- Sales increased 8 percent to $375.2
million for the third quarter from $347.8 million last year
- Adjusted EBITDA(1) increased 54
percent to $40.7 million for the quarter compared to $26.4 million
last year
- Net income of $4.5 million, or $0.17
per diluted share for the quarter compared to $8.8 million, or
$0.33 per diluted share last year
- Cash flows from operating activities of
$43.1 million for the quarter compared to cash used in operations
of $14.6 million last year
- Total backlog of $2.672 billion as of
June 30, 2016
- EPS guidance revised to $0.85 to $1.00
per diluted share; EBITDA(1) guidance unchanged at $70 million
to $85 million, Adjusted EBITDA(1) (2) guidance unchanged at
$130 million to $145 million; Sales guidance for fiscal 2016
unchanged at $1.51 billion to $1.56 billion
Cubic Corporation (NYSE: CUB) today reported its financial
results for the quarter and nine months ended June 30,
2016.
“We are pleased with this quarter’s financial performance.
Sales, Adjusted EBIDTA and operating cash flow improved
significantly over the third quarter last year. We continue to
expect a strong fourth quarter due to many shipments of higher
margin products in Defense Systems, which will lead to better
financial performance compared to last fiscal year,” said Bradley
H. Feldmann, president and chief executive officer of Cubic
Corporation. “We are making great progress with our One Cubic
ERP system implementation and the integration of our recent
acquisitions. We see opportunity to grow the company -
unparalleled in Cubic’s recent history - particularly in Defense
Systems and Transportation, leading to expected record financial
performance in fiscal year 2017 and beyond.”
Third Quarter Results
Sales for the third quarter of fiscal 2016 were $375.2 million
compared to $347.8 million in fiscal 2015, an increase of 8
percent. Sales grew for the quarter from Cubic Transportation
Systems (CTS) and Cubic Global Defense Systems (CGD Systems), but
decreased from Cubic Global Defense Services (CGD Services).
Foreign currency exchange translation reduced sales by $9.2 million
for the quarter when compared to prior year exchange rates. Sales
from recent acquisitions for the third quarter of fiscal 2016 were
$20.5 million compared to $10.8 million last year.
Operating income for the quarter was $13.9 million compared to
$10.3 million in the third quarter last year. Operating income for
the quarter was higher for CTS and CGD Services, but was lower for
CGD Systems. Foreign currency exchange translation reduced
operating income by $1.7 million in the quarter compared to last
year. Expenses incurred in the third quarter of 2016 for strategic
and IT system resource planning as part of One Cubic initiatives
totaled $8.5 million compared to $6.0 million in the third quarter
of last year.
Adjusted EBITDA(1), which excludes acquisition-related expenses,
expenses related to ERP system development and supply chain process
redesign, restructuring costs and other non-operating income and
expenses, was $40.7 million or 11 percent of sales for the
quarter compared to $26.4 million or 8 percent of sales in the
third quarter of fiscal 2015.
Net income attributable to Cubic shareholders was $4.5 million,
or $0.17 per diluted share, compared to $8.8 million, or $0.33 per
diluted share, in the third quarter of fiscal 2015. Although
operating income was higher in the third quarter of fiscal 2016
than the third quarter of fiscal 2015, net income attributable to
Cubic declined due to the increase in interest expense, which was
primarily caused by the increase in the average outstanding debt
during the respective periods, and the increase in income tax
expense between the comparable periods. A discrete tax expense of
$1.5 million was recorded in the third quarter of fiscal 2016
related to timing differences with respect to tax accounting for
long-term contracts resulting in an increase in the U.S. valuation
allowance.
Operating activities provided cash of $43.1 million in the third
quarter of fiscal year 2016 and used cash of $14.6 million in the
third quarter of fiscal year 2015. For the quarter ended June 30,
2016, all segments had positive operating cash flows.
