UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2011, or
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 0-17272
TECHNE CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota | 41-1427402 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
614 McKinley Place N.E. Minneapolis, MN 55413 |
(612) 379-8854 | |
(Address of principal executive offices) (Zip Code) | (Registrants telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). ¨ Yes x No
At January 31, 2012, 36,862,507 shares of the Companys Common Stock (par value $0.01) were outstanding.
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
TECHNE Corporation and Subsidiaries
(in thousands, except per share data)
(unaudited)
Quarter Ended | Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 74,662 | $ | 67,708 | $ | 152,258 | $ | 135,653 | ||||||||
Cost of sales |
19,492 | 15,327 | 38,701 | 30,677 | ||||||||||||
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Gross margin |
55,170 | 52,381 | 113,557 | 104,976 | ||||||||||||
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Operating expenses: |
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Selling, general and administrative |
10,651 | 8,427 | 21,424 | 16,040 | ||||||||||||
Research and development |
6,837 | 6,603 | 13,504 | 13,222 | ||||||||||||
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Total operating expenses |
17,488 | 15,030 | 34,928 | 29,262 | ||||||||||||
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Operating income |
37,682 | 37,351 | 78,629 | 75,714 | ||||||||||||
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Other income (expense): |
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Interest income |
798 | 1,020 | 1,526 | 1,867 | ||||||||||||
Other non-operating expense, net |
(607 | ) | (698 | ) | (1,782 | ) | (955 | ) | ||||||||
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Total other income (expense) |
191 | 322 | (256 | ) | 912 | |||||||||||
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Earnings before income taxes |
37,873 | 37,673 | 78,373 | 76,626 | ||||||||||||
Income taxes |
12,060 | 11,139 | 25,039 | 23,719 | ||||||||||||
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Net earnings |
$ | 25,813 | $ | 26,534 | $ | 53,334 | $ | 52,907 | ||||||||
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Earnings per share: |
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Basic |
$ | 0.70 | $ | 0.72 | $ | 1.44 | $ | 1.43 | ||||||||
Diluted |
$ | 0.70 | $ | 0.71 | $ | 1.44 | $ | 1.42 | ||||||||
Cash dividends per common share: |
$ | 0.28 | $ | 0.27 | $ | 0.55 | $ | 0.53 | ||||||||
Weighted average common shares outstanding: |
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Basic |
36,966 | 37,093 | 37,030 | 37,066 | ||||||||||||
Diluted |
37,028 | 37,156 | 37,099 | 37,131 |
See Notes to Condensed Consolidated Financial Statements.
1
CONDENSED CONSOLIDATED BALANCE SHEETS
TECHNE Corporation and Subsidiaries
(in thousands, except share and per share data)
(unaudited)
December 31, | June 30, | |||||||
2011 | 2011 | |||||||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 80,994 | $ | 77,613 | ||||
Short-term available-for-sale investments |
56,758 | 63,200 | ||||||
Trade accounts receivable, less allowance for doubtful accounts of $450 and $448, respectively |
32,351 | 35,914 | ||||||
Other receivables |
2,194 | 1,946 | ||||||
Inventories |
40,978 | 44,906 | ||||||
Deferred income taxes |
12,921 | 5,797 | ||||||
Prepaid expenses |
1,020 | 1,041 | ||||||
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Total current assets |
227,216 | 230,417 | ||||||
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Available-for-sale investments |
148,114 | 131,988 | ||||||
Property and equipment, net |
94,604 | 95,398 | ||||||
Goodwill |
85,240 | 86,633 | ||||||
Intangible assets, net |
48,679 | 52,282 | ||||||
Investments in unconsolidated entities |
19,176 | 19,633 | ||||||
Other assets |
1,219 | 1,319 | ||||||
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$ | 624,248 | $ | 617,670 | |||||
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current liabilities: |
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Trade accounts payable |
$ | 5,914 | $ | 5,207 | ||||
Salaries, wages and related accruals |
3,764 | 4,784 | ||||||
Accrued expenses |
3,478 | 2,688 | ||||||
Income taxes payable |
967 | 5,509 | ||||||
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Total current liabilities |
14,123 | 18,188 | ||||||
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Deferred income taxes |
12,619 | 13,360 | ||||||
Shareholders equity: |
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Common stock, par value $.01 per share; authorized 100,000,000; issued and outstanding 36,891,490 and 37,153,398, respectively |
369 | 371 | ||||||
Additional paid-in capital |
130,517 | 129,312 | ||||||
Retained earnings |
487,524 | 472,730 | ||||||
Accumulated other comprehensive loss |
(20,904 | ) | (16,291 | ) | ||||
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Total shareholders equity |
597,506 | 586,122 | ||||||
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$ | 624,248 | $ | 617,670 | |||||
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See Notes to Condensed Consolidated Financial Statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TECHNE Corporation and Subsidiaries
(in thousands)
(unaudited)
Six Month Ended | ||||||||
December 31, | ||||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net earnings |
$ | 53,334 | $ | 52,907 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
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Depreciation and amortization |
6,314 | 4,058 | ||||||
Costs recognized on sale of acquired inventory |
3,915 | 0 | ||||||
Deferred income taxes |
(7,472 | ) | 1,355 | |||||
Stock-based compensation expense |
1,148 | 850 | ||||||
Excess tax benefit from stock option exercises |
(13 | ) | (413 | ) | ||||
Losses by equity method investees |
415 | 547 | ||||||
Other |
108 | 183 | ||||||
Change in operating assets and operating liabilities: |
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Trade accounts and other receivables |
1,263 | 1,159 | ||||||
Inventories |
(929 | ) | (234 | ) | ||||
Prepaid expenses |
7 | 27 | ||||||
Trade accounts payable and accrued expenses |
1,435 | (842 | ) | |||||
Salaries, wages and related accruals |
(253 | ) | (417 | ) | ||||
Income taxes payable |
(4,402 | ) | 956 | |||||
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Net cash provided by operating activities |
54,870 | 60,136 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of available-for-sale investments |
(84,043 | ) | (80,589 | ) | ||||
Proceeds from sales of available-for-sale investments |
39,085 | 55,346 | ||||||
Proceeds from maturities of available-for-sale investments |
36,935 | 24,432 | ||||||
Additions to property and equipment |
(3,297 | ) | (1,765 | ) | ||||
Distribution from unconsolidated entity |
42 | 0 | ||||||
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Net cash used in investing activities |
(11,278 | ) | (2,576 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Cash dividends |
(20,387 | ) | (19,640 | ) | ||||
Proceeds from stock option exercises |
45 | 3,429 | ||||||
Excess tax benefit from stock option exercises |
13 | 413 | ||||||
Purchase of common stock for stock bonus plans |
(907 | ) | (294 | ) | ||||
Repurchase of common stock |
(17,748 | ) | (1,940 | ) | ||||
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Net cash used in financing activities |
(38,984 | ) | (18,032 | ) | ||||
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Effect of exchange rate changes on cash and cash equivalents |
(1,227 | ) | 2,208 | |||||
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Net increase in cash and cash equivalents |
3,381 | 41,736 | ||||||
Cash and cash equivalents at beginning of period |
77,613 | 94,139 | ||||||
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Cash and cash equivalents at end of period |
$ | 80,994 | $ | 135,875 | ||||
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See Notes to Condensed Consolidated Financial Statements.
