Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2016 | Nov. 04, 2016 | Mar. 31, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | CUBIC CORP /DE/ | ||
Entity Central Index Key | 26,076 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 994,278,286 | ||
Entity Common Stock, Shares Outstanding | 27,085,927 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net sales: | |||
Products | $ 661,904 | $ 607,226 | $ 583,937 |
Services | 799,761 | 823,819 | 814,415 |
Total net sales | 1,461,665 | 1,431,045 | 1,398,352 |
Costs and expenses: | |||
Products | 473,444 | 451,295 | 424,682 |
Services | 643,462 | 640,031 | 657,853 |
Selling, general and administrative expenses | 269,593 | 212,518 | 181,672 |
Research and development | 31,976 | 17,992 | 17,959 |
Amortization of purchased intangibles | 34,120 | 27,550 | 22,602 |
Restructuring costs | 1,852 | 6,272 | 1,094 |
Total costs and expenses | 1,454,447 | 1,355,658 | 1,305,862 |
Operating income (loss) | 7,218 | 75,387 | 92,490 |
Other income (expense): | |||
Interest and dividend income | 1,476 | 1,809 | 1,396 |
Interest expense | (11,199) | (4,400) | (4,084) |
Pension settlement loss | (2,671) | ||
Other income (expense), net | (2,301) | (885) | (391) |
Income (loss) before income taxes | (7,477) | 71,911 | 89,411 |
Income tax expense (benefit) | (9,212) | 48,997 | 19,831 |
Net income | 1,735 | 22,914 | 69,580 |
Less noncontrolling interest in income of VIE | 29 | 89 | |
Net income attributable to Cubic | $ 1,735 | $ 22,885 | $ 69,491 |
Net income per share attributable to Cubic: | |||
Basic (in dollars per share) | $ 0.06 | $ 0.85 | $ 2.59 |
Diluted (in dollars per share) | $ 0.06 | $ 0.85 | $ 2.59 |
Weighted average shares used in per share calculations: | |||
Basic (in shares) | 26,976 | 26,872 | 26,787 |
Diluted (in shares) | 27,040 | 26,938 | 26,845 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | |||
Net income | $ 1,735 | $ 22,914 | $ 69,580 |
Other comprehensive income (loss): | |||
Adjustment to pension liability, net of tax | (19,584) | (15,791) | (1,085) |
Foreign currency translation | (47,872) | (31,430) | (2,017) |
Change in unrealized gains/losses from cash flow hedges: | |||
Change in fair value of cash flow hedges, net of tax | 464 | 1,574 | 748 |
Adjustment for net gains/losses realized and included in net income, net of tax | (989) | (817) | (215) |
Total change in unrealized gains/losses realized from cash flow hedges, net of tax | (525) | 757 | 533 |
Total other comprehensive loss | (67,981) | (46,464) | (2,569) |
Total comprehensive income (loss) | $ (66,246) | $ (23,550) | $ 67,011 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 197,127 | $ 218,476 |
Restricted cash | 75,648 | 69,245 |
Marketable securities | 12,996 | 30,533 |
Accounts receivable: | ||
Trade and other receivables | 15,488 | 12,812 |
Long-term contracts | 367,419 | 346,292 |
Allowance for doubtful accounts | (326) | (179) |
Accounts receivable, total | 382,581 | 358,925 |
Recoverable income taxes | 9,706 | 753 |
Inventories | 66,362 | 63,700 |
Deferred income taxes | 1,384 | |
Prepaid expenses and other current assets | 38,502 | 32,286 |
Total current assets | 782,922 | 775,302 |
Long-term contract receivables | 20,926 | 36,809 |
Long-term capitalized contract costs | 65,382 | 73,017 |
Property, plant and equipment, net | 96,316 | 74,690 |
Deferred income taxes | 2,194 | 11,443 |
Goodwill | 406,946 | 237,899 |
Purchased intangibles, net | 123,403 | 72,936 |
Other assets | 6,590 | 18,180 |
Total assets | 1,504,679 | 1,300,276 |
Current liabilities: | ||
Short-term borrowings | 240,000 | 60,000 |
Trade accounts payable | 81,172 | 47,170 |
Customer advances | 49,481 | 77,083 |
Accrued compensation | 73,619 | 51,065 |
Other current liabilities | 74,071 | 92,854 |
Income taxes payable | 1,450 | 4,675 |
Deferred income taxes | 13,404 | |
Current maturities of long-term debt | 450 | 525 |
Total current liabilities | 520,243 | 346,776 |
Long-term debt | 200,562 | 126,180 |
Accrued pension liability | 46,865 | 26,025 |
Deferred compensation | 10,643 | 9,913 |
Income taxes payable | 11,855 | 8,519 |
Deferred income taxes | 3,980 | 1,971 |
Other non-current liabilities | 20,635 | 24,604 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Preferred stock, no par value: Authorized--5,000 shares, Issued and outstanding--none | ||
Common stock, no par value: Authorized--50,000 shares, 35,937 issued and 26,992 outstanding at September 30, 2016, 35,828 issued and 26,883 outstanding at September 30, 2015 | 32,756 | 25,560 |
Retained earnings | 813,035 | 818,642 |
Accumulated other comprehensive loss | (119,817) | (51,836) |
Treasury stock at cost - 8,945 shares | (36,078) | (36,078) |
Total shareholders' equity | 689,896 | 756,288 |
Total liabilities and shareholders' equity | $ 1,504,679 | $ 1,300,276 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2016 | Sep. 30, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, Authorized shares | 5,000 | 5,000 |
Preferred stock, Issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $ 0 | $ 0 |
Common stock, Authorized shares | 50,000 | 50,000 |
Common stock, Issued shares | 35,937 | 35,828 |
Common stock, outstanding shares | 26,992 | 26,883 |
Treasury stock, shares | 8,945 | 8,945 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Operating Activities: | |||
Net income | $ 1,735 | $ 22,914 | $ 69,580 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 45,478 | 37,662 | 30,440 |
Share-based compensation expense | 8,762 | 8,325 | 5,625 |
Change in fair value of contingent consideration | 1,274 | 3,607 | |
Inventory write-down | 598 | ||
Deferred income taxes | (23,988) | 33,816 | 2,684 |
Net pension cost (benefit) | 1,102 | (3,224) | (1,626) |
Excess tax benefits from equity incentive plans | 3 | 33 | (310) |
Changes in operating assets and liabilities, net of effects from acquisitions: | |||
Accounts receivable | 4,409 | (2,230) | (4,300) |
Inventories | (62) | (21,669) | 20,590 |
Prepaid expenses and other current assets | 3,403 | (15,045) | (6,488) |
Long-term capitalized contract costs | 7,635 | 3,192 | (7,246) |
Accounts payable and other current liabilities | 19,874 | 25,599 | 6,505 |
Customer advances | (24,900) | (10,200) | 7,304 |
Income taxes | (5,519) | 8,847 | (9,768) |
Other items, net | 5,396 | (1,938) | 1,222 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 44,602 | 89,689 | 114,810 |
Investing Activities: | |||
Acquisition of businesses, net of cash acquired | (243,459) | (92,178) | (83,456) |
Purchases of marketable securities | (28,470) | (58,855) | (25,557) |
Proceeds from sales or maturities of marketable securities | 43,456 | 51,173 | 4,050 |
Purchases of property, plant and equipment | (32,093) | (22,202) | (16,620) |
Purchases of other assets | (2,993) | ||
NET CASH USED IN INVESTING ACTIVITIES | (260,566) | (125,055) | (121,583) |
Financing Activities: | |||
Proceeds from short-term borrowings | 288,900 | 111,300 | 38,000 |
Principal payments on short-term borrowings | (108,900) | (51,300) | (38,000) |
Proceeds from long-term borrowings | 75,000 | 25,000 | |
Principal payments on long-term debt | (494) | (537) | (573) |
Deferred financing fees | (3,647) | ||
Proceeds from issuance of common stock | 113 | ||
Purchase of common stock | (1,563) | (2,652) | (1,204) |
Dividends paid | (7,285) | (7,256) | (6,429) |
Excess tax benefits from equity incentive plans | (3) | (33) | 310 |
Contingent consideration payments related to acquisitions of businesses | (2,479) | (2,368) | |
Purchase of noncontrolling interest | (1,029) | ||
Net change in restricted cash | (6,403) | (189) | 325 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 233,126 | 73,304 | (9,826) |
Effect of exchange rates on cash | (38,511) | (10,950) | 4,195 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (21,349) | 26,988 | (12,404) |
Cash and cash equivalents at the beginning of the period | 218,476 | 191,488 | 203,892 |
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 197,127 | 218,476 | 191,488 |
GATR | |||
Operating Activities: | |||
Net income | (23,000) | ||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Change in fair value of contingent consideration | 700 | ||
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | 6,788 | ||
TeraLogics | |||
Operating Activities: | |||
Net income | (1,700) | ||
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | 4,998 | ||
H4 Global | |||
Operating Activities: | |||
Net income | 400 | ||
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | 952 | ||
DTECH | |||
Operating Activities: | |||
Net income | 2,100 | 500 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Change in fair value of contingent consideration | (500) | 3,600 | |
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | 11,808 | ||
Intific | |||
Operating Activities: | |||
Net income | $ (800) | $ (1,800) | |
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | $ 1,173 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Interest in VIE | Total |
Balance at Sep. 30, 2013 | $ 15,825 | $ 740,002 | $ (2,803) | $ (36,078) | $ 134 | |
Balance (in shares) at Sep. 30, 2013 | 26,736 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 69,491 | 89 | $ 69,491 | |||
Other comprehensive loss, net of tax | (2,569) | |||||
Stock issued under equity incentive plans, value | $ 113 | (5) | ||||
Stock issued under equity incentive plans, shares | 75 | |||||
Purchase of common stock, value | $ (1,204) | |||||
Purchase of common stock, shares | (22) | |||||
Stock- based compensation | $ 5,625 | |||||
Tax benefit (expense) from equity incentive plans | 310 | |||||
Cash dividends paid | (6,429) | |||||
Balance at Sep. 30, 2014 | $ 20,669 | 803,059 | (5,372) | (36,078) | 223 | |
Balance (in shares) at Sep. 30, 2014 | 26,789 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 22,885 | 29 | 22,885 | |||
Other comprehensive loss, net of tax | (46,464) | |||||
Stock issued under equity incentive plans, value | (46) | |||||
Stock issued under equity incentive plans, shares | 160 | |||||
Purchase of common stock, value | $ (2,652) | |||||
Purchase of common stock, shares | (66) | |||||
Stock- based compensation | $ 8,325 | |||||
Purchase of noncontrolling interest | (749) | (252) | ||||
Tax benefit (expense) from equity incentive plans | (33) | |||||
Cash dividends paid | (7,256) | |||||
Balance at Sep. 30, 2015 | $ 25,560 | 818,642 | (51,836) | (36,078) | $ 0 | |
Balance (in shares) at Sep. 30, 2015 | 26,883 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 1,735 | $ 1,735 | ||||
Other comprehensive loss, net of tax | (67,981) | |||||
Stock issued under equity incentive plans, value | (57) | |||||
Stock issued under equity incentive plans, shares | 152 | |||||
Purchase of common stock, value | $ (1,563) | |||||
Purchase of common stock, shares | (43) | |||||
Stock- based compensation | $ 8,762 | |||||
Tax benefit (expense) from equity incentive plans | (3) | |||||
Cash dividends paid | (7,285) | |||||
Balance at Sep. 30, 2016 | $ 32,756 | $ 813,035 | $ (119,817) | $ (36,078) | ||
Balance (in shares) at Sep. 30, 2016 | 26,992 |
CONSOLIDATED STATEMENTS OF CHA8
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||
Cash dividends paid, per share of common stock | $ 0.27 | $ 0.27 | $ 0.24 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of the Business: We design, develop and manufacture products which are mainly electronic in nature such as mass transit fare collection systems, air and ground combat training systems, and networked Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) products and systems. We provide services such as specialized military training exercises, including live, virtual and constructive training exercises and support, and we operate and maintain fare systems for mass transit customers. Our principal lines of business are transportation fare collection systems and services, defense services, and defense systems. Our principal customers for defense products and services are the U.S. and foreign governments. Our transportation fare collection systems and services are sold primarily to large local government agencies worldwide. In February 2015, we implemented a plan to restructure our defense services and defense systems businesses into a single business called Cubic Global Defense (CGD) to better align our defense business organizational structure with customer requirements, increase operational efficiencies and improve collaboration and innovation across the company. After this restructuring there is now a single, combined management structure for our legacy Cubic Defense Systems (CDS) and legacy Mission Support Services (MSS) segments. However, for segment financial reporting purposes, we continue to report the financial results of our defense systems and defense services segments separately. These two reporting segments have been renamed Cubic Global Defense Systems (CGD Systems) and Cubic Global Defense Services (CGD Services), respectively. CGD Systems includes Cubic Mission Solutions (CMS), a business division that includes our C4ISR subsidiaries and product offerings. There have been no significant changes in the operations that are included in each of these reporting segments as a result of the restructuring. Principles of Consolidation: The consolidated financial statements include the accounts of Cubic Corporation, subsidiaries we control, and variable interest entities (VIE’s) for which Cubic is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. Foreign Currency Transactions and Translation : Our reporting currency is the U.S. dollar. Assets and liabilities of foreign subsidiaries are translated at the spot rate in effect at the applicable reporting date, and our Consolidated Statements of Income are translated at the average exchange rates in effect during the applicable periods. The resulting unrealized cumulative translation adjustments are recorded as a component of other comprehensive income (loss) in our Consolidated Statements of Comprehensive Income (Loss). Cash flows from our operations in foreign countries are translated at the average rate for the applicable period. The effect of exchange rates on cash balances held in foreign currencies are separately reported in our Consolidated Statements of Cash Flows. Transactions denominated in currencies other than our own subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in our Consolidated Balance Sheets related to such transactions result in transaction gains and losses that are reflected in our Consolidated Statements of Income as either unrealized (based on the applicable period end translation) or realized (upon settlement of the transactions). Total transaction losses, which are related primarily to advances to foreign subsidiaries and advances between foreign subsidiaries amounted to $0.9 million, $3.2 million and $1.3 million in 2016, 2015 and 2014, respectively. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include the estimated total costs at completion of our long-term contracts, estimated loss contingencies, estimated self-insurance liabilities, estimated discounted future cash flows of our reporting units used for goodwill impairment testing and estimated future cash flows for our long-lived asset impairment testing, estimated discounted cash flows used for valuation of intangible assets in business combinations, and estimated rates of return and discount rates related to our defined benefit pension plans. Actual results could differ from our estimates. Cash Equivalents : We consider highly liquid investments with maturity of three months or less when purchased to be cash equivalents. Restricted Cash: Restricted cash represents cash that is restricted as to usage for legal or contractual reasons. Restricted cash is classified either as current or non-current, depending upon the date of the lapse of the respective restriction. Concentration of Credit Risk: We have established guidelines pursuant to which our cash and cash equivalents are diversified among various money market instruments and investment funds. These guidelines emphasize the preservation of capital by requiring minimum credit ratings assigned by established credit organizations. We achieve diversification by specifying maximum investments in each instrument type and issuer. The majority of these investments are not on deposit in federally insured accounts. Marketable Securities : Marketable securities consist of time deposits with banks. Marketable securities are classified and accounted for as available-for-sale. These investments are recorded at fair value in the accompanying Consolidated Balance Sheets and the change in fair value is recorded, net of taxes, as a component of other comprehensive income. There have been no significant realized or unrealized gains or losses on these marketable securities to date. Marketable securities have been classified as current assets in the accompanying Consolidated Balance Sheets based upon the nature of the securities and availability for use in current operations. Accounts Receivable: Receivables consist primarily of amounts due from U.S. and foreign governments for defense products and services and local government agencies for transportation systems. Due to the nature of our customers, we generally do not require collateral. We have limited exposure to credit risk as we have historically collected substantially all of our receivables from government agencies. We generally require no allowance for doubtful accounts for these customers. Inventories: We state our inventories at the lower of cost or market. We determine cost using the first-in, first-out (FIFO) method, which approximates current replacement cost. We value our work in process at the actual production and engineering costs incurred to date, including applicable overhead. For contracts with the U.S. government our work in process also includes general and administrative costs. Any inventoried costs in excess of estimated realizable value are immediately charged to cost of sales. We include qualifying contract costs allocable to units-of-delivery contracts as inventory. We also receive performance-based payments and progress payments associated with certain of these contracts based on the billing terms in the underlying contracts. Pursuant to contract provisions, agencies of the U.S. government and certain other customers have title to, or security interest in, inventories related to such contracts as a result of advances, performance-based payments, and progress payments. Contract advances, performance-based payments and progress payments received are recorded as an offset against the related inventory balances for contracts that that are accounted for on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. This determination is performed on a contract by contract basis. Any amount of payments received in excess of the cumulative amount of accounts receivable and inventoried costs for a contract is classified as customer advances, which is classified as a liability on the balance sheet. Long-term capitalized contract costs: Long-term capitalized contract costs include costs incurred on contracts to develop and manufacture transportation systems for customers for which revenue recognition does not begin until the customers begin operating the systems. These capitalized costs are being recognized in cost of sales based upon the ratio of revenue recorded during a period compared to the revenue expected to be recognized over the term of the contracts. Property, Plant and Equipment: We carry property, plant and equipment at cost. We provide depreciation in amounts sufficient to amortize the cost of the depreciable assets over their estimated useful lives. Generally, we use straight-line methods for depreciable real property over estimated useful lives or the term of the underlying lease, if shorter than the estimated useful lives, for leasehold improvements. We use accelerated methods (declining balance and sum-of-the-years-digits) for machinery and equipment over their estimated useful lives. Certain costs incurred in the development of internal-use software and software applications, including external direct costs of materials and services and applicable compensation costs of employees devoted to specific software development, are capitalized as computer software costs. Costs incurred outside of the application development stage are expensed as incurred. The amounts capitalized are included in property, plant and equipment and are amortized on a straight-line basis over the estimated useful life of the software, which ranges from three to seven years. No amortization expense is recorded until the software is ready for its intended use. Goodwill and Purchased Intangibles: We evaluate goodwill for potential impairment annually as of July 1, or when circumstances indicate that the carrying value may not be recoverable. The test is performed by comparing the fair value of each of our reporting units, which are consistent with our operating segments, to its carrying value, including recorded goodwill. If the carrying value exceeds the fair value, we measure impairment by comparing the implied fair value of goodwill to its carrying value, and any impairment determined would be recorded in the current period. Our purchased intangible assets are subject to amortization and we use a combination of straight-line and accelerated methods, based on the expected cash flows from the assets. Impairment of Long-Lived Assets: We generally evaluate the carrying values of long-lived assets other than goodwill for impairment only if events or changes in facts and circumstances indicate that carrying values may not be recoverable. If we determined there was any impairment, we would measure it by comparing the fair value of the related asset to its carrying value and record the difference in the current period. Fair value is generally determined by identifying estimated discounted cash flows to be generated by those assets. We have not recorded any impairment of long-lived assets for the years ended September 30, 2016, 2015 and 2014. Recognizing assets acquired and liabilities assumed in a business combination: Acquired assets and assumed liabilities are recognized in a business combination on the basis of their fair values at the date of acquisition. We assess fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, using a variety of methods including income approaches such as present value techniques or cost approaches such as the estimation of current selling prices and replacement values. Fair value of the assets acquired and liabilities assumed, including intangible assets, and contingent payments, are measured based on the assumptions and estimations with regards to the variable factors such as the amount and timing of future cash flows for the asset or liability being measured, appropriate risk-adjusted discount rates, nonperformance risk, or other factors that market participants would consider. Upon acquisition, we determine the estimated economic lives of the acquired intangible assets for amortization purposes, which are based on the underlying expected cash flows of such assets. Adjustments to inventory are based on the fair market value of inventory and amortized into income based on the period in which the underlying inventory is sold. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Actual results may vary from projected results and assumptions used in the fair value assessments. Customer Advances : We receive advances, performance-based payments and progress payments from customers that may exceed revenues recognized to date on certain contracts, including contracts with agencies of the U.S. government. We classify such advances, other than those reflected as a reduction of receivables or inventories, as current liabilities. Contingencies : We establish reserves for loss contingencies when, in the opinion of management, the likelihood of liability is probable and the extent of such liability is reasonably estimable. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel, our defenses and our experience in similar cases or proceedings as well as our assessment of matters, including settlements, involving other defendants in similar or related cases or proceedings. We may increase or decrease our legal reserves in the future, on a matter-by-matter basis, to account for developments in such matters. Derivative Financial Instruments: All derivatives are recorded at fair value, however, the classification of gains and losses resulting from changes in the fair values of derivatives are dependent on the intended use of the derivative and its resulting designation. If a derivative is designated as a fair value hedge, then a change in the fair value of the derivative is offset against the change in the fair value of the underlying hedged item and only the ineffective portion of the hedge, if any, is recognized in cost of sales. If a derivative is designated as a cash flow hedge, then the effective portion of a change in the fair value of the derivative is recognized as a component of accumulated other comprehensive income until the underlying hedged item is recognized in cost of sales, or the forecasted transaction is no longer probable of occurring. If a derivative does not qualify as a highly effective hedge, a change in fair value is immediately recognized in earnings. We formally document hedging relationships for all derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transactions. Defined Benefit Pension Plans: Some of our employees are covered by defined benefit pension plans. The net periodic cost of our plans is determined using several actuarial assumptions, the most significant of which are the discount rate and the long-term rate of return on plan assets. We recognize on a plan-by-plan basis the funded status of our defined benefit pension plans as either an asset or liability on our balance sheets, with a corresponding adjustment to accumulated other comprehensive income (loss), net of tax, in shareholders’ equity. The funded status is measured as the difference between the fair value of the plan assets and the benefit obligation of the plan. Comprehensive Income (Loss): Other comprehensive income (loss), which is comprised of unrealized gains and losses on foreign currency translation adjustments, unrealized gains and losses on cash flow hedges, net of tax, unrealized gains and losses on available-for-sale securities, net of tax and pension liability adjustments, net of tax is included in our Consolidated Statement of Comprehensive Income (Loss) as other comprehensive income (loss). Revenue Recognition: We generate revenue from the sale of products such as mass transit fare collection systems, air and ground combat training systems, and products with C4ISR capabilities. We also generate revenue from services we provide such as specialized military training exercises, including live, virtual and constructive training exercises and support, and we operate and maintain fare systems for mass transit customers. We classify sales as products or services in our Consolidated Statements of Income based on the attributes of the underlying contracts. We recognize sales and profits under our long-term fixed-price contracts which require a significant amount of development effort in relation to total contract value using the cost-to-cost percentage-of-completion method of accounting. We record sales and profits based on the ratio of contract costs incurred to estimated total contract costs at completion. Contract costs include material, labor and subcontracting costs, as well as an allocation of indirect costs. For contracts with the U.S. federal government, general and administrative costs are included in contract costs; however, for purposes of revenue measurement, general and administrative costs are not considered contract costs for any other customers. Costs are recognized as incurred for contracts accounted for under the cost-to-cost percentage-of-completion method. For certain other long-term, fixed price production contracts not requiring substantial development effort we use the units-of-delivery percentage-of-completion method as the basis to measure progress toward completing the contract and recognizing sales. The units-of delivery measure recognizes revenues as deliveries are made to the customer generally using unit sales values in accordance with the contract terms. Costs of sales are recorded as deliveries are made. We estimate profit as the difference between total estimated revenue and total estimated cost of a contract and recognize that profit over the life of the contract based on deliveries. For long-term fixed price contracts, we only include amounts representing contract change orders, claims or other items in the contract value when they can be reliably estimated and we consider realization probable. Changes in estimates of sales, costs and profits are recognized using the cumulative catch-up method of accounting. This method recognizes in the current period the cumulative effect of the changes on current and prior periods. A significant change in one or more of these estimates could have a material effect on our consolidated financial position or results of operations. We record sales under cost-reimbursement-type contracts as we incur the costs. The Federal Acquisition Regulations provide guidance on the types of costs that we will be reimbursed in establishing the contract price. We consider incentives or penalties and awards applicable to performance on contracts in estimating sales and profits, and record them when there is sufficient information to assess anticipated contract performance. We do not recognize incentive provisions that increase or decrease earnings based solely on a single significant event until the event occurs. We occasionally enter into contracts that include multiple deliverables such as the construction or upgrade of a system and subsequent services to operate and maintain the delivered system. For such contracts, arrangement consideration is allocated at the inception of the arrangement to all deliverables using the relative-selling-price method. Under the relative-selling-price method, the selling price for each deliverable is determined using vendor specific objective evidence (VSOE) of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists for a deliverable, which is typically the case for our contracts, the guidance requires us to determine the best estimate of the selling price, which is the price at which we would sell the deliverable if it were sold on a standalone basis. In estimating the selling price of the deliverable on a standalone basis, we consider our overall pricing models and objectives, including the factors we contemplate in negotiating our contracts with our customers. The pricing models and objectives that we use are generally based upon a cost-plus margin approach, with the estimated margin based in part on qualitative factors such as perceived customer pricing sensitivity and competitive pressures. Once the contract value is allocated to the separate deliverables under a multiple-element arrangement, revenue recognition guidance relevant to each contractual element is followed. For example, for the long-term construction portion of a contract we generally use the percentage-of completion method and for the services portion we generally recognize the service revenues on a straight-line basis over the contractual service period or based on measurable units of work performed or incentives earned. For certain of our multiple-element arrangements, the contract specifies that we will not be paid upon the delivery of certain units of accounting, but rather we will be paid when subsequent performance obligations are satisfied. Generally, in these cases the allocation of arrangement consideration to the up-front deliverables is limited, in some cases to zero, and revenue is reduced, in some cases to zero for the delivery of up-front units of accounting. In such situations, if the costs associated with the delivered item exceed the amount of allocable arrangement consideration, we defer the direct and incremental costs associated with the delivered item that are in excess of the allocated arrangement consideration as capitalized contract costs. We assess recoverability of these costs by comparing the recorded asset to the deferred revenue in excess of the transaction price allocated to the remaining deliverables in the arrangement. Capitalized contract costs are subsequently recognized in income in a manner that is consistent with revenue recognition pattern for the arrangement as a whole. If no pattern of revenue recognition can be reasonably predicted for the arrangement, the capitalized costs are amortized on a straight-line basis. Revenue under our service contracts with the U.S. government is recorded under the cost-to cost percentage-of-completion method. Award fees and incentives related to performance under these service contracts are accrued during the performance of the contract based on our historical experience and estimates of success with such awards. Revenue under contracts for services other than those with the U.S. government and those associated with design, development, or production activities is recognized either as services are performed or when a contractually required event has occurred, depending on the contract. For non-U.S. government service contracts that contain measurable units of work performed we recognize sales when the units of work are completed. Certain of our transportation systems service contracts contain service level or system usage incentives, for which we recognize revenues when the incentive award is fixed or determinable. These contract incentives are generally based upon monthly service levels or monthly performance and become fixed or determinable on a monthly basis. However, one of our legacy transportation systems service contracts that terminated in late fiscal 2015 contained annual system usage incentive which were based upon system usage compared to annual baseline amounts. For this contract the annual system usage incentives were not considered fixed or determinable until the end of the contract year for which the incentives are measured, which fell within the second quarter of our fiscal year. The follow-on contract to this transportation systems service contract did not include an annual system usage incentive. Revenue under non-U.S. government service contracts that do not contain measurable units of work performed, which is generally the case for our service contracts, is recognized on a straight-line basis over the contractual service period, unless evidence suggests that the revenue is earned, or obligations fulfilled, in a different manner. Costs incurred under these services contracts are expensed as incurred. We make provisions in the current period to fully recognize any anticipated losses on contracts, other than service contracts. If we receive cash on a contract prior to revenue recognition, and for contracts that are accounted for on a units-of-delivery method, that is in excess of inventoried costs, we classify it as a customer advance on the balance sheet. In addition, we are subject to audit of incurred costs related to many of our U.S. government contracts. These audits could produce different results than we have estimated for revenue recognized on our cost-based contracts with the U.S. government; however, our experience has been that our costs are acceptable to the government. Research and Development (R&D) : We record the cost of company sponsored R&D activities as the expenses are incurred. The cost of engineering and product development activities incurred in connection with the performance of work on our contracts is included in cost of sales as they are directly related to contract performance. Stock-Based Compensation: Restricted stock units awards (RSUs) are granted to eligible employees and directors and represent rights to receive shares of common stock at a future date if vesting occurs. RSUs granted to date have either time-based vesting or performance-based vesting. Compensation expense for all RSUs is measured at fair value at the grant date and recognized based upon the number of RSUs that ultimately vest. We determine the fair value of RSUs based on the closing market price of our common stock on the grant date. The grant date of the performance-based RSUs takes place when the grant is authorized and the specific achievement goals are communicated. Compensation expense for time-based vesting awards is recorded on a straight-line basis over the requisite service period, adjusted by estimated forfeiture rates. Vesting of performance-based RSUs is tied to achievement of specific company goals over the measurement period, which is generally a three-year period from the date of the grant. For purposes of measuring compensation expense for performance-based RSUs, at each reporting date we estimate the number of shares for which vesting is deemed probable based on management’s expectations regarding achievement of the relevant performance criteria, adjusted by estimated forfeiture rates. Compensation expense for the number of shares ultimately expected to vest is recognized on a straight-line basis over the requisite service period for the performance-based RSUs. The recognition of compensation expense associated with performance-based RSUs requires judgment in assessing the probability of meeting the performance goals. For performance-based RSUs, there may be significant expense recognition or reversal of recognized expense in periods in which there are changes in the assessed probability of meeting performance-based vesting criteria. Income Taxes : Our provision for income taxes includes federal, state, local and foreign income taxes. We provide deferred income taxes on temporary differences between assets and liabilities for financial reporting and tax purposes as measured by enacted tax rates we expect to apply when the temporary differences are settled or realized. Tax law and rate changes are reflected in income in the period such changes are enacted. We establish valuation allowances for deferred tax assets when the amount of future taxable income we expect is not likely to support the realization of the temporary differences. We evaluate the capital requirements of our foreign subsidiaries and determine the amount of excess capital, if any, that is available for distribution. We provide for U.S. taxes on the amount we determine to be excess capital available for distribution. U.S. taxes are not provided on amounts we consider to be permanently reinvested. We include interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision. Net Income Per Share: Basic net income per share (EPS) is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period, including vested RSUs. Diluted EPS is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period. Our common equivalent shares consist of dilutive RSUs. Dilutive RSUs are calculated based on the average share price for each fiscal period using the treasury stock method. For RSUs with performance-based vesting, no common equivalent shares are included in the computation of diluted EPS until the related performance criteria have been met. Basic and diluted EPS are computed as follows (amounts in thousands, except per share data): Three Months Ended Year Ended September 30, 2016 2015 2014 Net income attributable to Cubic $ $ $ Weighted average shares - basic Effect of dilutive securities Weighted average shares - diluted Net income per share attributable to Cubic, basic $ $ $ Effect of dilutive securities — — — Net income per share attributable to Cubic, diluted $ $ $ Anti-dilutive employee share-based awards — — — Recent Accounting Pronouncements: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance and will require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. ASU 2014-09 will be effective for us starting in the first quarter of fiscal 2019 as we have determined that we will not adopt ASU 2014-09 early. ASU 2014-09 allows for two methods of adoption: (a) “full retrospective” adoption, meaning the standard is applied to all periods presented, or (b) “modified retrospective” adoption, meaning the cumulative effect of applying ASU 2014-09 is recognized as an adjustment to the opening retained earnings balance in the year of adoption. We have not yet determined which method of adoption we will select. We are currently in the process of modeling the impact of the adoption of the new standard on certain of our long-term contracts in order to assess the expected impacts. As the new standard will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact revenue and cost recognition on a significant number of contracts across our business segments, in addition to our business processes and our information technology systems. As a result, our evaluation of the effect of the new standard will likely extend over several future periods. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern , which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and provide related footnote disclosures. ASU 2014-15 will be effective for us for the year ended September 30, 2017 and for interim reporting periods thereafter. Early adoption is permitted for financial statements that have not been previously issued, but we have not yet adopted this standard. This adoption is not expected to have a significant impact on our financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that all costs incurred to issue debt be presented in the balance sheet as a direct reduction from the carrying value of the debt, similar to the presentation of debt discounts. ASU 2015-03 is effective for us |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Sep. 30, 2016 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 2—ACQUISITIONS Each of the following acquisitions has been treated as a business combination for accounting purposes. The results of operations of each acquired business has been included in our consolidated financial statements since the respective date of each acquisition. GATR On February 2, 2016, we acquired all of the outstanding capital stock of GATR Technologies, LLC (GATR), a defense systems business based in Huntsville, Alabama which manufactures deployable satellite communication terminal solutions. GATR expands our satellite communications and networking applications technologies for our CGD Systems segment and expands our customer base. GATR’s sales totaled $42.9 million for the year ended September 30, 2016. GATR’s operating income since the acquisition date was significantly impacted by the GAAP accounting requirements regarding business combinations. Prior to our acquisition of GATR, GATR had a number of share-based payment awards in place to its employees. Due to the structure of certain of these share-based payment awards and the acceleration of vesting of certain of these awards in connection with our acquisition of GATR, we were required to recognize compensation expense, rather than purchase consideration, for the portion of our purchase price that we paid to the seller that was distributed to the recipients of these awards. Consequently, we recognized $18.1 million of compensation expense within general and administrative expenses as of September 30, 2016. Of this $18.1 million amount, $15.8 million is not expected to be deductible for tax purposes. In addition, for the year ended September 30, 2016, GATR incurred charges of $9.7 million for the amortization of intangibles and $0.5 million for acquisition costs. The GATR operating results for the year ended September 30, 2016 include a charge of $0.7 million for the increase in the fair value of contingent consideration. The GATR net loss after taxes for the year ended September 30, 2016 totaled $23.0 million, which included the impact of the charges above. The estimated fair value of consideration is $220.5 million, which is comprised of cash paid of $231.3 million plus the estimated acquisition-date fair value of contingent consideration of $2.5 million, plus additional held back consideration to be paid in the future estimated at $4.8 million, less the $18.1 million of cash paid to the seller recorded as expense described above. Under the purchase agreement, we will pay the sellers up to $7.5 million of contingent consideration if GATR meets certain gross profit goals for the 12 month periods ended February 28, 2017 and 2018. The contingent consideration liability will be re-measured to fair value at each reporting date until the contingencies are resolved and any changes in fair value are recognized in earnings. The acquisition of GATR is being paid for predominantly with the proceeds of the borrowings described below. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Backlog Technology Non-compete agreements Trade name Accounts receivable Inventory Income tax receivable Accounts payable and accrued expenses Deferred tax liabilities Net identifiable assets acquired Goodwill Net assets acquired $ The fair values of purchased intangibles were determined using the valuation methodology deemed to be the most appropriate for each type of asset being valued. The customer relationships and backlog valuation used the excess earnings approach, the non-compete agreements used the with-and-without approach, and the technology and trade name asset valuations used the relief from royalty approach. The intangible assets are being amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of nine years from the date of acquisition. The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of GATR with our existing CGD Systems business, including the synergies expected from combining its satellite communications and networking applications technologies with our C4ISR and other products in our CGD Systems portfolio. The goodwill also includes the value of the assembled workforce that became our employees following the close of the acquisition. The amount recorded as goodwill is allocated to our CGD Systems segment and is generally not expected to be deductible for tax purposes. The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of GATR for fiscal years 2017 through 2021 and thereafter is as follows (in millions): Year Ended September 30, 2017 $ 2018 2019 2020 2021 Thereafter TeraLogics On December 21, 2015, we acquired all of the assets of TeraLogics, LLC, an Ashburn, Virginia-based provider of real-time full motion video processing, exploitation and dissemination (PED) for the Department of Defense, the intelligence community and commercial customers. TeraLogics’ ability to develop real-time video analysis and delivery software for full motion video complements the existing tactical communications portfolio of our CGD Systems segment and expands our customer base. For the year ended September 30, 2016, TeraLogics had sales of $14.2 million and net loss after taxes of $1.7 million, including $3.0 million for the amortization of intangibles. In addition, during the quarter ended December 31, 2015 we incurred $0.9 million of transaction and acquisition expenses and a $1.3 million charge for compensation expense incurred related to amounts paid to TeraLogics employees upon the close of the acquisition. The estimated fair value of consideration is $33.9 million, which is comprised of cash paid of $28.9 million plus the estimated acquisition-date fair value of contingent consideration of $5.0 million. Under the purchase agreement, we will pay the sellers up to $9.0 million of contingent consideration. Of this amount, up to $6.0 million will be paid if TeraLogics meets certain revenue thresholds in fiscal years 2016, 2017 and 2018; and up to $3.0 million will be paid if specific contract extensions are exercised by TeraLogics customers through fiscal 2018. The contingent consideration liability will be re-measured to fair value at each reporting date until the contingencies are resolved and any changes in fair value are recognized in earnings. The TeraLogics operating results for the year ended September 30, 2016 also include a charge of $1.5 million for the increase in the fair value of contingent consideration. The acquisition of TeraLogics is being paid for with a combination of funds from our existing cash resources and borrowings on our revolving credit facility. The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Backlog Software Non compete agreements Accounts receivable Accounts payable and accrued expenses Other net assets acquired (liabilities assumed) Net identifiable assets acquired Goodwill Net assets acquired $ The fair values of purchased intangibles were determined using the valuation methodology deemed to be the most appropriate for each type of asset being valued. The customer relationships and backlog valuation used the excess earnings approach, the non-compete agreements used the with-and-without approach, and the software used the replacement cost new less cost decrements for obsolescence approach. The intangible assets are being amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of seven years from the date of acquisition. The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of TeraLogics with our existing CGD Systems business, including the synergies expected from combining TeraLogics real-time video capabilities with our existing tactical communications product portfolio. The goodwill also includes the value of the assembled workforce who became our employees following the close of the acquisition. The amount recorded as goodwill is allocated to our CGD Systems segment and is expected to be deductible for tax purposes. The estimated amortization expense amounts related to the intangible assets recorded in connection with our acquisition of TeraLogics for fiscal years 2017 through 2021 and thereafter is as follows (in millions): Year Ended September 30, 2017 $ 2018 2019 2020 2021 Thereafter H4 Global On November 4, 2015, we acquired all of the assets of H4 Global, a U.K.-based provider of simulation-based training solutions which complements our CGD Systems segment portfolio. For the year ended September 30, 2016, the amounts of H4 Global’s sales and net income after taxes included in our Consolidated Statement of Income were $2.2 million and $0.4 million, respectively, including $0.1 million of transaction costs to acquire H4 Global. The fair value of consideration is $1.9 million, which is comprised of cash paid of $0.9 million plus the fair value of contingent consideration of $1.0 million. Under the purchase agreement, we will pay the sellers up to $4.1 million of contingent consideration, based upon the value of contracts entered over the five-year period beginning on the acquisition date. The contingent consideration liability will be re-measured to fair value at each reporting date until the contingencies are resolved and any changes in fair value will be recognized in earnings. There has been no significant change in the fair value of contingent consideration since the date of the acquisition. The fair value of the net assets acquired and liabilities assumed was not material. Consequently, virtually the entire purchase price of $1.9 million was recorded as goodwill, which is comprised of expected synergies and assembled workforce. The amount recorded as goodwill is allocated to our CGD Systems segment and is not expected to be deductible for tax purposes. DTECH On December 16, 2014 we acquired all of the outstanding capital stock of DTECH Labs, Inc. (DTECH). Based in Sterling, Virginia, DTECH is a provider of modular networking and baseband communications equipment that adds networking capability to our secure communications business. This acquisition expands the portfolio of product offerings and the customer base of our CGD Systems segment. For the year ended September 30, 2016, the amounts of DTECH’s sales and net loss after taxes included in our Consolidated Statement of Income were $20.3 million and $2.1 million, respectively. The DTECH operating results for the year ended September 30, 2016 include a gain of $0.5 million for the decrease in the fair value of contingent consideration and charges of $8.0 million for the amortization of intangibles. For the year ended September 30, 2015, the amounts of DTECH’s sales and net income after taxes included in our Consolidated Statement of Income were $45.8 million and $0.5 million, respectively. Included in DTECH’s operating results are $0.8 million of transaction and acquisition related costs before related income taxes during the year ended September 30, 2015, as well as general and administrative expenses totaling $3.6 million related to the change in the fair value of contingent consideration described below. The purchase agreement states that the cost of the acquisition is approximately $99.5 million, adjusted by the difference between the net working capital acquired and the targeted working capital amounts and adjusted for other acquisition related payments made upon closing, plus a contingent amount of up to $15.0 million based upon DTECH’s achievement of revenue and gross profit targets in the future. The acquisition date fair value of the consideration was $99.4 million. The total acquisition date fair value of consideration includes the acquisition fair value of holdback consideration and contingent consideration described below. Approximately $4.7 million of cash consideration (Holdback Consideration) will be paid to the seller over time when certain events occur in the future. At September 30, 2016 the fair value of the Holdback Consideration is estimated to approximate $4.5 million using a discounted cash flow model, based upon the expected timing of the payment of the Holdback Consideration. In addition to the Holdback Consideration, we will pay the seller up to $15.0 million of contingent cash consideration based upon DTECH’s achievement of revenue and gross profit targets. The purchase agreement specifies independent revenue and gross profit targets for the period from our acquisition of DTECH through September 30, 2015, and separately for each of fiscal 2016 and fiscal 2017. At the acquisition date, the total fair value of the contingent consideration was estimated at $3.9 million using a real options approach (see Note 3 for further discussion of fair value measurements). The contingent consideration liability will be re-measured to fair value at each reporting date until the contingencies are resolved and any changes in fair value are recognized in earnings. The cumulative change in the fair value of the contingent consideration was recognized as a gain of $0.5 million in 2016 and an expense of $3.6 million in 2015. Through September 30, 2016 we have paid $96.3 million to the seller. At September 30, 2016 we have recorded a liability of $6.5 million as an estimate of the additional cash consideration that will be due to the seller in the future, including the Holdback Consideration and contingent consideration. The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Non-compete agreements Backlog Cash Accounts receivable Inventory Warranty obligation Tax liabilities Accounts payable and accrued expenses Other net assets acquired Net identifiable assets acquired Goodwill Net assets acquired $ The fair values of purchased intangibles were determined using the valuation methodology deemed to be the most appropriate for each type of asset being valued. The customer relationships and backlog valuation used the excess earnings approach and the non-compete agreements used the with-and-without approach. The intangible assets are being amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of seven years from the date of acquisition and the amortization is expected to be deductible for tax purposes. The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of DTECH with our existing CGD Systems business, including the synergies expected from combining the networking and secure communications technologies of DTECH, and complementary products that will enhance our overall product and service portfolio. The goodwill also consists of the value of the assembled workforce that became our employees following the close of the acquisition. The amount recorded as goodwill is allocated to our CGD Systems segment and is expected to be deductible for tax purposes. The estimated amortization expense amounts related to the intangible assets recorded in connection with our acquisition of DTECH for fiscal years 2017 through 2021 is as follows (in millions): Year Ended September 30, 2017 $ 6.8 2018 5.5 2019 4.1 2020 2.8 2021 1.5 Intific On February 28, 2014 we acquired all of the outstanding capital stock of Intific Inc. (Intific). Intific is focused on software and game-based solutions in modeling and simulation, training and education, cyber warfare, and neuroscience. The acquisition of Intific expanded the portfolio of services and customer base of our CGD Systems segment. For the year ended September 30, 2016, the amounts of Intific’s sales and net loss after taxes included in our Consolidated Statement of Income were $17.3 million and $0.8 million, respectively. For the year ended September 30, 2015, the amounts of Intific’s sales and net loss after taxes included in our Consolidated Statement of Income were $14.7 million and $1.8 million, respectively. The acquisition date fair value of the consideration transferred was $12.4 million. We paid cash of $11.2 million to the sellers in fiscal 2014 and the remaining $1.2 million was paid in fiscal 2015. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Technology Backlog Other intangible assets Accounts receivable Deferred tax assets Accounts payable and accrued expenses Deferred tax liabilities Other net liabilities assumed Net identifiable assets acquired Goodwill Net assets acquired $ The fair values of purchased intangibles were determined using the valuation methodology deemed to be the most appropriate for each type of asset being valued. The customer relationships and backlog valuation used the excess earnings approach and the technology valuation used the replacement cost approach. The intangible assets are being amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of two years from the date of acquisition and the amortization expense is not expected to be deductible for tax purposes. The net deferred tax assets and liabilities offset each other to a negligible amount. However, the deferred tax liabilities of $1.5 million were primarily recorded to reflect the tax impact of amortization related to identified intangible assets that is not expected to be deductible for tax purposes, net of acquisition consideration that is a tax deductible expense. The deferred tax assets of $1.5 million primarily related to the future tax deduction for the cancellation of unvested options. The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of Intific with our existing CGD Systems business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CGD Systems segment and is not expected to be deductible for tax purposes. The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of Intific for fiscal years 2017 through 2020 is as follows (in millions): Year Ended September 30, 2017 $ 0.6 2018 0.5 2019 0.2 2020 0.1 ITMS On November 26, 2013 we acquired all of the outstanding capital stock of Intelligent Transport Management Solutions Limited (ITMS) from Serco Limited. ITMS is a provider of traffic management systems technology, traffic and road enforcement and maintenance of traffic signals, emergency equipment and other critical road and tunnel infrastructure. The acquisition of ITMS expands the portfolio of services and customer base of our Cubic Transportation Systems (CTS) segment. For the year ended September 30, 2016, the amounts of ITMS’ sales and net loss after taxes included in our Consolidated Statement of Income were $41.3 million and $7.0 million, respectively. For the year ended September 30, 2015, the amounts of ITMS’ sales and net loss after taxes included in our Consolidated Statement of Income were $47.0 million and $3.0 million, respectively. For the year ended September 30, 2014, the amounts of ITMS’ sales and net loss after taxes included in our Consolidated Statement of Income were $43.7 million and $2.3 million, respectively. Included in ITMS’ operating results are $0.5 million of transaction costs incurred during the year ended September 30, 2014. The acquisition date fair value of the consideration transferred was $72.2 million. We paid the seller cash of $69.0 million in November 2013 and in May 2014, we paid the remaining cash of $3.2 million. The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Intellectual property Backlog Supplier relationships Agreements with seller Accounts receivable - billed Accounts receivable - unbilled Deferred tax liabilities, net Deferred revenue Accounts payable and accrued expenses Other net assets acquired Net identifiable assets acquired Goodwill Net assets acquired $ The fair values of purchased intangibles were determined using the valuation methodology deemed to be the most appropriate for each type of asset being valued. The customer relationships and backlog valuation used the excess earnings approach and the non-compete agreement and seller agreements valuations used the with-and-without approach. The supplier relationship and intellectual property valuations used the replacement cost approach. The intangible assets are being amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of two years from the date of acquisition. Future amortization of purchased intangibles is not deductible for tax purposes. The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of ITMS with our existing CTS business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CTS segment and is not expected to be deductible for tax purposes. The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of ITMS for fiscal years 2017 through 2020 is as follows (in millions): Year Ended September 30, 2017 $ 2018 2019 2020 Pro forma information The following unaudited pro forma information presents our consolidated results of operations as if GATR, TeraLogics, H4 Global and DTECH had been included in our consolidated results since October 1, 2014 (in millions): Year Ended September 30, 2016 2015 Net sales $ $ Net income attributable to Cubic $ $ The pro forma information includes adjustments to give effect to pro forma events that are directly attributable to the acquisitions and have a continuing impact on operations including the amortization of purchased intangibles and the elimination of interest expense for the repayment of debt. No adjustments were made for transaction expenses, other adjustments that do not reflect ongoing operations or for operating efficiencies or synergies. The pro forma financial information is not necessarily indicative of what the consolidated financial results of our operations would have been had the acquisitions been completed on October 1, 2014, and it does not purport to project our future operating results. TranSys Transaction Systems Limited (TranSys) is the joint venture company through which we won the PRESTIGE contract in London in 1998. Although in recent years the entity has been less active, we intend to use TranSys in our future endeavors. We owned 50 percent of TranSys through September 30, 2015, and we consolidated TranSys in our financial statements because it was a VIE and we were its primary beneficiary. On September 30, 2015 we purchased its remaining equity for $1.0 million. The difference between the purchase price and the carrying value of our noncontrolling interest in TranSys was recorded as a decrease in equity. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 3—FAIR VALUE OF FINANCIAL INSTRUMENTS 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 - Quoted prices for identical instruments in active markets. · Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. · Level 3 - Significant inputs to the valuation model are unobservable. The fair value of certain of our cash equivalents are based upon quoted prices for identical instruments in active markets. The fair value of our other cash equivalents and our available for sale marketable securities is based upon a discounted cash flow model and approximate cost. The marketable securities in the rabbi trust are carried at fair value, which is based upon quoted market prices for identical securities. Derivative financial instruments are measured at fair value, the material portions of which are based on active or inactive markets for identical or similar instruments or model-derived valuations whose inputs are observable. Where model-derived valuations are appropriate, we use the applicable credit spread as the discount rate. Credit risk related to derivative financial instruments is considered minimal and is managed by requiring high credit standards for counterparties and through periodic settlements of positions. The fair value of contingent consideration liabilities to the sellers of businesses that we have acquired are revalued to their fair value each period and any increase or decrease is recorded into selling, general and administrative expense. Any changes in the assumed timing and amount of the probability of payment scenarios could impact the fair value. The fair value of contingent consideration liabilities that are based upon revenue targets or gross margin targets are based upon a real option approach. The contingent consideration liabilities that are valued using this real option approach include a portion of the TeraLogics contingent consideration, the DTECH contingent consideration, and the GATR contingent consideration. Under this real option approach, each payment was modeled using a long digital options written on the underlying revenue or gross margin metric. The strike price for each option is the respective revenue or gross margin as specified in the related agreement, and the spot price is calibrated to the revenue or gross margin forecast by calculating the present value of the corresponding projected revenues or gross margins using a risk-adjusted discount rate. The volatility for the underlying revenue metrics was based upon analysis of comparable guideline public companies and the volatility factor used in the September 30, 2016 valuations was 17% for TeraLogics, 18% for DTECH and 17% for GATR. The volatility factor used in the September 30, 2015 valuation for DTECH was 22%. The risk-free rate was selected based on the quoted yields for U.S. Treasury securities with terms matching the earn-out payment period. The fair value of the portion of the TeraLogics contingent consideration that is based on customer execution of contract extensions was estimated using a probability weighted approach. Subject to the terms and conditions of the TeraLogics Purchase Agreement, contingent consideration will be paid over a period commencing on the closing date and ending on December 21, 2018. The fair value of the contingent consideration was determined by applying probabilities of achieving the periodic payment to each period’s potential payment, and summing the present value of any future payments. The fair value of the H4 Global contingent consideration was estimated using a probability weighted approach. Subject to the terms and conditions of the H4 Global Purchase Agreement, contingent consideration will be paid over a five year term that commenced on October 1, 2015 and ends on September 30, 2020. The payments will be calculated based on the award of certain contracts during the specified period. The fair value of the contingent consideration was determined by applying probabilities to different scenarios, and summing the present value of any future payments. The inputs to each of the contingent consideration fair value models include significant unobservable inputs and therefore represent Level 3 measurements within the fair value hierarchy. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition dates and each subsequent period. Accordingly, changes in the assumptions described above can materially impact the amount of contingent consideration expense we record in any period. As of September 30, 2016, the following table summarizes the change in fair value of our Level 3 contingent consideration liability (in thousands): DTECH H4 TeraLogics (Contract Extensions) TeraLogics (Revenue Targets) GATR Total Balance as of September 30, 2014 $ — $ — $ — $ — $ — $ — Initial measurement recognized at acquisition — — — — Total remeasurement recognized in earnings — — — — Balance as of September 30, 2015 $ $ — $ — $ — $ — $ Initial measurement recognized at acquisition — Cash paid to seller — — — Adjustment to the provisional acquisition date valuation — — — Total remeasurement recognized in earnings Balance as of September 30, 2016 $ $ $ $ $ $ The following table presents assets and liabilities measured and recorded at fair value on our balance sheets on a recurring basis (in thousands): September 30, 2016 September 30, 2015 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash equivalents $ $ — $ — $ $ $ — $ — $ Marketable securities — — — — Current derivative assets — — — — Noncurrent derivative assets — — — — Marketable securities in rabbi trust — — — — Total assets measured at fair value — — Liabilities Current derivative liabilities — — — — Noncurrent derivative liabilities — — — — Contingent consideration to seller of GATR — — — — — — Contingent consideration to seller of TeraLogics - contract extensions — — — — — — Contingent consideration to seller of TeraLogics - revenue targets — — — — — — Contingent consideration to seller of H4 Global — — — — — — Contingent consideration to seller of DTECH — — — — Total liabilities measured at fair value $ — $ $ $ $ — $ $ $ We carry certain financial instruments, including accounts receivable, short-term borrowings, accounts payable and accrued liabilities at cost, which we believe approximates fair value because of the short-term maturity of these instruments. The fair value of long-term debt is calculated by discounting the value of the note based on market interest rates for similar debt instruments, which is a Level 2 technique. The following table presents the estimated fair value and carrying value of our long-term debt (in millions): September 30, September 30, 2016 2015 Fair value $ $ Carrying value $ $ We did not have any significant non-financial assets or liabilities measured at fair value on a non-recurring basis in 2016, 2015, or 2014 other than assets and liabilities acquired in business acquisitions. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Sep. 30, 2016 | |
ACCOUNTS RECEIVABLE | |
ACCOUNTS RECEIVABLE | NOTE 4—ACCOUNTS RECEIVABLE The components of accounts receivable under long-term contracts are as follows (in thousands): September 30, 2016 2015 U.S. Government Contracts: Amounts billed $ $ Recoverable costs and accrued profits on progress completed--not billed Commercial Customers: Amounts billed Recoverable costs and accrued profits on progress completed--not billed Less unbilled amounts not currently due--commercial customers $ $ A portion of recoverable costs and accrued profits on progress completed is billable under progress or milestone payment provisions of the related contracts. The remainder of these amounts is billable upon delivery of products or furnishing of services, with an immaterial amount subject to retainage provisions of the contracts. It is anticipated that we will bill and collect substantially the entire unbilled portion of receivables identified as current assets under progress billing provisions of the contracts or upon completion of milestones and/or acceptance by the customers during fiscal 2017. The amount classified as not currently due is an estimate of the amount of long-term contract accounts receivable that will not be collected within one year from September 30, 2016 under transportation systems contracts in the U.S. and Australia, and under a CGD Systems contract in Italy based upon the payment terms in the contracts. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Sep. 30, 2016 | |
INVENTORIES | |
INVENTORIES | NOTE 5—INVENTORIES Significant components of inventories are as follows (in thousands): September 30, September 30, 2016 2015 Finished products $ $ Work in process and inventoried costs under long-term contracts Materials and purchased parts Customer advances Net inventories $ $ At September 30, 2016, work in process and inventoried costs under long-term contracts includes approximately $0.7 million in costs incurred outside the scope of work or in advance of a contract award, compared to $1.9 million as of September 30, 2015. We believe it is probable that we will recover the costs inventoried at September 30, 2016, plus a profit margin, under contract change orders or awards within the next year. Costs we incur for certain U.S. federal government contracts include general and administrative costs as allowed by government cost accounting standards. The amounts remaining in inventory at September 30, 2016 and 2015 were $2.3 million and $1.8 million, respectively. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Sep. 30, 2016 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 6—PROPERTY, PLANT AND EQUIPMENT Significant components of property, plant and equipment are as follows (in thousands): September 30, 2016 2015 Land and land improvements $ $ Buildings and improvements Machinery and other equipment Software Leasehold improvements Construction and internal-use software development in progress Accumulated depreciation and amortization $ $ As a part of our efforts to upgrade our current information systems, early in fiscal 2015 we purchased new enterprise resource planning (ERP) software and began the process of designing and configuring this software and other software applications to manage our operations. Costs incurred in the development of internal-use software and software applications, including external direct costs of materials and services and applicable compensation costs of employees devoted to specific software development, are capitalized as computer software costs. Costs incurred outside of the application development stage are expensed as incurred. The amounts capitalized are included in property, plant and equipment and are amortized on a straight-line basis over the estimated useful life of the software, which ranges from three to seven years. No amortization expense is recorded until the software is ready for its intended use. Through September 30, 2016 we have incurred costs of $72.7 million related to the purchase and development of our ERP system, including $45.2 million of costs incurred during fiscal 2016. We recognized expense for $24.9 million and $11.5 million of these costs in fiscal years 2016 and 2015, respectively, for costs that did not qualify for capitalization. Amounts that were expensed in connection with the development of these systems are classified within selling, general and administrative expenses in the Consolidated Statements of Income. We capitalized $16.0 million of qualifying software development costs in fiscal year 2015 and an additional $20.3 million in fiscal 2016 as internal-use software development in progress. On April 1, 2016 we began using certain components of the ERP system. We reclassified the costs of the ERP components that we began using, totaling $28.4 million, into completed software and we began amortizing these costs over the seven year estimated useful life of these software components. We continue to capitalize costs associated with the development of other ERP components that are not yet ready for their intended use. In 2014 we capitalized internal costs of $5.0 million related to the development of software that is used to design products for CGD Systems’ customers. This software was placed in service in late fiscal 2014. Amortization of this software totaled $1.0 million, $1.0 million, and $0.4 million in fiscal years 2016, 2015, and 2014, respectively. Our provisions for depreciation of plant and equipment and amortization of leasehold improvements and software amounted to $11.4 million, $10.1 million and $7.8 million in 2016, 2015 and 2014, respectively. Generally, we use straight-line methods for depreciable real property over estimated useful lives ranging from 15 to 39 years or for leasehold improvements, the term of the underlying lease if shorter than the estimated useful lives. We use accelerated methods (declining balance and sum-of-the-years-digits) for machinery and equipment and software other than our ERP system over estimated useful lives ranging from 5 to 10 years. |
GOODWILL AND PURCHASED INTANGIB
GOODWILL AND PURCHASED INTANGIBLE ASSETS | 12 Months Ended |
Sep. 30, 2016 | |
GOODWILL AND PURCHASED INTANGIBLE ASSETS | |
GOODWILL AND PURCHASED INTANGIBLE ASSETS | NOTE 7—GOODWILL AND PURCHASED INTANGIBLE ASSETS The changes in the carrying amount of goodwill for the two years ended September 30, 2016 are as follows (in thousands): Cubic Global Cubic Global Transportation Defense Defense Systems Systems Services Total Balances at October 1, 2014 $ $ $ $ Acquisitions (see Note 2) — — Foreign currency exchange rate changes — Balances at September 30, 2015 $ $ $ $ Acquisitions (see Note 2) — — Foreign currency exchange rate changes — Balances at September 30, 2016 $ $ $ $ The components of the net goodwill balances at September 30, 2016 are as follows (in thousands): Cubic Global Cubic Global Transportation Defense Defense Systems Systems Services Total Goodwill $ $ $ $ Accumulated impairment charges — — Net balances $ $ $ $ We complete our annual goodwill impairment test each year as of July 1. The first step of the goodwill impairment test compares the fair value of our reporting units to their carrying values. We estimate the fair value of our reporting units primarily based on the discounted projected cash flows of the underlying operations and based upon market multiples from publicly traded comparable companies. For our 2016 impairment test, the estimated fair value of all three of our reporting units exceeded their respective carrying values. As such, there was no impairment of goodwill in 2016. The estimated fair values for our CGD Services and Transportation Systems reporting units each exceeded their carrying values by over 20%, while the estimated value of our CGD Systems reporting unit exceeded its carrying value by over 15%. Significant management judgment is required in the forecast of future operating results that are used in our impairment analysis. The estimates we used are consistent with the plans and estimates that we use to manage our business. For our CGD Services reporting unit, significant assumptions utilized in our discounted cash flow approach included growth rates for sales and margins at greater levels than we have achieved in the past five years, but at levels that are less than the average annual growth we achieved over the period from fiscal 2000 through fiscal 2010. Although we believe our underlying assumptions supporting this assessment are reasonable, if our forecasted sales and margin growth rates, timing of growth, or the discount rate vary from our forecasts, we may be required to perform an interim analysis in 2017 that could expose us to material impairment charges in the future. Assumptions used in our discounted cash flow approach for our CGD Systems reporting unit also included growth rates for sales and margins at greater levels than we have achieved in recent years due to our expectation that businesses recently acquired by this reporting unit will achieve growth at higher rates than the unit’s legacy operations. Purchased Intangible Assets: The table below summarizes our purchased intangible assets (in thousands): September 30, 2016 September 30, 2015 Gross Gross Carrying Accumulated Net Carrying Carrying Accumulated Net Carrying Amount Amortization Amount Amount Amortization Amount Contract and program intangibles $ $ $ $ Other purchased intangibles Total $ $ $ $ $ $ Total amortization expense for 2016, 2015 and 2014 was $34.1 million, $27.6 million and $22.6 million, respectively. The table below shows our expected amortization of purchased intangibles as of September 30, 2016, for each of the next five years and thereafter (in thousands): Cubic Global Cubic Global Transportation Defense Defense Systems Systems Services Total 2017 $ $ $ $ 2018 2019 2020 2021 Thereafter $ $ $ $ |
FINANCING ARRANGEMENTS
FINANCING ARRANGEMENTS | 12 Months Ended |
Sep. 30, 2016 | |
FINANCING ARRANGEMENTS | |
FINANCING ARRANGEMENTS | NOTE 8—FINANCING ARRANGEMENTS Long-term debt consists of the following (in thousands): September 30, 2016 2015 Series A senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% $ $ Series B senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% Series C senior unsecured notes payable to a group of insurance companies, interest fixed at 3.70% Series D senior unsecured notes payable to a group of insurance companies, interest fixed at 3.93% — Mortgage note from a U.K. financial institution, with quarterly installments of principal and interest at 6.48% Less current portion $ $ Maturities of long-term debt for each of the five years in the period ending September 30, 2021, are as follows: 2017 — $0.5 million; 2018 — $0.5 million; 2019 — $0.1 million; 2020 — $10.7 million; 2021 — $35.7 million Interest paid amounted to $11.0 million, $4.8 million and $4.1 million in 2016, 2015 and 2014, respectively. In March 2013, we entered into a note purchase and private shelf agreement pursuant to which we issued $100.0 million of senior unsecured notes, bearing interest at a rate of 3.35% and maturing on March 12, 2025. In addition, pursuant to the agreement, on July 17, 2015, we issued an additional $25.0 million of senior unsecured notes, bearing interest at a rate of 3.70% and maturing on March 12, 2025. Interest payments on the notes issued in 2013 and 2015 are due semi-annually and principal payments are due from 2021 through 2025. On February 2, 2016 we revised the note purchase agreement and we issued an additional $75.0 million of senior unsecured notes bearing interest at 3.93% and maturing on March 12, 2026. Interest payments on these notes are due semi-annually and principal payments are due from 2020 through 2026. At the time of the issuance of the last series of notes, certain terms and conditions of the note purchase and private shelf agreement were revised in coordination with the revision and expansion of the revolving credit agreement as discussed below in order to increase our leverage capacity. At the beginning of fiscal 2016, we had a committed five-year revolving credit agreement expiring in May 2017, with a group of financial institutions in the amount of $200.0 million. On February 2, 2016, we and the group of financial institutions increased the revolving line of credit available under this agreement to $400.0 million and we borrowed $150.0 million as a source of financing for the purchase of GATR. In connection with this increase in the facility size, certain debt covenant definitions and limitations were modified to increase our leverage capacity. On August 11, 2016 we executed the Third Amended and Restated Credit Agreement (Revolving Credit Agreement) to extend the maturity to August 11, 2021, add a new financial institution to the group of creditors and amend certain terms and covenants. Borrowings under the agreement bear a variable rate of interest, which is calculated based upon the U.S. dollar LIBOR rate plus a contractually defined credit spread that is based upon the tenor of the specific borrowing. At September 30, 2016, the weighted average interest rate on outstanding borrowings under the Revolving Credit Agreement was 2.5%. Debt issuance costs of $2.3 million and $1.3 million were incurred in connection with February 2, 2016 and August 11, 2016 amendments to the Revolving Credit Agreement, respectively. Debt issuance costs are recorded in Prepaid expenses and other current assets on the Company’s consolidated balance sheets, and will be amortized as interest expense using the effective interest method over the stated term of the Revolving Credit Agreement. At September 30, 2016, the Company’s total debt issuance costs have an unamortized balance of $2.9 million. The available line of credit is reduced by any letters of credit issued under the Revolving Credit Agreement. As of September 30, 2016, there were borrowings totaling $240.0 million under this agreement and there were letters of credit outstanding totaling $20.7 million, which reduce the available line of credit to $139.3 million. We have a secured letter of credit facility agreement with a bank (Secured Letter of Credit Facility) which is cancellable by us at any time upon the completion of certain conditions to the satisfaction of the bank. At September 30, 2016 there were letters of credit outstanding under this agreement of $62.7 million. Restricted cash at September 30, 2016 of $69.4 million was held on deposit in the U.K. as collateral in support of this Secured Letter of Credit Facility. We are required to leave the cash in the restricted account so long as the bank continues to maintain associated letters of credit under the facility. The maximum amount of letters of credit currently allowed by the facility is $63.1 million, and any increase above this amount would require bank approval and additional restricted funds to be placed on deposit. We may choose at any time to terminate the facility and move the associated letters of credit to another credit facility. Letters of credit outstanding under the Secured Letter of Credit Facility do not reduce the available line of credit under the Revolving Credit Agreement. We maintain a cash account with a bank in the United Kingdom for which the funds are restricted as to use. The account is required to secure the customer’s interest in cash deposited in the account to fund our activities related to our performance under a fare collection services contract in the United Kingdom. The balance in the account as of September 30, 2016 was $6.2 million and is classified as restricted cash in our Consolidated Balance Sheet. As of September 30, 2016, we had letters of credit and bank guarantees outstanding totaling $79.2 million, including the letters of credit outstanding under the Revolving Credit Agreement and the Secured Letter of Credit Facility, which guarantee either our performance or customer advances under certain contracts. In addition, we had financial letters of credit outstanding totaling $16.6 million as of September 30, 2016, which primarily guarantee our payment of certain self-insured liabilities. We have never had a drawing on a letter of credit instrument, nor are any anticipated; therefore, we estimate the fair value of these instruments to be zero. We maintain short-term borrowing arrangements in New Zealand and Australia totaling $0.5 million New Zealand dollars (equivalent to approximately $0.4 million) and $3.0 million Australian dollars (equivalent to approximately $2.3 million) to help meet the short-term working capital requirements of our subsidiaries in those countries. At September 30, 2016, no amounts were outstanding under these borrowing arrangements. The terms of certain of our lending and credit agreements include provisions that require and/or limit, among other financial ratios and measurements, the permitted levels of debt, coverage of cash interest expense, and under certain circumstances, payments of dividends or other distributions to shareholders. As of September 30, 2016, these agreements restrict such distributions to shareholders to a maximum of $48.7 million per fiscal year. Our self-insurance arrangements are limited to certain workers’ compensation plans, automobile liability and product liability claims. Under these arrangements, we self-insure only up to the amount of a specified deductible for each claim. Self-insurance liabilities included in other current liabilities on the balance sheet amounted to $8.2 million and $8.8 million as of September 30, 2016 and 2015, respectively. |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Sep. 30, 2016 | |
