SOURCE: Cubic Corporation

Cubic Corporation

February 03, 2011 06:00 ET

Cubic Corp. (NYSE: CUB) Reports Higher Sales and Earnings and Record Backlog for the Quarter Ended December 31, 2010

SAN DIEGO, CA--(Marketwire - February 3, 2011) - Cubic Corporation (NYSE: CUB) today reported earnings and sales for the quarter ended December 31, 2010. Sales for the first fiscal quarter were $284.4 million compared to $250.7 million last year, an increase of 13 percent. Net income attributable to Cubic shareholders increased by 45 percent to $19.9 million or 74 cents per share this year compared to $13.7 million or 51 cents per share last year. Net income in the first quarter benefitted from the retroactive reinstatement of the U.S. research and development credit, which reduced the income tax provision by $1.5 million.

Operating income increased in all three business segments. Consolidated operating income increased by 33 percent in the first fiscal quarter to $27.2 million, compared to $20.4 million last year. Cash flows from operations were $16.2 million for the quarter.

Cubic's acquisition of Abraxas Corporation on December 20, 2010 did not have a significant impact on sales, net income or operating income for the first quarter as only 11 days of Abraxas operations were included in the first quarter results.

Transportation Systems Segment

Cubic Transportation Systems (CTS) sales increased in the first quarter this year by 20 percent to $89.4 million from $74.3 million last year. Sales were higher from work on contracts in Australia and London.

Operating income from CTS increased 37 percent in the first quarter from $11.0 million last year to $15.1 million this year. Higher sales from contracts in Australia and London contributed to the increase, along with improved margins on contracts in North America.

Defense Systems Segment

Cubic Defense Systems (CDS) sales increased 27 percent to $95.8 million from $75.6 million in last year's first quarter. Sales increases in the training systems business were partially offset by a small decrease in communications business sales.

Operating income improved to $8.3 million from $6.7 million in last year's first quarter despite investment in development and marketing of cross domain and global tracking products that negatively impacted operating income by $2.3 million during the first quarter. Higher operating income on higher training systems sales contributed to the overall increase in operating income.

Mission Support Services Segment

Sales at Mission Support Services (MSS) decreased 1 percent to $98.8 million from $100.2 million in the first quarter of last year.

Operating income from MSS was $5.1 million compared to $4.0 million in the prior year's first quarter. Last year's first quarter included a provision of $2.0 million for a dispute with a customer over contract terms. Partially offsetting the improvement in operating income for the quarter over last year were expenses of $0.7 million incurred in the first quarter this year related to the acquisition of Abraxas.

Backlog

Total backlog was a record high $2.840 billion at December 31, 2010, compared to $2.486 billion at September 30, 2010, the Company's previous high backlog. The acquisition of Abraxas Corporation during the quarter added $107.7 million to total backlog.

Financial Condition

The company continues to maintain a strong liquidity position, ending the period with $267.4 million in cash and short-term investments, and total debt of only $16.3 million. The Company made cash payments of $124.0 million during the quarter in connection with the acquisition of Abraxas.

Cubic Corporation is the parent company of three major business segments: defense systems, mission support services and transportation systems. Cubic Defense Applications is a leading supplier of combat training systems, communications, cyber technologies, and global tracking solutions. 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)


                                                     Three Months Ended
                                                        December 31,
                                                      2010         2009
                                                  -----------  -----------

Net sales
  Products                                        $   148,009  $   132,785
  Services                                            136,411      117,899
                                                  -----------  -----------
                                                      284,420      250,684

Cost and expenses
  Products                                             99,923       94,855
  Services                                            111,975      103,337
  Selling, general and administrative                  37,030       28,683
  Research and development                              6,255        1,737
  Amortization of purchased intangibles                 2,038        1,698
                                                  -----------  -----------
                                                      257,221      230,310
                                                  -----------  -----------

Operating income                                       27,199       20,374

Other income (expense):
  Interest and dividends                                  864          346
  Interest expense                                       (407)        (450)
  Other income (expense)                                 (227)         593
                                                  -----------  -----------

