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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 31, 2002                                           
|           |  |                                                                                         
|           |  | OR                                                                                      
|           |  |                                                                                         
|[  ]       |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|           |  |                                                                                         
|           |  | For the transition period from _______________ to _______________                       

Commission file Number: 0-26126

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 [  ]

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 May 10, 2002
|                                       |  |                            
|Common Stock, $.01 par value per share |  | 24,341,673                 





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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                           
|PART II.                               
|                                        | Item 1. Legal Proceedings                                                                    
|                                        | Item 6. Exhibits and Reports on Form 8-K                                                     
|                                        | SIGNATURES                                                                                   
|4th Amended & Restated Credit Agreement
|Employment Agreement                   



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##### Table of Contents



INDEX

SEROLOGICALS CORPORATION AND SUBSIDIARIES

|                                                                                              |                                                                                                           |  |       |      | 
|--------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- |  | ----- | ---- | 
|PART I                                                                                        |                                                                                                           |  |       |     
|                                                                                              |                                                                                                           |  |       |     
|Item 1. Financial Statements                                                                  |                                                                                                           |  |       |     
|                                                                                              |                                                                                                           |  |       |     
|                                                                                              | Consolidated Balance Sheets -
March 31, 2002 (Unaudited) and December 30, 2001                            |  |       | 3    | 
|                                                                                              |                                                                                                           |  |       |     
|                                                                                              | Unaudited Consolidated Statements of Income -
For the quarters ended March 31, 2002 and April 1, 2001     |  |       | 4    | 
|                                                                                              |                                                                                                           |  |       |     
|                                                                                              | Unaudited Consolidated Statements of Cash Flows -
For the quarters ended March 31, 2002 and April 1, 2001 |  |       | 5    | 
|                                                                                              |                                                                                                           |  |       |     
|                                                                                              | Unaudited Notes to Consolidated Financial Statements                                                      |  |       | 6-11 | 
|                                                                                              |                                                                                                           |  |       |     
|Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations |                                                                                                           |  | 12-18 |     
|                                                                                              |                                                                                                           |  |       |     
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                           |  | 18    |     
|                                                                                              |                                                                                                           |  |       |     
|PART II                                                                                       |                                                                                                           |  |       |     
|                                                                                              |                                                                                                           |  |       |     
|Item 1. Legal Proceedings                                                                     |                                                                                                           |  | 18-19 |     
|                                                                                              |                                                                                                           |  |       |     
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                           |  | 19    |     
|                                                                                              |                                                                                                           |  |       |     
|SIGNATURES                                                                                    |                                                                                                           |  | 20    |     

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PART I.




Item 1. Financial Statements




SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

|                                                                      |  |                                                                    |        |                                            |         |             |         |              |         |   |         | 
|--------------------------------------------------------------------- |  | ------------------------------------------------------------------ | ------ | ------------------------------------------ | ------- | ----------- | ------- | ------------ | ------- | - | ------- | 
|                                                                      |  |                                                                    |        |                                            |         | March 31,   |         |              |         |  
|                                                                      |  |                                                                    |        |                                            |         | 2002        |         | December 30,
|                                                                      |  |                                                                    |        |                                            |         | (Unaudited) |         | 2001        
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  |                                                                    |        | ASSETS                                     |         |             |         |              |         |   |         | 
|CURRENT ASSETS:                                                       |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  | Cash and cash equivalents                                          |        | $                                          | 13,813  |             |         | $            | 10,780  |  
|                                                                      |  | Trade accounts receivable, net                                     |        |                                            | 21,089  |             |         |              | 24,652  |  
|                                                                      |  | Inventories                                                        |        |                                            | 33,919  |             |         |              | 31,595  |  
|                                                                      |  | Income tax receivable                                              |        |                                            | 3,405   |             |         |              | 4,201   |  
|                                                                      |  | Other current assets                                               |        |                                            | 4,026   |             |         |              | 4,144   |  
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  |                                                                    |        | Total current assets                       |         |             | 76,252  |              |         |   | 75,372  | 
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|PROPERTY AND EQUIPMENT, net                                           |  |                                                                    | 49,171 |                                            |         |             | 48,869  |             
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|OTHER ASSETS:                                                         |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  | Goodwill, net                                                      |        |                                            | 36,140  |             |         |              | 35,360  |  
|                                                                      |  | Patents and proprietary know-how, net                              |        |                                            | 11,279  |             |         |              | 11,471  |  
|                                                                      |  | Other, net                                                         |        |                                            | 4,233   |             |         |              | 4,266   |  
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  |                                                                    |        | Total other assets                         |         |             | 51,652  |              |         |   | 51,097  | 
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  |                                                                    |        | Total assets                               |         | $           | 177,075 |              |         | $ | 175,338 | 
|                                                                      |  |                                                                    |        |                                            |         |             |         |              |         |  
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  |                                                                    |        | LIABILITIES AND STOCKHOLDERS EQUITY       |         |             |         |              |         |   |         | 
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|CURRENT LIABILITIES:                                                  |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  | Current maturities of long-term debt and capital lease obligations |        | $                                          | 3,567   |             |         | $            | 3,125   |  
|                                                                      |  | Accounts payable                                                   |        |                                            | 6,600   |             |         |              | 5,955   |  
|                                                                      |  | Accrued liabilities                                                |        |                                            | 8,490   |             |         |              | 10,711  |  
|                                                                      |  | Deferred revenue                                                   |        |                                            | 944     |             |         |              | 425     |  
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  |                                                                    |        | Total current liabilities                  |         |             | 19,601  |              |         |   | 20,216  | 
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current maturities |  |                                                                    | 335    |                                            |         |             | 1,451   |             
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|DEFERRED INCOME TAXES                                                 |  |                                                                    | 721    |                                            |         |             | 858     |             
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|OTHER LIABILITIES                                                     |  |                                                                    | 345    |                                            |         |             | 338     |             
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|STOCKHOLDERS EQUITY:                                                 |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  | Common stock                                                       |        |                                            | 276     |             |         |              | 275     |  
|                                                                      |  | Additional paid-in capital                                         |        |                                            | 115,929 |             |         |              | 114,489 |  
|                                                                      |  | Retained earnings                                                  |        |                                            | 60,970  |             |         |              | 58,262  |  
|                                                                      |  | Accumulated other comprehensive loss                               |        |                                            | (755    | )           |         |              | (551    | )
|                                                                      |  | Less: common stock held in treasury                                |        |                                            | (20,347 | )           |         |              | (20,000 | )
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  |                                                                    |        | Total stockholders equity                 |         |             | 156,073 |              |         |   | 152,475 | 
|                                                                      |  |                                                                    |        |                                            |         |             |         |             
|                                                                      |  |                                                                    |        | Total liabilities and stockholders equity |         | $           | 177,075 |              |         | $ | 175,338 | 
|                                                                      |  |                                                                    |        |                                            |         |             |         |              |         |  

