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 thirteen-week period ended: March 24, 1995
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: 0-10726
C-COR ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 24-0811591
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 Decibel Road, State College, PA 16801
(Address of principal executive offices) (Zip Code)
(814) 238-2461
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed
since last report)
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
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Stock $.10 Par Value-9,369,982 shares as of March 24, 1995.
(1)
<PAGE>
INDEX
C-COR ELECTRONICS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
Consolidated condensed balance sheets --
June 24, 1994 and March 24, 1995.
Consolidated condensed statements of income -- thirteen
weeks ended March 24, 1995 and March 25, 1994;
thirty-nine weeks end March 24, 1995 and March 25, 1994.
Consolidated condensed statements of cash flow -- thirteen
weeks ended March 24, 1995 and March 25, 1994;
thirty-nine weeks ended March 24, 1995 and March 25, 1994.
Notes to consolidated condensed financial statements --
March 24, 1995.
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(2)
<PAGE>
<TABLE>
Item 1. Financial Statements.
C-COR ELECTRONICS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
<CAPTION>
March 24 June 24
1995 1994
(Unaudited) (Note)
(000's omitted)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ($ 841) $ 1,361
Marketable securities 1,290 3,728
Accounts and notes receivable 21,121 15,640
21,570 20,729
Inventories:
Raw materials 12,561 8,066
Work-in-process 5,206 4,157
Finished goods 6,279 4,241
Total inventories 24,046 16,464
Recoverable income taxes 23 15
Deferred tax asset 2,638 1,491
Other current assets 1,005 548
TOTAL CURRENT ASSETS 49,282 39,247
PROPERTY, PLANT AND EQUIPMENT - NET 20,051 8,249
INTANGIBLE ASSETS - NET AND
OTHER LONG-TERM ASSETS 1,537 1,997
$70,870 $49,493
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $14,363 $13,099
Income taxes currently payable 347 1,030
Current portion of long-term debt 139 57
Bank line-of-credit 12,849 -0-
TOTAL CURRENT LIABILITIES 27,698 14,186
LONG-TERM DEBT NET OF CURRENT PORTION 2,047 444
DEFERRED TAX LIABILITY 323 405
OTHER LONG-TERM LIABILITIES 391 319
30,459 15,354
SHAREHOLDERS' EQUITY:
Common stock $.10 par; authorized 24,000,000
shares; issued 9,369,982 shares on
03/24/95 and 9,102,124 on 06/24/94 941 920
Capital in excess of par 16,575 15,151
Retained earnings 22,936 18,116
Translation adjustment ( 13) ( 9)
Net unrealized loss on marketable
securities ( 28) ( 39)
40,411 34,139
$70,870 $49,493
<FN>
Note: The balance sheet at June 24, 1994 has been derived from the audited
financial statements at that date.
Note: Shares issued have been adjusted to reflect a two-for-one stock split
effective December 5, 1994.
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
(3)
<PAGE>
<TABLE>
C-COR ELECTRONICS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
March 24 March 25 March 24 March 25
1995 1994 1995 1994
(000's omitted, except per share data)
<S> <C> <C> <C> <C>
NET SALES $29,985 $17,828 $87,268 $49,147
COSTS AND EXPENSES:
Cost of sales 22,459 12,534 62,192 32,804
Selling, general and
administrative expense 4,595 3,380 12,595 9,224
Research and product
development costs 1,625 1,006 4,538 3,022
Interest expense 220 5 346 19
Investment income ( 21) ( 46) ( 53) ( 248)
Foreign exchange
(gain) loss ( 66) 34 ( 97) 79
Other expenses 154 137 410 398
28,966 17,050 79,931 45,298
INCOME BEFORE INCOME
TAXES 1,019 778 7,337 3,849
INCOME TAX EXPENSE 333 306 2,511 1,233
NET INCOME $ 686 $ 472 $ 4,826 $ 2,616
EARNINGS PER SHARE:
Primary $ 0.07 $ 0.05 $ 0.49 $ 0.28
Fully diluted $ 0.07 $ 0.05 $ 0.49 $ 0.28
<FN>
Note: Earnings per share amounts have been adjusted to reflect a two-for-one stock
split effective December 5, 1994.
