Applied Extrusion Technologies, Inc. Announces Fourth Quarter and Fiscal 2000 Year-End Results.

Business Editors

BOSTON--(BUSINESS WIRE)--Nov. 21, 2000

Applied Extrusion Technologies, Inc. (NASDAQ, NMS-AETC) today announced financial results for its fourth fiscal quarter and year ended September 30, 2000. Sales for the fourth fiscal quarter were $65,779,000, an increase of $5,431,000, or 9 percent, over the fourth quarter of 1999. Gross profit for the fourth fiscal quarter was $9,554,000, or 14.5 percent of sales, prior to $2,400,000 of costs associated with a temporary shutdown of certain manufacturing plants in September. Gross profit was $5,536,000 lower than fiscal 1999 due to approximately 40 percent higher raw material costs in the fourth quater of fiscal 2000 as a result of the increase in the price of crude oil. While the OPP films industry has been recovering from low capacity utilization, it has not reached a capacity utilization level sufficient to enable manufacturers to pass on the majority of the raw material cost increases to customers. Operating expenses decreased by $849,000 from the fourth quarter of 1999 to $8,246,000, or 12.5 percent of sales. Operating profit prior to shutdown costs was $1,308,000, or 2.0 percent of sales, compared with $5,995,000, or 9.9 percent of sales, for the same quarter in fiscal 1999. Net loss for the quarter was $4,191,000, or $.35 per share, of which $.13 resulted from the plant shutdown and $.22 from ordinary operations.

For fiscal 2000 the Company reported sales of $268,375,000, gross profit of $55,519,000, or 20.7 percent of sales, and net income of $328,000, or $.03 per share, prior to costs related to a plant shutdown. After including such costs, net loss was $1,209,000 or $.10 per share. In fiscal 1999 sales were $237,042,000, gross profit was $51,346,000, or 21.7 percent of sales, prior to $2,905,000 of plant shutdown costs incurred last year. The net loss was $4,669,000, or $.41 per share, of which $.15 resulted from the plant shutdown, $.19 from the write-off of acquisition related costs, and the remaining $.07 resulted from operations. Interest expense for fiscal 2000 was $21,096,000, an increase of $2,187,000 over fiscal 1999, as a result of both higher interest rates and increased borrowing levels.

"Fiscal 2000 was a disappointing year for AET," commented Thomas E. Williams, President and Chief Executive Officer. "We entered the year beginning to demonstrate the strength and earnings power of the business. In spite of industry overcapacity, AET improved gross and operating margins in the first half of fiscal 2000 to 24.6 percent and 11.5 percent, respectively, and achieved EBITDA margins of nearly 20 percent. These results were realized by achieving our strategy to lead the OPP films industry by selling differentiated products produced on highly-efficient assets. Unfortunately, the benefits of the strategic investments made in the business over the past several years were overshadowed by a $14 million increase in raw material costs over fiscal 1999, which were almost entirely felt in the second half of the year. Although the OPP films market has been recovering from excess capacity and pricing has stabilized, it has not reached a capacity utilization level sufficient to pass on price increases to cover the 70 percent increase in raw material costs experienced in the past eighteen months. AET has superior products and a low cost structure, yet we are not generating acceptable returns, a troubling situation for our industry and our customers, who need a reliable supply of OPP films."

"Looking forward, we remain confident about the OPP films industry and AET's leadership position in the marketplace. Demand for OPP films has steadily grown at an average rate of 6 percent per year over the past 20 years, as the unique capabilities of high-end films drive substitution for other packaging and labeling materials. Fiscal 2000 was no exception, with AET's volume increasing over 12 percent and estimated industry growth in excess of 6 percent. No new capacity has been announced and with two years required to build a new line, the industry-wide excess capacity is quickly being absorbed. In an industry where many participants are losing cash, we believe this tightened capacity will ultimately drive increased selling prices."

"We have entered fiscal 2001 with high cost inventory and raw materials and we have realized little selling price relief, resulting in our expectation of losses for the first half of the year. These losses could be exacerbated by potential lost sales volume as we take aggressive action to restore profit margins. In the second half of the year, we anticipate relief from lower raw material costs and higher selling prices as industry utilization continues to increase, driving improved profitability. It is unclear at this time whether expected profits in the second half of the year will be sufficient to make up for earlier losses, but they should position the Company well for fiscal 2002," concluded Williams.

Despite the challenges posed by the dramatic resin cost escalation in the past year, the Company generated reasonably strong cash flows in fiscal 2000, with an EBITDA margin of over 14 percent. However, due to current business conditions, the Company amended its Credit Agreement effective September 30, 2000, modifying the covenants for fiscal 2000 and 2001 and increasing its line of credit from $80 million to $90 million.

Applied Extrusion Technologies, Inc. is a leading developer and manufacturer of highly specialized plastic films used primarily in consumer product labeling, flexible packaging, health care and filtration applications. Through its technological innovations, AET is a leader in the North American oriented polypropylene and apertured films markets.

Except for the historical information contained herein, the matters discussed in this report are forward-looking statements that involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including those risks related to the timely development and acceptance of new products, fluctuations in raw materials and other production costs, the loss of one or more significant customers, the impact of competitive products and pricing, the timely completion of capital projects, the success of the Company's efforts to access capital markets on satisfactory terms, and to acquire, integrate, and operate new businesses and expand into new markets, as well as other risks detailed in Exhibit 99 of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1999 and from time to time in the Company's other reports filed with the Securities and Exchange Commission.

                 APPLIED EXTRUSION TECHNOLOGIES, INC.
                         Statements of Income
                 (In thousands, except per share data)
                              (Unaudited)

                            Three Months Ended     Fiscal Year Ended
                           --------------------  --------------------
                            Sept 30,   Sept 30,   Sept 30,   Sept 30,
                              2000       1999       2000       1999
                              ----       ----       ----       ----

Sales                      $  65,779  $  60,348  $ 268,375  $ 237,042
Cost of sales                 58,625     45,258    215,256    188,601
                           ---------  ---------  ---------  ---------

Gross profit                   7,154     15,090     53,119     48,441

Operating expenses:
  Selling, general and
   administrative              6,660      7,383     27,152     26,550
  Research and development     1,586      1,712      6,759      7,123
                           ---------  ---------  ---------  ---------
     Total operating
      expenses                 8,246      9,095     33,911     33,673

Operating profit (loss):      (1,092)     5,995     19,208     14,768

Non operating expenses:
  Interest expense, net        5,455      4,588     21,096     18,909
  Acquisition costs
   and other                     -          179        -        3,641
                           ---------  ---------  ---------  ---------
     Total non operating
      expenses                 5,455      4,767     21,096     22,550

Income (loss) before
 income taxes                 (6,547)     1,228     (1,888)    (7,782)
Income tax expense
 (benefit)                    (2,356)       491       (679)    (3,113)
                           ---------  ---------  ---------  ---------
Net income (loss)          $  (4,191) $     737  $  (1,209) $  (4,669)

Earnings (loss) per
 common share              $   (0.35) $    0.06  $   (0.10) $   (0.41)
                           =========  =========  =========  =========

Average common shares
 outstanding                  11,831     11,385     11,829     11,282
                           =========  =========  =========  =========