SAN DIEGO, CA -- (Marketwire) -- 08/07/08 -- 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
========= ========= ========= =========
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