Methode Electronics, Inc. Announces Fourth Quarter Sales and Earnings

Chicago, IL. Methode Electronics, Inc. (Nasdaq: METHA) today announced record sales of $117,155,000 for the fourth quarter ended April 30, 2000, up from $111,506,000 a year ago. Net income amounted to $9,678,000, up from $8,831,000 in 1999 with earnings per share of $0.27 versus $0.25 a year ago. Unusual items of income and expense were recorded in the fourth quarters of both fiscal years. In 1999 pretax income was reduced by (1) $3,100,000 to reflect a decision to exit participation in the printed circuit industry, and (2) by an additional $2,000,000 in provisions for bad debts and environmental remediation reserves. As a positive, the fourth quarter of 1999 included in other income a $2,650,000 favorable settlement of patent litigation. The fourth quarter of fiscal 2000 included a $1,000,000 provision for loss on idle equipment relating to connector operations included in the Electronic segment. In both fourth quarters, earnings before these unusual items amounted to $0.29 per share. For the year ended April 30, 2000, sales amounted to $422,146,000, up about 5% from $403,731,000. Net income for the year (which included a second quarter charge of $0.06 per share for a bad debt) was $0.87 per share as compared to $0.93 in fiscal 1999.

President James W. McGinley said, "As discussed in previous news releases, Methode is primarily comprised of two segments -- the Optical and Electronic. The Optical segment includes products which principally employ light to convert and convey electronic signals. Products in the Electronics segment principally employ electronic processes to connect, control and convey signals.

"Our Optical products business was transferred to Stratos Lightwave, Inc., a wholly owned subsidiary, as of May 28, 2000, in contemplation of its previously announced initial public offering. The results of our Optical segment include the results of Stratos Lightwave, Inc. and additional Methode business units which were not transferred to Stratos and will be retained by Methode. Sales for the fourth quarter for the Optical segment were $26,730,000, up 34% from $19,888,000 a year ago with profits of $3,497,000 versus $4,634,000 in 1999. For the year Optical segment sales were $84,847,000, up 43% from $59,247,000, with profits of $12,853,000 as compared to $11,858,000 in 1999. Profits were reduced by our R&D and other expenses at our recently acquired operations, Bandwidth Semiconductor and Methode Communication Modules, by approximately $0.03 per share for the fourth quarter and $0.05 per share for the year. In addition, R&D expenditures in optoelectronics for the fourth quarter more than doubled over the previous year. While we expect these investments to be dilutive for the short term, we are confident that they will position our business for continued strong growth going forward.

Sales of optoelectronic transceivers were up 33% over last year s fourth quarter and 59% for the year. Our sales growth for the quarter was driven by strong demand from both Gigabit Ethernet and Fibre Channel customers. New small form factor transceiver shipments grew significantly from the third quarter.

Fiber Optic product sales for the fourth quarter increased 85% over the same period last year. Our decision made last year to redirect our efforts from premise- and project-related business to OEM business was the driver of these improved results.

"The Electronic segment represents over 70% of Methode s consolidated sales and has been operating in a flat sales environment for the last half of the year. Sales for the fourth quarter for the Electronic segment were $85,676,000, up slightly from $84,262,000 with pretax profits of $13,887,000 as compared to $15,795,000 a year ago. Included in the current quarter s results is a pretax charge of $1,000,000 relating to a provision for loss on idle equipment at our Connector operations.

"A decline in profits at our automotive interconnect device and control businesses accounted for most of the balance of the difference in profits for the current quarter as compared to the fourth quarter of fiscal 1999. Actually, in fiscal 2000 we saw a recovery in operating profits relating to our automotive products which had been declining since 1997. Excluding the $3,000,000 write-off of a bad debt in the second quarter, automotive profits were up over 10% for the year, and we are pleased to report that fiscal 2001 points to a strong recovery in worldwide sales and earnings for automotive products. Most of the increase is expected in the second half of our fiscal year as model 2001 production ramp-ups and cost reduction initiatives come into full force. We continue to expand internationally with increased capacity planned for our existing facilities in Scotland and Malta and our new operation in Mexico.

