Concord Camera Corp. Announces Results for the First Quarter Ended September 27, 2003.Business Editors HOLLYWOOD Hollywood. 1 Community within the city of Los Angeles, S Calif., on the slopes of the Santa Monica Mts.; inc. 1903, consolidated with Los Angeles 1910. , Fla.--(BUSINESS WIRE)--Nov. 6, 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 first quarter of fiscal year 2004 that ended September 27, 2003 (see attached tables). For the first quarter ended September 27, 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 ("sales") were $57.4 million, a 90% increase over the same quarter last year. The net loss was $0.6 million, or $0.02 per share. This compared to sales of $30.2 million, and net income of $1.4 million, or $0.05 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 for the first quarter of the prior fiscal year. Excluding this year's first quarter non-cash variable stock option expense of $3.1 million ($2.7 million after taxes), net income was $2.1 million, or $0.07 per diluted share. In addition, starting in fiscal 2004, the Company changed its method of applying manufacturing labor and overhead costs overhead costs see fixed costs. to inventory. The Company believes the new method will improve the matching of costs to the flow of product through the production processes. As a result of this change, the cost of products sold increased by $3.4 million for the first quarter and therefore gross profit and net income decreased by $3.4 million and $3.0 million, respectively, or $0.10 per diluted share. Since the effect of the change in the first quarter was to reduce by $3.4 million the amount of labor and overhead costs that would have been allocated to the Company's inventory at the end of the quarter under the prior method, cost of sales in subsequent quarters in fiscal 2004 should be commensurately com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. reduced as inventories decline with an attendant ATTENDANT. One who owes a duty or service to another, or in some sort depends upon him. Termes de la Ley, h.t. As to attendant terms, see Powell on Morts. Index, tit. Attendant term; Park on Dower, c. 1 7. increase in gross profit and net income. Commenting on the financial results, Ira B. Lampert, Concord's Chairman, Chief Executive Officer and President, said, "Concord's sales for the first quarter of fiscal 2004 of $57.4 million was right in the middle of the range ($55 to $60 million) of the guidance we announced in August. Excluding non-cash variable stock option expense, net income was $2.1 million, or $0.07 per diluted share versus guidance of $2.1 to $2.7 million, or $0.07 to $0.09 per diluted share." Mr. Lampert also said, "Sales from our Retail Sales and Distribution ("RSD RSD Reflex sympathetic dystrophy, see there ") business for the first quarter of fiscal 2004 were $42.4 million, an increase of $16.5 million, or 64%, compared to the same quarter last year and accounted for 74% of total sales. This growth was in large part due to sales of Polaroid branded single use and traditional cameras, new digital product sales, new accounts and organic growth from existing accounts due to sell through and new product introductions. Sales from our 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. ") business were $15.0 million, an increase of $10.7 million, or 247%, compared to the same quarter last year and accounted for 26% of total sales. This increase was primarily due to single use cameras being manufactured for Eastman Kodak Company under a 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 all of our products in both of our RSD and DMS businesses. This increased penetration was primarily a result of opening new accounts, growth in existing accounts, increased digital camera product offerings and growth in our single use camera product offerings and sales. "Gross profit for the first quarter of fiscal 2004 was $10.7 million, or 18.7% of sales, versus $7.7 million, or 25.6% of sales in the same quarter last year. This year we implemented a new method of applying manufacturing labor and overhead costs to inventory by developing new automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. systems to capture our standard costs of manufacturing. We feel this will provide us with better variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality analyses and will improve the matching of costs of manufacturing labor and overhead to the flow of product through our production processes. The impact of implementing this new method in our first quarter of fiscal 2004 was a decrease in gross profit and net income of $3.4 million and $3.0 million, respectively, or $0.10 per diluted share. We continue to invest in new product engineering, design and development, primarily focusing on digital technologies and products. We incurred $2.5 million, or 4.4% of sales, in product development costs in this year's fiscal first quarter as compared to $1.9 million, or 6.4% of sales in the first quarter last year. "Selling expenses for the first quarter of fiscal 2004 were $2.4 million, or 4.1% of sales. This compared to $1.8 million, or 6.0% of sales, for the first quarter last year. The increase in absolute dollars was primarily due to royalties related to the Polaroid brand licenses, the cost of additional sales and marketing personnel, and higher variable costs including freight and handling costs, all of which are attributable to the Company's sales growth. "General and administrative ("G&A") expenses for the first quarter of fiscal 2004 were $6.0 million, or 10.4% of sales. This compared to $4.3 million, or 14.2% of sales, for the first quarter last year. The increase in G&A expenses was primarily due to additional staffing, professional fees, insurance costs and additional costs associated with the Company's growth. Last year's G&A expenses included a $0.5 million recovery from Polaroid Corporation resulting in a reduction of expenses," said Mr. Lampert. Non-cash variable stock option expense for the first quarter of this fiscal year was $3.1 million, compared to no such expense for the same quarter