OCCF Optical Cable Corp. (MM)

ROANOKE, Va., March 17 /PRNewswire-FirstCall/ -- Optical Cable Corporation (Nasdaq GM: OCCF) ("OCC") today announced financial results for its fiscal first quarter ended January 31, 2010.  

First Quarter 2010 Financial Results

OCC reported improved results of operations during the first quarter of fiscal year 2010, when compared to the same period last year.  The Company recorded a net loss attributable to OCC of $316,000, or $0.05 per basic and diluted share, for the first quarter of fiscal year 2010, compared to a net loss of $742,000, or $0.12 per basic and diluted share, for the same period last year.  

The improvement in results is attributable to gross profit margin improvement and cost reduction initiatives started last year, partially offset by costs associated with adding military and harsh environment connectivity products to OCC's product offering following the Company's acquisition of Applied Optical Systems, Inc. ("AOS") on October 31, 2009.  

Excluding the impact of the AOS acquisition, the Company believes it would have recorded net income before taxes in the first quarter of fiscal year 2010.  Additionally, during the first quarter of fiscal year 2010, OCC recorded a loss before income taxes of $364,000 associated with a business in which OCC acquired a controlling interest on August 1, 2008.

OCC's consolidated net sales for each of the first quarters of fiscal years 2010 and 2009 were approximately $15.0 million. Net sales increased in the Company's specialty markets (partially as a result of the acquisition of AOS) during the first quarter of fiscal year 2010 compared to the same period last year, but this increase was offset by decreases in net sales in the Company's commercial markets.

Gross profit increased 14.9% to $5.5 million in the first quarter of fiscal 2010, compared to $4.8 million in the first quarter of fiscal 2009.  Gross profit margin for the first quarter of fiscal 2010 increased to 36.7% compared to 32.0% for the same period last year, due to improved gross profit margins on fiber optic cable products.  

Management's Comments

Neil Wilkin, President and Chief Executive Officer of OCC, said "Our improving results of operations reflect our efforts to reduce costs and achieve profitable growth.  We are pleased that we maintained our strong balance sheet in the first quarter while delivering positive EBITDA (earnings before interest, taxes, depreciation and amortization)."    

"While we continue to expect challenging financial conditions through the first half of 2010, OCC is in an enviable position in our industry.  We have taken steps to grow our business organically and through acquisitions -- and now OCC provides the comprehensive suite of products needed by our customers.  We are confident that OCC is well-positioned for further growth and shareholder value creation as the economy improves," stated Mr. Wilkin.    

Company Information

Optical Cable Corporation is a leading manufacturer of a broad range of fiber optic and copper data communications cabling and connectivity solutions primarily for the enterprise market, offering an integrated suite of high quality, warranted products which operate as a system solution or seamlessly integrate with other providers' offerings.  OCC's product offerings include designs for uses ranging from commercial, enterprise network, datacenter, residential and campus installations to customized products for specialty applications and harsh environments, including military, industrial, mining and broadcast applications.  OCC products include fiber optic and copper cabling, fiber optic and copper connectors, specialty fiber optic and copper connectors, fiber optic and copper patch cords, pre-terminated fiber optic and copper cable assemblies, racks, cabinets, datacom enclosures, patch panels, face plates, multi-media boxes and other cable and connectivity management accessories, and are designed to meet the most demanding needs of end-users, delivering a high degree of reliability and outstanding performance characteristics. 

OCC is internationally recognized for pioneering the design and production of fiber optic cables for the most demanding military field applications, as well as of fiber optic cables suitable for both indoor and outdoor use, and creating a broad product offering built on the evolution of these fundamental technologies.  OCC also is internationally recognized for its role in establishing copper connectivity data communications standards, through its innovative and patented technologies.

Founded in 1983, OCC is headquartered in Roanoke, Virginia with offices, manufacturing and warehouse facilities located in each of Roanoke, Virginia, near Asheville, North Carolina and near Dallas, Texas.  OCC primarily manufactures its high quality fiber optic cables at its Roanoke facility which is ISO 9001:2008 registered and MIL-STD-790F certified, its high quality enterprise connectivity products at its Asheville facility which is ISO 9001:2008 registered, and its high quality military and harsh environment connectivity products and systems at its Dallas facility which is MIL-STD-790F certified.

Optical Cable Corporation, OCC, Superior Modular Products, SMP Data Communications, Applied Optical Systems, and associated logos are trademarks of Optical Cable Corporation.

Further information about OCC is available on the Internet at www.occfiber.com.

