SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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, 1998, 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 (I.R.S. Employer of incorporation or organization) Identification No.) 614 MCKINLEY PLACE N.E. (612) 379-8854 MINNEAPOLIS, MN 55413 (Registrant's telephone number, (Address of principal (Zip Code) including area code) executive offices) 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 ( ) At February 1, 1999, 20,088,355 shares of the Company's Common Stock (par value $.01) were outstanding. PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS TECHNE CORPORATION & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
12/31/98 6/30/98 ------------ ------------ ASSETS Cash and cash equivalents $ 13,651,175 $ 27,372,345 Short-term investments 12,100,711 15,321,935 Accounts receivable (net) 12,281,320 10,001,937 Inventories 8,614,812 3,810,600 Deferred income taxes 1,825,000 1,583,000 Other current assets 567,302 431,187 ------------ ------------ Total current assets 49,040,320 58,521,004 Deferred income taxes 2,347,000 1,798,000 Fixed assets (net) 12,454,899 11,687,300 Intangible assets (net) 50,341,749 293,854 Other assets 446,800 618,723 ------------ ------------ TOTAL ASSETS $114,630,768 $ 72,918,881 ============ ============ LIABILITIES & EQUITY Trade accounts payable $ 2,908,066 $ 2,203,130 Salary and related accruals 1,394,560 2,005,428 Other payables 5,848,454 1,039,334 Income taxes payable 2,518,020 2,185,122 ------------ ------------ Total current liabilities 12,669,100 7,433,014 Deferred rent 1,809,300 1,655,100 Royalty payable 13,382,000 - Common stock, par value $.01 per share; authorized 50,000,000; issued and outstanding 20,058,509 and 19,049,983, respectively 200,585 190,500 Additional paid-in capital 31,634,868 13,714,445 Retained earnings 54,483,713 49,446,319 Accumulated foreign currency translation adjustments 451,202 479,503 ------------ ------------ Total stockholders' equity 86,770,368 63,830,767 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $114,630,768 $ 72,918,881 ============ ============
See notes to unaudited Consolidated Financial Statements. TECHNE CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
QUARTER ENDED SIX MONTHS ENDED ------------------------ ------------------------ 12/31/98 12/31/97 12/31/98 12/31/97 ----------- ----------- ----------- ----------- Sales $21,464,259 $15,472,857 $42,799,451 $31,010,000 Cost of sales 6,228,253 4,885,856 12,843,130 9,431,762 ----------- ----------- ----------- ----------- Gross margin 15,236,006 10,587,001 29,956,321 21,578,238 Operating expenses (income): Selling, general and administrative 4,468,183 3,850,195 8,899,278 7,853,599 Research and development 2,941,986 2,515,658 5,694,111 4,981,506 Amortization expense 2,394,662 9,663 4,789,324 52,134 Interest income (230,672) (286,499) (443,083) (530,367) ----------- ----------- ----------- ----------- 9,574,159 6,089,017 18,939,630 12,356,872 ----------- ----------- ----------- ----------- Earnings before income taxes 5,661,847 4,497,984 11,016,691 9,221,366 Income taxes 2,075,000 1,370,000 3,905,000 2,831,000 ----------- ----------- ----------- ----------- NET EARNINGS $ 3,586,847 $ 3,127,984 $ 7,111,691 $ 6,390,366 =========== =========== =========== =========== BASIC EARNINGS PER SHARE $ 0.18 $ 0.17 $ 0.35 $ 0.34 DILUTED EARNINGS PER SHARE $ 0.17 $ 0.16 $ 0.35 $ 0.33
See notes to unaudited Consolidated Financial Statements. TECHNE CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED ---------------------------- 12/31/98 12/31/97 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 7,111,691 $ 6,390,366 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 5,871,521 1,121,240 Deferred income taxes (795,000) (273,000) Deferred rent 154,200 356,400 Tax benefit from exercise of options 179,000 44,000 Other 321,923 273,187 Change in current assets and current liabilities, net of acquisition: (Increase) decrease in: Accounts receivable (2,246,896) 322,086 Inventories 902,067 61,271 Other current assets (136,175) (41,986) Increase (decrease) in: Trade account/other payables (60,760) 650,478 Salary and related accruals (612,880) (68,409) Income taxes payable 339,183 91,008 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 11,027,874 8,926,641 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition (Note B) (24,977,219) - Purchase of short-term investments (7,277,214) (14,547,334) Proceeds from sale of short-term investments 10,498,438 8,206,450 Additions to fixed assets (1,525,295) (1,648,881) Proceeds from sale of fixed assets - 246,728 Increase in other long term assets (150,000) - ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (23,431,290) (7,743,037) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 752,894 367,796 Repurchase of common stock (2,075,683) (280,000) ----------- ----------- NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,322,789) 87,796 EFFECT OF EXCHANGE RATE CHANGES ON CASH 5,035 30,400 ----------- ----------- NET CHANGE IN CASH AND EQUIVALENTS (13,721,170) 1,301,800 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 27,372,345 8,598,367 ----------- ----------- CASH AND EQUIVALENTS AT END OF PERIOD $13,651,175 $ 9,900,167 =========== ===========
