Techne Corporation Releases Unaudited Fourth Quarter Results for
Fiscal Year 2004 MINNEAPOLIS, Aug. 10 /PRNewswire-FirstCall/ -- For
the quarter ended June 30, 2004, Techne Corporation's consolidated
net earnings were $13.4 million or 32 cents per share (diluted),
including the effect of a one-time $1.5 million write-down (4 cents
per share) of the Company's investment in Discovery Genomics, Inc.
(DGI). This compares with $12.7 million or 31 cents per share
(diluted) for the quarter ended June 30, 2003. For the fiscal year
ended June 30, 2004, Techne's consolidated net earnings were $52.9
million or $1.27 per share (diluted), (including the effect of the
4 cents per share DGI write- down), compared with $45.4 million or
$1.08 per share (diluted) for the fiscal year ended June 30, 2003.
Fiscal 2004 results were favorably effected by the strength of the
British pound as compared to the U.S. dollar. The impact on
consolidated net earnings of the change in exchange rates used to
convert R&D Europe results from British pounds to U.S. dollars
was $226,000 and $1.1 million for the quarter and year ended June
30, 2004, respectively. Consolidated net sales for the quarter and
fiscal year ended June 30, 2004 were $42.5 million and $161.3
million, respectively, an increase of 8% and 11%, respectively.
R&D Systems' Biotechnology Division net sales for the quarter
and fiscal year ended June 30, 2004 were a record $26.5 million and
$99.4 million, respectively, increases of 9% for both periods.
R&D Europe's net sales for the quarter and fiscal year were
$11.3 million and $44.4 million, increases of 12% and 19%,
respectively. In British pound sterling, R&D Europe's net sales
increased 1% for the quarter and 8% for the fiscal year ended June
30, 2004, respectively. R&D Systems' Hematology Division net
sales for the quarter ended June 30, 2004, decreased 5%, but
increased 5% for the fiscal year. Gross margins, as a percentage of
net sales, increased from 75.7% in the fourth quarter of fiscal
2003 to 79.2% in the fourth quarter of fiscal 2004. For the fiscal
year ended June 30, 2004, gross margins, as a percentage of net
sales, increased from 75.6% to 78.4%. The majority of the increase
in margin percentage was the result of R&D Europe's gross
margins increasing from 43.3% in the fourth quarter of fiscal 2003
to 51.6% in the fourth quarter of fiscal 2004. R&D Europe's
gross margins for the fiscal year ended June 30, 2004 increased
from 41.8% to 51.4%. These increases were due to favorable exchange
rates as a result of a weaker U.S. dollar to the British pound
sterling and the expiration, on June 30, 2003, of a royalty
agreement associated with the purchase of Genzyme, Inc's reagent
business in fiscal 1999. R&D Europe expensed $498,000 and
$1,838,000, respectively, in the quarter and fiscal year ended June
30, 2003 under this agreement. Selling, general and administrative
expenses for the quarter and fiscal year ended June 30, 2004
increased $849,000 (18%) and $2,349,000 (12%), respectively.
R&D Systems' selling, general and administrative expenses
increased $727,000 (24%) and $1,126,000 (9%) for the quarter and
fiscal year ended June 30, 2004, respectively. The majority of the
increase for the quarter and fiscal year was a result of an
increase in profit sharing accrual in the third and fourth quarters
of fiscal 2004. In addition, Techne's corporate expenses increased
$383,000 for the fiscal year ended June 30, 2004. This increase was
the result of higher audit and related fees, directors' and
officers' liability insurance premium increases and consulting fees
associated with compliance with Sarbanes-Oxley. R&D Europe's
selling, general and administrative expenses increased $163,000
(10%) and $839,000 (13%) for the quarter and fiscal year. Most of
this increase was the result of the change in exchange rates used
to convert R&D Europe's expenses from pounds to dollars. In
British pound sterling, R&D Europe's selling, general and
administrative expenses decreased 2% for the quarter and increased
3% for the fiscal year. Research and development expenses for the
quarter ended June 30, 2004 decreased $206,000 (4%), but increased
$191,000 (1%) for the fiscal year ended June 30, 2004. Included in
research and development expenses for each period were the
Company's share of losses by ChemoCentryx, Inc. (CCX) and Discovery
Genomics, Inc. (DGI), development stage companies in which Techne
has invested and the Company's share of losses by Hemerus Medical,
LLC in which the Company invested on January 1, 2004. The portion
of the losses by these companies included in Techne results for the
quarter and fiscal year ended June 30, 2004 were $703,000 and
$2,853,000, respectively, compared to $908,000 and $3,188,000 for
the quarter and fiscal year ended June 30, 2003, respectively.
R&D Systems' internal research and development expenses were
flat for the quarter ended June 30, 2004, but increased $526,000
(3%) for fiscal year 2004. In fiscal 2002 Techne invested $3
million in DGI. Currently, DGI has cash available for approximately
three months of operation and has been unsuccessful to-date in
raising additional equity. As a result, during the fourth quarter
of fiscal 2004, Techne determined that its investment in DGI is
other than temporarily impaired and has written off the remaining
net investment of $1.5 million as a one-time charge in the fourth
quarter of fiscal 2004. The write-off of the DGI investment is not
currently deductible for tax purposes, however, the total $3
million capital loss may be used to offset future taxable capital
gains on other investments. Statements in this earnings release and
elsewhere, which look forward in time involve risks and
uncertainties which 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,
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. 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 and R&D
Europe is a distributor of biotechnology products. TECHNE
CORPORATION 6/30/04 (In thousands, except per share data)
(Unaudited) QUARTER ENDED FISCAL YEAR ENDED 6/30/04 6/30/03 6/30/04
6/30/03 Net sales $42,459 $39,426 $161,257 $145,011 Cost of sales
8,837 9,579 34,887 35,396 Gross margin 33,622 29,847 126,370
109,615 Operating expenses: Selling, general and administrative
5,667 4,819 21,725 19,377 Research and development 5,278 5,483
20,773 20,581 Amortization of intangible assets 400 485 1,599 1,939
Interest expense 164 177 678 974 Interest income (910) (707)
(3,251) (2,933) Impairment loss on equity investment 1,523 -- 1,523
-- Other non-operating expense (income), net 269 48 782 122 12,391
10,305 43,829 40,060 Earnings before income taxes 21,231 19,542
82,541 69,555 Income taxes 7,864 6,866 29,613 24,159 Net earnings
$13,367 $12,676 $52,928 $45,396 Earnings per share: Basic $0.33
$0.31 $1.29 $1.10 Diluted $0.32 $0.31 $1.27 $1.08 Weighted average
common shares outstanding: Basic 41,114 40,807 41,046 41,237
Diluted 41,785 41,496 41,697 42,031 6/30/04 6/30/03 ASSETS Cash and
equivalents $51,201 $39,371 Short-term investments 125,392 79,392
Trade accounts receivable 20,262 18,387 Interest receivable 837 792
Inventory 7,457 6,332 Other current assets 5,774 5,241 Property and
equipment, net 80,504 81,166 Goodwill, net 12,540 12,540 Intangible
assets, net 2,819 4,418 Other non-current assets 18,674 15,638
Total assets $325,460 $263,277 LIABILITIES Current liabilities
$13,459 $10,808 Long-term debt 14,576 15,852 Stockholders' equity
297,425 236,617 Total liabilities and equity $325,460 $263,277
DATASOURCE: Techne Corporation CONTACT: Kathy Backes, Controller of
Techne Corporation, +1-612-379-8854
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