SOURCE: Cubic Corporation

Cubic Corporation

May 05, 2011 06:00 ET

Cubic Corp. (NYSE: CUB) Reports Higher Sales and Earnings for the Quarter Ended March 31, 2011

SAN DIEGO, CA--(Marketwire - May 5, 2011) - Cubic Corporation (NYSE: CUB) today reported higher earnings on higher sales for the quarter ended March 31, 2011. Sales for the second fiscal quarter increased 26 percent to $334.0 million compared to $264.5 million last year, and net income attributable to Cubic shareholders increased by 15 percent to $19.9 million or 75 cents per share this year from $17.4 million or 65 cents per share last year.

Operating income increased 7 percent in the second quarter to $28.0 million this year from $26.1 million last year. Cash flow from operations was $28.1 million in the quarter.

Six-month Results

For the six months ended March 31, 2011, sales increased 20 percent to $618.4 million from $515.2 million last year. Net income attributable to Cubic shareholders increased 28 percent to $39.9 million for the six-month period, or $1.49 per share, compared to last year's net income of $31.1 million, or $1.16 per share. Operating income for the first six months increased 19 percent to $55.2 million this year from $46.5 million in 2010. Cash flow from operations was $44.2 million in the six-month period.

Transportation Systems Segment

Cubic Transportation Systems (CTS) sales increased from $91.2 million in the second quarter last year to $96.8 million this year and increased from $165.5 million for the six-month period last year to $186.2 million this year. Sales increased from work on contracts in Australia and the U.K.

Operating income from CTS in the second quarter was $13.2 million compared to $15.1 million last year. Last year's second quarter results had included a contract modification on a contract in Europe that added $1.6 million to operating income, in addition to higher margins than usual on one contract in North America. For the first half of the year, operating income improved from $26.1 million last year to $28.3 million this year.

Defense Systems Segment

Sales from Cubic Defense Systems (CDS) increased to $103.7 million from $63.4 million in last year's second quarter. Sales were higher from air and ground combat training systems and small arms training systems. Operating income from CDS more than doubled to $11.1 million compared to $5.3 million last year resulting from higher sales and improved margins in the training systems business.

For the first half of the year CDS sales increased from $139.0 million last year to $199.5 million this year due to increased sales from the training systems business. Operating income increased from $12.0 million last year to $19.4 million in the first six months of this year due to increased sales and improved margins in the training systems business.

Mission Support Services Segment

Mission Support Services (MSS) sales increased to $133.1 million from $109.4 million in last year's second quarter. The acquisition of Abraxas Corporation (Abraxas) in December 2010 added $14.2 million to sales for the quarter. Sales were also higher from homeland security related contracts and in support of operations in Afghanistan, but were lower from training and education contracts due to delays in contract awards, and services insourcing. Operating income from MSS was $5.1 million compared to $7.1 million last year. Abraxas incurred an operating loss of $0.7 million in the quarter, after deducting $2.6 million of intangible asset amortization. In addition, the decreased sales from training and education contracts contributed to lower operating income.

For the first half of the year, MSS sales increased from $209.6 million to $231.9 million. Operating income decreased from $11.1 million last year to $10.2 million in the first six months of this year. The year to date operating loss of Abraxas was $1.5 million, which included amortization of intangible assets of $2.9 million since the acquisition, as well as acquisition costs of $0.7 million that were incurred in the first quarter.

Backlog

Total backlog was $2.692 billion at March 31, 2011 compared to $2.486 billion at September 30, 2010. Abraxas added $92.9 million to total backlog as of March 31, 2011.

Financial Condition

The company continues to maintain a strong liquidity position, ending the period with $293.3 million in cash and short-term investments, and total debt of only $16.3 million.

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, cyber technologies, asset tracking solutions 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 CONDENSED STATEMENTS OF INCOME (UNAUDITED)
              (amounts in thousands, except per share data)


                                  Six Months Ended     Three Months Ended
                                      March 31,             March 31,
                                  2011       2010       2011       2010
                                ---------  ---------  ---------  ---------

Net sales:
 Products                       $ 316,113  $ 267,038  $ 168,104  $ 134,253
 Services                         302,275    248,205    165,864    130,306
                                ---------  ---------  ---------  ---------
                                  618,388    515,243    333,968    264,559

Costs and expenses:
 Products                         215,995    187,594    116,072     92,739
 Services                         254,866    216,476    142,891    113,139
 Selling, general and
  administrative                   74,407     55,911     37,377     27,228
 Research and development          11,526      5,348      5,271      3,611
 Amortization of purchased
  intangibles                       6,350      3,408      4,312      1,710
                                ---------  ---------  ---------  ---------
                                  563,144    468,737    305,923    238,427
                                ---------  ---------  ---------  ---------

Operating income                   55,244     46,506     28,045     26,132

Other income (expense):
 Interest and dividends             1,239        897        375        551
 Interest expense                    (781)      (868)      (374)      (418)
 Other income (expense)              (243)       719        (16)       126
                                ---------  ---------  ---------  ---------

Income before income taxes         55,459     47,254     28,030     26,391

Income taxes                       15,400     16,200      8,000      9,000
                                ---------  ---------  ---------  ---------

