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, 1996 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 15, 1996
Common Stock, par value $.08 1,608,163 Shares
PHOTO CONTROL CORPORATION
INDEX
PART I Financial Information Page Number
Item 1: Financial Statements
Consolidated Balance Sheet -
March 31, 1996 and December 31, 1995 3
Consolidated Statement of Operations
Three Months Ended March 31, 1996 and 1995 4
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1996 and 1995 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)
March 31 December 31
1996 1995
------------ ------------
ASSETS
Current Assets
Cash $ 1,500 $ 145,899
Accounts Receivable 1,442,533 1,262,540
Other Receivables 2,700 15,706
Inventories 6,541,090 6,658,336
Prepaid Expenses 394,452 351,263
------------ ------------
Total Current Assets 8,382,275 8,433,744
------------ ------------
Investments and other Assets
Cash Value of Life Insurance 220,570 215,263
Deferred Income Taxes 332,000 332,000
------------ ------------
Total Investments and other Assets 552,570 547,263
------------ ------------
Plant and Equipment
Land and Building 4,242,519 4,197,081
Machinery and Equipment 3,563,258 3,551,997
Accumulated Depreciation (4,234,462) (4,134,974)
------------ ------------
Total Plant and Equipment 3,571,315 3,614,104
------------ ------------
$ 12,506,160 $ 12,595,111
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Note Payable to Bank $ 750,000 $ 450,000
Current Maturities of Long-Term Debt 125,785 130,616
Accounts Payable 1,144,331 1,384,830
Accrued Payroll and Employee Benefits 271,531 213,872
Accrued Expenses 114,210 120,991
------------ ------------
Total Current Liabilities 2,405,857 2,300,309
------------ ------------
Long-Term Debt 600,000 600,000
------------ ------------
Deferred Compensation 524,036 522,494
------------ ------------
Stockholders' Equity
Common Stock 128,653 128,653
Additional Paid-In Capital 1,396,524 1,396,524
Retained Earnings 7,451,090 7,647,131
------------ ------------
Total Stockholders' Equity 8,976,267 9,172,308
------------ ------------
$ 12,506,160 $ 12,595,111
============ ============
See accompanying notes to consolidated financial statements.
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
THREE MONTHS ENDED MARCH 31
--------------------------
1996 1995
----------- -----------
Sales $ 3,260,981 $ 3,044,080
Cost and Expenses
Cost of Goods Sold 2,421,589 2,273,403
Marketing and Administrative 799,281 971,777
Research, Development & Eng. 311,539 399,189
Interest 21,613 18,948
----------- -----------
3,554,022 3,663,317
----------- -----------
Loss Before Income Tax (293,041) (619,237)
Income Tax Benefit (97,000) (223,000)
----------- -----------
Net Loss (196,041) (396,237)
=========== ===========
Net Loss Per Common Share $ (.12) $ (.25)
=========== ===========
See accompanying notes to consolidated financial statements.
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
March 31
1996 1995
--------- ---------
Cash flows from operating activities:
Net Loss from operations $(196,041) $(396,237)
Items not affecting cash-
Depreciation 99,486 100,143
Amortization 6,459
Deferred compensation 7,698 6,669
(Gain) Loss on sale of equipment (3,635)
Change in:
Receivables (166,987) 125,123
Inventories 117,246 (525,583)
Prepaid Expenses (43,189) (223,361)
Accounts payable (240,499) (46,747)
Accrued expenses 50,878 57,309
Payment of Deferred Compensation (6,156) (6,156)
--------- ---------
Net cash used in operating
expenses (377,564) (906,016)
--------- ---------
Cash flows from investing activities:
Additions to plant and equipment (56,697) (23,652)
Additions to cash value of life
insurance (5,307) (5,307)
Proceeds from sale of equipment 14,507
--------- ---------
Net cash used in investing
activities: (62,004) (14,452)
--------- ---------
Cash flow from financing activities:
(Repayment) Borrowing on line of credit 300,000 725,000
Repayment of long-term debt (4,831) (19,558)
Purchase of common stock (142,816)
Proceeds from stock options exercised 54,835
--------- ---------
Net cash provided by financing
activities 295,169 617,461
--------- ---------
Change in cash (144,399) (303,007)
Cash at beginning of period 145,899 307,227
--------- ---------
Cash at end of period $ 1,500 $ 4,220
========= =========
PHOTO CONTROL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(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
1996 1995
---------- ----------
Raw Materials $4,132,561 $4,272,903
Work in Progress 963,539 819,686
Finished Goods 1,444,990 1,565,747
---------- ----------
$6,541,090 $6,658,336
========== ==========
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, 1996, were $3,261,000, an increase
of 7.1% and $216,000 from the first quarter in 1995. The increase in sales was
primarily due to a price increase in the flash equipment product line.
The gross profit margin for the first quarter of 1996 was 25.7% compared to
25.3% in the first quarter of 1995.
Research, development and engineering expenses decreased by $87,000 for the
first quarter of 1996 compared to the first quarter of 1995 as the result of
employing fewer engineering personnel.
Marketing and administrative expenses decreased $172,000 in the first quarter of
1996 as compared to the first quarter of 1995. Of this decrease, $69,000 was due
to compensation paid in 1995 upon exercise of non-qualified stock options as
allowed for under the plan. Advertising declined by $48,000 and commissions
accounted for the remainder of the decline in expenses because of a
restructuring of the commissions programs.
Interest expense increased by $3,000 compared to the first quarter of 1995 due
to higher outstanding debt.
LIQUIDITY AND CAPITAL RESOURCES
Cash decreased $144,000 to $1,500 since December 31, 1995. Operations for the
quarter resulted in $377,000 of negative cash flow. At March 31, 1996 the
balance of bank borrowings was $750,000 of which $300,000 was borrowed during
the quarter to fund the operating loss. The Company can borrow up to $1,500,000
under the line of credit.
Since July 1989 a total of $2,000,000 has been authorized for the stock
repurchase program and $402,000 remains available at March 31, 1996 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, 1995 1,608,163 $128,653 $1,396,524 $7,647,131
Net Loss (196,041)
--------- -------- ---------- ---------
Balance at
March 31, 1996 1,608,163 $128,653 $1,396,524 7,451,090
========= ======== ========== =========
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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