UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 4, 2008
CONCORD CAMERA CORP.
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(Exact name of registrant as specified in its charter)
New Jersey 0-17038 13-3152196
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4000 Hollywood Boulevard, North Tower, Hollywood, Florida 33021
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 331-4200
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 8.01 Other Events.
In connection with recent publicity regarding the auction rate securities
markets, Concord Camera Corp. (the "Company") reports that, as of December 29,
2007, it has a total of approximately $38.4 million in consolidated cash, cash
equivalents and marketable securities, which includes approximately $6.2 million
of restricted cash and $27.8 million in investments in certain auction rate
securities. All of the auction rate security investments are AAA rated
securities collateralized by student loans, with approximately 100% of such
collateral being guaranteed by the U.S. government under the Federal Family
Education Loan Program.
The Company has recently experienced several failed auctions for the portion of
its auction rate securities portfolio that has gone to auction, resulting in the
Company's inability to sell these securities. The result of a failed auction,
which does not signify a default by the issuer, is that these securities
continue to pay interest in accordance with their terms until there is a
successful auction or until such time as other markets for these investments
develop. Upon an auction failure, the interest rates do not reset at a market
rate but instead reset based on a formula contained in the security, which rate
is generally higher than the current market rate.
If any of the issuers of the auction rate securities are unable to successfully
close future auctions and/or their credit ratings deteriorate, the Company may
be required to record an impairment charge on these investments. The Company is
in the process of evaluating the extent of any impairment in its auction rate
securities resulting from the current lack of liquidity; however, the Company is
not yet able to quantify the amount of any such impairment, if any. The Company
is also evaluating, but has not yet determined whether or not to reclassify
these short-term auction rate security investments from current assets to
long-term assets.
Based on the Company's expected operating cash flows and other sources of cash,
cash equivalents and short-term investments, it is possible that the potential
lack of liquidity in its auction rate security investments could adversely
affect the Company's liquidity and its ability to fund its operations. The
Company cannot predict whether future auctions related to its auction rate
securities will be successful. The Company is currently seeking alternatives for
reducing its exposure to the auction rate market, but may not be able to
identify any such alternative. Although the Company currently has sufficient
working capital to finance its operations in the near term, if the Company's
working capital is insufficient in the future and the Company is not able to
monetize some or all of its auction rate securities at that time, it could have
a material adverse effect on the Company's ability to finance its future ongoing
operations.
On March 4, 2008, Concord Keystone Sales Corp. ("Keystone"), the Company's U.S.
subsidiary, received a letter from The CIT Group/Commercial Services, Inc.
("CIT") with notice that an event of default exists under the Financing
Agreement between Keystone and CIT as a result of Keystone's failure to provide
CIT with the Company's financial information for the Company's second quarter
ending December 29, 2007 as required by the Financing Agreement (see the
Company's Current Report on Form 8-K, dated February 12, 2008, announcing that
it was delaying the filing of its Quarterly Report on Form 10-Q for the period
ended December 29, 2007 with the Securities and Exchange Commission). As a
result of this event of default, CIT has notified Keystone that it will increase
the availability reserve, thereby decreasing the borrowing base, by $500,000.
CIT has not exercised its right to accelerate Keystone's obligation to repay the
credit facility and CIT continues to make loans to Keystone under the revolving
credit facility.
NOTE REGARDING FORWARD LOOKING STATEMENTS:
Except for the historical information contained herein, statements in this
report 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 involve risks and uncertainties that may affect
the Company's business and prospects, including the risks discussed under "Risk
Factors" and disclosures in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2007 and subsequently filed reports. Such
forward-looking statements include, without limitation, statements regarding the
condition and status of the issuers of auction rate securities held in the
Company's investment portfolio, their ability to hold successful auctions with
respect to these securities in the future, potential impairment charges,
potential reclassification of assets, expectations regarding the Company's
ability to meet its future liquidity needs, CIT's willingness to continue
funding the revolving credit facility and the potential for any lack of
liquidity to affect the Company's ability to fund its operations. Actual results
could differ materially from these forward-looking statements. Factors that
could result in these forward-looking statements being inaccurate include, among
other things, the financial condition of issuers of auction rate securities held
in the Company's investment portfolio and their ability to hold successful
auctions with respect to such securities in the future in light of prevailing
market conditions, the Company's liquidity needs in operating its business and
the potential that auction rate securities contained in the Company's investment
portfolio may not be liquid on reasonable terms until final maturity, CIT's
willingness to continue being a creditor of the Company and to continue funding
the revolving credit facility and other factors and uncertainties that affect
the Company. Any forward-looking statements contained in this report represent
the Company's estimates only as of the date hereof, or as of such earlier dates
as are indicated, and should not be relied upon as representing its estimates as
of any subsequent date. Although the Company may elect to update forward-looking
statements in the future, it disclaims any intent or obligation to do so, even
if its estimates change.
SIGNATURES
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.
Date: March 5, 2008 By: /s/ Scott L. Lampert
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Scott L. Lampert, Vice President,
General Counsel and Secretary