Exhibit 99
[CONCORD CAMERA LOGO]
CONTACT: OR LENS' INVESTOR RELATIONS COUNSEL:
Concord Camera Corp. The Equity Group Inc.
Harlan Press Robert Goldstein (212) 371-8660
Vice President and Treasurer Devin Sullivan (212) 836-9608
(954) 331-4200
FOR IMMEDIATE RELEASE
CONCORD CAMERA CORP. ANNOUNCES RESULTS FOR
THE THIRD QUARTER AND NINE MONTHS ENDED MARCH 27, 2004
HOLLYWOOD, FLORIDA - May 17, 2004 - Concord Camera Corp. ("Concord" or
"Company") (NASDAQ: LENS) today reported financial results for the third quarter
and nine months of fiscal 2004 ended March 27, 2004 (see attached tables).
Third Quarter Comparison
For the third quarter ended March 27, 2004 ("Third Quarter Fiscal 2004"), net
sales were $28.3 million, a 22.0% decrease from the same quarter last year. Net
(loss) was $(17.6) million, or $(0.61) per share. This compared to net sales of
$36.2 million, and a net income of $1.3 million, or $0.04 per diluted share, for
the third quarter of the prior fiscal year ("Third Quarter Fiscal 2003"). The
Third Quarter Fiscal 2004 loss includes the impact of a significant reduction in
the carrying values of certain digital camera and component inventory of $6.8
million related to recent volatility in the digital camera market, resulting
from recent price declines and pricing reductions by the Company's competitors
and excess inventory levels at its customers. In addition, the Third Quarter
Fiscal 2004 loss includes unfavorable production variances due to lower than
expected production volumes and manufacturing inefficiencies which created
significant under absorption of manufacturing labor and overhead costs. The
Third Quarter Fiscal 2004 loss also includes the impact of increasing our
valuation allowances as a result of the aforementioned pre-tax loss against the
Company's deferred tax assets of $7.2 million. These charges in Third Quarter
Fiscal 2004 were offset by variable stock-based compensation income of $3.7
million. In the prior year, the Third Quarter Fiscal 2003 net income was
positively impacted by the resolution of a previously disclosed disputed claim
with a Design and Manufacturing Services ("DMS") customer. The resolution
resulted in a net after tax benefit of $2.0 million from a $2.2 million pretax
reduction of cost of products sold.
Concord Camera Corp. Announces Results For
Third Quarter and Nine Months Ended March 27, 2004
May 17, 2004
Page 2
Commenting on the financial results, Ira B. Lampert, Concord's Chairman, Chief
Executive Officer and President, said, "Concord's net sales for the third
quarter of fiscal 2004 of $28.3 million were below the guidance we issued in
February of $30 million to $35 million, primarily due to pricing pressures for
digital cameras, lower unit sales for all products and increases in estimated
sales returns and allowances. Recent price declines in the digital camera market
have negatively impacted the net realizable value of digital camera and
component inventory and, in response to market conditions, the Company has
significantly lowered the carrying value of this inventory and reduced its net
deferred tax assets.
Mr. Lampert also said, "Net sales in our Design and Manufacturing Services
business were $9.0 million this year versus $12.3 million in the third quarter
of fiscal 2003. This represents a $3.3 million decrease or 27.3% below last
year. This decrease was primarily attributable to a decrease in single use
camera sales to certain customers to some extent offset by digital camera sales
to other customers. Additionally, our Retail Sales and Distribution ("RSD")
business declined compared to the same quarter last year. RSD net sales were
$19.3 million in the third quarter of fiscal 2004, a decrease of $4.6 million,
or 19.1% over last year's sales of $23.9 million.
"We had a gross deficit for the third quarter of fiscal 2004 of $(5.7) million,
or (20.1)% of net sales, versus a gross profit of $8.4 million, or 23.2% of net
sales in the same quarter last year. During the Third Quarter of Fiscal 2004,
gross deficit was negatively affected by a $6.8 million pre-tax charge to cost
of products sold relating to lowering the carrying value of certain digital
camera and component inventory to their estimated net realizable value as a
result of competitive pricing pressure and excess customer inventory levels.
Higher manufacturing costs mainly resulting from significant under absorption of
labor and overhead due to lower production volumes and production inefficiencies
contributed to the decrease in gross profit. To a lesser extent, lower gross
profit percentages related to certain DMS and RSD product sales contributed to
the gross profit decrease. Last year's fiscal third quarter included the $2.2
million pretax benefit related to the favorable dispute resolution. We continue
to invest in new product engineering, design and development, primarily focusing
on digital technologies and products. We incurred approximately $2.4 million, or
8.6% of net sales, in product development costs in this year's fiscal third
quarter as compared to $2.2 million, or 6.0% of net sales, last year.
