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Bio-Techne Corporation
614 McKinley Place NE
Minneapolis, MN 55413-2610, USA
(612) 379-8854
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~225,000 additional
Abs and digital platform
*
Small
Molecules
Low-cost protein
manufacturing
in China
*
Proteins
e R e a g e n ts
r
o
FISCAL 2015
Products and Technology Expansion
Antibodies
trols and IVD C
n
o
C
l
a
c
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n
i
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C
P
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o
t
e
i
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P
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a
t
f
o
m
s Global Footprint
Arrays
Blood chemistry
and urine controls
*
Luminex®
n
t i o
a
t
n
u m e
r
t
s
I n
*
Making protein
analysis simple
1400+
Employees
Assays
*
Immunoassay
automation and
multiplexing
Annual Meeting
The annual meeting of shareholders of
Bio-Techne Corporation will be held at the corporate office,
614 McKinley Place NE, Minneapolis, Minnesota, on
Thursday, October 29, 2015, at 3:30 p.m. (CDT).
Bio-Techne Corporation
614 McKinley Place NE
Minneapolis, MN 55413-2610, USA
(612) 379-8854
ProteinSimple
3001 Orchard Parkway
San Jose, CA 95134, USA
(408) 510-5500
Research & Diagnostic Systems, Inc.
614 McKinley Place NE
Minneapolis, MN 55413-2610, USA
(612) 379-8854
ProteinSimple Ltd.
27 Coronet Road
Toronto, Ontario, Canada
M8Z 2L8
(416) 231-1664
ProteinSimple Ltd.
115 Terence Matthews Crescent
Ottawa, ON, Canada
K2M 2B2
(613) 591-7715
ProteinSimple Bioscience & Technology (Shanghai) Co., Ltd.
Room 1007, No. 1 Building, Sandhill Plaza
Lane No. 2290, Zuchongzhi Road, Zhangjiang High-Tech Park
Shanghai 201203 China
+86-21-60276091
ProteinSimple Japan K.K.
HULIC Nihonbashi Muromachi Building 9F
3-4-7 Nihonbashi Muromachi, Chuo-ku
Tokyo 103-0022 Japan
CyVek, Inc.
2 Barnes Industrial Rd S,
Wallingford, CT 06492, USA
(203) 679-0395
BiosPacific, Inc.
5980 Horton Street, Suite 360
Emeryville, CA 94608, USA
(510) 652-6155
Bionostics, Inc.
7 Jackson Road
Devens, MA 01434, USA
(978) 772-7070
Boston Biochem, Inc.
840 Memorial Drive
Cambridge, MA 02139, USA
(617) 576-2210
R&D Systems China Co., Ltd.
15K Hua Min Empire Plaza
726 West Yan An Road
Shanghai, PRC 200050
86 (21) 52380373
Bio-Techne Hong Kong Limited
Unit 208B, 2nd Floor Photonics Ctr.
HKSTP Phase One
Pak Shek Kok, Tai Po, NT.
Hong Kong
Shanghai PrimeGene
Bio-Tech Co., Ltd. (China)
Shanghai, PRC
(852) 29926006
Novus Biologicals, LLC
8100 Southpark Way, A-8
Littleton, CO 80120, USA
(303) 730-1950
Novus Biologicals Canada ULC
461 North Service Road West Unit B37
Oakville, ON L6M 2V5, Canada
(905) 827-6400
Cliniqa Corporation
288 Distribution St,
San Marcos, CA 92078, USA
(760) 744-1900
R&D Systems Europe Ltd.
19 Barton Lane
Abingdon Science Park
Abingdon, OX14 3NB,
United Kingdom
+ 44 (0)1235 529449
R&D Systems GmbH
Borsigstrasse 7a
65205 Wiesbaden-Nordenstadt, Germany
6122 90980
Tocris Cookson Limited
Tocris House, IO Centre
Moorend Farm Avenue
Bristol, BS11 0QL
United Kingdom
+ 44 (0)117 916-3333
Board of Directors
Executive Officers
Robert V. Baumgartner
Chairman of the Board and Director
Charles Kummeth
President and Chief Executive Officer
Roger C. Lucas, Ph.D.
Vice Chairman and Director
James T. Hippel
Chief Financial Officer
Charles Kummeth
President, Chief Executive Officer and Director
J. Fernando Bazan, Ph.D.
Chief Technology Officer
David Eansor
Senior VP, Biotechnology Division
Brenda Furlow
Senior VP, General Counsel
Robert Gavin
Senior VP, Protein Platforms Division
Marcel Veronneau
Senior VP, Clinical Controls Division
Charles A. Dinarello, M.D.
Director
John L. Higgins
Director
Karen A. Holbrook, Ph.D.
Director
Roeland Nusse, Ph.D.
Director
Howard O’Connell
Director
Randolph C. Steer, M.D., Ph.D.
Director
Harold J. Wiens
Director
TECH is Bio-Techne Corporation’s Nasdaq stock symbol, which is listed on the Nasdaq Global Select Market.
Charles Kummeth
President and Chief Executive Officer
To Our Shareholders
What a year for Bio-Techne!
Our fiscal year (cid:21)(cid:19)(cid:20)(cid:24) was a year of i(cid:80)portant progress
on our strategic plan, a year of i(cid:80)proved growth and
certainly a year of integration(cid:17)
(cid:48)uch of our strategic plan is driven by ac(cid:84)uisitions
and integration of those ac(cid:84)uisitions, and fiscal year
(cid:21)(cid:19)(cid:20)(cid:24) was a busy one for ac(cid:84)uisitions(cid:17) (cid:58)e ac(cid:84)uired
(cid:49)ovus Biologicals and Protein(cid:54)i(cid:80)ple(cid:17) (cid:58)e also
co(cid:80)pleted the ac(cid:84)uisition of Cy(cid:57)e(cid:78) last (cid:49)ove(cid:80)ber(cid:17)
(cid:44)n (cid:45)uly (cid:21)(cid:19)(cid:20)(cid:24), we ac(cid:84)uired Clini(cid:84)a Corporation(cid:17)
Much of our
strategic plan
is driven by
acquisitions
and integration
(cid:36)fter each ac(cid:84)uisition
co(cid:80)es the i(cid:80)portant tas(cid:78) of
integrating those businesses
into Bio-Techne(cid:17) (cid:44) a(cid:80) happy to
report that we have fully
integrated Pri(cid:80)e(cid:42)ene, the
China-based co(cid:80)pany with
protein (cid:80)anufacturing capabilities we ac(cid:84)uired in fiscal
year (cid:21)(cid:19)(cid:20)(cid:23)(cid:17) (cid:58)e have helped Pri(cid:80)e(cid:42)ene build out a
catalog of over (cid:25)(cid:19)(cid:19) proteins in a strategy of (cid:180)China for
China(cid:181)(cid:30) the business is now growing organically nearly
(cid:20)(cid:19)(cid:19)(cid:8)(cid:4) (cid:49)ovus Biologicals has been another integration
success story(cid:17) (cid:58)ith the addition of over (cid:21)(cid:19)(cid:19),(cid:19)(cid:19)(cid:19)
antibodies sold by (cid:49)ovus Biologicals, we substantially
increased our antibody product offering to custo(cid:80)ers(cid:17)
The addition of (cid:49)ovus gave us (cid:80)ore than (cid:77)ust an
antibody portfolio, however(cid:17) The executive tea(cid:80) at
(cid:49)ovus Biologicals has beco(cid:80)e instru(cid:80)ental in the
(cid:80)ar(cid:78)eting and operations of Bio-Techne(cid:17) Our (cid:44)T
depart(cid:80)ent has doubled in si(cid:93)e and proficiency(cid:17) The
launching of a new (cid:53)(cid:9)D (cid:54)yste(cid:80)s website that is
opti(cid:80)i(cid:93)ed for search engines has i(cid:80)proved custo(cid:80)er
experience and increased our web traffic and
orders by (cid:27)(cid:8) in the first (cid:80)onth of i(cid:80)ple(cid:80)entation(cid:17)
(cid:49)ovus Biologicals led this endeavor(cid:17) (cid:58)e built a new
business seg(cid:80)ent with the ac(cid:84)uisition of Protein(cid:54)i(cid:80)ple
in early fiscal (cid:21)(cid:19)(cid:20)(cid:24)(cid:17) Cy(cid:57)e(cid:78) was later ac(cid:84)uired and
integrated into that new Protein Platfor(cid:80)s division(cid:17)
Clini(cid:84)a is our latest co(cid:80)pany ac(cid:84)uisition and will
co(cid:80)ple(cid:80)ent our Clinical Controls division(cid:17) The co(cid:80)pany
has (cid:20)(cid:25)(cid:24) (cid:24)(cid:20)(cid:19)(cid:11)(cid:78)(cid:12) FD(cid:36) regulatory filings and is a recogni(cid:93)ed
leader in upstrea(cid:80) (cid:80)anufacturing co(cid:80)petencies for
diagnostics co(cid:80)panies(cid:17)
1
Beyond our ac(cid:84)uisition activities, we also grew
organically in other areas of our business(cid:17) (cid:58)e had
another standout year of growth in China(cid:30) even with the
govern(cid:80)ent(cid:183)s anti-corruption auditing activities(cid:17) China
revenues grew organically by (cid:21)(cid:23)(cid:8)(cid:17) (cid:58)ith the addition of
Pri(cid:80)e(cid:42)ene, our nu(cid:80)ber of e(cid:80)ployees in China increased
fro(cid:80) (cid:22)(cid:20) to nearly (cid:20)(cid:19)(cid:19)(cid:17) Our sales in China now represent
nearly (cid:26)(cid:8) of global sales with the addition of Clini(cid:84)a(cid:17) Our
global headcount has increased to nearly (cid:20)(cid:24)(cid:19)(cid:19) and our
site count has risen fro(cid:80) (cid:25) to (cid:21)(cid:20)(cid:17) (cid:36)ll this growth has
allowed us to create (cid:80)ore critical (cid:80)ass and synergies in
our regional businesses which have accelerated organic
growth(cid:17) Once again, we have attracted strong talent to
the co(cid:80)pany(cid:17) (cid:48)ost recently, we brought on a new leader
of (cid:43)u(cid:80)an (cid:53)esources who has global experience in
change (cid:80)anage(cid:80)ent, a new (cid:57)ice President for (cid:36)sia who
has lived in the region for (cid:20)(cid:24)(cid:14) years and the leader of
Clini(cid:84)a who has (cid:21)(cid:24)(cid:14) years of experience in the
diagnostics industry(cid:17)
(cid:58)e are co(cid:80)ing to the close of the second year of our
five-year strategic plan we launched in (cid:45)anuary of (cid:21)(cid:19)(cid:20)(cid:23)(cid:17)
The plan re(cid:80)ains the sa(cid:80)e and we are executing
well against the goals we have set(cid:17)
Expand regionally with s(cid:80)aller (cid:180)tuc(cid:78)-in(cid:181) ac(cid:84)uisitions
Expand our antibody portfolio, giving researchers
(cid:80)ore choice
(cid:36)c(cid:84)uire novel instru(cid:80)ent technologies that
can leverage our reagents, offering researchers
full solutions
(cid:36)c(cid:84)uire new talent to help the co(cid:80)pany with
its next phase of accelerated growth
(cid:44)nspire innovation in the co(cid:80)pany through scientific
collaboration and support, expanding
our intellectual property and product portfolios
(cid:7)(cid:20)(cid:21)(cid:24)(cid:80)
Our strategic directions re(cid:80)ain(cid:29)
To Our Shareholders
F(cid:60)2013
F(cid:60)2014
F(cid:60)2015
(cid:7)(cid:23)(cid:24)(cid:21)(cid:80)
(cid:7)(cid:20)(cid:21)(cid:26)(cid:80)
NET SALES
(cid:7)(cid:22)(cid:24)(cid:27)(cid:80)
(cid:7)(cid:22)(cid:20)(cid:20)(cid:80)
ADJUSTED NET EARNINGS
(cid:7)(cid:20)(cid:20)(cid:27)(cid:80)
CASH FLOW FROM OPERATIONS
(cid:7)(cid:20)(cid:22)(cid:28)(cid:80)
(cid:7)(cid:20)(cid:22)(cid:26)(cid:80)
(cid:7)(cid:20)(cid:21)(cid:23)(cid:80)
2
Financial Performance in Fiscal 2015
The co(cid:80)pany achieved organic growth of (cid:23)(cid:8) this fiscal year(cid:17) This is a nice
i(cid:80)prove(cid:80)ent over the previous year given the continued headwinds in
acade(cid:80)ic sector spending and the latest challenge, currency (cid:193)uctuations(cid:17)
(cid:36)s we loo(cid:78) forward, we expect these obstacles to subside as a result of
i(cid:80)proving federal govern(cid:80)ent funding in the (cid:56)nited (cid:54)tates, continued
strong growth in China and (cid:80)odest i(cid:80)prove(cid:80)ent in (cid:45)apan(cid:183)s and Europe(cid:183)s
econo(cid:80)ic cli(cid:80)ates(cid:17)
(cid:43)ighlights of our fiscal year (cid:21)(cid:19)(cid:20)(cid:24) perfor(cid:80)ance include the following(cid:29)
(cid:36)d(cid:77)usted earnings were approxi(cid:80)ately (cid:7)(cid:20)(cid:21)(cid:26) (cid:80)illion
(cid:11)an increase of (cid:20)(cid:8) over the prior fiscal year(cid:12), and ad(cid:77)usted
diluted earnings per share were (cid:7)(cid:22)(cid:17)(cid:23)(cid:19)(cid:17)
(cid:49)et sales increased (cid:21)(cid:25)(cid:8) to (cid:7)(cid:23)(cid:24)(cid:21)(cid:17)(cid:21) (cid:80)illion(cid:17) Organic revenue
growth was (cid:23)(cid:8) over the prior year, with currency translation
having a negative i(cid:80)pact of (cid:21)(cid:8) and ac(cid:84)uisitions contributing
(cid:21)(cid:24)(cid:8) to the revenue growth(cid:17)
(cid:36)d(cid:77)usted operating (cid:80)argins for the full year were (cid:22)(cid:28)(cid:17)(cid:28)(cid:8)(cid:17)
Excluding the i(cid:80)pact of ac(cid:84)uisitions, foreign exchange rate
(cid:193)uctuations and higher non-cash stoc(cid:78)-based co(cid:80)pensation,
operating (cid:80)argins were essentially (cid:193)at co(cid:80)pared to the prior year(cid:17)
(cid:49)et cash fro(cid:80) operations was (cid:7)(cid:20)(cid:22)(cid:28) (cid:80)illion for the year(cid:17) (cid:58)e returned
(cid:7)(cid:23)(cid:26) (cid:80)illion to our shareholders in the for(cid:80) of dividends(cid:17)
FINANCIAL PERFORMANCE
F(cid:44)(cid:54)C(cid:36)(cid:47) (cid:21)(cid:19)(cid:20)(cid:24)
(cid:11)(cid:44)n thousands,
except per share data(cid:12)
(cid:60)ear Ended (cid:45)une (cid:22)(cid:19),
2015
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:49)et (cid:54)ales
$ 452,246
(cid:7) (cid:22)(cid:24)(cid:26),(cid:26)(cid:25)(cid:22)
(cid:7) (cid:22)(cid:20)(cid:19),(cid:24)(cid:26)(cid:24)
(cid:36)d(cid:77)usted net earnings(cid:11)(cid:20)(cid:12)
$ 126,758
(cid:7) (cid:20)(cid:21)(cid:24),(cid:22)(cid:21)(cid:24)
(cid:7) (cid:20)(cid:20)(cid:27),(cid:19)(cid:22)(cid:21)
(cid:36)d(cid:77)usted diluted earnings
per share(cid:11)(cid:20)(cid:12)
$
3.40
(cid:7)
(cid:22)(cid:17)(cid:22)(cid:28)
(cid:7)
(cid:22)(cid:17)(cid:21)(cid:19)
Cash (cid:193)ow fro(cid:80) operations
$ 139,359
(cid:7) (cid:20)(cid:22)(cid:25),(cid:26)(cid:25)(cid:21)
(cid:7) (cid:20)(cid:21)(cid:22),(cid:24)(cid:25)(cid:21)
(cid:11)(cid:20)(cid:12) Excludes intangible asset a(cid:80)orti(cid:93)ation, costs recogni(cid:93)ed upon the sale of inventory that was written-up to
fair value as part of ac(cid:84)uisitions, professional fees related to ac(cid:84)uisition activity and the i(cid:80)pact of certain
tax events(cid:17) (cid:54)ee (cid:44)te(cid:80) (cid:26)(cid:17) of the Co(cid:80)pany(cid:183)s (cid:36)nnual (cid:53)eport on For(cid:80) (cid:20)(cid:19)-(cid:46), following, for further details(cid:17)
(cid:11)(cid:44)n thousands(cid:12)
2015
(cid:45)une (cid:22)(cid:19),
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
Cash, cash e(cid:84)uivalents
and available-for-sale invest(cid:80)ents
$ 110,921
(cid:7) (cid:22)(cid:25)(cid:25),(cid:28)(cid:21)(cid:28)
(cid:7) (cid:23)(cid:25)(cid:24),(cid:22)(cid:20)(cid:22)
Total assets
$ 1,063,360
(cid:7) (cid:27)(cid:25)(cid:21),(cid:23)(cid:28)(cid:20)
(cid:7) (cid:26)(cid:26)(cid:27),(cid:19)(cid:28)(cid:27)
(cid:47)ong ter(cid:80) debt obligations (cid:11)(cid:20)(cid:12)
$ 112,024
(cid:7) (cid:25),(cid:28)(cid:28)(cid:26)
(cid:7) (cid:19)
(cid:54)toc(cid:78)holders(cid:183) e(cid:84)uity
$ 846,935
(cid:7) (cid:26)(cid:28)(cid:24),(cid:21)(cid:25)(cid:24)
(cid:7) (cid:26)(cid:22)(cid:26),(cid:24)(cid:23)(cid:20)
Co(cid:80)(cid:80)on shares outstanding
37,153
(cid:22)(cid:26),(cid:19)(cid:19)(cid:21)
(cid:22)(cid:25),(cid:27)(cid:22)(cid:24)
(cid:11)(cid:20)(cid:12) (cid:53)elated party note payable, line-of-credit, and contingent consideration payable
3
To Our Shareholders
Global Business Units
The Biotechnology
division had a good
year with (cid:22)(cid:8) organic
growth(cid:17) Total (cid:54)ales
increased (cid:27)(cid:8) to
(cid:7)(cid:22)(cid:21)(cid:25)(cid:48)(cid:48) while
holding ad(cid:77)usted
operating (cid:80)argins to
(cid:24)(cid:22)(cid:8)(cid:17) (cid:36)ccounting for
(cid:80)ix due to
ac(cid:84)uisitions and
currency exchange,
the operating (cid:80)argin
was (cid:193)at co(cid:80)pared to
(cid:21)(cid:19)(cid:20)(cid:23)(cid:17) This is a nice
result for us given the
added invest(cid:80)ents we
have (cid:80)ade to the
business(cid:17) These invest(cid:80)ents are pri(cid:80)arily funded by strong
productivity i(cid:80)prove(cid:80)ent pro(cid:77)ects(cid:17) (cid:44) fir(cid:80)ly believe invest(cid:80)ents
should be partially funded by internal process productivity(cid:17)
(cid:47)oo(cid:78)ing forward, we see i(cid:80)prove(cid:80)ents in growth in our core
areas and are confident in our ability to (cid:80)aintain organic
growth while holding or i(cid:80)proving the operating (cid:80)argins(cid:17)
The Clinical Controls
division ended the
year in line with
expectations(cid:17) This
division has done
well absorbing and
leveraging the
integration of
the Bionostics
ac(cid:84)uisition in (cid:21)(cid:19)(cid:20)(cid:22)(cid:17)
(cid:58)e now have critical
(cid:80)ass to drive better
growth and scale in
this business(cid:17) The
Clinical Controls division ended the year with (cid:7)(cid:25)(cid:19)(cid:48)(cid:48) in
sales and (cid:24)(cid:8) organic growth(cid:17) (cid:43)ere, too, operating (cid:80)argins
were very si(cid:80)ilar to last year(cid:17) (cid:58)e had (cid:25)(cid:19) basis points of
erosion due to glucose controls pricing pressure which
has now stabili(cid:93)ed(cid:17) (cid:36)s we loo(cid:78) forward to expanding our
division with the addition of Clini(cid:84)a, we believe we can
i(cid:80)prove the growth rate and business scale due to the
fact that we have even better custo(cid:80)er coverage(cid:17)
Between the three businesses that co(cid:80)prise this division,
our custo(cid:80)er base now co(cid:80)prises virtually every instru(cid:80)ent
(cid:80)a(cid:78)er in the diagnostic space for such (cid:80)ar(cid:78)ets as
blood, glucose, blood gasses and che(cid:80)istry controls
and calibrations(cid:17)
Finally, the Protein Platfor(cid:80)s division had an enor(cid:80)ous year,
finishing at (cid:21)(cid:21)(cid:8) organic growth(cid:17) This was led exclusively by
Protein(cid:54)i(cid:80)ple products(cid:17) (cid:58)e shipped a record nu(cid:80)ber of
(cid:54)i(cid:80)ple (cid:58)estern syste(cid:80)s, and we believe we are still on the
very leading edge of the wave for adoption of this platfor(cid:80)(cid:17)
The pro(cid:80)ise of (cid:80)oving fro(cid:80) a two-day, tedious, (cid:80)anual labor
western blotting
process to a (cid:22)-hour
(cid:180)sa(cid:80)ple to answer(cid:181)
auto(cid:80)ated solution
is very co(cid:80)pelling(cid:17)
(cid:36)nd let(cid:183)s not forget
there is also a great
lineup of biologics-
based instru(cid:80)ents
that (cid:80)easure the
purity of the
proteins through
charge heterogeneity analysis(cid:17) This, too, is growing in the
double-digit range(cid:17) The integration of Cy(cid:57)e(cid:78) into this division
was the right (cid:80)ove and this will create both synergy and
leverage given sufficient ti(cid:80)e(cid:17) (cid:58)e are now selling Ella
instru(cid:80)ents and expect this platfor(cid:80) to be profitable in the
co(cid:80)ing years(cid:17) The big win for our co(cid:80)pany here is that this
platfor(cid:80) easily lends itself to being adopted as a co(cid:80)panion
diagnostic platfor(cid:80) by the phar(cid:80)aceutical industry(cid:17)
One of our (cid:80)ost significant
acco(cid:80)plish(cid:80)ents has been
our recovery in the
acade(cid:80)ic (cid:80)ar(cid:78)et(cid:17) For
several years, sales to this
(cid:80)ar(cid:78)et eroded at a negative-
double-digit rate(cid:17) This has
been corrected(cid:17) For the past
year we have seen steady
i(cid:80)prove(cid:80)ents using a
variety of co(cid:80)(cid:80)ercial
strategies(cid:17) One of the(cid:80) has
been the Fisher alliance, which has given us stronger results
every (cid:84)uarter since we entered into that relationship(cid:17) For the
year, we have (cid:80)ade
it bac(cid:78) to nearly (cid:193)at
organic growth in this
sector and for (cid:52)(cid:23)
we experienced
(cid:80)id-single-digit
growth(cid:17) (cid:36)nd we
continue to do well in
the biotechnology
and phar(cid:80)aceutical
custo(cid:80)er groups with
double-digit growth(cid:17)
4
Global Markets
New Product Development
(cid:58)e have i(cid:80)proved significantly in our innovation endeavors(cid:17)
Through our ac(cid:84)uisitions and i(cid:80)ple(cid:80)enting an (cid:44)P process and
policy, we now own or have filed for about (cid:20)(cid:19)(cid:19) patents(cid:17) Our
vitality rate(cid:179)the sales dollars we can attribute to first-year
product sales(cid:179)rose significantly this past year(cid:17)
(cid:58)e created (cid:20)(cid:25)(cid:24)(cid:24)
new products for a
co(cid:80)bined first-year
revenue of
(cid:7)(cid:24)(cid:17)(cid:27)(cid:48)(cid:48)(cid:17) This
co(cid:80)pares to (cid:20),(cid:24)(cid:24)(cid:19)
new products last
year that generated
(cid:7)(cid:22)(cid:17)(cid:23)(cid:48)(cid:48)(cid:17) Those
sa(cid:80)e (cid:20),(cid:24)(cid:24)(cid:19)
products of (cid:21)(cid:19)(cid:20)(cid:23)
yielded (cid:7)(cid:25)(cid:17)(cid:27)(cid:48)(cid:48) in
their second year of
sales, a (cid:20)(cid:19)(cid:19)(cid:8)
increase(cid:17) Our goal is to have a three-year vitality index of
(cid:20)(cid:19)(cid:8) or better(cid:17) (cid:58)e are well on our way to (cid:80)eeting that goal(cid:17)
Encouraging innovation is not a trivial tas(cid:78)(cid:17) (cid:58)e have to wor(cid:78)
on our culture and our desire to collaborate(cid:17) (cid:58)e have hired
an expert in the field of change (cid:80)anage(cid:80)ent who (cid:44) thin(cid:78) can
shave years off the process of creating an innovative,
collaborative culture that is divisional and regional across all of
our sites(cid:17) (cid:47)eaving this to serendipity would ta(cid:78)e (cid:80)any years(cid:17)
(cid:44)nnovation is not a pro(cid:77)ect or a process you can drive(cid:30) it(cid:183)s an
environ(cid:80)ent you create and nurture(cid:17) (cid:44)f done well, with ti(cid:80)e,
such an environ(cid:80)ent results in acco(cid:80)plish(cid:80)ent(cid:17) (cid:44) a(cid:80)
extre(cid:80)ely proud of the progress our co(cid:80)pany has (cid:80)ade in this
direction(cid:17) (cid:58)e are a science-driven co(cid:80)pany, and the heart of
any science co(cid:80)pany is innovation(cid:17)
(cid:58)e had another great year in the Pacific (cid:53)i(cid:80) with the exception
of (cid:45)apan(cid:30) where currency issues affected local de(cid:80)and for our
products(cid:17) (cid:54)etting aside (cid:45)apan and China, the rest of the Pacific
(cid:53)i(cid:80) finished the year at about (cid:22)(cid:8) organic growth(cid:17) The
invest(cid:80)ents in hu(cid:80)an capital and ac(cid:84)uisitions in the region to
date have been accretive to our business(cid:17) Europe had another
year si(cid:80)ilar to last year(cid:17) (cid:58)e had a terrific year in (cid:42)er(cid:80)any in
fiscal (cid:21)(cid:19)(cid:20)(cid:23) largely due to de(cid:80)and fro(cid:80) phar(cid:80)a spending on
specific pro(cid:77)ects(cid:17) Ti(cid:80)ing of new pro(cid:77)ects has given us a pause
in revenue growth this past fiscal year, although the (cid:56)(cid:46)
experienced record double-digit growth(cid:17) (cid:58)e expect (cid:42)er(cid:80)any(cid:183)s
revenues to slowly co(cid:80)e bac(cid:78), but re(cid:80)ain in the low-single-
digit level of growth(cid:17) (cid:58)e changed distributors in (cid:54)outh (cid:36)(cid:80)erica,
which is beginning to yield results, with revenue growth in the
(cid:80)id-single digits(cid:17)
The Tocris s(cid:80)all (cid:80)olecule
business had a better year
and we have discovered
that China has a large
appetite for Tocris
products(cid:17) (cid:58)e are investing
in product (cid:80)anagers in
China for Tocris products to
further drive growth, which
we expect to reach (cid:22)(cid:19)(cid:14)(cid:8)
in China and (cid:80)id- to upper-single digits globally(cid:17) Tocris had a
banner year for product develop(cid:80)ent, releasing (cid:24)(cid:19)(cid:8) (cid:11)nearly
(cid:23)(cid:19)(cid:19)(cid:12) (cid:80)ore products than in (cid:21)(cid:19)(cid:20)(cid:23)(cid:17)
Channel Strategies
(cid:44)t(cid:183)s been a couple years now since we added to our (cid:49)orth
(cid:36)(cid:80)erican (cid:54)ales force and (cid:20)(cid:27) (cid:80)onths since we began our
Fisher alliance(cid:17) (cid:44)t appears both strategies are wor(cid:78)ing(cid:17) (cid:58)e
ended (cid:21)(cid:19)(cid:20)(cid:22) in negative territory in revenues and we ended
this year in (cid:80)id-single-digit growth(cid:17) The sales experts we added
also help (cid:80)anage the local Fisher reps(cid:30) together this has been
a good custo(cid:80)er-focused relationship(cid:17) (cid:44) a(cid:80) very pleased with
the help and support Fisher has given us(cid:17) (cid:44)t should also be
noted that (cid:49)ovus Biologicals has a (cid:80)ature product
(cid:80)anage(cid:80)ent(cid:18)(cid:80)ar(cid:78)eting (cid:80)odel that we have incorporated into
the entire co(cid:80)pany(cid:17) Their strong co(cid:80)petencies in (cid:80)ining
custo(cid:80)er data and infor(cid:80)ation fro(cid:80) the website, tradeshows
and direct contact has been an i(cid:80)portant ele(cid:80)ent to the
i(cid:80)prove(cid:80)ents we have shown this year in revenue growth(cid:17)
The strategies for channel growth in China are relatively si(cid:80)ple
(cid:178) add sales representatives in every (cid:80)a(cid:77)or city(cid:17) (cid:58)e have done
that by opening an office in Bei(cid:77)ing and hiring sales reps in
other (cid:80)a(cid:77)or cities(cid:17) (cid:58)e now have a regional strategy for China
and are beginning to i(cid:80)ple(cid:80)ent synergies with our Protein
Platfor(cid:80)s tea(cid:80) there as well(cid:17) (cid:44)t has been exciting watching our
(cid:20)(cid:21)-person China tea(cid:80) grow to nearly (cid:20)(cid:19)(cid:19) in only two years(cid:4)
5
To Our Shareholders
Building an enduring,
science-based,
innovative company
that will make a
positive difference
in the world.
