UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES ACT OF 1934
For the Fiscal Year Ended December 31, 2016
1-8931
Commission File Number
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
CUBIC APPLICATIONS, INC. 401(k) RETIREMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
CUBIC CORPORATION
9333 Balboa Avenue
San Diego, California 92123
Telephone (858) 277-6780
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Financial Statements and Supplemental Schedule
December 31, 2016 and 2015
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Financial Statements: |
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4-14 | |
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Schedule H, Part IV, Line 4i — Schedule of Assets (Held at End of Year) | 16 |
* Other schedules required by Section 2520.103-10 of the United States Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable.
Report of Independent Registered Public Accounting Firm
Plan Administrator and Participants of the
Cubic Applications, Inc. 401(k) Retirement Plan:
We have audited the accompanying statements of net assets available for benefits of the Cubic Applications, Inc. 401(k) Retirement Plan (the “Plan”) as of December 31, 2016 and 2015, and the related statement of changes in net assets available for benefits for the year ended December 31, 2016. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2016 and 2015, and the changes in net assets available for benefits for the year ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.
The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2016, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but includes supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we have evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ MAYER HOFFMAN MCCANN P.C. |
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San Diego, California |
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June 19, 2017 |
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CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Statements of Net Assets Available for Benefits
December 31, 2016 and 2015
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| 2016 |
| 2015 |
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Assets: |
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Investments, at fair value: |
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Mutual funds |
| $ | 165,896,813 |
| $ | 161,327,557 |
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Common collective trust |
| 17,840,498 |
| 18,355,167 |
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Cubic Corporation common stock |
| 1,658,593 |
| 1,712,921 |
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Self-directed brokerage account |
| 360,920 |
| 267,530 |
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| 185,756,824 |
| 181,663,175 |
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Investments, at contract value |
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Guaranteed interest account |
| 19,629,426 |
| 18,492,969 |
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Total investments |
| 205,386,250 |
| 200,156,144 |
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Receivables: |
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Employer’s contributions |
| 236,124 |
| 303,467 |
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Participants’ contributions |
| 334,944 |
| 313,271 |
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Notes receivable from participants |
| 2,735,874 |
| 2,856,518 |
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Total receivables |
| 3,306,942 |
| 3,473,256 |
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Total assets |
| 208,693,192 |
| 203,629,400 |
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Liabilities: |
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Excess contributions payable |
| 385,566 |
| 136,630 |
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Total liabilities |
| 385,566 |
| 136,630 |
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Net assets available for benefits |
| $ | 208,307,626 |
| $ | 203,492,770 |
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See the accompanying notes to financial statements.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2016
Additions to net assets attributed to: |
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Investment income: |
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Interest and dividends |
| $ | 2,566,581 |
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Interest on guaranteed interest account |
| 548,079 |
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Net change of investments |
| 8,661,373 |
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Total investment income |
| 11,776,033 |
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Interest income on notes receivable from participants |
| 113,420 |
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Contributions: |
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Participants’ |
| 12,149,795 |
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Employer’s |
| 6,770,287 |
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Participants’ rollovers from other qualified plans |
| 1,480,759 |
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Total contributions |
| 20,400,841 |
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Total additions |
| 32,290,294 |
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Deductions from net assets attributed to: |
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Benefits paid to participants |
| 27,354,950 |
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Administrative expenses |
| 120,488 |
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Total deductions |
| 27,475,438 |
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Net increase |
| 4,814,856 |
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Net assets available for benefits: |
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Beginning of year |
| 203,492,770 |
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End of year |
| $ | 208,307,626 |
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See the accompanying notes to financial statements.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
December 31, 2016 and 2015
(1) Plan Description
The following description of the Cubic Applications, Inc. 401(k) Retirement Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan.
(a) General
The Plan, which was effective April 8, 1994 and amended from time to time thereafter, is a defined contribution plan covering eligible full-time, part-time and temporary employees of Cubic Corporation and affiliated companies that have adopted participation in the Plan (collectively, the “Company”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
(b) Contributions
There are certain differences in contribution options and certain other matters between participating employees of Cubic Global Defense, Inc. (“Sub Plan 1”), participating employees of Abraxas Corporation, Abraxas Dauntless, Inc., and NEK Services, Inc. (“Sub Plan 2”), and participating employees of Cubic Worldwide Technical Services (“Sub Plan 3”). All three Sub Plans have a 3% automatic enrollment feature.
