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<ul><li><p>NotestoconsolidatedfinancialstatementsDecember31,2017</p><p>1.CorporateInformationandBasisofPresentation</p><p>CorporateInformationQIAGENN.V.isapubliclimitedliabilitycompany('naamlozevennootschap')underDutchlawwithregisteredofficeatHulsterweg82,5912PLVenlo,TheNetherlands.QIAGENN.V.,aNetherlandsholdingcompany,andsubsidiaries(we,ourortheCompany)istheleadingglobalproviderofSampletoInsightsolutionstotransformbiologicalmaterialsintovaluablemolecularinsights.OursampletechnologiesisolateandprocessDNA,RNAandproteinsfromblood,tissueandothermaterials.Assaytechnologiesmakethesebiomoleculesvisibleandreadyforanalysis.Bioinformaticssoftwareandknowledgebasesinterpretdatatoreportrelevant,actionableinsights.Automationsolutionstiethesetogetherinseamlessandcost-effectivemoleculartestingworkflows.Weprovidetheseworkflowstofourmajorcustomerclasses:MolecularDiagnostics(humanhealthcare),AppliedTesting(forensics,veterinarytestingandfoodsafety),Pharma(pharmaceuticalandbiotechnologycompanies)andAcademia(lifesciencesresearch).Wemarketourproductsinmorethan130countries.</p><p>BasisofPresentationTheaccompanyingconsolidatedfinancialstatementswerepreparedinaccordancewithU.S.generallyacceptedaccountingprinciples(GAAP)andallamountsarepresentedinU.S.dollarsroundedtothenearestthousand,unlessotherwiseindicated.Theconsolidatedfinancialstatementshavebeenpreparedonahistoricalcostbasis,exceptforderivativefinancialinstruments,contingentconsiderationandavailable-for-salefinancialinstrumentsthathavebeenmeasuredatfairvalue.</p><p>OnJanuary6,2017,weacquiredOmicSoftCorporation,locatedinCary,NorthCarolina(U.S.).OnJune28,2016,weacquiredExiqonA/S,locatedinVedbaek,DenmarkandonNovember20,2015,weacquiredMOBIOLaboratories,Inc.,locatedinCarlsbad,California.Accordingly,attheacquisitiondates,alloftheassetsacquiredandliabilitiesassumedwererecordedattheirrespectivefairvaluesandourconsolidatedresultsofoperationsincludetheoperatingresultsfromtheacquiredcompaniesfromtheacquisitiondates.</p><p>CertainprioryearamountsrelatedtodeferredtaxeshavebeenreclassifiedinNote16IncomeTaxesandtheConsolidatedStatementsofCashFlows.Certainprioryearamountsrelatedtorestructuringcostshavebeenreclassifiedtoconformtothecurrentyearpresentation.FortheyearendedDecember31,2016,$26.3millionand$25.0millioncostswerereclassifiedoutofresearchanddevelopmentandsalesandmarketing,respectively,togeneralandadministrative,restructuring,integrationandother.Thesereclassificationshadnoeffectonincomefromoperations.</p><p>2.EffectsofNewAccountingPronouncements</p><p>AdoptionofNewAccountingStandards</p><p>FINANCIALRESULTS</p></li><li><p>ThefollowingnewFASBAccountingStandardsUpdates(ASU)wereeffectivefortheyearendedDecember31,2017.</p><p>ASU2015-11,Inventory(Topic330):SimplifyingtheMeasurementofInventoryrequiresinscopeinventory,includinginventorymeasuredusingfirst-in,firstout(FIFO)oraveragecost,tobemeasuredatthelowerofcostandnetrealizablevalue.Netrealizablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lessreasonablypredictablecostsofcompletion,disposal,andtransportation.TheadoptionofASU2015-11didnothaveamaterialimpactonourconsolidatedfinancialstatements.</p><p>ASU2016-07,Investments-EquityMethodandJointVentures(Topic323):SimplifyingtheTransitiontotheEquityMethodofAccountingeliminatestherequirementtoretroactivelyadopttheequitymethodofaccountingwhenaninvestmentqualifiesforuseoftheequitymethodasaresultofanincreaseinthelevelofownershipordegreeofinfluence.Thenewguidancehadnoimpactonourconsolidatedfinancialstatements.