-----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, OluYOCyBsAtxt/w47NOE/oDQm79x1ULClqjif9QbtJ0uCTGGGCaynQMBvabz/W32 hmWwdNoASCa/hSbpdPKd5g== 0000350621-97-000009.txt : 19971111 0000350621-97-000009.hdr.sgml : 19971111 ACCESSION NUMBER: 0000350621-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970926 FILED AS OF DATE: 19971110 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: C COR ELECTRONICS INC CENTRAL INDEX KEY: 0000350621 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 240811591 STATE OF INCORPORATION: PA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10726 FILM NUMBER: 97711534 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 09/26/97 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: September 26, 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 - 9,147,494 shares as of November 3, 1997. INDEX C-COR ELECTRONICS, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited). Condensed consolidated balance sheets -- June 27, 1997, and September 26, 1997. Condensed consolidated statements of operations -- thirteen weeks ended September 26, 1997, and September 27, 1996. Condensed consolidated statements of cash flows -- thirteen weeks ended September 26, 1997, and September 27, 1996. Notes to condensed consolidated financial statements -- September 26, 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 September 26, June 27, ASSETS 1997 1997 ----------- ---------- (Unaudited) (Note) (000's omitted) CURRENT ASSETS Cash and cash equivalents $ 471 $ 452 Marketable securities 363 359 Accounts receivable 20,358 19,299 ----------- ---------- 21,192 20,110 ----------- ---------- Inventories: Raw materials 14,476 14,358 Work-in-process 2,559 3,346 Finished goods 2,337 1,436 ----------- ---------- Total inventories 19,372 19,140 ----------- ---------- Deferred taxes 2,839 2,616 Other current assets 1,666 1,893 Net current assets of discontinued operations 280 0 ----------- ---------- TOTAL CURRENT ASSETS 45,349 43,759 ----------- ---------- PROPERTY, PLANT, AND EQUIPMENT, NET 24,959 25,060 INTANGIBLE ASSETS AND OTHER LONG-TERM ASSETS, NET 866 785 Net noncurrent assets of discontinued operations 505 1,515 ----------- ---------- TOTAL ASSETS $ 71,679 $ 71,119 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 18,832 $ 15,461 Line-of-credit 0 3,466 Current portion of long-term debt 839 834 Noncurrent liabilities of discontinued operations 0 1,253 ----------- ---------- TOTAL CURRENT LIABILITIES 19,671 21,014 ----------- ---------- LONG-TERM DEBT, less current portion 6,155 6,367 DEFERRED TAXES 1,370 1,311 OTHER LONG-TERM LIABILITIES 836 749 ----------- ---------- TOTAL LIABILITIES 28,032 29,441 ----------- ---------- SHAREHOLDERS' EQUITY Common Stock, $.10 par; authorized shares 24,000,000; issued shares of 9,642,851 on 09/26/97, and 9,633,435 on 06/27/97. 964 963 Additional paid-in capital 20,031 19,963 Retained earnings 28,513 26,632 Translation adjustment (84) (101) Net unrealized loss on marketable securities (12) (14) Treasury Stock (5,765) (5,765) ----------- ---------- TOTAL SHAREHOLDERS' EQUITY 43,647 41,678 ----------- ---------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 71,679 $ 71,119 =========== ========== Note: The balance sheet at June 27, 1997, has been derived from audited financial statements at that date. See notes to condensed consolidated financial statements.
