Channell Announces Fourth Quarter Results.Business Editors & High-Tech high-tech also hi-tech adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. Writers TEMECULA, Calif.--(BUSINESS WIRE)--March 1, 2002 -- Loss of ($0.04) per share in fourth quarter compared with Street estimate of ($0.05) per share. -- Cash and marketable securities at $8.8 million at 12/31/01. -- Bank Credit Agreement to be extended through 2002. Channell Commercial Corp. (Nasdaq:CHNL CHNL Channel ) today announced unaudited financial results for the fourth quarter ending Dec. 31, 2001. For the three months ended Dec. 31, 2001, Channell's net revenues were $18.6 million, compared with $27 million in the same period in 2000. Channell's net loss for the fourth quarter of 2001 was ($0.4 million) or ($0.04) per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Revenues for the fiscal year ending Dec. 31, 2001 were $88.7 million compared with revenues in fiscal year 2000 of $128.2 million. The company's net loss in fiscal year 2001 was ($25.2 million) or ($2.78) per basic and diluted share. In the third quarter of 2001 the company had special charges of $33.1 million for a major restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). program that included significant reductions in headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. and facilities usage, additions to inventory and trade account receivable account receivable Any amount owed to a business as the result of a purchase of goods or services from it on a credit basis. Although the firm making the sale receives no written promise of payment, it enters the amount due as a current asset in its books. reserves as well as $11.8 million in write down of goodwill. Excluding the third quarter special charges of $33.1 million, the company's pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss in 2001 would have been ($0.19) per basic and diluted share. The decline in revenue in the fourth quarter of 2001 and fiscal year 2001 from the fourth quarter and fiscal year 2000 was primarily a result of a major slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in capital expenditures of the service providers in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry. The capital expenditure slowdown was caused by a number of factors including merger consolidation, debt reduction efforts and attempts to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. new service deployment expenses with new service revenues. Cash flows from operations was $6.9 million in the fourth quarter of 2001, compared with $4.3 million in the third quarter of 2001 and $3.8 million in the fourth quarter of 2000. Channell's cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has were $8.8 million at Dec. 31, 2001, $4 million at Sept. 30, 2001 and $0.9 million at Dec. 31, 2001. Three Financial Objectives Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs Liguori, chief financial officer, said, "I am pleased to report we are making good progress on each of the three primary financial objectives identified in our third quarter news release: 1. Downsize Downsize Reducing the size of a company by eliminating workers and/or divisions within the company. Notes: When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability. It is sometimes referred to as trimming the fat. our cost structure to achieve profitable operations in 2002. The cost structure downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing is essentially complete. Headcount was reduced 47% from 12/31/00 to 12/31/01. Facilities square footage utilized was reduced 33% in the same period. 2. Reduce debt by $10 million by 12/31/02. Improved working capital management enabled us to reduce debt by $2.1 million in the fourth quarter and end the quarter at $8.8 million in cash and marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. securities. We are on track to meet our $10 million debt reduction goal in the first half of 2002. 3. Realign re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. our asset valuations to current business environment. The asset write downs were recorded in the third quarter of 2002. Our receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and inventory positions continue to improve with decreases in both past due receivables and slow moving inventory. We believe our third quarter asset write downs were sufficient and we are comfortable with our current valuations. We have reached agreement with our banks to extend the maturity of the Credit Agreement to December December: see month. 31, 2002. This extension along with our strong cash balance and debt reduction program position the company going forward. We have reduced our cost structure to meet market conditions and are on track to a break-even first quarter. "We are comfortable with the Street estimate of $0.17 per share for the year 2002." Today's Conference Call There will be a conference call webcast at www.companyboardroom.com. at noon Eastern time today to discuss today's release. About Channell Channell Commercial Corp. is a global designer and manufacturer of telecommunications equipment primarily supplied to telephone and broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). network operators worldwide. Major product lines include a complete line of thermoplastic A polymer material that turns to liquid when heated and becomes solid when cooled. There are more than 40 types of thermoplastics, including acrylic, polypropylene, polycarbonate and polyethylene. and metal fabricated fab·ri·cate tr.v. fab·ri·cat·ed, fab·ri·cat·ing, fab·ri·cates 1. To make; create. 2. To construct by combining or assembling diverse, typically standardized parts: enclosures, advanced copper termination and connectorization products, fiber optic cable Noun 1. fiber optic cable - a cable made of optical fibers that can transmit large amounts of information at the speed of light fibre optic cable transmission line, cable, line - a conductor for transmitting electrical or optical signals or electric power management systems and coaxial-based passive RF electronics. Channell's headquarters and U.S. manufacturing facilities are in Temecula. International operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. include facilities in Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing (Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ), London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. (United Kingdom), Sydney Sydney, city, Australia Sydney, city (1991 pop. 3,097,956), capital of New South Wales, SE Australia, surrounding Port Jackson inlet on the Pacific Ocean. Sydney is Australia's largest city, chief port, and main cultural and industrial center. (Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. ) and Kuala Lumpur Kuala Lumpur (kwä`lə l  m`pr), city (1990 est. pop. (Malaysia).Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Forward-looking statements contained within this news release are subject to many uncertainties in the company's operations and business environments. Examples of such uncertainties include customer demand, material costs, integration of acquired businesses and worldwide economic conditions among others. Such uncertainties are discussed further in the company's annual report/10K and S-1 filed with the Securities and Exchange Commission.
