-----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, FiEvGbey7JnwSwZxrebF4qjEo93W89BhuPlxIx9nfPRz/P5E+6PeGXX3mb4QO2TQ M/FKWNtuftAGPuUVldkxBg== 0000912057-00-005074.txt : 20000211 0000912057-00-005074.hdr.sgml : 20000211 ACCESSION NUMBER: 0000912057-00-005074 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000210 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: SEC FILE NUMBER: 001-08931 FILM NUMBER: 530954 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 UNITED STATES 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 December 31, 1999 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 (858) 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 January 26, 2000, Registrant had only one class of common stock of which there were 8,906,704 shares outstanding (after deducting 2,981,539 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)
Three Months Ended December 31 1999 1998 --------------- -------------- Revenues: Sales $ 115,398 $ 98,758 Other income 1,504 789 --------------- -------------- 116,902 99,547 --------------- -------------- Costs and expenses: Cost of sales 88,212 74,636 Selling, general and administrative expenses 19,396 17,954 Research and development 1,328 1,586 Goodwill amortization 521 527 Interest 917 779 --------------- -------------- 110,374 95,482 --------------- -------------- Income before income taxes 6,527 4,065 Income taxes 2,400 1,400 --------------- -------------- Net income $ 4,127 $ 2,665 =============== ============== Net income per share $ .46 $ .30 =============== ============== Average shares of common stock outstanding 8,907 8,907 =============== ==============
SEE ACCOMPANYING NOTES 2 CUBIC CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (in thousands)
December 31 September 30 1999 1999 (Unaudited) (See note below) ------------------- ----------------- ASSETS Current assets: Cash and cash equivalents $ 72,883 $ 61,540 Marketable securities, available-for-sale 1,775 1,802 Accounts receivable 119,581 133,252 Inventories -- Note 3 32,186 36,400 Deferred income taxes and other current assets 14,621 16,540 ------------------- ----------------- Total current assets 241,046 249,534 ------------------- ----------------- Property, plant and equipment - net 42,181 42,976 Goodwill, less amortization 22,531 23,273 Deferred income taxes and other assets 12,363 14,378 ------------------- ----------------- $318,121 $330,161 =================== ================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 1,619 $ 6,457 Trade accounts payable 9,026 13,761 Customer advances 24,348 23,460 Other current liabilities 33,347 37,976 Income taxes payable 3,910 4,671 Current portion of long-term debt 5,000 5,000 ------------------- ----------------- Total current liabilities 77,250 91,325 ------------------- ----------------- Long-term debt 50,000 50,000 Deferred income taxes and other liabilities 4,846 5,871 Shareholders' equity: Common stock 234 234 Additional paid-in capital 12,123 12,123 Retained earnings 210,474 206,347 Accumulated other comprehensive income (loss) (744) 317 Treasury stock at cost (36,062) (36,056) ------------------- ----------------- 186,025 182,965 ------------------- ----------------- $318,121 $330,161 =================== =================
NOTE: THE BALANCE SHEET AT SEPTEMBER 30, 1999 HAS BEEN DERIVED FROM THE AUDITED FINANCIAL STATEMENTS AT THAT DATE. SEE ACCOMPANYING NOTES 3 CUBIC CORPORATION CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Three Months Ended December 31 1999 1998 ---------------- ---------------- Operating Activities: Net income $ 4,127 $ 2,665 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,496 2,514 Changes in operating assets and liabilities 10,888 (34,490) ---------------- ---------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 17,511 (29,311) ---------------- ---------------- Investing Activities: Net additions to property, plant and equipment (1,326) (2,586) Other items - net (194) (378) ---------------- ---------------- NET CASH USED IN INVESTING ACTIVITIES (1,520) (2,964) ---------------- ---------------- Financing Activities: Change in short-term borrowings (4,747) (9,081) Change in long-term borrowings - 50,000 Purchases of treasury stock (6) - ---------------- ---------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (4,753) 40,919 ---------------- ---------------- Effect of exchange rates on cash 105 (33) ---------------- ---------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 11,343 8,611 Cash and cash equivalents at the beginning of the period 61,540 3,500 ---------------- ---------------- CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $72,883 $12,111 ================ ================
SEE ACCOMPANYING NOTES 4 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) December 31, 1999 NOTE 1 -- 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, 2000. 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, 1999. 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. Certain prior period amounts have been reclassified to conform to current period classifications. NOTE 2 -- PER SHARE AMOUNTS Per share amounts are based upon the weighted average number of shares of common stock outstanding. NOTE 3 - INVENTORIES Inventories consist of the following (in thousands):
December 31 September 30 1999 1999 ------------------- ------------------- Finished products $ 1,356 $ 1,515 Work in process 16,004 22,926 Raw material and purchased parts 14,826 11,959 ------------------- ------------------- $ 32,186 $ 36,400 =================== ===================
5 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)--continued December 31, 1999 NOTE 4 -- COMPREHENSIVE INCOME Comprehensive income is as follows (in thousands):
Three Months Ended December 31 1999 1998 --------------- -------------- Net income $ 4,127 $ 2,665 Foreign currency translation adjustment (1,034) (1,161) Unrealized holding loss on marketable securities (27) - --------------- -------------- $ 3,066 $ 1,504 =============== ==============
NOTE 5 -- BUSINESS SEGMENT INFORMATION Business segment financial data is as follows (in millions):
Three Months Ended December 31 1999 1998 --------------- -------------- REVENUES: Transportation systems $ 52.0 $ 43.0 Defense 59.4 51.9 Software development - 0.5 --------------- -------------- Total for reportable segments 111.4 95.4 Other revenues 5.5 4.1 --------------- -------------- $116.9 $ 99.5 =============== ============== OPERATING PROFIT (LOSS): Transportation systems $ 3.3 $ 3.0 Defense 3.2 2.6 Software development - (0.9) --------------- -------------- Total for reportable segments 6.5 4.7 Other profit 0.9 0.2 Interest expense (0.9) (0.8) --------------- -------------- Income before income taxes $ 6.5 $ 4.1 =============== ==============
