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STAR TECHNOLOGIES REPORTS THIRD QUARTER RESULTS GE INVENTORY REDUCTION PROGRAM ENDS; LOSSES CURBED BY SHARP EXPENSE CUTS

 STERLING, Va., Feb. 10 /PRNewswire/ -- Star Technologies, Inc. (NASDAQ: STRR) today reported revenue of $5.1 million for the third quarter ended Dec. 31, 1992, compared with revenue of $7.3 million for the same period last year. The company reported a net loss of $222,000, or $(0.04) a share, compared with a net loss of $960,000, or $(0.08) a share, reported for the same prior-year period.
 For the nine months, the company reported revenue of $16.7 million, compared with $26.1 million for the same period last year. The company reported a net loss of $713,000, or $(.12) a share, compared with a net loss of $389,000 or $(.10) a share, for the first nine months of last year.
 "As anticipated, the quarter's results reflect the impact of an inventory reduction program that has been implemented by a large OEM customer, which is now in its final phase," said Edward J. Larese, Star's vice president of finance and administration. "However, results benefited from increased sales of array processors including the first shipments to the People's Republic of China, and from ongoing activity on a large U.S. Navy simulator program. Our aggressive cost reduction program was another positive factor in the quarter. This program sharply reduced operating expenses and will provide annual savings of more than $5 million."
 The company attributed the decline in revenue for the quarter to lower sales of its ST-CT array processor to GE Medical Systems (GEMS) under a long-term OEM contract. As previously reported, sales to GEMS declined as GEMS completed a program to reduce its level of on-hand inventory. The GEMS inventory reduction program, which commenced during the first quarter, was completed on Dec. 31, 1992. As a result, GEMS revenue is expected to approach more historical levels in following quarters.
 The GEMS decline was partially offset by sales of the Graphicon(TM) image generators and end-user sales of array processors. During the quarter, Star continued work on the U.S. Navy's SH-60 program -- a multi-year, multi-million dollar program to upgrade the Navy's helicopter simulation trainers. Under a subcontract, Star is supplying multiple Graphicon image generators and database services, which provide the visual imagery for the helicopter simulators.
 Other sales of note during the quarter included multiple array processors to a Canadian customer for satellite imaging ground stations which will be installed in Taiwan, Thailand, Indonesia and Saudi Arabia. In addition, Star shipped the first array processors to Grant Tensor Geophysical Corp. under an OEM agreement that enables Grant Tensor to exclusively market Star's array processors in the People's Republic of China. These initial systems will be shipped to the Daquing Oil Field, the oldest and largest oil field in China.
 Aggressive cost-cutting actions moderated the impact of the quarter's anticipated revenue decline. These comprehensive and ongoing actions have sharply reduced operating expenses by 53 percent for the quarter as compared to the third quarter of last year. The benefit of these actions is expected to continue throughout fiscal 1993.
 The company also announced that it is concluding an agreement to extend its bank line of credit with NationsBank of Atlanta. The extended agreement will provide Star with a $3 million line of credit to support the company's capital requirements, and will extend the previous credit line with NationsBank (which expired on Dec. 31, 1992) through Sept. 30, 1993.
 Star Technologies is a manufacturer of high-performance computing products, including array processors and image generators. Star is headquartered at 515 Shaw Road, Sterling, Va., 20166. Telephone: 703-689-4400.
 STAR TECHNOLOGIES, INC.
 Comparative Results
 (Unaudited -- In thousands, except per share data)
 Periods Ended Three Months Nine Months
 Dec. 31 1992 1991 1992 1991
 Revenue $5,115 $7,323 $16,734 $26,132
 Cost of revenue (2,945) (3,292) (9,236) (11,860)
 Operating expenses (2,325) (4,937) (8,032) (14,438)
 Operating income (loss) (155) (906) (534) (166)
 Interest and other expense (52) (54) (153) (223)
 Income taxes, net (15) -- (26) --
 Net income (loss) (222) (960) (713) (389)
 Per Share Data:
 Net loss per common and common
 equivalent share $(.04) $(.08) $(.12) $(.10)
 Average shares outstanding 19,311 18,329 19,017 18,054
 (A) Per share data includes adjustments for declared and undeclared cumulative preferred dividends for the period.
 Graphicon is a trademark of Star Technologies, Inc.
 -0- 2/10/93
 /CONTACT: Helen Ryan of Star Technologies, 703-689-4400, or Anne Lampert of Makovsky & Company, 212-532-6300, for Star Technologies/
 (STRR)


CO: Star Technologies, Inc. ST: Virginia IN: CPR SU: ERN

SM-PS -- NY042 -- 5137 02/10/93 12:07 EST
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Date:Feb 10, 1993
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