[LOGO]
CONTACT: OR LENS' INVESTOR RELATIONS COUNSEL:
Concord Camera Corp. The Equity Group, Inc.
Brian King Robert Goldstein (212) 371-8660
Senior Executive Vice President Devin Sullivan (212) 836-9608
(954) 331-4200
FOR IMMEDIATE RELEASE
CONCORD CAMERA CORP. ANNOUNCES RESULTS FOR
THE FIRST QUARTER ENDED SEPTEMBER 27, 2003
------------------------------------------
HOLLYWOOD, FLORIDA - November 6, 2003 - Concord Camera Corp. ("Concord" or
"Company") (NASDAQ National Market: LENS) today reported financial results for
the first quarter of fiscal year 2004 that ended September 27, 2003 (see
attached tables).
For the first quarter ended September 27, 2003, net sales ("sales") were $57.4
million, a 90% increase over the same quarter last year. The net loss was $0.6
million, or $0.02 per share. This compared to sales of $30.2 million, and net
income of $1.4 million, or $0.05 per diluted share for the first quarter of the
prior fiscal year. Excluding this year's first quarter non-cash variable stock
option expense of $3.1 million ($2.7 million after taxes), net income was $2.1
million, or $0.07 per diluted share. In addition, starting in fiscal 2004, the
Company changed its method of applying manufacturing labor and overhead costs to
inventory. The Company believes the new method will improve the matching of
costs to the flow of product through the production processes. As a result of
this change, the cost of products sold increased by $3.4 million for the first
quarter and therefore gross profit and net income decreased by $3.4 million and
$3.0 million, respectively, or $0.10 per diluted share. Since the effect of the
change in the first quarter was to reduce by $3.4 million the amount of labor
and overhead costs that would have been allocated to the Company's inventory at
the end of the quarter under the prior method, cost of sales in subsequent
quarters in fiscal 2004 should be commensurately reduced as inventories decline
with an attendant increase in gross profit and net income.
Commenting on the financial results, Ira B. Lampert, Concord's Chairman, Chief
Executive Officer and President, said, "Concord's sales for the first quarter of
fiscal 2004 of $57.4 million was right in the middle of the range ($55 to $60
million) of the guidance we announced in August. Excluding non-cash variable
stock option expense, net income was $2.1 million, or $0.07 per diluted share
versus guidance of $2.1 to $2.7 million, or $0.07 to $0.09 per diluted share."
Mr. Lampert also said, "Sales from our Retail Sales and Distribution ("RSD")
business for the first quarter of fiscal 2004 were $42.4 million, an increase of
$16.5 million, or 64%, compared to the same quarter last year and accounted for
74% of total sales. This growth was in large part due to sales of Polaroid
branded single use and traditional cameras, new digital product sales, new
accounts and organic growth from existing accounts due to sell through and new
product introductions. Sales from our Design and Manufacturing Services ("DMS")
business were $15.0
Page 1 of 6
Concord Camera Corp. Announces Results For
First Quarter Ended September 27, 2003
November 6, 2003
Page 2
million, an increase of $10.7 million, or 247%, compared to the same quarter
last year and accounted for 26% of total sales. This increase was primarily due
to single use cameras being manufactured for Eastman Kodak Company under a
supply agreement entered into in September 2002."
Mr. Lampert continued, "We are very pleased with the increased market
penetration we experienced with all of our products in both of our RSD and DMS
businesses. This increased penetration was primarily a result of opening new
accounts, growth in existing accounts, increased digital camera product
offerings and growth in our single use camera product offerings and sales.
"Gross profit for the first quarter of fiscal 2004 was $10.7 million, or 18.7%
of sales, versus $7.7 million, or 25.6% of sales in the same quarter last year.
This year we implemented a new method of applying manufacturing labor and
overhead costs to inventory by developing new automated systems to capture our
standard costs of manufacturing. We feel this will provide us with better
variance analyses and will improve the matching of costs of manufacturing labor
and overhead to the flow of product through our production processes. The impact
of implementing this new method in our first quarter of fiscal 2004 was a
decrease in gross profit and net income of $3.4 million and $3.0 million,
respectively, or $0.10 per diluted share. We continue to invest in new product
engineering, design and development, primarily focusing on digital technologies
and products. We incurred $2.5 million, or 4.4% of sales, in product development
costs in this year's fiscal first quarter as compared to $1.9 million, or 6.4%
of sales in the first quarter last year.
