<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
COBRA ELECTRONICS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
COBRA ELECTRONICS CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[COBRA ELECTRONICS CORPORATION LETTERHEAD]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1996
To the Shareholders:
The Annual Meeting of Shareholders of Cobra Electronics Corporation (the
"Company") will be held at the offices of Sidley & Austin, One First National
Plaza, 55th Floor, Room 5-6 C, Chicago, Illinois on Tuesday, May 14, 1996 at
11:00 a.m. to:
1. Elect two Class I directors of the Company to hold office until the
1999 Annual Meeting of Shareholders; and
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on April 5, 1996 are
entitled to notice of and to vote at the meeting or any adjournments thereof. A
complete, alphabetic list of such shareholders showing their addresses and the
number of shares registered for each will be kept open at the offices of the
Company, 6500 West Cortland Street, Chicago, Illinois 60635, for examination by
any shareholder during ordinary business hours for a period of ten days prior to
the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
A copy of the Annual Report for the year ended December 31, 1995, a Proxy
Statement and Proxy Card accompany this notice.
By order of the Board of Directors,
GERALD M. LAURES
Secretary
Chicago, Illinois
April 17, 1996
<PAGE> 3
COBRA ELECTRONICS CORPORATION
6500 WEST CORTLAND STREET
CHICAGO, ILLINOIS 60635
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1996
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with a solicitation of
proxies by the Board of Directors of Cobra Electronics Corporation (the
"Company") to be voted at the Company's 1996 Annual Meeting of Shareholders to
be held on Tuesday, May 14, 1996, at the offices of Sidley & Austin, One First
National Plaza, 55th Floor, Room 5-6 C, Chicago, Illinois at 11:00 a.m. The
principal executive offices of the Company are located at 6500 West Cortland
Street, Chicago, Illinois 60635. This Proxy Statement, the accompanying Proxy
Card and the 1995 Annual Report were first mailed to shareholders on or about
April 17, 1996.
RECORD DATE AND OUTSTANDING VOTING SECURITIES
Only shareholders of record at the close of business on April 5, 1996 are
entitled to notice of and to vote at the meeting. On that date the Company had
outstanding 6,230,398 shares of Common Stock, par value $.33 1/3 per share.
Owners of Common Stock are entitled to one vote for each share held. The Company
has no other outstanding voting securities.
REVOCATION OF PROXIES AND OTHER VOTING INFORMATION
Proxies given pursuant to this solicitation may be revoked at any time
prior to the voting thereof (by giving written notice to the Secretary of the
Company, by executing a proxy bearing a later date which is voted at the meeting
or by attending the 1996 Annual Meeting of Shareholders and voting in person);
once voted, however, proxies may not be retroactively revoked.
A shareholder may (i) vote for the election of both nominees designated
below as Class I directors, (ii) withhold authority to vote for both director
nominees or (iii) vote for the election of such director nominees other than a
nominee with respect to whom the shareholder withholds authority to vote by
striking a line through the nominee's name on the proxy. All outstanding shares
of Common Stock represented by properly executed and unrevoked proxies received
in time for the meeting will be voted as instructed in the accompanying proxy.
If no instructions are given, the shares will be voted for the election of both
nominees designated below to serve as Class I directors.
A proxy submitted by a shareholder may indicate that all or a portion of
the shares represented by such proxy are not being voted by such shareholder
with respect to the election of directors (the "non-voted shares"). Non-voted
shares will be considered shares not present and entitled to vote for the
election of directors, although such shares will count for purposes of
determining the presence of a quorum. The affirmative vote of a plurality of the
shares of Common Stock present in person or by proxy at the meeting and entitled
to vote in the election of directors is required to elect directors. Thus, if a
quorum is present at the meeting, the two persons receiving the greatest number
of votes will be elected to serve as Class I directors. Accordingly, non-voted
shares and withholding authority to vote for a director nominee will not affect
the outcome of the election of directors.
