Welcome to the Cubic Corporation's Third Quarter Fiscal Year 2014 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Diane Dyer, Director of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon everyone and thank you for joining the call. We have two speakers today, Brad Feldmann, Cubic's President and CEO; and John Thomas, Cubic's CFO who will review the fiscal 2014 third quarter and nine months financial results and operational highlights that we announced this afternoon. After our prepared remarks, our executive team will be happy to take your questions. By now, you should have a copy of our earnings press release. If you need a copy of the press release, you can go to www.cubic.com under the Investor Relations tab to find an electronic copy. We encourage everyone to read today's press release and refer to our most recent reports on Form 10-Q and Form 10-KA. For anyone who has not seen a copy of these documents, they're available on Cubic Corporation's Web site and on the SEC's Web site. Now I'll turn the call over to Jim Edwards, Cubic's Senior Vice President and General Counsel, for the Safe Harbor disclosure.

Thank you, Diane. Please note that certain information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that during this call, Cubic management will be making forward-looking statements about the future events or Cubic's future financial and operating performance. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements should be considered in conjunction with and are qualified by the cautionary statements contained in Cubic's earnings press release and SEC filings, including its annual report on Form 10-KA and quarterly reports on Form 10-Q. This conference call contains time-sensitive information that is accurate only as of the date of this broadcast, August 4, 2014. Cubic undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. This conference call will also include a discussion of non-GAAP financial measures as that term is defined in Regulation G. Cubic believes this information is useful to investors because it provides a basis for measuring the company's available capital resources, the actual and forecasted operating performance of the company's business and the company's cash flow. A reconciliation between the GAAP financial measures that correspond to these non-GAAP financial measures is contained in our earnings press release and our amended SEC Form 10-K report for the fiscal year ended September 30, 2013. Any discussion of non-GAAP measures is not intended to detract from the importance of comparable GAAP measures. With that said, let me turn the call over to Brad Feldmann, our President and Chief Executive Officer.

Thank you, Jim. Good afternoon everyone. Thanks for joining us on the call today. Today is my first conference call as Cubic's CEO. I would like to thank the Board for my recent appointment as the President and CEO. I have over 15 years of service with the company. And I look forward to working with our team to make the company even better. Cubic is a great company that as a diversified portfolio of markets, systems and services, technologies as well as geographies. I want to express appreciation for our founder Walter J. Zable and thank long-term executive Bill Boyle for creating such a great company and serving a strong examples of leadership. I'm very passionate about the growth and future success of the company. During the last year, our team as reexamined our strategy, growth and performance. As a result, we have started a number of initiatives that we believe will improve the company. As we began to implement this plan, we will update you on our progress. Cubic Corporation has been run as a holding company of various operating businesses for many years. Going forward, we intend to run the company as one Cubic, where we will share people, technologies, the innovation, strategies, our global reach, common processes and systems to create value for our customers, employees and shareholders. But, one Cubic really means is a restructuring of the company and a fundamental change in how we operate. That means better execution and better capture and this should translate into higher profitability and growth for the company. The team has also defined a new vision and strategy for the company. Our vision is to be the global market leader by winning the customer to accelerate our growth. Today, we are fortunate that 2/3rds of core businesses are…

Thanks Brad. I will start by reviewing our guidance for the year and then discuss our consolidated highlights for the quarter and for the nine months ended June 30. And after that I will review our segment results and give some color as to what is happening in each of our businesses. We are revising our revenue guidance from a previous range of $1.42 billion to $1.45 billion for the year and to $1.39 billion to $1.42 billion. The primary factors for the revision are mission support services sales have continued to be adversely impacted by the slowdown in U.S. government spending through the third quarter. And the transportation segment incurred and increased and the cost to complete the Vancouver project. The increase had a corresponding reduction of $13.5 million in this segment sales. We are also revising our earnings per share guidance from a previous range of $2.60 to $2.75 down to $2.30 to $2.60 for the year. In the third quarter, completion cost for the Vancouver contract increased – was impacted operating profits by $13.5 million which makes reaching our prior guidance somewhat problematic. By consolidated basis, net sales for the nine months were down about 2% from last year. Through the quarter, consolidated sales of $340.4 million were up about 1% from last year. For the quarter and year-to-date decreases in mission support services sales were offset by increases in defense systems and transportation systems. Acquisitions completed during fiscal years 2013 and 2014 contributed $82.7 million sales for the nine months and $36 million in the quarter. Adjusted EBITDA was $76 million for the nine months or a decrease of 26%. For the quarter, adjusted EBITDA was $26.7 million compared to $33.3 million last year. Operating income was $53.2 million for the nine month a decrease of…

