UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K


                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended  May 31, 1997           Commission file number 1-11479
                           ------------                                  -------

                                  E-Z-EM, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                                  11-1999504
     -------------------------------                 -------------------
     (State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)                  Identification No.)

       717 Main Street, Westbury, New York                 11590
     ----------------------------------------            ----------
     (Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code  (516) 333-8230
                                                    --------------

Securities registered pursuant to Section 12(b) of the Act: Class A Common
   Stock, par value $.10 and Class B Common Stock, par value $.10

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                      Yes   /X/         No   / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

The aggregate market value of the registrant's voting Class A Common Stock held
by non-affiliates on August 4, 1997 was $15,262,000.

On August 4, 1997, there were 4,035,346 shares of the registrant's Class A
Common Stock outstanding and 5,602,196 shares of the registrant's Class B Common
Stock outstanding.

                  DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for registrants 1997 Annual Meeting of
Stockholders to be held October 21, 1997 are incorporated by reference in Part
III of this Form 10-K Report.


                              Page 1 of 85
                        Exhibit Index on Page 35

<PAGE>

                     E-Z-EM, Inc. and Subsidiaries

                                 INDEX

                                                                          Page
                                                                          ----
PART I:

     Item l.  Business                                                       3

     Item 2.  Properties                                                    14

     Item 3.  Legal Proceedings                                             15

     Item 4.  Submission of Matters to a Vote of Security
              Holders                                                       16


PART II:

     Item 5.  Market for Registrant's Common Equity and
              Related Stockholder Matters                                   17

     Item 6.  Selected Financial Data                                       18

     Item 7.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations                 19

     Item 8.  Financial Statements and Supplementary Data                   25

     Item 9.  Changes in and Disagreements with Accountants
              on Accounting and Financial Disclosure                        25


PART III:

     Item 10. Directors and Executive Officers of the
              Registrant                                                    26

     Item 11. Executive Compensation                                        29

     Item 12. Security Ownership of Certain Beneficial
              Owners and Management                                         32

     Item 13. Certain Relationships and Related Transactions                34


PART IV:

     Item 14. Exhibits, Financial Statement Schedules and
              Reports on Form 8-K                                           35


                                      -2-
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                                 PART I


Item 1.  BUSINESS
         
(a)  GENERAL DEVELOPMENT OF BUSINESS

     E-Z-EM, Inc. (the "Company" or "E-Z-EM"), organized in Delaware in 1983,
has been in business for over 35 years, and has its corporate offices located at
717 Main Street, Westbury N.Y. 11590. The Company is primarily engaged in
developing, manufacturing and marketing diagnostic products used by radiologists
and other physicians during image-assisted procedures to detect physical
abnormalities and diseases. The Company also designs, develops, manufactures and
markets, through its wholly-owned subsidiary, AngioDynamics, Inc.
("AngioDynamics"), a variety of therapeutic and diagnostic products, for use
principally in the diagnosis and treatment of cardiovascular disease. These
products are primarily used by interventional medicine practitioners during
minimally invasive diagnostic and surgical procedures. Thirty-nine percent (39%)
of the Company's sales are to customers outside the U.S.

     E-Z-EM contrast systems consist of specially developed powdered and liquid
barium sulfate formulations and consumable medical devices, which function
together as a system, for examinations of the various parts of the
gastrointestinal ("G.I.") tract. Contrast systems are used in X-ray, CT-scanning
and other imaging examinations. The G.I. tract is commonly referred to as the
digestive system and consists of the esophagus, stomach, intestine (or small
bowel) and colon. E-Z-EM manufactures a broad spectrum of barium sulfate
products for different uses in G.I. tract examinations. Each E-Z-EM barium
sulfate formulation is tailored to that portion of the G.I. tract to be
examined, and to the procedures employed by radiologists in each examination.
Based upon sales, the Company believes that it is the leading worldwide producer
of barium sulfate contrast systems for use in G.I. tract examinations.

     The Company also competes in areas related and complementary to its basic
contrast systems business, categorized as non-contrast systems. Non-contrast
systems include: diagnostic radiology devices, custom contract pharmaceuticals,
gastrointestinal cleansing laxatives, X-ray protection equipment, and
immunoassay tests. See "Narrative Description of Business."

     The Company's sales of contrast and non-contrast systems, collectively the
diagnostic ("Diagnostic") products industry segment, declined 2% during 1997 as
compared to 1996.

     The Company manufactures and markets, through AngioDynamics, three
differentiated product groups for use during interventional procedures:
CO2/angiography products, therapeutic products and coronary products,
collectively the AngioDynamics products industry segment. See "Narrative
Description of Business".

     During 1997, AngioDynamics product sales, net of intersegment eliminations
(see Note N to the Consolidated Financial Statements included herein), increased
61%, due to international and domestic market penetration. The most significant
growth occurred in the sale 


                                      -3-
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of AngioStent(TM), a device used during coronary procedures as a treatment for
atherosclerosis. The AngioStent, introduced in January 1996, is only marketed
internationally. The Company intends to use the base of stent technology to
develop stents for the radiology market.

     In January 1997, AngioDynamics acquired certain assets of Leocor, Inc., a
developer and manufacturer of percutaneous tansluminal cardiac angioplasty
("PTCA") balloon catheters. A PTCA balloon catheter is used to inflate a
narrowing in the arteries of the heart, either by expanding a stent or on a
stand-alone basis. This acquisition allows AngioDynamics to vertically integrate
the manufacture of its AngioStent and to compete in the worldwide angioplasty
market. The PTCA products include the Racer Pico(TM), Racer Select(TM), Pico
Runner(TM) and Pico ST II(TM) balloon catheters, each of which is approved for
sale internationally (with the Pico Runner cleared for sale in the U.S.). The
Company intends to use the base of balloon catheter technology to develop PTA
balloon catheters for the radiology market.

     Unless the context requires otherwise, all references herein to a
particular year are references to the Company's fiscal year.

(b)  FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

     The Company is engaged in the manufacture and distribution of a wide
variety of products that are classified into two industry segments: Diagnostic
products and AngioDynamics products. Diagnostic products encompass both contrast
systems, consisting of barium sulfate formulations and related medical devices
used in X-ray, CT-scanning and other imaging examinations, and non-contrast
systems, including diagnostic radiology devices, custom contract
pharmaceuticals, gastrointestinal cleansing laxatives, X-ray protection
equipment, and immunoassay tests. AngioDynamics products include CO2/angiography
products, therapeutic products and coronary products used in the interventional
medicine marketplace.

     The net sales and operating profit (loss) of each industry segment and the
identifiable assets, depreciation and amortization, and capital expenditures
attributable to each industry segment are set forth in Note N to the
Consolidated Financial Statements included herein.

(c)  NARRATIVE DESCRIPTION OF BUSINESS

     DIAGNOSTIC PRODUCTS

     Diagnostic products include both contrast systems, consisting of barium
sulfate formulations and related medical devices used in X-ray, CT-scanning and
other imaging examinations, and non-contrast systems, including diagnostic
radiology devices, custom contract pharmaceuticals, gastrointestinal cleansing
laxatives, X-ray protection equipment, and immunoassay tests. Diagnostic
products accounted for 82% of net sales in 1997, as compared to 88% in 1996 and
92% in 1995.

     Contrast Systems

     Contrast systems, using barium sulfate formulations as contrast media
together with consumable medical devices, have been E-Z-EM's principal business
since the Company's organization over 35 years ago. For over 80 years, barium
sulfate has been the contrast medium of 


                                      -4-
<PAGE>

choice for virtually all G.I. tract X-ray examinations. It has the longest
history of use among all contrast media. Barium sulfate is preferred among G.I.
tract contrast media because it has a high absorption coefficient of X-rays. In
addition, it is inert, insoluble in water and chemically stable. Barium sulfate
for suspension is listed in the U.S. Pharmacopeia. The use of properly
formulated barium sulfate suspensions permits the visualization of the entire
G.I. tract.

     The Company's contrast systems are designed for a variety of radiological
procedures. In single contrast procedures, a portion of the G.I. tract is filled
with barium sulfate to produce a diagnostic image of the tract's contours. In
double contrast procedures, gas or air is used to distend the G.I. tract after
coating with a high density barium sulfate suspension. This produces a
significantly clearer diagnostic image of the tract's surface than that
obtainable through the use of single contrast procedures. In computed tomography
procedures, known as "CT-scanning", a specially formulated low density barium
sulfate product is used to visualize the G.I. tract and thus significantly
enhance the radiological procedure.

     Contrast systems provide radiologists with a range of effective and
convenient powdered and liquid product formulations tailored to single contrast,
double contrast or CT-scanning procedures. Many of the Company's products are
functionally packaged in consumable dispensing containers. The Company believes
that it currently has the broadest barium sulfate product line of any worldwide
manufacturer and is continuing to develop additional formulations for modern
X-ray techniques. E-Z-EM also sells accessory medical devices for use in
contrast system procedures, including empty enema administration kits and
components. Contrast systems accounted for 61% of net sales in 1997, as compared
to 68% of net sales in 1996 and 72% of net sales in 1995.

     Non-Contrast Systems

     The Company also competes in areas related and complementary to its basic
contrast systems business, categorized as non-contrast systems. Non-contrast
systems include: diagnostic radiology devices, custom contract pharmaceuticals,
gastrointestinal cleansing laxatives, X-ray protection equipment, and
immunoassay tests. Non-contrast systems accounted for 21% of net sales in 1997,
as compared to 20% of net sales in both 1996 and 1995.

     The Company's line of diagnostic radiology devices include
electromechanical pumps and syringes; needles, trays and ancillary devices used
during a variety of diagnostic radiological and ultrasound procedures. This
product grouping includes the PercuPump(TM) injection system, which is designed
to inject contrast media into the vascular system for visualization purposes
during CT procedures. The PercuPump system is comprised of an electromechanical
pump and a consumable syringe. Other diagnostic radiology devices include entry
needles, biopsy needles, trays and ancillary products used during mammography,
amniocentesis and other specialty procedures.

     Custom contract pharmaceutical and cosmetic products are manufactured on a
contract basis by the Company's Canadian subsidiary. Pharmaceutical products
include liquid vitamins and antacids, decongestants, cough medicines and
vaporizing ointments. Cosmetic 


                                      -5-
<PAGE>

products include tanning lotions and bath powders.

     The Company offers laxative products specially formulated to cleanse the
G.I. tract prior to X-ray and colonoscopic examinations. These products are sold
through the same distribution network as the Company's contrast systems.

     The Company markets a line of X-ray protection equipment featuring
Adjust-A-Weight(TM), a patented design concept which allows the wearer to adjust
the weight distribution of the protective apron to relieve fatigue. This product
line is sold through the same distribution network as the Company's contrast
systems.

     The Company, through its wholly-owned subsidiary, Enteric Products, Inc.
("EPI"), markets immunoassay tests for use in the detection of Helicobacter
pylori ("H. pylori"). The tests analyze a patient's serum or whole blood sample
using a patented antigen licensed from Baylor College of Medicine and are
currently available for both laboratory use and for use in a physician's office.

     H. pylori infection has been identified as the leading cause of duodenal
and gastric ulcers and has also been linked to gastritis and gastric cancer. The
World Health Organization has categorized H. pylori as a Class 1 carcinogen, a
definite cancer causing agent in humans. Gastric cancer is a leading cause of
death in Asia, Africa and Eastern Europe.

     In May 1996, the Company entered into an agreement with Abbott Laboratories
for the international marketing of its physician's office test to detect H.
pylori. The agreement covers both serum and whole-blood versions of a simple,
highly accurate four-minute test. The tests, manufactured by SmithKline
Diagnostics, Inc. ("SKD"), a subsidiary of Beckman Instruments, Inc., are
privately labelled under the name FlexPack(TM) HP and sold by Abbott
Laboratories ("Abbott") in China, India, other parts of Asia, Eastern Europe and
parts of the Middle East and Africa. A prior agreement, between SKD and Abbott,
gave Abbott the marketing rights to most of the remainder of the world market.
SKD, with whom EPI co-developed the serum and whole blood tests, also markets
its own version of the product under the name FlexSure(TM) HP in the U.S. and
other selected territories.

     As a result of these agreements, EPI will receive revenue (1) on the sale
of products directly to Abbott, (2) from royalties on the sale of products to
Abbott by SKD, (3) from royalties on the sale of product by SKD to its
distributors and end-users, and (4) from the sale of EPI's patented antigen to
SKD for use in both tests. In addition, EPI derives revenue from the sale of
HM-CAP(TM), the laboratory version of the blood serum test. The Company markets
the HM-CAP test through distributors in the U.S. and abroad.

     Sales to Picker International, Inc., which is a distributor of the
Company's Diagnostic products, were 15%, 16% and 15% of total net sales during
1997, 1996 and 1995, respectively.

ANGIODYNAMICS PRODUCTS

     The Company, through its wholly-owned subsidiary, AngioDynamics, develops,
manufactures and markets a variety of differentiated products


                                      -6-
<PAGE>

and systems for the worldwide interventional medicine marketplace, which is the
practice of medicine using traditional diagnostic procedures for therapeutic
purposes.

     The Company believes that the interventional medicine market is growing
dramatically. This is due, in large part, to the less invasive aspects of
interventional procedures, as compared to open surgical procedures, which result
in a reduction in the overall cost of medical care while providing important
patient benefits. Interventional procedures are often performed on an
out-patient basis, thereby requiring fewer hospital support services. These
procedures, even when performed on an in-patient basis, generally require a
shorter hospital stay than do surgical procedures. Interventional procedures
also typically have reduced risk and trauma, are less complex, have fewer and
less serious complications, can often be performed earlier in the stage of a
disease and frequently result in less costly and more definitive therapy than do
surgical procedures. The Company expects the number of interventional procedures
performed to increase as these procedures gain wider acceptance, as more
physicians become trained in less invasive medical specialties, and as these
procedures become more widely performed in community hospitals as well as in
major medical centers. Improvements in technology should further expand the
application of interventional procedures.

     AngioDynamics products accounted for 18% of net sales in 1997, as compared
to 12% of net sales in 1996 and 8% of net sales in 1995.

     The Company has focused its efforts in three distinct interventional
categories: CO2/angiography products, therapeutic products and coronary
products.

     CO2/Angiography Products

     The Company's CO2/angiography products include CO2Ject(TM), a proprietary
angiographic system that uses carbon dioxide ("CO2") instead of standard
iodinated contrast media, diagnostic catheters and fluid management products.
These products are used during studies known as "angiograms", "venograms", and
"cardiac catheterizations", which provide images of the human vasculature and
blood flow.

     The CO2Ject is comprised of CO2 contrast, an automated injector, a CO2
connection set, a diagnostic catheter and an angioplasty balloon catheter. Since
the function of the human vasculature and blood flow system is the transfer and
expulsion of CO2 through the respiratory system, the Company believes that CO2
provides a higher degree of safety than iodinated contrast media, which can
cause severe allergic reactions in certain patients. The Company also believes
that CO2 is more cost effective and provides better images than iodinated
contrast media. Currently, the CO2Ject is being sold in Europe, South America,
Australia and Asia. To date, there is no automated CO2 system that has received
U.S. Food and Drug Administration ("FDA") clearance for sale in the U.S. The
Company does not anticipate receiving FDA clearance for the CO2Ject prior to
January 1999, at the earliest, and there can be no assurance that such clearance
will be obtained at all.

     The Company's diagnostic catheters can be used with traditional
angiographic systems using traditional contrast media or CO2. All of the
Company's diagnostic catheters are cleared for sale in the U.S. and

                                      -7-
<PAGE>

internationally. The Company's angiographic fluid management products are used
to control, administer and contain fluids, such as blood, saline solutions and
contrast media, in order to reduce the healthcare worker's contact with them.
These products are intended to reduce the potential exposure of the healthcare
worker to disease, including HIV and hepatitis. All of the Company's fluid
management products are cleared for sale in the U.S. and internationally.

     The Company manufactures four lines of diagnostic catheters, Memory
Tip(TM), Memory-Vu(TM), ANGIOPTIC(TM), and Soft-Vu(TM), suitable for diagnosing
the complete human vascular system. These catheters are made in 3, 4, 5, and 6
French sizes, with wire braided and non-braided nylon shafts, and are available
in over 500 tip configurations and lengths, either as standard catalogue items
or made to order through the Company's customization program. All of the
Company's angiographic catheters are cleared for sale in the U.S. and
internationally.

     The Soft-Vu/Memory-Vu catheter technology incorporates a soft, atraumatic
tip that is attached to a more rigid shaft. In addition to being soft, the
catheter tips are also easily visualized under fluoroscopy. The Company believes
this soft tipped catheter technology offers the physician a safe diagnostic
catheter with less propensity to perforate or lacerate an artery or vein.

     The Company has developed a unique catheter line called ANGIOPTIC. The
distinguishing characteristic of this product is that the entire catheter is
highly visible under fluoroscopy. The catheter is constructed of a proprietary
triple-layer extrusion technology.

     The Company has developed two patented needles to address the problem of
spurting blood: the Sos Bloodless Entry Needle(TM) and the Pulse-Vu Needle(TM).
Both needles have a thin diaphragm within the needle hub. This diaphragm diverts
the pressurized column of blood into a clear, flexible side arm tube thus
preventing the blood from entering the clinical environment. The special
diaphragm has a slit that allows easy passage of a guidewire through the needle
hub and needle lumen and into the lumen of the artery. The Company believes its
diaphragm technology is proprietary.

     The AngioFill(TM) and AngioFill II Fluid Management Systems(TM) are used to
collect and isolate blood and other body fluids. They replace open bowls and
garbage disposals which allow blood to splatter in the procedure room. The
AngioFill systems also have fluid lines that connect to saline and contrast
media bottles. In use, the physicians will aspirate the catheter with a syringe
and release the contents in the AngioFill bag. While the syringe is still
connected to the AngioFill, the physician will draw fresh saline or contrast
media to flush the catheter.