Results for Nine Months Ended June 30, 2016
Sales for the first nine months of fiscal 2016 were $1.055
billion compared to $1.005 billion in fiscal 2015. Sales grew for
the nine months from CTS and CGD Systems, but decreased from CGD
Services. The average exchange rates between the prevailing
currency in foreign operations and the U.S. dollar had a negative
impact on sales of $26.4 million for the nine-month period compared
to the same period last year. Sales from recent acquisitions for
the first nine months of fiscal 2016 were $43.4 million compared to
$22.6 million last year.
The operating loss was $3.3 million in the first nine months of
2016 compared to operating income of $40.7 million in
2015. Operating results in the first nine months of 2016 were
largely driven by charges incurred related to business
acquisitions. Businesses acquired in 2016 and 2015 generated an
operating loss of $33.4 million for the nine months ended
June 30, 2016 compared to an operating loss of $3.3 million in
the first nine months of 2015. The loss incurred during the first
nine months of fiscal 2016 included an $18.5 million charge
incurred in the second quarter of fiscal 2016 related to the GATR
Technologies, LLC (GATR) acquisition. Due to the structure of
certain GATR’s share-based payment awards to its employees and the
acceleration of vesting of these certain awards in connection with
the acquisition of GATR, Cubic was required to recognize $18.5
million of compensation expense, rather than purchase
consideration, for a portion of the purchase price that was paid to
the seller that was distributed to the recipients of these awards.
Additionally, expenses related to strategic and IT system resource
planning totaled $24.4 million for the first nine months of 2016
compared to $7.9 million in the first nine months of last year.
Adjusted EBITDA(1) decreased to $82.3 million in the first
nine months of 2016 from $86.6 million last year largely driven by
decreased margins on the follow-on fare collection contract in
London, and cost growth on a ground combat training system in the
Far East. These decreases were partially offset by improved
profitability on transportation contracts in Sydney, Vancouver, and
Chicago, as well as improved profitability in CGD Services
operations.
For the first nine months of the year, net income attributable
to Cubic was $9.2 million, or $0.34 per diluted share, compared to
$2.9 million, or $0.11 per diluted share last year. The increase in
net income attributable to Cubic for the nine-month period was
primarily due to the impact of income taxes. A discrete tax benefit
of $22.2 million was recorded in the second quarter of fiscal 2016
related to a reduction in the U.S. valuation allowance following
the acquisition of GATR in the second quarter which permitted the
realization of a portion of pre-existing deferred tax assets,
partially offset by a discrete tax expense of $5.9 million related
to non-deductible compensation expense paid to the sellers of GATR.
Interest expense increased to $7.4 million for the first nine
months of fiscal 2016 from $3.1 million for the same period last
year due to the increase in outstanding debt.
Operating activities provided cash of $5.4 million in the
nine-month period ended June 30, 2016. For the nine months ended
June 30, 2016, CGD Systems used cash, while the operating
activities of CTS and CGD Services had positive cash flows. The use
of cash in CGD Systems resulted primarily from $18.5 million in
compensation expense incurred in connection with the GATR
acquisition, as described above.
The Company paid cash of $243.5 million for the acquisitions of
GATR and TeraLogics in the first nine months of 2016. Financing
activities for the nine-month period consisted primarily of the net
receipt of proceeds of $170.0 million from short-term borrowings
and $74.6 million from long-term borrowings that, in addition to
existing cash resources, were used to finance operations and the
business acquisitions above.
Total backlog was $2.672 billion at the end of the quarter
compared to $2.976 billion at September 30, 2015, a decrease
of $304.0 million. Businesses acquired in the first nine months of
fiscal 2016 added $17.2 million of funded backlog and $49.0 million
of total backlog at acquisition. Changes in exchange rates between
the prevailing currency in the Company’s foreign operations and the
U.S. dollar as of the end of the quarter decreased backlog by $71.8
million compared to September 30, 2015.