C-COR ELECTRONICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Thirteen Weeks Ended September 26, September 27, 1997 1996 ----------- ----------- (000's omitted, except per share data) NET SALES $ 37,065 $ 31,844 ----------- ----------- COSTS AND EXPENSES: Cost of sales 28,473 24,647 Selling, general and administrative expenses 3,555 3,472 Research and product development costs 1,773 1,379 Interest expense 77 59 Investment income (6) (31) Foreign exchange gain (21) (10) Other expenses 322 18 ----------- ----------- 34,173 29,534 ----------- ----------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 2,892 2,310 INCOME TAXES 1,011 777 ----------- ----------- INCOME FROM CONTINUING OPERATIONS 1,881 1,533 DISCONTINUED OPERATIONS: Loss from operations of discontinued business segment, less applicable income tax benefit of $377 0 (774) ----------- ----------- NET INCOME $ 1,881 $ 759 =========== =========== NET INCOME (LOSS) PER SHARE: Continuing operations $ 0.20 $ 0.16 Discontinued operations 0.00 (0.08) ----------- ----------- Total $ 0.20 $ 0.08 =========== =========== See notes to condensed consolidated financial statements.
C-COR ELECTRONICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Thirteen Weeks Ended September 26, September 27, 1997 1996 ----------- ----------- (000's omitted) OPERATING ACTIVITIES Net Income $ 1,881 $ 759 Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: Depreciation and amortization 1,623 1,318 Provision for deferred retirement salary plan 87 37 Changes in operating assets and liabilities: Accounts receivable (1,059) 1,921 Inventories (232) (1,705) Other assets 146 292 Accounts payable 1,001 798 Accrued liabilities 2,370 (983) Deferred income taxes (166) 158 Discontinued operations - working capital changes and noncash charges (545) (1,108) NET CASH AND CASH EQUIVALENTS PROVIDED BY ----------- ----------- OPERATING ACTIVITIES 5,106 1,487 ----------- ----------- INVESTING ACTIVITIES Purchase of property, plant and equipment (1,505) (1,060) Purchase of marketable securities 0 (200) Investing activities of discontinued operations 22 (70) NET CASH AND CASH EQUIVALENTS ----------- ----------- USED IN INVESTING ACTIVITIES (1,483) (1,330) ----------- ----------- FINANCING ACTIVITIES Payment of debt and capital lease obligations (207) (208) Proceeds from line-of-credit 12,792 555 Payment of line-of-credit (16,258) (1,702) Tax benefit deriving from exercise and sale of stock option shares 0 60 Issue common stock to employee stock purchase plan 12 27 Proceeds from exercise of stock options 57 64 NET CASH AND CASH EQUIVALENTS USED IN ----------- ----------- FINANCING ACTIVITIES (3,604) (1,204) ----------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 19 (1,047) Cash and cash equivalents at beginning of period 452 1,474 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 471 $ 427 =========== =========== 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 September 26, 1997, and the results of its operations for the thirteen-week period then ended. Operating results for the thirteen-week period are not necessarily indicative of the results that may be expected for the year ending June 26, 1998. 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 27, 1997. 2. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consist of:
September 26, June 27, 1997 1997 ---------------- ---------------- (000's omitted) Accounts payable $ 9,637 $ 8,636 Accrued incentive plan expense 796 0 Accrued vacation expense 1,350 1,358 Accrued salary expense 1,204 569 Accrued payroll and sales tax expense 345 555 Accrued warranty expense 2,366 2,185 Accrued workers compensation self-insurance expense 1,342 1,162 Income taxes payable 940 137 Accrued other 852 859 ---------------- ---------------- $18,832 $15,461 ================ ================
Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations The following discussion addresses the financial condition of the Company as of September 26, 1997, and the results of operations for the thirteen-week period ended September 26, 1997, compared with the same period the prior year. This discussion should be read in conjunction with the Management's Discussion and Analysis section for the fiscal year ended June 27, 1997, included in the Company's Annual Report on Form 10-K. Disclosure Regarding Forward-Looking Statement: 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, anticipated new product development initiatives, and the continued availability of capital resources. Although the Company believes 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, new product development activities, changes in the cost and availability of parts and supplies, fluctuations in warranty costs, 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 September 26, 1997, were $37,065,000, an increase of 16% from the prior year's sales of $31,844,000 for the same period. The increase in sales was primarily attributable to increased demand for RF distribution products by international customers in the cable television (CATV) industry, compared to the same period of the prior year. Domestic sales, as a percentage of total consolidated sales, were 72% for the quarter ended September 26, 1997. This compares to 81% for the same period the prior year. Sales to domestic customers increased 2% during the quarter ended September 26, 1997, compared to the same period of the prior year. In recent periods, the Company has seen a steady demand from domestic CATV operators for hybrid/fiber coax (HFC) distribution equipment. The Company believes the increased demand continues to be driven by network upgrade activity resulting from demands for improved services, affecting not only voice and video requirements, but also demands for high-speed data. International sales, as a percentage of total consolidated sales, were 28% for the quarter ended September 26, 1997. This compares to 19% for the same period the prior year. Sales to international customers increased 78% during the quarter ended September 26, 1997, compared to the same period of the prior year. The increase for the quarter resulted primarily from increased demand in Canada, Asia, and Europe. These markets continue to represent distinct markets for CATV equipment, and, in general, demand can be highly variable. The Company's backlog of sales orders at September 26, 1997, was approximately $37.9 million, up from approximately $34.9 million at the end of the Company's fiscal year ended June 27, 1997. The Company booked approximately $40.1 million of new sales orders during the quarter ended September 26, 1997. Gross profit percentage for the thirteen-week period ended September 26, 1997, was 23.2% versus 22.6% for the same period the prior year. The increase in the gross profit margin for the quarter is primarily a result of changes in customer and product sales mix, and efficiencies resulting from higher production volumes, compared to the same period the prior year. Although pricing pressures continue, the Company has implemented initiatives to mitigate these pressures. The Company has taken steps to lower manufacturing costs and is continuing efforts to improve manufacturing processes in order to enhance efficiency and productivity, and efforts to redesign products to enhance manufacturability and reduce material costs. As one of these initiatives, production began during the quarter at the Company's new manufacturing facility in Tijuana, Mexico. The Company will manufacture the power supply assembly component of it's RF amplifier products at this new facility. Selling, general and administrative expenses for the thirteen-week period ended September 26, 1997, were $3,555,000, an increase of 2% over the prior year's total of $3,472,000 for the same period. The increase is due primarily to an increase in accrued profit incentive expense under the Company's profit sharing plan, compared to the previous year. Research and product development costs for the thirteen-week period ended September 26, 1997, were $1,773,000, an increase of 29% over the prior year's total of $1,379,000 for the same period. The increase is a result of higher personnel costs and increased expenditures for AM fiber optics product development. In addition, the aforementioned increase in accrued profit incentive expense under the Company's profit sharing plan contributed to the increased research and product development expenses, compared to the previous year. Anticipated new product development initiatives are expected to increase research and product development expenses in future periods. Other expense for the thirteen-week period ended September 26, 1997, was $322. This compares to $18 for same period the prior year. The increase is primarily a result of expense accrued in relation to a tentative settlement reached in relation to litigation dating back to March of 1995 that alleged violations of securities and other laws. The effective income tax rate for the thirteen-week period ended September 26, 1997, was 35.0%. This compares to an effective income tax rate of 33.6% for the same period the prior year. The provision for income tax expense reflects changes in the relative profitability related to both U.S. and non-U.S. operations and differences in statuatory rates. Net income for the thirteen-week period ended September 26, 1997, was $1,881,000 or $.20 per share versus $759,000 or $.08 per share for the same period the prior year. Net income for the first quarter of the prior year reflects income from continuing operations of $1,533,000 or $.16 per share, and a loss from discontinued