SAN DIEGO–(BUSINESS WIRE)–July 30, 2002–San Diego-based Cubic Corporation (AMEX:CUB) today reported a 34 percent increase in earnings for the third quarter of fiscal 2002 and a 16 percent increase in sales from the same period last year. Total backlog at June 30, 2002 was $1,180,000,000.
Net income for the third quarter was $7.1 million or 27 cents per share compared to $5.3 million or 20 cents per share for the same period in 2001. Third quarter 2002 sales were $148.2 million, compared to $127.2 for the same period in 2001.
For the first three quarters of fiscal year 2002, net income was $19.3 million or 72 cents per share, up 29 percent from $15 million or 56 cents per share last year. For the first three quarters of fiscal year 2002, sales were $410.6 million, compared to nine month sales of $370.4 million for fiscal 2001, an increase of 11 percent.
Reported per share amounts above reflect the April 2002 three-for-one stock split. Before the stock split, net income for the third quarter would have been 81 cents compared to 60 cents per share for the same period in 2001, and for the first three quarters, pre-stock-split net income for 2002 would have been $2.16 per share, up from $1.68 per share last year.
Goodwill charges in 2001 were $425,000 or 2 cents per share for the third quarter of 2001 and $1.3 million or 5 cents per share for the first nine months, whereas no goodwill charges were reflected in 2002.
Total backlog, including unfunded customer orders, increased to $1,180,000,000 at June 30, 2002, compared to $1,095,000,000 at September 30, 2001 and $1,092,000,000 at June 30, 2001. Included in the above amounts was funded backlog of $822,000,000 at June 30, 2002, $738,000,000 at September 30, 2001 and $745,000,000 at June 30, 2001.
“Operating profits from our defense and transportation segments continue to improve and are up a combined 40 percent for the nine months, while investment income was down $2.3 million from a year ago. We now expect earnings to improve in the vicinity of 30 percent for the year, rather than 20 percent, as we projected in the first quarter,” said Cubic Corp. President and CEO Walter J. Zable.
“In light of the current financial turmoil in the markets, it is important that we also take this opportunity to state that Cubic has a strong, sound balance sheet, and neither our officers, employees, nor I have stock options that could dilute future earnings,” he added.
Cubic Board of Directors Approves Higher Dividend
Cubic's Board of Directors has approved a semi-annual dividend of 7 cents per share, to be paid on August 30, 2002, to shareholders of record at the close of business on August 9, 2002. The dividend represents a 10.5 percent increase, the equivalent of 14 cents per share annually. This is the same impact as an increase from 38 cents to 42 cents annually before the April 2002 three-for-one stock split. Cubic has paid uninterrupted semi-annual dividends for 30 years.
While the sales growth in the first six months of the year came from Cubic’s defense business, the third quarter increase came primarily from the transportation segment. Year-to-date sales improvement was the result of higher sales in both segments.
The transportation segment sales increase in the current year is due to higher work volume on contracts for Bay Area Rapid Transit, Vancouver’s B.C. Rapid Transit and the extension of the Washington Metropolitan Area Transportation Authority smart card ticketing service for buses in Maryland and Virginia. Another factor was increased activity on the Prestige contract in London, where installation of the system is nearly completed and smart cards are being phased in.
Defense segment improvement compared to last year is due to increased activity from recently awarded contracts for the company’s battle command training, maintenance, communications equipment, and laser-based MILES products.
The transportation segment’s profits continued to be strong and were higher for the third quarter and first nine months compared to the same periods last year, but Cubic’s significant earnings improvement from last year is mostly due to its defense segment. The defense segment improvement came primarily as a result of increased sales in its operations and services business, and improved profit margins in MILES and communications products.
The company expects strong earnings in the fourth quarter and through 2003. Sales growth is also expected as the company positions itself to win new business to meet the demand for defense and automated fare collection systems.
Cubic is benefiting from the need among cities, particularly those in the untapped medium-sized markets, for upgraded, high-tech automatic fare collection hardware and software systems for public transit. Current customers, such as transit authorities in the Washington D. C. and New York metropolitan areas, are expanding their fare collection systems with airport links and advanced systems that make travel faster and fare collection more efficient. The transportation segment continues to improve customer service in order to maintain the kinds of relationships that have after 30 years made Cubic the leading supplier of end-to-end fare collection systems. While the company focuses on the existing and emerging domestic markets’ demand for state-of-the art fare collection systems, new opportunities exist internationally, particularly in Europe. Cubic has start-up automatic fare collection systems in Germany and The Netherlands. This places the company in good position for near and long-term business in Europe.
Management sees a demand by the U.S. and allied governments for high-tech battle command training applications, services and communications equipment. Cubic recently successfully completed U.S. government tests of its Common Data Link equipment. Passing these military compliance tests opens the door for Cubic to compete for business on a broad range of programs.
Addressing new national priorities, Cubic is exploring new opportunities in the area of Homeland Defense/Security. The company is building on its systems integration experience and technology in both defense and transportation and the established presence of its smart card technology in key metropolitan areas to develop solutions for high-security access control for borders, airports and other public and private locations.
Cubic is working with potential partners to demonstrate the benefits of integrating biometrics functions into smart-card based systems to help positively identify and authenticate personal characteristics of cardholders. The company sees potential smart card security applications opportunities in both military and civilian markets at the Federal, state and local levels. Management expects that over the next two to three years, the company will be involved in customer-funded trials that could lead to new Homeland Security/Defense business as these emerging markets take shape.
On current government contracts, Cubic is already involved in helping agencies plan and prepare for contingencies through high-level simulations and exercises involving real-world scenarios. This effort is expected to continue and provide basic insights for products, procedures and systems to deter, counter or manage the consequences of a wide range of future threats.
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.
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, 2002 2001 2002 2001