Seracare Life Sciences (SRLS) 10-Q 2010 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to

Commission file number: 1-34105

SeraCare Life Sciences, Inc.

(Exact name of registrant as specified in its charter)

DE
(State or other jurisdiction
of incorporation or organization) 33-0056054
(I.R.S. Employer
Identification No.)

37 Birch Street
Milford, MA
(Address of principal executive offices) 01757
(Zip Code)

Registrant’s telephone number, including area code: (508) 244-6400

     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 þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o  Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company þ

     Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes þ No o

     The number of shares of common stock outstanding as of July 31, 2010 was 18,853,584.

TABLE OF CONTENTS

	Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements		4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosures About Market Risk		18
Item 4. Controls and Procedures		18
PART II: OTHER INFORMATION
Item 1. Legal Proceedings		19
Item 1A. Risk Factors		19
Item 6. Exhibits		19
EX-10.1
EX-10.2
EX-31.1
EX-31.2
EX-32.1

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PART I: FINANCIAL INFORMATION

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     We caution you that this document contains disclosures that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about SeraCare Life Sciences, Inc. (“SeraCare” or the “Company”). All statements regarding our expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budget, projected costs or cost savings, capital expenditures, competitive positions, growth opportunities for existing products or products under development, plans and objectives of management for future operations and markets for stock are forward-looking statements. In addition, forward-looking statements include statements in which we use words such as “expect,” “believe,” “anticipate,” “intend,” or similar expressions. Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, we cannot assure you that these expectations will prove to have been correct, and actual results may differ materially from those reflected in the forward-looking statements. Factors that could cause our actual results to differ from the expectations reflected in the forward-looking statements in this document include those set forth in “Risk Factors” in Part II, Item 1A. Many of these factors are beyond our ability to control or predict.

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Item 1. Financial Statements

SERACARE LIFE SCIENCES, INC.

BALANCE SHEETS — UNAUDITED

	As of			As of
	June 30,			September 30,
	2010			2009
ASSETS
Current Assets
Cash and cash equivalents	$	12,673,729		$	6,169,396
Accounts receivable, less allowance for doubtful accounts of $75,000 and $195,000 as of June 30, 2010 and September 30, 2009, respectively		7,866,115			7,179,946
Taxes receivable		171,168			257,405
Inventory		8,965,912			8,706,937
Prepaid expenses and other current assets		218,066			155,533
Total current assets		29,894,990			22,469,217
Property and equipment, net		5,478,123			5,941,589
Assets held for sale		—			1,264,330
Goodwill		4,284,979			4,284,979
Other assets		361,273			504,006
Total assets	$	40,019,365		$	34,464,121
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,413,548		$	1,320,259
Accrued expenses and other liabilities		4,020,494			3,155,666
Current portion of long-term debt		57,154			349,329
Total current liabilities		5,491,196			4,825,254
Long-term debt		34,250			1,194,979
Other liabilities		2,252,311			2,249,950
Total liabilities		7,777,757			8,270,183
Commitments and contingencies
Stockholders’ equity
Preferred stock, $.001 par value, 5,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock, $.001 par value, 35,000,000 shares authorized, 18,849,919 and 18,652,982 shares issued and outstanding as of June 30, 2010 and September 30, 2009, respectively		18,850			18,653
Additional paid-in capital		104,105,199			102,748,387
Retained earnings (deficit)		(71,882,441	)		(76,573,102	)
Total stockholders’ equity		32,241,608			26,193,938
Total liabilities and stockholders’ equity	$	40,019,365		$	34,464,121

See accompanying notes to financial statements.

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SERACARE LIFE SCIENCES, INC.

STATEMENTS OF OPERATIONS — UNAUDITED

	For the Three Months Ended						For the Nine Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Revenue	$	12,975,119		$	11,777,786		$	37,083,594		$	31,912,353
Cost of revenue		7,867,551			7,530,936			21,500,674			21,635,109
Gross profit		5,107,568			4,246,850			15,582,920			10,277,244
Research and development expense		210,695			217,344			542,300			913,541
Selling, general and administrative expenses		3,510,410			3,257,944			10,178,633			10,285,026
Impairment of goodwill		—			—			—			15,091,099
Loss related to assets held for sale		—			—			—			600,000
Operating income (loss)		1,386,463			771,562			4,861,987			(16,612,422	)
Interest expense		(2,184	)		(85,686	)		(232,834	)		(292,069	)
Other income, net		40,000			7,737			70,083			106,369
Income (loss) before income taxes		1,424,279			693,613			4,699,236			(16,798,122	)
Income tax expense (benefit)		112,500			(3,406	)		8,575			21,104
Net income (loss)	$	1,311,779		$	697,019		$	4,690,661		$	(16,819,226	)
Earnings (loss) per common share
Basic	$	0.07		$	0.04		$	0.25		$	(0.91	)
Diluted	$	0.07		$	0.04		$	0.24		$	(0.91	)
Weighted average shares outstanding
Basic		18,848,478			18,596,172			18,805,324			18,580,801
Diluted		19,293,283			18,596,172			19,172,586			18,580,801

See accompanying notes to financial statements.

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SERACARE LIFE SCIENCES, INC.

STATEMENTS OF CASH FLOWS — UNAUDITED

	For the Nine Months Ended
	June 30,
	2010			2009
Cash flows from operating activities:
Net income (loss)	$	4,690,661		$	(16,819,226	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization		785,473			966,864
Amortization of deferred financing expenses		142,733			134,907
Bad debt (recoveries) expense, net		(112,290	)		38,145
Write-down of inventory		472,151			447,658
Impairment of goodwill		—			15,091,099
Loss related to assets held for sale		—			600,000
Loss on disposal of property and equipment		—			12,063
Gain on disposition of certain assets of Genomics Collaborative division		(65,000	)		(101,162	)
Stock-based compensation		1,346,179			861,323
(Increase) decrease from changes:
Accounts receivable		(573,879	)		(306,934	)
Taxes receivable		86,237			260,649
Inventory		(731,126	)		2,296,119
Prepaid expenses and other current assets		(62,533	)		(20,320	)
Other assets		—			(16,808	)
Increase (decrease) from changes:
Accounts payable		93,289			(1,006,819	)
Accrued expenses and other liabilities		867,189			(1,492,324	)
Net cash provided by operating activities		6,939,084			945,234
Cash flows from investing activities:
Purchases of property and equipment		(322,007	)		(578,218	)
Proceeds from the sale of assets held for sale, net		1,264,330			—
Proceeds from landlord for leasehold improvements		—			483,266
Proceeds from the disposal of property and equipment		—			12,000
Proceeds from the disposition of certain assets of Genomics Collaborative division		65,000			101,162
Net cash provided by investing activities		1,007,323			18,210
Cash flows from financing activities:
Repayments of long-term debt		(1,452,904	)		(206,561	)
Proceeds from revolving credit facility		—			19,700,000
Repayments of revolving credit facility		—			(19,700,000	)
Proceeds from exercise of options		10,830			—
Net cash used in financing activities		(1,442,074	)		(206,561	)
Net increase in cash and cash equivalents		6,504,333			756,883
Cash and cash equivalents,beginning of period		6,169,396			2,945,866
Cash and cash equivalents,end of period	$	12,673,729		$	3,702,749

See accompanying notes to financial statements.

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SERACARE LIFE SCIENCES, INC.

NOTES TO FINANCIAL STATEMENTS

1. Basis of Presentation

     The unaudited condensed financial statements of SeraCare Life Sciences, Inc. (“SeraCare” or the “Company”) for the nine months ended June 30, 2010 and 2009 presented herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for quarterly reports on Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In addition, the September 30, 2009 unaudited condensed Balance Sheet was derived from the audited financial statements, but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the audited financial statements for the year ended September 30, 2009 and the notes thereto included in the Company’s Annual Report on Form 10-K. The accounting policies used in preparing these unaudited condensed financial statements are materially consistent with those described in the audited September 30, 2009 financial statements.

     The financial information in this report reflects, in the opinion of management, all adjustments of a normal recurring nature necessary to present fairly the results for the interim period. Quarterly operating results are not necessarily indicative of the results that may be expected for other interim periods or the year ending September 30, 2010.

     The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, as of the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Judgments and estimates of uncertainties are required in applying the Company’s accounting policies in many areas. Following are some of the areas requiring significant judgments and estimates: revenue recognition, cost of revenue, accounts receivable, inventory, accrued expenses and other liabilities, cash flow and valuation assumptions in performing asset impairment tests of long-lived assets, income taxes and stock-based compensation value.

2. Recent Accounting Pronouncements

     The Financial Accounting Standards Board (the “FASB”) provided guidance for using fair value to measure assets and liabilities which applies whenever other guidance requires (or permits) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. The guidance clarifies that for items that are not actively traded, such as certain kinds of derivatives, fair value should reflect the price in a transaction with a market participant, including an adjustment for risk, not just the company’s mark-to-market value. The guidance also requires expanded disclosure of the effect on earnings for items measured using unobservable data. Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. The FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, the guidance establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, such as the reporting entity’s own data. Under the guidance, fair value measurements are separately disclosed by level within the fair value hierarchy. The FASB agreed to defer the effective date of the guidance for all nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company adopted this guidance on October 1, 2008 for assets and liabilities not subject to the deferral and on October 1, 2009 for all other assets and liabilities. The guidance did not have a material effect on the financial position, results of operations or cash flows of the Company.

     On December 4, 2007, the FASB revised its guidance for business combinations. Under the revised guidance, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. The guidance will change the accounting treatment for certain items as follows:

• acquisition costs will be generally expensed as incurred;

• noncontrolling interests will be valued at fair value at the acquisition date;

• acquired contingent liabilities will be recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies;

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• in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date until the completion or abandonment of the associated research and development efforts;

• restructuring costs associated with a business combination will be generally expensed subsequent to the acquisition date; and

• changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.

     The revised guidance also includes a substantial number of new disclosure requirements. The revised guidance applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted this guidance on October 1, 2009. The guidance did not have a material effect on the financial position, results of operations or cash flows of the Company.

     On December 4, 2007, the FASB issued guidance which establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this guidance requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. The guidance clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this guidance requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. The guidance also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company adopted this guidance on October 1, 2009. The guidance did not have a material effect on the financial position, results of operations or cash flows of the Company.

3. Inventory

     Inventory consists primarily of human blood plasma and products derived from human blood plasma. Inventory is carried at specifically identified cost and assessed periodically to ensure it is valued at the lower of cost or market. The Company reviews inventory periodically for impairment based upon factors related to age, historical scrap rates, usability and fair market value and provides a reserve where necessary to ensure the inventory is appropriately valued. A provision has been made to reduce excess and not readily marketable inventories to their estimated net realizable value.

