Repeats filing of 10Q which was filed by Edgar on February 11, 1997
Accession No. 0000831861-97-000004
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, 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 -- 10,880,473 shares as of February 10, 1997
------------------------------
Page 1 of 16
Exhibit Index on Page 15
<PAGE>
<TABLE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Concord Camera Corp.
Consolidated Balance Sheets
December 31,
1996 June 30,
(unaudited) 1996
<S> <C> <C>
Current assets:
Cash $ 7,217,694 $ 4,996,770
Accounts receivable, net 8,646,096 7,550,408
Inventories 18,662,896 17,491,615
Prepaid expenses and other current assets 3,072,000 2,540,802
----------- -----------
Total current assets 37,598,686 32,579,595
Plant and equipment, net 11,763,343 11,708,736
Goodwill, net 1,310,882 1,510,197
Other assets 4,427,340 4,051,268
----------- -----------
Total assets $55,100,251 $49,849,796
=========== ===========
Current liabilities:
Short-term debt $ 6,677,919 $ 6,368,972
Current portion of long-term debt 31,218 29,552
Current obligations under capital leases 629,231 570,899
Accounts payable 10,335,944 6,000,328
Accrued expenses 2,476,555 2,172,863
Income taxes payable 2,834 79,050
Other current liabilities 146,880 661,735
----------- -----------
Total current liabilities 20,300,581 15,883,399
Deferred income taxes 469,544 442,889
Long-term debt 414,175 430,589
Obligations under capital leases 1,718,572 1,948,443
Other long-term liabilities 666,791 666,791
----------- -----------
Total liabilities 23,569,663 19,372,111
----------- -----------
Stockholders' equity:
Common stock, no par value, 20,000,000 authorized; 10,944,026 issued
as of December 31 and June 30, 1996 39,361,893 36,361,893
Paid in capital 850,786 850,786
Deficit (5,677,905) (6,802,992)
Notes receivable arising from common stock purchase agreements (2,551,267) (2,479,083)
------------ -----------
31,983,507 30,930,604
Less: treasury stock, at cost; 63,553 shares (452,919) (452,919)
----------- -----------
Total stockholders' equity 31,530,588 30,477,685
---------- -----------
Total liabilities and stockholders' equity $55,100,251 $49,849,796
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
2
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<TABLE>
Concord Camera Corp.
Consolidated statements of operations
(unaudited)
for the three months ended
December 31,
1996 1995
---- ----
<S> <C> <C>
Net sales $19,677,268 $17,863,775
Cost of products sold 13,004,008 11,633,076
----------- -----------
Gross profit 6,673,260 6,230,699
Selling expenses 2,037,700 2,209,264
General and administrative expenses 2,463,677 2,133,728
Financial expenses 374,637 408,906
Other (income), net (31,903) (7,065)
Legal expenses and settlement costs 95,202 184,788
----------- -----------
Income from operations before income taxes 1,733,947 1,301,078
Provision for income taxes 602 771
----------- -----------
Net Income $ 1,733,345 $ 1,300,307
=========== ===========
Income per common and common equivalent share $0.16 $0.12
=========== ===========
Weighted average number of common and common equivalent shares
outstanding 10,880,473 11,145,130
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
3
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<TABLE>
Concord Camera Corp.
Consolidated statements of operations
(unaudited)
for the six months ended
December 31,
1996 1995
---- ----
<S> <C> <C>
Net sales $34,809,822 $35,399,508
Cost of products sold 24,450,978 23,373,627
----------- -----------
Gross profit 10,358,844 12,025,881
Selling expenses 3,737,558 4,082,338
General and administrative expenses 4,625,931 4,454,718
Financial expenses 739,152 744,115
Other (income) expense, net (24,730) 41,075
Legal expenses and settlement costs 155,244 285,682
----------- -----------
Income from operations before income taxes 1,125,689 2,417,953
Provision for income taxes 602 771
----------- -----------
Net Income $ 1,125,087 $ 2,417,182
=========== ===========
Earnings per common and common equivalent share $0.10 $0.22
=========== ===========
Weighted average number of common and common equivalent shares
outstanding 10,880,473 11,052,116
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
Concord Camera Corp.
