EXHIBIT 99
[CONCORD 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 SECOND QUARTER AND SIX MONTHS ENDED DECEMBER 27, 2003
HOLLYWOOD, FLORIDA - February 5, 2004 - Concord Camera Corp. ("Concord" or
"Company") (NASDAQ National Market: LENS) today reported financial results for
the second quarter and six months of fiscal year 2004 ended December 27, 2003
(see attached tables).
Second Quarter Comparison
For the second quarter ended December 27, 2003, net sales ("sales") were $65.1
million, a 5.2% increase over the same quarter last year. The net loss was
$(2.9) million, or $(0.10) per share. This compared to sales of $61.8 million,
and net income of $2.1 million, or $0.07 per diluted share for the second
quarter of the prior fiscal year. This year's second quarter includes the pretax
recognition of a $0.9 million loss related to the decline in fair value of
certain short-term investments, which loss was realized upon the sale of the
investments subsequent to the end of the quarter, and a pretax $3.1 million
charge with respect to certain inventory and tooling primarily attributable to
digital camera products.
Commenting on the financial results, Ira B. Lampert, Concord's Chairman, Chief
Executive Officer and President, said, "Concord's sales of $65.1 million for the
second quarter of fiscal 2004 set a company record for the highest revenue in
any prior quarter. The net loss was $(2.9) million, or $(0.10) per share, versus
the revised guidance, issued on January 16, 2004, of a loss of $(2.0) to $(2.5)
million, or $(0.07) to $(0.09) per share. The disappointing results were
primarily attributable to lower than anticipated digital camera sales coupled
with lower than projected average selling prices. Furthermore, another
contributing factor to the loss was the significantly higher manufacturing costs
that were incurred as a result of production inefficiencies related to delays in
completing the development of certain new digital camera products."
Mr. Lampert also said, "Sales from our Retail Sales and Distribution ("RSD")
business for the second quarter of fiscal 2004 were $55.4 million, an increase
of $7.1 million, or 14.7% compared to the same quarter last year, and accounted
for 85% of total sales. This growth was in large part due to sales of Polaroid
branded and other single use and traditional cameras, new accounts and organic
growth from existing accounts. Sales from our Design and Manufacturing Services
("DMS") business were $9.7 million, a decrease of $3.8 million, or 28.5%,
compared to the same quarter last year, and accounted for 15% of total sales.
The decline was primarily attributable to a decrease in sales to certain
customers which was offset, to some extent, by single use and digital camera
sales to other customers."
Concord Camera Corp. Announces Results For
Second Quarter and Six Months Ended December 27, 2003
February 5, 2004
Page 2
Mr. Lampert continued, "Our performance in the second quarter was very
disappointing, in particular, sales of one of our digital cameras were
significantly lower than we had expected. Although our average selling prices
for digital cameras increased by more than 30% over the prior fiscal year, they
were lower than anticipated on certain products due to significant price
pressure during the holiday selling season.
"For the reasons described above, gross profit for the second quarter of fiscal
2004 was $6.5 million, or 9.9% of sales, versus $9.5 million, or 15.3% of sales
in the same quarter last year.
"We continue to invest in new product engineering, design and development,
primarily focusing on digital technologies and products. We incurred $2.5
million, or 3.8% of sales, in product development costs in this year's fiscal
second quarter as compared to $2.0 million, or 3.2% of sales, in the second
quarter last year.
"Selling expenses for the second quarter of fiscal 2004 were $3.7 million, or
5.7% of sales. This compared to $2.2 million, or 3.5% of sales, for the second
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, all of which are attributable to the Company's growth.
"General and administrative expenses for the second quarter of fiscal 2004 were
$5.5 million, or 8.5% of sales. This compared to $5.3 million, or 8.5% of sales,
for the second quarter last year," said Mr. Lampert.
Non-cash variable stock option expense for the second quarter of this fiscal
year was $48,000 compared to no such expense for the same quarter last year.
Interest expense for the second quarter of fiscal 2004 was $0.2 million compared
to $0.1 million in the same quarter last year.
Other (income), net was a $0.3 million expense for this year's second quarter as
compared to $(0.7) million of income last year. The decrease of $1.0 million
related primarily to the $0.9 million loss we recognized on the decline in fair
value of the short-term investments that were sold subsequent to the end of the
quarter. Over the holding period of the short-term investments, the Company
realized a net positive return after giving effect to the dividend income
received which more than offset the realized loss.
