-----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, MbU9x3CxJnxk80ztQaUg4SXsuNrJBjy9N2vDsauA87vy/3AXa7KgPpT8m5unEkdQ K+fIwvo9qlQhQnyUN4LGWw== 0000912057-01-005246.txt : 20010223 0000912057-01-005246.hdr.sgml : 20010223 ACCESSION NUMBER: 0000912057-01-005246 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010214 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: 1539041 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 a2037832z10-q.txt FORM 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, 2000 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, 2001, Registrant had only one class of common stock of which there were 8,906,689 shares outstanding (after deducting 2,981,554 shares held as treasury stock). PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS CUBIC CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) (amounts in thousands, except per share data)
Three Months Ended December 31, 2000 1999 ---------- ---------- Revenues: Sales $120,334 $115,398 Other income 3,375 1,504 ---------- ---------- 123,709 116,902 ---------- ---------- Costs and expenses: Cost of sales 94,493 88,212 Selling, general and administrative expenses 18,597 19,397 Research and development 2,005 1,328 Goodwill amortization 661 521 Interest 884 917 ---------- ---------- 116,640 110,375 ---------- ---------- Income before income taxes 7,069 6,527 Income taxes 2,400 2,400 ---------- ---------- Net income $4,669 $4,127 ========== ========== Net income per share $0.52 $0.46 ========== ========== Average shares of common stock outstanding 8,907 8,907 ========== ==========
SEE ACCOMPANYING NOTES 2 CUBIC CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)
December 31, September 30, 2000 2000 (Unaudited) (See note below) ------------- ---------------- ASSETS Current assets: Cash and cash equivalents $ 59,207 $ 69,753 Marketable securities, available- for-sale 1,496 3,586 Accounts receivable 136,094 123,410 Inventories -- Note 3 25,641 29,499 Deferred income taxes and other current assets 23,392 23,495 ------------- ---------------- Total current assets 245,830 249,743 ------------- ---------------- Property, plant and equipment - net 37,817 38,469 Goodwill, less amortization 22,597 23,193 Other assets 11,265 10,945 ------------- ---------------- $ 317,509 $ 322,350 ============= ================ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 10,647 $ 18,749 Customer advances 26,022 29,976 Other current liabilities 36,908 36,286 Income taxes payable 7,688 6,265 ------------- ---------------- Total current liabilities 81,265 91,276 ------------- ---------------- Long-term debt 50,000 50,000 Deferred compensation 5,446 5,051 Shareholders' equity: Common stock 234 234 Additional paid-in capital 12,123 12,123 Retained earnings 208,306 203,637 Accumulated other comprehensive loss (3,802) (3,908) Treasury stock at cost (36,063) (36,063) ------------- ---------------- 180,798 176,023 ------------- ---------------- $ 317,509 $ 322,350 ============= ================
NOTE: THE BALANCE SHEET AT SEPTEMBER 30, 2000 HAS BEEN DERIVED FROM THE AUDITED FINANCIAL STATEMENTS AT THAT DATE. SEE ACCOMPANYING NOTES 3 CUBIC CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
Three Months Ended December 31, 2000 1999 --------- -------- Operating Activities: Net income $ 4,669 $ 4,127 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,480 2,496 Changes in operating assets and liabilities (16,245) 10,888 --------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (9,096) 17,511 --------- -------- Investing Activities: Net additions to property, plant and equipment (1,125) (1,326) Proceeds from sale of marketable securities 2,310 - Other items - net (3,044) (194) --------- -------- NET CASH USED IN INVESTING ACTIVITIES (1,859) (1,520) --------- -------- Financing Activities: Change in short-term borrowings - (4,747) Purchases of treasury stock - (6) --------- -------- NET CASH USED IN FINANCING ACTIVITIES - (4,753) --------- -------- Effect of exchange rates on cash 409 105 --------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (10,546) 11,343 Cash and cash equivalents at the beginning of the period 69,753 61,540 --------- -------- CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 59,207 $ 72,883 ========= ========
SEE ACCOMPANYING NOTES 4 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) December 31, 2000 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 ending September 30, 2001. 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, 2000. 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. NOTE 2 - PER SHARE AMOUNTS Per share amounts are based upon the weighted average number of shares of common stock outstanding. NOTE 3 - DERIVATIVE FINANCIAL INSTRUMENTS The Company adopted Financial Accounting Standards Board Statement No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (SFAS 133) effective October 1, 2000. Adoption of SFAS 133 has not materially affected the results of operations or financial position of the Company. The Company's use of derivative financial instruments is limited to foreign exchange forward and option contracts used to hedge significant contract sales and purchase commitments that are denominated in currencies other than the functional currency of the subsidiary responsible for the commitment. Gains and losses from hedging activities are recognized when the hedged sale or purchase commitment is settled and the hedge is closed out. At December 31, 2000, the Company had foreign exchange contracts with a notional value of $22.6 million outstanding. The net amount of deferred gains and losses at that date was immaterial. 5 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)-continued December 31, 2000 NOTE 4 - INVENTORIES Inventories consist of the following (in thousands):
