<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, 1997
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: $181,838,621 as of December 5, 1997, based on the closing stock
price on that date.
Number of shares of common stock outstanding as of December 5, 1997: 8,946,658
(after deducting 2,941,585 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.
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Cubic Corporation - SEC Form 10-K Page 2
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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, manufacture,
install and service products which are mainly electronic in nature, such as:
Equipment for use in customized military range instrumentation, training
and applications systems, communications and surveillance systems, HF and
VHF/UHF surveillance receivers, avionics systems and space RF/digital
products.
Automatic revenue collection equipment including fare card technology,
passenger gates, and ticket vending machines for mass transit networks,
including rail systems, buses and parking lots.
High-fidelity, high speed video and audio compression software for
applications including electronic mail, intra-net based training and
surveillance.
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.
In 1996 the Company sold its toll collection business, resulting in lower sales
volume in fiscal 1997 than in 1996. This decrease was somewhat offset by the
acquisition, in April 1997, of Thorn Transit Systems International, a United
Kingdom company in the automatic revenue collection business. Sales in the
automatic revenue collection systems segment were down nearly 14% from fiscal
1996 to 1997 primarily because of the sale of the toll business, while overall
sales were down about 5%. Defense segment sales increased again in fiscal 1997
as a result of contracts awarded for the production of additional J-STARS Data
Link systems.
The outlook for revenue collection business in the United Kingdom continues to
be favorable. It is expected that a contract with London Transport will be
signed during fiscal year 1998 to upgrade and maintain the fare collection
system, which could be the largest contract in the Company's history. In
addition, other contracts in Europe, the Far East, Australia and North America
are being pursued.
Work has continued on the contract to develop the new MILES 2000 (Multiple
Integrated Laser Engagement System) technology. System integration testing of
the system has commenced and full production of the product is expected to
begin early in calendar year 1998.
The Company has also developed new software technology for sending video e-mail
over the Internet. The Company sees several opportunities for the application
of this technology including e-mail, intra-net based training and surveillance.
During fiscal 1997, the Company sold its callbox and electro-optical product
lines which had been a part of its commercial operations segment but did not
offer good long-term prospects to the Company.
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Cubic Corporation - SEC Form 10-K Page 3
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During fiscal year 1997, approximately 47% of the Company's total business was
done, either directly or indirectly, with various agencies of the United States
government. The remaining 53% 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, 1997, and follows at Item 14(a)(1) of this filing, on pages 33
through 35.
(c) NARRATIVE DESCRIPTION OF BUSINESSES.
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) has been 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 Surveillance
and Target Attack Radar System) being built for the Air Force by Northrop
Grumman. This subsidiary also builds avionics products, such as the PLS
(Personnel Locator System) for helicopters, and a GCAS (Ground Collision
Avoidance System) which provides warnings for flight safety, for the U. S.
military, aircraft prime contractors and foreign governments.
In 1995, this subsidiary 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 system integration testing 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.
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.
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Cubic Corporation - SEC Form 10-K Page 4
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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, 1997 was $105,000,000
compared to $123,000,000 at September 30, 1996. Approximately $22,000,000 is
not expected to be completed by September 30, 1998.
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 five subsidiaries
which work together to design, produce and service rail and bus fare collection
systems. These include Cubic Automatic Revenue Collection Group, Cubic
Transportation Systems Ltd. (formerly Westinghouse Cubic Ltd.), Thorn Transit
Systems International, Southern Cubic Pty. Ltd. and Scanpoint Technology A/S.
This group of companies is the acknowledged leader in a market that serves
rapid, mass 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 Cubic Transportation
Systems Limited, have been awarded large contracts by the cities of New York,
Washington, D.C., Chicago, London and Sydney, Australia. These programs provide
a solid base of current business and the potential for additional future
business as the programs are expanded. In 1997, the Company was awarded
contracts by the Shanghai Metro Corporation and the Guangzhou Metro Corporation
to install automatic fare collection equipment in China's first two modern
heavy rail systems. Additional orders from customers in Singapore and Hong Kong
are received annually.
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. These systems have been installed in cities such
as New York and Chicago.
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.
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Cubic Corporation - SEC Form 10-K Page 5
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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,
1997 was $252,000,000, compared to $183,000,000 at September 30, 1996. The
increase in backlog from 1996 to 1997 was primarily the result of the
acquisition of Thorn Transit Systems International, which contributed
approximately $62,000,000 to backlog at September 30, 1997. Approximately
$93,000,000 of the September 30, 1997 backlog is not expected to be completed
by September 30, 1998.
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.
COMMERCIAL OPERATIONS
The primary business included in the commercial 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. A new addition to this segment in 1997 was Cubic VideoComm, which was
spun off Cubic Defense Systems to pursue markets for high fidelity, high speed
audio and video compression software for commercial applications including
electronic mail, intra-net based training and surveillance.
RAW MATERIALS:
Raw materials used in the commercial operations segment include paper and
composite products, integrated circuitry, and peripheral electronic equipment.
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
customer orders in the future.
BACKLOG:
The commercial operations segment had an immaterial amount of sales backlog at
September 30, 1997 compared to $7,000,000 at September 30, 1996. Virtually all
of the backlog at September 30, 1996 represented backlog of the callbox and
electro-optical product lines, which were sold in fiscal 1997. The remaining
businesses in this segment do not track sales backlog due to the short-term
conversion of customer orders into sales and the absence of any significant
long-term contracts.
COMPETITION:
In the commercial 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.
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Cubic Corporation - SEC Form 10-K Page 6
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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 $34,000,000,
$55,000,000 and $46,000,000 in 1997, 1996 and 1995, respectively. The cost of
Company sponsored research and development activities was $8,558,000,
$7,186,000 and $10,753,000 in 1997, 1996 and 1995, 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 3,500 persons employed by the Company and its
subsidiaries at September 30, 1997.
Typically, the Company's long-term contracts provide for progress or advance
payments by its customers, which provide assistance in financing the working
capital requirements on those contracts.
