Cubic Corp. (NYSE: CUB) reported Q1 EPS of ($0.22), which may not compare with the analyst estimate of $0.43. Revenue for the quarter came in at $338.8 million versus the consensus estimate of $321.51 million.

Audit Committee Investigation

The audit committee of the board of directors has conducted an investigation with the assistance of Latham & Watkins LLP and Deloitte FAS LLP to review the company’s controls and procedures in connection with programs that are accounted for under the percentage of completion method. Through the application of the company’s internal controls, management identified an issue which led to the investigation. As a result of the investigation, the audit committee and management of the company have together determined that, as of September 30, 2014, the total estimated costs of certain of our CGD Systems segment (formerly known as Cubic Defense Systems (CDS) segment) contracts were inappropriately reduced during its accounting close for the year ended September 30, 2014. The inappropriate reduction of the estimated costs to complete these contracts resulted in the overstatement of CGD Systems sales and operating income by approximately $750,000 for the fourth quarter and full year of fiscal 2014. This error, as well as the unrelated errors described in the following paragraph, are cumulatively and individually considered immaterial to the 2014 financial statements and are immaterial to the expected full year results for 2015 and had no effect on the trend of financial results. As such, these errors have been corrected in the financial statements for the quarter ended December 31, 2014.

Correction of Immaterial Errors

During the accounting close for our March 31, 2015 financial statements, management of the company identified certain errors in the September 30, 2014 financial statements including an overstatement of revenue recognition on one contract and the understatement of cost of sales on a small number of contracts. The cumulative impact of these errors resulted in an overstatement of the company’s operating income for the year ended September 30, 2014 of $1.6 million. These errors, as well as the unrelated errors described above related to the audit committee investigation, are cumulatively and individually considered immaterial to the 2014 financial statements and are immaterial to the expected full year results for 2015 and had no effect on the trend of financial results. As such, these errors have been corrected in the financial statements for the quarter ended December 31, 2014.

For earnings history and earnings-related data on Cubic Corp. (CUB) click here.