     Inventory consists of the following:

	June 30, 2010			September 30, 2009
Raw materials and supplies	$	1,227,650		$	1,623,148
Work-in process		1,132,101			813,874
Finished goods		8,695,856			9,059,860
Gross inventory		11,055,607			11,496,882
Reserve for obsolete inventory		(2,089,695	)		(2,789,945	)
Net inventory	$	8,965,912		$	8,706,937

4. Impairment of Goodwill

     The Company performed its annual impairment test as of March 31, 2010 and concluded that no impairment was required.

     Due to the economic downturn, the turmoil in the financial markets and the associated decline in the Company’s stock price and market capitalization, the Company tested goodwill for impairment as of December 31, 2008. At that time, the Company revised its future cash flow projections as revenue during the three months ended December 31, 2008 was lower than expected due to the economic downturn. As a result during the three months ended December 31, 2008, the Company recorded an impairment charge to goodwill in the amount of $15.1 million which related to its Diagnostic & Biopharmaceutical Products segment. This represented the entire balance of goodwill related to the Diagnostic & Biopharmaceutical Products segment. The Company determined the fair value of this segment under various methodologies including performing a discounted cash flow analysis as well as allocating the Company’s market capitalization to each segment according to revenue. Using a discounted cash flow model requires a number of assumptions about future cash flows and related costs necessary to generate such estimated cash flows. Using what management believed were reasonable assumptions based on the best information available as of the testing date, the value of the BioServices segment was found to be in excess of its carrying

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value, and therefore the related goodwill was not impaired. The remaining goodwill of $4.3 million relates to the BioServices segment. There was no impairment charge associated with the BioServices segment as it is service driven and has fewer assigned assets which have a lower carrying amount as compared to the Diagnostic & Biopharmaceutical Products segment which requires more assets to manufacture and sell products.

     The Company will continue to test goodwill for impairment as part of its annual impairment testing and as events occur that would more likely than not reduce the fair value of the reporting unit below its carrying value.

5. Commitments and Contingencies

     The Company is involved from time to time in litigation incidental to the conduct of the Company’s business, but the Company is not currently a party to any material lawsuit or proceeding.

6. Leases

     On October 1, 2007, the Company entered into a lease agreement pursuant to which the Company is leasing approximately 60,000 rentable square feet in three buildings in a business park in Milford, Massachusetts. This lease expires in January 2018. During fiscal 2008, the landlord reimbursed the Company $1.2 million for leasehold improvements. The Company has recorded the $1.2 million as a deferred lease liability which is recognized over the term of the lease using the straight-line method. The Company is also accounting for the lease expense using the straight-line method which results in a deferred lease liability. As of both June 30, 2010 and September 30, 2009, the total deferred lease liability for this facility was $1.4 million.

     In addition, the Company is currently leasing properties in Frederick, Maryland and Gaithersburg, Maryland. These operating leases expire July 2015 and October 2017, respectively, and currently consist of approximately 65,000 square feet and 36,000 square feet, respectively. These properties include laboratories, refrigerated storage facilities and administrative offices. These leases are accounted for as operating leases using the straight-line method. During the nine months ended June 30, 2009, our landlord reimbursed the Company $0.5 million for leasehold improvements at our Gaithersburg facility. The Company has recorded the $0.5 million as a deferred lease liability which is recognized over the term of the lease using the straight-line method. As of June 30, 2010, the total deferred lease liability for these facilities was $1.0 million as compared to $1.1 million as of September 30, 2009. The Company also leases various equipment under capital leases.

7. Assets Held For Sale

     On October 1, 2007, the Company signed a lease agreement which enabled it to consolidate all of its Massachusetts operations into its state-of-the-art Milford facility during the year ended September 30, 2008. The Company sold its West Bridgewater facility and land for $1.4 million ($1.3 million net of selling expenses) during January 2010, at which time the Company repaid the real property mortgage note in its entirety.

8. Debt

     Debt consists of the following:

	June 30, 2010			September 30, 2009
Real property mortgage note	$	—		$	1,400,000
Capital leases		91,404			144,308
Total debt		91,404			1,544,308
Less current portion		(57,154	)		(349,329	)
Total long-term debt	$	34,250		$	1,194,979

Real Property Mortgage Note

     The Company had a promissory note (the “Note”) with Commerce Bank & Trust Company (“Commerce Bank”) which was secured by a mortgage on the real property located at 375 West Street, West Bridgewater, Massachusetts (the “Real Property”). The Company sold the Real Property for $1.4 million during January 2010, at which time the Company repaid the Note in its entirety.

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GE Capital Credit and Security Agreement

     On June 7, 2007, the Company entered into a three-year Credit and Security Agreement, dated as of June 4, 2007, with Merrill Lynch Capital (now GE Capital) pursuant to which a $10.0 million revolving credit facility was made available to the Company. During October 2009, the Company terminated the Credit and Security Agreement and paid a $0.1 million termination fee to GE Capital which was charged to interest expense in October 2009. In addition, the Company had $0.1 million of unamortized deferred financing expenses related to the Credit and Security Agreement which was charged to interest expense in October 2009.

9. Stockholders’ Equity

     The Company is authorized to issue 35,000,000 shares of common stock and 5,000,000 shares of preferred stock at $0.001 par value. The Board of Directors may, without further action by the Company’s shareholders, issue preferred stock in one or more series. The terms of such preferred stock may include voting rights, preferences as to dividends and liquidation, and conversion and redemption rights.

     During the three months ended June 30, 2010, the non-employee directors were issued a total of 5,534 shares of the Company’s common stock and the senior management team was issued a total of 10,916 shares of the Company’s common stock. Employees exercised 2,666 stock options during the three months ended June 30, 2010.

