UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
FORM 10-Q/A
(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, 2001
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: 0-10961
QUIDEL CORPORATION
(Exact name of Registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) | 94-2573850 (I.R.S. Employer Identification No.) |
10165 McKellar Court, San Diego, California 92121
(Address of principal executive offices)
(858) 552-1100
(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 / /
As of April 30, 2001, 28,165,232 shares of common stock were outstanding.
QUIDEL CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
MARCH 31, 2001
| | Page | ||
|---|---|---|---|
| PART I—FINANCIAL INFORMATION | |||
ITEM 1. Financial Statements | |||
Condensed Consolidated Balance Sheets as of March 31, 2001 (unaudited) and December 31, 2000 | 3 | ||
Consolidated Statements of Operations for the three months ended March 31, 2001 and 2000 (unaudited) | 4 | ||
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and 2000 (unaudited) | 5 | ||
Notes to Condensed Consolidated Financial Statements | 6 | ||
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 10 | ||
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk | 14 | ||
PART II—OTHER INFORMATION | |||
ITEM 1. Legal Proceedings | 23 | ||
ITEM 4. Submission of Matters to a Vote of Security Holders | 23 | ||
ITEM 6. Exhibits and Reports on Form 8-K | 23 | ||
Signature | 26 | ||
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PART I—FINANCIAL INFORMATION
ITEM 1. Financial Statements
QUIDEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| | March 31, 2001 | December 31, 2000 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | (unaudited) | | ||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 3,227 | $ | 1,901 | ||||||
| Accounts receivable, net | 10,947 | 12,065 | ||||||||
| Inventories | 8,137 | 8,438 | ||||||||
| Prepaid expenses and other current assets | 844 | 616 | ||||||||
| Total current assets | 23,155 | 23,020 | ||||||||
| Property and equipment, net | 20,608 | 20,541 | ||||||||
| Intangible assets, net | 30,196 | 31,330 | ||||||||
| Deferred tax asset | 5,022 | 5,707 | ||||||||
| Other assets | 1,390 | 1,434 | ||||||||
| Total assets | $ | 80,371 | $ | 82,032 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
| Accounts payable | $ | 2,710 | $ | 4,412 | ||||||
| Accrued royalties | 1,394 | 1,054 | ||||||||
| Line of credit | 4,000 | 3,200 | ||||||||
| Current portion obligations under capital leases | 412 | 469 | ||||||||
| Other accrued liabilities | 2,746 | 3,861 | ||||||||
| Total current liabilities | 11,262 | 12,996 | ||||||||
| Capital lease, net of current portion | 10,649 | 10,729 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 28 | 28 | ||||||||
| Additional paid-in capital | 137,987 | 137,768 | ||||||||
| Accumulated other comprehensive loss | (552 | ) | (69 | ) | ||||||
| Accumulated deficit | (79,003 | ) | (79,420 | ) | ||||||
| Total stockholders' equity | 58,460 | 58,307 | ||||||||
| Total liabilities and stockholders' equity | $ | 80,371 | $ | 82,032 | ||||||
See accompanying notes to condensed consolidated financial statements.
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QUIDEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
| | Three months ended March 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | 2001 | 2000 | ||||||||
| REVENUES | ||||||||||
| Net sales | $ | 19,544 | $ | 21,664 | ||||||
| Research contracts, license fees and royalty income | 398 | 314 | ||||||||
| Total Revenues | 19,942 | 21,978 | ||||||||
COSTS AND EXPENSES | ||||||||||
| Cost of sales | 8,994 | 10,514 | ||||||||
| Research and development | 1,533 | 1,792 | ||||||||
| Sales and marketing | 4,102 | 4,748 | ||||||||
| General and administrative | 2,221 | 2,208 | ||||||||
| Restructuring charge | 550 | — | ||||||||
| Amortization of intangibles | 1,103 | 632 | ||||||||
| Total costs and expenses | 18,503 | 19,894 | ||||||||
| Income from operations | 1,439 | 2,084 | ||||||||
OTHER INCOME (EXPENSE) | ||||||||||
| Interest income | 11 | 10 | ||||||||
| Interest expense | (337 | ) | (51 | ) | ||||||
| Other | (11 | ) | (350 | ) | ||||||
| Total other income (expense) | (337 | ) | (391 | ) | ||||||
| Income before provision for income taxes and cumulative effect of change in accounting principle | 1,102 | 1,693 | ||||||||
| Provision for income taxes | 685 | 768 | ||||||||
| Income before cumulative effect of change in accounting principle | 417 | 925 | ||||||||
| Cumulative effect of change in accounting principle | — | (1,068 | ) | |||||||
| Net income (loss) | $ | 417 | $ | (143 | ) | |||||
| Basic earnings per share before cumulative effect of change in accounting principle | $ | 0.01 | $ | 0.04 | ||||||
| Diluted earnings per share before cumulative effect of change in accounting principle per share | $ | 0.01 | $ | 0.03 | ||||||
| Basic and diluted cumulative effect of change in accounting principle per share | $ | — | $ | (0.05 | ) | |||||
| Basic and diluted net earnings (loss) per share | $ | 0.01 | $ | (0.01 | ) | |||||
| Weighted shares used in basic per share calculation | 28,124 | 24,404 | ||||||||
| Weighted shares used in diluted per share calculation | 29,038 | 26,703 | ||||||||
See accompanying notes to consolidated financial statements.
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QUIDEL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
| | Three months ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| | 2001 | 2000 | |||||||
| OPERATING ACTIVITIES: | |||||||||
| Net cash provided by operating activities | $ | 2,096 | $ | 1,954 | |||||
| INVESTING ACTIVITIES: | |||||||||
| Acquisition of property and equipment | (1,177 | ) | (1,204 | ) | |||||
| Other | 8 | (138 | ) | ||||||
| Net cash used for investing activities | (1,169 | ) | (1,342 | ) | |||||
| FINANCING ACTIVITIES: | |||||||||
| Net proceeds from issuance of common stock and warrants | 219 | 2,031 | |||||||
| Line of credit, net | 800 | (1,000 | ) | ||||||
| Payments on obligations under capital leases | (137 | ) | (84 | ) | |||||
| Net cash provided by financing activities | 882 | 947 | |||||||
Effect of exchange rate fluctuations on cash and cash equivalents | (483 | ) | 165 | ||||||
| Net increase in cash and cash equivalents | 1,326 | 1,724 | |||||||
| Cash and cash equivalents, beginning of period | 1,901 | 4,672 | |||||||
| Cash and cash equivalents, end of period | $ | 3,227 | $ | 6,396 | |||||
| Supplemental disclosures of cash flow information: | |||||||||
| Cash paid during the period for interest | $ | 271 | $ | 333 | |||||
Cash paid during the period for income taxes | $ | — | $ | — | |||||
See accompanying notes to condensed consolidated financial statements.
