Bio-Techne (TECH) 10-K risk factor changes: FY2017 vs FY2016

[removed: Acquisitions] [added: Our acquisition growth strategy] pose financial, management and other risks and challenges.

There can be no assurance that [removed: the Company] [added: we] will engage in any additional acquisitions or that [removed: the Company] [added: we] will be able to do so on terms that will result in any expected benefits.

In addition, acquisitions financed with borrowings could make [removed: the Company] [added: us] more vulnerable to business downturns and could negatively affect [removed: the Company’s] [added: our] earnings due to higher leverage and interest expense.

We are required under generally accepted accounting principles to test goodwill for impairment at least annually and to review our [added: goodwill,] amortizable intangible assets, [removed: including goodwill] and other assets acquired through merger and acquisition activity, for impairment when events or changes in circumstance indicate the carrying value may not be recoverable.

Factors that could lead to impairment of [removed: goodwill and] [added: goodwill,] amortizable intangible [removed: assets (including goodwill or] [added: assets, and other] assets acquired via [removed: acquisitions)] [added: acquisitions] include significant adverse changes in the business climate and actual or projected operating results (affecting our company as a whole or affecting any particular segment) and declines in the financial condition of our business.

We [removed: have recorded and] may be required in the future to record additional charges to earnings if our goodwill, amortizable intangible assets or other investments become impaired.

[removed: The Company is] [added: We are] dependent on maintaining [removed: its] [added: our] intellectual property rights.

[removed: The Company’s] [added: Our] success depends in part on [removed: its] [added: our] ability to protect and maintain [removed: its] [added: our] intellectual property, including trade secrets.

[removed: The Company attempts] [added: We attempt] to protect trade secrets in part through confidentiality agreements, but those agreements can be breached, and if they are, there may not be an adequate remedy.

If trade secrets become publicly known, [removed: the Company] [added: we] could lose [removed: its] [added: our] competitive position.

[removed: The Company] [added: We] also [removed: attempts] [added: attempt] to protect and maintain intellectual property through the patent process.

As of June 30, [removed: 2016,] [added: 2017,] we owned or exclusively licensed [removed: 76] [added: 115] granted U.S. patents and approximately [removed: 70] [added: 100] pending patent applications.

[removed: The Company’s] [added: Our] success depends in part on its ability to operate without infringing the proprietary rights of others, and to obtain licenses where necessary or appropriate.

[removed: The Company has] [added: We have] obtained and [removed: continues] [added: continue] to negotiate licenses to produce a number of products claimed to be owned by others.

Since [removed: the Company has] [added: we have] not conducted a patent infringement study for each of [removed: its] [added: our] products, it is possible that [removed: products] [added: some] of [removed: the Company] [added: our products] may unintentionally infringe patents of third parties.

[removed: The Company has] [added: We have] been and may in the future be sued by third parties alleging that [removed: the Company is] [added: we are] infringing their intellectual property rights.

If [removed: the Company is] [added: we are] found to be infringing the intellectual property of others, [removed: it] [added: we] could be required to cease certain activities, alter [removed: its] [added: our] products or processes or pay licensing fees.

This would cause unexpected costs and delays which may have a material adverse effect on [removed: the Company.][added: us.]

If [removed: the Company is] [added: we are] unable to obtain a required license on acceptable terms, or unable to design around any third party patent, [removed: it] [added: we] may be unable to sell some of [removed: its] [added: our] products and services, which could result in reduced revenue.

In addition, if [removed: the Company does] [added: we do] not prevail, a court may find damages or award other remedies in favor of the opposing party in any of these suits, which may adversely affect [removed: the Company’s] [added: our] earnings.

[removed: The Company has] [added: We have] entered into and drawn on a revolving credit facility.

The burden of this additional debt could adversely affect [removed: the Company,] [added: us,] make [removed: it] [added: us] more vulnerable to adverse economic or industry conditions, and prevent [removed: it] [added: us] from funding [removed: its] [added: our] expansion strategy.

In connection with the acquisition of Advanced Cell Diagnostics on August 1, 2016, [removed: the Company entered into a new] [added: we modified our] revolving credit facility, governed by a Credit Agreement [removed: dated] [added: on] July 28, 2016.

As of August [removed: 26, 2016,] [added: 30, 2017,] the Company had drawn [removed: $250] [added: $368.5] million under the Credit Agreement.

| | [removed: ■] [added: •] | limiting our ability to obtain additional financing to fund our working capital, capital expenditures, debt service requirements, expansion strategy, or other needs; |

| | [removed: ■] [added: •] | increasing [removed: the Company’s] [added: our] vulnerability to, and reducing [removed: its] [added: our] flexibility in planning for, adverse changes in economic, industry and competitive conditions; and |

| | [removed: ■] [added: •] | increasing [removed: the Company’s] [added: our] vulnerability to increases in interest rates. |

As disclosed in Item 9A, [added: at the beginning of fiscal 2017] management identified [removed: a] material [removed: weakness] [added: weaknesses] in our internal control over financial reporting involving the effectiveness of the [removed: control environment] [added: information] and [removed: risk assessment, information,] communication, and monitoring processes resulting in a lack of effective controls over general information technology controls (GITC) for certain applications.

As a result of [removed: this] [added: these] material [removed: weakness,] [added: weaknesses,] our management concluded that our internal control over financial reporting was not effective based on criteria set forth by the Committee of Sponsoring Organization of the Treadway Commission in Internal [removed: Control—An] [added: Control-An] Integrated Framework (2013 Framework).

Any failure to [removed: implement] [added: complete the implementation of] effective internal controls could harm our operating results or cause [removed: usto] [added: us to] fail to meet our reporting obligations.

[removed: The Company is] [added: We are] subject to [added: financial, operating, legal and compliance] risk associated with global operations.

[removed: The Company engages in business globally, with approximately 37% of the Company’s sales revenue in fiscal 2016 coming from outside the U.S.] This subjects [removed: the Company] [added: us] to a number of risks, including international economic, political, and labor conditions; currency fluctuations; tax laws (including U.S. taxes on foreign subsidiaries); increased financial accounting and reporting burdens and complexities; unexpected changes in, or impositions of, legislative or regulatory requirements; failure of laws to protect intellectual property rights adequately; inadequate local infrastructure and difficulties in managing and staffing international operations; delays resulting from difficulty in obtaining export licenses for certain technology; tariffs, quotas and other trade barriers and restrictions; transportation delays; operating in locations with a higher incidence of corruption and fraudulent business practices; and other factors beyond [removed: the Company’s] [added: our] control, including terrorism, war, natural disasters, climate change and diseases.

Compliance with these laws and regulations may involve significant costs or require changes in [removed: the Company’s] [added: our] business practices that result in reduced revenue and profitability.

Non-compliance could also result in fines, damages, criminal sanctions, prohibited business conduct, and damage to [removed: the Company’s] [added: our] reputation.

[removed: The Company incurs] [added: We incur] additional legal compliance costs associated with [removed: its] [added: our] global operations and could become subject to legal penalties in foreign countries if it does not comply with local laws and regulations, which may be substantially different from those in the U.S.

[removed: In many foreign countries, particularly] [added: We continue to expand our operations] in [removed: those] [added: countries] with developing economies, [added: where] it may be common to engage in business practices that are prohibited by U.S. regulations applicable to the Company, such as the Foreign Corrupt Practices Act.

Although [removed: the Company implements] [added: we implement] policies and procedures designed to ensure compliance with these laws, there can be no assurance that all of [removed: the Company’s] [added: our] employees, contractors, and agents, as well as those companies to which [removed: the Company outsources] [added: we outsource] certain aspects of [removed: its] [added: our] business operations, including those based in foreign countries where practices which violate such U.S. laws may be customary, will comply with [removed: the Company’s] [added: our] internal policies.

Any such non-compliance, even if prohibited by [removed: the Company’s] [added: our] internal policies, could have an adverse effect on [removed: the Company’s] [added: our] business and result in significant fines or penalties.

[removed: The Company’s] [added: Our] success will be dependent on recruiting and retaining highly qualified [removed: personnel.][added: personnel and creating a new culture that includes the employees joining through acquisition.]

Recruiting and retaining qualified scientific, production, sales and marketing, and management personnel are critical to [removed: the Company’s] [added: our] success.

See the section entitled “forward-looking statements” set forth above.

It may be difficult for us to implement our strategies for maintaining organic growth.

Some of the markets in which we compete are experiencing slower growth and we face significant competition across many of our product lines.

To address this issue, we are pursuing a number of strategies to improve our internal growth, including:

| | • | strengthening our presence in selected geographic markets; |

| | • | allocating research and development funding to products with higher growth prospects; |

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| | • | developing new applications for our technologies; |

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| | • | continuing key opinion leader initiatives; |

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| | • | finding new markets for our products; and |

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| | • | continuing the development of commercial tools and infrastructure to increase and support cross-selling opportunities of products and services to take advantage of our depth in product offerings. |

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We may not be able to successfully implement these strategies, and these strategies may not result in the expected growth of our business.

We routinely explore acquiring other businesses and assets, and have completed nine acquisitions and several investments in the last three years.

In fiscal 2017, we also invested and hold a minority interest in privately-held Astute Medical, Inc., a diagnostics company developing new diagnostics tests relating to kidney injury.

While their initial product is on the market, its adoption and success is highly uncertain, and our initial investment may be significantly impaired if it does not have market success.

Any diminution in the value of these investments could result in future dilution of our investments or materially impact our financial statements.

Significant developments stemming from the recent U.S. elections and the U.K.’s referendum on membership in the EU could have an adverse effect on us.

The current Congress is considering significant changes to, or replacement or elimination of the Patient Protection and Affordable Care Act, and government negotiation/regulation of drug prices paid by government programs.

The new U.S. administration has called for substantial changes to trade agreements and has raised the possibility of imposing significant increases on tariffs on goods imported into the United States, particularly from China and Mexico.

These and other potential shifts in law, regulation and policy could adversely affect operating results and our business.

