Cobra Electronics (COBR) 10-Q 2008 Q2 Quarterly report

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 quarterly period ended June 30, 2008

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 0-511

COBRA ELECTRONICS CORPORATION

(Exact name of Registrant as specified in its Charter)

DELAWARE	36-2479991
(State of Incorporation)	(I.R.S. Employer Identification No.)

6500 WEST CORTLAND STREET
CHICAGO, ILLINOIS	60707
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (773) 889-8870

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 by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  ¨	Smaller reporting company  x
(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

Number of shares of Common Stock of Registrant outstanding as of August 7, 2008: 6,471,280

TABLE OF CONTENTS

		Page No.
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3	Qualitative and Quantitative Disclosures About Market Risk	27
Item 4	Controls and Procedures	27
PART II	OTHER INFORMATION
Item 1A	Risk Factors	28
Item 4	Submission of Matters to a Vote of Security Holders	28
Item 6	Exhibits	28
SIGNATURE		29

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

Cobra Electronics Corporation and Subsidiaries

Consolidated Statements of Operations—Unaudited

(In Thousands, Except Per Share Amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Net sales	$	34,318		$	39,215		$	63,176		$	71,251
Cost of sales		22,878			30,835			42,820			54,783
Gross profit		11,440			8,380			20,356			16,468
Selling, general and administrative expense		8,784			9,632			17,091			18,668
Earnings (loss) from operations		2,656			(1,252	)		3,265			(2,200	)
Interest expense		241			411			544			730
Other (expense) income		(114	)		358			(306	)		615
Earnings (loss) before income taxes		2,301			(1,305	)		2,415			(2,315	)
Tax provision (benefit)		584			(874	)		610			(1,172	)
Minority interest		(7	)		(3	)		(14	)		(11	)
Net earnings (loss)	$	1,710		$	(434	)	$	1,791		$	(1,154	)
Net earnings (loss) per common share:
Basic	$	0.26		$	(0.07	)	$	0.28		$	(0.18	)
Diluted	$	0.26		$	(0.07	)	$	0.28		$	(0.18	)
Weighted average shares outstanding:
Basic		6,471			6,454			6,471			6,446
Diluted		6,471			6,454			6,471			6,446
Dividends declared per common share	$	—		$	—		$	0.16		$	0.16

The accompanying notes are an integral part of these financial statements.

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Cobra Electronics Corporation and Subsidiaries

Consolidated Balance Sheets—Unaudited

(In Thousands)

	June 30, 2008			December 31, 2007
ASSETS
Current assets:
Cash	$	7,679		$	1,860
Receivables, net of allowance for claims and doubtful accounts of $227 in 2008 and $205 in 2007		19,405			26,804
Inventories, primarily finished goods, net		30,188			33,054
Deferred income taxes		9,438			8,715
Prepaid assets		1,854			1,568
Other current assets		2,166			3,338
Total current assets		70,730			75,339
Property, plant and equipment, at cost:
Buildings and improvements		5,449			5,442
Tooling and equipment		21,542			21,554
		26,991			26,996
Accumulated depreciation		(21,361	)		(20,423	)
Land		230			230
Property, plant and equipment, net		5,860			6,803
Other assets:
Cash surrender value of officers’ life insurance policies		4,113			4,280
Goodwill		11,997			11,997
Intangible assets		14,141			15,559
Other assets		254			340
Total other assets		30,505			32,176
Total assets	$	107,095		$	114,318

The accompanying notes are an integral part of these financial statements.

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Cobra Electronics Corporation and Subsidiaries

Consolidated Balance Sheets—Unaudited

(In Thousands, Except Share Data)

	June 30, 2008			December 31, 2007
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	1,240		$	1,240
Accounts payable		4,421			7,273
Accrued salaries and commissions		863			847
Accrued advertising and sales promotion costs		1,263			2,093
Accrued product warranty costs		1,229			3,440
Accrued income taxes		1,589			266
Other accrued liabilities		3,761			4,505
Total current liabilities		14,366			19,664
Non-current liabilities:
Long-term bank debt, net of current maturities		15,822			18,745
Deferred compensation		6,592			6,320
Deferred income taxes		3,322			3,772
Other long-term liabilities		601			679
Total non-current liabilities		26,337			29,516
Total liabilities		40,703			49,180
Commitments and contingencies		—			—
Minority interest		37			23
Shareholders’ equity:
Preferred stock, $1 par value, 1,000,000 shares authorized - none issued		—			—
Common stock, $.33 1/3 par value, 12,000,000 shares authorized - 7,039,100 issued for 2008 and 2007		2,345			2,345
Paid-in capital		20,230			20,101
Retained earnings		46,935			46,179
Accumulated comprehensive income		682			327
		70,192			68,952
Treasury stock, at cost (567,820 shares for 2008 and 2007)		(3,837	)		(3,837	)
Total shareholders’ equity		66,355			65,115
Total liabilities and shareholders’ equity	$	107,095		$	114,318

The accompanying notes are an integral part of these financial statements.

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Cobra Electronics Corporation and Subsidiaries

Consolidated Statement of Cash Flows—Unaudited

(In Thousands)

	Six Months Ended June 30,
	2008			2007
Cash flows from operating activities:
Net earnings (loss)	$	1,791		$	(1,154	)
Adjustments to reconcile net earnings (loss) to net cash flows from operating activities:
Depreciation and amortization		3,139			3,767
Product software impairment		266			—
Deferred income taxes		(1,173	)		(171	)
Loss (gain) on cash surrender value (CSV) life insurance		461			(220	)
Stock-based compensation		129			91
Tax benefit from stock options exercised		—			19
Minority interest		14			4
Changes in assets and liabilities:
Receivables		7,399			7,726
Inventories		2,866			(753	)
Other current assets		567			(1,064	)
Accounts payable		(2,852	)		(114	)
Accrued income taxes		1,323			(1,537	)
Accrued liabilities		(3,769	)		(2,213	)
Deferred compensation		272			399
Deferred income		(206	)		(448	)
Other long-term liabilities		(78	)		(171	)
Net cash provided by operating activities		10,149			4,161
Cash flows from investing activities:
Capital expenditures		(192	)		(845	)
Premiums on CSV life insurance		(295	)		(295	)
Intangible assets		(326	)		(1,581	)
Net cash used in investing activities		(813	)		(2,721	)
Cash flows from financing activities :
Bank borrowings		(2,923	)		458
Transactions related to exercise of stock options, net		—			170
Dividends paid		(1,035	)		(1,031	)
Other		—			26
Net cash used in financing activities		(3,958	)		(377	)
Effect of exchange rate changes on cash and cash equivalents		441			120
Net increase in cash		5,819			1,183
Cash at beginning of period		1,860			1,878
Cash at end of period	$	7,679		$	3,061
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	528		$	483
Income taxes, net of refunds	$	(133	)	$	1,874

The accompanying notes are an integral part of these financial statements.

