Cobra Electronics Corp. reported a pretax loss of $1.1 million for the second quarter of 2009, compared to pretax income of $2.3 million in the second quarter of 2008, as sales declined to $26 million from $34.3 million in the prior year.
Cobra reported a net loss of $9.9 million, or $1.53 per share, for the second quarter of 2009, as compared to net income of $1.7 million, or 26 cents per fully diluted share, in the second quarter of 2008.
"We are disappointed by sales results and earnings of the second quarter, which reflect the continued global recession," said Jim Bazet, Cobra chairman and CEO, in a statement. "However, we are not simply accepting the adverse effects of the economic downturn; we have taken, and will continue to take, aggressive actions to mitigate its impact by cutting expenses, tightly managing working capital and capitalizing on the opportunities created by the economic climate."
"Cost-containment steps have included reducing our global work force since the beginning of the year by nearly 12 percent and reducing discretionary selling, general and administrative expenditures at an annualized rate of $1.8 million," he added.
The impact of the global economic downturn on the company's financial performance has resulted in Cobra's failure to satisfy the financial covenants relating to the period set forth in its loan agreement, the company said.
Cobra has been in discussions with its lenders and has reached an agreement in principle on the terms of an amendment to the loan agreement in which the company's lenders would waive any defaults resulting from the existing covenant violations.
The amendment, expected to be executed within the next two weeks, is expected to provide the company with sufficient availability for its anticipated needs and will contain financial covenants that are in line with expectations for the company's business through the October 2011 term of the loan agreement.
Cobra reported that its year-over-year decline in second quarter net sales of $8.3 million was attributable to a lack of store traffic for both the Cobra and PPL segments.
Sales of the Cobra segment declined by $5.6 million, as radar detection and citizens band radio sales were particularly hurt by a cutback in consumer spending, with declines of 37.4 percent and 28.5 percent, respectively.
On a year-to-date basis, consolidated net sales for the six-month period have declined to $45.1 million from $63.2 million, or 28.7 percent, reflecting the overall weakness in the global economy.
The decline for the Cobra segment was $12.9 million, or 24.1 percent, while the decline for the PPL segment was $5.2 million, or 54.1 percent.
As a result of the decline in sales and margins, offset in part by lower operating expenses, Cobra has incurred a net loss for the first half of 2009 of $11.5 million, or $1.78 per share, compared to net income of $1.8 million, or 28 cents per fully diluted share, in the prior year.