Hauser Reports Fiscal 2002 Fourth Quarter and Full Year Financial Results


LONG BEACH, Calif., and LONGMONT, Colo., July 1, 2002 (PRIMEZONE) -- Hauser, Inc. (OTCBB:HAUS) today reported its financial results for the fiscal 2002 fourth quarter and full year ended March 31, 2002.

For the fiscal 2002 fourth quarter, total revenues were $14.3 million compared with $14.5 million in the corresponding year-earlier quarter. Net loss decreased to $1.5 million, or $0.26 per share, from net loss of $23.1 million, or $4.56 per share, in the corresponding quarter a year ago. Loss from operations was $1.5 million, compared with loss from operations of $22.4 million in the same quarter a year ago. Excluding restructuring charges of $927,000 in the fiscal 2002 fourth quarter and $17.8 million in the fiscal 2001 fourth quarter, loss from operations would have been $575,000 and $4.6 million, respectively.

For the fiscal year ended March 31, 2002, total revenues were $57.6 million, compared with $66.7 million a year ago. Net loss significantly narrowed to $5.4 million, or $0.96 per share, compared with net loss in the prior year of $33.3 million, or $6.75 per share. Loss from operations totaled $4.2 million, compared with loss from operations of $32.7 million in fiscal 2001. Excluding restructuring charges of $2.9 million in fiscal 2002 and $17.8 million in fiscal 2001, loss from operations would have been $1.3 million and $14.8 million, respectively.

"In fiscal 2002, we made excellent progress on our plan to refocus on our businesses of producing and marketing bulk herbal extracts and nutritional substances," said Kenneth Cleveland, president and chief executive officer. "We did this by divesting a non-core business, lowering operating expenses as well as cost of revenues, and streamlining our manufacturing operations. Also, we were successful in lowering inventory levels and improving collections of accounts receivables."

The company also said that its credit agreement with Wells Fargo Bank was amended on June 25, 2002 to provide for a termination date of August 31, 2002 instead of August 31, 2003 in exchange for Wells Fargo Bank agreeing to waive defaults under the agreement. The auditors for Hauser have delivered an opinion in connection with the audit for the fiscal year ending March 31, 2002 stating that, because of significant operating losses, the existing deficit and the lack of certainty as to a credit line to finance operations, there is substantial doubt regarding the ability of Hauser to continue as a going concern. Cleveland said, "Hauser is engaged in discussions, including regarding the sale of Shuster Laboratories, which could result in Hauser obtaining funds to pay the Wells Fargo Bank loans and permit Hauser to obtain a new line of credit to finance operations." He added: "There can be no assurance that the discussions will produce the desired result."

Hauser, headquartered in Long Beach, California and Longmont, Colorado, is a leading supplier of herbal extracts and nutritional supplements. Hauser also provides interdisciplinary laboratory testing services, chemical engineering services, and contract research and development. Hauser's products and services are principally marketed to the pharmaceutical, dietary supplement and food ingredient businesses. Hauser's business units include: Botanicals International, Shuster Laboratories, ZetaPharm and Hauser Contract Research Organization.

Certain oral and written statements of management of the Company included in this Press Release and elsewhere may contain forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations. The forward-looking statements included herein and elsewhere are based on current expectations that involve judgments which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.


                            HAUSER, INC.
                     CONSOLIDATED BALANCE SHEETS
                           (In thousands)

                                                Year Ended March 31,
                  ASSETS                           2002        2001
                                                 --------    --------

 CURRENT ASSETS:
  Cash and cash equivalents                      $    452    $    616
  Accounts receivable, less
   allowance for doubtful accounts:
   2002, $896; 2001, $876                           9,707      12,270
  Inventory, at lower of cost or market             7,513       9,802
  Prepaid expenses and other                        1,221         928
                                                 --------    --------
 Total current assets                              18,893      23,616
                                                 --------    --------
 PROPERTY AND EQUIPMENT:
  Land and buildings                                9,552       8,968
  Laboratory and processing equipment              11,127      17,402
  Furniture and fixtures                            2,338       3,588
                                                 --------    --------
  Total property and equipment                     23,017      29,958

  Accumulated depreciation and amortization       (11,542)    (17,258)
                                                 --------    --------
  Net property and equipment                       11,475      12,700
                                                 --------    --------
 OTHER ASSETS:
  Goodwill, less accumulated amortization:
   2002, $1,495; 2001, $1,273                         726         948
  Deposits and other                                  871         575
                                                 --------    --------
                                                 $ 31,965    $ 37,839
                                                 ========    ========

