ASTeX Announces Record Fiscal 1998 First Quarter Earnings; Raises Proceeds of $13.9 Million From Redemption of Warrants.

WOBURN, Mass.--(BUSINESS WIRE)--Oct. 21, 1997--Applied Science and Technology, Inc. ("ASTeX") (Nasdaq:ASTX) today reported record earnings for the fiscal 1998 first quarter ended September 27, 1997. The Company also announced the completion of the redemption of all outstanding publicly traded redeemable warrants, which raised net proceeds of approximately $13.9 million in cash through the issuance of one million new common shares.

Total revenues for the first quarter were $17.4 million, versus $9.9 million reported in the first quarter of fiscal 1997. Net earnings for the quarter were an all-time record $1.2 million, or $0.22 per share fully diluted, compared to net earnings of $312,000, or $0.07 per share, in last year's comparable quarter.

The acquisition of ASTeX CPI, Inc., completed in the fourth quarter of fiscal 1997, added $3.6 million of revenue in the first quarter. In addition, $4.2 million was received from the warrant redemption in the first quarter. Several subsequent events, occurring after the end of the first quarter, are not reflected in the financial statements. These include the additional proceeds of $9.7 million from the warrant redemption and the $4 million of cash used to acquire Sorbios.

Dr. Richard Post, President and Chief Executive Officer, stated, "We are extremely pleased with our record performance. Several factors contributed to these strong results, including a product mix that supported higher gross margins and improvements in our internal operating and manufacturing efficiencies. We decided against pursuing the stand-alone optical smart sensor market and sold our $250,000 investment in Low Entropy Systems, Inc. (LES) for $500,000. This resulted in a non-operating gain in the quarter of $0.03 per share after tax."

"As we continue to grow our business, we have successfully sought ways to improve our operations, achieve manufacturing efficiencies and lower costs, and expand our business globally. Our focus on promoting the highest level of customer satisfaction has resulted in us working closer with our customers to provide them with integrated solutions, with just-in-time delivery. An exciting recent development in-line with this strategy is the recently announced acquisition of Sorbios GmbH. Sorbios is a high-tech company located in Berlin with excellent products in ozone for semiconductor processing and air ionizers for neutralization of static electricity in semiconductor fabs. Through this acquisition, we established a base of operations in Europe, expanded our existing product lines and customer base, and improved our applications expertise, engineering, product development, manufacturing, and distribution capabilities."

Dr. Post continued, "Throughout the quarter, we have focused on standardizing all processes within the Company including our plan for a new Enterprise Resource Planning computer system to run on a wide- area-network (WAN) providing computer links with all Company sites, ISO 9001 qualification for all divisions, and employee training and development. We feel these are also critical steps in improving customer satisfaction as well as gross margins and asset management." Dr. Post concluded, "We continue to be encouraged by the direction the semiconductor capital equipment industry is taking. We have seen extremely positive reception of our recently introduced products and continue to see strengthening business from our semiconductor customers. Specifically, we look forward to the introduction of our first ASTRON units for chamber clean applications in the coming quarter. Finally, we have seen improvements from our non- semiconductor products, specifically, power supplies for lasers and electro-optics. As we continue to provide more fully integrated, complete subsystem solutions for our customers, we look forward to growing the business to serve new markets and international clientele."

ASTeX is a leading provider of innovative production technology for the manufacture of advanced semiconductor devices. ASTeX markets its plasma sources and subsystems, ozone generators and subsystems, and specialty power sources to the world's leading semiconductor capital equipment manufacturers. ASTeX markets the same underlying core technology for medical, electro-optic and synthetic diamond applications.

