<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended September 30, 1996
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
COMMON STOCK AMERICAN STOCK EXCHANGE, INC.
Title of each class Name of exchange on which registered
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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K.
Yes X No
----- -----
The aggregate market value of voting stock held by non-affiliates of the
registrant is: $110,474,106 as of December 6, 1996.
Number of shares of common stock outstanding as of December 6, 1996:
8,980,889 (after deducting 2,907,354 shares held as treasury stock).
Parts I and III incorporate information by reference from the Registrant's
definitive proxy statement which will be filed no later than 120 days after
the close of the Registrant's year-end, and no later than 30 days prior to
the Annual Shareholders' Meeting.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 2
- -------------------------------------------------------------------------------
PART I
ITEM 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS.
The Registrant, CUBIC CORPORATION (the Company), was incorporated in the
State of California in 1949 and began operations in 1951. In 1984, the
Company moved its Corporate domicile to the State of Delaware.
The Company, its subsidiaries and divisions design, develop and manufacture
products which are mainly electronic in nature, such as:
Electronic equipment for use in customized military range instrumentation,
training and applications systems, communications and surveillance systems,
HF and VHF/UHF surveillance receivers, avionics systems, space RF/digital
products and cellular call boxes for public use on freeways and in parking
lots.
Automatic revenue collection equipment, ticket-vending machines and
passenger gates for mass transit systems, including rail systems, buses and
parking lots.
The Company also performs a variety of services, such as computer simulation
training, distributed interactive simulation and development of training
doctrine, as well as field operations and maintenance services related to
products previously produced and products produced by others. The Company
also manufactures replacement parts for its own such products. In addition,
it operates a corrugated paper converting facility through its subsidiary,
Consolidated Converting Company.
Sales volume increased by 10% in fiscal 1996, compared to fiscal 1995, to a
record high for the Company. This growth is primarily the result of new
contract awards which the Company received in 1995 for training ranges and
systems in the defense segment. Sales volume in the automatic revenue
collection systems segment also increased, despite the sale of the toll
collection systems product line in May 1996.
Research and development expenditures over the past few years by the defense
segment resulted in the winning of the defense contracts mentioned above and
cause the outlook for the Company's future in defense contracting to be
favorable. The market for air and ground training ranges and systems
continues to provide significant opportunities for the Company to expand its
defense businesses.
The Company also continues to expand its world-wide customer base for
automatic revenue collection systems. Contracts awarded or pending in China
and Thailand are an indication of the substantial international growth
potential for this segment of the business.
On September 30, 1996, the Company acquired 50% of the outstanding stock of
its subsidiary, Westinghouse Cubic Ltd. (WCL) for approximately $6.6 million,
giving the Company control of 100% of the outstanding stock. WCL is a United
Kingdom company engaged in revenue collection equipment design, fabrication,
and installation.
On July 23, 1996, the shareholders of the Company approved a 3-for-2 stock
split which was distributed on August 7, 1996 to shareholders of record on
August 1, 1996.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 3
- -------------------------------------------------------------------------------
During fiscal year 1996, approximately 40% of the Company's total business
was done, either directly or indirectly, with various agencies of the United
States government. The remaining 60% of the business is classified as
commercial.
The Company's products and services are sold almost entirely by its
employees. Overseas sales are made either directly or through representatives
or licensees.
(b) FINANCIAL INFORMATION RELATING TO INDUSTRY
SEGMENTS AND CLASSES OF PRODUCTS OR SERVICES.
Information regarding the amounts of revenue, operating profit and loss and
identifiable assets attributable to each of the Company's industry segments, is
set forth in Note M to the Consolidated Financial Statements for the year ended
September 30, 1996, and follows at Item 14(a)(1) of this filing, on pages 35
and 36.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
DEFENSE
The defense segment's products include customized military range
instrumentation, training and applications systems, communications and
surveillance systems, HF and UHF/VHF surveillance receivers, avionics systems
and space RF/digital products. Services provided by the segment include
computer simulation training, distributed interactive simulation, development
of training doctrine and field operations and maintenance.
Cubic Defense Systems, Inc. is best known for its combat training systems for
military field exercises. These systems use lasers or computer software to
simulate "live fire", plus instrumentation to record the force-on-force
engagement. When the missions are completed, computer data is replayed on
display screens for review by the instructors and personnel involved. The
TACTS (Tactical Aircrew Combat Training System) is used by the U. S. Navy and
Marine Corps, and ACMI (Air Combat Maneuvering Instrumentation) by the Air
Force. A new generation of air ranges based on the GPS (Global Positioning
System) is now being developed for the Air Force. Instrumented training
ranges at the CMTC (Combat Maneuver Training Center) and JRTC (Joint
Readiness Training Center) are for use by the U. S. Army.
Cubic Defense Systems, Inc. also produces the SRS (Sonobuoy Reference System)
for anti-submarine aircraft for the United States and foreign Navies and the
air/ground data link for the J-STARS reconnaissance system (Joint Suveillance
and Target Attack Radar System) being built for the Air Force by Grumman.
Avionics products, such as the PLS (Personnel Locator System) for
helicopters, and a GCAS (Ground Collision Avoidance System) which provides
warnings for flight safety, are built for the U. S. military, aircraft prime
contractors and foreign governments.
In 1995, the company was selected by the U.S. Army for the Multiple
Integrated Laser Engagement System (MILES) 2000 program. MILES is a family
of products that uses lasers to realistically simulate weapons firing and
detection systems, to register hits or kills without endangering the target.
These products, which are currently in the development phase, will be used by
U.S. Army and Marine Corp. personnel as well as allied forces in realistic
force-on-force combat training exercises.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 4
- -------------------------------------------------------------------------------
Cubic Applications, Inc. is a tactical knowledge based service company that
teaches commanders to make correct decisions in battle situations by using
computer simulation for training.
Cubic Communications, Inc. designs and produces HF and VHF/UHF surveillance
receivers and direction finders primarily for the U. S. and foreign military
markets.
RAW MATERIALS:
The principal raw materials used by the defense segment are sheet aluminum
and steel, copper electrical wire, and composite products. A significant
portion of the segment's end product is composed of purchased electronic
components and subcontracted parts and supplies. These items are primarily
procured from commercial sources. In general, supplies of raw materials and
purchased parts are presently adequate to meet the requirements of the
segment.
BACKLOG:
The defense segment's sales backlog at September 30, 1996 was $123,000,000
compared to $125,000,000 at September 30, 1995. Approximately $25,000,000 is
not expected to be completed by September 30, 1997.
COMPETITION:
The defense segment competes with concerns of varying size, including some of
the largest corporations in the country. It is not possible to predict the
extent of competition which present or future activities will encounter,
particularly since the defense industry is subject to rapidly changing
competitive conditions, customer requirements and technological developments.
However, it is expected that United States government spending for defense
programs will continue at a lower level than in the past, resulting in
continued heavy competition for this segment.
AUTOMATIC REVENUE COLLECTION SYSTEMS
The automatic revenue collection systems segment includes four subsidiaries
which work together to design, produce and service rail and bus fare
collection systems. These include Cubic Automatic Revenue Collection Group,
Southern Cubic Pty. Ltd. and Scanpoint Technology A/S, as well as the
Company's subsidiary in England, Westinghouse Cubic Limited, which, as of
September 30, 1996, is wholly-owned. This group of companies is the
acknowledged leader in a market that serves rapid transit systems the world
over.
The rail system product line, headquartered in San Diego, designs
computerized systems for rapid transit rail systems. The manufacture of
these systems is accomplished at the Tullahoma, Tennessee facility. The
Company and its subsidiaries, Cubic Automatic Revenue Collection Group and
Westinghouse Cubic Ltd., have been awarded large contracts by the cities of
New York, Chicago, London and Sydney, Australia, as well as a major system
enhancement for the Washington, D.C. Metro. These programs provide a solid
base of current business and the potential for additional future business as
the programs are expanded. In 1996, the Company was awarded a contract by the
Shanghai Metro Corporation to install automatic fare collection equipment in
China's first modern heavy rail system. Additional orders from customers in
Singapore and Hong Kong are received annually.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 5
- -------------------------------------------------------------------------------
Cubic Automatic Revenue Collection Group is also a major supplier of bus
fareboxes. Public bus systems across the United States are being equipped
with computerized fareboxes, which accept all denominations of coins, $1
bills and magnetically encoded passes. Contracts with New York and Chicago
are currently in production.
