Repeats filing of 10Q which was filed by Edgar on November 14, 1996
Accession No. 0000831861-96-000008
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 0-17038
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 November 7, 1996
------------------------------
Page 1 of 12
Exhibit Index on Page 11
1
<PAGE>
<TABLE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Concord Camera Corp.
Consolidated Balance Sheets
<CAPTION>
September 30,
1996 June 30,
(Unaudited) 1996
<S> <C> <C>
Current Assets:
Cash $4,813,703 $4,996,770
Accounts receivable, net 8,222,141 7,550,408
Inventories 17,401,924 17,491,615
Prepaid expenses and other current assets 2,200,347 2,540,802
--------- ---------
Total current assets 32,638,115 32,579,595
Plant and equipment, net 11,764,618 11,708,736
Goodwill, net 1,410,540 1,510,197
Other assets 3,996,299 4,051,268
--------- ---------
Total assets $49,809,572 $49,849,796
=========== ===========
Current Liabilities:Short-term debt $6,709,232 $6,368,972
Current portion of long-term debt 30,374 29,552
Current obligations under capital leases 568,685 570,899
Accounts payable 6,331,935 6,000,328
Accrued expenses 2,598,461 2,172,863
Income taxes payable - 79,050
Other current liabilities 377,467 661,735
------- -------
Total current liabilities 16,616,154 15,883,399
Deferred income taxes 469,544 442,889
Long-term debt 422,492 430,589
Obligations under capital leases 1,801,256 1,948,443
Other long-term liabilities 666,791 666,791
------- -------
Total liabilities 19,976,237 19,372,111
---------- ----------
Stockholders' equity:
Common stock, no par value, 20,000,0000 authorized;
10,944,026 issued as of September 30 and June 30, 1996 39,361,893 39,361,893
Paid in capital 850,786 850,786
Deficit (7,411,250) (6,802,992)
Notes receivable arising from common stock purchase agreements (2,515,175) (2,479,083)
----------- -----------
30,286,254 30,930,604
Less: treasury stock, at cost; 63,553 shares (452,919) (452,919)
--------- ---------
Total stockholders' equity 29,833,335 30,477,685
---------- ----------
Total liabilities and stockholders' equity $49,809,572 $49,849,796
<FN> =========== ===========
See accompanying notes to consolidated financial statements
</TABLE>
2
<PAGE>
<TABLE>
Concord Camera Corp.
Consolidated Statements of Operations
<CAPTION>
Unaudited
For the three months ended September 30,
1996 1995
<S> <C> <C>
Net sales $15,132,554 $17,535,733
Cost of products sold 11,446,970 11,740,551
---------- -----------
Gross profit 3,685,584 5,795,182
Selling Expenses 1,699,858 1,873,075
General and administrative expenses 2,162,254 2,320,989
Financial expenses 364,515 335,209
Other (income), net 7,173 48,140
Legal expenses and settlement costs 60,042 100,894
---------- -----------
Net Income (loss) ($608,258) $ 1,116,875
========== ===========
Income (loss) per common and common equivalent share ($0.06) $0.10
========== ===========
Weighted average number of common and common equivalent
shares outstanding 10,882,973 10,998,929
========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
Concord Camera Corp.
Consolidated Statements of Cash Flows
<CAPTION>
(Unaudited)
For the three months ended September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($ 608,258) $1,116,875
---------- ----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 785,196 714,263
Interest income on notes receivable arising from common stock agreements (36,092) -
Change in assets and liabilities:
(Increase) in accounts receivable (671,733) (1,423,155)
(Increase) decrease in inventories 89,691 (2,954,584)
(Increase) decrease in prepaid expenses and other current assets 339,354 (284,225)
(Increase) in other assets (94,841) (97,252)
Increase in accounts payable 331,607 1,841,361
Increase in accrued expenses 425,598 604,950
(Decrease) in income taxes payable (79,050) (64,879)
(Decrease) in other current liabilities (284,268) (302,835)
Increase (decrease) in deferred income taxes 26,655 (375)
---------- ----------
Total adjustments 832,117 (1,966,731)
---------- ----------
Net cash provided by (used in) operating activities 223,859 (849,856)
---------- ----------
Cash flows from investing activities:
Purchase of property, plant and equipment (590,509) (476,482)
Decrease in Investments and advances to joint ventures - 9,165
---------- ----------
Net cash used in investing activities (590,509) (467,317)
---------- ----------
Cash flows from financing activities:
Net borrowings under short-term debt agreements 340,260 286,041
(Repayments) of long-term debt (7,276) (1,462)
Principal payments under capital lease obligations (149,401) (241,481)
Net proceeds from issuance of common stock - 25,256
---------- ----------
Net cash provided by financing activities 183,583 68,354
---------- ----------
Net decrease in cash (183,067) (1,248,819)
Cash at beginning of period 4,996,770 4,533,216
---------- ----------
Cash at end of period $4,813,703 $3,284,397
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
See Note 3 - Supplemental disclosure of cash flow information.
