##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  GEN-PROBE INCORPORATED
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    33-0044608
(I.R.S. Employer
Identification Number)10210 Genetic Center Drive 
San Diego, CA
(Address of Principal Executive 
Offices)
    
    92121
(Zip Code)
 (858) 410-8000
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




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##### 



GEN-PROBE INCORPORATED
 TABLE OF CONTENTS
FORM 10-Q
 PagePART I  FINANCIAL INFORMATIONItem 1. Consolidated Financial StatementsConsolidated Balance Sheets
    
    
    3Consolidated Statements of Income
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    35PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    37Item 1A. Risk Factors
    
    
    37Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    52Item 4. Submission of Matters to a Vote of Security Holders
    
    
    53Item 6. Exhibits
    
    
    54SIGNATURES
    
    
    55EX-10.99EX-10.100EX-10.101EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



GEN-PROBE INCORPORATED
 
 CONSOLIDATED BALANCE SHEETS
  June 30,
2009
    
    
    December 31,
2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    233,506
    
    
    $
    60,122Marketable securities
    
    
    230,698
    
    
    
    371,276Trade accounts receivable, net of allowance for doubtful accounts of $691 and
$700 at June 30, 2009 and December 31, 2008, respectively
    
    
    39,946
    
    
    
    33,397Accounts receivable  other
    
    
    2,852
    
    
    
    2,900Inventories
    
    
    56,455
    
    
    
    54,406Deferred income tax
    
    
    9,136
    
    
    
    7,269Prepaid income tax
    
    
    6,863
    
    
    
    2,306Prepaid expenses
    
    
    13,388
    
    
    
    15,094Other current assets
    
    
    4,322
    
    
    
    6,135Total current assets
    
    
    597,166
    
    
    
    552,905Marketable securities, net of current portion
    
    
    105,037
    
    
    
    73,780Property, plant and equipment, net
    
    
    153,767
    
    
    
    141,922Capitalized software, net
    
    
    12,858
    
    
    
    13,409Goodwill
    
    
    90,682
    
    
    
    18,621Deferred income tax, net of current portion
    
    
    11,837
    
    
    
    12,286Purchased
intangible assets, net
    
    
    57,930
    
    
    
    298Licenses, manufacturing access fees and other assets, net
    
    
    62,451
    
    
    
    56,310Total assets
    
    $
    1,091,728
    
    
    $
    869,531LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    19,477
    
    
    $
    16,050Accrued salaries and employee benefits
    
    
    20,534
    
    
    
    25,093Other accrued expenses
    
    
    10,983
    
    
    
    4,027Income tax payable
    
    
    1,187
    
    
    
    Short-term borrowings
    
    
    240,872
    
    
    
    Deferred income tax
    
    
    1,406
    
    
    
    Deferred revenue
    
    
    2,204
    
    
    
    1,278Total current liabilities
    
    
    296,663
    
    
    
    46,448Non-current income tax payable
    
    
    4,864
    
    
    
    4,773Deferred income tax, net of current portion
    
    
    14,120
    
    
    
    55Deferred revenue, net of current portion
    
    
    2,306
    
    
    
    2,333Other long-term liabilities
    
    
    2,997
    
    
    
    2,162Commitments and contingenciesStockholders equity:Preferred stock, $0.0001 par value per share; 20,000,000 shares authorized, none
issued and outstanding
    
    
    
    
    
    
    Common stock, $0.0001 par value per share; 200,000,000 shares authorized,
50,581,177 and 52,920,971 shares issued and outstanding at June 30, 2009
and December 31, 2008, respectively
    
    
    5
    
    
    
    5Additional paid-in capital
    
    
    292,828
    
    
    
    382,544Accumulated other comprehensive income
    
    
    4,227
    
    
    
    3,055Retained earnings
    
    
    473,718
    
    
    
    428,156Total stockholders equity
    
    
    770,778
    
    
    
    813,760Total liabilities and stockholders equity
    
    $
    1,091,728
    
    
    $
    869,531
  3




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##### Table of Contents



GEN-PROBE INCORPORATED
 
 CONSOLIDATED STATEMENTS OF INCOME
 
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Product sales
    
    $
    116,816
    
    
    $
    113,701
    
    
    $
    229,338
    
    
    $
    215,208Collaborative research revenue
    
    
    2,187
    
    
    
    4,651
    
    
    
    3,862
    
    
    
    7,110Royalty and license revenue
    
    
    1,542
    
    
    
    1,462
    
    
    
    3,528
    
    
    
    20,059Total revenues
    
    
    120,545
    
    
    
    119,814
    
    
    
    236,728
    
    
    
    242,377Operating expenses:Cost of
product sales (excluding acquisition-related intangibles
amortization)
    
    
    38,280
    
    
    
    32,510
    
    
    
    71,594
    
    
    
    65,146Acquisition-related intangibles amortization
    
    
    1,114
    
    
    
    
    
    
    
    1,114
    
    
    
    Research and development
    
    
    26,069
    
    
    
    29,368
    
    
    
    51,067
    
    
    
    52,434Marketing and sales
    
    
    14,015
    
    
    
    11,453
    
    
    
    25,070
    
    
    
    23,361General and administrative
    
    
    17,823
    
    
    
    13,671
    
    
    
    31,670
    
    
    
    25,608Total operating expenses
    
    
    97,301
    
    
    
    87,002
    
    
    
    180,515
    
    
    
    166,549Income from operations
    
    
    23,244
    
    
    
    32,812
    
    
    
    56,213
    
    
    
    75,828Other income/(expense):Investment
and interest income
    
    
    10,122
    
    
    
    3,900
    
    
    
    15,004
    
    
    
    8,107Interest expense
    
    
    (726
    )
    
    
    (2
    )
    
    
    (877
    )
    
    
    (2
    )Other income/(expense)
    
    
    (895
    )
    
    
    (191
    )
    
    
    (1,037
    )
    
    
    1,282Total other income, net
    
    
    8,501
    
    
    
    3,707
    
    
    
    13,090
    
    
    
    9,387Income before income tax
    
    
    31,745
    
    
    
    36,519
    
    
    
    69,303
    
    
    
    85,215Income tax expense
    
    
    11,930
    
    
    