Net income                         40,059     31,054     20,030     17,391

Less noncontrolling interest in
 income of VIE                        205          -         84          -
                                ---------  ---------  ---------  ---------

Net income attributable to
 Cubic                          $  39,854  $  31,054  $  19,946  $  17,391
                                =========  =========  =========  =========

Basic and diluted net income
 per common share               $    1.49  $    1.16  $    0.75  $    0.65
                                =========  =========  =========  =========

Dividends per common share      $    0.19  $    0.09  $    0.19  $    0.09
                                =========  =========  =========  =========
Average number of common
 shares outstanding                26,736     26,734     26,736     26,736
                                =========  =========  =========  =========



                            CUBIC CORPORATION
                  CONSOLIDATED CONDENSED BALANCE SHEETS
                              (in thousands)


                                                March 31,   September 30,
                                                  2011           2010
                                                              (See note
                                              (Unaudited)       below)
                                              ------------  --------------
ASSETS
Current assets:
 Cash and cash equivalents                    $    250,976  $      295,434
 Short-term investments                             42,288          84,081
 Accounts receivable - net                         234,162         210,284
 Recoverable income taxes                           12,843           8,320
 Inventories - net                                  33,248          32,820
 Deferred income taxes and other current
  assets                                            41,580          43,718
                                              ------------  --------------
Total current assets                               615,097         674,657
                                              ------------  --------------

Long-term contract receivables                      25,180          28,080
Property, plant and equipment - net                 47,635          47,469
Goodwill                                           146,769          64,142
Purchased intangibles                               62,529          26,295
Other assets                                        15,333          23,766
                                              ------------  --------------
                                              $    912,543  $      864,409
                                              ============  ==============




LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Trade accounts payable                       $     32,890  $       33,638
 Customer advances                                 154,022         139,723
 Accrued compensation and other current
  liabilities                                      127,603         109,035
 Income taxes payable                                7,597          20,107
 Current portion of long-term debt                   4,556           4,545
                                              ------------  --------------
Total current liabilities                          326,668         307,048
                                              ------------  --------------

Long-term debt                                      11,754          15,949
Other long-term liabilities                         57,270          53,653

Shareholders' equity:
 Common stock                                       12,574          12,574
 Retained earnings                                 556,341         521,567
 Accumulated other comprehensive loss              (15,628)         (9,745)
 Treasury stock at cost                            (36,078)        (36,074)
                                              ------------  --------------
Shareholders' equity related to Cubic              517,209         488,322
 Noncontrolling interest in variable interest
  entity                                              (358)           (563)
                                              ------------  --------------
Total shareholders' equity                         516,851         487,759
                                              ------------  --------------
                                              $    912,543  $      864,409
                                              ============  ==============

Note: The balance sheet at September 30, 2010 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,
                                  2011       2010       2011       2010
                                ---------  ---------  ---------  ---------
Operating Activities:
 Net income                     $  40,059  $  31,054  $  20,030  $  17,391
 Adjustments to reconcile net
  income to net cash
  provided by operating activities:
   Depreciation and
    amortization                   10,086      7,294      6,218      3,732
   Changes in operating assets
    and liabilities                (5,916)     7,863      1,828     13,744
                                ---------  ---------  ---------  ---------
NET CASH PROVIDED BY
 OPERATING ACTIVITIES              44,229     46,211     28,076     34,867
                                ---------  ---------  ---------  ---------

Investing Activities:
 Acquisitions, net of cash
  acquired                       (126,825)      (850)    (2,394)         -
 Consolidation of variable
  interest entity                       -     38,266          -     38,266
 Net additions to property,
  plant and equipment              (3,575)    (2,703)    (2,135)    (1,532)
 Proceeds from sales or
  maturities of short-term
  investments                      41,793      3,224     10,867      3,148
 Purchases of short-term
  investments                           -    (64,009)         -    (47,990)
                                ---------  ---------  ---------  --------- 
NET CASH PROVIDED BY (USED IN)
 INVESTING ACTIVITIES             (88,607)   (26,072)     6,338     (8,108)
                                ---------  ---------  ---------  ---------

Financing Activities:
 Principal payments on
  long-term borrowings             (4,274)    (4,275)      (137)       (61)
 Purchases of treasury stock           (4)        (3)         -         (3)
 Other                                  -         44          -         44
                                ---------  ---------  ---------  ---------
NET CASH USED IN
 FINANCING ACTIVITIES              (4,278)    (4,234)      (137)       (20)
                                ---------  ---------  ---------  ---------

Effect of exchange rates on
 cash                               4,198       (857)     2,428     (1,749)
                                ---------  ---------  ---------  ---------

NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS             (44,458)    15,048     36,705     24,990

Cash and cash equivalents at
 the beginning of the period      295,434    244,074    214,271    234,132
                                ---------  ---------  ---------  ---------

CASH AND CASH EQUIVALENTS AT
 THE END OF THE PERIOD          $ 250,976  $ 259,122  $ 250,976  $ 259,122
                                =========  =========  =========  =========

Contact Information

  • Media Contact:
    John D. Thomas
    858-505-2989

    Investor Contact:
    Diane Dyer
    858-505-2907