Applied Extrusion Technologies announces second quarter results, start-up of new production line.

BOSTON--(BUSINESS WIRE)--April 17, 1996--Applied Extrusion Technologies, Inc. (Nasdaq NMS-AETC) today announced financial results for the second quarter and six-month periods ended March 31.

For the second quarter of fiscal 1996, sales were $62,565,000, net income was $1,504,000, and earnings per share was $.14. Gross margin for the quarter was 19.9 percent while operating margin was 9.3 percent. These results compare with sales of $58,105,000, net income of $3,065,000 and earnings per share of $.43 in the second quarter of fiscal 1995. Gross margin was 29.3 percent while operating margin was 17.2 percent for the second quarter of the prior fiscal year. For the six months ended March 31, 1996, sales were $112,816,000, net income was $2,907,000 and earnings per share was $.27. Sales for the first six months of fiscal 1995 were $108,847,000 and net income was $4,392,000 or $.62 per share. Since the beginning of the current fiscal year, profitability has been affected by a softness in demand caused by inventory corrections at customers and end users of oriented polypropylene (OPP) films. This temporary softness, which ended during the second quarter, resulted in lower average selling prices and a less favorable product mix. Earnings per share decreased from 1995 proportionately more than net income due to the 55 percent increase in shares outstanding.

President and Chief Executive Officer Thomas E. Williams said, "The OPP films industry was challenged by demand shortfalls experienced during the first half of fiscal 1996, but the fundamentals of the industry remain strong. We are making continued investments to ensure that AET is well positioned to take advantage of future growth, and expect that the Company will experience significantly improved revenues and earnings during the second half of the fiscal year. The volume of the Company's OPP films sales increased significantly over the second quarter of last year and the first quarter of this year, indicating an end of the inventory correction. However, margins in 1996 have been negatively impacted by lower average selling prices related to competitors' price reductions in reaction to the temporary market softness. In addition, average prices have been reduced by a less favorable product mix resulting from demand shortfalls for certain high-end products."

The Company also announced that it has recently brought on-stream its new eight-meter tenter line in Terre Haute, Ind. This new line, expected to reach full production capacity by July, was completed in 19 months -- ahead of schedule and under budget. The Company believes this line, and its existing sister line in Terre Haute, will be the most cost efficient OPP film production lines in the world, and will comprise over 40% of our production capacity.

"By expanding our high-efficiency production capacity, developing superior new products and assembling the best talent in the OPP films industry, AET continues to differentiate itself in the marketplace," added Williams. "Product development will drive our future growth. Over the past six months, we have commercialized six new products, and we expect at least six more introductions by the end of the year. This pace of development is unmatched in the OPP films industry."

Applied Extrusion Technologies, Inc., is a leading developer and manufacturer of highly specialized plastic films used primarily in consumer product labeling, flexible packaging 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 press release are forward-looking statements that involve risks and uncertainties, including the timely development and acceptance of new products, fluctuations in raw materials prices, the loss of one or more significant customers, the impact of competitive products and pricing, the timely completion of capital projects, and other risks detailed in the Company's prospectus dated Aug. 16, 1995 and from time to time in the Company's other reports filed with the Securities and Exchange Commission. -0-

                   Applied Extrusion Technologies, Inc.
                        Statements of Earnings
                  (In thousands, except per share data)
                              (Unaudited)

                             Three Months Ended      Six Months Ended
                            March 31,    March 31,  March 31  March 31,
                             1996           1995     1996      1995

Sales                     $62,565         $58,105  $112,816  $108,847
Cost of sales              50,087          41,080    88,993    77,366

Gross profit               12,478          17,025    23,823    31,481

Operating expenses:
 Selling, general and
  administrative            4,745          5,406     8,946     9,817
 Research and development   1,918          1,597     3,496     3,048
  Total operating expenses  6,663          7,003    12,442    12,865

Operating profit            5,815         10,022    11,381    18,616

Non operating expenses:
 Interest expense, net      3,308          4,913     6,536     9,895
 Litigation settlement                                         1,400
  Total non operating
   expenses                 3,308          4,913     6,536    11,295
Income before income taxes  2,507          5,109     4,845     7,321
Income tax expense          1,003          2,044     1,938     2,929
Net income                 $1,504         $3,065    $2,907    $4,392
Earnings per common share    $.14           $.43      $.27      $.62
Average shares outstanding 11,012          7,165    10,942     7,112

CONTACT: Applied Extrusion Technologies, Inc.

David N. Terhune

508/538-1516