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 March 31, 1996
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 May
9, 1996: 6,230,398
<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
(Unaudited)
--------------------------
<S> <C> <C>
March 31, March 31,
1996 1995
--------- ---------
Net sales........................... $ 19,272 $ 20,737
Cost of sales....................... 16,139 16,938
--------- ---------
Gross profit....................... 3,133 3,799
Selling, general and
administrative expense............. 3,417 3,762
--------- ---------
Operating income (loss)............ (284) 37
Other income (expense):
Interest expense.................. (470) (315)
Other, net........................ 171 (15)
--------- ---------
Loss before taxes................... (583) (293)
Provision (benefit) for taxes....... --- ---
--------- ---------
Net loss............................ $ (583) $ (293)
========= =========
Net loss per share.................. $ (0.09) $ (0.05)
========= =========
Weighted average number of common
shares and common share
equivalents outstanding........... 6,230 6,227
========= =========
Cash dividends...................... 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
March 31, December 31,
1996 1995
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
ASSETS:
Current assets:
Cash........................ $ 665 $ 1,299
Receivables, less allowance
for doubtful accounts of
$957 at March 31, 1996,
and $1,451 at December 31,
1995...................... 14,308 15,228
Inventories, primarily
finished goods............ 19,836 18,238
Other current assets........ 945 896
------------ ------------
Total current assets........ 35,754 35,661
------------ ------------
Property, plant and equipment,
at cost:
Land........................ 593 593
Building and improvements... 6,923 6,892
Tooling and equipment....... 8,735 15,462
------------ ------------
16,251 22,947
Accumulated depreciation
and amortization.......... (9,321) (15,877)
------------ ------------
Net property, plant and
equipment................. 6,930 7,070
------------ ------------
Other assets.................. 7,211 7,350
------------ ------------
Total assets.................. $ 49,895 $ 50,081
============ ============
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
March 31, December 31,
1996 1995
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current liabilities:
Accounts payable............ $ 5,933 $ 6,070
Accrued liabilities......... 6,579 6,469
Short-term debt............. 19,784 19,368
------------ ------------
Total current liabilities... 32,296 31,907
------------ ------------
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 6,230,398
outstanding at March
31, 1996 and 6,226,648
outstanding at December 31,
1995...................... 2,345 2,345
Paid-in capital............. 22,100 22,118
Retained earnings........... 396 979
------------ ------------
24,841 25,442
Treasury stock, at cost..... (5,519) (5,545)
Note receivable from
officer's exercise of
stock options (1,723) (1,723)
------------ ------------
Total shareholders' equity.. 17,599 18,174
------------ ------------
Total liabilities and share-
holders' equity............. $ 49,895 $ 50,081
============ ============
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 Three Months Ended
(Unaudited)
--------------------------------
<S> <C> <C>
March 31, March 31,
1996 1995
---------- ----------
Cash flows from operating activities:
Net loss from operations $ (583) $ (293)
Adjustments to reconcile net loss
from operations to net cash
provided by (used for)
operating activities:
Depreciation and amortization 439 488
Changes in assets and
liabilities:
Receivables.................. 920 (1,699)
Inventories.................. (1,598) (896)
Other current assets......... (55) (238)
Other assets................. 124 113
Accounts payable............. (137) 2,497
Accrued liabilities.......... 110 272
---------- ----------
Net cash provided by (used for)
operating activities......... (780) 244
---------- ----------
Cash flows from investing activities:
Capital expenditures........... (278) (402)
Net cash used for discontinued
operation.................... --- (224)
---------- ----------
Net cash used for investing
activities................... (278) (626)
---------- ----------
Cash flows from financing activities:
Net borrowing under
line-of-credit agreement..... 416 443
Transactions related to exercise
of options, net ............. 8 ---
---------- ----------
Net cash provided by
financing activities......... 424 443
---------- ----------
Net increase (decrease) in cash.. (634) 61
Cash at beginning of period...... 1,299 197
---------- ----------
Cash at end of period............ $ 665 $ 258
========== ==========
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, 1995 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 March 31, 1996, the Company had outstanding purchase orders
with suppliers totaling approximately $21.0 million compared to
$28.2 million as of March 31, 1995.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
ANALYSIS OF RESULTS OF OPERATIONS
First Quarter 1996 vs. First Quarter 1995:
- ------------------------------------------
Sales for the first quarter of 1996 decreased to $19.3 million
from $20.7 million for the first quarter of 1995. Sales of
mobile electronics products, primarily CB, decreased due to
continued weakness in the retail environment. This slowdown was
due in part to a continuation of the soft consumer demand that
negatively impacted 1995's year-end holiday selling season as
well as the result of the severe winter storms that plagued the
East Coast early in the first quarter and kept consumers inside
their homes and out of the stores. In addition, sales in the
first quarter of 1995 benefitted from a CB promotional program.
Partially offsetting the lower sales of mobile electronics
products was an increase in telecommunication sales due to strong
demand for new 25-channel Intenna cordless phones and integrated
answering systems.
Gross margin decreased to 16.3% in the first quarter of 1996 from
18.3% in the first quarter of 1995 due mainly to a change in
sales mix resulting from lower CB sales.
Selling, general and administrative expenses for the first
quarter of 1996 were $345,000 below expenses for the first
quarter of 1995 and, as a percentage of net sales, decreased to
17.7% from 18.1% for the first quarter of 1995. The decrease was
primarily due to lower payroll costs and lower bad debt expense,
which reflected improvement in the quality of the receivable
portfolio and favorable collections experience.
Interest expense for the current quarter increased $155,000
compared to the prior year's quarter as a result of higher
borrowings required to finance increased working capital levels.
Other income of $171,000 includes a gain of $218,000 from a suit
against a former distributor for violation of a licensing
agreement.
LIQUIDITY AND CAPITAL RESOURCES
Net cash of $780,000 was used in operating activities during the
three months ended March 31, 1996. The decrease in receivables
reflects the normal seasonal pattern of lower first quarter sales
and increased collections commensurate with higher fourth quarter
sales. Inventories increased due to lower than anticipated first
quarter sales. The increase in capital expenditures primarily
reflected tooling for new products. Net cash used in operating
activities and capital expenditures were funded by net borrowings
under the Company's line-of-credit agreement. At March 31, 1996,
the Company had approximately $1.7 million of unused credit line.
Also, tooling which was fully amortized and related to products no
longer produced by the company was written off in the first quarter
of 1996.
<PAGE>
PART II
OTHER INFORMATION
Items 1, 2, 3, 4 and 5 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: May 15, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 665
<SECURITIES> 0
<RECEIVABLES> 14,308
<ALLOWANCES> 957
<INVENTORY> 19,836
<CURRENT-ASSETS> 35,754
<PP&E> 16,251
<DEPRECIATION> 9,321
<TOTAL-ASSETS> 49,895
<CURRENT-LIABILITIES> 32,296
<BONDS> 0
<COMMON> 2,345
0
0
<OTHER-SE> 15,254
<TOTAL-LIABILITY-AND-EQUITY> 49,895
<SALES> 19,272
<TOTAL-REVENUES> 19,272
<CGS> 16,139
<TOTAL-COSTS> 16,139
<OTHER-EXPENSES> 3,417
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 470
<INCOME-PRETAX> (583)
<INCOME-TAX> 0
<INCOME-CONTINUING> (583)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (583)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