     Therapeutic Products

     The Company's therapeutic line of products is used to dissolve arterial and
venous blood clots and is marketed under the name Pulse*Spray(TM). A Pulse*Spray
Set includes the PRO(TM) Infusion Catheters, occluding wires, check valves, and
bifurcated connecting lines. The Pulse*Spray Set optimizes the delivery of lytic
agent (the drug that actually dissolves the clot) by providing a controlled,
forceful, uniform dispersion. This improvement has been clinically


                                      -8-
<PAGE>

shown to reduce the amount of lytic agent and the time necessary for the
procedure by a factor of three. This represents significant cost savings for the
hospital, the patient, and the healthcare system, while reducing the
complications associated with the use of larger volumes of the lytic agent. The
Pulse*Spray Set is cleared for sale in the U.S. and internationally.

     The Pulse*Spray Injector is designed to be used in conjunction with
AngioDynamics' other therapeutic products. This automated injector replaces hand
pressure as an injection mechanism and improves the consistency and efficiency
of the delivery of lytic agents through various Pulse*Spray Sets and PRO
Infusion Catheters. The Pulse*Spray Injector will only accept the Company's
manufactured single use components and catheters. It allows the user to deliver
a wide range of infusion volumes and times and utilizes state-of-the-art
computer technology with a touch screen program to store up to 20
customer-specified programs. Subsequent to year end, the FDA granted
AngioDynamics a 510(k) clearance to market the Pulse*Spray Injector in the U.S.
The Pulse*Spray Injector is also cleared for sale outside the U.S.

     The Company also acts as the U.S. sales agent for Navarre Biomedical, Ltd.
("Navarre Biomedical"). Navarre Biomedical manufactures percutaneous abscess
drainage catheters. Percutaneous abscess drainage involves resolution of pus
pockets, pleural effusions and other fluids by inserting the catheter directly
into the fluid pocket under fluoroscopic, CT or ultrasound guidance. The
percutaneous approach to resolve an abscess avoids the mortality and morbidity
associated with a surgical resolution. All Navarre Biomedical drainage products
are cleared for sale in the U.S.

     Coronary Products

     The Company's principal coronary product is called the AngioStent. Stents
are used to hold open passageways in the body that may have closed or become
obstructed as a result of aging, disease, or trauma. Stents are increasingly
being used as an alternative to or adjunct to surgical and minimally invasive
procedures and drug therapies because they reduce procedure time, patient
trauma, hospitalization and recovery time. The Company believes that the
coronary AngioStent, introduced in January 1996, provides a competitive
advantage over competing stent products and alternative therapies.

     The Company believes AngioStent incorporates a number of unique and
proprietary design features that allow the effective treatment of a variety of
lesion and vessel types. The AngioStent is constructed from a single strand of
platinum alloy wire that is precision formed into a spiraling sinusoidal
configuration. This configuration has the wire turn back on itself and attach
back at its beginning, thereby forming a longitudinal wire that imparts added
strength and stability. The Company believes that its patented stent design
provides more consistent vessel support and radial force than other stent
designs, as well as more visibility, flexibility, and easier delivery than
competitive stents. The Company believes that its use of platinum imparts better
hemocompatibility and long-term biocompatibility than stainless steel stent
designs. The AngioStent is available in a variety of diameters and lengths and
is provided pre-mounted on both the over-the-wire and rapid exchange delivery
systems. Both of these 


                                      -9-
<PAGE>

delivery systems offer advanced features, such as a high pressure balloon and
one-step-placement with no necessity for pre-dilation of the target lesion. The
AngioStent has been utilized in a variety of coronary applications, including
vessels in which other stent procedures have failed, as well as in the treatment
of difficult lesions in curved or tortuous vessels. The Company believes the
technical features of its proprietary AngioStent systems provide the Company
with a number of competitive advantages. The Company intends to use the base of
stent technology to develop stents for the radiology market.

     The AngioStent has not yet been cleared by the FDA for sale in the U.S.
and the Company does not anticipate receiving FDA clearance to sell the coronary
AngioStent prior to June 2000, if at all.

     In January 1997, AngioDynamics acquired certain assets of Leocor, Inc., a
developer and manufacturer of percutaneous tansluminal cardiac angioplasty
("PTCA") balloon catheters. A PTCA balloon catheter is used to inflate a
narrowing in the arteries of the heart, either by expanding a stent or on a
stand-alone basis. This acquisition allows AngioDynamics to vertically integrate
the manufacture of its AngioStent and to compete in the worldwide angioplasty
market. The PTCA products include the Racer Pico, Racer Select, Pico Runner and
Pico ST II balloon catheters, each of which is approved for sale internationally
(with the Pico Runner and Pico ST II cleared for sale in the U.S.). The Company
intends to use the base of balloon catheter technology to develop PTA balloon
catheters for the radiology market.

     MARKETING

     The Company believes that the success of its barium sulfate products is
primarily due to its ability to create contrast systems with specific,
sophisticated barium formulations for varying radiological needs. E-Z-EM
continues to develop new barium sulfate products, including products for
CT-scanning and Magnetic Resonance Imaging ("MRI") procedures.

     E-Z-EM's contrast systems, laxatives, syringes, X-ray protection equipment
and diagnostic radiology devices, such as biopsy needles and trays, are marketed
to radiologists and hospitals in the U.S. through about 275 distributors,
supported by 36 E-Z-EM sales people, many of whom have had technical training as
X-ray technicians. The Company also advertises in medical journals and displays
at most national and international radiology conventions.

     Outside the U.S., the Company's contrast systems are also marketed through
127 distributors, including wholly-owned subsidiaries in Canada, the United
Kingdom, Japan and Holland. Significant sales are made in Canada, the United
Kingdom, Japan, Holland, Italy, Austria, Sweden and Belgium. Foreign
distributors are generally granted exclusive distribution rights and hold
governmental product registrations in their names, although new registrations
are currently being filed in the Company's name.

     The Company's AngioDynamics products are marketed to interventional
radiologists, cardiologists, vascular surgeons and nephrologists. Domestic sales
are supported by 19 direct sales employees, while the international marketing
effort is conducted


                                      -10-
<PAGE>

through 54 distributors, including 3 wholly-owned subsidiaries. Foreign
distributors are generally granted exclusive distribution rights on a
country-by-country basis.

     COMPETITION

     Based upon sales, E-Z-EM contrast systems are the most widely used
diagnostic imaging products of their kind in the U.S., Canada and certain
European countries. The Company faces competition domestically from Lafayette
Pharmaceuticals, Incorporated, as well as from small U.S. competitors, and it
also faces competition outside of the U.S. The Company competes primarily on the
basis of product quality, customer service, the availability of a full line of
barium sulfate formulations tailored to user needs, and price.

     Radiological procedures for which the Company supplies products complement,
as well as compete with, endoscopic procedures such as colonoscopy and
endoscopy. Such examinations involve visual inspection of the G.I. tract through
the use of a flexible fiber optic instrument inserted into the patient by a
gastroenterologist. The use of gastroenterology procedures has been growing in
both upper and lower G.I. examinations as patients have been increasingly
referred to gastroenterologists rather than radiologists. Also, the availability
of drugs which successfully treat ulcers and other gastrointestinal disorders
has tended to reduce the need for upper G.I. tract examinations.

     The major non-contrast systems market that the Company competes in is the
medical device radiology market, which is highly competitive. No single company,
domestic or foreign, competes with the Company across all of its non-contrast
system product lines. In electromechanical pumps and syringes, the Company's
main competitors are Schering AG and Mallinckrodt, Inc. In needles and trays,
the Company competes with C.R. Bard, Inc., Baxter Healthcare Corporation,
Sherwood Medical Co. and various other competitors. The Company also encounters
competition in the marketing of its other non-contrast systems products.

     The Company competes in the AngioDynamics products segment on the basis of
product quality, product innovation, sales, marketing and service effectiveness,
and price. There are many large companies, with significantly greater financial,
manufacturing, marketing, distribution and technical resources than the Company,
focusing on these markets. Those Company products that already have FDA
clearance and those Company products that in the future receive FDA clearance
will have to compete vigorously for market acceptance and market share.

     Johnson & Johnson Interventional System, Co. ("JJIS"), Schneider, Inc. (a
part of Pfizer, Inc.), C.R. Bard, Inc., Cook, Inc., Cordis Corporation, Guidant
Corporation, Medtronic, Inc., Biotronik GmbH, Progressive Angioplasty Systems,
American Biomed, Inc., Global Therapeutics, Arterial Vascular Engineering, Inc.,
and Boston Scientific Corporation, among others, currently compete against the
Company in the development, production and marketing of stents and stent
technology.

     The Company believes that the coronary stent marketed by JJIS has captured
in excess of 75% of the U.S. market. The medical indications


                                      -11-
<PAGE>

that can be treated by stents can also be treated by surgery, drugs, or other
medical devices, many of which are widely accepted in the medical community.

     The ability to use patents and other proprietary rights to prevent sales by
competitors is an important tool in the medical devices industry. JJIS has
commenced litigation against Cook, Inc. and Medtronic, Inc. claiming that these
companies' products infringe JJIS' patents covering balloon-expandable stents.
During 1997, the JJIS/Cook litigation was settled, with the licensing of Cook by
JJIS for undisclosed consideration. The Company believes that the AngioStent,
which is a balloon-expandable stent, does not infringe upon the JJIS patents,
although there can be no assurance that the AngioStent will not be determined to
infringe upon the JJIS patents or other patents.

     Within the contrast media market, the Company's CO2Ject system competes
with a product offered by Daum GmbH. The Company also competes with companies
marketing iodinated contrast agents. These companies include Nycomed Inc.,
Bracco s.p.a., Schering AG and Mallinckrodt, Inc.

     In the market for diagnostic angiography catheters, the Company's
major competitors are Boston Scientific Corporation, Cook, Inc. and
Mallinckrodt, Inc.

     The competitive situation in the market for therapeutic products is
complex. The first level of competition is the medical profession, where each
physician can decide if an artery or graft will be cleared surgically or by
thrombolysis. If thrombolysis is used, the second level of competition is for
the specific type of catheter or wire that will be used. The primary competitors
in this market are MediTech and Cook, Inc.

     The Company believes that it is perceived as a market leader in the market
for blood containment products, where its primary competition comes from Arrow
International and Becton-Dickinson. The market for fluid management systems is
extremely competitive, with the Company's products being similar to products
from NAMIC, Merit, Burron Medical, DeRoyal, Biocore, Advanced Medical Design,
Medex and Argon. These products are non-patient contact and, therefore, the
barriers to entry, such as regulatory clearance, potential liability, and the
need for technical sophistication, are not significant.

     RESEARCH AND DEVELOPMENT

     In addition to its technical staff, consisting of a Medical Director and 51
employees, the Company has consulting arrangements with various physicians who
assist E-Z-EM through their independent research and product development.
Research and development expenditures totalled $6,881,000, or 7% of net sales,
in 1997, as compared to $5,323,000, or 6% of net sales, in 1996 and $6,077,000,
or 7% of net sales, in 1995, reflecting the Company's commitment to expansion of
its product lines through research and development. 

     RAW MATERIALS AND SUPPLIES

     Most of the barium sulfate for contrast systems is supplied by a number of
European and U.S. manufacturers, with a minor portion being


                                      -12-
<PAGE>

supplied by the Company's wholly-owned Canadian subsidiary, E-Z-EM Canada Inc.
("E-Z-EM Canada"), which operates a barium sulfate mine and processing facility
in Nova Scotia and whose reserves are anticipated to last a minimum of three
years. The Company believes that these sources should be adequate for its
foreseeable needs.

     The Company has generally been able to obtain adequate supplies of all
components for its AngioDynamics business in a timely manner from existing
sources. However, the inability to develop alternative sources, if required, or
a reduction or interruption in supply, or a significant increase in the price of
components, could adversely affect operations.

     PATENTS AND TRADEMARKS

     Although several products and processes are patented and the Company
considers its trademarks to be a valuable marketing tool, the Company does not
consider any single patent, group of patents, or trademarks to be materially
important to its Diagnostic business segment. E-Z-EM and AngioDynamics are
examples of the Company's registered trademarks in the U.S.

     The Company believes that success in the AngioDynamics products segment is
dependent, to a large extent, on patent protection and the proprietary nature of
its technology. The Company intends to file and prosecute patent applications
for technology for which it believes patent protection is effective and
advisable. The Company believes that issued patents covering Pulse*Spray and
AngioStent are significant to its AngioDynamics business.

     Because patent applications are secret until patents are issued in the U.S.
or corresponding applications are published in foreign countries, and because
publication of discoveries in the scientific or patent literature often lags
behind actual discoveries, the Company cannot be certain that it was the first
to make the inventions covered by each of its pending patent applications, or
that it was the first to file patent applications for such inventions. The
Company also relies on trade secret protection and confidentiality agreements
for certain unpatented aspects of its proprietary technology.

     REGULATION

     The Company's products are registered with the FDA and with similar
regulatory agencies in foreign countries where they are sold. The Company
believes it is in compliance in all material respects with applicable
regulations of these agencies.

     Certain of the Company's products are subject to FDA regulation as medical
devices and certain other products, such as various contrast systems products
and CO2Ject, are regulated as pharmaceuticals. Outside of the U.S., the
regulatory process and categorization of products vary on a country-by-country
basis.

     The Company's products are covered by Medicare, Medicaid and private
healthcare insurers, subject to patient eligibility. Changes in the
reimbursement policies and procedures of such insurers may affect the frequency
with which such procedures are performed.

                                      -13-
<PAGE>

     The Company operates several facilities within a broad industrial area
located in Nassau County, New York, which has been designated by New York State
as a Superfund site. This industrial area has been listed as an inactive
hazardous waste site, due to ground water investigations conducted on Long
Island during the 1980's. Due to the broad area of the designated site, the
potential number of responsible parties, and the lack of information concerning
the degree of contamination and potential clean-up costs, it is not possible to
estimate what, if any, liability exists with respect to the Company. Further, it
has not been alleged that the Company contributed to the contamination, and it
is the Company's belief that it has not done so.

     EMPLOYEES

     The Company employs 958 persons, 221 of whom are covered by various
collective bargaining agreements. Collective bargaining agreements covering 139
and 78 employees expire in December 1999 and December 1998, respectively. The
Company considers employee relations to be satisfactory.

(d)  FINANCIAL INFORMATION REGARDING FOREIGN AND DOMESTIC OPERATIONS
     AND EXPORT SALES

     The Company currently derives about 39% of its sales from customers outside
the U.S. Operating profit margins on export sales are somewhat lower than
domestic sales margins. The Company's domestic operations bill third party
export sales in U.S. dollars and, therefore, do not incur foreign currency
transaction gains or losses. Third party sales to Canadian customers, which are
made by E-Z-EM Canada, are billed in local currency. Third party sales to
Japanese customers, which are made by the Company's Japanese subsidiary, are
also billed in local currency.

     The Company employs 293 persons involved in the developing, manufacturing
and marketing of products internationally. The Company's product lines are
marketed through approximately 159 foreign distributors to 87 countries outside
of the U.S.

     The net sales and operating profit (loss) of each geographic area and the
identifiable assets attributable to each geographic area as well as export sales
from domestic operations are set forth in Note N to the Consolidated Financial
Statements included herein.


Item 2.  PROPERTIES

     The Company's principal manufacturing facilities and executive offices are
located in Westbury, New York. They consist of five buildings, one of which is
owned by the Company, containing an aggregate of 209,800 square feet used for
manufacturing, warehousing and administration. One of the Westbury facilities is
leased to the Company by various lessors, including certain related parties.
Such facility is currently being leased on a month-to-month basis. See "Certain
Relationships and Related Transactions". AngioDynamics occupies manufacturing
and warehousing facilities located in Queensbury, New York consisting of two
buildings, one of which is owned by the Company, containing an aggregate of
29,312 square feet. AngioDynamics Ltd. owns a 20,000 square-foot manufacturing
and 


                                      -14-
<PAGE>

warehousing facility located in Enniscorthy, Ireland. E-Z-EM Caribe owns a
38,600 square-foot plant in San Lorenzo, Puerto Rico which fabricates enema tips
and heat-sealed products. E-Z-EM Canada leases a 29,120 square-foot building in
Debert, Nova Scotia and both owns and leases land encompassing its barium
sulfate mining operation. E-Z-EM Canada also owns a 64,050 square-foot
manufacturing and warehousing facility located in Montreal, Canada.


Item 3.  LEGAL PROCEEDINGS

     The Company is presently a defendant in the following product liability
action:

     PATRICIA M. HELLER AND WAYNE HELLER, PLAINTIFFS VS. E-Z-EM, INC.,
     A CORPORATION, DEFENDANT, pending in the Court of Common Pleas,
     Montgomery County, Pennsylvania, filed on February 25, 1997.

     This suit claims damages based upon alleged injuries resulting from the use
of one of the Company's products. The action is in its early stages and while
the Company is actively defending against the claim, it is unable to predict its
outcome. The Company does not believe that the ultimate outcome in this action
will have a material adverse effect on the consolidated financial statements.

     Previously, the Company was named as a defendant in the following product
liability action:

     MARGARET J. LEMLEY AND JAMES LEMLEY, PLAINTIFFS VS. INLAND VALLEY REGIONAL
     MEDICAL CENTER, INC., NORTH COAST IMAGING RADIOLOGY MEDICAL GROUP, INC.,
     E-Z-EM, INC., MALLINCKRODT MEDICAL, INC., THOMAS MCGREEVY, M.D., BARBARA
     LARSON, CAROLYN HOHENBERGER, DEFENDANTS, pending in the Superior Court of
     the State of California, County of Riverside, filed on January 30, 1995.

     This suit claimed damages based upon alleged injuries resulting from the
use of one of the Company's products. During August 1997, the Company settled
such action for an amount under its insurance limit and the amount contributed
by the Company was not material to its consolidated financial statements.

     The Company has been sued by Olympia Holding Corporation p/k/a P-I-E
Nationwide, Inc. for $443,830. The suit, filed on October 5, 1992, is presently
pending in the U.S. Bankruptcy Court for the Middle District of Florida. The
Company is being represented in this action by a law firm which is also
representing numerous other defendants being sued by the same plaintiff on the
same grounds - recovery for alleged undercharges for freight carriage. It is not
possible, at this stage, to determine what, if any, liability exists with
respect to the Company in this matter. The Company will vigorously defend
against this action; it has been informed by legal counsel that there exist
numerous valid defenses to this case.

