OCCF » Topics » Gross Profit

These excerpts taken from the OCCF 10-Q filed Jun 12, 2009.

Gross Profit

Our gross profit was $5.7 million for the second quarters of fiscal years 2009 and 2008. Gross profit margin, or gross profit as a percentage of net sales, decreased to 37.3% in the second quarter of fiscal year 2009 from 42.6% in the second quarter of fiscal year 2008. By comparison, gross profit margin was 32.0% in the first quarter of fiscal year 2009.

The primary reason for the decrease when comparing the second quarter of fiscal year 2009 to the second quarter of fiscal year 2008 is the acquisition of SMP Data Communications on May 30, 2008. Specifically, SMP Data Communications has historically had gross profit margin percentages lower than the historical gross profit margins of Optical Cable Corporation. The gross profit margin associated with the sale of connectivity products was 16.0% for the second quarter of fiscal year 2009, while the gross profit margin associated with fiber optic cable sales was 41.4% during the second quarter of fiscal year 2009.

We believe SMP Data Communications will continue to place downward pressure on our historical gross profit margins in future periods. However, at this time, we are unable to determine if this is a trend or predict the amount by which our future gross profit margins will be impacted.

Exclusive of the impact of SMP Data Communications, gross profit decreased 7.3% to $5.3 million for the second quarter of fiscal year 2009, compared to $5.7 million for the same period in fiscal year 2008. Our gross profit margin decreased slightly to 41.4% for the second quarter of fiscal year 2009, compared to 42.6% for the same period last year. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and unanticipated changes in product mix.

Gross Profit

Our gross profit decreased 5.1% to $10.5 million for the first half of fiscal 2009 from $11.1 million for the same period in fiscal year 2008. Gross profit margin, or gross profit as a percentage of net sales, decreased to 34.7% for the first half of fiscal year 2009 from 42.3% for the same period last year.

The primary reason for the decrease is the acquisition of SMP Data Communications on May 30, 2008. Specifically, SMP Data Communications has historically had gross profit margin percentages lower than the historical gross profit margins of Optical Cable Corporation. The gross profit margin associated with the sale of connectivity products was 18.3% for the first half of fiscal year 2009, while the gross profit margin associated with fiber optic cable sales was 39.0% during the first half of fiscal year 2009.

We believe SMP Data Communications will continue to place downward pressure on our historical gross profit margins in future periods. However, at this time, we are unable to determine if this is a trend or predict the amount by which our future gross profit margins will be impacted.

Exclusive of the impact of SMP Data Communications, gross profit decreased 15.5% to $9.4 million for the first half of fiscal year 2009, compared to $11.1 million for the same period in fiscal year 2008. Our gross profit margin decreased to 39.0% for the first half of fiscal year 2009, compared to 42.3% for the same period last year. We believe the decrease in our gross profit margin, exclusive of the impact of SMP Data Communications, for the first half of fiscal year 2009 related primarily to the fact certain fixed manufacturing costs were spread over lower sales volumes. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and unanticipated changes in product mix.

This excerpt taken from the OCCF 10-Q filed Mar 16, 2009.

Gross Profit

Our gross profit decreased 10.2% to $4.8 million in the first quarter of fiscal year 2009, compared to $5.3 million in the first quarter of fiscal year 2008. Gross profit margin, or gross profit as a percentage of net sales, decreased to 32.0% in the first quarter of fiscal year 2009 from 42.1% in the first quarter of fiscal year 2008.

The primary reason for the decrease is that historically, SMP Data Communications has had gross profit margin percentages lower than the historical gross profit margins of Optical Cable Corporation. The gross profit margin associated with the sale of connectivity products was 19.8% for the first quarter of fiscal year 2009, while the gross profit margin associated with fiber optic cable sales was 36.2% during the first quarter of fiscal year 2009.

We believe SMP Data Communications will continue to place downward pressure on our historical gross profit margins in future periods. However, at this time, we are unable to determine if this is a trend or predict the amount by which our future gross profit margins will be impacted.