     During the nine months ended June 30, 2010, the non-employee directors were issued a total of 20,040 shares of the Company’s common stock and the senior management team was issued a total of 168,233 shares of the Company’s common stock. Employees exercised 8,664 stock options during the nine months ended June 30, 2010.

10. Stock-Based Compensation Plans

     SeraCare has granted various stock-based awards under its Amended and Restated 2001 Stock Incentive Plan, as amended and its 2009 Equity Incentive Plan (collectively, the “Plans”), which are described in further detail in SeraCare’s Annual Report on Form 10-K for the year ended September 30, 2009. Unless the Compensation Committee otherwise provides, stock options vest ratably over three years. The maximum term of stock options is ten years. Options that are granted to Board members generally vest either immediately or over one year.

A summary of the Company’s options as of June 30, 2010 and changes during the nine months then ended is presented below:

				Weighted-
				Average
	Number			Exercise
	of			Price Per
Options	Options			Share
Outstanding September 30, 2009		2,227,792		$	5.57
Granted		570,000		$	3.00
Exercised		(8,664	)	$	1.25
Expired		(142,000	)	$	10.06
Forfeited		(24,834	)	$	2.34
Outstanding June 30, 2010		2,622,294		$	4.81
Exercisable at June 30, 2010		1,642,546		$	6.04

     As of June 30, 2010, options to purchase 874,243 shares of common stock remain available for future grants under the Plans.

     As of June 30, 2010, options to purchase 700,000 shares of common stock remain outstanding outside the Plans, all of which were exercisable. These options vested in equal annual installments over a period of three years and have a maximum term of ten years. During the nine months ended June 30, 2010, no options to purchase shares of common stock were issued outside of the Plans.

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     During the three months ended June 30, 2010, the Company granted 10,916 and 5,534 shares of common stock to the senior management team and non-employee directors, respectively. During the nine months ended June 30, 2010, the Company granted 168,233 and 20,040 shares of common stock to the senior management team and non-employee directors, respectively. Of the 168,233 shares of common stock that were issued to the senior management team, 128,094 shares of common stock valued at $0.4 million were issued as part of the fiscal 2009 bonus plan in November 2009 and are included in the table below as part of selling, general and administrative expenses for the nine months ended June 30, 2010. The Company did not grant any stock options with an exercise price that was less than the market price of the underlying stock on the date of the grant in the current period.

     The following table presents stock-based compensation included in our statements of operations:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
Cost of revenue	$	72,129	$	43,789	$	203,943	$	147,707
Research and development expense		7,997		12,307		27,337		40,904
Selling, general and administrative expenses		233,628		211,797		1,114,899		672,712
Total stock-based compensation expense	$	313,754	$	267,893	$	1,346,179	$	861,323
Incremental charge to earnings per share
Basic	$	0.02	$	0.01	$	0.07	$	0.05
Diluted	$	0.02	$	0.01	$	0.07	$	0.05

11. Earnings Per Share

     Basic earnings (loss) per common share is computed based on the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is calculated by considering the dilutive impact of common stock equivalents (e.g., outstanding stock options) under the treasury stock method as if they were converted into common stock as of the beginning of the period or as of the date of grant, if later.

     The following table sets out the computations of basic and diluted earnings (loss) per common share:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
Numerator:
Net income (loss)	$	1,311,779	$	697,019	$	4,690,661	$	(16,819,226	)
Denominator:
Weighted average common shares outstanding		18,848,478		18,596,172		18,805,324		18,580,801
Effect of dilutive securities:
Stock options(1)		444,805		—		367,262		—
Diluted weighted average common shares outstanding		19,293,283		18,596,172		19,172,586		18,580,801
Earnings (loss) per common share
Basic	$	0.07	$	0.04	$	0.25	$	(0.91	)
Diluted	$	0.07	$	0.04	$	0.24	$	(0.91	)

(1) Excluded from the calculation of diluted earnings per common share for the three and nine months ended June 30, 2010 were 1,505,000 and 1,535,132 shares, respectively, related to stock options because their exercise prices would render them anti-dilutive. For the three months ended June 30, 2009, 2,230,315 shares related to stock options were excluded from the calculation of diluted earnings per common share because their exercise prices would render them anti-dilutive. Excluded from the calculation of diluted earnings per common share for the nine months ended June 30, 2009 were 2,126,343 shares related to stock options because their effect was anti-dilutive on the net loss.

12. Segment Information

     The Company’s business is divided into two segments: Diagnostic & Biopharmaceutical Products and BioServices. SeraCare’s Diagnostic & Biopharmaceutical Products segment includes two types of products: controls and panels, which include the

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manufacture of products used for the evaluation and quality control of infectious disease testing in hospital and clinical testing labs and blood banks, and byin vitrodiagnostic manufacturers; and reagents and bioprocessing products, which include the manufacture and supply of biological materials used in the research, development and manufacturing of human and animal diagnostics, therapeutics and vaccines. The BioServices segment includes biobanking, sample processing and testing services for research and clinical trials, and contract research services in molecular biology, virology, immunology and biochemistry. These reportable segments are strategic business lines that offer different products and services and require different marketing strategies.

     The Company utilizes multiple forms of analysis and control to evaluate the performance of the segments and to evaluate investment decisions. Gross profit is deemed to be the most significant measurement of performance, and administrative expenses are not allocated or reviewed by management at the segment level. Segments are expected to manage only assets completely under their control. Accordingly, segment assets include primarily accounts receivable, inventory, property plant and equipment and goodwill and do not include assets identified as general corporate assets. Amortization of intangibles is not allocated to the segment level, and accordingly has not been included in this data. The following segment information has been prepared on the same basis as the Company’s financial statements.

