STLW Stratos Intl (MM)

Reports Q3 Revenues of $22.3 Million, a 16% Increase over Prior Year CHICAGO, March 1 /PRNewswire-FirstCall/ -- Stratos International, Inc. (NASDAQ:STLW), today announced financial results for its third quarter ended January 31, 2007. Sales for the third quarter of fiscal 2007 were $22.1 million. Stratos also recorded license fees and royalty income of $0.2 million. Total revenues were $22.3 million in the third quarter of fiscal 2007, a 16% increase over total revenues of $19.2 million in the third quarter of fiscal 2006. The net income attributable to common shareholders for the third quarter of fiscal 2007 was $1.5 million, or $0.10 per share on a diluted basis. By comparison, in the third quarter of fiscal 2006, Stratos reported a net loss attributable to common shareholders of $1.1 million or $0.08 per share on a diluted basis. Andy Harris, President and CEO of Stratos, remarked, "we are pleased with our fiscal third quarter results. Our strategy of providing unique solutions and quick turnaround capabilities has resulted in a 320 basis-point increase in gross margin over the prior year. Our goal is to continue to unlock value in this company by improving operations and turning this company profitable in a sustainable manner. We generated $2.6 million of EBITDA this quarter, making this our eighth consecutive quarter of positive EBITDA." Year-to-Date Results Sales for the nine months ended January 31, 2007 were $66.2 million. Stratos also recorded license fees and royalty income of $0.5 million. For comparison, sales for the nine months ended January 31, 2006 were $58.4 million, and license fees and royalties were $0.4 million. The net income attributable to common shareholders for the nine months ended January 31, 2007 was $0.7 million, or $0.05 per share. By comparison, for the nine months ended January 31, 2006, Stratos reported a net loss attributable to common shareholders of $2.7 million or $0.19 per share. Common shares outstanding as of January 31, 2007 were 14,494,647 shares. Cash and short-term investments at January 31, 2007 were $31.3 million compared to $30.7 million at April 30, 2006. Capital expenditures were $0.2 million in the third quarter of fiscal 2007, compared to $0.1 million in the third quarter of fiscal 2006. Third quarter and year-to-date results are preliminary, as the company's auditors have not completed their quarterly review process. Webcast of Investor Call Available Today at 4:00PM Central Time Chief Executive Officer, Andy Harris, and Chief Financial Officer, Barry Hollingsworth will discuss Stratos' earnings and operations. Investors and other interested parties may listen to the live web cast by visiting the investor relations section of the Stratos International website at http://www.stratosinternational.com/ . An audio replay of the call will be accessible to the public two hours after the call's completion by calling (888) 203-1112 or (719) 457-0820 and then following the prompts to enter conference ID 9280104. The replay will be available for two days following the call. A web cast replay will also be available on Stratos' website. ABOUT STRATOS INTERNATIONAL Stratos International, Inc. is a leading designer, developer and manufacturer of RF and microwave, as well as optical subsystems, components and interconnect products used in telecom, enterprise, military and video markets. Stratos has a rich history of optical and mechanical packaging expertise and has been a pioneer in developing several optical devices using innovative form-factors for telecom, datacom and harsh environment applications. This expertise, coupled with several strategic acquisitions, has allowed Stratos to amass a broad range of products and build a strong IP portfolio of more than 150 US patents issued and pending. Stratos currently serves more than 1,300 active customers, primarily in the telecom/datacom, military/aerospace and video markets. Safe Harbor Statement This press release contains predictions and other forward-looking statements. All forward-looking statements in this press release are based on information available to Stratos as of the date hereof, and we assume no obligation to update any such forward-looking statements. Forward-looking statements are subject to risks and uncertainties and actual results may differ materially from any future performance suggested. These factors include rapid technological change in the optical communications industry; fluctuations in operating results; Stratos' dependence on a few large customers; and competition. Other risk factors that may affect the Company's performance are listed in Stratos' annual report on Form 10-K and other reports filed from time to time with the Securities and Exchange Commission. STRATOS INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share amounts and shares outstanding) Three Months Ended Nine Months Ended January 31 January 31 2007 2006 2007 2006 Revenues: Net sales 22,101 $18,993 66,202 $58,422 License fees and royalties 167 201 494 410 Total revenues 22,268 19,194 66,696 58,832 Cost of revenues 13,553 12,304 42,660 37,020 Gross profit 8,715 6,890 24,036 21,812 Operating expenses Research and development 1,939 2,299 6,060 6,142 Sales and marketing 2,621 2,389 7,859 7,471 General and administrative 3,741 3,921 11,378 11,787 Restructuring and other charges 359 842 Litigation settlements, net (700) (700) Total operating expenses 8,301 8,268 25,297 25,542 Income (loss) from operations 414 (1,378) (1,261) (3,730) Interest income, net 713 340 1,437 887 Other income 405 16 867 397 Income (loss) before income taxes 1,532 (1,022) 1,043 (2,446) Income tax provision (17) 41 (17) 32 Net income (loss) 1,515 (981) 1,026 (2,414) Preferred Stock Dividends (17) (88) (329) (263) Net income (loss) attributable to Common shareholders (Basic and Diluted) 1,498 (1,069) 697 (2,677) Net incomeloss per share attributable to common shareholders (Basic) $0.11 ($0.08) $0.05 ($0.19) (Diluted) $0.10 ($0.08) $0.05 ($0.19) Weighted average number of Common Shares outstanding: Basic 13,750,904 13,875,654 13,653,864 13,900,956 Weighted average number of Common Shares outstanding: Diluted 14,672,975 13,875,654 14,579,675 13,900,956 STRATOS INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands, except per share amounts and shares outstanding) January 31 April 30 2007 2006 Assets Current assets Cash and cash equivalents $13,111 $11,742 Short term investments 18,150 19,000 Accounts receivable - net 14,147 13,606 Inventories 18,993 15,482 Prepaid expenses and other current assets 706 2,427 Total current assets 65,107 62,257 Property plant and equipment, net 12,960 16,437 Intangible assets, net of amortization 10,854 11,832 Goodwill and other long lived assets 5,664 5,664 Assets held for sale 2,600 2,864 Other assets 100 100 Total assets $97,285 $99,154 Liabilities and shareholders' equity: Current liabilities Accounts payable $4,543 $4,724 Accrued expenses 5,783 6,028 Income taxes payable 186 216 Total current liabilities 10,512 10,968 Redeemable Preferred Stock 982 1,979 Total liabilities 11,494 12,947 Shareholders' equity Preferred stock, $0.01 par value: Authorized 1,000,000 shares, issued and outstanding 9,820 and 19,790 shares of Series B redeemable preferred stock at January 31, 2007 and April 30, 2006, respectively - - Common stock, $0.01 par value: Authorized 20,000,000 shares, 15,077,455 shares issued and 14,494,647 shares outstanding at January 31, 2007; 14,942,164 shares issued and 14,640,643 shares outstanding at April 30, 2006. 151 149 Cost of shares in treasury (3,723) (1,871) Additional paid in capital 319,437 322,607 Unearned Compensation - (4,400) Accumulated other comprehensive income (502) (9) Accumulated deficit (229,572) (230,269) Total shareholders' equity 85,791 86,207 Total liabilities and shareholders' equity $97,285 $99,154 DATASOURCE: Stratos International, Inc. CONTACT: Barry Hollingsworth, Vice President & Chief Financial Officer, Stratos International, Inc., +1-708-457-2379, Web site: http://www.stratosinternational.com/

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