TECHNE CORPORATION RELEASES UNAUDITED FOURTH QUARTER
RESULTS FOR FISCAL YEAR 2003
Minneapolis/August 12, 2003/--For the three months ended June 30, 2003,
Techne Corporation's consolidated net earnings were $12,676,548 or 31 cents
per share (diluted), compared with a loss of $303,659 or a 1 cent per share
loss (diluted) in the fourth quarter of fiscal 2002. For the fiscal year
ended June 30, 2003, Techne's consolidated net earnings were $45,396,293 or
$1.08 per share (diluted) compared with $27,129,669 or 64 cents per share
last year. Techne's results for the fourth quarter of fiscal 2002 included a
$17.5 million litigation settlement with Amgen, Inc. The after-tax amount of
the charge to Techne's results for the fourth quarter of last year was
approximately $11.4 million or 27 cents per share.
Consolidated net sales for the quarter and fiscal year ended June 30, 2003
were both records of $39,425,932 and $145,010,900, respectively. This was
an increase of $3,790,390 or 11% and $14,110,505 or 11% from the fourth
quarter and prior fiscal year. R&D Systems' Biotechnology Division net sales
for the quarter and fiscal year increased $1,512,852 (7%) and $6,309,833
(7%). R&D Systems' Hematology Division net sales for the quarter and fiscal
year increased $442,351 (10%) and $1,095,382 (7%). R&D Europe's net sales
for the quarter and fiscal year increased $1,835,187 (22%) and $6,705,290
(22%). In British pounds, R&D Europe's net sales increased 11% for both the
quarter and fiscal year. Adjusted for the effect of changes in foreign
exchange rates, consolidated net sales increased 8% for both the fourth
quarter and fiscal year.
Gross margins, as a percentage of sales, decreased slightly from 76.0% in the
fourth quarter of fiscal 2002 to 75.7% in fiscal 2003. However, for the full
fiscal year, gross margins improved from 75.2% in fiscal 2002 to 75.6% in
fiscal 2003. Gross margins vary slightly from quarter to quarter based on
product mix and sales levels.
Selling, general and administrative expenses for the quarter and fiscal year
ended June 30, 2003 decreased $1,067,190 and $422,683 from the prior year,
respectively. The decrease was mainly the result of lower employee profit
sharing and stock bonus contributions.
Research and development expenses for the fourth quarter and fiscal year
ended June 30, 2003 increased $754,623 (16%) and $3,111,076 (18%),
respectively. Part of the increase in each period was due to increased
losses by ChemoCentryx, Inc. (CCX) and Discovery Genomics, Inc. (DGI),
development stage companies in which Techne has invested. The portion of the
losses by these two companies included in Techne results for the quarter and
fiscal year ended June 30, 2003 were $908,190 and $3,187,902 ($.02 and $.08
per diluted share), respectively, compared to $814,382 and $1,855,450 ($.02
and $.04 per diluted share), respectively, in the fourth quarter and fiscal
year ended June 30, 2002. R&D Systems' internal research and development
expenses for the fourth quarter and fiscal year increased $660,816 (17%) and
$1,778,624 (11%), respectively. R&D Systems released 1,015 new products in
fiscal 2003 compared to 856 in fiscal 2002.
On July 1, 2002, Techne adopted Statement of Financial Accounting Standards
(SFAS) No. 142, "Goodwill and Other Intangible Assets". Goodwill
amortization of $1,567,500 and $6,270,000 was expensed in the fourth quarter
and fiscal year ended June 30, 2002, respectively, but is no longer amortized
under SFAS No. 142. The after tax effect of the goodwill expense in the
fourth quarter and fiscal 2002 was $.02 and $.09 per diluted share,
respectively.
Interest expense for the fourth quarter and fiscal year ended June 30, 2003
decreased $146,955 and $346,699, respectively due to the change from a fixed
rate of 7% to a floating interest rate (currently at 4%) on a mortgage note
payable. Meanwhile, interest income for the same periods decreased $267,835
and $803,959, respectively, due to lower returns on short-term investments.
The income tax rate increased in fiscal 2003 as a result of changes in state
income tax regulations that resulted in $666,000 state income tax expense in
fiscal 2003 compared to a state tax credit of $1 million in the fourth
quarter of fiscal 2002.
Thomas E. Oland, Techne's President and CEO, stated "We were very pleased
with fiscal 2003 results for R&D Europe and R&D Systems' Hematology Division.
