TECHNE CORPORATION RELEASES UNAUDITED FIRST QUARTER
RESULTS FOR FISCAL YEAR 2004
Minneapolis/October 23, 2003/--For the quarter ended September 30, 2003,
Techne Corporation's consolidated net earnings were $12,572,000 or 30 cents
per share (diluted), compared with $10,445,000 or 25 cent per share (diluted)
for the quarter ended September 30, 2002. The improvement in profitability
was the result of increased sales, improved gross margins, reduced losses by
ChemoCentryx, Inc. and tight control of operating expenses.
Consolidated net sales for the first quarter of fiscal 2004 were $37,993,000,
an increase of $3,445,000 or 10% from the first quarter of last year. R&D
Systems' Biotechnology Division net sales for the quarter increased
$1,545,000 (7%), which was slightly better than the fourth quarter fiscal
2003 growth rate. R&D Systems' Hematology Division net sales for the quarter
increased $507,000 (13%). The higher than usual growth in Hematology was
primarily due to a new distributor obtained in January 2003 and growth in OEM
business. R&D Europe's net sales for the quarter increased $1,393,000 (17%).
In British pounds, R&D Europe's net sales increased 13% for the quarter.
Gross margins, as a percentage of sales, increased from 74.9% in the first
quarter of fiscal 2003 to 77.2% in fiscal 2004. The majority of the increase
in margin percentage was the result of R&D Europe's gross margins increasing
from 39.9% in the first quarter of fiscal 2003 to 49.2% in fiscal 2004. This
increase was 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 $408,000 in the quarter ended
September 30, 2002 under this agreement.
Research and development expenses for the first quarter of fiscal 2004
increased $130,000 (3%). 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. The portion of the losses by these two companies
included in Techne results for the quarter ended September 30, 2003 were
$608,000 compared to $697,000 for the quarter ended September 30, 2002. R&D
Systems' internal research and development expenses for the quarter ended
September 30, 2003 increased $219,000 (5%) from the quarter ended September
30, 2002.
The Company's balance sheet continued to strengthen in the first quarter of
fiscal 2004. The Company generated $15.3 million of net cash from operating
activities in the first quarter of fiscal 2004 and cash, cash equivalents and
short-term investments increased to $132 million from $118 million at June
30, 2003.
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
9/30/03
(In thousands, except per share data)
(Unaudited)
QUARTER ENDED
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9/30/03 9/30/02
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Net sales $ 37,993 $ 34,548
Cost of sales 8,663 8,690
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Gross margin 29,330 25,858
Operating expenses:
Selling, general and administrative 5,083 4,951
Research and development 4,963 4,833
Amortization of intangible assets 400 484
Interest expense 175 323
Interest income (726) (790)
Other non-operating expense (income), net 78 150
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9,973 9,951
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Earnings before income taxes 19,357 15,907
Income taxes 6,785 5,462
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Net earnings $ 12,572 $ 10,445
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Earnings per share:
Basic $ 0.31 $ 0.25
Diluted $ 0.30 $ 0.25
Weighted average common
shares outstanding:
Basic 40,965 41,363
Diluted 41,600 42,286
9/30/03 6/30/03
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ASSETS
Cash and equivalents $ 44,020 $ 39,371
Short-term investments 87,868 78,130
Trade accounts receivable 17,902 18,387
Interest receivable 2,109 2,054
Inventory 6,603 6,332
Other current assets 5,643 5,241
Property and equipment, net 81,389 81,166
Goodwill, net 12,540 12,540
Intangible assets, net 4,018 4,418
Other non-current assets 15,209 15,638
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Total assets $277,301 $263,277
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LIABILITIES
Current liabilities $ 10,597 $ 10,808
Long-term debt 15,538 15,852
Stockholders' equity 251,166 236,617
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Total liabilities and equity $277,301 $263,277
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