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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Commission File Number: 000-20198

CHOLESTECH CORPORATION

3347 Investment Boulevard, Hayward, CA 94545
(Address of principal executive offices) (Zip Code)

(510) 732-7200
(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 shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.
Yes  [X]    No  [  ]

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

As of September 26, 2003, 13,986,277 shares of the registrant’s common stock were outstanding.

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CHOLESTECH CORPORATION
INDEX

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PART I - FINANCIAL INFORMATION

ITEM 1.       CONDENSED FINANCIAL STATEMENTS

CHOLESTECH CORPORATION
CONDENSED BALANCE SHEETS
(in thousands)

(1)  The information in this column was derived from the Company’s audited consolidated financial statements as of the fiscal year ended, March 28, 2003.

See Notes to Condensed Financial Statements

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CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)

See Notes to Condensed Financial Statements

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CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

See Notes to Condensed Financial Statements

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NOTES TO CONDENSED FINANCIAL STATEMENTS

1.		Interim Results
		The interim unaudited financial information of Cholestech Corporation (the “Company”) is prepared in conformity with accounting principles generally accepted in the United States of America. The financial information included herein has been prepared by management, without audit by independent auditors, and should be read in conjunction with the audited consolidated financial statements contained in the Annual Report on Form 10-K for the fiscal year ended March 28, 2003. The information furnished includes all adjustments and accruals consisting only of normal recurring accrual adjustments that are, in the opinion of management, necessary for a fair presentation of results for the interim periods. Certain information or footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.
		The interim results are not necessarily indicative of the results of operations for the full fiscal year ending March 26, 2004. Certain financial statement items have been reclassified to conform to the current year format.
2.		Balance Sheet Data

The components of inventories are as follows (in thousands):

3.		Sale of WellCheck
		On December 23, 2002, the Company completed the sale of certain assets and the assignment of certain obligations of its wholly owned subsidiary WellCheck Inc. (“WellCheck”). The sale was made pursuant to the terms and conditions of a Stock Purchase Agreement (the “Agreement”) dated December 23, 2002 by and among the Company, WellCheck and ImpactHealth.com, Inc. Under the terms of the Agreement, the Company received a secured promissory note in the aggregate principal amount of $250,000 (the “Note”) due on the first anniversary of the issuance of the Note, the right to receive an additional $200,000 contingent upon the attainment of certain performance measures and a royalty per participant tested with TEAMS for three years after the date of the agreement. Information presented in the financial statements for prior periods have been adjusted to reflect WellCheck as “Discontinued Operations.”

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As a result of the sale, the Company recorded a loss of $4.4 million for the fiscal year ended March 28, 2003. The components of the loss are as follows (in thousands):

Revenues and losses of the Company’s discontinued operations for the thirteen and twenty-six weeks ended September 26, 2003 and September 27, 2002 (in thousands of dollars) were as follows:

		Contingent sales proceeds, including TEAMS royalty and performance remuneration, will be recognized as earned as a component of discontinued operations.
4.		Derivative Financial Instruments
		At September 26, 2003, the Company had outstanding forward contracts to purchase £796,000 for approximately $1.3 million. The open contracts mature at various dates through February 13, 2004 and hedge certain forecasted inventory purchases denominated in the British Pound Sterling. The unrealized gain on the forward contracts at September 26, 2003 was $68,000, all of which is expected to be reclassified to earnings within the next 12 months. There was no gain or loss recorded in the period from hedge ineffectiveness or from forecasted transactions no longer expected to occur.
5.		Earnings Per Share
		Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to all potential common stock outstanding during a period, if dilutive.

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A reconciliation of the basic and diluted earnings per share calculations follows: