StockerYale Announces Third Quarter 2002 Financial Results; Reduced Operating Loss Highlights Third Quarter Sequential Results.Business Editors SALEM, N.H.--(BUSINESS WIRE)--Oct. 22, 2002 StockerYale, Inc., (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : STKR), an independent supplier of photonics-based products, today announced financial results for the third quarter of fiscal 2002. SEQUENTIAL QUARTERLY COMPARISONS Net revenue of $3.5 million for the third quarter of 2002 was level with the second quarter of 2002. A significant gain in LED shipments from our Ireland subsidiary and continued improvement in our fiber optic illumination product line offset a decline in phase mask revenue. Specialty optical fiber (SOF SOF abbr. sound on film ) sales doubled, albeit from a modest base, as newly developed SOF products began to achieve traction in the OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and evaluation cycle. The operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the third quarter declined to $2.6 million representing a $1.1 million or 30% improvement over the second quarter of 2002. An improved gross margin, reduced joint venture research and development expenses, and the flow through benefit of expense savings related to the cost reduction program implemented in the second quarter all contributed to the improved performance. Sales, general & administrative, and R & D costs declined 26% quarter-to-quarter. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , excluding capital expenditures and external financing In the theory of capital structure, External financing is the phrase used to describe funds that firms obtain from outside of the firm. It is contrasted to internal financing which consists mainly of profits retained by the firm for investment. , continued to improve as the deficit declined $1.7 million from $4.0 million in the second quarter to a reported $2.3 million in the third quarter. Reflecting the completion of our two-year capital program, capital expenditures declined $1.4 million from the second quarter of 2002. FISCAL YEAR COMPARISONS Net revenues in the third quarter of 2002 declined 5% or $0.2 million compared to the third quarter of 2001 as a sharp decline in phase mask sales offset a 70% growth in laser and LED revenue. The third quarter 2002 operating loss declined $1.3 million to $2.6 million compared to the third quarter of 2001 as expense savings of $1.5 million more than offset a modest decline in gross margins. Cash flow, including capital expenditures, improved $2.7 million due to both a reduced operating loss and significantly lower capital expenditures. Frank O'Brien, StockerYale's executive vice president and chief financial officer stated, "Stable revenues, increased margins and significantly reduced operating costs operating costs npl → gastos mpl operacionales provided the basis for the current and on-going improvement in financial performance." O'Brien continued, "As we enter the fourth quarter of 2002, we expect both revenues and margins to increase as shipments of recently developed specialty optical fiber products ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale and laser and LED product lines continue up the growth line. Specifically, during the month of October 2002, we reduced our annual operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. another $4.0 million, bringing the total annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. savings to $9.0 million. These additional cost reductions will begin to favorably impact operating results in the latter part of the fourth quarter 2002 and throughout fiscal 2003. Our costs are now aligned with our revenue projections without compromising our research and development objectives, as evidenced by our recent introduction of specialty optical fibers and new laser and LED products." Commenting on the performance in the third quarter, Mark W. Blodgett, StockerYale's chairman and chief executive officer stated, "We are pleased with our progress on the financial front having dramatically reduced operating expenses while increasing revenues during the last six months. Clearly, we are benefiting from our diverse, photonics-based product strategy as demonstrated by this month's announced long-term military contract with BAE Systems BAE Systems British manufacturer of aircraft, missiles, avionics, naval vessels, and other aerospace and defense products. BAE Systems was formed (1999) from the merger of British Aerospace (BAe) with Marconi Electronic Systems. for custom designed lasers, which will commence shipping in the fourth quarter 2002. This contract win was based on four years of extensive research & development. In addition, the company was awarded its single largest LED contract in August 2002 for an application in the law enforcement industry. We expect to be making an official announcement concerning this award in the very near future. Looking forward, we expect the sale of lasers, LEDs and specialty optical fibers to make defense/security our largest market segment in 2003. Further, based on recent supply contract announcements, as well as