<PAGE>
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, 1994
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 July 29, 1994, Registrant had only one class of common stock of which
there were 5,987,474 shares outstanding (after deducting 1,938,140 shares held
as treasury stock).
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CUBIC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME (UNAUDITED)
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
June 30 June 30
1994 1993 1994 1993
---------- --------- --------- --------
<S> <C> <C> <C> <C>
Revenues:
Net sales $163,940 $162,733 $65,616 $59,514
Other income 6,471 4,806 1,970 2,011
-------- -------- ------- -------
170,411 167,539 67,586 61,525
Costs and expenses:
Cost of sales 126,110 130,756 51,270 47,103
Selling, general and
administrative expenses 37,072 33,207 13,231 10,775
Research and development 4,369 3,050 1,832 895
Interest 1,832 1,730 611 561
-------- -------- ------- -------
169,383 168,743 66,944 59,334
-------- -------- ------- -------
Income (loss) from continuing operations before income
taxes and cumulative effect of accounting change 1,028 (1,204) 642 2,191
Income tax credit (300) (1,347) (300) 653
-------- -------- ------- -------
Income from continuing operations before
cumulative effect of accounting change 1,328 143 942 1,538
Discontinued operations, net of applicable income taxes:
Income (loss) from operations 689 (78)
Net gain (loss) on disposal (153) 20,103
-------- -------- ------- -------
Income (loss) from discontinued operations (153) 20,792 (78)
-------- -------- ------- -------
Income before cumulative effect of accounting change 1,175 20,935 942 1,460
Cumulative effect of accounting change 1,379
-------- -------- ------- -------
Net income $ 2,554 $ 20,935 $ 942 $ 1,460
======== ======== ======= =======
Average shares of common
stock outstanding 6,035 6,099 5,994 6,086
======== ======== ======= =======
Per share data:
Income from continuing operations $ .22 $ .02 $ .16 $ .25
Income (loss) from discontinued operations (.03) 3.41 (.01)
Cumulative effect of accounting change .23
-------- -------- ------- -------
Net income $ .42 $ 3.43 $ .16 $ .24
======== ======== ======= =======
Dividends per share $ .265 $ 1.265 $ $ 1.00
======== ======== ======= =======
</TABLE>
See accompanying notes.
1
<PAGE>
CUBIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(thousands of dollars)
<TABLE>
<CAPTION>
June 30 September 30
1994 1993
(Unaudited) (See note below)
----------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,384 $ 24,496
Marketable securities 8,108 17,383
Accounts receivable 119,604 114,288
Inventories:
Finished products 1,241 1,330
Work in process 8,255 8,475
Raw material and purchased parts 13,452 8,108
-------- --------
22,948 17,913
Recoverable income taxes and other current assets 6,203 6,646
-------- --------
Total current assets 164,247 180,726
Property, plant and equipment - net 29,012 28,038
Toll equipment under operating leases - net 18,031 19,952
Preferred stock of U. S. Elevator Corp. 20,000 20,000
Cost in excess of net tangible assets of
purchased businesses, less amortization 18,472 373
Net assets of discontinued operation 2,618 2,823
Other assets 16,170 12,656
-------- --------
$268,550 $264,568
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 67,301 $ 62,721
Income taxes 1,040
Current portion of long-term debt 5,000 100
-------- --------
Total current liabilities 72,301 63,861
Long-term debt 33,943 37,343
Deferred income taxes and other 3,845 3,812
Shareholders' equity:
Common stock 234 234
Additional paid-in capital 12,123 12,123
Retained earnings 179,827 178,867
-------- --------
192,184 191,224
-------- --------
Less treasury stock at cost 33,723 31,672
-------- --------
158,461 159,552
-------- --------
$268,550 $264,568
======== ========
</TABLE>
Note: The balance sheet at September 30, 1993 has been derived from the audited
financial statements at that date.
See accompanying notes.
2
<PAGE>
CUBIC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
June 30
1994 1993
--------- ---------
<S> <C> <C>
Operating Activities:
Net income $ 2,554 $ 20,935
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Gain on the sale of U.S. Elevator Corp, before income taxes (25,103)
Depreciation and amortization 7,030 6,763
Change in accounting principle (1,379)
Undistributed earnings of affiliates, net
of distributions (967) (1,969)
Changes in operating assets and liabilities (2,537) (12,020)
-------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 4,701 (11,394)
Investing Activities:
Purchase of Titan Applications Group, net of cash acquired (22,045)
Proceeds from the sale of U.S. Elevator Corp. 40,000
Decrease in marketable securities 9,275 14,394
Net additions to property, plant and equipment
and toll equipment under operating leases (5,282) (15,148)
Other items - net (1,617) (1,584)
-------- --------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (19,669) 37,662
Financing Activities:
Principal payments on long-term debt (3,100) (25,925)
Long-term borrowing 4,600 30,000
Purchases of treasury stock (2,051) (1,054)
Dividends paid (1,593) (7,699)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (2,144) (4,678)
-------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (17,112) 21,590
Cash and cash equivalents at the
beginning of the period 24,496 31,126
-------- --------
CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD $ 7,384 $ 52,716
======== ========
</TABLE>
See accompanying notes.
3
<PAGE>
CUBIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1994
A. Basis for Presentation
----------------------
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the instructions to Form 10-Q and
therefore do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations, and cash flows
in conformity with generally accepted accounting principles.