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Quidel Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note l. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Quidel Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. 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, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. Operating results for the three months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2000 included in the Company's 2000 Annual Report on Form 10-K/A.
Reclassifications—Certain prior period amounts have been reclassified to conform with the current period presentation.
Note 2. Comprehensive Income (Loss)
The components of comprehensive income (loss) are as follows (in thousands, unaudited):
| | Three months ended March 31, | ||||||
|---|---|---|---|---|---|---|---|
| | 2001 | 2000 | |||||
| Net income (loss) | $ | 417 | $ | (143 | ) | ||
| Foreign currency translation adjustment | (483 | ) | 165 | ||||
| Comprehensive income (loss) | $ | (66 | ) | $ | 22 | ||
Note 3. Computation of Earnings Per Share
Basic earnings (loss) per share was computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if the income were divided by the weighted-average number of common shares and potentially dilutive common shares from outstanding stock options and warrants. Potential dilutive common shares were calculated using the treasury stock method and represent incremental shares issuable upon exercise of the Company's outstanding options and warrants. Potentially dilutive shares have not been included for the three months ended March 31, 2000 as their inclusion would be antidilutive.
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Note 4. Inventories
Inventories are recorded at the lower of cost (first-in, first-out) or market and consist of the following (in thousands):
| | March 31, 2001 | December 31, 2000 | ||||
|---|---|---|---|---|---|---|
| | (unaudited) | | ||||
| Raw materials | $ | 3,141 | $ | 3,293 | ||
| Work-in-process | 2,012 | 2,053 | ||||
| Finished goods | 2,984 | 3,092 | ||||
| $ | 8,137 | $ | 8,438 | |||
Note 5. Stockholders' Equity
During the three months ended March 31, 2001, 60,997 shares of common stock were issued due to the exercise of common stock options and 19,056 shares of common stock were issued in connection with the employee stock purchase plan, resulting in proceeds to the Company of approximately $0.2 million (unaudited).
On March 29, 2001, the Company's Board of Directors authorized the adoption of the Company 2001 Equity Incentive Plan (the "2001 Plan") and the concurrent termination of its 1988 Stock Incentive Plan and 1996 Non-Employee Directors Stock Options Plan (the "Prior Plans"). The adoption and concurrent termination are subject to stockholder approval at the annual meeting of stockholders scheduled for May 23, 2001. As of March 31, 2001, the Prior Plans had 3.4 million shares reserved for issuance, of which approximately 2.9 million shares underlying options had been awarded.
The remaining aggregate of approximately 0.1 million shares reserved for issuance under the Prior Plans will be cancelled with the termination of those plans if the Company's stockholders approve this proposal. Following the cancellation of these shares reserved for issuance, 2.7 million shares of common stock (subject to antidilution adjustments) will be reserved for issuance under the 2001 Plan. Options currently outstanding under the Prior Plans are unaffected by this proposal. If the Company's stockholders do not approve this proposal, the Prior Plans will not be terminated and any remaining shares reserved under these plans will not be cancelled.
Note 6. Change in Accounting Principle
The Company changed their accounting policies to implement the effects of the SEC Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements" which resulted in a cumulative effect of a change in accounting principle of $1.1 million during fiscal year 2000. The Company implemented SAB 101 in the fourth quarter of 2000, by restating their first three quarters of 2000 (see Note 11).
Note 7. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 changes the previous accounting definition of a derivative, expanding it to include embedded derivatives and many
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commodity contracts. Under SFAS No. 133, every derivative instrument is recorded in the consolidated balance sheet at its fair value, and any changes in the derivative's fair value are recognized currently in earnings, unless specific hedge accounting criteria are met. As amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities—Deferral of the Effective Date of FASB Statement No. 133," SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000.
The FASB has issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities—an Amendment of FASB Statement No. 133." SFAS No. 138 amends certain provisions of SFAS No. 133. SFAS No. 138 is effective concurrently with SFAS No. 133, if SFAS No. 133 is not adopted prior to June 15, 2000. The adoption of SFAS No. 133, as amended, and SFAS No. 138 did not have a material effect on the Company's financial statements.
Note 8. Industry and Geographic Information
The Company operates in one reportable segment. Sales to customers outside the United States (primarily Europe) totaled 21% and 20% of net sales for the three months ended March 31, 2001 and 2000 (unaudited), respectively. As of March 31, 2001 and December 31, 2000, balances due from foreign customers were $4.7 million (unaudited) and $4.7 million, respectively.
The Company had sales to individual customers in excess of 10% of net sales, as follows:
| | Three months ended March 31 | ||||
|---|---|---|---|---|---|
| | 2001 | 2000 | |||
| | (unaudited) | ||||
| Customer: | |||||
| A | 17 | % | 15 | % | |
| B | 13 | % | 10 | % | |
As of March 31, 2001 and December 31, 2000, accounts receivable from three customers with balances due in excess of 10% of total accounts receivable totaled $4.1 million (unaudited) and $4.4 million, respectively.
For the three months ended March 31, 2001 and 2000, the Company recorded revenue from domestic and foreign customers. The following presents net sales for the three months ended
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March 31, 2001 and 2000 and long-lived assets as of March 31, 2001 and December 31, 2000 by geographic territory:
| | | | Net Sales | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Long-Lived Assets | Three months ended March 31, | |||||||||||
| | March 31, 2001 | December 31, 2000 | |||||||||||
| | 2001 | 2000 | |||||||||||
| | (unaudited) | | (unaudited) | ||||||||||
| United States Operations: | |||||||||||||
| Domestic | $ | 50,621 | $ | 51,611 | $ | 15,476 | $ | 17,247 | |||||
| Foreign | — | — | 2,164 | 2,395 | |||||||||
| Foreign Operations | 183 | 260 | 1,904 | 2,022 | |||||||||
| Total | $ | 50,804 | $ | 51,871 | $ | 19,544 | $ | 21,664 | |||||
Note 9. Restructuring
In the first quarter of 2001, the Company implemented a restructuring plan (the "Restructuring") of certain of its operations. The Restructuring included a workforce reduction of approximately 15 employees and closure of the Company's facilities in the United Kingdom ("UK"). In the first quarter of 2001, the Company recorded a restructuring charge of approximately $0.6 million (unaudited) related to the Restructuring. The significant components of the Restructuring are $0.5 million (unaudited) for employee severance costs and $0.1 million (unaudited) in closing costs related to the UK facility and asset impairment. As of March 31, 2001, $0.5 million (unaudited) had been paid and $0.1 million (unaudited) is included in other accrued liabilities in the accompanying consolidated balance sheet as of March 31, 2001 for remaining severance and costs related to the closure of the UK facility.
