United States
SECURITIES AND 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: December 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 - 9,575,570 shares as of December 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
December 29, 1995.
Consolidated condensed statements of income -- thirteen weeks
ended December 29, 1995 and December 23, 1994; twenty-six weeks ended
December 29, 1995 and December 23, 1994.
Consolidated condensed statements of cash flows -- thirteen weeks
ended December 29, 1995 and December 23, 1994; twenty-six weeks ended
December 29, 1995 and December 23, 1994.
Notes to consolidated condensed financial statements -- December 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.
<TABLE>
Item 1. Financial Statments
<CAPTION>
C-COR Electronics, Inc.
Consolidated Condensed Balance Sheet
ASSETS
December 29 June 30
1995 1995
(Unaudited) (Note)
(000's omitted)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,218 $ 1,545
Marketable securities 391 393
Accounts receivable 23,948 33,142
----------- ---------
27,557 35,080
Inventories:
Raw materials 17,527 16,406
Work-in-process 4,801 3,826
Finished goods 4,888 4,751
----------- ---------
Total inventories 27,216 24,983
Deferred taxes 3,022 2,873
Other current assets 868 1,210
----------- ---------
TOTAL CURRENT ASSETS 58,663 64,146
PROPERTY, PLANT AND EQUIPMENT - NET 24,074 22,129
INTANGIBLE ASSETS - NET AND
OTHER LONG-TERM ASSETS 1,307 1,386
----------- ---------
$ 84,044 $ 87,661
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 15,579 $ 18,245
Income taxes (recoverable) payable (1,647) 872
Line-of-credit 10,000 20,451
Current portion of long-term debt 851 136
----------- ---------
TOTAL CURRENT LIABILITIES 24,783 39,704
LONG-TERM DEBT, less current portion 7,217 2,036
DEFERRED TAXES 782 828
OTHER LONG-TERM LIABILITIES 407 368
----------- ---------
33,189 42,936
SHAREHOLDERS' EQUITY:
Common Stock, $.10 par, authorized shares 24,000,000;
issued shares of 9,575,570 on 12/29/95
and 9,450,272 on 06/30/95 958 945
Additional paid-in capital 19,691 16,915
Retained earnings 30,218 26,891
Translation adjustment (5) (7)
Net unrealized loss on marketable securities (7) (19)
----------- ---------
50,855 44,725
----------- ---------
$ 84,044 $ 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>
<CAPTION>
C-COR Electronics, Inc.
Consolidated Condensed Statements of Income (Unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
December 29 December 23 December 29 December 23
1995 1994 1995 1994
(000's omitted, except per share data)
<S> <C> <C> <C> <C>
NET SALES $35,657 $29,730 $75,297 $57,284
------- ------- ------- -------
COSTS AND EXPENSES:
Cost of sales 27,320 20,865 56,129 39,734
Selling, general and administrative expense 4,639 4,053 9,319 7,999
Research and product development costs 2,120 1,506 4,070 2,914
Interest expense 325 103 701 126
Investment Income (8) (30) (21) (32)
Foreign exchange loss (gain) 77 174 (147) (31)
Other expenses 48 141 72 256
------- ------- ------- -------
34,521 26,812 70,123 50,966
INCOME BEFORE INCOME TAXES 1,136 2,918 5,174 6,318
INCOME TAXES 440 973 1,847 2,178
------- ------- ------- -------
NET INCOME $ 696 $ 1,945 $ 3,327 $ 4,140
EARNINGS PER SHARE:
Primary $ 0.07 $ 0.20 $ 0.34 $ 0.42
Fully diluted $ 0.07 $ 0.20 $ 0.34 $ 0.42
<FN>
See notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
C-COR ELECTRONICS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
December 29 December 23 December 29 December 23
1995 1994 1995 1994
(000's omitted)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 696 $ 1,945 $ 3,327 $ 4,140
Adjustments to reconcile net income to net cash
and cash equivalents provided by (used in)
operating activities:
Depreciation and amortization 1,331 928 2,649 1,811
Provision for doubtful accounts 106 59 72 112
Provision for deferred income tax benefit 10 (246) (201) (645)
Provision for deferred retirement salary plan 19 24 39 46
Tax benefit of sales of stock option shares 197 541 1,790 541
Issue common stock to employee stock purchase plan 22 11 46 20
Loss on sale of marketable securities - - - 45
Gain on sale of property, plant and equipment - - (2) (1)
Changes in operating assets and liabilities:
Accounts receivable 5,504 476 9,122 (2,467)
Inventories (1,069) (1,945) (2,233) (5,339)
Other assets 25 (75) 313 (181)
Accounts payable 953 263 (696) (596)
Accrued liabilities (497) 846 (1,968) 433
Income taxes (2,037) (2,302) (2,519) (1,228)
NET CASH AND CASH EQUIVALENTS PROVIDED BY ---------- ------------ ---------- ------------
(USED IN) OPERATING ACTIVITIES 5,260 525 9,739 (3,309)
---------- ------------ ---------- ------------
INVESTING ACTIVITIES
Purchase of property, plant and equipment (1,988) (4,824) (4,486) (8,309)
Proceeds from sale of property, plant and equipment - - 2 2
Proceeds from sale of marketable securities - 10 - 1,882
Proceeds from maturity of marketable securities - - 20 80
NET CASH AND CASH EQUIVALENTS ---------- ------------ ---------- ------------
USED IN INVESTING ACTIVITIES (1,988) (4,814) (4,464) (6,345)
---------- ------------ ---------- ------------
FINANCING ACTIVITIES
Payment of debt and capital lease obligations (128) (15) (156) (29)
Proceeds from long-term borrowings 6,052 - 6,052 -
Proceeds from line-of-credit 10,609 15,247 26,539 23,984
Payment of line-of-credit (17,741) (10,736) (36,990) (15,801)
Proceeds from exercise of stock options 148 403 953 602
NET CASH AND CASH EQUIVALENTS (USED IN) ---------- ------------ ---------- ------------
PROVIDED BY FINANCING ACTIVITIES (1,060) 4,899 (3,602) 8,756
---------- ------------ ---------- ------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,212 610 1,673 (898)
Cash and equivalents at beginning of period 1,006 (147) 1,545 1,361
---------- ------------ ---------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,218 $ 463 $ 3,218 $ 463
<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 December 29, 1995 and
the results of its operations for the thirteen-week period then ended.
