-----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, NCXJbO5/vcAx9AyyatNMMMotCSvPfP8Xd8NBAl5PN6eL2TbkxPSirARbX7qXYYM2 Oq5QeNVyb7Av6Nx51v0ClQ== 0000950124-96-002160.txt : 19960515 0000950124-96-002160.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950124-96-002160 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CODE ALARM INC CENTRAL INDEX KEY: 0000821509 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 382334698 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16441 FILM NUMBER: 96563893 BUSINESS ADDRESS: STREET 1: 950 E WHITCOMB CITY: MADISON HEIGHTS STATE: MI ZIP: 48071 BUSINESS PHONE: 8105839620 MAIL ADDRESS: STREET 1: 950 E WHITCOMB CITY: MADISON HEIGHTS STATE: MI ZIP: 48071 10-Q 1 FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 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: 016441 ------ CODE-ALARM, INC. ---------------- (Exact name of registrant as specified in its charter) MICHIGAN -------- (State or other jurisdiction of incorporation or Organization) 38-2334698 ------------------ (I.R.S. Employer Identification No.) 950 EAST WHITCOMB, MADISON HEIGHTS, MICHIGAN 48071 ------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code): 810-583-9620 ------------ 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 ---- ---- The number of shares outstanding of the registrant's common stock, without par value, as of May 14, 1996 is 2,320,361. 2 INDEX
Page No. -------- Part I. - Financial Information 3 Consolidated Condensed Balance Sheets - As of March 31, 1996 (Unaudited) and December 31, 1995 3 Consolidated Condensed Statements of Operations (Unaudited) - First Quarter Ended March 31, 1996 and March 31, 1995 4 Consolidated Condensed Statements of Cash Flows (Unaudited) - First Quarter Ended March 31, 1996 and March 31, 1995 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Financial 7 Condition and Results of Operations Part II. - Other Information 8
2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. CODE-ALARM, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands)
March 31, December 31, 1996 1995 ASSETS (Unaudited) ----------- ------------ Cash and cash equivalents $ 11 $ 416 Accounts receivable (less allowance for doubtful accounts of $470,000 and $667,000, respectively) 11,620 10,592 Inventories 13,154 14,811 Refundable income taxes 992 825 Deferred income taxes 485 560 Other 1,273 1,338 ------- ------- Total current assets 27,535 28,542 Property and equipment, net of accumulated depreciation 4,208 4,500 Excess of cost over net assets acquired, net 4,551 4,574 Other intangibles, net 765 816 Deferred income taxes 1,193 1,566 Other assets 2,387 2,045 ------- ------- Total assets $40,639 $42,043 ======= ======= LIABILITIES & SHAREHOLDERS' EQUITY Current portion of long-term debt $ 3,486 $ 3,921 Accounts payable 10,630 12,362 Accrued expenses 2,114 1,832 Income tax payable 43 46 ------- ------- Total current liabilities 16,273 18,161 Long term debt 9,998 9,545 Reserve for litigation 5,806 5,839 ------- ------- Total liabilities 32,077 33,545 Shareholders' equity: Common stock 12,210 12,210 Foreign currency translation adjustment 69 54 (Accumulated deficit) (3,717) (3,766) ------- ------- Total shareholders' equity 8,562 8,498 ------- ------- Total liabilities and shareholders' equity $40,639 $42,043 ======= =======
See accompanying notes to consolidated condensed financial statements. 3 4 CODE-ALARM, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
First Quarter Ended March 31 1996 1995 -------------------- Net sales $16,596 $17,159 Cost of sales 10,674 11,218 ------- ------- Gross profit 5,922 5,941 Operating expenses: Sales and marketing 2,504 3,001 Engineering 856 703 General and administrative 2,037 2,145 ------- ------- 5,397 5,849 ------- ------- Income from operations 525 92 Other income (expense): Interest expense (418) (297) Litigation expense (1,055) Other expense (2) (46) ------- ------- Income (loss) before income taxes 105 (1,306) Income taxes (benefits) 56 (236) ------- ------- Net income (loss) $ 49 $(1,070) ======= ======= Net income (loss) per common share $ 0.02 $ (0.46) ======= ======= Weighted average number of common shares outstanding 2,320 2,320 ======= =======
See accompanying notes to consolidated condensed financial statements. 4 5 CODE-ALARM, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) First Quarter Ended March 31 1996 1995 ---- ---- Cash flows from operating activities $ (440) $ (1,412) Cash flows from investing activities: Capital expenditures (87) (427) Payments for intangible assets (33) Cash flows from financing activities: Net repayments of long-term debt (521) 212 Net borrowings on credit facility 676 1,544 Issuance of stock options 1 ------ -------- Net change in cash and cash equivalents (405) (82) Cash and cash equivalents, beginning of period 416 107 ------ -------- Cash and cash equivalents, end of period $ 11 $ 25 ====== ======== SUPPLEMEMTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the quarter for: Interest $ 237 $ 85 ====== ======== Income taxes $ 0 $ 0 ====== ======== See accompanying notes to consolidated condensed financial statements. 5 6 CODE-ALARM, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1) The consolidated condensed interim financial statements reflect all adjustments which in the opinion of management are necessary to fairly state results for the interim periods presented. Except for the $1.1 million recorded in connection with the patent infringement suit in the first quarter of 1995, all adjustments are of a normal and recurring nature. Results of operations for the interim periods presented are not necessarily indicative of results to be expected for the fiscal year. 2) The financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. 3) Inventories consist of the following:
March 31, December 31, 1996 1995 (Unaudited) ----------- ------------ Raw materials $ 6,020 $ 7,089 Work in process 195 135 Finished goods 6,939 7,587 -------- --------- $ 13,154 $ 14,811 ======== =========
6 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations: Code-Alarm's consolidated net sales decreased $563,000, or 3.3%, in the first quarter of 1996 as compared to the first quarter of 1995. The decline in sales was due primarily to the elimination of several product lines and softness in the European market following a general strike in France, offset by an increase in sales to North American original equipment manufacturers. Consolidated gross profit decreased $19,000, or 0.3%, in the first quarter of 1996 as compared to the first quarter of 1995. Consolidated gross profit, as a percentage of consolidated net sales for the first quarter of 1996 was 35.7%, as compared to 34.6% for the same quarter in 1995. The increased gross margin percentage was due to productivity improvements and cost containment programs. Consolidated operating expenses decreased $452,000, or 7.7%, in the first quarter of 1996 as compared to the first quarter of 1995. Consolidated operating expenses, as a percentage of consolidated net sales, for the first quarter of 1996 were 32.5%, as compared to 34.1% for the first quarter of 1995. The decrease in operating expenses were also due to the company's continued emphasis on cost control, and to a lesser extent the lower sales volume. As a result of the foregoing, consolidated operating income improved $433,000, or almost five fold, in the first quarter of 1996 as compared to the first quarter of 1995. Interest expense increased $121,000, or 40.7%, in the first quarter of 1996 compared to the first quarter of 1995. The increase was due to additional borrowings and higher average interest rates for the 1996 quarter. During the first quarter of 1995, the Company recorded $1.1 million in additional charges in connection with the patent infringement suit. No such accrual was necessary in the first quarter of 1996. The Company had an effective income tax rate of 53% for the first quarter 1996. The high rate was due to nondeductible expenses and foreign losses. As a result of the above, the Company recorded a net profit of $49,000 for the quarter ended March 31, 1996, or .3% of net sales, as compared to a net loss of $1.1 million, or 6.2% of net sales, in the first quarter of 1995. Liquidity and Capital Resources The Company's consolidated working capital was $11.3 million at March 31, 1996, as compared to $10.4 million at December 31, 1995. The current ratio (current) assets divided by current liabilities) was 1.7 to 1 on March 31, 1996, as compared to 1.6 to 1 at December 31, 1995. Net cash used in operating activities for the first quarter ended March 31, 1996, was $440,000. Capital expenditures for the quarter were not significant. As of May 7, 1996, $1.3 million of the $13.8 million revolving credit facility was unused and available. In March 1996, the credit agreement was amended to provide an additional $750,000 under the revolving credit facilities through May 31, 1996. As of March 31, 1996, the Company was in compliance with all loan covenants, as amended. 7 8 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Directed Electronics, Inc. v. Code Alarm, Inc., Rand Mueller, and Peter J. Stouffer, Civil Action No. 96-659 B AJB filed on April 15, 1996, in the United States District Court for the Southern District of California, by Directed Electronics, Inc. ("Directed"), seeking damage arising from an alleged anti-trust, unfair competition, interference with prospective economic advantage, and malicious prosecution activities related to the assertion, by the Company, of United States patents 5,049,867 and 4,740,775 against Directed. An answer has not as yet been filed and the Company's liability, if any, cannot be determined at this time. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) The documents filed as a part of this report: (11) Shares issuable under employee stock options were excluded from the computation of weighted average number of shares outstanding since such shares were either anti-dilutive or their dilutive effect was not material. (27) Financial Data Schedules. (b) There were no reports on Form 8-K filed during the quarter ended March 31, 1996. 8 9 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. CODE-ALARM, INC ------------------------------- (Registrant) Date: May 14, 1996 /s/ Rand W. Mueller ------------ ------------------------------- Rand W. Mueller President Date: May 14, 1996 /s/ Robert V. Wagner ------------ ------------------------------ Robert V. Wagner Vice President of Finance (Chief Financial Officer) (Principal Accounting Officer) 9 10 Exhibit Index -------------
Exhibit No. Description - ----------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1996 MAR-31-1996 11 0 12,090 470 13,154 27,535 11,350 7,142 40,639 16,273 9,998 0 0 12,210 (3,717) 40,639 16,597 16,597 10,674 10,674 5,397 31 418 105 56 49 0 0 0 49 0.02 0.02
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