In a referendum vote held on June 23, 2016, the United Kingdom (UK) voted to leave the European Union (EU).

Subsequently, on March 29, 2017, the UK invoked Article 50 of the Lisbon Treaty to formally begin the withdrawal process.

The impact of this action has caused and may continue to cause global economic uncertainty and currency exchange rate fluctuations.

Although it is unknown what the terms of the UK’s future relationship with the EU will be, it is possible that there will be disruption to the UK and EU economies, as well as greater restrictions on imports and exports between the UK and the EU and increased regulatory and tax complexities.

Any of these factors could adversely affect customer demand, our relationships with customers and suppliers, and our business and financial results, particularly since our European headquarters and shipping facilities are currently located in the UK.

Additionally, attracting and retaining qualified employees who are citizens of EU countries to our UK facilities may be more difficult given the uncertainties resulting from the UK withdrawal.

We engage in business globally, with approximately 31% of our sales revenue in fiscal 2017 coming from outside the U.S. In addition, one of our strategies is to expand geographically, particularly in China and in developing countries, both through distribution and through direct operations.

We have developed and implemented a remediation plan designed to address these material weaknesses, but have not yet had sufficient time to fully and effective implement and test the additional controls established in that plan.

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Our share price will fluctuate.

Over the last several years, stock markets in general and our common stock in particular have experienced significant price and volume volatility.

Both the market price and the daily trading volume of our common stock may continue to be subject to significant fluctuations due not only to general stock market conditions but also to a change in sentiment in the market regarding our operations and business prospects.

In addition to the risk factors discussed above, the price and volume volatility of our common stock may be affected by:

| | • | operating results that vary from our financial guidance or the expectations of securities analysts and investors; |

The Company routinely explores acquiring other businesses and assets.

During fiscal 2015, the Company acquired Novus, ProteinSimple, and CyVek, and in fiscal 2016, we acquired Cliniqa Corporation and Zephyrus BioSciences.

| | | |

We may experience difficulties implementing our enterprise resource planning system.

We are implementing a new enterprise resource planning (“ERP”) system.

Our ERP system is critical to our ability to accurately maintain books and records, record transactions, provide important information to our management and prepare our financial statements.

The implementation of the new ERP system requires the investment of significant financial and human resources.

We completed the first phase of implementation in July of 2016.

During this initial implementation, which covered most of our operations and accounting systems at our headquarters in Minneapolis, we experienced some disruption in our shipping and invoicing activities we believe will impact revenues in the short term.

As we continue expanding the use of our new ERP system to additional locations, we may experience further difficulties.

Any further disruptions, delays or deficiencies in the design and implementation of the new ERP system could adversely affect our ability to process orders, ship products, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.

We are actively engaged in developing a remediation plan designed to address this material weakness.

The Company conducts and plans to grow its business in developing markets, which may cause additional operational and legal risk.

The Company’s efforts to grow its businesses depend, to a degree, on its success in developing market share in additional geographic markets including, but not limited to, China.

In some cases, these countries have greater political and economic volatility and greater vulnerability to infrastructure and labor disruptions than the Company’s other markets.

For example, a recent incident involving a Chinese university student who died after seeking treatment for a rare form of cancer from a treatment center identified through an internet search has led to a government investigation and a temporary halt to certain cancer treatments until more comprehensive safety regulations can be implemented, leading to lower sales growth in certain products offered by the Company.

Operating and seeking to expand business in a number of different regions and countries exposes the Company to multiple and potentially conflicting cultural practices, business practices and legal and regulatory requirements.

The Company is significantly dependent on sales made through foreign subsidiaries which are subject to changes in exchange rates and changes to the strength of foreign governments and economic conditions.

Approximately 23% of the Company’s net sales in fiscal 2016 were made through its foreign subsidiaries, which transact their sales in foreign currencies.

Any adverse movement in foreign currency exchange rates could, therefore, negatively affect the Company’s revenues and earnings.

In June of 2016, Britain voted to exit the European Union.

The uncertainty over the consequences of that decision has negatively impacted the value of the British pound and has led to some disruption in economic activity in the UK and in the Eurozone region.

The Company maintains its European headquarters and shipping facilities in the UK.

It is also unclear how and whether the British vote to depart the European Union will impact our ability to conduct business cost effectively from our UK headquarters.

Moreover, the financial crisis faced by several Eurozone countries, and the ongoing economic instability in that region, may lead to reduced spending on health care and research by Eurozone governments, which could adversely affect the Company’s European sales, as well as its revenues, financial condition and results of operations.

The industry segments in which we operate are very competitive, more so recently due to consolidation trends.

The Company faces significant competition across all of its product lines and in each market in which it operates.

The Company’s future growth is dependent on the development of new products in a rapidly changing technological environment.

One element of the Company’s growth strategy is to increase revenues through new product releases.

As a result, the Company must anticipate industry trends and develop products in advance of customer needs.

New product development requires planning, designing and testing at both technological and manufacturing-process levels and may require significant research and development expenditures.

There can be no assurance that any products now in development, or that the Company may seek to develop in the future, will achieve feasibility or gain market acceptance.

There can also be no assurance that the Company’s competitors will not succeed in developing technologies and products in a more timely and cost effective manner than the Company.

If the Company does not appropriately innovate and invest in new technologies, the Company’s technologies will become outdated, rendering the Company’s technologies and products obsolete or noncompetitive.

To the extent the company fails to introduce new and innovative products, the Company may lose market share to its competitors, which may be difficult or impossible to regain.

The Company’s business is subject to governmental laws and regulations.

The Company’s operations are subject to regulation by various US federal, state and international agencies.

Laws and regulations enacted and enforced by these agencies impact all aspects of the Company’s operations including design, development, manufacturing, labeling, selling and the importing and exporting of products across international borders.

Any changes to laws and regulations governing such activities could have an effect on the Company’s operations and ability to obtain regulatory clearance or approval of the Company’s products.

If the Company fails to comply with any of these regulations, it may become subject to fines, penalties or actions that could impact development, manufacturing and distribution and/or increase costs or reduce sales.

[removed: | | ■ | fluctuations] [added: Consolidated organic net sales exclude the impact of net sales contributed by companies acquired during the fiscal year and the effect of the change from the prior year] in exchange rates used to convert [removed: transactions] [added: sales] in foreign currencies (primarily the [removed: Euro,] [added: euro,] British pound [removed: sterling] [added: sterling,] and Chinese yuan) [removed: to] [added: into] U.S. [removed: dollars; |][added: dollars.]

After adjusting for the impact of the Cliniqa acquisition in fiscal 2016, as well as foreign currency fluctuations, organic sales for the year increased 6% with currency translation having a negative impact of 2% and acquisitions contributing [removed: 6% to the revenue growth.][added: 6%.]

For fiscal [removed: 2015,] [added: 2017,] consolidated net sales increased [removed: 26%] [added: 13%] as compared to fiscal [removed: 2014.][added: 2016.]

After adjusting for the [removed: impact] [added: impacts] of the [removed: Novus, ProteinSimple] [added: Space] and [removed: CyVek] [added: ACD] acquisitions in fiscal [removed: 2015,] [added: 2016,] as well as foreign currency fluctuations, organic sales for the year increased [removed: 4%] [added: 6%] with currency translation having a negative impact of [removed: 2%] [added: 1%] and acquisitions contributing [removed: 25% to the revenue growth.][added: 8%.]

The organic growth was broad-based, with the Company achieving growth in [removed: both the Biotechnology and Clinical Controls] [added: all three of its] reporting segments.

Consolidated GAAP net earnings decreased [removed: 3%] [added: 27%] for fiscal [removed: 2015] [added: 2017] as compared to fiscal [removed: 2014.][added: 2016.]

After adjusting for acquisition related [removed: costs] [added: costs, stock based compensation,] and certain income tax items in both years, adjusted net earnings increased [removed: 1%] [added: 4%] in fiscal [removed: 2015] [added: 2017] as compared to fiscal [removed: 2014.][added: 2016.]

Adjusted earnings growth was driven by increased [removed: organic sales and contribution from acquisitions] [added: revenue] partially offset by [added: negative mix and] a negative impact from foreign [removed: currency translation.][added: currency.]

[removed: _Net Sales_][added: _Net Sales_]

| | | _Year Ended June 30,_ | | | | | | | [added: | | | |]

| Organic sales growth | | | 6 | % | | | [added: 6 | % | | |] 4 | % |

| Acquisitions sales growth | | | [added: 8 | % | | |] 6 | % | | | 25 | % |

| Impact of foreign currency fluctuations | | | [removed: \-2] [added: (1] | [removed: %] [added: )%] | | | [removed: \-2] [added: (2] | [removed: %] [added: )%] | [added: | | (2 | )% |]

| Consolidated net sales growth [removed: (may not foot due to rounding)] | | | [added: 13 | % | | |] 10 | % | | | 26 | % |

| Biotechnology | | $ | [removed: 317,340] [added: 364,504] | | | $ | [removed: 308,437] [added: 317,340] | | | $ | [removed: 285,142] [added: 308,437] | |

| Protein Platforms | | | [removed: 77,324] [added: 91,464] | | | | [removed: 66,249] [added: 77,324] | | | | [removed: 0] [added: 66,249] | |

| Intersegment | | | [removed: (125] [added: (104] | ) | | | [removed: (305] [added: (125] | ) | | | [removed: 0] [added: (306] | [added: )] |

| Consolidated net sales | | $ | [removed: 499,023] [added: 563,003] | | | $ | [removed: 452,247] [added: 499,023] | | | $ | [removed: 357,763] [added: 452,246] | |

In fiscal 2016, Biotechnology segment net sales increased 3% [removed: from the prior] [added: compared to] fiscal [removed: year.][added: 2015.]

Organic growth for the segment was 6% for the fiscal year, with [added: foreign] currency translation having an unfavorable impact of [removed: 3% on revenue growth.][added: 3%.]

[removed: Growth was achieved] [added: We grew] in all major geographies, [removed: especially] [added: most notably] in China and from BioPharma customers in the U.S. and Europe.

