimica Valaner. We also acquired the minority interest in its Brazilian sub, QIAGEN Brasil Biotecnologia Ltda., for $3.2 million in cash in 2008. The establishment of QIAGEN Mexico,patented or non-patented technology as well as supply agreements, particularly in the acquisitionareas of Pharma and Molecular Diagnostics. The agreements may be structured such that the transaction is required to be accounted for in accordance with ASC No. 845, minority interestassets surrendered. As there is no observable market for these assets, we have performed this nonrecurring fair value measurement based on significant unobservable inputs (Level 3 as defined in its Brazilian subsidiary, represents our commitment to expanding our presence in Latin America.Note 14). We do not consider these acquisitionshave performed the fair value analysis using an income approach, including development of inputs such as future revenues to be material.2009 Divestiture$30.3 millionJuly 2009, through the salesame series of our subsidiarytransactions, we agreed to supply certain products and the deferred revenue will be recognized ratably in Austria, we soldconnection with the Olerup SSP® product line and related assets to Olerup International AB, a subsidiary of LinkMed, a Swedish venture capital company specializing in life sciences. The Olerup SSP® product line includes molecular transplantation testing products used for DNA human leukocyte antigen (HLA) typing. We retained rights to all Olerup SSP® assays for applications outside transplantation testing, such as in personalized medicine. The transaction does not affect our presence in new sequencing-based typing assays in the area of transplantation. We recorded a net gain of approximately $1.2 million on the salesupply of the business, which is recorded in other income, net in 2009.products. Through 2009 Restructuring of Acquired BusinessDecember 31, 2011In October 2009,, we started the closure of our facilities and relocation of our activities in Brisbane and Sydney to other locations, primarily to QIAGEN Instruments AG in Switzerland. These restructurings follow the acquisition of Corbett in 2008 and consolidate our instrument manufacturing activities. The closure and relocation were completed in 2010 at a total pre-tax cost of approximately $4.2recognized $1.6 million of which $1.9 million was incurred in 2010.5.Accumulated Other Comprehensive IncomeThe following table is a summary of the componentsdeferred revenue. No amounts of accumulateddeferred revenue were recognized during 2012.comprehensive income:(in thousands) 2010 2009 $ (1,644 ) $ (5,326 ) (11 ) 118 5,774 7,465 60,635 47,889 $ 64,754 $ 50,146 6.liabilities at Derivatives and Hedging(in thousands) 2012 2011 Accrued expenses $ 62,567 $ 82,342 Payroll and related accruals 49,563 44,421 Deferred revenue 27,296 23,793 Accrued royalties 17,600 25,659 Fair value of derivative instruments 12,911 2,492 Accrued earn-outs and milestone payments 9,806 17,470 Accrued interest on long-term debt 7,008 7,383 Preacquisition contingencies assumed in acquisition 5,493 6,203 Current portion of capital lease obligations 4,203 4,006 Total accrued and other liabilities $ 196,447 $ 213,769 2010,2011, all derivatives that qualifyqualified for hedge accounting arewere cash-flow hedges. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. In 2010,2012 and 2011, we did not record any hedge ineffectiveness related to any cash-flow hedges in income (expense)earnings and did not discontinue any cash-flow hedges. There are no expected transactions which would result in a reclassification of amounts in other comprehensive income into earnings inthe next 12 months. Derivatives,The cash flows derived from derivatives, including those that are not designated as hedges, are classified in the operating section of the consolidated statements of cash flows, in the same categoryflows. As of the related consolidated balance sheet account.positions.positions including intercompany items. We manage balance sheet exposure on a group-wide basis primarily using foreign exchange forward contracts, foreign exchange options and cross-currency swaps.We have foreign currency forward contracts with an aggregate notional amount of $44.0 million, which have been entered into in connection with the notes payable to QIAGEN Finance (see Note 15) and which qualify for hedge accounting as cash-flow hedges. We have determined that no ineffectiveness exists related to these derivatives. However, the differences between spot and forward rates were excluded from the assessment of hedge effectiveness and included in interest income as it effectively constitutes the difference in the interest rates of the respective currency pairs. The contracts mature in July 2011 and had fair market values at December 31, 2010 and 2009 of approximately $3.9 million, included in accrued and other liabilities, and $5.7 million, included in other long-term liabilities, respectively, in the accompanying consolidated balance sheets.have beenwere entered into in connection with the notes payable to Euro Finance (see Note 15) and which qualified as cash-flow hedges with a notional amount of $120.0$120.0 million as of December 31, 2010 and 2009,2011, which maturematured in November 2012 and had fair market values of $4.6$0.7 million included in prepaid and $16.7other assets and $1.7 million at included in accrued and other liabilities as of December 31, 2010 and 2009, respectively, which are included in other long-term liabilities2011 in the accompanying consolidated balance sheets.2010,2012, an aggregate notional value of approximately $295.4$574.5 million and fair values of $0.7$0.8 million and $5.1$12.9 million, which are included in prepaid and other assets and accrued and other liabilities, respectively, and which expire at various dates through April 2011.2013. The transactions have been entered into to offset the effects from short-term balance sheet exposure to foreign currency exchange risk. Changes in the fair value of these arrangements have been recognized in other (expense) income, net.2009,2011, an aggregate notional value of approximately $200.1$204.0 million and fair values of $0.9$5.5 million and $7.7$0.8 million, which are included in prepaid and other assets and accrued and other liabilities, respectively, and which expired at various dates through March 2010.April 2012. The transactions have been used to offset the effects from short-term balance sheet exposure to foreign currency exchange risk. Changes in the fair value of these arrangements have been recognized in other (expense) income, net.useused interest rate derivative contracts on certain borrowing transactions to hedge fluctuating interest rates.rates until October 2011. We have entered into interest rate swaps in which we agreeagreed to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. During 2008, we entered into interest rate swaps, which effectively fixed the variable interest rates on $200.0 million of our variable rate debt and qualify for hedge accounting as cash-flow hedges. We have determined that no ineffectiveness exists related to these swaps. During 2010, $100.0 million of the swaps matured. The remaining $100.0 million matures in October 2011, and as of December 31, 2010 had an aggregate fair value of $2.7 million, which is recorded in accrued and other liabilities in the accompanying consolidatedbalance sheet. As of December 31, 2009 these swaps had an aggregate fair value of $6.3 million, of which $2.1 million is recorded in accrued and other liabilities and $4.2 million is recorded in other long-term liabilities in the accompanying consolidated balance sheet.20102012 and 2009: Derivatives in Asset Positions
Fair value Derivatives in Liability Positions
Fair value (in thousands) 12/31/2010 12/31/2009 12/31/2010 12/31/2009 $ — $ — $ (2,663 ) $ (6,274 ) — — (8,452 ) (22,495 ) $ — $ — $ (11,115 ) $ (28,769 ) $ 677 $ 947 $ (5,113 ) $ (7,690 ) $ 677 $ 947 $ (16,228 ) $ (36,459 ) (in thousands) 12/31/2012 12/31/2011 12/31/2012 12/31/2011 Derivative instruments designated as hedges Interest rate contracts $ — $ — $ — $ — Foreign exchange contracts — 658 — (1,723 ) Total derivative instruments designated as hedges $ — $ 658 $ — $ (1,723 ) Undesignated derivative instruments Foreign exchange contracts $ 833 $ 5,489 $ (12,911 ) $ (769 ) Total derivative instruments $ 833 $ 6,147 $ (12,911 ) $ (2,492 ) 20102012 and 2009:Year-Ended December 31, 2010 (in thousands) Gain/(loss)
recognized in AOCI Location of
(gain) loss in
income statement (Gain) loss
reclassified
from AOCI into
income Loss recognized