</TABLE>
4
<PAGE>
CONCORD CAMERA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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 September 30, 1996, and the results of operations and
cash flows for the periods ended September 30, 1996 and 1995.
The Notes to Consolidated Financial Statements, which are included in the
Company's 1996 Form 10-K Annual Report, should be read with the accompanying
financial statements.
Loss per common share, for the three months ended September 30, 1996, is based
on the weighted average number of common shares outstanding during such three
month period. Earnings per common and common equivalent share, for the three
months ended September 30, 1995 is 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 such three month period
ended September 30, 1995.
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 purchased 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.
Note 2 - Inventories
Inventories are comprised of the following:
September 30, June 30,
1996 1996
Raw materials and components $ 7,641,878 $ 7,743,884
Finished goods 9,760,046 9,747,731
----------- -----------
$17,401,924 $17,491,615
=========== ===========
5
<PAGE>
Note 3 - Supplemental Disclosures of Cash Flow Information:
For the Three months ended September 30,
1996 1995
---- ----
Cash paid for interest $ 266,535 $ 199,994
=========== ===========
Cash paid for taxes $ 460 $ 72,567
=========== ===========
During the three months ended September 30, 1995, capital lease obligations of
approximately $523,000 were incurred when the Company entered into leases for
the purchase of equipment.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
Three months ended September 30, 1996 compared to the three months ended
September 30, 1995.
Total revenues for the three months ended September 30, 1996 and 1995
were approximately $15,133,000 and $17,536,000, respectively, a decrease of
approximately $2,403,000 or 13.7%. Sales to OEM customers for the three months
ended September 30, 1996 and 1995 were approximately $5,039,000 and $5,833,000,
respectively, a decrease of approximately $794,000 or 13.6%. Sales to Customers
in the Americas for the three months ended September 30, 1996 and 1995 were
approximately $6,091,000 and $7,777,000 respectively, a decline of approximately
$1,686,000 or 21.7%. Sales to customers in Europe for the three months ended
September 30, 1996 and 1995 were approximately $4,003,000 and $3,925,000
respectively, a decline of approximately $146,000 or 3.7%. These decreases are
due to lower sales of traditional and single-use camera models. The decrease in
traditional camera revenues was anticipated and previously outlined in the
Company's Form 10-K in connection with management's decision to eliminate a
number of older motorized and manual traditional models, which resulted in
inventory provisions in the fourth quarter of Fiscal 1996. Furthermore, sales of
traditional 110 and 35 millimeter cameras are sluggish industry-wide as
retailers have been reducing the shelf space they are devoting to these camera
models because of the introduction of Advance Photo system ("APS") products.
With respect to single-use cameras, normal production ramp-up of single-use APS
cameras impacted the Company's ability to satisfy all OEM customer orders in the
first quarter. The Company expects increased production levels in the second and
third quarters and anticipates single-use camera sales for the first six months
will exceed the same period last year.
The Company has designed and will be introducing a number of innovative
APS traditional cameras to supplement and replace the product line that was
discontinued. These new APS traditional cameras will be introduced in the fourth
quarter of Fiscal 1997 and in the first half of Fiscal 1998. These models have
been well received at major photographic trade shows and by large potential
customers and the Company believes their introduction will reverse the declining
sales trend of traditional cameras. Demand for the Company's single-use cameras
continues to be strong. The Company has already received substantial orders for
its newly introduced OEM Customer APS single-use cameras.
In the single-use category, the Company is readying two additional APS
models, one daylight and one flash, two other APS models for a major OEM
customer and a 35mm camera in a single-use body design in which new rolls of
film can be inserted. In addition, the Company is completing development of two
new 35mm single-use cameras, daylight and flash, for its OEM customers, with
initial anticipated delivery in the Company's fourth fiscal quarter.
In addition to developing two APS traditional cameras, the Company is
engaged in developing two 35mm traditional cameras for two well known
manufacturers of high profile branded educational toys, with initial production
for one of these products expected to commence during the second half of Fiscal
1997. The Company is also well along in negotiations with two potential new OEM
customers for the Company's new traditional APS cameras. Annualized sales
estimates for the larger of these two potential contracts are projected in the
$40 million range once full production is attained. The Company has a number of
quality and performance evaluations it has to meet before these arrangements can
be completed. The Company has also commenced negotiations and quality testing
with one of these potential OEM customers for a significant APS single-use
camera contract.
