SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
<PAGE>
May 20, 2005

Mr. John Cash
Accounting Branch Chief
Securities and Exchange Commission
Division of Corporation Finance
Washington, DC 20549

Re: Strategic Diagnostics Inc.
    Annual Report on Form 10-K for the year ended December 31, 2004
    File No. 000-22400

Dear Mr. Cash:

This letter is in response to comments of the Staff contained in your letter to
Anthony J. Simonetta, Vice President -- Finance and Chief Financial Officer of
Strategic Diagnostics Inc. ("management", "we", "our", "us" or the "Company"),
dated April 19, 2005. The comments in the Staff's letter have been set forth
below, along with the Company's responses thereto.

The information contained herein is being furnished by the Company on a
supplemental basis. As set forth in the various responses below, the Company
proposes to include, where appropriate, revisions to its disclosures in future
filings under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In this respect, the Company has included a number of such disclosures in
its Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, filed on
May 16, 2005. The Company proposes to include any other appropriate additional
disclosures in its Annual Report on Form 10-K for the year ending December 31,
2005 (the "2005 Annual Report").

Letter to Shareholders
----------------------
1.   WE NOTE THAT YOU INTRODUCED THE STARS PROGRAM DURING 2004. IF THE COSTS OF
     THIS PROGRAM ARE MATERIAL, PLEASE REVISE FUTURE FILINGS TO DISCLOSE HOW YOU
     ARE ACCOUNTING FOR THE COSTS OF THIS PROGRAM.

     The Schedule Tracking and Antibody Reporting system (STARs) is a web-based
     program that allows our customers online access to detailed information
     relating to the processing and status of their specific projects. The

<PAGE>

Mr. John Cash
Accounting Branch Chief - SEC
May 20, 2005
Page 2

     program was developed by the Company's IT department and software was not
     purchased in connection with the program's development. The internal costs
     required in the development of STARs were de minimis and expensed as
     incurred. As such, the Company respectfully suggests that at this time
     specific disclosure regarding the costs of the program is not necessary.

Year Ended December 31, 2003 versus year ended December 31, 2002 -- Non-GAAP
Financial Measures, page 30
----------------------------------------------------------------------------
2.   WE NOTE THAT YOU HAVE PRESENTED THE NON-GAAP MEASURE "PRO FORMA NET INCOME"
     FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2003 AND HAVE THE FOLLOWING
     COMMENTS.

o    DO NOT LABEL YOUR NON-GAAP MEASURE AS "PRO FORMA" AS THIS IMPLIES
     COMPLIANCE WITH THE REQUIREMENTS OF ARTICLE 11.

     The Company advises that, in all future filings that include a non-GAAP
     measure of this type, the term "as adjusted" will be used in place of
     "pro-forma."

o    WE NOTE THAT THIS NON-GAAP MEASURE INCLUDES YOUR INVENTORY WRITE DOWN OF
     $3.0 MILLION. IT IS UNCLEAR TO US WHY THE $389,000 RECOVERY FROM SALES OF
     CERTAIN OF THIS INVENTORY IN 2004 IS NOT ADDRESSED AND PRESENTED IN YOUR
     DISCUSSION OF NON-GAAP FINANCIAL MEASURES. PLEASE DO SO IN FUTURE FILINGS.

     The Company advises that the table on page 31 of the Annual Report on Form
     10-K for the year ended December 31, 2004 (the "2004 Annual Report")
     reconciles net income as reported to net income adjusted for those one time
     events that do not represent normal recurring activities of the Company for
     the year ended December 31, 2003. A similar non-GAAP measure was not
     presented for the year ended December 31, 2004.

Critical Accounting Policies -- Deferred Taxes, page 34
-------------------------------------------------------
3.   IN FUTURE FILINGS, PROVIDE THE FOLLOWING ADDITIONAL DISCLOSURES REGARDING
     YOUR ACCOUNTING FOR DEFERRED TAXES:

o    THE AMOUNT AND TIMING OF YOUR PROJECTED FUTURE TAXABLE INCOME NECESSARY TO
     FULLY UTILIZE YOUR NET OPERATING LOSS CARRY FORWARDS;

     The Company advises that, in future filings where providing such
     information is required, the table presented on page F-19 of the 2004
     Annual Report will be expanded to include amounts for all years in which
     net operating loss carry forwards (NOLs) expire. The Company will also

<PAGE>

     Mr. John Cash
     Accounting Branch Chief - SEC
     May 20, 2005
     Page 3

     include a statement with the table that will read as follows: "The Company
     expects to have sufficient future taxable income to utilize such NOLs prior
     to the expiration of the net operating loss carry forwards."

o    ADDRESS THE NEGATIVE INDICATORS YOU CONSIDERED IN REVIEWING THE
     RECOVERABILITY OF YOUR DEFERRED TAX ASSET;

     The Company advises that, in future filings where providing such
     information is required, the discussion of the negative indicators
     considered in reviewing the recoverability of our deferred tax assets will
     be included. For the year ended December 31, 2004, these negative
     indicators included:

         The Company experienced a loss before taxes of $854 thousand in 2003
         and a loss before taxes of $912 thousand in 2002. It should be noted
         that the 2003 loss included $3.6 million of losses before taxes related
         to items that management believes are outside of normal operations.