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Cobra Electronics Corporation and Subsidiaries

Notes to Consolidated Financial Statements

For the three and six months ended June 30, 2008 and 2007

(Unaudited)

The consolidated financial statements included herein have been prepared by Cobra Electronics Corporation (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The Consolidated Balance Sheet as of December 31, 2007 has been derived from the audited consolidated balance sheet as of that date. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2007. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. Due to the seasonality of the Company’s business, the results of operations of any interim period are not necessarily indicative of the results that may be expected for a fiscal year.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business— The Company is a leading designer and marketer of two-way mobile communication products under the COBRA^® brand name in the United States, Canada and Europe, holding the number one or strong number two position in each of its longstanding product lines and targeting a similar position for marine VHF radios and power inverters. The Company’s UK-based subsidiary, Performance Products Limited (“PPL”) is a designer and marketer of consumer electronics principally in the United Kingdom and elsewhere in Europe, including GPS-enabled speed camera detection systems and satellite navigation devices under the SNOOPER^® brand name and also markets a database of speed camera locations. A majority of the Company’s products are purchased from overseas suppliers, primarily in China, Hong Kong and South Korea. The consumer electronics market is characterized by rapidly changing technology and certain products may have limited life cycles. Management believes that it maintains strong relationships with its current suppliers and that, if necessary, other suppliers could be found. The extent to which a change in a supplier would have an adverse effect on the Company’s business depends on the timing of the change, the product or products that the supplier produces for the Company and the volume of that production. The Company also maintains insurance coverage that would, in certain limited circumstances, reimburse the Company for lost profits resulting from a supplier’s inability to fulfill its commitments to the Company.

Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its subsidiaries. The consolidated financial statements also include a variable interest entity (“VIE”) of which PPL is the primary beneficiary. Except as otherwise set forth herein, the consolidated entities are collectively referred to as the “Company”. All significant intercompany balances and transactions have been eliminated in consolidation. The Company operates in two business segments, Cobra Consumer Electronics (“Cobra”) and Performance Products Limited (“PPL”); refer to Note 3Segment Informationfor more detail.

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(2) NEW ACCOUNTING PRONOUNCEMENTS

On January 1, 2008, the Company adopted Statement of Financial Accounting Standard No. 157,Fair Value Measurements (“SFAS 157”) as it relates to financial assets and liabilities. In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) No. FAS 157-2,Effective Date of FASB Statement No. 157, which delayed the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on at least an annual basis, until January 1, 2009 for calendar year-end entities. The adoption of SFAS 157, as it relates to financial assets, had no impact on the financial statements. Management is currently evaluating the potential impact of SFAS 157, as it relates to nonfinancial assets and liabilities, on the financial statements.

As of June 30, 2008, the Company had a derivative contract (interest rate swap) that was valued using quoted market prices. This financial instrument is exchange-traded and is classified within Level 2 of the fair value hierarchy because the exchange is not deemed to be an active market. The interest rate swap was classified as a long-term liability on the balance sheet. As of June 30, 2008, the fair value of the interest rate swap was $234,000.

In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities – and amendment of FASB Statement No. 133, (“SFAS 161”). SFAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities, including (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under SFAS 133, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This standard becomes effective for the Company on January 1, 2009. Earlier adoption of SFAS 161, and separately, comparative disclosures for earlier periods at initial adoption are encouraged. As SFAS 161 only requires enhanced disclosures, this standard will have no impact on the financial statements.

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(3) SEGMENT INFORMATION

The Company operates in two business segments (1) Cobra and (2) PPL. The Cobra segment is comprised of Cobra Electronics Corporation, Cobra Hong Kong Limited (“CHK”) and Cobra Electronics Europe Limited (“CEEL”). The PPL segment includes Cobra Electronics U.K. Limited (“CEUK”) and its wholly-owned subsidiary Performance Products Limited. The Company has separate sales departments and distribution channels for each segment, which provide segment-exclusive product lines to all customers for that segment. Currently, intersegment sales are not material.

The tabular presentation below summarizes the financial information by business segment for the three and six months ended June 30, 2008 and 2007.

	Second Quarter - 2008 vs. 2007
	2008									2007
	COBRA			PPL			TOTAL			COBRA			PPL			TOTAL
	(In Thousands)
Net sales	$	28,932		$	5,386		$	34,318		$	35,439		$	3,776		$	39,215
Cost of sales		20,726			2,152			22,878			28,532			2,303			30,835
Gross profit		8,206			3,234			11,440			6,907			1,473			8,380
Selling, general and administrative expense		7,424			1,360			8,784			8,240			1,392			9,632
Earnings (loss) from operations		782			1,874			2,656			(1,333	)		81			(1,252	)
Interest expense		241			—			241			426			(15	)		411
Other (expense) income		(70	)		(44	)		(114	)		379			(21	)		358
Income (loss) before income taxes		471			1,830			2,301			(1,380	)		75			(1,305	)
Tax expense (benefit)		150			434			584			(790	)		(84	)		(874	)
Minority interest		—			(7	)		(7	)		—			(3	)		(3	)
Net earnings (loss)	$	321		$	1,389		$	1,710		$	(590	)	$	156		$	(434	)

