-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UuWg2dnkHSKjhBg5oSx83CWJmsVYA2qT1HKCrzDpiTdwGGmmdWwEKPggvMYW75BB oPV3zfdAW2GuUY84FyH4Dw== 0000350621-96-000004.txt : 19960620 0000350621-96-000004.hdr.sgml : 19960620 ACCESSION NUMBER: 0000350621-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960329 FILED AS OF DATE: 19960513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: C COR ELECTRONICS INC CENTRAL INDEX KEY: 0000350621 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 240811591 STATE OF INCORPORATION: PA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10726 FILM NUMBER: 96561579 BUSINESS ADDRESS: STREET 1: 60 DECIBEL RD CITY: STATE COLLEGE STATE: PA ZIP: 16801 BUSINESS PHONE: 8142382461 MAIL ADDRESS: STREET 1: 60 DECIBEL ROAD CITY: STATE COLLEGE STATE: PA ZIP: 16801 10-Q 1 10-Q QUARTER ENDING 03/29/96 United States SECURITIES & EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the thirteen-week period ended: March 29, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________________ Commission file number: 0-10726 C-COR ELECTRONICS, INC. (Exact name of registrant as specified in its charter) Pennsylvania 24-0811591 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 60 Decibel Road, State College, PA 16801 (Address of principal executive offices) (Zip Code) (814) 238-2461 (Registrant's telephone number, including area code) 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 ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Common Stock, $.10 Par Value - 9,578,840 shares as of March 29, 1996. INDEX C-COR ELECTRONICS, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited). Consolidated condensed balance sheets -- June 30, 1995 and March 29, 1996 Consolidated condensed statements of income -- thirteen-weeks ended March 29, 1996 and March 24, 1995; thirty-nine weeks ended March 29, 1996 and March 24, 1995 Consolidated condensed statements of cash flows -- thirteen-weeks ended March 29, 1996 and March 24, 1995; thirty-nine weeks ended March 29, 1996 and March 24, 1995 Notes to consolidated condensed financial statements -- March 29, 1996 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. 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. C-COR ELECTRONICS, INC. (Registrant) Date: May 10, 1996 /s/ CHRIS A. MILLER Chris A. Miller, C.P.A., Vice President-Finance, Secretary & Treasurer (Principal Financial Officer) Date: May 10, 1996 /s/ JOSEPH E. ZAVACKY Controller & Assistant Secretary (Principal Accounting Officer) Item 1. Financial Statements
C-COR ELECTRONICS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS ASSETS March 29, June 30, 1996 1995 ---------------- ---------------- (Unaudited) (Note) (000's omitted) CURRENT ASSETS: Cash and cash equivalents $2,435 $1,545 Marketable securities 367 393 Accounts receivable - net 19,118 33,142 ---------------- ---------------- 21,920 35,080 ---------------- ---------------- Inventories: Raw materials 17,085 16,406 Work-in-process 5,396 3,826 Finished goods 4,069 4,751 ---------------- ---------------- Total inventories 26,550 24,983 ---------------- ---------------- Deferred taxes 3,331 2,873 Other current assets 713 1,210 ---------------- ---------------- TOTAL CURRENT ASSETS 52,514 64,146 ---------------- ---------------- PROPERTY, PLANT AND EQUIPMENT - NET 25,283 22,129 INTANGIBLE ASSETS - NET AND OTHER LONG-TERM ASSETS 1,300 1,386 ---------------- ---------------- $79,097 $87,661 ================ ================ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities $12,842 $18,245 Income taxes (recoverable) payable (1,354) 872 Line-of-credit 5,912 20,451 Current portion of long-term debt 832 136 ---------------- ---------------- TOTAL CURRENT LIABILITIES 18,232 39,704 ---------------- ---------------- LONG-TERM DEBT, less current portion 7,406 2,036 DEFERRED TAXES 793 828 OTHER LONG-TERM LIABILITIES 433 368 ---------------- ---------------- 26,864 42,936 ---------------- ---------------- SHAREHOLDERS' EQUITY: Common Stock, $.10 par; authorized shares 24,000,000; issued shares of 9,578,840 on 03/29/96 and 9,450,272 on 06/30/95 958 945 Additional paid-in capital 19,740 16,915 Retained earnings 31,580 26,891 Translation adjustment (23) (7) Net unrealized loss on marketable securities (22) (19) ---------------- ---------------- 52,233 44,725 ---------------- ---------------- $79,097 $87,661 ================ ================ Note: The balance sheet at June 30, 1995 has been derived from the audited financial statements at that date. See notes to consolidated condensed financial statements.