3
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TECHNE Corporation and Subsidiaries
(unaudited)
A. Basis of presentation:
The interim unaudited condensed consolidated financial statements of Techne Corporation and Subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America and with instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying interim unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature.
A summary of significant accounting policies followed by the Company is detailed in the Companys Annual Report on Form 10-K for fiscal 2011. The Company follows these policies in preparation of the interim unaudited condensed consolidated financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Companys Consolidated Financial Statements and Notes thereto for the fiscal year ended June 30, 2011, included in the Companys Annual Report on Form 10-K for fiscal 2011.
Certain reclassifications have been made to prior years Condensed Consolidated Financial Statements to conform to the current year presentation. The Company reclassified prior years amortization expense as appropriate based upon the nature of the related intangible asset to cost of sales or selling, general and administrative expense. These reclassifications had no impact on net earnings or shareholders equity as previously reported.
B. Available-for-sale investments:
Included in Long-term available-for-sale investments at December 31, 2011 is a $10 million loan receivable from ChemoCentryx, Inc. (CCX), one of the Companys equity investees. The loan bears interest at 5% with interest due annually until maturity on September 30, 2021. The loan agreement contains a number of conversion features contingent upon CCX obtaining future debt or equity financing. In addition, the agreement includes a $5 million commitment by the Company to participate in a private placement in the event of a successful public offering of CCX shares. The loan is carried at fair value based on the Companys assessment (Level 3 input) using an internal cash flow valuation that incorporated contractual terms, maturity, timing and amount of future cash flows, as well as assumptions about liquidity. There was no change in the fair value of the investment for the quarter or six month periods ended December 31, 2011.
The Companys remaining available-for-sale investments at December 31, 2011 are carried at fair value and are valued using quoted market prices in active markets (Level 1 input) for identical assets and liabilities.
C. Inventories:
Inventories consist of (in thousands):
December 31, | June 30, | |||||||
2011 | 2011 | |||||||
Raw materials |
$ | 5,455 | $ | 5,644 | ||||
Finished goods |
35,523 | 39,262 | ||||||
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$ | 40,978 | $ | 44,906 | |||||
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4
D. Property and equipment:
Property and equipment consist of (in thousands):
December 31, | June 30, | |||||||
2011 | 2011 | |||||||
Cost: |
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Land |
$ | 7,461 | $ | 7,497 | ||||
Buildings and improvements |
121,591 | 119,833 | ||||||
Laboratory equipment |
30,999 | 30,315 | ||||||
Office equipment |
5,614 | 5,407 | ||||||
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165,665 | 163,052 | |||||||
Accumulated depreciation and amortization |
71,061 | 67,654 | ||||||
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$ | 94,604 | $ | 95,398 | |||||
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E. Intangible assets and goodwill:
Intangible assets consist of (in thousands):
December 31, | June 30, | |||||||
2011 | 2011 | |||||||
Developed technology |
$ | 29,162 | $ | 29,943 | ||||
Trade names |
17,802 | 18,021 | ||||||
Customer relationships |
8,679 | 8,781 | ||||||
Non-compete agreement |
400 | 400 | ||||||
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56,043 | 57,145 | |||||||
Accumulated amortization |
7,364 | 4,863 | ||||||
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$ | 48,679 | $ | 52,282 | |||||
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The change in the carrying amount of net intangible assets for the six months ended December 31, 2011 resulted from amortization expense and currency translation. Amortization expense related to technologies included in cost of sales was $749,000 and $1.5 million, respectively, for the quarter and six months ended December 31, 2011, and $110,000 and $219,000 for the quarter and six months ended December 31, 2010, respectively. Amortization expense related to trade names, customer relationships, and the non-compete agreement included in selling, general and administrative expense was $519,000 and $1.0 million for the quarter and six months ended December 31, 2011, respectively, and $61,000 and $122,000 for the quarter and six months ended December 31, 2010, respectively. The change in the carrying amount of goodwill for the six months ended December 31, 2011 resulted from currency translation.
F. Share-based compensation:
Option activity under the Companys stock option plans during the six months ended December 31, 2011 was as follows:
Shares (in thousands) |
Weighted Average Exercise Price |
Weighted Average Contractual Life (Yrs.) |
Aggregate Intrinsic Value |
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Outstanding at June 30, 2011 |
499 | $ | 64.15 | |||||||||||||
Granted |
65 | $ | 72.59 | |||||||||||||
Exercised |
(1 | ) | $ | 39.93 | ||||||||||||
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Outstanding at December 31, 2011 |
563 | $ | 65.18 | 6.1 | $ | 3.0 million | ||||||||||
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Exercisable at December 31, 2011 |
354 | $ | 60.43 | 6.1 | $ | 2.9 million | ||||||||||
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5
The fair value of options granted under the Companys stock option plans was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used:
Quarter
Ended December 31, |
Six Months
Ended December 31, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Dividend yield |
1.6% | 1.8% | 1.5% | 1.8% | ||||||||||||
Expected annualized volatility |
22% | 27% | 22%-23% | 22%-27% | ||||||||||||
Risk free interest rate |
1.9% | 2.0% | 1.4%-1.9% | 1.3%-2.0% | ||||||||||||
Expected life |
7 years | 7 years | 6 years | 7 years |
The dividend yield is based on the Companys historical annual cash dividend divided by the market value of the Companys Common Stock. The expected annualized volatility is based on the Companys historical stock price over a period equivalent to the expected life of the option granted. The risk-free interest rate is based on U.S. Treasury constant maturity interest rates with a term consistent with the expected life of the options granted. Separate groups of employees that have similar historical exercise behavior with regard to option exercise timing and forfeiture rates are considered separately in determining option fair value.
The weighted average per share fair value of options granted during the quarter and six months ended December 31, 2011 was $15.68 and $14.90, respectively. The weighted average per share fair value of options granted during the quarter and six months ended December 31, 2010 was $15.70 and $15.02, respectively. The total intrinsic value of options exercised during the six months ended December 31, 2011 was $34,000. No options were exercised during the quarter ended December 31, 2011. The total intrinsic value of options exercised during the quarter and six months ended December 31, 2010 was $1.5 million and $1.8 million, respectively. The total fair value of options vested during the quarter and six months ended December 31, 2011 was $627,000 and $698,000, respectively. The total fair value of options vested during the quarter and six months ended December 31, 2010 was $628,000 and $677,000, respectively.
Stock-based compensation cost of $858,000 and $1.1 million was included in selling, general and administrative expense for the quarter and six months ended December 31, 2011, respectively. Stock-based compensation cost of $714,000 and $850,000 was included in selling, general and administrative expense for the quarter and six months ended December 31, 2010, respectively. Compensation cost is recognized using a straight-line method over the vesting period and is net of estimated forfeitures. As of December 31, 2011, there was $2.3 million of total unrecognized compensation cost related to non-vested stock options. The weighted average period over which the compensation cost is expected to be recognized is 1.4 years.