     The Company’s segment information for the three and nine months ended June 30, 2010 and 2009 is as follows:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
Revenue:
Diagnostic & Biopharmaceutical Products	$	9,081,521	$	8,739,168	$	25,753,180	$	23,781,061
BioServices		3,893,598		3,038,618		11,330,414		8,131,292
Total revenue	$	12,975,119	$	11,777,786	$	37,083,594	$	31,912,353
Gross Profit:
Diagnostic & Biopharmaceutical Products	$	4,404,339	$	3,611,507	$	13,283,931	$	8,845,170
BioServices		703,229		635,343		2,298,989		1,432,074
Total gross profit	$	5,107,568	$	4,246,850	$	15,582,920	$	10,277,244

13. Fair Value Measurements

     The FASB Accounting Standards Codification defines fair value and establishes a hierarchy for reporting the reliability of input measurements used to assess fair value for all assets and liabilities. Fair value is defined as the selling price that would be received for an asset, or paid to transfer a liability, in the principal or most advantageous market on the measurement date. The hierarchy prioritizes fair value measurements based on the types of inputs used in the valuation technique. The inputs are categorized into the following levels:

Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities

Level 2 — Directly or indirectly observable inputs for quoted and other than quoted prices for identical or similar assets and liabilities in active or non-active markets

Level 3 — Unobservable inputs not corroborated by market data, therefore requiring the entity to use the best available information available in the circumstances, including the entity’s own data

     The following table represents the assets and liabilities measured at fair value on a recurring basis in the Company’s financial statements as of June 30, 2010 and the valuation approach applied to each.

	Level 1		Level 2		Level 3		Balance
Assets
Cash and cash equivalents	$	12,673,729	$	—	$	—	$	12,673,729

     At June 30, 2010, the fair value of the assets measured and classified within Level 1 was based on quoted prices.

     Assets and liabilities measured at fair value on a nonrecurring basis are recognized at fair value subsequent to initial recognition when they are deemed to be impaired. As of June 30, 2010, the Company’s assets and liabilities subject to measurement at fair value on a nonrecurring basis are property and equipment and goodwill. Neither was deemed to be impaired and measured at fair value on a nonrecurring basis during the nine months ended and as of June 30, 2010.

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

     This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Financial Statements and related notes thereto and other financial information included elsewhere in thisForm 10-Q and our Annual Report onForm 10-K for the year ended September 30, 2009.

Business Overview

     SeraCare serves the global life sciences industry by providing vital products and services to facilitate the discovery, development and production of human and animal diagnostics and therapeutics. The Company’s innovative portfolio includes diagnostic controls, plasma-derived reagents and molecular biomarkers and biobanking and contract research services. SeraCare’s quality systems, scientific expertise and state-of-the-art facilities support its customers in meeting the stringent requirements of the highly regulated life sciences industry.

     The Company’s business is divided into two segments: Diagnostic & Biopharmaceutical Products and BioServices. SeraCare’s Diagnostic & Biopharmaceutical Products segment includes two types of products: controls and panels, which include the manufacture of products used for the evaluation and quality control of infectious disease testing in hospital and clinical testing labs and blood banks, and byin vitrodiagnostic manufacturers; and reagents and bioprocessing products, which include the manufacture and supply of biological materials used in the research, development and manufacturing of human and animal diagnostics, therapeutics and vaccines. The BioServices segment includes biobanking, sample processing and testing services for research and clinical trials, and contract research services in molecular biology, virology, immunology and biochemistry.

Critical Accounting Policies and Estimates

     As previously disclosed in our Annual Report on Form 10-K for the year ended September 30, 2009, we have identified revenue recognition, inventory valuation, valuation of long-lived and intangible assets and goodwill, contingencies and litigation reserves, stock-based compensation, and accounting for income taxes as the accounting policies critical to the operations of SeraCare. For a full discussion of these policies, please refer to our Annual Report on Form 10-K for the year ended September 30, 2009.

Results of Operations

     The following table shows gross profit and expense items as a percentage of revenue:

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2010		2009			2010			2009
	%		%			%			%
STATEMENT OF OPERATIONS DATA:
Revenue		100.0		100.0			100.0			100.0
Cost of revenue		60.6		63.9			58.0			67.8
Gross profit		39.4		36.1			42.0			32.2
Research and development expense		1.6		1.8			1.5			2.9
Selling, general and administrative expenses		27.1		27.7			27.4			32.2
Impairment of assets		—		—			—			47.2
Loss related to asset held for sale		—		—			—			1.9
Operating income (loss)		10.7		6.6			13.1			(52.0	)
Interest expense		—		(0.7	)		(0.6	)		(0.9	)
Other income, net		0.3		—			0.2			0.3
Net income (loss) before income taxes		11.0		5.9			12.7			(52.6	)
Income tax expense		0.9		—			—			0.1
Net income (loss)		10.1		5.9			12.7			(52.7	)

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Comparison of three months ended June 30, 2010 and June 30, 2009

Revenue

     The following table sets forth segment revenue in millions of dollars for the three months ended June 30, 2010 and 2009, respectively:

	June 30,		June 30,		Percent
	2010		2009		change
Diagnostic & Biopharmaceutical Products	$	9.1	$	8.8		4	%
BioServices		3.9		3.0		28	%
Total revenue	$	13.0	$	11.8		10	%

     Revenue for the three months ended June 30, 2010 increased by 10%, or $1.2 million, to $13.0 million from $11.8 million in the three months ended June 30, 2009. Diagnostic & Biopharmaceutical Products revenue during the same period increased by $0.3 million, a 4% increase due to strong demand for our bioprocessing products from our top customers.

