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, 1996 Commission File Number 0-7475
- ------------------------------------ -----------------------------
PHOTO CONTROL CORPORATION
-------------------------
(Exact Name of Registrant as Specified in its Charter)
Minnesota 41-0831186
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(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
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(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, 1996
- --------------------------- -------------------------------
Common Stock, par value $.08 1,608,163 Shares
PHOTO CONTROL CORPORATION
INDEX
PART I Page Number
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ITEM 1: Financial Information
Consolidated Balance Sheet -
September 30, 1996 and December 31, 1995 3
Consolidated Statement of Operations -
Nine Months and Three Months Ended
September 30, 1996 and 1995 4
Consolidated Statement of Cash Flows -
Nine Months Ended September 30, 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
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ITEM 2: Changes in Securities 8
ITEM 6: Exhibits and Reports on Form 8-K 8
<TABLE>
<CAPTION>
PHOTO CONTROL CORPORATION
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30 DECEMBER 31
1996 1995
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ASSETS
<S> <C> <C>
Current Assets
Cash $ 607,460 $ 145,899
Accounts Receivable 1,568,593 1,262,540
Other Receivables 2,700 15,706
Inventories 5,703,890 6,658,336
Prepaid Expenses 50,345 351,263
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Total Current Assets 7,932,988 8,433,744
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Investments and other Assets
Cash Value of Life Insurance 234,064 215,263
Deferred Income Taxes 332,000 332,000
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Total Investments and other Assets 566,064 547,263
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Plant and Equipment
Land and Building 4,244,724 4,197,081
Machinery and Equipment 3,592,090 3,551,997
Accumulated Depreciation (4,417,329) (4,134,104)
------------ ------------
Total Plant and Equipment 3,419,485 3,614,104
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$ 11,918,537 $ 12,595,111
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Note Payable to Bank $ -- $ 450,000
Current Maturities of Long-Term Debt 116,126 130,616
Accounts Payable 476,860 1,384,830
Accrued Payroll and Employee Benefits 529,758 213,872
Accrued Expenses 111,082 120,991
Accrued Income Taxes 97,323 --
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Total Current Liabilities 1,331,149 2,300,309
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Long-Term Debt 530,000 600,000
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Deferred Compensation 526,548 522,494
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Stockholders' Equity
Common Stock 128,653 128,653
Additional Paid-In Capital 1,396,524 1,396,524
Retained Earnings 8,005,662 7,647,131
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Total Stockholders' Equity 9,530,839 9,172,308
------------ ------------
$ 11,918,536 $ 12,595,111
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------------ ------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 4,618,348 $ 4,858,565 $ 12,345,472 $ 11,399,228
------------ ------------ ------------ ------------
Cost and Expenses
Cost of Goods Sold 3,183,267 3,441,190 8,496,486 8,197,121
Marketing & Administrative 805,054 811,210 2,415,492 2,523,387
Research, Development & Engineering 280,322 312,445 838,126 1,021,567
Interest 14,453 33,293 58,837 85,318
------------ ------------ ------------ ------------
4,283,096 4,598,138 11,808,941 11,827,393
------------ ------------ ------------ ------------
Income (Loss) Before Income Taxes 335,252 260,427 536,531 (428,165)
Income Tax Provision (Benefit) 111,000 93,000 178,000 (154,000)
------------ ------------ ------------ ------------
Net Income (Loss) $ 224,252 $ 167,427 $ 358,531 $ (274,165)
============ ============ ============ ============
Net Income (Loss) Per Common Share $ .14 $ .11 $ .22 $(.17)
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
PHOTO CONTROL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE MONTHS
ENDED SEPTEMBER 30
---------------------------
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income from operations $ 358,531 $ (274,165)
Items not affecting cash-
Depreciation 294,144 300,429
Amortization -- 19,352
Deferred compensation 22,522 17,950
Loss on Sale of Equipment (1,000) 8,774
Payment of Deferred Benefits (18,468) (18,468)
Change in:
Receivables (293,047) (326,883)
Inventories 954,446 (582,136)
Prepaid Expenses 300,918 (87,047)
Income Taxes 97,323 --
Accounts Payable (907,970) 395,740
Accrued Expenses 305,977 (106,681)
----------- -----------
Net cash provided (used in) by operating activities 1,113,376 (653,135)
----------- -----------
Cash flows from investing activities:
Common Stock contributed to profit sharing plan -- 33,391
Additions to plant and equipment (99,524) (215,419)
Additions to cash value of life insurance (18,801) (15,921)
Proceeds from sale of equipment 1,000 20,833
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Net cash used in investing activities (117,325) (177,116)
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Cash flow from financing activities:
Proceeds from stock options exercised -- 309,335
Repayment of long-term debt (84,490) (16,666)
Purchase of common stock (142,816)
Borrowing (repayment) on line of credit (450,000) 700,000
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Net cash provided by (used in) financing activities (534,490) 849,853
----------- -----------
Change in cash 461,561 19,602
Cash at beginning of period 145,899 307,227
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Cash at end of period $ 607,460 $ 326,829
=========== ===========
See Accompanying notes to consolidated financial statements
</TABLE>
PHOTO CONTROL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
NOTE 1
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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
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Inventories are analyzed as follows:
SEPTEMBER 30 DECEMBER 31
1996 1995
------------ -----------
Raw Materials $3,831,878 $4,272,903
Work in Progress 895,171 819,686
Finished Goods 976,841 1,565,747
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$5,703,890 $6,658,336
========== ==========
NOTE 3
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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 nine months ended September 30, 1996 were $12,345,000, an increase
of 8.3% over the same period in the prior year. The increase in sales was
primarily due to an increase in lighting sales of $1,275,000 for the year to
date period, as compared to the same period in the prior year. The lighting
sales increase is substantially due to the sales of OEM equipment to two
customers. OEM equipment is sold direct and not marketed through the dealer
sales organization. It is not certain if OEM sales of this level will continue.
