SUPER VISION ANNOUNCES 2006 2ND QUARTER AND SIX MONTH RESULTS

PRESS RELEASE

For more information:

Dan A. Regalado, Executive VP & CFO, Super Vision International, Inc.
407/857-9900 ext. 287   Email: dregalado@svision.com

SUPER VISION ANNOUNCES 2006 2ND QUARTER AND SIX MONTH RESULTS

ORLANDO, Fla., August 14, 2006 – Super Vision International, Inc. (NASDAQ Capital Market: SUPVA, Class A Common), a world leader in solid-state LED and fiber optic lighting systems and controls used in commercial, architectural, signage, swimming pool and retail lighting applications today announced financial results for the second quarter and six months ended June 30, 2006.

Total revenue for the second quarter of 2006 was approximately $3.1 million, down 2% or $68,000 from approximately $3.2 million in the second quarter of 2005. Revenues were up 23% in the commercial lighting division driven by a 38% increase in sales of the new SaVi™ brand LED lighting products and a 14% increase in fiber optic sales as compared to the same quarter in 2005.  This increase however, was offset by lower revenues from the pool and spa and international divisions. 

Revenue from sales of pool and spa lighting was down 10% for the second quarter of 2006 as compared to the same period in 2005. An increase of 7% from the sale of fiber optic products for the pools and spas was offset by an 18% decrease in sales of LED products for pools and spas due to the timing of sales of OEM LED spa lighting systems.

Revenue from sales in our international division declined 14%, for the second quarter of 2006 as compared to the same period in 2005.  An increase of 6% from the sale of LED products in our international division was offset by a 33% decrease in sales of fiber optic products as a result of fewer large project shipments and lower sales of fiber optic products in Spain, Russia and the middle-east as compared to the second quarter of 2005.

Overall, sales of LED products accounted for 52% of the company’s revenue in the second quarter of 2006, while fiber optic sales accounted for 45% and waterfall/water feature products accounted for 3%.

Gross margin for the second quarter of 2006 was 46%, compared to 48% in the same quarter a year ago. However, excluding the benefit of a one-time $240,000 legal settlement which reduced costs of goods sold in the second quarter of 2005, gross margin increased $151,000 or 12% in the second quarter of 2006.  Comparative gross margin, excluding the 2005 one time recovery of costs from the legal settlement, was 46% for the quarter ended June 30, 2006 compared to 40% for the quarter ended June 30, 2005.

Operating expenses in the second quarter of 2006 were approximately $1.54 million compared to $1.34 million in the same quarter of 2005. The increase in operating expenses was primarily due to increased wages including stock option related expenses pursuant to adoption of FAS123(R) Share Based Payment, increased legal and professional fees and increased marketing costs related to launching several new products. These increases were offset by lower R&D expenses as new products were completed, and lower insurance and tax expenses in 2006 compared to the same period in 2005.

As a result of the increased operating expenses and lower revenue, Super Vision reported a net loss of approximately $125,000 or $0.05 per common and diluted share for the second quarter of 2006 compared to net income of approximately $152,000 or $0.06 per common and diluted share in the same quarter of 2005.  Excluding the benefit in 2005 of a one-time legal settlement of $240,000, the company would have recorded a net loss of approximately $88,000 in the second quarter of 2005.

“The second quarter brought mixed results with strong performance from our commercial division, up 23%, as sales of our new SaVi LED products increased 38%, while sales in our international and pool and spa divisions decreased 14% and 10% respectively, as compared to the same period in 2005.  The net loss, combined with the continued lower than planned revenue, increased legal and administrative costs and the planned build up in inventory to support the launch our new SaVi SHO and SaVi Pool and Spa lights has significantly impacted our working capital mix,” stated Mike Bauer, President and CEO of Super Vision.  “To address this concern, we have implemented an aggressive restructuring and cost cutting plan for the second half of the year. In July, we reduced our overall workforce by 19% and implemented a reduced budget that should reduce controllable operating expenses by an additional $200,000 in the second half of 2006.  We estimate the overall savings from both workforce and planned operating expense reductions in the next six months will exceed $400,000.  Our goal is to aggressively reduce inventory through sales, improve our cash position and right size the company’s expenses in proportion to revenues to achieve profitability.  We have an aggressive second half sales and marketing plan. Our hope is that our restructuring efforts will combine with increases in overall sales and sales of our new products to enable us to achieve our desired financial results.”  