Sub Plan 1 participants may voluntarily contribute to the Plan up to 30% of pre-tax and after-tax annual compensation (up to the Internal Revenue Service (“IRS”) maximum allowable amount), as defined by the Plan, to the Plan. These participants may also rollover amounts representing distributions from other eligible retirement plans. Sub Plan 1 participants direct their contributions and the Company’s contributions in 1% increments in the Guaranteed Interest Account, mutual funds, Stable Value Fund, and the Company’s common stock. They may also transfer up to 99% of their account balance to a Self-Directed Brokerage Account.
For Sub Plan 1 participants, the matching Company contribution is 100% of the first 5% of base compensation that a participant contributes to the Plan. For Sub Plan 1 participants employed under the Technical Services rate center, the matching Company contribution is 50% of the first 8% of base compensation that a participant contributes to the Plan. The Plan also provides for a Company discretionary contribution, at the option of the Cubic Corporation Board of Directors, in an amount to be determined annually for these participants. Discretionary contributions to the Plan for Sub Plan 1 participants are allocated based on the ratio of each participant’s compensation to total compensation of all eligible participants. Sub Plan 1 participants must be employed by Cubic Applications, Inc. as of the Plan’s year end, have at least one year of service and have earned at least 1,000 hours of service during the Plan year to be eligible for any discretionary contributions.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(1) Plan Description, Continued
(b) Contributions, continued
Sub Plan 2 participants can voluntarily contribute up to 90% of their compensation as pre-tax or after-tax contributions. However, their combined pre-tax and after-tax contributions together cannot exceed 90% of their annual compensation (not to exceed the IRS maximum allowable amount), as defined by the Plan. These participants may also rollover amounts representing distributions from other eligible retirement plans. Sub Plan 2 participants direct their contributions and the Company’s contributions in 1% increments in the Guaranteed Interest Account, mutual funds, Stable Value Fund, and the Company’s common stock. They may also transfer up to 99% of their account balance to a Self-Directed Brokerage Account.
The Company matching for eligible Sub Plan 2 participants, other than as noted below, is 100% of the participant’s elective contribution made during the Plan year, up to 5% of the participant’s annual compensation. The Company matching for eligible NEK Services, Inc. employees is 50% of the participant’s elective contribution made during the Plan year, up to 6% of the participant’s annual compensation. In addition, the Sub Plan 2 provides for a Company discretionary contribution, at the option of the Cubic Corporation Board of Directors. Discretionary contributions to the Plan for Sub Plan 2 participants are allocated to all eligible participants based on the ratio of each eligible participant’s compensation to total compensation of all eligible participants.
Sub Plan 3 participants may voluntarily contribute to the Plan up to 30% of pre-tax and after-tax annual compensation (up to the IRS maximum allowable amount), as defined by the Plan, to the Plan. These participants may also rollover amounts representing distributions from other eligible retirement plans. Sub Plan 3 participants direct their contributions and the Company’s contributions in 1% increments in the Guaranteed Interest Account, mutual funds, Stable Value Fund, and the Company’s common stock. They may also transfer up to 99% of their account balance to a Self-Directed Brokerage Account.
The Company matching for eligible Sub Plan 3 participants is 100% of the first 4% of base compensation that a participant contributes to the Plan. The Plan also provides for an employer Service Contract Act (“SCA”) contribution to be made by the Company in accordance with certain SCA agreements and pursuant to the McNamara-O’Hara Service Contract Act of 1965. The employer SCA contributions are allocated to participants who are entitled to benefits under the SCA and have not otherwise been furnished such benefits or received a cash equivalent payment that would meet the requirements of the SCA. The amount of the employer SCA contributions shall be equal to the amount determined under the SCA. A participant is 100% vested at all times in the amount held in his or her employer SCA contributions account.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(1) Plan Description, Continued
(b) Contributions, continued
All Plan participants may change their investment options daily. All contributions are held in a trust and invested by the Plan’s custodian in accordance with the options elected by the participants (i.e. all investments are participant directed). The maximum allowable calendar-year combined pre-tax and Roth after-tax voluntary contribution, as determined by the IRS, was $18,000 for 2016 and 2015.
