Cobra Electronics Reports Third Quarter Results

               Cobra Electronics Reports Third Quarter Results

Sluggish Store Traffic impacts Net Sales and Operating Income

PR Newswire

CHICAGO, Nov. 8, 2012

CHICAGO, Nov. 8, 2012 /PRNewswire/ -- Cobra Electronics Corporation (NASDAQ:
COBR), a leading global designer and marketer of mobile communications and
navigation products, today reported net income of $564,000, or $0.09 per share
for the third quarter of 2012 as compared to  net income of $1.4 million, or
$0.21 per share for the third quarter of 2011.  In addition, operating income
was $304,000 for the current quarter compared to $2.3 million in the same
quarter last year. This significant reduction reflected a drop in net sales to
$27.7 million from $34.5 million and a gross margin of 28.1 percent compared
to 29.9 percent in the prior year period.

Consolidated net sales were $27.7 million compared to $34.5 million in the
third quarter of 2011, with the Cobra segment reporting lower sales of $6.9
million and the Performance Products Limited ("PPL") segment reporting an
increase of $163,000, or 4.6 percent. The sales drop for the Cobra segment
resulted from lower domestic sales of Citizens Band radios, Truck Navigation,
Two Way radio and Detection products, but was partially offset by higher
European sales. The lower domestic Citizens Band radio and Truck Navigation
sales reflected significantly reduced store traffic in travel centers and in
the case of Citizens Band radios, strong sales from the third quarter of 2011
that included sales of a limited edition model that was not repeated in 2012. 
The drop in Two Way radio and Detection sales also reflected lower retail
store traffic as certain large retailers pushed out orders into the fourth
quarter. European sales included in the Cobra segment increased by nearly 6%
representing higher Detection sales into Eastern Europe. The PPL sales
increase was attributable to higher sales of satellite navigation products.

"While we are very disappointed to report a substantially lower operating
performance from the third quarter of 2011, which primarily resulted from an
unexpected slowdown in store traffic at both retail and travel centers, we are
still optimistic about our fourth quarter, typically the Company's best
financial quarter of the year" said Jim Bazet, Cobra's Chairman and Chief
Executive Officer.

Consolidated gross margin was 28.1 percent compared to 29.9 percent in the
third quarter of 2011 primarily as a result of a less favorable product mix.
The gross margin for the Cobra segment was 27.0 percent versus 29.2 percent in
the same quarter last year as higher margin products represented a much
smaller percentage of total sales and as a result of an unfavorable foreign
exchange impact. PPL's gross margin declined to 35.3 percent from 36.0 percent
last year reflecting a slightly unfavorable product mix.

Selling, general and administrative expenses decreased to $7.5 million in the
third quarter from $8.0 million in the prior year's quarter. The decrease
related to variable selling expenses, which declined consistent with net
sales, partially offset by higher fixed expenses, principally in the Cobra
segment, that represented mainly increased salary and travel expenses.

Interest expense for the third quarter of 2012 was $277,000 compared to
$272,000 for the third quarter of 2011. Other income was $336,000 compared to
other expense of $899,000 in the prior year's quarter primarily due to a
$274,000 gain on the cash surrender value of life insurance that the Company
owns for the purpose of funding deferred compensation programs for several
current and former officers of the Company as compared to a $671,000 loss in
the third quarter of 2011.

Interest-bearing debt increased to $22.6 million as of September 30, 2012
compared to $20.2 million at September 30, 2011. Cash on hand at September 30,
2012 was $3.4 million as compared to $1.3 million at September 30, 2011 due to
the timing of cash receipts. Inventory at the end of the third quarter
increased to $38.9 million from $32.5 million the prior year as a result of
ordering product within lead times for anticipated third quarter sales, which
were lower than expected. Accounts receivable at the end of the quarter were
$17.9 million, a decrease from $22.1 million one year earlier.

On a year-to-date basis, consolidated net sales for Cobra decreased by 3.0
percent, to $83.2 million from $85.8 million due to the sales drop in the
third quarter compared to the same quarter last year. However, an improved
gross margin partially offset this sales shortfall and resulted in operating
income of $1.9 million for the first nine months as compared to operating
income of $2.5 million for the prior year's period.  The net income for the
year-to-date period was $1.8 million, or $0.27 per share, as compared to a net
income of $1.1 million, or $0.16 per share in the prior year.

