-----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, NJxd+nAgsYvUb6EjKSxDFay6Z0v4aYVKM5OnEIc1M4cXnZAl9rqw3GtU7XXCmSpT BVxi6OJiE9qIT22LDHAU/w== 0000350621-97-000003.txt : 19970520 0000350621-97-000003.hdr.sgml : 19970520 ACCESSION NUMBER: 0000350621-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970328 FILED AS OF DATE: 19970512 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: 97600542 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 03/28/97 United States SECURITIES AND 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 28, 1997 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 practicable date. Common Stock, $.10 Par Value - 9,344,737 shares as of May 06, 1997. INDEX C-COR ELECTRONICS, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited). Condensed consolidated balance sheets -- June 28, 1996, and March 28, 1997. Condensed consolidated statements of income -- thirteen weeks ended March 28, 1997, and March 29, 1996; thirty-nine weeks ended March 28, 1997, and March 29, 1996. Condensed consolidated statements of cash flows -- thirteen weeks ended March 28, 1997, and March 29, 1996; thirty-nine weeks ended March 28, 1997, and March 29, 1996. Notes to condensed consolidated financial statements -- March 28, 1997. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. Item 1. Financial Statements
C-COR ELECTRONICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 28, June 28, ASSETS 1997 1996 ----------- ---------- (Unaudited) (Note) (000's omitted) CURRENT ASSETS Cash and cash equivalents $ 1,194 $ 1,474 Marketable securities 367 364 Accounts receivable 18,718 21,465 ----------- ---------- 20,279 23,303 ----------- ---------- Inventories: Raw materials 17,620 14,508 Work-in-process 4,411 4,349 Finished goods 3,312 4,049 ----------- ---------- Total inventories 25,343 22,906 ----------- ---------- Deferred taxes 3,279 3,304 Other current assets 1,955 1,964 ----------- ---------- TOTAL CURRENT ASSETS 50,856 51,477 ----------- ---------- PROPERTY, PLANT, AND EQUIPMENT, NET 26,207 25,617 INTANGIBLE ASSETS AND OTHER LONG-TERM ASSETS, NET 1,380 1,313 ----------- ---------- TOTAL ASSETS $ 78,443 $ 78,407 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 15,155 $ 13,918 Income taxes (recoverable) payable (974) 131 Line-of-credit 2,808 1,147 Current portion of long-term debt 829 829 ----------- ---------- TOTAL CURRENT LIABILITIES 17,818 16,025 ----------- ---------- LONG-TERM DEBT, less current portion 6,577 7,201 DEFERRED TAXES 1,540 1,367 OTHER LONG-TERM LIABILITIES 746 497 ----------- ---------- TOTAL LIABILITIES 26,681 25,090 ----------- ---------- SHAREHOLDERS' EQUITY Common Stock, $.10 par; authorized shares 24,000,000; issued shares of 9,626,589 on 03/28/97, and 9,602,528 on 06/28/96 963 960 Additional paid-in capital 19,896 19,602 Retained earnings 34,069 32,810 Translation adjustment (88) (34) Net unrealized loss on marketable securities (16) (21) Treasury Stock (3,062) 0 ----------- ---------- TOTAL SHAREHOLDERS' EQUITY 51,762 53,317 ----------- ---------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 78,443 $ 78,407 =========== ========== Note: The balance sheet at June 28, 1996, has been derived from the audited financial statements at that date. See notes to condensed consolidated financial statements.
C-COR ELECTRONICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Thirteen Weeks Ended Thirty-Nine Weeks Ended March 28, March 29, March 28, March 29, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- (000's omitted, except per share data) NET SALES $ 33,718 $ 36,904 $ 102,646 $ 112,201 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Cost of sales 27,561 27,940 81,168 84,069 Selling, general and administrative expenses 4,481 4,390 12,916 13,708 Research and product development costs 2,438 2,612 7,551 6,682 Interest expense 59 167 175 868 Investment income (31) (59) (96) (80) Foreign exchange gain (10) (20) (37) (167) Other (income) expenses (63) 33 65 106 ----------- ----------- ----------- ----------- 34,435 35,063 101,742 105,186 ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES (717) 1,841 904 7,015 INCOME TAX (BENEFIT) EXPENSE (881) 479 (355) 2,326 ----------- ----------- ----------- ----------- NET INCOME $ 164 $ 1,362 $ 1,259 $ 4,689 =========== =========== =========== =========== NET INCOME PER SHARE: Primary $ 0.02 $ 0.14 $ 0.13 $ 0.47 =========== =========== =========== =========== Fully diluted $ 0.02 $ 0.14 $ 0.13 $ 0.47 =========== =========== =========== =========== See notes to condensed consolidated financial statements.