C-COR ELECTRONICS, INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Thirteen Weeks Ended Thirty-Nine Weeks Ended March 29, March 24, March 29, March 24, 1996 1995 1996 1995 --------- --------- --------- --------- NET SALES $36,904 $29,985 $112,201 $87,268 --------- --------- --------- --------- COSTS AND EXPENSES: Cost of sales 27,940 22,459 84,069 62,192 Selling, general and administrative expense 4,390 4,595 13,708 12,595 Research and product development costs 2,612 1,625 6,682 4,538 Interest expense 167 220 868 346 Investment income (59) (21) (80) (53) Foreign exchange gain (20) (66) (167) (97) Other expenses 33 154 106 410 --------- --------- --------- --------- 35,063 28,966 105,186 79,931 --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 1,841 1,019 7,015 7,337 INCOME TAXES 479 333 2,326 2,511 --------- --------- --------- --------- NET INCOME $1,362 $686 $4,689 $4,826 ========= ========= ========= ========= EARNINGS PER SHARE: Primary $0.14 $0.07 $0.47 $0.49 ========= ========= ========= ========= Fully diluted $0.14 $0.07 $0.47 $0.49 ========= ========= ========= ========= See notes to consolidated condensed financial statements.
C-COR ELECTRONICS, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED) Thirteen Weeks Ended Thirty-Nine Weeks Ended March 29, March 24, March 29, March 24, 1996 1995 1996 1995 --------- --------- --------- --------- OPERATING ACTIVITIES Net Income $1,362 $686 $4,689 $4,826 Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities: Depreciation and amortization 1,260 1,257 3,909 3,069 Provision for doubtful accounts 37 74 109 186 Provision for deferred income tax benefit (289) (593) (490) (1,238) Provision for deferred retirement salary plan 26 26 65 72 Tax benefit of premature sales of stock option shares - - 1,790 541 Issue common stock to employee stock purchase plan - 20 46 40 Loss on sale of marketable securities - 7 - 51 Loss (gain) on sale of property, plant and equipment - 22 (2) 21 Changes in operating assets and liabilities: Accounts receivable 4,793 (3,200) 13,915 (5,667) Inventories 666 (2,243) (1,567) (7,582) Other assets 110 (274) 423 (455) Accounts payable (2,956) 1,023 (3,652) 427 Accrued liabilities 201 401 (1,767) 834 Income taxes 293 537 (2,226) (691) NET CASH AND CASH EQUIVALENTS PROVIDED BY --------- --------- --------- --------- (USED IN) OPERATING ACTIVITIES 5,503 (2,257) 15,242 (5,566) INVESTING ACTIVITIES Purchase of property, plant and equipment (2,417) (4,397) (6,903) (12,706) Proceeds from sale of property, plant and equipment - 2 2 4 Proceeds from sale of marketable securities - 405 - 2,287 Proceeds from maturity of marketable securities - 35 20 115 NET CASH AND CASH EQUIVALENTS --------- --------- --------- --------- USED IN INVESTING ACTIVITIES (2,417) (3,955) (6,881) (10,300) FINANCING ACTIVITIES Payment of debt and capital lease obligations (220) (14) (376) (43) Proceeds from long-term debt borrowing 390 - 6,442 - Proceeds from line-of-credit 9,435 13,156 35,974 37,140 Payment of line-of-credit (13,523) (8,490) (50,513) (24,291) Proceeds from exercise of stock options 49 256 1,002 858 NET CASH AND CASH EQUIVALENTS (USED IN) --------- --------- --------- --------- PROVIDED BY FINANCING ACTIVITIES (3,869) 4,908 (7,471) 13,664 INCREASE (DECREASE) IN CASH AND --------- --------- --------- --------- CASH EQUIVALENTS (783) (1,304) 890 (2,202) Cash and equivalents at beginning of period 3,218 463 1,545 1,361 --------- --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,435 $ (841) $2,435 $(841) ========= ========= ========= ========= See notes to consolidated condensed financial statements.
