<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 26, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________ .
COMMISSION FILE NUMBER 0-26126
SEROLOGICALS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
DELAWARE 58-2142225
-------- ----------
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
780 PARK NORTH BLVD.
SUITE 110
ATLANTA, GEORGIA 30021
(Address of principal (Zip Code)
executive offices)
</TABLE>
(404) 296-5595
(Registrant's Telephone Number Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past (90) days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT MAY 4, 2000
----- --------------------------
<S> <C>
Common Stock, $.01 par value per 23,244,092
share
</TABLE>
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<PAGE> 2
INDEX
SEROLOGICALS CORPORATION AND SUBSIDIARIES
PART I.
<TABLE>
<S> <C> <C>
Item 1. Financial Statements (Unaudited)............................ 3
Condensed Consolidated Balance Sheets -- March 26, 2000 and
December 26, 1999......................................... 3
Condensed Consolidated Statements of Income -- for the
quarters ended March 26, 2000 and March 28, 1999.......... 4
Condensed Consolidated Statements of Cash Flows -- for the
quarters ended March 26, 2000 and March 28, 1999.......... 5
Notes to Condensed Consolidated Financial Statements........ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 11
Item 3. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 14
PART II.
Item 1. Legal Proceedings........................................... 15
Item 6. Exhibits and Reports on Form 8-K............................ 15
SIGNATURES............................................................ 16
</TABLE>
2
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PART I.
ITEM 1. FINANCIAL STATEMENTS
SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 26, DECEMBER 26,
2000 1999
--------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,152 $ 3,294
Trade accounts receivable, net............................ 22,762 29,559
Inventories............................................... 34,403 33,361
Other current assets...................................... 8,801 7,328
-------- --------
Total current assets.............................. 68,118 73,542
-------- --------
PROPERTY AND EQUIPMENT, net................................. 32,390 32,437
-------- --------
OTHER ASSETS:
Goodwill, net............................................. 39,255 39,987
Other, net................................................ 10,788 10,932
-------- --------
Total other assets................................ 50,043 50,919
-------- --------
$150,551 $156,898
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt and capital lease
obligations............................................ $ 2,562 $ 2,567
Accounts payable.......................................... 7,340 5,508
Accrued liabilities....................................... 10,746 13,910
Deferred revenue.......................................... 1,385 1,385
-------- --------
Total current liabilities......................... 22,033 23,370
-------- --------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current
maturities................................................ 18,295 30,000
-------- --------
OTHER LIABILITIES........................................... 304 304
-------- --------
STOCKHOLDERS' EQUITY:
Common stock.............................................. 259 249
Additional paid-in capital................................ 95,813 91,383
Retained earnings......................................... 30,627 28,253
Accumulated other comprehensive income.................... 243 362
Less: treasury stock, at cost............................. (17,023) (17,023)
-------- --------
Total stockholders' equity........................ 109,919 103,224
-------- --------
$150,551 $156,898
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------
MARCH 26, MARCH 28,
2000 1999
----------- -----------
<S> <C> <C>
Net sales................................................... $ 36,335 $ 39,532
Costs and expenses:
Cost of sales............................................. 26,333 27,621
Selling, general and administrative expenses.............. 4,925 4,784
Other expense, net........................................ 795 897
Interest expense (income), net............................ 422 (51)
Special charges........................................... 151 --
----------- -----------
Income before income taxes.................................. 3,709 6,281
Provision for income taxes.................................. 1,336 2,204
----------- -----------
Net income........................................ $ 2,373 $ 4,077
=========== ===========
Net income per common share:
Basic..................................................... $ 0.10 $ 0.17
=========== ===========
Diluted................................................... $ 0.10 $ 0.16
=========== ===========
Weighted average shares:
Basic..................................................... 22,793,325 24,581,753
=========== ===========
Diluted................................................... 23,495,275 26,276,603
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------
MARCH 26, MARCH 28,
2000 1999
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income................................................ $ 2,373 $ 4,077
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 2,093 1,913
Deferred income taxes.................................. 2 (3)
Non-cash special charges............................... 151 --
Changes in operating assets and liabilities, net of
acquisitions of businesses:
Trade accounts receivable, net......................... 6,797 (2,881)
Inventories............................................ (1,042) 321
Other current assets................................... 860 (157)
Accounts payable....................................... 1,832 417
Accrued expenses....................................... (3,433) 563
Deferred revenue....................................... -- (431)
-------- --------
Total adjustments................................. 7,260 (258)
-------- --------
Net cash provided by operating activities......... 9,633 3,819
-------- --------
INVESTING ACTIVITIES:
Purchases of property and equipment....................... (1,169) (4,073)
Acquisitions of businesses, net of cash acquired.......... -- (27,872)
Other..................................................... -- 274
-------- --------
Net cash used in investing activities............. (1,169) (31,671)
-------- --------
FINANCING ACTIVITIES:
Net repayments on revolving line of credit................ (11,705) --
Payments on long-term debt and capital lease
obligations............................................ (5) (21)
Proceeds from employee stock plans........................ 2,104 1,538
-------- --------
Net cash provided by (used in) financing
activities....................................... (9,606) 1,517
-------- --------
Net decrease in cash and cash equivalents................... (1,142) (26,335)
Cash and cash equivalents, beginning of period.............. 3,294 34,940
-------- --------
Cash and cash equivalents, end of period.................... $ 2,152 $ 8,605
======== ========
SUPPLEMENTAL DISCLOSURES:
Interest paid............................................. $ 541 $ 68
Taxes paid................................................ $ 77 $ 89
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 6
SEROLOGICALS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 26, 2000
(UNAUDITED)
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which generally can be identified by the use of forward looking
terminology such as "may," "will," "expect," "anticipate," "intend," "estimate,"
"plan," "believe," or "continue" or the negative thereof or other variations
thereon or similar terminology. These forward looking statements include,
without limitation, statements regarding the impact on Serologicals of reduced
anti-D sales and our efforts to replace them; the impact on the Company of
current industry supply and demand factors and the supply of and demand for our
individual products; the margin pressure on Serologicals' non-specialty antibody
product line; the possible divestiture of the non-specialty business; the impact
of certain operational adjustments regarding anti-D antibody collections; the
level of capital expenditures during 2000; the ability to complete the purchase
of the site in Scotland to expand our monoclonal manufacturing facility; the
risks of liability for product claims; and the sufficiency of capital and
liquidity to fund operations, capital expenditures, stock repurchases and
acquisitions. These forward looking statements are subject to certain risks and
uncertainties, such as changes in the economy or market conditions, changes in
financial, banking and capital markets, changes in customers' needs or abilities
to manufacture products, changes in government policy or regulations and other
factors discussed in Part I of the Company's Annual Report on Form 10-K for the
year ended December 26, 1999, which could cause actual results to differ
materially.
