Cubic To Restate Financial Statements

(RTTNews) - Cubic Corp. (CUB) said Monday that the Audit Committee of its Board, after consultation with Ernst & Young LLP, the company's accounting firm, determined that Cubic's financial statements for the fiscal years ended September 30, 2013 and 2012 and each of the prior quarters of 2013 and 2012 can no longer be relied upon as being in compliance with generally accepted accounting principles. Accordingly, the company will restate such financial statements.

The decision follows a recommendation by management that revenues in these previously issued financial statements should be adjusted due to errors in calculating revenues for a contract in the company's transportation systems segment.

Similarly, related press releases, Ernst & Young's reports on the financial statements and shareholder communications describing the company's financial statements for these periods should no longer be relied upon, the company said.

Preliminary indications from the company's evaluation are that the changes described hereforth will result in an increase in revenues and net income cumulatively over the period of the restatement and an increase in retained earnings as of September 30, 2013.

The company is continuing to evaluate the total amount of the adjustments and the specific impact on each period covered by the restatement, which may result in an increase or decrease in previously reported amounts for individual periods.

In 2012, the company restated its financial statements for the years ended September 30, 2011, 2010 and 2009, the quarters ended March 31, 2012 and December 31, 2011 and each of the prior quarters of 2011 and 2010. This previous restatement was the result of the company's determination that it had made errors in the calculation of revenues for a significant number of its contracts due to an incorrect application of GAAP.

In the course of its financial statement closing process for the quarter ended December 31, 2013, management identified an error in the computation of revenues for one contract that dates back to the previous restatement period, beginning in 2011.

The error identified resulted from an error in a revenue recognition model used to record revenue for this contract, that was created during the previous restatement activity.

In the course of its review, management also identified a second error related to this same contract that resulted from a failure to accurately update the contract value that is used in the calculation of revenue under the cost-to-cost percentage of completion method of accounting.

The company is in the process of evaluating the differences resulting from these errors but has not yet completed the evaluation.

The company intends to amend its annual and quarterly SEC filings, as appropriate, as soon as practicable.