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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 September 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
  
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
 
 
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  ¨
 
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
YES  ¨   NO   x
 
Number of shares of Common Stock of Registrant outstanding at November 8, 2002: 6,419,777
 

1

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 Nine
Months Ended (Unaudited)
  
    
Sept 30,
2002
     
Sept 30,
2001
     
Sept 30,
2002
     
Sept 30,
2001
  
Net sales
   
$
35,924
 
   
$
35,051
 
   
$
93,231
 
   
$
99,547
 
Cost of sales
   
 
27,528
 
   
 
26,046
 
   
 
70,851
 
   
 
74,113
 
    
  
  
  
Gross profit
   
 
8,396
 
   
 
9,005
 
   
 
22,380
 
   
 
25,434
 
Selling, general and administrative expenses
   
 
7,729
 
   
 
6,548
 
   
 
20,900
 
   
 
19,241
 
Expenses for the terminated acquisition of Lowrance
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
1,402
 
    
  
  
  
Operating income
   
 
667
 
   
 
2,457
 
   
 
1,480
 
   
 
4,791
 
Other income (expense):
                                    
Interest expense
   
 
(43
)
   
 
(201
)
   
 
(183
)
   
 
(574
)
Other, net
   
 
(70
)
   
 
(23
)
   
 
(23
)
   
 
(205
)
    
  
  
  
Income before taxes
   
 
554
 
   
 
2,233
 
   
 
1,274
 
   
 
4,012
 
Tax provision
   
 
216
 
   
 
858
 
   
 
551
 
   
 
1,541
 
    
  
  
  
Net income
   
$
338
 
   
$
1,375
 
   
$
723
 
   
$
2,471
 
    
  
  
  
Net income per common share:
                                    
Basic
   
$
0.05
 
   
$
0.22
 
   
$
0.11
 
   
$
0.40
 
Diluted
   
$
0.05
 
   
$
0.22
 
   
$
0.11
 
   
$
0.39
 
Weighted average shares outstanding:
                                    
Basic
   
 
6,407
 
   
 
6,243
 
   
 
6,357
 
   
 
6,214
 
Diluted
   
 
6,553
 
   
 
6,383
 
   
 
6,515
 
   
 
6,401
 
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
Sept 30,
2002
(Unaudited)
     
As of
December 31,
2001
(Unaudited)
  
     
     
     
                                         ASSETS:
                  
Current assets:
                  
Cash
   
$
1,555
 
   
$
675
 
Receivables, less allowance for claims and doubtful accounts of $1,298 at Sept 30, 2002, and $2,518 at December 31, 2001
   
 
25,302
 
   
 
41,798
 
Inventories, primarily finished goods
   
 
23,962
 
   
 
22,190
 
Deferred income taxes
   
 
7,661
 
   
 
7,661
 
Other current assets
   
 
3,301
 
   
 
2,488
 
    
  
Total current assets
   
 
61,781
 
   
 
74,812
 
    
  
Property, plant and equipment, at cost:
                  
Land
   
 
330
 
   
 
330
 
Building and improvements
   
 
4,499
 
   
 
4,008
 
Tooling and equipment
   
 
19,558
 
   
 
17,966
 
    
  
    
 
24,387
 
   
 
22,304
 
Accumulated depreciation
   
 
(16,704
)
   
 
(14,843
)
    
  
Net property, plant and equipment
   
 
7,683
 
   
 
7,461
 
    
  
Other assets:
                  
Cash surrender value of officers’ life insurance policies
   
 
5,893
 
   
 
5,753
 
Other
   
 
1,633
 
   
 
1,566
 
    
  
Total other assets
   
 
7,526
 
   
 
7,319
 
    
  
Total assets
   
$
76,990
 
   
$
89,592
 
    
  
 
See notes to consolidated financial statements.

3

Cobra Electronics Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
 
    
As of Sept 30, 2002
(Unaudited)
     
As of December 31, 2001 (Unaudited)
  
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
                  
Accounts payable
   
$
4,782
 
   
$
2,935
 
Accrued salaries and commissions
   
 
718
 
   
 
1,445
 
Accrued advertising and sales promotion costs
   
 
1,343
 
   
 
4,182
 
Accrued product warranty costs
   
 
2,150
 
   
 
2,721
 
Other accrued liabilities
   
 
728
 
   
 
1,246
 
    
  
Total current liabilities
   
 
9,721
 
   
 
12,529
 
    
  
Non-current liabilities:
                  
Deferred compensation
   
 
3,773
 
   
 
3,328
 
Deferred income taxes
   
 
4,385
 
   
 
4,385
 
Long-term debt
   
 
3,918
 
   
 
15,378
 
    
  
Total non-current liabilities
   
 
12,076
 
   
 
23,091
 
    
  
Total liabilities
   
 
21,797
 
   
 
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
   
 
19,730
 
   
 
19,899
 
Retained earnings
   
 
37,052
 
   
 
36,329
 
Accumulated comprehensive loss
   
 
(12
)
   
 
—  
 
Treasury stock, at cost (619,323 shares for 2002 and 736,048 shares for 2001)
   
 
(3,922
)
   
 
(4,601
)
    
  
Total shareholders’ equity
   
 
55,193
 
   
 
53,972
 
    
  
Total liabilities and shareholders’ equity
   
$
76,990
 
   
$
89,592
 
    
  
 
See notes to consolidated financial statements.

4

 
Cobra Electronics Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(dollars in thousands)
 
    
For the Nine Months Ended
(Unaudited)
  
    
Sept 30, 2002
     
Sept 30, 2001
  
Cash flows from operating activities:
                  
Net income
   
$
723
 
   
$
2,471
 
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
                  
Depreciation and amortization
   
 
2,084
 
   
 
1,716
 
Loss on cash surrender value (CSV) of life insurance
   
 
151
 
   
 
163
 
Changes in assets and liabilities:
                  
Receivables
   
 
16,496
 
   
 
6,212
 
Inventories
   
 
(1,772
)
   
 
(11,162
)
Other current assets
   
 
(863
)
   
 
658
 
Other assets
   
 
(324
)
   
 
467
 
Accounts payable
   
 
1,847
 
   
 
3,615
 
Deferred compensation
   
 
445
 
   
 
302
 
Accrued liabilities
   
 
(4,683
)
   
 
(819
)
    
  
Net cash flows from operating activities
   
 
14,104
 
   
 
3,623
 
    
  
Cash flows from investing activities:
                  
Capital expenditures
   
 
(1,983
)
   
 
(1,922
)
CSV life insurance premiums
   
 
(291
)