- Sales of $1.462 billion for fiscal year
2016 and sales of $406.6 million for the fourth quarter.
- Net income of $1.7 million or $0.06 per
diluted share for the year, and net loss for the fourth quarter of
$7.5 million or $0.29 per diluted share.
- Adjusted EBITDA(1) of $118.1
million for fiscal year 2016.
- Cash flows provided by operating
activities of $44.6 million for the year.
- Total backlog of $2.940 billion as of
September 30, 2016.
- Sales guidance for fiscal 2017 of
$1.505 billion to $1.555 billion; EPS guidance of $0.40 to $0.80
per diluted share; Net income guidance of $10 million to $20
million; EBITDA(1) guidance of $80 million to $100 million;
Adjusted EBITDA(1) (2) guidance of $120 million to $140
million(3).
Cubic Corporation (NYSE: CUB) today reported its financial
results for the fourth quarter and fiscal year ended
September 30, 2016.
As described in a press release dated October 13, 2016, Sales,
EBITDA(1), Adjusted EBITDA(1) and EPS were lower than previous
expectations and the guidance provided by the Company in August,
mainly due to funding delays from the U.S. Department of Defense,
specifically for higher margin orders in the Mission Solutions and
Training Systems businesses within the Cubic Global Defense Systems
(CGD Systems) segment.
“While we are disappointed by the shortfall in our fiscal year
2016 financial results, we fully anticipate the delayed orders will
be received in fiscal year 2017,” said Bradley H. Feldmann,
president and chief executive officer of Cubic Corporation. “As
part of our One Cubic initiative, we will complete our ERP
implementation which will position us for stronger growth and
greater efficiency going forward.”
Financial Results
Comparison
Fourth Quarter Fiscal 2016
Fourth quarter sales of $406.6 million in 2016 were 5 percent
lower than sales of $425.9 million in the corresponding quarter
last year. Sales would have been $5.9 million higher this year
absent the negative impact on quarterly sales from changes in
foreign currency rates compared to last year. Sales from recent
acquisitions, which were all in the CGD Systems segment, for the
fourth quarter of fiscal 2016 were $36.2 million compared to $23.2
million during the same quarter last year. Sales decreased for the
quarter from CGD Systems and Cubic Global Defense Services (CGD
Services), and were virtually unchanged for Cubic Transportation
Systems (CTS).
Operating income decreased 70 percent to $10.5 million for the
fourth quarter of 2016 compared to $34.7 million in the fourth
quarter of 2015. Operating income for the quarter was lower from
all three operating segments. Foreign currency exchange translation
reduced operating income by $1.2 million in the quarter compared to
last year. Expenses incurred in the fourth quarter of 2016 for
strategic and IT system resource planning as part of One Cubic
initiatives totaled $12.4 million compared to $5.3 million in the
fourth quarter of last year.
Adjusted EBITDA(1), which excludes acquisition-related expenses,
expenses related to ERP system development and supply chain process
redesign, restructuring costs and other non-operating income and
expenses, was $35.7 million or 9 percent of sales for the
quarter compared to $54.0 million or 13 percent of sales in the
fourth quarter of fiscal 2015.
Full Year Fiscal 2016
Sales in 2016 were $1.462 billion compared to $1.431 billion in
2015, an increase of 2 percent. Increases in sales for CTS and CGD
Systems of 3 percent and 5 percent, respectively, were partially
offset by a 3 percent decrease in CGD Services sales. Revenues from
businesses acquired in 2016 and 2015, all within the CGD Systems
operating segment, were $79.6 million in 2016 compared to $45.8
million in 2015. The impact of changes in foreign currency exchange
rates, particularly the strengthening of the U.S. dollar against
the British pound, adversely affected sales. The average exchange
rates between the prevailing currencies in foreign operations and
the U.S. dollar had a negative impact on sales of 2 percent, or
$32.3 million in 2016 compared to 2015.