last year. Interest expense for the first quarter of fiscal 2004 was $0.2 million compared to $0.7 million in the same quarter last year. The decrease of $0.5 million was attributable to the reduction in interest expense related 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 and the non-recurring write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of $0.3 million in deferred finance costs. Other (income), net was $(0.1) million and $(0.3) million for the first quarter of fiscal 2004 and 2003, respectively. The decrease of $0.2 million related primarily to foreign exchange losses. Working Capital Working capital was $123.4 million at September 27, 2003, an increase of $2.3 million over working capital at June 28, 2003. During the first quarter, cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments increased $0.2 million ending the quarter at $88.5 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 decreased by $6.8 million, while inventory levels increased by $14.1 million, in anticipation of higher sales planned for our second quarter. Concord's Balance Sheet Remains Strong Mr. Lampert continued, "Concord ended the first quarter with working capital of $123.4 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 $88.5 million or approximately $3.13 per share. 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 $159.8 million, or approximately $5.64 per share, as of September 27, 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 grow. 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." Second Quarter 2004 Guidance Commenting on the short-term outlook for the Company, Mr. Lampert continued, "Providing long- term future guidance continues to be challenging. The economy is improving, but still remains difficult to forecast. Currently, for the second quarter of fiscal 2004, we anticipate sales in the range of $70 to $75 million and net income in the range of $5.2 to $6.5 million, or $0.17 to $0.21 per diluted share, before any non-cash variable stock option expense or income." Potential New Products and Relationships If the Company's development efforts are successfully concluded, the Company anticipates introducing several new digital, single use and traditional cameras to potential new and existing DMS and RSD customers during the remainder of Fiscal 2004. 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, Thursday, November 6, 2003 at 11:00 A.M. Eastern Time, to discuss the first quarter results. To participate in the live conference call with management, please call (973) 582-2783 at least five minutes prior to the start time. The conference call will also be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the 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 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 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 People's Republic n. A political organization founded and controlled by a national Communist party. of China. The Polaroid trademark is owned by Polaroid Corporation and is used by Concord under license from Polaroid. CONCORD, KEYSTONE, CONCORD EYE Q, LE CLIC, GOLDLINE, APEX and ARGUS are trademarks and/or registered trademarks of Concord Camera Corp. in the United States and/or other countries. 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 28, 2003 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)
September 27, June 28,
2003 2003
------------- -----------
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $ 38,292 $ 38,221
Short-term investments 50,203 50,035
Accounts receivable, net 25,684 32,494
Inventories 46,400 32,317
Prepaid expenses and other current assets 5,786 5,122
----------- ----------
Total current assets 166,365 158,189
Property, plant and equipment, net 20,377 21,328
Goodwill, net 3,721 3,721
Other assets 23,374 22,576
----------- ----------
Total assets $ 213,837 $ 205,814
=========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 28,751 $ 22,105
Accrued expenses 11,802 13,023
Other current liabilities 2,402 1,984
----------- ----------
Total current
liabilities 42,955 37,112
Other long-term liabilities 11,096 11,874
----------- ----------
Total liabilities 54,051 48,986
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; 30,244 and 29,464 shares
issued as of September 27, 2003 and June 28,
2003, respectively 142,255 141,109
Paid-in capital 8,563 5,407
Deferred stock-based compensation (148) (190)
Deferred compensation arrangement 413 -
Retained earnings 14,456 15,070
Accumulated other comprehensive loss (720) (431)
----------- ----------
164,819 160,965
Less: treasury stock, at cost, 1,599
shares and 1,543 shares
as of September 27, 2003 and June 28,
2003, respectively (4,620) (4,137)
----------- ----------
Less: common stock held in trust, 331
shares as of September 27, 2003 (413) -
----------- ----------
Total stockholders' equity 159,786 156,828
----------- ----------
Total liabilities and stockholders' equity $ 213,837 $ 205,814
=========== ==========
Concord Camera Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
For the quarter ended
----------------------------
September 27, September 28,
2003 2002
------------- -------------
Net sales $ 57,401 $ 30,182
Cost of products sold 46,661 22,460
------------- -------------
Gross profit 10,740 7,722
Selling expenses 2,381 1,819
General and administrative expenses 5,957 4,277
Variable stock-based compensation
expense 3,050 -
Interest expense 163 677
Other (income), net (109) (281)
------------- -------------
(Loss) income before income taxes (702) 1,230
(Benefit) for income taxes (88) (161)
------------- -------------
Net (loss) income $ (614) $ 1,391
============= =============
Basic (loss) earnings per common
share $ (0.02) $ 0.05
============= =============
Diluted (loss) earnings per common
share $ (0.02) $ 0.05
============= =============
Weighted average
common shares
outstanding - basic 28,455 27,756
Dilutive effect of common stock
options - 1,520
------------- -------------
Weighted average
common shares
outstanding - diluted 28,455 29,276
============= =============
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