Hauser Reports Fiscal 2003 First Quarter Financial Results

Company Achieves Profitability


LONG BEACH, Calif. and LONGMONT, Colo., Aug. 14, 2002 (PRIMEZONE) -- Hauser, Inc. (OTCBB:HAUS) today reported financial results for its fiscal 2003 first quarter ended June 30, 2002.

For the fiscal 2003 first quarter, total revenues were $13.4 million versus $13.0 million in the corresponding year-earlier quarter. Net income was $117,000, or $0.02 per share, compared with net loss of $618,000, or $0.12 per share, in the first quarter last year. Income from operations was $182,000, compared with loss from operations of $550,000 in the same quarter a year ago.

"Our consistent and steady progress has resulted in our first profitable quarter in some time," said Kenneth Cleveland, president and chief executive officer. "We will build on this accomplishment as we continue to look for ways to enhance our operational efficiencies and grow our business."

As previously announced, Hauser intends to divest its Shuster Laboratories division. Accordingly, the financial information presented in this news release reflects this division as discontinued operations for all periods presented.

The company recorded a small loss from continuing operations due, in part, to the acceleration of prepaid interest expense. Cleveland noted that proceeds from the divestiture of the Shuster Laboratories division will be used to pay down debt, which will substantially lower future interest expense. There can be no assurance, however, that the Shuster sale will be consummated.

"The sale of Shuster is a significant step in our restructuring and debt repayment plan," Cleveland said. "The remainder of our bank debt is due August 31, 2002. We are working to obtain a new line of credit, though there can be no assurance that we will be successful in this endeavor. If the bank debt is not paid in accordance with its terms, the lender will be entitled to exercise certain remedies."

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 STATEMENTS OF OPERATIONS
                 (In thousands, except share amounts)


                                        Three months ended June 30,
                                            2002          2001
                                        -----------    -----------

 REVENUES:
  Dietary supplements                   $     8,905    $     9,411
  Pharmaceutical and functional
   food ingredients                           2,458          1,606
  Technical services                          2,018          1,958
                                        -----------    -----------
  Total revenues                             13,381         12,975
                                        -----------    -----------
 COST OF REVENUES:
  Dietary supplements                         7,140          7,400
  Pharmaceutical and functional
   food ingredients                           2,106          1,331
  Technical services                          1,416          1,684
                                        -----------    -----------
  Total cost of revenues                     10,662         10,415
                                        -----------    -----------
 GROSS PROFIT                                 2,719          2,560
                                        -----------    -----------

 OPERATING EXPENSES:
  New product development                       469            671
  Sales and marketing                           611            596
  General and administrative                  1,457          1,843
                                        -----------    -----------
  Total operating expenses                    2,537          3,110
                                        -----------    -----------

 INCOME (LOSS) FROM OPERATIONS                  182           (550)

 INTEREST EXPENSE                              (568)          (331)
                                        -----------    -----------

 LOSS FROM CONTINUING OPERATIONS
  BEFORE INCOME TAX BENEFIT
  AND DISCONTINUED OPERATIONS                  (386)          (881)
 INCOME TAX BENEFIT                             201            105
                                        -----------    -----------

 LOSS FROM CONTINUING OPERATIONS
  AND BEFORE DISCONTINUED OPERATIONS           (185)          (776)

 DISCONTINUED OPERATIONS:
  Income from operations of
   discontinued Shuster component,
   net of income tax of $201 and $105           302            158
                                        -----------    -----------

 NET INCOME (LOSS)                      $       117    $      (618)
                                        ===========    ===========

 INCOME (LOSS) PER SHARE
  BASIC AND DILUTED
   Continuing operations                $     (0.03)   $     (0.15)
   Discontinued operations                     0.05           0.03
                                        -----------    -----------
   Net income (loss)                    $      0.02    $     (0.12)
                                        ===========    ===========


 WEIGHTED AVERAGE SHARES
  OUTSTANDING                             5,957,339      5,205,582
                                        ===========    ===========



                               HAUSER, INC.
                       CONSOLIDATED BALANCE SHEETS
                              (In thousands)

                                              June 30,    March 31,
                     ASSETS                    2002        2002
                     ------                  ---------    --------
                                            (Unaudited)
 CURRENT ASSETS:
  Cash and cash equivalents                   $     25    $    452
  Accounts receivable, less allowance for
   doubtful accounts: June 30, 2002, $848;
   March 31, 2002, $824                          8,632       7,620
  Inventory, at lower of cost or market          7,005       7,513
  Prepaid expenses and other                       853         801
  Current assets of business held for sale       2,879       2,197
                                              --------    --------
   Total current assets                         19,394      18,583
                                              --------    --------
 PROPERTY AND EQUIPMENT:
  Land and buildings                             6,160       6,160
  Laboratory and processing equipment            9,861       9,736
  Furniture and fixtures                         1,870       1,672
                                              --------    --------
  Total property and equipment                  17,891      17,568

  Accumulated depreciation and amortization     (9,896)     (9,669)
                                              --------    --------
   Net property and equipment                    7,995       7,899
                                              --------    --------

 OTHER ASSETS:
  Deposits and other                               494         845
  Non-current assets of business held
  for sale                                       4,772       4,638
                                              $ 32,655    $ 31,965
                                              ========    ========

                   LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES:
  Checks outstanding                          $  1,205    $   --
  Accounts payable                               4,640       3,185
  Current portion of long-term debt             15,467      16,455
  Note payable to related party                  2,852       2,823
  Accrued salaries and benefits                  1,243       1,377
  Customer deposits                                297         461
  Accrued exit costs                               162         251
  Amount due to related party                    2,660       2,946
  Other current liabilities                      1,841       2,498
  Liabilities of business held for sale            948         789
                                              --------    --------
   Total current liabilities                    31,315      30,785
                                              --------    --------

 LONG-TERM DEBT                                   --          --

 COMMITMENTS AND CONTINGENCIES
  (Notes 1 and 7)

 STOCKHOLDERS' EQUITY:
  Common stock, $.001 par value;
   20,000,000 shares authorized; shares
   issued and outstanding; June 30, 2002,
   5,976,749; March 31, 2002, 5,871,493              6           6
  Additional paid-in capital                    95,182      95,139
  Warrants                                       1,133       1,133
  Accumulated deficit                          (94,981)    (95,098)
                                              --------    --------
                                                 1,340       1,180
                                              --------    --------
                                              $ 32,655    $ 31,965
                                              ========    ========


            

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