3
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM November 1, 1994 TO December 31,
1994
Commission File Number 0-11727
COOPER DEVELOPMENT COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 94-2876745
(State or other jurisdiction of (I.R.S. Employer Identification
Number)
incorporation or organization)
2420 SAND HILL ROAD, SUITE 300
MENLO PARK, CA 94025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 233-0696
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at December 31, 1994
COMMON STOCK, $.10 PAR VALUE 3,629,376
<TABLE>
COOPER DEVELOPMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
<CAPTION>
TWO MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, JANUARY 31,
1994 1994
---- ----
<S> <C> <C>
Net sales $ 3,003 $ 4,190
Cost of sales 1,397 1,765
------ ------
Gross profit 1,606 2,425
------ ------
Research and development expenses 153 143
Selling, general and administrative expenses 3,204 3,807
Amortization of intangible assets 56 68
------ ------
Operating loss (1,807) (1,593)
Interest income 77 60
Interest expense (42) (148)
Other income (expense), net (30) (257)
------ ------
Loss from continuing operations before income taxes (1,802) (1,938)
Provision for income tax benefit (expense) (89) 653
------ ------
Loss from continuing operations (1,891) (1,285)
Discontinued operations:
Income (loss)from operations
(net of tax benefits of $680 in 1994) - (1,015)
Gain on sale of operations (net of taxes of $1,521 in 1994) - 17,264
------ ------
- 16,249
------ ------
Net income (loss) $ (1,891) $ 14,964
====== ======
Net income (loss) per share--primary:
Continuing operations $ (.52) $ (.35)
Discontinued operations - 4.47
------ ------
Net income (loss) per share--primary $ (.52) $ 4.12
====== ======
Net income (loss) per share--fully diluted:
Continuing operations $ (.52) $ (.24)
Discontinued operations - 3.19
------ ------
Net income (loss) per share--fully diluted $ (.52) $ 2.95
====== ======
Average number of shares outstanding - primary 3,629 3,629
====== ======
Average number of shares outstanding - fully diluted 3,629 5,086
====== ======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
<TABLE>
COOPER DEVELOPMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
DECEMBER 31, OCTOBER 31,
1994 1994
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,952 $ 12,286
Accounts receivable, net 4,139 4,374
Other receivables 429 407
Inventories 6,009 5,482
Prepaid expenses 190 309
------ ------
Total current assets 20,719 22,858
Property, plant and equipment, net 2,808 2,734
Intangible assets, net 116 112
Excess cost over net assets acquired, net 4,667 4,723
Other assets 515 501
------ ------
$28,825 $ 30,928
====== ======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Short-term borrowings $ 1,000 $ 1,000
Notes payable to related parties 2,948 2,948
Accounts payable 3,822 3,856
Accrued expenses 5,633 5,822
Tax liabilities 6,386 6,289
------ ------
Total current liabilities 19,789 19,915
Other long--term liabilities 2,195 2,189
------ ------
Total liabilities 21,984 22,104
------ ------
Stockholders' equity:
Common stock, $.10 par value per share 447 447
Additional paid--in capital 68,580 68,580
Foreign currency translation adjustments 250 341
Accumulated deficit (57,668) (55,777)
Cost of shares held in treasury (4,662) (4,662)
Unrealized loss on marketable securities (106) (105)
------ ------
Total stockholders' equity 6,841 8,824
------ ------
$28,825 $ 30,928
====== ======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
<TABLE>
COOPER DEVELOPMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
TWO MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, JANUARY 31,
1994 1994
<S> <C> <C>
Cash flows from operating activities:
Net cash used by continuing operating activities $(2,202) $(2,439)
Net cash used by discontinued operating activities - (1,186)
------ ------
Net cash used by operating activities (2,202) (3,625)
Cash flows from investing activities:
Purchases of fixed and intangible assets (132) (325)
Proceeds from sale of discontinued operations - 22,521
------ ------
Net cash provided (used) by investing activities (132) 22,196
Cash flows from financing activities:
Proceeds from short--term bank borrowings - -
Proceeds from short-term notes payable - -
Repayments of short-term bank borrowings - (1,300)
Repayments of other long-term debt - (3)
------ ------
Net cash used by financing activities ---- (1,303)
Net increase (decrease) in cash and cash equivalents (2,334) 17,268
Cash and cash equivalents at beginning of period 12,286 2,290
------ ------
Cash and cash equivalents at end of period $ 9,952 $ 19,558
====== ======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
COOPER DEVELOPMENT COMPANY AND SUBSIDIAREIS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. INCOME TAXES
Income tax expense for the two months ended December 31, 1994 consists of
(in thousands):
<TABLE>
<CAPTION>
Current Deferred Total
------- -------- -----
<S> <C> <C> <C>
Federal $ ---- ---- $----
State and Local 12 ---- 12
Foreign 77 ---- 77
------ ------ ------
$ 89 ---- $ 89
====== ====== ======
</TABLE>
NOTE 2. NET INCOME (LOSS) PER SHARE
Primary net income (loss) per share is computed using the weighted average
number of common shares outstanding during the period.
Fully diluted net income (loss) per share assumes full conversion of the
company's outstanding convertible related party notes payable.
