FiberCore Reports First Quarter 2002 Results to Hold Conference Call on Monday, May 20
CHARLTON, Mass., May 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 first quarter ended March 31, 2002.
Sales in the first quarter of 2002 decreased by 51% to $7.9 million from $16.2 million in the first quarter of 2001 and decreased by 15% from fourth quarter levels. Sales were negatively impacted by a 95% decline in sales to South America, which is primarily a single-mode market. Overall, single-mode sales were down in all regions, while multimode sales increased by approximately 20%. Production at Xtal has been reduced in line with demand. To help offset some of the reduction in sales, the Company continues to focus on increasing both its multimode business and exports to markets outside Brazil.
Gross profit in the quarter was $(185,000), compared to a gross profit of $6.6 million, or 40.6% of sales, in the first quarter of 2001. FiberCore's gross margin was severely impacted by continuing price declines in single-mode fiber, lower production levels, and a $787,000 writedown of inventory to reflect the deterioration of prices in the first quarter of 2002. Without the inventory writedown, the gross profit would have been $602,000, or 7.6% of sales, which compares favorably to the gross profit of $(632,000), or (6.8%) of sales in the fourth quarter of 2001.
Cost cutting at the Company's facilities in the first quarter, as well as planned cost cutting in the second quarter of 2002 are expected to save in excess of $3.0 million annually, beginning in the third quarter of 2002. In addition, we expect gross margins to increase with the implementation of productivity improvements scheduled for the second half of the year.
R&D spending increased by 10% to $484,000 in the first quarter from $440,000 in the first quarter of 2001. The Company plans to continue the development of its recently patented Plasma Outside Vapor Deposition (POVD) process as well as other manufacturing initiatives, which are all intended to reduce production costs. Higher interest expenses in the quarter were associated with the Company's expansion program in Germany.
The loss from operations in the first quarter of 2002 was approximately $3.3 million compared to a profit from operations of approximately $4.5 million in the first quarter of 2001, and a loss from operations in the fourth quarter of 2001 of approximately $4.0 million.
FiberCore reported a net loss of $4.1 million, or $0.07 per diluted share, in the first quarter of 2002. The net loss includes $502,000 of non-cash interest expense in connection with a deemed beneficial conversion feature 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 in January 2002. The charge to interest expense was offset by a $287,000 increase in additional paid-in-capital and, accordingly, that amount had no effect on the net equity, operations, or cash flow of the Company. In the first quarter of 2001, the net profit was approximately $3.0 million, or $0.05 per diluted share.
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. We do believe, however, that our business is either at or near bottom. While recent industry estimates from market analysts call for a 19% reduction in the single-mode market in 2002, most are looking for a rebound in the first half of 2003. The multimode market is expected to continue to exhibit steady growth, albeit at lower levels than previously projected, and we continue to expect a growing percentage of our business to come from multimode fiber."
"At March 31, 2002, our backlog was approximately $283 million, down from $292 million at the end of 2001. While approximately $48 million of the backlog is scheduled for shipment in 2002, we are currently using $40 million in our projections. Our backlog remains subject to change depending on business conditions, including contractual re-pricing, rescheduling of deliveries, and the booking of new orders for 2002 delivery. As a result of our continued excellent relationships with our customers, we should benefit, accordingly, when business begins to recover," added Dr. Aslami.
"We continue to focus on improving our cash flow and have further downsized our plant in Brazil and reduced staffing by 56% at Xtal to better align production to currently depressed market demand. We anticipate taking a $0.5 million restructuring charge in the second quarter to account for costs associated with this staffing reduction. We estimate that the anticipated quarterly savings from the restructuring will be approximately $275,000. While it remains extremely difficult to provide guidance in this market environment, we do expect to see sequential revenue improvement, as well as further improvement in gross profit and cash flow as a result of these actions. In that regard, both operating income and cash flow from operations have improved from fourth quarter levels and are expected to turn positive beginning in the third quarter, although we still expect a net loss over the next several quarters," concluded Dr. Aslami.
Due to management's travel schedule, FiberCore will be holding its conference call to discuss its financial results and continuing business plans on Monday, May 20 at 8:30 a.m. ET. Interested individuals are invited to listen to the call live over the Internet at fibercoreusa.com or viavid.com . The teleconference may also be accessed by dialing (800) 240-6709. International callers can dial (303) 262-2142. A replay of the teleconference will be available on fibercoreusa.com , viavid.com , or by dialing (800) 405-2236 or (303) 590-3000, using passcode 472710.
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: 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. |
