SOURCE: Cubic Corporation

Cubic Corporation

December 09, 2009 14:56 ET

Cubic Corp. (NYSE: CUB) Reports Record Sales and Earnings for the Fiscal Year Ended September 30, 2009

SAN DIEGO, CA--(Marketwire - December 9, 2009) - Cubic Corporation (NYSE: CUB) today reported record high sales and earnings for the fiscal year ended September 30, 2009. Sales in fiscal 2009 were $1.017 billion, exceeding $1 billion for the first time and representing an increase of 15 percent over sales of $881.1 million in 2008. Net income increased 51 percent, to $55.7 million or $2.08 per share from $36.9 million ($1.38 per share) in 2008.

Operating income increased 59 percent, from $53.3 million in 2008 to $84.7 million this year and cash flows from operations were strong, at $176.0 million, compared to $92.7 million in 2008.

Beginning with the fiscal fourth quarter of 2009, the Company is now reporting results of its defense business as two separate segments, Defense Systems and Mission Support Services. Prior year results have been reclassified for comparison purposes.

Transportation Systems Segment

Cubic Transportation Systems (CTS) sales increased 11 percent to $303.4 million in 2009 from $272.3 million in 2008. A lower average exchange rate between the British pound and the U.S. dollar in 2009 resulted in a decrease in the dollar value of U.K. sales by $38.6 million compared to the rate in effect in 2008.

Operating income from CTS increased 3 percent in 2009 to $44.1 million from $43.0 million in 2008. Although operating income in the U.K. was higher in 2009 than in 2008, the lower British pound vs. U.S. dollar exchange rate reduced operating income by $8.8 million in 2009.

Defense Systems Segment

Cubic Defense Systems (CDS) sales increased 4 percent to $285.4 million in 2009 from $275.3 million in 2008. Sales increased in both the Training Systems and Communications businesses.

Operating income from CDS improved to $19.0 million in 2009 from a loss of $9.5 million in 2008. Higher sales of training systems and contract restructuring and change orders on fixed-price development contracts contributed to the increase. In addition, the restructuring activity in 2008 designed to streamline operations resulted in improved performance at CDS.

Mission Support Services Segment

Sales at Mission Support Services (MSS) increased 28 percent to $424.4 million in 2009 from $332.5 million in 2008. About half the growth came from Omega Training Systems, a company Cubic acquired late last year.

Operating income from MSS was about the same as in 2008, increasing to $27.9 million from $27.8. Higher operating profits from Omega were offset by amortization and acquisition related costs. A reserve of $1.4 million was provided in the fourth quarter of 2009 for settlement of a wage-related lawsuit on a military contract in California.

Backlog

Total backlog was $2.183 billion at September 30, 2009 compared to $1.773 billion at September 30, 2008. Funded backlog was $1.535 billion at September 30, 2009 compared to $1.073 billion at September 30, 2008.

Financial Condition

The Company finished 2009 with the strongest financial condition in its history. Cash and short-term investments at September 30, 2009 were $252.2 million while long-term debt was only $25.1 million. The total debt to capital ratio was less than 6 percent at the fiscal year end.

SEC Form 10-K

The Company also announced that it filed its form 10-K with the Securities and Exchange Commission today. This report may be found at www.cubic.com under "Investor Info." Shareholders may also receive a free hard copy upon written request to the Company or by E-mail to Investor.Relations@Cubic.com.

Cubic Corporation is the parent company of three major business segments: defense systems, mission support services and transportation systems. Cubic Defense Systems is a leading provider of realistic combat training systems and defense electronics. Mission Support Services is a leading provider of training, operations, maintenance, technical and other support services. Cubic Transportation Systems is the world's leading provider of automated fare collection systems and services 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 STATEMENTS OF INCOME



                                     Years Ended       Three Months Ended
                                    September 30,         September 30,
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
                                  (in thousands, except per share data)

Net sales:
   Products                     $ 526,879  $ 478,478  $ 144,814  $ 118,116
   Services                       489,778    402,657    135,942    117,125
                                ---------  ---------  ---------  ---------
                                1,016,657    881,135    280,756    235,241
Costs and expenses:
   Products                       394,478    376,213    113,997     95,955
   Services                       411,038    333,268    112,021     92,573
   Selling, general and
    administrative expenses       111,828     98,613     30,443     23,218
   Restructuring costs                  -      6,203          -      6,203
   Research and development         8,173     12,231      2,316      5,479
   Amortization of purchased
    intangibles                     6,432      1,343      1,859        998
                                ---------  ---------  ---------  ---------
                                  931,949    827,871    260,636    224,426
                                ---------  ---------  ---------  ---------

Operating income                   84,708     53,264     20,120     10,815

Other income (expenses):
   Gain on sale of assets               -      1,238          -      1,238
   Interest and dividends           1,664      6,351        408      1,304
   Interest expense                (2,031)    (2,745)      (409)      (518)
   Other income (expense)             899       (653)      (637)      (987)
   Minority interest in income
    of subsidiary                       -       (216)         -       (113)
                                ---------  ---------  ---------  ---------

Income before income taxes         85,240     57,239     19,482     11,739

Income taxes                       29,554     20,385      7,104      3,685
                                ---------  ---------  ---------  ---------

Net income                      $  55,686  $  36,854  $  12,378  $   8,054
                                =========  =========  =========  =========



Basic and diluted net income
 per common share               $    2.08  $    1.38  $    0.46  $    0.30
                                =========  =========  =========  =========

Average number of common
 shares outstanding                26,731     26,725     26,732     26,727
                                =========  =========  =========  =========



