ENVIRONMENTAL TECTONICS CORPORATION >>>>>NEWS RELEASE<<<<<

SOUTHAMPTON, Pa., July 24, 2001 /PR Newswire/ --Entertainment Tectonics Corporation, (AMEX: ETC) announced financial results for the first quarter ended May 25, 2001.

For the first quarter ended May 25, 2001, net income was $224,000, or $.03 per share (diluted), versus a net income of $882,000 or $.12 per share (diluted) for the corresponding first quarter of fiscal 2001. Sales for the quarter were $8,340,000, an increase of $1,183,000 or 16.5% over the corresponding prior period. Increases were evidenced in most product areas, most significantly in Entertainment Technology products, which increased $2,787,000 or 224.5%. Providing a partial offset were decreased total international sales for Aircrew Training Systems, which were down $1,578,000 or 52.7%. Overall, domestic sales were up $2,141,000 or 87.4% from the prior period and represented 55.0% of the Company’s total sales, up from 34.2% a year ago. Government sales decreased $676,000 or 46.2%, primarily reflecting the booking in the prior period of higher government claims revenue. International sales were down $283,000 or 8.7%, and represented 35.5% of total sales, down from 38.9% in the prior period. Gross Profit dollars were down $662,000 from the prior period as the higher sales level was completely offset by a 14.7 percentage point drop in the rate as a percent of sales to 32.2%. Contributing to the gross margin decrease were reduced gross margins for ATS products and exchange losses of $405,000 for two contracts that are denominated in foreign currencies. Acting as a partial offset was additional gross margin on the significantly increased Entertainment sales.

William F. Mitchell, ETC’s President and Chairman, stated that, "Although disappointing, the results for the first quarter did contain some brighter aspects. Most of our product areas were up from last year. Our Entertainment line, which had been stalled while we negotiated significant design changes and contract price increases with our customer, was finally able to progress at a faster pace with a sales increase of almost $2.8 million over the prior year’s quarter. Our Environmental Group booked approximately $1.1 million in orders to China (and have booked another approximate $1.8 to China since then) and we were awarded a multi-year contract to maintain and upgrade a C-130 Simulator in Egypt.

On the development side, as was noted in a press release Tuesday, July 24, we plan to unveil our new GAT-II® at the EAA/Oshkosh Fly-in Convention in Oshkosh, Wisconsin, from July 24th to July 30th. Additionally, our Sterilizer Group has recently developed a new sterilizer that will allow rubber stoppers used by the pharmaceutical industry to be sterilized and dried in a single process. This product will offer a significant reduction in the overall processing time for our customers by eliminating the requirement for separate drying equipment. These are only two of the many exciting projects currently in work.

One of our most significant achievements was the completion of "The Ride Works™", a $1.5 million state of the art test laboratory and assembly facility . This unique facility will be utilized to develop new high end Entertainment rides.

Looking forward, I expect to see the benefits of many of our programs as the seeds we have planted begin to grow."

ETC designs, develops, installs and maintains aircrew training systems, public entertainment systems, process simulation systems (sterilization and environmental), clinical hyperbaric systems, environmental testing and simulation systems, and related products for domestic and international customers.

Certain matters in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. This includes, but is not limited to, market acceptance of new products, competitive actions, economic conditions, and other risks indicated in filings from time to time with the Securities and Exchange Commission. 

CONTACT: Duane D. Deaner, CFO Tel: 215-355-9100, ext.(1203) or fax, 215-357-4000