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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-K

Commission File Number 0-28582

Registrant’s telephone number, including area code: (909) 719-2600

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

          Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

          On March 25, 2003, the Registrant had 9,124,993 shares of Common Stock outstanding with a par value of $.01 per share.  The aggregate market value of the 4,104,863 shares held by non-affiliates of the Registrant was $28,734,041 computed by reference to the price at which the shares were last sold, as of the last business day of the Registrant’s most recently completed second fiscal quarter.  Shares of Common Stock held by each officer and director and by each person who may be deemed to be an affiliate have been excluded.

          Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

DOCUMENTS INCORPORATED BY REFERENCE

          Part III of this Form 10-K incorporates by reference certain information from the Registrant’s definitive proxy statement (the “Proxy Statement”) for its annual meeting of stockholders to be held on April 25, 2003.

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TABLE OF CONTENTS

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PART I

Item 1.  Business

Background

          Channell Commercial Corporation (the “Company”) was incorporated in Delaware on April 23, 1996, as the successor to Channell Commercial Corporation, a California corporation.  The Company’s executive offices are located at 26040 Ynez Road, Temecula, California 92591, and its telephone number at that address is (909) 719-2600.

General

          The Company is a designer and manufacturer of telecommunications equipment supplied to cable television and telephone network providers worldwide.  Major product lines include a complete line of thermoplastic and metal fabricated enclosures, advanced copper termination and connectorization products, fiber optic cable management systems, and heat shrink products.   The Company believes it was the first to design, manufacture and market thermoplastic enclosure products for use in the telecommunications industry on a wide scale, and the Company believes it currently supplies a substantial portion of the enclosure product requirements of a number of major community antenna television (“CATV”) and telephone service providers.  The Company’s enclosure products house, protect and provide access to advanced telecommunications hardware, including both radio frequency (“RF”) electronics and photonics, and transmission media, including coaxial cable, copper wire and optical fibers, used in the delivery of voice, video and data services.  The enclosure products are deployed within the portion of the local signal delivery network, commonly known as the “outside plant”, “local loop” or “last mile”, that connects the network provider’s signal origination point or local office with its residential and business customers.

Industry

          CATV and local telephone operators are building, rebuilding or upgrading signal delivery networks around the world.  These networks are designed to deliver video, voice and/or data transmissions to individual residences and businesses.  Operators deploy a variety of network technologies and architectures, such as HFC, FTTC, DLC and ADSL (see “Glossary of Terms”) to carry broadband and narrowband signals.  These architectures are constructed of electronic hardware connected via coaxial cables, copper wires and/or optical fibers, including various access devices, amplifiers, nodes, hubs and other signal transmission and powering electronics.  Many of these devices in the outside plant require housing in secure, protective enclosures and cable management connectivity systems, such as those manufactured by the Company.

          As critical components of the outside plant, enclosure products provide (i) protection against weather and vandalism, (ii) ready access for technicians who maintain and manage the outside plant and, (iii) in some cases, provide dissipation of heat generated by the active electronic hardware.  CATV and local telephone network operators place great reliance on manufacturers of protective enclosures because any material damage to the signal delivery networks is likely to disrupt communications services.

          The primary drivers of demand for enclosures in the communications industry are the construction, rebuilding, upgrading and maintenance of signal delivery networks by CATV operators and local telephone companies. Technological developments in the communications industry are resulting in significant increases in system upgrades.  For example, CATV networks are being upgraded and prepared for advanced two-way services such as high-speed Internet access via cable modems, telephony and PCS transport. Local telephone service providers are employing advanced technologies, such as a variety of digital subscriber line (“DSL”) technologies, which utilize installed copper wires for broadband services.  These “local loop” copper wire systems often require significant upgrading and maintenance to provide the optimal throughput necessary to carry high-speed broadband signals, increasing the need for fully sealed outside plant facilities in order to sustain network reliability and longevity.

Business Strategy

          The Company’s strategy is to capitalize on opportunities in the global communications industry by providing enclosures, connectivity products and other complementary components to meet the evolving needs of its customers’ communications networks.  The Company’s wide range of products, manufacturing expertise, application-based sales and marketing approach and reputation for high quality products address key

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requirements of its customers. Principal elements of the Company’s strategy include the following:

          Focus on Core Telecommunications Business.The Company will continue to seek to capitalize on its position as a leading designer, manufacturer and marketer of enclosures for the CATV and local telephone industries in the United States and Canada through new product development for both domestic and international market applications.  The Company believes it currently supplies a substantial portion of the enclosure product requirements of a number of major CATV operators. 

