Concord Camera Corp. Announces Results for the Second Quarter and Six Months Ended December 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)--Feb. 5, 2004 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 second quarter and six months of fiscal year 2004 ended December December: see month. 27, 2003 (see attached tables). Second Quarter Comparison For the second quarter ended December 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 $65.1 million, a 5.2% increase over the same quarter last year. The net loss was $(2.9) million, or $(0.10) per share. This compared to sales of $61.8 million, and net income of $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 for the second quarter of the prior fiscal year. This year's second quarter includes the pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern recognition of a $0.9 million loss related to the decline in fair value of certain 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, which loss was realized upon the sale of the investments subsequent to the end of the quarter, and a pretax $3.1 million charge with respect to certain inventory and tooling primarily attributable to digital camera products. Commenting on the financial results, Ira B. Lampert, Concord's Chairman, Chief Executive Officer and President, said, "Concord's sales of $65.1 million for the second quarter of fiscal 2004 set a company record for the highest revenue in any prior quarter. The net loss was $(2.9) million, or $(0.10) per share, versus the revised guidance, issued on January January: see month. 16, 2004, of a loss of $(2.0) to $(2.5) million, or $(0.07) to $(0.09) per share. The disappointing results were primarily attributable to lower than anticipated digital camera sales coupled with lower than projected average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. . Furthermore, another contributing factor to the loss was the significantly higher manufacturing costs that were incurred as a result of production inefficiencies related to delays in completing the development of certain new digital camera products." 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 2004 were $55.4 million, an increase of $7.1 million, or 14.7% compared to the same quarter last year, and accounted for 85% of total sales. This growth was in large part due to sales of Polaroid Polaroid: see Land, Edwin H. branded and other single use and traditional cameras, new accounts and organic growth from existing accounts. 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 $9.7 million, a decrease of $3.8 million, or 28.5%, compared to the same quarter last year, and accounted for 15% of total sales. The decline was primarily attributable to a decrease in sales to certain customers which was offset, to some extent, by single use and digital camera sales to other customers." Mr. Lampert continued, "Our performance in the second quarter was very disappointing, in particular, sales of one of our digital cameras were significantly lower than we had expected. Although our average selling prices for digital cameras increased by more than 30% over the prior fiscal year, they were lower than anticipated on certain products due to significant price pressure during the holiday selling season. "For the reasons described above, gross profit for the second quarter of fiscal 2004 was $6.5 million, or 9.9% of sales, versus $9.5 million, or 15.3% of sales in the same quarter last year. "We continue to invest in new product engineering, design and development, primarily focusing on digital technologies and products. We incurred $2.5 million, or 3.8% of sales, in product development costs in this year's fiscal second quarter as compared to $2.0 million, or 3.2% of sales, in the second quarter last year. "Selling expenses for the second quarter of fiscal 2004 were $3.7 million, or 5.7% of sales. This compared to $2.2 million, or 3.5% of sales, for the second 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, all of which are attributable to the Company's growth. "General and administrative expenses for the second quarter of fiscal 2004 were $5.5 million, or 8.5% of sales. This compared to $5.3 million, or 8.5% of sales, for the second quarter last year," said Mr. Lampert. Non-cash variable stock option expense for the second quarter of this fiscal year was $48,000 compared to no such expense for the same quarter last year. Interest expense for the second quarter of fiscal 2004 was $0.2 million compared to $0.1 million in the same quarter last year. Other (income), net was a $0.3 million expense for this year's second quarter as compared to $(0.7) million of income last year. The decrease of $1.0 million related primarily to the $0.9 million loss we recognized on the decline in fair value of the short-term investments that were sold subsequent to the end of the quarter. Over the holding period of the short-term investments, the Company realized a net positive return after giving effect