Cubic Corp. (AMEX: CUB) Reports Earnings and Sales for the Quarter Ended March 31, 2008

SAN DIEGO, CA -- (MARKET WIRE) -- 05/07/08 -- Cubic Corporation (AMEX: CUB) today reported earnings and sales for the second quarter ended March 31, 2008. Earnings were $9.6 million in the second quarter ($.36 per share) versus $11.2 million last year, while for the six-month period, earnings increased from $19.5 million last year to $20.3 million ($.76 per share) this year.

Sales for the second quarter, although higher than the first quarter, were $210.3 million this year compared to $230.0 million in the same quarter last year. Lower sales in defense were partially offset by increased sales from transportation. Last year's second quarter included sales of $3.2 million from the corrugated box business the company sold in the fourth quarter of 2007. For the first six months of the fiscal year, sales were $413.0 million compared to $433.0 million a year ago.

Operating income was up for the six-month period from $29.5 million in 2007 to $31.0 million this year but was lower for the quarter at $13.9 million versus $17.8 million in the second quarter last year. Operating income in transportation grew significantly from $6.9 million to $11.9 million in this year's second quarter, and more than doubled from $9.2 million last year to $19.2 million for the six months ended March 31, 2008. However, improvements in transportation were largely offset by a reduction in defense's operating profits to $2.8 million in the second quarter versus $11.9 million last year, and to $12.6 million for the six months ended March 31, 2008 compared to $21.4 million last year.

Cash flows from operations for the first six months of the fiscal year were $25.1 million, with both segments contributing to the positive result.

Transportation Systems Segment

Transportation Systems sales increased from $62.0 million in the second quarter last year to $72.1 million this year. Sales increased primarily due to additional work on contracts in the U.K. and system installation work on a contract in Australia. Significant progress was made on several system enhancement projects in the U.K. during the quarter, generating higher sales and profits than are expected in the remaining two quarters. Sales from system installation contracts in North America were lower, however, this decrease was partially offset by higher sales of spare parts to U.S. customers. For the first half of the fiscal year, transportation systems sales increased from $118.0 million in 2007 to $128.6 million this year for the reasons described above.

Operating income from the transportation segment improved from $6.9 million in the second quarter last year to $11.9 million this year. Strong operating income on higher sales from U.K. operations as mentioned above and profits from increased spares sales in the U.S. contributed to the improvement. For the first half of the fiscal year, transportation systems operating income more than doubled from $9.2 million to $19.2 million for the reasons described above and due to improved operating performance from system installation contracts in North America.

Defense Segment

Sales from the defense segment decreased in the second quarter from $164.8 million last year to $138.2 million this year. Defense service sales were down due to a temporary decrease in army training activities during the quarter, while combat training system sales were lower primarily because of a transition from engineering development contracts to long-term production orders, which also is expected to have only a short-term impact on sales. In addition, sales were down in the communications business due to lower sales from data link contracts. For the first six months of the fiscal year defense sales decreased from $308.1 million to $284.4 million for the reasons identified above. The company expects sales from each of the defense business units to increase in the third and fourth quarters over the second quarter level.

Operating income in the defense segment decreased in the second quarter to $2.8 million from $11.9 million last year due primarily to higher costs on development contracts and lower sales. Operating income for the first half was $12.6 million compared to $21.4 million last year. Management believes the second quarter results in the defense segment are short-term in nature and expects improved performance for the remainder of the year.

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 CONDENSED STATEMENTS OF INCOME (UNAUDITED) (amounts in thousands, except per share data)

Six Months Ended Three Months Ended March 31, March 31, 2008 2007 2008 2007 --------- --------- --------- --------- Net sales: Products $ 230,096 $ 253,443 $ 117,749 $ 132,484 Services 182,906 179,533 92,531 97,557 --------- --------- --------- --------- 413,002 432,976 210,280 230,041

Costs and expenses: Products 175,597 206,805 91,407 107,716 Services 153,773 148,413 78,882 80,249 Selling, general and administrative 48,875 46,917 24,096 23,707 Research and development 3,783 1,351 2,009 570 --------- --------- --------- --------- 382,028 403,486 196,394 212,242 --------- --------- --------- --------- Operating income 30,974 29,490 13,886 17,799

