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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

Commission file Number: 0-26126

SEROLOGICALS CORPORATION
(Exact Name of Registrant as Specified in its Charter)

        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 ý    No o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ý    No o

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

INDEX

SEROLOGICALS CORPORATION AND SUBSIDIARIES

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PART I.

Item 1. Financial Statements

SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and in thousands, except share and per share amounts)

The accompanying notes are an integral part of these consolidated financial statements.

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SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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SEROLOGICALS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 28, 2004
(UNAUDITED)

1.     ORGANIZATION AND BASIS OF PRESENTATION

Organization

        Serologicals Corporation, a Delaware corporation (together with its subsidiaries, the "Company" or "Serologicals"), is a global provider of biological products and enabling technologies to life science companies. The Company's products are essential for the research, development and manufacture of biologically based life science products. The Company's products and technologies are used in a wide variety of applications within the areas of oncology, hematology, immunology, cardiology and infectious disease research and detection, as well as in the study of molecular biology. The Company's customers include many of the leading life sciences companies throughout the world.

        The Company conducts operations of its research segment through Chemicon International ("Chemicon"), which was acquired effective April 1, 2003. Chemicon provides a broad range of specialty reagents, kits, antibodies and molecular biology tools to biotechnology, pharmaceutical and academic researchers working in the areas of neuroscience, infectious diseases, stem cell biology, cancer, drug discovery and proteomics. Chemicon is also a leading supplier of monoclonal antibodies, conjugates, antibody blends and kits for use in diagnostic laboratories. Chemicon, headquartered in Temecula, California, has manufacturing and distribution operations in California, Australia and the United Kingdom.

        The Company manufactures cell culture and diagnostic products in facilities located in North America and the United Kingdom. The Company operates protein fractionation facilities located in Kankakee, Illinois and Toronto, Ontario and has a third facility under construction in Lawrence, Kansas. These facilities provide a variety of highly purified proteins used in diagnostic reagents and cell culture media components for use in the development and manufacturing of biotechnology products. Additionally, these facilities produce a line of highly purified animal proteins known as cell culture media components that are used primarily by biopharmaceutical and biotechnology companies as nutrient additives in cell culture media. One example of these media components is EX-CYTE®, which is produced through a patented manufacturing process. The Company manufactures monoclonal antibodies in its Scotland facility. The monoclonal antibodies are used in diagnostic products such as blood typing reagents and in controls for diagnostic tests for certain infectious diseases. The Company also operates a facility in Milford, Massachusetts that includes a central distribution facility as well as operations related to production of substrates used in diagnostic assays.

Basis of Presentation

        The accompanying unaudited 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 accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, which are of a normal recurring nature, to present 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

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audited consolidated financial statements as of December 28, 2003 and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 28, 2003.

        Certain prior year amounts have been reclassified to conform to the current year presentation.

Inventories

        Inventories are stated at the lower of cost or market, cost being determined on a first-in, first-out basis. Market for product inventories is net realizable value.

        Inventories at March 28, 2004 and December 28, 2003 consisted of the following (in thousands):

Derivative Financial Instruments

        On October 17, 2003, the Company entered into interest rate swap agreements relating to $70.0 million principal amount of its 4.75% Convertible Senior Subordinated Debentures due August 15, 2033 (the "Debentures"). The objective of the swaps are to convert the 4.75% fixed interest rate on this portion of the Debentures to a variable interest rate based on the 6-month LIBOR at the end of each interest period plus a spread of 66 basis points. The gain or loss from changes in the fair value of the swaps is expected to offset the gain or loss from the changes in the fair value of the cash flows from the interest payments of 54% of the Debentures throughout the expected life of the Debentures. At March 28, 2004 and December 28, 2003, the fair market value of the interest rate swaps was $2.2 million and $0.9 million, respectively. The Company analyzed ineffectiveness on the swaps at March 28, 2004 and determined that ineffectiveness was immaterial. This interest rate swaps were designated and qualified as a fair value hedge in accordance with Statement of Financial Accounting Standards No. 133, "Accounting for Derivative and Hedging Activities" and related interpretations and amendments. The fair value of the interest rate swaps was included in "Other assets" in the accompanying Consolidated Balance Sheets. The Company also adjusts the carrying amount of the Debentures by the changes in the fair value of the swaps.

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 Debentures that are dilutive and the weighted average number of shares includes the dilutive effect of stock options, stock awards, and Debentures. The dilutive effect of the Debentures were included in diluted earnings per share for the first time during the quarter ended March 28, 2004 as one of the conversion triggers was met during the period.

