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
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
(Unaudited) (Unaudited)
---------------------------- ------------------------
<S> <C> <C> <C> <C>
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.
</TABLE>
<PAGE>
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
As of As of
June 30, December 31,
1995 1994
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
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.
</TABLE>
<PAGE)
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
As of As of
June 30, December 31,
1995 1994
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
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.
</TABLE>
<PAGE)
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
(Unaudited)
-----------------------------
<S> <C> <C>
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.
</TABLE>
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUNE 30,1995
<CASH> 111
<SECURITIES> 0
<RECEIVABLES> 13,437
<ALLOWANCES> 1,074
<INVENTORY> 18,403
<CURRENT-ASSETS> 33,787
<PP&E> 22,461
<DEPRECIATION> 15,202
<TOTAL-ASSETS> 46,635
<CURRENT-LIABILITIES> 27,705
<BONDS> 0
<COMMON> 2,345
0
0
<OTHER-SE> 16,585
<TOTAL-LIABILITY-AND-EQUITY> 46,635
<SALES> 21,350
<TOTAL-REVENUES> 21,350
<CGS> 17,066
<TOTAL-COSTS> 17,066
<OTHER-EXPENSES> 4,152
<LOSS-PROVISION> 202
<INTEREST-EXPENSE> 398
<INCOME-PRETAX> (206)
<INCOME-TAX> 0
<INCOME-CONTINUING> (206)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (206)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
<PAGE>
</TABLE>
