LightPath Technologies Records Loss in 2Q of FY2002

Jan. 31, 2002
LightPath Technologies, Inc., manufacturer and integrator of families of high performance fiber-optic collimator, isolator and precision molded aspheric optics, announced financial results for the second quarter and the first six months of the fiscal year ended June 30, 2002

LightPath Technologies, Inc., manufacturer and integrator of families of high performance fiber-optic collimator, isolator and precision molded aspheric optics, announced financial results for the second quarter and the first six months of the fiscal year ended June 30, 2002.

For the quarter ended December 31, 2001, the Company reported total revenues of $2.4 million compared to total revenues of $7.8 million for the second quarter of the previous fiscal year, a decrease of approximately 69%. Net loss for the quarter was $17.6 million, which includes approximately $11.2 million in non-cash charges for impairment of intangible assets and manufacturing equipment, the amortization of acquisition intangible assets and goodwill and stock-based compensation expense. The asset impairment charges relate to the recoverability of the values assigned to certain intangible assets in connection with acquisitions completed in fiscal 2000 and 2001. The values assigned to certain intangibles at acquisition may not be recoverable due to reduced revenue forecasts from those expected at acquisition due to the downturn in the telecom industry. In addition, the Company recorded charges of approximately $1.2 million for the write-off of inventory.

Net loss applicable to common shareholders for the second quarter of fiscal 2002 was $17.6 million or $(0.91) per applicable common share, compared to a net loss of $8.8 million and net loss applicable to common shareholders of $8.9 million or $(0.46) per applicable common share for the second quarter of fiscal 2001. Excluding the non-cash charges and the write-off of inventory discussed above, which contributed $(0.64) and $(0.33) to the net loss per share for the second quarter of fiscal 2002 and fiscal 2001 respectively, the net loss per applicable common share would have been $(0.27) in the second quarter of fiscal 2002, as compared to a net loss of $(0.13) per applicable common share for the second quarter of fiscal 2001.

For the six-month period ended December 31, 2001, the Company reported a decrease of approximately $5 million or 46% in total revenues to $5.8 million, compared with $10.8 million for the comparable period in the previous fiscal year. Net loss for the first six-months of fiscal 2002 was $28 million, which includes approximately $16.8 million in non-cash charges for the impairment of intangible assets and manufacturing equipment, the amortization of acquisition intangible assets and goodwill and stock-based compensation expense. In addition, the Company recorded charges of approximately $1.4 million related to the proposed settlement of pending litigation and $1.2 million for the write-off of inventory.

Net loss applicable to common shareholders for the first six months of fiscal 2002 was $28 million or $(1.45) per applicable common share, compared to a net loss applicable to common shareholders of $25.8 million or $(1.38) per applicable common share for the first six months of fiscal 2001. Excluding the non-cash charges and other charges for legal costs and inventory write-off, discussed above, which contributed $(0.86), $(0.07) and $(0.06) respectively, to the net loss per share for the first six months of fiscal 2002 and $(1.11) to the net loss per share for the first six months of fiscal 2001 respectively, the net loss per applicable common share would have been $(0.46) in the first six months of fiscal 2002, as compared to a net loss of $(0.27) per applicable common share for the first six months of fiscal 2001.

Robert Ripp, President and CEO, commented, "The continuing telecommunications sector issues have made it difficult for LightPath to achieve its revenue expectations this quarter. However, our design wins have increased our customer base and backlog coverage indicates that sales for the second half of fiscal 2002 will exceed $7 million, an increase from the first six months of fiscal 2002 sales of $5.8 million. A number of significant positive internal trends were established at LightPath this quarter. We continued to reduce our overall expenditures. During the second quarter our recurring operational costs (excluding non-cash and other charges) were approximately $400,000 less than the first quarter. This improvement was approximately $500,000 more than our original expectations at the beginning of the quarter. Our cash flow requirements for the second quarter were $4.2 million just about equal to the first quarter cash requirements of $4.3 million on a lower sales base. We believe our cash flow deficits from operations have bottomed with this quarter."

Mr. Ripp continued, "While we do not know when the telecommunications sector will return to robust growth, we believe we are well positioned to grow in a flat to modestly down industry trend. However, to be prudent in managing our cash flow, LightPath has a number of initiatives in process to reduce our quarterly operating expenditures by $1.2 million by the fourth quarter of fiscal 2002 and another $0.6 million by December 2002. We believe this will reduce our cash flow deficit by 50% in the fourth quarter of fiscal 2002 and we will be near breakeven cash flow for the December 2002 quarter. To accomplish this cumulative $1.8 million operational quarterly savings we are eliminating low margin product lines, improving labor and material efficiencies, reducing administrative costs and deferring any additional effort on the switch project formerly being done at the New Jersey site."

Mr. Ripp concluded, "The LightPath team continues to provide value to its customers, believes it is well positioned in the marketplace and is committed to deliver strong financial performance."

LightPath manufactures proprietary collimator assemblies, GRADIUM glass products and other optical telecommunications products at its headquarters in Albuquerque. The Company's subsidiaries manufacture isolator products utilizing proprietary automation technology in Walnut, CA, and precision molded aspheric optics used in the active telecom components market in Orlando, FL. Additionally, the Company has a unique and proprietary line of all-glass diffraction gratings (StableSil) for telecom applications as well as a product family of Sol-Gel based waveguides. The Company has 49 U.S. patents, plus 5 more pending, associated with its optical technologies. In addition, various foreign countries have issued a total of 29 patents with 15 patents pending.

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