C-COR ELECTRONICS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. The accompanying, unaudited, consolidated condensed financial statements have been prepared in accordance with generally-accepted accounting principles for interim financial information, and in the opinion of management, contain all adjustments (consisting only of normal, recurring adjustments) necessary to fairly present the Company's financial position as of March 29, 1996 and the results of its operations for the thirty-nine week period then ended. Operating results for the thirty-nine week period are not necessarily indicative of the results that may be expected for the year ending June 28, 1996. For further information, refer to financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended June 30, 1995. 2. The Company borrowed the remaining balance available of $390,000 on a low interest loan during the quarter ended March 29, 1996. The loan, in the principal amount of $1,952,000 from the Pennsylvania Industrial Development Authority (PIDA), financed the expansion and renovation at the Company's manufacturing facility in State College, Pennsylvania. The loan has an interest rate of 2%, contingent upon meeting certain job creation commitments. Monthly payments of principal and interest are required through the year 2010 (fifteen years). 3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consist of:
March 29, June 30, 1996 1995 --------- -------- (000's omitted) Accounts payable $ 5,634 $ 9,286 Accrued incentive plan expense 324 2,416 Accrued vacation expense 1,339 1,295 Accrued salary expense 1,346 819 Accrued warranty expense 1,961 1,754 Accrued workers compensation self insurance expense 963 553 Accrued other 1,275 2,122 --------- -------- $12,842 $18,245 ========= ========
Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations General The following discussion addresses the financial condition of the Company as of March 29, 1996 and the results of operations for the thirteen-week and thirty-nine week period ended March 29, 1996, compared with the same periods last year. This discussion should be read in conjunction with the Management's Discussion and Analysis section for the fiscal year ended June 30, 1995 included in the Company's Annual Report on Form 10-K. Some of the information presented in this report constitutes forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors which could cause actual results to differ from expectations include the timing of orders received from customers, the gain or loss of significant customers, changes in the mix of products sold, changes in the cost and availability of parts and supplies, regulatory changes affecting the telecommunications industry, in general, and the Company's operations, in particular, competition and changes in domestic and international demand for the Company's products and other factors which may impact operations and manufacturing. For additional information concerning these and other important factors which may cause the Company's actual results to differ materially from expectations and underlying assumptions, please refer to the Company's reports filed on form 10-K and other reports filed with the Securities and Exchange Commission. Results of Operations Net sales for the thirteen-week period ended March 29, 1996 were $36,904,000, an increase of 23.1% from last year's sales of $29,985,000 for the same period. Net sales for the thirty-nine week period ended March 29, 1996 were $112,201,000, an increase of 28.6% over last year's sales of $87,268,000 for the same period. The increased sales for the third quarter and year-to-date versus the same periods last year are attributable to increased sales of RF and AM Fiber Optic distribution products, primarily to customers in the cable television (CATV) industry. International sales as a percentage of total consolidated sales were 43% for the quarter ended March 29, 1996 and 46% for the period year-to-date. This compares to 41% for the quarter and 36% year-to-date for the same periods in the prior year. The increase is the result of expanded sales and marketing efforts to pursue additional international sales primarily in Canada, Asia, Europe, and Latin America. C-COR's backlog at March 29, 1996 was approximately $37 million compared with $55 million at June 30, 1995. The long awaited passage of the telecommunications reform legislation became a reality during the quarter. Although passage of this legislation may enhance competition and reduce regulatory uncertainty, no significant impact on new order bookings materialized during the quarter. C-COR's primary customers are CATV multiple system operators (MSO's) and telephone companies (telcos). Legislation, as well as other factors, has prompted a recent series of consolidation and merger activities in the telecommunications industry. MSO's continue to consolidate with each other. More recently, two planned mergers