Concord Camera Corp. Announces Results for Second Quarter and Six Months Ended December 28, 2002.Business Editors HOLLYWOOD, Fla.--(BUSINESS WIRE)--Jan. 29, 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") (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 second quarter and six months of fiscal 2003 ended December 28, 2002 (see attached tables). Second Quarter Comparison For the second quarter ended December 28, 2002, 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 $61.8 million, a 57% increase over last year. Net income was $2.1 million, or $0.07 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 $39.3 million, and a net loss of $(1.6) million, or $(0.06) per share, for the second 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 second quarter of fiscal 2003 of $61.8 million set a Company record for sales in a quarter. We exceeded the high end of the range ($50 to $55 million) of guidance announced in October by almost $7 million, or 12.4%. Our digital cameras sold very well and comprised over 50% of total sales. Net income of $2.1 million was significantly larger than our prior guidance of $1.0 to $1.5 million. During the critical holiday shipping season the West Coast dock workers were involved in a labor dispute ("Dock Worker Labor Dispute") that disrupted dis·rupt tr.v. dis·rupt·ed, dis·rupt·ing, dis·rupts 1. To throw into confusion or disorder: Protesters disrupted the candidate's speech. 2. normal shipping. As a result, we incurred approximately $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, however, we met all customer shipping requirements." Mr. Lampert also said, "Sales from our Retail Sales and Distribution ("RSD RSD Reflex sympathetic dystrophy, see there ") business for the second quarter of fiscal 2003 were $48.8 million, an increase of $19.2 million, or 65.1%, and accounted for 79.0% 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 Design and Manufacturing Services (formerly OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and ) ("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. ") business were $13.0 million, an increase of $3.3 million, or 34.2%, and accounted for 21.0% of total sales. This increase was due to digital product sales to a Fuji Photo Film Co., Ltd. subsidiary ("Fuji"), Legend Group Limited ("Legend") in the People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China ("PRC"), and Visioneer, Inc. ("Visioneer"), a new single use camera being manufactured for Eastman Kodak Company ("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 contracts." Mr. Lampert commented, "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 still cameras ("DSC (1) (Digital Signal Controller) A microcontroller and DSP combined on the same chip. It adds the interrupt-driven capabilities normally associated with a microcontroller to a DSP, which typically functions as a continuous process. See microcontroller and DSP. ") both in our RSD and DMS businesses. This increased penetration was primarily a result of opening new accounts, growth in existing accounts and increased DSC product offerings. During the first two quarters of 2003 we offered for sale thirteen (13) Concord branded DSC 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 including fixed focus, digital and 3X optical zoom Changing the focal length of a camera by adjusting the physical zoom lens. All zoom lenses in film cameras and digital single lens reflex (DSLR) cameras are optical zoom. Digital point-and-shoot cameras as well as consumer and prosumer video camcorders have optical zoom, but they also products. "Our sales of DSC's have increased almost tenfold tenfold Adjective 1. having ten times as many or as much 2. composed of ten parts Adverb by ten times as many or as much Adj. 1. from the second quarter of fiscal 2002 to the second quarter of fiscal 2003 and represented over fifty percent of net sales in the most recent second quarter. "Gross profit for the second quarter of fiscal 2003 was $9.5 million, or 15.3% of net sales, versus $7.3 million, or 18.7% of net sales in the same quarter last year. Due to significantly higher sales, absolute gross profit dollars were higher in the second quarter of this year compared to the same quarter last year. However, our gross profit margin 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. dropped by 3.4 percentage points due to product mix (that is a significant increase in digital camera sales which typically generate higher gross profit dollars, but lower gross profit margins), and higher incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. air freight costs of $0.8 million due to the Dock Worker Labor Dispute. Margins and costs were positively impacted by efficiency gains in our manufacturing processes and positive labor and overhead absorption at our vertically integrated world-class facility located in the PRC. We continue to invest in new product engineering, design and development, primarily focusing on digital technologies and products. We incurred approximately $2.0 million in product development costs in the second quarters of each of the last two fiscal years, which was 3.2% of net sales in the second quarter of fiscal 2003 and 5.0% of net sales in the second quarter of fiscal 2002. "Selling expenses for the second quarter of fiscal 2003 were $2.2 million, or 3.5% of net sales. This compares to $1.5 million, or 3.8% of net sales for the second quarter last year. The increase in absolute dollars was primarily due to higher freight