	Six Months - June 2008 vs. June 2007
	2008									2007
	COBRA			PPL			TOTAL			COBRA			PPL			TOTAL
	(In Thousands)
Net sales	$	53,508		$	9,668		$	63,176		$	64,385		$	6,866		$	71,251
Cost of sales		38,318			4,502			42,820			50,729			4,054			54,783
Gross profit		15,190			5,166			20,356			13,656			2,812			16,468
Selling, general and administrative expense		14,395			2,696			17,091			15,970			2,698			18,668
Earnings (loss) from operations		795			2,470			3,265			(2,314	)		114			(2,200	)
Interest expense		544			—			544			696			34			730
Other (expense) income		(446	)		140			(306	)		485			130			615
(Loss) income before income taxes		(195	)		2,610			2,415			(2,525	)		210			(2,315	)
Tax expense (benefit)		58			552			610			(1,238	)		66			(1,172	)
Minority interest		—			(14	)		(14	)		—			(11	)		(11	)
Net (loss) earnings	$	(253	)	$	2,044		$	1,791		$	(1,287	)	$	133		$	(1,154	)

There have been no differences in the basis of segmentation or the basis of measurement.

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(4) MOBILE NAVIGATION STRATEGY CHANGE

The Company’s decision to change its North American mobile navigation strategy resulted in a $7.7 million charge in the fourth quarter of 2007. This strategy change limits the future development of mass market mobile navigation products in North America to unique mobile navigation products sold into niche markets with specialized and focused distribution and employs lower cost sourcing arrangements utilizing the platform of the Company’s PPL subsidiary or that of other qualified vendors. In second quarter of 2008, the Company incurred a $266,000 product software impairment charge because lower selling prices are anticipated for the remaining mobile navigation units on-hand. The mobile navigation strategy change reserve totaled $944,000 at June 30, 2008 and the Company does not expect future costs to exceed the current reserve balance.

(5) FINANCING ARRANGEMENTS

On February 15, 2008, the Company entered into a Loan and Security Agreement (the “LSA”) with The PrivateBank and Trust Company, as lender and agent, and RBS Citizens, N.A., as lender, for a $5.7 million term loan facility and a $40 million revolving credit facility, both of which mature on October 19, 2011. At June 30, 2008, the Company had interest bearing debt outstanding of $17.1 million, consisting of the $5.1 million term loan and $12.0 million on the revolver.

Interest under the LSA is calculated based on the base rate (Prime or the Federal Funds Rate plus 0.5% per annum) or LIBOR, at the Company’s option, plus an applicable margin. The margin, which is currently 0.25% for the base rate loan and 1.75% for LIBOR loans, is determined based on the Company’s total debt to EBITDA ratio tested quarterly, commencing as of June 30, 2008. The revolving credit facility under the LSA is also subject to an unused line fee of 0.25%. Borrowings under the LSA are secured by substantially all of the assets of the Company except for equity interests in non-US subsidiaries. The Company entered into an interest rate swap which fixed the interest rate on the term loan at 5.34%. The weighted average interest rate for the first half of 2008 was 5.8%.

Availability under the revolver is calculated based on a borrowing base formula including 75% of eligible accounts receivable, 60% of eligible inventory and 60% of open trade letters of credit, but it can be subject to reserves at the lenders’ discretion. Excess availability must be at least $3 million at all times.

The LSA contains certain financial and other covenants including a fixed charge coverage ratio and a debt to EBITDA ratio. The term loan is subject to quarterly installment payments and mandatory prepayments based on certain asset sales and issuance of equity or debt.

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(6) EARNINGS/LOSS PER SHARE

	Three Months Ended June 30,					Six Months Ended June 30,
	2008		2007			2008		2007
	(In Thousands, Except Share Data)
Basic earnings (loss) per share:
Net earnings (loss) available to common shareholders	$	1,710	$	(434	)	$	1,791	$	(1,154	)
Weighted-average shares outstanding		6,471,280		6,454,209			6,471,280		6,445,989
Basic earnings (loss) per share	$	0.26	$	(0.07	)	$	0.28	$	(0.18	)
Diluted earnings (loss) per share:
Weighted-average shares outstanding		6,471,280		6,454,209			6,471,280		6,445,989
Dilutive shares issuable in connection with stock option plans (a)		—		—			—		—
Less: shares purchasable with option proceeds		—		—			—		—
Total		6,471,280		6,454,209			6,471,280		6,445,989
Diluted earnings (loss) per share	$	0.26	$	(0.07	)	$	0.28	$	(0.18	)

(a) Stock options to purchase 562,696 shares were not included in the calculation for dilutive loss per share for the three and six months ended June 30, 2007, as the effect would have been antidilutive. Stock options to purchase shares for the three and six months ended June 30, 2008 were not included since the exercise price was above the market price.

(7) COMPREHENSIVE EARNINGS/LOSS

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008		2007
	(In Thousands)
Net earnings (loss)	$	1,710		$	(434	)	$	1,791	$	(1,154	)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment (no tax effect)		34			18			304		96
Interest rate swap (net of tax)		(93	)		47			51		(3	)
Total comprehensive earnings (loss)	$	1,651		$	(369	)	$	2,146	$	(1,061	)

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(8) COMMITMENTS AND CONTINGENCIES

The Company is subject to various unresolved legal actions, which arise in the normal course of its business. None of these matters are expected to have a material adverse effect on the Company’s financial position or results of operations. However, the ultimate resolution of these matters could result in a change in the Company’s estimate of its liability for these matters.

The Company warrants to the consumer who purchases its products that it will repair or replace, without charge, defective products within a specified time period, generally one year. The Company also has a return policy for its customers that allows customers to return to the Company products returned to them by their customers for full or partial credit based on when the Company’s customer last purchased these products. Consequently, it maintains a warranty reserve, which reflects historical warranty return rates by product category multiplied by the most recent six months of unit sales of that model and the unit standard cost of the model. A roll-forward of the warranty reserve follows:

	Six Months Ended June 30, 2008			Year Ended December 31, 2007
	(In Thousands)
Accrued product warranty costs, beginning of period	$	3,440		$	1,963
Warranty provision		1,548			4,304
Warranty expenditures		(3,759	)		(2,827	)
Accrued product warranty costs, end of period	$	1,229		$	3,440

The decrease in the accrued warranty reserve was mainly due to the mobile navigation warranty reserve which declined to $492,000 at June 30, 2008 from $2.1 million at December 31, 2007 as a result of returns received during the first half of 2008 and substantially lower sales of mobile navigation products during this period.

