##### 



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UNITED STATES
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, 2002                                          

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 0-28194



DIGENE
CORPORATION
(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 52-1536128                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                         |  |           
|---------------------------------------- |  | ----------
|1201 Clopper Road
Gaithersburg, Maryland |  | 20878     
|                                         |  |           
|(Address of principal executive offices) |  | (Zip Code)

Registrants telephone number, including area code (301) 944-7000

(Former name, former address and former fiscal year, if changed since last
report)

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.

|                                       |  |                                      
|-------------------------------------- |  | -------------------------------------
|Class                                  |  | Shares outstanding as of
May 14, 2002
|                                       |  |                                      
|Common Stock, par value $.01 per share |  | 17,955,413                           



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##### 



DIGENE CORPORATION

INDEX TO FORM 10-Q

|                                            |                                                                                               |  |                                                                                             |    |      |   | 
|------------------------------------------- | --------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- | -- | ---- | - | 
|                                            |                                                                                               |  |                                                                                             |    | Page
|                                            |                                                                                               |  |                                                                                             |    |     
|Part I. Consolidated Financial Information: |                                                                                               |  |                                                                                             |   
|                                           
|                                            | Item 1. Consolidated Financial Statements                                                     |  |                                                                                             |    |     
|                                           
|                                            |                                                                                               |  | Consolidated Balance Sheets 
March 31, 2002 and June 30, 2001                              |    |      | 3 | 
|                                           
|                                            |                                                                                               |  | Consolidated Statements of Operations 
Three and nine months ended March 31, 2002 and 2001 |    |      | 4 | 
|                                           
|                                            |                                                                                               |  | Consolidated Statements of Cash Flows 
Nine months ended March 31, 2002 and 2001           |    |      | 5 | 
|                                           
|                                            |                                                                                               |  | Notes to Consolidated Financial Statements                                                  |    |      | 6 | 
|                                           
|                                            | Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations |  |                                                                                             | 9  |     
|                                           
|                                            | Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |  |                                                                                             | 13 |     
|                                           
|Part II. Other Information:                 |                                                                                               |  |                                                                                             |   
|                                           
|                                            | Item 1. Legal Proceedings                                                                     |  |                                                                                             | 14 |     
|                                           
|                                            | Item 2.
Changes in Securities and Use of Proceeds                                             |  |                                                                                             | 14 |     
|                                           
|                                            | Item 5. Other Information                                                                     |  |                                                                                             | 15 |     
|                                           
|                                            | Item 6. Exhibits and Reports on Form 8-K                                                      |  |                                                                                             | 16 |     
|                                           
|Signatures                                  |                                                                                               |  | 18                                                                                          |   
|                                           
|Exhibit Index                               |                                                                                               |  | 19                                                                                          |   





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##### 



PART I. Consolidated Financial Information

Item 1. Consolidated Financial Statements

DIGENE CORPORATION
CONSOLIDATED BALANCE SHEETS

|                                           |                                                                                                                                                                        |                                      |            |             |             |   |            |             |   |  | 
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ---------- | ----------- | ----------- | - | ---------- | ----------- | - |  | 
|                                           |                                                                                                                                                                        |                                      |            |             | March 31,   |   | June 30,  
|                                           |                                                                                                                                                                        |                                      |            |             | 2002        |   | 2001      
|                                           |                                                                                                                                                                        |                                      |            |             |             |   |           
|                                           |                                                                                                                                                                        |                                      |            |             | (Unaudited) |   |            |             |  
|                                           |                                                                                                                                                                        |                                      | ASSETS     |             |             |   |            |             |   |  | 
|Current assets:                            |                                                                                                                                                                        |                                      |            |             |             |   |            |            
|                                           | Cash and cash equivalents                                                                                                                                              |                                      | $          | 18,447,822  |             |   | $          | 20,626,252  |  
|                                           | Short-term investments                                                                                                                                                 |                                      |            | 26,500,113  |             |   |            | 8,977,412   |  
|                                           | Accounts receivable, less allowance of approximately $382,000 and
$281,000 at March 31, 2002 and June 30, 2001, respectively                                           |                                      |            | 9,474,368   |             |   |            | 5,694,648   |  
|                                           | Inventories                                                                                                                                                            |                                      |            | 6,029,229   |             |   |            | 5,548,415   |  
|                                           | Prepaid expenses and other current assets                                                                                                                              |                                      |            | 1,448,094   |             |   |            | 1,685,767   |  
|                                           |                                                                                                                                                                        |                                      |            |             |             |   |            |            
|                                          
|Total current assets                       |                                                                                                                                                                        |                                      | 61,899,626 |             |             |   | 42,532,494 |            
|                                          
|Note receivable                            |                                                                                                                                                                        |                                      | 406,500    |             |             |   | 406,500    |            
|Property and equipment, net                |                                                                                                                                                                        |                                      | 4,087,969  |             |             |   | 3,490,490  |            
|Intangible assets, net                     |                                                                                                                                                                        |                                      | 938,037    |             |             |   | 1,050,601  |            
|Deposits                                   |                                                                                                                                                                        |                                      | 706,513    |             |             |   | 715,242    |            
|                                           |                                                                                                                                                                        |                                      |            |             |             |   |            |            
|                                          
|Total assets                               |                                                                                                                                                                        | $                                    | 68,038,645 |             |             | $ | 48,195,327 |            
|                                           |                                                                                                                                                                        |                                      |            |             |             |   |            |            
|                                          
|                                           |                                                                                                                                                                        | LIABILITIES AND STOCKHOLDERS EQUITY |            |             |             |   |            |             |   | 
|Current liabilities:                       |                                                                                                                                                                        |                                      |            |             |             |   |            |            
|                                           | Accounts payable                                                                                                                                                       |                                      | $          | 6,345,214   |             |   | $          | 3,260,186   |  
|                                           | Accrued expenses                                                                                                                                                       |                                      |            | 4,828,625   |             |   |            | 2,709,490   |  
|                                           | Accrued payroll                                                                                                                                                        |                                      |            | 1,954,816   |             |   |            | 1,865,777   |  
|                                           | Deferred revenues                                                                                                                                                      |                                      |            | 4,704,000   |             |   |            | 7,792,000   |  
|                                           |                                                                                                                                                                        |                                      |            |             |             |   |            |            
|                                          
|Total current liabilities                  |                                                                                                                                                                        |                                      | 17,832,655 |             |             |   | 15,627,453 |            
|                                          
|Deferred rent                              |                                                                                                                                                                        |                                      | 327,969    |             |             |   | 233,584    |            
|Long-term debt                             |                                                                                                                                                                        |                                      | 1,000,000  |             |             |   | 1,000,000  |            
|Deferred liability                         |                                                                                                                                                                        |                                      | 5,000,000  |             |             |   | 5,000,000  |            
|                                          
|Stockholders equity:                      |                                                                                                                                                                        |                                      |            |             |             |   |            |            
|                                           | Preferred stock, $0.10 par value, 1,000,000 shares authorized, no shares
issued and outstanding                                                                        |                                      |            |            |             |   |            |            |  
|                                           | Common stock, $0.01 par value, 50,000,000 shares authorized, 17,947,280
and 16,755,339 shares issued and outstanding at March 31, 2002
and June 30, 2001, respectively |                                      |            | 179,473     |             |   |            | 167,553     |  
|                                           | Additional paid-in capital                                                                                                                                             |                                      |            | 110,635,185 |             |   |            | 88,199,211  |  
|                                           | Deferred stock compensation                                                                                                                                            |                                      |            | (40,172     | )           |   |            | (64,274     | )
|                                           | Accumulated deficit                                                                                                                                                    |                                      |            | (66,896,465 | )           |   |            | (61,968,200 | )
|                                           |                                                                                                                                                                        |                                      |            |             |             |   |            |            
|                                          
|Total stockholders equity                 |                                                                                                                                                                        |                                      | 43,878,021 |             |             |   | 26,334,290 |            
|                                           |                                                                                                                                                                        |                                      |            |             |             |   |            |            
|                                          
|Total liabilities and stockholders equity |                                                                                                                                                                        | $                                    | 68,038,645 |             |             | $ | 48,195,327 |            
|                                           |                                                                                                                                                                        |                                      |            |             |             |   |            |            

