<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  ----------

                                   FORM 10-Q

                                  ----------

(Mark One)

    [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934 for the Quarterly Period Ended July 31, 2001, or

    [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934 for the Transition Period from _________ to
        ___________

                        Commission file number 0-30869


                            STRATOS LIGHTWAVE, INC.
            (Exact name of Registrant as specified in its charter)

                                  ----------


              Delaware                                36-4360035
  (State or other jurisdiction of                  (I.R.S. Employer
   incorporation or organization)                Identification No.)


                            7444 West Wilson Avenue
                            Chicago, Illinois 60706
                                (708) 867-9600
         (Address, including zip code, and telephone number, including
            area code, of Registrant's principal executive offices)

                                  ----------

                                  Not Applicable
  --------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
                                      ---

As of September 12, 2001, there were 64,092,307 shares of the Registrant's
common stock outstanding.
<PAGE>

                            STRATOS LIGHTWAVE, INC.

                                     INDEX
                                     -----

<TABLE>
<CAPTION>
                                                                                                              Page
                                                                                                              ----
<S>                                                                                                           <C>
PART I       FINANCIAL INFORMATION..........................................................................   1
Item 1.      Financial Statements...........................................................................   1
             Condensed Consolidated Balance Sheets as of April 30, 2001 and July 31, 2001 (unaudited).......   1
             Condensed Consolidated Statements of Operations (unaudited) for the three months ended July 31,
             2000 and 2001..................................................................................   2
             Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended July 31,
             2000 and 2001..................................................................................   3
             Notes to Condensed Consolidated Financial Statements (unaudited) July 31, 2001.................   4
    Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operation...........   8
    Item 3.  Quantitative and Qualitative Disclosures About Market Risk.....................................  24

PART II.     OTHER INFORMATION..............................................................................  25
    Item 1.  Legal Proceedings..............................................................................  25
    Item 2.  Changes in Securities and Use of Proceeds......................................................  26
    Item 6.  Exhibits and Reports on Form 8-K...............................................................  28

SIGNATURES..................................................................................................  29

INDEX TO EXHIBITS...........................................................................................  30
</TABLE>

                                      -i-
<PAGE>

                                    PART I
                             FINANCIAL INFORMATION

Item 1.   Financial Statements.
          --------------------

                            STRATOS LIGHTWAVE, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                          April 30,        July 31,
                                                                                           2001             2001
                                                                                         ----------      -----------
                                                                                                         (unaudited)
<S>                                                                                      <C>             <C>
                                        ASSETS
Current assets:
   Cash and cash equivalents........................................................      $125,438         $ 92,514
   Short-term investments...........................................................        20,400           34,500
   Accounts receivable, less allowance..............................................        24,646           13,572
   Inventories:.....................................................................
      Finished products.............................................................         1,551            1,173
      Work in process...............................................................         2,281            1,662
      Materials.....................................................................        23,430           21,626
                                                                                         ----------       ----------
                                                                                            27,262           24,461
   Deferred income taxes............................................................         2,624            6,714
   Prepaid expenses.................................................................         1,012            1,291
                                                                                         ----------       ----------
      Total current assets..........................................................       201,382          173,052
   Other assets:
      Goodwill, less accumulated amortization.......................................        13,472           20,421
      Other.........................................................................           534              600
                                                                                         ----------       ----------
                                                                                            14,006           21,021

Property, plant, and equipment......................................................        85,181           98,260
   Less allowances for depreciation.................................................        20,121           23,077
                                                                                         ----------       ----------
                                                                                            65,060           75,183
                                                                                         ----------       ----------
      Total assets..................................................................      $280,448         $269,256
                                                                                         ==========       ==========

                          LIABILITIES AND STOCKHOLDERS'EQUITY
Current liabilities:
   Accounts payable.................................................................      $ 12,993         $ 16,380
   Other current liabilities........................................................         9,875            4,702
                                                                                         ----------       ----------
      Total current liabilities.....................................................        22,868           21,082
Deferred income taxes...............................................................         2,205            2,475
Minority interest...................................................................           476              496
Stockholders' equity
   Preferred stock..................................................................            --               --
   Common stock.....................................................................           641              641
   Additional paid-in capital.......................................................       245,538          245,538
   Retained earnings (deficit)......................................................         9,075             (642)
   Foreign currency translation adjustment..........................................          (355)            (334)
                                                                                         ----------       ----------
      Total stockholders' equity....................................................       254,899          245,203
                                                                                         ----------       ----------
         Total liabilities and stockholders' equity.................................      $280,448         $269,256
                                                                                         ==========       ==========
</TABLE>

           See notes to condensed consolidated financial statements.

                                      -1-
<PAGE>

                            STRATOS LIGHTWAVE, INC.

          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                   (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                         Three Months Ended July 31,
                                                                                         ---------------------------
                                                                                            2000             2001
                                                                                         ----------       ----------
<S>                                                                                      <C>              <C>
Revenue:
   Net sales........................................................................       $25,916         $ 17,499
   License fees and royalties.......................................................           409            1,126
                                                                                         ----------       ----------
      Total.........................................................................        26,325           18,625

Costs and expenses:
   Costs of sales...................................................................        17,377           21,593
   Research and development.........................................................         2,782            7,511
   Sales and marketing..............................................................         1,928            2,227
   General and administrative.......................................................         1,950            4,865
                                                                                         ----------       ----------
      Total costs and expenses......................................................        24,037           36,196
                                                                                         ----------       ----------

Income (loss) from operations.......................................................         2,288          (17,571)

Investment income, net..............................................................           917            1,369
                                                                                         ----------       ----------

Income (loss) before income taxes...................................................         3,205          (16,202)
Provision for income taxes (credit).................................................         1,164           (6,485)
                                                                                         ----------       ----------
Net income (loss)...................................................................       $ 2,041         $ (9,717)
                                                                                         ==========       ==========
Net income (loss) per share, basic and diluted......................................       $  0.04         $  (0.15)
                                                                                         ==========       ==========
Weighted average number of common shares outstanding:
   Basic............................................................................        57,603           64,092
                                                                                         ==========       ==========
   Diluted..........................................................................        57,973           64,092
                                                                                         ==========       ==========
</TABLE>

           See notes to condensed consolidated financial statements.

                                      -2-
<PAGE>

                            STRATOS LIGHTWAVE, INC.

          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                (in thousands)

<TABLE>
<CAPTION>
                                                              Three Months Ended July 31,
                                                             -----------------------------
                                                                 2000             2001
                                                             ------------     ------------
<S>                                                          <C>              <C>
Operating activities:
   Net income (loss).......................................    $  2,041         $ (9,717)
   Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
      Provision for depreciation and amortization..........       1,400            3,125
      Provision for deferred taxes (credit)................          --           (3,820)
      Provision for losses on accounts receivable..........          --            2,425
      Change in operating assets and liabilities...........      (1,142)           9,926
                                                             ------------     ------------
   Net cash provided by operating activities...............       2,299            1,939

Investing activities:
   Purchases of property, plant and equipment..............      (5,455)         (12,741)
   Purchases of short-term investment......................          --          (14,100)
   Acquisitions............................................          --           (8,027)
   Additional purchase price of prior period acquisition...      (2,957)              --
   Other...................................................         225                5
                                                             ------------     ------------
   Net cash used in investing activities...................      (8,187)         (34,863)
Financing activities:
   Net proceeds from initial public offering...............     195,947               --
   Payment of note related to prior period acquisition.....        (333)              --
   Net cash transfers to Methode Electronics, Inc..........        (812)              --
                                                             ------------     ------------
   Net cash provided by financing activities...............     194,802               --
                                                             ------------     ------------
   Net increase (decrease) in cash and cash equivalents....     188,914          (32,924)
   Cash and cash equivalents at beginning of period........         537          125,438
                                                             ------------     ------------
   Cash and cash equivalents at end of period..............    $189,451         $ 92,514
                                                             ============     ============
</TABLE>

           See notes to condensed consolidated financial statements.

                                      -3-
<PAGE>

                            STRATOS LIGHTWAVE, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

                                 July 31, 2001

1.   Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended July 31, 2001
are not necessarily indicative of the results that may be expected for the year
ending April 30, 2002. This unaudited quarterly information should be read in
conjunction with the audited consolidated financial statements and related notes
for the fiscal year ended April 30, 2001 included in the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission.