     The Company is presently involved in various other claims, legal actions
and complaints arising in the ordinary course of business. The Company believes
such matters are without merit, or involve such amounts that unfavorable
disposition would not have a material adverse effect on the Company's financial
position.

                                      -15-
<PAGE>


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.


                                      -16-
<PAGE>

                                     PART II


Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

     Effective July 24, 1995, E-Z-EM, Inc. Class A and Class B Common Stock
began trading on the American Stock Exchange ("AMEX") under the symbols "EZM.A"
and "EZM.B", respectively. Previously, the Company's Class A and Class B Common
Stock was traded in the over-the-counter market and was quoted on the Nasdaq
National Market ("Nasdaq") under the symbols "EZEMA" and "EZEMB", respectively.
The following table sets forth, for the periods indicated, the high and low sale
prices for the Class A and Class B Common Stock as reported by Nasdaq (through
July 23, 1995) and the AMEX (from July 24, 1995 through May 31, 1997).

                                       Class A          Class B
                                   ---------------  ---------------
                                     High    Low      High    Low
                                   ------- -------  ------- -------

     Fifty-two weeks ended May 31, 1997
     ----------------------------------

     First Quarter................ $14.13  $10.38   $13.25  $ 9.75
     Second Quarter...............  15.00   10.50    15.25   10.63
     Third Quarter................  13.00   11.00    12.75   11.00
     Fourth Quarter...............  12.13    8.19    11.50    7.63

     Fifty-two weeks ended June 1, 1996
     ----------------------------------

     First Quarter................ $ 8.25  $ 5.25   $ 8.19   $4.25
     Second Quarter...............  13.13    7.13    12.63    6.75
     Third Quarter................  11.13    9.50    10.25    9.19
     Fourth Quarter...............  16.50   10.00    15.38    9.63

     As of August 4, 1997 there were approximately 263 and 344 record holders of
the Company's Class A and Class B Common Stock, respectively.

     The Company's current policy has been to issue stock dividends. During the
third quarter of fiscal years 1995 and 1996 and the fourth quarter of fiscal
year 1997, the Company issued 3% stock dividends. Future dividends are subject
to the Board of Directors' review of operations and financial and other
conditions then prevailing.



                                      -17-
<PAGE>


Item 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                   Fifty-two                         Fifty-two
                                  weeks ended      Fifty-three      weeks ended
                             --------------------  weeks ended  ------------------
                              May 31,     June 1,    June 3,    May 28,    May 29,
                               1997        1996       1995*      1994*      1993*
                             --------    --------   --------   --------   --------
                                     (in thousands, except per share data)
<S>                          <C>         <C>        <C>        <C>        <C>     
Income statement data:
  Net sales ..............   $ 97,324    $ 91,932   $ 88,526   $ 85,645   $ 84,507
  Gross profit ...........     36,570      36,414     36,681     33,617     35,547
  Operating profit (loss)      (4,911)        957      2,837      1,200      2,558
  Earnings (loss) from
    continuing operations
    before income taxes ..     (4,530)      1,940      3,559      1,528      3,888
  Earnings (loss) from
    continuing operations      (3,208)      1,697      2,473        379      2,451
  Net earnings (loss) ....     (3,208)     21,008      1,630        277      1,679
  Earnings (loss) from
    continuing operations
    per common share
      Primary and fully
        diluted (1) ......       (.33)        .17        .26        .04        .26
  Earnings (loss) per
    common share
      Primary (1) ........       (.33)       2.10        .17        .03        .18
      Fully diluted (1) ..       (.33)       2.07        .17        .03        .18
  Cash dividends declared
    per common share .....   $    .00    $    .00   $    .00   $    .00   $    .10
  Weighted average common
    shares
      Primary (1) ........      9,584      10,015      9,360      9,353      9,380
      Fully diluted.(1) ..      9,584      10,127      9,365      9,353      9,383

<CAPTION>
                              May 31,     June 1,    June 3,    May 28,    May 29,
                               1997        1996       1995       1994       1993
                             --------    --------   --------   --------   --------
                                                 (in thousands)
<S>                        <C>        <C>        <C>        <C>        <C>     
Balance sheet data:
  Working capital ......     $ 43,115    $ 53,508   $ 33,254   $ 33,088   $ 36,283
  Cash, certificates of
    deposit and short-
    term debt and equity
    securities .........       15,475      23,610      4,447      7,336      8,359
  Total assets .........      100,720      96,037     76,095     71,531     73,252
  Long-term debt, less 
    current maturities .          842         680      1,114        586      2,900
  Stockholders' equity .       77,244      80,603     57,890     54,269     55,001
</TABLE>

---------------
 *   Reclassified to reflect the discontinued operation described in Note C to
     the Consolidated Financial Statements included herein.

(1)  Retroactively restated to reflect the total shares issued after the 3%
     stock dividends described in Note L to the Consolidated Financial
     Statements included herein.

                                      -18-
<PAGE>

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

     The following discussion and analysis is based on the results of continuing
operations of the Company.

     The Company's fiscal years ended May 31, 1997 and June 1, 1996 represent
fifty-two weeks and the fiscal year ended June 3, 1995 represents fifty-three
weeks.

RESULTS OF OPERATIONS

     SEGMENT OVERVIEW

     The Company operates in two industry segments: Diagnostic products and
AngioDynamics products.

     The Diagnostic products industry segment accounted for 82% of sales, net of
intersegment eliminations (see Note N to the Consolidated Financial Statements
included herein) in 1997, as compared to 88% in 1996 and 92% in 1995. This
segment encompasses both contrast systems, consisting of barium sulfate
formulations and related medical devices used in X-ray, CT-scanning and other
imaging examinations, and non-contrast systems, including diagnostic radiology
devices, custom contract pharmaceuticals, gastrointestinal cleansing laxatives,
X-ray protection equipment, and immunoassay tests. Contrast systems, which
constitute the Company's core business and the majority of the Diagnostic
products segment, accounted for 61% of net sales in 1997, as compared to 68% in
1996 and 72% in 1995. Non-contrast system sales accounted for 21% of net sales
in 1997, as compared to 20% in both 1996 and 1995.

     Diagnostic segment results for 1997 were adversely affected by lower gross
profit and increased operating expenses of $1,523,000. The lower gross profit
resulted from increased inventory reserves of $676,000, approximately $558,000
of increased unabsorbed overhead costs associated with the relocation of a
portion of the Company's contrast systems manufacturing operations, and sales
discounts to group purchasing organizations. The effects of the manufacturing
site relocation will continue to be felt through the first half of next fiscal
year resulting in lower than normal Canadian gross profit. Increased regulatory
costs associated with product validations of $857,000 and severance costs of
$365,000 contributed to the increased operating expenses in 1997.

     Diagnostic segment results for 1996 were adversely affected by unabsorbed
overhead costs associated with the manufacturing site relocation, as well as by
increased selling and marketing expenses in the Company's contrast systems
business. Investment in new marketing initiatives and product introductions
contributed to the increased selling and marketing expenses.

     Diagnostic segment results for 1995 were positively impacted by improved
gross margins, partially offset by increased domestic and international selling
and administrative expenses.

     The AngioDynamics products industry segment accounted for 18% of sales, net
of intersegment eliminations (see Note N to the Consolidated


                                      -19-
<PAGE>

Financial Statements included herein) in 1997, as compared to 12% in 1996 and 8%
in 1995. This segment includes CO2/angiography products, therapeutic products
and coronary products used in the interventional medicine marketplace.

     AngioDynamics segment results for 1997 were adversely affected by increased
operating expenses of $4,502,000, partially offset by sales growth of 61%, as
compared to 1996. The sales growth was due to continued international and
domestic market penetration. The AngioStent(TM), a device used during coronary
procedures, was introduced internationally by the Company in the third quarter
of 1996 and was the major contributor to the international sales growth in 1997.
Increased operating expenses can be attributed to expenses supporting the 61%
sales increase in 1997 and increased administrative expenses. Gross profit
expressed as a percentage of net sales declined to 42% in 1997, as compared to
48% in 1996, due primarily to start-up costs relating to AngioDynamics' entry
into the coronary stent marketplace and increased inventory reserves of
$180,000. AngioDynamics incurred operating losses of $3,816,000 in 1997, as
compared to operating losses of $1,536,000 in 1996.

     AngioDynamics segment results for 1996 were positively affected by sales
growth of 57%, as compared to 1995, coupled with improved manufacturing
efficiencies. The sales growth was due to domestic and international market
penetration. The AngioStent was the major contributor to the international sales
growth in 1996. Gross profit expressed as a percentage of net sales improved to
48% in 1996, as compared to 32% in 1995, due, in large part, to the improved
manufacturing efficiencies. AngioDynamics incurred operating losses of
$1,536,000 in 1996, as compared to operating losses of $4,603,000 in 1995.

     During 1996, the Company discontinued the operation of its surgical
products industry segment when it sold Surgical Dynamics Inc. ("SDI"), its
51%-owned subsidiary, to United States Surgical Corporation. As a result of this
sale, the Company recognized a gain, pretax of approximately $25,539,000,
after-tax of approximately $19,520,000, or $1.95 per common share on a primary
basis. The surgical products industry segment has been reported as a
discontinued operation and, accordingly, the gain from the sale of SDI and the
Company's proportionate share of losses from operations of SDI have been
classified as a discontinued operation in the consolidated statements of
operations. The surgical products industry segment included the Nucleotome(TM)
device, the Ray Threaded Fusion Cage(TM) and other surgical devices and
accessories used in spinal surgery.

     The net sales and operating profit (loss) of each industry segment and the
identifiable assets, depreciation and amortization, and capital expenditures
attributable to each industry segment are set forth in Note N to the
Consolidated Financial Statements included herein.

     CONSOLIDATED RESULTS OF OPERATIONS

     The Company reported a net loss of $3,208,000, or ($.33) per common share
on a primary and fully diluted basis for 1997, as compared to net earnings of
$21,008,000, or $2.10 and $2.07 per common share on a primary and fully


                                      -20-
<PAGE>

diluted basis, respectively, for 1996, and net earnings of $1,630,000, or $.17
per common share on a primary and fully diluted basis, for 1995. Results for
1996 included an after-tax gain on the sale of SDI of $19,520,000, or $1.95 and
$1.93 per common share on a primary and fully diluted basis, respectively.

     Loss from continuing operations for 1997 was $3,208,000, or ($.33) per
common share on both a primary and fully diluted basis, as compared to earnings
from continuing operations of $1,697,000, or $.17 per common share on both a
primary and fully diluted basis, in 1996 and $2,473,000, or $.26 per common
share on both a primary and fully diluted basis, in 1995.

     Results from continuing operations for 1997 were adversely impacted by
increased operating expenses in both industry segments, as well as reduced gross
profit in the Diagnostic segment. In the AngioDynamics segment, increased
operating expenses can be attributed to expenses supporting the 61% sales
increase in 1997 and increased administrative expenses. In the Diagnostic
segment, increased regulatory costs associated with product validations of
$857,000 and severance costs of $365,000 contributed to the increased operating
expenses in 1997. The lower Diagnostic gross profit resulted from increased
inventory reserves of $676,000, increased unabsorbed overhead costs associated
with the manufacturing site relocation of approximately $558,000, and sales
discounts to group purchasing organizations.

     Results from continuing operations for 1996 were adversely impacted by
unabsorbed overhead costs associated with the manufacturing site relocation, as
well as by increased selling and marketing expenses in the Company's contrast
systems business, and were positively affected by AngioDynamics sales growth and
improved AngioDynamics manufacturing efficiencies.

     Results from continuing operations for 1995 were positively impacted by
increased sales demand in the AngioDynamics segment, coupled with improved gross
profit in the Diagnostic segment, partially offset by increased domestic and
international selling and administrative expenses in both industry segments.

     Net sales increased 6%, or $5,392,000, to $97,324,000 in 1997, and
increased 4%, or $3,406,000, to $91,932,000 in 1996. Net sales in 1997 were
favorably affected by increased sales of AngioDynamics products of $6,740,000
and increased non-contrast systems sales of $1,923,000. The AngioDynamics sales
growth was due to international market penetration, due primarily to the
introduction of the AngioStent, and domestic market penetration. Net sales in
1997 were adversely affected by a 6% decline in the Company's sales of barium
contrast systems. Price increases had no effect on net sales in 1997. Net sales
in 1996 were favorably affected by increased AngioDynamics sales of $3,995,000
and increased non-contrast systems sales of $1,148,000. Price increases
accounted for approximately .5% of net sales in 1996. The AngioDynamics sales
growth was due to domestic and international market penetration. The AngioStent
was the major contributor to the international sales growth in 1996. Net sales
in 1996 were adversely affected by a decline in the Company's sales of barium
contrast systems.

     Net sales in international markets, including direct exports from the U.S.,
increased 12%, or $3,932,000, to $37,714,000 in 1997 and


                                      -21-
<PAGE>

increased 5%, or $1,744,000, to $33,782,000 in 1996. The 1997 increase was due
to increased sales of AngioDynamics products of $3,679,000 and non-contrast
systems of $1,825,000, partially offset by decreased sales of contrast systems
of $1,572,000. The 1996 increase was due to increased sales of AngioDynamics
products of $1,888,000.

     Gross profit expressed as a percentage of net sales was 38% in 1997, as
compared to 40% in 1996 and 41% in 1995. Gross profit in 1997 was negatively
impacted by approximately $3,037,000 of unabsorbed overhead costs associated
with the manufacturing site relocation, increased inventory reserves of
$856,000, start-up costs relating to AngioDynamics' entry into the coronary
stent marketplace, and sales discounts to group purchasing organizations. Gross
profit in 1996 was negatively impacted by approximately $2,479,000 of unabsorbed
overhead costs associated with the manufacturing site relocation, and was
positively affected by improved AngioDynamics manufacturing efficiencies. Gross
profit in 1995 was adversely affected by increased provisions for inventory
adjustments, partially offset by sales price increases.

     Selling and administrative ("S&A") expenses were $34,600,000 in 1997,
$30,134,000 in 1996 and $27,767,000 in 1995. The increase in 1997 versus 1996 of
$4,466,000, or 15%, was due to increased AngioDynamics S&A expenses of
$3,776,000 and increased Diagnostic S&A expenses of $690,000. Increased
AngioDynamics S&A expenses can be attributed to expenses supporting the 61%
sales increase in 1997 and increased administrative expenses, partially
resulting from the write-off of expenses relating to the proposed initial public
offering of AngioDynamics, the start-up of a facility in Ireland and the
acquisition of Leocor, Inc. ("Leocor"). Increased Diagnostic S&A expenses
resulted, in part, from severance costs of $365,000 in 1997. The increase in
1996 versus 1995 of $2,367,000, or 9%, was due primarily to expanded domestic
selling and marketing efforts in the Company's contrast systems business
approximating $1,361,000 and expanded AngioDynamics selling and marketing
efforts both domestically and internationally approximating $1,063,000.
Investment in new product introductions and selling and marketing initiatives
contributed to the increased selling and marketing expenses in both industry
segments.

     Research and development ("R&D") expenditures in 1997 totalled $6,881,000,
or 7% of net sales, as compared to $5,323,000, or 6% of net sales, in 1996 and
$6,077,000, or 7% of net sales, in 1995. The increase in 1997 versus 1996 of
$1,558,000 was due primarily to increased regulatory costs associated with
product validations of $857,000 and increased spending of $691,000 relating to
AngioDynamics projects. The decline in 1996 versus 1995 of $754,000 was due
primarily to reduced spending of $898,000 relating to the overseas
commercialization of AngioDynamics' CO2Ject system; reduced spending of $347,000
relating to the commercialization of H. pylori products; partially offset by
increased contrast systems spending of $361,000 relating to the development of
several new products. Of the R&D expenditures in 1997, approximately 34% relate
to AngioDynamics projects, 29% to contrast systems, 4% to immunological
projects, 12% to other projects and 21% to general regulatory costs. R&D
expenditures are expected to continue at approximately current levels. In
addition to its in-house technical staff, the Company is presently sponsoring
various independent R&D projects and is committed to continued


                                      -22-
<PAGE>

expansion of its product lines through R&D.

     Other income, net of other expenses, totalled $381,000 in 1997, $983,000 in
1996 and $722,000 in 1995. The decline in other income in 1997 versus 1996 was
primarily due to increased interest expense of $253,000, resulting from
AngioDynamics bank financing, and increased foreign currency exchange losses of
$161,000. The improvement in other income in 1996 versus 1995 was primarily due
to increased licensing income of $240,000 and increased interest income of
$184,000, partially offset by increased currency exchange losses incurred by
foreign subsidiaries of $211,000. The increased interest income of $184,000
resulted from the investment of SDI sale proceeds, partially offset by the
income recorded in 1995 of $180,000 as a result of the prepayment of an
interest-free loan.

     Note G to the Consolidated Financial Statements included herein details the
major elements affecting income taxes for 1997, 1996 and 1995. In 1997, the
Company's effective tax benefit rate of 29% differed from the Federal statutory
tax rate of 34% due primarily to losses incurred in a foreign jurisdiction
subject to lower tax rates and to the fact that the Company did not provide for
the tax benefit on losses incurred in certain foreign jurisdictions, since it is
more likely than not that such benefits will not be realized, partially offset
by earnings of the Puerto Rican subsidiary, which are subject to favorable U.S.
tax treatment. In 1996, the Company's low effective tax rate of 13% differed
from the Federal statutory tax rate of 35% due primarily to earnings of the
Puerto Rican subsidiary, which are subject to favorable U.S. tax treatment and
tax-exempt interest income. In 1995, the Company's effective tax rate of 31%
differed from the Federal statutory tax rate of 34% due primarily to earnings of
the Puerto Rican subsidiary, which are subject to favorable U.S. tax treatment,
and were partially offset by the fact that the Company did not provide for the
tax benefit on losses incurred in certain jurisdictions, since, at that time, it
was more likely than not that such benefits would not be realized.