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Serologicals Corporation (collectively with its subsidiaries,
"Serologicals", "We", "Our" or the "Company") is a leading worldwide provider of
specialty human antibodies and other blood-related products and services to
major healthcare companies. Our services, including donor recruitment, donor
management and clinical testing services, enable us to provide value-added
specialty antibodies that are used as the active ingredients in therapeutic
products for the treatment and management of such medical indications as Rh
incompatibility in newborns, rabies and hepatitis. We also provide a variety of
proteins used in diagnostic reagents and tissue culture media components for use
as additives in biotech products. Additionally, we collect source plasma
containing non-specialty antibodies from which a number of products, primarily
intravenous immune globulin (IVIG), a product containing a broad spectrum of
antibodies used in the treatment of a wide variety of medical indications, are
derived.
As of May 5, 2000, we conducted our operations through a national network
of 64 donor centers and through laboratories located in the United States and
the United Kingdom. We operate two monoclonal antibody manufacturing facilities
in Scotland that are engaged in the development, manufacture and sale of
monoclonal antibodies, and a blood protein fractionation facility located in
Kankakee, Illinois that supplies a broad line of purified animal and human blood
proteins to the diagnostic and biopharmaceutical industries.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
include the accounts of Serologicals and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The accompanying statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, the
accompanying unaudited condensed consolidated financial statements reflect all
adjustments, which are of a normal recurring nature, to present
6
<PAGE> 7
SEROLOGICALS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
fairly Serologicals' financial position, results of operations and cash flows at
the dates and for the periods presented. Interim results of operations are not
necessarily indicative of results to be expected for the full year. The interim
financial statements should be read in conjunction with the audited consolidated
financial statements as of December 26, 1999 and the notes thereto included in
our Annual Report on Form 10-K for the year ended December 26, 1999.
Certain prior year amounts have been reclassified to conform to the current
year presentation.
Earnings Per Share
Basic earnings per share are calculated by dividing net income by the
weighted average number of common shares outstanding during the period. The
calculation of diluted earnings per share is similar to basic earnings per
share, except that net income is adjusted by the after-tax interest expense on
convertible indebtedness and the weighted average number of shares includes the
dilutive effect of stock options, warrants, convertible indebtedness and similar
instruments.
The following table sets forth the calculation of basic and diluted
earnings per share for the quarters ended March 26, 2000 and March 28, 1999,
respectively:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------
MARCH 26, MARCH 28,
2000 1999
--------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Basic earnings per share:
Net income................................................ $ 2,373 $ 4,077
Weighted average shares of common stock outstanding....... 22,793 24,582
------- -------
Net income per share.............................. $ 0.10 $ 0.17
======= =======
Diluted earnings per share:
Net income................................................ $ 2,373 $ 4,077
Plus: interest expense on convertible indebtedness, net of
tax.................................................... 17 36
------- -------
Net income, as adjusted........................... $ 2,390 $ 4,113
------- -------
Weighted average shares of common stock outstanding....... 22,793 24,582
Effect of dilutive securities:
Stock options and warrants............................. 520 1,299
Convertible indebtedness............................... 182 396
------- -------
Weighted average shares of common stock outstanding,
including dilutive instruments......................... 23,495 26,277
------- -------
Net income per share.............................. $ 0.10 $ 0.16
======= =======
</TABLE>
7
<PAGE> 8
SEROLOGICALS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Comprehensive Income
The following table sets forth the calculation of comprehensive income for
the periods indicated below:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------
MARCH 26, MARCH 28,
2000 1999
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Net income, as reported..................................... $2,373 $4,077
Other comprehensive income, net of tax
Foreign currency translation adjustments.................. (73) (124)
Unrealized gains on securities:
Unrealized holding gains during period................. -- 178
Less: reclassification adjustment for gains included in
net income............................................ -- (72)
------ ------
Other comprehensive income.................................. (73) (18)
------ ------
Comprehensive income........................................ $2,300 $4,059
====== ======
</TABLE>
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No.133"). SFAS No. 133 requires
derivative instruments to be recorded on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
values of derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. In June 1999, the FASB
issued Statement of Financial Accounting Standards No. 137, which defers the
effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. We
do not believe that the adoption of SFAS No. 133 will have a material effect on
our results of operations or financial position.