Consolidated statements of cash flows
(Unaudited)
For the six months ended December 31,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $1,125,087 $2,417,182
---------- ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,545,080 1,439,952
Interest income on notes receivable arising from common stock
agreements (72,184) 0
Change in assets and liabilities:
(Increase) in accounts receivable (1,095,688) (459,983)
(Increase) in inventories (1,171,281) (3,324,432)
(Increase) in prepaid expenses and other current assets (533,383) (820,238)
(Increase) in other assets (673,116) (30,897)
Increase in accounts payable 4,335,616 317,026
Increase in accrued expenses 303,692 659,512
(Decrease) in income taxes payable (76,216) (108,931)
(Decrease) in other current liabilities (514,855) (245,983)
Increase (decrease) in deferred income taxes 26,655 (375)
---------- ----------
Total adjustments 2,074,320 (2,574,349)
---------- ----------
Net cash provided by (used in) operating activities 3,199,407 (157,167)
---------- ----------
Cash flows from investing activities:
Purchase of property, plant and equipment (975,192) (1,461,852)
Decrease in Investments and advances to joint ventures - 36,772
---------- ----------
Net cash (used in) investing activities (975,192) (1,425,080)
---------- ----------
Cash flows from financing activities:
Net borrowings under short-term debt agreements 308,947 980,394
Net borrowings (repayments) of long-term debt (14,748) 184,776
Principal payments under capital lease obligations (297,490) (490,394)
Net proceeds from issuance of common stock - 25,256
---------- ----------
Net cash provided by (used in) financing activities (3,291) 700,032
---------- ----------
Net increase in cash 2,220,924 (882,215)
Cash at beginning of period 4,996,770 4,533,216
---------- ----------
Cash at end of period $7,217,694 $3,651,001
========== ==========
See accompanying notes to consolidated financial statements. See Note 3 -
Supplemental Disclosure of cash flow information.
</TABLE>
5
<PAGE>
CONCORD CAMERA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(unaudited)
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, 1996, and the results of operations and
cash flows for the periods ended December 31, 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.
Earnings per common and common equivalent share, for the three and six
months ended December 31, 1996 are based on the weighted average number of
common shares outstanding. Common stock equivalents outstanding during the three
and six months ended December 31, 1996 were not included in the calculation of
earnings per share because their effect was antidilutive. Earnings per common
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.
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:
December 31, June 30,
1996 1996
Raw materials and components $10,734,244 $ 7,743,884
Finished goods 7,928,652 9,747,731
----------- -----------
$18,662,896 $17,491,615
=========== ===========
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Note 3 - Supplemental Disclosures of Cash Flow Information:
For the Six months ended December 31,
1996 1995
---- ----
Cash paid for interest $ 530,649 $ 394,163
=========== ===========
Cash paid for taxes $ 22,578 $ 100,111
=========== ===========
During the six months ended December 31, 1996 and 1995, capital lease
obligations of approximately $126,000 and $565,000 were incurred when the
Company entered into leases for the purchase of equipment.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations
Three months ended December 31, 1996 compared to the three months ended December
31, 1995.
Total revenues for the three months ended December 31, 1996 and 1995 were
approximately $19,677,000 and $17,864,000, respectively, an increase of
approximately $1,813,000 or 10.1%. Sales to original equipment manufacturer
("OEM") customers for the three months ended December 31, 1996 and 1995 were
approximately $8,938,000 and $6,192,000, respectively, an increase of
approximately $2,746,000 or 44.3%. Sales to Customers in the Americas for the
three months ended December 31, 1996 and 1995 were approximately $7,582,000 and
$7,738,000 respectively, a decline of approximately $156,000 or 2.0%. Sales to
customers in Europe for the three months ended December 31, 1996 and 1995 were
approximately $3,157,000 and $3,934,000 respectively, a decline of approximately
$777,000 or 19.8%. The overall increase in sales was primarily due to increased
sales of certain single-use camera models. However, sales of traditional cameras
continued to decline from the year earlier period, though sales increased from
the first quarter. The decrease in traditional camera revenues was anticipated
and previously outlined in the Company's Form 10-K, for the fiscal year ended
June 30, 1996, 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 Advanced Photo System products. With
respect to single-use cameras, slower than planned production ramp-up of new
single-use Advanced Photo System cameras continued to impact the Company's
ability to satisfy all OEM customer orders in the second quarter, and the
Company expects this condition to continue into the third quarter.
The Company has designed and will be introducing a number of innovative
Advanced Photo System traditional cameras 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 . Sales of
traditional cameras are not expected to increase until these new models are
introduced. 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 Advanced Photo System single-use cameras.
In the single-use camera category, the Company is readying two additional
Advanced Photo System models, one daylight and one flash, two other Advanced
Photo System models for a major OEM customer and a compact 35mm camera in a
single-use body design in which new rolls of film can be reloaded. 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 and the first half of Fiscal 1998.