Company Direction
Five-year strategic plans typically re(cid:80)ain valid, if not for five years, at
least for a couple(cid:17) (cid:42)iven we are in our second year of the co(cid:80)pany(cid:183)s
first strategic plan, (cid:44) will re(cid:80)ind everyone of our five strategic pillars(cid:29)
Enable and sponsor innovation in the core product lines
(cid:42)eographic expansion
Co(cid:80)(cid:80)ercial execution
Operational excellence
Talent recruit(cid:80)ent and retention
Tactical plans, so(cid:80)e of the(cid:80) outlined in (cid:80)y opening paragraph, have
been created to support these pillars(cid:30) and they drive the agendas of all
our internal rhyth(cid:80)s, business reviews and planning sessions(cid:17) Our
efforts to (cid:80)ove forward in this strategic direction have been successful(cid:30)
as this letter, our earnings conference calls and our financial results
de(cid:80)onstrate(cid:17) (cid:44) want to close on a couple thoughts on where we are now
and where we plan to be in future years(cid:17) The tea(cid:80) and (cid:44) are building
Bio-Techne to be an enduring, science-based, innovative co(cid:80)pany that
will (cid:80)a(cid:78)e a positive difference in the world(cid:17) (cid:58)e will acco(cid:80)plish this by
creating products that e(cid:80)power researchers in (cid:80)a(cid:78)ing (cid:47)ife (cid:54)cience
brea(cid:78)throughs(cid:17) Products will consist of both reagents and instru(cid:80)ents(cid:17)
(cid:58)e will atte(cid:80)pt to provide co(cid:80)plete wor(cid:78)(cid:193)ow solutions, and to be
(cid:80)ar(cid:78)et responsive by paying close attention to our custo(cid:80)ers(cid:183) needs as
they (cid:80)a(cid:78)e new discoveries(cid:17) (cid:58)e will be good citi(cid:93)ens in both our local
and global co(cid:80)(cid:80)unities(cid:17) (cid:58)e will be an ethical co(cid:80)pany with sound
values and ut(cid:80)ost co(cid:80)pliance as we do business around the world(cid:17) (cid:58)e
will strive to be good stewards of our co(cid:80)pany(cid:183)s assets(cid:30) such that our
e(cid:80)ployees and shareholders derive (cid:80)axi(cid:80)al benefits(cid:17) To reach our goal
of (cid:7)(cid:20) billion in revenue in five years, all of this (cid:80)ust co(cid:80)e together in a
sustainable (cid:80)anner(cid:17) The tea(cid:80) is ready and so a(cid:80) (cid:44)(cid:17)
Charles Kummeth
President and Chief Executive Officer
6
Our goal of accelerated growth
is built on a solid foundation. We
have high quality products and can
leverage this into innovation in our core
areas of expertise. We have a strong
brand name that can open the doors to
geographic expansion. The breadth of
our product offering is extensive and,
with strong commercial execution, we
can increase our market share. We have
a solid balance sheet, but a focus on
operational excellence will create more
value for shareholders. Our long-tenured
and dedicated staff have made this
company strong and, with adding
new talent in key areas, we can
bring in new ideas to continue
our legacy into the future to
meet the expanding needs
o(cid:73) sci(cid:72)n(cid:87)ific (cid:71)isco(cid:89)(cid:72)(cid:85)(cid:92).
ACCELERATED GROWTH
N
O
I
T
A
V
O
N
N
I
A
E
R
A
E
R
O
C
I
N
O
S
N
A
P
X
E
C
H
P
A
R
G
O
E
G
I
N
O
I
T
U
C
E
X
E
L
A
C
R
E
M
M
O
C
I
E
C
N
E
L
L
E
C
X
E
L
A
N
O
I
T
A
R
E
P
O
N
O
I
T
N
E
T
E
R
D
N
A
T
N
E
M
T
I
U
R
C
E
R
HIGH
QUALITY
STRONG
BRAND
PRODUCT
BREADTH
BALANCE
SHEET
TALENTED
STAFF
STRONG FOUNDATION
FIVE STRATEGIC PILLARS
(cid:139) Bio-Techne (cid:21)(cid:19)(cid:20)(cid:24)
Building
Innovation
Opportunities
Forward (cid:47)oo(cid:78)ing (cid:54)tate(cid:80)ents
Certain state(cid:80)ents in this letter (cid:80)ay constitute forward-loo(cid:78)ing state(cid:80)ents as defined in the (cid:56)(cid:17)(cid:54)(cid:17) Private
(cid:54)ecurities (cid:47)itigation (cid:53)efor(cid:80) (cid:36)ct of (cid:20)(cid:28)(cid:28)(cid:24)(cid:17) Forward-loo(cid:78)ing state(cid:80)ents re(cid:193)ect the Co(cid:80)pany(cid:183)s current
views with respect to future events and financial perfor(cid:80)ance and include any state(cid:80)ent that does not
directly relate to a current or historical fact(cid:17) Forward-loo(cid:78)ing state(cid:80)ents can generally be identified by
the words (cid:180)believe,(cid:181) (cid:180)expect,(cid:181) (cid:180)anticipate(cid:181) or (cid:180)intend(cid:181) or si(cid:80)ilar words(cid:17) There are a nu(cid:80)ber of ris(cid:78)s and
uncertainties that could affect actual results(cid:17) For additional infor(cid:80)ation concerning such ris(cid:78)s and
uncertainties, see the section titled (cid:180)(cid:53)is(cid:78) Factors(cid:181) in the Co(cid:80)pany(cid:183)s annual report on For(cid:80) (cid:20)(cid:19)-(cid:46) and
(cid:84)uarterly reports on For(cid:80) (cid:20)(cid:19)-(cid:52) as filed with the (cid:54)ecurities and Exchange Co(cid:80)(cid:80)ission(cid:17) (cid:58)e underta(cid:78)e no
obligation to update or revise any forward-loo(cid:78)ing state(cid:80)ents due to new infor(cid:80)ation or future events(cid:17)
(cid:44)nvestors are cautioned not to place undue e(cid:80)phasis on these state(cid:80)ents(cid:17)
7
To Our Shareholders
Bio-Techne vs. S&P 500 Index
Comparison of Cumulative Ten Year Total Return
Bio-Techne significantly outperfor(cid:80)ed the (cid:54)(cid:9)P (cid:24)(cid:19)(cid:19)
(cid:44)ndex during the ten-year period fro(cid:80) the end of
fiscal (cid:21)(cid:19)(cid:19)(cid:24) to the end of fiscal (cid:21)(cid:19)(cid:20)(cid:24)(cid:17) The price of
Bio-Techne(cid:183)s stoc(cid:78) increased (cid:20)(cid:20)(cid:21)(cid:8) during this ti(cid:80)e,
providing a co(cid:80)pound, annuali(cid:93)ed stoc(cid:78)-price yield to
shareholders of (cid:26)(cid:17)(cid:27)(cid:8) vs(cid:17) (cid:24)(cid:17)(cid:26)(cid:8) for the (cid:54)(cid:9)P (cid:24)(cid:19)(cid:19) (cid:44)ndex(cid:17)
(cid:58)e are proud of Bio-Techne(cid:183)s long-ter(cid:80) record but, as
always, past perfor(cid:80)ance should not be interpreted
as an indication of future perfor(cid:80)ance(cid:17)
July 1, 2005 to June 30, 2015
Bio-Techne
S&P 500
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
8
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, 2015
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
BIO-TECHNE CORPORATION
(Exact name of Registrant as specified in its charter)
Minnesota
(State of Incorporation)
41-1427402
(IRS Employer Identification No.)
614 McKinley Place N.E., Minneapolis, MN
(Address of principal executive offices)
55413-2610
(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. ( )
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,
2014 as reported on The Nasdaq Stock Market ($92.40 per share) was approximately $3.4 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, 2015: 37,167,171
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s Proxy Statement for its 2015 Annual Meeting of Shareholders are incorporated by reference into Part III.
TABLE OF CONTENTS
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
PART II
Page
1
12
18
18
19
19
Item 5.
Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
20
Item 6.
Selected Financial Data
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
PART IV
Item 15.
Exhibits, Financial Statement Schedules
SIGNATURES
22
23
33
34
56
56
57
57
57
57
58
59
59
60
i
PART I
ITEM 1. BUSINESS
OVERVIEW
Bio-Techne and its subsidiaries, collectively doing business as Bio-Techne (Bio-Techne, we, our, us or the Company) develop, manufacture
and sell biotechnology reagents, instruments and clinical diagnostic products worldwide. With our deep product portfolio and application
expertise, Bio-Techne is a leader in providing specialized proteins, including cytokines and growth factors, antibodies, related immunoassays,
biologically active small molecules and other reagents to the research, diagnostics and clinical controls markets. With recent acquisitions, we
also support our customers with instrumentation designed to simplify key protein analysis processes.
A Minneapolis, Minnesota-based company, Bio-Techne originally was founded as Research and Diagnostic Systems, Inc. (R&D Systems) in
1976. Techne Corporation, a public entity at the time, acquired R&D Systems in 1985 and through this action made R&D Systems a public
company. The initial products focused on the hematology blood controls and calibrators market but soon expanded through the creation of
the Biotechnology Division to include reagents used in life science research. We further expanded the product portfolio through a series of
acquisitions, including, the Amgen Inc. research business in 1991, the Genzyme Corporation research business in 1998, Fortron Bio Science,
Inc. and BiosPacific, Inc. (BiosPacific) in 2005, and Boston Biochem, Inc. and Tocris Holdings Limited (Tocris) in 2011. In fiscal 2014, we
strengthened our Clinical Controls solutions by acquiring Bionostics Holdings Limited (Bionostics). We also increased our Biotechnology
segment offerings through the acquisition of Shanghai-based PrimeGene Bio-Tech Co. (PrimeGene) and Novus Biologicals LLC (Novus
Biologicals) in 2014. Also in 2014, we acquired ProteinSimple and CyVek, Inc., both with innovative instrument platforms useful for protein
analysis, and which together form our new Protein Platforms segment. Following the 2015 fiscal year, in July 2015, we acquired Cliniqa
Corporation, which specializes in the manufacturing and commercialization of quality controls and calibrators as well as bulk reagents used
in the clinical diagnostic market to further expand and complement our Clinical Controls solutions. With these recent investments, we are
able to scale our business and expand our product portfilio as well as geographic markets.
Recognizing the importance of a unified and global approach to meeting our mission and accomplishing our strategies, in fiscal 2014 we
implemented a new global brand, Bio-Techne. In November 2014 we also changed the name of the parent corporation from Techne
Corporation to Bio-Techne Corporation. The Bio-Techne name is derived from the Greek words “Bio,” or “life,” and “Techne,” or “the
application of knowledge to practical matters.” The combination of these words and their meanings capture the essence of Bio-Techne, its
products and mission. The Bio-Techne name solidifies the new strategic direction for the Company, and also unifies all of our brands under
one complete portfolio.
We operate globally, with offices in multiple locations in the United States, Europe and China. Today, our product line extends to over
275,000 products with state of the art facilities to accommodate many of our manufacturing needs.
We are committed to providing the life sciences community with innovative, high-quality scientific tools to better understand biological
processes and drive discovery. We intend to build on Bio-Techne’s past accomplishments, high quality reputation and sound financial
position by executing strategies that position us to become the standard for biological content in the research market, and to leverage that
leadership position to enter the diagnostics and other adjacent markets. Our strategies include:
Continued innovation in core products. Through collaborations with key opinion leaders and participation in scientific discussions and
associations, we expect to leverage our continued significant investment in our research and development activities to be first-to-market
with quality products that are at the leading edge of life science researchers’ needs.
Investments in targeted acquisitions. We intend to leverage our strong balance sheet to gain access to new technologies and products
that improve our competitiveness in the current market, meet customers’ expanding work flow needs and allow us to enter adjacent
markets.
1
Expansion of geographic footprint. We will continue to expand our sales staff and distribution channels globally in order to increase our
global presence and make it easier for customers to transact with us.
Realignment of resources. In recognition of the increased size and scale of the organization, we intend to redesign our development and
operational resources to create greater efficiencies throughout the organization.
Talent recruitment and retention. We will recruit, train and retain the most talented staff to implement all of our strategies effectively.
OUR PRODUCTS AND MARKETS
Currently Bio-Techne operates worldwide and has three reportable business segments, the Biotechnology, Clinical Controls and Protein
Platforms divisions. The Biotechnology reporting segment develops, manufactures and sells biotechnology research and diagnostic products
world-wide. The Clinical Controls reporting segment develops and manufactures controls and calibrators for the global clinical market. And
the Protein Platforms reporting segment develops and commercializes proprietary systems and consumables for protein analysis. In fiscal
2015, net sales from Bio-Techne’s Biotechnology, Clinical Controls and Protein Platforms segments represented 72.1%, 13.3% and 14.6% of
consolidated net sales, respectively. Financial information relating to Bio-Techne’s segments is incorporated herein by reference to Note L to
the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Biotechnology Segment
Through our Biotechnology segment, we are one of the world’s leading suppliers of specialized proteins, such as cytokines, growth factors,
immunoassays, antibodies and related reagents, to the biotechnology research community. We isolate and produce proteins in a pure form
either from the native cells or through recombinant DNA technology. With the acquisition of Tocris in April 2011, we added chemically-
based products to our Biotechnology segment. Our combined chemical and biological reagents portfolio provides new tools which customers
can use in solving the complexity of important biological pathways and glean knowledge which may lead to a fuller understanding of
biological processes and ultimately to the development of novel strategies to address different pathologies.
Biotechnology Segment Products
Proteins. We develop and manufacture in-house a range of cytokines, growth factors and enzymes, extracted from natural sources or
produced using recombinant DNA technology. We produce and characterize all protein products to a high degree of purity and biological
activity. The growing interest by academic and commercial researchers in cytokines is largely due to the profound effect that tiny
amounts of a cytokine can have on cell’s and tissues. Cytokines are intercellular messengers and, as a result, act as signaling agents by
interacting with specific receptors on the affected cells and trigger events that can lead to significant changes in a cell behavior. Enzymes
are proteins which act as biological catalysts that accelerate chemical reactions. Most enzymes, including proteases, kinases and
phosphatases, are proteins that modify the structure and function of other proteins and in turn affect cell behavior and function.
Additionally, both enzymes and cytokines have the potential to serve as predictive biomarkers and therapeutic targets for a variety of
diseases and conditions including cancer, Alzheimer’s, arthritis, autoimmunity, diabetes, hypertension, obesity, inflammation, AIDS and
influenza.
Antibodies. Antibodies are specialized proteins produced by the immune system of an animal that recognize and bind to target
molecules. We produce our polyclonal antibodies in animals (primarily goats, sheep and rabbits), purifying them from the animals’
blood. We derive monoclonal antibodies from immortalized rodent cell lines using hybridoma technology, isolating them from cell
culture medium, or we manufacture them through recombinant DNA technology. The flow cytometry product line includes
fluorochrome labeled antibodies and kits that are used to determine the immuno-phenotypic properties of cells from different tissues.
2
Immunoassays. We market a variety of immunoassays on different testing platforms, including microtiter-plate based kits sold under the
trade name Quantikine®, multiplex immunoassays based on encoded bead technology and immunoassays based on planar spotted
surfaces. Researchers use these immunoassay products to quantify the level of a specific protein in biological fluids, such as serum,
plasma, or urine. Protein quantification is an integral component of basic research, as potential diagnostic tools for various diseases and
as a valuable indicator of the effects of new therapeutic compounds in the drug discovery process. Immunoassays can also be useful in
clinical diagnostics. We have received Food and Drug Administration (FDA) marketing clearance for erythropoietin (EPO), transferrin
receptor (TfR) and Beta2-microglobulin (b2M) immunoassays for use as in vitro diagnostic devices.
Small Molecule Chemically-based Products. These products include small natural or synthetic chemical compounds used by
investigators as agonists, antagonists and/or inhibitors of various biological functions. Used in concert with other Company products,
they provide additional tools to elucidate key pathways of cellular functions and can provide insight into the drug discovery process.
Biotechnology Segment Customers and Distribution Methods
We sell our biotechnology products directly to customers who are primarily located in North America, western Europe and China. We have a
sales and marketing partnership agreement with Fisher Scientific in order to bolster our market presence in North America and leverage the
transactional efficiencies offered by the large Fisher organization. We also sell through third party distributors in China, Japan, southern
Europe and the rest of the world. Our sales are widely distributed, and no single end-user customer accounted for more than 10% of
Biotechnology’s net sales during fiscal 2015, 2014 or 2013.
Biotechnology Segment Competitors
A number of companies supply the worldwide market for protein related and chemically-based research reagents, including GE Healthcare
Life Sciences, BD Biosciences, Merck KGaA/EMD Chemicals, Inc., PeproTech, Inc., Santa Cruz Biotechnology, Inc., Abcam plc., Thermo
Fisher Scientific, Inc., Cayman Chemical Company and Enzo Biochem, Inc. Market success is primarily dependent upon product quality,
selection and reputation. We believe we are one of the leading world-wide suppliers of cytokine related products in the research market. We
further believe that the expanding line of our products, their recognized quality, and the growing demand for protein related and chemically-
based research reagents will allow us to remain competitive in the growing biotechnology research and diagnostic market.
Biotechnology Segment Manufacturing
We develop and manufacture the majority of our cytokines using recombinant DNA technology, thus significantly reducing our reliance on
outside resources. Tocris chemical-based products are synthesized from widely available products. We typically have several outside sources
for all critical raw materials necessary for the manufacture of our products.
The majority of our Biotechnology products are shipped within one day of receipt of the customers’ orders. Consequently, we had no
significant backlog of orders for our Biotechnology segment products as of the date of this Annual Report on Form 10-K or as of a
comparable date for fiscal 2014.
Clinical Controls Segment
Proper diagnosis of many illnesses requires a thorough and accurate analysis of a patient’s blood cells, which is usually done with automated
or semi-automated hematology instruments. Our Clinical Controls segment develops and manufactures controls and calibrators for
instruments in the global clinical market.
Clinical Controls Segment Products
We derive our hematology controls and calibrators from various cellular components of blood which have been stabilized. These control and
calibrator products ensure that hematology instruments are performing accurately and reliably.
3
We offer a wide range of hematology controls and calibrators for both impedance and laser type cell counters. We also supply hematology
control products for use as proficiency testing tools by laboratory certifying authorities in a number of states and countries. We believe our
products have improved stability and versatility and a longer shelf life than most of those of our competitors. We also offer clinical controls
for blood glucose and blood gas devices, as well as coagulation device control products.
Clinical Controls Segment Customers and Distribution Methods
Original Equipment Manufacturer (OEM) agreements represent the largest market for our clinical controls products. In fiscal 2015, 2014 and
2013, OEM agreements accounted for $41.1 million, $41.2 million, and $10.8 million, respectively, or 9%, 12%, and 3% of total
consolidated net sales in each fiscal year, respectively. The increase in fiscal 2014 was a result of the acquisition of Bionostics. We sell our
clinical control products directly to customers in the United States and primarily through distributors in the rest of the world. One OEM
customer accounted for approximately 13% and 14% of Clinical Controls’ net sales during fiscal 2015 and 2014, respectively. No single
customer accounted for more than 10% of Clinical Controls’ net sales in fiscal 2013.
