Bio-Techne (TECH) 10-K risk factor changes: FY2011 vs FY2010

Statements in this Annual Report on Form 10-K, and elsewhere, that are forward-looking involve risks and uncertainties which may affect the Company’s actual results of operations.

Certain of these risks and uncertainties which have affected and, in the future, could affect the Company’s actual results are discussed below.

The Company undertakes no obligation to update or revise any forward-looking statements made due to new information or future events.

Investors are cautioned not to place undue emphasis on these statements.

The following risk factors should be read carefully in connection with evaluation of the Company’s business and any forward-looking statements made in this Annual Report on Form 10-K and elsewhere.

Any of the following risks or others discussed in this Annual Report on Form 10-K or the Company’s other SEC filings, could materially adversely affect the Company’s business, operating results and financial condition.

The Company’s future growth is dependent on the development of new products in a rapidly changing technological environment.

A major element of the Company’s growth strategy is to increase revenues through new product releases.

As a result, the Company must anticipate industry trends and develop products in advance of customer needs.

New product development requires planning, designing and testing at both technological and manufacturing-process levels and may require significant research and development expenditures.

There can be no assurance that any products now in development, or that the Company may seek to develop in the future, will achieve feasibility or gain market acceptance.

There can also be no assurance that the Company’s competitors will not succeed in developing technologies and products that are more effective than any which have been or are being developed by the Company or that would render the Company’s technologies and products obsolete or noncompetitive.

Changes in economic conditions could negatively impact the Company’s revenues and earnings.

The Company’s biotechnology products are sold primarily to research scientists at pharmaceutical and biotechnology companies and at university and government research institutions.

Research and development spending by the Company’s customers and the availability of government research funding can fluctuate based on spending priorities and general economic conditions.

An economic downturn or a reduction or delay in governmental funding could cause customers to delay or forego purchases of the Company’s products.

The Company carries essentially no backlog of orders and changes in the level of orders received and filled daily can cause fluctuations in quarterly revenues and earnings.

The biotechnology and hematology industries are very competitive.

The Company faces significant competition across all of its product line and in each market in which it operates.

Competitors include companies ranging from start-up companies, who may be able to more quickly respond to customers’ needs, to large multinational companies, which may have greater financial and marketing resources than the Company.

In addition consolidation trends in the pharmaceutical and biotechnology industries have served to create fewer customer accounts and/or to concentrate purchasing decisions for some customers, resulting in increased pricing pressure on the Company.

The entry into the market of manufacturers in China and other low-cost manufacturing locations is also creating increased pricing pressures, particularly in developing markets.

Failure to anticipate and respond to competitors’ actions may impact the Company’s future sales and earnings.

The Company relies heavily on internal manufacturing and related operations to produce, package and distribute its products.

The Company manufactures the majority of the products it sells at its Minneapolis facility.

Quality control, packaging and distribution operations support all of the Company’s sales.

Any significant disruption of these operations for any reason could adversely affect sales and customer relationships, and therefore adversely affect the business.

While the Company has taken certain steps to manage these operational risks, and while insurance coverage may reimburse, in whole or in part, for losses related to such disruptions, the Company’s ability to provide products in the longer term could adversely affect future sales growth and earnings.

The design and manufacture of products involves certain inherent risks.

Manufacturing or design defects could lead to recalls, litigation or alerts relating to the Company’s products.

A recall could result in significant costs and damage to the Company’s reputation which could reduce demand for its products.

The Company is significantly dependent on sales made through foreign subsidiaries which are subject to changes in exchange rates.

Approximately 30% of the Company’s sales are made through its foreign subsidiaries, which make their sales in foreign currencies.

The Company’s revenues and earnings are, therefore, affected by fluctuations in currency exchange rates.

Any adverse movement in foreign currency exchange rates could negatively affect the Company’s revenues and earnings.

The Company may be unsuccessful in integrating Boston Biochem and Tocris into its operations.

The actual financial results of Boston Biochem and Tocris could differ from the Company’s forecasts, effecting the Company’s future sales and net earnings.

If the integrations of the acquired businesses are not successful, the Company may record unexpected impairment charges.

Factors that will affect the success of the acquisitions include any decrease in customer loyalty caused by dissatisfaction with the combined companies’ product lines or its sales and marketing practices, including price increases, the ability to retain key employees and the ability of the Company to achieve synergies among its subsidiary companies.

