Concord Camera Corp. Announces Results and Record Sales for the Third Quarter and Nine Months Ended March 29, 2003.Business Editors HOLLYWOOD, Fla.--(BUSINESS WIRE)--May 9, 2003 Concord Concord, cities, United States Concord (kŏng`kərd, kŏn`kôrd'). 1 city (1990 pop. 111,348), Contra Costa co., W central Calif.; settled c.1852, inc. 1906. Camera Corp. ("Concord" or "Company") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on National Market: LENS) today reported financial results for the third quarter and nine months of fiscal 2003 ended March 29, 2003 (see attached tables). Third Quarter Comparison For the third quarter ended March 29, 2003, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight were $36.2 million, a 37% increase over the same quarter last year. Net income was $1.3 million, or $0.04 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. This compared to net sales of $26.4 million, and a net loss of $(3.3) million, or $(0.12) per share, for the third quarter of the prior fiscal year. Commenting on the financial results, Ira B. Lampert, Concord's Chairman, Chief Executive Officer and President, said, "Concord's net sales for the third quarter of fiscal 2003 of $36.2 million exceeded the high end of the range ($32 to $35 million) of guidance announced in January and last year's third quarter sales of $26.4 million by 37%. Third quarter sales also set a Company record by exceeding sales in any prior third quarter, historically the Company's weakest quarter. Net income was $1.3 million versus guidance of breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations . However, during this quarter net income was positively impacted by the resolution of a previously disclosed disputed claim with a Design and Manufacturing Services ("DMS (1) (Document Management System) See document management. (2) (Defense Messaging System) An X.500-compliant messaging system developed by the U.S. Dept. of Defense. ") customer. The resolution resulted in a net after tax benefit of $2.0 million from a $2.2 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern reduction of cost of products sold. Mr. Lampert also said, "Sales from our Retail Sales and Distribution ("RSD RSD Reflex sympathetic dystrophy, see there ") business for the third quarter of fiscal 2003 were $23.1 million, an increase of $5.4 million, or 30.8%, and accounted for 64% of total sales. This growth was in large part due to new digital product sales, Polaroid branded single use and traditional cameras, new accounts and organic growth from existing accounts due to sell through and new product introductions. Sales from our DMS business were $13.1 million, an increase of $4.4 million, or 50.2%, and accounted for 36% of total sales. This increase was in part due to a new single use camera being manufactured for Eastman Kodak Company ("Kodak") under a new supply agreement entered into in September 2002. Mr. Lampert continued, "We are very pleased with the increased market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" we experienced with our digital cameras both in our RSD and DMS businesses. This increased penetration was primarily a result of opening new accounts, growth in existing accounts and increased digital camera product offerings. During the first three quarters of 2003, we offered for sale thirteen (13) Concord branded digital camera models ranging from simple VGA (Video Graphics Array) The display standard for the PC. All PC display adapters support VGA, and Windows machines boot up in "VGA mode" before switching to higher resolutions. to four megapixel One million pixels. Refers to the resolution of a digital imaging device (monitor, scanner, video camera, still camera, etc.). For example, a five-megapixel digital still camera might take a picture composed of 5,038,848 red-green-blue color dots (pixels). products. "Our sales of digital cameras during the third quarter of fiscal 2003 were $6.3 million compared to $3.6 million in the same period last year, an increase of $2.7 million or 75%. For the first three quarters of fiscal 2003, digital camera sales increased $40.1 million over the same period in fiscal 2002, that is $48.6 million versus $8.5 million. Digital camera sales are the primary reason why our sales have increased over 30% this fiscal year. " "Gross profit for the third quarter of fiscal 2003 was $8.4 million, or 23.2% of net sales, versus $1.8 million, or 6.8% of net sales in the same quarter last year. This year's fiscal third quarter included the $2.2 million pretax benefit related to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. dispute resolution. Last year's fiscal third quarter included a net inventory provision of $1.5 million. Margins and costs were positively impacted by increased sales and the resultant This article is about the resultant of polynomials. For the result of adding two or more vectors, see Parallelogram rule. For the technique in organ building, see Resultant (organ). In mathematics, the resultant of two monic polynomials efficiency gains in our manufacturing processes at our vertically integrated world class manufacturing facility located in the People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China ("PRC"). We continue to invest in new product engineering, design and development, primarily focusing on digital technologies and products. We incurred approximately $2.2 million, or 6.0% of net sales, in product development costs in this year's fiscal third quarter as compared to $1.8 million, or 6.8% of net sales, last year. "Selling expenses for the third quarter of fiscal 2003 were $1.9 million, or 5.2% of net sales. This compared to $1.4 million, or 5.4% of net sales, for the third quarter last year. The increase in absolute dollars was primarily due to additional sales and marketing personnel, higher variable costs including freight and handling costs, and royalties related to the Polaroid brand licenses, all of which are attributable to the Company's sales growth." "General and administrative ("G&A") expenses for the third quarter of fiscal 2003 were $5.4 million, or 14.8% of net sales. This compared to $4.1 million, or 15.4% of net sales, for the third quarter last year. The increase in G&A expenses was primarily due to additional staffing, non-reimbursed legal expenses associated with defending the Company's class action litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and certain intellectual property-related legal costs, insurance costs and additional costs associated with the Company's growth. Last year's G&A expenses included a $0.3 million bad debt recovery," said Mr. Lampert. There was no non-cash variable stock option expense for the third quarter of this fiscal year in comparison to a $1.2 million expense for the same quarter last year. Last year's third quarter included a $1.2 million recovery of operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. associated with a previously disclosed employee defalcation The misappropriation or Embezzlement of money. Defalcation implies that funds have in some way been mishandled, particularly where an officer or agent has breached his or her fiduciary duty. . Interest expense for the third quarter of fiscal 2003 was $0.2 million compared to $0.6 million in the same quarter last year. The decrease of $0.4 million was attributable to the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. in August 2002 of our $15 million, 11% Senior Notes. Other (income), net was $(0.5) million for the third quarter of fiscal 2003, versus $(0.3) million for the third quarter last year. The increase is primarily related to foreign exchange gains. Nine Month Comparison For the nine months ended March 29, 2003 ("Fiscal 2003 YTD See Year-to-date. YTD See year to date (YTD). "), net sales were $128.3 million, a 30% increase over the same period last year, and net income was $4.7 million, or $0.16 per diluted share. For the nine months ended March 30, 2002 ("Fiscal 2002 YTD"), net sales were $98.6 million and the net loss was $(6.2) million, or $(0.23) per share. RSD sales for Fiscal 2003 YTD were $97.8 million, an increase of $28.7 million, or 41.7%, and accounted for 76% of total sales. This growth was in large part due to new digital camera sales, Polaroid branded single use and traditional cameras, new accounts and organic growth from existing accounts due to sell through and new product introductions. DMS sales were $30.5 million, an increase of $1.0 million, or 3.1%, and accounted for 24% of total sales. The increase was due in part to digital camera sales to a Fuji Photo Film Co., Ltd. subsidiary, Legend Group Limited in the PRC and Visioneer, Inc., sales of a new single use camera being manufactured for Kodak under a new supply agreement entered into in September 2002 and other sales to existing customers, partially offset by the previously disclosed expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of certain DMS contracts. Gross profit for Fiscal 2003 YTD was $25.6 million, or 19.9% of net sales, versus $14.9 million, or 15.1% of net sales in Fiscal 2002 YTD. This year included the $2.2 million pretax benefit related to the favorable dispute resolution partially offset by $0.8 million of additional air freight air freight n → flete m por avión air freight n → fret aérien air freight air n → Luftfracht f costs due to the West Coast dock worker labor dispute, while last year included $3.3 million of net inventory provisions. Fiscal 2003 YTD gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. were positively impacted by increased sales, efficiency gains and positive labor and overhead absorption in manufacturing. Product development expenses were $6.1 million, or 4.8% of net sales, for Fiscal 2003 YTD versus $5.8 million, or 5.9%, of net sales last year. Selling expenses for Fiscal 2003 YTD were $5.9 million, or 4.6% of net sales. Last year, selling expenses were $4.6 million, or 4.7% of net sales. The increase was primarily due to additional sales and marketing personnel, higher freight and handling costs, and royalties related to the Polaroid brand licenses, all of which are attributable to the Company's year over year sales growth. General and administrative expenses for Fiscal 2003 YTD were $14.9 million, or 11.6% of net sales. This compared to $16.3 million, or 16.5% of net sales last year. Fiscal 2002 YTD G&A expenses included a $1.6 million accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying provision due to the Polaroid bankruptcy, a $1.1 million charitable contribution charitable contribution n. in taxation, a contribution to an organization which is officially created for charitable, religious, educational, scientific, artistic, literary, or other good works. for victims of the September 11, 2001 terrorist attack, and a net $0.7 million provision due to the Kmart bankruptcy. Fiscal 2003 YTD G&A expenses included a $0.5 million reduction in expense due to a payment from Polaroid in settlement of Concord's outstanding Polaroid claims related to the Polaroid bankruptcy filing. The remaining elements of G&A expenses increased year over year by approximately $2.5 million primarily due to additional staffing, professional and insurance costs, and other costs associated with the Company's growth. Interest expense for Fiscal 2003 