Aerovox Reports Third Quarter Results.

NEW BEDFORD, Mass.--(BUSINESS WIRE)--Oct. 15, l998--Aerovox Incorporated (Nasdaq/NM:ARVX) today reported results for the third quarter and nine months ended September 26, l998.

Net sales for the quarter ended September 26, 1998 totaled $27.4 million compared with $26.1 million for the three months ended September 27, l997. Net income in the third quarter of 1998 totaled $550,000, or $0.10 per share, versus a loss of $838,000 or ($0.16) per share, in the third quarter last year. Sales during the quarter were buoyed by strong demand from HVAC OEMs responding to the warm summer throughout North America.

Included in income for the third quarter was a gain of $949,000 on the sale of the Company's Power Factor Correction business, as announced by the Company in August. Excluding this gain, the Company sustained a loss before taxes of $121,000, compared to a loss before taxes of $1.5 million in the same period of 1997.

Revenues for the nine months were $89.1 million versus $92.9 million in 1997. Net income for the nine-month period was $1.6 million, or $0.30 share, compared to $15,000, or $0.00 per share, for the same period in 1997.

"The fact that we showed such dramatic year to year improvement in what is historically our weakest quarter is very encouraging to all of us," said Aerovox President and CEO, Robert D. Elliott. "Despite heavy expenditures on the conversion of information systems during the quarter, our efforts to cut costs, streamline operations and improve service were clearly visible at the gross margin line," added Elliott.

In addition to operating improvements, the Company continued to make progress on improving its balance sheet, as interest-bearing debt dropped to $16.3 million, the lowest level in over four years.

Aerovox manufactures film, paper and aluminum electrolytic capacitors. The Company sells its products worldwide, principally to original equipment manufacturers as components in electrical and electronic equipment. In addition to its plant in New Bedford, Massachusetts, Aerovox has operations in Huntsville, Alabama; Juarez, Mexico; and Weymouth, England. -0-

                             AEROVOX INC.
                   Consolidated Statements of Income
             (Amounts in thousands, except per share data)
                              (Unaudited)

                      Three Months Ended            Nine Months Ended
                     Sept. 26,     Sept. 27,     Sept. 26,   Sept. 27,
                        1998         1997           1998        1997


Net sales                 $ 27,384    $ 26,126    $ 89,140    $ 92,927
Cost of sales               22,846      23,583      73,207      78,915

Gross margin                 4,538       2,543      15,933      14,012
Selling, general
 and administrative          4,437       3,643      13,515      12,743
 expenses

Income (loss)
 from operations               101      (1,100)      2,418       1,269

Other income (expense):
      Interest expense        (358)       (432)     (1,185)     (1,407)
      Other income           1,085          63       1,298         120

Income (loss) before
 income taxes                  828      (1,469)      2,531         (18)
Provision for income
 taxes                         278        (631)        908         (33)

Net income (loss)         $    550    $   (838)   $  1,623     $    15

Basic earnings
 (loss) per share         $   0.10    $  (0.16)   $   0.30    $   0.00

Diluted earnings
 (loss) per share         $   0.10    $  (0.16)   $   0.30    $   0.00


                             AEROVOX INC.
                      Consolidated Balance Sheets
                        (Amounts in thousands)
                              (Unaudited)

                                                  Sept. 26,   Dec. 27,
                                                    1998        l997
                        ASSETS
Current assets:
  Cash                                            $    625   $    693
  Accounts receivable, net                          15,484     14,249
  Inventories                                       18,606     18,176
  Prepaid expenses and other current assets          1,190        637

    Total current assets                            35,905     33,755

Property, plant and equipment, net of accumulated
  depreciation                                      29,684     32,263
Deferred income taxes                                5,412      5,385
Other assets                                          --          156

    Total assets                                  $ 71,001   $ 71,559


            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                $  9,403   $ 10,351
  Accrued compensation and related expenses          3,292      2,887
  Other accrued expenses                             3,380      3,030
  Current maturities of long-term debt               1,645      1,909
  Income taxes                                       1,158        362

          Total current liabilities                 18,878     18,539

Deferred income taxes                                5,474      5,446
Industrial revenue bond                              1,868      1,750
Long-term debt less current maturities              12,779     14,973
Reserve for environmental costs and plant
 remediation                                         6,033      6,033
Other liabilities                                      670      1,052

Stockholders' equity:
  Common stock                                       5,387      5,384
  Additional paid-in capital                         1,045      1,037
  Retained earnings                                 18,905     17,282
  Foreign currency translation adjustment              (38)        63

    Total stockholders' equity                      25,299     23,766
    Total liabilities and stockholders' equity    $ 71,001   $ 71,559

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