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 December 31, 1995 - Commission file Number 0-17038
Concord Camera Corp.
(Exact names of registrant as specified in its charter)
New Jersey 13-3152196
(State or other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
35 Mileed Way, Avenel, New Jersey 07001
(Address of principal executive office) (Zip code)
908/499-8280
(Registrant's telephone number, including area code)
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 12 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 practicable date.
Common Stock, no par value -- 10,944,026 shares as of February 9, 1996
______________________________
Page 1 of 17
Exhibit Index on Page 16
<TABLE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Concord Camera Corp.
Consolidated Balance Sheets
<CAPTION>
December 31,
1995 June 30
(unaudited) 1995
<S> <C> <C>
Current Assets:
Cash $ 3,651,001 $ 4,533,216
Accounts receivable, net 9,049,773 8,589,790
Inventories 22,189,755 18,865,323
Prepaid expenses and other current Assets 3,271,714 2,494,559
Total current assets 38,162,243 34,482,888
Plant and equipment, net 11,743,853 10,802,688
Goodwill, net 1,594,569 1,678,629
Investments in joint ventures 55,212 91,984
Other assets 2,935,874 3,132,566
Total assets $54,491,751 $50,188,755
Current liabilities:
Short-term debt $ 6,722,457 $ 5,742,063
Current portion of long-term debt 27,979 24,836
Current obligations under capital leases 462,918 788,165
Accounts payable 7,310,883 6,993,857
Accrued expenses 3,561,794 2,902,282
Income taxes payable 185,653 294,584
Other current liabilities 59,192 305,175
Total current liabilities 18,330,876 17,050,962
Deferred income taxes 484,467 484,842
Long-term debt 446,064 264,432
Obligations under capital leases 523,013 123,626
Other long-term liabilities 648 648
Total liabilities 19,785,068 17,924,510
Stockholders' equity:
Common stock, no par value, 20,000,000
authorized; 10,944,926 and 10,490,526 issued
as of December 31,1995 and June 30, 1995 39,346,930 36,935,174
Paid in capital 850,786 850,786
Deficit (2,651,614) (5,068,796)
Notes receivable arising from common stock
purchase agreements (2,386,500) -
Less: treasury stock, at cost;
63,553 shares 35,159,602 32,717,164
(452,919) (452,919)
Total stockholders' equity 34,706,683 32,264,245
Total liabilities and stockholders'
equity $54,491,751 $50,188,755
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Concord Camera Corp.
Consolidated statements of operations
<CAPTION>
(unaudited)
for the three months ended
December 31,
1995 1994
<S> <C> <C>
Net sales $17,863,775 $18,554,945
Cost of products sold 11,633,076 12,707,180
Gross profit 6,230,699 5,847,765
Selling Expenses 2,209,264 1,940,591
General and administrative expenses 2,133,728 1,866,767
Financial expenses 408,906 391,937
Other (income) expense, net (7,065) (155,680)
Legal Expenses and Settlement Costs 184,788 80,742
Income from operations before income
taxes 1,301,078 1,523,410
Provision for income taxes 771 101,299
Net Income $1,300,307 $ 1,422,111
Earnings per common and common equivalent
share $0.12 $0.14
Weighted average number of common and common
equivalent shares outstanding 11,145,130 10,509,239
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
Concord Camera Corp.
Consolidated statements of operations
<CAPTION> (unaudited)
for the six months ended
December 31,
1995 1994
<S> <C> <C>
Net sales $35,399,508 $33,271,793
Cost of products sold 23,373,627 22,705,134
Gross profit 12,025,881 10,566,659
Selling Expenses 4,082,338 3,617,066
General and administrative expenses 4,454,718 3,785,891
Financial expenses 744,115 754,460
Other (income) expense, net 41,075 (98,208)
Legal Expenses and Settlement Costs 285,682 490,974
Income from operations before income
taxes 2,417,953 2,016,476
Provision for income taxes 771 102,944
Net Income $2,417,182 $ 1,913,532
Earnings per common and common equivalent
share $0.22 $0.18
Weighted average number of common and common
equivalent shares outstanding 11,052,116 10,499,883
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Concord Camera Corp.