See accompanying notes.

3



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##### 



DIGENE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

|                                          |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |            |  
|----------------------------------------- | ---------------------------------- | - | ------------------ | ---------- | ----------------- | - | ---------- | --------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                                          |                                    |   | Three Months Ended |            | Nine Months Ended
|                                          |                                    |   | March 31,          |            | March 31,        
|                                          |                                    |   |                    |            |                  
|                                          |                                    |   | 2002               |            | 2001              |   | 2002       |           | 2001
|                                          |                                    |   |                    |            |                   |   |            |           |     
|                                          |                                    |   | (Unaudited)        |            | (Unaudited)      
|Revenues:                                 |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           
|                                          | Product sales                      |   | $                  | 14,031,145 |                   |   | $          | 9,003,659 |      |   | $          | 35,722,020 |   |   | $          | 23,395,694 |  
|                                          | Research and development contracts |   |                    | 181,885    |                   |   |            | 5,943     |      |   |            | 456,860    |   |   |            | 541,180    |  
|                                          |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           
|Total revenues                            |                                    |   | 14,213,030         |            |                   |   | 9,009,602  |           |      |   | 36,178,880 |            |   |   | 23,936,874 |           
|Costs and expenses:                       |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           
|                                          | Cost of product sales              |   |                    | 3,713,137  |                   |   |            | 2,891,419 |      |   |            | 9,440,765  |   |   |            | 8,916,091  |  
|                                          | Research and development           |   |                    | 2,238,902  |                   |   |            | 1,986,729 |      |   |            | 6,654,938  |   |   |            | 5,933,980  |  
|                                          | Selling and marketing              |   |                    | 5,811,734  |                   |   |            | 3,442,318 |      |   |            | 14,488,908 |   |   |            | 8,725,233  |  
|                                          | General and administrative         |   |                    | 3,461,735  |                   |   |            | 2,603,525 |      |   |            | 8,350,612  |   |   |            | 6,211,271  |  
|                                          | Amortization of intangible assets  |   |                    | 37,522     |                   |   |            | 37,522    |      |   |            | 112,564    |   |   |            | 112,565    |  
|                                          | Abbott termination fee             |   |                    | 2,500,000  |                   |   |            |          |      |   |            | 2,500,000  |   |   |            |           |  
|                                          |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           
|                                         
|Loss from operations                      |                                    |   | (3,550,000         | )          |                   |   | (1,951,911 | )         |      |   | (5,368,907 | )          |   |   | (5,962,266 | )         
|                                         
|Other income (expense):                   |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           
|                                          | Other income (expense)             |   |                    | 71,837     |                   |   |            | 3,542     |      |   |            | 84,441     |   |   |            | 601        |  
|                                          | Interest income                    |   |                    | 141,117    |                   |   |            | 345,175   |      |   |            | 533,019    |   |   |            | 923,868    |  
|                                          | Interest expense                   |   |                    | (5,824     | )                 |   |            | (6,384    | )    |   |            | (10,909    | ) |   |            | (7,287     | )
|                                          |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           
|                                         
|Loss from operations before income taxes  |                                    |   | (3,342,870         | )          |                   |   | (1,609,578 | )         |      |   | (4,762,356 | )          |   |   | (5,045,084 | )         
|                                         
|Provision for (benefit from) income taxes |                                    |   | (23,594            | )          |                   |   | 35,960     |           |      |   | 165,909    |            |   |   | 93,777     |           
|                                          |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           
|                                         
|Net loss                                  |                                    | $ | (3,319,276         | )          |                   | $ | (1,645,538 | )         |      | $ | (4,928,265 | )          |   | $ | (5,138,861 | )         
|                                          |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           
|                                         
|Basic and diluted net loss per share      |                                    | $ | (0.19              | )          |                   | $ | (0.10      | )         |      | $ | (0.29      | )          |   | $ | (0.31      | )         
|                                          |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           
|                                         
|Weighted average shares outstanding       |                                    |   | 17,683,415         |            |                   |   | 16,686,772 |           |      |   | 17,161,810 |            |   |   | 16,497,923 |           
|                                          |                                    |   |                    |            |                   |   |            |           |      |   |            |            |   |   |            |           

See accompanying notes.

