Strategic Diagnostics Inc. Reports 1996 Results

Business Wire, April 2, 1997

NEWARK, DE--(BUSINESS WIRE)--April 2, 1997--Strategic Diagnostics Inc. (Nasdaq: SDIX, formerly EnSys Environmental Products, Inc. (Nasdaq: ENSY)) today reported financial results for 1996. On December 30, 1996, Strategic Diagnostics was merged with and into EnSys. The surviving entity was renamed Strategic Diagnostics (SDI). This transaction was accounted for as a purchase, with SDI as the acquiring company. Accordingly, the 1996 financial data reflects results for the former SDI.

Revenues for the year were $5,837,000, up 58 percent from $3,689,000 in 1995. This $2,148,000 increase is primarily the result of a $1,797,000 (112 percent) increase in product revenues. The company reported a net loss applicable to common stockholders of $757,000, or $0.18 per share, excluding merger-related charges for acquired research and development of $8,266,000 ($1.95 per share), compared with a loss of $1,593,000, or $0.46 per share, a year earlier. At December 31, 1996, stockholders' equity was $10,673,000, and cash and investments totaled $6,627,000.

The new SDI was formed through a series of transactions in 1996 which consolidated and strengthened the industrial sector of the biotechnology-based diagnostic testing industry. Prior to the merger between the former SDI and EnSys, the former SDI had acquired Ohmicron Corporation in August and EnSys had purchased Millipore Corporation's EnviroGard product line in March. The former SDI also made other significant changes in its business in 1996, including the restructuring of TSD BioServices, a joint venture, into a wholly-owned subsidiary.

On a pro forma basis, which combines the former SDI, EnSys, Ohmicron, and TSD for the full year, the new SDI's revenues for 1996 were $12,700,000. Excluding merger-related and Millipore product line charges for acquired R&D ($9,966,000), the adjusted pro forma net loss was $4,908,000, or $0.39 per share. The pro forma results for 1996 reflect duplicative R&D and SG&A expenses, which are being sharply reduced as the former companies' operations are integrated into SDI. By early 1997, all of the acquired companies and manufacturing operations had been consolidated at two locations.

Richard C. Birkmeyer, President and Chief Executive Officer of the new SDI, said, "In addition to an improved cost structure, the new SDI has significantly greater product breadth and marketing resources than any of its predecessors. Our goals for 1997 are to realize the benefits of a strengthened industrial product line and to accelerate the commercialization of a number of promising new products in other areas. We believe that the Company's cost savings and revenue potential will result in a profitable 1997."

Mr. Birkmeyer concluded, "We believe our key strategic assets, including a strong proprietary technology base, excellent working relationships with our corporate partners, and a proven process for applying basic immunoassay technology to industrial applications, will enable us to realize our long-term goal of profitable growth."

Strategic Diagnostics Inc. is a leading provider of biotechnology-based diagnostic tests for a broad range of agricultural, industrial, and water treatment applications. Through its TSD BioServices subsidiary, the company also provides antibody and immunoreagent research and development services. The company's test kits are produced in a variety of formats suitable for field and laboratory use, offering advantages of accuracy, cost-effectiveness, portability, and rapid response.

This news release contains forward-looking statements reflecting the company's current expectations. Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by the company at this time. Such risks and uncertainties include, without limitation, changes in demand for products, delays in product development, inability to obtain required governmental approvals, modifications to development and sales relationships, the ability to integrate acquired businesses to achieve anticipated synergies, competition, and other factors more fully described in the company's public filings with the Securities and Exchange Commission. -0-

            Strategic Diagnostics Inc. and Subsidiaries
             Consolidated Statements of Operations
           (derived from audited financial statements)
          ($ in 000s, except share data and per share data)

                                              Years Ended
                                          Dec. 31,     Dec. 31,
                                            1996         1995

Net revenues:
Product related                           $ 3,402      $ 1,605
Contract                                    2,435        2,084
   Total net revenue                        5,837        3,689

Operating expenses:
Manufacturing                               2,839        1,288
Research and Development                    1,569        2,272
Acquired research and development           8,266            0
Selling, general and administrative         1,737        1,190
    Total operating expenses               14,411        4,750
      Operating loss                       (8,574)      (1,061)
Interest income (expense), net                  8         (206)

Equity in income of TSD Bioservices           178           41
    Net loss                               (8,388)      (1,226)

Accretion of redeemable convertible
 preferred stock liquidation value           (635)        (367)

Net loss applicable to common
 stockholders                              (9,023)      (1,593)
Net loss per share                        $ (2.12)     $ (0.46)
Shares used in computing loss per share 4,248,000    3,464,000

-0-

            Strategic Diagnostics Inc. and Subsidiaries
                   Consolidated Balance Sheets
           (derived from audited financial statements)
                          ($ in 000s)

                        Dec. 31, 1996     Dec. 31, 1995

Cash and investments        $ 6,627         $ 35
Receivables                   2,334          560
Inventories                   1,557          447
Other current assets            510          328
Total current assets         11,028        1,370
Equipment, furniture and
 fixtures (net)                 728          249
Other non current assets      2,825          457
Total assets                 14,581        2,076
Current liabilities           3,858        2,261
Capital lease obligations        50            0
Redeemable convertible
 preferred stock                  0        3,879
Stockholders' equity         10,673       (4,064)
Total liabilities and
 stockholders' equity        14,581        2,076