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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q

(Mark One)

|   |  |                                                                                         
|-- |  | ----------------------------------------------------------------------------------------
|x  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 
|   |  | For the quarterly period ended March 30, 2003                                           
|   |  |                                                                                         
|OR
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|   |  | For the transition period from
               to                .                       

Commission file Number: 0-26126

SEROLOGICALS CORPORATION

(Exact Name of Registrant as Specified in its Charter)


|                                                                               |  |                                                   
|------------------------------------------------------------------------------ |  | --------------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization)        |  | 58-2142225
(I.R.S. Employer
Identification Number)
|                                                                               |  |                                                   
|5655 Spalding Drive
Norcross, Georgia
(Address of principal executive offices) |  | 30092
(Zip Code)                                  

(678) 728-2000
(Registrants Telephone Number Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past (90) days.
   
Yes   x   
No   o

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

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

|                                       |  |                              
|-------------------------------------- |  | -----------------------------
|Class                                  |  | Outstanding at April 15, 2003
|                                       |  |                              
|Common Stock, $.01 par value per share |  | 24,471,330                   





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TABLE OF CONTENTS



|                                                |                                                                                               |                                            |  |  |  |  |  | 
|----------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I.                                        
|                                                | Item 1. Financial Statements                                                                 
|                                                |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                                                |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME         
|                                                |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                                |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                                                | Item 4. Controls and Procedures                                                              
|PART II.                                       
|                                                | Item 1. Legal Proceedings                                                                    
|                                                | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                     
|CERTIFICATION OF CHIEF EXECUTIVE OFFICER       
|CERTIFICATION OF CHIEF FINANCIAL OFFICER       
|EX-10.1 SEVERANCE AGREEMENT/ KEITH J. THOMPSON 
|EX-10.2 EMPLOYMENT AGREEMENT/ JEFFERY D. LINTON
|EX-99.1 SECTION 906 CERTIFICATION OF THE CEO   
|EX-99.2 SECTION 906 CERTIFICATION OF THE CFO   



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INDEX

SEROLOGICALS CORPORATION AND SUBSIDIARIES

|                                                                                              |                                                                                                            |  |    |   |  | 
|--------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- |  | -- | - |  | 
|PART I.                                                                                       |                                                                                                            |  |    |  
|Item 1. Financial Statements                                                                  |                                                                                                            |  |    |  
|                                                                                              | Unaudited Consolidated Balance Sheets -
March 30, 2003 and December 29, 2002                               |  |    | 3 | 
|                                                                                              | Unaudited Consolidated Statements of Income -
For the quarters ended March 30, 2003 and March 31, 2002     |  |    | 4 | 
|                                                                                              | Unaudited Consolidated Statements of Cash Flows -
For the quarters ended March 30, 2003 and March 31, 2002 |  |    | 5 | 
|                                                                                              | Unaudited Notes to Consolidated Financial Statements                                                       |  |    | 6 | 
|Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations |                                                                                                            |  | 12 |  
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                            |  | 19 |  
|Item 4. Controls and Procedures                                                               |                                                                                                            |  | 19 |  
|PART II.                                                                                      |                                                                                                            |  |    |  
|Item 1. Legal Proceedings                                                                     |                                                                                                            |  | 20 |  
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                            |  | 20 |  
|SIGNATURES                                                                                    |                                                                                                            |  | 21 |  
|CERTIFICATION OF CHIEF EXECUTIVE OFFICER                                                      |                                                                                                            |  | 22 |  
|CERTIFICATION OF CHIEF FINANCIAL OFFICER                                                      |                                                                                                            |  | 23 |  

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##### Table of Contents






PART I.




Item 1. Financial Statements

SEROLOGICALS CORPORATION AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS


(Unaudited and in thousands)


|                                                                      |                                                                    |                            |                                            |         |           |         |              |         |         |         | 
|--------------------------------------------------------------------- | ------------------------------------------------------------------ | -------------------------- | ------------------------------------------ | ------- | --------- | ------- | ------------ | ------- | ------- | ------- | 
|                                                                      |                                                                    |                            |                                            |         | March 30, |         | December 29,
|                                                                      |                                                                    |                            |                                            |         | 2003      |         | 2002        
|                                                                      |                                                                    |                            |                                            |         |           |         |             
|ASSETS                                                                |                                                                    |                            |                                            |         |           |         |              |        
|CURRENT ASSETS:                                                       |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      | Cash and cash equivalents                                          |                            | $                                          | 21,146  |           |         | $            | 12,850  |        
|                                                                      | Trade accounts receivable, net                                     |                            |                                            | 26,019  |           |         |              | 35,868  |        
|                                                                      | Inventories                                                        |                            |                                            | 29,889  |           |         |              | 26,305  |        
|                                                                      | Other current assets                                               |                            |                                            | 5,786   |           |         |              | 6,692   |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      |                                                                    | Total current assets       |                                            |         | 82,840    |         |              |         | 81,715  |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|PROPERTY AND EQUIPMENT, net                                           |                                                                    |                            | 56,795                                     |         |           |         | 55,461       |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|OTHER ASSETS:                                                         |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      | Goodwill                                                           |                            |                                            | 39,226  |           |         |              | 39,226  |        
|                                                                      | Patents and proprietary know-how, net                              |                            |                                            | 10,512  |           |         |              | 10,704  |        
|                                                                      | Intangible assets, net                                             |                            |                                            | 3,138   |           |         |              | 3,508   |        
|                                                                      | Other, net                                                         |                            |                                            | 1,817   |           |         |              | 551     |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      |                                                                    | Total other assets         |                                            |         | 54,693    |         |              |         | 53,989  |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      |                                                                    |                            | Total assets                               |         | $         | 194,328 |              |         | $       | 191,165 | 
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|LIABILITIES AND STOCKHOLDERS EQUITY                                  |                                                                    |                            |                                            |         |           |         |              |        
|CURRENT LIABILITIES:                                                  |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      | Current maturities of long-term debt and capital lease obligations |                            | $                                          | 199     |           |         | $            | 385     |        
|                                                                      | Accounts payable                                                   |                            |                                            | 3,728   |           |         |              | 5,361   |        
|                                                                      | Accrued liabilities                                                |                            |                                            | 11,747  |           |         |              | 9,833   |        
|                                                                      | Deferred revenue                                                   |                            |                                            | 675     |           |         |              | 668     |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      |                                                                    | Total current liabilities  |                                            |         | 16,349    |         |              |         | 16,247  |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current
maturities |                                                                    |                            | 39                                         |         |           |         | 39           |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|DEFERRED INCOME TAXES                                                 |                                                                    |                            | 4,407                                      |         |           |         | 4,116        |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|OTHER LIABILITIES                                                     |                                                                    |                            | 353                                        |         |           |         | 393          |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|STOCKHOLDERS EQUITY:                                                 |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      | Preferred stock                                                    |                            |                                            |        |           |         |              |        |        
|                                                                      | Common stock                                                       |                            |                                            | 277     |           |         |              | 277     |        
|                                                                      | Additional paid-in capital                                         |                            |                                            | 118,264 |           |         |              | 118,116 |        
|                                                                      | Retained earnings                                                  |                            |                                            | 74,233  |           |         |              | 72,211  |        
|                                                                      | Accumulated other comprehensive loss                               |                            |                                            | 753     |           |         |              | 113     |        
|                                                                      | Less: common stock held in treasury                                |                            |                                            | (20,347 | )         |         |              | (20,347 | )      
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      |                                                                    | Total stockholders equity |                                            |         | 173,180   |         |              |         | 170,370 |        
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        
|                                                                      |                                                                    |                            | Total liabilities and stockholders equity |         | $         | 194,328 |              |         | $       | 191,165 | 
|                                                                      |                                                                    |                            |                                            |         |           |         |              |        

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

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SEROLOGICALS CORPORATION AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF INCOME