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

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

|                             |                                              |         |        |               |            |          |        |        |            | 
|---------------------------- | -------------------------------------------- | ------- | ------ | ------------- | ---------- | -------- | ------ | ------ | ---------- | 
|                             |                                              |         |        | Quarter Ended
|                             |                                              |         |        |              
|                             |                                              |         |        | March 31,     |            | April 1,
|                             |                                              |         |        | 2002          |            | 2001    
|                             |                                              |         |        |               |            |         
|Net sales                    |                                              | $       | 31,470 |               |            | $        | 26,458 |       
|Costs and expenses:          |                                              |         |        |               |            |          |        |       
|                             | Cost of sales                                |         |        | 15,987        |            |          |        | 13,786 |           
|                             | Selling, general and administrative expenses |         |        | 10,218        |            |          |        | 5,365  |           
|                             | Research and development                     |         |        | 996           |            |          |        | 331    |           
|                             |                                              |         |        |               |            |          |        |       
|Operating income             |                                              |         | 4,269  |               |            |          | 6,976  |       
|                             | Other expense, net                           |         |        | 179           |            |          |        | 271    |           
|                             | Interest income, net                         |         |        | (76           | )          |          |        | (363   | )         
|                             |                                              |         |        |               |            |          |        |       
|Income before income taxes   |                                              |         | 4,166  |               |            |          | 7,068  |       
|Provision for income taxes   |                                              |         | 1,458  |               |            |          | 2,686  |       
|                             |                                              |         |        |               |            |          |        |       
|Net income                   |                                              | $       | 2,708  |               |            | $        | 4,382  |       
|                             |                                              |         |        |               |            |          |        |       
|Net income per common share: |                                              |         |        |               |            |          |        |       
|                             | Basic                                        |         | $      | 0.11          |            |          | $      | 0.19   |           
|                             |                                              |         |        |               |            |          |        |       
|                             | Diluted                                      |         | $      | 0.11          |            |          | $      | 0.18   |           
|                             |                                              |         |        |               |            |          |        |       
|Weighted average shares:     |                                              |         |        |               |            |          |        |       
|                             |                                              | Basic   |        |               | 24,267,077 |          |        |        | 23,233,566 | 
|                             |                                              |         |        |               |            |          |        |       
|                             |                                              | Diluted |        |               | 24,823,061 |          |        |        | 23,866,712 | 
|                             |                                              |         |        |               |            |          |        |       

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
(In thousands)
(Unaudited)

|                                                  |                                                                                   |   |                                |                                                     |   |               |        |          |   |      |        |  
|------------------------------------------------- | --------------------------------------------------------------------------------- | - | ------------------------------ | --------------------------------------------------- | - | ------------- | ------ | -------- | - | ---- | ------ | -
|                                                  |                                                                                   |   |                                |                                                     |   | Quarter Ended
|                                                  |                                                                                   |   |                                |                                                     |   |              
|                                                  |                                                                                   |   |                                |                                                     |   | March 31,     |        | April 1,
|                                                  |                                                                                   |   |                                |                                                     |   | 2002          |        | 2001    
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|Operating activities:                             |                                                                                   |   |                                |                                                     |   |               |        |         
|                                                  | Net income                                                                        |   | $                              | 2,708                                               |   |               | $      | 4,382    |  
|                                                  | Adjustments to reconcile net income to net cash provided by operating activities: |   |                                |                                                     |   |               |        |          |  
|                                                  | Depreciation and amortization                                                     |   |                                | 1,520                                               |   |               |        | 1,420    |  
|                                                  | Loss on disposal of assets                                                        |   |                                |                                                    |   |               |        | 39       |  
|                                                  | Tax benefit from exercise of stock options                                        |   |                                | 449                                                 |   |               |        | 1,079    |  
|                                                  | Changes in operating assets and liabilities:                                      |   |                                |                                                     |   |               |        |          |  
|                                                  |                                                                                   |   | Trade accounts receivable, net |                                                     |   | 3,563         |        |          |   | (526 | )     
|                                                  |                                                                                   |   |                                | Inventories                                         |   |               | (2,474 | )        |   |      | 182    |  
|                                                  |                                                                                   |   |                                | Income tax receivable                               |   |               | 796    |          |   |      | 549    |  
|                                                  |                                                                                   |   |                                | Other current assets                                |   |               | 118    |          |   |      | 3,411  |  
|                                                  |                                                                                   |   |                                | Accounts payable                                    |   |               | 645    |          |   |      | (462   | )
|                                                  |                                                                                   |   |                                | Accrued liabilities                                 |   |               | (1,719 | )        |   |      | (1,836 | )
|                                                  |                                                                                   |   |                                | Deferred revenue                                    |   |               | 519    |          |   |      | 1,247  |  
|                                                  |                                                                                   |   |                                | Other, net                                          |   |               | (205   | )        |   |      | (272   | )
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|                                                  |                                                                                   |   |                                | Total adjustments                                   |   |               | 3,212  |          |   |      | 4,831  |  
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|                                                  |                                                                                   |   |                                | Net cash provided by operating activities           |   |               | 5,920  |          |   |      | 9,213  |  
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|Investing activities:                             |                                                                                   |   |                                |                                                     |   |               |        |         
|                                                  | Purchases of property and equipment                                               |   |                                | (2,425                                              | ) |               |        | (1,575   | )
|                                                  | Other                                                                             |   |                                | (125                                                | ) |               |        |         |  
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|                                                  |                                                                                   |   |                                | Net cash used in investing activities               |   |               | (2,550 | )        |   |      | (1,575 | )
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|Financing activities:                             |                                                                                   |   |                                |                                                     |   |               |        |         
|                                                  | Payments on long-term debt and capital leases                                     |   |                                | (674                                                | ) |               |        | (5       | )
|                                                  | Proceeds from stock plans                                                         |   |                                | 684                                                 |   |               |        | 4,410    |  
|                                                  | Purchase of common stock                                                          |   |                                | (347                                                | ) |               |        |         |  
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|                                                  |                                                                                   |   |                                | Net cash (used in) provided by financing activities |   |               | (337   | )        |   |      | 4,405  |  
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|Net increase in cash and cash equivalents         |                                                                                   |   | 3,033                          |                                                     |   |               | 14,657 |         
|Cash and cash equivalents, beginning of period    |                                                                                   |   | 10,780                         |                                                     |   |               | 22,492 |         
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|Cash and cash equivalents, end of period          |                                                                                   | $ | 13,813                         |                                                     |   | $             | 37,149 |         
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |          |  
|                                                  |                                                                                   |   |                                |                                                     |   |               |        |         
|Supplemental Disclosures:                         |                                                                                   |   |                                |                                                     |   |               |        |         
|Interest paid, net of amounts capitalized         |                                                                                   | $ |                               |                                                     |   | $             | 80     |         
|Income taxes paid                                 |                                                                                   | $ | 258                            |                                                     |   | $             | 729    |         
|Non-Cash Investing and Financing Activities:      |                                                                                   |   |                                |                                                     |   |               |        |         
|Contingent consideration payable                  |                                                                                   | $ | 450                            |                                                     |   |               |       |         
|Stock acquired by employees in lieu of cash bonus |                                                                                   | $ | 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 31, 2002
(UNAUDITED)

