CHARLTON, Mass., Aug. 15 /PRNewswire-FirstCall/ --
FiberCore, Inc. (Nasdaq: FBCE), a leading manufacturer and global supplier of
optical fiber and preform for the telecommunication and data communications
markets, today announced results for the second quarter ended June 30, 2002.
Sales in the second quarter of 2002 decreased by 65% to $6.4 million from
$18.1 million in the second quarter of 2001 and decreased by 19% from first
quarter levels. Sales were negatively impacted by a 95% year-over-year
decline in sales to South America, which is primarily a single-mode market.
Overall, single-mode sales were down in all regions except for China.
Multimode sales, however, increased by approximately 22% compared to the same
quarter last year. Production at Xtal, which continues to manufacture
primarily single-mode fiber, has been reduced in line with demand. The
Company continues to focus on increasing both its multimode business and
exports to markets outside Brazil to try to minimize the large negative
effects of the Brazilian market.
Gross profit in the quarter was $659,000, or 10.3% of sales, compared to a
gross profit of $7.2 million, or 40.0% of sales, in the second quarter of
2001. FiberCore's gross margin was severely impacted by continuing price
declines in single-mode fiber, lower production levels, and a $346,000 write-
down of inventory to reflect the deterioration of prices in the second quarter
of 2002. As anticipated, the Company also took a restructuring charge during
the second quarter of $197,000 against cost of sales associated with staff
reductions at its Brazilian facility. Without the inventory write-down and
restructuring charges, the gross profit in the second quarter would have been
$1,202,000, or 18.9% of sales, which compares favorably to the gross profit of
$602,000, or 7.6% of sales, on a similar basis in the first quarter of 2002.
R&D spending decreased by 12% to $510,000 in the second quarter from
$581,000 in the second quarter of 2001. The Company is continuing the
development of its recently patented Plasma Outside Vapor Deposition (POVD)
process. The Company's first manufacturing plant utilizing the POVD
technology is expected to come on line in Germany in the fourth quarter of
this year. This, as well as other manufacturing initiatives, is expected to
reduce production costs.
The loss from operations in the second quarter of 2002 was approximately
$2.8 million compared to a profit from operations of approximately
$4.6 million in the second quarter of 2001, and a loss from operations in the
first quarter of 2002 of approximately $3.3 million.
Excluding the inventory write-down and restructuring charges, the second
quarter operating loss was approximately $2.2 million, or about 12% less than
the first quarter loss on a comparable basis.
Higher interest expenses in the quarter were associated with the Company's
expansion program in Germany and the Convertible Debentures issued during the
first quarter. Additionally, the Company experienced a foreign exchange loss
of $1,737,000 due to the rapid devaluation of the Brazilian Real against the
US Dollar, the Japanese Yen and the European Euro during the quarter. The
Company currently does not have credit lines sufficient to hedge this
exposure.
FiberCore reported a net loss of $5.1 million, or $0.08 per diluted share,
in the second quarter of 2002. The net loss includes $525,000 of non-cash
interest expense in connection with a deemed beneficial conversion feature,
the amortization of deferred financing costs and the fair value of warrants
issued to a group of institutional investors related to the issuance of $5.0
million of convertible, subordinated debentures issued in January 2002. In
the second quarter of 2001, the net profit was approximately $3.0 million, or
$0.05 per diluted share.
Actions taken to reduce costs at all locations during the first half of
the year, as well as planned actions to be implemented in the second half of
2002, are expected to save in excess of $4.0 million annually from the first
half 2002 actual expense level, beginning in the third quarter of 2002. In
addition, gross margins are expected to increase with the implementation of
productivity improvements scheduled for the second half of the year.
Dr. Aslami, President and CEO commented, "We continue to be impacted by
the weak industry environment, particularly in our single-mode fiber business
in South America. While we continue to believe our business and volume demand
is either at or near bottom, pricing remains weak as a result of the lower
demand compared to industry capacity. While uncertainty remains, most
industry participants are now expecting to see a rebound beginning sometime in
2003. The multimode market is expected to continue to exhibit steady growth,
albeit at lower levels than previously projected. In fact, we have seen a 30%
increase in the volume of multimode fiber shipped in the first six months of
the year compared to last year and multimode sales now account for over 50% of
our revenues."
"FiberCore is continuing to invest in the next generation POVD technology,
which will provide technical benefits to our products and will allow us to
significantly reduce production costs," said Dr. Aslami. "FiberCore's first
plant utilizing the first generation of the newly patented POVD technology is
expected to start production in the fourth quarter of this year. As we bring
this plant on line and add to its capacity, we will see improvements in our
gross margins."
"We continue to focus on improving our cash flow and have downsized our
plant in Brazil and reduced its staffing by 62% since the first of the year to
better align production to the currently depressed market. While it remains
extremely difficult to provide guidance in this market environment, we expect
to see revenue levels in the second half of the year at or above first half
levels. We also expect improvement in gross profit and cash flow as a result
of the actions we have taken. In that regard, operating income has continued
to improve from fourth and first quarter levels and we expect to be at or
above breakeven in operating income for the second half of the year, although
we still expect a net loss over the next several quarters," said Dr. Aslami.