2. LONG-TERM DEBT AND LEASE OBLIGATIONS
Long-term debt and capital lease obligations at March 26, 2000 and December
26, 1999 consisted of the following:
<TABLE>
<CAPTION>
MARCH 26, DECEMBER 26,
2000 1999
--------- ------------
(IN THOUSANDS)
<S> <C> <C>
Revolving credit facility, maturing in September 2002,
bearing interest at floating rates........................ $18,295 $30,000
$2.55 million convertible subordinated note payable,
interest payable quarterly at 4.0%; principal payable on
September 23, 2000........................................ 2,550 2,550
Capital lease obligations at varying interest rates and
terms, maturing through 2000.............................. 12 17
------- -------
20,857 32,567
Less current maturities..................................... 2,562 2,567
------- -------
$18,295 $30,000
======= =======
</TABLE>
8
<PAGE> 9
SEROLOGICALS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. LIABILITY FOR SPECIAL CHARGES
The following table summarizes the activity in the severance accrual
through March 26, 2000:
<TABLE>
<CAPTION>
ADDITIONS
TO RESERVE
BALANCE, CHARGED TO CASH BALANCE,
DESCRIPTION 12/26/99 EXPENSE PAYMENTS OTHER 3/26/00
- ----------- -------- ---------- -------- ----- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Employee termination costs................. $1,377 $151 $(486) $-- $1,042
</TABLE>
The amount charged to expense during the current period consists of an
additional severance arrangement and is included in "Special charges" in the
Condensed Consolidated Statements of Income. The remaining accrual of
approximately $1.0 million is included in "Accrued expenses" in the Condensed
Consolidated Balance Sheet. As of March 26, 2000, the expected remaining cash
requirements for this liability are approximately $0.6 million in 2000 and $0.4
million in 2001.
4. SEGMENT INFORMATION
Serologicals conducts its business primarily through two business segments,
the Therapeutic Products segment and the Diagnostic Products segment. These
segments were determined based primarily on the differing nature of the ultimate
end use of our products, the differing production and other value-added
processes performed by us with respect to the products and, to a lesser extent,
the differing customer bases to which each reportable segment sells its
products. The remainder of our operations that do not otherwise fall into one of
these two segments, as well as general, unallocated corporate overhead expenses,
are reported in the category entitled "Corporate and Other." Selected financial
information is reported below for the quarters ended March 26, 2000 and March
28, 1999:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------
MARCH 26, MARCH 28,
2000 1999
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Net sales -- unaffiliated customers:
Therapeutic Products...................................... $26,446 $29,813
Diagnostic Products....................................... 9,889 9,457
Corporate/Other........................................... -- 262
------- -------
Total............................................. $36,335 $39,532
======= =======
Segment operating income (loss):
Therapeutic Products...................................... $ 3,372 $ 5,275
Diagnostic Products....................................... 3,793 3,598
Corporate/Other........................................... (2,088) (1,746)
------- -------
Total............................................. 5,077 7,127
------- -------
Reconciling items:
Other expense, net........................................ 795 897
Interest income, net...................................... 422 (51)
Special charges........................................... 151 --
------- -------
Income before income taxes........................ $ 3,709 $ 6,281
======= =======
</TABLE>
Segment operating income is defined as earnings before income taxes,
interest, amortization, foreign currency gains and losses, special charges and
other non-operating income and expenses. "Corporate and Other" includes general
corporate expenses, corporate interest income, interest expense other than that
9
<PAGE> 10
SEROLOGICALS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
directly attributable to an operating segment and other operations that do not
otherwise meet the SFAS No. 131 criteria for disclosure. Serologicals had no
intersegment sales during 2000 or 1999.
5. COMMITMENTS AND CONTINGENCIES
Litigation
Serologicals is involved in certain litigation arising in the ordinary
course of business. We do not believe any of this litigation is likely to have a
material adverse effect on Serologicals' financial position or results of
operations.
Additionally, subsequent to the end of the first quarter of 2000, we have
learned of several complaints that have been filed against the Company and
certain of its current and former executive officers and directors. Although
neither the Company nor any of the officers or directors has been served,
Serologicals has obtained copies of three of the complaints, which allege
violations of the Securities Exchange Act of 1934 including Sections 10(b) and
20(a) thereof and Rule 10b-5 promulgated thereunder. Although we consider all of
the claims in the complaints to be without merit and intend to defend the
lawsuits vigorously, we are unable to predict at this time the final outcome of
these claims.
Product Claims
During 1999, we discovered and notified a customer that we had
inadvertently shipped a unit of source plasma that did not meet FDA standards
requiring negative test results for a certain virus. The customer subsequently
indicated to us that the product had been partially manufactured with other
units of plasma and thus had potentially affected a substantial number of units.
After completing further testing, the customer notified us that the
manufacturing pool containing this unit tested negative for the particular
virus, and therefore may be available for further manufacture into finished
product, pending FDA approval. During the first quarter of 2000, the customer
informed us that FDA approval had been granted for use of this manufacturing
pool, and accordingly, we expect no further risk of liability for this
particular claim.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Serologicals is a leading worldwide provider of biological materials and
services to major healthcare companies. We provide value-added antibody-based
products that are used as the active ingredients in therapeutic products for the
treatment and management of diseases such as Rh incompatibility in newborns,
rabies and hepatitis and in diagnostic products such as blood typing reagents
and diagnostic test kits. Through our Pentex protein fractionation facility, we
provide a variety of proteins used in diagnostic reagents and tissue culture
media components for use as additives in biotech products. We are also engaged
in the development, manufacturing and sale of monoclonal antibodies at our
facilities in the United Kingdom. As of May 5, 2000, the Company operated 64
donor centers, 17 of which specialize in the collection of specialty antibodies
and 47 of which primarily collect source plasma containing non-specialty
antibodies from which a number of products, primarily IVIG, are produced.
