**UNITED STATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

**QUARTERLYREPORT**

 

**Pursuant toSection 13 or 15(d) of the Securities Exchange Act of 1934**

 

**For the Quarter Ended March 31,2008**

 

**1-8931**

**Commission File Number**

 

##### **CUBIC CORPORATION**

Exact Name of Registrant asSpecified 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) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months, and (2) has beensubject to such filing requirements for the past 90 days.

 

Yes x    No o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See definitions of“large accelerated filer,” “accelerated filer,” and “smaller reporting company”in Rule 12b-2 of the Exchange 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 check mark whether the registrant is a shell company (asdefined in Rule 12-b-2 of the Exchange Act).       Yeso    No x

 

Asof April  16, 2008, registrant had only one class of common stock of whichthere were 26,724,541 shares outstanding (after deducting 8,945,066 shares heldas treasury stock).

 

 

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**PART I - FINANCIALINFORMATION**

ITEM 1 - FINANCIAL STATEMENTS

 

### **CUBIC CORPORATION**

CONDENSED CONSOLIDATEDSTATEMENTS OF INCOME (UNAUDITED)

(amounts in thousands, exceptper share data)

 
| ** **                                     | ** ** | **Six Months Ended** | ** ** | **Three Months Ended** | ** ** |
|------------------------------------------------|------------|--------------------------------|------------|----------------------------------|------------|
| ** **                                     | ** ** | **March 31,**             | ** ** | **March 31,**               | ** ** |
| ** **                                     | ** ** | **2008**                       | ** ** | **2007**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Net sales:                                     |       |                           |       |                             |       |   |   |   |   |
| Products                                       |       | $                              | 230,096    |                             | $          | 253,443 |   | $ | 117,749 |   | $ | 132,484 |   |
| Services                                       |       | 182,906                        |       | 179,533                          |       | 92,531 |   | 97,557 |   |
|                                           |       | 413,002                        |       | 432,976                          |       | 210,280 |   | 230,041 |   |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Costs and  expenses:                           |       |                           |       |                             |       |   |   |   |   |
| Products                                       |       | 175,597                        |       | 206,805                          |       | 91,407 |   | 107,716 |   |
| Services                                       |       | 153,773                        |       | 148,413                          |       | 78,882 |   | 80,249 |   |
| Selling, general  and administrative           |       | 48,875                         |       | 46,917                           |       | 24,096 |   | 23,707 |   |
| Research and  development                      |       | 3,783                          |       | 1,351                            |       | 2,009 |   | 570 |   |
|                                           |       | 382,028                        |       | 403,486                          |       | 196,394 |   | 212,242 |   |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Operating income                               |       | 30,974                         |       | 29,490                           |       | 13,886 |   | 17,799 |   |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Other income  (expense):                       |       |                           |       |                             |       |   |   |   |   |
| Interest and  dividends                        |       | 2,793                          |       | 898                              |       | 1,272 |   | 464 |   |
| Interest expense                               |       | (1,391                         | )          | (1,476                           | )          | (659 | ) | (732 | ) |
| Other income  (expense)                        |       | 328                            |       | 530                              |       | 634 |   | 48 |   |
| Minority  interest in loss of subsidiary       |       | 118                            |       | 394                              |       | 113 |   | 132 |   |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Income before  income taxes                    |       | 32,822                         |       | 29,836                           |       | 15,246 |   | 17,711 |   |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Income taxes                                   |       | 12,500                         |       | 10,300                           |       | 5,600 |   | 6,500 |   |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Net income                                     |       | $                              | 20,322     |                             | $          | 19,536 |   | $ | 9,646 |   | $ | 11,211 |   |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Basic and  diluted net income per common share |       | $                              | 0.76       |                             | $          | 0.73 |   | $ | 0.36 |   | $ | 0.42 |   |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Dividends per  common share                    |       | $                              | 0.09       |                             | $          | 0.09 |   | $ | 0.09 |   | $ | 0.09 |   |
|                                           |       |                           |       |                             |       |   |   |   |   |
| Average number  of common shares outstanding   |       | 26,723                         |       | 26,720                           |       | 26,724 |   | 26,720 |   |

 

*See accompanying notes.*

 

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CUBIC CORPORATION

CONDENSED CONSOLIDATED BALANCESHEETS

(in thousands)

