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Techne Corporation Releases Unaudited First Quarter Results For Fiscal Year 2010
Date:10/28/2009

MINNEAPOLIS, Oct. 28 /PRNewswire-FirstCall/ -- Techne Corporation's (Nasdaq: TECH) consolidated net earnings for the quarter ended September 30, 2009 decreased 6.4% to $26.8 million or $.72 per diluted share compared with $28.6 million or $.74 per diluted share for the quarter ended September 30, 2008. The decline in net earnings was mainly due to foreign currency fluctuations, decreased consolidated net sales and lower interest income. Foreign currency fluctuations and general economic conditions continued to have a negative impact on consolidated net sales and earnings in the quarter ended September 30, 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 $566,000 ($.01 per diluted share) for the quarter ended September 30, 2009 as compared to the same prior-year period.

Consolidated net sales for the quarter ended September 30, 2009 were $66.5 million, a 4.0% decrease from the quarter ended September 30, 2008. 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 decreased 2.2% for the quarter ended September 30 from the comparable prior-year period.

Biotechnology net sales, which include sales by R&D Systems' Biotechnology Division, R&D Systems China and BiosPacific, were $44.0 million for the quarter ended September 30, 2009, a decrease of 4.6% from the quarter ended September 30, 2008. The Company attributes the lower sales growth rate to continued customer caution in a time of economic uncertainty and the exceptionally strong growth rate of 18.7% in the first quarter of fiscal 2009 as compared to the same quarter in fiscal 2008. North American biotechnology sales to industrial pharmaceutical and biotechnology customers declined approximately 12.8% during the first quarter of fiscal 2010 as compared to the first quarter of fiscal 2009. Biotechnology sales to North American academic customers and Pacific Rim distributors each grew about 3.9% in the first quarter of fiscal 2010. Biotechnology sales in China grew 30.1% during the first quarter of fiscal 2010 compared to the same prior-year period.

R&D Europe's net sales for the quarter ended September 30, 2009 were $17.8 million, a decrease of 5.8% from the same prior-year period. R&D Europe's net sales increased 0.8% for the quarter ended September 30, 2009 when measured at currency rates in effect in the comparable prior period. Hematology net sales for the quarter ended September 30, 2009 were $4.7 million, an increase of 9.9% compared to the quarter ended September 30, 2008.

Consolidated gross margins were 80.6% for the quarter ended September 30, 2009 compared to 81.1% for the quarter ended September 30, 2008. The decrease in gross margin percent in the quarter was primarily caused by lower gross margins in Europe resulting from comparatively unfavorable exchange rates. The consolidated gross margin percent for the quarter ended September 30, 2009 increased from the quarter ended June 30, 2009 gross margin percentage of 77.4% as a result of higher gross margins in Europe resulting from comparatively favorable exchange rates and an improvement in Hematology gross margins due to higher sales volume.

Selling, general and administrative expenses for the quarter ended September 30, 2009 decreased $802,000 (9.1%) from the quarter ended September 30, 2009. The decrease in selling, general and administrative expenses from the comparable prior-year period was the result of lower profit sharing expense of $635,000 and the effect of the change in exchange rates used to convert foreign expenses to U.S. dollars of $198,000.

Interest income decreased $1.7 million for the quarter ended September 30, 2009 from the comparable prior-year period primarily as a result of lower rates of return on cash and available-for-sale investments.

The effective tax rate for the quarter ended September 30, 2009 was 32.6% compared to 33.4% for the quarter ended September 30, 2008. The U.S. credit for research and development expired at the end of calendar 2007 and was not renewed until the quarter ended December 31, 2008, resulting in a higher effective tax rate for the quarter ended September 30, 2008.

Forward Looking Statements:

Our press releases may contain forward-looking statements within the meaning of the Private Litigation Reform Act. Such statements 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 our press releases 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
                                                 ----------------
                                                 9/30/09  9/30/08
                                                 -------  -------
    Net sales                                    $66,534  $69,324
    Cost of sales                                 12,901   13,086
                                                  ------   ------
    Gross margin                                  53,633   56,238
                                                  ------   ------
    Operating expenses:
       Selling, general and administrative         8,038    8,840
       Research and development                    6,154    5,910
       Amortization of intangible assets             240      240
                                                     ---      ---
          Total operating expenses                14,432   14,990
                                                  ------   ------
    Operating income                              39,201   41,248
    Other income (expense):
       Interest income                             1,168    2,887
       Other non-operating expense, net             (662)  (1,187)
                                                   -----  -------
           Total other income                        506    1,700
                                                     ---    -----
    Earnings before income taxes                  39,707   42,948
    Income taxes                                  12,935   14,355
                                                  ------   ------
    Net earnings                                 $26,772  $28,593
                                                 =======  =======
    Earnings per share:
      Basic                                        $0.72    $0.74
      Diluted                                      $0.72    $0.74
    Weighted average common shares outstanding:
      Basic                                       37,245   38,624
      Diluted                                     37,339   38,747

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


    ASSETS                                          9/30/09    6/30/09
    ------                                          ------     -------
    Cash and equivalents                           $174,757   $160,940
    Short-term available-for-sale investments        52,518     41,947
    Trade accounts receivable                        30,334     29,516
    Other receivables                                 1,391      1,637
    Inventory                                        12,468     11,269
    Other current assets                             10,416     10,158
                                                     ------     ------
      Current assets                                281,884    255,467
                                                    -------    -------
    Available-for-sale investments                   52,612     61,863
    Property and equipment, net                      98,806    100,133
    Goodwill and intangible assets, net              27,832     28,072
    Other non-current assets                         25,912     26,470
                                                     ------     ------
      Total assets                                 $487,046   $472,005
                                                   ========   ========
    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------
    Current liabilities                             $16,040    $15,523
    Stockholders' equity                            471,006    456,482
                                                    -------    -------
      Total liabilities and stockholders' equity   $487,046   $472,005
                                                   ========   ========

SOURCE Techne Corporation


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SOURCE Techne Corporation
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