Edgar Filing: QIAGEN NV

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________

FORM 6-K

__________________________________

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

Commission File Number 0-28564

__________________________________

QIAGEN N.V.

__________________________________

Hulsterweg 82

5912 PL Venlo

The Netherlands

__________________________________

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x Form 40-F o

Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .

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QIAGEN N.V.

Form 6-K

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Item		Page
Other Information		3
Signatures		4
Exhibit Index		5

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OTHER INFORMATION

For the three- and six-month periods ended June 30, 2016, QIAGEN N.V. prepared its quarterly report under United States generally accepted accounting principles (U.S. GAAP). This quarterly report is furnished herewith as Exhibit 99.1 and incorporated by reference herein.

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SIGNATURES

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



QIAGEN N.V.

BY:	/S/ ROLAND SACKERS
	Roland Sackers
	Chief Financial Officer

Date:	July 29, 2016

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EXHIBIT INDEX



Exhibit No.		Exhibit

99.1		U.S. GAAP Quarterly Report for the Period Ended June 30, 2016

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Exhibit 99.1

QIAGEN N.V. AND SUBSIDIARIES

U.S. GAAP QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 2016

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Financial Information

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015	2

Condensed Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2016 and 2015	4

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended June 30, 2016 and 2015	6

Condensed Consolidated Statements of Changes in Equity (unaudited) for the six months ended June 30, 2016 and 2015	7

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2016 and 2015	8

Notes to Condensed Consolidated Financial Statements (unaudited)	9

Operating and Financial Review and Prospects	27

Quantitative and Qualitative Disclosures About Market Risk	32

Recent Authoritative Pronouncements	33

Application of Critical Accounting Policies, Judgments and Estimates	33

Off-Balance Sheet Arrangements	33

Contractual Obligations	33

Legal Proceedings	34

Risk Factors	34

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QIAGEN N.V. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)



	Note	June 30, 2016		December 31, 2015
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	328,157	$	290,011
Short-term investments		78,282		130,817
Accounts receivable, net of allowance for doubtful accounts of $7,638 and $7,255 in 2016 and 2015, respectively		254,780		273,853
Income taxes receivable		27,353		26,940
Inventories, net	(11)	140,090		136,586
Prepaid expenses and other current assets (of which $600 in 2016 due from a related party)		71,903		70,121
Deferred income taxes		—		33,068
Total current assets		900,565		961,396
Long-term assets:
Property, plant and equipment, net of accumulated depreciation of $441,559 and $409,634 in 2016 and 2015, respectively		460,337		442,944
Goodwill	(6)	1,971,884		1,875,698
Intangible assets, net of accumulated amortization of $896,917 and $827,084 in 2016 and 2015, respectively	(6)	593,674		636,421
Deferred income taxes		5,946		2,036
Other long-term assets (of which $8,928 and $7,472 in 2016 and 2015 due from related parties, respectively)	(5, 7, 16)	186,110		260,622
Total long-term assets		3,217,951		3,217,721
Total assets		$	4,118,516	$	4,179,117

The accompanying notes are an integral part of these condensed consolidated financial statements.

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QIAGEN N.V. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)



	Note	June 30, 2016			December 31, 2015
		(unaudited)
Liabilities and equity
Current liabilities:
Accounts payable		$	45,563		$	52,306
Accrued and other current liabilities		183,918			192,069
Income taxes payable		18,960			21,515
Deferred income taxes		—			2,463
Total current liabilities		248,441			268,353
Long-term liabilities:
Long-term debt	(9)	1,072,412			1,049,026
Deferred income taxes		50,984			75,726
Other long-term liabilities	(7)	120,165			224,058
Total long-term liabilities		1,243,561			1,348,810
Commitments and contingencies	(14)
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—239,707 shares in 2016 and in 2015		2,812			2,812
Additional paid-in capital		1,755,121			1,741,167
Retained earnings		1,243,888			1,227,509
Accumulated other comprehensive loss	(12)	(248,871		)	(259,156		)
Less treasury shares at cost— 5,707 and 6,702 shares in 2016 and in 2015, respectively	(12)	(131,868		)	(152,412		)
Equity attributable to the owners of QIAGEN N.V.		2,621,082			2,559,920
Noncontrolling interest		5,432			2,034
Total equity		2,626,514			2,561,954
Total liabilities and equity		$	4,118,516		$	4,179,117

The accompanying notes are an integral part of these condensed consolidated financial statements.

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QIAGEN N.V. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share data)



	Three months ended
	June 30,
	2016			2015
	(unaudited)
Net sales	$	334,412		$	319,456
Cost of sales	123,514			118,916
Gross profit	210,898			200,540
Operating expenses:
Research and development	42,120			33,575
Sales and marketing	98,771			89,830
General and administrative, integration and other	30,787			27,481
Acquisition-related intangible amortization	9,739			9,667
Total operating expenses	181,417			160,553
Income from operations	29,481			39,987
Other income (expense):
Interest income	1,502			1,046
Interest expense	(9,408		)	(9,329		)
Other income (expense), net	1,017			(2,330		)
Total other expense, net	(6,889		)	(10,613		)
Income before income taxes	22,592			29,374
Income taxes	1,591			4,268
Net income	21,001			25,106
Net loss attributable to noncontrolling interest	—			(4		)
Net income attributable to the owners of QIAGEN N.V.	$	21,001		$	25,110
Basic earnings per common share attributable to the owners of QIAGEN N.V.	$	0.09		$	0.11
Diluted earnings per common share attributable to the owners of QIAGEN N.V.	$	0.09		$	0.11

Weighted-average shares outstanding
Basic	234,760			233,540
Diluted	237,161			237,008

The accompanying notes are an integral part of these condensed consolidated financial statements.

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QIAGEN N.V. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share data)



	Six months ended
	June 30,
	2016			2015
	(unaudited)
Net sales	$	632,791		$	617,885
Cost of sales	237,145			219,473
Gross profit	395,646			398,412
Operating expenses:
Research and development	81,879			71,903
Sales and marketing	192,744			178,441
General and administrative, integration and other	56,605			53,648
Acquisition-related intangible amortization	19,536			19,302
Total operating expenses	350,764			323,294
Income from operations	44,882			75,118
Other income (expense):
Interest income	3,018			1,745
Interest expense	(18,744		)	(18,540		)
Other income (expense), net	2,334			(9,901		)
Total other expense, net	(13,392		)	(26,696		)
Income before income taxes	31,490			48,422
Income taxes	(4,348		)	3,952
Net income	35,838			44,470
Net loss attributable to noncontrolling interest	(47		)	(130		)
Net income attributable to the owners of QIAGEN N.V.	$	35,885		$	44,600
Basic earnings per common share attributable to the owners of QIAGEN N.V.	$	0.15		$	0.19
Diluted earnings per common share attributable to the owners of QIAGEN N.V.	$	0.15		$	0.19

Weighted-average shares outstanding
Basic	234,423			233,308
Diluted	237,008			237,206

The accompanying notes are an integral part of these condensed consolidated financial statements.

