Net Sales Up 89%, Operating Income Up 72%, Net Income Up 53%

    RANCHO CUCAMONGA, Calif., Jan. 27 /PRNewswire/ -- Pacer Technology
(Nasdaq: PTCH), owner of such branded consumer products as Super Glue, ZAP(R),
PRO SEAL(R), Cook Bates(R), Diamond Deb(R)/Kurlash(R) and Gem(R), today
announced rapid growth in net sales, operating income and net income for its
second quarter ended December 31, 1998.
    President and Chief Executive Officer Jim Munn stated, "Our dominant
market position in several of our product segments and the acquisition of Cook
Bates last March are the primary factors driving these strong results.  We are
quite pleased with our strong quarterly performance as well as our year-to-
date results.  Equally important, our plans to increase the number of products
in our existing customers' outlets and to capture additional market share
through aggressive programs utilizing Super Glue and Cook Bates are on track."

    Financial Results
    For the three months ended December 31, 1998, net sales were $11,840,117,
an 89% gain over the $6,273,501 reported for the comparable 1997 second
quarter.  Operating income increased to $942,359 for the second quarter from
$546,483 in the same period a year ago.  Net income advanced 53% to $420,886,
or $.02 per share, versus $275,646, or $.02 per share, for the comparable
prior year quarter.
    For the six months ended December 31, 1998, net sales improved 87% to
$25,497,826 from $13,648,651 during the first six months of 1997.  Operating
income was $2,817,630, a 90% increase from $1,481,556 in the comparable period
a year ago.  Net income also rose 90% to $1,377,797, or $.08 per share, up
from $726,519, or $.04 per share, in the 1997 first six month period.

    Domestic Operations
    The Company reported domestic sales of $23,211,492 for the first six
months versus $10,920,453 in the prior year.  The increase was driven largely
by revenues from Cook Bates and the Company's Super Glue product line.  Pacer
further announced that during the first half it experienced strong seasonal
sales related to pre-holiday Halloween and Christmas purchases of Cook Bates
products.  For the most part, pre-Cook Bates sales remain relatively level.

    International Operations
    International sales were $2,429,568 representing approximately 10% of
total sales for the first half, compared to $2,728,198 or 20% of total sales,
for the corresponding period a year ago.  For the second quarter of fiscal
1999, international sales rose to $1,274,617, a 16% increase from the
corresponding quarter last year.  The Company enjoyed strong sales in
Australia, Mexico, and South Africa.  Munn explained that international sales
represents a lower percentage of total revenue primarily due to the inclusion
of results from Cook Bates, whose products are mostly distributed
domestically.

    Other Operating Expenses
    Pacer's gross margin was 35% for the second quarter of fiscal 1999 versus
36% in the comparable quarter the year before.  This slight decline in Pacer's
gross margin was the result of the Company's activities related to integrating
Cook Bates' operations into existing facilities.  Operating margin was 8% of
net sales during the current quarter compared to 9% in the corresponding
quarter the prior year.  Selling, general and administrative expenses remained
approximately level at 27% of sales for the three-month period versus the same
quarter a year ago.  Munn stated, "The slight decreases in operating margin
are attributable to higher labor and freight costs incurred in order to meet
customer needs in a timely fashion during the peak of our seasonal sales
period."

    Financial Position
    At December 31, 1998, Pacer reported total assets of $34,267,700,
stockholders' equity of $12,044,860, long-term debt of $13,689,222 and working
capital of $19,882,254.
    Except for historical information contained herein, the matters set forth
in this news release are forward looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those set forth herein in the forward looking statements,
including such factors, among others, as significant fluctuations in operating
results, uncertain market acceptance of the company's products and intense
competition.
    Pacer Technology is a manufacturer and worldwide marketer of advanced
technology adhesives, sealants and related products for a variety of consumer
and industrial applications, as well as manicure implements for consumer
markets.  It is the provider of SUPER GLUE, ZAP(R), PRO SEAL(R), Cook
Bates(R), Diamond Deb(R)/Kurlash(R) and Gem(R), and other well known branded
products.

                      Pacer Technology and Subsidiaries
                          Consolidated Balance Sheet

                                                       Fiscal Year-Ended
                                                   December 31,      June 30,
                                                       1998            1998
    Assets
    Current Assets:
     Cash                                           $662,069        $277,370
     Trade Receivables                            13,825,336       8,591,327
     Notes and Other Receivables                     304,518         334,941
     Inventories                                  11,516,121      10,974,578
     Prepaid Expenses                                961,059         810,451
     Deferred Income Tax - Current                 1,146,769       1,146,769

        Total Current Assets                      28,415,872     $22,135,436

    Equipment and Leasehold Improvements, Net      2,150,986       1,819,783

    Deferred Income Tax Asset                        124,065         124,065
    Cost In Excess of Net Assets Acquired          3,548,407       3,689,516
    Other Assets                                      28,370          30,125

       Total Assets                               34,267,700     $27,798,925

    Liability And Stockholders' Equity
    Current Liabilities:
     Accounts Payable                              4,734,516       4,135,472
     Other Accrued Expenses                        3,465,769       3,162,266
     Current Portion of Long-Term Debt               333,333         333,333

       Total Current Liabilities                   8,533,618       7,631,071

    Long-Term Liabilities:
     Long-Term Debt, Excluding Current Installments13,689,222      9,535,889

       Total Liabilities                          22,222,840      17,166,960
    Stockholders' Equity:
     Notes Receivable From Directors                (265,227)       (265,257)
     Common Stock                                  8,305,499       8,270,633
     Retained Earnings                             3,991,251       2,613,453
     Exchange Rates Difference                        13,337          13,136

       Total Stockholders' Equity                 12,044,860      10,631,965

       Total Liabilities and Equity              $34,267,700     $27,798,925

       Working Capital                            19,882,254      14,504,365

       Current Ratio                                    3.33            2.90

                      Pacer Technology and Subsidiaries
                        Consolidated Income Statement

                               Three Months Ended        Six Months Ended
                                  December 31,              December 31,
                                 1998       1997          1998        1997

    Net Sales               $11,840,117  $6,273,501  $25,497,826 $13,648,651
    Cost of Sales             7,704,599   4,021,341   16,443,321   8,662,349

    Gross Profit on Sales     4,135,518   2,252,160    9,054,505   4,986,302

    Selling, General and
      Administrative Expenses 3,193,159   1,705,678    6,236,875   3,504,747

    Operating Income            942,359     546,483    2,817,630   1,481,556

    Interest Expense (Income)
      and Other                 194,573      62,287      405,351     183,339

    Income Before Taxes         747,786     484,196    2,412,279   1,298,217

    Income Taxes                326,900     208,550    1,034,482     571,698

    Net Income                 $420,886    $275,646   $1,377,797    $726,519

    Weighted Average Shares  15,914,642  15,849,975   15,889,809  15,849,975

    Basic Earnings Per Share      $0.03       $0.02        $0.09       $0.05

    Adjusted Weighted Average
      Shares                 17,867,284  17,138,808   17,849,241  17,389,432

    Diluted Earnings Per Share    $0.02       $0.02        $0.08       $0.04


    SOURCE             Pacer Technologies