In fiscal 2016, [removed: Clinical Controls] [added: Diagnostics] segment net sales increased [removed: 34%.][added: 34% compared to fiscal 2015.]

Included in fiscal 2016 [removed: Clinical Controls] [added: Diagnostics] segment net sales was $26.6 million generated by the acquisition of Cliniqa in July 2015, contributing essentially all of the growth.

In fiscal 2016, the Protein Platforms segment net sales increased 17% [removed: from the prior] [added: compared to] fiscal [removed: year.][added: 2015.]

Organic [removed: revenue increased] [added: growth for the segment was] 14% with [added: acquisitions contributing 5% and foreign currency translation having] an unfavorable [removed: currency] impact of [removed: 2% and acquisitions adding 5% to segment growth.][added: 2%.]

[removed: Organic growth was driven by additional] [added: Additional] market demand for Simple Western instruments and consumables, a new instrument product launch in the Biologics [added: (Maurice)] product [removed: line (Maurice),] [added: line,] and [removed: instrument/consumable sales of Ella,] [added: Simple Plex (Ella) instrument and consumable sales,] the Elisa-multiplexing solution that was the key technology acquired as part of the CyVek acquisition in [removed: the prior] fiscal [removed: year.][added: 2015, all drove growth in this segment.]

In fiscal [removed: 2015,] [added: 2017,] Biotechnology segment net sales increased [removed: 8% from the prior] [added: 15% compared to] fiscal [removed: year.][added: 2016.]

In fiscal [removed: 2015,] [added: 2017,] the [removed: new] Protein Platforms segment [removed: generated] net sales [removed: of $66.2 million.][added: increased 18% compared to fiscal 2016.]

[removed: _Gross Margins_][added: _Gross Margins_]

Consolidated gross margins were [removed: 68%, 68%] [added: 67%, 67%] and [removed: 70%] [added: 68%] in fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

[removed: GAAP reported consolidated] [added: Consolidated] gross margins were negatively impacted as a result of purchase accounting related to inventory and intangible assets acquired during fiscal [added: 2017,] 2016, [removed: 2015, 2014] [added: 2015] and prior years.

Excluding the impact of acquired inventory sold and amortization of intangibles, adjusted gross margins were 71%, [removed: 72%] [added: 71%] and [removed: 74%] [added: 72%] in fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

| Consolidated gross margin percentage | | | [removed: 67.5] [added: 66.5] | % | | | [removed: 67.9] [added: 67.5] | % | | | [removed: 70.3] [added: 67.9] | % |

| Costs recognized upon sale of acquired inventory | | | [removed: 1.1] [added: 0.6] | % | | | [removed: 1.5] [added: 1.1] | % | | | [removed: 2.1] [added: 1.5] | % |

| Amortization of intangibles | | | [removed: 2.2] [added: 4.1] | % | | | [removed: 2.1] [added: 2.2] | % | | | [removed: 1.1] [added: 2.2] | % |

| Adjusted gross margin percentage | | | [removed: 70.8] [added: 71.2] | % | | | [removed: 71.6] [added: 70.8] | % | | | [removed: 73.5] [added: 71.6] | % |

In fiscal 2016, the biggest impact to gross margin, as compared to fiscal 2015, was the change in product mix associated with the [removed: aquisition] [added: acquisition] of Cliniqa.

In fiscal 2015, the biggest impact to gross margin, as compared to fiscal 2014, was the change in product mix associated with the acquisitions of Novus, ProteinSimple, and [removed: CyVek.We expect that, in the future, gross margins will continue to be impacted by the mix of our portfolio growing at different rates as well as future acquisitions.][added: CyVek.]

[removed: Gross] [added: The Biotechnology segment and the Protein Platforms segment gross] margin percentage improvements [removed: in] [added: for] fiscal [added: 2017 and] 2016 [removed: when] [added: as] compared to fiscal 2015 was [removed: mostly driven by] [added: primarily attributable to higher volume leverage and] operational productivity.

[removed: _Selling,] [added: _Selling,] General and Administrative [removed: Expenses_][added: Expenses_]

The following management discussion and analysis (“MD&A”) provides information that we believe is useful in understanding our operating results, cash flows and financial condition.

We provide quantitative information about the material sales drivers including the effect of acquisitions and changes in foreign currency at the corporate and segment level.

We also provide quantitative information about discrete tax items and other significant factors we believe are useful for understanding our results.

The MD&A should be read in conjunction with the consolidated financial information and related notes included in this Form 10-K.

This discussion contains various “Non-GAAP Financial Measures” and also contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

We refer readers to the statements entitled “Non-GAAP Financial Measures” located at the end of this MD&A and “Forward-Looking Information and Cautionary Statements” and “Risk Factors” within Items 1 and 1A of this Form 10-K.

Bio-Techne operates worldwide with three reportable business segments, Biotechnology, Protein Platforms, and Diagnostics, all of which service the life science and diagnostics markets.

The Biotechnology reporting segment provides proteins, antibodies, immunoassays, flow cytometry products, intracellular signaling products, and biologically active chemical compounds used in biological research.

The Protein Platforms reporting segment develops and commercializes proprietary systems and consumables for protein analysis.

The Diagnostics reporting segment reporting segment provides a range of controls and calibrators used with diagnostic equipment and as proficiency testing tools, as well as other reagents incorporated into diagnostic kits.

A strong BioPharma end-market in the US and Europe and additional market demand for Protein Platforms instruments were the biggest contributing factors to organic growth.

| | | _2017_ | | | | _2016_ | | | | _2015_ | | |

| | | _2017_ | | | | _2016_ | | | | _2015_ | | |

| Diagnostics | | | 107,139 | | | | 104,484 | | | | 77,866 | |

Organic growth for the segment was 4% for the fiscal year, with acquisitions contributing 13% and foreign currency translation having an unfavorable impact of 2%.

Antibody and assay product categories drove growth.

The growth in antibodies was led by double-digit growth in the Novus brand.

The growth in assays was by Luminex-based products the Company makes and sells and royalties received from Luminex assay suppliers who use the Company’s content in the production of their assays.

Organic growth for the segment was 19% with acquisitions contributing 1% and foreign currency translation having an unfavorable impact of 2%.

Growth was broad-based and led by additional market demand for Simple Western (Wes) instruments and consumables, and the Simple Plex (Ella) and Biologics (Maurice) product lines.

In fiscal 2017, Diagnostics segment net sales increased 3% compared to fiscal 2016.

All results for fiscal 2017 are organic.

Timing of OEM orders had a negative impact on fiscal 2017 results.

Mid-single digit sales growth in blood and glucose-based controls was partially offset by the timing of OEM shipments from the diagnostic assay and reagent product lines.

| | | _2017_ | | | | _2016_ | | | | _2015_ | | |

In fiscal 2017, the biggest impact to gross margin as compared to fiscal 2016, was the change in product mix associated with the acquisition of ACD.

We expect that, in the future, gross margins will continue to be impacted by the mix of our portfolio growing at different rates as well as future acquisitions.

Management uses adjusted operating results to monitor and evaluate performance of the Company’s three business segments.

Since these results are used for this purpose, they are also considered to be prepared in accordance with GAAP.

| | | _2017_ | | | | _2016_ | | | | _2015_ | | |

| Biotechnology | | | 80.5 | % | | | 80.0 | % | | | 79.8 | % |

| Protein Platforms | | | 67.6 | % | | | 67.8 | % | | | 66.9 | % |

| Diagnostics | | | 42.3 | % | | | 44.8 | % | | | 42.7 | % |

| Consolidated adjusted gross margin percentage | | | 71.2 | % | | | 70.8 | % | | | 71.6 | % |

The Diagnostics segment gross margin percentage for fiscal 2017 was negatively impacted by lower volume leverage and margin mix of product sales.

Increased operational productivity in fiscal 2016 increased margins compared to fiscal 2015

The increase in fiscal 2017 was driven by additional expenses associated with the Space, ACD and Zephyrus acquisitions including $21.1 million of selling, general and administrative expenses, a $3.2 million increase in acquisition intangible amortization, a $18.4 million change in the fair value of contingent consideration and a $4.3 million increase in other acquisition related costs.

| | | _2017_ | | | | _2016_ | | | | _2015_ | | |

| Biotechnology | | $ | 82,801 | | | $ | 58,414 | | | $ | 53,033 | |

| Protein Platforms | | | 37,735 | | | | 34,186 | | | | 28,806 | |

FORWARD-LOOKING INFORMATION

This report contains forward-looking statements, which are based on the Company’s current assumptions and expectations.

The principal forward-looking statements in this report include the Company’s expectations regarding product releases and strategy, future financial results, acquisition activity, the competitive environment, currency fluctuation and exchange rates, capital expenditures, the performance of the Company’s investments, future dividend declarations, the construction and lease of certain facilities, the adequacy of owned and leased property for future operations, anticipated financial results and sufficiency of capital resources to meet the Company’s foreseeable future cash and working capital requirements.

All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended.

Although the Company believes there is a reasonable basis for the forward-looking statements, the Company’s actual results could be materially different.

The most important factors which could cause the Company’s actual results to differ from forward-looking statements are set forth in the Company’s description of risk factors in Item 1A to this Annual Report on Form 10-K.

Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statements.

USE OF ADJUSTED FINANCIAL MEASURES

The adjusted financial measures used in this Annual Report on Form 10-K quantify the impact the following events had on reported net sales, gross margin percentages and net earnings for fiscal 2016 as compared to fiscal 2015 and 2014:

| --- | --- | --- |

| | ■ | the acquisitions in fiscal 2016 of Cliniqa, Inc. (Cliniqa) on July 8, 2015 and Zephyrus BioSciences, Inc. on March 21, 2016. In fiscal 2015 of CyVek, Inc. (CyVek) on November 4, 2014, ProteinSimple on July 31, 2014, and Novus Biologicals, LLC (Novus) on July 1, 2014 and in fiscal 2014 of Shanghai-based PrimeGene Bio-Tech Co. (PrimeGene) on April 30, 2014 and Bionostics Holdings, Ltd. (Bionostics) on July 22, 2013 including the impact of amortizing intangible assets and the recognition of costs upon the sale of inventory written-up to fair value; |

| | ■ | professional fees and other costs incurred as part of the acquisitions of the acquisitions listed above and other ongoing activity; |

| | ■ | expenses related to stock based compensation; and |

| | ■ | the gain on the purchase of CyVek; |

These adjusted financial measures are not prepared in accordance with generally accepted accounting principles (GAAP) and may be different from adjusted financial measures used by other companies.

