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Cubic Corp Reports Operating Results (10-K)

December 09, 2010 | About:
10qk

10qk

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Cubic Corp (CUB) filed Annual Report for the period ended 2010-09-30.

Cubic Corp has a market cap of $1.28 billion; its shares were traded at around $47.76 with a P/E ratio of 19.3 and P/S ratio of 1.3. The dividend yield of Cubic Corp stocks is 0.4%. Cubic Corp had an annual average earning growth of 17.1% over the past 10 years. GuruFocus rated Cubic Corp the business predictability rank of 3.5-star.CUB is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Murray Stahl of Horizon Asset Management, Bruce Kovner of Caxton Associates.

Highlight of Business Operations:

Funded sales backlog of CTS at September 30, 2010 and 2009 amounted to $1.113 billion and $772 million, respectively. We expect that approximately $774 million of the September 30, 2010 backlog will not be completed by September 30, 2011.

Our training business is organized into Air Combat and Ground Combat divisions. In Air Combat, Cubic was the initial developer and supplier of Air Combat Maneuvering Instrumentation (ACMI) capability during the Vietnam War. The ACMI product line has progressed through several generations of technologies and capabilities. We continue to maintain a market leadership position based on the competitive award of a 10-year, $525 million indefinite delivery/ indefinite quantity (IDIQ) contract in 2003, called P5, to provide advanced air combat training capability to the U.S. Air Force, Navy and Marine Corps. We also received a $50 million development contract in 2007 to develop an internal version of the P5 system for use on the F-35 Joint Strike Fighter. While most of the latest ACMI systems are designed to operate in a rangeless environment we continue to support a number of legacy, fixed geographic ranges. Many nations employ our ACMI systems for air to air combat training.

Funded sales backlog of CDS at September 30, 2010 was $523 million compared to $556 million at September 30, 2009. We expect that approximately $259 million of the September 30, 2010 backlog will not be completed by September 30, 2011.

Funded sales backlog of our MSS segment at September 30, 2010 was $236 million compared to $207 million at September 30, 2009. Total backlog, including unfunded customer orders and options under multiyear service contracts, was $850 million at September 30, 2010 compared to $856 million at September 30, 2009. We expect that approximately $501 million of the September 30, 2010 total backlog will not be completed by September 30, 2011.

An example of this at CDS is the award of a 10 year contract to provide the next generation U.S. air combat training system. Starting in 1971 Cubic developed the first generation of Air Combat Maneuvering Instrumentation system, or ACMI, for the U.S. Military for live combat training. In 2003 we were awarded the P5 $525 million ID/IQ contract to deliver the latest technology for rangeless live training to the U.S. and foreign militaries. In 2007 we were awarded a $50.3 million contract to develop the next generation of live training for the F-35 Joint Strike Fighter aircraft using embedded technology. Thus since the initial contract in 1971, we have successfully and continuously supplied the U.S. and foreign militaries with the latest in air combat training technologies.

The cost of company sponsored research and development (R&D) activities was $19.0 million, $8.2 million and $12.2 million in 2010, 2009 and 2008, respectively. In addition to internally funded R&D, a significant portion of our new product development occurs in conjunction with the performance of work on our contracts. The amount of contract-required product development activity was $63 million in 2010 compared to $54 million and $55 million in 2009 and 2008, respectively; however, these costs are included in cost of sales as they are directly related to contract performance.

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