Clinical Controls Segment Competitors
Competition is intense in the clinical controls business. The market is composed of manufacturers of laboratory reagents, chemicals and
coagulation products and independent blood control manufacturers in addition to instrument manufacturers. The principal clinical diagnostic
control competitors for our products in this segment are Abbott Diagnostics, Beckman Coulter, Inc., Bio-Rad Laboratories, Inc., Streck, Inc.,
Siemens Healthcare Diagnostics Inc. and Sysmex Corporation. We believe we are the third largest supplier of hematology controls in the
marketplace behind Beckman Coulter, Inc. and Streck, Inc. We compete based primarily on product performance, quality, and price.
Clinical Controls Segment Manufacturing
The primary raw material for our clinical controls products is whole blood. We purchase human blood from commercial blood banks, and
porcine and bovine blood from nearby meat processing plants. After we receive raw blood, we separate it into its cellular components, and
then process and stabilize it. Although the cost of human blood has increased due to the requirement that it be tested for certain diseases and
pathogens prior to use, the higher cost of these materials has not had a material adverse effect on our business. Bio-Techne does not perform
its own pathogen testing, as most suppliers test all human blood collected.
The majority of the Clinical Control products are shipped based on a preset, recurring schedule. There was no significant backlog of orders
for our Clinical Control products as of the date of this Annual Report on Form 10-K or as of a comparable date for fiscal 2014.
Protein Platforms Segment
Proteins are important for understanding disease because they are the functional units that carry out specific tasks in every cell. Without
them, the cell cannot perform its intended function, produce the energy it requires, maintain its shape or survive in its environment. However,
proteins are difficult to interrogate because they are large, complex and unique. Our Protein Platforms segment develops, manufactures and
sells tools to make protein analysis simpler, more quantitative and reproduceable.
Protein Platforms Segment Products
The Simple Western Platform. The Western blot, or Western, is one of the most widely-used assay for protein analysis and identification
today. Unchanged since its invention in 1979, the Western assay is used by molecular biologists, biochemists and clinicians to determine if a
specific protein is present in a sample. This assay is an immunoassay, meaning that it requires a specific antibody in order to correctly
identify the protein of interest. The Western blot also shows the researcher the size of the protein identified. Our Simple Western platform is
a fully-automated, analytical technique that can identify and quantify a protein of interest in a sample. Like the Western blot, our Simple
Western also provides the user with the size of the protein and utilizes antibodies to identify specific proteins in the sample. The Simple
Western automates the entire workflow and transforms the Western blot into a gel-free, blot-free assay requiring just 30 minutes of sample
prep time. Not only does the Simple Western simplify the workflow, it transforms the Western into a real analytical tool for protein analysis,
providing truly quantitative, high quality data. The reproducibility of the assay enables researchers to determine quantitatively how much
protein exists in a given sample. As has been demonstrated in numerous experiments conducted by us and our customers, each of our Simple
Western products is more sensitive than a traditional Western, meaning that the Simple Western will detect a lower level of target protein in a
given sample or allow a researcher to use less sample to run the assay. Multiple proteins can also be assessed in every sample allowing a
more holistic view of protein function.
4
SimplePlex Platform. A common assay used in research and clinical diagnostics is the ELISA, or enzyme-linked immunosorbent assay.
ELISA tests detect a variety proteins, including cytokines, hormones, bacterial antigens, and antibodies. ELISA tests can be cumbersome and
time-consuming, and are not always easy to replicate, especially when attempting to test several proteins in a single assay. The SimplePlex
platform is a transformative immunoassay technology which integrates an innovatively designed microfluidic cartridge with a state-of-the-art
analyzer to deliver a bench-top immunoassay system that is more sensitive than ELISA with none of the traditional challenges of assay
design or repeatability. SimplePlex assays are fully automated, multi-analyte immunoassays that permit the customer to run multiple samples
while interrogating multiple analytes in approximately one hour. We believe the SimplePlex technology, along with other immunoassay
platforms offered by Bio-Techne, represents the most comprehensive line of immunoassay products to meet customers’ complete workflow
in their research and clinical protein applications.
Biologics Instrumentation. Biologics are complex protein-based therapeutics, and are transforming the pharmaceutical industry and treatment
of many diseases. Biologic drugs are very effective targeted therapeutics for diseases such as arthritis, cancer and diabetes, and their number
in development is increasing because of a variety of advances in biochemistry, immunology and biotechnology. Biologics can be monoclonal
antibodies, recombinant proteins and vaccines. Developers of biologics are required by regulatory agencies, such as FDA, to develop robust
processes to ensure that the specific biologic of interest can be identified and characterized accurately and then consistently and reliably
produced. As a result, a suite of complementary analytical approaches are utilized to measure attributes such as identity, biological potency,
purity, safety and impurities. These analytical approaches are used throughout the product development process, spanning initial discovery,
expression, formulation, process development, quality control and final release. Our Biologics tools help researchers interrogate protein
purity and identify contaminants during the development and production of biologics. Our iCE3 system is an analytical tool that measures the
charge heterogeneity of proteins. Our micro-flow imaging, or MFI, platform detects both visible (10 µm and larger) and subvisible (below 10
µm) particles. It directly measures the size, shape, count and concentration of particles within the 1 µm to 300 µm size range.
Protein Platforms Segment Customers and Distribution Methods.
We sell our protein platforms products directly to customers who are primarily located in North America, western Europe and Japan. We also
sell through third party distributors in China, southern Europe and the rest of the world. Our sales are widely distributed, and no single end-
user customer accounted for more than 10% of Protein Platforms’ net sales during fiscal 2015, 2014 or 2013.
Protein Platforms Segment Competitors.
Our Simple Western platform is a complete replacement for the traditional Western blot. As a result, we face competition from the vendors
that supply instruments and reagents to traditional Western blot users. These competitors include Bio-Rad Laboratories, GE Healthcare,
Merck KGaA, PerkinElmer and Thermo Fisher Scientific. All of these vendors provide elements of the traditional work flow. Similarly, our
SimplePlex platform replaces the traditional ELISA assay as well as some flow-based multiplex assays; competitors include those who
supply instruments and reagents for ELISAs, including Meso Scale Discovery, PerkinElmer, Thermo Fisher, Luminex, Millipore, Molecular
Devices, Tecan BioTek, and Bio-Rad Laboratories. The primary competitors for our Biologics instrumentation are Agilent Technologies,
Danaher and PerkinElmer, as well as GE Healthcare, Shimadzu, Thermo Fisher and Waters. We believe our competitive position is strong
due to the unique aspects of our products and our product quality.
Protein Platforms Segment Manufacturing.
We manufacture our Simple Western products at our facility in San Jose, California and Minneapolis, Minnesota. Our Biologics instruments
and consumables are manufactured at our facilities in Toronto and Ottawa, both located in Ontario, Canada. We manufacture our Simple Plex
products at our facility in Wallingford, Connecticut. We manufacture our own components where we believe it adds significant value, but we
rely on suppliers for the manufacture of some of the consumables, components, subassemblies and autosamplers used with, or included in,
our systems, which are manufactured to our specifications. We are not dependent on any one supplier and are not required to carry significant
amounts of inventory to assure ourselves of a continuous allotment of goods from suppliers. We conduct all final testing and inspection of
our products. We have established a quality control program, including a set of standard manufacturing and documentation procedures.
5
There was no significant backlog of orders for our Protein Platforms products as of the date of this Annual Report on Form 10-K or as of a
comparable date for fiscal 2014.
Geographic Information
Following is financial information relating to geographic areas (in thousands):
External sales
United States
Europe
China
Other Asia
Rest of world
Total external sales
Long-lived assets
United States and Canada
Europe
China
Total long-lived assets
Year Ended June 30,
2014
2015
245,217 $
134,077
26,105
23,806
23,041
452,246 $
190,359 $
97,157
18,878
32,704
18,665
357,763 $
2013
164,308
88,297
14,106
28,608
15,256
310,575
As of June 30,
2015
2014
2013
119,075 $
11,239
1,286
131,600 $
109,790 $
8,340
678
118,808 $
103,541
7,129
117
110,787
$
$
$
$
Net sales are attributed to countries based on the location of the customer or distributor. Long-lived assets are comprised of land, buildings
and improvements and equipment, net of accumulated depreciation and other assets. See the description of risks associated with the
Company’s foreign subsidiaries in Item 1A of this Annual Report on Form 10-K.
PRODUCTS UNDER DEVELOPMENT
Bio-Techne is engaged in ongoing research and development in all of our major product lines: controls and calibrators, protein analysis
instrumentation and related reagents, and cytokines, antibodies, assays, small bioactive molecules and related biotechnology products. We
believe that our future success depends, to a large extent, on our ability to keep pace with changing technologies and market needs.
In fiscal 2015, Bio-Techne introduced approximately 1,600 new biotechnology products to the life science market. All of these products are
for research use only and therefore did not require FDA clearance. We also expect to significantly expand our portfolio of products through
acquisitions of existing businesses. However, there is no assurance that any of the products in the research and development phase can be
successfully completed or, if completed, can be successfully introduced into the marketplace.
6
Research expense (in thousands):
Biotechnology
Clinical Controls
Protein Platforms
Year Ended June 30,
2015
2014
$
$
28,201 $
1,628
11,024
40,853 $
29,189 $
1,756
0
30,945 $
2013
28,441
816
0
29,257
Percent of net sales
9 %
9 %
9 %
ACQUISITIONS AND INVESTMENTS
Fiscal 2016 Acquisition
On July 8, 2015, Bio-Techne acquired all of the outstanding equity of Cliniqa Corporation (Cliniqa). Cliniqa, based in San Marcos,
California, specializes in the manufacturing and commercialization of quality controls and calibrators as well as bulk reagents used in the
clinical diagnostic market. Its controls and reagents are used in a wide variety of diagnostic tests for such pathologies as cardiac disease,
diabetes, cancer, immunological disorders, therapeutic drug monitoring, urine analysis and toxicology. The acquisition further expanded and
complemented our clinical controls product lines.
Fiscal 2015 Acquisitions
On July 31, 2014, Bio-Techne closed on the acquisition of all of the outstanding equity of ProteinSimple for approximately $300 million. The
purchase price was adjusted post-closing based on the final levels of cash and working capital of ProteinSimple at closing. Certain
ProteinSimple stockholders are subject to non-compete and non-solicitation obligations for three years following the closing. ProteinSimple
develops, markets and sells Western-blotting instruments, biologics and reagents. Western blotting remains one of the most frequently
practiced life science techniques, and ProteinSimple’s tools allow researchers to perform this basic research technique with greater speed and
efficiency. Automation of the Western blotting technique has the potential to drive additional sales of the consumables Bio-Techne already
sells, especially antibodies which have been validated for Western blotting applications. The ProteinSimple products became the foundation
of our ProteinPlatforms segment.
On July 2, 2014, Bio-Techne announced that it had acquired all of the issued and outstanding equity interests of Novus Biologicals, LLC
(Novus) for approximately $60.0 million. Novus is a Littleton, Colorado-based supplier of a large portfolio of both outsourced and in-house
developed antibodies and other reagents for life science research, delivered through an innovative digital commerce platform. The acquisition
further expanded our antibody portfolio, consistent with our long term strategic business plan to serve customers with a complete and quality
line of reagents, and became a part of our Biotechnology segment.
Fiscal 2014 Investments and Acquisitions
After investing $10.0 million in CyVek, Inc. on April 1, 2014, Bio-Techne’s wholly-owned subsidiary, R & D Systems, Inc. acquired all of
CyVek’s equity on November 4, 2014 for approximately $60.0 million. Bio-Techne completed the acquisition as a result of CyVek meeting
certain pre-agreed commercial milestones. We will pay CyVek stockholders up to an additional $35.0 million based on the revenue generated
by CyVek’s products and related products before May 4, 2017. We will also pay CyVek’s stockholders 50% of the amount, if any, by which
the revenue from CyVek’s products and related products exceeds $100 million in calendar year 2020. This strategic investment allowed us to
offer the SimplePlex platform as part of our Protein Platforms segment, strengthening our market position in the immunoassay market where
multiplex testing platforms are becoming more significant.
On April 30, 2014, Bio-Techne’s China affiliate, R&D Systems China, acquired PrimeGene for approximately $18.8 million. PrimeGene is a
leader in the China market in the development and manufacture of recombinant proteins for research and industrial applications, and has
large scale protein manufacturing capabilities to serve the Chinese market as well as global industrial customers. PrimeGene is included in
Bio-Techne’s Biotechnology segment.
7
On July 22, 2013, the Company’s R&D Systems subsidiary acquired for approximately $103 million cash all of the outstanding shares of
Bionostics. Bionostics is a global leader in the development, manufacture and distribution of control solutions that verify the proper operation
of in-vitro diagnostic devices primarily utilized in point of care blood glucose and blood gas testing. Bionostics is included in Bio-Techne’s
Clinical Controls segment.
Prior Investments
Bio-Techne has an approximate 14% equity investment in ChemoCentryx, Inc. (CCXI). CCXI is a 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. Bio-Techne’s investment in CCXI is included in “Short-term available-for-sale investments” at June 30,
2015 and 2014 at fair values of $52.3 million and $37.1 million, respectively.
GOVERNMENT REGULATION
All manufacturers of clinical diagnostic controls are regulated under the Federal Food, Drug and Cosmetic Act, as amended. All of Bio-
Techne’s clinical control products are classified as "in vitro diagnostic products" by the U.S. Food and Drug Administration (FDA). The
entire control manufacturing process, from receipt of raw materials to the monitoring of control products through their expiration date, is
strictly regulated and documented. FDA inspectors make periodic site inspections of Bio-Techne’s clinical control operations and facilities.
Clinical control manufacturing must comply with Quality System Regulations (QSR) as set forth in the FDA’s regulations governing medical
devices.
Three of Bio-Techne’s immunoassay kits, EPO, TfR and b2M, have FDA clearance to be sold for clinical diagnostic use. Bio-Techne must
comply with QSR for the manufacture of these kits. Biotechnology products manufactured in the U.S. and sold for use in the research market
do not require FDA clearance. Tocris products are used as research tools and require no regulatory approval for commercialization. However,
some of Tocris’ products are considered controlled substances and require government permits to stock such products and to ship them to
end-users. Bio-Techne has no reason to believe that these annual permits will not be re-issued.
Some of Bio-Techne’s research groups use small amounts of radioactive materials in the form of radioisotopes in their product development
activities. Thus, Bio-Techne is subject to regulation and inspection by the Minnesota Department of Health and has been granted a license
through August 2016. Bio-Techne has had no difficulties in renewing this license in prior years and has no reason to believe it will not be
renewed in the future. If, however, the license was not renewed, it would have minimal effect on Bio-Techne’s business since there are other
technologies the research groups could use to replace the use of radioisotopes.
Bio-Techne is subject to the medical device excise tax which was included as part of the Affordable Care Act. The tax applies to the sale of
medical devices by a manufacturer, producer or importer of the device and is 2.3% of the sale price. The tax applies to Bio-Techne’s in vitro
diagnostic products, including its clinical control products and biotechnology clinical diagnostic immunoassay kits. Bio-Techne’s medical
device excise tax for fiscal 2015 and 2014 was $0.6 million and $0.5 million, respectively.
PATENTS AND TRADEMARKS
Our success depends at least in part upon our ability to protect our core technologies and intellectual property. To accomplish this, we rely on
a combination of intellectual property rights, including patents, trade secrets and trademarks, as well as customary contractual protections. As
of June 30, 2015, we had rights to 45 granted patents and approximately 50 pending patent applications, primarily relating to our clinical
controls products. Paten protection, if granted, generally has a life of 20 years from the date of the patent application or patent grant. We
cannot assure you whether any of our pending patent applications will result in the grant of a patent, whether the examination process will
require us to narrow our claims, and whether our claims will provide adequate coverage of our competitors’ products or services. Bio-Techne
is not substantially dependent on products for which it has obtained patent protection.
8
In addition to pursuing patents on our products, we also preserve much of our innovation as trade secrets. We have taken steps to protect our
intellectual property and proprietary technology by entering into confidentiality agreements and intellectual property assignment agreements
with our employees, consultants, corporate partners and, when needed, our advisors. Such agreements may not be enforceable or may not
provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other
breaches of the agreements, and we may not be able to prevent such unauthorized disclosure. Monitoring unauthorized disclosure is difficult,
and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate.
No assurance can be given that Bio-Techne’s products do not infringe upon patents or proprietary rights owned or claimed by others,
particularly for genetically engineered products. Bio-Techne has not conducted a patent infringement study for each of its products. Where
we have been contacted by patent holders with certain intellectual property rights, Bio-Techne has entered into licensing agreements with
patent holders under which it has the exclusive and/or non-exclusive right to use patented technology as well as the right to manufacture and
sell certain patented proteins and related products to the research market. For fiscal 2015, 2014 and 2013, total royalties expensed under these
licenses were approximately $4.0 million, $3.5 million and $3.3 million, respectively.
Bio-Techne has obtained federal trademark registration for certain of its brand and product names. Bio-Techne believes it has common law
trademark rights to certain marks in addition to those which it has registered.
SEASONALITY OF BUSINESS
Biotechnology and Protein Platforms segment products marketed by Bio-Techne historically experience a slowing of sales or of the rate of
sales growth during the summer months. Bio-Techne also usually experiences a slowing of sales in all of its reportable segments during the
Thanksgiving to New Year holiday period. Bio-Techne believes this seasonality is a result of vacation and academic schedules of its world-
wide customer base.
EMPLOYEES
Through its subsidiaries, Bio-Techne employed approximately 1,356 full-time and part-time employees as of June 30, 2015.
ENVIRONMENT
Compliance with federal, state and local environmental protection laws in the United States, United Kingdom, Germany, China and Hong
Kong had no material effect on Bio-Techne in fiscal 2015.
INVESTOR INFORMATION
We are subject to the information requirements of the Securities Exchange Act of 1934 (the Exchange Act). Therefore, we file periodic
reports, proxy statements, and other information with the Securities and Exchange Commission (SEC). Such reports, proxy statements, and
other information may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, N.E., Room 1580, Washington, DC
20549 or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet site (http://www.sec.gov) that contains reports,
proxy and information statements, and other information regarding issuers that file electronically.
Financial and other information about us is available on our web site (http://www.bio-techne.com). We make available on our web site copies
of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed
or furnished pursuant to Section 13 or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material electronically or
otherwise furnishing it to the SEC.
9
EXECUTIVE OFFICERS OF THE REGISTRANT
Currently, the names, ages, positions and periods of service of each executive officer of the Company are as follows:
Name
Charles Kummeth
James T. Hippel
Brenda Furlow
J. Fernando Bazan
Marcel Veronneau
David Eansor
Robert Gavin
Age
55
44
57
55
61
54
48
Position
Officer Since
President, Chief Executive Officer and Director
Chief Financial Officer
Senior Vice President, General Counsel and Secretary
Chief Technology Officer
Senior Vice President, Clinical Controls
Senior Vice President, Biotechnology
Senior Vice President, Protein Platforms
2013
2014
2014
2013
1995
2014
2014
Set forth below is information regarding the business experience of each executive officer. There are no family relationships among any of
the officers named, nor is there any arrangement or understanding pursuant to which any person was selected as an officer.
Charles Kummeth has been President and Chief Executive Officer of the Company since April 1, 2013. Prior to joining the Company, he
served as President of Mass Spectrometry and Chromatography at Thermo Fisher Scientific Inc. from September 2011. He was President of
that company’s Laboratory Consumables Division from 2009 to September 2011. Prior to joining Thermo Fisher, Mr. Kummeth served in
various roles at 3M Corporation, most recently as the Vice President of the company’s Medical Division from 2006 to 2008.
James T. Hippel has been Chief Financial Officer of the Company since April 1, 2014. Prior to joining the Company, Mr. Hippel served as
Senior Vice President and Chief Financial Officer for Mirion Technologies, Inc., a $300 million global company that provides radiation
detection and identification products. Prior to Mirion, Mr. Hippel served as Vice President, Finance at Thermo Fisher Scientific, Inc., leading
finance operations for its Mass Spectrometry & Chromatography division and its Laboratory Consumables division. In addition, Mr. Hippel’s
experience includes nine years of progressive financial leadership at Honeywell International, within its Aerospace Segment. Mr. Hippel
started his career with KPMG LLP and is a CPA (inactive).
Brenda Furlow joined the Company as Senior Vice President and General Counsel on August 4, 2014. Most recently, Ms. Furlow was an
associate with Alphatech Counsel, SC and served as general counsel to emerging growth technology companies. Ms. Furlow was General
Counsel for TomoTherapy, Inc., a global, publicly traded company that manufactured and sold radiation therapy equipment from 2007 to
2011. From 1998 to 2007, Ms. Furlow served as General Counsel for Promega Corporation, a global life sciences company. In addition, Ms.
Furlow’s experience includes five years in various positions with a credit union trade association. Ms. Furlow began her legal career as an
associate with a Chicago-based law firm.
Dr. J. Fernando Bazan was appointed Chief Technical Officer when he joined the Company on August 1, 2013. Dr. Bazan is an adjunct
professor at the University of Minnesota School of Medicine and served as Chief Scientific Officer at Neuroscience, Inc., a
neuroimmunology startup from 2010 to 2012. From 2003 through 2010, Dr. Bazan served as Senior Scientist at Genentech, Inc. (Roche).
Marcel Veronneau was appointed as Vice President, Clinical Controls in March 1995. Prior thereto, he served as Director of Operations for
R&D Systems’ Clinical Controls Division since joining the Company in 1993.
David Eansor has served as Senior Vice President, Biotechnology since April, 2015. Prior to that, Mr. Eansor was Senior Vice President,
Novus Biologicals, since the Company completed its acquisition of Novus on July 2, 2014. From January 2013 until the date of the
acquisition, Mr. Eansor was the Senior Vice President of Corporate Development of Novus Biologicals. Prior to joining Novus, Mr. Eansor
was the President of the Bioscience Division of Thermo Fisher Scientific. Mr. Eansor was promoted to Division President in early 2010 after
5 years as President of Thermo Fisher’s Life Science Research business.
Robert Gavin was appointed Senior Vice President of the Protein Platforms Division in December 2014. Mr. Gavin had previously been
Vice President of Product Development at ProteinSimple, which was acquired by the Company in July, 2014. Prior to joining ProteinSimple
in 2008, Mr. Gavin served as Director of Engineering at MDS Analytical Technologies (previously Molecular Devices, Inc.). Prior to
Molecular Devices, Mr. Gavin managed a team of engineers at Affymax Research Institute.
11
ITEM 1A. RISK FACTORS
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.
Changes in economic conditions could negatively impact the Company’s revenues and earnings.
The Company’s biotechnology and protein platforms 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 due to changes in available resources, mergers of
pharmaceutical and biotechnology companies, spending priorities, general economic conditions and institutional and governmental
budgetary policies. The U.S. and global economies recently experienced a period of economic downturn and have been slow to recover.
Such downturns, and other reductions or delays 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 clinical control industries are very competitive, more so recently due to consolidation trends.
The Company faces significant competition across all of its product lines and in each market in which it operates. Competitors include
companies ranging from start-up companies, which may be able to more quickly respond to customers’ needs, to large multinational
companies, which may have greater financial, marketing, operational, and research and development resources than the Company. In
addition, consolidation trends in the pharmaceutical and biotechnology industries have served to create fewer customer accounts and to
concentrate purchasing decisions for some customers, resulting in increased pricing pressure on the Company. Moreover, customers may
believe that consolidated businesses are better able to compete as sole source vendors, and therefore prefer to purchase from such
businesses. The entry into the market by manufacturers in China and other low-cost manufacturing locations is also creating increased
pricing and competitive pressures, particularly in developing markets. Failure to anticipate and respond to competitors’ actions may
impact the Company’s future sales and earnings.
The Company’s future growth is dependent on the development of new products in a rapidly changing technological environment.
One 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 in a more timely and cost effective manner than the Company. If the Company does not appropriately
innovate and invest in new technologies, the Company’s technologies will become outdated, rendering the Company’s technologies and
products obsolete or noncompetitive. To the extent the company fails to introduce new and innovative products, the Company may lose
market share to its competitors, which may be difficult or impossible to regain.
12
Acquisitions and divestures pose financial, management and other risks and challenges.