COMMITMENTS | |
COMMITMENTS | NOTE 9—COMMITMENTS We lease certain office, manufacturing and warehouse space, vehicles, and other office equipment under non-cancelable operating leases expiring in various years through 2030. These leases, some of which may be renewed for periods up to 10 years, generally require us to pay all maintenance, insurance and property taxes. Several leases are subject to periodic adjustment based on price indices or cost increases. Rental expense (net of sublease income of $0.3 million in 2016, $0.3 million in 2015 and $0.2 million in 2014) for all operating leases amounted to $12.7 million, $11.9 million and $12.0 million in 2016, 2015 and 2014, respectively. Future minimum payments, net of minimum sublease income, under non-cancelable operating leases with initial terms of one year or more consist of the following for the next five years and thereafter, as of September 30, 2016 (in thousands): 2017 $ 2018 2019 2020 2021 Thereafter $ |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES | |
INCOME TAXES | NOTE 10—INCOME TAXES Income (loss) before income taxes includes the following components (in thousands): Years ended September 30, 2016 2015 2014 (in thousands) United States $ $ $ Foreign Total $ $ $ Significant components of the provision for income taxes are as follows: Years ended September 30, 2016 2015 2014 (in thousands) Current: Federal $ $ $ State Foreign Total current Deferred: Federal State Foreign Total deferred Provision for income taxes $ $ $ The reconciliation of income tax computed at the U.S. federal statutory tax rate to income tax expense is as follows: Years ended September 30, 2016 2015 2014 (in thousands) Tax expense at U.S. statutory rate $ $ $ State income taxes, net of federal tax effect Nondeductible expenses (1) Change in reserve for tax contingencies Change in deferred tax asset valuation allowance (2) Foreign income taxed at less than statutory rate Research and development credits (3) Other Provision for income taxes $ $ $ (1) In 2016, we recorded $6.3 million of tax expense related to nondeductible acquisition related compensation expenses (2) In 2016, we recorded a net tax benefit primarily related to a business combination in which we acquired significant U.S. deferred tax liabilities as well as a utilization and subsequent release of the deferred tax valuation allowance in Australia. In 2015, we recorded a full valuation allowance on U.S. net deferred tax assets with a charge to expense of $35.8 million. (3) In both 2016 and 2015, we recorded tax benefits of $1.0 million and $1.2 million, respectively, related to the reinstatement of the research and development tax credit. Significant components of our deferred tax assets and liabilities are as follows: September 30, 2016 2015 (in thousands) Deferred tax assets: Accrued employee benefits $ $ Long-term contracts and inventory valuation reductions Allowances for loss contingencies Deferred compensation Property, plant and equipment — Intangible assets — Retirement benefits Tax credit carryforwards Net operating losses carryforwards Other Total gross deferred tax assets Valuation allowance Total deferred tax assets Deferred tax liabilities: Deferred revenue Unremitted foreign earnings Property, plant and equipment — Intangible assets — Foreign currency mark-to-market — Other Total deferred tax liabilities Net deferred tax asset (liability) $ $ The deferred tax assets and liabilities for fiscal 2016 and 2015 include amounts related to various acquisitions. The total change in deferred tax assets and liabilities in fiscal 2016 includes changes that are recorded to Other Comprehensive Income (OCI) and Goodwill. We calculate deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, and measure them using the enacted tax rates and laws that we expect will be in effect when the differences reverse. Certain items within the 2015 presentation of the components of deferred tax assets and liabilities have been reclassified to conform to the current year presentation. The reclassifications primarily relate to differences of $0.5 million related to unremitted foreign earnings and $0.5 million of charitable contribution carryovers that were reclassified from other deferred tax liabilities to unremitted foreign earnings and other deferred tax assets, respectively. On October 1, 2015, we adopted FASB ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” on a prospective basis. This ASU requires that deferred tax assets and liabilities be classified as non-current in a statement of financial position. Adoption of this ASU resulted in a reclassification of our net deferred tax assets and liabilities to the net non-current deferred tax asset in our Consolidated Balance Sheet for all periods after adoption. No prior periods were retrospectively adjusted. At September 30, 2016, we have federal and state income tax credit carryforwards of $8.2 million and $17.9 million, respectively, which will expire at various dates beginning in 2023. Such credit carryforwards (in thousands) expire as follows: U.S. foreign tax credits $ 2023-2026 U.S. research and development tax credits 2035-2036 State research and development tax credits Do not expire We have federal, state and foreign net operating losses (in thousands) which expire as follows: U.S. net operating loss carryforwards $ State net operating loss carryforwards 2020-2036 Foreign net operating loss carryforwards Do not expire We evaluated our net deferred income taxes, which included an assessment of the cumulative income or loss over the prior-three year period and future periods, to determine if a valuation allowance was required. After considering our recent history of U.S. losses, we recorded a valuation allowance during fiscal year 2015 on our net U.S. deferred tax assets, with a corresponding charge to our income tax provision of $35.8 million and ended the year with a U.S. valuation allowance of $47.5 million. During fiscal 2016 the U.S. valuation allowance decreased $3.8 million to a balance of $43.7 million. The net decrease primarily related to acquired deferred tax liabilities of $23.8 million offset by current year activity of $20.0 million, which included the generation of unused tax credits and net operating losses. As of September 30, 2016, we maintained a valuation allowance against our U.S. net deferred tax assets as it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved. In addition, after considering our cumulative three-year income position in Australia and future sources of income in the near-term, we determined that a valuation allowance was no longer required and the existing $3.1 million valuation allowance was either utilized or reversed in fiscal 2016. As of September 30, 2016, a total valuation allowance of $47.9 million has been established against U.S. deferred tax assets, certain foreign operating losses and other foreign assets. For fiscal 2016, the valuation allowance was reduced by $6.9 million, of which $9.2 million was recorded as a net tax benefit in our Consolidated Statement of Income, offset primarily by amounts recorded through Other Comprehensive Income related to retirement benefits. The non-cash charge to increase or decrease a valuation allowance does not have any impact on our cash flows, nor does such an allowance preclude us from using loss carryforwards or other deferred tax assets in the future. Until we re-establish a pattern of continuing profitability, in accordance with the applicable accounting guidance, U.S. income tax expense or benefit related to the recognition of deferred tax assets in the Consolidated Statement of Income for future periods will be offset by decreases or increases in the valuation allowance with no net effect on the Consolidated Statement of Income. If sufficient positive evidence arises in the future, any existing valuation allowance could be reversed as appropriate, decreasing income tax expense in the period that such conclusion is reached. We do not provide for U.S. income taxes on the earnings of foreign subsidiaries which are considered indefinitely reinvested outside the U.S. Deferred income taxes, net of foreign tax credits, are provided for foreign earnings available for repatriation. As of September 30, 2016, the cumulative amount of earnings upon which U.S. income taxes have not been provided is approximately $389.5 million of which $360.0 million originates from the U.K. We continually evaluate the financial requirements of our U.S. operations as well as funding requirements outside the U.S. for potential acquisitions, market growth and ongoing operations to determine the amount of excess capital, if any, that is available for distribution . Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to both U.S. income taxes and foreign withholding taxes, but would also be able to offset unrecognized foreign tax credit carryforwards, if any. It is not practicable for us to determine the total amount of unrecognized deferred U.S. income tax liability because of the complexities associated with its hypothetical calculation. During the year ended September 30, 2016; we identified two errors in our income tax accounting . These errors understated income tax expense for years prior to fiscal year 2016 by a cumulative amount of $3.0 million, and the impact of correcting these errors in fiscal 2016 was to overstate income tax expense in 2016 by $3.0 million. Based on a qualitative and quantitative analysis of these errors, management concluded that all such errors are cumulatively and individually considered immaterial to the financial statements for all periods presented. As such, these errors have been corrected in the financial statements for the year ended September 30, 2016. Accounting for Uncertainty in Income Taxes During fiscal 2016 and 2015, the aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows: Years ended September 30, 2016 2015 (in thousands) Balance at beginning of year $ $ Additions (reductions) for tax positions taken in prior years: — Recognition of benefits from expiration of statutes Other — Additions for tax positions related to the current year Additions for tax positions related to current year acquisitions Balance at end of year $ $ At September 30, 2016 and 2015, the amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $7.5 million and $4.5 million, respectively. During the next 12 months, it is reasonably possible that resolution of reviews by taxing authorities, both domestic and foreign, could be reached with respect to approximately $4.4 million of the unrecognized tax benefits depending on the timing of examinations or expiration of statute of limitations, either because our tax positions are sustained or because we agree to the disallowance and pay the related income tax. We recognize interest and/or penalties related to income tax matters in income tax expense. The amount of net interest and penalties recognized as a component of income tax expense during 2016, 2015 and 2014 was not material. Interest and penalties accrued at September 30, 2016 and 2015 amounted to $1.6 million and $1.2 million, respectively, bringing the total net liability for uncertain tax issues to $15.5 million and $10.9 million, respectively, as of September 30, 2016 and 2015. We are subject to ongoing audits from various taxing authorities in the jurisdictions in which we do business. As of September 30, 2016, the fiscal years open under the statute of limitations in significant jurisdictions include 2012 through 2016 in the U.S. We believe we have adequately provided for uncertain tax issues we have not yet resolved with federal, state and foreign tax authorities. Although not more likely than not, the most adverse resolution of these issues could result in additional charges to earnings in future periods. Based upon a consideration of all relevant facts and circumstances, we do not believe the ultimate resolution of uncertain tax issues for all open tax periods will have a material adverse effect upon our financial condition or results of operations. Cash amounts paid for income taxes, net of refunds received, were $14.2 million, $15.2 million and $27.3 million in 2016, 2015 and 2014, respectively. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended |
Sep. 30, 2016 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 11—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In order to limit our exposure to foreign currency exchange rate risk we generally hedge those commitments greater than $50,000 by using foreign currency exchange forward and option contracts for periods up to 3 years that are denominated in currencies other than the functional currency of the subsidiary responsible for the commitment, typically the British pound, Canadian dollar, Singapore dollar, Euro, Swedish krona, New Zealand dollar and Australian dollar. These contracts are designed to be effective hedges regardless of the direction or magnitude of any foreign currency exchange rate change, because they result in an equal and opposite income or cost stream that offsets the change in the value of the underlying commitment. We do not use any derivative financial instruments for trading or other speculative purposes. All derivatives are recorded at fair value, however, the classification of gains and losses resulting from changes in the fair values of derivatives are dependent on the intended use of the derivative and its resulting designation. If a derivative is designated as a fair value hedge, then a change in the fair value of the derivative is offset against the change in the fair value of the underlying hedged item and only the ineffective portion of the hedge, if any, is recognized in earnings. If a derivative is designated as a cash flow hedge, then the effective portion of a change in the fair value of the derivative is recognized as a component of accumulated other comprehensive income until the underlying hedged item is recognized in earnings, or the forecasted transaction is no longer probable of occurring. If a derivative does not qualify as a highly effective hedge, any change in fair value is immediately recognized in earnings. We formally document all hedging relationships for all derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transactions. We classify the fair value of all derivative contracts as current or non-current assets or liabilities, depending on the realized and unrealized gain or loss position of the hedged contract at the balance sheet date, and the timing of future cash flows. The cash flows from derivatives treated as hedges are classified in the Consolidated Statements of Cash Flows in the same category as the item being hedged. The following table shows the notional principal amounts of our outstanding derivative instruments as of September 30, 2016 and 2015 (in thousands): Notional Principal September 30, 2016 September 30, 2015 Instruments designated as accounting hedges: Foreign currency forwards $ $ Instruments not designated as accounting hedges: Foreign currency forwards $ $ Included in the amounts not designated as accounting hedges at September 30, 2016 and 2015 were foreign currency forwards with notional principal amounts of $78.4 million and $117.8 million, respectively, that have been designed to manage exposure to foreign currency exchange risks, and for which the gains or losses of the changes in fair value of the forwards has approximately offset an equal and opposite amount of gains or losses related to the foreign currency exposure. Unrealized losses of $8.2 million and unrealized gains of $5.3 million were recognized in other income (expense), net for the fiscal years ended September 30, 2016 and 2015, respectively. The notional principal amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not represent the amount of our exposure to credit or market loss. Credit risk represents our gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract, based on then-current interest or currency exchange rates at each respective date. Our exposure to credit loss and market risk will vary over time as a function of interest and currency exchange rates. The amount of credit risk from derivative instruments and hedging activities was not material for the fiscal years ended September 30, 2016 and 2015. Although the table above reflects the notional principal amounts of our foreign exchange instruments, it does not reflect the gains or losses associated with the exposures and transactions that the foreign exchange instruments are intended to hedge. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments. We generally enter into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. We present our derivative assets and derivative liabilities at their gross fair values. We did not have any derivative instruments with credit-risk related contingent features that would require us to post collateral as of September 30, 2016 or 2015. The table below presents the fair value of our derivative financial instruments that qualify for hedge accounting as well as their classification on the consolidated balance sheets as of September 30, 2016 and 2015 (in thousands): Fair Value Balance Sheet Location September 30, 2016 September 30, 2015 Asset derivatives: Foreign currency forwards Other current assets $ $ Foreign currency forwards Other noncurrent assets $ $ Liability derivatives: Foreign currency forwards Other current liabilities $ $ Foreign currency forwards Other noncurrent liabilities Total $ $ The tables below present gains and losses recognized in OCI for the years ended September 30, 2016 and 2015 related to derivative financial instruments designated as cash flow hedges, as well as the amount of gains and losses reclassified into earnings during those periods (in thousands): Years ended September 30, 2016 2015 Gains (losses) Gains (losses) Gains (losses) reclassified into reclassified into recognized in earnings - Gains (losses) earnings - Derivative Type OCI Effective Portion recognized in OCI Effective Portion Foreign currency forwards $ $ $ $ Losses of $0.1 million and gains of $0.1 million from derivative instruments and hedging activities classified as not highly effective were recognized in other income (expense), net for the years ended September 30, 2016 or 2015, respectively. The amount of estimated unrealized net gains from cash flow hedges which are expected to be reclassified to earnings in the next twelve months is $0.7 million, net of income taxes. |
PENSION, PROFIT SHARING AND OTH
PENSION, PROFIT SHARING AND OTHER BENEFIT PLANS | 12 Months Ended |
Sep. 30, 2016 | |
Pension Plans | |