in income $ 3,611 Interest expense $ — n/a 11,025 Other income, net (8,874 ) n/a $ 14,636 n/a n/a Other income, net n/a $ (2,239 ) Year-Ended December 31, 2009 (in thousands) Gain/(loss)
recognized in AOCI Location of
(gain) loss in
income statement (Gain) loss
reclassified
from AOCI into
income Loss recognized
in income $ 537 Interest expense $ — n/a (13,278 ) Other income, net 8,367 n/a $ (12,741 ) $ 8,367 n/a n/a Other income, net n/a $ (2,333 ) Year-Ended December 31, 2012 (in thousands) Cash-flow hedges Interest rate contracts $ — Interest expense $ — $ — Foreign exchange contracts 305 Other expense / income, net 781 — Total $ 305 $ 781 $ — Undesignated derivative instruments Foreign exchange contracts $ — Other expense / income, net $ — $ (13,456 ) Year-Ended December 31, 2011 (in thousands) Cash-flow hedges Interest rate contracts $ 2,721 Interest expense $ — n/a Foreign exchange contracts 2,696 Other expense / income, net (3,961 ) n/a Total $ 5,417 $ (3,961 ) n/a Undesignated derivative instruments Foreign exchange contracts n/a Other expense / income, net n/a $ 14,194 7.Fair Value Measurementsand derivative contracts used to hedge currency and interest rate risk, which are classified in Level 2 of the fair value hierarchy, and contingent consideration accruals, which are classified in Level 3 of the fair value hierarchy, and are shown in the tables below. In determining fair value for Level 2 instruments, we apply a market approach, using quoted active market prices relevant to the particular instrument under valuation, giving consideration to the credit risk of both the respective counterparty to the contract and the Company. To determine our credit risk we estimated our credit rating by benchmarking the price of outstanding debt to publicly-available comparable data from rated companies. Using the estimated rating, our credit risk was quantified by reference to publicly-traded debt with a corresponding rating.20102012 and 2009: As of December 31, 2010 As of December 31, 2009 (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total $ 70,000 $ 36,077 $ — $ 106,077 $ 40,000 $ — $ — $ 40,000 — 677 — 677 — 947 — 947 $ 70,000 $ 36,754 $ — $ 106,754 $ 40,000 $ 947 $ — $ 40,947 $ — $ 13,565 $ — $ 13,565 $ — $ 30,185 $ — $ 30,185 — 2,663 — 2,663 — 6,274 — 6,274 $ — $ 16,228 $ — $ 16,228 $ — $ 36,459 $ — $ 36,459 As of December 31, 2012 As of December 31, 2011 (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Short-term investments $ 7,989 $ 82,462 $ — $ 90,451 $ 9,290 $ 45,287 $ — $ 54,577 Foreign exchange contracts — 833 — 833 — 6,147 — 6,147 $ 7,989 $ 83,295 $ — $ 91,284 $ 9,290 $ 51,434 $ — $ 60,724 Liabilities: Foreign exchange contracts $ — $ 12,911 $ — $ 12,911 $ — $ 2,492 $ — $ 2,492 Contingent Consideration — — 18,983 18,983 — — 38,646 38,646 $ — $ 12,911 $ 18,983 $ 31,894 $ — $ 2,492 $ 38,646 $ 41,138 (in thousands) (unaudited)
Significant Unobservable Inputs
(Level 3) Contingent Consideration BALANCE AT DECEMBER 31, 2010 $ 22,510 Additions from acquisitions 24,885 Payments (9,065 ) Loss included in earnings 253 Foreign currency translation 63 BALANCE AT DECEMBER 31, 2011 $ 38,646 Additions from acquisitions 16,875 Payments (6,008 ) Gain included in earnings (11,463 ) Reversals (19,129 ) Foreign currency translation 62 BALANCE AT DECEMBER 31, 2012 $ 18,983 20102012 and 20092011 for nonfinancial assets or liabilities required to be measured at fair value on a nonrecurring basis.basis other than the impairment of a cost-method investment as discussed in Note 10. 8.Short-term InvestmentsAt December 31, 2010, short-term investments consisted2012$70.0which no amounts were utilized at December 31, 2012, and four other lines of credit amounting to €38.0 million with no expiration date, none of investmentswhich were utilized as of December 31, 2012. The €400.0 million facility can be utilized in short-term funds that haveeuro, U.K pound or U.S. dollar and bears interest of 0.8% to 2.35% above three months EURIBOR, or LIBOR in relation to any loan not in euro, and is offered with interest periods of one, two, three, six or twelve months. The commitment fee is calculated based on 35% of the applicable margin. In 2012, $1.1 million of commitment fees were paid. The revolving facility agreement contains certain financial and non-financial covenants, including but not limited to, restrictions on the encumbrance of assets and the maintenance of certain financial ratios. We were in compliance with these covenants at December 31, 2012. The credit facilities are for general corporate purposes.fixed maturity date. Thereof $50.0private placement through the issuance of new senior unsecured notes at a total amount of $400 million matured with a weighted average interest rate of 3.66% (settled on October 16, 2012). The notes were issued in January 2011three series: (1) $73 million7-year term due in 2019 (3.19%); (2) $300 million10-year term due in 2022 (3.75%); and $20.0(3) $27 million12-year term due in 2024 (3.90%). We paid $2.1 million in debt issue costs which will maturebe amortized through interest expense over the lifetime of the notes. The note purchase agreement contains certain financial and non-financial covenants, including but not limited to, restrictions on priority indebtedness and the maintenance of certain financial ratios. We were in May 2011. These fund investments are carriedcompliance with these covenants at December 31, 2012. The carrying values of these Senior Notes totaling $400.0 million approximates fair market value which is equal to the cost. Additionally, we had EUR 27.0 million ($36.1 million as of December 31, 2010)2012 as neither the Treasury rates or credit spreads have changed significantly since the issuance date in October 2012.loan note receivables dueproceeds from financial institutions. These loan receivables are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. These loans consistthe notes were used to repay amounts outstanding under our short-term revolving credit facility. The remainder of $9.4 million which matured in February 2011, and $26.7 million which matures in November 2013 with put option rights on a quarterly basis beginning in February 2011. Interest income is determined using the effective interest rate method. These loans are classified as current assets in the accompanying consolidated balance sheets since we may put the loans at our discretion beginning February 2011.2009, we had2012, total long-term debt was approximately $847.0 million, $0.9 million of which is current. We believe that funds from operations, existing cash and cash equivalents, short-term investments which had a fair market value and costavailability of $40.0 million.Forfinancing facilities as needed, will be sufficient to fund our debt repayments coming due in 2013.year ended following:(in thousands) December 31, 2012 December 31, 2011 Notes payable to QIAGEN Euro Finance bearing interest at an effective rate of 3.7% due in May 2026 $ 300,000 $ 300,000 Notes payable to QIAGEN Finance bearing interest at an effective rate of 1.8% due in February 2024 145,000 145,000 3.19% Series A Senior Notes due October 16, 2019 73,000 — 3.75% Series B Senior Notes due October 16, 2022 300,000 — 3.90% Series C Senior Notes due October 16, 2024 27,000 — Other notes payable bearing interest up to 6.28% and due through November 2015 1,992 2,622 Total long-term debt 846,992 447,622 Less current portion 948 1,617 Long-term portion $ 846,044 $ 446,005 2010, proceeds from sales of short term investments totaled $44.0 million. There were no sales of short term investments in 2009. There were no realized gains or losses during 2010 or 2009.2012 are as follows: Year ending December 31, (in thousands) 2013 $ 948 2014 396 2015 648 2016 — 2017 — thereafter 845,000 $ 846,992 9.Prepaid Expenses and Other Current AssetsPrepaid expenses and other current assets are summarized as follows as of December 31, 2010 and 2009:(in thousands) 2010 2009 $ 24,061 $ 29,109 27,006 37,094 7,039 7,865 6,296 22,825 $ 64,402 $ 96,893 $24.9 million 10.Property, Plant and EquipmentProperty, plant and equipment, including equipment acquired under capital lease obligations, are summarized as follows as of December 31, 2010 and 2009:(in thousands) Estimated
useful life