The Company routinely explores acquiring other businesses and assets. From time to time, the Company may also consider disposing of
certain assets, subsidiaries, or lines of business. During fiscal 2015, the Company acquired Novus, ProteinSimple, and CyVek, In July
2016, we acquired Cliniqa Corporation. Acquisitions or divestitures present financial, managerial and operational challenges, including
diversion of management attention, difficulty with integrating acquired businesses, integration of different corporate cultures or
separating personnel and financial and other systems, increased expenses, assumption of unknown liabilities, indemnities, and potential
disputes with the buyers or sellers, and the need to evaluate the financial systems of and establish internal controls for acquired entities.
There can be no assurance that the Company will engage in any additional acquisitions or divestitures or that the Company will be able
to do so on terms that will result in any expected benefits. In addition, acquisitions financed with borrowings could make the Company
more vulnerable to business downturns and could negatively affect the Company’s earnings due to higher leverage and interest expense.
The Company is subject to risk associated with global operations.
The Company engages in business globally, with approximately 46% of the Company’s sales revenue in fiscal 2015 coming from
outside the U.S. This subjects the Company to a number of risks, including international economic, political, and labor conditions; tax
laws (including U.S. taxes on foreign subsidiaries); increased financial accounting and reporting burdens and complexities; unexpected
changes in, or impositions of, legislative or regulatory requirements; failure of laws to protect intellectual property rights adequately;
inadequate local infrastructure and difficulties in managing and staffing international operations; delays resulting from difficulty in
obtaining export licenses for certain technology; tariffs, quotas and other trade barriers and restrictions; transportation delays; operating
in locations with a higher incidence of corruption and fraudulent business practices; and other factors beyond the Company’s control,
including terrorism, war, natural disasters, climate change and diseases.
The application of laws and regulations implicating global transactions is often unclear and may at times conflict. Compliance with these
laws and regulations may involve significant costs or require changes in the Company’s business practices that result in reduced revenue
and profitability. Non-compliance could also result in fines, damages, criminal sanctions, prohibited business conduct, and damage to the
Company’s reputation. The Company incurs additional legal compliance costs associated with its global operations and could become
subject to legal penalties in foreign countries if it does not comply with local laws and regulations, which may be substantially different
from those in the U.S.
The Company conducts and plans to grow its business in developing markets, which may cause additional operational and legal risk.
The Company’s efforts to grow its businesses depends, to a degree, on its success in developing market share in additional geographic
markets including, but not limited to, China. In some cases, these countries have greater political and economic volatility and greater
vulnerability to infrastructure and labor disruptions than the Company’s other markets. Operating and seeking to expand business in a
number of different regions and countries exposes the Company to multiple and potentially conflicting cultural practices, business
practices and legal and regulatory requirements.
In many foreign countries, particularly in those with developing economies, it may be common to engage in business practices that are
prohibited by U.S. regulations applicable to the Company, such as the Foreign Corrupt Practices Act. Although the Company
implements policies and procedures designed to ensure compliance with these laws, there can be no assurance that all of the Company’s
employees, contractors, and agents, as well as those companies to which the Company outsources certain aspects of its business
operations, including those based in foreign countries where practices which violate such U.S. laws may be customary, will comply with
the Company’s internal policies. Any such non-compliance, even if prohibited by the Company’s internal policies, could have an adverse
effect on the Company’s business and result in significant fines or penalties.
13
The Company is significantly dependent on sales made through foreign subsidiaries which are subject to changes in exchange rates
and changes to the strength of foreign governments and economic conditions.
Approximately 24% of the Company’s net sales in fiscal 2015 were made through its foreign subsidiaries, which transact their sales in
foreign currencies. Any adverse movement in foreign currency exchange rates could, therefore, negatively affect the Company’s
revenues and earnings. In fiscal 2015, for example, the exchange rate between the Euro and the US dollar changed materially, resulting
in consolidated net sales that were approximately $8.5 million lower in fiscal 2015 when compared to fiscal 2014. Moreover, the
financial crisis faced by several Eurozone countries, and the ongoing economic instability in that region, may lead to reduced spending
on health care and research by Eurozone governments, which could adversely affect the Company’s European sales, as well as its
revenues, financial condition and results of operations.
The Company may incur losses as a result of its investments in ChemoCentryx, Inc. and other companies in which it does not have a
majority interest, the success of which is largely out of the Company’s control.
The Company’s expansion strategies include collaborations and investments in joint ventures and companies developing new products
related to the Company’s business. These strategies carry risks that objectives will not be achieved and future earnings will be adversely
affected.
The Company has an approximate 14% equity investment in ChemoCentryx, Inc. (CCXI) that is valued at $52.3 million on the
Company’s June 30, 2015 Consolidated Balance Sheet. CCXI is a biopharmaceutical company focused on discovering, developing and
commercializing orally-administered therapeutics to treat autoimmune diseases, inflammatory diseases and cancers. The development of
new drugs is a highly risky undertaking. CCXI is dependent on a limited number of products, must achieve favorable clinical trial
results, obtain regulatory and marketing approval for these products. CCXI has also incurred significant losses and has yet to achieve
profitability.
The ownership of CCXI shares is very concentrated, the share price is highly volatile and there is limited trading of the shares. These
factors make it possible that the Company could experience future dilution or a decline in the $22.8 million unrealized gain it has on its
CCXI investment and/or its original $29.5 million investment in CCXI. At August 26, 2015, the market value of the Company’s
investment in CCXI was approximately $44 million.
The Company’s success will be dependent on recruiting and retaining highly qualified personnel.
Recruiting and retaining qualified scientific, production, sales and marketing, and management personnel are critical to the Company’s
success. The Company’s anticipated growth and its expected expansion into areas and activities requiring additional expertise will
require the addition of new personnel and the development of additional expertise by existing personnel. The failure to attract and retain
such personnel could adversely affect the Company’s business.
The Company is dependent on maintaining its intellectual property rights.
The Company’s success depends in part on its ability to protect and maintain its intellectual property, including trade secrets. If we fail to
protect our intellectual property, third parties may be able to compete more effectively against us, we may lose our technological or
competitive advantage, or we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property.
The Company attempts to protect trade secrets in part through confidentiality agreements, but those agreements can be breached, and if
they are, there may not be an adequate remedy. If trade secrets become publicly known, the Company could lose its competitive position.
The Company also attempts to protect and maintain intellectual property through the patent process. As of June 30, 2015, we owned or
exclusively licensed 45 granted U.S. patents and approximately 50 pending patent applications. We cannot be confident that any of our
currently pending or future patent applications will result in granted patents, and we cannot predict how long it will take for such patents
to be granted. It is possible that, if patents are granted to us, others will design around our patented technologies. Further, other parties
may challenge any patents granted to us and courts or regulatory agencies may hold our patents to be invalid or unenforceable. We may
not be successful in defending challenges made against our patents and patent applications. Any successful third-party challenge to our
patents could result in the unenforceability or invalidity of such patents. Our ability to establish or maintain a technological or
competitive advantage over our competitors may be diminished because of these uncertainties. To the extent our intellectual property
offers inadequate protection, or is found to be invalid or unenforceable, we would be exposed to a greater risk of direct competition. If
our intellectual property does not provide adequate coverage of our competitors’ products, our competitive position could be adversely
affected, as could our business. Both the patent application process and the process of managing patent disputes can be time consuming
and expensive.
14
We may be involved in lawsuits to determine the scope, coverage and validity of others’ proprietary rights, or to defend against
third-party claims of intellectual property infringement, any of which could be time-intensive and costly and may adversely impact
our business.
The Company’s success depends in part on its ability to operate without infringing the proprietary rights of others, and to obtain licenses
where necessary or appropriate. The Company has obtained and continues to negotiate licenses to produce a number of products claimed
to be owned by others. Since the Company has not conducted a patent infringement study for each of its products, it is possible that
products of the Company may unintentionally infringe patents of third parties.
The Company has been and may in the future be sued by third parties alleging that the Company is infringing their intellectual property
rights. These lawsuits are expensive, take significant time, and divert management’s focus from other business concerns. If the Company
is found to be infringing the intellectual property of others, it could be required to cease certain activities, alter its products or processes
or pay licensing fees. This would cause unexpected costs and delays which may have a material adverse effect on the Company. If the
Company is unable to obtain a required license on acceptable terms, or unable to design around any third party patent, it may be unable
to sell some of its products and services, which could result in reduced revenue. In addition, if the Company does not prevail, a court
may find damages or award other remedies in favor of the opposing party in any of these suits, which may adversely affect the
Company’s earnings.
The Company has entered into and drawn on a revolving credit facility. The burden of this additional debt could adversely affect the
Company, make it more vulnerable to adverse economic or industry conditions, and prevent it from funding its expansion strategy.
In connection with the acquisition of ProteinSimple in July 2014, the Company entered into a revolving credit facility, governed by a
Credit Agreement dated July 28, 2014. The Credit Agreement provides for a revolving credit facility of $150 million, which can be
increased by an additional $150 million subject to certain conditions. Borrowings under the Credit Agreement bear interest at a variable
rate. As of July 31, 2015, the Company had drawn $73 million under the Credit Agreement.
The terms of the Credit Agreement and the burden of the indebtedness incurred thereunder could have negative consequences for us,
such as:
■
■
limiting our ability to obtain additional financing to fund our working capital, capital expenditures, debt service requirements,
expansion strategy, or other needs;
increasing the Company’s vulnerability to, and reducing its flexibility in planning for, adverse changes in economic, industry and
competitive conditions; and
■
increasing the Company’s vulnerability to increases in interest rates.
The Credit Agreement also contains negative covenants that limit our ability to engage in specified types of transactions. These
covenants limit our ability to, among other things, sell, lease or transfer any properties or assets, with certain exceptions; and enter into
certain merger, consolidation or other reorganization transactions, with certain exceptions.
A breach of any of these covenants could result in an event of default under our credit facility. Upon the occurrence of an event of
default, the lender could elect to declare all amounts outstanding under such facility to be immediately due and payable and terminate all
commitments to extend further credit. In addition, the Company would be subject to additional restrictions if an event of default exists
under the Credit Agreement, such as a prohibition on the payment of cash dividends.
15
We may experience difficulties implementing our enterprise resource planning system.
We are implementing a new enterprise resource planning (“ERP”) system. Our ERP system is critical to our ability to accurately
maintain books and records, record transactions, provide important information to our management and prepare our financial statements.
The implementation of the new ERP system requires the investment of significant financial and human resources. In addition, we may
not be able to successfully complete the implementation of the new ERP system without experiencing difficulties. Any disruptions,
delays or deficiencies in the design and implementation of the new ERP system could adversely affect our ability to process orders, ship
products, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate
our business.
The Company’s business is subject to governmental laws and regulations.
The Company’s operations are subject to regulation by various US federal, state and international agencies. Laws and regulations
enacted and enforced by these agencies impact all aspects of the Company’s operations including design, development, manufacturing,
labeling, selling and the importing and exporting of products across international borders. Any changes to laws and regulations
governing such activities could have an effect on the Company’s operations and ability to obtain regulatory clearance or approval of the
Company’s products. If the Company fails to comply with any of these regulations, it may become subject to fines, penalties or actions
that could impact development, manufacturing and distribution and/or increase costs or reduce sales. The approval process applicable to
clinical control products and certain immunoassay kits that may be developed by the Company may take a year or more. Delays in
obtaining approvals could adversely affect the marketing of new products developed by the Company, and negatively affect the
Company’s revenues.
As a multinational corporation, the Company is subject to the tax laws and regulations of U.S. federal, state and local governments and
of several international jurisdictions. From time to time, new tax legislation may be implemented which could adversely affect current or
future tax filings or negatively impact the Company’s effective tax rate and thus increase future tax payments.
The Company relies heavily on internal manufacturing and related operations to produce, package and distribute its products.
The Company’s internal quality control, packaging and distribution operations support the majority of the Company’s sales. Since
certain Company products must comply with Food and Drug Administration Quality System Regulations and because in all instances,
the Company creates value for its customers through the development of high-quality products, any significant decline in quality or
disruption of operations for any reason, particularly at the Minneapolis facility, 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 future sales growth and
earnings may be adversely affected by perceived disruption risks or actual disruptions.
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, particularly for certain of its regulated products.
Disruptions in the supply and cost of raw materials could reduce the Company’s earnings, cash flow, and ability to meet customers’
needs.
The Company’s products are made from a wide variety of raw materials that are generally available from alternate sources of supply.
However, some of the Company’s products are available only from a single supplier. If such suppliers were to limit or terminate
production or otherwise fail to supply these materials for any reason, such failures could have a material adverse impact on the
Company’s product sales and business. In addition, price increases for raw materials could adversely affect the Company’s earnings and
cash flow.
16
Increased exposure to product liability claims could adversely affect the Company’s earnings.
Product liability is a major risk in testing and marketing biotechnology and pharmaceutical products offered by the Company’s
customers. Currently these risks are primarily borne by the Company’s customers. As the Company’s products and services are further
integrated into customers’ production processes, the Company may become increasingly exposed to product liability and other claims in
the event that the use of its products or services is alleged to have resulted in adverse effects. There can be no assurance that a future
product liability claim or series of claims brought against the Company would not have an adverse effect on the Company’s business or
the results of operations. The Company’s business may be materially and adversely affected by a successful product liability claim or
claims in excess of any insurance coverage that it may have. In addition, product liability claims, regardless of their merits, could be
costly, divert management’s attention, and adversely affect the Company’s reputation and demand for its products.
Any such product liability claims brought against the Company could be significant and any adverse determination may result in
liabilities in excess of the Company’s insurance coverage. Although the Company carries product liability insurance, it cannot be certain
that current insurance will be sufficient to cover these claims or that it can be maintained on acceptable terms, if at all.
Cyber security risks and the failure to maintain the confidentiality, integrity, and availability of the Company’s computer hardware,
software, and Internet applications and related tools and functions could result in damage to the Company’s reputation and/or
subject the Company to costs, fines, or lawsuits.
The integrity and protection of the Company’s own data, and that of its customers and employees, is critical to the Company’s business.
The regulatory environment governing information, security and privacy laws is increasingly demanding and continues to evolve.
Maintaining compliance with applicable security and privacy regulations may increase the Company’s operating costs and/or adversely
impact the Company’s ability to market its products and services to customers. Although the Company’s computer and communications
hardware is protected through physical and software safeguards, it is still vulnerable to fire, storm, flood, power loss, earthquakes,
telecommunications failures, physical or software break-ins, software viruses, and similar events. These events could lead to the
unauthorized access, disclosure and use of non-public information. The techniques used by criminal elements to attack computer systems
are sophisticated, change frequently and may originate from less regulated and remote areas of the world. As a result, the Company may
not be able to address these techniques proactively or implement adequate preventative measures. If the Company’s computer systems
are compromised, it could be subject to fines, damages, litigation, and enforcement actions, customers could curtail or cease using its
applications, and the Company could lose trade secrets, the occurrence of which could harm its business.
We are now subject to regulations related to “conflict minerals” which may cause us to incur additional expenses and could limit the
supply and increase the cost of certain metals used in manufacturing our products.
With our acquisitions of ProteinSimple and CyVek in 2014, we now manufacture and sell products that may be covered under the
Securities and Exchange Commission’s (SEC) rule regarding “conflict minerals.” We are now required to determine whether these
products contain conflict minerals, and, if so, to perform an extensive inquiry into our supply chain in an effort to determine whether or
not such conflict minerals originate from the Democratic Republic of Congo (DRC) or an adjoining country. Under the regulations, we
are required to file a report with the SEC by May 31, 2017, to disclose and report whether or not such conflict minerals originate from
the DRC or an adjoining country. Complying with this regulation could affect sourcing at competitive prices and availability in
sufficient quantities of certain minerals used in the manufacture of our products, including tantalum, tin, gold and tungsten. The number
of suppliers who provide conflict-free minerals may be limited. In addition, there may be material costs associated with complying with
the disclosure requirements, such as costs related to determining the source of certain minerals used in our products, as well as costs of
possible changes to products, processes, or sources of supply as a consequence of such verification activities. We may not be able to
sufficiently verify the origins of the relevant minerals used in our products through the due diligence procedures that we implement,
which may harm our reputation. In addition, we may encounter challenges to satisfy those customers who require that all of the
components of our products be certified as conflict-free, which could place us at a competitive disadvantage if we are unable to do so.
17
There are no unresolved staff comments as of the date of this report.
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
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 Clinical Controls and Biotechnology segments.
The Minneapolis complex includes approximately 800,000 square feet of space in several adjoining buildings. Bio-Techne uses
approximately 625,000 square feet of the complex for administrative, research, manufacturing, shipping and warehousing activities. The
Company is currently leasing or plans to lease the remaining space in the complex as retail and office space.
The Company owns approximately 649 acres of farmland, including buildings, in southeast Minnesota. A portion of the land and buildings
are leased to third parties as cropland and for a dairy operation. The remaining property is used by the Company to house animals for
polyclonal antibody production for its Biotechnology segment.
Rental income from the above properties was $1.0 million, $1.0 million, and $0.8 million in fiscal 2015, 2014, and 2013, 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 and Protein Platforms segments.
The Company leases the following facilities, all of which are utilized by the Company’s Biotechnology segment with the exception of the
location used by the Company’s Bionostics subsidiary (Clinical Control segment), and the ProteinSimple and CyVek sites which support the
Protein Platforms segment:
Subsidiary
Location
Type
Square Feet
R&D Systems Europe Ltd.
R&D Systems GmbH
BiosPacific, Inc.
R&D Systems China Co.,
Ltd.
Bio-Techne Hong Kong,
Ltd.
Boston Biochem, Inc.
Tocris Crookson Limited
Shanghai PrimeGene Bio-
Tech Co., Ltd.
Bionostics, Inc.
Novus Biologicals, LLC
ProteinSimple
ProteinSimple Canada
ProteinSimple Japan
CyVek Inc.
Langely, U.K.
Wiesbaden-Nordenstadt, Germany
Emeryville, California
Shanghai and Bejing, China
Warehouse
Office space
Office space
Office/warehouse
Hong Kong
Office space
Cambridge, Massachusetts
Bristol, United Kingdom
Shanghai, China
Devens, Massachusetts
Littleton, Colorado
Santa Clara, California
Ottawa and Toronto, Canada
Tokyo, Japan
Wallingford, Connecticut
Office/lab
Office/manufacturing/lab/warehouse
Office/manufacturing/lab
Office/manufacturing
Office/warehouse
Office/manufacturing/warehouse
Office/manufacturing/warehouse
Office
Office/manufacturing/warehouse
14,300
4,200
3,000
5,700
1,200
7,400
40,900
13,700
48,000
22,500
167,000
10,000
3,500
17,500
The Company is currently pursuing new lease space for its Tocris operations. The Company believes the owned and leased properties, other
than the Tocris facility, are adequate to meet its occupancy needs in the foreseeable future.
18
As of August 26, 2015, the Company is not a party to any legal proceedings that, individually or in the aggregate, are reasonably expected to
have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
19
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Price of Common Stock
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.
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Holders of Common Stock and Dividends Paid
Fiscal 2015 Price
Fiscal 2014 Price
High
Low
High
Low
$
97.15 $
95.89
101.60
103.56
89.03 $
86.01
87.24
95.37
83.83 $
94.78
96.96
93.06
69.30
77.14
82.51
82.63
As of August 26, 2015, there were over 31,000 beneficial shareholders of the Company’s common stock and over 150 shareholders of record.
The Company paid quarterly cash dividends totaling $47.1 million, $45.4 million and $43.5 million in fiscal 2015, 2014 and 2013,
respectively. The Board of Directors periodically considers the payment of cash dividends, and there is no guarantee that the Company will
pay comparable cash dividends, or any cash dividends, in the future. The Company entered into a revolving line of credit in July 2014, which
would prohibit payment of dividends to Company shareholders in the event of a default thereunder. The Credit Agreement that governs the
revolving line of credit contains customary events of default.
Issuer Purchases of Equity Securities
There was no share repurchase activity by the Company in fiscal 2015. The maximum approximate dollar value of shares that may yet be
purchased under the Company’s existing stock repurchase plan is approximately $125 million. The plan does not have an expiration date.
20
Stock Performance Graph
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, 2010 in the Company’s
common stock and in each of the foregoing indices and assumes reinvestment of dividends.
21
ITEM 6. SELECTED FINANCIAL DATA
(dollars in thousands, except per share data)
Income and Share Data:
2015 (1)
2014 (2)
2013
2012
2011 (3)
Net sales
Operating income
Earnings before income taxes (4)
Net earnings
Diluted earnings per share
$
452,246 $
147,023
154,162
107,735
2.89
357,763 $
159,750
161,392
110,948
3.00
310,575 $
158,469
160,662
112,561
3.05
314,560 $
166,209
162,195
112,331
3.04
289,962
163,055
164,981
112,302
3.02
Average common and common equivalent
shares - diluted (in thousands)
37,231
37,005
36,900
37,006
37,172
Balance Sheet Data as of June 30:
2015
2014
2013
2012
2011
Cash, cash equivalents and short-term available-
for-sale investments
Working capital
Total assets
Total shareholders’ equity
110,921 $
208,515
1,063,360
846,935
363,354 $
443,022
862,491
795,265
332,937 $
377,432
778,098
737,541
268,986 $
310,757
719,324
674,442
140,813
212,229
617,670
586,122
Cash Flow Data:
2015
2014
2013
2012
2011
Net cash provided by operating activities
$
Capital expenditures
Cash dividends declared per share
139,359 $
19,904
1.27
136,762 $
13,821
1.23
123,562 $
22,454
1.18
126,746 $
6,017
1.11
127,194
3,630
1.07
Employee Data as of June 30:
2015
2014
2013
2012
Employees
1,356
967
789
783
2011
763
(1) The Company acquired Novus Holdings LLC (Novus) on July 2, 2014, ProteinSimple on July 31, 2014, and CyVek Inc. on November 3,
2014.
(2) The Company acquired Bionostics Holdings, Ltd on July 22, 2013 and Shanghai PrimeGene Bio-Tech Co. on April 30, 2014.
(3) The Company acquired Boston Biochem, Inc. on April 1, 2011 and Tocris Holdings Limited and subsidiaries on April 28, 2011.
(4) Earnings before income taxes included acquisition related expenses related to amortization of intangibles, costs recognized on sale of
acquired inventories and professional fees associated with acquisition activity, as follows: 2015 - $37.6 million; 2014 - $20.0 million; 2013 -
$10.2 million; 2012 - $12.7 million; 2011 - $5.0 million; 2010.
22
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
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 and strategy, future financial results,
acquisition activity, the competitive environment, currency fluctuation and exchange rates, capital expenditures, the performance of the
Company’s investments, future dividend declarations, the construction and lease of certain facilities, the adequacy of owned and leased
property for future operations, anticipated financial results 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.
USE OF ADJUSTED FINANCIAL MEASURES
The adjusted financial measures used in this Annual Report on Form 10-K quantify the impact the following events had on reported net sales,
gross margin percentages and net earnings for fiscal 2015 as compared to fiscal 2014 and 2013:
■
■
fluctuations in exchange rates used to convert transactions in foreign currencies (primarily the Euro, British pound sterling and Chinese
yuan) to U.S. dollars;
the acquisitions in fiscal 2015 of CyVek, Inc. (CyVek) on November 4, 2014, ProteinSimple on July 31, 2014, and Novus Biologicals,
LLC (Novus) on July 1, 2014 and in fiscal 2014 of Shanghai-based PrimeGene Bio-Tech Co. (PrimeGene) on April 30, 2014 and
Bionostics Holdings, Ltd. (Bionostics) on July 22, 2013 including the impact of amortizing intangible assets and the recognition of costs
upon the sale of inventory written-up to fair value;
■ professional fees and other costs incurred as part of the acquisitions of CyVek, ProteinSimple, and Novus in fiscal 2015 and of
Bionostics and PrimeGene in fiscal 2014;
■
income tax adjustments related to the reinstatement of the U.S. credit for research and development expenditures in fiscal 2013, the
expiration of the credit on December 31, 2013, and the reversal of valuation allowances on deferred tax assets in fiscal 2012; and
■
the gain on the purchase of CyVek
These adjusted financial measures are not prepared in accordance with generally accepted accounting principles (GAAP) and may be
different from adjusted financial measures used by other companies. Adjusted financial measures should not be considered as a substitute for,
or superior to, measures of financial performance prepared in accordance with GAAP. The Company views these adjusted financial measures
to be helpful in assessing the Company's ongoing operating results. In addition, these adjusted financial measures facilitate our internal
comparisons to historical operating results and comparisons to competitors' operating results. These adjusted financial measures are included
in this Annual Report on Form 10-K because the Company believes they are useful to investors in allowing for greater transparency related to
supplemental information used in the Company’s financial and operational analysis. Investors are encouraged to review the reconciliations of
adjusted financial measures used in this Annual Report on Form 10-K to their most directly comparable GAAP financial measures.