At June 30, 2008 and 2007, the Company had outstanding inventory purchase orders with suppliers totaling approximately $23.6 million and $37.6 million, respectively. This decrease in purchase commitments reflects improved vendor performance, lower two-way radio demand and the mobile navigation strategy change.

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(9) INVENTORY VALUATION RESERVES

The Company maintains a liquidation reserve representing the write-down of returned product from its customers to its net realizable value. Returned inventory is either sold to various liquidators or returned to vendors for partial credit against similar, new models. The decision to sell or return products to vendors depends upon the estimated future demand for the models. Judgments are made as to whether various models are to be liquidated or returned to the vendor, taking into consideration the liquidation prices expected to be received and the amount of the vendor credit. The amount of the reserve is determined by comparing the cost of each unit returned to the estimated amount to be realized upon each unit’s disposition, either from returning the unit to the vendor for partial credit towards the cost of new, similar product or liquidating the unit. This reserve can fluctuate significantly from quarter to quarter depending upon quantities of returned inventory on hand and the estimated liquidation price or vendor credit per unit. A roll-forward of the liquidation reserve follows:

	Six Months Ended June 30, 2008			Year Ended December 31, 2007
	(In Thousands)
Liquidation reserve, beginning of period	$	2,695		$	1,112
Liquidation provision		2,775			7,339
Liquidation of models		(4,693	)		(5,756	)
Liquidation reserve, end of period	$	777		$	2,695

The decrease in the inventory liquidation reserve was due to the mobile navigation reserve which declined to $26,000 at June 30, 2008 from $1.9 million at December 31, 2007 as a result of the returns received during the first half of 2008 and substantially lower sales of mobile navigation products during this period.

The Company maintains a net realizable value (“NRV”) reserve to write-down, as necessary, certain finished goods, except for those goods covered by the previously discussed liquidation reserve, below cost. The reserve includes models where it is determined that the estimated realizable value is less than cost. Thus, judgments must be made about which slow-moving, excess or non-current models are to be included in the reserve and the NRV of such models. The estimated NRV of each model is the per unit price that is estimated to be received if the model were sold in the marketplace.

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This reserve will vary depending upon the specific models selected, the estimated NRV for each model and quantities of each model that are determined will be sold below cost from quarter to quarter. A roll-forward of the NRV reserve follows:

	Six Months Ended June 30, 2008			Year Ended December 31, 2007
	(In Thousands)
Net realizable reserve, beginning of period	$	1,614		$	736
NRV provision		506			4,121
NRV write-offs		(1,746	)		(3,243	)
Net realizable reserve, end of period	$	374		$	1,614

The decrease in the NRV reserve is due to the sales of mobile navigation products in the first half of 2008 that were fully reserved for at December 31, 2007.

(10) OTHER INCOME/EXPENSE

The following table shows the components of other income/expense:

	Three Months Ended June 30,					Six Months Ended June 30,
	2008			2007		2008			2007
	(In Thousands)
Interest income	$	29		$	4	$	45		$	15
CSV (loss) gain		(112	)		151		(461	)		220
Exchange (loss) gain		(59	)		74		114			158
Other - net		28			129		(4	)		222
	$	(114	)	$	358	$	(306	)	$	615

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

ANALYSIS OF RESULTS OF OPERATIONS

Executive Summary—Second Quarter

Net earnings for the second quarter of 2008 totaled $1.7 million or $.26 per share – an increase of $2.1 million or $.33 per share compared to the second quarter of 2007. Key factors contributing to the operating results were:

• Overall sales declined $4.9 million, or 12.5%, mainly due to the discontinuation of mass market mobile navigation products in North America. Sales increases by PPL nearly offset the lower sales of non-GPS products in the United States.

• Gross profit increased by $3.1 million, accompanied by a gross margin increase of 12 points, due to higher margins on new models, lower airfreight and the stabilization of the selling price for the NAV ONE^TM 5000. The margin improvement impact for 2008 was offset by a $266,000 product software impairment charge because lower selling prices are anticipated for the remaining mobile navigation products in inventory.

• Selling, general and administrative expenses decreased $848,000 or 8.8% due to the Company’s cost containment efforts, headcount reductions and lower professional fees.

• Other expenses, including interest, increased by $302,000 mainly due to the recording of a cash surrender value (“CSV”) expense for life insurance in 2008 compared to CSV income in 2007. The impact of lower interest rates on interest expense, offset the other expense increases.

The combined impact of the foregoing factors was a $3.6 million improvement in pre-tax earnings. The effective tax rate for the second quarter of 2008 was 25.4% compared to 67.0% for the second quarter of 2007.

The 25.4% effective tax rate for the second quarter of 2008 was attributed to the tax jurisdiction mix of earnings. Most of the pre-tax earnings for the second quarter of 2008 were recorded in the British and Irish tax jurisdictions that levy tax rates at 28.5% and 12.5%, respectively.

The 67.0% effective tax rate for the second quarter of 2007 was due to a disproportionate amount of the total loss recorded in the United States and subject to tax rates in excess of the rates assessed by the British and Irish tax authorities. Furthermore, there was no Irish tax provision in the second quarter of 2007 due to a NOL carry forward.

15

Executive Summary—Six Months

Net earnings for the first half of 2008 totaled $1.8 million or $.28 per share—an increase of $2.9 million or $.46 per share compared to the first half of 2007. Key factors contributing to the operating results were:

• Overall sales declined $8.1 million, or 11.3%, mainly due to the discontinuation of mass market mobile navigation products and lower sales of two-way radios and radar detectors in North America. A $2.8 million increase recorded by PPL partially offset the lower sales of non-GPS products in the United States.

