Techne Corporation Releases Unaudited Third Quarter Results for Fiscal Year 2009

MINNEAPOLIS, April 28 /PRNewswire-FirstCall/ — Techne Corporation’s (Nasdaq: TECH) consolidated net earnings for the quarter ended March 31, 2009 decreased 6.6% to $27.6 million or $.74 per diluted share compared with $29.6 million or $.76 per diluted share for the quarter ended March 31, 2008. For the nine months ended March 31, 2009, Techne’s consolidated net earnings increased 4.7% to $79.9 million or $2.10 per diluted share compared with $76.3 million or $1.94 per diluted share for the nine months ended March 31, 2008. Net earnings as a percentage of net sales was 40.1% for the nine months ended March 31, 2009 as compared to 40.2% in the first nine months of last year.

Foreign currency fluctuations and general economic conditions continued to have a negative impact on consolidated net sales and earnings in the quarter ended March 31, 2009. The change in exchange rates used to convert foreign currencies (primarily British pound sterling and euros) to U.S. dollars reduced net earnings by $1.5 million ($.04 per diluted share) for the quarter and $3.3 million ($.09 per diluted share) for the nine months ended March 31, 2009, as compared to the same periods in last fiscal year.

Consolidated net sales for the quarter and nine months ended March 31, 2009 were $67.9 million and $199.1 million, respectively. This was a 2.4% decrease and a 5.0% increase from the quarter and nine months ended March 31, 2008, respectively. Consolidated net sales were negatively affected by the strength of the U.S. dollar as compared to foreign currencies. Excluding the effect of changes in foreign currency exchange rates, consolidated net sales increased 2.9% and 8.3% for the quarter and nine months ended March 31, 2009, respectively, from the comparable prior year periods.

Biotechnology net sales, which include sales by R&D Systems’ Biotechnology Division, R&D Systems China and BiosPacific, were $45.1 million for the quarter ended March 31, 2009, essentially the same as in the quarter ended March 31, 2008. Biotechnology sales were $131.6 million for the nine months ended March 31, 2009, an increase of 6.9% over the same period last year. North American biotechnology sales to industrial pharmaceutical and biotechnology customers declined approximately 5% during the third quarter of fiscal 2009. Biotechnology sales to academic and Pacific Rim distributor customers grew about 3% during the same period. The Company attributes the lower third quarter sales growth rate to customer caution in a time of economic uncertainty.

R&D Europe’s net sales for the quarter and nine months ended March 31, 2009 were $18.3 million and $54.5 million, decreases of 9.6% and 0.3%, respectively, from the same prior-year periods. R&D Europe’s net sales increased 8.5% and 11.3% for the quarter and nine months ended March 31, 2009 when measured at currency rates in effect in the comparable prior periods.

Hematology net sales for the quarter and nine months ended March 31, 2009 were $4.4 million and $12.9 million, increases of 5.4% and 9.3%, respectively, compared to the quarter and nine months ended March 31, 2008.

Consolidated gross margins were 78.9% and 79.5% for the quarter and nine months ended March 31, 2009, respectively, compared to 79.7% and 79.4% for the quarter and nine months ended March 31, 2008, respectively. The decrease in gross margins in the third quarter was primarily caused by lower gross margins in Europe resulting from unfavorable exchange rates.

Selling, general and administrative expenses for the quarter and nine months ended March 31, 2009 decreased $1.9 million (21.5%) and $2.1 million (7.7%), respectively from the quarter and nine months ended March 31, 2008. The decrease in selling, general and administrative expenses from the comparable prior-year periods were the result of the following (in thousands):

                                                       Quarter    Nine Months
                                                      --------    -----------
    Reduction in profit sharing expense               $(1,326)      $(1,943)
    Change in exchange rates to convert foreign
     expenses to U.S. dollars                            (651)       (1,538)
    Other, including annual wage, salary and
     benefits increases                                    44         1,356
                                                      --------      --------
                                                      $(1,933)      $(2,125)
                                                      ========      ========

Research and development expenses decreased $30,000 (0.5%) and increased $983,000 (5.9%), respectively, for the quarter and nine months ended March 31, 2009 from the comparable prior-year periods.

Interest income decreased $1.6 million and $2.8 million for the quarter and nine months ended March 31, 2009, respectively, from the comparable prior-year periods, primarily as a result of lower rates of return on cash and available-for-sale investments and, to a lesser extent, to lower cash and available-for-sale investment balances.

The effective tax rate for both the quarter and nine months ended March 31, 2009 was 32.3% as compared to effective tax rates of 31.2% and 32.7%, respectively, from the same prior-year periods. The effective rate in the quarter ended March 31, 2008 was positively impacted by changes in state apportionment estimates. The Company expects its fiscal 2009 effective income tax rate to range from approximately 32.0% to 33.0%.