LIQUIDITY AND CAPITAL RESOURCES

     During 1997, the purchase of Leocor, capital expenditures and increased
inventory levels were funded primarily by cash reserves and proceeds from the
issuance of bank debt. During 1996, capital expenditures and increased inventory
levels were funded primarily by cash reserves. As a result of the sale of SDI in
November 1995, the Company increased its cash reserves by approximately
$21,000,000. The proceeds from the sale of SDI were invested in debt securities.
During 1995, capital expenditures, primarily related to the acquisition of the
previously leased Canadian facility, increased inventory levels and repayments
of debt were funded primarily by cash provided by operations and cash reserves.
In the past, the Company's policy has been to fund capital requirements without
incurring significant debt. At May 31, 1997, debt (notes payable, current
maturities of long-term debt and long-term debt) was $8,388,000 as compared to
$1,927,000 at June 1, 1996. The Company has available $11,965,000 under four
bank lines of credit of which $6,392,000 was outstanding at May 31, 1997.

     The Company's current policy is to issue stock dividends. During the third
quarter of fiscal years 1995 and 1996 and the fourth quarter of fiscal year
1997, the Company issued 3% stock dividends.

                                      -23-
<PAGE>

     Presently, the Company is continuing to look for both new and complementary
lines of business for expansion in order to ensure its continued growth.

     On January 8, 1997, the Company purchased certain assets of Leocor and
certain other assets directly from a principal shareholder of Leocor for
approximately $7,096,000, including acquisition costs. Leocor is a Texas
corporation, based in Houston, Texas, which develops and manufactures
angioplasty catheters.

     The purchase of Leocor is a strategic acquisition for the AngioDynamics
business segment. Angioplasty catheters are used as a delivery system for the
AngioStent and the acquisition enables AngioDynamics to vertically integrate its
stent manufacturing capability, as well as to compete in the worldwide
angioplasty market.

     At May 31, 1997, approximately 59% of the Company's assets consist of
inventories, accounts receivable, debt and equity securities, and cash and cash
equivalents. Inventories have increased at a greater rate than sales as a result
of broadened product lines, and safety stock during the relocation of a portion
of the Company's contrast systems manufacturing operations. The current ratio is
3.07 to 1, with net working capital of $43,115,000 at May 31, 1997, as compared
to the current ratio of 5.15 to 1, with net working capital of $53,508,000 at
June 1, 1996. The decline in both the current ratio and net working capital is a
direct result of the purchase of Leocor.

     Net capital expenditures, primarily for a facility acquisition and
machinery and equipment, were $4,370,000 in 1997, as compared to $4,231,000 in
1996 and $4,812,000 in 1995. Of the 1997 expenditures, approximately $1,900,000
relates to the acquisition, and related improvements, of a manufacturing
facility by AngioDynamics' Irish subsidiary. Of the 1996 expenditures,
approximately $2,223,000 relates to the purchase of machinery and equipment and
facility improvements in connection with the Company's manufacturing site
relocation. Of the 1995 expenditures, approximately $2,817,000 relates to the
purchase of the land and building housing the manufacturing facilities of the
Company's Canadian subsidiary. No material increase in the aggregate level of
capital expenditures is currently contemplated for 1998.

     In August 1997, the Company acquired approximately 25% of ITI Medical
Technologies, Inc. ("ITI") for $1,300,000, to be paid in three installments over
a six month period commencing in August 1997. ITI is a California corporation,
based in Livermore, California, which develops and manufactures MRI diagnostic
and therapeutic medical devices.

     This Form 10-K contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which are intended to be covered by the safe
harbors created thereby. Investors are cautioned that all forward-looking
statements involve risks and uncertainty, including without limitation, the
ability of the Company to develop its products, as well as general market
conditions, competition and pricing. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no 


                                      -24-
<PAGE>

assurance that the forward-looking statements included in this Form 10-K will
prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Financial statements and supplementary data required by Part II, Item 8 are
included in Part IV of this form as indexed at Item 14 (a) 1.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

     None.


                                      -25-
<PAGE>

                                    PART III


     Certain information required by Part III is omitted from this Annual Report
on Form 10-K because the Company will file a definitive proxy statement within
120 days after the end of its fiscal year pursuant to Regulation 14A (the "Proxy
Statement") for its Annual Meeting of Stockholders, currently scheduled for
October 21, 1997, and the information included in the Proxy Statement is
incorporated herein by reference.


Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table sets forth certain information with respect to the
Company's officers and directors.

         NAME                AGE                POSITIONS

Howard S. Stern (1)(4)...     66      Chairman of the Board, Director
Daniel R. Martin (1).....     60      President, Chief Executive Officer,
                                        Director
Arthur L. Zimmet.........     61      Senior Vice President - Special Projects
Sandra D. Baron..........     45      Vice President - Human Resources
Craig A. Burk............     44      Vice President - Manufacturing
Joseph A. Cacchioli......     41      Vice President - Controller
Dennis J. Curtin.........     50      Vice President - Chief Financial Officer
Eamonn P. Hobbs..........     44      Vice President - AngioDynamics Division
Joseph J. Palma..........     55      Vice President - Sales and Marketing
Archie B. Williams.......     46      Vice President - Imaging Products
                                        Management
Terry S. Zisowitz........     50      Vice President - Legal and Regulatory
                                        Affairs
Andrew A. Zwarun, PhD....     54      Vice President - MRI
Michael A. Davis, M.D....     56      Medical Director, Technical Director,
                                        Director
Paul S. Echenberg (1)....     53      Chairman of the Board of E-Z-EM Canada,
                                        Director
James L. Katz CPA, JD....     61      Director
  (1)(2)(5)                         
Donald A. Meyer (3)(4)...     63      Director
David P. Meyers..........     33      Director
Robert M. Topol (1)(2)...     72      Director
  (3)(5)                            
Peter J. Graham..........     31      Secretary

---------------                  
(1)   Member of Executive Committee
(2)   Member of Audit Committee
(3)   Member of Nominating Committee
(4)   Member of Compensation Committee
(5)   Member of Finance Committee

     Directors are elected for a three year term and each holds office until his
successor is elected and qualified. Officers are elected annually and serve at
the pleasure of the Board of Directors.

     Mr. Stern is a co-founder of the Company and has served as 


                                      -26-
<PAGE>


Chairman of the Board and Director of the Company since its formation in 1962.
Prior to 1994, Mr. Stern also served as Chief Executive Officer, and from the
formation of the Company until 1990, he served as President of the Company.

     Mr. Martin has served as President, Chief Executive Officer and Director
since 1994, and previously served as President, Chief Operating Officer and
Director from 1990 to 1993.

     Mr. Zimmet has served as Senior Vice President - Special Projects since
1988, and has been an employee of the Company since 1982.

     Ms. Baron has served as Vice President - Human Resources since 1995, and
has been an employee of the Company since 1985.

     Mr. Burk has served as Vice President - Manufacturing since 1987.

     Mr. Cacchioli has served as Vice President - Controller since 1988, and has
been an employee of the Company since 1984.

     Mr. Curtin has served as Vice President - Chief Financial Officer since
1995, and previously served as Vice President - Finance from 1985 to 1995. Mr.
Curtin has been an employee of the Company since 1983.

     Mr. Hobbs has served as Vice President - AngioDynamics Division since 1991,
and has been an employee of the Company since 1988.

     Mr. Palma has served as Vice President - Sales and Marketing since 1996,
and previously served as Vice President - Sales from 1995 to 1996. Mr. Palma has
been an employee of the Company since 1994. Prior to joining the Company, Mr.
Palma served as Director of Sales for the Imaging Division of Berlex
Laboratories (pharmaceutical products) since 1989.

     Mr. Williams has served as Vice President - Imaging Products Management
since 1993, and has been an employee of the Company since 1980.

     Ms. Zisowitz has served as Vice President - Legal and Regulatory Affairs
since 1995, and previously served as Vice President - Legal Affairs from 1990 to
1995. Ms. Zisowitz has been an employee of the Company since 1989.

     Mr. Zwarun has served as Vice President - MRI since 1992, and has been an
employee of the Company since 1987.

     Dr. Davis has served as Medical Director/Technical Director and Director of
the Company since January 1997, and previously served as Medical Director and
Director of the Company from 1995 to 1996, as Medical Director from 1994 to
1995, and as Associate Medical Director from 1988 to 1993. He has been Professor
of Radiology and Nuclear Medicine and Director of the Division of Radiologic
Research, University of Massachusetts Medical Center since 1980. He is also a
director of MacroChem Corp.

     Mr. Echenberg has been a director of the Company since 1987 and has served
as Chairman of the Board of E-Z-EM Canada since 1994. He is the President, Chief
Executive Officer and Director of Schroders &


                                      -27-
<PAGE>

Associates Canada Inc. (investment buy-out advisory services) since January 1997
and Director of Schroders Ventures Ltd. since June 1997. He is also a founder
and has been a general partner and director of Eckvest Equity Inc. (personal
investment and consulting services) since 1989. He was also a founder and had
been a senior partner of BDE Capital Partners (investment banking partnership)
from 1992 to 1994. He is also a director of Lallemand Inc., ISG Technologies,
Inc., LDI Research Co., Inc., LDI Marketing Co., Inc., Benvest Capital Inc.,
Colliers MacAuley Nicholl and Huntington Mills (Canada) Ltd. The Company has an
investment in ISG Technologies, Inc.

     Mr. Katz has been a director of the Company since 1983. He is a founder and
has been a principal of Chapman Partners LLC (investment banking) since its
organization in 1995. Previously, he had been the co-owner and President of Ever
Ready Thermometer Co., Inc. from its acquisition in 1985 until its sale in 1994.
From 1971 until 1980 and from 1983 until 1985, he held various executive
positions with Baxter International and subsidiaries of Baxter International,
including that of Chief Financial Officer of Baxter International. He is also a
director of Intec, Inc. and Binax.

     Mr. Meyer has been a director of the Company since 1968. He is currently an
independent consultant in legal matters to arts and business organizations,
specializing in technical assistance. He had been the Executive Director of the
Western States Arts Federation, Santa Fe, New Mexico, which provides and
develops regional arts programs, from 1990 to 1995. From 1958 through 1990, he
was an attorney practicing in New Orleans, Louisiana.

     Mr. Meyers has been a director of the Company since November 1996. He is
the founder of MedTest Express, Inc., an Atlanta, Georgia provider of contracted
laboratory services for home health agencies, and has served as its President
and Chief Executive Officer since 1994. For the five years prior to that, Mr.
Meyers was the Vice President of Operations at Radiation Care, Inc., an Atlanta,
Georgia operator of radiation therapy and diagnostic imaging centers. Mr. Meyers
is the son of Dr. Phillip H. Meyers, a former director, officer and holder of
over 23% of the outstanding securities of the Company, who died during the past
year.

     Mr. Topol has been a director of the Company since 1982. Prior to his
retirement in 1994, he served as an Executive Vice President of Smith Barney,
Inc. (financial services) for more than five years. He is also a director of
First American Health Concepts, Fund for the Aging, City Meals on Wheels,
American Health Foundation, State University of New York - Purchase and Redstone
Resources Inc.

     Mr. Graham has served as Secretary of the Company since May 1997, and has
served as associate general counsel for the Company since February 1997.
Previously, he was employed as an attorney by Segal & Lax, P.C., a New York City
law firm specializing in commercial and civil litigation, from 1996 through
February 1997. From 1992 through 1995, Mr. Graham was a full time law student at
the Benjamin N. Cardoza School of Law.


                                      -28-
<PAGE>

Item 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     The following table sets forth information concerning the compensation for
services, in all capacities for 1997, 1996 and 1995, of those persons who were,
at the end of 1997, Chief Executive Officer ("CEO") (Daniel R. Martin) and each
of the four most highly compensated executive officers of the Company other than
the CEO (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
                                  Annual Compensation             Long Term Compensation
                              ---------------------------  -------------------------------------
                                                                      Awards             Payouts
                                                           ----------------------------  -------
                                                 Other
                                                 Annual    Restricted                             All Other
    Name and                                    Compensa-    Stock         Options        LTIP    Compensa-
    Principal         Fiscal  Salary    Bonus   tion (1)     Awards    ----------------  Payouts  tion (4)
    Position           Year    ($)       ($)       ($)        ($)       # (2)    # (3)     ($)       ($)
    ---------         ------  ------    -----   ---------  ----------  -------  -------  -------  ---------

<S>                    <C>   <C>       <C>         <C>        <C>      <C>       <C>       <C>     <C>    
Howard S. Stern,.....  1997  $250,000  $11,538     None       None       None    8.5227    None    $ 7,090
Chairman of the Board  1996   250,000    None      None       None       None     None     None      7,245
                       1995   250,000    None      None       None      76,491    None     None     11,712

Daniel R. Martin,....  1997  $230,000  $ 7,962     None       None       None     None     None    $ 7,270
President and Chief    1996   220,000    None      None       None       None     None     None      9,261
Executive Officer      1995   200,000    None      None       None     120,200    None     None      8,453

Arthur L. Zimmet,....  1997  $153,000  $ 7,062     None       None       None     None     None    $ 7,380
Senior Vice President  1996   153,000    None      None       None       None     None     None      7,760
                       1995   153,000   10,000     None       None      41,524    None     None      7,466

Eamonn P. Hobbs,.....  1997  $176,250  $ 6,058     None       None       None   45.4545    None    $ 7,902
Vice President         1996   170,648    None      None       None       None     None     None      8,021
                       1995   120,000   15,000     None       None      31,689    None     None      5,856

Dennis J. Curtin,....  1997  $144,000  $ 6,646     None       None       None    3.4091    None    $ 7,534
Vice President         1996   144,000    7,500     None       None       None     None     None      7,880
                       1995   144,000   25,000     None       None      41,205    None     None      7,027
</TABLE>

---------------

(1)  The Company has concluded that the aggregate amount of perquisites and
     other personal benefits paid to each of the Named Executive Officers for
     1997, 1996 and 1995 did not exceed the lesser of 10% of such officer's
     total annual salary and bonus for 1997, 1996 or 1995 or $50,000; such
     amounts are, therefore, not reflected in the table.

(2)  Options are exercisable in Class B Common Stock of the Company and have
     been retroactively adjusted for the 3% stock dividends described in Note L
     to the Consolidated Financial Statements.

(3)  Options are exercisable in Class B Common Stock of AngioDynamics, Inc., a
     wholly-owned subsidiary of the Company.

(4)  For 1997, 1996 and 1995, represents for each of the Named Executive
     Officers the amounts contributed by the Company under the Profit-Sharing
     Plan and, as matching contributions, under the companion 401(k) Plan.


                                      -29-
<PAGE>

OPTION GRANTS TABLE

     The following table sets forth certain information concerning stock option
grants made during 1997 to the Named Executive Officers. These grants are also
reflected in the Summary Compensation Table. All of the options granted during
1997 have an exercise price equal to the fair market value of the Class B Common
Stock of AngioDynamics, Inc., a wholly-owned subsidiary of the Company, on the
date of grant, and expire in ten years. In accordance with SEC disclosure rules,
the hypothetical gains or "option spreads" for each option grant are shown based
on compound annual rates of stock price appreciation of 5% and 10% from the
grant date to the expiration date. The assumed rates of growth are prescribed by
the SEC and are for illustrative purposes only; they are not intended to predict
future stock prices, which will depend upon market conditions and the Company's
future performance. The Company did not grant any stock appreciation rights
during 1997.


<TABLE>
<CAPTION>
                                                                                    Potential Realizable Value at
                                                                                    Assumed Annual Rates of Stock
                            Individual Grants                                    Price Appreciation for Option Term
---------------------------------------------------------------------     -------------------------------------------------

                     Number of    % of Total
                    Securities     Options                                          5%                        10%
                    Underlying   Granted to     Exercise                  ----------------------     ----------------------
                     Options      Employees     or Base                    Stock      Potential       Stock      Potential
                     Granted     Fiscal Year     Price     Expiration      Price        Value         Price        Value
      Name           (#) (1)       1997 (3)      ($/Sh)       Date         ($/Sh)         $           ($/Sh)          $
      ----          -----------  -----------    --------   ----------     --------    ----------     --------    ----------
<S>                 <C>              <C>         <C>         <C>          <C>         <C>            <C>         <C>       
Howard S. Stern...   8.5227 (2)       8.7%       $80,000     3/03/07      $130,312      $428,794     $207,499    $1,086,636
                                                                                                                
Daniel R. Martin..    None                                                                                      
                                                                                                                
Arthur L. Zimmet..    None                                                                                      
                                                                                                                
Eamonn P. Hobbs...  45.4545 (2)      46.4%       $80,000     3/03/07      $130,312    $2,286,907     $207,499    $5,795,403
                                                                                                                
Dennis J. Curtin..   3.4091 (2)       3.5%       $80,000     3/03/07      $130,312      $171,519     $207,499      $434,657
</TABLE>        

---------------

(1)  Options are exercisable in Class B Common Stock of AngioDynamics, Inc., a
     wholly-owned subsidiary of the Company.

(2)  Options are exercisable 20% per year over five years from the date of
     grant, provided a threshold event occurs or 100% on the ninth anniversary
     of the grant, if no threshold event occurs. A threshold event is the
     earlier of (i) fourteen months after either an initial public offering
     ("IPO") or the spin off of all AngioDynamics stock to the Company's
     shareholders, or (ii) two months after the occurrence of both an IPO and
     the spin off of all AngioDynamics stock to the Company's shareholders.

(3)  Represents the percentage of total options granted to employees during 1997
     and exercisable in Class B Common Stock of AngioDynamics, Inc.