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, anti-D, the level of capital expenditures during 2002,
and the sufficiency of capital and liquidity to fund operations, capital
expenditures, and acquisitions. 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, and
other factors discussed in Part I of the Companys Annual Report on Form 10-K
for the year ended December 30, 2001, which could cause actual results to
differ materially.

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

Serologicals Corporation (a Delaware Corporation) (together with its
subsidiaries, the Company or Serologicals) is a worldwide 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 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.

On December 13, 2001, the Company acquired Intergen Company L.P.,
(Intergen) a privately held Delaware limited partnership. The purchase price
of $45 million, less approximately $1.7 million representing costs to complete
the expansion of Intergens manufacturing facility in Toronto, Canada, was
funded with cash on hand. Additionally, the former partners of Intergen are
entitled to earn certain additional cash consideration based on the financial
performance of Intergen over a defined period of time. The results of
operations of Intergen are included in the accompanying financial statements
from the date of acquisition.

The Company conducts its operations in facilities located in North America
and Europe. The Company operates protein fractionation facilities located in
Kankakee, Illinois and 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. A number of these products, such as bovine
serum albumin (BSA), are primarily supplied to life science companies for use
in diagnostic reagents. Additionally, these facilities produce a line of highly
purified animal proteins known as tissue culture media components that are used
primarily by biopharmaceutical and biotechnology companies as nutrient
additives in cell culture media. One example of these media components is
EX-CYTE®, which is produced through a patented manufacturing process. The
Company operates two monoclonal antibody manufacturing facilities in
Scotland that are engaged in the development, manufacturing and sale of
monoclonal antibodies and related 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. The
Company also operates research and development

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laboratories in the United
States and Scotland. The Company conducts its therapeutic operations (or
blood
plasma operations) through a national network of 17 donor centers that
specialize in the collection of specialty human antibodies.

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 financial statements should be read in conjunction with
the audited consolidated financial statements as of December 30, 2001 and the
notes thereto included in the Companys Annual Report on Form 10-K for the year
ended December 30, 2001.

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

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, warrants, convertible indebtedness 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 31,     |      | April 1,
|                            |                                                                                     |                            |   | 2002          |      | 2001    
|                            |                                                                                     |                            |   |               |      |         
|Basic earnings per share:   |                                                                                     |                            |   |               |      |          |   |       
|                            | Net income                                                                          |                            | $ | 2,708         |      |          | $ | 4,382  |     
|                            | Weighted average shares of common stock outstanding                                 |                            |   | 24,267        |      |          |   | 23,234 |     
|                            |                                                                                     |                            |   |               |      |          |   |       
|                            |                                                                                     | Net income per share       |   | $             | 0.11 |          |   | $      | 0.19 | 
|                            |                                                                                     |                            |   |               |      |          |   |       
|Diluted earnings per share: |                                                                                     |                            |   |               |      |          |   |       
|                            | Net income                                                                          |                            | $ | 2,708         |      |          | $ | 4,382  |     
|                            | Weighted average shares of common stock outstanding                                 |                            |   | 24,267        |      |          |   | 23,234 |     
|                            | Effect of dilutive securities:                                                      |                            |   |               |      |          |   |        |     
|                            |                                                                                     | Stock options and warrants |   |               | 543  |          |   |        | 623  | 
|                            |                                                                                     | Common stock awards        |   |               | 13   |          |   |        | 10   | 
|                            |                                                                                     |                            |   |               |      |          |   |       
|                            | Weighted average shares of common stock outstanding,
including dilutive instruments |                            |   | 24,823        |      |          |   | 23,867 |     
|                            |                                                                                     |                            |   |               |      |          |   |       
|                            |                                                                                     | Net income per share       |   | $             | 0.11 |          |   | $      | 0.18 | 
|                            |                                                                                     |                            |   |               |      |          |   |       

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For the quarters ended March 31, 2002 and April 1, 2001, the effect of
diluted shares totaling approximately 411,000 shares and 719,000, 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.