Adjusted financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

The Company views these adjusted financial measures to be helpful in assessing the Company's ongoing operating results.

In addition, these adjusted financial measures facilitate our internal comparisons to historical operating results and comparisons to competitors' operating results.

These adjusted financial measures are included in this Annual Report on Form 10-K because the Company believes they are useful to investors in allowing for greater transparency related to supplemental information used in the Company’s financial and operational analysis.

Investors are encouraged to review the reconciliations of adjusted financial measures used in this Annual Report on Form 10-K to their most directly comparable GAAP financial measures.

Bio-Techne operates worldwide and has three reportable segments based on the nature of products; they are Biotechnology, Clinical Controls and Protein Platforms.

The Biotechnology reporting segment develops, manufactures and sells biotechnology research and diagnostic products world-wide.

The Clinical Controls reporting segment develops and manufactures controls, calibrators, and other reagents for the global clinical market.

The Protein Platforms reporting segment includes the product lines associated with the acquisitions of ProteinSimple in July, 2014, CyVek in November, 2014 and Zephyrus Biosceinces in March 2016, all of which expand the Company’s solutions that it can offer its customers by developing and commercializing proprietary systems and consumables for protein analysis.

A strong bio-pharma end-market in the US and significant government funding of life science research in China were the biggest contributing factors impacting organic growth.

_Reorganization of Segments_

As previously disclosed, beginning in fiscal 2016, the Clinical Controls segment includes the financial results of the Company’s BiosPacific business.

Historically, this business was managed and reported as part of the Biotechnology segment.

The recent acquisition of Cliniqa and its commonality of customer and end markets with BiosPacific influenced this management and reporting change.

All comparisons to prior periods reflect the new reporting structure as if it existed in the prior reporting periods.

Consolidated organic net sales exclude the impact of net sales contributed by companies acquired during the fiscal year and the effect of the change from the prior year in exchange rates used to convert sales in foreign currencies (primarily British pound sterling, euros and Chinese yuan) into U.S. dollars.

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | _201__6_ | | | | _201__5_ | | |

| | | | | | | | | |

| | | _201__6_ | | | | _201__5_ | | | | _201__4_ | | |

| Clinical Controls | | | 104,484 | | | | 77,866 | | | | 72,621 | |

This segment includes the ProteinSimple product lines associated with the acquisitions of ProteinSimple in July, 2014, CyVek in November, 2014, and Zephyrus in March 2016, all of which expand the Company’s solutions that it can offer its customers by developing and commercializing proprietary systems and consumables for protein analysis.

Revenue from acquisitions included sales from ProteinSimple and CyVek for the months that we did not own them in the prior year.

Included in fiscal 2015 Biotechnology segment net sales was $18.5 million generated by the acquisition of Novus Biologicals in July 2014 and the negative impact of foreign currency fluctuations of $8.5 million.

Excluding these amounts, organic net sales for the segment increased 3% in fiscal 2015, driven by a strong bio-pharma end-market in the US and significant government funding of life science research in China.

Approximately [removed: 24%] [added: 27%] of the [removed: Company’s] [added: Company's] consolidated net sales in fiscal [removed: 2016] [added: 2017] were made in foreign currencies, including [removed: 7%] [added: 14%] in euro, [removed: 6%] [added: 4%] in British pound sterling, [removed: 6%] [added: 4%] in Chinese yuan and the remaining 5% in other [removed: European and Asian] currencies.

[removed: As a result, the] [added: The] Company is exposed to market risk [removed: mainly] [added: primarily] from foreign exchange rate fluctuations of the euro, British pound sterling, [removed: and the] Chinese yuan [added: and Canadian dollar] as compared to the U.S. dollar as the financial position and operating results of the [removed: Company’s] [added: Company's] foreign operations are translated into U.S. dollars for consolidation.

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

| High | | $ | [removed: 1.48] [added: 1.32] | | | $ | [removed: 1.69] [added: 1.48] | | | $ | [removed: 1.71] [added: 1.69] | |

| Low | | | [removed: 1.33] [added: 1.22] | | | | [removed: 1.48] [added: 1.33] | | | | [removed: 1.52] [added: 1.48] | |

| Average | | | [removed: 1.42] [added: 1.27] | | | | [removed: 1.57] [added: 1.42] | | | | [removed: 1.64] [added: 1.57] | |

| High | | $ | [removed: 1.13] [added: 1.14] | | | $ | [removed: 1.34] [added: 1.13] | | | $ | [removed: 1.39] [added: 1.34] | |

| Low | | | [removed: 1.10] [added: 1.05] | | | | [removed: 1.08] [added: 1.10] | | | | [removed: 1.32] [added: 1.08] | |

| Average | | | [removed: 1.12] [added: 1.09] | | | | [removed: 1.19] [added: 1.12] | | | | [removed: 1.36] [added: 1.19] | |

| High | | $ | [removed: .152] [added: .150] | | | $ | [removed: .164] [added: .152] | | | $ | [removed: .165] [added: .164] | |

| Low | | | [removed: .150] [added: .144] | | | | [removed: .162] [added: .150] | | | | [removed: .160] [added: .162] | |

| Average | | | [removed: .152] [added: .147] | | | | [removed: .163] [added: .152] | | | | .163 | |

The effects of a hypothetical simultaneous 10% appreciation in the U.S. dollar from June 30, [removed: 2016] [added: 2017] levels against the euro, British pound [removed: sterling and] [added: sterling,] Chinese yuan [added: and Canadian dollar] are as follows (in thousands):

| Decrease in translation of [removed: 2016] [added: 2017] earnings into U.S. dollars | | $ | [removed: 2,391] [added: 2,540] | |

| Decrease in translation of net assets of foreign subsidiaries | | | [removed: 12,445] [added: 37,356] | |

| Additional transaction losses | | | [removed: 2,301] [added: 1,158] | |

| | | _2017_ | | | | _2016_ | | | | _2015_ | | |

| Canadian dollar: | | | | | | | | | | | | |

| High | | $ | .770 | | | $ | .781 | | | $ | .933 | |

| Low | | | .733 | | | | .706 | | | | .793 | |

| Average | | | .754 | | | | .755 | | | | .855 | |

In fiscal 2016, for example, the average exchange rate between the British Pound and the US dollar changed by 10% on, resulting in consolidated net sales that were lower in fiscal 2016 compared to fiscal 2015.

| | | _201__6_ | | | | _201__5_ | | | | _201__4_ | | |

[removed: Additionally] [added: Through our Diagnostics Division,] we [removed: also] serve the clinical markets with regulated products such as controls, calibrators, reagents and immunoassays intended for diagnostic uses.

Recognizing the importance of [removed: a unified and] [added: an integrated,] global approach to meeting our mission and accomplishing our strategies, we have unified our brands and recent acquisitions under a single global brand, Bio-Techne.

The Bio-Techne name solidifies the new strategic direction for the Company, and also unifies all of our brands under one complete [removed: portfolio.][added: corporate umbrella.]

[added: Our common stock is listed on the NASDAQ under the symbol “TECH.”] We operate globally, with offices in multiple locations in the United States, Europe, and Asia.

Today, our product line extends to over 300,000 [added: manufactured] products in state of the art facilities to accommodate many of our manufacturing needs.

[added: Our mission is to “build epic tools for epic science.”] We intend to build on Bio-Techne’s past accomplishments, high product quality reputation and sound financial position by executing strategies that position us to serve as the standard for biological content in the research market, and to leverage that leadership position to enter the diagnostics and other adjacent markets.

[removed: _Continued innovation in core products._] [added: _Continued_ _innovation_ _in_ _core_ _products._] Through collaborations with key opinion leaders, participation in scientific discussions and societies, and leveraging our internal talent we expect to be able to convert our continued significant investment in our research and development activities to be first-to-market with quality products that are at the leading edge of life science researchers’ needs.

[removed: _Investments in targeted acquisitions._] [added: _Targeted acquisitions and investments._] We will continue to leverage our strong balance sheet to gain access to new technologies and products that improve our competitiveness in the current market, meet customers’ expanding work flow needs and allow us to enter adjacent markets.

[removed: _Expansion of geographic footprint._] [added: _Expansion_ _of_ _geographic_ _footprint._] We will continue to expand our sales staff and distribution channels globally in order to increase our global presence and make it easier for customers to transact with us.

[removed: _Realignment of resources._] [added: _Realign__m__ent_ _of_ _resources._] In recognition of the increased size and scale of the organization, we continue to redesign our development and operational processes to create greater efficiencies throughout the organization.

[removed: _Talent recruitment and retention._] [added: _Talent_ _recruit__m__ent_ _and_ _retention._] We strive to recruit, train and retain the most talented staff to implement all of our strategies effectively.

In fiscal [removed: 2016,] [added: 2017,] net sales from Bio-Techne’s Biotechnology, [removed: Clinical Controls and] Protein Platforms [added: and Diagnostics] segments represented [removed: 64%, 21%,] [added: 65%, 16%,] and [removed: 15%] [added: 19%] of consolidated net sales, respectively.

Financial information relating to Bio-Techne’s segments is incorporated herein by reference to Note [removed: 12] [added: 11] to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Through our Biotechnology segment, we are one of the [removed: world’s] [added: world's] leading suppliers of specialized proteins, such as [removed: cytokines,] [added: cytokines and] growth factors, immunoassays, antibodies and related reagents, to the biotechnology research community.