and handling costs and additional sales and marketing personnel. "General and Administrative ("G&A") expenses for the second quarter of fiscal 2003 were $5.3 million, or 8.5% of net sales. This compares to $6.7 million, or 17.1% of net sales for the second quarter last year. Last year G&A expenses included a $2.0 million bad debt provision related to Kmart Corporation and a 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 the September 11, 2001 attack. The remaining elements of G&A expenses increased approximately $0.6 million primarily due to additional staffing, some increased costs and other costs associated with the Company's growth," said Mr. Lampert. There was no non-cash variable stock option expense for the second quarter of this fiscal year. Interest expense for the second quarter of fiscal 2003 was $0.1 million compared to $0.6 million in the same quarter last year. The decrease of $0.5 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 $(0.7) million for the second quarter of fiscal 2003, versus $(1.8) million for the second quarter last year. Last year's second quarter included 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. of $(1.2) million. Six Month Comparison For the six months ended December 28, 2002 ("Fiscal 2003 YTD See Year-to-date. YTD See year to date (YTD). "), net sales were $92.0 million, a 28% increase over the same period last year and net income was $3.5 million, or $0.12 per diluted share. For the six months ended December 29, 2001 ("Fiscal 2002 YTD"), net sales were $72.2 million and we incurred a net loss of $(2.8) million, or $(0.10) per share. RSD sales for Fiscal 2003 YTD were $74.7 million, an increase of $23.3 million, or 45.4% and accounted for 81.2% 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. DMS sales were $17.3 million, a decrease of $3.5 million, or 16.7% and accounted for 18.8% of total sales. The decrease was primarily due to the previously disclosed expiration of certain contracts, partially offset by sales to Fuji, Kodak, Legend and Visioneer. Gross profit for Fiscal 2003 YTD was $17.2 million, or 18.7% of net sales, versus $13.1 million, or 18.1% of net sales in Fiscal 2002 YTD. This year included $0.8 million of additional air freight costs due to the Dock Worker Labor Dispute and last year included $1.8 million related to an inventory provision in conjunction with Polaroid Corporation's filing for bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most protection under Chapter 11 of the US Bankruptcy Code Bankruptcy Code may refer to:
Selling expenses for Fiscal 2003 YTD were $4.0 million, or 4.4% of net sales. Last year, selling expenses were $3.2 million, or 4.4% of net sales. The increase was primarily due to additional sales and marketing personnel. General and Administrative expenses for Fiscal 2003 YTD were $9.5 million, or 10.4% of net sales. This compares to $12.2 million, or 16.9% of net sales last year. Fiscal 2002 YTD G & A expenses included $2.0 million for those items included and described in the above Second Quarter Comparison section, plus a first quarter fiscal 2002 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 of $1.6 million due to the Polaroid bankruptcy, for a total of $3.6 million. The remaining elements of G&A expenses increased $0.9 million primarily due to additional staffing, some increased costs and other costs associated with the company's growth. Interest expense for Fiscal 2003 YTD was $0.8 million, versus $1.3 million last year, a decrease of $0.5 million. The decrease relates to the repurchase of the Senior Notes described herein. Other (income), net was $(1.0) million for Fiscal 2003 YTD as compared to $(2.4) million in Fiscal 2002 YTD. Last year included $(1.2) million from an arbitration award and also included higher investment income. Working Capital Working capital was $115.2 million at December 28, 2002, as compared to $128.4 at June 29, 2002, a decrease of $13.2 million. Working capital however increased by $2.2 million in the second quarter. Cash decreased by $20.9 million from $103.9 million at June 29, 2002 to $83.0 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 $2.5 million of fixed asset expenditures. Cash during the second quarter increased by $5.6 million from the end of the first quarter. Accounts receivable, net increased $6.4 million from June 29, 2002 based on significant sales growth in the second quarter of fiscal 2003. Inventory increased from $22.5 million to $39.6 million during the first quarter of this fiscal year due to ramping up for significant sales growth in the second quarter. Inventory decreased $5.3 million to $34.3 million at the end of the second quarter because the Company's sales are normally lower in the third quarter than in the second quarter. Concord's Balance Sheet Remains Strong Mr. Lampert continued, "Concord ended its second quarter with working capital of $115.2 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 on hand of $83.0 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 $153.3 million, or approximately $5.49 per share as of December 28, 2002. 