                                      -30-
<PAGE>

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE

     The following table sets forth certain information concerning all exercises
of stock options during 1997 by the Named Executive Officers and the fiscal
year-end value of unexercised stock options on an aggregated basis:

<TABLE>
<CAPTION>
                                             Number of
                                             Securities     Value of
                                             Underlying    Unexercised
                                            Unexercised    In-the-Money
                                             Options at     Options at
                                            May 31, 1997   May 31, 1997
                                                (#)          ($) (1)
                                           -------------  -------------

                      Shares       Value   Exercisable/   Exercisable/
                   Acquired on   Realized  Unexercisable  Unexercisable
      Name         Exercise (#)     ($)         (2)            (2)
      ----         ------------  --------  -------------  -------------
<S>                    <C>         <C>       <C>             <C>
Howard S. Stern...     None        None       76,491/        $250,743/
                                               None            None

Daniel R. Martin..     None        None      188,743/        $472,445/
                                               None            None

Arthur L. Zimmet..     None        None       49,402/        $152,442/
                                               None            None

Eamonn P. Hobbs...     None        None       38,442/        $117,871/
                                               None            None

Dennis J. Curtin..     None        None       49,084/        $157,515/
                                               None            None
</TABLE>

---------------

(1)  Options are "in-the-money" if on May 31, 1997, the market price of the
     stock exceeded the exercise price of such options. At May 31, 1997, the
     closing price of the Company's Class A and Class B Common Stock was $8.25
     and $7.63, respectively. The value of such options is calculated by
     determining the difference between the aggregate market price of the stock
     covered by the options on May 31, 1997 and the aggregate exercise price of
     such options.

(2)  Options granted prior to the Company's recapitalization on October 26, 1992
     are exercisable one-half in Class A Common Stock and one-half in Class B
     Common Stock. Options granted after the recapitalization are exercisable in
     Class B Common Stock.

COMPENSATION OF DIRECTORS

     Directors, who are not employees of the Company, are entitled to directors
fees of $15,000 annually. Directors, who serve on committees of the Company and
who are not employees or consultants of the Company, are entitled to a fee of
$500 for each committee meeting attended, except that the chairman of the
committee is entitled to a fee of $1,000 for each committee meeting attended.


                                      -31-
<PAGE>

EMPLOYMENT CONTRACT

     During 1994, the Company entered into an employment contract with Howard S.
Stern. This employment contract is for a term of eight years at an annual
compensation of $250,000.

SEVERANCE ARRANGEMENTS

     The information required by this caption is incorporated by reference to
the Company's Proxy Statement under the heading "Severance Arrangements."

COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The information required by this caption is incorporated by reference to
the Company's Proxy Statement under the heading "Compensation and Stock Option
Committee Report on Executive Compensation."

COMMON STOCK PERFORMANCE

     The information required by this caption is incorporated by reference to
the Company's Proxy Statement under the heading "Common Stock Performance."


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information, as of August 4, 1997, as to the
beneficial ownership of the Company's voting Class A Common Stock by each person
known by the Company to own beneficially more than 5% of the Company's voting
Class A Common Stock:

 Name and Address of                  Shares             Percent of
  Beneficial Owner              Beneficially Owned         Class
  ----------------              ------------------         -----

Howard S. Stern,................     956,412                23.7
Chairman of the Board,
Director
717 Main Street
Westbury, NY  11590

Betty S. Meyers and estate......     820,806                20.3
of Phillip H. Meyers, M.D.,
former officer and director
401 Emerald Street
New Orleans, LA  70124

Wellington Management Company,..     219,258                 5.4
75 State Street
Boston, MA  02109

Dimensional Fund Advisors, Inc.,     215,575                 5.3
1299 Ocean Avenue
Santa Monica, CA 90401


                                      -32-
<PAGE>

     The following table sets forth information, as of August 4, 1997, as to the
beneficial ownership of the Company's voting Class A and nonvoting Class B
Common Stock, by (i) each of the Company's directors, (ii) each of the Company's
Named Executive Officers, and (iii) all directors and executive officers of the
Company as a group:

                                  Class A                Class B
                           ---------------------  ---------------------
                              Shares     Percent     Shares     Percent
      Name of              Beneficially     of    Beneficially     of
  Beneficial Owner           Owned (1)    Class     Owned (2)    Class
  ----------------         ------------  -------  ------------  -------

Howard S. Stern,...........   956,412      23.7    1,271,968      22.4
Chairman of the Board,
Director

David P. Meyers,...........   192,750       4.8      257,842       4.6
Director

Daniel R. Martin,..........    24,389        *       180,581       3.1
President, Chief Executive
Officer, Director

Arthur L. Zimmet,..........    28,750        *        87,304       1.5
Senior Vice President

Robert M. Topol,...........    26,398        *        62,833       1.1
Director

Paul S. Echenberg,.........     3,398        *        72,472       1.3
Chairman of the Board of
E-Z-EM Canada, Director

James L. Katz,.............     3,423        *        52,343        *
Director

Dennis J. Curtin,..........     2,052        *        51,770        *
Vice President

Donald A. Meyer,...........    20,577        *        31,542        *
Director

Eamonn P. Hobbs,...........        50        *        38,450        *
Vice President

Michael A. Davis, M.D.,....      None        *        36,705        *
Medical Director/
Technical Director,
Director

All directors and executive
  officers as a group (18
  persons)................. 1,258,199 (3)  31.0    2,330,181 (4)  36.5
---------------

 *  Does not exceed 1%.

(1)  Includes Class A Common Stock shares issuable upon exercise of options
     currently exercisable or exercisable within 60 days from August 4, 1997 as
     follows: Daniel R. Martin (17,389), Robert M.


                                      -33-
<PAGE>

     Topol (2,898), Paul S. Echenberg (2,898), James L. Katz (2,898) and Donald
     A. Meyer (2,898).

(2)  Includes Class B Common Stock shares issuable upon exercise of options
     currently exercisable or exercisable within 60 days from August 4, 1997 as
     follows: Howard S. Stern (76,491), Daniel R. Martin (171,354), Arthur L.
     Zimmet (49,402), Robert M. Topol (39,035), Paul S. Echenberg (71,816),
     James L. Katz (50,598), Dennis J. Curtin (49,084), Donald A. Meyer (7,208),
     Eamonn P. Hobbs (38,442) and Michael A. Davis, M.D. (36,705).

(3)  Includes Class A Common Stock shares issuable upon exercise of options
     currently exercisable or exercisable within 60 days from August 4, 1997
     totalling 28,981 shares.

(4)  Includes Class B Common Stock shares issuable upon exercise of options
     currently exercisable or exercisable within 60 days from August 4, 1997
     totalling 776,506 shares.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     A facility of the Company located in Westbury, New York is owned 27% by
Howard S. Stern, 25% by Betty S. Meyers, a principal shareholder, 2% by other
employees of the Company and 46% by unrelated parties, which includes a 25%
owner who manages the property. Aggregate rentals, including real estate tax
payments, approximated $145,000 during 1997. The lease term expired in June 1996
and is currently being extended on a month-to-month basis.

     The Company has engaged Paul S. Echenberg, a director of the Company, both
as a consultant and employee. Fees for such services, including fees relating to
attendance at directors' meetings, were approximately $333,000 during 1997.

     The Company has engaged Michael A. Davis, M.D., a director of the Company,
for consulting services. Fees for such services were approximately $107,000
during 1997.



                                      -34-
<PAGE>


                                     PART IV


Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

                                                                        Page
                                                                        ----
(a)  l.  FINANCIAL STATEMENTS

     The following consolidated financial statements and
supplementary data of Registrant and its subsidiaries required by
Part II, Item 8, are included in Part IV of this report:

     Report of Independent Certified Public Accountants                  38

     Consolidated balance sheets - May 31, 1997 and June 1, 1996         39

     Consolidated statements of operations - fifty-two weeks
          ended May 31, 1997 and June 1, 1996 and fifty-three weeks 
          ended June 3, 1995                                             41

     Consolidated statements of stockholders' equity - fifty-two
          weeks ended May 31, 1997 and June 1, 1996 and fifty-three 
          weeks ended June 3, 1995                                       42

     Consolidated statements of cash flows - fifty-two weeks
          ended May 31, 1997 and June 1, 1996 and fifty-three 
          ended June 3, 1995                                             43

     Notes to consolidated financial statements                          45

(a)  2.  FINANCIAL STATEMENT SCHEDULES

     The following consolidated financial statement schedule is
included in Part IV of this report:

     Schedule II - Valuation and qualifying accounts                     71

     All other schedules are omitted because they are not
applicable, or not required, or because the required information
is included in the consolidated financial statements or notes thereto.


(a)  3.  EXHIBITS

      3(i)  Certificate of Incorporation                                 72

      3(ii) Amended Bylaws                                               (a)

     10(a)  Agreement and Plan of Merger dated November 7, 1995
            among United States Surgical Corporation, USSC
            Acquisition Corporation, Surgical Dynamics Inc.,
            and E-Z-EM, Inc. and Calmed Laboratories, Inc.
            and E-Z-SUB, Inc.                                            (b)

     10(b)  1983 Stock Option Plan                                       (c)

     10(c)  1984 Directors and Consultants Stock Option Plan             (d)

                              -35-
<PAGE>

                                                                       Page
                                                                       ----
(a)  3.  EXHIBITS (CONTINUED)

     10(d)  Income Deferral Program                                     (e)

     13     Annual report to security holders                           (f)

     21     Subsidiaries of the Company                                 82

     22     Proxy statement to security holders                         (f)

     23     Consent of Independent Certified Public Accountants         83

     27     Financial Data Schedule                                     84

     99     Report of Independent Certified Public Accountants
                 Other than Principal Accountants                       85
---------------

          (a)  Incorporated by reference to Exhibit 3(ii) of the
               Company's annual report filed on Form 10-K for the
               fiscal year ended May 28, 1994

          (b)  Incorporated by reference to Exhibit 10 of the
               Company's current report filed on Form 8-K/A dated
               November 22, 1995

          (c)  Incorporated by reference to Exhibit 10(a) of the
               Company's quarterly report filed on Form 10-Q for
               the quarterly period ended December 2, 1995

          (d)  Incorporated by reference to Exhibit 10(b) of the
               Company's quarterly report filed on Form 10-Q for
               the quarterly period ended December 2, 1995

          (e)  Incorporated by reference to Exhibit 10(c) of the
               Company's annual report filed on Form 10-K for the
               fiscal year ended May 29, 1993

          (f)  To be filed on a subsequent date

(b)  1.  REPORTS ON FORM 8-K

     No reports on Form 8-K were filed for the quarter ended May 31, 1997.

     Schedules other than those shown above are not submitted as the subject
matter thereof is either not required or is not present in amounts sufficient to
require submission in accordance with the instructions in Regulation S-X or the
information required is included in the Notes to Consolidated Financial
Statements.



                                      -36-
<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      E-Z-EM, Inc.
                                     ----------------------------------
                                      (Registrant)


Date  August 29, 1997                 /s/ Howard S. Stern
     -----------------               ----------------------------------
                                      Howard S. Stern, Chairman of the
                                      Board, Director

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


Date  August 29, 1997                 /s/ Howard S. Stern
     -----------------               ----------------------------------
                                      Howard S. Stern, Chairman of the
                                      Board, Director


Date  August 29, 1997                 /s/ Daniel R. Martin
     -----------------               ----------------------------------
                                      Daniel R. Martin, President,
                                      Chief Executive Officer, Director


Date  August 29, 1997                 /s/ Dennis J. Curtin
     -----------------               ----------------------------------
                                      Dennis J. Curtin, Vice President-
                                      Chief Financial Officer


Date  August 29, 1997                 /s/ Michael A. Davis
     -----------------               ----------------------------------
                                      Michael A. Davis, Director


Date  August 29, 1997                 /s/ Paul S. Echenberg
     -----------------               ----------------------------------
                                      Paul S. Echenberg, Director


Date  August 25, 1997                 /s/ James L. Katz
     -----------------               ----------------------------------
                                      James L. Katz, Director


Date  August 25, 1997                 /s/ Donald A. Meyer
     -----------------               ----------------------------------
                                      Donald A. Meyer, Director


Date  August 26, 1997                 /s/ Robert M. Topol
     -----------------               ----------------------------------
                                      Robert M. Topol, Director


                                      -37-
<PAGE>

                              REPORT OF INDEPENDENT
                          CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
  E-Z-EM, Inc.

We have audited the accompanying consolidated balance sheets of E-Z-EM, Inc. and
Subsidiaries as of May 31, 1997 and June 1, 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for the fifty-two
weeks ended May 31, 1997 and June 1, 1996 and the fifty-three weeks ended June
3, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of a
certain subsidiary, which statements reflect total assets constituting
approximately 15% in 1997 and 16% in 1996 and net sales constituting
approximately 10% in 1997, 12% in 1996 and 13% in 1995 of the related
consolidated totals. Those statements were audited by other auditors, whose
report thereon has been furnished to us, and our opinion, insofar as it relates
to the amounts included for this subsidiary, is based solely upon the report of
the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of E-Z-EM, Inc. and Subsidiaries as of May
31, 1997 and June 1, 1996, and the consolidated results of their operations and
their consolidated cash flows for the fifty-two weeks ended May 31, 1997 and
June 1, 1996 and the fifty-three weeks ended June 3, 1995, in conformity with
generally accepted accounting principles.

We have also audited the financial statement schedule listed in the Index at
Item 14(a)(2). In our opinion, this schedule presents fairly, in all material
respects, the information required to be set forth therein.



                                     GRANT THORNTON LLP
                                     Certified Public Accountants



Melville, New York
August 5, 1997


                                      -38-
<PAGE>

                     E-Z-EM, Inc. and Subsidiaries

                      CONSOLIDATED BALANCE SHEETS
                             (in thousands)


                                                          May 31,        June 1,
          ASSETS                                           1997           1996
                                                          ------         ------

CURRENT ASSETS
  Cash and cash equivalents                             $  4,484       $  3,363
  Debt and equity securities                              10,991         20,247
  Accounts receivable, principally
    trade, net of allowance for
    doubtful accounts of $930 in
    1997 and $527 in 1996                                 16,971         16,152
  Inventories                                             27,351         23,708
  Other current assets                                     4,147          2,936
                                                         -------         ------
      Total current assets                                63,944         66,406

PROPERTY, PLANT AND EQUIPMENT - AT COST,
  less accumulated depreciation and
  amortization                                            23,418         21,823

COST IN EXCESS OF FAIR VALUE OF NET
  ASSETS ACQUIRED, less accumulated
  amortization of $447 in 1997 and
  $411 in 1996                                               489            558

INTANGIBLE ASSETS, less accumulated
  amortization of $594 in 1997 and
  $345 in 1996                                             7,057            767

DEBT AND EQUITY SECURITIES                                 2,081          3,647

OTHER ASSETS                                               3,731          2,836
                                                         -------         ------
                                                        $100,720        $96,037
                                                         =======         ======





The accompanying notes are an integral part of these statements.


                                      -39-
<PAGE>

                     E-Z-EM, Inc. and Subsidiaries

                      CONSOLIDATED BALANCE SHEETS
            (in thousands, except share and per share data)


                                                           May 31,       June 1,
   LIABILITIES AND STOCKHOLDERS' EQUITY                     1997          1996
                                                           ------        ------

CURRENT LIABILITIES
  Notes payable                                          $  7,029       $   979
  Current maturities of long-term debt                        517           268
  Accounts payable                                          6,168         5,095
  Accrued liabilities                                       6,829         6,218
  Accrued income taxes                                        286           338
                                                          -------        ------
      Total current liabilities                            20,829        12,898

LONG-TERM DEBT, less current maturities                       842           680

OTHER NONCURRENT LIABILITIES                                1,805         1,856

COMMITMENTS AND CONTINGENCIES
                                                          -------        ------
      Total liabilities                                    23,476        15,434
                                                          -------        ------
STOCKHOLDERS' EQUITY
  Preferred stock, par value $.10 per 
    share - authorized, 1,000,000 shares; issued, none         -             -
  Common stock
    Class A (voting), par value $.10 per 
      share - authorized, 6,000,000 shares;
      issued and outstanding, 4,035,346
      shares in 1997 and 1996                                 403           403
    Class B (nonvoting), par value $.10 per
      share - authorized, 10,000,000 shares;
      issued and outstanding, 5,600,883
      shares in 1997 and 5,199,615 shares
      in 1996                                                 560           520
  Additional paid-in capital                               19,073        15,165
  Retained earnings                                        57,087        63,347
  Unrealized holding gain on debt and equity
    securities                                              1,332         2,360
  Cumulative translation adjustments                       (1,211)       (1,192)
                                                          -------        ------
      Total stockholders' equity                           77,244        80,603
                                                          -------        ------
                                                         $100,720       $96,037
                                                          =======        ======







The accompanying notes are an integral part of these statements.

                                      -40-
<PAGE>

                       E-Z-EM, Inc. and Subsidiaries

                   CONSOLIDATED STATEMENTS OF OPERATIONS
                   (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                   Fifty-two      Fifty-two     Fifty-three
                                                  weeks ended    weeks ended    weeks ended
                                                     May 31,        June 1,        June 3,
                                                      1997           1996           1995*
                                                    --------       --------       ---------
<S>                                                 <C>            <C>            <C>     
Net sales                                            $97,324        $91,932        $88,526

Cost of goods sold                                    60,754         55,518         51,845
                                                      ------         ------         ------
      Gross profit                                    36,570         36,414         36,681
                                                      ------         ------         ------
Operating expenses                                                                  
  Selling and administrative                          34,600         30,134         27,767
  Research and development                             6,881          5,323          6,077
                                                      ------         ------         ------
    Total operating expenses                          41,481         35,457         33,844
                                                      ------         ------         ------
      Operating profit (loss)                         (4,911)           957          2,837

Other income (expense)
  Interest income                                        830            735            551
  Interest expense                                      (517)          (264)          (286)
  Other, net                                              68            512            457
                                                       -----          -----          -----
      Earnings (loss) from continuing
        operations before income taxes                (4,530)         1,940          3,559

Income tax provision (benefit)                        (1,322)           243          1,086
                                                       -----          -----          -----
      Earnings (loss) from
        continuing operations                         (3,208)         1,697          2,473

Discontinued operation:
  Losses from operations, net of
    income tax provision of $10 and     
    $142 in 1996 and 1995, respectively                                (209)          (843)
  Gain on sale, net of income tax
    provision of $6,019                                              19,520
                                                       -----         ------          -----
      NET EARNINGS (LOSS)                            $(3,208)       $21,008         $1,630
                                                       =====         ======          =====
Primary earnings (loss) per common share
  Continuing operations                                $(.33)          $.17           $.26
  Discontinued operation                                 .00           1.93           (.09)
  Total operations                                      (.33)          2.10            .17

Fully diluted earnings (loss) per common share
  Continuing operations                                $(.33)          $.17           $.26
  Discontinued operation                                 .00           1.90           (.09)
  Total operations                                      (.33)          2.07            .17
</TABLE>

* Reclassified to reflect the discontinued operation.