Our combined chemical and biological reagents portfolio provides [removed: new] [added: high quality] tools which customers can use in solving the complexity of important biological pathways and glean knowledge [removed: which] [added: that] may lead to a more complete understanding of biological [removed: processes] [added: processes,] and ultimately to the development of novel strategies to address different pathologies.

[removed: Biotechnology Segment Products][added: _Biotechnology Segment_ _Products_]

[removed: Additionally, both enzymes and cytokines] [added: In addition, a number of our products] have the potential to serve as predictive biomarkers and therapeutic targets for a variety of [added: human] diseases and conditions including cancer, [removed: Alzheimer’s, arthritis,] autoimmunity, diabetes, hypertension, obesity, inflammation, [removed: AIDS] [added: neurological disorders,] and [removed: influenza.][added: kidney failure.]

[removed: We] [added: In fact, we] have received Food and Drug Administration (FDA) marketing clearance for [removed: erythropoietin (EPO), transferrin receptor (TfR) and Beta2-microglobulin (b2M)] [added: a few of our] immunoassays for use as _in vitro_ diagnostic devices.

[removed: Biotechnology Segment Customers] [added: _Biotechnology Segment_ _Customers] and Distribution [removed: Methods][added: Methods_]

We also sell through third party distributors in China, Japan, [removed: southern and] eastern Europe and the rest of the world.

Our sales are widely distributed, and no single end-user customer accounted for more than 10% of [removed: Biotechnology’s] [added: Biotechnology's] net sales during fiscal [removed: 2016, 2015] [added: 2017, 2016] or [removed: 2014.][added: 2015.]

[removed: Biotechnology Segment Competitors][added: _Biotechnology Segment_ _Competitors_]

A number of companies supply the worldwide market for protein-related and chemically-based research [added: and diagnostic] reagents, including GE Healthcare Life Sciences, BD Biosciences, Merck KGaA/EMD Chemicals, Inc., PeproTech, Inc., [removed: Santa Cruz Biotechnology, Inc.,] Abcam plc., [added: and] Thermo Fisher Scientific, [removed: Inc., Cayman Chemical Company and Enzo Biochem,] Inc. Market success is primarily dependent upon product quality, [removed: selection] [added: selection, price] and reputation.

We further believe that the [removed: expanding line] [added: expansion] of our [removed: products,] [added: product offering,] their recognized quality, and the [removed: growing] [added: continued] demand for protein-related and chemically-based research reagents will allow us to remain competitive in the growing biotechnology research and diagnostic [removed: market.][added: markets.]

[removed: Biotechnology Segment Manufacturing][added: _Biotechnology_ _Manufacturing_]

We develop and manufacture the majority of our [removed: cytokines] [added: proteins] using recombinant DNA technology, thus significantly reducing our reliance on outside resources.

[removed: Tocris] [added: Our] chemical-based [added: small molecule] products are synthesized from widely available products.

Consequently, we had no significant backlog of orders for our Biotechnology segment products as of the date of this Annual Report on Form 10-K or as of a comparable date for fiscal [removed: 2015.][added: 2016.]

[removed: _Clinical_ _Controls_ _Segment_][added: _Diagnostics Segment (formerly Clinical Controls)_]

Our original business in this segment was focused [added: primarily] on controls and calibrators for hematology clinical instruments.

With the acquisition of Bionostics in fiscal 2014 and Cliniqa in fiscal 2016, we expanded this segment to include blood chemistry and blood [removed: gases] [added: gas] quality [removed: controls] [added: controls,] diagnostic [removed: immunoassays as well as] [added: immunoassays, and] other bulk and custom reagents for the [removed: in vitro] [added: _in vitro_] diagnostic market.

[removed: Clinical Controls] [added: _Diagnostics] Segment [removed: Products][added: Products_]

[removed: These control] [added: Our hematology controls] and [removed: calibrator products] [added: calibrators] ensure that hematology instruments are performing accurately and reliably.

We also offer [removed: clinical] controls for blood glucose and blood gas devices, as well as coagulation device control products.

[removed: Clinical Controls] [added: _Diagnostics] Segment Customers and Distribution [removed: Methods][added: Methods_]

Original Equipment Manufacturer (OEM) agreements represent the largest market for our [removed: clinical controls] [added: diagnostics] products.

In fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] OEM agreements accounted for [removed: $54.2] [added: $60.7] million, [removed: $41.1] [added: $54.2] million, and [removed: $41.2] [added: $41.1] million, [removed: respectively,] or [removed: 8%, 9%,] [added: 57%, 52%,] and [removed: 12%] [added: 53%] of [removed: total consolidated] [added: division] net sales in each fiscal year, respectively.

We sell [added: some of] our [removed: clinical control] [added: diagnostics] products directly to customers and, in Europe and Asia, also through distributors.

One OEM customer accounted for approximately [removed: 13%,] [added: 12%] and [removed: 14%] [added: 13%] of [removed: Clinical Controls’] [added: the Diagnostics Division's] net sales during fiscal [removed: 2015] [added: 2017] and [removed: 2014] [added: 2015,] respectively.

[removed: Clinical Controls] [added: _Diagnostics] Segment [removed: Competitors][added: Competitors_]

With our deep product portfolio and application expertise, we strive to provide the life sciences community with innovative, high-quality scientific tools to better understand biological processes and drive discovery.

We currently operate with three reporting segments – our Biotechnology, Protein Platforms and Diagnostics Divisions.

Our Biotechnology Division is a leader in providing high quality proteins and antibodies, and related immunoassays, as well as biologically active small molecules and other reagents for the research and clinical diagnostics markets, all under the primary brands of R&D Systems, Novus Biologicals and Tocris Bioscience.

Through our most recent acquisition, Advanced Cell Diagnostics, we also sell products for RNA in situ hybridization.

Our Protein Platforms Division focuses on developing and supplying instrumentation and related consumables designed to simplify protein analysis processes along with single cell protein analysis, all under the ProteinSimple brand.

We are a Minnesota corporation with our global headquarters in Minneapolis, Minnesota.

We originally were founded over forty years ago, in 1976, as Research and Diagnostic Systems, Inc. We became a publicly traded company in 1985 through a merger with Techne Corporation, now Bio-Techne Corporation.

Our historical focus was on providing high quality proteins, antibodies and immunoassays to the life science research market and hematology controls for the diagnostics market.

Beginning in 2012, and accelerating over the last three years, we implemented a strategy to accelerate growth in part by acquiring businesses and product portfolios that leveraged and diversified our existing product lines, filled portfolio gaps with differentiated high growth businesses, and expanded our geographic scope.

_Growth Through Acquisition_

| _Acquisition_ | _Year Acquired (Fiscal)_ | _Reporting Segment_ | _Primary Product Portfolios_ |

| --- | --- | --- | --- |

| Tocris | 2012 | Biotechnology | Biologically active small molecules |

| Bionostics | 2014 | Diagnostics | Blood chemistry and packaging |

| PrimeGene | 2014 | Biotechnology | Bulk and GMP proteins manufacturing for China |

| Novus Biologicals | 2015 | Biotechnology | Antibodies |

| ProteinSimple | 2015 | Protein Platforms | Protein analysis, including automated western blot, ELISAs and biologics instrumentation |

| CyVek | 2015 | Protein Platforms | Automated ELISA systems |

| Cliniqa | 2016 | Diagnostics | Blood chemistry quality controls and bulk immunochemistry reagents |

| Zephyrus BioSciences | 2016 | Protein Platforms | Single cell western blotting |

| Space Import-Export | 2017 | Biotechnology | Geographic expansion |

| Advanced Cell Diagnostics | 2017 | Biotechnology | Genomic _in situ_ hybridization |

The portfolio in this segment includes five main product lines: native and recombinant proteins, monoclonal and polyclonal antibodies, immunoassays, biologically active chemical compounds and, through our most recent acquisition, Advanced Cell Diagnostics, _in situ_ genomic hybridization.

As mentioned above, all are useful in a wide variety of important biomedical research activities.

In addition to being useful research tools, our RNA in situ hybridization assays have diagnostics applications as well, and several are currently being cleared with the FDA in partnership with diagnostics instrument manufacturers and pharmaceutical companies.

We are not dependent on key or sole source suppliers for most of our products in the Biotechnology segment.

Our antibodies are produced using a variety of technologies including traditional animal immunization and hybridoma technology as well as recombinant antibody techniques.

Biologics Platform.

Our Maurice, iCE3 and MFI platforms all measure some elements of protein identity, purity and heterogeneity.

Our customers for this segment include researchers in academia as well as commercial researchers.

Our biologics line of products is used primarily by production and quality control departments at biotech and pharmaceutical companies.

_Protei__n Platforms Segment Competitors_

We manufacture our products for this division at various locations in the United States and Canada.

Beginning in the first quarter of fiscal 2017, the Clinical Controls segment has been renamed Diagnostics.

We renamed the operating segment to reflect this expanded portfolio of products.

In fiscal 2017, we launched the Paratest® product, a novel and convenient stool collection and test device for the veterinary market, utilizing our expertise in packaging and reagents from our Devens, Massachusetts site.

No customers accounted for more than 10% of the Diagnostics Division’s net sales during fiscal year 2016.

We compete based primarily on product performance, quality, and price.

Our other reagent products are manufactured using a variety of suppliers, with no supplier representing a material portion of our business.

However, the majority of our business in this segment are large orders shipped based on our customers' needs; we are highly dependent on our customers’ demand and inventory controls.

With our deep product portfolio and application expertise, Bio-Techne is a leader in providing specialized proteins, including cytokines and growth factors, antibodies, related immunoassays, biologically active small molecules and other reagents, as well as instrumentation designed to simplify key protein analysis processes.

A Minneapolis, Minnesota-based company, Bio-Techne originally was founded as Research and Diagnostic Systems, Inc. (R&D Systems) in 1976.

Techne Corporation, a public entity at the time, acquired R&D Systems in 1985 and through this action R&D Systems became a public company.

The initial products focused on the hematology blood controls and calibrators market but soon expanded through the creation of the Biotechnology segment to include reagents used in life science research, driven by a series of acquisitions beginning with the Amgen Inc. research business in 1991.

