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Techne Corporation Releases Unaudited Second Quarter Results for Fiscal Year 2009
Date:2/3/2009

MINNEAPOLIS, Feb. 3 /PRNewswire-FirstCall/ -- Techne Corporation's (Nasdaq: TECH) consolidated net earnings for the quarter ended December 31, 2008 were $23.6 million or $.62 per diluted share compared with $23.6 million or $.60 per diluted share for the quarter ended December 31, 2007. For the six months ended December 31, 2008, Techne's consolidated net earnings increased 11.8% to $52.2 million or $1.36 per diluted share compared with $46.7 million or $1.18 per diluted share for the six months ended December 31, 2007. Net earnings as a percentage of net sales improved to 39.8% for the six months ended December 30, 2008 from 38.9% in the first six months of last year.

Foreign currency fluctuations and general economic conditions had a negative impact on consolidated net sales and earnings in the quarter ended December 31, 2008. 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 $1.8 million ($.05 per diluted share) for the six months ended December 31, 2008, as compared to the same periods in last fiscal year.

Consolidated net sales for the quarter and six months ended December 31, 2008 were $61.9 million and $131.2 million, respectively. This was a 0.4% decrease and 9.2% increase from the quarter and six months ended December 31, 2007, 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 5.0% and 11.5% for the quarter ended and six months ended December 31, 2008, 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 $40.3 million and $86.5 million for the quarter and six months ended December 31, 2008, increases of 3.0% and 10.8%, respectively, from the comparable prior-year periods. North American biotechnology sales to industrial and academic customers grew at less than 2% during the second quarter of fiscal 2009. The Company attributes the lower second quarter sales growth rate to customer caution in a time of economic uncertainty.

R&D Europe's net sales for the quarter and six months ended December 31, 2008 were $17.3 million and $36.2 million, a decrease of 9.2% and an increase of 5.1%, respectively, from the same prior-year periods. R&D Europe's net sales increased 8.6% for the quarter and 13.0% for the six months ended December 31, 2008 when measured at currency rates in effect in the comparable prior-year periods.

Hematology net sales for the quarter and six months ended December 31, 2008 were $4.3 million and $8.5 million, increases of 7.2% and 11.5%, respectively, compared to the quarter and six months ended December 31, 2007.

Consolidated gross margins were 78.3% and 79.8% for the quarter and six months ended December 31, 2008 respectively, compared to 79.5% and 79.3% for the quarter and six months ended December 31, 2007. The decrease in gross margins in the second quarter was primarily caused by lower gross margins in Europe resulting from unfavorable exchange rates.

Selling, general and administrative expenses for the quarter and six months ended December 31, 2008 decreased $942,000 (8.9%) and $192,000 (1.0%), respectively from the quarter and six months ended December 31, 2007. The decrease in selling, general and administrative expenses from the comparable prior-year periods were the result of the following (in thousands):



                                                     Quarter     Six Months
    Change in exchange rates to convert foreign
     expenses to U.S. dollars                         $(685)         $(887)
    Reduction in profit sharing expense                (670)          (617)
    Other, including annual wage, salary and
     benefits increases                                 413          1,312
                                                      $(942)         $(192)


Second quarter selling, general and administrative expense increased from the first quarter of fiscal 2009 due primarily to costs associated with production, printing and mailing of the annual catalog and additional expense as a result of the annual grant of stock options to the Company's Board of Directors.

Research and development expenses increased $283,000 (5.1%) and $1.0 million (9.4%), respectively, for the quarter and six months ended December 31, 2008 from the comparable prior-year periods.

Interest income decreased $1.0 million and $1.2 million for the quarter and six months ended December 31, 2008, 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 was 30.8% for the quarter and 32.3% for the six months ended December 31, 2008 as compared to 33.6% for the quarter and six months ended December 31, 2007. Income tax expense in the second quarter of fiscal 2009 benefited from the renewal of the U.S. research and development credit. The $695,000 research and development tax credit for the quarter ended December 31, 2008, included credit for the January to June 2008 period in addition to a credit for the current year six-month period. Without significant business developments, the Company expects its fiscal 2009 effective income tax rate to range from approximately 32.5% to 33.5%.

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 960,000 shares of its common stock during the second quarter of fiscal 2009 for approximately $62.7 million. Approximately $20.0 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.


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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            SIX MONTHS ENDED
                             12/31/08     12/31/07     12/31/08     12/31/07
    Net sales                 $61,876      $62,142     $131,200     $120,129
    Cost of sales              13,430       12,751       26,516       24,855
    Gross margin               48,446       49,391      104,684       95,274
    Operating expenses:
      Selling, general and
       administrative           9,703       10,645       18,543       18,735
      Research and development  5,846        5,562       11,756       10,743
      Amortization of
       intangible assets          240          282          480          570
        Total operating
         expenses              15,789       16,489       30,779       30,048
    Operating income           32,657       32,902       73,905       65,226
    Other income (expense):
      Interest income           2,205        3,252        5,092        6,250
      Other non-operating
       expense, net              (712)        (573)      (1,899)      (1,142)
        Total other income      1,493        2,679        3,193        5,108
    Earnings before income
     taxes                     34,150       35,581       77,098       70,334
    Income taxes               10,528       11,942       24,883       23,623
    Net earnings              $23,622      $23,639      $52,215      $46,711
    Earnings per share:
     Basic                      $0.62        $0.60        $1.36        $1.18
     Diluted                    $0.62        $0.60        $1.36        $1.18
    Weighted average common
     shares outstanding:
     Basic                     37,894       39,395       38,259       39,442
     Diluted                   37,992       39,497       38,370       39,542



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

    ASSETS                                          12/31/08        6/30/08
    Cash and equivalents                            $119,595       $166,992
    Short-term available-for-sale investments         24,366         39,353
    Trade accounts receivable                         24,852         31,747
    Other receivables                                  4,701          1,585
    Inventory                                          9,877          9,515
    Other current assets                               9,732          9,241
      Current assets                                 193,123        258,433
    Available-for-sale investments                    85,493         87,384
    Property and equipment, net                       98,352        101,722
    Goodwill and intangible assets, net               28,552         29,032
    Other non-current assets                          28,010         30,798
      Total assets                                  $433,530       $507,369
    LIABILITIES
    Current liabilities                              $13,036        $20,239
    Stockholders' equity                             420,494        487,130
      Total liabilities and equity                  $433,530       $507,369

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SOURCE Techne Corporation
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