Operating results for the twenty-six 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. The Company received disbursements on two, low-interest mortgage loans
during the quarter ended December 29, 1995 as a result of expansion and
renovations at its manufacturing facility in State College, Pennsylvania.
A partial disbursement was received from The Pennsylvania Industrial
Development Authority (PIDA)in the amount of $1,552,000. This represents
80% of a total commitment of $1,952,000. The mortgage has an interest rate
of 2%, contingent upon meeting certain job creation commitments. Monthly
payments of principal and interest are required through the year 2010
(fifteen years). A second source of mortgage funding was received from
the Pennsylvania "SunnyDay Fund" for $4,500,000. This loan, also requires
monthly payments of principal and interest and carries an interest rate of
2%, contingent upon meeting certain job creation commitments. This funding
is evidenced by two notes, the first of which is for $489,000 maturing in
approximately 15 years, and the other for $4,011,000 with a maturity up to
7 years.
3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>
Accounts payable and accrued liabilities consist of:
December 29 June 30
1995 1995
----------- --------
<S> <C> <C>
Accounts payable $ 8,590 $ 9,286
Accrued incentive plan expense 863 2,416
Accrued vacation expense 1,335 1,295
Accrued salary expense 658 819
Accrued warranty expense 1,936 1,754
Accrued other 2,197 2,675
-------- --------
$ 15,579 $ 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 December 29, 1995 were $35,657,000,
an increase of 19.9% from last year's sales of $29,730,000 for the same period.
Net sales for the twenty-six week period ended December 29, 1995 were
$75,297,000, an increase of 31.4% over last year's sales for the same period of
$57,284,000. The increased sales for the second quarter and year-to-date
versus the same periods last year were attributed to increased sales of RF and
Fiber Optics products to both cable television (CATV) and telephone companies
worldwide.
C-COR's backlog at December 29, 1995 was approximately $42 million. A
factor that could have a significant impact on C-COR's future bookings is
telecommunication reform legislation, that was signed into law on February 8,
1996 by President Clinton. The passage of this legislation may enhance
competition and reduce regulatory uncertainty. The timing and extent of any
anticipated sales are still currently unknown.
C-COR's gross profit percentage for the second quarter of fiscal year 1996 was
23.4% versus 29.8% for the same period the prior year. The gross profit
percentage for the twenty-six week period ended December 29, 1995 was 25.5%
versus 30.6% for the same period last fiscal year. The reduction in gross margin
is a result of increased production costs over the prior year. Increased fixed
manufacturing costs, as a result of expansion of personnel and capital equipment
to meet higher production volumes, resulted in increased underabsorbed overhead.
In addition, product mix and pricing pressures also contributed to lower gross
margins during the period. Another factor for C-COR was the installation of a
new corporate computer system, which was a major undertaking during the second
quarter of fiscal year 1996. The system, designed to improve information at all
levels of the organization, is a totally integrated manufacturing, financial,
engineering and services software package that operates in a multi-plant
environment. Personnel resources were shifted temporarily in order to make the
necessary software conversion, impacting productivity and efficiency during the
quarter.
Selling, general and administrative expense for the second quarter of fiscal
year 1996 was $4,639,000, an incease of 14.5% over last year's total of
$4,053,000. Selling, general and administrative expense for the first half
of fiscal year 1996 was $9,319,000, an increase of 16.5% over last year's
expense of $7,999,000 for the same period. The increase is primarily
attributed to the expansion of the Company's sales group to address potential
new customer opportunities both in the domestic and international markets.
Research and product development costs for the second quarter of fiscal year
1996 were $2,120,000, an increase of 40.8% over last year's total of $1,506,000
for the same period. Research and product development costs for the first
two quarters of fiscal year 1996 totaled $4,070,000, an increase of 39.7%
over last year's figure of $2,914,000 for the same period.