Fiscal Year 2016 Guidance Update
FY16 Guidance Issued in May 2016 (4)
Revised FY16 Guidance (3)
Change Total sales $1.510
to $1.560B $1.510 to $1.560B
No change EBITDA (1) $70 to $85M
$70 to $85M No change Adjusted
EBITDA (1) $130 to $145M(2)
$130 to $145M (2) No change GAAP
diluted EPS $1.20 to $1.40
$0.85 to $1.05
- Anticipated charges related to a partial pension settlement
planned for the fourth quarter
- Higher interest and financing cost on a new credit
facility
- Higher non-cash charge for tax expense due to an increase in
our deferred tax valuation allowance
(1) EBITDA and Adjusted EBITDA are Non-GAAP metrics - see the
table included in the section titled “Use of Non-GAAP Financial
Information” for a reconciliation of these GAAP and Non-GAAP
financial measures.
(2) Fiscal year 2016 guidance for Adjusted EBITDA adds back to
EBITDA an estimated $34-$36 million of pretax expense related to
the strategic investment in ERP and supply chain improvements and
$34-$36 million of pretax acquisition related expenses for recent
business acquisitions.
(3) Key foreign exchange rates (full year average estimated
rates) used in the previous forecasts of sales, EPS, EBITDA and
Adjusted EBITDA compared to the U.S. dollar were as
follows: British pound — 1.43; Australian dollar — 0.73; New
Zealand dollar — 0.67.
(4) Key foreign exchange rates (full year average estimated
rates) used in the revised forecasts of sales, EPS, EBITDA and
Adjusted EBITDA compared to the U.S. dollar are as
follows: British pound — 1.43; Australian dollar — 0.71; New
Zealand dollar — 0.66.
Reportable Segment Results
Cubic Transportation Systems (41 percent of consolidated
sales for the first nine months of fiscal 2016)
Nine Months Ended
Three Months Ended June 30, June 30,
2016 2015 2016
2015 (in millions) Transportation
Systems Segment Sales $ 430.5 $ 411.5 $ 156.0 $ 133.3
Transportation Systems Segment Operating Income $ 43.9 $ 50.8 $
20.5 $ 11.7
CTS sales increased 17 percent in the third quarter to $156.0
million compared to $133.3 million last year, and increased 5
percent for the nine-month period to $430.5 million from $411.5
million last year. Foreign currency exchange rates had a
significant impact on the comparability of CTS sales between the
periods. The average exchange rates between the prevailing currency
in foreign operations and the U.S. dollar resulted in a decrease in
sales of $8.5 million for the third quarter and $21.9 million for
the nine-month period compared to the same periods last year. For
the third quarter and first nine months of fiscal year 2016, CTS
had higher sales in North America but lower sales in the U.K. Sales
in Australia were higher for the third fiscal quarter, but slightly
lower for the first nine months of the fiscal year compared to last
year. The lower sales in the U.K. are as a result of the transition
to our follow-on contract in London this fiscal year.
CTS operating income increased 75 percent in the third quarter
to $20.5 million compared to $11.7 million last year, and decreased
14 percent for the nine-month period to $43.9 million from $50.8
million last year. In the third quarter of fiscal 2016, we
finalized negotiations regarding scope and pricing with a customer
in Australia for system development work that the customer directed
us to begin in the second quarter of fiscal 2015, and for which we
had deferred revenue until negotiations were complete. Quarterly
operating income also increased due to improved profitability on
service contracts in Sydney, Chicago, and Vancouver. The increase
in operating profits in the third quarter was partially offset by
the follow-on fare collection contract in London that has lower
margins than the legacy contract.