23
OVERVIEW
Bio-Techne develops, manufactures and sells biotechnology products and clinical diagnostic controls worldwide. With our deep product
portfolio and application expertise, Bio-Techne is a leader in providing specialized proteins, including cytokines and growth factors, and
related immunoassays, small molecules and other reagents to the research, diagnostics and clinical controls markets.
Bio-Techne operates worldwide and has three reportable segments based on the nature of products; they are Biotechnology, Clinical Controls
and Protein Platforms. The Biotechnology reporting segment develops, manufactures and sells biotechnology research and diagnostic
products world-wide. The Clinical Controls reporting segment develops and manufactures controls and calibrators for the global clinical
market. The Protein Platforms reporting segment includes the product lines associated with the acquisitions of ProteinSimple in July, 2014
and CyVek in November, 2014, both of which expand the Company’s solutions that it can offer its customers by developing and
commercializing proprietary systems and consumables for protein analysis.
OVERALL RESULTS
For fiscal 2015, consolidated net sales increased 26% as compared to fiscal 2014. After adjusting for the impact of the Novus, ProteinSimple
and CyVek acquisitions in fiscal 2015, as well as foreign currency fluctuations, organic sales for the year increased 4% with currency
translation having a negative impact of 2% and acquisitions contributing 25% to the revenue growth. The organic growth was broad-based,
with the Company achieving growth in both the Biotechnology and Clinical Controls reporting segments. A strong bio-pharma end-market in
the US and significant government funding of life science research in China were the biggest contributing factors impacting organic growth.
Consolidated GAAP net earnings decreased 3% for fiscal 2015 as compared to fiscal 2014. After adjusting for acquisition related costs and
certain income tax items in both years, adjusted net earnings increased 1% in fiscal 2015 as compared to fiscal 2014. Adjusted earnings
growth was driven by increased organic sales and contribution from acquisitions partially offset by a negative impact from foreign currency
translation.
For fiscal 2014, consolidated net sales increased 15% as compared to fiscal 2013. After adjusting for the 11% impact of the Bionostics and
PrimeGene acquisitions in fiscal 2014, as well as 2% positive impact of foreign currency fluctuations, organic sales for the year increased
3%. The growth was broad-based, with the Company achieving organic growth in both the Biotechnology and Clinical Controls reporting
segments and in most regions of the world. Commercial investments made globally in fiscal 2014, especially in China, were the biggest
contributing factor impacting organic revenue growth.
Consolidated GAAP net earnings decreased 1% for fiscal 2014 as compared to fiscal 2013. After adjusting for acquisition related costs and
certain income tax items in both years, adjusted net earnings increased 6% in fiscal 2014 as compared to fiscal 2013. Adjusted earnings
growth was driven by increased sales partially offset by a lower margin mix from the acquired Bionostics business, as well as investments
made in commercial operations and administrative infrastructure during fiscal 2014.
24
RESULTS OF OPERATIONS
Net Sales
Consolidated organic net sales exclude the impact of net sales contributed by companies acquired during the fiscal year and the effect of the
change from the prior year in exchange rates used to convert sales in foreign currencies (primarily British pound sterling, euros and Chinese
yuan) into U.S. dollars.
Consolidated net sales growth was as follows:
Organic sales growth
Acquisitions sales growth
Impact of foreign currency fluctuations
Consolidated net sales growth (may not foot due to rounding)
Consolidated net sales by reportable segment were as follows (in thousands):
Year Ended June 30,
2015
2014
4 %
25 %
-2 %
26 %
3 %
11 %
2 %
15 %
Biotechnology
Clinical Controls
Protein Platforms
Intersegment
Consolidated net sales
Year Ended June 30,
2014
2015
$
$
325,897 $
60,377
66,247
(273 )
452,247 $
300,578 $
57,185
0
0
357,763 $
2013
288,156
22,419
0
0
310,575
In fiscal 2015, Biotechnology segment net sales increased 8% from the prior fiscal year. Included in fiscal 2015 Biotechnology segment net
sales was $18.5 million generated by the acquisition of Novus Biologicals in July 2014 and the negative impact of foreign currency
fluctuations of $8.5 million. Excluding these amounts, organic net sales for the segment increased 3% in fiscal 2015, driven by a strong bio-
pharma end-market in the US and significant government funding of life science research in China. The academia and government end-
market in the U.S. continued to improve sequentially each quarter in 2015, which the Company capitalized on through its distribution
partnership with Fisher Scientific. In Europe, most countries experienced growth in 2015, but this growth was negated by the timing of
research cycles experienced by the Company’s large pharma customers located in Germany. The Pacific Rim regions delivered modest
growth, with the exception of Japan, where the devaluation of the yen versus the US dollar encouraged local distributors to hold lower levels
of inventory than in the prior year.
In fiscal 2015, Clinical Controls segment net sales increased 6%, with organic sales contributing 5% to growth and the acquisition of
Bionostics contributing 1% to growth. Growth came equally from solid demand for both the segment’s hematology-based controls and
blood glucose/gas-based controls attributable to close relationships with our OEM customers.
In fiscal 2015, the new Protein Platforms segment generated net sales of $66.2 million. This segment includes the ProteinSimple product
lines associated with the acquisitions of ProteinSimple in July, 2014 and CyVek in November, 2014, both of which expand the Company’s
solutions that it can offer its customers by developing and commercializing proprietary systems and consumables for protein analysis.
In fiscal 2014, Biotechnology segment net sales increased 4% from the prior fiscal year. Included in fiscal 2014 Biotechnology segment net
sales was $0.7 million from the acquisition of PrimeGene in April 2014 and the positive impact of foreign currency fluctuations of $3.5
million. Excluding these amounts, organic net sales for the segment increased 3% in fiscal 2014, driven by the commercial investments made
in China, solid execution from our Pacific Rim distributors, and a robust pharma and biotech market in the U.S. U.S. academic customers still
suffered from decreases in NIH funding, but sales to these customers stabilized sequentially throughout fiscal 2014. Included in fiscal 2014
net sales were $3.4 million of sales of new biotechnology products released during the fiscal year.
In fiscal 2014, Clinical Controls segment net sales increased $34.8 million, or 61% from the prior fiscal year. Included in Clinical Controls
segment net sales was $33.1 million from the acquisition of Bionostics in July 2013. Clinical Controls segment organic net sales increased
7% in fiscal 2014 from each of the prior fiscal year, primarily as a result of strong end-market demand and operational execution.
25
Gross Margins
Consolidated gross margins were 68%, 70% and 74% in fiscal 2015, 2014 and 2013, respectively. GAAP reported consolidated gross
margins were negatively impacted as a result of purchase accounting related to inventory and intangible assets acquired during fiscal 2015,
2014, 2013 and prior years. Under purchase accounting, inventory is valued at fair value less expected selling and marketing costs, resulting
in reduced margins in future periods as the inventory is sold. Excluding the impact of acquired inventory sold and amortization of intangibles,
adjusted gross margins were 72%, 74% and 77% in fiscal 2015, 2014 and 2013, respectively.
A reconciliation of the reported consolidated gross margin percentages, adjusted for acquired inventory sold and intangible amortization
included in cost of sales, is as follows:
Consolidated gross margin percentage
Identified adjustments:
Costs recognized upon sale of acquired inventory
Amortization of intangibles
Adjusted gross margin percentage
Year Ended June 30,
2015
2014
67.9 %
1.5 %
2.1 %
71.6 %
70.3 %
2.1 %
1.1 %
73.5 %
2013
74.4 %
1.4 %
1.0 %
76.8 %
Fluctuations in adjusted gross margins, as a percentage of net sales, have primarily resulted from changes in foreign currency exchange rates
and changes in product mix. In fiscal 2015, the biggest impact to gross margin, as compared to fiscal 2014, was the change in product mix
associated with the acquisitions of Novus, ProteinSimple, and CyVek. In fiscal 2014, the biggest impact to gross margin, as compared to
fiscal 2013, was the change in product mix associated with the acquisition of Bionostics. We expect that, in the future, gross margins will
continue to be impacted by future acquisitions as well as by the introduction and growth of lower-priced brands that will differentiate from
our current premium brands, and allow the Company to better compete in more price-sensitive markets.
Segment gross margins, as a percentage of net sales, were as follows:
Biotechnology
Clinical Controls
Protein Platforms
Consolidated
Year Ended June 30,
2015
2014
77.8 %
40.1 %
57.8 %
67.9 %
76.3 %
38.5 %
70.3 %
2013
76.4 %
49.0 %
74.4 %
The Biotechnology segment gross margin percentage for fiscal 2015 was negatively impacted by purchase accounting and intangible asset
amortization related to the Novus acquisition in July 2014, as well as foreign currency translation, as discussed above. The Clinical Controls
segment gross margin percentage for fiscal 2015 and 2014 was negatively impacted by purchase accounting and intangible asset amortization
related to the acquisition of Bionostics in July 2013, as discussed above, as well as reduced pricing for it’s glucose-based control products
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $58.7 million (97%) and $17.3 million (40%) in fiscal 2015 and 2014, respectively.
The increase in fiscal 2015 was mainly the result of the acquisitions of Novus, ProteinSimple, and CyVek including $37.1 million of selling,
general and administrative expenses by the acquired companies and an increase of $10.5 million of intangible amortization compared to fiscal
2014. Selling, general and administrative expenses in fiscal 2015 also included $4.5 million of acquisition related professional fees. The
remaining increase in selling, general and administrative expenses in fiscal 2015 included investments made in global commercial resources,
administrative infrastructure, non-cash stock based compensation, and annual wage, salary and benefits increases.
26
The increase in fiscal 2014 was mainly the result of the acquisitions of Bionostics and PrimeGene, including $4.2 million of selling, general
and administrative expenses by the acquired companies and an increase of $4.0 million of intangible amortization. Selling, general and
administrative expenses in fiscal 2014 also included $2.2 million of acquisition related professional fees. The remaining increase in selling,
general and administrative expenses in fiscal 2014 included investments made in global commercial resources, administrative infrastructure,
and annual wage, salary and benefits increases.
Consolidated selling, general and administrative expenses were composed of the following (in thousands):
Biotechnology
Clinical Controls
Protein Platforms
Unallocated corporate expenses
Research and Development Expenses
Year Ended June 30,
2014
2015
$
$
59,359 $
10,278
39,144
10,620
119,401 $
42,863 $
9,765
8,088
60,716 $
2013
37,421
1,561
4,402
43,384
Research and development expenses increased $9.9 million (32%) and $1.7 million (6%) in fiscal 2015 and 2014, respectively, as compared
to prior-year periods. Included in research and development expense in fiscal 2015 and 2014 was $11.0 million and $0.9 million of expenses
by the companies acquired during fiscal 2015 and 2014, respectively. The remaining expenditures for fiscal 2015 and 2014 were primarily
related to the development of new proteins, antibodies and assay kits within the Biotechnology segment, although fiscal 2015 research and
development expenses were slightly lower within the Biotechnology segment than in prior years. The Company introduced approximately
1,600 new biotechnology products in fiscal 2015 and in fiscal 2014. Research and development expenses were composed of the following (in
thousands):
Biotechnology
Clinical Controls
Protein Platforms
Net Interest Income (Expense)
$
$
28,001 $
1,828
11,023
40,852 $
Year Ended June 30,
2014
2015
29,189 $
1,756
2013
28,441
816
30,945 $
29,257
Net interest income/(expense) for fiscal 2015, 2014 and 2013 was ($0.9) million, $2.7 million, and $2.6 million respectively. Net interest
expense in fiscal 2015 resulted from the opening of a debt facility in July 2014 to partially fund the acquisitions of Novus, ProteinSimple, and
CyVek. Interest income in fiscal 2014 remained flat from fiscal 2013 due to an increase in cash flow slightly offset by cash used for the
acquisition of Bionostics in the first quarter of fiscal 2014.
27
Other Non-operating Expense, Net
Other non-operating expense, net, consists of foreign currency transaction gains and losses, rental income, building expenses related to rental
property and the Company’s share of gains and losses from equity method investees as follows (in thousands):
Foreign currency (losses) gains
Rental income
Real estate taxes, depreciation and utilities
Net gain (loss) from equity method investees
Year Ended June 30,
2014
2015
$
$
372 $
1,014
(2,547 )
8,300
7,139 $
(128 ) $
1,026
(1,940 )
0
(1,042 ) $
2013
339
830
(2,192 )
570
(453 )
Other non-operating expenses, net for the twelve months ended June 30, 2015 included a non-taxable gain of $8.3 million on the Company’s
previous investment in CyVek discussed above.
Income Taxes
Income taxes for fiscal 2015, 2014 and 2013 were provided at rates of 30.1%, 31.3%, and 29.9%, respectively, of consolidated earnings
before income taxes. The impact of prior year acquisitions resulted in a net increase in the rate due to additional anticipated state tax filings in
comparison to prior year. This increase was offset by other discrete items including the non-taxable CyVek gain as well as an increased tax
benefit resulting from a dividend paid from R&D Systems Europe.
In January 2013, the U.S. federal credit for research and development was reinstated for the period of January 2012 through December 2013.
As a result, fiscal 2014 included a credit of $0.5 million for the period of July 2013 through December 2013, while fiscal 2013 included a
credit of $1.4 million for the period of January 2012 to June 2013.
U.S. federal taxes have been reduced by the manufacturer’s deduction provided for under the American Jobs Creation Act of 2004 and the
U.S. federal credit for research and development. Foreign income taxes have been provided at rates which approximate the tax rates in the
countries in which the Company has operations.
Net Earnings
Adjusted consolidated net earnings are as follows (in thousands):
Net earnings
Identified adjustments:
Costs recognized upon sale of acquired inventory
Amortization of intangibles
Professional and other acquisition related costs
Gain in investments
Tax impact of above adjustments
Tax impact of research and development credit
Tax impact of deemed dividend and state and foreign adjustments
Adjusted net earnings
Adjusted net earnings growth
LIQUIDITY AND CAPITAL RESOURCES
Year Ended June 30,
2015
2014
2013
$
107,735 $
110,948 $
112,561
6,958
26,169
4,519
(8,300 )
(11,735 )
(910 )
2,321
126,758 $
7,479
10,267
2,247
0
(5,305 )
(476 )
165
125,325 $
1 %
6 %
4,501
5,061
607
0
(2,596 )
(1,392 )
(710
118,032
$
Cash, cash equivalents and available-for-sale investments at June 30, 2015 were $111 million compared to $367 million at June 30, 2014.
Included in available-for-sale investments at June 30, 2015 and June 30, 2014 was the fair value of the Company’s investment in CCXI of
$52.3 million and 37.1 million, respectively.
At June 30, 2015, approximately 42%, 23%, and 15% of the Company’s cash and equivalent account balances of $55 million were located in
the U.S., China, and Canada respectively with the remainder located in the U.K. and other European countries. At June 30, 2015,
approximately 93% of the Company’s available-for-sale investment accounts are located in the U.S., with the remaining 7% in China.
28
The Company has either paid U.S. taxes on its undistributed foreign earnings or intends to indefinitely reinvest the undistributed earnings in
the foreign operations or expects the earnings will be remitted in a tax neutral transaction. Management of the Company expects to be able to
meet its cash and working capital requirements for operations, facility expansion, capital additions, and cash dividends for the foreseeable
future, and at least the next 12 months, through currently available funds including funds available through our line-of-credit and cash
generated from operations.
During fiscal 2015, the Company acquired Novus, ProteinSimple, and CyVek for approximately $60 million, $300 million and $95 million,
respectively. The Novus acquisition was financed through cash on hand. The purchases of ProteinSimple and CyVek were financed through
cash on hand and a $150 million revolving line of credit facility that was opened in July 2014. This senior unsecured revolving credit facility
has a term of five years with an adjustable interest rate equal to the greater of (i) the prime commercial rate, (ii) the per annum federal funds
rate plus 0.5%, or (iii) LIBOR + 1.00% - 1.75% depending on the existing total leverage ratio of Debt to EBITDA (as defined in the Credit
Agreement governing the revolving credit facility). The financial covenants of the revolving credit facility require the Company to maintain a
minimum Interest Coverage Ratio, defined as the ratio of EBIT to cash interest expense, of 4.0x and a maximum total leverage ratio of 3.5x.
The annualized fee for any unused portion of the credit facility is 15 basis points.
Future acquisition strategies may or may not require additional borrowings under the line of credit facility or other outside sources of
funding.
Cash Flows From Operating Activities
The Company generated cash from operations of $139 million, $137 million and $124 million in fiscal 2015, 2014 and 2013, respectively.
The increase in cash generated from operating activities in fiscal 2015 as compared to fiscal 2014 and in fiscal 2014 compared to fiscal 2013
was mainly the result of increase in net earnings after adjustment for non-cash expenses related to depreciation, amortization, costs
recognized on sale of acquired inventory, and stock based compensation expense. Operating cash flow also benefitted from the timing of
certain trade receivable cash receipts, trade payable cash disbursements, and income tax payments in fiscal 2014 compared to fiscal 2013.
Cash Flows From Investing Activities
On July 22, 2013, the Company acquired for cash all of the outstanding shares of Bionostics for a net purchase price of approximately $103
million. The acquisition was financed through cash and cash equivalents on hand. On April 30, 2014, the Company acquired all of the
ownership interest of PrimeGene for a net purchase price of approximately $18.8 million. The Company paid approximately $6.0 million at
closing, with the remaining purchase price payable over fiscal years 2015 to 2017. The acquisition cash payment was financed through cash
and cash equivalents on hand and sale of certain short-term available-for-sale investments.
On July 2, 2014, the Company acquired, for a net purchase price of approximately $60 million cash, all of the issued and outstanding equity
interests of Novus Holdings LLC (Novus), including its subsidiary, Novus Biologicals, LLC. The acquisition was financed through cash and
cash equivalents on hand.
On July 31, 2014, the Company acquired ProteinSimple for a net purchase price of approximately $300 million. The transaction was financed
through cash on hand and a revolving line-of-credit facility.
On November 3, 2014, the Company acquired CyVek for a net cash payment of $60 million on the date of acquisition and certain future
contingent payments of approximately $35 million. The cash paid at the acquisition date was financed through cash on hand and a revolving
line-of-credit facility.
The Company’s net proceeds from the purchase, sale and maturity of available-for-sale investments in fiscal 2015, 2014 and 2013 were $13
million, $184 million and ($9) million, respectively. Most of the Company’s available-for-sale investments in the U.S. (other than its
investment in CCXI) were liquidated by fiscal 2014 year-end to prepare for the July purchase of Novus and ProteinSimple. The Company’s
investment policy is to place excess cash in municipal and corporate bonds with the objective of obtaining the highest possible return while
minimizing risk and keeping the funds accessible.
29
Capital additions consisted of the following (in thousands):
Laboratory, manufacturing, and computer equipment
Construction/renovation
Year Ended June 30,
2014
2015
$
$
9,213 $
10,691
19,904 $
6,626 $
7,195
13,821 $
2013
2,882
19,572
22,454
Construction/renovation for fiscal 2015 included $3.8 million related to the relocation and expansion of the Company’s Tocris facilities in the
U.K. Construction and renovation for fiscal 2014 and 2013 included $6.5 million and $18.0 million, respectively, related to the renovation of
a building on the Company’s Minneapolis campus which was completed in fiscal 2014. Capital additions planned for fiscal 2016 are
approximately $20 million and are expected to be financed through currently available cash and cash generated from operations. Included in
the planned fiscal 2016 capital expenditures are approximately $5.6 million for leasehold improvements and equipment needed to complete
the relocation and expansion of the Company’s Tocris facilities in the U.K.
Cash Flows From Financing Activities
In fiscal 2015, 2014 and 2013, the Company paid cash dividends of $47.1 million, $45.4 million and $43.5 million, respectively. The Board
of Directors periodically considers the payment of cash dividends.
The Company received $9.7 million, $8.3 million, and $1.1 million for the exercise of options for 241,000, 141,000, and 22,000 shares of
common stock in fiscal 2015, 2014 and 2013, respectively. The Company recognized excess tax benefits from stock option exercises of $0.6
million, $0.3 million, $0.1 million in fiscal 2015, 2014 and 2013, respectively.
In fiscal 2013, the Company purchased 8,324 shares of common stock, for its employee stock bonus plans at a cost of $0.6 million.
During fiscal 2015, the Company drew $163 million under its revolving line-of-credit facility to partially fund its acquisitions of
ProteinSimple and CyVek. The Company made payments on the line-of-credit and other debt of $95 million.
In April 2009, the Board of Directors authorized a plan for the repurchase and retirement of $60 million of its common stock. In October
2012, the Board of Directors increased the amount authorized under the plan by $100 million. The plan does not have an expiration date. In
fiscal 2013, the Company purchased and retired 28,000 and shares of common stock at market values of $1.8 million. There were no stock
repurchases in fiscal 2015 or 2014. At June 30, 2015, approximately $125 million remained available for purchase under the above
authorizations. There were no share repurchase activity by the Company in fiscal 2015.
CONTRACTUAL OBLIGATIONS
The following table summarizes the Company’s contractual obligations and commercial commitments as of June 30, 2015 (in thousands):
Operating leases
Minimum royalty payments
CyVek acquisition (1)
Payments Due by Period
Total
47,648 $
160
35,000
82,808 $
Less than
1 Year
5,578 $
160
0
5,738 $
1-2
Years
10,883 $
0
35,000
45,883 $
$
$
3-4
Years
8,679 $
0
0
8,679 $
After
5 Years
22,508
0
0
22,508
(1) Amounts represent the maximum potential contingent liability under the CyVek Merger Agreement. In addition, the Company will pay
CyVek’s other stockholders up to 50% of the amount, if any, by which revenues of CyVek’s products and related products exceeds $100
million in calendar year 2020.
30
OFF-BALANCE SHEET ARRANGEMENTS
The Company is not a party to any off-balance sheet transactions, arrangements or obligations that have, or are reasonably likely to have, a
current or future material effect on the Company’s financial condition, changes in the financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.
CRITICAL ACCOUNTING POLICIES
Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s
Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United
States of America (U.S. GAAP). The preparation of these financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, management evaluates its estimates. Management bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions.
The Company has identified the policies outlined below as critical to its business operations and an understanding of results of operations.
The listing is not intended to be a comprehensive list of all accounting policies; investors should also refer to Note A to the Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K .
Valuation of Available-For-Sale Investments
The Company considers all of its marketable securities available-for-sale and reports them at fair market value. Fair market values are based
on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. Unrealized
gains and losses on available-for-sale investments are excluded from income, but are included, net of taxes, in other comprehensive income.
If an “other-than-temporary” impairment is determined to exist, the difference between the value of the investment recorded in the financial
statements and the Company’s current estimate of fair value is recognized as a charge to earnings in the period in which the impairment is
determined. Net unrealized gains on available-for-sale investments at June 30, 2015 were $14.3 million.
Valuation of Inventory
Inventories are stated at the lower of cost (first-in, first-out method) or market. The Company regularly reviews inventory on hand for slow-
moving and obsolete inventory, inventory not meeting quality control standards and inventory subject to expiration.
To meet strict customer quality standards, the Company has established a highly controlled manufacturing process for proteins, antibodies
and its chemically-based products. These products require the initial manufacture of multiple batches to determine if quality standards can be
consistently met. In addition, the Company will produce larger batches of established products than current sales requirements due to
economies of scale. The manufacturing process for these products, therefore, has and will continue to produce quantities in excess of
forecasted usage. The Company values its manufactured protein and antibody inventory based on a two-year forecast and its chemically-
based products on a five-year forecast. The establishment of a two-year or five-year forecast requires considerable judgment. Inventory
quantities in excess of the forecast are not valued due to uncertainty over salability. The value of protein, antibody and chemically-based
product inventory not valued at June 30, 2015 was $24 million.
The fair value of inventory purchased through acquisitions was determined based on quantities acquired, selling prices at the date of
acquisition and management’s assumptions regarding inventory having future value and the costs to sell such inventories. Inventory
purchased in fiscal 2015 through the acquisitions of Novus, ProteinSimple, and CyVek was increased $4.1 million, $1.4 million and $0.1
million respectively. The increase in value of the fiscal 2015 acquired inventory remaining at June 30, 2015 was $2.3 million for Novus.
Substantially all of ProteinSimple and CyVek acquired inventory was sold as of June 30, 2015.
31
Inventory purchased in fiscal 2014 through the acquisition of Bionostics and PrimeGene was increased $1.7 million to $5.7 million and $0.8
million to $1.0 million, respectively. Substantially all of Bionostics and PrimeGene acquired inventory was sold as of June 30, 2015.