Operating income was $7.2 million in 2016 compared to $75.4
million in 2015, a decrease of 90 percent. CGD Systems had an
operating loss of $17.1 million in 2016 compared to operating
income of $18.4 million in 2015 primarily due to the impact of
purchase accounting on businesses acquired in this segment during
fiscal 2016, as further described below. CTS operating income
decreased by 24 percent primarily related to lower profits on the
transition to the follow-on fare collection contract in London as
well as the impact of changes in foreign exchange rates, partially
offset by improved profitability on contracts in Chicago, Sydney
and Vancouver. CGD Services operating income increased by 70
percent in 2016 due to decreased amortization of purchased
intangibles and the impact of cost-saving efforts. Unallocated
corporate and other costs for fiscal 2016 were $44.4 million in
2016 compared to $25.5 million in 2015 which includes expenses
incurred for strategic and IT system resource planning of $36.8
million in 2016 compared to $13.2 million in 2015. The average
exchange rates between the prevailing currencies in foreign
operations and the U.S. dollar resulted in a decrease in operating
income of $4.0 million in 2016 compared to 2015.
Adjusted EBITDA(1) decreased to $118.1 million in fiscal
year 2016 from $140.4 million last year largely driven by decreased
margins on the follow-on fare collection contract in London and by
lower sales of CGD Systems products caused by delayed orders. These
decreases were partially offset by improved profitability on
transportation contracts in Sydney, Vancouver and Chicago, as well
as improved profitability in CGD Services operations.
Net income attributable to Cubic decreased to $1.7 million (6
cents per share) in 2016 from $22.9 million (85 cents per share) in
2015. The change was primarily due to the decrease in operating
income described above and an increase in interest expense related
to increased outstanding debt, partially offset by a reduction in
income tax expense. Cubic’s income tax benefit totaled $9.2 million
for fiscal 2016, compared to an income tax provision of $49.0
million in fiscal 2015. The benefit for income taxes in fiscal 2016
primarily results from the benefit derived from the release of a
portion of the existing valuation allowance against U.S. deferred
tax assets due to acquired deferred tax liabilities, partially
offset by nondeductible acquisition related compensation expenses.
In 2015, tax expense of $35.8 million was recorded in order to
establish a valuation allowance against U.S. deferred tax assets.
Due to the effects of the deferred tax asset valuation allowance,
the effective tax rates for fiscal 2016 and 2015 does not correlate
to the amount of pretax income or loss. The change in the valuation
allowance does not have any impact on cash flows, nor does such an
allowance preclude the use of loss carryforwards or other deferred
tax assets in the future. Until a pattern of continuing
profitability is established, U.S. income tax expense or benefit
related to the recognition of deferred tax for future periods will
be offset by decreases or increases in the valuation allowance with
no net effect on income.
Operating activities provided cash of $44.6 million in the year
ended September 30, 2016, compared to $89.7 million in 2015. In
2016, CTS and CGD Services contributed to positive operating cash
flows, while CGD Systems operations used cash. The use of cash in
CGD Systems resulted primarily from the cash flows related to
transaction costs on acquired businesses of $27.8 million in 2016.
In addition, cash flows related to strategic and IT system resource
planning efforts that were expensed are classified as operating
cash outflows. These expenses totaled $36.8 million in 2016
compared to $13.2 million in 2015.
The Company paid cash of $243.5 million for the acquisitions of
GATR and TeraLogics in fiscal 2016, and incurred capital
expenditures totaling $32.1 million. Financing activities for
fiscal 2016 consisted primarily of the net proceeds of $180.0
million from short-term borrowings and $74.5 million from long-term
borrowings that, in addition to existing cash resources, were used
to finance the business acquisitions above.
Total backlog was $2.940 billion at the end of fiscal year 2016
compared to $2.976 billion in the prior year, a decrease of $36.0
million. Businesses acquired in fiscal 2016 added $49.0 million of
backlog at acquisition. Changes in exchange rates between the
prevailing currency in the Company’s foreign operations and the
U.S. dollar as of the end of fiscal 2016 decreased backlog by $81.3
million compared to September 30, 2015.
(1)
EBITDA and Adjusted EBITDA are non-GAAP
financial measures - see the section titled “Use of Non-GAAP
Financial Information” for additional information regarding these
non-GAAP financial measures.