Exclusive of the impact of SMP Data Communications, gross profit decreased 24.4% to $4.0 million for the first quarter of fiscal year 2009, compared to $5.3 million for the same period in fiscal year 2008. Our gross profit margin decreased to 36.2% for the first quarter of fiscal year 2009, compared to 42.1% for the same period last year. We believe the decrease in our gross profit margin, exclusive of the impact of SMP Data Communications, for the first quarter of 2009 related primarily to the fact that certain fixed manufacturing costs were spread over lower sales volumes. By comparison, our gross profit margin for the second quarter of fiscal year 2007 was 36.5%—a quarter with similar net sales volumes.

These excerpts taken from the OCCF 10-K filed Jan 29, 2009.

Gross Profit

Gross profit increased 40.7% to $24.2 million in fiscal year 2008 from $17.2 million in fiscal year 2007. Gross profit margin, or gross profit as a percentage of net sales, increased to 39.6% for fiscal year 2008, compared to 37.7% for fiscal year 2007. Quarterly gross profit margins during fiscal year 2008 were 42.1%, 42.6%, 37.7% and 37.4% during the first, second, third and fourth quarters, respectively. Our lower gross profit margins in the second half of fiscal year 2008 reflected the fact that SMP Data Communications has historically had gross profit margin percentages lower than the historical gross profit margins of Optical Cable Corporation. Our gross profit margins from our fiber optic cable product lines, exclusive of the acquisition of SMP Data Communications, during fiscal year 2008 were: 42.1%, 42.6%, 42.0% and 43.4% during the first, second, third and fourth quarters, respectively. Gross profit margin during the second half of fiscal year 2008 was also impacted by SFAS 141 purchase accounting adjustments with respect to the valuation of inventory acquired in the acquisition of SMP Data Communications as discussed previously. SFAS 141 required work-in-process and finished goods inventory acquired in the acquisition to be recorded at approximate net selling price, reducing the gross profit normally realized upon the sale of such inventory by approximately $312,000.

Exclusive of the impact of the acquisition of SMP Data Communications, gross profit increased 31.2% to $22.5 million for fiscal year 2008, compared to $17.2 million for fiscal year 2007. Our gross profit margin increased to 42.5% for fiscal year 2008, compared to 37.7% for the same period last year, exclusive of the impact of the acquisition.

We believe the acquisition of SMP Data Communications will continue to place downward pressure on our historical gross profit margins in future periods—even though all inventories revalued to fair market value in connection with the acquisition (pursuant to SFAS 141) have been sold as of October 31, 2008. However, at this time we are unable to determine if this is a trend or predict the amount by which our future gross profit margins will be impacted.

During fiscal year 2008, we continued to experience positive impacts on our gross profit margins that we believe are attributable, in part, to the improvements in our manufacturing efficiencies, including improvements resulting from the successful integration of our ERP system at our Roanoke, Virginia facility. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and unanticipated changes in product mix. We believe that our trend toward greater efficiency as a result of our ERP system will stabilize in fiscal year 2009.

Gross profit increased 11.3% to $17.2 million in fiscal year 2007 from $15.4 million in fiscal year 2006. Gross profit margin, or gross profit as a percentage of net sales, increased to 37.7% for fiscal year 2007 compared to 34.0% for fiscal year 2006.

Gross Profit

Gross
profit increased 40.7% to $24.2 million in fiscal year 2008 from $17.2 million in fiscal year 2007. Gross profit margin, or gross profit as a percentage of net sales, increased to 39.6% for fiscal year 2008, compared to 37.7% for fiscal year 2007.
Quarterly gross profit margins during fiscal year 2008 were 42.1%, 42.6%, 37.7% and 37.4% during the first, second, third and fourth quarters, respectively. Our lower gross profit margins in the second half of fiscal year 2008 reflected the fact
that SMP Data Communications has historically had gross profit margin percentages lower than the historical gross profit margins of Optical Cable Corporation. Our gross profit margins from our fiber optic cable product lines, exclusive of the
acquisition of SMP Data Communications, during fiscal year 2008 were: 42.1%, 42.6%, 42.0% and 43.4% during the first, second, third and fourth quarters, respectively. Gross profit margin during the second half of fiscal year 2008 was also impacted
by SFAS 141 purchase accounting adjustments with respect to the valuation of inventory acquired in the acquisition of SMP Data Communications as discussed previously. SFAS 141 required work-in-process and finished goods inventory acquired in the
acquisition to be recorded at approximate net selling price, reducing the gross profit normally realized upon the sale of such inventory by approximately $312,000.