Note 10. Subsequent Events
On April 9, 2001, the Board of Directors authorized an amendment to the 1983 Employee Stock Purchase Plan (the "ESPP") to increase the number of shares of the Companys' common stock available for issuance under the ESPP from 600,000 to 750,000 shares. This proposal is subject to stockholder approval at the annual meeting of stockholders scheduled for May 23, 2001.
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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
In this section, all references to "we," "our," and "us" refer to Quidel.
Future Uncertainties
This discussion contains forward-looking statements within the meaning of the federal securities laws that involve material risks and uncertainties. Many possible events or factors could affect our future financial results and performance, such that our actual results and performance may differ materially. As such, no forward-looking statement can be guaranteed. Differences in operating results may arise as a result of a number of factors, including, without limitation, seasonality, adverse changes in the competitive and economic conditions in domestic and international markets, actions of our major distributors, manufacturing and production delays or difficulties, adverse actions or delays in product reviews by the United States Food and Drug Administration ("FDA"), and lower acceptance of our new products than forecast. Forward-looking statements typically are identified by the use of terms such as "may", "will", "should", "might", "expect", "anticipate", "estimate" and similar words, although some forward-looking statements are expressed differently. The risks described in this report and in other reports and registration statements filed with the SEC from time to time should be carefully considered. The following should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q/A.
Recent Events
In the first quarter of 2001, we implemented a restructuring plan (the "Restructuring") of certain of our operations. The Restructuring included a workforce reduction of approximately 15 employees and closure of our facilities in the United Kingdom ("UK"). In the first quarter of 2001, we recorded a restructuring charge of approximately $0.6 million.
Overview
We commenced our operations in 1979 and launched our first products, dipstick-based pregnancy tests, in 1984. The product base has expanded through internal development and acquisitions of other products. Our primary product areas are pregnancy and ovulation, infectious diseases, autoimmune diseases, osteoporosis and urinalysis. We discover, develop, manufacture and market rapid diagnostic products for point-of-care detection. These products provide simple, accurate and cost-effective diagnoses for acute and chronic medical conditions. Products are sold worldwide to professionals in the physician's office and clinical laboratories, and to consumers through organizations that provide private label, store brand products.
Results of Operations
Net Sales
Net sales decreased 10% to $19.5 million for the first quarter ended March 31, 2001 from $21.7 million for the first quarter ended March 31, 2000. The decrease for the three months ended March 31, 2001 as compared to the three months ended March 31, 2000 was primarily due to unusually high sales levels associated with the withdrawal of one of our competitors products from the market in 2000 offset by an increase of our influenza product sales which were new to the market in 2000.
Research Contract, License Fees and Royalty Income
Research contract, license fees and royalty income increased to $0.4 million for the three months ended March 31, 2001 from $0.3 million for the three months ended March 31, 2000. The income for
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the three months ended March 31, 2001 and 2000 are primarily related to royalties received on a patented technology of ours utilized by a third-party.
Cost of Sales and Gross Profit From Net Sales
Gross profit from net sales decreased to $10.6 million for the three months ended March 31, 2001 from $11.1 million for the three months ended March 31, 2000. Gross profit as a percentage of net sales ("gross margin") increased to 54% for the three months ended March 31, 2001 from 51% for the three months ended March 31, 2000. The percentage increase for the three months ended March 31, 2001 as compared to the three months ended March 31, 2000 was primarily due to increased sales of higher margin products such as influenza and urinalysis as well as increased manufacturing efficiency achieved during the March 31, 2001 quarter resulting from improvement in our procedures for procurement of materials and manufacturing equipment.
Research and Development Expense
Research and development expense decreased to $1.5 million for the three months ended March 31, 2001 from $1.8 million for the three months ended March 31, 2000. Research and development expense as a percentage of net sales was 8% for both the three months ended March 31, 2001, and the three months ended March 31, 2000. The dollar decrease was primarily attributable to certain contract costs incurred in 2000 related to the development of two diagnostic tests to detect herpes simplex virus. We anticipate that we will continue to devote a significant amount of financial resources to research and development for the foreseeable future.
Sales and Marketing Expense
Sales and marketing expense decreased to $4.1 million for the three months ended March 31, 2001 from $4.7 million for the three months ended March 31, 2000. Sales and marketing expense as a percentage of net sales decreased to 21% for the three months ended March 31, 2001 from 22% for the three months ended March 31, 2000. These decreases were primarily due to increased investment in sales and marketing infrastructure, costs associated with the domestic launch of the urinalysis product line and the contract sales force employed to assist with the launch of the influenza products for the three months ended March 31, 2000.
General and Administrative Expense
General and administrative expense was $2.2 million for the three months ended March 31, 2001 and the three months ended March 31, 2000. General and administrative expense as a percentage of net sales increased to 11% for the three months ended March 31, 2001 from 10% for the three months ended March 31, 2000. The percentage increase was primarily due to the fixed nature of the general and administrative expenses and the overall decrease in net sales.
Restructuring Charge
In the first quarter of 2001, we implemented the Restructuring. The Restructuring included a workforce reduction of approximately 15 employees and closure of our facilities in the UK. In the first quarter of 2001, we recorded a restructuring charge of approximately $0.6 million. The significant components of the Restructuring are $0.5 million for employee severance costs and $0.1 million in closing costs related to the UK facility and asset impairment.
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Amortization of Intangibles
Amortization of intangibles increased to $1.1 million for the three months ended March 31, 2001 from $0.6 million for the three months ended March 31, 2000. This increase was primarily due to an increase in intangible assets related to the acquisition of Litmus Concepts, Inc. in December 2000.
Interest Expense
Interest expense increased to $0.3 million for the three months ended March 31, 2001 from $0.1 million for the three months ended March 31, 2000. This increase is primarily due to the increased debt outstanding under our line of credit for the three months ended March 31, 2001 as compared to the three months ended March 31, 2000.
Income Taxes
We recorded an income tax provision of $0.7 million for the three months ended March 31, 2001 and $0.8 million for the three months ended March 31, 2000.
