Cobra Electronics Reports Fourth Quarter Results; Quarterly Earnings Up 50% and Annual Earnings Up 7%.Business Editors CHICAGO--(BUSINESS WIRE)--Feb. 20, 2004 Cobra Electronics Corporation (Nasdaq: COBR COBR Cabinet Office Briefing Room (British Parliament) COBR Continuous Oscillatory Baffled Reactor ), a leading global manufacturer of mobile communications products, today announced results for its fourth quarter ended December December: see month. 31, 2003 and for the full year. For the quarter, Cobra reported that net income increased 50 percent to $1.5 million, or $.23 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income of $1.0 million, or $.15 per diluted share, in the fourth quarter of 2002. The company reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $41.3 million, down 3.0% from $42.6 million for the prior year's quarter. Gross margin for the fourth quarter decreased to 25.9 percent from 27.9 percent in the fourth quarter of 2002. Selling, general and administrative expenses decreased 21.1% to $8.0 million from $10.2 million in the fourth quarter of 2002. "Cobra is pleased with this strong increase in net income for the fourth quarter of 2003," said Jim Bazet, Cobra's President and Chief Executive Officer. "Our focus on tightly managing selling, general and administrative expenses was very successful as we saw these expenses drop significantly from a year ago. The decline in gross margins, after registering year-over-year increases for the past three quarters, was attributable to continued pricing pressures in the two-way radio A voice network that provides an always-on connection enabling the user to just "push the button and talk." Also called "dispatch radio," two-way radio has traditionally been used by police, fire, taxi and other mobile fleets. market, as well as efforts to sell through certain slower moving items during the holiday season when the most favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing would be available." With respect to the fourth quarter drop in sales, Bazet indicated that a decrease in two-way radio sales was the major contributor as a decline in average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. per unit exceeded the modest growth in unit volume. "Nevertheless," said Bazet, "Cobra continues to build its share of this market and remains optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op regarding its prospects going forward. In addition to contributions from Cobra's newest product lines, handheld GPS Handheld GPS use GPS Signal from a minimum of 3 overhead satellites to obtain a fix which is usually accurate to within 30m. Actual accuracy can be achieved down to 5m but due to US Military intervention accuracy is restricted. Popular brands include Garmin, Magellan Navigation. and marine radios, citizens band radio citizens band radio: see radio. sales were strong and exceeded those of last year." Bazet added that fourth quarter sales include expanded placement of Cobra's first two handheld GPS models, the GPS 100 and the GPS 500, including sales to Canada and Europe. "Cobra is opening new sales channels with our GPS products, including marine, outdoor and sporting goods Noun 1. sporting goods - sports equipment sold as a commodity commodity, trade good, good - articles of commerce sports equipment - equipment needed to participate in a particular sport retailers. Additionally, several of our European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. distributors are stocking Cobra's GPS 100 and we anticipate broader retail distribution there in 2004," noted Bazet. "Further expansion of Cobra's marketing and distribution channels will be generated by the introduction later this year of the GPS 1000, featuring street-level maps and points of interest. Our mobile navigation products, including the award-winning SKYNAV(TM) 3000, also are slated for introduction in mid- mid- pref. Middle: midbrain. 2004 and are anticipated to achieve broad distribution." For the year, Cobra reported a 7.0% increase in net income to $1.8 million, or $.28 per diluted share, from $1.7 million, or $.26 per diluted share, in 2002. Net sales for the year were $114.8 million, down from $135.8 million in the prior year. Gross margin for the year improved to 26.7 percent from 25.2 percent in 2002. Selling, general and administrative expenses declined to $27.5 million from $31.1 million in the prior year. Bazet expressed disappointment at the decline in sales but noted that he was encouraged by the improvement in gross margin and increase in net income, which demonstrated the company's resilience resilience (r  ·zilˑ·yens),n and continued earning power Earning power Earnings before interest and taxes (EBIT) divided by total assets. earning power 1. The earnings that an asset could produce under optimal conditions. For example, AT&T may currently be earning $2. . "Our goal for 2003 was to reverse the decline in revenues and earnings that Cobra has experienced over the past two years. We achieved part of our goal as earnings exceeded those of 2002, but the continued decline in the two-way radio market made the sales goal unachievable. We remain committed to these goals in 2004." Cobra maintained its strong balance sheet position during the fourth quarter. The company had no interest-bearing debt as of December 31, 2003, the same position as one year earlier, and $4.7 million in cash, as compared to $2.8 million one year earlier. Inventory decreased to $20.7 million from $21.0 million the prior year. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying at the end of the year decreased to $22.4 million from $24.8 million as a result of lower sales and increased collections activity. Net book value per share on December 31, 2003 increased to $8.99 from $8.70 one year ago. Cobra also noted that it has amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. its loan agreement to extend it through January 31, 2006, reduce the credit facility from $55 million to $45 million and reduce the interest rate on outstanding balances and letters of credit by 25 basis points. Mr. Bazet noted that the size of the credit facility was well beyond the company's foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. needs and that its bottom line will benefit by reducing the credit limit (and associated facility fees) and lowering interest rates. In connection with the amendment, the company and the lenders agreed to amend certain financial covenants for the quarter ending December 31, 2003 and for each quarter of 2004. Mr. Bazet also provided the company's outlook for 2004, including a focus on the first quarter. "Cobra anticipates a resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of revenue growth in 2004 as new product categories contribute to sales and earnings. We are particularly excited regarding the prospects for handheld GPS and our mobile navigation systems A GPS-based electronic system in a car or truck that provides a real time map of the vehicle's current location as well as step-by-step directions to a programmed destination. See GPS and vehicle tracking. , which are scheduled to be available for sale late in the second quarter. While uncertainties are present with the launch of complex products, we are projecting both higher revenues and earnings in 2004 than in 2003. The first quarter, however, will reflect the increasing seasonality of our business, with forecasted sales slightly less and a loss somewhat larger than the first quarter of last year. Cobra will be conducting a conference call on February 20, 2004 at 11:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy to discuss fourth quarter results as well as its current strategies and outlook. The call can also be accessed live or through replay via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.cobra.com. About Cobra Electronics Cobra Electronics Corporation (Nasdaq: COBR) is a leading global manufacturer of mobile communications products for consumers, having attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. a leadership position in every market in which it currently does business. The FRS/GMRS (Family Radio Service/General Mobile Radio Service) market is one of the largest categories of mobile communications, and Cobra is a leading provider in the U.S., Canada and Europe. In addition, 2003 marks Cobra's entry into the GPS (Global Positioning System Global Positioning System: see navigation satellite. Global Positioning System (GPS) Precise satellite-based navigation and location system originally developed for U.S. military use. ) market with the development of another innovative mobile communications product line. Cobra, ranked among Forbes' 200 Best Small Companies for two of the past three years, has a track record of designing innovative and award-winning products. To learn more about Cobra Electronics, please visit the Cobra site at www.cobra.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on management's current expectations and 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 cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. efforts and the continuation of key distribution channel relationships. Please refer to Cobra's filings with the Securities and Exchange Commission for a more detailed discussion of factors that may affect Cobra's performance.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts, unaudited)
For the Three For the Twelve
Months Ended Months Ended
------------------- -------------------
December December December December
31, 31, 31, 31,
2003 2002 2003 2002
----------------------------------------
Net sales $41,330 $42,610 $114,811 $135,840
Cost of sales 30,618 30,713 84,156 101,563
----------------- -------------------
Gross profit 10,712 11,897 30,655 34,277
Selling, general and
administrative expenses 8,032 10,174 27,515 31,074
----------------- -------------------
Operating income 2,680 1,723 3,140 3,203
Other income (expense):
Interest expense (59) (45) (162) (228)
Other, net (50) 114 165 91
------------------ -------------------
Income before taxes 2,571 1,792 3,143 3,066
Tax provision 1,075 795 1,302 1,346
------------------ -------------------
Net income $ 1,496 $ 997 $ 1,841 $ 1,720
================== ===================
Net income per common share:
Basic $ 0.23 $ 0.16 $ 0.29 $ 0.27
Diluted $ 0.23 $ 0.15 $ 0.28 $ 0.26
================== ===================
Weighted average shares
outstanding:
Basic 6,420 6,420 6,420 6,373
Diluted 6,511 6,477 6,495 6,505
=================== ===================
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
ASSETS: December December
31, 31,
2003 2002
---------- --------
Current assets:
Cash $ 4,736 $ 2,829
Accounts receivable, net 22,437 24,784
Inventories, net 20,668 20,956
Other current assets 8,550 10,020
---------- --------
Total current assets 56,391 58,589
Net property, plant and equipment 6,707 7,420
Total other assets 13,135 8,773
---------- --------
Total assets $ 76,233 $ 74,782
========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 3,073 $ 4,292
Accrued liabilities 6,932 7,153
--------- --------
Total current liabilities 10,005 11,445
--------- --------
Non-current liabilities:
Deferred taxes 3,836 3,673
Deferred compensation 4,556 3,785
Other long-term liabilities 135 0
--------- --------
Total non-current liabilities 8,527 7,458
--------- --------
--------- --------
Total shareholders' equity 57,701 55,879
--------- --------
--------- --------
Total liabilities and shareholders' equity $ 76,233 $ 74,782
========= ========
Note: December 31, 2002 balance sheet reflects the reclassification of
the principal amount of the Company's 2002 loan to its chief
executive officer from "other current assets" to a deduction from
shareholders' equity to conform with the 2003 presentation.
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