From fiscal 2014 through fiscal 2016, we have added seven new businesses and product portfolios and formed a third segment -- Protein Platforms.

We also strengthened our Clinical Controls segment solutions by acquiring Bionostics Holdings Limited (Bionostics) and also expanded our Biotechnology segment product offerings through the acquisition of Shanghai-based PrimeGene Bio-Tech Co. (PrimeGene) in fiscal 2014.

In fiscal 2015, we acquired Novus Biologicals LLC (Novus Biologicals) to expand our antibody business which was made part of our Biotechnology segment.

Also in fiscal 2015, we acquired ProteinSimple and CyVek, Inc. (CyVek), both with innovative instrument platforms useful for protein analysis, and which together form our new Protein Platforms segment.

Early in fiscal 2016, we acquired Cliniqa Corporation (Cliniqa) (July 2015), which specializes in the manufacturing and commercialization of blood chemistry quality controls and calibrators as well as bulk reagents used for the clinical diagnostic market to further expand and complement our Clinical Controls solutions.

Zephyrus BioSciences, Inc. (Zephyrus) (March 2016) was also acquired with a product line that enables western blotting on single cells and is now part of our Protein Platforms segment.

Subsequent to the end of fiscal 2016, we acquired our Italian distributor, Space Import-Export Srl (Space) (July 2016) and Advanced Cell Diagnostics (ACD) (August 2016).

Space is a long and trusted business partner of Bio-Techne, distributing its products since 1985 and creating a very effective and visible presence in the Italian market space.

ACD develops and commercializes proprietary consumables for genomic analysis, reinventing the widely used in-situ hybridization technique.

Our mission is to build epic tools for epic science.

Currently Bio-Techne operates worldwide and has three reportable business segments: Biotechnology, Clinical Controls and Protein Platforms.

The Biotechnology reporting segment develops, manufactures and sells biotechnology research and diagnostic products world-wide.

The Clinical Controls reporting segment develops and manufactures controls, calibrators, immunoassays and other reagents for the global clinical market.

The Protein Platforms reporting segment develops and commercializes proprietary systems and consumables for protein analysis.

Proteins.

We develop and manufacture in-house a range of cytokines, growth factors and enzymes, extracted from natural sources or produced using recombinant DNA technology.

We produce and characterize all protein products to a high degree of purity and biological activity.

The growing interest by academic and commercial researchers in cytokines is largely due to the profound effect that tiny amounts of a cytokine can have on cells and tissues.

Cytokines are intercellular messengers and, as a result, act as signaling agents by interacting with specific receptors on the affected cells and trigger events that can lead to significant changes in a cell behavior.

Enzymes are proteins which act as biological catalysts that accelerate chemical reactions.

Most enzymes, including proteases, kinases and phosphatases, are proteins that modify the structure and function of other proteins and in turn affect cell behavior and function.

Antibodies.

Antibodies are specialized proteins produced by the immune system of an animal that recognize and bind to target molecules.

We produce our polyclonal antibodies in animals (primarily goats, sheep and rabbits), purifying them from the animals’ blood.

We derive monoclonal antibodies from immortalized rodent cell lines using hybridoma technology, isolating them from cell culture medium, or we manufacture them through recombinant DNA technology.

The flow cytometry product line includes fluorochrome labeled antibodies and kits that are used to determine the immuno-phenotypic properties of cells from different tissues.

Immunoassays.

We market a variety of immunoassays on different testing platforms, including microtiter-plate based kits sold under the trade name Quantikine®, multiplex immunoassays based on encoded bead technology and immunoassays based on planar spotted surfaces and microfluidic-based multiplex immunoassays on our automated testing platform.

Researchers use these immunoassay products to quantify the level of a specific protein in biological fluids, such as serum, plasma, or urine.

Protein quantification is an integral component of basic research, as potential diagnostic tools for various diseases and as a valuable indicator of the effects of new therapeutic compounds in the drug discovery process.

Small Molecule Chemically-based Products.

These products include small natural or synthetic chemical compounds used by investigators as agonists, antagonists and/or inhibitors of various biological functions.

Used in concert with other Company products, they provide additional tools to elucidate key pathways of cellular functions and can provide insight into the drug discovery process.

Our BiosPacific brand product revenues are also now included in this segment as of fiscal 2016, and have been reclassified in prior years for comparative purposes.

Controls and Calibrators.

Proper diagnosis of many illnesses requires a thorough and accurate analysis of a patient’s blood cells, which is usually done with automated or semi-automated hematology instruments.

As of August [removed: 26, 2016,] [added: 30, 2017,] the Company is not a party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the [removed: Company’s] [added: Company's] business, results of operations, financial condition or cash flows.

10-K 1 [removed: tech20160630_10k.htm] [added: tech20170630_10k.htm] FORM 10-K

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] DC [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: X ANNUAL] [added: | ☒ | ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934 |]

[removed: For the fiscal year ended June 30, 2016][added: For the fiscal year ended June 30, 2017, or]

[removed: TRANSITION] [added: | ☐ | TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934 |]

[removed: For] [added: For] the transition [removed: period from to][added: period]

[removed: Commission File Number: 000-17272][added: Commission file number 0-17272]

[removed: BIO-TECHNE CORPORATION][added: BIO-TECHNE CORPORATION]

[removed: (Exact] [added: (Exact] name of [removed: Registrant] [added: registrant] as specified in its [removed: charter)][added: charter)]

| [removed: |] Minnesota | [removed: 41-1427402] | [added: 41-1427402] |

| [removed: | (State of Incorporation)] [added: (State or other jurisdiction of incorporation or organization)] | [removed: (IRS Employer Identification No.)] | [added: (I.R.S. Employer Identification No.)] |

| [removed: | 614 McKinley Place N.E., Minneapolis, MN] [added: 614 McKinley Place N.E. Minneapolis, MN 55413] | [removed: 55413-2610] | [added: (612) 379-8854] |

| [removed: | (Address] [added: (Address] of principal executive offices) [removed: |] (Zip [removed: Code)] [added: Code)] | | [added: (Registrant's telephone number, including area code) |]

[removed: Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.01 par value][added: Securities registered pursuant to Section 12(b) of the Act:]

[removed: Name of each exchange on which registered: The Nasdaq Stock Market LLC][added: | Title of each class | | Name of each exchange on which registered |]

Securities registered pursuant to Section 12(g) of the [removed: Act: None][added: Act: None]

[removed: Yes (X) No ( )] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or [added: Section] 15(d) of the Act.

Yes [removed: ( )] [added: ☒] No [removed: (X)][added: ☐]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by [removed: section] [added: Section] 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 [removed: days: Yes (X) No ( )][added: days.]

Indicate by check mark whether the [removed: registrants] [added: registrant] has submitted electronically and posted on its corporate [removed: Web site,] [added: website,] if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T [removed: (§232.405 of this chapter)] during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [removed: (X)] [added: ☐] No [removed: ( )][added: ☒]

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting company” [added: and “emerging growth company”] in Rule 12b-2 of the Exchange Act.

[removed: Large accelerated filer (X) Accelerated filer ( )] [added: |] Non-accelerated filer [removed: ( ) Small] [added: | | ☐ | | Smaller] reporting company [removed: ( )][added: | | ☐ |]

Indicate by check mark whether the [removed: Registrant] [added: registrant] is a shell company (as defined in [removed: Exchange Act] Rule [removed: 12b-2).][added: 12b-2 of the Act).]

[removed: The] [added: As of December 31, 2016 the] aggregate market value of the Common Stock held by non-affiliates of the [removed: Registrant,] [added: Registrant was $3.8 billion] based upon the closing sale price [removed: on December 31, 2015] as reported on The Nasdaq Stock Market [removed: ($90.00] [added: ($102.83] per [removed: share) was approximately $3.3 billion.][added: share).]

Portions of the Company’s Proxy Statement for its [removed: 2016] [added: 2017] Annual Meeting of Shareholders are incorporated by reference into Part III.

| | | [removed: Page] [added: Page] |

| [removed: PART I] [added: PART I] | | |

Risk Factors [removed: 12][added: 10]

Unresolved Staff Comments [removed: 18][added: 16]

Properties [removed: 18][added: 16]

Legal Proceedings [removed: 19][added: 16]

| --- | --- |

| --- | --- |

from to

| --- | --- | --- |

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

Yes ☒ No ☐

Yes ☒ No ☐

(Check one):

| Large accelerated filer | | ☒ | | Accelerated filer | | ☐ |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | | | | | |

| | | | | Emerging growth company | | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ☐ No ☒

As of August 30, 2017, 37,382,025 shares of the Company’s Common Stock ($0.01 par value) were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

| --- | --- | --- |

| | | |

| | | |

| --- | --- | --- | --- |

| | | | |

Registrant’s telephone number: (612) 379-8854

(Nasdaq Global Select Market)

( )

Shares of $0.01 par value Common Stock outstanding at August 26, 2016: 37,296,323

DOCUMENTS INCORPORATED BY REFERENCE

| [removed: PART II] [added: PART II] | | |

Market for [removed: the] Registrant’s Common Equity, Related [removed: Shareholder] [added: Stockholder] Matters and Issuer Purchases of Equity Securities [removed: 20][added: 17]

Selected Financial Data [removed: 22][added: 19]

Management’s Discussion and Analysis of Financial Condition and Results of Operations [removed: 23][added: 20]

Quantitative and Qualitative Disclosures about Market Risk [removed: 33][added: 32]

Financial Statements and Supplementary Data [removed: 34][added: 33]

| | | |

Controls and Procedures [removed: 58][added: 63]

| [removed: PART III] [added: PART III] | | |

Directors, Executive Officers [removed: and Corporate Governance 60][added: 66]

Executive Compensation [removed: 60][added: 66]

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters [removed: 60][added: 66]

Certain Relationships and Related Transactions, and Director Independence [removed: 61][added: 66]

Principal Accounting Fees and Services [removed: 62][added: 66]

| [removed: PART IV] [added: PART IV] | | |

Exhibits, Financial Statement Schedules [removed: 62][added: 67]

| [removed: SIGNATURES] | [added: SIGNATURES] | [removed: 63] [added: 67] |

| | | |

The Minneapolis facilities are utilized by both the [removed: Company’s Clinical Controls and] [added: Company's] Biotechnology [added: and Diagnostics] segments.

