SAN DIEGO, CA -- (Marketwire) -- 12/14/12 -- Cubic Corporation (NYSE: CUB) today reported higher sales and earnings for the fiscal year ended September 30, 2012. Sales in fiscal year 2012 were $1.381 billion, an increase of 7 percent over sales of $1.296 billion in the restated prior year. Net income attributable to Cubic shareholders increased to $91.9 million, or $3.44 per share, from $83.6 million, or $3.13 per share, last year, as restated. Sales and net income were both record highs.
The company filed with the Securities and Exchange Commission (SEC) its financial statements for the quarter ended June 30, 2012 and the fiscal year ended September 30, 2012. In addition, Cubic filed its restated financial statements for the fiscal years ended September 30, 2011, 2010 and 2009, the quarters ended March 31, 2012 and December 31, 2011, and each of the prior quarters of 2011 and 2010. The restatement resulted in a cumulative increase in equity of $26.9 million through March 31, 2012.
Fiscal Year 2012 Financial Review
- Sales increased 7 percent to $1.381 billion in fiscal 2012 from $1.296 billion in the restated prior year. The increase was primarily due to growth of 20 percent in Cubic Transportation Systems (CTS), and in particular from our contracts in Sydney, Australia and Vancouver, B.C. Growth in 2012 sales from Mission Support Services (MSS) was nearly offset by a decrease in Cubic Defense Systems (CDS) sales.
- Operating income increased 13 percent to $128.0 million in 2012 compared to $113.5 million in the restated prior year. CTS and CDS each contributed to the growth in operating income in 2012, while MSS operating income was down in 2012 from 2011. Growth in CTS sales was the primary reason for the increase in operating income. CDS operating income grew primarily due to a decrease in our investment in cross domain and global asset tracking products in 2012 compared to 2011. Operating results for MSS include an operating loss from Abraxas of $1.3 million in 2012, including amortization of intangible assets of $9.3 million, compared to a loss of $3.5 million in 2011, which included amortization of intangible assets of $8.2 million and acquisition costs of $0.7 million.
- Selling, general and administrative (SG&A) expenses increased to $163.7 million or 12 percent of sales in 2012, compared to $159.8 million or 12 percent of sales in the restated prior year. The increase in SG&A expenses in 2012 reflects the overall growth of the business.
- Company-sponsored research and development (R&D) spending totaled $28.7 million in 2012 compared to $25.3 million in the restated prior year. The increase in R&D expenditures in 2012 came from the transportation systems business, which increased R&D spending from $4.0 million in 2011 to $8.3 million in 2012.
- Our effective tax rate for 2012 was 29 percent of pretax income compared to 28 percent in 2011, as restated, primarily because of the expiration of the U.S. R&D credit on December 31, 2011.
- Net income attributable to Cubic increased to $91.9 million, or $3.44 per share, in 2012 from $83.6 million, or $3.13 per share, in the restated prior year. Higher net income year-over-year resulted primarily from the improvements in operating income.
- While CDS and CTS both generated negative operating cash flows in 2012, MSS contributed positive operating cash flows. Operating activities used cash of $54.7 million in 2012, compared to providing cash of $129.1 million in the prior year. In 2012, cash generated by earnings was offset by increases in accounts receivable of $118.2 million and inventories of $13.6 million, and a net decrease in customer advances of $38.0 million. In addition, the company incurred $26.9 million in costs to build a new open payment fare collection system for Chicago. The growth in accounts receivable and reduction of customer advances related to several large transportation systems and defense systems contracts the company worked on in 2012. Negative cash flows on these contracts at this stage of their completion are in accordance with contract terms. The company expects cash flows from these contracts to improve as deliveries are made and milestones are reached on these contracts.
- Total backlog increased $50.2 million from $2.781 billion, as restated at September 30, 2011, to $2.832 billion at September 30, 2012. The majority of the CTS backlog increase was related to a new contract in Chicago, which added $454 million. Backlog for CDA and MSS decreased from September 30, 2011, as restated, to September 30, 2012. In 2013 the amount of sales from backlog are expected to be approximately $1 billion, which historically has represented 70 to 73 percent of the company's revenues for the following year. The U.S. Department of Defense (DoD) has been issuing shorter duration contract awards for both product and services and this has resulted in decreased backlog for the company's defense businesses.
