SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995 Commission File Number 0-7475
PHOTO CONTROL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Minnesota 41-0831186
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4800 Quebec Avenue North, Minneapolis, Minnesota 55428
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (612) 537-3601
(Former name, former address, and former fiscal year
if changes since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _X_ No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Class Outstanding at July 20, 1995
Common Stock, par value $.08 1,510,647 Shares
PHOTO CONTROL CORPORATION
INDEX
PART I Page Number
ITEM 1: Financial Information
Consolidated Balance Sheet -
June 30, 1995 and December 31, 1994 3
Consolidated Statement of Operations -
Six Months and Three Months Ended
June 30, 1995 and 1994 4
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
ITEM 2: Management's Discussion and Analysis
of Financial Condition and Results of Operations 7
PART II
ITEM 2: Changes in Securities 9
ITEM 4: Results of Vote of Security Holders 9
ITEM 6: Exhibits and Reports on Form 8-K 9
PHOTO CONTROL CORPORATION
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30 DECEMBER 31
1995 1994
ASSETS
Current Assets
Cash $ 71,215 $ 307,227
Accounts Receivable 1,869,198 1,506,202
Other Receivables 3,100 21,100
Inventories 6,377,553 5,727,360
Prepaid Expenses 323,709 180,524
Total Current Assets 8,644,775 7,742,413
Investments and other Assets
Cash Value of Life Insurance 200,316 194,035
Goodwill 6,434 19,352
Deferred Income Taxes 295,000 295,000
Total Investments and other Assets 501,750 508,387
Plant and Equipment
Land and Building 4,185,355 4,185,355
Machinery and Equipment 3,493,768 3,393,608
Accumulated Depreciation (3,933,817) (3,765,624)
Total Plant and Equipment 3,745,306 3,813,339
$ 12,891,831 $ 12,064,139
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Note Payable to Bank $ 1,000,000 $
Current Maturities of Long-Term Debt 140,776 117,612
Accounts Payable 1,107,827 782,450
Accrued Payroll and Employee Benefits 421,843 382,760
Accrued Expenses 86,734 81,061
Total Current Liabilities 2,757,180 1,363,883
Long-Term Debt 635,000 670,000
Deferred Compensation 519,630 520,661
Stockholders' Equity
Common Stock 120,852 121,185
Additional Paid-In Capital 962,863 927,645
Retained Earnings 7,896,306 8,460,765
Total Stockholders' Equity 8,980,021 9,509,595
$ 12,891,831 $ 12,064,139
See accompanying notes to consolidated financial statements.
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Sales $ 3,496,583 $4,491,738 $ 6,540,663 $8,206,240
Cost and Expenses
Cost of Goods Sold 2,482,528 2,895,935 4,755,931 5,328,238
Marketing & Administrative 740,400 737,688 1,712,177 1,606,101
Research, Development & Engineering 309,933 362,456 709,122 728,557
Interest 33,077 5,177 52,025 50,730
3,565,938 4,001,256 7,229,255 7,713,626
Income (Loss) Before Income Taxes (69,355) 490,482 (688,592) 492,614
Income Tax Provision (Benefit) (24,000) 187,000 (247,000) 188,000
Net Income (Loss) $ (45,355) $ 303,482 $ (441,592) $ 304,614
Net Income (Loss) Per Common Share $ (.03) $ .18 $ (.28) $ .18
</TABLE>
See accompanying notes to consolidated financial statements.
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income from operations (441,592) 304,614
Items not affecting cash-
Depreciation 200,286 208,206
Amortization 12,918 12,918
Deferred compensation 11,281 13,698
Loss on sale of equipment 8,774
Change in:
Receivables (344,996) 68,781
Inventories (650,193) (1,118,437)
Prepaid Expenses (143,185) 159,754
Income Taxes 128,978
Accounts Payable 325,377 312,293
Accrued Expenses 44,756 35,075
Net cash provided by operating activities (976,574) 125,880
Cash flows from investing activities:
Additions to plant and equipment (161,861) (359,435)
Additions to cash value of life insurance (6,281) (10,614)
Proceeds from sale of equipment 20,833
Net cash used in investing activities (147,309) (370,049)
Cash flow from financing activities:
Repayment of long-term debt (11,836) (902,869)
Purchase of common stock (142,816) (81,810)
(Repayment) borrowing on line of credit 1,000,000 350,000
Proceeds from stock option exercised 54,835
Proceeds from life insurance 202,127
Payment of deferred compensation (12,312)
Net cash used in financing activities 887,871 (432,552)
Change in cash (236,012) (676,721)
Cash at beginning of period 307,227 842,815
Cash at end of period $ 71,215 $ 166,094
</TABLE>
See Accompanying notes to consolidated financial statements
PHOTO CONTROL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
NOTE 1
Notes to financial statements presented herein do not include all the
footnotes normally presented in the Company's annual report to
stockholders.
The accompanying financial statements reflect, in the opinion of
management, all normal and recurring adjustments necessary to a fair
presentation of financial position, results of operations, and cash
flows for the interim periods. The results for interim periods are not
necessarily indicative of results to be expected for the year.
NOTE 2
Inventories are analyzed as follows:
JUNE 30 DECEMBER 31
1995 1994
Raw Materials $3,757,711 $3,606,564
Work in Progress 1,226,813 942,939
Finished Goods 1,393,029 1,177,857
$6,377,553 $5,727,360
NOTE 3
Net Income per common share is computed based on the weighted average
number of common shares outstanding and the potentially dilutive
effective of stock options during the respective periods. Stock option
dilution is computed under the Treasury Stock method using the average
market price of the Company's common stock.