1
<PAGE> 4
DIRECTORS AND NOMINEES
The Company's Certificate of Incorporation classifies the Board of
Directors into three classes, as nearly equal in number as possible, each of
whom serves for three years. The term of office of one class of directors
expires each year in rotation so that one class is elected at each annual
meeting for a full three-year term. The terms of two of the present directors
will expire at the 1996 Annual Meeting of Shareholders. Mr. Jerry Kalov,
President and Chief Executive Officer, and Mr. Harold D. Schwartz, appointed a
director in 1983, have been nominated for election as Class I directors for
three-year terms expiring at the 1999 Annual Meeting of Shareholders and until
their successors are elected and qualified. The terms of the other four
directors will continue as indicated below.
Unless otherwise specified in the proxy, it is the present intention of the
persons named in the accompanying proxy to vote such proxy for the election of
Jerry Kalov and Harold D. Schwartz, the two nominees designated below, to serve
as Class I directors. Management is not aware of any nominee for director to be
proposed by others. If on account of death or unforeseen contingencies, either
of Messrs. Kalov or Schwartz should not be available for election, the persons
named in the accompanying proxy reserve the right to vote such proxy for such
other person or persons as may be nominated to serve as a Class I director by
the management of the Company. Management has no reason to believe that any
Class I nominee will be unable to serve if elected.
The names of the Company's directors and director nominees, their principal
occupations and certain biographical information relating to such persons are
set forth below.
<TABLE>
<CAPTION>
NOMINEES AND DIRECTORS AGE PRINCIPAL OCCUPATION
- ------------------------------ ---- ---------------------------------------------------
<S> <C> <C>
William P. Carmichael, Class 52 Senior Vice President & Chief Accounting Officer,
III Sara Lee Corporation, 1991-1993; retired 1993;
(Term expiring in 1998) Senior Vice President & Chief Financial Officer,
Beatrice Company, 1988-1990. Director since 1994.
Samuel B. Horberg, Class II 69 Vice President, Secretary and Treasurer of the
(Term expiring in 1997) Company, 1985-1986; retired 1986; Vice
President-Finance, Secretary and Treasurer of the
Company, 1961-1985. Director since 1961.
Jerry Kalov, Class I 60 President and Chief Executive Officer of the
(Nominee, term, if elected, Company, August 1986 to present; President and
expiring in 1999) Chief Operating Officer of the Company, April 1985
to August 1986; President, Kalov & Associates,
Inc., management consultants, 1983-1985; President,
Harman International Industries, Inc., 1980-1983.
Director since 1985.
Carl Korn, Class III 74 Chairman of the Board of the Company, 1961 to
(Term expiring in 1998) present; President and Chief Executive Officer of
the Company, 1961-1985. Director since 1961.
Gerald M. Laures, Class II 48 Vice President-Finance of the Company, since March,
(Term expiring in 1997) 1994; Corporate Secretary of the Company, 1989 to
present; Corporate Controller of the Company
1988-1994. Director since 1994.
Harold D. Schwartz, Class I 70 President, Chez & Schwartz, Inc., marketing and
(Nominee, term, if elected, sales consultants, 1973 to present. Director since
expiring in 1999) 1983.
</TABLE>
2
<PAGE> 5
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held 5 meetings during fiscal year
1995. Each member of the Board of Directors attended all the meetings of the
Board of Directors and committees of which they are members. The Board of
Directors has four committees: the Audit Committee, the Finance Committee, the
Compensation Committee and the 1995 Stock Option Plan Committee. During fiscal
year 1995, these committees met four times, one time, three times and one time,
respectively.
The members of the Audit Committee are: Harold D. Schwartz (Chairman),
William P. Carmichael, Samuel B. Horberg and Carl Korn. The Audit Committee
assists the Board of Directors in fulfilling its responsibility for the
accounting practices of the Company and reviews the selection of, and
recommendations by, the Company's independent auditors.
The members of the Finance Committee are: William P. Carmichael (Chairman),
Jerry Kalov and Gerald M. Laures. The Finance Committee reviews and recommends
financing plans and agreements.