     During the three months ended June 30, 2010, revenue for our BioServices segment increased by $0.9 million, a 28% increase, to $3.9 million from $3.0 million in the three months ended June 30, 2009. The BioServices segment benefited from increased government funding of scientific research which has resulted in additional services provided directly to the government as well as services provided to commercial customers who have received government funding.

Gross Profit

     Gross profit margin increased to 39% in the three months ended June 30, 2010 from 36% in the three months ended June 30, 2009. Our Diagnostic & Biopharmaceutical Products gross profit margin increased to 48% in the three months ended June 30, 2010 from 41% in the three months ended June 30, 2009 primarily due to lower raw material costs and process improvements.

     Our BioServices gross profit margin decreased to 18% in the three months ended June 30, 2010 from 21% in the three months ended June 30, 2009. BioServices gross profit margin decreased as a result of the growth in lower margin government business as compared to higher margin commercial business.

Research and Development Expense

     Research and development expense totaled $0.2 million, or 2% of revenue for each of the three month periods ended June 30, 2010 and 2009. We have held research and development spending flat while remaining focused on our priority projects.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses increased to $3.5 million, or 27% of revenue in the three months ended June 30, 2010, from $3.3 million, or 28% of revenue in the three months ended June 30, 2009. The increase is primarily due to $0.3 million of expenses for professional services related to exploring potential transactions for the Company during the three months ended June 30, 2010.

Operating Income

     Operating income resulted from the factors above and included stock-based compensation expense and depreciation and amortization. Operating income was $1.4 million for the three months ended June 30, 2010, which included $0.3 million each of stock-based compensation and depreciation and amortization, as compared to operating income of $0.8 million for the three months ended June 30, 2009, which included $0.3 million each of stock-based compensation and depreciation and amortization.

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Interest Expense and Other Income

     Interest expense was nominal during the three months ended June 30, 2010 as compared to $0.1 million during the three months ended June 30, 2009. During the three months ended June 30, 2010, our debt consisted solely of capital leases as we repaid our mortgage note during January 2010. Other income was nominal during each of the three months ended June 30, 2010 and 2009.

Income Tax (Benefit) Expense

     During the three months ended June 30, 2010, we recorded a tax provision of $0.1 million related to a reserve for a state tax receivable which is currently under audit. We recorded a nominal tax benefit during the three months ended June 30, 2009.

Net Income and Earnings Per Share

     As a result of the above, net income was $1.3 million in the three months ended June 30, 2010, compared to net income of $0.7 million in the three months ended June 30, 2009. Earnings per share on a basic and diluted basis was $0.07 in the three months ended June 30, 2010 compared to earnings per share of $0.04 in the three months ended June 30, 2009. If we had not incurred the $0.3 million of expenses related to exploring potential transactions, the basic and diluted earnings per share would have increased by $0.02 per share for the three months ended June 30, 2010.

Comparison of nine months ended June 30, 2010 and June 30, 2009

Revenue

     The following table sets forth segment revenue in millions of dollars for the nine months ended June 30, 2010 and 2009, respectively:

	June 30,		June 30,		Percent
	2010		2009		change
Diagnostic & Biopharmaceutical Products	$	25.8	$	23.8		8	%
BioServices		11.3		8.1		39	%
Total revenue	$	37.1	$	31.9		16	%

     Revenue for the nine months ended June 30, 2010 increased by 16%, or $5.2 million, to $37.1 million from $31.9 million in the nine months ended June 30, 2009. Diagnostic & Biopharmaceutical Products revenue during the same period increased by $2.0 million, an 8% increase. Diagnostic & Biopharmaceutical Products revenue included sales from therapeutic grade human serum albumin products of $0.6 million during the nine months ended June 30, 2010 as compared to $0.1 million in the nine months ended June 30, 2009. These sales have historically been variable and we are building a new customer base as a result of switching suppliers in December 2007.

     During the nine months ended June 30, 2010, revenue for our BioServices segment increased by $3.2 million, a 39% increase, to $11.3 million from $8.1 million in the nine months ended June 30, 2009. The BioServices segment benefited from increased government funding of scientific research which has resulted in additional services provided directly to the government as well as services provided to commercial customers who have received government funding.

Gross Profit

     Gross profit margin increased to 42% in the nine months ended June 30, 2010 from 32% in the nine months ended June 30, 2009. Our Diagnostic & Biopharmaceutical Products gross profit margin increased to 52% in the nine months ended June 30, 2010 from 37% in the nine months ended June 30, 2009. The increase is due to lower raw material costs and a reduction in manufacturing expenses due to the consolidation of our manufacturing facility.

     Our BioServices gross profit margin increased to 20% in the nine months ended June 30, 2010 from 18% in the nine months ended June 30, 2009. The increase is due to the higher revenue base over which our costs are spread, including an increase in commercial services which have a higher gross profit margin.