Comprehensive Income

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

|                                      |                                          |   |               |      |          |   |       |      |  
|------------------------------------- | ---------------------------------------- | - | ------------- | ---- | -------- | - | ----- | ---- | -
|                                      |                                          |   | Quarter Ended
|                                      |                                          |   |              
|                                      |                                          |   | March 31,     |      | April 1,
|                                      |                                          |   | 2002          |      | 2001    
|                                      |                                          |   |               |      |         
|Net income, as reported               |                                          | $ | 2,708         |      |          | $ | 4,382 |     
|Other comprehensive loss, net of tax: |                                          |   |               |      |          |   |       |     
|                                      | Foreign currency translation adjustments |   |               | (204 | )        |   |       | (431 | )
|                                      |                                          |   |               |      |          |   |       |     
|Other comprehensive loss              |                                          |   | (204          | )    |          |   | (431  | )   
|                                      |                                          |   |               |      |          |   |       |     
|Comprehensive income                  |                                          | $ | 2,504         |      |          | $ | 3,951 |     
|                                      |                                          |   |               |      |          |   |       |     

Recent Accounting Pronouncements

Statement of Financial Accounting Standards (SFAS) No. 142 supersedes
APB Opinion No. 17, Intangible Assets. This Standard prescribes the
accounting practices for acquired goodwill and other intangible assets. Under
this Standard, goodwill and indefinite-lived intangibles are no longer
amortized to earnings, but instead are reviewed periodically (at least
annually) for impairment. In accordance with the requirements of SFAS No.
142, goodwill and identifiable, indefinite-lived assets related to the Intergen
acquisition were not amortized. Effective December 31, 2001, all goodwill and
other intangible assets with indefinite lives existing prior to July 1, 2001
were not amortized. The impact of adopting this Standard has not yet been
determined as the Company expects to complete its initial goodwill impairment
analysis by the end of the second quarter of 2002. During the first quarter of
2001, the Company recorded goodwill amortization expense totaling approximately
$350,000.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. This Standard addresses financial accounting and
reporting for asset retirement costs of long-lived assets resulting from legal
obligations associated with acquisition, construction or development
transactions. The Company plans to adopt this in the first quarter of 2003.
The adoption of this Standard is not expected to have a material impact on the
Companys financial position or results of operations.

2. ACQUISITION

On December 13, 2001, the Company completed the acquisition of Intergen
Company, L.P. and Subsidiaries, a privately held limited partnership. The
assets, liabilities and results of operations of Intergen have been included in
the Companys consolidated financial statements since the date of acquisition.
Intergen was a developer, manufacturer and supplier of a variety of biological
products and technologies to the life sciences industry. Intergens products
and technology support the development and manufacturing of biopharmaceutical
products. The three primary strategic markets served by Intergen are i)
biotechnology products, ii) diagnostic components, and iii) life sciences
research. Intergen was headquartered in Purchase, New York, and had operations
located in Gaithersburg, Maryland; Milford, Massachusetts; and Toronto,
Ontario. The Intergen corporate headquarters were permanently closed during the
first quarter of 2002 based on an integration plan determined at the time of
acquisition. The acquisition of Intergen greatly expands the Companys range of
products and customers within the life sciences industry, particularly within
the research

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and pharmaceutical drug development sectors. Additionally,
Intergen had a much larger research and development group than the
Company, thus this function was greatly expanded with the acquisition.

The total purchase price was $45 million, less costs remaining to complete
the expansion of Intergens manufacturing facility in Toronto, which was
approximately $1.7 million as of the acquisition date. Additionally, the
Company entered into an earnout agreement with the sellers which requires the
Company to pay additional consideration to the sellers based on a defined
formula if Intergen sales exceed $8 million during the first quarter of 2002.
The Company estimates that the additional consideration will approximate
$450,000, and this estimate was recorded as an adjustment to goodwill in the
consolidated balance sheet. Also, a second component of the earnout agreement
requires the Company to pay additional consideration based on a formula related
to sales of certain technologies acquired through the Intergen transaction over
a five year period ending December 31, 2006. Any payments made under the
earnout agreement will be treated as additional goodwill. No payments were
earned under this component of the earnout agreement during the first quarter
of 2002.

During the first quarter of 2002, the Company recorded several additional
purchase price adjustments to goodwill totaling approximately $330,000. These
adjustments included additional severance costs related to the Intergen
acquisition and an adjustment to the preliminary opening inventory valuation.

The following table summarizes the activity in the accrual for termination
benefits and other costs for the first quarter ended March 31, 2002:

|                           |  |                   |     |         |  |                    |   |       |  |                  |     |   |  |   |     |  |  |   |     | 
|-------------------------- |  | ----------------- | --- | ------- |  | ------------------ | - | ----- |  | ---------------- | --- | - |  | - | --- |  |  | - | --- | 
|                           |  |                   |     |         |  | Additions to       |   |       |  |                  |     |   |  |   |     |  |  |  
|                           |  |                   |     |         |  | reserve charged to |   |       |  |                  |     |   |  |   |     |  |  |  
|Description                |  | Balance, 12/30/01 |     | expense |  | Cash payments      |   | Other |  | Balance, 3/31/02
|                           |  |                   |     |         |  |                    |   |       |  |                 
|Employee
termination costs |  | $                 | 544 |         |  |                    |  |       |  | $                | (64 | ) |  | $ | 180 |  |  | $ | 660 | 
|Relocation costs           |  | $                 | 100 |         |  |                    |  |       |  |                  |    |   |  |   |    |  |  | $ | 100 | 

The remaining accrual of $760,000 is included in Accrued liabilities in
the Consolidated Balance Sheets. All of these amounts are expected to be paid
in 2002.

The following table summarizes the results of Serologicals on a pro forma
basis for the three months ended April 1, 2001 as if the acquisition of
Intergen had occurred on January 1, 2001. These results do not purport to
represent what the results of operations for Serologicals would actually have
been or to be indicative of the future results of operations of Serologicals
(in thousands, except per share amounts).

|                             |  |   |        | 
|---------------------------- |  | - | ------ | 
|Revenues                     |  | $ | 33,006 | 
|Net income                   |  | $ | 3,928  | 
|Net income per common
share: |  |   |        | 
|Basic                        |  | $ | 0.17   | 
|Diluted                      |  | $ | 0.16   | 

