-----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, THzT86XDzHVbipYu01CuqUUGKZPHxH0W046JuhEFtjEAal4zNzUt0ilZtR+TzH9L SiHSlmKp8OcH1vk7KcPVFw== 0000912057-97-027674.txt : 19970814 0000912057-97-027674.hdr.sgml : 19970814 ACCESSION NUMBER: 0000912057-97-027674 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 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: 97659719 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 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 June 30, 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 August 5, 1997, Registrant had only one class of common stock of which there were 8,963,173 shares outstanding (after deducting 2,925,070 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)
Nine Months Ended Three Months Ended June 30 June 30 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Revenues: Net sales $ 290,073 $ 303,501 $ 109,828 $ 98,667 Other income 4,869 3,986 1,875 1,498 ------------ ------------ ------------ ------------ 294,942 307,487 111,703 100,165 Costs and expenses: Cost of sales 228,605 237,834 88,112 75,165 Selling, general and administrative expenses 46,653 48,263 16,557 17,441 Research and development 4,838 5,791 1,766 1,687 Interest 1,269 2,215 411 350 ------------ ------------ ------------ ------------ 281,365 294,103 106,846 94,643 ------------ ------------ ------------ ------------ Income before income taxes and minority interest 13,577 13,384 4,857 5,522 Income taxes 4,750 4,800 1,600 1,950 Minority interest in income of subsidiary - 796 - 436 ------------ ------------ ------------ ------------ Net income $ 8,827 $ 7,788 $ 3,257 $ 3,136 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net income per share $ 0.98 $ 0.87 $ 0.36 $ 0.35 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Dividends per share $ 0.19 $ 0.1767 $ - $ - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Average shares of common stock outstanding 8,981 8,981 8,981 8,981 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
See accompanying notes. 2 CUBIC CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (thousands of dollars)
June 30 September 30 1997 1996 (Unaudited) (See note below) ---------------- ------------------- ASSETS Current assets: Cash and cash equivalents $ 31,924 $ 20,062 Marketable securities, available-for-sale 2,391 2,759 Accounts receivable 130,745 125,750 Inventories -- Note C 15,679 15,233 Deferred income taxes and other current assets 18,218 14,684 ---------------- ------------------- Total current assets 198,957 178,488 Property, plant and equipment - net 39,653 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 29,080 18,847 Miscellaneous other assets 14,509 10,974 ---------------- ------------------- $ 282,199 $ 266,638 ---------------- ------------------- ---------------- ------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 13,504 $ 11,175 Customer advances 27,367 33,892 Other current liabilities 42,234 26,777 Income taxes payable 3,918 2,564 Current portion of long-term debt 5,000 5,000 ---------------- ------------------- Total current liabilities 92,023 79,408 Long-term debt 10,000 15,000 Deferred income taxes and other 5,101 4,563 Shareholders' equity: Common stock 234 234 Additional paid-in capital 12,123 12,123 Retained earnings 196,550 189,429 Foreign currency translation adjustment 16 (393) Treasury stock at cost (33,848) (33,726) ---------------- ------------------- 175,075 167,667 ---------------- ------------------- $ 282,199 $ 266,638 ---------------- ------------------- ---------------- -------------------
Note: The balance sheet at September 30, 1996 has been derived from the audited financial statements at that date. See accompanying notes. 3 CUBIC CORPORATION CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) (thousands of dollars)
Nine Months Ended June 30 1997 1996 ---------- ---------- Operating Activities: Net income $ 8,827 $ 7,788 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 6,291 7,974 Minority interest - 796 Changes in operating assets and liabilities (12,649) 5,203 ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,469 21,761 ---------- ---------- Investing Activities: Sales of marketable securities 368 290 Proceeds from sale of toll collection product line - 17,731 Proceeds from sale of U. S. Elevator Corp. 31,996 - Acquisition of business, net of cash acquired (11,620) - Net additions to property, plant and equipment and toll equipment under operating leases (4,830) (8,939) Other items - net 685 (651) ---------- ---------- NET CASH PROVIDED BY INVESTING ACTIVITIES 16,599 8,431 ---------- ---------- Financing Activities: Principal payments on long-term debt (5,000) (24,000) Purchases of treasury stock (122) (3) Dividends paid (1,706) (1,587) ---------- ---------- NET CASH USED IN FINANCING ACTIVITIES (6,828) (25,590) ---------- ---------- Effect of exchange rates on cash (378) (578) ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS 11,862 4,024 Cash and cash equivalents at the beginning of the period 20,062 20,705 ---------- ---------- CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 31,924 $ 24,729 ---------- ---------- ---------- ----------
See accompanying notes. 4 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS June 30, 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. C. INVENTORIES June 30 September 30 1997 1996 -------------- -------------- Inventories consist of the following: Finished products $ 2,257 $ 3,170 Work in process 5,781 3,634 Raw material and purchased parts 7,641 8,429 -------------- -------------- $ 15,679 $ 15,233 -------------- -------------- -------------- --------------
