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CHEMDESIGN REPORTS SECOND QUARTER RESULTS

 FITCHBURG, Mass., July 20 /PRNewswire/ -- ChemDesign Corporation (NASDAQ: CDCC) today announced sales for the second quarter ended June 30, 1993 of $13.0 million, up 31.0 percent from the $9.9 million reported for the second quarter of 1992. This increase in sales includes sizable revenues from the company's new manufacturing plant in Fitchburg, which is operating without problems.
 Gross margin for the second quarter of 1993 of $2.7 million was up from the $2.1 million reported for the same period in 1992 but down from the $3.1 million level achieved in the first quarter of 1993. The gross margin rate remained flat at 21.1 percent compared to the second quarter of 1992 but fell from the 27.2 percent level achieved in the first quarter of 1993.
 Net earnings for the second quarter of 1993 of $265,000, or 3 cents per share, increased over the $94,000, or 1 cent per share, reported for the second quarter of 1992. Earnings per share dropped from the 7 cent level achieved in the first quarter of 1993, ending ChemDesign's string of quarterly earnings growth begun in the first quarter of 1992.
 For the first half of the current year, the company reported sales of $24.3 million, up 15.5 percent from the prior year's sales level for the same period. Net earnings for the first half of 1993 of $847,000, or 10 cents per share, were up significantly from the $126,000, or 1 cent per share, reported for the first half of 1992.
 Richard E.T. Brooks, chairman and chief executive officer of ChemDesign, commented: "Obviously, we are disappointed with the unanticipated pause in the company's profitability growth in the second quarter, particularly since it interrupted the solid earnings momentum we had established during 1992 and through the first quarter of 1993. The principal problem lay in deferred shipments of a major product late in the quarter due to quality problems and deferred shipments of a new, pharmaceutical intermediate produced but not yet qualified by the customer. Yet, ChemDesign's business fundamentals remain strong, and we are committed to resolving our performance problems so that the company can rapidly return to a higher level of profitability."
 Michael J. O'Donnell, senior vice president and chief financial officer, commented further on the financial results: "As expected, net interest expense grew to $440,000 for the second quarter from $268,000 reported for the second quarter of 1992 and $144,000 reported for the first quarter of 1993. The increased interest expense during the second quarter of 1993 results primarily from the expensing of interest costs that were previously capitalized in connection with the construction of the company's new Fitchburg manufacturing plant."
 O'Donnell added: "The company will not meet the interest charges covenant for the second quarter with its principal lenders. We have obtained waivers and amendments of these covenants, and the lenders have exercised their existing right to secure previously unsecured loans. We are pleased to have the continued support and confidence of our lenders in the overall outlook for the company."
 Brooks concluded: "We remain confident in our ability to get ChemDesign's recovery back on track. Proprietary products and other long term business opportunities are emerging in a steady stream from our "Proprietary Products Growth Strategy" and the outlook for the second half of 1993 and for 1994 remains good. Given the performance that we are capable of, we expect an increased level of profitability in 1993 over the 1992 annual results."
 CHEMDESIGN CORPORATION (NASDAQ: CDCC)
 QUARTER ENDED JUNE 30,
 1993 1992
 Sales $13,007,000 $9,927,000
 Net Income 265,000 94,000
 Earnings (Loss) Per Share 3 cents 1 cent
 Average Shares 8,997,000 8,908,000
 SIX MONTHS ENDED JUNE 30,
 1993 1992
 Sales $24,306,000 $21,050,000
 Net Income 847,000 126,000
 Earnings (Loss) Per Share 3 cents 1 cent
 Average Shares 8,912,000 8,873,000
 -0- 7/20/93
 /CONTACT: Michael J. O'Donnell, senior vice president and chief financial officer or Steven E. Borgeson, senior vice president and general counsel, both of ChemDesign, 508-345-9999/
 (CDCC)


CO: ChemDesign Corporation ST: Massachusetts IN: MTC SU: ERN

DD -- NE005 -- 6569 07/20/93 08:39 EDT
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Publication:PR Newswire
Date:Jul 20, 1993
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