 
| ** **                                      | ** ** | **March 31,** | ** ** | **September 30,**         | ** ** |
|-------------------------------------------------|------------|--------------------|------------|--------------------------------|------------|
| ** **                                      | ** ** | **2008**           | ** ** | **2007**                       | ** ** |
| ** **                                      | ** ** | **(Unaudited)**    | ** ** | **(See note below)** | ** ** |
| **ASSETS**                                      |       |               |       |                           |       |
| Current assets:                                 |       |               |       |                           |       |
| Cash and cash  equivalents                      |       | $                  | 115,257    |                           | $          | 73,563 |   |
| Short-term  investments                         |       | —             |       | 27,200                         |       |
| Accounts  receivable - net                      |       | 278,154            |       | 305,672                        |       |
| Inventories                                     |       | 34,940             |       | 27,342                         |       |
| Recoverable  income taxes                       |       | 2,395              |       | —                         |       |
| Deferred income  taxes and other current assets |       | 36,168             |       | 39,597                         |       |
| Total current  assets                           |       | 466,914            |       | 473,374                        |       |
|                                            |       |               |       |                           |       |
| Long-term  contract receivables                 |       | 35,600             |       | 16,650                         |       |
| Property, plant  and equipment - net            |       | 55,386             |       | 57,251                         |       |
| Goodwill                                        |       | 35,965             |       | 36,003                         |       |
| Other assets                                    |       | 16,328             |       | 9,287                          |       |
|                                            |       | $                  | 610,193    |                           | $          | 592,565 |   |
|                                            |       |               |       |                           |       |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY**  |       |               |       |                           |       |
| Current  liabilities:                           |       |               |       |                           |       |
| Trade accounts  payable                         |       | $                  | 21,684     |                           | $          | 27,992 |   |
| Customer  advances                              |       | 71,103             |       | 58,412                         |       |
| Other current  liabilities                      |       | 66,908             |       | 69,970                         |       |
| Income taxes  payable                           |       | —             |       | 4,905                          |       |
| Current portion  of long-term debt              |       | 6,121              |       | 6,138                          |       |
| Total current  liabilities                      |       | 165,816            |       | 167,417                        |       |
|                                            |       |               |       |                           |       |
| Long-term debt                                  |       | 26,740             |       | 32,699                         |       |
| Other long-term  liabilities                    |       | 19,068             |       | 9,678                          |       |
|                                            |       |               |       |                           |       |
| Shareholders’  equity:                     |       |               |       |                           |       |
| Common stock                                    |       | 12,485             |       | 12,357                         |       |
| Retained  earnings                              |       | 390,740            |       | 375,299                        |       |
| Accumulated  other comprehensive income         |       | 31,413             |       | 31,184                         |       |
| Treasury stock  at cost                         |       | (36,069            | )          | (36,069                        | )          |
|                                            |       | 398,569            |       | 382,771                        |       |
|                                            |       | $                  | 610,193    |                           | $          | 592,565 |   |

 

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

# *See accompanying notes.*

 

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**CUBIC CORPORATION**

CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 
| ** **                                                                                   | ** ** | **Six Months Ended** | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------------------------------------------------------|------------|--------------------------------|------------|----------------------------------|------------|
| ** **                                                                                   | ** ** | **March 31,**             | ** ** | **March 31,**               | ** ** |
| ** **                                                                                   | ** ** | **2008**                       | ** ** | **2007**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| Operating  Activities:                                                                       |       |                           |       |                             |       |   |   |   |   |
| Net income                                                                                   |       | $                              | 20,322     |                             | $          | 19,536 |   | $ | 9,646 |   | $ | 11,211 |   |
| Adjustments to  reconcile net income to net cash provided by (used in) operating activities: |       |                           |       |                             |       |   |   |   |   |
| Depreciation and  amortization                                                               |       | 4,104                          |       | 4,520                            |       | 1,998 |   | 2,179 |   |
| Changes in  operating assets and liabilities                                                 |       | 628                            |       | 13,609                           |       | (13,410 | ) | 28,931 |   |
| NET CASH  PROVIDED BY (USED IN) OPERATING ACTIVITIES                                         |       | 25,054                         |       | 37,665                           |       | (1,766 | ) | 42,321 |   |
|                                                                                         |       |                           |       |                             |       |   |   |   |   |
| Investing  Activities:                                                                       |       |                           |       |                             |       |   |   |   |   |
| Net additions to  property, plant and equipment                                              |       | (4,864                         | )          | (3,326                           | )          | (3,036 | ) | (1,470 | ) |
| Proceeds from  sales of marketable securities                                                |       | 66,300                         |       | 92,153                           |       | — |   | 15,852 |   |
| Purchases of  marketable securities                                                          |       | (39,100                        | )          | (91,705                          | )          | — |   | (24,278 | ) |
| NET CASH  PROVIDED BY (USED IN) INVESTING ACTIVITIES                                         |       | 22,336                         |       | (2,878                           | )          | (3,036 | ) | (9,896 | ) |
|                                                                                         |       |                           |       |                             |       |   |   |   |   |
| Financing  Activities:                                                                       |       |                           |       |                             |       |   |   |   |   |
| Change in short-term  borrowings, net                                                        |       | —                         |       | (10,000                          | )          | — |   | — |   |
| Principal  payments on long-term borrowings                                                  |       | (5,777                         | )          | (5,764                           | )          | (172 | ) | (168 | ) |
| Other                                                                                        |       | 128                            |       | —                           |       | 85 |   | — |   |
| NET CASH USED IN  FINANCING ACTIVITIES                                                       |       | (5,649                         | )          | (15,764                          | )          | (87 | ) | (168 | ) |
|                                                                                         |       |                           |       |                             |       |   |   |   |   |
| Effect of  exchange rates on cash                                                            |       | (47                            | )          | 965                              |       | 1,064 |   | 348 |   |
|                                                                                         |       |                           |       |                             |       |   |   |   |   |
| NET INCREASE  (DECREASE) IN CASH AND CASH EQUIVALENTS                                        |       | 41,694                         |       | 19,988                           |       | (3,825 | ) | 32,605 |   |
|                                                                                         |       |                           |       |                             |       |   |   |   |   |
| Cash and cash  equivalents at the beginning of the period                                    |       | 73,563                         |       | 42,380                           |       | 119,082 |   | 29,763 |   |
|                                                                                         |       |                           |       |                             |       |   |   |   |   |
| CASH AND CASH  EQUIVALENTS AT THE END OF THE PERIOD                                          |       | $                              | 115,257    |                             | $          | 62,368 |   | $ | 115,257 |   | $ | 62,368 |   |

 

# *See accompanying notes.*

 

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# *** ***

# ***CUBIC CORPORATION***

NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS

(UNAUDITED)

 

March 31, 2008

 

**Note1 – Basis for Presentation**

 

