**UNITEDSTATES**

**SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

** **

**FORM 10-Q**

 

**QUARTERLY REPORT**

** **

**Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934**

 

**For the Quarter Ended June 30, 2008**

 

**1-8931**

**Commission File Number**

 

##### **CUBIC CORPORATION**

Exact Name of Registrant as Specified in its Charter

 

| **Delaware**            | ** ** | **95-1678055**                   |
|-------------------------|------------|----------------------------------|
| State of  Incorporation |       | IRS Employer  Identification No. |

 

**9333 Balboa Avenue**

**San Diego, California 92123**

**Telephone (858) 277-6780**

 

Indicate by check mark whether the Registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months, and (2) hasbeen subject to such filing requirements for the past 90 days.

 

Yes x    No o

 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See the definitions of “large accelerated filer,”“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of theExchange Act. (Check one):

 

| Large accelerated filer  o | Accelerated filer x | Non-accelerated filer o                        | Smaller reporting  company o |
|----------------------------|--------------------------|------------------------------------------------|-----------------------------------|
|                       |                     | (Do not check if a smaller  reporting company) |                              |

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12-b-2of the Exchange Act).

Yes o    No x

 

As of July 17, 2008,registrant had only one class of common stock of which there were 26,727,487shares outstanding (after deducting 8,945,120 shares held as treasury stock).

 

 

 

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**PART I - FINANCIAL INFORMATION**

ITEM 1 - FINANCIAL STATEMENTS

 

### **CUBIC CORPORATION**

CONDENSED CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED)

(amounts in thousands, except per share data)

 
| ** **                                       | ** ** | **Nine Months Ended  June 30,** | ** ** | **Three Months Ended  June 30,** | ** ** |
|--------------------------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                       | ** ** | **2008**                                       | ** ** | **2007**                                        | ** ** | **2008** | ** ** | **2007** | ** ** |
| Net sales:                                       |       |                                           |       |                                            |       |   |   |   |   |
| Products                                         |       | $                                              | 360,362    |                                            | $          | 391,563 |   | $ | 130,266 |   | $ | 138,120 |   |
| Services                                         |       | 285,532                                        |       | 275,162                                         |       | 102,626 |   | 95,629 |   |
|                                             |       | 645,894                                        |       | 666,725                                         |       | 232,892 |   | 233,749 |   |
| Costs and expenses:                              |       |                                           |       |                                            |       |   |   |   |   |
| Products                                         |       | 280,258                                        |       | 318,031                                         |       | 104,661 |   | 111,226 |   |
| Services                                         |       | 240,695                                        |       | 227,874                                         |       | 86,922 |   | 79,461 |   |
| Selling, general and administrative              |       | 75,740                                         |       | 72,169                                          |       | 26,865 |   | 25,252 |   |
| Research and development                         |       | 6,752                                          |       | 2,601                                           |       | 2,969 |   | 1,250 |   |
|                                             |       | 603,445                                        |       | 620,675                                         |       | 221,417 |   | 217,189 |   |
| Operating income                                 |       | 42,449                                         |       | 46,050                                          |       | 11,475 |   | 16,560 |   |
|                                             |       |                                           |       |                                            |       |   |   |   |   |
| Other income (expense):                          |       |                                           |       |                                            |       |   |   |   |   |
| Interest and dividends                           |       | 5,047                                          |       | 1,791                                           |       | 2,254 |   | 893 |   |
| Interest expense                                 |       | (2,227                                         | )          | (2,202                                          | )          | (836 | ) | (726 | ) |
| Other income (expense)                           |       | 334                                            |       | 1,195                                           |       | 6 |   | 665 |   |
| Minority interest in loss (income) of subsidiary |       | (103                                           | )          | 579                                             |       | (221 | ) | 185 |   |
|                                             |       |                                           |       |                                            |       |   |   |   |   |
| Income before income taxes                       |       | 45,500                                         |       | 47,413                                          |       | 12,678 |   | 17,577 |   |
|                                             |       |                                           |       |                                            |       |   |   |   |   |
| Income taxes                                     |       | 16,700                                         |       | 16,700                                          |       | 4,200 |   | 6,400 |   |
|                                             |       |                                           |       |                                            |       |   |   |   |   |
| Net income                                       |       | $                                              | 28,800     |                                            | $          | 30,713 |   | $ | 8,478 |   | $ | 11,177 |   |
|                                             |       |                                           |       |                                            |       |   |   |   |   |
| Basic and diluted net income per common share    |       | $                                              | 1.08       |                                            | $          | 1.15 |   | $ | 0.32 |   | $ | 0.42 |   |
|                                             |       |                                           |       |                                            |       |   |   |   |   |
| Dividends per common share                       |       | $                                              | 0.09       |                                            | $          | 0.09 |   | $ | — |   | $ | — |   |
|                                             |       |                                           |       |                                            |       |   |   |   |   |
| Average number of common shares outstanding      |       | 26,725                                         |       | 26,720                                          |       | 26,728 |   | 26,720 |   |

 

*See accompanying notes.*

 

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CUBIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 
| ** **                                     | ** ** | **June 30,** | ** ** | **September 30,**         | ** ** |
|------------------------------------------------|------------|-------------------|------------|--------------------------------|------------|
| ** **                                     | ** ** | **2008**          | ** ** | **2007**                       | ** ** |
| ** **                                     | ** ** | **(Unaudited)**   | ** ** | **(See note below)** | ** ** |
| **ASSETS**                                     |       |              |       |                           |       |
| Current assets:                                |       |              |       |                           |       |
| Cash and cash equivalents                      |       | $                 | 146,591    |                           | $          | 73,563 |   |
| Short-term investments                         |       | —            |       | 27,200                         |       |
| Accounts receivable - net                      |       | 258,326           |       | 305,672                        |       |
| Inventories                                    |       | 50,476            |       | 27,342                         |       |
| Deferred income taxes and other current assets |       | 34,038            |       | 39,597                         |       |
| Total current assets                           |       | 489,431           |       | 473,374                        |       |
|                                           |       |              |       |                           |       |
| Long-term contract receivables                 |       | 38,355            |       | 16,650                         |       |
| Property, plant and equipment - net            |       | 55,319            |       | 57,251                         |       |
| Goodwill                                       |       | 35,353            |       | 36,003                         |       |
| Other assets                                   |       | 15,641            |       | 9,287                          |       |
|                                           |       | $                 | 634,099    |                           | $          | 592,565 |   |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**  |       |              |       |                           |       |
| Current liabilities:                           |       |              |       |                           |       |
| Trade accounts payable                         |       | $                 | 26,844     |                           | $          | 27,992 |   |
| Customer advances                              |       | 80,378            |       | 58,412                         |       |
| Other current liabilities                      |       | 70,230            |       | 69,970                         |       |
| Income taxes payable                           |       | 1,544             |       | 4,905                          |       |
| Current portion of long-term debt              |       | 6,120             |       | 6,138                          |       |
| Total current liabilities                      |       | 185,116           |       | 167,417                        |       |
|                                           |       |              |       |                           |       |
| Long-term debt                                 |       | 26,559            |       | 32,699                         |       |
| Other long-term liabilities                    |       | 16,596            |       | 9,678                          |       |
|                                           |       |              |       |                           |       |
| Shareholders’ equity:                     |       |              |       |                           |       |
| Common stock                                   |       | 12,485            |       | 12,357                         |       |
| Retained earnings                              |       | 399,218           |       | 375,299                        |       |
| Accumulated other comprehensive income         |       | 30,196            |       | 31,184                         |       |
| Treasury stock at cost                         |       | (36,071           | )          | (36,069                        | )          |
|                                           |       | 405,828           |       | 382,771                        |       |
|                                           |       | $                 | 634,099    |                           | $          | 592,565 |   |