(Unaudited and in thousands, except share and per share amounts)


|                             |                                              |   |        |               |  |           |        |            |   | 
|---------------------------- | -------------------------------------------- | - | ------ | ------------- |  | --------- | ------ | ---------- | - | 
|                             |                                              |   |        | Quarter Ended
|                             |                                              |   |        |              
|                             |                                              |   |        | March 30,     |  | March 31,
|                             |                                              |   |        | 2003          |  | 2002     
|                             |                                              |   |        |               |  |          
|Net sales                    |                                              | $ | 30,168 |               |  | $         | 31,470 |           
|Costs and expenses:          |                                              |   |        |               |  |           |        |           
|                             | Cost of sales                                |   |        | 16,449        |  |           |        | 15,987     |  
|                             | Selling, general and administrative expenses |   |        | 7,866         |  |           |        | 10,218     |  
|                             | Research and development                     |   |        | 1,026         |  |           |        | 996        |  
|                             | Special charges                              |   |        | 1,339         |  |           |        |           |  
|                             |                                              |   |        |               |  |           |        |           
|Operating income             |                                              |   | 3,488  |               |  |           | 4,269  |           
|                             | Other expense, net                           |   |        | 315           |  |           |        | 179        |  
|                             | Interest expense (income), net               |   |        | 62            |  |           |        | (76        | )
|                             |                                              |   |        |               |  |           |        |           
|Income before income taxes   |                                              |   | 3,111  |               |  |           | 4,166  |           
|Provision for income taxes   |                                              |   | 1,089  |               |  |           | 1,458  |           
|                             |                                              |   |        |               |  |           |        |           
|Net income                   |                                              | $ | 2,022  |               |  | $         | 2,708  |           
|                             |                                              |   |        |               |  |           |        |           
|Net income per common share: |                                              |   |        |               |  |           |        |           
|                             | Basic                                        |   | $      | 0.08          |  |           | $      | 0.11       |  
|                             |                                              |   |        |               |  |           |        |           
|                             | Diluted                                      |   | $      | 0.08          |  |           | $      | 0.11       |  
|                             |                                              |   |        |               |  |           |        |           
|Weighted average shares:     |                                              |   |        |               |  |           |        |           
|                             | Basic                                        |   |        | 24,453,634    |  |           |        | 24,267,077 |  
|                             |                                              |   |        |               |  |           |        |           
|                             | Diluted                                      |   |        | 24,776,054    |  |           |        | 24,823,061 |  
|                             |                                              |   |        |               |  |           |        |           

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

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SEROLOGICALS CORPORATION AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited and in thousands)


|                                                  |                                                                                   |                                   |                                           |        |                |        |                |        |        |        |  
|------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------- | ----------------------------------------- | ------ | -------------- | ------ | -------------- | ------ | ------ | ------ | -
|                                                  |                                                                                   |                                   |                                           |        | Quarter Ended 
|                                                  |                                                                                   |                                   |                                           |        |               
|                                                  |                                                                                   |                                   |                                           |        | March 30, 2003 |        | March 31, 2002
|                                                  |                                                                                   |                                   |                                           |        |                |        |               
|Operating activities:                             |                                                                                   |                                   |                                           |        |                |        |                |       
|                                                  | Net income                                                                        |                                   | $                                         | 2,022  |                |        | $              | 2,708  |       
|                                                  | Adjustments to reconcile net income to net cash
provided by operating activities: |                                   |                                           |        |                |        |                |        |       
|                                                  | Depreciation and amortization                                                     |                                   |                                           | 1,954  |                |        |                | 1,520  |       
|                                                  | Non-cash special charges                                                          |                                   |                                           | 653    |                |        |                |       |       
|                                                  | Deferred and other compensation                                                   |                                   |                                           | 19     |                |        |                | 48     |       
|                                                  | Tax benefit from exercise of stock options                                        |                                   |                                           | 3      |                |        |                | 449    |       
|                                                  | Changes in operating assets and liabilities:                                      |                                   |                                           |        |                |        |                |        |       
|                                                  |                                                                                   | Trade accounts receivable, net    |                                           |        | 9,849          |        |                |        | 3,563  |       
|                                                  |                                                                                   | Inventories                       |                                           |        | (3,655         | )      |                |        | (2,474 | )     
|                                                  |                                                                                   | Income tax receivable and payable |                                           |        | 953            |        |                |        | 796    |       
|                                                  |                                                                                   | Other current assets              |                                           |        | 126            |        |                |        | 118    |       
|                                                  |                                                                                   | Accounts payable                  |                                           |        | (1,633         | )      |                |        | 645    |       
|                                                  |                                                                                   | Accrued liabilities               |                                           |        | 1,741          |        |                |        | (1,719 | )     
|                                                  |                                                                                   | Deferred revenue                  |                                           |        | 7              |        |                |        | 519    |       
|                                                  |                                                                                   | Other, net                        |                                           |        | (1,219         | )      |                |        | (253   | )     
|                                                  |                                                                                   |                                   |                                           |        |                |        |                |       
|                                                  |                                                                                   | Total adjustments                 |                                           |        | 8,798          |        |                |        | 3,212  |       
|                                                  |                                                                                   |                                   |                                           |        |                |        |                |       
|                                                  |                                                                                   |                                   | Net cash provided by operating activities |        |                | 10,820 |                |        |        | 5,920  |  
|                                                  |                                                                                   |                                   |                                           |        |                |        |                |       
|Investing activities:                             |                                                                                   |                                   |                                           |        |                |        |                |       
|                                                  | Purchases of property and equipment                                               |                                   |                                           | (2,330 | )              |        |                | (2,425 | )     
|                                                  | Other                                                                             |                                   |                                           |       |                |        |                | (125   | )     
|                                                  |                                                                                   |                                   |                                           |        |                |        |                |       
|                                                  |                                                                                   |                                   | Net cash used in investing activities     |        |                | (2,330 | )              |        |        | (2,550 | )
|                                                  |                                                                                   |                                   |                                           |        |                |        |                |       
|Financing activities:                             |                                                                                   |                                   |                                           |        |                |        |                |       
|                                                  | Payments on long-term debt and capital leases                                     |                                   |                                           | (185   | )              |        |                | (674   | )     
|                                                  | Proceeds from stock plans                                                         |                                   |                                           | 126    |                |        |                | 684    |       
|                                                  | Payment of debt issuance costs                                                    |                                   |                                           | (135   | )              |        |                |       |       
|                                                  | Purchase of common stock                                                          |                                   |                                           |       |                |        |                | (347   | )     
|                                                  |                                                                                   |                                   |                                           |        |                |        |                |       
|                                                  |                                                                                   |                                   | Net cash used in financing activities     |        |                | (194   | )              |        |        | (337   | )
|                                                  |                                                                                   |                                   |                                           |        |                |        |                |       
|Net increase in cash and cash equivalents         |                                                                                   |                                   | 8,296                                     |        |                |        | 3,033          |       
|Cash and cash equivalents, beginning of period    |                                                                                   |                                   | 12,850                                    |        |                |        | 10,780         |       
|                                                  |                                                                                   |                                   |                                           |        |                |        |                |       
|Cash and cash equivalents, end of period          |                                                                                   | $                                 | 21,146                                    |        |                | $      | 13,813         |       
|                                                  |                                                                                   |                                   |                                           |        |                |        |                |       
|Supplemental Disclosures:                         |                                                                                   |                                   |                                           |        |                |        |                |       
|Interest paid, net of amounts capitalized         |                                                                                   | $                                 | 15                                        |        |                | $      |               |       
|Income taxes paid                                 |                                                                                   | $                                 | 214                                       |        |                | $      | 258            |       
|Non-Cash Investing and Financing Activities:      |                                                                                   |                                   |                                           |        |                |        |                |       
|Contingent consideration payable                  |                                                                                   | $                                 |                                          |        |                | $      | 450            |       
|Stock acquired by employees in lieu of cash bonus |                                                                                   | $                                 | 138                                       |        |                | $      | 212            |       

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

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SEROLOGICALS CORPORATION AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


MARCH 30, 2003
(UNAUDITED)


1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

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

The Company conducts its manufacturing operations at facilities located in
North America and Europe. The Company operates protein fractionation facilities
located in Kankakee, Illinois and in Toronto, Ontario. These facilities provide
a variety of proteins used in diagnostic reagents and cell culture media
components for use as additives in biotech products. The Company also operates
a monoclonal antibody manufacturing facility in Scotland that is engaged in the
development, manufacturing and sale of monoclonal antibody products for use in
diagnostic products such as blood typing reagents, and in controls for tests
used for diagnosing certain infectious diseases. The Company operates a
facility in Milford, Massachusetts that includes a central product distribution
facility, as well as operations related to the Companys human-sourced
polyclonal antibody business and the production of substrates for use in
diagnostic assays. The Company conducts its therapeutic operations (or blood
plasma operations) through a national network of 10 donor centers that
specialize in the collection of specialty human antibodies.

