Science & Technology
Science and TechnologyScience and Technology 
Thu, February 3, 2011
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 (
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 ========== ==========