     As of May 28, 2000, Methode Electronics, Inc. ("Methode") contributed and
transferred to the Company all of the capital stock and equity interests held by
Methode in subsidiaries and other entities that conducted a majority of its
optical products business, pursuant to a master separation agreement. The
capital stock and equity interests contributed and transferred to the Company
were Bandwidth Semiconductor, LLC, Methode Communications Modules, Inc. (now
Stratos Lightwave-Florida, Inc.), Stratos Lightwave, LLC, Methode's sixty
percent interest in MP Optical Communications, LLC and Stratos Limited. Prior to
its transfer of Stratos Lightwave, LLC to the Company, Methode transferred all
of the assets and liabilities of its optoelectronics and fiber optic divisions,
the properties associated with its optoelectronics research center and Methode's
corporate facilities occupied by these divisions to Stratos Lightwave, LLC.

     In July 2000, the Company completed the sale of 10,062,500 shares of common
stock in its initial public offering at a price of $21 per share. The net
proceeds from the offering, after deducting the underwriting discount and the
offering expenses paid by the Company, were approximately $195.5 million.

     After completion of the Company's initial public offering, Methode owned
54,029,807 shares of the Company's common stock, representing approximately
84.3% of the outstanding shares. After receiving a favorable letter ruling from
the Internal Revenue Service in March 2001, and in accordance with its
previously announced intentions, on April 28, 2001, Methode distributed all of
the shares on the Company's common stock owned by Methode to Methode's
stockholders in a distribution intended to be tax free for U.S. federal income
tax purposes.

     The Company's condensed consolidated financial statements for the periods
ended on or prior to May 28, 2000, have been carved out from the consolidated
financial statements of Methode, using the historical results of operations and
cash flows and historical basis of the assets and liabilities of the business.
The condensed consolidated financial statements for the periods ended on or
prior to May 28, 2000, also include allocations to the Company of Methode's
corporate expenses, including centralized

                                      -4-
<PAGE>

accounting, treasury, information technology, human resources, sales and
marketing, legal, real estate and other corporate service and infrastructure
costs. The Company considers the expense allocations to be reasonable
reflections of the utilization of the services provided to it or the benefits
received by it. The condensed consolidated financial statements after May 28,
2000 reflect the operations, cash flows and assets and liabilities of the
Company on a stand-alone basis.

     For purposes of governing certain of the ongoing relationships between the
Company and Methode after the separation and to provide for an orderly
transition, the Company and Methode entered into various agreements to provide
similar services as those described above. The agreements govern individual
transitional services as requested by Methode or the Company, of the other
party. These services are to be provided in accordance with the policies,
procedures and practices in effect before the transfer date. The term of each
agreement is one year (provision for extension exists) unless earlier
terminated.

     The Company's expenses under its transitional service arrangements with
Methode do not differ significantly from the costs historically allocated to it
by Methode for similar arrangements and reflected in these condensed
consolidated financial statements. The need for services under these agreements
have been substantially reduced at the close of fiscal 2001. It is anticipated
that shared services will continue in fiscal 2002 only in the areas of legal and
quality control.

     The allocation of Methode corporate expenses was discontinued on May 28,
2000. After this date, the Company incurred corporate expenses directly in its
operations or indirectly under its transitional services agreement with Methode.
Charges to the Company from Methode for allocations in the three months ended
July 31, 2000 were classified as follows:

<TABLE>
<CAPTION>
                                                          (in thousands)
                                                          --------------
                    <S>                                   <C>
                    Cost of sales......................         $106
                    Research and development...........            5
                    Sales and marketing................          188
                    General and administrative.........          376
                                                          --------------
                        Total..........................         $675
                                                          ==============
</TABLE>

     In addition, the Company incurred net charges of approximately $149,000 and
$0 in the three months ended July 31, 2000 and 2001 under its transitional
service agreements with Methode.

     Our condensed consolidated financial statements for the three months ended
July 31, 2000 may not necessarily be representative of results that would have
been attained if the Company operated as a separate independent entity.

     Comprehensive income (loss) consists of net income (loss) and foreign
currency translation adjustments and totaled $2,109,000 and $(9,696,000) for the
first quarters of fiscal 2001 and 2002.

     Recent Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual

                                      -5-
<PAGE>

impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives.

     The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of fiscal year 2003.
Application of the nonamortization provisions of the Statement is expected to
result in an increase in net income of approximately $535,000 ($0.01 per share)
per year. During fiscal year 2003, the Company will perform the first of the
required impairment tests of goodwill and indefinite lived intangible assets as
of May 1, 2002 and has not yet determined what the effect of these tests will be
on the earnings and financial position of the Company.

     2.   Acquisitions

     On May 31, 2001, the Company purchased, for approximately $8,027,000 in
cash including costs of acquisition, substantially all of the net assets of the
Optical Flexcircuits division of Advanced Interconnection Technology, Inc.

     The allocation of the purchase price to the net assets acquired was as
follows:

<TABLE>
          <S>                                              <C>
          Assets Acquired:
              Inventories............................        $  520,000
              Property, Plant and Equipment..........           318,000
              Other..................................            50,000
                                                           ---------------
                Total Assets.........................           888,000

          Liabilities Assumed:
              Accrued expenses.......................                --
                                                           ---------------
              Total liabilities......................                --
                                                           ---------------
              Net Assets Acquired....................           888,000
              Excess Purchase Price..................         7,139,000
                                                           ---------------
              Purchase Price.........................        $8,027,000
                                                           ===============
</TABLE>

     On November 22, 2000, the company purchased, for approximately $770,000 in
cash including costs of acquisition, substantially all of the net assets of B&H
Mold, Inc., a tool manufacturer in Libertyville, Illinois.

     Effective February 23, 2000, the Company entered into an amendment to the
Asset Purchase Agreement with Rockledge Microelectronics, Inc. (formerly
Polycore Technologies, Inc.) which provided that in the event the Company is
part of an initial public offering of shares to be accomplished not later than
November 15, 2000, the sum of $2.957 million will become payable to the seller
within 30 days following the initial public offering in full satisfaction of
such additional contingent consideration. This amount was paid in July 2000 and
has been accounted for as additional purchase price.

     The above described acquisitions were accounted for using the purchase
method of accounting. Had these acquisitions been made as of the beginning of
Fiscal 2001, the impact on the Company's operating results would not have been
significant.

                                      -6-
<PAGE>

     3.   Earnings (Loss) Per Share

<TABLE>
<CAPTION>
                                                                          Three Months Ended July 31,
                                                                      -------------------------------------
                                                                          2000                    2001
                                                                      --------------           ------------
<S>                                                                   <C>                      <C>
Numerator - net income (loss)......................................       $ 2,041                $(9,717)
                                                                      ==============           ============
Denominator:
   Denominator for basic earnings per share -
   weighted-average shares outstanding.............................        57,603                 64,092
   Dilutive potential common shares - employee stock options.......           370                     --
                                                                      --------------           ------------
   Denominator for diluted earnings (loss) per share - adjusted
   weighted-average shares and assumed conversions.................        57,973                 64,092
                                                                      ==============           ============
Basic and diluted earnings (loss) per share........................       $  0.04                $ (0.15)
                                                                      ==============           ============
</TABLE>

                                      -7-
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        -----------------------------------------------------------------------
        of Operation.
        ------------

     The following discussion of our financial condition and results of
operations should be read in conjunction with the condensed consolidated
financial statements and related notes thereto included elsewhere in this Form
10-Q. The following discussion contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ substantially from
those anticipated in these forward-looking statements as a result of several
factors, including those set forth under "Factors That May Affect Our Future
Results."

Overview

     We develop, manufacture and sell optical subsystems and components for high
data rate networking, data storage and telecommunication applications. These
optical subsystems are designed for use in local area networks (LANs), storage
area networks (SANs), metropolitan area networks (MANs), wide area networks
(WANs) and in the telecommunication markets. Our optical subsystems are
compatible with the advanced transmission protocols used in these networks,
including Gigabit Ethernet, Fast Ethernet, Fibre Channel, and synchronous
optical network (SONET). We also design, manufacture and sell a full line of
optical components and cable assemblies for use in these networks.

