Pacific Research & Engineering AnnouncesThird-Quarter Results; Nine-Month Sales up 46 Percent;...

CARLSBAD, Calif.--(BUSINESS WIRE)--Nov. 12, 1997--Pacific Research & Engineering Corp. (PR&E) (AMEX:PXE) Wednesday announced that sales for the third quarter ended Sept. 30, 1997, increased approximately 52 percent to $3,515,121, compared with sales for the same quarter last year of $2,309,682.

For the nine-month period ended Sept. 30, 1997, the company reported sales of $9,118,610, as compared with sales of $6,230,605 for the same period the previous year, an increase of approximately 46 percent.

For the nine-month period, net earnings decreased slightly to $252,568, or 11 cents per share (with 2,305,500 common shares outstanding), as compared with $385,686, or 22 cents per share (with 1,749,945 common shares outstanding) for the same period last year.

The company attributed the slight decrease in earnings to its continued emphasis on increasing both the quality and quantity of its sales and marketing staff, and expanding infrastructure. One of the primary areas of growth for PR&E is to take advantage of the growing radio market generated by the Telecommunications Bill of 1996.

Gross profit for the three-month period ended Sept. 30, 1997, increased to $1,537,791, or 44 percent of sales, from $968,848, or 42 percent of sales, the previous year. For the nine-month period, gross profit was $4,017,654, or 44 percent of sales, compared with $2,628,093, or 42 percent of sales, for the comparative nine months in 1996.

Gross profit increased as a percentage of sales in 1997 compared with 1996 as a result of improved purchasing, requisition procedures and manufacturing processes.

Jack Williams, president and chief executive officer, stated: ``We are extremely pleased with the continued excellent performance of the company. We see the demand for radio-broadcasting studio equipment and enhancements growing, and it is our job as a public company to capitalize on that demand.

``We are constantly reviewing our product line and market potential, and are looking for ways to increase market share. A perfect example is our pursuit of the middle market. PR&E has traditionally been high-end, but we see a strong growth opportunity in the middle sector of the radio market.''

PR&E manufactures high-quality broadcast-studio products and provides turnkey studio design/integration services to the worldwide broadcasting industry.

Products include on-air and production mixing consoles, digital audio workstations and studio furniture. PR&E's clients include NBC, ABC Radio, The Walt Disney Co., CBS Inc., Jacor Communications Inc., Chancellor Media Broadcasting, American Radio Systems and Cox Communications. For more information, visit the company's Web site at www.pre.com or call 760/438-3911.

Forward-looking statements and comments in this news release are made pursuant to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934. Such statements relating to, among other things, the prospects for the company to increase the level of sales and maintain profitability are necessarily subject to risks and uncertainties, some of which are significant in scope and nature, including risks related to the demand for radio-broadcasting equipment, competition and availability of capital. These risks are further discussed in the periodic reports and registration statements filed by the company from time to time with the Securities and Exchange Commission. -0-

                    PACIFIC RESEARCH & ENGINEERING
                       Condensed Financial Data

                           Three months ended      Nine months ended
                                Sept. 30,               Sept. 30,
                            1997        1996        1997        1996

Net sales             $3,515,121  $2,309,682  $9,118,610  $6,230,605
Cost of sales          1,977,330   1,340,834   5,100,956   3,602,512
Gross margin           1,537,791     968,848   4,017,654   2,628,093
Operating expenses:
 General and
  administrative         470,707     383,336   1,284,412     914,106
 Selling and marketing   553,121     258,791   1,349,012     620,803
 Research, development
  and engineering        260,634     212,463     810,134     551,658
 Depreciation and
  amortization           150,459      51,377     272,059     132,297
 Total operating
  expenses             1,434,921     905,967   3,715,617   2,218,864
Income from operations   102,870      62,881     302,037     409,229
Other income (expense):
 Interest, net            (4,782)     23,831       7,244      (3,168)
 Gain on sale of assets       --          --          --      16,087
 Other                     3,813       8,376       3,987      18,538
 Total other income
  (expense)                 (969)     32,207      11,231      31,457
Income before income
 taxes                   101,901      95,088     313,268     440,686
Income-tax (benefit)
 expense                  (5,312)     30,000      60,700      55,000
Net income            $  107,213  $   65,088  $  252,568  $  385,686
Earnings per average
 common share            5 cents     3 cents    11 cents    22 cents
Weighted average shares
 outstanding           2,305,500   2,305,500   2,305,500   1,749,945

CONTACT: Pacific Research & Engineering Corp., Carlsbad

Larry Eyler, 760/438-3911

or

Coffin Communications Group, Sherman Oaks, Calif.

Michael Manahan, 818/789-0100