 

*Note: The balance sheet at September 30, 2007has been derived from the audited financial statements at that date.*

# *See accompanying notes.*

 

3

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**CUBIC CORPORATION**

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

(in thousands)

 
| ** **                                                                         | ** ** | **Nine Months Ended  June 30,** | ** ** | **Three Months Ended  June 30,** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2008**                                       | ** ** | **2007**                                        | ** ** | **2008** | ** ** | **2007** | ** ** |
| Operating  Activities:                                                             |       |                                           |       |                                            |       |   |   |   |   |
| Net income                                                                         |       | $                                              | 28,800     |                                            | $          | 30,713 |   | $ | 8,478 |   | $ | 11,177 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                                           |       |                                            |       |   |   |   |   |
| Depreciation and  amortization                                                     |       | 6,139                                          |       | 6,782                                           |       | 2,035 |   | 2,262 |   |
| Changes in  operating assets and liabilities                                       |       | 26,647                                         |       | 32,351                                          |       | 26,019 |   | 18,742 |   |
| NET CASH  PROVIDED BY OPERATING ACTIVITIES                                         |       | 61,586                                         |       | 69,846                                          |       | 36,532 |   | 32,181 |   |
|                                                                               |       |                                           |       |                                            |       |   |   |   |   |
| Investing  Activities:                                                             |       |                                           |       |                                            |       |   |   |   |   |
| Net additions to  property, plant and equipment                                    |       | (6,799                                         | )          | (6,756                                          | )          | (1,935 | ) | (3,430 | ) |
| Proceeds from  sales of marketable securities                                      |       | 76,300                                         |       | 181,028                                         |       | 10,000 |   | 88,874 |   |
| Purchases of  marketable securities                                                |       | (49,100                                        | )          | (193,340                                        | )          | (10,000 | ) | (101,634 | ) |
| NET CASH  PROVIDED BY (USED IN) INVESTING ACTIVITIES                               |       | 20,401                                         |       | (19,068                                         | )          | (1,935 | ) | (16,190 | ) |
|                                                                               |       |                                           |       |                                            |       |   |   |   |   |
| Financing  Activities:                                                             |       |                                           |       |                                            |       |   |   |   |   |
| Change in  short-term borrowings, net                                              |       | —                                         |       | (10,000                                         | )          | — |   | — |   |
| Principal  payments on long-term borrowings                                        |       | (5,950                                         | )          | (5,937                                          | )          | (173 | ) | (173 | ) |
| Purchases of  treasury stock                                                       |       | (2                                             | )          | —                                          |       | (2 | ) | — |   |
| Dividends paid                                                                     |       | (2,405                                         | )          | (2,405                                          | )          | (2,405 | ) | (2,405 | ) |
| Other                                                                              |       | 128                                            |       | —                                          |       | — |   | — |   |
| NET CASH USED IN  FINANCING ACTIVITIES                                             |       | (8,229                                         | )          | (18,342                                         | )          | (2,580 | ) | (2,578 | ) |
|                                                                               |       |                                           |       |                                            |       |   |   |   |   |
| Effect of  exchange rates on cash                                                  |       | (730                                           | )          | 1,634                                           |       | (683 | ) | 669 |   |
|                                                                               |       |                                           |       |                                            |       |   |   |   |   |
| NET INCREASE IN  CASH AND CASH EQUIVALENTS                                         |       | 73,028                                         |       | 34,070                                          |       | 31,334 |   | 14,082 |   |
|                                                                               |       |                                           |       |                                            |       |   |   |   |   |
| Cash and cash  equivalents at the beginning of the period                          |       | 73,563                                         |       | 42,380                                          |       | 115,257 |   | 62,368 |   |
|                                                                               |       |                                           |       |                                            |       |   |   |   |   |
| CASH AND CASH  EQUIVALENTS AT THE END OF THE PERIOD                                |       | $                                              | 146,591    |                                            | $          | 76,450 |   | $ | 146,591 |   | $ | 76,450 |   |

 

# *See accompanying notes.*

 

4

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# * *

# ***CUBIC CORPORATION***

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

June 30, 2008

 

**Note 1 – Basis forPresentation**

** **

The accompanying unaudited consolidated condensed financial statementshave been prepared in accordance with generally accepted accounting principlesfor interim financial information and with the instructions to Form 10-Qand Article 10 of Regulation S-X. Accordingly, they do not include allinformation and footnotes required by accounting principles generally acceptedin the United States for complete financial statements.

 

In the opinion of management, all adjustments considered necessary fora fair presentation have been included. Operating results for the three andnine month periods ended June 30, 2008 are not necessarily indicative ofthe results that may be expected for the year ending September 30, 2008.For further information, refer to the consolidated financial statements andfootnotes thereto included in the Company’s annual report on Form 10-K forthe year ended September 30, 2007.

 

The preparation of the financial statements in conformity with U. S.generally accepted accounting principles requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.