     On February 23, 2000, Methode Electronics, Inc. ("Methode") announced plans
to create a separate company comprised of its optical products businesses.
Accordingly, we were incorporated in Delaware in April 2000 as a wholly owned
subsidiary of Methode. In June 2000 we launched our initial public offering of
10,062,500 shares of common stock at $21.00 per share. After the completion of
our public offering, Methode owned approximately 84.3% of our outstanding common
stock. On March 23, 2001, Methode announced that its board of directors had
declared a stock dividend of all of Methode's shares in us. The dividend was
distributed on April 28, 2001 to Methode stockholders of record as of April 5,
2001. The distribution was made on the basis of 1.5113 shares of Stratos stock
for each share of Methode Class A and Class B common stock held.

     Our net sales are derived principally from the sale of optical subsystems
and components to optical communication original equipment manufacturers (OEMs).
Our net sales have fluctuated from period to period based on the size and timing
of customer orders, particularly from our largest customers, and based on any
canceled, delayed or rescheduled orders in the relevant period. We determine
reserves for rapid technological change on a product by product basis. While it
is likely that obsolescence due to rapid technological change will continue, the
timing and amount of this obsolescence cannot be predicted with certainty.

     The average unit prices of our products generally decrease as the products
mature in response to factors such as increased competition, the introduction of
new products and increased unit volumes. We anticipate that average selling
prices will continue to decline in future periods, although the timing and
degree of the declines cannot be predicted with any certainty. We must continue
to develop and introduce on a timely basis new products that incorporate
features that can be sold at higher average selling prices.

     License fees and royalties represent payments received from licensees of
our patented technology, which is also used by us in our optical subsystems.
These license agreements generally provide for up-front payments and/or future
fixed payments or ongoing royalty payments based on a percentage of sales of the
licensed products. The timing and amounts of these payments is beyond our

                                      -8-
<PAGE>

control. Accordingly, the amount received in any given period is expected to
vary significantly. The duration of all of these license agreements extends
until the expiration of the licensed patents. We will consider entering into
similar agreements in the future, however, we are not able to predict whether we
will enter into any additional licenses in the future and, if so, the amount of
any license fees or royalties.

     Our cost of sales consists of materials, salaries and related expenses for
manufacturing personnel and manufacturing overhead. We purchase several key
components used in the manufacture of our products from a limited number of
suppliers. We have periodically experienced shortages and delivery delays for
these materials. In some circumstances, we maintain an inventory of limited
source components to decrease the risk of shortage. If we overestimate our
requirements, we may have excess inventory of these components. Substantially
all of our products are designed and manufactured in our own facilities.
Accordingly, a portion of our cost of sales is fixed over the near term. In
order to remain competitive, we must continually reduce our manufacturing costs
through design and engineering innovations and increases in manufacturing
efficiencies. There can be no assurance that we will be able to reduce our
manufacturing costs or introduce new products to offset anticipated decreases in
the average selling prices of our products.

     Research and development expenses consist primarily of salaries and related
expenses for design engineers, scientists and other technical personnel,
depreciation of test and prototyping equipment, and tooling. Research and
development expenses also consist of materials and overhead costs related to
major product development projects. Prior to May 28, 2000, research and
development expenses have included allocations from Methode of expenses for
salaries and related expenses for research and development personnel. We charge
all research and development expenses to operations as incurred. We believe that
continued investment in research and development is critical to our long-term
business success. We intend to increase investment in research and development
programs in future periods for the purpose of enhancing or reducing the cost of
current optical subsystems and components, and developing new optical subsystems
and components.

     We market and sell our products domestically and internationally through
our direct sales force, local resellers and manufacturers' representatives.
Sales and marketing expenses consist primarily of personnel costs, including
sales commissions and product marketing and promotion costs. Prior to May 28,
2000, expenses have included allocations from Methode of expenses for the
salaries and related expenses for sales and marketing personnel. We expect to
continue to make significant expenditures for sales and marketing services.

     General and administrative expenses consist primarily of personnel costs
for our administrative and financial groups, as well as legal, accounting and
other professional fees. General and administrative expenses in fiscal 2001 also
consist of the amortization of goodwill resulting from the excess of the
purchase price over net assets of the acquired companies. Prior to May 28, 2001,
expenses have included allocations from Methode for the salaries and related
expenses for administrative, finance and human resources personnel; professional
fees; information technology and other corporate expenses. In support of our
anticipated growth and our operations as an independent public company, we
expect to continue to make significant expenditures for general and
administrative services.

Basis of Presentation

     Our historical consolidated financial statements for periods ending on or
prior to May 28, 2000 have been carved out from the consolidated financial
statements of Methode using the historical results of

                                      -9-
<PAGE>

operations and cash flows and historical basis of the assets and liabilities of
our business. The historical consolidated financial statements also include
allocations to us of Methode's corporate expenses, including centralized
accounting, treasury, information technology, human resources, sales and
marketing, legal, real estate and other corporate services and infrastructure
costs. We consider the expense allocations to be reasonable reflections of the
utilization of the services provided to us or the benefits received by us. The
consolidated financial statements after May 28, 2000 reflect the operations,
cash flows and assets and liabilities of the Company on a stand-alone basis.

     Our historical financial information for periods ending on or prior to May
28, 2000, is not indicative of our financial position, results of operation or
cash flows in the future, nor is it necessarily indicative of what our financial
position, results of operations or cash flows would have been were we a
separate, stand-alone entity for the periods presented. Our consolidated
financial information for periods ending on or prior to May 28, 2000 does not
reflect additional expenses which we may incur as a result of being a stand-
alone public company.

Results of Operations

     The following table sets forth certain statement of operations data as a
percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
                                                         Three Months Ended July 31,
                                                        -----------------------------
                                                           2000               2001
                                                        ----------         ----------
<S>                                                     <C>                <C>
Revenue:
   Net Sales......................................         100.0%             100.0%
   License fees and royalties.....................           1.6                6.4
                                                        ----------         ----------
      Total.......................................         101.6              106.4

Costs and expenses:
   Cost of sales..................................          67.1              123.4
   Research and development.......................          10.7               42.9
   Sales and marketing............................           7.4               12.7
   General and administrative.....................           7.5               27.8
                                                        ----------         ----------
      Total costs and expenses....................          92.7              206.8
                                                        ----------         ----------

Income (loss) from operations.....................           8.9             (100.4)

Investment income, net............................           3.5                7.8
                                                        ----------         ----------
Income (loss) before income taxes.................          12.4              (92.6)

Provision for income taxes (credit)...............           4.5              (37.1)
                                                        ----------         ----------

Net income (loss).................................           7.9%             (55.5%)
                                                        ==========         ==========
</TABLE>

Three Months Ended July 31, 2001 and 2000

     Net Sales. Net sales decreased to $17.5 million in the three months ended
July 31, 2001 from $25.9 million in the three months ended July 31, 2000. Of
this $8.4 million decrease, $5.1 million is from a decrease in net sales of
optical subsystems and $3.3 million is from a decrease in net sales of optical

                                      -10-
<PAGE>

components. The decrease in net sales of our optical subsystems was primarily
due to a decrease in sales of our embedded and removable transceivers in a
variety of wavelengths and form factors. The decrease in sales of our optical
components was primarily due to a decrease in sales of our optical backplane
connectors and cable assemblies. The overall decrease in sales was partially due
to declines in average unit prices for our products resulting from pricing
pressure and changes in product mix. Our total sales order backlog decreased to
$17.6 million as of July 31, 2001 from $34.2 million as of April 30, 2001. Of
this $16.6 million decrease, $13.1 million was due to a decrease in orders for
our optical subsystems and $3.5 million decrease in orders for our optical
components.

     License Fees and Royalties. License fees increased to $1.1 million in the
three months ended July 31, 2001 from $409,000 in the three months ended July
31, 2000. License fees consist of both fixed schedule payments and contingent
payments based on sales volumes of licensed products.

     Cost of Sales. Cost of sales increased to $21.6 million in the three months
ended July 31, 2001 from $17.4 million in the three months ended July 31, 2000.
Gross profit as a percentage of net sales, or gross margin, decreased to
negative (23.4)% in the three months ended July 31, 2001 from 32.9% in the three
months ended July 31, 2000. Approximately 45.1% of the 56.3% decrease in gross
margin was the result of recording a charge for excess and obsolete inventory in
the three months ended July 31, 2001, due to decreased demand for certain
products. The balance of the decrease was due to the decrease in sales and
declines in average unit prices for our products due primarily to pricing
pressure and product mix.