In addition to developing two Advanced Photo System traditional cameras,
the Company is engaged in developing and/or completing 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 fourth quarter of Fiscal 1997. The Company is also well along in
negotiations with two potential new OEM customers for the Company's new
traditional Advanced Photo System cameras. Annualized sales estimates for the
larger of these two potential contracts are projected in the $30 to $35 million
range once
8
<PAGE>
full production is attained. While the Company has a number of quality and
performance evaluations it has to meet before these arrangements can be
completed, initial production under the larger potential contract is expected to
begin in the fourth quarter of Fiscal 1997. The Company has also commenced
negotiations and quality testing with one of these potential OEM customers for a
significant Advanced Photo System single-use camera contract.
While the revenues in the second quarter exceeded the revenues in the same
quarter last year, the Company remains cautious about near term financial
performance. Increased costs associated with the introduction of new products
during the remainder of Fiscal 1997 will have a negative impact on margins and
profitability. While management is making every effort to reduce expenses, it is
not unreasonable to anticipate the Company will experience a loss in third
quarter of Fiscal 1997.
Gross Profit
Gross profit, expressed as a percentage of sales, decreased to 33.9% for
the three months ended December 31, 1996 from 34.9% for the three months ended
December 31, 1995. This decrease was due to increases in license and royalty
expenses, and substantial increases in product development costs. Product
development costs for the three months ended December 31, 1996 and 1995, were
approximately $810,000 and $370,000, respectively, an increase of approximately
$440,000, or 118.9%. Gross profit percent increased 9.5% from the first quarter
of Fiscal 1997, reflecting the manufacturing efficiencies from increased
production volume.
Expenses
Operating expenses consisting of selling, general and administrative and
financial expenses, increased to $4,971,000 in the three months ended December
31, 1996 from $4,937,000 in the three months ended December 31, 1995, an
increase of $34,000. As a percentage of sales, operating expenses decreased to
25.3% in the three months ended December 31, 1996 from 27.6% in the three months
ended December 31, 1995.
Selling expenses decreased to $2,038,000 or 10.4% of net sales in the
three months ended December 31, 1996 from $2,209,000 or 12.4% of net sales in
the three months ended December 31, 1995. The decrease was primarily
attributable to the decreases in sales commissions due to decreased volume in
the Americas and Europe and benefits from the consolidation of warehouse and
administration facilities undertaken in Fiscal 1996.
General and Administrative expenses increased to $2,464,000 or 12.5% of
net sales in the three months ended December 31, 1996 from $2,134,000 or 11.9%
of net sales in the three months ended December 31, 1995. The increase is
primarily attributable to a reduction in the amortization period for goodwill
and increases in professional fees and expenses related to contracts.
Financial expenses decreased to $375,000 or 1.9% of net sales in the three
months ended December 31, 1996 from $409,000 or 2.3% of net sales in the three
months ended December 31, 1995. Such decrease was primarily a result of a
decrease in average debt outstanding during the three months ended December 31,
1996, partially offset by an increase in the prime lending rate.
Litigation and settlement costs in the three months ended December 31,
1996 and 1995 were
9
<PAGE>
approximately $95,000 and $185,000, respectively, a decrease of approximately
$90,000, or 48.5%. The decrease in litigation and settlement expenses reflects
the disposition of a number of outstanding matters in Fiscal 1996. The Company
incurred legal expenses and settlement costs in the three months ended December
31, 1996 in connection with non-operating matters, primarily the demand for
arbitration and other litigation against Jack Benun. In the three months ended
December 31, 1995, litigation and settlement expenses were comprised of
primarily the demand for arbitration and other litigation against Jack Benun and
the purported class action.
Other (Income), Net
Other income, net includes foreign exchange gains and losses and interest
income net of directors fees and certain public relations costs.
Income Taxes
The Company has made a minimal tax provision for the three months ended
December 31, 1996 and 1995 because of loss carryforwards and no taxes payable in
countries where the Company has earnings.
10
<PAGE>
Six months ended December 31, 1996 compared to the six months ended December 31,
1995.
