First Quarter, Fiscal 2000

Operationally, the company began fiscal 2000 with its most profitable first quarter ever. Net sales for the quarter rose to $280,761,000 compared to $258,557,000 for the first quarter of fiscal 1999. Operating income increased to $16,415,000 from $12,792,000 last year.

The first quarter results reflect the required adoption of the American Institute of Certified Public Accountants’ Statement of Position No. 98-5, “Reporting on the Costs of Start-up Activities,” and the related cumulative effect of a change in accounting principle to write-off costs that were previously capitalized by the company’s 60%-owned joint venture in connection with start-up activities and the implementation of additional production capacity. Income before the cumulative effect of the accounting change for the quarter was $9,732,000 compared to $7,152,000 for the first quarter of last year, and includes a credit of $2,116,000 representing the minority interest’s share of the change in accounting principle. Diluted earnings per share for the quarter before the cumulative effect of the change in accounting principle was $.32 compared to $.23 a year earlier. Basic earnings per share for the quarter before the cumulative effect of the change in accounting principle was $.32 compared to $.24 last year.

The increase in operating income was primarily from substantially improved results in specialty plastic films. This unit’s European joint venture achieved volume-driven improvement and increased manufacturing efficiencies. Management expects that this improvement in Europe will continue, and anticipates that new programs with the division’s major customer should invigorate specialty plastic films’ domestic business toward the end of the fiscal year.

Since the end of fiscal 1999 the company has purchased approximately 500,000 shares of its common stock, and recently increased its stock buyback program from 1,500,000 shares to 3,000,000 shares. Since 1993, the company has expended $81,000,000 to purchase 9,000,000 shares of its capital stock as part of this plan. Additional purchases will be made from time-to-time, depending upon market conditions, at prices deemed appropriate by management.

The company also announced the acquisition by Telephonics, our electronic information and communication systems operation, of search and weather radar product lines from Honeywell International Inc. These radars, which have long been used on fixed wing and helicopter aircraft, round out Telephonics’ existing product line, enabling it to provide a full range of radar options for maritime surveillance, search and rescue, drug interdiction, weather detection and other applications in domestic and international markets. We are pleased to see that recent investments in our specialty plastic films business are beginning to positively affect our operating results, and look forward to reporting continued improvement throughout the remainder of fiscal 2000.