There is worldwide demand for automatic revenue management systems in all
forms of public transit. The Company's automatic revenue collection systems
segment continues to provide the technology and leadership to give the world
fare collection market quality products and service.
RAW MATERIALS:
Raw materials used in this segment include sheet steel, composite products,
copper electrical wire and castings. All of these items are procured from
commercial sources. In general, supplies of raw materials and purchased
parts are presently adequate to meet the requirements of the segment.
BACKLOG:
The automatic revenue collection systems segment sales backlog at September
30, 1996 was $183,000,000, compared to $252,000,000 at September 30, 1995.
The decrease in backlog from 1995 to 1996 reflects the sale of the toll
collection product line, which represented approximately $61,000,000 of the
backlog at September 30, 1995. Approximately $78,000,000 of the September
30, 1996 backlog is not expected to be completed by September 30, 1997.
COMPETITION:
The Company's automatic revenue collection systems segment is a leading
manufacturer of automatic fare collection systems for rapid transit systems
throughout the world. The Company's state-of-the-art systems and equipment,
together with continuing research and development, should enable it to
maintain its leading position in the industry for the immediate foreseeable
future. Incident to the sale of its automatic revenue collection systems
products, the Company's subsidiaries are subject to possible liability by
reason of warranties against defects in design, material and workmanship.
INDUSTRIAL OPERATIONS
The primary business included in the industrial operations segment is
Consolidated Converting Co., which converts corrugated paper stock into
high-quality packaging and shipping containers and converts paper stock into
seat covers.
The segment also includes call boxes produced by the Company's subsidiary,
Cubic Communications, Inc., for use on freeways, golf courses and in parking
lots and optical tooling produced by the Precision Electro-optical systems
division.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 6
- --------------------------------------------------------------------------------
RAW MATERIALS:
Raw materials used in the industrial operations segment include sheet aluminum
and steel, paper and composite products. All of these items are procured from
commercial sources. In general, supplies of raw materials and purchased parts
are presently adequate to meet the requirements of the segment. Paper shortages
could delay completion of the segment's contracts in the future.
BACKLOG:
The industrial operations segment sales backlog at September 30, 1996 was
$7,000,000, compared to $6,000,000 at September 30, 1995. Approximately
$3,000,000 is not expected to be completed by September 30, 1997.
COMPETITION:
In the industrial operations segment, the subsidiaries of the Company compete
with concerns of varying size, including some of the largest corporations in the
country. It is not possible to predict the extent of the competition which
present or future activities will encounter, particularly since many of the
activities of the Company's subsidiaries are subject to rapidly changing
competitive conditions.
GENERAL
The Company pursues a policy of seeking patent protection for its products,
where deemed advisable, but it does not regard itself as materially dependent on
its patents for the maintenance of its competitive position.
The Company does not engage in any business that is seasonal in nature.
The estimated dollar amounts spent for customer sponsored research activities
relating to the development of new products or services was $55,000,000,
$46,000,000 and $35,000,000 in 1996, 1995 and 1994, respectively. The cost of
Company sponsored research and development activities was $7,186,000,
$10,753,000 and $7,440,000 in 1996, 1995 and 1994, respectively.
The Company must comply with federal, state and local laws and regulations
regarding discharge of materials into the environment and the handling and
disposal of materials classed as hazardous and/or toxic. Such compliance has no
material effect upon the capital expenditures, earnings or competitive position
of the Company.
There were approximately 3,400 persons employed by the Company and its
subsidiaries at September 30, 1996.
Typically, the Company's long-term contracts provide for progress or advance
payments by its customers, which provide assistance in financing the Company's
working capital requirements on those contracts.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 7
- --------------------------------------------------------------------------------
(d) FINANCIAL INFORMATION ABOUT FOREIGN
AND DOMESTIC OPERATIONS AND EXPORT SALES
Information regarding foreign and domestic operations and export sales is set
forth in Note M to the Consolidated Financial Statements for the year ended
September 30, 1996, and follows at Item 14(a)(1) of this filing, on pages 35
and 36.
ITEM 2. PROPERTIES.
The Company's corporate headquarters and part of its subsidiary, Cubic Defense
Systems, Inc., are located in a Company-owned 100,000 square-foot facility,
situated on an 8-1/2 acre parcel in the City of San Diego, California.
The Company owns an approximately 100,000 square-foot, two-story facility
adjacent to the corporate headquarters and located on the westerly portion of
the parcel referred to above. The facility is used primarily by the Company's
subsidiary, Cubic Defense Systems, Inc., for engineering and office space.
Adjacent to the corporate headquarters is a Company owned, 127,000 square-foot
office and manufacturing facility on a fourteen acre parcel which is used almost
entirely by the Company's subsidiary, Cubic Defense Systems, Inc.
A four-acre parcel, located adjacent and south of the above facility, is owned
by the Company and contains a plant facility consisting of approximately 60,000
square feet used by Cubic Defense Systems, Inc.
The Company leases approximately 57,000 square feet of manufacturing and office
space near the Corporate headquarters in San Diego. This facility is used by
the Company's subsidiary, Cubic Defense Systems, Inc.
The Company also owns the property in which its Cubic Automatic Revenue
Collection Group headquarters is located, consisting of approximately twenty
acres and 78,000 square feet of plant and office facilities.
The Company's subsidiary, Westinghouse Cubic Ltd., owns a 60,000 square foot
plant and office facility located on a two acre parcel in Merstham Surrey,
approximately 30 miles north of London, England.
A 100,000 square-foot facility, located on sixteen acres in Tullahoma,
Tennessee, is owned by the Company and used by Cubic Automatic Revenue
Collection Group.
The Company leases approximately 75,000 square feet of manufacturing and office
space in Teterboro, New Jersey. These facilities are partially used by the
Precision Electro-Optical Division, with a portion available for sub-lease.
The Company and its subsidiaries own and lease additional plant and office
facilities, individually under 50,000 square feet in size, at various locations
around the United States for terms having varied expiration dates, mostly of
short-term duration. See note G to the Consolidated Financial Statements for
financial information about the Company's lease commitments, which follows at
item 14(a)(1) of this filing, on page 30.
Total square footage either owned or under lease comprises approximately 1.1
million square feet. Approximately forty percent of the total square footage of
the facilities of the Company is utilized for manufacturing and the remainder is
utilized for administrative and engineering purposes. All owned and leased
properties used by the Company are generally well maintained in good operating
condition.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 8
- --------------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS.
In October 1991, the California Environmental Protection Agency notified the
Company and two of its subsidiaries that they had been identified as three of
approximately ninety potentially responsible parties with respect to alleged
hazardous substances released into the environment at a used oil and solvent
recycling facility in San Diego County. The Company and its subsidiaries are
not in the business of transporting or disposing of waste materials. The
Company and the involved subsidiaries sold for recycling certain waste materials
generated by them to the owners of the recycling facility. After receipt of the
materials by the owners of the recycling facility, the Company and the involved
subsidiaries were not further involved in the transportation, treatment, or
disposal of the materials. It is the Company's understanding that alleged
hazardous materials from at least ninety other parties were allegedly released
at the facility. Under Federal and California law, the Company and the involved
subsidiaries are "potentially responsible parties" and, therefore, potentially
liable for response costs even though they were not involved in the transport or
disposal of the materials. Removal and remediation activities have not yet been
completed but the eventual costs of such activities are expected to be
substantial.
The Company and its involved subsidiaries have joined a group of other
potentially responsible parties (PRP Group) to share costs and resources and to
undertake a unified course of action in response to their potential liability as
potentially responsible parties and have, without admission of liability,
entered into a Consent Order with the State to remove the most contaminated
ground water and to develop a remedial action plan. The PRP Group has approved
a budget of approximately $15 million for completion of the work required under
the Consent Order (which budget includes $4 million which the PRP Group has
agreed to pay to the State of California for response costs incurred with
respect to the site). Approximately $13 million of the $15 million budgeted had
been spent to date. The share of these costs currently attributable to the
Company and its involved subsidiaries is approximately 2.5 percent. A second
Consent Order is contemplated to conduct the site remediation in accordance with
the plan.
Several of the Company's insurance carriers have entered into settlements
whereby they have agreed to pay approximately three-quarters of the costs of the
Company and its involved subsidiaries, estimated to be necessary for the
completion of the work specified in the first Consent Order. The Company
believes that its insurance policies provide coverage for any additional costs
it may incur under the contemplated second Consent Order, and will pursue its
claims for that coverage in a timely manner. It is management's opinion that
any possible liability resulting from this situation will not have a material
effect on the Company's financial statements.
