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 September 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 October 20, 1995
Common Stock, par value $.08 1,618,995 Shares
PHOTO CONTROL CORPORATION
INDEX
PART I Page Number
ITEM 1: Financial Information
Consolidated Balance Sheet -
September 30, 1995 and December 31, 1994 3
Consolidated Statement of Operations -
Nine Months and Three Months Ended
September 30, 1995 and 1994 4
Consolidated Statement of Cash Flows -
Nine Months Ended September 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 8
ITEM 6: Exhibits and Reports on Form 8-K 8
PHOTO CONTROL CORPORATION
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30 DECEMBER 31
1995 1994
ASSETS
Current Assets
Cash $ 326,829 $ 307,227
Accounts Receivable 1,851,085 1,506,202
Other Receivables 3,100 21,100
Inventories 6,309,496 5,727,360
Prepaid Expenses 267,571 180,524
Total Current Assets 8,758,081 7,742,413
Investments and other Assets
Cash Value of Life Insurance 209,956 194,035
Goodwill 19,352
Deferred Income Taxes 295,000 295,000
Total Investments and other Assets 504,956 508,387
Plant and Equipment
Land and Building 4,185,355 4,185,355
Machinery and Equipment 3,547,327 3,393,608
Accumulated Depreciation (4,033,960) (3,765,624)
Total Plant and Equipment 3,698,722 3,813,339
$ 12,961,759 $ 12,064,139
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Note Payable to Bank $ 700,000 $
Current Maturities of Long-Term Debt 135,946 117,612
Accounts Payable 1,178,190 782,450
Accrued Payroll and Employee Benefits 283,847 382,760
Accrued Expenses 73,293 81,061
Total Current Liabilities 2,371,276 1,363,883
Long-Term Debt 635,000 670,000
Deferred Compensation 520,143 520,661
Stockholders' Equity
Common Stock 127,020 121,185
Additional Paid-In Capital 1,244,587 927,645
Retained Earnings 8,063,733 8,460,765
Total Stockholders' Equity 9,435,340 9,509,595
$ 12,961,759 $ 12,064,139
See accompanying notes to consolidated financial statements.
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Sales $4,858,565 $ 5,993,414 $ 11,399,228 $14,199,654
Cost and Expenses
Cost of Goods Sold 3,441,190 3,926,075 8,197,121 9,254,313
Marketing & Administrative 811,210 1,058,585 2,523,387 2,664,686
Research, Development & Engineering 312,445 384,011 1,021,567 1,112,568
Interest 33,293 25,157 85,318 75,887
4,598,138 5,393,828 11,827,393 13,107,454
Income (Loss) Before Income Taxes 260,427 599,586 (428,165) 1,092,200
Income Tax Provision (Benefit) 93,000 227,000 (154,000) 415,000
Net Income (Loss) $167,427 $372,586 $(274,165) $677,200
Net Income (Loss) Per Common Share $ .11 $ .23 $ (.17) $ .41
</TABLE>
See accompanying notes to consolidated financial statements.
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income from operations $(274,165) $ 677,200
Items not affecting cash-
Depreciation 300,429 312,309
Amortization 19,352 19,377
Deferred compensation 17,950 22,339
Loss on Sale of Equipment 8,774
Change in:
Receivables (326,883) (732,307)
Inventories (582,136) (218,810)
Prepaid Expenses (87,047) 136,378
Income Taxes 50,930
Accounts Payable 395,740 10,618
Accrued Expenses (106,681) 57,137
Net cash provided by operating activities (634,667) 335,171
Cash flows from investing activities:
Common Stock contributed to profit sharing plan 33,391
Additions to plant and equipment (215,419) (488,222)
Additions to cash value of life insurance (15,921) (15,921)
Proceeds from sale of equipment 20,833
Net cash used in investing activities (177,116) (504,143)
Cash flow from financing activities:
Proceeds from life insurance 202,127
Proceeds from stock options exercised 309,335 13,332
Repayment of long-term debt (16,666) (908,179)
Purchase of common stock (142,816) (165,119)
Borrowing (repayment) on line of credit 700,000 500,000
Payment of deferred compensation (18,468)
Net cash provided by (used in) financing activities 831,385 (357,839)
Change in cash 19,602 (526,811)
Cash at beginning of period 307,227 842,815
Cash at end of period $ 326,829 $ 316,004
</TABLE>
See Accompanying notes to consolidated financial statements
PHOTO CONTROL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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:
SEPTEMBER 30 DECEMBER 31
1995 1994
Raw Materials $3,726,406 $3,606,564
Work in Progress 1,182,705 942,939
Finished Goods 1,400,385 1,177,857
$6,309,496 $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 third quarter ended September 30, 1995 were $4,858,000, a decrease
of 18.9% from the same quarter in the prior year. Sales for the nine months
ended September 30, 1995 were $11,399,000, a decrease of 19.7% over the same
period in the prior year. The decrease in sales were primarily due to a decrease
in camera sales of $1,046,000 for the third quarter, and $2,455,000 decrease for
the year to date period, as compared to the same periods in the prior year. The
decrease in camera sales is substantially due to the reduction in sales of dual
ported lens cameras to one customer. This customer constituted 24% of the 1994
consolidated sales. Sales to this customer have been made primarily under a
multi-year contract. A portion of this contract was completed in January 1995
and sales under this contract will continue at reduced amounts through April
1996. The number of dual ported lens cameras to be sold under this contract is
uncertain. Printer sales declined for the three months and for the nine months
ended September 30, 1995 as compared to the same periods in 1994, but was offset
by increased flash equipment sales. A decrease of printer sales to the foreign
market and sales of custom printer optics account for the decline in the printer
product line.