Thank you, Jay. We set out this year to win our major recompetes and capture new business. The news over the last few weeks makes us feel good that we are achieving our goals. Unfortunately, this fiscal year our financial performance will likely fall below our earlier guidance. We believe, this is a short-term phenomenon. To summarize, I believe mission support services has turned the corner. With regard to CDS, I'm very bullish about the future of our ISR business. We are far along in solving CTS' challenges and next year, we expect much improved performance in this business. I have the privilege of being with our team in London on July 29th, when we signed the Electra contract which is the largest contract in Cubic's history. We are very grateful to Transport for London for their continue trust. I'm very excited to serve Cubic as the next President and CEO. I will focus on improving execution and driving growth of the company. We believe our vision of winning the customer and supporting strategy are sound and will achieve enhanced growth going forward. And with that, we will open the call for a Q&A session.

Thank you. (Operator Instructions) Our first question comes from Julian Mitchell with Credit Suisse. Please state your question.

Hi. Thank you. I guess my question was just on the width of the guidance range because you had been guiding for a $0.15 EPS range for the year and now you have only got about eight weeks left then the range has widened to $0.30. So that's sort of quite unusual cadence maybe just give us some background there?

Hey, Julian. Jay Thomas here. The reason why we have the wider than normal range there is, in the fourth quarter a lot of the sales and profits are coming out of our defense business initially tied to shipments, so I think we start a little bit of contingency there around making through shipments happen by September 30th.

Thanks. And then, on the quarter specifically I guess looking at the guidance for the year, you are looking at sales up maybe 20% or so sequentially in Q4, the EPS but it looks like you have the sort of more than double in Q3. You need over a dollar and you get $0.45 in Q3, so is that just pure kind of EBIT bouncing with the higher sales or is there some kind of below the line items in Q4, we need to be aware of?

It's a combination of – as I mentioned shipments in our defense business and then it would be defective, we are expecting any kind of cost issues in the transportation business going down the results from the fourth quarter.

Great. And then lastly, just quickly on MMS, I think you talked before about larger players may start to kind of exit the market eventually. But right now, it seems that competition is getting worse not easier. How you sort of thinking about your cost base there, if the competitive pressures remain the same?

As we have announced there – this is Brad Feldmann. As we have announced, we have had some recent success recently in a bunch of competitive situations. We believe that we have sharpened our pencil well and will be competitive going forward. And as I suggested earlier, we believe this business will grow. We also know that we won't have to pay for G&A multiple times and we would expect improvements in the margins as we continue to grow.

Great. Thank you.

Our next question comes from Jim Ricchiuti with Needham & Company. Please state your question. Jim Ricchiuti - Needham & Company: Thank you. I wonder if you can elaborate Jay on the shipments that you are anticipating in defense that seem to be one of the key factors, I think improvement in earnings, are you anticipating in Q4, is it concentrated within the shipping programs or you can highlight that we might able to better understand?

Sure. So because in the U.S. DoD market a lot of the work that we do on air and ground are task quarter based. So it won't take revenue until we actually ship when the customer accepts it. So it just happened if you noticed that we often times had very lumpy quarters and that usually been driven by our North American sales. So it just happened to coincide this year that we knew that we have a lot of shipments taking place in the fourth quarter primarily in the U.S.

And I checked this morning with our team and defense systems and those shipments are on track. Jim Ricchiuti - Needham & Company: Okay. And you discussed the evaluation – evaluating some of the underperforming businesses. I assume that the process that's been in ongoing. But, how should we think about decisions maybe over the next year in terms of whether you decide to take further actions or not. I mean how far along are you in this process and how comfortable are you that you are going to see the improvement in some of these underperforming businesses?

In defense systems, one of the underperforming business is in the cargo tracking business. We had anticipated being able to use that product with the draw down from Afghanistan and it didn't pan out for us. So we are in the process of minimizing our costs in that business and will eliminate the loss going forward. We will continue that thought-process across all of our businesses, sub-businesses and be aggressive and diligent to shut businesses down that aren't generating positive cash flow. Jim Ricchiuti - Needham & Company: And one final question, if I may, if you could just talk about a little about the pipeline of new business in transportation obviously, some good news in London, but maybe just in broad terms how you see the pipeline for new business out there, new contracts?

So the pipeline is larger than it ever has been as we have chatted in calls and recent past, we kind of moved that business from an automated fare collection business to this idea of next city which has to do with providing situational awareness to people in cities to make it convenient. This change and expansion has doubled the size of the markets that we can look at. We recently as you know did an acquisition of ITMS that's part of that strategy. So there are a plenty of things to bid around the world. And we expect some modest growth going forward.

And just on that point, the ITMS business historically has been very focused in the U.K. with a little bit of exposure in Australia with no penetration into North America. So that's an area that we are very focused on to see if we can grow. Jim Ricchiuti - Needham & Company: Okay. Thanks a lot.