4



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DIGENE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                     |                                                                                           |                                                         |                                           |             |                   |            |            |             |           |            |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------------------- | ----------- | ----------------- | ---------- | ---------- | ----------- | --------- | ---------- | -
|                                                     |                                                                                           |                                                         |                                           |             | Nine Months Ended
|                                                     |                                                                                           |                                                         |                                           |             | March 31,        
|                                                     |                                                                                           |                                                         |                                           |             |                  
|                                                     |                                                                                           |                                                         |                                           |             | 2002              |            | 2001      
|                                                     |                                                                                           |                                                         |                                           |             |                   |            |           
|                                                     |                                                                                           |                                                         |                                           |             | (Unaudited)      
|Operating activities                                 |                                                                                           |                                                         |                                           |             |                   |            |            |            
|                                                     | Net loss                                                                                  |                                                         | $                                         | (4,928,265  | )                 |            | $          | (5,138,861  | )        
|                                                     | Adjustments to reconcile net loss to net cash provided by
(used in) operating activities: |                                                         |                                           |             |                   |            |            |             |          
|                                                     |                                                                                           | Depreciation and amortization of property and equipment |                                           |             | 1,185,947         |            |            |             | 1,026,969 |           
|                                                     |                                                                                           | Amortization of intangible assets                       |                                           |             | 112,564           |            |            |             | 112,565   |           
|                                                     |                                                                                           | Compensation expense related to stock options           |                                           |             | 24,102            |            |            |             | 24,102    |           
|                                                     |                                                                                           | Abbott termination fee                                  |                                           |             | 2,500,000         |            |            |             |          |           
|                                                     |                                                                                           | Changes in operating assets and liabilities:            |                                           |             |                   |            |            |             |           |           
|                                                     |                                                                                           |                                                         | Accounts receivable                       |             |                   | (3,779,720 | )          |             |           | 7,790      |  
|                                                     |                                                                                           |                                                         | Inventories                               |             |                   | (480,814   | )          |             |           | (1,675,783 | )
|                                                     |                                                                                           |                                                         | Prepaid expenses and other current assets |             |                   | 237,673    |            |             |           | 83,757     |  
|                                                     |                                                                                           |                                                         | Deposits                                  |             |                   | 8,729      |            |             |           | (116,376   | )
|                                                     |                                                                                           |                                                         | Accounts payable                          |             |                   | 3,085,028  |            |             |           | (204,874   | )
|                                                     |                                                                                           |                                                         | Accrued expenses                          |             |                   | 2,119,135  |            |             |           | 27,392     |  
|                                                     |                                                                                           |                                                         | Accrued payroll                           |             |                   | 89,039     |            |             |           | (156,990   | )
|                                                     |                                                                                           |                                                         | Deferred revenues                         |             |                   | (3,088,000 | )          |             |           |           |  
|                                                     |                                                                                           |                                                         | Deferred rent                             |             |                   | 94,385     |            |             |           | 120,654    |  
|                                                     |                                                                                           |                                                         |                                           |             |                   |            |            |            
|                                                    
|Net cash used in operating activities                |                                                                                           |                                                         | (2,820,197                                | )           |                   |            | (5,889,655 | )          
|                                                    
|Investing activities                                 |                                                                                           |                                                         |                                           |             |                   |            |            |            
|                                                     | Purchases of short-term investments                                                       |                                                         |                                           | (26,457,329 | )                 |            |            | (10,810,494 | )        
|                                                     | Maturities of short-term investments                                                      |                                                         |                                           | 8,934,628   |                   |            |            | 16,158,228  |          
|                                                     | Capital expenditures                                                                      |                                                         |                                           | (1,783,426  | )                 |            |            | (1,267,958  | )        
|                                                     |                                                                                           |                                                         |                                           |             |                   |            |            |            
|                                                    
|Net cash (used in) provided by investing activities  |                                                                                           |                                                         | (19,306,127                               | )           |                   |            | 4,079,776  |            
|                                                     |                                                                                           |                                                         |                                           |             |                   |            |            |            
|Financing activities                                 |                                                                                           |                                                         |                                           |             |                   |            |            |            
|                                                     | Net proceeds from issuance of common stock                                                |                                                         |                                           | 14,948,250  |                   |            |            |            |          
|                                                     | Exercise of common stock options                                                          |                                                         |                                           | 4,999,644   |                   |            |            | 3,051,590   |          
|                                                     | Proceeds from note payable                                                                |                                                         |                                           |            |                   |            |            | 1,000,000   |          
|                                                     |                                                                                           |                                                         |                                           |             |                   |            |            |            
|                                                    
|Net cash provided by financing activities            |                                                                                           |                                                         | 19,947,894                                |             |                   |            | 4,051,590  |            
|                                                     |                                                                                           |                                                         |                                           |             |                   |            |            |            
|                                                    
|Net (decrease) increase in cash and cash equivalents |                                                                                           |                                                         | (2,178,430                                | )           |                   |            | 2,241,711  |            
|Cash and cash equivalents at beginning of period     |                                                                                           |                                                         | 20,626,252                                |             |                   |            | 7,534,998  |            
|                                                     |                                                                                           |                                                         |                                           |             |                   |            |            |            
|                                                    
|Cash and cash equivalents at end of period           |                                                                                           | $                                                       | 18,447,822                                |             |                   | $          | 9,776,709  |            
|                                                     |                                                                                           |                                                         |                                           |             |                   |            |            |            

See accompanying notes.

5



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##### 



DIGENE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Basis of Presentation

The consolidated financial statements of Digene Corporation (Digene) for the
three- and nine-month periods ended March 31, 2002 and 2001 are unaudited and
include all adjustments which, in the opinion of management, are necessary to
present fairly the results of operations for the periods then ended. All such
adjustments are of a normal recurring nature. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in our Annual Report on Form 10-K for the
year ended June 30, 2001 filed with the Securities and Exchange Commission.

The results of operations for any interim period are not necessarily indicative
of the results of operations for any other interim period or for a full fiscal
year.

2.     Inventories

Inventories are stated at the lower of cost or market on a first-in, first-out
basis.

Inventories consist of the following:

|                     |  |             |            |          |  |   |            |  
|-------------------- |  | ----------- | ---------- | -------- |  | - | ---------- | -
|                     |  | March 31,   |            | June 30,
|                     |  | 2002        |            | 2001    
|                     |  |             |            |         
|                     |  | (Unaudited) |            |          |  |  
|Finished goods       |  | $           | 3,802,885  |          |  | $ | 3,087,651  |  
|Work in process      |  |             | 2,968,937  |          |  |   | 3,369,419  |  
|Raw materials        |  |             | 962,586    |          |  |   | 1,256,358  |  
|                     |  |             |            |          |  |   |            |  
|                     |  |             | 7,734,408  |          |  |   | 7,713,428  |  
|Obsolescence reserve |  |             | (1,705,179 | )        |  |   | (2,165,013 | )
|                     |  |             |            |          |  |   |            |  
|                     |  | $           | 6,029,229  |          |  | $ | 5,548,415  |  
|                     |  |             |            |          |  |   |            |  

3.     Marketing and Distribution Agreements

On April 30, 2001, Digene terminated the Marketing and Distribution Agreement
(the Abbott Agreement) between Digene and Abbott Laboratories (Abbott) as
it applies to the distribution of Digenes human papillomavirus DNA products,
and converted Abbotts distribution rights under the Abbott Agreement for
Digenes Hepatitis B DNA products to non-exclusive for the remainder of the
term of the Abbott Agreement. Prior to such action, Abbott was the exclusive
distributor of Digenes human papillomavirus (HPV) and Hepatitis B DNA products
in Europe, Africa and the Middle East. The Abbott Agreement provides for a
non-exclusive, twelve-month wind-down distribution period for the HPV products.

