Concord Camera Corp. Announces Record Fourth Quarterand Fiscal Year Results.

HOLLYWOOD, Fla.--(BUSINESS WIRE)--Aug. 26, 1999--

Concord Camera Corp. ("Concord") (NASDAQ National Market: LENS) today reported financial results for the fourth fiscal quarter and year ended July 3, 1999.

For the quarter ended July 3, 1999, net sales were $34,813,000 compared

to $32,377,000 for the fourth quarter of last year, an increase of $2,436,000 or 7.5%. Concord reported net income for the July 3, 1999 quarter of $2,772,000 or $0.24 per diluted share, as compared to $2,245,000 or $0.19 per share for the June 30, 1998 quarter. The profit for the quarter was primarily a result of more favorable absorption of manufacturing overhead and labor utilization resulting from increased sales and manufacturing volume and efficiencies. This resulted in an increase in gross margin to 31.2% from 28.2% for last year's fourth quarter.

For the year ended July 3, 1999, net sales were $118,418,000 versus $102,663,000 for the comparable period in 1998, an increase of $15,755,000 or 15.3%, before giving effect to approximately $9,492,000 of non-recurring sales in the year ended June 30, 1998. For comparison purposes, excluding the approximate $9,492,000 of non-recurring sales in the year ended June 30, 1998, net sales for the year ended July 3, 1999 were $118,418,000 versus $93,171,000 for the year ended June 30, 1998, an increase of approximately $25,247,000 or 27.1%. Net income for the year ended July 3, 1999 was $7,708,000 or $0.67 per diluted share, as compared to $6,013,000 or $0.52 per share for the prior year.

Commenting on the financial results, Ira B. Lampert, Concord's Chairman and Chief Executive Officer, said, "Year to date sales were up for both OEM and Retail distribution sales. Shipments of the new single-use instant and the new reloadable manual instant camera increased by 13% from the third fiscal quarter. We were well within the previously projected sales and profits for the fiscal year ended July 3, 1999, which were forecasted to be between $115 and $125 million and $7 to $8 million, respectively."

Discussing the fourth quarter, Mr. Lampert continued, "The gross profit percentage increased from 28.2% in the fourth quarter last year to 31.2% in the fourth quarter of this year, primarily as a result of more favorable absorption of manufacturing overhead and labor utilization resulting from the increased sales and manufacturing volume and efficiencies. As a percentage of sales, selling and general and administrative expenses declined to 19.4% from last year's fourth quarter's 20.3%."

For the year ended July 3, 1999, the gross profit margin was 26.8% compared to 27.2% the prior year, primarily as a result of costs associated with the production ramp up of new products, increases in license costs, royalty expenses, and product development costs associated with new products. Product development costs associated with new products increased from $3,963,000 in the year ended June 30, 1998 to $4,815,000 in the year ended July 3, 1999, an increase of $852,000 or 21.5%.

As compared to last year's fourth quarter, SG&A expenses increased overall by $184,000 or 2.8%. Selling expenses for the fourth quarter of Fiscal 1999 of $1,875,000 decreased $1,291,000 or 40.7% from the same period last year. General and administrative expenses of $4,867,000 increased $1,476,000 or 43.5% from the same period last year. Financial expenses of $862,000 increased $385,000 or 80.7% from the same period last year. Other income net of $185,000 decreased $166,000 from $351,000 in the fourth quarter of last year.

As compared to the prior fiscal year, SG&A expenses were lower overall by $183,000. Selling expenses for the year ended July 3, 1999 of $7,922,000 decreased $1,312,000 or 14.2% from the same period in the prior year. General and administrative expenses for the year ended July 3, 1999 of $11,905,000 increased $1,128,000 or 10.5% from the same period in the prior year, reflecting the increases in legal costs associated with new OEM contracts and other expenses. Financial expenses of $3,454,000 increased $1,787,000 from the same period in the prior year. Other income of $441,000 decreased $76,000 from $517,000 for the same period in the prior year.

Potential New Products and Relationships

The Company is actively engaged in negotiating with existing OEM customers and new potential OEM customers for the development, design and production of a number of new products, including an Advanced Photo System (APS) Single-use Camera, an APS camera, and cameras and image capture devices incorporating digital technology. If negotiations and development efforts are successfully concluded, certain new products would be introduced in Fiscal 2000, impacting results in the second half of that year.

Share Repurchase Program

During the year ended July 3, 1999, the Company announced a $5 million share repurchase program. To date, the Company has repurchased approximately 612,000 of its outstanding common shares for an aggregate purchase price of approximately $2,926,000, pursuant to that program.

Concord's Balance Sheet Remains Strong

Mr. Lampert continued, "Concord completed the fiscal year in a strong financial position. Shareholders' equity is approximately $42.7 million, or approximately $3.67 per share. At year-end, we had only $17.5 million in long-term debt and our working capital was $37.7 million. Cash flow provided by operating activities for the year ended July 3, 1999 was approximately $17.5 million as compared to $1.1 million in the prior year. We have prepared Concord for the growth we are now experiencing. We continue to invest in human resources, technologies, manufacturing facilities, capital equipment and product development to support ongoing growth, and our transition to a technology based OEM."

Fiscal 2000

"We anticipate sales in Fiscal 2000 to be in the $150 million to $160 million range, an increase of approximately $32-to-$42 million over Fiscal 1999 sales of $118 million, or 27% to 36% higher than Fiscal 1999. While many factors outside the control of the Company can affect profitability, our expectation is that net income for Fiscal 2000 will be in the range of $11.0 million to $12.0 million, or $.94 to $1.03 per diluted share, or 40% to 54% over Fiscal 1999. The Company should continue to generate positive cash flow. The Company is positioned to continue its growth in Fiscal 2000 and beyond, which growth will be fueled by its technical prowess and capabilities in the development, design and low-cost manufacture of innovative electro, optical, mechanical devices and apparatus, initially in digital image capture and transmission for large branded international OEM's."

This press release contains 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 filings with the Securities & Exchange Commission, some of which are summarized under the caption "Risk Factors" in the Company's Form 10-K Annual Report for the fiscal year ended July 3, 1999 and updated in subsequently filed reports. 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 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.

Concord Camera Corp. is principally engaged in the manufacture and sale of popularly-priced, easy-to-use, conventional and single-use 35 millimeter and Advanced Photo System cameras and 110 cartridge cameras which it manufactures and assembles in the Peoples Republic of China on an OEM basis and under the trade names CONCORD(R), KEYSTONE(R), LE CLIC(R), APEX(R) and, for sales outside the United States and Mexico, ARGUS(R) trade names, as well as private labels. The Company sells and markets its camera products worldwide through direct sales offices in the United States, Canada, Germany, Hong Kong, United Kingdom, France and through independent sales agents.

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