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Research and Development Expense

     Research and development expense totaled $0.5 million, or 2% of revenue, in the nine months ended June 30, 2010 as compared to $0.9 million, or 3% of revenue, in the nine months ended June 30, 2009. Our customers have increased their product development requests, resulting in lower research and development expense as our scientists have been working on these billable customer projects. In addition, during the latter half of fiscal 2009, we controlled spending by focusing on priority projects. As a result, research and development spending has decreased during the nine months ended June 30, 2010 as compared to the nine months ended June 30, 2009.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased to $10.2 million, or 27% of revenue in the nine months ended June 30, 2010, from $10.3 million, or 32% of revenue in the nine months ended June 30, 2009. During the nine months ended June 30, 2010, we have focused on improving our operating processes and have decreased discretionary spending from the nine months ended June 30, 2009. During the nine months ended June 30, 2010, we collected previously written-off receivables, resulting in recoveries to bad debt, negotiated lower pricing for various services and reduced spending in sales and marketing. These savings were partially offset by $0.6 million for professional services related to exploring potential transactions for the Company.

Impairment of Assets

     The Company performed its annual impairment test as of March 31, 2010 and concluded that no impairment was required.

     Due to the economic downturn, the turmoil in the financial markets and the associated decline in the Company’s stock price and market capitalization, the Company tested goodwill for impairment as of December 31, 2008. At that time, the Company revised its future cash flow projections as revenue during the three months ended December 31, 2008 was lower than expected due to the economic downturn. As a result during the three months ended December 31, 2008, the Company recorded an impairment charge to goodwill in the amount of $15.1 million which related to its Diagnostic & Biopharmaceutical Products segment. This represented the entire balance of goodwill related to the Diagnostic & Biopharmaceutical Products segment. The remaining goodwill of $4.3 million on the balance sheets relates to the BioServices segment. There was no impairment charge associated with the BioServices segment as it is service driven and has fewer assigned assets which have a lower carrying amount as compared to the Diagnostic & Biopharmaceutical Products segment which requires more assets to manufacture and sell products.

     The Company will continue to test goodwill for impairment as part of its annual impairment testing or as events occur that would more likely than not reduce the fair value of the reporting unit below its carrying value.

Loss Related to Assets Held for Sale

     Due to a softening in the real estate market, we recorded a loss of $0.6 million during the nine months ended June 30, 2009 related to an impairment to write-down the assets to their fair value less costs to sell. We estimated the fair value of the West Bridgewater facility and land based on the lower of its listing price and an independent third party appraisal. We had listed the facility and land at a price less than the appraised value due to our desire to sell the assets in a short amount of time. We sold these assets for $1.4 million during the nine months ended June 30, 2010.

Operating Income (loss)

     Operating income (loss) resulted from the factors above and included stock-based compensation expense and depreciation and amortization. Operating income was $4.9 million for the nine months ended June 30, 2010, which included stock-based compensation and depreciation and amortization totaling $1.3 million and $0.8 million, respectively, as compared to operating loss of $16.6 million for the nine months ended June 30, 2009, which included an impairment of goodwill, loss related to assets held for sale, stock-based compensation and depreciation and amortization totaling $15.1 million, $0.6 million, $0.9 million and $1.0 million, respectively.

Interest Expense and Other Income

     Interest expense was $0.2 million during the nine months ended June 30, 2010 as compared to $0.3 million during the nine months ended June 30, 2009. During the nine months ended June 30, 2010, interest expense included $0.2 million for the write-off of unamortized deferred financing expenses and a termination fee related to the Credit and Security Agreement with GE Capital which we terminated in October 2009. Other income was $0.1 million for each of the nine months ended June 30, 2010 and 2009 which

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related primarily to the collection of royalty payments from the sale of certain assets of our Genomics Collaborative division which occurred in 2007.

Income Tax (Benefit) Expense

     During the nine months ended June 30, 2010, we recorded a state tax provision of $0.1 million offset by a federal tax benefit of $0.1 million. The state tax provision related to a reserve for a state tax receivable which is currently under audit. The federal tax benefit is due to federal tax law changes which allowed us to amend a prior return and utilize our net operating loss carry-forwards to recover alternative minimum tax payments. We recorded a nominal tax provision during the nine months ended June 30, 2009.

Net Income (Loss) and Earnings (Loss) Per Share

     As a result of the above, net income was $4.7 million in the nine months ended June 30, 2010 compared to a net loss of $16.8 million in the nine months ended June 30, 2009. Earnings per share on a basic and diluted basis was $0.25 and $0.24, respectively, in the nine months ended June 30, 2010 compared to net loss per share on a basic and diluted basis of $0.91 in the nine months ended June 30, 2009. If we had not incurred the $0.6 million of expenses related to exploring potential transactions, the basic and diluted earnings per share would have increased by $0.03 per share for the nine months ended June 30, 2010.

Liquidity and Capital Resources

Cash Flows

     The following table summarizes our sources and uses of cash over the nine month periods indicated (in millions):

	June 30,			June 30,
	2010			2009
Net cash provided by operating activities	$	6.9		$	1.0
Net cash provided by investing activities		1.0			—
Net cash used in financing activities		(1.4	)		(0.2	)
Net increase in cash and cash equivalents	$	6.5		$	0.8

     As of June 30, 2010, our cash balance was $12.7 million, an increase of $6.5 million from our cash balance as of September 30, 2009. We had a current ratio of 5.4 to 1 as of June 30, 2010 compared to 4.7 to 1 as of September 30, 2009. Total liabilities as of June 30, 2010 were $7.8 million compared to $8.3 million as of September 30, 2009. The total debt to equity ratio was 0.2 to 1 as of June 30, 2010 compared to 0.3 to 1 as of September 30, 2009. As of June 30, 2010, our debt has decreased to less than $0.1 million.

