Channell Announces Fourth-Quarter Results.Business Editors/High-Tech Writers TEMECULA, Calif.--(BUSINESS WIRE)--Feb. 25, 2003 Channell Commercial Corp. (Nasdaq:CHNL CHNL Channel ) today announced unaudited financial results for the fourth quarter ending Dec. 31, 2002. For the three months ended Dec. 31, 2002, Channell's net revenues were $19.7 million, compared with $18.6 million in the same period of 2001. Excluding special charges, Channell's net income in the fourth quarter of 2002 was $0.1 million, or $0.01 per share, compared with a net loss of ($0.4) million or ($0.04) per share in the fourth quarter of 2001. After special charges of $4.7 million in the fourth quarter of 2002, the net loss was ($4.5) million, or ($0.50) per share. The special charges include: 1) restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $1.2 million for vacated facilities lease payments and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when payments primarily in the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. region; 2) $1.7 million for asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of equipment in the European region and $0.5 million for asset impairment of tooling for discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: products in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ; 3) $1.0 million for impairment of goodwill in the Australia/Asia region, and 4) $0.3 million for write down of inventory of discontinued products. Revenues for the fiscal year ending Dec. 31, 2002, were $84.8 million, compared with revenues in fiscal year 2001 of $88.7 million. The company's net loss including special charges in fiscal year 2002 was ($3.1) million or ($0.34) 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, compared with a net loss of ($25.2) million or ($2.78) per share in 2001. Excluding special charges, net income in 2002 was $1.6 million, or $0.17 per basic and diluted share, compared with a net loss of ($1.7) million or ($0.19) per share in 2001. 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. 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: "Fourth-quarter results before special charges were in line with our guidance. Subsequent to our Dec. 19, 2002, press release on fourth quarter special charges and as part of the accounting for restructuring operations, we chose to reduce the deferred tax assets for loss carry forwards in 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. . "As a result, the fourth quarter special charges after tax were $0.51 per share rather than the original $0.46 per share estimate. We are pleased we were able to meet our original 2002 guidance of $0.17 net income per share excluding special charges, particularly in view of the $2.0 million charge resulting from the Adelphia A`del´phi`a n. 1. (Bot.) A "brotherhood," or collection of stamens in a bundle; - used in composition, as in the class names, Monadelphia, Diadelphia, etc. s> Chapter 11 bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most , as well as the continued severe downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in our industry throughout 2002. "In reducing debt by $30.3 million in 2002, we deleveraged our balance sheet and positioned the company to take advantage of an industry recovery when it occurs. We currently expect earnings per share for 2003 to be in the $0.26 to $0.30 range." 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 is a global designer and manufacturer of telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. 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 The point where a line, channel or circuit ends. See SCSI termination and hybrid. and connectorization products and fiber-optic See fiber optics. cable management systems. Channell's headquarters and U.S. manufacturing facilities are in Temecula. International operations 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 , 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. and 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. . 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 Operations and Comprehensive Income
(Unaudited, Except for 12 Months Ended Dec. 31, 2001)
(Amounts in Thousands, Except Per-Share Data)
Three Months Ended 12 Months Ended
Dec. 31, Dec. 31,
2002 2001 2002 2001
Net sales $19,720 $18,633 $84,785 $88,698
Cost of goods sold 14,290 13,022 57,450 69,892
Gross profit 5,430 5,611 27,335 18,806
Operating expenses
Selling 2,273 2,552 9,246 12,789
General and administrative 2,653 1,889 11,452 14,124
Research and development 404 472 1,619 2,331
Restructuring charges 1,228 0 1,228 2,999
Impairment of fixed assets 2,154 0 2,154 4,322
Impairment of goodwill 966 0 966 11,772
9,678 4,913 26,665 48,337
Income (loss) from operations (4,248) 698 670 (29,531)
Interest (expense), net (187) (1,068) (1,999) (3,874)
Loss before income taxes (4,435) (370) (1,329) (33,405)
Income taxes (benefit) 97 0 1,737 (8,207)
Net loss ($4,532) ($370)$(3,066)$(25,198)
Net loss per share
Basic $(0.50) $(0.04) $(0.34) $(2.78)
Diluted $(0.50) $(0.04) $(0.34) $(2.78)
Weighted number of shares
outstanding
Basic 9,114 9,025 9,048 9,053
Diluted 9,114 9,025 9,048 9,053
Net loss ($4,532) ($370)$(3,066)$(25,198)
Other comprehensive income,
net of tax
Foreign currency translation
adjustments 53 383 688 (937)
Comprehensive net income (loss) ($4,479) $13 $(2,378)$(26,135)
EBITDA ($1,868) $2,644 $8,455 $(20,974)
CHANNELL COMMERCIAL CORP.