     Research and Development. Research and development expenses increased to
$7.5 million in the three months ended July 31, 2001 from $2.8 million in the
three months ended July 31, 2000. This increase of $4.7 million was due
primarily to $2.4 million in material and overhead costs related to major
product development projects, $1.8 million of additional personnel costs
dedicated to research and development, and $500,000 for expanded research and
development facilities in Chicago, Illinois and Bedford, Massachusetts.

     Sales and Marketing. Sales and marketing expenses increased to $2.2 million
in the three months ended July 31, 2001 from $1.9 million in the three months
ended July 31, 2000. This increase was due to an increase of $135,000 in sales
and marketing salaries, fringe benefits, bonuses and commissions, and $165,000
in field sales operating costs supporting our sales.

     General and Administrative. General and administrative expenses increased
to $ 4.9 million in the three months ended July 31, 2001 from $1.9 million in
the three months ended July 31, 2000. This $3.0 million increase was primarily
due to a $2.1 million increase in the allowance for doubtful accounts. The
balance of the increase was due to $700,000 of additional costs for expanded
facilities and staff, and $200,000 of additional corporate management and legal
costs.

     Investment Income, Net. Investment income, net of investment expense,
increased to $1.4 million in the three months ended July 31, 2001 from $917,000
in the three months ended July 31, 2000. Investment income consists of earnings
on the short-term investment of excess cash balances.

     Income Taxes. The effective tax rate was 40.0% in the three months ended
July 31, 2001 compared with 36.3% in the three months ended July 31, 2000. The
overall increase in the effective tax rate in the current fiscal year is
principally the result of increased investment income that is not taxable for
federal income tax purposes.

                                      -11-
<PAGE>

Liquidity and Capital Resources

     Net cash provided by operating activities was $1.9 million for the three
months ended July 31, 2001. Cash provided by operating activities resulted
primarily from decreases in accounts receivable and inventories offset in part
by the net loss and decreases in accounts payable and accrued expenses. Net cash
provided by operating activities was $2.3 million for the three months ended
July 31, 2000 and resulted primarily from net income and increases in accounts
payable and accrued expenses, offset in part by increases in accounts receivable
and inventories.

     Net cash used in investing activities was $34.9 million in the three months
ended July 31, 2001 and $8.2 million in the three months ended July 31, 2000.
Net cash used in investing activities during these periods related primarily to
acquisitions, purchases of equipment and facilities and the purchase of short-
term investments in the three months ended July 31, 2001. We expended $2.95
million for the additional purchase price in connection with our purchase of our
Stratos Lightwave-Florida subsidiary in July 2000 and $8.0 million in May 2001
for the purchase of substantially all of the assets of the Optical Flexcircuits
division of Advanced Interconnection Technology, Inc.

     Net cash provided by financing activities in the three months ended July
31, 2000, consisted primarily of net proceeds of $196.0 million, after related
expenses, from our initial public offering, and $1.9 million in advances from a
subsidiary of Methode, offset in part by the repayment of $2.7 million of
advances from a Methode subsidiary, and $333,000 for repayment of a note assumed
in connection with the acquisition of our Stratos Ltd. Subsidiary. We sold
10,062,500 shares of common stock, including the underwriters' exercise of their
overallocation option, at $21 per share in our initial public offering.

     Our future capital requirements will depend on a number of factors,
including our future net sales and the timing and rate of expansion of our
business. We believe that our current cash balances together with the cash flow
expected to be generated from our future operations will be sufficient to meet
our cash needs for working capital and capital expenditures for the next 12
months.

Factors That May Affect Our Future Results

                        Risks Relating to Our Business

Our net sales and operating results vary significantly from quarter to quarter,
and our stock price may fall if our quarterly performance does not meet
analysts' or investors' expectations.

     Our quarterly net sales and operating results have varied significantly in
the past and are likely to vary significantly in the future, which makes it
difficult to predict our future operating results. Accordingly, we believe that
quarter-to-quarter comparisons of our net sales and operating results are not
meaningful and should not be relied upon as an indicator of our future
performance. Some of the factors which cause our net sales and operating results
to vary include:

     .    the timing of customer orders, particularly from our largest
          customers;

     .    our ability to manufacture and ship our products on a timely basis;

     .    changes in our product mix;

                                      -12-
<PAGE>

     .    competitive pressures resulting in lower prices;

     .    the introduction of new products or technologies by us or our
          competitors; and

     .    the timing of our receipt of license fees and royalty payments
          relating to our intellectual property.

     In one or more future quarters, our net sales or operating results will
likely be below the expectations of public market analysts and investors. If
this occurs, the price of our common stock would likely decline.

Our success depends on the long-term growth of communication networks and their
use of optical communication technologies. If these events do not occur, our net
sales may decline and our business would likely be significantly harmed.

     Our optical subsystems and components are used primarily in enterprise,
metropolitan area, wide area and telecommunication networks. These markets are
rapidly evolving and it is difficult to predict their potential size or future
growth rate. In addition, there is uncertainty as to the extent to which optical
communication technologies will be used throughout these markets. Our success in
generating revenue in these markets will depend on the long-term growth of these
markets and their use of optical communication technologies. If these markets do
not grow, or if the use of optical communication technologies in these markets
does not expand, our net sales may decline and our business would likely be
significantly harmed.

We must develop new products and technology as well as enhancements to existing
products and technology in order to remain competitive. If we fail to do so, our
products will no longer be competitive and our net sales will decline.

     The market for our products and technology is characterized by rapid
technological change, new and improved product introductions, changes in
customer requirements and evolving industry standards. Our future success will
depend to a substantial extent on our ability to develop, introduce and support
new products and technology on a successful and timely basis. If we fail to
develop and deploy new products and technologies or enhancements of existing
products on a successful and timely basis or we experience delays in the
development, introduction or enhancement of our products and technologies, our
products will no longer be competitive and our net sales will decline.

     The development of new, technologically advanced products is a complex and
uncertain process requiring high levels of innovation and highly skilled
engineering and development personnel, as well as the accurate anticipation of
technological and market trends. We cannot assure you that we will be able to
identify, develop, manufacture, market or support new or enhanced products
successfully, if at all, or on a timely basis. Further, we cannot assure you
that our new products will gain market acceptance or that we will be able to
respond effectively to product announcements by competitors, technological
changes or emerging industry standards. Any failure to respond to technological
change would significantly harm our business.

Our products are incorporated into larger systems which must comply with various
domestic and international government regulations. If the performance of our
products contributes to our

                                      -13-
<PAGE>

customers' inability to comply with these requirements, we may lose these
customers and our net sales will decline.

     In the United States, our products are incorporated into larger systems
which must comply with various regulations and standards defined by the Federal
Communications Commission and Underwriters Laboratories. Internationally, our
products are incorporated into larger systems which must also comply with
standards established by local authorities in various countries which may vary
considerably. If the performance of our products contributes to our customers'
inability to comply with existing or evolving standards established by
regulatory authorities or to obtain timely domestic or foreign regulatory
approvals we may lose these customers and our net sales will decline.

If our products fail to comply with evolving industry standards or alternative
technologies in our markets, we may be required to make significant expenditures
to redesign our products.

     Our products comprise only a part of an entire networking system and must
comply with evolving industry standards in order to gain market acceptance. In
many cases, we introduce a product before an industry standard has become widely
accepted. Because industry standards do not exist in some cases at the time we
are developing new products, we may develop products that do not comply with the
eventual industry standard. If this occurs, we would need to redesign our
products to comply with adopted industry standards. In addition, if alternative
technologies are adopted as an industry standard within our target markets, we
would have to dedicate significant time and resources to redesign our products
to meet this new industry standard. If we are required to redesign our products,
we may incur significant expenses and losses due to lack of customer demand,
unusable purchased components for these products and the diversion of our
engineers from future product development efforts. If we are not successful in
redesigning our products or developing new products to meet new standards or any
other standard that may emerge, our net sales will decline.