Such synergies include leveraging the combined companies’ sales and marketing efforts, achieving certain cost savings and effectively combining technologies to develop new products.

CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING INFORMATION

This report contains forward-looking statements, which are based on the Company’s current assumptions and expectations.

The principal forward-looking statements in this report include: the Company’s expectations regarding product releases, governmental license renewals, future tax rates, capital expenditures, future dividend declarations, adequacy of owned and leased property for future operations, and sufficiency of capital resources to meet the Company’s foreseeable future cash and working capital requirements.

All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended.

Although the Company believes there is a reasonable basis for the forward-looking statements, the Company’s actual results could be materially different.

The most important factors which could cause the Company’s actual results to differ from forward-looking statements are set forth in the Company’s description of risk factors in Item 1A to this Annual Report on Form 10-K.

Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statements.

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 Company’s 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.

On April 1, 2011, the Company acquired for approximately $7.9 million cash, the assets of Boston Biochem, Inc., a leading developer and manufacturer of innovative ubiquitin-related research products.

These products provide biomedical researchers the tools that facilitate and accelerate basic research and drug discovery efforts.

Boston Biochem was founded in 1997 and currently has over 800 ubiquitin-related products.

The Ubiquitin Proteasome Pathway is the principal system for protein degradation and signaling in eukaryotic cells.

Ubiquitination also affects proteasome-independent events such as protein localization, activity and function.

These pathways are central to the regulation of almost all cellular processes.

Ubiquitin and related pathways are associated with the regulation of numerous disease states including multiple cancers, diabetes, Parkinson’s, Alzheimer’s, cystic fibrosis, Angelman’s syndrome, Liddle syndrome and Wilson’s disease.

On April 28, 2011, the Company acquired for £75.0 million cash (approximately $124 million), 100% ownership of Tocris Holdings Limited and subsidiaries (Tocris), a leading supplier of reagents for non-clinical life science research.

Pursuant to the purchase agreement, £7.5 million of the purchase price paid to Tocris’ shareholders is being held in escrow for 18 months to secure warranty and indemnity obligations of the shareholders.

Tocris’ products are used in both in-vitro and in-vivo experiments, to understand biological processes and diseases.

The business is focused on making biologically active neuro- and bio-chemicals which are used by researchers to elucidate biological processes and pathways.

The products are used in life-science research activities and as part of the initial drug discovery process.

Tocris is a Bristol, U.K. based company with origins deriving from Tocris Neuramin and Cookson Chemical, which were founded in 1982 and 1985, respectively.

Tocris currently offers over 2,900 chemical, peptide and antibody products.

The principal end users are non-clinical laboratory based researchers, working in areas such as neuroscience, cardiovascular disease, endocrinology and cellular processes.

Originally a supplier of small molecules, Tocris has successfully pursued a strategy of extending its product range into related market segments such as signal transduction.

The products sold by Tocris are used in various research

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fields including cancer, cardiovascular disease, endocrinology, immunology, metabolic diseases, neurological diseases, pain and inflammation, and respiratory diseases.

From a cellular process perspective, Tocris products are used to study angiogenesis, apoptosis, cell cycle, cell metabolism, cellular skeleton and motor proteins, extracellular matrix, adhesion molecules, signal transduction and stem cells.

Tocris reagents are also used from a pharmacological perspective to study ion channels, 7-TM receptors, nuclear receptors, enzyme-linked receptors, transporter molecules and enzymes.

The Company has two reportable segments based on the nature of its products.

As a result of the above acquisitions, the Company has changed the presentation of its segment disclosure from three reporting segments (biotechnology, R&D Europe and hematology) to two reporting segments (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 Company’s biotechnology reporting segment develops, manufactures and sells biotechnology research and diagnostic products world-wide.

ABOUT MARKET RISK

At the end of fiscal 2011, the Company had a portfolio of fixed income securities, excluding those classified as cash and cash equivalents, of $195 million (see Note C to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K).

These securities, like all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase.

The Company’s investment policy requires all investment in short-term and long-term securities to have at least debt ratings of A1 or A3 (or the equivalent), respectively.

As the Company’s fixed income securities are classified as available-for-sale, no gains or losses are recognized by the Company in its Consolidated Statement 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.

