United States
SECURITIES & EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the thirteen-week period ended: September 29, 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 Identification No.)
incorporation or organization)
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 No_____
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 - 9,552,388 shares as of September 29, 1995.
<PAGE>
INDEX
C-COR ELECTRONICS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited).
Consolidated condensed balance sheets -- June 30, 1995 and
September 29, 1995
Consolidated condensed statements of income -- thirteen-weeks
ended September 29, 1995 and September 23, 1994
Consolidated condensed statements of cash flows -- thirteen-weeks
ended September 29, 1995 and September 23, 1994
Notes to consolidated condensed financial statements --
September 29, 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.
<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: November 13, 1995 /s/ CHRIS A. MILLER
Chris A. Miller, C.P.A.,
Vice President-Finance,
Secretary & Treasurer
(Principal Financial Officer)
Date: November 13, 1995 /s/ JOSEPH E. ZAVACKY
Controller & Assistant
Secretary
(Principal Accounting Officer)
<PAGE>
Item 1. Financial Statments
<TABLE>
C-COR Electronics, Inc.
Consolidated Condensed Balance Sheet
ASSETS
<CAPTION>
September 29 June 30
1995 1995
(Unaudited) (Note)
(000's omitted)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,006 $ 1,545
Marketable securities 377 393
Accounts receivable 29,558 33,142
30,941 35,080
Inventories:
Raw materials 16,677 16,406
Work-in-process 4,971 3,826
Finished goods 4,499 4,751
Total inventories 26,147 24,983
Deferred taxes 3,076 2,873
Other current assets 911 1,210
TOTAL CURRENT ASSETS 61,075 64,146
PROPERTY, PLANT AND EQUIPMENT - NET 23,362 22,129
INTANGIBLE ASSETS - NET AND
OTHER LONG-TERM ASSETS 1,344 1,386
$85,781 $87,661
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $15,131 $18,245
Income taxes currently payable 390 872
Line-of-credit 17,132 20,451
Current portion of long-term debt 136 136
TOTAL CURRENT LIABILITIES 32,789 39,704
LONG-TERM DEBT, less current portion 2,008 2,036
DEFERRED TAXES 820 828
OTHER LONG-TERM LIABILITIES 388 368
36,005 42,936
SHAREHOLDERS' EQUITY:
Common Stock, $.10 par, authorized shares 24,000,000;
issued shares of 9,552,388 on 09/29/95
and 9,450,272 on 06/30/95 955 945
Additional paid-in capital 19,327 16,915
Retained earnings 29,523 26,891
Translation adjustment (13) (7)
Net unrealized loss on marketable
securities (16) (19)
49,776 44,725
$85,781 $87,661
<FN>
Note: The Balance sheet at June 30, 1995 has been derived from audited
financial statements at that date.
See notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
C-COR Electronics, Inc.
Consolidated Condensed Statements of Income (Unaudited)
<CAPTION>
Thirteen-Weeks Ended
September 29 September 23
1995 1994
(000's omitted, except per share data)
<S> <C> <C>
NET SALES $39,640 $27,554
COSTS AND EXPENSES:
Costs of sales 28,809 18,869
Selling, general and administrative expense 4,680 3,946
Research and product development costs 1,950 1,408
Interest expense 375 23
Investment income (13) (2)
Foreign exchange gain (224) (206)
Other expenses 25 116
35,602 24,154
INCOME BEFORE INCOME TAXES 4,038 3,400
INCOME TAXES 1,407 1,205
NET INCOME $ 2,631 $ 2,195
EARNINGS PER SHARE:
Primary $ .27 $ .23
Fully diluted $ .27 $ .23
<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.
</FN>
</TABLE>
<PAGE>
<TABLE>
C-COR Electronics, Inc.
