Thursday August 7 6:31 AM EDT
Company Press Release
Cabletel Communications Reports Second Quarter and Six-Months
Results
MARKHAM, Ontario--(BUSINESS WIRE)--August 7, 1997--
- Announces Restructuring and Related Charges - - Ron Eilath Named Chief Financial Officer -
Cabletel Communications Corp. (AMEX: ``TTV'', TSE: ``TTV'') today reported second quarter and six- months results for
the periods ended June 30, 1997 which reflect a $1,470,000 restructuring charge related to inventory write-downs and
company-wide workforce reductions. Cabletel also announced today that Ron Eilath, 41, has been named Chief Financial
Officer, replacing Brian S. Kelsey who resigned from the Company.
Net sales (all figures reported in Canadian dollars) in the second quarter ended June 30, 1997 increased 21% to $14,243,248
from $11,751,662 in the second quarter of 1996. Gross profit in the second quarter of 1997 increased 23% to $2,392,505
from $1,947,563 in the second quarter of 1996 as gross margins increased to 16.8% from 16.6%, reflecting a more beneficial
sales mix featuring higher margin electronic components.
After giving effect to a pre-tax restructuring charge of $1,470,000 related to the write-down of certain inventory items
acquired in the August 1996 purchase of ANTEC Corp.'s (Nasdaq:ANTC) Canadian distribution operations and severance
payments associated with a 15 percent reduction in Cabletel's workforce, the Company reported a net loss of $824,036, or
$0.13 per share, for the second quarter of 1997, compared to net income of $81,282, or $0.02 per share, in the second
quarter of 1996. Excluding the restructuring charge, Cabletel would have reported 1997 second quarter operating income of
$339,588, compared to $341,634 in the second quarter of 1996, and a 1997 second quarter net loss of $15,536, or break
even on a per share basis. Per share results are based on a weighted average number of shares outstanding of 6,495,112 and
4,630,000 for the second quarters of 1997 and 1996, respectively, reflecting the issuance of 1,450,000 shares issued pursuant
to the ANTEC acquisition and the conversion of a note by ARC International (AMEX:ATV), Cabletel's majority shareholder,
into 165,153 Cabletel shares.
For the six-months period ended June 30, 1997, net sales increased 26% to $28,132,650, compared to $22,365,292 in the
first six-months of 1997. Gross profit in the first two quarters of 1997 increased 31% to $4,943,653 from $3,782,590 in the
comparable 1996 period as gross margins increased to 17.6% from 16.9%. Giving effect to the restructuring charge, Cabletel
reported a net loss of $763,279, or $0.12 per share, compared to net income of $300,377, or $0.06 per share, in the same
period last year. Excluding restructuring costs, Cabletel would have reported operating income of $843,543 in the first half of
1997, compared to $933,189 in the first six-months of 1996, and net income of $45,221, or break even on a per share basis.
Per share results are based on a weighted average number of shares outstanding of 6,495,112 and 4,626,250 for the first
six-months of 1997 and 1996, respectively.
Sheldon M. Rittenberg, President and Chief Executive Officer of Cabletel Communications, commented on the restructuring,
``While revenues in the first half of 1997 showed significant improvement from sales of our newly acquired ANTEC product
lines, the increase did not offset the drag on our performance from slow moving inventory and investments made over the past
year to enhance our sales and distribution infrastructure. Slower than expected capital spending by our customers on products
traditionally supplied by Cabletel diminished the Company's ability to generate profits from its recent expansion. Through
inventory write-downs and personnel reduction, we have taken proactive steps to reduce our cost structure, improve our
balance sheet and increase profitability.''
Mr. Eilath brings over nine years of public company management experience to Cabletel. He joins the Company from the
Mariposa Communications Group where he was Vice President of Finance. Prior to joining Mariposa, Mr. Eilath was for eight
years Executive Vice President, Finance and Administration for Dynacare, Inc. (TSE: DNA.B) and the affiliated
Shiplake/Greenwin Group of Companies, a privately held real estate concern, where he focused on tax planning, strategic
investments and real estate holding divestitures. Mr. Eilath began his career as a senior staff auditor with Kraft Rothman Berger
and Grill and holds a Bachelor of Arts degree from the University of Toronto. He is both a Chartered Accountant in Canada
and a Certified Public Accountant in the United States.
Mr. Rittenberg added, ``We are pleased to have Ron Eilath join Cabletel's management team. His expertise in strategic
business planning, financial management and control are welcome additions that should position Cabletel to operate more
efficiently and better leverage top-line growth.
``Despite the restructuring charges, Cabletel's core business remains viable. With our geographic reach, turn-key inventory
capabilities and range of industry relationships, Cabletel still controls the strongest cable television equipment distribution
franchise in Canada, and we are a more focused Company as a result of the restructuring.''
Cabletel Communications Corp. is the largest full-service distributor of broadband equipment to the Canadian cable television
and telecommunications industries, offering over 10,000 products required to construct, build, maintain and upgrade cable
television and telecommunications systems. The Company also manufactures brass and aluminum connectors for use in cable
distribution systems through its wholly-owned subsidiary, Stirling Connectors Inc.
Except for the historical information in this press release, it includes forward-looking statements that involve risks and
uncertainties, including, but not limited to, quarterly fluctuations in results, the management of growth, and other risks detailed
from time to time in the Company's Securities and Exchange Commission filings. Actual results may differ materially from
management expectations.
Cabletel Communications Corp.
Consolidated Statement of Operations
(Canadian $)
(Unaudited)
Three Months Ended Six-Months Ended
June 30, June 30,
1997 1996 1997 1996
Net Sales $14,243,248 $11,751,662 $28,132,650 $22,365,292
Cost of Sales 11,850,743 9,804,099 23,188,997 18,582,702
Gross profit 2,392,505 1,947,564 4,943,653 3,782,590
Selling, General &
Administrative Expenses 2,052,917 1,605,930 4,100,110 2,849,401
Restructuring Costs (1,470,000) - 0 (1,470,000) - 0
Income (loss) from
operations (1,130,412) 341,633 (626,457) 933,189
Other:
Interest expense 113,397 64,768 225,413 157,354
Depreciation &
amortization 204,727 96,085 430,909 190,958
Income (loss) before
taxes (1,448,536) 180,780 (1,282,779) 584,877
Income tax (expense)
benefit 624,500 (99,500) 519,500 (284,500)
Net income (loss) ($824,036) $ 81,280 ($763,279) $ 300,377
Net income (loss) per
share $ (0.13) $ 0.02 $ (0.12) $ 0.06
Weighted average
shares outstanding 6,495,112 4,630,000 6,495,112 4,626,250
Contact:
Ron Eilath Arnold S. Tenney
Chief Financial Officer Chairman
905/475-1030 416/630-0200
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