The Company operates internationally, and thus is subject to potentially adverse movements in foreign currency rates.

Approximately 30% of consolidated net sales are made in foreign currencies, including 15% in euro, 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 Company’s foreign operations are translated into U.S. dollars for consolidation.

Month-end 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:

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | _Year Ended June 30,_ | | | | | | | | | | |

| | | _2011_ | | | | _2010_ | | | | _2009_ | | |

| British pound: | | | | | | | | | | | | |

| High | | $ | 1.67 | | | $ | 1.67 | | | $ | 1.98 | |

| Low | | | 1.53 | | | | 1.45 | | | | 1.43 | |

| Average | | | 1.59 | | | | 1.58 | | | | 1.60 | |

| Euro: | | | | | | | | | | | | |

| High | | $ | 1.48 | | | $ | 1.50 | | | $ | 1.56 | |

| Low | | | 1.27 | | | | 1.22 | | | | 1.27 | |

| Average | | | 1.37 | | | | 1.38 | | | | 1.37 | |

| Chinese yuan: | | | | | | | | | | | | |

| High | | $ | .155 | | | $ | .148 | | | $ | .147 | |

| Low | | | .148 | | | | .146 | | | | .146 | |

| Average | | | .151 | | | | .146 | | | | .146 | |

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The Company’s 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 June 30, 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 | | £ | 1,593 | | | $ | 2,557 | |

| Other European currencies | | £ | 921 | | | $ | 1,478 | |

| Intercompany payable in: | | | | | | | | |

| Euros | | £ | 284 | | | $ | 456 | |

| U.S. dollars | | £ | 266 | | | $ | 426 | |

| U.S. dollars | | yuan | 4,934 | | | $ | 763 | |

All of the above balances are revolving in nature and are not deemed to be long-term balances.

OVERVIEW

TECHNE Corporation was incorporated on July 17, 1981 in the state of Minnesota.

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 Company’s 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.

On April 1, 2011, the Company acquired for approximately $7.9 million cash, the assets of Boston Biochem, Inc., a leading developer and manufacturer of innovative ubiquitin-related research products.

These products provide biomedical researchers the tools that facilitate and accelerate basic research and drug discovery efforts.

Boston Biochem was founded in 1997 and currently has over 800 ubiquitin-related products.

The Ubiquitin Proteasome Pathway is the principal system for protein degradation and signaling in eukaryotic cells.

Ubiquitination also affects proteasome-independent events such as protein localization, activity and function.

These pathways are central to the regulation of almost all cellular processes.

Ubiquitin and related pathways are associated with the regulation of numerous disease states including multiple cancers, diabetes, Parkinson’s, Alzheimer’s, cystic fibrosis, Angelman’s syndrome, Liddle syndrome and Wilson’s disease.

On April 28, 2011, the Company acquired for £75.0 million cash (approximately $124 million), 100% ownership of Tocris Holdings Limited and subsidiaries (Tocris), a leading supplier of reagents for non-clinical life science research.

Pursuant to the purchase agreement, £7.5 million of the purchase price paid to Tocris’ shareholders is being held in escrow for 18 months to secure warranty and indemnity obligations of the shareholders.

Tocris’ products are used in both in-vitro and in-vivo experiments, to understand biological processes and diseases.

The business is focused on making biologically active chemicals which are used by researchers to elucidate biological processes and pathways.

The products are used in life-science research activities and as part of the initial drug discovery process.

Tocris is a Bristol, U.K. based company with origins deriving from Tocris Neuramin and Cookson Chemical, which were founded in 1982 and 1985, respectively.

Tocris currently offers over 2,900 chemical, peptide and antibody products.

The principal end users are non-clinical laboratory based researchers, working in areas such as neuroscience, cardiovascular disease, endocrinology and cellular processes.

Originally a supplier of small molecules, Tocris has successfully pursued a strategy of extending its product range into related market segments such as signal transduction.

The products sold by Tocris are used in various research fields including cancer, cardiovascular disease, endocrinology, immunology, metabolic diseases, neurological diseases, pain and inflammation, and respiratory diseases.

From a cellular process perspective, Tocris products are used to study angiogenesis, apoptosis, cell cycle, cell metabolism, cellular skeleton and motor proteins, extracellular matrix, adhesion molecules, signal transduction and stem cells.

