Analysis & Technology third quarter revenue rises 22 percent to a record $35.7 million as net earnings from continuing operations increase to $.36 from $.33 per share.

NORTH STONINGTON, Conn.--(BUSINESS WIRE)--Jan. 24, 1997--

Nine Month Net Earnings From Continuing Operations Increase to

$1.04 From $.95 Per Share

Analysis & Technology, Inc. (NASDAQ/NMS: AATI) announced today that net earnings for the third quarter of fiscal 1997, which ended December 31, 1996, increased to $868,000, or $.36 per share, on a 22% gain in revenue to $35,653,000. This is a quarterly revenue record for Analysis & Technology, Inc. (A&T). For the third quarter of fiscal 1996, net earnings from continuing operations were $820,000, or $.33 per share, on revenue of $29,353,000.

Fiscal 1997 third quarter results include the operations of Vector Research Company, Inc., which was acquired by A&T on July 29, 1996. "Vector has contributed modestly to net earnings since its acquisition and we expect increasingly positive earnings contributions in the future," said Gary P. Bennett, president and chief executive officer of A&T. Vector Research provides high-end engineering and technical services primarily to U.S. Navy customers.

For the nine months of fiscal 1997 ended December 31, 1996, net earnings from continuing operations rose to $2,510,000, or $1.04 per share. Revenue for the period increased 13% to a record of $103,648,000. During fiscal 1996, comparable nine month net earnings from continuing operations (without an R&D tax credit taken during the second quarter of fiscal 1996) were $2,361,000, or $.95 per share. Revenue for this period was $91,808,000. When the R&D tax credit mentioned above is included for the first nine months of fiscal 1996, net earnings from continuing operations were $2,761,000, or $1.11 per share.

Mr. Bennett attributed A&T's third quarter growth to the integration of Vector Research, and to increased sales in the Company's core defense business. A&T's contractual backlog at December 31, 1996 was 22% ahead of last year at $528.2 million. Mr. Bennett noted, "We are increasingly confident in the quality of our core defense business. As evidenced by our backlog, we are benefiting from the Navy's budget commitments to antisubmarine warfare, mine warfare, integrated communications networks, and advanced training programs. These areas are A&T's strengths." He continued, "We plan to achieve growth in our defense business through a program of acquisition of smaller defense companies that complement our core technology competencies, as well as through internal growth."

Mr. Bennett said A&T's sales of interactive multimedia training systems to commercial customers increased 35% for the first nine months of fiscal 1997. Addressing A&T's plan for growth in its non-defense markets, Mr. Bennett said, "The second element of our strategy is to significantly expand our commercial operations in information technology and interactive multimedia (IMM) training. To achieve this, we are developing sales and marketing capabilities focused on target markets with greatest potential for our outsourcing services."

Working with customers, Analysis & Technology, Inc. creates technology-based solutions in three key areas: engineering services, information technologies, and interactive multimedia training systems. -0-

Except for historical information contained in this report, the information in the report consists of forward looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Potential risks and uncertainties include changes in Navy program funding priorities, budget reductions in defense programs, and pricing pressures from competitors and/or customers. Other risks and uncertainties are discussed in the documents filed by the Company with the Securities and Exchange Commission.

                                         Three Months
                                         Ended Dec. 31,
                                1996 (unaudited)   1995 (unaudited)

Revenue
 from continuing operations       $35,653,000        $29,353,000

Operating earnings
 from continuing operations         1,646,000          1,608,000

Earnings from continuing operations
 before income taxes                1,426,000          1,402,000

Net earnings from continuing
 operations                           868,000            820,000

Loss from discontinued operations,
 net of income tax benefit                  0            (53,000)

Net earnings                          868,000            767,000

Earnings (loss) per common and
common equivalent share
 Continuing operations                   0.36               0.33
 Discontinued operations                 0.00              (0.02)

   Net earnings                          0.36               0.31

Weighted average shares and common
 equivalent shares outstanding      2,418,000          2,514,000

-0-

                                             Nine Months
                                            Ended Dec. 31,
                                 1996 (unaudited)   1995 (unaudited)

Revenue
 from continuing operations        $103,648,000       $91,808,000

Operating earnings
 from continuing operations           4,941,000         4,822,000

Earnings from continuing operations
 before income taxes                  4,290,000         4,056,000

Net earnings from continuing
 operations
 Without R&D tax credit               2,510,000         2,361,000
 Including R&D tax credit                   N/A         2,761,000

Loss from discontinued operations,
 net of income tax benefit                    0          (195,000)

Loss on the disposal of discontinued
 operations, net of income tax benefit        0        (1,316,000)

Net earnings                          2,510,000         1,250,000

Earnings (loss) per common and
common equivalent share
 Continuing operations, w/o R&D tax
  credit                                   1.04              0.95
 Continuing operations, incl. R&D tax
  credit                                    N/A              1.11
 Discontinued operations                   0.00             (0.61)

Net earnings                               1.04              0.50

Weighted average shares and common
 equivalent shares outstanding        2,416,000         2,482,000

CONTACT: Analysis & Technology Inc.

Elaine Beckwith

860-599-3910, ext. 2630

E-Mail: [e-mail]

World Wide Web: http://www.aati.com