Consolidated Condensed Statements of Cash Flows (Unaudited)
<CAPTION>
Thirteen-Weeks Ended
September 29 September 23
1995 1994
(000's omitted)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 2,631 $ 2,195
Adjustments to reconcile net income to net cash
and cash equivalents provided by (used in)
operating activities:
Depreciation and amortization 1,318 883
Provision for doubtful accounts (34) 53
Provision for deferred income tax benefit (211) (399)
Provision for deferred retirement salary plan 20 23
Tax benefit of premature sales of incentive
stock option shares 1,593 0
Issue common stock to employee stock purchase plan 24 9
Loss on sale of marketable securities 0 45
Gain on sale of propoerty, plant and equipment (2) (1)
Changes in operating assets and liabilities:
Accounts receivable 3,618 (2,943)
Inventories (1,164) (3,395)
Other assets 288 (106)
Accounts payable (1,649) (859)
Accrued liabilities (1,471) (413)
Income taxes recoverable 0 (7)
Income taxes payable (482) 1,081
NET CASH AND CASH EQUIVALENTS PROVIDED BY
(USED IN) OPERATING ACTIVITIES 4,479 (3,834)
INVESTING ACTIVITIES
Purchase of property, plant and equipment (2,498) (3,485)
Proceeds from sale of property, plant and equipment 2 2
Proceeds from sale of marketable securities 0 1,872
Proceeds from maturity of marketable securities 20 80
NET CASH AND CASH EQUIVALENTS USED IN
INVESTING ACTIVITIES (2,476) (1,531)
FINANCING ACTIVITIES
Payment of debt and capital lease obligations (28) (14)
Proceeds from line-of-credit 15,930 8,737
Payment of line-of-credit (19,249) (5,065)
Proceeds from exercise of stock options 805 199
NET CASH AND CASH EQUIVALENTS (USED IN)
PROVIDED BY FINANCING ACTIVITIES (2,542) 3,857
DECREASE IN CASH AND CASH EQUIVALENTS (539) (1,508)
Cash and cash equivalents at beginning of period 1,545 1,361
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,006 $ (147)
<FN>
See notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
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 September 29, 1995 and the results of its
operations for the thirteen-week period then ended. Operating results for
the thirteen-week period are not necessarily indicative of the results that
may be expected for the year ending June 28, 1996. 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 30, 1995.
2. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
Accounts payable and accrued liabilities consist of:
<CAPTION>
September 29 June 30
1995 1995
(000's omitted)
<S> <C> <C>
Accounts payable $ 7,638 $ 9,286
Accrued incentive plan expense 1,115 2,416
Accrued vacation expense 1,310 1,295
Accrued salary expense 1,348 819
Accrued warranty expense 1,843 1,754
Accrued other 1,877 2,675
$15,131 $18,245
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations.
Results of Operations
Net sales for the thirteen-week period ended September 29, 1995 were
$39,640,000. This represents an increase of 44% over last fiscal year's
sales of $27,554,000 for the same period. The increased sales for the
first quarter versus the same period of last year were attributable to
increased sales of RF amplifiers and AM fiber optic products to cable
television (CATV) operators and telephone companies worldwide.
Telecommunications reform legislation is still pending in the U.S.
Congress as of September 29, 1995. This legislation is aimed at
deregulating the domestic communications industry, bringing the
benefits of competition to telephone and video services. It is
anticipated that passage of this legislation may have a positive
revenue impact on C-COR and other suppliers of telecommunication
equipment because of enhanced competition and a reduction in regulatory
uncertainty. The timing and extent of the anticipated positive impact
are currently unknown.
International sales accounted for 51% of total consolidated sales for
the quarter ended September 29, 1995. This compares to 36% for the same
period the prior fiscal year. Strong sales to Canada combined with an
expanding international marketplace, especially in Asia, Europe, and
Latin America resulted in an increased demand for the Company's
products outside the U.S.
Gross profit percentage for the first quarter of fiscal year 1996 was
27.3% versus 31.5% for the same period the prior fiscal year. Increases
in fixed manufacturing overhead costs as a result of expansion of
facilities and personnel accounted for a portion of the gross profit
percentage decrease over the prior year. Manufacturing variances
charged directly to cost-of-sales were also higher in the first quarter
of fiscal year 1996 versus the same period last year due to increased
training costs and other expenses associated with the ramp-up in
production. In addition, expense was and will continue to be incurred
during fiscal year 1996 associated with the contracting of an outside
consulting group to assist with improving productivity and efficiency
in C-COR's order fulfillment and material procurement processes.
Selling, general and administrative expense for the first quarter of
fiscal year 1996 was $4,680,000. This is up 18.6% over last year's
total of $3,946,000 for the same period. The increase is primarily due
to expansion of the Company's sales group to address new market
opportunities and additions to administrative personnel to support
increased business activity. As a percent of net sales, however,
selling, general and administrative expense decreased by approximately
2.5% to 11.8% in the first quarter of fiscal year 1996, versus 14.3%
for the same period of the prior year.
Research and product development costs for the first quarter of fiscal
year 1996 were $1,950,000. This represents a 38.4% increase over the
same period of the prior year. The increase is attributable to the
expansion of the Company's engineering personnel and resources,
especially in the area of fiber optic product development. Research and
product development costs were 4.9% of net sales in the first quarter
of fiscal year 1996, versus 5.1% for the same period of the previous
year.