(2)
Fiscal year 2017 guidance for Adjusted
EBITDA adds back to EBITDA an estimated $25-$35 million of pretax
expense related to the strategic investment in ERP and supply chain
improvements and $8-$12 million of pretax acquisition related
expenses for recent business acquisitions.
(3) Key foreign exchange rates (full year average estimated rates)
used in the forecasts of sales, EPS, EBITDA and Adjusted EBITDA
compared to the U.S. dollar were as follows: British pound — 1.22;
Australian dollar — 0.76; New Zealand dollar — 0.72.
Reportable Segment Results
Cubic Transportation Systems (40 percent of fiscal 2016
consolidated sales)
September 30, 2016 2015
2014 (in millions) Transportation Systems Segment
Sales $ 586.4 $ 566.8 $ 599.7 Transportation Systems Segment
Operating Income $ 57.5 $ 75.9 $ 65.9
CTS sales increased 3 percent to $586.4 million in 2016 compared
to $566.8 million in 2015. Changes in foreign currency exchange
rates had a significant adverse impact on CTS sales. The average
exchange rates between the prevailing currencies in foreign
operations and the U.S. dollar resulted in a decrease in CTS sales
of $28.6 million for 2016 compared to 2015.
CTS operating income decreased 24 percent in 2016 to $57.5
million compared to $75.9 million in 2015. The average exchange
rates between the prevailing currency in foreign operations and the
U.S. dollar resulted in a reduction in CTS operating income of $3.9
million for 2016 compared to 2015. The decrease in operating income
was primarily related to lower profits on the transition to
the follow-on fare collection contract in London, partially
offset by improved profitability on service contracts in Sydney,
Chicago and Vancouver.
Cubic Global Defense Systems (33 percent of fiscal 2016
consolidated sales)
September 30, 2016
2015 2014 (in millions) Cubic Global
Defense Systems Segment Sales $ 484.2 $ 462.1 $ 400.6 Cubic
Global Defense Systems Segment Operating Income (Loss) $ (17.1 ) $
18.4 $ 26.8
CGD Systems sales increased 5 percent to $484.2 million in 2016
compared to $462.1 million in 2015. Businesses acquired by CGD
Systems in fiscal years 2016 and 2015 contributed sales of $79.6
million in 2016 compared to $45.8 million in 2015. Sales were
higher from air combat training, live fire training systems and
simulation systems. These increases were partially offset by lower
sales from ground combat training systems, datalinks and personnel
locator systems.
CGD Systems had an operating loss of $17.1 million in 2016
compared to operating income of $18.4 million in 2015. The change
in CGD Systems operating results was largely driven by the charges
incurred related to business acquisitions. Including these impacts
of business purchase accounting, the businesses acquired in 2016
and 2015 had an operating loss of $32.7 million for 2016 compared
to operating income of $0.9 million in 2015. Included in the 2016
operating loss were CGD Systems business acquisition transaction
costs of $27.8 million. These transaction costs included an $18.5
million charge incurred in the second quarter of fiscal 2016 in
connection with GATR related to cash paid in the acquisition to
recipients of GATR’s share-based compensation awards. For fiscal
2016, operating income was higher than fiscal 2015 on increased air
combat training system sales, and profitability improved on virtual
training system sales. In 2016, operating income declined on lower
sales of ground combat training systems, datalinks and personnel
locator systems.
Cubic Global Defense Services (27 percent of fiscal 2016
consolidated sales)
September 30, 2016 2015
2014 (in millions) Cubic Global Defense Services
Segment Sales $ 391.1 $ 402.1 $ 398.1 Cubic Global Defense
Services Segment Operating Income $ 11.2 $ 6.6 $ 7.8
CGD Services sales decreased 3 percent to $391.1 million in 2016
compared to $402.1 million in 2015. Sales for 2016 were lower
primarily because of decreased activity supporting Special
Operations Forces training and lower activity on U.S. Army support
contracts other than at the Joint Readiness Training Center, where
activity and revenue was slightly higher than fiscal 2015. These
decreases were partially offset by higher sales from intelligence
support services.
