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, 1997
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 60707
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(773) 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
12, 1997: 6,242,273
<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,
1997 1996
--------- ---------
Net sales........................... $ 17,915 $ 19,272
Cost of sales....................... 14,403 16,139
--------- ---------
Gross profit....................... 3,512 3,133
Selling, general and
administrative expense............. 3,134 3,417
--------- ---------
Operating income (loss)............ 378 (284)
Other income (expense):
Interest expense.................. (262) (470)
Other income (expense), net....... (23) 171
--------- ---------
Income (loss) before taxes.......... 93 (583)
Income taxes........................ --- ---
--------- ---------
Net income (loss)................... $ 93 $ (583)
========= =========
Net income (loss) per share......... $ 0.02 $ (0.09)
========= =========
Weighted average number of common
shares and common share
equivalents outstanding........... 6,242 6,230
========= =========
Cash dividends...................... None None
========= =========
See notes to consolidated 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,
1997 1996
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
ASSETS:
Current assets:
Cash........................ $ 1,442 $ 2,606
Receivables, less allowance
for doubtful accounts of
$690 at March 31, 1997,
and $792 at December 31,
1996...................... 11,389 12,314
Inventories, primarily
finished goods............ 16,901 15,418
Other current assets........ 834 733
------------ ------------
Total current assets........ 30,566 31,071
------------ ------------
Property, plant and equipment,
at cost:
Land........................ 482 482
Building and improvements... 5,831 5,804
Tooling and equipment....... 10,038 10,091
------------ ------------
16,351 16,377
Accumulated depreciation
and amortization.......... (10,576) (10,244)
------------ ------------
Net property, plant and
equipment................. 5,775 6,133
------------ ------------
Other assets.................. 5,191 5,392
------------ ------------
Total assets.................. $ 41,532 $ 42,596
============ ============
See notes to consolidated 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,
1997 1996
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current liabilities:
Accounts payable............ $ 4,122 $ 3,335
Accrued liabilities......... 7,588 7,271
Short-term debt............. 11,014 13,277
------------ ------------
Total current liabilities... 22,724 23,883
------------ ------------
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 6,242,273
outstanding at March
31, 1997 and 6,241,648
outstanding at December 31,
1996...................... 2,345 2,345
Paid-in capital............. 22,066 22,062
Retained earnings........... 1,673 1,580
------------ ------------
26,084 25,987
Treasury stock, at cost..... (5,452) (5,450)
Note receivable from
officer's exercise of
stock options (1,824) (1,824)
------------ ------------
Total shareholders' equity.. 18,808 18,713
------------ ------------
Total liabilities and share-
holders' equity............. $ 41,532 $ 42,596
============ ============
See notes to consolidated 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)
--------------------------------
March 31, March 31,
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) from operations $ 93 $ (583)
Adjustments to reconcile net loss
from operations to net cash
provided by (used for)
operating activities:
Depreciation and amortization 712 439
Changes in assets and liabilities:
Receivables.................. 925 920
Inventories.................. (1,483) (1,598)
Other current assets......... (120) (55)
Other assets................. (104) 124
Accounts payable............. 787 (137)
Accrued liabilities.......... 317 110
---------- ----------
Net cash flows from (used for)
operating activities........ 1,127 (780)
---------- ----------
Cash flows from investing activities:
Capital expenditures........... (30) (278)
---------- ----------
Net cash flows used for investing
activities................... (30) (278)
---------- ----------
Cash flows from financing activities:
Net borrowing (repayments) under the
line-of-credit agreement..... (2,263) 416
Transactions related to exercise
of options, net ............. 2 8
---------- ----------
Net cash flows from (used for)
financing activities......... (2,261) 424
---------- ----------
Net decrease in cash............. (1,164) (634)
Cash at beginning of period...... 2,606 1,299
---------- ----------
Cash at end of period............ $ 1,442 $ 665
========== ==========
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest $ 283 $ 478
Taxes 135 25
See notes to consolidated 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, 1996 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, 1997, the Company had outstanding purchase orders
with suppliers totaling approximately $35.7 million compared to
$21.0 million as of March 31, 1996.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
ANALYSIS OF RESULTS OF OPERATIONS
First Quarter 1997 vs. First Quarter 1996:
- ------------------------------------------
Sales for the first quarter of 1997 were $17.9 million compared
to $19.3 million for the first quarter of 1996. Much of the
decrease was due to lower sales of telecommunication products.