Consolidated statements of cash flows
<CAPTION>
(Unaudited)
For the six months ended
December 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,417,182 $ 1,913,532
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,439,952 1,214,649
Net gain on sale of property & equipment 0 (1,812)
Change in assets and liabilities:
(Increase) in accounts receivable (459,983) (2,786,591)
(Increase)decrease in inventories (3,324,432) 1,465,834
(Increase)decrease in prepaid expenses and
other current assets (820,238) 16,195
(Increase)in other assets (30,897) (788,544)
Increase in accounts payable 317,026 411,652
Increase (decrease) in accrued expenses 659,512 (2,168)
Increase (decrease) in income taxes payable (108,931) 169,513
(Decrease) in other current liabilities (245,983) (90,277)
Increase(Decrease) in deferred income taxes (375) 1,226
(Decrease)in other liabilities 0 (14,758)
Total adjustments (2,574,349) (405,081)
Net cash provided by (used in)
operating activities (157,167) 1,508,451
Cash flows from investing activities:
Purchase of property, plant and equipment (1,461,852) (439,491)
Proceeds from sale of long term assets 0 26,618
Decrease in Investments and advances to
joint ventures 36,772 75,000
Net cash (used in) investing activities (1,425,080) (337,873)
Cash flows from financing activities:
Net borrowings under short-term debt 980,394 226,997
Net borrowings (Repayments) of long-term debt 184,776 (8,724)
Principal payments under capital lease
obligations (490,394) (309,083)
Net proceeds from issuance of common stock 25,256 -
Net cash provided by (used in) financing
activities 700,032 (90,810)
Net increase (decrease) in cash (882,215) 1,079,768
Cash at beginning of period 4,533,216 3,394,658
Cash at end of period $ 3,651,001 $ 4,474,426
See accompanying notes to consolidated financial statements.
See Note 3 - Supplemental Disclosure of cash flow information.
/TABLE
<PAGE>
CONCORD CAMERA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(unaudited)
NOTE 1 - General
In the opinion of Concord Camera Corp. ("the Company"), the accompanying
unaudited financial statements contain all adjustments, including normal
recurring adjustments, necessary for the fair presentation of the
Company`s financial position as of December 31, 1995, and the results of
operations and cash flows for the periods ended December 31, 1995 and
1994.
The Notes to Consolidated Financial Statements, which are included in
the Company's 1995 Form 10-K Annual Report, should be read with the
accompanying financial statements.
Earnings per common and common equivalent share, for the three and six
months ended December 31, 1995 are based on the weighted average number
of common shares outstanding and the dilutive effect of common stock
equivalents, which include stock options and/or warrants that are
exercisable at prices below the average price of the Company's common
stock during the three and six months ended December 31, 1995. Earnings
per common share, for the three and six months ended December 31, 1994,
are based on the weighted average number of common shares outstanding.
Common stock equivalents outstanding during the three and six months
ended December 31, 1994 were not included in the calculation of earnings
per share because their effect was antidilutive.
The Company operates on a worldwide basis and its results may be
adversely or positively affected by fluctuations of various foreign
currencies against the U.S. Dollar, specifically, the Canadian Dollar,
German Mark, British Pound Sterling, Hungarian Forints, French Francs,
and Japanese Yen. Each of the Company's foreign subsidiaries purchases
its inventories in U.S. Dollars and sells them in local currency,
thereby creating an exposure to fluctuations in foreign currency
exchange rates. Certain components needed to manufacture cameras are
priced in Japanese Yen. The impact of foreign exchange transactions is
reflected in the profit and loss statement. The Company continues to
analyze the benefits and costs associated with hedging against foreign
currency fluctuations.
<TABLE>
NOTE 2 - Inventories
Inventories are comprised of the following:
<CAPTION>
December 31, June 30,
1995 1995
<S> <C> <C>
Raw material $ 8,494,532 $ 7,162,899
Finished goods 13,695,223 11,702,424
$22,189,755 $18,865,323
</TABLE>
<PAGE>
Note 3 - Supplemental Disclosures of Cash Flow Information:
For the six months ended December 31,
1995 1994
Cash paid for interest $ 394,163 $ 374,041
Cash paid for taxes $ 100,111 $ 1,070
During the six months ended December 31, 1995 and 1994, capital lease
obligations of approximately $565,000 and $130,000, respectively were
incurred when the company entered into leases for the purchase of
equipment.