We derive a significant portion of our net sales from a few large customers, and
our net sales may decline significantly if any of these customers cancels,
reduces or delays purchases of our products.

     Our success will depend on our continued ability to develop and manage
relationships with significant customers. For the three months ended July 31,
2001, our two largest customers and their respective contract manufacturers
accounted for 19% of our net sales, with McData Corporation and Con-Tech Systems
Inc. accounting for 14% and 5% of our net sales, respectively. For the 2001
fiscal year, our three largest customers and their respective contract
manufacturers accounted for 32% of our net sales, with McData Corporation,
Alcatel Network Systems and Cisco Systems accounting for 11%, 11% and 10% of our
net sales, respectively. We expect our dependence on sales to a small number of
large customers to continue.

     The markets in which we sell our products are dominated by a relatively
small number of systems manufacturers, thereby limiting the number of our
potential customers. As a result, our relationships with these customers are
critically important to our business. We cannot assure you that we will be able
to retain our largest customers, that we will be able to attract additional
customers or that our customers will be successful in selling their products
which incorporate our products. Our customers have in the past sought price
concessions from us and will continue to do so in the future. Also, some of our
customers have canceled, reduced or delayed purchases of our products. Further,
some of our customers may in the future shift their purchases of products from
us to our competitors or to joint ventures between these customers and our
competitors. The loss of or a significant reduction in orders from one or more
of our

                                      -14-
<PAGE>

largest customers, our inability to successfully develop relationships with
additional customers or future price concessions that we may make could cause
our net sales to significantly decline.

Our sales cycle runs from our customers' initial design to production for
commercial sale. This cycle is long and unpredictable and may cause our net
sales to decline or increase our operating expenses.

     We cannot predict the timing of our sales accurately because of the length
of our sales cycles. As a result, if sales forecasts from specific customers are
not realized, we may be unable to compensate for the sales shortfall and our net
sales may decline. The period of time between our initial contact with a
customer and the receipt of a purchase order may span up to a year or more, and
varies by product and customer. During this time, customers may perform, or
require us to perform, extensive evaluation and qualification testing of our
products. Generally, they consider a wide range of issues before committing to
purchase our products, including ability to interoperate with other subsystems
and components, product performance and reliability. We may incur substantial
sales and marketing expenses and expend significant management effort while our
potential customers are qualifying our products. Even after incurring these
costs, we ultimately may not sell any or only small amounts of our products to
these potential customers. Consequently, if new sales do not result from our
efforts to qualify our products, our operating expenses will increase.

Our customers may cease purchasing our products at any time and may cancel or
defer purchases on short notice, which may cause our net sales to decline or
increase our operating expenses.

     We generally do not have long-term contracts with our customers. Sales are
typically made pursuant to individual purchase orders, often with extremely
short lead times, that may be canceled or deferred by customers on short notice
without significant penalty. Our customers base their orders for our products on
the forecasted sales and manufacturing schedules for their own products. Our
customers have in the past significantly accelerated, canceled or delayed orders
for our products in response to unanticipated changes in the manufacturing
schedules for their own products, and will likely do so again in the future. The
reduction, cancellation or delay of individual customer purchase orders could
cause our net sales to decline. Moreover, these uncertainties complicate our
ability to accurately plan our manufacturing schedule and may increase our
operating expenses.

If we do not decrease our manufacturing costs or increase sales of higher margin
products as the average unit price of our existing products decreases, our gross
margins will decline.

     The average unit price of our products generally decrease as the products
mature in response to increased competition, the introduction of new products
and increased unit volumes. Substantially all of our products are designed and
manufactured in our own facilities. Accordingly, a significant portion of our
cost of sales is fixed over the near term. In order to remain competitive, we
must continually reduce our manufacturing costs through design and engineering
changes and increases in manufacturing efficiencies. We must also continue to
develop and introduce on a timely basis new products that incorporate features
that can be sold at higher average selling prices. Our inability to reduce
manufacturing costs or introduce new products will cause our gross margins to
decline, which would significantly harm our operating results.

The market for optical subsystems and components is highly competitive, which
may result in lost sales or lower gross margins.

                                      -15-
<PAGE>

     The markets for optical subsystems and components are highly competitive
and are expected to intensify in the future. For optical subsystems, we compete
primarily with Agilent Technologies, Inc., Finisar Corporation, Infineon
Technologies Corp., International Business Machines Corporation and Optical
Communications Products, Inc. For optical components, we compete primarily with
Infineon Technologies Corp, Lucent Technologies Inc., Molex, Inc. and Tyco
International, Ltd. and numerous other smaller companies. Many of these
companies have substantially greater financial, technical, marketing and
distribution resources and brand name recognition than we have. We expect that
more companies, including some of our customers, will enter the markets for our
products. We may not be able to compete successfully against either current or
future competitors. Our competitors continue to introduce improved products with
lower prices, and we will have to do the same to remain competitive. In
addition, some of our current and potential customers are attempting to
integrate their operations by producing their own optical subsystems or
components or acquiring one or more of our competitors which may eliminate the
need to purchase our products. Furthermore, larger companies in other related
industries are developing and acquiring technologies and applying their
significant resources, including their distribution channels and brand name
recognition, in an effort to capture significant market share. While this trend
has not historically impacted our competitive position, it may result in future
decreases in our net sales.

We depend on suppliers for several key components and if these suppliers are
unable to meet our needs, we may experience delays in shipments and increased
costs.

     We purchase several key components that are incorporated into our products
from a limited number of suppliers. We have experienced shortages and delays in
obtaining key components in the past and expect to experience shortages and
delays in the future. These shortages and delays have typically occurred when
demand within the industry has increased rapidly and exceeds the capacity of
suppliers of key components in the short term. Delays and shortages also often
occur in the early stages of a product's life cycle. The length of shortages and
delays in the past has varied from several days to a month. We are unable to
predict the length of any future shortages or delays.

     Although we enter into long-term agreements for the purchase of key
components from time to time, our purchases of key components are generally made
on a purchase order basis. We may also maintain an inventory of limited source
components to limit the potential impact of a component shortage.

     The inability to obtain sufficient quantities of these components that meet
our quality requirements may interrupt and delay the manufacturing of our
products or result in the cancellation of orders for our products. In addition,
our suppliers could discontinue the manufacture or supply of these components at
any time. We may not be able to identify and integrate alternative sources of
supply in a timely fashion, or at all. Any transition to alternative suppliers
may result in delays in shipment and increased expenses and may limit our
ability to deliver products to our customers. Furthermore, if we are unable to
identify an alternative source of supply, we may have to redesign or modify our
products, which may cause delays in shipments, increased design and
manufacturing costs and increased prices for our products.

If we are unable to manage our growth effectively, we will incur additional
operating expenses and our operating results will suffer.

                                      -16-
<PAGE>

     We have significantly expanded our operations over the last several years.
This growth has placed a strain on our management systems and operational
resources. As demand for our products grows, we will need to expand our design
and manufacturing capabilities, as well as our sales, marketing and technical
support. We will also need to improve our financial and managerial controls,
reporting systems and procedures. The technical complexities of our products and
the rapidly evolving markets we serve will require a high level of management
effectiveness in managing the expansion of our operations. Our key management
personnel have limited experience in managing this type of growth. If we are
unable to manage our growth effectively, we will incur additional expenses which
will cause our operating results to suffer.

Our success depends on our ability to hire and retain qualified technical
personnel, and if we are unable to do so, our product development efforts and
customer relations will suffer.

     Our products require sophisticated manufacturing, research and development,
marketing and sales, and technical support. Our success depends on our ability
to attract, train and retain qualified technical personnel in each of these
areas. Competition for personnel in all of these areas is intense and we may not
be able to hire or retain sufficient personnel to achieve our goals or support
the anticipated growth in our business. The market for the highly-trained
personnel we require is very competitive, due to the limited number of people
available with the necessary technical skills and understanding of our products
and technology. If we fail to hire and retain qualified personnel, our product
development efforts and customer relations will suffer.

Our products may contain defects which may cause us to incur significant costs,
divert our attention from product development efforts and result in a loss of
customers.