operations of ($774,000) or ($.08) per share (net of applicable tax benefit). Results of Discontinued Operations: On July 10, 1997, the Company announced the discontinuation of its digital fiber optic business segment located in Fremont, California, in a phase-down process expected to span nine months. Anticipated wind-down costs were recorded as a loss on disposal of the discontinued segment in the results of discontinued operations for the Company's prior fiscal year ended June 27, 1997. Thus, no wind-down costs from operations of the discontinued business segment were recorded for the quarter ended September 26, 1997. This compares to a loss from operations of the discontinued business segment for the same period of the prior year of ($774,000), net of applicable tax benefit of ($377,000). Liquidity and Capital Resources The Company's current ratio at September 26, 1997, increased to 2.3 from 2.1 at June 27, 1997. Net cash generated from operating activities increased to $5,106,000 as of September 26, 1997, compared to $1,487,000 for the same period the prior year. Working capital was $25,678,000 as of September 26, 1997, compared to $22,745,000 for the same period of the prior year. Cash used by investing activities was $1,483,000 as of September 26, 1997, compared to $1,330,000 for the same period the prior year. The increase of cash used in investing activities was primarily due to higher purchases of property, plant, and equipment compared to the same period the prior year. Cash totaling $3,604,000 was used in financing activities as of September 26, 1997, compared to $1,204,000 for the same period the prior year. The increase in cash used in financing activities resulted from payments on borrowings related to the Company's line-of-credit. On September 4, 1997, the Company announced that it was beginning another stock repurchase program. The new 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 intends to use 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. To date, no shares were repurchased under this new stock repurchase program adopted in September 1997. In May 1997 the Company completed a stock repurchase program, which it had begun in December 1996, for 500,000 shares. The Company maintains a line-of-credit with a bank, pursuant to which it may borrow the lesser of $23,000,000 or a percentage 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 no borrowings on this line-of-credit as of September 26, 1997. Based upon the Company's analysis of eligible accounts receivable and inventory, approximately $20,442,000 was available to borrow as of September 26, 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 (27) Financial Data Schedule Reports on Form 8-K On July 14, 1997, the Registrant filed a Form 8-K to report that the Registrant announced on July 10, 1997, that it will discontinue its digital fiber optic business segment. 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: November 10, 1997 /s/ CHRIS A. MILLER Chris A. Miller, C.P.A., Vice President-Finance, Secretary & Treasurer (Principal Financial Officer) Date: November 10, 1997 /s/ JOSEPH E. ZAVACKY Controller & Assistant Secretary (Principal Accounting Officer) EX-11 2 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Thirteen Weeks Ended September 26, September 27, 1997 1996 (000's omitted, except per share data) Primary: Weighted average shares outstanding 9,139 9,608 Net effect of dilutive stock options-based on the treasury stock method using average market price 120 195 ---------- ---------- Total 9,259 9,803 Income from continuing operations $ 1,881 $ 1,533 Loss from discontinued operations 0 (774) ---------- ---------- Net income $ 1,881 $ 759 ---------- ---------- Net income (loss) per share Continuing operations $ 0.20 $ 0.16 Discontinued operations 0.00 (0.08) ---------- ---------- Net income per share $ 0.20 $ 0.08 ---------- ---------- Fully Diluted: Weighted average shares outstanding 9,139 9,608 Net effect of dilutive stock options-based on the treasury stock method using the greater of the average market price or the period end market price 160 204 ---------- ---------- Total 9,299 9,812 Income from continuing operations $ 1,881 $ 1,533 Loss from discontinued operations 0 (774) ---------- ---------- Net income $ 1,881 $ 759 ---------- ---------- Net income (loss) per share Continuing operations $ 0.20 $ 0.16 Discontinued operations 0.00 (0.08) ---------- ---------- Net income per share $ 0.20 $ 0.08 ---------- ----------
EX-27 3 FDS 1ST QUARTER ENDING SEPTEMBER 26, 1997
5 1000 3-MOS JUN-26-1998 JUN-28-1997 SEP-26-1997 471 363 20,905 547 19,372 45,349 48,239 23,280 71,679 19,671 0 0 0 964 42,683 71,679 37,065 37,065 28,473 5,328 295 0 77 2,892 1,011 1,881 0 0 0 1,881 .20 .20
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