CHARLTON, Mass., Aug. 30 /PRNewswire/ -- FiberCore, Inc. (Nasdaq: FBCE), a
leading manufacturer and global supplier of optical fiber and preform for the
telecommunication and data communications markets, today provided an update on
the progress of contract discussions with one of its larger South American
customers, which is currently in breach of its contract. The Company has also
revised financial guidance and expects 2001 revenue growth of between 70% and
85% over 2000 levels, compared to the 100% growth projected in the Company's
May 7, 2001 press release.
Contract Discussions
Negotiations have been progressing on the repayment plan between FiberCore
and one of its large South American customers regarding its $5.8 million
breach of contract. The breach consists of $2.8 million in past due accounts
receivable and $3.0 million in advance payments toward the future purchase of
products to help support capacity expansion in Brazil. While FiberCore
continues to expect an amicable resolution without substantial diminution of
its contractual rights, it is prepared to commence legal proceedings if
necessary. The negotiations were delayed for the last two weeks at the
customer's request and are scheduled to resume next week.
Revised Financial Guidance
Accordingly, FiberCore is revising its guidance for 2001. Management
currently expects revenue to increase approximately 70 to 85% over 2000
revenue of $36.9 million. The Company believes it will meet its target of a
year-end gross margin of at least 35%. The low end of the revenue range
assumes a total loss of the South American customer that is in breach of
contract with no product sales to new customers; however, the Company believes
this possibility is highly remote at this time. The high end of the revenue
range assumes product sales to new customers at current prices but does not
include the receipt of any proceeds from the South American customer on breach
of contract. FiberCore expects the impact of the South American situation to
be felt primarily in the third quarter, with fourth quarter results benefiting
from the full effect of the shifts in product mix and customers. In 2002,
revenue growth is still expected to at least double that of 2001, with
improving gross margins.
"We are taking a slightly more conservative stance on capacity expansion
given today's environment and have also factored in more conservative
assumptions on pricing and margins," commented Dr. Mohd Aslami, President and
CEO. "Nevertheless, we consider our strong growth in 2001 to still be a
significant achievement compared to the flat or negative growth recently
projected by industry leaders. We continue to see significant opportunities
for FiberCore over the longer term. We are in discussions with entities in
several countries to locate new facilities. In addition, continuing global
diversification and our expanding customer base, coupled with the flexibility
of our technology have enabled us to respond to changes in regional demand.
This flexibility, as well as our strong customer relationships make us
confident in the success of our long term growth plan."
Approximately two-thirds of production originates from FiberCore's
Brazilian facility and approximately one-third from its Jena, Germany plant;
however, shipments are more globally dispersed. While a significant portion
of the company's Brazilian capacity is sold within Brazil, more than 50% of
its end product is ultimately shipped for use outside of South America, which
is consistent with FiberCore's long-term strategy of targeting the global
market. Correspondingly, FiberCore is increasing its export to regions
outside of South America where the demand for fiber remains strong. In
addition, the demand for multi-mode fiber continues to increase globally, and
is being addressed by on-going capacity expansion.
Clarification to August 23, 2001 Press Release
On August 23, FiberCore announced a $28 million contract revision with one
of the Company's South American customers to add a 30% "take or pay" provision
to an existing contract, which had no such provision. This contract was not
with the customer currently in discussions regarding its breach of contract.
By adding such a provision to a contract, the Company obtains a significantly
stronger purchase commitment. These commitments from FiberCore's customers
significantly strengthen the backlog while supporting the Company's capacity
expansion plans. Approximately 65% of FiberCore's $320 million backlog at
June 30, 2001 was in "take or pay" contracts.
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, 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.
SOURCE FiberCore, Inc.
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Related links:
http://www.FiberCoreUSA.com
CONTACT:
Dr. Mohd A. Aslami, President-CEO, Robert
Lobban, CFO, both of FiberCore, +1-508-248-3900; or General,
Alison Ziegler, Analysts, Peter Seltzberg, both of The Financial
Relations Board BSMG Worldwide, +1-212-445-8400
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