          The Company has invested in the development of a broad range of products designed specifically for telephone applications. The Company has successfully marketed its traditional CATV/broadband products to local telephone companies that have been designing and deploying broadband networks to deliver competitive video and data services.  The Company will continue to target this market for growth, both with telephone network operators and with major system OEMs.

          Expand International Presence. Management believes international markets offer significant opportunities for increased sales to both CATV and telephone companies. The Company’s principal international markets currently consist of Canada, Mexico, Asia, the Pacific Rim, the Middle East and Europe.  Trends expected to result in international growth opportunities include the on-going deregulation and privatization of telecommunications in many nations around the world, the focus of numerous countries on building, expanding and enhancing their communications systems in order to participate fully in the information-based global economy, and multinational expansion by many U.S.-based network carriers.  The Company currently operates overseas manufacturing operations in Australia and the U.K.  The Company will concentrate on expansion in international markets that are characterized by deregulation or privatization of telecommunications and by the availability of capital for the construction of signal delivery networks.

          Develop New Products and Enter New Markets.  The Company continues to leverage its core capabilities in developing innovative products that meet the evolving needs of its customers.  Innovative products offered by the Company include its DSLink™ modular terminal block, its FlexPed™ free-breathing telephony enclosures, the Mini-Rocker™ insulation displacement copper connectivity products, and a range of Rhino™ metal fabricated enclosures.  The Company continually invests in ongoing improvement and enhancement projects for the existing products developed by the Company, several of which have received U.S. patent protection.  The Company’s products are designed to improve the performance of its customers’ outside plant systems.  The Company has a proven record in designing, developing and manufacturing “next generation” products that provide solutions for its customers and offer advantages over those offered by other suppliers to the industry.

Products

          The Company currently markets over 50 product families, with several thousand optional product configurations.  The primary functions of the Company’s products designed for the telecommunications industry are cable routing and management, equipment access, heat dissipation and security.  The Company believes that it offers one of the most complete lines of outside plant infrastructure products in the telecommunications industry.

          Enclosures.  The Company manufactures precision-molded, highly engineered and application-specific thermoplastic and metal fabricated enclosures that are considered state-of-the-industry for many applications, having been field tested and received approvals and standardization certifications from major CATV and telephone company operators.  Most of the Company’s products are designed for buried and underground network applications.  The Company’s enclosure products provide technicians access to network equipment for maintenance, upgrades and installation of new services.  Buried and underground networks and enclosures are generally preferred by CATV operators for increased network reliability, lower maintenance, improved security, reduced utility right-of-way conflicts, and aesthetic appeal. The enclosure products, particularly the thermoplastic versions, must provide advanced heat dissipation characteristics increasingly required for the protection of active electronics in many network installations.  The Company is also a designer and manufacturer of metal fabricated enclosures that house advanced electronics, fiber optic cable and power systems for broadband telecommunications networks (branded as “Rhino Enclosures™”).  The Company designs and manufactures a series of termination blocks, brackets and cable management devices for mounting inside its enclosure products.  To position itself as a full-line product supplier, the Company also offers a variety of complementary products, including thermoplastic and concrete grade level boxes.  These products are typically purchased by customers as part of a system package and are marketed by the Company through its direct sales force to its customer base.  The Company is recognized in the industry for its differentiated product designs and the functionality, field performance and service life of its products.

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          Copper Connectivity.   The Company is a designer and manufacturer of innovative telephone connectivity devices.  The Company’s Insulation Displacement Connector (“IDC”) technology provides advanced “tool-less” termination systems for copper wires, the predominant medium used in the “Last Mile” for telephone services worldwide.  These proprietary IDC products environmentally seal network termination points with a high level of reliability.  The Company’s DSLink ^TM  modular terminal block offers telephone service providers a CAT 5 solution to the rising costs of DSL deployment in the local loop. The Company’s Mini-Rocker™ line of copper connectivity modules, blocks and accessories offer tool-less installation, hinged wire-entry parts and transparent wire receivers.