NOTE 6 -- 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. 6 CUBIC CORPORATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS December 31, 1999 RESULTS OF OPERATIONS Revenues for the first quarter of fiscal 2000 were 17% higher than the first quarter of fiscal 1999, as the result of higher sales in both the defense and transportation segments and increased investment income, due to increased cash available for investment. The increase in sales came primarily from ground combat training systems in the defense segment and from the PRESTIGE contract in the transportation segment. The increase in cash available for investment was the result of nearly $50 million in positive cash flow from operating activities in fiscal 1999 and another $17.5 million provided by operating activities in the quarter ended December 31, 1999. Operating profits in the defense segment increased as the result of the increase in sales volume and as the result of somewhat higher margins from the JSTARS product line, which continues to perform well. Operating profits in the transportation segment also increased due to the increased sales volume, however, the operating margins contributed by the PRESTIGE contract continue to be modest as the program is still in its early stages of completion. In addition, an improvement in operating profits resulted from the Company having discontinued the video email product line in the fourth quarter of fiscal 1999. The increase in other profits reflects the higher investment income, as described above. For the three-month period, selling, general and administrative expenses increased modestly, in support of the higher sales volume, but decreased as a percentage of sales. The increased spending resulted primarily from selling costs in both the defense and transportation systems segments as proposal activity related to new business prospects increased. LIQUIDITY AND CAPITAL RESOURCES The $17.5 million in cash provided by operating activities resulted primarily from accelerated collections of accounts receivable in both the defense and transportation segments. This included the collection of a significant portion of the amounts related to contract claims in the transportation segment that had been outstanding for more than a year. The amounts remaining in accounts receivable subject to contract claims were not significant at December 31, 1999. The Company's financial condition remains strong with working capital of $164 million and a current ratio of 3.1 to 1 at December 31, 1999. The Company expects that cash on hand will be adequate to meet its short-term working capital requirements for the foreseeable future. The backlog of orders at December 31, 1999 was $843 million compared to $907 million at September 30, 1999 and $966 million at December 31, 1998. 7 CUBIC CORPORATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued December 31, 1999 YEAR 2000 ISSUE The Company has completed its Year 2000 (Y2K) Project as scheduled and the possibility of significant interruptions of normal operations has been reduced. As of January 27, 2000, the Company's products, computing, and communications systems have operated without any significant problems and the Company believes that its systems have successfully made the Y2K transition. The Company is also not aware of any of its major customers or third-party suppliers having experienced significant Y2K related problems. However, there can be no assurance that the Company has discovered all possible failure points. Factors contributing to this uncertainty include possible failure to identify all systems, unprepared third parties whose systems and operations impact the Company, and other similar uncertainties. Contingency plans are complete and will be implemented if required. Through December 31, 1999, the Company expensed approximately $1,000,000 of incremental Y2K remedial costs, consisting primarily of internal labor. The Company currently does not expect to incur any significant additional Y2K related costs, and any such costs will continue to be expensed as incurred. FORWARD-LOOKING STATEMENTS In addition to historical matters, this report contains forward-looking statements. They can be identified by words such as MAY, LIKELY, ANTICIPATE, HOPE, ESTIMATE, PLAN, POTENTIAL, FEEL, EXPECT, SHOULD, and CONFIDENT. These forward-looking statements are made pursuant to the safe harbor provisions of 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. These include the effects of politics on negotiations and business dealings with government entities, reductions in defense budgets, economic conditions in the various countries in which the Company does or hopes to do business, competition and technology changes in the defense and transportation industries, and other competitive and technological factors. 8 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 FEBRUARY 8, 2000 /S/ W. W. BOYLE ------------------- ------------------------------- W. W. Boyle Vice President Finance and CFO Date FEBRUARY 8, 2000 /S/ T. A. BAZ ------------------- -------------------------------- T. A. Baz Vice President and Controller 9 EX-15 2 EXHIBIT 15 EXHIBIT 15 - INDEPENDENT ACCOUNTANTS' REVIEW REPORT Board of Directors and Shareholders Cubic Corporation We have reviewed the accompanying consolidated condensed balance sheet of Cubic Corporation as of December 31, 1999, and the related consolidated condensed statements of income and cash flows for the three-month periods ended December 31, 1999 and 1998. 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, 1999 and the related consolidated statements of income, changes in shareholders' equity and cash flows for the year then ended (not presented herein) and in our report dated November 29, 1999, 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, 1999, 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 February 8, 2000 EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999 AND THE RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS SEP-30-2000 DEC-31-1999 72,883 1,775 119,581 0 32,186 241,046 42,181 0 318,121 77,250 0 234 0 0 185,791 318,121 115,398 116,902 88,212 88,212 21,245 0 917 6,527 2,400 4,127 0 0 0 4,127 0.46 0
-----END PRIVACY-ENHANCED MESSAGE-----