Six Month Comparison
For the six months ended December 27, 2003 ("Fiscal 2004 YTD"), sales were
$122.5 million, a 33.1% increase over the same period last year, and we incurred
a net loss of $(3.5) million, or $(0.12) per share. For the six months ended
December 28, 2002 ("Fiscal 2003 YTD"), sales were $92.0 million and net income
was $3.5 million, or $0.12 per diluted share.
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Concord Camera Corp. Announces Results For
Second Quarter and Six Months Ended December 27, 2003
February 5, 2004
Page 3
RSD sales for Fiscal 2004 YTD were $97.8 million, an increase of $23.7 million,
or 31.8%, and accounted for 80% of sales. This growth was in large part due to
sales of Polaroid branded and other single use and traditional cameras, new
accounts and organic growth from existing accounts. DMS sales were $24.7
million, an increase of $6.8 million, or 38.4%, and accounted for 20% of total
sales. The increase was primarily attributable to sales of single-use cameras.
Gross profit for Fiscal 2004 YTD was $17.2 million, or 14.0% of sales, versus
$17.2 million, or 18.7% of sales, in Fiscal 2003 YTD. Fiscal 2004 YTD included
the $3.1 million charge in the second quarter for certain inventory and tooling
primarily attributable to digital camera products. In addition, cost of products
sold for the six month period was $2.3 million higher than it would have been
had we not changed our method of applying manufacturing labor and overhead costs
to inventory during the first quarter of fiscal 2004. Fiscal 2003 YTD included
$0.8 million of additional airfreight costs attributable to the West Coast dock
worker labor dispute. Product development expenses were $5.0 million, or 4.1% of
sales for Fiscal 2004 YTD versus $4.0 million, or 4.3% of sales, for the same
period last year.
Selling expenses for Fiscal 2004 YTD were $6.1 million, or 5.0% of sales. For
the same period last year, selling expenses were $4.0 million, or 4.4% of sales.
The increase was primarily due to the cost of additional sales and marketing
personnel, royalties related to the Polaroid licenses and higher variable costs
including freight and handling, all of which are associated with the Company's
growth.
General and administrative expenses for Fiscal 2004 YTD were $11.5 million, or
9.4% of sales, compared to $9.5 million, or 10.4% of sales for the same period
last year. The increase was primarily attributable to increases in professional
fees associated with installing a new Enterprise Resource Planning System, costs
of compliance with certain aspects of the Sarbanes-Oxley Act of 2002 and
additional costs associated with the Company's growth.
Variable stock-based compensation expense for Fiscal 2004 YTD was $3.1 million
as compared to no expense in the first six months of Fiscal 2003.
Interest expense for Fiscal 2004 YTD was $0.4 million, versus $0.8 million for
Fiscal 2003 YTD, a decrease of $0.4 million. The decrease related to the
repurchase in August 2002 of our $15 million, 11% Senior Notes and the write-off
of deferred finance costs of $0.3 million recorded in the first quarter of
Fiscal 2003.
Other (income), net was an expense of $0.2 million for Fiscal 2004 YTD as
compared to income of $(1.0) million in Fiscal 2003 YTD. This year includes the
$0.9 million loss we recognized as a result of the decline in fair value of our
short-term investments and lower foreign exchange gains than last year.
Working Capital
Working capital was $122.5 million at December 27, 2003, an increase of $1.4
million over working capital at June 28, 2003. For the first six months of
Fiscal 2004, cash and short-term investments decreased $33.4 million, primarily
due to accounts receivable increasing by $13.2 million, inventory increasing by
$13.2 million and liabilities declining by $7.0 million. Accounts receivable
increased due to higher sales in the second quarter. Inventory increased from
$32.3 million at the end of Fiscal 2003 to $46.4 million at the end of the first
quarter of this year due to the significant sales growth in the second quarter.
During the second quarter, inventory declined by $0.9 million to $45.5 million.
Page 3 of 7
Concord Camera Corp. Announces Results For
Second Quarter and Six Months Ended December 27, 2003
February 5, 2004
Page 4
Concord's Balance Sheet Remains Strong
Mr. Lampert continued, "Concord ended the second quarter with working capital of
$122.5 million, no long-term debt, and cash and investments on hand of $54.8
million. We also had total stockholders' equity of $158.1 million, or
approximately $5.56 per share, as of December 27, 2003. We believe 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 company."
Third Quarter 2004 Guidance
Commenting on the short-term outlook for the Company, Mr. Lampert continued,
"Currently, for the third quarter of fiscal 2004, we anticipate sales in the
range of $30 to $35 million and a net loss in the range of $3.0 to $4.0 million,
or $(0.10) to $(0.14) per share, before any non-cash variable stock option
expense or income."