Valuation of Intangible Assets and Goodwill
When a business is acquired, the purchase price is allocated, as applicable, between tangible assets, identifiable intangible assets and
goodwill. Determining the portion of the purchase price allocated to intangible assets requires significant estimates. The fair value of
intangible assets acquired, including developed technologies, trade names, customer relationships and non-compete agreements, were based
on management’s forecasted cash inflows and outflows using a relief-from-royalty and multi-period excess earnings method with
consideration to other factors including an independent valuation of management’s assumptions. Intangible assets are being amortized over
their estimated useful lives, ranging from 3 to 20 years. The Company reviews the carrying amount of intangible assets for impairment
whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Intangible assets, net of
accumulated amortization, were $293 million at June 30, 2015.
Goodwill recognized in connection with a business acquisition represents the excess of the aggregate purchase price over the fair value of net
assets acquired. Goodwill is tested for impairment annually or more frequently if changes in circumstance or the occurrence of events suggest
impairment exists. Assessing the impairment of goodwill requires the Company to make judgments regarding the fair value of the net assets
of its reporting units and the allocation of the carrying amount of shared assets to the reporting units. The Company’s annual assessment
included a qualitative assessment of whether it is more-likely-than-not that a reporting unit’s fair value is less than its carrying value. A
significant change in the Company’s market capitalization or in the carrying amount of net assets of a reporting unit could result in an
impairment charge in future periods. The Company completed its annual impairment testing of goodwill and concluded that no impairment
existed as of June 30, 2015, as the fair values of the Company’s reporting units exceeded their carrying values. Goodwill at June 30, 2015
was $391 million.
Valuation of Investments
The Company has made equity investments in several start-up and early development stage companies, including CyVek in fiscal 2014. The
accounting treatment of each investment (cost method or equity method) is dependent upon a number of factors, including, but not limited to,
the Company’s share in the equity of the investee and the Company’s ability to exercise significant influence over the operating and financial
policies of the investee. In determining which accounting treatment to apply, the Company must make judgments based upon the quantitative
and qualitative aspects of the investment.
The Company periodically assesses its equity investments for impairment. Development stage companies of the type the Company has
invested in are dependent on their ability to raise additional funds to continue research and development efforts and on receiving patent
protection and/or FDA clearance to market their products. If such funding were unavailable or inadequate to fund operations or if patent
protection or FDA clearance were not received, the Company would potentially recognize an impairment loss to the extent of its remaining
net investment.
32
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
At the end of fiscal 2015, the Company had a portfolio of equity securities, excluding those classified as cash and cash equivalents, of $56.4
million (see Note 3 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K). As the
Company’s securities are classified as available-for-sale, unrealized gains or losses are recognized by the Company in “Other comprehensive
income (loss)” on the Consolidated Statement of Earnings and Comprehensive Income.
The Company operates internationally, and thus is subject to potentially adverse movements in foreign currency exchange rates.
Approximately 18% of the Company’s consolidated net sales in fiscal 2015 were made in foreign currencies, including 6% in euro, 4% in
British pound sterling, 5% in Chinese yuan and the remaining 3% in other European and Asian 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. In fiscal 2015, for example, the exchange rate between the Euro and the US dollar changed materially, resulting in
consolidated net sales that were approximately $8.5 million lower in fiscal 2015 compared to fiscal 2014.
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:
British pound:
High
Low
Average
Euro:
High
Low
Average
Chinese yuan:
High
Low
Average
$
$
$
Year Ended June 30,
2014
2015
1.69 $
1.48
1.57
1.34 $
1.08
1.19
.164 $
.162
.163
1.71 $
1.52
1.64
1.39 $
1.32
1.36
.165 $
.160
.163
2013
1.62
1.52
1.57
1.36
1.23
1.30
.163
.157
.160
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, 2015, the Company had the following
trade receivable and intercompany payables denominated in one currency but receivable or payable in another currency (in thousands):
Accounts receivable in:
Euros
British Pound Sterling
Intercompany payable in:
Euros
U.S. dollars
U.S. dollars
Denominated
Currency
U. S. Dollar
Equivalent
£
£
451 $
1,529 $
709
2,402
£
£
yuan
451 $
2,956 $
20,332 $
771
5,057
3,305
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 currency forward contracts to reduce its exposure to foreign currency rate changes on forecasted
intercompany sales transactions or on intercompany foreign currency denominated balance sheet positions. Foreign currency transaction
gains and losses are included in “Other non-operating expense, net” in the Consolidated Statement of Earnings and Comprehensive Income.
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 (loss).”
The effects of a hypothetical simultaneous 10% appreciation in the U.S. dollar from June 30, 2015 levels against the euro, British pound
sterling and Chinese yuan are as follows (in thousands):
Decrease in translation of 2015 earnings into U.S. dollars
Decrease in translation of net assets of foreign subsidiaries
Additional transaction losses
$
3,352
26,808
409
33
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
Bio-Techne Corporation and Subsidiaries
(in thousands, except per share data)
Net sales
Cost of sales
Gross margin
Operating expenses:
Selling, general and administrative
Research and development
Total operating expenses
Operating income
Other income (expense):
Interest expense
Interest income
Other non-operating income (expense), net
Total other income (expense)
Earnings before income taxes
Income taxes
Net earnings
Other comprehensive income (loss):
Foreign currency translation adjustments
Unrealized (losses) gains on available-for-sale investments, net of tax of
3,895, ($17,110) and ($2,129), respectively
Other comprehensive (loss) income
Comprehensive income
Earnings per share:
Basic
Diluted
Cash dividends per common share:
Weighted average common shares outstanding:
Basic
Diluted
Year Ended June 30,
2014
2015
$
452,246 $
144,969
307,277
357,763 $
106,352
251,411
119,401
40,853
160,254
147,023
(1,544 )
634
8,049
7,139
154,162
46,427
107,735
60,716
30,945
91,661
159,750
0
2,684
(1,042 )
1,642
161,392
50,444
110,948
2013
310,575
79,465
231,110
43,384
29,257
72,641
158,469
0
2,646
(453 )
2,193
160,662
48,101
112,561
$
$
$
$
(36,513 )
15,819
(3,538 )
11,308
(25,205 )
82,530 $
(35,760 )
(19,941 )
91,007 $
(3,684 )
(7,222 )
105,339
2.90 $
2.89 $
1.27 $
3.01 $
3.00 $
1.23 $
37,096
37,231
36,890
37,005
3.06
3.05
1.18
36,836
36,900
See Notes to Consolidated Financial Statements.
34
CONSOLIDATED BALANCE SHEETS
Bio-Techne Corporation and Subsidiaries
(in thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Short-term available-for-sale investments
Accounts receivable, less allowance for doubtful accounts of $555 and $487, respectively
Deferred income taxes
Inventories
Other current assets
Total current assets
Available-for-sale investments
Property and equipment, net
Goodwill
Intangible assets, net
Investments in unconsolidated entities
Other assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable
Salaries, wages and related accruals
Accrued expenses
Deferred revenue
Income taxes payable
Related party note payable, current
Total current liabilities
Deferred income taxes
Related party note payable, long-term
Long-term debt obligations
Contingent consideration payable
Other long-term liabilities
Shareholders’ equity:
Undesignated capital stock, no par; authorized 5,000,000 shares; none issued or outstanding
Common stock, par value $.01 a share; authorized 100,000,000 shares; issued and outstanding
37,152,979 and 37,002,203 shares, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive (loss) income
Total shareholders’ equity
See Notes to Consolidated Financial Statements.
June 30,
2015
54,532 $
56,389
70,034
11,511
49,577
6,240
248,283
0
129,749
390,638
292,839
0
1,851
1,063,360 $
13,443 $
10,344
6,604
3,380
1,972
4,024
39,768
61,429
0
73,000
39,024
3,204
2014
318,568
44,786
55,001
9,623
38,847
2,588
469,413
3,575
117,120
151,473
108,776
10,446
1,688
862,491
9,652
6,158
4,136
0
496
5,949
26,391
33,838
6,997
0
0
0
0
0
371
163,306
713,851
(30,593 )
846,935
1,063,360 $
370
147,004
653,279
(5,388 )
795,265
862,491
$
$
$
$
35
Balances at June 30, 2013
36,835
368
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Bio-Techne Corporation and Subsidiaries
(in thousands)
Common Stock
Shares
Amount
Additional
Paid-in
Capital
Balances at June 30, 2012
36,826 $
368 $
131,851 $
Accumulated
Other
Compre-
Retained
Earnings Income(Loss)
hensive
520,448 $
112,561
21,775 $
(7,222 )
Net earnings
Other comprehensive loss
Common stock issued for exercise of
options
Common stock issued for restricted
stock award
Repurchase of common stock
Cash dividends
Stock-based compensation expense
Tax benefit from exercise of stock
options
Net earnings
Other comprehensive loss
Surrender and retirement of stock to
exercise options
Common stock issued for exercise of
options
Common stock issued for restricted
stock awards
Cash dividends
Stock-based compensation expense
Tax benefit from exercise of stock
options
Net earnings
Other comprehensive loss
Surrender and retirement of stock to
exercise options
Common stock issued for exercise of
options
Common stock issued for restricted
stock awards
Cash dividends
Stock-based compensation expense
Tax benefit from exercise of stock
options
Employee stock purchase plan
expense
22
15
(28 )
0
1,105
0
(0 )
(1,821 )
(43,463 )
(1 )
(0 )
(56 )
142
26
2
0
1,864
75
134,895
587,725
110,948
14,553
(19,941 )
8,380
3,523
262
147,004
(45,394 )
653,279
107,735
(5,388 )
(25,205 )
(0 )
(0 )
(31 )
141
10
1
0
9,761
(57 )
(47,106 )
5,918
615
39
163,306 $
713,851 $
(30,593 )
Total
674,442
112,561
(7,222 )
1,105
0
(1,821 )
(43,463 )
1,864
75
737,541
110,948
(19,941 )
(56 )
8,382
0
(45,394 )
3,523
262
795,265
107,735
(25,205 )
(31 )
9,762
(57 )
(47,106 )
5,918
615
39
846,935
Balances at June 30, 2015
37,153 $
371 $
Balances at June 30, 2014
37,002
370
See Notes to Consolidated Financial Statements.
36
CONSOLIDATED STATEMENTS OF CASH FLOWS
Bio-Techne Corporation and Subsidiaries
(in thousands)
Year Ended June 30,
2014
2015
2013
$
107,735 $
110,948 $
112,561
Cash flows from operating activities:
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization
Costs recognized on sale of acquired inventory
Deferred income taxes
Stock-based compensation expense
Gain on sale of CyVek
Excess tax benefit from stock option exercises
Net (gain) loss from equity method investees
Other
Change in operating assets and liabilities, net of acquisitions:
Trade accounts and other receivables
Inventories
Prepaid expenses
Trade accounts payable and accrued expenses
Salaries, wages and related accruals
Income taxes payable
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of available-for-sale investments
Proceeds from sale and maturities of available-for-sale investments
Additions to property and equipment
Acquisitions, net of cash acquired
Investment in unconsolidated entity
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Cash dividends
Proceeds from stock option exercises
Excess tax benefit from stock option exercises
Purchase of common stock for stock bonus plans
Repurchase of common stock
Borrowings under line-of-credit agreement
Payment on line-of-credit and other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
$
37,226
6,961
1,304
5,957
(8,300 )
(615 )
0
458
(11,747 )
(4,714 )
(620 )
2,154
1,679
1,881
139,359
0
13,466
(19,905 )
(420,102 )
0
48
(426,493 )
(47,106 )
9,731
615
0
0
163,000
(94,964 )
31,276
(8,178 )
(264,036 )
318,568
54,532 $
19,175
7,480
(2,853 )
3,523
0
(262 )
0
592
1,145
(2,895 )
(554 )
1,368
1,034
(1,939 )
136,762
(106,746 )
289,410
(13,821 )
(109,180 )
(10,000 )
25
49,688
(45,394 )
8,326
262
0
0
0
0
(36,806 )
5,138
154,782
163,786
318,568 $
12,321
4,501
(2,534 )
1,864
0
(75 )
(570 )
763
(2,334 )
(2,216 )
(33 )
243
(92 )
(837 )
123,562
(112,712 )
103,610
(22,454 )
0
0
352
(31,204 )
(43,463 )
1,105
75
(573 )
(1,821 )
0
0
(44,677 )
(570 )
47,111
116,675
163,786
See Notes to Consolidated Financial Statements.
37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bio-Techne Corporation and Subsidiaries
Years ended June 30, 2015, 2014 and 2013
Note 1. Description of Business and Summary of Significant Accounting Policies:
Description of business: Bio-Techne Corporation and subsidiaries, collectively doing business as Bio-Techne (the Company) develop,
manufacture and sell biotechnology products and clinical diagnostic controls worldwide. With its deep product portfolio and application
expertise, Bio-Techne is a leader in providing specialized proteins, including cytokines and growth factors, and related immunoassays, small
molecules and other reagents to the research, diagnostics and clinical controls markets.
Estimates: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and
expenses during the reporting period. These estimates include the valuation of accounts receivable, available-for-sale investments, inventory,
intangible assets, stock based compensation and income taxes. Actual results could differ from these estimates.
Principles of consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.
All intercompany accounts and transactions have been eliminated.
Translation of foreign financial statements: Assets and liabilities of the Company’s foreign operations are translated at year-end rates of
exchange and the resulting gains and losses arising from the translation of net assets located outside the U.S. are recorded as other
comprehensive income (loss) on the consolidated statement of earnings and comprehensive income. The cumulative translation adjustment is
a component of accumulated other comprehensive income (loss) on the consolidated balance sheets. Foreign statements of earnings are
translated at the average rate of exchange for the year. Foreign currency transaction gains and losses are included in other non-operating
expense in the consolidated statements of earnings.
Revenue recognition: The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or
services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Payment terms for shipments to end-
users are generally net 30 days. Payment terms for distributor shipments may range from 30 to 90 days. Freight charges billed to end-users
are included in net sales and freight costs are included in cost of sales. Freight charges on shipments to distributors are paid directly by the
distributor. Any claims for credit or return of goods must be made within 10 days of receipt. Revenues are reduced to reflect estimated credits
and returns. Sales, use, value-added and other excise taxes are not included in revenue.
Research and development: Research and development expenditures are expensed as incurred. Development activities generally relate to
creating new products, improving or creating variations of existing products, or modifying existing products to meet new applications.
Advertising costs: Advertising expenses (including production and communication costs) were $4.1 million, $3.4 million, and $3.2 million
for fiscal 2015, 2014, and 2013, respectively. The Company expenses advertising expenses as incurred.
Share-based compensation: The cost of employee services received in exchange for the award of equity instruments is based on the fair value
of the award at the date of grant. 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. Compensation cost is recognized using a straight-line
method over the vesting period and is net of estimated forfeitures. Stock option exercises and stock awards are satisfied through the issuance
of new shares.
38
Income taxes: The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are
recognized to record the income tax effect of temporary differences between the tax basis and financial reporting basis of assets and
liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. Tax positions taken or expected to be taken in a tax return are recognized
in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities. A
recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon
ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.
Financial instruments not measured at fair value: Certain of the Company’s financial instruments are not measured at fair value but
nevertheless are recorded at carrying amounts approximating fair value, based on their short-term nature. These financial instruments include
cash and cash equivalents, accounts receivable, accounts payable and other current liabilities.
Cash and equivalents: Cash and cash equivalents include cash on hand and highly-liquid investments with original maturities of three months
or less.
Available-for-sale investments: Available-for-sale investments consist of debt instruments with original maturities of generally three months
to three years and equity securities. Available-for-sale investments are recorded based on trade-date. The Company considers all of its
marketable securities available-for-sale and reports them at fair value. The Company utilizes valuation techniques for determining fair market
value which maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company
determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most
advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy
distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the
measurement date.
Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or
indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not
available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
Unrealized gains and losses on available-for-sale securities are excluded from income, but are included, net of taxes, in other comprehensive
income. If an “other-than-temporary” impairment is determined to exist, the difference between the value of the investment security recorded
in the financial statements and the Company’s current estimate of the fair value is recognized as a charge to earnings in the period in which
the impairment is determined.
Inventories: Inventories are stated at the lower of cost (first-in, first-out method) or market. The Company regularly reviews inventory on
hand for slow-moving and obsolete inventory, inventory not meeting quality control standards and inventory subject to expiration. To meet
strict customer quality standards, the Company has established a highly controlled manufacturing process for proteins, antibodies and its
chemically-based products. These products require the initial manufacture of multiple batches to determine if quality standards can be
consistently met. In addition, the Company will produce larger batches of established products than current sales requirements due to
economies of scale. The manufacturing process for these products, therefore, has and will continue to produce quantities in excess of
forecasted usage. The Company values its manufactured protein and antibody inventory based on a two-year forecast and its chemically-
based products on a five-year forecast. Inventory quantities in excess of the forecast are not valued due to uncertainty over salability. Sales of
previously unvalued protein, antibody and chemically-based inventory for fiscal years 2015, 2014, and 2013 were not material.
39
Property and equipment: Property and equipment are recorded at cost. Equipment is depreciated using the straight-line method over an
estimated useful life of five years. Buildings, building improvements and leasehold improvements are amortized over estimated useful lives
of 5 to 40 years. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. In the current year, the Company has identified no such events.
Goodwill: At June 30, 2015 and 2014, the Company had recorded goodwill of $390.6 million and $151.5 million, respectively. The Company
tests goodwill at least annually for impairment. The Company completed its annual impairment testing of goodwill and concluded that no
impairment existed as of June 30, 2015.
Intangible assets: Intangible assets are being amortized over their estimated useful lives. Intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In the current year, the Company has
identified no such events.
Investments in unconsolidated entities: The Company has equity investments in several start-up and early development stage companies.
The accounting treatment of each investment (cost method or equity method) is dependent upon a number of factors, including, but not
limited to, the Company’s share in the equity of the investee and the Company’s ability to exercise significant influence over the operating
and financial policies of the investee.
Note 2. Acquisitions:
Bionostics Holdings, Ltd.: On July 22, 2013, the Company acquired for cash all of the outstanding shares of Bionostics Holdings, Ltd.
(Bionostics) and its U.S. operating subsidiary, Bionostics, Inc. Bionostics is a global leader in the development, manufacture and distribution
of control solutions that verify the proper operation of in-vitro diagnostic devices primarily utilized in point of care blood glucose and blood
gas testing. Bionostics is included in the Company’s Clinical Controls segment.
In connection with the Bionostics acquisition, the Company recorded $14.4 million of developed technology intangible assets that have an
estimated useful life of 9 years, $2.7 million of trade name intangible assets that have an estimated useful life of 5 years, $2.4 million related
to non-compete agreements that have an estimated useful life of 3 years, and $41.0 million related to customer relationships that have an
estimated useful life of 14 years. The intangible asset amortization is not deductible for income tax purposes.
The goodwill recorded as a result of the Bionostics acquisition represents the strategic benefits of growing the Company’s product portfolio
and the expected revenue growth from increased market penetration from future products and customers. The goodwill is not deductible for
income tax purposes.
Transaction costs of $0.5 million and $0.6 million were included in the Company’s selling, general and administrative costs during fiscal
2014 and 2013, respectively, related to the Bionostics acquisition.
Shanghai PrimeGene Bio-Tech Co.: On April 30, 2014, the Company acquired all of the ownership interest of Shanghai PrimeGene Bio-
Tech Co. (PrimeGene). PrimeGene manufactures recombinant proteins and is included in the Company’s Biotechnology segment. The
Company paid approximately $6.0 million at closing, with the remaining purchase price payable over fiscal years 2015 to 2017. The note
payable is due to individuals who are currently employed by PrimeGene.
In connection with the PrimeGene acquisition, the Company recorded $2.2 million of developed technology intangible assets that have an
estimated useful life of 9 years, $3.0 million of trade name intangible assets that have an estimated useful life of 11 years, $0.3 million related
to non-compete agreements that have an estimated useful life of 3 years, and $9.1 million related to customer relationships that have an
estimated useful life of 9 years. The intangible asset amortization is not deductible for income tax purposes.
The goodwill recorded as a result of the PrimeGene acquisition represents the strategic benefits of growing the Company’s product portfolio
and the expected revenue growth from increased market penetration from future products and customers. The goodwill is not deductible for
income tax purposes.
40
Transaction costs of $0.4 million were included in the Company’s selling, general and administrative costs during fiscal 2014, related to the
PrimeGene acquisition.
Novus Holdings LLC: On July 2, 2014, the Company acquired all of the issued and outstanding equity interests of Novus Holdings LLC
(Novus). Novus broadens the Company’s antibody offerings by being a supplier of a large portfolio of both outsourced and in-house
developed antibodies and other reagents for life science research. Novus is included in the Company’s Biotechnology segment.
In connection with the Novus acquisition, the Company recorded $5.0 million of developed technology intangible assets that have estimated
useful lives of 4-12 years, $5.3 million of trade name intangible assets that have an estimated useful life of 20 years, and $14.4 million related
to customer relationships that have an estimated useful life of 15 years. The majority of the intangible asset amortization is not deductible for
income tax purposes.
The goodwill recorded as a result of the Novus acquisition represents the strategic benefits of growing the Company’s product portfolio and
the expected revenue growth from increased market penetration from future products and customers. The majority of the goodwill is not
deductible for income tax purposes.
Transaction costs of $0.1 million were included in the Company’s selling, general and administrative costs during fiscal 2015 related to the
Novus acquisition.
ProteinSimple: On July 31, 2014, the Company acquired ProteinSimple. ProteinSimple expands the Company’s solutions that it can offer its
customers by developing and commercializing proprietary systems and consumables for protein analysis. The Company opened a line-of-
credit (Note 7) to partially fund the acquisition. The purchase price of ProteinSimple exceeded the fair value of the identifiable net assets and,
accordingly, the difference was allocated to goodwill. ProteinSimple is included in the Company’s Protein Platform segment.
In connection with the ProteinSimple acquisition, the Company recorded $40.5 million of developed technology intangible assets that have
an estimated useful lives of 9-10 years, $35.8 million of trade name intangible assets that have an estimated useful lives of 18-20 years,
$100.6 million related to customer relationships that have estimated useful lives of 14-16 years, and $0.2 million related to non-compete
agreements that have an estimated useful life of 3 years. The intangible asset amortization is not deductible for income tax purposes.
The goodwill recorded as a result of the ProteinSimple acquisition represents the strategic benefits of growing the Company’s product
portfolio and the expected revenue growth from increased market penetration from future products and customers. The goodwill is not
deductible for income tax purposes.
Transaction costs of $0.8 million were included in the Company’s selling, general and administrative costs during fiscal 2015 related to the
ProteinSimple acquisition.
CyVek Inc.: On November 3, 2014, the Company acquired CyVek, Inc. (CyVek) through a merger. CyVek has developed a transformative
immunoassay technology which integrates an innovatively designed microfluidic cartridge with a state-of-the-art analyzer to deliver the most
advanced and efficient bench top immunoassay system. In fiscal 2014, the Company entered into an Agreement of Investment and Merger
(the Agreement) with CyVek. Pursuant to the terms of the Agreement, the Company invested $10.0 million in CyVek and received shares of
Common Stock representing approximately 19.9% of the outstanding voting stock of CyVek. Between the time of the Company’s initial
investment and November 3, 2014, CyVek met certain commercial milestones related to the sale of its products, which obligated the
Company to acquire CyVek through a merger, with CyVek surviving as a wholly-owned subsidiary of the Company.
The Company made an initial payment of approximately $62.0 million to the other stockholders of CyVek on November 3, 2014. Such
purchase price was adjusted after closing based on the final levels of cash, indebtedness and transaction expenses of CyVek as of the closing.
The Company will also pay CyVek’s previous stockholders up to $35.0 million based on the revenue generated by CyVek’s products before
May 3, 2017 (30 months from the closing of the Merger). The Company will also pay CyVek’s previous stockholders 50% of the amount, if
any, by which the revenue from CyVek’s products and related products exceeds $100 million in calendar year 2020. The Company has
recorded the present value of these contingent payments as a long-term liability of $35.0 million at June 30, 2015. In addition, at November
3, 2014, the Company re-measured its previous investment in CyVek to acquisition-date fair value, resulting in a gain on the investment of
$8.3 million which is included in Other income on the Condensed Consolidated Statements of Earnings and Comprehensive Income. The
purchase price of CyVek exceeded the fair value of the identifiable net assets and, accordingly, the difference was allocated to goodwill,
substantially all of which is not tax deductible. CyVek is included in the Company’s Protein Platforms segment.