products currently in trial, we expect to see meaningful sequential revenue growth for these product lines over the next several quarters." Blodgett continued, "Despite the challenging economic environment I am particularly encouraged by the momentum we are building, not only from new product roll-outs, customer acceptances and the increased revenue stream, but also as a result of our cost realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. program, which reduced headcount 30% and operating expenses 45% compared to fiscal 2001. While our cost savings positively impacted third quarter results, we expect a more significant impact over the upcoming quarters. During the last six months, we eliminated our commitment to R&D joint ventures, which could not produce meaningful revenues in the near term and refocused our resources on developing fibers, lasers and LEDs. Moving forward, we are strategically well positioned with a diversified portfolio of optics-based products servicing a wide variety of markets, including biomedical bi·o·med·i·cal adj. 1. Of or relating to biomedicine. 2. Of, relating to, or involving biological, medical, and physical sciences. , defense, electronics inspection, machine vision and telecom. Given our many new products, with several more to be announced To be announced (TBA) A contract for the purchase or sale of an MBS to be delivered at an agreed-upon future date but does not include a specified pool number and number of pools or precise amount to be delivered. shortly, we see significant new revenue opportunities, which will enhance our future financial performance. We are encouraged by our results this quarter; our people are working harder then ever and I am confident that we will continue to build momentum in our core businesses." Following is a review of the key accomplishments and progress made by StockerYale in the third quarter: - L-Band Erbium-Doped Fiber Introduced The Company announced the availability of its EDF-1480-T6 Erbium-Doped Fiber, which is specifically designed to optimize the performance of L-band erbium-doped fiber amplifiers (EDFAs). The high erbium erbium (ûr`bēəm) [from Ytterby, a town in Sweden], metallic chemical element; symbol Er; at. no. 68; at. wt. 167.26; m.p. 1,529°C;; b.p. 2,863°C;; sp. gr. 9.05 at 25°C;; valence +3. peak absorption levels of this fiber also assist in reducing and controlling design costs in the development of EDFAs by reducing the amount of fiber required within the optical amplifier A device that boosts light signals in an optical fiber network. Unlike regenerators, which have to convert light to electricity in order to amplify it and then convert it back again to light, the optical amplifier amplifies the light signal itself. . - StockerYale Awarded ISO- iso- or is- pref. 1. Equal; uniform: isobar. 2. Isomeric: isopropyl. 3. 9001:2000 Registration The Company was awarded ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. registration for its Salem, New Hampshire Salem is a town in Rockingham County, New Hampshire, United States. The population was 28,112 at the 2000 census. Salem is a marketing and distributing center, with several colleges, recreation attractions and a large shopping mall, the Mall at Rockingham Park. facility as it relates to the ISO 9001:2000 standard for Quality Management Systems Requirements. The registration was granted by TUV (Technischer Überwachungs-Verein) Literally "Technical Watch-Over Association." A German certifying body involved with product safety for the European community. following an extensive independent review of the Company's quality management system. - New Model 21AC Fiber Optic Illuminator illuminator (light box), n a source of light with uniform intensity for viewing radiographs. illuminator the source of light for viewing an object. Announced StockerYale's Model 21AC state-of-the-art fiber optic illuminator was designed specifically as a cost effective, versatile, high-quality industrial light source for use in both microscopy and machine vision applications. This 150W halogen halogen (hăl`əjĕn) [Gr.,=salt-bearing], any of the chemically active elements found in Group 17 of the periodic table; the name applies especially to fluorine (symbol F), chlorine (Cl), bromine (Br), and iodine (I). illuminator provides shadow-free, cool illumination when configured with an array of standard fiber optic components and accessories. - IL Series of Industrial Grade Fluorescent Linears Introduced The Company's IL Series of industrial grade fluorescent linear lighting products are designed for use in harsh, industrial environments within the machine vision, packaging, food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. processing, and other industrial inspection applications where an industrial grade fluorescent illumination solution is critical. - StockerYale Awarded Contract From BAE Systems StockerYale will supply thermoelectrically cooled lasers to BAE Systems for their Advanced Threat Infrared Countermeasures This article is about missile counter measures. For IRCMonitor, see Wikipedia:IRCMonitor. Infrared countermeasures (IRCM) are devices designed