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        The following table sets forth the calculation of basic and diluted earnings per share (in thousands, except per share amounts):

        For the quarters ended March 28, 2004 and March 30, 2003, the effect of diluted shares associated with options totaling approximately 0.6 million and 1.3 million shares, respectively, were excluded from the calculation of diluted shares outstanding as the option price exceeded the average market price for the Company's common stock during the period and thus were considered anti-dilutive.

Stock-Based Compensation Plan

        At March 28, 2004, the Company had three stock-based employee compensation plans. The Company accounts for these plans under the recognition and measurement principles of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. No stock-based employee compensation cost was reflected in net income, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting

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for Stock-Based Compensation," to stock-based employee compensation (in thousands, except per share amounts):

        Under SFAS No. 123, the fair value of stock-based awards is calculated through the use of option-pricing models, even though such models were developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which differ significantly from the Company's stock option grants. These models also require subjective assumptions, including future stock price volatility and expected lives of each option grant.

Comprehensive Income

        The following table sets forth the calculation of comprehensive income for the periods indicated below (in thousands):

2.     ACQUISITION

        Effective April 1, 2003, Serologicals completed the acquisition of 100% of the common stock of Chemicon, a privately-owned company based in Temecula, California. The acquisition of Chemicon greatly expanded the Company's range of products and customers within the research market. The purchase price of $95 million in cash was initially funded with the proceeds from an $82.5 million five-year term loan and cash on hand. The results of operations of Chemicon are included in the Company's financial statements beginning April 1, 2003.

        The Company has completed its evaluation of a restructuring of certain components of Chemicon's operations, which was contemplated at the date of acquisition. As a result, certain European operations will be closed and a portion relocated. The Company accrued $1.8 million related to lease termination and relocation costs. This amount was recorded to goodwill as an adjustment to the purchase price of Chemicon in accordance with Emerging Issues Task Force ("EITF") 95-3, "Recognition of Liabilities in

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Connection with a Purchase Business Combination." The Company expects to complete the shutdown and relocation in the first half of 2005.

        The following table summarizes the Company's results of operations on an actual basis for the quarter ended March 28, 2004 and on a pro forma basis for the quarter ended March 30, 2003 as if the acquisition of Chemicon had occurred at the beginning of the quarter ended March 30, 2003. These results do not purport to represent what the results of operations for Serologicals would have actually been or to be indicative of the future results of operations of Serologicals (in thousands, except per share amounts).

3.     DISCONTINUED OPERATIONS

        On January 15, 2004, the Company completed the divestiture of its therapeutic plasma business to Gradipore Limited ("Gradipore"), a company based in Sydney, Australia, effective December 28, 2003. As a result, this business was classified as a discontinued operation as it met the criteria prescribed by SFAS No. 144, "Impairment of Long-Lived Assets and Discontinued Operations." The therapeutic plasma business consisted of the Company's ten plasma collection centers and a central testing laboratory. The Company received $3.5 million in cash at closing. Gradipore also assumed $1.3 million of current and long term liabilities of the business. The balance consisted of two secured promissory notes: a short term note in the amount of $1.5 million bearing interest at the London Interbank Offered Rate ("LIBOR") plus 5% due on December 31, 2004, and a long term note ("Long Term Note"), which was recorded at its estimated net realizable value of $6.4 million. The Long Term Note is non-interest bearing and includes payment terms of $1.0 million on July 31, 2004 and quarterly payments of $1.1 million beginning on April 30, 2005 through July 31, 2007. These payments may be partially deferred until July 31, 2007 if certain revenue goals are not achieved by the therapeutic plasma business, as defined in the stock purchase agreement relating to the divestitures. The Long Term Note also includes a 15% per annum discount for any amounts paid prior to their due date.

        At December 28, 2003, the assets of discontinued operations have been reclassified on the accompanying Consolidated Balance Sheets to reflect the anticipated realization based on the

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maturities of the net realizable value of the total consideration. The following table presents the assets and liabilities of discontinued operations as of December 28, 2003 (in thousands):

        The following table presents results of operations from discontinued operations for the quarter ended March 30, 2003 (in thousands):

4.     SEGMENT INFORMATION

        SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" defines operating segments to be those components of a business for which separate financial information is available that is regularly evaluated by management in making operating decisions and in assessing performance. SFAS No. 131 further requires that the segment information presented be consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting in making internal operating decisions. The operations of the Company's subsidiaries are organized into three primary operating segments: Research Products ("Research"), Cell Culture Products ("Cell Culture") and Diagnostic Products ("Diagnostics"). These segments are based primarily on the differing production, manufacturing and other value-added processes performed by the

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Company with respect to the products and, to a lesser extent, the differing end use and customer bases to which each reportable segment sells its products.