PENSION, PROFIT SHARING AND OTHER BENEFIT PLANS | NOTE 12—PENSION, PROFIT SHARING AND OTHER BENEFIT PLANS Deferred Compensation Plan We have a non-qualified deferred compensation plan offered to a select group of highly compensated employees. The plan provides participants with the opportunity to defer a portion of their compensation in a given plan year. The liabilities associated with the non-qualified deferred compensation plan are included in other long-term liabilities in our Consolidated Balance Sheets and totaled $10.6 million and $9.9 million at September 30, 2016 and 2015, respectively. In the first quarter of fiscal 2015, we began making contributions to a rabbi trust to provide a source of funds for satisfying a portion of these deferred compensation liabilities. The total carrying value of the assets set aside to fund deferred compensation liabilities, which was comprised entirely of life insurance contracts as of September 30, 2016, was $3.6 million. The total carrying value of the assets set aside to fund deferred compensation liabilities as of September 30, 2015 was $2.9 million, which included life insurance contracts with a carrying value of $1.9 million and marketable securities with a carrying value of $1.0 million. The carrying value of the life insurance contracts is based on the cash surrender value of the policies. The marketable securities in the rabbi trust are carried at fair value, which is based upon quoted market prices for identical securities. Changes in the carrying value of the deferred compensation liability, and changes in the carrying value of the assets held in the rabbi trust are reflected in our Consolidated Statements of Income. Defined Contribution Plans We have profit sharing and other defined contribution retirement plans that provide benefits for most U.S. employees. Certain of these plans require us to match a portion of eligible employee contributions up to specified limits. These plans also allow for additional company contributions at the discretion of the Board of Directors. We also have a defined contribution plan for European employees that were formerly eligible for the European defined benefit plan described below. Under this plan, we match a portion of the eligible employee contributions up to limits specified in the plan. Company contributions to defined contribution plans aggregated $15.6 million, $14.2 million and $19.6 million in 2016, 2015 and 2014, respectively. Defined Benefit Pension Plans Certain employees in the U.S. are covered by a noncontributory defined benefit pension plan for which benefits were frozen as of December 31, 2006 (curtailment). The effect of the U.S. plan curtailment is that no new benefits have been accrued after that date. Approximately one-half of our European employees are covered by a contributory defined benefit pension plan for which benefits were frozen as of September 30, 2010. Although the effect of the European plan curtailment is that no new benefits will accrue after September 30, 2010, the plan is a final pay plan, which means that benefits will be adjusted for increases in the salaries of participants until their retirement or departure from the company. The European plan was amended in 2014 to reduce the amount of participant compensation used in computing the pension liability for certain participants. U.S. and European employees hired subsequent to the dates of the curtailment of the respective plans are not eligible for participation in the defined benefit plans. During fiscal year 2016, we partially settled our remaining obligations associated with its U.S. plan. The plan offered certain retired, vested participants the opportunity to voluntarily elect to receive their benefits as an immediate lump sum distribution. The lump sum distribution was paid out from plan assets in September 2016 and resulted in a settlement loss of $2.7 million, which is recorded in other non-operating expense for the year ended September 30, 2016. Our funding policy for the defined benefit pension plans provides that contributions will be at least equal to the minimum amounts mandated by statutory requirements. Based on our known requirements for the U.S. and U.K. plans, as of September 30, 2016, we expect to make contributions of approximately $3.9 million in 2017. September 30 is used as the measurement date for these plans. The unrecognized amounts recorded in accumulated other comprehensive income (loss) will be subsequently recognized as net periodic pension cost, consistent with our historical accounting policy for amortizing those amounts. We will recognize actuarial gains and losses that arise in future periods and are not recognized as net periodic pension cost in those periods as increases or decreases in other comprehensive income (loss), net of tax, in the period they arise. We adjust actuarial gains and losses recognized in other comprehensive income (loss) as they are subsequently recognized as a component of net periodic pension cost. The unrecognized actuarial gain or loss included in accumulated other comprehensive income (loss) at September 30, 2016 and expected to be recognized in net pension cost during fiscal 2017 is a loss of $4.2 million ($3.2 million net of income tax). The unrecognized actuarial loss was $41.6 million in fiscal year 2016 which was primarily driven by the reduction in discount rates used in the calculation of the net benefit obligation. No plan assets are expected to be returned to us in 2017. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the defined benefit pension plans were as follows (in thousands): September 30, 2016 2015 Projected benefit obligation $ $ Accumulated benefit obligation Fair value of plan assets The following table sets forth changes in the projected benefit obligation and fair value of plan assets and the funded status for these defined benefit plans (in thousands): September 30, 2016 2015 Change in benefit obligations: Net benefit obligation at the beginning of the year $ $ Service cost Interest cost Actuarial loss Plan amendments — — Gross benefits paid Settlements — Foreign currency exchange rate changes Net benefit obligation at the end of the year Change in plan assets: Fair value of plan assets at the beginning of the year Actual return on plan assets Employer contributions Gross benefits paid Settlements — PBGC Premium paid — Administrative expenses Foreign currency exchange rate changes Fair value of plan assets at the end of the year Unfunded status of the plans Unrecognized net actuarial loss Net amount recognized $ $ Amounts recognized in Accumulated OCI Liability adjustment to OCI $ $ Deferred tax asset Valuation allowance on deferred tax asset Accumulated other comprehensive loss $ $ The components of net periodic pension cost (benefit) were as follows (in thousands): Years ended September 30, 2016 2015 2014 Service cost $ $ $ Interest cost Expected return on plan assets Amortization of actuarial loss Settlement loss — — Administrative expenses Net pension cost (benefit) $ $ $ Years ended September 30, 2016 2015 2014 Weighted-average assumptions used to determine benefit obligation at September 30: Discount rate Rate of compensation increase Weighted-average assumptions used to determine net periodic benefit cost for the years ended September 30: Discount rate Expected return on plan assets Rate of compensation increase The long-term rate of return assumption represents the expected average rate of earnings on the funds invested or to be invested to provide for the benefits included in the benefit obligations. That assumption is determined based on a number of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, historical plan return data, plan expenses, and the potential to outperform market index returns. We have the responsibility to formulate the investment policies and strategies for the plans’ assets. Our overall policies and strategies include: maintain the highest possible return commensurate with the level of assumed risk, and preserve benefit security for the plans’ participants. We do not direct the day-to-day operations and selection process of individual securities and investments and, accordingly, we have retained the professional services of investment management organizations to fulfill those tasks. The investment management organizations have investment discretion over the assets placed under their management. We provide each investment manager with specific investment guidelines by asset class. The target ranges for each major category of the plans’ assets at September 30, 2016 are as follows: Allocation Asset Category Range Equity securities 20% to 55% Debt securities 25% to 75% Cash 0% to 55% Real estate 0% to 10% Our defined benefit pension plans invest in cash and cash equivalents, equity securities, fixed income securities, pooled separate accounts and common collective trusts. The following tables present the fair value of the assets of our defined benefit pension plans by asset category and their level within the fair value hierarchy (in thousands). See Note 3 for a description of each level within the fair value hierarchy. Beginning in 2015 our plans began investing in diversified growth funds that hold underlying investments in equities, fixed-income securities, commodities, and real estate. All assets classified as Level 2 or Level 3 in the table below are invested in pooled separate accounts or common collective trusts which do not have publicly quoted prices. The fair value of the pooled separate accounts and common collective trusts are determined based on the net asset value of the underlying investments. The fair value of the underlying investments held by the pooled separate accounts and common collective trusts, other than real estate investments, is generally based upon quoted prices in active markets. The fair value of the underlying investments comprised of real estate properties is determined through an appraisal process which uses valuation methodologies including comparisons to similar real estate and discounting of income streams. For investments in the pooled separate accounts and common collective trusts categorized as Level 2 below, there are no restrictions on the ability of our benefit plans to sell these investments. September 30, 2016 September 30, 2015 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash equivalents $ $ $ — $ $ $ $ — $ Equity: U.S. equity securities — — — — Foreign equity securities — — — — Fixed Income: U.S. fixed-income funds — — — — U.K. fixed-income funds — — — — Diversified growth fund — — Real Estate — — — — Total $ $ $ $ $ $ $ $ The following table presents the changes in the fair value of plan assets categorized as Level 3 in the preceding table (in thousands): Real Estate Balance as of October 1, 2014 $ Realized and unrealized gains, net Purchases, sales and settlements, net Balance as of September 30, 2015 Realized and unrealized gains, net Purchases, sales and settlements, net Balance as of September 30, 2016 $ The pension plans held no direct positions in Cubic Corporation common stock as of September 30, 2016 and 2015. We expect to pay the following pension benefit payments, which reflect expected future service, as appropriate, (in thousands): 2017 $ 2018 2019 2020 2021 2022-2026 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Sep. 30, 2016 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 13—STOCKHOLDERS’ EQUITY Long-Term Equity Incentive Plan In 2013, the Executive Compensation Committee of the Board of Directors (Compensation Committee) approved a long-term equity incentive award program. Through September 30, 2016, the Compensation Committee has granted 740,384 RSUs with time-based vesting and 785,256 RSUs with performance-based vesting under this program. Each RSU represents a contingent right to receive one share of our common stock. Dividend equivalent rights accrue with respect to the RSUs when and as dividends are paid on our common stock and vest proportionately with the RSUs to which they relate. Vested shares are delivered to the recipient following each vesting date. The RSUs granted with time-based vesting generally vest in four equal installments on each of the four October 1 dates following the grant date, subject to the recipient’s continued service through such vesting date. The performance-based RSUs granted to participants vest over three-year performance periods based on Cubic’s achievement of performance goals established by the Compensation Committee over the performance periods, subject to the recipient’s continued service through the end of the respective performance periods. For the performance-based RSUs granted to date, the vesting will be contingent upon Cubic meeting one of three types of vesting criteria over the performance period. These three categories of vesting criteria consist of revenue growth targets, earnings growth targets, and return on equity targets. The level at which Cubic’s performs against scalable targets over the performance periods will determine the percentage of the RSUs that will ultimately vest. Through September 30, 2016, Cubic has granted 1,525,640 RSUs of which 345,318 have vested. The grant date fair value of each RSU is the fair market value of one share of our common stock at the grant date. At September 30, 2016, the total number of unvested RSUs that are ultimately expected to vest, after consideration of expected forfeitures and estimated vesting of performance-based RSUs is 409,619. The following table summarizes our RSU activity: Unvested Restricted Stock Units Weighted-Average Number of Shares Grant-Date Fair Value Unvested at October 1, 2014 $ Granted Vested Forfeited Unvested at September 30, 2015 $ Granted Vested Forfeited Unvested at September 30, 2016 $ As of September 30, 2016, approximately 914,701 shares remained available for future grants under our long-term equity incentive plan. On October 1, 2016, 143,726 RSU’s vested. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Sep. 30, 2016 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 14 — STOCK-BASED COMPENSATION We recorded non-cash compensation expense related to stock-based awards of $8.8 million for the year ended September 30, 2016, which was comprised of the following (in thousands): Cost of sales $ Selling, general and administrative $ As of September 30, 2016, there was $35.7 million of unrecognized compensation cost related to unvested RSUs. Based upon the expected forfeitures and the expected vesting of performance-based RSUs, the aggregate fair value of RSUs expected to ultimately vest is $18.8 million. This amount is expected to be recognized over a weighted-average period of 1.7 years. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods on a cumulative basis in the period the estimated forfeiture rate changes for all stock-based awards when significant events occur. We consider our historical experience with employee turnover as the basis to arrive at our estimated forfeiture rate. The forfeiture rate was estimated to be 12.5% per year as of September 30, 2016. To the extent the actual forfeiture rate is different from what we have estimated, stock-based compensation related to these awards will be different from our expectations. |
LEGAL MATTERS
LEGAL MATTERS | 12 Months Ended |
Sep. 30, 2016 | |
LEGAL MATTERS | |
LEGAL MATTERS | NOTE 15—LEGAL MATTERS In October 2014, a lawsuit was filed in the United States District Court, Northern District of Illinois against us and one of our transit customers alleging infringement of various patents held by the plaintiff, seeking judgment that we have infringed on plaintiff’s patents; regular and treble damages; requiring an accounting of sales, profits, royalties and damages owed plaintiffs; pre and post judgment interest; an award of costs, fees and expenses, an injunction prohibiting the continuing infringement of the patents; and any other relief the court deems just and equitable. We are investigating the matter and plan to vigorously defend the lawsuit. We are also undertaking defense of our customer in this matter pursuant to our contractual obligations to that customer. Due to the preliminary nature of this case, we cannot estimate the probability of loss or any range of estimate of possible loss. We are not a party to any other material pending proceedings and we consider all other matters to be ordinary proceedings incidental to our business. We believe the outcome of these other proceedings will not have a materially adverse effect on our financial position, results of operations, or cash flows. |
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION | 12 Months Ended |
Sep. 30, 2016 | |
BUSINESS SEGMENT INFORMATION | |
BUSINESS SEGMENT INFORMATION | NOTE 16—BUSINESS SEGMENT INFORMATION We have three primary business segments: Cubic Transportation Systems (CTS), Cubic Global Defense Services (CGD Services) and Cubic Global Defense Systems (CGD Systems). CTS designs, produces, installs and services electronic revenue collection systems for mass transit projects, including railways and buses. CGD Services provides training, operations, intelligence, maintenance, technical and other services to the U.S. government and allied nations. CGD Systems performs work under U.S. and foreign government contracts relating to electronic defense systems and equipment. CGD Systems products include customized military range instrumentation, laser based training systems, and virtual simulation systems. CGD systems also includes our secure communications business, called CMS, which offers products such as datalinks, power amplifiers, avionics systems, modular networking and baseband communications equipment, deployable satellite communication terminal solutions, real-time video processing, exploitation and dissemination, and cross domain hardware solutions to address multi-level security requirements. We evaluate performance and allocate resources based on total segment operating profit or loss. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are immaterial and are eliminated in consolidation. Our reportable segments are business units that offer different products and services. Operating results for each segment are reported separately to senior corporate management to make decisions as to the allocation of corporate resources and to assess performance. Business segment financial data is as follows (in millions): Year Ended September 30, 2016 2015 2014 Sales: Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services Total sales $ $ $ Operating income (loss): Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services Unallocated corporate expenses Total operating income $ $ $ Assets: Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services Corporate Total assets $ $ $ Depreciation and amortization: Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services Corporate Total depreciation and amortization $ $ $ Capital expenditures: Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services — — — Corporate Total expenditures for long-lived assets $ $ $ Years ended September 30, 2016 2015 2014 Geographic Information: Sales (a): United States $ $ $ United Kingdom Canada Australia Middle East Far East Other Total sales $ $ $ (a) Sales are attributed to countries or regions based on the location of customers. Long-lived assets, net: United States $ $ $ United Kingdom Other foreign countries Total long-lived assets, net $ $ $ CGD Services and CGD Systems segment sales include $657.9 million, $670.0 million and $651.1 million in 2016, 2015 and 2014, respectively, of sales to U.S. government agencies. CTS segment sales include $156.3 million, $183.2 million and $213.2 million in 2016, 2015 and 2014, respectively, of sales under various contracts with our customer, Transport for London (TfL). No other customer accounts for 10% or more of our revenues for any periods presented. Changes in estimates on contracts for which revenue is recognized using the cost-to-cost percentage-of-completion method decreased operating income by approximately $2.8 million in 2016, decreased operating income by approximately $14.5 million in 2015 and increased operating income by approximately $1.3 million in 2014. These adjustments decreased net income by approximately $1.6 million ($0.06 per share) in 2016, decreased net income by approximately $8.0 million ($0.30 per share) in 2015 and increased net income by approximately $3.5 million ($0.13 per share) in 2014. Certain of our transportation systems service contracts contain service level or system usage incentives, for which we recognize revenues when the incentive award is fixed or determinable. These contract incentives are generally based upon monthly service levels or monthly performance and become fixed or determinable on a monthly basis. However, one of our legacy transportation systems service contracts that terminated in late fiscal 2015 contained annual system usage incentive which were based upon system usage compared to annual baseline amounts. For this contract the annual system usage incentives were not considered fixed or determinable until the end of the contract year for which the incentives are measured, which fell within the second quarter of our fiscal year. During the second quarter of fiscal years ended September 30, 2015 and 2014, we recognized sales of $9.3 million and $12.2 million, respectively related to annual system usage incentives on this transportation systems contract. In August 2015 we completed this contract and recognized an additional $3.1 million related to the final amount of system usage incentives. The recognition of these system usage incentives resulted in additional operating income of the same amounts in these respective periods. Upon completion of this contract we entered into a new service contract with this customer that is structured differently than the contract that completed in August 2015; the new contract does not have any significant system usage incentives. In fiscal years 2016, 2015, and 2014 we conducted a number of restructuring initiatives. In 2016, we incurred a total of $1.9 million of charges related to restructuring. In fiscal 2016 our CGD-Systems and CGD-Services segments incurred restructuring costs in connection with the formalization of CMS, a business division within our CGD Systems segment that includes our C4ISR subsidiaries and product offerings. CGD-Systems and CGD Services incurred cumulative restructuring charges of $0.9 million in connection with this initiative. In addition, during fiscal 2016, our CTS business implemented a restructuring plan to reduce headcount by approximately 20 in order to rebalance our resources with work levels. CTS incurred resulting restructuring charges of $1.0 million in connection with this initiative. In 2015, we incurred a total of $6.3 million of charges related to restructuring. In February 2015, we implemented a plan to restructure our defense services and defense systems businesses into a single organization to better align our defense business organizational structure with customer requirements, increase operational efficiencies and improve collaboration and innovation across the company. CGD Systems and CGD Services incurred restructuring charges of $4.6 million and $0.6 million, respectively, in connection with these restructuring activities. In addition, CTS incurred $0.6 million of restructuring costs and we incurred $0.5 million of unallocated corporate expenses related to various restructuring activities. In 2014, we incurred restructuring charges of $1.1 million primarily by our CTS business in September 2014 as a result of a planned reduction of employee headcount in the U.S. by approximately 20. This restructuring was predominantly driven by the reduction in work on certain contracts that were in the process of moving from the design and build phase to the services phase. Restructuring charges (reversals) incurred by business segment were as follows (in millions): Year Ended September 30, 2016 2015 2014 Restructuring costs (reversals): Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services — Unallocated corporate expenses and other — Total restructuring costs (reversals) $ $ $ A summary of the activity relating to the restructuring liability and employee separation expenses, which is included within accrued compensation and other current liabilities within our Consolidated Balance Sheet, is as follows (in thousands): Employee Separation Balance as of October 1, 2014 $ Accrued costs Cash payments Liability as of September 30, 2015 $ Accrued costs Cash payments Liability as of September 30, 2016 $ Certain restructuring costs are based upon estimates. Actual amounts paid may ultimately differ from these estimates. If additional costs are incurred or recognized amounts exceed costs, such changes in estimates will be recognized when incurred. The total costs of each of the restructuring plans described above are not expected to be significantly greater than the charges incurred to date. |
