Leica to forge ahead - new stock issue to raise capital

Salient points:

.. go ahead given to preserve the company
.. new stock offering 13.5 M shares at € 1.70 (~ € 23M)
.. admits management misjudged pace of digital growth
.. expects to lose € 1.7 per month (April and May 05) on € 6.2 M sales.

From the Leica website - Press Release
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

The Extraordinary General Meeting of Leica Camera AG on May 31, 2005 has
approved the capital measures proposed by the Board of Management and
the Supervisory Board, in each case with a vast majority of more than
90%. As announced in essential outline in the electronic Federal Gazette
(elektronischer Bundesanzeiger) of April 20, 2005, the measures consist
of a simplified capital reduction, an increase of the share capital
against contributions in cash and a creation of authorised capital. At
the General Meeting, Dr. Josef Spichtig, Chairman of the Board of
Management of Leica Camera AG since April 18, 2005, described these
measures as being “indispensable for the existence of the Company”. He
rated the consent given by the shareholders as “a declaration for the
preservation of the Company and a positive attitude to its perspectives
in the future”. The Company now plans to issue 13.5 million new shares
at a price of € 1.70 per share. The new shares will initially be offered
to the existing shareholders of the Company.

According to Mr. Spichtig, the goal to be attained by the Company will
be to reorientate its corporate structure in order to achieve a sales
volume of approximately € 100 million in the near future. Mr. Spichtig
said, he intended to continue all of the Company’s business, i.e., both
the Photo and Sports Optics business units. In addition to the two
camera systems, Leica M and Leica R, the Company will continue to offer
compact cameras as cooperation products. In all product lines, digital
solutions, development of which will be continued in cooperation with
partners, will be strengthened. “As we all know, digital tech¬nologies
have already been developed and are available on the market. We intend
to combine these technologies with our Leica know-how, in keeping with
the idea of engineering.

To master this task, we plan to increase our human resources”, said the
Chairman. The maturity achieved in digital photo solutions, which had
led to a neck-and-neck race with analogue processes at the high end, now
increasingly offered room for Leica solutions, said Mr. Spichtig.
State-of-the-art optics, a concentration on the essentials and solidity
again were important factors, since sensors were no longer the main
distinguishing quality characteristic of a digital system.

As concerns production and logistics, Mr. Spichtig said that he planned
a streamlining, entailing, among other things, a halving of the
Company’s inventory, which currently amounted to € 42 million. The
measures were directed at the Solms and the Portuguese locations and
would be implemented in a way that would not endanger “Made in Germany”
manufacturing.

As to marketing and distribution, Mr. Spichtig sees his responsibility
in reshaping the Company’s sales structure according to quality
criteria. “For those Leica products that require explanation we need
well-trained dealers who offer good service. We must gear our
international distribution policy to the development of attractive
business for our chosen partners”, said Mr. Spichtig.

In his speech to the Company’s shareholders Mr. Spichtig said that the
Leica Camera Group in fiscal 2004/2005 (FY end March 31) had recorded a
21% sales decline from € 119.1 million to € 93.7 million in a difficult
market environment. As to the reasons for this devolopment, Mr. Spichtig
pointed out that there had been false estimations of the Company’s
management concerning the speed at which the photo market would change
over to digitalisation, combined with weak points in the Company’s
structure, as well as external factors such as unfavourable exchange rates.

In addition to the expected loss of € 15.5 million already announced
there could be a burden resulting from the valuation of inventories, as
currently discussed with the Company’s auditors. Mr. Spichtig said the
new valuation was not the result of a prior mistake in valuation but a
possible effect of the currently prepared turnaround strategy on the
valuation of inventory range.

The Company started into the new fiscal year with sales of € 6.2 million
in the month of April. This resulted in a loss of € 1.7 million. The
Company expects sales and losses on a similar scale for the month of May.

The losses have led to an excess of debts over assets in the Company’s
financial reporting. However, subordination agreements ensure that the
Company will not reach overindebtedness status at any time.

The capital measures are based on a results planning that takes into
account operating losses in the € 13 million range in fiscal year
2005/2006. Mr. Spichtig said that the examination process with respect
to possible improvements was not yet completed. Possible extraordinary
expenditure for restructuring measures also had to be taken into
account. For the subsequent fiscal year, 2006/2007, the Company had set
the goal of a break-even result.

http://www.leica-camera.com/unterneh...4/index_e.html

.. admits management misjudged pace of digital growth

You think?
Leica is a non-factor in the 35mm and digital markets.
Despite what the film luddites say, 35mm is dying on the vine.
There is no money to be made there from future development.