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 and sixmonth periods ended March 31, 2008 are not necessarily indicative of theresults that may be expected for the year ending September 30, 2008. Forfurther 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):

 
| ** **                                | ** ** | **March 31,** | ** ** | **September 30,** | ** ** |
|-------------------------------------------|------------|--------------------|------------|------------------------|------------|
| ** **                                | ** ** | **2008**           | ** ** | **2007**               | ** ** |
| ** **                                | ** ** | **(unaudited)**    | ** ** | ** **             | ** ** |
| Trade and other  receivables              |       | $                  | 18,368     |                   | $          | 13,024 |   |
| Long-term  contracts:                     |       |               |       |                   |       |
| Billed                                    |       | 85,793             |       | 101,054                |       |
| Unbilled                                  |       | 214,459            |       | 213,388                |       |
| Allowance for  doubtful accounts          |       | (4,866             | )          | (5,144                 | )          |
| Total accounts  receivable                |       | 313,754            |       | 322,322                |       |
| Less estimated  amounts not currently due |       | (35,600            | )          | (16,650                | )          |
| Current accounts  receivable              |       | $                  | 278,154    |                   | $          | 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 March 31, 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**

 

Inventoriesconsist of the following (in thousands):

 
| ** **                        | ** ** | **March 31,** | ** ** | **September 30,** | ** ** |
|-----------------------------------|------------|--------------------|------------|------------------------|------------|
| ** **                        | ** ** | **2008**           | ** ** | **2007**               | ** ** |
| ** **                        | ** ** | **(unaudited)**    | ** ** | ** **             | ** ** |
| Finished  products                |       | $                  | 344        |                   | $          | 240 |   |
| Work in process  and inventoried  |       |               |       |                   |       |
| costs under  long-term contracts  |       | 32,083             |       | 25,005                 |       |
| Raw material and  purchased parts |       | 2,513              |       | 2,097                  |       |
| Total  inventories                |       | $                  | 34,940     |                   | $          | 27,342 |   |

 

At March 31, 2008,work in process and inventoried costs under long-term contracts includesapproximately $2.9 million in costs incurred in advance of contract award oroutside the scope of work on several contracts in the defense segment. Suchcosts were $8.4 million as of September 30, 2007. The company has alsoreclassified $5.2 million from Work in Process and Inventoried Costs UnderLong-term Contracts to Other Assets (non-current) as of March 31, 2008.The company has submitted a claim to the Armed Services Board of ContractAppeals related to these costs and a trial date is set for January 2009.Refer to legal proceedings note for additional information. Management believesit is probable that these costs, plus appropriate profit margin, will berecovered under contract change orders or upon the award of new contracts.

 

**Note 3 – Comprehensive Income**

 

Comprehensiveincome is as follows (in thousands):

 
| ** **                                 | ** ** | **Six Months Ended** | ** ** | **Three Months Ended** | ** ** |
|--------------------------------------------|------------|--------------------------------|------------|----------------------------------|------------|
| ** **                                 | ** ** | **March 31,**             | ** ** | **March 31,**               | ** ** |
| ** **                                 | ** ** | **2008**                       | ** ** | **2007**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
|                                       |       |                           |       |                             |       |   |   |   |   |
| Net income                                 |       | $                              | 20,322     |                             | $          | 19,536 |   | $ | 9,646 |   | $ | 11,211 |   |
| Foreign currency  translation adjustments  |       | 358                            |       | 4,607                            |       | 1,416 |   | 487 |   |
| Net unrealized  loss from cash flow hedges |       | (129                           | )          | (7                               | )          | (163 | ) | (18 | ) |
| Comprehensive  income                      |       | $                              | 20,551     |                             | $          | 24,136 |   | $ | 10,899 |   | $ | 11,680 |   |

 

**Note 4 – Dividend**

 

On February 26, 2008,the Board of Directors declared a 9 cents per common share dividend payable on April 24,2008, to shareholders of record at the close of business on March 31,2008. The $2.4 million dividend payable is included in other currentliabilities as of March 31, 2008.

 

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### ** **

### **Note 5 – Segment Information**

 

Business segment financialdata is as follows (in millions):

 
| ** **                    | ** ** | **Six Months Ended** | ** ** | **Three Months Ended** | ** ** |
|-------------------------------|------------|--------------------------------|------------|----------------------------------|------------|
| ** **                    | ** ** | **March 31,**             | ** ** | **March 31,**               | ** ** |
| ** **                    | ** ** | **2008**                       | ** ** | **2007**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
|                          |       |                           |       |                             |       |   |   |   |   |
| **Sales:**                    |       |                           |       |                             |       |   |   |   |   |
| Defense                       |       | $                              | 284.4      |                             | $          | 308.1 |   | $ | 138.2 |   | $ | 164.8 |   |
| Transportation  systems       |       | 128.6                          |       | 118.0                            |       | 72.1 |   | 62.0 |   |
| Corporate and  other          |       | —                         |       | 6.9                              |       | — |   | 3.2 |   |
| Total sales                   |       | $                              | 413.0      |                             | $          | 433.0 |   | $ | 210.3 |   | $ | 230.0 |   |
|                          |       |                           |       |                             |       |   |   |   |   |
| **Operating  income (loss):** |       |                           |       |                             |       |   |   |   |   |
| Defense                       |       | $                              | 12.6       |                             | $          | 21.4 |   | $ | 2.8 |   | $ | 11.9 |   |
| Transportation  systems       |       | 19.2                           |       | 9.2                              |       | 11.9 |   | 6.9 |   |
| Corporate and  other          |       | (0.8                           | )          | (1.1                             | )          | (0.8 | ) | (1.0 | ) |
| Total operating  income       |       | $                              | 31.0       |                             | $          | 29.5 |   | $ | 13.9 |   | $ | 17.8 |   |

### ** **

### **Note 6 – Financing Arrangements**

 

TheCompany has a committed five-year revolving credit agreement with a group offinancial institutions in the amount of $150 million, expiring in March 2010.As of March 31, 2008, there were no borrowings under this agreement;however, there were letters of credit outstanding under the agreement totaling$18.2 million.