Effective April 1, 2003, Serologicals completed the acquisition of
Chemicon International, Inc. (Chemicon), a privately-owned company based in
Temecula, California. Chemicon has manufacturing and distribution operations
in Temecula, California, Australia and the United Kingdom. Chemicon provides a
broad range of specialty reagents, kits, antibodies and molecular biology tools
to biotech, pharma and academic research customers working in the areas of
neuroscience, infectious disease, drug discovery, cancer research, stem cell
research and proteomics. Chemicon is also a leading supplier of monoclonal
antibodies, conjugates, antibody blends and kits for use in the diagnostic
laboratory. The acquisition of Chemicon greatly expands the Companys range of
products and customers within the research market. The purchase price of $95
million was funded with the proceeds from an $82.5 million five-year term loan
and cash on hand. The results of operations of Chemicon will be included in
the Companys financial statements beginning April 1, 2003.

Basis of Presentation

The accompanying unaudited consolidated financial statements include the
accounts of Serologicals and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. The
accompanying statements have been prepared in accordance with accounting
principles generally accepted in the United States for interim financial
information and the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements. In
the opinion of management, the accompanying unaudited consolidated financial
statements reflect all adjustments, which are of a normal recurring nature, to
present fairly Serologicals financial position, results of operations and cash
flows at the dates and for the periods presented. Interim results of
operations are not necessarily indicative of results to be expected for the
full year. The interim

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financial statements should be read in conjunction with
the audited consolidated financial statements as of December 29, 2002 and the
notes thereto included in the Companys Annual Report on Form 10-K for the year
ended December 29, 2002.

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

Inventories

Inventories are stated at the lower of cost or market, cost being
determined on a first-in, first-out basis. Market for product inventories is
net realizable value and for supplies is replacement cost. The components of
inventories are stated as follows (in thousands):

|                |       |   |                |        |                   |   |        |        | 
|--------------- | ----- | - | -------------- | ------ | ----------------- | - | ------ | ------ | 
|                |       |   | March 30, 2003 |        | December 29, 2002
|                |       |   |                |        |                  
|Raw materials   |       | $ | 4,480          |        |                   | $ | 4,167  |       
|Work in process |       |   | 5,125          |        |                   |   | 4,132  |       
|Finished goods  |       |   | 20,284         |        |                   |   | 18,006 |       
|                |       |   |                |        |                   |   |        |       
|                | Total |   | $              | 29,889 |                   |   | $      | 26,305 | 
|                |       |   |                |        |                   |   |        |       

Earnings per Share

Basic earnings per share are calculated by dividing net income by the
weighted average number of common shares outstanding during the period. The
calculation of diluted earnings per share is similar to basic earnings per
share, except the weighted average number of shares includes the dilutive
effect of stock options, stock awards and similar instruments.

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

|                                                                                    |                                                     |                      |        |               |      |           |        |        |      | 
|----------------------------------------------------------------------------------- | --------------------------------------------------- | -------------------- | ------ | ------------- | ---- | --------- | ------ | ------ | ---- | 
|                                                                                    |                                                     |                      |        | Quarter Ended
|                                                                                    |                                                     |                      |        |              
|                                                                                    |                                                     |                      |        | March 30,     |      | March 31,
|                                                                                    |                                                     |                      |        | 2003          |      | 2002     
|                                                                                    |                                                     |                      |        |               |      |          
|Basic earnings per share:                                                           |                                                     |                      |        |               |      |           |        |       
|                                                                                    | Net income                                          |                      | $      | 2,022         |      |           | $      | 2,708  |     
|                                                                                    | Weighted average shares of common stock outstanding |                      |        | 24,454        |      |           |        | 24,267 |     
|                                                                                    |                                                     |                      |        |               |      |           |        |       
|                                                                                    |                                                     | Net income per share |        | $             | 0.08 |           |        | $      | 0.11 | 
|                                                                                    |                                                     |                      |        |               |      |           |        |       
|Diluted earnings per share:                                                         |                                                     |                      |        |               |      |           |        |       
|                                                                                    | Net income                                          |                      | $      | 2,022         |      |           | $      | 2,708  |     
|                                                                                    | Weighted average shares of common stock outstanding |                      |        | 24,454        |      |           |        | 24,267 |     
|                                                                                    | Effect of dilutive securities:                      |                      |        |               |      |           |        |        |     
|                                                                                    |                                                     | Stock options        |        |               | 306  |           |        |        | 543  | 
|                                                                                    |                                                     | Common stock awards  |        |               | 16   |           |        |        | 13   | 
|                                                                                    |                                                     |                      |        |               |      |           |        |       
|Weighted average shares of common stock outstanding,
including dilutive instruments |                                                     |                      | 24,776 |               |      |           | 24,823 |       
|                                                                                    |                                                     |                      |        |               |      |           |        |       
|                                                                                    | Net income per share                                |                      | $      | 0.08          |      |           | $      | 0.11   |     
|                                                                                    |                                                     |                      |        |               |      |           |        |       

For the quarters ended March 30, 2003 and March 31, 2002, the effect of
diluted shares totaling approximately 1.3 million and 0.4 million shares,
respectively, were excluded from the calculation of diluted shares outstanding
as the option price exceeded the average market price for the Companys stock
during the period and thus their effect was anti-dilutive.

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Stock-Based Compensation Plan

At March 30, 2003, the Company has one stock-based employee compensation
plan. The Company accounts for this plan under the recognition and measurement
principles of Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations. No stock-based
employee compensation cost is reflected in net income, as all options granted
under this plan had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following table illustrates
the effect on net income and earnings per share if the Company had applied the
fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation (in thousands, except per
share amounts):

|                                                                                                                                            |                       |   |                |      |                |   |       |      | 
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | - | -------------- | ---- | -------------- | - | ----- | ---- | 
|                                                                                                                                            |                       |   | Quarter Ended 
|                                                                                                                                            |                       |   |               
|                                                                                                                                            |                       |   | March 30, 2003 |      | March 31, 2002
|                                                                                                                                            |                       |   |                |      |               
|Net income, as reported                                                                                                                     |                       | $ | 2,022          |      |                | $ | 2,708 |     
|Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects |                       |   | 488            |      |                |   | 280   |     
|Pro forma net income                                                                                                                        |                       | $ | 1,534          |      |                | $ | 2,428 |     
|Earnings per share:                                                                                                                         |                       |   |                |      |                |   |       |     
|                                                                                                                                            | Basic
 as reported   |   | $              | 0.08 |                |   | $     | 0.11 | 
|                                                                                                                                            | Basic
 pro forma     |   |                | 0.06 |                |   |       | 0.10 | 
|                                                                                                                                            | Diluted
 as reported |   | $              | 0.08 |                |   | $     | 0.11 | 
|                                                                                                                                            | Diluted
 pro forma   |   |                | 0.06 |                |   |       | 0.10 | 

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

Comprehensive Income



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

|                                               |                                          |   |               |     |           |   |       |      |  
|---------------------------------------------- | ---------------------------------------- | - | ------------- | --- | --------- | - | ----- | ---- | -
|                                               |                                          |   | Quarter Ended
|                                               |                                          |   |              
|                                               |                                          |   | March 30,     |     | March 31,
|                                               |                                          |   | 2003          |     | 2002     
|                                               |                                          |   |               |     |          
|Net income, as reported                        |                                          | $ | 2,022         |     |           | $ | 2,708 |     
|Other comprehensive loss (income), net of tax: |                                          |   |               |     |           |   |       |     
|                                               | Foreign currency translation adjustments |   |               | 640 |           |   |       | (204 | )
|                                               |                                          |   |               |     |           |   |       |     
|Comprehensive income                           |                                          | $ | 2,662         |     |           | $ | 2,504 |     
|                                               |                                          |   |               |     |           |   |       |     

2. SPECIAL CHARGES

During the first quarter 2003 the Company closed three of its thirteen
donor centers, located in Birmingham, Alabama; Washington D.C.; and Provo,
Utah. The donor base for the Provo center will be integrated into the
Companys Salt Lake City, Utah center. As a result of these closings, the
Company recorded a charge of $0.8 million. The components of the charge
included approximately $0.3 million for employee termination costs, $0.3
million for lease termination costs and $0.2 million related to write-off of
certain long-

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lived assets. The employee termination costs covered
approximately 46 employees. Employee termination costs and lease termination
costs are expected to be paid by the end of 2003. The employee termination and
headcount also includes employees terminated at the Companys central testing
laboratory.