(in years) 2010 2009 — $ 16,053 $ 16,045 1-40 232,946 237,547 1-15 157,973 135,540 1-10 53,948 53,038 1-15 75,030 69,310 — 59,418 16,788 595,368 528,268 (249,704 ) (210,801 ) $ 345,664 $ 317,467 Amortization of assets acquired under capital lease obligations is included within accumulated depreciation and amortization above for the years ended 20102012, 2011 and 2009,2010, respectively. For the years ended December 31, 2010, 2009 and 2008 depreciation and amortization expense totaled $47.9 million, $42.0 million and $36.2 million, respectively. Repairs and maintenance expense was $11.8 million, $10.9 million and $9.7 million in 2010, 2009 and 2008, respectively. For the year ended December 31, 2010, construction in progress includes amounts related to the construction of new facilities in Germany and the United States. For the years ended December 31, 2010, 2009 and 2008, interest capitalized in connection with construction projects was not significant.11.InvestmentsWe have made strategic investments in certain companies that are accounted for using the equity or cost method of accounting. The method of accounting for an investment depends on the level of influence. We monitor changes in circumstances that may require a reassessment of the level of influence. We periodically review the carrying value of these investments for impairment, considering factors such as the most recent stock transactions and book values from the recent financial statements. The fair value of cost-method investments is estimated when there are identified events or changes in circumstances that may have an impact on the fair value of the investment. A summary of these investments, which are included in other assets, is as follows: Equity investments
as of December 31, Share of income (loss)
for the years ended December 31, Ownership
Percentage 2010 2009 2010 2009 2008 50.00 % $ 15,308 $ 10,894 $ 2,969 $ 2,887 $ 1,459 19.50 % $ 405 $ 394 $ 11 $ (49 ) $ (61 ) 100.00 % $ 949 $ 818 $ 131 $ 115 $ 426 100.00 % $ 1,306 $ 1,033 $ 273 $ 300 $ 257 19.00 % $ 3,927 $ — $ (73 ) $ — $ — 33.30 % $ — $ — $ — $ (316 ) $ (408 ) We have a 50% interest in a joint venture company, PreAnalytiX GmbH, for which we are not the primary beneficiary. Thus, the investment is accounted for under the equity method. PreAnalytiX was formed to develop, manufacture and market integrated systems for the collection, stabilization and purification of nucleic acids for molecular diagnostic testing. At present, our maximum exposure to loss as a result of our involvement with PreAnalytiX is limited to our share of losses from the equity method investment itself.We have a 100% interest in QIAGEN Finance (Luxembourg) S.A. (QIAGEN Finance) and QIAGEN Euro Finance (Luxembourg) S.A. (Euro Finance), companies established for the purpose of issuing convertible debt in 2004 and 2006, respectively. In August 2004, we issued $150.0 million of 1.5% Senior Convertible Notes (2004 Notes) due in 2024 through QIAGEN Finance. In $300.0$300 million of 3.25% Senior Convertible Notes (2006 Notes) due in 2026 (2006 Notes) through an unconsolidated subsidiary, QIAGEN Euro Finance. The net proceeds of the 20042006 Notes are loaned by Euro Finance to consolidated subsidiaries and at December 31, 2012 and 2011, $300 million is included in long-term debt for the loan amounts payable to Euro Finance. These long-term notes payable to Euro Finance have an effective interest rate of 3.7% and were originally due in December 2014. In 2012, we refinanced the $300 million note with QIAGEN Euro Finance and under the new terms the debt is due in May 2026. Interest is payable semi-annually in May and November. The 2006 Notes were loanedissued at 100% of principal value, and are convertible into 15.0 million common shares at the option of the holders upon the occurrence of certain events, at a price of $20.00 per share, subject to subsidiaries within the consolidated QIAGEN N.V. group.adjustment. QIAGEN N.V. has guaranteed all of these Notes, and has agreementsan agreement with each of QIAGEN Finance and Euro Finance to issue common shares to the investors in the event of conversionconversion. This subscription right, along with the related receivable, is recorded at fair value in the equity of anyQIAGEN N.V. as paid-in capital. The 2006 Notes cannot be called for the first 7 years and are callable thereafter subject to a provisional call trigger of 130% of the Notes. QIAGEN Finance and Euro Finance are variable interest entities. We are notconversion price. In addition, the primary beneficiary, therefore neither is consolidated. Accordingly, the 2004 and 2006 convertible debt is not included in the consolidated statements of QIAGEN N.V., though QIAGEN N.V. does report the full obligationholders of the debt through its liabilities2006 Notes may require QIAGEN to QIAGEN Finance and Euro Finance. QIAGEN N.V. accounts for its investments in QIAGEN Finance and Euro Finance as equity investments and accordingly records 100%repurchase all or a portion of the profit or loss of QIAGEN Finance and Euro Finance in the gain or loss from equity method investees. At present, our maximum exposure to loss as a result of our involvement with QIAGEN Finance and Euro Finance is limited to our share of losses from the equity method investments.In 2010, we made a $4.0 million investment in Pyrobett, a company located in Singapore which performs research and development activities related to the development of instrumentsoutstanding Notes for use in life sciences.At December 31, 2010 and 2009, we had a loan receivable of $1.6 million and $1.4 million, respectively, included in other long-term assets, due from Dx Assays, which bears interest at 15% and is due in March 2013.During 2010, we made an investment of EUR 2.5 million (approximately $3.4 million as of December 31, 2010) for a 7.6% share of a privately-held company. The investment is accounted for under the cost-method.During 2009, we sold our investment in a privately-held company which had been accounted for under the cost-method of accounting, and realized a gain of $10.5 million in 2009. The proceeds were received in January 2010, and an additional gain of $0.6 million was recorded in 2010 following the receipt of additional proceeds which had been held in escrow.During 2008, in connection with the acquisition of Corbett, we impaired our $4.0 million investment in a privately-held company which had been accounted for under the cost-method of accounting. Following the acquisition of Corbett, management anticipated a change in our purchasing patterninvestee’s products, which negatively impactedprincipal amount, plus accrued interest, on May 16, 2013, 2017 and 2022. Based on an estimation using available over-the-counter market information on the forecasted financial condition of the investee. Accordingly, the known impact to the investee’s financial condition, absent other evidence indicating a realizable value of the investment, indicated that our investment was worthless and that recoverability of the asset through future cash flows was not considered likely enough to support the current carrying value. We had no contractual obligation to provide any additional investment or other financing beyond the investment in the investee. The impairment is included in other income, net in the accompanying consolidated statements of income.12.Intangible AssetsThe following sets forth the acquired intangible assetsconvertible bond issued by major asset class as of December 31, 2010 and December 31, 2009: 2010 2009 (in thousands) Weighted
Average
Life Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization 11.0 years $ 289,199 $ (88,275 ) $ 246,535 $ (69,380 ) 9.7 years 501,287 (157,838 ) 461,507 (108,374 ) 11.3 years 275,167 (66,213 ) 263,985 (41,977 ) $ 1,065,653 $ (312,326 ) $ 972,027 $ (219,731 ) $ 1,352,281 $ 1,337,064 In connection with the acquisitions as more fully discussed in Note 4, approximately $0.6 million and $3.1 million of purchase price was allocated to purchased in-process research and development and capitalized in 2010 and 2009, respectively. Prior to January 1, 2009, purchased in-process research and development costs were expensed. During the year ended December 31, 2008 approximately $1.0 million of purchase price was allocated to purchased in-process research and development and expensed.Amortization expense on intangible assets totaled approximately $94.9 million, $78.4 million and $69.4 million, respectively, for the years ended December 31, 2010, 2009 and 2008. During 2009, additional amortization of $5.0 million was recorded in cost of sales related to the impairment of developed technology, which was triggered by the acquisition of DxS and SABiosciences. Amortization of intangibles for the next five years is expected to be approximately:(in thousands) Amortization $ 96,858 $ 94,916 $ 91,653 $ 90,240 $ 89,677 The changes in the carrying amount of goodwill for the years ended December 31, 2010 and 2009 are as follows:(in thousands) Total $ 