The members of the Compensation Committee are: Samuel B. Horberg
(Chairman), Jerry Kalov and Harold D. Schwartz. The Compensation Committee
reviews the compensation of the Company's executive officers, except for options
issued under the 1995 Stock Option Plan which is administered by the 1995 Stock
Option Plan Committee.
The members of the 1995 Stock Option Plan Committee are: Samuel B. Horberg
(Chairman), William P. Carmichael and Harold D. Schwartz. The 1995 Stock Option
Plan Committee administers the 1995 Stock Option Plan.
The Company has no nominating or similar committee.
COMPENSATION OF DIRECTORS
Mr. Korn in his capacity as Chairman of the Board of the Company currently
receives an annual retainer of $25,000. Messrs. Carmichael, Horberg and
Schwartz, who are not employees of the Company, currently receive annual
retainers of $10,000 and a fee of $1,000 for each Board meeting and $500 for
each committee meeting attended, not to exceed one Board meeting and one
committee meeting or two committee meetings on any one day. When a committee
meeting occurs on the same day as a Board meeting or another committee meeting,
the fee for the committee meeting or meetings is reduced to $400 for each such
meeting. In addition, Messrs. Carmichael, Horberg and Schwartz, each of whom
serves as a chairman of a committee of the Board, receives a $1,000 annual
retainer. At the present time, the other directors of the Company who serve on
the Board or any committee thereof receive no compensation for doing so.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated above, the members of the Compensation Committee are: Samuel
B. Horberg (Chairman), Jerry Kalov and Harold D. Schwartz and the members of the
1995 Stock Option Plan Committee are Samuel B. Horberg (Chairman), William P.
Carmichael and Harold D. Schwartz. Mr. Horberg served as Vice President,
Secretary and Treasurer of the Company from 1961 until his retirement in 1986.
Mr. Kalov is the President and Chief Executive Officer of the Company.
During 1990, pursuant to Jerry Kalov's employment agreement dated January
1, 1988, the Company loaned him $1.25 million for the exercise of options on
375,000 shares of Common Stock. Mr. Kalov signed a promissory note with recourse
due December 30, 1997, which is secured by the related shares. From the
inception of the loan through December 31, 1995, accrued interest of $472,945
has been added to the loan balance reflecting an average interest rate of 6.6%.
During fiscal 1995, the largest amount outstanding under the loan was $1,722,945
and, as of March 31, 1996, the amount outstanding was approximately $1,745,511.
3
<PAGE> 6
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as to the beneficial ownership
of Common Stock, as of February 29, 1996, of each of the Company's directors and
director nominees, each person named in the summary compensation table below and
the Company's directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OUTSTANDING
NAME OWNERSHIP(1) COMMON STOCK
------------------------------------------- ----------------- ------------
<S> <C> <C>
William P. Carmichael...................... 10,000 *
Samuel B. Horberg.......................... 16,500 *
Jerry Kalov................................ 796,493(2) 12.0%
Carl Korn.................................. 267,183(3) 4.3%
Gerald M. Laures........................... 17,900(4) *
Harold D. Schwartz......................... 37,354(5) *
Stephen M. Yanklowitz...................... 25,000(6) *
All directors, director nominees and
executive officers as a group (7
persons)................................. 1,170,430(7) 17.6%
</TABLE>
- ------------
* Less than 1% of the outstanding Common Stock.
(1) Except as otherwise disclosed, beneficial ownership includes both sole
investment and voting power with respect to the shares indicated.
(2) The amount includes 406,493 shares, which Mr. Kalov may acquire pursuant to
the exercise of stock options.
(3) The amount shown includes 57,785 shares held by the Carl and Frances Korn
Foundation with respect to which Mr. Korn has sole investment and voting
power.
(4) The amount includes 13,500 shares, which Mr. Laures may acquire pursuant to
the exercise of stock options.
(5) The amount shown represents 35,195 shares owned by Chez & Schwartz, Inc.