See notes to unaudited Consolidated Financial Statements. TECHNE CORPORATION & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) A. BASIS OF PRESENTATION: The unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles and with instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying unaudited Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary to 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 Annual Report to Shareholders for Fiscal 1998. The Company follows these policies in preparation of the interim Financial Statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that the Consolidated Financial Statements be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto for the fiscal year ended June 30, 1998 included in the Company's Annual Report to Shareholders for Fiscal 1998. Certain Consolidated Balance Sheet captions appearing in this interim report are as follows:
12/31/98 6/30/98 ----------- ----------- ACCOUNTS RECEIVABLE Accounts receivable $12,550,320 $10,270,937 Less reserve for bad debts 269,000 269,000 ----------- ----------- NET ACCOUNTS RECEIVABLE $12,281,320 $10,001,937 =========== =========== INVENTORIES Raw materials $ 1,992,540 $ 2,125,365 Supplies 181,328 145,539 Finished goods 6,440,944 1,539,696 ----------- ----------- TOTAL INVENTORIES $ 8,614,812 $ 3,810,600 =========== =========== FIXED ASSETS Laboratory equipment $10,927,794 $ 9,944,951 Office equipment 3,077,207 2,923,110 Leasehold improvements 10,924,938 10,243,142 ----------- ----------- 24,929,939 23,111,203 Less accumulated depreciation and amortization 12,475,040 11,423,903 ----------- ----------- NET FIXED ASSETS $12,454,899 $11,687,300 =========== =========== INTANGIBLE ASSETS Customer lists $18,010,000 $ 1,010,000 Technology licensing agreements 500,000 500,000 Goodwill 39,062,766 1,225,547 ----------- ----------- 57,572,766 2,735,547 Less accumulated amortization 7,231,017 2,441,693 ----------- ----------- NET INTANGIBLE ASSETS $50,341,749 $ 293,854 =========== ===========
Effective July 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," which requires disclosures of comprehensive income and its components in the Company's financial statements. The Company's total comprehensive income for the quarters ended December, 1998 and 1997 were $3,418,159 and $3,239,763, respectively. The Company's total comprehensive income for the six months ended December 31, 1998 and 1997 were $7,083,390 and $6,379,860, respectively. The Company's comprehensive income consists of net income, unrealized holding gains and losses on securities and foreign currency translation adjustments. On June 30, 1999, the Company will adopt Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information," which requires the disclosure of financial and descriptive information about the reportable operating segments of the Company. B. ACQUISITION: On July 1, 1998, the Company, through its Research and Diagnostics Systems, Inc. subsidiary, acquired the research products business of Genzyme Corporation. Assets acquired were as follows: Inventories $ 5,660,000 Equipment 320,000 Customer list 17,000,000 ----------- $22,980,000 =========== The purchase price paid and payable for the acquisition is as follows: $24.76 million cash, 987,206 shares of Techne common stock valued at $17 million and $18.84 million of royalties (present value of an estimated $23.7 million payable over five years) on the Company's biotechnology sales. The excess of the consideration (including acquisition costs) over the fair market value of the assets acquired has been recorded as goodwill and is being amortized on a straight-line basis over six years. The customer list is being amortized on a declining basis over an estimated economic life of five years. Pro forma financial information for the quarter and six months ended December 31, 1997, presented as if the acquisition had occurred on July 1, 1997, are as follows (in 000's except earnings per share data):
QUARTER ENDED SIX MONTHS ENDED ------------- ---------------- 12/31/97 12/31/97 ----------- ---------------- Sales $19,024 $38,082 Net earnings 688 1,785 Basic earnings per share .03 .09 Diluted earnings per share .03 .09
C. EARNINGS PER SHARE: Shares used in the earnings per share computations are as follows:
QUARTER ENDED SIX MONTHS ENDED ---------------------- ---------------------- 12/31/98 12/31/97 12/31/98 12/31/97 ---------- ---------- ---------- ---------- Weighted average common shares outstanding--basic 20,048,267 18,898,817 20,082,018 18,883,475 Dilutive effect of stock options and warrants 495,235 726,937 461,470 684,750 ---------- ---------- ---------- ---------- Average common shares outstanding--diluted 20,543,502 19,625,754 20,543,488 19,568,225 ========== ========== ========== ==========