        The activities of the Research segment primarily include manufacturing and sales of reagents, cell-based assays, antibodies and molecular biology products. The Cell Culture segment products consist of cell culture media and supplements for drug development, biomanufacturing and life science research. The Company's most significant product within this segment is EX-CYTE®. Other key products within the Cell Culture segment include proprietary bovine serum albumin, human recombinant insulin and other products used principally in mammalian cell culture. The key products within the Diagnostic segment are monoclonal antibodies used in blood typing reagents and diagnostic antibodies.

        The Company's segment information for the quarters ended March 28, 2004 and March 30, 2003 is as follows (in thousands):

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 about Serologicals Corporation and its subsidiaries (collectively, "Serologicals" or the "Company" or "we" or "our" or "us") that are subject to risks and uncertainty. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by the use of words such as "may," "will," "expect," "anticipate," "intend," "estimate," "plan," "believe," or "continue" and other words of similar meaning or future or conditional verbs such as "will," "should," "would," and "could." Forward-looking statements include discussions of our expected business outlook, future operations, financial performance, pending acquisitions, financial strategies, future working capital needs and projected industry trends, as well as our strategies for growth, product development, regulatory approvals and compliance, market position and expenditures.

        Forward-looking statements are only predictions and are not guarantees of performance. Forward-looking statements are based on current expectations of future events and are based on our current views and assumptions regarding future events and operating performance. These assumptions could prove inaccurate, or unknown risks or uncertainties could materialize, which could cause our actual results to differ materially from our expectations or predictions. Many of these factors are beyond our ability to control or predict.

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        Factors that could cause our actual results to differ materially include:

•

the risks and other factors described under the caption "Cautionary Statements" in the Company's Annual Report on Form 10-K for the year ended December 28, 2003;



•

our ability to implement our growth strategy;



•

our ability to manage our growth and expansion;



•

our ability to raise capital;



•

our ability to find acceptable acquisitions in the future and to integrate and manage them;



•

our ability to compete effectively within our industry;



•

our dependence on the success of the customers of our EX-CYTE® product in developing and marketing existing and new drugs using the product;



•

our ability to complete validation of the new Bio-Process Manufacturing Facility during 2004;



•

our ability to comply with regulatory, customer and industry regulations and guidelines;



•

our ability to identify new commercial product opportunities;



•

our ability to protect our intellectual property;



•

our customers' dependence on research budgets and government funding, which may be reduced;



•

fluctuations in foreign currency exchange rates;



•

the effect on our results of operations of the loss of any significant customers or reduced orders from significant customers, including reductions or delays in research and development budgets and in government funding; and



•

adoption of or changes in, domestic and foreign laws and regulations that could affect our ability to maintain existing licenses and approvals.

        You should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any of them in light of new information or future events. The factors listed above (in addition to other possible factors not listed) could affect our actual results and cause these results to differ materially from those expressed in forward-looking statements made by us or on our behalf.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

        Serologicals, with facilities in North America, Europe, and Australia, is a global provider of biological products and enabling technologies to life science companies. Our products are essential for the research, development and manufacturing of biologically based life science products. Our products and technologies are used in a wide variety of applications within the areas of oncology, hematology, immunology, cardiology and infectious diseases, as well as in the study of molecular biology. Our customers include many of the leading life science companies throughout the world.

        Our business is organized into three operating segments: Research Products, Cell Culture Products and Diagnostic Products. These segments are based primarily on the differing production, manufacturing and other value-added processes that we perform with respect to the products and to a lesser extent, the differing nature of the ultimate end use of our products. Prior to our decision to exit the therapeutic plasma business, the Company reported a fourth operating segment, Therapeutics

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Products, for the first two quarters of fiscal 2003. The therapeutics plasma business is now reported as discontinued operations.