C-COR ELECTRONICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Thirteen Weeks Ended Thirty-Nine Weeks Ended March 28, March 29, March 28, March 29, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- (000's omitted) OPERATING ACTIVITIES Net Income $ 164 $ 1,362 $ 1,259 $ 4,689 Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: Depreciation and amortization 1,498 1,260 4,536 3,909 Provision for deferred retirement salary plan 103 26 249 65 Loss (gain) on sale of property, plant and equipment (21) - 25 (2) Changes in operating assets and liabilities: Accounts receivable (624) 4,830 2,747 14,024 Inventories 482 666 (2,437) (1,567) Other assets (474) 110 (218) 423 Accounts payable 228 (2,956) 1,497 (3,652) Accrued liabilities 541 201 (260) (1,767) Income taxes (248) 293 (1,106) (2,226) Deferred income taxes (314) (289) 195 (490) NET CASH AND CASH EQUIVALENTS PROVIDED BY ----------- ----------- ----------- ----------- OPERATING ACTIVITIES 1,335 5,503 6,487 13,406 ----------- ----------- ----------- ----------- INVESTING ACTIVITIES Purchase of property, plant and equipment (1,885) (2,417) (5,056) (6,903) Proceeds from sale of property, plant and equipment - - 12 2 Purchase of marketable securities - - (200) - Proceeds from sale of marketable securities 200 - 205 - Proceeds from maturity of marketable securities - - - 20 NET CASH AND CASH EQUIVALENTS ----------- ----------- ----------- ----------- (USED IN) INVESTING ACTIVITIES (1,685) (2,417) (5,039) (6,881) ----------- ----------- ----------- ----------- FINANCING ACTIVITIES Payment of debt and capital lease obligations (205) (220) (624) (376) Proceeds from long-term debt borrowing - 390 - 6,442 Proceeds from line-of-credit 3,685 9,435 4,240 35,974 Payment of line-of-credit (877) (13,523) (2,579) (50,513) Tax benefit deriving from exercise and sale of stock option shares - - 71 1,790 Issue common stock to employee stock purchase plan 33 - 78 46 Proceeds from exercise of stock options 53 49 148 1,002 Purchase of treasury stock (3,062) - (3,062) - NET CASH AND CASH EQUIVALENTS (USED IN) ----------- ----------- ----------- ----------- FINANCING ACTIVITIES (373) (3,869) (1,728) (5,635) ----------- ----------- ----------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (723) (783) (280) 890 Cash and cash equivalents at beginning of period 1,917 3,218 1,474 1,545 ----------- ----------- ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,194 $ 2,435 $ 1,194 $ 2,435 =========== =========== =========== =========== See notes to condensed consolidated financial statements.
C-COR ELECTRONICS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited condensed consolidated 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 28, 1997, and the results of its operations for the thirteen-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 27, 1997. For further information refer to financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ending June 28, 1996. 2. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consist of:
March 28, June 28, 1997 1996 ---------------- ---------------- (000's omitted) Accounts payable $ 8,224 $ 6,727 Accrued incentive plan expense - 318 Accrued vacation expense 1,496 1,532 Accrued salary expense 1,316 752 Accrued salary and sales tax expense 718 942 Accrued warranty expense 1,898 1,772 Accrued workers compensation self-insurance expense 829 704 Accrued other 674 1,171 ---------------- ---------------- $15,155 $13,918 ================ ================
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 28, 1997, and the results of operations for the thirteen-week and thirty-nine-week periods ended March 28, 1997, compared with the same periods the prior year. This discussion should be read in conjunction with the Management's Discussion and Analysis section for the fiscal year ended June 28, 1996, 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, including, without limitation, continuation of increased domestic spending for network upgrades, the continuation of competitive pricing pressures, financial impact that restructuring plans will have on cost reductions and improvements in operating efficiencies, and the continued availability of capital resources. 