STLW Stratos Intl (MM)

Reports Q3 Revenues of $19.2 Million CHICAGO, March 9 /PRNewswire-FirstCall/ -- Stratos International, Inc. (NASDAQ:STLW), today announced financial results for its third quarter ended January 31, 2006. Sales for the third quarter of fiscal 2006 were $19.0 million. Stratos also recorded license fees and royalty income of $0.2 million. Total revenues were $19.2 million in the third quarter of fiscal 2006. For comparison, third quarter fiscal 2005 revenues for the three months ended January 31, 2005 were $19.5 million. The net loss attributable to common shareholders for the third quarter of fiscal 2006 was $1.1 million, or $0.08 per share. Third quarter results include a net benefit of $0.7 million related to a litigation settlement, and $0.4 million of restructuring charges for the closing of a corporate office in Westlake Village, CA. By comparison, in the third quarter of fiscal 2005, Stratos reported a net loss attributable to common shareholders of $8.7 million or $0.64 per share. Andy Harris, President and CEO of Stratos, remarked, "We are pleased that we achieved a fourth consecutive quarter of positive EBITDA and continued our trend toward profitability. Our progress in realizing benefits from our restructuring and operating efficiency initiatives is gaining momentum. Now, as we invest in new product development and product enhancements, we plan to leverage our competitive advantage as an agile and technically skilled organization to build our diverse customer base and revenues. We continue to improve our operating model and closed the quarter with $35.8 million in cash and long-term investments." Year-to-Date Results Sales for the 9 months ended January 31, 2006 were $58.4 million. Stratos also recorded license fees and royalty income of $0.4 million. For comparison, sales for the 9 months ended January 31, 2005 were $58.6 million, and license fees and royalties were $0.4 million. The net loss attributable to common shareholders for the 9 months ended January 31, 2006 was $2.7 million, or $0.19 per share. By comparison, for the 9 months ended January 31, 2005, Stratos reported a net loss attributable to common shareholders of $13.2 million or $0.97 per share. Common shares outstanding as of January 31, 2006 were 14,562,641 shares. Cash and short-term investments at January 31, 2006 were $35.8 million compared to $31.8 million at April 30, 2005. Capital expenditures were $0.1 million in the third quarter of fiscal 2006 compared to $0.2 million in the third quarter of the prior year. During the quarter Stratos repurchased 142,470 shares of its common stock in the open market at a cost of $0.9 million. 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 5441816. 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. For additional information, contact Barry Hollingsworth, Vice President & Chief Financial Officer at (708) 457-2379, or email at . Website: http://www.stratosinternational.com/ 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 2006 2005 2006 2005 Revenues: Net sales $18,993 $19,430 $58,422 $58,634 License fees and royalties 201 103 410 352 Total revenues 19,194 19,533 58,832 58,986 Cost of revenues 12,304 13,400 37,020 39,654 Gross profit 6,890 6,133 21,812 19,332 Operating expenses Research and development 2,299 2,382 6,142 7,210 Sales and marketing 2,389 2,443 7,471 7,861 General and administrative 3,921 6,301 11,787 17,643 Restructuring and other charges 359 4,275 842 4,275 Litigation settlements, net (700) (63) (700) (4,090) Total operating expenses 8,268 15,338 25,542 32,899 Loss from operations (1,378) (9,205) (3,730) (13,567) Investment income, net 340 173 887 302 Other income 16 467 397 307 Loss before income taxes (1,022) (8,565) (2,446) (12,958) Income tax (provision) credit 41 - 32 - Net loss (981) (8,565) (2,414) (12,958) Preferred Stock Dividends ($88) ($88) ($263) ($263) Net loss attributable to Common shareholders ($1,069) ($8,653) ($2,677) ($13,221) Net loss per share attributable to common shareholders ($0.08) ($0.64) ($0.19) ($0.97) Weighted average number of Common Shares outstanding: Basic and diluted 13,875,654 13,559,133 13,900,956 13,669,525 STRATOS INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands, except per share amounts and shares outstanding) January 31 April 30 2006 2005 Assets Current assets Cash and cash equivalents $13,776 $13,276 Short term investments 22,000 18,552 Accounts receivable - net 11,984 12,926 Inventories 15,060 15,974 Prepaid expenses 603 6,139 Refundable income taxes 1,837 4,267 Total current assets 65,260 71,134 Property plant and equipment, net 17,652 21,338 Intangible assets, net of amortization 12,424 13,462 Goodwill and other long lived assets 6,110 6,110 Assets held for sale 2,864 2,936 Total assets $104,310 $114,980 Liabilities and shareholders' equity: Current liabilities Accounts payable $4,218 $6,987 Accrued expenses 6,573 11,259 Current portion of long-term debt - 815 Total current liabilities 10,791 19,061 Deferred Income Taxes 446 446 Redeemable Preferred Stock 5,000 5,000 Total liabilities 16,237 24,507 Shareholders' equity Preferred stock, $0.01 par value, authorized 5,000,000 shares, issued and outstanding 50,000 shares at January 31, 2006 and April 30, 2005. - - Common stock, $0.01 par value, authorized 100,000,000 shares, issued and outstanding 14,562,641, and 14,559,348 at January 31, 2006 and April 30, 2005 respectively. 148 146 Cost of shares in treasury (1,109) (259) Additional paid in capital 321,162 320,410 Unearned Compensation (3,378) (3,505) Accumulated other comprehensive income 219 (29) Accumulated deficit (228,969) (226,290) Total shareholders' equity 88,073 90,473 Total liabilities and shareholders' equity $104,310 $114,980 DATASOURCE: Stratos International, Inc. CONTACT: Barry Hollingsworth, Vice President & Chief Financial Officer of Stratos International, Inc., +1-708-457-2379, Web site: http://www.stratosinternational.com/

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