EXHIBIT 99
NEWS RELEASE
FOR IMMEDIATE RELEASE Company Contact:
Arthur A. Koch, Jr.
Chief Operating Officer
(302) 456-6789
www.sdix.com
Investor Relations Contact:
Lippert/Heilshorn & Associates, Inc.
William A. Walkowiak, CFA
Klea Theoharis
(212) 838-3777
klea@lhai.com
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Strategic Diagnostics Reports Substantial Increases in
Operating and Net Income for the Second Quarter
USDA Certifies Use of Mycotoxin Test Kit
Goldman Sachs & Co. Retained as Financial Advisor
NEWARK, Del., July 26, 2001 - Strategic Diagnostics Inc. (Nasdaq: SDIX) - a
leading provider of antibody products and analytical test kits for the food
safety and water quality markets, today reported financial results for the
second quarter ended June 30, 2001.
Revenue for the quarter increased 24% to $7.2 million from $5.8 million in the
second quarter of 2000. Operating income increased 46%, to $775,000 from
$532,000 in the prior year.
Operating income included a one-time charge of $253,000, related to severance in
connection with the recently announced planned consolidation of the Company's
Strategic BioSolutions division, which is expected to result in anticipated
savings of $750,000 to $1,000,000 a year. Excluding this one-time charge,
operating income increased 93%, to $1.0 million from $0.5 million in the prior
year. Net income was $515,000, or $0.03 per diluted share.
Excluding the one-time restructuring charge and a one-time gain on the sale of
assets in 2001 of $47,000, adjusted net income was $623,000, or $0.04 per
diluted share, a 135% increase over the prior year's income of $265,000, or
$0.02 per diluted share.
For the six months ended June 30, 2001, revenues were $14.3 million, versus
$11.6 million in the prior year, an increase of 23%. Operating income for the
six-month period was $1.6 million ($1.9 million excluding the one-time charge)
versus $0.9 million in the prior year. Net income for the first six months was
$994,000, or $0.06 per diluted share, up 75% from the $569,000, or $0.03 per
diluted share. Excluding the one-time restructuring charge above and one-time
gains on asset sales in the 2000 period, adjusted net income was $1,102,000 or
$0.06 per diluted share, an increase of 178% over the adjusted $397,000, or
$0.02 per diluted share, in the prior year.
Revenue growth continues to benefit from the increased demand for GMO
(genetically modified organism) testing that has occurred since the recall of
certain foods containing StarLink(TM) corn last fall. As the controversy
surrounding StarLink and other genetically modified foods continues, the
pressure on food suppliers to verify the presence of genetically modified traits
is growing. As a result, an increasing number of production, distribution, and
food companies are evaluating their procedures to include routine GMO testing.
This trend is expected to continue to drive growth in the Company's food safety
unit. SDI offers a comprehensive set of GMO test kits, with associated testing
protocols and procedures, for a variety of crops, including soybeans, corn, and
sugar beets.
In a separate development, the Company announced that the USDA Grain Inspection,
Packers and Stockyards Administration (GIPSA) has issued its certification of
the MycoCheck(TM) test kit for the detection of deoxynivalenol (DON), also
referred to as vomitoxin, a mycotoxin found in grain. This MycoCheck assay is
the first test to be certified in the family of three SDI MycoCheck test kits
for the detection of mycotoxins. The market for test kits for the detection of
mycotoxins is estimated to be $20 million annually. SDI's family of tests offers
meaningful competitive advantages. All the MycoCheck test kits are of a similar
format that allows easy, visual, semi-quantitative analysis as well as
instrument based quantitative analysis. All of SDI's mycotoxin assays are being
evaluated by the USDA using a low cost plate-reading instrument. For the first
time, this allows end users to be able to use a low-cost reader when following a
USDA-certified method. The Company believes that these competitive advantages
and the existing customer relationships established within the food safety
market category position the Company to attract a meaningful market share of
mycotoxin test kit sales.
In further news, the Company today reported that it has retained Goldman Sachs
& Co. as financial advisor in connection with exploring strategic alternatives
available to the Company to maximize shareholder value.
Richard C. Birkmeyer, President and CEO of Strategic Diagnostics, stated, "We
are extremely pleased with our strong financial performance, especially in light
of the weak economy. This performance demonstrates the growing acceptance of our
GMO testing products. To continue this momentum, we are applying our successful
GMO marketing strategy to other expanding lines of diagnostic tests in the food
safety market. The GIPSA certification of our DON kit will allow us to
aggressively gain market share in this important market.
