Optical Cable Corporation Returns to Profitability in Fiscal First Quarter
ROANOKE, Va., March 12 /PRNewswire-FirstCall/ -- Optical Cable Corporation (Nasdaq: OCCF - news) today announced financial results, including a return to profitability, in its fiscal first quarter ended January 31, 2002.
The Company reported net income for its first fiscal quarter of 2002 of $604,000, or $ 0.01 per diluted share, compared to a net loss of $115,000, for the first fiscal quarter of 2001. The Company had reported net losses in the first, second and fourth fiscal quarters of 2001 due in part to losses in a trading portfolio which was liquidated in 2001.
Net sales for first fiscal quarter of 2002 decreased 33.0% to $11.4 million from $17.0 million in the first fiscal quarter of 2001. By comparison, net sales were $11.9 million for the fourth fiscal quarter of 2001 and $11.3 million for the first fiscal quarter of 2000. The decrease in net sales during the first fiscal quarter of 2002 when compared to the same period last year was a result of weak economic conditions on market demand and pricing, a trend that significantly affected the Company beginning in the second half of fiscal year 2001. During the first fiscal quarter of 2002, the Company experienced a relatively stable product mix for cable containing multimode fiber (which typically has a higher relative sales price), compared to cable containing single-mode fiber (which typically has a lower relative sales price), when compared to first fiscal quarter 2001.
The gross profit as a percentage of net sales for the first fiscal quarter of 2002 was 39.5% compared to 46.4% for the first fiscal quarter of 2001, as production costs did not decrease at the same relative rate as the decrease in net sales. The gross margin in the fiscal fourth quarter of 2001 was 21.8%. During the fourth fiscal quarter of 2001, the Company wrote-off slow-moving and impaired inventory to net realizable value, disposed of certain impaired finished goods inventory, and adjusted inventory for book to physical variances resulting from year-end physical inventory counts.
As a percentage of net sales, selling, general and administrative (SG&A) expenses increased to 30.8% for the first fiscal quarter of 2002, compared to 23.1% for the first fiscal quarter of 2001. SG&A was 47.2% of net sales in the fourth quarter of fiscal 2001. The increase in SG&A expenses as a percentage of net sales is partly attributable to increases in legal and other professional fees. Additionally, although sales commissions and bonuses decreased as a result of the decrease in net sales, total SG&A expenses did not decrease as significantly as net sales decreased.
``We are generally pleased with our first quarter, given the state of the economy,'' stated Neil Wilkin, Acting-President and Chief Financial Officer. ``Net sales were down only slightly from the fourth fiscal quarter and, with the exception of fiscal year 2001, the first half of each year is generally our weakest due to seasonality. More importantly, we showed a reasonable profit this quarter.''
``While our industry appears near the bottom, it remains difficult to predict how the rest of fiscal 2002 will shake out. We do hope to see the typical seasonal patterns and look for sales to improve as we move through the year. While we are not prepared to comment on our expectations for margins, we are working diligently to control costs. We are pleased we were able to settle the outstanding brokerage lawsuits and to have the EEOC settlement behind us. Based on our positive cash flow in the quarter and stable outlook, we are also hopeful that we will be able to continue to finalize a new credit agreement in the near term,'' added Mr. Wilkin.
Optical Cable Corporation manufactures and markets a broad range of fiber optic cables for _high bandwidth_ transmission of data, video, and audio communications over short to moderate distances. Optical Cable Corporation's cables can be used both indoors and outdoors and utilize a tight-buffer coating process that protects the optical fiber.
Further information on Optical Cable Corporation is available through our website on the World Wide Web at www.occfiber.com .
FORWARD-LOOKING INFORMATION
This news release may contain certain ``forward-looking'' information within the meaning of the federal securities laws. The forward-looking information may include, among other information, (i) statements concerning Optical Cable Corporation's (the _Company_) outlook for the future, (ii) statements of belief, (iii) future plans, strategies or anticipated events, and (iv) similar information and statements concerning matters that are not historical facts. Such forward-looking information is subject to risks and uncertainties that may cause actual events to differ materially from the expectations of the Company. Factors that could cause or contribute to such differences include, but are not limited to, the level of sales to key customers or distributors; the economic conditions affecting network service providers; the slowdown in corporate spending on information technology; actions by competitors; fluctuations in the price of raw materials (including optical fiber); the Company's dependence on a single manufacturing facility; the ability of the Company to protect its proprietary manufacturing technology; market conditions influencing prices or pricing; the Company's dependence on a limited number of suppliers; an adverse outcome in litigation, claims and other actions, and potential litigation, claims and other actions against the Company, including, but not limited to, the shareholder litigation that has been filed; the effect of sales of the Company's common stock by the various brokerage firms alleging that the Company's former President and Chief Executive Officer pledged substantially all of his personally-held unregistered shares of the Company to cover personal margin loans; technological changes and introductions of new competing products; the current recession; terrorist attacks or acts of war, particularly given the acts of terrorism against the United States on September 11, 2001 and subsequent military responses by the United States; ability to retain key personnel; changes in market demand; exchange rates; productivity; weather; and market and economic conditions in the areas of the world in which the Company operates and markets its products. |
