SOURCE: Cubic Corporation

May 07, 2008 17:54 ET

Cubic Corp. (AMEX: CUB) Reports Earnings and Sales for the Quarter Ended March 31, 2008

SAN DIEGO, CA--(Marketwire - May 7, 2008) - Cubic Corporation (AMEX: CUB) today reported earnings and sales for the second quarter ended March 31, 2008. Earnings were $9.6 million in the second quarter ($.36 per share) versus $11.2 million last year, while for the six-month period, earnings increased from $19.5 million last year to $20.3 million ($.76 per share) this year.

Sales for the second quarter, although higher than the first quarter, were $210.3 million this year compared to $230.0 million in the same quarter last year. Lower sales in defense were partially offset by increased sales from transportation. Last year's second quarter included sales of $3.2 million from the corrugated box business the company sold in the fourth quarter of 2007. For the first six months of the fiscal year, sales were $413.0 million compared to $433.0 million a year ago.

Operating income was up for the six-month period from $29.5 million in 2007 to $31.0 million this year but was lower for the quarter at $13.9 million versus $17.8 million in the second quarter last year. Operating income in transportation grew significantly from $6.9 million to $11.9 million in this year's second quarter, and more than doubled from $9.2 million last year to $19.2 million for the six months ended March 31, 2008. However, improvements in transportation were largely offset by a reduction in defense's operating profits to $2.8 million in the second quarter versus $11.9 million last year, and to $12.6 million for the six months ended March 31, 2008 compared to $21.4 million last year.

Cash flows from operations for the first six months of the fiscal year were $25.1 million, with both segments contributing to the positive result.

Transportation Systems Segment

Transportation Systems sales increased from $62.0 million in the second quarter last year to $72.1 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. Significant progress was made on several system enhancement projects in the U.K. during the quarter, generating higher sales and profits than are expected in the remaining two quarters. 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 half of the fiscal year, transportation systems sales increased from $118.0 million in 2007 to $128.6 million this year for the reasons described above.

Operating income from the transportation segment improved from $6.9 million in the second quarter last year to $11.9 million this year. Strong operating income on higher sales from U.K. operations as mentioned above and profits from increased spares sales in the U.S. contributed to the improvement. For the first half of the fiscal year, transportation systems operating income more than doubled from $9.2 million to $19.2 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 second quarter from $164.8 million last year to $138.2 million this year. Defense service sales were down due to a temporary decrease in army training activities during the quarter, while combat training system sales were lower primarily because of a transition from engineering development contracts to long-term production orders, which also 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 six months of the fiscal year defense sales decreased from $308.1 million to $284.4 million for the reasons identified above. The company expects sales from each of the defense business units to increase in the third and fourth quarters over the second quarter level.

Operating income in the defense segment decreased in the second quarter to $2.8 million from $11.9 million last year due primarily to higher costs on development contracts and lower sales. Operating income for the first half was $12.6 million compared to $21.4 million last year. Management believes the second quarter results in the defense segment are short-term in nature and expects improved performance for the remainder of the 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)


                                  Six Months Ended     Three Months Ended
                                      March 31,             March 31,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------

Net sales:
  Products                      $ 230,096  $ 253,443  $ 117,749  $ 132,484
  Services                        182,906    179,533     92,531     97,557
                                ---------  ---------  ---------  ---------
                                  413,002    432,976    210,280    230,041

Costs and expenses:
  Products                        175,597    206,805     91,407    107,716
  Services                        153,773    148,413     78,882     80,249
  Selling, general and
   administrative                  48,875     46,917     24,096     23,707
  Research and development          3,783      1,351      2,009        570
                                ---------  ---------  ---------  ---------
                                  382,028    403,486    196,394    212,242
                                ---------  ---------  ---------  ---------

Operating income                   30,974     29,490     13,886     17,799

Other income (expense):
  Interest and dividends            2,793        898      1,272        464
  Interest expense                 (1,391)    (1,476)      (659)      (732)
  Other income                        328        530        634         48
  Minority interest in loss of
   subsidiary                         118        394        113        132
                                ---------  ---------  ---------  ---------

Income before income taxes         32,822     29,836     15,246     17,711

Income taxes                       12,500     10,300      5,600      6,500
                                ---------  ---------  ---------  ---------

Net income                      $  20,322  $  19,536  $   9,646  $  11,211
                                =========  =========  =========  =========