to the dividend income received which more than offset the realized loss Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. . Six Month Comparison For the six months ended December 27, 2003 ("Fiscal 2004 YTD See Year-to-date. YTD See year to date (YTD). "), sales were $122.5 million, a 33.1% increase over the same period last year, and we incurred a net loss of $(3.5) million, or $(0.12) per share. For the six months ended December 28, 2002 ("Fiscal 2003 YTD"), sales were $92.0 million and net income was $3.5 million, or $0.12 per diluted share. RSD sales for Fiscal 2004 YTD were $97.8 million, an increase of $23.7 million, or 31.8%, and accounted for 80% of sales. This growth was in large part due to sales of Polaroid branded and other single use and traditional cameras, new accounts and organic growth from existing accounts. DMS sales were $24.7 million, an increase of $6.8 million, or 38.4%, and accounted for 20% of total sales. The increase was primarily attributable to sales of single-use cameras. Gross profit for Fiscal 2004 YTD was $17.2 million, or 14.0% of sales, versus $17.2 million, or 18.7% of sales, in Fiscal 2003 YTD. Fiscal 2004 YTD included the $3.1 million charge in the second quarter for certain inventory and tooling primarily attributable to digital camera products. In addition, cost of products sold for the six month period was $2.3 million higher than it would have been had we not changed our method of applying manufacturing labor and overhead costs overhead costs see fixed costs. to inventory during the first quarter of fiscal 2004. Fiscal 2003 YTD included $0.8 million of additional airfreight air·freight n. 1. A system of transporting freight by air. 2. The amount charged for transporting freight by air. air costs attributable to the West Coast dock worker labor dispute. Product development expenses were $5.0 million, or 4.1% of sales for Fiscal 2004 YTD versus $4.0 million, or 4.3% of sales, for the same period last year. Selling expenses for Fiscal 2004 YTD were $6.1 million, or 5.0% of sales. For the same period last year, selling expenses were $4.0 million, or 4.4% of sales. The increase was primarily due to the cost of additional sales and marketing personnel, royalties related to the Polaroid licenses and higher variable costs including freight and handling, all of which are associated with the Company's growth. General and administrative expenses for Fiscal 2004 YTD were $11.5 million, or 9.4% of sales, compared to $9.5 million, or 10.4% of sales for the same period last year. The increase was primarily attributable to increases in professional fees associated with installing a new Enterprise Resource Planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. System, costs of compliance with certain aspects of the Sarbanes-Oxley Act See SOX. of 2002 and additional costs associated with the Company's growth. Variable stock-based compensation expense for Fiscal 2004 YTD was $3.1 million as compared to no expense in the first six months of Fiscal 2003. Interest expense for Fiscal 2004 YTD was $0.4 million, versus $0.8 million for Fiscal 2003 YTD, a decrease of $0.4 million. The decrease 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 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 deferred finance costs of $0.3 million recorded in the first quarter of Fiscal 2003. Other (income), net was an expense of $0.2 million for Fiscal 2004 YTD as compared to income of $(1.0) million in Fiscal 2003 YTD. This year includes the $0.9 million loss we recognized as a result of the decline in fair value of our short-term investments and lower foreign exchange gains than last year. Working Capital Working capital was $122.5 million at December 27, 2003, an increase of $1.4 million over working capital at June June: see month. 28, 2003. For the first six months of Fiscal 2004, cash and short-term investments decreased $33.4 million, primarily due to 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 increasing by $13.2 million, inventory increasing by $13.2 million and liabilities declining by $7.0 million. Accounts receivable increased due to higher sales in the second quarter. Inventory increased from $32.3 million at the end of Fiscal 2003 to $46.4 million at the end of the first quarter of this year due to the significant sales growth in the second quarter. During the second quarter, inventory declined by $0.9 million to $45.5 million. Concord's Balance Sheet Remains Strong Mr. Lampert continued, "Concord ended the second quarter with working capital of $122.5 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 $54.8 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 $158.1 million, or approximately $5.56 per share, as of December 27, 2003. We believe 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 company." Third Quarter 2004 Guidance Commenting on the short-term outlook for the Company, Mr. Lampert continued, "Currently, for the third quarter of fiscal 2004, we anticipate sales in the range of $30 to $35 million and a net loss in the range of $3.0 to $4.0 million, or $(0.10) to $(0.14) per share, before any non-cash variable stock option expense or income." Potential New Products and Relationships If the Company's sourcing and development efforts are successfully concluded, the Company anticipates introducing several new digital, single use and traditional camera products to potential new and existing DMS and RSD customers during the remainder of Fiscal 2004. Investor Conference Call Ira B. Lampert, Chairman, Chief Executive Officer and President, will host a conference call today, Thursday Thursday: see week. , February February: see month. 