SALEM, N.H. -- StockerYale, Inc., (NASDAQ: STKR - News), a leading independent provider of photonics-based products today announced its financial results for the first quarter ended March 31, 2003. Net revenue increased 24% from $2.9 million in the first quarter of 2002 to $3.6 million in 2003 as the Company benefited from higher laser, LED and specialty fiber sales. The net loss was significantly reduced from $4.5 million to $2.1 million over the same period as the Company benefited from a substantially lower cost structure, as well as higher revenues. "The entire StockerYale team was heartened by the progress achieved as evidenced by the first quarter results," said Mark W. Blodgett, StockerYale's chairman and CEO. "While there is still much work to do, we have repositioned our business, dramatically cut costs and cash burn, and most importantly, strategically positioned ourselves to profitably grow the business over the long term." Blodgett outlined a number of quarterly highlights, including: Order bookings increased 40% to $4.3 million versus fourth quarter 2002. Realized meaningful cost savings from the 2002 restructuring programs. Operating expenses declined 38% from $4.7 million to $2.9 million. Gross margin improved from 11% to 26%. Operating loss was reduced 55% from $4.4 million to $2.0 million. Announced several new OEM design wins, including an $800,000 order for custom LED illuminators for security systems and a $412,000 order for advanced imaging systems for disc drive inspection. Received first significant erbium-doped fiber order for Asian amplifier manufacturers. Began shipping polarization maintaining fiber to two of the leading oil service providers and one of the world's leading military fiber optic gyroscope builders. Financial Review Illumination and specialty fiber revenues increased $1.0 million or 44% over the comparable period in 2002 despite a modest decline in phase mask sales and the elimination of printer and recorder revenue resulting from the transfer of this product line to an outside distributor in the fourth quarter of 2002. Structured light laser sales from Montreal and initial shipments of recently announced major orders from Ireland (LEDs) and Singapore (advanced imaging systems) were the principal factors driving the illumination gain. For the first time, the Company realized meaningful specialty fiber sales to amplifier, sensor and gyroscope customers as compared to an absence of sales in the comparable quarter, since fibers were still largely under development. The operating loss declined $2.4 million from $4.4 million in 2002 to $2.0 million in 2003 as gross margins improved $0.6 million and operating expenses declined $1.8 million. Higher revenue and lower manufacturing overhead contributed $0.4 million and $0.2 million, respectively, to the increase in gross margin. Research and development expenses declined 50% due to reduced salaries, development costs and joint venture expenditures. The Company's focus on only those product development projects, which would positively impact near-term revenue, resulted in a 43% reduction in research and development headcount. Lower salaries and commissions combined with tighter marketing expenditures resulted in a 25% decline in selling expenditures. Finally, general and administrative expenses were reduced 36% due to lower salaries, travel and professional fees. Overall, the cost realignment programs implemented in the second half of 2002 eliminated 77 positions, reducing total headcount from 255 to 178. Outlook "Our financial goal is to achieve cash flow breakeven and profitability in the fourth quarter," said Frank O'Brien, executive vice president and chief financial officer. "We anticipate closing our new Canadian credit facility in the second quarter, which will put us in compliance with all debt covenants with our lenders. Furthermore, as the Company moves toward profitability, we are considering several financing options to improve liquidity, including a Canadian government development loan, sale of real estate or other assets, as well as the possible issuance of equity or debt securities." "The first quarter of 2003 represents a turning point for the Company as we clearly benefited from new product revenues, continued sales growth in our base business and a reduced cost structure, which we expect will continue to provide the basis for sequential quarterly improvement," said Mark Blodgett, StockerYale's chairman and chief executive officer. "I am especially pleased by major new OEM orders in Ireland and Singapore, continued gains in lasers and the beginning of meaningful specialty fiber revenues. Finally, our first quarter bookings of $4.3 million, which include record orders for certain product lines, will provide the Company with a positive revenue stream for the second quarter," said Blodgett. StockerYale Inc.