          Fiber Optic Products.  The Company offers a range of fiber optic cable management products designed for use in telephone and CATV telecommunications networks.  The Company’s fiber optic splice cases are used for organizing, managing and protecting the connection points between separate lengths of fiber optic cable in the outside plant network.  Fiber optic cable assemblies and interconnect hardware are used to connect fiber optic electronics and fiber optic cables primarily for in-building applications.  Fiber optic electronic enclosures house optical electronics, power supplies and cables.  All of these products are designed and manufactured by the Company and marketed worldwide. 

          OEM Programs.  The Company has OEM marketing programs through which other manufacturers incorporate the Company’s products as components of their telecommunications systems.  These OEM programs generally include exchanges of technical information that the Company can use in developing new products and improvements and enhancements to existing designs.  The Company has established additional relationships with systems integrators and innovative end users that provide valuable product improvement information.

Marketing and Sales

          The Company markets its products primarily through a direct sales force of technically trained salespeople. The Company employs an application-specific, systems approach to marketing its products, offering the customer a complete, cost-effective system solution to meet its outside plant requirements.  All sales personnel have technical expertise in the products they market and are supported by the Company^’s engineering and technical marketing staff.

          An internal sales/customer service department  administers and schedules incoming orders, handles requests for product enhancements and service inquiries and supports the Company’s direct sales force. This department maintains direct communications with customers and the Company’s field sales and operations personnel.

          By engaging in public relations activities, product literature development, market research and advertising, the marketing department also promotes and positions the Company within both domestic and international markets.  The Company regularly attends, participates and exhibits its products at industry trade shows and conferences within domestic and international telecommunications markets throughout the year.

Manufacturing Operations

          The Company’s vertically integrated manufacturing operations enable the Company to control each step in the manufacturing process, including product design and engineering; design and production of many of its own dies, tools and molds; and wiring, assembly and packaging.

          The Company’s manufacturing expertise enables it to modify its product lines to meet changing market demands, rapidly and efficiently produce large volumes of products, control expenses and ensure product quality.  Management considers the Company’s manufacturing expertise a distinct and significant competitive advantage, providing it with the ability to satisfy the requirements of major customers with relatively short lead-times by promptly booking and shipping orders.

          The Company owns a majority of its manufacturing equipment.  Manufacturing processes are performed by trained Company personnel.  These manufacturing processes include injection molding, structural foam molding, rotational molding, metal fabrication, automated discrete connector fabrication, rubber injection, transfer and compression molding, and termination block fabrication.  The Company has implemented several comprehensive process and quality assurance programs, including continuous monitoring of key processes, regular product inspections and comprehensive testing.  The Company’s Temecula, California manufacturing facility has received ISO-9001 certification, a worldwide industry standards certification.

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          The Company’s manufacturing and distribution facilities include approximately 304,000 square feet in Temecula, California; 7,000 square feet in Mississauga, Ontario, Canada; 43,000 square feet in Orpington, United Kingdom; and 40,000 square feet in Sydney, Australia.  In November, 2001, the Company announced a restructuring plan (see Financial Statement Footnote H, Restructuring Charge) that would, among other things, reduce its facilities utilization in the U.S., U.K. and Australia operations to improve operating efficiencies and reduce facilities expense.  In December, 2002, the Company announced additional steps to rationalize international manufacturing operations to further consolidate manufacturing operations. The Company has completed the majority of its facilities reduction program.

Product Development and Engineering

          The Company’s product development and engineering staff has designed and tested the Company’s products and has developed core competencies in telecommunications outside plant product development and engineering. As a direct result, the Company has been able to develop a broad series of superior products designed to meet the specific needs of telecommunications companies.  Distinguishing characteristics of the Company’s products include:

          The Company’s product development approach is applications-based and customer driven.  A team comprised of engineering, marketing, manufacturing and direct sales personnel work together to define, develop and deliver comprehensive systems solutions to customers, focusing on the complete design cycle from product concept through tooling and high-volume manufacturing.  The Company is equipped to conduct many of its own product testing requirements for performance qualification purposes, enabling it to accelerate the product development process.  The Company spent $2.8 million in 2000, $2.3 million in 2001, and $1.6 million in 2002 on research and development.

