QIAGEN N.V. Annual Report 2001

On March 20, 1997, the Company sold certain research and licensing agreements valued at $500,000 to a newly
founded company, Coley Pharmaceutical Group, Inc. (Coley) (formerly CpG ImmunoPharmaceuticals, Inc.), for
2,040 shares of its preferred stock. In May 2000 and in June 1999, the Company invested an additional $500,000
and $499,000, respectively, bringing the Company’s total interest to 7.97 percent. At December 31, 2001 and
2000, the Company had receivables from Coley in the amount of $19,000 and $65,000, respectively. The
investment is accounted for under the cost method. In 2001, the Company held one of nine seats on Coley’s Board
of Directors, and members of the Company’s management and Board had interests in Coley totaling 9.9 percent.
The Company periodically reviews the carrying value of these investments for impairment, considering factors such
as the most recent stock transactions and book value from the most recent financial statements. These investments are
included in other assets in the accompanying consolidated balance sheets.
10. INTANGIBLE ASSETS
In September 2001, the Company entered a development, supply and marketing agreement with Polysciences, Inc.
for the development and marketing of certain of Polysciences’ existing and future magnetic polymer technologies. In
exchange for exclusive rights to the technology, the Company gave Polysciences $829,000 and 52,399 common
shares (valued at approximately $746,000 at the time of the exchange). This license is being amortized over the
seven-year contract life.
In January 2000, the Company entered a collaboration agreement with Zeptosens AG for the manufacture and
marketing of products. The Company has purchased licensing rights for approximately $397,000.
Through December 31, 2001, for intangibles acquired before June 30, 2001, all patents and licensing rights were
amortized straight line over periods of three to seven years. The Company recognized amortization expense relating
to patents and licensing rights of $509,000, $450,000 and $384,000 for the years ended December 31, 2001,
2000 and 1999, respectively. The cost of intangible assets is evaluated periodically and adjusted, if necessary, if
later events and circumstances indicate that a permanent decline in value below the current unamortized historical
cost has occurred.
The Company recorded identified intangible assets in connection with the purchase of QIAGEN Genomics, Inc. on
December 31, 1999. These intangible assets were capitalized and consist of developed technology and know-how,
and goodwill. Based on the appraisal, $3.2 million was allocated to developed technology and know-how and
approximately $1.5 million was allocated to goodwill, after purchase accounting adjustments, to be amortized
straight line over seven and ten years, respectively. In each of the years ended December 31, 2001 and 2000, the
Company recorded amortization expense of $607,000 on these intangibles. In connection with the adoption of
SFAS No. 142, amortization over the previously identified lives will cease, and the intangibles will be assessed for
impairment each year using a fair-value-based test.
In connection with its formation, QIAGEN K.K., entered into a business transfer agreement with its minority
shareholder. Pursuant to the agreement, the minority shareholder agreed to transfer to QIAGEN K.K. certain
intangible assets, such as certain ”know-how” and marketing information relating to the sale of the Company’s
products, in exchange for 330 million Japanese Yen (approximately $2.9 million at December 31, 1999). The
Company made the payment of 330 million Japanese Yen on August 31, 1998, and capitalized the intangible assets,
which are being amortized straight-line over seven years. During 2001, 2000 and 1999, the Company recorded
amortization expense relating to these intangible assets of approximately $361,000, $373,000 and $415,000,
respectively. In connection with the adoption of SFAS No. 142, amortization over the previously identified life will
cease, and the intangibles will be assessed for impairment each year using a fair-value-based test.
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11. INCOME TAXES
Under SFAS No. 109, deferred income tax assets or liabilities are computed based on the temporary difference
between the financial statement and income tax bases of assets and liabilities using the enacted marginal income tax
rate in effect for the year in which the differences are expected to reverse. Deferred income tax expenses or credits
are based on the changes in the deferred income tax assets or liabilities from period to period.