6



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##### 



On January 28, 2002, in accordance with an Amendment to the Abbott Agreement,
Digene terminated Abbotts exclusive rights to market, sell and distribute
Digenes chlamydia and gonorrhea (CT/GC) products worldwide, subject to a
non-exclusive wind-down period for Abbotts activities with respect to such
products in Europe, Africa and the Middle East until April 30, 2002. In
connection with this Amendment, Digene issued 87,873 shares of common stock to
Abbott in a private placement transaction representing an agreed upon
termination fee paid to Abbott. Digene recognized a one-time expense of
$2,500,000 in the third quarter of fiscal year 2002 representing the fair
market value of the shares issued to Abbott in this transaction.

On April 29, 2001, Digene entered into an agreement (the Roche Letter
Agreement) with Roche Molecular Systems, Inc. (Roche). Under the Roche
Letter Agreement, Roche is a co-exclusive distributor for Digenes HPV products
in Europe, the Middle East and Africa from May 1, 2001 through June 30, 2002.
Roche has guaranteed minimum purchases over the term of the Roche Letter
Agreement. During the nine-month period ended March 31, 2002, Digene received
prepayments of approximately $7.3 million for certain of these guarantees.
Roche did not meet its minimum quarterly purchase obligations for the
nine-month period ended March 31, 2002, and, accordingly, Digene recognized
approximately $2,951,000 of the prepayments as product revenue for such period.
As of March 31, 2002, Digene is obligated to return approximately $941,000 of
the prepayments to Roche due to offsetting revenue received by Digene from
Abbott under the Abbott Agreement. This obligation is recorded in accrued
expenses on the Consolidated Balance Sheet as of March 31, 2002.

Under the Roche Letter Agreement, Roche made a non-refundable payment of $5.0
million to Digene, which is recorded as a deferred liability on the
Consolidated Balance Sheet as of March 31, 2002. Under certain circumstances,
this payment will be converted into shares of Digenes common stock at a
conversion price of $35 per share.

4.     Private Offering

On January 30, 2002, Digene completed a private offering of 588,235 shares of
common stock, the net proceeds of which, after expenses, were approximately
$14,950,000.

5.     Tender Offer

On February 19, 2002, Digene, Cytyc Corporation (Cytyc) and Cruiser, Inc., a
wholly-owned subsidiary of Cytyc, entered into an Agreement and Plan of Merger
(the Merger Agreement), which provides for, among other things: (i) the
commencement by Cytyc of a stock and cash tender offer for all of the
outstanding shares of common stock, par value, $.01 per share, of Digene for
$4.00 per share in cash plus 1.1969 shares of Cytyc common stock (the Offer);
and (ii) following consummation of the Offer, the merger of Cruiser, Inc. with
and into Digene. The closing of the transaction is subject to the successful
completion of the Offer, the receipt of all necessary regulatory approvals,
including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the HSR Act), and other customary closing conditions.

7



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On February 27, 2002, Digene filed its Notification and Report Form under the
HSR Act with the Federal Trade Commission (the FTC) and the U.S. Department
of Justice.
On May 14, 2002, Digene announced that it had been informed by
the Premerger Notification Office of the FTC that the beginning of
the applicable waiting period under the HSR Act did not commence
until information completing the HSR notification was provided to the
FTC on April 26, 2002. As a result, the applicable waiting period
under the HSR Act will expire at midnight on May 28, 2002,
unless extended by the issuance of a request for additional
information. The staff of the FTC has advised Digene that it can
expect to receive a request for additional information no later than
May 28, 2002. Because Digene was already engaged in providing
requested information to the FTC, it is anticipated that Digene will
be able to respond to such request promptly.

The tender offer was commenced by Cytyc on March 1, 2002 and, in
connection with such commencement, Cytyc filed a Registration Statement on Form
S-4 and Schedule TO and Digene filed a Solicitation/ Recommendation Statement
on Schedule 14D-9 with the Securities and Exchange Commission. Cytyc has
extended the expiration of the Offer three times while the companies continue
to furnish information to, and work with, the FTC with respect to possible
antitrust issues related to the transaction. The Offer is currently scheduled
to expire on May 23, 2002 at 12:00 midnight, New York City
time, unless extended by Cytyc.

8



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

Forward-Looking Statements

The following discussion of our financial condition and results of operations
should be read in conjunction with our Consolidated Financial Statements and
the related Notes thereto included elsewhere in this report and in our Annual
Report on Form 10-K for the year ended June 30, 2001. Some of the information
that follows are not statements of historical fact, but merely reflect our
intent, belief or expectations regarding the anticipated effect of events,
circumstances and trends. Such statements should be considered as
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. We believe that our expectations are based on
reasonable assumptions within the bounds of our knowledge of our business and
operations. Factors that might cause or contribute to differences between our
expectations and actual results include: any failure to consummate the pending
tender offer and merger transaction with Cytyc Corporation; uncertainty of
market acceptance of our products by the worldwide medical community; our
limited sales and marketing experience, including our limited experience in
selling our products directly, particularly our chlamydia and gonorrhea
products in the United States; uncertainty of future profitability and cash
generation from operations; delay in or failure to obtain regulatory approvals
for our products in development; dependence on Roche as our principal European
distributor in fiscal 2002 and the affects of, including potential variability
of our quarterly revenues due to, the transition of our European distribution
structure from Roche and Abbott; uncertainty regarding patents and proprietary
rights in connection with our products and products in development; uncertainty
regarding the outcome of pending patent-related litigation; risks inherent in
international transactions, including those relating to our sales and marketing
efforts in Europe; dependence on third-party reimbursement from government
entities, managed care organizations and private insurance plans; our ability
to scale up our manufacturing to the extent product sales increase; the extent
of future expenditures for sales and marketing programs; uncertainty of
clinical trial results for our products in development; our ability to obtain
requisite additional financing to fund our operations beyond calendar 2003; and
other factors as set forth under the caption Additional Considerations in our
Annual Report on Form 10-K for the year ended June 30, 2001.