 

### **Note 7 – Pension Plans**

 

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

 
| ** **                      | ** ** | **Six Months Ended** | ** ** | **Three Months Ended** | ** ** |
|---------------------------------|------------|--------------------------------|------------|----------------------------------|------------|
| ** **                      | ** ** | **March 31,**             | ** ** | **March 31,**               | ** ** |
| ** **                      | ** ** | **2008**                       | ** ** | **2007**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| Service cost                    |       | $                              | 1,763      |                             | $          | 3,368 |   | $ | 875 |   | $ | 1,114 |   |
| Interest cost                   |       | 5,023                          |       | 4,812                            |       | 2,505 |   | 2,406 |   |
| Expected return  on plan assets |       | (6,505                         | )          | (5,688                           | )          | (3,244 | ) | (2,844 | ) |
| Amortization of:                |       |                           |       |                             |       | — |   | — |   |
| Prior service  cost             |       | —                         |       | 6                                |       | — |   | 3 |   |
| Actuarial loss  (gain)          |       | (105                           | )          | 236                              |       | (52 | ) | 118 |   |
| Administrative  expenses        |       | 60                             |       | 50                               |       | 30 |   | 25 |   |
| Net pension cost                |       | $                              | 236        |                             | $          | 2,784 |   | $ | 114 |   | $ | 822 |   |

 

7

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### ** **

### **Note 8 – New AccountingPronouncements**

### ** **

Effective October 1, 2007, the Company adopted FASB InterpretationNo. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48prescribes a more-likely-than-not threshold for financial statement recognitionand measurement of a tax position taken or expected to be taken in a taxreturn. This interpretation also provides guidance in de-recognition of incometax assets and liabilities, classification of current and deferred income taxassets and liabilities, accounting for interest and penalties associated withtax positions, accounting for income taxes in interim periods and income taxdisclosures. The cumulative effects of applying this interpretation were toincrease non-current tax liabilities by $5.0 million, decrease retainedearnings by $2.5 million and increase net deferred income tax assets by $2.5million as of October 1, 2007.

 

The liability for unrecognized tax benefits, exclusive of interest, was$10.0 million at October 1, 2007, of which $3.9 million, if recognized,would affect the effective tax rate. In the quarter ended March 31, 2008,we recognized a $0.4 million tax benefit relating to the completion of an auditin a foreign jurisdiction. In conjunction with the adoption of FIN 48, we haveclassified uncertain tax positions as noncurrent income tax liabilities unlessexpected to be paid in one year.

 

The Company continues to report income tax-related interest income orexpense and penalties in income tax expense in the Condensed ConsolidatedStatement of Income. As of October 1, 2007 and March 31, 2008, thetotal amount of accrued income tax-related interest and penalties included inthe Condensed Consolidated Balance Sheets was $0.8 million and $1.0 million,respectively.

 

The Company is subject to examination in the U.S. federal taxjurisdiction for the 2004 - 2007 tax years. The Company is also subject toexamination in the U.K. for the 2003 - 2007 tax years. In addition, the Companyis subject to examination in various state and foreign jurisdictions for the2004 - 2007 tax years, none of which were individually material. The Companybelieves appropriate provisions for all outstanding issues have been made forall jurisdictions and all open years.

 

Approximately $1.4 millionof unrecognized tax benefits relate to items that are affected by expiringstatute of limitations within the next 12 months. Of this amount, approximately$1.0 million, if recognized,would affect the effective tax rate.

 

In September 2006, the FASB issued SFAS No. 157,*Fair Value Measurements*. SFAS 157defines fair value, establishes a framework and gives guidance regarding themethods used for measuring fair value, and expands disclosures about fair valuemeasurements. SFAS 157 is effective for financial statements issued for fiscalyears beginning after November 15, 2007 and interim periods within thosefiscal years. The Company is currently evaluating the impact of SFAS 157 on itsconsolidated results of operations and financial position.

 

In February 2007, the FASB issued SFAS No. 159,*The Fair Value Option for Financial Assets andFinancial Liabilities – Including an Amendment of FASB Statement No. 115*,which is effective for fiscal years beginning after November 15, 2007.This statement permits an entity to choose to measure many financialinstruments and certain other items at fair value at specified election dates.

 

8

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### ** **

### **Note 8 – New AccountingPronouncements - Continued**

 

Subsequent unrealized gains and losses on items for whichthe fair value option has been elected will be reported in earnings. TheCompany is currently evaluating the potential impact of SFAS 159 on itsconsolidated results of operations and financial position.

 

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 isintended to simplify existing guidance and converge rulemaking under U.S.generally accepted accounting principles (GAAP) with international accountingrules. The Company is currently evaluatingthe potential impact of SFAS 141(R) on its consolidated results ofoperations and financial position.

 

In December 2007, the FASB also issued SFAS No. 160,*Noncontrolling Interests in Consolidated FinancialStatements*, which is effective for fiscal years beginning after December 15,2008. This statement requiresall entities to report noncontrolling (minority) interests in subsidiaries asequity in the consolidated financial statements. The Company is currently evaluating the potential impact of SFAS 160 onits consolidated results of operations and financial position.

 

In March 2008, the FASB issued SFAS No. 161, *Disclosures about Derivative Instruments and Hedging Activities*,which is effective for fiscal years beginning after November 15, 2008.This statement asks entities to provided qualitative disclosures about theobjectives and strategies for using derivatives. The Company is currentlyevaluating the potential impact of SFAS 161 on its consolidated results ofoperations and financial position.