     Our products are complex and may contain defects, particularly when first
introduced or as new versions are released. Our customers integrate our
subsystems and components into systems and products that they develop themselves
or acquire from other vendors. As a result, when problems occur in equipment or
a system into which our products have been incorporated, it may be difficult to
identify the source of the problem. We may be subject to liability claims for
damages related to product defects or experience manufacturing delays as a
result of these defects in the future, any or all of which could be substantial.
The length of any future manufacturing delays in connection with a product
defect will depend on the nature of the defect and whether we or one of our
component suppliers was the source of the defect. Moreover, the occurrence of
defects, whether caused by our products or technology or the products of another
vendor, may result in significant customer relations problems and injury to our
reputation and may impair the market acceptance of our products and technology.

We are subject to environmental laws and other legal requirements that have the
potential to subject us to substantial liability and increase our costs of doing
business.

     Our properties and business operations are subject to a wide variety of
federal, state, and local environmental, health and safety laws and other legal
requirements, including those relating to the storage, use, discharge and
disposal of toxic, volatile or otherwise hazardous substances used in our
manufacturing processes. We cannot assure you that these legal requirements will
not impose on us the need for additional capital expenditures or other
requirements. If we fail to obtain required permits or otherwise fail to operate
within these or future legal requirements, we may be required to pay substantial
penalties, suspend our operations or make costly changes to our manufacturing
processes or facilities.

                                      -17-
<PAGE>

Although we believe that we are in compliance and have complied with all
applicable legal requirements, we may also be required to incur additional costs
to comply with current or future legal requirements.

Economic, political and regulatory risks associated with international
operations may limit our sales and increase our costs of doing business abroad.

     A portion of our sales are generated from customers located outside the
United States, principally in Europe. We also operate manufacturing facilities
in China and the United Kingdom. Sales to customers located outside of the
United States, excluding sales to Methode and its affiliates, were approximately
26.9% of our net sales during the three months ended July 31, 2001 and
approximately 19.8% of our net sales in fiscal 2001. Our international
operations are subject to a number of risks and uncertainties, including:

     .    difficulties in managing operations in different locations;

     .    changes in foreign currency rates;

     .    longer accounts receivable collection cycles;

     .    difficulties associated with enforcing agreements through foreign
          legal systems;

     .    seasonal reductions in business activities in some parts of the world,
          such as during the summer months in Europe;

     .    trade protection measures and import and export licensing
          requirements;

     .    changes in a specific country's or region's political or economic
          conditions;

     .    potentially adverse tax consequences; and

     .    the potential difficulty in enforcing intellectual property rights in
          some foreign countries.

     These factors could adversely impact our international sales or increase
our costs of doing business abroad or impair our ability to expand into
international markets, and therefore could significantly harm our business.

Future acquisitions we undertake could harm our business by diverting our
resources and increasing our costs.

     We expect to pursue opportunities to buy other businesses or technologies
that would complement our current products, expand our markets or enhance our
technical capabilities, or that may otherwise offer growth opportunities. Any
future acquisitions may result in the use of significant amounts of cash, the
incurrence of debt, and amortization expenses related to goodwill and other
intangible assets. Our experience in acquiring other businesses and technologies
is limited. Acquisitions involve numerous risks, including:

     .    difficulties in integrating operations, products, technologies and
          personnel;

                                      -18-
<PAGE>

     .    unanticipated costs or write-offs associated with the acquisition;

     .    diversion of management's attention from other business concerns;

     .    diversion of capital and other resources from our existing businesses;
          and

     .    potential loss of key employees of purchased organizations.

Our recent acquisitions have not generated significant sales, and if these
businesses do not become profitable our operating results could be seriously
harmed.

     In December 1999, Methode acquired the optoelectronics business of Spire
Corporation, which we operate as our Bandwidth Semiconductor subsidiary. In May
2001, we acquired substantially all of the assets of Advanced Interconnection
Technology, Inc. The integration of these businesses into our company is not
complete. Since their acquisition by us, these businesses have focused on the
introduction of new products and the expansion of their manufacturing
capabilities and have not generated significant revenues. In addition, these
businesses have required significant amounts of capital to support their
development activities, and we expect to continue to invest substantial amounts
of capital in these businesses. If these businesses do not become profitable,
our operating results could be seriously harmed.

Our inability to protect our intellectual property rights would significantly
impair their value and our competitive position.

     We rely on a combination of patent, copyright, trademark and trade secret
laws, as well as confidentiality agreements and licensing arrangements, to
establish and protect our proprietary rights. Although we have numerous issued
patents and pending patent applications, we cannot assure you that any patents
will issue as a result of our pending patent applications or, if issued, that
any patent claim allowed will be sufficiently broad to protect our technology.
In addition, we cannot assure you that any existing or future patents will not
be challenged, invalidated or circumvented, or that any right granted thereunder
would provide us with meaningful protection of our technology. Despite our
efforts to protect our proprietary rights, unauthorized parties may attempt to
copy or otherwise obtain and use our products or technology. We may be unable to
detect the unauthorized use of our intellectual property or to take appropriate
steps to enforce our intellectual property rights. Policing unauthorized use of
our products and technology is difficult. In addition, the laws of some foreign
countries do not protect our proprietary rights to the same extent as do the
laws of the United States. Further, enforcing our intellectual property rights
could result in the expenditure of significant financial and managerial
resources and the success of these efforts cannot be predicted with certainty.
Litigation may be necessary in the future to enforce our intellectual property
rights. This litigation could be costly and its outcome cannot be predicted with
certainty. Our inability to adequately protect against unauthorized use of our
intellectual property would significantly impair its value and our competitive
position.

We are currently involved in pending patent litigation which, if decided against
us, could impair our ability to prevent others from using our technology, result
in the loss of future royalty income and require us to pay significant monetary
damages.

     Methode and Stratos are plaintiffs in several lawsuits relating to our
intellectual property rights. The defendants in these lawsuits include Finisar
Corporation, Infineon Technologies Corp., and Optical Communications Products,
Inc. In these actions, Stratos alleges that optoelectronic products sold by the



                                      -19-
<PAGE>

defendants infringe upon certain Stratos patents. The defendants in these
lawsuits have filed various affirmative defenses. In addition, Finisar has filed
various counterclaims. These counterclaims include claims that Finisar is the
rightful owner or co-owner of the patents, that Stratos has engaged in certain
antitrust violations and theft of trade secrets, and that Stratos has breached
contracts and the covenants of good faith and fair dealing. Finisar seeks
unspecified compensatory damages, restitution and the correction of inventorship
with respect to the Stratos patents.

         As part of our separation from Methode, the Methode patents which are
the subject of these lawsuits and Methode's rights in these lawsuits have been
contributed to us and we have agreed to indemnify Methode against all costs,
expenses and liabilities associated with these lawsuits. These lawsuits are in
the preliminary stage, and we cannot predict their outcome with certainty. If
one or more of these patents were found to be invalid or unenforceable, we would
lose the ability to prevent others from using the technologies covered by the
invalidated patents. This could result insignificant decreases in our sales and
gross margins for our products that use these technologies. In addition, we
would lose the future royalty payments from our current licensees of these
patents. We could also be required to pay significant monetary damages to one or
more of the defendants or be required to reimburse them for their legal fees.
Accordingly, if one or more of these patents were found to be invalid or
unenforceable, our business would be significantly harmed.

Claims that we infringe third-party intellectual property rights could result in
significant monetary damages and expenses or restrictions on our ability to sell
our products.

         In recent years, there has been significant litigation in the United
States involving patents and other intellectual property rights. From time to
time, third parties may assert patent, copyright and other intellectual property
rights to technologies used in our business. In addition, our rights to use our
name or other trademarks are subject to challenge by others. Any claims, with or
without merit, could be time-consuming, result in costly litigation, and divert
the efforts of our technical and management personnel. If we are unsuccessful in
defending ourselves against these types of claims, we could be subject to
significant monetary damages and may be required to do one or more of the
following:

         .       stop using the challenged trademarks or selling our products
                 that use or incorporate the relevant technology;

         .       attempt to obtain a license to sell or use the challenged
                 intellectual property, which license may not be available on
                 reasonable terms or at all; or

         .       redesign those products that use the relevant technology.

         In the event a claim against us was successful and we could not obtain
a license to the relevant technology on acceptable terms or license a substitute
technology or redesign our products to avoid infringement, our business would be
significantly harmed.

We are currently defending several class action lawsuits which could subject us
to significant money damages, cause us to incur significant costs or otherwise
harm our business.