During the first quarter 2003 the Company also incurred special charges of
approximately $0.5 million. Subsequent to notifying the lender of our intent
to terminate the existing credit facility the Company recorded a charge of
approximately $0.4 million related to the write-off of debt issuance costs.
Additionally, the Company recorded a charge of $0.1 million related to a loss
associated with an equipment failure at the Toronto facility and other
termination costs. These termination benefits are expected to be paid by the
end of the first quarter 2004.

The following table summarizes the activity in the accrual for termination
benefits and other costs for the first quarter ended March 30, 2003:

|                           |  |                   |       |          |  |                   |     |                  |  |   |      |   |  |   |     | 
|-------------------------- |  | ----------------- | ----- | -------- |  | ----------------- | --- | ---------------- |  | - | ---- | - |  | - | --- | 
|Description                |  | Balance, 12/29/02 |       | Expenses |  | Expenses Incurred |     | Balance, 3/30/03
|                           |  |                   |       |          |  |                   |     |                 
|Employee termination costs |  | $                 | 1,026 |          |  | $                 | 365 |                  |  | $ | (441 | ) |  | $ | 950 | 
|Lease termination costs    |  |                   | 325   |          |  |                   | 244 |                  |  |   | (17  | ) |  |   | 552 | 
|Asset impairment           |  |                   |      |          |  |                   | 653 |                  |  |   | (653 | ) |  |   |    | 
|Other                      |  |                   |      |          |  |                   | 77  |                  |  |   | (77  | ) |  |   |    | 

The remaining accrual of $1.5 million is included in Accrued liabilities
in the Consolidated Balance Sheets. All of these amounts are expected to be
paid in 2003 and 2004.

3. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long-term debt and capital lease obligations at March 30, 2003 and
December 29, 2002 consisted of the following (in thousands):

|                                                                                |  |                |     |                   |  |   |     | 
|------------------------------------------------------------------------------- |  | -------------- | --- | ----------------- |  | - | --- | 
|                                                                                |  | March 30, 2003 |     | December 29, 2002
|                                                                                |  |                |     |                  
|Capital lease obligations at varying interest rates and terms, maturing
in 2004 |  | $              | 238 |                   |  | $ | 424 | 
|                                                                                |  |                |     |                   |  |   |     | 
|                                                                                |  |                | 238 |                   |  |   | 424 | 
|Less: current maturities                                                        |  |                | 199 |                   |  |   | 385 | 
|                                                                                |  |                |     |                   |  |   |     | 
|                                                                                |  | $              | 39  |                   |  | $ | 39  | 
|                                                                                |  |                |     |                   |  |   |     | 

On April 7, 2003, the Company entered into a new $82.5 million five-year
term loan. This term loan, combined with a new revolving credit facility (the
Revolver) of $35 million, replaced the Companys existing $65 million
facility. The credit facility bears interest at a floating rate of interest
determined by reference to a base rate or to Eurodollar interest rates, plus a
margin. The margin on base rate loans is 3.25% and 2.75% for the term loan and
Revolver, respectively. The margin on Eurodollar loans is 4.25% and 3.75% for
the term loan and Revolver, respectively. The Company is required to pay a
commitment fee ranging from .5% to .75%, depending on the Companys leverage
and amounts borrowed under the revolving credit facility. The applicable
margins and commitment fees on the unused portion of the Revolver are subject
to adjustment on future adjustment dates based on the consolidated leverage
ratio of the Company. The term loan and Revolver are secured by substantially
all of the assets of the Company. The term loan and Revolver contain certain
financial covenants that require the maintenance of a minimum interest coverage
ratio, a fixed charge coverage ratio and earnings before interest, taxes,
depreciation and amortization and that also provide for a maximum leverage
ratio and limitations on capital expenditures. Furthermore, under the terms of
the term loan and Revolver, there are covenants dealing with acquisitions,
repurchasing common stock and on the Companys ability to pay dividends. The
following table reflects the principal payments under the term loan (in
thousands):

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|     |  |   |        | 
|---- |  | - | ------ | 
|2003 |  | $ | 500    | 
|2004 |  |   | 4,625  | 
|2005 |  |   | 12,375 | 
|2006 |  |   | 26,813 | 
|2007 |  |   | 22,187 | 
|2008 |  |   | 16,000 | 
|     |  |   |        | 
|     |  | $ | 82,500 | 
|     |  |   |        | 

The Company capitalizes interest on borrowings during the active
construction period of major capital projects. During the first quarter of
2002, the Company capitalized approximately $0.2 million in connection with
various projects. During the first quarter 2003, the Company capitalized an
immaterial amount of interest.

4. SEGMENT INFORMATION

Statement of Financial Accounting Standards No. 131, Disclosure about
Segments of an Enterprise and Related Information (SFAS No. 131), requires
the reporting of information about operating segments in annual financial
statements and requires selected information in interim financial reports.
Beginning in 2003, for management purposes the operations of the Companys
subsidiaries are organized into four primary operating segments: Cell Culture
Products (Cell Culture), Diagnostic Products (Diagnostics), Research
Products (Research) and Therapeutic Products (Therapeutics). These segments
are based primarily on the differing nature of the ultimate end use of the
Companys products, the differing production, manufacturing and other
value-added processes performed by the Company with respect to the products
and, to a lesser extent, the differing customer bases to which each reportable
segment sells its products. During 2002, the Company reported only three
operating segments, Biotechnology and Molecular Biology Products, Therapeutic
Products and Diagnostic Products. As a result of the Chemicon acquisition, as
well as the increased significance of the Companys Research products, the
Company has developed a significant portfolio of products used in applications
within the research and development fields.

The Cell Culture segment products consist of cell culture media and
supplements for drug development, biomanufacturing and life science research.
The Companys flagship product within this segment is EX-CYTE®. Other key
products within the Cell Culture segment include bovine serum albumin (BSA),
recombinant insulin and other products used principally in mammalian cell
culture. The key products within the Diagnostic segment are monoclonal
antibodies used in blood typing reagents and diagnostic antibodies
and certain human-sourced polyclonal antibodies. The
activities of the Research segment primarily include manufacturing and sales of
antibodies and molecular biology products. The operating results of Chemicon
will be reported in this segment beginning in the second quarter of 2003. The
key products within the Therapeutic segment are specialty antibodies, including
Anti-D immune globulin (anti-D), Anti-Hepatitis B immune globulin
(anti-HBs), Vaccinia immune globulin (vaccinia) and Anti-Rabies immune
globulin (anti-rabies). All of the comparisons discussed below reflect the
restatement of the prior year segments so that they are consistent with the
current year presentation.