    11,728
    
    
    
    23,741
    
    
    
    28,479Net income
    
    $
    19,815
    
    
    $
    24,791
    
    
    $
    45,562
    
    
    $
    56,736Net income per share:Basic
    
    $
    0.39
    
    
    $
    0.46
    
    
    $
    0.88
    
    
    $
    1.05Diluted
    
    $
    0.38
    
    
    $
    0.45
    
    
    $
    0.87
    
    
    $
    1.03Weighted average shares outstanding:Basic
    
    
    51,285
    
    
    
    53,907
    
    
    
    51,851
    
    
    
    53,859Diluted
    
    
    52,061
    
    
    
    55,147
    
    
    
    52,598
    
    
    
    55,093
  4




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GEN-PROBE INCORPORATED
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Six Months EndedJune 30,2009
    
    
    2008Operating activitiesNet income
    
    $
    45,562
    
    
    $
    56,736Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    19,463
    
    
    
    17,233Amortization of premiums on investments, net of accretion of discounts
    
    
    2,720
    
    
    
    3,504Stock-based compensation
    
    
    11,405
    
    
    
    9,228Stock-based compensation income tax benefits
    
    
    310
    
    
    
    1,294Excess tax benefit from stock-based compensation
    
    
    (702
    )
    
    
    (614
    )Deferred revenue
    
    
    (255
    )
    
    
    (3,165
    )Deferred income tax
    
    
    (1,041
    )
    
    
    (821
    )Gain on sale of investment in MPI
    
    
    
    
    
    
    (1,600
    )Impairment of intangible assets
    
    
    
    
    
    
    3,496Loss / (gain) on disposal of property and equipment
    
    
    69
    
    
    
    (1
    )Changes in assets and liabilities:Trade and other accounts receivable
    
    
    1,372
    
    
    
    3,290Inventories
    
    
    3,890
    
    
    
    (2,749
    )Prepaid expenses
    
    
    3,137
    
    
    
    5,333Other current assets
    
    
    2,081
    
    
    
    (1,322
    )Goodwill
    
    
    856
    
    
    
    Other long-term assets
    
    
    (2,486
    )
    
    
    (909
    )Accounts payable
    
    
    (2,218
    )
    
    
    3,992Accrued salaries and employee benefits
    
    
    (7,272
    )
    
    
    (1,732
    )Other accrued expenses
    
    
    1,337
    
    
    
    (9
    )Income tax payable
    
    
    (3,704
    )
    
    
    (72
    )Other long-term liabilities
    
    
    335
    
    
    
    603Net cash provided by operating activities
    
    
    74,859
    
    
    
    91,715Investing activitiesProceeds from sales and maturities of marketable securities
    
    
    293,504
    
    
    
    205,283Purchases of marketable securities
    
    
    (189,091
    )
    
    
    (318,558
    )Purchases of property, plant and equipment
    
    
    (14,666
    )
    
    
    (25,717
    )Capitalization of software development costs
    
    
    (288
    )
    
    
    Purchases of intangible assets, including licenses and manufacturing access fees
    
    
    (811
    )
    
    
    (315
    )Net cash paid for business combinations
    
    
    (123,816
    )
    
    
    Proceeds from sale of investment in MPI
    
    
    
    
    
    
    4,100Cash paid for investment in DiagnoCure and related license fees
    
    
    (5,250
    )
    
    
    Cash paid for Roche manufacturing access fees
    
    
    
    
    
    
    (10,000
    )Other assets
    
    
    (289
    )
    
    
    28Net cash used in investing activities
    
    
    (40,707
    )
    
    
    (145,179
    )Financing activitiesExcess tax benefit from stock-based compensation
    
    
    702
    
    
    
    614Repurchase and retirement of restricted stock for payment of taxes
    
    
    (38
    )
    
    
    (479
    )Repurchase
and retirement of common stock
    
    
    (105,577
    )
    
    
    Proceeds from issuance of common stock
    
    
    3,777
    
    
    
    10,814Borrowings under short-term borrowings, net
    
    
    238,450
    
    
    
    Net cash provided by financing activities
    
    
    137,314
    
    
    
    10,949Effect of exchange rate changes on cash and cash equivalents
    
    
    1,918
    
    
    
    14Net increase (decrease) in cash and cash equivalents
    
    
    173,384
    
    
    
    (42,501
    )Cash and cash equivalents at the beginning of period
    
    
    60,122
    
    
    
    75,963Cash and cash equivalents at the end of period
    
    $
    233,506
    
    
    $
    33,462
  5




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Notes to the Consolidated Financial Statements (unaudited)
 Note 1  Summary of significant accounting policies
 Basis of presentation
     Principles of consolidation
   Use of estimates
  Foreign currencies
  6




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Fair value of financial instruments
  Marketable securities
    Revenue recognition
     7




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Adoption of recent accounting pronouncements
 SFAS No. 165
  FSP SFAS No. 115-2
  FSP SFAS No. 107-1
  8




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EITF Issue No. 03-6-1
  SFAS No. 161
  SFAS No. 141(R)
  SFAS No. 160
  EITF Issue No. 07-1
  9




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Pending adoption of recent accounting pronouncements
 SFAS No. 168
 TM
 Note 2  Business combination
 Acquisition
of Tepnel Life Sciences plc
     10




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Total purchase price
    
    
    137,093Exchange rate differences
    
    
    (568
    )(1)Allocated
purchase price
    
    $
    136,525Net working capital
    
    
    15,660Fixed assets
    
    
    11,352Goodwill
    
    
    70,997Deferred tax liabilities
    
    
    (15,599
    )Other intangible assets
    
    
    57,497Liabilities assumed
    
    
    (3,382
    )Allocated purchase price
    
    $
    136,525
 
 (1)
    
    Difference caused by
exchange rate fluctuations between the date of acquisition and the date funds were wired.  Patents
    