CGD Services operating income increased 70 percent to $11.2
million in 2016 compared to $6.6 million in 2015. The largest
individual contributor to the increase in CGD Services operating
margins was a $2.9 million decrease in amortization expense on
purchased intangible assets. In fiscal 2016, operating margins also
increased on a number of fixed price contracts as a result of cost
efficiency efforts. In fiscal 2016, the increase in operating
income was partially offset by an operating loss realized in the
first quarter of fiscal 2016 on a Marine Corps training contract
that was bid in an extremely competitive environment.
Outlook for 2017
- Sales guidance for fiscal 2017 of
between $1.505 billion and $1.555 billion.
- EPS guidance of $0.40 to $0.80 per
diluted share.
- EBITDA(1) guidance of $80 million
to $100 million.
- Adjusted EBITDA(1) (2) guidance of
$120 million to $140 million(3).
“We expect our financial performance in fiscal year 2017 will
show a strong improvement over fiscal year 2016 results,” said
Feldmann. “We believe our growth prospects are sound with several
key contracts in the coming year. We have a superb team that will
drive growth and increase shareholder value.”
Conference Call
Cubic management will host a conference call to discuss the
Company’s fourth quarter and fiscal year 2016 results today,
Monday, November 21, 2016 at 1:00 p.m. EST/10:00
a.m. PST, which will be simultaneously broadcast over the
Internet. Bradley H. Feldmann, president and chief executive
officer and John “Jay” D. Thomas, executive vice president and
chief financial officer, will host the call.
Conference Dial-In Information
Financial analysts and institutional investors interested in
participating in the call are invited to dial:
- (877) 407-9708 for domestic
callers
- (201) 689-8259 for international
callers
Please dial-in approximately 10 minutes prior to the start of
the call.
Audio Webcast
A live webcast of the conference call and presentation slides
will be accessible on our website under the “Investor Relations”
tab at www.cubic.com.
Please visit the website at least 15 minutes prior to the call
to register, download and install any streaming media software
needed to listen to the webcast. A replay of the broadcast
will be available on the Investor Relations tab of Cubic’s
website.
About Cubic
Cubic Corporation designs, integrates and operates systems,
products and services focused in the transportation, defense
training and secure communications markets. Cubic Transportation
Systems is a leading integrator of payment and information
technology and services to create intelligent travel solutions for
transportation authorities and operators. Cubic Global Defense is a
leading provider of live, virtual, constructive and game-based
training solutions, special operations and intelligence for the
U.S. and allied forces. Cubic Mission Solutions provides networked
Command, Control, Communications, Computers, Intelligence,
Surveillance and Reconnaissance (C4ISR) capabilities for defense,
intelligence, security and commercial missions. For more
information about Cubic, please visit the company's website at
www.cubic.com or on Twitter @CubicCorp.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that are subject to the safe harbor created by such Act.
Forward-looking statements include, among others, statements about
our expectations regarding future events or our future financial
and/or operating performance; our receipt of delayed orders in
2017; the completion of our ERP implementation; improvement in our
financial performance in fiscal year 2017; our growth prospects and
upcoming key contracts; and increases in shareholder value. These
statements are often, but not always, made through the use of words
or phrases such as “may,” “will,” “anticipate,” “estimate,” “plan,”
“project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”
“predict,” “potential,” “opportunity” and similar words or phrases
or the negatives of these words or phrases. These statements
involve risks, estimates, assumptions and uncertainties that could
cause actual results to differ materially from those expressed in
these statements, including, among others: our dependence on U.S.
