<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, 1995
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 24, 1995, Registrant had only one class of common stock of which
there were 5,987,466 shares outstanding (after deducting 1,938,148 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>
Nine Months Ended Three Months Ended
June 30 June 30
1995 1994 1995 1994
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Net sales $255,970 $182,360 $94,395 $74,486
Other income 3,647 6,228 1,255 1,940
-------- -------- ------- -------
259,617 188,588 95,650 76,426
Costs and expenses:
Cost of sales 197,981 138,317 73,621 57,786
Selling, general and administrative expenses 44,202 40,960 15,659 14,545
Research and development 7,223 4,546 2,703 1,954
Interest 2,243 1,832 838 611
-------- -------- ------- -------
251,649 185,655 92,821 74,896
-------- -------- ------- -------
Income from continuing operations before income
taxes, minority interest and cumulative effect of
accounting change 7,968 2,933 2,829 1,530
Income taxes 2,750 652 950 144
Minority interest in income of subsidiary 1,798 953 691 444
-------- -------- ------- -------
Income from continuing operations before
cumulative effect of accounting change 3,420 1,328 1,188 942
Loss on disposal of discontinued operations,
net of applicable income taxes - (153) - -
-------- -------- ------- -------
Income before cumulative effect of
accounting change 3,420 1,175 1,188 942
Cumulative effect of accounting change - 1,379 - -
-------- -------- ------- -------
Net income $ 3,420 $ 2,554 $ 1,188 $ 942
======== ======== ======= =======
Average shares of common
stock outstanding 5,987 6,035 5,987 5,994
======== ======== ======= =======
Per share data:
Income from continuing operations $ .57 $ .22 $ .20 $ .16
Loss from discontinued operations - (.03) - -
Cumulative effect of accounting change - .23 - -
-------- -------- ------- -------
Net income $ .57 $ .42 $ .20 $ .16
======== ======== ======= =======
Dividends per share $ .265 $ .265 $ - $ -
======== ======== ======= =======
</TABLE>
See accompanying notes.
1
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CUBIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(thousands of dollars)
<TABLE>
<CAPTION>
June 30 September 30
1995 1994
(Unaudited) (See note below)
----------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 32,437 $ 25,782
Marketable securities, available-for-sale 4,019 4,814
Accounts receivable 135,620 127,865
Inventories:
Finished products 2,748 1,172
Work in process 13,001 9,336
Raw material and purchased parts 8,967 10,672
-------- --------
24,716 21,180
Recoverable income taxes and other current assets 12,812 10,511
-------- --------
Total current assets 209,604 190,152
Property, plant and equipment - net 35,986 34,125
Toll equipment under operating leases - net 13,193 15,990
Preferred stock of U. S. Elevator Corp. 20,000 20,000
Cost in excess of net tangible assets of
purchased businesses, less amortization 17,201 18,150
Miscellaneous other assets 10,514 10,256
-------- --------
$306,498 $288,673
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 5,000 $ -
Accounts payable and other current liabilities 88,222 78,181
Current portion of long-term debt 5,000 5,000
-------- --------
Total current liabilities 98,222 83,181
Long-term debt 35,000 35,000
Deferred income taxes and other 7,907 7,565
Minority interest 5,885 5,282
Shareholders' equity:
Common stock 234 234
Additional paid-in capital 12,123 12,123
Retained earnings 181,279 179,446
Foreign currency translation adjustment (429) (435)
Treasury stock at cost (33,723) (33,723)
-------- --------
159,484 157,645
-------- --------
$306,498 $288,673
======== ========
</TABLE>
Note: The balance sheet at September 30, 1994 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>
Nine Months Ended
June 30
1995 1994
-------- --------
<S> <C> <C>
Operating Activities:
Net income $ 3,420 $ 2,554
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,271 7,227
Minority interest 1,798 953
Cumulative effect of accounting change - (1,379)
Changes in operating assets and liabilities (19,763) (2,147)
-------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (6,274) 7,208
-------- --------
Investing Activities:
Acquisition of businesses, net of cash acquired 14,712 (18,922)
Sales of marketable securities 795 9,275
Net additions to property, plant and equipment
and toll equipment under operating leases (5,711) (5,480)
Other items - net 178 (1,617)
-------- --------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 9,974 (16,744)
-------- --------
Financing Activities:
Short-term borrowings 5,000 -
Principal payments on long-term debt (5,000) (100)
Long-term borrowings 5,000 1,600
Purchases of treasury stock - (2,051)
Dividends paid to minority interest (1,229) (961)
Dividends paid to shareholders (1,587) (1,593)
-------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 2,184 (3,105)
-------- --------
Effect of exchange rates on cash 771 155
-------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 6,655 (12,486)
Cash and cash equivalents at the
beginning of the period 25,782 24,496
-------- --------
CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD $ 32,437 $ 12,010
======== ========
</TABLE>
See accompanying notes.
3
<PAGE>
CUBIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1995
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, 1995.