Cumulative Effect of Change in Accounting Principle
We changed our accounting policies to implement the effects of the SEC Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements," which resulted in a cumulative effect of a change in accounting principle of $1.1 million for the three months ended March 31, 2000. We implemented SAB 101 in the fourth quarter of 2000 by restating our first three quarters of 2000.
Liquidity and Capital Resources
Our principal sources of liquidity have historically been cash flow from operations and borrowings under our line of credit. Cash flow from operations and borrowings under our line of credit are expected to continue to be our sources of liquidity. Our principal requirements for cash have been repayment of borrowings under our line of credit and capital expenditures.
Cash provided by operating activities was $2.1 million for the three months ended March 31, 2001 and $2.0 million for the three months ended March 31, 2000 and consisted of funding our working capital for the three months ended March 31, 2001 and March 31, 2000, less non-cash amortization and depreciation of $2.2 million for the three months ended March 31, 2001 and $1.7 million for the three months ended March 31, 2000, a decrease in receivables of $1.1 million for the three months ended March 31, 2001 compared to an increase of $0.7 million for the three months ended March 31, 2000, a decrease in inventories of $0.3 million for the three months ended March 31, 2001 compared to an increase of $0.9 million for three months ended March 31, 2000, an increase in prepaid and other assets of $0.2 for the three months ended March 31, 2001, compared to an increase of $0.5 million for the three months ended March 31, 2000, a decrease in accounts payable of $1.7 million for the three months ended March 31, 2001 and $0.5 million for the three months ended March 31, 2000, a decrease in accrued payroll and related expenses of $0.1 million for the three months ended March 31, 2001 compared to an increase of $0.4 million for the three months ended March 31, 2000, and a decrease in other accrued liabilities of $1.1 million for the three months ended March 31, 2001 compared to an increase of $0.7 million for the three months ended March 31, 2000.
Cash used for investing activities was $1.2 million for the three months ended March 31, 2001 and $1.3 million for the three months ended March 31, 2000. For the three months ended March 31, 2001 and 2000, the amount consisted primarily of cash used in connection with purchases of property and equipment of $1.1 million and $1.2 million, respectively. Cash provided by financing activities was $0.9 million for the three months ended March 31, 2001 and 2000. For the three months ended March 31, 2001 the amount consisted of net borrowings under our line of credit of $0.8 million, proceeds from
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issuance of common stock of $0.2 million, offset by payments on capital leases of $0.1 million. For the three months ended March 31, 2000 the amount consisted of the net payments on our line of credit of $1.0 million offset by proceeds from issuance of common stock and warrants of $2.0 million and payments on capital leases of $0.1 million.
As of March 31, 2001, our outstanding indebtedness included $11.2 million under capital leases (primarily our San Diego facility) and $3.2 million of borrowing under line of credit. Our line of credit provides for a maximum availability of $7.5 million, bore interest at 9.5% at March 31, 2001, matures in June 2001 and is secured by our inventory, accounts receivable and fixed assets. We currently have $4.3 million available to borrow under this line of credit. This line of credit agreement contains certain customary covenants restricting our ability to, among other things, incur additional indebtedness, create liens or other encumbrances, pay dividends or make other restricted payments, make investments, loans and guarantees or sell or otherwise dispose of a substantial portion of assets to, or merge or consolidate with, another entity.
We plan approximately $5.2 million in capital expenditures for the next nine months. The primary purpose for our capital expenditures is manufacturing equipment, facilities improvements and information technology. We plan to fund these capital expenditures with cash flow from operations and borrowings under our existing credit facility. We have no material commitments with respect to such planned expenditures as of the date of this filing.
We also intend to continue searching for acquisition and technology licensing candidates. As such, we may need to incur additional debt, or sell additional equity, to successfully complete these acquisitions. Cash requirements fluctuate as a result of numerous factors, such as the extent to which we generate cash in operations, progress in research and development projects, competition and technological developments and the time and expenditures required to obtain governmental approval of our products. Based on the current cash position and the current assessment of future operating results, we believe that our existing sources of liquidity will be adequate to meet operating needs during the next twelve months.
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 changes the previous accounting definition of a derivative, expanding it to include embedded derivatives and many commodity contracts. Under SFAS No. 133, every derivative instrument is recorded in the consolidated balance sheet at its fair value, and any changes in the derivative's fair value are recognized currently in earnings, unless specific hedge accounting criteria are met. As amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities—Deferral of the Effective Date of FASB Statement No. 133," SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000.
The FASB has issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities—an Amendment of FASB Statement No. 133." SFAS No. 138 amends certain provisions of SFAS No. 133. SFAS No. 138 is effective concurrently with SFAS No. 133, if SFAS No. 133 is not adopted prior to June 15, 2000. The adoption of SFAS No. 133, as amended, and SFAS No. 138 did not have a material effect on our financial statements.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to the risk of future currency exchange rate fluctuations, which is accounted for as an adjustment to stockholders' equity. Therefore, changes from reporting period to reporting period in the exchange rates between various foreign currencies and the U.S. dollar have had and will continue to have an impact on the accumulated other comprehensive loss component of stockholders' equity reported by us, and such effect may be material in any individual reporting period.
The fair market value of floating interest rate debt is subject to interest rate risk. Generally, the fair market value of floating interest rate debt will will vary as interest rates increase or decrease. Based on our market risk sensitive instruments outstanding at March 31, 2001 and December 31, 2000, we have determined that there was no material market risk exposure to our consolidated financial position, results of operations or cash flows as of such dates.
Risk Factors
Our operating results may fluctuate as a result of factors which are outside our control, and this could have a negative effect on the price of our common stock.
Fluctuations in our operating results, for any reason, that decrease sales or profitability could cause our growth or operating results to fall below the expectations of investors and securities analysts, and this could cause our stock price to decline. The market price of our common stock has fluctuated substantially in the past. Between March 31, 2000 and March 31, 2001, the price of our common stock, as reported on the Nasdaq National Market, has ranged from a low of $3.25 to a high of $8.38. We expect the market price of our common stock to continue to experience significant fluctuations in the future in response to a variety of factors, including fluctuation in our operating results.
For the three months ended March 31, 2001, revenues decreased $2.2 million to $19.5 million from $21.7 million for the three months ended March 31, 2001. We had income before income taxes of $1.1 million for the three months ended March 31, 2001 compared to income before income taxes and certain nonrecurring items of $1.7 million for the three months ended March 31, 2000. The difference was primarily due to unusually high sales levels associated with the withdrawal of one of our competitors products from the market in 2000, as well as increased amortization expense in 2001 due to our recent acquisitions.