In 1991, the government of Iran commenced an arbitration proceeding against the
Company seeking $12.9 million for reimbursement of payments made for equipment
that was to comprise an Air Combat Maneuvering Range pursuant to a contract
executed in 1977, and an additional $15 million for unspecified damages. The
Company believes that Iran defaulted on the agreement and has brought a
counterclaim for compensatory damages of $10.4 million, plus interest. In a
preliminary ruling subject to further consideration, the arbitrary panel has
eliminated the $15 million Iran damage claim as time barred and allowed the
Company's damage claim to stand. The Company is vigorously contesting Iran's
claim and believes its defenses and counterclaim are strong and that the
ultimate outcome of the matter will not have a material effect on the Company's
financial statements.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 9
- --------------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS--CONTINUED.
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 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-judgement interest
and costs of suit. The claims allegedly arise out of a strategic supplier
agreement in 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. and the lawsuit was filed. Written and deposition discovery has
been initiated but no trial date has yet been set. Subsequent to the filing of
the lawsuit, the Superior Court dismissed the part of UDT Sensors' claim 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 Company
believes the lawsuit is without merit and will not have a material effect on the
Company's financial statements, and is vigorously pursuing its defense.
Neither the Company nor any of its subsidiaries are presently a party to any
material pending proceedings other than ordinary litigation incidental to the
business, the outcome of which will not, in management's opinion, have a
materially adverse effect on the financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS.
Information regarding submission of matters to a vote of security holders is
incorporated herein by reference from the Company's definitive Proxy Statement,
which will be filed no later than 30 days prior to the date of the Annual
Meeting of Shareholders.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 10
- --------------------------------------------------------------------------------
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS.
The principal market on which the Company's common stock is being traded is the
American Stock Exchange, Inc. The high and low sales prices for the stock, as
reported in the consolidated transaction reporting system on the American Stock
Exchange, Inc. for the quarterly periods during the past two fiscal years, and
dividend information for those periods, are as follows. All amounts have been
restated to reflect a 3-for-2 stock split which occurred in August 1996.
Sales Price of Common Shares Dividends per Share
------------------------------- -------------------
1996 1995 1996 1995
------------ ------------ ---- ----
Quarter ended: High Low High Low
December 31 19-1/8 14-3/4 13-1/4 11-5/8 - -
March 31 18-1/8 15-3/4 13-7/8 11-3/8 $.177 $.177
June 30 23-1/8 17-7/8 16-1/8 12-7/8 - -
September 30 22 17-3/4 16-7/8 15 .19 .177
On December 6, 1996, the closing price of the Company's common stock on the
American Stock Exchange, Inc. was $20.375.
The terms of the Company's credit facilities include provisions that require
and/or limit, among other financial ratios and measurements, the permitted
levels of working capital, debt and tangible net worth and coverage of fixed
charges. At September 30, 1996, the most restrictive covenant leaves
consolidated retained earnings of $22.1 million available for the payment of
dividends to shareholders, purchases of the Company's common stock and other
charges to shareholders' equity.
There were approximately 2,700 shareholders of record of the Company's common
stock as of December 6, 1996.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 11
- -------------------------------------------------------------------------------
ITEM 6. SELECTED FINANCIAL DATA.
FINANCIAL HIGHLIGHTS AND SUMMARY OF CONSOLIDATED OPERATIONS
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended September 30
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $407,621 $370,065 $260,622 $221,437 $237,505
Cost of sales 316,293 290,441 200,549 178,491 178,921
Selling, general and administrative
expenses 69,359 60,505 52,071 42,347 51,384
Interest expense 3,081 2,995 2,535 2,294 4,223
Income taxes (benefit) 6,568 3,437 825 (450) 1,100
Income from continuing operations 11,063 5,392 2,533 2,210 4,080
Income (loss) from discontinued operations - - (153) 20,071 2,931
Cumulative effect of accounting change - - 1,379 - -
Net income 11,063 5,392 3,759 22,281 7,011
Average number of shares of common
stock outstanding 8,981 8,981 9,035 9,143 9,443
Per Share Data:
Income from continuing operations $ 1.23 $ .60 $ .28 $ .24 $ .43
Income (loss) from discontinued operations - - (.02) 2.20 .31
Cumulative effect of accounting change - - .15 - -
Net income 1.23 .60 .41 2.44 .74
Cash dividends .367 .35 .35 1.02 .35
Year-End Data:
Shareholders' equity $167,667 $159,865 $157,645 $159,552 $147,639
Equity per share 18.67 17.80 17.55 17.48 16.01
Total assets 266,638 299,694 288,673 264,568 244,084
Long-term debt 15,000 39,000 35,000 35,500 13,600
Shares of common stock outstanding 8,981 8,981 8,981 9,129 9,219
</TABLE>
Prior year shares outstanding and per share amounts have been restated to
reflect a 3-for-2 stock split which occurred in August 1996.
This summary should be read in conjunction with the related consolidated
financial statements and accompanying notes.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 12
- -------------------------------------------------------------------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FISCAL 1996 COMPARED TO FISCAL 1995
Continuing the upward trend started last year, sales increased again in
fiscal 1996 by ten percent despite the sale, in May, of Cubic Toll Systems.
Inc. (CTS) and the Company's toll collection systems product line. Defense
sales increased by 16%, reflecting the strong bookings of contracts for
training ranges and systems in fiscal 1995. Due to the divestiture of the
toll product line, sales increases in the revenue collection systems segment
were held to just under five percent.
Operating profits increased by over 50%, again continuing the trend started
last year. Operating profits in the defense segment continued to benefit from
mature programs such as the J-Stars data link and Personnel Locator Systems.
In addition, reduced expenditures for Company sponsored research and
development helped to improve operating profits. It is anticipated that
defense profitability will improve further as programs in air and ground
ranges won last year progress through their start up phases and further
shipments are delivered for the more mature successful products.
Revenue collection systems profitability was significantly improved in fiscal
1996 by the elimination of toll systems losses recorded in fiscal 1995. On
the other hand, profitability in the segment was somewhat hurt by the slow
down in business activity at the Company's United Kingdom subsidiary,
Westinghouse Cubic Ltd. (WCL). This slow down of new business activity was
occasioned by the process of privatization of the ticketing and fare
collection for the London Underground. The pursuit of this contract, coupled
with the slow down mentioned above, adversely impacted the overall profit
performance in this segment. Excluding this subsidiary, the revenue
collection segment operating profit approximately doubled from the previous
year.
Notwithstanding the lower performance in 1996, we believe the business
climate is favorable for a bright future for WCL. It enjoys a long standing
solid business relationship with its principal customer, the London
Underground, and Cubic's participation in London's privatization project
mentioned above is likely. Acquisition of the 50% share of this subsidiary
not previously owned by Cubic was accomplished as of September 30, 1996. We
believe this move will strengthen the Company's position in the United
Kingdom and provide a foundation for future profitability in this market.
Improvement in cost of sales as a percentage of sales, from 78.5% to 77.6%,
reflects the elimination of the toll systems losses of the prior year.
Selling, general and administrative expenses amounted to 17.0% of sales, up
from 16.3% in the previous year. This increase was primarily the result of
increased selling activity in the revenue collection segment, directed toward
the London Underground project and other major fare collection projects
worldwide. Spending for research and development in 1996 returned to 1994
levels as certain defense technology projects for combat training ranges and
surveillance systems were brought to completion in 1995 or early 1996.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 13
- -------------------------------------------------------------------------------
FISCAL 1995 COMPARED TO FISCAL 1994
Fiscal 1995 was a year of significant growth in revenue and operating
profits for the Company. Sales increased by 42% from the fiscal 1994 level.
The businesses acquired in 1994 and 1995 contributed to this growth, along
with increased sales volume from automatic revenue collection systems
customers in New York City and London, and a turnaround in the defense
segment from the downward trend of recent years. Along with the increase in
sales came increased operating profits, which grew from $11 million in fiscal
1994 to $15.1 million in fiscal 1995.
The 48% increase in the defense segment's sales from fiscal 1994 to fiscal
1995 was primarily attributable to Cubic Applications, Inc., the business
acquired in April 1994. Sales for 1994 include the sales of this subsidiary
only from the date of acquisition, however, sales of the subsidiary also
increased on an annualized basis by 42% from 1994 to 1995. Cubic Defense
Systems, Inc. also experienced a 15% increase in sales, ending a decline that
began ten years ago.