"We have applied this same strategy in our water quality testing product line.
Rather than simply offer an individual test, we market a full testing solution.
This strategy is driving the development of the water quality testing product
line and our pending acquisition of AZUR Environmental. A hearing is being held
with the California Department of Corporations (DOC) on July 30 for approval of
the acquisition. The combined AZUR and SDI technologies enable us to offer a
full solution to water companies, rather than the partial solutions that we
previously offered separately. We are very excited about the potential for this
product line.
"Looking at the longer-term, we are also excited about our ongoing research and
development with diagnostic devices to monitor drug levels within a patient's
body. The potential benefits that derive from the ability to optimize drug
dosages are compelling. We are pleased with the development of each of our
market categories, Food Safety, Water Quality and Antibodies and we are proud of
the market leading positions we have been able to establish, as recently
evidenced by our inclusion in FSB: Fortune Small Business magazine's listing of
"America's 100 Fastest-Growing Small Companies." With the assistance of Goldman
Sachs, we are evaluating alternatives to accelerate the further development of
these markets to their potential, enhance the leadership position our products
have earned and thereby maximize shareholder value. This is an important step in
the growth and development of Strategic Diagnostics and we believe these efforts
will assist us in unlocking the value we see for our businesses."
Mr. Birkmeyer reaffirmed the company's expectations of revenue growth of at
least 20% and net income growth of 25% - 30% for the full year over last year's
results.
Conference Call
A conference call to review second quarter results is scheduled for 11:00 a.m.
EDT on July 26, 2001. The dial-in number for the live conference call will be
212-896-6098. A live webcast of the conference call will be available on the
company's Web site, www.sdix.com, as well as www.vcall.com. For those who cannot
listen to the live broadcast, an audio replay of the call will be available on
these sites for 30 days. Telephone replays of the call will be available for 24
hours, from 1:00 p.m. EDT on July 26 until 1:00 p.m. EDT on July 27. To listen
to the telephone replay, dial 800-633-8284 (858-812-6440 outside the U.S.) and
enter reservation number 19324701.
About Strategic Diagnostics Inc.
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.
This news release contains forward-looking statements reflecting SDI's current
expectation. When used in this press release, the words "anticipate", "enable",
"estimate", "intend", "expect", "believe", "potential", "will", "should",
"project" and similar expressions as they relate to SDI are intended to identify
said forward-looking statements. Investors are cautioned that all
forward-looking statements involve risks and uncertainties, which may cause
actual results to differ from those anticipated by SDI at this time. Such risks
and uncertainties include, without limitation, changes in demand for products,
delays in product development, delays in market acceptance of new products,
ability of manufacturers of non-GMO food products to charge premiums to
consumers, successful integration of the AZUR Environmental business if and when
the acquisition is completed, retention of customers and employees, adequate
supply of raw materials, inability to obtain required government approvals,
modifications of government regulations, modifications to development and sales
relationships, construction delays or cost overruns in the Maine expansion
project, delays or unanticipated costs relating to the consolidation of the
California facility, the ability to meet increased market demand, the ability to
achieve anticipated growth, increasing dependence on the sale of certain
products, competition, protection of intellectual property, non-infringement of
intellectual property, seasonality, and other factors more fully described in
SDI's public filings with the U.S. Securities and Exchange Commission.
STRATEGIC DIAGNOSTICS INC. SUMMARIZED CONSOLIDATED OPERATING DATA
(in thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
---------------------------- -----------------------------
2001 2000 2001 2000
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Revenue $ 7,201 $ 5,788 $ 14,275 $ 11,564
Gross Profit 3,943 3,469 7,694 6,745
Operating Income 775 532 1,621 867
Net Income 515 265 994 569
Net Income per diluted share $ 0.03 $ 0.02 $ 0.06 $ 0.03
STRATEGIC DIAGNOSTICS INC. SUMMARIZED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
June 30, Dec. 31,
2001 2000
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Assets
Current Assets $ 14,888 $ 13,716
Property and Equipment 2,672 2,919
Other Assets 9,310 9,873
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Total Assets $ 26,870 $ 26,508
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Liabilities & Stockholders' Equity
Current Liabilities $ 3,494 $ 3,285
Long-term Debt 892 1,889
Equity 22,484 21,334
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Total Liabilities & Equity $ 26,870 $ 26,508
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