Overview

Since our incorporation in 1987, we have devoted substantially all of our
resources to developing, manufacturing and marketing our proprietary gene-based
testing systems, using our patented Hybrid Capture® technology, for the
screening, monitoring and diagnosis of human diseases. Since our inception, we
have incurred substantial operating losses, resulting principally from expenses
associated with our research and development programs, including preclinical
studies, clinical trials and regulatory submissions for our products, the
expansion of our manufacturing facilities and our global sales and marketing
activities.

Our revenues to a significant extent have been derived from the sales of our
HPV tests, which, for fiscal year 2001, accounted for 57% of total revenues
and, for the nine months ended March 31,
2002, accounted for 74% of total revenues. We expect that the growing
acceptance of our HPV tests in both the United States and abroad will continue
to drive the growth in revenues from our HPV tests and testing services in the
future.

9



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Results of Operations

Product sales increased to approximately $14,213,000 for the three-month period
ended March 31, 2002 from approximately $9,010,000 for the corresponding period
in 2001. The increase was due primarily to an 80% growth in sales of our HPV
tests and testing services over such sales in the corresponding period in 2001,
and revenues recorded on account of minimum purchase guarantees by Roche of
approximately $2,349,000 of HPV products, partially offset by decreases in
sales of equipment and non-core products. The growth in HPV products sales was
due to increased sales in the United States (107% over such sales in the
corresponding period in 2001), partially offset by decreased sales in Europe,
which were totally offset by the guaranteed payments from Roche. Under the
Roche Letter Agreement, Roche has no further minimum purchase obligations after
fiscal 2002, which will adversely affect our product revenues unless we are
able to increase product sales.

Product sales increased to approximately $35,722,000 for the nine-month period
ended March 31, 2002 from approximately $23,396,000 for the corresponding
period in 2001. The increase was due primarily to a 97% growth in sales of our
HPV tests and testing services over such sales in the corresponding period in
2001, in addition to revenues recorded on account of minimum purchase
guarantees by Roche of approximately $2,951,000 of HPV products, partially
offset by decreases in sales of equipment and non-core products. The majority
of the growth in HPV products sales was due to increased sales in the United
States (121% over such sales in the corresponding period in 2001) and increased
sales in Europe (39% over such sales in the corresponding period in 2001), in
addition to the guaranteed payments from Roche.

Research and development contract revenues increased to approximately $182,000
for the three-month period ended March 31, 2002 from approximately $6,000 for
the corresponding period in 2001 and decreased to approximately $457,000 for
the nine-month period ended March 31, 2002 from approximately $541,000 for the
corresponding period in 2001. The increase in the three-month period was due
primarily to an increase in research and development revenue under an existing
contract. The decrease in the nine-month period was due primarily to a
reduction in revenue under an exclusive contract, which was converted to
non-exclusive during fiscal 2001.

Cost of product sales increased to approximately $3,713,000 for the three-month
period ended March 31, 2002 from approximately $2,891,000 for the corresponding
period in 2001 and increased to approximately $9,441,000 for the nine-month
period ended March 31, 2002 from approximately $8,916,000 for the corresponding
period in 2001. Gross margin on product sales increased to 74% for the
three-month period ended March 31, 2002 from 68% for the corresponding period
in 2001 and increased to 74% for the nine-month period ended March 31, 2002
from 62% for the corresponding period in 2001. The increase in gross margin
percentage in both periods was due primarily to increased sales of our test
products, particularly HPV tests, principally in the United States where we
sell such products directly, and decreased sales of lower margin equipment
products, as well as the elimination by the first quarter of fiscal year

10



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2002 of certain operating expenses associated with the relocation to our new
manufacturing facility in April 2000, which negatively impacted our gross
margins during fiscal year 2001, improved inventory management and excess
margin generated by revenues recorded on account of minimum purchase guarantees
by Roche, partially offset by European value added taxes on past inventory purchases
not previously accrued.

Research and development expenses increased to approximately $2,239,000 for the
three-month period ended March 31, 2002 from approximately $1,987,000 for the
corresponding period in 2001 and increased to approximately $6,655,000 for the
nine-month period ended March 31, 2002 from approximately $5,934,000 for the
corresponding period in 2001. The increase for the three-month period was due
primarily to personnel costs, which increased 23%. The increase for the
nine-month period was due primarily to personnel costs, which increased 24% and
laboratory supplies, which increased 11%, partially offset by an 11% decrease
in outside professional services and clinical trial expenses. During the
nine-month period ended March 31, 2002, we focused our research and development
activities principally on: the development of our Rapid Capture System for
automated processing of our Hybrid Capture tests, initially related to HPV and
CT/GC; activities related to the preparation of a PMA supplement that we
submitted to the U.S. Food and Drug Administration (FDA) in October 2001 to
obtain market approval for the use of our Hybrid Capture 2 HPV Test as a
primary cervical cancer screening test to be performed in conjunction with the
Pap smear for women age 30 and older; the development of our universal
collection medium (UCMTM) that is expected to allow the simultaneous testing of
HPV, chlamydia, gonorrhea and other genetic and cellular material from a single
patient sample; clinical trials related to CT/GC testing for ThinPrep specimens
and HPV testing from the TriPath Prep system; activities utilizing our Hybrid
Capture technology for microarray-based genomics analysis in the areas of gene
expression profiling, genotyping and molecular disease management; and the
creation of our next generation of Hybrid Capture technology.

Selling and marketing expenses increased to approximately $5,812,000 for the
three-month period ended March 31, 2002 from approximately $3,442,000 for the
corresponding period in 2001 and increased to approximately $14,489,000 for the
nine-month period ended March 31, 2002 from approximately $8,725,000 for the
corresponding period in 2001. The increase was due primarily to various
marketing programs and associated professional expenses, which increased 202%
and 177% for the three- and nine-month periods, respectively, royalty costs,
which increased 24% and 75% for the three- and nine-month periods,
respectively, and personnel costs, which increased 16% and 19% for the three-
and nine-month periods, respectively. We expect our selling and marketing
expenses to increase during the remainder of fiscal 2002 as we begin to sell
our CT/GC products directly, initially in the United States, and as
we prepare to sell our HPV and CT/GC products directly in Europe, the
Middle East and Africa following the expiration, on April 30, 2002, of Abbotts non-exclusive distribution
wind-down period for our HPV and CT/GC products in Europe, the Middle East and
Africa and as we anticipate termination of the term of the Roche Letter
Agreement on June 30, 2002.