Interest expense was $375,000 for the first quarter of fiscal year
1996. The increase over the total for the same period of last fiscal
year is due to borrowings on the Company's line-of-credit for expansion
of manufacturing capabilities and facilities, which began in the prior
fiscal year. Renovations are currently nearing completion at the
Company's headquarters, located in State College, Pennsylvania.
A foreign currency exchange gain of $224,000 was recorded in the first
quarter of fiscal year 1996 versus a gain of $206,000 in the same
period of the prior fiscal year. The exchange gain was primarily
attributable to the strengthening of the Canadian dollar relative to
the U.S. dollar during the first quarter of fiscal year 1996.
Liquidity and Sources of Capital
Cash and cash equivalents as of September 29, 1995 totaled $1,006,000.
Principal sources of cash in the first quarter of fiscal year 1996 were
from operating activities which generated $4,479,000. The Company's
current ratio increased to 1.9 at September 29, 1995, up from 1.6 at
June 30, 1995.
The Company closed on two low interest mortgages on October 24, 1995.
The Company anticipates receiving all mortgage funds in the second
quarter of fiscal year 1996. The first source of funding is through
the Pennsylvania Industrial Development Authority (PIDA), for
$1,952,000, at an interest rate of 2%. This represents 40% of the cost
of the new 90,000 square foot facility at the Company's headquarters in
State College, Pennsylvania. Monthly payments of principal and
interest will be required through the year 2010 (fifteen years). The
second source of mortgage funding is through the Pennsylvania "Sunny
Day Fund" for $4,499,000, also at an interest rate of 2%. This funding
will be evidenced by two notes, the first of which is for $488,000
maturing in approximately fifteen years, and the other for $4,011,000
with a maturity up to seven years, for the purchase of new equipment.
The Company maintains a line-of-credit with a bank which can be drawn
upon up to a maximum of $23,000,000, contingent on sufficient
collateral in accounts receivable as outlined in a revolving credit
agreement. The Company had a balance of $17,132,000 drawn on this
line-of-credit at the end of the first quarter of fiscal year 1996,
down $3,319,000 from the end of the prior fiscal year. The borrowings,
as mentioned earlier, resulted from expansion of manufacturing
capability and facility improvements which started during the prior
fiscal year. Borrowings on this line-of-credit will be offset upon
receipt of the mortgage funding previously discussed.
Management perceives that operating cash flow as well as the
aforementioned financing source, will adequately provide for all cash
requirements for the immediate future subject to requirements that
additional growth or strategic development might dictate.
<TABLE>
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Thirteen-Weeks Ended
September 29 September 23
1995 1994
(000's omitted, except per share data)
<S> <C> <C>
PRIMARY
Weighted Average Shares Outstanding 9,490 9,222
Net effect of dilutive stock
options-based on the
treasury stock method using
average market price 413 410
Total(1) 9,903 9,632
Net income $ 2,631 $ 2,195
Net income per share(1) $ 0.27 $ 0.23
FULLY DILUTED
Weighted Average Shares Outstanding 9,490 9,222
Net effect of dilutive stock
options-based on the treasury
stock method using the greater
of the average market price or
period end market price 413 491
Total(1) 9,903 9,713
Net income $ 2,613 $ 2,195
Net income per share(1) $ 0.27 $ 0.23
<FN>
(1) Adjusted to reflect a two-for-one stock split
effective December 5, 1994.
</FN>
</TABLE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
The following exhibit is included herein:
(11) Statement re: computation of earnings per share
The Company did not file any reports on Form 8-K during the thirteen-
week period ended September 29, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1996
<PERIOD-END> SEP-29-1995
<CASH> 1,006
<SECURITIES> 377
<RECEIVABLES> 30,087
<ALLOWANCES> 624
<INVENTORY> 26,147
<CURRENT-ASSETS> 61,075
<PP&E> 38,434
<DEPRECIATION> 15,072
<TOTAL-ASSETS> 85,781
<CURRENT-LIABILITIES> 32,789
<BONDS> 0
<COMMON> 955
0
0
<OTHER-SE> 19,327
<TOTAL-LIABILITY-AND-EQUITY> 85,781
<SALES> 40,011
<TOTAL-REVENUES> 40,011
<CGS> 28,809
<TOTAL-COSTS> 6,630
<OTHER-EXPENSES> (212)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 375
<INCOME-PRETAX> 4,038
<INCOME-TAX> 1,407
<INCOME-CONTINUING> 2,631
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,631
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