G. Earnings per share:
Shares used in the earnings per share computations are as follows (in thousands):
Quarter
Ended December 31, |
Six Months
Ended December 31, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Weighted average common shares outstanding-basic |
36,966 | 37,093 | 37,030 | 37,066 | ||||||||||||
Dilutive effect of stock options |
62 | 63 | 69 | 65 | ||||||||||||
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Weighted average common shares outstanding-diluted |
37,028 | 37,156 | 37,099 | 37,131 | ||||||||||||
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The dilutive effect of stock options in the above table excludes all options for which the aggregate exercise proceeds exceeded the average market price for the period. The number of potentially dilutive option shares excluded from the calculation was 238,000 and 192,000 for the quarter and six months ended December 31, 2011, respectively, and 71,000 and 90,000 for the quarter and six months ended December 31, 2010, respectively.
6
H. Segment information:
The Company has two reportable segments based on the nature of products: biotechnology and hematology. Following is financial information relating to the Companys reportable segments (in thousands):
Quarter
Ended December 31, |
Six Months
Ended December 31, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
External sales |
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Biotechnology |
$ | 69,808 | $ | 63,080 | $ | 142,111 | $ | 126,121 | ||||||||
Hematology |
4,854 | 4,628 | 10,147 | 9,532 | ||||||||||||
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Consolidated net sales |
$ | 74,662 | $ | 67,708 | $ | 152,258 | $ | 135,653 | ||||||||
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Earnings before income taxes |
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Biotechnology |
$ | 37,878 | $ | 37,953 | $ | 77,862 | $ | 76,413 | ||||||||
Hematology |
1,681 | 1,427 | 3,599 | 3,349 | ||||||||||||
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Segment earnings before income taxes |
39,559 | 39,380 | 81,461 | 79,762 | ||||||||||||
Unallocated corporate expenses and equity method investee losses |
(1,686 | ) | (1,707 | ) | (3,088 | ) | (3,136 | ) | ||||||||
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Consolidated earnings before income taxes |
$ | 37,873 | $ | 37,673 | $ | 78,373 | $ | 76,626 | ||||||||
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I. Comprehensive income:
Comprehensive income was as follows (in thousands):
Quarter
Ended December 31, |
Six Months
Ended December 31, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Net earnings |
$ | 25,813 | $ | 26,534 | $ | 53,334 | $ | 52,907 | ||||||||
Foreign currency translation adjustments |
(705 | ) | (1,378 | ) | (4,606 | ) | 2,521 | |||||||||
Unrealized gain (loss) on available-for-sale investments, net of tax |
21 | (381 | ) | (7 | ) | (337 | ) | |||||||||
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$ | 25,129 | $ | 24,775 | $ | 48,721 | $ | 55,091 | |||||||||
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Accumulated other comprehensive (loss) income consists of (in thousands):
December 31, 2011 |
June 30, 2011 |
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Foreign currency translation adjustments |
$ | (21,545 | ) | $ | (16,939 | ) | ||
Net unrealized gain on available-for-sale investments, net of tax |
641 | 648 | ||||||
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$ | (20,904 | ) | $ | (16,291 | ) | |||
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J. Recent accounting pronouncements:
In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05 Comprehensive Income under an amendment to Topic 220. Under this update, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders equity. The update does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The Company must comply with ASU No. 2011-05 for the quarter ended September 30, 2012. The Company does not believe this update will have a material impact on the Companys consolidated financial statements.
7
In September 2011, the FASB issued ASU No. 2011-08 Intangibles Goodwill and Other under an amendment to Topic 350, which permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting units fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not be required to perform the two-step impairment test for that reporting unit. The update is effective for the Company for annual and interim goodwill impairment tests for fiscal 2013. Early adoption is permitted. The Company does not believe this update will have a material impact on the Companys consolidated financial statements.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
TECHNE Corporation and subsidiaries (the Company) are engaged in the development, manufacture and sale of biotechnology products and hematology calibrators and controls. These activities are conducted domestically through its wholly-owned subsidiaries, Research and Diagnostic Systems, Inc. (R&D Systems), Boston Biochem, Inc. (Boston Biochem), Tocris Cookson, Inc. (Tocris US), and BiosPacific, Inc. (BiosPacific). The Companys European biotechnology operations are conducted through its wholly-owned U.K. subsidiaries, R&D Systems Europe Ltd. (R&D Europe) and Tocris Holdings Limited (Tocris UK). R&D Europe has a sales subsidiary, R&D Systems GmbH, in Germany and a sales office in France. The Company distributes its biotechnology products in China through its wholly-owned subsidiary, R&D Systems China Co., Ltd. (R&D China). R&D China has a sales subsidiary, R&D Systems Hong Kong Ltd., in Hong Kong.
The Company has two reportable segments based on the nature of its products: biotechnology and hematology. R&D Systems Biotechnology Division, R&D Europe, Tocris, R&D China, BiosPacific and Boston Biochem operating segments are included in the biotechnology reporting segment. The Companys biotechnology reporting segment develops, manufactures and sells biotechnology research and diagnostic products world-wide. The Companys hematology reporting segment, which consists of R&D Systems Hematology Division, develops and manufactures hematology controls and calibrators for sale world-wide.
RESULTS OF OPERATIONS
Consolidated net sales and consolidated net earnings before tax increased 10.3% and 0.5%, respectively for the quarter ended December 31, 2011 compared to the quarter ended December 31, 2010. Consolidated net sales and consolidated net earnings before tax increased 12.2% and 2.3%, respectively for the six months ended December 31, 2011 compared to the six months ended December 31, 2010. Consolidated net sales for the quarter and six months ended December 31, 2011 included $5.5 million and $11.1 million of revenues from the Boston Biochem and Tocris businesses that were acquired during the fourth quarter of fiscal 2011. Consolidated net sales for the quarter and six months ended December 31, 2011 were positively affected by changes in exchange rates from the prior year. The favorable impact on consolidated net sales of the change from the prior year in exchange rates used to convert sales in foreign currencies (primarily British pounds sterling, euros and Chinese yuan) into U.S. dollars was $238,000 and $2.1 million, respectively, for the quarter and six months ended December 31, 2011.
8
Net sales
Consolidated net sales for the quarter and six months ended December 31, 2011 were $74.7 million and $152.3 million, respectively, increases of $7.0 million (10.3%) and $16.6 million (12.2%) from the quarter and six months ended December 31, 2010. Included in consolidated net sales for the quarter and six months ended December 31, 2011 were $5.5 million and $11.1 million, respectively, of sales from products of companies acquired during the fourth quarter of fiscal 2011. Excluding these sales from acquisitions and the effect of changes in foreign currency exchange rates, consolidated net sales increased 1.8% and 2.5% for the quarter and six months ended December 31, 2011 from the comparable prior-year periods. Included in consolidated net sales for the quarter and six months ended December 31, 2011 were $636,000 and $871,000, respectively, of sales of new biotechnology products that had their first sale in fiscal 2012.
