SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended March 31, 1995
1-8931
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Commission File Number
CUBIC CORPORATION
Exact Name of Registrant as Specified in its Charter
Delaware 95-1678055
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State of Incorporation IRS Employer Identification No.
9333 Balboa Avenue
San Diego, California 92123
Telephone (619) 277-6780
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
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As of April 26, 1995, Registrant had only one class of common stock of which
there were 5,987,466 shares outstanding (after deducting 1,938,148 shares held
as treasury stock).
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CUBIC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME (UNAUDITED)
(amounts in thousands, except per share data)
Six Months Ended Three Months Ended
March 31 March 31
1995 1994 1995 1994
---------- ---------- -------------- ---------------
Revenues:
Net sales $161,575 $107,874 $91,968 $59,467
Other income 2,392 4,288 1,495 2,121
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163,967 112,162 93,463 61,588
Costs and expenses:
Cost of sales 124,360 81,608 72,844 44,017
Selling, general and
administrative expenses 28,543 26,415 15,868 15,182
Research and
development 4,520 1,515 2,521 604
Interest 1,405 1,221 778 632
-------- -------- ------- --------
158,828 110,759 92,011 60,435
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Income from continuing
operations before income
taxes, minority interest
and cumulative effect of
accounting change 5,139 1,403 1,452 1,153
Income taxes 1,800 508 400 458
Minority interest in
income of subsidiary 1,107 509 678 509
-------- -------- ------- --------
Income from continuing
operations before
cumulative effect of
accounting change 2,232 386 374 186
Loss on disposal of
discontinued operations,
net of applicable - (153) - -
income taxes -------- -------- ------- -------
Income before cumulative
effect of accounting
change 2,232 233 374 186
Cumulative effect of
accounting change - 1,379 - -
-------- -------- ------- -------
Net income $ 2,232 $ 1,612 $ 374 $ 186
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Average shares of common
stock outstanding 5,987 6,056 5,987 6,031
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Per share data:
Income from
continuing operations $ .37 $ .06 $ .06 $.03
Loss from discontinued
operations - (.03) - -
Cumulative effect of
accounting change - .23 - -
-------- -------- ------- -------
Net income $ .37 $ .26 $ .06 $.03
======== ======== ======= =======
Dividends per share $ .265 $ .265 $ .265 $ .265
======== ======== ======= =======
See accompanying notes.
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CUBIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(thousands of dollars)
March 31 September 30
1995 1994
(Unaudited) (See note below)
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ASSETS
Current assets:
Cash and cash equivalents $ 14,796 $ 25,782
Marketable securities, available-for-sale 4,028 4,814
Accounts receivable 144,805 127,865
Inventories:
Finished products 1,743 1,172
Work in process 15,811 9,336
Raw material and purchased parts 9,510 10,672
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27,064 21,180
Recoverable income taxes and other current assets 9,792 10,511
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Total current assets 200,485 190,152
Property, plant and equipment - net 34,876 34,125
Toll equipment under operating leases - net 14,111 15,990
Preferred stock of U. S. Elevator Corp. 20,000 20,000
Cost in excess of net tangible assets of
purchased businesses, less amortization 17,517 18,150
Miscellaneous other assets 10,472 10,256
-------- --------
$297,461 $288,673
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities $ 78,647 $ 78,181
Current portion of long-term debt 5,000 5,000
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Total current liabilities 83,647 83,181
Long-term debt 41,000 35,000
Deferred income taxes and other 7,883 7,565
Minority interest 6,515 5,282
Shareholders' equity:
Common stock 234 234
Additional paid-in capital 12,123 12,123
Retained earnings 180,091 179,446
Foreign currency translation adjustment (309) (435)
Treasury stock at cost (33,723) (33,723)
-------- --------
158,416 157,645
-------- --------
$297,461 $288,673
======== ========
Note: The balance sheet at September 30, 1994 has been derived from the audited
financial statements at that date.
See accompanying notes.
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CUBIC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(thousands of dollars)
Six Months Ended
March 31
1995 1994
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Operating Activities:
Net income $ 2,232 $ 1,612
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 5,392 4,548
Minority interest 1,233 509
Cumulative effect of accounting change - (1,379)
Undistributed earnings of affiliates (84) (235)
Changes in operating assets and liabilities (21,514) 14,469
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NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (12,741) 19,524
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Investing Activities:
Acquisition of business, net of cash acquired - 3,123
Sales of marketable securities 786 6,007
Net additions to property, plant and equipment
and toll equipment under operating leases (3,593) (3,539)
Other items - net 23 (1,600)
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NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (2,784) 3,991
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Financing Activities:
Principal payments on long-term debt - (100)
Long-term borrowings 6,000 2,600
Purchases of treasury stock - (1,619)
Dividends paid (1,587) (1,593)
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NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 4,413 (712)
-------- -------
Effect of exchange rates on cash 126 (121)
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NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (10,986) 22,682
Cash and cash equivalents at the
beginning of the period 25,782 24,496
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CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD $ 14,796 $47,178
======== =======
See accompanying notes.
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CUBIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1995
A. Basis for Presentation
----------------------
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the quarter are not necessarily indicative
of the results that may be expected for the year ended September 30, 1995.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on form 10-K for
the year ended September 30, 1994.
Certain prior period amounts have been reclassified to conform to
current period classifications.
B. Per Share Amounts
-----------------
Per share amounts are based upon the weighted average number of shares
of common stock outstanding.
C. Change in Accounting for Marketable Securities
----------------------------------------------
In May 1993 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The Company adopted the
provisions of the new standard for investments held as of or acquired after
October 1, 1994, however, adoption of the new rules did not have a material
effect on shareholders' equity at October 1, 1994 or March 31, 1995, as
there was an immaterial difference between the cost and market value of
securities held at those dates.
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CUBIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- continued
D. Contingent Amounts
------------------
Accounts Receivable and Work in Process inventories include
unrecovered costs subject to future negotiation amounting to approximately
$7.6 million and $1.2 million, respectively. These amounts result from
customer-required work performed not specified in contract provisions
and/or delays and interference in work performance caused by others.
Management believes the Company will ultimately recover these contingent
amounts through contract modifications.
E. Review by Independent Accountants
---------------------------------
A review of the data presented was made by Ernst & Young LLP,
independent accountants, in accordance with established professional
standards and procedures, and their report is included herein.
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CUBIC CORPORATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
March 31, 1995
Sales for the quarter ended March 31, 1995 increased by 55% over the same
quarter of the previous year. A significant portion of the sales increase for
the quarter came from Cubic Applications Inc., a business acquired in April
1994. Without the newly acquired company, defense segment sales would have
increased by 14% over the prior year in both the three and six month periods
ending March 31, 1995. Sales for the second quarter of the fiscal year were
higher in the automatic revenue collection systems segment as the result of
increased sales to major customers in New York City and London, England. Sales
for the six months ended March 31, 1995 were also higher because of the
consolidation of Westinghouse Cubic Limited (WCL) as of January 1, 1994, as
discussed in previous reports.
Income from continuing operations for the six months ended March 31, 1995,
increased substantially from the same period in the prior year, but for the
second quarter was up only slightly. The increase in income from continuing
operations was hampered by cost growth on a revenue collection contract with the
Florida Department of Transportation, resulting in the recognition of a loss on
the contract during the quarter ended March 31, 1995. Overall operating profit
in the automatic revenue collection segment was higher for the six month period
ended March 31, 1995, compared to the same period in the prior year, primarily
due to the consolidation of WCL.
During the second quarter of the fiscal year, the defense segment continued its
research and development expenditures for new combat training range and receiver
technology, resulting in limited growth in operating profits during the period.
However, operating profits for this segment increased over the prior year, for
both the second quarter and six month period, as the result of operating profits
contributed by Cubic Applications Inc.
Selling, general and administrative expenses decreased as a percent of sales
from 24% in the six months ended March 31, 1994, to 18% in the same period of
fiscal 1995, as a result of the substantial increase in sales volume, without
the need for corresponding increases in selling, general and administrative
expenses.
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CUBIC CORPORATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- continued
Financial Position and Liquidity
- --------------------------------
During the six month period ended March 31, 1995, cash decreased by $11.0
million. This decrease resulted from increases in long-term contract receivables
and inventories. These uses of cash were partially offset by long-term
borrowings of $6 million during the period. The Company anticipates that the
increasing amounts receivable from customers will turn around and provide
positive cash flows in the remaining quarters of this fiscal year.
The Company's financial condition remains strong with working capital of $116.8
million and a current ratio of 2.4 to 1 at March 31, 1995. The Company expects
that cash on hand and available through the line of credit of its leasing
subsidiary will be adequate to meet its short-term financing needs, although
alternative financing vehicles are being considered and should be in place
before the end of the fiscal year.
The backlog of orders was $385.2 million at March 31, 1995 compared to $406.5
million at September 30, 1994 and $334.9 million at March 31, 1994.
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PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
15--Independent Accountants' Review Report
27--Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CUBIC CORPORATION
Date May 10, 1995 /s/ W. W. Boyle
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W. W. Boyle
Vice President Finance and CFO
Date May 10, 1995 /s/ T. A. Baz
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T. A. Baz
Vice President and Controller
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