-----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, BkQlLOK1o9GaJhhJsH7kIw89/+9cItsawqgE4MMsDUrYAQ8yvqVItnO2pWz6N0cW JmV9VeezqlDGRkplD23UcA== 0001047469-98-005931.txt : 19980218 0001047469-98-005931.hdr.sgml : 19980218 ACCESSION NUMBER: 0001047469-98-005931 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980213 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: SEC FILE NUMBER: 001-08931 FILM NUMBER: 98537460 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 December 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 January 30, 1998, Registrant had only one class of common stock of which there were 8,907,158 shares outstanding (after deducting 2,981,085 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 1997 1996 --------- --------- Revenues: Net sales $ 91,752 $ 84,058 Other income 1,394 1,174 --------- --------- 93,146 85,232 --------- --------- Costs and expenses: Cost of sales 68,805 64,870 Selling, general and administrative expenses 17,994 14,084 Research and development 1,702 1,314 Interest 503 419 --------- --------- 89,004 80,687 --------- --------- Income before income taxes 4,142 4,545 Income taxes 1,500 1,650 --------- --------- Net income $ 2,642 $ 2,895 --------- --------- --------- --------- Net income per share $ .30 $ .32 --------- --------- --------- --------- Average shares of common stock outstanding 8,943 8,981 --------- ---------
See accompanying notes. 2 CUBIC CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (thousands of dollars)
December 31 September 30 1997 1997 (Unaudited) (See note below) ----------- ---------------- ASSETS Current assets: Cash and cash equivalents $ 66,359 $ 53,257 Marketable securities, available-for-sale 2,392 2,426 Accounts receivable 103,256 107,807 Inventories -- Note C 25,973 20,955 Deferred income taxes and other current assets 13,113 15,783 ---------- ---------- Total current assets 211,093 200,228 ---------- ---------- Property, plant and equipment - net 39,710 40,110 Cost in excess of net tangible assets of purchased businesses, less amortization 26,757 27,281 Miscellaneous other assets 14,505 14,663 -------- -------- $ 292,065 $ 282,282 ---------- ---------- ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 10,905 $ 9,620 Accounts payable and other current liabilities 47,593 46,270 Customer advances 33,445 30,896 Income taxes payable 2,136 206 Current portion of long-term debt 5,000 5,000 ---------- ---------- Total current liabilities 99,079 91,992 ---------- ---------- Long-term debt 10,000 10,000 Deferred income taxes and other liabilities 5,453 4,970 Shareholders' equity: Common stock 234 234 Additional paid-in capital 12,123 12,123 Retained earnings 200,855 198,213 Foreign currency translation adjustment (425) (557) Treasury stock at cost (35,254) (34,693) ---------- ---------- 177,533 175,320 ---------- ---------- $ 292,065 $ 282,282 ---------- ---------- ---------- ----------
Note: The balance sheet at September 30, 1997 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)
Three Months Ended December 31 1997 1996 -------- -------- Operating Activities: Net income $ 2,642 $ 2,895 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 2,493 2,013 Changes in operating assets and liabilities 8,970 (10,556) -------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 14,105 (5,648) -------- -------- Investing Activities: Sales of marketable securities 34 -- Net additions to property, plant and equipment (1,537) (1,520) Other items - net 50 -- -------- -------- NET CASH USED IN INVESTING ACTIVITIES (1,453) (1,520) -------- -------- Financing Activities: Short-term borrowings 1,097 -- Purchases of treasury stock (561) -- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 536 -- -------- -------- Effect of exchange rates on cash (86) (101) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,102 (7,269) Cash and cash equivalents at the beginning of the period 53,257 20,062 -------- -------- CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 66,359 $ 12,793 -------- -------- -------- --------
See accompanying notes. 4 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS December 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, 1998. 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, 1997. 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
December 31 September 30 1997 1997 ----------- ------------ Inventories consist of the following: Finished products $ 2,179 $ 2,501 Work in process 15,149 10,300 Raw material and purchased parts 8,645 8,154 -------- -------- $ 25,973 $ 20,955 -------- -------- -------- --------
Work in process inventories include costs relating to long term contracts of approximately $8.0 million, the recovery of which is subject to future determination through contract negotiations. These amounts result from customer-required work performed not specified in contract provisions and pre-contract work performed at the Company's risk. Management believes the Company will ultimately recover these amounts through the modification or award of the related contracts. 5 CUBIC CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- continued December 31, 1997 D. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT In the first quarter of fiscal 1998, the Company adopted Financial Accounting Standards Board Statement No. 128, "Earnings per Share". This statement redefines the standards for computing and presenting earnings per share, previously promulgated by Accounting Principles Board Opinion No. 15, " Earnings per Share". Due to the Company's current simple capital structure, the Company is not required to calculate or present diluted earnings per share, nor restate earnings per share previously reported. E. LEGAL MATTER In July 1995, UDT Sensors, Inc. a potential subcontractor, filed a lawsuit against Cubic Defense Systems, Inc. in the Superior Court of the State of California in Los Angeles, alleging breach of a written contract, unjust enrichment, fraud and deceit, among other related charges. The claims allegedly arose out of a strategic supplier agreement under which UDT Sensors, Inc. alleges it was to receive a subcontract to provide a certain product if Cubic Defense Systems, Inc. was selected by the United States Army as the prime contractor for a certain government program. After winning the prime contract, Cubic Defense Systems, Inc. was unable to reach agreement on certain terms and conditions for a subcontract with UDT Sensors, Inc. The lawsuit claimed damages in the amount of $20 million and more according to proof at trial, exemplary damages in an amount to be determined at trial, pre-judgment interest and costs of suit. Subsequent to the filing of the lawsuit, the Superior Court dismissed that part of the claim of UDT Sensors, Inc. dealing with breach of contract and the damages claim was reduced to $2 million. The only remaining claims are ones for fraud and unjust enrichment. The trial date has been reset for April 13, 1998. The Company expects an out-of-court settlement to be reached, which will not have a material adverse effect on the Company's financial statements. F. 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, 1997 RESULTS OF OPERATIONS Sales for the first quarter of fiscal 1998 were 9% higher than the first quarter of fiscal 1997, primarily due to the acquisition of Thorn Transit Systems International (TTSI) in April 1997. The addition of this business contributed to a sales increase of 27% from the prior year in the automatic revenue collection segment. Sales in the defense segment for the first quarter of fiscal 1998 were comparable to the first quarter of fiscal 1997. The Company has continued to invest in the development and promotion of its proprietary software technology which delivers compressed video and audio transmission over personal computer networks for applications including e-mail, intra-net based training and surveillance. This investment amounted to approximately $1 million in the first quarter, resulting in lower overall operating profits compared to the first quarter of fiscal 1997. Operating profits in the defense segment for the first quarter were 35% higher than in the previous year as a result of increased profits from product lines such as the J-STARS Data Link and Personnel Locator Systems. Although sales in the first quarter for the revenue collection segment were up from last year, operating profits for the first quarter were comparable to the prior year, as the continued delay of an expected contract with the London Transport has affected profitability. In addition, second quarter earnings may be negatively impacted because of the possible need to set aside reserves for some of the Asian contracts that came with the acquisition of TTSI. The impact of this is currently being assessed and will, if necessary, be reflected in the second quarter. For the three-month period, selling, general and administrative expenses increased, both nominally and as a percentage of sales, over the level in fiscal 1997. This increase was in support of higher sales volume at the automatic revenue collection systems segment, increased selling expenses incurred at the defense segment in pursuit of new contracts and selling expenses related to the video compression product mentioned above. LIQUIDITY AND CAPITAL RESOURCES During the three month period ended December 31, 1997, operating activities provided $14.1 million, due primarily to collections from customers exceeding the related contract expenditures. Investing activities included planned expenditures for capital equipment, which used $1.5 million. Financing activities included an increase in the Company's short-term borrowings in the United Kingdom that provided $1.1 million. This was partially offset by treasury stock purchases of $0.6 million. Overall, cash and cash equivalents increased by $13.1 million during the first quarter to $66.4 million as of December 31, 1997. The Company expects that cash on hand and its available debt capacity will be adequate to meet its short-term working capital requirements. 7 CUBIC CORPORATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued December 31, 1997 The Company's financial condition remains strong with working capital of $112.0 million and a current ratio of 2.1 to 1 at December 31, 1997. The backlog of orders at December 31, 1997 was $380 million compared to $358 million at September 30, 1997 and $320 million at December 31, 1996. The increase from December 31, 1996 to December 31, 1997, was primarily the result of the TTSI acquisition. 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. 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 6, 1998 /s/ W. W. Boyle ---------------- ----------------- W. W. Boyle Vice President Finance and CFO Date February 6, 1998 /s/ T. A. Baz ---------------- ----------------- T. A. Baz Vice President and Controller 9 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 December 31, 1997, and the related consolidated condensed statements of income and cash flows for the three-month periods ended December 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, 1997, 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, 1997, 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, 1997, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. ERNST & YOUNG LLP February 6, 1998 San Diego, California 10 EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 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-30-1998 DEC-31-1997 66,359 2,392 103,256 0 25,973 211,093 39,710 0 292,065 99,079 0 0 0 234 177,299 292,065 91,752 93,146 68,805 68,805 19,696 0 503 4,142 1,500 2,642 0 0 0 2,642 .30 .30
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