Profit Sharing Trust and 2,000 shares held by the Chez & Schwartz Pension
Plan, as to both of which Mr. Schwartz is the sole beneficiary, and 159
shares owned by Chez & Schwartz, Inc., of which Mr. Schwartz is President
and sole shareholder.
(6) Effective June 22, 1995, Mr. Yanklowitz left the employ of the Company.
(7) The amount includes 419,993 shares, which such directors and executive
officers may acquire pursuant to the exercise of stock options.
Other than Mr. Kalov, 6500 West Cortland Street, Chicago, Illinois 60635,
to the knowledge of the Company, as of December 31, 1995, the only beneficial
owners of more than 5% of the outstanding shares of Common Stock are as follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OUTSTANDING
NAME AND ADDRESS OWNERSHIP(1) COMMON STOCK
------------------------------------------- ----------------- ------------
<S> <C> <C>
Heartland Advisors, Inc.................... 513,750 8.2%
790 N. Milwaukee St.
Milwaukee, WI 53202
Dimensional Fund Advisors.................. 434,150 7.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
- ------------
(1) Beneficial ownership includes both sole investment and voting power with
respect to the shares indicated.
4
<PAGE> 7
EXECUTIVE COMPENSATION
ANNUAL AND LONG-TERM COMPENSATION
The following table sets forth the annual and long-term compensation for
services in all capacities to the Company for the fiscal years ended December
31, 1995, 1994 and 1993 for (i) the chief executive officer of the Company and
(ii) each other executive officer of the Company whose annual salary and bonus
exceeded $100,000 during fiscal year 1995 (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (2)($) (#) ($)
- --------------------------------- ---- ------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Jerry Kalov...................... 1995 300,000 -0- 5,500 -0- 4,620(3)
President and Chief 1994 300,000 -0- 5,500 170,986 3,883(3)
Executive Officer 1993 311,519 -0- 5,500 -0- 2,312(3)
Stephen M. Yanklowitz(1)......... 1995 100,000 -0- -0- -0- 200,000(4)
Chief Operating Officer 1994 57,692 -0- -0- 125,000 -0-
1993 -0- -0- -0- -0- -0-
Gerald M. Laures................. 1995 115,000 10,000 -0- 10,500 3,465(3)
Vice President-Finance 1994 102,404 -0- -0- 25,000 2,549(3)
and Corporate Secretary 1993 94,615 -0- -0- 14,500 848(3)
</TABLE>
- ------------
(1) Effective June 22, 1995, Mr. Yanklowitz left the employ of the Company.
(2) All amounts indicated for Named Officers relate to reimbursements for taxes
owed for certain perquisites.
(3) Represents the Company's contributions under The Cobra Electronics
Corporation Profit Sharing and 401(k) Incentive Savings Plan. For 1995,
1994 and 1993, these amounts represent only the Company's required matching
contribution to the Plan in an amount equal to a certain percentage of the
amount contributed by the Named Officers.
(4) Represents the amount payable to Mr. Yanklowitz in connection with his
termination of employment as discussed at "Employment Agreements".
STOCK OPTIONS/SAR GRANTS IN 1995
Shown below is information with respect to grants during fiscal year 1995
to the Named Officers of options to purchase Common Stock of the Company. No
stock appreciation rights ("SARs") were granted in 1995.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE OF ASSUMED
ANNUAL RATES OF
STOCK
PERCENTAGE OF PRICE APPRECIATION
SECURITIES TOTAL OPTIONS/ FOR
UNDERLYING SARS GRANTED EXERCISE OR OPTION TERM
OPTIONS/SARS TO EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME GRANTED(#) 1995 ($/SHARE) DATE 5%($) 10%($)
- --------------------------- ------------ --------------- ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Jerry Kalov................ -- -- -- -- -- --
Stephen M. Yanklowitz(1)... -- -- -- -- -- --
Gerald M. Laures........... 10,500(2) 5.9% 3.125 11/1/2000 9,065 20,032
</TABLE>
- ------------
(1) Effective June 22, 1995, Mr. Yanklowitz left the employ of the Company.
