<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 March 31, 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 April 25, 1994, Registrant had only one class of common stock of which
there were 6,001,719 shares outstanding (after deducting 1,923,895 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>
Six Months Ended Three Months Ended
March 31 March 31
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 98,324 $103,219 $49,917 $ 50,931
Other income 4,501 2,795 2,334 1,566
-------- -------- ------- --------
102,825 106,014 52,251 52,497
Costs and expenses:
Cost of sales 76,404 83,653 38,504 43,497
Selling, general and
administrative expenses 23,354 22,432 12,121 11,895
Research and development 1,460 2,155 858 1,009
Interest 1,221 1,169 632 583
-------- -------- ------- --------
102,439 109,409 52,115 56,984
-------- -------- ------- --------
Income (loss) from continuing operations before income
taxes and cumulative effect of accounting change 386 (3,395) 136 ( 4,487)
Income tax credit (2,000) (50) (2,285)
------- -------- ------- --------
Income (loss) from continuing operations before
cumulative effect of accounting change 386 (1,395) 186 (2,202)
Discontinued operations, net of applicable income taxes:
Income from operations 767 359
Net gain (loss) on disposal (153) 20,103 20,103
-------- -------- ------- --------
Income (loss) from discontinued operations (153) 20,870 20,462
-------- -------- ------- --------
Income before cumulative effect of accounting change 233 19,475 186 18,260
Cumulative effect of accounting change -- Note C 1,379
-------- -------- ------- --------
Net income $ 1,612 $ 19,475 $ 186 $ 18,260
======== ======== ======= ========
Average shares of common
stock outstanding 6,056 6,105 6,031 6,087
======== ======== ======= ========
Per share data:
Income (loss) from continuing operations $ .06 $ (.23) $ .03 $ (.36)
Income (loss) from discontinued operations (.03) 3.42 3.36
Cumulative effect of accounting change .23
-------- -------- ------- --------
Net income $ .26 $ 3.19 $ .03 $ 3.00
======== ======== ======= ========
Dividends per share $ .265 $ .265 $ .265 $ .265
======== ======== ======= ========
</TABLE>
See accompanying notes.
1
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CUBIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(thousands of dollars)
<TABLE>
<CAPTION>
March 31 September 30
1994 1993
(Unaudited) (See note below)
----------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 38,323 $ 24,496
Marketable securities 11,376 17,383
Accounts receivable 102,044 114,288
Inventories:
Finished products 1,285 1,330
Work in process 12,278 8,475
Raw material and purchased parts 10,439 8,108
-------- --------
24,002 17,913
Other current assets 5,989 6,646
-------- --------
Total current assets 181,734 180,726
Property, plant and equipment - net 27,992 28,038
Toll equipment under operating leases - net 18,909 19,952
Preferred stock of U. S. Elevator Corp. 20,000 20,000
Net assets of discontinued operation 2,840 2,823
Other assets 15,626 13,029
-------- --------
$267,101 $264,568
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 64,838 $ 62,721
Income taxes 572 1,040
Current portion of long-term debt 100
-------- --------
Total current liabilities 65,410 63,861
Long-term debt 39,943 37,343
Deferred income taxes and other 3,797 3,812
Shareholders' equity:
Common stock 234 234
Additional paid-in capital 12,123 12,123
Retained earnings 178,885 178,867
-------- --------
191,242 191,224
Less treasury stock at cost 33,291 31,672
-------- --------
157,951 159,552
-------- --------
$267,101 $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
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CUBIC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended
March 31
1994 1993
-------- --------
<S> <C> <C>
Operating Activities:
Net income $ 1,612 $ 19,475
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 4,431 4,432
Change in accounting principle (1,379)
Undistributed earnings of affiliates, net
of distributions (744) (1,427)
Changes in operating assets and liabilities 9,525 (310)
-------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 13,445 (2,933)
Investing Activities:
Proceeds from the sale of U.S. Elevator Corp. 40,000
Decrease in marketable securities 6,007 13,699
Net additions to property, plant and equipment
and toll equipment under operating leases (3,313) (12,892)
Other items - net (1,600) (1,573)
-------- --------
NET CASH PROVIDED BY INVESTING ACTIVITIES 1,094 39,234
Financing Activities:
Principal payments on long-term debt (2,100) (4,850)
Long-term borrowing 4,600
Purchases of treasury stock (1,619) (1,054)
Dividends paid (1,593) (1,613)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (712) (7,517)
-------- --------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 13,827 28,784
Cash and cash equivalents at the
beginning of the period 24,496 31,126
-------- --------
CASH AND CASH EQUIVALENTS
THE END OF THE PERIOD $ 38,323 $ 59,910
======== ========
</TABLE>
See accompanying notes.
3
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CUBIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 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. 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 was included in net income for the quarter ended
December 31, 1993.
Significant components of the Company's deferred tax assets and
liabilities as of October 1, 1993 are as follows (in thousands):
<TABLE>
<CAPTION>
<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>
4
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CUBIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--CONTINUED
D. Subsequent Event
----------------
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
$21 million. The purchase price, which was determined by auction bid, is
subject to an upward or downward post-closing adjustment based on the
amount of net assets as reflected in the Closing Balance Sheet. The
Company intends to devote the acquired assets to continuation of the
business of these divisions, which will operate as a subsidiary of the
Company, within the electronic defense systems segment.
E. 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
March 31, 1994
Sales from continuing operations for the quarter ended March 31, 1994, were down
slightly from the same quarter in the previous year due to lower sales volume in
the electronic defense systems segment. This decrease was partially offset by
increased sales in the automatic revenue collection systems segment. These
results are consistent with the trend in recent quarters due to increased
competition in the defense market caused by reduced U.S. Government spending and
the Company's success in obtaining contracts in the revenue collection business.
Income from continuing operations for the three and six month periods ending
March 31, 1994 were substantially improved from the losses incurred in the same
periods of fiscal 1993. This improvement was the result of profits on revenue
collection system contracts in the first half of fiscal 1994, compared to losses
incurred by this segment during the first half of fiscal 1993. Operating
profits in the electronic defense systems segment for the quarter ended March
31, 1994 were slightly lower than in the second quarter of fiscal 1993,
commensurate with the decline in sales volume for the segment.
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.
The Company's financial condition remains strong with working capital of $116.5
million at March 31, 1994, compared to $116.9 million at September 30, 1993.
The Company experienced positive cash flow from operations for the first six
months of fiscal 1994, resulting primarily from reductions in accounts
receivable during the period.
The backlog of orders was $288.4 million at March 31, 1994 compared to $246.7
million at September 30, 1993 and $236.4 million at March 31, 1993.
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) 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 May 11, 1994 /s/ W. W. Boyle
----------------- -------------------------
W. W. Boyle
Vice President Finance and CFO
Date May 11, 1994 /s/ T. A. Baz
---------------- -------------------------------
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 March 31, 1994, and the related consolidated condensed
statements of income for the three and six-month periods ended March 31, 1994
and 1993, and consolidated condensed statement of cash flows for the six-month
periods ended March 31, 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
May 5, 1994
