MSS operating income decreased 7 percent to $4.2 million in the first quarter this year from $4.5 million in the first quarter of last year. NEK, a Special Operations Forces Training company we acquired in December 2012, had an operating loss of $0.5 million in the first quarter of fiscal 2013 primarily due to the incurrence of $0.4 million of acquisition-related costs.
Defense Systems
Cubic Defense Systems (CDS) is focused on two primary lines of business: training systems and secure communications. Training systems sales increased 1 percent in the first quarter this year to $65.6 million while operating income decreased 48 percent for the quarter from $4.8 million last year to $2.5 million this year. Although total training systems sales increased, the sales of higher margin small arms training systems and air combat training systems to a customer in the Far East decreased, which decreased operating income.
Secure communications sales decreased 23 percent in the first quarter this year to $11.6 million compared to $15.0 million in the first quarter of last year. Secure communications operating income decreased to $0.3 million in the first quarter this year from $3.2 million in the first quarter of last year. Decreased profitability on lower data link sales, including the impact of a $1.2 million cost increase on a U.S. government contract, contributed to the decrease in operating income.
Segment Results
The following table presents sales, operating profits, and depreciation and amortization for each of the three business segments, in millions.
Three Months Ended December 31, 2012 2011 --------- ---------Sales: Transportation Systems $ 118.6 $ 125.8 Mission Support Services 113.4 107.5 Defense Systems 81.2 83.3 Other 0.2 0.2 --------- ---------Total sales $ 313.4 $ 316.8 ========= =========Operating income (loss): Transportation Systems $ 13.2 $ 17.9 Mission Support Services 4.2 4.5 Defense Systems 1.2 6.0 Unallocated corporate expenses and other (0.4) (0.6) --------- ---------Total operating income $ 18.2 $ 27.8 ========= =========Depreciation and amortization: Transportation Systems $ 0.5 $ 0.9 Mission Support Services 3.1 3.5 Defense Systems 0.8 1.2 Other 0.3 0.2 --------- ---------Total depreciation and amortization $ 4.7 $ 5.8 ========= =========