For the six-months ended June 30, 2006, total revenue was $5.8 million, down 4% or $272,000 from approximately $6.1 million in the same period of 2005.  Despite increases of 1% and 2% in both the commercial lighting and pool and spa lighting divisions respectively, the decrease of 22% in international sales led to an overall decline in revenue during the first six months of 2006 as compared to the same period in 2005.  Driven by strong second quarter sales of the new SaVi™ brand of LED products, our commercial lighting sales, which were down 18% at the end of the first quarter, are now up 1% for the six months ended June 30, 2006 as compared to the same period in 2005.  Pool and spa sales are up 2% for the first six months of 2006 due to a 9% increase in fiber optic and water feature sales offsetting lower sales of LED products due to the timing of OEM spa lighting sales.  Although sales in Asia were up 25% in the second quarter, sales in this region are still down for the six months ended June 30, 2006 due to lower revenues from sales of our Flex-LED product. 

Gross margin for the six months ended June 30, 2006 was approximately $2,592,000 or 45% as compared to approximately $2,720,000 or 45% for the six months ended June 30, 2005. Excluding the one-time $240,000 legal settlement which lowered costs of good sold in 2005, 2006 year-to-date gross margins improved $112,000 or 45% compared to 41% during the first six months of 2005.

Operating expenses in the first six months of 2006 were approximately $2.9 million compared to $2.6 million in the same period of 2005. The increase in operating expenses was primarily due to increased wages including stock option related expenses pursuant to the adoption of FAS123(R) Share Based Payment, increased marketing expenses related to the launch of new products and increased legal and consulting fees.  These increases were offset slightly by lower commissions, bad-debt and insurance expenses compared to the same period in 2005.

“The recently concluded cost reduction initiatives are essential to Super Vision’s success,” stated Dan Regalado, the Company’s Executive Vice President and CFO. “This process allowed the company to revisit numerous opportunities for operational efficiencies across the entire organization. As a result of the restructuring, we have consolidated similar functions in every department and further re-aligned our manufacturing operations to promote additional cross functional training among our production staff.  As a result, we are well positioned to handle current revenue levels while still capable of handling growth.” concluded Dan Regalado.

For the six months ended June 30, 2006, Super Vision reported a net loss of approximately $340,000 or $0.13 per common and diluted share compared to net income of approximately $7,000 or $0.00 per common and diluted share in the same period of 2005.  Excluding the benefit of a one-time legal settlement of $240,000, the net loss for the first six-months of 2005 would have been approximately $233,000.

EBITDA, which is Earnings Before Interest, Taxes, Depreciation and Amortization, is a non-GAAP measure which management uses as part of its performance appraisal in reviewing the Company’s ongoing operational business trends related to its financial condition and results of operations. For the second quarter ended June 30, 2006, EBITDA was approximately $125,000 or 4% of revenue as compared to EBITDA of approximately $385,000 or 12% in the same period of 2005.  Excluding the benefit of a one-time legal settlement of $240,000, EBITDA for the second quarter of 2005 would have been approximately $145,000 or 5% of revenue.  For the six months ended June 30, 2006, EBITDA was approximately $152,000 or 3% of revenue as compared to $471,000 or 8% in 2005.  Excluding the benefit of the one-time legal settlement, EBITDA for the first six months in 2005 would have been approximately $231,000 or 4% of revenue.

About Super Vision International, Inc.

Super Vision International’s vision is to incorporate Light, Color and Imagination with advanced technology to become one of the world’s leading suppliers of lighting and lighting control products that add visual excitement, accent, impact and identity to commercial and residential lighting projects around the world.  For more information, please visit the Super Vision web site at www.svision.com.

Certain of the above statements contained in this press release are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Reference is made to Super Vision's filings under the Securities Exchange Act for factors that could cause actual results to differ materially. Super Vision undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements.

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Super Vision International, Inc.
Condensed Statements of Operations (Unaudited)

Reconciliation of Non-GAAP Financial Measure

The following table reconciles GAAP to non-GAAP financial measures: