Replies to post #1469 on The Rising Influence of Rising Affluence

[DewDiligence]

60-Mile Traffic Jam Could Last Until Mid-September

[This story is even more bullish for CUB than the one in #msg-53481095.]

http://online.wsj.com/article/SB10001424052748704125604575449173989748704.html

›AUGUST 24, 2010
By SHAI OSTER

BEIJING—A 60-mile traffic jam near the Chinese capital could last until mid-September, officials say.

Traffic has been snarled along the outskirts of Beijing and is stretching toward the border of Inner Mongolia ever since roadwork on the Beijing-Tibet Highway started Aug. 13. The following week, parts of a major road circling Beijing were closed, further tightening overburdened roadways.

As the jam on the highway, also known as National Highway 110, passed the 10-day mark Tuesday, local authorities dispatched hundreds of police to keep order and to reroute cars and trucks carrying essential supplies, such as food or flammables, around the main bottleneck. There, vehicles were inching along little more than a third of a mile a day [!]. Zhang Minghai, director of Zhangjiakou city's Traffic Management Bureau general office, said in a telephone interview he didn't expect the situation to return to normal until around Sept. 17 when road construction is scheduled to be finished and traffic lanes will open up.

Villagers along Highway 110 took advantage of the jam, selling drivers packets of instant noodles from roadside stands and, when traffic was at a standstill, moving between trucks and cars to hawk their wares.

Truck drivers, when they weren't complaining about the vendors overcharging for the food, kept busy playing card games. Their trucks, for the most part, are basic, blue-colored vehicles with no features added to help pamper drivers through long hauls.

Truck driver Long Jie said his usual trip from the coal boomtown of Baotou in Inner Mongolia to Beijing, which normally takes three days, was now taking him a week or more. The delay, he said, meant he would have to raise his rates above the usual 12,000 yuan, about $1,765, for a 30-ton truck full of cargo.

Sounding frazzled and tired, Mr. Long, a driver for Baotou Zengcai Shipping Co., said in a telephone interview that the traffic got a little better once he finally made it off the highway.

Though triggered by construction, the root cause for the congestion is chronic overcrowding on key national arteries. Automobile sales in China whizzed past the U.S. for the first time last year, as Chinese bought 13.6 million vehicles, compared with 9.4 million vehicles in 2008. China is racing to build new roads to ease the congestion, but that very construction is making traffic problems worse—at least temporarily.

China's roads suffer from extra wear and tear from illegally overloaded trucks, especially along key coal routes. Coal supplies move from Mongolia through the outskirts of the capital on their way to factories. There are few rail lines to handle the extra load. Though the current massive gridlock is unusual, thousands of trucks line up along the main thoroughfares into Beijing even on the best days.

Beijing is particularly prone to traffic jams because it is a bottleneck point. Drivers from the northwest have to navigate its rings of concentric circular highways to get to coastal ports or to head south. The sixth-ring road is the biggest, and until a new beltway is finished in the next few years, there is no alternative route around the capital.

Also entering the mix is the swell of passenger cars into the city from residents who have had to move farther from the capital to find affordable homes.

Other cities around the world face similar congestion headaches. The worst are in developing countries where the sudden rise of a car-buying middle class outpaces highway construction—unlike in the U.S., which had decades to develop transportation infrastructure to keep up with auto buyers.

A recent study by IBM suggested some of the worst commutes are in Moscow, where drivers reported 2½-hour delays, on average, when asked about the worst traffic jam they faced in three years. Still, Beijing beat out Mexico City, Johannesburg, Moscow and New Delhi to take top spot in the International Business Machines Corp. survey of "commuter pain," which is based on a measure of the economic and emotional toll of commuting.

The mega-jam on the city outskirts comes as officials warn that downtown traffic in Beijing is steadily worsening. State media on Tuesday reported that average driving speeds in the capital could drop below nine miles an hour if residents keep buying at current rates of 2,000 new cars a day.

At that pace, Beijing will have seven million vehicles by 2015, according to the head of the Beijing Transportation Research Center, and transportation will slow to what it was decades ago when China was known as the Bicycle Kingdom.

