ASTeX announces record fiscal 1997 second quarter revenues.

WOBURN, Mass.--(BUSINESS WIRE)--February 4, 1997--

Signs $14 Million Contract with Leading Semiconductor Capital Equipment Manufacturer

Applied Science and Technology, Inc. ("ASTeX") (Nasdaq:ASTX) today reported results for the fiscal 1997 second quarter ended December 28, 1996.

Total revenues for the second quarter increased 35% to a record $9.3 million, versus $6.9 million reported in the second quarter of fiscal 1996. Net earnings for the quarter rose $2.7 million to $280,000, or $0.06 per share, compared to a loss of $2.4 million, or $0.58 per share, which included non-recurring expenses associated with the acquisition of ETO, Inc., for the comparable second quarter of fiscal 1996. Excluding the non-recurring expenses, net earnings decreased by 50% from $559,000, or $0.13 per share, to $280,000, or $0.06 per share. Weighted average common shares outstanding increased by 333,541 to 4,484,908, of which 328,662 were associated with the acquisition of ETO.

Dr. Richard Post, President and Chief Executive Officer, stated, "The Company's stronger revenue results for the second quarter of fiscal 1997 were due to the addition of the medical capital equipment revenues from ETO which added $3.2 million or 35% of ASTeX total revenues of $9.3 million. Without ETO, total revenues would have been $5.7 million, a 17% decrease from last year's $6.9 million, as a result of the downturn in the semiconductor capital equipment market. Without ETO, earnings would have been $270,000, or $0.06 per share."

Mr. Paul Blackborow, Vice President for Customer Operations, stated, "During the quarter, ASTeX signed two major supply agreements with leading semiconductor capital equipment manufacturers (SCEMs). In December the Company signed a 20 month supply agreement valued at $14 million with a leading SCEM. The agreement covers microwave components for photoresist strip and passivation, and ozone generators for depositing intermetal dielectrics in semiconductors. Additionally, as previously announced, ASTeX entered into a Global Procurement Agreement with another major SCEM for the delivery of an advanced photoresist strip source as well as microwave components for CVD. The agreement is valued at $11 million and runs for two years beginning January 1, 1997, with the customer having an option to renew for an additional year. Both contracts may be terminated without penalty."

"ASTeX strengthened its senior management with the addition of Brian Chisholm as Senior Vice President for Operations in early January," Dr. Post said. "In this newly established position, Mr. Chisholm will manage engineering, manufacturing, service and reliability for the semiconductor equipment group. Prior to his joining ASTeX, Mr. Chisholm was manager for research and development at Varian Associates-Semiconductor Equipment Business-Thin Film Systems. Brian will provide ASTeX with the technical leadership to get products to market faster, while achieving our corporate goal of producing the highest quality and most reliable products at the lowest possible costs."

Mr. Chisholm commented, "ASTeX represents a very exciting opportunity for me personally. They have great technology, employees and customers. I look forward to helping ASTeX meet its growth objectives as a strong, global OEM supplier by becoming a more process- and data-driven organization. My experience in the semiconductor equipment industry allows me to better understand our customers' needs."

Dr. Post added, "The Company has continued to increase spending on research and development, with a focus on new product introductions and new design wins. Spending in the quarter increased by 46% to $1.4 million or 15% of total revenues as compared with $965,000 or 14% of total revenues last year. In addition, investments in manufacturing are being made to meet our future production capacity needs. Furthermore, ASTeX continues to focus on improving CVD diamond production rates to lower the costs of producing synthetic diamond. With continuing financial support from the Defense Advanced Research Projects Agency (DARPA), we have successfully upgraded a key part of our production reactor in order to provide high quality diamond at lower cost."

Dr. Post concluded, "Though the semiconductor capital equipment industry has experienced a significant downturn, we see signs that the industry has begun to recover. We anticipate revenue increases based upon new business from some of our major customers, and are well positioned to take advantage of the expected recovery through additional new contracts, continued R & D investments and key additions to management."

ASTeX is a leading provider of innovative production technology through delivery of components and systems for semiconductor, medical, and CVD diamond applications. ASTeX markets its systems to producers of CVD diamond, while its microwave and RF power generators, plasma sources and ozone generators and subsystems are marketed to the world's leading semiconductor and medical capital equipment manufacturers. Typical semiconductor applications include manufacture of leading edge devices such as Pentium and PowerPC chips, while medical applications include diagnostic imaging and sterilization.

"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.