1,152,105 116,340 (1,631 ) 28,946 13,729 27,575 $ 1,337,064 2,983 579 11,655 $ 1,352,281 The changes in the carrying amount of goodwill during the year ended December 31, 2009 resulted from the 2009 acquisitions, foreign currency translation and purchase price adjustments primarily related to tax matters in connection with prior year acquisitions. During 2009, $1.6 million of goodwill from a previous acquisition was written off following the acquisition of DxS Ltd. in September 2009 and is recorded in general and administrative, integration and other expenses in the accompanying consolidated statements of income. During 2010, changes in goodwill resulted from earn-out and milestone payments, purchase price adjustments related to the 2009 acquisitions and foreign currency translation.We occasionally enter into transactions which include the purchase, sale, or licensing of patented or non-patented technology as well as supply agreements, particularly in the areas of Pharma and Molecular Diagnostics. The agreements may be structured such that the transaction is required to be accounted for in accordance with ASC No. 845, Nonmonetary Transactions (“ASC No. 845”) and may include multiple deliverables accounted for accordance with ASC No. 605, Revenue Recognition.During 2010, we entered into a series of transactions with a third party, under which we exchanged certain intangible assets in a nonmonetary exchange. We have accounted for this transaction under ASC No. 845, and recorded the intangible assets received atQIAGEN Euro Finance, the fair value of the assets surrendered. As there is no observable market for these assets, we have performed this nonrecurring fair value measurement based on significant unobservable inputs (Level 3 as defined in Note 7)performedreserved 15.0 million common shares for issuance in the event of conversion.analysis using an income approach, including development of inputs such as future revenues to be generated under the assets, and future costs associated with product development, production, and distribution under the patents, in order to determine an exit price from the perspective of a market participant that holds the assets. As a result of nonmonetary transactions, we recorded intangible assets of $30.3 million, net sales of $11.0 million and deferred revenues of $19.3 million. In the same series of transactions, we agreed to supply certain products and the deferred revenue will be recognized ratably in connection with the supply of the products.2004 Notes at December 31, 2012 was $209.7 million. We have reserved 11.5 million common shares for issuance in the event of conversion. 13.Income Taxes2010, 20092012, 2011 and 20082010 consisted of:(in thousands) 2010 2009 2008 $ 55,431 $ 72,190 $ 53,032 117,690 100,140 66,254 $ 173,121 $ 172,330 $ 119,286 (in thousands) 2012 2011 2010 Pretax income in The Netherlands $ 27,222 $ 30,232 $ 55,431 Pretax income from foreign operations 117,931 65,980 117,690 $ 145,153 $ 96,212 $ 173,121 2010, 20092012, 2011 and 20082010 are as follows:(in thousands) 2010 2009 2008 $ 12,265 $ 12,633 $ 8,999 36,487 32,539 23,326 48,752 45,172 32,325 — — — (19,942 ) (10,609 ) (2,563 ) (19,942 ) (10,609 ) (2,563 ) $ 28,810 $ 34,563 $ 29,762 (in thousands) 2012 2011 2010 Current—The Netherlands $ 3,271 $ 6,752 $ 12,265 —Foreign 35,112 26,372 36,487 38,383 33,124 48,752 Deferred—The Netherlands — — — —Foreign (22,767 ) (31,861 ) (19,942 ) (22,767 ) (31,861 ) (19,942 ) Total provision for income taxes $ 15,616 $ 1,263 $ 28,810 2010, 20092012, 2011 and 20082010 was 25%, 25% and 25.5%. The principal items comprising the differences between income taxes computed at Thethe Netherlands statutory rate and the effective tax rate for the years ended December 31, 2010, 20092012, 2011 and 20082010 are as follows: 2010 2009 2008 (in thousands) Amount Percent Amount Percent Amount Percent $ 44,146 25.5 % $ 43,944 25.5 % $ 30,418 25.5 % 7,710 4.5 4,710 2.7 1,432 1.2 3,295 1.9 — — (3,064 ) (2.6 ) (10,283 ) (6.0 ) (11,039 ) (6.4 ) — — — — — — 300 0.3 (1,269 ) (0.7 ) 1,774 1.0 (1,665 ) (1.4 ) (1,400 ) (0.8 ) (3,671 ) (2.0 ) 2,429 2.0 (12,903 ) (7.5 ) — — — — (486 ) (0.3 ) (1,155 ) (0.7 ) (88 ) (0.1 ) $ 28,810 16.6 % $ 34,563 20.1 % $ 29,762 24.9 % Certain countries benefit from tax holidays which represent a tax exemption period aimed to attract foreign investment in certain tax jurisdictions. These agreements include programs that reduce up to 100% 2012 2011 2010 (in thousands) Amount Percent Amount Percent Amount Percent Income taxes at The Netherlands statutory rate $ 36,288 25.0 % $ 24,053 25.0 % $ 44,146 25.5 % Earnings of subsidiaries taxed at different rates 5,180 3.6 3,204 3.3 7,710 4.5 Tax impact from permanent items 4,854 3.4 5,989 6.2 3,295 1.9 Tax impact from tax exempt income (36,969 ) (25.5 ) (23,382 ) (24.3 ) (10,283 ) (6.0 ) Tax contingencies, net 2,729 1.9 (1,675 ) (1.7 ) (1,269 ) (0.7 ) Taxes due to changes in tax rates (1,086 ) (0.8 ) (3,521 ) (3.7 ) (1,400 ) (0.8 ) Taxes due to changes in tax laws 2,697 1.9 — — — — Restructuring — — — — (12,903 ) (7.5 ) Prior year taxes 2,805 1.9 (2,632 ) (2.7 ) 476 0.3 Other items, net (882 ) (0.6 ) (773 ) (0.8 ) (962 ) (0.6 ) Total provision for income taxes $ 15,616 10.8 % $ 1,263 1.3 % $ 28,810 16.6 % Our taxTax years since 2002in the Netherlands are open since 2000 for income tax examinations by tax authorities. Our subsidiaries, with few exceptions, are no longer subject to income tax examinations by tax authorities for years before 2004.2008. The U.S. consolidated group is subject to federal and most state income tax examinations by tax authorities beginning the year ending December 31, 20072008 through the current period.20102012 will significantly increase or decrease during the twelve-month period ending December 31, 2011;2013; however, various events could cause our current expectations to change in the future. The majority of these uncertain tax positions, if ever recognized in the financial statements, would be recorded in the statement of operations as part of the income tax provision.(in thousands) Unrecognized
Tax
Benefits $ 8,309 616 1,399 (241 ) — 255 $ 10,338 $ 322 124 (592 ) (1,361 ) (158 ) $ 8,673 (in thousands) Balance at December 31, 2010 $ 8,673 Additions based on tax positions related to the current year 757 Additions for tax positions of prior years 31 Settlements with taxing authorities (2,257 ) Reductions due to lapse of statute of limitations (207 ) Decrease from currency translation (62 ) Balance at December 31, 2011 $ 6,935 Additions based on tax positions related to the current year 819 Additions for tax positions of prior years 3,608 Reductions due to lapse of statute of limitations (691 ) Increase from currency translation 104 Balance at December 31, 2012 $ 10,775 20102012 and December 31, 2009,2011, our net unrecognized tax benefits totaled approximately $8.0$8.8 million and $9.6$6.3 million, respectively, of which $8.0$8.8 million and $6.3 million in benefits, if recognized, would favorably, affect our effective tax rate in any future period. It is possible that approximately $0.5$2.4 million of the unrecognized tax benefits may be released during the next 12 months due to lapse of statute of limitations or settlements with tax authorities.2010,2012 and 2011, we had $0.4have net interest expense and penalties of $2.8 million of and $0.1 million, respectively. At December 31, 2012 and 2011, we have accrued interest of $3.0 million and $0.5 million, respectively, that are not included in accrued and other liabilities in the accompanying consolidated balance sheet. During 2010, the amount of accrued interest decreased by $0.1 million with approximately $0.2 million of interest income and $0.1 million of interest expense recognized during 2010. At December 31, 2009, we had $0.5 million of accrued interest included in accrued and other liabilities in the accompanying consolidated balance sheet. During 2009, the amount of accrued interest increased by $0.1 million with approximately $0.03 million of interest income and $0.2 million of interest expense recognized during 2009.$163.3$165.0 million and $171.7$181.5 million at December 31, 20102012 and 2009, respectively which are reflected2011, respectively. The 2011 deferred taxes have been adjusted to correctly reflect as current or non-current and to net deferred tax positions within the same tax jurisdictions. These balance sheet reclassifications have no impact on the consolidated balance sheets at December 31, 2010 and 2009 as follows:(in thousands) 2010 2009 $ 30,731 $ 33,525 (30,504 ) (18,912 ) 37,182 26,387 (200,667 ) (212,690 ) $ (163,258 ) $ (171,690 ) 20102012 and December 31, 20092011 are as follows: 2010 2009 (in thousands) Deferred
