Channell Reports Record Revenues and Record Pre-Tax Income in Second Quarter of FY 2000.Business Editors and High-Tech Writers TEMECULA, Calif.--(BUSINESS WIRE)--Aug. 8, 2000 Channell Commercial Corp. (Nasdaq:CHNL CHNL Channel ) Tuesday announced financial results for the second quarter of fiscal year 2000. For the three months ended June 30, 2000, Channell's revenues were a record $35.7 million, up 14% from the same period in 1999. Channell's net income for the second quarter was $3.1 million or $0.34 per share, as compared with $2.7 million or $0.30 per share for the second quarter of 1999. William 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, "Second quarter results not only met expectations but also emphasized the growing diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of Channell's expanding revenue stream. "Our U.S. operations generated a 22% increase in revenues over the second quarter of last year, primarily from higher 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 enclosure enclosure (inclosure) n. land bounded by a fence, wall, hedge, ditch or other physical evidence of boundary. Unfortunately, too often these creations are not included among the actual legally-described boundaries and cause legal problems. ENCLOSURE. sales to both CATV (Community Antenna TV) The original name for cable TV. It used a single antenna at the highest location in the community in order to deliver a quality signal to homes in areas with hilly terrain or other interference. and telephone service providers. We are encouraged by the 28% growth in revenues produced by our European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operation, due in large part to increased fiber optics fiber optics, transmission of digitized messages or information by light pulses along hair-thin glass fibers. Each fiber is surrounded by a cladding having a high index of refractance so that the light is internally reflected and travels the length of the fiber products and RF sales. "Our Latin American revenues were up 55% over the second quarter of last year, principally due to increased penetration of the important Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum market. Our AustralAsian operation experienced a 29% decrease in revenues in the second quarter compared to the same period last year. "We expect to offset lower AustralAsian revenues in the second half primarily by continued revenue growth in the U.S., Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and the U.K." Tom Liguori, chief financial officer, said, "The increased throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. and productivity of our domestic operations continue to increase our U.S. gross margin. "As a percentage of sales, gross profit in the U.S. operations increased from 43.6% in the second quarter of 1999 to 46.3% in the second quarter of this year. We are performing a comprehensive assessment of our gross margins for both products and customers and expect to see benefits as early as the fourth quarter." 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 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. With headquarters in Temecula, Channell currently operates U.S. manufacturing facilities in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and a distribution facility in North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. . 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 manufacturing facilities in Toronto, London, Sydney, Australia and Kuala Lumpur Kuala Lumpur (kwä`lə l  m`pr), city (1990 est. pop. , Malaysia.Channell's customers have included telco and broadband service providers An ISP, telephone company, cable company or other carrier that offers high-speed communications to homes and businesses, typically for Internet access. Cable modems, DSL and T1 lines are the common technologies. See broadband, cable modem, DSL and T1. such as AT&T, Bell Atlantic, BellSouth, GTE GTE General Telephone & Electronics GTE Génie Thermique et Énergie (French) GTE Gas Turbine Engine GTE Global Tropospheric Experiment GTE Geothermal Energy GTE Gas Turbine Efficiency plc (Sweden & USA) , British Telecom The telephone and communications carrier that provides services in Great Britain and Northern Ireland. It used to be a division of the British Post Office, but was privatized in 1984 under Margaret Thatcher's administration. , Singapore Telecom, Telekom Malaysia Telekom Malaysia Berhad (TM) is the largest telecommunication company in Malaysia and also Southeast Asia's second-largest telecommunication company. It has a monopoly on the fixed line network and has a considerable market share of the mobile communications market after its , Telstra, Cable & Wireless, Rogers Canada, Shaw Communications Shaw Communications Inc. (TSX: SJR.NV.B NYSE: SJR) is a Canadian telecomunications company headquartered in Calgary, Alberta. The company was founded by J.R. Shaw in 1966 as Capital Cable Television Co Ltd.. , Optus, Cox Communications Cox Communications is a privately owned subsidiary of Cox Enterprises providing digital cable television and telecommunications services in the United States. It is the third-largest[2] cable television provider in the United States, serving more than 6. , Time Warner, Media One and TCI (Trustworthy Computing Initiative) An umbrella term from Microsoft for its efforts to improve security in Windows. TCI was announced in 2002 after viruses such as Code Red and Nimda had succeeded in attacking numerous Windows computers. . Corporate Profile An eight-page Channell Corporate Profile can be viewed at www.channellcomm.com. The corporate profile includes illustrations of the Local Loop and typical Channell products in the Local Loop. It also includes a discussion of the company's markets, competitive position and growth strategy. 