(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, 1997, and follows at Item 14(a)(1) of this filing, on page 35.
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Cubic Corporation - SEC Form 10-K Page 7
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ITEM 2. PROPERTIES.
The Company conducts its operations in approximately 1.1 million square feet in
both owned and leased properties located throughout the world. Approximately
50% of the square footage is owned by the Company, including 425,000 square
feet located in the City of San Diego. All owned and leased properties are
considered in good condition and adequately utilized, with approximately 40%
dedicated to manufacturing and the remainder utilized for engineering and
administrative purposes. The following table identifies significant properties
by business segment:
LOCATION OF PROPERTY OWNED OR LEASED
CORPORATE HEADQUARTERS:
San Diego, CA Owned
DEFENSE SEGMENT:
Alexandria, VA Leased
Hampton, VA Leased
Lacey, WA Leased
Leavenworth, KS Leased
Orlando, FL Leased
Salisbury, Wilts, England Leased
San Diego, CA Owned
San Diego, CA Leased
Shalimar, FL Leased
Teterboro, NJ Leased
Washington, DC Leased
AUTOMATIC REVENUE COLLECTION SYSTEMS:
Auburn, NSW Australia Leased
Brondby, Denmark Leased
Chicago, IL Leased
Merstham, Surrey, England Owned
New York, NY Leased
Oakland, CA Leased
Kowloon Bay, Hong Kong Leased
San Diego, CA Owned
Tullahoma, TN Owned
Vienna, VA Leased
Wells, Somerset, England Leased
COMMERCIAL OPERATIONS:
San Diego, CA Owned
Whittier, CA Leased
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Cubic Corporation - SEC Form 10-K Page 8
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ITEM 3. LEGAL PROCEEDINGS.
Since 1991, the Company and two of its subsidiaries, on a de minimus basis,
have shared response costs with a group of other potentially responsible
parties to remediate a used oil and solvent recycling facility in San Diego
County, even though the Company was not involved in the transport or disposal
of alleged hazardous materials. The Company believes that its insurance
policies provide coverage for any additional costs it may incur in connection
with this activity. 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.
Information regarding other legal proceedings is set forth in Note L to the
Consolidated Financial Statements for the year ended September 30, 1997, and
follows at Item 14(a)(1) of this filing, on pages 32 and 33.
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.
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Cubic Corporation - SEC Form 10-K Page 9
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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.
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 closing 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.
MARKET AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
SALES PRICE OF COMMON SHARES DIVIDENDS PER SHARE
---------------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
QUARTER ENDED: High Low High Low
December 31 24-1/4 19 19-1/8 14-3/4
March 31 27-7/8 22-1/2 18-1/8 15-3/4 $.19 $.177
June 30 27-1/4 20-1/4 23-1/8 17-7/8
September 30 40 24-1/4 22 17-3/4 .19 .19
</TABLE>
On December 5, 1997, the closing price of the Company's common stock on the
American Stock Exchange was $33.75.
There were approximately 1,700 shareholders of record of the Company's common
stock as of December 5, 1997.
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Cubic Corporation - SEC Form 10-K Page 10
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ITEM 6. SELECTED FINANCIAL DATA.
FINANCIAL HIGHLIGHTS AND SUMMARY OF CONSOLIDATED OPERATIONS
Share information and per share amounts have been restated to reflect a 3-for-2
stock split which occurred in August 1996.
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended September 30
1997 1996 1995 1994 1993
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales $388,154 $407,621 $370,065 $260,622 $221,437
Cost of sales 296,991 316,293 290,441 200,549 178,491
Selling, general and administrative expenses 68,208 69,359 60,505 52,071 42,347
Interest expense 1,837 3,081 2,995 2,535 2,294
Income taxes (benefit) 6,598 6,568 3,437 825 (450)
Income from continuing operations 12,193 11,063 5,392 2,533 2,210
Income (loss) from discontinued operations - - - (153) 20,071
Cumulative effect of accounting change - - - 1,379 -
Net income 12,193 11,063 5,392 3,759 22,281
Average number of shares outstanding 8,975 8,981 8,981 9,035 9,143
PER SHARE DATA:
Income from continuing operations $ 1.36 $ 1.23 $ .60 $ .28 $ .24
Income (loss) from discontinued operations - - - (.02) 2.20
Cumulative effect of accounting change - - - .15 -
Net income 1.36 1.23 .60 .41 2.44
Cash dividends .38 .367 .35 .35 1.02
YEAR-END DATA:
Shareholders' equity $175,320 $167,667 $159,865 $157,645 $159,552
Equity per share 19.60 18.67 17.80 17.55 17.48
Total assets 282,282 266,638 299,694 288,673 264,568
Long-term debt 10,000 15,000 39,000 35,000 35,500
Shares outstanding 8,947 8,981 8,981 8,981 9,129
</TABLE>
This summary should be read in conjunction with the related consolidated
financial statements and accompanying notes.
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Cubic Corporation - SEC Form 10-K Page 11
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FISCAL 1997 COMPARED TO FISCAL 1996
As a result of the acquisition of Thorn Transit Systems International, a
United Kingdom company in the automatic revenue collection business, in April
1997, the decrease in sales caused by the sale of the toll collection
product line in 1996 was somewhat mitigated. Sales in the automatic revenue
collection systems segment were down nearly 14% from fiscal 1996 to 1997
because of the sale of the toll collection product line, while overall sales
were down about 5%. Defense segment sales increased again in fiscal 1997 as a
result of contracts awarded for the production of additional J-STARS Data
Link systems.
Automatic revenue collection systems profitability was somewhat lower than in
the prior fiscal year because of the disposal of the toll collection product
line mentioned above. In the second and third quarters of fiscal 1996, prior
to its disposal, the product line had produced a profit. In addition, the
ongoing pursuit of a contract to upgrade and maintain the London Transport
fare collection system continued to impact the profitability of this segment.
Despite these costs, operating profits for the bus and rail product lines in
this segment were higher than in fiscal 1996.
The outlook for revenue collection business in the United Kingdom continues to
be favorable. It is expected that the London Transport contract will be signed
during fiscal year 1998 and work on the contract will begin immediately upon
signing. In addition, other major contracts in Europe, the Far East, Australia
and North America are being pursued.
Operating profits in the defense business were also lower in fiscal 1997 than
in 1996. This was the result of cost growth on the contract to develop the new
MILES 2000 (Multiple Integrated Laser Engagement System) technology. This cost
growth resulted from higher than expected costs to resolve technical issues in
the development of the system. System integration testing has commenced and
full production of the product is expected to begin early in calendar year
1998.
The increase in J-STARS Data Link sales described above resulted in higher
profits from this product line than in the previous year, helping to offset the
impact of the MILES 2000 cost growth. In addition, higher profits were realized
in fiscal 1997 from the Company's avionics product line, including the
Personnel Locator System.
During fiscal 1997, the Company sold two product lines in its commercial
operations segment which did not offer good long-term prospects to the Company.
The sale of the electro-optical and freeway callbox product lines generated an
aggregate pretax gain of approximately $1.5 million, which is included in other
income on the consolidated statement of income and retained earnings. This gain
was nearly offset by costs incurred in the development and marketing of new
software technology for sending video e-mail over the Internet. The Company
sees several opportunities for the application of this new technology including
e-mail, intra-net based training and surveillance.
Selling, general and administrative expenses, although somewhat lower in
amount, increased as a percentage of sales from 17.0% in 1996 to 17.6% in 1997.
This increase was the result of selling expenses related to the video e-mail
product and the ongoing proposal effort for the London Transport project.
Interest expense was $1.2 million lower in fiscal 1997 than in 1996 because of
a $24 million reduction of long-term debt in 1996.
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Cubic Corporation - SEC Form 10-K Page 12
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FISCAL 1996 COMPARED TO FISCAL 1995
Continuing the upward trend started in fiscal 1995, sales increased again in
1996 by ten percent despite the sale, in May, of Cubic Toll Systems, Inc. and
the Company's toll collection 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 5%.
Operating profits increased by over 50%, again continuing the trend started in
fiscal 1995. 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.
Revenue collection systems profitability was significantly improved in fiscal
1996 primarily because of profits in the toll collection systems business,
compared to 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, Cubic Transportation Systems Ltd. This
slow down of new business activity resulted from a lengthy procurement process
for a large contract to upgrade and maintain the automatic revenue collection
system for London Transport. 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.
Improvement in cost of sales as a percentage of sales, from 78.5% to 77.6%,
reflects the elimination of the toll systems losses from fiscal 1995. 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
Transport 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.
FINANCIAL POSITION AND LIQUIDITY
During 1997, the Company allowed its $35 million credit agreement to expire. As
of September 30, 1997, the Company had over $53 million in cash, resulting
largely from the exercise of the put option on the shares of U.S. Elevator
Corp. preferred stock and a contingent payment related to the sale of the
common stock, which generated nearly $32 million. As a result of this cash
inflow, there was no need for this credit facility in the short term. The
Company is currently reviewing its options for securing a long term credit
facility.
Operating activities of the Company provided cash flow of $22 million in 1997,
due primarily to continued reductions of accounts receivable. Investing
activities provided cash flow of $11 million, as the $32 million from the U.S.
Elevator Corp. preferred stock and contingent payment was partially offset by
$12 million paid to acquire Thorn Transit Systems International and $7 million
used for normal additions to property, plant and equipment. Financing
activities were cash neutral as a scheduled debt payment and the payment of
dividends were offset by nearly $10 million borrowed on a short-term basis to
finance temporary operating needs in the United Kingdom and to mitigate
currency exposure. The possibility of a longer-term credit facility for United
Kingdom operating needs is also being explored.
At September 30, 1997 the Company had working capital of $108 million,
including cash and marketable securities of $56 million, compared to total
short and long-term debt of less than $25 million. Management believes that
this strong financial position provides adequate resources to meet anticipated
financing needs at this time.
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Cubic Corporation - SEC Form 10-K Page 13
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.
The following consolidated financial statements of the Company and its
subsidiaries, for the year ended September 30, 1997, are attached hereto,
marked Pages 14 and 19 through 35.
