SOURCE: Norsat International Inc.

August 18, 2006 18:30 ET

Norsat Posts Q2 2006 Results

VANCOUVER, BC -- (MARKET WIRE) -- August 18, 2006 -- Norsat International Inc. (TSX: NII) (OTCBB: NSATF) today reported second quarter sales of $3.76 million, gross margins of 47% and a net loss of $1.07 million. For the same period last year, the Company reported sales of $6.16 million, gross margins of 50% and a net loss of $1.24 million.

Sales for the six months ended June 30, 2006 were $6.68 million as compared to $8.67 million in the same period last year. For the six-month period ended June 30, 2006, sales generated by the Microwave Business Unit were $4.23 million, compared to $3.88 million last year. The Satellite Systems business unit meanwhile, reported sales of $2.45 million, compared to $4.79 million for the same period last year.

Total operating costs for the six-month period ending June 30, 2006 were $5.57 million, down from $5.75 million for the same period last year. Of those costs, selling, general and administrative expenses decreased by $0.28 million to $4.22 million, due to a reduction in salaries and consulting fees. Production development expenses meanwhile, increased by $0.15 million to $1.06 million due to larger purchases of materials related to the GLOBETrekker. Amortization costs for the period decreased to $0.28 million from $0.33 million as an increasing number of the Company's assets have now been fully amortized.

The increase in the net loss from $2.43 million, compared to the same six-month period last year of $2.85 million, was attributable, in part, to a lower level of sales of satellite systems, and an increase in research and development expenses related to the GLOBETrekker. The increase of these research and development costs was partially offset by a decrease in sales, general and administrative costs and the impact of the modification in the conversion price of the long-term debt.

The Company has recently become aware that certain disclosures designed to reconcile Canadian GAAP to United States GAAP in Note 22 "Reconciliation to United States accounting principles" to the 2005 Consolidated Financial Statements may be misstated. The effects, if any, arising from this matter are currently undergoing an in-depth review by management. Depending on the results of management's procedures, the 2005 Consolidated Financial Statements may be restated. The outcomes of these procedures cannot be predicted at this time. The Company will announce the results of these procedures as soon as they are completed.

Forward-Looking Statements

Statements in this report relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third party manufacturing, managing rapid growth, global sales risks, limited intellectual property protection and other risks and uncertainties described in Norsat's public filings with securities regulatory authorities.

About Norsat International Inc.

Norsat International Inc. designs, engineers and markets intelligent satellite solutions for high-speed data transmission. For more than 25 years, Norsat has built a strong reputation in the field of satellite technology by providing its customers with innovative products. Norsat's latest innovations include the Norsat OmniLink™ and GLOBETrekker™ lines of portable satellite terminal products that provide rapidly deployable broadband satellite data and video connectivity in areas where traditional communications infrastructure is insufficient, damaged, or non-existent. Additional information is available at www.norsat.com.

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