41
In connection with the CyVek acquisition, the Company recorded $20.2 million of developed technology intangible assets that have an
estimated useful life of 15 years, $0.1 million of trade name intangible assets that have an estimated useful life of 1.5 years, and $0.6 million
related to customer relationships that have an estimated useful life of 10 years. The intangible asset amortization is not deductible for income
tax purposes.
The goodwill recorded as a result of the CyVek acquisition represents the strategic benefits of growing the Company’s product portfolio and
the expected revenue growth from increased market penetration from future products and customers. The goodwill is not deductible for
income tax purposes.
Transaction costs of $0.1 million were included in the Company’s selling, general and administrative costs during fiscal 2015 related to the
CyVek acquisition.
The aggregate purchase price of the acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair
values at the date of acquisition. The estimate of the excess of purchase price over the fair value of net tangible assets acquired was allocated
to identifiable intangible assets and goodwill. The following table summarizes the estimated fair values of the assets acquired and liabilities
assumed as a result of the acquisitions (in thousands):
Current assets
Equipment
Other long-term assets
Intangible Assets:
Developed technology
Trade name
Customer relationships
Non-compete agreements
Goodwill
Total assets acquired
Liabilities
Deferred income taxes, net
Net assets
Less fair-value of previous investment
Net assets acquired
Cash paid, net of cash acquired
Contingent consideration payable
Net purchase price
Novus
Protein-
Simple
CyVek
Bionostics
PrimeGene
$
10,739 $
1,266
40
19,660 $
1,983
554
1,206 $
971
19
9,605 $
2,180
1,272
546
5,010
5,300
14,400
-
28,408
65,163
2,166
2,875
60,122 $
-
60,122
39,200
36,100
101,600
200
134,074
333,371
11,644
21,674
300,053 $
-
300,053
20,200
100
600
-
91,658
114,754
1,965
(438 )
113,327 $
18,300
94,927
14,400
2,700
41,000
2,400
56,349
128,634
3,007
22,478
103,149 $
-
103,149
60,122 $
-
60,122 $
300,053 $
-
300,053 $
59,927 $
35,000
94,927 $
103,149 $
-
103,149 $
2,200
3,000
9,100
322
5.518
21,958
887
2,310
18,761
-
18,761
6,031
12,730
18,761
$
$
$
Tangible assets acquired, net of liabilities assumed, were stated at fair value at the date of acquisition based on management’s assessment.
The purchase price allocated to developed technology, trade names, non-compete agreements and customer relationships was based on
management’s forecasted cash inflows and outflows and using a relief-from-royalty and a multi-period excess earnings method to calculate
the fair value of assets purchased. The developed technology is being amortized with the expense reflected in cost of goods sold in the
Consolidated Statement of Earnings and Comprehensive Income. Amortization expense related to trade names, the non-compete agreement
and customer relationships is reflected in selling, general and administrative expenses in the Consolidated Statement of Earnings and
Comprehensive Income. The deferred income tax liability represents the estimated future impact of adjustments for the cost to be recognized
upon the sale of acquired inventory that was written up to fair value and intangible asset amortization, of which are not deductible for income
tax purposes, and the future tax benefit of net operating loss and tax credit carryforwards which will be deductible by the Company in future
periods.
42
The Company’s Condensed Consolidated Financial Statements include the following from the above acquisitions:
Novus
Protein- Simple
CyVek
Net sales
Net income (loss)
Amortization expense
Costs recognized on sale of acquired inventory
$
21,092 $
(610 )
1,898
1,946
65,512 $
(3,624 )
11,364
1,444
735
(4,196 )
981
64
The unaudited pro forma financial information below summarizes the combined results of operations for Bio-Techne and the above
acquisitions as though the companies were combined as of the beginning fiscal 2014. The pro forma financial information for all periods
presented includes the purchase accounting effects resulting from these acquisitions. The pro forma financial information as presented below
is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had
taken place at the beginning of fiscal 2014.
Net sales
Net income
For the Year Ended June, 30
2014
2015
$
457,270 $
104,132
433,034
100,958
See Note 15. Subsequent Events. for information regarding the Company’s acquisition of Cliniqa Corporation in July 2015.
Note 3. Available-For-Sale Investments:
At June 30, 2015 and 2014, the amortized cost and market value of the Company’s available-for-sale securities by major security type were
as follows (in thousands):
State and municipal debt securities
Corporate debt securities
Certificates of deposit
Equity securities
2015
Cost
0 $
0
4,089
29,472
33,561
$
$
June 30,
Market
0 $
0
4,089
52,300
56,389 $
2014
Cost
3,525 $
100
7,639
29,472
40,736 $
Market
3,525
100
7,639
37,097
48,361
At June 30, 2015 and 2014, all of the Company’s available-for-sale debt securities were valued using Level 2 inputs, while its equity
securities were valued using Level 1 inputs. Certificates of deposit are carried at cost and are not subject to the fair value hierarchy. There
were no transfers between Level 1 and Level 2 securities during fiscal 2015. Gross unrealized gains on available-for-sale investments were
$22.8 million and $7.6 million at June 30, 2015, and June 30, 2014, respectively.
The Company’s investment in equity securities consists of investments in the common stock and warrants of ChemoCentryx, Inc. (CCXI).
The warrants are to purchase 150,000 shares of CCXI common stock at $20 per share and expire in February, 2022. The fair value of the
warrants as of June 30, 2015 and 2014 were $52.3 million and $37.1 million, respectively, and were valued using Level 2 inputs. At June 30,
2015, the Company holds an approximate 14% interest in CCXI.
Proceeds from maturities or sales of available-for-sale securities were $13.5 million, $289 million, and $104 million during fiscal 2015, 2014,
and 2013, respectively. There were no material realized gains or losses on these sales. Realized gains and losses are determined on the
specific identification method.
43
Note 4. Inventories:
Inventories consist of (in thousands):
Raw materials
Finished goods
June 30,
2015
15,892 $
33,685
49,577 $
2014
9,852
28,995
38,847
$
$
At June 30, 2015 and 2014, the Company had $24.0 million and $30.3 million, respectively, of excess protein, antibody and chemically-
based inventory on hand which was not valued.
Note 5. Property and Equipment:
Property and equipment consist of (in thousands):
Cost:
Land
Buildings and improvements
Machinery, equipment and other
Accumulated depreciation and amortization
Note 6. Intangible Assets and Goodwill:
Intangible assets and goodwill consist of (in thousands):
Developed technology
Trade names
Customer relationships
Non-compete agreement
Accumulated amortization
Goodwill
June 30,
2015
7,370 $
156,965
74,385
238,720
(108,967 )
129,749 $
2014
7,468
149,442
53,067
209,977
(92,857 )
117,120
$
$
Useful Life
(years)
8 - 15 $
5 - 20
8 - 16
3 - 5
$
$
June 30,
2015
2014
108,887 $
63,867
167,494
3,298
343,546
(50,707 )
292,839 $
48,166
24,280
59,240
3,109
134,795
(26,019 )
108,776
390,638 $
151,473
Changes to the carrying amount of goodwill consists of (in thousands):
Beginning balance
Acquisitions
Currency translation
Ending balance
Year Ended June 30,
2015
2014
$
$
151,473 $
254,140
(14,975 )
390,638 $
84,336
61,867
5,270
151,473
44
Changes to the carrying amount of net intangible assets consists of (in thousands):
Beginning balance
Acquisitions
Amortization expense
Currency translation
Ending balance
Year Ended June 30,
2015
2014
$
$
108,776 $
222,710
(26,170 )
(12,777 )
292,839 $
40,552
75,122
(10,267 )
(3,369 )
108,776
Amortization expense related to technologies included in cost of sales was $9.5 million, $4.2 million, and $3.0 million in fiscal 2015, 2014,
and 2013, respectively. Amortization expense related to trade names, customer relationships, and the non-compete agreement included in
selling, general and administrative expense was $16.7 million, $6.1 million, and $2.1 million in fiscal 2015, 2014, and 2013, respectively.
The estimated future amortization expense for intangible assets as of June 30, 2015 is as follows (in thousands):
Year Ending June 30:
2016
2017
2018
2019
2020
Thereafter
28,416
27,532
27,335
26,721
26,401
156,434
292,839
$
Note 7. Debt and Other Financing Arrangements:
On July 28, 2014, the Company entered into a revolving line-of-credit facility governed by a Credit Agreement (the Credit Agreement). The
Credit Agreement provides for a revolving credit facility of $150 million, which can be increased by an additional $150 million subject to
certain conditions. Borrowings under the Credit Agreement may be used for working capital and expenditures of the Company and its
subsidiaries, including financing permitted acquisitions. Borrowings under the Credit Agreement for base rate loans bear interest at a variable
rate equal to the greater of (i) the prime commercial rate, (ii) the per annum federal funds rate plus 0.5%, or (iii) LIBOR + 1.00% - 1.75%
depending on the existing total leverage ratio of Debt to Earnings Before Interest, Taxes, Depreciation and Amortization (as defined in the
Credit Agreement). The annualized fee for any unused portion of the credit facility is 15 basis points.
The Credit Agreement matures on July 31, 2019 and contains customary restrictive and financial covenants and customary events of default.
As of June 30, 2015, the outstanding balance under the Credit Agreement was $73 million.
45
Note 8. Commitments and Contingencies:
The Company leases office and warehouse space, vehicles and various office equipment under operating leases. At June 30, 2015, aggregate
net minimum rental commitments under non-cancelable leases having an initial or remaining term of more than one year are payable as
follows (in thousands):
Year Ending June 30:
2016
2017
2018
2019
2020
Thereafter
5,289
5,463
4,964
4,270
4,212
22,490
46,688
$
Total rent expense was approximately $4.9 million, $1.6 million, and $0.7 million for the years ended June 30, 2015, 2014, and 2013,
respectively.
The Company is routinely subject to claims and involved in legal actions which are incidental to the business of the Company. Although it is
difficult to predict the ultimate outcome of these matters, management believes that any ultimate liability will not materially affect the
consolidated financial position or results of operations of the Company.
Note 9. Share-based Compensation and Other Benefit Plans:
Equity incentive plan: The Company’s 2010 Equity Incentive Plan (the 2010 Plan) provides for the granting of incentive and nonqualified
stock options, restricted stock, restricted stock units, performance shares, performance units and stock appreciation rights. There are 3.0
million shares of common stock authorized for grant under the 2010 Plan. At June 30, 2015, there were 1.8 million shares of common stock
available for grant under the 2010 Plan. The maximum term of incentive options granted under the 2010 Plan is ten years. The 2010 Plan
replaced the Company’s 1998 Nonqualified Stock Option Plan (the 1998 Plan) and 1997 Incentive Stock Option Plan (the 1997 Plan). The
2010 Plan, the 1998 Plan and the 1997 Plan (collectively, the Plans) are administered by the Board of Directors and its Compensation
Committee, which determine the persons who are to receive awards under the Plans, the number of shares subject to each award and the term
and exercise price of each award. The number of shares of common stock subject to outstanding awards at June 30, 2015 under the 2010
Plan, the 1998 Plan and the 1997 Plan were 1.1 million, 98,000, and 9,000, respectively.
Stock option activity under the Plans for the three years ended June 30, 2015, consists of the following (shares in thousands):
Outstanding at June 30, 2012
Granted
Exercised
Outstanding at June 30, 2013
Granted
Forfeited
Exercised
Outstanding at June 30, 2014
Granted
Forfeited
Exercised
Outstanding at June 30, 2015
Exercisable at June 30:
2013
2014
2015
Weighted
Average
Exercise
Price
Weighted
Avg.
Contractual
Life (Yrs.)
Aggregate
Intrinsic
Value
65.78
67.80
51.17
66.70
80.88
76.23
59.07
72.11
93.98
92.85
69.31
Shares
575 $
175
(22 )
728
251
(26 )
(142 )
811
600
(133 )
(141 )
1,137 $
81.57
$19.2
million
5.4
497 $
534
65.04
69.49
547
72.72
$14.1
million
5.0
46
The fair values of options granted under the Plans were estimated on the date of grant using the Black-Scholes option-pricing model with the
following assumptions used:
Dividend yield
Expected volatility
Risk-free interest rates
Expected lives (years)
Year Ended June 30,
2015
2014
1.3%
18% - 21%
1.3% - 2.2%
5
1.5%
18% - 22%
1.4% - 2.1%
6
2013
1.8%
18% - 23%
0.4% - 1.4%
5
The dividend yield is based on the Company’s historical annual cash dividend divided by the market value of the Company’s common stock.
The expected annualized volatility is based on the Company’s 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.
The weighted average fair value of options granted during fiscal 2015, 2014 and 2013 was $15.01, $14.77 and $9.72, respectively. The total
intrinsic value of options exercised during fiscal 2015, 2014 and 2013 were $3.5 million, $3.7 million, and $0.4, respectively. The total fair
value of options vested during fiscal 2015, 2014 and 2013 were $2.3 million, $2.2 million, and $1.5 million, respectively.
In fiscal 2015, 2014 and fiscal 2013, 9,000, 26,355 and 15,000 restricted common stock shares were granted at weighted average grant date
fair values of $91.78, $86.60 and $67.46 per share, respectively. Non-vested restricted common stock shares at June 30, 2015, 2014 and 2013
were 19,102, 36,355 and 15,000, respectively.
In fiscal 2015 and 2014, 36,192 and 5,000 restricted stock units were granted at a weighted average grant date fair value of $94.13 and
$86.25, respectively. The restricted stock units vest over a three year period. In fiscal 2015, 10,000 restricted stock units were forfeited.
Stock-based compensation cost of $5.9 million, $3.5 million, and $1.9 million was included in selling, general and administrative expense in
fiscal 2015, 2014 and 2013, respectively. As of June 30, 2015, there was $7.9 million of unrecognized compensation cost related to non-
vested stock options, non-vested restricted stock units and non-vested restricted stock which will be expensed in fiscal 2016 through 2019.
The weighted average period over which the compensation cost is expected to be recognized is 1.2 years.
Employee stock purchase plan: In fiscal year 2015, the Company established the Bio-Techne Corporation 2014 Employee Stock Purchase
Plan, which was approved by the Company’s shareholders on October 30, 2014, and which is designed to comply with IRS provisions
governing employee stock purchase plans. Two hundred thousand shares were allocated to the Plan. The initial participation period for the
plan began March 1, 2015 and ended on August 31, 2015. The Company recorded $39,000 expense for the plan in fiscal year 2015.
Profit sharing and savings plans: The Company has profit sharing and savings plans for its U.S. employees, which conform to IRS
provisions for 401(k) plans. The Company may makes matching contributions to the Plan. The Company has recorded an expense for
contributions to the plans of $1.1 million and $0.7 million for the years ended June 30, 2015, and 2014, respectively. No contribution was
charged to operations for fiscal 2013. The Company operates defined contribution pension plans for its U.K. employees. The Company has
recorded an expense for contributions to the plans of $0.7 million, $0.6 million, and $0.6 million for the years ended June 30, 2015, 2014 and
2013, respectively.
Performance incentive programs: In fiscal 2015, under certain employment agreements and a Management Incentive Plan available to
executives officers and certain management personnel, the Company recorded cash bonuses of $1.9 million and granted options for 322,000
shares of common stock and issued 11,129 restricted stock units. The Company recorded cash bonuses of $0.9 and $0.3 million and granted
options for 216,000 and 132,852 shares of common stock for the years ended June 30, 2014 and 2013, respectively. In addition, 5,000
restricted stock units and 17,855 shares of restricted common stock were issued in fiscal 2014 and 15,000 restricted common stock shares
were issued to an executive officer in fiscal 2013.
47
Note 10. Income Taxes:
The provisions for income taxes consist of the following (in thousands):
Earnings before income taxes consist of:
Domestic
Foreign
Taxes on income consist of:
Currently payable:
Federal
State
Foreign
Net deferred:
Federal
State
Foreign
Year Ended June 30,
2014
2015
121,765 $
32,397
154,162 $
127,681 $
33,711
161,392 $
28,220 $
6,165
10,704
4,401
292
(3,355 )
46,427 $
40,967 $
1,709
10,668
(1,137 )
(41 )
(1,722 )
50,444 $
$
$
$
$
2013
127,491
33,171
160,662
37,666
2,012
10,758
(595 )
(7 )
(1,733 )
48,101
The following is a reconciliation of the federal tax calculated at the statutory rate of 35% to the actual income taxes provided (in thousands):
Computed expected federal income tax expense
State income taxes, net of federal benefit
Qualified production activity deduction
Non-taxable gain on investment
Research and development tax credit
Tax-exempt interest
Foreign tax rate differences
Other
Year Ended June 30,
2014
2015
$
$
53,957 $
4,762
(3,140 )
(2,905 )
(912 )
0
(4,059 )
(1,276 )
46,427 $
56,487 $
1,048
(3,823 )
0
(476 )
(654 )
(2,857 )
719
50,444 $
2013
56,232
1,300
(3,774 )
0
(1,392 )
(568 )
(2,587 )
(1,110 )
48,101
In the year ended June 30, 2015, as a result of the recent acquisitions, the rate reflects an increase for state tax expense as well as a resulting
provision to return true up from fiscal 2014. This increase is offset by the non-taxable gain which was a result of purchasing the remaining
interest in CyVek. In addition the Company‘s R&D Europe subsidiary declared and paid a dividend of £46.6 million which resulted in a tax
benefit of approximately $1.7 million.
48
Temporary differences comprising deferred taxes on the Consolidated Balance Sheets are as follows (in thousands):
Inventory
Net operating loss carryovers
Tax credit carryovers
Excess tax basis in equity investments
Deferred compensation
Other
Valuation allowance
Net deferred tax assets
Net unrealized gain on available-for-sale investments
Goodwill and intangible asset amortization
Depreciation
Other
Deferred tax liabilities
Net deferred tax liabilities
June 30
2015
8,753 $
34,767
3,872
4,496
3,747
4,712
(2,558 )
57,789
(8,446 )
(96,401 )
(2,394 )
(466 )
(107,707 )
(49,918 ) $
2014
9,932
0
0
4,344
3,295
3,088
(1,806 )
18,853
(2,745 )
(37,641 )
(2,166 )
(516 )
(43,068 )
(24,215 )
$
$
A deferred tax valuation allowance is required when it is more likely than not that all or a portion of deferred tax assets will not be realized.
At June 30, 2015, a valuation allowance for potential capital loss carryovers on equity investments was zero as a result of improved
performance of available-for-sale investments. Approximately $2.4 million of the valuation allowance at June 30, 2015 is for certain foreign
and state tax net operating loss and state credit carryforwards that existed at the date the Company acquired Novus, ProteinSimple, and
CyVek. The remainder of the valuation allowance is for certain state tax credit carryovers generated in fiscal 2015. The Company believes it
is more likely than not that these tax carryovers will not be realized. At June 30, 2014, the Company had provided a valuation allowance for
potential capital loss carryovers resulting from excess tax basis in certain of its equity investments. The Company believes that it is more
likely than not that the results of future operations will generate sufficient taxable income to realize the remaining deferred tax assets.
At June 30, 2015, the Company has federal and state net operating loss carryforwards of approximately $86.3 million and $77.8 million,
respectively, from its fiscal 2015 acquisitions of ProteinSimple and CyVek, which are not limited under IRC Section 382. At June 30, 2015,
the company has foreign net operating loss carryforwards of $2.5 million from its fiscal 2015 acquisition of Novus. The net operating loss
carryforwards expire between fiscal 2016 and 2034. The Company has a deferred tax asset of $32.6 million, net of the valuation allowance
discussed above, related to the net operating loss carryovers. At June 30, 2015, the Company has federal and state tax credit carryforwards of
$2.5 million and $1.3 million, respectively. The federal tax credit carryforwards expire between 2018 and 2035. The state credit
carryforwards have no expiry date. The Company has a deferred tax asset of $3.5 million, net of the valuation allowance discussed above,
related to the tax credit carryovers.
The Company has not recognized a deferred tax liability for unremitted earnings of approximately $43.0 million from its foreign operations
because its subsidiaries have invested or will invest the undistributed earnings indefinitely, or the earnings will be remitted in a tax-neutral
transaction.
The Company’s unrecognized tax benefits at June 30, 2015, 2014 and 2013, including accrued interest and penalties, were not material. The
Company does not believe it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase in the next
twelve months. The Company files income tax returns in the U.S federal and certain state tax jurisdictions, and several jurisdictions outside
the U.S. The Company’s federal returns are subject to tax assessment for 2012 and subsequent years. State and foreign income tax returns are
generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal
changes remains subject to examination by various states for a period of up to one year after formal notification to the states.
49
Note 11. Earnings Per Share:
The number of shares used to calculate earnings per share are as follows (in thousands, except per share data):
Year Ended June 30,
2014
2015
2013
Net earnings used for basic and diluted earnings per share
$
107,735 $
110,948 $
112,561
Weighted average shares used in basic computation
Dilutive stock options
Weighted average shares used in diluted computation
Basic EPS
Diluted EPS
37,096
135
37,231
2.90 $
2.89 $
36,890
115
37,005
3.01 $
3.00 $
36,836
64
36,900
3.06
3.05
$
$
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 516,000, 196,000, and
329,000 at June 30, 2015, 2014 and 2013, respectively.
Note 12. Segment Information:
The Company has three reportable segments based on the nature of its products; they are Biotechnology, Clinical Controls, and Protein
Platforms.
The Company’s Biotechnology reporting segment develops, manufactures and sells biotechnology research and diagnostic products world-
wide. No customer in the Biotechnology segment accounted for more than 10% of the segments net sales for the years ended June 30, 2015,
2014 and 2013.
The Company’s Clinical Controls reporting segment develops and manufactures controls and calibrators for sale world-wide. One customer
accounted for approximately 13% and 14% of Clinical Controls’ net sales during fiscal 2015 and 2014 respectively. No single customer
accounted for more than 10% of Clinical Controls’ net sales in fiscal 2013.
The Company’s Protein Platforms segment develops and commercializes proprietary systems and consumables for protein analysis. This
segment was formed from the fiscal 2015 acquisitions of ProteinSimple and CyVek. No customer in the Protein Platforms segment accounted
for more than 10% of the segments net sales for the years ended June 30, 2015.
There are no concentrations of business transacted with a particular customer or supplier or concentrations of revenue from a particular
product or geographic area that would severely impact the Company in the near term.
Following is financial information relating to the operating segments (in thousands):
External sales
Biotechnology
Clinical Controls
Protein Platforms
Inter segment
Consolidated net sales
Year Ended June 30,
2014
2015
$
$
325,897 $
60,377
66,247
(273 )
452,246 $
300,578 $
57,185
0
0
357,763 $
2013
288,156
22,419
0
0
310,575
50
Operating Income
Biotechnology
Clinical Controls
Protein Platforms
Segment operating income
Costs recognized upon sale of acquired inventory
Amortization of intangibles
Acquisition related expenses
Corporate general, selling and administrative expenses
Consolidated operating income
Goodwill
Biotechnology
Clinical Controls
Protein Platforms
Consolidated goodwill
Intangible assets, net
Biotechnology
Clinical Controls
Protein Platforms
Consolidated intangible assets, net
Assets
Biotechnology
Clinical Controls
Protein Platforms
Segment assets
Corporate cash and available- for- sale investments
Corporate property and equipment
Corporate, other
Consolidated assets
Depreciation and amortization
Biotechnology
Clinical Controls
Protein Platforms
Segment depreciation and amortization
Corporate
Consolidated depreciation and amortization
Capital purchases
Biotechnology
Clinical Controls
Protein Platforms
Segment capital purchases
Corporate
Consolidated capital purchases
Year Ended June 30,
2014
2015
$
$
$
$
$
$
$
$
$
$
$
$
171,059 $
18,148
4,469
193,675
(6,958 )
(26,169 )
(4,519 )
(9,007 )
147,022 $
119,450 $
56,349
214,839
390,638 $
68,777 $
49,130
174,932
292,839 $
439,377 $
66,101
444,899
950,378
52,800
58,270
1,912
1,063,360 $
13,820 $
7,963
13,364
35,147
2,079
37,226 $
9,794 $
1,932
8,179
19,905
0
19,905 $
168,041 $
17,556
0
185,597
(7,480 )
(10,276 )
(2,247 )
(5,845 )
159,750 $
95,124 $
56,349
0
151,473 $
53,778 $
54,998
0
108,776 $
685,302 $
55,615
0
740,917
60,142
60,350
1,082
862,491 $
10,879 $
7,205
0
18,084
1,091
19,175 $
4,157 $
5,687
9,844
3,977
13,821 $
2013
164,886
8,746
0
173,632
(4,501 )
(5,061 )
(607 )
(4,994 )
158,469
84,336
0
0
84,336
40,552
0
0
40,552
580,085
24,887
0
604,972
108,504
61,296
3,326
778,098
10,781
389
0
11,170
1,151
12,321
3,248
6,914
10,162
12,292
22,454
The other reconciling items include the results of unallocated corporate expenses and the Company’s share of gain (losses) from its equity
method investees.
