0000030828-95-000005.txt : 19950815 0000030828-95-000005.hdr.sgml : 19950815 ACCESSION NUMBER: 0000030828-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COBRA ELECTRONICS CORP CENTRAL INDEX KEY: 0000030828 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 362479991 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00511 FILM NUMBER: 95563234 BUSINESS ADDRESS: STREET 1: 6460 W CORTLAND ST CITY: CHICAGO STATE: IL ZIP: 60635 BUSINESS PHONE: 3128898870 MAIL ADDRESS: STREET 1: 6460 W CORTLAND ST CITY: CHICAGO STATE: IL ZIP: 60635 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) --- OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) --- OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-511 COBRA ELECTRONICS CORPORATION (Exact name of Registrant as specified in its Charter) DELAWARE 36-2479991 (State of incorporation) (I.R.S. Employer Identification No.) 6500 WEST CORTLAND STREET CHICAGO, ILLINOIS 60635 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (312) 889-8870 Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par Value $.33 1/3 Per Share Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Number of shares of Common Stock of Registrant outstanding at August 11, 1995: 6,226,648 PART I FINANCIAL INFORMATION Item 1. Financial Statements Cobra Electronics Corporation and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share amounts)
For the Three Months Ended For the Six Months Ended (Unaudited) (Unaudited) ---------------------------- ------------------------ June 30, June 30, June 30, June 30, 1995 1994 1995 1994 -------- -------- -------- -------- Net sales.............. $ 21,350 $ 21,132 $ 42,087 $ 39,613 Cost of sales.......... 17,066 17,480 34,004 32,370 --------- --------- -------- -------- Gross profit......... 4,284 3,652 8,083 7,243 Selling, general and administrative expense 4,152 3,448 7,914 6,615 --------- --------- -------- -------- Operating income..... 132 204 169 628 Other expense: Interest expense..... 398 241 713 460 Other, net........... (60) (91) (45) 12 ---------- ---------- -------- ------- Income(loss)before taxes (206) 54 (499) 156 Provision (benefit) for taxes............. --- --- --- --- ---------- ---------- --------- ------- Net income(loss)........$ (206) $ 54 $ (499) $ 156 ========== ========= ========= ======= Net income(loss) per share.............$ (0.03) $ 0.01 $ (0.08) $ 0.03 =========== ========== ========= ====== Weighted average number of common shares and common share equivalents outstanding 6,227 6,236 6,227 6,233 ========== ========= ======== ====== Cash dividends.......... None None None None ========== ========= ======== ====== The accompanying notes are an integral part of these financial statements.
Cobra Electronics Corporation and Subsidiaries Condensed Consolidated Balance Sheets (dollars in thousands)
As of As of June 30, December 31, 1995 1994 (Unaudited) (Unaudited) ------------ ------------ ASSETS: Current assets: Cash................................$ 111 $ 197 Receivables, less allowance for doubtful accounts of $1,074 at June 30, 1995 and $638 at December 31, 1994................. 13,437 10,280 Inventories, primarily finished goods 18,403 15,627 Other current assets................ 1,836 1,399 ---------- ---------- Total current assets................ 33,787 27,503 ---------- ---------- Property, plant and equipment, at cost: Land................................ 593 593 Building and improvements........... 6,891 6,848 Tooling and equipment............... 14,977 13,837 ---------- --------- 22,461 21,278 Accumulated depreciation and amortization...................... (15,202) (14,294) ----------- ---------- Net property, plant and equipment... 7,259 6,984 ---------- --------- Other assets.......................... 5,589 5,855 ---------- --------- Total assets......................... $ 46,635 $ 40,342 ========== ========= The accompanying notes are an integral part of these financial statements.