Thank you. Our next question comes from Josephine Millward with Benchmark Company. Please state your question. Josephine Millward – Benchmark Company: Hi, guys.

How are you Josephine?

Hi, Josephine.

I'm doing well. How are you Brad, Jay?

Doing well, thank you.

Can you, Brad – can you talk to us about the U.K. recompete, congratulations by the way. What is roughly your annual run rate and how do you see this contracts growing over the next ten years going forward?

You are speaking about the London contract?

Yes.

We are doing about $100 million U.S. per year on that contract, the margins in recent days have been very, very good. I would expect that to continue as you know having reviewed the company for some period of time, there are – there is always changes there and we expect that going forward on this contract as well.

Okay. What about – can you talk – can you extend on investment you are making in data link and cyber. You're seen very excited about the future of ISR, are we gaining traction on data link? When can we see it start to contribute?

So we are making investments Internet technology, we are making investments in, making the data links smaller. We are making investments in adding SatCom capability as well. And as I noted in my remarks, we also have hired Mike Twyman who has a successful track record of growing such businesses. We are – the pipeline is rich and we have been winning some. I would expect next year, you will see positive results in that area.

Great. Thank you.

Thank you. (Operator Instructions) Thank you. Our next question comes from Andrew Storm with Cortina.

Hi, guys. Thank you. I'm curious just to make sure I understand this from reading the press release, it sounds like between Chicago and Vancouver, year-to-date you lost $42.5 million in operating income is that correct?

That is correct. Yes.

Okay.

Now in the case of Chicago, we are going in, we knew we are going to have to write-off services cost before – within the revenue services. So in that respect it's the timing of when all that took place. In the case of Vancouver, we definitely had some issues where the schedule swept in. So we have to provide close to $18 million of additional cost on that program.

Okay. And so can you – for Chicago is now generating revenue, you are billing so I look forward to next year, I assume that project will be profitable.

That is correct.

Okay. And that starting until next quarter that moves to profitability or is it more of a ramp?

I would say we will see a better impact over time because it's really a combination of some growth on the program and if they get through we will call the burn in phase which is – they went fully operational here in the fourth quarter.

Okay. Got it. And so the Vancouver then you said is in the spring?

Vancouver will complete some time next year, the design built phase and then it will go into services. So at this point – we awfully provided all the cost we need to do to get through the design built phase.

We had a technical issue on that contract which we believe we have solved and we are validating with the customers we speak.

Okay. That's helpful. So if you can remind me – if I remember correctly I think Chicago, the $45 million a year in the variable cost could be $45 million towards the end. So looking into next year, then should be, I don't know $50 million in Vancouver, and when gets running it should be $25 million a year is that…

No. Chicago won't be about – on just the Chicago contract it's around $45 million a year plus we've also won pace and then there are some other fall on works. So therefore the magnitude it's in the low 50s.

Okay. So combined cost $75 million give or take that a reasonable range?

Well, Vancouver once we complete the design built phase and it's just services and that's going to be down -- I think down a low $10 million to $15 million per year range on just the services side.

Okay. Got you. What I'm trying to understand is effectively those two contracts you convert to earnings something in the teen operating income, I would assume combined from this year rate $42.5 million loss, so it's mid-50 million swing in operating income from this year to next or year after?

Yes. We don't typically disclose what the margins might be at the contract level, but you are right in that. We shouldn't have the operating losses going forward.

Okay. I was just trying to understand the magnitude of the earnings hit that you have taken this year versus what a normalized bubble is? So are they at a reasonable range, just what you are saying?

Your first comment what's it in the – it's been 40 odd million dollars is correct.

Okay. That's very helpful. Thank you. With Littoral, that's a pretty large contract. Are you guys up and running on that or is that just still getting ramped?

We are up and running. We are providing immersive course wear to that customer. I would expect that contract volume to expect over time.

Okay. And is there -- are you in a situation where because it's a newer program that you are incurring cost and excessive revenue early on or is that profitable the whole way through?

It appears to be profitable all the way through. I would expect good results. I think the only challenge that we have seen on that particular program has just been making sure that their funding is there. I mean the customer is growing out to ships and so they need to have the training capability. But, anything in Washington these days it's a flight ticket – make sure your funding state is in place.

Might be so, I'm just trying to again get a magnitude of sort of what earnings are going forward. And so this is a small level now or it's pretty much at a reasonable level what it should be going forward?

I think it will expand slightly, but Jay's comment, we work very diligently to ensure we keep our program sold.

That's so helpful. Thank you.

Thank you, Andrew.

Thank you. There are no further questions at this time, I will turn the call back over to Brad Feldmann to conclude. Thank you.

Thank you all for participating in the call today. As always we appreciate your continued support and interest in our company. Thanks very much.