Biotechnology segment net sales increased $6.7 million (10.7%) and $16.0 million (12.7%) for the quarter and six months ended December 31, 2011, respectively, compared to the same prior-year periods. Excluding sales from acquisitions and changes in exchange rates from the prior year, biotechnology segment sales increased $974,000 (1.5%) and $2.8 million (2.2%), respectively. This increase was mainly the result of increased sales volume. For the quarter and six months ended December 31, 2011, biotechnology net sales to U.S. industrial, pharmaceutical and biotechnology customers increased 4.6% and 7.0%, respectively. Biotechnology net sales to U.S. academic customers decreased 4.1% and 3.3% for the quarter and six months ended December 31, 2011, respectively, compared to the comparable prior-year periods. Sales to Pacific Rim distributors increased 11.2% and 5.8% for the quarter and six months ended December 31, 2011, respectively, compared to the comparable prior-year periods. Biotechnology segment net sales by R&D Europe increased 1.0% and 5.9% for the quarter and six months ended December 31, 2011, respectively. Excluding changes in currency rates and sales from acquired products, R&D Europe net sales decreased 0.8% in both periods as compared to the prior year. Biotechnology segment net sales by R&D China increased 48.5% and 36.7% for the quarter and six months ended December 31, 2011, respectively, compared to the quarter and six months ended December 31, 2010. Excluding changes in currency rates and sales from acquired products, R&D China net sales increased 32.8% and 23.8%, respectively.
Hematology segment net sales increased $226,000 (4.9%) and $615,000 (6.5%) for the quarter and six months ended December 31, 2011 compared to the same prior-year periods as a result of increased sales volume.
Gross margins
Gross margins, as a percentage of net sales, were as follows:
Quarter
Ended December 31, |
Six Months
Ended December 31, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Biotechnology |
75.8 | % | 80.0 | % | 76.5 | % | 79.8 | % | ||||||||
Hematology |
46.3 | % | 41.5 | % | 47.3 | % | 45.3 | % | ||||||||
Consolidated |
73.9 | % | 77.4 | % | 74.6 | % | 77.4 | % |
Consolidated gross margins, as a percentage of consolidated net sales, were 73.9% and 74.6% for the quarter and six months ended December 31, 2011, respectively, compared to 77.4% for both the quarter and six months ended December 31, 2010. Consolidated and biotechnology segment gross margin percentages for the quarter and six months ended December 31, 2011 were negatively impacted as a result of purchase accounting related to inventory and intangible assets acquired during the fourth quarter of fiscal 2011. Under purchase accounting, inventory acquired is valued at fair value less expected selling and marketing costs, resulting in reduced margins in future periods as the inventory is sold. For the quarter and six months ended December 31, 2011, the consolidated margin was reduced $1.8 million (2.4%) and $3.9 million (2.6%) as a result of purchase accounting related to acquired inventory sold in the respective periods. In addition, consolidated gross margins for the quarter and six months ended December 31, 2011 were reduced $749,000 (1.0%) and $1.5 million (1.0%), respectively, as a result of amortization of acquired technology, compared to $110,000 (0.2%) and $219,000 (0.2%) for the quarter and six months ended December 31, 2010, respectively. The hematology segment gross margin percentage for the quarter and six months ended December 31, 2011 were 46.3% and 47.3%, compared to 41.5% and 45.3% for the quarter and six months ended December 31, 2010, as a result of changes in product mix.
9
Selling, general and administrative expenses
Selling, general and administrative expenses were composed of the following (in thousands):
Quarter
Ended December 31, |
Six Months
Ended December 31, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Biotechnology |
$ | 9,003 | $ | 6,859 | $ | 18,473 | $ | 13,345 | ||||||||
Hematology |
400 | 336 | 880 | 664 | ||||||||||||
Unallocated corporate expenses |
1,248 | 1,232 | 2,071 | 2,031 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 10,651 | $ | 8,427 | $ | 21,424 | $ | 16,040 | |||||||||
|
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|
|
|
|
|
Selling, general and administrative expenses for the quarter and six months ended December 31, 2011 increased $2.2 million (26.4%) and $5.4 million (33.6%) from the same prior-year periods. The increase in selling, general and administrative expense resulted primarily from expenses of the companies acquired in late fiscal 2011 of $1.7 million and $3.3 million for the quarter and six months ended December 31, 2011, respectively. In addition, the increase in selling, general and administrative expenses was due to an increase in customer relationships and trade name amortization as a result of the acquisitions of $458,000 and $918,000 for the quarter end six months ended December 31, 2011, respectively, and an increase in profit sharing expense of $832,000 for the six months ended December 31, 2011.
Research and development expenses
Research and development expenses were composed of the following (in thousands):
Quarter
Ended December 31, |
Six Months
Ended December 31, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Biotechnology |
$ | 6,624 | $ | 6,379 | $ | 13,093 | $ | 12,800 | ||||||||
Hematology |
213 | 224 | 411 | 422 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 6,837 | $ | 6,603 | $ | 13,504 | $ | 13,222 | |||||||||
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Research and development expenses for the quarter and six months ended December 31, 2011 increased $234,000 and $282,000 from the same prior- year periods. The increase was mainly due to increases in personnel and supply costs associated with the continuous development and release of new high-quality biotechnology products.
Other non-operating expense, net
Other non-operating expense, net, consists mainly of foreign currency transaction gains and losses, rental income, building expenses related to rental property, and the Companys share of losses by equity method investees.
Quarter
Ended December 31, |
Six Months
Ended December 31, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Foreign currency (losses) gains |
$ | (105 | ) | $ | (87 | ) | $ | (629 | ) | $ | 418 | |||||
Rental income |
198 | 138 | 332 | 261 | ||||||||||||
Building expenses related to rental property |
(482 | ) | (531 | ) | (1,069 | ) | (1,087 | ) | ||||||||
Losses by equity method investees |
(218 | ) | (218 | ) | (416 | ) | (547 | ) | ||||||||
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|
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|
|
|||||||||
$ | (607 | ) | $ | (698 | ) | $ | (1,782 | ) | $ | (955 | ) | |||||
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10
Income taxes
Income taxes for the quarter and six months ended December 31, 2011 were provided at rates of 31.8% and 31.9% of consolidated earnings before income taxes compared to 29.6% and 31.0% for the same prior-year periods. The low tax rate for the quarter and six months ended December 31, 2010 was a result of the renewal of the U.S. research and development credit in the second quarter of fiscal 2011. Included in income taxes for the quarter and six months ended December 31, 2010 was a $659,000 research and development credit related to prior periods. Foreign income taxes have been provided at rates that approximate the tax rates in the countries in which R&D Europe, Tocris and R&D China operate. The Company expects its fiscal 2012 effective income tax rate to range from approximately 31.0% to 33.0%.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2011, cash and cash equivalents and available-for-sale investments were $286 million compared to $273 million at June 30, 2011. The Company believes it can meet its cash and working capital requirements, capital addition needs and share repurchase, cash dividend, investment and acquisition strategies for at least the next twelve months through currently available funds, cash generated from operations and maturities or sales of available-for-sale investments. The Company has an unsecured line of credit of $750,000. The interest rate on the line of credit is at prime. There were no borrowings on the line in the prior or current fiscal year.
On January 23, 2012, CCX filed a Form S-1/A with the Securities & Exchange Commission for an initial public offering of 4.0 million shares of CCX common stock at an estimated price of between $14.00 and $16.00 per share. If this offering is successful, in addition to the Company purchasing $5.0 million of CCX common shares, all preferred shares of CCX held by the Company and the loan receivable from CCX, including interest, would automatically convert into common shares of CCX. The fair market value of the Companys investment in CCX, assuming an offering price of $14.00 per share at the date of the initial public offering, would be approximately $81 million, implying a $51.7 million unrealized gain. A variance of $1.00 in the initial public offering price would change the unrealized appreciation of the Companys CCX holding by plus or minus $4.7 million. The Company has agreed not to sell any CCX share for 180 days following an initial public offering.