Tax Assets Deferred
Tax Liability Deferred
Tax Assets Deferred
Tax Liability $ 8,282 $ — $ 33,462 $ — 30,138 (6,487 ) 20,972 (838 ) 3,134 (1,915 ) 4,612 (1,634 ) 744 (473 ) 902 (432 ) 2,303 (3,588 ) 1,846 (3,992 ) 51 (7,757 ) 1,644 (13,043 ) 9,067 — 9,288 — — (1,042 ) — (864 ) — (1,515 ) 693 (725 ) 1,228 (206,481 ) 462 (222,015 ) 5,624 — 4,117 — 7,342 (1,913 ) 12,434 (2,995 ) — — (15,584 ) — $ 67,913 $ (231,171 ) $ 74,848 $ (246,538 ) $ (163,258 ) $ (171,690 ) 2012 2011 (in thousands) Net operating loss carry forwards $ 17,664 $ — $ 10,389 $ — Accrued and other liabilities 21,412 (552 ) 25,981 (65 ) Inventories 2,991 (1,410 ) 3,106 (1,578 ) Allowance for bad debts 687 (600 ) 726 (471 ) Currency revaluation 266 (746 ) — (546 ) Depreciation and amortization 606 (10,027 ) 124 (19,854 ) Capital lease 2,149 — 2,392 — Tax credits 611 — 6,848 — Unremitted profits and earnings — (1,215 ) — (1,175 ) Intangibles 5,270 (220,880 ) 2,523 (218,027 ) Equity awards 10,082 — 7,289 — Other 10,460 (1,314 ) 6,553 (1,432 ) Valuation allowance (442 ) — (4,260 ) — $ 71,756 $ (236,744 ) $ 61,671 $ (243,148 ) Net deferred tax liabilities $ (164,988 ) $ (181,477 ) 2010,2012 and 2011, we had $37.8$58.7 million and $39.4 million in total foreign net operating losses in the U.S. and other countries.losses. At December 31, 2010,2012 and 2011, we had $23.5$13.5 million and $5.1 million of U.S. federal net operating loss (NOL) carryforwards. These amounts include $9.4 million related to deductions for equity awards. TheseAt December 31, 2012, the entire NOLs have, forin the most part, been acquired in recent acquisitions and a portion of these NOLsU.S. are subject to limitations under Section 382 of the Internal Revenue Code. TheseCode but all losses subject to IRC 382 limitation are expected to be utilized before they expire. The net operating losses in the U.S. will expire beginning December 31, 2021 though through December 31, 2027.2031. As of December 31, 20102012 and December 31, 2009,2011, we had other foreign NOL carryforwards totaling approximately $14.3$45.2 million and $45.6$34.3 million, respectively. These NOLs were primarily generated from acquisitions and operating losses from our subsidiaries. A portion of the foreign net operating losses will be expiring beginning December 31, 2012.2013. The valuation allowance amounts are zero and $15.6 million for the years ended December 31, 20102012 and 20092011 are $0.4 million and $4.3 million, respectively. TheWe had a release of the valuation allowance decreased by $15.6of $3.9 million during 2010 which was triggered by in 2012 as an intercompany saleadjustment to goodwill related to a deferred tax asset from a 2009 acquisition. In 2011, we had a decrease of valuation allowance of $1.1 million from the deferred tax assets andthat were used to offset current tax liability. related tax affects eliminated in consolidation.We have undistributed earnings inof the majority of our foreign subsidiaries. Upon repatriation of those earnings, in the form of dividends or otherwise, in some jurisdictions we would be subject to withholding taxes payable to the foreign countries or the receipts would be subject to tax. For those subsidiaries where theas these earnings are considered to be either permanently reinvested no provision for taxes has been provided. At or can be repatriated tax free. These earnings retained by subsidiaries and equity accounted investments amounted to 20102012. We have $18.0 million of undistributed earnings that we do not consider permanently reinvested and 2009, we hadhave recorded deferred income tax liabilitiestaxes or withholding taxes at December 31, 2012 and December 31, 2011, of approximately $1.0$1.2 million and $0.9 million, respectively, for taxes that would be payable on the unremitted earnings of certain of our subsidiaries. Determination of the amount of unrecognized deferred tax liability on those unremitted earnings is not practicable because of the complexities associated with this hypothetical calculation.. There are no income tax consequences regarding payment of dividends to our shareholders. To date, we have never paid dividends.14.Accrued and Other LiabilitiesAccrued andliabilitiescomprehensive income at December 31, 2010 and 2009 consist31:(in thousands) 2012 2011 Net unrealized loss on hedging contracts, net of tax of $0.1 million in 2011 $ — $ (762 ) Net unrealized (loss) gain on pension, net of tax (483 ) 115 Foreign currency effects from intercompany long-term investment transactions, net of tax of $4.4 million and $4.9 million in 2012 and 2011, respectively 5,954 7,369 Foreign currency translation adjustments 38,520 9,182 Accumulated other comprehensive income $ 43,991 $ 15,904 following:(in thousands) 2010 2009 $ 54,122 $ 64,000 42,503 49,388 28,679 40,828 24,808 27,273 11,685 26,658 16,400 18,313 20,973 15,943 6,296 6,296 3,588 3,417 $ 209,054 $ 252,116 15.Lines of Credit and DebtWe have five separate lines of credit amountingSupervisory Board approved a program authorizing management to $160.8 million in the aggregate with variable interest rates, of which insignificant amounts were utilized at December 31, 2010 and 2009. There were no significant short-term borrowings as of December 31, 2010 and 2009.At December 31, 2010, total debt was approximately $873.0 million, $75.8 million of which is current. Total debt consists of the following:(in thousands) 2010 2009 $ 425,000 $ 475,000 300,000 300,000 145,000 145,000 3,006 — 873,006 920,000 75,835 50,000 $ 797,171 $ 870,000 As of December 31, 2010, we have drawn down $3.0 million under a loan which can be utilized forpurchase up to EUR 12.7a total of to finance R&D projects in Germany. The loan bears interest at 3.5% and is due to be fully repaid by 2019 with repayments commencing in 2011.Future principal maturities of long-term debt as of December 31, 2010 are as follows: (in thousands) $ 75,835 796,670 501 $ 873,006 Interest expense on long-term debt was $24.9 million, $26.7 million and $33.7 million for the years ended December 31, 2010, 2009 and 2008, respectively.During 2007, we signed a Syndicated Multi-Currency Term Loan and Revolving Credit Facilities Agreement with Deutsche Bank AG, Deutsche Bank Luxembourg S.A., and the lenders named in the agreement. The lenders made available a term loan, a bridge loan, which was utilized and repaid in 2007, and a $150 million revolving credit facility. Under the agreement, the $500 million term loan will mature in July 2012 with repayment beginning in July 2009. In July 2010 and 2009, $50.0 million and $25.0 million, respectively, were repaid. The $150 million revolving credit facility will expire in July 2012. The proceeds of the debt were loaned to a subsidiary of QIAGEN N.V., and QIAGEN N.V. has guaranteed the debt. The loan agreements contain certain financial and non-financial covenants, including but not limited to, restrictions on the encumbrance of land, restrictions on the transfer of patents to third parties and the maintenance of certain financial ratios. We were in compliance with these covenants at December 31, 2010. The fair value of the note payable approximated its carrying value at December 31, 2010.In May 2006, we completed the offering of the $300 million of 3.25% Senior Convertible Notes due in 2026 (2006 Notes) through an unconsolidated subsidiary, QIAGEN Euro Finance. The net proceeds of the 2006 Notes were loaned by Euro Finance to consolidated subsidiaries and at December 31, 2010 and 2009, $300.0 million is included in long-term debt for the loan amounts payable to Euro Finance. These long-term notes payable to Euro Finance have an effective interest rate of 3.97% and are due in November 2012. Interest is payable semi-annually in May and November. The 2006 Notes were issued at 100% of principal value, and are convertible into 15.0 million common shares at the option of the holders upon the occurrence of certain events, at a price of $20.00 per share, subject to adjustment. QIAGEN N.V. has an agreement with Euro Finance to issue shares to the investors in the event of conversion. This subscription right, along with the related receivable, is recorded at fair value in the equity of QIAGEN N.V. as paid-in capital. The 2006 Notes cannot be called for the first 7 years and are callable thereafter subject to a provisional call trigger of 130% of the conversion price. In addition, the holders of the 2006 Notes may require QIAGEN to repurchase all or a portion of the outstanding Notes for 100% of the principal amount, plus accrued interest, on