    $
    294Software
    
    
    441Customer relationships
    
    
    45,439Trademarks / trade names
    
    
    11,323$
    57,497
  Years ending December 31,Second half of 2009
    
    $
    2,2352010
    
    
    4,4702011
    
    
    4,4702012
    
    
    4,4702013
    
    
    4,470Thereafter
    
    
    37,380Total
    
    $
    57,497
   Goodwill balance as of December 31, 2008
    
    $
    18,621Additional goodwill recognized
    
    
    70,997Changes due to deferred tax assets/liabilities
    
    
    90Changes due to foreign translation
    
    
    974Goodwill balance as of June 30, 2009
    
    $
    90,682
 11




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Note 3  Stock-based compensation
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Cost of product sales
    
    $
    805
    
    
    $
    592
    
    
    $
    1,603
    
    
    $
    1,187Research and development
    
    
    1,765
    
    
    
    1,266
    
    
    
    3,468
    
    
    
    2,701Marketing and sales
    
    
    779
    
    
    
    607
    
    
    
    1,538
    
    
    
    1,302General and administrative
    
    
    2,297
    
    
    
    1,571
    
    
    
    4,796
    
    
    
    4,038Total
    
    $
    5,646
    
    
    $
    4,036
    
    
    $
    11,405
    
    
    $
    9,228
 12




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Stock Option PlansRisk-free interest rate
    
    
    1.7
    %
    
    
    2.6
    %
    
    
    1.6
    %
    
    
    2.7
    %Volatility
    
    
    36
    %
    
    
    34
    %
    
    
    36
    %
    
    
    34
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected term (years)
    
    
    4.2
    
    
    
    4.2
    
    
    
    4.2
    
    
    
    4.2Resulting average fair value
    
    $
    13.50
    
    
    $
    17.37
    
    
    $
    13.30
    
    
    $
    17.41ESPPRisk-free interest rate
    
    
    1.3
    %
    
    
    3.3
    %
    
    
    1.3
    %
    
    
    3.3
    %Volatility
    
    
    47
    %
    
    
    34
    %
    
    
    47
    %
    
    
    34
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected term (years)
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.5Resulting average fair value
    
    $
    12.20
    
    
    $
    14.82
    
    
    $
    12.20
    
    
    $
    14.82
  UnrecognizedWeighted Average
    
    
    Expense as ofRemaining Expense
    
    
    June 30, 2009Awards
    
    Life (In years)
    
    
    (In thousands)Options
    
    
    1.2
    
    
    $
    31,821ESPP
    
    
    0.2
    
    
    
    187Restricted Stock
    
    
    1.7
    
    
    
    10,429Deferred Issuance Restricted Stock
    
    
    1.6
    
    
    
    2,439$
    44,876
 Note 4  Net income per share
  13




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    19,815
    
    
    $
    24,791
    
    
    $
    45,562
    
    
    $
    56,736Weighted average shares outstanding  Basic
    
    
    51,285
    
    
    
    53,907
    
    
    
    51,851
    
    
    
    53,859Effect of dilutive common stock options
outstanding
    
    
    776
    
    
    
    1,240
    
    
    
    747
    
    
    
    1,234Weighted average shares outstanding  Diluted
    
    
    52,061
    
    
    
    55,147
    
    
    
    52,598
    
    
    
    55,093Net income per share:Basic
    
    $
    0.39
    
    
    $
    0.46
    
    
    $
    0.88
    
    
    $
    1.05Diluted
    
    $
    0.38
    
    
    $
    0.45
    
    
    $
    0.87
    
    
    $
    1.03
  Note 5  Fair value measurements
 SFAS No. 157
  
    
    Level 1  Quoted prices for identical instruments in active markets.
 
    
    Level 2  Quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and model-derived
valuations in which all significant inputs and significant value drivers are observable in
active markets.
 
    
    Level 3  Valuations derived from valuation techniques in which one or more
significant inputs or significant value drivers are unobservable.
   Assets and liabilities measured at fair value on a recurring basis:
  14




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Fair Value Measurements at June 30, 2009Quoted prices in
    
    
    
    
    
    
    Significant
    
    
    Total carryingactive markets for
    
    
    Significant other
    
    
    unobservable
    
    
    value in theidentical assets
    
    
    observable inputs
    
    
    inputs
    
    
    consolidated(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    balance sheetAssets:Cash equivalents
    
    $
    
    
    
    $
    168,237
    
    
    $
    
    
    
    $
    168,237Marketable securities
    
    
    
    
    
    
    335,735
    
    
    
    
    
    
    
    335,735Other investments (1)
    
    
    
    
    
    
    4,737
    
    
    
    
    
    
    
    4,737Total assets at fair value
    
    
    
    
    
    
    508,709
    
    
    
    
    
    
    
    508,709Liabilities:Other investments (1)
    
    
    
    
    
    
    4,936
    
    
    
    
    
    
    
    4,936Total liabilities at fair
value
    
    $
    
    
    
    $
    4,936
    
    
    $
    
    
    
    $
    4,936
 
 (1)
    
    Includes the Companys deferred compensation plan liability and related assets which
are invested in corporate owned life insurance policies. Assets and liabilities measured at fair value on a non-recurring basis:
  Equity investment in public company
  Equity investment in private company
   15




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SFAS No. 159
   Note 6  Balance sheet information
  Inventories
 June 30,
    
    
    December 31,2009
    
    
    2008Raw materials and supplies
    
    $
    10,114
    
    
    $
    8,529Work in process
    
    
    21,744
    
    
    
    24,945Finished goods
    
    
    24,597
    
    
    
    20,932$
    56,455
    
    
    $
    54,406
 Property, plant and equipment, net
 June 30,
    
    
    December 31,2009
    
    
    2008Land
    
    $
    19,258
    
    
    $
    18,804Building
    
    
    80,391
    
    
    
    80,426Machinery and equipment
    
    
    174,364
    
    
    
    153,211Building improvements
    
    
    42,241
    
    
    
    34,592Furniture and fixtures
    
    
    17,241
    
    
    
    16,270Construction in-progress
    
    
    558
    
    
    
    19Property, plant and equipment, at cost
    
    
    334,053
    
    
    
    303,322Less accumulated depreciation and amortization
    
    
    (180,286
    )
    
    
    (161,400
    )Property, plant and equipment, net
    
    $
    153,767
    
    
    $
    141,922
 Purchased
intangible assets, net
 June 30,
    
    
    December 31,2009
    
    
    2008Purchased
intangible assets, at cost
    
    $
    92,566
    
    
    $
    33,636Less accumulated amortization
    
    
    (34,636
    )
    
