Cubic Corporation Implements Cost-Saving Initiatives to Improve Profitability
February 18 2015 - 4:01PM
Business Wire
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.
Forward-Looking
Statements
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.
Media contact:Cubic
CorporationSuzanne HatcherDirector of Corporate
Communications858-505-2430orInvestor
contact:Cubic CorporationDiane DyerDirector of Investor
Relations858-505-2907investor.relations@cubic.com
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