Benthos Announces Fourth Quarter and Fiscal Year 2000 Results.

Business/Technology Editors

NORTH FALMOUTH, Mass.--(BUSINESS WIRE)--Nov. 22, 2000

Benthos, Inc. (NASDAQ: BTHS) announced today that sales for the fiscal year ended September 30, 2000 were a record $20.6 million, up 19% compared to sales of $17.2 million in the prior year. Earnings for the year were $521,000, or $0.37 per diluted share, compared to earnings of $828,000, or $0.60 per diluted share, in the prior year.

Sales in the final quarter of 2000 were up 13% to $4.9 million compared to $4.3 million in the final quarter of 1999. The Company reported a net profit of $58,000, or $0.04 per diluted share, compared to a net loss of $173,000, or ($0.13) per diluted share, in the final quarter of last year.

Commenting on today's announcement, Benthos President and CEO John L. Coughlin noted, "Fiscal 2000 was a transition year for Benthos and a dramatically different company has emerged. We began the year having just completed the acquisition of Datasonics, adding approximately 50% to our existing revenue base and bringing new products and core competencies to Benthos. We moved rapidly and leveraged our existing overhead and infrastructure by integrating Datasonics into our present facilities by the end of the second quarter. As a result, the acquisition was immediately accretive to Benthos' earnings."

"We were also challenged during the year with a very soft market environment for our traditional undersea products. The marine seismic industry and the offshore oil and gas market underwent a severe contraction, negatively impacting sales of our flagship GeoPoint hydrophone products and our larger remotely operated vehicle systems. The result was pressure on both revenues and earnings during every quarter of fiscal 2000, especially during this last reporting period. This situation also underscores the soundness of our strategy in acquiring Datasonics, which diversified our product mix and the market segments that we serve."

"Our TapTone Package Inspection Division continued its strategy of increased penetration into the food packaging marketplace and recorded significant sales growth in both the North American and Asian markets. During the year, TapTone introduced two important new products, both with major sales potential. The TapTone 500 Universal Inspection Controller, which combines acoustic, x-ray, proximity and laser technology in a single system, allows packagers unprecedented multiple inspection capabilities. The TapTone 500 has already opened up new market opportunities, such as the beer industry where the use of plastic beer bottles is a rapidly developing trend. In August, TapTone introduced the PBI-100, the most advanced system available for the inspection of flexible packages. We expect that this new-to-the-world system, which presents major market opportunities with food packaging, pharmaceutical, chemical and home health care industries, will add significant incremental revenues to TapTone in the coming year."

Coughlin remarked further, "We continue to be optimistic about fiscal 2001. While the current softness in our traditional ocean markets is expected to influence this year's first quarter results, we also foresee a much better operating and earnings environment as the year progresses. There is strong evidence that the market for our traditional Benthos ocean products is recovering. For example, we have received over $1 million in new hydrophone orders during the last 45 days, and this backlog is scheduled for shipment in the second and third quarters of this year. We have introduced several new undersea products, including a new shallow water acoustic release that was introduced in September. The last two quarters have seen the introduction of new products in both the TapTone and ocean product lines. We are on schedule to introduce additional new products throughout the year."

Benthos, Inc., through its Undersea Systems Division, designs, manufactures, sells and services a variety of oceanographic products for underwater tasks; and through its TapTone Container Inspection Division makes systems for testing consumer packages made of glass, metal or plastic. The common stock of the Company is traded on the Nasdaq SmallCap market under the symbol BTHS. For more information, Benthos can be found on the Internet at www.benthos.com.

Forward Looking Statements

The statements in this news release and in oral statements which may be made by representatives of the Company relating to plans, strategies, economic performance and trends and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Federal Securities Laws. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors which include: the timing of large project orders, competitive factors, shifts in customer demand, government spending, economic cycles, availability of financing as well as the factors described in this news release. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein as anticipated, believed, estimated, expected or intended.

                       BENTHOS, INC.& SUBSIDIARY
             CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                 (in thousands, except per share data)
                              (unaudited)

                                          Thirteen Weeks Ended
                                     September 30,    September 30,
                                         2000             1999

Net Sales                             $  4,901         $  4,322
Cost of Sales                            3,113            2,417
Gross Profit                             1,788            1,905
Selling, General and
     Administrative Expenses             1,157            1,077
Research and Development
     Expenses                              338              403
Amortization of Goodwill
     and Other Acquired
     Intangibles                           126               38
In Process Research and
     Development                             0              750
Income (Loss) from Operations              167             (363)
Interest Income                             17               58
Interest Expense                          (101)             (49)
Income (Loss) before Provision
     for Income Taxes                       83             (354)
Provision for Income Taxes                  25             (181)
Net Income (Loss)                     $     58        $    (173)
Basic Earnings (Loss) Per Share       $   0.04        $   (0.13)
Diluted Earnings (Loss) Per Share     $   0.04        $   (0.13)
Weighted Average Common
     Shares Outstanding                  1,379            1,363
Weighted Average Common
     Shares Outstanding,
     Assuming Dilution                   1,413            1,363


                       BENTHOS, INC.& SUBSIDIARY
             CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                 (in thousands, except per share data)
                              (unaudited)

                                         Fiscal Year Ended
                                     September 30,   September 30,
                                         2000             1999

Net Sales                           $   20,553          $ 17,248
Cost of Sales                           12,080             9,801
Gross Profit                             8,473             7,447
Selling, General and
     Administrative Expenses             5,290             4,347
Research and Development
     Expenses                            1,608             1,363
Amortization of Goodwill
     and Other Acquired
     Intangibles                           507                38
In Process Research and
     Development                             0               750
Income from Operations                   1,068               949
Interest Income                             78               176
Interest Expense                          (402)              (49)
Income before Provision
     for Income Taxes                      744             1,076
Provision for Income Taxes                 223               248
Net Income                          $      521          $    828
Basic Earnings Per Share            $     0.38          $   0.61
Diluted Earnings Per Share          $     0.37          $   0.60
Weighted Average Common
     Shares Outstanding                  1,376             1,355
Weighted Average Common
     Shares Outstanding,
     Assuming Dilution                   1,415             1,387


                      BENTHOS, INC. & SUBSIDIARY
                      CONSOLIDATED BALANCE SHEETS
                 (in thousands, except per share data)
                              (unaudited)

Assets                              September 30,       September 30,
                                        2000               1999
Current Assets:
Cash and Cash Equivalents             $  1,474          $  2,930
Accounts Receivable, Net                 3,448             2,432
Inventories                              4,974             4,794
Prepaid Expenses
     and Other Current Assets              159               734
Deferred Tax Asset                       1,354             1,299
Total Current Assets                    11,409            12,189
Property, Plant and Equipment, Net       1,960             1,779
Other Assets, Net                        4,496             4,819
                                      $ 17,865          $ 18,787
Liabilities and
     Stockholders' Investment
Current Liabilities:
Current Maturities of
     Long-Term Debt                        786               786
Accounts Payable                         1,160             1,292
Accrued Expenses                         1,729             2,311
Customer Deposits                          350               391
Total Current Liabilities                4,025             4,780
Long-Term Debt,
     Net of Current Maturities           3,863             4,649
Stockholders' Investment:
     Common Stock, $.06 2/3 par value-
     Authorized - 7,500 shares
     Issued - 1,653 shares at
     September 30, 2000 and
     1,649 at September 30, 1999           110               110
Capital in Excess of Par Value           1,569             1,546
Retained Earnings                        8,959             8,437
Treasury Stock, at Cost                   (661)             (735)
Total Stockholders' Investment           9,977             9,358
                                      $ 17,865          $ 18,787