Other factors which are beyond our control and which could affect our results in the future include:
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revenue but would not reduce costs by the same proportion, and hence could cause operating losses.
Our operating results may also fluctuate as a result of factors which we do control, such as introducing new products or developing new markets. We may have to expend considerable resources in order to pursue these steps, and this could have a negative effect on our profits.
We must change the mix of products we sell from time to time. For example, while we do not presently have major products that are nearing the end of their life cycle, we may in the future be required to replace aging products. We also attempt to focus on products with relatively higher margins. The development, manufacture and sale of our diagnostic products require a significant investment of resources. We may incur increased operating expenses as a result of our increased investment in sales and marketing activities, manufacturing scale-up and new product development associated with our efforts to:
The funds for these projects came primarily from our business operations, and a working capital line of credit. If our business slows, as we become less profitable, and as a result have less money available to fund research and development, we will have to decide at that time which programs to cut, and by how much. This decision will be based on a number of factors, including the amount of the funding shortfall, how promising a particular project appears to be, and how close the project is to being available commercially. Our operations will be adversely affected if our net sales and gross profits do not correspondingly increase, or if our product development efforts are unsuccessful or delayed. Development of new markets also requires a substantial investment of resources, such as new employees, offices and manufacturing facilities, and if adequate financial, personnel, equipment or real estate resources are not available we may be required to delay or scale back market developments.
Unexpected significant increases in demand for our products could require us to spend considerable resources to meet the demand, or harm our customer relationships if we are unable to meet demand.
If we experience unexpected significant increases in the demand for our products, we may be required to expend additional capital resources to meet these demands. These capital resources could involve the cost of new machinery, or even the cost of new manufacturing facilities. This would increase our capital costs, which could affect our earnings. If we are unable to develop necessary manufacturing capabilities, our net sales could be adversely affected. Failure to increase production volumes, if required, in a cost-effective manner, or lower than anticipated yields or production problems encountered as a result of changes we may make in our manufacturing processes to meet increased demand, could result in shipment delays as well as increased manufacturing costs, which could also have a material adverse effect on our net sales.
Unexpected increases in demand for our products could also require us to obtain additional raw materials in order to manufacture products to meet the demand. The majority of raw materials and purchased components used to manufacture our products are readily available. However, some of these materials are currently obtained from a sole supplier or a limited group of suppliers. For example, our nitro cellulose which is part of the Pregnancy and Group A Strep products, as well as certain plastics, which serve as housings for the majority of our diagnostic test strips are sole sourced. We have long-term supply agreements with these vendors. The reliance on sole or limited suppliers and the failure to
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maintain long-term agreements with other suppliers involve several risks, including the inability to obtain an adequate supply of raw materials and components and reduced control over pricing, quality and timely delivery. Although we attempt to minimize our supply risks by maintaining an inventory of raw materials and continuously evaluating other sources, any interruption in supply could have a material adverse effect on our sales or cost of sales.
In November 2001, we plan to begin manufacturing our urinalysis products in Marburg, Germany. Currently, we contract with a third party to manufacture these products. Any delays or problems encountered in the integration of this process could result in shipment delays and increased manufacturing costs and could have a material adverse effect on our results of operations.
The loss of key distributors or an unsuccessful effort to directly distribute our products could lead to reduced sales.
Although we have distribution agreements with approximately 80 distributors, the market is dominated by a small group of these distributors. Five of our distributors, which are considered to be among the market leaders, accounted for approximately 45% and 46% of our net sales for the three months ended March 31, 2001 and March 31, 2000, respectively. While we believe our relationship with our distributors is good, the loss of a major distributor may have an adverse effect on our net sales. The loss or termination of our relationship with any of these key distributors could significantly disrupt our business unless suitable alternatives can be timely found. Finding a suitable alternative may pose challenges in our industry's competitive environment, and another suitable distributor may not be found on satisfactory terms. For instance, many distributors already have exclusive arrangements with our competitors, and others do not have the same level of penetration into our target markets as our existing distributors. We could expand our efforts to distribute and market our products directly; however, this would require an investment in additional sales and marketing resources, including hiring additional field sales personnel, which would significantly increase our future selling, general and administrative expenses. In addition, our direct sales, marketing and distribution efforts may not be successful.
We may not achieve market acceptance of our products among physicians and other health care providers, and this will have a negative effect on future sales growth.
A large part of our business is based on the sale of rapid point-of-care diagnostic tests that physicians and other health care providers can administer in their own facilities without sending samples to laboratories. Thus, clinical reference laboratories and hospital-based laboratories are significant competitors for our products, and provide many of the diagnostic tests used by physicians and other healthcare providers. Our market share in fiscal 2000 for some of our key products was 58% in pregnancy tests, 40% in Group Strep A tests and 20% for Influenza A/B tests. Our future sales depend on, among other matters, capture of sales from these laboratories by achieving market acceptance from physicians and other health care providers. If we do not capture sales at the levels we have budgeted for, our net sales may not grow as much as we hope and the costs we have incurred will be disproportionate to our sales levels. We expect that these laboratories will compete vigorously to maintain their dominance of the testing market. Moreover, even if we can demonstrate that our products are more cost-effective or save time, physicians and other health care providers may resist changing their established source for these tests.
Intense competition with other manufacturers of point-of-care diagnostic products may reduce our sales.
In addition to competition from laboratories, our point-of-care diagnostic tests compete with similar products made by our competitors. We have a large number of multinational and regional competitors making investments in competing technologies, including several large pharmaceutical and
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diversified health care companies. These competitors include Abbott Laboratories, Beckman Coulter Primary Care, and Becton Dickinson. A number of our competitors have a potential competitive advantage because they have substantially greater financial, technical, research and other resources, and larger, more established marketing, sales, distribution and service organizations we have. Moreover, some competitors offer broader product lines and have greater name recognition than we have. If our competitors' products are more effective than ours, or are cheaper, our net sales could be adversely affected. Competition also has the effect of limiting the prices we can charge for our products.
To remain competitive we must continue to develop or obtain proprietary technology rights; otherwise, other companies may increase their market share by selling products that compete with our products.
Our competitive position is heavily dependent on obtaining and protecting our proprietary technology or obtaining licenses from others. Our ability to compete successfully in the diagnostic market depends on continued development and introduction of new proprietary technology and the improvement of existing technology. If we cannot continue to obtain and protect proprietary technology, our net sales and gross profits could be adversely affected. Moreover, our current and future licenses may not be adequate for the operation of our business.
