FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

Ibis Technology Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IBIS)") else Response.Write("(NASDAQ: IBIS)") end if %>
32A Cherry Hill Drive
Danvers, MA 01923
(508) 777-4247

UNION CITY, Ca., October 31, 1996/FOOLWIRE/ ---Ibis Technology released third quarter 1996 results yesterday. Total revenues were $2.85 million which is a quarterly record for the company. This amount is more than double the total revenue of the third quarter last year. That is primarily due to the sale of the IBIS 1000 to one of their leading customrs. In fact, in this quarter, they recognized $1.6 million of this sale along with the associated costs on a percent of completion basis. They actually made very solid progress on the build and test of this equipment. And, at the third quarter it was almost 70% complete and they anticipate that this equipment will ship to the customer in the fourth quarter with the final recognition of the profit on the sale.

As a reminder, this is the first time they have sold equipment as opposed to wafers, as it is not yet clear whether the customer demand for implanter equipment will continue.

PRODUCT SALES. In terms of product sales for the third quarter, they increased 4% compared with the same quarter last year. They also reversed the slight downward trend from Q1 to Q2 this year. But, it is still a little below their internal expectations and they attribute this primarily to the slowdown in the semiconductor industry. They still believe that SIMOX is a new technology that addresses fundamental strategic industry needs. But they are not completely immune to broad industry trends.

GROSS MARGINS. The gross margins this quarter are improved compared to last year for two primary reasons. First, they have the favorable impact of the implanter sale and secondly the depreciation has been reduced since they wrote off the prototype of the IBIS 1000 at the end of Q3 last year. The operating expenses are up 30% this quarter compared to the third quarter last year and most of that is the result of some additional marketing and sales expense, some additional product and equipment development efforts, and expenses relating to serving a larger shareholder base.

NET EARNINGS RESULTS. The net result of all this is that their net loss for the quarter was $177,000 or $0.03 per share compared to a $1.3 million loss or $0.38 per share in the same quarter last year. $0.21 of the $0.38 per share loss last year was due to the write-off of the IBIS 1000 prototype. But, even so, the loss this year of $0.03 per share represents a substantial improvement.

OPERATIONAL HIGHLIGHTS. From a general operational point of view, there were a number of highlights in the quarter. First, the second IBIS 1000 which was funded by Motorola, was completed around the middle of the quarter. The material qualification by the customer proceeded very smoothly and the unit was put in full production in September.

The construction of the third IBIS 1000, which is being built for a leading customer, has also proceeded very smoothly, on schedule, and on budget. Early testing of that unit looks very promising. They still anticipate shipping this unit in the fourth quarter.

In terms of their wafer processing technology, they made some very good progress this quarter and, in fact, announced a new SIMOX product which they have trademarked ADVANTOX. This is a thinner buried oxide layer and has significantly lower manufacturing costs. Furthermore, this type of SIMOX, with the thin buried oxide, has been identified as a major requirement for the Japanese market and they are very encouraged by the building material characterizations and are already moving into the beta site evaluation and testing phase with several customers. It is early to be declaring a victory with this material, but certainly the early results are very encouraging.

Apart from addressing specific industry requirements in terms of constant quality, it is important to note that the ADVANTOX could possibly result in as much as a three-fold increase in wafer capacity for each of their IBIS 1000 implanters. The customers that are the most interested in ADVANTOX are the ones that have been concerned about the cost of the basic, standard version of SIMOX which has been around for several years. There has been a lot of work going on with various technologies trying to reduce the thickness of the buried oxide in the SIMOX because that, almost on a one-to-one ratio, increases the throughput and reduces the cost of the manufacturing of SIMOX.

Product sales this quarter did increase 10% over Q2 and this is almost entirely a reflection of the Motorola funded unit moving into a revenue generating mode in September.

There continues to be a declining demand for the wafers from the older NV200 implanters. In fact, the percent of revenue now generated by the new IBIS 1000 systems has systematically increased from 40% of revenue last year at this time to 80% of revenue this year. With the second IBIS 1000 now in production and online, the dependence on a single system has finally been eliminated. So the challenge now facing them has really changed from a capacity limitation to one of demand. The two machines are pretty much at capacity now.

INDUSTRY CONDITIONS. In general, because this is new technology and leading-edge, they have been somewhat immune to the cyclical nature of the industry. They think that is still true to some extent although they are feeling it now. The difference is that, sometime in the past when SIMOX was in the R&D phases and the wafers were being ordered in small quantities, that wasn't really affected by what was going on in the big picture of the industry. In contrast, the numbers of wafers that customers are using is increasing, indicating that transition into pilot production certainly customers are trying to identify fabs where they will run SIMOX products. And that type of activity is slowed down by the industry. But they see no signs of any program cancellations. The enthusiasm, in general, that they have is just as great as it always was.

The other thing they need with the extra machine now is to do a lot of work pushing for the development of this ADVANTOX in new materials as they work with customers. So that will give them a little bit of breathing space and time to do some of that development which they've not enjoyed in the past.

They are on schedule on construction of the two additional IBIS 1000s which are currently planned for completion in the first half of next year.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.