STLW Stratos Intl (MM)

Reports Q2 Revenues of $23.2 Million, a 22% Increase Over Prior Year CHICAGO, Nov. 27 /PRNewswire-FirstCall/ -- Stratos International, Inc. (NASDAQ:STLW) today announced financial results for its second quarter ended October 31, 2006. Sales for the second quarter of fiscal 2007 were $23.0 million. Stratos also recorded license fees and royalty income of $0.2 million. Total revenues were $23.2 million in the second quarter of fiscal 2007, a sequential increase of 10% over total revenues of $21.2 million in the first quarter of fiscal 2007, and a 22% increase over total revenues of $19.0 million in the second quarter of fiscal 2006. The net income attributable to common shareholders for the second quarter of fiscal 2007 was $0.7 million, or $0.05 per share. By comparison, in the second quarter of fiscal 2006, Stratos reported a net loss attributable to common shareholders of $0.4 million or $0.03 per share. Andy Harris, President and CEO of Stratos, remarked, "We have taken a disciplined and measured approach in managing this business with the goal of turning this company profitable in a sustainable manner. Our goal is to build for the long-term success of Stratos by pursuing niche opportunities yielding high gross margins with a broad range of optical and electronic product offerings. We generated $2.5 million of EBITDA this quarter, making this our seventh consecutive quarter of positive EBITDA." Year-to-Date Results Sales for the 6 months ended October 31, 2006 were $44.1 million. Stratos also recorded license fees and royalty income of $0.3 million. For comparison, sales for the 6 months ended October 31, 2005 were $39.4 million, and license fees and royalties were $0.2 million. The net loss attributable to common shareholders for the 6 months ended October 31, 2006 was $0.8 million, or $0.06 per share. By comparison, for the 6 months ended October 31, 2005, Stratos reported a net loss attributable to common shareholders of $1.6 million or $0.12 per share. Common shares outstanding as of October 31, 2006 were 14,489,925 shares. Cash and short-term investments at October 31, 2006 were $26.1 million compared to $30.7 million at April 30, 2006. Capital expenditures were $0.3 million in the second quarter of fiscal 2007, compared to $0.2 million in the second quarter of fiscal 2006. Stratos repurchased 96,500 shares of its common stock in the open market at a cost of $0.6 million during the second quarter of fiscal 2007. Second 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 (800) 642-1687 or (706) 645-9291 and then following the prompts to enter Conference ID Number 2017967. 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 2006 2005 2006 2005 Revenues: Net sales 23,036 18,949 44,100 39,429 License fees and royalties 196 65 327 209 Total revenues 23,232 19,014 44,427 39,638 Cost of revenues 14,419 12,262 29,107 24,715 Gross profit 8,813 6,752 15,320 14,923 Operating expenses Research and development 2,209 1,839 4,121 3,843 Sales and marketing 2,697 2,536 5,238 5,083 General and administrative 3,652 3,562 7,637 7,866 Restructuring and other charges 483 483 Total operating expenses 8,558 8,420 16,996 17,275 Income (loss) from operations 255 (1,668) (1,676) (2,352) Investment income, net 362 295 725 547 Other income 156 1,027 462 381 Income (loss) before income taxes 773 (346) (489) (1,424) Income tax provision - - - (9) Net income (loss) 773 (346) (489) (1,433) Preferred Stock Dividends (25) (88) (312) (175) Net income (loss) attributable to Common shareholders (Basic and Diluted) 748 (434) (801) (1,608) Net income (loss) per share attributable to common shareholders (Basic and Diluted) $0.05 ($0.03) ($0.06) ($0.12) Weighted average number of Common Shares outstanding: Basic 13,658,285 13,921,333 13,679,134 13,913,469 Weighted average number of Common Shares outstanding: Diluted 14,624,926 13,921,333 13,679,134 13,913,469 STRATOS INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands, except per share amounts and shares outstanding) October 31 April 30 2006 2006 Assets Current assets Cash and cash equivalents $7,993 $11,742 Short term investments 18,150 19,000 Accounts receivable - net 14,724 13,606 Inventories 18,290 15,482 Prepaid expenses and other current assets 818 590 Refundable income taxes 1,837 1,837 Total current assets 61,812 62,257 Property plant and equipment, net 14,204 16,437 Intangible assets, net of amortization 11,141 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 $95,521 $99,154 Liabilities and shareholders' equity: Current liabilities Accounts payable $4,945 $4,724 Accrued expenses 5,279 6,028 Income taxes payable 207 216 Total current liabilities 10,431 10,968 Redeemable Preferred Stock 982 1,979 Total liabilities 11,413 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 October 31, 2006 and April 30, 2006, respectively - - Common stock, $0.01 par value: Authorized 20,000,000 shares, 15,072,743 shares issued and 14,489,925 shares outstanding at October 31, 2006; 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 323,303 322,607 Unearned Compensation (4,270) (4,400) Accumulated other comprehensive income (283) (9) Accumulated deficit (231,070) (230,269) Total shareholders' equity 84,108 86,207 Total liabilities and shareholders' equity $95,521 $99,154 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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