D. SUBSEQUENT EVENT: On January 22, 1999, the Company entered into agreements to acquire real estate which its wholly-owned subsidiary, R&D Systems, currently occupies in Minneapolis, Minnesota. The purchase price of the properties is approximately $28 million, which will be paid through the issuance of 100,000 shares of Common Stock and cash of approximately $25.8 million. A substantial portion of the cash requirement will be obtained through mortgage financing. The closing of the purchase transaction is expected to be in July, 1999. In addition to agreements to purchase the currently occupied properties, the Company has acquired options on property adjacent to its R&D Systems' facility to provided future expansion space for the Company. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Quarter and Six Months Ended December 31, 1998 vs. Quarter and Six Months Ended December 31, 1997 Techne Corporation (Techne) has two operating subsidiaries: Research and Diagnostic Systems, Inc. (R&D Systems) located in Minneapolis, Minnesota and R&D Systems Europe Ltd. (R&D Europe) located in Abingdon, England. R&D Systems has two divisions: Biotechnology and Hematology. The Biotechnology Division manufactures purified cytokines (proteins), antibodies and assay kits which are sold primarily to biomedical researchers and clinical research laboratories. The Hematology Division develops and manufactures whole blood hematology controls and calibrators which are sold to hospital and clinical laboratories to check the performance of their hematology instruments to assure the accuracy of hematology test results. R&D Europe sells R&D Systems' biotechnology products in Europe, both directly and through a sales subsidiary in Germany. The Company has a foreign sales corporation, Techne Export Inc. In November 1997, January 1998 and July 1998, Techne purchased a total of $3 million of preferred stock of ChemoCentryx, Inc. (CCX), representing approximately 37% of issued and outstanding voting shares. In addition, Techne is obligated to purchase up to an additional $2 million of preferred stock over the next year upon CCX's achievement of certain milestones. After purchase of the additional preferred shares, Techne will own approximately 49% of the issued and outstanding voting shares (assuming no investment by other parties). Techne has consolidated CCX into its financial statements due to the limited amount of cash consideration provided by the holders of the common shares of CCX. CCX is a new technology and drug development company working in the area of chemokines. Chemokines are cytokines which regulate the trafficking patterns of leukocytes, the effector cells of the human immune system. In conjunction with the equity investment and joint research efforts, Techne obtains exclusive worldwide research and diagnostic marketing rights to chemokine proteins, antibodies and receptors discovered or developed by CCX or R&D Systems. Net Sales Net sales for the quarter ended December 31, 1998 were $21,464,259, an increase of $5,991,402 (39%) from the quarter ended December 31, 1997. Sales for the six months ended December 31, 1998 increased $11,789,451 (38%) from $31,010,000 to $42,799,451. R&D Systems sales increased $4,368,189 (40%) and $8,732,439 (38%) for the quarter and six months ended December 31, 1998, respectively. R&D Europe sales increased $1,623,213 (37%) and $3,057,012 (37%) for the quarter and six months ended December 31, 1998, respectively. The increase in sales for the quarter and six months was due, in part, to the acquisition of Genzyme Corporation's research products business on July 1, 1998. Sales of these products were $1,701,770 and $4,164,797 for the quarter and six months ended December 31, 1998, respectively. In addition, the increase in consolidated sales for the quarter and six months was due to increased sales of R&D Systems' cytokines, antibodies and immunoassay kits to both R&D Systems customers and to former Genzyme customers as they are converted from Genzyme products to R&D Systems products. Gross Margins Gross margins, as a percentage of sales, increased slightly from the prior year. Margins for the second quarter of fiscal 1999 were 71.0% compared to 68.4% for the same quarter in fiscal 1998. Margins for the six months ended December 31, 1998 were 70.0% compared to 69.6% for the same period in fiscal 1998. R&D Europe gross margins decreased from 48.6% to 46.4% for the quarter and from 50.6% to 46.6% for the six months ended December 31, 1998 as a result of the conversion from both manufacturing and sales activities to a sales only function through the transfer of all manufacturing activities to R&D Systems during fiscal 1998. Hematology Division gross margins increased from 42.2% to 47.2% for the quarter and from 45.5% to 46.6% for the six months ended December 31, 1998 as a result of changes in product mix and increased volumes. Biotechnology Division gross margins increased from 70.9% to 72.11% for the quarter, but decreased slightly from 72.0% to 71.0% for the six months ended December 31, 1998. The decrease in Biotechnology Division gross margins for the six months was a result of lower gross profit levels on the inventory acquired from Genzyme during the first quarter of fiscal 1999. In the second quarter, the lower gross profit on Genzyme products was offset by the increased sales of higher margin R&D Systems products. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $617,988 (16%) from the second quarter of fiscal 1998 to the second quarter of fiscal 1999. These expenses also increased $1,045,679 (13%) for the first six months of fiscal 1999. The majority of the increase for the quarter and six months was due to additional sales personnel added in the U.S. and Europe as a result of the Genzyme acquisition. Research and Development Expenses Research and development expenses increased $426,328 (17%) and $712,605 (14%) for the quarter and six months ended December 31, 1998. The increase related to products currently under development, many of which have been or will be released in fiscal 1999. Products currently under development include both biotechnology and hematology products. Amortization Expense Amortization expense increased $2,384,999 and $4,737,190 for the quarter and six months ended December 31, 1998 as a result of the customer list and goodwill associated with the Genzyme acquisition. Net Earnings Earnings before income taxes increased $1,163,863 from $4,497,984 in the second quarter of fiscal 1998 to $5,661,847 in the second quarter of fiscal 1999. Earnings before taxes for the six months increased $1,795,325 from $9,221,366 to $11,016,691. The increase in earnings before income taxes was due mainly to an increase in Biotechnology Division earnings of $867,983 and $1,722,086, an increase in R&D Europe earnings of $306,745 and $366,627, and an increase in Hematology Division earnings of $232,478 and $205,050 for the quarter and six months ended December 31, 1998. These increases were reduced by a net loss by CCX in the second quarter and first six months of fiscal 1999. Income taxes for the quarter and six months ended December 31, 1998 were provided at a rate of approximately 37% and 35% of consolidated pretax earnings compared to 30% and 31% for the prior year. The increase in the tax rate is due to the net loss by CCX in the second quarter and first six months of fiscal 1999 for which no tax benefit has been provided. U.S. federal taxes have been reduced by the credit for research and development expenditures and the benefit of the foreign sales corporation. Foreign income taxes have been provided at rates which approximate the tax rates in the United Kingdom and Germany. Liquidity and Capital Resources At December 31, 1998, cash and cash equivalents and short-term investments were $25,751,886 compared to $42,694,280 at June 30, 1998. The decrease from June 30, 1998 was due to the cash outlay for the Genzyme acquisition. The Company believes it can meet its future cash, working capital and capital addition requirements (excluding real estate to be acquired in July, 1999) through currently available funds, cash generated from operations and maturities of short-term 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 years. Cash Flows From Operating Activities The Company generated cash of $11,027,874 from operating activities in the first six months of fiscal 1999 compared to $8,926,641 for the first six months of fiscal 1998. The increase was mainly the result of increased net earnings adjusted for noncash expenses partially offset by increased accounts receivable. Cash Flows From Investing Activities On July 1, 1998 the Company acquired the research products business of Genzyme Corporation for $24.76 million cash, $17 million common stock and royalties on the Company's biotechnology sales for five years. Cash and cash equivalents at June 30, 1998 and maturities of short-term investments were used to finance the cash portion of the acquisition. During the six months ended December 31, 1998 short-term investments decreased by $3,221,224. During the six months ended December 31, 1997, the Company increased short-term investments by $6,340,884. The Company's investment policy is to place excess cash in short-term tax-exempt bonds. The objective of this policy is to obtain the highest possible return with the lowest risk, while keeping the funds accessible. Capital additions were $1,525,295 for the first six months of fiscal 1999, compared to $1,648,881 for the first six months of fiscal 1998. Included in the fiscal 1999 and 1998 additions were $683,000 and $721,000 for leasehold improvements related to remodeling of facilities by R&D Systems. The remaining additions in fiscal 1999 and 1998 were for laboratory and computer equipment. Total expenditures for capital additions planned for the remainder of fiscal 1999 are expected to cost approximately $4.5 million and are expected to be financed through currently available funds and cash generated from operating activities. Cash Flows From Financing Activities Cash of $752,894 and $367,796 was received during the six months ended December 31, 1998 and 1997, respectively, for the exercise of options for 158,420 and 46,540 shares of common stock. During the first six months of fiscal 1998, options for 24,506 shares of common stock were exercised by the surrender of 7,624 shares of the Company's common stock with a fair market value of $126,194. During the first six months of fiscal 1999 and 1998, the Company purchased and retired 138,600 and 20,000 shares, respectively, of Company common stock at market values of $2,075,683 and $280,000. The Board of Directors has authorized the Company, subject to market conditions and share price, to purchase and retire up to $10 million of its common stock. Through February 1, 1999, 575,600 shares have been purchased at a market value of $6,887,547. The Company has never paid cash dividends and has no plans to do so in fiscal 1999. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK At December 31, 1998, the Company had an investment portfolio of fixed income securities, excluding those classified as cash and cash equivalents, of $12,100,711. These securities, like all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase. However, the Company has the ability to hold its fixed income investments until maturity and therefore the Company would not expect to recognize an adverse impact in income or cash flows. The Company operates internationally, and thus is subject to potentially adverse movements in foreign currency rate changes. The Company does not enter into foreign exchange forward contracts to reduce its exposure to foreign currency rate changes on intercompany foreign currency denominated balance sheet positions. Historically, the effect of movements in the exchange rates haS been immaterial to the consolidated operating results of the Company. Y2K AND EURO CURRENCY ISSUES The Company must take steps to ensure that it is not adversely affected by Y2K software failures which may arise in software applications where two- year digits are used to define the applicable year. The Company is conducting a review of all of its computer systems (information technology as well as embedded systems) to identify those areas that could be affected by Year 2000 noncompliance. The Company plans to complete the process of upgrading those systems which may not be Y2K compliant by mid 1999 and does not believe the cost of any such upgrades will be material. The Company is in the process of developing contingency plans should systems fail. The Company has also communicated with many of its suppliers and service providers regarding compliance with Y2K requirements. As a result of such inquiries, no significant deficiencies have been identified. The Company will continue to monitor these third parties for Y2K compliance. There can be no assurance, however, that there will not be a delay in, or increased costs associated with, upgrading the Company's computer systems, which could have a material adverse effect on the operations and financial position of the Company. In addition, there can be no assurances that the Company's customers and suppliers will not be adversely affected by their own Y2K issues, which may indirectly adversely affect the Company. The Company has implemented new accounting and operational software at its European subsidiary which accommodated the conversion on January 1, 1999 to a common currency, the "euro," by members of the European Union. The software is also Y2K compliant. PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS No change. ITEM 2 - CHANGES IN SECURITIES None ITEM 3 - DEFAULTS UPON SENIOR SECURITIES None ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SHAREHOLDERS Information relating to the Company's Annual Meeting of Shareholders, held on October 22, 1998 is contained in the Company's Form 10-Q for the quarter ended September 30, 1998, which is incorporated herein by reference. ITEM 5 - OTHER INFORMATION Forward Looking Information and Cautionary Statements: Statements in this filing, and elsewhere, which look forward in time involve risks and uncertainties which may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company's actual results: the level of success in converting customers and distributors of Genzyme Corporation's research product business to the Company and selling the Company's broader range of products to the former Genzyme customers and distributors, the introduction and acceptance of new biotechnology and hematology products, the levels and particular directions of research into cytokines by the Company's customers, the impact of the growing number of producers of cytokine research products and related price competition, the retention of hematology OEM and proficiency survey business, the Company's expansion of marketing efforts in Europe, and the costs and results of research and product development efforts of the Company and of companies in which the Company has invested or with which it has formed strategic relationships. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K A. EXHIBITS See exhibit index immediately following signature page. B. REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended December 31, 1998. SIGNATURE 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 12, 1998 Thomas E. Oland -------------------------------- Thomas E. Oland President, Chief Executive and Financial Officer EXHIBIT INDEX TO FORM 10-Q TECHNE CORPORATION Exhibit # Description ---------- ------------------ 10.1 Purchase Agreement dated January 22, 1999, between R&D Systems, Inc. and Hillcrest Development, relating to the purchase of property at 614 and 640 McKinley Place NE and 2201 Kennedy Street in Minneapolis, Minnesota and First Amendment to the Purchase Agreement, dated February 5, 1999 27 Financial Data Schedule