<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 31, 1998
[ ] 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 0-68440
STRATEGIC DIAGNOSTICS INC.
(Exact name of Registrant as specified in its charter)
----------------------------
Delaware 56-1581761
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
111 Pencader Drive
Newark, Delaware 19702
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302) 456-6789
--------------------
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report: None
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 __
As of March 31, 1998 there were 13,112,949 outstanding shares of the
Registrant's common stock, par value $.01 per share.
<PAGE>
STRATEGIC DIAGNOSTICS INC.
INDEX
Item Page
- ---- ----
PART I
ITEM 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 1998 and December 31, 1997 2
Consolidated Statements of Operations - Three months ended
March 31, 1998 and 1997 3
Consolidated Statements of Cash Flows - Three months ended
March 31, 1998 and 1997 4
Notes to Consolidated Interim Financial Statements 5
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II
ITEM 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, December 31,
- ---------------------------------------------------------------------------------------------------------------------
1998 1997
- ---------------------------------------------------------------------------------------------------------------------
ASSETS (unaudited)
- ---------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 1,999 $ 2,580
Short-term investments 3,869 3,638
Receivables 2,938 3,159
Inventories 1,551 1,547
Other current assets 242 174
- ---------------------------------------------------------------------------------------------------------------------
Total current assets 10,599 11,098
- ---------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, net 500 496
OTHER ASSETS 630 634
INTANGIBLE ASSETS, net 1,762 1,832
- ---------------------------------------------------------------------------------------------------------------------
Total assets $ 13,491 $ 14,060
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 363 $ 619
Accrued expenses 464 953
Deferred revenue 247 100
Current portion of capital lease obligations 17 23
- ---------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,091 1,695
- ---------------------------------------------------------------------------------------------------------------------
CAPITAL LEASE OBLIGATIONS 23 25
- ---------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 17,500,000 shares authorized,
no shares issued or outstanding - -
Series A preferred stock, $.01 par value, 2,164,362
authorized, issued and outstanding 22 22
Common stock, $.01 par value, 35,000,000 authorized,
13,112,949 and 13,102,949 issued and outstanding
at March 31, 1998 and December 31, 1997, respectively 132 132
Additional paid-in capital 23,930 23,913
Accumulated deficit (11,682) (11,702)
Cumulative translation adjustments (25) (25)
Deferred compensation - -
- ---------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 12,377 12,340
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 13,491 $14,060
- ---------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
2
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STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months
Ended March 31,
- ------------------------------------------------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------------------------------
NET REVENUES:
- ------------------------------------------------------------------------------------------------------ ----------------
Product related $ 2,521 $ 2,402
Contract and other 375 $ 371
- ------------------------------------------------------------------------------------------------------------------------
Total net revenues 2,896 2,773
- ------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Manufacturing 1,131 919
Research and development 377 494
Selling, general and administrative 1,454 1,320
- ------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,962 2,733
- ------------------------------------------------------------------------------------------------------------------------
Operating income (loss)
(66) 40
Interest and other income (expense), net 86 69
- ------------------------------------------------------------------------------------------------------------------------
NET INCOME 20 109
BASIC NET INCOME PER SHARE
APPLICABLE TO COMMON STOCKHOLDERS $ 0.00 $ 0.01
- ------------------------------------------------------------------------------------------------------------------------
SHARES USED IN COMPUTING BASIC NET INCOME
PER SHARE APPLICABLE TO COMMON STOCKHOLDERS 13,146,504 13,056,421
- ------------------------------------------------------------------------------------------------------------------------
DILUTED NET INCOME PER SHARE
APPLICABLE TO COMMON STOCKHOLDERS $ 0.00 $ 0.01
- ------------------------------------------------------------------------------------------------------------------------
SHARES USED IN COMPUTING DILUTED NET INCOME
PER SHARE APPLICABLE TO COMMON STOCKHOLDERS 16,184,751 15,585,000
- ------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
3
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STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months
Ended March 31,
- --------------------------------------------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities :
Net income $ 20 $ 109
Adjustments to reconcile net income to
cash used in operating activities:
Depreciation and amortization 151 182
(Increase) decrease in:
Receivables 221 (1,010)
Inventories (4) (117)
Other current assets (68) 77
Note receivable and other assets 4 (2)
Increase (decrease) in :
Accounts payable (256) (451)
Accrued expenses (489) (697)
Deferred revenue 147 (8)
- --------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (274) (1,917)
Cash Flows from Investing Activities :
Purchase of property and equipment (85) (15)
Short-term investment activity (231) 1,679
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (316) 1,664
Cash Flows from Financing Activities:
Proceeds from exercise of incentive stock options 17 -
Repayments on capital lease obligations (8) (20)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 9 (20)
Net Decrease in Cash and Cash Equivalents (581) (273)
Cash and Cash Equivalents, Beginning of Period 2,580 917
- --------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $ 1,999 $ 664
- --------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Disclosure :
Cash paid for interest 9 8
- --------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
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STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(in thousands, except share and per share data)
(unaudited)
1. BACKGROUND:
Business
Strategic Diagnostics Inc. (the "Company") develops, manufactures and
markets immunoassay based test kits for rapid and inexpensive detection of
a wide variety of substances in the water quality, industrial and
agricultural market segments.