In discussing the outlook for the fourth quarter of 2012, as well as the
entire year, Mr. Bazet said, "The Company expects to achieve better results in
the fourth quarter of 2012 than in the fourth quarter of 2011 in part due to
the movement of certain orders from third quarter 2012 to fourth quarter 2012.
In addition, the Company anticipates a similar level of profitability in 2012
as compared to 2011."

Cobra will be conducting a conference call on November 8, 2012 at 11:00 a.m.
EST to discuss third quarter results as well as its current strategies and
outlook.  The call can also be accessed live or through replay via the
Internet at http://www.cobra.com.

About Cobra Electronics
Cobra Electronics is a leading global designer and marketer of communication
and navigation products, with a track record of delivering innovative and
award-winning products.  Building upon its leadership position in the GMRS/FRS
two-way radio, radar detector and Citizens Band radio industries, Cobra
identified new growth opportunities and has aggressively expanded into the
marine market and has expanded its European operations. The Consumer
Electronics Association, Forbes and Deloitte & Touche have all recognized
Cobra for the company's innovation and industry leadership.  To learn more
about Cobra Electronics, please visit the Cobra site at www.cobra.com.

Safe Harbor
This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.  These statements are based
on management's current expectations and are subject to risks and
uncertainties.  Actual results may differ materially from these expectations
due to factors such as the acceptance of Cobra's new and existing products by
customers, the continued success of Cobra's cost containment efforts and the
continuation of key distribution channel relationships.  Please refer to
Cobra's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K, for a more detailed discussion of factors that may
affect Cobra's performance.

Condensed Consolidated Statements of Operations
(in thousands, except per share amounts, unaudited)
                            For the Three Months       For the Nine Months
                            Ended                      Ended
                             Sept 30,      Sept 30,     Sept 30,     Sept 30,
                            2012          2011         2012         2011
Net sales                   $   27,672    $   34,454   $  83,174    $  85,753
Cost of sales                   19,893        24,155      58,949       61,430
    Gross profit                7,779         10,299      24,225       24,323
Selling, general and            7,475         7,952       22,315       21,847
administrative expense
    Earnings from               304           2,347       1,910        2,476
    operations
Other (expense) income:
    Interest expense            (277)         (272)       (765)        (795)
    Other, net                  336           (899)       685          (738)
Earnings before taxes           363           1,176       1,830        943
Tax (benefit) provision         (201)         (202)       25           (133)
Net earnings                $   564       $   1,378    $  1,805     $  1,076
Net earnings per common
share:
    Basic                   $   0.09      $   0.21     $  0.27      $  0.16
    Diluted                 $   0.09      $   0.21     $  0.27      $  0.16
Weighted average shares
outstanding: 
    Basic                       6,611         6,540       6,595        6,522
    Diluted                     6,633         6,540       6,610        6,522

 

                       Condensed Consolidated Balance Sheets
                       (in thousands, unaudited)
ASSETS:                                  Sept 30,     December        Sept 30,
                                                    31,
                                       2012         2011            2011
Current assets:
      Cash                           $ 3,434      $ 1,033         $ 1,289
      Accounts receivable, net         17,894       23,400          22,064
      Inventories, net                 38,946       34,093          32,487
      Other current assets             3,293        2,726           2,931
      Total current assets             63,567       61,252          58,771
Property, plant and equipment,         5,373        5,367           5,485
net
Total other assets                     14,309       13,976          13,844
Total assets                         $ 83,249     $ 80,595        $ 78,100
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current liabilities:
      Accounts payable               $ 5,870      $ 7,368         $ 6,655
      Accrued liabilities              6,442        8,910           7,445
      Short-term debt                  22,578       18,655          20,172
      Total current liabilities        34,890       34,933          34,272
Non-current liabilities:
      Deferred taxes                   914          1,159           1,203
      Deferred compensation            7,730        7,392           7,242
      Other long-term liabilities      742          588             533
      Total non-current                9,386        9,139           8,978
      liabilities
Equity:
      Shareholders' equity -           38,973       36,523          34,850
      Cobra
      Total equity                     38,973       36,523          34,850
Total liabilities and shareholders'  $ 83,249     $ 80,595        $ 78,100
equity

 

SOURCE Cobra Electronics Corporation

Website: http://www.cobra.com
Contact: Investors, Jim Bazet, Chairman and CEO of Cobra Electronics
Corporation, +1-773-804-6265, jbazet@cobra.com, or Media, Chris Doyle of
Annual Reports, Inc., +1-317-736-8838, chrisdoyle@annualreportsinc.com, for
Cobra Electronics Corporation