were announced by Regional Bell Operating Companies (RBOCs). Nynex announced a merger with Bell Atlantic. Similarly, Pacific Telesis announced a merger with Southwest Bell. In a move that further blurred the line between C-COR's MSO and telco markets, U.S. West purchased Continental Cablevision, Inc. The Company believes that the uncertainty caused by the new legislation and aforementioned business combination activity has resulted in delays, as customers develop new construction strategies and capital equipment budgets. The Company is positioning itself to introduce new products to meet future anticipated demand for hybrid-fiber-coax (HFC) networks in both the domestic and international markets. C-COR's gross profit percentage for the third quarter of fiscal year 1996 was 24.3% versus 25.1% for the same period of the prior year. The gross profit percentage for the thirty-nine week period ended March 29, 1996 was 25.1% versus 28.7% for the same period of the prior fiscal year. The reduction in gross margin is a result of several factors. Pricing pressures and product mix contributed to lower gross margin results for the quarter and year-to-date compared to the previous year. In addition, production and fixed manufacturing costs increased over the prior year as a result of capacity expansion to meet anticipated higher production volumes. The Company expects pricing pressures to continue, and is actively pursuing and implementing process improvements and other programs to increase productivity and reduce costs throughout the Company with the objective of mitigating the effect of these pressures. Selling, general and administrative expense for the third quarter of fiscal year 1996 was $4,390,000, a decrease of 4.5% over last year's total of $4,595,000. The reduction for the quarter is primarily the result of higher personnel procurement costs incurred in the third quarter of the previous year as a result of the Company adding personnel. In addition, in January 1995, start up costs were incurred to establish a regional sales office in Denver, Colorado. Selling, general and administrative expense for the first three quarters of fiscal year 1996 was $13,708,000, an increase of 8.8% over last year's expense of $12,595,000 for the same period. This increase, as mentioned above, is primarily attributable to the expansion of personnel and increased marketing activities in the domestic and international markets. The regional sales office mentioned above is reflected for a full three quarters of fiscal year 1996, where in the previous fiscal year these costs were only included beginning in the third quarter. Research and product development costs for the third quarter of fiscal year 1996 were $2,612,000, an increase of 60.7% over last year's total of $1,625,000 for the same period. Research and product development costs for the first three quarters of fiscal year 1996 totaled $6,682,000, an increase of 47.2% over last year's figure of $4,538,000 for the same period. The increases are due primarily to new product development related to C-COR's line of digital fiber optic products. Increased levels of spending for RF and AM fiber optic development continued for the quarter and year-to-date compared to the previous year. Interest expense for the first nine months of fiscal year 1996 was $868,000. This represents an increase over last year's total for the same period of $346,000. This increase is due primarily to an increase in the level of outstanding borrowings during the three quarters of fiscal year 1996 on the Company's line-of-credit for expansion of manufacturing capabilities and upgrade to its facilities. Proceeds from long-term permanent financing, at a lower interest rate, was used to pay down a portion of the outstanding balance on the Company's line-of-credit. The effective income tax rate for the thirty-nine weeks ended March 29, 1996 is 33.2% compared to 34.2% for the same period the previous year. The provision for income taxes relates to both U.S. and non-U.S. operations. The reduction is the result of tax benefits arising out of increased foreign sales activity and changes in the relative level of profitability of U.S. and non-U.S. operations. Liquidity and Sources of Capital Cash and cash equivalents as of March 29, 1996 totaled $2,435,000. The principal source of cash in the third quarter of fiscal year 1996 was from operating activities which generated $5,503,000, as a result of improved collections on accounts receivable and a reduction in inventories. The Company's current ratio increased to 2.9 at March 29, 1996, up from 1.6 at June 30, 1995. Accounts receivable-net decreased to $19,118,000 as of March 29, 1996, as compared to $33,142,000 at June 30, 1995. The decrease is attributed primarily to the fact that sales in the fourth quarter of fiscal year 1995 were $50,172,000, compared to sales during the third quarter of fiscal year 1996 of $36,904,000, and