ATEC Announces Interpharm Annual Results.

Business Editors/Health/Medical Writers

COMMACK, N.Y.--(BUSINESS WIRE)--April 4, 2003

ATEC Group, Inc. (AMEX:TEC) today announced the year-end 2002 financial results of Interpharm, Inc. ATEC previously announced the planned acquisition of Interpharm.

Year ended December 31, 2002 compared to December 31, 2001

Results of Operations

Financial Highlights

-- Net sales increased 32% or 5.9 million to $24.3 million from

$18.4 million.

-- Gross profit increased 22% or $.8 million to $4.3 million from

$3.5 million.

-- Operating income increased 80% or $.8 million to $1.8 million

from $1.0 million.

-- Net income increased 104% or $535,854 to $1,050,419 from

$514,565.

Net Sales and Gross Profit

Net sales for the fiscal year ended December 31, 2002 were $24.3 million compared to $18.4 million for the fiscal year ended December 31, 2001, an increase of $5.9 million. Of this 32% increase in net sales approximately $5.1 million is attributable to increased orders from existing customers spread evenly across Interpharm's product lines and resulting from Interpharm's increased production capacity and $800.000 is attributable to the introduction of Naproxen to Interpharm's product line. The increase in net sales was not attributable to any change in prices which, for all products in Interpharm's product line, remained stable from the fiscal year ended December 31, 2001 to the year ended December 31, 2002. Gross profit for the year ended December 31, 2002 was $4.3 million, an increase of 22% or $.8 million from the $3.5 million for the prior year.

During the year ended December 31, 2002, two Interpharm customers accounted for approximately 48% of Interpharm's total sales.

Cost of Sales

Cost of sales increased to $20 million in the fiscal year ended December 31, 2002, or 34% from $14.9 million in the prior year due to increased production. Approximately $3.7 million, or 73% of this increase is primarily raw material purchases and approximately $1.0 million, or 12% was for increased labor costs. Raw material prices were constant during the period.

Interpharm increased its production to satisfy existing demand from existing customers, which have additional purchasing capacity. The increase in production is attributable to the introduction of Naproxen as well as increased production of Ibuprofen and Iso Cap, the production of which increased 25% and 30% respectively.

Research and Development

Research and development expenses for the fiscal year ended December 31, 2002 were $211,450, or 1% of net sales, compared to $110,000, or 1% of net sales in 2001, and increase of $101,450. Research and development expenses were used primarily for a biostudy for a new drug currently in development.

Selling, General and Administrative

Selling, general and administrative expenses were $2.1 million, in the year ended December 31, 2002, or 9% of net sales, compared to $2.0 million, or 11% of net sales, for 2001.

Selling, general and administrative expenses for the fiscal year ended December 31, 2002 were primarily made up of salaries ($492,000), selling commissions ($164,000) freight expenses ($370,000), legal, accounting and other professional services ($328,000), repairs and maintenance costs ($74,000) and insurance expense ($23,000). Salaries increased $37,000 due to increases in staff to accommodate increased production. In addition, bad debt expense decreased by $214,000 due to the write-off of one customer balance in the preceding year and write-offs occurring during the year ended December 31, 2002 were $47,000. No sales were made to the customer whose balance was written off in the fiscal year ended December 31, 2002.

Income Taxes

The effective tax rate for the fiscal year ended December 31, 2002 was 32% compared to 29% for 2001. The increase in the effective tax rate for 2002 was primarily due to a decrease in the net deferred tax asset valuation allowance in the 2001 fiscal period. The deferred tax asset was primarily attributable to New York State investment tax and employment incentive tax credits. The tax credits utilized are limited to the state taxes computed on the minimum taxable income base. These tax credits also expire in 15 years if not utilized. Management has estimated a reserve for the deferred tax asset based upon prior years' actual credits utilized and projected credits to be utilized on future taxable income. The valuation allowance reserve has decreased due to Interpharm's increased taxable income, which has utilized more credits and management's estimate of future growth, which has reduced the estimated credits that will not be utilized.

ATEC has filed a preliminary proxy statement with the U.S. Securities and Exchange Commission on March 26, 2003. The filing is available at the SEC's website and contains information on Interpharm and the proposed sale of the computer operations.

About Interpharm:

Based in Hauppauge, New York, Interpharm, Inc., is in the business of developing, manufacturing, and distributing generic drugs in the United States. Interpharm currently markets 20 products, representing various dosage strengths for 11 distinct drugs that are manufactured by it. Interpharm markets its products primarily to wholesalers and drug distributors principally through its internal sales staff as well as independent sales representatives.

About ATEC:

Based in Commack, New York, ATEC Group, Inc., is a system integrator and provider of a full line of information technology solutions and services. Its Technology Integration Services "TIS" division is a one-stop provider for the computer needs of enterprise customers including businesses, government agencies and educational institutions. The Global Distribution "GD" division is a B2B division that offers a unique combination of price and delivery to other resellers, retailers and enterprise customers. ATEC has entered into an asset purchase agreement to sell the computer operations to its management group. For more information, visit www.atecgroup.com.

Forward-looking Statements 

Statements made in this news release, may contain forward-looking statements concerning ATEC Group's and Interpharm's business and products. The actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, shipment, market acceptance, additional competition from existing and new competitors, changes in technology, and various other factors beyond their control. Other risks inherent in ATEC Group's business are described in its Securities and Exchange Commission filings, including its most recently filed Forms 10K and 10Q. ATEC Group and Interpharm undertake no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.