Owing in part to increasing margin pressures and the inability of
Serologicals to pass increased costs on to its customers, we are performing a
strategic review of our non-specialty antibody business and are currently in
discussions which could result in a divestiture of all or a portion of our 47
non-specialty donor centers.
For management purposes, the operations of Serologicals' subsidiaries are
organized into two primary operating segments, Therapeutic Products and
Diagnostic Products. These segments are based primarily on the differing nature
of the ultimate end use of our products, the differing production and other
value-added processes performed by us with respect to the products and, to a
lesser extent, the differing customer bases to which each reportable segment
sells its products.
The activities of the Therapeutic Products segment primarily include the
collection and sale of specialty and non-specialty human antibodies that are
used as the active ingredients in therapeutic products for the treatment and
management of various diseases. The activities of the Diagnostic Products
segment include the monoclonal antibody production facilities and certain
human-sourced, polyclonal antibodies. While an increasing number of
Pentex(R)-branded products are being used in therapeutic end products, the
management of this business is performed within Serologicals' diagnostic
business unit and, accordingly, is included in the Diagnostic Products
reportable business segment. The antibodies and other proteins provided by the
Diagnostic Products segment are used in diagnostic products such as blood typing
reagents and diagnostic test kits and as nutrient additives in biotech products.
RESULTS OF OPERATIONS
The following discussion and analysis of Serologicals' financial condition
and results of operations should be read in conjunction with the Condensed
Consolidated Financial Statements and Notes thereto.
The following table sets forth certain operating data of Serologicals as a
percentage of net sales for the periods indicated below.
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------
MARCH 26, MARCH 28,
2000 1999
--------- ---------
<S> <C> <C>
Net sales................................................... 100.0% 100.0%
Gross profit................................................ 27.5 30.1
Selling, general and administrative expenses................ 13.6 12.1
Net income.................................................. 6.5 10.3
</TABLE>
Quarters Ended March 26, 2000 and March 28, 1999
NET SALES
Consolidated. Consolidated net sales decreased approximately $3.2 million,
or 8%, from $39.5 million in 1999 to $36.3 million in 2000. The decrease was
primarily attributable to lower sales of anti-D antibodies,
11
<PAGE> 12
which was partially offset by an increase in sales of non-specialty antibodies
and increases in sales of diagnostic products.
Therapeutic Products. Net sales of Therapeutic Products totaled $26.4
million, a decrease of approximately $3.4 million, or 11%, from the prior year.
This decrease was primarily due to a $5.8 million decrease in the sale of
specialty antibodies. The decrease in anti-D sales reflected the loss in 1999 of
orders from a major customer, as well as a generally higher supply of anti-D in
the marketplace from other independent producers. Net sales of non-specialty
antibodies increased 14% year-over-year, due partially to price increases, as
well as to an increase in the percentage of the product sold on a "gross"
pricing basis, for which the increased selling price reflects the provision of
laboratory testing services and certain donor supplies by Serologicals.
Diagnostic Products. Net sales of Diagnostic Products increased
approximately $432,000, or 5%, from $9.5 million in 1999 to $9.9 million in
2000, primarily as a result of increased sales of monoclonal antibodies and
blood protein products. Sales of monoclonal antibodies increased $498,000, or
18%, from $2.7 million to $3.2 million and reflect additional demand for certain
products manufactured for customers under an outsourcing arrangement. Sales of
blood protein products, including bovine serum albumin (BSA) and the EX-CYTE(R)
product line, increased approximately $265,000 to $5.1 million in the first
quarter of 2000. These increases were offset by lower sales of primarily
human-sourced antibodies used in blood typing reagents and diagnostic test kits,
which decreased approximately $330,000 from $1.8 million in 1999 to $1.5 million
in 2000.
GROSS PROFIT
Consolidated. Consolidated gross profit decreased approximately $1.9
million, or 16%, from $11.9 million in the first quarter of 1999 to $10.0
million during 2000. This decrease was primarily the result of the overall
decrease in sales, as well as the product mix. Compared to the first quarter of
1999, sales for the first quarter of 2000 included a higher percentage of
relatively lower margin non-specialty antibodies. Gross profit as a percentage
of net sales ("gross margin") decreased from 30% in 1999 to 28% in the current
year, primarily as a result of the impact of the change in product mix
previously described.
Therapeutic Products. Gross profit from Therapeutic Products decreased
approximately $2.0 million, or 30%, from $6.6 million in 1999 to $4.6 million in
the first quarter of 2000, primarily as a result of the lower sales of anti-D
and an increase in the percentage of total sales representing non-specialty
antibodies. Non-specialty antibodies increased as a percentage of total
Therapeutic Product sales from 56% in 1999 to 72% in 2000. Gross margins on
Therapeutic Products decreased from 22% to 17%, primarily due to the lower
percentage of higher-margin specialty antibody sales as a percentage of total
sales, and slightly lower margins on sales of non-specialty antibodies.
Diagnostic Products. Gross profit from Diagnostic Products was $5.4
million for the first quarter of 1999, unchanged from the comparable period of
1999. Gross margins on Diagnostic Products decreased from 57% in 1999 to 55% in
2000, primarily due to slightly lower margins from sales of monoclonal
antibodies.
INTEREST EXPENSE (INCOME), NET
Interest expense (income), net increased $473,000, from net interest income
of $51,000 in 1999 to net interest expense of $422,000 in the current year, due
to borrowings outstanding under the revolving line of credit.
