Aydin Corporation Announces Full Year and Fourth Quarter 1998 Results.

HORSHAM, Pa.--(BUSINESS WIRE)--Feb. 26, 1999--AYDIN CORPORATION (NYSE: AYD) today announced results for the full year 1998 and for the fourth quarter.

During the last half of 1998, the Company took significant restructuring action. While the fourth quarter 1998 results do not fully reflect the benefits of this restructuring, the Company anticipates reporting improved operating results throughout 1999.

The Company has reduced its cost structure by more than $7.6 million on an annual running rate basis, including a significant reduction in the running rate of corporate overhead to $2.5 million annually. Furthermore, recent booking activity has increased, as reflected by the recently announced $18 million of orders received in January.

In 1999, the Company also expects significant strengthening of its balance sheet, due to the timing of contract payments and the planned sale of surplus real estate. The Company anticipates that by the end of the third quarter of 1999, its cash on hand will reach a level of approximately $30 million.

In 1998, the Company succeeded in paying off the full $17.2 million arbitration award won by Lockheed Martin Corporation in April 1998, together with related interest. This was achieved without incurring any new debt, and while maintaining good relationships with the Company's vendors. Notwithstanding these substantial cash payments, cash at year-end 1998 was $9.5 million.

For the year, the Company reported a net loss of $26.3 million, or $5.05 per share, compared to a net loss of $1.7 million, or $.34 per share, for 1997.

The 1998 loss primarily reflects the first quarter loss of $24.1 million, or $4.64 per share, driven largely by the arbitration award to Lockheed Martin, and a $6.7 million loss from discontinued operations related to the Displays Division which was sold in the fourth quarter, partly offset by a $5.6 million gain on the sale of the West Coast Microwave Components Division which was also sold in the fourth quarter.

The 1998 net loss from continuing operations was $19.6 million, or $3.77 per share, compared to 1997 net income from continuing operations of $1.8 million, or $.34 per share. 1997 figures have been restated to reflect the Displays Division as a discontinued operation.

Net sales from continuing operations for the full year were $77.9 million, compared to $94.9 million for 1997. The decrease year to year relates primarily to a $13.0 million decrease in sales on the TMRC contract with the government of Turkey and a $3.4 million decrease in Telemetry Division sales for the year.

Most of the decrease in TMRC sales had been anticipated, as 1997 sales reflected significant activity on a subcontract which was completed in that year, and the TMRC contract is winding down as it approaches completion. The Company believes that the decrease in Telemetry Division sales is reflective of the impact on the Company's business from the April arbitration award to Lockheed Martin and management turnover which took place in 1998.

With the satisfaction of the Company's obligations to Lockheed Martin in November, the disruption caused by this award has been resolved, and the Company is now working aggressively to rebuild its backlog.

For the fourth quarter of 1998, the Company reported net income of $.1 million, or $.03 per share, compared to fourth quarter 1997 net income of $.4 million, or $.08 per share. Fourth quarter 1998 net income from continuing operations was $.1 million, or $.03 per share, compared to the prior year's $1.4 million, or $.27 per share.

Net sales from continuing operations for the fourth quarter were $12.7 million in 1998, compared to $25.2 million in 1997. The decrease in net sales resulted from a number of factors, including but not limited to reduced Telemetry Division sales and a $3.8 million reduction in revenues from Turkish operations as described above, the absence of fourth quarter sales from divisions sold and shut down in 1998 which contributed $2.4 million of sales in the fourth quarter of 1997, $1.9 million of cost at completion and contract value adjustments on the TMRC program and several other contracts which have been finalized in the first quarter of 1999, and a delay in customer acceptance of delivery on one program which deferred $2.4 million of revenues into the first quarter of 1999.

The fourth quarter 1998 results reflect a $5.6 million gain on the sale of a division, which was largely offset by charges which reduced quarterly income by $4.8 million.

These charges included the $1.9 million of contract value adjustments described above, $1.7 million of employee related matters including severance obligations and litigation reserves, and a $.5 million addition to the reserve for future environmental remediation costs.

Division operating income before the aforementioned fourth quarter items and corporate expenses of approximately $1.2 million would have been approximately $.2 million in the 1998 fourth quarter.

As previously announced, the Company has engaged PricewaterhouseCoopers Securities, LLC, to assist the Board of Directors in its efforts to maximize value for Aydin's shareholders. This process is continuing and remains the primary focus of the Board of Directors.

Aydin Corporation is a world-class provider of products and systems for the acquisition and distribution of information over electronic communications media. The Company designs, engineers, manufactures, markets, distributes and installs technologically advanced communications products and systems, from basic components to turnkey systems for military, space, government and commercial organizations around the world.

Certain statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Investors are cautioned that these forward-looking statements reflect numerous assumptions and involve risks and uncertainties which may affect Aydin's business and prospects and cause actual results to differ materially from these forward-looking statements, including loss of current customers, reductions in orders from current customers, or delays in ordering by current customers, failure to obtain anticipated contracts or orders from new customers, or expected volume from such customers, higher material or labor costs, unfavorable results in litigation against Aydin, the availability of adequate sources of working capital, and economic, competitive, technological, governmental, and other factors discussed in Aydin's filings with the Securities and Exchange Commission.

Summary Income Statement Attached

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                 AYDIN CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS
                           OF OPERATIONS
             ($000 omitted except per share amounts)


                        3 Months Ended            12 Months Ended

                        --------------            ----------------
                    12/31/98     12/31/97     12/31/98      12/31/97

                    --------     --------     --------      --------
Net sales          $ 12,677     $ 25,214      $ 77,888     $ 94,854


Cost and expenses
  Contract arbitration
   and related         (529)           -        19,814            0

  All Other          13,063       23,980        78,472       91,930
                 -------------  -----------  -----------  -----------

    Total Costs
     and Expenses    12,534       23,980        98,286       91,930


Income (loss) from
 continuing operations
 before income taxes    143        1,234       (20,398)       2,924


Income tax provision
 (recovery)               -         (197)         (750)       1,118

                  -------------  -----------  ------------ -----------

INCOME (LOSS) FROM
 CONTINUING OPERATIONS  143        1,431       (19,648)       1,806


LOSS FROM
 DISCONTINUED OPERATIONS  -       (1,008)       (6,659)      (3,498)

                  -------------  -----------  -----------  -----------

NET INCOME (LOSS)     $ 143        $ 423      $(26,307)    $ (1,692)

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

INCOME (LOSS) PER SHARE
Income (loss)
 from continuing
 operations          $ 0.03       $ 0.27       $ (3.77)     $ 0.34
                 =============  ===========  ===========  ===========
Net income (loss)    $ 0.03       $ 0.08       $ (5.05)    $ (0.34)
                 =============  ===========  ===========  ===========

Number of shares
 used for per
 share amounts    5,220,936    5,224,905     5,216,032   5,192,333