If I was Leica management I'd work out an exclusive deal with
Wal-Mart to sell film and digital cameras in all their stores.
The Leica reputation might suffer as millions would then be
able to own Leicas. But the key word here is "millions" rather
than thousands or even hundreds. Leica would quickly become
the dominant player in the industry.

But that's just me.

Annika1980 wrote:

.. admits management misjudged pace of digital growth


You think?

Yes, I think, so I would have recognized it as the 'highlight' indicator
it was and not reply with a cyncical question.

SNP
If I was Leica management I'd work out an exclusive deal with
Wal-Mart to sell film and digital cameras in all their stores.
The Leica reputation might suffer as millions would then be
able to own Leicas. But the key word here is "millions" rather
than thousands or even hundreds. Leica would quickly become
the dominant player in the industry.

There are already enough dominant brands like Kodak, Fujifilm, Polaroid,
Konica, Minolta, Sony, Oly, Sanyo, etc. that Wal*Merde shoppers
recognize. Carving into that would be rough going, even if you were a
well recognized brand.

Not many Bumf-ck, Arkansas lifetime Wal*Merde members have even heard
the word "Leica". The classic marketing approach is to go on an
awareness advertising campaign, but Leica, in debt, and losing $2M a
month on $6M or so in sales does not have the bucks at all for such an
expensive (VERY expensive) undertaking aimed at the broad public.

Having said that, Wal*Merde could probably do an effective job of
touting it. But their recent trend has been to make every cost account
go to the suplier. Soon, most goods on Wal*Merde shelves will be
consigned and the supplier will only be paid 30 days after the sale,
item, by item. What isn't sold will be sent back, at the suppliers cost.

Soon at Wal*Merde: Chinese built automobiles. If you think Detroit is
in deep kaka now ...

Cheers,
Alan.

--
-- r.p.e.35mm user resource: http://www.aliasimages.com/rpe35mmur.htm
-- r.p.d.slr-systems: http://www.aliasimages.com/rpdslrsysur.htm
-- [SI] gallery & rulz: http://www.pbase.com/shootin
-- e-meil: Remove FreeLunch.

"Alan Browne" wrote in message
.. .

Salient points:

.. go ahead given to preserve the company
.. new stock offering 13.5 M shares at € 1.70 (~ € 23M)
.. admits management misjudged pace of digital growth
.. expects to lose € 1.7 per month (April and May 05) on € 6.2 M sales.

snip

It will be interesting to see how it pans out for Leica. Digital has created
a whole new ballgame and we've witnessed the death of a few name
brands/companies and turmoil at some others. To me, Leica and digital seem
like oil and water. Leica produced some high precision photo gear that was
as collectible as it was used. I just don't see a digital Leica with
electronics that may last 10 or 15 years as collectible. And there is just
so many cameras from cheap to high end to choose from now anyway. Perhaps
they can pull it off.
John

Alan wrote ...

Salient points:
.. go ahead given to preserve the company
.. new stock offering 13.5 M shares at =80 1.70 (~ =80 23M)
.. admits management misjudged pace of digital growth

This reads almost exactly like the Agfa re-organization announcement
last November, especially the "management misjudged pace of digital
growth" and the "new stock offering" parts. Eight months after the
Agfa re-org they are already bankrupt. Hope Leica makes it but they'll
need more than a premium brand name ...

"Bill Hilton" wrote in message
ups.com...
Alan wrote ...

Salient points:
.. go ahead given to preserve the company
.. new stock offering 13.5 M shares at 1.70 (~ 23M)
.. admits management misjudged pace of digital growth

This reads almost exactly like the Agfa re-organization announcement
lst November, especially the "management misjudged pace of digital
growth" and the "new stock offering" parts. Eight months after the
Agfa re-org they are already bankrupt. Hope Leica makes it but they'll
need more than a premium brand name ...

What all the die hard afficionados don't realise is that if leica goes then
there current collections will become even rarer, more valuable.
Personally, if they are still losing money selling stuff at those prices
then they are doing something very wrong indeed. The best thing to do is to
break up the company and rent out manufacturing capacity and leica brand to
other companies the way carl zeiss has done with sony.