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 28, 1997, were $33,718,000, a decrease of 9% from the prior year's sales of $36,904,000 for the same period. Net sales for the thirty-nine-week period ended March 28, 1997, were $102,646,000, a decrease of 9% from the prior year's sales of $112,201,000 for the same period. The decrease in sales was primarily attributable to reduced demand for RF distribution products by international customers in the cable television (CATV) industry. Domestic sales, as a percentage of total consolidated sales, were 82% for the quarter ended March 28, 1997, and 78% for the period year-to-date. This compares to 57% for the quarter and 54% year-to-date for the same periods the prior year. Sales to domestic customers increased 31% during the quarter ended March 28, 1997, and 32% for the period year-to-date, compared to the same periods the prior year. Domestic spending on network upgrades has continued to remain strong. The increased demand is the result of expanded bandwidth requirements by new and existing customers. During the quarter, shipments increased for the Company's new 800 Series and 900 Series FlexNet products. International sales, as a percentage of total consolidated sales, were 18% for the quarter ended March 28, 1997, and 22% for the period year-to-date. This compares to 43% for the quarter and 46% year-to-date for the same periods of the prior year. Sales to international customers decreased 61% during the quarter ended March 28, 1997, and 56% for the period year-to-date, compared to the same periods of the prior year. The decrease for the quarter and year-to-date periods resulted primarily from reduced demand by a significant customer in Canada and customers in Asia and Latin America. Countries in the aforementioned areas continue to represent distinct markets for CATV equipment, and, in general, demand can be highly variable. The Company's backlog of sales orders at March 28, 1997, was approximately $36.4 million, up from $29.9 million at the end of the previous quarter. Sales order bookings were $40.2 million during the third quarter, the second highest quarterly bookings in the Company's history. It is uncertain whether the Company will sustain this level of order activity for future periods. The Company's book-to-bill ratio for the past three quarters has been above 1. Gross profit percentage for the thirteen-week period ended March 28, 1997, was 18.3% versus 24.3% for the same period the prior year. Gross profit percentage for the thirty-nine-week period ended March 28, 1997, was 20.9% versus 25.1% for the same period the prior year. The reduction in gross profit margin for the quarter and year-to-date periods is primarily a result of changes in product and customer sales mix, compared to the same periods the prior year. In addition, excess capacity among suppliers continues to drive competitive pricing pressures, particularly on RF coaxial cable amplifiers. The Company expects pricing pressures to continue, but is actively working on several initiatives with the objective of mitigating the effect of these pressures. The Company is implementing an aggressive corporate restructuring plan designed to increase gross margins and improve operating efficiencies. As part of this plan, the Company anticipates transferring the manufacturing of the power supply assembly component of its RF amplifiers to Mexico in the summer of 1997. Several other initiatives are currently underway that are focused on reducing costs and increasing plant utilization. Selling, general and administrative expense for the quarter ended March 28, 1997, was $4,481,000, an increase of 2% from the prior year's total of $4,390,000. The increase is a result of higher outside service expenses and marketing costs incurred in the quarter compared to the previous year. Selling, general and administrative expense for the thirty-nine-week period ended March 28, 1997, was $12,916,000, a decrease of 6% from the prior year's expense of $13,708,000 for the same period. The reduction, year-to-date, is primarily the result of various ongoing cost reduction initiatives. Going forward, as part of the Company's restructuring plan, a reconfiguration of the Company's worldwide sales territories and consolidation of the Company's sales forces will be implemented. These changes are designed to improve operational efficiencies and will allow the Company to continue to provide high-quality products and services to the global communications marketplace. Research and product development costs for the quarter ended March 28, 1997, were $2,438,000, a decrease of 7% from the prior year's total of $2,612,000 for the same period. The decrease was primarily due to reductions in digital fiber optic product development expense for the quarter, compared to the prior year. Research and product development costs for the thirty-nine-week period ended March 28, 1997, were $7,551,000, an increase of 13% over the prior year's total of $6,682,000 for the same period. The increase is due primarily to the continued expanded funding of AM fiber optics and Network Management product development. The restructuring plan the Company is implementing will impact various areas of the organization. Costs related to the restructuring plan will be reflected in the fourth quarter results for fiscal year 1997, but the amount is uncertain at this time. Interest expense for the quarter ended March 28, 1997, was $59,000, a decrease of 65% from the prior year's total of $167,000 for the same period. Interest expense for the thirty-nine-week period ended March 28, 1997, was $175,000, a decrease of 80% from the prior year's