SAN DIEGO, Calif., Aug. 1, 2007 -- Cubic Corporation (AMEX: CUB) today announced higher sales and earnings for the quarter ended June 30, 2007. Sales for the company's third fiscal quarter were $233.7 million compared to $214.9 million last year, an increase of 9 percent. Net income increased 87 percent to $11.2 million or $.42 per share from $6.0 million or $.22 per share in the same quarter last year.

Operating income for the third fiscal quarter was $16.6 million compared to $10.3 million in the third quarter last year. This year's operating income growth reflects strong performance from the defense segment, which increased operating income from $9.6 million to $13.7 million, and improved results from the transportation systems segment, which generated operating income of $4.1 million for the third quarter this year compared to $1.1 million last year. Strong cash flows and currency exchange gains resulted in net investment and other income of $0.8 million in the third quarter this year versus net interest expense of $1.1 million last year, an improvement of $1.9 million.

Nine-Month Results

For the nine months ended June 30, 2007, sales grew 8 percent from $616.6 million last year to $666.7 million this year. Net income was $30.7 million for the nine-month period, or $1.15 per share compared to last year's net income of $17.2 million, or $0.64 per share. This year's nine-month earnings results were primarily from operations, while last year's net income included a gain on the sale of real estate of approximately $4.3 million, after applicable income taxes, or about $0.16 per share. Operating income more than doubled for the nine-month period, increasing from $20.4 million in 2006 to $46.1 million in 2007.

Cash flows from operations for the first nine months of the fiscal year were about $70 million. Both segments contributed to the positive result, with the bulk of it coming from the transportation systems segment.

Defense Segment

In the third quarter of 2007, defense segment sales increased 18 percent from $149.4 million last year to $176.6 million this year. Defense sales were up 15 percent for the first nine months of the fiscal year, from $422.1 million to $484.7 million. Higher sales from Mission Support Services and Readiness Systems (formerly called Training Systems) contributed to the increase. Sales in Communications and Electronic Systems were down for the quarter and first nine months of the fiscal year.

Operating income in the defense segment increased in the third quarter to $13.7 million from $9.6 million last year with the biggest increase coming from Mission Support Services. For the nine-month period, operating income increased from $20.7 million in 2006 to $35.1 million this year. Both the Mission Support Services and Readiness Systems business units produced significantly higher operating income, while the Communications and Electronics business unit results were at break-even for the nine months.

Transportation Systems Segment

Transportation Systems sales decreased in the third quarter to $54.0 million compared to $61.8 million last year and for the first nine months of the fiscal year, sales decreased from $183.3 million to $172.0 million. This decrease resulted primarily from lower sales on system installation contracts in North America as several long-term projects neared completion.

Operating income in the transportation segment improved in the third quarter to $4.1 million, compared to $1.1 million last year. Bonuses earned from the Prestige contract for system usage, the strength of the British pound, and improved performance from North American system installation contracts contributed to the profit improvement. For the nine-month period, operating income increased to $13.3 million this year from $1.5 million last year for the above reasons, as well as settlements reached with three customers that added $5.2 million to operating income.

Backlog

Total backlog was $2.012 billion at June 30, 2007 compared to $1.479 billion at September 30, 2006. Funded backlog was $1.347 billion at June 30, 2007 compared to $1.224 billion at September 30, 2006.

Cubic Corporation is the parent company of two major business segments: defense and transportation. The Cubic Defense Applications group is a world leader in realistic combat training systems, mission support services and defense electronics. Cubic Transportation Systems designs and manufactures automatic fare collection systems for public transit authorities. For more information about Cubic, see the company's Web site at www.cubic.com.

In addition to historical matters, this release may contain forward-looking statements which are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These forward-looking statements involve predictions of future results. Investors are cautioned that forward-looking statements involve risks and uncertainties which may affect the Company's business and prospects. These include the effects of politics on negotiations and business dealings with government entities, economic conditions in the various countries in which the Company does or hopes to do business, competition and technology changes in the defense and transit industries, and other competitive and technological factors.

Any statements about the Company's expectations, beliefs, plans, objectives, assumptions or future events or future financial and/or operating performance are not historical and may be forward-looking. 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 estimates, assumptions and uncertainties.

Since actual results or outcomes may differ materially from those expressed in any forward-looking statements made by the Company, investors should not place undue reliance on any forward-looking statements. In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance and investors should not use the Company's historical performance to anticipate results or future period trends. Further, any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for the Company to predict which factors will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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