PHOTO CONTROL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
RESULTS OF OPERATIONS
Sales for the second quarter ended June 30, 1995 were $3,496,000 a decrease of
22.1% from the same quarter in the prior year. Sales for the six months ended
June 30, 1995 were $6,540,000, a decrease of 20.3% over the same period in the
prior year. The decrease in sales were primarily due to a decrease in camera
sales of $800,000 for the second quarter, and $1,408,000 decrease for the year
to date period, as compared to the same periods in the prior year. The camera
sales decrease is substantially due to reduction of sales of dual ported lens
cameras to one customer which constituted 24% of 1994 consolidated sales. Sales
to this customer in 1994 were primarily under a multi-year contract. A portion
of this contract was completed in January 1995 and the balance of the contract
has been rescheduled over a longer period of time. The impact of the decreased
sales of dual ported lens cameras, as compared to fiscal year 1994, is expected
to continue throughout 1995. Printer sales declined by $541,000 for the second
quarter of 1995 from the same quarter in the prior year and was off-set by flash
equipment sales increase of $346,000. Printer sales for the six months ended
June 30, 1995 declined by $705,000 and was off-set by flash equipment sales
increase of $448,000. A decrease of printer sales to the foreign market and
sales of custom printer optics account for the decline in the printer product
line. As a result of slower order flow, consolidated sales are expected to
decline during 1995 as compared to 1994
The gross profit margin for the second quarter of 1995 decreased to 29.0% from
35.5% in the second quarter of 1994. The gross profit margin for the six months
ended June 30, 1995 decreased to 27.3% from 35.2% in the prior year period. The
gross profit margin decreases are due to lower levels of production in 1995 as
compared to 1994 resulting in under absorption of overhead. Marketing and
administrative expenses increased as a percentage of sales to 21.1% for the
second quarter of 1995 from 16.4% for the second quarter of 1994 and increased
to 26.2% for the six months of 1995 from 19.6% for the same period in 1994.
These increases resulted from increased marketing expense while sales were
decreasing.
Research, development and engineering expense decreased by $52,000 for the
second quarter of 1995 compared to the second quarter of 1994 and decreased by
$19,000 for the first six months of 1995 compared to the same period of 1994. As
a result of increased outstanding debt, interest expense increased by $28,000 in
the second quarter of 1995 compared to the second quarter of 1994 and increased
$1,000 dollars for the first six months of 1995 compared to the same period in
1994.
LIQUIDITY & CAPITAL RESOURCES
Cash decreased $236,000 to $71,000 since December 31, 1994. Operations for the
six months ended June 30, 1995 resulted in $976,000 of negative cash flow. As a
result of this negative cash flow, the Company borrowed $1,000,000 under its
$1,500,000 line of credit. The Company believes it has sufficient additional
borrowing capacity to meet its foreseeable financing needs.
The Company repurchased 23,750 shares of common stock at a total cost of
$143,000 during six months ended June 30, 1995 The Company's Board has
authorized an aggregate of $1,500,000 for the stock repurchase program of which
$44,000 remains available at June 30, 1995 for additional repurchases.
The Company believes that its cash flow from operations and available borrowing
capacity will be sufficient to finance operations, the stock repurchase program
and capital requirements for the remainder of 1995.
ITEM 2. CHANGES IN SECURITIES
<TABLE>
<CAPTION>
COMMON STOCK
ADDITIONAL
NUMBER OF PAID IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
<S> <C> <C> <C> <C>
Balance at December 31, 1994 1,514,813 $ 121,185 $ 927,645 $ 8,460,765
Repurchase of Stock (23,750) (1,900) (18,050) (122,867)
Stock Options Exercised 19,584 1,567 53,268
Net Loss (441,592)
Balance at June 30, 1995 1,510,647 $ 120,852 $ 962,863 $ 7,896,306
</TABLE>
ITEM 4. RESULTS OF VOTE OF SECURITY HOLDERS
At the annual meeting of stockholders held on May 11, 1995 the following matters
were approved by the Company's stockholders:
1. Set the number of directors at six (6). The voting results were:
1,394,288 For, 6,583 Against and 5,643 Abstained.
2. Elected Messrs. Leslie A. Willig and George A. Kiproff to the
Board of Directors for a three year term or until the election and
qualification of a respective successor.
The voting results were as follows:
FOR TO WITHHOLD AUTHORITY
Leslie A. Willig 1,399,214 7,300
George A. Kiproff 1,400,608 5,906
Messrs. Thomas J. Cassady, Joe M. Kilgore, James R. Loomis, and
William L. Norman are directors of the Company whose terms of
office continued after the annual meeting of stockholders.
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
A. Exhibits - None
B. Reports on Form 8-K - None
PHOTO CONTROL CORPORATION
(Registrant)
__________________ ______________________________________
Date L. A. Willig, Chairman of the Board
__________________ ______________________________________
Date C. R. Jackels, Vice President-Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 71,215
<SECURITIES> 0
<RECEIVABLES> 1,869,198
<ALLOWANCES> 0
<INVENTORY> 6,377,553
<CURRENT-ASSETS> 8,644,775
<PP&E> 7,679,123
<DEPRECIATION> 3,933,817
<TOTAL-ASSETS> 12,891,831
<CURRENT-LIABILITIES> 2,757,180
<BONDS> 635,000
<COMMON> 120,852
0
0
<OTHER-SE> 8,859,169
<TOTAL-LIABILITY-AND-EQUITY> 12,891,831
<SALES> 3,496,583
<TOTAL-REVENUES> 3,496,583
<CGS> 2,482,528
<TOTAL-COSTS> 2,482,528
<OTHER-EXPENSES> 1,050,333
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,077
<INCOME-PRETAX> (69,355)
<INCOME-TAX> (24,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,355)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
