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 March 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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 60635
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 889-8870
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.33 1/3 Per Share
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
Number of shares of Common Stock of Registrant outstanding at May
6, 1994: 6,226,648
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
For the Three Months Ended
(Unaudited)
March 31, March 31,
1994 1993
Net sales $ 18,481 $ 18,841
Cost of sales 14,890 16,278
Gross profit 3,591 2,563
Selling, general and
administrative expense 3,167 4,328
Operating income <loss> 424 (1,765)
Other expense:
Interest expense (219) (267)
Other, net (103) (110)
Income <loss> before taxes 102 (2,142)
Provision <benefit> for taxes ---- ----
Net income <loss> $ 102 $ (2,142)
Net income <loss> per share $ 0.02 $ (0.34)
Weighted average number of common
shares and common share equivalents
outstanding during the period 6,232 6,228
Cash dividends None None
The accompanying notes are an integral part of these financial
statements.
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
(Unaudited)
As of As of
March 31, December 31,
1994 1993
ASSETS:
Current assets:
Cash and cash equivalents $ 460 $ 176
Receivables, less allowance for
doubtful accounts of $899 at
March 31, 1994 and $795 at
December 31, 1993. 10,640 15,657
Inventories, primarily finished
goods 16,005 16,128
Prepaid taxes and expenses 5,753 5,449
Total current assets 32,858 37,410
Property, plant and equipment, at cost:
Land 593 593
Building and improvements 6,815 6,815
Equipment 12,845 12,717
20,253 20,125
Accumulated depreciation
and amortization (13,148) (12,738)
Net property, plant and equipment 7,105 7,387
Other assets 5,125 4,929
Total assets $ 45,088 $ 49,726
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 3,242 $ 3,442
Accrued expenses 7,974 8,289
Short-term debt 9,464 13,689
Total current liabilities 20,680 25,420
Deferred taxes 3,346 3,346
Total liabilities 24,026 28,766
Shareholders' equity:
Preferred stock, $1 par value,
shares authorized-1,000,000;
none issued ---- ----
Common stock, $.33 1/3 par value,
12,000,000 shares authorized;
7,039,100 issued and 6,226,648
outstanding at both March 31,
1994 and December 31, 1993. 2,345 2,345
Paid-in capital 22,118 22,118
Retained earnings 3,741 3,639
28,204 28,102
Treasury stock, at cost (5,545) (5,545)
Note receivable from officer's
exercise of stock options (1,597) (1,597)
Total shareholders' equity 21,062 20,960
Total liabilities and shareholders'
equity $ 45,088 $ 49,726
The accompanying notes are an integral part of these financial
statements.
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
For the Three Months Ended
(Unaudited)
March 31, March 31,
1994 1993
Cash flows from operating activities:
Net income <loss> from operations $ 102 $ (2,142)
Adjustments to reconcile net
income <loss> from operations
to net cash provided by (used
for) operating activities:
Depreciation and amortization 500 392
Deferred taxes on income ---- ----
Changes in assets and liabilities:
Receivables 5,017 8,913
Inventories 123 (5,294)
Prepaid taxes & expenses (392) 69
Other assets (54) 284
Accounts payable (200) 498
Accrued liabilities (315) (45)
Net cash provided by operating
activities 4,781 2,675
Cash flows from investing activities:
Capital expenditures (130) (415)
Net cash used for discontinued
operation (142) (116)
Net cash used for investing
activities (272) (531)
Cash flows from financing activities:
Net
repayments under line-of-credit
agreement (4,225) (2,650)
Net cash used for financing
activities (4,225) (2,650)
Net increase (decrease) in cash and
cash equivalents 284 (506)
Cash and cash equivalents at beginning
of period 176 558
Cash & cash equivalents at end of period $ 460 $ 52
The accompanying notes are an integral part of these financial
statements.
PAGE
Cobra Electronics Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The condensed consolidated financial statements included herein
have
been prepared by the Company, without audit, pursuant to the rules
and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting
principles have been condensed or omitted pursuant to such rules
and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is
suggested that these financial statements be read in conjunction
with
the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K. 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. All such adjustments are of a
normal recurring nature.
(1) EARNINGS PER COMMON SHARE:
The number of common shares used in the computation of
earnings
per common share for the three month periods ended March 31,
1994
and 1993 includes average common share equivalents of 5,340
and
and 1,089, respectively.
(2) PURCHASE ORDERS AND COMMITMENTS:
At March 31, 1994, the Company had outstanding purchase orders
with foreign suppliers totaling approximately $22.3 million
compared to $30.4 million as of March 31, 1993.
.
(3) FINANCING ARRANGEMENTS
The company has in place a secured credit agreement which
extends
until January 11, 1995. Management expects to have in place
a new
credit agreement prior to the expiration date of the current
agreement.
PAGE
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Analysis of Results of Operations
Despite significantly higher sales of INTENNA cordless phones, net
sales for the first quarter of 1994 decreased $360,000 to $18.5
million
compared to $18.8 million for the prior year first quarter. This
is
because the higher cordless phone sales were offset by lower sales
of
answering machines and radar/laser detector sales and the fact that
the
prior year quarter included sales from the Company's former
Professional Products Group, which was sold in late 1993.
Gross margin was 19.4% in the first quarter of 1994 compared to
13.6%
in the prior year quarter. The improvement in margin was due
primarily
to increased sales of higher-margin cordless phones compared to the
prior year quarter.
Operating expenses declined by $1.2 million in the first quarter of
1994 compared to the prior year quarter. The decrease was due
primarily to reduced payroll-related costs resulting from the
Company's work force reduction implemented during the third quarter
of
1993.
Interest expense declined slightly during the first quarter of 1994
compared to the prior year quarter due to lower borrowings under
the
Company's line-of-credit agreement.
Liquidity and Capital Resources
Operating activities provided net cash of $4.8 million during the
first
quarter of 1994. The net cash was provided primarily by a $5.0
million
reduction in accounts receivable. The first quarter typically
generates significant cash flows from a reduction in accounts
receivable due to the normal seasonal pattern of lower first
quarter
sales and increased collections commensurate with higher fourth
quarter
sales.
As a result of the cash flow generated from operating activities
during
the first quarter of 1994, the Company was able to reduce
borrowings
under its line-of-credit agreement by $4.2 million from December
31,
1993.
The majority of any taxes payable in 1994 will be offset by
utilizing
tax net operating loss carryforwards which, at December 31, 1993,
totalled $49.9 million. As such, no income tax provision was
recorded
in the first quarter of 1994.
PAGE
PART II
OTHER INFORMATION
ITEMS 1, 2, 3, 4, 5, AND 6 NOT APPLICABLE
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.
COBRA ELECTRONICS CORPORATION
By /s/ Gerald M. Laures
Gerald M. Laures
Vice President - Finance,
and Corporate Secretary
Dated: May 13, 1994