12
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth certain indicators of financial condition
and liquidity as of March 26, 2000 and December 26, 1999:
<TABLE>
<CAPTION>
MARCH 26, DECEMBER 26,
2000 1999
--------- ------------
<S> <C> <C>
Cash and cash equivalents................................... $ 2,152 $ 3,294
Working capital............................................. 46,085 50,172
Total long-term debt and capital lease obligations.......... 20,857 32,567
Stockholders' equity........................................ 109,919 103,224
Total debt to equity ratio.................................. 19.0% 31.5%
</TABLE>
Serologicals has three principal sources of near-term liquidity: (i)
existing cash and cash equivalents; (ii) cash generated by operations, and (iii)
available borrowing capacity under our revolving credit facility (the
"Revolver"), which provides for a maximum borrowing capacity of $75 million. Our
management believes that our liquidity and capital resources are sufficient to
meet our working capital, capital expenditure and other anticipated cash
requirements over the next twelve months and may be available for use in
acquisitions. However, we anticipate that future acquisition and growth
opportunities may require supplementary funding, including the issuance of
equity or debt securities.
During the first three months of 2000, net cash provided by operating
activities was $9.6 million compared with $3.8 million during the first quarter
of 1999, an increase of $5.8 million. This increase was primarily attributable
to a smaller investment in working capital of approximately $7.2 million versus
the prior year, offset by a $1.7 million decrease in net income. The decreased
investment in working capital was in large part due to a decrease in accounts
receivable of $6.8 million compared with a $2.9 million increase in the prior
year, offset by an increase in inventories of $1.0 million in 2000 versus a $0.3
million decrease in 1999, and a $3.4 million decrease in accrued expenses in
2000 versus an increase of $0.6 million in 1999. Accounts receivable decreased
approximately 23% from the previous year end, due primarily to the timing of
sales and collections as a significant amount of shipments occurred during the
last several weeks of fiscal year 1999.
Net cash used in investing activities during the first quarter of 2000 was
$1.2 million as compared to $31.7 million in 1999. Capital expenditures
decreased $2.9 million compared with the first quarter of 1999. The first
quarter of 1999 included the acquisition of the Pentex Blood Proteins Business
of Bayer Corporation ("Pentex") and costs associated with the development of a
donor center operating system.
Serologicals anticipates capital expenditures for the remainder of fiscal
year 2000 to be approximately $9 to $11 million. Significant planned
expenditures include the following: (i) completion of an expansion of our BSA
manufacturing capacity at our fractionation facility in Kankakee, Illinois; (ii)
several information systems initiatives, primarily the automation of our donor
center network; and (iii) renovations or relocations of existing donor centers.
In addition, we have reached an agreement in principle to purchase a site in
Scotland to expand our monoclonal manufacturing operations which, if
consummated, would require additional expenditures of approximately $2.5
million.
Net cash used in financing activities was $9.6 million in 2000 compared to
cash provided of $1.5 million in 1999. During the first quarter of 2000, we
repaid $11.7 million of the outstanding balance on the Revolver. As of March 26,
2000, borrowings outstanding under the Revolver totaled $18.3 million, compared
with $30.0 million outstanding as of December 26, 1999. Other financing
activities in both periods consisted primarily of proceeds from the exercise of
stock options.
OUTLOOK
Therapeutic Products
Demand for non-specialty antibodies remains strong and generally exceeds
Serologicals' ability to supply targeted amounts to our customers. However, we
expect continued margin pressure on this product line unless and until we are
able to increase collections of this product and selling prices to our
customers. Furthermore,
13
<PAGE> 14
we believe that the non-specialty antibody business may no longer match our
primary strategic objectives of providing high margin, value-added products to
the pharmaceutical, biotechnology and diagnostic industries. As a result, we are
in discussions that could result in a divestiture of all or a portion of our 47
non-specialty donor centers. However, there can be no assurance that we will be
successful in either divesting or otherwise successfully restructuring the
non-specialty operations, or that any further impact from the factors affecting
the business will not have a material adverse effect on Serologicals or our
operations.
We expect a modest recovery in anti-D sales in 2000. However, further
operational adjustments may be required, including reducing the level of anti-D
specialty antibody collections, which could adversely affect the per unit
production costs of anti-D and other specialty therapeutic products.
Demand for Serologicals other specialty antibody products, anti-HBs and
anti-rabies, continues to be strong and is expected to increase in 2000.
Diagnostic Products
Serologicals anticipates moderate increases in sales of polyclonal
antibodies used in blood typing reagents and diagnostic test kits, and more
substantial increases during 2000 in sales of monoclonal antibodies, primarily
as a result of the potential of the outsource manufacturing work we are
performing for a major diagnostic customer. We expect demand for our Pentex(R)
line of blood protein products, in particular the EX-CYTE(R) line of tissue
culture media, to continue to increase. Our Pentex(R) facility in Kankakee,
Illinois is currently undergoing a $2 million expansion of the Pentex(R) bovine
serum albumin (BSA) manufacturing operations, which we expect to complete during
the latter part of 2000. This expansion is expected to increase BSA production
capacity by approximately 30%, in order to meet current and expected customer
demand.
We are developing a line of monoclonal antibodies to be used as controls in
diagnostic test kits, which were historically derived from human donors. While
sales to date have not been significant, we believe that this product line could
provide additional opportunities for growth in Diagnostic Products.
Additionally, we believe that in addition to the aforementioned internal
growth potential, opportunities exist to expand our diagnostic operations
through selective acquisitions that are complementary to our existing monoclonal
and protein fractionation operations. However, there can be no assurance that we
will be successful in achieving any or all of the elements of our strategy.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 requires
derivative instruments to be recorded on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
values of derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. In June 1999, the FASB
issued Statement of Financial Accounting Standards No. 137, which defers the
effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. We
do not believe that the adoption of SFAS No. 133 will have a material effect on
our results of operations or financial position.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes regarding Serologicals' market risk
position from the information provided in our Annual Report on Form 10-K for the
fiscal year ended December 26, 1999. The quantitative and qualitative
disclosures about market risk are discussed under the caption "Market Risk" in
Item 7 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations, contained in the Form 10-K.
