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 March 31, 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 latest practical date.
Class Outstanding at April 19, 1995
Common Stock, par value $.08 1,510,647 Shares
PHOTO CONTROL CORPORATION
INDEX
PART I Financial Information Page Number
Item 1: Financial Statements
Consolidated Balance Sheet -
March 31, 1995 and December 31, 1994 3
Consolidated Statement of Operations
Three Months Ended March 31, 1995 and 1994 4
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 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 Other Information
Item 2: Changes in Securities 9
Item 6: Exhibits and Reports on Form 8-K 9
PHOTO CONTROL CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31 December 31
1995 1994
ASSETS
<S> <C> <C>
Current Assets
Cash $ 4,220 $ 307,227
Accounts Receivable 1,399,079 1,506,202
Other Receivables 3,100 21,100
Inventories 6,252,943 5,727,360
Prepaid Expenses 403,885 180,524
Total Current Assets 8,063,227 7,742,413
Investments and other Assets
Cash Value of Life Insurance 199,342 194,035
Goodwill 12,893 19,352
Deferred Income Taxes 295,000 295,000
Total Investments and other Assets 507,235 508,387
Plant and Equipment
Land and Building 4,185,355 4,185,355
Machinery and Equipment 3,397,552 3,393,608
Accumulated Depreciation (3,856,931) (3,765,624)
Total Plant and Equipment 3,725,976 3,813,339
$ 12,296,438 $12,064,139
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Note Payable to Bank $ 725,000
Current Maturities of Long-Term Debt 98,054 117,612
Accounts Payable 735,704 782,450
Accrued Payroll and Employee Benefits 399,893 382,760
Accrued Expenses 121,237 81,061
Total Current Liabilities 2,079,888 1,363,883
Long-Term Debt 670,000 670,000
Deferred Compensation 521,174 520,661
Stockholders' Equity
Common Stock 120,852 121,185
Additional Paid-In Capital 962,863 927,645
Retained Earnings 7,941,661 8,460,765
Total Stockholders' Equity 9,025,376 9,509,595
$ 12,296,438 $12,064,139
</TABLE>
See accompanying notes to consolidated financial statements.
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
THREE MONTHS ENDED MARCH 31
1995 1994
Sales $3,044,080 $3,714,502
Cost and Expenses
Cost of Goods Sold 2,273,403 2,432,303
Marketing and Administrative 971,777 868,413
Research, Development & Eng. 399,189 366,101
Interest 18,948 45,553
3,663,317 3,712,370
Income (Loss) Before Income Tax (619,237) 2,132
Income Tax Provision (Benefit) (223,000) 1,000
Net Income (Loss) (396,237) 1,132
Net Income (Loss) Per Common Share $ (.25) $ -
See accompanying notes to consolidated financial statements.
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
March 31
1995 1994
Cash flows from operating activities:
Net income (Loss) from operations $(396,237) $ 1,132
Items not affecting cash-
Depreciation 100,143 104,103
Amortization 6,459 6,459
Deferred compensation 6,669 6,849
(Gain) Loss on sale of equipment (3,635)
Change in:
Receivables 125,123 186,088
Inventories (525,583) (506,875)
Prepaid Expenses (223,361) 49,079
Accounts payable (46,747) 231,362
Accrued expenses 57,309 21,936
Proceeds from Life Insurance 202,127
Payment of Deferred Compensation (6,156)
Net cash provided by (used in)
operating expenses (906,016) 302,260
Cash flows from investing activities:
Additions to plant and equipment (23,652) (249,410)
Additions to cash value of life insurance (5,307) (5,307)
Proceeds from sale of equipment 14,507
Net cash (used in) investing activities (14,452) (254,717)
Cash flow from financing activities:
(Repayment) Borrowing on line of credit 725,000
Repayment of long-term debt (19,558) (862,560)
Purchase of common stock (142,816) (26,298)
Proceeds from stock options exercised 54,835
Net cash provided by (used in) by
financing activities 617,461 (888,858)
Change in cash (303,007) (841,315)
Cash at beginning of period 307,227 842,815
Cash at end of period $ 4,220 $ 1,500
PHOTO CONTROL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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:
March 31 December 31
1995 1994
Raw Materials $4,074,815 $3,606,564
Work in Progress 772,889 942,939
Finished Goods 1,405,239 1,177,857
$6,252,943 $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
OPERATIONS
Sales for the first quarter ended March 31, 1995, were $3,044,000, a decrease of
18.0% and $670,000 from the first quarter in 1994. The decrease in sales was
primarily due to a decrease in the camera product line of $608,000. The camera
sales decrease is mostly 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. 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 first quarter of 1995 decreased to 25.3% from
34.5% in the first quarter of 1994 due to the decrease in sales volume and the
related under-absorption of overhead. The first quarter margin in 1994 was
abnormally high due to the product mix in that quarter. The expected decline in
sales is expected to result in decreases in the gross margin in 1995 as compared
to 1994.
Research, development and engineering expenses increased by $33,000 for the
first quarter of 1995 compared to the first quarter of 1994 as the result of
employing additional engineering personnel.
Marketing and administrative expenses increased $103,000 in the first quarter of
1995 as compared to the first quarter of 1994. Of this increase, $69,000 was due
to additional sales and management personnel and compensation paid upon exercise
of non-qualified stock options as allowed for under the plan. An increase in
trade shows and advertisement accounted for $34,000 of additional expenses.
Interest expense decreased by $27,000 compared to the first quarter of 1994 due
to lower outstanding debt.
LIQUIDITY AND CAPITAL RESOURCES
Cash decreased $303,000 to $4,220 since December 31, 1994. Operations for the
quarter resulted in $906,000 of negative cash flow. $725,000 was borrowed under
the $1,500,000 line of credit to fund the operating loss.
The Company repurchased 23,750 shares of common stock at a total cost of
$145,000. $1,500,000 has been authorized for the stock repurchase program and
$44,000 remains available at March 31, 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.
ITEM 2. Changes in Securities
Common Stock
Additional
Number of Paid In Retained
Shares Amount Capital Earnings
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 (396,237)
Balance at
March 31, 1995 1,510,647 $ 120,852 $ 962,863 7,941,661
ITEM 6. Exhibit and Reports on Form 8-K
A. Exhibits - None
B. Reports on Form 8-K - There was no Form 8-K filed during the
quarter.
PHOTO CONTROL CORPORATION
(Registrant)
__________________ ______________________________________
Date L.A. Willig, Chairman of the Board
__________________ ______________________________________
Date C.R. Jackels, Vice President-Treasurer
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
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<RECEIVABLES> 1,399,079
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<OTHER-SE> 8,904,524
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<TOTAL-REVENUES> 3,044,080
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<TOTAL-COSTS> 2,273,403
<OTHER-EXPENSES> 1,370,966
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<INTEREST-EXPENSE> 18,948
<INCOME-PRETAX> (619,237)
<INCOME-TAX> (223,000)
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