 

### **Note 2 – Balance Sheet Details**

### ** **

Thecomponents of accounts receivable are as follows (in thousands):

 
| ** **                               | ** ** | **June 30,  2008** | ** ** | **September 30,  2007** | ** ** |
|------------------------------------------|------------|-------------------------|------------|------------------------------|------------|
| ** **                               | ** ** | **(unaudited)**         | ** ** | ** **                   | ** ** |
| Trade and other receivables              |       | $                       | 14,401     |                         | $          | 13,024 |   |
| Long-term contracts:                     |       |                    |       |                         |       |
| Billed                                   |       | 97,144                  |       | 101,054                      |       |
| Unbilled                                 |       | 189,994                 |       | 213,388                      |       |
| Allowance for doubtful accounts          |       | (4,858                  | )          | (5,144                       | )          |
| Total accounts receivable                |       | 296,681                 |       | 322,322                      |       |
| Less estimated amounts not currently due |       | (38,355                 | )          | (16,650                      | )          |
| Current accounts receivable              |       | $                       | 258,326    |                         | $          | 305,672 |   |

 

The amount classified asnot currently due is an estimate of the amount of long-term contract accountsreceivable that will not be collected within one year from June 30, 2008under transportation systems contracts in the U.S., Australia and the U.K. anda defense contract in Canada. The non-current balance at September 30,2007 represented non-current amounts due from the same contracts.

 

5

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### **Note 2 – Balance Sheet Details -Continued**

 

Inventories consist of the following (in thousands):

 
| ** **                                                      | ** ** | **June 30,  2008** | ** ** | **September 30,  2007** | ** ** |
|-----------------------------------------------------------------|------------|-------------------------|------------|------------------------------|------------|
| ** **                                                      | ** ** | **(unaudited)**         | ** ** | ** **                   | ** ** |
| Finished products                                               |       | $                       | 216        |                         | $          | 240 |   |
| Work in process and inventoried costs under long-term contracts |       | 52,288                  |       | 25,005                       |       |
| Raw material and purchased parts                                |       | 3,188                   |       | 2,097                        |       |
| Total inventories                                               |       | 55,692                  |       | 27,342                       |       |
| Less amounts reclassified to non-current assets                 |       | (5,216                  | )          | —                       |       |
| Inventories reported as current assets                          |       | $                       | 50,476     |                         | $          | 27,342 |   |

 

At June 30, 2008,work in process and inventoried costs under long-term contracts includesapproximately $7.0 million in costs incurred in advance of contract award oroutside the scope of work on several contracts in the defense segment, comparedto $8.4 million as of September 30, 2007. Of the balance at June 30,2008, $5.2 million was classified as non-current and included in Other Assetson the balance sheet, as it is uncertain whether the costs will be collectedwithin one year. The company has submitted a claim to the Armed Services Boardof Contract Appeals related to these costs and a trial date is set for January 2009.Management believes it is probable that the $7.0 million in inventoried costsat June 30, 2008, plus appropriate profit margin, will be recovered undercontract change orders or upon the award of new contracts.

 

###### **Note 3 – Comprehensive Income**

###### ** **

Comprehensiveincome is as follows (in thousands):

 
| ** **                                       | ** ** | **Nine Months Ended** | ** ** | **Three Months Ended** | ** ** |
|--------------------------------------------------|------------|---------------------------------|------------|----------------------------------|------------|
| ** **                                       | ** ** | **June 30,**               | ** ** | **June 30,**                | ** ** |
| ** **                                       | ** ** | **2008**                        | ** ** | **2007**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| Net income                                       |       | $                               | 28,800     |                             | $          | 30,713 |   | $ | 8,478 |   | $ | 11,177 |   |
| Foreign currency translation adjustments         |       | (928                            | )          | 7,127                            |       | (1,286 | ) | 2,520 |   |
| Net unrealized gain (loss) from cash flow hedges |       | (60                             | )          | —                           |       | 69 |   | 7 |   |
| Comprehensive income                             |       | $                               | 27,812     |                             | $          | 37,840 |   | $ | 7,261 |   | $ | 13,704 |   |

 

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### **Note 4 – Segment Information**

### ** **

Businesssegment financial data is as follows (in millions):

 
| ** **                   | ** ** | **Nine Months Ended  June 30,** | ** ** | **Three Months Ended  June 30,** | ** ** |
|------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                   | ** ** | **2008**                                       | ** ** | **2007**                                        | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                   |       |                                           |       |                                            |       |   |   |   |   |
| **Sales:**                   |       |                                           |       |                                            |       |   |   |   |   |
| Defense                      |       | $                                              | 447.1      |                                            | $          | 484.7 |   | $ | 162.7 |   | $ | 176.6 |   |
| Transportation systems       |       | 198.3                                          |       | 172.0                                           |       | 69.7 |   | 54.0 |   |
| Corporate and other          |       | 0.5                                            |       | 10.0                                            |       | 0.5 |   | 3.1 |   |
| Total sales                  |       | $                                              | 645.9      |                                            | $          | 666.7 |   | $ | 232.9 |   | $ | 233.7 |   |
| ** **                   |       |                                           |       |                                            |       |   |   |   |   |
| **Operating income (loss):** |       |                                           |       |                                            |       |   |   |   |   |
| Defense                      |       | $                                              | 13.5       |                                            | $          | 35.1 |   | $ | 0.9 |   | $ | 13.7 |   |
| Transportation systems       |       | 30.8                                           |       | 13.3                                            |       | 11.6 |   | 4.1 |   |
| Corporate and other          |       | (1.8                                           | )          | (2.3                                            | )          | (1.0 | ) | (1.2 | ) |
| Total operating income       |       | $                                              | 42.5       |                                            | $          | 46.1 |   | $ | 11.5 |   | $ | 16.6 |   |

 

### **Note 5 – Financing Arrangements**

### ** **

The Company has acommitted five-year revolving credit agreement with a group of financialinstitutions in the amount of $150 million, expiring in March 2010. As of June 30,2008, there were no borrowings under this agreement; however, there wereletters of credit outstanding under the agreement totaling $22.6 million.

