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Newark, Delaware
February 22, 2001
Strategic Diagnostics Inc. (Nasdaq: SDIX) - a leading provider of analytical test
kits for the agricultural, antibody, water quality and food testing markets, today reported financial results for the fourth quarter and
year ended December 31, 2000.
Revenue for the fourth quarter 2000 increased 51% to $8.6 million from $5.7 million in the fourth quarter of 1999. Pre-tax income was
$1.1 million versus $460,000 in the prior year's fourth quarter. Net income for the period totaled $888,000, or $0.05 per diluted share.
For the full year, revenue increased 15% to $25.9 million versus $22.5 million in 1999. Pre-tax income was $2.2 million versus a
pre-tax loss of $1.5 million in 1999 ($2.0 million income after considering the acquired research and development charge). Net
income for the twelve months totaled $1.5 million, or $0.09 per diluted share.
During the fourth quarter of 2000, the Company recorded a tax charge of $204 thousand (net of a reduction in the valuation allowance
of approximately $220 thousand) and in the fourth quarter of 1999, the Company recorded a tax benefit of $5.3 million, also related to
a reduction in the valuation allowance, all in accordance with Statement of Financial Accounting Standards 109 ("SFAS 109") since
management believed that it is more likely than not that the Company will realize that portion of the benefits of net operating loss
carryforwards. The recognition of these deferred tax assets under SFAS 109 has no impact on the Company's cash flows for income
taxes. As a result, net income comparisons between 1999 and 2000 are not meaningful.
President and CEO Richard C. Birkmeyer commented, "The sale of test kits for the detection of genetically modified organisms
(GMOs) in the food supply was clearly the highlight of SDI's strong fourth quarter performance. The recall of foods containing
StarLink(TM) corn has accelerated the use of SDI test kits. SDI responded rapidly to these events, and successfully met
the sudden increase in demand. We also expanded the product line by adding related products, such as a test kit that enables fourteen
samples to be analyzed at one time with results in less than 15 minutes. In addition, we introduced the TraitCheck BT9 Lateral Flow
Test Strip, which is more sensitive than our original test strip. It can detect one StarLink(TM) corn kernel in 800 non-StarLink(TM)
kernels versus one in 400 with the previous test.
"StarLink(TM) sales continue to be strong so far in fiscal 2001, although at a lower rate than in the fourth quarter when corn was
harvested in the United States. Moreover, we expect that publicity surrounding this issue will continue to improve market awareness
of the need for other types of testing. SDI offers the most comprehensive set of GMO test kits available today. Concerns about the
global food supply are expected to continue generating demand for SDI's test kits and we have a number of projects in the pipeline
that are expected to generate revenue for the Company in 2001 and beyond."
During the fourth quarter, SDI began marketing a new test kit to detect GMOs in soybeans. This Trait Check RUR Soya Test Kit is
especially important and timely in the European market, where genetically modified foods are the subject of increasing controversy,
and meat producers have shifted to high-protein, United States soy meal and similar products in response to the mad-cow disease
situation.
"Looking forward, we will continue to move ahead with our strategy to focus on markets rather than individual products," continued
Mr. Birkmeyer. "This will allow us to leverage the customer relationships, including new relationships that we have developed as a
result of the StarLink(TM) corn situation. We do this by offering complementary testing products that help these customers make
informed decisions on food quality matters. We are leveraging our GMO relationships and including sales of our mycotoxin family of
products. In this way, we are able to offer the grain industry a comprehensive set of solutions and provide them with a set of tools
that allow them to take appropriate actions. We are also taking this approach with our water-quality testing product line.
"Beyond fiscal 2001, growth rates are expected to benefit from continuing
expansion of our agricultural and water markets, both of which are in their infancy, as well as our ongoing collaboration with major pharmaceutical companies. In this pharmaceutical
category, SDI is developing diagnostic devices to monitor drug levels within a patient's body, in order to determine optimum dosages.
Although each drug application must undergo lengthy clinical trials, we believe the long-term potential for this unique product line is
significant. If clinical trials are successful, the first such device to reach the market will be associated with a new drug now in Phase
III trial by Bayer AG.
"We remain extremely optimistic about the potential of our core antibody technology. In many markets, we are changing old
methods of operation, which often takes time. However, as these changes take hold, we believe we are establishing ourselves as the
preeminent source of reliable and efficient diagnostic tests in a number of exciting applications."
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), GMO QuickCheck(TM), and GMO Check(TM) are pending trademarks for SDI.
Company news release
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