At December 31, 2011, the Company has a deferred tax asset of $5.0 million related to excess tax basis in its investment in CCX. A 100% valuation allowance has been recorded against the deferred tax asset at December 31, 2011. A successful initial public offering by CCX might result in the reversal of this valuation allowance with a positive after tax impact of approximately $1.8 million.
Cash flows from operating activities
The Company generated cash of $54.9 million from operating activities in the first six months of fiscal 2012 compared to $60.1 million in the first six months of fiscal 2011. The decrease from the prior year was primarily due to changes in deferred income taxes and income taxes payable, as a result of the timing of tax payments, partially offset by adjustments for non-cash depreciation expense, amortization expense, and costs recognized on the sale of acquired inventory.
Cash flows from investing activities
During the six months ended December 31, 2011, the Company purchased $84.0 million and had sales or maturities of $76.0 million of available-for-sale investments. During the six months ended December 31, 2010, the Company purchased $80.6 million and had sales or maturities of $79.8 million of available-for-sale investments. The Companys investment policy is to place excess cash in municipal and corporate bonds and other investments with maturities of less than three years. The objective of this policy is to obtain the highest possible return while minimizing risk and keeping the funds accessible.
Capital expenditures for fixed assets for the first six months of fiscal 2012 and 2011 were $3.3 million and $1.8 million. Included in capital expenditures for the first six months of fiscal 2012 was $1.9 million related to remodeling of laboratory space at the Companys Minneapolis facility. The remaining capital additions were mainly for laboratory and computer equipment. Capital expenditures in the remainder of fiscal 2012 are expected to be approximately $4.2 million and are expected to be financed through currently available funds and cash generated from operating activities.
Cash flows from financing activities
During the first six months of fiscal 2012 and 2011, the Company paid cash dividends of $20.4 million and $19.6 million, respectively, to all common shareholders. On January 31, 2012, the Company announced the payment of a $0.28 per share cash dividend. The dividend of approximately $10.3 million will be payable February 24, 2012 to all common shareholders of record on February 10, 2012.
Cash of $45,000 and $3.4 million was received during the six months ended December 31, 2011 and 2010, respectively, from the exercise of stock options. The Company also recognized excess tax benefits from stock option exercises of $13,000 and $413,000 for the six months ended December 31, 2011 and 2010, respectively.
11
During the first six months of fiscal 2012 and 2011, the Company purchased 13,140 and 4,923 shares of common stock for its employee stock bonus plans at a cost of $907,000 and $294,000, respectively.
During the first six months of fiscal 2012, the Company purchased and retired 263,027 shares of common stock at a market value of $18.2 million, of which $17.7 million had been disbursed prior to December 31, 2011. During the first six months of fiscal 2011, the Company disbursed $1.9 million for the settlement of common stock purchased and retired during the fourth quarter of fiscal 2010.
CONTRACTUAL OBLIGATIONS
There were no material changes outside the ordinary course of business in the Companys contractual obligations during the quarter ended December 31, 2011.
CRITICAL ACCOUNTING POLICIES
The Companys significant accounting policies are discussed in the Companys Annual Report on Form 10-K for fiscal 2011. The application of certain of these policies requires judgments and estimates that can affect the results of operations and financial position of the Company. Judgments and estimates are used for, but not limited to, valuation of available-for-sale investments, inventory valuation and allowances, valuation of intangible assets and goodwill and valuation of investments in unconsolidated entities. There have been no significant changes in estimates in fiscal 2012 that would require disclosure. There have been no changes to the Companys policies in fiscal 2012.
FORWARD LOOKING INFORMATION AND CAUTIONARY STATEMENTS
This quarterly report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those regarding the Companys expectations as to the effect of changes to accounting policies, effective tax rate, pending litigation, the amount of capital expenditures for the remainder of the fiscal year, the sufficiency of currently available funds for meeting the Companys needs and the impact of fluctuations in interest rates and currency exchange rates. These statements involve risks and uncertainties that may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Companys actual results: the introduction and acceptance of new products, general economic conditions, increased competition, the reliance on internal manufacturing and related operations, the impact of currency exchange rate fluctuations, the integration of Boston Biochem and Tocris, the recruitment and retention of qualified personnel, the impact of governmental regulation, maintenance of intellectual property rights, credit risk and fluctuation in the market value of the Companys investment portfolio and the success of financing efforts by companies in which the Company has invested. For additional information concerning such factors, see the Companys Annual Report on Form 10-K for fiscal 2011 as filed with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At December 31, 2011, the Company had a portfolio of fixed income securities, excluding those classified as cash and cash equivalents, of $205 million. These securities, like all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase. As the Companys fixed income securities are classified as available-for-sale, no gains or losses are recognized by the Company in its consolidated statements of earnings due to changes in interest rates unless such securities are sold prior to maturity. The Company generally holds its fixed income securities until maturity and, historically, has not recorded any material gains or losses on any sale prior to maturity.
12
The Company operates internationally, and thus is subject to potentially adverse movements in foreign currency rate changes. For the six months ended December 31, 2011, approximately 31% of consolidated net sales were made in foreign currencies, including 16% in euros, 7% in British pound sterling, 3% in Chinese yuan and the remaining 5% in other European currencies. As a result, the Company is exposed to market risk mainly from foreign exchange rate fluctuations of the euro, British pound sterling and the Chinese yuan as compared to the U.S. dollar as the financial position and operating results of the Companys foreign operations are translated into U.S. dollars for consolidation.
Month-end average exchange rates between the British pound sterling, euro and Chinese yuan and the U.S. dollar, which have not been weighted for actual sales volume in the applicable months in the periods, were as follows:
Quarter
Ended December 31, |
Six Months
Ended December 31, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Euro |
$ | 1.34 | $ | 1.34 | $ | 1.37 | $ | 1.33 | ||||||||
British pound sterling |
1.58 | 1.57 | 1.59 | 1.56 | ||||||||||||
Chinese yuan |
.158 | .151 | .157 | .149 |
The Companys exposure to foreign exchange rate fluctuations also arises from trade receivables and intercompany payables denominated in one currency in the financial statements, but receivable or payable in another currency. At December 31, 2011, the Company had the following trade receivable and intercompany payables denominated in one currency but receivable or payable in another currency (in thousands):
Denominated Currency |
U.S.
Dollar Equivalent |
|||||||
Accounts receivable in: |
||||||||
Euros |
£ | 1,024 | $ | 1,591 | ||||
Other European currencies |
£ | 713 | $ | 1,108 | ||||
Intercompany payable in: |
||||||||
Euros |
£ | 61 | $ | 95 | ||||
U.S. dollars |
£ | 2,766 | $ | 4,299 | ||||
U.S. dollars |
yuan 5,543 | $ | 880 | |||||
British pound sterling |
yuan 131 | $ | 21 |
All of the above balances are revolving in nature and are not deemed to be long-term balances. The Company does not enter into foreign exchange forward contracts to reduce its exposure to foreign currency rate changes on forecasted intercompany foreign currency denominated balance sheet positions. Foreign currency transaction gains and losses are included in Other non-operating expense in the consolidated statement of earnings. The effect of translating net assets of foreign subsidiaries into U.S. dollars are recorded on the consolidated balance sheet as part of Accumulated other comprehensive income.