### ** **

### **Note 6 – Pension Plans**

### ** **

The components of netperiodic pension benefits costs are as follows (in thousands):

 
| ** **                     | ** ** | **Nine Months Ended  June 30,** | ** ** | **Three Months Ended  June 30,** | ** ** |
|--------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                     | ** ** | **2008**                                       | ** ** | **2007**                                        | ** ** | **2008** | ** ** | **2007** | ** ** |
| Service cost              |       | $                                              | 2,631      |                                            | $          | 4,476 |   | $ | 868 |   | $ | 1,108 |   |
| Interest cost                  |       | 7,519                                          |       | 7,212                                           |       | 2,496 |   | 2,400 |   |
| Expected return on plan assets |       | (9,739                                         | )          | (8,525                                          | )          | (3,234 | ) | (2,837 | ) |
| Amortization of:               |       |                                           |       |                                            |       |   |   |   |   |
| Prior service cost             |       | —                                         |       | 8                                               |       | — |   | 2 |   |
| Actuarial loss (gain)          |       | (156                                           | )          | 353                                             |       | (51 | ) | 117 |   |
| Administrative expenses        |       | 90                                             |       | 75                                              |       | 30 |   | 25 |   |
| Net pension cost               |       | $                                              | 345        |                                            | $          | 3,599 |   | $ | 109 |   | $ | 815 |   |

 

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### ** **

### **Note 7 – New AccountingPronouncements**

### ** **

Effective October 1,2007, the Company adopted FASB Interpretation No. 48, Accounting forUncertainty in Income Taxes (FIN 48). FIN 48 prescribes a more-likely-than-notthreshold for financial statement recognition and measurement of a tax positiontaken or expected to be taken in a tax return. This interpretation alsoprovides guidance in de-recognition of income tax assets and liabilities,classification of current and deferred income tax assets and liabilities,accounting for interest and penalties associated with tax positions, accountingfor income taxes in interim periods and income tax disclosures. The cumulativeeffects of applying this interpretation were to increase non-current taxliabilities by $5.0 million, decrease retained earnings by $2.5 million andincrease net deferred income tax assets by $2.5 million as of October 1,2007.

 

The liability forunrecognized tax benefits, exclusive of interest, was $7.2 million at June 30,2008 compared to $9.7 million at October 1, 2007. Of the June 30,2008 balance, $2.8 million, would affect the effective tax rate, if recognized.In the quarter ended June 30, 2008, the Company recognized a $1.4 milliontax benefit relating to the expiration of a statute of limitations, partiallyoffset by an addition of $0.5 million to the reserve due to new positions takenin the quarter. For the first nine months of the fiscal year, the Companyrecognized tax benefits net of reserve additions and interest totaling $1.1million.

 

The Companycontinues to report income tax-related interest income or expense and penaltiesin income tax expense in the Condensed Consolidated Statement of Income. As of October 1,2007 and June 30, 2008, the total amount of accrued income tax-relatedinterest and penalties included in the Condensed Consolidated Balance Sheetswas $0.8 million and $0.6 million, respectively.

 

The Company issubject to examination in the U.S. federal tax jurisdiction for the 2005 - 2007tax years. The Company is also subject to examination in the U.K. for the 2006- 2007 tax years. In addition, the Company is subject to examination in variousstate and foreign jurisdictions for the 2003 - 2007 tax years, none of whichwere individually material. The Company believes appropriate provisions for alloutstanding issues have been made for all jurisdictions and all open years.

 

In September 2006,the FASB issued SFAS No. 157, *Fair Value Measurements*.SFAS 157 defines fair value, establishes a framework and gives guidanceregarding the methods used for measuring fair value, and expands disclosuresabout fair value measurements. SFAS 157 is effective for financial statementsissued for fiscal years beginning after November 15, 2007 and interimperiods within those fiscal years. The Company is currently evaluating theimpact of SFAS 157 on its consolidated results of operations and financialposition.

 

In February 2007,the FASB issued SFAS No. 159, *The Fair Value Option forFinancial Assets and Financial Liabilities — Including an Amendment of FASBStatement No. 115*, which is effective for fiscal yearsbeginning after November 15, 2007. This statement permits an entity tochoose to measure many financial instruments and certain other items at fairvalue at specified election dates. Subsequent unrealized gains and losses onitems for which the fair value option has been elected will be reported inearnings. The Company is currently evaluating the potential impact of SFAS 159on its consolidated results of operations and financial position.

 

8

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### **Note 7 – New Accounting Pronouncements- Continued**

### ** **

In December 2007,the FASB issued SFAS No. 141(R), *Business Combinations(revised 2007)*, which is effective for fiscal years beginning after December 15,2008. This revised statement is intended to simplify existing guidance andconverge rulemaking under U.S. generally accepted accounting principles (GAAP)with international accounting rules. The Company is currently evaluating thepotential impact of SFAS 141(R) on its consolidated results of operationsand financial position.

 

In December 2007,the FASB also issued SFAS No. 160, *Noncontrolling Interestsin Consolidated Financial Statements*, which is effective for fiscalyears beginning after December 15, 2008. This statement requires allentities to report noncontrolling (minority) interests in subsidiaries asequity in the consolidated financial statements. The Company is currentlyevaluating the potential impact of SFAS 160 on its consolidated results ofoperations and financial position.

 

In March 2008, theFASB issued SFAS No. 161, *Disclosures aboutDerivative Instruments and Hedging Activities*, which is effectivefor fiscal years beginning after November 15, 2008. This statement asksentities to provided qualitative disclosures about the objectives andstrategies for using derivatives. The Company is currently evaluating thepotential impact of SFAS 161 on its consolidated results of operations andfinancial position.

 

### **Note 8 – Subsequent Events**

### ** **

On July 23, 2008 theCompany announced a reduction to its San Diego, CA defensesegment facility workforce of 105 employees. In addition, fivecorporate office positions were eliminated. This action is the result of a costcutting initiative designed to streamline operations, enhance competitivenessand better position the Company in the defense-related marketplace. Affectedemployees will receive severance pay and outplacement assistance, as well ascompany paid medical coverage for a defined period based on years of service.The cost of this restructuring will be approximately $5.2 million and will bereflected in the company’s results for the fourth quarter ending September 30,2008.

 

On July 29, 2008 theCompany acquired all outstanding capital stock from the five shareholders ofthe privately-held Omega Training Group, Inc., headquartered in Columbus,Georgia. The purchase was for $61 million in cash which was funded fromexisting cash reserves.  Omega providestraining, testing, analysis, logistics and staffing services to U.S. Armylocations at the U.S. Army Infantry School at Fort Benning, Fort Bliss, FortJackson and Fort Hood. None of these locations are significant customers of theCompany’s defense segment.  Founded in1990, Omega now has 790 employees. Omega will be managed within the Company’sMission Support Business Unit.

 

9

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**CUBIC CORPORATION**

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL

CONDITION AND RESULTS OF OPERATIONS

 

June 30, 2008

 

Our two primary businesses are in the defense and transportation industries. These are high technology businesses that design, manufacture and integrate complex systems and provide essential services to meet the needs of various federal and regional government agencies in the U.S. and other nations around the world.