Total revenues for the six months ended December 31, 1996 and 1995 were
approximately $34,810,000 and $35,400,000, respectively, a decrease of
approximately $590,000 or 1.7%. Sales to OEM customers for the six months ended
December 31, 1996 and 1995 were approximately $13,977,000 and $12,025,000,
respectively, an increase of approximately $1,952,000 or 16.2%. Sales to
Customers in the Americas for the six months ended December 31, 1996 and 1995
were approximately $13,674,000 and $15,515,000 respectively, a decline of
approximately $1,841,000 or 11.9%. Sales to customers in Europe for the six
months ended December 31, 1996 and 1995 were approximately $7,159,000 and
$7,860,000 respectively, a decline of approximately $701,000 or 8.9%. The
overall decrease in sales was primarily due to decreased sales of traditional
cameras net of increased sales of certain single-use camera models. The decrease
in traditional camera revenues was anticipated and previously outlined in the
Company's Form 10-K for the fiscal year ended June 30, 1996 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 Advanced
Photo System products. With respect to single-use cameras, for the first six
months, unit sales of single-use cameras were consistent with the same period in
the prior year, although revenue from the sale of these cameras increased by
more than $3,000,000, which is attributable to favorable product mix and higher
average selling prices. Slower than planned production ramp-up of new single-use
Advanced Photo System cameras continued to impact the Company's ability to
satisfy all OEM customer orders in the second quarter, and the Company expects
this condition to continue into the third quarter.
The Company has designed and will be introducing a number of innovative
Advanced Photo System traditional cameras 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. Sales of
traditional cameras are not expected to increase until these new models are
introduced. 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 Advanced Photo System single-use cameras.
In the single-use category, the Company is readying two additional
Advanced Photo System models, one daylight and one flash, two other Advanced
Photo System models for a major OEM customer and a compact 35mm camera in a
single-use body design in which new rolls of film can be reloaded. 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 and the first half of Fiscal 1998.
In addition to developing two Advanced Photo System traditional cameras,
the Company is engaged in developing and/or completing 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 fourth quarter of Fiscal 1997. The Company is also well along in
negotiations with two potential new OEM customers for the Company's new
traditional Advanced Photo System cameras. Annualized sales estimates for the
larger of these two potential contracts are projected in the $30 to $35 million
range once full production is attained. While the Company has a number of
quality and performance evaluations it has to meet before these arrangements can
be completed, initial production under the larger potential contract is expected
to begin in the fourth quarter of Fiscal 1997. The Company has also commenced
negotiations and quality testing with one of these potential OEM customers for a
significant Advanced Photo System
11
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single-use camera contract.
The Company remains cautious about near term financial performance.
Increased costs associated with the introduction of new products during the
remainder of Fiscal 1997 will have a negative impact on margins and
profitability. While management is making every effort to reduce expenses, it is
not unreasonable to anticipate the Company will experience a loss in third
quarter of the Fiscal 1997.
Gross Profit
Gross profit, expressed as a percentage of sales, decreased to 29.8% for
the six months ended December 31, 1996 from 34.0% for the six months ended
December 31, 1995. This decrease was due to increases in license and royalty
expenses, and substantial increases in product development costs. Product
development costs for the six months ended December 31, 1996 and 1995, were
approximately $1,581,000 and $694,000, respectively, an increase of
approximately $887,000, or 127.8%. As new products are introduced and production
volume increases, the Company expects margins to increase.
Expenses
Operating expenses consisting of selling, general and administrative and
financial expenses, decreased to $9,258,000 in the six months ended December 31,
1996 from $9,567,000 in the six months ended December 31, 1995, a decrease of
$309,000 or 3.2%. As a percentage of sales, operating expenses decreased to
26.6% in the six months ended December 31, 1996 from 27.0% in the six months
ended December 31, 1995.
Selling expenses decreased to $3,738,000 or 10.7% of net sales in the six
months ended December 31, 1996 from $4,082,000 or 11.5% of net sales in the six
months ended December 31, 1995. The decrease was primarily attributable to the
decreases in sales commissions due to decreased volume in the Americas and
Europe and benefits from the consolidation of warehouse and administration
facilities undertaken in Fiscal 1996.
General and Administrative expenses increased to $4,626,000 or 13.3% of
net sales in the six months ended December 31, 1996 from $4,455,000 or 12.6% of
net sales in the six months ended December 31, 1995. The increase is primarily
attributable to a reduction in the amortization period for goodwill and
increases in professional fees and expenses related to contracts.
Financial expenses decreased to $739,000 or 2.1% of net sales in the six
months ended December 31, 1996 from $744,000 or 2.1% of net sales in the six
months ended December 31, 1995. Such decrease was primarily a result of a
decrease in average debt outstanding during the six months ended December 31,
1996, partially offset by an increase in the prime lending rate.
Litigation and settlement costs in the six months ended December 31, 1996
and 1995 were approximately $155,000 and $286,000, respectively, a decrease of
approximately $131,000, or 45.8%. The decrease in litigation and settlement
expenses reflects the settlement of a number of outstanding issues in Fiscal
1996. The legal expenses and settlement costs incurred in the six months ended
December 31, 1996 were related primarily to the demand for arbitration and other
litigation against Jack Benun. In the six months ended December 31, 1995,
litigation and settlement expenses were comprised of primarily the demand for
arbitration and other litigation against Jack Benun, the purported class action,
and the Roland Kohl litigation.
