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: September 27, 1996
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)
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 - 9,610,167 shares as of September 27, 1996.
<PAGE>
INDEX
C-COR ELECTRONICS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited).
Consolidated condensed balance sheets -- June 28, 1996 and
September 27, 1996
Consolidated condensed statements of income -- thirteen weeks
ended September 27, 1996 and September 29, 1995
Consolidated condensed statements of cash flows -- thirteen weeks
ended September 27, 1996 and September 29, 1995
Notes to consolidated condensed financial statements --
September 27, 1996
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 11, 1996 /s/ CHRIS A. MILLER
Chris A. Miller, C.P.A.,
Vice President-Finance,
Secretary & Treasurer
(Principal Financial Officer)
Date: November 11, 1996 /s/ JOSEPH E. ZAVACKY
Controller & Assistant
Secretary
(Principal Accounting Officer)
<PAGE>
<TABLE>
Item 1. Financial Statements
<CAPTION>
C-COR ELECTRONICS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
<S> <C> <C>
September 27, June 28,
1996 1996
---------------- ----------------
(Unaudited) (Note)
(000's omitted)
CURRENT ASSETS:
Cash and cash equivalents $427 $1,474
Marketable securities 567 364
Accounts receivable 20,865 21,465
---------------- ----------------
21,859 23,303
---------------- ----------------
Inventories:
Raw materials 16,434 14,372
Work-in-process 4,262 4,557
Finished goods 4,587 3,977
---------------- ----------------
Total inventories 25,283 22,906
---------------- ----------------
Deferred taxes 3,251 3,304
Other current assets 1,682 1,964
---------------- ----------------
TOTAL CURRENT ASSETS 52,075 51,477
---------------- ----------------
PROPERTY, PLANT AND EQUIPMENT - NET 25,281 25,617
INTANGIBLE ASSETS - NET AND
OTHER LONG-TERM ASSETS 1,296 1,313
---------------- ----------------
$78,652 $78,407
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $14,392 $13,918
Income taxes currently payable 236 131
Line-of-credit 0 1,147
Current portion of long-term debt 828 829
---------------- ----------------
TOTAL CURRENT LIABILITIES 15,456 16,025
LONG-TERM DEBT, less current portion 6,994 7,201
DEFERRED TAXES 1,442 1,367
OTHER LONG-TERM LIABILITIES 534 497
---------------- ----------------
24,426 25,090
---------------- ----------------
SHAREHOLDERS' EQUITY:
Common Stock, $.10 par; authorized shares
24,000,000; issued shares of 9,610,167 on
09/27/96 and 9,602,528 on 06/28/96 961 960
Additional paid-in capital 19,752 19,602
Retained earnings 33,569 32,810
Translation adjustment (37) (34)
Net unrealized loss on marketable securities (19) (21)
---------------- ----------------
54,226 53,317
---------------- ----------------
$78,652 $78,407
================ ================
<FN>
Note: The balance sheet at June 28, 1996 has been derived from the audited
financial statements at that date.
See notes to consolidated condensed financial statements.
</FN>
</TABLE>
<TABLE>
C-COR ELECTRONICS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
Thirteen Weeks Ended
September 27, September 29,
1996 1995
---------------- ----------------
(000's omitted, except per share data)
<S> <C> <C>
NET SALES $34,014 $39,640
---------------- ----------------
COSTS AND EXPENSES:
Cost of sales 26,212 28,809
Selling, general and administrative expense 4,116 4,680
Research and product development costs 2,449 1,950
Interest expense 62 375
Investment income (27) (13)
Foreign exchange gain 2 (224)
Other expenses 42 25
---------------- ----------------
32,856 35,602
---------------- ----------------
INCOME BEFORE INCOME TAXES 1,158 4,038
INCOME TAXES 399 1,407
---------------- ----------------
NET INCOME $759 $2,631
================ ================
NET INCOME PER SHARE:
Primary $0.08 $0.27
================ ================
Fully diluted $0.08 $0.27
================ ================
<FN>
See notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
C-COR ELECTRONICS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
Thirteen Weeks Ended
September 27, September 29,
1996 1995
---------------- ----------------
(000's omitted)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 759 $2,631
Adjustments to reconcile net income to net cash
and cash equivalents provided by operating
activities:
Depreciation and amortization 1,518 1,318
Provision (benefit) for deferred income tax benefit 127 (211)
Provision for deferred retirement salary plan 37 20
Gain on sale of property, plant and equipment - (2)
Changes in operating assets and liabilities:
Accounts receivable 600 3,584
Inventories (2,377) (1,164)
Other assets 244 288
Accounts payable 1,291 (1,649)
Accrued liabilities (817) (1,471)
Income taxes payable 105 (482)
NET CASH AND CASH EQUIVALENTS ---------------- ----------------
PROVIDED BY OPERATING ACTIVITIES 1,487 2,862
INVESTING ACTIVITIES
Purchase of property, plant and equipment (1,130) (2,498)
Proceeds from sale of marketable securities (200) -
Proceeds from maturity of marketable securities - 20
Proceeds from sale of property, plant and equipment - 2
NET CASH AND CASH EQUIVALENTS ---------------- ----------------
USED IN INVESTING ACTIVITIES (1,330) (2,476)
FINANCING ACTIVITIES
Payment of debt and capital lease obligations (208) (28)
Proceeds from line-of-credit 555 15,930
Payment on line-of-credit (1,702) (19,249)
Tax benefit deriving from exercise and sale
of stock option shares 60 1,593
Issue common stock to employee stock purchase plan 27 24
Proceeds from exercise of stock options 64 805
NET CASH AND CASH EQUIVALENTS ---------------- ----------------
USED IN FINANCING ACTIVITIES (1,204) (925)
---------------- ----------------
DECREASE IN CASH AND CASH EQUIVALENTS (1,047) (539)
Cash and cash equivalents at beginning of period 1,474 1,545
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 427 $1,006
================ ================
<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 (consisting only of normal, recurring adjustments) necessary to
fairly present the Company's financial position as of September 27, 1996 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 27, 1997. 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 28, 1996.
2. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
Accounts payable and accrued liabilities consist of:
<CAPTION>
September 27, June 28,
1996 1996
---------------- ----------------
(000's omitted)
<S> <C> <C>
Accounts payable $ 8,018 $ 6,727
Accrued incentive plan expense 141 318
Accrued vacation expense 1,488 1,532
Accrued salary expense 1,310 752
Accrued salary and sales tax expense 471 942
Accrued warranty expense 1,630 1,772
Accrued workers compensation
self-insurance expense 679 704
Accrued other 655 1,171
---------------- ----------------
$14,392 $13,918
================ ================
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations
General
The following discussion addresses the financial condition of the Company as of
September 27, 1996, and the results of operations for the thirteen-week period
ended September 27, 1996, compared with the same period of the prior year. This
discussion should be read in conjunction with the Management's Discussion and
Analysis section for the fiscal year ended June 28, 1996, included in the
Company's Annual Report on Form 10-K.
Some of the information presented in this report constitutes forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Although the Company believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors which could cause actual results to
differ from expectations include the timing of orders received from customers,
the gain or loss of significant customers, changes in the mix of products sold,
changes in the cost and availability of parts and supplies, regulatory changes
affecting the telecommunications industry, in general, and the Company's
operations, in particular, competition and changes in domestic and international
demand for the Company's products and other factors which may impact operations
and manufacturing. For additional information concerning these and other
important factors which may cause the Company's actual results to differ
materially from expectations and underlying assumptions, please refer to the
Company's reports filed on Form 10-K and other reports filed with the Securities
and Exchange Commission.
Results of Operations
Net sales for the thirteen-week period ended September 27, 1996, were
$34,014,000, a decrease of 14% from the prior year's sales of $39,640,000 for
the same period. The decrease in revenues was primarily attributable to a
reduction in purchase activity by a significant international customer, which
was partially offset by increased sales in the domestic cable television (CATV)
market.
International sales, as a percentage of total consolidated sales, were 19% for
the quarter ended September 27, 1996. This compares to 51% for the same period
of the prior year. The decrease in international sales was primarily a result of
reduced purchases by Rogers Cablesystems, Inc., a large cable system operator
located in Canada. Sales to Rogers Cablesystems, Inc. are expected to increase
in the future, but the timing and extent of the increase are currently unknown.
<PAGE>
Domestic sales, as a percentage of total consolidated sales, were 81% for the
quarter ended September 27, 1996. This compares to 49% for the same period of
the prior year. This increase was a result of higher purchases of RF amplifiers
by domestic CATV customers. In addition, increased demand resulted from the
introduction of expanded bandwidth products such as C-COR's 862 MHz bandwidth
amplifiers, and higher current carrying products such as C-COR's new line of 15
amp power passing amplifiers. The Company believes that its continued
development and introduction of new products for hybrid fiber coax (HFC)
networks will enhance its product offerings to both domestic and international
customers in the second half of fiscal year 1997.
The Company's backlog of sales orders at September 27, 1996, was approximately
$28.3 million compared with $27.1 million at June 28, 1996.
Gross profit percentage for the thirteen-week period ended September 27, 1996,
was 23% versus 27% for the same period the prior year. The reduction in gross
profit margin for the period is primarily a result of changes in product and
customer sales mix, compared to the same period the prior year. In addition,
excess capacity among suppliers has created competitive pricing pressures,
particularly on RF coaxial cable amplifiers. The Company expects pricing
pressures to continue, but is actively working on process improvements and other
programs to increase productivity and reduce costs throughout the Company with
the objective of mitigating the effect of these pressures.