total of $868,000 for the same period. These decreases for the quarter and year-to-date periods are due to a reduced level of outstanding borrowings on the Company's line-of-credit during the periods. An income tax benefit of $881,000 was recorded for the quarter. Approximately $593,000 of this tax benefit resulted from reassessment of the Company's foreign sales transactions for the prior three years and optimizing the tax benefits deriving from its Foreign Sales Corporation (FSC). FSC tax returns from the previous three years were amended and the resultant tax benefit was reflected in the third quarter results. The reduction in the effective tax rate for the year-to-date period includes the adjustment discussed above and reflects changes in the relative level of profitability of U.S. and non-U.S. operations. Liquidity and Sources of Capital Cash and cash equivalents totaled $1,194,000 as of March 28, 1997, compared to $1,474,000 at June 28, 1996. The Company's current ratio was 2.9 at March 28, 1997, compared to 3.2 at June 28, 1996. Cash and cash equivalents provided by operations totaled $1,335,000 for the quarter ended March 28, 1997. Cash generated from operations was used primarily to finance acquisitions of property, plant and equipment and repurchase treasury stock. The Company's principal sources of liquidity are borrowings under its line-of-credit facility and from internally-generated funds. The Company continues to maintain sufficient liquidity to fund its operations under current business conditions. Accounts receivables decreased to $18,718,000 as of March 28, 1997, compared to $21,465,000 at June 28, 1996, due to lower sales in March 1997 compared to June 1996. Inventory as of March 28, 1997, was $25,343,000, down $482,000 from the previous quarter, but up $2,437,000 over the balance at June 28, 1996, primarily due to higher levels of raw material inventories. As of March 28, 1997, the Company had repurchased 239,900 shares of its common stock for $3,062,000, under a stock repurchase program adopted in December 1996. The program allows the Company to repurchase up to 500,000 shares of C-COR common stock. The shares may be purchased from time to time in the open market through block or privately negotiated transactions, or otherwise. The Company used its currently available capital resources to fund the purchases. The repurchased stock is expected to be held by the Company as treasury stock to be used to meet the Company's obligations under its present and future stock option plans and for other corporate purposes. The Company maintains a line-of-credit with a bank pursuant to which it may borrow the lesser of $23,000,000 or percentages of eligible accounts receivable and inventory. The borrowings are collateralized by accounts receivable and inventory. The line-of-credit is committed through October 31, 1997, and the Company anticipates renewing this line-of-credit annually. The Company had borrowings of $2,808,000 on this line-of-credit as of March 28, 1997. This compares to an outstanding balance of $1,147,000 at the end of the Company's fiscal year ended June 28, 1996. Based upon the Company's analysis of eligible accounts receivable and inventory, approximately $16,383,000 was available to borrow at March 28, 1997. Management believes that operating cash flow, as well as the aforementioned financing source, will adequately provide for all cash requirements for the foreseeable 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 28, 1997. 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 12, 1997 /s/ CHRIS A. MILLER Chris A. Miller, C.P.A., Vice President-Finance, Secretary & Treasurer (Principal Financial Officer) Date: May 12, 1997 /s/ JOSEPH E. ZAVACKY Controller & Assistant Secretary (Principal Accounting Officer) EX-11 2 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Thirteen Weeks Ended Thirty-Nine Weeks Ended March 28, March 29, March 28, March 29, 1997 1996 1997 1996 (000's omitted, except per share data) PRIMARY Weighted Average Shares Outstanding 9,548 9,577 9,590 9,543 Net effect of dilutive stock options-based on the treasury stock method using average market price 158 248 157 332 -------- ------- ------- ------- Total 9,706 9,825 9,747 9,875 Net income $ 164 $ 1,362 $ 1,259 $ 4,689 Net income per share $ 0.02 $ 0.14 $ 0.13 $ 0.47 FULLY DILUTED Weighted Average Shares Outstanding 9,548 9,577 9,590 9,543 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 158 248 157 332 -------- ------- ------- ------- Total 9,706 9,825 9,747 9,875 Net income $ 164 $ 1,362 $ 1,259 $ 4,689 Net income per share $ 0.02 $ 0.14 $ 0.13 $ 0.47
EX-27 3 FDS 3RD QUARTER ENDING MARCH 28, 1997
5 1000 3-MOS JUN-27-1997 DEC-28-1996 MAR-28-1997 1,194 367 19,004 286 25,343 50,856 48,913 22,706 78,443 17,818 0 0 0 963 50,799 78,443 33,718 33,718 27,561 6,919 (104) 0 59 (717) (881) 164 0 0 0 164 .02 .02
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