to protect aircraft from infrared homing ("heat seeking") missiles by confusing the missiles' infrared (ATIRCM ATIRCM Advanced Threat Infrared Countermeasures ATIRCM Advanced Tactical Infrared Countermeasures ) system with the potential for long-term deliveries through 2020. CONFERENCE CALL INFORMATION The company will host a conference call at 11:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Tuesday, October 22, 2002. Callers from North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. can access this teleconference by dialing 888-482-0024. Callers from areas outside of North America can participate by dialing 617-801-9702. Participants from the United Kingdom should dial 00-800-280-02002. The teleconference will also be simultaneously web cast and can be accessed through the Company's website, http://www.stockeryale.com/investor/earnings.htm. The web cast will be archived for 30 days following the call and can be accessed by visiting the above mentioned web address. About StockerYale StockerYale, Inc., headquartered in Salem, NH, is an independent designer and manufacturer of phase masks, specialty optical fiber, and advanced optical sub-components as well as structured light lasers, specialized fiber optic, fluorescent, and LED technologies for use in a wide range of markets and industries including the telecommunications, military, utilities, machine vision, industrial inspection, and medical markets. StockerYale serves a widely varied, international customer base from its corporate offices in Salem and reinvests a significant percentage of its revenues in R&D to meet the future requirements of its customers. StockerYale has offices and subsidiaries in the U.S., Canada, Europe, and the Pacific Rim Pacific Rim, term used to describe the nations bordering the Pacific Ocean and the island countries situated in it. In the post–World War II era, the Pacific Rim has become an increasingly important and interconnected economic region. . For more information about StockerYale and its innovative products, contact StockerYale, Inc., 32 Hampshire Rd., Salem, NH, 03079. Call 800-843-8011; Fax 603-893-5604; e-mail info@stockeryale.com, or visit the Company's website at www.stockeryale.com. Notice to Investors: This press release contains forward-looking statements that do not give full weight to all the potential risks, but relate to StockerYale's plans, objectives, and expectations, which are dependent upon a number of factors outside of StockerYale's control including, but not limited to: uncertainty that StockerYale's new photonics-based products launched in 2002 will gain market acceptance; the risk that delays and unanticipated expenses in developing new products could delay the commercial release of those products and affect revenue estimates; the risk that one of our competitors could develop and bring to market a technology that is superior to those products that we are currently developing; and StockerYale's ability to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. its significant research and development efforts by successfully marketing those products that the Company develops. You should also refer to the discussion under "Certain Factors Affecting Operating Results" in StockerYale's form 10K for additional matters to be considered in this regard. Thus, actual results may differ materially. All Company, brand, and product names are trademarks or registered trademarks of their respective holders. StockerYale undertakes no duty to update any of these forward-looking statements. This press release also contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc , among other things, the Company's future operating results and sales trends. Reliance should not be placed on forward looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases, beyond the control of StockerYale, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward looking statements
Consolidated Statement of Operations
($ in thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Net Sales $ 3,456 $ 3,663 $ 9,887 $ 12,183
Cost of Sales 2,758 2,692 8,249 7,723
Gross Profit 698 971 1,638 4,460
Research & Development
Expenses 1,488 2,397 5,241 2,986
Selling, General &
Administrative Expenses 1,717 2,300 6,919 9,119
Amortization of Goodwill
and Intangible Assets 81 171 250 509
Operating Income/(Loss) (2,588) (3,897) (10,772) (8,154)
Interest & Other Income/
(Expense) 75 31 265 257
Interest Expense 95 224 265 513
Pretax Income/(Loss) (2,608) (4,090) (10,772) (8,410)
Tax Provision
(Benefit) 0 (30) 0 (96)
Net Income/(Loss) ($ 2,608) ($ 4,060) ($ 10,772) ($ 8,314)
Earnings/(Loss)
Per Share ($ 0.20) ($ 0.36) ($ 0.85) ($ 0.80)
Weighted Average
Shares Outstanding 12,771,524 11,336,592 12,656,020 10,446,697
Assets September 30, December 31,
2002 2001
Total Cash $ 4,091 $ 3,576
Accounts Receivable, Net 2,953 2,091
Inventory 4,878 5,224
Total Current Assets 12,841 11,969
Property, Plant & Equipment, Net 25,474 25,813
$43,601 $43,360
LIABILITIES AND STOCKHOLDERS EQUITY
Total Liabilities 14,345 13,335
Stockholders Investment 29,256 30,025
$43,601 $43,360
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