Cubic Corp (NYSE: CUB) Reports Sales and Earnings for the Fiscal Year Ended September 30, 2008

• Press Release
• Source: Cubic Corporation
• On 6:00 am EST, Thursday December 4, 2008

SAN DIEGO, CA--(MARKET WIRE)--Dec 4, 2008 -- Cubic Corporation (NYSE:CUB - News) today reported sales and earnings for the fiscal year ended September 30, 2008. Sales in fiscal 2008 were $881.1 million, while net income was $36.9 million or $1.38 per share. Cash flow from operations was strong again this year, at $92.7 million, following $69.2 million in 2007.

Related Quotes Symbol Price Change CUB 35.65 +0.47 {"s" : "cub","k" : "c10,l10,p20,t10","o" : "","j" : ""}

Sales and operating income were higher from the transportation systems segment, while defense segment sales and operating income decreased from the strong performance of 2007. Sales were also lower in 2008 by $12.2 million because the Company sold its former corrugated box business in the fourth quarter of 2007. Earnings were impacted in 2008 by a restructuring charge of $6.2 million (approximately $3.7 million or $0.14 per share after applicable income taxes) recorded in the fourth quarter as the result of severance costs related to a reduction in force in the San Diego defense systems subsidiary and corporate headquarters. This is intended to streamline operations and enhance competiveness in the defense-related marketplace. Strong cash flows resulted in net investment and other income increasing to $3.0 million in 2008 compared to $1.3 million in 2007, before applicable income taxes.

Transportation Systems Segment

Transportation systems sales increased 15 percent to $272.3 million in 2008 from $236.6 million in 2007. Sales were higher in the U.K. and Australia and from spare part orders in North America while sales from system installation contracts in North America and Sweden decreased.

Operating income from the transportation segment more than doubled in 2008 to $43.0 million from $20.1 million in 2007. Increased operating income resulted from higher sales in the U.K., increased spare parts orders in the U.S. and improved operating performance on North American system installation contracts.

Defense Segment

Sales from the defense segment decreased 5 percent to $607.8 million in 2008 from $641.1 million in 2007. Sales were higher in the Mission Support Services business, but Training Systems and Communications sales decreased. Sales in several defense training-related product lines were impacted during 2008 by a transition of work from the engineering development phase to the production phase, thereby deferring the recording of sales until the product is delivered and accepted by the customer.

Operating income in the defense segment decreased to $18.3 million in 2008 from $44.2 million in 2007. Cost growth on fixed-price development contracts resulted in an operating loss in Communications and lower operating income in Training Systems. Operating income in 2008 from Mission Support Services was about the same as in 2007.

Backlog

Total backlog was $1.773 billion at September 30, 2008 compared to $2.034 billion at September 30, 2007. Funded backlog was $1.073 billion at September 30, 2008 compared to $1.389 billion at September 30, 2007. The reduction in backlog at September 30, 2008 reflects the termination by Transport for London (TfL), effective in August 2010, of its contract with Transaction Systems Limited (TranSys), a 37.5% owned subsidiary of Cubic, thereby substantially reducing Cubic's backlog as of the 2008 year end. Subsequently, in November 2008, TfL awarded Cubic a new contract with a base value of $255 million (£170 million) to continue providing virtually all the services formerly contracted to TranSys. This amount will be added to Cubic's backlog in the quarter ending December 31, 2008.

Liquidity

After spending $53.8 million on a defense acquisition in July, the Company ended the year with $112.7 million in cash and only $31.7 million in total debt, with substantial debt availability.

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 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 STATEMENTS OF INCOME


                                    Years Ended        Three Months Ended
                                    September 30,         September 30,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
                                  (in thousands, except per share data)
Net sales:
   Products                     $ 478,478  $ 517,165  $ 118,116  $ 125,602
   Services                       402,657    372,705    117,125     97,543
                                ---------  ---------  ---------  ---------
                                  881,135    889,870    235,241    223,145
Costs and expenses:
   Products                       376,213    415,729     95,955     97,698
   Services                       333,268    311,811     92,573     83,937
   Selling, general and
    administrative expenses        99,956     95,054     24,216     22,885
   Restructuring costs              6,203          -      6,203          -
   Research and development        12,231      5,178      5,479      2,577
                                ---------  ---------  ---------  ---------
                                  827,871    827,772    224,426    207,097
                                ---------  ---------  ---------  ---------

Operating income                   53,264     62,098     10,815     16,048

Other income (expenses):
   Gain on sale of assets           1,238      1,052      1,238      1,052
   Interest and dividends           6,351      3,431      1,304      1,640
   Interest expense                (2,745)    (3,403)      (518)    (1,201)
   Other income (expense)            (653)     1,299       (987)       104
   Minority interest in loss
    (income) of subsidiary           (216)       771       (113)       192
                                ---------  ---------  ---------  ---------

Income before income taxes         57,239     65,248     11,739     17,835

Income taxes                       20,385     23,662      3,685      6,962
                                ---------  ---------  ---------  ---------

Net income                      $  36,854  $  41,586  $   8,054  $  10,873
                                =========  =========  =========  =========



Basic and diluted net income
 per common share               $    1.38  $    1.56  $    0.30  $    0.41
                                =========  =========  =========  =========

Average number of common shares
 outstanding                       26,725     26,720     26,727     26,720
                                =========  =========  =========  =========