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

                     Three Months Ended             Six Months Ended
                   December 28,  December 30,  December 28,  December 30,
                       1996         1995           1996         1995
                   (unaudited)  (unaudited)    (unaudited)   (unaudited)

Product sales, net  $8,174,529  $6,506,727     $16,996,986   $11,594,564
Research contract
 revenue               284,314      87,725         544,230       295,346
Other revenue          833,934     264,515       1,611,901       608,472
Total revenue        9,292,777   6,858,967      19,153,117    12,498,382
Cost of sales and revenue:
Product sales
 and other revenue  5,758,982    3,857,866      11,686,365     7,281,781
Research contracts    138,400       57,481         257,943       149,612
Total cost of sales
 and revenue        5,897,382    3,915,347      11,944,308     7,431,393
Gross profit        3,395,395    2,943,620       7,208,809     5,066,989
Operating expenses:
Research and development
 expenses           1,409,836      965,415       3,079,266     1,701,468
Selling expenses      632,885      601,960       1,398,848     1,134,950
General and administrative
 expenses             891,602      780,752       1,733,927     1,402,786
In process research
 and development            0    2,203,000               0     2,203,000
Acquisition
 related expenses           0      750,000               0       750,000
Total operating
 expenses           2,934,323    5,301,127       6,212,041     7,192,204
Earnings (loss) from
 operations           461,072   (2,357,507)        996,768    (2,125,215)
Other expense (income):
Interest expense      141,222            0         293,422             0
Interest income       (99,265)    (207,644)       (214,482)     (408,481)
Other expense         (24,473)       4,250         (20,676)        8,859
Total other
 (income) expense      17,484     (203,394)         58,264      (399,622)
Earnings (loss) before
 income taxes         443,588   (2,154,113)        938,504    (1,725,593)
Income tax expense    164,000      240,000         347,000       370,000
Net earnings (loss) $ 279,588  $(2,394,113)    $   591,504   $(2,095,593)
Primary net
 earnings (loss)
 per share          $    0.06  $     (0.57)    $      0.13   $     (0.50)
Fully diluted net
 earnings (loss)
 per share          $    0.06  $     (0.58)    $      0.13   $     (0.51)
Weighted average
 common shares
 outstanding        4,484,908    4,151,367       4,487,324     4,114,187

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

Assets
                                          December 28,     June 28,
                                              1996           1996
                                           (unaudited)
Current assets:
 Cash and cash equivalents                $4,133,201    $5,182,294
 Short-term marketable investments           999,496     1,990,962
 Accounts receivable, trade, net           7,372,989     8,921,890
 Inventories                               9,116,930     8,734,401
 Prepaid expenses and other assets           322,249       276,848
 Deferred income taxes                       969,741       969,741
   Total current assets                  $22,914,606  $ 26,076,136

Property, plant and equipment:
 Land                                        473,000       473,000
 Building and improvements                 1,619,007     1,606,947
 Equipment                                 7,352,123     7,068,802
 Furniture and fixtures                      536,639       543,860
 Leasehold improvements                    1,458,390     1,455,977
                                          11,439,159    11,148,586
 Less accumulated depreciation
  and amortization                        (4,213,127)   (3,458,407)
 Net property, plant and equipment         7,226,032     7,690,179
Other assets:
 Patents, net                                160,564       141,525
 Other                                       253,104       262,224
 Long-term investments                     1,300,185           ---
 Notes receivable                            159,686       191,362
    Total other assets                     1,873,539       595,111
                                         $32,014,177   $34,361,426

Liabilities and Stockholders' Equity
Current Liabilities:
  Current maturities of long-term debt     1,625,788     1,624,641
  Accounts payable                         1,728,248     2,564,149
  Accrued expenses                           691,147       820,030
  Accrued compensation expense
   and related costs                         457,806     1,428,759
  Accrued income tax expense                  25,155       173,179
  Commissions payable and customer advances  210,051       248,836
     Total current liabilities             4,738,195     6,859,594

Long-term debt, less current maturities    5,342,220     6,169,517
Deferred income taxes                         36,507        36,507
     Total liabilities                    10,116,922    13,065,618

Stockholders' equity:
 Common stock                                 44,438        44,484
 Additional paid-in capital               26,615,097    26,690,108
 Accumulated deficit                      (4,613,954)   (5,205,458)
 Less: Notes receivable for
   common stock purchases                   (148,326)     (233,326)
 Total stockholders' equity               21,897,255    21,295,808
                                         $32,014,177   $34,361,426

CONTACT: Applied Science and Technology, Inc.

John Tarrh, 617/937-5135

or

Morgen-Walke Associates, Inc.

Investor Relations Contact:

Donna N. Stein, APR/Dan Durkin/Keil Decker

212/850-5600

Press Contact: Lee Foley

212/850-5600