Tocris reagents are also used from a pharmacological perspective to study ion channels, 7-TM receptors, nuclear receptors, enzyme-linked receptors, transporter molecules and enzymes.

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As a result of the above acquisitions, the Company has changed the presentation of its segment disclosure from three reporting segments (biotechnology, R&D Europe and hematology) to two reporting segments (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 Company’s biotechnology reporting segment develops, manufactures and sells biotechnology research and diagnostic products world-wide.

The Company’s hematology reporting segment, which consists of R&D Systems’ Hematology Division, develops and manufactures hematology controls and calibrators for sale world-wide.

Corresponding items of segment information have been revised for prior periods to conform to the current year presentation.

THE MARKET

The Company manufactures and sells products for the biotechnology research market and the clinical diagnostics market.

In fiscal 2011, 2010 and 2009, net sales from the Company’s biotechnology segment were 93% of consolidated net sales in each year.

The Company’s hematology segment net sales were 7% of consolidated net sales for each of fiscal 2011, 2010 and 2009.

Financial information relating to the Company’s segments is incorporated herein by reference to Note M to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

_Biotechnology segment_

The Company, through its biotechnology segment, is one of the world’s leading suppliers of specialized proteins, such as cytokines and related reagents, to the biotechnology research community.

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.

If the Company’s appeal is successful, after cancellation of the Streck patents, the Company may be issued a patent covering integrated hematology controls containing reticulocytes.

The Company does not believe the resolution of the above proceedings will have a material impact on the Company’s Consolidated Financial Statements.

10-K 1 d10k.htm FORM 10-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

| --- | --- |

For the fiscal year ended June 30, 2011

| ¨ | 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: 000-17272

TECHNE CORPORATION

(Exact name of Registrant as specified in its charter)

| | | |

| --- | --- | --- |

| Minnesota | | 41-1427402 |

| (State of Incorporation) | | (IRS Employer Identification No.) |

| | | |

| --- | --- | --- |

| | | |

| 614 McKinley Place N.E., Minneapolis, MN | | 55413-2610 |

| (Address of principal executive offices) | | (Zip Code) |

Registrant’s telephone number: (612) 379-8854

Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.01 par value

Name of each exchange on which registered: The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ¨ No x

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 registrants 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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.

| | | | | | | |

There are no unresolved staff comments as of the date of this report.

The Company owns the facilities that its headquarters and R&D Systems subsidiary occupy in Minneapolis, Minnesota.

The Minneapolis facilities are utilized by both the Company’s hematology and biotechnology segments.

The R&D Systems main complex includes approximately 500,000 square feet of administrative, research and manufacturing space in several adjoining buildings.

The Company owns two additional properties adjacent to its main complex.

The Company has renovated the first property and is currently leasing or plans to lease approximately 60% of the 176,000 square foot building as retail and office space and use the remainder as office, warehouse and storage space.

A portion of the second property is currently leased to third parties and the Company plans to continue to lease out the building until the space is needed for its own operations.

The Company owns approximately 649 acres of farmland, including buildings, in southeast Minnesota.

A portion of the land and buildings are being leased to third parties as cropland and for a dairy operation.

The remaining property is used by the Company to house goats and sheep for polyclonal antibody production for its biotechnology segment.

Rental income from the above properties was $549,000, $413,000 and $481,000 in fiscal 2011, 2010 and 2009, respectively.

The Company owns the 17,000 square foot facility that its R&D Europe subsidiary occupies in Abingdon, England.

This facility is utilized by the Company’s biotechnology segment.

The Company leases the following facilities, all of which are utilized by the Company’s biotechnology segment:

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| _Subsidiary_ | | _Location_ | | _Type_ | | _Square Feet_ | | |

| R&D GmbH | | Wiesbaden-Nordenstadt, Germany | | Office space | | | 4,200 | |

| BiosPacific | | Emeryville, California | | Office space | | | 3,000 | |

| R&D China | | Shanghai, China | | Office/warehouse | | | 5,600 | |

| R&D Hong Kong | | Hong Kong | | Office space | | | 1,200 | |

| Boston Biochem | | Cambridge, Massachusetts | | Office/lab | | | 6,000 | |

| Tocris | | Bristol, United Kingdom | | Office/manufacturing lab/warehouse | | | 11,000 | |

| Tocris | | Ellisville, Missouri | | Office/warehouse | | | 3,700 | |

The Company believes the owned and leased properties discussed above are adequate to meet its occupancy needs in the foreseeable future.