The gross profit margin for the third quarter of 1995 decreased to 29.8% from
34.5% in the third quarter of 1994. The gross profit margin for the nine months
ended September 30, 1995 decreased to 28.1% from 34.8% 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 decreased as a percentage of sales to 16.7% for the
third quarter of 1995 from 17.7% for the third quarter of 1994 and increased to
22.1% for the nine months of 1995 from 18.8% for the same period in 1994. In the
third quarter of 1994, a profit sharing contribution was recorded which caused
the higher percentage that quarter compared to the third quarter of 1995. The
increase for the nine months of 1995 over the nine months of 1994 resulted from
increased marketing expense while sales were decreasing.
Research, development and engineering expense decreased by $72,000 for the third
quarter of 1995 compared to the third quarter of 1994 and decreased by $91,000
for the first nine months of 1995 compared to the same period of 1994. As a
result of increased outstanding debt, interest expense increased by $8,000 in
the third quarter of 1995 compared to the third quarter of 1994 and increased
$9,000 dollars for the first nine months of 1995 compared to the same period in
1994.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased $20,000 to $327,000 since December 31, 1994. Operations for the
nine months ended September 30, 1995 resulted in $635,000 of negative cash flow.
As a result of this negative cash flow, the Company borrowed $700,000 under its
$1,500,000 line of credit. The Company believes that, if necessary, it has
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 nine months ended September 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 September 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 foreseeable future.
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, 1993 1,514,813 $ 121,185 $ 927,645 $ 8,460,765
Repurchase of Stock (23,750) (1,900) (18,050) (122,867)
Stock Options Exercised 88,334 7,067 302,268
Shares Contributed to Profit 8,348 668 32,724
Sharing Plan
Net Loss (274,165)
Balance at September 30,1995 1,587,745 $ 127,020 $ 1,244,587 $ 8,063,733
</TABLE>
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
A. Exhibits -
Exhibit 27 (For SEC use only)
B. Reports on Form 8-K - None
PHOTO CONTROL CORPORATION
(Registrant)
_______________________________________ _________________
L.A. Willig, Chairman of the Board Date
_______________________________________ _________________
C.R. Jackels, Vice President-Treasurer Date
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 326,829
<SECURITIES> 0
<RECEIVABLES> 1,851,085
<ALLOWANCES> 0
<INVENTORY> 6,309,496
<CURRENT-ASSETS> 8,758,081
<PP&E> 7,732,682
<DEPRECIATION> 4,033,960
<TOTAL-ASSETS> 12,961,759
<CURRENT-LIABILITIES> 2,371,276
<BONDS> 635,000
<COMMON> 127,020
0
0
<OTHER-SE> 9,308,320
<TOTAL-LIABILITY-AND-EQUITY> 12,961,759
<SALES> 4,858,565
<TOTAL-REVENUES> 4,858,565
<CGS> 3,441,190
<TOTAL-COSTS> 3,441,190
<OTHER-EXPENSES> 1,123,655
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,293
<INCOME-PRETAX> 260,427
<INCOME-TAX> 93,000
<INCOME-CONTINUING> 167,427
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 167,427
<EPS-PRIMARY> .11
<EPS-DILUTED> 0
</TABLE>