The information furnished reflects all adjustments (consisting of
normal recurring accruals) which are, in the opinion of management,
necessary for a fair statement of the results for the interim periods.
Results for the quarter are not necessarily indicative of the results to be
expected for the year.
Certain prior period amounts have been reclassified to conform to
current period classifications.
B. Per Share Amounts
-----------------
Per share amounts are based upon the weighted average number of shares
of common stock outstanding.
C. Acquisition
-----------
On April 8, 1994, the Company acquired all of the assets and assumed
certain liabilities of the Titan Applications Group and Titan Services
International divisions of The Titan Corporation, for cash in the amount of
$22 million. The purchase price was determined by an auction bid of $21
million and was subsequently adjusted upward based on the amount of net
assets as reflected in the Closing Balance Sheet. 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 $18.3 million and will be amortized over
a period of 15 years using the straight-line method. The Company has
devoted the acquired assets to continuation of the business, which provides
training, applications and operations services to the United States Army.
The results of operations from the date of acquisition to June 30, 1994
have been included in the accompanying consolidated condensed financial
statements as a part of the electronic defense systems segment.
4
<PAGE>
CUBIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--continued
June 30, 1994
C. Acquisition -- continued
------------------------
Pro forma results of the Company's operations, assuming the
acquisition had occurred as of October 1, 1993 and 1992 are presented
below (in thousands, except per share data). In addition to purchase
accounting adjustments, the pro forma amounts include certain adjustments
to historical financial data, including reduction of nonrecurring general
and administrative expenses, reduction of interest income and the income
tax effect of these adjustments. The pro forma operating results may not
be indicative of the results that actually would have occurred if the
acquisition had taken place on the dates indicated or which may occur in
the future.
<TABLE>
<CAPTION>
Nine Months Ended
June 30
1994 1993
-------- --------
<S> <C> <C>
Net sales $185,399 $184,196
Net income 3,506 21,405
Earnings per share .58 3.51
</TABLE>
D. Review by Independent Accountants
---------------------------------
A review of the data presented was made by Ernst & Young, independent
accountants, in accordance with established professional standards and
procedures, and their report is included herein.
5
<PAGE>
CUBIC CORPORATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
June 30, 1994
Sales from continuing operations for the quarter ended June 30, 1994, increased
by 10% over the same quarter in the previous year as a result of the Company's
acquisition, in April, of the Titan Applications Group and Titan Services
International divisions of the Titan Corporation. This new subsidiary of the
Company added over $7 million in sales to the electronic defense systems segment
from the date of acquisition to the end of the quarter. Sales in the automatic
revenue collection systems segment remained flat in comparison to the same
quarter of the previous year.
Income from continuing operations for the nine month period ending June 30, 1994
was higher than the same period in 1993, but for the third quarter of the fiscal
year, was lower than last year. Operating profits in the automatic revenue
collection segment for both the quarter and year-to-date continued to be higher
than in 1993. However, operating profits in the electronic defense systems
segment were lower than in fiscal 1993 for both the quarter and nine-month
periods. A substantial portion of this decline in operating profits can be
attributed to increased bidding and proposal costs and increased spending on the
development of new products.
Selling, general and administrative expenses were higher than in the previous
year primarily as the result of increased selling and proposal activities in
both the electronic defense systems and automatic revenue collection systems
segments. These include additional personnel as well as increased expenditures
for travel, primarily targeting international markets.
The provisions for income taxes were different from statutory income tax rates
in all periods primarily as a result of the Company's tax exempt interest and
dividend income, and its equity share in the net income of its 50% owned foreign
subsidiary which is not subject to federal income taxes.
During the quarter ended June 30, 1994, the Company used $22 million in cash for
the acquisition of the Titan Applications Group and Titan Services International
divisions of the Titan Corporation. This acquisition resulted in a reduction of
working capital of approximately $19 million. Overall, working capital
decreased by almost $25 million since the beginning of the fiscal year. Despite
this decrease, the Company's financial condition remains strong with working
capital of $91.9 million and a current ratio of 2.3 to 1 at June 30, 1994. The
Company expects that cash provided by operations and the line of credit of its
leasing subsidiary will be adequate to meet its short-term financing needs.
The backlog of orders was $284.1 million at June 30, 1994 compared to $246.7
million at September 30, 1993 and $253.6 million at June 30, 1993.
6
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is included herein:
28--Independent Accountants' Review Report
(b) Registrant filed a Form 8-K as of April 8, 1994 to report the
acquisition of all the assets and certain liabilities of the Titan
Applications Group and Titan Services International divisions of
the Titan Corporation.
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 11, 1994 /s/ W. W. Boyle
-------------------- ----------------------------------
W. W. Boyle
Vice President Finance and CFO
Date August 11, 1994 /s/ T. A. Baz
------------------- ----------------------------------
T. A. Baz
Vice President and Controller
7
<PAGE>
EXHIBIT 28 -- INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors
Cubic Corporation
San Diego, California
We have reviewed the accompanying consolidated condensed balance sheet of Cubic
Corporation as of June 30, 1994, and the related consolidated condensed
statements of income for the three and nine-month periods ended June 30, 1994
and 1993, and consolidated condensed statement of cash flows for the nine-month
periods ended June 30, 1994 and 1993. 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 review, 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, 1993, 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 8, 1993, 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, 1993, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
ERNST & YOUNG LLP
August 8, 1994