The Company continued its increased level of spending for research and
development activities in the defense segment. The Company invested $9.7
million into the development of new technology for combat training ranges,
surveillance receivers and related systems during fiscal 1995, compared to
$6.5 million in fiscal 1994 and $3.0 million in fiscal 1993. These
investments began to pay off for the Company, as three major contracts which
apply this new technology were awarded in 1995.
Operating profits in the defense segment improved moderately from 1994 to
1995 as a result of higher profits contributed by Cubic Applications, Inc.
and Cubic Communications, Inc., the subsidiary which provides high technology
surveillance receivers to the U.S. and foreign governments. These improved
profits were partially offset by a loss incurred by Cubic Environmental
Technologies, Inc., a venture which the Company discontinued during the year.
Profits at Cubic Defense Systems, Inc. remained at a low level due to the
expenditures to develop new products and rebuild the subsidiary's
capabilities, as mentioned above.
Work on the New York City Transit Authority (NYCTA) contract progressed well
during the year and contributed significantly to the increase in sales volume
and operating profits of the automatic revenue collection systems segment.
Sales in 1995 to another major customer, the London Underground, also
increased notably over the 1994 level and added to the operating profits of
this segment.
The improvement in operating profit of the automatic revenue collection
systems segment was accomplished despite poor performance from the Company's
toll product line which incurred operating losses of $6 million in fiscal
1995.
Cost of sales increased as a percent of sales from 77.0% to 78.5%, reflecting
the losses from the toll road business mentioned above. Selling, general and
administrative expenses increased by $7 million as a result of the
acquisitions made in 1994 and in support of the increase in sales volume of
both major segments of the Company. However, these expenses decreased from
20.0% of sales in 1994 to 16.3% in 1995.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 14
- -------------------------------------------------------------------------------
FINANCIAL POSITION AND LIQUIDITY
During 1996, the Company maintained a $35 million unsecured revolving credit
agreement with a group of banks (see Note F to the consolidated financial
statements). The borrowing facility supported by this agreement provides
liquidity to the Company to assure that additional working capital is
available, if needed. The facility was unused as of September 30, 1996. The
Company plans to extend this agreement, which will expire in August 1997.
Operating activities of the Company provided cash flow of $35.4 million in
1996, due primarily to the reduction of amounts receivable from customers
such as the State of Florida and various U.S. Department of Defense
customers. Proceeds of $17.7 million from the sale of the toll collection
product line in May 1996 were used to retire $12 million of outstanding
borrowings under the CTS revolving credit agreement. The Company used $6.6
million to acquire the remaining 50% ownership share in WCL as of September
30, 1996. Cash was used for normal additions to property, plant and
equipment, a scheduled debt payment and the payment of dividends. Cash of $7
million was also used to repay borrowings under the revolving credit
agreement described above.
At September 30, 1996 the Company had working capital of $99 million,
including cash and marketable securities of $23 million, compared to total
long-term debt of $20 million. Management believes that this strong
financial position and liquidity and the revolving credit agreement provide
adequate resources to meet anticipated financing needs at this time.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 15
- -------------------------------------------------------------------------------
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.
The following consolidated financial statements of the Company and its
subsidiaries, for the year ended September 30, 1996, are attached hereto,
marked Pages 16 and 21 through 37.
Report of Ernst & Young LLP, Independent Auditors
See Page 16
Consolidated Balance Sheet
September 30, 1996 and 1995
See Pages 21 and 22
Consolidated Statement of Income and Retained Earnings
Years ended September 30, 1996, 1995 and 1994
See Page 23
Consolidated Statement of Cash Flows
Years ended September 30, 1996, 1995 and 1994
See Page 24
Notes to Consolidated Financial Statements
September 30, 1996
See Pages 25 through 37
ITEM 9. DISAGREEMENTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 16
________________________________________________________________________________
Report of Ernst & Young LLP, Independent Auditors
Board of Directors and Shareholders
Cubic Corporation
We have audited the accompanying consolidated balance sheet of Cubic Corporation
as of September 30, 1996 and 1995, and the related consolidated statements of
income, retained earnings and cash flows for each of the three years in the
period ended September 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance that the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Cubic
Corporation at September 30, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
September 30, 1996, in conformity with generally accepted accounting principles.
Ernst & Young LLP
San Diego, California
December 4, 1996
<PAGE>
Cubic Corporation - SEC Form 10-K Page 17
________________________________________________________________________________
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------
Information regarding directors and executive officers is incorporated herein by
reference from the Company's definitive Proxy Statement, which will be filed no
later than 30 days prior to the date of the Annual Meeting of Shareholders.
ITEM 11. EXECUTIVE COMPENSATION.
----------------------
Information regarding executive compensation is incorporated herein by reference
from the Company's definitive Proxy Statement, which will be filed no later than
30 days prior to the date of the Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
--------------------------------
Information regarding security ownership of certain beneficial owners and
management is incorporated herein by reference from the Company's definitive
Proxy Statement, which will be filed no later than 30 days prior to the date of
the Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-----------------------------------------------
Information regarding "Certain Relationships and Related Transactions" is
included in Note K to the Consolidated Financial Statements for the year ended
September 30, 1996, and follows at Item 14(a)(1) of this filing, on page 34.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 18
________________________________________________________________________________
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K.
---------------------------------
(a) Documents filed as part of this Report:
(1) The following consolidated financial statements of Cubic Corporation
and subsidiaries, as referenced in Item 8:
Consolidated Balance Sheet
September 30, 1996 and 1995
Consolidated Statement of Income and Retained Earnings
Years ended September 30, 1996, 1995 and 1994
Consolidated Statement of Cash Flows
Years ended September 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
September 30, 1996
(2) The following consolidated financial statement schedules of Cubic
Corporation and subsidiaries, as referenced in Item 14(d):
None
Schedules, for which provision is made in the applicable accounting
rules and regulations of the Securities and Exchange Commission, are
not required under the related instructions or are not applicable and,
therefore, have been omitted.