SUMMARY OF QUARTERLY RESULTS OF
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | 12 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | NOTE 17—SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of our quarterly results of operations for the fiscal years ended September 30, 2016 and 2015: Year Three Months Ended Ended Fiscal 2016 September 30 June 30 March 31 December 31 September 30 (in thousands, except per share data) Net sales $ $ $ $ $ Operating income (loss) Net income (loss) attributable to Cubic Net income (loss) per share, basic Net income (loss) per share, diluted year Three Months Ended Ended Fiscal 2015 September 30 June 30 March 31 December 31 September 30 (in thousands, except per share data) Net sales $ $ $ $ $ Operating income Net income (loss) attributable to Cubic Net income (loss) per share, basic Net income (loss) per share, diluted Changes in estimates on contracts for which revenue is recognized using the cost-to-cost-percentage-of-completion method increased operating profit by approximately $1.3 million in the three months ended September 30, 2016 and increased operating profit by approximately $0.7 million in the three months ended September 30, 2015. These adjustments increased net income by approximately $0.9 million ($0.03 per share) in the three months ended September 30, 2016 and increased net income by approximately $0.5 million ($0.02 per share) in the three months ended and September 30, 2015. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Organization and Nature of the Business | Organization and Nature of the Business: We design, develop and manufacture products which are mainly electronic in nature such as mass transit fare collection systems, air and ground combat training systems, and networked Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) products and systems. We provide services such as specialized military training exercises, including live, virtual and constructive training exercises and support, and we operate and maintain fare systems for mass transit customers. Our principal lines of business are transportation fare collection systems and services, defense services, and defense systems. Our principal customers for defense products and services are the U.S. and foreign governments. Our transportation fare collection systems and services are sold primarily to large local government agencies worldwide. In February 2015, we implemented a plan to restructure our defense services and defense systems businesses into a single business called Cubic Global Defense (CGD) to better align our defense business organizational structure with customer requirements, increase operational efficiencies and improve collaboration and innovation across the company. After this restructuring there is now a single, combined management structure for our legacy Cubic Defense Systems (CDS) and legacy Mission Support Services (MSS) segments. However, for segment financial reporting purposes, we continue to report the financial results of our defense systems and defense services segments separately. These two reporting segments have been renamed Cubic Global Defense Systems (CGD Systems) and Cubic Global Defense Services (CGD Services), respectively. CGD Systems includes Cubic Mission Solutions (CMS), a business division that includes our C4ISR subsidiaries and product offerings. There have been no significant changes in the operations that are included in each of these reporting segments as a result of the restructuring. |
Principles of Consolidation | Principles of Consolidation: The consolidated financial statements include the accounts of Cubic Corporation, subsidiaries we control, and variable interest entities (VIE’s) for which Cubic is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. |
Foreign Currency Transactions and Translation | Foreign Currency Transactions and Translation : Our reporting currency is the U.S. dollar. Assets and liabilities of foreign subsidiaries are translated at the spot rate in effect at the applicable reporting date, and our Consolidated Statements of Income are translated at the average exchange rates in effect during the applicable periods. The resulting unrealized cumulative translation adjustments are recorded as a component of other comprehensive income (loss) in our Consolidated Statements of Comprehensive Income (Loss). Cash flows from our operations in foreign countries are translated at the average rate for the applicable period. The effect of exchange rates on cash balances held in foreign currencies are separately reported in our Consolidated Statements of Cash Flows. Transactions denominated in currencies other than our own subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in our Consolidated Balance Sheets related to such transactions result in transaction gains and losses that are reflected in our Consolidated Statements of Income as either unrealized (based on the applicable period end translation) or realized (upon settlement of the transactions). Total transaction losses, which are related primarily to advances to foreign subsidiaries and advances between foreign subsidiaries amounted to $0.9 million, $3.2 million and $1.3 million in 2016, 2015 and 2014, respectively. |
Use of Estimates | Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include the estimated total costs at completion of our long-term contracts, estimated loss contingencies, estimated self-insurance liabilities, estimated discounted future cash flows of our reporting units used for goodwill impairment testing and estimated future cash flows for our long-lived asset impairment testing, estimated discounted cash flows used for valuation of intangible assets in business combinations, and estimated rates of return and discount rates related to our defined benefit pension plans. Actual results could differ from our estimates. |
Cash Equivalents | Cash Equivalents : We consider highly liquid investments with maturity of three months or less when purchased to be cash equivalents. |
Restricted Cash | Restricted Cash: Restricted cash represents cash that is restricted as to usage for legal or contractual reasons. Restricted cash is classified either as current or non-current, depending upon the date of the lapse of the respective restriction. |
Concentration of Credit Risk | Concentration of Credit Risk: We have established guidelines pursuant to which our cash and cash equivalents are diversified among various money market instruments and investment funds. These guidelines emphasize the preservation of capital by requiring minimum credit ratings assigned by established credit organizations. We achieve diversification by specifying maximum investments in each instrument type and issuer. The majority of these investments are not on deposit in federally insured accounts. |
Marketable Securities | Marketable Securities : Marketable securities consist of time deposits with banks. Marketable securities are classified and accounted for as available-for-sale. These investments are recorded at fair value in the accompanying Consolidated Balance Sheets and the change in fair value is recorded, net of taxes, as a component of other comprehensive income. There have been no significant realized or unrealized gains or losses on these marketable securities to date. Marketable securities have been classified as current assets in the accompanying Consolidated Balance Sheets based upon the nature of the securities and availability for use in current operations. |
Accounts Receivable | Accounts Receivable: Receivables consist primarily of amounts due from U.S. and foreign governments for defense products and services and local government agencies for transportation systems. Due to the nature of our customers, we generally do not require collateral. We have limited exposure to credit risk as we have historically collected substantially all of our receivables from government agencies. We generally require no allowance for doubtful accounts for these customers. |
Inventories | Inventories: We state our inventories at the lower of cost or market. We determine cost using the first-in, first-out (FIFO) method, which approximates current replacement cost. We value our work in process at the actual production and engineering costs incurred to date, including applicable overhead. For contracts with the U.S. government our work in process also includes general and administrative costs. Any inventoried costs in excess of estimated realizable value are immediately charged to cost of sales. We include qualifying contract costs allocable to units-of-delivery contracts as inventory. We also receive performance-based payments and progress payments associated with certain of these contracts based on the billing terms in the underlying contracts. Pursuant to contract provisions, agencies of the U.S. government and certain other customers have title to, or security interest in, inventories related to such contracts as a result of advances, performance-based payments, and progress payments. Contract advances, performance-based payments and progress payments received are recorded as an offset against the related inventory balances for contracts that that are accounted for on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. This determination is performed on a contract by contract basis. Any amount of payments received in excess of the cumulative amount of accounts receivable and inventoried costs for a contract is classified as customer advances, which is classified as a liability on the balance sheet. |
Long-term capitalized contract costs | Long-term capitalized contract costs: Long-term capitalized contract costs include costs incurred on contracts to develop and manufacture transportation systems for customers for which revenue recognition does not begin until the customers begin operating the systems. These capitalized costs are being recognized in cost of sales based upon the ratio of revenue recorded during a period compared to the revenue expected to be recognized over the term of the contracts. |
Property, Plant and Equipment | Property, Plant and Equipment: We carry property, plant and equipment at cost. We provide depreciation in amounts sufficient to amortize the cost of the depreciable assets over their estimated useful lives. Generally, we use straight-line methods for depreciable real property over estimated useful lives or the term of the underlying lease, if shorter than the estimated useful lives, for leasehold improvements. We use accelerated methods (declining balance and sum-of-the-years-digits) for machinery and equipment over their estimated useful lives. Certain costs incurred in the development of internal-use software and software applications, including external direct costs of materials and services and applicable compensation costs of employees devoted to specific software development, are capitalized as computer software costs. Costs incurred outside of the application development stage are expensed as incurred. The amounts capitalized are included in property, plant and equipment and are amortized on a straight-line basis over the estimated useful life of the software, which ranges from three to seven years. No amortization expense is recorded until the software is ready for its intended use. |
Goodwill and Purchased Intangibles | Goodwill and Purchased Intangibles: We evaluate goodwill for potential impairment annually as of July 1, or when circumstances indicate that the carrying value may not be recoverable. The test is performed by comparing the fair value of each of our reporting units, which are consistent with our operating segments, to its carrying value, including recorded goodwill. If the carrying value exceeds the fair value, we measure impairment by comparing the implied fair value of goodwill to its carrying value, and any impairment determined would be recorded in the current period. Our purchased intangible assets are subject to amortization and we use a combination of straight-line and accelerated methods, based on the expected cash flows from the assets. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets: We generally evaluate the carrying values of long-lived assets other than goodwill for impairment only if events or changes in facts and circumstances indicate that carrying values may not be recoverable. If we determined there was any impairment, we would measure it by comparing the fair value of the related asset to its carrying value and record the difference in the current period. Fair value is generally determined by identifying estimated discounted cash flows to be generated by those assets. We have not recorded any impairment of long-lived assets for the years ended September 30, 2016, 2015 and 2014. |
Recognizing assets acquired and liabilities assumed in a business combination | Recognizing assets acquired and liabilities assumed in a business combination: Acquired assets and assumed liabilities are recognized in a business combination on the basis of their fair values at the date of acquisition. We assess fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, using a variety of methods including income approaches such as present value techniques or cost approaches such as the estimation of current selling prices and replacement values. Fair value of the assets acquired and liabilities assumed, including intangible assets, and contingent payments, are measured based on the assumptions and estimations with regards to the variable factors such as the amount and timing of future cash flows for the asset or liability being measured, appropriate risk-adjusted discount rates, nonperformance risk, or other factors that market participants would consider. Upon acquisition, we determine the estimated economic lives of the acquired intangible assets for amortization purposes, which are based on the underlying expected cash flows of such assets. Adjustments to inventory are based on the fair market value of inventory and amortized into income based on the period in which the underlying inventory is sold. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Actual results may vary from projected results and assumptions used in the fair value assessments. |
Customer Advances | Customer Advances : We receive advances, performance-based payments and progress payments from customers that may exceed revenues recognized to date on certain contracts, including contracts with agencies of the U.S. government. We classify such advances, other than those reflected as a reduction of receivables or inventories, as current liabilities. |
Contingencies | Contingencies : We establish reserves for loss contingencies when, in the opinion of management, the likelihood of liability is probable and the extent of such liability is reasonably estimable. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel, our defenses and our experience in similar cases or proceedings as well as our assessment of matters, including settlements, involving other defendants in similar or related cases or proceedings. We may increase or decrease our legal reserves in the future, on a matter-by-matter basis, to account for developments in such matters. |
Derivative Financial Instruments | Derivative Financial Instruments: All derivatives are recorded at fair value, however, the classification of gains and losses resulting from changes in the fair values of derivatives are dependent on the intended use of the derivative and its resulting designation. If a derivative is designated as a fair value hedge, then a change in the fair value of the derivative is offset against the change in the fair value of the underlying hedged item and only the ineffective portion of the hedge, if any, is recognized in cost of sales. If a derivative is designated as a cash flow hedge, then the effective portion of a change in the fair value of the derivative is recognized as a component of accumulated other comprehensive income until the underlying hedged item is recognized in cost of sales, or the forecasted transaction is no longer probable of occurring. If a derivative does not qualify as a highly effective hedge, a change in fair value is immediately recognized in earnings. We formally document hedging relationships for all derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transactions. |
Defined Benefit Pension Plans | Defined Benefit Pension Plans: Some of our employees are covered by defined benefit pension plans. The net periodic cost of our plans is determined using several actuarial assumptions, the most significant of which are the discount rate and the long-term rate of return on plan assets. We recognize on a plan-by-plan basis the funded status of our defined benefit pension plans as either an asset or liability on our balance sheets, with a corresponding adjustment to accumulated other comprehensive income (loss), net of tax, in shareholders’ equity. The funded status is measured as the difference between the fair value of the plan assets and the benefit obligation of the plan. |
Comprehensive Income (Loss) | Comprehensive Income (Loss): Other comprehensive income (loss), which is comprised of unrealized gains and losses on foreign currency translation adjustments, unrealized gains and losses on cash flow hedges, net of tax, unrealized gains and losses on available-for-sale securities, net of tax and pension liability adjustments, net of tax is included in our Consolidated Statement of Comprehensive Income (Loss) as other comprehensive income (loss). |