We have a license agreement with Becton Dickinson related to our Pregnancy and Group Strep A products, which accounted for 32% and 33% and 30% and 28% of our net sales for the three months ended March 31, 2001 and March 31, 2000, respectively. The license agreement expires in 2004. Our ability to obtain patents and licenses, and their benefits, are uncertain. We have 212 issued patents and approximately 60 applications are pending. Our patents have expiration dates from 2002 to 2017. There are no patents which are expiring in the near term which we consider material to our business. However, our pending patent applications may not result in the issuance of any patents, or if issued, the patents may not have priority over others' applications or may not offer protection against competitors with similar technology. Moreover, any patents issued to us may be challenged, invalidated or circumvented in the future. Further, we have patents issued in Canada, Germany, France, United Kingdom, Italy, Spain, Australia, Belgium, Korea, Norway, Lithuania, the Netherlands, Austria, Switzerland, Sweden and South Africa. Therefore, third parties can make, use, and sell products covered by our patents in any country in which we do not have patent protection. We license the right to use our products to our customers under label licenses that are for research purposes only. These licenses could be contested and, because we cannot monitor all potential unauthorized uses of our products around the world, we might not be aware of an unauthorized use and might not be able to enforce the license restrictions in a cost-effective manner. Also, we may not be able to obtain licenses for technology patented by others or on commercially reasonable terms.
We may be involved in intellectual property infringement disputes which are costly and could limit our ability to use some technologies in the future.
There are a large number of patents and patent applications in our product areas, and we believe, based on experience and published reports, that litigation in our industry regarding patent and other intellectual property rights is prevalent. We are not currently involved in any litigation in this area, but our involvement in litigation to determine rights in proprietary technology could adversely affect our net sales because:
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The uncertainty and cost of regulatory approval for our products may have a negative effect on our profitability.
The testing, manufacture and sale of our products are subject to regulation by numerous governmental authorities, principally the FDA and corresponding state and foreign regulatory agencies. The FDA regulates all of our products except our veterinary product, Heska, which is regulated by the U.S. Department of Agriculture. Our future performance depends on, among other matters, our estimates as to when and at what cost we will receive regulatory approval for new products. However, complying with laws and regulations of these regulatory agencies can be a lengthy, expensive and uncertain process making the timing and costs of approvals difficult to predict. Our FDA regulated products are categorized as Class I, II and III medical devices, depending on the level of regulation that the FDA believes is necessary to establish safety and efficacy. Depending on the classification of the device, these products need to have either 510(k) or premarket approval prior to distribution. The 510(k) process requires us to submit extensive clinical data, and can take at least three to six months before approval is granted. The premarket approval application must be supported by valid scientific evidence demonstrating the safety and effectiveness of the device, typically including the results of clinical investigations, trials, and laboratory and animal studies. This process can take several years, and is expensive and uncertain. We currently have no pending 510(k) FDA applications or premarket approvals. Our products are also subject to testing under the Clinical Laboratory Improvement Act of 1988, which regulates laboratories and includes quality control, proficiency testing of personnel, personnel standards and physical inspections. We have one application pending under this statute, which was filed in 1999. While we have not to date experienced any unexpected action by any governmental regulatory body, our net sales would be negatively affected by delays in the receipt of or failure to receive approvals or clearances, the loss of previously received approvals or clearances or the placement of limits on the use of the products.
We are subject to numerous government regulations in addition to FDA regulation, compliance with changes in which could increase our expenses.
In addition to the FDA and other regulations described in the previous paragraph, numerous laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances impact our business operations. If these laws change, are amended, or are added to, the costs of compliance with these laws could substantially increase our costs. While we believe we currently are in compliance with these laws, compliance with any future modifications of these laws or laws regulating the manufacture and marketing of our products could result in substantial costs and loss of sales or customers. Because of the number and extent of the laws and regulations affecting our industry, and the number of governmental agencies whose actions could affect our operations, it is impossible to reliably predict the full nature and impact of future legislation or regulatory developments relating to our industry. We do not estimate that we will have material capital expenditures for environmental control facilities for the remainder of our current fiscal year or the succeeding fiscal year. To the extent the costs and procedures associated with meeting new requirements are substantial, our business and results of operations could be adversely affected.
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We use hazardous materials in our business that may result in unexpected and substantial claims against us relating to handling, storage or disposal.
Our research and development and manufacturing activities involve the controlled use of hazardous materials, including chemicals and biological materials such as dimethyl sulfate, sodium nitrite, acetaldehyde, acrylamide, potassium bromate and radionuclides. The risk of accidental contamination or injury from these materials cannot be completely eliminated. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of hazardous materials. These regulations include federal statutes popularly known as CERCLA, RCRA and the Clean Water Act. Compliance with these laws and regulations is expensive. If any governmental authorities were to impose new environmental regulations requiring compliance in addition to that required by existing regulations, these future environmental regulations could impair our research, development or production efforts by imposing substantial costs on our business. In addition, because of the nature of the penalties provided for in some of these environmental regulations, we could be required to pay substantial fines, penalties or damages in the event of noncompliance with environmental laws or the exposure of individuals to hazardous materials. Further, any accident could partially or completely shut down our research and manufacturing facilities and operations.
Our net sales could be affected by third-party reimbursement policies and potential cost constraints.
We sell many of our products to physicians and other health care providers. They will not use our products if they do not get reimbursed for the cost by their patients' health care insurers or payors, such as Blue Cross, Blue Shield, Medicare, or other public or private health care programs. Our net sales could be adversely affected by changes in reimbursement policies of these governmental or private health care payors. In the U.S., health care providers such as hospitals and physicians that purchase diagnostic products generally rely on third party payors, principally private health insurance plans, federal Medicare and state Medicaid, to reimburse all or part of the cost of the procedure. We believe that the overall escalating cost of medical products and services has led to and will continue to lead to increased pressures on the health care industry, both foreign and domestic, to reduce the cost of products and services, including our products. Given the efforts to control and reduce health care costs in the U.S. in recent years, currently available levels of reimbursement may not continue to be available in the future for our existing products or products under development. Third-party reimbursement and coverage may not be available or adequate in either U.S. or foreign markets, current reimbursement amounts may be decreased in the future and future legislation, regulation or reimbursement policies of third-party payors may reduce the demand for our products or our ability to sell our products on a profitable basis.
If we are not able to manage our growth strategy, and if we experience difficulties integrating acquired companies or technologies after the acquisition, our earnings may be adversely affected.