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3. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long-term debt and capital lease obligations at March 31, 2002 and
December 30, 2001 consisted of the following (in thousands):

|                                                                                |  |                |       |                   |  |   |       | 
|------------------------------------------------------------------------------- |  | -------------- | ----- | ----------------- |  | - | ----- | 
|                                                                                |  | March 31, 2002 |       | December 30, 2001
|                                                                                |  |                |       |                  
|Revolving credit facility                                                       |  | $              |      |                   |  | $ |      | 
|Note payable; interest at 7% payable at maturity; maturing on
March 1, 2003     |  |                | 3,190 |                   |  |   | 3,752 | 
|Capital lease obligations at varying interest rates and terms, maturing
in 2003 |  |                | 712   |                   |  |   | 824   | 
|                                                                                |  |                |       |                   |  |   |       | 
|                                                                                |  |                | 3,902 |                   |  |   | 4,576 | 
|Less: current maturities                                                        |  |                | 3,567 |                   |  |   | 3,125 | 
|                                                                                |  |                |       |                   |  |   |       | 
|                                                                                |  | $              | 335   |                   |  | $ | 1,451 | 
|                                                                                |  |                |       |                   |  |   |       | 

On April 25, 2002, the Company amended its revolving credit facility (the
Revolver) that was scheduled to mature in September 2002. The amount
available under the facility has been reduced from $75 million to $65 million.
The Revolver is payable in full on April 25, 2005 and bears interest at either
a floating rate or a Eurodollar interest rate plus a margin that fluctuates
based on the Companys leverage ratio. The margin on the Eurodollar rate
ranges from 1.25% to 1.75%, and the margin on the floating rate option ranges
from 0% to 0.25%. The Company is required to pay a fee ranging from .3% to .5%
on the unused portion of the Revolver, depending on the Companys leverage
ratio. The Revolver contains certain financial covenants that require the
maintenance of minimum levels of cash flow coverage, minimum cash flows from
domestic operations, debt to net worth, debt service coverage, and limitations
on capital expenditures.

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 $165,000 in connection with various
projects.

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 2002, for management purposes the operations of the Companys
subsidiaries are organized into three primary operating segments:
Biotechnology and molecular biology products (Biotech), Diagnostic products
and life science reagents (Diagnostics) 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. Prior to 2002, the
Company reported only two operating segments, Therapeutics and Diagnostics.
As a result of the Intergen acquisition, as well as the increased significance
on the Companys operations of its EX-CYTE® product, the Company has developed
a significant portfolio of products used in applications within the
biotechnology and biopharmaceutical fields. The activities of the new Biotech
segment primarily include the manufacture and sale of tissue culture media
components, as well as certain research products and technologies used in life
sciences research and in high throughput drug screening. 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 31,     |        | April 1,
|                                  |                        |   | 2002          |        | 2001    
|                                  |                        |   |               |        |         
|Net sales-unaffiliated customers: |                        |   |               |        |          |   |       |       
|                                  | Biotechnology Products |   | $             | 12,086 |          |   | $     | 2,367  |  
|                                  | Therapeutic Products   |   |               | 8,535  |          |   |       | 14,699 |  
|                                  | Diagnostic Products    |   |               | 10,849 |          |   |       | 9,392  |  
|                                  |                        |   |               |        |          |   |       |        |  
|                                  | Total                  |   | $             | 31,470 |          |   | $     | 26,458 |  
|                                  |                        |   |               |        |          |   |       |       
|                                  |                        |   |               |        |          |   |       |       
|Segment operating income (loss):  |                        |   |               |        |          |   |       |       
|                                  | Biotechnology Products |   | $             | 4,324  |          |   | $     | 1,244  |  
|                                  | Therapeutic Products   |   |               | 1,899  |          |   |       | 4,764  |  
|                                  | Diagnostic Products    |   |               | 3,664  |          |   |       | 3,168  |  
|                                  | Corporate/Other        |   |               | (5,618 | )        |   |       | (2,200 | )
|                                  |                        |   |               |        |          |   |       |        |  
|                                  | Total                  |   | $             | 4,269  |          |   | $     | 6,976  |  
|                                  |                        |   |               |        |          |   |       |       
|                                  |                        |   |               |        |          |   |       |       
|Reconciling items:                |                        |   |               |        |          |   |       |       
|                                  | Other expense, net     |   |               | 179    |          |   |       | 271    |  
|                                  | Interest income, net   |   |               | (76    | )        |   |       | (363   | )
|                                  |                        |   |               |        |          |   |       |        |  
|Income before income taxes        |                        | $ | 4,166         |        |          | $ | 7,068 |       
|                                  |                        |   |               |        |          |   |       |       

Segment operating income is defined as earnings before income taxes,
interest, amortization, and foreign currency gains and losses. Corporate and
other includes general corporate expenses other than those directly
attributable to an operating segment. The Company had no material intersegment
sales during 2002 or 2001.

5. COMMITMENTS AND CONTINGENCIES

Litigation

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.

During 2000, twelve complaints were filed against the Company and certain
of its current and former executive officers and directors which allege
violations of the Securities Exchange Act of 1934, including Sections 10(b) and
20(a) thereof and Rule 10b-5 promulgated thereunder. During the third quarter
of 2000, the complaints were consolidated and a lead plaintiff was named. A
consolidated complaint was filed on October 10, 2000 which also seeks the
courts certification of the litigation as class action on behalf of all
purchases of the Companys stock between April 27, 1999 and April 10, 2000. On
November 30, 2000, the Company and the other defendants filed a motion to
dismiss the consolidated complaint. On January 17, 2001, the plaintiff filed an
opposition to the motion to dismiss. On April 20, 2001, a hearing was held on
the motion to dismiss. On September 5, 2001, the Court granted the motion to
dismiss the complaint in its entirety with prejudice and ruled that the
plaintiffs would not be allowed to amend the complaint. On September 19, 2001,
the plaintiffs filed a motion to amend the judgment and/or for relief arguing
that they should have been allowed to amend the complaint. The Company
responded by filing a brief supporting the Courts dismissal of the complaint.
On January 17, 2002, the Court reconsidered its decision and granted plaintiffs
leave to file an amended complaint. The plaintiffs filed a second amended
consolidated complaint on February 12, 2002. The Company does not consider the
claims of the second amended consolidated complaint to be substantively
different than those of the initial consolidated complaint and, consequently,
filed a motion to dismiss the second amended consolidated
complaint on March
11, 2002. Although
management considers all of the claims in the second amended consolidated
complaint to be without merit and intends to defend the lawsuit vigorously if
the Companys motion to dismiss is denied, management is unable at this time to
predict the final outcome of these claims.

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

Overview

The Company is a worldwide 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 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 customer base includes many of the leading life science companies
throughout the world.

