-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QJJmpbldajZ3eVauesq1bv0vousy6peuppCucQQ7sQ4L3mf2eXLyOGcEtlAmlsgM KFb+B7iossi6HNJNBX7j6g== 0000912057-97-017485.txt : 19970515 0000912057-97-017485.hdr.sgml : 19970515 ACCESSION NUMBER: 0000912057-97-017485 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CUBIC CORP /DE/ CENTRAL INDEX KEY: 0000026076 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 951678055 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08931 FILM NUMBER: 97603932 BUSINESS ADDRESS: STREET 1: 9333 BALBOA AVE CITY: SAN DIEGO STATE: CA ZIP: 92123 BUSINESS PHONE: 6192776780 MAIL ADDRESS: STREET 1: PO BOX 85587 CITY: SAN DIEGO STATE: CA ZIP: 92186-5587 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended March 31, 1997 1-8931 Commission File Number CUBIC CORPORATION Exact Name of Registrant as Specified in its Charter DELAWARE 95-1678055 State of Incorporation IRS Employer Identification No. 9333 Balboa Avenue San Diego, California 92123 Telephone (619) 277-6780 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of April 30, 1997, Registrant had only one class of common stock of which there were 8,980,889 shares outstanding (after deducting 2,907,354 shares held as treasury stock). PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS CUBIC CORPORATION CONSOLIDATED CONDENSED STATEMENT OF INCOME (UNAUDITED) (amounts in thousands, except per share data)
Six Months Ended Three Months Ended March 31 March 31 1997 1996 1997 1996 ---- ---- ---- ---- Revenues: Net sales $180,245 $204,834 $96,187 $110,870 Other income 2,994 2,488 1,820 1,322 -------- -------- ------- -------- 183,239 207,322 98,007 112,202 Costs and expenses: Cost of sales 140,493 162,669 75,623 87,974 Selling, general and administrative expenses 30,096 30,822 16,012 16,880 Research and development 3,072 4,104 1,758 2,121 Interest 858 1,865 439 1,168 -------- -------- ------- -------- 174,519 199,460 93,832 108,143 -------- -------- ------- -------- Income before income taxes and minority interest 8,720 7,862 4,175 4,059 Income taxes 3,150 2,850 1,500 1,550 Minority interest in income of subsidiary - 360 - 23 -------- -------- ------- -------- Net income $ 5,570 $ 4,652 $ 2,675 $ 2,486 -------- -------- ------- -------- -------- -------- ------- -------- Net income per share $ .62 $ .52 $ .30 $ .28 -------- -------- ------- -------- -------- -------- ------- -------- Dividends per share $ .19 $ .1767 $ .19 $ .1767 -------- -------- ------- -------- -------- -------- ------- -------- Average shares of common stock outstanding 8,981 8,981 8,981 8,981 -------- -------- ------- -------- -------- -------- ------- --------
See accompanying notes. 1 CUBIC CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (thousands of dollars)
March 31 September 30 1997 1996 (Unaudited) (See note below) ----------- ---------------- ASSETS Current assets: Cash and cash equivalents $ 24,438 $ 20,062 Marketable securities, available-for-sale 2,718 2,759 Accounts receivable 132,678 125,750 Inventories -- Note C 17,696 15,233 Deferred income taxes and other current assets 14,336 14,684 -------- -------- Total current assets 191,866 178,488 Property, plant and equipment - net 38,345 38,329 Preferred stock of U. S. Elevator Corp. -- Note D - 20,000 Cost in excess of net tangible assets of purchased businesses, less amortization 18,116 18,847 Miscellaneous other assets 15,573 10,974 -------- -------- $263,900 $266,638 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and other current liabilities $ 66,414 $ 71,844 Income taxes payable 699 2,564 Current portion of long-term debt 5,000 5,000 -------- -------- Total current liabilities 72,113 79,408 Long-term debt 15,000 15,000 Deferred income taxes and other 4,968 4,563 Shareholders' equity: Common stock 234 234 Additional paid-in capital 12,123 12,123 Retained earnings 193,293 189,429 Foreign currency translation adjustment (105) (393) Treasury stock at cost (33,726) (33,726) -------- -------- 171,819 167,667 -------- -------- $263,900 $266,638 -------- -------- -------- --------
Note: The balance sheet at September 30, 1996 has been derived from the audited financial statements at that date. See accompanying notes. 