Financial Restatement Summary
- Cubic today also filed its restated financial statements for the fiscal years ended September 30, 2011, 2010 and 2009, the quarters ended March 31, 2012 and December 31, 2011, and each of the quarters of 2011 and 2010.
- The restatement resulted in a cumulative increase in retained earnings of $18.3 million as of September 30, 2007, and changes in revenues and net income for 2008 through 2011 as shown in the table below.
September 30, 2011 2010 2009 2008
----------- ----------- ----------- -----------
Sales (previously reported) $ 1,285,203 $ 1,194,189 $ 1,016,657 $ 881,135
Adjustments 10,378 4,003 9,267 11,499
----------- ----------- ----------- -----------
Sales (as restated) $ 1,295,581 $ 1,198,192 $ 1,025,924 $ 892,634
=========== =========== =========== ===========
Operating income
(previously reported) $ 112,335 $ 105,525 $ 84,708 $ 53,264
Adjustments 1,173 1,108 11,159 9,256
----------- ----------- ----------- -----------
Operating income (as
restated) $ 113,508 $ 106,633 $ 95,867 $ 62,520
=========== =========== =========== ===========
Net income (previously
reported) $ 84,768 $ 70,636 $ 55,686 $ 36,854
Adjustments (1,174) 1,458 7,459 4,638
----------- ----------- ----------- -----------
Net income (as restated) $ 83,594 $ 72,094 $ 63,145 $ 41,492
=========== =========== =========== ===========
Earnings per share
(previously reported) $ 3.17 $ 2.64 $ 2.08 $ 1.38
Adjustments (0.04) 0.06 0.28 0.17
----------- ----------- ----------- -----------
Earnings per share (as
restated) $ 3.13 $ 2.70 $ 2.36 $ 1.55
=========== =========== =========== ===========
- Fiscal year 2012 was a very good year for the corporation in terms of performance. In comparison, the company anticipates that 2013 will be a challenging year. The company's defense businesses, like all companies in the defense industry, continue to face uncertainties related to DoD budget cuts. These cuts, if implemented, could trigger across-the-board spending reductions scheduled to go into effect in 2013.
- Additionally, the defense services market is becoming increasingly competitive. As a result of this market environment, the company's defense services business may experience lower profit margins in 2013 compared to 2012. While the company believes its training services and systems are essential to the U.S. military, Cubic, and the defense industry as a whole, is uncertain as to which programs and technologies could be most affected. Approximately 50 percent of sales in our defense systems business have been international in recent years, which should help mitigate an anticipated slowdown in U.S. spending.
- In 2013 the company expects its transportation business to complete the design/build phase on major automated fare collection projects. During this phase, the transportation business may also face margin pressure until the new systems are operational.
- Although 2013 is anticipated to be a transition year, the company remains confident in its long-term prospects for growth. The company has a diverse portfolio of market leading businesses which provide systems and services to a global customer base. The company plans to leverage and build upon its market leading positions and find additional opportunities for growth in adjacent markets by leveraging both research and development, and acquisitions.
The Company filed its Form 10-Q for the quarter ended June 30, 2012 and its Form 10-K for the year ended September 30, 2012 with the Securities and Exchange Commission today. These reports may be found at www.cubic.com under "Investor Info." Shareholders may also receive a free copy of these reports upon written request to the Company or by e-mail to Investor.Relations@Cubic.com.
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 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 uncertainties related to possible Department of Defense budget cuts, any unanticipated issues related to the restatement of the Company's financial statements, any additional issues or matters arising from a potential review of the Company's periodic reports by the SEC, the Company's ability to develop and implement new processes and procedures to remediate the material weakness that existed in its internal control over financial reporting, 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 statement.
CUBIC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
Years Ended September 30,
2012 2011 2010 2009
----------- ----------- ----------- -----------
(As (As (As
Restated) Restated) Restated)
Net sales:
Products $ 663,287 $ 600,933 $ 607,756 $ 508,167
Services 718,208 694,648 590,436 517,757
----------- ----------- ----------- -----------
1,381,495 1,295,581 1,198,192 1,025,924
Costs and expenses:
Products 451,573 418,279 430,417 378,052
Services 594,662 564,062 511,014 418,292
Selling, general and
administrative
expenses 163,688 159,791 124,306 119,108
Research and
development 28,722 25,260 18,976 8,173
Amortization of
purchased intangibles 14,828 14,681 6,846 6,432
----------- ----------- ----------- -----------
1,253,473 1,182,073 1,091,559 930,057
----------- ----------- ----------- -----------
Operating income 128,022 113,508 106,633 95,867
Other income (expenses):
Interest and dividend
income 2,994 2,568 1,590 1,664
Interest expense (1,550) (1,461) (1,755) (2,031)
Other income - net 821 1,662 3,637 661
----------- ----------- ----------- -----------
Income before income
taxes 130,287 116,277 110,105 96,161
Income taxes 38,183 32,373 38,011 33,016
----------- ----------- ----------- -----------
Net income 92,104 83,904 72,094 63,145
Less noncontrolling
interest in income of
VIE 204 310 - -
----------- ----------- ----------- -----------
Net income attributable
to Cubic $ 91,900 $ 83,594 $ 72,094 $ 63,145
=========== =========== =========== ===========
Basic and diluted net
income per common share $ 3.44 $ 3.13 $ 2.70 $ 2.36
=========== =========== =========== ===========
Average number of common
shares outstanding 26,736 26,736 26,735 26,731
=========== =========== =========== ===========
CUBIC CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30,
2012 2011 2010 2009
----------- ----------- ----------- -----------
(As (As (As
Restated) Restated) Restated)
ASSETS
Current assets:
Cash and cash
equivalents $ 212,267 $ 329,148 $ 295,434 $ 244,074
Restricted cash 68,749 - - -
Short-term investments - 25,829 84,081 8,127
Accounts receivable:
Trade and other
receivables 17,543 20,259 11,594 12,833
Long-term contracts 333,617 207,426 201,898 222,709
Allowance for
doubtful accounts (463) (395) (663) (4,558)
----------- ----------- ----------- -----------
350,697 227,290 212,829 230,984
Recoverable income
taxes 7,083 24,917 6,810 249
Inventories 52,366 38,359 40,653 57,605
Deferred income taxes 7,587 9,483 14,290 20,191
Prepaid expenses and
other current assets 13,977 21,080 26,127 29,957
----------- ----------- ----------- -----------
Total current assets 712,726 676,106 680,224 591,187
----------- ----------- ----------- -----------
Long-term contract
receivables 22,070 23,700 28,080 13,400
Long-term capitalized
contract costs 26,875 - - -
Property, plant and
equipment - net 55,327 48,467 47,469 48,895
Deferred income taxes 16,364 12,824 19,288 14,504
Goodwill 146,933 146,355 64,142 59,433
Purchased intangibles -
net 39,374 54,139 26,295 28,618
Miscellaneous other
assets 6,648 4,933 6,021 7,536
----------- ----------- ----------- -----------
Total assets $ 1,026,317 $ 966,524 $ 871,519 $ 763,573
=========== =========== =========== ===========
CUBIC CORPORATION
CONSOLIDATED BALANCE SHEETS-continued
(in thousands)
September 30,
2012 2011 2010 2009
----------- ----------- ----------- -----------
(As (As (As
Restated) Restated) Restated)
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 47,917 $ 43,984 $ 39,085 $ 32,542
Customer advances 100,764 134,316 98,515 83,978
Accrued compensation 52,680 49,513 48,994 49,134
Other current
liabilities 55,988 57,006 61,091 59,644
Income taxes payable 20,733 18,716 27,219 12,099
Current maturities of
long-term debt 4,561 4,541 4,545 4,554
----------- ----------- ----------- -----------
Total current
liabilities 282,643 308,076 279,449 241,951
----------- ----------- ----------- -----------