 

**Note 9 – Legal Proceedings**

 

InMay 2007 the Company filed a claim with the U.S. Navy for $6.2 millionarising out of allegedly defective specifications, the late delivery ofgovernment-furnished equipment and the Navy’s attempt to unilaterally imposeadditional contract requirements in connection with a contract whose initialaward value was $31.8 million.  In February 2008, the Navy asserted acounter-claim seeking a $4.1 million reduction in the contract price because itallegedly relaxed certain specifications, provided more government-furnishedequipment than was required and had to revise certain equipment and manualsfurnished by the Company.  These claims are now on appeal before the U.S.Armed Services Board of Contract Appeals.  Trial is scheduled to occur inJanuary, 2009.  Management believes its claims are valid and it hasjustified defenses to the Navy’s counter-claim.  The exact amount ofmonetary recovery cannot be quantified at this time. However, since managementbelieves it has a legally justified claim and will prevail with a monetaryaward, the Company inventoried the additional costs it has incurred to datetotaling $5.2 million in respect of the amount it has claimed.  Noliability for the Navy’s claim has been recorded because management believesthere is no merit to that claim and that the Company will prevail. Document review is at an early stage, no depositions have been taken and no reportsof expert witnesses have been produced.

 

9

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### **CUBIC CORPORATION**

ITEM 2 - MANAGEMENT’S DISCUSSIONAND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OFOPERATIONS

 

March 31, 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 systemsfor fighter aircraft, armored vehicles and infantry force-on-force livetraining; weapons effects simulations; laser-based tactical engagement andvirtual simulation systems; and precision gunnery solutions. Our services arefocused on training mission support,computer simulation training, distributed interactive simulation, developmentof military training doctrine, force modernization services for NATOentrants and field operations andmaintenance. Our communications products are aimed at intelligence,surveillance, and search and 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**

 

Salesfor the quarter ended March 31, 2008 decreased 9% to $210.3 millioncompared to $230.0 million in the same quarter last year. Defense salesdecreased 16% compared to last year, while transportation systems sales increasedby 16%. Last year’s second quarter included sales of $3.2 million from thecorrugated box business we sold in the fourth quarter of 2007. Operating incomedecreased to $13.9 million in the quarter compared to $17.8 million in thesecond quarter last year, a decrease of 22%. Defense operating income decreasedwhile transportation systems operating income increased. See the segmentdiscussions following for further analysis of segment sales and operatingincome.

 

Salesdecreased to $413.0 million for the first six months of the fiscal yearcompared to $433.0 million for the first six months of 2007, a decrease of 5%.2007 sales included $6.9 million from the corrugated box business that we soldin the fourth quarter of 2007. Defense sales decreased 8% while transportationsystems sales increased 9%. Operating income for the first six months of thefiscal year increased from $29.5 million in 2007 to $31.0 million this year.Transportation systems segment operating income increased $10.0 million comparedto the first half of 2007 and defense segment operating income decreased $8.8million. See the segment discussions following for further analysis of segmentsales and operating income.

 

10

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Net income for the second quarter of fiscal 2008 decreased to $9.6million, or 36 cents per share, compared to $11.2 million, or 42 cents pershare last year as a result of the decrease in operating income. For thefirst six months of the year, net income increased to $20.3 million, or 76cents per share, from $19.5 million, or 73 cents per share last year. Net income for the first six months of thisfiscal year was negatively impacted approximately $1.3 million by a highereffective income tax rate. See following discussion on effective tax rate.

 

Selling, generaland administrative (SG&A) expenses increased in the second quarter thisyear compared to last year, increasing from $23.7 million in the second quarterlast year to $24.1 million this year. For the first six months of the yearSG&A expenses increased by 4%, from $46.9 million in 2007 to $48.9 million this year. As apercentage of sales, SG&A expenses increased from 10.8% to 11.8%. SG&Aexpenses increased in both segments due primarily to increased selling expensesincurred for new contract proposals. We also increased company funded researchand development expenditures by $2.4 million in the first half of this year,primarily in the defense segment relating to advanced programs dealing withoptical technologies.

 

Our projected effective tax rate for the remainder of fiscal 2008 is39.0%. The projected effective rate for fiscal 2008 is higher than last year’sfirst half effective rate of 35.1% due to the expiration of the U.S. Researchand Experimentation credit as of December 31, 2007. The tax provision inthe first half last year also benefitted by $0.5 million from the retroactivereinstatement of the U.S. Research and Experimentation credit in that period.In addition, the rate is higher this year because we are projecting higherearnings in the U.K. and are required to provide U.S. taxes on the earningswhich we do not consider to be permanently reinvested as they may berepatriated in the form of dividends. As a result of the completion of an auditin a foreign jurisdiction during the second quarter, we were able to reduce ourliability for unrecognized tax benefits by $0.4 million and recognize a taxbenefit of that amount in the quarter. The effective rate for fiscal 2008 couldbe affected by, among other factors, the mix of business between the U.S. andforeign jurisdictions, our ability to take advantage of available tax creditsand audits of our records by taxing authorities.

