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: April 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-9487
CORCOM, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-2307626
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
844 E. Rockland Road, Libertyville, Illinois 60048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 680-7400
Indicate by checkmark 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 last practical date.
Common Stock, No Par Value--3,658,386 Shares as of April 19, 1995
CORCOM, INC.
INDEX
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets --
April 1, 1995 (Unaudited) and
December 31, 1994
Consolidated Condensed Statements of Operations (Unaudited)
for the Thirteen Weeks Ended April 1, 1995 and
April 2, 1994
Consolidated Condensed Statements of Cash Flows
(Unaudited)--For the Thirteen Weeks Ended
April 1, 1995 and April 2, 1994
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit 4.1 -- Loan Agreement and Note with American National
Bank and Trust Company of Chicago
Exhibit 11.1 -- Computation of Earnings per Share
Exhibit 27.1 -- Financial Data Schedule (EDGAR ONLY)
PART I. -- FINANCIAL INFORMATION
CORCOM, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, except Share Data)
April 1, December 31,
1995 1994
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 339 $ 202
Accounts receivable--net 4,832 4,225
Inventories--Note B 6,501 6,418
Other current assets 412 572
Total current assets 12,084 11,417
PROPERTY, PLANT AND EQUIPMENT--AT COST 16,680 16,302
Less allowances for depreciation
and amortization 13,210 12,903
Net Property Plant & Equipment 3,470 3,399
TOTAL ASSETS $15,554 $14,816
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Cash overdraft $ 0 $ 130
Current portion of long-term debt 278 300
Accounts payable 1,449 1,235
Other accrued liabilities 1,090 1,257
Notes payable 428 249
Total current liabilities 3,245 3,171
LONG-TERM DEBT 200 213
STOCKHOLDERS' EQUITY
Common stock, no par value:
Authorized 10,000,000 shares; issued
(including shares in treasury) -
3,658,543 shares in 1995 and
3,619,543 in 1994 13,839 13,749
(Accumulated deficit) (1,729) (2,235)
Accumulated exchange rate adjustment (1) (82)
12,109 11,432
Less cost of common stock in treasury--
157 shares in 1995 and 1994 0 0
12,109 11,432
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $15,554 $14,816
<FN>
See notes to Consolidated Condensed Financial Statements.
CORCOM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except Share Data)
Thirteen Weeks Ended
April 1, 1995 April 2, 1994
Net sales $6,920 $6,496
Costs and expenses:
Cost of sales 4,464 4,519
Engineering expenses 298 299
Selling, administrative
and other expenses 1,601 1,181
Interest expense 25 86
Total cost and expenses 6,388 6,085
Earnings before income taxes 532 411
Income taxes 26 8
Net earnings $ 506 $ 403
Average number of common and common
equivalent shares outstanding 3,798,144 3,638,637
Net earnings per common and common
equivalent share--Note C $ 0.13 $ 0.11
<FN>
Cash dividends have not been declared in the periods covered by these statements.
<FN>
See notes to Consolidated Condensed Financial Statements.
CORCOM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
Thirteen Weeks Ended
April 1, 1995 April 2, 1994
OPERATING ACTIVITIES
Net cash flows from operating
activities $ 364 $ (75)
INVESTING ACTIVITIES
Additions to property, plant
and equipment, net (331) (69)
Proceeds from sale of property 0 2,541
TOTAL INVESTING ACTIVITIES (331) 2,472
FINANCING ACTIVITIES
Proceeds from borrowings under notes
payable and long-term debt 190 0
Stock options exercised 90 0
Repayments of notes payable and
long-term debt (46) (2,230)
Change in cash overdraft (130) (241)
TOTAL FINANCING ACTIVITIES 104 (2,471)
Effect of exchange rate changes on cash
and cash equivalents 0 2
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 137 (72)
Cash and cash equivalents at beginning
of year 202 238
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 339 $ 166
<FN>
See notes to Consolidated Condensed Financial Statements
CORCOM, INC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the thirteen weeks
ended April 1, 1995 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1995. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended
December 31, 1994.