Income before income taxes                             27,429       20,863

Income taxes                                            7,400        7,200
                                                  -----------  -----------

Net income                                             20,029       13,663

Less noncontrolling interest in income of VIE             121            -
                                                  -----------  -----------

Net income attributable to Cubic                  $    19,908  $    13,663
                                                  ===========  ===========

Basic and diluted net income per common share     $      0.74  $      0.51
                                                  ===========  ===========

Average number of common shares outstanding            26,736       26,732
                                                  ===========  ===========





                            CUBIC CORPORATION
                  CONSOLIDATED CONDENSED BALANCE SHEETS
                              (in thousands)



                                            December 31,    September 30,
                                                2010             2010
                                            (Unaudited)    (See note below)
                                          ---------------  ---------------
ASSETS
Current assets:
  Cash and cash equivalents               $       214,271  $       295,434
  Short-term investments                           53,155           84,081
  Accounts receivable - net                       207,260          210,284
  Inventories - net                                35,471           32,820
  Deferred income taxes and other current
   assets                                          40,465           43,718
                                          ---------------  ---------------
Total current assets                              550,622          666,337
                                          ---------------  ---------------

Long-term contract receivables                     26,530           28,080
Property, plant and equipment - net                47,210           47,469
Goodwill                                          150,291           64,142
Purchased intangibles                              67,204           26,295
Other assets                                       15,271           23,766
                                          ---------------  ---------------
                                          $       857,128  $       856,089
                                          ===============  ===============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable                  $        22,766  $        33,638
  Customer advances                               160,830          139,723
  Accrued compensation and other current
   liabilities                                     90,012          109,035
  Income taxes payable                              1,604           11,787
  Current portion of long-term debt                 4,541            4,545
                                          ---------------  ---------------
Total current liabilities                         279,753          298,728
                                          ---------------  ---------------

Long-term debt                                     11,786           15,949
Other long-term liabilities                        60,040           53,653

Shareholders' equity:
  Common stock                                     12,574           12,574
  Retained earnings                               541,475          521,567
  Accumulated other comprehensive loss            (11,980)          (9,745)
  Treasury stock at cost                          (36,078)         (36,074)
                                          ---------------  ---------------
Shareholders' equity related to Cubic             505,991          488,322
  Noncontrolling interest in variable
   interest entity                                   (442)            (563)
                                          ---------------  ---------------
Total shareholders' equity                        505,549          487,759
                                          ---------------  ---------------
                                          $       857,128  $       856,089
                                          ===============  ===============

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)


                                                      Three Months Ended
                                                         December 31,
                                                       2010        2009
                                                    ----------  ----------

Operating Activities:
  Net income                                        $   20,029  $   13,663
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization                        3,868       3,562
    Changes in operating assets and liabilities         (7,744)     (5,881)
                                                    ----------  ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES               16,153      11,344
                                                    ----------  ----------

Investing Activities:
  Acquisitions net of cash acquired                   (124,431)       (850)
  Net additions to property, plant and equipment        (1,440)     (1,171)
  Proceeds from sales of short-term investments         30,926          76
  Purchases of short-term investments                        -     (16,019)
                                                    ----------  ----------
NET CASH USED IN INVESTING ACTIVITIES                  (94,945)    (17,964)
                                                    ----------  ----------

Financing Activities:
  Principal payments on long-term borrowings            (4,137)     (4,214)
  Purchases of treasury stock                               (4)          -
                                                    ----------  ----------
NET CASH USED IN FINANCING ACTIVITIES                   (4,141)     (4,214)
                                                    ----------  ----------

Effect of exchange rates on cash                         1,770         892
                                                    ----------  ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS              (81,163)     (9,942)

Cash and cash equivalents at the beginning of the
 period                                                295,434     244,074
                                                    ----------  ----------

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD  $  214,271  $  234,132
                                                    ==========  ==========

Contact Information

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

    Investor Contact:
    Diane Dyer
    858-505-2907