 

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**Defense Segment**

 
| ** **                             | ** ** | **Six Months Ended** | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------|------------|--------------------------------|------------|----------------------------------|------------|
| ** **                             | ** ** | **March 31,**             | ** ** | **March 31,**               | ** ** |
| ** **                             | ** ** | **2008**                       | ** ** | **2007**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                             | ** ** | **(in millions)**         | ** ** |
| **Defense  Segment Sales**             |       |                           |       |                             |       |   |   |   |   |
| Mission support  services (MSBU)       |       | $                              | 148.0      |                             | $          | 148.0 |   | $ | 75.7 |   | $ | 80.9 |   |
| Readiness  systems (RSBU)              |       | 113.4                          |       | 126.0                            |       | 50.5 |   | 67.0 |   |
| Communications  and electronics (CEBU) |       | 17.6                           |       | 29.3                             |       | 8.8 |   | 14.5 |   |
| Tactical systems  and other            |       | 5.4                            |       | 4.8                              |       | 3.2 |   | 2.4 |   |
|                                   |       | $                              | 284.4      |                             | $          | 308.1 |   | $ | 138.2 |   | $ | 164.8 |   |
|                                   |       |                           |       |                             |       |   |   |   |   |
| **Defense  Segment Operating Income**  |       |                           |       |                             |       |   |   |   |   |
| Mission support  services (MSBU)       |       | $                              | 10.7       |                             | $          | 13.4 |   | $ | 5.2 |   | $ | 8.4 |   |
| Readiness  systems (RSBU)              |       | 6.0                            |       | 8.1                              |       | 0.5 |   | 4.1 |   |
| Communications  and electronics (CEBU) |       | (3.1                           | )          | 1.0                              |       | (2.3 | ) | — |   |
| Tactical systems  and other            |       | (1.0                           | )          | (1.1                             | )          | (0.6 | ) | (0.6 | ) |
|                                   |       | $                              | 12.6       |                             | $          | 21.4 |   | $ | 2.8 |   | $ | 11.9 |   |

 

Defensesegment sales in the second quarter decreased 16%, from $164.8 million lastyear to $138.2 million this year. Each of the three major business unitsexperienced a decrease in sales for the quarter compared to last year. Operatingincome in the defense segment was also lower in the second quarter, decreasingto $2.8 million compared to $11.9 million in the second quarter of fiscal 2007due largely to cost growth on development contracts. RSBU and MSBU operatingincome decreased from last year, while CEBU incurred a loss for the quarter.

 

Forthe first six months of the fiscal year defense sales decreased 8% compared tolast year. MSBU sales were equal to last year while sales decreased from eachthe other two major divisions. Operating income for the first half was down 41%compared to last year, with each business unit experiencing a decrease fromlast year’s first half.

 

**MissionSupport Services (MSBU)**

 

MSBUsales decreased 6% to $75.7 million in the second quarter this year, comparedto $80.9 million last year. Education, training and exercise support activitiesfor the U.S. Army decreased during the quarter due to a reduction in customerrequirements compared to last year, resulting in lower sales. This decrease waspartially offset by increased sales from Marine Corps contracts and a newcontract supporting the U.S. Army’s Quartermaster Center and School. For thefirst six months of the fiscal year sales were equal to last year. Higher salesfrom the new Army contract mentioned above and from the Marine Corp supportservices were offset by lower sales from two key Army support contracts inKorea and at Ft. Polk, LA due to a decrease in customer requirements.

 

MSBUoperating income decreased 38% from $8.4 million in the second quarter lastyear to $5.2 million in the second quarter this year. Lower sales volume and achange in the mix of contracts contributed to this decrease. Last year’s secondquarter had included several mature contracts that 

 

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were experiencing healthy profit margins, while certain of these havebeen replaced this year by new or follow-on contracts with lower profitmargins, such as the new U.S. Army Quartermaster Center and School contract. Weconsider this to be a temporary situation that will be resolved with increasesin military training requirements and finalization of certain contract add-onsand follow-ons. For the first six months operating income was down 20% from$13.4 million last year to $10.7 million this year, for substantially the samereasons.

 

**ReadinessSystems (RSBU)**

 

RSBUsales decreased from $67.0 million in the second quarter last year to $50.5million this year, a decrease of 25%. Sales were lower by about $7.0 millionfrom the air combat training system contract known as P5 and from an air combattraining system in Australia that was completed in the first quarter. The P5contract is in a transition from the development phase, where revenue isrecognized on a percentage completion basis, to the production phase, where wewill not realize the revenues for these orders until the product is deliveredand the sales process is complete. This transition also contributed to anincrease in inventories of $7.6 million in the first six months of the year.Partially offsetting these sales decreases was an increase in sales from thenew Joint Strike Fighter (JSF) development contract. Sales were also lower fromground combat training system contracts in Canada and the Far East and fromsmall arms training systems. In addition, problems encountered in systemintegration testing for a contract to develop the next generation laser-basedtactical engagement system resulted in a delay in progress on this program and,therefore, lower sales.

 

For the first half of thefiscal year, RSBU sales were down 10%, from $126.0 million last year to $113.4million this year. The decrease was from lower sales of ground combat trainingsystems, small arms training systems and laser-based tactical engagement systems,as described above in the second quarter results. Sales of air combat training systems were upfor the first six months of the year due to the new JSF contract mentionedabove.

 

Readiness systemsoperating income decreased from $4.1 million in the second quarter last year to$0.5 million this year. Cost growth of $3.2 million resulting primarily from problems encountered in system integrationtesting of the tactical engagement system mentioned above was theprimary reason for the decrease in operating income. We believe we have nowfound solutions to these issues, and that no significant further cost growthfrom this situation will occur. Lower sales from air combat training systemscaused a decrease in operating income from that product line; however, this wasmore than offset by higher profit margins from small arms training systems and ground combat training systemsin Canada and the Middle East. Operating income in the second quarter last yearalso had included $1.2 million from the close-out of an old ground combattraining system contract completed inthe mid-1990’s.