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|                           |                                     |   |               |        |           |   |       |        |  
|-------------------------- | ----------------------------------- | - | ------------- | ------ | --------- | - | ----- | ------ | -
|                           |                                     |   | Quarter Ended
|                           |                                     |   |              
|                           |                                     |   | March 30,     |        | March 31,
|                           |                                     |   | 2003          |        | 2002     
|                           |                                     |   |               |        |          
|Net sales:                 |                                     |   |               |        |           |   |       |       
|                           | Cell Culture Products               |   | $             | 13,766 |           |   | $     | 15,190 |  
|                           | Diagnostic Products                 |   |               | 7,169  |           |   |       | 6,701  |  
|                           | Research Products                   |   |               | 1,048  |           |   |       | 1,010  |  
|                           | Therapeutic Products                |   |               | 8,185  |           |   |       | 8,569  |  
|                           |                                     |   |               |        |           |   |       |        |  
|                           | Total                               |   | $             | 30,168 |           |   | $     | 31,470 |  
|                           |                                     |   |               |        |           |   |       |       
|Gross profit:              |                                     |   |               |        |           |   |       |       
|                           | Cell Culture Products               |   | $             | 7,079  |           |   | $     | 7,861  |  
|                           | Diagnostic Products                 |   |               | 3,873  |           |   |       | 3,675  |  
|                           | Research Products                   |   |               | 817    |           |   |       | 397    |  
|                           | Therapeutic Products                |   |               | 1,950  |           |   |       | 3,550  |  
|                           |                                     |   |               |        |           |   |       |        |  
|                           | Total                               |   |               | 13,719 |           |   |       | 15,483 |  
|Reconciling items:         |                                     |   |               |        |           |   |       |       
|                           | Selling, general and administrative |   |               | 7,866  |           |   |       | 10,218 |  
|                           | Research and development            |   |               | 1,026  |           |   |       | 996    |  
|                           | Special charges                     |   |               | 1,339  |           |   |       |       |  
|                           | Other expense, net                  |   |               | 315    |           |   |       | 179    |  
|                           | Interest expense (income), net      |   |               | 62     |           |   |       | (76    | )
|                           |                                     |   |               |        |           |   |       |        |  
|Income before income taxes |                                     | $ | 3,111         |        |           | $ | 4,166 |       
|                           |                                     |   |               |        |           |   |       |       

5. OTHER SUBSEQUENT EVENTS

During April 2003, the Company decided to transfer the responsibility for
manufacturing and distribution of its research products from Gaithersburg,
Maryland to the Chemicon division. This transfer is expected to provide a more
competitive focus for the manufacturing, sales and distribution of these
products and is anticipated to be complete by the end of the third quarter of
2003. In addition, during April 2003, the Company continued to review its
resources related to supporting other areas of the Company to ensure that it is
focused on primary growth areas related to its strategic plan. As a result of
these efforts, including its ongoing product rationalization initiatives, the
Company has reduced its workforce at various locations including the Kankakee
facility, the Milford facility and the corporate office. In total, the Company
reduced its workforce by approximately 50 positions during the second quarter.
The Company is in the process of estimating the cost of these events, pending
the disposition of its lease at the Gaithersburg facility, which runs through
2009, and determining which fixed assets will be relocated to Chemicon. The
Company expects to record special charges related to termination benefits,
asset impairments and lease commitments associated with the relocation of
research products from Gaithersburg, Maryland to Chemicon during the remainder
of 2003.

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Forward Looking Statements

This Quarterly Report on Form 10-Q contains certain forward looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, which generally can be identified by the use of forward looking
terminology such as may, will, expect, anticipate, intend,
estimate, plan, believe, or continue or the negative thereof or other
variations thereon or similar terminology. These forward-looking statements
include, without limitation, sales expectations for certain of the Companys
products, particularly, Therapeutic Products; the level of capital expenditures
during 2003; the sufficiency of capital and liquidity to fund operations,
capital expenditures, and acquisitions; the timing of completing the transfer
of the Gaithersburg products to the Chemicon division; expectations that the
Chemicon acquisition will be slightly accretive to 2003 earnings; the ability
to meet demand for plasma products through the Companys 10 remaining
collection centers; expectations for full year revenues and earnings per share;
and the possibility of reporting special charges in future quarters and the
materiality of such charges. These forward looking statements are subject to
certain risks and uncertainties, such as changes in the economy or market
conditions; changes in financial, banking and capital markets; changes in
customers needs or abilities to manufacture products; changes in government
policy or regulations; the ability to attract and retain qualified donors; the
Companys ability to successfully integrate the operations of Chemicon; the
Companys ability to service its substantial level of indebtedness following
the Chemicon acquisition; the Companys ability to maintain and expand its
customer base; increased competition for donors, which may affect the Companys
ability to attract and retain qualified donors; the Companys ability to comply
with various regulatory, customer and other standards; the impact of
competition; changes in government and industry mandated regulations or
customer specifications; changes in the markets or customers demand for the
Companys products and services; the ability of the Company to complete
construction and validation of its new EX-CYTE® manufacturing facility during
the first half of 2004; and the ability of the Company to identify new product
opportunities that it can successfully commercialize and other factors
discussed in Part I of the Companys Annual Report on Form 10-K for the year
ended December 29, 2002, which could cause actual results to differ materially.

Forward-looking statements are only predictions and are not guarantees of
performance. Forward-looking statements are based on current expectations of
future events. The forward-looking statements contained in this Quarterly
Report on Form 10-Q are based on the Companys current views and assumptions
regarding future events and operating performance. These assumptions could
prove inaccurate, or unknown risks or uncertainties materialize, which could
cause the Companys actual results to differ materially from the Companys
expectations or predictions. Many of these factors are beyond the Companys
ability to control or predict.




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

Overview

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

The Company conducts its manufacturing operations at facilities located in
North America and Europe. The Company operates protein fractionation facilities
located in Kankakee, Illinois and in Toronto, Ontario. These facilities provide
a variety of proteins used in diagnostic reagents and cell culture media
components for use as additives in biotech products. The Company also operates
a monoclonal antibody manufacturing facility in Scotland that is engaged in the
development, manufacturing and sale of monoclonal antibody products for use in
diagnostic products such as blood typing reagents, and in controls for tests
used for diagnosing certain infectious diseases. The Company operates a
facility in Milford, Massachusetts that includes a central product

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distribution
facility, as well as operations related to the Companys human-sourced
polyclonal antibody business and the production of substrates for use in
diagnostic assays. The Company conducts its therapeutic operations (or blood
plasma operations) through a national network of 10 donor centers that
specialize in the collection of specialty human antibodies.

Effective April 1, 2003, Serologicals completed the acquisition of
Chemicon International, Inc. (Chemicon), a privately-owned company based in
Temecula, California. Chemicon has manufacturing and distribution operations
in Temecula, California, Australia and the United Kingdom. Chemicon provides a
broad range of specialty reagents, kits, antibodies and molecular biology tools
to biotech, pharma and academic research customers working in the areas of
neuroscience, infectious disease, drug discovery, cancer research, stem cell
research and proteomics. Chemicon is also a
leading supplier of monoclonal antibodies, conjugates, antibody blends and
kits for use in the diagnostic laboratory. The acquisition of Chemicon greatly
expands the Companys range of products and customers within the research
market.The purchase price of $95 million was funded with the proceeds from an
$82.5 million five-year term loan and cash on hand. The results of operations
of Chemicon will be included in the Companys financial statements beginning
April 1, 2003.

Beginning in 2003, for management purposes the operations of the Companys
subsidiaries are organized into four primary operating segments: Cell Culture
Products (Cell Culture), Diagnostic Products (Diagnostics), Research
Products (Research) and Therapeutic Products (Therapeutics). These segments
are based primarily on the differing nature of the ultimate end use of the
Companys products, the differing production, manufacturing and other
value-added processes performed by the Company with respect to the products
and, to a lesser extent, the differing customer bases to which each reportable
segment sells its products. During 2002, the Company reported only three
operating segments, Biotechnology and Molecular Biology Products, Therapeutic
Products and Diagnostic Products. As a result of the Chemicon acquisition, as
well as the increased significance of the Companys Research products, the
Company has developed a significant portfolio of products used in applications
within the research and development fields.

The Cell Culture segment includes operations at the Companys protein
fractionation facilities. Cell Culture products consist of cell culture media
and supplements for drug development, biomanufacturing and life science
research. The Companys flagship product within this segment is EX-CYTE®.
Other key products within Cell Culture include bovine serum albumin (BSA),
human recombinant insulin and other products used principally in mammalian cell
culture. The activities of the Diagnostic segment include the operations of
the Companys monoclonal antibody manufacturing facility and certain
human-sourced polyclonal antibodies. The products within the Diagnostic
segment are used in blood typing reagents and diagnostic test kits. The
activities of the Research segment primarily include manufacturing and sales of
antibodies and molecular biology products. The operating results of Chemicon
will be reported in this segment beginning second quarter 2003. The activities
of the Therapeutic segment include the collection and sale of specialty human
antibodies that are used as active ingredients in therapeutic products for the
treatment and management of various human diseases. The key products within
the Therapeutic segment are specialty antibodies, including Anti-D immune
globulin (anti-D), Anti-Hepatitis B immune globulin (anti-HBs), Vaccinia
immune globulin (vaccinia) and Anti-Rabies immune globulin (anti-rabies).
All of the comparisons below reflect the restatement of the prior year segment
so that they are consistent with the current year presentation.