        We conduct the operations of our Research Products segment through Chemicon International ("Chemicon"), which we acquired in April 2003. Chemicon provides a broad range of specialty reagents, kits, antibodies and molecular biology tools to biotechnology, pharmaceutical and academic researchers working in the areas of neuroscience, infectious diseases, stem cell biology, cancer, drug discovery and proteomics. Chemicon is also a leading supplier of monoclonal antibodies, conjugates, antibody blends and molecular biology-based detection kits for use in diagnostic laboratories. Chemicon, headquartered in Temecula, California, has manufacturing and distribution operations in California, Australia and the United Kingdom.

        We manufacture our Cell Culture and Diagnostic Products in facilities located in North America and the United Kingdom. We operate protein fractionation facilities located in Kankakee, Illinois and Toronto, Ontario and have a third facility under construction in Lawrence, Kansas. These facilities provide a variety of highly purified proteins used in diagnostic reagents and cell culture media components for use in the development and manufacturing of biotechnology products. Additionally, these facilities produce a line of highly purified animal proteins known as cell culture media components that are used primarily by biopharmaceutical and biotechnology companies as nutrient additives in cell culture media. The Company's most significant product within the Cell Culture segment is EX-CYTE®, which is produced through a patented manufacturing process. Other key products within the Cell Culture segment include proprietary bovine serum albumin ("BSA"), human recombinant insulin ("Insulin") and other products used principally in mammalian cell culture.

        We manufacture monoclonal antibodies in our Scotland facility. These monoclonal antibodies are used in diagnostic products such as blood typing reagents and in controls for diagnostic tests for certain infectious diseases. We operate a facility in Milford, Massachusetts that includes a central distribution facility as well as operations related to production of substrates used in diagnostic assays. The key products within the Diagnostic segment are monoclonal antibodies used in blood typing reagents and diagnostic antibodies.

Critical Accounting Policies

        There have been no material changes regarding Serologicals' critical accounting policies from those discussed under the caption "Critical Accounting Policies" in "Item 7-Management's Discussion and Analysis of Financial Conditions and Results of Operations" in our Annual Report on Form 10-K for the year ended December 28, 2003.

Results of Operations

        The following discussion and analysis of Serologicals' financial condition and results of operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes thereto.

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        The following table sets forth certain operating data of Serologicals as a percentage of net sales for the periods indicated below:

        The following table sets forth a breakdown of revenue and gross profit contributed by segment for the quarters ended March 28, 2004 and March 30, 2003 (dollars in thousands):

NET SALES AND GROSS PROFIT

Consolidated

        Consolidated net sales and gross profit increased $14.5 million and $7.7 million, respectively, primarily due to increased sales as a result of the acquisition of Chemicon in April 2003. Gross margins declined 1% during the quarter ended March 28, 2004 compared to the quarter ended March 30, 2003, primarily due to expenses associated with a production halt at our Toronto facility early in the first quarter of 2004 due to a "mad-cow" scare in Washington State, impact of operating our Scotland facility at a lower utilization in order to more accurately match inventory levels to anticipated customer demand and effects of foreign currency.

Research Products

        Sales and gross profit of Research Products in the first quarter of 2004 increased $14.1 million and $8.5 million, respectively, over the prior year quarter as a result of the Chemicon acquisition in April 2003. Chemicon's sales and gross profit for the first quarter of 2003 (prior to the acquisition)

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were $11.3 million and $7.0 million, respectively. Chemicon reported sales increases of 16% in the United States, 26% in Europe and 53% in Asia for the first quarter of 2004 compared to the first quarter of 2003. Specific product lines that reported strong growth over the prior year quarter were apoptosis, cell signaling and bulk reagents as well as custom services and intellectual property licensing. Changes in foreign currency exchange rates increased dollar-denominated Research Products' sales by $0.7 million in the first quarter of 2004.

Cell Culture Products

        Sales of Cell Culture Products increased 5% to $14.4 million in the first quarter of 2004 compared to the first quarter of 2003. Sales of EX-CYTE® in the first quarter of 2004 were $3.6 million, compared to $4.6 million in the first quarter of 2003. The decrease was primarily due to timing of customer shipments in 2004. Sales of the Company's proprietary BSA were $4.3 million for each of the first quarters of 2004 and 2003. Sales of insulin increased $2.4 million, or 84%, from $2.8 million in the first quarter of 2003 to $5.2 million in the first quarter of 2004. Insulin sales increased primarily because of additional availability of this product from our supplier and the exiting of one of the Company's competitors from this market space. The Company expects insulin sales to continue to grow in 2004 but at a more modest rate than experienced in the third and fourth quarters of 2003 and the first quarter of 2004.