</p><p>ASU2016-09,Compensation-StockCompensation(Topic718):ImprovementstoEmployeeShare-BasedPaymentAccountingisintendedtosimplifyseveralaspectsoftheaccountingforshare-basedpaymenttransactions,includingtheincometaxconsequences,classificationofawardsaseitherequityorliabilities,andclassificationonthestatementofcashflows.ThenewguidancebecameeffectiveforusonJanuary1,2017.TheimpactoftheadoptionofASU2016-09islimitedtotherecordingofanywindfallorshortfallbenefitdirectlytothetaxprovisionandthereclassificationofcertainitemsinourstatementofcashflows.Wewillcontinueestimatingstock-basedcompensationawardforfeituresindeterminingtheamountofcompensationcosttoberecognizedeachperiod.Asaresultofthisadoption,weexpectvolatilityinoureffectivetaxrateasanywindfallorshortfalltaxbenefitsrelatedtoourshare-basedcompensationwillberecordeddirectlyintoourresultsofoperations.Additionally,excesstaxbenefitsafteradoptionareclassifiedascashflowsfromoperatingactivitiesinsteadofcashflowsfromfinancingactivities.Weadoptedthisstandardonaprospectivebasisandduring2017,$5.2millionofexcesstaxbenefitwasrecognizeddirectlytothetaxprovisionandclassifiedascashflowsfromoperatingactivities.</p><p>NewAccountingStandardsNotYetAdoptedThefollowingnewFASBAccountingStandardsUpdates,whicharenotyetadopted,havebeengroupedbytheirrequiredeffectivedates:</p><p>FirstQuarterof2018ASU2014-09,RevenuefromContractswithCustomers(Topic606)affectsanyentitythateitherentersintocontractswithcustomerstotransfergoodsorservicesorentersintocontractsforthetransferofnonfinancialassetsunlessthosecontractsarewithinthescopeofotherstandards(e.g.,insurancecontractsorleasecontracts).InAugust2015,theFASBissuedAccountingStandardsUpdateNo.2015-14(ASU2015-14),RevenuefromContractswithCustomers(Topic606):DeferraloftheEffectiveDatewhichdeferstheeffectivedateofASU2014-09tointerimandannualreportingperiodsbeginningafterDecember15,2017.TheFASBhascontinuedtoissueaccountingstandardsupdatestoclarifyandprovideimplementationguidancerelatedtoRevenuefromContractswithCustomers,includingASU2016-08RevenuefromContractwithCustomers:PrincipalversusAgentConsiderations,ASU2016-10RevenuefromContractswithCustomers:IdentifyingPerformanceObligationsandLicensing,andASU2016-12RevenuefromContractswithCustomers:Narrow-ScopeImprovementsandPracticalExpedients.Anentityshouldapplytheamendmentseitherretrospectivelytoeachpriorreportingperiodpresentedandtheentitymayelectcertainpracticalexpedients(thefullretrospectivemethodofadoption);or,retrospectivelywiththecumulativeeffectofinitiallyapplyingthisASUrecognizedatthedateofinitialapplication(themodifiedretrospectivemethodofadoption).</p><p>Wewilladoptthisstandardonitseffectivedate,January1,2018usingthemodifiedretrospectivemethod.Thenewstandardislargelyconsistentwiththeexistingguidanceandcurrentpracticesappliedbyourbusinessandwedonotexpectamaterialimpactonourexistingrevenueaccountingpolicies.Thenewstandardalsorequiresadditionaldisclosuresincludingquantitativeandqualitativedisclosuresaboutthenature,amount,timinganduncertaintyof</p></li><li><p>revenueandcashflowsfromcustomercontracts.TheCompanyisintheprocessoffinalizingchangestosupportrecognitionanddisclosureunderthenewrevenuestandard.</p><p>ASU2016-01,FinancialInstruments-Overall(Subtopic825-10):RecognitionandMeasurementofFinancialAssetsandFinancialLiabilitieswillimpactcertainaspectsofrecognition,measurement,presentationanddisclosureoffinancialinstruments.ThenewguidancemakestargetedimprovementstoexistingU.S.GAAPby:</p><p>Theamendmentswillbecomeeffectiveforourfinancialstatementsbeginninginthefirstquarterof2018andrequireadoptionusingacumulative-effectadjustmenttothebalancesheetasofthebeginningofthefiscalyearofadoption.Theimplementationoftheamendmentsisexpectedtoincreasethevolatilityofnetincomeasgainsorlossesinfutureperiodswillberecognizedinnetincome;howevertheextentofanyvolatilitywillbedependentuponthesignificanceoftheequityinvestmentsatthetimeofadoption.AtDecember31,2017,wehadanetunrealizedlossof$0.9millionnetoftax,andatDecember31,2016,wehadanetunrealizedloss,netoftax,of$0.2millionfromequityinvestmentsrecordedinequity,respectively.