In November 2007, the Company’s Board of Directors authorized the repurchase and retirement of up to $150 million of the Company’s common stock. The Company repurchased approximately 213,000 shares of its common stock during the third quarter of fiscal 2009 for approximately $10.5 million. Approximately $7.5 million remains available for the repurchase of shares under this authorization.

Forward Looking Statements:

This earnings release contains forward-looking statements within the meaning of the Private Litigation Reform Act. These statements, including the Company’s expectations as to consolidated income tax rates, involve risks and uncertainties that may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company’s actual results: the introduction and acceptance of new biotechnology and hematology products, the levels and particular directions of research by the Company’s customers, the impact of the growing number of producers of biotechnology research products and related price competition, general economic conditions, the retention of hematology OEM and proficiency survey business, the impact of currency exchange rate fluctuations, and the costs and results of research and product development efforts of the Company and of companies in which the Company has invested or with which it has formed strategic relationships.

For additional information concerning such factors, see the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements we make in this release due to new information or future events. Investors are cautioned not to place undue emphasis on these statements.

Techne Corporation has two operating subsidiaries: Research and Diagnostic Systems, Inc. (R&D Systems) of Minneapolis, Minnesota and R&D Systems Europe, Ltd. (R&D Europe) of Abingdon, England. R&D Systems is a specialty manufacturer of biological products. R&D Systems has two subsidiaries, BiosPacific, Inc. (BiosPacific), located in Emeryville, California and R&D Systems China Co. Ltd., (R&D China), located in Shanghai, China. BiosPacific is a worldwide supplier of biologics to manufacturers of in vitro diagnostic systems and immunodiagnostic kits. R&D China and R&D Europe distribute biotechnology products.

                                    TECHNE CORPORATION
                           CONSOLIDATED STATEMENTS OF EARNINGS
                          (In thousands, except per share data)
                                        (Unaudited)

                                      QUARTER ENDED      NINE MONTHS ENDED
                                    3/31/09    3/31/08   3/31/09    3/31/08
                                    -------    -------   -------    -------
    Net sales                       $67,866    $69,522  $199,066   $189,651
    Cost of sales                    14,316     14,146    40,832     39,001
                                     ------     ------    ------     ------
    Gross margin                     53,550     55,376   158,234    150,650
                                     ------     ------   -------    -------
    Operating expenses:
       Selling, general and
        administrative                7,061      8,994    25,604     27,729
       Research and development       5,809      5,839    17,565     16,582
       Amortization of intangible
        assets                          240        283       720        853
                                        ---        ---       ---        ---
          Total operating expenses   13,110     15,116    43,889     45,164
                                     ------     ------    ------     ------
    Operating income                 40,440     40,260   114,345    105,486
    Other income (expense):
       Interest income                1,504      3,155     6,596      9,405
       Other non-operating
        expense, net                 (1,103)      (423)   (3,002)    (1,565)
                                    -------      -----   -------    -------
           Total other income           401      2,732     3,594      7,840
                                        ---      -----     -----      -----
    Earnings before income taxes     40,841     42,992   117,939    113,326
    Income taxes                     13,200     13,402    38,083     37,025
                                     ------     ------    ------     ------
    Net earnings                    $27,641    $29,590   $79,856    $76,301
                                    =======    =======   =======    =======
    Earnings per share:
     Basic                            $0.74      $0.76     $2.10      $1.94
     Diluted                          $0.74      $0.76     $2.10      $1.94
    Weighted average common shares
     outstanding:
      Basic                          37,427     39,000    37,986     39,296
      Diluted                        37,499     39,108    38,085     39,396

                                    TECHNE CORPORATION
                               CONSOLIDATED BALANCE SHEETS
                                      (In thousands)
                                        (Unaudited)

    ASSETS                                               3/31/09    6/30/08
    ------                                               -------    -------
    Cash and equivalents                                $133,821   $166,992
    Short-term available-for-sale investments             33,296     39,353
    Trade accounts receivable                             31,593     31,747
    Other receivables                                      3,020      1,585
    Inventory                                             10,749      9,515
    Other current assets                                  10,196      9,241
                                                          ------      -----
      Current assets                                     222,675    258,433
                                                         -------    -------
    Available-for-sale investments                        66,925     87,384
    Property and equipment, net                           97,428    101,722
    Goodwill and intangible assets, net                   28,312     29,032
    Other non-current assets                              26,463     30,798
                                                          ------     ------
      Total assets                                      $441,803   $507,369
                                                        ========   ========
    LIABILITIES
    -----------
    Current liabilities                                  $14,914    $20,239
    Stockholders' equity                                 426,889    487,130
                                                         -------    -------
      Total liabilities and equity                      $441,803   $507,369
                                                        ========   ========

SOURCE Techne Corporation