Benthos Announces Second Quarter Sales and Earnings: Revenues Up 20%.

Business/Technology Editors

NORTH FALMOUTH, Mass.--(BUSINESS WIRE)--April 27, 2000

Benthos, Inc. (NASDAQ: BTHS) today reported financial results for the second quarter and the first half of fiscal 2000, ended March 31, 2000.

Net sales for the quarter, which include the Datasonics, Inc. product lines acquired in August 1999, were $5,237,000, a 20% increase over sales of $4,361,000 in the second quarter of fiscal 1999. The quarter's performance benefited from strong contributions by the Datasonics products and by the Company's TapTone Container Inspection Systems Division which recorded its sixth consecutive quarter of increasing sales. On a year-to-date basis, TapTone sales are up 69% over last year.

Net income for the second quarter of fiscal 2000 was $229,000, or $0.16 per diluted share, as compared to $374,000, or $0.27 per diluted share, for the same quarter last year. The second quarter of fiscal 2000 includes $226,000 ($0.10 per diluted share) of interest expense and the amortization of acquired intangibles and goodwill related to the acquisition of the assets of Datasonics, Inc.

For the first half of fiscal 2000, net sales were $10,648,000, up 30% compared to $8,196,000 in the first half of last year. Net income was $307,000, or $0.22 per diluted share, compared to net income of $590,000, or $0.43 per diluted share, in the first half of fiscal 1999. The first half of fiscal 2000 includes $459,000 ($0.21 per diluted share) of interest expense and the amortization of acquired intangibles and goodwill related to the acquisition of the assets of Datasonics, Inc.

Commenting on these results, John L. Coughlin, Benthos' President and Chief Executive officer, said, "In March 2000, we accomplished -- on schedule -- our goal of consolidating the Datasonics acquisition so as to eliminate all duplicate expenses. This had a relatively small effect on earnings in the second quarter but will have a significantly greater effect in subsequent quarters. We are also excited about signs that the cyclical lull may be over in our hydrophone business, which is now showing an increasing backlog, and by the interest and orders we are getting in our newly rolled out TapTone 500 package inspection products."

"The product lines that we acquired from Datasonics continue to perform ahead of our expectations. Sales of side scan sonar systems and deep sea survey systems have been stronger than expected and have benefited from an active telecommunications industry and the requirements to install additional sub-sea cables. We have also benefited from an increase in government funding for advanced capabilities development of our acoustic telemetry products."

Coughlin further stated, "Our TapTone Container Inspection Systems Division continues to post strong quarter to quarter growth. During the past quarter we released the next generation TapTone 500 control system and sales of these products are ahead of our aggressive targets. Over the next two quarters, we will be adding to the capabilities of the TapTone 500, opening up new market opportunities for our unique inspection capabilities."

"Despite current high petroleum prices, the offshore geophysical industry has been depressed during fiscal 2000, impacting sales of our geophysical hydrophones. However, there are signs of a rebound and late in the past quarter we began receiving orders from major geophysical customers for GeoPoint hydrophones."

Coughlin went on to comment about the Company's outlook, noting, "We are very bullish on the future. The market environment for our geophysical survey products is very favorable, there are definite signs of recovery in the market for our hydrophone products, our TapTone Division is expanding into new markets, and the full economic benefits associated with the integration of Datasonics are ahead of us."

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 Twenty-Six Weeks Ended
                                   March 31,            March 31,
                                2000       1999      2000        1999


Net Sales                    $  5,237   $  4,361   $ 10,648   $  8,196

Cost of Sales                   2,638      2,376      5,924      4,721
Gross Profit                    2,599      1,985      4,724      3,475

Selling, General &
 Administrative Expenses        1,601      1,171      2,945      2,075
Research and Development
 Expenses                         457        347        922        631
Amortization of Goodwill
 and Other Acquired
 Intangibles                      130        --         254        --
Income from Operations            411        467        603        769

Interest Income                    12         39         41         74
Interest Expense                  (96)        --       (205)       --
Income before Provision
 for Income Taxes                 327        506        439        843
Provision for Income Taxes         98        132        132        253
Net Income                   $    229   $    374   $    307   $    590

Basic Earnings Per Share     $   0.17   $   0.28   $   0.22   $   0.44

Diluted Earnings Per Share   $   0.16   $   0.27   $   0.22   $   0.43

Common Shares Outstanding       1,376      1,353      1,372      1,351

Common Shares Outstanding,
 Assuming Dilution              1,419      1,389      1,416      1,385


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

                                            March 31,  September 30,
Assets                                         2000        1999

Current Assets:
Cash and Cash Equivalents                   $  1,723    $  2,930
Accounts Receivable, Net                       3,668       2,432
Inventories                                    4,646       4,794
Prepaid Expenses and Other Current Assets        130         734
Deferred Tax Asset                             1,299       1,299
Total Current Assets                          11,466      12,189


Property, Plant and Equipment, Net             1,784       1,779
Other Assets, Net                              4,778       4,819
                                            $ 18,028    $ 18,787

Liabilities and Stockholders' Investment

Current Liabilities:
Current Maturities of Long Term Debt        $    786    $    786
Accounts Payable                                 828       1,292
Accrued Expenses                               2,119       2,311
Customer Deposits                                277         391
Total Current Liabilities                      4,010       4,780

Long-Term Debt, Net of Current Maturities      4,256       4,649

Stockholders' Investment:
Common Stock, $.06 2/3 par value-
  Authorized - 7,500 shares
  Issued - 1,653 shares at March 31, 2000
  and 1,649 at September 30, 1999                110         110
Capital in Excess of Par Value                 1,569       1,546
Retained Earnings                              8,744       8,437
Treasury Stock, at Cost                         (661)       (735)
Total Stockholders' Investment                 9,762       9,358
                                            $ 18,028    $ 18,787