SIZE="2">Exclusive of the impact of the acquisition of SMP Data Communications, gross profit increased 31.2% to $22.5 million for fiscal year 2008, compared to $17.2 million for fiscal year 2007. Our gross profit margin increased to 42.5% for fiscal
year 2008, compared to 37.7% for the same period last year, exclusive of the impact of the acquisition.

We believe the acquisition of SMP Data
Communications will continue to place downward pressure on our historical gross profit margins in future periods—even though all inventories revalued to fair market value in connection with the acquisition (pursuant to SFAS 141) have been sold
as of October 31, 2008. However, at this time we are unable to determine if this is a trend or predict the amount by which our future gross profit margins will be impacted.

FACE="Times New Roman" SIZE="2">During fiscal year 2008, we continued to experience positive impacts on our gross profit margins that we believe are attributable, in part, to the improvements in our manufacturing efficiencies, including improvements
resulting from the successful integration of our ERP system at our Roanoke, Virginia facility. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both
anticipated and unanticipated changes in product mix. We believe that our trend toward greater efficiency as a result of our ERP system will stabilize in fiscal year 2009.

FACE="Times New Roman" SIZE="2">Gross profit increased 11.3% to $17.2 million in fiscal year 2007 from $15.4 million in fiscal year 2006. Gross profit margin, or gross profit as a percentage of net sales, increased to 37.7% for fiscal year 2007
compared to 34.0% for fiscal year 2006.

This excerpt taken from the OCCF 10-Q filed Sep 15, 2008.

Gross Profit

Our gross profit increased 47.0% to $17.3 million for the first nine months of fiscal year 2008 from $11.7 million for the same period in fiscal year 2007. Gross profit margin, or gross profit as a percentage of net sales, was 40.6% for the nine months ended July 31, 2008, compared to 36.6% for the same period in fiscal 2007. Our lower gross profit margin reflected the fact that SMP Data Communications has historically had gross profit margin percentages lower than the historical gross profit margins of Optical Cable Corporation. Gross profit margin during the first nine months of fiscal year 2008 was also impacted by SFAS 141 purchase accounting adjustments with respect to the valuation of inventory acquired in the acquisition of SMP Data Communications as discussed above. SFAS 141 required finished goods inventory acquired in the acquisition to be recorded at approximate net selling price, reducing the gross profit normally realized upon the sale of such inventory.

Exclusive of the impact of the acquisition of SMP Data Communications, gross profit increased 41.0% to $16.6 million for the nine months ended July 31, 2008, compared to $11.7 million for the same period last year. Our gross profit margin increased to 42.2% for the first nine months of fiscal 2008, compared to 36.6% for the same period last year, exclusive of the impact of the acquisition.

We believe the acquisition of SMP Data Communications will continue to place downward pressure on our historical gross profit margins in future periods—even after all inventories revalued to fair market value in connection with the acquisition (pursuant to SFAS 141) have been sold. However, at this time we are unable to predict the amount by which our future gross profit margins will be impacted, if any.

During the first nine months of fiscal 2008, we continued to experience positive impacts on our gross profit margins that we believe are attributable, in part, to the improvements in our manufacturing efficiencies, including improvements resulting from the successful integration of our ERP system at our Roanoke, Virginia facility. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and unanticipated changes in product mix.

This excerpt taken from the OCCF 10-Q filed Jun 13, 2008.

Gross Profit

Gross profit margin, or gross profit as a percentage of net sales, increased to 42.3% for the first half of fiscal year 2008 from 34.5% for the same period last year. Gross profit increased 57.2% to $11.1 million for the first half of fiscal 2008 from $7.0 million for the same period in 2007.

During the first half of fiscal 2008, we continued to experience positive impacts (as we did in the past three consecutive quarters) on our gross profit margins that we believe are attributable, in part, to the improvements in our manufacturing efficiencies, including improvements resulting from the successful integration of our ERP system. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and unanticipated changes in product mix.

