Techne Corporation Releases Unaudited Fourth Quarter Results for Fiscal Year 2006
Tuesday August 8, 7:00 am ET
MINNEAPOLIS, Aug. 8 /PRNewswire-FirstCall/ -- Techne Corporation's (Nasdaq: TECH - News) consolidated net earnings increased 10.9% to $73.4 million and its earnings per diluted share increased 14.2% to $1.85 compared with $66.1 million and $1.62 per diluted share for the fiscal year ended June 30, 2005. For the quarter ended June 30, 2006, Techne's consolidated net earnings increased 5.0% to $19.5 million and its earnings per diluted share increased 4.3% to $.49 for the quarter ended June 30, 2006 compared with $18.6 million and $.47 per diluted share for the quarter ended June 30, 2005.
Consolidated net earnings and diluted earnings per share for the periods ended June 30, 2006 were impacted by stock option related compensation expense from the adoption of Financial Accounting Standards Board (FASB) Statement of Accounting Standards No. 123 (Revised 2004), Share-Based Payments (SFAS No. 123R). Consolidated net earnings and diluted earnings per share for the fiscal year ended June 30, 2006 were also impacted by the decline in exchange rates used to convert R&D Europe results from British pound sterling to U.S. dollars. The acquisitions of Fortron Bio Science, Inc. and BiosPacific, Inc. on July 1, 2005 and an accelerated stock buyback transaction ("ASB") on March 1, 2005 had positive impacts on current year reported amounts. The impact of these items on comparable net earnings and diluted earnings per share is summarized as follows:
Consolidated net sales for the three months and fiscal year ended June 30, 2006 were $52.1 million and $202.6 million, respectively. This was an increase of 9.5% and 13.4% from the three months and fiscal year ended June 30, 2005, respectively. R&D Systems' Biotechnology Division net sales for the three months and fiscal year ended June 30, 2006 were $32.3 million and $125.0 million, increases of 9.1% and 12.5%, respectively, as compared to prior-year periods. Approximately $670,000 and $1.3 million of the increase in Biotechnology Division net sales for the quarter and fiscal year ended June 30, 2006 was the result of price increases. R&D Europe's net sales for the three months ended June 30, 2006 were $13.5 million, a decrease of 3.0% from the prior year, while net sales for the fiscal year ended June 30, 2006 were $53.0 million, an increase of 3.2% as compared to the prior year. In British pound sterling, R&D Europe's net sales decreased 3.9% in the fourth quarter from the fourth quarter of the prior year, but increased 7.8% for the fiscal year ended June 30, 2006. Compared to the prior year, R&D Systems Europe had two fewer shipping days in the quarter ended June 30, 2006 due to the timing of the European Easter holiday. In addition, sales in Germany declined 12.6% in the quarter ended June 30, 2006 as compared to the same quarter last year, primarily due to a work stoppage by researchers which has since been settled. R&D Systems' Hematology Division net sales for the three months ended June 30, 2006 were $4.2 million, an increase of 5.5% as compared to the quarter ended June 30, 2005. Hematology sales for the fiscal year were $15.2 million, a decrease of 5.8% from the prior fiscal year, mainly as a result of a large OEM customer changing to a new primary vendor in January 2005. Included in consolidated net sales for the three months and fiscal year ended June 30, 2006 was $2.0 million and $9.4 million, respectively, of net sales from Fortron Bio Science, Inc. and BiosPacific, Inc., which were acquired effective July 1, 2005.
Consolidated gross margins were 77.3% and 77.4% for the quarter and fiscal year ended June 30, 2006, respectively. Excluding Fortron and BiosPacific, gross margins for the quarter ended June 30, 2006 were 78.9% compared to 79.3% in the fourth quarter of fiscal 2005, and 79.5% for the fiscal year ended June 30, 2006 compared to 79.4% for the fiscal year ended June 30, 2005. Combined gross margins for Fortron and BiosPacific operations of 38.7% and 34.4% for the quarter and fiscal year ended June 30, 2006, respectively, were affected by inventory on hand at the acquisition date that was recorded at fair value as determined by purchase accounting.
Selling, general and administrative expenses increased $3.1 million for the fiscal year ended June 30, 2006 primarily due to $1.6 million of stock option expense from the adoption of SFAS No. 123R in fiscal 2006. Excluding the impact of adopting SFAS No. 123R, selling, general and administrative expense as a percent of net sales decreased to 12.8% from 13.7% for the fiscal years ended June 30, 2006 and 2005, respectively.
The dollar increases in selling, general and administrative expenses were also impacted by the acquisitions of Fortron and BiosPacific.
The Company allocated approximately $12.8 million to goodwill and $7.1 million to other intangible assets arising from the acquisition of Fortron and BiosPacific. The intangible assets, mainly technologies, trade names and customer and supplier relationships, are being amortized over lives of one to eight years and amortization expense of $271,000 and $1,086,000 was recorded for the quarter and fiscal year ended June 30, 2006, respectively, related to these assets.
In April 2006, the Company made an additional $9 million investment in ChemoCentryx, Inc. (CCX) in the form of a convertible note subject to the limitation that the Company's holdings in CCX will not exceed 19.9% of CCX voting shares. In June 2006, approximately $4.3 million of the note was converted into shares of CCX preferred stock. The Company currently holds a 19.9% interest in CCX |
