Cubic Corporation is the parent company of two major business segments: defense and transportation. The Cubic Defense Applications 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. Cubic Transportation Systems designs manufactures and integrates automatic fare collection systems for public transit projects throughout the world. This includes rail bus and parking lot systems. The company supplies contactless smart cards; magnetic stripe cards; device software; and transit hardware including gates ticket machines and card readers. Cubic Defense Applications provides realistic live combat training systems for military forces as well as virtual training systems constructive simulation support force modernization battle command training and education and engineering & technical support. Cubic Corp has a market cap of $726.97 million; its shares were traded at around $26.92 with a P/E ratio of 17.7 and P/S ratio of 0.83. The dividend yield of Cubic Corp stocks is 0.66%. Cubic Corp had an annual average earning growth of 16.9% over the past 10 years.
Highlight of Business Operations:Operating income increased 23% to $21.1 million in the first quarter compared to $17.1 million in the first quarter of last year. Defense operating income increased 30% while transportation systems operating income increased 37%. Also included in operating income were corporate and other costs of $1.6 million this year, compared to zero in the first quarter of last year. These costs included a $0.8 million investment in the development and marketing of new security related technologies. Of the increase in total operating income for the quarter, $1.2 million came from Omega and is included in the defense segment results. See the segment discussions following for further analysis of segment operating income.
Mission Support Services operating income increased 36% to $7.5 million in the first quarter of this year from $5.5 million in the first quarter of last year. Of this increase, $1.2 million came from Omega, net of amortization of purchased intangibles of $1.4 million. Higher sales from the JRTC also resulted in higher operating income; however, this was more than offset by lower profits from our U.S. Marine Corp. program, as we started a new five year contract cycle with lower margins than previously realized. During the quarter we received a contract modification related to the completed U.S. Marine Corp. contract that reimbursed us for out-of-scope costs expensed last year, adding $1.2 million to operating income.
Communications sales were $11.9 million in the first quarter of 2009, an increase of 35% from $8.8 million in the same quarter last year. A settlement agreement reached in the first quarter with the U.S. Navy on a data link development contract added $3.3 million to sales for the quarter, accounting for the increase. Sales decreased from the sale of personnel locator systems, partially offset by higher sales from data link contracts, in addition to the settlement mentioned above.
Operating income from transportation systems increased 37% in the first quarter from $7.3 million last year to $10.0 million this year. Higher profits came from increased spares sales in the U.S. and increased sales to train operating companies in the U.K. During the first quarter, Transport for London (TfL) awarded Cubic directly a new three year contract for the period from August 2010 to August 2013 that includes virtually all of the services currently being performed under the PRESTIGE contract by our 37.5% owned subsidiary, TranSys, through Cubic and the other primary shareholder. At the same time, an agreement was reached that resolves several disputed issues with the other primary shareholder of TranSys. Settlement agreements were also reached during the quarter with two other customers to restructure our contracts with them. The two contract restructurings and the dispute resolution added a net $1.6 million to operating income for the quarter. As a result of one of the contract restructurings, we wrote off accounts receivable of $4.0 million against the associated allowance for doubtful accounts, resulting in no impact on operating income.
As reflected in the table above, total backlog increased $70.2 million at December 31, 2008 compared to September 30, 2008. Transportation systems backlog increased $173.0 million and defense backlog decreased $102.8 million during the quarter. The new contract awarded by TfL added $255 million (£170 million) to transportation systems backlog during the quarter, however, a lower exchange rate between the British Pound and the U.S. Dollar as of the end of the quarter decreased backlog by approximately $50 million compared to September 30, 2008. Funded backlog increased $130.9 million during the period, with transportation systems increasing $173.0 million and defense funded backlog decreasing by $42.1 million.
Investing activities for the three-month period consisted of capital expenditures of $1.4 million and the final payment related to our fiscal year 2008 acquisition of Omega, amounting to $6.1 million. Financing activities for the quarter consisted of scheduled payments on our long-term debt of $5.6 million.
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