STLW Stratos Intl (MM)

Reports Q2 Revenues of $19.0 Million CHICAGO, Dec. 8 /PRNewswire-FirstCall/ -- Stratos International, Inc. (NASDAQ:STLW) today announced financial results for its second quarter ended October 29, 2005. Sales for the second quarter of fiscal 2006 were $18.9 million. Stratos also recorded license fees and royalty income of $0.1 million. For comparison, second quarter fiscal 2005 sales for the three months ended October 31, 2004 were $18.2 million. Sales for the first quarter of fiscal 2006 were $20.5 million and license fees and royalties were $0.1 million. The net loss attributable to common shareholders for the second quarter of fiscal 2006 was $0.4 million, or $0.03 per share. The net loss in the second quarter includes a net benefit of approximately $0.6 million primarily related to the resolution of prior year accruals. Second quarter results include $0.5 million of non-recurring restructuring charges, which includes the closing of a corporate office in Westlake Village, CA. By comparison, in the second quarter of fiscal 2005, Stratos reported a net loss attributable to common shareholders of $4.1 million or $0.30 per share. The net loss attributable to common shareholders for the first quarter of fiscal 2006 was $1.2 million or $0.09 per share. Andy Harris, President and CEO of Stratos, remarked, "We are pleased that we achieved a third consecutive quarter of positive EBITDA and continued our trend toward profitability. Our continued focus on the customer, investing in new product offerings, and achieving increased operating efficiency will bring Stratos to success in our markets and our objective of sustained profitability." Year-to-Date Results Sales for the 6 months ended October 29, 2005 were $39.4 million. Stratos also recorded license fees and royalty income of $0.2 million. For comparison, sales for the 6 months ended October 31, 2004 were $39.2 million, and license fees and royalties were $0.2 million. The net loss attributable to common shareholders for the 6 months ended October 29, 2005 was $1.6 million, or $0.12 per share. By comparison, for the 6 months ended October 31, 2004, Stratos reported a net loss attributable to common shareholders of $4.6 million or $0.34 per share. Common shares outstanding as of October 29, 2005 were 14,612,884 shares. Cash and short-term investments at October 29, 2005 were $34.0 million compared to $31.8 million at April 30, 2005. Capital expenditures were $0.2 million in the second quarter of fiscal 2006 compared to $0.2 million in the second quarter of the prior year. Webcast of Investor Call Available Today 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 (800) 642-1687 or (706) 645-9291 and then following the prompts to enter Conference ID Number 2708920. 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 environments application. 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 100 patents. Stratos currently serves more than 1,300 active customers, who are primarily in telecom/datacom, military/aerospace and video markets. Stratos' headquarters is in Chicago, Illinois, USA. 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 Six Months Ended October 31 October 31 2005 2004 2005 2004 Revenues: Net sales $18,949 $18,181 $39,429 $39,204 License fees and royalties 65 29 209 249 Total revenues 19,014 18,210 39,638 39,453 Cost of revenues 12,262 12,439 24,715 26,253 Gross profit 6,752 5,771 14,923 13,200 Operating expenses Research and development 1,839 2,422 3,843 4,828 Sales and marketing 2,536 2,610 5,083 5,419 General and administrative 3,562 6,197 7,866 11,377 Restructuring and other charges 483 - 483 - Litigation settlements, net - (1,463) - (4,026) Total operating expenses 8,420 9,766 17,275 17,598 Loss from operations (1,668) (3,995) (2,352) (4,398) Investment income, net 295 65 547 129 Other income 1,027 (69) 381 (123) Loss before income taxes (346) (3,999) (1,424) (4,392) Income tax (provision) credit - (9) Net loss (346) (3,999) (1,433) (4,392) Preferred Stock Dividends ($88) ($88) ($175) ($175) Net loss attributable to Common shareholders ($434) ($4,087) ($1,608) ($4,567) Net loss per share attributable to common shareholders ($0.03) ($0.30) ($0.12) ($0.34) Weighted average number of Common Shares outstanding: Basic and diluted 13,921,333 13,549,000 13,913,469 13,542,000 STRATOS INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands, except per share amounts and shares outstanding) October 29 April 30 2005 2004 Assets Current assets Cash and cash equivalents $9,515 $13,276 Short term investments 24,500 18,552 Accounts receivable - net 11,261 12,926 Inventories 15,556 15,974 Prepaid expenses 955 6,139 Refundable income taxes 3,804 4,267 Other current assets Total current assets 65,591 71,134 Property plant and equipment, net 19,021 21,338 Intangible assets, net of amortization 12,760 13,462 Goodwill and other long lived assets 6,110 6,110 Assets held for sale 2,868 2,936 Other assets Total assets $106,350 $114,980 Liabilities and shareholders' equity: Current liabilities Accounts payable $4,579 $6,987 Accrued expenses 6,647 11,259 Current portion of long-term debt 815 Total current liabilities 11,226 19,061 Long term debt, less current portion Deferred Income Taxes 446 446 Redeemable Preferred Stock 5,000 5,000 Total liabilities 16,672 24,507 Shareholders' equity Preferred stock, $0.01 par value, authorized 5,000,000 shares, issued and outstanding 50,000 shares at October 31, 2005 and April 30, 2005. - - Common stock, $0.01 par value, authorized 100,000,000 shares, issued and outstanding 14,612,884, and 14,559,348 at October 31, 2005 and April 30, 2005 respectively. 146 146 Cost of shares in treasury (259) (259) Additional paid in capital 320,643 320,410 Unearned Compensation (3,239) (3,505) Accumulated other comprehensive income 286 (29) Accumulated deficit (227,899) (226,290) Total shareholders' equity 89,678 90,473 Total liabilities and shareholders' equity 106,350 $114,980 DATASOURCE: Stratos International, Inc. CONTACT: Barry Hollingsworth, Vice President & Chief Financial Officer of Stratos International, Inc., +1-708-457-2379, or Web site: http://www.stratosinternational.com/

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