Concord Camera's future operations may be adversely affected by auction-rate securities

By Lisa Kerner

Charlotte, N.C., March 5 - Concord Camera Corp. said based on its expected operating cash flows and other sources of cash, cash equivalents and short-term investments, a potential lack of liquidity in its auction-rate security investments could affect the company's ability to fund its operations.

There is enough working capital to finance operations in the near term. However, Concord Camera said it may find it difficult to finance future ongoing operations if working capital falls short or if the company is unable to monetize its auction-rate securities.

Concord Camera reported several failed auctions for a portion of its auction-rate securities, resulting in the company's inability to sell these securities.

The company is currently seeking alternatives for reducing its exposure to the auction-rate market, according to a form 8-K filing with the Securities and Exchange Commission.

As of Dec. 29, Concord Camera had a total of some $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 AAA-rated auction-rate securities.

Concord Keystone Sales Corp., a Concord Camera subsidiary, was notified of a default by the CIT Group/Commercial Services, Inc. for failing to provide second-quarter financial information as required under the companies' financing agreement.

As a result, CIT will increase the availability reserve, decreasing the borrowing base, by $500,000.

CIT continues to make loans to Concord Keystone under a revolving credit facility.

Based in Hollywood, Fla., Concord Camera develops, manufactures and sells single-use and 35 millimeter traditional film cameras.

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