FORWARD-LOOKING INFORMATION

This news release by Optical Cable Corporation and its subsidiaries (collectively, the "Company" or "OCC") 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 the Company's outlook for the future, (ii) statements of belief, anticipation or expectation, (iii) future plans, strategies or anticipated events, and (iv) similar information and statements concerning matters that are not historical facts. Such forwardlooking information is subject to variables, uncertainties, contingencies and risks that may cause actual events to differ materially from the Company's expectations.  Additionally, such variables, uncertainties, contingencies and risks may adversely affect the Company and the Company's future results of operation and future financial condition.  Factors that could cause or contribute to such differences from the Company's expectations or could adversely affect the Company, include, but are not limited to: the level of sales to key customers, including distributors; timing of certain projects and purchases by key customers; the economic conditions affecting network service providers; corporate and/or government spending on information technology; actions by competitors; fluctuations in the price of raw materials (including optical fiber, copper, gold and other precious metals, and plastics and other materials affected by petroleum product pricing); fluctuations in transportation costs; the Company's dependence on customized equipment for the manufacture of its products and a limited number of production facilities; the Company's ability to protect its proprietary manufacturing technology; the Company's ability to replace royalty income as existing patented and licensed products expire by developing and licensing new products; market conditions influencing prices or pricing; the Company's dependence on a limited number of suppliers; the loss of or conflict with one or more key suppliers or customers; an adverse outcome in litigation, claims and other actions, and potential litigation, claims and other actions against the Company; an adverse outcome in regulatory reviews and audits and potential regulatory reviews and audits; adverse changes in state tax laws and/or positions taken by state taxing authorities affecting the Company; technological changes and introductions of new competing products; changes in end-user preferences for competing technologies, relative to the Company's product offering; economic conditions that affect the telecommunications sector, certain technology sectors or the economy as a whole; changes in demand of our products from certain competitors for which we provide private label connectivity products; terrorist attacks or acts of war,  and any current or potential future military conflicts; changes in the level of military spending by the United States government; ability to retain key personnel; inability to recruit needed personnel; poor labor relations; the inability to successfully integrate the operations of the Company's new subsidiaries; the impact of changes in accounting policies, including those by the Securities and Exchange Commission and the Public Company Accounting Oversight Board; the Company's ability to continue to successfully comply with, and the cost of compliance with, the provisions of Section 404 of the Sarbanes-Oxley Act of 2002 or any revisions to that act which apply to the Company; the impact of changes and potential changes in federal laws and regulations adversely affecting our business and/or which result in increases in our direct and indirect costs as we comply with such laws and regulations; impact of future consolidation among competitors and/or among customers adversely affecting the Company's position with its customers and/or its market position; actions by customers adversely affecting the Company in reaction to the expansion of its product offering in any manner, including, but not limited to, by offering products that compete with its customers, and/or by entering into alliances with, making investments in or with, and/or acquiring parties that compete with and/or have conflicts with customers of the Company; adverse reactions by customers, vendors or other service providers to unsolicited proposals regarding the management of the Company, and the additional costs of considering and possibly defending the Company's position on such unsolicited proposals; impact of weather or natural disasters in the areas of the world in which the Company operates and markets its products; the Company's ability to secure financing to fund working capital needs; economic downturns and/or changes in market demand, exchange rates, productivity, or market and economic conditions in the areas of the world in which the Company operates and markets its products, and the Company's success in managing the risks involved in the foregoing. The Company cautions readers that the foregoing list of important factors is not exclusive and the Company incorporates by reference those factors included in current reports on Form 8K, in the annual report on Form 10K for the fiscal year ended October 31, 2009, and/or in the Company's other filings.

(Financial Tables Follow)

    
    
                                   OPTICAL CABLE CORPORATION
                          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (thousands, except per share data)
                                         (unaudited)
                          -----------------------------------------------
                                                    Three Months Ended
                                                        January 31,
                                                  -----------------------
                                                     2010          2009
                                                  ---------     ---------
    Net sales                                    $  15,007     $  14,958
    Cost of goods sold                               9,506        10,170
                                                  ---------     ---------
        Gross profit                                 5,501         4,788
    Selling, general and                             
     administrative expenses                         6,049         5,810
    Royalty income, net                               (246)         (162)
    Amortization of intangible assets                  147           210
                                                  ---------     ---------
    
        Loss from operations                          (449)       (1,070)
    
    Interest expense, net                             (145)         (166)
    Other, net                                          (7)           24
                                                  ---------     ---------
        Other expense, net                            (152)         (142)
                                                  ---------     ---------
        Loss before income taxes                      (601)       (1,212)
    Income tax benefit                                (222)         (470)
                                                  ---------     ---------
        Net loss                                 $    (379)    $    (742)
    Net loss attributable to                           
     noncontrolling interest                           (63)            —                                   
                                                  ---------     ---------
                                                  
    Net loss attributable to OCC                 $    (316)    $    (742)
                                                  ==========    ==========
                                                   
    Net loss attributable to OCC per share:
      Basic and diluted                          $   (0.05)    $   (0.12)
                                                  ==========    ==========
    Weighted average shares outstanding:
      Basic and diluted                              5,860         6,131
                                                  ==========    ==========  
    
    
    
    
    
                                   OPTICAL CABLE CORPORATION
                           CONDENSED CONSOLIDATED BALANCE SHEET DATA
                                          (thousands)
                                          (unaudited)
                           -------------------------------------------
    
                                                   January 31,    October 31,
                                                      2010            2009
                                                   -----------    -----------
    Cash and cash equivalents                     $   1,121      $   1,948
    Trade accounts receivable, net                    8,805          9,533
    Inventories                                      13,626         12,306
    Other current assets                              4,925          3,915
                                                   -----------    -----------
        Total current assets                         28,477         27,702
    Non-current assets                               22,067         22,625
                                                   -----------    -----------
        Total assets                              $  50,544      $  50,327
                                                   ===========    ===========
    Current liabilities                           $   7,564      $   7,632
    Non-current liabilities                           9,906          9,438
                                                   -----------    -----------
        Total liabilities                            17,470         17,070
    Total shareholders' equity 
     attributable to OCC                             33,137         33,257
    Noncontrolling interest                             (63)             —
                                                   -----------    -----------
    Total shareholders' equity                       33,074         33,257
                                                   -----------    -----------
        Total liabilities and                   
              shareholders' equity                     $  50,544     $  50,327
                                                   ===========    ===========
                    

SOURCE Optical Cable Corporation