Hauser Reports Fiscal 2003 Third Quarter Financial Results


EL SEGUNDO, Calif. and LONGMONT, Colo., Feb 14, 2003 (PRIMEZONE) -- Hauser, Inc. (OTCBB:HAUS) today reported its financial results for the fiscal 2003 third quarter ended December 31, 2002.

For the fiscal 2003 third quarter, total revenues were $12.0 million compared with $11.3 million in the corresponding year-earlier quarter. Net loss decreased to $1.2 million, or $0.18 per share, from a net loss of $2.3 million, or $0.41 per share, in the corresponding quarter a year ago. Loss from operations was $693,000, compared with a loss from operations of $2.2 million in the same quarter a year ago.

For the first nine months of fiscal 2003, total revenues were $39.2 million compared with $35.4 million in same period of the prior year. Net loss narrowed to $1.3 million, or $0.21 per share, from a net loss of $3.9 million, or $0.70 per share, in the corresponding period a year earlier. Income from operations was $423,000, compared with a loss from operations of $3.2 million in the first nine months of fiscal 2002.

"We have substantially reduced costs, increased manufacturing efficiencies, consolidated operations, restructured administrative activities and reduced operating assets," said Kenneth Cleveland, president and chief executive officer. "These actions, however, have not been sufficient to allow Hauser to remain in compliance with the terms of its amended credit agreement with Wells Fargo Bank."

Wells Fargo has advised the company that certain events of default had occurred, including a payment default, and that it will not waive these events of default. Hauser has been unable to secure alternative financing that would permit it to satisfy its obligations to Wells Fargo. If Wells Fargo is not willing to defer collection of the past due amounts, the company may be forced to seek bankruptcy protection.

Hauser has established a special committee of independent directors to consider and evaluate a number of alternatives, which would permit the company to satisfy its cash needs and its obligations to its creditors. It is likely that any alternative will require Hauser to file a voluntary petition under Chapter 11 of the Bankruptcy Code.

Hauser, headquartered in El Segundo, California and Longmont, Colorado, is a leading supplier of herbal extracts and nutritional supplements. Hauser also provides 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, 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)
                              (Unaudited)

                             Three Months Ended    Nine Months Ended
                               2002      2001        2002      2001
                           ---------  ---------  ---------  ---------
 REVENUES:
  Dietary supplements      $   9,264  $   7,373  $  28,258  $  24,379
  Pharmaceutical and
   functional food 
   ingredients                 1,326      1,574      5,587      4,501
  Technical services           1,452      2,394      5,363      6,519
                           ---------  ---------  ---------  ---------

    Total revenues            12,042     11,341     39,208     35,399

 COST OF REVENUES:
  Dietary supplements          7,283      5,264     22,316     18,726
  Pharmaceutical and
   functional food 
   ingredients                 1,148      1,315      4,802      3,746
  Technical services           1,226      1,567      4,190      5,041
                           ---------  ---------  ---------  ---------

   Total cost of revenues      9,657      8,146     31,308     27,513

 GROSS PROFIT                  2,385      3,195      7,900      7,886

 OPERATING EXPENSES:
  New product development        556        658      1,456      1,938
  Sales and marketing            905        828      2,108      1,994
  General and 
   administrative              1,617      1,946      3,913      5,210
  Restructuring charge           --       1,957        --       1,957
                           ---------  ---------  ---------  ---------

   Total operating 
    expenses                   3,078      5,389      7,477     11,099
                           ---------  ---------  ---------  ---------


 INCOME (LOSS) FROM
  OPERATIONS                    (693)    (2,194)       423     (3,213)

 OTHER INCOME (EXPENSE):
    Interest expense            (334)      (232)    (1,437)      (958)
                           ---------  ---------  ---------  ---------

 INCOME (LOSS) FROM
  CONTINUING OPERATIONS
  AND BEFORE                  (1,027)    (2,426)    (1,014)    (4,171)

 INCOME (LOSS) FROM
  OPERATIONS OF                 (127)        79       (294)       295
                           ---------  ---------  ---------  ---------

 NET LOSS                  $  (1,154) $  (2,347) $  (1,308) $  (3,876)
                           =========  =========  =========  =========

 INCOME (LOSS) PER
  SHARE BASIC 
  AND DILUTED
 Continuing operations     $   (0.16) $   (0.42) $   (0.16) $   (0.75)
 Discontinued operations       (0.02)      0.01      (0.05)      0.05
                           ---------  ---------  ---------  ---------

     Net loss              $   (0.18) $   (0.41) $   (0.21) $   (0.70)
                           =========  =========  =========  =========

 WEIGHTED AVERAGE
  SHARES OUTSTANDING       6,472,932  5,769,808  6,233,937  5,560,341
                           =========  =========  =========  =========

                             HAUSER, INC.
                      CONSOLIDATED BALANCE SHEETS
                            (In thousands)

                                      December 31,   March 31,
                                          2002         2002
                                      -----------   ---------
                       ASSETS         (Unaudited)
 CURRENT ASSETS:
 Cash and cash equivalents               $   --     $   549
 Accounts receivable, less 
  allowance for doubtful accounts:
  December 31, 2002, $478; 
  March 31, 2002, $824                     8,011      7,620
 Inventory, at lower of 
  cost or market                           8,197      7,513
 Prepaid expenses and other                  995        732
 Current assets of business 
  held for sale                              --       2,266
                                         -------    ------- 
 Total current assets                     17,203     18,680
 
 PROPERTY AND EQUIPMENT:
 Land and buildings                        4,292      6,160
 Laboratory and processing  
  equipment                                9,745      9,736
 Furniture and fixtures                    1,870      1,672
                                         -------    -------
                                          15,907     17,568
 Accumulated depreciation 
  and amortization                        (9,537)    (9,669)
                                         -------    ------- 
 Net property and equipment                6,370      7,899
                                         -------    -------
 OTHER ASSETS:
 Deposits and other                          555        845
 Non-current assets of 
  business held for sale                     --       4,638
                                         -------    ------- 

 TOTAL ASSETS                            $24,128    $32,062
                                         =======    =======

 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 CURRENT LIABILITIES:
  Accounts payable                       $ 7,108    $ 3,185
  Book cash overdraft
   (outstanding checks)                      141       --
  Current portion of
   long-term debt                          8,706     16,455
  Note payable to
   related party                           2,911      2,823
  Accrued salaries
   and benefits                              901      1,377
  Customer deposits                           84        461
  Accrued exit costs                        --          251
  Amount due to related party              2,175      3,043
  Other current liabilities                2,198      2,498
  Liabilities of business
   held for sale                            --          789
                                         -------    -------
     Total current liabilities            24,224     30,882
                                         -------    -------

 STOCKHOLDERS' EQUITY (DEFICIT):
  Common stock, $.001 par value;  
   20,000,000 shares authorized;               6          6
  Additional paid-in capital              95,171     95,139
  Warrants                                 1,133      1,133
  Accumulated deficit                    (96,406)   (95,098)
                                        --------   --------
                                             (96)     1,180
                                        --------   --------

 TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY (DEFICIT)        $ 24,128   $ 32,062
                                        ========   ========


            

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