• Gross profit increased by $3.9 million, accompanied by a gross margin increase of 9 points, due to higher margins on new models, lower airfreight and the stabilization of the selling price for NAV ONE 5000.

• Selling, general and administrative expenses decreased $1.6 million or 8.4% due to the Company’s cost containment efforts, headcount reductions and lower professional fees.

• Other expenses, including interest, increased by $735,000 mainly due to the recording of a CSV expense in 2008 compared to CSV income in 2007. The impact of lower interest rates on interest expense partially offset the other expense increases.

The combined impact of the foregoing factors was a $4.7 million improvement in pre-tax earnings. The effective tax rate for the first half of 2008 was 25.3% compared to 50.6% for the first half of 2007.

The 25.3% effective tax rate for the first half of 2008 was attributed to the tax jurisdiction mix of earnings. Most of the pre-tax earnings for the first half of 2008 were recorded in the British and Irish tax jurisdictions that levy tax rates at 28.5% and 12.5%, respectively.

The 50.6% effective tax rate for the first half of 2007 was due to a disproportionate amount of the total loss recorded in the United States and subject to tax rates in excess of the rates assessed by the British and Irish tax authorities. Furthermore, there was no Irish tax provision in the first half of 2007 due to a NOL carry forward.

16

EBITDA

The following table shows the reconciliation of net income to EBITDA and EBITDA As Defined:

	Three Months Ended June 30,					Six Months Ended June 30,
	(in thousands)
	2008		2007			2008			2007
Net income (loss)	$	1,710	$	(434	)	$	1,791		$	(1,154	)
Depreciation/amortization		1,711		2,201			3,405			3,767
Interest expense		241		411			544			730
Income tax provision (benefit)		584		(874	)		610			(1,172	)
Minority interest		7		3			14			11
EBITDA		4,253		1,307			6,364			2,182
Stock option expense		64		43			129			91
CSV loss (gain)		112		(151	)		461			(220	)
Other non-cash items		104		(45	)		(56	)		(27	)
EBITDA As Defined	$	4,533	$	1,154		$	6,898		$	2,026

EBITDA represents earnings before interest, taxes, depreciation and amortization. EBITDA As Defined, represents EBITDA plus the applicable adjustments required to agree with the EBITDA measurement for compliance with the financial covenants of the Company’s lenders. The Company believes EBITDA is a useful performance indicator and is frequently used by management, securities analysts and investors to judge operating performance between time periods and among other companies. The Company uses EBITDA As Defined to assess operating performance and ensure compliance with financial covenants.

EBITDA and EBITDA As Defined are Non-GAAP performance indicators that should be used in conjunction with GAAP performance measurements such as net sales, operating profit and net income to evaluate the Company’s operating performance. EBITDA and EBITDA As Defined are not alternatives to net income or cash flow from operations determined in accordance with GAAP. Furthermore, EBITDA and EBITDA As Defined may not be comparable to the calculation of similarly titled measures reported by other companies.

17

Second Quarter 2008 Compared to Second Quarter 2007

The following table contains sales and pre-tax profit (loss) after eliminating intercompany accounts by business segment for the three-month periods ending June 30, 2008 and 2007:

	2008				2007					2008 vs. 2007 Increase (Decrease)
	(in thousands)
Business Segment	Net Sales		Pre-tax Profit		Net Sales		Pre-tax (Loss) Profit			Net Sales			Pre-tax Profit
Cobra	$	28,932	$	471	$	35,439	$	(1,380	)	$	(6,507	)	$	1,851
PPL		5,386		1,830		3,776		75			1,610			1,755
Total Company	$	34,318	$	2,301	$	39,215	$	(1,305	)	$	(4,897	)	$	3,606

Cobra Business Segment

Cobra net sales decreased $6.5 million, or 18.4%, in the second quarter of 2008 to $28.9 million. During the fourth quarter of 2007, the Company announced a change in its mass market mobile navigation strategy in North America. As part of this change in strategy, all future development of mass marketed mobile navigation products ceased with future efforts limited to unique mobile navigation products sold into niche markets with specialized and focused distribution. When such products are launched, lower cost sourcing arrangements utilizing the PPL platform or that of other qualified vendors will be employed. Accordingly, $4.2 million of this decline was due to lower mobile navigation/GPS product net sales as a result of this change in strategy (with mobile navigation/GPS returns in 2008 exceeding sales). The remaining $2.3 million decline was due to lower sales of two-way radios and detectors in the United States due to weak store traffic and competitive pressures. Somewhat offsetting the decline in the non-GPS products were improved Citizens Band radio sales driven by the launch of the 29 LTD BT with Bluetooth^® wireless technology, and higher sales of radar detectors in Eastern Europe. The following table summarizes the net sales for the three-month periods ending June 30, 2008 and 2007:

	Mobile Navigation/ GPS Products Net Sales			Other Products Net Sales			Total Net Sales
	(in thousands)
2008	$	(1,488	)	$	30,420		$	28,932
2007		2,675			32,764			35,439
Decrease	$	(4,163	)	$	(2,344	)	$	(6,507	)

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Gross profit increased $1.3 million in the second quarter of 2008 from the second quarter of 2007 to $8.2 million and the gross margin improved to 28.4% in the second quarter of 2008 from 19.5% in the second quarter of 2007. The gross margin benefited from margin improvement for domestic two-way radios, detectors and Citizens Band radios because of higher margins on new models. Substantially lower air freight also contributed to the improvement in the two-way radio gross margin. Additionally, the gross margin in mobile navigation improved as prices for the most recent product, the NAV ONE 5000, remained stable through the second quarter. However, this improvement was partially offset by a $266,000 charge against remaining NAV ONE 5000 unamortized product software cost for lower anticipated selling prices of these remaining units. Anticipated selling prices were lower because of a deteriorating retail selling environment for mobile navigation products. The following table summarizes the gross profit for the three-month periods ending June 30, 2008 and 2007:

	Mobile Navigation/ GPS Products Gross (Loss) Profit			Other Products Gross Profit			Total Gross Profit
	(in thousands)
2008 gross (loss) profit	$	(564	)	$	8,770		$	8,206
2007 gross (loss) profit		(825	)		7,732			6,907
Increase	$	261		$	1,038		$	1,299
2008 gross margin		37.9	%		28.8	%		28.4	%
2007 gross margin		-30.8	%		23.6	%		19.5	%

Selling, general and administrative expenses decreased $816,000, or 9.9%, to $7.4 million in the second quarter of 2008 from $8.2 million in the second quarter of 2007. The decrease was due to less variable selling expenses because of the lower sales and a $248,000 increase in the reversal of unused program funds from prior periods, as well as lower costs from headcount reductions and reduced professional fees.