(2) Option becomes exercisable in annual 25% increments commencing twelve months
after the date of grant.
5
<PAGE> 8
FISCAL YEAR-END OPTION/SAR VALUES
Shown below is information with respect to unexercised options to purchase
Common Stock of the Company held by the Named Officers. None of the Named
Officers exercised any stock options during fiscal year 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
DECEMBER 31, 1995(#) AT DECEMBER 31, 1995($)(2)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jerry Kalov............................... 406,493 85,493 23,187 23,187
Stephen M. Yanklowitz(1).................. -- -- -- --
Gerald M. Laures.......................... 13,500 36,500 4,375 10,625
</TABLE>
- ------------
(1) Effective June 22, 1995, Mr. Yanklowitz left the employ of the Company. All
unexercisable options terminated upon Mr. Yanklowitz's cessation of
employment.
(2) Based on the closing price on The Nasdaq Stock Market on December 29, 1995.
REPORT ON EXECUTIVE COMPENSATION
The members of the Compensation Committee of the Board of Directors and the
1995 Stock Option Plan Committee have furnished the following report on
executive compensation:
The Compensation Committee administers the Company's various incentive
plans, including its annual bonus plan and stock incentive plans, other than the
1995 Stock Option Plan. In addition, the Compensation Committee reviews with the
Board of Directors in detail the compensation of the Named Officers. The 1995
Stock Option Plan Committee administers the Company's 1995 Stock Option Plan.
The compensation policy of the Company, which is endorsed by each
Committee, is designed to align the interests of the Company's executive
officers and key employees with that of the Company's shareholders and to
advance the interests of the Company and its shareholders by attracting and
retaining well-qualified executive officers and key employees. Therefore, it is
the Company's policy that a substantial portion of the incentive compensation of
each Named Officer relates to and must be contingent upon the performance of the
Company, as well as the individual contribution of each officer. When
considering the compensation of the Company's executive officers, each Committee
considers, as applicable, the following factors: (a) Company performance; (b)
the individual performance of each executive officer; (c) compensation levels
for similar positions at comparable companies; (d) the recommendations of the
Chief Executive Officer; and (e) in the case of Mr. Kalov, the terms of his
ten-year employment agreement with the Company dated January 1, 1988, as amended
(the "Employment Agreement").
Mr. Kalov's salary and bonus are determined pursuant to his Employment
Agreement. The Employment Agreement provides that Mr. Kalov will be paid an
annual salary of $300,000 and an annual bonus equal to 4% of the Company's
pretax accounting income, if any. For the other Named Officers, base salaries
are set at competitive levels. Salary increases and bonuses are paid based upon
both the performance of the entire Company and individual performance. The
Compensation Committee does not assign any specific weight to any measure of
Company or individual performance.
The 1995 Stock Option Plan Committee may grant options to purchase the
Company's Common Stock under the 1995 Stock Option Plan to certain key
employees. The Compensation Committee may recommend to the Board of Directors
that certain key employees be granted options to purchase the Company's Common
Stock under all other stock incentive plans. The exercise price of each option
granted is generally equal to 100% of the fair market value of the shares on the
date of grant and options granted are generally exercisable in part from time to
time commencing twelve months after the grant date, generally in an amount equal
to 25% of the total number of shares covered during each successive twelve-month
period. The Committees believe that such grants are an important way to link
directly the financial interests of key employees with
6
<PAGE> 9
those of the Company's shareholders. In fiscal year 1995, Mr. Laures received
options to purchase 10,500 shares of Common Stock at the exercise price of
$3.125 per share.
The foregoing report has been furnished by:
<TABLE>
<S> <C>
Mr. Horberg (Chairman)
Mr. Kalov
Mr. Carmichael
Mr. Schwartz
</TABLE>
7
<PAGE> 10
PERFORMANCE GRAPH
The following Performance Graph compares the yearly percentage change in
the Company's cumulative total shareholder return on the Company's Common Stock
for the five-year period, December 31, 1990 to December 31, 1995, with the
percentage change in the cumulative total return for The Nasdaq Stock Market
(U.S. Companies), which includes the Company, and a peer group of companies
selected by the Company (the "Peer Group").