1996 sales included close-out sales of 10-channel cordless phones
and 10-channel cordless phone integrated answering systems, which
were discontinued as a result of the introduction of 25-channel
products late in 1995. Also contributing to the decrease was
lower sales of 25-channel products to two large retail customers,
offset in part by sales of a Sprint-branded Intenna cordless
phone that was not available in the first quarter of 1996. The
decrease in telecommunication product sales was partly offset by
higher sales of mobile electronics products, including increased
sales of domestic CB radios, mainly because of the addition of a
new retail customer in mid 1996, and increased sales of detection
systems to international customers. Also contributing to the
sales decrease was lower sales of factory reconditioned products
as a result of agreements with some of the company's vendors that
allows product returned from the company's customers to be
returned to the vendor for partial credit towards future
purchases. Prior to these agreements, which were entered into in
1996, the company repaired and resold this returned merchandise
as factory reconditioned product.
Gross margin increased to 19.6% in the current quarter from
16.3%, primarily due to stronger margins on telecommunication
products and detection systems. Telecommunication products
gross margin improved because last year's first quarter included
lower margin, close out sales of 10-channel cordless phones and
10-channel cordless phone integrated answering systems. Gross
margin on detection systems improved because the line included
new, lower cost models that replaced older, higher cost models.
Selling, general and administrative expenses decreased $283,000
or 8.3%, in the first quarter of 1997 from the same period a year
ago, and as a percentage of net sales was 17.5% compared to 17.7%
for the first quarter of 1996. The major contributor to the
decline was lower variable selling expenses due to a decrease in
volume. Partially offsetting lower variable selling expense was
a $288,000 charge to reduce advertising credits to their
realizable value, which was partially offset by a decline in bad
debts expense because of continuing improvement in the quality of
the receivable portfolio and favorable collections experience.
Interest expense for the current quarter decreased $208,000
compared to the prior year's first quarter. Debt levels declined
due to lower inventory and receivable levels.
Other expense for the first quarter of 1997 was $23,000 compared
to other income of $171,000 in the prior year. Prior year's
other income included a gain of $218,000 from a suit against a
former distributor for violation of a licensing agreement.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities generated cash of $1.1 million during the
first quarter of 1997. 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 of telecommunication products. Accounts payable
increased due to an increase in purchases.
The company was able to reduce borrowing under its line-of-credit
agreement by $2.3 million and, at March 31, 1997, had
approximately $4.2 million of unused credit line.
<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 /S/GERALD M. LAURES
------------------------
Gerald M. Laures
Vice President - Finance,
and Corporate Secretary
Dated: May 15, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 1,442
<SECURITIES> 0
<RECEIVABLES> 11,389
<ALLOWANCES> 690
<INVENTORY> 16,901
<CURRENT-ASSETS> 30,566
<PP&E> 16,351
<DEPRECIATION> 10,576
<TOTAL-ASSETS> 41,532
<CURRENT-LIABILITIES> 22,724
<BONDS> 0
<COMMON> 2,345
0
0
<OTHER-SE> 16,463
<TOTAL-LIABILITY-AND-EQUITY> 41,532
<SALES> 17,915
<TOTAL-REVENUES> 17,915
<CGS> 14,403
<TOTAL-COSTS> 14,403
<OTHER-EXPENSES> 3,134
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 262
<INCOME-PRETAX> 93
<INCOME-TAX> 0
<INCOME-CONTINUING> 93
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