As of As of June 30, December 31, 1995 1994 (Unaudited) (Unaudited) ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable....................$ 4,773 $ 3,422 Accrued liabilities................. 6,713 6,030 Short-term debt..................... 16,219 11,461 ---------- ---------- Total current liabilities........... 27,705 20,913 ---------- ---------- Shareholders' equity: Preferred stock, $1 par value, shares authorized-1,000,000; none issued....................... --- --- Common stock, $.33 1/3 par value, 12,000,000 shares authorized; 7,039,100 issued and 6,226,648 outstanding at both June 30, 1995 and December 31, 1994............. 2,345 2,345 Paid-in capital..................... 22,118 22,118 Retained earnings................... 1,625 2,124 ---------- ---------- 26,088 26,587 Treasury stock, at cost............. (5,545) (5,545) Note receivable from officer's exercise of stock options......... (1,613) (1,613) ----------- ----------- Total shareholders' equity.......... 18,930 19,429 ---------- ---------- Total liabilities and shareholders' equity.............................$ 46,635 $ 40,342 ========== ========== The accompanying notes are an integral part of these financial statements. For the Six Months Ended (Unaudited) ----------------------------- June 30, June 30, 1995 1994 ------------- ------------- Cash flows from operating activities: Net income (loss) from operations........$ (499) $ 156 Adjustments to reconcile net income (loss) from operations to net cash provided by (used for) operating activities: Depreciation and amortization.......... 1,025 1,040 Changes in assets and liabilities: Receivables.......................... (3,157) 3,796 Inventories.......................... (2,776) 668 Other current assets................. (464) (466) Other assets......................... 456 (65) Accounts payable..................... 1,351 (55) Accrued liabilities.................. 683 (644) ---------- ---------- Net cash provided by (used for) operating activities................ (3,381) 4,430 ----------- --------- Cash flows from investing activities: Capital expenditures.................. (1,217) (465) Net cash used for discontinued operation (246) (178) ----------- ---------- Net cash used for investing activities. (1,463) (643) ----------- ---------- Cash flows from financing activities: Net borrowing (repayments) under line-of-credit agreement............ 4,758 (3,360) ----------- --------- Net cash provided by (used for) financing activities................ 4,758 (3,360) ----------- --------- Net increase (decrease) in cash......... (86) 427 Cash at beginning of period............. 197 176 ----------- -------- Cash at end of period...................$ 111 $ 603 =========== ======== The accompanying notes are an integral part of these financial statements. Cobra Electronics Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The Condensed Consolidated Balance Sheet as of December 31, 1994 has been derived from the audited consolidated balance sheet as of that date. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. The results of operations of any interim period are not necessarily indicative of the results that may be expected for a fiscal year. (1) PURCHASE ORDERS AND COMMITMENTS: At June 30, 1995, the Company had outstanding purchase orders with foreign suppliers totaling approximately $25.7 million compared to $25.3 million as of June 30, 1994. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ANALYSIS OF RESULTS OF OPERATIONS Second Quarter 1995 vs. Second Quarter 1994: ------------------------------------------- Sales for the second quarter of 1995 increased to $21.4 million from $21.1 million for the second quarter of 1994. The sales growth was primarily due to increased sales of answering systems, because of new all-digital models that were not available in 1994, and higher international sales of CB radios and other products. Partially offsetting these increases was a decline in cordless phone sales mainly because of volume generated in 1994 from a special promotion with one of the company's major customers. Gross margin increased to 20.1% in the current quarter from 17.3% for the prior year's quarter. The increase reflected improved margins in all of the company's major product lines, except for cordless phones. The improved margins for answering systems and integrated radar/laser detectors were due to new, higher-margin products, while the margin increase for CB radios was due to lower air freight charges in 1995 compared to 1994, when the company had to use more expensive air freight to reduce large back orders for its new line of weather-alert CB radios. Cordless phone margins declined mainly because of lower prices at retail for 10-channel cordless telephones in anticipation of new 25-channel phones due to be introduced by the company and most of its competitors later in the year. Selling, general and administrative expenses were $4.2 million for the second quarter of 1995 compared to $3.4 million for the same period a year ago. Much of the increase was due to a favorable adjustment to the company's allowance for doubtful accounts, which