SOURCE: Cubic Corporation

August 07, 2008 13:30 ET

Cubic Corp. (AMEX: CUB) Reports Earnings for the Quarter Ended June 30, 2008

SAN DIEGO, CA--(Marketwire - August 7, 2008) - Cubic Corporation (AMEX: CUB) today reported earnings for the third quarter ended June 30, 2008. Earnings were $8.5 million in the third quarter ($.32 per share) versus $11.2 million last year, while for the nine-month period, earnings were $28.8 million ($1.08 per share) this year compared to $30.7 million last year.

Sales for the third quarter were $232.9 million this year compared to $233.7 million in the same quarter last year. Lower sales in defense were offset by increased sales from transportation, however last year's third quarter included sales of $3.1 million from the corrugated box business the company sold in the fourth quarter of 2007. For the first nine months of the fiscal year, sales were $645.9 million compared to $666.7 million a year ago. Sales in several defense related product lines during the current year were impacted by a transition of work from the engineering development phase, where revenue is recognized on a percentage completion basis, to the production phase, where revenues are not realized until the product is delivered and the sales process is complete. This has also resulted in a significant increase in inventories totaling $22.3 million from these product lines in the first nine months of the year.

Operating income for the third quarter was $11.5 million this year compared to $16.6 million in 2007. Operating income for the nine-month period was $42.5 million this year compared to $46.1 million in 2007. Operating income in transportation grew significantly from $4.1 million to $11.6 million in this year's third quarter, and more than doubled from $13.3 million last year to $30.8 million for the nine months ended June 30, 2008. However, improvements in transportation were more than offset by a reduction in defense's operating profits to $0.9 million in the third quarter versus $13.7 million last year, and to $13.5 million for the nine months ended June 30, 2008 compared to $35.1 million last year.

Cash flows from operations in 2008 for the third quarter were $36.5 million and were $61.6 million for the first nine months, with both segments contributing to the positive result.

Transportation Systems Segment

Transportation Systems sales increased from $54.0 million in the third quarter last year to $69.7 million this year. Sales increased primarily due to additional work on contracts in the U.K. and system installation work on a contract in Australia. Sales from system installation contracts in North America were lower, however, this decrease was partially offset by higher sales of spare parts to U.S. customers. For the first nine months of the fiscal year, transportation systems sales increased from $172.0 million in 2007 to $198.3 million this year for the reasons described above.

Operating income from the transportation segment improved from $4.1 million in the third quarter last year to $11.6 million this year. Strong operating income on higher sales from U.K. operations and profits from increased spares sales in the U.S. contributed to the improvement. For the first nine months of the fiscal year, transportation systems operating income more than doubled from $13.3 million to $30.8 million for the reasons described above and due to improved operating performance from system installation contracts in North America.

Defense Segment

Sales from the defense segment decreased in the third quarter from $176.6 million last year to $162.7 million this year. Defense service sales increased 5% in the quarter compared to 2007, primarily from a new Army contract. This was offset by lower combat training system sales due to the transition from engineering development contracts to long-term production orders, which is expected to have only a short-term impact on sales. In addition, sales were down in the communications business due to lower sales from data link contracts. For the first nine months of the fiscal year defense sales decreased from $484.7 million to $447.1 million for the reasons identified above.

Operating income in the defense segment decreased in the third quarter to $0.9 million from $13.7 million last year due to higher costs on development contracts, increased research and development spending and lower sales. Operating income for the first nine months was $13.5 million compared to $35.1 million last year.

Cubic Corporation is the parent company of two major business segments: defense and transportation. The Cubic Defense group is a world leader in realistic combat training systems, mission support services and defense electronics. Cubic Transportation Systems designs and manufactures automatic fare collection systems for public transit authorities. For more information about Cubic, see the company's Web site at www.cubic.com.

In addition to historical matters, this release contains forward-looking statements which are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These forward-looking statements involve predictions of future results. Investors are cautioned that forward-looking statements involve risks and uncertainties which may affect the Company's business and prospects. These include the effects of politics on negotiations and business dealings with government entities, economic conditions in the various countries in which the Company does or hopes to do business, competition and technology changes in the defense and transit industries, and other competitive and technological factors.

Any statements about the Company's expectations, beliefs, plans, objectives, assumptions or future events or future financial and/or operating performance are not historical and may be forward-looking. 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 estimates, assumptions and uncertainties.

Since actual results or outcomes may differ materially from those expressed in any forward-looking statements made by the Company, investors should not place undue reliance on any forward-looking statements. In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance and investors should not use the Company's historical performance to anticipate results or future period trends. Further, any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for the Company to predict which factors will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

                            CUBIC CORPORATION
          CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
              (amounts in thousands, except per share data)


                                  Nine Months Ended    Three Months Ended
                                      June 30,              June 30,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
Net sales:
  Products                      $ 360,362  $ 391,563  $ 130,266  $ 138,120
  Services                        285,532    275,162    102,626     95,629
                                ---------  ---------  ---------  ---------
                                  645,894    666,725    232,892    233,749

Costs and expenses:
  Products                        280,258    318,031    104,661    111,226
  Services                        240,695    227,874     86,922     79,461
  Selling, general and
   administrative                  75,740     72,169     26,865     25,252
  Research and development          6,752      2,601      2,969      1,250
                                ---------  ---------  ---------  ---------
                                  603,445    620,675    221,417    217,189
                                ---------  ---------  ---------  ---------