The Company owns the 17,000 square foot facility that its [removed: R&D] [added: Bio-Techne] Europe subsidiary occupies in Abingdon, England.

The Company leases the following material facilities, all of which are utilized by the [removed: Company’s] [added: Company's] Biotechnology segment with the exception of the [removed: location] [added: locations] used by the [removed: Company’s Bionostics and Cliniqa subsidiaries (Clinical Controls segment), and the] [added: Company's] ProteinSimple and CyVek [removed: sites] [added: sites,] which support the Protein Platforms [removed: segment.][added: segment and the Bionostics and Cliniqa subsidiaries (Diagnostics segment).]

| Bio-Techne Europe [removed: Ltd.] | | [removed: Langely, U.K.] [added: Langley, United Kingdom] | | Warehouse | | 14,300 | |

| [removed: R&D Systems] [added: Bio-Techne] China [removed: Co., Ltd.] | | Shanghai and [removed: Bejing,] [added: Beijing,] China | | Office/warehouse | | [removed: 5,700] [added: 10,700] | |

| Boston [removed: Biochem, Inc.] [added: Biochem] | | Cambridge, Massachusetts | | Office/lab | | 7,400 | |

| Tocris [removed: Crookson Limited] | | Bristol, United Kingdom | | Office/manufacturing/lab/warehouse | | [removed: 40,900] [added: 30,000] | |

| [removed: Shanghai] PrimeGene [removed: Bio-Tech Co., Ltd.] | | Shanghai, China | | Office/manufacturing/lab | | [removed: 13,700] [added: 20,600] | |

| [removed: Bionostics, Inc.] [added: Bionostics] | | Devens, Massachusetts | | Office/manufacturing | | 48,000 | |

| Novus [removed: Biologicals, LLC] [added: Biologicals] | | Littleton, Colorado | | Office/warehouse | | 22,500 | |

| ProteinSimple | | [removed: Santa Clara,] [added: San Jose,] California | | Office/manufacturing/warehouse | | 167,000 | |

| ProteinSimple Canada | | Ottawa and Toronto, Canada | | Office/manufacturing/warehouse | | [removed: 10,000] [added: 13,900] | |

| CyVek [removed: Inc.] | | Wallingford, Connecticut | | Office/manufacturing/warehouse | | 17,500 | |

| [removed: Cliniqa, Inc.] [added: Cliniqa] | | San Marcos, California | | Office/manufacturing/warehouse | | [removed: 37,200] [added: 87,200] | |

The Company is currently [removed: pursuing] [added: in the process of transitioning into] new lease space for its Cliniqa operations.

The Company believes the owned and leased [removed: properties, other than the Cliniqa facility,] [added: properties] are adequate to meet its occupancy needs in the foreseeable future.

| Advanced Cell Diagnostics | | Newark, California | | Office/manufacturing/warehouse | | 35,100 | |

| | | _Fiscal [removed: 2016_] [added: 2017_] _Price_ | | | | | | | | _Fiscal [removed: 201__5_] [added: 2016_] _Price_ | | | | | | |

As of August [removed: 26, 2016,] [added: 30, 2017,] there were over [removed: 31,000] [added: 29,000] beneficial shareholders of the [removed: Company’s] [added: Company's] common stock and over [removed: 150] [added: 165] shareholders of record.

The Company paid quarterly cash dividends totaling [removed: $47.6] [added: $47.7] million, [removed: $47.1] [added: $47.6] million and [removed: $45.4] [added: $47.1] million in fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

There was no share repurchase activity by the Company in fiscal [removed: 2016.][added: 2017.]

The comparison assumes $100 was invested on the last trading day before July 1, [removed: 2010] [added: 2012] in the [removed: Company’s] [added: Company's] common stock and in each of the foregoing indices and assumes reinvestment of dividends.

[removed: ][added: |  |]

| First Quarter | | $ | 117.42 | | | $ | 103.99 | | | $ | 114.56 | | | $ | 87.49 | |

| Second Quarter | | | 112.20 | | | | 98.92 | | | | 96.81 | | | | 83.90 | |

| Third Quarter | | | 108.58 | | | | 95.68 | | | | 96.83 | | | | 79.95 | |

| Fourth Quarter | | | 119.98 | | | | 98.22 | | | | 114.62 | | | | 91.45 | |

| --- |

| 1st Quarter | | $ | 114.56 | | | $ | 87.49 | | | $ | 97.15 | | | $ | 89.03 | |

| 2nd Quarter | | | 96.81 | | | | 83.90 | | | | 95.89 | | | | 86.01 | |

| 3rd Quarter | | | 96.83 | | | | 79.95 | | | | 101.60 | | | | 87.24 | |

| 4th Quarter | | | 114.62 | | | | 91.45 | | | | 103.56 | | | | 95.37 | |

| _Income and Share Data:_ | | [added: _2017__(1)_] | [removed: _2016_(1)__] | | | [added: _2016__(2)_] | [removed: _2015_(2)__] | | | [added: _2015__(3)_] | [removed: _2014_(3)__] | | | [added: _2014__(4)_] | [removed: _2013_] | | | [added: _2013_] | [removed: _2012_] | |

| Net sales | | $ | [removed: 499,023] [added: 563,003] | | | $ | [removed: 452,246] [added: 499,023] | | | $ | [removed: 357,763] [added: 452,246] | | | $ | [removed: 310,575] [added: 357,763] | | | $ | [removed: 314,560] [added: 310,575] | |

| Operating income | | | [removed: 150,593] [added: 120,584] | | | | [removed: 147,023] [added: 150,593] | | | | [removed: 159,750] [added: 147,023] | | | | [removed: 158,469] [added: 159,750] | | | | [removed: 166,209] [added: 158,469] | |

| Earnings before income taxes [removed: (4)] [added: (5)] | | | [removed: 147,481] [added: 111,961] | | | | [removed: 154,162] [added: 147,481] | | | | [removed: 161,392] [added: 154,162] | | | | [removed: 160,662] [added: 161,392] | | | | [removed: 162,195] [added: 160,662] | |

| Net earnings | | | [removed: 104,476] [added: 76,086] | | | | [removed: 107,735] [added: 104,476] | | | | [removed: 110,948] [added: 107,735] | | | | [removed: 112,561] [added: 110,948] | | | | [removed: 112,331] [added: 112,561] | |

| Diluted earnings per share | | | [removed: 2.80] [added: 2.03] | | | | [removed: 2.89] [added: 2.80] | | | | [removed: 3.00] [added: 2.89] | | | | [removed: 3.05] [added: 3.00] | | | | [removed: 3.04] [added: 3.05] | |

| Average common and common equivalent shares - diluted (in thousands) | | | [removed: 37,326] [added: 37,500] | | | | [removed: 37,231] [added: 37,326] | | | | [removed: 37,005] [added: 37,231] | | | | [removed: 36,900] [added: 37,005] | | | | [removed: 37,006] [added: 36,900] | |

| _Balance Sheet Data as of June 30:_ | | [removed: _201__6_] [added: _2017_] | | | | [removed: _201__5_] [added: _2016_] | | | | [removed: _201__4_] [added: _2015_] | | | | [removed: _201__3_] [added: _2014_] | | | | [removed: _201__2_] [added: _2013_] | | |

| Cash, cash equivalents and short-term available-for-sale investments | | | [removed: 95,835] [added: 157,714] | | | $ | [removed: 110,921] [added: 95,835] | | | $ | [removed: 363,354] [added: 110,921] | | | $ | [removed: 332,937] [added: 363,354] | | | $ | [removed: 268,986] [added: 332,937] | |

| Working capital | | | [removed: 199,744] [added: 212,503] | | | | [removed: 208,515] [added: 199,744] | | | | [removed: 443,022] [added: 208,515] | | | | [removed: 377,432] [added: 443,022] | | | | [removed: 310,757] [added: 377,432] | |

| Total assets | | | [removed: 1,129,581] [added: 1,558,219] | | | | [removed: 1,063,360] [added: 1,129,581] | | | | [removed: 862,491] [added: 1,063,360] | | | | [removed: 778,098] [added: 862,491] | | | | [removed: 719,324] [added: 778,098] | |

| Total [removed: shareholders’] [added: shareholders'] equity | | | [removed: 879,280] [added: 949,627] | | | | [removed: 846,935] [added: 879,280] | | | | [removed: 795,265] [added: 846,935] | | | | [removed: 737,541] [added: 795,265] | | | | [removed: 674,442] [added: 737,541] | |

| Net cash provided by operating activities | | $ | [removed: 143,870] [added: 143,811] | | | $ | [removed: 139,359] [added: 143,870] | | | $ | [removed: 136,762] [added: 139,359] | | | $ | [removed: 123,562] [added: 136,762] | | | $ | [removed: 126,746] [added: 123,562] | |

| Capital expenditures | | | [removed: 16,898] [added: 15,179] | | | | [removed: 19,904] [added: 16,898] | | | | [removed: 13,821] [added: 19,905] | | | | [removed: 22,454] [added: 13,821] | | | | [removed: 6,017] [added: 22,454] | |

| Cash dividends declared per share | | | 1.28 | | | | [removed: 1.27] [added: 1.28] | | | | [removed: 1.23] [added: 1.27] | | | | [removed: 1.18] [added: 1.23] | | | | [removed: 1.11] [added: 1.18] | |

| Employees | | | [removed: 1,560] [added: 1,789] | | | | [removed: 1,356] [added: 1,560] | | | | [removed: 967] [added: 1,356] | | | | [removed: 789] [added: 967] | | | | [removed: 783] [added: 789] | |

| [removed: (1)] [added: (2)] | The Company acquired Cliniqa on July 8, 2015, and Zephyrus on March 21, 2016. |