(c) Vesting
Sub Plan 1, Sub Plan 2, and Sub Plan 3 employee contributions, rollover contributions, Company matching, SCA, and discretionary contributions are immediately 100% vested.
(d) Participants’ Accounts
Each participant’s account is credited with the participant’s contributions, the Company’s matching contributions, his or her pro rata share of the Company’s discretionary contributions (if any), rollovers and transfers from other plans and allocations of Plan earnings or losses including market value adjustments on Plan investments. Allocations are based on participant earnings or account balances, as defined in the Plan agreement. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account. At December 31, 2016 and 2015, forfeited nonvested accounts total $26,661 and $230,128, respectively. These accounts will be used to reduce future employer contributions. During 2016 and 2015, forfeitures used to offset employer contributions and expenses amounted to $0 and $181,104, respectively.
(e) Distribution of Participants’ Accounts
The entire vested balance of a participant’s account may be distributed at the date of the participant’s retirement, termination of service, death, or permanent and total disability. Participants still employed are eligible for distributions of their rollover contributions each Plan year and up to 65% of their vested portion of the Company discretionary contributions once every five years. Participants, including terminated participants, may request a withdrawal of their accounts, excluding their matching contributions, in the case of financial hardship. Sub Plan 2 participants who have reached the age of 40 may also withdraw up to 100% of their Company discretionary contributions. The normal retirement age, as defined by the Plan, is the later date at which participants reach the age of 65 or have reached five years of service. If a participant terminates employment with
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(1) Plan Description, Continued
(e) Distribution of Participants’ Accounts, continued
the Company before retirement, the participant will receive either a lump sum payment of their vested account balance or if the vested account exceeds $1,000, the participant may elect any distribution date up to age 70½.
(f) Notes Receivable from Participants
Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. A participant may not have more than two notes outstanding at any time. The notes, which are collateralized by the balance in the participant’s account, bear interest at prime plus 1%, and the interest rate on notes that were outstanding at December 31, 2016 ranged from 4.25% to 9.25%. Interest rates for new notes are determined on the first business day of each calendar quarter. These rates are effective for all new loans initiated on or after the first business day of the following quarter, and will remain in effect until a new rate is established.
Principal and interest are paid ratably through scheduled payroll deductions. Participant notes are measured at their unpaid principal balance plus accrued but unpaid interest. All notes are repaid within a period of five years and outstanding notes at December 31, 2016 have maturity dates ranging from January 2017 through January 2022. Defaulted participant notes are reclassified as distributions based upon the terms of the Plan agreement.
(2) Summary of Significant Accounting Policies
(a) Basis of Accounting
The accompanying financial statements are prepared under the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.
(b) Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(2) Summary of Significant Accounting Policies, Continued
(c) Investment Valuation and Income Recognition
The Plan’s mutual funds and the funds held in the Self-Directed Brokerage Account are stated at fair value, the Stable Value Fund is stated at the net asset value of units held as determined by The Prudential Insurance Company of America (the “Custodian”). The shares of Cubic Corporation common stock and the shares of the underlying securities in the Self-Directed Brokerage Account are valued at quoted market prices at year-end, as reported by the Custodian.
Investment contracts held in the Guaranteed Interest Account are valued at fair value which equals contract value, representing contributions, reinvested income, less any withdrawals, plus accrued interest. Contract value represents the estimated proceeds that would have been paid had the contract been discontinued as of December 31, 2016. When establishing interest crediting rates for this investment, the Custodian considers many factors, including external factors such as current economic and market conditions, the general interest rate environment and internal factors such as the expected and actual experience of a reference portfolio within the issuer’s general account. While these rates are established without the use of a specific formula, the crediting rate can never be less than 3.00%. The investment contracts are fully benefit- responsive because participants may direct withdrawals and transfers at contract value.
There are no reserves against contract value for credit risk of the contract issuer or otherwise. Participants may not transfer between the Guaranteed Interest Account and the Stable Value Fund without first investing in another investment option of the Plan for a period of 90 days.