Customers

          The Company sells its products directly to CATV operators and telephone companies throughout the world, principally within developed nations.  The Company also sells its products to OEMs on a global basis.  During 2002, the Company’s five largest customers accounted for 57.2% of total net sales.  In 2002, the Company’s five largest customers by sales in the United States were Comcast/AT&T Broadband, Time Warner, Verizon, Cox and Charter. Comcast/AT&T Broadband accounted for 28% of the Company’s net sales in 2002.  In international markets, the Company’s five largest customers in 2002 by sales were Rogers (Canada), Telstra (Australia), Unitelco (Malaysia), Fluor (U.K.) and British Telecom.

          The Company has historically operated with a relatively small backlog. Sales and operating results in any quarter are primarily dependent upon orders booked and products shipped in the quarter.  The Company’s customers generally do not enter into long-term supply contracts providing for future purchase commitments of the Company’s products.  Rather, the Company believes that many of its customers periodically review their supply relationships and adjust buying patterns based upon their current assessment of the products and pricing available in the marketplace.  From fiscal period to fiscal period, significant changes in the level of purchases of the Company’s products by specific customers can and do result from this periodic assessment.

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Intellectual Property

          Upon the consummation of its initial public offering (the “Initial Public Offering”) in 1996, the Company became the owner of all of the patents and other technology employed by it in the manufacture and design of its products.  The Company’s patents, which expire through the year 2010, cover various aspects of the Company’s products.  In addition, the Company has certain trade secrets, know-how and trademarks related to its technology and products.

          Management does not believe any single patent or other intellectual property right is material to the Company’s success as a whole.  The Company intends to maintain an intellectual property protection program designed to preserve its intellectual property assets.

Competition

          The telecommunications industry is highly competitive.  The Company’s competitors include companies that are much larger than the Company, such as Tyco, 3M, Marconi, Arris and Corning.  The Company believes its competitive advantages include its ability to service national and multi-national customers, its direct sales force, its specialized engineering resources and its vertically integrated manufacturing operations.

          Management believes the principal competitive factors in the telecommunications equipment market are customer service, new product capabilities, price, product availability, and product performance.

          Competitive price pressures are common in the industry.  In the past, the Company has responded effectively to competition with cost controls through vertical integration utilizing advanced manufacturing techniques, cost-effective product designs and material selection, and an aggressive procurement approach.

          In the past, certain of the Company’s telecommunications customers have required relatively lengthy field testing of new products prior to purchasing such products in quantity.  While field testing can delay the introduction of new products, it can also act as a competitive advantage for those products tested and approved because to a certain extent it creates a barrier to new product introduction and sales by competitors.

Raw Materials; Availability of Complementary Products

          The principal raw materials used by the Company are thermoplastic resins, neoprene rubbers, hot and cold rolled steel, stainless steel and copper.  The Company also uses certain other raw materials, such as fasteners, packaging materials and communications cable.  Management believes the Company has adequate sources of supply for the raw materials used in its manufacturing processes and it attempts to develop and maintain multiple sources of supply in order to extend the availability and encourage competitive pricing of these materials.

          Most plastic resins are purchased under annual or multi-year contracts to stabilize costs and improve supplier delivery performance.  Neoprene rubbers are manufactured by multiple custom compounders using the Company’s proprietary formulas.  Metal products are supplied in standard stock shapes, coils and custom rollforms.

          The Company also relies on certain other manufacturers to supply products that complement the Company’s own product line, such as grade level boxes and cable-in-conduit.  The Company believes there are multiple sources of supply for these products.

Employees

          As of December 31, 2002, the Company employed 402 people, of whom 50 were in sales, 311 were in manufacturing operations, 8 were in research and development and 33 were in administration.  The Company considers its employee relations to be good and recognizes its ability to attract and retain qualified employees is an important factor in its growth and development.  None of the Company’s employees is subject to a collective bargaining agreement, and the Company has not experienced any business interruption as a result of labor disputes within the past five years.

Regulation

          The telecommunications industry is subject to regulations in the United States and other countries.  Federal

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and state regulatory agencies regulate most of the Company’s domestic customers.  On February 1, 1996, the United States Congress passed the Telecommunications Act of 1996 that the President signed into law on February 8, 1996.  The Telecommunications Act lifted certain restrictions on the ability of companies, including RBOCs and other customers of the Company, to compete with one another and generally reduced the regulation of the communications industry.