Management expects that the second quarter will be profitable with
sales ahead of those for the first quarter, and possibly ahead of sales for the
second quarter of last year. Management remains cautious about near term
financial performance, but is enthusiastic over the potential results to be
realized from the introduction of the Company's new products.
7
<PAGE>
While Fiscal 1997 is a transitional year for the Company as it
introduces new products, Management expects sales for the year to be no less
than last year, and believes the Company has the management, engineering and
financial resources to complete the Company's strategic plans for Fiscal 1997.
Gross Profit
Gross profit, expressed as a percentage of sales, decreased to 24.4%
for the three months ended September 30, 1996 from 33.0% for the three months
ended September 30, 1995. This decrease was due in part to the decline in
manufacturing volume, increases in license and royalty expenses, and substantial
increases in product development costs. Product development costs for the three
months ended September 30, 1996 and 1995, were approximately $771,000 and
$324,000, respectively, an increase of approximately $447,000, or 138.0%.
Expenses
Operating expenses consisting of selling, general and administrative
and financial expenses, decreased to $4,287,000 in the three months ended
September 30, 1996 from $4,630,000 in the three months ended September 30, 1995,
a decrease of $343,000 or 7.4%. As a percentage of sales, operating expenses
increased to 28.3% in the three months ended September 30, 1996 from 26.4% in
the three months ended September 30, 1995.
Selling expenses decreased to $1,700,000 or 11.2% of net sales in the
three months ended September 30, 1996 from $1,873,000 or 10.7% of net sales in
the three months ended September 30, 1995. The decrease was primarily
attributable to the Company's decreased sales volume and benefits from the
consolidation of warehouse and administration facilities undertaken in Fiscal
1996.
General and Administrative expenses decreased to $2,162,000 or 14.3% of
net sales in the three months ended September 30, 1996 from $2,320,000 or 13.2%
of net sales in the three months ended September 30, 1995. The decrease is
primarily attributable to certain specific provisions for doubtful accounts that
were incurred in the three month period ended September 30, 1995.
Financial expenses increased to $365,000 or 2.4% of net sales in the
three months ended September 30, 1996 from $335,000 or 1.9% of net sales in the
three months ended September 30, 1995. Such increase was primarily a result of a
increase in average debt outstanding during the three months ended September 30,
1996, and an increase in the prime lending rate.
Litigation and settlement costs in the three months ended September 30,
1996 and 1995 were approximately $60,000 and $101,000, respectively, a decrease
of approximately $41,000, or 40.5%. The decrease in litigation and settlement
expenses reflects the settlement of a number of outstanding issues in Fiscal
1996. The Company incurred significant legal expenses and settlement costs in
the three months ended September 30, 1996 in connection with non-operating
matters, primarily the demand for arbitration and other litigation against Jack
Benun. In the three months ended September 30, 1995, litigation and settlement
expenses were comprised of primarily the demand for arbitration and other
litigation against Jack Benun the purported class action, the Roland Kohl
litigation, 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.
8
<PAGE>
Income Taxes
The Company has not recorded any income tax benefits in the three
months ended September 30, 1996.
Liquidity and Capital Resources
At September 30, 1996, the Company had working capital of $16,022,000
as compared to $16,696,000 at June 30, 1996. Cash flow provided by operating
activities was approximately $224,000 for the three months ended September 30,
1996 compared to a use of approximately ($850,000) for the three months ended
September 30, 1995. Capital expenditures, excluding assets financed under
capital leases, for the three months ended September 30, 1996 and 1995 were
approximately $591,000 and $476,000, respectively. The Company's principal
funding requirement 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. On September 20, 1995, the Company
executed an amendment to its revolving line of credit with the BOEA NY to
increase the credit facility to $3,000,000. The facility has also 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 8.25% at September 30, 1996.
Availability under the BOEA NY Facility is subject to advance formulas based on
eligible accounts receivable with no minimum borrowing. At September 30, 1996,
approximately $1,741,000 was outstanding and classified as short-term debt under
the BOEA NY Facility.
The CIT Group/Credit Finance, Inc ("CIT")
The Company has a $5,000,000 credit facility with CIT (the "CIT
Facility") which expires on May 31, 1997. 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 8.25% at September 30, 1996. Availability under the CIT Facility is subject
to advance formulas based on eligible inventory and accounts receivable with
minimum borrowing of $2,000,000. At September 30, 1996, approximately $1,692,000
was outstanding and classified as short-term debt under the CIT Facility.