Selling, general and administrative expense for the thirteen-week period ended
September 27, 1996, was $4,116,000, a decrease of 12% over the prior year's
total of $4,680,000 for the same period. The reduction is the result of reduced
selling and personnel expenses at the Company's Denver, Colorado, sales office,
and reductions in human resource and accrued Profit Incentive Plan expense.
Research and product development costs for the thirteen-week period ended
September 27, 1996, were $2,449,000, an increase of 26% over the prior year's
total of $1,950,000 for the same period. The increase is due primarily to higher
expenses for new product development related to C-COR's lines of AM and digital
fiber optic products and consulting expenses incurred to improve product
development processes.
Interest expense for the thirteen-week period was $62,000. This represents a
decrease of 83% over last year's total for the same period of $375,000. This
reduction is due primarily to a reduced level of outstanding borrowings on the
Company's line-of-credit during the period.
A foreign currency exchange loss of $2,000 was recorded during the thirteen-week
period ended September 27, 1996, versus a gain of $224,000 during the same
period of the prior year. The Company's balance of accounts receivable,
denominated in foreign currency, declined resulting in a minimal exchange loss
compared to the prior year.
Net income for the thirteen-week period ended September 27, 1996, was $759,000,
a decrease of 71% from the prior year's net income of $2,631,000 for the same
period. The aforementioned reduction in gross profitability on lower sales
volume was the primary factor in reduced net income for the period.
<PAGE>
Liquidity and Sources of Capital
Cash and cash equivalents totaled $427,000 as of September 27, 1996, compared to
$1,474,000 at June 28, 1996. The Company's current ratio was 3.4 at September
27, 1996, up from 3.2 at June 28, 1996. The primary source of cash during the
thirteen-week period ended September 27, 1996, were from net cash provided from
operations of $1,487,000. The Company's primary uses of cash during the
thirteen-week period ended September 27, 1996, were for purchases of property,
plant, and equipment of $1,130,000 and payments on the Company's line-of-credit
of $1,147,000.
The Company maintains a line-of-credit with a bank against which it may borrow
the lesser of $23,000,000 or a percentage of eligible accounts receivable. The
borrowings are collateralized by accounts receivable and inventory. The
line-of-credit is committed through October 31, 1996, and the Company
anticipates renewing this line-of-credit agreement upon expiration. The Company
had no borrowings on this line-of-credit as of September 27, 1996. This compares
to an outstanding balance of $1,147,000 at the end of the Company's fiscal year
ended June 28, 1996. Based upon the Company's analysis of eligible accounts
receivable, approximately $16,476,000 was available to borrow at September 27,
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>
PART II. OTHER INFORMATION
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 July 2, 1996 the Registrant filed a Form 8-K informing the Securities and
Exchange Commission that Scott C. Chandler will become the Registrant's
President and Chief Executive Officer.
<TABLE>
<CAPTION>
C-COR ELECTRONICS, INC.
COMPUTATION OF EARNINGS PER SHARE
Thirteen Weeks Ended
September 27, September 29,
1996 1995
---------------- ----------------
(000's omitted, except per share data)
<S> <C> <C>
PRIMARY
Weighted average shares outstanding 9,608 9,490
Net effect of dilutive stock
options-based on the
treasury stock method using
average market price 195 413
---------------- ----------------
Total 9,803 9,903
================ ================
Net income $759 $2,631
================ ================
Net income per share $0.08 $0.27
================ ================
FULLY DILUTED
Weighted average shares outstanding 9,608 9,490
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 204 413
---------------- ----------------
Total 9,812 9,903
================ ================
Net income $759 $2,631
================ ================
Net income per share $0.08 $0.27
================ ================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-27-1997
<PERIOD-START> JUN-29-1996
<PERIOD-END> SEP-27-1996
<CASH> 427
<SECURITIES> 567
<RECEIVABLES> 20,865
<ALLOWANCES> 223
<INVENTORY> 25,283
<CURRENT-ASSETS> 52,075
<PP&E> 25,281
<DEPRECIATION> 19,814
<TOTAL-ASSETS> 78,652
<CURRENT-LIABILITIES> 15,456
<BONDS> 0
0
0
<COMMON> 961
<OTHER-SE> 53,265
<TOTAL-LIABILITY-AND-EQUITY> 78,652
<SALES> 34,014
<TOTAL-REVENUES> 34,014
<CGS> 26,212
<TOTAL-COSTS> 6,565
<OTHER-EXPENSES> 17
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62
<INCOME-PRETAX> 1,158
<INCOME-TAX> 399
<INCOME-CONTINUING> 759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 759
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