This excerpt taken from the OCCF 10-Q filed Mar 14, 2008.

Gross Profit

Gross profit margin, or gross profit as a percentage of net sales, increased to 42.1% in the first quarter of fiscal 2008 from 32.1% in the first quarter of fiscal 2007. Gross profit increased 79.2% to $5.3 million during the first quarter of fiscal 2008 compared to $3.0 million for the same period last year.

During the first quarter of fiscal 2008, we continued to experience positive impacts (as we did in the second half of fiscal year 2007) on our gross profit margins that we believe are attributable to the improvements in our manufacturing efficiencies resulting from the successful integration of our ERP system. Additionally, during the first quarter of fiscal 2008, we experienced an increase in net sales related to higher margin products. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and unanticipated changes in product mix.

These excerpts taken from the OCCF 10-K filed Jan 29, 2008.

Gross Profit

Gross profit increased 11.3% to $17.2 million in fiscal year 2007 from $15.4 million in fiscal year 2006. Gross profit margin, or gross profit as a percentage of net sales, increased to 37.7% for fiscal year 2007 compared to 34.0% for fiscal year 2006. Quarterly gross profit margins during fiscal year 2007 were 32.1%, 36.5%, 40.2% and 40.5% during the first, second, third and fourth quarters, respectively.

We believe that the benefits of the investments made in our systems, processes and facilities are being realized. During fiscal year 2007, our manufacturing lead times decreased, our manufacturing efficiencies improved and we experienced improved gross profit margins when compared to fiscal year 2006. We believe these improvements are in part the result of the successful implementation of the major portions of our new ERP system, as well as overcoming certain ERP implementation challenges.

Our gross profit margin percentages are heavily dependent upon product mix and may deviate from expectations based on both anticipated and unanticipated changes in product mix. We believe the product sales pattern during fiscal year 2007 was impacted by a number of factors including the timing of projects and other factors affecting product demand.

We believe the improvement in gross profit margins throughout fiscal year 2007 is primarily a result of improved manufacturing efficiencies as discussed above, rather than a significant increase in the sale of a mix of products with relatively higher margins.

Gross profit decreased 13.5% to $15.4 million in fiscal year 2006 from $17.8 million in 2005. Gross profit margin, or gross profit as a percentage of net sales, decreased to 34.0% for fiscal year 2006 from 38.9% for 2005. Our gross profit margin in fiscal year 2006, compared to fiscal year 2005, was negatively impacted by a temporary decrease in manufacturing efficiencies during fiscal year 2006, in part resulting from process and system changes in connection with our new ERP system and other initiatives.

Gross Profit

STYLE="margin-top:6px;margin-bottom:0px">Gross profit increased 11.3% to $17.2 million in fiscal year 2007 from $15.4 million in fiscal year 2006. Gross profit margin, or gross profit as a percentage of net
sales, increased to 37.7% for fiscal year 2007 compared to 34.0% for fiscal year 2006. Quarterly gross profit margins during fiscal year 2007 were 32.1%, 36.5%, 40.2% and 40.5% during the first, second, third and fourth quarters, respectively.

We believe that the benefits of the investments made in our systems, processes and facilities are being realized. During fiscal year 2007, our
manufacturing lead times decreased, our manufacturing efficiencies improved and we experienced improved gross profit margins when compared to fiscal year 2006. We believe these improvements are in part the result of the successful implementation of
the major portions of our new ERP system, as well as overcoming certain ERP implementation challenges.

Our gross profit margin percentages are heavily
dependent upon product mix and may deviate from expectations based on both anticipated and unanticipated changes in product mix. We believe the product sales pattern during fiscal year 2007 was impacted by a number of factors including the timing of
projects and other factors affecting product demand.

We believe the improvement in gross profit margins throughout fiscal year 2007 is primarily a result
of improved manufacturing efficiencies as discussed above, rather than a significant increase in the sale of a mix of products with relatively higher margins.

