Strategic Diagnostics Inc., a leading provider of biotechnology-based test kits for food, water, agriculture and industry use, today reported financial results for the fourth quarter and year ended December 31, 1999. 

Total net revenues were $5.7 million for the fourth quarter of 1999 and $22.5 million for the year.
These revenues were approximately 57% above the comparable fourth quarter 1998 amount and
43% above total net revenues for the year ended December 31, 1998. Income, before the
acquisition related $3.5 million in-process research and development expense and an income tax
benefit of $5.3 million, totaled $2.0 million for the year ended December 31, 1999 or $0.12 per
diluted share and $460,000 for the fourth quarter of 1999 or $0.03 per diluted share and excludes
the potential impact of the non-recurring gain related to the Macra Lp(a) sales transaction. The
results compare to net income of $781,000 or $0.05 per diluted share for the year ended
December 31, 1998 and net loss of $454,000 or $0.03 per share in the fourth quarter of 1998.
The Company has recorded a tax benefit and eliminated approximately $1.3 million of intangible
goodwill in December 1999, all in accordance with Statement of Financial Accounting Standards
109 ("SFAS 109'') since it believes that it is more likely than not that the Company will realize that portion of the benefits of net operating loss carryforwards. Due to the recognition of the
Company's tax benefit in 1999, the Company expects that its effective tax rate in future periods will approximate 40%. The recognition of these deferred tax assets under SFAS 109 has no impact on the Company's cash flows for income taxes. 

The increase in revenues can be primarily attributed to increased agricultural sales resulting from the expansion of the agricultural product line to include kits designed for the quality assurance of
foundation seed to the launch of a product line designed for the food processing and grain industry. The increase is also attributable to the growth of the antibody business, Strategic BioSolutions, primarily resulting from the successful acquisition of HTI and the operating assets of the OEM business of Atlantic Antibodies. 

Product Expansion in the Agriculture Market 

One of the keys to SDI's success in 1999 were the commercial launches of Trait Check and GMO Check, products which not only meet the market need for detection of the Roundup Ready® trait at a 0.1% level in soybeans, but can be simply performed in less than 5 minutes. This ease-of-use and rapid response time has lent itself to an environment where time is of the essence. 

In addition to the successful launch of the GMO product line, SDI recently announced its entrance into the $20 million diagnostic market for mycotoxins. SDI's unique position as the developer and supplier of the first commercial, rapid, on-site test for the detection of mycotoxins in grain provide an excellent opportunity to introduce companion testing to the same end users. The expansion of product offerings in the agricultural marketplace will enable SDI to offer the industry the tools necessary to ensure the integrity of the supply chain. 

Strategic BioSolutions 

With the acquisition of HTI and the operating assets of the OEM business of Atlantic Antibodies,
TSD BioServices has been enlarged to create Strategic BioSolutions, a division within SDI. This
combined unit is one of the largest, independent custom antibody operations in the U.S. and is
building on the reputation of the three organizations for a high quality product with dependable
service. The combined operation has benefited from lower operating costs resulting from the
complete integration of the three organizations, a single, highly effective sales network that now
offers a comprehensive set of products and services to the industry, and a substantial research and development team experienced at developing new products and the technology necessary to
establish and maintain a market leadership role. 

Mr. Richard C. Birkmeyer, President and CEO, commented, "We saw many significant
developments in the markets for our products in 1999. In agriculture, our business grew 124%
over 1998. This growth was principally driven by regulatory agencies in many parts of the world
adopting and/or implementing labeling regulations, largely in response to consumer demands to be able to know the genetic composition of their finished food products. Also contributing to this
growth, the food processing and grain distribution industries began to segregate genetically
modified products. Overall, specialization within large bulk commodities according to genetic
characteristics began to emerge, and we saw the development of a second tier in the markets and prices of soybeans. 

"As we look ahead, we expect further adoption of systems to identify genetic characteristics of
agricultural products and maintain that identity from the farm to the food processor (identity
preservation systems, or IP systems). We believe these developments are forging the modifications to the worldwide agricultural complex necessary to support the use of this valuable technology and to provide consumers with the products they desire at the best possible price. Furthermore, we believe these IP systems are necessary to support further genetically enhanced products currently being developed, including output traits, such as enhanced nutritional content, that will provide the consumer with high value-added characteristics not possible with conventional breeding techniques. We are focused on the further development of IP systems within the agricultural complex. We are working with growers, distributors, processors and retailers to provide a systematic approach supported with analytical testing information to identify genetic characteristics of agricultural commodities. 

"Our antibody business also contributed significant growth to 1999 revenues. In addition to the
revenues and customers we added with the HTI and OEM business acquisitions, in the short time
of integrated operations during 1999, we began to observe synergies, including cross-selling
monoclonal products to polyclonal customers and polyclonal products to monoclonal customers.
We believe we are well positioned for 2000 to continue to realize these synergies and increase
revenues through expanding customer relationships. 

"For the year ahead, we are committed to maintaining and enhancing our leading positions in the
markets we serve and we believe we are well positioned to achieve our business objectives.'' 

SDI is a leading provider of biotechnology-based diagnostic tests for a broad range of agricultural,
industrial and water-treatment applications. Through its antibody business, Strategic BioSolutions, Strategic Diagnostics also provides antibody and immunoreagent research and development services. SDI'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. Trait Check (TM) is a pending trademark for SDI. 

Company news release
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