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QIAGEN N.V. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)



		Three Months Ended
		June 30,
		2016			2015
		(unaudited)
Net income		$	21,001		$	25,106
Other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods:
Gains on cash flow hedges, before tax	(7)	11,570			—
Reclassification adjustments on cash flow hedges, before tax	(7)	(5,094		)	—
Cash flow hedges, before tax		6,476			—
Losses on marketable securities, before tax		(845		)	—
Foreign currency translation adjustments, before tax		(37,123		)	40,443
Other comprehensive (loss) income, before tax		(31,492		)	40,443
Income tax relating to components of other comprehensive income (loss)		(1,471		)	(66		)
Total other comprehensive (loss) income, after tax		(32,963		)	40,377
Comprehensive (loss) income		(11,962		)	65,483
Comprehensive (loss) income attributable to the noncontrolling interest		(87		)	901
Comprehensive (loss) income attributable to the owners of QIAGEN N.V.		$	(11,875	)	$	64,582




		Six Months Ended
		June 30,
		2016			2015
		(unaudited)
Net income		$	35,838		$	44,470
Other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods:
Losses on cash flow hedges, before tax	(7)	(4,825		)	—
Reclassification adjustments on cash flow hedges, before tax	(7)	3,870			—
Cash flow hedges, before tax		(955		)	—
Losses on marketable securities, before tax		(1,189		)	—
Foreign currency translation adjustments, before tax		12,906			(60,406		)
Other comprehensive income (loss), before tax		10,762			(60,406		)
Income tax relating to components of other comprehensive income (loss)		73			(366		)
Total other comprehensive income (loss), after tax		10,835			(60,772		)
Comprehensive income (loss)		46,673			(16,302		)
Comprehensive income attributable to the noncontrolling interest		503			205
Comprehensive income (loss) attributable to the owners of QIAGEN N.V.		$	46,170		$	(16,507	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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QIAGEN N.V. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands)



		Common Shares			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Shares					Equity Attributable to the Owners of QIAGEN N.V.			Non-controlling Interest			Total Equity
(unaudited)	Note	Shares	Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Shares		Amount			Equity Attributable to the Owners of QIAGEN N.V.			Non-controlling Interest			Total Equity
BALANCE AT DECEMBER 31, 2015		239,707	$	2,812	$	1,741,167		$	1,227,509		$	(259,156	)	(6,702	)	$	(152,412	)	$	2,559,920		$	2,034		$	2,561,954
Acquisition of QIAGEN Marseille S.A. shares from non-controlling interests	(3)	—	—		—			—			—			—		—			—			(2,624		)	(2,624		)
Acquisition of Exiqon A/S	(3)	—	—		—			—			—			—		—			—			5,519			5,519
Net income (loss)		—	—		—			35,885			—			—		—			35,885			(47		)	35,838
Unrealized loss, net on hedging contracts	(7)	—	—		—			—			(3,619		)	—		—			(3,619		)	—			(3,619		)
Realized loss, net on hedging contracts	(7)	—	—		—			—			2,902			—		—			2,902			—			2,902
Unrealized loss, net on marketable securities	(5)	—	—		—			—			(1,189		)	—		—			(1,189		)	—			(1,189		)
Translation adjustment, net	(12)	—	—		—			—			12,191			—		—			12,191			550			12,741
Issuance of common shares in connection with stock plan		—	—		—			(19,506		)	—			995		20,544			1,038			—			1,038
Share-based compensation	(15)	—	—		13,880			—			—			—		—			13,880			—			13,880
Tax benefit of employee stock plans		—	—		74			—			—			—		—			74			—			74
BALANCE AT JUNE 30, 2016		239,707	$	2,812	$	1,755,121		$	1,243,888		$	(248,871	)	(5,707	)	$	(131,868	)	$	2,621,082		$	5,432		$	2,626,514

BALANCE AT DECEMBER 31, 2014		239,707	$	2,812	$	1,823,171		$	1,125,686		$	(134,735	)	(7,684	)	$	(167,190	)	$	2,649,744		$	8,255		$	2,657,999
Acquisition of QIAGEN Marseille S.A. shares from non-controlling interests		—	—		—			—			—			—		—			—			(4,731		)	(4,731		)
Net income (loss)		—	—		—			44,600			—			—		—			44,600			(130		)	44,470
Proceeds from subscription receivables		—	—		97			—			—			—		—			97			—			97
Redemption of subscription receivables		—	—		(112,995		)	—			—			—		—			(112,995		)	—			(112,995		)
Translation adjustment, net		—	—		—			—			(61,107		)	—		—			(61,107		)	335			(60,772		)
Purchase of treasury shares		—	—		—			—			—			(611	)	(14,992		)	(14,992		)	—			(14,992		)
Issuance of common shares in connection with stock plan		—	—		—			(21,737		)	—			1,428		27,969			6,232			—			6,232
Share-based compensation		—	—		20,030			—			—			—		—			20,030			—			20,030
Excess tax benefit of employee stock plans		—	—		2,099			—			—			—		—			2,099			—			2,099
BALANCE AT JUNE 30, 2015		239,707	$	2,812	$	1,732,402		$	1,148,549		$	(195,842	)	(6,867	)	$	(154,213	)	$	2,533,708		$	3,729		$	2,537,437

The accompanying notes are an integral part of these condensed consolidated financial statements.

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QIAGEN N.V. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



		Six months ended
		June 30,
	Note	2016			2015
Cash flows from operating activities:		(unaudited)
Net income		$	35,838		$	44,470
Adjustments to reconcile net income to net cash provided by operating activities, net of effects of businesses acquired:
Depreciation and amortization		103,289			90,187
Non-cash impairments	(5)	—			2,189
Amortization of debt discount and issuance costs		10,152			9,901
Share-based compensation expense	(15)	13,880			20,030
Excess tax benefits from share-based compensation		(74		)	(2,099		)
Deferred income taxes		(8,379		)	(5,769		)
Loss on early redemption of debt	(9)	—			7,564
(Gain) loss on marketable securities		(1,360		)	1,948
Changes in fair value of contingent consideration	(8)	(5,501		)	—
Other items, net including fair value changes in derivatives		(142		)	846
Net changes in operating assets and liabilities:
Accounts receivable		25,720			9,892
Inventories		(5,805		)	(18,732		)
Prepaid expenses and other		2,887			24,288
Other long-term assets		4,617			(482		)
Accounts payable		(9,053		)	(3,011		)
Accrued and other current liabilities		(16,623		)	(24,663		)
Income taxes		2,175			(14,618		)
Other long-term liabilities		(3,853		)	(7,268		)
Net cash provided by operating activities		147,768			134,673
Cash flows from investing activities:
Purchases of property, plant and equipment		(39,840		)	(50,583		)
Proceeds from sale of equipment		20			52
Purchases of intangible assets		(7,167		)	(6,221		)
Purchases of investments		(21,287		)	(6,335		)
Cash paid for acquisitions, net of cash acquired		(90,490		)	(7,097		)
Purchases of short-term investments		(355,051		)	(95,346		)
Proceeds from sales of short-term investments		409,103			144,705
Other investing activities		(2,424		)	(559		)
Net cash used in investing activities		(107,136		)	(21,384		)
Cash flows from financing activities:
Net proceeds from issuance of cash convertible notes and cash paid for issuance costs	(9)	—			(86		)
Repayment of long-term debt	(9)	—			(250,899		)
Principal payments on capital leases		(556		)	(526		)
Proceeds from subscription receivables		—			97
Excess tax benefits from share-based compensation		74			2,099
Proceeds from issuance of common shares		1,038			6,232
Purchase of treasury shares	(12)	—			(14,992		)
Other financing activities		(5,519		)	(4,731		)
Net cash used in financing activities		(4,963		)	(262,806		)
Effect of exchange rate changes on cash and cash equivalents		2,477			(8,820		)
Net increase (decrease) in cash and cash equivalents		38,146			(158,337		)
Cash and cash equivalents, beginning of period		290,011			392,667
Cash and cash equivalents, end of period		$	328,157		$	234,330

The accompanying notes are an integral part of these condensed consolidated financial statements.