(b) No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
(c) Exhibits:
21. List of Subsidiaries
27. Financial Data Schedule
(d) Financial Statement Schedules
None
<PAGE>
Cubic Corporation - SEC Form 10-K Page 19
________________________________________________________________________________
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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:
(Registrant) CUBIC CORPORATION
12/18/96 /s/ Walter J. Zable
________________ ____________________________________________________
Date WALTER J. ZABLE, President
- ------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
12/18/96 /s/ Walter J. Zable
________________ ____________________________________________________
Date WALTER J. ZABLE, President, Chief
Executive Officer and Chairman of the
Board of Directors
12/18/96 /s/ Jackson D. Arnold
________________ ____________________________________________________
Date JACKSON D. ARNOLD, Director
12/18/96 /s/ Richard G. Duncan
________________ ____________________________________________________
Date RICHARD G. DUNCAN, Director
12/18/96 /s/ Raymond E. Peet
________________ ____________________________________________________
Date RAYMOND E. PEET, Director
12/18/96 /s/ William W. Boyle
________________ ____________________________________________________
Date WILLIAM W. BOYLE, Director, Vice President of
Finance & Chief Financial Officer
12/18/96 /s/ Thomas A. Baz
________________ ____________________________________________________
Date THOMAS A. BAZ, Vice President and
Corporate Controller, Principal Accounting Officer
<PAGE>
Cubic Corporation - SEC Form 10-K Page 20
________________________________________________________________________________
ITEM 8, ITEM 14(A)(1) AND (2),(C) AND (D)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
EXHIBITS
Cubic Corporation
Year Ended September 30, 1996
San Diego, California<PAGE>
<PAGE>
CUBIC CORPORATION - SEC FORM 10-K PAGE 21
- -------------------------------------------------------------------------------
CUBIC CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
September 30
1996 1995
------ ------
(in thousands)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 20,062 $ 20,705
Marketable securities, available-for-sale 2,759 3,405
Accounts receivable:
Trade and other receivables 8,393 18,166
Long-term contracts--Note D 117,600 136,781
Allowance for doubtful accounts (243) (1,365)
------- -------
125,750 153,582
Inventories--Note E 15,233 18,995
Deferred income taxes--Note H 10,386 7,314
Prepaid expenses and other current assets 4,298 3,756
------- -------
TOTAL CURRENT ASSETS 178,488 207,757
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 12,873 12,797
Buildings and improvements 21,453 20,510
Machinery and other equipment 64,628 55,273
Leasehold improvements 2,655 2,376
Allowance for depreciation and amortization (63,280) (56,245)
------- -------
38,329 34,711
OTHER ASSETS
Toll equipment under operating leases, net--Note C - 10,933
Preferred stock of United States Elevator Corp.--Note J 20,000 20,000
Cost in excess of net tangible assets of purchased
businesses, less amortization--Note B 18,847 16,886
Miscellaneous other assets 10,974 9,407
------- -------
49,821 57,226
------- -------
TOTAL ASSETS $266,638 $299,694
-------- --------
-------- --------
</TABLE>
<PAGE>
CUBIC CORPORATION - SEC FORM 10-K PAGE 22
- -------------------------------------------------------------------------------
<TABLE>
September 30
1996 1995
------ ------
(in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable $ 11,175 $ 14,176
Customer advances--Note B 33,891 40,643
Salaries and wages, and amounts withheld from
employees' compensation 14,051 13,135
Other current liabilities 12,727 11,934
Income taxes payable 2,564 4,172
Current portion of long-term debt 5,000 5,000
------- -------
TOTAL CURRENT LIABILITIES 79,408 89,060
LONG-TERM DEBT, less current portion--Note F 15,000 39,000
OTHER LIABILITIES
Deferred income taxes--Note H 2,433 3,663
Deferred compensation 2,130 1,641
------- -------
4,563 5,304
MINORITY INTEREST--Note B - 6,465
COMMITMENTS AND CONTINGENCIES--Notes G and L
SHAREHOLDERS' EQUITY--Note F
Common stock, no par value:
Authorized--15,000,000 shares
Issued--11,888,243 shares 234 234
Additional paid-in capital 12,123 12,123
Retained earnings 189,429 181,665
Foreign currency translation adjustment (393) (434)
Treasury stock at cost:
1996 -- 2,907,354 shares
1995 -- 2,907,222 shares (33,726) (33,723)
--------- --------
167,667 159,865
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $266,638 $299,694
--------- --------
--------- --------
</TABLE>
See accompanying notes
<PAGE>
CUBIC CORPORATION - SEC FORM 10-K PAGE 23
- -------------------------------------------------------------------------------
CUBIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
Year Ended September 30
1996 1995 1994
-------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C>
Revenue:
Net sales $407,621 $370,065 $260,622
Interest and dividends 2,901 3,171 3,987
Other income--Note C 3,743 2,591 2,840
-------- -------- --------
414,265 375,827 267,449
Costs and expenses:
Cost of sales 316,293 290,441 200,549
Selling, general and administrative expenses 69,359 60,505 52,071
Research and development 7,186 10,753 7,440
Interest 3,081 2,995 2,535
-------- -------- --------
395,919 364,694 262,595
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES, MINORITY INTEREST AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 18,346 11,133 4,854
Income taxes--Note H 6,568 3,437 825
Minority interest in income of subsidiary--Note B 715 2,304 1,496
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 11,063 5,392 2,533
Discontinued operations -- net loss on disposal - - (153)
Cumulative effect of accounting change--Note A - - 1,379
-------- -------- ---------
NET INCOME 11,063 5,392 3,759
Cash dividends paid (per share of common stock:
1996--$.367, 1995--$.35 and 1994--$.35) (3,299) (3,173) (3,180)
Retained earnings at the beginning of the year 181,665 179,446 178,867
-------- -------- ---------
RETAINED EARNINGS AT THE END OF THE YEAR $189,429 $181,665 $179,446
-------- -------- ---------
Per share amounts:
Income from continuing operations $ 1.23 $ .60 $ .28
Income (loss) from discontinued operations - - (.02)
Cumulative effect of accounting change - - .15
-------- -------- ---------
NET INCOME PER SHARE $ 1.23 $ .60 $ .41
-------- -------- ---------
-------- -------- ---------
Average number of shares outstanding 8,981 8,981 9,035
-------- -------- ---------
-------- -------- ---------
</TABLE>
See accompanying notes
<PAGE>
CUBIC CORPORATION - SEC FORM 10-K PAGE 24
- -------------------------------------------------------------------------------
<TABLE>
CUBIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS Year Ended September 30
1996 1995 1994
----------------------------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $11,063 $ 5,392 $ 3,759
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 10,520 12,547 9,938
Minority interest 715 2,304 1,496
Deferred income taxes (3,549) (4,394) 1,970
Net loss (gain) on disposal of discontinued operations - - 153
Cumulative effect of accounting change - - (1,379)
Changes in operating assets and liabilities,
net of effects from acquisitions:
Accounts receivable 25,235 (22,395) 766
Inventories 2,270 359 (625)
Prepaid expenses (551) (490) 655
Accounts payable and other current liabilities (1,815) (2,813) (2,160)
Customer advances (6,324) (6,791) 12,444
Income taxes (1,573) 5,746 (4,676)
Other items - net (583) 1,103 (138)
------- ------- ------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 35,408 (9,432) 22,203
------- ------- ------
Investing Activities:
Acquisition of businesses, net of cash acquired (6,632) 14,712 (20,367)
Proceeds from sale of product line 17,731 - -
Sale of marketable securities 646 1,409 12,569
Additions to toll equipment under operating leases (2,789) (1,360) (1,763)
Purchases of property, plant and equipment (10,047) (6,583) (6,040)
Proceeds from the sale of property, plant and equipment 100 2,120 -
Other items - net (4,044) (5,878) (3,735)
------- ------- ------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (5,035) 4,420 (19,336)
------- ------- ------
Financing Activities:
Proceeds from issuance of long-term debt - 9,000 4,500
Principal payments on long-term debt (24,000) (5,000) (100)
Purchases of treasury stock (3) - (2,051)
Dividends paid to minority interest (3,300) (1,229) (961)
Dividends paid to shareholders (3,299) (3,173) (3,180)
------- ------- ------
NET CASH USED IN FINANCING ACTIVITIES (30,602) (402) (1,792)
------- ------- ------
Effect of exchange rates on cash (414) 337 211
------- ------- ------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (643) (5,077) 1,286
Cash and cash equivalents at the beginning of the year 20,705 25,782 24,496
------- ------- ------
CASH AND CASH EQUIVALENTS AT
THE END OF THE YEAR $20,062 $20,705 $25,782
------- ------- ------
------- ------- ------
</TABLE>
See accompanying notes
<PAGE>
CUBIC CORPORATION - SEC FORM 10-K PAGE 25
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF THE BUSINESS: Cubic Corporation (the Company), was
incorporated in the State of California in 1949 and began operations in 1951.
In 1984, the Company moved its corporate domicile to the State of Delaware. The
Company's subsidiaries design, develop and manufacture products which are mainly
electronic in nature and provide services related to products previously
produced and products produced by others. The Company's principal lines of
business are defense electronics and automatic revenue collection systems, which
are about equal in size based on sales. Principal customers for defense
products and services are the United States and foreign governments. Automatic
revenue collection systems are sold primarily to large local government agencies
in the United States and world-wide.
CONSOLIDATION: The consolidated financial statements include the accounts of
the Company and all of its subsidiaries, including Westinghouse Cubic Limited
(WCL) subsequent to December 31, 1993, when WCL became controlled by the
Company. As explained in Note B, WCL was 50% owned until September 30, 1996, at
which time the Company acquired the remaining 50% interest in the Company from
its former joint venture partner. All significant intercompany transactions are
eliminated in consolidation.
CASH EQUIVALENTS: The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
MARKETABLE SECURITIES, AVAILABLE-FOR-SALE: Marketable securities are classified
as available-for-sale and are stated at cost at September 30, 1996 and 1995, as
the difference between cost and fair value of the securities is immaterial.
INVENTORIES: Inventories are stated at the lower of cost or market. Cost is
determined using primarily the first-in, first-out (FIFO) method, which
approximates current replacement cost.
Work in process is stated at the actual production and engineering costs
incurred to date, including applicable overhead, and is reduced by charging any
amounts in excess of estimated realizable value to cost of sales. Although
costs incurred for certain government contracts include general and
administrative costs, the amounts remaining in inventory at September 30, 1996
and 1995 were immaterial .