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PART II

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock trades on the NASDAQ Global Select Market under the symbol “TECH.” The following table sets forth for the periods indicated the high and low sales price per share for the Company’s common stock as reported by the NASDAQ Global Select Market.

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | _Fiscal 2011 Price_ | | | | | | | | _Fiscal 2010 Price_ | | | | | | |

| | | _High_ | | | | _Low_ | | | | _High_ | | | | _Low_ | | |

| 1st Quarter | | $ | 63.44 | | | $ | 55.63 | | | $ | 65.54 | | | $ | 58.91 | |

| 2nd Quarter | | | 68.12 | | | | 58.60 | | | | 69.95 | | | | 62.12 | |

| 3rd Quarter | | | 73.96 | | | | 65.33 | | | | 69.74 | | | | 60.00 | |

| 4th Quarter | | | 83.82 | | | | 71.54 | | | | 67.65 | | | | 57.10 | |

As of August 24, 2011, there were over 28,000 beneficial shareholders of the Company’s common stock and over 190 shareholders of record.

The Company paid quarterly cash dividends totaling $39.7 million and $38.4 million in fiscal 2011 and 2010, respectively.

Its Board of Directors periodically considers the payment of cash dividends.

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The following chart compares the cumulative total shareholder return on the Company’s common stock with the S&P Midcap 400 Index and the S&P 400 Biotechnology Index.

The comparison assumes $100 was invested on the last trading day before July 1, 2006 in the Company’s common stock and in each of the foregoing indices and assumes reinvestment of dividends.


The following table sets forth the repurchases of Company common stock for the quarter ended June 30, 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_ | | |

| 4/1/11 - 4/30/11 | | | 0 | | | | 0 | | | | 0 | | | $ | 50.6 million | |

| 5/1/11 - 5/31/11 | | | 0 | | | | 0 | | | | 0 | | | $ | 50.6 million | |

| 6/1/11 - 6/30/11 | | | 0 | | | | 0 | | | | 0 | | | $ | 50.6 million | |

In November 2007, the Company authorized a plan for the repurchase and retirement of up to $150 million of its common stock.

In April 2009, the Company authorized an additional $60 million for its stock repurchase plan.

The plan does not have an expiration date.

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_(dollars in thousands, except per share data)_

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| _Income and Share Data:_ | | _2011 (1)_ | | | | _2010_ | | | | _2009_ | | | | _2008_ | | | | _2007_ | | |

| Net sales | | $ | 289,962 | | | $ | 269,047 | | | $ | 263,956 | | | $ | 257,420 | | | $ | 223,482 | |

| Gross margin(2)(3) | | | 77.6 | % | | | 79.6 | % | | | 78.8 | % | | | 79.3 | % | | | 78.9 | % |

| Selling, general and administrative expenses(2)(3) | | | 12.4 | % | | | 12.2 | % | | | 12.8 | % | | | 14.5 | % | | | 14.4 | % |

| Research and development expenses(2)(3) | | | 9.0 | % | | | 9.3 | % | | | 8.9 | % | | | 8.7 | % | | | 9.0 | % |

| Operating income(2) | | | 56.2 | % | | | 58.1 | % | | | 57.1 | % | | | 56.1 | % | | | 55.6 | % |

| Earnings before income taxes(2) | | | 56.9 | % | | | 58.1 | % | | | 58.9 | % | | | 59.8 | % | | | 57.7 | % |

| Net earnings(2) | | | 38.7 | % | | | 40.8 | % | | | 39.9 | % | | | 40.2 | % | | | 38.1 | % |

| Net earnings | | $ | 112,302 | | | $ | 109,776 | | | $ | 105,242 | | | $ | 103,558 | | | $ | 85,111 | |

| Diluted earnings per share | | $ | 3.02 | | | $ | 2.94 | | | $ | 2.78 | | | $ | 2.64 | | | $ | 2.15 | |

| Average common and common equivalent shares — diluted (in thousands) | | | 37,172 | | | | 37,347 | | | | 37,900 | | | | 39,247 | | | | 39,513 | |