May 16, 2013, 2017 and 2022. Based on an estimation using available over-the-counter market information on the convertible bond issued by QIAGEN Euro Finance, the fair value of the 2006 Notes at December 31, 2010 was approximately $365.0 million. We have reserved 15.0 million common shares for issuance in the event of conversion.In August 2004, we completed the sale of the $150 million of 1.5% Senior Convertible Notes due in 2024 (2004 Notes), through its unconsolidated subsidiary QIAGEN Finance. The net proceeds of the Senior Convertible Notes were loaned by QIAGEN Finance to consolidated subsidiaries in the U.S. and Switzerland and at December 31, 2010 and 2009, $145.0 million is included in long-term debt for the loan amounts payable to QIAGEN Finance. These long-term notes payable to QIAGEN Finance have an effective interest rate of 2.16% and have a maturity until further notice but in no case earlier than July 2012. During 2010, we entered into an agreement for the refinancing of the loan payable for interest and a new maturity date to be determined upon the finalization of the refinancing, but in no case earlier than July 2012. Interest is payable semi-annually in February and August. The 2004 Notes were issued at 100% of principal value, and are convertible into 11.5 million common shares at the option of the holders upon the occurrence of certain events at a price of $12.6449 per share, subject to adjustment. QIAGEN N.V. has an agreement with QIAGEN Finance to issue shares to the investors in the event of conversion. This subscription right, along with the related receivable, is recorded at fair value in the equity of QIAGEN N.V. as paid-in capital. The 2004 Notes may be redeemed, in whole or in part, at QIAGEN’s option on or after August 18, 2011, at 100% of the principal amount, provided that the actual trading priceexceeds 120% of the conversion price for twenty consecutive trading days. In addition, the holders of the 2004 Notes may require QIAGEN to repurchase all or a portion of the outstanding 2004 Notes for 100% of the principal amount, plus accrued interest, on August 18, 2011, 2014 and 2019. Based on an estimation using available over-the-counter market information on the convertible bond issued by QIAGEN Finance, the fair value of the 2004 Notes at (excluding transaction costs). Through December 31, 2010 was2012, a total of 1.9 million QIAGEN shares were repurchased for approximately $228.8 million.$35.7 million, in total. We have reserved 11.5 millionintend to complete the share repurchase program in 2013. The cost of repurchased shares is included in treasury stock and reported as a reduction in total equity when a repurchase occurs. Repurchased shares will be held in treasury in order to satisfy various obligations, which include exchangeable debt instruments and employee share-based remuneration plans.for issuance inoutstanding. Diluted earnings per share reflect the event of conversion.16.Share-Based CompensationWe adoptedpotential dilution that would occur if all “in the QIAGEN N.V. Amended and Restated 2005 Stock Plan (the Plan) in 2005. The Plan allows for the granting of stock rights and incentive stock options, as well as non-qualified options, stock grants and stock-based awards, generally with terms of upmoney” securities to 10 years, subject to earlier termination in certain situations. Generally, options vest over a three-year period. The vesting and exercisability of certain stock rights will be accelerated in the event of a Change of Control, as defined in the Plan. To date, all option grants have been at the market value on the grant date or at a premium above the closing market price on the grant date. We issue new Common Shares to satisfy option exercises and had approximately 14.0 million Common Shares reserved and available for issuance under this plan at December 31, 2010.In connection with the 2007 acquisition of Digene Corporation, we assumed three additional equity incentive plans. No new grants will be made under these plans. We had approximately 0.3 million common shares reservedwere exercised. The following schedule summarizes the information used to compute earnings per common share: Years ended December 31, (in thousands, except per share data) 2012 2011 2010 Net income attributable to the owners of QIAGEN N.V. $ 129,506 $ 96,038 $ 144,311 Weighted average number of common shares used to compute basic net income per common share 235,582 233,850 232,635 Dilutive effect of stock options and restrictive stock units 2,341 2,876 2,843 Dilutive effect of outstanding warrant shares 2,823 2,338 5,005 Weighted average number of common shares used to compute diluted net income per common share 240,746 239,064 240,483 Outstanding options and awards having no dilutive effect, not included in above calculation 2,906 3,995 2,152 Outstanding warrants having no dilutive effect, not included in above calculation 23,644 23,591 21,462 Basic earnings per common share attributable to the owners of QIAGEN N.V. $ 0.55 $ 0.41 $ 0.62 Diluted earnings per common share attributable to the owners of QIAGEN N.V. $ 0.54 $ 0.40 $ 0.60 available for issuance under these plans at December 31, 2010.Stock OptionsDuring the years ended December 31, 2010 and 2009, we granted 570,282 and 491,714 stock options, respectively. Following are the weighted-average assumptions used in valuing the stock options granted to employees for the years ended December 31: 2010 2009 2008 31 % 40 % 38 % 2.12 % 2.13 % 2.91 % 4.84 5.01 5.27 0 % 0 % 0 % 7.0 % 7.7 % 8.5 % A summary of the status of employee stock options as of December 31, 2010 and changes during the year then ended is presented below:All Employee Options Number of
Shares Weighted
Average
Exercise
Price Weighted
Average
Contractual
Term Aggregate
Intrinsic
Value
(in thousands) 8,281,559 $ 14.743 570,282 $ 21.271 (924,529 ) $ 12.469 (594,901 ) $ 35.421 7,332,411 $ 13.860 3.66 $ 44,740 6,351,142 $ 12.927 2.88 $ 43,864 7,248,637 $ 13.790 3.60 $ 44,700 Generally, stock option grants are valued as a single award with a single average expected term and are amortized over the vesting period. The weighted-average grant-date fair value of options granted during the years ended December 31, 2010, 2009 and 2008 was $6.42, $6.33 and $7.80, respectively. The total intrinsic value of options exercised during the years ended December 31, 2010 and 2009 was $7.7 million and $16.7 million, respectively. At December 31, 2010, the unrecognized share-based compensation expense related to employee stock option awards is approximately $4.1 million and will be recognized over a weighted average period of approximately 1.77 years.At December 31, 2010, 2009 and 2008, options were exercisable with respect to 6.4 million, 7.4 million and 9.6 million Common Shares at a weighted average price of $12.93, $14.36 and $13.91 per share, respectively. The options outstanding at December 31, 2010 expire in various years through 2020.Restricted Stock UnitsRestricted stock units represent rights to receive Common Shares at a future date. There is no exercise price and the fair market value at the time of the grant is recognized ratably over the requisite vesting period, generally 10 years. The fair market value is determined based on the number of restricted stock units granted and the market value of our shares on the grant date. Pre-vesting forfeitures were estimated to be approximately 7.3%. At December 31, 2010, there was $51.8 million remaining in unrecognized compensation cost related to these awards, which is expected to be recognized over a weighted average period of 8.2 years. The weighted average grant date fair value of restricted stock units granted during the year ended December 31, 2010 was $21.15. The total fair value of restricted stock units released during the years ended December 31, 2010 and 2009 was $2.5 million and $6.9 million, respectively.A summary of restricted stock units as of December 31, 2010 and changes during the year are presented below: Restricted Stock
Units Weighted
Average
Contractual
Term Aggregate
Intrinsic
Value