and foreign government contracts; delays in approving U.S. and
foreign government budgets and cuts in U.S. and foreign government
defense expenditures; the ability of certain government agencies to
unilaterally terminate or modify our contracts with them; the
effect of sequestration on our contracts; our assumptions
concerning behavior by public transit authorities; our ability to
successfully integrate new companies into our business and to
properly assess the effects of such integration on our financial
condition; the U.S. government’s increased emphasis on awarding
contracts to small businesses, and our ability to retain existing
contracts or win new contracts under competitive bidding processes;
negative audits by the U.S. government; the effects of politics and
economic conditions on negotiations and business dealings in the
various countries in which we do business or intend to do business;
risks associated with the restatement of our prior consolidated
financial statements, including our identification of material
weaknesses in our internal control over financial reporting;
competition and technology changes in the defense and
transportation industries; the change in the way transit agencies
pay for transit systems; our ability to accurately estimate the
time and resources necessary to satisfy obligations under our
contracts; the effect of adverse regulatory changes on our ability
to sell products and services; our ability to identify, attract and
retain qualified employees; our failure to properly implement our
ERP system; unforeseen problems with the implementation and
maintenance of our information systems; business disruptions due to
cyber security threats, physical threats, terrorist acts, acts of
nature and public health crises; our involvement in litigation,
including litigation related to patents, proprietary rights and
employee misconduct; our reliance on subcontractors and on a
limited number of third parties to manufacture and supply our
products; our ability to comply with our development contracts and
to successfully develop, introduce and sell new products, systems
and services in current and future markets; defects in, or a lack
of adequate coverage by insurance or indemnity for, our products
and systems; and changes in U.S. and foreign tax laws, exchange
rates or our economic assumptions regarding our pension plans. In
addition, please refer to the risk factors contained in our SEC
filings available at www.sec.gov, including our most recent Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q.
Because the risks, estimates, assumptions and uncertainties
referred to above could cause actual results or outcomes to differ
materially from those expressed in any forward-looking statements,
you should not place undue reliance on any forward-looking
statements. Any forward-looking statement speaks only as of the
date hereof, and, except as required by law, we undertake no
obligation to update any forward-looking statement to reflect
events or circumstances after the date hereof.
Use of Non-GAAP Financial Information
We believe that the presentation of Earnings before interest,
taxes, depreciation, amortization (EBITDA) and Adjusted EBITDA
included in this report provides useful information to investors
with which to analyze our operating trends and performance and
ability to service and incur debt. Also, we believe EBITDA
facilitates company-to-company operating performance comparisons by
backing out potential differences caused by variations in capital
structures (affecting net interest expense), taxation, variations
in organic vs. inorganic growth (affecting amortization expense)
and the age and book depreciation of property, plant and equipment
(affecting relative depreciation expense). We believe Adjusted
EBITDA further facilitates company-to-company operating comparisons
by backing out items that we believe are not part of our core
operating performance. Items backed out of Adjusted EBITDA are
comprised of expenses incurred in the development of our ERP system
and the redesign of our supply chain, business acquisition expenses
including retention bonus expenses, due diligence and consulting
costs incurred in connection with the acquisitions, expenses
recognized related to the change in the fair value of contingent
consideration for acquisitions, restructuring costs and income and
expenses classified as other non-operating income and expenses
which may vary for different companies for reasons unrelated to
operating performance.
In addition, EBITDA and Adjusted EBITDA are key drivers of the
Company’s core operating performance and major factors in
management’s bonus compensation each year. Management has excluded
the effects of these items in these measures to assist investors in
analyzing and assessing our past and future core operating
performance.
In addition, we believe that EBITDA and Adjusted EBITDA are
frequently used by securities analysts, investors and other
interested parties in their evaluation of companies, many of which
present EBITDA, Adjusted EBITDA and/or other adjusted measures when
reporting their results.
EBITDA and Adjusted EBITDA are not measurements of financial
performance under GAAP and should not be considered as alternatives
to net income as a measure of performance. In addition, other
companies may define EBITDA and Adjusted EBITDA differently and, as
a result, our measures of EBITDA and Adjusted EBITDA may not be
directly comparable to EBITDA and Adjusted EBITDA of other
companies. Furthermore, EBITDA and Adjusted EBITDA have limitations
as analytical tools, and you should not consider either of them in
isolation, or as a substitute for analysis of our results as
reported under GAAP.
Because of these limitations, EBITDA and Adjusted EBITDA should
not be considered as measures of discretionary cash available to us
to invest in the growth of our business. We compensate for these
limitations by relying primarily on our GAAP results and using
EBITDA and Adjusted EBITDA only supplementally. You are cautioned
not to place undue reliance on EBITDA or Adjusted EBITDA.
The following table reconciles EBITDA and Adjusted EBITDA to net
income attributable to Cubic, which we consider to be the most
directly comparable GAAP financial measure to EBITDA and Adjusted
EBITDA.