Potential New Products and Relationships
If the Company's sourcing and development efforts are successfully concluded,
the Company anticipates introducing several new digital, single use and
traditional camera products to potential new and existing DMS and RSD customers
during the remainder of Fiscal 2004.
Investor Conference Call
Ira B. Lampert, Chairman, Chief Executive Officer and President, will host a
conference call today, Thursday, February 5, 2004 at 11:00 A.M. Eastern Time, to
discuss the second quarter and six months results. To participate in the live
conference call with management, please call (973) 582-2783 approximately ten
(10) minutes prior to the start time and ask to be connected to the Concord
conference call. The conference call will also be broadcast live over the
Internet via the WEBCAST section featured 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. The conference call will also be archived and can be accessed on
Concord's website 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 principally markets its cameras under the
trademarks POLAROID(R), CONCORD(R) and CONCORD EYE Q(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 and CONCORD EYE Q are trademarks and/or
registered trademarks of Concord Camera Corp. in the United States and/or other
countries.
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Concord Camera Corp. Announces Results For
Second Quarter and Six Months Ended December 27, 2003
February 5, 2004
Page 5
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 5 of 7
Concord Camera Corp. Announces Results For
Second Quarter and Six Months Ended December 27, 2003
February 5, 2004
Page 6
Concord Camera Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
December 27, June 28,
2003 2003
------------ ---------
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $ 9,386 $ 38,221
Short-term investments 45,429 50,035
Accounts receivable, net 45,721 32,494
Inventories 45,527 32,317
Prepaid expenses and other current assets 6,668 5,122
--------- ---------
Total current assets 152,731 158,189
Property, plant and equipment, net 20,266 21,328
Goodwill, net 3,721 3,721
Other assets 23,330 22,576
--------- ---------
Total assets $ 200,048 $ 205,814
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 16,193 $ 22,105
Accrued expenses 11,256 13,023
Other current liabilities 2,827 1,984
--------- ---------
Total current liabilities 30,276 37,112
Other long-term liabilities 11,628 11,874
--------- ---------
Total liabilities 41,904 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; 30,357 and 29,464 shares issued
as of December 27, 2003 and June 28, 2003, respectively 142,714 141,109
Paid-in capital 8,611 5,407
Deferred stock-based compensation (105) (190)
Deferred compensation arrangement 413 --
Retained earnings 11,544 15,070
Accumulated other comprehensive loss -- (431)
--------- ---------
163,177 160,965
Less: treasury stock, at cost, 1,599 and 1,543 shares as
of December 27, 2003 and June 28, 2003, respectively (4,620) (4,137)
Less: common stock held in trust, 331 shares as
of December 27, 2003 (413) --
--------- ---------
Total stockholders' equity 158,144 156,828
--------- ---------
Total liabilities and stockholders' equity $ 200,048 $ 205,814
========= =========
Page 6 of 7
Concord Camera Corp. Announces Results For
Second Quarter and Six Months Ended December 27, 2003
February 5, 2004
Page 7
Concord Camera Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
For the quarter ended For the six months ended
-------------------------------------- --------------------------------------
December 27, December 28, December 27, December 28,
2003 2002 2003 2002
--------------- --------------- --------------- ---------------
Net sales $ 65,063 $ 61,840 $ 122,464 $ 92,022
Cost of products sold 58,602 52,372 105,262 74,832
--------- --------- --------- ---------
Gross profit 6,461 9,468 17,202 17,190
Selling expense 3,707 2,191 6,088 4,010
General and
administrative expenses 5,538 5,270 11,496 9,547
Variable stock-based
compensation expense 48 -- 3,098 --
Interest expense 207 146 370 824
Other (income), net 288 (684) 180 (966)
--------- --------- --------- ---------
(Loss) income before (3,327) 2,545 (4,030) 3,775
income taxes
(Benefit) provision for
income taxes (416) 460 (504) 299
--------- --------- --------- ---------
Net (loss) income $ (2,911) $ 2,085 $ (3,526) $ 3,476
========= ========= ========= =========
Basic (loss) earnings per
common share $ (0.10) $ 0.07 $ (0.12) $ 0.12
========= ========= ========= =========
Diluted (loss) earnings per
common share $ (0.10) $ 0.07 $ (0.12) $ 0.12
========= ========= ========= =========
Weighted average
common shares
outstanding - basic 28,370 27,910 28,276 27,830
Dilutive effect of common
stock options -- 1,630 -- 1,593
--------- --------- --------- ---------
Weighted average
common shares
outstanding - diluted 28,370 29,540 28,276 29,423
========= ========= ========= =========
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