General and administrative expenses increased to approximately $3,462,000 for
the three-month period ended March 31, 2002 from approximately $2,604,000 for
the corresponding period in 2001 and increased to approximately $8,351,000 for
the nine-month period ended March 31, 2002 from $6,211,000 for the
corresponding period in 2001. The increase was due primarily to professional
fees, which increased 39% and 46% for the three- and nine-month periods,
respectively, and

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personnel costs, which increased 27% and 32% for the three- and nine-month
periods, respectively. The increase in professional fees was primarily
attributable to legal and accounting fees associated with the proposed merger
with Cytyc Corporation, as well as our litigation with Ventana Medical Systems,
Inc. and with Enzo Biochem, Inc. and its subsidiary, Enzo Diagnostics, Inc.

In connection with an Amendment to the Abbott Agreement, on January 28, 2002
Digene issued 87,873 shares of common stock to Abbott in a private placement
transaction representing an agreed upon termination fee paid to Abbott as
consideration for the termination of Abbotts exclusive rights to sell our
chlamydia and gonorrhea products worldwide. Digene recognized a one-time
expense of $2,500,000 in the third quarter of fiscal year 2002 representing the
fair market value of the shares issued to Abbott in this transaction.

Interest income decreased to approximately $141,000 for the three-month period
ended March 31, 2002 from approximately $345,000 for the corresponding period
in 2001 and decreased to approximately $533,000 for the nine-month period ended
March 31, 2002 from approximately $924,000 for the corresponding period in
2001. The decrease was primarily due to lower interest rates in the first nine
months of fiscal year 2002 compared to the corresponding period in fiscal year
2001. The cash received from Roche associated with advance minimum payments is
held in an account that does not provide interest income to Digene.

Liquidity and Capital Resources

Since inception, our expenses have significantly exceeded our revenues,
resulting in an accumulated deficit of approximately $66,896,000 at March 31,
2002. We have funded our operations primarily through the sale of equity
securities and revenues from product sales and research and development
contracts. We have experienced negative cash flows from operations of
approximately $2,820,000 and $5,890,000 for the nine months ending March 31,
2002 and 2001, respectively.

Capital expenditures increased to approximately $1,783,000 for the nine months
ended March 31, 2002 from approximately $1,268,000 for the corresponding period
in 2001.

On January 28, 2002, we issued 87,873 shares of common stock to Abbott in a
private placement transaction as consideration for the termination of Abbotts
exclusive rights to sell our chlamydia and gonorrhea products worldwide.
Digene recognized a one-time expense of $2,500,000 in the third quarter of
fiscal year 2002 representing the fair market value of the shares issued to
Abbott in this transaction.

On January 30, 2002, we completed a private offering of 588,235 shares of
common stock, the net proceeds of which, after expenses, were approximately
$14,950,000. We intend to use the net proceeds from this offering for general
corporate purposes, including to support our sales and marketing and research
and development activities.

We anticipate that working capital requirements will increase moderately for
the foreseeable future due to increasing accounts receivable as a result of
expected revenue growth. Since our inception,

12



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exclusive of cash received from Roche for advance minimum payments under the
Roche Letter Agreement, we have incurred quarterly negative cash flows from
operations, and have expended, and expect to continue to expend in the future,
substantial funds to complete our planned product development efforts, expand
our sales and marketing activities and expand our manufacturing capabilities.
We do not currently have any available credit line or other source of
financing. We expect that our existing capital resources will be adequate to
fund our operations through calendar year 2003. Our future capital
requirements and the adequacy of available funds may change, however, based on
numerous factors, including any failure to consummate the pending tender offer
and merger transaction with Cytyc, the successful commercialization of our
products, the development and maintenance of effective sales and marketing
activities, the cost of filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights, progress in our product
development efforts and the magnitude and scope of such efforts, progress with
preclinical studies and clinical trials, progress in our regulatory affairs
activities, the cost and timing of expansion of our manufacturing capabilities,
competing technological and market developments, and the development and
maturation of strategic alliances for the marketing of our products. To the
extent that our existing capital resources and funds generated from operations
are insufficient to meet current or planned operating requirements, we will be
required to obtain additional funds through equity or debt financing, strategic
alliances with corporate partners and others, or through other sources. We do
not have any committed sources of additional financing, and there can be no
assurance that additional funding, if necessary, will be available on
acceptable terms, if at all. If adequate funds are not available, we may be
required to delay, scale back or eliminate certain aspects of our operations or
attempt to obtain funds through arrangements with collaborative partners or
others that may require us to relinquish rights to certain of our technologies,
product candidates, products or potential markets. Under such conditions, our
business, financial condition and results of operations will be materially
adversely affected.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to market risk associated with changes in foreign currency
exchange rates and interest rates. Our exchange rate risk comes from our
operations in Europe and South America. The net impact of foreign exchange
activities on earnings was immaterial for the three-month periods ended March
31, 2002 and 2001, respectively. Interest rate exposure is primarily limited
to the approximately $36,700,000 of cash, cash equivalents and short-term
investments owned by us. Such investments are money market debt securities
that generate interest income for us on cash balances. We do not actively
manage the risk of interest rate fluctuations; however, such risk is mitigated
by the relatively short-term, less than twelve months, nature of certain
investments. We do not consider the present rate of inflation to have a
significant impact on our business.

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PART II. Other Information

Item 1. Legal Proceedings

On November 19, 2001, we filed an action for patent infringement against
Ventana Medical Systems, Inc. The action was filed in the United States
District Court for the District of Delaware. In the action, Digene alleges
that Ventana Medical Systems, Inc. has made, used, sold and/or offered for sale
products embodying a patented invention of Digene thereby infringing Digenes
United States Patent No. 4,849,332 entitled Human Papilloma Virus 35 Nucleic
Acid Hybridization Probes and Methods for Employing the Same and Digenes
United States Patent No. 4,849,331 entitled Human Papilloma Virus 44 Nucleic
Acid Hybridization Probes and Methods for Employing the Same. Digene is
seeking a permanent injunction and monetary damages for past infringement.

On March 15, 2002, we filed an action for declaratory judgment against Enzo
Biochem, Inc. The action was filed in the United States District Court for the
District of Delaware. Digene filed this action after having received direct
threats from Enzo Biochem of infringement of U.S. Patent No. 6,221,581 entitled
Processes for Detecting Polynucleotides, Determining Genetic Mutations or
Defects in Genetic Material, Separating or Isolating Nucleic Acid of Interest
from Samples, and Useful Compositions of Matter and Multihybrid Complex
Compositions. Digene is seeking a judgment that the patent is invalid and has
not been infringed by Digene. On March 20, 2002, in response to Digenes
complaint, Enzo Biochem filed a motion to dismiss Digenes complaint for lack
of subject matter jurisdiction, based on assertions that Enzo Diagnostics, Inc.
(a wholly owned subsidiary of Enzo Biochem), not Enzo Biochem, was the holder
of the patent in question. On the same day, Enzo Diagnostics, Inc. also filed
a complaint for patent infringement against Digene in the Delaware District
Court. Enzo Diagnostics, Inc. asserts in its complaint that Digene has
infringed U.S. Patent No. 6,221,581 through its manufacture, sale and offer for
sale of its hybrid capture products.