12
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Other (Income), Net
Other income, net includes foreign exchange gains and losses and interest
income net of directors fees and certain public relations costs.
Income Taxes
The Company has made a minimal tax provision for the six months ended
December 31, 1996 and 1995 because of loss carryforwards and no taxes payable in
countries where the Company had earnings.
Liquidity and Capital Resources
At December 31, 1996, the Company had working capital of $17,298,000 as
compared to $16,696,000 at June 30, 1996. Cash flow provided by operating
activities was approximately $3,199,000 for the six months ended December 31,
1996 compared to a use of approximately ($157,000) for the six months ended
December 31, 1995. Capital expenditures, excluding assets financed under capital
leases, for the six months ended December 31, 1996 and 1995 were approximately
$975,000 and $1,462,000, 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, 1997. 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 December 31, 1996. Availability
under the BOEA NY Facility is subject to advance formulas based on eligible
accounts receivable with no minimum borrowing. At December 31, 1996,
approximately $1,538,000 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 December 31, 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 December 31, 1996, approximately $2,006,000
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 December 31, 1996,
approximately $5,370,000 was utilized and approximately
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$1,055,000 was available under the BOEA Facility. Approximately $3,134,000 of
the total $5,370,000 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, 1996 BOEA's prime lending rate was 8.25%. In connection
with the BOEA Facility, Concord HK has placed a $1,169,000 time deposit with
BOEA, which is included in prepaid and other current assets at December 31, 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. At
December 31, 1996, approximately $3,134,000 was classified as short-term debt
under the BOEA facility.
On January 31, 1997, the Company received a commitment letter from the
East Asia Finance Company, a wholly-owned subsidiary of BOEA, to extend to
Concord HK a five year equipment leasing facility in the amount of $1,100,000 to
finance $1,600,000 of capital expenditures for its expanded China manufacturing
facilities. The Company anticipates utilizing this facility during the third
quarter of Fiscal 1997 to acquire additional equipment to help meet the demand
for additional production in the fourth quarter and in Fiscal 1998.
Toronto Domino Bank ("TDB")
On November 25, 1996, the Company obtained a $1,090,000 working capital
facility with TDB (the "TDB Facility") with an annual review date of December
31, 1997. The TDB Facility is secured by accounts receivable, inventory and
other related assets of the Company's Canadian operations and bears interest at
1% above TDB's prime lending rate, which was 4.75% at December 31, 1996.
Availability under the TDB Facility is subject to advance formulas based on
eligible accounts receivable and seasonable inventory eligibility with no
minimum borrowings and is subject to monthly covenant requirements. At December
31, 1996, no amounts were outstanding and the Company was in compliance with all
covenants under the TDB Facility.
Other arrangements and future cash commitments
The Company anticipates utilizing a five year equipment leasing facility
in the amount of $1,100,000 from the East Asia Finance Company to finance
$1,600,000 of capital expenditures for its expanded China manufacturing
facilities during the third quarter of Fiscal 1997. [See Bank of East Asia,
Limited ("BOEA") - Hong Kong].
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
14
<PAGE>
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.
PART 2. OTHER INFORMATION
Exhibits and Reports on Form 8-K None
Item 6. Exhibits None
15
<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: February 12, 1997
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Concord
Camera Corp.'s Consolidated financial statements as of December 31, 1996 and the
results of operations for the six months ended December 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1996
<CASH> $7,217,694
<SECURITIES> 0
<RECEIVABLES> 10,526,339
<ALLOWANCES> (1,880,243)
<INVENTORY> 18,662,896
<CURRENT-ASSETS> 37,598,686
<PP&E> 23,211,681
<DEPRECIATION> (11,448,338)
<TOTAL-ASSETS> 55,100,251
<CURRENT-LIABILITIES> 20,300,581
<BONDS> 414,175
0
0
<COMMON> 39,361,893
<OTHER-SE> (7,831,305)
<TOTAL-LIABILITY-AND-EQUITY> 55,100,251
<SALES> 34,809,822
<TOTAL-REVENUES> 34,809,822
<CGS> 24,450,978
<TOTAL-COSTS> 9,257,885
<OTHER-EXPENSES> (24,730)
<LOSS-PROVISION> 37,780
<INTEREST-EXPENSE> 535,894
<INCOME-PRETAX> 1,125,689
<INCOME-TAX> 602
<INCOME-CONTINUING> 1,125,087
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,125,087
<EPS-PRIMARY> $0.10
<EPS-DILUTED> $0.10
</TABLE>