</p><p>ASUNo.2016-15,StatementofCashFlows(Topic320):ClassificationofCertainCashReceiptsandCashPayments(aconsensusoftheFASBEmergingIssuesTaskForce),addresseseightclassificationissuesrelatedtothestatementofcashflows:</p><p>requiringequityinvestments(exceptthoseaccountedforundertheequitymethodofaccounting,orthosethatresultinconsolidationoftheinvestee)tobemeasuredatfairvaluewithchangesinfairvaluerecognizedinnetincome;</p><p>requiringpublicbusinessentitiestousetheexitpricenotionwhenmeasuringthefairvalueoffinancialinstrumentsfordisclosurepurposes;</p><p>requiringseparatepresentationoffinancialassetsandfinancialliabilitiesbymeasurementcategoryandformoffinancialasset(i.e.,securitiesorloansandreceivables)onthebalancesheetortheaccompanyingnotestothefinancialstatements;</p><p>eliminatingtherequirementforpublicbusinessentitiestodisclosethemethod(s)andsignificantassumptionsusedtoestimatethefairvaluethatisrequiredtobedisclosedforfinancialinstrumentsmeasuredatamortizedcostonthebalancesheet;and</p><p>requiringareportingorganizationtopresentseparatelyinothercomprehensiveincometheportionofthetotalchangeinthefairvalueofaliabilityresultingfromachangeintheinstrument-specificcreditrisk(alsoreferredtoasowncredit)whentheorganizationhaselectedtomeasuretheliabilityatfairvalueinaccordancewiththefairvalueoptionforfinancialinstruments.</p><p>debtprepaymentordebtextinguishmentcosts;</p><p>settlementofzero-couponbonds;</p><p>contingentconsiderationpaymentsmadeafterabusinesscombination;</p><p>proceedsfromthesettlementofinsuranceclaims;</p><p>proceedsfromthesettlementofcorporate-ownedlifeinsurancepolicies,includingbank-ownedlifeinsurancepolicies;</p><p>distributionsreceivedfromequitymethodinvestees;</p><p>beneficialinterestsinsecuritizationtransactions;and</p><p>separatelyidentifiablecashflowsandapplicationofthepredominanceprinciple.</p></li><li><p>WewilladoptASU2016-15onJanuary1,2018.WewillberequiredtoapplythisASUusingaretrospectivetransitionmethodtoeachperiodpresentedotherthanforissueswhereapplicationwouldbeimpracticableinwhichcasewewillbepermittedtoapplytheamendmentsforthoseissuesprospectivelyasoftheearliestdatepracticable.WedonotexpectanymaterialimpactfromtheadoptionofASU2016-15onourconsolidatedfinancialstatements.</p><p>ASU2016-16,IncomeTaxes(Topic740):Intra-EntityTransfersofAssetsOtherThanInventory,aimstoimprovetheaccountingfortheincometaxconsequencesofintra-entitytransfersofassetsotherthaninventory.Thisamendmentrequiresanentitytorecognizetheincometaxconsequencesofanintra-entitytransferofanassetotherthaninventorywhenthetransferoccurs.Theamendmentsinthisupdateshouldbeappliedonamodifiedretrospectivebasisthroughacumulative-effectadjustmentdirectlytoretainedearningsasofthebeginningoftheperiodofadoption.WewilladoptASU2016-16onJanuary1,2018withoutmaterialimpact.</p><p>ASU2016-18,StatementofCashFlows(Topic320):RestrictedCash,requiresentitiestoshowthechangesinthetotalofcash,cashequivalents,restrictedcashandrestrictedcashequivalentsinthestatementofcashflows.Asaresult,entitieswillnolongerpresenttransfersbetweencashandcashequivalentsandrestrictedcashandrestrictedcashequivalentsinthestatementofcashflows.Theamendmentsinthisupdateshouldbeappliedusingaretrospectivetransitionmethodtoeachperiodpresented.ThisupdateiseffectiveforusonJanuary1,2018.ThereisnoimpactfromtheadoptionofASU2016-18onourconsolidatedfinancialstatementsotherthantheeffectofaretrospectiveadjustmentforthe$6.3millionrestrictedcashbalanceheldasofJanuary1,2016inthecomparativeConsolidatedStatementsofCashFlows.</p><p>ASU2017-01,BusinessCombinations(Topic805):ClarifyingtheDefinitionofaBusiness,clarifiesandprovidesamorerobustframeworktouseindeterminingwhenasetofassetsandactivitiesisabusiness.Theamendmentsinthisupdateshouldbeappliedprospectivelyonoraftertheeffectivedate.WeadoptedthisupdatebeginningJanuary1,2018.