Investments held in the Stable Value Fund are valued at the net asset value of units held in the common collective trust, as determined by the Custodian, as a practical expedient to estimate fair value. Participants may direct withdrawals and transfers daily at contract value. A 12 month redemption period and fair value calculation would only apply to a Plan Sponsor initiated withdrawal.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(2) Summary of Significant Accounting Policies, Continued
(c) Investment Valuation and Income Recognition, continued
Interest income is recognized when earned. Dividend income is recorded on the ex-dividend date. Realized gains and losses on investments are recognized upon the sale of the related investments and unrealized appreciation or depreciation is recognized at period end when the carrying values of the related investments are adjusted to their estimated fair market value. Purchase and sales of securities are reflected on a trade-date basis.
Earnings on investments are allocated on a pro rata basis to individual participant accounts based on the type of investment and the ratio of each participant’s individual account balance to the aggregate of participant account balances. The portion of interest included in each note payment made by a participant is recognized as interest income in the participant’s individual account.
(d) Net Change in Fair Value of Investments
The Plan presents in the statement of changes in net assets available for benefits the net change in the fair value of its investments, which consists of the realized gains and losses and the net unrealized gain (loss) on those investments.
(e) Fair Value Measurements
The valuation techniques required to determine fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. The two types of inputs create the following fair value hierarchy:
Level 1 — Valuation is based upon unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 — Valuation is based upon other significant observable inputs (including quoted prices for similar assets or liabilities in active markets, identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, etc.).
Level 3 — Valuation is based upon significant unobservable inputs. These inputs reflect the reporting entity’s own assumptions about how market participants would price the asset or liability, including assumptions about risk in determining the fair value of the asset or liability.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(2) Summary of Significant Accounting Policies, Continued
(e) Fair Value Measurements, continued
The inputs or methodology used by valuing securities are not necessarily an indication of risk associated with investing in those securities.
The following is a description of the valuation methodologies used for investments measured at fair value. There have been no changes in the methodologies used at December 31, 2016 and 2015. Mutual funds, funds held in the Self-Directed Brokerage Account and Cubic Corporation common stock are valued at quoted prices for identical assets in active markets. The Stable Value Fund is measured at NAV.
The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following is a summary of investments classified in accordance with the fair value hierarchy:
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| Assets at Fair Value as of December 31, 2016 |
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| Level 1 |
| Level 2 |
| Level 3 |
| Total |
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Mutual funds |
| $ | 165,896,813 |
| $ | — |
| $ | — |
| $ | 165,896,813 |
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Cubic Corporation common stock |
| 1,658,593 |
| — |
| — |
| 1,658,593 |
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Self Directed Brokerage Account |
| 360,920 |
| — |
| — |
| 360,920 |
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Total investments in the the fair value hierarchy |
| $ | 167,916,326 |
| $ | — |
| $ | — |
| $ | 167,916,326 |
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Common collective trust measured at NAV* |
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| $ | 17,840,498 |
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Total Investments Measured At Fair Value |
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| $ | 185,756,824 |
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* Certain investments that are measured at fair value using NAV (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the statements of net assets available for benefits.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(2) Summary of Significant Accounting Policies, Continued
(e) Fair Value Measurements, continued
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| Assets at Fair Value as of December 31, 2015 |
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| Level 1 |
| Level 2 |
| Level 3 |
| Total |
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Mutual funds |
| $ | 161,327,557 |
| $ | — |
| $ | — |
| $ | 161,327,557 |
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Cubic Corporation common stock |
| 1,712,921 |
| — |
| — |
| 1,712,921 |
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Self Directed Brokerage Account |
| 267,530 |
| — |
| — |
| 267,530 |
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Total investments in the the fair value hierarchy |
| $ | 163,308,008 |
| $ | — |
| $ | — |
| $ | 163,308,008 |
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Common collective trust measured at NAV* |
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| $ | 18,355,167 |
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Total Investments |
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| $ | 181,663,175 |
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* Certain investments that are measured at fair value using NAV (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the Statements of Net Assets Available for Benefits.
The following table summarizes investments measured at fair value based on net asset value (NAV) per share as of December 31, 2016 and 2015, respectively.