 

Our defense segment is a diversified supplier ofconstructive, live and virtual military training systems, services andcommunication systems and products to the U.S. Department of Defense, othergovernment agencies and allied nations. We design instrumented range systems forfighter aircraft, armored vehicles and infantry force-on-force live training;weapons effects simulations; laser-based tactical engagement and virtualsimulation systems; and precision gunnery solutions. Our services are focusedon training, mission support, computer simulation training, distributedinteractive simulation, development of military training doctrine, forcemodernization services for NATO entrants and field operations and maintenance.Our communications products are aimed at intelligence, surveillance, and searchand rescue markets.

 

Our transportation systems segment develops anddelivers innovative fare collection systems for public transit authoritiesworldwide.  We provide hardware, softwareand multi-agency, multimodal transportation integration technologies andservices that allow the agencies to efficiently collect fares, manage theiroperations, reduce shrinkage and make using public transit a more convenientand attractive option for commuters.

 

**Consolidated Overview**

** **

Sales for the thirdquarter ended June 30, 2008, although higher than the second quarter, wereflat compared to last year at $232.9 million this year compared to $233.7million last year. Defense sales decreased 8% compared to last year, whiletransportation systems sales increased by 29%. Last year’s third quarterincluded sales of $3.1 million from the corrugated box business we sold in thefourth quarter of 2007. For the first nine months of the fiscal year salesdecreased to $645.9 million compared to $666.7 million in the first nine monthsof 2007, a decrease of 3%. 2007 sales included $10.0 million from thecorrugated box business that we sold in the fourth quarter of 2007. Defensesales decreased 8% in the nine-month period while transportation systems salesincreased 15%. See the segment discussions following for further analysis ofsegment sales.

 

Operating incomedecreased 31% to $11.5 million in the quarter compared to $16.6 million in thethird quarter last year. Defense operating income decreased while transportationsystems operating income increased. Defense operating income was impacted bycost growth on several long-term fixed-price contracts and by higher researchand development spending. Operating income for the first nine months of thefiscal year decreased from $46.1 million in 2007 to $42.5 million this year, an8% decrease. Transportation systems segment operating income increased $17.5million compared to the first nine months of 2007 and defense segment operatingincome decreased $21.6 million for the reasons identified above. See thesegment discussions following for further analysis of segment operating income.

 

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Selling, generaland administrative (SG&A) expenses increased in the third quarter this yearcompared to last year from $25.3 million to $26.9 million. For the first ninemonths of the year SG&A expenses increased 5%, from $72.2 million in 2007to $75.7 million this year and, as a percentage of sales, increased from 10.8%to 11.7%. SG&A expenses increased in both segments due primarily toincreased selling expenses incurred for new contract proposals. We alsoincreased company funded research and development expenditures by $1.7 millionin the third quarter compared to last year and by $4.2 million in the firstnine months of this year, primarily in the defense segment relating to datalinks and advanced programs dealing with optical technologies.

 

Our projectedeffective tax rate for fiscal 2008 is 39.2%, prior to net tax benefits of $1.1million recognized in the first nine months relating to the completion ofaudits and expirations of statutes of limitations. The projected effective ratefor fiscal 2008 is higher than last year’s effective rate for the first ninemonths of 35.1%, due primarily to the expiration of the U.S. Research andExperimentation credit as of December 31, 2007. The tax provision in thefirst nine months last year also benefitted by $0.5 million from theretroactive reinstatement of the U.S. Research and Experimentation credit inthat period. In addition, the rate is higher this year because we areprojecting higher earnings in the U.K. and are required to provide U.S. taxeson the earnings which we do not consider to be permanently reinvested as theymay be repatriated in the form of dividends. As a result of the expiration of astatute during the third quarter, we were able to reduce our liability forunrecognized tax benefits by $2.5 million and recognize a tax benefit in theamount of $1.4 million, with the remaining $1.1 million reducing deferred taxassets and goodwill. This was partially offset by a provision of $0.5 millionfor new positions taken during the quarter. The effective rate for fiscal 2008could be affected by, among other factors, the mix of business between the U.S.and foreign jurisdictions, our ability to take advantage of available taxcredits and audits of our records by taxing authorities.

 

Net income for thethird quarter of fiscal 2008 decreased to $8.5 million, or 32 cents per share,compared to $11.2 million, or 42 cents per share last year as a result of thedecrease in operating income, partially offset by higher investment income. Forthe first nine months of the year, net income decreased to $28.8 million, or$1.08 per share, from $30.7 million, or $1.15 per share last year for the samereasons.

 

### **Subsequent Events**

### ** **

### **In July, after the end of the quarter, we reduced theworkforce at our San Diego, CA defense segment facility by 105employees, in addition to eliminating five corporate office positions. Thisaction is the result of a cost cutting initiative designed to streamlineoperations, enhance competitiveness and better position us in thedefense-related marketplace. The cost of this restructuring will beapproximately $5.2 million, which includes severance pay, outplacementassistance, and company paid medical coverage and will be included in ourfourth quarter results. We estimate this cost-cutting action will yield anannual savings of approximately $13 million.**

### ** **

At the end of July, weacquired all outstanding capital stock of the privately-held Omega TrainingGroup, Inc.  The purchase was for$61.0 million in cash which was funded from existing cash reserves.  Omega provides training, testing, analysis,logistics and staffing services to U.S. Army locations at the U.S. ArmyInfantry School at Fort Benning, Fort Bliss, Fort Jackson and Fort Hood.Founded in 1990, Omega now has 790 employees. We believe this acquisition willenhance our position in the defense services market place and add revenues ofapproximately $60 to $70 million next year.