The accompanying notes are an integral part of these statements.

                                      -41-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

               Fifty-two weeks ended May 31, 1997 and June 1, 1996
                    and fifty-three weeks ended June 3, 1995
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                 Unrealized
                                   Class A               Class B                                holding gain
                                 common stock          common stock      Additional                on debt     Cumulative
                              -----------------    -------------------     paid-in     Retained   and equity   translation
                               Shares    Amount     Shares      Amount     capital     earnings   securities   adjustments   Total
                              ---------  ------    ---------    ------    ----------   --------   ----------   -----------  -------
                                                                                      
<S>                           <C>         <C>      <C>           <C>       <C>         <C>          <C>        <C>          <C>    
Balance at May 28, 1994       4,032,532   $403     4,528,680     $453      $10,505     $44,414      $  -       $(1,506)     $54,269
                                                                                      
Unrealized holding gain on                                                            
  debt and equity securities                                                          
  at May 29, 1994                                                                                    3,531                    3,531
Issuance of stock                                        270                     1                                                1
3% common stock dividend                             256,512       26        1,064      (1,091)                                  (1)
Net earnings                                                                             1,630                                1,630
Unrealized holding loss on                                                            
  debt and equity securities                                                                        (1,745)                  (1,745)
Foreign currency translation                                                          
  adjustments                                                                                                      205          205
                              ---------    ---     ---------      ---       ------      ------       -----       -----       ------
Balance at June 3, 1995       4,032,532    403     4,785,462      479       11,570      44,953       1,786      (1,301)      57,890
                                                                                      
Exercise of stock options         2,813              145,369       14          759                                              773
Income tax benefits on                                                                
  stock options exercised                                                      246                                              246
Issuance of stock                     1                  933                     5                                                5
3% common stock dividend                             267,851       27        2,585      (2,614)                                  (2)
Net earnings                                                                            21,008                               21,008
Unrealized holding gain on                                                            
  debt and equity securities                                                                           574                      574
Foreign currency translation                                                          
  adjustments                                                                                                      109          109
                              ---------    ---     ---------      ---       ------      ------       -----       -----       ------
Balance at June 1, 1996       4,035,346    403     5,199,615      520       15,165      63,347       2,360      (1,192)      80,603
                                                                                      
Exercise of stock options                            117,919       12          600                                              612
Income tax benefits on                                                                
  stock options exercised                                                      261                                              261
Compensation related to                                                               
  stock option plans                                                             2                                                2
Issuance of stock                                      3,022                    24                                               24
3% common stock dividend                             280,327       28        3,021      (3,052)                                  (3)
Net loss                                                                                (3,208)                              (3,208)
Unrealized holding loss on                                                            
  debt and equity securities                                                                        (1,028)                  (1,028)
Foreign currency translation                                                          
  adjustments                                                                                                      (19)         (19)
                              ---------    ---     ---------      ---       ------      ------       -----       -----       ------
Balance at May 31, 1997       4,035,346   $403     5,600,883     $560      $19,073     $57,087      $1,332     $(1,211)     $77,244
                              =========    ===     =========      ===       ======      ======       =====       =====       ======
</TABLE>

The accompanying notes are an integral part of these statements.      

                                      -42-
<PAGE>

                     E-Z-EM, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (in thousands)

<TABLE>
<CAPTION>
                                             Fifty-two       Fifty-two       Fifty-three
                                            weeks ended     weeks ended      weeks ended
                                              May 31,         June 1,          June 3,
                                               1997            1996             1995
                                             --------        --------         --------
<S>                                          <C>             <C>              <C>      
Cash flows from operating activities:
  Net (loss) earnings                          $(3,208)        $21,008           $1,630
  Adjustments to reconcile net (loss)
    earnings to net cash (used in)
    provided by operating activities
      Depreciation and amortization              3,037           2,552            2,800
      Provision for doubtful accounts              451             176               91
      Gain on disposal of business                             (25,539)
      Loss (gain) on sale of assets                  2            (193)
      Minority share of subsidiary's
        operations                                                (200)            (810)
      Deferred tax (benefit) provision            (147)             60              282
      Other non-cash items                          20
      Changes in operating assets
        and liabilities, net of
        acquisition and disposition
          Accounts receivable                   (1,270)           (907)             142
          Inventories                           (3,421)         (3,123)          (3,833)
          Other current assets                  (1,111)           (446)            (305)
          Other assets                            (137)           (754)             128
          Accounts payable                       1,073            (312)           2,319
          Accrued liabilities                      608             905              312
          Accrued income taxes                     (54)             22             (107)
          Other noncurrent liabilities             (25)            168              190
                                                ------          ------            -----
            Net cash (used in) provided
              by operating activities           (4,182)         (6,583)*          2,839
                                                ------          ------            -----
Cash flows from investing activities:
  Additions to property, plant and
    equipment                                   (4,370)         (4,231)          (4,812)
  Acquisition of business                       (7,096)
  Proceeds from disposal of business                            26,785
  Proceeds from sale of assets                     114             485
  Held-to-maturity securities
    Purchases                                                 (104,253)          (1,958)
    Proceeds from maturity                                     105,846            1,964
  Available-for-sale securities
    Purchases                                  (22,735)        (39,750)             (31)
    Proceeds from sale                          31,998          19,995
                                                ------          ------            -----
      Net cash (used in) provided by
        investing activities                    (2,089)          4,877           (4,837)
                                                ------          ------            -----
</TABLE>

*Includes income taxes paid on the disposition of Surgical Dynamics Inc. of
 approximately $6,019.

The accompanying notes are an integral part of these statements.

                                      -43-
<PAGE>

                     E-Z-EM, Inc. and Subsidiaries

           CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                             (in thousands)

<TABLE>
<CAPTION>
                                                      Fifty-two      Fifty-two    Fifty-three
                                                     weeks ended    weeks ended   weeks ended
                                                       May 31,       June 1,       June 3,
                                                        1997          1996          1995
                                                      --------      --------      --------
<S>                                                     <C>           <C>           <C>    
Cash flows from financing activities:
  Proceeds from issuance of debt                         $7,592        $1,121        $1,686
  Repayments of debt                                     (1,023)         (910)       (3,374)
  Proceeds from issuance of loan
    by minority shareholder                                               238           258
  Proceeds from exercise of stock
    options, including related
    income tax benefits                                     873         1,019
  Proceeds from issuance of stock in
    connection with the stock
    purchase plan                                            24             5             1
                                                          -----         -----         -----
      Net cash provided by (used in)
        financing activities                              7,466         1,473        (1,429)
                                                          -----         -----         -----
Effect of exchange rate changes on
  cash and cash equivalents                                 (74)         (366)          538
                                                          -----         -----         -----
      INCREASE (DECREASE) IN CASH
        AND CASH EQUIVALENTS                              1,121          (599)       (2,889)

Cash and cash equivalents
  Beginning of year                                       3,363         3,962         6,851
                                                          -----         -----         -----
  End of year                                            $4,484        $3,363        $3,962
                                                          =====         =====         =====

Supplemental disclosures of cash flow information:
    Cash paid during the year for:
      Interest                                           $  398        $  136        $  201
                                                          =====         =====         =====
      Income taxes (net of $686,
        $508 and $449 in refunds
        in 1997, 1996 and 1995,
        respectively)                                    $    6        $6,319        $  674
                                                          =====         =====         =====
</TABLE>





The accompanying notes are an integral part of these statements.

                                      -44-
<PAGE>


                          E-Z-EM, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  The summary of significant accounting policies is presented to assist the
    reader in understanding and evaluating the consolidated financial
    statements. These policies are in conformity with generally accepted
    accounting principles and have been applied consistently in all material
    respects.

  Basis of Consolidation
  ----------------------
  The consolidated financial statements include the accounts of E-Z-EM, Inc. and
    all 100%-owned subsidiaries (the "Company"). Surgical Dynamics Inc.
    ("SDI"), a former 51%-owned subsidiary, has been reported as a discontinued
    operation and, accordingly, the gain from the sale of SDI and the Company's
    proportionate share of losses from operations of SDI have been classified
    as a discontinued operation for 1996 and 1995 in the accompanying
    consolidated statements of operations. The discontinued operation has not
    been segregated in the accompanying statements of consolidated cash flows
    and, therefore, amounts for certain captions will not agree with the
    respective consolidated statements of operations. The Company is primarily
    engaged in developing, manufacturing and marketing diagnostic products used
    by radiologists and other physicians during image-assisted procedures to
    detect physical abnormalities and diseases. The Company also designs,
    develops, manufactures and markets, through its wholly-owned subsidiary,
    AngioDynamics, Inc. ("AngioDynamics"), a variety of therapeutic and
    diagnostic products, for use principally in the diagnosis and treatment of
    cardiovascular disease.

  Operations outside the U.S. are included in the consolidated financial
    statements and consist of: a subsidiary operating a mining and chemical
    processing operation in Nova Scotia, Canada and a manufacturing and
    marketing facility in Montreal, Canada; a subsidiary manufacturing products
    located in Puerto Rico; a subsidiary manufacturing and marketing products
    located in Japan; a subsidiary promoting and distributing products located
    in Holland; a subsidiary promoting and distributing products located in the
    United Kingdom; and a subsidiary manufacturing products located in Ireland.

  Fiscal Year
  -----------
  The Company reports on a fiscal year which concludes on the Saturday nearest
    to May 31. Fiscal years 1997 and 1996 ended on May 31, 1997 and June 1,
    1996, respectively, for reporting periods of fifty-two weeks and fiscal year
    1995 ended on June 3, 1995 for a reporting period of fifty-three weeks.



                                      -45-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  Cash and Cash Equivalents
  -------------------------
  The Company considers all unrestricted highly liquid investments purchased
    with a maturity of less than three months to be cash equivalents. Included
    in cash equivalents are certificates of deposit and Eurodollar investments
    of $2,443,000 and $1,796,000 at May 31, 1997 and June 1, 1996, respectively.
    The carrying amount of these financial instruments reasonably approximates
    fair value because of their short maturity. Foreign-denominated cash and
    cash equivalents aggregated $1,141,000 and $1,101,000 at May 31, 1997 and
    June 1, 1996, respectively.

  Debt and Equity Securities
  --------------------------
  Debt and equity securities are classified as "available-for-sale securities"
    and reported at fair value, with unrealized gains and losses excluded from
    operations and reported as a separate component of stockholders' equity, net
    of the related tax effects. Cost is determined using the specific
    identification method.

  Inventories
  -----------
  Inventories are stated at the lower of cost (on the first-in, first-out
    method) or market. Appropriate consideration is given to deterioration,
    obsolescence and other factors in evaluating net realizable value.

  Property, Plant and Equipment
  -----------------------------
  Property, plant and equipment are stated at cost, less accumulated
    depreciation. Depreciation is computed principally using the straight-line
    method over the estimated useful lives of the assets. Leasehold improvements
    are amortized over the terms of the related leases or the useful life of the
    improvements, whichever is shorter. Expenditures for repairs and maintenance
    are charged to expense as incurred. Renewals and betterments are
    capitalized. Depreciation expense from continuing operations was $2,721,000,
    $2,308,000 and $2,273,000 in 1997, 1996 and 1995, respectively.

  Cost in Excess of Fair Value of Net Assets Acquired
  ---------------------------------------------------
  The cost in excess of fair value of net assets acquired ("goodwill") is being
    amortized on a straight-line basis over 5 and 40 year periods. Amortization
    from continuing operations was $64,000, $73,000 and $70,000 in 1997, 1996
    and 1995, respectively.



                                      -46-
<PAGE>


                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  Intangible Assets
  -----------------
  Intangible assets are being amortized on a straight-line basis over the
    estimated useful lives of the respective assets ranging from five to fifteen
    and one-half years. Amortization from continuing operations was $252,000,
    $47,000 and $44,000 in 1997, 1996 and 1995, respectively.

  On an ongoing basis, management reviews the valuation and amortization of
    goodwill and intangible assets to determine possible impairment by
    considering current operating results and comparing the carrying values to
    the anticipated undiscounted future cash flows of the related assets.

  Income Taxes
  ------------
  Deferred income taxes are recognized for temporary differences between
    financial statement and income tax bases of assets and liabilities and loss
    carryforwards and tax credit carryforwards for which income tax benefits are
    expected to be realized in future years. A valuation allowance has been
    established to reduce deferred tax assets as it is more likely than not that
    all, or some portion, of such deferred tax assets will not be realized. The
    effect on deferred taxes of a change in tax rates is recognized in income in
    the period that includes the enactment date.

  Foreign Currency Translation
  ----------------------------
  In accordance with Statement of Financial Accounting Standards No. 52,
    "Foreign Currency Translation," the Company has determined that the
    functional currency for each of its foreign subsidiaries is the local
    currency. This assessment considers that the day-to-day operations are not
    dependent upon the economic environment of the parent's functional currency,
    financing is effected through their own operations, and the foreign
    operations primarily generate and expend foreign currency. Foreign currency
    translation adjustments are accumulated as a separate component of
    stockholders' equity.




                                      -47-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  Earnings (Loss) Per Common Share
  --------------------------------
  Primary and fully diluted earnings (loss) per common share are computed on the
    basis of the weighted average number of common shares outstanding plus the
    common stock equivalents which would arise from the exercise of stock
    options, if the latter causes dilution in earnings per common share in
    excess of 3%. Common stock equivalents are excluded from both the primary
    and fully diluted calculations for 1997, since their inclusion would be
    antidilutive, and included in both the primary and fully diluted
    calculations for 1996 and 1995.

  The weighted average number of common shares used was:

                                     1997         1996         1995
                                    ------       ------       ------
    Primary                       9,583,810   10,015,034    9,360,202
    Fully diluted                 9,583,810   10,127,352    9,365,214

  The weighted average number of common shares and the per share amounts for all
    periods presented have been retroactively restated to reflect the total
    shares issued after the 3% stock dividends described in Note L.

  In February 1997, the Financial Accounting Standards Board issued Statement of
    Financial Accounting Standards No. 128, "Earnings Per Share," which is
    effective for financial statements for both interim and annual periods
    ending after December 15, 1997. Early adoption of the new standard is not
    permitted. The standard eliminates primary and fully diluted earnings per
    share and requires presentation of basic and diluted earnings per share
    together with disclosure of how the per share amounts were computed. The
    adoption of this new standard is not expected to have a material impact on
    the disclosure of earnings per share in the consolidated financial
    statements.

  Use of Estimates
  ----------------
  The preparation of financial statements in conformity with generally accepted
    accounting principles requires management to make estimates and assumptions
    that affect the reported amounts of assets and liabilities and disclosures
    of contingent assets and liabilities at year-end and the reported amounts of
    revenues and expenses during the reporting period. Actual results could
    differ from those estimates.



                                      -48-
<PAGE>


                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE B - ASSET PURCHASE

  On January 8, 1997, the Company purchased certain assets of Leocor, Inc.
    ("Leocor") and certain other assets directly from a principal shareholder of
    Leocor for approximately $7,096,000, including acquisition costs. Leocor is
    a Texas corporation, based in Houston, Texas, which develops and
    manufactures angioplasty catheters. No liabilities were assumed in
    connection with this acquisition. The acquisition was accounted for under
    the purchase method with the results of operations being included in the
    Company's consolidated statement of operations from the date of acquisition.
    The fair values of the intangible assets acquired ($6,543,000), representing
    technology, trademarks, licenses and know-how, are being amortized on a
    straight-line basis over fifteen years.

  In connection with this acquisition, the Company also entered into a
    consulting agreement with the principal shareholder of Leocor for
    consideration of $200,000. The term of such consulting agreement is for a
    period of two years from the acquisition date of January 8, 1997.

  The following unaudited pro forma information has been prepared assuming
    Leocor had been acquired as of the beginning of the periods presented, after
    giving effect to certain adjustments, including amortization of intangible
    assets, interest expense on the acquisition debt and related income tax
    effects. The pro forma information is presented for informational purposes
    only and is not necessarily indicative of what would have occurred if the
    acquisition had been made as of those dates.

  Pro Forma Information (Unaudited)

                                                   1997         1996
                                                  ------       ------
                                                    (in thousands,
                                                 except per share data)

    Net sales                                    $97,882      $92,905
    Earnings (loss) from continuing
      operations                                  (3,651)         826
    Earnings (loss) per common share
      from continuing operations:
        Primary and fully diluted                   (.38)         .08




                                      -49-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE C - DISCONTINUED OPERATION

  On November 22, 1995 (the "Closing Date"), E-Z-EM, Inc. completed the sale of
    all of the capital stock of SDI held by E-Z-EM, Inc. through its subsidiary,
    E-Z-SUB, Inc., (collectively, the "Company") to United States Surgical
    Corporation ("USSC") pursuant to the terms of an Agreement and Plan of
    Merger Agreement dated November 7, 1995 (the "Merger Agreement") by and
    among USSC, USSC Acquisition Corporation, SDI, CalMed Laboratories, Inc.
    ("CalMed") and the Company. As of the Closing Date, the Company owned 51%
    (approximately 47% on a fully diluted basis after taking into account
    outstanding options) of the outstanding capital stock of SDI and CalMed, a
    company not affiliated with E-Z-EM, Inc., owned 49% (approximately 45% on a
    fully diluted basis after taking into account outstanding options) of the
    outstanding capital stock of SDI. The aggregate consideration paid for SDI
    was $59,900,000 in cash, which amount included repayment by USSC of $200,000
    of loans owed by SDI to its shareholders. After closing costs and payments
    made to option holders, the Company received, at closing, cash proceeds of
    $27,073,000 for the sale of its interest in SDI. In addition, $510,000 of
    the consideration payable to the Company is being held back by USSC as a
    nonexclusive source of indemnification for breaches of representations and
    warranties, and to the extent not drawn upon, will be repaid to the Company
    two years after the Closing Date. As a result of this sale, the Company
    recognized a gain, pretax, of approximately $25,539,000, after-tax of
    approximately $19,520,000, or $1.95 per common share on a primary basis. The
    effective tax rate of 24% on the gain on the sale of SDI differs from the
    Federal statutory tax rate of 35% due primarily to the utilization of
    previously unrecorded tax loss and tax credit carryforwards.