The effects of a hypothetical simultaneous 10% appreciation in the U.S. dollar from December 31, 2011 levels against the euro, British pound sterling and Chinese yuan are as follows (in thousands):
Decrease in translation of 2012 earnings into U.S. dollars (annualized) |
$ | 2,360 | ||
Decrease in translation of net assets of foreign subsidiaries |
13,485 | |||
Additional transaction losses |
518 |
13
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as amended (the Exchange Act)). Based on this evaluation, the principal executive officer and principal financial officer concluded that the Companys disclosure controls and procedures are effective to ensure that material information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. There was no change in the Companys internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Companys most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
In a previously disclosed lawsuit filed by Streck, Inc. (Streck), venued in the U.S. District Court for the District of Nebraska (the Nebraska Court), Streck alleged patent infringement involving certain patents issued to Streck relating to the addition of reticulocytes to hematology controls. Streck was seeking a royalty on sales of integrated hematology controls containing reticulocytes. The Company has reason to believe that R&D Systems, and not Streck, first invented the inventions claimed in these patents and several other patents issued to Streck. As a result, the Company requested, and in 2007 the U.S. Patent and Trademark Office (USPTO) declared, an interference to determine priority of invention between a patent application filed by R&D Systems and five Streck patents, including each of the patents involved in the lawsuit. On November 2, 2009, the interference board ordered that judgment for the Company and against Streck be entered; finding that R&D Systems was the first to invent the integrated hematology controls containing reticulocytes.
The judgment, if upheld by the Federal Circuit Court of Appeals, will constitute cancellation of all claims of the five Streck patents involving the addition of reticulocytes to hematology controls. Such cancellation may moot an earlier jury decision on October 28, 2009, at the conclusion of trial in the Nebraska Court, that the Company did not meet its burden of demonstrating by clear and convincing evidence that the Streck patents were invalid. The jury also found that a reasonable license royalty rate was 12.5%, and that R&D Systems did not willfully infringe, resulting in a judgment in favor of Streck in the amount of approximately $170,000 including court-related costs. On September 30, 2010, the Nebraska Court upheld the jury verdict and, in a related action, reversed the ruling of the USPTO interference board. The Nebraska Court entered an injunction prohibiting the making and selling of the products that are the subject of the lawsuit, but stayed a portion of the injunction to allow the Company to sell inventory on-hand through December 20, 2010. In October 2010, the Company appealed the adverse decisions of the Nebraska Court to the Federal Circuit Court of Appeals. On October 20, 2011, the Federal Circuit issued an opinion upholding the District Courts interference-related finding of priority in favor of Streck, and on January 10, 2012, the Federal Circuit affirmed the District Courts infringement finding and permanent injunction. The Company has filed a Petition for rehearing regarding the affirmation of the interference-related findings and has filed a motion to stay the mandate in the infringement case. The Company does not believe the resolution of the above proceedings will have a material impact on the Companys consolidated financial statements.
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of the Companys Annual Report on Form 10-K for the year ended June 30, 2011.
14
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth the repurchases of Company common stock for the quarter ended December 31, 2011:
Period | Total Number of Shares Purchased |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
||||||||
10/1/11-10/31/11 |
0 | $ | 0 | 0 | $ | 39.9 million | ||||||
11/1/11-11/30/11 |
60,811 | $ | 65.76 | 60,811 | $ | 35.9 million | ||||||
12/1/11-12/31/11 |
52,356 | $ | 66.50 | 52,356 | $ | 32.4 million |
In April 2009, the Company authorized a plan for the repurchase and retirement of $60 million of its common stock. The plan does not have an expiration date.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. (REMOVED AND RESERVED)
None.
See exhibit index following the signature page.
15
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TECHNE CORPORATION (Company) | ||||||
Date: February 7, 2012 | /s/ Thomas E. Oland | |||||
Thomas E. Oland President, Chief Executive Officer | ||||||
Date: February 7, 2012 | /s/ Gregory J. Melsen | |||||
Gregory J. Melsen Chief Financial Officer |
EXHIBIT INDEX
TO
FORM 10-Q
TECHNE CORPORATION
Exhibit # |
Description | |
10.1 | Deed of Assignment and Novation dated January 23, 2012 in connection with a share purchase agreement relating to Tocris Holdings Limited. | |
31.1 | Section 302 Certification | |
31.2 | Section 302 Certification | |
32.1 | Section 906 Certification | |
32.2 | Section 906 Certification | |
101 | The following financial statements from the Companys Quarterly Report on Form 10-Q for the quarter ended December 31, 2011, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Earnings, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to the Condensed Consolidated Financial Statements.* |
*Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filings.
16
Exhibit 10.1
DATED 23 January 2012
(1) ANDREW BIRNIE AND OTHERS
(2) TOTAL CAPITAL FINANCE LIMITED
(3) R & D SYSTEMS EUROPE LIMITED
(4) RESEARCH & DIAGNOSTIC SYSTEMS, INC
DEED OF ASSIGNMENT AND NOVATION
in connection with a share purchase agreement
relating to Tocris Holdings Limited
Cobbetts LLP
No.1 Whitehall Riverside
Leeds
LS1 4BN
Tel: +44 (0)161 833 3333
MJZD/TE274-2
CONTENTS
Clause | Page | |||
1 DEFINITIONS AND INTERPRETATION |
1 | |||
2 ASSIGNMENT, TRANSFER AND NOVATION |
2 | |||
3 FURTHER ASSURANCE |
2 | |||
4 OTHER PROVISIONS |
3 | |||
THE SCHEDULE |
4 |
THIS DEED IS MADE ON 23 JANUARY 2012
BETWEEN:
(1) | THE SEVERAL PERSONS whose names and addresses are set out in the Schedule (together the Sellers); and |
(2) | TOTAL CAPITAL FINANCE LIMITED (incorporated and registered in England and Wales with company number 5984100) whose registered office is at 1 Princes Street, London EC2R 8PB (TCF); |
(3) | R&D SYSTEMS EUROPE LIMITED (incorporated and registered in England and Wales with company number 2490104) whose registered office is at 19 Barton Lane, Abingdon Science Park, Abingdon, Oxfordshire, OX14 3NB (RDSEL); and |