(in thousands) 3,039,157 1,647,579 (115,809 ) (154,287 ) 4,416,640 3.07 $ 85,904 3,594,698 2.95 $ 69,917 Compensation ExpenseShare-based compensation expense for the years ended December 31, 2010, 2009 and 2008 totaled approximately $13.6 million, $9.7 million and $9.8 million, respectively, as shown in the table below. No share-based compensation cost was capitalized in inventory in 2010, 2009 or 2008 as the amounts were not material. The actual tax benefit realized for the tax deductions of the share-based payment arrangements totaled $2.0 million, $5.9 million and $1.8 million, respectively, for the years ended December 31, 2010, 2009 and 2008.Compensation Expense (in thousands) 2010 2009 2008 $ 932 $ 799 $ 968 2,087 1,826 1,818 2,885 1,936 2,999 7,688 5,186 3,620 — — 386 13,592 9,747 9,791 2,856 2,913 3,025 $ 10,736 $ 6,834 $ 6,766 17.Commitments and Contingencies2016.2022. Certain rental commitments provide for escalating rental payments or have renewal options extending through various years. Certain facility and equipment leases constitute capital leases expiring in various years through 2018.2018. The accompanying consolidated financial statements include the assets and liabilities arising from these capital lease obligations. Rent expense under operating lease agreements was $17.9$21.5 million $13.0, $20.3 million and $11.2$17.9 million for the years ended December 31, 2010, 20092012, 2011 and 2008,2010, respectively.20102012 are as follows:(in thousands) Capital
Leases Operating
Leases $ 5,251 $ 13,989 5,272 12,145 5,209 9,332 5,121 7,862 5,149 6,196 7,062 11,013 33,064 $ 60,537 (6,121 ) 26,943 (3,588 ) $ 23,355 (in thousands) 2013 $ 5,396 $ 16,309 2014 5,304 11,389 2015 5,290 9,834 2016 3,998 5,879 2017 1,429 3,234 Thereafter 1,429 7,809 22,846 $ 54,454 Less: Amount representing interest (2,958 ) 19,888 Less: Current portion (4,203 ) Long-term portion $ 15,685 $16.4$17.6 million and $18.3$25.7 million at December 31, 20102012 and 2009,2011, respectively. Royalty expense relating to these agreements amounted to $45.7$52.5 million $47.2, $43.3 million, and $45.6$45.7 million for the years ended December 31, 2010, 20092012, 2011 and 2008,2010, respectively. Royalty expense is primarily recorded in cost of sales, with a small portion recorded as research and development expense depending on the use of the technology under license. Some of these agreements also have minimum raw material purchase requirements and requirements to perform specific types of research.2010,2012, we had commitments to purchase goods or services, and for future minimum guaranteed royalties. They are as follows:(in thousands) Purchase
Commitments License & Royalty
Commitments $ 50,888 $ 1,064 3,013 1,168 1,600 1,368 355 1,468 355 1,468 203 4,385 $ 56,414 $ 10,921 (in thousands) 2013 $ 54,754 $ 9,224 2014 4,124 3,762 2015 1,339 1,773 2016 152 1,798 2017 — 1,799 Thereafter — 2,905 $ 60,369 $ 21,261 4,5, we could be required to make additional contingent cash payments totaling up to $85.4$134.2 million based on the achievement of certain revenue and operating results milestones as follows: $8.3$18.9 million in 2011, $16.32013, $23.4 million in 2012, $13.32014, $16.3 million in 2013, $2.72015, $17.5 million in 20142016, $7.0 million in 2017, and $44.8$51.1 million, payable in any 12-month period from now until 20152017 based on the accomplishment of certain revenue targets, the launch of certain products or the grant of certain patent rights. Of the $85.4$134.2 million total contingent obligation, approximately $28.7 million is accrued as of December 31, 2010. We reassessedwe have assessed the fair value of the contingent consideration as of at December 31, 2010, the result2012, to be $19.0 million, where $9.8 million and $9.2 million are included in accrued and other liabilities and other long-term liabilities, respectively.2010,2012, the commitment under these agreements totaled $19.4 million.$15.3 million.20102012 and 20092011 appropriately reflect the estimated cost of such warranty obligations.$27.0$7.5 million and $7.0 million as of December 31, 2010 ($37.1 million as of December 31, 2009).2012 and 2011, respectively. In addition, we have recorded $28.7$5.5 million and $6.2 million for preacquistion contingencies as a liability under accrued and other liabilities as of December 31, 2010 ($40.8 million as of December 31, 2009). We reassessed the fair value of the preacquistion contingencies as of December 31, 2010, the result of which was not materially different from the fair value determined as of the date of the acquisitions.QIAGENwe may be party to legal proceedings incidental to itsour business. As of December 31, 2010,2012, certain claims, suits or legal proceedings arising out of the normal course of business have been filed or were pending against QIAGEN or its subsidiaries. These matters have arisen in the ordinary course and conduct of business, as well as through acquisition. Although it is not possible to predict the outcome of such litigation, basedwe assess the degree of probability and evaluate the reasonably possible losses that we could incur as a result of these matters. We accrue for any estimated loss when it is probable that a liability has been incurred and that the amount of the probable loss can be estimated. Based on the facts known to QIAGEN and after consultation with legal counsel, management believes that such litigation will not have a material adverse effect on QIAGEN’s financial position or results of operations.Digene Corporation v. F. Hoffmann-LaRoche Ltd. and Roche Molecular Systems, Inc.In December 2006, Digene filed for arbitration withWe adopted the International Centre for Dispute Resolution of the American Arbitration Association in New York against F. Hoffmann-LaRoche Ltd. and Roche Molecular Systems, Inc. (collectively Roche) for breach of contract of a 1990 Cross License Agreement between Digeneand Roche for rights to certain HPV patents. Digene alleged that Roche had breached this license agreement by entering into a Supply and Purchase Agreement with Gen-Probe, Inc. (Gen-Probe) in violation of the terms of the Cross License Agreement. On July 13, 2007, the arbitration panel granted Gen-Probe’s request to intervene as a respondent in the arbitration. On April 1, 2009, the arbitration panel granted an interim award denying QIAGEN’s breach of contract claims and consequently also the damages. On April 15, 2009, Roche and Gen-Probe filed motions for reimbursement of attorneys’ fees. On August 12, 2009, the arbitration panel issued a total award of $6.3 million, including administrative and arbitrator fees, and on August 13, 2009, the Company filed a petition in the Supreme Court of the State of New York to vacate or modify the award of the arbitrators. On August 20, 2009, Roche and Gen-Probe filed a joint petition to confirm the award, and on September 23, 2009, the Court set the briefing/hearing schedule. On December 18, 2009, the District Court heard oral arguments on the petitions to vacate and confirm the arbitration award. On August 16, 2010, the court entered a final judgment in favor of Roche and Gen-Probe and the case was closed.Corbett v. Montreal Biotechnologies, Inc.On February 19, 2009, M.H. Montreal Biotechnologies, Inc. (MBI) sued QIAGEN, Inc. and Corbett Life Science Pty. Ltd. (Corbett) in the Circuit Court for Montgomery County, Maryland, seeking monetary damages. MBI claimed that QIAGEN, Inc. intentionally interfered with MBI’s contractual relations with Corbett, intentionally interfered with MBI’s contractual and business relations with its customers, and engaged in unfair competition. Separately, MBI contended that Corbett breached its contract with MBI, breached the implied covenant of good faith and fair dealing, and also engaged in unfair competition. In a court hearing on October 14, 2009, the Court dismissed the case against Corbett. MBI amended its complaint on November 16, 2009, adding QIAGEN N.V. Amended and QIAGEN GmbH as new defendantsRestated 2005 Stock Plan (the Plan) in 2005. The Plan allows for the granting of stock rights and changing certain contentions against QIAGEN. The claims against QIAGEN GmbH and QIAGEN N.V. were dismissed in September 2010. In January 2011, QIAGEN and MBI agreed to settle the matter based on confidential terms which included payment by QIAGEN of a de minimis amount.QIAGEN Sciences, Inc. v. Operon Biotechnologies, Inc.On July 2, 2009, Operon Biotechnologies, Inc. (Operon) commenced arbitration against QIAGEN Sciences, Inc. asserting a breach of a supply agreement between the parties and seeking monetary damages. Operon asserts that QIAGEN failed to comply with the preferred supplier provisions of the agreement and that this breach has caused damages, including lost profits. QIAGEN is in the process of responding to this claim and will vigorously defend against the claim.QIAGEN Gaithersburg, Inc. v. Abbott GmbH & Co. KG.On November 4, 2009, QIAGEN Gaithersburg, Inc. filed a patent infringement lawsuit against Abbott GmbH & Co. KG (Abbott) in the Düsseldorf District Court in Germany moving for injunctive reliefincentive stock options, as well as declaratory judgmentnon-qualified options, stock grants and stock-based awards, generally with terms of up to 10 years, subject to earlier termination in certain situations. Generally, options vest over a three-year period. The vesting and exercisability of certain stock rights will be accelerated in the event of a Change of Control, as defined in the Plan. To date, all option grants have been at the market value on damagesthe grant date or at a premium above the closing market price on the grant date. We issue new Common Shares to satisfy option exercises and had approximately 19.8 million Common Shares reserved and available for issuance under this plan at December 31, 2012. 