Beijing's roads now have capacity to handle 6.7 million vehicles—and that is assuming current restrictions stay in place, such as the one requiring private cars to keep off the road for one day a week. Still, Beijing has half the number of cars of a comparably sized city, such as Tokyo.

The capital greatly expanded its bus lines and subway in preparation for the 2008 Summer Olympics, and work continues to open even more stations. But public transport remains crowded and many who can afford it prefer to drive cars.

Longer term, city planners are pinning their hopes on expanded mass transit, adding subway, light rail and mode dedicated bus lanes.‹

[DewDiligence]

Cubic Reports Record FY2010 Results

[Please see the prologue of #msg-53598437 for the reason I think CUB is a good stock and a beneficiary of The Global Demographic Tailwind. (And be sure to read #msg-53690679 if you have not done so already!)

The fiscal year ended on 9/30/10. Please see actual PR for financial tables. CUB does not hold quarterly CC’s.]

http://finance.yahoo.com/news/Cubic-Corp-NYSE-CUB-Reports-iw-4010290724.html?x=0&.v=1

›Thursday December 9, 2010, 6:00 am

SAN DIEGO, CA--(Marketwire - 12/09/10) - Cubic Corporation (NYSE:CUB) today reported record high sales and earnings for the fiscal year ended September 30, 2010. Sales in fiscal 2010 were $1.194 billion, representing an increase of 17 percent over sales of $1.017 billion in 2009. Net income increased 27 percent, to $70.6 million ($2.64 per share) from $55.7 million ($2.08 per share) in 2009.

Operating income increased 25 percent, from $84.7 million in 2009 to $105.5 million this year, and cash flows from operations were strong, at $111.7 million in 2010.

Transportation Systems Segment

Cubic Transportation Systems (CTS) sales increased 27 percent to $386.0 million in 2010 from $303.4 million in 2009. Sales were higher in 2010 from work in the San Francisco Bay area, London, Southern California and Sydney, Australia.

Operating income from CTS increased 24 percent in 2010 to $54.7 million from $44.1 million in 2009. Increased income resulted from higher sales and margins in North America and from slightly higher operating profits from European operations.

Defense Systems Segment

Cubic Defense Systems (CDS) sales increased 27 percent to $362.8 million in 2010 from $285.4 million in 2009. Sales increased in both the Training Systems and Communications businesses.

Operating income from CDS increased 51 percent to $28.7 million in 2010 from $19.0 million in 2009. Higher sales of training systems and communications products and improved profit margins contributed to the increase. In addition, an allowance for doubtful accounts receivable of $3.1 million established in 2009 was fully recovered in 2010, plus attorney's fees, costs and interest, of $1.1 million.

Mission Support Services Segment

Sales at Mission Support Services (MSS) increased 4 percent to $443.3 million in 2010 from $424.4 million in 2009. Sales were higher in 2010 primarily from increased activity at the Joint Readiness Training Center in Fort Polk, Louisiana.

Operating income from MSS was slightly lower in 2010 at $26.5 million compared to $27.9 million in 2009, due primarily to a provision of $2.0 million recorded in the first quarter of 2010 for a dispute with a customer over contract terms.

Financial Condition

The Company's financial condition continued to be very strong in 2010. Cash and short-term investments at September 30, 2010 were $379.5 million while long-term debt was only $20.5 million.

Backlog

Total backlog was a record high $2.486 billion at September 30, 2010 compared to $2.183 billion at September 30, 2009. Funded backlog was $1.872 billion at September 30, 2010 compared to $1.534 billion at September 30, 2009.

SEC Form 10-K

The Company also announced that it filed its form 10-K with the Securities and Exchange Commission today. This report may be found at www.cubic.com under "Investor Info." Shareholders may also receive a free hard copy upon written request to the Company or by e-mail to [e-mail].