Other income (expense): Interest and dividends 2,793 898 1,272 464 Interest expense (1,391) (1,476) (659) (732) Other income 328 530 634 48 Minority interest in loss of subsidiary 118 394 113 132 --------- --------- --------- --------- Income before income taxes 32,822 29,836 15,246 17,711

Income taxes 12,500 10,300 5,600 6,500 --------- --------- --------- --------- Net income $ 20,322 $ 19,536 $ 9,646 $ 11,211 ========= ========= ========= ======== Basic and diluted net income per common share $ 0.76 $ 0.73 $ 0.36 $ 0.42 ========= ========= ========= ======== Dividends per common share $ 0.09 $ 0.09 $ 0.09 $ 0.09 ========= ========= ========= ======== Average number of common shares outstanding 26,723 26,720 26,724 26,720 ========= ========= ========= ======== CUBIC CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)

March 31, September 30, 2008 2007 (Unaudited) (See note below) ------------- --------------ASSETS Current assets: Cash and cash equivalents $ 115,257 $ 73,563 Short-term investments - 27,200 Accounts receivable, net 278,154 305,672 Inventories 34,940 27,342 Recoverable income taxes 2,395 - Deferred income taxes and other current assets 36,168 39,597 ------------- -------------Total current assets 466,914 473,374 ------------- ------------- Long-term contract receivables 35,600 16,650 Property, plant and equipment - net 55,386 57,251 Goodwill 35,965 36,003 Other assets 16,328 9,287 ------------- ------------- $ 610,193 $ 592,565 ============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 21,684 $ 27,992 Customer advances 71,103 58,412 Other current liabilities 66,908 69,970 Income taxes payable - 4,905 Current portion of long-term debt 6,121 6,138 ------------- -------------Total current liabilities 165,816 167,417 ------------- ------------- Long-term debt 26,740 32,699 Other long-term liabilities 19,068 9,678

Shareholders' equity: Common stock 12,485 12,357 Retained earnings 390,740 375,299 Accumulated other comprehensive income 31,413 31,184 Treasury stock at cost (36,069) (36,069) ------------- ------------- 398,569 382,771 ------------- ------------- $ 610,193 $ 592,565 ============= ============ Note: The balance sheet at September 30, 2007 has been derived from the audited financial statements at that date.

CUBIC CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)

Six Months Ended Three Months Ended March 31, March 31, 2008 2007 2008 2007 --------- --------- --------- --------- Operating Activities: Net income $ 20,322 $ 19,536 $ 9,646 $ 11,211 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 4,104 4,520 1,998 2,179 Changes in operating assets and liabilities 628 13,609 (13,410) 28,931 --------- --------- --------- ---------NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 25,054 37,665 (1,766) 42,321 --------- --------- --------- --------- Investing Activities: Net additions to property, plant and equipment (4,864) (3,326) (3,036) (1,470) Proceeds from sales of marketable securities 66,300 92,153 - 15,852 Purchases of marketable securities (39,100) (91,705) - (24,278) --------- --------- --------- ---------NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 22,336 (2,878) (3,036) (9,896) --------- --------- --------- --------- Financing Activities: Change in short-term borrowings, net - (10,000) - - Principal payments on long-term borrowings (5,777) (5,764) (172) (168) Other 128 - 85 - --------- --------- --------- ---------NET CASH USED IN FINANCING ACTIVITIES (5,649) (15,764) (87) (168) --------- --------- --------- --------- Effect of exchange rates on cash (47) 965 1,064 348 --------- --------- --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 41,694 19,988 (3,825) 32,605

Cash and cash equivalents at the beginning of the period 73,563 42,380 119,082 29,763 --------- --------- --------- --------- CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 115,257 $ 62,368 $ 115,257 $ 62,368 ========= ========= ========= ========

Media: David Liddle 858-505-2642

Investors: Diane Dyer 858-505-2907

9333 Balboa Ave. San Diego, CA 92123

2008-05-07 17:55:02 0355865 MARKETWIRE