Companies used to construct the Peer Group index include the following:
Cincinnati Microwave, Inc., Code Alarm, Koss Corporation and Zenith Electronics
Corporation. In selecting companies for the Peer Group, the Company focused on
publicly traded companies that design and market electronics products, which
have characteristics similar to that of the Company's in terms of one or more of
the following: type of product, end market, distribution channels, sourcing or
sales volume.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR ENDED DECEMBER 31) COBRA NASDAQ PEER GROUP
<S> <C> <C> <C>
1990 100.000 100.000 100.000
1991 103.850 160.564 112.870
1992 134.621 186.866 104.077
1993 80.773 214.511 165.597
1994 57.696 209.686 201.532
1995 92.314 296.304 127.409
</TABLE>
The graph assumes $100 invested on December 31, 1990 in each of the
Company's Common Stock, The Nasdaq Stock Market (U.S. Companies) and the Peer
Group. Reinvestment of dividends, if any, has been assumed and, with respect to
each Company in the Peer Group, the returns of such Company have been weighted
to reflect stock market capitalization at the beginning of each period indicated
on the Performance Graph. The graph was plotted using the following data:
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Cobra........................... $100.000 $103.850 $134.621 $ 80.773 $ 57.696 $ 92.314
NASDAQ.......................... 100.000 160.564 186.866 214.511 209.686 296.304
Peer Group...................... 100.000 112.870 104.077 165.597 201.532 127.409
</TABLE>
Note: Sources include The Nasdaq Stock Market, CDA Investment Technologies,
Inc. and Standard & Poor's Corporation.
8
<PAGE> 11
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Jerry Kalov and
Stephen Yanklowitz.
The Company's employment agreement with Jerry Kalov provides that, subject
to certain conditions, Mr. Kalov will be entitled to a lump sum payment equal to
450 percent of Mr. Kalov's base salary for the calendar year immediately
preceding a change of control of the Company in addition to certain provisions
with respect to the performance of the Company. In addition, under the terms of
Mr. Kalov's agreement, the Company is obligated to make payments to him or his
designated beneficiary beginning at the earlier of the date on which Mr. Kalov
reaches age 62 or his employment with the Company is terminated. In either such
event, the Company is to make payments for a period of 15 years in an amount
equal to 60% of the average of Mr. Kalov's salary (including bonus) for the five
years during which he received the highest compensation within the ten-year
period preceding the earlier of Mr. Kalov's attaining age 62 or termination of
employment. The deferred payments are limited to a minimum of $252,272 and a
maximum of $326,477. The obligation of the Company to make such payments is
irrevocable in the case of death, permanent disability or termination following
a change of control of the Company. Otherwise, Mr. Kalov's interest in such
payments is not fully vested until 1997. Mr. Kalov's agreement also requires the
Company to pay him an annual salary of $300,000 and an annual bonus equal to 4%
of the Company's pretax accounting income, if any. Under the terms of the
deferred compensation arrangement described above and based upon actual
compensation paid through fiscal year 1995, Mr. Kalov would be entitled to
annual payments of $252,272 upon attaining age 62.
The Company also has an employment agreement with Stephen Yanklowitz that
ended with his termination of employment on June 22, 1995. The agreement
provides that in the event of termination of employment Mr. Yanklowitz is
entitled to an amount equal to Mr. Yanklowitz's regular annual salary, payable
in twelve equal monthly installments, and continuation of Mr. Yanklowitz's then
existing medical and health benefits for one year from the date of Mr.
Yanklowitz's termination. However, if during this one year period, Mr.