reduced bad debt expense in 1994 and reflected an improvement in the quality of the receivable portfolio and favorable collections experience. The company also incurred higher marketing and product development costs in 1995, in order to build sales volume, and higher payroll costs to strengthen its management staff. Interest expense for the current quarter increased $157,000 compared to the prior year's quarter. A higher level of debt in 1995, because of increased working capital, was the main reason for the increase. Six Months 1995 vs. Six Months 1994 ----------------------------------- Sales for the first six months of 1995 increased 6.2%, to $42.1 million from $39.6 million for the first six months of 1994. This sales growth resulted primarily from higher sales of CB radios and answering systems, due in part to the introduction of a number of new models. Partially offsetting these increases was a decline in cordless phone sales during the second quarter of 1995 as discussed above. Gross margin for the current period increased to 19.2% from 18.3% for the prior year period. The increase reflected improved margins in CB radios, answering systems and integrated radar/laser detectors, partially offset by a drop in cordless telephone margins in the second quarter of 1995 as discussed above. The increase in CB, answering system and detector margins were primarily the result of sales of new, higher-margin products not available in 1994. Selling, general and administrative expenses were $7.9 million for 1995 compared to $6.6 million for 1994. The increase was because of higher marketing and product development costs, incurred to build sales volume, and higher payroll costs to strengthen the company's management staff. In addition, the company had lower bad debt expense in 1994 because of a favorable adjustment to the company's allowance for doubtful accounts, which reflected an improvement in the quality of the receivable portfolio and favorable collections experience. Interest expense for the current quarter increased $253,000 compared to the prior year as a result of higher interest rates and borrowings required to finance increased working capital levels. LIQUIDITY AND CAPITAL RESOURCES Net cash used for operating activities amounted to $3.4 million for the first six months of 1995. Most of this was due to increases in receivables and inventories. The increase in receivables was due to higher sales in the first and second quarters of 1995 and lower collections commensurate with 1994 fourth quarter sales, which were lower than seasonally normal because of temporary product shortages. The increase in inventories was primarily because of new all-digital answering system models, which were in short supply at December 31, 1994. The higher accounts payable balance reflected increased obligations for purchases of inventory from suppliers. Capital expenditures of $1.2 million related primarily to investments in tooling for new products. Net cash required for operating activities and capital expenditures were funded by net borrowing under the company's line-of-credit agreement. At June 30, 1995, the Company had approximately $2.7 million of unused credit line. PART II OTHER INFORMATION Items 1, 2, 3 and 5 Not Applicable. --------------------------------------- Item 4. Submission of Matters to a vote of Security Holders ----------------------------------------------------------- a) The 1995 Annual Meeting of Shareholders was held on May 9, 1995. b) The following persons were elected as Class III directors of the Company to serve until the 1998 Annual Meeting of Shareholders: Name Votes For Votes Withheld ---- --------- -------------- William P. Carmichael 5,092,828 125,287 Carl Korn 5,099,149 118,966 The Class I directors continuing in office until the 1996 Annual Meeting of Shareholders are Jerry Kalov and Harold D. Schwartz. The Class II directors continuing in office until the 1997 Annual Meeting of Shareholders are Samuel B. Horberg and Gerald M. Laures. c) The Cobra Electronics Corporation 1995 Stock Option Plan was approved: Votes For Votes Against Votes Abstaining ------------- ------------------- ---------------------- 4,939,304 194,939 80,713 Because brokers had discretionary authority to vote with respect to each matter submitted to shareholders, no broker non votes were tabulated. d) Not applicable. Item 6. Exhibits and Reports on Form 8-K ----------------------------------------- a) Exhibits: Exhibit No. Description ----------- ----------- 27 Financial data schedule required under Article 5 of Regulation S-X b) During the quarter, the Company filed no Current Reports on Form 8-K SIGNATURE 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. COBRA ELECTRONICS CORPORATION By Gerald M. Laures ---------------------------- Gerald M. Laures Vice President - Finance, and Corporate Secretary Dated: August 14, 1995 EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 3-MOS DEC-31-1995 JUNE 30,1995 111 0 13,437 1,074 18,403 33,787 22,461 15,202 46,635 27,705 0 2,345 0 0 16,585 46,635 21,350 21,350 17,066 17,066 4,152 202 398 (206) 0 (206) 0 0 0 (206) (0.03) (0.03)