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 CORPORATION
FINANCIAL HIGHLIGHTS
(Amounts in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenue $35,722 $31,315 $67,972 $56,013
Gross Profit 13,884 12,341 25,125 21,940
Operating Profit 6,053 5,364 9,543 8,748
Net Income 3,132 2,718 4,743 4,428
Net Income Per Share
Basic .34 .30 .52 .49
Diluted .34 .30 .51 .49
EBIT $ 6,053 $ 5,364 $ 9,543 $ 8,748
EBITDA 8,041 7,221 13,412 12,029
Average Shares Outstanding
Basic 9,083 9,099 9,080 9,099
Diluted 9,141 9,099 9,230 9,099
CHANNELL COMMERCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (UNAUDITED)
(amounts in thousands, except per share data)
Six months ended Three months ended
June 30, June 30,
2000 1999 2000 1999
Net sales $67,972 $56,013 $35,722 $31,315
Cost of goods sold 42,847 34,073 21,838 18,974
Gross profit 25,125 21,940 13,884 12,341
Operating expenses
Selling 7,871 7,022 3,886 3,687
General and
administrative 6,406 4,855 3,250 2,602
Research and development 1,305 1,315 695 688
15,582 13,192 7,831 6,977
Income from operations 9,543 8,748 6,053 5,364
Interest expense, net (1,346) (1,123) (743) (586)
Income before income
taxes 8,197 7,625 5,310 4,778
Income taxes 3,454 3,197 2,178 2,060
Net income $ 4,743 $ 4,428 $ 3,132 $ 2,718
Net income per share
Basic $ 0.52 $ 0.49 $ 0.34 $ 0.30
Diluted $ 0.51 $ 0.49 $ 0.34 $ 0.30
Net income $ 4,743 $ 4,428 $ 3,132 $ 2,718
Other comprehensive income, net of tax
Foreign currency translation
adjustments (625) 80 147 75
Comprehensive net
income $4,118 $4,508 $3,279 $2,793
CHANNELL COMMERCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(amounts in thousands)
June 30, Dec. 31,
2000 1999
ASSETS
Current assets
Cash and cash equivalents $ 1,050 $ 2,733
Accounts receivable, net 25,082 23,235
Inventories 18,663 19,449
Deferred income taxes 848 707
Prepaid expenses 2,086 2,294
Income taxes receivable -- 389
Total current assets 47,729 48,807
Property and equipment at cost, net 52,323 49,452
Deferred income taxes 509 124
Intangible assets, net 14,034 14,450
Other assets 2,260 1,707
$ 116,855 $ 114,540
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 6,877 $11,643
Short term debt (including current
maturities of long term debt) 208 4,135
Current maturities of capital lease
obligations 2,860 2,608
Accrued expenses 2,182 2,497
Income taxes payable 803 --
Total current liabilities 12,930 20,883
Long term debt, less current
maturities 33,921 26,240
Capital lease obligations, less current
maturities 3,467 5,078
Stockholders' equity
Preferred stock -- --
Common stock, par value $.01 per share,
authorized -- 19,000 shares; issued --
9,245 shares at June 30, 2000 and 9,237
at Dec. 31, 1999; 9,084 outstanding at
June 30, 2000; 9,076 outstanding at
Dec. 31, 1999 92 92
Additional paid-in capital 28,070 27,991
Treasury stock -- 161 shares (1,352) (1,352)
Retained earnings 39,995 35,252
Accumulated other comprehensive income --
Foreign currency translation (268) 356
Total stockholders' equity 66,537 62,339
Total liabilities and stockholders'
equity $ 116,855 $ 114,540
CHANNELL COMMERCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(amounts in thousands)
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities:
Net income $ 4,743 $ 4,428
Depreciation and amortization 3,869 3,281
Deferred income taxes (560) 2
Change in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (1,634) (1,939)
Inventories 1,124 (2,211)
Prepaid expenses 237 (542)
Other (553) 276
Increase (decrease) in liabilities:
Accounts payable (5,715) 452
Accrued expenses (315) (2,756)
Income taxes payable 1,191 237
Net cash provided by operating activities 2,387 1,228
Cash flows from investing activities:
Acquisition of property and equipment (6,324) (5,679)
Net cash used in investing activities (6,324) (5,679)
Cash flows from financing activities:
Repayment of debt (4,150) (412)
Proceeds from issuance of long term debt 7,772 --
Acquisition (Repayment) of obligations under
capital lease (1,353) 796
Exercise of stock options 79 --
Net cash provided by financing activities 2,348 384
Effect of exchange rates on cash (94) 80
Decrease in cash and cash equivalents (1,683) (3,987)
Cash and cash equivalents, beginning of period 2,733 5,828
Cash and cash equivalents, end of period $ 1,050 $ 1,841
Cash paid during the period for:
Interest $ 1,385 $ 902
Income taxes $ 3,810 $ 2,881
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