"Selling expenses for the Third Quarter Fiscal 2004 were $3.2 million, or 11.4%
of net sales. This compared to $1.9 million, or 5.2% of net sales, for the Third
Quarter Fiscal 2003. The increase was primarily due to the cost of additional
sales and marketing personnel, tradeshows and higher freight costs. Consistent
with our strategic plan to grow sales, we have increased our sales and marketing
personnel worldwide to position us for future growth."
"General and administrative expenses ("G&A") for the Third Quarter Fiscal 2004
were $7.2 million, or 25.5% of net sales. This compared to $5.4 million, or
14.8% of net sales, for the Third Quarter Fiscal 2003. The increase in G&A
expenses was primarily due to increases in professional fees associated with
installing an ERP system, costs associated with implementing measures necessary
to comply with the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), increases in
salaried personnel expenses, and severance expenses, partially offset by lower
legal costs," said Mr. Lampert.
Variable stock-based compensation income for the Third Quarter Fiscal 2004 was
$3.7 million because the Common Stock price on March 27, 2004, (the last day of
Third Quarter Fiscal 2004) was lower than our Common Stock price on the first
day of the fiscal period. Variable stock-based compensation expense was $0 in
the same quarter last year.
Page 2 of 7
Concord Camera Corp. Announces Results For
Third Quarter and Nine Months Ended March 27, 2004
May 17, 2004
Page 3
Income tax provision for the Third Quarter Fiscal 2004 was $5.7 million as
compared to $0.1 million in the same quarter last year. As a result of the
pre-tax loss incurred during the Third Quarter of Fiscal 2004, the Company
determined that a portion of our deferred tax asset may not be fully realizable
and accordingly the Company increased our deferred tax assets valuation
allowance by $7.2 million, which included $1.4 million to offset the income tax
benefit relating to our loss from operations recorded during the quarter.
Nine Month Comparison
For the nine months ended March 27, 2004 ("Fiscal 2004 YTD"), net sales were
$150.7 million, a 17.5% increase over the same period last year, and net (loss)
was $(21.1) million, or $(0.74) per share. For the nine months ended March 29,
2003 ("Fiscal 2003 YTD"), net sales were $128.3 million and net income was $4.7
million, or $0.16 per diluted common share.
RSD sales for Fiscal 2004 YTD were $117.0 million, an increase of $19.0 million,
or 19.4%, and accounted for 78% of total sales. The growth in RSD sales was in
large part due to sales of Polaroid branded single use and traditional cameras,
new customers and organic growth from existing accounts due to sell through and
new product introductions. DMS sales were $33.7 million in Fiscal 2004 YTD, an
increase of $3.5 million, or 11.7%, as compared to the same period last year,
and accounted for 22% of total sales. The increase in DMS sales was primarily
due to sales of single use cameras to a certain customer, partially offset by
lower sales to existing customers.
Gross profit for Fiscal 2004 YTD was $11.5 million, or 7.6% of net sales, versus
$25.6 million, or 19.9% of net sales in Fiscal 2003 YTD. During Fiscal 2004 YTD,
gross profit was negatively affected by the $9.9 million pre-tax charge to cost
of products sold which resulted from the $9.4 million of pre-tax inventory
charges to lower the carrying value of certain digital and component inventory
to their estimated net realizable value resulting from the negative impact of a
decline in the digital camera market, competitive pricing pressure and excess
customer inventory levels, and increased depreciation expense of $0.5 million
for molds and tooling related to certain digital cameras. In addition, higher
manufacturing costs mainly resulting from production inefficiencies related to
the production of digital products contributed to the decrease in gross profit,
in dollars and as a percentage of sales. The comparable prior year period
included a $2.2 million pre-tax benefit from the favorable resolution of a
previously disclosed disputed claim with a DMS customer in the third quarter
partially offset by $0.8 million of additional air freight costs due to the West
Coast dock worker labor dispute. Product engineering, design and development
costs for Fiscal 2004 YTD and Fiscal 2003 YTD, in dollars and as a percentage of
net sales, were $7.6 million (5.0%) and $6.1 million (5.0%), respectively.
Selling expenses for Fiscal 2004 YTD were $9.3 million, or 6.2% of net sales.
