AXSYS TECHNOLOGIES ANNOUNCES SECOND QUARTER RESULTS

• Second Quarter Sales Increased 18.6% Over 2003
• Operating Income Increased 57.7% Over 2003
• Backlog up 32.8% Over The Prior Year and 18.5% Over Year End

ROCKY HILL, CONN. - August 2, 2004 - Axsys Technologies, Inc. (NASDAQ: AXYS), a global leader in the design, manufacture and distribution of precision opto-mechanical components and assemblies for the aerospace, defense and high performance commercial markets, today announced results for the second quarter of 2004.

Sales totaled $25.7 million in the quarter ended July 3, 2004, compared to $21.7 million in the second quarter of 2003, an increase of $4.0 million, or 18.6 percent. In the second quarter of 2004, Axsys reported net income of $1 .97 million, or $0.28 per share, compared to net income of $1.44 million, or $0.21 per share, in the quarter ende d June 28, 2003. These per share values reflect the impact of the 3 for 2 stock split in June of 2004.

The income tax provision for the second quarter of 2004 reflects a combined federal and state effective tax rate o f 10.0 percent, which represents 6.0 percent for federal taxes and 4.0 percent for state taxes. The federal tax pr ovision for the quarter reflects a reduced tax rate due to the utilization of $0.6 million of the previously estab lished federal tax valuation allowance. The combined federal and state effective tax rate in the second quarter of 2003 was 4.5%. Pre-tax income in the second quarter of 2004 was $2.2 million compared to $1.5 million in the seco nd quarter of 2003.

Sales within the Aerospace and Defense Group during the quarter totaled $15.5 million, an increase of 23.1 percent from the second quarter of 2003. Sales within the Commercial Products Group of $3.8 million were comparable to th e second quarter of 2003. The Distributed Products Group's sales totaled $6.4 million, representing a 21.4 percent increase from the second quarter of 2003.

Gross margin in the second quarter of 2004 was 30.4 percent, which compares favorably to the 27.6 percent gross ma rgin reported for the same period in 2003. Gross margins improved across all three business segments over the prio r year, due largely to an increase in volume combined with a favorable mix of higher margin products, including th ose products sold through our newly acquired business unit, Axsys Technologies IR Systems, formerly Telic Optics, Inc.

Stephen W. Bershad, Chairman and Chief Executive Officer of Axsys, commented: "Our financial performance this quar ter is a continuation of the strong results we reported last quarter and validates our strategic focus on precisio n optical assemblies. Our backlog, which grew 7.6 percent from the previous quarter, reached a new record of $81.7 million and reflects the increasing demand for our unique capabilities and products."

Axsys' management invites you to listen to our conference call or our live audio webcast on August 3, 2004, at 10 a.m. ET regarding second quarter of 2004 financial results. The domestic dial-in number is (800) 670-3547, the int ernational dial-in number is (212) 341-7080 and the access number is 21200372. This call is being webcast by CCBN and can be accessed at Axsys Technologies' Web site at www.axsys.com.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchang e Act of 1934, as amended. One can identify these forward-looking statements by the use of the words such as "expe ct," "anticipate," "plan," "may," "will," "estimate" or other similar expressions. Because such statements apply to future events, they are subject to risks and uncertainties that could cause the actual results to differ materi ally. Important factors, which could cause actual results to differ materially, are described in Axsys' reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission, including without limitation: the introdu ction of competing products or technologies by other companies and/or pricing pressures from competitors and/or cu stomers, a reversal or slowdown of the modest economic recovery presently being experienced in the United States, Axsys' inability to achieve synergies in connection with the acquisition of Telic Optics, Inc., the incurrence of unexpected costs in connection with the acquisition and other contingencies and risks relating to the integration of Telic's operations and business.