Cubic Corporation Implements Cost-Saving Initiatives to Improve Profitability
Cubic Corporation (NYSE:CUB) today announced the next steps in streamlining its corporate and business segment operations as part of a company-wide activity to improve profitability and competitiveness through its One Cubic initiatives. The company’s new operating structure is effective immediately.
These initiatives are anticipated to yield $15-16 million in annualized pre-tax savings in fiscal year 2016. The company will incur a pre-tax charge in the second quarter of fiscal year 2015 of approximately $6 million due to the restructuring, but estimates cost savings for the balance of the year will result in the restructuring having a neutral impact on its earnings per share for fiscal year 2015.
A key component of the restructuring includes combining the company’s Defense Systems and Mission Support Services business segments. The new business segment, Cubic Global Defense, will be led by William J. Toti, former president of Mission Support Services. In addition, the company will consolidate its segment and corporate support functions for manufacturing, supply chain, finance, human resources and information technology worldwide. This consolidation will enable the functions to deliver superior service to their internal and external customers, reduce duplicative infrastructure and processes and enable the organization to more readily implement a new Enterprise Resource Planning (ERP) system commencing in fiscal year 2016.
“Today’s restructuring announcement reinforces our commitment to improving the business by eliminating redundancies to create a more efficient and responsive organization,” said Bradley H. Feldmann, president and chief executive officer of Cubic Corporation. “These changes are necessary to align our organization with our goals for profitability and growth in the future.”
As a result of the restructuring, the company will implement a phased reduction in force of less than two percent of its global workforce. Employees affected by the consolidation will be offered an employment separation package. The company anticipates the reductions in force as part of this streamlining will be completed by the beginning of the third quarter of fiscal year 2015.
About Cubic Corporation
Cubic Corporation is the parent company of two major business segments. Cubic Transportation Systems is a leading integrator of payment and information technology and services for intelligent travel solutions. Cubic Global Defense is a leading provider of realistic combat training systems, secure communications, operations, maintenance, technical and other support services for the U.S. and allied nations. For more information about Cubic, please visit the company’s web site at www.cubic.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor created by such Act. Forward-looking statements include, among others, statements regarding annualized pre-tax savings in fiscal year 2016, charges we expect to incur due to the restructuring, impacts of the restructuring on earnings per share for fiscal year 2016, our plans for consolidation of business segments and corporate support functions, implementation of a new Enterprise Resource Planning system and our expectations regarding the size and timing of the reduction in force and the offering of employment separation packages. These statements are often, but not always, made through the use 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 or phrases. These statements involve risks, estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in these statements, including, among others: our ability to successfully implement and manage the restructuring and obtain the benefits we expect to derive from the consolidation of business segments and corporate support functions and reduction in force; potential delays in the completion of the restructuring; our dependence on U.S. and foreign government contracts; delays in approving U.S. and foreign government budgets and cuts in U.S. and foreign government defense expenditures; the ability of certain government agencies to unilaterally terminate or modify our contracts with them; our ability to successfully integrate new companies into our business and to properly assess the effects of such integration on our financial condition; the U.S. government’s increased emphasis on awarding contracts to small businesses, and our ability to retain existing contracts or win new contracts under competitive bidding processes; the effects of politics and economic conditions on negotiations and business dealings in the various countries in which we do business or intend to do business; risks associated with the restatement of our prior consolidated financial statements, including our identification of material weaknesses in our internal control over financial reporting; the outcome of the investigation of our controls and procedures in connection with programs that are accounted for under the percentage of completion method; competition and technology changes in the defense and transportation industries; our ability to accurately estimate the time and resources necessary to satisfy obligations under our contracts; the effect of adverse regulatory changes on our ability to sell products and services; our ability to identify, attract and retain qualified employees; business disruptions due to cyber security threats, physical threats, terrorist acts, acts of nature and public health crises; our involvement in litigation, including litigation related to patents, proprietary rights and employee misconduct; our reliance on subcontractors and on a limited number of third parties to manufacture and supply our products; our ability to comply with our development contracts and to successfully develop, introduce and sell new products, systems and services in current and future markets; defects in, or a lack of adequate coverage by insurance or indemnity for, our products and systems; and changes in U.S. and foreign tax laws, exchange rates or our economic assumptions regarding our pension plans. In addition, please refer to the risk factors contained in our SEC filings available at www.sec.gov, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Because the risks, estimates, assumptions and uncertainties referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements, you should not place undue reliance on any forward- looking statements. Any forward-looking statement speaks only as of the date hereof, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof.
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