YTD was $1.0 million, versus $1.9 million last year, a decrease of $0.9 million. The decrease relates to the repurchase of the Senior Notes described herein. Other (income), net was $(1.4) million for Fiscal 2003 YTD as compared to $(2.7) million in Fiscal 2002 YTD. Last year included $1.2 million of income from an arbitration award An arbitration award (or arbitral award) is a determination on the merits by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law. and also included higher investment income. Working Capital Working capital was $115.4 million at March 29, 2003, $115.2 million at December 28, 2002 and $128.4 million at June 29, 2002. Working capital has declined $13.0 million since the beginning of the fiscal year. Cash and investments decreased by $20.2 million from $103.9 million at June 29, 2002 to $83.7 million at December 28, 2002 as a result of the repurchase of the $15 million Senior Notes, pre-paying $4 million in conjunction with the Polaroid brand license agreements and incurring $3.9 million of fixed asset expenditures. Cash and investments during the third quarter increased by $0.7 million. Accounts receivable, net decreased by $10.0 million during the third quarter and has decreased by $3.6 million from the beginning of the year. Inventory increased from $22.5 million to $34.4 million during the first three quarters of fiscal 2003, but remained relatively unchanged from the end of the second quarter of fiscal 2003. Concord's Balance Sheet Remains Strong Mr. Lampert continued, "Concord ended the third quarter with working capital of $115.4 million, no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. , and cash and investments on hand of $83.7 million. We also had total stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. of $154.6 million, or approximately $5.54 per share, as of March 29, 2003. We remain convinced that if we adhere to adhere to verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful 2. our fundamental strategies of engineering, developing, designing and manufacturing high quality products at low cost and introducing new products to our RSD and DMS customers, our business will progress. We continue to invest in human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. , technologies, manufacturing facilities, capital equipment and product development to support growth and our transition to a leading image capture technology-based DMS and RSD business." Commenting on the short-term outlook for the Company, Mr. Lampert continued, "Providing long- term future guidance continues to be challenging. The economy remains difficult to forecast particularly in light of mixed economic indicators Economic indicators The key statistics of the economy that reveal the direction the economy is heading in; for example, the unemployment rate and the inflation rate. and disruptive disruptive /dis·rup·tive/ (-tiv) 1. bursting apart; rending. 2. causing confusion or disorder. world events. Historically, the Company's fourth quarter has been relatively strong. Currently, for the fourth quarter of fiscal 2003, we anticipate revenues in the approximate range Noun 1. approximate range - near to the scope or range of something; "his answer wasn't even in the right ballpark" ballpark ambit, range, scope, reach, compass, orbit - an area in which something acts or operates or has power or control: "the range of a of $50 to $55 million and net income in the approximate range of $0.9 to $1.8 million, or $0.03 to $0.06 per share, before any non-cash variable stock option expense." Potential New Products and Relationships If the Company's development efforts are successfully concluded, the Company anticipates introducing a number of new digital, single use and traditional cameras to potential new and existing DMS and RSD customers during the remainder of this fiscal year and the first part of next fiscal year. Corporate Governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. and Enhanced Reporting Concord has endorsed and will fully comply with the requirements of NASDAQ, the Sarbanes-Oxley Act See SOX. and the new SEC rules related to corporate governance, accounting and reporting. Investor Conference Call Ira B. Lampert, Chairman, Chief Executive Officer and President, will host a conference call today, Friday, May 9, 2003 at 11:30 A.M. Eastern Daylight Time, to discuss fiscal 2003 third quarter and nine month results. To participate in the live conference call with management, please call (973) 582-2866 five to ten minutes prior to the start time. The conference call will also be broadcast live over the Internet via the WEBCAST section on the home page of Concord's web site - www.concord-camera.com. To listen to the live call, go to the web site at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen to the call live, the conference call will be archived and can be accessed for approximately five business days. About Concord Camera Corp. Concord Camera Corp. is a global developer, designer, manufacturer and marketer of high quality, popularly priced, digital, instant, Advanced Photo System (APS), and 35mm format cameras and 35mm, APS, and instant format single use cameras. Concord markets its cameras under the trademarks POLAROID(R), CONCORD(R), KEYSTONE key·stone n. 1. Architecture The central wedge-shaped stone of an arch that locks its parts together. Also called headstone. 