NOTE 3. INVENTORIES
<TABLE>
Inventories as of December 31, 1994 consist of the following (in
thousands):
<CAPTION>
<S> <C>
Raw materials $2,775
Work--in--process 23
Finished goods 3,804
------
6,602
Less inventory reserves (593)
------
$6,009
======
</TABLE>
NOTE 4. MANAGEMENT REPRESENTATION
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all the adjustments necessary to present
fairly the Company's consolidated condensed financial position as of December
31, 1994 and October 31, 1994 and the consolidated condensed results of their
operations and cash flows for the two months ended December 31, 1994 and three
months ended January 31, 1994.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
On December 20, 1994 the Company elected to change the fiscal year from
October 31 to December 31. The management discussion that follows compares the
two months ended December 31, 1994 to the three months ended January 31, 1994,
therefore the current period results are not directly comparable with those of
the prior period.
Two Months Ended December 31, 1994 Compared with Three Months Ended January
31, 1994
The Company's net sales for the two months ended December 31, 1994 amounted
to $3,003,000 compared to net sales of $4,190,000 for the three months ending
January 31, 1994. Gross profit margin was 54% for the two months ended December
31, 1994 as compared to 58% for the three months ended January 31, 1994. The
gross profit margin decrease is attributable to higher returns for discontinued
products.
Selling, general and administrative expenses for the two months ended
December 31, 1994 amounted to $3,204,000 and were comprised of selling costs of
$1,132,000, advertising costs of $409,000 and general and administrative costs
of $1,663,000. Selling, general and administrative expenses for the three
months ended January 31, 1994 amounted to $3,807,000 and were comprised of
selling costs of $1,704,000, advertising costs of $546,000 and general and
administrative costs of $1,557,000.
Interest expense of $42,000 decreased $106,000 for the two months ended
December 31, 1994 over the three months ended January 31, 1994 as average
borrowing levels for the two months ended December 31, 1994 were lower than the
period ending January 31, 1994.
Other income (expense) in the prior year includes $375,000 related to
certain litigation costs accrued in the three months ending January 31, 1994.
CAPITAL RESOURCES AND LIQUIDITY
The Company has experienced operating cash flow deficiencies for a number
of years and has relied upon asset sales and financing from stockholders to fund
liquidity needs. At December 31, 1994, current assets exceeded current
liabilities by $930,000 and cash required by continuing operations was
$2,202,000 for the two months ended December 31, 1994.
The Company expects a continuing deficiency in cash generated from
operations in fiscal 1995. The Company plans to use the cash obtained from the
sale of assets to fund its short and long term liquidity and capital
expenditure requirements. In addition, the Company is considering various
alternatives, including but not limited to, acquiring certain product lines or
businesses, which may require the Company to raise additional financing from
stockholders, financial institutions or other sources. No assurances can be
given that the Company will obtain financing on terms acceptable to the Company.
The Company has incurred significant expense in connection with the
Company's attempt to acquire Avanza Corp. ("Avanza") and the ongoing legal
challenges to Avanza's actions in opposition thereof and could be required to
incur additional expense in the future.
A $1,000,000 note incurred in conjunction with the acquisition of Cooper
Development S.A. is due on April 27, 1995.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8--K
(a) Exhibit
-------
Exhibit 11 Statement Regarding Computation of Net Income (Loss)
Per Share.
The following report on Form 8-K was filed during the transitional period
for which this report is filed.
(b) Reports on Form 8-K
-------------------
Date of Report Items Required
-------------- --------------
December 20, 1994 Item 8. Change in Fiscal Year
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
Cooper Development Company
------------------------
(Registrant)
Date: February 8, 1995 By: MICHAEL J. BRADEN/S/
--------------------------------------
Michael J. Braden
Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
EXHIBIT Description Page
- - ------- ----------- ----
Exhibit 11 Statement Regarding Computation of Net Income (Loss)
Per Share following table
<TABLE>
EXHIBIT 11
COOPER DEVELOPMENT COMPANY AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF NET INCOME (LOSS) PER SHARE
<CAPTION>
TWO MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, JANUARY 31,
1994 1994
---- ----
<S> <C> <C>
Weighted average number of shares of common
stock and stock equivalents:
Primary:
Common stock 3,629 3,629
Fully diluted:
Common shares issuable upon assumed
conversion of notes from related parties - 1,457
------ ------
3,629 5,086
====== ======
Net loss from continuing operations $(1,891) $(1,285)
Interest on notes to related parties - 59
------ ------
Net loss from continuing operations fully diluted (1,891) (1,226)
Discontinued operations - 16,249
------ ------
Net income - fully diluted $(1,891) $15,023
====== ======
Net income per share primary
Continuing operations $ (.52) $ (.35)
Discontinued operations - 4.47
------ ------
Net income per share - primary $ (.52) $ 4.12
====== ======
Net income per share - fully diluted
Continuing operations $ (.52) $ (.24)
Discontinued operations - 3.19
------ ------
Net income per share - fully diluted $ (.52) $ 2.95
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000720062
<NAME> COOPER DEVELOPMENT COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> NOV-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,952
<SECURITIES> 0
<RECEIVABLES> 5,231
<ALLOWANCES> 1,092
<INVENTORY> 6,009
<CURRENT-ASSETS> 20,719
<PP&E> 4,278
<DEPRECIATION> 1,470
<TOTAL-ASSETS> 28,825
<CURRENT-LIABILITIES> 19,789
<BONDS> 0
<COMMON> 447
0
0
<OTHER-SE> 6,394
<TOTAL-LIABILITY-AND-EQUITY> 28,825
<SALES> 3,003
<TOTAL-REVENUES> 3,003
<CGS> 1,397
<TOTAL-COSTS> 1,397
<OTHER-EXPENSES> 98
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> (1,802)
<INCOME-TAX> 89
<INCOME-CONTINUING> (1,891)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,891)
<EPS-PRIMARY> (.52)
<EPS-DILUTED> (.52)
</TABLE>