"While the Company's cash and liquidity position has been weakened as a
result of the losses that we have absorbed over the last 12 months, and our
short-term debt has increased as well, we are actively working on these issues
and have a plan in place to address both of them. We have a total of about
$24 million in notes payable that are due within the next 12 months. If we
are successful with our negotiations and close on existing debt financing
commitments and associated grants, approximately $22 million of this amount
will be paid and/or converted to long term debt as more fully described in the
10Q. The remaining $2 million will be paid from operating cash flow or
refinanced over the next 12 months. In addition, from the above financing
commitments an additional $3 to $4 million in excess of our short-term debt
obligations will be available for working capital. Furthermore, we have put
in place a revised plan for the balance of 2002 that is expected to result in
breakeven to positive cash flow from operations for that period. While we
have made significant progress toward implementing this plan, we cannot give
assurances that all of these negotiations and actions will be successful,"
concluded Dr. Aslami.
In lieu of a conference call, management invites shareholders to the
Company's Annual Meeting, scheduled for Friday, August 16, 2002 at 10:00 A.M.
at the Ramada Inn, 624 Southbridge Street, Auburn, MA.
FiberCore, Inc. develops, manufactures, and markets single-mode and
multimode optical fiber preforms and optical fiber for the telecommunications
and data communications markets. In addition to its standard multimode and
single-mode fiber, FiberCore also offers various grades of fiber for use in
laser-based systems up to 10 gigabits/sec, to help guarantee high bandwidths
and to suit the needs of Feeder Loop (also known as Metropolitan Area
Network), Fiber-to-the Curb, Fiber-to-the Home and Fiber-to-the Desk
applications. Manufacturing facilities are presently located in Jena, Germany
and Campinas, Brazil.
For more information about the company, its products, or shareholder
information please visit our Website at: http://www.FiberCoreUSA.com or contact us
at: Phone - 508-248-3900 or by FAX - 508-248-5588 or E-Mail:
sales@FiberCoreUSA.com; investor_relations@FiberCoreUSA.com
Except for the historical matters discussed above, the statements in this
press release are forward looking and are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. They are
based on the Company's current expectations and are subject to a number of
risks and uncertainties. Actual results may differ materially from those
projected as a result of certain general economic and business conditions;
loss of market share through competition; introduction of competing products
by other companies; changes in industry capacity; pressure on prices from
competition or from purchasers of the Company's products; availability of
qualified personnel; the delivery of an ability to commission new equipment as
scheduled; ability to obtain required financing; dependence on a limited
number of raw material suppliers; the loss or reduced creditworthiness of any
significant customers; and other factors detailed from time to time in the
Company's filings with the Securities and Exchange Commission.
FIBERCORE, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands except share data)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $6,374 $18,066 $14,259 $34,292
Cost of sales:
Cost of sales 5,172 10,836 12,455 20,471
Restructuring costs 197 -- 197 --
Write-down of inventory 346 -- 1,133 --
Total cost of sales: 5,715 10,836 13,785 20,471
Gross profit 659 7,230 474 13,821
Operating expenses:
Selling, general and
administrative expenses 2,887 2,037 5,500 3,734
Research and development 510 581 993 1,021
Restructuring costs 103 -- 103 --
Income (loss) from
operations (2,841) 4,612 (6,122) 9,066
Interest expense, net (1,280) (481) (2,366) (665)
Other income (expense) -
net (1,710) 71 (1,795) (80)
Income (loss) before
income taxes and
minority interest (5,831) 4,202 (10,283) 8,321
Benefit from (provision
for) income taxes 86 (937) (190) (1,794)
Earnings (loss) before
minority interest (5,745) 3,265 (10,093) 6,527
Minority interest in
income of subsidiaries 602 (216) 872 (499)
Net earnings (loss) $(5,143) $3,049 $(9,221) $6,028
Basic earnings (loss) per
share of common stock $(0.08) $0.05 $(0.15) $0.10
Diluted earnings (loss) per
share of common stock $(0.08) $0.05 $(0.15) $0.09
Weighted average shares
outstanding:
Basic 61,589,533 59,565,539 61,553,024 59,263,000
Diluted 61,589,533 65,533,406 61,553,024 65,230,867
SELECTED BALANCE SHEET DATA: June 30, December 31,
2002 2001
(unaudited) (audited)
Working capital (Deficiency) $(14,335) $(1,319)
Total assets 96,261 92,983
Long-term debt 23,652 22,475
Total liabilities 64,014 49,491
Minority interest 4,410 5,117
Accumulated deficit (28,634) (19,413)
Stockholders' equity 27,837 38,375
SOURCE FiberCore, Inc.
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Related links:
http://www.FiberCoreUSA.com
CONTACT:
Dr. Mohd A. Aslami, President-CEO, or Robert
Lobban, CFO, both of FiberCore, Inc., +1-508-248-3900, or
General, Alison Ziegler of FRB Weber Shandwick, +1-212-445-8432
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