Report of Ernst & Young LLP, Independent Auditors
See Page 14
Consolidated Balance Sheet
September 30, 1997 and 1996
See Pages 19 and 20
Consolidated Statement of Income and Retained Earnings
Years ended September 30, 1997, 1996 and 1995
See Page 21
Consolidated Statement of Cash Flows
Years ended September 30, 1997, 1996 and 1995
See Page 22
Notes to Consolidated Financial Statements
September 30, 1997
See Pages 23 through 35
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
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Cubic Corporation - SEC Form 10-K Page 14
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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, 1997 and 1996, and the related consolidated
statements of income and retained earnings and cash flows for each of the three
years in the period ended September 30, 1997. 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, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
September 30, 1997, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
San Diego, California
December 4, 1997
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Cubic Corporation - SEC Form 10-K Page 15
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Certain 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 J to the Consolidated Financial Statements for the year ended
September 30, 1997, and follows at Item 14(a)(1) of this filing, on page 32.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 16
- -------------------------------------------------------------------------------
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, 1997 and 1996
Consolidated Statement of Income and Retained Earnings
Years ended September 30, 1997, 1996 and 1995
Consolidated Statement of Cash Flows
Years ended September 30, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
September 30, 1997
(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 17
- -------------------------------------------------------------------------------
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
12/19/97 /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:
12/19/97 /s/ Walter J. Zable
- -------- -----------------------------------------------
Date WALTER J. ZABLE, President, Chief
Executive Officer and Chairman of the
Board of Directors
12/19/97 /s/ Walter C. Zable
- -------- -----------------------------------------------
Date WALTER C. ZABLE, Vice President and
Vice Chairman of the Board of Directors
12/19/97 /s/ Jackson D. Arnold
- -------- -----------------------------------------------
Date JACKSON D. ARNOLD, Director
12/19/97 /s/ Richard G. Duncan
- -------- -----------------------------------------------
Date RICHARD G. DUNCAN, Director
12/19/97 /s/ Raymond E. Peet
- -------- -----------------------------------------------
Date RAYMOND E. PEET, Director
12/19/97 /s/ William W. Boyle
- -------- -----------------------------------------------
Date WILLIAM W. BOYLE, Director, Vice President of
Finance & Chief Financial Officer
12/19/97 /s/ Thomas A. Baz
- -------- -----------------------------------------------
Date THOMAS A. BAZ, Vice President and
Corporate Controller, Principal Accounting Officer
<PAGE>
Cubic Corporation - SEC Form 10-K Page 18
- -------------------------------------------------------------------------------
ITEM 8, ITEM 14(a)(1) AND (2),(c) AND (d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
EXHIBITS
Cubic Corporation
Year Ended September 30, 1997
San Diego, California
<PAGE>
Cubic Corporation - SEC Form 10-K Page 19
- -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 53,257 $ 20,062
Marketable securities, available-for-sale 2,426 2,759
Accounts receivable:
Trade and other receivables 10,053 8,393
Long-term contracts--Note D 97,951 117,600
Allowance for doubtful accounts (197) (243)
--------- ---------
107,807 125,750
Inventories--Note E 20,955 15,233
Deferred income taxes--Note H 10,454 10,386
Prepaid expenses and other current assets 5,329 4,298
--------- ---------
TOTAL CURRENT ASSETS 200,228 178,488
--------- ---------
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 12,886 12,873
Buildings and improvements 22,179 21,453
Machinery and other equipment 70,510 64,628
Leasehold improvements 1,888 2,655
Allowance for depreciation and amortization (67,353) (63,280)
--------- ---------
40,110 38,329
--------- ---------
OTHER ASSETS
Preferred stock of United States Elevator Corp.--Note J - 20,000
Cost in excess of net tangible assets of purchased
businesses, less amortization--Note B 27,281 18,847
Miscellaneous other assets 14,663 10,974
--------- ---------
41,944 49,821
--------- ---------
TOTAL ASSETS $282,282 $266,638
--------- ---------
--------- ---------
</TABLE>
See accompanying notes
<PAGE>
Cubic Corporation - SEC Form 10-K Page 20
- -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30
1997 1996
-------- -------
(in thousands)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 9,620 $ -
Trade accounts payable 8,380 11,175
Customer advances 30,896 33,891
Salaries and wages, and amounts withheld from
employees' compensation 13,476 14,051
Other current liabilities 24,414 12,727
Income taxes payable 206 2,564
Current portion of long-term debt 5,000 5,000
-------- -------
TOTAL CURRENT LIABILITIES 91,992 79,408
-------- -------
LONG-TERM DEBT, less current portion--Note F 10,000 15,000
OTHER LIABILITIES
Deferred income taxes--Note H 2,131 2,433
Deferred compensation 2,839 2,130
-------- -------
4,970 4,563
-------- -------
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 198,213 189,429
Foreign currency translation adjustment (557) (393)
Treasury stock at cost:
1997 -- 2,941,585 shares
1996 -- 2,907,354 shares (34,693) (33,726)
-------- -------
175,320 167,667
-------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $282,282 $266,638
-------- -------
-------- -------
</TABLE>
See accompanying notes
<PAGE>
Cubic Corporation - SEC Form 10-K Page 21
- -------------------------------------------------------------------------------
CUBIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Year Ended September 30
1997 1996 1995
-------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C>
Revenue:
Net sales $388,154 $407,621 $370,065
Interest and dividends 2,259 2,901 3,171
Other income 3,972 3,743 2,591
-------- -------- --------
394,385 414,265 375,827
-------- -------- --------
Costs and expenses:
Cost of sales 296,991 316,293 290,441
Selling, general and administrative expenses 68,208 69,359 60,505
Research and development 8,558 7,186 10,753
Interest 1,837 3,081 2,995
-------- -------- --------
375,594 395,919 364,694
-------- -------- --------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 18,791 18,346 11,133
Income taxes--Note H 6,598 6,568 3,437
Minority interest in income of subsidiary--Note B - 715 2,304
-------- -------- --------
NET INCOME 12,193 11,063 5,392
Cash dividends paid (per share of common stock:
1997 -- $.38, 1996 -- $.367 and 1995 -- $.35) (3,409) (3,299) (3,173)
Retained earnings at the beginning of the year 189,429 181,665 179,446
-------- -------- --------
RETAINED EARNINGS AT THE END OF THE YEAR $198,213 $189,429 $181,665
-------- -------- --------
-------- -------- --------
Net income per share $ 1.36 $ 1.23 $ .60
-------- -------- --------
-------- -------- --------
Average number of shares outstanding 8,975 8,981 8,981
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes
<PAGE>
Cubic Corporation - SEC Form 10-K Page 22
- -------------------------------------------------------------------------------
CUBIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended September 30
1997 1996 1995
--------- --------- --------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $ 12,193 $ 11,063 $ 5,392
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,976 10,520 12,547
Minority interest - 715 2,304
Deferred income taxes 4,150 (3,549) (4,394)
Changes in operating assets and liabilities,
net of effects from acquisitions:
Accounts receivable 22,862 25,235 (22,395)
Inventories (7,986) 2,270 359
Prepaid expenses (469) (551) (490)
Accounts payable and other current liabilities (9,834) (1,815) (2,813)
Customer advances (2,682) (6,324) (6,791)
Income taxes (2,364) (1,573) 5,746
Other items - net (2,875) (583) 1,103
--------- --------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 21,971 35,408 (9,432)
--------- --------- --------
Investing Activities:
Acquisition of businesses, net of cash acquired (11,844) (6,632) 14,712
Proceeds from sale of U.S. Elevator Corp. 31,996 - -
Proceeds from sale of product line - 17,731 -
Sale of marketable securities 333 646 1,409
Additions to toll equipment under operating leases - (2,789) (1,360)
Purchases of property, plant and equipment (7,374) (10,047) (6,583)
Proceeds from the sale of property, plant and equipment 86 100 2,120
Other items - net (1,840) (4,044) (5,878)
--------- --------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 11,357 (5,035) 4,420
--------- --------- --------
Financing Activities:
Long-term borrowings - - 9,000
Short-term borrowings 9,726 - -
Principal payments on long-term debt (5,000) (24,000) (5,000)
Purchases of treasury stock (967) (3) -
Dividends paid to minority interest - (3,300) (1,229)
Dividends paid to shareholders (3,409) (3,299) (3,173)
--------- --------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 350 (30,602) (402)
--------- --------- --------
Effect of exchange rates on cash (483) (414) 337
--------- --------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 33,195 (643) (5,077)
Cash and cash equivalents at the beginning of the year 20,062 20,705 25,782
--------- --------- --------
CASH AND CASH EQUIVALENTS AT
THE END OF THE YEAR $ 53,257 $ 20,062 $ 20,705
--------- --------- --------
--------- --------- --------
</TABLE>
See accompanying notes
<PAGE>
Cubic Corporation - SEC Form 10-K Page 23
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
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.
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.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of Cubic Corporation and its subsidiaries. All significant
intercompany balances and transactions are eliminated.
The consolidation of foreign subsidiaries requires financial statement
translation in accordance with FASB Statement No. 52. Monetary assets and
liabilities are translated into U.S. dollars at year end exchange rates, while
non-monetary assets such as property, plant and equipment and intangible assets
are translated at historical rates. Statements of income and cash flows are
translated at the average exchange rates for each year, except for the
depreciation and amortization of non-monetary assets, which are translated at
historical rates. As of September 30, 1997, the effects of foreign currency
translation on the Company's consolidated financial position, results of
operations and cash flows have been minimal.
CASH EQUIVALENTS: The Company considers 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, 1997
and 1996, 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, 1997
and 1996 were immaterial.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are carried at
cost. Depreciation is 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. Provisions for depreciation of plant and equipment
amounted to $7,199,000, $9,151,000 and $11,206,000 in 1997, 1996 and 1995,
respectively.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 24
- -------------------------------------------------------------------------------
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, 1997
and 1996 was $4,915,000 and $3,056,000, 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.
DERIVATIVE FINANCIAL INSTRUMENTS: The Company's use of derivative financial
instruments is limited to hedging foreign exchange and interest rate risk
through the use of forward and option contracts. Foreign exchange forward and
option contracts are used to hedge significant, firm contract sales and
purchase commitments that are denominated in currencies other than the
functional currency of the subsidiary responsible for the commitment. Gains and
losses from hedging activities are recognized when the hedged sale or purchase
commitment is settled and the hedge is closed out. At September 30, 1997, the
Company had foreign exchange contracts with a notional value of $16.4 million
outstanding. The net amount of deferred gains and losses at that date was
immaterial.
NEW ACCOUNTING PRONOUNCEMENTS: In the quarter beginning October 1, 1997, the
Company will adopt FASB Statement No. 128, "Earnings Per Share," however, due
to the simple capital structure of the Company, there will be no impact on the
calculation of earnings per share.
The Company will adopt FASB Statement No. 130, "Reporting Comprehensive Income"
in the period beginning October 1, 1998. This pronouncement establishes
standards for reporting and display of comprehensive income, which includes all
components of the change in Shareholders' Equity during a period, except those
resulting from investment by or distribution to shareholders. As a result of
adopting this statement, the Company will begin displaying additional
information relating to the change in the foreign currency translation
adjustment component of Shareholders' Equity. Currently, other required
disclosures resulting from this pronouncement are not applicable or are
immaterial.
In the year beginning October 1, 1998, the Company will adopt FASB Statement
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
Among other changes, this new standard requires that segment information be
provided using what is termed the "management approach." The management
approach is based on the way that management organizes segments for making
operating decisions and assessing performance. Although there will be minor
changes in the Company's disclosure of segment information, current disclosures
are largely in compliance with this statement.
RESTATEMENT FOR STOCK SPLIT: Per share amounts have been restated to reflect a
3-for-2 stock split which occurred in August 1996.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 25
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
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.
NOTE B--ACQUISITIONS
On April 9, 1997, the Company acquired all of the outstanding stock of Thorn
Transit Systems International, a United Kingdom company engaged in revenue
collection equipment design, fabrication, and installation, for $11.8 million,
net of cash acquired. 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
book value of the assets acquired was $8 million and is being amortized over a
period of 15 years using the straight-line method.
On September 30, 1996, the Company acquired 50% of the outstanding stock of its
subsidiary, Westinghouse Cubic Ltd. (WCL) for $6.6 million, giving the Company
control of 100% of the outstanding stock. Based upon a final determination of
the fair value of assets and liabilities of the acquired entity, the amount by
which the purchase price exceeded the book value of the stock acquired was
revised in the quarter ended September 30, 1997, from the approximately $2.9
million estimated in the previous year, to $5.0 million, and is being amortized
over a period of 15 years using the straight-line method. This change in
estimate was the result of reassessing the value of net assets acquired,
particularly long-term contract accounts receivable. 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.
Unaudited pro forma results of the Company's operations, assuming the
acquisitions had occurred as of October 1, 1996, 1995 and 1994, 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 inter-company sales, reduction of non-
recurring general and administrative expenses, reduction of interest income and
the income tax effect of these adjustments. The pro forma
<PAGE>
Cubic Corporation - SEC Form 10-K Page 26
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE B--ACQUISITIONS--Continued
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
1997 1996 1995
------------------------------------
Net sales $399,760 $433,706 $376,077
Net income 12,193 11,488 7,704
Net income per share 1.36 1.28 .86
NOTE C--SALE OF PRODUCT LINE
During the quarter ended June 30, 1996, the Company sold its toll collection
product line and its subsidiary Cubic Toll Systems, Inc. (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, of $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.