Long-term debt 6,942 11,377 15,949 20,570
Accrued pension
liability 46,382 41,166 39,855 33,762
Deferred compensation 8,619 7,884 8,508 7,902
Income taxes payable 4,862 12,129 9,961 11,001
Other non-current
liabilities 6,527 6,582 4,748 -
Commitments and
contingencies
Shareholders' equity:
Preferred stock, no
par value: Authorized
-- 5,000 shares
Issued and
outstanding -- none - - - -
Common stock, no par
value: Authorized--
50,000 shares 2012,
2011 and 2010 --
Issued 35,682 shares,
outstanding--26,736
shares 2009 -- Issued
35,677 shares,
outstanding--26,732
shares 12,574 12,574 12,574 12,530
Retained earnings 715,043 629,560 553,452 486,170
Accumulated other
comprehensive loss (21,148) (26,493) (16,340) (14,242)
Treasury stock at cost
- 8,945 shares (36,078) (36,078) (36,074) (36,071)
----------- ----------- ----------- -----------
Shareholders' equity
related to Cubic 670,391 579,563 513,612 448,387
Noncontrolling
interest in variable
interest entity (49) (253) (563) -
----------- ----------- ----------- -----------
Total shareholders'
equity 670,342 579,310 513,049 448,387
----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $ 1,026,317 $ 966,524 $ 871,519 $ 763,573
=========== =========== =========== ===========
CUBIC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended September 30,
2012 2011 2010 2009
---------- ---------- ---------- ----------
(As (As (As
Restated) Restated) Restated)
Operating Activities:
Net income $ 92,104 $ 83,904 $ 72,094 $ 63,145
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 22,857 22,341 14,469 15,586
Deferred income taxes (1,486) 2,512 1,130 5,320
Provision for doubtful
accounts - - (3,889) 3,038
Changes in operating
assets and
liabilities, net of
effects from
acquisitions:
Accounts receivable (118,164) 3,566 25,225 41,077
Inventories (13,636) 2,442 17,304 (7,734)
Prepaid expenses and
other current
assets 7,574 5,122 4,167 5,751
Long-term
capitalized
contract costs (26,875) - - -
Accounts payable and
other current
liabilities 8,525 (1,547) (24,141) 15,083
Customer advances (37,999) 37,143 18,462 34,619
Income taxes 11,929 (23,713) (13,628) (675)
Other items - net 494 (2,676) 3,799 1,614
---------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED
IN) OPERATING ACTIVITIES (54,677) 129,094 114,992 176,824
---------- ---------- ---------- ----------
Investing Activities:
Acquisition of businesses,
net of cash acquired - (126,825) (8,250) (19,965)
Consolidation of variable
interest entity - - 38,264 -
Proceeds from sales or
maturities of short-term
investments 25,829 58,252 82,992 -
Purchases of short-term
investments - - (158,946) (8,127)
Purchases of property,
plant and equipment (14,226) (8,728) (6,878) (5,332)
Other items - net - - - 41
---------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED
IN) INVESTING ACTIVITIES 11,603 (77,301) (52,818) (33,383)
---------- ---------- ---------- ----------
Financing Activities:
Principal payments on
long-term debt (4,549) (4,555) (4,541) (5,970)
Proceeds from issuance of
common stock - - 44 45
Purchases of treasury
stock - (4) (3) -
Net change in restricted
cash (68,584) - - -
Dividends paid to
shareholders (6,417) (7,486) (4,812) (4,811)
---------- ---------- ---------- ----------
NET CASH USED IN FINANCING
ACTIVITIES (79,550) (12,045) (9,312) (10,736)
---------- ---------- ---------- ----------
Effect of exchange rates on
cash 5,743 (6,034) (1,502) (1,327)
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (116,881) 33,714 51,360 131,378
Cash and cash equivalents at
the beginning of the year 329,148 295,434 244,074 112,696
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT
THE END OF THE YEAR $ 212,267 $ 329,148 $ 295,434 $ 244,074
========== ========== ========== ==========
CONTACTS:
Jay Thomas
Senior Vice President of Finance and Corporate Development
jay.thomas@cubic.com
858-505-2989
Diane Dyer
Director of Investor Relations
diane.dyer@cubic.com
858-505-2907