| [removed: (2)] [added: (3)] | The Company acquired Novus Biologicals on July 2, 2014, ProteinSimple on July 31, 2014, and [removed: CyVek,] [added: CyVek] on November 3, 2014. |

| [removed: (3)] [added: (4)] | The Company acquired Bionostics on July 22, [removed: 2013] [added: 2013,] and PrimeGene on April 30, 2014. |

| [removed: (4)] [added: (5)] | Earnings before income taxes included acquisition related expenses related to amortization of intangibles, costs recognized on sale of acquired inventories and professional fees associated with acquisition activity, as follows: [added: 2017 - $73.2 million;] 2016 - $37.6 million; 2015 - $37.6 million; 2014 - $20.0 million; 2013 - $10.2 [removed: million; 2012 - $12.7] million. |

| _Cash Flow Data:_ | | _2017_ | | | | _2016_ | | | | _2015_ | | | | _2014_ | | | | _2013_ | | |

| _Employee Data as of June 30:_ | | _2017_ | | | | _2016_ | | | | _2015_ | | | | _2014_ | | | | _2013_ | | |

| (1) | The Company acquired Space on July 1, 2016, and Advanced Cell Diagnostics on August 1, 2016. |

| --- | --- |

| _Cash Flow Data:_ | | _201__6_ | | | | _201__5_ | | | | _201__4_ | | | | _201__3_ | | | | _201__2_ | | |

| _Employee Data as of June 30:_ | | _201__6_ | | | | _201__5_ | | | | _201__4_ | | | | _201__3_ | | | | _201__2_ | | |

| Net sales | | $ | [removed: 499,023] [added: 563,003] | | | $ | [removed: 452,246] [added: 499,023] | | | $ | [removed: 357,763] [added: 452,246] | |

| Cost of sales | | | [removed: 162,364] [added: 188,462] | | | | [removed: 144,969] [added: 162,364] | | | | [removed: 106,352] [added: 144,969] | |

| Gross margin | | | [removed: 336,659] [added: 374,541] | | | | [removed: 307,277] [added: 336,659] | | | | [removed: 251,411] [added: 307,277] | |

| Selling, general and administrative | | | [removed: 140,879] [added: 200,443] | | | | [removed: 119,401] [added: 140,879] | | | | [removed: 60,716] [added: 119,401] | |

| Research and development | | | [removed: 45,187] [added: 53,514] | | | | [removed: 40,853] [added: 45,187] | | | | [removed: 30,945] [added: 40,853] | |

| Total operating expenses | | | [removed: 186,066] [added: 253,957] | | | | [removed: 160,254] [added: 186,066] | | | | [removed: 91,661] [added: 160,254] | |

| Operating income | | | [removed: 150,593] [added: 120,584] | | | | [removed: 147,023] [added: 150,593] | | | | [removed: 159,750] [added: 147,023] | |

| Interest expense | | | [removed: (1,748] [added: (7,361] | ) | | | [removed: (1,544] [added: (1,748] | ) | | | [removed: 0] [added: (1,544] | [added: )] |

| Interest income | | | [removed: 249] [added: 304] | | | | [removed: 634] [added: 249] | | | | [removed: 2,684] [added: 634] | |

| Other non-operating income (expense), net | | | [removed: (1,613] [added: (1,566] | ) | | | [removed: 8,049] [added: (1,613] | [added: )] | | | [removed: (1,042] [added: 8,049] | [removed: )] |

| Total other income (expense) | | | [removed: (3,112] [added: (8,623] | ) | | | [removed: 7,139] [added: (3,112] | [added: )] | | | [removed: 1,642] [added: 7,139] | |

| Earnings before income taxes | | | [removed: 147,481] [added: 111,961] | | | | [removed: 154,162] [added: 147,481] | | | | [removed: 161,392] [added: 154,162] | |

| Income taxes | | | [removed: 43,005] [added: 35,875] | | | | [removed: 46,427] [added: 43,005] | | | | [removed: 50,444] [added: 46,427] | |

| Net earnings | | | [removed: 104,476] [added: 76,086] | | | | [removed: 107,735] [added: 104,476] | | | | [removed: 110,948] [added: 107,735] | |

| Foreign currency translation adjustments | | | [removed: (19,932] [added: (3,061] | ) | | | [removed: (36,513] [added: (19,888] | ) | | | [removed: 15,819] [added: (36,513] | [added: )] |

| Unrealized [removed: (losses)] gains [added: (losses)] on available-for-sale investments, net of tax of [removed: ($3,794), $3,895,] [added: $(6,501), $3,794,] and [removed: ($17,110)] [added: $(3,895),] respectively | | | [removed: (19,924] [added: 24,531] | [removed: )] | | | [removed: 11,308] [added: (19,924] | [added: )] | | | [removed: (35,760] [added: 11,308] | [removed: )] |

| Other comprehensive [removed: (loss)] income [added: (loss)] | | | [removed: (39,812] [added: 21,470] | [removed: )] | | | [removed: (25,205] [added: (39,812] | ) | | | [removed: (19,941] [added: (25,205] | ) |

| Comprehensive income | | $ | [removed: 64,664] [added: 97,556] | | | $ | [removed: 82,530] [added: 64,664] | | | $ | [removed: 91,007] [added: 82,530] | |

| Basic | | $ | [removed: 2.81] [added: 2.04] | | | $ | [removed: 2.90] [added: 2.81] | | | $ | [removed: 3.01] [added: 2.90] | |

| Diluted | | $ | [removed: 2.80] [added: 2.03] | | | $ | [removed: 2.89] [added: 2.80] | | | $ | [removed: 3.00] [added: 2.89] | |

| Cash dividends per common share: | | $ | 1.28 | | | $ | [removed: 1.27] [added: 1.28] | | | $ | [removed: 1.23] [added: 1.27] | |

| Basic | | | [removed: 37,194] [added: 37,313] | | | | [removed: 37,096] [added: 37,194] | | | | [removed: 36,890] [added: 37,096] | |

| Diluted | | | [removed: 37,326] [added: 37,500] | | | | [removed: 37,231] [added: 37,326] | | | | [removed: 37,005] [added: 37,231] | |

See Notes to Consolidated Financial [removed: Statements.][added: Statements]

| Cash and cash equivalents | | $ | [removed: 64,237] [added: 91,612] | | | $ | [removed: 54,532] [added: 64,237] | |

| Short-term available-for-sale investments | | | [removed: 31,598] [added: 66,102] | | | | [removed: 56,389] [added: 31,598] | |

| Accounts receivable, less allowance for doubtful accounts of [removed: $555] [added: $696] and [removed: $487,] [added: $555,] respectively | | | [removed: 93,393] [added: 116,830] | | | | [removed: 70,034] [added: 93,393] | |

| Deferred income [removed: taxes | | | 0 |] [added: taxes, net] | | | [removed: 11,511] [added: 2,125] | |

| Inventories | | | [removed: 57,102] [added: 60,151] | | | | [removed: 49,577] [added: 57,102] | |

| Other current assets | | | [removed: 7,561] [added: 13,330] | | | | [removed: 6,240] [added: 7,561] | |

| Total current assets | | | [removed: 253,891] [added: 348,025] | | | | [removed: 248,283] [added: 253,891] | |

| Property and equipment, net | | | [removed: 132,362] [added: 135,124] | | | | [removed: 129,749] [added: 132,362] | |

| Goodwill | | | [removed: 430,882] [added: 579,026] | | | | [removed: 390,638] [added: 430,882] | |

| Intangible assets, net | | | [removed: 310,524] [added: 452,042] | | | | [removed: 292,839] [added: 310,524] | |

| Other assets | | | [removed: 1,922] [added: 44,002] | | | | [removed: 1,851] [added: 1,922] | |

| Trade accounts payable | | $ | [removed: 20,653] [added: 16,856] | | | $ | [removed: 13,443] [added: 20,653] | |

| Salaries, wages and related accruals | | | [removed: 14,868] [added: 26,602] | | | | [removed: 10,344] [added: 14,868] | |

| Accrued expenses | | | [removed: 8,371] [added: 18,518] | | | | [removed: 6,604] [added: 8,371] | |

| Deferred [removed: revenue] [added: revenue, current] | | | [removed: 4,717] [added: 5,968] | | | | [removed: 3,380] [added: 4,717] | |

| Income taxes payable | | | [removed: 1,779] [added: 2,478] | | | | [removed: 1,972] [added: 1,779] | |

| | | _2017_ | | | | _2016_ | | | | _2015_ | | |

| | | _2017_ | | | | _2016_ | | |

| Total assets | | $ | 1,558,219 | | | $ | 1,129,581 | |

| Contingent consideration payable | | | 65,100 | | | | \- | |

| Total liabilities and shareholders’ equity | | $ | 1,558,219 | | | $ | 1,129,581 | |

| Surrender and retirement of stock to exercise options | | | (3 | ) | | | \- | | | | (275 | ) | | | | | | | | | | | (275 | ) |

| Common stock issued to employee stock purchase plan | | | 11 | | | | | | | | 1,022 | | | | | | | | | | | | 1,022 | |

| Employee stock purchase plan expense | | | | | | | | | | | 213 | | | | | | | | | | | | 213 | |

| Balances at June 30, 2017 | | | 37,356 | | | $ | 374 | | | $ | 199,161 | | | $ | 799,027 | | | $ | (48,935 | ) | | $ | 949,627 | |

| | | _2017_ | | | | _2016_ | | | | _2015_ | | |

| Fair value adjustment to contingent consideration payable | | | 18,400 | | | | \- | | | | \- | |

| Contingent consideration and ACD compensation, operating | | | (13,322 | ) | | | | | | | | |

| Other operating activity | | | 1,942 | | | | (566 | ) | | | (157 | ) |

| Other investing activities | | | \- | | | | (25 | ) | | | 49 | |

| Contingent consideration and ACD compensation, financing | | | (21,060 | ) | | | \- | | | | \- | |

See Note 10 for additional information regarding income taxes.