Critical Accounting Policies

The consolidated financial statements are presented on the basis of
accounting principles that are generally accepted in the United States of
America, which require management to make estimates that affect the amount of
revenues, expenses, assets and liabilities reported. The following are five
critical accounting policies that are both very important to the portrayal of
the Companys financial condition and results of operations and required
managements most difficult, subjective, or complex judgments. The accounting
for these matters were based on current facts and circumstances which, in
managements judgment, hold potential for change which could affect
managements future estimates. Therefore, future financial results could differ
materially from current financial results based on managements current
estimates.

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Revenue recognition

The Company recognizes revenue in accordance with SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101).
SAB 101 requires that four basic criteria must be met before revenue can be
recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred; (3) the selling price is fixed and determinable; and (4)
collectibility is reasonably assured. Determination of criteria (3) and (4) are
based on managements judgments regarding the fixed nature of the selling
prices of the products delivered and the collectibility of those amounts. The
Company has negotiated volume pricing discounts with certain customers that
provide for a discount if certain volumes of the Companys products are
purchased. The Company defers any revenue subject to refund if the volumes are
met under these arrangements until such time that the Company and the customer
jointly determine that the volumes required for discount will not be achieved.
If the amount of revenue deferred were to be inaccurate, the Company may have
over or under stated revenue and accounts receivables, accordingly.

Accounts receivable

The Company performs ongoing credit evaluations of its customers and
adjusts credit limits based upon payment history and the customers current
credit worthiness, as determined by review of current credit information. The
Company monitors collections and payments from its customers and maintains a
provision for estimated credit losses based upon historical experience and any
specific customer collection issues that have been identified. These estimates
may prove to
be inaccurate, in which case the Company may have over or under stated the
reserve required for uncollectible accounts receivables and selling, general
and administrative expense, accordingly.

Inventory

Inventories are carried at the lower of cost or market. Cost includes
materials, labor and overhead. Market, with respect to all inventories, is
replacement cost or net realizable value. Management frequently reviews
inventory to determine the necessity of reserves for excess, obsolete or
unsaleable inventory. These reviews require management to assess customer and
market demand as well as age of inventory on-hand. These estimates may prove to
be inaccurate, in which case the Company may have over or under stated the
reserve required for excess, obsolete or unsaleable inventory and its cost of
goods sold, accordingly.

Valuation of goodwill and other intangible assets

The Company periodically evaluates its goodwill and intangibles for
potential impairment whenever events or changes occur that indicate the
carrying value may no longer be recoverable. Evaluations are based on estimated
discounted future cash flows from the use and eventual disposition of the
underlying assets. In the first quarter of 2002, the Company adopted Statement
of Financial Standard No. 142, Goodwill and Other Intangible Assets (SFAS
No. 142). Additionally in accordance with SFAS 142, the Company performs an
annual impairment review of its intangible assets as of the end of the second
quarter. The estimates used to evaluate the fair value of goodwill and other
intangibles assets may prove to be inaccurate, in which case the Company may
have over stated goodwill and other intangible assets.

Deferred income taxes

The Company recognizes deferred tax assets and liabilities based on
differences between the carrying amount in the financial statements and the tax
bases of assets and liabilities. The Company regularly reviews its deferred tax
assets for recoverability. If the Company determines that the recoverability of
its deferred tax assets is not probable, a valuation allowance is recorded
against these assets. The estimates used to evaluate the recoverability of
deferred tax assets may prove to be inaccurate, in which case the Company may
have over or under stated income tax valuation allowances and its provision for
income taxes, accordingly.

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The Company uses a combination of historical results, anticipated future
events and detailed assessment of relevant facts and circumstances to estimate
and make assumptions relating to its critical accounting policies. Actual
results could differ from those estimates.

Results of Operations

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

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

|                                             |  |               |       |           |  |  |       |  
|-------------------------------------------- |  | ------------- | ----- | --------- |  |  | ----- | -
|                                             |  | Quarter Ended
|                                             |  |              
|                                             |  | March 30,     |       | March 31,
|                                             |  | 2003          |       | 2002     
|                                             |  |               |       |          
|Net sales                                    |  |               | 100.0 | %         |  |  | 100.0 | %
|Gross profit                                 |  |               | 45.5  | %         |  |  | 49.2  | %
|Selling, general and administrative expenses |  |               | 26.1  | %         |  |  | 32.5  | %
|Research and development                     |  |               | 3.4   | %         |  |  | 3.2   | %
|Income before income taxes                   |  |               | 10.3  | %         |  |  | 13.2  | %

Quarters Ended March 30, 2003 and March 31, 2002

NET SALES

Consolidated

Consolidated net sales decreased approximately $1.3 million or 4%, from
$31.5 million during the first quarter of 2002 to $30.2 million during the
first quarter of 2003. The decrease was principally due to declines in sales
of Cell Culture products, primarily because one of the Companys major
customers deferred its shipments until the second half of 2003.

Cell Culture Products

Net sales of Cell Culture Products declined $1.4 million or 9% from $15.2
million in the first quarter of 2002 to $13.8 million in the first quarter of
2003. The decrease was principally due to lower sales of EX-CYTE®, primarily
because one of the Companys major customers deferred its shipments until the
second half of 2003. Sales of EX-CYTE® declined approximately $1.3 million
from $5.9 million in the first quarter of 2002 to $4.6 million in the first
quarter of 2003. Sales of BSA increased approximately $1.0 million or 29% from
$3.4 million in the first quarter of 2002 to $4.3 million in the first quarter
of 2003. The increase in BSA is largely due to the Toronto plant coming on
line in January 2003. Sales of media supplements remained stable at $3.3
million in the first quarter of 2002 and $3.4 million in the first quarter of
2003. The increase in BSA was offset by declines in other Cell
Culture Products.

Diagnostic Products

Net sales of Diagnostic Products increased approximately $0.5 million, or
7%, from $6.7 million in the first quarter of 2002 to $7.2 million in 2003.
Sales of monoclonal antibodies and related products increased from $3.9 million
in the first quarter of 2002 to $5.3 million in the current year quarter due to
increased demand and price increases. The Company expects sales to continue to
be strong for the monoclonal antibodies and related products in particular due
to new blood typing regulations in Europe. This increase was partially offset
by decreased sales of disease state antibodies, detection products and other
diagnostic products.

15



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Research Products

Net sales of Research Products remained constant at $1.0 million in the
first quarter of 2002 and in the first quarter of 2003.

Therapeutic Products

Net sales of Therapeutic Products declined from $8.6 million in the first
quarter of 2002 to $8.2 million in the first quarter of 2003. Sales of
vaccinia antibodies totaled $5.6 million in the first quarter of 2003 compared
to no sales in the prior year quarter, as this product was introduced in the
third quarter of 2002. The incremental revenue from the vaccinia product was
offset by declines in sales of the Companys other therapeutic plasma products,
with the most significant decline coming from anti-hepatitis antibodies, which
declined approximately $5.0 million or 88% from $5.7 million in the first
quarter of 2002 to $0.7 million in the first quarter of 2003.

GROSS PROFIT

Consolidated

Consolidated gross profit decreased approximately $1.8 million, or 12%,
from $15.5 million in the first quarter of 2002 to $13.7 million in 2003.
Gross margins were 46% for the first quarter of 2003 versus 49% in the same
period in 2002. The decrease is primarily attributable to the significantly
lower margins on Therapeutic Products as well as the impact of
EX-CYTE® representing a lower percentage of total sales in the
first quarter of 2003 versus first quarter of 2002.

Cell Culture Products

Gross profit from Cell Culture Products decreased $0.8 million, or 10%,
from $7.9 million in the first quarter of 2002 to $7.1 million in the first quarter of 2003. The
decrease was principally due to declines in sales of EX-CYTE®, primarily
because one of the Companys major customers deferred its shipments until the
second half of 2003. Gross margins on Cell Culture Products were relatively
unchanged at 52% in the first quarter of 2002 compared with 51% in the first
quarter of 2003.