This compared to $5.9 million, or 4.6% of net sales for Fiscal 2003 YTD. The
increase was primarily due to the cost of additional sales and marketing
personnel, royalties related to the Polaroid brand licenses, tradeshows, and
higher variable costs including freight and handling, all of which were
attributable to our sales growth.
G&A expenses for Fiscal 2004 YTD were $18.7 million, or 12.4% of net sales. This
compared to $14.9 million, or 11.6% of net sales for Fiscal 2003 YTD. The
increase in G&A expenses was primarily due to increases in personnel,
professional fees associated with installing an ERP system, costs associated
with implementing measures necessary to comply with the Sarbanes-Oxley Act, and
additional costs associated with our growth. During Fiscal 2003 YTD, G&A
expenses included a $0.5 million recovery from Polaroid Corporation resulting in
a reduction of expenses.
Page 3 of 7
Concord Camera Corp. Announces Results For
Third Quarter and Nine Months Ended March 27, 2004
May 17, 2004
Page 4
Variable stock-based compensation income for Fiscal 2004 YTD was $0.6 million
since our Common Stock price on March 27, 2004 (the last day of the fiscal
period) was lower than our Common Stock price at the beginning of the fiscal
period. No variable stock-based compensation income or expense was recorded in
the same period last year.
Interest expense for Fiscal 2004 YTD was $0.5 million, compared to $1.0 million
in the same period last year. The decrease of $0.5 million was attributable to
the reduction in interest expense related to the repurchase of Senior Notes in
August 2002 and the non-recurring write-off of deferred finance costs of $0.3
million recorded in Fiscal 2003 YTD.
Other income, net was $0.5 million and $1.4 million for Fiscal 2004 YTD and
Fiscal 2003 YTD, respectively. The decrease of $0.9 million related primarily to
the loss on the sale of short-term investments of $0.9 million recorded in the
Second Quarter Fiscal 2004. Over the holding period of the short-term
investments, we realized a net positive return of $0.6 million after giving
effect to the dividend income received which more than offset the loss.
Income tax provision for the Fiscal 2004 YTD was $5.2 million as compared to
$0.4 million in the same period last year. As a result of the pre-tax loss
incurred during the Third Quarter of Fiscal 2004, we determined that a portion
of our deferred tax asset may not be fully realizable, and accordingly, we
increased our deferred tax asset valuation allowance by $7.2 million, which
included $2.0 million to offset the benefit relating to losses generated during
the first three quarters of Fiscal 2004.
Working Capital
Mr. Lampert continued, "Concord ended the third quarter with working capital of
$106.1 million, no long-term debt, and cash and cash equivalents on hand of
$62.3 million. We also had total shareholders' equity of $137.0 million, or
approximately $4.76 per share, as of March 27, 2004.
Fourth Quarter 2004 Guidance
Commenting on the short-term outlook for the Company, Mr. Lampert continued,
"Providing long- term future guidance continues to be challenging. Our business
remains difficult to forecast. Currently, for the fourth quarter of fiscal 2004,
we anticipate revenues in the approximate range of $52 to $57 million and a net
loss in the approximate range of $(3.0) to $(4.0) million, or $(0.10) to $(0.14)
per share, before any non-cash variable stock option expense. Fourth quarter
guidance includes sales and results of operations from Jenimage Europe GmbH
which was acquired on May 10, 2004."
Strategy and Potential New Products and Relationships
In conjunction with its assessment of recent market conditions, the Company
continues to evaluate its strategic direction in order to operate effectively in
the digital camera market place. In addition, we continue to believe that if we
execute our fundamental strategies of engineering, developing, designing and
manufacturing high quality products at low costs and introduce new products to
our RSD and DMS customers in a timely manner, our business will progress and
operate efficiently. We are introducing new products, enhancing product design
and development capabilities, and fortifying sales and marketing infrastructure
to address new sales channels. Consistent with our recent acquisition of
Jenimage Europe GmbH, the Company continues to investigate and pursue
opportunities to create a more significant and visible branded product presence
for its digital cameras.
Page 4 of 7
Concord Camera Corp. Announces Results For
Third Quarter and Nine Months Ended March 27, 2004
May 17, 2004
Page 5
If the Company's sourcing and 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 this Fiscal 2004 and 2005. We are evaluating various growth
opportunities that could require significant funding commitments. We have from
time to time held, and will continue to hold, discussions and negotiations with
(i) companies that represent potential acquisition or investment opportunities,
(ii) potential strategic and financial investors who might have an interest in
making an investment in or acquiring us, (iii) potential joint venture partners
looking toward formation of strategic alliances that would broaden our product
base or enable us to enter new lines of business and (iv) potential new and
existing DMS customers where the design, development and production of new
products, including certain new technologies, would enable us to expand our
existing business, and enter new markets.