SIZE="2">Gross profit decreased 13.5% to $15.4 million in fiscal year 2006 from $17.8 million in 2005. Gross profit margin, or gross profit as a percentage of net sales, decreased to 34.0% for fiscal year 2006 from 38.9% for 2005. Our gross profit
margin in fiscal year 2006, compared to fiscal year 2005, was negatively impacted by a temporary decrease in manufacturing efficiencies during fiscal year 2006, in part resulting from process and system changes in connection with our new ERP system
and other initiatives.

This excerpt taken from the OCCF 10-Q filed Sep 14, 2007.

Gross Profit

Gross profit margin, or gross profit as a percentage of net sales, decreased to 32.1% in the first quarter of 2007 from 33.4% in the first quarter of 2006. As a result, gross profit decreased to $3.0 million during the first quarter of fiscal 2007 compared to $3.3 million for the same period last year.

During the first quarter of fiscal year 2007, our manufacturing lead times decreased and our manufacturing efficiencies increased compared to the first quarter of 2006. We believe these improvements are a result of the identification and correction of certain issues, in part related to the implementation of process and system changes in connection with our new enterprise resource planning (“ERP”) system and other initiatives. However, the efficiencies we gained during the quarter did not outweigh the impact of certain fixed costs being spread over lower net sales. As a result, we experienced a decrease in gross profit margins in the first quarter of fiscal year 2007 compared to the same period last year.

 

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This excerpt taken from the OCCF 10-Q filed Sep 14, 2007.

Gross Profit

Gross profit margin, or gross profit as a percentage of net sales, increased to 36.6% in the first nine months of fiscal 2007 from 32.7% for the same period last year. As a result, gross profit increased 10.1% to $11.7 million for the first nine months of fiscal 2007 from $10.7 million for the same period in 2006, despite the 1.8% decrease in net sales for the same period.

During the first nine months of fiscal year 2007, our manufacturing lead times decreased, our manufacturing efficiencies increased and we experienced improved gross profit margins, when compared to the same period last year. We believe these improvements are in part the result of the successful implementation of the major portions of our new ERP system, as well as overcoming certain ERP implementation challenges.

This excerpt taken from the OCCF 10-Q filed Sep 14, 2007.

Gross Profit

Gross profit margin, or gross profit as a percentage of net sales, increased to 34.5% for the first half of fiscal year 2007 from 31.7% for the same period last year. As a result, gross profit increased 5.2% to $7.0 million for the first half of fiscal 2007 from $6.7 million for the same period in 2006, despite the 3.3% decrease in net sales for the same period.

 

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During the first half of fiscal year 2007, our manufacturing lead times decreased, our manufacturing efficiencies increased and we experienced improved gross profit margins, when compared to the first half of fiscal year 2006. We believe these improvements are in part the result of the successful implementation of the major portions of our new ERP system by the end of the second quarter of fiscal 2007, as well as, overcoming certain ERP implementation challenges during the first half of fiscal year 2006.

This excerpt taken from the OCCF 10-Q filed Jun 14, 2007.

Gross Profit

Gross profit margin, or gross profit as a percentage of net sales, increased to 34.6% for the first half of fiscal year 2007 from 31.7% for the same period last year. As a result, gross profit increased 5.5% to $7.1 million for the first half of fiscal 2007 from $6.7 million for the same period in 2006, despite the 3.3% decrease in net sales for the same period.

 

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During the first half of fiscal year 2007, our manufacturing lead times decreased, our manufacturing efficiencies increased and we experienced improved gross profit margins, when compared to the first half of fiscal year 2006. We believe these improvements are in part the result of the successful implementation of the major portions of our new ERP system by the end of the second quarter of fiscal 2007, as well as, overcoming certain ERP implementation challenges during the first half of fiscal year 2006.

This excerpt taken from the OCCF 10-Q filed Mar 19, 2007.

Gross Profit

Gross profit margin, or gross profit as a percentage of net sales, increased to 35.2% in the first quarter of 2007 from 33.4% in the first quarter of 2006. As a result, during the first quarters of both our 2007 and 2006 fiscal years, gross profit remained fairly consistent at $3.3 million, with a minimal decrease of $27,000 in the first quarter of fiscal 2007 compared to the same period last year.