Diagnostic Products

Gross profit from Diagnostic Products increased $0.2 million, or 5% from
$3.7 million in the first quarter of 2002 to $3.9 million in the first quarter
of 2003. The increase was attributable to increased sales of monoclonal
antibodies and related products partially offset by decreased sales of disease
state antibodies, detection products and other diagnostic products. Gross
margins on Diagnostic Products were 55% for the first quarter of 2002, compared
with 54% in the current year quarter.

Research Products

Gross profit from Research Products increased $0.4 million from $0.4
million in the first quarter of 2002 to $0.8 million in the first quarter of
2003. Gross margins on Research Products were 39% in the first quarter of 2002
and 78% in the first quarter of 2003. The improved gross margin is largely due
to higher royalty income from licensed products in the current year period.

Therapeutic Products

Gross profit from Therapeutic Products decreased approximately $1.6
million, or 45%, from $3.6 million in the first quarter of 2002 to $2.0 million
in the first quarter of 2003. Gross margins on Therapeutic Products
decreased from 41% in the first quarter of 2002 to 24% in the first quarter of 2003. Therapeutic
gross margins have been negatively impacted by excess production capacity in
the donor centers. This excess capacity has resulted in a higher cost
of production, which resulted in a writedown to net realizable value
during the quarter of approximately $0.5 million. The Company addressed this excess

16



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##### Table of Contents



capacity by closing an
additional three centers during the first quarter. However, based on
current order volume the Company expects it may continue to
experience excess capacity, which could result in additional net
realizable value adjustments during the remainder of 2003. The
Company will continue to analyze demand and adjust capacity
accordingly.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Consolidated selling, general and administrative expenses decreased
approximately $2.3 million, or 23%, in the first quarter of 2003, from $10.2
million in the first quarter of 2002 to $7.9 million in the current year. The
decline was primarily attributable to the prior year quarter including costs
related to operation of the former Intergen headquarters, integration costs
related to the Intergen acquisition and professional fees related to the
operational assessment and optimization of the Companys plasma operations.

RESEARCH AND DEVELOPMENT

Research and development expenses remained stable at $1.0 million in the
first quarter of 2002 and 2003. The Company expects 2003 research and
development expenditures to represent approximately 3.5% of sales, and that the
investment in this area may increase over the next several years.

The Companys research and development activities are focused on
developing new products and applications for the markets it serves,
particularly in the areas of therapeutics and cell culture media supplements.
The therapeutic activities are focused on the development of new indications
for hyper-immune plasma products related to identified bio-terrorism targets
and infectious diseases for which there are no or insufficient treatment
opportunities. Additionally, a longer term objective is to leverage the
knowledge and expertise existing in the Company to develop monoclonal
antibodies for therapeutic purposes. With respect to cell culture media
supplements, the Company is performing studies related to EX-CYTE® that should
lead to more defined derivatives and specifically targeted compounds. In
addition, research efforts include the study and development of new recombinant
supplements.

SPECIAL CHARGES

During the first quarter 2003 the Company closed three of its thirteen
donor centers, located in Birmingham, Alabama; Washington D.C.; and Provo,
Utah. The donor base for the Provo center will be integrated into the
Companys Salt Lake City, Utah center. As a result of these closings, the
Company recorded a charge of $0.8 million. The components of the charge
included approximately $0.3 million for employee termination costs, $0.3
million for lease termination costs and $0.2 million related to write-off of
certain long-lived assets. The employee termination costs covered
approximately 46 employees. Employee termination costs and lease termination
costs are expected to be paid by the end of 2003. The employee termination and
headcount also includes employees terminated at the Companys central testing
laboratory.

During the first quarter 2003 the Company also incurred special charges of
approximately $0.5 million. The components of this charge included
approximately $0.4 million related to the write-off of debt issuance costs
associated with its existing revolving credit facility that was replaced on
April 7, 2003, $0.1 million related to loss associated with an equipment
failure at the Toronto facility and other termination costs. These termination
benefits are expected to be paid by the end of the first quarter 2004.

OTHER EXPENSE, NET

Other expense, net consists primarily of amortization of definite-lived
intangible assets and gains and losses from foreign currency transactions.
Amortization expense was unchanged between years at $0.2 million in the first
quarter of 2002 and 2003. Foreign currency gain (loss) was immaterial during
the first quarter of 2002 and 2003.

17



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##### Table of Contents



INTEREST (INCOME) EXPENSE, NET

Interest (income) expense, net remained relatively constant at $(0.1)
million in the first quarter of 2002 and $0.1 million in the first quarter of
2003.

Liquidity and Capital Resources

The following table sets forth certain indicators of financial condition
and liquidity as of March 30, 2003 and December 29, 2002 (in thousands):

|                                                   |  |           |         |              |  |   |         |  
|-------------------------------------------------- |  | --------- | ------- | ------------ |  | - | ------- | -
|                                                   |  | March 30, |         | December 29,
|                                                   |  | 2003      |         | 2002        
|                                                   |  |           |         |             
|Cash and cash equivalents                          |  | $         | 21,146  |              |  | $ | 12,850  |  
|Working capital                                    |  |           | 66,491  |              |  |   | 65,468  |  
|Total long-term debt and capital lease obligations |  |           | 238     |              |  |   | 424     |  
|Stockholders equity                               |  |           | 173,180 |              |  |   | 170,370 |  
|Total debt to equity ratio                         |  |           | 0.1     | %            |  |   | 0.2     | %

Serologicals has three principal sources of near-term liquidity: (1)
existing cash and cash equivalents; (2) cash generated by operations, and (3)
available borrowing capacity under the new revolving credit facility (the
Revolver), which provides for a maximum borrowing capacity of $35 million. As
of May 6, 2003, the Company had $33.0 million of borrowing capacity under the
Revolver. Management believes the Companys liquidity and capital resources are
sufficient to meet its working capital, capital expenditure and other
anticipated cash requirements over the next twelve months.

Net cash provided by operating activities in the first quarter of 2003 was
$10.8 million as compared to net cash provided of $5.9 million in the first
quarter of 2002. This increase was primarily attributable to incremental
decline in accounts receivable and increase in accrued liabilities of $6.3
million and $3.5 million, respectively, offset by lower net income of $0.7
million and incremental increases in inventories and decreases in accounts
payable of $1.2 million and $2.3 million, respectively. Accounts receivable
historically decline in the first quarter of each year due to the fourth
quarter of each year being the strongest sales quarter of the year. Accounts
receivable declined more in the first quarter of 2003 than in first
quarter of 2002
due to the incremental sales growth in the fourth quarter of 2002 compared to the
fourth quarter of 2001. Additionally, inventories historically rise in the first
quarter of each year, but this year rose more than in 2002 due to the delays in
EX-CYTE® shipments as discussed earlier.

Net cash used in investing activities in the first quarter of 2003 was
$2.3 million, compared with $2.6 million in the first quarter of 2002. Capital
expenditures for the first quarter of 2003 consisted primarily of the following
items: 1) construction of the Companys new EX-CYTE® manufacturing facility in
Lawrence, Kansas, 2) leasehold improvements associated with the relocation of
certain human plasma donor centers and 3) completion of the Companys
Enterprise Resource Planning system. The Company anticipates capital
expenditures for the remainder of the year to total approximately $27.0 million
to $31.0 million. The most significant expenditure anticipated for the
remainder of 2003 is the construction of the Companys new EX-CYTE®
manufacturing facility.

Net cash used in financing activities in the first quarter of 2003 was
$0.2 million, compared with net cash used in financing activities of $0.3
million in the first quarter of 2002. Financing activities in the first
quarter of 2003 consisted of the repayment of borrowings on a note payable and
certain capital lease obligations and payment of debt issuance costs associated
with the Companys new credit facility, offset partially by proceeds from the exercise of
stock options.

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There
have been no material changes regarding Serologicals contractual
obligations from the information provided in our Annual Report on
Form 10-K for the fiscal year ended December 29, 2002, other than
as discussed below. The contractual obligations are discussed under the
caption Liquidity and Capital Resources in Item
7Managements Discussion and Analysis of Financial
Condition and Results of Operations, contained in the Form 10-K.