          The Company is also subject to a wide variety of federal, state and local environmental laws and regulations.  The Company utilizes, principally in connection with its thermoplastic manufacturing processes, a limited number of chemicals or similar substances that are classified as hazardous.  It is difficult to predict what impact these environmental laws and regulations may have on the Company in the future.  Restrictions on chemical uses or certain manufacturing processes could restrict the ability of the Company to operate in the manner that it currently operates or is permitted to operate.  Management believes that the Company’s operations are in compliance in all material respects with current environmental laws and regulations.  Nevertheless, it is possible that the Company may experience releases of certain chemicals to environmental media which could constitute violations of environmental law (and have an impact on its operations) or which could cause the Company to incur material cleanup costs or other damages.  For these reasons, the Company might become involved in legal proceedings involving exposure to chemicals or the remediation of environmental contamination from past or present operations.   Because certain environmental laws impose strict joint and several retrospective liability upon current owners or operators of facilities from which there have been releases of hazardous substances, the Company could be held liable for remedial measures or other damages (such as liability in personal injury actions) at properties it owns or utilizes in its operations, even if the contamination were not caused by the Company’s operations.

Item 2.  Properties

          The Company’s facilities approximate 544,000 square feet, of which approximately 52%, 32% and 16% were used for manufacturing, warehouse and office space, respectively.  In Temecula, California, 261,000 square feet of the total 364,000 square feet are leased from William H. Channell, Sr., the Company’s Chairman of the Board and Chief Executive Officer.  (See “Certain Relationships and Related Transactions”, Item 13.)  The Company also leases an aggregate of approximately 180,000 square feet of manufacturing, warehouse and office space in Canada, Australia and the United Kingdom. In November, 2001, the Company announced a restructuring plan (see Financial Statement Footnote H, Restructuring Charge) that would, among other things, reduce its facilities utilization in the U.S., U.K. and Australia operations to improve operating efficiencies and reduce facilities expense.  In December, 2002, the Company announced additional steps to rationalize international manufacturing operations to further consolidate manufacturing operations.  The Company has completed the majority of its facilities reduction program.  Included in the Company’s facilities of 544,000 square feet is 150,000 square feet that has been vacated as part of restructuring activities.  The Company is attempting to sublease the vacated space. In 2002, the Company completed a sale and leaseback of approximately 103,000 square feet of manufacturing, warehouse and office space in Temecula, California.  The Company sold approximately 53,000 square feet of manufacturing, warehouse and office space in the United Kingdom in January, 2003.  The Company considers its current facilities to be adequate for its operations.

Item 3.  Legal Proceedings

          The Company is from time to time involved in ordinary routine litigation incidental to the conduct of its business.  The Company regularly reviews all pending litigation matters in which it is involved and establishes reserves deemed appropriate for such litigation matters.  Management believes that no presently pending litigation matters will have a material adverse effect on its business or on its results of operations.

Item 4.  Submission of Matters to a Vote of Security Holders

          No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

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PART II

Item 5.  Market for Registrant’s Common Equity and Related Shareholder Matters

          The Company’s Common Stock began trading on July 2, 1996 on the National Market System maintained by the National Association of Securities Dealers (now the NASDAQ National Market) upon completion of the Company’s Initial Public Offering.  The following table sets forth, for the periods indicated, the high and low sale prices for the Company’s Common Stock, as reported on the NASDAQ National Market.

          The Company has not declared any dividends subsequent to its Initial Public Offering in July 1996.

          The Company currently anticipates it will retain all available funds to finance its business.  The Company does not intend to pay cash dividends in the foreseeable future.  Under the terms of the Company’s Loan and Security Agreement, the Company has agreed not to pay any dividends.

          As of March 25, 2003, the Company had 9,124,993 shares of its Common Stock outstanding, held by approximately 781 shareholders of record.

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Item 6.  Selected Financial Data

          The selected consolidated financial data presented below for each of the five years in the period ended December 31, 2002, have been derived from audited consolidated financial statements which for the most recent three years appear elsewhere herein. The data should be read in conjunction with the financial statements, related notes and other financial information included therein (amounts in thousands, except per share data).

Notes to Selected Financial Data
(amounts in thousands, except per share data)