For the nine-month period ended June 30, 2016, the decrease in
operating income was primarily related to lower profits on the
transition to a follow-on fare collection contract in London,
particularly because it no longer includes the award of usage
bonuses once a year, in the second fiscal quarter, as well as
transition costs incurred on this contract in the first quarter of
fiscal 2016. The decrease in operating income for the first nine
months of fiscal 2016 was partially offset by improved
profitability on service contracts in Sydney, Chicago, and
Vancouver, as well as the impact of the finalization of the system
development contract negotiations in Australia described above.
The average exchange rates between the prevailing currency in
the CTS foreign operations and the U.S. dollar resulted in a
decrease in operating income of $1.7 million for the third quarter
and $2.8 million for the nine-month period ended June 30, 2016
compared to the same periods last year.
Cubic Global Defense Systems (31 percent of consolidated
sales for the first nine months of fiscal 2016)
Nine Months Ended
Three Months Ended June 30, June 30,
2016 2015 2016
2015 (in millions) Cubic Global Defense
Systems Segment Sales $ 331.3 $ 295.2 $ 119.0 $ 102.6 Cubic
Global Defense Systems Segment Operating Income (Loss) $ (23.7 ) $
2.8 $ 0.9 $ 3.2
CGD Systems sales increased 16 percent in the third quarter of
fiscal 2016 to $119.0 million compared to $102.6 million last year,
and increased 12 percent for the nine-month period to $331.3
million from $295.2 million last year. For the quarter and nine
month period, sales were higher from ground combat training system
and simulator sales, partially offset by lower sales from modular
networking and baseband communications equipment. Sales of air
combat training systems were higher for the third quarter of 2016
compared to the third quarter last year, but were slightly lower
for the first nine months of 2016 compared to the corresponding
period last year. Sales generated by businesses acquired by CGD
Systems during 2016 and 2015 totaled $20.5 million and $43.4
million for the three- and nine-month periods ended June 30, 2016,
respectively, compared to $10.8 million and $22.6 million for the
three- and nine-month periods ended June 30, 2015, respectively.
The average exchange rates between the prevailing currency in the
CGD Systems foreign operations and the U.S. dollar resulted in a
decrease in sales of $0.7 million for the third quarter of 2016 and
$4.5 million for the nine-month period ended June 30, 2016 compared
to the corresponding periods last year.
CGD Systems had operating income of $0.9 million in the third
quarter of fiscal 2016 compared to $3.2 million last year, and an
operating loss of $23.7 million for the nine-month period compared
to operating income of $2.8 million for the nine-month period last
year. CGD Systems operating results in the third quarter and first
nine months of fiscal 2016 were largely driven by the charges
incurred related to business acquisitions. Businesses acquired by
CGD Systems in 2016 and 2015 generated an operating loss of $4.7
million for the third quarter of fiscal 2016 compared to $0.3
million in the third quarter of fiscal 2015. These acquired
businesses had an operating loss of $33.4 million for the nine
months ended June 30, 2016 compared to $3.3 million in the
first nine months of 2015. The loss incurred during the first nine
months of fiscal 2016 included the $18.5 million charge described
above that was incurred in connection with the GATR acquisition in
the second quarter of fiscal 2016. For the third quarter and first
nine months of fiscal 2016, operating income was higher than in the
same periods in 2015 on increased simulator sales, but was lower on
decreased sales of networking and baseband communications
equipment. Operating income increased on higher sales of air combat
training systems in the third quarter of 2016 compared to the third
quarter last year, but was slightly lower for the first nine months
of 2016 compared to the corresponding period last year.