14
<PAGE> 15
PART II.
ITEM 1. LEGAL PROCEEDINGS
Serologicals has learned of several complaints that have been filed against
the Company and certain of its current and former executive officers and
directors. Although neither the Company nor any of the officers or directors has
been served, Serologicals has obtained copies of three of the complaints, which
allege violations of the Securities Exchange Act of 1934 including Sections
10(b) and 20(a) thereof and Rule 10b-5 promulgated thereunder. Although we
consider all of the claims in the complaints to be without merit and intend to
defend the lawsuits vigorously, we are unable to predict at this time the final
outcome of these claims.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits (numbered in accordance with Item 601 of Regulation S-K):
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<C> <C> <S>
10.17.1 -- Transition agreement between the Company and P. Anne Hoppe
10.23.1 -- Letter agreement between the Company and Desmond H.
O'Connell, Jr.
10.26 -- Letter agreement between the Company and Samuel A.
Penninger, Jr.
27 -- Financial Data Schedule (electronic filing only)
</TABLE>
b. Reports on Form 8-K:
None
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEROLOGICALS CORPORATION
(Registrant)
<TABLE>
<S> <C>
Date: May 10, 2000 By: /s/ PETER J. PIZZO, III
----------------------------------------------------
Peter J. Pizzo, III
Vice President/Chief Financial Officer
(Principal Financial and Accounting Officer)
</TABLE>
16
<PAGE> 1
EXHIBIT 10.17.1
MEMORANDUM
TO: Ann Hoppe
FROM: Desmond O'Connell
DATE: January 21, 2000 (Revised 8 Feb 2000)
RE: Transition Agreement
As discussed, during the transition period, not to exceed nine (9) months, you
will:
- - Continue to serve as the VP, Regulatory Affairs and Responsible Head for
Serologicals, Inc., continuing to perform the duties and responsibilities
associated with this role to the best of your abilities.
- - Assist in the selection, training and evaluation of the Quality
Assurance/Control management staff, ensuring personnel are trained on
critical regulatory areas.
- - Assist in the recruitment and selection of the new VP, Regulatory Affairs.
- - Assist the senior executive team with Company-wide regulatory issues, as
requested.
Upon your termination from employment by the Company without cause as
contemplated herein, you will be entitled to the provisions outlined in your
employment agreement (dated 23 Jan 97) and the provisions of the Senior
Executive Incentive Plan (dated 14 Sep 99), including nine (9) months salary
continuation ("severance period"). The severance pay will be paid to you in
equal periodic installments, in conjunction with the Company's normal payroll
cycle, with the first such installment made on the first pay date after your
date of termination. A termination of your employment on account of death,
disability or cause shall be governed by your January 23, 1997 employment
agreement.
The Company, at its sole discretion, may elect to pay you, in lieu of the
periodic installments, a single lump-sum payment that is equal to the aggregate
amount of the severance pay to which you are entitled. If made in a lump-sum
form, such single payment shall be made within thirty (30) days after your date
of termination. The date on which the Company makes the final installment
payment, or the single lump-sum payment, as applicable, to the Employee shall be
referred to below as the "Completion Date." Regardless of the manner in which
the Company elects to make these payments (i.e., installment or single
lump-sum), the Completion Date will remain the last day on which the final
installment of the periodic payment would have been made. If the Employee dies
before the Completion Date, any unpaid installments, or such lump-sum payment,
as applicable, shall be paid to the Employee's estate at the same time and in
the same amounts as such installments or payment would have been paid to the
Employee if he or she had survived.
Provided you continue to perform the duties and responsibilities associated with
your role to your current standards of performance, the Company agrees that your
termination date will be no earlier than September 15, 2000. The intent of the
parties is that 50% of the 14 Sep 99 option award will be immediately vested
upon termination of employment. With respect to the cash bonus provisions under
the 14 Sep 99 Senior Executive Incentive Plan, you shall remain eligible to
receive and shall be paid for up to the full amount provided for under this
plan, provided you have earned such bonus during the term of your employment, as
determined by the President and CEO. In the event of your death prior to the
payment of any earned bonus under the 14 Sep 99 Senior Executive Incentive Plan,
payment due to you will be made to your estate. If you are to die before the
full severance benefits have been paid to you, any unpaid installments shall be
paid to the Employee's estate at the same time and in the same amounts as such
installments or payment would have been paid to the Employee if he or she had
survived.
<PAGE> 2
In addition, the Company agrees to continue your group health insurance coverage
for the duration of your severance period; provided, however, that you continue
to pay your portion of the health insurance premiums during this period.
Additionally, the Company agrees to reimburse you up to $10,000 in fees
associated with outplacement services provided by Drake-Beam.
Unless identified above, all other terms and conditions of your employment
agreement dated January 23, 1997 remain in effect.
Please acknowledge your acceptance of this agreement by signing and dating
below.
/s/ Desmond H. O'Connell, Jr. February 10, 2000
- ------------------------------------ ---------------------
Desmond H. O'Connell, Jr. Date
/s/ P. Ann Hoppe February 10, 2000
- ------------------------------------ ---------------------
P. Ann Hoppe Date
<PAGE> 1
EXHIBIT 10.23.1
SEROLOGICALS CORPORATION
780 PARK NORTH BOULEVARD
SUITE 110
CLARKSTON, GEORGIA 30021
April 18, 2000
Desmond H. O'Connell, Jr.