    
    (33,338
    )Purchased intangible assets, net
    
    $
    57,930
    
    
    $
    298
 16




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##### Table of Contents



Licenses, manufacturing access fees and other assets, net
 June 30,
    
    
    December 31,2009
    
    
    2008Patents
    
    $
    14,596
    
    
    $
    13,962Licenses and manufacturing access fees
    
    
    59,595
    
    
    
    64,507Investment in Qualigen
    
    
    5,404
    
    
    
    5,404Investment in DiagnoCure
    
    
    5,000
    
    
    
    Other assets
    
    
    6,097
    
    
    
    3,611Licenses and manufacturing access fees and other assets, at cost
    
    
    90,692
    
    
    
    87,484Less accumulated amortization
    
    
    (28,241
    )
    
    
    (31,174
    )Licenses and manufacturing access fees and other assets, net
    
    $
    62,451
    
    
    $
    56,310
 Other accrued expenses
 June 30,
    
    
    December 31,2009
    
    
    2008Royalties
    
    $
    3,181
    
    
    $
    985Professional fees
    
    
    2,923
    
    
    
    1,494Warranty
    
    
    821
    
    
    
    923Other
    
    
    4,058
    
    
    
    625Other accrued expenses
    
    $
    10,983
    
    
    $
    4,027
 Note 7  Marketable securities
   Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueMunicipal securities
    
    $
    334,114
    
    
    $
    2,143
    
    
    $
    (522
    )
    
    $
    335,735
  Less than 12 Months
    
    
    More than 12 MonthsEstimated
    
    
    Unrealized
    
    
    Estimated
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesMunicipal securities
    
    $
    92,149
    
    
    $
    (227
    )
    
    $
    17,681
    
    
    $
    (295
    )
  17




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##### Table of Contents



June 30,
    
    
    December 31,2009
    
    
    2008Current
    
    $
    230,698
    
    
    $
    371,276Non-current
    
    
    105,037
    
    
    
    73,780Total municipal securities
    
    $
    335,735
    
    
    $
    445,056
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Proceeds from sale of marketable securities
    
    $
    197,284
    
    
    $
    14,862
    
    
    $
    270,943
    
    
    $
    29,267Gross realized gains
    
    $
    6,644
    
    
    $
    89
    
    
    $
    8,516
    
    
    $
    407Gross realized losses
    
    
    (28
    )
    
    
    (22
    )
    
    
    (455
    )
    
    
    (22
    )Net realized gain
    
    $
    6,616
    
    
    $
    67
    
    
    $
    8,061
    
    
    $
    385
 Note 8  Short-term borrowings
      18




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##### Table of Contents



Note 9  Income tax
  Note 10  Stockholders equity
  Balance at December 31, 2008
    
    $
    813,760Net income
    
    
    45,562Other comprehensive income, net
    
    
    1,172Proceeds from the issuance of common stock
    
    
    1,700Proceeds
from the issuance of common stock through ESPP
    
    
    2,077Proceeds
from the issuance of common stock to board members
    
    
    90Repurchase and retirement of common stock
    
    
    (105,577
    )Repurchase and retirement of restricted stock for payment of taxes
    
    
    (38
    )Stock-based compensation
    
    
    11,330Excess tax
benefit from stock-based compensation
    
    
    702Balance at June 30, 2009
    
    $
    770,778
 Comprehensive income
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income, as reported
    
    $
    19,815
    
    
    $
    24,791
    
    
    $
    45,562
    
    
    $
    56,736Other comprehensive (loss) income:Foreign currency translation adjustment
    
    
    3,419
    
    
    
    9
    
    
    
    3,359
    
    
    
    84Change in net unrealized gain on available-for-sale
securities during the period
    
    
    (311
    )
    
    
    (2,758
    )
    
    
    3,053
    
    
    
    (1,275
    )Reclassification adjustments:Net realized gains on available-for-sale securities
    
    
    (4,300
    )
    
    
    (44
    )
    
    
    (5,240
    )
    
    
    (250
    )Total other comprehensive (loss) income, net
    
    
    (1,192
    )
    
    
    (2,793
    )
    
    
    1,172
    
    
    
    (1,441
    )Comprehensive income
    
    $
    18,623
    
    
    $
    21,998
    
    
    $
    46,734
    
    
    $
    55,295
 19




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##### Table of Contents



Stock options
  WeightedAverageRemaining
    
    
    AggregateNumber of
    
    
    Weighted Average
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Exercise Price
    
    
    Life (Years)
    
    
    ValueOutstanding at December 31, 2008
    
    
    5,657
    
    
    $
    44.12Granted
    
    
    267
    
    
    
    42.29Exercised
    
    
    (85
    )
    
    
    20.05Cancelled
    
    
    (71
    )
    
    
    54.22Outstanding at June 30, 2009
    
    
    5,768
    
    
    $
    44.26
    
    
    
    4.6
    
    
    $
    31,723Exercisable at June 30, 2009
    
    
    3,855
    
    
    $
    38.91
    
    
    
    4.1
    
    
    $
    31,128
 Restricted Stock
  WeightedAverageNumber of
    
    
    Grant-DateShares
    
    
    Fair ValueUnvested at December 31, 2008
    
    
    294
    
    
    $
    57.51Granted
    
    
    22
    
    
    
    43.72Vested and exercised
    
    
    (10
    )
    
    
    50.10Forfeited
    
    
    (6
    )
    
    
    52.04Unvested at June 30, 2009
    
    
    300
    
    
    $
    56.87
 Stock Repurchase Program
  Note 11  Contingencies
  Digene Corporation
  20




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Note 12  Derivative financial instruments
   Three Months Ended
    
    
    Six Months EndedLocation of gain/(loss)
    
    
    June 30,
    
    
    June 30,Derivatives not designated as hedging instruments under SFAS No. 133:
    
    recognized in income
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Foreign currency forward contracts
    
    Other income/(expense)
    
    $
    (897
    )
    
    $
    
    
    
    $
    (635
    )
    
    $
    
  21




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Overview
    Recent Events
 Financial Results
   22