 

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**DefenseSegment**

 
| ** **                            | ** ** | **Nine Months Ended  June 30,** | ** ** | **Three Months Ended  June 30,** | ** ** |
|---------------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                            | ** ** | **2008**                                       | ** ** | **2007**                                        | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                            | ** ** | **(in millions)**                         | ** ** |
| **Defense Segment Sales**   | ** ** | ** **                                     | ** ** | ** **                                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| Mission support services (MSBU)       |       | $                                              | 234.5      |                                            | $          | 230.1 |   | $ | 86.5 |   | $ | 82.1 |   |
| Readiness systems (RSBU)              |       | 174.8                                          |       | 202.5                                           |       | 61.8 |   | 76.5 |   |
| Communications and electronics (CEBU) |       | 28.1                                           |       | 44.3                                            |       | 10.5 |   | 15.0 |   |
| Tactical systems and other            |       | 9.7                                            |       | 7.8                                             |       | 3.9 |   | 3.0 |   |
|                                  |       | $                                              | 447.1      |                                            | $          | 484.7 |   | $ | 162.7 |   | $ | 176.6 |   |
|                                  |       |                                           |       |                                            |       |   |   |   |   |
| **Defense Segment Operating Income**  |       |                                           |       |                                            |       |   |   |   |   |
| Mission support services (MSBU)       |       | $                                              | 17.3       |                                            | $          | 21.8 |   | $ | 6.6 |   | $ | 8.4 |   |
| Readiness systems (RSBU)              |       | 7.7                                            |       | 13.8                                            |       | 1.7 |   | 5.7 |   |
| Communications and electronics (CEBU) |       | (10.9                                          | )          | 0.1                                             |       | (7.8 | ) | (0.9 | ) |
| Tactical systems and other            |       | (0.6                                           | )          | (0.6                                            | )          | 0.4 |   | 0.5 |   |
|                                  |       | $                                              | 13.5       |                                            | $          | 35.1 |   | $ | 0.9 |   | $ | 13.7 |   |

 

**Mission Support Services (MSBU)**

 

MSBU sales increased 5%to $86.5 million in the third quarter this year, compared to $82.1 million lastyear. The increase was primarily the result of a new contract supporting theU.S. Army’s Quartermaster Center and School. For the first nine months of thefiscal year sales were 2% higher than last year at $234.5 million compared to$230.1 million. Higher sales from the new Army contract mentioned above andfrom a contract in support of Marine Corp training were partially offset bylower sales from two key Army support contracts in Korea and at Ft. Polk, LAdue to a decrease in customer requirements.

 

MSBU operatingincome decreased to $6.6 million in the third quarter this year from $8.4million in the third quarter last year. Although sales increased from theMarine Corp. program, operating profits from the contract were lower for thequarter as we started a new five year contract cycle which may not experiencemargins as high as previously realized. The new U.S. Army Quartermaster Centerand School contract also contributed to the lower profit margins. For the firstnine months operating income decreased to $17.3 million this year from $21.8million last year. Sales were lower this year from more mature contracts whichhad generated higher profit margins last year than the new contracts we startedthis year. Overall, operating income as a percentage of sales was 7.4% for thefirst nine months this year, which we consider competitive for a governmentservices business, and more sustainable than the 9.5% realized in the firstnine months last year.

 

**Readiness Systems (RSBU)**

 

RSBU sales decreased from$76.5 million in the third quarter last year to $61.8 million this year, adecrease of 19%. Sales were lower by about $12.0 million from the air combattraining system contract known as P5 and from an air combat training system inAustralia that was completed in the first quarter. Partially offsetting thesesales decreases was an increase in sales from the new Joint 

 

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Strike Fighter (JSF)development contract and other air combat training contracts. Sales were alsolower from a ground combat training system contract in the Far East and fromsmall arms training systems. Sales in three RSBU product lines have beenimpacted by a transition from the development phase, where revenue isrecognized on a percentage completion basis, to the production phase, where wewill not realize the revenues from production orders until the product isdelivered and the sales process is complete. This includes the P5 air combattraining contract, small arms training systems and laser-based tacticalengagement systems. This transition has also resulted in a significant increasein inventories totaling $22.3 million from these product lines in the firstnine months of the year.

 

For the first nine monthsof the fiscal year, RSBU sales were down 14%, from $202.5 million last year to$174.8 million this year. The decrease was from lower sales of air and groundcombat training systems, small arms training systems and laser-based tacticalengagement systems, as described above in the third quarter results.

 

RSBU operating incomedecreased from $5.7 million in the third quarter last year to $1.7 million thisyear. Problems encountered in the second quarter during system integrationtesting for a contract to develop the next generation laser-based tacticalengagement system resulted in greater difficulties than we had previouslyanticipated. These included manufacturing cost growth and rework costs totalingapproximately $3.5 million recorded during the third quarter that resulted fromdesign changes made as a result of the integration issues. We have assessed theexpected costs to complete this contract and at this point expect nosignificant further cost growth. Lower sales from small arms training systemsand a ground combat training system in the Far East, as mentioned above, alsocontributed to lower operating income for the quarter.

 

For the first nine monthsof the fiscal year RSBU operating income decreased from $13.8 million in 2007to $7.7 million this year. This was caused by the cost growth in thedevelopment phase of the tactical engagement system contract mentioned abovetotaling $7.7 million for the nine month period. Improved profit margins fromsmall arms training systems and a ground combat training system in Canadapartially offset the impact from this contract.

 

**Communications and Electronics(CEBU)**

 

CEBU sales were $10.5million in the third quarter of 2008, down from $15.0 million in the samequarter last year, a 30% decrease. Sales decreased from contracts for thesupply of data links for unmanned aerial vehicles in the U.S. and U. K.,partially offset by higher sales of personnel locator systems and poweramplifiers. For the first nine months of the fiscal year, sales from CEBU weredown 37% in 2008 compared to 2007, from $44.3 million to $28.1 million. Salesof data links were lower for the nine-month period, partially offset by highersales of personnel locator systems and power amplifiers.

 

CEBU incurred anoperating loss of $7.8 million for the third quarter this year compared to anoperating loss of $0.9 million last year. The greatest impact on the quarter’sresults came from a contract to develop new data link technology for unmannedaerial vehicles for a U.K. customer. We have encountered significantdifficulties in performing this firm fixed-price contract due in part tocustomer-caused delay and disruption, directed changes and due to delays causedby two subcontractors. We are in discussions with the customer to substantiallyrestructure the contract in order to establish a reasonable basis for contractcompletion and to recover costs we have incurred 

 

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outside the scopeof the contract and additional costs incurred due to delay and disruption.During the quarter ended June 30, 2008, we recognized no sales from thisprogram and identified costs of $3.6 million which we believe were directed bythe customer and incurred outside the scope of the contract. The ultimatecollectability of this amount will depend on the outcome of ongoingnegotiations with the customer. Due to the current uncertainty of collectingthese costs, they were expensed in the third quarter. In addition, weestablished a reserve for additional cost growth of $2.9 million due in part todelays and disruption caused by a subcontractor and the customer. We areoptimistic that a portion of these costs can be recovered through negotiationswith the customer; however, the amount of any recovery cannot be determined atthis time, therefore, these costs also were expensed. Cost growth on anotherdata link development contract impacted profitability by $1.8 million duringthe quarter. We have assessed the estimated costs to complete this contract andwe presently do not anticipate any further cost growth. In addition, we startedwork on several research and development projects for new data link technologyduring the quarter, which added $0.9 million to the operating loss for thequarter.