We recently acquired two businesses, Litmus Concepts and a division of Dade Behring Marburg Gmbh. Our business strategy contemplates further increased growth in the number of employees, the scope of operating and financial systems and the geographic area of our operations, including further expansion outside the United States, as new products are developed and commercialized. We may experience difficulties integrating our own operations with those of companies or technologies that we have acquired or we may acquire, and as a result we may not realize our anticipated benefits and cost savings within our expected time frame, or at all. Because we do not have a large executive staff, future growth may also divert management's attention from other aspects of our business, and will place a strain on existing management, as well as on our operational, financial and management information systems. Furthermore, we may expand into markets in which we have less experience or incur higher costs. Should we encounter difficulties in managing these tasks, our growth strategy may suffer and our net sales and gross profits could be adversely affected.
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Our business could be negatively affected by the loss of key personnel or our inability to hire qualified personnel.
Our future success depends in part on our ability to retain our key technical, sales, marketing and executive personnel and our ability to identify and hire additional qualified personnel. Competition for these personnel is intense, both in the industry in which we operate and also in the geographic area (Northern San Diego County) where our headquarters and many of our operations are located. If we are not able to retain existing key personnel, or identify and hire additional qualified personnel, our business could be negatively impacted. Although we currently experience relatively low rates of turnover for our management and key personnel, the rate of turnover may increase in the future. In addition, we expect to further grow our operations, and our needs for additional management and other key personnel will increase.
We are exposed to business risks which, if not covered by insurance, could have an adverse effect on our profits.
We maintain insurance which we believe is appropriate to protect us against the kinds of insurable risks, such as product liability claims or business interruptions, that companies of our size and companies in our industry typically insure against. However, there is a risk that claims may be made against us for types of damages, or for amounts of damages, that are not covered by our insurance. For example, there is a risk of product liability claims arising from our testing, manufacturing and marketing of medical diagnostic devices, both those currently being marketed as well as those under development. We currently have a product liability policy providing coverage up to $10 million, and our claims to date have not been material. However, it is possible that potential product liability claims may exceed the amount of our insurance coverage or may be excluded from coverage under the terms of our policy. Also, if we are held liable, our existing insurance may not be renewed at the same cost and level of coverage as presently in effect, or may not be renewed at all. If we are held liable for a claim against which we are not indemnified or for damages exceeding the limits of our insurance coverage, whether arising out of product liability matters or from some other matter, that claim could have a material negative effect on our results of operations.
We face risks relating to our international sales and foreign operations, including the risk of currency fluctuations, which could increase our costs or stifle our growth opportunities.
Our products are sold internationally, primarily at this time to customers in Western Europe, including Germany and Italy, and also Poland. Net sales to foreign customers accounted for 21% and 20% of our net sales for the three months ended March 31, 2001 and March 31, 2000, respectively, and are expected to continue to account for a significant percentage of our net sales. For example, our business strategy calls for the launch of a worldwide basis of our proposed herpes simplex virus antibody rapid diagnostic test, and marketing our Influenza A/B test on a worldwide basis. Moreover, while we do not currently manufacture any product overseas, we do have our urinalysis products manufactured for us by a third party in Germany and in November 2001, we will commence manufacture of all urinalysis products in Germany ourselves. International sales and manufacturing operations are subject to inherent risks which could increase our costs and stifle our growth opportunities. These risks include:
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Even that portion of our international sales which is negotiated for and paid in U.S. dollars is subject to currency risks, since changes in the values of foreign currencies relative to the value of the U.S. dollar can render our products comparatively more expensive. These exchange rate fluctuations could negatively impact international sales of our products and our anticipated foreign operations, as could changes in the general economic conditions in those markets. In fiscal 2000, for example, the value of the German and Italian currencies dropped 7% against the U.S. dollar. To date, we have not reflected that change in currency value in our selling prices. In order to maintain a competitive price for our products in Europe, however, we may have to provide discounts or otherwise effectively reduce our prices, resulting in a lower margin on products sold in Europe. Continued change in the values of European currencies or changes in the values of other foreign currencies could have a negative impact on our business, financial condition and results of operations. Although we do not currently hedge against exchange rate fluctuations, any measures we take to hedge against exchange rate fluctuations may not adequately protect us from their potential harm.
We rely on a continuous power supply to conduct our operations, and California's current energy crisis could disrupt our operations and increase our expenses.
California is in the midst of an energy crisis that could disrupt our operations and significantly increase our expenses. In the event of an acute power shortage, that is, when power reserves for the State of California fall below 1.5%, California has on some occasions implemented, and may in the future continue to implement, rolling blackouts throughout California. We currently have a backup generator with limited capacity. We have no alternate source of power in the event of a blackout, and our current insurance does not provide coverage for any damages we or our customers may suffer as a result of any interruption in our power supply. If blackouts interrupt our power supply, we would be temporarily unable to continue operations at our facilities. Any such interruption in our ability to continue operations at our facilities could damage our reputation, harm our ability to retain existing customers and to obtain new customers, and could result in lost revenue, any of which could substantially harm our business and results of operations. Furthermore, our utility expenses have increased substantially and could continue to be negatively impacted by the California energy crisis.
Future sales by existing stockholders could depress the market price of our common stock and make it more difficult for us to sell stock in the future.
Sales of our common stock in the public market, or the perception that such sales could occur, could negatively impact the market price of our securities and impair our ability to complete equity financings. In addition to the shares to be sold in this offering, we have outstanding the following shares of common stock:
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We are unable to estimate the number of shares of common stock that may actually be resold in the public market since this will depend upon the market price for the common stock, the individual circumstances of the sellers and other factors. We also have a number of individual institutional stockholders that own significant blocks of our common stock. If these stockholders sell large portions of their holdings in a relatively short time, for liquidity or other reasons, the prevailing market price of our common stock could be negatively affected.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
We received a letter dated April 24, 1992 from the United States Environmental Protection Agency (the "EPA") notifying us that we are a potentially responsible party for cleanup costs at a federal Superfund site, the Marco of Iota Drum Site (the "Marco Site"), near Iota, Louisiana. Documents gathered in response to such letter indicate that we sent a small amount of hazardous waste to facilities in Illinois. It is possible that subsequently, such waste could have been shipped to the Marco Site. The EPA letter indicates that a similar notice regarding the Marco Site was sent by the EPA to over 500 other parties. At this time, we do not know how much of our waste may have reached the Marco Site, the total volume of waste at the Marco Site or the likely site remediation costs. There is, as in the case of most environmental litigation, the theoretical possibility of joint and several liability being imposed upon us for damages that may be awarded.