Item 2. Changes in Securities and Use of Proceeds

On January 28, 2002, we entered into an Amendment to the Abbott Agreement
pursuant to which we terminated Abbotts exclusive rights to distribute our
CT/GC tests and accessories worldwide. We commenced the direct distribution of
our CT/GC tests in the United States in February 2002. Pursuant to the
Amendment, Abbott continued to distribute the CT/GC tests and accessories in
Europe during a non-exclusive wind-down period that ended on April 30, 2002.
Under the terms of the Amendment and a related Stock Purchase Agreement, we
issued 87,873 shares of our common stock to Abbott as consideration for the
termination of these exclusive rights, and agreed to repurchase Hybrid Capture
instrumentation used for HPV, chlamydia and gonorrhea testing previously
purchased by Abbott under the Abbott Agreement. The shares of common stock
were issued in a private placement transaction in reliance upon the exemption
from the registration requirements of the Securities Act of 1933 (the
Securities Act) set forth in Section 4(2) of the Securities Act and Rule 506
promulgated by the SEC under the Securities Act. On February 28, 2002, we
filed a Registration Statement on Form S-3 to register the shares for resale by
Abbott, which Registration Statement was declared effective by the SEC on March
13, 2002.

On January 30, 2002, we completed a private placement of 588,235 shares of our
common stock to two accredited investors. The purchase price was $25.50 per
share, resulting in net proceeds to us of approximately $14,950,000. The
shares of common stock were issued in a private placement transaction in
reliance upon the exemption from the registration requirements of the
Securities Act set forth in Section 4(2) of the Securities Act and Rule 506
promulgated by the SEC under the Securities Act. On February 19, 2002, we
filed a Registration Statement on Form S-3 to register the shares for resale by
the holders, which Registration Statement was declared effective by the SEC on
February 26, 2002. We intend to use the net proceeds from this offering for
general corporate purposes, including the support of our sales and marketing
and research and development activities.

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Item 5. Other Information

On February 19, 2002, Digene, Cytyc Corporation (Cytyc) and Cruiser, Inc., a
wholly-owned subsidiary of Cytyc, entered into an Agreement and Plan of Merger
(the Merger Agreement), which provides for, among other things: (i) the
commencement by Cytyc of a stock and cash tender offer for all of the
outstanding shares of common stock, par value, $.01 per share, of Digene for
$4.00 per share in cash plus 1.1969 shares of Cytyc common stock (the Offer);
and (ii) following consummation of the Offer, the merger of Cruiser, Inc. with
and into Digene. The closing of the transaction is subject to the successful
completion of the Offer, the receipt of all necessary regulatory approvals,
including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the HSR Act), and other customary closing conditions.

On February 27, 2002, we filed our Notification and Report Form under the HSR
Act with the Federal Trade Commission (the FTC) and the U.S. Department of
Justice. On May 14, 2002, we announced that we had been
informed by the Premerger Notification Office of the FTC that the
beginning of the applicable waiting period under the HSR Act did not
commence until information completing the HSR notification was
provided to the FTC on April 26, 2002. As a result, the
applicable waiting period under the HSR Act will expire at midnight
on May 28, 2002, unless extended by the issuance of a request
for additional information. The staff of the FTC has advised us that
we can expect to receive a request for additional information no later
than May 28, 2002. Because we were already engaged in providing
requested information to the FTC, it is anticipated that we will be
able to respond to such request promptly.

The tender offer was commenced by Cytyc on March 1, 2002 and, in
connection with such commencement, Cytyc filed a Registration Statement on Form
S-4 and Schedule TO and we filed a Solicitation/ Recommendation Statement on
Schedule 14D-9 with the Securities and Exchange Commission. Cytyc has extended
the expiration of the Offer three times while the companies continue to furnish
information to, and work with, the FTC with respect to possible antitrust
issues related to the transaction. The Offer is currently scheduled to expire
on May 23, 2002 at 12:00 midnight, New York City time, unless
extended by Cytyc.

In connection with the Merger Agreement, we entered into a Transaction Option
Agreement, dated February 19, 2002 (the Transaction Option Agreement), with
Cytyc, pursuant to which we granted Cytyc an option to purchase up to a number
of shares of Digene common stock equal to 19.9% of the shares of Digene common
stock issued and outstanding immediately prior to the exercise of such option,
at a per share price equal to $28.81 per share. Such option is exercisable at
any time after the completion of the Offer only if, after giving effect to the
exercise of such option, the number of shares of Digene common stock
beneficially owned by Cytyc would equal at least 90.1% of the then outstanding
shares of Digene.

In addition, in connection with the Merger Agreement, Armonk Partners, a
Connecticut partnership and beneficial owner of approximately 24.5% of the
outstanding shares of Digenes common stock (Armonk Partners), and the
executive officers and directors of Digene entered into a Stockholders
Agreement, dated February 19, 2002 (the Stockholders Agreement), with Cytyc,
Cruiser, Inc. and Digene, pursuant to which Armonk Partners and such executive
officers

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and directors agreed, among other things, to: (i) tender in the Offer all of
the shares of Digene common stock beneficially owned by such stockholders
(which is an aggregate of approximately 26.4% of Digenes outstanding common
stock); (ii) vote such shares in favor of the Merger Agreement; and (iii) grant
Cytyc a proxy with respect to voting such shares to effect the transactions
contemplated by the Merger Agreement.