NOTE B--INVENTORIES
Major classes of the Company's inventories are as follows (in thousands):
April 1, 1995 April 2, 1994
Finished products $2,760 $2,848
Materials and work-in-process 3,741 3,570
$6,501 $6,418
NOTE C--EARNINGS PER SHARE
Net earnings per common and common equivalent share are based upon the
weighted average number of shares of common stock and common stock
equivalents (dilutive stock options) outstanding during each period.
NOTE D--INCOME TAXES
The provision for income taxes in 1995 as a percentage of earnings before
income taxes is less than the federal statutory rate due principally to the
effect of utilization of net operating loss carryovers.
The components of the net deferred tax asset, tax effected, recognized in
the accompanying balance sheet as of April 1, 1995 are as follows (in
thousands):
Deferred tax assets $4,832
Less valuation allowance (4,832)
Net deferred tax assets $ 0
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations - First Quarter 1995 vs. First Quarter 1994
Net sales for the first quarter 1995 were $6,920,000, an increase of 6.5 %
from the $6,496,000 reported in the first quarter of 1994. This increase
was commensurate with the increase in the overall electronics market.
Cost of sales for the current quarter were 64.5% of net sales compared to
69.6% for the first quarter of 1994. The improvement is due to lower costs
at the Company's North American manufacturing facilities.
Engineering expenses, at $298,000 in the first quarter of 1995, were about
the same as the $299,000 reported in the first quarter of 1994. Selling,
administrative, and other expenses rose in the first quarter of 1995
to $1,601,000 from the $1,181,000 reported in the first quarter of 1994 due
principally to the fact that a $241,000 one-time gain on the sale of real
estate in the first quarter of 1994 was not repeated in 1995 and also to the
fact more sales commission were paid on the higher level of sales in 1995.
Interest expense was $25,000 in the first quarter of 1995 as compared to
$86,000 in the first quarter of 1994, the result of lower borrowings in the
current period.
Income tax expense was $26,000 in the first quarter of 1995 as compared to
$8,000 in the first quarter of 1994.
Net earnings for the first quarter of 1995 were $506,000 ($0.13 per share
on average shares outstanding of 3,798,144). This compares to earnings of
$403,000 including the gain on sale of real estate ($0.11 per share on
3,638,637 average shares outstanding) for the first quarter of 1994.
Liquidity and Capital Resources
On April 3, 1995, the Company entered into a new loan agreement with American
National Bank and Trust Company of Chicago. This agreement is a one year,
presently unsecured line of credit with maximumborrowings of $4,000,000, or
80% of eligible accounts receivable, whichever is less. Interest on this
loan is the Company's choice of either LIBOR plus one hundred fifty basis
points, or the Bank's prime rate. This agreement replaces the secured line
of credit with Norwest Business Credit, Inc. which had been established in
June 1991. Maximum borrowings under the old agreement were $5,000,000, of
which $4,600,000 was a revolving credit facility and $400,000 was a term
loan. The borrowings were collateralized by domestic inventory and
receivables. The interest rate under the old loan agreement was the Bank's
prime rate plus two and one half percent.
The Company was borrowing $478,000 against its line of credit as of
April 1, 1995. This compares to borrowings of $513,000 as of
December 31, 1994.
The Company does not believe that it will need to identify additional sources
of capital over the next year and feels that cash provided by operating
activities and the existing credit facility will be sufficient to meet its
operating needs and capital resource requirements.
PART II. OTHER INFORMATION
CORCOM, INC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
4.1 Loan Agreement with American
National Bank and Trust Company
of Chicago
11.1 Computation of Earnings
per share
27.1 Financial Data Schedule (EDGAR ONLY)
(b) The Company did not file any reports on Form 8-K
during the thirteen week period ended April 1, 1995.
CORCOM, INC.
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.
CORCOM, INC.
Dated: April 25, 1995 Thomas J. Buns
By: Thomas J. Buns
Vice President and Treasurer
(Principal Financial Officer)