Both exceeded our budget expectations for sales and earnings. R&D Europe
also benefited from favorable currency exchange rates throughout the year.
Our R&D Systems' Biotechnology Division did not do as well as we had
expected. This was due to a slowdown in research spending by our
pharmaceutical and biotechnology customers that began in our second fiscal
quarter. We attribute the slowdown to general economic factors and recent
world events. We believe the worst of the slowdown is behind us as we have
seen sequential improvement in revenue growth in the third and fourth
quarters of fiscal 2003. Further, we believe that our continuing focus on
new product development and expanding product lines will support future
growth."
During fiscal 2003, Techne purchased and retired 1,026,500 shares of common
stock at a market value of $22,512,572. From the start of the Company's
repurchase program in May 1995, the Board of Directors has authorized,
subject to market conditions and share price, the purchase and retirement of
up to a total of $40 million of common stock. Through July 31, 2003,
2,397,700 shares have been purchased at a market value of $33,176,069.
On a final note, Techne is pleased to announce the appointment of Mr. Robert
V. Baumgartner, President and CEO of the Center for Diagnostic Imaging, Inc.,
as a Director and member of the Audit Committee. Mr. Baumgartner is a CPA
and an experienced executive with a diverse background in public accounting,
manufacturing, distribution, retail and medical industries. His combination
of business experience and former background as a chief financial officer,
treasurer and controller, combined with his current responsibilities as a
CEO, are all essential qualifications that will benefit Techne. Mr.
Baumgartner replaces Mr. Lowell E. Sears, who retired after nine years of
service as a Techne Director.
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.
Contact: Kathy Backes, Controller (612) 379-8854
TECHNE CORPORATION
6/30/03
(UNAUDITED)
QUARTER ENDED FISCAL YEAR ENDED
------------------------ --------------------------
6/30/03 6/30/02 6/30/03 6/30/02
----------- ----------- ------------ ------------
Net sales $39,425,932 $35,635,542 $145,010,900 $130,900,395
Cost of sales 9,579,002 8,539,454 35,396,174 32,507,846
----------- ----------- ------------ ------------
Gross margin 29,846,930 27,096,088 109,614,726 98,392,549
Operating expenses:
Selling, general and
administrative 4,818,843 5,886,033 19,376,538 19,799,221
Research and
development 5,483,826 4,729,203 20,581,343 17,470,267
Amortization of
intangible assets 484,812 2,137,311 1,939,250 8,549,246
Litigation settlement -- 17,500,000 -- 17,500,000
Interest expense 176,281 323,236 973,780 1,320,479
Interest income (706,865) (974,700) (2,933,348) (3,737,307)
Other non-operating
expense/(income) 47,485 (228,336) 121,870 (245,026)
----------- ----------- ------------ ------------
10,304,382 29,372,747 40,059,433 60,656,880
----------- ----------- ------------ ------------
Earnings before
income taxes 19,542,548 (2,276,659) 69,555,293 37,735,669
Income taxes 6,866,000 (1,973,000) 24,159,000 10,606,000
----------- ----------- ------------ ------------
Net earnings $12,676,548 $ (303,659) $ 45,396,293 $ 27,129,669
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Earnings per share:
Basic $ 0.31 $ (0.01) $ 1.10 $ 0.65
Diluted $ 0.31 $ (0.01) $ 1.08 $ 0.64
Weighted average
common shares
outstanding:
Basic 40,807,361 41,565,855 41,237,473 41,507,727
Diluted 41,496,295 42,494,525 42,031,510 42,522,664
6/30/03 6/30/02
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ASSETS
Cash and equivalents $ 39,371,062 $ 26,392,480
Short-term investments 78,130,269 70,671,341
Receivables 20,440,270 19,413,618
Inventory 6,332,248 6,077,035
Other current assets 5,549,888 6,523,275
Property and equipment (net) 81,166,311 70,312,602
Intangible assets (net) 16,957,750 18,897,000
Other non-current assets 15,329,330 19,959,608
------------ ------------
Total assets $263,277,128 $238,246,959
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LIABILITIES
Current liabilities $ 10,808,033 $ 14,629,524
Long-term debt 15,851,901 17,100,652
Stockholders' equity 236,617,194 206,516,783
------------ ------------
Total liabilities and equity $263,277,128 $238,246,959
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