PROPERTY, PLANT AND EQUIPMENT AND TOLL EQUIPMENT UNDER OPERATING LEASES:
Property, plant and equipment are carried at cost. Depreciation and
amortization are provided in amounts sufficient to amortize the cost of the
depreciable assets over their estimated useful lives. Straight-line and
accelerated methods are each used for approximately one-half of the depreciable
plant and equipment. As explained in Note C, all of the Company's toll
equipment under operating leases was sold during the year ended September 30,
1996, as a part of the sale of the Company's subsidiary, Cubic Toll Systems,
Inc. (CTS). Provisions for depreciation and amortization of plant and equipment
and toll equipment under operating leases amounted to $9,151,000, $11,206,000
and $9,430,000 in 1996, 1995 and 1994, respectively.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 26
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
COST IN EXCESS OF NET TANGIBLE ASSETS OF PURCHASED BUSINESSES: Cost in excess
of net tangible assets of purchased businesses is amortized on a
straight-line basis over a period of 15 years. Accumulated amortization at
September 30, 1996 and 1995 was $3,056,000 and $1,925,000, respectively.
LONG-LIVED ASSETS: The Company adopted FASB Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," in the year ended September 30, 1996, however, there was no
impact on the Company's financial statements.
REVENUE RECOGNITION: Sales under long-term contracts are recognized as costs
are incurred and fees are earned on cost-plus-fee contracts, and as costs are
incurred and estimated profits are earned on long-term, fixed price
contracts. Such estimated profits are computed by applying the various
percentages of completion of the contracts to the estimated ultimate profits.
Provisions are made on a current basis to fully recognize any anticipated
losses on contracts.
INCOME TAXES: Income taxes are accounted for under the provisions of FASB
Statement No. 109. Deferred tax assets and liabilities are determined based
on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to reverse. The cumulative
effect of adopting Statement 109, as of October 1, 1993, increased net income
by $1,379,000, or $.15 per share, in the year ended September 30, 1994.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
RISKS AND UNCERTAINTIES: The Company is subject to the normal risks and
uncertainties of performing large, multi-year, often fixed price contracts.
In addition, certain of the Company's contracts provide the customer with
fixed-price options which, if exercised, could result in losses to the
Company upon performance.
RESTATEMENT FOR STOCK SPLIT: Prior year shares outstanding and per share
amounts have been restated to reflect a 3-for-2 stock split which occurred in
August 1996.
RECLASSIFICATION: Certain prior year amounts have been reclassified to
conform to current year classifications.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 27
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE B--ACQUISITIONS
On September 30, 1996, the Company acquired 50% of the outstanding stock of
its subsidiary, Westinghouse Cubic Ltd. (WCL) for approximately $6.6 million,
giving the Company control of 100% of the outstanding stock. The amount by
which the purchase price exceeded the book value of the stock acquired was
approximately $2.9 million and is being amortized over a period of 15 years
using the straight-line method. WCL is a United Kingdom company engaged in
revenue collection equipment design, fabrication, and installation.
In May 1995, the Company acquired all of the outstanding stock of Scanpoint
Technology A/S, a Danish company engaged in revenue collection equipment
design, fabrication, and installation, for the nominal purchase price of one
dollar. The acquisition was accounted for by the purchase method, and the
assets and liabilities were recorded at their estimated fair values at the
date of acquisition. The purchase included assets of $20.3 million, $14.7
million of which was cash, and liabilities assumed of $20.3 million,
including a reserve for contract performance obligations in excess of
realizable revenue of $14.7 million. The balance of this reserve was $1.1
million and $9.5 million at September 30, 1996 and 1995, respectively, and is
included in customer advances on the consolidated balance sheet.
In April 1994, the Company acquired certain assets and assumed certain
liabilities of the Titan Applications and Titan Services International
divisions of The Titan Corporation, for a cash price of approximately $23.6
million. The acquisition was accounted for by the purchase method, and the
assets and liabilities were 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 is being
amortized over a period of 15 years using the straight-line method. The
acquired entity provides training, applications and operations services
primarily to the Department of Defense.
Unaudited pro forma results of the Company's operations, assuming the
acquisitions had occurred as of October 1, 1995, 1994 and 1993, 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 elimination of intercompany sales,
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 acquisitions had taken place on the dates
indicated or which may occur in the future.
Year Ended
September 30
1996 1995 1994
-------- -------- --------
Net sales $407,621 $376,077 $305,253
Income from continuing operations 11,488 7,704 5,407
Net income 11,488 7,704 6,633
Net income per share 1.28 .86 .73
<PAGE>
Cubic Corporation - SEC Form 10-K Page 28
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE C--SALE OF PRODUCT LINE
During the quarter ended June 30, 1996, the Company sold its toll collection
product line and its subsidiary CTS, resulting in a modest gain, which is
included in other income on the Consolidated Statement of Income and Retained
Earnings. This sale included all toll equipment under operating leases,
related inventory and accounts receivable. Proceeds of the sale,
approximately $17.7 million, were used primarily to repay the line of credit
borrowings which had been secured by the leases, leased equipment and capital
stock of CTS. The Company may continue to manufacture toll collection
equipment for the purchaser of the product line, but will no longer be
involved in the sale or leasing of toll collection systems.
NOTE D--ACCOUNTS RECEIVABLE
The components of accounts receivable for long-term contracts at September
30 are as follows:
1996 1995
-------- --------
(in thousands)
U.S. Government Contracts:
Amounts billed $ 17,798 $ 26,806
Recoverable costs and accrued profits on
progress completed--not billed 33,027 30,632
-------- --------
50,825 57,438
Commercial Customers:
Amounts billed 24,094 18,174
Recoverable costs and accrued profits on
progress completed--not billed 42,681 61,169
-------- --------
66,775 79,343
-------- --------
$117,600 $136,781
-------- --------
-------- --------
A substantial portion of recoverable costs and accrued profits on progress
completed is billable under progress payment provisions of the related
contracts. The remainder of these amounts is billable upon delivery of
products or furnishing of services. It is anticipated that such receivables
from the U.S. Government at September 30, 1996 will be billed during 1997 as
units are delivered and those from commercial customers will be billed upon
completion of performance tests and/or acceptance by the customers in 1997.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 29
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE E--INVENTORIES
Inventories at September 30 are classified as follows:
1996 1995
-------- --------
(in thousands)
Finished products $ 3,170 $ 2,846
Work in process 3,634 6,850
Materials and purchased parts 8,429 9,299
-------- --------
$15,233 $18,995
-------- --------
-------- --------
NOTE F--FINANCING ARRANGEMENTS
Long-term debt at September 30 consists of the following:
1996 1995
-------- --------
(in thousands)
Revolving credit agreement $ - $ 7,000
Revolving credit agreement of CTS, a former subsidiary - 12,000
Unsecured note payable to an insurance company,
due $5,000,000 annually on June 30, plus
interest at 6.09% payable semi-annually 20,000 25,000
-------- --------
20,000 44,000
Less current portion 5,000 5,000
-------- --------
$15,000 $39,000
-------- --------
-------- --------
During the year ended September 30, 1995, the Company entered into a $35
million unsecured revolving credit agreement with a group of banks which
expires in August 1997. Borrowings under this agreement bear interest at
rates indexed to either the prime rate or LIBOR, selected at the Company's
option. The terms of the credit agreement provide for commitment fees of 1/4
of 1% per annum of the available unutilized balance. As of September 30,
1996, there were no borrowings outstanding under this credit agreement.
The terms of the credit facilities include provisions that require and/or
limit, among other financial ratios and measurements, the permitted levels of
working capital, debt and tangible net worth and coverage of fixed charges.
At September 30, 1996, the most restrictive covenant leaves consolidated
retained earnings of $22.1 million available for the payment of dividends to
shareholders, purchases of the Company's common stock and other charges to
shareholders' equity.
Interest paid amounted to $3,186,000, $3,063,000 and $2,377,000 in 1996, 1995
and 1994, respectively.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 30
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE G--COMMITMENTS
The Company leases certain office, manufacturing and warehouse space and
miscellaneous office machines and other equipment under noncancelable
operating leases expiring in various years through 2003. These leases, some
of which may be renewed for periods up to 10 years, generally require the
lessee to pay all maintenance, insurance and property taxes. Several leases
are subject to periodic adjustment based on price indices or cost increases.
Rental expense for all operating leases amounted to $3,286,000, $2,833,000
and $2,591,000 in 1996, 1995 and 1994, respectively.