 

For the first six monthsof the fiscal year RSBU operating income decreased 26% from $8.1 million in2007 to $6.0 million this year. This was caused by the cost growth in thedevelopment phase of the tactical engagement system contract mentioned above.Improved profit margins from small arms training systems and the ground combat trainingsystem in Canada partially offset the impact from this contract.

 

13

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**Communicationsand Electronics (CEBU)**

 

Salesfrom CEBU were $8.8 million in the second quarter of 2008, down from $14.5million in the same quarter last year, a 39% decrease. Sales decreased fromcontracts for the supply of data links for unmanned aerial vehicles in the U.S.and U. K. and from personnel locator systems. For the first six months of thefiscal year, sales from CEBU were down 40% in 2008 compared to 2007, from $29.3million to $17.6 million. Sales were down from all three major product lines:data links, personnel locator systems and power amplifiers.

 

CEBU incurred anoperating loss of $2.3 million for the second quarter this year compared to abreak-even second quarter last year. Cost growth on three data link developmentcontracts impacted profitability by $2.7 million during the quarter.Approximately $0.6 million of these costs related to a claim with the U.S. Navyas described in Note 9 to the financial statements, while most of the remainderresulted from ongoing problems with subcontractors. The company may be able torecover some of its increased costs from the subcontractors; however, theamount of any potential cost recovery cannot be determined at this time andtherefore these costs have been expensed. Cost growth on one of the contractsresulted from problems in environmental testing which have now been solved. For the first half of the fiscal year, CEBUincurred an operating loss of $3.1 million in 2008 compared to operating incomeof $1.0 million last year. Cost growth totaling $4.0 million on the three datalink development contracts mentioned above was the primary reason for thedecrease, in addition to lower sales of power amplifiers.

 

**Transportation Systems Segment**

 
| ** **                               | ** ** | **Six Months Ended** | ** ** | **Three Months Ended** | ** ** |
|------------------------------------------|------------|--------------------------------|------------|----------------------------------|------------|
| ** **                               | ** ** | **March 31,**             | ** ** | **March 31,**               | ** ** |
| ** **                               | ** ** | **2008**                       | ** ** | **2007**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                               | ** ** | **(in millions)**         | ** ** |
|                                     |       |                           |       |                             |       |   |   |   |   |
| Transportation  Segment Sales            |       | $                              | 128.6      |                             | $          | 118.0 |   | $ | 72.1 |   | $ | 62.0 |   |
|                                     |       |                           |       |                             |       |   |   |   |   |
| Transportation  Segment Operating Income |       | $                              | 19.2       |                             | $          | 9.2 |   | $ | 11.9 |   | $ | 6.9 |   |

 

Transportationsegment sales increased from $62.0 million in the second quarter last year to$72.1 million this year, an increase of 16%. 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. Significant progress wasmade on several system enhancement projects in the U.K. during the quarter,generating higher than usual sales. Sales from system installation contracts inNorth America were lower as several programs are nearing completion, however,this decrease was partially offset by higher sales of spare parts to U.S.customers. For the first half of the fiscal year, transportation systems salesincreased 9% from $118.0 million in 2007 to $128.6 million this year for thereasons described above. A higher average exchange rate between the BritishPound and the U.S. Dollar added approximately $1.0 million to sales in thesecond quarter and approximately $3.0 million for the first half of the year.

 

Operatingincome from transportation systems in the second quarter improved to $11.9million compared to $6.9 million last year. Higher sales and improved profitmargins from the U.K. contracts mentioned above and profits from increasedspares sales in the U.S. contributed to the 

 

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increasefor the quarter.Inaddition, last year’s second quarter results included a loss provision of $4.7million for several contracts in North America compared to only $0.9 millionthis year. However, last year’s second quarter results also included contractsettlements with two customers that added $3.9 million to operating income inthat quarter.

 

Forthe first half of the fiscal year, transportation systems operating income morethan doubled from $9.2 million to $19.2 million. As described above for thesecond quarter, higher sales and profit margins from contracts in the U.K. andhigher U.S. spares sales contributed much of the increase. In the first half of2007, cost growth of $5.4 million on several North American contracts and $3.9million on a contract in Sweden had adversely affected operating income;however, contract settlements also added $5.2 million to last year’s operatingprofits. In the first half of 2008, cost growth on these same contracts waslimited to $2.1 million.

 

A higher average exchange rate between the British Pound and the U.S.Dollar added approximately $0.4 million to operating income in the secondquarter and approximately $0.7 million for the first half of the year.

 

**Backlog**

 

As reflected inthe table below, total backlog decreased $93.2 million at March 31, 2008compared to September 30, 2007. Transportation systems backlog decreased$9.1 million and defense backlog decreased $84.1 million during the six-monthperiod. Delayed award oftwo multi-year service contracts in the Mission Support business was theprimary cause of the decrease in total backlog during the period. Fundedbacklog decreased $5.8 million during the period, with transportation systemsdecreasing $9.1 million and defense funded backlog increasing by $3.3 million.