         Without removing the effect of items management believes are outside of
         normal operations, the Company has a cumulative loss before taxes of
         $1.6 million for the three year period from 2002 through 2004.

         The 2004 income before taxes of $1.8 million was lower than the 2004
         budget for income before taxes of $3.3 million.

         The Company has net operating loss carry forwards that begin to expire
         in 2007.

o    ADDRESS THE POSITIVE AND NEGATIVE INDICATORS YOU CONSIDERED IN CONCLUDING
     THAT A FULL VALUATION ALLOWANCE WAS NECESSARY FOR DEFERRED TAX ASSETS IN
     CERTAIN STATE JURISDICTIONS AND A SUBSTANTIAL VALUATION ALLOWANCE FOR
     FOREIGN DEFERRED TAX ASSETS.

     The Company advises that, in future filings where providing such
     information is required, a discussion of the positive and negative
     indicators management considered in concluding that a valuation allowance
     was necessary for deferred tax assets in certain state jurisdictions and
     for foreign deferred tax assets will be included.

     At December 31, 2004, the positive and negative indicators management
     considered in concluding that a full valuation allowance was necessary for
     deferred tax assets in certain state jurisdictions were as follows:

         Management has considered the positive and negative evidence consistent
         with the analysis for federal tax purposes described in Note 12 "Income
         Taxes" of the Notes to the Consolidated Financial Statements included
         in the 2004 Annual Report and the additional items described above.
         Based on those positive and negative factors, management believes that

<PAGE>

     Mr. John Cash
     Accounting Branch Chief - SEC
     May 20, 2005
     Page 4

         it will realize the deferred tax assets in Delaware and other states,
         excluding Pennsylvania and North Carolina, (discussed below) and,
         therefore, no valuation allowance is required.

         The Company has substantially reduced its presence in North Carolina
         and Pennsylvania since the time when the net operating losses were
         incurred in those jurisdictions. With the reduced presence, the Company
         does not expect to utilize net operating loss carry forwards in North
         Carolina and Pennsylvania and has maintained a full valuation
         allowance.

     Also, at December 31, 2004, the positive and negative indicators we
     considered in concluding that a substantial valuation allowance was
     necessary for foreign deferred tax assets were as follows:

         Positive indicators
            o  The foreign operations in the United Kingdom ("UK") contributed
               income before taxes of $375 thousand for the year ended December
               31, 2004.

            o  The 2005 Budget for UK income before taxes is $345 thousand.

         Negative indicators
            o  The Company has a history of substantial net operating losses in
               the UK.

            o  The Company did not have income before taxes in the UK until
               recently and 2004 was the first year that the Company had more
               than $100 thousand of such income.

            o  The Company has limitations with regard to budgeting the
               operations in the UK beyond the next year. Such limitations
               included the hiring of a UK Director of Distribution late in 2004
               and the rebuilding of the distributor network for sales of
               Company products beginning in 2005.

Critical Accounting Policies -- Revenue Recognition, pages 34 and 35
--------------------------------------------------------------------
4.   WE NOTE THAT YOUR DISCUSSION UNDER REVENUE RECOGNITION IS MERELY A REPEAT
     OF YOUR ACCOUNTING POLICY IN NOTE 2 OF THE NOTES TO THE CONSOLIDATED
     FINANCIAL STATEMENTS. EXPAND YOUR DISCUSSION IN FUTURE FILINGS TO DISCUSS
     THE SIGNIFICANT ASSUMPTIONS AND JUDGMENTS THAT ARE INVOLVED IN RECOGNIZING
     YOUR REVENUE AND THE IMPACT THAT CHANGES IN THESE UNDERLYING ASSUMPTIONS
     AND JUDGMENTS COULD HAVE ON YOUR FINANCIAL STATEMENTS.

     The Company will expand its disclosure of revenue recognition policies in
     future filings in accordance with the Staff's comment.

     The Company advises that, as described on page 34 of the 2004 Annual
     Report, the sale of immunoassay-based test kits, standard antibodies and

<PAGE>

     Mr. John Cash
     Accounting Branch Chief - SEC
     May 20, 2005
     Page 5

     immunochemical reagents are recognized upon the shipment of product or when
     services are provided. In future filings, the Company will expand the
     discussion to include a statement substantially as follows: "Revenue
     associated with such products or services is recognized when persuasive
     evidence of an order exists, shipment of product has occurred or services
     have been provided, the price is fixed and determinable and collectibility
     is probable. Management is required to make judgments based on actual
     experience about whether or not collectibility is reasonably assured."

