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CHEMDESIGN DISCUSSES NEAR TERM OUTLOOK

 CHEMDESIGN DISCUSSES NEAR TERM OUTLOOK
 FITCHBURG, Mass., Dec. 23 /PRNewsire/ -- ChemDesign Corporation


(NASDAQ: CDCC) announced that Richard E. T. Brooks, its chairman and chief executive officer, is meeting today with analysts on a conference call to discuss ChemDesign's near term outlook. Brooks is making the following comments in his prepared remarks:
 "First, although results are clearly not final, our preliminary review for the fourth quarter indicates that we are likely to show a small loss for the quarter or possibly break even. During the fourth quarter, we undertook a record number of new product start-ups, and production of several of these will carry over into the first quarter of 1992. As you know, there are often significant short-term costs to start-ups that must be incurred if you are to have any hope of reaping the longer term benfits. Although we welcome the new revenues from these products and the improved utilization rate that resulted in our manufacturing facilities in the fourth quarter, the large number of start-ups we undertook in the quarter overburdened our manufacturing staff. As a result, we were unable to achieve a level of plant productivity sufficient to cover all our manufacturing costs, and a significant portion of the revenues expected from these products in the fourth quarter will be postponed to the first quarter of 1992. I should note that, due in part to the portion of the new product revenues we did achieve in the fourth quarter, we expect fourth quarter revenues to be equal to, if not higher than, the reported third quarter revenues of $9.25 million.
 "Second, relative to 1992, although our operating plan is not yet finalized, the results of our start-up efforts during the second half of 1991 should contribute to keeping our capacity utilization rate relatively high well into the first half of 1992. Assuming we are successful in keeping the plants productive as we presently expect, we anticipate first quarter revenues higher than the fourth quarter of 1991 and a return to profitability in the first quarter.
 "Not all of our existing capacity is yet 'booked' for 1992, which is not unusual in our customer driven, custom business. This, combined with continuing uncertainty about the status of a general economic recovery, dictates that we remain guarded about our 1992 outlook beyond the first quarter. We are, however, satisfied with the results called for by our preliminary 1992 operating plan.
 "Given the economic uncertainties, we are prudently tightening our belt across the board on cost and expense control and instituting some previously delayed price increases. One exception to our belt tightening is the opening and staffing of our new R&D laboratory at Fitchburg. This newly formed R&D group has the exclusive charter for capitalizing on the opportunities we see for commercialization of proprietary (non-custom) products for multi-customer sales.
 "Third, relative to the new plant under construction at Fitchburg, we have now received our key air permit and are in a position to complete construction without significant regulatory delay. We have, however, just received notice from a customer for one of the key, 'base-load' new custom products for the plant that the customer's production needs are expected to be postponed for at least three months. Although we will continue to monitor the construction schedule closely, given this recent development, we will not have to accelerate completion of the plant to accommodate that customer. Accordingly, we expect that the construction, capital outlay, staffing and start-up of the new plant will likely be delayed well into the second half of 1992. In addition, we have several, smaller capital projects unrelated to the new plant and scheduled for the spring of 1992 in support of our growing electronic chemicals products. These projects will proceed as scheduled.
 "As a final remark, our existing, custom fine chemicals business remains generally strong in terms of customer demand. The rate of new customer inquiries and business opportunities also remains strong, which still surprises us somewhat given the depth and duration of the current recession."
 -0- 12/23/91
 /CONTACT: Richard E. T. Brooks chairman and CEO, or Steven E. Borgeson, general counsel, 508-345-9999, both of ChemDesign/
 (CDCC) CO: ChemDesign Corporation ST: Massachusetts IN: CHM SU:


DD-DH -- NE006 -- 4955 12/23/91 16:30 EST
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Date:Dec 23, 1991
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