        Gross margins for Cell Culture Products decreased in the current quarter primarily due to product mix and expenses of approximately $0.5 million or 4% of Cell Culture sales related to a production halt at our Toronto facility early in the first quarter of 2004 due to a "mad-cow" scare in Washington State. The production halt resulted from our inability to transport raw materials from our U.S. supplier to our facility in Toronto. As a result, much of our Toronto plant was idle for approximately a month until all of the importation clearances from the Canadian government were obtained. The plant is now fully operational and running near capacity and we expect to meet customer demand for the remainder of 2004.

Diagnostic Products

        Sales of Diagnostic Products were down slightly in the first quarter of 2004 compared to the first quarter of 2003. Sales of diagnostic monoclonal antibodies and related products were $5.4 million in the first quarter of 2004, compared with $5.3 million in the first quarter of 2003. Sales of disease state antibodies, detection products and other diagnostic products decreased during the first quarter of 2004 from the same period in the prior year, primarily because the prior year's first quarter included sales of certain Diagnostic Products that were sourced from our donor center network, which was sold as part of the therapeutic plasma divestiture. Gross margins on Diagnostic Products were 44% for the first quarter of 2004 compared with 54% in the first quarter of 2003. The decline in gross margin is due primarily to the impact of operating our Scotland facility at a lower utilization in order to more accurately match inventory levels to anticipated customer demand, customer mix and the effects of foreign currency. The Company expects Diagnostic gross margin to be lower than those experienced in the prior year, but trend towards 2003 Diagnostic's gross margin over the remainder of the year on a quarter to quarter basis. Changes in foreign currency exchange rates increased dollar-denominated Diagnostic Products' sales and gross profit by $0.4 million and $30,000, respectively, in the first quarter of 2004 as compared to the first quarter of 2003.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

        Selling, general and administrative ("SG&A") expenses increased $4.7 million from $7.0 million (32% of net sales) in the first quarter of 2003 to $11.7 million (32% of net sales) in the same period of 2004, primarily due to the acquisition of Chemicon in April 2003. Chemicon accounted for $5.5 million of SG&A in the first quarter of 2004. The increase attributable to Chemicon was partially offset as the

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Company continued to emphasize cost controls over SG&A at all locations including its corporate office. Management expects SG&A to be under 30% of consolidated sales for the full fiscal year 2004.

RESEARCH AND DEVELOPMENT

        Research and development expense increased 112% in the first quarter of 2004 over the prior year's quarter, and represented over 5% of sales in the current year's period, compared with 4% in the first quarter of 2003 due to the acquisition of Chemicon in April 2003. Chemicon accounted for $1.0 million of research and development expenses in the first quarter of 2004.

AMORTIZATION OF INTANGIBLES

        Amortization of intangibles increased from $0.2 million in the first quarter of 2003 to $0.7 million in the first quarter of 2004 due to the acquisition of Chemicon effective April 1, 2003. The Chemicon acquisition added $0.4 million in amortization during the first quarter of 2004 compared to the same period of 2003.

SPECIAL CHARGES AND WRITE-OFF OF DEFERRED FINANCING COSTS

        During the first quarter of 2003, the Company incurred charges of approximately $0.6 million. The components of these charges included approximately $0.4 million related to the write-off of debt issuance costs associated with our revolving credit facility that was replaced on April 7, 2003, which was included in "Write-off of deferred financing costs" in the accompanying Consolidated Statements of Income. The balance, $0.2 million, related to a loss associated with an equipment failure at our Toronto facility, which was included in "Special charges" in the accompanying Consolidated Statements of Income.

OTHER (INCOME) EXPENSE, NET

        Other (income) expense, net consists primarily of gains and losses from foreign currency transactions and income from transition services associated with the therapeutic plasma divestiture. Recognized losses on foreign exchange totaled approximately $0.2 million for the first quarter of 2004, compared to a loss of approximately $0.1 million in the first quarter of 2003. Income from transition services was $0.4 million in the first quarter of 2004. The Company expects income from transition services to continue at a similar rate as the first quarter of 2004 until June 2004. The Company did not have any income from transition services in 2003.

INTEREST EXPENSE

        Interest expense increased from $0.1 million during the first quarter of 2003 to $1.1 million during the first quarter of 2004. The increase in interest expense was due to interest on the Company's 4.75% Convertible Senior Subordinated Debentures, which were issued on August 22, 2003.