| Closing price per share: | | | | | | | | | | | | | | | | | | | | |

| High | | $ | 83.37 | | | $ | 69.65 | | | $ | 81.90 | | | $ | 79.73 | | | $ | 61.87 | |

| Low | | $ | 56.14 | | | $ | 57.10 | | | $ | 45.64 | | | $ | 56.20 | | | $ | 45.63 | |

| | | | | | | | | | | | | | | | | | | | | |

| _Balance Sheet Data as of June 30:_ | | _2011_ | | | | _2010_ | | | | _2009_ | | | | _2008_ | | | | _2007_ | | |

| Cash, cash equivalents and short-term available-for-sale investments | | $ | 140,813 | | | $ | 138,811 | | | $ | 202,887 | | | $ | 206,345 | | | $ | 164,774 | |

| Receivables | | | 37,860 | | | | 34,137 | | | | 31,153 | | | | 33,332 | | | | 30,966 | |

| Inventories | | | 44,906 | | | | 13,737 | | | | 11,269 | | | | 9,515 | | | | 8,757 | |

| Working capital | | | 212,229 | | | | 184,016 | | | | 239,944 | | | | 238,194 | | | | 195,645 | |

| Total assets | | | 617,670 | | | | 518,816 | | | | 472,005 | | | | 507,369 | | | | 454,844 | |

| | | | | | | | | | | | | | | | | | | | | |

| _Cash Flow Data:_ | | _2011_ | | | | _2010_ | | | | _2009_ | | | | _2008_ | | | | _2007_ | | |

| Net cash provided by operating activities | | $ | 127,194 | | | $ | 111,260 | | | $ | 111,321 | | | $ | 115,317 | | | $ | 90,503 | |

| Capital expenditures | | | 3,630 | | | | 4,644 | | | | 6,556 | | | | 16,365 | | | | 8,076 | |

| Cash dividends paid per common share(4) | | | 1.07 | | | | 1.03 | | | | 0.75 | | | | 0.00 | | | | 0.00 | |

| | | | | | | | | | | | | | | | | | | | | |

| _Financial Ratios:_ | | _2011_ | | | | _2010_ | | | | _2009_ | | | | _2008_ | | | | _2007_ | | |

| Return on average equity | | | 20.6 | % | | | 22.9 | % | | | 22.3 | % | | | 22.4 | % | | | 21.9 | % |

| Return on average assets | | | 19.8 | % | | | 22.2 | % | | | 21.5 | % | | | 21.5 | % | | | 20.6 | % |

| Current ratio | | | 12.7 | | | | 11.8 | | | | 16.5 | | | | 12.8 | | | | 12.4 | |

| Price to earnings ratio(5) | | | 28 | | | | 20 | | | | 23 | | | | 29 | | | | 27 | |

| | | | | | | | | | | | | | | | | | | | | |

| _Employee Data as of June 30:_ | | _2011_ | | | | _2010_ | | | | _2009_ | | | | _2008_ | | | | _2007_ | | |

| Full-time employees | | | 763 | | | | 684 | | | | 687 | | | | 666 | | | | 628 | |

| (1) | The Company acquired Boston Biochem, Inc. on April 1, 2011 and Tocris Holdings Limited and subsidiaries on April 28, 2011. |

| --- | --- |

CONSOLIDATED STATEMENTS OF EARNINGS

_TECHNE Corporation and Subsidiaries_

_(in thousands, except per share data)_

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | _Year Ended June 30,_ | | | | | | | | | | |

| | | _2011_ | | | | _2010_ | | | | _2009_ | | |

| Net sales | | $ | 289,962 | | | $ | 269,047 | | | $ | 263,956 | |

| Cost of sales | | | 65,025 | | | | 54,898 | | | | 55,923 | |

| | | | | | | | | | | | | |

| Gross margin | | | 224,937 | | | | 214,149 | | | | 208,033 | |

| | | | | | | | | | | | | |

| Operating expenses: | | | | | | | | | | | | |

| Selling, general and administrative | | | 35,897 | | | | 32,700 | | | | 33,689 | |