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##### Table of Contents



Acquisition of Tepnel Life Sciences plc
   Amended Collaboration Agreement with DiagnoCure Inc.
    Credit Agreement
     23




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##### Table of Contents



Corporate Collaboration with Novartis
     Stock Repurchase Program
  Critical accounting policies and estimates
   24




---



##### Table of Contents



Marketable securities
    Adoption of recent accounting pronouncements
 EITF Issue No. 07-1
  SFAS No. 160
  SFAS No. 141(R)
  25




---



##### Table of Contents



SFAS No. 161
  EITF Issue No. 03-6-1
  FSP SFAS No. 115-2
  FSP SFAS No. 107-1
  SFAS No. 165
  Pending adoption of recent accounting pronouncements
 SFAS No. 168
 TM
 26




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##### Table of Contents



Results of Operations
 Product Sales
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeClinical diagnostics
    
    $
    67.8
    
    
    $
    57.2
    
    
    $
    10.6
    
    
    
    19
    %
    
    $
    127.4
    
    
    $
    109.7
    
    
    $
    17.7
    
    
    
    16
    %Blood screening
    
    
    45.8
    
    
    
    56.5
    
    
    
    (10.7
    )
    
    
    (19
    )%
    
    
    98.7
    
    
    
    105.5
    
    
    
    (6.8
    )
    
    
    (6
    )%Research products and services
    
    
    3.2
    
    
    
    
    
    
    
    3.2
    
    
    
    N/M
    
    
    
    3.2
    
    
    
    
    
    
    
    3.2
    
    
    
    N/MProduct Sales
    
    $
    116.8
    
    
    $
    113.7
    
    
    $
    3.1
    
    
    
    3
    %
    
    $
    229.3
    
    
    $
    215.2
    
    
    $
    14.1
    
    
    
    7
    %As a percent of total revenues
    
    
    97
    %
    
    
    95
    %
    
    
    
    
    
    
    
    
    
    
    97
    %
    
    
    89
    %
    Diagnostic product sales
    27




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##### Table of Contents



Blood screening related sales
   Research Products and Services
  Collaborative research revenue
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeCollaborative Research Revenue
    
    $
    2.2
    
    
    $
    4.6
    
    
    $
    (2.4
    )
    
    
    (52
    )%
    
    $
    3.9
    
    
    $
    7.1
    
    
    $
    (3.2
    )
    
    
    (45
    )%As a percent of total revenues
    
    
    2
    %
    
    
    4
    %
    
    
    
    
    
    
    
    
    
    
    2
    %
    
    
    3
    %
     28




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##### Table of Contents



Royalty and license revenue
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeRoyalty and License Revenue
    
    $
    1.5
    
    
    $
    1.5
    
    
    $
    
    
    
    
    0
    %
    
    $
    3.5
    
    
    $
    20.1
    
    
    $
    (16.6
    )
    
    
    (83
    )%As a percent of total revenues
    
    
    1
    %
    
    
    1
    %
    
    
    
    
    
    
    
    
    
    
    1
    %
    
    
    8
    %
     Cost of product sales
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeCost of Product Sales
    
    $
    38.3
    
    
    $
    32.5
    
    
    $
    5.8
    
    
    
    18
    %
    
    $
    71.6
    
    
    $
    65.1
    
    
    $
    6.5
    
    
    
    10
    %Gross profit margin
as a percent of
product sales
    
    
    67
    %
    
    
    71
    %
    
    
    
    
    
    
    
    
    
    
    69
    %
    
    
    70
    %
      29




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##### Table of Contents




    
    lower overall gross margin percentages for the recently acquired Tepnel business;
    
    an increase in cost of sales related to changes in production volumes; and
    
    an increase in the amortization of intellectual property associated with the
commercialization of our CE-marked APTIMA HPV assay; partially offset by
    
    an increase in instrumentation margins.
    Acquisition-related intangibles amortization
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeAcquisition-related intangibles amortization
    
    $
    1.1
    
    
    $
    
    
    
    $
    1.1
    
    
    
    N/M
    
    
    $
    1.1
    
    
    $
    
    
    
    $
    1.1
    
    
    
    N/MAs a percent of total revenues
    
    
    1
    %
    
    
    0
    %
    
    
    
    
    
    
    
    
    
    
    0
    %
    
    
    0
    %
  Research and development
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeResearch and Development
    
    $
    26.1
    
    
    $
    29.4
    
    
    $
    (3.3
    )
    
    
    (11
    )%
    
    $
    51.1
    
    
    $
    52.4
    
    
    $
    (1.3
    )
    
    
    (2
    )%As a percent of total revenues
    
    
    22
    %
    
    
    25
    %
    
    
    
    
    
    
    
    
    
    
    22
    %
    
    
    22
    %
  30




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##### Table of Contents



Marketing and
sales
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeMarketing and Sales
    
    $
    14.0
    
    
    $
    11.4
    
    
    $
    2.6
    
    
    
    23
    %
    
    $
    25.1
    
    
    $
    23.4
    
    
    $
    1.7
    
    
    
    7
    %As a percent of total revenues
    
    
    12
    %
    
    
    10
    %
    
    
    
    
    
    
    
    
    
    
    11
    %
    
    
    10
    %
   General and administrative
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeGeneral and Administrative
    
    $
    17.8
    
    
    $
    13.7
    
    
    $
    4.1
    
    
    
    30
    %
    
    $
    31.7
    
    
    $
    25.6
    
    
    $
    6.1
    
    
    
    24
    %As a percent of total revenues
    
    
    15
    %
    
    
    11
    %
    
    
    
    
    
    
    
    
    
    
    13
    %
    
    
    11
    %
   Total other income, net
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeInvestment and interest income
    
    $
    10.1
    
    
    $
    3.9
    
    
    $
    6.2
    
    
    
    159
    %
    
    $
    15.0
    
    
    $
    8.1
    
    
    $
    6.9
    
    
    
    85
    %Interest expense
    
    
    (0.7
    )
    
    
    
    
    
    
    (0.7
    )
    
    
    N/M
    
    
    
    (0.9
    )
    
    
    
    
    
    
    (0.9
    )
    
    
    N/MOther income / (expense)
    
    
    (0.9
    )
    
    
    (0.2
    )
    
    
    (0.7
    )
    