"Selling expenses for the first quarter of fiscal 2004 were $2.4 million, or
4.1% of sales. This compared to $1.8 million, or 6.0% of sales, for the first
quarter last year. The increase in absolute dollars was primarily due to
royalties related to the Polaroid brand licenses, the cost of additional sales
and marketing personnel, and higher variable costs including freight and
handling costs, all of which are attributable to the Company's sales growth.
"General and administrative ("G&A") expenses for the first quarter of fiscal
2004 were $6.0 million, or 10.4% of sales. This compared to $4.3 million, or
14.2% of sales, for the first quarter last year. The increase in G&A expenses
was primarily due to additional staffing, professional fees, insurance costs and
additional costs associated with the Company's growth. Last year's G&A expenses
included a $0.5 million recovery from Polaroid Corporation resulting in a
reduction of expenses," said Mr. Lampert.
Non-cash variable stock option expense for the first quarter of this fiscal year
was $3.1 million, compared to no such expense for the same quarter last year.
Interest expense for the first quarter of fiscal 2004 was $0.2 million compared
to $0.7 million in the same quarter last year. The decrease of $0.5 million was
attributable to the reduction in interest expense related to the repurchase in
August 2002 of our $15 million, 11% Senior Notes and the non-recurring write-off
of $0.3 million in deferred finance costs.
Other (income), net was $(0.1) million and $(0.3) million for the first quarter
of fiscal 2004 and 2003, respectively. The decrease of $0.2 million related
primarily to foreign exchange losses.
Page 2 of 6
Concord Camera Corp. Announces Results For
First Quarter Ended September 27, 2003
November 6, 2003
Page 3
Working Capital
Working capital was $123.4 million at September 27, 2003, an increase of $2.3
million over working capital at June 28, 2003. During the first quarter, cash
and short-term investments increased $0.2 million ending the quarter at $88.5
million. Accounts receivable decreased by $6.8 million, while inventory levels
increased by $14.1 million, in anticipation of higher sales planned for our
second quarter.
Concord's Balance Sheet Remains Strong
Mr. Lampert continued, "Concord ended the first quarter with working capital of
$123.4 million, no long-term debt, and cash and investments on hand of $88.5
million or approximately $3.13 per share. We also had total stockholders' equity
of $159.8 million, or approximately $5.64 per share, as of September 27, 2003.
We remain convinced that if we adhere to our fundamental strategies of
engineering, developing, designing and manufacturing high quality products at
low cost and introducing new products to our RSD and DMS customers, our business
will grow. We continue to invest in human resources, technologies, manufacturing
facilities, capital equipment and product development to support growth and our
transition to a leading image capture technology-based DMS and RSD business."
Second Quarter 2004 Guidance
Commenting on the short-term outlook for the Company, Mr. Lampert continued,
"Providing long- term future guidance continues to be challenging. The economy
is improving, but still remains difficult to forecast. Currently, for the second
quarter of fiscal 2004, we anticipate sales in the range of $70 to $75 million
and net income in the range of $5.2 to $6.5 million, or $0.17 to $0.21 per
diluted share, before any non-cash variable stock option expense or income."
Potential New Products and Relationships
If the Company's development efforts are successfully concluded, the Company
anticipates introducing several new digital, single use and traditional cameras
to potential new and existing DMS and RSD customers during the remainder of
Fiscal 2004.
Corporate Governance and Enhanced Reporting
Concord has endorsed and will fully comply with the requirements of NASDAQ, the
Sarbanes-Oxley Act and the new SEC rules related to corporate governance,
accounting and reporting.
Page 3 of 6
Concord Camera Corp. Announces Results For
First Quarter Ended September 27, 2003
November 6, 2003
Page 4
Investor Conference Call
Ira B. Lampert, Chairman, Chief Executive Officer and President, will host a
conference call today, Thursday, November 6, 2003 at 11:00 A.M. Eastern Time,
to discuss the first quarter results. To participate in the live conference
call with management, please call (973) 582-2783 at least five minutes prior
to the start time. The conference call will also be broadcast live over the
Internet via the WEBCAST section on the home page of Concord's web site -
www.concord-camera.com. To listen to the live call, go to the web site at least
15 minutes early to register, download and install any necessary audio software.
If you are unable to listen to the call live, the conference call will be
archived and can be accessed for approximately five business days.
About Concord Camera Corp.