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QIAGEN N.V. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


1.	Corporate Information

QIAGEN N.V. is a public limited liability company ('naamloze vennootschap') under Dutch law with a registered office at Hulsterweg 82, 5912 PL Venlo, The Netherlands. QIAGEN N.V., a Netherlands holding company, and subsidiaries (we, our or the Company) is the leading global provider of Sample to Insight solutions to transform biological materials into valuable molecular insights. Our sample technologies isolate and process DNA, RNA and proteins from blood, tissue and other materials. Assay technologies make these biomolecules visible and ready for analysis. Bioinformatics software and knowledge bases interpret data to report relevant, actionable insights. Automation solutions tie these together in seamless and cost-effective molecular testing workflows. We provide these workflows to four major customer classes: Molecular Diagnostics (human healthcare), Applied Testing (forensics, veterinary testing and food safety), Pharma (pharmaceutical and biotechnology companies) and Academia (life sciences research). We market our products in more than 130 countries.


2.	Basis of Presentation and Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of QIAGEN N.V., its wholly-owned subsidiaries and any partially owned subsidiaries that the Company has the ability to control. All significant intercompany accounts and transactions have been eliminated in consolidation. All amounts are presented in U.S. dollars, unless otherwise indicated. Investments in companies where we exercise significant influence over the operations but do not have control, and where we are not the primary beneficiary, are accounted for using the equity method. All other investments are accounted for under the cost method. 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 condensed 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.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and generally in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the Securities and Exchange Commission (SEC) rules and regulations. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation have been included.

On June 28, 2016, we acquired Exiqon A/S, located in Vedbaek, Denmark and on November 20, 2015, we acquired MO BIO Laboratories, located in Carlsbad, California. Accordingly, at the acquisition date, all of the assets acquired and liabilities assumed were recorded at their respective fair values and our consolidated results of operations include the operating results from the acquired companies from the acquisition date.

Certain reclassifications of prior year amounts have been made to conform to the current year presentation in the condensed consolidated statement of cash flows. For the six-month period ended June 30, 2016, the amounts related to the amortization of debt issuance costs and loss on marketable securities have been reclassed from other items, net and are now stated separately in the consolidated statements of cash flows. These reclassifications had no effect on cash provided by operating activities or total cash flows.

We operate as one operating segment in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 280, Segment Reporting. We have a common basis of organization and our products and services are offered globally. Our chief operating decision maker (CODM) makes decisions based on the Company as a whole. Accordingly, we operate and make decisions as one reporting unit.

The results of operations for an interim period are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 20-F for the year ended December 31, 2015.

Summary of Significant Accounting Policies

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The interim condensed consolidated financial statements were prepared based on the same accounting policies as those applied and described in the consolidated financial statements as of December 31, 2015 including the adoption of new standards and interpretations as of January 1, 2016.

Adoption of New Accounting Standards

In November 2015, the FASB issued Accounting Standard Update No. 2015-17 (ASU 2015-17), Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on organizations’ balance sheets. The ASU eliminates the requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. We have elected to early adopt the amendments in the first quarter of 2016 prospectively and accordingly the prior period is not retrospectively adjusted. The adoption did not have a material impact on our condensed consolidated financial statements.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16 (ASU 2015-16), Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments eliminate the requirement to retrospectively account for those adjustments. The amendments require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments became effective for our financial statements beginning in the first quarter of 2016.

In April 2015, the FASB issued Accounting Standards Update No. 2015-05 (ASU 2015-05), Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This amendment provides guidance to help entities determine whether a cloud computing arrangement contains a software license that should be accounted for as internal-use software or as a service contract. ASU 2015-05 became effective for our financial statements beginning in the first quarter of 2016 and is applied on a prospective basis.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03 (ASU 2015-03) Interest: Imputation of Interest (Subtopic 835-30) requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. The FASB issued Accounting Standards Update No. 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting. This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff indicated that it would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-03 became effective for us beginning in the first quarter of 2016 and was applied on a retrospective basis wherein the balance sheet of each period presented is adjusted to reflect the period-specific effects of applying the new guidance. As of December 31, 2015, the effect of the change in balance sheet presentation was a reduction in prepaid expenses and other current assets of $0.2 million and a reduction in other long-term assets of $10.3 million. These amounts are then presented net against the long-term debt liability.

In February 2015, the FASB issued Accounting Standards Update No. 2015-02 (ASU 2015-02) Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new standard modifies current guidance on consolidation under the variable interest model and the voting model. ASU 2015-02 is effective for us beginning in the first quarter of 2016. The adoption did not have an impact on our consolidated financial statements.

New Accounting Standards Not Yet Adopted

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13), Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The main objective of ASU 2016-13 is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in ASU 2016-13 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance will become effective for us beginning on January 1, 2020. We are currently evaluating the potential impact of ASU 2016-13 on our consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09), Compensation--Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or

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liabilities, and classification on the statement of cash flows. The new guidance will become effective for us beginning January 1, 2017. We are currently evaluating the potential impact of ASU 2016-09 on our consolidated financial statements.

In March 2016, the FASB also issued Accounting Standards Update No. 2016-07 (ASU 2016-07), Investments--Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The amendments in ASU 2016-17 eliminate the requirement to retroactively adopt the equity method of accounting. The new guidance will become effective for us beginning on January 1, 2017.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). The objective of ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 will become effective for us beginning in the first quarter of 2019. We are currently evaluating the potential impact of ASU 2016-02 on our consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01 (ASU 2016-01), Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments. The new guidance makes targeted improvements to existing U.S. GAAP by:


•	Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income;


•	Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes;


•	Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements;


•	Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities;


•	Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and


•	Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.

The amendments will become effective for our financial statements beginning in the first quarter of 2018. We are currently evaluating the impact of ASU 2016-01 on our consolidated financial statements.

In July 2015, the FASB issued Accounting Standards Update No. 2015-11 (ASU 2015-11), Inventory: (Topic 330): Simplifying the Measurement of Inventory requiring in scope inventory, including inventory measured using first-in, first out (FIFO) or average cost, to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for us beginning in the first quarter of 2017. We are currently evaluating the potential impact of ASU 2015-11 on our consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers: (Topic 606) which affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). In August 2015, the FASB issued Accounting Standards Update No. 2015-14 (ASU 2015-14), Revenue from Contracts with Customers: (Topic 606): Deferral of the Effective Date which defers the effective date of ASU 2014-09 to interim and annual reporting periods beginning after December 15, 2017. The FASB has continued to issue accounting standards updates to clarify and provide implementation guidance related to Revenue from Contracts with Customers, including ASU 2016-08 Revenue from Contract with Customers: Principal versus Agent Considerations, ASU 2016-10 Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, and ASU 2016-12 Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients. An entity should apply the amendments either retrospectively to each prior reporting period presented and the entity may elect certain practical expedients; or, retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. Early adoption is permitted only as of interim and annual reporting periods beginning after December 15, 2016. We are currently evaluating the impact its adoption would have on our financial position, results of operations or cash flows and plan to adopt in 2018.