On December 13, 2001, the Company acquired Intergen Company L.P., a
privately held Delaware limited partnership. The purchase price of $45
million, less approximately $1.7 million representing costs to complete the
expansion of Intergens manufacturing facility in Toronto, Canada, was funded
with cash on hand. Additionally, the former partners of Intergen are entitled
to earn certain additional cash consideration based on the financial
performance of Intergen over a period of time. During the first quarter of
2002, additional consideration totaling approximately $450,000 was earned based
on the performance of the Company in accordance with an earnout agreement.
Also during the first quarter of 2002, the Company permanently closed the
former Intergen corporate headquarters in Purchase, New York upon completing
the transfer of all of the essential functions performed at that location to
the Companys corporate office.

The Company conducts its operations in facilities located in North America
and Europe. The Company operates protein fractionation facilities located in
Kankakee, Illinois and 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. A number of these products, such as bovine
serum albumin (BSA), are primarily supplied to life science companies for use
in diagnostic reagents. Additionally, these facilities produce a line of highly
purified animal proteins known as tissue culture media components that are used
primarily by biopharmaceutical and biotechnology companies as nutrient
additives in cell culture media. One example of these media components is
EX-CYTE®, which is produced through a patented manufacturing process.
Additionally, the Company operates two monoclonal antibody manufacturing
facilities in Scotland that are engaged in the development, manufacturing and
sale of monoclonal antibodies and related 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. The Company also operates research and development
laboratories in the United States and Scotland. The Company conducts its
therapeutic operations (or blood plasma operations) through a national network
of 17 donor centers that specialize in the collection of specialty human
antibodies.

Beginning in 2002, for management purposes the operations of the Companys
subsidiaries have been organized into three primary operating segments:
Biotechnology and molecular biology products (Biotech), Diagnostic products
and life science reagents (Diagnostics) 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. Prior to 2002, the
Company reported only two operating segments, Therapeutics and Diagnostics.
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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The activities of the Biotech segment primarily include the manufacture
and sale of tissue culture media components, as well as certain research
products and technologies used in life sciences research and in high throughput
drug screening. The primary products included in this segment are EX-CYTE®,
certain grades of BSA, human recombinant insulin and Amplifluor, a patented
technology used for the detection of nucleic acids amplified by polymerase
chain reaction (PCR) and other techniques. The activities of the Diagnostic
segment include the Companys monoclonal antibody production facilities and
certain human-sourced, polyclonal antibodies, as well as certain blood protein
products manufactured at the Companys facilities in Kankakee and Toronto. The
antibodies and other proteins provided by the Diagnostic Products segment are
used in diagnostic products such as blood typing reagents and diagnostic test
kits and as nutrient additives in biotech products. The activities of the
Therapeutics segment include the collection and sale of specialty human
antibodies that are used as the active ingredients in therapeutic products for
the treatment and management of various diseases.

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 31,     |       | April 1,
|                                             |  | 2002          |       | 2001    
|                                             |  |               |       |         
|Net sales                                    |  |               | 100.0 | %        |  |  | 100.0 | %
|Gross profit                                 |  |               | 49.2  | %        |  |  | 47.9  | %
|Selling, general and administrative expenses |  |               | 32.5  | %        |  |  | 20.3  | %
|Research and development                     |  |               | 3.2   | %        |  |  | 1.3   | %
|Income before income taxes                   |  |               | 13.2  | %        |  |  | 26.7  | %

Quarters Ended March 31, 2002 and April 1, 2001

NET SALES

Consolidated

Consolidated net sales increased approximately $5 million, or 19%, from
$26.5 million in 2001 to $31.5 million in 2002. The increase was primarily due
to the sales contribution from Intergen and increased sales of EX-CYTE®,
partially offset by a decrease in sales of Therapeutic products.

Biotech Products

Net sales of biotechnology products increased $9.7 million, or 411% from
$2.4 million in 2001 to $12.1 million in 2002. Sales of EX-CYTE® increased
$3.6 million, or 151% from $2.4 million in 2001 to $6.0 million in 2002. The
growth in the EX-CYTE® product is due to continued advancement in the
commercialization of the Companys customers end-products by moving to later
stage clinical trials and FDA drug approval. The remainder of the increase was
due to the sales contribution from Intergen.

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Diagnostic Products

Net sales of Diagnostic Products increased approximately $1.5 million, or
16%, from $9.4 million in the first quarter of 2001 to $10.9 million in 2002.
This increase was primarily due to increased sales of BSA and sales growth from
other products acquired through the Intergen acquisition. BSA sales increased
from $2.5 million in 2001 to $3.2 million in 2002. Sales of monoclonal
antibodies and related products declined from $4.5 million to $4.1 million, due
primarily to timing of customer orders and shipments. Sales of primarily
human-sourced antibodies used in blood typing reagents and diagnostic test kits
(bio-diagnostic products) increased slightly from $1.8 million in 2001 to $1.9
million in 2002.

Therapeutic Products

Net sales of Therapeutic Products decreased approximately $6.2 million, or
42%, from $14.7 million in 2001 to $8.5 million in 2002. Sales of anti-D
declined $6.7 million, or 83% compared with the prior year. The Company
expects anti-D sales to be significantly lower for the full year 2002 compared
with 2001, due to the uneven ordering patterns of our customers for this
product. Sales of anti-hepatitis antibodies increased $1.8 million, or 45%
over the prior year. Anti-hepatitis continues to be the fastest growing
product in this segment, as growth in demand is largely being driven by the
increasing life span for liver transplant patients, as well as other new
treatment protocols for liver patients. Sales of anti-rabies declined 50% from
the prior year quarter, primarily as a result of timing of customer orders and
delivery requirements.

GROSS PROFIT

Consolidated

Consolidated gross profit increased approximately $2.8 million, or 22%,
from $12.7 million in the first quarter of 2001 to $15.5 million in 2002. This
increase was primarily due to the higher sales, combined with the mix as the
relatively higher margin EX-CYTE® product represented a significantly higher
percentage of total sales in 2002 compared with 2001. Gross margin increased
from 48% in 2001 to 49% in the current period.