(4) | RESEARCH AND DIAGNOSTIC SYSTEMS, INC a corporation incorporated in Minnesota and whose registered office is at 614 McKinley Place NE, Minneapolis, MN 55413 (RDSI). |
BACKGROUND
1 | The Sellers, TCF, RDSEL and RDSI entered into a share purchase agreement on 28 April 2011 (the Agreement) pursuant to which the Sellers and TCF sold and RDSEL and RDSI acquired the entire issued share capital of Tocris Holdings Limited (incorporated in England and Wales with number 6008610 (the Company)). Under the Agreement, certain of the Sellers gave, inter alia, warranties relating to the Company and its subsidiary undertakings to each of RDSEL and RDSI. |
2 | On 30 June 2011: |
2.1 | the entire issued share capital of Tocris Cookson, Inc (incorporated in Delaware with number 2485172 (Tocris US)) was transferred: |
(a) | from Tocris Cookson Limited (incorporated in England and Wales with number 2869577 (TCL)) to Tocris Investments Limited (incorporated in England and Wales with number 7013194 (TCI)) by way of a dividend in specie declared by TCL; and, subsequently |
(b) | from TCI to the Company by way of a dividend in specie declared by TCI; |
and so that, following such transfers, the entire issued share capital of Tocris US was held by the Company; and
2.2 | an intra-group share purchase agreement dated 30 June 2011 (the Intra-Group Agreement) was entered into between the Company and RDSI pursuant to which the Company sold and RDSI acquired the entire issued share capital of Tocris US. |
3 | The parties to this deed have agreed that, on and subject to the terms of this deed: |
3.1 | certain of RDSIs rights under the Agreement shall be assigned and transferred to RDSEL; and |
3.2 | certain of RDSELs rights under the Agreement shall be assigned and transferred to RDSI. |
IT IS AGREED AS FOLLOWS:
1 | DEFINITIONS AND INTERPRETATION |
1.1 | Unless the context requires otherwise: |
1.1.1 | words and expressions defined in the Agreement shall have the same meaning in this deed; and |
1.1.2 | the principles of interpretation set out in Clause 1 of the Agreement shall apply in this deed. |
1.2 | In this deed, the following words and expressions shall have the meaning defined in this Clause 1.2 of this deed: |
RDSEL Rights |
the rights and interest of RDSEL under the Warranties, the warranties in Clause 10 of the Agreement, the indemnities in Clause 11 of the Agreement and the Tax Covenant, in each case, to the extent the same relate to Tocris US and/or any of the business, assets, undertaking, officers and employees of Tocris US; and |
RDSI Rights |
the rights and interest of RDSI under the Warranties, the warranties in Clause 10 of the Agreement, the indemnities in Clause 11 of the Agreement and the Tax Covenant, in each case, to the extent the same relate to the Company, TCI and/or TCL and/or any of the business, assets, undertaking, officers and employees of any of the Company, TCI and TCL. |
1.3 | For the purposes of the definition of Transaction Documents in the Agreement, this deed shall be deemed to be a Transaction Document and the Agreement shall be varied accordingly. |
2 | ASSIGNMENT, TRANSFER AND NOVATION |
2.1 | In accordance with Clause 13 of the Agreement and Clause 6.12 of the Agreement: |
2.1.1 | RDSI assigns to RDSEL all its rights, title, interest, and benefit in and to the RDSI Rights; and |
2.1.2 | RDSEL assigns to RDSI all its rights, title, interest, and benefit in and to the RDSEL Rights. |
2.2 | This deed constitutes notice of the assignments made pursuant to Clause 2.1 of this deed to the Sellers Representative, the Sellers and TCF and acknowledgment by each of such persons of such notice of assignment is given by the execution of this deed by or on behalf of each of such persons. |
2.3 | Without prejudice to the assignments in Clause 2.1 of this deed, each of the parties to this deed acknowledges and agrees that: |
2.3.1 | RDSI shall have transferred to RDSEL all of the RDSI Rights including, without limitation, all rights in respect of and to pursue a Relevant Claim in relation to any of the RDSI Rights and to recover all losses suffered or incurred by any member of the Buyers Group in respect of the same and that RDSEL shall enjoy all the rights and benefits of RDSI in respect of the RDSI Rights as if it was named in the Agreement as having the benefit of the RDSI Rights in place of RDSI; |
2.3.2 | RDSEL shall have transferred to RDSI all of the RDSEL Rights including, without limitation, all rights in respect of and to pursue a Relevant Claim in relation to any of the RDSEL Rights and to recover all losses suffered or incurred by any member of the Buyers Group in respect of the same and that RDSI shall enjoy all the rights and benefits of RDSEL in respect of the RDSEL Rights as if it was named in the Agreement as having the benefit of the RDSEL Rights in place of RDSEL. |
2.4 | Each of the Sellers and TCF agrees to continue to perform the Agreement and be bound by its terms in every way and as if: |
2.4.1 | RDSEL was always entitled under the original terms of the Agreement to the RDSI Rights in place of RDSI; and |
2.4.2 | RDSI was always entitled under the original terms of the Agreement to the RDSEL Rights in place of RDSEL. |
3 | FURTHER ASSURANCE |
Each party to this deed shall do, or procure the doing of, all acts and things, and execute or procure the execution of, all documents and deeds, as may reasonably be required by RDSI and/or RDSEL to give full effect to this deed and/or to ensure that RDSEL obtains the full benefit of the RDSI Rights and that RDSI obtains the full benefit of the RDSEL Rights, in each case, in accordance with the terms of this deed.
4 | SEVERANCE |
4.1 | If any provision of this deed (or part of any provision of this deed) is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, all other provisions of this deed (and parts of provisions of this deed) shall not be affected and shall remain in force and effective. |
4.2 | If any invalid, unenforceable or illegal provision of this deed would be valid, enforceable or legal if some part of it were deleted, that provision shall apply with whatever modification is necessary to give effect to the commercial intention of the parties to this deed. |
5 | OTHER PROVISIONS |
The provisions of Clauses 9 (Announcements), 13 (Assignment), 14 (Whole Agreement), 15 (Variation and Waiver), 16 (Costs), 17 (Sellers Representative), 18 (Buyers Representative), 19 (Notices), 21 (Agreement Survives Completion), 22 (Third Party Rights). 23 (Limitation Act 1980), 24 (Successors), 25 (Counterparts), 26 (Governing Law and Jurisdiction) of the Agreement shall apply mutatis mutandis to this deed.
This document has been executed as a deed and is delivered and takes effect on the date stated at the beginning of it.