Note 3 - Stockholders' Equity
For financial reporting purposes, 444,000 shares of common stock, which
were issued in exchange for notes of $2,386,500 pursuant to the
Company's Senior Management Common Stock Purchase Award Provisions,
forming a part of the Company's Incentive Plan, have been treated as
outstanding since August 23, 1995, the date upon which commitments for
the purchase of such shares were made by the purchasers. Definitive
agreements and the related notes for such purchases were executed on
November 7, 1995 when the shares were issued.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Three months ended December 31, 1995 compared to the three months ended
December 31, 1994.
Total revenues for the three months ended December 31, 1995 and
1994 were approximately $17,864,000 and $18,555,000, respectively, a
decrease of approximately $691,000 or 3.7%. The decrease, which
includes a decrease in non-camera revenues, is primarily a reflection of
retailers' early orders which were delivered and posted in the first
quarter of fiscal 1996. Revenues from traditional camera sales
decreased by approximately $3,800,000 or 24.8% for the three months
ended December 31, 1995 to $11,530,000 from $15,330,000 for the three
months ended December 31, 1994, while revenues from OEM sales increased
by approximately $3,296,000 or 108.5% for the three months ended
December 31, 1995 to $6,334,000 from $3,038,000 for the three months
ended December 31, 1994. In the three months ended December 31, 1995,
there were no non-camera sales compared to approximately $186,000 of
such sales in the three months ended December 31, 1994. Non-camera
sales were substantially discontinued by the Company as of the end of
the three months ended December 31, 1994. The increase in OEM sales is
attributable to increased purchases from the Company's one new and two
preexisting OEM customers.
Sales by Concord Camera HK Limited ("Concord HK") for the three
months ended December 31, 1995 and 1994 were approximately $9,834,000
and $6,251,000, respectively, an increase of approximately $3,583,000 or
57.3%. The increase is due primarily to the increase in OEM sales and a
change in the OEM point of sale from the United States to Hong Kong
during the quarter ended December 31, 1994. The Company effectuated a
change in the OEM point of sale in order to secure an additional working
capital line from the Bank of East Asia, New York (see Bank of East
Asia, New York.) Payment of FOB sales are primarily by letter of
credit.
Consolidated sales of the Company's United States, Canadian, and
Panamanian operations, collectively "Concord Americas," for the three
months ended December 31, 1995 and 1994 were approximately $5,314,000
and $9,820,000, respectively, a decrease of approximately $4,506,000 or
45.9%. Net sales for the three months ended December 31, 1994 included
OEM sales with point of sale out of U.S. of approximately $1,394,000,
and non-camera revenues of approximately $186,000. If the foregoing
sales were eliminated from Concord Americas' operations in the three
months ended December 31, 1994 it would reflect a decrease in
traditional camera sales in the Americas for the three months ended
December 31, 1995 of approximately $2,926,000 or 35.5% over such sales
for the comparable period last year. In addition, certain Concord
Americas customers increased merchandise purchases on an F.O.B. Hong
Kong basis from Concord HK. During the three months ended December 31,
1995 and 1994 Concord Americas customers purchased approximately
$3,559,000 and $3,184,000, respectively, from Concord HK, an increase
of approximately $375,000 or 11.8%. If this increase were added to the
three months ended December 31, 1995 sales, sales of traditional cameras
to Concord Americas customers would have decreased by 22.3% reflecting a
slower retail environment, in general, and a decision not to ship
certain customers that became financially unstable during the period.
Consolidated sales of Concord Camera GmbH ("Concord Germany"),
Concord Camera UK Limited ("Concord UK"), Concord Camera France
("Concord France"), and Concord Camera (Hungary) Ltd. ("Concord
Hungary"), collectively "Concord Europe", for the three months ended
December 31, 1995 and 1994, were approximately $2,716,000 and
$2,484,000, respectively, an increase of approximately $232,000 or 9.3%.
