Applied Extrusion Technologies, Inc. Returns to Profitability and Announces Fiscal 1999 Third Quarter Results.

BOSTON--(BUSINESS WIRE)--July 20, 1999--

Applied Extrusion Technologies, Inc. (NASDAQ NMS - AETC) today announced financial results for its third fiscal quarter ended June 30, 1999. The Company reported its third consecutive quarter of improved operating results, excluding businesses divested in 1998, and its first profitable quarter in a year. Sales were $62,269,000, a 1.8 percent increase over sales in the third quarter of 1998, adjusted for businesses divested in 1998, and a 5.6 percent increase compared with the second quarter of 1999. The Company achieved record unit volume sales. Gross profit was $13,757,000, or 22.1 percent of sales, an increase in gross margin of 110 basis points over the third quarter of 1998 and 230 basis points over the second quarter of 1999. Operating profit was $4,921,000, a decrease of $877,000 compared with the third quarter of 1998; however, exclusive of divestitures, operating profit increased by $156,000 to 7.9 percent of sales. Net income was $194,000, or $.02 per share.

For the nine months ended June 30, 1999, the Company reported sales of $176,693,000, gross profit of $36,255,000, or 20.5 percent of sales, operating profit of $11,679,000 and net loss of $1,585,000, or $.14 per share, prior to costs related to plant shutdowns and acquisition costs reported in the first fiscal quarter. For the comparable period in 1998, sales were $185,380,000, gross profit was $37,204,000, or 20.1 percent of sales, operating profit was $12,151,000 and net loss was $421,000 or $.04 per share.

"The OPP films industry continues to strengthen," commented Thomas E. Williams, President and Chief Executive Officer. "The initial phases of this recovery have been characterized by strong demand and longer lead times, as well as stabilization in pricing levels. Demand growth for OPP films has continued steadily and, combined with the exit of AEP Industries from the OPP films market, industry-wide capacity utilization levels have tightened. This industry recovery, coupled with AET's highly efficient production assets, new product development, aggressive sales force and ongoing productivity increases, have underpinned our return to profitability and should lead to continued strengthening of the Company's financial performance in upcoming quarters. When comparing results of operations to the comparable quarter of 1998, exclusive of businesses divested in that year, sales, gross profit, gross margin, operating profit and unit volume for the current quarter all increased."

"The strength of the Company's OPP films sales allowed the Company to set record volume levels and to focus on enhancing the mix of products sold. This sales strength, combined with cost reduction efforts, has provided increased profitability in the third quarter of 1999 as compared with 1998, and will provide improved results for the remainder of the year. No new OPP films capacity is anticipated in the North American marketplace before fiscal 2002, resulting in improved industry capacity utilization levels. This tightening of capacity utilization should result in higher OPP films pricing and therefore enhanced Company profitability," concluded Williams.

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, 1997 and from time to time in the Company's other reports filed with the Securities and Exchange Commission. -0-

                         Statements of Income
                 (In thousands, except per share data)
                              (Unaudited)

                          Three Months Ended       Nine Months Ended
                        ---------------------   ---------------------
                         June 30,    June 30,    June 30,    June 30,
                           1999        1998        1999        1998

Sales                   $  62,269   $  66,525   $ 176,693   $ 185,380
Cost of sales              48,512      52,582     143,343     148,176
                        ---------   ---------   ---------   ---------

Gross profit               13,757      13,943      33,350      37,204

Operating expenses:

 Selling, general and
  administrative            6,903       6,061      19,165      17,931
 Research and
  development               1,933       2,084       5,411       5,583
 Start-up costs              --          --          --         1,539
                        ---------   ---------   ---------   ---------
  Total operating
   expenses                 8,836       8,145      24,576      25,053

Operating profit            4,921       5,798       8,774      12,151

Non-operating expenses:

 Interest expense, net      4,597       4,240      14,320      11,433
 Acquisition costs           --          --         3,462         --
                        ---------   ---------   ---------   ---------
  Total non-operating
   expenses                 4,597       4,240      17,782      11,433

Income (loss) before
 income taxes and change
 in accounting                324       1,558      (9,008)        718
Income tax expense
 (benefit)                    130         623      (3,603)        287
                        ---------   ---------   ---------   ---------
Income (loss) before
 change in accounting         194         935      (5,405)        431
Change in accounting,
 net of related tax
 benefits of $568             --          --          --          852
                        ---------   ---------   ---------   ---------

Net income (loss)       $     194   $     935   $  (5,405)  $    (421)
                        =========   =========   =========   =========

Earnings (loss) per
 common share           $    0.02   $    0.08   $   (0.48)  $   (0.04)
                        =========   =========   =========   =========

Average common shares
 outstanding               11,439      11,107      11,287      10,968
                        =========   =========   =========   =========