Date: Fri, 21 Nov 1997 02:38:39 GMT Server: Apache/1.2.4 Last-Modified: Wed, 05 Nov 1997 18:27:46 GMT ETag: "2378-396f-3460baa2" Content-Length: 14703 Accept-Ranges: bytes Connection: close Content-Type: text/html STRATUS REPORTS THIRD QUARTER EPS GREW 71 PERCENT
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STRATUS REPORTS THIRD QUARTER EPS GREW 71 PERCENT

MARLBORO, Mass., October 22, 1997 -- Stratus Computer, Inc. (NYSE:SRA) today reported that revenues for the third quarter ended September 28, 1997 totaled $175.0 million, up 17 percent from $150.0 million in the previous year's third quarter. Earnings and earnings per share in 1997's third quarter were $19.3 million and $0.77, respectively, compared to $10.8 million and $0.45 in the third quarter of 1996, representing increases of 79 percent and 71 percent, respectively.

Revenues for the nine months ended September 28, 1997 were $498.3 million, up 15 percent from the $433.2 million Stratus reported for the first nine months of 1996. Earnings and earnings per share for the period were $51.4 million and $2.10, respectively, compared to $25.8 million and $1.09 for the same period a year ago, representing increases of 99 percent and 93 percent, respectively.

"Strong telecommunications revenue growth continued in quarter three, up 44 percent from last year, and represented 54 percent of total product revenue," said Bruce Sachs, Stratus president and CEO. The company reported that its product revenue grew 23 percent in the current quarter over the third quarter of 1996. "Although we were pleased with the third quarter growth rates, we expect slower growth in the fourth quarter of 1997 and in 1998," said Sachs. Stratus' balance sheet strengthened in its third quarter, with cash growing to $248 million. Days sales outstanding (DSO) decreased to 68 days from 79 in the second quarter of 1997. Inventory days on hand decreased to 81 days from 86 in the second quarter of 1997.

"We reached two major new product milestones this quarter," continued Sachs. "We announced our newest generation of Continuum® systems, based on the Hewlett-PackardTM PA-RISC 8000 microprocessor. Beginning with the Continuum Series 400 running our implementation of the Hewlett-Packard HP-UXTM operating system, these systems offer three to five times the performance of the previous models, at similar pricing. The remainder of the Continuum line will begin shipping with the 8000 chip during the next two quarters, and the entire family will offer both HP-UX and the Stratus FTXTM operating system, a native port of UNIX® SVR 4.0. The Stratus® VOS system will follow on mid-range and high-end Continuums. The new generation will be 100 percent binary compatible with the previous generation of Continuum systems. Also this quarter, we began shipments of RADIO ClusterTM systems based on the Pentium® Pro microprocessor and running Windows NT®. These achievements underscore our long-standing commitment to deliver open systems with the highest levels of computer reliability, very attractive price-performance, and maximum protection for our customers' investments in their applications," said Sachs.

Stratus also announced two major alliances to provide Internet-based financial services. Stratus and Security First Technologies (S1) will deliver S1's scalable, secure Internet banking solution using Stratus Continuum computers. Stratus will also partner with RBT Engineering Systems and Software, and The PowerHouse Systems Group, to offer an integrated Internet-based securities trading system, featuring "straight-through processing" from trade entry to settlement. The company also announced that it had been selected as the hardware platform for new Internet electronic commerce services to be supplied by Belgacom, Belgium's telecommunications provider. Using software supplied by Stratus partner Open Market, Inc., Belgacom's customers will be able to market their products via the Internet without developing their own systems.

About Stratus
Based in Marlboro, Mass., Stratus Computer, Inc. (NYSE:SRA) is the premier supplier of computer based systems and services where continuous availability is a critical need. Stratus and its subsidiaries offer a broad range of continuously available computer platforms, application software, middleware, and professional services. The company markets its systems and solutions to a range of industries in more than 60 countries. Stratus posted revenue of $609.3 million in fiscal year 1996. For more information, see Stratus on the Internet at http://www.stratus.com.

Statements contained in this press release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from such forward-looking statements and/or historical results. Such risks and uncertainties are discussed more fully in the company's latest annual report on Form 10-K filed with the Securities and Exchange Commission.

Stratus, the Stratus logo, and Continuum are registered trademarks, and FTX and RADIO Cluster are trademarks of Stratus Computer, Inc. Hewlett-Packard, HP, and HP-UX are trademarks of Hewlett-Packard Company. UNIX is a registered trademark in the United States and other countries licensed exclusively through X/Open Company, Limited. Windows NT is a registered trademark of Microsoft Corporation. Intel and Pentium are registered trademarks of Intel Corporation. All other trademarks are the property of their respective owners.

Contact:
Peter Christiana
460-2135
Peter_Christiana@stratus.com (Financial summary follows) 


Consolidated Statements of Income
(in thousands, except per share amounts)

                    Third Quarter Ended                Nine Months Ended
                    9/28/97     9/29/96                9/28/97   9/29/96

Revenues:
Product sales       $124,999    $101,618               $348,944  $282,256
Service               50,024      48,392                149,316   150,980
  Total revenues     175,023     150,010                498,260   433,236

Cost of sales:
Product cost of sales 65,013      55,117                180,912   150,949
Service expense       31,034      29,094                 92,480    91,634
  Total cost of sales 96,047      84,211                273,392   242,583

Gross profit          78,976      65,799                224,868   190,653

Operating expenses:
Research and 
 development          24,189      19,439                 65,833    59,310
Selling, general and
 administrative       33,813      33,726                102,161    98,436
Restructuring 
 charge (a)            ---         ---                    ---       4,623
Total operating 
 expenses             58,002      53,165                167,994   162,369


Operating income      20,974      12,634                 56,874    28,284

Other income           3,718       1,520                  9,073     5,149

Income before provision
 for income taxes     24,692      14,154                 65,947    33,433

Provision for income 
 taxes                 5,432       3,397                 14,508     7,638

Net income          $ 19,260    $ 10,757               $ 51,439  $ 25,795

Weighted average shares
of common stock and common
stock equivalents 
outstanding           25,055      23,816                 24,473    23,719

Net income per 
 common share       $   0.77    $   0.45               $  2.10   $   1.09

(a)  The results of operations for the nine months ended September 29,
1996 include a one-time charge of $4.6 million for the cost of restructuring 
the Company's software business.  Excluding this charge, earnings per share 
for the nine months ended September 29, 1996 would have been $1.24.



Consolidated Balance Sheets


                                             (all amounts in thousands)
                                               9/28/97         12/29/96

Assets:

   Current assets:
     Cash and cash equivalents                $247,640        $174,870
     Accounts receivable, net                  132,293         175,061
     Inventories                                83,405          63,283
     Other current assets                       33,906          28,313
        Total current assets                   497,244         441,527

   Property, plant and equipment, net          146,125         122,756
   Other assets                                 66,408          74,638

        Total assets                          $709,777        $638,921


Liabilities and stockholders' equity:

   Current liabilities:
     Short-term borrowings
          and obligations                     $  1,626        $  2,667
     Accounts payable                           27,868          30,357
     Accrued expenses                           81,632          69,215
     Income taxes payable                       25,656          13,564
        Total current liabilities              136,782         115,803

   Long-term obligations and
          deferred gain                            750           3,634
  Stockholders' equity                         572,245         519,484

         Total liabilities and
            stockholders' equity              $709,777        $638,921

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