 

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| ** **                      | ** ** | **March 31,**     | ** ** | **September 30,** | ** ** |
|---------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                      | ** ** | **2008**               | ** ** | **2007**               | ** ** |
| ** **                      | ** ** | **(in millions)** | ** ** |
| **Total  backlog**              |       |                   |       |                   |       |
| Transportation  systems         |       | $                      | 778.2      |                   | $          | 787.3 |   |
| Defense:                        |       |                   |       |                   |       |
| Mission support  services       |       | 681.7                  |       | 776.6                  |       |
| Readiness  systems              |       | 402.8                  |       | 383.4                  |       |
| Communications  and electronics |       | 51.8                   |       | 56.4                   |       |
| Tactical systems  and other     |       | 26.6                   |       | 30.6                   |       |
| Total defense                   |       | 1,162.9                |       | 1,247.0                |       |
| Total                           |       | $                      | 1,941.1    |                   | $          | 2,034.3 |   |
|                            |       |                   |       |                   |       |
| **Funded  backlog**             |       |                   |       |                   |       |
| Transportation  systems         |       | $                      | 778.2      |                   | $          | 787.3 |   |
| Defense:                        |       |                   |       |                   |       |
| Mission support  services       |       | 123.7                  |       | 131.2                  |       |
| Readiness  systems              |       | 402.8                  |       | 383.4                  |       |
| Communications  and electronics |       | 51.8                   |       | 56.4                   |       |
| Tactical systems  and other     |       | 26.6                   |       | 30.6                   |       |
| Total defense                   |       | 604.9                  |       | 601.6                  |       |
| Total                           |       | $                      | 1,383.1    |                   | $          | 1,388.9 |   |

 

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.

 

###### **Liquidity and Capital Resources**

 

Operatingactivities provided cash of $25.1 million for the first half of the fiscalyear. In addition to net income for the period, customer advances andreductions in accounts receivable and prepaid expenses contributed to thepositive cash flows. Positive operating cash flows came from both thetransportation systems and defense segments, with the greater portion comingfrom the defense systems segment.

 

Investing activities for the six-month period included capital expendituresof $4.9 million 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.

 

Financing activities for the first six months included scheduledpayments on our long-term debt of $5.8 million.

 

Our financial conditionremains strong with working capital of $301.1 million and a current ratio of2.8 to 1 at March 31, 2008. We expect that cash on hand and our unused linesof credit will be adequate to meet our liquidity requirements for theforeseeable future.

 

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**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 8 for discussion of the Company’s implementation of FIN 48, which has affected the method for calculating income tax liabilities.

 

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 

 

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financial and/oroperating 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 onwhich it 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.

 

ITEM 4 - STATEMENT ON DISCLOSURE CONTROLS ANDPROCEDURES.

 

Wemaintain disclosure controls and procedures, including internal control overfinancial reporting, which are designed to ensure that information required tobe disclosed in our periodic filings with the SEC is reported within the timeperiods specified in the SEC’s rules and forms, and to provide reasonableassurance that assets are safeguarded and transactions are properly executedand recorded. Our disclosure controls and procedures are also designed toensure that information is accumulated and communicated to our management,including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO),as appropriate, to allow timely decisions regarding required disclosure. Indesigning and evaluating such controls and procedures, we recognize that anycontrols and procedures, no matter how well designed and operated, can provideonly reasonable assurance of achieving the desired control objectives, andmanagement necessarily is required to use its judgment in evaluating thecost-benefit relationship of possible controls and procedures.

 

Weroutinely review our system of internal control over financial reporting andmake changes to our processes and systems to improve controls and increaseefficiency, while ensuring that we maintain an effective internal controlenvironment. Changes may include such activities as implementing new, moreefficient systems and migrating certain processes from our operating units toour corporate shared service center. In addition, if we acquire new businesses,we will review the controls and procedures of the acquired business as part ofour integration activities.

 

Weperformed an evaluation of the effectiveness of our disclosure controls andprocedures as of March 31, 2008. The evaluation was performed with theparticipation of senior management of each business segment and key corporatefunctions, and under the supervision of the CEO and CFO. Based on ourevaluation, we concluded that our disclosure controls and procedures wereeffective as of March 31, 2008.

 

Therewere no changes in our internal control over financial reporting during themost recently completed fiscal quarter that materially affected, or arereasonably likely to materially affect, our internal control over financialreporting.

 

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**PART II - OTHER INFORMATION**

 

ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

 

The Company heldits annual meeting of shareholders on February 26, 2008.  Matters voted upon were (1) election ofdirectors and (2) ratification of the Board’s selection of Ernst &Young LLP as the Company’s independent auditors for the fiscal year ending September 30,2008.

 

The number ofvotes cast for, against or withheld, with respect to each matter are set outbelow.

 

1.  Election of Directors

 
| **Director**              | ** ** | **For**    | ** ** | **Against** | ** ** | **Withheld** | ** ** |
|---------------------------|------------|------------|------------|-------------|------------|--------------|------------|
| Walter J. Zable           |       | 24,415,338 |       | —      |       | 1,078,623    |       |
| Walter C. Zable           |       | 24,395,004 |       | —      |       | 1,098,957    |       |
| Bruce G. Blakley          |       | 24,622,607 |       | —      |       | 871,354      |       |
| William W. Boyle          |       | 24,087,808 |       | —      |       | 1,406,153    |       |
| Raymond L.  deKozan       |       | 24,397,852 |       | —      |       | 1,096,109    |       |
| Robert T.  Monagan        |       | 24,194,962 |       | —      |       | 1,298,999    |       |
| Raymond E. Peet           |       | 24,516,867 |       | —      |       | 997,094      |       |
| Robert S.  Sullivan       |       | 24,619,358 |       | —      |       | 874,603      |       |
| John H.  Warner, Jr. |       | 24,616,618 |       | —      |       | 877,343      |       |

 
| ** **                               | ** ** | **For**    | ** ** | **Against** | ** ** | **Abstain** | ** ** |
|------------------------------------------|------------|------------|------------|-------------|------------|-------------|------------|
| 2. Ratification  of Independent Auditors |       | 25,396,641 |       | 87,976      |       | 9,344       |       |

 

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** **

**PART II - OTHER INFORMATION**

 

ITEM 6 - EXHIBITS

 

(a) The followingexhibits 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 attached hereto as Exhibit 10.4                                                                                                             |
| 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                                                                                                                                                                   |

 

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

 

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