Electroglas Announces Second Quarter Fiscal 2007 Results.

SAN JOSE, Calif. -- Electroglas, Inc. (Nasdaq:EGLS), a leading supplier of wafer probing and test handling solutions for the semiconductor industry, today reported its operating results for the second fiscal quarter 2007 ended December 2, 2006.

Revenue for the second quarter of fiscal 2007 was $12.6 million. Net loss on a GAAP (Generally Accepted Accounting Principles) basis was $3.2 million, or $0.12 per share. At December 2, 2006, the Company had cash and investments of $13.9 million.

"For the first six months of fiscal 2007, revenue increased 33% to $26.1 million from the same period of fiscal 2006 and non-GAAP gross margin increased from 20% to 35%," said Thomas Rohrs, Electroglas Chairman and CEO. "The second quarter revenue was within guidance. However, the decline in revenue from the first quarter to the second quarter of fiscal 2007 indicates we have entered a down period of this semiconductor equipment business cycle."

Third Fiscal Quarter 2007 Business Outlook

Electroglas expects revenue for the third fiscal quarter of 2007 to be in the $10-$12 million range and improving through the year as the Company's new products are adopted by new and existing customers.

Investor Conference Call Details

Electroglas' management plans to hold a teleconference on its second fiscal quarter results, along with its outlook for the third fiscal quarter 2007, today beginning at 2:00 p.m. PT, 5:00 p.m. ET. Interested parties who wish to attend the teleconference may call [phone] (United States); [phone] (International), Conference ID is 4370882, and are asked to do so approximately 10 minutes before the teleconference is scheduled to begin. No reservations are required. The teleconference will be available via webcast from the Company's website at www.electroglas.com.

About Electroglas

Electroglas is a supplier of innovative probers, prober-based test handlers, test floor management software and services that improve the overall effectiveness of semiconductor manufacturers' wafer and device testing. Headquartered in San Jose, California, the Company has been a leading equipment supplier to the semiconductor industry for over four decades, and has shipped more than 15,000 systems worldwide. Electroglas' stock trades on the Nasdaq National Market under the symbol "EGLS." More information about the Company and its products is available at www.electroglas.com.

Safe Harbor Statement

This news release contains forward-looking statements including statements relating to the current business condition in the semiconductor industry including orders and revenue; Electroglas' business outlook; and expectations regarding revenue in the third fiscal quarter of 2007. These forward-looking statements involve risks and uncertainties including, but not limited to, the risk of adverse changes in global and domestic economic conditions, a prolonged downturn in the semiconductor and electronics industries, a downturn or decrease in customer utilization rates, unforeseen technical difficulties related to the development and manufacture of Electroglas' products, and a failure of its new products to achieve broad market acceptance as a result of competing technologies. Electroglas assumes no obligation to update this information. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Electroglas' business in general, see the risk disclosures in Electroglas' SEC filings, including its most recent Annual Report on Form 10-K for the year ended May 31, 2006 and its Quarterly Reports on Form 10-Q filed from time to time with the SEC.

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Reconciliation of GAAP to Non-GAAP Financial Measures Financial Information

In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles (GAAP), Electroglas also discloses non-GAAP results of operations that exclude certain unusual charges, gains, or benefits. Electroglas reports non-GAAP results in order to better assess and reflect operating performance. These results are provided as a complement to results provided in accordance with GAAP. Management believes the non-GAAP measure helps indicate underlying trends in Electroglas' business, and management uses non-GAAP measures to establish operational goals. Non-GAAP information is not determined using GAAP and should not be considered superior to or as a substitute for GAAP measures or data prepared in accordance with GAAP.

The following is a reconciliation of Generally Accepted Accounting Principles (GAAP) income (loss) to non-GAAP net loss (unaudited):

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The following is a reconciliation of GAAP gross profit to non-GAAP gross profit:

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(1) During Q1 2007, the Company reduced its forecast outlook for its Sidewinder product line. In connection with this decision, the Company recorded a $3.4 million provision for excess inventory.

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