Future minimum payments under noncancelable operating leases with initial
terms of one year or more consist of the following at September 30, 1996 (in
thousands):
1997 $2,666
1998 2,131
1999 1,860
2000 1,071
2001 421
Thereafter 485
------
$8,634
------
------
NOTE H--INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets as of
September 30, are as follows:
1996 1995
-------- --------
(in thousands)
Deferred tax assets:
Accrued employee benefits $ 2,968 $ 2,884
Inventory reserves and long-term contract accounting 6,202 3,338
Self-insurance reserves 908 846
Deferred compensation 878 662
Other 2,652 2,275
-------- --------
Total deferred tax assets 13,608 10,005
Valuation allowance for deferred tax assets (191) (171)
-------- --------
Net deferred tax assets 13,417 9,834
-------- --------
Deferred tax liabilities:
Tax over book depreciation 707 1,093
Leveraged lease accounting 2,831 2,673
Other 1,926 2,417
-------- --------
Total deferred tax liabilities 5,464 6,183
-------- --------
Net deferred tax asset $ 7,953 $ 3,651
-------- --------
-------- --------
<PAGE>
Cubic Corporation - SEC Form 10-K Page 31
- --------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE H--INCOME TAXES--Continued
Significant components of the provision for income taxes attributable to
continuing operations are as follows:
1996 1995 1994
------ ------ -------
(in thousands)
Current (credit):
Federal $ 7,660 $ 4,787 $(2,007)
State 1,418 640 (613)
Foreign 1,039 2,404 1,475
------- ------- -------
Total current 10,117 7,831 (1,145)
Deferred (credit):
Federal (3,002) (3,834) 1,412
State (520) (519) 558
Foreign (27) (41) --
------- ------- -------
Total deferred (3,549) (4,394) 1,970
------- ------- -------
$ 6,568 $ 3,437 $ 825
------- ------- -------
------- ------- -------
The reconciliation of income tax attributable to continuing operations computed
at the U.S. federal statutory tax rate to income tax expense is as follows:
1996 1995 1994
------ ------ -------
(in thousands)
Taxes on income based on statutory
federal income tax rate $6,421 $3,785 $1,650
State income taxes (credit), net of
federal tax benefit 583 79 (37)
------ ------ -------
7,004 3,864 1,613
Increases (decreases) resulting from:
Effect of recording equity in
net income of Westinghouse
Cubic Ltd. -- -- (210)
Tax exempt interest and
dividend income (494) (504) (391)
Foreign sales corporation
tax benefit (403) (182) (244)
Non-deductible expenses 714 214 420
Effect of change in tax rates
on deferred tax asset (226) -- --
Other (27) 45 (363)
------ ------ -------
(436) (427) (788)
------ ------ -------
$6,568 $3,437 $ 825
------ ------ -------
------ ------ -------
The Company made income tax payments, net of refunds, totalling $11,689,000,
$2,085,000 and $3,246,000 in 1996, 1995 and 1994, respectively.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 32
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE H--INCOME TAXES--Continued
Income from continuing operations before income taxes, minority interest and
cumulative effect of accounting change include the following components:
1996 1995 1994
------- ------- -------
(in thousands)
United States $15,295 $ 3,452 $ 386
Foreign 3,051 7,681 4,468
------- ------- -------
Total $18,346 $11,133 $4,854
------- ------- -------
------- ------- -------
NOTE I--PENSION AND OTHER RETIREMENT PLANS
The Company maintains a defined benefit pension plan covering substantially
all non-union U.S. employees of certain of its subsidiaries. Benefits under
this plan are based on the employee's earnings during the period of
employment. The Company's policy is to fund this plan based on legal
requirements, tax considerations and investment opportunities. Plan assets
include equities, short and long-term debt instruments and real estate
investments.
Net pension cost for this plan included the following components:
1996 1995 1994
------- ------- -------
(in thousands)
Service cost--benefits earned
during the period $ 1,681 $ 1,398 $ 1,627
Interest cost on projected benefit
obligation 2,453 2,216 2,154
Actual (return) loss on plan assets (3,516) (4,526) 752
Net amortization and deferral 1,062 2,513 (2,975)
------- ------- -------
Net pension cost $ 1,680 $ 1,601 $ 1,558
------- ------- -------
------- ------- -------
<PAGE>
Cubic Corporation - SEC Form 10-K Page 33
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE I--PENSION AND OTHER RETIREMENT PLANS--Continued
The following table sets forth the funded status and amounts recognized in
the Consolidated Balance Sheet as of September 30, 1996 and 1995, for the
Company's defined benefit pension plan:
1996 1995
------- -------
(in thousands)
Actuarial present value of benefit obligations:
Vested benefits $29,662 $27,628
Non vested benefits 792 682
------- -------
Accumulated benefit obligation $30,454 $28,310
------- -------
------- -------
Projected benefit obligation for services
rendered to date $33,795 $31,460
Plan assets at fair value 33,276 27,560
------- -------
Projected benefit obligation in excess of
plan assets 519 3,900
Unrecognized net transition asset 124 176
Unrecognized prior service costs 38 47
Unrecognized net loss (905) (3,028)
------- -------
Pension (asset) liability recognized in the
consolidated balance sheet $ (224) $ 1,095
------- -------
------- -------
Major assumptions at year-end are as follows:
1996 1995 1994
------- ------- -------
Discount rate 7.7% 7.4% 8.5%
Rate of increase in compensation level 4.5% 4.5% 5.5%
Expected long-term rate of return
on assets 8.5% 8.5% 8.5%
Net periodic pension cost is determined using the assumptions as of the
beginning of the year. The funded status is determined using the assumptions
as of the end of the year.
The Company and certain of its subsidiaries also have other retirement plans
which provide benefits for participating employees. An employee is eligible
to participate in these plans after six months to one year of service, and
may make additional contributions to the plans. These plans provide for full
vesting of benefits over five to seven years. A substantial portion of
Company contributions to these plans are discretionary with the Board of
Directors. Company contributions to the plans aggregated $6,215,000,
$5,606,000 and $5,015,000 in 1996, 1995 and 1994, respectively.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 34
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE J--DISCONTINUED OPERATIONS
In 1993, the Company sold all of the outstanding common stock of its
subsidiary, United States Elevator Corp. (USEC), to Thyssen Holding
Corporation (Thyssen). Proceeds of the sale were $40 million in cash and $20
million of USEC 6% cumulative, nonvoting, redeemable preferred stock which is
required to be repurchased by Thyssen at the option of the Company. The gain
on the sale was $20 million, net of applicable income taxes of $5 million.
The agreement for the sale of USEC also provides for possible additional
consideration based on a formula relating to the post-sale earnings of USEC.
This contingent payment provision, which would also require redemption of the
preferred stock, can be triggered by either party through 2009.
NOTE K--RELATED PARTY TRANSACTIONS
The Company leases certain manufacturing facilities in the County of San
Diego from co-owners Walter C. Zable, an officer and director of the Company,
and his sister, who are the children of Walter J. Zable. The facilities are
leased through July 1997 under a triple net lease at the rate of $168,000 per
year.
In October 1992, a trust established by Mr. and Mrs. Walter J. Zable, entered
into an agreement with the Company whereby the Company agreed to make
advances of premiums payable on a split-dollar life insurance policy
purchased by the trust on the life of Mrs. Zable. The agreement is so
designed that if the assumptions made as to mortality experience, policy
dividends and other factors are realized, at the death of Mrs. Zable the
Company will recover all of its insurance premium payments as well as other
costs associated with the policy. The advances are secured by a collateral
assignment of the policy to the Company. The agreement is intended to
prevent the possibility of a large block of the Company's common shares being
put on the market, to the detriment of the share price, in order for the
beneficiaries to pay estate taxes. The Company may cause the agreement to be
terminated and the policy to be surrendered at any time. The difference
between policy premiums and other payments, and the increase in the cash
surrender value of the policy has been expensed in the year incurred. The
amounts expensed related to the policy were a net $130,000, $390,000 and
$503,000 in 1996, 1995 and 1994, respectively. However, should the policy be
held to maturity, all payments advanced to carry this policy will be
returned. Further, should the policy be held for ten years, the Company
estimates that the cash surrender value will exceed all payments made, and
amounts previously expensed in the early years of the policy will have been
reversed.
NOTE L--LEGAL MATTER
In 1991, the government of Iran commenced an arbitration proceeding against
the Company seeking $12.9 million for reimbursement of payments made for
equipment that was to comprise an Air Combat Maneuvering Range pursuant to a
contract executed in 1977, and an additional $15 million for unspecified
damages. The Company believes that Iran defaulted on the agreement and has
brought a counterclaim for compensatory damages of $10.4 million, plus
interest. The Company is vigorously contesting Iran's claim and believes its
defenses and counterclaim are strong and that the ultimate outcome of the
matter will not have a material effect on the Company's financial statements.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 35
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE M--BUSINESS SEGMENT INFORMATION
The Company's operations are best grouped into three main product segments:
defense, automatic revenue collection systems, and industrial operations. A
description of each segment's primary activities follows:
DEFENSE--work under U.S. and foreign government contracts relating to
electronic defense systems and equipment, computer simulation training,
distributed interactive simulation, development of training doctrine and
field operations and maintenance. Products include customized range
instrumentation and training systems, communications and surveillance
systems, HF and UHF/VHF surveillance receivers, avionics systems and space
RF/digital products.