    
    N/M
    
    
    
    (1.0
    )
    
    
    1.3
    
    
    
    (2.3
    )
    
    
    N/MTotal other income, net
    
    $
    8.5
    
    
    $
    3.7
    
    
    $
    4.8
    
    
    
    129
    %
    
    $
    13.1
    
    
    $
    9.4
    
    
    $
    3.7
    
    
    
    39
    %
  31




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##### Table of Contents



Income tax expense
 (Dollars in millions)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % Change
    
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeIncome Tax Expense
    
    $
    11.9
    
    
    $
    11.7
    
    
    $
    0.2
    
    
    
    2
    %
    
    $
    23.7
    
    
    $
    28.5
    
    
    $
    (4.8
    )
    
    
    (17
    )%As a percent of income before tax
    
    
    37
    %
    
    
    32
    %
    
    
    
    
    
    
    
    
    
    
    34
    %
    
    
    33
    %
  
    
    non-deductible transaction fees related to our acquisition of Tepnel;
    
    a decrease in our anticipated tax advantaged interest income for the year; and
    
    benefits recognized in the prior year upon settlement of an IRS audit.
  Liquidity and capital resources
 June 30,
    
    
    December 31,2009
    
    
    2008(In thousands)Cash, cash equivalents and current marketable securities
    
    $
    464,204
    
    
    $
    431,398Working capital
    
    
    300,503
    
    
    
    506,457Current ratio
    
    
    2.0
    
    
    
    11.9
    Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change(In thousands)Cash provided by (used in):Operating activities
    
    $
    74,859
    
    
    $
    91,715
    
    
    $
    (16,856
    )Investing activities
    
    
    (40,707
    )
    
    
    (145,179
    )
    
    
    104,472Financing activities
    
    
    137,314
    
    
    
    10,949
    
    
    
    126,365Purchases of property, plant and equipment
(included in investing activities above)
    
    
    (14,666
    )
    
    
    (25,717
    )
    
    
    (11,051
    )
  32




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Contractual obligations and commercial commitments
  Less than
    
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsMaterial purchase commitments (1)
    
    $
    36,442
    
    
    $
    19,014
    
    
    $
    17,428
    
    
    $
    
    
    
    $
    Operating leases (2)
    
    
    5,313
    
    
    
    1,037
    
    
    
    2,031
    
    
    
    1,614
    
    
    
    631Collaborative commitments (3)
    
    
    5,782
    
    
    
    200
    
    
    
    3,458
    
    
    
    750
    
    
    
    1,374Minimum royalty commitments (4)
    
    
    9,505
    
    
    
    960
    
    
    
    3,545
    
    
    
    3,090
    
    
    
    1,910Deferred employee compensation (5)
    
    
    3,291
    
    
    
    951
    
    
    
    1,108
    
    
    
    833
    
    
    
    399Capital leases (6)
    
    
    943
    
    
    
    451
    
    
    
    423
    
    
    
    69
    
    
    
    Total(7)
    
    $
    61,276
    
    
    $
    22,613
    
    
    $
    27,993
    
    
    $
    6,356
    
    
    $
    4,314
 
 (1)
    
    Amounts represent our minimum purchase commitments from key vendors for the TIGRIS,
Panther and Luminex instruments, as well as raw materials used in manufacturing. Of the $36.4
million total, $25.9 million is expected to be used to purchase TIGRIS instruments, of which
we anticipate that approximately $15.4 million
of instruments will be sold to Novartis. Not included in the $36.4 million is $6.6 million
expected to be used to purchase pre-production and production instruments, and
associated tooling, pursuant to our development agreement with Stratec Biomedical Systems AG, or
Stratec, for the Panther instrument, as well as potential minimum purchase commitments under our
supply agreement with Stratec. Our obligations under the supply agreement are contingent on
successful completion of all activities under the development agreement with Stratec.(2)
    
    Reflects obligations for facilities and vehicles under operating leases in place as
of June 30, 2009. Future minimum lease payments are included in the table above. 33




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##### Table of Contents



(3)
    
    In addition to the minimum payments due under our collaborative agreements, we may
be required to pay up to $12.2 million in milestone payments, plus royalties on net sales of
any products using specified technology. We may also be required to pay up to $5.2 million in
future development costs in the form of milestone payments.(4)
    
    Amounts represent our minimum royalties due on the net sales of products
incorporating licensed technology and subject to a minimum annual royalty payment. During the
three and six months ended June 30, 2009, we recorded $2.2 million and $3.8 million,
respectively, in royalty costs related to our various license agreements.(5)
    
    We have liabilities for deferred employee compensation which totaled $4.9 million at
June 30, 2009. These liabilities are typically dependent upon when certain key employees
retire or otherwise leave the Company. Of the $4.9 million, $1.6 million was not included in
the table above as we cannot reasonably predict when these events may occur. Total liabilities
for deferred employee compensation are partially offset by deferred compensation assets, which
totaled $4.7 million at June 30, 2009.(6)
    
    Reflects obligations on capital leases in place as of June 30, 2009. Interest
amounts were not material, therefore, capital lease obligations were shown net of interest
expense in the table above.(7)
    
    Does not include amounts relating to our obligations under our collaboration with
Novartis, pursuant to which both parties have obligations to each other. We are obligated to
manufacture and supply blood screening assays to Novartis, and Novartis is obligated to
purchase all of the assay quantities specified on a 90-day demand forecast, due 90 days prior
to the date Novartis intends to take delivery, and certain quantities specified on a rolling
12-month forecast.    Available Information
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Interest Rate Risk
  34