5 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--continued June 30, 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 has been 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 was realized by the Company in connection with this transaction. E. ACQUISITION 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 acquisition has been accounted for by the purchase method, and the assets and liabilities have been recorded at their estimated fair values at the date of acquisition. The amount by which the purchase price exceeded the net book value of tangible assets was approximately $11.5 million and will be amortized over a period of 15 years using the straight-line method. The Company intends that 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. In May 1997, the arbitration panel, based in Switzerland, issued an award in favor of the government of Iran for $2.8 million, plus interest at the rate of 12% per annum, from September 1991 until May of 1997. The Company believes that it has been denied due process in the arbitration proceeding and is vigorously contesting the basis of the award. The Company and its outside counsel believe that the award is unenforceable against the assets of the Company and that the likelihood of ultimate payment by the Company is remote. Therefore, no provision for this award has been made in the financial statements. 6 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--continued June 30, 1997 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. 7 CUBIC CORPORATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS June 30, 1997 RESULTS OF OPERATIONS Sales for the nine month period ended June 30, 1997 were 4% 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 defense segment sales increased by nearly 10%. The increase in defense sales was the result of a new contract awarded earlier in the year for the production of additional JSTARS Data Link systems. For the quarter ended June 30, 1997, sales in both the revenue collection systems and defense segments were higher than the previous year, resulting in an overall increase of 11%. Defense sales were higher for the reason described above while revenue collection sales increased due to the acquisition of Thorn Transit Systems International (TTSI), as described in note E. As mentioned in previous quarters, operating profits in the defense segment continued to be lower than in the previous year for both the three and nine month periods ended June 30, 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. System integration testing has been delayed by several months but it is anticipated that the product will be ready for full production by the end of the calendar year. The increase in J-STARS Data Link sales described above resulted in higher profits for this product line than in the previous fiscal year, helping to mitigate the impact of the MILES 2000 cost issues. Operating profits in the automatic revenue collection systems segment for both the quarter and nine months ended June 30, 1997 were lower than in the prior year because of the disposal of the toll collection product line in May 1996. In the second and third quarters of fiscal 1996, the product line had produced a profit, prior to its disposal. As a result, overall operating profits for this segment have been lower in fiscal 1997 without the product line. However, operating profits for the remaining product lines of the segment were higher than in 1996, for the third quarter and first nine months of fiscal 1997. Despite lower operating profits in the two primary segments described above, overall operating profits were comparable to last year, primarily because of increased profits in the industrial operations segment. This increase was due to a modest gain on the sale of the Company's optical tooling product line in the third quarter and from the sale of the call box product line in the second quarter. These gains are included in other income on the consolidated condensed statement of income. In addition, a reduction in interest expense in the first nine months of fiscal 1997 contributed to the increase in net income for the period. This decrease in interest expense resulted from the repayment of $24 million in long-term debt during the third quarter of fiscal 1996. 8 CUBIC CORPORATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- continued June 30, 1997 FINANCIAL POSITION AND LIQUIDITY During the nine month period ended June 30, 1997, operating activities generated $2.5 million in cash, including $25 million in the quarter ended June 30. This positive cash flow was the result of large customer payments received in the quarter, particularly from the New York City Transit Authority. In addition, the Company received $32 million in the second quarter from the exercise of its 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. As described in note E, the Company used approximately $12 million during the third quarter for the acquisition of TTSI. The Company's financial condition remains strong with working capital of $107 million and a current ratio of 2.2 to 1 at June 30, 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 June 30, 1997 was $368 million compared to $313 million at September 30, 1996 and $282 million at June 30, 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. 9 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) Registrant filed a Form 8-K as of April 9, 1997 to report the acquisition of Thorn Transit Systems International Limited and Thorn Transit Korean Holdings Limited 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 August 12, 1997 /s/ W. W. Boyle ------------------- -------------------------------- W. W. Boyle Vice President Finance and CFO Date August 12, 1997 /s/ T. A. Baz ------------------- -------------------------------- T. A. Baz Vice President and Controller 10 EX-15 2 EXHIBIT 15 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 June 30, 1997, and the related consolidated condensed statement of income for the three and nine-month periods ended June 30, 1997 and 1996, and consolidated condensed statement of cash flows for the nine-month periods ended June 30, 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 San Diego, California August 5, 1997 11 EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEET AS OF JUNE 30, 1997 AND RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS SEP-30-1997 JUN-30-1997 31,924 2,391 130,745 0 15,679 198,957 39,653 0 282,199 92,023 0 0 0 234 174,841 282,199 290,073 294,942 228,605 228,605 51,491 0 1,269 12,577 4,750 8,827 0 0 0 8,827 .98 0
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