Years Ended September 30, 2016
2015 2014 Net income attributable to Cubic $
1,735 $ 22,885 $ 69,491 Add: Interest expense, net 9,723
2,591 2,688 Income taxes (9,212 ) 48,997 19,831 Depreciation and
amortization 45,478 37,662 30,440 Noncontrolling interest in income
of VIE - 29 89 EBITDA 47,724
112,164 122,539 Adjustments to EBITDA:
Acquisition related expenses, excluding amortization 28,682 7,928
5,586 ERP system development and supply chain process redesign
expense 34,819 13,176 - Restructuring costs 1,852 6,272 1,094 Other
non-operating expense (income), net 4,972 885
391 Adjusted EBITDA $ 118,049 $ 140,425 $ 129,610
Financial Statements
CUBIC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
Years Ended
September 30,
2016 2015 2014 Net sales: Products $ 661,904 $
607,226 $ 583,937 Services 799,761 823,819
814,415 1,461,665 1,431,045 1,398,352 Costs and expenses: Products
473,444 451,295 424,682 Services 643,462 640,031 657,853 Selling,
general and administrative expenses 269,593 212,518 181,672
Research and development 31,976 17,992 17,959 Amortization of
purchased intangibles 34,120 27,550 22,602 Restructuring costs
1,852 6,272 1,094 1,454,447
1,355,658 1,305,862 Operating income 7,218 75,387
92,490 Other income (expenses): Interest and dividend income
1,476 1,809 1,396 Interest expense (11,199) (4,400) (4,084) Pension
settlement loss (2,671) — — Other income (expense), net
(2,301) (885) (391) Income (loss) before
income taxes (7,477) 71,911 89,411 Income tax expense
(benefit) (9,212) 48,997 19,831 Net
income 1,735 22,914 69,580 Less noncontrolling interest in
income of VIE — 29 89 Net income
attributable to Cubic $ 1,735 $ 22,885 $ 69,491 Net income
per share attributable to Cubic: Basic $ 0.06 $ 0.85 $ 2.59 Diluted
0.06 0.85 2.59 Dividends per common share Weighted
average shares used in per share calculations: Basic 26,976 26,872
26,787 Diluted 27,040 26,938 26,845
CUBIC CORPORATION
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share
data)
September 30,
2016 2015
ASSETS Current assets: Cash and cash equivalents $ 197,127 $
218,476 Restricted cash 75,648 69,245 Marketable securities 12,996
30,533 Accounts receivable: Trade and other receivables 15,488
12,812 Long-term contracts 367,419 346,292 Allowance for doubtful
accounts (326 ) (179 ) 382,581 358,925
Recoverable income taxes 9,706 753 Inventories 66,362 63,700
Deferred income taxes — 1,384 Prepaid expenses and other current
assets 38,502 32,286 Total current
assets 782,922 775,302 Long-term
contract receivables 20,926 36,809 Long-term capitalized contract
costs 65,382 73,017 Property, plant and equipment, net 96,316
74,690 Deferred income taxes 2,194 11,443 Goodwill 406,946 237,899
Purchased intangibles, net 123,403 72,936 Other assets 6,590
18,180 $ 1,504,679 $ 1,300,276
CUBIC CORPORATION
CONSOLIDATED BALANCE SHEETS -
continued
(amounts in thousands, except per share data)
September 30,
2016 2015
LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities:
Short-term borrowings $ 240,000 $ 60,000 Trade accounts payable
81,172 47,170 Customer advances 49,481 77,083 Accrued compensation
73,619 51,065 Other current liabilities 74,071 92,854 Income taxes
payable 1,450 4,675 Deferred income taxes — 13,404 Current
maturities of long-term debt 450 525
Total current liabilities 520,243 346,776
Long-term debt 200,562 126,180 Accrued pension
liability 46,865 26,025 Deferred compensation 10,643 9,913 Income
taxes payable 11,855 8,519 Deferred income taxes 3,980 1,971 Other
non-current liabilities 20,635 24,604 Commitments and
contingencies Shareholders’ equity: Preferred stock, no par
value: Authorized--5,000 shares Issued and outstanding--none — —