CONSOLIDATED BALANCE SHEETS
Dec. 31,
(Amounts in thousands)
2002 2001
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $3,162 $8,762
Accounts receivable, net 10,156 13,301
Inventories 7,757 9,776
Deferred income taxes 1,037 1,473
Prepaid expenses and misc. receivables 1,090 1,238
Income taxes receivable 247 5,076
Total current assets 23,449 39,626
Property and equipment at cost, net 25,431 38,718
Deferred income taxes 4,367 5,124
Intangible assets, net 504 1,463
Other assets 412 446
$54,163 $85,377
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $5,820 $5,090
Short term debt (including current
maturities of long-term debt) 952 30,228
Current maturities of capital lease
obligations 694 1,983
Accrued restructuring liability 2,155 2,420
Accrued expenses 3,625 3,554
Total current liabilities 13,246 43,275
Long term debt, less current maturities 4,877 3,991
Deferred gain on sale leaseback transaction 574 -
Capital lease obligations, less current
maturities 25 614
Commitments and contingencies -- --
Stockholders' equity
Preferred stock -- --
Common stock, par value $.01 per share,
authorized -- 19,000 shares; issued --
9,269 shares in 2001 and 9,369 in 2002;
outstanding -- 9,025 shares in 2001
and 9,125 in 2002 94 93
Additional paid-in capital 28,655 28,334
Treasury stock -- 244 shares in 2001 and
2002 (1,871) (1,871)
Retained earnings 10,556 13,622
Accumulated other comprehensive income
(loss) --
Foreign currency translation (1,993) (2,681)
Total stockholders' equity 35,441 37,497
Total liabilities and stockholders'
equity $54,163 $85,377
CHANNELL COMMERCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
12 Months Ended
Dec. 31,
2002 2001
(Unaudited)
Cash flows from operating activities:
Net (loss) ($3,066)$(25,198)
Depreciation and amortization 7,785 8,557
Impairment of fixed assets 2,154 4,322
Impairment of goodwill 966 11,772
Loss on disposal of fixed assets 288 353
Amortization of deferred gain on sale leaseback 30
Foreign currency transaction gain -
Deferred income taxes 1,193 (3,709)
Changes in assets and liabilities:
Accounts receivable 3,120 10,157
Inventories 2,182 11,330
Income tax receivable 4,682 (2,889)
Prepaid expenses 156 304
Other assets 32 69
Accounts payable 562 (3,348)
Accrued expenses 71 836
Restructuring liability (388) 1,408
Net cash provided by operating activities 19,767 13,964
Cash flows from investing activities:
Acquisition of property and equipment (1,886) (3,153)
Disposal of property and equipment 6,232
Net cash provided (used) in investing activities 4,346 (3,153)
Cash flows from financing activities:
Repayment of debt (35,133) (2,553)
Proceeds from issuance of long term debt 6,742 2,500
Repayment of obligations under capital lease (1,763) (2,579)
Purchase of treasury stock - (295)
Exercise of stock options 322 -
Net cash (used) in financing activities (29,832) (2,927)
Effect of exchange rates on cash 119 (35)
Increase (decrease) in cash and cash equivalents (5,600) 7,849
Cash and cash equivalents, beginning of period 8,762 913
Cash and cash equivalents, end of period $3,162 $8,762
Cash paid during the period for:
Interest $1,608 $3,801
Income taxes $1,122 $752
PRO FORMA RECONCILIATION
(UNAUDITED)
Fourth Quarter 2002 Total Year 2002
Without Without
Special Special GAAP Special Special GAAP
Charges Charges Reporting Charges Charges Reporting
Net sales 19,720 19,720 84,785 84,785
Cost of goods sold 13,949 341 14,290 57,109 341 57,450
Gross profit 5,771 (341) 5,430 27,676 (341) 27,335
Operating expenses
Selling 2,273 2,273 9,246 9,246
General and
administrative 2,653 2,653 11,452 11,452
Research and
development 404 404 1,619 1,619
Restructuring
charge - 1,228 1,228 - 1,228 1,228
Asset impairment
charge - 2,154 2,154 - 2,154 2,154
Goodwill
impairment
charge - 966 966 - 966 966
5,330 4,348 9,678 22,317 4,348 26,665
Income (loss)
from
operations 441 (4,689) (4,248) 5,359 (4,689) 670
Interest (expense) (187) - (187)(1,999) - (1,999)
Income (loss)
before
income tax 254 (4,689) (4,435) 3,360 (4,689) (1,329)
Income tax expense 163 (66) 97 1,803 (66) 1,737
Net income
(loss) 91 (4,623) (4,532) 1,557 (4,623) (3,066)
Net income (loss)
per share
Basic $0.01 $(0.51) $(0.50) $0.17 $(0.51) $(0.34)
Dilutive $0.01 $(0.51) $(0.50) $0.17 $(0.51) $(0.34)
Weighted number of shares
Basic 9114 9114 9114 9048 9048 9048
Dilutive 9137 9114 9114 9071 9048 9048
CHANNELL COMMERCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
PRO FORMA RECONCILIATION
(UNAUDITED)
Total Year 2001
Without Special Special GAAP
Charges Charges Reporting
Net sales 88,698 88,698
Cost of goods sold 61,397 8,495 69,892
Gross profit 27,301 (8,495) 18,806
Operating expenses
Selling 12,789 12,789
General and administrative 10,590 3,534 14,124
Research and development 2,331 2,331
Restructuring charge - 2,999 2,999
Asset impairment charge - 4,322 4,322
Goodwill impairment charge - 11,772 11,772
25,710 22,627 48,337
Income (loss) from
operations 1,591 (31,122) (29,531)
Interest (expense) (3,874) - (3,874)
Income (loss) before
income tax (2,283) (31,122) (33,405)
Income tax expense (600) (7,607) (8,207)
Net income (loss) (1,683) (23,515) (25,198)
Net income (loss) per
share
Basic $(0.19) $(2.60) $ (2.78)
Dilutive $(0.19) $(2.60) $ (2.78)
Weighted number of
shares
Basic 9050 9050 9050
Dilutive 9050 9050 9050
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