         We and certain of our executive officers are defendants in certain
purported class action lawsuits filed in the United States District Court,
Southern District of New York. Although we believe these lawsuits are without
merit, an adverse result in these lawsuits could subject us to significant money

                                      -20-
<PAGE>

damages. This litigation may also require us to incur significant costs in
defense of these lawsuits, could require significant involvement of our senior
management and may divert management's attention from our business and
operations, any of which could have a material adverse affect on our business,
results of operation or financial condition. For a description of these
lawsuits, see "Part II - Other Information, Item 1 - Legal Proceedings".

               Risks Relating to Our Separation from Methode Electronics

Our historical financial information may not be representative of our results as
a separate company.

     Our historical financial information for periods ending on or prior to
April 30, 2000 may not reflect what our results of operation, financial position
and cash flows would have been had we been a stand-alone company for the periods
presented. Methode did not account for us as, and we were not operated as, a
stand-alone company during these periods. In addition, our historical financial
information is not necessarily indicative of what our results of operations,
financial position and cash flows will be in the future. We have not made
adjustments to reflect many significant changes that will occur in our cost
structure, funding and operations as a result of our separation from Methode,
including changes in our management structure and employee benefit plans and the
increased costs associated with being a public, stand-alone company.

One of our directors may have conflicts of interest because he is also a
director of Methode.

     One member of our board of directors is also a director of Methode. This
director will have obligations to both companies and may have conflicts of
interest with respect to matters potentially or actually involving or affecting
us. In addition, this director's family owns significant amounts of Methode's
stock. This ownership could create, or appear to create, potential conflicts of
interest when this director is faced with decisions that could have different
implications for Methode and us.

We may have potential business conflicts of interest with Methode with respect
to our past and ongoing relationships, the resolution of which may not be as
favorable to us as if we were dealing with an unaffiliated party.

     We currently have various interim and ongoing agreements with Methode. As a
result, conflicts of interest may arise between Methode and us in a number of
areas relating to our past and ongoing relationships, including:

     .    the nature, quality and pricing of the interim services Methode has
          agreed to provide to us;

     .    litigation, labor, tax, employee benefits and other matters arising
          from our separation from Methode; and

     .    major business combinations involving us.

     We cannot assure you that we will be able to resolve any conflicts we may
have with Methode or, if we are able to do so, that the resolution will be as
favorable as if we were dealing with an unaffiliated party.

                                      -21-
<PAGE>

We have agreed to contractual limitations under our separation agreements with
Methode which could limit the conduct of our business and our ability to pursue
business objectives.

     We have agreed to contractual limitations under our separation agreements
with Methode which place restrictions on our ability to conduct our business.
Under our tax sharing and indemnification agreement with Methode, we have agreed
to limit our ability to complete acquisitions and divestitures and issue capital
stock. The purpose of these provisions is to preserve Methode's tax-free
treatment of the spin-off. These restrictions in the tax sharing and
indemnification agreement generally expire two years after the completion of the
spin-off.

     Under our master separation agreement with Methode, we and our affiliates
have agreed not to engage in:

     .    the manufacture or sale, other than to our current customers as of the
          contribution date, of standard cable assemblies and specified cable
          management cabinets and value-added cable assemblies for local area
          networks, data centre, telecom and other project installation driven
          applications in Europe;

     .    the manufacture or sale of electronic interconnect devices anywhere in
          the world; and/or

     .    the sale of standard cable assembly or cable management cabinets in
          combination with system integration or system installation services to
          end-user clients in the United States and Europe.

     Any of these restrictions could materially limit the way in which we
conduct our business and our ability to pursue our business objectives.

If the spin-off is not tax-free, we could be liable to Methode for the resulting
taxes, which would significantly harm our business.

     We have agreed to indemnify Methode in the event the spin-off is not tax-
free to Methode for reasons including actions taken by or with respect to us or
our failure to take various actions, all as set forth in our tax sharing
agreement with Methode. We may not be able to control some of the events that
could trigger this liability. In particular, any acquisition of us by a third
party within two years of the spin-off could result in the spin-off becoming a
taxable transaction and give rise to our obligation to indemnify Methode for any
resulting tax or other liability. If we were to become obligated to indemnify
Methode for this liability, our financial condition and business would be
significantly harmed.

      Risks Relating to the Securities Markets and Ownership of Our Common Stock

The market prices for securities of technology related companies have been
volatile in recent years and our stock price could fluctuate significantly.

     Our common stock has been publicly traded only since June 27, 2000. The
market price of our common stock has been subject to significant fluctuations
since the date of our initial public offering. These fluctuations could
continue. Factors that could affect our stock price include:

                                      -22-
<PAGE>

     .    economic and stock market conditions generally and specifically as
          they may impact participants in the communication industry;

     .    earnings and other announcements by, and changes in market evaluations
          of, participants in the optical communication industry;

     .    changes in financial estimates and recommendations by securities
          analysts following our stock;

     .    announcements or implementation by us or our competitors of technical
          innovations or new products; and

     .    strategic moves by us or our competitors, such as acquisitions.

     In addition, the securities of many companies have experienced extreme
price and volume fluctuations in recent years, often unrelated to the companies'
operating performance. Specifically, market prices for securities of technology
related companies have frequently reached elevated levels, often following their
initial public offerings. These levels may not be sustainable and may not bear
any relationship to these companies' operating performances.

Provisions in our charter documents and Delaware law may delay or prevent an
acquisition of our company, which could decrease the value of your shares.

     Our restated certificate of incorporation and bylaws and Delaware law
contain provisions that could make it more difficult for a third party to
acquire us without the consent of our board of directors. These provisions
include a classified board of directors and limitations on actions by our
stockholders by written consent. In addition, our board of directors has the
right to issue preferred stock without stockholder approval, which could be used
to dilute the stock ownership of a potential hostile acquiror. Delaware law also
imposes some restrictions on mergers and business combinations between us and
any holder of 15% or more of our outstanding common stock. These provisions
apply even if the offer may be considered beneficial by some stockholders.

                                      -23-
<PAGE>

Item 3.        Quantitative and Qualitative Disclosures About Market Risk
               ----------------------------------------------------------

         Although certain of our subsidiaries enter into transactions in
currencies other than their functional currency, foreign currency exposures
arising from these transactions are not material to us. The primary foreign
currency exposure arises from the translation of our net equity investment in
our foreign subsidiaries to U.S. dollars. We generally view as long-term our
investments in foreign subsidiaries with functional currencies other than the
U.S. dollar. The primary currencies to which we are exposed are the pound
sterling and Chinese renminbi.

                                      -24-
<PAGE>

                                    PART II
                               OTHER INFORMATION
                               -----------------

Item 1.        Legal Proceedings.
               -----------------

         From time to time, we become involved in various lawsuits and legal
proceedings that arise in the normal course of business. Litigation is subject
to inherent uncertainties and an adverse result in a lawsuit may harm our
business, financial condition or results of operation. The Company's management
is of the opinion that the resolution of these lawsuits and legal proceedings
will not have a significant effect on the Company's business, financial
condition or results of operation.

         The Company and certain of its directors and executive officers have
been named as defendants in purported class action lawsuits filed in the United
States District Court, Southern District of New York. The first of these
lawsuits, filed on July 25, 2001, is captioned Kucera v. Stratos Lightwave, Inc.
et. al., No. 01 CV 6821. Three other similar lawsuits have also been filed
against the Company and certain of its directors and executive officers. The
complaints also name as defendants the underwriters for the Company's initial
public offering. The complaints are substantially identical to numerous other
complaints filed against other companies that went public over the last several
years. The complaints generally allege, among other things, that the
registration statement and prospectus from the Company's June 26, 2000 initial
public offering failed to disclose certain alleged actions by the underwriters
for the offering. The complaints charge the Company and two or three of its
directors and executive officers with violations of Sections 11 and 15 of the
Securities Act of 1933, as amended, and/or Sections 10(b) and Section 20(a) of
the Securities Exchange Act of 1934, as amended. The complaints also allege
claims solely against the underwriting defendants under Section 12(a)(2) of the
Securities Act of 1933, as amended. The Company believes that these lawsuits are
without merit and intends to defend them vigorously.

