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, 2003
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
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 May 8, 2003: 6,419,777
1
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, 2003 |
March 31, 2002 |
|||||||
| Net sales |
$ |
20,554 |
|
$ |
21,042 |
| ||
| Cost of sales |
|
15,440 |
|
|
16,281 |
| ||
| Gross profit |
|
5,114 |
|
|
4,761 |
| ||
| Selling, general and administrative expenses |
|
5,810 |
|
|
5,073 |
| ||
| Operating loss |
|
(696 |
) |
|
(312 |
) | ||
| Other income (expense): |
||||||||
| Interest expense |
|
(30 |
) |
|
(92 |
) | ||
| Other, net |
|
(33 |
) |
|
12 |
| ||
| Loss before taxes |
|
(759 |
) |
|
(392 |
) | ||
| Tax benefit |
|
306 |
|
|
156 |
| ||
| Net loss |
$ |
(453 |
) |
$ |
(236 |
) | ||
| Net loss per common share: |
||||||||
| Basic |
$ |
(0.07 |
) |
$ |
(0.04 |
) | ||
| Diluted |
$ |
(0.07 |
) |
$ |
(0.04 |
) | ||
| Weighted average shares outstanding: |
||||||||
| Basic |
|
6,420 |
|
|
6,315 |
| ||
| Diluted |
|
6,479 |
|
|
6,460 |
| ||
| Cash dividends |
|
None |
|
|
None |
| ||
See notes to condensed consolidated financial statements.
2
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
| As of March 31, 2003 (Unaudited) |
As of December 31, 2002 (Unaudited) |
|||||||
| ASSETS: |
||||||||
| Current assets: |
||||||||
| Cash |
$ |
6,851 |
|
$ |
2,829 |
| ||
| Receivables, less allowance for claims and doubtful accounts of $1,005 at March 31, 2003, and $1,179 at December 31, 2002 |
|
18,577 |
|
|
24,784 |
| ||
| Inventories, primarily finished goods |
|
17,976 |
|
|
20,956 |
| ||
| Deferred income taxes |
|
6,552 |
|
|
6,552 |
| ||
| Other current assets |
|
4,303 |
|
|
3,868 |
| ||
| Total current assets |
|
54,259 |
|
|
58,989 |
| ||
| Property, plant and equipment, at cost: |
||||||||
| Land |
|
330 |
|
|
330 |
| ||
| Building and improvements |
|
4,362 |
|
|
4,542 |
| ||
| Tooling and equipment |
|
20,302 |
|
|
19,865 |
| ||
|
|
24,994 |
|
|
24,737 |
| |||
| Accumulated depreciation |
|
(18,158 |
) |
|
(17,317 |
) | ||
| Net property, plant and equipment |
|
6,836 |
|
|
7,420 |
| ||
| Other assets: |
||||||||
| Cash surrender value of officers’ life insurance policies |
|
5,954 |
|
|
5,966 |
| ||
| Other |
|
4,180 |
|
|
2,807 |
| ||
| Total other assets |
|
10,134 |
|
|
8,773 |
| ||
| Total assets |
$ |
71,229 |
|
$ |
75,182 |
| ||
See notes to condensed consolidated financial statements.
3
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share data)
| As of March 31, 2003 (Unaudited) |
As of December 31, 2002 (Unaudited) |
|||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
3,621 |
|
$ |
4,292 |
| ||
| Accrued salaries and commissions |
|
527 |
|
|
881 |
| ||
| Accrued advertising and sales promotion costs |
|
1,196 |
|
|
2,002 |
| ||
| Accrued product warranty costs |
|
1,896 |
|
|
2,137 |
| ||
| Other accrued liabilities |
|
498 |
|
|
2,133 |
| ||
| Total current liabilities |
|
7,738 |
|
|
11,445 |
| ||
| Non-current liabilities: |
||||||||
| Deferred compensation |
|
3,981 |
|
|
3,785 |
| ||
| Deferred income taxes |
|
3,673 |
|
|
3,673 |
| ||
| Total non-current liabilities |
|
7,654 |
|
|
7,458 |
| ||
| Total liabilities |
|
15,392 |
|
|
18,903 |
| ||
| 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 2003 and 2002 |
|
2,345 |
|
|
2,345 |
| ||
| Paid-in capital |
|
19,772 |
|
|
19,772 |
| ||
| Retained earnings |
|
37,596 |
|
|
38,049 |
| ||
| Accumulated other comprehensive income |
|
46 |
|
|
35 |
| ||
| Treasury stock, at cost (619,323 shares for 2003 and 619,323 shares for 2002) |
|
(3,922 |
) |
|
(3,922 |
) | ||
| Total shareholders’ equity |
|
55,837 |
|
|
56,279 |
| ||
| Total liabilities and shareholders’ equity |
$ |
71,229 |
|
$ |
75,182 |
| ||
See notes to condensed consolidated financial statements.
4
Cobra Electronics Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
| For the Three Months Ended (Unaudited) |
||||||||
| March 31, 2003 |
March 31, 2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ |
(453 |
) |
$ |
(236 |
) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: |
||||||||
| Depreciation and amortization |
|
942 |
|
|
799 |
| ||
| Loss on cash surrender value (CSV) of life insurance |
|
16 |
|
|
8 |
| ||
| Changes in assets and liabilities: |
||||||||
| Receivables |
|
6,207 |
|
|
21,238 |
| ||
| Inventories |
|
2,980 |
|
|
(744 |
) | ||
| Other current assets |
|
(461 |
) |
|
(971 |
) | ||
| Other assets |
|
(587 |
) |
|
48 |
| ||
| Accounts payable |
|
(671 |
) |
|
411 |
| ||
| Deferred compensation |
|
196 |
|
|
117 |
| ||
| Accrued liabilities |
|
(3,036 |
) |
|
(4,397 |
) | ||
| Net cash flows from operating activities |
|
5,133 |
|
|
16,273 |
| ||
| Cash flows used in investing activities: |
||||||||
| Long-term loan receivable |
|
(850 |
) |
|
— |
| ||
| Capital expenditures |
|
(257 |
) |
|
(1,057 |
) | ||
| CSV life insurance premiums |
|
(4 |
) |
|
(4 |
) | ||
| Net cash flows used in investing activities |
|
(1,111 |
) |
|
(1,061 |
) | ||
| Cash flows from financing activities: |
||||||||
| Net repayments under the line-of-credit agreement |
|
— |
|
|
||||