2 CUBIC CORPORATION CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) (thousands of dollars) Six Months Ended March 31 1997 1996 ---- ---- Operating Activities: Net income $ 5,570 $ 4,652 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 4,000 5,839 Minority interest - 360 Changes in operating assets and liabilities (32,454) (500) ------- ------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (22,884) 10,351 ------- ------- Investing Activities: Sales of marketable securities 41 290 Proceeds from sale of U. S. Elevator Corp. 31,996 - Net additions to property, plant and equipment and toll equipment under operating leases (3,273) (5,644) Other items - net 443 (917) ------- ------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 29,207 (6,271) ------- ------- Financing Activities: Credit line borrowings - 5,800 Purchases of treasury stock - (3) Dividends paid (1,706) (1,587) ------- ------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,706) 4,210 ------- ------- Effect of exchange rates on cash (241) (402) ------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS 4,376 7,888 Cash and cash equivalents at the beginning of the period 20,062 20,705 ------- ------- CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $24,438 $28,593 ------- ------- ------- ------- See accompanying notes. 3 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS March 31, 1997 A. BASIS FOR PRESENTATION The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter are not necessarily indicative of the results that may be expected for the year ended September 30, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on form 10-K for the year ended September 30, 1996. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. B. PER SHARE AMOUNTS Per share amounts are based upon the weighted average number of shares of common stock outstanding. Prior year per share amounts have been restated to reflect a 3-for-2 stock split distributed in August 1996. C. INVENTORIES March 31 September 30 1997 1996 ---- ---- Inventories consist of the following: Finished products $ 2,776 $ 3,170 Work in process 6,600 3,634 Raw material and purchased parts 8,320 8,429 ------- ------- $17,696 $15,233 ------- ------- ------- ------- 4 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--continued March 31, 1997 D. PREFERRED STOCK OF U. S. ELEVATOR CORP. On December 30, 1996, the Company exercised its option to require Thyssen Holding Corporation (Thyssen) to purchase from the Company all of the preferred stock of U.S. Elevator Corp. (USEC). In accordance with the terms of the agreement, proceeds from the sale of the stock of $20 million were received by the Company in February 1997. In addition to the sale of the stock, the agreement provided for additional consideration to be paid by Thyssen, based on the earnings of USEC from October 1, 1992 to December 30, 1996. This consideration, amounting to approximately $12 million, was received on March 31, 1997 and will be used to offset the costs of certain product liability and warranty obligations which were incorporated in the original sale agreement. Therefore, no additional gain or loss has been realized by the Company in connection with this transaction. E. SUBSEQUENT EVENT On April 9, 1997, the Company acquired all of the outstanding capital shares of Thorn Transit Systems International Limited and Thorn Transit Korean Holdings Limited, which were wholly-owned subsidiaries of EMI Group plc, a United Kingdom corporation, for cash in the amount of $12.9 million. The Company intends that the assets of the acquired companies will continue to be devoted to the automatic revenue collection systems business. F. LEGAL MATTER In 1991, the government of Iran commenced an arbitration proceeding against the Company seeking $12.9 million for reimbursement of payments made for equipment that was to comprise an Air Combat Maneuvering Range pursuant to a contract executed in 1977, and an additional $15 million for unspecified damages. The Company believes that Iran defaulted on the agreement and has brought a counterclaim for compensatory damages of $10.4 million, plus interest. The Company is vigorously contesting Iran's claim and believes its defenses and counterclaim are strong and that the ultimate outcome of the matter will not have a material effect on the Company's financial statements. G. REVIEW BY INDEPENDENT ACCOUNTANTS A review of the data presented was made by Ernst & Young LLP, independent accountants, in accordance with established professional standards and procedures, and their report is included herein. 5 CUBIC CORPORATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS March 31, 1997 Sales for the six month period ended March 31, 1997 were 12% below the same period of fiscal 1996, primarily because of the sale of the toll collection product line in May 1996. As a result of the sale of this product line, the automatic revenue collection systems segment generated lower overall sales than in the previous year, while the defense segment experienced a moderate increase in sales. Operating profits in the automatic revenue collection systems segment for both the quarter and six months ended March 31, 1997 were lower than the prior year because of the sale of the toll collection product line. This product line had contributed operating profits in the second quarter of fiscal 1996, so its elimination reduced operating profits in the current year. Operating profits in the first six months