Yanklowitz obtains either employment elsewhere or an independent contract or any
other type of engagement providing Mr. Yanklowitz with salary, commission or any
other type of compensation or benefits, or both, the Company's obligation to
make such salary payments and benefits to Mr. Yanklowitz shall be reduced by the
salary, commission or any other type of compensation and benefits, respectively,
payable to Mr. Yanklowitz from such employment, contract or engagement.
AUDITORS
As a result of a bidding process to select an auditor for fiscal year 1994,
on July 19, 1994, the Company's Board of Directors informed Arthur Andersen LLP
("Andersen"), the Company's independent accountants for fiscal year 1993, that
Andersen would not be retained for fiscal year 1994. The decision to change
independent accountants was recommended to the Board of Directors by its Audit
and Finance Committee. Andersen's report on the Company's financial statements
for fiscal year 1993 did not contain an adverse opinion or disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit scope, or
accounting principles.
Andersen informed the Company that Andersen believed that two disagreements
occurred in connection with its audit of the Company's financial statements for
the year ended December 31, 1993, that if not resolved to Andersen's
satisfaction, would have caused it to make reference to the subject matter of
the disagreements in its auditor's report on the Company's financial statements.
These two disagreements were as follows:
1) In connection with Andersen's audit of the Company's December 31, 1993
financial statements, Andersen observed conditions that raised a
question about the Company's ability to continue in existence as a going
concern. As part of its audit procedures, consistent with Statement of
Auditing Standards No. 59, Andersen requested the Company's 1994
financial plan ("Plan"). Andersen was provided with the Company's Plan
but requested that the Company provide a revised Plan. A revised Plan
was provided promptly; however, the Company questioned Andersen's need
for a revised Plan in light of all of the other information the Company
provided to Andersen. As a result, Andersen viewed
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this matter as a disagreement as defined under Item 304 of Regulation
S-K adopted by the Securities and Exchange Commission. The matter was
resolved to Andersen's satisfaction prior to the issuance of the
Company's December 31, 1993 financial statements.
2) In connection with Andersen's audit of the Company's December 31, 1993
financial statements, Andersen disagreed with the Company regarding its
classification of the Company's debt as non-current. Andersen indicated
that because of various factors, including the existence of a material
adverse change clause in the debt agreement, current classification of
the Company's bank debt as of December 31, 1993 would be appropriate. At
that time, the Company believed that its bank debt could be classified
as non-current with appropriate financial statement disclosure. After
reviewing the information presented by Andersen with respect to the
effect of the material adverse change clause on debt classification, the
Company agreed with Andersen. Andersen viewed this discussion as a
disagreement as defined under Item 304 of Regulation S-K. The
disagreement was resolved to Andersen's satisfaction prior to the
issuance of the Company's December 31, 1993 financial statements in
which the debt was classified as a current liability.
Both of these matters were discussed between Andersen and the Audit and
Finance Committee of the Board of Directors. The Company believes that there
were no disagreements with Andersen within the meaning of Item 304 of Regulation
S-K because Instruction 4 of Item 304 specifically excludes as disagreements
"initial differences of opinion based on incomplete facts or preliminary
information that were later resolved to the former accountant's satisfaction by,
and providing the Company and the accountant do not continue to have a
difference of opinion upon, obtaining additional relevant facts or information."
The Company believes that each disagreement identified by Andersen was resolved
to the satisfaction of Andersen, that there was no continuing difference of
opinion between the Company and Andersen and that each "disagreement" was
resolved upon the Company's obtaining additional relevant facts and information
from Andersen.
On August 15, 1994, the Company engaged Deloitte & Touche LLP as its
independent accountant for fiscal year 1994. The decision to engage Deloitte &
Touche LLP was recommended to the Board of Directors by the Company's Audit and
Finance Committee. Deloitte & Touche LLP has also been selected by the Board of
Directors to serve as the Company's independent accountants for 1996. A
representative of Deloitte & Touche LLP will be present at the 1996 Annual
Meeting of Shareholders and will be given an opportunity to make a statement and
to respond to appropriate questions from shareholders.