Business Risks
The Company is subject to risks of entities in similar stages of
development. These risks include the Company's ability to successfully
develop, produce and market its products and its dependence on its key
collaborative partners and management personnel. Management believes that
its current cash resources are sufficient to fund operations for at least
the next 18 months.
Basis of Presentation and Interim Financial Statements
The accompanying balance sheets at December 31, 1997 and March 31, 1998,
and the statements of operations for the three months ended March 31, 1997
and 1998 and cash flows for the three months ended March 31, 1997 and 1998
include the consolidated financial statements of the Company. All
intercompany balances and transactions have been eliminated in
consolidation.
The accompanying unaudited consolidated interim financial statements of
the Company have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission regarding financial
reporting. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements and should be read in conjunction with the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997. In
the opinion of management, the accompanying financial statements include
all adjustments (all of which are of a normal recurring nature) necessary
for a fair presentation. The results of operations for the three months
ended March 31, 1998 are not necessarily indicative of the results expected
for the full year.
5
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Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. NET INCOME PER SHARE APPLICABLE TO COMMON STOCKHOLDERS:
Net income per share applicable to common stockholders for all periods
presented is calculated by dividing net income applicable to common
stockholders by the weighted average number of shares outstanding. All
shares and per share amounts have been adjusted retroactively to give
effect to the equivalent number of shares received by the SDI stockholders
in the EnSys Merger discussed in Note 3. This retroactive adjustment is
reflected in the net income per share calculations and the Notes to the
Consolidated Interim Financial Statements.
Net income applicable to common stockholders is the sum of the net income
less the accretion of the redeemable convertible preferred stock
liquidation value. Effective December 30, 1996, the redeemable convertible
preferred stock was converted into shares of a newly issued class of Series
A Preferred Stock (Note 5). No additional accretion will be recorded.
3. MERGERS AND ACQUISITIONS
Merger with EnSys Environmental Products, Inc.
On December 30, 1996, SDI merged with and into EnSys (the "Merger"). The
Merger agreement provided that SDI common and preferred stockholders
receive .7392048 shares of EnSys stock for each share of SDI Common or
Preferred Stock. This resulted in the former SDI stockholders owning
5,780,136 shares of EnSys Common Stock and 2,164,362 shares of EnSys Series
A Convertible Preferred Stock or approximately 52% of the 15,219,532 voting
shares outstanding after the Merger. In addition to the Common and
Preferred Stock noted above, SDI option and warrant holders received
options and warrants to purchase .7818026 shares of EnSys Common Stock for
each option or warrant held. Upon consummation of the Merger, SDI option
and warrant holders received options and warrants for the purchase of
383,216 and 599,644 shares, respectively, of EnSys Common Stock. The
difference in exchange ratios between stockholders and option and warrant
holders is due to the stock preferences received by SDI's preferred
stockholders upon exchange of their shares. The cost of receiving these
preferences was shared by all SDI stockholders upon exchange of their
shares, but was not borne by the SDI option and warrant holders.
The Merger was accounted for as a purchase transaction with SDI as the
acquiring company. Based on the $1.75 per share closing price of EnSys
Common Stock on October 14, 1996, (date of transaction public announcement)
6
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the estimated total purchase price of EnSys was $16,133, which consists of
the following: (i) the $12,731 market value of the outstanding shares of
EnSys Common Stock (7,275,034 shares multiplied by $1.75 per share), (ii)
the $328 fair value of the outstanding options and warrants to purchase
EnSys Common Stock and (iii) estimated transaction costs of approximately
$3,074. Since SDI is the acquiror for accounting purposes, the EnSys
options and warrants are required to be valued for purchase accounting
purposes as if they are additional consideration in the transaction. The
valuation for EnSys options and warrants was provided by an investment
banking firm using a traditional valuation approach. Of the approximately
$3,074 of estimated transaction costs, approximately $457 relates to
severance payments to former EnSys employees, $362 to facility termination
and moving and $36 to employee relocation. In connection with the Merger,
approximately 35 EnSys employees were terminated in December 1996.