In addition, certain European customers increased merchandise purchases
on an F.O.B. Hong Kong basis from Concord HK. During the three months
ended December 31, 1995 and 1994 European customers purchased
approximately $1,028,000 and $890,000, respectively, from Concord HK, an
increase of approximately $138,000 or 15.5%. If this increase were
added to the three months ended December 31, 1995 sales, sales to
European customers would have increased by 11.0%. This increase is
primarily attributable to sales to new customers by the Company's
increased European Sales and Marketing force.
Gross Profit
Gross profit, expressed as a percentage of sales, increased to
34.9% for the three months ended December 31, 1995 from 31.5% for the
three months ended December 31, 1994. This increase was due in part to
improved manufacturing efficiencies as well as the sale of product with
higher margins.
Expenses
Operating expenses consisting of selling, general and
administrative and financial expenses, increased to $4,752,000 in the
three months ended December 31, 1995 from $4,199,000 in the three months
ended December 31, 1994, an increase of $553,000 or 13.2%. As a
percentage of sales, operating expenses increased to 26.6% in the three
months ended December 31, 1995 from 22.6% in the three months ended
December 31, 1994.
Selling expenses increased to $2,209,000 or 12.4% of net sales
in the three months ended December 31, 1995 from $1,941,000 or 10.5% of
net sales in the three months ended December 31, 1994 The increase was
primarily attributable to the Company's increased sales volume and
increases in freight costs, royalty expenses, promotion allowances, and
marketing expenses.
General and administrative expenses increased to $2,134,000 or
11.9% of net sales in the three months ended December 31, 1995 from
$1,867,000 or 10.1% of net sales in the three months ended December 31,
1994. The increase is primarily attributable to increases in
professional fees, rent expense, and costs associated with building the
necessary infrastructure to support the anticipated continuing growth in
volume.
Financial expenses increased to $409,000 or 2.3 % of net sales
in the three months ended December 31, 1995 from $392,000 or 2.1% of net
sales in the three months ended December 31, 1994. Financial expenses
for the three months ended December 31, 1995 included anticipation
discounts granted to a customer totaling approximately $44,000. After
giving effect to these cash discounts, financial expenses decreased by
approximately $27,000 or 6.9% in the three months ended December 31,
1995. Such decrease was primarily a result of a reduction in average
debt outstanding during the three months ended December 31, 1995, and a
reduction in loan guarantee fees.
Litigation and settlement costs in the three months ended
December 31, 1995 and 1994 were approximately $185,000 and $281,000,
respectively. The Company incurred significant legal expenses and
settlement costs in connection with non-operating matters. In the three
months ended December 31, 1995, those months consisted primarily of the
demand for arbitration and other litigation against Jack C. Benun, and
the purported class action. In the three months ended December 31,
1994, these matters consisted primarily of the demand for arbitration
against Jack C. Benun, the purported class action, the Roland Kohl
Settlement, and the Argus settlement.
Other Expense, Net
Other expense, net includes directors fees, certain public
relations costs, and foreign exchange gains and losses net of interest
income and gains from the sale of fixed assets.
Income Taxes
The Company's provision for income taxes for the three months
ended December 31, 1995 is primarily related to the earnings of the
Company's Far East operations, net of benefits relating to
overpayments/refunds on the Company's other foreign Subsidiaries.
<PAGE>
Six months ended December 31, 1995 compared to the six months ended
December 31, 1994.
Total revenues for the six months ended December 31, 1995 and
1994 were approximately $35,400,000 and $33,272,000, respectively, an
increase of approximately $2,128,000 or 6.4%. The increase, which is
net of decreases in non-camera revenues, is due to an increase in OEM
revenues, the Company's European expansion, and its continued acceptance
of the Company's single-use and slim-line camera models. Revenues from
traditional camera sales decreased by approximately $3,694,000 or 13.7%
for the six months ended December 31, 1995 to $23,233,000 from
$26,927,000 for the six months ended December 31, 1994, while revenues
from OEM sales increased by approximately $8,298,000 or 214.5% for the
six months ended December 31, 1995 to $12,167,000 from $3,869,000 for
the six months ended December 31, 1994. In the six months ended
December 31, 1995, there were no non-camera sales compared to
approximately $2,476,000 of such sales in the six months ended December
31, 1994. Non-camera sales were substantially discontinued by the
Company as of the end of the six months ended December 31, 1994. The
increase in OEM sales is attributable to increased purchases from the
Company's one new and two preexisting OEM customers.