The increase is due to expansion of the Company's engineering personnel and
resources, which enabled the introduction of a series of new products during the
quarter. Expenditures increased for development of new products for C-COR's
FlexNet(TM) series of RF product and LinkNet(TM) series of AM fiber optic
product. A Cable Network Manager (CNM(TM)) system has also been developed to
allow users access to critical information pertaining to network components.
Expenditures also increased for ongoing development of C-COR's digital fiber
optic line of products.
Interest expense for the first six months of fiscal year 1996 was $701,000. This
represents an increase over last year's total for the same period of $126,000.
This increase is due to borrowings on the Company's line-of-credit for expansion
of manufacturing capabilities and upgrade to its facilities.
Liquidity and Sources of Capital
Cash and cash equivalents as of December 29, 1995 totaled $3,218,000. Principal
sources of cash in the second quarter of fiscal year 1996 were from operating
activities which generated $5,260,000, and proceeds from long-term borrowings.
The Company's current ratio increased to 2.37 at December 29, 1995, up from 1.6%
at June 30, 1995.
Accounts receivable decreased $9,194,000 and inventories increased $2,233,000
over the first six months of fiscal year 1996. The decrease in accounts
receivable is attributed primarily to the fact that sales in the fourth quarter
of fiscal year 1995 were $50,172,000, compared to sales during the second
quarter of fiscal year 1996 of $35,657,000. Inventories increased as a result of
timing of order bookings and changes in production mix during the quarter.
As of December 29, 1995, C-COR had a balance of recoverable income taxes that
derived primarily from prepayments of estimated taxes and a tax benefit deriving
from sales of stock option shares.
The Company received disbursements on two low interest mortgage loans during the
quarter ended December 29, 1995. A partial disbursement was received from The
Pennsylvania Industrial Development Authority (PIDA), in the amount of
$1,552,000. This represents 80% of a total funding commitment of $1,952,000. The
mortgage has an interest rate of 2%, and requires monthly principal and interest
payments through the year 2010 (fifteen years). A second source of mortgage
funding was received from the Pennsylvania "Sunny Day Fund" for $4,500,000. This
loan also carries an interest rate of 2%, and is evidenced by two notes, the
first of which is for $489,000 maturing in approximately fifteen years, and the
other for $4,011,000 with a maturity up to seven years.
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 $10,000,000 drawn on this line-of-credit at the end of the second
quarter of fiscal year 1996, down $10,451,000 since the end of fiscal year 1995.
Long-term mortgage funding was used to offset the balance of short-term
borrowings during the second quarter of fiscal year 1996.
Management believes 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.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
The following exhibit is included herin:
(11) Statement re: comuputation of earnings per share
The Company did not file any reports on Form 8-K during the thirteen
week period ended December 29, 1995.
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
December 29 December 23 December 29 December 23
1995 1994 1995 1994
(000's omitted, except per share data)
<S> <C> <C> <C> <C>
PRIMARY
Weighted Average Shares Outstanding 9,562 9,299 9,526 9,262
Net effect of dilutive stock
options-based on the
treasury stock method using
average market price 261 560 368 505
-------- ------- ------- -------
Total 9,823 9,859 9,894 9,767
Net income $ 696 $ 1,945 $ 3,327 $ 4,140
Net income per share $ 0.07 $ 0.20 $ 0.34 $ 0.42
FULLY DILUTED
Weighted Average Shares Outstanding 9,562 9,299 9,526 9,262
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 261 580 368 585
-------- ------- ------- -------
Total 9,823 9,879 9,894 9,847
Net income $ 696 $ 1,945 $ 3,327 $ 4,140
Net income per share $ 0.07 $ 0.20 $ 0.34 $ 0.42
</TABLE>
<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: February 12, 1996 /s/ CHRIS A. MILLER
C.P.A., Vice President-Finance
Secretary and Treasurer
(Principal Financial Officer)
Date: February 12, 1996 /s/ JOSEPH E. ZAVACKY
Controller and Assistant Secretary
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1996
<PERIOD-START> SEP-30-1995
<PERIOD-END> DEC-29-1995
<CASH> 3,218
<SECURITIES> 391
<RECEIVABLES> 23,377
<ALLOWANCES> 571
<INVENTORY> 27,216
<CURRENT-ASSETS> 58,663
<PP&E> 40,424
<DEPRECIATION> 16,350
<TOTAL-ASSETS> 84,044
<CURRENT-LIABILITIES> 24,783
<BONDS> 0
<COMMON> 958
0
0
<OTHER-SE> 49,897
<TOTAL-LIABILITY-AND-EQUITY> 84,044
<SALES> 35,657
<TOTAL-REVENUES> 35,657
<CGS> 27,320
<TOTAL-COSTS> 6,759
<OTHER-EXPENSES> 117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 325
<INCOME-PRETAX> 1,136
<INCOME-TAX> 440
<INCOME-CONTINUING> 696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 696
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