Other expense, including interest, increased $264,000 in the second quarter of 2008 as compared to the second quarter of 2007. This increase was mainly due to a $112,000 loss in 2008 on the cash surrender value of life insurance, owned by the Company for the purpose of funding deferred compensation programs for several current and former officers, compared to a gain on cash surrender value of $151,000 in the second quarter of prior year. The loss was generated as the investment vehicles in which the cash was invested declined in value in line with the overall financial markets. Partially offsetting the negative swing on cash surrender value was a $185,000 decline in interest expense, primarily because of a drop in interest rate.

As a result of the above, pre-tax earnings increased to $471,000 in the second quarter of 2008 from the $1.4 million loss in second quarter of 2007.

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Performance Products Limited (“PPL”) Business Segment

PPL’s net sales increased $1.6 million, or 42.6%, to $5.4 million in the second quarter of 2008 from $3.8 million in the second quarter of 2007. Driving the increase was the availability of a complete satellite navigation product line in 2008, which had not been the case in early 2007 because of production issues, and higher database sales using encrypted SD card sales for a smartphone promotion.

Gross profit increased to $3.2 million, or 60.0%, in the second quarter of 2008 from $1.5 million, or 39.0%, in the second quarter of 2007 primarily as the sales mix shifted to higher margin sales of proprietary data, including the sales of SD cards for use in smartphones and download fees for mobile navigation and GPS speed camera locator products.

Selling, general and administrative expenses totaled $1.4 million for the second quarter of 2008 and were unchanged from the second quarter of prior year but as a percentage of net sales declined to 25.3% from 36.9%.

As a result of the above, pre-tax earnings increased to $1.8 million in the second quarter of 2008 from $75,000 in the second quarter of 2007.

20

Six Months 2008 Compared to Six Months 2007

The following table contains sales and pre-tax profit (loss) after eliminating intercompany accounts by business segment for the six-month periods ending June 30, 2008 and 2007.

	2008					2007					2008 vs. 2007 Increase (Decrease)
	(in thousands)
Business Segment	Net Sales		Pre-tax (Loss) Profit			Net Sales		Pre-tax (Loss) Profit			Net Sales			Pre-tax Profit
Cobra	$	53,508	$	(195	)	$	64,385	$	(2,525	)	$	(10,877	)	$	2,330
PPL		9,668		2,610			6,866		210			2,802			2,400
Total Company	$	63,176	$	2,415		$	71,251	$	(2,315	)	$	(8,075	)	$	4,730

Cobra Business Segment

Cobra net sales decreased $10.9 million, or 16.9%, in 2008 to $53.5 million as compared to the first half of 2007. $4.6 million of the decline was due to lower mobile navigation sales as a result of the change in Cobra’s North American mass market mobile navigation strategy as previously discussed. The remaining $6.3 million decline was due primarily to lower sales of two-way radios and detectors in the United States. The two-way radio decline was because of a reduction in the number of skus at a major retailer, mostly driven by the continuing decline of this product category. Lower detector sales resulted principally from weak store traffic and competitive pressures, which were offset, in part, by sales to a major account with which Cobra had not done business for several years. The following table summarizes the net sales for the six-month periods ending June 30, 2008 and 2007:

	Mobile Navigation/ GPS Products Net Sales			Other Products Net Sales			Total Net Sales
	(in thousands)
2008	$	(365	)	$	53,873		$	53,508
2007		4,268			60,117			64,385
Decrease	$	(4,633	)	$	(6,244	)	$	(10,877	)

21

Gross margin increased to 28.4% in the first half of 2008 from 21.2% in the first half of 2007, which increased gross profit by $1.5 million to $15.2 million in the first half of 2008 as compared to the first half of 2007. This strong gross margin improvement reflected the impact of new higher-margin models such as the 29 LTD BT Citizens Band radio with Bluetooth wireless technology and XRS 9950 radar detector that includes an optional GPS locator which alerts drivers of dangerous speed and red light camera locations in North America. Also contributing to the strong gross margin improvement was lower air freight and increased gross margin in mobile navigation as prices for the most recent product, the NAV ONE 5000, remained stable through the period.

	Mobile Navigation/ GPS Products Gross Profit (Loss)			Other Products Gross Profit			Total Gross Profit
	(in thousands)
2008 gross profit	$	43		$	15,147		$	15,190
2007 gross (loss) profit		(1,133	)		14,789			13,656
Increase	$	1,176		$	358		$	1,534
2008 gross margin		11.8	%		28.1	%		28.4	%
2007 gross margin		-26.5	%		24.6	%		21.2	%

Selling, general and administrative expenses decreased $1.6 million, or 9.9%, to $14.4 million in the first half of 2008 from $16.0 million in the first half of 2007. The decrease was due to lower variable selling expenses because of the drop in sales, lower fixed sales and marketing costs due to headcount reductions and lower professional fees. The lower variable selling expense is partially due to a favorable variance of $124,000 in the unused program funds from prior periods.

Other expense, including interest, was $779,000 higher in the first half of 2008 as compared to the first half of 2007 mainly because of a $461,000 loss in 2008 on the cash surrender value of life insurance compared to a $220,000 gain on cash surrender value in the prior year.

As a result of the above, pre-tax earnings increased $2.3 million to a loss of $195,000 in the first half of 2008 from a $2.5 million loss in the first half of 2007.

