STOCKREPORTS

Etec Systems, Inc.

NASDAQ Symbol ETEC In S&P SmallCap 600

Recent Price 48.88 52 Wk Range 48.88 - 20.25

Yield Nil 12-Mo. P/E 26.6

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) 3+ Fair Value NA Risk NA Earn/Div Rank NR
Technical Evaluation: NA since NA Rel. Strength Rank (1 Lowest - 99 Highest) 95 Insider Activity Neutral

Business Profile 12-MAR-97

In December 1996, ETEC completed its third public offering in 14 months. Net proceeds of $39.8 million from the latest offering were earmarked for capital expenditures and general corporate purposes. In January 1997, the company completed a 60,000 square foot building at its Hayward, CA, location, which will enable the expansion of manufacturing and research and development. Initial shipments of the first Etec Polyscan products for the interconnect (PCB and MCM) and flat panel display (FPD) markets have been delayed to the third quarter of FY 97 (Jul.). Management is pleased with the initial market acceptance of the Etec Polyscan systems; six system orders have been received.

Operation Review 12-MAR-97

Revenues for the six months ended January 31, 1997, advanced 75%, year to year, primarily reflecting a 101% gain in products revenues; services revenues were up 7.4%. Profitability benefited from continued strong demand for the company's advanced laser- and electron-beam IC mask pattern generation systems. Pretax income climbed to $20,628,000 from $8,600,000. After taxes at 29.4%, versus 25.0%, net income rose to $14,570,000 ($0.68 a share, based on 27% more average shares) from $6,450,000 ($0.38). Results for the FY 96 period are before a special charge of $0.02 a share from the early extinguishment of debt.

Stock Performance 18-JUL-97n

In the past 30 trading days, ETEC's shares have increased 22%, compared to a 7% rise in the S&P 500. Average trading volume for the past five days was 573,380 shares, compared with the 40-day moving average of 531,450 shares.

Key Stock Statistics

Fiscal Year Ending Jul. 31

Dividend Data: No cash dividends have been paid and the company does not anticipate paying any dividends for the foreseeable future. It currently intends to retain its earnings, if any, for the development of its business. A shareholder rights plan was adopted in 1997.

Business Summary 12-MAR-97

Etec Systems believes that the products it makes are crucial to the success of the semiconductor and electronics industries. ETEC is the leading supplier of electronic and laser-beam mask patterns generation (PG) equipment for the worldwide semiconductor industry. These systems create the master patterns that make semiconductor chip designs. Semiconductor chips going into every conceivable electronic product, ranging from sophisticated communications devices to household consumer products, must deliver greater performance in less space as the electronic content of these products grows to meet the demands of manufacturers and consumers.

The company's pattern generation equipment transforms electronic design data into complex master patterns or masks, similar to a photographic negative, which are then used many times to create chips. Each chip needs an average of 16 to 24 different masks in the manufacturing process to create a unique electronic function. Semiconductor manufacturers use ETEC's products to help meet the challenge of shrinking feature sizes, greater device complexity, and the need for higher accuracy and throughput.

ETEC is the technology leader in the global semiconductor mask pattern generation market, holding a market share of more than 75%. The company is the only mask PG supplier with a dual technology strategy offering both electron-beam and laser-beam based systems. The different characteristics of these systems suit each to different segments of the mask pattern generation market. Electron beam systems have a much smaller beam spot size than laser beam systems and are best suited for leading-edge market segments that require the highest resolution and accuracy.

The company derives most of its annual revenues from the sale of a relatively small number of systems at prices ranging from about $3.2 million from $7.3 million. Consequently, results for any given period could be adversely impacted by any delay in the recognition of revenue for a single system or upgrade. It also derives significant revenues from service and support of its installed base of systems. ETEC believes that over 250 commercial electron beam and laser beam mask pattern generation systems were installed outside of the former Eastern Bloc as of FY 96 (Jul.) year-end, of which over 165 were produced by ETEC, giving it about 65% of the active installed base worldwide. Sales to customers outside of the U.S. are substantial, comprising about 45% of revenues in each of the past three years.

Through Etec Polyscan, the company has begun to manufacture ultraviolet laser direct imaging systems for applications that require large area pattern generation, including printed circuit boards (PCB), multi-chip modules (MCM) and flat panel displays (FPD).

Capitalization

Long Term Debt: $5,000,000 (1/97).

Curr. Ratio	2.5	1.4	1.1	NA	NA	NA	NA	NA	NA	NA
% LT Debt of Cap.	5.5	65.3	NM	NA	NA	NA	NA	NA	NA	NA
% Net Inc.of Revs.	25.9	5.4	2.3	NM	NA	NA	NA	NA	NA	NA
% Ret. on Assets	25.6	6.0	NM	NA	NA	NA	NA	NA	NA	NA
% Ret. on Equity	157.7	NM	NM	NA	NA	NA	NA	NA	NA	NA

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--26460 Corporate Ave., Hayward, CA 94545. Tel--(510) 783-9210. Website--http://www.etec.com Chrmn, Pres & CEO--S. E. Cooper. VP-CFO--P. J. Koen Jr. Dirs--S. E. Cooper, E. J. Gelbach, J. H. King, C. P. Lego, J. B. McBennett, T. Suzuki, T. M. Trent, R. L. Wehrli. Transfer Agent & Registrar--Bank of Boston. Incorporated--in Nevada in 1989. Empl-- 0. S&P Analyst: J.J.S.

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997