  SDI is a manufacturer of minimally invasive surgical devices for the spine,
    including the Nucleotome(TM) for use in percutaneous diskectomy and the Ray
    Threaded Fusion Cage(TM) spine implants for use in interbody fusions.

  SDI has been reported as a discontinued operation and, accordingly, the gain
    from the sale of SDI and the Company's proportionate share of losses from
    operations of SDI have been classified as a discontinued operation for 1996
    and 1995 in the accompanying consolidated statements of operations. Revenues
    attributable to the SDI operations were approximately $3,475,000 for the
    period June 4, 1995 through November 22, 1995 and $9,071,000 for the fiscal
    year ended June 3, 1995. Changes in operating assets and liabilities
    reflected in the consolidated statements of cash flows include amounts
    pertaining to the operations of SDI.



                                      -50-
<PAGE>


                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE D - DEBT AND EQUITY SECURITIES

  Debt and equity securities at May 31, 1997 consist of the following:

                                                            Unrealized
                                    Amortized      Fair       holding
                                      cost        value     gain (loss)
                                    ---------     -----     -----------
                                              (in thousands)
    Current
    -------
      Available-for-sale securities
        (carried on the balance
        sheet at fair value)
          Debt securities           $10,660      $10,660
          Equity securities             250          250
          Other                          81           81
                                     ------       ------
                                    $10,991      $10,991
                                     ======       ======

    Noncurrent
    ----------
      Available-for-sale securities
        (carried on the balance
        sheet at fair value)
          Equity securities          $1,669       $2,080         $411
          Other                           1            1
                                      -----        -----          ---
                                     $1,670       $2,081         $411
                                      =====        =====          ===




                                      -51-
<PAGE>




                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE D - DEBT AND EQUITY SECURITIES (continued)

  Debt and equity securities at June 1, 1996 consist of the following:

                                                            Unrealized
                                    Amortized      Fair       holding
                                      cost        value     gain (loss)
                                    ---------     -----     -----------
                                              (in thousands)
    Current
    -------
      Available-for-sale securities
        (carried on the balance
        sheet at fair value)
          Debt securities           $19,787      $19,776       $  (11)
          Equity securities             398          376          (13)
          Other                          95           95
                                     ------       ------        -----
                                    $20,280      $20,247       $  (24)
                                     ======       ======        =====

    Noncurrent
    ----------
      Available-for-sale securities
        (carried on the balance
        sheet at fair value)
          Equity securities          $1,675       $3,646       $1,971
          Other                           1            1
                                      -----        -----        -----
                                     $1,676       $3,647       $1,971
                                      =====        =====        =====


NOTE E - INVENTORIES

  Inventories consist of the following:

                                                  May 31,      June 1,
                                                   1997         1996
                                                  -------      -------
                                                     (in thousands)

    Finished goods                               $14,170      $13,157
    Work in process                                1,639        1,159
    Raw materials                                 11,542        9,392
                                                  ------       ------
                                                 $27,351      $23,708
                                                  ======       ======


                                      -52-
<PAGE>


                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE F - PROPERTY, PLANT AND EQUIPMENT, AT COST

  Property, plant and equipment are summarized as follows:

                                   Estimated
                                    useful        May 31,      June 1,
                                     lives         1997         1996
                                   ---------      -------      -------
                                                     (in thousands)

    Building and building
      improvements              10 to 39 years   $13,642      $11,661
    Machinery and equipment      2 to 10 years    25,930       24,008
    Leasehold improvements       Term of lease     1,610        1,568
                                                  ------       ------
                                                  41,182       37,237
    Less accumulated depreciation
      and amortization                            21,293       18,903
                                                  ------       ------
                                                  19,889       18,334
    Land                                           3,529        3,489
                                                  ------       ------
                                                 $23,418      $21,823
                                                  ======       ======


NOTE G - INCOME TAXES

  Income tax expense (benefit) from continuing operations analyzed by category
    and by income statement classification is summarized as follows:

                                      1997         1996         1995
                                     ------       ------       ------
                                              (in thousands)
    Current
      Federal                       $  (724)        $413       $    1
      State and local                    54           31           60
      Foreign                          (505)        (261)         877
                                      -----          ---        -----
        Subtotal                     (1,175)         183          938

    Deferred                           (147)          60          148
                                      -----          ---        -----
        Total                       $(1,322)        $243       $1,086
                                      =====          ===        =====




                                      -53-
<PAGE>


                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE G - INCOME TAXES (continued)

  Temporary differences which give rise to deferred tax assets and liabilities
    are summarized as follows:


                                                         May 31,         June 1,
                                                          1997            1996
                                                         -------         -------
                                                            (in thousands)
Deferred tax assets
  Difference between book and tax basis
    in investment sold to Canadian
    subsidiary                                           $1,137          $1,137
  Tax credit carryforwards                                  477             638
  Tax operating loss carryforwards                          313             372
  Expenses incurred not currently
    deductible                                            1,321           1,191
  Unrealized investment losses                              962             722
  Deferred compensation costs                               554             547
  Inventories                                               412             291
  Other                                                     132              89
                                                          -----           -----
    Gross deferred tax asset                              5,308           4,987
                                                          -----           -----
Deferred tax liabilities
  Excess tax over book depreciation                       1,096           1,074
  Unrealized investment gains                                41             305
  Tax on unremitted profits of Puerto
    Rican subsidiary                                         76              67
  Other                                                      60              86
                                                          -----           -----
    Gross deferred tax liability                          1,273           1,532

Valuation allowance                                      (2,945)         (3,040)
                                                          -----           -----
    Net deferred tax asset                               $1,090          $  415
                                                          =====           =====

  In 1994, the Company sold to its Canadian subsidiary warrants to purchase
    396,396 shares of stock in ISG Technologies, Inc. This transaction generated
    a capital gain for tax purposes of approximately $3,344,000, utilizing a
    portion of the Company's capital loss carryforward and giving rise to a
    temporary difference pertaining to the difference between the financial
    statement and tax basis in this asset.

  During 1996, the Company utilized tax operating and capital losses, tax credit
    and AMT credit carryforwards of approximately $8,279,000, $596,000 and
    $121,000, respectively, in connection with the sale of SDI described in Note
    C.


                                      -54-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE G - INCOME TAXES (continued)

  If not utilized, the tax operating loss carryforwards will expire in various
    amounts over the years 1998 through 2010. The tax credit carryforwards will
    expire in various amounts over the years 1998 through 2003.

  Deferred income taxes are provided for the expected Tollgate tax on the
    undistributed earnings of the Company's Puerto Rican subsidiary, which are
    expected to be distributed at some time in the future.

  At May 31, 1997, undistributed earnings of certain foreign subsidiaries
    aggregated $12,529,000 which will not be subject to U.S. tax until
    distributed as dividends. Any taxes paid to foreign governments on these
    earnings may be used, in whole or in part, as credits against the U.S. tax
    on any dividends distributed from such earnings. It is not practical to
    estimate the amount of U.S. tax, if any, that might be payable on the
    eventual remittance of such earnings. On remittance, certain foreign
    countries impose withholding taxes that are then available for use as
    credits against a U.S. tax liability, if any, subject to certain
    limitations. The amount of withholding tax that would be payable on
    remittance of the entire amount of undistributed earnings would approximate
    $626,000.

  Deferred tax assets and liabilities are included in the consolidated balance
    sheets as follows:

                                                  May 31,      June 1,
                                                   1997         1996
                                                  -------      -------
                                                     (in thousands)

      Current - Accrued income taxes              $ (103)       $(118)
      Noncurrent - Other assets                    1,193          533
                                                   -----         ----
        Net deferred tax asset                    $1,090        $ 415
                                                   =====         ====

  Earnings (loss) from continuing operations before income taxes for
    U.S. and international operations consist of the following:

                                      1997         1996         1995
                                     ------       ------       ------
                                              (in thousands)

      U.S.                          $(1,977)      $2,280       $  805
      International                  (2,553)        (340)       2,754
                                      -----        -----        -----
                                    $(4,530)      $1,940       $3,559
                                      =====        =====        =====


                                      -55-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE G - INCOME TAXES (continued)

  The Company's consolidated income tax provision (benefit) has differed from
    the amount which would be provided by applying the U.S. Federal statutory
    income tax rate to the Company's earnings (loss) from continuing operations
    before income taxes for the following reasons:

                                              1997          1996          1995
                                             ------        ------        ------
                                                       (in thousands)

Income tax provision (benefit)              $(1,322)         $243        $1,086
Effect of:
  State income taxes, net of
    Federal tax benefit                         (34)          (21)          (22)
  Research and development credit                75            95            24
  Earnings of the Puerto Rican
    subsidiary, net of Puerto
    Rico Corporate tax and
    Tollgate tax                                214           348           373
  Earnings of the Foreign Sales
    Corporation                                   7            16
  Tax-exempt portion of
    investment income                           202           137             7
  Nondeductible expenses                       (269)         (251)         (138)
  Losses of entities generating
    no current tax benefit                     (380)          (79)          (83)
  Utilization of tax operating
    and capital loss
    carryforwards                                              61
  Change in valuation allowance                (100)           74
  Other                                          67            56           (37)
                                              -----           ---         -----
Income tax provision (benefit)
  at statutory tax rate of 34%
  in 1997, 35% in 1996 and 34%
  in 1995                                   $(1,540)         $679        $1,210
                                              =====           ===         =====

  The Company has an agreement with the Commonwealth of Puerto Rico pursuant to
    which its operations in Puerto Rico are subject to a partial tax exemption
    which expires January 23, 2007. Commonwealth taxes are currently being
    provided on earnings of the subsidiary.

  The U.S. Federal income tax returns of the Company through May 29, 1993 have
    been closed by the Internal Revenue Service.



                                      -56-
<PAGE>


                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE H - DEBT

  Short-term debt consists of the following:

                                                  May 31,      June 1,
                                                   1997         1996
                                                  -------      -------
                                                     (in thousands)

    Bank, lines of credit
      7.16% to 7.25% (1)                          $5,000
      7.75% (2)                                      846
      4.75% (3)                                      546
      6.50% (3)                                                  $287
    Japanese bank
      2.63% note (4)                                 430          462
    Other financial institutions
      5.99% note, unsecured                          207
      6.12% note, unsecured                                       230
                                                   -----          ---
                                                  $7,029         $979
                                                   =====          ===

  Long-term debt consists of the following:

                                                  May 31,      June 1,
                                                   1997         1996
                                                  -------      -------
                                                     (in thousands)

    Japanese bank loans, due December 1998
      through August 2003, 1.45% to 4.10% (4)     $  754         $948
    Canadian bank loan, due November 1999,
      5.25% (5)                                      605
                                                   -----          ---
                                                   1,359          948
    Less current maturities                          517          268
                                                   -----          ---
                                                  $  842         $680
                                                   =====          ===

  (1) AngioDynamics has available $5,000,000 under this unsecured line of credit
      with a bank, which is guaranteed by the Company and expires on 
      November 30, 1997.

  (2) AngioDynamics' Irish subsidiary has available $1,514,200 (Irish Punts
      1,000,000) under this unsecured line of credit with a bank, which is
      guaranteed by the Company and expires on November 17, 1997.

 (3) The Company's Canadian subsidiary has available $1,451,000 (Canadian
     $2,000,000) under this line of credit with a bank, which is collateralized
     by accounts receivable and expires on



                                      -57-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE H - DEBT (continued)
     
      September 30, 1997.

  (4) Collateralized by property, plant and equipment having a net carrying
      value of $1,900,000 at May 31, 1997.

  (5) Collateralized by accounts receivable and $726,000 (Canadian $1,000,000)
      in machinery and equipment.

  The Company also has available $4,000,000 under an unsecured line of credit
    with a bank, which expires on November 30, 1997. At May 31, 1997, no amounts
    were outstanding under this line of credit.

  The Company believes that the carrying amount of its debt approximates the
    fair value as the variable interest rates approximate current prevailing
    interest rates.

  During 1997 and 1996, the weighted average interest rates on short-term debt
    were 6.19% and 5.93%, respectively.


NOTE I - ACCRUED LIABILITIES

  Accrued liabilities consist of the following:

                                                  May 31,      June 1,
                                                   1997         1996
                                                  -------      -------
                                                     (in thousands)

    Payroll and related expenses                  $3,006       $3,146
    Accrued sales rebates                          1,940        1,040
    Other                                          1,883        2,032
                                                   -----        -----
                                                  $6,829       $6,218
                                                   =====        =====


NOTE J - RETIREMENT PLANS

  E-Z-EM, Inc. and certain domestic subsidiaries ("E-Z-EM") provide pension
    benefits through a Profit-Sharing Plan, under which E-Z-EM makes
    discretionary contributions to eligible employees, and a companion 401(k)
    Plan, under which eligible employees can defer a portion of their annual
    compensation, part of which is matched by E-Z-EM. These plans cover all
    E-Z-EM employees not otherwise covered by collective bargaining agreements.
    In 1997, 1996 and 1995, profit-sharing contributions were $507,000, $468,000
    and $464,000, respectively, and 401(k) matching contributions were
    $328,000, $316,000 and $292,000, respectively.

                                      -58-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE J - RETIREMENT PLANS (continued)
    
  E-Z-EM Canada Inc., a wholly-owned subsidiary of the Company, also provides
    pension benefits to eligible employees through a Defined Contribution Plan.
    In 1997, 1996 and 1995, contributions were $55,000, $45,000 and $53,000, 
    respectively.


NOTE K - COMMITMENTS AND CONTINGENCIES

  The Company is presently a defendant in a product liability action. This suit
    claims damages based upon alleged injuries resulting from the use of one of
    the Company's products. The action is in its early stages and while the
    Company is actively defending against the claim, it is unable to predict its
    outcome. The Company does not believe that the ultimate outcome in this
    action will have a material adverse effect on the consolidated financial
    statements.

  During August 1997, the Company settled a product liability action in which it
    had been a defendant. Such action was settled for an amount under the
    Company's insurance limit and the amount contributed by the Company was not
    material to its consolidated financial statements.

  The Company has been sued by Olympia Holding Corporation p/k/a P-I-E
    Nationwide, Inc. for $443,830. The suit, filed on October 5, 1992, is
    presently pending in the U.S. Bankruptcy Court for the Middle District of
    Florida. The Company is being represented in this action by a law firm
    which is also representing numerous other defendants being sued by the same
    plaintiff on the same grounds recovery - for alleged undercharges for
    freight carriage. It is not possible, at this stage, to determine what, if
    any, liability exists with respect to the Company in this matter. The
    Company will vigorously defend against this action; it has been informed by
    legal counsel that there exist numerous valid defenses to this case.





                                      -59-
<PAGE>



                     E-Z-EM, Inc. and Subsidiaries

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

              May 31, 1997, June 1, 1996 and June 3, 1995


NOTE K - COMMITMENTS AND CONTINGENCIES (continued)

  The Company leases several facilities from related parties. During 1997, 1996
    and 1995, aggregate rental costs under all operating leases from continuing
    operations, which primarily consist of facility rentals, were approximately
    $1,216,000, $1,131,000 and $1,041,000, respectively, of which approximately
    $197,000, $202,000 and $205,000 were paid to related parties. Future annual
    operating lease payments in the aggregate, which include escalation clauses
    and real estate taxes, with initial remaining terms of more than one year at
    May 31, 1997, are summarized as follows:

                                                          Related
                                             Total         party
                                            leases        leases
                                            ------        -------
                                                (in thousands)

                    1998                    $  889          $ 84
                    1999                       559            25
                    2000                       444
                    2001                       429
                    2002                       409
                    Thereafter               2,113
                                             -----           ---
                                            $4,843          $109
                                             =====           ===

  The Company has an employment contract with a key executive that provides for
    a term of eight years. Future annual commitments with respect to this
    contract at May 31, 1997, are summarized as follows:

                                                      (in thousands)

                    1998                                  $  250
                    1999                                     250
                    2000                                     250
                    2001                                     250
                    2002                                     125
                                                           -----
                                                          $1,125
                                                           =====

  In August 1997, the Company acquired approximately 25% of ITI Medical
    Technologies, Inc. ("ITI") for $1,300,000, to be paid in three installments
    over a six month period commencing in August 1997. ITI is a California
    corporation, based in Livermore, California, which develops and manufactures
    MRI diagnostic and therapeutic medical devices.


                                      -60-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE L - COMMON STOCK

  In August 1983, the Company adopted a Stock Option Plan (the "1983 Plan"). The
    1983 Plan provides for the grant to key employees of both nonqualified stock
    options and incentive stock options. A total of 1,780,249 shares of the
    Company's Common Stock may be issued under the 1983 Plan pursuant to the
    exercise of options. All stock options must have an exercise price of not
    less than the market value of the shares on the date of grant. Options will
    be exercisable over a period of time to be designated by the administrators
    of the 1983 Plan (but not more than 10 years from the date of grant) and
    will be subject to such other terms and conditions as the administrators may
    determine. The 1983 Plan terminates in December 2005.

  In August 1984, the Company adopted a second Stock Option Plan (the "1984
    Plan"). The 1984 Plan provides for the grant to members of the Board of
    Directors and consultants of nonqualified stock options. A total of 447,344
    shares of the Company's Common Stock may be issued under the 1984 Plan
    pursuant to the exercise of options. All stock options must have an exercise
    price of not less than the market value of the shares on the date of grant.
    Options will be exercisable over a period of time to be designated by the
    administrators of the 1984 Plan (but not more than 10 years from the date of
    grant) and will be subject to such other terms and conditions as the
    administrators may determine. The 1984 Plan terminates in December 2005.