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This release contains forward looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of competitive products and pricing, product demand and market acceptance, new product development, reliance on key strategic alliances, availability of raw materials, the regulatory environment, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. -0-

            Applied Science and Technology, Inc. and Subsidiaries
                 Consolidated Statements of Operations

                                           Three Months Ended
                                September 27,           September 28,
                                    1997                    1996
                                (unaudited)              (unaudited)

Product sales, net              $16,580,003              $8,822,457
Research contract revenue           200,040                 259,916
Other revenue                       641,259                 777,967
     Total revenue               17,421,302               9,860,340

Cost of sales and revenue:
     Product sales and
      other revenue              10,879,417               5,927,383
     Research contracts              67,870                 119,543
          Total cost of sales
           and revenue           10,947,287               6,046,926

          Gross profit            6,474,015               3,813,414

Operating expenses:
     Research and development
      expenses                    2,561,007               1,669,430
     Selling expenses               835,058                 765,963
     General and administrative
      expenses                    1,400,906                 842,325
          Total operating
           expenses               4,796,971               3,277,718

          Earnings from
           operations             1,677,044                 535,696

Other expense (income):
     Interest expense               160,711                 152,200
     Interest income                (80,056)               (115,217)
     Other expense (income)        (236,557)                  3,797
          Total other (income)
           expense                 (155,902)                 40,780

          Earnings before
           income taxes           1,832,946                 494,916
Income tax expense                  678,000                 183,000

          Net earnings          $ 1,154,946              $  311,916

Primary net earnings per share  $      0.23              $     0.07
Fully diluted
 net earnings per share         $      0.22              $     0.07

Weighted average common shares
  outstanding used to calculate primary
  Earnings per share              5,069,825               4,489,287

Weighted average common shares
  Outstanding used to calculate
  fully diluted
  Earnings per share              5,205,765               4,489,287


             Applied Science and Technology, Inc. and Subsidiaries
                      Consolidated Balance Sheets

Assets                                   September 27,   June 28,
                                            1997           1997
                                         (unaudited)
Current assets:
     Cash and cash equivalents           $  9,293,426 $ 3,246,337
     Short-term marketable investments      1,299,658           0
     Accounts receivable, trade, net       10,116,114  11,915,919
     Inventories                           10,866,968  10,013,422
     Prepaid expenses and other assets        249,067     276,682
     Deferred income taxes                    895,237     895,237
              Total current assets         32,720,470  26,347,597

Property, plant and equipment:
     Land                                     473,000     473,000
     Building and improvements              1,624,578   1,621,469
     Equipment                              8,103,478   7,871,718
     Furniture and fixtures                   746,955     741,143
     Leasehold improvements                 1,946,801   1,946,800
                                           12,894,812  12,654,130
     Less accumulated depreciation
      and amortization                     (5,670,168) (5,150,881)
               Net property,
                plant and equipment         7,224,644   7,503,249

Other assets:
     Patents, net                             156,828     148,794
     Goodwill, net of accumulated
      amortization                          3,227,599   3,261,652
     Long-term investments                          0   1,299,545
     Notes receivable, less
      current maturities                      382,072     383,080
     Other                                    141,486     383,304
               Total other assets           3,907,985   5,476,375
                                          $43,853,099 $39,327,221
Liabilities and Stockholders' Equity
Current Liabilities:
     Current maturities of
      long-term debt                        1,824,397   1,824,397
     Accounts payable                       3,568,376   3,869,521
     Accrued expenses                       1,240,960   1,374,635
     Accrued compensation expense
      and related costs                     1,048,872   1,448,928
     Accrued income tax expense               704,488     674,142
     Commissions payable and
      customer advances                       264,749     226,672
               Total current liabilities    8,651,842   9,391,295

Long-term debt, less current maturities     5,909,666   6,368,913
Deferred income taxes                          78,003      78,003
               Total liabilities           14,639,511  15,838,211

Stockholders' equity:
     Common stock                              48,624      45,190
     Additional paid-in capital            32,426,039  27,859,845
     Accumulated deficit                   (3,112,749) (4,267,699)
     Less: Notes receivable
      for common stock purchases             (148,326)   (148,326)
               Total stockholders' equity  29,213,588  23,489,010
                                          $43,853,099 $39,327,221

CONTACT: Applied Science and Technology, Inc., Woburn

John Tarrh, [phone]

or

Morgen-Walke Associates, Inc., New York 

Investor Relations Contact:

Donna N. Stein, APR/Dan Durkin/Keil Decker, [phone]

Press Contact: Lee Foley/Ann Travers, [phone]