Cubic Global Defense Services (28 percent of consolidated
sales for the first nine months of fiscal 2016)
Nine Months Ended
Three Months Ended June 30, June 30,
2016 2015 2016
2015 (in millions) Cubic Global Defense
Services Segment Sales $ 293.3 $ 298.4 $ 100.2 $ 111.9 Cubic
Global Defense Services Segment Operating Income $ 9.3 $ 4.2 $ 4.8
$ 3.1
CGD Services sales decreased 10 percent in the third quarter to
$100.2 million compared to $111.9 million last year, and decreased
2 percent for the nine-month period to $293.3 million from $298.4
million last year. Sales for the third quarter of fiscal 2016 were
lower primarily because of decreased activity at the Joint
Readiness Training Center (JRTC) and on other U.S. Army contracts
as well as lower activity supporting Special Operations Forces
(SOF) training. Sales for the first nine months of fiscal 2016 were
lower primarily because of decreased activity on U.S. Army support
contracts other than at JRTC, where activity and revenue was
slightly higher than in the first nine months of fiscal 2015. In
addition, sales decreased for the nine months due to lower activity
supporting SOF training.
CGD Services operating income increased 55 percent in the third
quarter to $4.8 million compared to $3.1 million last year, and
increased 121 percent for the nine-month period to $9.3 million
from $4.2 million last year. The largest contributor to the
increase in CGD Services operating margins for the third quarter
and the first nine months of 2016 related to decreases in the
amortization expense on purchased intangible assets which are
amortized based upon accelerated methods. In the third quarter and
first nine months of fiscal 2016 operating margins also increased
on a number of fixed price contracts due to the impacts of cost
efficiency efforts. For the first nine months of fiscal 2016, the
increase in operating income was partially offset by an operating
loss realized in the first quarter of fiscal 2016 on a Marine Corps
training contract that was bid in an extremely competitive
environment.
Conference Call
Cubic management will host a conference call to discuss the
Company’s third quarter and nine month results today, Wednesday,
August 3, 2016 at 1:00 p.m. EDT/10:00 a.m. PDT,
which will be simultaneously broadcast over the Internet. Bradley
H. Feldmann, president and chief executive officer and John “Jay”
D. Thomas, executive vice president and chief financial officer,
will host the call.
Conference Dial-In Information
Financial analysts and institutional investors interested in
participating in the call are invited to dial:
- (877) 407-9708 for domestic
callers
- (201) 689-8259 for international
callers
Please dial-in approximately 10 minutes prior to the start of
the call.
Audio Webcast
A live webcast of the conference call and presentation slides
will be accessible on our website under the “Investor Relations”
tab at www.cubic.com.
Please visit the website at least 15 minutes prior to the call
to register, download and install any streaming
media software needed to listen to the webcast. A
replay of the broadcast will be available on the Investor Relations
tab of Cubic’s website.
About Cubic
Cubic Corporation designs, integrates and operates systems,
products and services focused in the transportation, defense
training and secure communications markets. Cubic Transportation
Systems is a leading integrator of payment and information
technology and services to create intelligent travel solutions for
transportation authorities and operators. Cubic Global Defense is a
leading provider of live, virtual, constructive and game-based
training solutions, special operations and intelligence for the
U.S. and allied forces. Cubic Mission Solutions provides networked
Command, Control, Communications, Computers, Intelligence,
Surveillance and Reconnaissance (C4ISR) capabilities for defense,
intelligence, security and commercial missions. For more
information about Cubic, please visit the company's website at
www.cubic.com or on Twitter @CubicCorp.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that are subject to the safe harbor created by such Act.
