Cobra 2005 Annual Report Download - page 5

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Cobra Electronics ended 2005 with an award-winning line of
products, substantial financial resources and a management team
dedicated to increasing shareholder value. We also saw tremen-
dous support from our shareholders and the financial markets
for our strategy and performance, with our stock price increasing
by more than 60 percent. With these underlying strengths, we
eagerly look forward to 2006.
Cobra made significant advances in 2005 – in both our legacy
and growth product lines. Our mobile navigation strategy took
a significant step forward with the launch of the NAV ONE™
4000 and the NAV ONE 4500. These products, which have
received accolades from the media, customers and consumers,
have confirmed Cobra’s position among the leading providers of
mobile navigation products. Our products include innovative fea-
tures that consumers have told us they want, including real-time
traffic reports in more than 48 metropolitan areas, more than
7.6 million points of interest, and an easy-to-use, touch screen
interface. Looking ahead, in 2006 Cobra will launch our newest
mobile navigation product, the NAV ONE 2500, building on
the attributes of the 2005 products, but with a smaller and lighter
form factor and a price point that is more attractive to the average
consumer.
Our recreational marine product line secured additional
placement in 2005, with our line of handheld and fixed-mount
VHF radios leading the way. For example, West Marine, the
largest specialty marine retailer in the world, introduced Cobra
marine products in April and one of our handheld radios vaulted
into the ranks of their top ten selling products for the year. Our
success has not been limited to the United States; our VHF radios
have secured shelf space with distributors and retailers in Europe,
South America, the Caribbean, Australia and New Zealand. With
the launch of our new chartplotters in the fourth quarter, we
anticipate that additional distribution will be captured in 2006,
both in the U.S. and internationally.
These successes in our growth product lines have not come at
the expense of our legacy product lines. In 2005, Cobra contin-
ued to maintain a leading worldwide position in the two-way
radio market. We achieved additional placement in some of the
world’s leading retailers, including Wal-Mart, Best Buy, Canadian
Tire, Costco and others, due to the introduction of products that
meet the needs of both our customers and consumers. Cobra has
the most complete family of two-way radios, including 4, 6, 8
and 12-mile units. We anticipate that 2006 will bring continued
success in this market, as Cobra introduces a new line of two-
way radios, including 14 and 17-mile units that are powered by
lithium-ion batteries for greater power and distance and longer
battery life at half the size of traditional long-range radios.
Cobra continues to lead the radar detection market, with a
market share that exceeds 50 percent. Combining performance,
innovative features and styling, the Cobra line of radar detectors
secured new retail placement in 2005. Innovation will remain
the hallmark of this business in 2006, as Cobra introduces a new
line of 12-band radar detectors featuring the industry’s first color
video displays that allow the driver to match the display color
with the vehicle’s instrumental illumination. Performance also
will be enhanced as new circuitry provides for super-fast sweeping
technology and extra detection range.
The Citizens Band radio market is dominated by Cobra
Electronics. In spite of the impact of rising fuel prices on the pur-
chasing power of the professional driver, Cobra’s sales of Citizens
Band radios increased in 2005. Cobra also introduced in 2005
an amateur radio line, building on the legacy of its Citizens Band
radios. These radios, which require a user license from the Federal
Communications Commission, are sold by specialty retailers,
and have provided
a new market for
Cobra’s products.
Financial results
for 2005 reflected
several non-recur-
ring events that
benefited Cobra.
Underlying these
results was an
increase in sales to
$133.1 million from $122.9 million in 2004. This increase of
8.3 percent comes on top of an increase of 7 percent recorded
in the previous year. Earnings per fully diluted share, including
non-recurring events, increased to $1.81 from $.36 in 2004. Our
balance sheet remains strong, and Cobra ended 2005 with $6.7
million in cash and no interest-bearing debt.
In recognition of our financial strength and as a statement of
confidence in our future, Cobra was pleased to announce earlier
this year our first cash dividend. It is our hope and expectation
that we will continue to provide this return to our shareholders
each year.
Cobra’s success in 2005 was fueled by innovation and an
entrepreneurial spirit disciplined by a clear understanding of the
needs of our customers and consumers and the financial demands
of our shareholders. We are committed to continuing to increase
shareholder value in 2006 and beyond. We appreciate the support
of our vendors, customers, shareholders and employees.
Sincerely,
Carl Korn
Chairman of the Board
Jim Bazet
President & Chief Executive Officer
March 27, 2006
LETTER TO SHAREHOLDERS
Carl Korn Jim Bazet