During the first quarter of fiscal year 2007, our manufacturing lead times decreased and our manufacturing efficiencies increased compared to the first quarter of 2006. We believe these improvements are a result of the identification and correction of certain issues, in part related to the implementation of process and system changes in connection with our new enterprise resource planning (“ERP”) system and other initiatives. As a result, we experienced improved gross profit margins compared to the comparable period last year, which we believe reflect our improved manufacturing lead times and efficiencies.

This excerpt taken from the OCCF 10-K filed Jan 29, 2007.

Gross Profit

Gross profit decreased 13.5% to $15.4 million in fiscal year 2006 from $17.8 million in 2005. Gross profit margin, or gross profit as a percentage of net sales, decreased to 34.0% for fiscal year 2006 compared to 38.9% for 2005. Quarterly gross profit margins during fiscal year 2006 were 33.4%, 30.3%, 34.3% and 37.6% during the first, second, third and fourth quarters, respectively.

We believe a number of factors contributed to the decrease in the gross profit margin during fiscal year 2006 compared to fiscal year 2005. We believe the decrease in the gross profit margin during the year resulted in part from the sale of a mix of products with lower margins. We experienced an increase in net sales in our commercial market (with relatively lower gross profit margins) compared to last year. This increase in our commercial market, however, was more than offset by a decrease in net sales for certain of our specialty markets (with relatively higher gross profit margins). Product mix can vary as a result of changes in sales of products with different fiber types and fiber counts, and changes in sales to various markets that require different product types. Our gross profit margin percentages are heavily dependent upon product mix and may deviate from expectations based on both anticipated and unanticipated changes in product mix. We believe the product sales pattern during fiscal 2006 are a result of a number of factors including the timing of projects and other factors affecting product demand in certain specialty markets, and relatively consistent growth in our commercial market.

Additionally, during the first half of 2006, we experienced what we believe to be a temporary decrease in manufacturing efficiencies in part resulting from the continuing implementation of process and system changes in connection with our new ERP system and other initiatives, which likely contributed to lower gross profit margins during the first half of 2006. The improvement in our gross profit margin in the last half of 2006 compared to the first half of 2006 is supportive of the fact that by the end of the second quarter, we had identified and corrected a number of issues that previously impacted our manufacturing lead times and manufacturing efficiencies. We continued to closely monitor the impact of revisions to our processes throughout the third and fourth quarters. We believe that our process and system changes ultimately will improve the scalability of our systems (and therefore our ability to better handle increased production volume), improve our plant efficiency, and improve our customer service.

We believe the improvement in gross profit margins during fiscal year 2006—particularly in the fourth quarter—is a result of improved manufacturing efficiencies as discussed above, rather than an increase in the sale of a mix of products with relatively higher margins.

Gross profit increased 6.8% to $17.8 million in fiscal year 2005 from $16.7 million in 2004. Gross profit margin, or gross profit as a percentage of net sales, increased slightly to 38.9% for fiscal year 2005 from 38.6% for 2004.

This excerpt taken from the OCCF 10-Q filed Sep 14, 2006.

Gross Profit

Gross profit decreased 21.5% to $10.7 million for the first nine months of fiscal 2006 from $13.6 million for the same period in 2005. Gross profit margin, or gross profit as a percentage of net sales, decreased to 32.7% in the first nine months of fiscal 2006 from 39.9% in the first nine months of fiscal 2005.

We believe a number of factors contributed to the decrease in the gross profit margin during the nine month period ended July 31, 2006 compared to the same period last year. We believe the decrease in the gross profit margin during the first nine months of 2006 resulted in part from the sale of a mix of products with lower margins. We experienced an increase in net sales in our commercial market (with relatively lower gross profit margins) compared to the same period last year. This increase, however, was more than offset by a decrease in net sales for certain of our specialty markets (with relatively higher gross profit margins). Product mix can vary as a result of changes in sales of products with different fiber types and fiber counts, and changes in sales to various markets that require different product types. Our gross profit margin percentages are heavily dependent

 

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upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and unanticipated changes in product mix. We believe the product sales patterns during the first nine months of fiscal 2006 are a result of a number of factors including the timing of projects and other factors affecting product demand in certain specialty markets, and relatively consistent growth in our commercial market.