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
(4)
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<TABLE>
C-COR ELECTRONICS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
March 24 March 25 March 24 March 25
1995 1994 1995 1994
(000s omitted)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 686 $ 472 $4,826 $2,616
Adjustments to reconcile net income to
net cash and cash equivalents provided
by (used in) operating activities:
Depreciation and amortization 1,257 637 3,069 1,739
Provision for doubtful accounts 74 34 186 59
Provision for deferred income tax
benefit ( 593) ( 112) ( 1,238) ( 505)
Provision for deferred retirement
salary plan 26 28 72 76
Tax benefit deriving from stock option
exercise and sale activity -0- -0- 541 -0-
Issue common stock to retirement plan -0- 9 -0- 45
Issue common stock to employee stock
purchase plan 20 9 40 28
Loss (gain) on sale of property,
plant and equipment 22 ( 29) 21 ( 28)
Loss (gain) on sale of marketable
securities 7 ( 5) 51 ( 17)
Provision for unrealized loss of
marketable securities -0- 53 -0- 53
Changes in operating assets and
liabilities:
Accounts receivable ( 3,200) ( 1,410) ( 5,667) ( 2,499)
Inventories ( 2,243) ( 2,332) ( 7,582) ( 4,828)
Other current assets ( 274) 28 ( 455) ( 144)
Accounts payable 1,023 3,329 427 3,499
Accrued liabilities 401 298 834 ( 33)
Income taxes recoverable -0- ( 1) ( 8) 172
Income taxes payable 537 367 ( 683) 295
NET CASH AND CASH EQUIVALENTS (USED IN)
PROVIDED BY OPERATING ACTIVITIES ( 2,257) 1,375 ( 5,566) 528
INVESTING ACTIVITIES
Purchase of property, plant
and equipment ( 4,397) ( 888) (12,706) ( 2,442)
Proceeds from sale of property,
plant and equipment 2 -0- 4 2
Purchase of marketable securities -0- ( 726) -0- ( 2,147)
Proceeds from sale of marketable
securities 405 544 2,287 983
Proceeds from maturity of marketable
securities 35 -0- 115 -0-
NET CASH AND CASH EQUIVALENTS (USED IN)
INVESTING ACTIVITIES ( 3,955) ( 1,070) (10,300) ( 3,604)
FINANCING ACTIVITIES
Payment of debt and capital
lease obligation ( 14) ( 15) ( 43) ( 71)
Proceeds from exercise of stock options 256 38 858 148
Proceeds on line-of-credit 13,156 300 37,140 1,050
Payment of line-of-credit ( 8,490) ( 300) (24,291) ( 1,050)
NET CASH AND CASH EQUIVALENTS PROVIDED
BY FINANCING ACTIVITIES 4,908 23 13,664 77
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ( 1,304) 328 ( 2,202) ( 2,999)
Cash and cash equivalents at beginning
of period 463 3,231 1,361 6,558
CASH AND CASH EQUIVALENTS AT
END OF PERIOD ($ 841) $3,559 ($ 841) $3,559
</TABLE>
(5)
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C-COR ELECTRONICS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The accompanying, unaudited, consolidated, condensed
financial statements have been prepared in accordance with
generally-accepted accounting principles for interim financial
information, and in the opinion of management, contain all
adjustments necessary to fairly present the Company's financial
position as of March 24, 1995, and the results of its
operations for the thirteen-week period then ended.
Operating results for the thirty-nine week period are not
necessarily indicative of the results that may be expected
for the year ending June 30, 1995. For further
information, refer to financial statements and footnotes
thereto included in the Company's annual report on
Form 10-K for the year ended June 24, 1994.
2. A two-for-one stock split was voted by the Company's
Board of Directors. The additional shares were
distributed on December 5, 1994 to shareholders of record at
the close of business on November 4, 1994 on the basis of one
additional share for each share held.
3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
Accounts payable and accrued liabilities consist of:
<CAPTION>
March 24 June 24
1995 1994
<S> <C> <C>
Accounts payable $ 8,345 $ 7,918
Accrued other 1,807 1,594
Accrued warranty expense 1,382 602
Accrued incentive plan 1,156 1,127
Accrued vacation 1,048 928
Accrued salary 625 930
$14,363 $13,099
</TABLE>
(6)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations.