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, 1994.
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. Contingent Amounts
------------------
As of June 30, 1995, Accounts Receivable included unrecovered costs
subject to future negotiation amounting to approximately $8.5 million. This
amount resulted from customer-required work performed not specified in
contract provisions and/or delays and interference in work performance
caused by others. Management believes the Company will ultimately recover
this contingent amount through contract modifications.
D. 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.
4
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CUBIC CORPORATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
June 30, 1995
Sales for the quarter ended June 30, 1995 increased by 27% over the same quarter
of the previous year, resulting from growth in both the defense and automatic
revenue collection systems segments. Sales for the nine month period ended June
30, 1995 were up by 40% over the prior year. Sales were higher in the automatic
revenue collection systems segment as the result of continued higher sales to
major customers in New York City and London, England. The defense segment
experienced an increase in sales of its air and ground training ranges in the
current year, as well as an increase resulting from the acquisition of Cubic
Applications, Inc. in April of 1994. Sales for the nine months ended June 30,
1995 were also higher than in 1994 because of the consolidation of Westinghouse
Cubic Limited (WCL) as of January 1, 1994, as discussed in previous reports.
Income from continuing operations for both the three and nine month periods
ended June 30, 1995, increased over the corresponding periods in the prior year
resulting from higher operating profits in all segments of the company. The
largest increases were from the defense segment, despite continued expenditures
on research and development for new combat training range and receiver
technology, which limited the growth in operating profits. Cost growth on
contracts in the toll road business limited the increase in operating profits
from the automatic revenue collection systems segment for both the three and
nine month periods ended June 30, 1995.
Selling, general and administrative expenses decreased as a percent of sales
from 23% in the first nine months of fiscal 1994, to 17% in the same period of
the current year, as a result of the substantial increase in sales volume,
without the need for corresponding increases in selling, general and
administrative expenses.
During the quarter ended June 30, 1995, the Company acquired all of the
outstanding stock of an automatic revenue collection company in the country of
Denmark for a purchase price of less than one dollar. At the date of
acquisition, the acquired company had contractual obligations and other
liabilities amounting to approximately $20.3 million, cash in the amount of
$14.7 million and assets other than cash of $5.6 million.
5
<PAGE>
CUBIC CORPORATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- continued
Financial Position and Liquidity
--------------------------------
During the quarter ended June 30, 1995, operating activities provided cash of
$6.4 million, decreasing the cash used in operating activities for the first
nine months of the fiscal year to $6.3 million. This increase in cash during
the quarter resulted primarily from a reduction in accounts receivable. Cash
also increased as a result of the $14.7 million of cash acquired in the purchase
of the business described previously. During the quarter, the Company borrowed
$5 million from a bank on a short-term basis at an interest rate of 6.7%.
The cash balance of $32.4 million at June 30, 1995, included cash of $23.3
million in the Company's foreign subsidiaries.
The Company had total working capital of $111.4 million and a current ratio of
2.1 to 1 at June 30, 1995. The Company expects that cash on hand and available
through short-term borrowings and the line of credit of its leasing subsidiary
will be adequate to meet its short-term financing needs.
The backlog of orders was $431.9 million at June 30, 1995 compared to $406.5
million at September 30, 1994 and $421.2 million at June 30, 1994.
6
<PAGE>
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 August 10, 1995 /s/ W. W. Boyle
-------------------- ----------------------------------
W. W. Boyle
Vice President Finance and CFO
Date August 10, 1995 /s/ T. A. Baz
------------------- ---------------------------------------
T. A. Baz
Vice President and Controller
7
<PAGE>
EXHIBIT 15 -- 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, 1995, and the related consolidated condensed
statements of income for the three and nine month periods ended June 30, 1995
and 1994 and cash flows for the nine month periods ended June 30, 1995 and 1994.
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, 1994, 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 5, 1994, 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, 1994, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
ERNST & YOUNG LLP
August 1, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET AS OF JUNE 30, 1995 AND THE RELATED
CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE NINE MONTH PERIOD THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 32,437
<SECURITIES> 4,019
<RECEIVABLES> 135,620
<ALLOWANCES> 0
<INVENTORY> 24,716
<CURRENT-ASSETS> 209,604
<PP&E> 35,986
<DEPRECIATION> 0
<TOTAL-ASSETS> 306,498
<CURRENT-LIABILITIES> 98,222
<BONDS> 0
<COMMON> 234
0
0
<OTHER-SE> 159,250
<TOTAL-LIABILITY-AND-EQUITY> 306,498
<SALES> 255,970
<TOTAL-REVENUES> 259,617
<CGS> 197,981
<TOTAL-COSTS> 197,981
<OTHER-EXPENSES> 51,425
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,243
<INCOME-PRETAX> 7,968
<INCOME-TAX> 2,750
<INCOME-CONTINUING> 3,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,420
<EPS-PRIMARY> .57
<EPS-DILUTED> 0
</TABLE>