Sales by Concord Camera HK Limited ("Concord HK") for the six
months ended December 31, 1995 and 1994 were approximately $20,661,000
and $11,095,000, respectively, an increase of approximately $9,566,000
or 86.2%. The increase is due primarily to the increase in OEM sales
and a change in the OEM point of sale from the United States to Hong
Kong during the quarter ended December 31, 1994. The Company effectuated
a change in the OEM point of sale in order to secure an additional
working capital line from the Bank of East Asia, New York (see Bank of
East Asia, New York.) Payment of FOB sales are primarily by letter of
credit.
Consolidated sales of the Company's United States, Canadian, and
Panamanian operations, collectively "Concord Americas," for the six
months ended December 31, 1995 and 1994 were approximately $9,415,000
and $17,723,000, respectively, a decrease of approximately $8,308,000 or
46.9%. Net sales for the six months ended December 31, 1994 included
OEM sales with point of sale out of U.S. of approximately $2,225,000,
and non-camera revenues of approximately $2,475,000. If the foregoing
sales were eliminated from Concord Americas' operations in the six
months ended December 31, 1994 it would reflect a decrease in
traditional camera sales in the Americas for the six months ended
December 31, 1995 of approximately $3,608,000 or 27.7% over such sales
for the comparable period last year. In addition, certain Concord
Americas customers decreased merchandise purchases on an F.O.B. Hong
Kong basis from Concord HK. During the six months ended December 31,
1995 and 1994 Concord Americas customers purchased approximately
$16,478,000 and $19,904,000, respectively, from Concord HK, a decrease
of approximately $3,426,000 or 17.2%. If this decrease were added to
the six months ended December 31, 1995 sales, sales of traditional
cameras to Concord Americas customers would have decreased by 21.4%
reflecting a slower retail environment, in general, and certain
customers that became financially unstable that the company did not ship
product to during the period.
Consolidated sales of Concord Camera GmbH ("Concord Germany"),
Concord Camera UK Limited ("Concord UK"), Concord Camera France
("Concord France"), and Concord Camera (Hungary) Ltd. ("Concord
Hungary"), collectively "Concord Europe", for the six months ended
December 31, 1995 and 1994, were approximately $5,324,000 and
$4,453,000, respectively, an increase of approximately $871,000 or
19.6%. In addition, certain European customers increased merchandise
purchases on an F.O.B. Hong Kong basis from Concord HK. During the six
months ended December 31, 1995 and 1994 European customers purchased
approximately $2,355,000 and $1,355,000, respectively, from Concord HK,
an increase of approximately $1,000,000 or 73.8%. If this increase were
added to the six months ended December 31, 1995 sales, sales to European
customers would have increased by 32.2%. This increase is primarily
attributable to sales to new customers by the Company's increased
European Sales and Marketing force.
Gross Profit
Gross profit, expressed as a percentage of sales, increased to
34.0% for the six months ended December 31, 1995 from 31.8% for the six
months ended December 31, 1994. This increase was due in part to
improved manufacturing efficiencies as well as the sale of product with
higher margins, and the discontinuance of lower margin non-camera
products.
Expenses
Operating expenses consisting of selling, general and
administrative and financial expenses, increased to $9,281,000 in the
six months ended December 31, 1995 from $8,157,000 in the six months
ended December 31, 1994, an increase of $1,124,000 or 13.8%. As a
percentage of sales, operating expenses increased to 26.2% in the six
months ended December 31, 1995 from 24.5% in the six months ended
December 31, 1994.
Selling expenses increased to $4,082,000 or 11.5% of net sales
in the six months ended December 31, 1995 from $3,617,000 or 10.9% of
net sales in the six months ended December 31, 1994 The increase was
primarily attributable to the Company's increased sales volume and
increases in freight costs, royalty expenses, sales allowances, and
marketing expenses.
General and administrative expenses increased to $4,454,000 or
11.9% of net sales in the six months ended December 31, 1995 from
$3,786,000 or 11.4% of net sales in the six months ended December 31,
1994. The increase is primarily attributable to increases in
professional fees, rent expense, and costs associated with building the
necessary infrastructure to support the growth in volume.