Net sales for the thirteen-week period ended March 24,
1995 were $29,985,000, up 68.2% from last year's sales of
$17,828,000 for the same period. Net sales for the
thirty-nine week period ended March 24, 1995 were
$87,268,000. This sales figure is up 77.6% over last year's
sales of $49,147,000 for the same period. The increase in
sales in the third quarter and year-to-date versus the same
periods last year was attributable to increased demand by
cable television operators for telecommunication equipment.
International sales as a percentage of total consolidated sales
were 41% for the quarter ended March 24, 1995 and 36% for
the period year-to-date. This compares to 16% for the quarter
and 27% for the same periods the prior year. The increase is
primarily attributable to sales to Canada and the Far East.
C-COR's traditional customer base, as well as potential new
customers in the communications industry, are positioning
themselves to participate in an evolving and dynamic
multimedia communications market. Part of this positioning
involves the installation and/or upgrading of signal
distribution equipment in their communications networks.
C-COR develops and sells RF amplifiers and fiber optic
equipment which are integral components of the aforementioned
networks.
C-COR's gross profit percentage for the third quarter of
fiscal year 1995 was 25.1% versus 29.7% for the same period
the prior year. The gross profit percentage for the
nine-month period ended March 24, 1995 was 28.7% versus 33.3%
for the same period the prior year. Third quarter
gross profitability was down relative to the prior year as a
result of startup costs incurred with C-COR's new manufacturing
facility located in Reedsville, Pennsylvania. The move
into C-COR's new production facility in State College,
Pennsylvania in January 1995 also impacted productivity and
gross profitability for the quarter. The lower gross margin
percentage year-to-date relative to last year is a result of
a combination of the factors previously described which
impacted third quarter plus product sales mix and warranty
expense.
Selling, general and administrative expense for the third
quarter of fiscal year 1995 was $4,595,000. This is up
35.9% over last year's total of $3,380,000 for the same
period. Selling, general and administrative expense for the
first three quarters of fiscal year 1995 was $12,595,000.
This is up 36.5% over the prior year's total of
$9,224,000 for the same period. The increase for the
quarter and year-to-date is primarily attributable to the
Company's expansion of its sales group to address potential
new customer opportunities in the evolving multimedia
communications market.
Research and product development expense for the
quarter ended March 24, 1995 was $1,625,000, up 61.5% over
last year's total of $1,006,000. Research and product
development expense for the three quarters ended March 24,
1995 was $4,538,000, up 50.2% over last year's total of
$3,022,000 for the same period. The increases for the quarter
and year-to-date relate to increased fiber optic and RF
product development activity. Research and product
development headcount increased 29% from March 25, 1994
through March 24, 1995.
(7)
<PAGE>
Interest expense for the third quarter of fiscal year 1995 was
$220,000. Last year's interest expense for the same period
was $5,000. Interest expense for the thirty-nine weeks
ended March 24, 1995 was $346,000 versus $19,000 for the same
period the prior year. Investment income for the first nine
months of fiscal year 1995 was $53,000 versus $248,000
for the same period the prior year. The Company is in the
process of expanding its manufacturing capabilities and
upgrading its facilities in general. This effort, in
conjunction with pronounced sales growth, has caused C-COR to
liquidate a portion of its investment portfolio (reducing
investment income) and borrow approximately $12.8 million on
its line-of-credit during fiscal year 1995 (increasing
interest expense). Cash requirements and sources of
cash will be discussed in greater detail in a subsequent
section.
To summarize, sales for the first nine months of fiscal year
1995 were up 77.6% over last year's sales for the same
period. Gross margin percentage on these sales, however,
decreased 4.6% to 28.7% as a result of new plant start-up
costs and other expenses related to C-COR's capacity ramp-up.
Operating expenses increased 39.9% for the first nine months
of fiscal year 1995 relative to last year as C-COR added
personnel to support expanded sales and product development
efforts. Earnings per share for the thirty-nine week period
were $0.49 versus $0.28 for the same period last year.
Accounts receivable increased $5,481,000 and inventories
increased $7,582,000 over the first nine months of fiscal year
1995. The increase in receivables is attributable to the
aforementioned increase in C-COR's sales volume in fiscal 1995
versus the prior year. Inventory increased as a result of
C-COR's ramp-up efforts to meet increased production demands.
