Exhibit 99.1
[FIBERCORE, INC. LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
FiberCore Reports Second Quarter 2002 Results
CHARLTON, Mass - August 15, 2002 -- 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.
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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
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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: 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.
Contacts:
At the Company: At FRB|Weber Shandwick:
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Dr. Mohd A. Aslami, President/CEO Alison Ziegler - General Info.
Robert Lobban, CFO 212/445-8432
508/248-3900
- --Financial Tables Follow--
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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
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