 LIABILITIES AND STOCKHOLDERS' EQUITY      

 CURRENT LIABILITIES:
  Accounts payable                               $  3,418    $  2,833
  Current portion of long-term debt                16,455      18,790
  Current portion of note payable
     to related party                               2,823        --
  Accrued salaries and benefits                     1,832       1,300
  Customer deposits                                   543         643
  Accrued exit costs                                  251         508
  Amount due to related party                       2,946       2,988
  Other current liabilities                         2,517       2,826
                                                 --------    --------
  Total current liabilities                        30,785      29,888
                                                 --------    --------
 LONG-TERM DEBT                                      --            36

 NOTE PAYABLE TO RELATED PARTY                       --         2,705

 COMMITMENTS AND CONTINGENCIES                    

 STOCKHOLDERS' EQUITY:
  Common stock, $.001 par value;
   20,000,000 shares authorized;
   shares issued and outstanding;
   2002, 5,921,768; 2001, 5,072,742                     6           5
  Additional paid-in capital                       95,386      94,543
  Warrants                                            886         354
  Accumulated deficit                             (95,098)    (89,692)
                                                 --------    --------
                                                    1,180       5,210
                                                 --------    --------
                                                 $ 31,965    $ 37,839
                                                 ========    ========

                             HAUSER, INC.
                CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except share amounts)


                         Quarter Ended March 31,  Year Ended March 31,
                            2002       2001        2002        2001
                          ---------  ---------   ---------  ---------

 REVENUES:
  Dietary Supplements      $  7,680    $ 8,234    $ 32,059   $ 39,127
  Pharmaceutical and
   functional
   ingredients                1,874      1,904       6,375     10,670
  Technical services          4,785      4,323      19,188     16,246
  Other                         --           3         --         671
                          ---------  ---------   ---------  ---------
   Total revenues            14,339     14,464      57,622     66,714
                          ---------  ---------   ---------  ---------
 COST OF REVENUES:
  Dietary Supplements         5,981      4,148      24,707     35,522
  Pharmaceutical and
   functional
   ingredients                1,574      1,639       5,320      9,845
  Technical services          3,546      3,774      14,402     14,097
  Write-down of
   inventory                    212      4,498         212      4,498
                          ---------  ---------   ---------  ---------
  Total cost of
   revenues                  11,313     14,059      44,641     63,962
                          ---------  ---------   ---------  ---------
 GROSS PROFIT                 3,026        405      12,981      2,752
                          ---------  ---------   ---------  ---------
 OPERATING EXPENSES:
  New product
   development                  642        762       2,580      2,586
  Sales and marketing           886        671       3,374      3,621
  General and
   administrative             2,073      3,546       8,319     11,394
  Restructuring charge          927     17,844       2,884     17,844
                          ---------  ---------   ---------  ---------
  Total operating
   expenses                   4,528     22,823      17,157     35,445
                          ---------  ---------   ---------  ---------
 LOSS FROM OPERATIONS        (1,502)   (22,418)     (4,176)   (32,693)
                          ---------  ---------   ---------  ---------
 OTHER INCOME (EXPENSE):
  Interest and other
   income                         2        107          12        392
  Interest expense             (441)      (501)     (1,653)    (2,296)
  Gain from sale of
   assets                       309       (204)        309      1,430
                          ---------  ---------   ---------  ---------
  Total other
   (expense) income            (130)      (598)     (1,332)      (474)
                          ---------  ---------   ---------  ---------
 LOSS BEFORE INCOME TAX      (1,632)   (23,016)     (5,508)   (33,167)

 INCOME TAX EXPENSE
  (BENEFIT)                    (107)        94        (103)        94
                          ---------  ---------   ---------  ---------
 NET LOSS                  $ (1,525)  $(23,110)   $ (5,405)  $(33,261)
                          =========  =========   =========  =========
 LOSS PER SHARE
  BASIC AND DILUTED           (0.26)     (4.56)      (0.96)   ($ 6.75)


 WEIGHTED AVERAGE SHARES
  OUTSTANDING BASIC
  AND DILUTED             5,874,217  5,070,117   5,637,735  4,929,473
                          =========  =========   =========  =========

                            HAUSER, INC.
         TABLE OF OPERATING RESULTS EXCLUSIVE OF RESTRUCTURING
                  (In thousands, except share amounts)

                              Quarter Ended             Year Ended 
                                 March 31,               March 31,

                             2002       2001          2002     2001
                           -------------------       ----------------
 Loss from operations      (1,502)     (22,417)      (4,176)  (32,693)
 Restructuring charge         927       17,844        2,884    17,844 
                           ------       ------        -----    ------
 Loss from operations
  exclusive of
  restructuring              (575)      (4,573)      (1,292)  (14,849)
                           ======       ======        =====    ======


            

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