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##### Table of Contents



Foreign Currency Exchange Risk
    British pounds
    
    $
    3,271Canadian dollars
    
    
    1,691Danish kroner
    
    
    18Euros
    
    
    4,056U.S. dollars
    
    
    31,600Total gross trade accounts receivable
    
    $
    40,636
   
 Item 4. Controls and Procedures
  35




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36




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Our quarterly revenue and operating results may vary significantly in future periods and our stock
price may decline.*
  Our financial performance may be adversely affected by current global economic conditions.
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We are dependent on Novartis and other third parties for the distribution of some of our products.
If any of our distributors terminates its relationship with us or fails to adequately perform, our
product sales will suffer.
      If we cannot maintain our current corporate collaborations and enter into new corporate
collaborations, our product development could be delayed. In particular, any failure by us to
maintain our collaboration with Novartis with respect to blood screening would have a material
adverse effect on our business.
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We may acquire other businesses or form collaborations, strategic alliances and joint ventures
that could decrease our profitability, result in dilution to stockholders or cause us to incur
debt or significant expense, and acquired companies or technologies could be difficult to
integrate and could disrupt our business.*
    
    
    the anticipated financial performance and estimated cost savings and other synergies as
a result of an acquisition;
    
    the inability to retain or replace key employees of any acquired businesses or hire
enough qualified personnel to staff any new or expanded operations;
    
    the impairment of relationships with key customers of acquired businesses due to
changes in management and ownership of the acquired businesses;
    
    the exposure to federal, state, local and foreign tax liabilities in connection with
any acquisition or the integration of any acquired businesses;
    
    the exposure to unknown liabilities;
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
    
    higher than expected acquisition and integration costs that could cause our quarterly
and annual operating results to fluctuate;
    
    increased amortization expenses if an acquisition includes significant intangible
assets;
    
    combining the operations and personnel of acquired businesses with our own, which could
be difficult and costly;
    
    the risk of entering new markets; and
    
    integrating, or completing the development and application of, any acquired
technologies and personnel with diverse business and cultural backgrounds, which could
disrupt our business and divert our managements time and attention.
  Our future success will depend in part upon our ability to enhance existing products and to
develop, introduce and commercialize new products.*
    We face intense competition, and our failure to compete effectively could decrease our revenues
and harm our profitability and results of operations.*
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We have collaboration agreements to develop NAT products for industrial testing applications. We
have limited experience operating in these markets and may not successfully develop commercially
viable products.
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Pseudomonas
aeruginosa.
 Failure to manufacture our products in accordance with product specifications could result in
increased costs, lost revenues, customer dissatisfaction or voluntary product recalls, any of
which could harm our profitability and commercial reputation.
  Disruptions in the supply of raw materials and consumable goods or issues associated with the
quality thereof from our single source suppliers, including Roche Molecular Biochemicals, which is
an affiliate of one of our primary competitors, could result in a significant disruption in sales
and profitability.*
    We have only one third-party manufacturer for each of our instrument product lines, which exposes
us to increased risks associated with production delays, delivery schedules, manufacturing
capability, quality control, quality assurance and costs.
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We and our customers are subject to various governmental regulations, and we may incur significant
expenses to comply with, and experience delays in our product commercialization as a result of,
these regulations.*
   Trichomonas vaginalis Trichomonas
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Trichomonas
vaginalis.
    Our products are subject to recalls even after receiving FDA approval or clearance.
   Our gross profit margin percentage on the sale of blood screening assays will decrease upon the
implementation of smaller pool size testing.
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Because we depend on a small number of customers for a significant portion of our total revenues,
the loss of any of these customers or any cancellation or delay of a large purchase by any of
these customers could significantly reduce our revenues.
  Intellectual property rights on which we rely to protect the technologies underlying our products
may be inadequate to prevent third parties from using our technologies or developing competing
products.
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The diagnostic products industry has a history of patent and other intellectual property
litigation, and we have been and may continue to be involved in costly intellectual property
lawsuits.*
    Our indebtedness could adversely affect our financial health .
   
    
    increase our vulnerability to general adverse economic and industry conditions;
 
    
    have a material adverse effect on our business and financial condition if we are unable
to service our indebtedness or refinance such indebtedness;
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
    
    limit our flexibility in planning for, or reacting to, changes in our business and the
industry in which we operate;
 
    
    place us at a disadvantage compared to our competitors that have less indebtedness; and
 
    
    expose us to higher interest expense in the event of increases in interest rates
because indebtedness under our credit facility bears interest at a variable rate.
  We may be subject to future product liability claims that may exceed the scope and amount of our
insurance coverage, which would expose us to liability for uninsured claims.
  We are exposed to risks associated with acquisitions and other long-lived and intangible assets
that may become impaired and result in an impairment charge.*
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Future changes in financial accounting standards or practices, or existing taxation rules or
practices, may cause adverse unexpected revenue or expense fluctuations and affect our reported
results of operations.
  We expect to continue to incur significant research and development expenses, which may make it
difficult for us to maintain profitability.
  Our marketable securities are subject to market and investment risks which may result in a loss of
value.
  We may not have financing for future capital requirements, which may prevent us from addressing
gaps in our product offerings or improving our technology.
   If we or our contract manufacturers are unable to manufacture our products in sufficient
quantities, on a timely basis, at acceptable costs and in compliance with regulatory requirements,
our ability to sell our products will be harmed.
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Our sales to international markets are subject to additional risks.
   
    
    the imposition of government controls;
 
    
    export license requirements;
 
    
    economic and political instability;
 
    
    price controls;
 
    
    trade restrictions and tariffs;
 
    
    differing local product preferences and product requirements; and
 
    
    changes in foreign medical reimbursement and coverage policies and programs.
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If third-party payors do not reimburse our customers for the use of our clinical diagnostic
products or if they reduce reimbursement levels, our ability to sell our products will be harmed.
    We are dependent on technologies we license, and if we fail to maintain our licenses or license
new technologies and rights to particular nucleic acid sequences for targeted diseases in the
future, we may be limited in our ability to develop new products.*
    If we fail to attract, hire and retain qualified personnel, we may not be able to design, develop,
market or sell our products or successfully manage our business.
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If a natural or man-made disaster strikes our manufacturing facilities, we will be unable to
manufacture our products for a substantial amount of time and our sales will decline.
  If we use biological and hazardous materials in a manner that causes injury or violates laws, we
may be liable for damages.
  The anti-takeover provisions of our certificate of incorporation and by-laws, and provisions of
Delaware law, could delay or prevent a change of control that our stockholders may favor.
  
    
    divide our board of directors into three classes, with members of each class to be
elected for staggered three-year terms;
 
    
    limit the right of stockholders to remove directors;
 
    
    regulate how stockholders may present proposals or nominate directors for election at
annual meetings of stockholders; and
 
    
    authorize our board of directors to issue preferred stock in one or more series,
without stockholder approval.
  If we do not effectively manage our growth, it could affect our ability to pursue opportunities
and expand our business.
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Information technology systems implementation issues could disrupt our internal operations and
adversely affect our financial results.