Cubic Corporation is the parent company of three major business segments: defense systems, mission support services and transportation systems. Cubic Defense Systems is a leading provider of realistic combat training systems, cyber technologies, asset tracking solutions, and defense electronics. Mission Support Services is a leading provider of training, operations, maintenance, technical and other support services. Cubic Transportation Systems is the world's leading provider of automated fare collection systems and services for public transit authorities. For more information about Cubic, see the company's Web site at www.cubic.com.‹

[DewDiligence]

CUB Reports FY3Q11 Results

[The stock is down a whopping 10% today as I’m typing and was down much more earlier in the day; amid this week’s bloodbath in the broad market, it’s hard to tell how much of this is company-specific. Fears that the federal government will cut defense are surely weighing on the share price but these fears are largely misplaced, IMO, for reasons I’ve mentioned in previous posts.

FY3Q10, the year-ago period, was unusually strong for the reasons discussed in this PR (also see #msg-53598437), so almost all of the FY3Q11 numbers were down YoY excluding the effect of acquisitions. Still, FY3Q11 EPS of 0.78 beat the analysts’ consensus, FWIW. CUB does not hold quarterly CC’s or issue guidance. (There was an accounting restatement for FY2010 but it was immaterial, so I doubt that it’s a factor in today’s sell-off.)

Please see the prologue of #msg-53598437 for the reason I think CUB is a beneficiary of The Global Demographic Tailwind.]

http://finance.yahoo.com/news/Cubic-Corp-NYSE-CUB-Reports-iw-4069502280.html?x=0&.v=1

›Friday August 5, 2011, 6:00 am EDT

SAN DIEGO, CA--(Marketwire -08/05/11)- Cubic Corporation (NYSE: CUB) today reported its financial results for the third quarter ended June 30, 2011. While sales and earnings were lower than the unusually high third quarter of last year, third quarter earnings were the highest quarter in the nine-month period this year and the second highest quarter ever. Sales, operating income and earnings per share for the nine-month period were all higher than last year, and total backlog at June 30, 2011 was up by $338.6 million compared to last year end.

Net income attributable to Cubic shareholders for the third quarter was $20.8 million or 78 cents per share this year compared to $22.7 million or 85 cents per share last year. Sales for the third fiscal quarter decreased from $331.3 million to $319.9 million. Operating income was $26.8 million in this year's third quarter compared to $32.6 million last year. Cash flow from operations was $51.9 million in the quarter.

In the third quarter of 2010, the company had made a significant delivery of virtual small arms training systems to a U.S. government customer which resulted in a spike in quarterly sales and operating income for the defense systems segment. In the current year, the deliveries of these systems occurred throughout the year, resulting in sales and operating income more evenly spread across the quarters. The third quarter last year also included a large gating system installation for a customer in Southern California by the transportation systems segment, adding to sales and operating income for the quarter. Sales from the transportation systems segment usually come from the development of systems over a period of time, resulting in the revenue spread more evenly over the period of performance.

For the nine months ended June 30, 2011, sales increased to $938.3 million compared to $846.5 million last year. Operating income was $82.0 million for the first nine months compared to $79.1 million last year. Net income attributable to Cubic shareholders was higher for the first nine months, increasing from $57.4 million or $2.15 per share last year, as restated, to $60.7 million or $2.27 per share this year. Cash flow from operations was $96.2 million for the nine-month period.

During the third fiscal quarter of 2011, the company identified errors in its consolidated financial statements for the three months ended March 31, 2010, for the nine months ended June 30, 2010 and for the three months ended September 30, 2010. The company has restated its previously reported consolidated statements of income and cash flows for the nine months ended June 30, 2010 to record the impact of changes in exchange rates on U.S. dollar denominated money market investments that are held by its wholly-owned subsidiary in the United Kingdom that has the British Pound as its functional currency. These investments were purchased during the quarter ended March 31, 2010 and the company historically recorded the impact of changes in exchange rates on these investments in other comprehensive income as they were treated as an economic hedge. Upon reviewing the accounting treatment for these investments, management determined that these changes in exchange rates did not meet the requirements for hedge accounting treatment and therefore should have been recorded in other non-operating income.