CHANNELL COMMERCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (UNAUDITED)
(amounts in thousands, except per share data)
Three months ended Twelve months ended
Dec. 31, Dec. 31,
2001 2000 2001 2000
Net sales $ 18,633 $ 27,025 $ 88,698 $ 128,179
Cost of goods sold 13,022 17,604 69,892 81,108
Gross profit (loss) 5,611 9,421 18,806 47,071
Operating expenses
Selling 2,552 3,453 12,789 15,484
General and
administrative 1,889 4,290 14,124 14,231
Research and development 472 694 2,331 2,771
Impairment of goodwill - - 11,772 -
Impairment of fixed
assets - 4,569 4,322 4,569
Restructuring charge - 1,513 2,999 1,513
4,913 14,519 48,337 38,568
(Loss) income from
operations 698 (5,098) (29,531) 8,503
Interest income (expense),
net (1,068) (996) (3,874) (2,859)
(Loss) income before
income taxes (370) (6,094) (33,405) 5,644
Income taxes expense
(benefit) - (2,871) (8,207) 2,076
Net (loss) income $ (370) $ (3,223) $(25,198) $ 3,568
Net (loss) income per
share
Basic $ (0.04) $ (0.35) $ (2.78) $ 0.39
Diluted $ (0.04) $ (0.35) $ (2.78) $ 0.39
Weighted average number
of shares outstanding
Basic 9,025 9,103 9,050 9,091
Diluted 9,025 9,103 9,050 9,126
Net (loss) income $ (370) $ (3,223) $(25,198) $ 3,568
Other comprehensive
income, net of tax
Foreign currency
translation
adjustments 383 (879) (937) (2,100)
Comprehensive net (loss)
income $ 13 $ (4,102) $(26,135) $ 1,468
CHANNELL COMMERCIAL CORP.
CONSOLIDATED BALANCE SHEETS
December 31,
(amounts in thousands)
2001 2000
ASSETS
Current assets
Cash and cash equivalents $ 8,762 $ 913
Accounts receivable, net 13,301 24,007
Inventories 9,776 21,620
Deferred income taxes 1,473 1,171
Prepaid expenses and misc. receivables 1,238 1,966
Income taxes receivable 5,076 1,854
Total current assets 39,626 51,531
Property and equipment at cost, net 38,718 48,669
Deferred income taxes 5,509 2,102
Intangible assets, net 1,463 13,931
Other assets 446 515
$ 85,762 $116,748
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 5,090 $ 7,998
Short term debt (including current
maturities of long term debt) 30,228 31,086
Current maturities of capital lease
obligations 1,983 2,726
Restructuring liability 2,420 1,323
Accrued expenses 3,939 3,136
Total current liabilities 43,660 46,269
Long term debt, less current maturities 3,991 4,092
Capital lease obligations, less current
maturities 614 2,460
Stockholders' equity
Preferred stock, par value $0.01 per
share, authorized -- 1,000 shares, none
issued and outstanding - -
Common stock, par value $0.01 per share,
authorized -- 19,000 shares; issued -
9,269 shares in 2000 and 2001;
outstanding - 9,077 shares in 2000 and
9,025 shares in 2001 93 93
Additional paid-in capital 28,334 28,334
Treasury stock - 192 and 244 shares in
2000 and 2001 (1,871) (1,576)
Retained earnings 13,622 38,820
Accumulated other comprehensive income
(loss) - Foreign currency translation (2,681) (1,744)
Total stockholders' equity 37,497 63,927
Total liabilities and stockholders'
equity $ 85,762 $ 116,748
CHANNELL COMMERCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(amounts in thousands)
Three months ended Twelve months ended
Dec. 31, Dec. 31,
2001 2000 2001 2000
Cash flows from operating
activities:
Net (loss) income ($370) ($3,223)($25,198) $ 3,568
Depreciation and
amortization 1,946 2,488 8,557 8,168
Impairment of fixed
assets - 4,569 4,322 4,569
Impairment of goodwill - - 11,772 -
Loss on disposal of fixed
assets 99 - 353 -
Foreign currency
transaction gain 368 - - -
Deferred income taxes 4,449 (2,001) (3,709) (2,442)
Changes in assets and
liabilities:
Accounts receivable 4,049 230 10,157 (931)
Inventories 962 (4,242) 11,330 (1,904)
Prepaid expenses 534 (98) 304 538
Other assets 94 1,157 69 1,191
Accounts payable 395 5,647 (3,348) (4,654)
Accrued expenses (920) 448 836 948
Restructuring liability (1,266) 1,323 1,408 1,323
Income taxes receivable (3,419) (2,528) (2,889) (2,022)
Net cash provided by
operating activities 6,921 3,770 13,964 8,352
Cash flows from investing
activities:
Acquisition of property
and equipment (592) (4,560) (3,153) (11,606)
Disposal of property and
equipment - 82 - 110
Contingent purchase pmts
(AC Egerton Acq) - (361) - (361)
Net cash used in investing
activities (592) (4,839) (3,153) (11,857)
Cash flows from financing
activities:
Repayment of debt (985) (3,973) (2,553) (11,025)
Proceeds from issuance of
long term debt - 5,513 2,500 15,284
Repayment of obligations
under capital lease (583) (472) (2,579) (2,503)
Purchase of treasury stock (26) (224) (295) (224)
Exercise of stock options - - - 344
Net cash (used in) provided
by financing activities (1,594) 844 (2,927) 1,876
Effect of exchange rates on
cash 19 50 (35) (191)
Increase (decrease) in cash
and cash equivalents 4,754 (175) 7,849 (1,820)
Cash and cash equivalents,
beginning of period 4,008 1,088 913 2,733
Cash and cash equivalents,
end of period $ 8,762 $ 913 $ 8,762 $ 913
Cash paid during the
period for:
Interest $ 1,140 $ 896 $ 3,801 $ 3,081
Income taxes $ - $ 750 $ 752 $ 6,956
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