     We believe our current cash on hand combined with expected future operating cash flows will be sufficient to meet our future operating cash needs.

Operating Cash Flows

     Cash provided by operating activities was $6.9 million for the nine months ended June 30, 2010, an improvement of $5.9 million compared to cash provided of $1.0 million for the nine months ended June 30, 2009. During the nine months ended June 30, 2010, we had net income of $4.7 million, which included non-cash charges of approximately $2.6 million, primarily related to stock based compensation of $1.3 million, depreciation and amortization of $0.8 million and inventory write-downs of $0.5 million. In addition, our accounts receivable, inventory and accrued expenses increased $0.6 million, $0.7 million and $0.9 million, respectively. The increase in accounts receivable is due to higher revenue during the three months ended June 30, 2010 as compared to the three months ended September 30, 2009. The increase in inventory is due to the projected increase in our sales for the remainder of fiscal 2010. Accrued expenses increased $0.9 million, primarily due to the deferral of revenue on our government contracts due to our indirect billing rate. The indirect billing rate currently applied to government contract invoices is based on our prior year rate which is higher than our calculated indirect billing rate for fiscal 2010. The government is currently in the process of reviewing our indirect billing rate calculation for fiscal 2010.

Investing Cash Flows

     Cash provided by investing activities was $1.0 million in the nine months ended June 30, 2010 compared to nominal cash provided in the nine months ended June 30, 2009. In the nine months ended June 30, 2010, we realized $1.3 million from the sale of our West

17

Bridgewater facility and land and invested $0.3 million in equipment. During the nine months ended June 30, 2009, we received $0.5 million from our landlord for renovations at our Gaithersburg, Maryland facility which was offset by spending for renovations at our Frederick, Maryland facility as well as for various equipment. During each of the nine month periods ended June 30, 2010 and 2009, we received $0.1 million in royalty payments related to the sale of certain assets of our Genomics Collaborative division which occurred in 2007.

Financing Cash Flows

     Cash used in financing activities was $1.4 million in the nine months ended June 30, 2010 compared to cash used of $0.2 million in the nine months ended June 30, 2009. During the nine months ended June 30, 2010, we made debt payments of $1.5 million, primarily for the mortgage note which we repaid in full when we sold our West Bridgewater facility. Throughout the nine months ended June 30, 2009, we utilized the GE Capital revolving credit facility and received proceeds of $19.7 million. We made payments of $19.9 million during the nine months ended June 30, 2009 for the revolving credit facility, mortgage note and various capital leases.

Off-Balance Sheet Arrangements

     During the nine months ended June 30, 2010, we were not party to any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Interest Rate and Market Risk.As of June 30, 2010, we had no assets or liabilities subject to risks from interest rate changes. Our cash and cash equivalents were held in non-interest bearing deposit accounts. Since interest rates are low, this strategy generates a higher savings to bank fees than the interest income that would have been earned in an interest bearing account.

     Foreign Currency Exchange Risk.The Company does not believe that it currently has material exposure to foreign currency exchange risk because all international sales are designated in U.S. dollars.

     We were not a party to any derivative financial instruments at June 30, 2010.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

     Rule 13a-15(b) under the Exchange Act of 1934 (the “Exchange Act”) and Item 307 of Regulation S-K require management to evaluate the effectiveness of the design and operation of our disclosure controls and procedures as of the end of each fiscal quarter. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

     The Company’s management, including the principal executive officer and the principal financial officer, conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective at the reasonable assurance level as of June 30, 2010.

Changes in Internal Control

     As required by Rule 13a-15(d) of the Exchange Act, the Company’s management, including the principal executive officer and the principal financial officer conducted an evaluation of the internal control over financial reporting to determine whether any changes occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Based on that evaluation, the principal executive officer and the principal financial officer concluded no such changes during the quarter ended June 30, 2010 materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1. Legal Proceedings

     With respect to the fiscal quarter ended June 30, 2010, the information required in response to this Item is set forth in Note 5 to our Financial Statements contained in this report, and such information is hereby incorporated herein by reference. Such description contains all of the information required with respect hereto.

Item 1A. Risk Factors

     There were no material changes from the risk factors previously disclosed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2009.

Item 6. Exhibits

     The Exhibits listed in the Exhibit Index immediately preceding the Exhibits are filed or furnished as a part of this Quarterly Report on Form 10-Q.

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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.

SERACARE LIFE SCIENCES, INC.
/s/ Gregory A. Gould
By: Gregory A. Gould
Title:	Chief Financial Officer, Treasurer, Secretary and Principal Accounting Officer

Date: August 11, 2010

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INDEX TO EXHIBITS

Exhibit		Incorporated by Reference
Number	Exhibit Description	Form	Date	Number
3.1	Certificate of Incorporation.	8-A	5/17/07		3.1
3.2	Amended and Restated Bylaws.	8-K	9/3/08		3.1
10.1	Amendment of Solicitation/Modification of Contract dated as of June 15, 1998, by and between the National Institutes of Health and SeraCare Life Sciences, Inc. d/b/a SeraCare BioServices.*
10.2	Amended and Restated SeraCare Life Sciences, Inc. Fiscal 2010 Director Compensation Program.*
31.1	Sarbanes-Oxley Act Section 302 Certification of Susan L.N. Vogt.*
31.2	Sarbanes-Oxley Act Section 302 Certification of Gregory A. Gould.*
32.1	Sarbanes-Oxley Act Section 906 Certification of Susan L.N. Vogt and Gregory A. Gould.+

*	Filed herewith.
+	Furnished herewith.

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