TECHNE CORPORATION RELEASES UNAUDITED SECOND QUARTER RESULTS FOR FISCAL YEAR 2009

Minneapolis/February 3, 2009/--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):

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.

Contact:

Greg Melsen, Chief Financial Officer Kathy Backes, Controller (612) 379-8854

 

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