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DAMON ANNOUNCES IMPROVED FIRST-QUARTER OPERATING RESULTS

 DAMON ANNOUNCES IMPROVED FIRST-QUARTER OPERATING RESULTS
 NEEDHAM HEIGHTS, Mass., Jan. 7 /PRNewswire/ -- Damon Corporation (NYSE: DCL) today reported its results of operations for the first quarter of fiscal 1992 (Nov. 30, 1991).
 Damon also announced that for financial reporting purposes the company adopted a calendar year-end instead of the current Aug. 31 fiscal year-end, effective Dec. 31, 1991, to assist the financial community in analyzing and comparing Damon's results.
 Sales for fiscal 1992's first quarter ended Nov. 30, 1991, increased 17 percent to $67.5 million, compared to $57.5 million last year. Operating cash flow, or earnings before depreciation, amortization, interest, income taxes, and after minority interests, (EBDIT) increased 20 percent to $9.2 million from $7.7 million in the comparable fiscal 1991 period. The net loss applicable to common stockholders before extraordinary item was reduced to $0.5 million or $0.04 per share, in the current quarter, as compared to a net loss applicable to common stockholders of $5.3 million or $1.06 per share, in fiscal 1991. After a one-time extraordinary net charge of $24.2 million, or $2.07 per share, solely related to the redemption of the company's senior subordinated discount notes at a premium and the associated write-off of financing fees related to the notes and the repayment of the company's old bank financing, Damon reported a net loss applicable to common stockholders of $24.7 million, or $2.11 per share, in the current quarter. Robert L. Rosen, chairman and chief executive officer, said, "Damon's strong, double-digit increases in sales and operating cash flow reflect the company's outstanding performance. Nearly all of the first quarter's sales increase was internally generated, primarily derived from unit volume increases as opposed to price increases or acquisitions. Importantly, as a result of seasonality, the second half of Damon's fiscal year results are stronger in terms of sales and operating earnings.
 "We expect future growth will be both internally generated, primarily from unit volume increases, and externally driven, from acquisitions in existing and new regional markets. In December 1991, Damon acquired a laboratory in Vero Beach, Fla., with over $1 million in sales -- and we are currently reviewing other potential acquisitions of varying sizes."
 Rosen also stated that the current quarter's net interest expense does not fully reflect the benefits of the company's de-leveraged capital structure since the company's 15.25 percent senior subordinated notes and senior preferred stock were called for redemption on Nov. 6, 1991. Proceeds from the company's Nov. 6, 1991, common stock offering and its new $165 million bank facility were used to retire these two high-cost securities and to refinance the company's old bank debt. Rosen further noted that the full benefit of this interest expense savings will appear in subsequent quarters. Under the terms of the new bank facility, as of December 1991, Damon was paying LIBOR plus a 1.75 percent spread or approximately 6-3/4 percent on its bank debt. This interest rate spread will further decline by an additional one-half of 1 percent when the company's EBDIT/interest expense exceeds 3:1 for two consecutive fiscal quarters.
 Continuing, Rosen said, "Damon's enhanced financial position is being translated into greater operational flexibility. We possess the resources to make thoughtful and sound acquisitions, to continue to invest in state-of-the-art technology that produces both superior quality and cost efficient results, and continue to provide our customers with unparalleled service. We believe the combination of strong market share, superior quality and service, and our position as one of the lowest cost industry providers will continue to drive our sales, operating cash flow and EPS growth."
 It was also announced that in order to facilitate the comparability of the company's results with its publicly traded competitors, Damon will change its accounting period from an Aug. 31 fiscal year-end to a calendar year-end, effective Dec. 31, 1991. Accordingly, Damon will be restating its prior financial statements on a calendar quarterly basis including issuing results for the three and 12 months ended Dec. 31, 1991, followed by quarterly operating results for the calendar quarter ending March 31, 1992.
 Damon Corporation, one of the nation's leading clinical laboratory testing companies, provides a full range of high-quality, technologically advanced testing services to the medical community, corporations, U.S. government agencies and municipalities nationwide and is a leader in substance abuse testing, preventative health screening and AIDS testing.
 DAMON CORPORATION
 Fiscal 1992 First Quarter Comparative Earnings Summary
 (Unaudited; in thousands, except per-share amounts)
 Three months ended Nov. 30 1991 1990
 Sales $67,468 $57,529
 Gross profit 25,577 21,213
 Selling, general and
 administration expenses 15,396 13,044
 Interest expense, net 6,109 7,216
 Net income (loss) before
 minority interests and
 extraordinary item 864 (2,139)
 Minority interests 893 472
 Net loss before extraordinary
 item (29) (2,611)
 Extraordinary loss on early
 extinguishment of debt, net
 of income tax benefit of
 $1,084 24,188 --
 Net loss (24,217) (2,611)
 Preferred dividends and
 accretion 473 2,689
 Net loss applicable to
 common stockholders $(24,690) $(5,300)
 Net loss per common share
 before extraordinary item ($0.04) $(1.06)
 Net loss per common share $(2.11) $(1.06)
 Weighted average common
 shares outstanding 11,685 5,000
 Other Data:
 Income before interest
 expense, taxes, minority
 interests and extraordinary
 item $7,028 $5,209
 Depreciation and
 amortization 3,066 2,915
 Minority interests (893) (472)
 Earnings before depreciation,
 amortization, interest, income
 taxes, and after minority
 interests (EBDIT) $9,201 $7,652
 -0- 1/7/92
 /CONTACT: Lissa Perlman or Michael Freitag of Kekst and Company, 212-593-2655, for Damon/
 (DCL) CO: Damon Corporation ST: Massachusetts IN: HEA SU: ERN


CK -- NY060 -- 7394 01/07/92 14:51 EST
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Date:Jan 7, 1992
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