of the fiscal year, for the remaining product lines of this segment, were comparable with the same period in fiscal 1996. Operating profits in the defense segment were somewhat lower in the first six months of the year, than in the previous year, primarily as the result of cost growth on the contract to develop the new MILES 2000 (Multiple Integrated Laser Engagement System) technology. This resulted from greater than expected costs to resolve technical issues in the development of the system. It is anticipated that this product will be ready for full production by the end of the fiscal year. The J-STARS Data Link and Personnel Locator System product lines continued to generate higher profits than in the previous fiscal year, helping to mitigate the impact of the MILES 2000 cost issues. Despite the lower operating profits described above, net income for both the quarter and six months ended March 31, 1997 was higher than in the corresponding periods of fiscal 1996. This resulted from of a significant reduction in interest expense in the first half of fiscal 1997 because of the repayment of $24 million in long-term debt during the third quarter of fiscal 1996. In addition, during the quarter ended March 31, 1997 the company realized a modest gain on the sale of its call box product line, which is included in other income on the consolidated condensed statement of income. FINANCIAL POSITION AND LIQUIDITY During the six month period ended March 31, 1997, operating activities used $23 million in cash, due primarily to growth in long-term contract receivables, the liquidation of certain customer advances during the period and the above described cost growth on the MILES 2000 contract. This use of cash was more than offset by the receipt of $32 million from the exercise of the company's option to sell its preferred stock in U.S. Elevator Corp. and obtain additional consideration from the purchaser of the former subsidiary, as described in note D to the consolidated condensed financial statements. 6 CUBIC CORPORATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- continued March 31, 1997 The Company's financial condition remains strong with working capital of $119.8 million and a current ratio of 2.7 to 1 at March 31, 1997. The Company expects that cash on hand and available through its line of credit facility, will be adequate to meet its short-term financing needs. The backlog of orders at March 31, 1997 was $343 million compared to $313 million at September 30, 1996 and $326 million at March 31, 1996. The backlog at March 31, 1996 included $46 million of backlog in the toll collection systems product line, which was sold in May 1996. Except for historical matters contained herein, statements in this discussion and analysis are forward-looking and are made pursuant to the Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties which may affect the company's business and prospects, including economic, competitive, governmental, technological and other factors. 7 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are included herein: 15--Independent Accountants' Review Report 27--Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CUBIC CORPORATION Date May 9, 1997 /s/ W. W. Boyle --------------- ------------------------------- W. W. Boyle Vice President Finance and CFO Date May 9, 1997 /s/ T. A. Baz --------------- ------------------------------- T. A. Baz Vice President and Controller 8 EX-15 2 INDEPENDENT ACCOUNTANT'S REVIEW REPORT EXHIBIT 15 -- INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors Cubic Corporation We have reviewed the accompanying consolidated condensed balance sheet of Cubic Corporation as of March 31, 1997, and the related consolidated condensed statement of income for the three and six-month periods ended March 31, 1997 and 1996, and consolidated condensed statement of cash flows for the six-month periods ended March 31, 1997 and 1996. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated condensed financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Cubic Corporation as of September 30, 1996, and the related consolidated statements of income, retained earnings, and cash flows for the year then ended (not presented herein) and in our report dated December 4, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet at September 30, 1996, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. ERNST & YOUNG LLP May 2, 1997 San Diego, California EX-27 3 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEET AS OF MARCH 31, 1997 AND THE RELATED CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS SEP-30-1997 MAR-31-1997 24,438 2,718 132,678 0 17,696 191,866 38,345 0 263,900 72,113 0 0 0 234 171,585 163,900 180,245 183,239 140,493 140,493 33,168 0 858 8,720 3,150 5,570 0 0 0 5,570 .62 0
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