                            CUBIC CORPORATION

                       CONSOLIDATED BALANCE SHEETS

                                                          September 30,
                                                        2009       2008
                                                      ---------  ---------
                                                         (in thousands)
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                           $ 244,074  $ 112,696
  Short-term investments                                  8,127          -
  Accounts receivable:
    Trade and other receivables                          12,833      9,014
    Long-term contracts                                 223,186    264,748
    Allowance for doubtful accounts                      (4,558)    (4,878)
                                                      ---------  ---------
                                                        231,461    268,884

  Inventories                                            49,107     45,118
  Deferred income taxes                                  22,132     27,082
  Prepaid expenses and other current assets              29,957     21,548
                                                      ---------  ---------
TOTAL CURRENT ASSETS                                    584,858    475,328
                                                      ---------  ---------

LONG-TERM CONTRACT RECEIVABLES                           13,400     19,930

PROPERTY, PLANT AND EQUIPMENT
  Land and land improvements                             15,292     15,408
  Buildings and improvements                             42,661     43,379
  Machinery and other equipment                          80,018     83,598
  Leasehold improvements                                  4,685      4,656
  Accumulated depreciation and amortization             (93,761)   (93,154)
                                                      ---------  ---------
                                                         48,895     53,887
                                                      ---------  ---------

OTHER ASSETS
  Deferred income taxes                                  14,082      4,631
  Goodwill                                               59,433     61,032
  Purchased intangibles                                  28,618     19,060
  Miscellaneous other assets                              7,029      7,384
                                                      ---------  ---------
                                                        109,162     92,107
                                                      ---------  ---------

TOTAL ASSETS                                          $ 756,315  $ 641,252
                                                      =========  =========



                            CUBIC CORPORATION

                CONSOLIDATED BALANCE SHEETS--continued

                                                          September 30,
                                                         2009       2008
                                                      ---------  ---------
                                                         (in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Trade accounts payable                              $  28,626  $  23,288
  Customer advances                                     123,458     74,963
  Accrued compensation                                   49,134     41,111
  Other current liabilities                              60,402     44,721
  Income taxes payable                                    3,491      6,017
  Current maturities of long-term debt                    4,554      6,045
                                                      ---------  ---------
TOTAL CURRENT LIABILITIES                               269,665    196,145
                                                      ---------  ---------


LONG-TERM DEBT                                           20,570     25,700

OTHER LIABILITIES
  Accrued pension liability                              32,214     16,451
  Deferred compensation                                   7,902      7,821
  Income taxes payable                                    5,119      6,283

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  Preferred stock, no par value (in thousands):
   Authorized--5,000 shares
   Issued and outstanding--none                               -          -
  Common stock, no par value (in thousands):
   Authorized--50,000 shares
   2009--Issued 35,677 shares, outstanding--26,732
    shares
   2008--Issued 35,673 shares, outstanding--26,727
    shares                                               12,530     12,485
  Retained earnings                                     455,743    404,868
  Accumulated other comprehensive (loss) income         (11,357)     7,570
  Treasury stock at cost (in thousands):
   2009 and 2008--8,945 shares                          (36,071)   (36,071)
                                                      ---------  ---------
                                                        420,845    388,852
                                                      ---------  ---------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $  756,315  $  641,252
                                                    ==========  ==========



                            CUBIC CORPORATION

                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                           Years Ended
                                                          September 30,
                                                      --------------------
                                                         2009       2008
                                                      ---------  ---------
                                                         (in thousands)
Operating Activities:
  Net income                                           $ 55,686   $ 36,854
    Adjustments to reconcile net income to net cash
     provided by operating activities:
      Depreciation and amortization                      15,586      9,688
      Deferred income taxes                               3,346     (6,203)
      Provision for doubtful accounts                     3,038        (39)
      Gain on sale of assets                                  -     (1,238)
      Minority interest in income of subsidiary               -        216
      Changes in operating assets and liabilities,
       net of effects from acquisitions:
        Accounts receivable                              36,211     40,495
        Inventories                                      (4,275)   (18,748)
        Prepaid expenses and other current assets         5,141        451
        Accounts payable and other current
         liabilities                                     14,175      4,037
        Customer advances                                48,663     16,952
        Income taxes                                     (2,890)     7,835
        Other items - net                                 1,352      2,355
                                                      ---------  ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES               176,033     92,655
                                                      ---------  ---------

Investing Activities:
  Acquisition of businesses, net of cash acquired       (19,965)   (53,776)
  Proceeds from sale of assets                                -      1,779
  Proceeds from sale of short-term investments                -     66,160
  Purchases of short-term investments                    (8,127)   (39,070)
  Purchases of property, plant and equipment             (5,332)    (8,100)
  Other items - net                                          41     (2,254)
                                                      ---------  ---------
NET CASH USED IN INVESTING ACTIVITIES                   (33,383)   (35,261)
                                                      ---------  ---------

Financing Activities:
  Change in short-term borrowings                             -          -
  Principal payments on long-term debt                   (5,970)    (6,112)
  Proceeds from issuance of common stock                     45        128
  Purchases of treasury stock                                 -         (2)
  Dividends paid to shareholders                         (4,811)    (4,810)
                                                      ---------  ---------
NET CASH USED IN FINANCING ACTIVITIES                   (10,736)   (10,796)
                                                      ---------  ---------

Effect of exchange rates on cash                           (536)    (7,465)
                                                      ---------  ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS               131,378     39,133

Cash and cash equivalents at the beginning of the
 year                                                   112,696     73,563
                                                      ---------  ---------

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR      $ 244,074  $ 112,696
                                                      =========  =========

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