THE SCHEDULE
NAME | ADDRESS | |
Graham Miller |
Fosseway Lodge Fosseway Lodge Fosse Lane Bath BA1 7JS | |
Andrew Birnie |
Ashburnham 69 Coombe Lane Stoke Bishop Bristol BS9 2AZ | |
Jennifer Birnie |
Ashburnham 69 Coombe Lane Stoke Bishop Bristol BS9 2AZ | |
Richard Morley |
31 Ffordd y Capel Efail Isaf Pontypridd CF38 1AP | |
Rhod Samuel |
127 Roundways Coalpit Heath Bristol BS36 2LU | |
Graham Marsh |
21 Gauntlet Road Brockworth Gloucester GL3 4EB | |
Sophie Newton |
65 Cumbria Close Thornbury BS35 2YF | |
Stewart Read |
Knole Close Almondsbury Bristol BS32 4EJ |
Adele Sheehan |
First Floor Flat 60 Lower Redland Road Bristol BS6 6SS | |
Natalie Harker |
54 Parliament Street Chippenham SN14 0DE | |
Julian Wherlock |
8 Broadfield Road Knowle Bristol BS4 2UQ | |
Tina Humphries |
Waterslade Kites Croft Westbury-sub-Mendip BA5 1HU | |
Mark Cooper |
16 Nightingale Rise Portishead Bristol BS20 8LN | |
Pierre Lacrouts |
15 Northend Batheaston Bath BA1 7EE | |
Justin Cowell |
Sunnybank Stowell Hill Road Tytherington GL12 8UH | |
Robert Felix |
36 West View Road Bristol BS3 3JJ | |
Stephen Raynolds |
33 Napier Road Bath BA1 4LN | |
Didier Bruyere |
12 Station Road Ashley Down Bristol BS7 9LB | |
Louise Argent |
52 The Glebe Wrington Bristol BS40 5LX |
Burhan Karadogan |
31 Ffordd y Capel Efail Isaf Pontypridd CF38 1AP | |
Elsa Crawford |
47A Park Road Congresbury Bristol BS49 5HJ | |
Karl Swift |
30 Chasewood Corner Chalford Stroud GL6 8JS | |
Kim Swift |
30 Chasewood Corner Chalford Stroud GL6 8JS | |
Sarah Edwards |
44 Clarkson Avenue Milton West super Mare BS22 8EJ | |
David Peters |
12 Nightingale Rise Portishead Bristol BS20 8LN | |
Catherine Peters |
12 Nightingale Rise Portishead Bristol BS20 8LN | |
Esmond Jones |
36 Westmead Crescent Trowbridge Bath BA1 0LY | |
Duncan Crawford |
47A Park Road Congresbury Bristol BS49 5HJ | |
Laurence Ede |
41 High Bannerdown Bath BA1 7JZ |
Hazel Ede |
41 High Bannerdown Bath BA1 7JZ | |
Anthony Kenny |
30 Druid Stoke Avenue Bristol BS9 1DD | |
Robert Crews |
34 Old Sneed Park Bristol BS9 1RF | |
Joanne Clarke |
Fosseway Lodge Fosse Lane Bath BA1 7JS | |
Jennie Williams |
90 St Marys Road Shirehampton BS11 9PF | |
Ruth Cuffe |
Steepyfields, Shirehampton Bristol BS11 0DR | |
Janice Beale |
92 Stockwood Road Stockwood Bristol BS14 8JE |
SIGNED by R&D SYSTEMS EUROPE LIMITED acting by a director in the presence of | ||||
Thomas E. Oland | ||||
Director | ||||
WITNESS: |
||||
Signature: |
Frank Mortari | |||
Address: |
614 Mckinley Place N.E. | |||
Minneapolis, MN 55413 | ||||
USA | ||||
Occupation: |
Dir. Of Business Development |
SIGNED by RESEARCH AND DIAGNOSTIC SYSTEMS, INC acting by a director in the presence of: | ||||
Gregory J. Melsen | ||||
Director | ||||
WITNESS: |
||||
Signature: |
Frank Mortari | |||
Address: |
614 Mckinley Place N.E. | |||
Minneapolis, MN 55413 | ||||
USA | ||||
Occupation: |
Dir. of Business Development |
SIGNED (but not delivered until the date hereof) as a DEED by TOTAL CAPITAL FINANCE LIMITED acting by a director in the presence of: | ||||
Lee Morse | ||||
Director | ||||
WITNESS: |
||||
Signature: |
||||
Name (in block capitals) |
STEPHEN BRENIER | |||
Address: |
C/O 280 Bishopsgate | |||
London | ||||
EC2m 4RB | ||||
Occupation: |
Banker |
SIGNED (but not delivered until the date hereof) as a DEED by LAURENCE EDE in the presence of: | ||||
Laurence Ede | ||||
Laurence Ede | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
2 Temple Back East | |||
Temple Quay | ||||
Bristol, BS1 GEG | ||||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by GRAHAM MILLER acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by ANDREW BIRNIE acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by JENNIFER BIRNIE acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by RICHARD MORLEY acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by RHOD SAMUEL acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by GRAHAM MARSH acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by SOPHIE NEWTON acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by STEWART READ acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by ADELE SHEEHAN acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by NATALIE HARKER acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by JULIAN WHERLOCK acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by TINA HUMPHRIES acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by MARK COOPER acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by PIERRE LACROUTS acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by JUSTIN COWELL acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by ROBERT FELIX acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by STEPHEN REYNOLDS acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by DIDIER BRUYERE acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by LOUISE ARGENT acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by BURHAN KARADOGAN acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by ELSA CRAWFORD acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by KARL SWIFT acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by KIM SWIFT acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by SARAH EDWARDS acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by DAVID PETERS acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by CATHERINE PETERS acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by ESMOND JONES acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by DUNCAN CRAWFORD acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by HAZEL EDE acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by ANTHONY KENNY acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by ROBERT CREWS acting by his duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by JOANNE CLARKE acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by JENNIE WILLIAMS acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by RUTH CUFFE acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
SIGNED (but not delivered until the date hereof) as a DEED by JANICE BEALE acting by her duly appointed and authorised attorney and representative, Laurence Ede, in the presence of: |
||||
Laurence Ede | ||||
Attorney | ||||
WITNESS: |
||||
Signature: |
DAVID FERRIS | |||
Address: |
As Above | |||
Occupation: |
Solicitor |
Exhibit 31.1
CERTIFICATION
I, Thomas E. Oland, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Techne Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: February 7, 2012
/s/ Thomas E. Oland
Thomas E. Oland
Chief Executive Officer
CERTIFICATION
I, Gregory J. Melsen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Techne Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: February 7, 2012
/s/ Gregory J. Melsen
Gregory J. Melsen
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Techne Corporation (the Company) On Form 10-Q for the quarter ended December 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Thomas E. Oland, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Thomas E. Oland |
Chief Executive Officer February 7, 2012 |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Techne Corporation (the Company) On Form 10-Q for the quarter ended December 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Gregory J. Melsen,Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Gregory J. Melsen |
Chief Financial Officer February 7, 2012 |
Financial Information Relating to Reportable Segments (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2011
|
Dec. 31, 2010
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Segment Reporting Information [Line Items] | ||||
External sales | $ 74,662 | $ 67,708 | $ 152,258 | $ 135,653 |
Earnings before income taxes | 37,873 | 37,673 | 78,373 | 76,626 |
Biotechnology
|
||||
Segment Reporting Information [Line Items] | ||||
External sales | 69,808 | 63,080 | 142,111 | 126,121 |
Earnings before income taxes | 37,878 | 37,953 | 77,862 | 76,413 |
Hematology
|
||||
Segment Reporting Information [Line Items] | ||||
External sales | 4,854 | 4,628 | 10,147 | 9,532 |
Earnings before income taxes | 1,681 | 1,427 | 3,599 | 3,349 |
Reportable Segment
|
||||
Segment Reporting Information [Line Items] | ||||
Earnings before income taxes | 39,559 | 39,380 | 81,461 | 79,762 |
Unallocated Amount to Segment
|
||||
Segment Reporting Information [Line Items] | ||||
Earnings before income taxes | $ (1,686) | $ (1,707) | $ (3,088) | $ (3,136) |
Property and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2011
|
Jun. 30, 2011
|
---|---|---|
Cost: | ||
Land | $ 7,461 | $ 7,497 |
Buildings and improvements | 121,591 | 119,833 |
Laboratory equipment | 30,999 | 30,315 |
Office equipment | 5,614 | 5,407 |
Property, Plant and Equipment, Gross, Total | 165,665 | 163,052 |
Accumulated depreciation and amortization | 71,061 | 67,654 |
Property and equipment, net | $ 94,604 | $ 95,398 |
Property and equipment
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2011
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Property and equipment | D. Property and equipment: Property and equipment consist of (in thousands):
|
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