We are involved in litigation matters from time to time in the ordinary course of business. Management believes that any and all such actions, in the aggregate, will not have a material adverse effect on us. We maintain insurance, including coverage for product liability claims, in amounts which management believes appropriate given the nature of our business.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 6. Exhibits and Reports on Form 8-K
| Exhibit Number | | |
|---|---|---|
| 2.1 | Agreement and Plan of Merger, as amended, dated as of October 30, 2000, among Litmus Concepts, Inc., Quidel Corporation and Litmus Acquisition Corporation (Incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K filed on December 22, 2000.) | |
3.1 | Certificate of Incorporation, as amended. (Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on February 26, 1991.) | |
3.2 | Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K dated November 8, 2000.) | |
4.1 | Certificate of Designations of Series C Junior Participating Preferred Stock as filed with the State of Delaware on December 31, 1996. (Incorporated by reference to Exhibit 1(A) to the Company's Registration Statement on Form 8-A filed on January 14, 1997.) | |
4.2 | Rights Agreement dated as of December 31, 1996 between Quidel Corporation and American Stock Transfer and Trust Company, as Rights Agent. (Incorporated by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A filed on January 14, 1997.) | |
10.1 | Registrant's 1983 Employee Stock Purchase Plan, as amended. (Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated February 26, 1991.) | |
10.2 | Form of Warrant Agreement between Registrant and American Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 10.3 to the Registrant's Form 10-K for the year ended March 31, 1995.) | |
10.3 | Registrant's 1990 Employee Stock Option Plan. (Incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990.) |
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10.4 | Registrant's 1990 Director Option Plan. (Incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990.) | |
10.5 | Form of Registration Rights Agreement of the Registrant. (Incorporated by reference to Appendix C to the final Joint Proxy Statement/Prospectus dated January 4, 1991 included within Amendment No. 2 to the Registrant's Registration Statement No. 33-38324 on Form S-4 filed on January 4, 1991.) | |
10.6 | Assumption Agreement dated January 31, 1991. (Incorporated by reference to Exhibit 10.52.1 to the Registrant's Current Report on Form 8-K dated February 26, 1991.) | |
10.7 | Trademark License Agreement dated October 1, 1994 between the Registrant and Becton Dickinson and Company regarding the Q-Test trademark. (Incorporated by reference to Exhibit 10.15 to the Registrant's Form 10-K for the year ended March 31, 1995.) | |
10.8 | Stock Purchase Agreement dated January 5, 1995 between Registrant and Eli Lilly & Company for the sale of all the outstanding capital stock of Pacific Biotech, Inc. (Incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K dated January 5, 1995.) | |
10.9 | Settlement Agreement effective April 1, 1997 between the Registrant and Becton Dickinson and Company. (Incorporated by reference to Exhibit 10.18 to the Registrant's Form 10-K for the year ended March 31, 1997.) | |
10.10 | Campbell License Agreement effective April 1, 1997 between the Registrant and Becton Dickinson and Company. (Incorporated by reference to Exhibit 10.19 to the Registrant's Form 10-K for the year ended March 31, 1997.) | |
10.11 | Rosenstein License Agreement effective April 1, 1997 between the Registrant and Becton Dickinson and Company. (Incorporated by reference to Exhibit 10.20 to the Registrant's Form 10-K for the year ended March 31, 1997.) | |
10.12 | Employment agreement dated June 9, 1998 between the Registrant and André de Bruin. (Incorporated by reference to Exhibit 10.23 to the Registrant's Form 10-Q for the quarter ended June 30, 1998.) | |
10.13 | Stock option agreement dated June 9, 1998 between the Registrant and André de Bruin. (Incorporated by reference to Exhibit 10.24 to the Registrant's Form 10-Q for the quarter ended June 30, 1998.) | |
10.14 | Employment agreement dated December 14, 1998 between the Registrant and Charles J. Cashion. (Incorporated by reference to Exhibit 10.28 to the Registrants Form 10-Q for the quarter ended December 31, 1998.) | |
10.15 | Offer to Purchase for Cash all outstanding shares of common stock of Metra Biosystems, Inc. by MBS Acquisition Corporation, a wholly-owned subsidiary of Quidel Corporation at $1.78 net per share. (Incorporated by reference to Metra's Schedule 14D-1 dated June 9, 1999.) | |
10.16 | Business Loan Agreement, dated as of July 12, 1999, by and between Bank of America National Trust and Savings Association and Quidel Corporation. (Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on July 26, 1999.) | |
10.17 | Security Agreement, dated as of July 12, 1999, by and among Bank of America National Trust and Savings Association, Quidel Corporation, MBS Acquisition Corporation, and Pacific Biotech, Inc. (Incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed on July 26, 1999.) |
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10.18 | Subsidiary Guaranty, dated as of July 12, 1999, by MBS Acquisition Corporation and Pacific Biotech, Inc. (Incorporated by reference to Exhibit 10.3 to the Registrant's Form 8-K filed on July 26, 1999.) | |
10.19 | Cash Collateral Agreement, dated as of July 12, 1999, by and between Bank of America National Trust and Savings Association and Pacific Biotech, Inc. (Incorporated by reference to Exhibit 10.4 to the Registrant's Form 8-K filed on July 26, 1999.) | |
10.20 | Form of Asset Sale Agreement — Rapignost® Urine Test Strip Business. (Incorporated by reference to Exhibit 10.5 to the Registrant's Form 8-K filed on December 15, 1999.) | |
10.21 | Form of Purchase and Sale Agreement and Escrow Instructions. (Incorporated by reference to Exhibit 10.6 to the Registrant's Form 8-K filed on January 4, 2000.) | |
10.22 | Form of Single Tenant Absolute Net Lease. (Incorporated by reference to Exhibit 10.7 to the Registrant's Form 8-K filed on January 4, 2000.) | |
10.23 | Form of Indemnification Agreement — Corporate Officer and/or Director. (Incorporated by reference to Exhibit 10.2 to the Registrant's Form 10-Q for the quarter ended June 30, 2000.) |
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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.
| QUIDEL CORPORATION | ||
Date: September 24, 2001 | /s/ S. Wayne Kay S. Wayne Kay President and Chief Executive Officer (Principal Executive Officer) and Secretary and authorized signatory | |
/s/ Paul E. Landers Paul E. Landers Vice President, Corporate Operations, Chief Financial Officer and Secretary (Principal Financial Officer and Accounting Officer) |
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