Investments in Entities that Calculate Net Asset Value per Share (or its Equivalent)
December 31, 2016 |
| Fair Value |
| Unfunded |
| Redemption |
| Redemption |
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Stable Value Fund |
| $ | 17,840,498 |
| n/a |
| Daily |
| *12 months |
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December 31, 2015 |
| Fair Value |
| Unfunded |
| Redemption |
| Redemption |
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Stable Value Fund |
| $ | 18,355,167 |
| n/a |
| Daily |
| *12 months |
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*The daily NAV reflects contract value and is fully benefit-responsive.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(2) Summary of Significant Accounting Policies, Continued
(f) Risk and Uncertainties
The Plan provides for various investment options in a Guaranteed Interest Account, mutual funds, a Stable Value Fund, Cubic Corporation common stock and a Self-Directed Brokerage Account option. These investment securities are exposed to various risks, such as interest rate, market, and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the values of the investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term, and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits.
(g) Concentration of Credit Risk
All of the Plan’s investments are financial instruments which potentially subject the Plan to concentrations of credit risk. Management believes that the Custodian maintains the Plan’s investments with high credit quality institutions and attempts to limit the credit exposure of any particular investment.
(h) Payments of Benefits
Benefit payments are recorded when paid.
(i) Administrative Expenses
The Company provides certain administrative and accounting services to the Plan at no cost. Most administrative expenses are paid directly by the Plan and include audit fees and certain legal fees. Administrative expenses incurred by the Plan include loan and Self-Directed Brokerage Account fees charged directly to the participants’ accounts and investment management fees which are netted against investment returns.
(j) Recent Accounting Pronouncements
In May 2015, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) No. 2015-07, “Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities that Calculate NAV per Share (or its Equivalent).” This ASU removes the requirement to make certain disclosures as well as categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per practical expedient.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(2) Summary of Significant Accounting Policies, Continued
(j) Recent Accounting Pronouncements, continued
The provisions of this ASU are effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Effective January 1, 2016, the Plan adopted this guidance and applied it retrospectively to all periods presented in the accompanying financial statements.
In July 2015, the FASB issued ASU No. 2015-12, “Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient.” Part I of this ASU eliminates the requirements to measure fully benefit-responsive investment contracts at fair value. Contract value will be the only required measure for fully benefit-responsive investment contracts. Part II of this ASU eliminates the requirements to disclose (i) individual investments that represent 5% or more of net assets available for benefits and (ii) the net appreciation or depreciation in fair value of investments by general type. In addition, the disclosure of information about fair value measurements shall be provided by general type of investment. Part III of this ASU is not applicable to the Plan. Effective January 1, 2016, the Plan adopted this guidance and applied it retrospectively to all periods presented in the accompanying financial statements.
(3) Tax Status
The Plan received a favorable tax determination letter from the IRS dated November 28, 2011, which states that the Plan qualifies under the applicable provisions of the Internal Revenue Code and that it is therefore exempt from federal income taxes. The Plan was amended since receiving this determination letter and in the opinion of the Company, the Plan continues to meet the IRS requirements and is currently operating such that its exempt status has been maintained. Accordingly, no provision for income taxes has been included in the accompanying financial statements.
Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2014.
CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN
Notes to Financial Statements
December 31, 2016 and 2015
(4) Plan Termination and Amendment
Although the Company has not expressed any intent to do so, the Company has the right, under the Plan agreement, to amend any or all provisions of the Plan as well as discontinue contributions and terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts, and the net assets of the Plan must be allocated among the participants and beneficiaries of the Plan in the order provided for by ERISA.
(5) Parties-In-Interest
Section 3(14) of ERISA defines a party-in-interest to include, among others, fiduciaries or employees in the Plan, any person who provides services to the Plan, or a Company whose employees are covered by the Plan. Certain Plan investments are managed by Prudential Insurance Company of America. Prudential Insurance Company of America is the Custodian as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. The Stable Value Fund is managed by Wells Fargo Bank Minnesota, N.A., and therefore these transactions qualify as party-in-interest transactions. An employee of Cubic Corporation serves as the trustee and Plan administrator of the Plan. In addition, Plan investments include investments in the Company’s common stock; therefore, these transactions also qualify as party-in-interest transactions. The Plan purchased and sold approximately 3,753 and 5,415 shares, respectively, of the Company’s common stock during the year ended December 31, 2016.