</p><p>ASU2017-09,Compensation-StockCompensation(Topic718):ScopeofModificationAccounting,clarifieswhentoaccountforachangetothetermsorconditionsofashare-basedpaymentawardasamodification.Underthenewguidance,modificationaccountingisrequiredonlyifthefairvalue,thevestingconditions,ortheclassificationoftheaward(asequityorliability)changesasaresultofthechangeintermsorconditions.TheguidanceiseffectiveforusprospectivelyforannualperiodsbeginningonJanuary1,2018.</p><p>FirstQuarterof2019ASU2016-02,Leases(Topic842)aimstoincreasetransparencyandcomparabilityamongorganizationsbyrecognizingleaseassetsandleaseliabilitiesonthebalancesheetanddisclosingkeyinformationaboutleasingarrangements.ASU2016-02willbecomeeffectiveforusbeginninginthefirstquarterof2019andrequiresmodifiedretrospectiveapplicationforleasesthatexistorareenteredintoafterthebeginningoftheearliestcomparativeperiodinthefinancialstatements.Wedonotplantoearlyadoptthisstandardandweanticipatethattheadoptionofthisstandardwillrequirechangestooursystemsandprocesses.Weexpectthisstandardtoincreasetotalassetsandtotalliabilities,however,wearecurrentlyevaluatingthepotentialsizeoftheimpactthatASU2016-02mayhaveonourconsolidatedfinancialstatements.</p><p>ASU2017-12,DerivativesandHedging(Topic815):TargetedImprovementstoAccountingforHedgingActivities,willmakemorefinancialandnonfinancialhedgingstrategieseligibleforhedgeaccounting.Italsoamendsthepresentationanddisclosurerequirementsandchangeshowcompaniesassesseffectiveness.Itisintendedtomorecloselyalignhedgeaccountingwithcompaniesriskmanagementstrategies,simplifytheapplicationofhedgeaccounting,andincreasetransparencyastothescopeandresultsofhedgingprograms.ThenewguidancewillbecomeeffectiveforusbeginningonJanuary1,2019byapplyingamodifiedretrospectiveapproachtoexistinghedgingrelationshipasoftheadoptiondate.Underthemodifiedretrospectiveapproach,entitieswithcashflowornetinvestmenthedgeswillmake(1)acumulative-effectadjustmenttoaccumulatedothercomprehensiveincomeso</p></li><li><p>thattheadjustedamountrepresentsthecumulativechangeinthehedginginstrumentsfairvaluesincehedgeinception(lessanyamountsthatshouldhavebeenrecognizedinearningsunderthenewaccountingmodel)and(2)acorrespondingadjustmenttoopeningretainedearningsasofthemostrecentperiodpresentedonthedateofadoption.WearecurrentlyevaluatingthepotentialimpactASU2017-12mayhaveonourconsolidatedfinancialstatements.</p><p>FirstQuarterof2020ASU2016-13,FinancialInstruments-CreditLosses(Topic326):MeasurementofCreditLossesonFinancialInstruments.providesfinancialstatementuserswithmoredecision-usefulinformationabouttheexpectedcreditlossesonfinancialinstrumentsandothercommitmentstoextendcreditheldbyareportingentityateachreportingdate.Toachievethisobjective,theamendmentsinASU2016-13replacetheincurredlossimpairmentmethodologyincurrentGAAPwithamethodologythatreflectsexpectedcreditlossesandrequiresconsiderationofabroaderrangeofreasonableandsupportableinformationtoinformcreditlossestimates.Thenewguidancewillbecomeeffectiveforusbyapplyingthestandard'sprovisionsasacumulative-effectadjustmenttoretainedearningsbeginningonJanuary1,2020.WearecurrentlyevaluatingthepotentialimpactASU2016-13mayhaveonourconsolidatedfinancialstatements.</p><p>ASU2017-04,IntangiblesGoodwillandOther(Topic350):SimplifyingtheTestforGoodwillImpairment,removesStep2ofthegoodwillimpairmenttest.Agoodwillimpairmentwillnowbetheamountbywhichareportingunitscarryingvalueexceedsitsfairvalue,nottoexceedthecarryingamountofgoodwill.ASU2017-04iseffectiveforusforannualperiodsbeginningJanuary1,2020andearlyadoptionispermitted.Thenewguidanceisrequiredtobeappliedonaprospectivebasis.Wearecurrentlyevaluatingtheimpacttheadoptionofthisnewstandardwillhaveonourfinancialpositionandresultsofoperations.</p><p>3.SummaryofSignificantAccountingPoliciesandCriticalAccountingEstimates</p><p>PrinciplesofConsolidationTheconsolidatedfinancialstatementsincludetheaccountsofQIAGENN.V.anditswholly-ownedsubsidiaries.Allsignificantintercompanyaccountsandtr...</p></li></ul>

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