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NEMATRON'S SECOND-QUARTER REVENUES IMPROVE OVER FIRST-QUARTER 1993 -- REVERSING DOWNWARD TREND

 ANN ARBOR, Mich., May 12 /PRNewswire/ -- Nematron Corporation (OTC Bulletin Board: NEMA.U) today reported second-quarter revenues of $3,225,381, a 7.4-percent improvement vs. the first quarter of fiscal 1993, reversing a trend of declining sales during the past several years. Compared to the same quarter of fiscal 1992, sales were down 6.0 percent from $3,432,234, reflecting the continuing effects of a weak economy, increased competition, and corporate uncertainty that preceded the company's spin-off on Feb. 26, 1993, from its former parent, Interface Systems, Inc. (NASDAQ-NMS: INTF).
 Before additional charges to the costs of revenues and spin-off costs, the company's pre-tax loss for the quarter was $17,744, nearly breakeven, vs. the loss of $180,527 for the similar quarter in the previous year. This improvement is predominantly the result of significant manufacturing and operating cost reductions implemented by the company's staff during 1993 to better align expenses with recent and anticipated levels of revenues.
 The company reported a pre-tax loss of $541,061 for the quarter as a result of two additional charges to the costs of revenues totaling $424,002 and spin-off costs of $99,315 expensed during the quarter. During the quarter, the company increased its reserve for obsolescence based upon the value of inventory of selected components used in products which have now been replaced by higher performance and more cost-effective designs. In addition, accelerated amortization and depreciation of certain acquired and capitalized intangible software assets was taken to reflect the company's strategic decision in the second quarter to focus its marketing and product development efforts on new software products now under development. The spin-off costs reflected the remaining non-recurring expenses incurred for legal and accounting fees and other expenses associated with the company becoming a separate public company.
 Paul Horst, president of Nematron, said, "The spin-off of Nematron allows the company to better pursue strategies appropriate to its position as a recognized leader in a rapidly changing market with expected growth. During the past two years, a combination of factors including the recession, increased competition, and sales channel concerns and other uncertainty during the period when Nematron's parent was considering the disposition of Nematron, caused sales to decline after several previous years of high growth. We are pleased with the recent reversal of the sales decline and the achieved cost reductions. We expect that with only a modest economic recovery, a return to profitability can be achieved for the second half of the year. The company expects to reinvest any improved gross profits during the balance of the year in modest increases in marketing, sales efforts and product development, in order to be better positioned for income and sales growth in fiscal 1994 and 1995."
 Nematron pioneered the industrial workstation market segment of factory automation in 1983 with the introduction of products combining ruggedized electronic displays, keyboards, computer technology and software, which provide operator-machine interfaces. Over 50,000 Nematron industrial workstations are installed around the world, with support provided by an international network of distributors, private label OEM customers including General Electric and Honeywell, and the company's wholly owned subsidiary in the Netherlands, Nematron Europa, BV.
 NEMATRON CORPORATION
 SELECTED FINANCIAL DATA
 (In thousands, except per-share data)
 Three Months Ended Six Months Ended
 March 31 March 31
 Operating Results 1993 1992 1993 1992
 Revenues $3,225 $3,432 $6,227 $7,326
 Cost of revenues(1) 2,617 2,345 4,680 4,898
 Gross profit 609 1,087 1,548 2,428
 Operating expenses 1,009 1,214 2,153 2,455
 Loss from operations (400) (127) (606) (27)
 Other expenses(2) (141) (54) (255) (111)
 Net loss after tax
 benefits (354) (119) (580) (91)
 Net loss per share(3) (0.26) (0.09) (0.42) (0.07)
 Financial Position March 31, 1993 Sept. 30, 1992
 Current assets $7,110 $7,489
 Property and equipment 3,216 3,227
 Other assets, primarily
 software 814 940
 Total assets $11,140 $11,656
 Current liabilities $3,194 $2,879
 Long-term debt 1,448 1,555
 Deferred income taxes 28 172
 Total liabilities $4,670 $4,606
 Stockholders' equity 6,470 7,050
 Total liabilities &
 stockholders' equity $11,140 $11,656
 Per share(3) $4.70 $5.11
 (1) Includes $424,002 in additional charges in second quarter for amortization, depreciation and reserve for obsolete material.
 (2) Includes $99,315 for second quarter and $108,681 for first six months relating to spin-off costs.
 (3) Based upon 1,377,773 shares outstanding as result of spin-off on Feb. 26, 1993.
 -0- 5/12/93
 /CONTACT: G. Paul Horst, president, Nematron Corporation, 313-994-0591, Ext. 241/
 (NEMA)


CO: Nematron Corporation ST: Michigan IN: CPR SU: ERN

JG-ML -- DE015 -- 7622 05/12/93 13:23 EDT
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Date:May 12, 1993
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