 

For the nine-monthperiod, CEBU incurred an operating loss of $10.9 million in 2008 compared tooperating income of $0.1 million last year. Cost growth totaling $12.4 millionon three data link development contracts was the reason for the decrease,partially offset by higher profits from the sale of personnel locator systems.

 

**Transportation Systems Segment**

 
| ** **                              | ** ** | **Nine Months Ended  June 30,** | ** ** | **Three Months Ended  June 30,** | ** ** |
|-----------------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                              | ** ** | **2008**                                       | ** ** | **2007**                                        | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                              | ** ** | **(in millions)**                         | ** ** |
|                                    |       |                                           |       |                                            |       |   |   |   |   |   |   |   |   |
| Transportation Segment Sales            |       | $                                              | 198.3      |                                            | $          | 172.0 |   | $ | 69.7 |   | $ | 54.0 |   |
|                                    |       |                                           |       |                                            |       |   |   |   |   |
| Transportation Segment Operating Income |       | $                                              | 30.8       |                                            | $          | 13.3 |   | $ | 11.6 |   | $ | 4.1 |   |

 

Transportation segmentsales increased from $54.0 million in the third quarter last year to $69.7million this year, an increase of 29%. Sales increased primarily due toadditional work from change orders on contracts in the U.K. and also due tosystem installation work on a contract in Australia and sales of spare parts inNorth America. For the first nine months of the fiscal year, transportationsystems sales increased 15% from $172.0 million in 2007 to $198.3 million thisyear for the reasons described above.

 

Operating income fromtransportation systems in the third quarter improved to $11.6 million comparedto $4.1 million last year. Higher sales and improved performance from U.K.contracts and profits from increased spares sales in the U.S. contributed tothe increase for the quarter. Partially offsetting the profit improvements wasan investment in new technology of $1.8 million we elected to make during thequarter related to a new contract in North America. These development costs arerequired for this contract; however, they will benefit future programs as well.For the first nine months of the fiscal year, transportation systems operatingincome improved from $13.3 million to $30.8 million for the same reasonsidentified above for the third 

 

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quarter. In addition, inthe first nine months of 2007, cost growth of $6.3 million on several NorthAmerican contracts and $4.0 million on a contract in Sweden had adverselyaffected operating income; however, contract settlements also added $5.2 millionto last year’s operating profits. In the first nine months of 2008, cost growthon these same contracts was limited to $2.3 million, partially offset by acontract settlement that added $0.4 million.

 

When comparing the2008 average exchange rate between the British Pound and the U.S. Dollar to the2007 rate, there was no impact on the operating results for the third quarter.However, for the first nine months of the year, the exchange rate differenceadded approximately $3.0 million in sales and $0.7 million in operating income.

 

**Backlog**

 

As reflected inthe table below, total backlog decreased $101.3 million at June 30, 2008compared to September 30, 2007. Transportation systems backlog increased$19.7 million and defense backlog decreased $121.0 million during thenine-month period. Delayed award of a multi-year service contract in theMission Support business was the primary cause of the decrease in total backlogduring the period. Funded backlog increased $7.0 million during the period,with transportation systems increasing $19.7 million and defense funded backlogdecreasing by $12.7 million.

 
| ** **                     | ** ** | **June 30,  2008** | ** ** | **September 30,  2007** | ** ** |
|--------------------------------|------------|-------------------------|------------|------------------------------|------------|
| ** **                     | ** ** | **(in millions)**  | ** ** |
| **Total backlog**              |       |                    |       |                         |       |
| Transportation systems         |       | $                       | 807.0      |                         | $          | 787.3 |   |
| Defense:                       |       |                    |       |                         |       |
| Mission support services       |       | 672.6                   |       | 776.6                        |       |
| Readiness systems              |       | 377.3                   |       | 383.4                        |       |
| Communications and electronics |       | 50.5                    |       | 56.4                         |       |
| Tactical systems and other     |       | 25.6                    |       | 30.6                         |       |
| Total defense                  |       | 1,126.0                 |       | 1,247.0                      |       |
| Total                          |       | $                       | 1,933.0    |                         | $          | 2,034.3 |   |
|                           |       |                    |       |                         |       |
| **Funded backlog**             |       |                    |       |                         |       |
| Transportation systems         |       | $                       | 807.0      |                         | $          | 787.3 |   |
| Defense:                       |       |                    |       |                         |       |
| Mission support services       |       | 135.5                   |       | 131.2                        |       |
| Readiness systems              |       | 377.3                   |       | 383.4                        |       |
| Communications and electronics |       | 50.5                    |       | 56.4                         |       |
| Tactical systems and other     |       | 25.6                    |       | 30.6                         |       |
| Total defense                  |       | 588.9                   |       | 601.6                        |       |
| Total                          |       | $                       | 1,395.9    |                         | $          | 1,388.9 |   |

 

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In defense, thedifference between total backlog and funded backlog represents options undermulti-year service contracts. Funding for these contracts comes from annualoperating budgets of the U.S. government and the options are normally exercisedannually. Options for the purchase of additional systems or equipment are notincluded in backlog until exercised nor are indefinite delivery, indefinitequantity contracts until an order is received.

 

###### **Liquidityand Capital Resources**

###### ** **

Operating activitiesprovided cash of $36.5 million for the third quarter, and $61.6 million for thefirst nine months of the fiscal year. Positive operating cash flows came fromboth the transportation systems and defense segments, with the greater portioncoming from the transportation systems segment. In addition to net income forthe period, customer advances and reductions in accounts receivable and prepaidexpenses contributed to the positive cash flows, partially offset by anincrease in inventories. As mentioned in the discussion of the defense segmentabove, we are in a transition period from development to production in threeReadiness Systems product lines, which has resulted in higher inventories andlater recognition of sales. Growth in inventories related to these productlines represented $22.3 million of the $23.1 million overall increase ininventories from September 30, 2007 to June 30, 2008.

 

Investingactivities for the nine-month period included capital expenditures of $6.8million and net positive cash flows from the liquidation of short-terminvestments of $27.2 million. In light of the turmoil in the credit market, wemade a portfolio shift to shorter duration investments.

 

Financingactivities for the first nine months included scheduled payments on ourlong-term debt of $6.0 million and dividends paid to our shareholders of $2.4million.