Financial expenses decreased to $744,000 or 2.1 % of net sales
in the six months ended December 31, 1995 from $754,000 or 2.3% of net
sales in the six months ended December 31, 1994. Financial expenses for
the six months ended December 31, 1995 included anticipation discounts
granted to a customer totaling approximately $44,000. After giving
effect to these cash discounts, financial expenses decreased by
approximately $54,000 or 7.2% in the six months ended December 31, 1995.
Such decrease was primarily a result of a reduction in average debt
outstanding during the six months ended December 31, 1995, and a
reduction in loan guarantee fees.
Litigation and settlement costs in the six months ended December
31, 1995 and 1994 were approximately $286,000 and $491,000,
respectively. The Company incurred significant legal expenses and
settlement costs in connection with non-operating matters. In the six
months ended December 31, 1995, those matters consisted primarily of the
demand for arbitration and other litigation against Jack C. Benun, and
the purported class action. In the six months ended December 31, 1994,
those matters consisted primarily of the demand for arbitration against
Jack C. Benun, the purported class action, the Roland Kohl settlement,
and the Argus settlement.
Other Expense, Net
Other expense, net includes directors fees, certain public
relations costs, and foreign exchange gains and losses net of interest
income and gains from the sale of fixed assets.
Income Taxes
The Company's provision for income taxes for the six months
ended December 31, 1995 is primarily related to the earnings of the
Company's Far East operations, net of benefits relating to
overpayments/refunds on the Company's other foreign Subsidiaries.
<PAGE>
Liquidity and Capital Resources
At December 31, 1995 the Company had working capital of $19,831,000 as
compared to $17,432,000 at June 30, 1995. Cash flow provided by (used
in) operating activities was approximately ($157,000) for the six months
ended December 31, 1995 as compared to $1,508,000 for the six months
ended December 31, 1994. Capital expenditures, excluding assets
financed under capital leases, for the six months ended December 31,
1995 were approximately $1,462,000 and $440,000, respectively. The
Company's principal funding has been, and is expected to continue to be,
the financing of accounts receivable and inventory.
The Bank of East Asia, Limited New York ("BOEA NY")
On December 20, 1994, the Company obtained a one year, $1,500,000
revolving credit facility with BOEA NY which has been extended to
December 19, 1996. The BOEA NY Facility is secured by certain accounts
receivable of the Company's Hong Kong operations and bears interest at
2% above BOEA NY's prime lending rate, which was 8.75% at December 31,
1995. Availability under the BOEA NY Facility is subject to advance
formulas based on eligible accounts receivable with no minimum
borrowing. At June 30, 1995, approximately $547,000 was outstanding and
classified as short-term debt under the BOEA NY Facility.
On September 20, 1995, the Company executed an amendment to its
revolving line of credit with BOEA NY to increase the credit facility to
$3,000,000.
The CIT Group/Credit Finance, Inc. ("CIT")
On March 30, 1994, the Company obtained a two year $10,000,000 credit
facility with CIT (the "CIT Facility") which expires on March 29, 1996.
The CIT Facility is secured by accounts receivable, inventory and other
related assets of the Company's United States operations and bears
interest at 2% above CIT's prime lending rate, which was 8.75% at
December 31, 1995. Availability under the CIT Facility is subject to
advance formulas based on eligible inventory and accounts receivable
with minimum borrowings of $2,000,000. At December 31, 1995,
approximately $1,871,000 was outstanding and classified as short-term
debt under the CIT Facility.
The Bank of East Asia, Limited ("BOEA")-Hong Kong
Effective August 2, 1993, Concord HK entered into a credit arrangement
(the "BOEA Facility") with BOEA that provides Concord HK with up to
$4,000,000 of financing, including, but not limited to trade finance and
overdraft privileges. On June 27, 1995, BOEA increased the total amount
available under the BOEA facility up to $6,375,000 as follows: letters
of credit and standby letters of credit $2,825,000, and overdraft and
packing loan of $3,075,000, totaling $5,900,000, and an installment loan
of $475,000. The installment loan was utilized in part to repay the
current mortgage outstanding on the Hong Kong office property with the
Bank of China. As of December 31, 1995, approximately $4,311,000 was
utilized and approximately $1,589,000 was available under the BOEA
Facility. Approximately $2,845,000 of the total $4,311,000 utilized,
was in the form of trade finance, including but not limited to import
letters of credit. The BOEA Facility, which is payable on demand, bears
interest at 2% above BOEA's prime lending rate for letters of credit and
2.25% above BOEA's prime lending rate for overdraft and packing loans.
