Results for Fourth Quarter 2002 and Preliminary Annual Results 2002

Activities
In the fourth quarter, Opticom and its operating subsidiary Thin Film Electronics (TFE), has continued the work on the deliverables in accordance with the productization and licensing agreement for process and product development with Intel. In the third quarter, certain work packages in the project proved to be more time-consuming than originally planned and consequently the completion of certain deliverables were delayed. The work continued in the fourth quarter, and further progress was made. Still, some deliverables scheduled for the third quarter remained open at the end of 2002, and the same is the case for the fourth quarter deliverables.
No insurmountable technical problems have been identified, and the scientific staff as well as management remain confident that all deliveries will be made compliant with the agreed performance specifications, albeit at least six months later than original scheduled. Considering the delays just noted, Opticom is reluctant to provide a revised time estimate for completion of the current productization phase, other than to confirm that the work on this phase of the Intel project will be completed within 2003.
Aside from the Intel project, TFE maintains its basic research in the field of polymer memory, particularly related to next-generation materials, designs and processes.
Opticom Group financial statements
TFE reported NOK 1.2 million revenue in the quarter, in line with the prior quarter. Revenue for the year 2002 was NOK 10.2 million, up from NOK 5.4 million the year before. The revenue in 2002 originated from Intel for project deliveries. Revenue is recorded only upon delivery to Intel.
Operating costs were NOK 34.5 million in the quarter. The increase over the preceding quarter was primarily due to bonus payments to employees who met their objectives in the year. In the year 2002, operating cost amounted to NOK 100.5 million, up from NOK 80.7 million in 2001. The increase is due to manning having been stable at about 75 in 2002, while the organisation grew from 42 to 73 in 2001. Operating costs will be reduced during 2003 as the present phase of the Intel project is completed.
Depreciation and write-down increased to NOK 17.2 million for the quarter, from NOK 16.3 million in the preceding quarter. Year-on-year depreciation and write-down grew from NOK 41.4 million in 2001 to 64.0 million in 2002. Depreciation of fixed assets has leveled since completion of the Linköping facility in the first quarter of 2002. Write-down of R&D assets will continue to increase as long as new investment exceeds write-down.
The company capitalises direct external and internal research and development expenses that are directed at creating new knowledge to become part of the company's intellectual property, while the cost of the deliverables for which revenue is recognised, is expensed. Capitalisation of the internal research and development effort is shown as a cost reduction, and amounted to NOK 17.0 million in the quarter, and NOK 49.7 million for the year (NOK 11.6 million in the fourth quarter 2001 and NOK 48.3 million in the year 2001). A sizeable share of the research and development team is now working on the deliverables being paid for by Intel and this has resulted in smaller share of total costs being capitalised. Research and development purchased externally is added directly to the balance sheet and does not flow through the profit and loss statement. The external purchases of research and development are lower in 2002 than prior years because TFE has gained the capability of performing in-house most of the tasks at hand.
The results from Opticom's Internet technology associate Fast Search & Transfer (FAST) are published by FAST. FAST reported a preliminary result for 2002 amounting to USD 1.3 million net profit under Norwegian accounting up from USD 27.3 million loss in 2001. This impressive improvement has been achieved by continued revenue growth combined with powerful cost reduction, demonstrating FAST's technological attractiveness and effective management. Opticom enjoyed a net income from the investment in FAST amounting to NOK 72.3 million for the year, largely because of Opticom's gain on dilution from the private placement completed by FAST in the first quarter. The result in FAST as well as the gain from dilution has no cash effect for Opticom.
Net other financial items were positive NOK 3.0 million for the quarter (up from NOK 1.6 million in the previous quarter), and NOK 4.1 million positive for the year (2001: NOK 0.3 million negative). Opticom earned interest income on its net cash position since the share issue in January 2002, but the TFE group recorded NOK 7.3 million non-cash exchange losses on loans within the group denominated in foreign currency. Such accounting loss or gain occurs when the NOK appreciates or depreciates.
Most of the reported tax cost of NOK 15.9 million for the year is estimated deferred tax from the gain on dilution in FAST. Such tax will only become payable in the event that Opticom sells FAST shares, for which there is no prospect.
The cash balance amounted to NOK 196.0 million at the end of the year, up from NOK 29.4 million the year before. NOK 300.1 million was obtained in a share issue in January 2002. During the year, NOK 80.2 million has been invested in fixed assets, NOK 40.6 million has been spent on this year's operations, and NOK 12.7 million was net of working capital and financial items. The cash position is adequate for the planned investments and operations. The group has no financial debt and does not need or intend to raise such debt.
At the end of 2002, the group had 76 employees one person more than at previous year-end.
The interim financial statements and this preliminary report have been prepared in accordance with Norwegian Accounting Standard NRS 11. The statements and this report have not been subject to audit.



For further information contact:

Thomas Fussell tel: +44 1491 412 522
Chairman e-mail: tf@opticomasa.com

Erling Svela tel: +47 2301 1240
Director Finance & Admin e-mail: svela@opticomasa.com

Opticom ASA website: www.opticomasa.com
Thin Film Electronics website: www.thinfilm.se
Fast Search & Transfer ASA website: www.fastsearch.com