Also during the first nine months of fiscal 2006, we experienced what we believe to be a temporary decrease in manufacturing efficiencies in part resulting from the continuing implementation of process and system changes in connection with our new ERP system and other initiatives, which likely contributed to lower gross profit margins during the first nine months of fiscal 2006, particularly in the first two quarters of the year. The improvement in our gross profit margin in the third quarter of 2006 compared to the first half of 2006 is supportive of the fact that by the end of the second quarter, we had identified and corrected a number of the issues that previously impacted our manufacturing lead times and manufacturing efficiencies. We continued to closely monitor the impact of revisions to our processes throughout the third quarter and will continue to do so in the fourth quarter. While we identified and corrected a number of the issues impacting our manufacturing efficiencies during the third quarter, we cannot be certain of the impact on the gross profit margin during the fourth quarter of fiscal 2006. Regardless of any further negative impact by these issues, we continue to believe that our process and system changes ultimately will improve the scalability of our systems (and therefore our ability to better handle increased production volume), improve our plant efficiency, and improve our customer service.

This excerpt taken from the OCCF 10-Q filed Jun 14, 2006.

Gross Profit

Gross profit decreased 28.1% to $6.7 million for the first half of fiscal 2006 from $9.3 million for the same period in 2005. Gross profit margin, or gross profit as a percentage of net sales, decreased to 31.7% in the first half of fiscal 2006 from 41.0% in the first half of fiscal 2005.

We believe a number of factors contributed to the decrease in gross profit margins during the six month period ended April 30, 2006 compared to the same period last year. We believe the decrease in the gross profit margin during the first half of fiscal 2006 resulted in part from the sale of a mix of products with lower margins. We experienced an increase in net sales in our commercial market (with relatively lower gross profit margins) compared to the same period last year. This increase, however, was more than offset by a decrease in net sales for certain of our specialty markets (with relatively higher gross profit margins). Product mix can vary as a result of changes in sales of products with different fiber types and fiber counts, and changes in sales to various markets that require different product types. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and unanticipated changes in product mix. We believe the product sales patterns during the first half of fiscal 2006 are a result of a number of factors including the timing of projects and other factors affecting product demand in certain specialty markets, and relatively consistent growth in our commercial market.

Also during the first half of fiscal 2006, we experienced what we believe to be a temporary decrease in manufacturing efficiencies in part resulting from the continuing implementation of process and system changes in connection with our new ERP system and other initiatives, which likely contributed to lower gross profit margins during the first half of fiscal 2006. While we identified and corrected a number of the issues impacting our manufacturing efficiencies by the end of the second quarter, we cannot be certain of the impact on the gross profit margins during the second half of fiscal 2006. Regardless of any further negative impact by these issues during the second half of fiscal year 2006, we continue to believe that our process and system changes ultimately will improve the scalability of our systems (and therefore our ability to better handle increased production volume), improve our plant efficiency, and improve our customer service.

We are continuing to evaluate to what extent the gross profit margin results during the first half of fiscal 2006 are indicative of expected results for the remainder of the year.

 

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Table of Contents
This excerpt taken from the OCCF 10-Q filed Mar 17, 2006.

Gross Profit

Gross profit decreased 28.2% to $3.3 million for the first quarter of 2006 from $4.6 million for the same period in 2005. Gross profit margin, or gross profit as a percentage of net sales, decreased to 33.4% in the first quarter of 2006 from 41.2% in the first quarter of 2005. We believe the decrease in gross profit margins we experienced in the first quarter of fiscal 2006 is not indicative of expected results for the remainder of the year. A number of factors contributed to the decrease in gross profit margins during the first quarter of fiscal 2006 compared to the same period last year.

The decrease in the gross profit margin during the first quarter of 2006 resulted in part from the sale of a mix of products with lower margins, as well as certain production costs being spread over lower net sales, when compared to the same period last year. Product mix can vary as a result of changes in sales of products with different fiber types and fiber counts, and changes in sales to various markets that require different product types.

During the first quarter, we experienced an increase in net sales in our commercial market (with relatively lower gross profit margins) and decreases in net sales for a number of our specialty markets (with relatively higher gross profit margins). We believe this was a result of the timing of projects and other factors affecting short-term product demand. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and unanticipated changes in product mix.

