STLW Stratos Intl (MM)

Stratos International Announces First Quarter Results Reports Q1 Sales of $21 Million CHICAGO, Sept. 2 /PRNewswire-FirstCall/ -- Stratos International, Inc. (NASDAQ:STLW), a leading provider of optoelectronic, fiber optic, and radio frequency (RF) and microwave subsystems and components, today announced financial results for its first quarter ended July 31, 2004. Sales for the first quarter of fiscal 2005 were $21.0 million. The Company also recorded license fees and royalty income of $2.8 million in the first quarter of fiscal 2005, which included a $2.5 million patent infringement settlement received in July 2004. For comparison, fourth quarter fiscal 2004 revenue for the three months ended April 30, 2004 was $19.7 million. Fourth quarter fiscal 2004 license fees and royalty income for the three months ended April 30, 2004 was $428,000. Jim McGinley, CEO of Stratos, remarked, "We are pleased to report our fourth consecutive quarter of revenue growth. Continued growth in our optoelectronic and fiber optic products combined with the acquisition of the RF Microwave business has provided significant sales gains from a year ago. Our balance sheet remains healthy with approximately $37 million of cash and short-term investments at quarter end." The net loss attributable to common shareholders for the first quarter of fiscal 2005 was $480,000, or $0.04 per share. By comparison, the Company reported a net loss attributable to common shareholders of $7.3 million or $0.99 per share for the first quarter of fiscal 2004, and a net loss attributable to common shareholders of $7.0 million or $0.52 per share for the fourth quarter of fiscal 2004. The Company completed the acquisition of Sterling Holding Company, a leading designer, manufacturer and marketer of specialty RF and microwave components, on November 6, 2003 as previously announced. Financial results include Sterling's operating results from that date. The merger with Sterling provided Stratos with two leading brands, Trompeter and Semflex, a suite of highly profitable and complementary products, an expanded customer base and strong sales channels to further its penetration into the military and video markets. Company Exploring Strategic Alternatives In May, Stratos International announced its decision to explore various strategic alternatives to maximize shareholder value, including the possible sale of the Company. The Company has retained CIBC World Markets Corp. as its exclusive financial advisor. There is no assurance that a transaction will result involving the Company. In the meantime, the Company expects to continue operations as usual by seeking new business, developing new products and working with customers to maintain a high level of customer service. Webcast/Conference Call Stratos International will host a live audio webcast and conference call on Thursday, September 2, 2004 at 5:00 pm EDT. Investors and other interested parties may listen to the live webcast by visiting the investor relations section of the Stratos International website at http://www.stratoslightwave.com/ . James W. McGinley and David A. Slack will discuss the Company's earnings and operations. A replay of the conference call will be available for 48 hours beginning at 7:00 pm EDT. The replay number is (706) 645-9291 with a conference ID of 9674952. A webcast replay will also be available on the Company's website. ABOUT STRATOS INTERNATIONAL Stratos International, Inc. is a leading designer, developer and manufacturer of active and passive optical, optoelectronic, RF and Microwave components, subsystems 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 the Company to amass a broad range of products and build a strong IP portfolio of more than 100 patents. The Company is a market leader in several niches including high margin specialty optical products such as RJ and low rider transceivers, Media Interface Adapters, flex circuits, as well as high performance RF and microwave coax and triax interconnect products. The Company currently serves more than 400 active customers in telecom, military and video markets. This press release contains predictions, estimates and other forward- looking statements regarding anticipated revenue growth, customer orders, manufacturing capacity and financial performance. All forward-looking statements in this press release are based on information available to the company 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; the Company's dependence on a few large customers; and competition. Other risk factors that may affect the Company's performance are listed in the Company's annual report on Form 10-K and other reports filed from time to time with the Securities and Exchange Commission. For additional information contact Stratos International at 7444 W. Wilson Ave., Chicago, IL USA 60706-4549; Tel: 708.867.9600. Fax: 708.867.0996. Website: http://www.stratoslightwave.com/ . STRATOS INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share amounts and shares outstanding) Three Months Ended July 31 2004 2003 Revenue: Net sales $21,023 $6,571 License fees and royalties 2,783 506 Total 23,806 7,077 Costs and expenses: Cost of products sold 13,814 7,478 Research and development 2,406 2,890 Sales and marketing 2,809 1,519 General and administrative 5,234 2,698 Total costs and expenses 24,263 14,585 Loss from operations (457) (7,508) Investment income 64 240 Loss before income taxes (393) (7,268) Provision (credit) for income taxes - - Net loss (393) (7,268) Preferred Stock Dividends $(87) $- Net loss attributable to Common shareholders $(480) $(7,268) Net loss per share, basic and diluted: $(0.03) $(0.99) Preferred stock dividend requirement $(0.01) - Net loss per share attributable to common shareholders $(0.04) $(0.99) Weighted average number of Common Shares outstanding: Basic 13,534,172 7,364,320 Diluted 13,534,172 7,364,320 STRATOS INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) July 31 April 30 2004 2004 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $18,094 $15,501 Short term investments 19,296 21,488 Accounts receivable - net 13,359 12,544 Inventories 16,597 15,964 Recoverable income taxes 4,212 4,176 Prepaid expenses 1,116 1,326 TOTAL CURRENT ASSETS 72,674 70,999 PROPERTY, PLANT AND EQUIPMENT 90,962 91,530 Less allowances for depreciation 65,271 64,574 NET PROPERTY, PLANT AND EQUIPMENT 25,691 26,956 OTHER ASSETS Goodwill and other long lived assets 6,110 6,110 Intangible assets, net of amortization 14,347 14,665 Assets held for sale 2,992 4,441 Other 5,892 5,879 TOTAL OTHER ASSETS 29,341 31,095 TOTAL ASSETS $127,706 $129,050 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $7,203 $8,422 Current portion of long-term debt 1,926 2,230 Other current liabilities 8,273 7,373 TOTAL CURRENT LIABILITIES 17,402 18,025 OTHER LIABILITIES Long term debt 310 801 Deferred Income Taxes 445 445 Redeemable Preferred Stock 5,000 5,000 SHAREHOLDERS' EQUITY Common Stock 142 143 Paid in capital 318,606 319,212 Accumulated deficit (211,114) (210,633) Unearned Compensation (2,951) (3,809) Treasury Stock (248) (248) Foreign Currency Translation Adjustment 114 114 TOTAL SHAREHOLDERS' EQUITY 104,549 104,779 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $127,706 $129,050 DATASOURCE: Stratos International, Inc. CONTACT: David A. Slack, Chief Financial Officer, or Barry R. Hollingsworth, Investor Relations, both of Stratos International, Inc., +1-708-867-9600 Web site: http://www.stratoslightwave.com/

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