2012 2011 2010 Stock price volatility 34 % 34 % 31 % Risk-free interest rate 0.82 % 1.88 % 2.12 % Expected life (in years) 4.89 4.97 4.84 Dividend rate 0 % 0 % 0 % Forfeiture rate 5.9 % 6.1 % 7.0 % All Employee Options Outstanding at January 1, 2012 6,527 $ 13.61 Granted 593 $ 16.00 Exercised (1,444 ) $ 11.53 Forfeited (82 ) $ 18.90 Expired (261 ) $ 17.64 Outstanding at December 31, 2012 5,333 $ 14.16 4.09 $ 25,006 Exercisable at December 31, 2012 4,252 $ 13.18 2.91 $ 23,664 Vested and expected to vest at December 31, 2012 5,257 $ 14.12 4.01 $ 24,886 patent infringement. On January 19, 2010,4.3 million, 5.5 million and 6.4 million Common Shares at a case management conference took place beforeweighted average price of $13.18, $12.37 and $12.93 per share, respectively. The options outstanding at December 31, 2012 expire in various years through 2022.Düsseldorf District Court during which Abbott moved for dismissalfair market value at the time of the complaint,grant is recognized over the requisite vesting period, generally 10 years. The fair market value is determined based on the number of restricted stock units granted and the Court set a due datemarket value of May 18, 2010 for Abbott’s statement of defense, withour shares on the Company’s reply due by September 21, 2010, and Abbott’s rejoinder due by grant date. Pre-vesting forfeitures were estimated to be approximately 7.1%. At December 27, 2010. The hearing date31, 2012, there was set for January 18, 2011. In reaction to the Dusseldorf lawsuit, Abbott has filed a motion to compel arbitration,$67.6 million remaining in unrecognized compensation cost including an anti-suit injunction against QIAGEN before the Northern District Court of Illinois. QIAGEN filed its opposition on March 8, 2010. By Memorandum and Order dated April 15, 2010, the U.S. District Judge has granted Abbott’s motion to compel arbitration but has denied the anti-suit injunction. On April 21, 2010, Abbott contacted QIAGEN seeking to initiate the arbitration proceedings by confirming an arbitrator, and on May 6, 2010, the arbitrator was confirmed. The parties further agreed to conduct the arbitration on September 15-16, 2010 in Philadelphia, Pennsylvania. On September 30, 2010, the parties entered into a settlement agreement resolving all disputesestimated forfeitures related to this matter.Roche Molecular Systems, Inc v. DxS Ltd.On February 11, 2010, Roche Molecular Systems filedthese awards, which is expected to be recognized over a lawsuit against DxSweighted average period of Stock Units Outstanding at January 1, 2012 5,651 Granted 2,574 Vested (831 ) Forfeited (473 ) Outstanding at December 31, 2012 6,921 2.85 $ 125,602 Vested and expected to vest at December 31, 2012 5,732 2.74 $ 104,029 federal courttable below. No share-based compensation cost was capitalized in inventory in 2012, 2011 or 2010 as the amounts were not material. The excess tax benefit realized for the Southern District of New York. In its lawsuit, Roche alleged that DxS is preparing to terminate the parties’ Distributor Agreement without good cause and that DxS’ terminationtax deductions of the Agreement would cause Roche to suffer irreparable harm inshare-based payment arrangements totaled $1.5 million, $4.2 million and $2.0 million, respectively, for the form of lost business opportunitiesyears ended December 31, 2012, 2011 and goodwill and damage to Roche’s reputation. In connection with its lawsuit, Roche had also filed a motion for preliminary injunction in which it asked the court to issue an order prohibiting DxS from terminating the Agreement and requiring DxS to perform its obligations under the Agreement pending the final resolution of the lawsuit. Roche amended its complaint adding QIAGEN N.V. and QIAGEN GmbH as new defendants and changing certain contentions against QIAGEN. Before the scheduled jury trial, parties entered into a settlement agreement whereby they released each other from and dismissed all mutual claims. The matter was thereby closed.$2.1 $2.0, $2.3 million and $2.2$2.1 million for the years ended December 31, 2010, 20092012, 2011 and 2008,2010, respectively. We also have a defined contribution plan which covers certain executives. We make matching contributions up to an established maximum. Matching contributions made to the plan, and expensed, totaled approximately $0.4$0.3 million in each year ended December 31, 2010, 20092012, 2011 and 2008.2010.$2.4$4.0 million at December 31, 20102012 and $2.1$2.9 million at December 31, 2009.2011, and is included as a component of other long-term liabilities on the consolidated balance sheets. 19.Related Party Transactionsconsulting agreement with Dr. Metin Colpan, our former Chief Executive Officer and current Supervisory Board member, pursuant to which Dr. Colpan is paid a fee of EUR 2,750 per day for consulting services, subject to adjustment. We paid approximately $0.3 million and $0.2 million to Dr. Colpan for scientific consulting services under this agreement during each of the years ended December 31, 2010 and 2009, respectively.We have a 11,10, QIAGEN Finance and Euro Finance are variable interest entities with nofor which we do not hold any variable interests and are not the primary beneficiary, thus they are not consolidated. Accordingly, the convertible debt is not included in the consolidated statements of QIAGEN N.V., though QIAGEN N.V. does report the full obligation of the debt through its liabilities to QIAGEN Finance and Euro Finance. As of December 31, 20102012 and 2009,2011, we had loans payable to QIAGEN Finance of $145.0$145.0 million and accrued interest due to QIAGEN Finance of $3.3$4.4 million and. We also had amounts receivable from QIAGEN Finance of $2.3 million.$3.4 million. As of December 31, 20102012 and 2009,2011, we have a loan payable to Euro Finance of $300.0$300.0 million, accrued interest due to Euro Finance of $3.0$2.6 million and $3.0 million, respectively and amounts receivable from Euro Finance of $1.6 million.$1.3 million and $1.6have a 50% interest in a joint venture company, PreAnalytiX GmbH, which is accounted for under the equity method. We had accounts receivable from PreAnalytiXincurred consulting expenses of $0.6approximately $0.1 million and $1.0 million as of December 31, 20102011 for scientific consulting services under this agreement. In January 2012, the agreement under which Dr. Colpan provided scientific consulting services terminated.December 31, 2009, respectively,license agreement with a company in which we also hold an interest. Under the terms of this agreement we will pay a total of $7.7 million in 2013 and accounts payable to PreAnalytiXanother $2.0 million in total based on the achievement of $0.3 million, as of December 31, 2010 and 2009.Year ending December 31, (in thousands) 2010 2009 $ 2,605 $ 1,783 $ 1,560 $ 1,427 $ 2,400 $ 2,062 $ 1,755 $ 902 20.Segment InformationDuring 2010,Year ending December 31, (in thousands) 2012 2011 Net sales $ 7,068 $ 6,287 Accounts receivable $ 2,651 $ 3,606 Accounts payable $ 3,699 $ 4,642 Loans receivable $ 1,674 $ 1,539 determined that we operate as one business segmenthave repurchased 1.9 million shares of common shares under the share repurchase program discussed more fully in accordance with ASC Topic 280, Segment Reporting. As a resultNote 18, for approximately $38.5 million, in total.2010, 20092012, 2011 AND 2008(in thousands) Balance at
Beginning of
Year Provision
Charged to
Expense Write-Offs Foreign
Exchange
and Other Balance at
End of Year $ 3,344 $ 827 $ (703 ) $ (398 ) $ 3,070 $ 3,070 $ 1,705 $ (562 ) $ (811 ) $ 3,402 $ 3,402 $ 1,444 $ (771 ) $ (848 ) $ 3,227 (in thousands) Write-Offs Year Ended December 31, 2010: Allowance for doubtful accounts $ 3,402 $ 1,444 $ (771 ) $ (848 ) $ 3,227 Year Ended December 31, 2011: Allowance for doubtful accounts $ 3,227 $ 2,131 $ (593 ) $ (450 ) $ 4,315 Year Ended December 31, 2012: Allowance for doubtful accounts $ 4,315 $ 1,048 $ (240 ) $ 98 $ 5,221