3.	Acquisitions

Acquisitions have been accounted for as business combinations, and the acquired companies’ results have been included in the accompanying condensed consolidated statements of income from their respective dates of acquisition. Our acquisitions have historically been made at prices above the fair value of the acquired net assets, resulting in goodwill, due to expectations of synergies

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of combining the businesses. These synergies include use of our existing infrastructure, such as sales force, shared service centers, distribution channels and customer relations, to expand sales of the acquired businesses' products; use of the infrastructure of the acquired businesses to cost-effectively expand sales of our products; and elimination of duplicative facilities, functions and staffing.

2016 Acquisition

During the second quarter of 2016, we acquired a majority shareholding in Exiqon A/S (Exiqon), a publicly traded Danish company headquartered in Vedbaek, Denmark, which is a leading provider of RNA analysis solutions with a proprietary Locked Nucleid Acid (LNA) technology. The acquisition will expand our leadership position in Sample to Insight solutions for RNA analysis. On June 28, 2016, we paid DKK 627.4 million ($95.2 million) for approximately 94.52% of the outstanding Exiqon common shares. The fair value of the noncontrolling interest was based on reference to quoted market values of Exiqon stock. We have initiated the process of purchasing the remaining outstanding stock from the remaining Exiqon shareholders. Shares of Exiqon's stock are expected to be delisted from trading by Nasdaq Copenhagen in August 2016. For the three and six-month periods ended June 30, 2016, acquisition-related costs of $3.3 million and $3.6 million are included in general, administrative, integration and other in the accompanying condensed consolidated statements of income, respectively.

The allocation of the purchase price is preliminary and is not yet finalized. The preliminary allocation of the purchase price is based upon preliminary estimates which used information that was available to management at the time the financial statements were prepared and these estimates and assumptions are subject to change within the measurement period, up to one year from the acquisition date. Accordingly, the allocation may change. We continue to gather information about the fair value of all assets and liabilities, including intangible assets acquired, and the related deferred taxes.



(in thousands)	Exiqon acquisition

Purchase Price:
Cash consideration	$	95,163
Fair value of remaining shares	5,519
	$	100,682

Preliminary Allocation:
Cash and cash equivalents	$	4,824
Accounts receivable	3,581
Inventory	1,553
Prepaid expenses and other current assets	1,499
Accounts payable	(1,289		)
Accruals and other current liabilities	(11,586		)
Debt assumed	(5,822		)
Other long term liabilities	(197		)
Fixed and other long term assets	3,664
Developed technology	9,100
Customer relationships	6,600
Tradenames	1,400
Goodwill	91,496
Deferred tax liability on fair value of identifiable intangible assets acquired	(4,141		)
	$	100,682

The weighted average amortization period for the intangible assets is 8.3 years. The goodwill acquired is not deductible for tax purposes.

No amounts of revenue or earnings are included in the condensed consolidated income statement for the reporting periods since the acquisition date. No pro forma financial information has been provided herein as the acquisition of Exiqon did not have a material impact to net sales, net income or earnings per share on a pro forma basis.

Other Acquisitions

During 2011, we acquired a majority shareholding in QIAGEN Marseille S.A., formerly Ipsogen S.A. (Marseille), a publicly listed company founded and based in Marseille, France. In February 2015, QIAGEN Marseille, a fully consolidated entity, agreed to the sale

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of all its assets and liabilities, with the exception of its intellectual property portfolio. In addition, we made a tender offer to acquire the remaining Marseille shares. During 2015, we acquired additional Marseille shares for a total of $8.0 million and held 97.22% of the Marseille shares as of December 31, 2015. Per the terms of the tender offer, $2.5 million was set aside as of December 31, 2015 in restricted cash for the remaining shares which were acquired in the first quarter of 2016 and as of June 30, 2016 we held 100% of the Marseille shares.


4.	Restructuring

Late in 2014, we implemented restructuring efforts to further streamline operations as part of a commitment to continuous improvement and related to our strategic focus on our growth drivers. No additional costs were incurred in 2015 or 2016 and we do not expect to record additional restructuring charges related to this program.

The following table summarizes the components of the 2014 restructuring costs. At December 31, 2015, a restructuring accrual of $4.1 million was recorded in accrued and other current liabilities in the accompanying condensed consolidated balance sheets. At June 30, 2016, no further amounts were payable under the restructuring program.



(in thousands)	Personnel Related			Facility Related			Contract and Other Costs			Total
Balance at December 31, 2015	$	469		$	3,428		$	214		$	4,111
Payments	(143		)	(3,428		)	(214		)	(3,785		)
Release of excess accrual	(325		)	—			—			(325		)
Foreign currency translation adjustment	(1		)	—			—			(1		)
Balance at June 30, 2016	$	—		$	—		$	—		$	—


5.	Investments

We 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 and equity-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.

As of June 30, 2016 and December 31, 2015, we had a total of cost-method investments in non-publicly traded companies with carrying amounts of $37.5 million and $17.2 million, respectively, which are included in other long-term assets in the accompanying condensed consolidated balance sheets. In April 2016, we entered into a new $20.0 million cost-method investment. The fair-value of these cost-method investments are not estimated unless there are identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. For the six-month period ended June 30, 2015, we recorded impairments of cost method investments totaling $2.2 million in other expense, net in the accompanying condensed consolidated statement of income.

As of June 30, 2016 and December 31, 2015, we had a total of equity-method investments in non-publicly traded companies of $18.0 million and $16.7 million, respectively, which are included in other long-term assets in the accompanying condensed consolidated balance sheets.

During 2015, our former cost-method investment in Curetis AG was reclassified as a long-term marketable security upon the completed initial public offering of the shares of its Dutch holding company, Curetis N.V. As a result we hold 320,712 shares, with a cost basis of $2.3 million. As of June 30, 2016 and December 31, 2015, the fair market value of these shares was $2.3 million and $3.5 million, respectively, included in other long-term assets in the accompanying condensed consolidated balance sheets.


6.	Intangible Assets

The following table sets forth the intangible assets by major asset class as of June 30, 2016 and December 31, 2015:

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	June 30, 2016					December 31, 2015
(in thousands)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized Intangible Assets:
Patent and license rights	$	348,696	$	(222,672	)	$	338,175	$	(205,880	)
Developed technology	705,841		(443,197		)	693,294		(409,374		)
Customer base, non-compete agreements and trademarks	436,054		(231,048		)	432,036		(211,830		)
	$	1,490,591	$	(896,917	)	$	1,463,505	$	(827,084	)
Unamortized Intangible Assets:
Goodwill	$	1,971,884				$	1,875,698

The changes in intangibles assets in 2016 are summarized as follows:



(in thousands)	Intangibles			Goodwill
Balance at December 31, 2015	$	636,421		$	1,875,698
Additions	7,816			—
Purchase adjustments	(321		)	329
Acquisitions	17,100			91,496
Amortization	(67,877		)	—
Foreign currency translation adjustments	535			4,361
Balance at June 30, 2016	$	593,674		$	1,971,884

Cash paid for purchases of intangibles assets during the six-month period ended June 30, 2016 totaled $7.2 million, of which $2.0 million is related to prepayments recorded in other long term assets in the accompanying condensed consolidated balance sheet as of June 30, 2016. Intangible asset additions of $7.8 million includes $5.1 million of cash paid during the six-month period ended June 30, 2016, together with $1.3 million of additions which were previously recorded as prepayments and $1.4 million of additions which were accrued as of June 30, 2016.

The changes in the carrying amount of goodwill for the six months ended June 30, 2016 resulted primarily from the acquisition of Exiqon as further discussed in Note 3, "Acquisitions" and changes in foreign currency translation.

