AG Associates Announces Record Financial Results for the Year Ended Sept. 30, 1995.

SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 24, 1995--AG Associates (NASDAQ: AGAI), reported record sales and earnings for the year ended Sept. 30, 1995.

Net sales of $62.7 million represented an increase of 56 percent from 1994.

Net income improved to $9.8 million or $2.06 per share from income of $3.2 million or 87 cents per share in 1994. The effective tax rate for fiscal 1995 was a credit of 6 percent, compared to most analysts' estimates that utilize a fully taxed rate of 35 percent to 38 percent. Included in fiscal 1995 income taxes is a one-time benefit of $1.3 million or 27 cents per share to record the expected future benefit of the company's deferred income tax assets.

Net sales of $19.7 million for the fourth quarter ended Sept. 30, 1995, grew 75 percent from the same quarter in 1994. Income from operations increased 180 percent to $3.5 million, and net income increased 175 percent to $2.9 million or 46 cents per share.

Compared to the third quarter ended June 30, 1995, fourth quarter 1995 net sales increased $3.0 million or 18 percent, income from operations grew $1.0 million or 43 percent, and net income decreased $793,000 or 22 percent, primarily due to the aforementioned one-time income tax benefit recorded in the third quarter.

"For AG Associates, fiscal 1995 was a defining year in terms of record revenues, profits and bookings," commented Dr. Arnon Gat, chairman and CEO. "We continue to see accelerated global investment in RTP tools for mass production of sub-half micron integrated circuits. As the leading supplier of RTP equipment and related process solutions, AG Associates is the direct beneficiary of this growth."

AG Associates is a global growth company and the world's largest supplier of rapid thermal processors (RTP). The company offers process and demonstration services in Sunnyvale and Japan. AG Israel, a 49 percent owned subsidiary, located in Migdal Haemek, designs and manufactures single-wafer integrated cluster tools and chemical vapor deposition (CVD) modules for integrated and sequential processing. Founded in 1981, AG Associates is traded on the NASDAQ National Market System under the symbol AGAI. -0-

                           AG ASSOCIATES INC.
                   CONSOLIDATED STATEMENTS OF INCOME
                 (in thousands, except per share data)

                           Three Months Ended    Twelve Months Ended
                               Sept. 30,               Sept. 30,
                           1995        1994       1995       1994
                             (unaudited)

Net Sales                  $19,731    $11,270    $62,725    $40,251
Costs and expenses:
  Cost of sales             10,382      6,296     33,697     22,673
  Research and development   2,983      1,682      8,893      6,078
  Selling, general and
   administrative            2,876      2,045     10,562      7,035
Total costs and expenses    16,241     10,023     53,152     35,786
Income from operations       3,490      1,247      9,573      4,465
Other income
  (expense), net               215      (154)         12     (1,104)
Equity interest -
  unconsolidated subsidiary   (307)         0      (364)          0
Income before income taxes   3,398      1,093      9,221      3,361
Provision (credit) for
  income taxes                 522         48      (532)        137
Net income                  $2,876     $1,045     $9,753     $3,224
Net income per share         $0.46      $0.28      $2.06      $0.87
Shares used in per share
 computations                6,264      3,786     4,770       3,772

                          AG ASSOCIATES, INC.
                      CONSOLIDATED BALANCE SHEETS

(in thousands)                            Sept. 30,      Sept. 30
                                            1995           1994

Assets
 Cash and equivalents and short-term
  investments                             $18,858        $ 1,598
 Accounts receivable, net                  13,508          6,232
 Inventories                                8,394          4,323
 Deferred tax asset                         3,904              0
 Prepaid expenses and other current assets    556            229
Total current assets                       45,220         12,382
 Property and equipment - net               3,453          2,279
 Other assets                                 151             15
Total assets                              $48,824        $14,676

Liabilities and shareholders' equity
(deficiency)
 Accounts payable                         $ 7,041        $ 3,847
 Accrued liabilities                        4,519          2,971
 Warranty reserve                           2,651          2,313
 Notes payable to banks                         0          2,400
 Current portion of long-term obligations     321            490
 Income tax payable                           650            209
 Customer advances and deferred revenue     1,150          1,409
Total current liabilities                  16,332         13,639
 Convertible subordinated debentures            0          2,107
 Long-term obligations                        192            691
 Minority interest in subsidiary                0          1,979
 Shareholders' equity (deficiency)         32,300         (3,740)
Total liabilities and shareholders'
 equity                                   $48,824        $14,676

CONTACT: AG Associates, Sunnyvale

Sue Salvesen, 408/745-1790 (phone)

408/747-0902 (fax) (through Oct. 26)

From Oct. 30: 408/935-2004 (phone)

408/935-2701 (fax)