Printer sales for the nine months ended September 30, 1996 declined by $315,000
and camera sales increased $46,000. The printer sales decline reflects a slight
softening in the market for this product. Sales for the third quarter ended
September 30, 1996 were $4,618,000, a decrease of 4.9% from the same quarter in
the prior year. The sales decrease of $240,000 in the third quarter of 1996 as
compared to the third quarter of 1995 reflects a $109,000 decline in lighting
sales, and a $145,000 decline in printer sales, offset by a $14,000 increase in
camera sales.
The gross profit margin for the third quarter of 1996 increased to 31.1% from
29.2% in the third quarter of 1995. The gross profit margin for the nine months
ended September 30, 1996 increased to 31.2% from 28.1% in the prior year period.
The gross profit margin increases are due to higher levels of production in 1996
as compared to 1995 and a 7% price increase on the lighting products. Marketing
and administrative expenses remained approximately the same as a percentage of
sales at 17.4% for the third quarter of 1996, compared to 16.7% for the third
quarter of 1995, and a decrease to 19.6% for the first nine months of 1996, from
22.1% for the same period in 1995. The decrease resulted from decreased
marketing expense due to a restructuring of the commission plans while sales
were increasing.
Research, development and engineering expense decreased by $32,000 for the third
quarter of 1996 compared to the third quarter of 1995 and decreased by $183,000
for the first nine months of 1996 compared to the same period of 1995 as the
result of employing fewer engineering personnel. As a result of decreased
outstanding debt, interest expense decreased by $19,000 in the third quarter of
1996 compared to the third quarter of 1995 and decreased $27,000 dollars for the
first nine months of 1996 compared to the same period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased $461,000 to $607,000 since December 31, 1995. Operations for the
nine months ended September 30, 1996 resulted in $1,113,000 of cash flow. As a
result of this cash flow, the Company paid off its line of credit which was
$450,000 at December 31, 1995. The Company can borrow up to $1,500,000 under its
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 September 30, 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
<TABLE>
<CAPTION>
COMMON STOCK
------------------------ ADDITIONAL
NUMBER OF PAID IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
--------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 1,608,163 $128,653 $1,396,524 $7,647,131
Net Income -- -- -- 358,531
--------- -------- ---------- ----------
Balance at September 30,1996 1,608,163 $128,653 $1,396,524 $8,005,662
========= ======== ========== ==========
</TABLE>
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
A. Exhibits - None
B. Reports on Form 8-K - None
PHOTO CONTROL CORPORATION
(Registrant)
/s/ L.A. Willig 10/30/96
- --------------------------------------- -----------------
L.A. Willig, Chairman of the Board Date
/s/ C.R. Jackels 10/30/96
- --------------------------------------- -----------------
C.R. Jackels, Vice President-Treasurer Date
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 607,460
<SECURITIES> 0
<RECEIVABLES> 1,571,293
<ALLOWANCES> 0
<INVENTORY> 5,703,890
<CURRENT-ASSETS> 7,932,988
<PP&E> 7,836,814
<DEPRECIATION> 4,417,329
<TOTAL-ASSETS> 11,918,537
<CURRENT-LIABILITIES> 1,331,149
<BONDS> 530,000
0
0
<COMMON> 128,653
<OTHER-SE> 9,402,186
<TOTAL-LIABILITY-AND-EQUITY> 11,918,537
<SALES> 4,618,348
<TOTAL-REVENUES> 4,618,348
<CGS> 3,183,267
<TOTAL-COSTS> 3,183,267
<OTHER-EXPENSES> 1,085,376
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,453
<INCOME-PRETAX> 335,252
<INCOME-TAX> 111,000
<INCOME-CONTINUING> 224,252
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 224,252
<EPS-PRIMARY> .14
<EPS-DILUTED> 0
</TABLE>
