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Spectran: 1998 earnings decline

23 July 1998: US-based SpecTran Corporation, which develops, manufactures and markets glass optical fibres and value-added optic products, has announced lower earnings estimates for the 1998 year and …

23 July 1998: US-based SpecTran Corporation, which develops, manufactures and markets glass optical fibres and value-added optic products, has announced lower earnings estimates for the 1998 year and that results for the June quarter will be significantly below analysts“ expectations. As previously announced, SpecTran continues to anticipate an earnings decline in 1998 compared with 1997, but presently expects the decline to be significantly greater than the 30% figure reported earlier. The lowered earnings expectations are attributed primarily to operational issues at the company“s Specialty Optics subsidiary, which are being addressed. In addition, manufacturing and engineering personnel from the company“s Communication Fiber Technology subsidiary have been assigned to address specific operational issues. “Sales demand at the Specialty Optics subsidiary remains strong. We are confident of our ability to resolve the operational problems and restore the business to its previous levels of growth and profitability. Once the operational issues have been resolved, the company expects that significant growth in sales volume and profitability should resume,” said Charles B. Harrison, SpecTran“s President and Chief Executive Officer, “We are also experiencing lower than expected sales at General Photonics, our cabling joint venture with General Cable, where we are experiencing soft market demand and pricing, not unlike our competitors. We have implemented stringent cost control measures that we believe will lead to improved results at General Photonics for the second half,” Harrison added. Although earnings for the first quarter of 1998 exceeded analysts“ expectations, the company presently expects that second quarter 1998 results will be significantly below analysts“ expectations, impacted by the operational and inventory issues at Specialty Optics coupled with a highly competitive market environment that resulted in price weakness and oversupply in our standard communication fibre business. As a result, the company currently expects that SpecTran will record a loss for the period in the range of US$ 0.18 to us$ 0.21 per share on revenues of US$ 16.5 million to US$ 17.5 million. These results would put the company in violation of certain covenants with its debt holders. As a result, SpecTran said it has initiated conversations with its debt holders to obtain waivers and/or modifications of certain covenants in its loan agreements to accommodate this temporary decline in earnings. Spectran still anticipates double digit revenue growth in 1998 over the previous year, and expects to be profitable for the second half and full 1998 year, the company said.

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