         Methode and Stratos are plaintiffs in several lawsuits relating to our
intellectual property rights. The defendants in these lawsuits include Finisar
Corporation ("Finisar"), Infineon Technologies Corp., and Optical Communications
Products, Inc. in the U.S. District Court for the Northern District of
California and E2O, Inc. in the District Court for the District of Delaware. In
these actions, Stratos alleges that optoelectronic products sold by the
defendants infringe upon nine of our patents. Stratos also alleges that Finisar
breached its obligations under a license and supply agreement with Methode by
failing to provide it with information regarding new technology related to the
products licensed under the agreement. We are seeking monetary damages and
injunctive relief. The defendants in these lawsuits have filed various
affirmative defenses and contend that the patents are invalid, unenforceable
and/or not infringed by the products sold by the defendants and, if successful,
are seeking attorneys' fees and costs in connection with the lawsuits. In
addition, Finisar has filed counterclaims asserting that one of its founders is
the primary inventor of the technology that is the subject of certain patents,
that Methode and Stratos improperly obtained the patents based on Finisar's
disclosure of the technology to Methode and that Finisar is the rightful owner
or co-owner of the patents. Finisar and Infineon have alleged that Methode
failed to disclose certain information to the Patent and Trademark Office (PTO)
that, if known to the PTO, would have prevented the issuance of one of the
patents and that Methode and Stratos engaged in inequitable conduct before the
PTO. Infineon's inequitable conduct claim has been dismissed by the court.
Finisar has also alleged breach of contract, antitrust violations, conversion,
trespass to chattels, breach of implied obligation of good faith and fair
dealing, constructive fraud, actual fraud, misappropriation of trade secrets,
breach of oral contract, conspiracy in restraint of trade, attempted
monopolization, conspiracy to monopolize, violation of the Cartwright Act,
unfair practices, unfair

                                      -25-
<PAGE>

competition and unjust enrichment and seeks unspecified compensatory damages,
restitution and the correction of inventorship with respect to certain patents.

         As part of our separation from Methode, the Methode patents which are
the subject of these lawsuits and Methode's rights in this litigation have been
contributed to us and we have agreed to indemnify Methode against all costs,
expenses and liabilities associated with these lawsuits. We intend to pursue
these lawsuits and defend against these counterclaims vigorously. These lawsuits
are in the preliminary stage, and we cannot predict their outcome with
certainty. Patent litigation is particularly complex and can extend for a
protracted time, which can substantially increase the cost of such litigation.
If one or more of these patents were found to be invalid or unenforceable, we
would lose the ability to prevent others from using the technologies covered by
the invalidated patents. This could result in significant decreases in our sales
and gross margins for our products that use these technologies. In addition, we
would lose the future royalty payments from our current licensees of these
patents. We could also be required to pay significant monetary damages to one or
more of the defendants and/or be required to reimburse them for their legal
fees. Accordingly, if one or more of these patents were found to be invalid or
unenforceable, our business would be significantly harmed.

Item 2.        Changes in Securities and Use of Proceeds.
               -----------------------------------------

         Stratos Lightwave's registration statement on Form S-1 filed under the
Securities Act of 1933, Commission File No. 333-34864, was declared effective by
the Commission on June 26, 2000. A total of 10,062,500 shares of our common
stock were registered pursuant to this registration statement. The managing
underwriters for the offering were Lehman Brothers, CIBC World Markets, U.S.
Bancorp Piper Jaffray, Robert W. Baird & Co., Tucker Anthony Cleary Gull, and
Fidelity Capital Markets, a division of National Financial Services Corporation.

         The offering commenced on June 26, 2000 and has been completed. All
10,062,500 registered shares, including 1,312,500 shares sold upon exercise of
the underwriters' over allotment option, were sold by Stratos Lightwave at an
initial public offering price of $21.00 per share. The aggregate underwriting
discount paid in connection with the offering was $14,791,875.

         The net proceeds from the offering, after deducting the underwriting
discount and the estimated offering expenses to be paid by Stratos Lightwave,
were approximately $195 million. Uses of proceeds to date include $60.0 million
for general corporate purposes and the purchase of equipment and facilities, a
payment of $3.0 million to Rockledge Microelectronics, Inc. (formerly Polycore
Technologies, Inc.) in connection with our purchase of our Stratos Lightwave-
Florida subsidiary, $752,000 for the purchase of substantially all of the assets
of B&H Mold, Inc., $8.0 million for the purchase of substantially all of the
assets of the Optical Flexcircuits Division of Advanced Interconnection
Technology, Inc., repayment of $2.7 million of advances from a Methode
subsidiary, and $333,000 for repayment of a note assumed in connection with the
acquisition of our Stratos Ltd. subsidiary. The remainder of the proceeds will
be used for general corporate purposes, including working capital, capital
expenditures, research and development, and payments to Methode Electronics for
transition services. Pending these uses, the remaining net proceeds have been
invested in short-term interest bearing, investment grade marketable securities.

         Other than the repayment of advances from a Methode subsidiary
described above and the payment of the additional purchase price described above
in connection with our Stratos Lightwave-Florida acquisition which was paid to
two of our officers (and the payment of salaries and expense

                                      -26-
<PAGE>

reimbursements to employees in the ordinary course of business), none of the net
proceeds of the offering have been paid, directly or indirectly, to any Stratos
Lightwave director or officer or any of their associates, to any persons owing
10 percent or more of our common stock, or to any Stratos Lightwave affiliate.

                                      -27-
<PAGE>

Item 6.        Exhibits and Reports on Form 8-K.
               --------------------------------

         (a)   Exhibits. Please see the Exhibit Index following the signature
               --------
page.

         (b)   Reports on Form 8-K. No reports on Form 8-K were filed by the
               -------------------
Registrant in the three months ended July 31, 2001.

                                      -28-
<PAGE>

                                  SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated: September 10, 2001         Stratos Lightwave, Inc.


                                  By: /s/ James W. McGinley
                                      ------------------------------------
                                          James W. McGinley
                                          President and Chief Executive Officer


                                  By: /s/ David A. Slack
                                      -------------------------------------
                                          David A. Slack
                                          Chief Financial Officer (Principal
                                          Financial and Accounting Officer)

                                      -29-
<PAGE>

                                 EXHIBIT INDEX

Exhibit
Number     Description of Document
------     -----------------------

 3.1       Certificate of Incorporation of Registrant (1)
 3.2       Restated Certificate of Incorporation of Registrant (1)
 3.3       Bylaws of Registrant (1)
 3.4       Certificate of Designation of Series A Junior Participating Preferred
           Stock, included as Exhibit A to Exhibit 4.2
 4.1       Specimen certificate representing the common stock (1)
 4.2       Rights Agreement, dated as of March 23, 2001, between Stratos
           Lightwave, Inc. and Mellon Investor Services LLC (2)
10.1       Master Separation Agreement between Methode Electronics, Inc. and
           Registrant (1)
10.2       Initial Public Offering and Distribution Agreement between Methode
           Electronics, Inc. and Registrant (3)
10.3       Tax Sharing and Indemnification Agreement between Methode
           Electronics, Inc. and Registrant (3)
10.4       Master Transitional Services Agreement between Methode Electronics,
           Inc. and Registrant (1)
10.5       Employee Matters Agreement between Methode Electronics, Inc. and
           Registrant (1)
10.6       Registration Rights Agreement between Methode Electronics, Inc. and
           Registrant (3)
10.7       General Assignment and Assumption Agreement between Methode
           Electronics, Inc. and Stratos Lightwave, LLC (1)
10.8       Form of Indemnity Agreement between Registrant and Registrant's
           directors and officers (1)
10.9       Stratos Lightwave, Inc. 2000 Stock Plan, as amended and restated (4)
10.10      Promissory Note of the Registrant payable to Methode Development
           Company (1)

____________________

(1)      Incorporated by reference to the Registrant's Registration Statement on
         Form S-1 effective June 26, 2000.
(2)      Incorporated by reference to the Registrant's Form 8-K dated March 22,
         2001.
(3)      Incorporated by reference to the Registrant's Quarterly Report on Form
         10-Q for the quarter ended July 31, 2000.
(4)      Incorporated by reference to the Registrant's Annual Report on Form
         10-K for the year ended April 30, 2001.

                                      -30-