22

Performance Products Limited (“PPL”) Business Segment

PPL’s net sales increased $2.8 million, or 40.8%, to $9.7 million in the first half of 2008 from $6.9 million in the first half of 2007. Driving the increase was the availability of a complete satellite navigation product line in 2008, which had not been the case during the same period in 2007, because of development and production issues and increased database sales, including $1.6 million of SD card sales for a smartphone promotion.

Gross profit increased $2.4 million to $5.2 million, or 53.4%, in the first half of 2008 from $2.8 million, or 41.0%, in the first half of 2007. The increase in gross margin primarily reflected a larger proportion of revenue from high-margin database sales, including SD card sales and download fees for speed camera data.

Selling, general and administrative expenses totaled $2.7 million for the first half of 2008 and the first half of 2007 and, as a percentage of net sales, was 27.9% compared to 39.3% for 2007.

As a result of the above, pre-tax earnings increased $2.4 million from $210,000 in the first half of 2007 to $2.6 million for the first half of 2008.

23

LIQUIDITY AND CAPITAL RESOURCES

On January 31, 2002, the Company executed a three-year Revolving Credit Agreement (the “Credit Agreement”) with three financial institutions, including LaSalle Bank National Association, as agent. In November 2005, the term of the agreement was amended to January 31, 2007. In October 2006, in connection with the PPL acquisition, the Credit Agreement was amended and restated for a five-year term and maximum loan limit of $53.6 million, including the $40 million revolver, a $7.0 million term loan and a $6.6 million delayed draw term loan. The delayed draw term loan was never activated. Borrowings under the Credit Agreement were secured by substantially all of the assets of the Company.

On February 15, 2008, the Company entered into a Loan and Security Agreement (the “LSA”) with The PrivateBank and Trust Company, as lender and agent, and RBS Citizens, N.A., as lender, for a $5.7 million term loan facility and a $40 million revolving credit facility. Both facilities mature on October 19, 2011 and replaced the previous Credit Agreement. During the transition period to The PrivateBank and RBS Citizens lenders, the Company was required to maintain cash on deposit with the prior lender to fund letters of credit; as of June 30, 2008 the deposit was $2.1 million. At June 30, 2008, the Company had interest bearing debt outstanding of $17.1 million, consisting of the $5.1 million term loan and $12.0 million in the revolver. As of June 30, 2008, availability was approximately $12.6 million under the revolving credit line based on the asset advance formulas.

Cobra Electronics U.K. Limited, a wholly-owned subsidiary of the Company, completed the acquisition of 100% of the issued and outstanding share capital of PPL in 2006. Under the acquisition agreement, the purchase price for the issued share capital of PPL consisted of $21.2 million paid in cash at the closing of the transaction. The former shareholders of PPL were eligible to receive additional cash consideration of up to approximately $6.5 million based on the achievement of certain performance targets by PPL for the twelve-month period ended March 31, 2007 (the first earn-out period) and up to approximately $10.0 million for the fourteen-month period ended May 31, 2008 (the second earn-out period). No additional consideration was paid to the former shareholders for the first earn-out period; the former shareholders are eligible to recapture all or a portion of this first earn-out payment should the performance in the second earn-out period exceed the performance targets established for the payment of the entire second earn-out. Additionally, the former shareholders were eligible to earn additional consideration if the performance of PPL exceeds certain cumulative targets for the combined earn-out periods.

The second and final earn-out period in connection with the purchase agreement concluded on May 31, 2008. The aggregate amount of the earn-out payment will be calculated on the results achieved during the earn-out period after determining the effect of product returns and other factors occurring in the ninety-day period subsequent to May 31, 2008. Based on information currently available, it is anticipated that the aggregate earn-out payment will not exceed $10 million and that such payment will be made in the fourth quarter of 2008 and treated as an additional purchase price. The LSA allows the Company to pay earn-out proceeds associated with the acquisition of PPL as long as excess availability is at least $3 million at all times and certain financial and other covenants, including a fixed charge coverage ratio and a debt to EBITDA ratio, are met.

For the six months ended June 30, 2008 net cash flows from operating activities were $10.1 million. Significant net cash inflows from operations included a reduction in accounts receivable of $7.4 million, non-cash depreciation and amortization of $3.4 million, a decrease in inventory of $2.9 million, and an increase in accrued income taxes of $1.3 million. The decrease in accounts receivable resulted from collections on sales from the fourth quarter of 2007. The increase in accrued income taxes was due to the strong PPL profits in the first half of 2008. Partially offsetting these inflows were outflows due to decreases in accrued liabilities of $3.8 million and decreases in accounts payable of $2.9 million. The decrease in accrued liabilities was due to two factors. First, accrued advertising and sales promotion costs declined as payments to customers for fourth quarter 2007 advertising and sales promotion programs more than offset similar accruals made in the first quarter of 2008 on lower sales. Second, there was a large reduction in the warranty reserve established at December 31, 2007 for the Company’s change in its North American mobile navigation strategy, which reflected customer returns in the first half of 2008. In the fourth quarter of 2007, $7.5 million was charged to cost of sales for costs related to the change in the Company’s mobile navigation strategy in North America, including the impairment of certain intellectual property, the write down of certain mobile navigation inventory, related parts and other assets to estimated net realizable value and the disposition of future product returns by means other than returning them to vendors for credit against new products. At June 30, 2008, the total remaining amount of reserves established for this change in strategy was approximately $944,000. Of this amount, $492,000 was for a warranty reserve for the disposition of future product returns by means other than returning them to vendors for credit against new products, $354,000 was to reduce certain mobile navigation parts to their estimated net realizable value and $72,000 was for a NRV reserve, which reduced mobile navigation products returned from customers to its estimated net realizable value. The decrease in accounts payable was due mainly to lower mobile navigation inventory because of the change in the North American strategy for this product line.

24

Working capital requirements are seasonal, with demand for working capital being higher later in the year as customers begin purchasing for the holiday selling season. The Company believes that cash generated from operations and from borrowings under its credit agreement will be sufficient in 2008 to fund its working capital needs.

