Applied Extrusion Technologies, Inc. Announces Major Cost Reduction Program; Establishes $50,000,000 Revolving Credit Facility.

Business Editors

BOSTON--(BUSINESS WIRE)--September 23, 2002

Applied Extrusion Technologies, Inc. (NASDAQ NMS - AETC) today announced a reorganization to significantly reduce its cost structure. The plan includes closure of the Boston-based corporate office, a realignment of the Company's business units and a reorganization of key roles and responsibilities. The reorganization will eliminate 50 full time positions and will be fully implemented by March 31, 2003. With these actions the Company anticipates annualized cost savings of approximately $5,000,000, the majority of which will be realized beginning in fiscal 2003, which begins October 1, 2002. In connection with the cost reduction program, the Company will record a one-time charge in the fourth fiscal quarter of approximately $9,000,000. The Company expects to report a full year after-tax loss for fiscal 2002 ending September 30, 2002 of approximately $17,500,000, of which $7,500,000 is from operations and $10,000,000 is from restructuring and plant shutdown costs.

With the retirement of Thomas E. Williams, AET's President and Chief Executive Officer, Amin J. Khoury, Chairman of the Board, will take on the additional role of Chief Executive Officer. Mr. Khoury founded AET and has served as its Chairman for the past 16 years. David N. Terhune, Chief Operating Officer, will be promoted to the position of President. Mr. Terhune joined AET in 1994 as its Chief Financial Officer and for the past seven years has been directing the operations of the AET Films Division.

"We are undertaking a major realignment of management responsibilities and a significant reduction in overhead costs in order to better position the Company to achieve profitable growth," commented Amin J. Khoury. "Once accomplished, our organization will be better aligned, not only towards maintaining leadership in our core product categories, but also in commercializing a number of new, highly differentiated products. We regret the impact that this cost reduction program will have on many valued employees."

"We are optimistic about the long-term prospects of the Company," continued Mr. Khoury, "but we can no longer wait for tightening capacity utilization to deliver profitability. In addition, our organization must be realigned to effectively execute our new product development initiatives."

Separately, the Company announced that it has established a $50,000,000 two-year Revolving Credit Facility. The Facility will be used for general corporate purposes.

"We must be committed to delivering a solid profit in fiscal 2003, which will form a base for strong earnings growth for several years thereafter. Future profitability growth will be driven by the planned introduction of a number of new, highly differentiated products," concluded Mr. Khoury.

As previously announced, the Company will hold a conference call to discuss the results at 11:00 AM Eastern Time today. To listen live via the Internet, visit the Investor Relations section of AET's website at http://www.aetfilms.com. AET suggests that you check this link in advance of the conference call to ensure that your computer is configured to receive the webcast. To access the conference call by phone, dial 800-553-0351 and reference access code 653065. A taped replay of the conference call will also be available from approximately 2:30 PM Eastern Time on September 23, 2002 until midnight on September 27, 2002. To listen to the replay, dial 800-475-6701 from within the U.S. or 320-365-3844 from outside the U.S. and enter access code 653065.

Applied Extrusion Technologies, Inc. is a leading North American developer and manufacturer of specialized oriented polypropylene (OPP) films used primarily in consumer products labeling and flexible packaging applications.

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 ability to implement a price increase and related volume losses, the timely development and acceptance of new products, fluctuations in raw materials and other production costs, the ability to satisfy our debt service requirements, 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, 2001 and from time to time in the Company's other reports filed with the Securities and Exchange Commission.