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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, 2002
 
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
(State of incorporation)
  
36-2479991
(I.R.S. Employer Identification No.)
 
6500 West Cortland Street
Chicago, Illinois
(Address of principal executive offices)
  
60707
(Zip Code)
 
Registrant’s telephone number, including area code: (773) 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 July 30, 2002: 6,419,777
 

PART I    FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
Cobra Electronics Corporation and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share amounts)
 
    
For the Three Months Ended (Unaudited)
     
For the Six Months Ended (Unaudited)
  
    
June 30,
2002
     
June 30,
2001
     
June 30,
2002
     
June 30,
2001
  
Net sales
   
$
36,264
 
   
$
34,488
 
   
$
57,306
 
   
$
64,496
 
Cost of sales
   
 
27,040
 
   
 
25,901
 
   
 
43,321
 
   
 
48,067
 
    
  
  
  
Gross profit
   
 
9,224
 
   
 
8,587
 
   
 
13,985
 
   
 
16,429
 
Selling, general and administrative expenses
   
 
8,098
 
   
 
6,488
 
   
 
13,172
 
   
 
12,693
 
Expenses for the terminated acquisition of Lowrance
   
 
—
 
   
 
1,402
 
   
 
—
 
   
 
1,402
 
    
  
  
  
Operating income
   
 
1,126
 
   
 
697
 
   
 
813
 
   
 
2,334
 
Other income (expense):
                                    
Interest expense
   
 
(48
)
   
 
(199
)
   
 
(140
)
   
 
(373
)
Other, net
   
 
35
 
   
 
109
 
   
 
47
 
   
 
(182
)
    
  
  
  
Income before taxes
   
 
1,113
 
   
 
607
 
   
 
720
 
   
 
1,779
 
Tax provision
   
 
492
 
   
 
233
 
   
 
335
 
   
 
683
 
    
  
  
  
Net income
   
$
621
 
   
$
374
 
   
$
385
 
   
$
1,096
 
    
  
  
  
Net income per common share:
                                    
Basic
   
$
0.10
 
   
$
0.06
 
   
$
0.06
 
   
$
0.18
 
Diluted
   
$
0.09
 
   
$
0.06
 
   
$
0.06
 
   
$
0.17
 
Weighted average shares outstanding:
                                    
Basic
   
 
6,349
 
   
 
6,221
 
   
 
6,332
 
   
 
6,200
 
Diluted
   
 
6,570
 
   
 
6,490
 
   
 
6,517
 
   
 
6,439
 
Cash dividends
   
 
None
 
   
 
None
 
   
 
None
 
   
 
None
 
 
See notes to consolidated financial statements.

2

Cobra Electronics Corporation and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands)
 
    
As of
June 30,
2002
(Unaudited)
     
As of
December 31,
2001
(Unaudited)
  
ASSETS:
                  
Current assets:
                  
Cash
   
$
995
 
   
$
675
 
Receivables, less allowance for claims and doubtful accounts of $1,644 at June 30, 2002, and $2,518 at December 31, 2001
   
 
28,506
 
   
 
41,798
 
Inventories, primarily finished goods
   
 
21,457
 
   
 
22,190
 
Deferred income taxes
   
 
7,661
 
   
 
7,661
 
Other current assets
   
 
3,299
 
   
 
2,488
 
    
  
Total current assets
   
 
61,918
 
   
 
74,812
 
    
  
Property, plant and equipment, at cost:
                  
Land
   
 
330
 
   
 
330
 
Building and improvements
   
 
4,499
 
   
 
4,008
 
Tooling and equipment
   
 
19,171
 
   
 
17,966
 
    
  
    
 
24,000
 
   
 
22,304
 
Accumulated depreciation
   
 
(16,178
)
   
 
(14,843
)
    
  
Net property, plant and equipment
   
 
7,822
 
   
 
7,461
 
    
  
Other assets:
                  
Cash surrender value of officers’ life insurance policies
   
 
5,921
 
   
 
5,753
 
Other
   
 
1,800
 
   
 
1,566
 
    
  
Total other assets
   
 
7,721
 
   
 
7,319
 
    
  
Total assets
   
$
77,461
 
   
$
89,592
 
    
  
 
See notes to consolidated financial statements.

3

Cobra Electronics Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
 
    
As of
June 30, 2002
(Unaudited)
     
As of
December 31, 2001
(Unaudited)
  
LIABILITIES AND SHAREHOLDERS’ EQUITY:
                  
Current liabilities:
                  
Accounts payable
   
$
6,152
 
   
$
2,935
 
Accrued salaries and commissions
   
 
855
 
   
 
1,445
 
Accrued advertising and sales promotion costs
   
 
1,512
 
   
 
4,182
 
Accrued product warranty costs
   
 
2,064
 
   
 
2,721
 
Other accrued liabilities
   
 
538
 
   
 
1,246
 
    
  
Total current liabilities
   
 
11,121
 
   
 
12,529
 
    
  
Non-current liabilities:
                  
Deferred compensation
   
 
3,588
 
   
 
3,328
 
Deferred income taxes
   
 
4,385
 
   
 
4,385
 
Long-term debt
   
 
3,933
 
   
 
15,378
 
    
  
Total non-current liabilities
   
 
11,906
 
   
 
23,091
 
    
  
Total liabilities
   
 
23,027
 
   
 
35,620
 
    
  
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 for 2002 and 2001
   
 
2,345
 
   
 
2,345
 
Paid-in capital
   
 
19,745
 
   
 
19,899
 
Retained earnings
   
 
36,714
 
   
 
36,329
 
Accumulated comprehensive loss
   
 
(34
)
   
 
—  
 
Treasury stock, at cost (690,423 shares for 2002 and 736,048 shares for 2001)
   
 
(4,336
)
   
 
(4,601
)
    
  
Total shareholders’ equity
   
 
54,434
 
   
 
53,972
 
    
  
Total liabilities and shareholders’ equity
   
$
77,461
 
   
$
89,592
 
    
  
 
See notes to consolidated financial statements.

4

 
Cobra Electronics Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(dollars in thousands)
 
    
For the Six Months Ended (Unaudited)
  
    
June 30, 2002
     
June 30,
2001
  
Cash flows from operating activities:
                  
Net income
   
$
385
 
   
$
1,096
 
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
                  
Depreciation and amortization
   
 
1,446
 
   
 
1,176
 
Loss on cash surrender value (CSV) of life insurance
   
 
123
 
   
 
162
 
Changes in assets and liabilities:
                  
Receivables
   
 
13,310
 
   
 
10,963
 
Inventories
   
 
733
 
   
 
(8,508
)
Other current assets
   
 
(838
)
   
 
268
 
Other assets
   
 
(412
)
   
 
628
 
Accounts payable
   
 
3,217
 
   
 
646
 
Deferred compensation
   
 
260
 
   
 
190
 
Accrued liabilities
   
 
(4,677
)
   
 
(2,212
)
    
  
Net cash flows from operating activities
   
 
13,547
 
   
 
4,409
 
    
  
Cash flows from investing activities:
                  
Capital expenditures
   
 
(1,602
)
   
 
(1,099
)
CSV life insurance premiums
   
 
(291
)
   
 
(127
)
    
  
Net cash flows from (used in) investing activities
   
 
(1,893
)
   
 
(1,226
)
    
  
Cash flows from financing activities:
                  
Net borrowings (repayments) under the line-of-credit agreement
   
 
(11,445
)
   
 
(3,388
)
Transactions related to exercise of common stock options, net
   
 
111
 
   
 
176