CHARLTON, Mass., Nov. 14 /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 third quarter ended September 30,
2002.
Sales in the third quarter of 2002 decreased by 31% to $6.1 million from
$8.8 million in the third quarter of 2001 and decreased by 4% from second
quarter levels. Sales were negatively impacted by a 66% decline in sales to
South America, which is primarily a single-mode market, compared to the same
quarter in 2001. Overall, single-mode sales were down in all regions except
for Asia. Multimode sales, however, increased by approximately 32% 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 $671,000, or 11.0% of sales, compared to a
gross profit of $3.1 million, or 35.0% of sales, in the third quarter of 2001.
FiberCore's gross margin was severely impacted by continuing price declines in
single-mode fiber, lower production levels, and a $333,000 write-down of
inventory to reflect the continued deterioration of prices in the third
quarter of 2002. The gross margin of 11% during the quarter compared
favorably to margins of (2.3)% and 10.3% during the first and second quarters
of 2002 in light of the continued decline in fiber prices.
SG&A expenses decreased by 9% to $2,059,000 from $2,253,000 during the
third quarter of 2001. R&D spending decreased by 25% to $375,000 in the third
quarter of 2002 from $502,000 in the third quarter of 2001. The Company is
continuing the development of its 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 future production costs. Overall, the company reduced operating
expenses by $321,000, or 11.7%, compared to the third quarter of 2001, and by
$963,000, or 28%, compared to the second quarter of 2002. These reductions
are the results of cost reduction initiatives, including a restructuring at
our Xtal operation, begun earlier in the year.
The loss from operations in the third quarter of 2002 was reduced to
approximately $1.8 million from a loss from operations in the second quarter
of 2002 of approximately $2.8 million. In the year ago quarter, the Company
reported a profit from operations of approximately $334,000.
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 of 2002. Additionally, the Company experienced a foreign
exchange loss of $3,065,000 due to the continued 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 third quarter of 2002. The net loss includes $209,000 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
$5.5 million of convertible, subordinated debentures in January and June 2002.
In the third quarter of 2001, the net loss was approximately $2.2 million, or
$0.04 per diluted share.
FiberCore remains on track with regards to its cost savings initiatives,
as indicated in the Company's press release describing second quarter results.
Savings of $963,000 in operating expenses and an improvement in gross margins,
despite lower pricing levels, were on plan. Actions taken to reduce costs at
all locations during the first half of the year, as well as actions being
implemented in the second half of 2002, continue to be expected to save in
excess of $4.0 million annually from first half 2002 actual expense levels,
beginning with the third quarter of 2002.
Dr. Aslami, President and CEO commented, "We continue to focus on
improving our cash flow, and in fact we generated over $2.5 million in cash
from operations during the last quarter. We will continue to take steps to
reduce our overall cost structure and reduce our production costs as we focus
on competing in this difficult market."
"FiberCore continues to be impacted by the weak industry environment,
particularly in our single-mode fiber business in South America. We continue
to believe our business and volume demand is either at or near bottom, but
pricing also remains weak as a result of continued excess industry capacity.
While uncertainty remains, most industry participants now expect to see a
rebound beginning sometime in 2003. The multimode market is expected to
continue to exhibit steady growth, albeit at somewhat lower levels than
previously projected. In fact, we have seen a 35% increase in the volume of
multimode fiber shipped in the first nine months of the year compared to last
year and multimode sales now account for over 60% of our revenues."
"FiberCore continues 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. "Our 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 expect to see improvements in our gross
margins."
"While the Company's cash and liquidity position has been weakened as a
result of the losses that we have absorbed over the last 15 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 them. We have recently completed the
financing package for the second phase of our expansion program in Germany and
the grants and long-term debt that are part of that package will significantly
reduce our short-term debt there and provide some operating funds as well. We
have also completed negotiations with our banking partners in Brazil to
restructure our debt there and move approximately $8 million of it to long-
term debt. Furthermore, in June of 2002 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 the second half of the year and we are currently
developing a plan to be able to achieve the same objective for 2003. While we
have made significant progress toward implementing these plans and are
committed to making it happen, we cannot give assurances that all of these
negotiations and actions will be successful and that we will produce operating
cash flow in subsequent quarters," concluded Dr. Aslami.
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 Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $6,107 $8,823 $20,366 $43,116
Cost of sales:
Cost of sales 5,103 5,734 17,557 25,980
Restructuring costs --- --- 197 ---
Write-down of inventory 333 --- 1,466 ---
Total cost of sales: 5,436 5,734 19,220 25,980
Gross profit 671 3,089 1,146 17,136
Operating expenses:
Selling, general and
administrative expenses 2,059 2,253 7,559 6,212
Research and development 375 502 1,369 1,524
Restructuring costs --- --- 103 ---
Income (loss) from
operations (1,763) 334 (7,885) 9,400
Interest expense, net (966) (943) (3,332) (1,609)
Other income (expense)
- net (2,908) (1,607) (4,704) (1,684)
Income (loss) before
income taxes and
minority interest (5,637) (2,216) (15,921) 6,107
Benefit from (provision
for) income taxes 199 (308) 389 (2,103)
Earnings (loss) before
minority interest (5,438) (2,524) (15,532) 4,004
Minority interest in
income of subsidiaries 320 283 1,193 (216)
Net earnings (loss) $(5,118) $(2,241) $(14,339) $3,788
Basic earnings (loss)
per share
of common stock $(0.08) $0.04 $(0.23) $0.06
Diluted earnings
(loss) per share
of common stock $(0.08) $0.04 $(0.23) $0.06
Weighted average
shares outstanding:
Basic 67,435,959 60,205,880 63,535,551 59,636,649
Diluted 67,435,959 60,205,880 63,535,551 65,633,372
SELECTED BALANCE SHEET DATA: September 30, December 31,
2002 2001
(unaudited) (audited)
Working capital (Deficiency) $(12,262) $(1,319)
Total assets 89,848 92,983
Long-term debt 32,265 22,475
Total liabilities 65,246 49,491
Minority interest 3,273 5,117
Accumulated deficit (33,752) (19,413)
Stockholders' equity 21,329 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, of FiberCore, Inc., +1-508-248-3900, or General
Info., Alison Ziegler of FRB Weber Shandwick, +1-212-445-8432
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