Fiscal fourth quarter ended February 27, 2009

For the fiscal fourth quarter of fiscal 2009, ETC had net income of $1,223, 000, or $0.11 per share (diluted) compared with a net loss of $3,102,000 or $(0.37) per share (diluted) for the corresponding period of fiscal 2008. Sales for the fourth quarter of fiscal 2009 were $9,282,000, as against $7,435,000 for the fourth quarter of fiscal 2008, an increase of $1,847,000, or 24.8%. The sales increase reflected double digit percentage increases in the ATS, hyperbaric and simulation product groups as well as favorable sales performance in the company’s Polish subsidiary. Most of the increase in ATS and simulation resulted from international contracts while hyperbaric reflected higher domestic sales.

Gross profit for the fourth quarter of fiscal 2009 was $4,364,000 compared with $1, 586,000 for the corresponding quarter of fiscal 2008, an increase of $2,778,000 or 175.2% representing the sales increase coupled with a 25.7 percentage point increase in the rate as a percentage of sales. The gross profit dollar increase reflected the aforementioned impact of increased sales and corresponding gross profit. The increase in the rate as a percentage of sales resulted from favorable gross profit rates primarily in ATS with smaller contributions from the sterilizer and hyperbaric product groups.

Operating income for the fourth quarter of fiscal 2009 was $1,608,000 compared with an operating loss of $2,490,000 for the prior period reflecting the aforementioned improvement in gross profit coupled with a 31.0% decrease in selling, general and administrative expenses. The decrease in selling, general and administrative expenses primarily reflected significant reductions in legal and bad debt expenses between the periods and an asset impairment charge in the fourth quarter of fiscal 2008 related to the carrying value of the company’s Polish subsidiary, ETC-PZL.

Earnings before interest, taxes, depreciation and amortization expense ( EBITDA) were $1,737,000 for the fourth quarter of fiscal 2009 compared with a negative EBITDA of $1,853,000 for fiscal 2008.

Fiscal year ended February 27, 2009

Operating Results

Operating loss in fiscal 2009 was $346,000 compared with an operating loss of $12,043,000 in fiscal 2008, a decline in operating loss of $11,697,000 or 97.1%. The decrease in operating loss resulted primarily from the higher sales level and resulting increased gross profit along with a reduction of claim settlement costs ($3,638,000) and impairment expense ($455,000).

The company also reported EBITDA of $1,451,000 for fiscal 2009, against a negative EBITDA of $10,047,000 for fiscal 2008.

For the fiscal year ended February 27, 2009, total sales were $36,687,000, up of $13,957,000 or 61.4% from fiscal 2008. The increase primarily reflected favorable performance in all geographic areas and in the ATS, hyperbaric and simulation product lines.

Geographically, domestic sales were $14,442,000, up $964,000, or 7.2%, from fiscal 2008, and represented 39.4% of total sales, down from 59.3% in fiscal 2008, reflecting favorable performance in hyperbaric (up 117.3%) and simulation (up 93.5%) products, offset in part by declines in sterilizer (down 17.4%) and environmental (down 15.8%) products. U.S. Government sales increased $1,268,000 or 69.4% from the prior fiscal year reflecting contracted research work for two TacModules. US Government sales represented 8.4% of total sales, up from 8.0% in fiscal 2008. International sales, including those in the company’s foreign subsidiaries, were $19,149,000, up $11,725,000 or 157.9%, from the prior fiscal period and represented 52.2% of total sales, up from 32.7% in fiscal 2008, primarily due to increased sales of ATS products to customers in Saudi Arabia and Turkey. International sales totaling at least $500,000 per country were made to customers in Saudi Arabia, Turkey, Thailand, Malaysia and Egypt.

Our sales backlog at February 27, 2009 and February 29, 2008, for work to be performed and revenue to be recognized under written agreements after such dates, was $44,324,000 and $38,281,000, respectively. Of the February 27, 2009 sales backlog, two product lines each represented at least 10% of the total backlog: ATS ($29,231,000, 66.0%) and disaster management simulation products ($ 6,397,000, 14.4%). Additionally, one customer represented $19,089,000, or 43.1%, of the total backlog.

From a business segment perspective, sales of our Training Services Group products were $20,608,000 in fiscal 2009, an increase of $12,764,000, or 162.7% from fiscal 2008. Sales of these products accounted for 56.2% of our sales compared with 34.5% in fiscal 2008. Sales in our other segment, the Control Systems Group, increased $1,193,000 or 8.0%, and constituted 43.8% of our total sales against 65.5% in fiscal 2008.

Gross profit for fiscal 2009 increased by $7,478,000, or 170.7%, from fiscal 2008, reflecting the favorable sales performance and resulting gross profit. Additionally, a favorable product and contract mix resulted in an increase in the gross profit rate as a percent of sales to 32.3% for fiscal 2009 compared with 19.3% for fiscal 2008. Significantly favorable margin rates were realized in simulation, aircrew training systems and sterilizers. Within the ATS product group, one specific international contract for aeromedical equipment contributed significantly to both the favorable gross profit dollar and improvement in the gross profit rate as a percentage of revenue increase.

Selling, general and administrative expenses declined $558,000, or 4.8%, from fiscal 2008, reflecting a reduction in bad debt expense and legal fees.

Claim settlement costs in fiscal 2008 were $3,638,000. This expense directly related to the claim settlement with the US Navy.

Impairment expense in fiscal 2008 reflected the write down of the remaining goodwill associated with the company’s purchase of ETC-PZL in 1998. Research and development expenses improved $432,000, or 63.7%, in fiscal 2009 as against fiscal 2008. This increase reflected reduced reimbursement for government grants in our Turkish subsidiary under government research awards.

Operating loss was $346,000 in fiscal 2009 against an operating loss of $ 12,043,000 in fiscal 2008, a decrease in the operating loss of $11,697,000, or 97.1%. This improvement in operating results represented a combination of higher sales volume and gross profit coupled with reduced claim settlement costs and impairment expenses.

On a segment basis, TSG had an operating income of $2,431,000, a $6,360,000 improvement over the segment operating loss of $3,929,000 in fiscal 2008. The CSG had an operating loss of $1,497,000 in fiscal 2009, a decrease in operating loss of $4,054,000, or 73.0%, from fiscal 2008. These segment operating results were offset, in part, by unallocated corporate expenses of $1,280,000 which were down $805,000, or 38.6%, from fiscal 2008.

Interest expense (net of interest income) declined $13,000, or 0.8%, in fiscal 2009 from fiscal 2008.

Other expense, net, decreased $169,000 for fiscal 2009 compared with fiscal 2008 reflecting miscellaneous income from insurance and other settlements.