Item 6. Exhibits and Reports on Form 8-K

(a)       Exhibits:

|     |  |                                                                                                                                                                                                                                                                                                         
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1  |  | Agreement and Plan of Merger, dated February 19, 2002, by and among Cytyc
Corporation, Cruiser, Inc. and Digene Corporation (as corrected)
(Incorporated by reference to Exhibit 2.1 to Digenes Current Report on
Form 8-K/A filed February 21, 2002).                                                 
|    
|3.1  |  | Amended and Restated Certificate of Incorporation (Incorporated by
reference to Exhibit 3.1 to Digenes Registration Statement on Form S-1
(File No. 333-2968)).                                                                                                                                        
|    
|3.2  |  | Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to
Digenes Annual Report on Form 10-K for the year ended June 30, 1999).                                                                                                                                                         
|    
|4.1  |  | Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to
Digenes Registration Statement on Form S-1 (File No. 333-2968)).                                                                                                                                                         
|    
|4.2  |  | Stock Purchase Agreement between Digene and Abbott Laboratories, dated
January 28, 2002 (Incorporated by reference to Exhibit 4.2 to Digenes
Quarterly Report on Form 10-Q for the quarter ended December 31, 2001).                                                                                   
|    
|4.3  |  | Form of Purchase Agreement dated January 28, 2002, between Digene and
Acqua Wellington Private Placement Fund, Ltd. and Acqua Wellington
Opportunity I Limited (Incorporated by reference to Exhibit 4.3 to
Digenes Quarterly Report on Form 10-Q for the quarter ended December 31,
2001).            
|    
|4.4  |  | Form of Registration Rights Agreement, dated January 28, 2002, between
Digene and Acqua Wellington Private Placement Fund, Ltd. and Acqua
Wellington Opportunity I Limited (Incorporated by reference to Exhibit
4.4 to Digenes Quarterly Report on Form 10-Q for the quarter ended
December 31, 2001).
|    
|4.5  |  | Transaction Option Agreement, dated February 19, 2002, by and among Cytyc
Corporation and Digene Corporation (Incorporated by reference to Exhibit
4.1 to Digenes Current Report on Form 8-K/A filed February 21, 2002).                                                                               
|    
|10.1 |  | Amendment No. 1 to Marketing and Distribution Agreement between Digene
and Abbott Laboratories, dated January 28, 2002 (Incorporated by
reference to Exhibit 10.1 to Digenes Quarterly Report on Form 10-Q for
the quarter ended December 31, 2001).                                                   

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|99.1 |  | Stockholders Agreement, dated February 19, 2002, by and among Cytyc
Corporation, Cruiser, Inc., Digene Corporation, Armonk Partners and the
executive officers and directors of Digene (Incorporated by reference to
Exhibit 99.1 to Digenes Current Report on Form 8-K/A filed February 21,
2002).
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)  Reports on Form 8-K:

Digene filed the following Current Reports on Form 8-K during the quarter ended
March 31, 2002:

|           |  |             |   |                   |  |                   |  |                |  |  |  | 
|---------- |  | ----------- | - | ----------------- |  | ----------------- |  | -------------- |  |  |  | 
|Report     |  | Item(s) No. |   | Date of Report    |  | Date Filed       
|           |  |             |   |                   |  |                  
|Form 8-K   |  | 5 and 7     |   | February 19, 2002 |  | February 19, 2002
|Form 8-K/A |  | 5 and 7     |   | February 19, 2002 |  | February 21, 2002
|Form 8-K   |  | 5 and 7     |   | March 15, 2002    |  | March 15, 2002   
|Form 8-K   |  |             | 5 |                   |  | March 22, 2002    |  | March 22, 2002
|Form 8-K   |  | 5 and 7     |   | March 27, 2002    |  | March 27, 2002   

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                       |  |                                 |                                                                                                                   
|---------------------- |  | ------------------------------- | ------------------------------------------------------------------------------------------------------------------
|                       |  | DIGENE CORPORATION             
|Date:    
May 15, 2002 |  | By:  /s/  Charles M. Fleischman
|                       |  |                                 |                                                                                                                   
|                       |  |                                 | Charles M. Fleischman
President, Chief Operating Officer and
Chief Financial Officer
(Principal Financial Officer)

|                       |  |                              |                                                                          
|---------------------- |  | ---------------------------- | -------------------------------------------------------------------------
|Date:    
May 15, 2002 |  | By:  /s/  Joseph P. Slattery
|                       |  |                              |                                                                          
|                       |  |                              | Joseph P. Slattery
Vice President, Finance
(Principal Accounting Officer)

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EXHIBIT INDEX

|            |  |                                                                                                                                                                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                        
|2.1         |  | Agreement and Plan of Merger, dated February 19, 2002, by and
among Cytyc Corporation, Cruiser, Inc. and Digene Corporation (as
corrected) (Incorporated by reference to Exhibit 2.1 to Digenes
Current Report on Form 8-K/A filed February 21, 2002).                                                
|            |  |                                                                                                                                                                                                                                                                                                        
|3.1         |  | Amended and Restated Certificate of Incorporation (Incorporated
by reference to Exhibit 3.1 to Digenes Registration Statement on
Form S-1 (File No. 333-2968)).                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                        
|3.2         |  | Amended and Restated Bylaws (Incorporated by reference to
Exhibit 3.2 to Digenes Annual Report on Form 10-K for the year ended
June 30, 1999).                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                        
|4.1         |  | Form of Common Stock Certificate (Incorporated by reference to
Exhibit 4.1 to Digenes Registration Statement on Form S-1 (File No.
333-2968)).                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                        
|4.2         |  | Stock Purchase Agreement between Digene and Abbott
Laboratories, dated January 28, 2002 (Incorporated by reference to
Exhibit 4.2 to Digenes Quarterly Report on Form 10-Q for the quarter
ended December 31, 2001).                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                        
|4.3         |  | Form of Purchase Agreement dated January 28, 2002, between
Digene and Acqua Wellington Private Placement Fund, Ltd. and Acqua
Wellington Opportunity I Limited (Incorporated by reference to
Exhibit 4.3 to Digenes Quarterly Report on Form 10-Q for the quarter
ended December 31, 2001).           
|            | 
|4.4         |  | Form of Registration Rights Agreement dated January 28, 2002,
between Digene and Acqua Wellington Private Placement Fund, Ltd. and
Acqua Wellington Opportunity I Limited (Incorporated by reference to
Exhibit 4.4 to Digenes Quarterly Report on Form 10-Q for the quarter
ended December 31, 2001).
|           
|4.5         |  | Transaction Option Agreement, dated February 19, 2002, by and
among Cytyc Corporation and Digene Corporation (Incorporated by
reference to Exhibit 4.1 to Digenes Current Report on Form 8-K/A
filed February 21, 2002).                                                                              
|           
|10.1        |  | Amendment No. 1 to Marketing and Distribution Agreement between
Digene and Abbott Laboratories, dated January 28, 2002 (Incorporated
by reference to Exhibit 10.1 to Digenes Quarterly Report on Form
10-Q for the quarter ended December 31, 2001).                                                  
|           
|99.1        |  | Stockholders Agreement, dated February 19, 2002, by and among
Cytyc Corporation, Cruiser, Inc., Digene Corporation, Armonk Partners
and the executive officers and directors of Digene (Incorporated by
reference to Exhibit 99.1 to Digenes Current Report on Form 8-K/A
filed February 21, 2002).   

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