C-COR's line-of-credit borrowings totaled $12,849,000 at
March 24, 1995. These funds were used to provide working
capital for expanding operations and financing capital
additions. Additionally, C-COR reduced its cash and cash
equivalents by approximately $2.2 million and its marketable
securities by $2,438,000 over the same period in funding
expansion requirements.
C-COR completed a new 90,000 square foot manufacturing
facility at its State College, Pennsylvania, location in
January of 1995. C-COR also entered into a lease-purchase
arrangement for a 60,000 square foot manufacturing facility
in Reedsville, Pennsylvania, in December of 1995. The
transaction was accounted for as a capital lease with a life
of 15 years and increased fixed assets and long-term
liabilities by approximately $1.7 million.
The Company has obtained a commitment for mortgage funding
through the Pennsylvania Industrial Development Authority
(PIDA) for 40% of the cost of the building expansion at the
State College, Pennsylvania, manufacturing facility up to
$1,952,000. The PIDA mortgage will have an interest rate of
2%. The funds will be made available at the completion of
the project. Monthly payments of principal and interest are
required through the year 2009 (fifteen years).
A commitment for additional mortgage funding for the expansion
and renovation of the State College facility has been obtained
from the Pennsylvania "Sunny Day Fund." This funding
commitment totals $4,500,000. It also will have an interest
rate of 2% and require monthly payments of principal and
interest through the year 2009. The funds will be disbursed
to the Company as construction requirements dictate throughout
fiscal year 1995. No funds have been disbursed yet through
March 24, 1995.
(8)
<PAGE>
The Company maintains a line-of-credit with a bank which can be
drawn on up to a maximum of $18,000,000, contingent on
sufficient collateral in accounts receivable as outlined in a
revolving credit agreement.
Management perceives that operating cash flow, as well as the
aforementioned financing sources, will adequately provide for
all cash requirements for the immediate future.
(9)
<PAGE>
<TABLE>
(11) -- STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
March 24 March 25 March 24 March 25
1995 1994 1995 1994
(000's omitted, except per share data)
<S> <C> <C> <C> <C>
PRIMARY:
Weighted Average Number of
Shares Outstanding 9,370 9,138 9,297 9,124
Net Effect of Dilutive Stock
Options--based on the
Treasury Stock method using
average market price 500 270 565 238
Totals 9,870 9,408 9,862 9,362
Net Income $ 686 $ 472 $4,826 $2,616
Per Share Amount $ 0.07 $ 0.05 $ 0.49 $ 0.28
FULLY DILUTED
Weighted Average Number of
Shares Outstanding 9,370 9,138 9,297 9,124
Net Effect of Dilutive Stock
Options--based on the
Treasury Stock method using
period ending market price
which is greater than average
market price 500 270 565 256
Totals 9,870 9,408 9,862 9,380
Net Income $ 686 $ 472 $4,826 $2,616
Per Share Amount: $ 0.07 $ 0.05 $ 0.49 $ 0.28
<FN>
Note: Shares outstanding and earnings per share amounts have been adjusted to reflect
a two-for-one stock split effective December 5, 1994.
</TABLE>
(10)
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
The following exhibit is included herein:
(11) Statement re: computation of earnings per share
Reports on Form 8-K.
On April 11, 1995, the Registrant filed a Form 8-K informing
the Securities & Exchange Commission of the following:
On or about March 31, 1995, a purported shareholder of
the Registrant filed a complaint in the United States
District Court for the Eastern District of Pennsylvania
against the Company and one of its executive officers
alleging that, during the period January 17, 1995 through
March 24, 1995, the defendants knowingly or recklessly
omitted material information about the Registrant in
violation of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and common law. The complaint seeks
permission to proceed as a class action on behalf of
certain persons who purchased shares of the Registrant's
Common Stock during the period January 17, 1995 through
March 24, 1995 and who were allegedly damaged. The
complaint seeks compensatory damages in an unspecified
amount and costs and expenses relating to the complaint,
including reasonable attorney's fees.
(11)
<PAGE>
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.
C-COR ELECTRONICS, INC.
(Registrant)
Date: May 1, 1995 /s/ JACK B. ANDREWS
Vice President-Finance,
Secretary & Treasurer
(Principal Financial Officer)
Date: May 1, 1995 /s/ CHRIS A. MILLER
Chris A. Miller, C.P.A.,
Controller & Planning Manager
(Principal Accounting Officer)
(12)
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