5, 2004 at 11:00 A.M. Eastern Time, to discuss the second quarter and six months results. To participate in the live conference call with management, please call (973) 582-2783 approximately ten (10) minutes prior to the start time and ask to be connected to the Concord conference call. 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 featured 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. The conference call will also be archived and can be accessed on Concord's website 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 principally markets its cameras under the trademarks POLAROID(R), CONCORD(R) and CONCORD EYE Q(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 Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , 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 and CONCORD EYE Q 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 con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (in thousands)
December 27, June 28,
2003 2003
-----------------------------
Assets (Unaudited)
-----------------------------------------
Current Assets:
Cash and cash equivalents $ 9,386 $ 38,221
Short-term investments 45,429 50,035
Accounts receivable, net 45,721 32,494
Inventories 45,527 32,317
Prepaid expenses and other current
assets 6,668 5,122
-------------- -------------
Total current assets 152,731 158,189
Property, plant and equipment, net 20,266 21,328
Goodwill, net 3,721 3,721
Other assets 23,330 22,576
-------------- -------------
Total assets $ 200,048 $ 205,814
============== =============
Liabilities and Stockholders' Equity
-----------------------------------------
Current Liabilities:
Accounts payable $ 16,193 $ 22,105
Accrued expenses 11,256 13,023
Other current liabilities 2,827 1,984
-------------- -------------
Total current
liabilities 30,276 37,112
Other long-term liabilities 11,628 11,874
-------------- -------------
Total liabilities 41,904 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; 30,357 and 29,464 shares
issued
as of December 27, 2003 and June 28,
2003, respectively 142,714 141,109
Paid-in capital 8,611 5,407
Deferred stock-based compensation (105) (190)
Deferred compensation arrangement 413 -
Retained earnings 11,544 15,070
Accumulated other comprehensive loss - (431)
-------------- -------------
163,177 160,965
Less: treasury stock, at cost, 1,599
and 1,543 shares as
of December 27, 2003 and June 28,
2003, respectively (4,620) (4,137)
Less: common stock held in trust,
331 shares as
of December 27, 2003 (413) -
-------------- -------------
Total stockholders' equity 158,144 156,828
-------------- -------------
Total liabilities and stockholders'
equity $ 200,048 $ 205,814
============== =============
Concord Camera Corp. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share data)
For the six months
For the quarter ended ended
----------------------- -------------------
December 27, December December December
2003 28, 2002 27, 2003 28, 2002
------------ ---------- --------- ---------
Net sales $ 65,063 $ 61,840 $ 122,464 $ 92,022
Cost of products sold 58,602 52,372 105,262 74,832
------------ ---------- --------- ---------
Gross profit 6,461 9,468 17,202 17,190
Selling expense 3,707 2,191 6,088 4,010
General and administrative
expenses 5,538 5,270 11,496 9,547
Variable stock-based
compensation expense 48 - 3,098 -
Interest expense 207 146 370 824
Other (income), net 288 (684) 180 (966)
------------ ---------- --------- ---------
(Loss) income before
income taxes (3,327) 2,545 (4,030) 3,775
(Benefit) provision for
income taxes (416) 460 (504) 299
------------ ---------- --------- ---------
Net (loss) income $ (2,911)$ 2,085 $ (3,526)$ 3,476
============ ========== ========= =========
Basic (loss) earnings per
common share $ (0.10)$ 0.07 $ (0.12)$ 0.12
============ ========== ========= =========
Diluted (loss) earnings
per
common share $ (0.10)$ 0.07 $ (0.12)$ 0.12
============ ========== ========= =========
Weighted average
common shares
outstanding - basic 28,370 27,910 28,276 27,830
Dilutive effect of common
stock options - 1,630 - 1,593
------------ ---------- --------- ---------
Weighted average
common shares
outstanding - diluted 28,370 29,540 28,276 29,423
============ ========== ========= =========
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