Common stock, no par value: Authorized--50,000 shares 35,937 issued
and 26,992 outstanding at September 30, 2016 35,828 issued and
26,883 outstanding at September 30, 2015 32,756 25,560 Retained
earnings 813,035 818,642 Accumulated other comprehensive loss
(119,817 ) (51,836 ) Treasury stock at cost - 8,945 shares
(36,078 ) (36,078 ) Total shareholders’ equity
689,896 756,288 Total liabilities and
shareholders’ equity $ 1,504,679 $ 1,300,276
CUBIC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands, except per share data)
Years Ended September 30, 2016
2015 2014
Operating Activities: Net income $ 1,735 $ 22,914 $ 69,580
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 45,478 37,662
30,440 Share-based compensation expense 8,762 8,325 5,625 Change in
fair value of contingent consideration 1,274 3,607 — Inventory
write-down — — 598 Deferred income taxes (23,988 ) 33,816 2,684 Net
pension cost (benefit) 1,102 (3,224 ) (1,626 ) Excess tax benefits
from equity incentive plans 3 33 (310 ) Changes in operating assets
and liabilities, net of effects from acquisitions: Accounts
receivable 4,409 (2,230 ) (4,300 ) Inventories (62 ) (21,669 )
20,590 Prepaid expenses and other current assets 3,403 (15,045 )
(6,488 ) Long-term capitalized contract costs 7,635 3,192 (7,246 )
Accounts payable and other current liabilities 19,874 25,599 6,505
Customer advances (24,900 ) (10,200 ) 7,304 Income taxes (5,519 )
8,847 (9,768 ) Other items, net 5,396 (1,938 )
1,222 NET CASH PROVIDED BY OPERATING ACTIVITIES
44,602 89,689 114,810
Investing Activities: Acquisition of businesses, net of cash
acquired (243,459 ) (92,178 ) (83,456 ) Purchases of marketable
securities (28,470 ) (58,855 ) (25,557 ) Proceeds from sales or
maturities of marketable securities 43,456 51,173 4,050 Purchases
of property, plant and equipment (32,093 ) (22,202 ) (16,620 )
Purchases of other assets — (2,993 ) —
NET CASH USED IN INVESTING ACTIVITIES (260,566 )
(125,055 ) (121,583 ) Financing Activities:
Proceeds from short-term borrowings 288,900 111,300 38,000
Principal payments on short-term borrowings (108,900 ) (51,300 )
(38,000 ) Proceeds from long-term borrowings 75,000 25,000 —
Principal payments on long-term debt (494 ) (537 ) (573 ) Deferred
financing fees (3,647 ) — — Proceeds from issuance of common stock
— — 113 Purchase of common stock (1,563 ) (2,652 ) (1,204 )
Dividends paid (7,285 ) (7,256 ) (6,429 ) Excess tax benefits from
equity incentive plans (3 ) (33 ) 310 Contingent consideration
payments related to acquisitions of businesses (2,479 ) — (2,368 )
Purchase of noncontrolling interest — (1,029 ) — Net change in
restricted cash (6,403 ) (189 ) 325 NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 233,126
73,304 (9,826 ) Effect of
exchange rates on cash (38,511 ) (10,950 )
4,195 NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (21,349 ) 26,988 (12,404 ) Cash and cash
equivalents at the beginning of the period 218,476
191,488 203,892 CASH AND CASH
EQUIVALENTS AT THE END OF THE PERIOD $ 197,127 $ 218,476
$ 191,488 Supplemental disclosure of non-cash
investing and financing activities: Liability incurred to acquire
GATR, net $ 6,788 $ — $ — Liability incurred to acquire TeraLogics,
net $ 4,998 $ — $ — Liability incurred to acquire H4 Global, net $
952 $ — $ — Liability incurred to acquire DTECH, net $ — $ 11,808 $
— Liability incurred to acquire Intific, net $ — $ — $ 1,173
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version on businesswire.com: http://www.businesswire.com/news/home/20161121005623/en/
Cubic CorporationDiane DyerInvestor Relations+1
858-505-2907orJohn D. ThomasMedia+1 858-505-2989
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