Forward-looking statements include, among others, statements about
our expectations regarding future events or our future financial
and/or operating performance; making investments in our Company to
drive increased productivity and efficiency in the future;
anticipated lower sales, operating income and gross margin
percentage in the future under our new contract with TfL; and the
potential recovery of certain costs related to a contract for the
development of a virtual training system. 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
risks, estimates, assumptions and uncertainties that could cause
actual results to differ materially from those expressed in these
statements, including, among others: our dependence on U.S. and
foreign government contracts; delays in approving U.S. and foreign
government budgets and cuts in U.S. and foreign government defense
expenditures; the ability of certain government agencies to
unilaterally terminate or modify our contracts with them; our
ability to successfully integrate new companies into our business
and to properly assess the effects of such integration on our
financial condition; the U.S. government’s increased emphasis on
awarding contracts to small businesses, and our ability to retain
existing contracts or win new contracts under competitive bidding
processes; the effects of politics and economic conditions on
negotiations and business dealings in the various countries in
which we do business or intend to do business; risks associated
with the restatement of our prior consolidated financial
statements, including our identification of material weaknesses in
our internal control over financial reporting; competition and
technology changes in the defense and transportation industries;
our ability to accurately estimate the time and resources necessary
to satisfy obligations under our contracts; the effect of adverse
regulatory changes on our ability to sell products and services;
our ability to identify, attract and retain qualified employees;
unforeseen problems with the implementation and maintenance of our
information systems; business disruptions due to cyber security
threats, physical threats, terrorist acts, acts of nature and
public health crises; our involvement in litigation, including
litigation related to patents, proprietary rights and employee
misconduct; our reliance on subcontractors and on a limited number
of third parties to manufacture and supply our products; our
ability to comply with our development contracts and to
successfully develop, introduce and sell new products, systems and
services in current and future markets; defects in, or a lack of
adequate coverage by insurance or indemnity for, our products and
systems; and changes in U.S. and foreign tax laws, exchange rates
or our economic assumptions regarding our pension plans. In
addition, please refer to the risk factors contained in our SEC
filings available at www.sec.gov, including our most recent Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q.
Because the risks, estimates, assumptions and uncertainties
referred to above could cause actual results or outcomes to differ
materially from those expressed in any forward-looking statements,
you should not place undue reliance on any forward- looking
statements. Any forward-looking statement speaks only as of the
date hereof, and, except as required by law, we undertake no
obligation to update any forward-looking statement to reflect
events or circumstances after the date hereof.
Use of Non-GAAP Financial Information
We believe that the presentation of Earnings before interest,
taxes, depreciation, and amortization (EBITDA) and Adjusted EBITDA
included in this report provides useful information to investors
with which to analyze our operating trends and performance and
ability to service and incur debt. Also, we believe EBITDA
facilitates company-to-company operating performance comparisons by
backing out potential differences caused by variations in capital
structures (affecting net interest expense), taxation, variations
in organic vs. inorganic growth (affecting amortization expense)
and the age and book depreciation of property, plant and equipment
(affecting relative depreciation expense). We believe Adjusted
EBITDA further facilitates company-to-company operating comparisons
by backing out items that we believe are not part of our core
operating performance. Items backed out of Adjusted EBITDA are
comprised of expenses incurred in the development of our ERP system
and the redesign of our supply chain, business acquisition expenses
including retention bonus expenses, due diligence and consulting
costs incurred in connection with the acquisitions, expenses
recognized related to the change in the fair value of contingent
consideration for acquisitions, restructuring costs, and income and
expenses classified as other non-operating income and expenses
which may vary for different companies for reasons unrelated to
operating performance.
In addition, EBITDA and Adjusted EBITDA are key drivers of the
Company’s core operating performance and major factors in
management’s bonus compensation each year. Management has excluded
the effects of these items in these measures to assist investors in
analyzing and assessing our past and future core operating
performance.
In addition, we believe that EBITDA and Adjusted EBITDA are
frequently used by securities analysts, investors and other
interested parties in their evaluation of companies, many of which
present EBITDA, Adjusted EBITDA and/or other adjusted measures when
reporting their results.
EBITDA and Adjusted EBITDA are not measurements of financial
performance under GAAP and should not be considered as alternatives
to net income as a measure of performance. In addition, other
companies may define EBITDA and Adjusted EBITDA differently and, as
a result, our measures of EBITDA and Adjusted EBITDA may not be
directly comparable to EBITDA and Adjusted EBITDA of other
companies. Furthermore, EBITDA and Adjusted EBITDA have limitations
as analytical tools, and you should not consider either of them in
isolation, or as a substitute for analysis of our results as
reported under GAAP.