| Research and development | | | 25,985 | | | | 25,121 | | | | 23,564 | |

| | | | | | | | | | | | | |

| Total operating expenses | | | 61,882 | | | | 57,821 | | | | 57,253 | |

| | | | | | | | | | | | | |

| Operating income | | | 163,055 | | | | 156,328 | | | | 150,780 | |

| | | | | | | | | | | | | |

| Other income (expense): | | | | | | | | | | | | |

| Interest income | | | 3,752 | | | | 4,375 | | | | 7,634 | |

| Other non-operating expense, net | | | (1,826 | ) | | | (4,257 | ) | | | (3,051 | ) |

| | | | | | | | | | | | | |

| Total other income | | | 1,926 | | | | 118 | | | | 4,583 | |

| | | | | | | | | | | | | |

| Earnings before income taxes | | | 164,981 | | | | 156,446 | | | | 155,363 | |

| Income taxes | | | 52,679 | | | | 46,670 | | | | 50,121 | |

| | | | | | | | | | | | | |

| Net earnings | | $ | 112,302 | | | $ | 109,776 | | | $ | 105,242 | |

| | | | | | | | | | | | | |

| Earnings per share: | | | | | | | | | | | | |

| Basic | | $ | 3.03 | | | $ | 2.95 | | | $ | 2.78 | |

| Diluted | | $ | 3.02 | | | $ | 2.94 | | | $ | 2.78 | |

| Cash dividends per common share: | | $ | 1.07 | | | $ | 1.03 | | | $ | 0.75 | |

| Weighted average common shares outstanding: | | | | | | | | | | | | |

| Basic | | | 37,098 | | | | 37,255 | | | | 37,802 | |

| Diluted | | | 37,172 | | | | 37,347 | | | | 37,900 | |

See Notes to Consolidated Financial Statements.

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ACCOUNTING AND FINANCIAL DISCLOSURE

None.

_Evaluation of Disclosure 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 Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)).

Based on this evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective.

_Changes in Internal Controls_

There was no change in the Company’s internal control over financial reporting during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

_Management’s Annual Report on Internal Control over Financial Reporting_

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

As of June 30, 2011, management, under the supervision of the chief executive officer and chief financial officer, assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the assessment, management determined that the Company maintained effective internal control over financial reporting as of June 30, 2011.

KPMG LLP, our independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting.

None.

PART III

Other than “Executive Officers of the Registrant” which is set forth at the end of Item 1 in Part I of this report, the information required by Item 10 is incorporated herein by reference to the sections entitled “Election of Directors,” “Corporate Governance” and “Compliance With Section 16(a) of the Exchange Act” in the Company’s Proxy Statement for its 2011 Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year for which this report is filed.

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The information required by Item 11 is incorporated herein by reference to the section entitled “Corporate Governance” and “Executive Compensation Discussion and Analysis” in the Company’s Proxy Statement for its 2011 Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year for which this report is filed.

OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

Information about the Company’s equity compensation plans at June 30, 2011 is as follows:

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| _Plan Category_ | | _Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights_ | | | | _Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights_ | | | | _Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans_ | | |

| Equity compensation plans approved by Shareholders (1) | | | 499,000 | | | $ | 64.15 | | | | 2.8 million | |

| Equity compensation plans not approved by Shareholders | | | 0 | | | | 0 | | | | 0 | |

| (1) | Includes the Company’s 2010 Equity Incentive Plan, 1997 Incentive Stock Option Plan and 1998 Nonqualified Stock Option Plan. |

| --- | --- |

The remaining information required by Item 12 is incorporated by reference to the sections entitled “Principal Shareholders” and “Management Shareholdings” in the Company’s Proxy Statement for its 2011 Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year for which this report is filed.

The information required by Item 13 is incorporated by reference to the sections entitled “Corporate Governance” in the Company’s Proxy Statement for its 2011 Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year for which this report is filed.

The information required by Item 14 is incorporated herein by reference to the section entitled “Audit Matters” in the Company’s Proxy Statement for its 2011 Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year for which this report is filed.

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PART IV

A.

(1) List of Financial Statements.

The following Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K:

Consolidated Statements of Earnings for the Years Ended June 30, 2011, 2010 and 2009

Consolidated Balance Sheets as of June 30, 2011 and 2010

Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss) for the Years Ended June 30, 2011, 2010 and 2009

Consolidated Statements of Cash Flows for the Years Ended June 30, 2011, 2010 and 2009

Notes to Consolidated Financial Statements for the Years Ended June 30, 2011, 2010 and 2009

Report of Independent Registered Public Accounting Firm

A.

