STG Stonepath Grp.

SEATTLE, Aug. 14 /PRNewswire-FirstCall/ -- Stonepath Group (AMEX:STG), a global logistics services organization, today reported financial results for the three and six months ended June 30, 2006. Second Quarter Results For the second quarter of 2006, Stonepath reported revenue of $90.9 million, a decrease of 9.1% compared to the prior year period. International segment revenues increased 0.6% to $70.9 million, while the Company's Domestic segment revenues declined 32.2% to $20.0 million for the quarter. The decline in Domestic segment revenue was due primarily to reduced volume from two major, national retail accounts. The Domestic Services segment has taken action to align its operating expenses with these reduced revenue levels. These actions include the reducing of personnel levels, facility costs and other administrative expenses. The International segment experienced a decline in revenue from its U.S. and China-based businesses, which were offset by growth in its other Asia operations. Net revenues were $17.2 million, a $4.9 million decrease, or 22.4%, compared to the prior year period. The Domestic Services segment delivered $6.8 million of net revenue in the second quarter of 2006, a decline of $4.4 million or 39.4% over the same prior year period. The International Services segment delivered $10.4 million of net revenue in the second quarter of 2006, a period over period decline of $0.5 million or 5.2%. The Company reported net income of $0.4 million, or $0.01 per basic share and a $(0.04) loss per diluted share. This compares to a net loss of $0.4 million, or $(0.1) per basic and diluted share for the same prior year period. Included in the Company's net income for the second quarter is a $3.6 million non-cash credit relating to the accounting for derivatives contained in certain of our financing agreements and a $0.8 million credit relating to a sublease of a previously closed facility. First Half Results For the first half of 2006, Stonepath reported revenues of $183.1 million, a decrease of $6.9 million, or 3.6%. Net revenue decreased over the prior-year period by $5.9 million, or 13.8%, to $36.7 million. The Company reported a net loss of $3.0 million in the first half of 2006 or $(0.7) per basic and $(0.8) diluted share. This compares to a net loss of $7.9 million or $(0.18) per diluted share for the same prior-year period. Effective July 19, 2006, Stonepath entered into of a letter of intent for our U.S-based International Services ("SLIS") and Germany units. The consideration for the transaction is $18.0 million, and will yield net proceeds of $17.1 million after the deduction for $0.9 million of potential contingent earn-out payments associated with a prior acquisition by SLIS. The proceeds will further be adjusted, upwards or downwards depending on the level of working capital of these entities as of closing. The sale is contingent upon the successful completion of negotiations between Stonepath and the buyers and satisfaction of customary conditions to closing, including third- party approvals. Stonepath expects to close on the transaction during the third quarter. "Our operating results have been less than satisfactory and our borrowings are higher than advisable," said Bob Arovas, Stonepath's Interim CEO. "To reduce our debt levels, we have initiated the sale of our US-based international business. We are also making further changes in the structure and operations of our remaining businesses both in the US and overseas. Among other actions, we are increasing our focus on China-based retail customer services in an effort to reduce reliance on a traditional wholesale business, which has been providing lower than acceptable margins." Arovas continued, "There is much to do to improve the performance of the Company, and it will take some time to achieve our objectives. We appreciate the patience and continuing support of our customers, employees, vendors and shareholders as we execute our plan to improve our financial performance." About Stonepath Group (AMEX:STG) Stonepath (http://www.stonepath.com) is a global, third-party logistics organization providing a full range of transportation and distribution solutions to multinational and local businesses including a diverse client mix of retail leaders, automotive and technology concerns, government agencies, and defense contractors. This Press Release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding future results, levels of activity, events, trends or plans. We have based these forward-looking statements on our current expectations and projections about such future results, levels of activity, events, trends or plans. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, events, trends or plans to be materially different from any future results, levels of activity, events, trends or plans expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "guidance," "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue" or the negative of such terms or other similar expressions. Although it is impossible to identify all of the factors that may cause our actual results, levels of activity, events, trends or plans to differ materially from those set forth in such forward-looking statements, such factors include the inherent risks associated with: (i) our ability to sustain an annual growth rate in revenue consistent with recent results, (ii) our ability to achieve our targeted operating margins, (iii) our ability to compute our restructuring efforts within the costs we now expect, (iv) our ability to realize the planned benefits from our restructuring efforts, (v) our dependence on certain large customers, (vi) our dependence upon certain key personnel, (vii) an unexpected adverse result in any legal proceeding, (viii) competition in the freight forwarding, logistics and supply chain management industry, (ix) the impact of current and future laws affecting the Company's operations, (x) adverse changes in general economic conditions as well as economic conditions affecting the specific industries and customers we serve, and (xi) regional disruptions in transportation. Other factors that might cause or contribute to such a discrepancy between expected and actual results include, but are not limited to, those factors identified in our Securities and Exchange Commission filings (including our Annual Report on Form 10-K for 2005), other public documents and recent press releases, which can be found on our corporate web site, http://www.stonepath.com. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events. DATASOURCE: Stonepath Group CONTACT: John Brine of Stonepath Group, +1-212-254-8280 Web site: http://www.stonepath.com/

Copyright