Because of these limitations, EBITDA and Adjusted EBITDA should
not be considered as measures of discretionary cash available to us
to invest in the growth of our business. We compensate for these
limitations by relying primarily on our GAAP results and using
EBITDA and Adjusted EBITDA only supplementally. You are cautioned
not to place undue reliance on EBITDA or Adjusted EBITDA.
The following table reconciles EBITDA and Adjusted EBITDA to net
income attributable to Cubic, which we consider to be the most
directly comparable GAAP financial measure to EBITDA and Adjusted
EBITDA.
Nine Months Ended
Three Months Ended June 30, June 30, 2016 2015
2016 2015 (in thousands) Net income
attributable to Cubic $ 9,228 $ 2,908 $ 4,498 $ 8,780 Add:
Interest expense, net 6,251 1,721 3,071 691 Income taxes (20,281 )
34,863 4,394 559 Depreciation and amortization 31,943 28,717 12,966
8,653 Noncontrolling interest in income of VIE -
29 - 6 EBITDA 27,141
68,238 24,929 18,689 Adjustments to EBITDA:
Acquisition related expenses, excluding amortization 27,633 3,894
3,678 1,329 ERP system development and supply chain process
redesign expense 24,428 7,920 8,493 6,039 Restructuring costs 1,615
5,385 1,690 127 Other non-operating expense (income), net
1,532 1,157 1,930 257 Adjusted EBITDA $
82,349 $ 86,594 $ 40,720 $ 26,441
Financial Statements
CUBIC CORPORATION CONDENSED CONSOLIDATED STATEMENTS
OF INCOME (UNAUDITED) (amounts in thousands, except per share data)
Nine Months Ended
Three Months Ended June 30, June 30,
2016 2015 2016
2015 Net sales: Products $ 451,329 $ 392,884 $
170,566 $ 133,762 Services 603,748 612,244
204,674 214,044 1,055,077
1,005,128 375,240 347,806 Costs and expenses: Products 328,422
288,926 108,785 94,381 Services 478,647 480,671 164,053 175,334
Selling, general and administrative expenses 206,897 155,603 68,632
55,127 Research and development 18,146 12,830 8,521 5,938
Amortization of purchased intangibles 24,620 21,035 9,666 6,606
Restructuring costs 1,615 5,385
1,690 127 1,058,347
964,450 361,347 337,513
Operating income (loss) (3,270 ) 40,678 13,893 10,293 Other
income (expenses): Interest and dividend income 1,152 1,337 415 434
Interest expense (7,403 ) (3,058 ) (3,486 ) (1,125 ) Other income
(expense), net (1,532 ) (1,157 ) (1,930 )
(257 ) Income (loss) before income taxes (11,053 )
37,800 8,892 9,345 Income tax expense (benefit)
(20,281 ) 34,863 4,394 559
Net income 9,228 2,937 4,498 8,786 Less
noncontrolling interest in income of VIE — 29
— 6 Net income
attributable to Cubic $ 9,228 $ 2,908 $ 4,498
$ 8,780 Net income per share attributable to Cubic:
Basic $ 0.34 $ 0.11 $ 0.17 $ 0.33 Diluted $ 0.34 $ 0.11 $ 0.17 $
0.33 Dividends per common share $ 0.14 $ 0.14 $ — $ —
Weighted average shares used in per share
calculations:
Basic 26,971 26,868 26,977 26,883 Diluted 27,010 26,925 27,058
26,960
CUBIC CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands)
June 30,
September 30, 2016 2015 ASSETS Current
assets: Cash and cash equivalents $ 173,439 $ 218,476 Restricted
cash 73,361 69,245 Marketable securities 13,331 30,533 Accounts
receivable - net 376,047 358,925 Recoverable income taxes 14,982
753 Inventories - net 64,803 63,700 Deferred income taxes and other
current assets 38,829 33,670 Total
current assets 754,792 775,302
Long-term contract receivables 21,755 36,809 Long-term capitalized
contract costs 67,686 73,017 Property, plant and equipment, net