Basic and diluted net income
 per common share               $    0.76  $    0.73  $    0.36  $    0.42
                                =========  =========  =========  =========

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

Average number of common
  shares outstanding               26,723     26,720     26,724     26,720
                                =========  =========  =========  =========






                            CUBIC CORPORATION
                  CONSOLIDATED CONDENSED BALANCE SHEETS
                              (in thousands)


                                                March 31,   September 30,
                                                  2008          2007
                                               (Unaudited) (See note below)
                                              ------------- --------------
ASSETS
Current assets:
 Cash and cash equivalents                    $     115,257  $      73,563
 Short-term investments                                   -         27,200
 Accounts receivable, net                           278,154        305,672
 Inventories                                         34,940         27,342
 Recoverable income taxes                             2,395              -
 Deferred income taxes and other current
  assets                                             36,168         39,597
                                              -------------  -------------
Total current assets                                466,914        473,374
                                              -------------  -------------

Long-term contract receivables                       35,600         16,650
Property, plant and equipment - net                  55,386         57,251
Goodwill                                             35,965         36,003
Other assets                                         16,328          9,287
                                              -------------  -------------
                                              $     610,193  $     592,565
                                              =============  =============


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Trade accounts payable                       $      21,684  $      27,992
 Customer advances                                   71,103         58,412
 Other current liabilities                           66,908         69,970
 Income taxes payable                                     -          4,905
 Current portion of long-term debt                    6,121          6,138
                                              -------------  -------------
Total current liabilities                           165,816        167,417
                                              -------------  -------------

Long-term debt                                       26,740         32,699
Other long-term liabilities                          19,068          9,678



Shareholders' equity:
 Common stock                                        12,485         12,357
 Retained earnings                                  390,740        375,299
 Accumulated other comprehensive income              31,413         31,184
 Treasury stock at cost                             (36,069)       (36,069)
                                              -------------  -------------
                                                    398,569        382,771
                                              -------------  -------------
                                              $     610,193  $     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)


                                  Six Months Ended     Three Months Ended
                                      March 31,             March 31,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------

Operating Activities:
  Net income                    $  20,322  $  19,536  $   9,646  $  11,211
  Adjustments to reconcile net
   income to net cash
   provided by (used in)
   operating activities:
     Depreciation and
      amortization                  4,104      4,520      1,998      2,179
     Changes in operating assets
      and liabilities                 628     13,609    (13,410)    28,931
                                ---------  ---------  ---------  ---------
NET CASH PROVIDED BY (USED IN)
 OPERATING ACTIVITIES              25,054     37,665     (1,766)    42,321
                                ---------  ---------  ---------  ---------

Investing Activities:
  Net additions to property,
   plant and equipment             (4,864)    (3,326)    (3,036)    (1,470)
  Proceeds from sales of
   marketable securities           66,300     92,153          -     15,852
  Purchases of marketable
   securities                     (39,100)   (91,705)         -    (24,278)
                                ---------  ---------  ---------  ---------
NET CASH PROVIDED BY (USED IN)
 INVESTING ACTIVITIES              22,336     (2,878)    (3,036)    (9,896)
                                ---------  ---------  ---------  ---------

Financing Activities:
  Change in short-term
   borrowings, net                      -    (10,000)         -          -
  Principal payments on
   long-term borrowings            (5,777)    (5,764)      (172)      (168)
  Other                               128          -         85          -
                                ---------  ---------  ---------  ---------
NET CASH USED IN
 FINANCING ACTIVITIES              (5,649)   (15,764)       (87)      (168)
                                ---------  ---------  ---------  ---------

Effect of exchange rates on
 cash                                 (47)       965      1,064        348
                                ---------  ---------  ---------  ---------

NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS              41,694     19,988     (3,825)    32,605

Cash and cash equivalents at
 the beginning of the period       73,563     42,380    119,082     29,763
                                ---------  ---------  ---------  ---------

CASH AND CASH EQUIVALENTS AT
 THE END OF THE PERIOD          $ 115,257  $  62,368  $ 115,257  $  62,368
                                =========  =========  =========  =========

Contact Information

  • Media:
    David Liddle
    858-505-2642

    Investors:
    Diane Dyer
    858-505-2907

    9333 Balboa Ave.
    San Diego, CA 92123