In connection with the Merger, all identifiable assets acquired by SDI,
including intangible assets, were assigned a portion of the cost of the
acquired company based on an independent valuation of EnSys' assets. Such
allocation included the identification and evaluation of each development
project to determine if technological feasibility had been achieved and if
there were any alternative future uses. EnSys' primary research and
development focus, the "One Step" assay, is currently under development. If
such technology is not fully developed on a timely basis, the existing
products may not be competitive enough to satisfy the technical
requirements of a changing market or be cost effective despite
demonstration of research prototypes by EnSys. The costs of developing the
remaining technology for the "One Step" assay is significant. As a result
of the substantial time and effort to produce the product in accordance
with all functions and specification, it has been determined that
technological feasibility has not been achieved. In addition, since
alternative uses of this developmental technology do not exist, the costs
of such technology have been charged to expense in accordance with SFAS No.
2, "Accounting for Research and Development Costs," ("SFAS No. 2"). Based
on the foregoing purchase price, the amount allocated to acquired research
and development of $4,353 was charged to the statement of operations at the
effective date of the Merger. The remaining amount of intangible assets of
approximately $1,167 includes approximately $472 for developed technology,
$55 for assembled workforce and $640 for goodwill. The intangible assets
purchased are being amortized on a straight-line basis over 7-10 years.
Amortization expense included in selling, general and administrative in the
accompanying consolidated statement of operations, for the three months
ended March 31, 1998 is approximately $34 related to the merger.
Acquisition of Ohmicron Corporation
On August 30, 1996, SDI acquired Ohmicron and certain of its wholly owned
subsidiaries for 2,268,456 shares of common stock. Prior to the
acquisition, Ohmicron spun-off certain assets and liabilities of another of
its wholly-owned subsidiaries, Ohmicron Medical Diagnostics, Inc. The
acquisition of Ohmicron was recorded as a purchase transaction accounting
using the fair market value of the SDI common stock issued to Ohmicron. The
total purchase price of approximately $4,503, including transaction and
7
<PAGE>
other costs of $533, has been allocated to the fair market value of the
assets acquired and liabilities assumed. Based on the foregoing estimated
purchase price, the amount allocated to acquired research and development
of $3,913 was charged to the statement of operations at the time of the
acquisition. In connection with the Ohmicron transaction, all identifiable
assets acquired including intangible assets were assigned a portion of the
cost of the acquired company based on an independent valuation of
Ohmicron's assets. Such allocation included the evaluation of each
development project identified to determine if technological feasibility
had been achieved and if there were any alternative future uses. Based on
this analysis, it has been determined that technological feasibility has
not been achieved, and that alternative uses of this developmental
technology do not exist. The cost of such technology has therefore been
charged to expense in accordance with SFAS No. 2. The remaining amount of
intangible assets of approximately $590 included approximately $384 for
developed technology, $103 for assembled workforce and $103 for goodwill.
The intangible assets purchased are being amortized on a straight-line
basis over 7-10 years. Amortization expense included in selling, general
and administrative in the accompanying consolidated statement of operations
for the three months ended March 31, 1998 is approximately $19. The fair
market value of the common stock issued to Ohmicron was based on several
factors including recent equity transactions, as well as the subsequently
negotiated Merger.
TSD BioServices Dissolution
In October 1996, SDI entered into an agreement with Taconic Farms, Inc.
("Taconic") to dissolve TSD BioServices, a partnership between Taconic and
SDI and to liquidate its assets, in connection with which certain of the
rights and assets were distributed to SDI. Upon dissolution, certain rights
and assets formerly owned by the joint venture were placed in a
wholly-owned subsidiary of SDI. The agreement to dissolve TSD BioServices
provides that each of the former partners receive rights to perform
services that were considered to be either a core part of that partner's
expertise, or an area in which the partner wanted to increase its market
presence or technical competency. The dissolution agreement also provided
that certain services previously provided by TSD BioServices, such as
ascites production and sales and marketing, would be subcontracted to
Taconic by SDI in the future based on established fees set annually. For
accounting purposes, this transaction was treated as a purchase, with the
consideration provided being SDI's investment of $338 which approximated
the fair market value of the assets received.
8
<PAGE>
4. SHORT-TERM INVESTMENTS:
The Company considers its investments as being available for sale in
accordance with SFAS No. 115 "Accounting for Certain Investments in Debt
and Equity Securities."