As a result of these errors other non-operating income was understated by $5.0 million for the quarter ended March 31, 2010 and non-operating income was overstated by a similar amount for the quarter ended September 30, 2010. The company evaluated the materiality of the errors from a qualitative and quantitative perspective and concluded that they were material to the interim periods previously presented and has restated these amounts. The company also concluded that since the understatement of non-operating income in the quarter ended March 31, 2010 approximated the overstatement in the quarter ended September 30, 2010, these errors were not material to the consolidated financial statements for the fiscal year ended September 30, 2010. The restatements had no impact on the consolidated financial statements for the nine months ended June 30, 2011 or any interim financial statements within that period.

Transportation Systems Segment

Cubic Transportation Systems (CTS) sales in the third quarter this year were $107.4 million compared to $111.2 million last year. Operating income for the quarter decreased in the third quarter this year to $13.6 million from $14.6 million last year. The large gating system installation in the third quarter last year described above contributed to the decrease for the quarter. Partially offsetting these decreases were higher quarterly sales and operating income from work on contracts in Australia and the U.K.

For the nine-month period, CTS sales increased to $293.6 million this year from $276.7 million last year, and operating income was $41.9 million compared to $40.7 million last year. The nine-month sales and operating income this year were higher from work on contracts in Australia and the U.K.

Defense Systems Segment

Sales from Cubic Defense Systems (CDS) were $86.4 million in this quarter compared to $108.5 million in last year's third quarter. Operating income for the third quarter decreased from $11.6 million last year to $6.3 million this year. The delivery of small arms training systems in the third quarter of last year mentioned above resulted in significant sales and income for that quarter. Sales also decreased in the communications business for the third quarter this year but operating income increased in the communications business related to higher margins on sales of a mini-common data link product. Partially offsetting the overall decreases in CDS sales and operating income in the current quarter were higher sales and operating income from air and ground combat training systems.

For the first nine months of the year, CDS sales increased from $247.5 million last year to $285.9 million this year due to increased sales from the training systems business, partially offset by decreased sales from the communications business. Operating income increased from $23.6 million last year to $25.7 million in the first nine months of this year due to increased operating profits on increased sales in the training systems business and improved margins in the communications business.

Mission Support Services Segment

Mission Support Services (MSS) sales increased to $125.9 million from $111.3 million in last year's third quarter. The acquisition of Abraxas Corporation (Abraxas) in December 2010 added $15.0 million to sales for the third quarter of this year [i.e. sales in this segment would have been flat w/o the acquisition]. Sales were also higher from homeland security related contracts and in support of instruction and maintenance of flight simulators, but were lower from training and education contracts due to delays in contract awards, and services insourcing. Operating income from MSS increased to $8.0 million in the third quarter of this year compared to $7.6 million last year as a result of a settlement received in the quarter related to a dispute over contract terms in 2010. Partially offsetting this increase was decreased operating income on decreased sales from training and education contracts. Abraxas incurred an operating loss of $0.3 million in the quarter, after deducting $2.6 million of intangible asset amortization.

For the first nine months of the year, MSS sales increased from $320.9 million to $357.8 million. Operating income decreased slightly from $18.7 million last year to $18.2 million in the first nine months of this year. The operating loss of Abraxas was $1.8 million since its acquisition, which included amortization of intangible assets of $5.5 million, as well as acquisition costs of $0.7 million that were incurred in the first quarter.

Backlog

Total backlog was $2.825 billion at June 30, 2011 compared to $2.486 billion at September 30, 2010. Abraxas added $120.1 million to total backlog as of June 30, 2011. [The backlog is roughly unchanged since 12/31/11.].

Financial Condition

The company continues to maintain a strong liquidity position, ending the period with $339.0 million in cash and short-term investments, and total debt of only $16.2 million.

Cubic Corporation is the parent company of three major business segments: Defense Systems, Mission Support Services and Transportation Systems. Cubic Defense Systems is a leading provider of realistic combat training systems, cyber technologies, asset tracking solutions and defense electronics. Mission Support Services is a leading provider of training, operations, maintenance, technical and other support services. Cubic Transportation Systems is the world's leading provider of automated fare collection systems and services for public transit authorities. For more information about Cubic, see the company's Web site at www.cubic.com.‹