SECTION 16(A) REPORTS
Based solely on a review of copies of reports of ownership, reports of
changes of ownership and written representations under Section 16(a) of the
Securities Exchange Act of 1934 which were furnished to the Company by persons
who were, at any time during 1995, directors or executive officers of the
Company or beneficial owners of more than 10% of the outstanding shares of
Common Stock, no such persons failed to file on a timely basis reports required
by such Section 16 during or with respect to 1995.
SHAREHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders, currently scheduled for May 13, 1997, must be received
by the Secretary of the Company not later than December 18, 1996, in order to be
considered for inclusion in the proxy statement and proxy relating to that
meeting.
REQUEST TO VOTE, SIGN AND RETURN PROXIES
Whether or not you plan to attend the Annual Meeting of Shareholders on May
14, 1996, please mark, sign, date and return the enclosed proxy as soon as
possible in the enclosed postage-paid envelope.
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OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors is not aware of
any matters, other than the election of Class I directors, that may be brought
before the 1996 Annual Meeting. However, if any other matters properly come
before the Meeting, it is the intention of the persons named in the enclosed
proxy to vote such proxy in accordance with their judgment on such matters. In
addition to use of the mails, the Company may also solicit proxies by telephone,
telegraph or similar means. The Company's registrar and transfer agent, American
Stock Transfer & Trust Company, will assist the Company in its solicitation of
proxies and will not receive any additional fee for its services. Other than
American Stock Transfer & Trust Company, no specially engaged employees or paid
solicitors will be used in this solicitation, the expenses of which will be paid
by the Company (such expenses are not expected to exceed the amount normally
expended for an uncontested solicitation in connection with an election of
directors). Officers and other regular employees of the Company will not receive
any additional compensation in connection with this solicitation.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1995 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE REQUIRED FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULE AND INFORMATION CONCERNING EXECUTIVE
OFFICERS OF THE COMPANY, WILL BE FURNISHED WITHOUT CHARGE, BY FIRST CLASS MAIL,
UPON THE WRITTEN OR ORAL REQUEST OF ANY SHAREHOLDER, INCLUDING ANY BENEFICIAL
OWNER ENTITLED TO VOTE AT THE MEETING DIRECTED TO THE ATTENTION OF GERALD M.
LAURES, THE COMPANY'S SECRETARY, 6500 WEST CORTLAND STREET, CHICAGO, ILLINOIS
60635, TELEPHONE: (312) 889-8870.
By order of the Board of Directors,
GERALD M. LAURES
Secretary
Cobra Electronics Corporation
Chicago, Illinois
April 17, 1996
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PROXY
COBRA ELECTRONICS CORPORATION
6500 WEST CORTLAND, CHICAGO, IL 60635
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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<S><C>
The undersigned hereby appoints William P. Carmichael and Gerald M. Laures as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of common stock
of Cobra Electronics Corporation held of record by the undersigned on April 5, 1996 at the Annual Meeting of Shareholders to be held
on May 14, 1996, or any adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE)
/X/ Please mark your
votes as in this
example.
WITHHOLD AUTHORITY
FOR TO VOTE
VOTE FOR
1. Election of 2. In their discretion, the Proxies are authorized to vote upon such
Directors. / / / / other business as may properly come before the meeting.
Nominees: Jerry Kalov This proxy, when properly executed below, will be voted in the
Harold D. Schwartz manner directed herein by the undersigned shareholder. If no
direction is made, this proxy will be voted for the election of the
(Instructions: to withhold authority to vote for either nominees listed in item (1).
person, strike a line through the nominee's name.)
The directors recommend a vote for the election of the board's
nominees to the board of directors.
Please mark, sign, date and return the proxy card promptly using the
enclosed envelope.
SIGNATURE
SIGNATURE ___________________________________ DATE __________ (if held jointly) _________________________________ DATE ___________
NOTE: Please sign exactly as name appears above. When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or as guardian, please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized person. If a partnership, please sign in the partnership name by an
authorized person.
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