971 South Lagoon Lane
Mantoloking, New Jersey 08738
Dear Desmond:
Reference is hereby made to the letter agreement between you
and Serologicals Corporation (the "Corporation") dated November 12, 1999 (the
"Letter Agreement"). In consideration of your agreeing to continue to serve as
President and Chief Executive Officer of the Corporation on an interim basis at
the pleasure of the Board of Directors on the terms and conditions outlined in
the Letter Agreement (including but not limited to the per diem compensation and
the expense reimbursement), you are hereby granted Options to purchase
thirty-seven thousand five hundred (37,500) shares of the Corporation's common
stock ($.01 par value) at an initial exercise price equal to $4.6875 (the fair
market value as of the close of business on the date hereof). The Options shall
have a term of six (6) years. Twelve thousand five hundred (12,500) of the
Options shall vest on the date hereof and twelve thousand five hundred (12,500)
Options shall vest on each of May 10, 2000 and June 10, 2000, provided that you
are serving on the date of such vesting as President and Chief Executive Officer
of the Corporation; and provided, further, that in the event of the termination
of your employment for any reason (including the hiring of a permanent Chief
Executive Officer) prior to any vesting dates, any unvested Options shall
expire. Such Options shall be issued pursuant to a stock option agreement
entered into by you and the Corporation and shall be subject to all other terms
and conditions contained in the Corporation's Amended and Restated 1994 Omnibus
Incentive Plan, including a provision providing for acceleration of the vesting
of these Options upon "change in control".
This letter is to be governed by and interpreted in accordance
with the laws of the State of Georgia applicable to agreements made and to be
performed within that State except otherwise provided herein.
If any provision of this letter shall be determined to be
invalid, illegal or unenforceable in whole or in part, all other provisions
hereof shall remain in full force and effect to the fullest extent permitted by
law.
<PAGE> 2
The Corporation advises you that it is not providing legal
advice in connection with your acceptance and execution hereof and that, if you
so elect, you should consult with an attorney prior to such execution.
Please indicate your acceptance of this extension offer by
signing in the space provided below.
Very truly yours,
/s/ Lawrence E. Tilton
---------------------------------------
Name: Lawrence E. Tilton
Title: Chairman, Compensation Committee
ACKNOWLEDGED AND AGREED:
/s/ Desmond H. O'Connell, Jr.
- -----------------------------------
Name: Desmond H. O'Connell, Jr.
<PAGE> 1
EXHIBIT 10.26
SEROLOGICALS CORPORATION
December 30, 1999
Mr. Samuel A. Penninger, Jr.
2015 Kings Cross Road
Alpharetta, GA 30022
Dear Mr. Penninger:
You have indicated to us and confirm by your signature below that you
will, not later than the day before the Company's next annual meeting of
stockholders, or earlier if requested by the Board of Directors of Serologicals
Corporation (the "Company"), resign as the Chairman of the Board of the Company
(the "Effective Date"). In connection with such resignation, we have agreed to
provide you with the severance benefits set forth in this letter agreement.
1. Severance Payments
The Company shall pay to you the aggregate sum of $275,000 on or prior
to January 14, 2000. All payments under this Section 1 shall be subject to all
applicable federal, state and local withholding taxes, if any. The Company
acknowledges receipt of your Form W-4 dated December 30, 1999. Subject to
collection of the payment provided for in this Section 1 and the compensation
provided for in Section 2, you acknowledge and agree that you are not entitled
to any other payments from the Company or its affiliates.
2. Director Compensation
You agree that should you continue serving as a director of the
Company, you irrevocably waive any right to the "lump sum" grant of stock
options under Section 4 (or any successor section) of the Company's Amended and
Restated 1995 Non-Employee Directors' Stock Option Plan (the "Option Plan") but
instead shall receive stock options in 1999 to purchase 9,000 shares of common
stock of the Company under the Company's Amended and Restated Omnibus Incentive
Plan and shall be eligible (if serving as a director) to receive annual grants
of stock options under Section 5 (or any successor section) of the Option Plan
in accordance with the terms of the Option Plan commencing in 2001.
<PAGE> 2
Mr. Samuel A. Penninger, Jr.
December 30, 1999
Page 2
Commencing on the date hereof, you will be entitled to the cash
compensation and reimbursement of expenses for attendance at board meetings
payable to non-employee directors generally.
3. General Release and Waiver
(1) You hereby release, remise, acquit and discharge the Company
and its subsidiaries, partners, directors, agents, employees, consultants,
independent contractors, attorneys, advisers, successors and assigns, jointly
and severally, from any and all claims, known or unknown, which you, your heirs,
successors, or assigns have or may have against any of such parties and any and
all liability which any of such parties may have to you whether denominated
claims, demands, causes of action, obligations, damages or liabilities arising
from any and all bases, however denominated, including but not limited to claims
under that certain severance agreement by and between Serologicals, Inc. and
you, dated as of August 3, 1993, and the letter dated April , 1996 with respect
thereto (collectively, the "Severance Agreement"), claims of discrimination
under the Civil Rights Act of 1866, as amended, the Civil Rights Act of 1991, as
amended, Title VII of the United States Civil Rights Act of 1964, as amended, 42
U.S.C. Section 1981, the Equal Pay Act, the Age Discrimination in Employment
Act, the Americans with Disabilities Act, the Employee Retirement Income
Security Act of 1974, as amended, or any other federal, Georgia or other state
or local law concerning wages, employment and discharge, and any other law,
rule, or regulation or workers' compensation or disability claim under any such
laws. Notwithstanding any other provision of this Letter Agreement, this release
is not intended to interfere with your right to file a charge with the U.S.