5. SERIES A PREFERRED STOCK:
In June 1993, the Company sold 1,267,208 shares of redeemable convertible
preferred stock and received proceeds of $3,000 less $47 of transaction
costs. In connection with the 1996 financing, the Company converted the
$1,500 of notes payable and $124 of accrued interest into 685,952 shares of
redeemable convertible preferred stock at $2.37 per share and received an
additional investment of $500 for the purchase of 211,202 shares less
transaction costs of $27. All such shares were redeemable with cumulative
dividends, at the option of the holders, beginning in 1998. Dividends have
been accreted through the Merger (Note 3).
In connection with the Merger, the redeemable convertible preferred stock
plus cumulative dividends were converted into 2,164,362 shares of a newly
issued class of Series A Preferred Stock ("Series A"). The Series A has no
redemption provisions outside the control of the Company. As a result, the
Series A is now classified as a component of stockholders' equity.
The Series A is convertible into one share of Common Stock at the option
of the holder at any time, or at the option of the Company if the closing
share price of the Company's Common Stock exceeds $4.50 per share for a
period of 45 business days. The Series A carries an aggregate liquidation
preference of $6,378. The Series A contains no annual dividend provisions
and is only redeemable in the event the Company converts the Series A into
securities of a lesser value, as defined.
9
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
The information included in this report on Form 10-Q contains forward
looking statements reflecting the current expectations of Strategic Diagnostics
Inc. and its subsidiaries (the "Company"). Investors are cautioned that all
forward looking statements involve risks and uncertainties that may cause actual
results to differ from those anticipated at this time. Such risks and
uncertainties include, without limitation, changes in demand for products,
delays in product development, failure to obtain necessary regulatory approvals,
modifications to development and sales relationships, the ability to integrate
the acquired businesses and achieve anticipated synergies, and competition.
Background
The Company is the entity resulting from the combination of EnSys
Environmental Products, Inc. ("EnSys"), Ohmicron Corporation ("Ohmicron"), TSD
BioServices ("TSD") and Strategic Diagnostics Inc. ("SDI"). On August 30, 1996
Ohmicron was acquired by SDI, with certain Ohmicron shareholders and note
holders receiving shares of SDI common stock. On October 1, 1996 SDI entered
into an agreement to dissolve TSD BioServices, a partnership, between Taconic
Farms, Inc. and SDI and to liquidate its assets, in connection with which
certain rights and assets formerly owned by the partnership were distributed to
SDI and placed in a wholly owned subsidiary of SDI. On December 30, 1996 SDI was
merged with and into EnSys. The surviving entity was then renamed Strategic
Diagnostics Inc. Each of the transactions was accounted for as a purchase
transaction with SDI as the acquiring company and, therefore, the surviving
company for financial reporting purposes.
EnSys was formed in 1987 to develop proprietary biotechnology based
test systems designed for fast and inexpensive detection of various chemicals in
soil and water samples. EnSys raised approximately $30 million in equity
financing, including approximately $16 million from the sale of 1,800,000 shares
of EnSys common stock in its initial public offering in October 1993. Since
1991, EnSys commercialized eleven immunoassay test kits and four other test kits
for the detection of various environmental contaminants. EnSys marketed and sold
these test kits and other associated products and services to environmental
consulting and engineering firms, hazardous waste processing firms,
environmental testing laboratories, and various state and federal agencies
through distributors and a regionally based direct sales force in the US. EnSys
also marketed and sold its products in Europe through EnSys (Europe) Limited, a
wholly owned subsidiary of EnSys. In March 1996, EnSys acquired from Millipore,
Inc. certain assets, which consisted primarily of inventory, work-in-process,
equipment, intellectual property rights, contract rights and customer lists
related to Millipore's EnviroGard(TM) product line for $1 million and 1,100,000
shares of EnSys common stock.
Ohmicron was founded in 1984 and began marketing its RaPID Assay(R)
products in 1991 to the same general market and in the same fashion as
previously described for EnSys.
10
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Since its inception in 1990, SDI has focused on using proprietary
technology and know-how to develop, manufacture and market immunoassay test kits
for applications primarily in the water quality, industrial testing and
agricultural markets. Commercial operations were initiated with a contact with a
corporate partner (a large integrated chemical company) to develop an
immunoassay test to detect certain corrosion causing bacteria. This product was
introduced in late 1991 and SDI purchased all rights and technology related to
this product in 1994.
In February 1992, SDI entered into a $3.9 million research and
development partnership with EM Industries, Inc. (an affiliate of Merck KGaA,
Darmstadt, Germany) for the development and manufacture of a line of immunoassay
test kits capable of identifying and quantifying targeted priority pollutants.