On April 7, 2003, the Company entered into a new $82.5
million five-year term loan. This term loan, combined with a new revolving
credit facility (the Revolver) of $35 million, replaced the Companys
existing $65 million facility. The credit facility bears interest at a floating
rate of interest determined by reference to a base rate or to Eurodollar
interest rates, plus a margin. The margin on base rate loans is 3.25% and
2.75% for the term loan and revolving credit facility, respectively. The
margin on Eurodollar loans is 4.25% and 3.75% for the term loan and revolving
credit facility, respectively. The Company is required to pay a commitment fee
ranging from .5% to .75%, depending on the Companys leverage and amounts
borrowed under the revolving credit
facility. The applicable margins and commitment fees on the unused
portion of the Revolver are subject to adjustment on future adjustment dates
based on the consolidated leverage ratio of the Company on the adjustment
dates. The term loan and Revolver are secured by substantially all of the
assets of the Company. The term loan and revolving credit facility contain
certain financial covenants that require the maintenance of a minimum interest
coverage ratio, a fixed charge coverage ratio and earnings before interest,
taxes, depreciation and amortization and that also provide for a maximum
leverage ratio and limitations on capital expenditures. Furthermore, under the
terms of the term loan and Revolver, there are covenants dealing with
acquisitions, repurchasing common stock and on the Companys ability to pay
dividends. The following table reflects the principal payments under the term
loan (in thousands):

|     |  |   |        | 
|---- |  | - | ------ | 
|2003 |  | $ | 500    | 
|2004 |  |   | 4,625  | 
|2005 |  |   | 12,375 | 
|2006 |  |   | 26,813 | 
|2007 |  |   | 22,187 | 
|2008 |  |   | 16,000 | 
|     |  |   |        | 
|     |  | $ | 82,500 | 
|     |  |   |        | 

The Company has no off-balance sheet financing arrangements and has not
created any special purpose entities. Additionally, the Company does not
undertake any trading activities within its business with respect to
non-exchange traded contracts accounted for at fair value.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes regarding Serologicals market risk
position from the information provided in our Annual Report on Form 10-K for
the fiscal year ended December 29, 2002. The quantitative and qualitative
disclosures about market risk are discussed under the caption Market Risk in
Item 7Managements Discussion and Analysis of Financial Condition and Results
of Operations, contained in the Form 10-K.




Item 4. Controls and Procedures



|a. |  | Evaluation of disclosure controls and procedures.
|-- |  | -------------------------------------------------

As required by SEC rules, the Company has evaluated the effectiveness of
the design and operation of its disclosure controls and procedures within 90
days of the filing of this quarterly report. This evaluation was carried out
under the supervision and with the participation of the Companys management,
including its principal executive officer and principal financial officer.
Based on this evaluation, these officers have concluded that the design and
operation of the Companys disclosure controls and procedures are effective.
There were no significant changes to the Companys internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their evaluation.

Disclosure controls and procedures are the Companys controls and other
procedures that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SECs

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rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports
that the Company files under the Exchange Act is accumulated and communicated
to the Companys management, including its principal executive officer and
principal financial officer, as appropriate, to allow timely decisions
regarding required disclosure.



|b. |  | Changes in internal controls.
|-- |  | -----------------------------

N/ A




PART II.




Item 1. Legal Proceedings

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




Item 6. Exhibits and Reports on Form 8-K



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

|     |  |                                                                                                                                                                                                                                                                         
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Amended and Restated Certificate of Incorporation
(Exhibit 3.1 to the Companys Annual Report on Form 10-K for
the period ending December 29, 2002 is hereby incorporated by
reference.)                                                                                
|3.2  |  | Amended and Restated By-laws (Exhibit 3.4 to the
Companys Registration Statement on Form S-1 (File No.
33-91176), effective June 14, 1995, is hereby incorporated by
reference).                                                                                       
|4.1  |  | Specimen Common Stock Certificate (Exhibit 4.1 to
the Companys Registration Statement on Form S-1 (File No.
33-91176), effective June 14, 1995, is hereby incorporated by
reference).                                                                                  
|4.2  |  | Specimen Form of Rights Certificate (Exhibit 2.1 of
the Companys Registration Statement on Form 8-A (File
No.000-26126) filed August 10, 1999, is hereby incorporated by
reference).                                                                                   
|4.3  |  | Form of Rights Agreement, dated as of August 2,
1999, between the Company and State Street Bank & Trust
Company, N.A. (Exhibit 2.2 of the Companys Registration
Statement on Form 8-A (File No. 000-26126) filed August 10,
1999, is hereby incorporated by reference).
|4.4  |  | Form of Certificate of Designation, Preferences and
Rights of Series B Preferred Stock (Exhibit 2.3 of the
Companys Registration Statement on Form 8-A (File No.
000-26126) filed August 10, 1999, is hereby incorporated by
reference).                               
|4.5  |  | Summary of Rights Plan (Exhibit 2.4 of the
Companys Registration Statement on Form 8-A (File No.
000-26126) filed August 10, 1999).                                                                                                                                    
|10.1 |  | Severance Agreement between the Company and Keith J. Thompson.                                                                                                                                                                                                          
|10.2 |  | Revised Employment Agreement between the Company and Jeffrey D.
Linton.                                                                                                                                                                                                 
|99.1 |  | Certification of the Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                      
|99.2 |  | Certification of the Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                      



| | b. |  | Reports on Form 8-K filed during the quarter ended March 30,
2003:
| | -- |  | ------------------------------------------------------------------

|   |  |                                                                                         
|-- |  | ----------------------------------------------------------------------------------------
|1) |  | Form 8-K announcing the agreement to purchase
Chemicon on February 11, 2002.            
|2) |  | Form 8-K filing the Companys fourth quarter 2002
earnings release on February 21, 2003.

20



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##### Table of Contents






SIGNATURES

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

|                   |  |                                       |  |                                                                                                                                               
|------------------ |  | ------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|                   |  | SEROLOGICALS CORPORATION
(Registrant)
|                   |  |                                       |  |                                                                                                                                               
|Date: May 14, 2003 |  |                                       |  |                                                                                                                                               
|                   |  | BY:                                   |  | /s/ HAROLD W. INGALLS                                                                                                                         
|                   |  |                                       |  |                                                                                                                                               
|                   |  |                                       |  | Harold W. Ingalls
Duly Authorized Officer of the Registrant, Vice President, Finance and Chief
Financial Officer (Principal Financial Officer)

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##### Table of Contents






CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, David A. Dodd, certify that



|1. |  | I have reviewed this Quarterly Report on Form 10-Q of Serologicals
Corporation;                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this Quarterly Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this Quarterly Report;
|  
|3. |  | Based on my knowledge, the financial statements and other financial
information included in this Quarterly Report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
Quarterly Report;                    
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | (a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this Report is being
prepared;
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this Quarterly Report (the Evaluation Date); and                                                                                        
|
| | (c) |  | presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                              



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
Quarterly Report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                   |  |                                                              
|------------------ |  | -------------------------------------------------------------
|Date: May 14, 2003 |  |                                                              
|                   |  |                                                              
|                   |  | /s/ DAVID A. DODD                                            
|                   |  |                                                              
|                   |  | David A. Dodd
President, Chief Executive Officer and Director

22



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##### Table of Contents






CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Harold W. Ingalls, certify that



|1. |  | I have reviewed this Quarterly Report on Form 10-Q of Serologicals
Corporation;                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this Quarterly Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this Quarterly Report;
|  
|3. |  | Based on my knowledge, the financial statements and other financial
information included in this Quarterly Report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
Quarterly Report;                    
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a. |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this Quarterly Report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this Quarterly Report (the Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
Quarterly Report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                   |  |                                                                      
|------------------ |  | ---------------------------------------------------------------------
|Date: May 14, 2003 |  |                                                                      
|                   |  |                                                                      
|                   |  | /s/ HAROLD W. INGALLS                                                
|                   |  |                                                                      
|                   |  | Harold W. Ingalls
Vice President, Finance and Chief Financial Officer

23