Stratos Announces 1Q Financial Results

Stratos Global Corp. announced financial results for the first quarter ended March 31. Its first quarter results were negatively impacted by non-cash, after-tax write-offs of approximately $23.3m, primarily related to the acquisition of Xantic, which was completed on February 14. These after-tax charges included the write-down of $19.6m of capital assets related to the Goonhilly land earth station as a result of the planned post-acquisition network rationalization; the write-off of $1m of deferred financing costs reflecting the successful financing of the Xantic acquisition; and, the write-off of capital assets of $2.7m related to the breach-of-contract claim recently filed against a provider of business process solutions. As a result, the corporation reported a net loss for the quarter of $24.9m, compared with net earnings of $3.5m reported for the same period last year. First quarter 2005 results were favorably impacted by $1.9m related to the settlement of a dispute over licensing and use of certain technology. Excluding these items, as well as non-cash, after-tax amortization of $1.1m for customer intangibles related to both the Xantic and Plenexis acquisitions, the Corporation reported an adjusted net loss (non-GAAP measure) of $500,000 in the first quarter of 2006, compared with adjusted net earnings of $1.9m in the same quarter a year ago. Revenue for the first quarter of 2006 was $119.3m, a 29 percent increase compared with the $92.4m achieved in the first quarter of 2005. This growth reflected Xantic revenue, which was consolidated with Stratos beginning February 14, as well as higher revenue from the Corporation's Broadband division.