NOTE D--ACCOUNTS RECEIVABLE
The components of accounts receivable for long-term contracts at September 30
are as follows:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
U.S. Government Contracts:
Amounts billed $ 19,000 $ 17,798
Recoverable costs and accrued profits on
progress completed--not billed 27,002 33,027
--------- ---------
46,002 50,825
Commercial Customers:
Amounts billed 28,991 24,094
Recoverable costs and accrued profits on
progress completed--not billed 22,958 42,681
--------- ---------
51,949 66,775
--------- ---------
$ 97,951 $117,600
--------- ---------
--------- ---------
</TABLE>
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, 1997 will be billed during 1998 as units are
delivered and those from commercial customers will be billed upon completion of
performance tests and/or acceptance by the customers in 1998.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 27
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE E--INVENTORIES
Inventories at September 30 are classified as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(in thousands)
<S> <C> <C>
Finished products $ 2,501 $ 3,170
Work in process 10,300 3,634
Materials and purchased parts 8,154 8,429
------- -------
$20,955 $15,233
------- -------
------- -------
</TABLE>
NOTE F--FINANCING ARRANGEMENTS
Long-term debt at September 30 consists of the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
(in thousands)
<S> <C> <C>
Unsecured note payable to an insurance company,
due $5,000,000 annually on June 30, plus
interest at 6.09% payable semi-annually $15,000 $20,000
Less current portion (5,000) (5,000)
------- -------
$10,000 $15,000
------- -------
------- -------
</TABLE>
The terms of the note payable 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, 1997, a covenant included in the agreement leaves consolidated
retained earnings of $14.5 million available for the payment of dividends to
shareholders, purchases of the Company's common stock and other charges to
shareholders' equity.
The Company also maintains short term borrowing arrangements totaling 10
million British Pounds (equivalent to approximately $16 million) with a United
Kingdom financial institution to help meet the short term working capital
requirements of two foreign subsidiaries. The outstanding balances are
guaranteed by Cubic Corporation and are repayable on demand. At September 30,
1997, $9.6 million was outstanding, bearing interest at a weighted average of
8.25%, payable quarterly.
Interest paid amounted to $1,913,000, $3,186,000 and $3,063,000 in 1997, 1996
and 1995, respectively.
As of September 30, 1997, the Company had letters of credit outstanding
totaling $17.3 million, which guarantee either the Company's performance or
customer advances under certain contracts. In addition, the Company had
financial letters of credit outstanding totaling $15 million as of September
30, 1997, which guarantee the Company's payment of certain self-insured
liabilities. Management believes self-insurance reserves recorded on the
balance sheet as of September 30, 1997 are adequate to meet the underlying
obligations. The Company has never incurred a loss on a letter of credit
instrument, nor are any anticipated; therefore, the fair value of these
instruments is estimated to be zero.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 28
- -------------------------------------------------------------------------------
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 non-cancelable
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 $4,171,000, $3,286,000 and
$2,833,000 in 1997, 1996 and 1995, respectively.
Future minimum payments under non-cancelable operating leases with initial
terms of one year or more consist of the following at September 30, 1997 (in
thousands):
1998 $ 3,450
1999 2,827
2000 1,752
2001 1,015
2002 780
Thereafter 204
-------
$10,028
-------
-------
NOTE H--INCOME TAXES
Significant components of the provision for income taxes attributable to
continuing operations, for the years ended September 30, are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Current:
Federal $ 1,498 $ 7,660 $ 4,787
State 737 1,418 640
Foreign 213 1,039 2,404
-------- -------- --------
Total current 2,448 10,117 7,831
-------- -------- --------
Deferred (credit):
Federal 2,548 (3,002) (3,834)
State 471 (520) (519)
Foreign 1,131 (27) (41)
-------- -------- --------
Total deferred 4,150 (3,549) (4,394)
-------- -------- --------
Total income tax expense $ 6,598 $ 6,568 $ 3,437
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
Cubic Corporation - SEC Form 10-K Page 29
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE H--INCOME TAXES--Continued
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. Significant components of the Company's
deferred tax liabilities and assets as of September 30, are as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(in thousands)
<S> <C> <C>
Deferred tax assets:
Accrued employee benefits $ 2,621 $ 2,968
Inventory reserves and long-term contract accounting 6,843 6,202
Self-insurance reserves 1,178 908
Deferred compensation 1,169 878
Other 2,875 2,652
-------- --------
Total deferred tax assets 14,686 13,608
Valuation allowance for deferred tax assets - (191)
-------- --------
Net deferred tax assets 14,686 13,417
-------- --------
Deferred tax liabilities:
Tax over book depreciation 864 707
Leveraged lease accounting 2,831 2,831
Other 2,668 1,926
-------- --------
Total deferred tax liabilities 6,363 5,464
-------- --------
Net deferred tax asset $ 8,323 $ 7,953
-------- --------
-------- --------
</TABLE>
The reconciliation of income tax attributable to continuing operations computed
at the U.S. federal statutory tax rate to income tax expense, for the years
ended September 30, is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -------
(in thousands)
<S> <C> <C> <C>
Taxes on income based on statutory
federal income tax rate $6,577 $6,421 $3,785
State income taxes, net of
federal tax benefit 785 583 79
------ ------ -------
7,362 7,004 3,864
Increases (decreases) resulting from:
Tax exempt interest and
dividend income (432) (494) (504)
Foreign sales corporation
tax benefit (206) (403) (182)
Non-deductible expenses 338 714 214
Effect of change in tax rates on deferred tax asset - (226) -
Other (464) (27) 45
------ ------ -------
(764) (436) (427)
------ ------ -------
Total income tax expense $6,598 $6,568 $3,437
------ ------ -------