 

Our financial conditionremains strong with working capital of $304.3 million and a current ratio of2.6 to 1 at June 30, 2008. We expect that cash on hand and our unusedlines of credit will be adequate to meet our liquidity requirements for theforeseeable future.

 

**Critical Accounting Policies, Estimates and Judgments**

 

Our financial statements are prepared in accordance with accounting principles that are generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments, the most critical of which are those related to revenue recognition, income taxes, valuation of goodwill and pension costs. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known.

 

Besides the estimates identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. All estimates, whether or not deemed critical affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical. Refer to Note 7 for discussion of the Company’s implementation of FIN 48, which has affected the method for calculating income tax liabilities.

 

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For furtherinformation, refer to the consolidated financial statements and notes theretoincluded in the Company’s annual report on Form 10-K for the year ended September 30,2007.

 

**CAUTIONARY STATEMENT ABOUTFORWARD-LOOKING INFORMATION**

 

This report,including the documents that we incorporate by reference, containsforward-looking statements within the meaning of Section 21E of theSecurities Exchange Act of 1934, as amended, that are subject to the “safeharbor” created by those sections. Any statements about our expectations,beliefs, plans, objectives, assumptions or future events or our futurefinancial and/or operating performance are not historical and may beforward-looking. These statements are often, but not always, made through theuse 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 orphrases.  These statements involveestimates, assumptions and uncertainties, including those discussed in “RiskFactors” in the Company’s annual report on Form 10-K for the year ended September 30,2007, and throughout this filing that could cause actual results to differmaterially from those expressed in these statements.

 

Because the riskfactors referred to above could cause actual results or outcomes to differmaterially from those expressed in any forward-looking statements made by us oron our behalf, you should not place undue reliance on any forward-lookingstatements.  In addition, past financialand/or operating performance is not necessarily a reliable indicator of futureperformance and you should not use our historical performance to anticipateresults or future period trends. Further, any forward-looking statement speaks only as of the date on whichit is made, and we undertake no obligation to update any forward-lookingstatement to reflect events or circumstances after the date on which thestatement is made or to reflect the occurrence of unanticipated events. Newfactors emerge from time to time, and it is not possible for us to predictwhich factors will arise. In addition, we cannot assess the impact of eachfactor on our business or the extent to which any factor, or combination offactors, may cause actual results to differ materially from those contained inany forward-looking statements.

 

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ITEM 4 - STATEMENT ON DISCLOSURE CONTROLS ANDPROCEDURES.

 

We maintain disclosurecontrols and procedures, including internal control over financial reporting,which are designed to ensure that information required to be disclosed in ourperiodic filings with the SEC is reported within the time periods specified inthe SEC’s rules and forms, and to provide reasonable assurance that assetsare safeguarded and transactions are properly executed and recorded. Ourdisclosure controls and procedures are also designed to ensure that informationis accumulated and communicated to our management, including our ChiefExecutive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, toallow timely decisions regarding required disclosure. In designing andevaluating such controls and procedures, we recognize that any controls andprocedures, no matter how well designed and operated, can provide only reasonableassurance of achieving the desired control objectives, and managementnecessarily is required to use its judgment in evaluating the cost-benefitrelationship of possible controls and procedures.

 

We routinely review oursystem of internal control over financial reporting and make changes to ourprocesses and systems to improve controls and increase efficiency, whileensuring that we maintain an effective internal control environment. Changesmay include such activities as implementing new, more efficient systems andmigrating certain processes from our operating units to our corporate sharedservice center. In addition, if we acquire new businesses, we will review thecontrols and procedures of the acquired business as part of our integrationactivities.

 

We performed anevaluation of the effectiveness of our disclosure controls and procedures as ofJune 30, 2008. The evaluation was performed with the participation ofsenior management of each business segment and key corporate functions, andunder the supervision of the CEO and CFO. Based on our evaluation, we concludedthat our disclosure controls and procedures were effective as of June 30,2008.

 

There were no changes inour internal control over financial reporting during the most recentlycompleted fiscal quarter that materially affected, or are reasonably likely tomaterially affect, our internal control over financial reporting.

 

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**PART II - OTHER INFORMATION**

 

ITEM 6 - EXHIBITS

 

(a) Thefollowing exhibits are included herein:

 

| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                       |
|----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                  |       | Amended  and Restated Certificate of Incorporation. Incorporated by reference to  Form 10-Q filed for the quarter ended June, 30, 2006, file  No. 1-8931, Exhibit 3.1. |
| 3.2                  |       | Bylaws.  Incorporated by reference to Form 10-K filed for the fiscal year ended  September 30, 2004, file No. 1-8931, Exhibit 3.                                  |
| 10.1                 |       | 2005  Equity Incentive Plan. Incorporated by reference to Form 10-K filed for  the fiscal year ended September 30, 2005, file No. 1-8931,  Exhibit 10.1.          |
| 10.2                 |       | Amended  Transition Protection Plan. Incorporated by reference to Form 10-K filed  for the fiscal year ended September 30, 2007, file No. 1-8931,  Exhibit 10.2.  |
| 10.3                 |       | Credit  Agreement dated March 10, 2005. Incorporated by reference to  Form 10-Q for the quarter ended March 31, 2005, file  No. 1-8931, Exhibit 10.          |
| 10.4                 |       | Revised  Deferred Compensation Plan. Incorporated by reference to Form 10-Q for  the quarter ended March 31, 2008, file No. 1-8931, Exhibit 10.                   |
| 15                   |       |                                                                                                                                                                                  | Report  of Independent Registered Public Accounting Firm |
| 31.1                 |       | Certification  of CEO                                                                                                                                                                 |
| 31.2                 |       | Certification  of CFO                                                                                                                                                                 |
| 32.1                 |       | CEO  Certification                                                                                                                                                                    |
| 32.2                 |       | CFO  Certification                                                                                                                                                                    |
|                      |            |                                                                                                                                                                                       |  |

 

SIGNATURES

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 
|   |                |   | CUBIC CORPORATION                        |
|--------|---------------------|--------|------------------------------------------|
|   |                |   |                                     |
|   |                |   |                                     |
| Date   | August 5, 2008 |   | /s/ William W. Boyle                     |
|   |                |   | William W. Boyle                         |
|   |                |   | Senior Vice President  and CFO           |
|   |                |   |                                     |
| Date   | August 5, 2008 |   | /s/ Mark A. Harrison                     |
|   |                |   | Mark A. Harrison                         |
|   |                |   | Vice President and  Corporate Controller |

 

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