Biotech Products

Gross profit from Biotech Products increased $4.3 million, or 243%, from
$1.8 million in 2001 to $6.1 million in 2002. This increase was primarily due
to the increased sales of EX-CYTE® and the addition of the former Intergen
products to the biotech sales mix. Gross margins on biotech products decreased
from 76% in 2001 to 51% in 2002. This decrease was due to the mix of sales.
In 2001, all sales in this segment represented sales of EX-CYTE®, while in 2002
approximately 49% of the biotech sales were sales of EX-CYTE®. The Intergen
products included in this segment are generally lower margin products than
EX-CYTE®. Additionally, during the first quarter of 2002, the Company recorded
a large sale of recombinant insulin which is a lower margin product due to the
fact that the Company purchases and resells this product under a distributor
relationship.

Diagnostic Products

Gross profit from Diagnostic Products increased $0.9 million, or 18% from
$4.8 million in the first quarter of 2001 to $5.7 million in the first quarter
of 2002. The majority of the increase was attributable to increased sales due
to the Intergen acquisition. Gross margins on Diagnostic products were 53% for
the first quarter of 2002, compared with 52% in the prior year quarter.

Therapeutic Products

Gross profit from Therapeutic Products decreased approximately $2.4
million, or 40%, from $6.0 million in 2001 to $3.6 million in the first quarter
of 2002. The decrease was due to the decreased sales of anti-D

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compared with
the prior year quarter. Gross margins on Therapeutic Products increased from
41% in 2001 to 43% in 2002, as margin improvements in the Companys
anti-hepatitis product offset the sales decline of the
relatively high margin anti-D product. The anti-hepatitis margins were
positively impacted by contractual arrangements with a customer that provide
for premium pricing adjustments for delivery of product that exceeds antibody
concentration requirements as defined within the contract.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Consolidated selling, general and administrative expenses increased
approximately $4.8 million, or 91%, in the first quarter of 2002, from $5.4
million in 2001 to $10.2 million in the current year.
Approximately $2.0 million of this increase was due to non-recurring
items including external costs related to the integration of
Intergen, professional fees incurred as part of a project to evaluate
all aspects of the Therapeutic products business operations and the cost of operating the former Intergen corporate office for the first
quarter while completing the shutdown of this office at the end of
March 2002. The
remaining increase was primarily due to the significant expansion of the
Companys sales and marketing organization as a result of the Intergen
acquisition and higher personnel costs due to the timing of hiring certain
executives during the second half of 2001.

RESEARCH AND DEVELOPMENT

Research and development expenses increased approximately $700,000, or
201% from $330,000 in the first quarter of 2001 to approximately $1.0 million
in the current year. As a percentage of sales, spending in this area increased
from 1.3% in 2001 to 3.2 % in 2002. This increase is primarily due to the
expansion of the Companys research and development activities as a result of
the Intergen acquisition. The Company expects 2002 research and development
expenditures to represent approximately 3.5% of sales, and that the investment
in this area will increase over the next several years.

OTHER EXPENSE, NET

Other expense, net, which consists primarily of amortization of
definite-lived intangible assets and gains and losses from foreign currency
transactions, decreased approximately 34% from the prior year. This was
primarily due to the amortization of goodwill totaling approximately $350,000
in the first quarter of 2001, which is not included in the current year as
goodwill and indefinite-lived intangible assets are no longer amortized. This
benefit was partially offset by amortization of certain definite-lived
intangibles acquired in the acquisition of Intergen.

INTEREST INCOME, NET

Interest income, net decreased $287,000, or 79% compared with the prior
year quarter. The decrease resulted from lower cash balances in the current
year as a result of using cash of hand to complete the acquisition of Intergen.

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Liquidity and Capital Resources

The following table sets forth certain indicators of financial condition
and liquidity as of March 31, 2002 and December 30, 2001:

|                                                   |  |           |         |              |  |   |         |  
|-------------------------------------------------- |  | --------- | ------- | ------------ |  | - | ------- | -
|                                                   |  | March 31, |         | December 30,
|                                                   |  | 2002      |         | 2001        
|                                                   |  |           |         |             
|Cash and cash equivalents                          |  | $         | 13,813  |              |  | $ | 10,780  |  
|Working capital                                    |  |           | 56,651  |              |  |   | 55,156  |  
|Total long-term debt and capital lease obligations |  |           | 3,902   |              |  |   | 4,576   |  
|Stockholders equity                               |  |           | 156,073 |              |  |   | 152,475 |  
|Total debt to equity ratio                         |  |           | 2.5     | %            |  |   | 3.0     | %

Serologicals has three principal sources of near-term liquidity: (i)
existing cash and cash equivalents; (ii) cash generated by operations, and
(iii) available borrowing capacity under the revolving credit facility (the
Revolver), which provides for a maximum borrowing capacity of $65 million.
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 and may be available
for use in acquisitions.

Net cash provided by operating activities in 2002 was $5.9 million as
compared to net cash provided of $9.2 million in the previous year. This
decrease was primarily attributable to an increased investment in working
capital of approximately $1.1 million versus the prior year, decreased net
income of $1.7 million and a reduction in the amount of tax benefit from the
exercise of stock options. The increased investment in working capital was
primarily due to a $3.6 million decrease in accounts receivable in 2002
compared with a $526,000 increase in 2001, a $2.5 million increase in inventory
in 2002, compared with a decrease of approximately $200,000 in the prior year
and a decrease in other assets of $0.1 million in 2002 versus a decrease of
$3.4 million in the first quarter of 2001. The receivable decrease was due to
the significant sales recorded at the end of 2001, combined with collections of
receivables that were acquired from Intergen at the date of acquisition. The
inventory build-up was primarily due to the reduced sales levels in the
Therapeutics segment.

Net cash used in investing activities in 2002 was $2.6 million, compared
with $1.6 million in the first quarter of 2001. Capital expenditures for the
first quarter of 2002 consisted primarily of the following items: i) completion
of the buildout of the expanded monoclonal manufacturing facility in Scotland
and ii) construction of the Companys expanded protein fractionation facility
in Toronto. The Company anticipates capital expenditures for the remainder of
the year to total approximately $11 million to $13 million. The most
significant expenditure anticipated for the remainder of 2002 is the
implementation of an ERP system with the majority of the costs to be incurred
over the next two quarters.