December 31, September 30, 2000 2000 -------------------------------------------- Finished products $ 1,337 $ 1,239 Work in process 14,126 17,699 Raw material and purchased parts 10,178 10,561 -------------------------------------------- $ 25,641 $ 29,499 ============================================
NOTE 5 - COMPREHENSIVE INCOME Comprehensive income is as follows (in thousands):
Three Months Ended December 31, 2000 1999 ------- ------- Net income 4,669 4,127 Foreign currency translation adjustments 570 (1,034) Unrealized gains on marketable securities: Unrealized holding gain (loss) arising during the period 445 (27) Reclassification adjustment for gain included in net income (909) - ------- ------- $ 4,775 $ 3,066 ======= =======
6 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)-continued December 31, 2000 NOTE 6 - BUSINESS SEGMENT INFORMATION Business segment financial data is as follows (in millions):
Three Months Ended December 31, 2000 1999 -------- -------- REVENUES: Transportation systems $ 50.3 $ 52.0 Defense 66.3 59.4 -------- -------- Total for reportable segments 116.6 111.4 Other revenues 7.1 5.5 -------- -------- $ 123.7 $ 116.9 ======== ======== OPERATING PROFIT (LOSS): Transportation systems $ 4.5 $ 3.3 Defense 0.6 3.2 -------- -------- Total for reportable segments 5.1 6.5 Other profit 2.9 0.9 Interest expense (0.9) (0.9) -------- -------- Income before income taxes $ 7.1 $ 6.5 ======== ========
NOTE 7 - 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 December 31, 2000 RESULTS OF OPERATIONS Revenues for the first quarter of fiscal 2001 were 6% higher than the first quarter of fiscal 2000, as the result of increased sales in the defense segment that offset slightly lower sales in the transportation segment. Other revenues increased primarily due to a gain of $1.4 million, before applicable income taxes, realized when the Company sold marketable equity securities. The increase in defense segment sales for the quarter resulted from acquisitions made in fiscal 2000 and from growth in the computerized battlefield simulation business. The 3% decline in transportation systems sales reflected a 10% decrease in the translation rate of British Pounds to U.S. Dollars, from the quarter ended December 31, 1999 to the quarter ended December 31, 2000, rather than a real decline in operating activities of the segment. This translation difference negatively impacted sales by approximately $3.3 million, as more than half of the transportation segment's revenues came from its European operations. Although this translation difference also negatively impacted operating profits of the transportation segment by nearly $300 thousand, increased profits from contracts in North America and the Far East, as well as European service contracts, improved the profit performance of this segment in the current year. Defense segment operating profits in the first quarter were lower than last year, due to legal and consulting costs incurred in the preparation of a claim for the MILES 2000 contract situation described in previous reports. In addition, defense segment profits were negatively impacted by certain costs incurred related to an air combat training range the Company had hoped to sell to the Australian Ministry of Defence. Although the Company had previously been selected to perform this work, budgetary funding issues in the Australian government, which arose during the quarter, caused the award of the contract to be postponed indefinitely, resulting in the expensing of pre-contract costs incurred by the Company. Other profits in the first quarter increased by $2 million over the previous year as a result of the sale of certain marketable securities at a profit, as mentioned above, and due to generally higher interest rates earned on the Company's cash investments in the current year. LIQUIDITY AND CAPITAL RESOURCES Operating activities for the quarter resulted in negative cash flow, as accounts receivable related to certain U.S. government contracts increased. This increase is expected to turn around in the second quarter of the fiscal year and generate positive cash flow from operations. The Company's financial condition remains strong with working capital of $164.6 million and a current ratio of 3.0 to 1 at December 31, 2000. The Company expects that cash on hand and its unused debt capacity will be adequate to meet its working capital requirements for the foreseeable future. The backlog of orders at December 31, 2000 was $760 million compared to $802 million at September 30, 2000 and $843 million at December 31, 1999. 8 CUBIC CORPORATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued December 31, 2000 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. 9 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibit is included herein: 15--Independent Accountants' Review Report (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 5, 2001 /s/ W. W. Boyle ---------------- --------------------------------- W. W. Boyle Vice President and CFO Date February 5, 2001 /s/ T. A. Baz ---------------- --------------------------------- T. A. Baz Vice President and Controller 10 EX-15 2 a2037832zex-15.txt 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, 2000, and the related consolidated condensed statements of income and cash flows for the three-month periods ended December 31, 2000 and 1999. 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 auditing standards generally accepted in the United States, 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 accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of Cubic Corporation as of September 30, 2000 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 28, 2000, 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, 2000, 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 2, 2001 -----END PRIVACY-ENHANCED MESSAGE-----