------ ------ -------
</TABLE>
The Company made income tax payments, net of refunds, totaling $4,770,000,
$11,689,000 and $2,085,000 in 1997, 1996 and 1995, respectively.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 30
- -------------------------------------------------------------------------------
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, for the years ended September 30,
include the following components:
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- -------
(in thousands)
<S> <C> <C> <C>
United States $15,757 $15,295 $ 3,452
Foreign 3,034 3,051 7,681
------- -------- -------
Total $18,791 $18,346 $11,133
------- -------- -------
------- -------- -------
</TABLE>
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, for the years ended September 30, included the
following components:
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- --------
(in thousands)
<S> <C> <C> <C>
Service cost--benefits earned during the period $ 1,643 $ 1,681 $ 1,398
Interest cost on projected benefit obligation 2,729 2,453 2,216
Actual return on plan assets (8,567) (3,516) (4,526)
Net amortization and deferral 5,652 1,062 2,513
-------- --------- --------
Net pension cost $ 1,457 $ 1,680 $ 1,601
-------- --------- --------
-------- --------- --------
</TABLE>
<PAGE>
Cubic Corporation - SEC Form 10-K Page 31
- -------------------------------------------------------------------------------
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, 1997 and 1996, for the Company's
defined benefit pension plan:
<TABLE>
<CAPTION>
1997 1996
------- -------
(in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $35,478 $29,662
Non vested benefits 1,128 792
------- -------
Accumulated benefit obligation $36,606 $30,454
------- -------
------- -------
Plan assets at fair value $43,054 $33,276
Projected benefit obligation for services rendered to date 40,587 33,795
------- -------
Plan assets in excess of (or less than) projected benefit
obligation 2,467 (519)
Unrecognized net transition asset (72) (124)
Unrecognized prior service costs (14) (38)
Unrecognized net (gain) loss (1,546) 905
------- -------
Pension asset recognized in the consolidated balance sheet $ 835 $ 224
------- -------
------- -------
</TABLE>
Major assumptions at September 30 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.2% 7.7% 7.4%
Rate of increase in compensation level 4.5% 4.5% 4.5%
Expected long-term rate of return on assets 8.5% 8.5% 8.5%
</TABLE>
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 from their date of hire. 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 $7,001,000,
$6,215,000 and $5,606,000 in 1997, 1996 and 1995, respectively.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 32
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE J--PREFERRED STOCK OF U.S. ELEVATOR CORPORATION
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 included $20 million of USEC 6% cumulative,
nonvoting, redeemable preferred stock which was required to be repurchased by
Thyssen at the option of the Company. The agreement for the sale of USEC also
provided for additional consideration based on a formula relating to the post-
sale earnings of USEC. In December of 1996, the Company exercised its option
and, in the quarter ended March 31, 1997, received $20 million for the
preferred stock and $12 million related to the contingent payment provision.
The contingent payment will be used to offset the costs of certain product
liability and warranty obligations which were incorporated in the original sale
agreement. Therefore, no additional gain or loss has been realized by the
Company in connection with this transaction.
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 on a
month-to-month basis under a triple net lease at a rate of $14,000 per month.
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 $165,000,
$130,000 and $390,000 in 1997, 1996 and 1995, 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 MATTERS
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. In May
1997, the arbitration panel, based in Switzerland, issued an award in favor of
the government of Iran for $2.8 million, plus interest at the rate of 12% per
annum from September 1991 until May 1997. The Company believes that it has been
denied due process in the arbitration proceeding and is vigorously contesting
the basis of the award. The Company and its outside counsel believe that the
award may be unenforceable against the assets of the Company and that it is
unlikely that the Company will ultimately be required to make payment.
Therefore, no provision for this award has been made in the financial
statements.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 33
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE L--LEGAL MATTERS--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 claims allegedly
arose out of a strategic supplier agreement under 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. 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-judgment interest and costs
of suit. Subsequent to the filing of the lawsuit, the Superior Court dismissed
that part of the claim of UDT Sensors, Inc. 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. A trial date has been set for January 13,
1998. The Company believes the lawsuit is without merit and will not have a
material adverse effect on the Company's financial statements, and is
vigorously pursuing its defense.
NOTE M--BUSINESS SEGMENT INFORMATION
The Company's operations are best grouped into three main product segments:
defense, automatic revenue collection systems, and commercial 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, installation and
servicing of electronic and mechanical revenue collection systems for mass
transit projects, including railways, buses, and highways.
COMMERCIAL OPERATIONS--includes the manufacture of corrugated paper products
and the development of high-speed video and audio compression software for
applications including electronic mail, intra-net based training, and
surveillance. In the years ended September 30, 1997, 1996 and 1995, the
software development business did not generate significant sales.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 34
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE M--BUSINESS SEGMENT INFORMATION--Continued
Business segment financial data for the three years ended September 30, 1997,
is presented below.