Net cash used in financing activities in 2002 was $0.3 million, compared
with net cash provided of $4.4 million in 2001. Financing activities in the
first quarter of 2002 consisted of the repayment of borrowings on a note
payable and certain capital lease obligations, the repurchase of 20,000 shares
of Common stock in a private transaction with a Director
of the Company, offset by proceeds from the exercise of stock options.

As of March 31, 2002, the Company had outstanding debt of approximately
$3.9 million consisting of a note payable to a supplier which was acquired
through the Intergen acquisition, as well as certain capital lease obligations.
The note payable bears interest at a rate of 7%, requires monthly payments of
principal, and will be paid in full no later than March 2003.

On April 25, 2002, the Company closed on its amended Revolver that was
scheduled to mature in September 2002. The amount available under the facility
has been reduced from $75 million to $65 million.

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The Revolver is payable in full on April 25, 2005 and bears interest at either
a floating rate or a Eurodollar interest rate plus a margin that fluctuates
based on the Companys leverage ratio. The margin on the Eurodollar rate
ranges from 1.25% to 1.75%, and the margin on the floating rate option ranges
from 0% to 0.25%. There were no borrowings outstanding under the Revolver as
of March 31, 2002.

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, and has no
transactions with related parties.

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. Following are five
critical accounting matters which are both very important to the portrayal of
our financial condition and results and required managements most difficult,
subjective, or complex judgments. The accounting for these matters was 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.

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 that 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.

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.

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. 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.

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
undiscounted future cash flows from the use and eventual disposition of the
underlying assets. In the

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first quarter of 2002, the Company adopted SFAS No.
142, Goodwill and Other Intangible Assets (SFAS No. 142). The
Company will complete its initial impairment review during the second
quarter of 2002 and will perform an annual review thereafter.

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 will be recorded
against these assets.

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.

Recent Accounting Pronouncements

SFAS No. 142 supersedes APB Opinion No. 17, Intangible Assets. This
Standard prescribes the accounting practices for acquired goodwill and other
intangible assets. Under this Standard, goodwill and indefinite lived
intangibles will no longer be amortized to earnings, but instead will be
reviewed periodically (at least annually) for impairment. During the first
quarter of 2001, the Company recorded goodwill amortization expense totaling
approximately $350,000. In accordance with the requirements of SFAS No. 142,
goodwill related to the Intergen acquisition was not amortized. Effective with
fiscal year 2002, goodwill is no longer amortized. However, goodwill will be
tested for impairment at least annually. The Company adopted this Standard on
December 31, 2001. The Company expects to complete the initial impairment
analysis required under this Standard during the second quarter of 2002.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. This Standard addresses financial accounting and
reporting for asset retirement costs of long-lived assets resulting from legal
obligations associated with acquisition, construction or development
transactions. The Company plans to adopt this in the first quarter of 2003. The
adoption of this Standard is not expected to have a material impact on the
Companys financial position or results of operations.




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 30, 2001. 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.




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.

During 2000, twelve complaints were filed against the Company and certain
of its current and former executive officers and directors which allege
violations of the Securities Exchange Act of 1934, including Sections 10(b) and
20(a) thereof and Rule 10b-5 promulgated thereunder. During the third quarter
of 2000, the complaints were consolidated and a lead plaintiff was named. A
consolidated complaint was filed on October 10,

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2000 which also seeks the
courts certification of the litigation as class action on behalf of all
purchases of the Companys
stock between April 27, 1999 and April 10, 2000. On November 30, 2000, the
Company and the other defendants filed a motion to dismiss the consolidated
complaint. On January 17, 2001, the plaintiff filed an opposition to the motion
to dismiss. On April 20, 2001, a hearing was held on the motion to dismiss. On
September 5, 2001, the Court granted the motion to dismiss the complaint in its
entirety with prejudice and ruled that the plaintiffs would not be allowed to
amend the complaint. On September 19, 2001, the plaintiffs filed a motion to
amend the judgment and/or for relief arguing that they should have been allowed
to amend the complaint. The Company responded by filing a brief supporting the
Courts dismissal of the complaint. On January 17, 2002, the Court reconsidered
its decision and granted plaintiffs leave to file an amended complaint. The
plaintiffs filed a second amended consolidated complaint on February 12, 2002.
The Company does not consider the claims of the second amended consolidated
complaint to be substantially different than those of the initial consolidated
complaint and, consequently, filed a motion to dismiss the second amended
consolidated complaint on March 11, 2002. Although management considers all of
the claims in the second amended consolidated complaint to be without merit and
intends to defend the lawsuit vigorously if the Companys motion to dismiss is
denied, management is unable at this time to predict the final outcome of these
claims.




Item 6. Exhibits and Reports on Form 8-K

|   |  |                                                                    |  |                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. |  | Exhibits (numbered in accordance with Item 601 of Regulation
S-K):
|   |  |                                                                    |  |                                                                                                                                                                                                                     
|   |  | 10.1                                                               |  | Fourth Amended and Restated Credit Agreement, dated
as of April 25, 2002, between the Company and Bank of America,
N.A., JP Morgan Chase Bank, Branch Banking and Trust Company,
and PNC Bank, National Association.
|   |  | 10.2                                                               |  | Employment Agreement between the Company and Roland Gerritsen
van der Hoop, M.D., Ph.D.                                                                                                                             
|   |  |                                                                    |  |                                                                                                                                                                                                                     
|b. |  | Reports on Form 8-K:                                              

|   |  |                                                                                                                                                                                                                                                          
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1) |  | On February 26, 2002, the Company filed a
Form 8-K/A, amending the Form 8-K which was filed on
December 19, 2001, to include the historical and pro forma
financial information related to the acquisition of the
Intergen Company required under Item 7.

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SIGNATURES

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

|                   |  |     |  |                                                                                       
|------------------ |  | --- |  | --------------------------------------------------------------------------------------
|                   |  |     |  | SEROLOGICALS CORPORATION
(Registrant)                                                 
|                  
|                   |  |     |  |                                                                                       
|                  
|Date: May 14, 2002 |  | By: |  | /s/ Harold W. IngallsHarold W. Ingalls
Vice President/Chief Financial
Officer         
|                  
|                   |  |     |  | /s/ Samuel R. SchwartzSamuel R. Schwartz
Corporate Controller/Chief Accounting Officer

20