For the three- and six-month periods ended June 30, 2016 and 2015, amortization expense on intangible assets totaled approximately $34.1 million and $67.9 million, and $31.9 million and $64.5 million, respectively. Amortization of intangibles for the next five years is expected to be approximately:



Year	Annual Amortization (in millions)
2017	$	123.3
2018	$	100.9
2019	$	80.1
2020	$	53.4
2021	$	46.3


7.	Derivatives and Hedging

In the ordinary course of business, we use derivative instruments, including swaps, forwards and/or options, to manage potential losses from foreign currency exposures and interest bearing assets or liabilities. The principal objective of such derivative instruments is to minimize the risks and/or costs associated with our global financial and operating activities. We do not utilize derivative or other financial instruments for trading or other speculative purposes. We recognize all derivatives as either assets or liabilities on the balance sheet on a gross basis, measure those instruments at fair value and recognize the change in fair value in earnings in the period of change, unless the derivative qualifies as an effective hedge that offsets certain exposures. In 2015, we agreed with almost all of our counterparties with whom we enter into cross-currency swaps, interest rate swaps or foreign exchange contracts, to enter into bilateral

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collateralization contracts under which receive or provide cash collateral, as the case may be, for the net position with each of these counterparties. As of June 30, 2016, we had a liability of $5.5 million recorded in accrued and other current liabilities and had an asset of $0.6 million from posted collateral recorded in prepaid and other assets in the accompanying condensed consolidated balance sheet. As of December 31, 2015, we had a liability position of $7.8 million recorded in accrued and other current liabilities in the accompanying condensed consolidated balance sheet.

As of June 30, 2016 and December 31, 2015, we held derivative instruments that are designated and qualify as cash flow hedges where 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 2016 and 2015, we did not record any hedge ineffectiveness related to any cash-flow hedges in earnings. Based on their valuation as of June 30, 2016, we expect that no significant amount of derivative gains included in accumulated other comprehensive income will be reclassified into income during the next 12 months. These cash flows derived from derivatives are classified in the condensed consolidated statements of cash flows in the same category as the condensed consolidated balance sheet account of the underlying item.

As of June 30, 2016 and December 31, 2015, we held derivative instruments that qualify for hedge accounting as fair value hedges. For derivative instruments that are designated and qualify as a fair value hedge, the effective portion of the gain or loss on the derivative is reflected in earnings. This earnings effect is offset by the change in the fair value of the hedged item attributable to the risk being hedged that is also recorded in earnings. In 2016 and 2015, there is no ineffectiveness. The cash flows derived from derivatives are classified in the consolidated statements of cash flows in the same category as the condensed consolidated balance sheet account of the underlying item.

Interest Rate Derivatives

We use interest rate derivative contracts to align our portfolio of interest bearing assets and liabilities with our risk management objectives. During 2015, we entered into five cross currency interest rate swaps through 2025 for a total notional amount of €180.0 million which qualify for hedge accounting as cash flow hedges. We determined that no ineffectiveness exists related to these swaps. As of June 30, 2016, the €180.0 million notional swap amount had a fair value of $0.5 million recorded within other long-term assets and accrued and unpaid interest of $1.5 million which is recorded in other long-term assets in the accompanying condensed consolidated balance sheet. As of December 31, 2015, this swap had a fair value of $5.3 million and accrued and unpaid interest of $1.6 million which are both recorded in other long-term assets in the accompanying condensed consolidated balance sheet.

During 2014, we entered into interest rate swaps, which effectively fixed the fair value of $200.0 million of our fixed rate private placement debt and qualify for hedge accounting as fair value hedges. We determined that no ineffectiveness exists related to these swaps. As of June 30, 2016, the $200.0 million notional swap amount had a fair value of $12.7 million and accrued and unpaid interest of $0.7 million which are both recorded in other long-term assets in the accompanying condensed consolidated balance sheet. At December 31, 2015, this swap had a fair value of $5.0 million and accrued and unpaid interest of $0.8 million which are both recorded in other long-term assets in the accompanying condensed consolidated balance sheet.

Call Options

We entered into Call Options during 2014 which, along with the sale of the Warrants, represent the Call Spread Overlay entered into in connection with the Cash Convertible Notes and which are more fully described in Note 9, “Debt.” We used $105.2 million of the proceeds from the issuance of the Cash Convertible Notes to pay the premium for the Call Options, and simultaneously received $68.9 million, (net of issuance costs) from the sale of the Warrants, for a net cash outlay of $36.3 million for the Call Spread Overlay. The Call Options are intended to offset cash payments in excess of the principal amount due upon any conversion of the Cash Convertible Notes.

Aside from the initial payment of a premium of $105.2 million for the Call Options, we will not be required to make any cash payments under the Call Options. We will however be entitled to receive under the terms of the Call Options an amount of cash generally equal to the amount by which the market price per share of our common stock exceeds the exercise price of the Call Options during the relevant valuation period. The exercise price under the Call Options is equal to the conversion price of the Cash Convertible Notes.

The Call Options, for which our common stock is the underlying security, are a derivative asset that requires mark-to-market accounting treatment due to the cash settlement features until the Call Options settle or expire. The Call Options are measured and reported at fair value on a recurring basis, within Level 2 of the fair value hierarchy. For further discussion of the inputs used to determine the fair value of the Call Options, refer to Note 8, “Fair Value Measurements.” The fair value of the Call Options at June 30, 2016 and December 31, 2015 was approximately $74.7 million and $169.0 million, respectively, which is recorded in other long-term assets in the accompanying condensed consolidated balance sheet.

The Call Options do not qualify for hedge accounting treatment. Therefore, the change in fair value of these instruments is recognized immediately in our condensed consolidated statements of income in other income (expense), net. For the six months ended June 30, 2016 and June 30, 2015, the change in the fair value of the Call Options resulted in losses of $94.3 million and $28.0 million,

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respectively. Because the terms of the Call Options are substantially similar to those of the Cash Convertible Notes' embedded cash conversion option, discussed below, we expect the effect on earnings from those two derivative instruments to mostly offset each other.

Cash Convertible Notes Embedded Cash Conversion Option

The embedded cash conversion option within the Cash Convertible Notes is required to be separated from the Cash Convertible Notes and accounted for separately as a derivative liability, with changes in fair value reported in our condensed consolidated statements of income in other income (expense), net until the cash conversion option settles or expires. For further discussion of the Cash Convertible Notes, refer to Note 9, “Debt.” The initial fair value liability of the embedded cash conversion option was $105.2 million, which simultaneously reduced the carrying value of the Cash Convertible Notes (effectively an original issuance discount). The embedded cash conversion option is measured and reported at fair value on a recurring basis, within Level 2 of the fair value hierarchy. For further discussion of the inputs used to determine the fair value of the embedded cash conversion option, refer to Note 8, “Fair Value Measurements.” The fair value of the embedded cash conversion option at June 30, 2016 and December 31, 2015 was approximately $75.7 million and $171.0 million, respectively, and is included in other long-term liabilities in the accompanying condensed consolidated balance sheet. For the six months ended June 30, 2016 and June 30, 2015, the change in the fair value of the embedded cash conversion option resulted in gains of $95.2 million and $28.1 million, respectively, recognized in our condensed consolidated statements of income in other income (expense), net.

Foreign Currency Derivatives

As a globally active enterprise, we are subject to risks associated with fluctuations in foreign currencies in our ordinary operations. This includes foreign currency-denominated receivables, payables, debt, and other balance sheet positions including intercompany items. We manage balance sheet exposure on a group-wide basis using foreign exchange forward contracts, foreign exchange options and cross-currency swaps.