51
Following is financial information relating to geographic areas (in thousands):
External sales
United States
Europe
China
Other Asia
Rest of world
Total external sales
Long-lived assets
United States and Canada
Europe
China
Total long-lived assets
Year Ended June 30,
2014
2015
$
$
$
$
245,217 $
134,077
26,105
23,806
23,041
452,246 $
119,075 $
11,239
1,286
131,600 $
190,359 $
97,157
18,878
32,704
18,665
357,763 $
109,790 $
8,340
678
118,808 $
2013
164,308
88,297
14,106
28,608
15,256
310,575
103,541
7,129
117
110,787
External sales are attributed to countries based on the location of the customer or distributor. Long-lived assets are comprised of land,
buildings and improvements and equipment, net of accumulated depreciation and other assets.
Note 13. Supplemental Disclosures of Cash Flow Information and Noncash Investing and Financing Activities:
In fiscal 2015, the Company acquired Novus, ProteinSimple, and CyVek for approximately $60 million, $300 million and $95 million,
respectively. CyVek was acquired for approximately $62 million in cash and the Company will also pay CyVek’s previous stockholders up to
$35.0 million based on the revenue generated by CyVek’s products before May 3, 2017 (30 months from the closing of the Merger).
In fiscal 2015, the Company opened a line of credit from which it borrowed a net amount of $73 million.
In fiscal 2014, the Company acquired Bionostics for approximately $103 million. PrimeGene was acquired for approximately $18.7 million.
Approximately $6.0 million was paid at closing with approximately $12.7 million payable over fiscal years 2015 through 2017.
In fiscal 2015, 2014 and 2013, the Company paid cash for income taxes of $42.6 million, $55.2 million and $51.6 million, respectively.
In fiscal 2015, stock options for 385 shares of common stock were exercised by the surrender of 309 shares of common stock at fair market
value of $31,000. In fiscal 2014, stock options for 1,077 shares of common stock were exercised by the surrender of 733 shares of common
stock at fair market value of $56,000.
Note 14. Accumulated Other Comprehensive Income:
Changes in accumulated other comprehensive income (loss), net of tax, for the year ended June 30, 2015 consists of (in thousands):
Beginning balance
Other comprehensive income
Ending balance
Unrealized Gains
(Losses) on
Available-for-Sale
Investments
Foreign Currency
Translation
Adjustments
$
$
3,074 $
11,308
14,382
(8,462 ) $
(36,513 )
(44,975 ) $
Total
(5,388 )
(25,205 )
(30,593 )
52
Note 15. Subsequent Events:
On July 8, 2015, the Company acquired all of the outstanding equity of Cliniqa Corporation. Cliniqa, based in San Marcos, California,
specializes in the manufacturing and commercialization of quality controls and calibrators as well as bulk reagents used in the clinical
diagnostic market. Its controls and reagents are used in a wide variety of diagnostic tests for such pathologies as cardiac disease, diabetes,
cancer, immunological disorders, therapeutic drug monitoring, urine analysis and toxicology. The acquisition further expanded and
complemented our clinical controls product lines.
53
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Bio-Techne Corporation:
We have audited the accompanying consolidated balance sheets of Bio-Techne Corporation and subsidiaries (the Company) as of June 30,
2015 and 2014, and the related consolidated statements of earnings and comprehensive income, shareholders’ equity, and cash flows for each
of the years in the three-year period ended June 30, 2015. We also have audited the Company’s internal control over financial reporting as of
June 30, 2015, based on criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements,
for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to
express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the
consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
54
Bio-Techne Corporation
August 31, 2015
Page 2 of 2
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bio-
Techne Corporation and subsidiaries as of June 30, 2015 and 2014, and the results of its operations and its cash flows for each of the years in
the three-year period ended June 30, 2015, in conformity with U.S. generally accepted accounting principles. Also in our opinion, Bio-
Techne Corporation maintained, in all material respects, effective internal control over financial reporting as of June 30, 2015, based on
criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
During the year ended June 30, 2015, the Company acquired Protein Platforms and Novus. Management excluded from its assessment of the
effectiveness of internal control over financial reporting as of June 30, 2015, Protein Platforms and Novus’ internal control over financial
reporting that comprise 47.9 % of total assets and 18.7% of total revenues included in the consolidated financial statements of Bio-Techne
Corporation and subsidiaries as of and for the year ended June 30, 2015. Our audit of internal control over financial reporting of Bio-Techne
Corporation also excluded an evaluation of the internal control over financial reporting of Protein Platforms and Novus.
Minneapolis, Minnesota
August 31, 2015
(signed) KPMG LLP
55
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Evaluation of Disclosure Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), management, with the participation of our
Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this report, the effectiveness of our
disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2015.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its
inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over
financial reporting as of June 30, 2015. In making this assessment, our management used the criteria for effective internal control over
financial reporting described in “Internal Control—Integrated Framework (1992)” issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on this assessment, management has determined that our internal control over financial reporting was
effective as of June 30, 2015.
The Company’s internal control over financial reporting as of June 30, 2015 has been audited by KPMG LLP, as stated in their report which
is included elsewhere herein.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) 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.
As previously announced, we acquired Novus on July 2, 2014, ProtienSimple on July 31, 2014, and CyVek on November 3, 2014. Novus,
ProteinSimple, and CyVek accounted for approximately $21 million, $66 million, and $1 million of fiscal 2015 consolidated net sales. We
have not fully evaluated any changes in internal control over financial reporting associated with these acquisitions. Therefore, management's
assessment of internal control over financial reporting as of June 30, 2015 excluded a portion of internal control over financial reporting
related to these acquisitions. We intend to disclose all material changes resulting from these acquisitions within or prior to the time of our
first annual assessment of internal control over financial reporting that is required to include these entities.
The results reported in this quarterly report include those of Novus, ProteinSimple, and CyVek.
56
None.
ITEM 9B. OTHER INFORMATION
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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," "Additional Corporate Governance Matters" and
"Principal Shareholders" in the Company’s Proxy Statement for its 2015 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.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by reference to the sections entitled “Election of Directors” and "Executive
Compensation" in the Company’s Proxy Statement for its 2015 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.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
Information about the Company’s equity compensation plans at June 30, 2015 is as follows:
Plan Category
Equity compensation plans approved by Shareholders (1)
Equity compensation plans not approved by Shareholders
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
1,166
0
$
81.57
0
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans
1.1 million
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 2015 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.
57
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 is incorporated by reference to the sections entitled "Election of Directors" and "Additional Corporate
Governance Matters" in the Company’s Proxy Statement for its 2015 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.
58
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
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 2015 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.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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 and Comprehensive Income for the Years Ended June 30, 2015, 2014, and 2013
Consolidated Balance Sheets as of June 30, 2015 and 2014
Consolidated Statements of Shareholders’ Equity for the Years Ended June 30, 2015, 2014 and 2013
Consolidated Statements of Cash Flows for the Years Ended June 30, 2015, 2014 and 2013
Notes to Consolidated Financial Statements for the Years Ended June 30, 2015, 2014 and 2013
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.
59
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.
SIGNATURES
Date: August 31, 2015
BIO-TECHNE CORPORATION
/s/ Charles Kummeth
By: Charles Kummeth
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
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
Signature and Title
/s/ Robert V. Baumgartner
Robert V. Baumgartner
Chairman of the Board and Director
/s/ Roger C. Lucas, Ph.D.
Dr. Roger C. Lucas
Vice Chairman and Director
/s/ Howard V. O’Connell
Howard V. O’Connell, Director
/s/ Randolph C. Steer, Ph.D., M.D.
Dr. Randolph C. Steer, Director
/s/ Charles A. Dinarello, M.D.
Dr. Charles A. Dinarello, Director
/s/ Karen A. Holbrook, Ph.D.
Dr. Karen A. Holbrook, Director
/s/ John L. Higgins
John L. Higgins, Director
/s/ Roeland Nusse, Ph.D.
Dr. Roeland Nusse, Director
/s/ Harold J. Wiens
Harold J. Wiens, Director
/s/ Charles Kummeth
Charles Kummeth, Chief Executive Officer
(principal executive officer)
/s/ James Hippel
James Hippel, Chief Financial Officer
(principal financial officer and principal accounting officer)
60
EXHIBIT INDEX
for Form 10-K for the 2015 Fiscal Year
Exhibit
Number
3.1
Description
Amended and Restated Articles of Incorporation of the Company--incorporated by reference to Exhibit 3.1 of the Company’s 10-Q
dated February 9, 2015.*
3.2
Amended and Restated Bylaws of the Company--incorporated by reference to Exhibit 3.2 of the Company’s 10-Q dated February 9,
2015.*
10.1**
1997 Incentive Stock Option Plan--incorporated by reference to Exhibit 10.24 of the Company’s Form 10-K for the year ended June
30, 1997.*
10.2**
Form of Stock Option Agreement for 1997 Incentive Stock Option Plan--incorporated by reference to Exhibit 10.25 of the
Company’s Form 10-K for the year ended June 30, 1997.*
10.3**
1998 Nonqualified Stock Option Plan--incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q for the quarter ended
September 30, 1998.*
10.4**
Form of Stock Option Agreement for 1998 Nonqualified Stock Option Plan--incorporated by reference to Exhibit 10.2 of the
Company’s Form 10-Q for the quarter ended September 30, 1998.*
10.5
Amended and Restated Investors Rights Agreement dated June 13, 2006 among ChemoCentryx, Inc. and the Company and certain
investors--incorporated by reference to Exhibit 10.31 of the Company’s 10-K for the year ended June 30, 2006.*
10.6**
Description of Management Incentive Bonus Under the Bio-Techne Corporation 2010 Equity Incentive Plan--incorporated by
reference to Exhibit 10.13 of the Company’s 10-K for the year ended June 30, 2013.*
10.7**
2010 Equity Incentive Plan--incorporated by reference to Exhibit 10.1 of the Company’s 8-K dated October 28, 2010.*
10.8**
Form of Nonqualified Stock Option Agreement for the 2010 Equity Incentive Plan--incorporated by reference to Exhibit 10.2 of the
Company’s 8-K dated October 28, 2010.*
10.9**
Form of Incentive Stock Option Agreement for the 2010 Equity Incentive Plan--incorporated by reference to Exhibit 10.3 of the
Company’s 8-K dated October 28, 2010.*
10.10**
Form of Incentive Stock Option Agreement under the Company’s 2010 Equity Incentive Plan--incorporated by reference to Exhibit
10.6 of the Company’s 10-Q dated February 9, 2015.*
10.11**
Form of Employee Non-Qualified Stock Option Agreement under the Company’s 2010 Equity Incentive Plan—incorporated by
reference to Exhibit 10.7 of the Company’s 10-Q dated February 9, 2015.*
10.12**
Form of Director Non-Qualified Stock Option Agreement under the Company’s 2010 Equity Incentive Plan—incorporated by
reference to Exhibit 10.8 of the Company’s 10-Q dated February 9, 2015.*
10.13**
Form of Restricted Stock Agreement for 2010 Equity Incentive Plan—incorporated by reference to Exhibit 10.1 of the Company’s
10-Q for the quarter ended March 31, 2013.*
61
Description
Exhibit
Number
10.14** Employment Agreement by and between the Company and Charles Kummeth--incorporated by reference to Exhibit 10.1 of the
Company’s 8-K dated March 16, 2013.*
10.15** Description of Non-employee Director Compensation Plan--incorporated by reference to Exhibit 10.25 of the Company’s 10-K for
the year ended June 30, 2013.*
10.16**
First Amendment to Employment Agreement by and between the Company and Charles Kummeth, effective January 30, 2015--
incorporated by reference to Exhibit 10.1 of the Company’s 10-Q dated February 9, 2015.*
10.17**
First Amendment to Employment Agreement by and between the Company and James Hippel, effective January 30, 2015--
incorporated by reference to Exhibit 10.2 of the Company’s 10-Q dated February 9, 2015.*
10.18**
Form of Employment Agreement by and between the Company and Executive Officers of the Company-- incorporated by reference
to Exhibit 10.4 of the Company’s 10-Q dated February 9, 2015.*
10.19** Compensation Arrangement for the Executive Officers for Fiscal Year 2014--incorporated by reference to Exhibit 10.28 of the
Company’s 10-K for the year ended June 30, 2013.*
10.20** Employment Agreement by and between the Company and Mr. James T. Hippel, dated February 5, 2014--incorporated by reference
to Exhibit 10.1 of the Company’s 8-K dated February 5, 2014.*
10.21
10.22
10.23
10.24
10.25
10.26
10.27
Agreement of Investment and Merger between the Company, Research and Diagnostics Systems, Inc., Cayenne Merger Sub, Inc.,
CyVek, Inc. and Citron Capital Limited dated April 1, 2014--incorporated by reference to Exhibit 10.22 of the Company’s 10-K
dated August 29, 2014.*
Agreement and Plan of Merger by and among Techne Corporation, McLaren Merger Sub, Inc., ProteinSimple and Fortis Advisors
LLC, as the Securityholders’ Representative, dated June 16, 2014--incorporated by reference to Exhibit 2.1 of the Company’s 8-K
dated June 16, 2014.*
Unit Purchase Agreement by and among Techne Corporation, Novus Holdings, LLC, the Members of Novus Holdings, LLC, and the
Members’ Representative dated July 2, 2014 --incorporated by reference to Exhibit 10.24 of the Company’s 10-K dated August 29,
2014.*
Credit Agreement by and among Techne Corporation, the Guarantors party thereto, the Lenders party thereto, and BMO Harris Bank
N.A., as Administrative Agent, dated July 28, 2014--incorporated by reference to Exhibit 10.1 of the Company’s 8-K dated July 28,
2014.*
Form of Indemnification Agreement entered into with each director and executive officers of the Company--incorporated by
reference to Exhibit 10.27 of the Company’s 10-K dated August 29, 2014.*
Letter Agreement between the Company, ProteinSimple, McLaren Merger Sub, Inc. and Fortis Advisors LLC dated July 31, 2014--
incorporated by reference to Exhibit 10.4 of the Company’s 10-Q dated November 10, 2014.*
Letter Agreement between the Company, Research and Diagnostics Systems, Inc., Cayenne Merger Sub, Inc., CyVek, Inc. and Citron
Capital Limited dated August 27, 2014--incorporated by reference to Exhibit 10.5 of the Company’s 10-Q dated November 10,
2014.*
10.28** Employment Agreement by and between the Company and Mr. Robert Gavin dated November 25, 2014--incorporated by reference
to Exhibit 10.5 of the Company’s 10-Q dated February 9, 2015.
10.29**
First Amendment to Employment Agreement by and between the Company and Robert Gavin, effective January 30, 2015--
incorporated by reference to Exhibit 10.3 of the Company’s 10-Q dated February 9, 2015.
62
Exhibit
Number
21
Description
Subsidiaries of the Company.
23
31.1
31.2
32.1
32.2
101
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The following financial statements from the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015,
formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Earnings and Comprehensive
Income, (ii)
the
Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements.
\
the Consolidated Statements of Shareholders’ Equity, (iv)
the Consolidated Balance Sheets, (iii)
-------------
* Incorporated by reference; SEC File No. 000-17272
** Management contract or compensatory plan or arrangement
Exhibits for Form 10-K have not been included in this report. Exhibits have been filed with the Securities and Exchange Commission. Upon
request to the Investor Relations Department, Bio-Techne Corporation will furnish, without charge, any such exhibits as well as copies of
periodic reports filed with the Securities and Exchange Commission.
63
Bio-Techne Corporation, a Minnesota corporation, had the subsidiaries below as of the date of filing its Annual Report on Form 10-K for the
fiscal year ended June 30, 2015. Certain subsidiaries are not named because they were not significant individually or in the aggregate as of
such date. Techne Corporation is not a subsidiary of any other entity.
SUBSIDIARIES
Exhibit 21
Name
Research and Diagnostic Systems Inc. (R&D Systems)
BiosPacific, Inc.
Bionostics, Inc.
Boston Biochem, Inc.
State/Country of Incorporation
Minnesota
Minnesota
Massachusetts
Minnesota
ProteinSimple
ProteinSimple Ltd.
ProteinSimple Hong Kong Ltd.
ProteinSimple Science and Technology Co., Ltd.
ProteinSimple Japan K.K.
Novus Holdings, LLC
Novus Biologicals, LLC
Novus Canada Int’l., LLC
R&D Systems Europe Ltd.
R&D Systems GmbH
Tocris Cookson Limited
Bio-Techne AG
Cliniqa
Delaware
Canada
Hong Kong
China
Japan
Delaware
Delaware
Delaware
United Kingdom
Germany
United Kingdom
Switzerland
California
Consent of Independent Registered Public Accounting Firm
Exhibit 23
The Board of Directors and Stockholders
Bio-Techne Corporation:
We consent to the incorporation by reference in the registration statement (No. 333-37263, 333-88885, 333-49962, 333-170576, and 333-
199847) on Form S-8 of Bio-Techne Corporation of our report dated August 31, 2015, with respect to the consolidated balance sheets of Bio-
Techne Corporation as of June 30, 2015 and 2014, and the related consolidated statements of earnings and comprehensive income,
shareholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2015, and all related financial statement
schedules, and the effectiveness of internal control over financial reporting as of June 30, 2015, which report appears in the June 30, 2015
annual report on Form 10-K of Bio-Techne Corporation.
Our report dated August 31, 2015 on internal control over financial reporting as of June 30, 2015, contains an explanatory paragraph that
states management excluded from its assessment of the effectiveness of internal control over financial reporting as of June 30, 2015, Protein
Platforms and Novus’ internal control over financial reporting that comprise 47.9% of total assets and 18.7% of total revenues included in the
consolidated financial statements of Bio-Techne Corporation as of and for the year ended June 30, 2015. Our audit of internal control over
financial reporting of Bio-Techne Corporation also excluded an evaluation of the internal control over financial reporting of Protein
Platforms and Novus.
/s/ KPMG LLP
Minneapolis, Minnesota
August 31, 2015
I, Charles Kummeth, certify that:
1.
I have reviewed this annual report on Form 10-K of Bio-Techne Corporation;
CERTIFICATION
Exhibit 31.1
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 registrant’s 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 registrant’s 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 registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonable likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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
registrant’s internal control over financial reporting.
Date: August 31, 2015
/s/ Charles Kummeth
Charles Kummeth
Chief Executive Officer
I, James T. Hippel, certify that:
1.
I have reviewed this annual report on Form 10-K of Bio-Techne Corporation;
CERTIFICATION
Exhibit 31.2
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 registrant’s 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 registrant’s 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 registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonable likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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
registrant’s internal control over financial reporting.
Date: August 31, 2015
/s/ James T. Hippel
James T. Hippel
Chief Financial Officer
Exhibit 32.1
BIO-TECHNE CORPORATION
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 Annual Report of Techne Corporation (the “Company”) on Form 10-K for the year ended June 30, 2015 as filed with
the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles Kummeth, 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/ Charles Kummeth
Charles Kummeth
Chief Executive Officer
August 31, 2015
Exhibit 32.2
BIO-TECHNE CORPORATION
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 Annual Report of Techne Corporation (the “Company”) on Form 10-K for the year ended June 30, 2015 as filed with
the Securities and Exchange Commission on the date hereof (the “Report”), I, James T. Hippel, 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/ James T. Hippel
James T. Hippel
Chief Financial Officer
August 31, 2015
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~225,000 additional
Abs and digital platform
*
Small
Molecules
Low-cost protein
manufacturing
in China
*
Proteins
e R e a g e n ts
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FISCAL 2015
Products and Technology Expansion
Antibodies
trols and IVD C
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P
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o
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i
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P
l
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t
f
o
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s Global Footprint
Arrays
Blood chemistry
and urine controls
*
Luminex®
n
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a
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t
s
I n
*
Making protein
analysis simple
1400+
Employees
Assays
*
Immunoassay
automation and
multiplexing
Annual Meeting
The annual meeting of shareholders of
Bio-Techne Corporation will be held at the corporate office,
614 McKinley Place NE, Minneapolis, Minnesota, on
Thursday, October 29, 2015, at 3:30 p.m. (CDT).
Bio-Techne Corporation
614 McKinley Place NE
Minneapolis, MN 55413-2610, USA
(612) 379-8854
ProteinSimple
3001 Orchard Parkway
San Jose, CA 95134, USA
(408) 510-5500
Research & Diagnostic Systems, Inc.
614 McKinley Place NE
Minneapolis, MN 55413-2610, USA
(612) 379-8854
ProteinSimple Ltd.
27 Coronet Road
Toronto, Ontario, Canada
M8Z 2L8
(416) 231-1664
ProteinSimple Ltd.
115 Terence Matthews Crescent
Ottawa, ON, Canada
K2M 2B2
(613) 591-7715
ProteinSimple Bioscience & Technology (Shanghai) Co., Ltd.
Room 1007, No. 1 Building, Sandhill Plaza
Lane No. 2290, Zuchongzhi Road, Zhangjiang High-Tech Park
Shanghai 201203 China
+86-21-60276091
ProteinSimple Japan K.K.
HULIC Nihonbashi Muromachi Building 9F
3-4-7 Nihonbashi Muromachi, Chuo-ku
Tokyo 103-0022 Japan
CyVek, Inc.
2 Barnes Industrial Rd S,
Wallingford, CT 06492, USA
(203) 679-0395
BiosPacific, Inc.
5980 Horton Street, Suite 360
Emeryville, CA 94608, USA
(510) 652-6155
Bionostics, Inc.
7 Jackson Road
Devens, MA 01434, USA
(978) 772-7070
Boston Biochem, Inc.
840 Memorial Drive
Cambridge, MA 02139, USA
(617) 576-2210
R&D Systems China Co., Ltd.
15K Hua Min Empire Plaza
726 West Yan An Road
Shanghai, PRC 200050
86 (21) 52380373
Bio-Techne Hong Kong Limited
Unit 208B, 2nd Floor Photonics Ctr.
HKSTP Phase One
Pak Shek Kok, Tai Po, NT.
Hong Kong
Shanghai PrimeGene
Bio-Tech Co., Ltd. (China)
Shanghai, PRC
(852) 29926006
Novus Biologicals, LLC
8100 Southpark Way, A-8
Littleton, CO 80120, USA
(303) 730-1950
Novus Biologicals Canada ULC
461 North Service Road West Unit B37
Oakville, ON L6M 2V5, Canada
(905) 827-6400
Cliniqa Corporation
288 Distribution St,
San Marcos, CA 92078, USA
(760) 744-1900
R&D Systems Europe Ltd.
19 Barton Lane
Abingdon Science Park
Abingdon, OX14 3NB,
United Kingdom
+ 44 (0)1235 529449
R&D Systems GmbH
Borsigstrasse 7a
65205 Wiesbaden-Nordenstadt, Germany
6122 90980
Tocris Cookson Limited
Tocris House, IO Centre
Moorend Farm Avenue
Bristol, BS11 0QL
United Kingdom
+ 44 (0)117 916-3333
Board of Directors
Executive Officers
Robert V. Baumgartner
Chairman of the Board and Director
Charles Kummeth
President and Chief Executive Officer
Roger C. Lucas, Ph.D.
Vice Chairman and Director
James T. Hippel
Chief Financial Officer
Charles Kummeth
President, Chief Executive Officer and Director
J. Fernando Bazan, Ph.D.
Chief Technology Officer
David Eansor
Senior VP, Biotechnology Division
Brenda Furlow
Senior VP, General Counsel
Robert Gavin
Senior VP, Protein Platforms Division
Marcel Veronneau
Senior VP, Clinical Controls Division
Charles A. Dinarello, M.D.
Director
John L. Higgins
Director
Karen A. Holbrook, Ph.D.
Director
Roeland Nusse, Ph.D.
Director
Howard O’Connell
Director
Randolph C. Steer, M.D., Ph.D.
Director
Harold J. Wiens
Director
TECH is Bio-Techne Corporation’s Nasdaq stock symbol, which is listed on the Nasdaq Global Select Market.
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Bio-Techne Corporation
614 McKinley Place NE
Minneapolis, MN 55413-2610, USA
(612) 379-8854
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