Also during the first quarter of fiscal 2006, we experienced what we believe to be a temporary decrease in manufacturing efficiencies in part resulting from the implementation of process and system changes in connection with our new ERP system and other initiatives, which likely contributed to lower gross profit margins during the first quarter of fiscal 2006. We believe any such effect will be temporary and will not adversely affect gross profit margins for the second half of fiscal 2006, and that our process and system changes ultimately will improve the scalability of our systems (and therefore our ability to better handle increased production volume), improve our plant efficiency, and improve our customer service.

 

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Increased compensation costs associated with the expansion of our technology and engineering department and increased costs associated with production loss during the period also negatively impacted our gross profit margin in the first quarter of 2006.

This excerpt taken from the OCCF 10-K filed Jan 30, 2006.

Gross Profit

 

Gross profit increased 6.8% to $17.8 million in fiscal year 2005 from $16.7 million in 2004. Gross profit margin, or gross profit as a percentage of net sales, increased slightly to 38.9% for fiscal year 2005 compared to 38.6% for 2004. Fluctuations in our gross profit margins generally result from the sale of a mix of products with higher margins.

 

Gross profit increased 14.3% to $16.7 million in fiscal year 2004 from $14.6 million in 2003. Gross profit margin, or gross profit as a percentage of net sales, increased to 38.6% for fiscal year 2004 from 35.5% for 2003.

 

This excerpt taken from the OCCF 10-Q filed Sep 7, 2005.

Gross Profit

 

Gross profit increased 9.7% to $13.6 million for the first nine months of fiscal year 2005 from $12.4 million for the same period in 2004. Gross profit margin, or gross profit as a percentage of net sales, increased slightly to 39.9% in the first nine months of fiscal year 2005 from 39.6% in the first nine months of 2004. Although product mix has caused gross profit margin fluctuations on a quarterly basis, the impact on a year-to-date basis has been minimal.

 

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Table of Contents
This excerpt taken from the OCCF 10-Q filed Jun 14, 2005.

Gross Profit

 

Gross profit increased 19.2% to $9.3 million for the first half of 2005 from $7.8 million for the same period in 2004. Gross profit margin, or gross profit as a percentage of net sales, increased to 41.0% in first half of 2005 from 39.1% in the first half of 2004. The increase in gross profit margin during the first half of 2005 was the result of the sale of a mix of products with higher margins in the first half of fiscal 2005.

 

This excerpt taken from the OCCF 10-Q filed Mar 16, 2005.

Gross Profit

 

Gross profit increased 25.9% to $4.6 million for the first quarter of 2005 from $3.6 million for the same period in 2004. Gross profit margin, or gross profit as a percentage of net sales, increased to 41.2% in the first quarter of 2005 from 39.0% in the first quarter of 2004. The increase in the gross profit margin during the first quarter of 2005 generally resulted from the sale of a mix of products with higher margins during the first quarter of 2005.

 

This excerpt taken from the OCCF 10-K filed Jan 26, 2005.

Gross Profit

 

Gross profit increased 14.3% to $16.7 million in fiscal year 2004 from $14.6 million in 2003. Gross profit margin, or gross profit as a percentage of net sales, increased to 38.6% for fiscal year 2004 from 35.5% for 2003. The higher gross profit margins for 2004 generally resulted from the sale of a mix of products with higher margins during fiscal year 2004.

 

Gross profit decreased 2.5% to $14.6 million in fiscal year 2003 from $15.0 million in 2002. Gross profit margin, or gross profit as a percentage of net sales, was approximately the same as gross profit margin in the prior year at 35.5% for fiscal year 2003 versus gross profit margin of 35.2% for fiscal year 2002. We continued to see pressure on pricing as a result of certain industry conditions during fiscal year 2003. We believe the pricing pressure resulted from the continued excess fiber and fiber optic cable manufacturing capacity in the marketplace. Therefore, despite a slight increase in volumes shipped during the year, net sales declined. The impact of the increased volumes was partially offset by our ability to obtain lower pricing on certain raw materials during the year.

 

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