Operating income                   42,449     46,050     11,475     16,560

Other income (expense):
  Interest and dividends            5,047      1,791      2,254        893
  Interest expense                 (2,227)    (2,202)      (836)      (726)
  Other income                        334      1,195          6        665
  Minority interest in loss of
   subsidiary                        (103)       579       (221)       185
                                ---------  ---------  ---------  ---------

Income before income taxes         45,500     47,413     12,678     17,577

Income taxes                       16,700     16,700      4,200      6,400
                                ---------  ---------  ---------  ---------

Net income                      $  28,800  $  30,713  $   8,478  $  11,177
                                =========  =========  =========  =========

Basic and diluted net income
 per common share               $    1.08  $    1.15  $    0.32  $    0.42
                                =========  =========  =========  =========

Dividends per common share      $    0.09  $    0.09  $       -  $       -
                                =========  =========  =========  =========

Average number of common
shares outstanding                 26,725     26,720     26,728     26,720
                                =========  =========  =========  =========




                            CUBIC CORPORATION
                  CONSOLIDATED CONDENSED BALANCE SHEETS
                              (in thousands)


                                                  June 30,   September 30,
                                                    2008         2007
                                                               (See note
                                                (Unaudited)      below)
                                                -----------  -------------
ASSETS
Current assets:
  Cash and cash equivalents                     $   146,591  $      73,563
  Short-term investments                                  -         27,200
  Accounts receivable, net                          258,326        305,672
  Inventories                                        50,476         27,342
  Deferred income taxes and other current
   assets                                            34,038         39,597
                                                -----------  -------------
Total current assets                                489,431        473,374
                                                -----------  -------------

Long-term contract receivables                       38,355         16,650
Property, plant and equipment - net                  55,319         57,251
Goodwill                                             35,353         36,003
Other assets                                         15,641          9,287
                                                -----------  -------------
                                                $   634,099  $     592,565
                                                ===========  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable                        $    26,844  $      27,992
  Customer advances                                  80,378         58,412
  Other current liabilities                          70,230         69,970
  Income taxes payable                                1,544          4,905
  Current portion of long-term debt                   6,120          6,138
                                                -----------  -------------
Total current liabilities                           185,116        167,417
                                                -----------  -------------

Long-term debt                                       26,559         32,699
Other long-term liabilities                          16,596          9,678

Shareholders' equity:
  Common stock                                       12,485         12,357
  Retained earnings                                 399,218        375,299
  Accumulated other comprehensive income             30,196         31,184
  Treasury stock at cost                            (36,071)       (36,069)
                                                -----------  -------------
                                                    405,828        382,771
                                                -----------  -------------
                                                $   634,099  $     592,565
                                                ===========  =============

Note: The balance sheet at September 30, 2007 has been derived from the
audited financial statements at that date.




                            CUBIC CORPORATION
        CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                              (in thousands)

                                  Nine Months Ended    Three Months Ended
                                      June 30,              June 30,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------

Operating Activities:
  Net income                    $  28,800  $  30,713  $   8,478  $  11,177
  Adjustments to reconcile net
   income to net cash provided
   by (used in) operating
   activities:
    Depreciation and
     amortization                   6,139      6,782      2,035      2,262
    Changes in operating assets
     and liabilities               26,647     32,351     26,019     18,742
                                ---------  ---------  ---------  ---------
NET CASH PROVIDED BY
 OPERATING ACTIVITIES              61,586     69,846     36,532     32,181
                                ---------  ---------  ---------  ---------

Investing Activities:
  Net additions to property,
   plant and equipment             (6,799)    (6,756)    (1,935)    (3,430)
  Proceeds from sales of
   marketable securities           76,300    181,028     10,000     88,874
  Purchases of marketable
   securities                     (49,100)  (193,340)   (10,000)  (101,634)
                                ---------  ---------  ---------  ---------
NET CASH PROVIDED BY (USED IN)
 INVESTING ACTIVITIES              20,401    (19,068)    (1,935)   (16,190)
                                ---------  ---------  ---------  ---------

Financing Activities:
  Change in short-term
   borrowings, net                      -    (10,000)         -          -
  Principal payments on
   long-term borrowings            (5,950)    (5,937)      (173)      (173)
  Purchases of treasury stock          (2)         -         (2)         -
  Dividends paid                   (2,405)    (2,405)    (2,405)    (2,405)
  Other                               128          -          -          -
                                ---------  ---------  ---------  ---------
NET CASH USED IN
 FINANCING ACTIVITIES              (8,229)   (18,342)    (2,580)    (2,578)
                                ---------  ---------  ---------  ---------

Effect of exchange rates on
 cash                                (730)     1,634       (683)       669
                                ---------  ---------  ---------  ---------

NET INCREASE IN CASH AND
 CASH EQUIVALENTS                  73,028     34,070     31,334     14,082

Cash and cash equivalents at
 the beginning of the period       73,563     42,380    115,257     62,368
                                ---------  ---------  ---------  ---------

CASH AND CASH EQUIVALENTS AT
 THE END OF THE PERIOD          $ 146,591  $  76,450  $ 146,591  $  76,450
                                =========  =========  =========  =========

Contact Information

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