AUTOMATIC REVENUE COLLECTION SYSTEMS--the design, production and servicing of
electronic and mechanical revenue collection systems.
INDUSTRIAL OPERATIONS--includes the manufacture of freeway call boxes,
optical tooling and paper products.
Business segment financial data for the three years ended September 30, 1996,
is presented below.
1996 1995 1994
------ ------ ------
(in millions)
Revenue:
Defense $195.9 $168.4 $113.3
Automatic revenue collection systems 192.8 183.4 130.2
Industrial operations 21.0 18.7 17.6
------ ------ ------
409.7 370.5 261.1
Corporate 4.6 5.3 6.3
------ ------ ------
Consolidated Totals $414.3 $375.8 $267.4
------ ------ ------
------ ------ ------
Operating profit:
Defense $ 7.6 $ 4.0 $ 2.2
Automatic revenue collection systems* 14.4 9.8 7.7
Industrial operations 0.8 1.3 1.1
------ ------ ------
Consolidated Operating Profit 22.8 15.1 11.0
Corporate (1.4) (1.0) (3.6)
Interest expense (3.1) (3.0) (2.5)
------ ------ ------
Income from Continuing Operations before
Income Taxes,Minority Interest and Cumulative
Effect of Accounting Change $ 18.3 $ 11.1 $ 4.9
------ ------ ------
------ ------ ------
* Beginning with the year ended September 30, 1995, the Company changed its
method of allocating certain corporate expenses to its subsidiaries. This
change in allocation of costs resulted in a decrease of approximately $3.0
million in operating profit of the automatic revenue collection systems
segment for the years ended September 30, 1996 and 1995, and a corresponding
decrease in net corporate expenses.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 36
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE M--BUSINESS SEGMENT INFORMATION--Continued
1996 1995 1994
------ ------ ------
(in millions)
Identifiable assets:
Defense $107.6 $112.9 $105.0
Automatic revenue collection systems 86.1 128.1 104.7
Industrial operations 5.1 3.5 3.6
198.8 244.5 213.3
Corporate 67.8 55.2 75.4
------ ------ ------
Consolidated Totals $266.6 $299.7 $288.7
------ ------ ------
------ ------ ------
Depreciation and amortization:
Defense $ 4.6 $ 3.3 $ 2.1
Automatic revenue collection systems 5.0 8.4 7.1
Industrial operations 0.3 0.3 0.3
------ ------ ------
9.9 12.0 9.5
Corporate 0.6 0.5 0.4
------ ------ ------
Consolidated Totals $ 10.5 $ 12.5 $ 9.9
------ ------ ------
------ ------ ------
Gross capital expenditures:
Defense $ 6.7 $ 3.5 $ 2.9
Automatic revenue collection systems 5.0 3.6 4.5
Industrial operations 0.2 0.2 0.1
------ ------ ------
11.9 7.3 7.5
Corporate 0.9 0.6 0.3
------ ------ ------
Consolidated Totals $ 12.8 $ 7.9 $ 7.8
------ ------ ------
------ ------ ------
Intersegment sales are immaterial. Sales of $170.8 million, $154.6 million
and $101.9 million in 1996, 1995 and 1994, respectively, were made to United
States Government agencies by the defense segment. Automatic revenue
collection systems sales include $35.2 million, $57.1 million and $24.3
million in 1996, 1995 and 1994, respectively, to the New York City Transit
Authority in addition to $39.1 million, $48.2 million and $27.9 million in
1996, 1995 and 1994, respectively, to the London Underground. No other
single customer accounts for 10% or more of the Company's revenue.
Domestic revenue includes $44.7 million, $30.8 million and $30.1 million in
1996, 1995 and 1994, respectively, for export. The Company's foreign assets
represent less than 10% of total assets. Foreign revenue consists of $59.2
million, $56.5 million and $27.9 million in sales made by foreign
subsidiaries in the automatic revenue collection systems segment during 1996,
1995 and 1994, respectively. Consolidated operating profit includes $3.3
million, $6.4 million and $4.5 million in operating profit from these foreign
subsidiaries in 1996, 1995 and 1994, respectively.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 37
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE N--SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the years
ended September 30, 1996 and 1995:
Quarter Ended
---------------------------------------------------
December 31 March 31 June 30 September 30
----------- -------- ------- ------------
(in thousands, except per share data)
1996
----
Net sales $93,964 $110,870 $98,667 $104,120
Gross profit 19,269 22,896 23,502 25,661
Net income 2,166 2,486 3,136 3,275
Net income per share .24 .28 .35 .36
1995
----
Net sales $69,607 $91,968 $94,395 $114,095
Gross profit 18,091 19,124 20,774 21,635
Net income 1,858 374 1,188 1,972
Net income per share .21 .04 .13 .22
<PAGE>
CUBIC CORPORATION - SEC FORM 10-K PAGE 38
EXHIBIT 21
SUBSIDIARY CORPORATIONS OF CUBIC CORPORATION
PLACE OF INCORPORATION AND PERCENTAGE OWNED
PLACE OF PERCENTAGE
SUBSIDIARY INCORPORATION OWNED
CONSOLIDATED CONVERTING CO.
Whittier, California California 100%
CUBIC APPLICATIONS, INC.
Lacey, Washington California 100%
CUBIC AUTOMATIC REVENUE COLLECTION GROUP
San Diego, California California 100%
CUBIC COMMUNICATIONS, INC.
San Diego, California California 100%
CUBIC DATA SYSTEMS, INC.
San Diego, California California 90%
CUBIC DEFENSE SYSTEMS, INC.
San Diego, California California 100%
CUBIC VIDEOCOMM, INC.
San Diego, California Delaware 100%
CUBIC WORLDWIDE TECHNICAL SERVICES, INC.
San Diego, California Delaware 100%
CUBIC FOREIGN SALES, INC. St. Thomas
San Diego, California U.S. Virgin Islands 100%
CUBIC LAND, INC.
San Diego, California California 100%
<PAGE>
CUBIC CORPORATION - SEC FORM 10-K PAGE 39
SUBSIDIARY CORPORATIONS OF CUBIC CORPORATION--continued
PLACE OF PERCENTAGE
SUBSIDIARY INCORPORATION OWNED
CUBIC (UK) LIMITED
London, England England 100%
NAVSAT CORPORATION
San Diego, California California 100%
NEW YORK REVENUE AUTOMATION, INC.
New York, New York New York 100%*
* (100% owned subsidiary of Cubic Automatic Revenue Collection Group)
SCANPOINT TECHNOLOGY A/S
Brondy, Denmark Denmark 100%*
* (100% owned subsidiary of Cubic Automatic Revenue Collection Group)
SOUTHERN CUBIC PTY., LTD
New South Wales, Australia Australia 100%*
* (50% owned subsidiary of Cubic Corporation and
50% owned subsidiary of Cubic Automatic Revenue Collection Group)
WESTINGHOUSE CUBIC LIMITED
London, England England 100%*
* (100% owned subsidiary of Cubic (UK) Limited)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of September 30, 1996 and the related consolidated
statement of income for the year then ended and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 20,062
<SECURITIES> 2,759
<RECEIVABLES> 125,993
<ALLOWANCES> 243
<INVENTORY> 15,233
<CURRENT-ASSETS> 178,488
<PP&E> 101,609
<DEPRECIATION> 63,280
<TOTAL-ASSETS> 266,638
<CURRENT-LIABILITIES> 79,408
<BONDS> 0
234
0
<COMMON> 0
<OTHER-SE> 167,433
<TOTAL-LIABILITY-AND-EQUITY> 266,638
<SALES> 407,621
<TOTAL-REVENUES> 414,265
<CGS> 316,293
<TOTAL-COSTS> 316,293
<OTHER-EXPENSES> 76,545
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,081
<INCOME-PRETAX> 18,346
<INCOME-TAX> 6,568
<INCOME-CONTINUING> 11,063
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,063
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.23
</TABLE>