Net cash used in investing activities amounted to $813,000 in the first half 2008, principally for the purchase of tooling, which was lower than in prior years because of the change in the Company’s North American mobile navigation strategy, premiums for CSV life insurance and increases in intangible assets.

Net cash used in the first half of 2008 for financing activities totaled $4.0 million due to the Company’s annual cash dividend of $0.16 per share as well as a $2.9 million reduction in long-term debt. The 2008 annual dividend payment of $1.0 million was paid on April 25, 2008 to shareholders of record on April 11, 2008.

The Company believes that for the foreseeable future, it will be able to continue to fund its operations and any payment of the earn-out contingent upon PPL’s operating performance for the fourteen-month period ended May 31, 2008 with cash generated from operations using existing or similar future bank credit agreements to fund its seasonal working capital needs.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s significant accounting policies and estimates are discussed in the notes to the consolidated financial statements. The application of certain of these policies requires significant judgments or a historical based estimation process that can affect the results of operations and financial position of the Company as well as the related footnote disclosures. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable. If actual amounts ultimately differ from previous estimates, the revisions are included in the Company’s results of operations for the period in which the actual amounts become known.

Critical accounting policies and estimates generally consist of those that reflect significant judgments and uncertainties and could potentially result in materially different results under different assumptions. For a description of the Company’s critical accounting polices and estimates refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

25

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995 found at Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the SEC, press releases, or otherwise. Statements contained in this report that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act. Forward-looking statements may include, but are not limited to, projections of revenue, income or loss and capital expenditures, statements regarding future operations, anticipated financing needs, compliance with financial covenants in loan agreements, liquidity, plans for acquisitions or sales of assets or businesses, plans relating to products or services, assessments of materiality, expansion into international markets, growth trends in the consumer electronics business, technological and market developments in the consumer electronics business, the availability of new consumer electronics products and predictions of future events, as well as assumptions relating to these statements. In addition, when used in this report, the words “anticipates,” “believes,” “should,” “estimates,” “expects,” “intends,” “plans” and variations thereof and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified based on current expectations. Consequently, future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements contained in this report or in other Company filings, press releases, or otherwise. Factors that could contribute to or cause such differences include, but are not limited to, unanticipated developments in any one or more of the following areas:

• global economic and market conditions, including continuation of or changes in the current economic environment;

• ability of the Company to introduce new products to meet consumer needs, including timely introductions as new consumer technologies are introduced, and customer and consumer acceptance of these new product introductions;

• pressure for the Company to reduce prices for older products as newer technologies are introduced;

• significant competition in the consumer electronics business, including introduction of new products and changes in pricing;

• factors related to foreign manufacturing, sourcing and sales (including foreign government regulation, trade and importation, and health and safety concerns, and effects of fluctuation in exchange rates);

• the effect of increasing commodity prices on the costs of products and the ability of the Company to mitigate such increases, if any, through product design, manufacturing efficiencies, price increases or other actions.

• ability of the Company to maintain adequate financing, to bear the interest cost of such financing and to remain in compliance with financing covenants;

• changes in law;

• ability to successfully integrate acquisitions, including PPL;

• consolidation of content providers in the mobile navigation industry;

• acquisition of mobile navigation content providers by competitors;

• and other risk factors, which may be detailed from time to time in the Company’s SEC filings.

Readers are cautioned not to place undue reliance on any forward-looking statements contained in this report, which speak only as of the date set forth on the signature page hereto. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

26

Item 3. Qualitative and Quantitative Disclosures About Market Risk

Market risks related to changes in foreign currency exchange risks and interest rates are inherent to the Company’s operations. Changes to these factors could cause fluctuations in the Company’s net earnings, cash flows and the fair values of financial instruments subject to market risks. The Company identifies these risks and mitigates the financial impact with hedging and interest rate swaps.

There have been no material changes in the Company’s market risk since December 31, 2007. However, in the second quarter of 2008, the Company began purchasing certain products in euros to mitigate the economic impact of the declining value of the U.S. dollar.

Item 4. Controls and Procedures

The Company has established disclosure controls and procedures to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. The Company’s disclosure controls and procedures have also been designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As of June 30, 2008, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures. Based on this evaluation, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective as of June 30, 2008.

There has been no change in the Company’s internal control over financial reporting that occurred during the first six months of 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

27

PART II

OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes to the risk factors as previously disclosed under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2007.

Item 4. Submission of Matters to a Vote of Security Holders

The 2008 Annual Meeting was held on May 13, 2008.

Proposal 1

The election of three directors was submitted to the shareholders for vote. The following persons were elected directors of the Company to serve until the annual meeting of the term specified below:

Name	Class	Votes For	Votes Withheld	Term
James R. Bazet	I	4,695,865	1,196,756	2011
William P. Carmichael	I	5,129,760	762,861	2011
John S. Lupo	I	5,507,685	384,936	2011

The Class II Directors continuing in office until the 2009 Annual Meeting of Shareholders are Robert P. Rohleder and S. Sam Park. The Class III Directors continuing in office until the 2010 Annual Meeting of Shareholders are Carl Korn and Ian R. Miller.

Proposal 2

The ratification of Grant Thornton’s appointment as the Company’s independent registered public accountant was submitted to the shareholders for vote. The result of Grant Thornton ratification is shown below:

Votes For	Votes Against	Votes Abstained
5,718,112	42,756	131,751

Item 6. Exhibits

a) Exhibit 31.1 Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.

b) Exhibit 31.2 Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.

c) Exhibit 32.1 Section 1350 Certification of the Chief Executive Officer.

d) Exhibit 32.2 Section 1350 Certification of the Chief Financial Officer.

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SIGNATURE

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.

COBRA ELECTRONICS CORPORATION
By	/s/ MICHAEL SMITH
	Michael Smith
	Senior Vice President and
	Chief Financial Officer
	(Duly Authorized Officer and Principal
	Financial Officer)

Dated: August 11, 2008

29

INDEX TO EXHIBITS

Exhibit Number	Description of Document
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer

30