Undesignated Derivative Instruments

We are party to various foreign exchange forward, option and swap arrangements which had, at June 30, 2016, an aggregate notional value of $300.1 million and fair value of $2.0 million included in prepaid and other assets and $3.7 million included in accrued and other current liabilities, which expire at various dates through December 2016. We were party to various foreign exchange forward and swap arrangements which had, at December 31, 2015, an aggregate notional value of $264.2 million and fair values of $1.4 million and $0.5 million included in prepaid and other assets and accrued and other current liabilities, respectively, which expired at various dates through March 2016. The transactions have been entered into to offset the effects from balance sheet exposure to foreign currency exchange risk. Changes in the fair value of these arrangements have been recognized in other income (expense), net.

Fair Values of Derivative Instruments

The following table summarizes the fair value amounts of derivative instruments reported in the condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015:



	Derivatives in Asset Positions Fair value				Derivatives in Liability Positions Fair value
(in thousands)	6/30/2016		12/31/2015		6/30/2016			12/31/2015
Derivative instruments designated as hedges
Interest rate contracts⁽¹⁾	$	15,383	$	12,687	$	—		$	—
Total derivative instruments designated as hedges	$	15,383	$	12,687	$	—		$	—
Undesignated derivative instruments
Call spread overlay	$	74,713	$	169,037	$	(75,733	)	$	(170,951	)
Foreign exchange contracts	1,978		1,393		(3,702		)	(525		)
Total undesignated derivative instruments	$	76,691	$	170,430	$	(79,435	)	$	(171,476	)

_________________

(1) The fair value amounts for the interest rate contracts include accrued interest.

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Gains and Losses on Derivative Instruments

The following tables summarize the locations and gains and losses on derivative instruments for the three and six months ended June 30, 2016 and 2015:



Three months ended June 30, 2016 (in thousands)	Gain/(loss) recognized in AOCI		Location of gain / loss in income statement	(Gain) loss reclassified from AOCI into income			Gain (loss) recognized in income
Cash flow hedges
Interest rate contracts	$	11,570	Other (expense) income, net	$	(5,094	)	n/a

Fair value hedges
Interest rate contracts	$	—	Other (expense) income, net	$	—		$	1,918

Undesignated derivative instruments
Call spread overlay	n/a		Other (expense) income, net	n/a			$	239
Foreign exchange contracts	n/a		Other (expense) income, net	n/a			(1,795		)
							$	(1,556	)

Three months ended June 30, 2015 (in thousands)	Gain/(loss) recognized in AOCI		Location of gain / loss in income statement	(Gain) loss reclassified from AOCI into income			Gain (loss) recognized in income
Fair value hedges
Interest rate contracts	$	—	Other (expense) income, net	$	—		$	(3,624	)

Undesignated derivative instruments
Call spread overlay	n/a		Other (expense) income, net	n/a			$	43
Foreign exchange contracts	n/a		Other (expense) income, net	n/a			(9,241		)
							$	(9,198	)

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Six months ended June 30, 2016 (in thousands)	Gain/(loss) recognized in AOCI			Location of (gain) loss in income statement	(Gain) loss reclassified from AOCI into income		Gain (loss) recognized in income
Cash flow hedges
Interest rate contracts	$	(4,825	)	Other (expense) income, net	$	3,870	n/a

Fair value hedges
Interest rate contracts	$	—		Other (expense) income, net	$	—	$	7,739

Undesignated derivative instruments
Call spread overlay	n/a			Other (expense) income, net	n/a		$	894
Foreign exchange contracts	n/a			Other (expense) income, net	n/a		(3,125		)
							$	(2,231	)

Six months ended June 30, 2015 (in thousands)	Gain/(loss) recognized in AOCI			Location of (gain) loss in income statement	(Gain) loss reclassified from AOCI into income		Gain (loss) recognized in income
Fair value hedges
Interest rate contracts	$	—		Other (expense) income, net	$	—	$	(388	)

Undesignated derivative instruments
Call spread overlay	n/a			Other (expense) income, net	n/a		$	124
Foreign exchange contracts	n/a			Other (expense) income, net	n/a		16,650
							$	16,774

The amounts noted in the table above for accumulated other comprehensive income (AOCI) do not include any adjustment for the impact of deferred income taxes.


8.	Fair Value Measurements

Assets and liabilities are measured at fair value according to a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs, such as quoted prices in active markets;

Level 2. Inputs, other than the quoted price in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Our assets and liabilities measured at fair value on a recurring basis consist of marketable securities as discussed in Note 5 and short-term investments, which are classified in Level 1 and Level 2 of the fair value hierarchy, derivative contracts used to hedge currency and interest rate risk, derivative financial instruments entered into in connection with the Cash Convertible Notes discussed in Note 9, 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. The Level 2 derivative financial instruments include the Call Options asset and the embedded conversion option liability. See Note 9, "Debt", and Note 7, "Derivatives and Hedging," for further information. The derivatives are not actively traded and are valued based on an option pricing model that uses observable market data for inputs. Significant market data inputs used to determine fair values as of June 30, 2016 included our common stock price, the risk-free interest rate, and the implied volatility of our common stock. The Call Options asset and the embedded cash conversion option liability were designed with

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the intent that changes in their fair values would substantially offset, with limited net impact to our earnings. Therefore, the sensitivity of changes in the unobservable inputs to the option pricing model for such instruments is substantially mitigated.

Our Level 3 instruments include contingent consideration liabilities. We value contingent consideration liabilities using 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 (0% to 100%) and the discount rate (between 0.7% and 2.2%), 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.

The following table presents our hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015:



	As of June 30, 2016											As of December 31, 2015
(in thousands)	Level 1		Level 2			Level 3			Total			Level 1		Level 2			Level 3			Total
Assets:
Short-term investments	$	3,746	$	74,536		$	—		$	78,282		$	3,674	$	127,143		$	—		$	130,817
Marketable securities	2,297		—			—			2,297			3,485		—			—			3,485
Call option	—		74,713			—			74,713			—		169,037			—			169,037
Foreign exchange contracts	—		1,978			—			1,978			—		1,393			—			1,393
Interest rate contracts	—		15,383			—			15,383			—		12,687			—			12,687
	$	6,043	$	166,610		$	—		$	172,653		$	7,159	$	310,260		$	—		$	317,419
Liabilities:
Foreign exchange contracts	$	—	$	(3,702	)	$	—		$	(3,702	)	$	—	$	(525	)	$	—		$	(525	)
Cash conversion option	—		(75,733		)	—			(75,733		)	—		(170,951		)	—			(170,951		)
Contingent consideration	—		—			(9,443		)	(9,443		)	—		—			(17,678		)	(17,678		)
	$	—	$	(79,435	)	$	(9,443	)	$	(88,878	)	$	—	$	(171,476	)	$	(17,678	)	$	(189,154	)

For liabilities with Level 3 inputs, the following table summarizes the activity for the six months ended June 30, 2016:



(in thousands)	Contingent Consideration
Beginning Balance at December 31, 2015	$	(17,678	)
Additions	(381		)
Payments	3,120
Gain included in earnings	5,501
Foreign currency translation adjustments	(5		)
Ending balance at June 30, 2016	$	(9,443	)

As of June 30, 2016, of the total $9.4 million accrued for contingent consideration, $6.5 million is included in other long-term liabilities and $2.9 million is included in accrued and other current liabilities in the accompanying condensed consolidated balance sheet. During 2016, a $5.5 million gain for the reduction in the fair value of contingent consideration was recognized in general and administrative, integration and other in the accompanying condensed consolidated statement of income.

