Applied Extrusion Technologies, Inc. Reports Second Quarter Results; Record Sales of $68.7 Million Increase 16.6 Percent; EPS of $.15 Exceeds Expectations;.

Business Editors

BOSTON--(BUSINESS WIRE)--April 25, 2000

First Half Operating Earnings of $14.8 Million Nearly Quadruple

Versus Last Year

Applied Extrusion Technologies, Inc. (NASDAQ NMS: AETC) today announced financial results for its second fiscal quarter ended March 31, 2000. Sales for the quarter increased 16.6 percent to a record $68,745,000, compared with $58,979,000 in the same quarter of 1999. Gross profit of $16,787,000 expanded by 460 basis points to 24.4 percent of sales for the quarter, compared with 19.8 percent of sales in the second quarter of 1999. Increased volume, improvements in manufacturing efficiency and high-end differentiated products continued to drive profitability, as second quarter gross profit increased by 44.1 percent over the second quarter of 1999. Operating profit for the second quarter more than doubled to $8,000,000, from $3,430,000 reported in the second quarter of 1999. Net income for the quarter was $1,803,000, or $.15 per share, compared with a net loss of $863,000, or ($.08) per share, a year earlier.

Sales in the first six months of 2000 increased 12.6 percent to $128,896,000, compared with $114,424,000 in the first six months of 1999. During the first half of fiscal 2000, gross profit was $31,663,000, 40.7 percent higher than gross profit in the same period of 1999. Gross margin expanded by 490 basis points to 24.6 percent of sales in the first six months of 2000, compared with 19.7 percent in 1999, after adjusting for the cost of a temporary plant shutdown recorded in 1999. Operating profit for the first six months of fiscal 2000 was $14,806,000, almost four times operating profit for the same period in 1999. Net income for the six months ended March 31, 2000 was $2,961,000, or $.25 per share, compared with a net loss of $5,598,000, or ($.50) per share, for the first six months of 1999.

"AET's financial performance continues to exceed expectations," commented Thomas E. Williams, President and Chief Executive Officer, "as our strategic initiatives of the last few years yield record sales volumes, all-time low manufacturing costs, steadily improving margins and sharply higher profitability. Our strategic positioning and higher-end differentiated products are enabling us to generate strong financial improvement in spite of industry overcapacity and substantial increases in resin costs, only a portion of which have been passed on to our customers. Demand growth is strong but will not absorb the excess capacity for about a year. For the second half of fiscal 2000, we expect earnings to more than double those of the second half of fiscal 1999, despite further steep increases in resin costs in an industry with a current utilization rate that may be insufficient to absorb a substantial amount of the increase. Therefore, second half results are likely to be only as good as, or even slightly worse than, our first half results. In fiscal 2001 the Company expects earnings to further accelerate as ongoing improvements in mix and our strategic positioning converge with more favorable pricing resulting from a strong OPP films industry."

"AET is beginning to reap the rewards of its leadership position in the OPP films industry. Having installed new highly efficient production assets, invested in research and development and expanded our sales capabilities, the Company is now benefiting from excellent operational execution, even though the industry overcapacity of the past several years is not expected to subside for another twelve months."

"We continue to focus on these strategic initiatives. Our new specialty label applications have broadened our existing product line, further enhancing the Company's leadership position in the label market. Plastic beer bottles, now being commercialized by Miller Brewing Company and tested by Anheuser-Busch, could also offer a tremendous growth opportunity for AET's recently developed cut-and-stack label films. Cut-and-stack labels represent a 250 million pound value-added market currently dominated by paper label technology. Due to successful development efforts like these, nearly half of our sales now come from new or enhanced products, with AET capturing over half the growth in the North American OPP films market for the past three years."

Mr. Williams concluded, "As we all know, the OPP films industry has experienced intense price competition over the past few years as a result of a more than 30 percent increase in capacity from mid-1996 through mid-1998. With most of this excess capacity absorbed by steady average demand growth of 6 percent per year, the OPP films industry is poised for a sustained period of improvement starting in 2001."

Applied Extrusion Technologies, Inc. is a leading developer and manufacturer of highly specialized plastic films used primarily in consumer products labeling, flexible packaging, filtration and health care 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 release 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  Six Months Ended
                           ------------------------------------
                             March   March    March     March
                               31,     31,      31,       31,
                              2000    1999     2000      1999

Sales                      $68,745 $58,979  128,896  $114,424
Cost of sales               51,958  47,327   97,233    94,831
                           ------------------------------------

Gross profit                16,787  11,652   31,663    19,593

Operating expenses:
 Selling, general
  and administrative         6,994   6,383   13,463    12,262
 Research and development    1,793   1,839    3,394     3,478
                           ------------------------------------
  Total operating expenses   8,787   8,222   16,857    15,740

Operating profit             8,000   3,430   14,806     3,853

Non-operating expenses:
 Interest expense, net       5,183   4,869   10,180     9,721
 Acquisition costs              -       -        -      3,462
                           ------------------------------------
  Total non-operating
   expenses                  5,183   4,869   10,180    13,183

Income (loss) before
 income taxes                2,817  (1,439)   4,626    (9,330)
Income tax expense (benefit) 1,014    (576)   1,665    (3,732)
                           ------------------------------------

Net income (loss)           $1,803   $(863)  $2,961   $(5,598)

                           ====================================

Earnings (loss)
 per common share            $0.15  $(0.08)   $0.25    $(0.50)
                           ====================================

Average common
 shares outstanding         12,195  11,309   12,005    11,209
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