At December 31, 1995 BOEA's prime lending rate was 8.75%. In connection
with the BOEA Facility, Concord HK has placed a $1,108,000 time deposit
with BOEA, which is included in prepaid and other current assets at
December 31, 1995 and such deposit is pledged as collateral for the BOEA
facility. In addition, all amounts outstanding under the BOEA Facility
are guaranteed by Concord.
In the fourth quarter of Fiscal 1995, East Asia Finance Company, a
wholly-owned subsidiary of BOEA, extended to Concord HK a five year
equipment leasing facility in the amount of approximately one million
dollars. At December 31, 1995, approximately $484,000 was outstanding
and classified as capital lease obligations.
On November 30, 1995 the Company received a commitment letter from the
BOEA to increase the amount available under the BOEA facility up to
$6,900,000 as follows; letters of credit and standby letters of credit
$2,825,000, overdraft and packing loan of $3,600,000, totaling
$6,425,000, and an installment loan $475,000.
Other arrangements and future cash commitments
In connection with the upgrading of its worldwide information systems,
the Company has committed to purchase hardware and software and incur
other costs of approximately $670,000 for its United States and Far East
operations; at December 31, 1995, approximately $516,000 of that amount
had been paid. The Company anticipates incurring approximately $154,000
of additional costs for hardware, software and other related items for
the balance of the Company's worldwide operations.
In connection with its construction activities in China, the Company
anticipates incurring costs of approximately $1,850,000; at December 31,
1995, approximately $599,000 of that amount had been incurred. The
Company anticipates incurring approximately $1,251,000 of additional
construction costs for the completion of the additional factory building
("Addition") and the conversion of the current Company owned dormitory
into office and administrative space and engineering facility as well as
a small factory for pilot runs and living quarters for foreign
employees.
Management believes that the anticipated cash flow from operations
together with financing from BOEA and CIT will be sufficient to fund its
operating cash needs over the next twelve months.
<PAGE>
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings
Fuji Photo Film Co., Ltd. ("Fuji"). On October 19, 1995, the Company
was served with a summons and complaint in an action styled Fuji Photo
Film Co., Ltd. V. Concord Camera Corp., filed in the United States
District Court for the Southern District of New Jersey. The action is
for patent infringement in connection with certain of the Company's
single-use cameras. The Company has answered the complaint and served
its counter-claim seeking a declaratory judgement that the Fuji patents
are invalid, unenforceable and not infringed by the Company. The matter
is in the early stages of discovery.
On February 22, 1995, the Company was served with a complaint purporting
to be a class action on behalf of purchasers of the Company's common
stock. On September 5, 1995, plaintiffs in response to motions to
dismiss by the Company and the individual defendants, filed a motion to
file an amended complaint. The complaint and the amended complaint were
predicated upon the wrongdoing of Jack C. Benun, the Company's former
Chairman and CEO, and the failure of the Company and the individual
members of the Board of Directors to properly address such actions. By
order of United States District Judge Sand, dated January 10, 1996, the
matter was placed on the suspense calendar until March 25, 1996. If, on
or before that date, plaintiffs can find new counsel, the application to
substitute counsel will be processed pursuant to the applicable federal
rule. In the event no application, whether for substitute counsel or
for other action, is made on behalf of the plaintiffs by that date,
subject to the filing of certain affidavits, the matter will be
dismissed for lack of diligent prosecution.
Exhibits and Reports on Form 8-K None
Item 6. Exhibits None
<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONCORD CAMERA CORP.
(Registrant)
BY: s/Harlan Press
(Signature)
Harlan Press
Chief Accounting Officer
DULY AUTHORIZED AND PRINCIPAL ACCOUNTING
OFFICER
DATE: February 12, 1996
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