The carrying values of financial instruments, including cash and equivalents, accounts receivable, accounts payable and other accrued liabilities, approximate their fair values due to their short-term maturities. The estimated fair value of long-term debt as disclosed in Note 9 was based on current interest rates for similar types of borrowings. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future. There were no adjustments in the six-month periods ended June 30, 2016 and 2015 for nonfinancial assets or liabilities required to be measured at fair value on a nonrecurring basis.


9.	Debt

Our credit facilities available and undrawn at June 30, 2016 total €436.6 million (approximately $484.7 million). This includes a €400.0 million syndicated multi-currency revolving credit facility expiring December 2020 of which no amounts were utilized at

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June 30, 2016 or at December 31, 2015, and four other lines of credit amounting to €36.6 million with no expiration date, none of which were utilized as of June 30, 2016 or as of December 31, 2015. The €400.0 million facility can be utilized in euro, U.K. pound or U.S. dollar and bears interest of 0.4% to 1.2% 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. 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 June 30, 2016. The credit facilities are for general corporate purposes.

At June 30, 2016 and December 31, 2015, long-term debt, net of debt issuance costs of $9.3 million and $10.6 million, respectively, consists of the following:



(in thousands)	2016		2015
3.19% Series A Senior Notes due October 2019	$	75,382	$	73,790
3.75% Series B Senior Notes due October 2022	309,193		302,943
3.90% Series C Senior Notes due October 2024	26,904		26,898
0.375% Senior Unsecured Cash Convertible Notes due 2019	396,916		391,111
0.875% Senior Unsecured Cash Convertible Notes due 2021	258,290		254,284
9.25% Other notes payable due November 2018	5,727		—
Total long-term debt	$	1,072,412	$	1,049,026

Cash Convertible Notes due 2019 and 2021

On March 19, 2014, we issued $730.0 million aggregate principal amount of Cash Convertible Senior Notes of which $430.0 million is due in 2019 (2019 Notes) and $300.0 million is due in 2021 (2021 Notes). We refer to the 2019 Notes and 2021 Notes, collectively as the “Cash Convertible Notes.” The aggregate net proceeds of the Cash Convertible Notes were $680.7 million, after payment of the net cost of the Call Spread Overlay described below and transaction costs. Additionally, we used $372.5 million of the net proceeds to repay the 2006 Notes and related subscription right.

Interest on the Cash Convertible Notes is payable semi-annually in arrears on March 19 and September 19 of each year, at rates of 0.375% and 0.875% per annum for the 2019 Notes and 2021 Notes, respectively, commencing on September 19, 2014. The 2019 Notes will mature on March 19, 2019 and the 2021 Notes will mature on March 19, 2021, unless repurchased or converted in accordance with their terms prior to such date.

The Cash Convertible Notes are convertible into cash in whole, but not in part, at the option of noteholders in the following circumstances: (a) from April 29, 2014 through September 18, 2018 for the 2019 Notes, and through September 18, 2020 for the 2021 Notes (Contingent Conversion Period), under any of the Contingent Conversion Conditions and (b) at any time following the Contingent Conversion Period through the fifth business day immediately preceding the applicable maturity date. Upon conversion, noteholders will receive an amount in cash equal to the Cash Settlement Amount, calculated as described below. The Cash Convertible Notes are not convertible into shares of our common stock or any other securities.

Noteholders may convert their Cash Convertible Notes into cash at their option at any time during the Contingent Conversion Period only under the following circumstances (Contingent Conversion Conditions):

•

during any calendar quarter commencing after the calendar quarter ending on March 31, 2014 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;


•	if we undergo certain fundamental changes;


•	during the five business day period immediately after any ten consecutive trading day period in which the quoted price for the 2019 Notes or the 2021 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;


•	if we elect to distribute assets or property to all or substantially all of the holders of our common stock and those assets or other property have a value of more than 25% of the average daily volume-weighted average trading price of our common stock for the prior 20 consecutive trading days;


•	if we elect to redeem the Cash Convertible Notes; or


•	if we experience certain customary events of default, including defaults under certain other indebtedness.

The initial conversion rate is 7,056.7273 shares of our common stock per $200,000 principal amount of Cash Convertible Notes (reflecting an initial conversion price of approximately $28.34 per share of common stock). Upon conversion, holders are entitled to a cash payment (Cash Settlement Amount) equal to the average of the conversion rate multiplied by the daily volume-weighted average trading price for our common stock over a 50-day period. The conversion rate is subject to adjustment in certain instances but will not be adjusted for any accrued and unpaid interest. In addition, following the occurrence of certain corporate events that may occur prior

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to the applicable maturity date, we may be required to pay a cash make-whole premium by increasing the conversion rate for any holder who elects to convert Cash Convertible Notes in connection with the occurrence of such a corporate event.

We may redeem the 2019 Notes or 2021 Notes in their entirety at a price equal to 100% of the principal amount of the applicable Cash Convertible Notes plus accrued interest at any time 20% or less of the aggregate principal amount of the applicable Cash Convertible Notes originally issued remain outstanding.

The Cash Convertible Notes are senior unsecured obligations, and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Cash Convertible Notes; equal in right of payment to any of our unsecured indebtedness that is unsubordinated; junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.

Because the Cash Convertible Notes contain an embedded cash conversion option, we have determined that the embedded cash conversion option is a derivative financial instrument, which is required to be separated from the Cash Convertible Notes and accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of operations until the cash conversion option transaction settles or expires. The initial fair value liability of the embedded cash conversion option was $105.2 million, which simultaneously reduced the carrying value of the Cash Convertible Notes (effectively an original issuance discount). For further discussion of the derivative financial instruments relating to the Cash Convertible Notes, refer to Note 7, “Derivatives and Hedging.”

As noted above, the reduced carrying value on the Cash Convertible Notes resulted in a debt discount that is amortized to the principal amount through the recognition of non-cash interest expense over the expected life of the debt, which is five and seven years for the 2019 Notes and 2021 Notes, respectively. This resulted in our recognition of interest expense on the Cash Convertible Notes at an effective rate approximating what we would have incurred had nonconvertible debt with otherwise similar terms been issued. The effective interest rate of the 2019 and 2021 Notes is 2.937% and 3.809%, respectively, which is imputed based on the amortization of the fair value of the embedded cash conversion option over the remaining term of the Cash Convertible Notes. As of June 30, 2016, we expect the 2019 Notes to be outstanding until their 2019 maturity date and the 2021 Notes to be outstanding until their 2021 maturity date, for remaining amortization periods of approximately three and five years, respectively. Based on an estimation using available over-the-counter market information on the Cash Convertible Notes, the Level 2 fair value of the 2019 Notes was $436.9 million and $495.5 million and the fair value of the 2021 Notes was $313.1 million and $356.1 million, at June 30, 2016 and December 31, 2015, respectively.

In connection with the issuance of the Cash Convertible Notes, we incurred approximately $13.1 million in transaction costs. Such costs have been allocated to the Cash Convertible Notes and are being amortized over the terms of the Cash Convertible Notes.

