American Science and Engineering, Inc. Announces 65% Increase in Revenues for Second Quarter FY 1999.

BILLERICA, Mass.--(BUSINESS WIRE)--Oct. 26, 1998--American Science and Engineering, Inc. (AMEX:ASE) today reported operating profits of $922,000 on revenues of $14.4 million in its second fiscal quarter ended September 30, 1998. Compared to the year ago quarter, operating profits were up 36% and revenues increased 65%, and compared to the first quarter of FY 1999, operating profits and revenues increased by 1% and 23%, respectively.

Ralph Sheridan, Chief Executive Officer and President, stated, "The surge in revenues this quarter reflects our growth in international CargoSearch(TM) project execution. This increase builds on a solid base of domestic revenues of both CargoSearch and ParcelSearch(TM) products. During the quarter, we announced our first major sale to Latin America, five MobileSearch(TM) systems to the Procuraduria General de la Republica (Attorney General's Office) in Mexico. Deliveries of these systems will commence in the third quarter. Other highlights include the delivery of the first MoblieSearch unit to the Middle East for protection of high threat facilities from terrorism. In addition, AS&E was awarded a ninth fixed-site CargoSearch system by U.S. Customs for drug interdiction on the Southwest border with Mexico.

"During the second quarter we acquired the operations and intellectual property of Schonberg Research Corporation in Santa Clara, California. This operation will serve as the West Coast research arm of AS&E(R), specializing in high-energy linear accelerator research and product development. Renamed the High Energy Systems Division, this team will pursue higher energy source development for integration into CargoSearch inspection platforms and pursue industrial markets for higher energy systems. Our research and development expenditures were $1,458,000 in the quarter compared to $881,000 in the year ago quarter, about 10% of revenues in each case and on target with expectations. These funds are devoted to both current product enhancement as well as future technology advances in security detection," Sheridan noted.

The Company reported after tax profits of $554,000 and earnings per share of $.11 in the current quarter, compared to the $526,000 and $.10 per share reported in the first quarter of FY 1999.

AS&E(R) develops and manufactures sophisticated X-ray inspection products for critical detection and security applications. AS&E's patented Z(R) Backscatter technology detects plastic explosives, illegal drugs, and other contraband, even when artfully concealed in complex backgrounds by terrorists and smugglers. For more information on AS&E products and technologies, please visit the Company's web site at http://www.as-e.com.

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                    CONSOLIDATED FINANCIAL SUMMARY
      (Dollars and shares in Thousands, except per share amounts)
                              (Unaudited)

                             Three Months Ended    Six Months Ended
                            Sept. 30,  Sept. 30,  Sept. 30,  Sept. 30,
                              1998       1997       1998        1997

Net sales and               $ 14,361   $  8,705   $ 26,053    $ 16,237
contract revenue

Operating Income                 922        677      1,836       1,293

Other Income (Expense)             1         35        (37)         59

Income before provision
 for income taxes                923        712      1,799       1,352

Provision for income taxes       369         27        719          57

Net income                  $    554   $    685   $  1,080    $  1,295

Income per common share     $    .11   $    .14   $   0.21    $   0.27

Shares used in income per
 share calculation             5,083      4,953      5,097       4,881

    The results of operations reported herein may not be indicative
of future financial conditions or results of future operations.

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Safe Harbor Statement

The foregoing press release contains statements concerning the Company's financial performance and business operations which may be considered "forward-looking" under applicable securities laws.

The Company wishes to caution readers of this press release that actual results might differ materially from those projected in any forward-looking statements.

Factors which might cause actual results to differ materially from those projected in the forward-looking statement contained herein include the following: significant reductions or delays in procurements of the Company's systems by the United States and other governments; disruption in the supply of any sole-source component incorporated into the Company's products (of which there are several); litigation seeking to restrict the use of intellectual property used by the Company; potential product liability claims against the Company; global political trends and events which affect public perception of the threat presented by drugs, explosives and other contraband; global economic developments and the ability of governments and private organizations to fund purchases of the Company's products to address such threats; and the potential insufficiency of Company resources, including human resources, capital, plant and equipment and management systems, to accommodate any future growth. These and certain other factors which might cause actual results to differ materially from those projected are more fully set forth under the caption "Risk Factors" in the Company's Registration Statement on Form S-3 (SEC File No. 333-9151).