2. The central supporting element of a whole. (R), CONCORD EYE Q(R), LE CLIC CLIC Centre Local d'Information et de Coordination (French) CLiC Climate and Cryosphere (World Climate Research Programme project, Norway) CLIC Compact Linear Collider CLIC Connecticut Licensing Information Center (R), GOLDLINE(R), APEX apex (a´peks) pl. apexes, a´pices [L.] tip; the pointed end of a conical part; the top of a body, organ, or part.ap´ical apex of lung the rounded upper extremity of either lung. (R), and ARGUS Argus (är`gəs) or Argos (är`gŏs, –gəs), in Greek mythology. 1 Many-eyed monster, also called Panoptes. He guarded Io after she had been changed into a heifer. (R). Concord sells and markets its camera products worldwide through direct sales offices in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada, Germany, Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , the United Kingdom and France and through independent sales agents. Concord manufactures its products in its vertically integrated manufacturing facilities in the People's Republic of China. The Polaroid trademark is owned by Polaroid Corporation and is used by Concord under license from Polaroid. Except for the historical matters contained herein, statements in this press release are forward-looking and are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Investors are cautioned that forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including the statements regarding anticipated or expected results and the future introduction of new products, involve risks and uncertainties which may affect the Company's business and prospects, including the risks discussed under "Risk Factors" in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended June 29, 2002 and subsequently filed reports. Any forward-looking statements contained in this press release represent our estimates only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , or as of such earlier dates as are indicated, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any obligation to do so, even if our estimates change. Concord Camera Corp. and Subsidiaries Condensed Consolidated Balance Sheets (In Thousands)
March 29, December 28, June 29,
2003 2002 2002
-----------------------------------
Assets (Unaudited) (Unaudited)
Current Assets:
Cash and cash equivalents $33,816 $83,028 $103,868
Short-term investments 49,906 - -
Accounts receivable, net 19,352 29,339 22,984
Inventories 34,355 34,340 22,485
Prepaid expenses and other
current assets 3,948 4,422 4,194
------------ ----------- ---------
Total current assets 141,377 151,129 153,531
Property, plant and equipment, net 20,779 20,732 20,985
Goodwill, net 3,721 3,721 3,721
Other assets 25,313 24,580 19,839
------------ ----------- ---------
Total assets $191,190 $ 200,162 $198,076
============ =========== =========
Liabilities and Stockholders'
Equity
Current Liabilities:
Accounts payable $15,398 $18,301 $12,502
Accrued expenses 8,885 15,371 12,013
Other current liabilities 1,664 2,220 634
------------ ----------- ---------
Total current liabilities 25,947 35,892 25,149
Senior notes - - 14,934
Other long-term liabilities 10,679 10,943 8,837
------------ ----------- ---------
Total liabilities 36,626 46,835 48,920
Commitments and contingencies
Stockholders' Equity:
Blank check preferred stock, no
par value
1,000 shares authorized, none
issued - - -
Common stock, no par value
100,000 shares
authorized, 29,458, 29,457 and
29,029 shares issued as of
March 29, 2003, December 28 and
June 29, 2002, respectively 141,092 141,089 140,547
Paid-in capital 4,507 4,507 4,412
Deferred stock-based compensation (232) (275) (332)
Retained earnings 13,400 12,143 8,667
Notes receivable arising from
common stock purchase agreements - - (1)
Accumulated other comprehensive
loss (66) - -
------------ ----------- ---------
158,701 157,464 153,293
Less: treasury stock, at cost;
1,543 shares (4,137) (4,137) (4,137)
------------ ----------- ---------
Total stockholders' equity 154,564 153,327 149,156
------------ ----------- ---------
Total liabilities and stockholders'
equity $191,190 $200,162 $198,076
============ =========== =========
Concord Camera Corp. and Subsidiaries
Condensed Consolidated Statements of Operation
(In Thousands except per share data)
----------------------------------------------------------------------
(Unaudited)
For the quarter ended For the nine months ended
----------------------------------------------------------------------
March 29, March 30, March 29, March 30,
2003 2002 2003 2002
-------------------------------------------------------
Net sales $36,246 $26,422 $128,268 $ 98,574
Cost of
products sold 27,854 24,615 102,686 83,696
--------- -------- ---------- ----------
Gross profit 8,392 1,807 25,582 14,878
Selling
expenses 1,886 1,432 5,896 4,586
General and
administrative
expenses 5,367 4,071 14,914 16,252
(Recovery) of
operating
expenses, net - (1,150) - (1,150)
Variable stock-
based
compensation
expenses - 1,169 - 2,825
Interest
expense 206 570 1,030 1,864
Other (income),
net (464) (320) (1,429) (2,682)
--------- -------- ---------- ----------
Income (loss)
before income
taxes 1,397 (3,965) 5,171 (6,817)
Provision
(benefit) for
income taxes 140 (617) 438 (646)
--------- -------- ---------- ----------
Net income
(loss) $1,257 $(3,348) $4,733 $(6,171)
========= ======== ========== ===========
Basic earnings
(loss) per
common share $0.05 $(0.12) $0.17 $(0.23)
========= ======== ========== ===========
Diluted
earnings
(loss) per
common share $0.04 $(0.12) $0.16 $(0.23)
========= ========= ========== ===========
Weighted
average common
shares
outstanding-
basic 27,915 27,442 27,858 27,425
Dilutive effect
of common
stock options 1,627 - 1,561 -
--------- -------- ---------- ----------
Weighted
average common
shares
outstanding-
diluted 29,542 27,442 29,419 27,425
========= ======== ========== ==========
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