Interest expense related to the Cash Convertible Notes was comprised of the following:



	Three months ended
	June 30,
(in thousands)	2016		2015
Coupon interest	$	1,059	$	1,059
Amortization of original issuance discount	4,358		4,216
Amortization of debt issuance costs	568		553
Total interest expense related to the Cash Convertible Notes	$	5,985	$	5,828




	Six months ended
	June 30,
(in thousands)	2016		2015
Coupon interest	$	2,119	$	2,119
Amortization of original issuance discount	8,679		8,398
Amortization of debt issuance costs	1,132		1,103
Total interest expense related to the Cash Convertible Notes	$	11,930	$	11,620

Cash Convertible Notes Call Spread Overlay

Concurrent with the issuance of the Cash Convertible Notes, we entered into privately negotiated hedge transactions (Call Options) with, and issued warrants to purchase shares of our common stock (Warrants) to, certain financial institutions. We refer to the Call Options and Warrants collectively as the “Call Spread Overlay”. The Call Options are intended to offset any cash payments payable by us in excess of the principal amount due upon any conversion of the Cash Convertible Notes. We used $105.2 million of the proceeds

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from the issuance of the Cash Convertible Notes to pay for the Call Options, and simultaneously received $69.4 million from the sale of the Warrants, for a net cash outlay of $35.8 million for the Call Spread Overlay. The Call Options are derivative financial instruments and are discussed further in Note 7, “Derivatives and Hedging.” The Warrants are equity instruments and are further discussed in Note 12, “Equity.”

Aside from the initial payment of a premium of $105.2 million for the Call Option, we will not be required to make any cash payments under the Call Options, and will be entitled to receive an amount of cash, generally equal to the amount by which the market price per share of our common stock exceeds the exercise price of the Call Options during the relevant valuation period. The exercise price under the Call Options is initially equal to the conversion price of the Cash Convertible Notes.

The Warrants cover an aggregate of 25.8 million shares of our common stock (subject to anti-dilution adjustments under certain circumstances) and have an initial exercise price of $32.085 per share, subject to customary adjustments. The Warrants expire as follows: Warrants to purchase 15.2 million shares expire over a period of 50 trading days beginning on December 27, 2018 and Warrants to purchase 10.6 million shares expire over a period of 50 trading days beginning on December 29, 2020. The Warrants are European-style (exercisable only upon expiration). The Warrants could have a dilutive effect to the extent that the price of our common stock exceeds the applicable strike price of the Warrants. For each Warrant that is exercised, we will deliver to the holder a number of shares of our common stock equal to the amount by which the settlement price exceeds the exercise price, divided by the settlement price, plus cash in lieu of any fractional shares. We will not receive any additional proceeds if the Warrants are exercised.

Private Placement

In October 2012, we completed a private placement through the issuance of new senior unsecured notes at a total amount of $400 million with a weighted average interest rate of 3.66% (settled on October 16, 2012). The notes were issued in three series: (1) $73 million 7-year term due in 2019 (3.19%); (2) $300 million 10-year term due in 2022 (3.75%); and (3) $27 million 12-year term due in 2024 (3.90%). We paid $2.1 million in debt issue costs which are being 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 compliance with these covenants at June 30, 2016. Based on an estimation using the changes in the U.S. Treasury rates, the Level 2 fair value of these senior notes as of June 30, 2016 and December 31, 2015 was approximately $417.0 million and $399.3 million, respectively. During 2014, we entered into interest rate swaps, which effectively fixed the fair value of $200.0 million of this debt and qualify for hedge accounting as fair value hedges as described in Note 7 "Derivatives and Hedging."

2004 Notes

In August 2004, we completed the sale of $150 million of 1.5% Senior Convertible Notes due in 2024 (2004 Notes), through our unconsolidated subsidiary QIAGEN Finance. The net proceeds of the 2004 Notes were loaned by QIAGEN Finance to consolidated subsidiaries with an effective interest rate of 1.8% and were due in February 2024. Interest was payable semi-annually in February and August. The 2004 Notes were issued at 100% of principal value, and were 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. had an agreement with QIAGEN Finance to issue shares to the investors in the event of conversion. This subscription right, along with the related receivable, was recorded at fair value in the equity of QIAGEN N.V. as paid-in capital. In 2014, 1.2 million common shares were issued in connection with conversions. During 2015, we repaid the loan to QIAGEN Finance and repurchased the warrant agreement with QIAGEN Finance for $250.9 million and recognized a loss of $7.6 million in other (expense) income, net. The repayment amount was allocated to the loan and warrants on a relative fair value basis with $113.0 million recorded against additional paid in capital for the redemption of the warrant subscription receivable. Subsequent to these transactions, QIAGEN Finance was liquidated.

Other Notes Payable

On June 28, 2016, we assumed notes payable totaling DKK 40.0 million via the acquisition of Exiqon. As discussed in Note 3, "Acquisitions" above, the allocation of the purchase price is preliminary, including the preliminary amount allocated to the notes payable as of June 30, 2016.


10.	Income Taxes

The quarterly provision for income taxes is based upon the estimated annual effective tax rates for the year applied to the current period ordinary income before tax plus the tax effect of any discrete items. Our operating subsidiaries are exposed to effective tax rates ranging from zero to more than 40%. Fluctuations in the distribution of pre-tax (loss) income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the consolidated financial statements. In the second quarters of 2016 and 2015, our effective tax rates were 6.9% and 14.5%, respectively. In the six-month periods ended June 30, 2016 and June 30, 2015, the effective tax rates were (13.8)% and 8.2%, respectively. During the three- and six-month periods ended June 30, 2016, we released $0.2 million and $6.8 million, respectively, of unrecognized tax benefits due to the closure of a tax audit and lapse of statute of limitations. Additionally in 2016 and 2015, tax expense on foreign operations was favorably impacted by lower income tax rates and partial tax exemptions on foreign income primarily derived from operations in Germany, Singapore, Luxembourg, Ireland and Switzerland. These foreign tax benefits are due to a combination of favorable tax laws, rules, rulings, and exemptions in these jurisdictions. In

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particular, we have pre-tax income in Germany which is statutorily exempt from trade tax on intercompany foreign royalty income. Further, we have intercompany financing arrangements through Luxembourg and Ireland in which the intercompany income is partially exempt.

We assess uncertain tax positions in accordance with ASC 740 (ASC 740-10 Accounting for Uncertainties in Tax). At June 30, 2016, our net unrecognized tax benefits totaled approximately $10.9 million which, if recognized, would favorably impact our effective tax rate in the periods in which they are recognized. It is possible that approximately $1.2 million of the unrecognized tax benefits may be released during the next 12 months due to lapse of statutes of limitations or settlements with tax authorities. We cannot reasonably estimate the range of the potential outcomes of these matters.

We conduct business globally and, as a result, file numerous consolidated and separate income tax returns in The Netherlands, Germany, Switzerland and the U.S. federal jurisdiction, as well as in various other state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. Our subsidiaries are generally no longer subject to income tax examinations by tax authorities for years before 2011. During the first quarter of 2016, the U.S. tax authority (Internal Revenue Service) concluded its federal audit of our U.S. tax returns for 2011 and 2012 and we were not required to make any adjustments to those tax returns.

As of June 30, 2016, residual Netherlands income taxes have not been provided on the undistributed earnings of the majority of our foreign subsidiaries as these earnings are considered to be either permanently reinvested or can be repatriated tax free.


11.	Inventories

The components of inventories consist of the following as of June 30, 2016 and December 31, 2015:



(in thousands)	June 30, 2016		December 31, 2015
Raw materials	$	24,652	$	27,051
Work in process	29,314		21,066
Finished goods	86,124