"Our connector and interconnect device businesses, serving primarily the telecom and computer marketplaces, are another important component of our Electronic segment. The connector and interconnect businesses showed some improvement during the fourth quarter as compared to a year ago, and we are encouraged that some of the comparisons could get better in fiscal 2001. Duel Systems, a manufacturer of products for the compact flash and wireless markets, has enjoyed a strong new order rate, and Methode Singapore, after a restructuring during fiscal 2000, has also shown recent improvement. Adam Tech, a provider of a wide variety of connector products, reported significant sales and profits during the fourth quarter and full year which will be difficult to duplicate in 2001.

"For the first nine months of fiscal 2000 we incurred losses of about $0.03 per share at our domestic cable assembly operation. During the fourth quarter we turned a modest profit, and looking into 2001 will continue to aggressively pursue cost-cutting and containment measures to continue this trend.

"Our dataMate operations, which are comprised mainly of facilities manufacturing adapters and terminators, and include a European cable assembly operation, round out our Electronic segment. These dataMate businesses have struggled for some time and were slightly down in sales and off somewhat in earnings compared to last year s fourth quarter.

"For the year ended April 30, 2000, Electronic segment sales were $312,327,000, down slightly from $314,406,000, with profits of $48,461,000 as compared to $57,047,000 a year ago. Profit comparisons are difficult because of unusual items. Fiscal 2000 contains about $4,000,000 relating to a bad debt and provisions for idle equipment losses. Fiscal 1999 contains a $2,650,000 recovery on a patent litigation settlement. As previously mentioned, automotive profits were up about 10%, but we did incur substantial reversals in earnings during the year at dataMate, Singapore and from the domestic cable assembly facility. We believe the problems in Singapore and at the domestic cable assembly facility have been stemmed, but we are still facing some continuing fall-off in the results from our dataMate operations. Overall the businesses comprising our Electronic segment appear poised to have good results for fiscal 2001," McGinley concluded.

Methode, in conjunction with its Fourth Quarter Sales and Earnings Release, will conduct a conference call, led by its President, James W. McGinley, on Wednesday, June 7, at 9:00 a.m. CDT. To participate call 888- 222-2994. A replay of the call will be available for seven days, beginning at 12:00 p.m. EDT, June 7. To hear the replay call 800/938-1593, Code No. 72677.

Certain statements in this press release are forward-looking statements that are subject to certain risks and uncertainties. The Company s business is highly dependent upon specific makes and models of automobiles. Therefore, the Company s financial results will be subject to many of the same risks that apply to the automotive industry, such as general economic conditions, interest rates and consumer spending patterns. A significant portion of the balance of the Company s business relates to the computer and telecommunication industries which are subject to many of the same risks facing the automotive industry as well as fast-moving technological change. Other factors which may result in materially different results for future periods include actual growth in the Company s various markets; operating costs; currency exchange rates and devaluations; delays in development, production and marketing of new products; and other factors set forth from time to time in the Company s Form 10-K and other reports filed with the Securities and Exchange Commission. Any of these factors could cause the Company s actual results to differ materially from those described in the forward-looking statements. The forward-looking statements in this press release are intended to be subject to the safe harbor protection provided under the securities law.

Methode Electronics, Inc., with 3,750 full-time and 400 temporary employees in 24 plants worldwide, manufactures component devices for Original Equipment Manufacturers (OEMs) of information processing and networking equipment, voice and data communications systems, consumer electronics, automobiles, aerospace vehicles and industrial equipment. Products employ electrical, electronic and fiber optic technologies in communication data links, interconnections and controls.

Contact:
James W. McGinley, President or Michael T. Perkins, Manager of Investor Relations
both of Methode Electronics, Inc.
Tel: 708-867-9600