                            CUBIC CORPORATION

                        CONSOLIDATED BALANCE SHEETS


                                                          September 30,
                                                        2008       2007
                                                      ---------  ---------
                                                         (in thousands)
ASSETS

CURRENT ASSETS
   Cash and cash equivalents                          $ 112,696  $  73,563
   Short-term investments                                     -     27,200
   Accounts receivable:
      Trade and other receivables                         9,014     13,024
      Long-term contracts                               264,748    297,792
      Allowance for doubtful accounts                    (4,878)    (5,144)
                                                      ---------  ---------
                                                        268,884    305,672

   Inventories                                           45,118     27,342
   Deferred income taxes                                 27,082     18,492
   Prepaid expenses and other current assets             21,548     21,105
                                                      ---------  ---------
TOTAL CURRENT ASSETS                                    475,328    473,374
                                                      ---------  ---------

LONG-TERM CONTRACT RECEIVABLES                           19,930     16,650

PROPERTY, PLANT AND EQUIPMENT
   Land and land improvements                            15,408     14,601
   Buildings and improvements                            43,379     46,519
   Machinery and other equipment                         83,598     84,149
   Leasehold improvements                                 4,656      4,299
   Accumulated depreciation and amortization            (93,154)   (92,317)
                                                      ---------  ---------
                                                         53,887     57,251
                                                      ---------  ---------

OTHER ASSETS
   Deferred income taxes                                  4,631        195
   Goodwill                                              61,032     36,003
   Purchased intangibles                                 19,060      1,922
   Miscellaneous other assets                             7,384      7,170
                                                      ---------  ---------
                                                         92,107     45,290
                                                      ---------  ---------

TOTAL ASSETS                                          $ 641,252  $ 592,565
                                                      =========  =========






                            CUBIC CORPORATION

                  CONSOLIDATED BALANCE SHEETS--continued


                                                          September 30,
                                                        2008       2007
                                                      ---------  ---------
                                                         (in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
   Trade accounts payable                             $  23,288  $  27,992
   Customer advances                                     74,963     58,412
   Accrued compensation                                  41,111     38,183
   Other current liabilities                             44,721     31,787
   Income taxes payable                                   6,017      4,905
   Current maturities of long-term debt                   6,045      6,138
                                                      ---------  ---------
TOTAL CURRENT LIABILITIES                               196,145    167,417
                                                      ---------  ---------


LONG-TERM DEBT                                           25,700     32,699

OTHER LIABILITIES
   Accrued pension liability                             16,451      1,530
   Deferred compensation                                  7,821      8,148
   Income taxes payable                                   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
      2008--Issued 35,673 shares, outstanding--26,727
       shares
      2007--Issued 35,665 shares, outstanding--26,720
       shares                                            12,485     12,357
   Retained earnings                                    404,868    375,299
   Accumulated other comprehensive income                 7,570     31,184
   Treasury stock at cost (in thousands):
      2008--8,945 shares; 2007--8,945 shares            (36,071)   (36,069)
                                                      ---------  ---------
                                                        388,852    382,771
                                                      ---------  ---------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $ 641,252  $ 592,565
                                                      =========  =========






                            CUBIC CORPORATION

                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                          Years Ended
                                                          September 30,
                                                      --------------------
                                                        2008       2007
                                                      ---------  ---------
                                                         (in thousands)
Operating Activities:
   Net income                                         $  36,854  $  41,586
      Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization                    9,688      8,854
         Deferred income taxes                           (6,203)       745
         Provision for doubtful accounts                    (39)        19
         Gain on sale of assets                          (1,238)    (1,052)
         Minority interest in income (loss) of
          subsidiary                                        216       (771)
         Changes in operating assets and liabilities,
          net of effects from acquisitions:
            Accounts receivable                          40,495     18,091
            Inventories                                 (18,748)    (7,610)
            Prepaid expenses                                451     (8,048)
            Accounts payable and other current
             liabilities                                  4,037      9,965
            Customer advances                            16,952     12,181
            Income taxes                                  7,835     (2,741)
            Other items - net                             2,355     (2,063)
                                                      ---------  ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES                92,655     69,156
                                                      ---------  ---------

Investing Activities:
   Acquisition of businesses, net of cash acquired      (53,776)         -
   Proceeds from sale of assets                           1,779      3,775
   Proceeds from sale of short-term investments          66,160    241,606
   Purchases of short-term investments                  (39,070)  (259,935)
   Purchases of property, plant and equipment            (8,100)    (6,098)
   Other items - net                                     (2,254)      (139)
                                                      ---------  ---------
NET CASH USED IN INVESTING ACTIVITIES                   (35,261)   (20,791)
                                                      ---------  ---------

Financing Activities:
   Change in short-term borrowings                            -    (10,000)
   Principal payments on long-term debt                  (6,112)    (6,112)
   Proceeds from issuance of common stock                   128          -
   Purchases of treasury stock                               (2)         -
   Dividends paid to shareholders                        (4,810)    (4,810)
                                                      ---------  ---------
   NET CASH USED IN FINANCING ACTIVITIES                (10,796)   (20,922)
                                                      ---------  ---------

Effect of exchange rates on cash                         (7,465)     3,740
                                                      ---------  ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     39,133     31,183

Cash and cash equivalents at the beginning of the
 year                                                    73,563     42,380
                                                      ---------  ---------

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR      $ 112,696  $  73,563
                                                      =========  =========

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     David Liddle
     858-505-2642
      
     Investors:
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