Channell Announces Second Quarter Results.Business Editors/High-Tech Writers TEMECULA, Calif.--(BUSINESS WIRE)--July 24, 2003 Channell Commercial Corp. (Nasdaq:CHNL CHNL Channel ) today announced unaudited financial results for the second quarter ended June June: see month. 30, 2003. For the three months ended June 30, 2003, Channell's net revenues were $20.3 million compared with $25.8 million in the same period of 2002. Channell's net income in the second quarter of 2003 was $1.1 million or $0.12 per share compared with net income of $0.8 million or $0.09 per share in the second quarter of 2002. The second quarter earnings in 2002 included a $2 million addition to bad debt reserves 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 . For the six months ended June 30, 2003, revenues were $36.5 million compared with $45.7 million in the same period in 2002. For the six months ended June 30, 2003 net income was $0.09 per 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 $0.14 per diluted share in the same period last year. William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack H. Channell, Jr., president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , said, "Given the difficult industry environment, we are pleased we were profitable in the second quarter. Visibility for the second half of 2003 is low. Order flow has trended down since peaking in April. We expect third quarter revenues to be similar to second quarter revenues and third quarter earnings to be in the $0.08 to $0.12 range. We believe our strong balance sheet and reduced cost structure position us to take advantage of a number of sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. telephone market opportunities
consistent with our strategy of increasing our telephone revenues to 50%
of total revenues."Today's Conference Call There will be a conference call webcast at www.companyboardroom.com at 3 p.m. Eastern time today to discuss today's release. About Channell Channell Commercial Corp. 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 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. (U.K.), 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 10K and S-1 filed with the Securities and Exchange Commission.
CHANNELL COMMERCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(amounts in thousands, except per share data)
Six months Three months
ended ended
June 30, June 30,
2003 2002 2003 2002
Net sales $36,503 $45,664 $20,285 $25,823
Cost of goods sold 25,572 29,194 13,836 15,835
Gross
profit 10,931 16,470 6,449 9,988
Operating expenses
Selling 4,647 4,961 2,345 2,792
General and
administrative 3,728 6,655 1,876 4,654
Research and
development 785 838 390 446
9,160 12,454 4,611 7,892
Income from
operations 1,771 4,016 1,838 2,096
Interest expense, net 260 1,321 139 551
Income before
income taxes 1,511 2,695 1,699 1,545
Income taxes 731 1,379 631 725
Net
income $780 $1,316 $1,068 $820
Net income per
share
Basic $0.09 $0.15 $0.12 $0.09
Diluted $0.09 $0.14 $0.12 $0.09
Weighted average
number of shares
outstanding
Basic 9,125 9,025 9,126 9,025
Diluted 9,138 9,086 9,140 9,101
Net income $780 $1,316 $1,068 $820
Other comprehensive income, net of
tax
Foreign currency translation
adjustments 1,202 615 732 681
Comprehensive net income $1,982 $1,931 $1,800 $1,501
EBITDA $4,999 $7,689 $3,433 $4,076
CHANNELL COMMERCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
June 30, Dec. 31,
2003 2002
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 5,743 $ 3,162
Accounts receivable, net 11,566 10,156
Inventories 9,008 7,757
Deferred income taxes 1,037 1,037
Prepaid expenses and
misc. receivables 937 1,090
Income taxes
receivable -- 247
Total current assets 28,291 23,449
Property and equipment at cost, net 20,510 25,431
Deferred income taxes 4,467 4,367
Intangible assets, net 504 504
Other assets 478 412
$54,250 $54,163
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 5,848 $ 5,820
Short term debt
(including current
maturities of long term debt) 952 952
Current maturities of
capital lease obligations 264 694
Accrued taxes 56 --
Accrued restructuring liability 1,663 2,155
Accrued expenses 4,129 3,625
Total current liabilities 12,912 13,246
Long term debt, less current maturities 3,336 4,877
Capital lease obligations, less current
maturities 30 25
Deferred gain on sale leaseback
transaction 544 574
Commitments and contingencies -- --
Stockholders' equity
Preferred stock, par value $.01 per share,
authorized -- 1,000 shares, none
issued and outstanding -- --
Common stock, par value $.01 per share,
authorized -- 19,000 shares;
issued - 9,369 shares in
Dec. 31, 2002 and 9,370 in June 30, 2003;
outstanding -- 9,125 shares in Dec. 31,
2002 and 9,126 in June 30, 2003 94 94
Additional paid-in capital 28,660 28,655
Treasury stock -- 244 shares in
2002 and 2003 (1,871) (1,871)
Retained earnings 11,336 10,556
Accumulated other
comprehensive income
(loss) -- Foreign currency translation (791) (1,993)
Total stockholders' equity 37,428 35,441
Total liabilities and
stockholders' equity $54,250 $54,163
CHANNELL COMMERCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(amounts in thousands)
Six months ended
June 30,
2003 2002
Cash flows from operating activities:
Net
income $780 $1,316
Depreciation and amortization 3,228 3,673
Deferred income taxes (100) 670
Loss on disposal of fixed assets 79 41
Foreign currency transaction gain 13 --
Change in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (1,071) 2,263
Inventories (940) 1,274
Prepaid expenses 376 480
Other (64) (100)
Income taxes receivable -- 5,076
Increase (decrease) in liabilities:
Accounts payable 101 (677)
Accrued expenses 479 301
Restructuring liability (548) (942)
Income taxes payable 242 742
Net cash provided by operating activities 2,575 14,117
Cash flows from investing activities:
Acquisition of property and equipment (639) (1,401)
Proceeds from the sales of property and equipment 2,314 6,614
Net cash provided by investing activities 1,675 5,213
Cash flows from financing activities:
Repayment of debt (1,541) (17,089)
Repayment of obligations under capital lease (436) (1,215)
Exercise of stock options 5 --
Net cash used in financing activities (1,972) (18,304)
Effect of exchange rates on cash 303 87
Increase in cash and cash equivalents 2,581 1,113
Cash and cash equivalents, beginning of period 3,162 8,762
Cash and cash equivalents, end of period $5,743 $9,875
Cash paid during
the period for:
Interest $172 $1,126
Income
taxes $407 $244
CHANNELL COMMERCIAL CORP.
RECONCILIATION OF EBITDA
(amounts in thousands)
Six months Three months
ended ended
June 30, June 30,
2003 2002 2003 2002
Net income 780 1,316 1,068 820
Interest expense, net 260 1,321 139 551
Income taxes 731 1,379 631 725
Depreciation & amortization 3,228 3,673 1,595 1,980
EBITDA 4,999 7,689 3,433 4,076
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