improved collections. Inventory levels decreased for the quarter ended March 29, 1996 compared to the previous quarter, but were higher compared to the balance at June 30, 1995. As of March 29, 1996, C-COR had a balance of recoverable income taxes that is derived primarily from prepayments of estimated taxes and a tax benefit derived from the exercise and sale by employees of stock option shares. Capital expenditures for purchases of property, plant, and equipment for the thirteen-week period ended March 29, 1996 were $2,417,000, compared to last year's purchases of $4,397,000 for the same period. For the thirty-nine week period ended March 29, 1996, purchases were $6,903,000, a decrease over last year's purchases of $12,706,000 for the same period. Lower capital expenditures in the current year were the result of the completion of expansion of facilities and equipment at C-COR's manufacturing facilities in State College and Reedsville, Pennsylvania. Accounts payable and accrued liabilities decreased as of March 29, 1996 to $12,842,000. This is a decrease of 29.6% from the balance as of June 30, 1995. Accounts payable declined as a result of reduced inventory purchases during the period. C-COR's accrued incentive plan expense also declined due to payments under the plan since June 30, 1995. For a further breakdown in the changes, see notes to consolidated condensed financial statements. The Company borrowed the remaining balance available of $390,000 on a low interest loan during the quarter ended March 29, 1996. The loan, in the principal amount of $1,952,000 from the Pennsylvania Industrial Development Authority (PIDA), financed the expansion and renovation at the Company's manufacturing facility in State College, Pennsylvania. The loan has an interest rate of 2%, contingent upon meeting certain job creation commitments. Monthly payments of principal and interest are required through the year 2010 (fifteen years). The Company maintains a line-of-credit with a bank which can be drawn upon up to a maximum of $23,000,000, contingent on sufficient collateral in accounts receivable as outlined in a revolving credit agreement. The Company had a balance of $5,912,000 drawn on this line-of-credit at the end of the third quarter of fiscal year 1996, down $14,539,000 since the end of fiscal year 1995. Proceeds from long-term permanent financing and operating cash flows were used to pay down a portion of the short-term borrowings during fiscal year 1996. As of April 26, 1996, the outstanding balance on the line-of-credit was $4,500,000, and, based on management's analysis of eligible accounts receivable, $12,752,000 was available. Management believes that operating cash flow as well as the aforementioned financing source, will adequately provide for all cash requirements for the immediate future subject to requirements that additional growth or strategic development might dictate. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. The following exhibit is included herein: (11) Statement re: computation of earnings per share The Company did not file any reports on Form 8-K during the thirteen-week period ended March 29, 1996. EX-11 2 COMPUTATION OF EARNINGS PER SHARE
C-COR ELECTRONICS, INC. COMPUTATION OF EARNINGS PER SHARE Thirteen Weeks Ended Thirty-Nine Weeks Ended March 29, March 24, March 29, March 24, 1996 1995 1996 1995 --------------- --------------- -------------- --------------- (000's omitted, except per share data) PRIMARY Weighted Average Shares 9,577 9,370 9,543 9,297 Outstanding Net effect of dilutive stock options-based on the treasury stock method using average market price 248 500 332 565 --------------- --------------- -------------- --------------- Total 9,825 9,870 9,875 9,862 =============== =============== ============== =============== Net income $1,362 $686 $4,689 $4,826 =============== =============== ============== =============== Net income per share $0.14 $0.07 $0.47 $0.49 =============== =============== ============== =============== FULLY DILUTED Weighted Average Shares Outstanding 9,577 9,370 9,543 9,297 Net effect of dilutive stock options-based on the treasury stock method using the greater of the average market price or period end market price 248 500 332 565 --------------- --------------- -------------- --------------- Total 9,825 9,870 9,875 9,862 =============== =============== ============== =============== Net income $1,362 $686 $4,689 $4,826 =============== =============== ============== =============== Net income per share $0.14 $0.07 $0.47 $0.49 =============== =============== ============== ===============
EX-27 3 FDS 3RD QUARTER ENDING MARCH 29, 1996
5 1000 9-MOS JUN-28-1996 JUL-01-1995 MAR-29-1996 2,435 367 19,709 591 26,550 52,514 42,839 17,556 79,097 18,232 0 958 0 0 51,275 79,097 112,201 112,201 84,069 20,390 (141) 0 868 7,015 2,326 4,689 0 0 0 4,689 0.47 0.47
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