     Also, as described on page 35 of the 2004 Annual Report, sales of certain
     antibodies and immunochemical reagents include revenues recognized under
     the percentage of completion method and are recognized based on the
     percentage of costs or time incurred through the reporting date versus the
     estimate for the complete contract or project. In future filings, the
     Company will expand the discussion to include a statement substantially as
     follows: "The Company's application of percentage of completion accounting
     is based on the fact that the outcome of projects can be estimated
     reliably. A project's outcome can be estimated reliably because total
     contract revenue is generally fixed, it is probable that economic benefit
     will flow to the Company and the stage of project completion can be
     measured with a high degree of certainty. Recognized revenues and profits
     are subject to revisions during the project in the event that the
     assumptions regarding the overall project outcome are revised. The
     cumulative impact of a revision in estimates or losses on projects in
     progress are recorded in the period such revisions or losses become likely
     and estimable."

     Also, please refer to the answer to comment #7.

Item 9A. Controls and Procedures
--------------------------------
5.   WE NOTE YOUR DISCLOSURE THAT YOUR CHIEF EXECUTIVE OFFICER AND CHIEF
     FINANCIAL OFFICER CONCLUDED THAT YOUR DISCLOSURE CONTROLS AND PROCEDURES
     WERE FUNCTIONING EFFECTIVELY TO PROVIDE REASONABLE ASSURANCE THAT THE
     INFORMATION REQUIRED TO BE DISCLOSED IN REPORTS FILED UNDER THE EXCHANGE
     ACT WAS RECORDED, PROCESSED, SUMMARIZED AND REPORTED WITHIN THE TIME
     PERIODS SPECIFIED IN THE COMMISSION'S RULES AND FORMS. IN FUTURE FILINGS,
     REVISE TO CLARIFY, IF TRUE, THAT YOUR OFFICERS CONCLUDED THAT YOUR
     DISCLOSURE CONTROLS AND PROCEDURES ARE ALSO EFFECTIVE FOR THE PURPOSE OF
     ENSURING THAT MATERIAL INFORMATION REQUIRED TO BE IN THIS REPORT IS MADE
     KNOWN TO MANAGEMENT AND OTHERS, AS APPROPRIATE, TO ALLOW TIMELY DECISIONS
     REGARDING REQUIRED DISCLOSURES. ALTERNATIVELY, YOU MAY SIMPLY CONCLUDE THAT
     YOUR DISCLOSURE CONTROLS ARE EFFECTIVE OR INEFFECTIVE, WHICHEVER THE CASE
     MAY BE. SEE EXCHANGE ACT RULE 13A-L 5(E). ADDRESS THIS COMMENT AS IT
     RELATES TO YOUR DISCLOSURES UNDER ITEM 4. CONTROLS AND PROCEDURES INCLUDED
     IN YOUR FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2005.

<PAGE>

     Mr. John Cash
     Accounting Branch Chief - SEC
     May 20, 2005
     Page 6

     The Company advises that Item 4 "Controls and Procedures" of Form 10-Q for
     the quarter ended March 31, 2005 included the following disclosure, which
     the Company also anticipates including in future periodic filings under the
     Exchange Act:

     "The Company's management, with the participation of the Chief Executive
     Officer and Chief Financial Officer, evaluated the effectiveness of our
     disclosure controls and procedures, as defined in Rule 13a-15(e) under the
     Securities Act of 1934, as amended, as of the end of the period covered by
     this report. Based on that evaluation, the Chief Executive Officer and
     Chief Financial Officer concluded that our disclosure controls and
     procedures as of the end of the period covered by this report are
     functioning effectively to provide reasonable assurance that the
     information required to be disclosed by us in reports filed under the
     Securities Exchange Act of 1934, as amended, is recorded, processed,
     summarized and reported within the time periods specified in the SEC's
     rules and forms, and that information required to be disclosed by us in the
     reports we file or submit under the Securities Exchange Act of 1934, as
     amended, is accumulated and communicated to our management, including our
     principal executive and financial officers, or persons performing similar
     functions, as appropriate to allow timely decisions regarding required
     disclosure. A controls system, no matter how well designed and operated,
     cannot provide absolute assurance that the objectives of the controls
     system are met, and no evaluation of controls can provide absolute
     assurance that all control issues and instances of fraud, if any, within a
     company have been detected."

Summary of Significant Accounting Policies, page F-6
----------------------------------------------------
Revenue Recognition, page F-8
-----------------------------
6.   WE NOTE THAT YOU RECOGNIZE THE REVENUE FROM THE SALE OF IMMUNOASSAY-BASED
     TEST KITS AND THE SALE OF CERTAIN ANTIBODIES AND IMMUNOCHEMICAL REAGENTS
     UPON SHIPMENT AND TRANSFER OF TITLE OR WHEN THE SERVICES ARE PROVIDED.
     PLEASE SUPPLEMENTALLY PROVIDE FOR US A COMPREHENSIVE DESCRIPTION OF YOUR
     REVENUE ARRANGEMENTS, INCLUDING A DISCUSSION OF WHETHER YOUR PRODUCTS AND
     SERVICES ARE PROVIDED UNDER REVENUE ARRANGEMENTS WITH MULTIPLE
     DELIVERABLES. IF APPLICABLE, ADDRESS FOR US HOW YOU HAVE APPLIED THE
     GUIDANCE SET FORTH IN EITF 00-21: REVENUE ARRANGEMENTS WITH MULTIPLE
     DELIVERABLES.

     The Company advises that arrangements with customers for the sale of
     immunoas