  In March 1997, the Company's AngioDynamics subsidiary adopted a Stock Option
    Plan (the "1997 Plan"). The 1997 Plan provides for the grant to key
    employees of both nonqualified stock options and incentive stock options and
    to members of the Board of Directors and consultants of nonqualified stock
    options. A total of 136.36 shares of AngioDynamics' Class B Common Stock may
    be issued under the 1997 Plan pursuant to the exercise of options. All stock
    options must have an exercise price of not less than the market value of the
    shares on the date of grant. Options will be exercisable over a period of
    time to be designated by the administrators of the 1997 Plan (but not more
    than 10 years from the date of grant) and will be subject to such other
    terms and conditions as the administrators may determine. The 1997 Plan
    terminates in March 2007.

  Effective in 1997, the Company adopted Statement of Financial Accounting
    Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123").
    SFAS 123 allows for a choice of the method of accounting used for
    stock-based compensation. Entities may elect the "intrinsic value" method
    based on APB  Opinion  No.25, "Accounting for Stock Issued to Employees" or
    the new "fair value" method contained in SFAS 123. The Company has elected
    to continue to account for stock-based compensation under the guidelines of
    APB


                                      -61-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE L - COMMON STOCK (continued)

    Opinion No. 25. Accordingly, no compensation expense has been recognized
    under these plans concerning options granted to key employees and to members
    of the Board of Directors, as such options were granted to Board members in
    their capacity as Directors. Compensation expense of $2,000 in 1997 was
    recognized under these plans for options granted to consultants. The Company
    has adopted the disclosure provisions of SFAS 123.

  If the Company had elected to recognize compensation expense based upon the
    fair value at the grant date for options granted under these plans to key
    employees and to members of the Board of Directors, consistent with the
    methodology prescribed by SFAS 123, the Company's pro forma net earnings
    (loss) and earnings (loss) per common share would be as follows:

                                                   1997         1996
                                                  ------       ------
                                                    (in thousands,
                                                 except per share data)

      Net earnings (loss)
        As reported                              $(3,208)     $21,008
        Pro forma                                 (3,672)      20,730

      Primary earnings (loss) per common share
        As reported                                $(.33)       $2.10
        Pro forma                                   (.38)        2.07

      Fully diluted earnings (loss) per
        common share
          As reported                              $(.33)       $2.07
          Pro forma                                 (.38)        2.05

  These pro forma amounts may not be representative of future disclosures
    because they do not take into effect pro forma compensation expense related
    to grants made before 1996. The fair value of these options was estimated at
    the date of grant using the Black-Scholes option-pricing model with the
    following weighted-average assumptions for 1997 and 1996, respectively:
    dividend yields of 3% for both years, expected volatility ranging from
    46.90% to 47.61% in 1997 and from 47.49% to 49.75% in 1996; risk-free
    interest rates ranging from 5.90% to 7.09% in 1997 and from 5.47% to 6.65%
    in 1996; and expected terms of 5 and 9 1/2 years in 1997 and 5 years in
    1996.


                                      -62-
<PAGE>


                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE L - COMMON STOCK (continued)

  A summary of the status of the Company's stock option plans as of May 31,
    1997, June 1, 1996 and June 3, 1995, and changes for the three years then
    ended, is presented below:

                           1997             1996             1995
                     ---------------- ---------------- ----------------
                             Weighted         Weighted         Weighted
                             -Average         -Average         -Average
                     Shares  Exercise Shares  Exercise Shares  Exercise
                     (000)    Price   (000)    Price   (000)    Price
                     ------  -------- ------  -------- ------  --------
  1983 Plan
  ---------
  Outstanding at
    beginning of
    year              1,194    $ 5.02  1,301     $4.85    704     $7.79
  Granted                10    $10.44     84     $8.87    991     $4.39
  Exercised            (118)   $ 5.19   (146)    $5.23
  Forfeited              (3)   $ 8.77    (27)    $4.79   (362)    $9.22
  Expired                                (18)    $9.23    (32)    $5.58
                      -----            -----            -----
  Outstanding at
    end of year       1,083    $ 5.05  1,194     $5.02  1,301     $4.85
                      =====            =====            =====

  Options exercisable
    at year-end       1,069    $ 5.00    654     $4.98    342     $6.18

  Weighted-average
    fair value of
    options granted
    during the year            $ 5.13            $4.41

  1984 Plan
  ---------
  Outstanding at
    beginning of
    year                298    $ 5.81    252    $ 5.42    143     $8.58
  Granted                15    $ 9.60     54    $ 8.61    184     $4.14
  Exercised                               (2)   $ 4.71
  Forfeited                                               (73)    $8.37
  Expired               (17)   $10.00     (6)   $15.03     (2)    $5.58
                        ---              ---              ---
  Outstanding at
    end of year         296    $ 5.77    298    $ 5.81    252     $5.42
                        ===              ===              ===

  Options exercisable
    at year-end         275    $ 5.39    191    $ 5.68     65     $9.06

  Weighted-average
    fair value of
    options granted
    during the year            $ 4.76           $ 4.31


                                      -63-
<PAGE>

                     E-Z-EM, Inc. and Subsidiaries

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

              May 31, 1997, June 1, 1996 and June 3, 1995


NOTE L - COMMON STOCK (continued)

                           1997
                     ----------------
                             Weighted
                             -Average
                             Exercise
                     Shares   Price
                     ------  --------
  1997 Plan
  ---------
  Outstanding at
    beginning of
    year
  Granted            122.39   $80,000
                     ------
  Outstanding at
    end of year      122.39   $80,000
                     ======

  Options exercisable
    at year-end        None

  Weighted-average
    fair value of
    options granted
    during the year           $36,463

  The following information applies to options outstanding at May 31, 1997:

                               1983 Plan        1984 Plan     1997 Plan
                               ---------        ---------     ---------
  Number outstanding           1,083,301         296,015        122.39

  Range of exercise prices  $3.77 to $11.00  $3.77 to $12.86   $80,000

  Weighted-average exercise
    price                        $5.05            $5.77        $80,000

  Weighted-average remaining
    contractual life (years)      6.91             7.26          9.77

  On May 31, 1997, there remained 206,088, 108,830 and 13.97 shares available
    for granting of options under the 1983, 1984 and 1997 Plans, respectively.

  Options granted prior to the Company's recapitalization on October 26, 1992
    are exercisable one-half in Class A Common Stock and one-half in Class B
    Common Stock. Options granted after the recapitalization are exercisable in
    Class B Common Stock.


                                      -64-
<PAGE>

                     E-Z-EM, Inc. and Subsidiaries

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

              May 31, 1997, June 1, 1996 and June 3, 1995


NOTE L - COMMON STOCK (continued)

  In August 1985, the Company adopted an Employee Stock Purchase Plan (the
    "Employee Plan"). The Employee Plan provides for the purchase by employees
    of Company stock at a discounted price of 85% of the market value of the
    shares on the date of purchase. A total of 150,000 shares of the Company's
    Common Stock may be purchased under the Employee Plan which terminates on
    September 30, 1998. During 1997, employees purchased 3,022 shares, at prices
    ranging from $7.23 to $9.99. Total proceeds received by the Company
    approximated $24,000.

  On January 24, 1995, the Board of Directors declared a 3% stock dividend on
    shares of Class A and Class B Common Stock. The dividend, payable in
    nonvoting Class B Stock, was distributed on March 16, 1995 to shareholders
    of record on February 24, 1995. On January 23, 1996, the Board of Directors
    declared a 3% stock dividend on shares of Class A and Class B Common Stock.
    The dividend, payable in nonvoting Class B Stock, was distributed on March
    15, 1996 to shareholders of record on February 23, 1996. On March 4, 1997,
    the Board of Directors declared a 3% stock dividend on shares of Class A and
    Class B Common Stock. The dividend, payable in nonvoting Class B Stock, was
    distributed on April 21, 1997 to shareholders of record on March 31, 1997.
    Earnings (loss) per common share have been retroactively adjusted to reflect
    the stock dividends.


NOTE M - OTHER RELATED PARTIES

  A director provided services, both as a consultant and employee, to the
    Company during 1997, 1996 and 1995. Fees for such services, including fees
    relating to attendance at directors' meetings, were approximately $333,000,
    $319,000 and $165,000 during 1997, 1996 and 1995, respectively. In
    connection with the sale of SDI during 1996, this director resigned as a
    director of SDI and received an investment banker's fee of $905,000, a bonus
    of $191,000 arising from the sale and a payment of $268,000 in connection
    with the surrender of outstanding stock options in SDI.

  In connection with the sale of SDI during 1996, an executive officer resigned
    as a director of SDI and received a bonus of $191,000 arising from the sale
    and a payment of $268,000 in connection with the surrender of outstanding
    stock options in SDI.

  Two other directors provided consulting services to the Company during 1997,
    1996 and 1995. Fees for such services, including fees relating to attendance
    at directors' meetings, were approximately $152,000, $196,000 and $196,000
    during 1997, 1996 and 1995, respectively.


                                      -65-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE N - INDUSTRY SEGMENT AND GEOGRAPHIC AREA OPERATIONS

  The Company is engaged in the manufacture and distribution of a wide variety
     of products which are classified into two industry segments: Diagnostic
     products and AngioDynamics products. Diagnostic products encompass both
     contrast systems, consisting of barium sulfate formulations and related
     medical devices used in X-ray, CT-scanning and other imaging examinations,
     and non-contrast systems, including diagnostic radiology devices, custom
     contract pharmaceuticals, gastrointestinal cleansing laxatives, X-ray
     protection equipment, and immunoassay tests. AngioDynamics products include
     CO2/angiography products, therapeutic products and coronary products used
     in the interventional medicine marketplace. The Company's primary business
     activity is conducted with radiologists and hospitals, located throughout
     the U.S. and abroad, through numerous distributors. The Company's exposure
     to credit risk is dependent, to a certain extent, on the healthcare
     industry. The Company performs ongoing credit evaluations of its customers
     and does not generally require collateral; however, in certain
     circumstances, the Company may require letters of credit from its
     customers.

  In the tables below, operating profit (loss) from continuing operations
    includes total net sales less operating expenses. Identifiable assets are
    those associated with industry segment or geographic area operations,
    excluding loans to or investments in another industry segment or geographic
    area operation.

  In 1997, 1996 and 1995, there was one customer to whom sales of Diagnostic
    products represented 15%, 16% and 15% of total sales, respectively.
    Approximately 19% and 21% of accounts receivable pertained to this customer
    at May 31, 1997 and June 1, 1996, respectively.




                                      -66-
<PAGE>


                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE N - INDUSTRY SEGMENT AND GEOGRAPHIC AREA OPERATIONS (continued)

  Industry Segments                  1997          1996        1995*
  -----------------                 ------        ------      -------
                                              (in thousands)
    Net Sales
      Diagnostic products           $80,838      $80,936      $81,525
      AngioDynamics products         18,662       11,696        7,396
      Eliminations                   (2,176)        (700)        (395)
                                     ------       ------       ------
    Total Net Sales                 $97,324      $91,932      $88,526
                                     ======       ======       ======

    Operating Profit (Loss)
      Diagnostic products           $(1,088)      $2,509       $7,452
      AngioDynamics products         (3,816)      (1,536)      (4,603)
      Eliminations                       (7)         (16)         (12)
                                     ------        -----        -----
    Total Operating Profit (Loss)   $(4,911)      $  957       $2,837
                                     ======        =====        =====

    Identifiable Assets
      Diagnostic products          $ 76,576      $83,304      $62,585
      AngioDynamics products         25,515       12,945        8,529
      Discontinued operation                                    5,033
      Eliminations                   (1,371)        (212)         (52)
                                    -------       ------       ------
    Total Identifiable Assets      $100,720      $96,037      $76,095
                                    =======       ======       ======

    Depreciation and Amortization
      Diagnostic products            $2,437       $2,111       $2,109
      AngioDynamics products            600          317          278
      Discontinued operation                         124          413
                                      -----        -----        -----
    Total Depreciation and
      Amortization                   $3,037       $2,552       $2,800
                                      =====        =====        =====

    Capital Expenditures
      Diagnostic products            $1,484       $3,850       $4,187
      AngioDynamics products          2,886          370          361
      Discontinued operation                          11          264
                                      -----        -----        -----
    Total Capital Expenditures       $4,370       $4,231       $4,812
                                      =====        =====        =====

* Net sales and operating profit (loss) amounts have been reclassified to
  reflect the discontinued operation described in Note C.


                                      -67-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE N - INDUSTRY SEGMENT AND GEOGRAPHIC AREA OPERATIONS (continued)

  Geographic Areas
  ----------------
    The following geographic area data includes net sales, operating profit
      (loss) generated by and assets employed in operations located in each
      area:

                                     1997         1996         1995*
                                    ------       ------       -------
                                              (in thousands)
    Net Sales
      U.S. operations               $80,190      $71,939      $65,073
      International operations:
        Canada                       14,369       12,254       14,100
        Other                        12,555       13,456       13,763
      Eliminations                   (9,790)      (5,717)      (4,410)
                                     ------       ------       ------
    Total Net Sales                 $97,324      $91,932      $88,526
                                     ======       ======       ======

    Operating Profit (Loss)
      U.S. operations               $(3,439)      $1,084       $  118
      International operations:
        Canada                       (1,518)        (410)       2,350
        Other                           175          225          456
      Eliminations                     (129)          58          (87)
                                      -----        -----        -----
    Total Operating Profit (Loss)   $(4,911)      $  957       $2,837
                                      =====        =====        =====

    Identifiable Assets
      U.S. operations:
        Continuing operations      $ 78,706      $73,604      $47,590
        Discontinued operation                                  5,033
      International operations:
        Canada                       15,496       15,543       15,816
        Other                         7,772        8,067        8,857
      Eliminations                   (1,254)      (1,177)      (1,201)
                                    -------       ------       ------
    Total Identifiable Assets      $100,720      $96,037      $76,095
                                    =======       ======       ======

* Net sales and operating profit (loss) amounts have been reclassified to
  reflect the discontinued operation described in Note C.



                                      -68-
<PAGE>

                     E-Z-EM, Inc. and Subsidiaries

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

              May 31, 1997, June 1, 1996 and June 3, 1995


NOTE N - INDUSTRY SEGMENT AND GEOGRAPHIC AREA OPERATIONS (continued)

  The Company's domestic export sales by geographic area are summarized as
    follows:

                                      1997         1996         1995
                                     ------       ------       ------
                                              (in thousands)

      Europe                        $ 9,252       $5,655       $2,605
      Other                           6,098        3,783        3,421
                                     ------        -----        -----
                                    $15,350       $9,438       $6,026
                                     ======        =====        =====


NOTE O - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

  Quarterly results of operations during 1997 and 1996 were as follows:

                                                  1997
                                   ----------------------------------
                                    First   Second    Third   Fourth
                                   quarter  quarter  quarter  quarter
                                   -------  -------  -------  -------
                                  (in thousands, except per share data)

    Net sales                      $23,355  $25,992  $23,576  $24,401
    Gross profit                     9,865   10,251    8,622    7,832
    Net earnings (loss)                513      243   (1,046)  (2,918)
    Earnings (loss) per common
      share (1)
        Primary and fully
          diluted (2)                  .05      .02     (.11)    (.30)

                                                  1996
                                   ----------------------------------
                                    First   Second    Third   Fourth
                                   quarter  quarter  quarter  quarter
                                   -------  -------  -------  -------
                                  (in thousands, except per share data)

    Net sales                      $21,999  $23,005  $21,550  $25,378
    Gross profit                     9,131    9,623    8,209    9,451
    Net earnings                       569   20,087        9      343
    Earnings per common share (1)
      Primary (2)                      .06     2.02      .00      .03
      Fully diluted (2)                .06     2.00      .00      .03

  (1) Earnings (loss) per common share have been retroactively restated to
      reflect the total shares issued after the 3% stock dividends described in
      Note L.

  (2) The sum of the quarters does not equal the fiscal year due to rounding and
      changes in the calculation of weighted average shares.


                                      -69-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                   May 31, 1997, June 1, 1996 and June 3, 1995


NOTE O - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (continued)

  The fourth quarter of 1997 was adversely affected by certain
    adjustments pertaining to the Company's AngioDynamics segment. The
    significant adjustments included the write-off of expenses relating to the
    proposed initial public offering of AngioDynamics and the effects of the
    sales price erosion of coronary stents in the European market.


                                      -70-
<PAGE>

                          E-Z-EM, Inc. and Subsidiaries

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>
     Column A           Column B            Column C              Column D      Column E
     --------           --------            --------              --------      --------
                                           Additions
                                     ----------------------
                                        (1)           (2)                           
                         Balance                   Charged to                    Balance
                           at        Charged to      other                       at end
                        beginning    costs and     accounts-     Deductions-       of
    Description         of period     expenses      describe       describe      period
    -----------         ---------    ----------    ----------    -----------     -------
<S>                        <C>         <C>                         <C>             <C>
Fifty-three weeks                                                               
  ended June 3, 1995                                                            
                                                                                
Allowance for                                                                   
  doubtful accounts        $406         $ 91                         $ 32 (a)       $465
                            ===          ===                          ===            ===
                                                                                
Fifty-two weeks                                                                 
  ended June 1, 1996                                                            
                                                                                
Allowance for                                                                   
  doubtful accounts        $465         $176                         $114 (b)       $527
                            ===          ===                          ===            ===
                                                                                
Fifty-two weeks                                                                 
  ended May 31, 1997                                                            
                                                                                
Allowance for                                                                   
  doubtful accounts        $527         $451                         $ 48 (a)       $930
                            ===          ===                          ===            ===
</TABLE>

(a)  Amounts written off as uncollectible.

(b)  Represents amounts written off as uncollectible of $64,000 and an amount
     deducted in conjunction with the sale of SDI of $50,000.



                                      -71-