Bank of East Asia, Limited ("BOEA")--Hong Kong
Concord HK has a credit facility (the "BOEA Facility") with BOEA that
provides Concord HK with up to $6,900,000 of financing as follows: letters of
credit and standby letters of credit up to $2,825,000, overdraft and packing
loans of up to $3,600,000 and an installment loan of $475,000. The installment
loan was utilized in part to repay the outstanding mortgage obligation on the
Hong Kong office property to the Bank of China. As of September 30, 1996,
approximately $4,906,000 was utilized and approximately $1,519,000 was available
under the BOEA Facility. Approximately $3,276,000 of the total $4,906,000
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 September 30, 1996
BOEA's prime lending rate was 8.25%. In connection with the BOEA Facility,
Concord HK has placed a $1,153,000 time deposit with BOEA, which is included in
prepaid and other current assets at
9
<PAGE>
September 30, 1996 and such deposit is pledged as collateral for the BOEA
facility. In addition, all amounts outstanding under the BOEA Facility are
guaranteed by Concord.
Other arrangements and future cash commitments
In connection with the Company's expansion of its China manufacturing
facilities, the Company anticipated incurring costs of approximately $1,850,000.
At September 30, 1996, approximately $1,510,000 of that amount had been
incurred. The Company anticipates incurring approximately $340,000 of additional
costs in Fiscal 1997 for the completion of its additional factory building and
the conversion of the current Company owned dormitory into office and
administrative space, engineering facility, a small factory space for pilot
runs, and living quarters for foreign employees.
Management believes that anticipated cash flow from operations together
with financing from BOEA and CIT or replacement facilities will be sufficient to
fund its operating cash needs over the next twelve months.
The information set forth under "Results of Operations" above includes
forward-looking statements that involve numerous risks and uncertainties. The
Company's actual results could differ materially from those anticipated in such
forward-looking statements as a result of certain factors, including those set
forth in the Company's Form 10-K Annual Report for its Fiscal Year ended June
30, 1996. In particular, expected sales increases could be adversely affected by
production difficulties or economic conditions adversely affecting the market
for the Company's products. To obtain the results expected from the introduction
of the new products will require timely completion of development, successful
ramp up of full-scale production on a timely basis and consumer acceptance of
the products. In addition, the Company's potential new OEM relationships will
require successful conclusion of negotiations, continued ability of the Company
to meet quality and performance tests and successful implementation of
production at greatly increased volumes, as to all of which there can be no
assurance.
10
<PAGE>
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings
Jack C. Benun. On November 18, 1994 the Company filed a demand
for arbitration in New Jersey, for money damages in excess of $1.5 million,
against Jack C. Benun ("Benun"), its former chief executive officer who was
discharged for cause in Fiscal 1995. This action was taken due to Benun's
failure to fully compensate the Company for damages it sustained as a result of
Benun's breaching his employment obligations, his fiduciary obligations and
perpetrating frauds upon the Company including the misappropriation of funds
from the Company. Benun has submitted a counterclaim in which he alleges among
other things a wrongful termination of his employment by the Company. The
Company is vigorously pursuing its action as well as defending the counterclaim.
The matter is currently in discovery. The Company has reserved its rights under
any other claims it may have against Mr. Benun.
Exhibits and Reports on Form 8-K
None
Item 6. Exhibits
None
11
<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 I. Press
(Signature)
Harlan I. Press
Corporate Controller and Assistant Secretary
DULY AUTHORIZED AND PRINCIPAL ACCOUNTING
OFFICER
DATE: November 7, 1996
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Concord
Camera Corp.'s Consolidated financial statements as of September 30, 1996 and
the results of operations for the three months ended September 30, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> $4,813,703
<SECURITIES> 0
<RECEIVABLES> 9,946,353
<ALLOWANCES> (1,724,212)
<INVENTORY> 17,401,924
<CURRENT-ASSETS> 32,638,115
<PP&E> 22,695,735
<DEPRECIATION> (10,931,117)
<TOTAL-ASSETS> 49,809,572
<CURRENT-LIABILITIES> 16,616,154
<BONDS> 422,492
0
0
<COMMON> 39,361,893
<OTHER-SE> (9,528,591)
<TOTAL-LIABILITY-AND-EQUITY> 49,809,572
<SALES> 15,132,554
<TOTAL-REVENUES> 15,132,554
<CGS> 11,446,970
<TOTAL-COSTS> 4,286,669
<OTHER-EXPENSES> 7,173
<LOSS-PROVISION> 11,870
<INTEREST-EXPENSE> 269,154
<INCOME-PRETAX> (608,258)
<INCOME-TAX> 0
<INCOME-CONTINUING> (608,258)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (608,258)
<EPS-PRIMARY> ($.06)
<EPS-DILUTED> ($.06)
</TABLE>
