<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 December 31, 1993
1-8931
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Commission File Number
CUBIC CORPORATION
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Exact Name of Registrant as Specified in its Charter
Delaware 95-1678055
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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 28, 1994, Registrant had only one class of common stock of which
there were 6,041,719 shares outstanding (after deducting 1,883,895 shares held
as treasury stock).
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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>
Three Months Ended
December 31
1993 1992
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<S> <C> <C>
Revenues:
Net sales $48,407 $52,288
Other income 2,167 1,229
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50,574 53,517
Costs and expenses:
Cost of sales 37,900 40,156
Selling, general and
administrative expenses 11,233 10,537
Research and development 602 1,146
Interest 589 586
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50,324 52,425
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Income from continuing operations before income taxes
and cumulative effect of accounting change 250 1,092
Income taxes 50 285
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Income from continuing operations before cumulative
effect of accounting change 200 807
Discontinued operations, net of applicable income taxes:
Income (loss) from operations (153) 408
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Income before cumulative effect of accounting change 47 1,215
Cumulative effect of accounting change -- Note C 1,379
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Net income $ 1,426 $ 1,215
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Average shares of common stock outstanding 6,081 6,123
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Per share data:
Income from continuing operations $ .03 $ .13
Income (loss) from discontinued operations (.03) .07
Cumulative effect of accounting change .23
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Net income $ .23 $ .20
======= =======
</TABLE>
See accompanying notes.
1
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CUBIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(thousands of dollars)
<TABLE>
<CAPTION>
December 31 September 30
1993 1993
(Unaudited) (See note below)
------------ ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 24,218 $ 24,496
Marketable securities 11,092 17,383
Accounts receivable 121,762 114,288
Inventories:
Finished products 1,389 1,330
Work in process 7,476 8,475
Raw material and purchased parts 11,522 8,108
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20,387 17,913
Other current assets 5,509 6,646
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Total current assets 182,968 180,726
Property, plant and equipment - net 28,185 28,038
Toll equipment under operating leases - net 19,260 19,952
Preferred stock of U. S. Elevator 20,000 20,000
Net assets of discontinued operation 2,848 2,823
Other assets 13,315 13,029
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$266,576 $264,568
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 59,956 $ 62,721
Income taxes 53 1,040
Current portion of long-term debt 100
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Total current liabilities 60,009 63,861
Long-term debt 41,943 37,343
Deferred income taxes and other 3,817 3,812
Shareholders' equity:
Common stock 234 234
Additional paid-in capital 12,123 12,123
Retained earnings 180,292 178,867
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192,649 191,224
Less treasury stock at cost 31,842 31,672
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160,807 159,552
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$266,576 $264,568
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</TABLE>
Note: The balance sheet at September 30, 1993 has been derived from the
audited financial statements at that date.
See accompanying notes.
2
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CUBIC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended
December 31
1993 1992
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<S> <C> <C>
Operating Activities:
Net income $ 1,426 $ 1,215
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 2,015 1,996
Change in accounting method (1,379)
Undistributed earnings of affiliates, net
of distributions (349) (544)
Changes in operating assets and liabilities (11,071) (4,034)
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NET CASH USED IN OPERATING ACTIVITIES (9,358) (1,367)
Investing Activities:
Decrease in marketable securities 6,291 6,618
Net additions to property, plant and equipment
and toll equipment under operating leases (1,541) (10,775)
Other items - net (1,573)
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NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 4,750 (5,730)
Financing Activities:
Principal payments on long-term debt (100) (4,775)
Long-term borrowing 4,600
Purchases of treasury stock (170) (757)
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NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 4,330 (5,532)
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NET DECREASE IN CASH
AND CASH EQUIVALENTS (278) (12,629)
Cash and cash equivalents at the
beginning of the period 24,496 31,126
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CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD $ 24,218 $ 18,497
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</TABLE>
See accompanying notes.
3
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CUBIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
December 31, 1993
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.
B. Per Share Amounts
-----------------
Per share amounts are based upon the weighted average number of
shares of common stock outstanding.
4
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C. Change in Accounting for Income Taxes
-------------------------------------
Effective October 1, 1993, the Company adopted Financial
Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes". Under the provisions of this new standard, the Company must now
recognize, to a greater degree, the future tax benefits of certain expenses
which previously had been recognized in the financial statements without
tax benefit. As permitted by the standard, the Company has elected not to
restate the financial statements of any prior periods. The change was
applied retroactively to certain elements of deferred income taxes
originating in prior years and resulted in a cumulative effect adjustment
of $1,379,000, which is included in net income for the first quarter of
fiscal 1994.
Significant components of the Company's deferred tax assets and
liabilities for federal and states income taxes as of October 1, 1993
are as follows (in thousands):
<TABLE>
<S> <C>
Deferred tax assets:
Accrued liabilities and other $3,894
Inventories 2,354
Long-term contract receivables 2,355
------
$8,603
======
Deferred tax liabilities:
Leveraged leases $3,755
Property, plant and equipment 2,585
Other - net 1,035
------
$7,375
======
</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
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CUBIC CORPORATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
December 31, 1993
Sales from continuing operations for the quarter ended December 31, 1993, were
down 7% from the same quarter in the previous year due to lower sales volume in
the defense systems segment. This decrease is a continuation of the trend which
has occurred over the last several years, resulting from Department of Defense
spending cuts which have caused increased competition in the instrumentation and
training market segment. Sales in the automatic revenue collection systems
segment were at about the same level as in the first quarter of the previous
fiscal year.
Operating profits in the electronic defense systems segment were lower than in
the first quarter of fiscal 1993, reflecting the lower sales volume and lower
profit margins on defense contracts. Operating profits in the automatic revenue
collection systems segment were also lower than last year primarily as the
result of increased selling, general and administrative expenses, as described
below.
Selling, general and administrative expenses increased from 20% of sales in the
first quarter of fiscal 1993 to 23% of sales in the first quarter of the current
fiscal year. This resulted from an increase in international selling
activities and legal expenses, primarily in the automatic revenue collection
systems segment.
The provisions for income taxes in both periods were low in comparison to
statutory income tax rates because of the Company's tax exempt interest and
dividend income and equity share in the net income of its 50% owned foreign
subsidiary.
The Company's financial condition remains strong with working capital of $123.0
million at December 31, 1993, up from $116.9 million at September 30, 1993. The
Company's subsidiary, Cubic Toll Systems, Inc., borrowed $4.5 million during the
quarter, through its revolving credit facility, to finance the on-going
construction of toll equipment for lease to customers.
The backlog of orders for the continuing operations was $265.6 million at
December 31, 1993 compared to $246.7 million at September 30, 1993 and $270.5
million at December 31, 1992.
6
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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) 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 9, 1994 /s/ W. W. Boyle
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W. W. Boyle
Vice President Finance and CFO
Date February 9, 1994 /s/ T.A. Baz
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T. A. Baz
Vice President and Controller
7
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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 December 31, 1993, and the related consolidated condensed
statements of income and cash flows for the three-month periods ended December
31, 1993 and 1992. 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
February 2, 1994