(2) Financial Statement Schedules.

All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the Consolidated Financial Statements or Notes thereto.

A.

(3) Exhibits.

See “Exhibit Index” immediately following signature page.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 | | |

| | | | | | | | | |

| Date: August 29, 2011 | | | | | | /s/ THOMAS E. OLAND | | |

| | | | | | | By: | | Thomas E. Oland |

| | | | | | | Its: | | President |

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

| | | | | |

| --- | --- | --- | --- | --- |

| Date | | Signature and Title | | |

| | | | | |

| August 29, 2011 | | | | /s/ THOMAS E. OLAND |

| | | | | Thomas E. Oland |

| | | | | Chairman of the Board, President, Chief Executive Officer and Director (principal executive officer) |

| | | | | |

| August 29, 2011 | | | | /s/ ROGER C. LUCAS, PH.D. |

| | | | | Dr. Roger C. Lucas |

| | | | | Vice Chairman and Director |

| | | | | |

| August 29, 2011 | | | | /s/ HOWARD V. O’CONNELL |

| | | | | Howard V. O’Connell, Director |

10-K 1 k2010.txt 10-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2010 ( ) 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: 000-17272 TECHNE CORPORATION (Exact name of Registrant as specified in its charter) Minnesota 41-1427402 (State of Incorporation) (IRS Employer Identification No.) 614 McKinley Place N.E., Minneapolis, MN 55413-2610 (Address of principal executive offices) (Zip Code) Registrant's telephone number: (612) 379-8854 Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.01 par value Name of each exchange on which registered: The Nasdaq Stock Market LLC (Nasdaq Global Select Market) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes (X) No ( ) Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ( ) No (X) 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 registrants 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 (Section 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 ( ) No ( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

(X) 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 ( ) Small reporting company ( ) Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2).

Yes ( ) No (X) The aggregate market value of the Common Stock held by non-affiliates of the Registrant, based upon the closing sale price on December 31, 2009 as reported on The Nasdaq Stock Market ($68.56 per share) was approximately $1.9 billion.

Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded.

Shares of $0.01 par value Common Stock outstanding at August 26, 2010: 37,043,775.

DOCUMENTS INCORPORATED BY REFERENCE Portions of the Company's Proxy Statement for its 2010 Annual Meeting of Shareholders are incorporated by reference into Part III.

TABLE OF CONTENTS Page PART I Item 1.

Business 1 Item 1A.

Risk Factors 9 Item 1B.

Unresolved Staff Comments 11 Item 2.

Properties 11 Item 3.

Legal Proceedings 11 Item 4.

(Removed and Reserved) 11 PART II Item 5.

Market for the Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 12 Item 6.

Selected Financial Data 14 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations 15 Item 7A.

Quantitative and Qualitative Disclosures about Market Risk 23 Item 8.

Financial Statements and Supplementary Data 25 Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 43 Item 9A.

Controls and Procedures 43 Item 9B.

Other Information 43 PART III Item 10.

Directors, Executive Officers and Corporate Governance 44 Item 11.

Executive Compensation 44 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 44 Item 13.

Certain Relationships and Related Transactions, and Director Independence 45 Item 14.

Principal Accounting Fees and Services 45 PART IV Item 15.

Exhibits and Financial Statement Schedules 45 SIGNATURES 46 i PART I ITEM 1.

BUSINESS OVERVIEW TECHNE Corporation was incorporated on July 17, 1981 in the state of Minnesota.

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) and BiosPacific, Inc. (BiosPacific).

The Company distributes biotechnology products in Europe through its wholly-owned U.K. subsidiary, R&D Systems Europe Ltd. (R&D Europe).

R&D Europe has a sales subsidiary, R&D Systems GmbH, in Germany and a sales office in France.

The Company distributes biotechnology products in China through its wholly-owned subsidiary, R&D Systems China, Co. Ltd. (R&D China).

The Company has three reportable operating segments based on the nature of products and geographic location: biotechnology, R&D Europe and hematology.

The biotechnology segment consists of R&D Systems' Biotechnology Division, BiosPacific and R&D China, which develop, manufacture and sell biotechnology research and diagnostic products world-wide.