Equal Employment Opportunity Commission in connection with any claim you believe
you may have against the Company. However, by signing and returning the
acknowledgment copy of this Letter Agreement, you agree to waive the right to
recover damages in any proceeding you may bring before the U.S. Equal Employment
Opportunity Commission or in any proceeding brought by the U.S. Equal Employment
Opportunity Commission on your behalf. This release relates to claims arising
from and during your employment relationship with the Company or as a result of
the termination of such relationship. This release is for any relief, no matter
how denominated, including but not limited to wages, back pay, front pay, tort
claims, compensatory damages or punitive damages, in any such case whether or
not such claims have been previously asserted by you. You further agree that you
will not file or permit to be filed on your behalf any such released claim. This
release shall not apply to the obligations set forth in this Letter Agreement or
any other claims that may arise after the date on which you sign the
acknowledgment copy of this Letter Agreement.
(2) You expressly acknowledge that the severance payments being
offered to you are payments to which you may not otherwise be entitled and
constitute consideration for the foregoing release.
(3) You hereby acknowledge that you have been provided the
opportunity to take 21 days to consider whether to execute this Letter
Agreement, although the Company and you
2
<PAGE> 3
Mr. Samuel A. Penninger, Jr.
December 30, 1999
Page 3
understand that you may, if you so choose, execute this Letter Agreement prior
to the expiration of that 21 day waiting period.
(4) You understand that during the seven (7) days following your
execution of this Letter Agreement you may revoke your agreement hereto at any
time by notifying the Company in writing. You acknowledge and agree that in the
event that you revoke your agreement hereto this entire Letter Agreement will be
thereby revoked and you shall return to the Company immediately any payments or
benefits received hereunder.
4. Return of Company Property; Other Matters
(1) You represent that you have returned to the Company all of the
Company's documents (other than documents necessary for your continued service
as a director of the Company) held by you as well as keys and Company credit
cards.
(2) You agree that upon execution of this Letter Agreement, or as
otherwise mutually agreed upon by you and the Company, you will vacate your
office at the Company and the Company will no longer be providing an office or
related office services to you. You agree that upon the receipt of the payment
required by Section 1 hereof, you shall no longer be an employee of the Company.
5. Heirs and Assigns
(1) This Letter Agreement is personal to you and, without the
prior written consent of the Company, shall not be assignable by you other than
(i) by will or the laws of descent and distribution or (ii) to a trust, the sole
beneficiaries of which are any or all of you, your spouse or any of your lineal
ancestors or descendants.
(2) The terms of this Letter Agreement shall inure to the benefit
of and shall be binding on the Company and its respective successors and
assigns.
6. General Provisions
(1) This Letter Agreement constitutes the entire understanding of
the Company and you with respect to the subject matter hereof, and supersedes
all prior understandings, written or oral, including, without limitation, the
Severance Agreement, other than the Indemnification Agreement, dated as of May
9, 1995, by and between the Company and you. The terms of this Letter Agreement
may be changed, modified or discharged only by an instrument in writing signed
by the parties hereto. A failure of a party to insist on strict compliance with
any provision of this Letter Agreement shall not be deemed a waiver of such
provision or any other provision hereof. The invalidity or unenforceability of
any provision of this Letter Agreement shall in no way affect the validity or
3
<PAGE> 4
Mr. Samuel A. Penninger, Jr.
December 30, 1999
Page 4
enforceability of any other provision. In the event that any provision of this
Letter Agreement is determined to be so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
(2) You hereby represent that you have reviewed all aspects of
this Letter Agreement, that you have carefully read and understand all of the
provisions of this Letter Agreement, that you understand that in agreeing to
this document, you are releasing the Company, with prejudice, from any and all
claims you may have against the Company, that you voluntarily agree to all the
terms set forth in this Letter Agreement, and that you knowingly and willingly
intend to be legally bound by those terms. You further acknowledge that you have
or have had the opportunity to review it with an attorney.
(3) This Letter Agreement shall be construed, enforced and
interpreted in accordance with and governed by the laws of the State of Georgia
without reference to the principles of conflicts of law.
(4) The Company represents that this Agreement has been duly
authorized and executed by an officer authorized to sign this Agreement on
behalf of the Company.
Upon your signature and return of this Letter Agreement, this Letter
Agreement will be effective, enforceable and irrevocable.
Sincerely,
By: /s/ Regina Bryant
------------------------------------------
Name: Regina Bryant
Title: Director, Human Resources
Agreed to and Accepted
as of the date first above-written:
/s/ Samuel A. Penninger, Jr.
- -------------------------------------
Samuel A. Penninger, Jr.
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SEROLOGICALS CORPORATION FOR THE THREE MONTHS ENDED
MARCH 26, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> DEC-27-1999
<PERIOD-END> MAR-26-2000
<CASH> 2,152
<SECURITIES> 0
<RECEIVABLES> 22,762
<ALLOWANCES> 0
<INVENTORY> 34,403
<CURRENT-ASSETS> 68,118
<PP&E> 47,491
<DEPRECIATION> 15,101
<TOTAL-ASSETS> 150,551
<CURRENT-LIABILITIES> 22,033
<BONDS> 0
0
0
<COMMON> 259
<OTHER-SE> 109,660
<TOTAL-LIABILITY-AND-EQUITY> 150,551
<SALES> 36,335
<TOTAL-REVENUES> 36,335
<CGS> 26,333
<TOTAL-COSTS> 26,333
<OTHER-EXPENSES> 5,871
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 422
<INCOME-PRETAX> 3,709
<INCOME-TAX> 1,336
<INCOME-CONTINUING> 2,373
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,373
<EPS-BASIC> 0.10
<EPS-DILUTED> 0.10
</TABLE>