Concord Camera Corp. is a global developer, designer, manufacturer and marketer
of high quality, popularly priced, digital, instant, Advanced Photo System
(APS), and 35mm cameras. Concord markets its cameras under the trademarks
POLAROID(R), CONCORD(R), KEYSTONE(R), CONCORD EYE Q(R), LE CLIC(R), GOLDLINE(R),
APEX(R), and ARGUS(R). Concord sells and markets its camera products worldwide
through direct sales offices in the United States, Canada, Germany, Hong Kong,
the United Kingdom and France and through independent sales agents. Concord
manufactures its products in its vertically integrated manufacturing facilities
in the People's Republic of China. The Polaroid trademark is owned by Polaroid
Corporation and is used by Concord under license from Polaroid. CONCORD,
KEYSTONE, CONCORD EYE Q, LE CLIC, GOLDLINE, APEX and ARGUS are trademarks and/or
registered trademarks of Concord Camera Corp. in the United States and/or other
countries.
Except for the historical matters contained herein, statements in this press
release are forward-looking and are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that forward-looking statements, including the statements regarding anticipated
or expected results and the future introduction of new products, involve risks
and uncertainties which may affect the Company's business and prospects,
including the risks discussed under "Risk Factors" in the Company's Annual
Report on Form 10-K for the fiscal year ended June 28, 2003 and subsequently
filed reports. Any forward-looking statements contained in this press release
represent our estimates only as of the date hereof, or as of such earlier dates
as are indicated, and should not be relied upon as representing our estimates as
of any subsequent date. While we may elect to update forward-looking statements
at some point in the future, we specifically disclaim any obligation to do so,
even if our estimates change.
Page 4 of 6
Concord Camera Corp. Announces Results For
First Quarter Ended September 27, 2003
November 6, 2003
Page 5
Concord Camera Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
September 27, June 28,
2003 2003
------------- ---------
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $ 38,292 $ 38,221
Short-term investments 50,203 50,035
Accounts receivable, net 25,684 32,494
Inventories 46,400 32,317
Prepaid expenses and other current assets 5,786 5,122
--------- ---------
Total current assets 166,365 158,189
Property, plant and equipment, net 20,377 21,328
Goodwill, net 3,721 3,721
Other assets 23,374 22,576
--------- ---------
Total assets $ 213,837 $ 205,814
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 28,751 $ 22,105
Accrued expenses 11,802 13,023
Other current liabilities 2,402 1,984
--------- ---------
Total current liabilities 42,955 37,112
Other long-term liabilities 11,096 11,874
--------- ---------
Total liabilities 54,051 48,986
Commitments and contingencies
Stockholders' equity:
Blank check preferred stock, no par value
1,000 shares authorized, none issued -- --
Common stock, no par value, 100,000 shares
authorized; 30,244 and 29,464 shares issued
as of September 27, 2003 and June 28, 2003, respectively 142,255 141,109
Paid-in capital 8,563 5,407
Deferred stock-based compensation (148) (190)
Deferred compensation arrangement 413 --
Retained earnings 14,456 15,070
Accumulated other comprehensive loss (720) (431)
--------- ---------
164,819 160,965
Less: treasury stock, at cost, 1,599 shares and 1,543 shares
as of September 27, 2003 and June 28, 2003, respectively (4,620) (4,137)
Less: common stock held in trust, 331 shares
as of September 27, 2003 (413) --
--------- ---------
Total stockholders' equity 159,786 156,828
--------- ---------
Total liabilities and stockholders' equity $ 213,837 $ 205,814
========= =========
Page 5 of 6
Concord Camera Corp. Announces Results For
First Quarter Ended September 27, 2003
November 6, 2003
Page 6
Concord Camera Corp. and Subsidiaries
Condensed Consolidated Statements
(Unaudited)
(in thousands, except per share data)
For the quarter ended
----------------------------------
September 27, September 28,
2003 2002
------------- -------------
Net sales $ 57,401 $ 30,182
Cost of products sold 46,661 22,460
-------- --------
Gross profit 10,740 7,722
Selling expenses 2,381 1,819
General and administrative expenses 5,957 4,277
Variable stock-based compensation expense 3,050 --
Interest expense 163 677
Other (income), net (109) (281)
-------- --------
(Loss) income before income taxes (702) 1,230
(Benefit) for income taxes (88) (161)
-------- --------
Net (loss) income $ (614) $ 1,391
======== ========
Basic (loss) earnings per common share $ (0.02) $ 0.05
======== ========
Diluted (loss) earnings
per common share $ (0.02) $ 0.05
======== ========
Weighted average common shares
outstanding - basic 28,455 27,756
Dilutive effect of common stock options -- 1,520
-------- --------
Weighted average common shares
outstanding - diluted 28,455 29,276
======== ========
Page 6 of 6