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." Outlook Commenting on the short-term outlook for the Company, Mr. Lampert continued, "Providing long term future guidance continues to be challenging. The economy continues to be problematic for consumers and many companies and it remains difficult to forecast sales particularly in light of the disappointing 2002 retail and holiday season. Historically, the Company's third quarter has been its most challenging due, in part, to seasonally lower sales resulting in a lack of optimum manufacturing efficiency due to lower production, and the Chinese New Year Chinese New Year (Simplified Chinese: ; Traditional Chinese: ; Pinyin: Chūnjié), or Spring Festival slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. which results in under-absorption of labor and overhead. Currently, for the third quarter of fiscal 2003, we anticipate revenues in the range of $32 to $35 million and net income to be break even, before non-cash variable stock option expense." Potential New Products and Relationships The Company is working with existing and potential DMS customers for the design, development, and production of new products, including single use, traditional and digital cameras. If the Company's development efforts are successfully concluded, certain new products could be introduced during the remainder of fiscal 2003. The Company anticipates introducing several new traditional and digital cameras to potential new and existing RSD customers during the remainder of this 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, January 29, 2003 at 11:00 A.M. Eastern Standard Time, to discuss fiscal 2003 second quarter and six 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.concordcam.com. To listen to the live call, go to the web site at least 15 minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. 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). Today, Concord is one of the world's leaders in the single use camera category, one of the fastest growing segments of the camera market, and the largest producer of single use cameras in the world in the private label, corporate premium and original equipment manufacturer segments of the industry. 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 expansive, vertically integrated manufacturing facilities in the People's Republic of China, which includes a class 10,000 "clean room" digital technology manufacturing and assembly facility. 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 statement regarding 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)
December September June
28, 28, 29,
2002 2002 2002
Assets (Unaudited)(Unaudited)
Current Assets:
Cash and cash equivalents $83,028 $77,419 $103,868
Accounts receivable, net 29,339 21,140 22,984
Inventories 34,340 39,553 22,485
Prepaid expenses and other current
assets 4,422 5,771 4,194
--------- --------- ---------
Total current assets 151,129 143,883 153,531
Property, plant and equipment, net 20,732 20,397 20,985
Goodwill, net 3,721 3,721 3,721
Other assets 24,580 24,224 19,839
--------- --------- ---------
Total assets $200,162 $192,225 $198,076
========= ========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $18,301 $11,783 $12,502
Accrued expenses 15,371 16,975 12,013
Other current liabilities 2,220 2,079 634
--------- --------- ---------
Total current liabilities 35,892 30,837 25,149
Senior notes - - 14,934
Other long-term liabilities 10,943 10,241 8,837
--------- --------- ---------
Total liabilities 46,835 41,078 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, 29,457, 29,445
and 29,029 shares issued as of
December 28, September 28 and June
29, 2002, respectively 141,089 141,037 140,547
Paid-in capital 4,507 4,507 4,412
Deferred stock-based compensation (275) (317) (332)
Retained earnings 12,143 10,058 8,667
Notes receivable arising from common
stock purchase agreements - (1) (1)
--------- --------- ---------
157,464 155,284 153,293
Less: treasury stock, at cost; 1,543
shares (4,137) (4,137) (4,137)
--------- --------- ---------
Total stockholders' equity 153,327 151,147 149,156
--------- --------- ---------
Total liabilities and stockholders'
equity $200,162 $192,225 $198,076
========= ========= =========
Concord Camera Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Thousands except per share data)
(Unaudited)
---------------------------------------------------------------------
For the quarter ended For the six months ended
---------------------------------------------------------------------
December December December December
28, 29, 28, 29,
2002 2001 2002 2001
Net sales $61,840 $39,266 $92,022 $72,153
Cost of products sold 52,372 31,938 74,832 59,081
-------- -------- --------- ----------
Gross profit 9,468 7,328 17,190 13,072
Selling expenses 2,191 1,499 4,010 3,154
General and
administrative
expenses 5,270 6,717 9,547 12,181
Variable stock-
based
compensation
expenses - 1,656 - 1,656
Interest expense 146 634 824 1,295
Other (income),
net (684) (1,764) (966) (2,363)
------------- -------- --------- ----------
Income (loss)
before income
taxes 2,545 (1,414) 3,775 (2,851)
Provision
(benefit) for
income taxes 460 141 299 (28)
--------------- -------- --------- ----------
Net income
(loss) $2,085 $(1,555) $3,476 $(2,823)
=============== ======== ========= ==========
Basic earnings
(loss) per
common share $0.07 $(0.06) $0.12 $(0.10)
=============== ======== ========= ==========
Diluted
earnings
(loss) per
common share $0.07 $(0.06) $0.12 $(0.10)
=============== ======== ========= ==========
Weighted
average common
shares
outstanding-
basic 27,910 27,421 27,830 27,417
Dilutive effect
of common
stock options 1,630 - 1,593 -
--------------- -------- --------- ----------
Weighted
average common
shares
outstanding-
diluted 29,540 27,421 29,423 27,417
=============== ======== ========= ==========
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