The first products under this agreement were introduced in 1993. Through August
1996, these products were manufactured by SDI and marketed by EM Industries,
Inc. In September 1996, EM Industries, Inc. and SDI reached an agreement whereby
the February 1992 agreement was terminated, together with EM Industries, Inc.'s
marketing rights thereunder, in exchange for certain specified royalty payments
to EM Industries, Inc. and shares of SDI common stock. The marketing activities
with respect to such products are now the responsibility of the Company.
Since 1992, the Company has entered into research and development
agreements with multiple corporate partners that have led to the introduction of
various products to the water quality, industrial testing, agricultural and
other markets. These agreements generally provide that sales and marketing costs
associated with a new product are borne by the corporate partner. In addition,
the Company currently sells directly other products that it has developed or
acquired.
Results of Operations
Three Months Ended March 31, 1998 vs. March 31, 1997
Total net revenues increased during the three month period ended March
31, 1998 over the three month period ended March 31, 1997 by $123,000 or 4%.
Product related sales increased $119,000 or 5%. This increase is due to 39%
growth in the agricultural product category as such revenues rose to $317,000
for the period ended March 31, 1998, versus $228,000 in this category for the
first quarter of 1997. All other product revenues increased slightly, largely
due to higher sales of the Macra product, antibodies and royalties.
Total operating expenses for the period ended March 31, 1998 increased
by $229,000 or 8% over the period ended March 31, 1997. Manufacturing costs
increased $212,000 or 23%, in the first quarter of 1998 over the first quarter
of 1997. This increase reflects the increased manufacturing staff added during
the latter portion of 1997 as product volume grew. Research and development
expenses decreased $117,000 or 24% in the first quarter of 1998 versus the first
quarter of 1997. This decrease is due to lower costs for lab supplies and other
11
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consumables. Selling, general and administrative expenses increased $134,000 or
10% in the first quarter of 1998 or versus the first quarter of 1997. This
increase is attributable to the higher levels of business activity.
Net interest income increased $17,000 or 25%. This increase is
attributable to a higher level of invested balances during the quarter ended
March 31, 1998, as compared to the quarter ended March 31, 1997.
Liquidity and Capital Resources
The Company's working capital which consists principally of cash, cash
equivalents and marketable investments, increased $105,000 from December 31,
1997 to $9,508,000 at March 31, 1998. Cash, cash equivalents and short-term
investments decreased $350,000 to $5,868,000. This decrease was used to reduce
accounts payable and accrued expenses by $745,000, and was net of increases
attributable to changes in other current assets and liabilities of $300,000 and
net income of $20,000.
The Company believes that its current cash, cash equivalents and
marketable securities will be sufficient to meet its working capital and funding
needs for at least the next 18 months. However, the Company's ability to meet
its long-term working capital and capital expenditure requirements will depend
on a number of factors, including the success of the Company's current and
future products, the focus and direction of the Company's research and
development programs, competitive and technological advances, future
relationships with corporate partners, government regulation and the Company's
marketing and distribution strategy. Accordingly, there can be no assurance that
the Company will be able to meet its long-term requirements.
12
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule (in electronic format only).
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the registrant during the quarter
covered by this report.
13
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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.
STRATEGIC DIAGNOSTICS INC
-------------------------
(Registrant)
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
/s/ RICHARD C. BIRKMEYER President and Chief Executive Officer May 12, 1998
- ------------------------ (Principal Executive Officer)
Richard C. Birkmeyer
/s/ ARTHUR A. KOCH, JR. Vice President and Chief Financial Officer May 12, 1998
- ------------------------ (Principal Financial Officer)
Arthur A. Koch, Jr.
</TABLE>
_______________________________________________________________________________
14
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<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<PERIOD-START> JAN-01-1998
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1,000
<CASH> 1,999
<SECURITIES> 3,869
<RECEIVABLES> 2,938
<ALLOWANCES> 0
<INVENTORY> 1,551
<CURRENT-ASSETS> 10,599
<PP&E> 500
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,491
<CURRENT-LIABILITIES> 1,091
<BONDS> 0
0
22
<COMMON> 132
<OTHER-SE> 12,223
<TOTAL-LIABILITY-AND-EQUITY> 13,491
<SALES> 2,521
<TOTAL-REVENUES> 2,896
<CGS> 0
<TOTAL-COSTS> 1,131
<OTHER-EXPENSES> 1,831
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 20
<INCOME-TAX> 0
<INCOME-CONTINUING> 20
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
