Fiberstars Net Up 50% On Record Sales - Company Financial Information

Cambridge Telcom Report, August 2, 1999

Fiberstars, Inc. (Nasdaq:FBST) has announced second quarter net income of $437,000 ($0.11 per share), a gain of 50% over 1998 second quarter income of $291,000 ($0.08 per share).

Quarterly sales were a record at $8,845,000, an increase of 44% over prior year sales of $6,162,000.

For the first six months of the 1999 fiscal year net income totaled $597,000, or $0.15 per share, vs net income of $30,000, or $0.01 per share, in the prior year first half. Sales for the 1999 first half totaled $16,027,000, an increase of 48% over sales of $10,821,000 in the prior year period.

Operating income of $705,000 for the quarter set a record for Fiberstars. The company's trailing twelve month earnings-per-share moved up to $0.35 per share. The corresponding figure was $0.05 per share for the twelve month period July 1997 through June 1998.

Margin in the quarter increased to 42.3%. The prior year figure was 40.7%, and the first quarter 1999 margin was 41.5%.

"We are very pleased with Fiberstars' turnaround," said David Ruckert, Fiberstars president, CEO. "There were solid sales gains in both product groups and margins and profitability improved."

"In the Commercial Lighting group, the three companies Fiberstars acquired in the latter part of 1998 delivered excellent sales in the first half. Crescent and LBM in Europe performed especially well, and expect good results for the balance of the year. Our core Commercial business also increased over a strong first half in the prior year."

"Following the large number of lamp failures which marred 1998 results, Fiberstars' Pools group has posted good sales increases in 1999. This is a credit to the strength of Fiberstars' products and the hard work of our people in this market."

Ruckert continued, "The outlook for the second half of 1999 remains positive. We believe sales and operating profit will continue to show increases over 1998."

Fiberstars is the world's leading supplier of fiber optic lighting, with products designed, manufactured and marketed in the commercial lighting, sign and swimming pool and spa markets. Fiber optic lighting provides aesthetic, safety, energy savings and maintenance cost benefits over conventional lighting. Company headquarters are located in Fremont. Telephone 510/490-0719. Web site: http://www.fiberstars.com.

FIBERSTARS, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)

                                        June 30,       Dec. 31,
                                           1999           1998
                                        (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                $  1,757       $  1,290
Accounts receivable trade, net              5,738          5,210
Notes and other accounts receivables          414            771
Inventories                                 4,160          4,179
Prepaids and other current assets             506            369
Deferred income taxes                         254            507
                                         --------       --------
Total current assets                       12,829         12,326

Fixed assets, net                           1,575          1,522
Goodwill, net                               4,060          4,403
Investment in joint ventures                    2             18
Other assets                                  169            566
Deferred income taxes                          89             89
                                         --------       --------
Total assets                             $ 18,724       $ 18,924
                                         ========       ========

LIABILITIES
Current liabilities:
Accounts payable                         $  2,046       $  2,598
Accrued expenses                            2,034          2,198
Current portion of long-term debt             114            107
                                         --------       --------
Total current liabilities                   4,194          4,903
                                         --------       --------
Long-term debt, less current portion          610            667
                                         --------       --------
Total liabilities                           4,804          5,570
                                         --------       --------

SHAREHOLDERS' EQUITY
Common stock                                    0              0
Additional paid-in capital                 13,946         13,930
Notes receivable from shareholder             (75)           (86)
Cumulative translation adjustments            (58)             0
Retained earnings (accumulated deficit)       107           (490)
                                         --------       --------
Total shareholders' equity                 13,920         13,354
                                         --------       --------
Total liabilities
and shareholders' equity                 $ 18,724       $ 18,924
                                         ========       ========

FIBERSTARS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share amounts)
(unaudited)

                       Three months ended       Six months ended
                            June 30,                 June 30,
                     1999         1998         1999         1998

Net sales         $  8,845     $  6,162     $ 16,027     $ 10,821
Cost of sales        5,106        3,657        9,312        6,801
                   -------      -------      -------      -------
Gross profit         3,739        2,505        6,715        4,020
                   -------      -------      -------      -------
Operating expenses:
Research and
development           324          344          653          651
Sales and marketing 2,101        1,343        3,959        2,620
General and
administrative        609          378        1,152          779
                  -------      -------      -------      -------
Total operating
expenses            3,034        2,065        5,764        4,050
                  -------      -------      -------      -------
Income (loss) from
operations            705          440          951         (30)

Other income:
Equity in joint
ventures' loss        (15)         (20)         (15)         (20)
Interest income, net    1           45            5          108
                  -------      -------      -------      -------
Income before
income tax           691          465          941           58

Provision for
income taxes        (254)        (174)        (344)         (28)
                 -------      -------      -------      -------
Net income      $    437     $    291     $    597     $     30
                 =======      =======      =======      =======
Net income per
share -- basic  $   0.11     $   0.08     $   0.15     $   0.01
                 =======      =======      =======      =======
Shares used in computing
net income per
share -- basic     3,983        3,554        3,983        3,534
                 =======      =======      =======      =======
Net income per
share -- diluted $  0.11     $   0.08     $   0.15     $   0.01
                 =======      =======      =======      =======
Shares used in computing
net income per
share -- diluted   4,053        3,639        4,053        3,637
                 =======      =======      =======      =======