95,013 74,690 Deferred income taxes 1,619 11,443 Goodwill 406,249
237,899 Purchased intangibles, net 132,643 72,936 Other assets
6,366 18,180 $ 1,486,123 $
1,300,276 LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities: Short-term borrowings $ 230,000 $ 60,000 Trade
accounts payable 62,165 47,170 Customer advances 48,915 77,083
Accrued compensation and other current liabilities 145,725 143,919
Income taxes payable 2,513 4,675 Deferred income taxes — 13,404
Current portion of long-term debt 462 525
Total current liabilities 489,780
346,776 Long-term debt 200,692 126,180 Other
long-term liabilities 68,553 71,032 Shareholders’ equity:
Common stock 31,006 25,560 Retained earnings 824,172 818,642
Accumulated other comprehensive loss (92,002 ) (51,836 ) Treasury
stock at cost (36,078 ) (36,078 ) Total shareholders’
equity 727,098 756,288 $ 1,486,123
$ 1,300,276
CUBIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in
thousands)
Nine Months Ended
Three Months Ended 2016
2015 2016
2015 Operating Activities: Net income $ 9,228 $ 2,937 $
4,498 $ 8,786 Adjustments to reconcile net income to net cash
provided by (used in) operating activities: Depreciation and
amortization 31,943 28,717 12,966 8,653 Share-based compensation
expense 6,916 6,652 2,828 1,361 Changes in operating assets and
liabilities, net of effects from acquisitions (42,648 )
8,186 22,842 (33,406 ) NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES 5,439
46,492 43,134 (14,606 )
Investing Activities: Acquisition of businesses, net of cash
acquired (243,483 ) (90,172 ) — (712 ) Purchases of property, plant
and equipment (25,883 ) (15,743 ) (4,508 ) (13,163 ) Purchases of
marketable securities (21,802 ) (6,201 ) (7,116 ) (1,611 ) Proceeds
from sales or maturities of marketable securities 36,923 1,196
7,053 — Purchases of other assets — (2,993 )
— — NET CASH USED IN INVESTING
ACTIVITIES (254,245 ) (113,913 ) (4,571 )
(15,486 ) Financing Activities: Proceeds from
short-term borrowings 263,300 95,000 10,000 25,000 Principal
payments on short-term borrowings (93,300 ) (25,000 ) (20,000 )
(10,000 ) Proceeds from long-term borrowings 75,000 — — — Principal
payments on long-term debt (378 ) (403 ) (124 ) (134 ) Purchase of
common stock (1,658 ) (2,652 ) — (929 ) Dividends paid (3,641 )
(3,627 ) — — Net change in restricted cash (4,116 ) (146 ) (602 )
(45 ) Contingent consideration payments related to acquisitions of
businesses (1,679 ) — — —
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
233,528 63,172 (10,726 ) 13,892
Effect of exchange rates on cash (29,759 )
(2,295 ) (13,206 ) 17,401 NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (45,037 ) (6,544 )
14,631 1,201 Cash and cash equivalents at the beginning of
the period 218,476 215,849
158,808 208,104 CASH AND CASH
EQUIVALENTS AT THE END OF THE PERIOD $ 173,439 $ 209,305
$ 173,439 $ 209,305 Supplemental
disclosure of non-cash investing and financing activities:
Liability incurred to acquire GATR, net $ 7,651 $ — $ — $ —
Liability incurred to acquire TeraLogics, net $ 4,998 $ — $ — $ —
Liability incurred to acquire H4 Global, net $ 952 $ — $ — $ —
Liability incurred to acquire DTECH, net $ — $ 8,898 $ — $ 44
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Cubic CorporationDiane DyerInvestor Relations858-505-2907orCubic
CorporationJohn D. ThomasMedia858-505-2989
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