Techne Corporation Releases Unaudited Third Quarter Results For
Fiscal Year 2004 MINNEAPOLIS, April 27 /PRNewswire-FirstCall/ --
For the quarter ended March 31, 2004, Techne Corporation's
consolidated net earnings were $14.6 million or 35 cents per share
(diluted), compared with $12.4 million or 30 cents per share
(diluted) for the quarter ended March 31, 2003. For the nine months
ended March 31, 2004, Techne's consolidated net earnings were $39.6
million or 95 cents per share (diluted), compared with $32.7
million or 78 cents per share (diluted) for the nine months ended
March 31, 2003. The improvement in profitability was the result of
increased net sales and improved gross margins. Consolidated net
sales for the quarter and nine months ended March 31, 2004 were
$42.5 million and $118.8 million, respectively, an increase of 13%
from both the third quarter and first nine months of last year.
Both R&D Systems' Biotechnology Division and R&D Europe had
record sales quarters. R&D Systems' Biotechnology Division net
sales for the quarter and nine months were $26.1 million and $72.9
million, increases of 10% and 9%, respectively. R&D Europe's
net sales for the quarter and nine months were $12.4 million and
$33.1 million, increases of 23% and 21%, respectively. In British
pound sterling, R&D Europe's net sales increased 6% for the
quarter and 11% for the nine months ended March 31, 2004,
respectively. R&D Systems' Hematology Division net sales for
the quarter and nine months increased 2% and 9%, respectively.
Gross margins, as a percentage of net sales, increased from 76.8%
in the third quarter of fiscal 2003 to 79.0% in the third quarter
of fiscal 2004. For the nine months ended March 31, 2004, gross
margins, as a percentage of net sales, increased from 75.5% to
78.1%. The majority of the increase in margin percentage was the
result of R&D Europe's gross margins increasing from 43.0% in
the third quarter of fiscal 2003 to 53.8% in the third quarter of
fiscal 2004. R&D Europe's gross margins for the nine months
ended March 31, 2004 increased from 41.2% to 51.3%. 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 $496,000 and $1,340,000, respectively, in the quarter and
nine months ended March 31, 2003 under this agreement. Selling,
general and administrative expenses for the quarter and nine months
ended March 31, 2004 increased $750,000 (16%) and $1,500,000 (10%),
respectively. R&D Systems' selling, general and administrative
expenses increased $345,000 (11%) and $400,000 (4%) for the quarter
and nine months ended March 31, 2004, respectively. The majority of
the increase for the quarter and nine months was a result of an
increase in profit sharing accrual in the third quarter of fiscal
2004. In addition, Techne's corporate expenses increased $144,000
and $424,000, respectively, for the quarter and nine months ended
March 31, 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 $261,000 (17%) and $676,000 (14%)
for the quarter and nine months. Most of this increase was the
result of higher 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 increased 1%
and 4%, respectively. Research and development expenses for the
quarter ended March 31, 2004 decreased $204,000 (4%), but increased
$397,000 (3%) for the nine months ended March 31, 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 nine months ended March 31, 2004 were $589,000 and
$2,150,000, respectively, compared to $924,000 and $2,280,000 for
the quarter and nine months ended March 31, 2003, respectively.
R&D Systems' internal research and development expenses for the
quarter and nine months ended March 31, 2004 increased $131,000
(3%) and $527,000 (4%), respectively, from the quarter and nine
months ended March 31, 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. TECHNE
CORPORATION 3/31/04 (In thousands, except per share data)
(Unaudited) QUARTER ENDED NINE MONTHS ENDED 3/31/04 3/31/03 3/31/04
3/31/03 Net sales $42,541 $37,737 $118,798 $105,585 Cost of sales
8,946 8,756 26,050 25,817 Gross margin 33,595 28,981 92,748 79,768
Operating expenses: Selling, general and administrative 5,456 4,706
16,058 14,558 Research and development 5,082 5,286 15,495 15,098
Amortization of intangible assets 400 485 1,199 1,454 Interest
expense 167 178 514 797 Interest income (853) (732) (2,341) (2,226)
Other non-operating expense (income), net 415 (60) 513 74 10,667
9,863 31,438 29,755 Earnings before income taxes 22,928 19,118
61,310 50,013 Income taxes 8,309 6,724 21,749 17,293 Net earnings
$14,619 $12,394 $39,561 $32,720 Earnings per share: Basic $0.36
$0.30 $0.96 $0.79 Diluted $0.35 $0.30 $0.95 $0.78 Weighted average
common shares outstanding: Basic 41,072 41,297 41,024 41,369
Diluted 41,752 41,991 41,668 42,198 3/31/04 6/30/03 ASSETS Cash and
equivalents $51,726 $39,371 Short-term investments 111,871 78,130
Trade accounts receivable 20,562 18,387 Interest receivable 1,986
2,054 Inventory 7,295 6,332 Other current assets 5,868 5,241
Property and equipment, net 81,354 81,166 Goodwill, net 12,540
12,540 Intangible assets, net 3,219 4,418 Other non-current assets
16,182 15,638 Total assets $312,603 $263,277 LIABILITIES Current
liabilities $14,300 $10,808 Long-term debt 14,900 15,852
Stockholders' equity 283,403 236,617 Total liabilities and equity
$312,603 $263,277 DATASOURCE: Techne Corporation CONTACT: Kathy
Backes, Controller, of Techne Corporation, +1-612-379-8854
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