Our forecasts and other forward looking statements are based upon various assumptions that are
subject to significant uncertainties that may result in our failure to achieve our forecasted
results.




Compliance with changing corporate governance and public disclosure regulations may result in
additional expenses.







Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds


Total Number
    
    
    Approximateof Shares
    
    
    Dollar ValuePurchased as
    
    
    of Shares thatPart of
    
    
    May Yet BePublicly
    
    
    PurchasedTotal Number
    
    
    Average
    
    
    Announced
    
    
    Under theof Shares
    
    
    Price Paid
    
    
    Plans or
    
    
    Plans orPurchased
    
    
    Per Share
    
    
    Programs
    
    
    ProgramsApril 1-30, 2009
    
    
    52,277
    
    
    $
    44.36
    
    
    
    52,200
    
    
    $
    137,087,871May 1-31, 2009
    
    
    1,549,900
    
    
    
    43.64
    
    
    
    1,549,900
    
    
    
    69,453,161June 1-30, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,453,161Total(1)(2)
    
    
    1,602,177
    
    
    
    43.66
    
    
    
    1,602,100





|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | In August 2008, our Board of Directors authorized the repurchase of up to $250.0
million of our common stock over the two years following adoption of the program, through
negotiated or open market transactions. There is no minimum or maximum number of shares to be
repurchased under the program.                                                                                                                                                                                                                                    
|   
|(2) |  | During the second quarter of 2009, we repurchased and retired 77 shares of our
common stock, at an average price of $46.15, withheld by us to satisfy employee tax
obligations upon vesting of restricted stock granted under our 2003 Incentive Award Plan. We
may make similar repurchases in the future to satisfy employee tax obligations upon vesting of
restricted stock. As of June 30, 2009, we had an aggregate of 248,840 shares of restricted
stock and 60,000 shares of deferred issuance restricted stock awards
outstanding.

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Item 4.
    
    Submission of Matters to a Vote of Security Holders
  (1)
    
    To elect three (3) nominees for director to hold office until the 2012 Annual Meeting of
Stockholders.
 
  
  
 (2)
    
    To approve an amendment to our 2003 Incentive Award Plan to increase the number of shares
of common stock authorized for issuance thereunder by 2,500,000 shares. The voting results
for this proposal were as follows:
 
 (3)
    
    To ratify the selection by the Audit Committee of our Board of Directors of Ernst & Young
LLP as our independent auditors for the fiscal year ending December 31, 2009. The voting
results for this proposal were as follows:
 
 (4)
    
    To approve, through a non-binding advisory vote, our Board of Directors proposed
appointment of Carl W. Hull to our Board of Directors, effective May 18, 2009. The voting
results for this proposal were as follows:
 
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Item 6. Exhibits
 ExhibitNumber
    
    Description2.1(1)
    
    Recommended
Cash Offer for Tepnel Life Sciences plc.2.2(2)
    
    Implementation Agreement dated as of January 30, 2009 by and between Gen-Probe
Incorporated and Tepnel Life Sciences plc.3.1(3)
    
    Form of
Amended and Restated Certificate of Incorporation of Gen-Probe
Incorporated.3.2(4)
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation of
Gen-Probe Incorporated.3.3(5)
    
    Amended and
Restated Bylaws of Gen-Probe Incorporated.3.4(6)
    
    Certificate of Elimination of Series A Junior Participating Preferred Stock of
Gen-Probe Incorporated.4.1(3)
    
    Specimen
common stock certificate.10.99
    
    Amendment No. 2 to License, Development and Cooperation Agreement, effective as of
April 28, 2009, between Gen-Probe Incorporated and DiagnoCure,
Inc.**10.100
    
    Amended and
Restated Employment Agreement, effective May 18, 2009, between Gen-Probe
Incorporated and Carl W. Hull.10.101
    
    Form of Grant Notice and Deferred Issuance Restricted Stock Award Agreement between
Gen-Probe Incorporated and Carl W. Hull.10.102(7)
    
    The 2003 Incentive Award Plan of Gen-Probe Incorporated, as adopted by the Board of
Directors on March 20, 2009 and approved by stockholders on
May 14, 2009.31.1
    
    Certification dated August 6, 2009, of Principal Executive Officer required
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification dated August 6, 2009, of Principal Financial Officer required
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification dated August 6, 2009, of Principal Executive Officer required
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification dated August 6, 2009, of Principal Financial Officer required
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 
    
    Filed herewith.
    
    Indicates management contract or
compensatory plan, contract or arrangement.**
    
    Gen-Probe has requested confidential treatment with respect to certain portions of this
exhibit.(1)
    
    Incorporated by reference to Gen-Probes Current Report on Form 8-K filed with the SEC on
January 30, 2009.(2)
    
    Incorporated by reference to Gen-Probes Current Report on Form 8-K filed with the SEC on
February 5, 2009.(3)
    
    Incorporated by reference to Gen-Probes Amendment No. 2 to Registration Statement on Form 10
filed with the SEC on August 14, 2002.(4)
    
    Incorporated by reference to Gen-Probes Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2004 filed with the SEC on August 9,
2004.(5)
    
    Incorporated by reference to Gen-Probes Current Report on Form 8-K filed with the SEC on
February 18, 2009.(6)
    
    Incorporated by reference to Gen-Probes Annual Report on Form 10-K for the year ended
December 31, 2006 filed with the SEC on February 23,
2007.(7)
    
    Incorporated by reference to Gen-Probes Current Report on Form 8-K filed with the SEC on May
19, 2009. 54




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SIGNATURES
  GEN-PROBE INCORPORATEDDATE: August 6, 2009
    By:
    /s/ Carl W. HullCarl W. HullPresident, Chief Executive Officer, and Director
(Principal Executive Officer)DATE: August 6, 2009
    By:
    /s/ Herm RosenmanHerm RosenmanSenior Vice President  Finance and Chief
Financial Officer (Principal Financial Officer and
Principal Accounting Officer) 55