INTEREST INCOME

        Interest income increased from $0.1 million during the first quarter of 2003 to $0.2 million during the first quarter of 2004. The increase in interest income was due to maintaining higher cash balances during the first quarter of 2004 compared to the first quarter of 2003.

PROVISION FOR INCOME TAXES

        The provision for income taxes as a percentage of income before taxes decreased from 35% during the first quarter of 2003 to 33% during the first quarter of 2004. The Company's effective tax rate

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declined during the first quarter of 2004 because it expects higher tax credits and generation of more of the Company's income in lower tax jurisdictions during the fiscal year.

Liquidity and Capital Resources

        The following table sets forth certain indicators of financial condition and liquidity as of March 28, 2004 and December 28, 2003 (in thousands):

        Serologicals has three principal sources of near-term liquidity: (1) existing cash and cash equivalents; (2) cash generated by operations; and (3) available borrowing capacity under the revolving credit facility ("Revolver"), which provides for a maximum borrowing capacity of $30.0 million. As of April 30, 2004, the Company had $30.0 million available under the Revolver. Management believes the Company's liquidity and capital resources are sufficient to meet its working capital, capital expenditure and other anticipated normal operating cash requirements over the next twelve months. However, the Company may be required to issue additional debt or equity over the next twelve months to finance potential acquisitions.

        Net cash provided by operating activities was $12.5 million and $5.1 million during the first quarters of 2004 and 2003, respectively. Operating assets and liabilities decreased $6.2 million and $0.5 million during the first quarters of 2004 and 2003, respectively. Operating assets and liabilities decreased more during the first quarter of 2004 primarily due to a larger reduction in accounts receivables. Accounts receivables declined $13.6 million during the first quarter of 2004 compared to a reduction of $4.6 million during the first quarter of 2003. Accounts receivables declined more in the first quarter of 2004 due to timing of shipments during the quarter. During the first quarter of 2004, 53% of the quarter's shipments occurred in March compared to 70% during the same period in 2003. The remaining increase in cash provided by operating activities is due to higher net income from operations, depreciation and amortization and tax benefit from exercise of stock options. Depreciation and amortization increased in the first quarter of 2004 compared to the same period in 2003 due to the acquisition of Chemicon effective April 1, 2003.

        Net cash used in investing activities in the first quarter of 2004 was $2.1 million, compared with $1.9 million in the first quarter of 2003. Capital expenditures for the first quarter of 2004 consisted primarily of the construction of the Company's new Bio-Process Manufacturing Facility in Lawrence, Kansas. During the first quarter of 2004, the Company also received the initial cash payment of $3.5 million from the sale of the therapeutic plasma business. The Company anticipates capital expenditures for the remainder of the year to total approximately $5.5 million to $7.5 million. The most significant capital expenditure anticipated for the remainder of 2004 is the completion of the Bio-Process Manufacturing Facility in Lawrence, Kansas and the implementation of our enterprise resource planning system at Chemicon.

        Net cash provided by financing activities in the first quarter of 2004 was $1.3 million, compared with net cash used in financing activities of $0.2 million in the first quarter of 2003. Financing activities in the first quarter of 2004 consisted of proceeds from the exercise of stock options.

        There have been no material changes regarding Serologicals' contractual obligations from the information provided in our Annual Report on Form 10-K for the fiscal year ended December 28,

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2003. The contractual obligations are discussed under the caption "Liquidity and Capital Resources" in "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations," contained in the Form 10-K.

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 28, 2003. 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.

Item 4. Controls and Procedures

a.

Evaluation of disclosure controls and procedures.

        As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic reports filed with the Securities and Exchange Commission. In addition, we reviewed our internal controls, and there have been no significant changes in our internal controls or in other factors during the period covered by this report that materially affected, or are reasonable likely to materially affect, our internal controls over financial reporting.

b.

Changes in internal controls.

        There were no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.

Item 1. Legal Proceedings

        The Company is involved in certain litigation arising in the ordinary course of business. In management's opinion, the ultimate resolution of these matters will not have a material adverse effect on the Company's financial position or results of operations.

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Item 6. Exhibits and Reports on Form 8-K

a.

Exhibits (numbered in accordance with Item 601 of Regulation S-K):

*

Filed herewith

†

Compensatory Plan or Arrangement

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b.

Reports on Form 8-K furnished or filed during the quarter ended March 28, 2004:

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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.

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QuickLinks

PART I.
Item 1. Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II.
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K