Investor Conference Call
Ira B. Lampert, Chairman, Chief Executive Officer and President, will host a
conference call today, Monday, May 17, 2003 at 11:00 A.M. Eastern Daylight Time,
to discuss fiscal 2004 third quarter and nine month results as well as other
topics. Interested parties may participate in the call by dialing (973) 317-5319
approximately 10 minutes before the call is scheduled to begin 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 website - www.concord-camera.com. To listen to the live call,
go to the website at least 15 minutes early to register, download and install
any necessary audio software. If you are unable to listen to the live call, the
conference call will be archived and can be accessed on Concord's website for
approximately 5 business days. A copy of the earnings release will be available
on the same website, by going to the Investor Relations page and clicking on the
"Press Releases" link.
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,
CONCORD and CONCORD EYE Q. 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. The JENOPTIK trademark is
owned by Jenoptik AG and is used by Concord under license from Jenoptik AG.
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
Third Quarter and Nine Months Ended March 27, 2004
May 17, 2004
Page 6
Concord Camera Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
March 27, June 28,
2004 2003
-------- --------
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $ 62,290 $ 38,221
Short-term investments -- 50,035
Accounts receivable, net 21,138 32,494
Inventories 43,776 32,317
Prepaid expenses and other current assets 6,659 5,122
--------- ---------
Total current assets 133,863 158,189
Property, plant and equipment, net 20,089 21,328
Goodwill, net 3,721 3,721
Other assets, net 18,557 22,576
--------- ---------
Total assets $ 176,230 $ 205,814
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 12,634 $ 22,105
Accrued expenses 12,991 13,023
Other current liabilities 2,110 1,984
--------- ---------
Total current liabilities 27,735 37,112
Other long-term liabilities 11,495 11,874
--------- ---------
Total liabilities 39,230 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; 30,410 and 29,464 shares issued
as of March 27, 2004 and June 28, 2003, respectively 142,824 141,109
Paid-in capital 4,911 5,407
Deferred stock-based compensation (63) (190)
Deferred share arrangement 413 --
Retained (deficit) earnings (6,052) 15,070
Accumulated other comprehensive loss -- (431)
--------- ---------
142,033 160,965
Less: treasury stock, at cost, 1,599 and 1,543 shares as
of March 27, 2004 and June 28, 2003, respectively (4,620) (4,137)
Less: common stock held in trust, 331 shares as
of March 27, 2004 (413) --
--------- ---------
Total stockholders' equity 137,000 156,828
--------- ---------
Total liabilities and stockholders' equity $ 176,230 $ 205,814
========= =========
Page 6 of 7
Concord Camera Corp. Announces Results For
Third Quarter and Nine Months Ended March 27, 2004
May 17, 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 nine months ended
--------------------------------- ---------------------------------
March 27, March 29, March 27, March 29,
2004 2003 2004 2003
--------------- -------------- --------------- --------------
Net sales $ 28,280 $ 36,246 $ 150,744 $ 128,268
Cost of products sold 33,952 27,854 139,214 102,686
-------- -------- --------- ---------
Gross (deficit) profit (5,672) 8,392 11,530 25,582
Selling expenses 3,234 1,886 9,322 5,896
General and administrative
expenses 7,211 5,367 18,737 14,914
Variable stock-based
compensation income (3,700) -- (601) --
Interest expense 124 206 494 1,030
Other income,
net (688) (464) (539) (1,429)
-------- -------- --------- ---------
(Loss) income before
income taxes (11,853) 1,397 (15,883) 5,171
Provision for
income taxes 5,743 140 5,239 438
-------- -------- --------- ---------
Net (loss) income $(17,596) $ 1,257 $ (21,122) $ 4,733
======== ======== ========= =========
Basic (loss) income per
common share $ (0.61) $ 0.05 $ (0.74) $ 0.17
======== ======== ========= =========
Diluted (loss) income per
common share $ (0.61) $ 0.04 $ (0.74) $ 0.16
======== ======== ========= =========
Weighted average
common shares
outstanding - basic 28,774 27,915 28,642 27,858
Dilutive effect of common
stock options -- 1,627 -- 1,561
-------- -------- --------- ---------
Weighted average
common shares
outstanding - diluted 28,774 29,542 28,642 29,419
========= ========= ========= =========
Page 7 of 7