(6) Form 5500
There were no differences between the accompanying financial statements as of December 31, 2016 and 2015 and the financial information reported on the Form 5500.
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| CUBIC APPLICATIONS, INC. 401(K) RETIREMENT PLAN |
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EIN # 95-1678055 |
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Plan # 005 |
| Schedule H, line 4i — Schedule of Assets (Held at End of Year) |
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| December 31, 2016 |
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| (b) |
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| (e) |
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| Identity of issue, borrower, |
| (c) |
| (d) |
| Current |
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(a) |
| lessor, or similar party |
| Description of investment |
| Cost ** |
| value |
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| Vanguard Wellington Fund |
| Mutual Fund |
| $ | — |
| $ | 30,090,134 |
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| American Europacific Growth R5 |
| Mutual Fund |
| — |
| 21,700,169 |
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* |
| Prudential Insurance Company of America |
| Guaranteed Interest Fund |
| — |
| 19,629,426 |
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* |
| Wells Fargo Bank Minnesota, N.A. |
| Common Collective Trust Account |
| — |
| 17,840,498 |
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* |
| Prudential Mutual Funds |
| Mutual Fund |
| — |
| 15,266,682 |
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| Vanguard GR Index Signal |
| Mutual Fund |
| — |
| 13,611,233 |
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| Metwest TTL Return Bond CL |
| Mutual Fund |
| — |
| 12,799,308 |
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| T. Rowe Price |
| Mutual Fund |
| — |
| 10,544,607 |
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| American Beac LG Cap Val Inst |
| Mutual Fund |
| — |
| 9,862,661 |
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| Vanguard Institutional Index |
| Mutual Fund |
| — |
| 9,272,940 |
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| Goldman Sachs Mid Cap Ins |
| Mutual Fund |
| — |
| 7,419,579 |
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| JPMorgan US Equity Select |
| Mutual Fund |
| — |
| 5,717,214 |
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| Vanguard Small Cap Index |
| Mutual Fund |
| — |
| 4,928,641 |
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| Vanguard Mid Cap Ind Fund |
| Mutual Fund |
| — |
| 4,425,105 |
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| American Century Gov’t Bond Investment |
| Mutual Fund |
| — |
| 3,443,863 |
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| Thornburg Core GR 1 |
| Mutual Fund |
| — |
| 3,419,154 |
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* |
| Prudential Mutual Funds |
| Mutual Fund |
| — |
| 2,932,792 |
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| Vanguard Value Institutional CL SH |
| Mutual Fund |
| — |
| 2,599,956 |
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| Vanguard Funds |
| Mutual Funds |
| — |
| 1,949,652 |
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| ClearBridge Funds |
| Mutual Funds |
| — |
| 1,782,848 |
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* |
| Cubic Stock |
| Equity Securities |
| — |
| 1,658,593 |
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| Templeton Funds |
| Mutual Fund |
| — |
| 1,239,485 |
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| Royce Total Return Fund |
| Mutual Fund |
| — |
| 1,104,261 |
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| Vanguard Inflation Protected Sec |
| Mutual Fund |
| — |
| 1,090,449 |
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| Dodge and Cox |
| Mutual Funds |
| — |
| 413,105 |
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| Self Directed Brokerage |
| Mutual Funds |
| — |
| 360,920 |
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| Dimensional Fund Advisors |
| Mutual Funds |
| — |
| 282,975 |
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* |
| Notes receivable from participants |
| Various maturities (Interest rates from 4.25% - 9.25%) |
| — |
| 2,735,874 |
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| $ | — |
| $ | 208,122,124 |
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* Parties-in-interest
** Historical cost is not required as all investments are participant directed.
B. Exhibit List.
Exhibit 23.1 Consent of Mayer Hoffman McCann P.C.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Cubic Applications, Inc. 401(k) Retirement Plan has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
| Cubic Applications, Inc. 401(k) Retirement Plan | |
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Date: June 19, 2017 | By: | /s/ John D. Thomas |
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| John D. Thomas | |
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| Executive Vice President and Chief Financial Officer | |
| and Plan Administrative Committee Member | |