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(in millions)
<S> <C> <C> <C>
REVENUE:
Defense $206.2 $195.9 $168.4
Automatic revenue collection systems 165.2 192.8 183.4
Commercial operations 17.9 21.0 18.7
------ ------ ------
389.3 409.7 370.5
Corporate 5.1 4.6 5.3
------ ------ ------
Consolidated Totals $394.4 $414.3 $375.8
------ ------ ------
------ ------ ------
OPERATING PROFIT:
Defense $ 6.6 $ 7.6 $ 4.0
Automatic revenue collection systems 12.3 14.4 9.8
Commercial operations 1.1 0.8 1.3
------ ------ ------
Consolidated Operating Profit 20.0 22.8 15.1
Corporate 0.6 (1.4) (1.0)
Interest expense (1.8) (3.1) (3.0)
------ ------ ------
Income before Income Taxes and Minority Interest $ 18.8 $ 18.3 $ 11.1
------ ------ ------
------ ------ ------
IDENTIFIABLE ASSETS:
Defense $106.9 $107.6 $112.9
Automatic revenue collection systems 98.1 86.1 128.1
Commercial operations 3.3 5.1 3.5
------ ------ ------
208.3 198.8 244.5
Corporate 74.0 67.8 55.2
------ ------ ------
Consolidated Totals $282.3 $266.6 $299.7
------ ------ ------
------ ------ ------
DEPRECIATION AND AMORTIZATION:
Defense $ 4.8 $ 4.6 $ 3.3
Automatic revenue collection systems 3.3 5.0 8.4
Commercial operations 0.2 0.3 0.3
------ ------ ------
8.3 9.9 12.0
Corporate 0.7 0.6 0.5
------ ------ ------
Consolidated Totals $ 9.0 $ 10.5 $ 12.5
------ ------ ------
------ ------ ------
GROSS CAPITAL EXPENDITURES:
Defense $ 3.4 $ 6.7 $ 3.5
Automatic revenue collection systems 2.9 5.0 3.6
Commercial operations 0.2 0.2 0.2
------ ------ ------
6.5 11.9 7.3
Corporate 0.9 0.9 0.6
------ ------ ------
Consolidated Totals $ 7.4 $ 12.8 $ 7.9
------ ------ ------
------ ------ ------
</TABLE>
<PAGE>
Cubic Corporation - SEC Form 10-K Page 35
- -------------------------------------------------------------------------------
CUBIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
NOTE M--BUSINESS SEGMENT INFORMATION--Continued
Inter-segment sales are immaterial. Defense segment sales include $183.0
million, $170.8 million and $154.6 million in 1997, 1996 and 1995,
respectively, to United States Government agencies. Automatic revenue
collection systems sales include $47.4 million, $35.2 million and $57.1 million
in 1997, 1996 and 1995, respectively, to the New York City Transit Authority in
addition to $33.0 million, $39.1 million and $48.2 million in 1997, 1996 and
1995, respectively, to the London Transport. No other single customer accounts
for 10% or more of the Company's revenue.
Domestic revenue includes $33.7 million, $44.7 million and $30.8 million in
1997, 1996 and 1995, respectively, for export. Foreign revenue consists of
$66.1 million, $59.2 million and $56.5 million in sales made by foreign
subsidiaries in the automatic revenue collection systems segment during 1997,
1996 and 1995, respectively. Consolidated operating profit includes $4.6
million, $3.3 million and $6.4 million in operating profit from these foreign
subsidiaries in 1997, 1996 and 1995, respectively. Foreign identifiable assets
represented $62.7 million, $23.1 million and $35.0 of total assets in 1997,
1996 and 1995, respectively.
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, 1997 and 1996:
<TABLE>
<CAPTION>
Quarter Ended
--------------------------------------------------------
DECEMBER 31 MARCH 31 JUNE 30 SEPTEMBER 30
----------- -------- ------- ------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
1997
----
Net sales $ 84,058 $ 96,187 $109,828 $ 98,081
Gross profit 20,489 21,190 24,461 25,023
Net income 2,895 2,675 3,257 3,366
Net income per share .32 .30 .36 .38
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
</TABLE>
Gross profit amounts for the quarters ended December 31, 1996, March 31, 1997
and June 30, 1997, have been restated from those previously reported to reflect
classification differences between cost of sales, selling, general and
administrative expenses and research and development expenses. Other amounts
presented above were not affected by this change.
<PAGE>
Cubic Corporation - SEC Form 10-K Page 36
- -------------------------------------------------------------------------------
EXHIBIT 21
SUBSIDIARY CORPORATIONS OF CUBIC CORPORATION
PLACE OF INCORPORATION AND PERCENTAGE OWNED
<TABLE>
<CAPTION>
PLACE OF PERCENTAGE
SUBSIDIARY INCORPORATION OWNED
---------- ------------- ----------
<S> <C> <C>
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 FOREIGN SALES, INC. St. Thomas
San Diego, California U.S. Virgin Islands 100%
CUBIC LAND, INC.
San Diego, California California 100%
CUBIC TRANSPORTATION SYSTEMS LIMITED
London, England England 100%*
* (100% owned subsidiary of Cubic (UK)
Limited)
CUBIC (UK) LIMITED
London, England England 100%
CUBIC VIDEOCOMM, INC.
San Diego, California Delaware 100%
CUBIC WORLDWIDE TECHNICAL SERVICES, INC.
San Diego, California Delaware 100%
NAVSAT CORPORATION
San Diego, California California 100%
</TABLE>
<PAGE>
Cubic Corporation - SEC Form 10-K Page 37
- -------------------------------------------------------------------------------
SUBSIDIARY CORPORATIONS OF CUBIC CORPORATION--CONTINUED
<TABLE>
<CAPTION>
PLACE OF PERCENTAGE
SUBSIDIARY INCORPORATION OWNED
---------- ------------- ----------
<S> <C> <C>
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
Brondby, 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)
THORN TRANSIT SYSTEMS INTERNATIONAL
Wells, England England 100%*
* (100% owned subsidiary of Cubic (UK) Limited)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997 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> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 53,257
<SECURITIES> 2,426
<RECEIVABLES> 108,004
<ALLOWANCES> 197
<INVENTORY> 20,955
<CURRENT-ASSETS> 200,228
<PP&E> 107,463
<DEPRECIATION> 67,353
<TOTAL-ASSETS> 282,282
<CURRENT-LIABILITIES> 91,992
<BONDS> 0
234
0
<COMMON> 0
<OTHER-SE> 175,086
<TOTAL-LIABILITY-AND-EQUITY> 282,282
<SALES> 388,154
<TOTAL-REVENUES> 394,385
<CGS> 296,991
<TOTAL-COSTS> 296,991
<OTHER-EXPENSES> 76,766
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,837
<INCOME-PRETAX> 18,791
<INCOME-TAX> 6,598
<INCOME-CONTINUING> 12,193
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,193
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.36
</TABLE>