Revenue Recognition | Revenue Recognition: We generate revenue from the sale of products such as mass transit fare collection systems, air and ground combat training systems, and products with C4ISR capabilities. We also generate revenue from services we provide such as specialized military training exercises, including live, virtual and constructive training exercises and support, and we operate and maintain fare systems for mass transit customers. We classify sales as products or services in our Consolidated Statements of Income based on the attributes of the underlying contracts. We recognize sales and profits under our long-term fixed-price contracts which require a significant amount of development effort in relation to total contract value using the cost-to-cost percentage-of-completion method of accounting. We record sales and profits based on the ratio of contract costs incurred to estimated total contract costs at completion. Contract costs include material, labor and subcontracting costs, as well as an allocation of indirect costs. For contracts with the U.S. federal government, general and administrative costs are included in contract costs; however, for purposes of revenue measurement, general and administrative costs are not considered contract costs for any other customers. Costs are recognized as incurred for contracts accounted for under the cost-to-cost percentage-of-completion method. For certain other long-term, fixed price production contracts not requiring substantial development effort we use the units-of-delivery percentage-of-completion method as the basis to measure progress toward completing the contract and recognizing sales. The units-of delivery measure recognizes revenues as deliveries are made to the customer generally using unit sales values in accordance with the contract terms. Costs of sales are recorded as deliveries are made. We estimate profit as the difference between total estimated revenue and total estimated cost of a contract and recognize that profit over the life of the contract based on deliveries. For long-term fixed price contracts, we only include amounts representing contract change orders, claims or other items in the contract value when they can be reliably estimated and we consider realization probable. Changes in estimates of sales, costs and profits are recognized using the cumulative catch-up method of accounting. This method recognizes in the current period the cumulative effect of the changes on current and prior periods. A significant change in one or more of these estimates could have a material effect on our consolidated financial position or results of operations. We record sales under cost-reimbursement-type contracts as we incur the costs. The Federal Acquisition Regulations provide guidance on the types of costs that we will be reimbursed in establishing the contract price. We consider incentives or penalties and awards applicable to performance on contracts in estimating sales and profits, and record them when there is sufficient information to assess anticipated contract performance. We do not recognize incentive provisions that increase or decrease earnings based solely on a single significant event until the event occurs. We occasionally enter into contracts that include multiple deliverables such as the construction or upgrade of a system and subsequent services to operate and maintain the delivered system. For such contracts, arrangement consideration is allocated at the inception of the arrangement to all deliverables using the relative-selling-price method. Under the relative-selling-price method, the selling price for each deliverable is determined using vendor specific objective evidence (VSOE) of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists for a deliverable, which is typically the case for our contracts, the guidance requires us to determine the best estimate of the selling price, which is the price at which we would sell the deliverable if it were sold on a standalone basis. In estimating the selling price of the deliverable on a standalone basis, we consider our overall pricing models and objectives, including the factors we contemplate in negotiating our contracts with our customers. The pricing models and objectives that we use are generally based upon a cost-plus margin approach, with the estimated margin based in part on qualitative factors such as perceived customer pricing sensitivity and competitive pressures. Once the contract value is allocated to the separate deliverables under a multiple-element arrangement, revenue recognition guidance relevant to each contractual element is followed. For example, for the long-term construction portion of a contract we generally use the percentage-of completion method and for the services portion we generally recognize the service revenues on a straight-line basis over the contractual service period or based on measurable units of work performed or incentives earned. For certain of our multiple-element arrangements, the contract specifies that we will not be paid upon the delivery of certain units of accounting, but rather we will be paid when subsequent performance obligations are satisfied. Generally, in these cases the allocation of arrangement consideration to the up-front deliverables is limited, in some cases to zero, and revenue is reduced, in some cases to zero for the delivery of up-front units of accounting. In such situations, if the costs associated with the delivered item exceed the amount of allocable arrangement consideration, we defer the direct and incremental costs associated with the delivered item that are in excess of the allocated arrangement consideration as capitalized contract costs. We assess recoverability of these costs by comparing the recorded asset to the deferred revenue in excess of the transaction price allocated to the remaining deliverables in the arrangement. Capitalized contract costs are subsequently recognized in income in a manner that is consistent with revenue recognition pattern for the arrangement as a whole. If no pattern of revenue recognition can be reasonably predicted for the arrangement, the capitalized costs are amortized on a straight-line basis. Revenue under our service contracts with the U.S. government is recorded under the cost-to cost percentage-of-completion method. Award fees and incentives related to performance under these service contracts are accrued during the performance of the contract based on our historical experience and estimates of success with such awards. Revenue under contracts for services other than those with the U.S. government and those associated with design, development, or production activities is recognized either as services are performed or when a contractually required event has occurred, depending on the contract. For non-U.S. government service contracts that contain measurable units of work performed we recognize sales when the units of work are completed. Certain of our transportation systems service contracts contain service level or system usage incentives, for which we recognize revenues when the incentive award is fixed or determinable. These contract incentives are generally based upon monthly service levels or monthly performance and become fixed or determinable on a monthly basis. However, one of our legacy transportation systems service contracts that terminated in late fiscal 2015 contained annual system usage incentive which were based upon system usage compared to annual baseline amounts. For this contract the annual system usage incentives were not considered fixed or determinable until the end of the contract year for which the incentives are measured, which fell within the second quarter of our fiscal year. The follow-on contract to this transportation systems service contract did not include an annual system usage incentive. Revenue under non-U.S. government service contracts that do not contain measurable units of work performed, which is generally the case for our service contracts, is recognized on a straight-line basis over the contractual service period, unless evidence suggests that the revenue is earned, or obligations fulfilled, in a different manner. Costs incurred under these services contracts are expensed as incurred. We make provisions in the current period to fully recognize any anticipated losses on contracts, other than service contracts. If we receive cash on a contract prior to revenue recognition, and for contracts that are accounted for on a units-of-delivery method, that is in excess of inventoried costs, we classify it as a customer advance on the balance sheet. In addition, we are subject to audit of incurred costs related to many of our U.S. government contracts. These audits could produce different results than we have estimated for revenue recognized on our cost-based contracts with the U.S. government; however, our experience has been that our costs are acceptable to the government. |
Research and Development (R&D) | Research and Development (R&D) : We record the cost of company sponsored R&D activities as the expenses are incurred. The cost of engineering and product development activities incurred in connection with the performance of work on our contracts is included in cost of sales as they are directly related to contract performance. |
Stock-Based Compensation | Stock-Based Compensation: Restricted stock units awards (RSUs) are granted to eligible employees and directors and represent rights to receive shares of common stock at a future date if vesting occurs. RSUs granted to date have either time-based vesting or performance-based vesting. Compensation expense for all RSUs is measured at fair value at the grant date and recognized based upon the number of RSUs that ultimately vest. We determine the fair value of RSUs based on the closing market price of our common stock on the grant date. The grant date of the performance-based RSUs takes place when the grant is authorized and the specific achievement goals are communicated. Compensation expense for time-based vesting awards is recorded on a straight-line basis over the requisite service period, adjusted by estimated forfeiture rates. Vesting of performance-based RSUs is tied to achievement of specific company goals over the measurement period, which is generally a three-year period from the date of the grant. For purposes of measuring compensation expense for performance-based RSUs, at each reporting date we estimate the number of shares for which vesting is deemed probable based on management’s expectations regarding achievement of the relevant performance criteria, adjusted by estimated forfeiture rates. Compensation expense for the number of shares ultimately expected to vest is recognized on a straight-line basis over the requisite service period for the performance-based RSUs. The recognition of compensation expense associated with performance-based RSUs requires judgment in assessing the probability of meeting the performance goals. For performance-based RSUs, there may be significant expense recognition or reversal of recognized expense in periods in which there are changes in the assessed probability of meeting performance-based vesting criteria. |
Income Taxes | Income Taxes : Our provision for income taxes includes federal, state, local and foreign income taxes. We provide deferred income taxes on temporary differences between assets and liabilities for financial reporting and tax purposes as measured by enacted tax rates we expect to apply when the temporary differences are settled or realized. Tax law and rate changes are reflected in income in the period such changes are enacted. We establish valuation allowances for deferred tax assets when the amount of future taxable income we expect is not likely to support the realization of the temporary differences. We evaluate the capital requirements of our foreign subsidiaries and determine the amount of excess capital, if any, that is available for distribution. We provide for U.S. taxes on the amount we determine to be excess capital available for distribution. U.S. taxes are not provided on amounts we consider to be permanently reinvested. We include interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision. |
Net Income Per Share | Net Income Per Share: Basic net income per share (EPS) is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period, including vested RSUs. Diluted EPS is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period. Our common equivalent shares consist of dilutive RSUs. Dilutive RSUs are calculated based on the average share price for each fiscal period using the treasury stock method. For RSUs with performance-based vesting, no common equivalent shares are included in the computation of diluted EPS until the related performance criteria have been met. Basic and diluted EPS are computed as follows (amounts in thousands, except per share data): Three Months Ended Year Ended September 30, 2016 2015 2014 Net income attributable to Cubic $ $ $ Weighted average shares - basic Effect of dilutive securities Weighted average shares - diluted Net income per share attributable to Cubic, basic $ $ $ Effect of dilutive securities — — — Net income per share attributable to Cubic, diluted $ $ $ Anti-dilutive employee share-based awards — — — |
Recent Accounting Pronouncements | Recent Accounting Pronouncements: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance and will require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. ASU 2014-09 will be effective for us starting in the first quarter of fiscal 2019 as we have determined that we will not adopt ASU 2014-09 early. ASU 2014-09 allows for two methods of adoption: (a) “full retrospective” adoption, meaning the standard is applied to all periods presented, or (b) “modified retrospective” adoption, meaning the cumulative effect of applying ASU 2014-09 is recognized as an adjustment to the opening retained earnings balance in the year of adoption. We have not yet determined which method of adoption we will select. We are currently in the process of modeling the impact of the adoption of the new standard on certain of our long-term contracts in order to assess the expected impacts. As the new standard will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact revenue and cost recognition on a significant number of contracts across our business segments, in addition to our business processes and our information technology systems. As a result, our evaluation of the effect of the new standard will likely extend over several future periods. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern , which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and provide related footnote disclosures. ASU 2014-15 will be effective for us for the year ended September 30, 2017 and for interim reporting periods thereafter. Early adoption is permitted for financial statements that have not been previously issued, but we have not yet adopted this standard. This adoption is not expected to have a significant impact on our financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that all costs incurred to issue debt be presented in the balance sheet as a direct reduction from the carrying value of the debt, similar to the presentation of debt discounts. ASU 2015-03 is effective for us on October 1, 2016. We do not expect that the adoption of this new accounting guidance will have a material impact on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 will be effective for us beginning on October 1, 2016. We are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes which removes the requirement to separate deferred tax liabilities and assets into current and noncurrent amounts and instead requires all such amounts be classified as noncurrent on the balance sheet. We adopted ASU 2015-17 prospectively on October 1, 2015 and reclassified the current portion of our net deferred tax assets and liabilities to net noncurrent deferred tax assets and liabilities. No prior periods were retrospectively adjusted. In January 2016, the FASB issued Accounting Standards Update ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for us beginning October 1, 2018 and, with the exception of a specific portion of the amendment, early adoption is not permitted. We are currently evaluating the impact this guidance will have on our financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases . Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The ASU will be effective for us beginning October 1, 2019 with early adoption permitted. ASU 2016-02 will be adopted on a modified retrospective transition basis for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the impact of the application of this accounting standard update on our consolidated financial statements as well as whether to adopt the new guidance early. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation . The new guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this standard are effective for our annual year and first fiscal quarter beginning on October 1, 2017 with early adoption permitted. We are currently evaluating the impact of the application of this accounting standard update on our consolidated financial statements as well as whether to adopt the new guidance early. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which provides clarifying guidance on how entities should classify certain cash receipts and cash payments on the statement of cash flows. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance will be effective for the Company in its fiscal year beginning October 1, 2018, and early adoption is permitted. We are currently evaluating the impact of the application of this accounting standard update on our consolidated financial statements as well as whether to adopt the new guidance early. |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of computation of basic and diluted EPS | Basic and diluted EPS are computed as follows (amounts in thousands, except per share data): Three Months Ended Year Ended September 30, 2016 2015 2014 Net income attributable to Cubic $ $ $ Weighted average shares - basic Effect of dilutive securities Weighted average shares - diluted Net income per share attributable to Cubic, basic $ $ $ Effect of dilutive securities — — — Net income per share attributable to Cubic, diluted $ $ $ Anti-dilutive employee share-based awards — — — |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Acquisitions | |
Schedule of estimated amortization expense related to acquisition | The table below shows our expected amortization of purchased intangibles as of September 30, 2016, for each of the next five years and thereafter (in thousands): Cubic Global Cubic Global Transportation Defense Defense Systems Systems Services Total 2017 $ $ $ $ 2018 2019 2020 2021 Thereafter $ $ $ $ |
Schedule of unaudited pro forma information | The following unaudited pro forma information presents our consolidated results of operations as if GATR, TeraLogics, H4 Global and DTECH had been included in our consolidated results since October 1, 2014 (in millions): Year Ended September 30, 2016 2015 Net sales $ $ Net income attributable to Cubic $ $ |
GATR | |
Acquisitions | |
Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Backlog Technology Non-compete agreements Trade name Accounts receivable Inventory Income tax receivable Accounts payable and accrued expenses Deferred tax liabilities Net identifiable assets acquired Goodwill Net assets acquired $ |
Schedule of estimated amortization expense related to acquisition | The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of GATR for fiscal years 2017 through 2021 and thereafter is as follows (in millions): Year Ended September 30, 2017 $ 2018 2019 2020 2021 Thereafter |
TeraLogics | |
Acquisitions | |
Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date | The acquisition of TeraLogics is being paid for with a combination of funds from our existing cash resources and borrowings on our revolving credit facility. The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Backlog Software Non compete agreements Accounts receivable Accounts payable and accrued expenses Other net assets acquired (liabilities assumed) Net identifiable assets acquired Goodwill Net assets acquired $ |
Schedule of estimated amortization expense related to acquisition | The estimated amortization expense amounts related to the intangible assets recorded in connection with our acquisition of TeraLogics for fiscal years 2017 through 2021 and thereafter is as follows (in millions): Year Ended September 30, 2017 $ 2018 2019 2020 2021 Thereafter |
DTECH | |
Acquisitions | |
Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date | The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Non-compete agreements Backlog Cash Accounts receivable Inventory Warranty obligation Tax liabilities Accounts payable and accrued expenses Other net assets acquired Net identifiable assets acquired Goodwill Net assets acquired $ |
Schedule of estimated amortization expense related to acquisition | The estimated amortization expense amounts related to the intangible assets recorded in connection with our acquisition of DTECH for fiscal years 2017 through 2021 is as follows (in millions): Year Ended September 30, 2017 $ 6.8 2018 5.5 2019 4.1 2020 2.8 2021 1.5 |
Intific | |
Acquisitions | |
Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Technology Backlog Other intangible assets Accounts receivable Deferred tax assets Accounts payable and accrued expenses Deferred tax liabilities Other net liabilities assumed Net identifiable assets acquired Goodwill Net assets acquired $ |
Schedule of estimated amortization expense related to acquisition | The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of Intific for fiscal years 2017 through 2020 is as follows (in millions): Year Ended September 30, 2017 $ 0.6 2018 0.5 2019 0.2 2020 0.1 |
ITMS | |
Acquisitions | |
Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date | The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ Intellectual property Backlog Supplier relationships Agreements with seller Accounts receivable - billed Accounts receivable - unbilled Deferred tax liabilities, net Deferred revenue Accounts payable and accrued expenses Other net assets acquired Net identifiable assets acquired Goodwill Net assets acquired $ |
Schedule of estimated amortization expense related to acquisition | The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of ITMS for fiscal years 2017 through 2020 is as follows (in millions): Year Ended September 30, 2017 $ 2018 2019 2020 |
FAIR VALUE OF FINANCIAL INSTR29
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Summary of change in fair value of liability | As of September 30, 2016, the following table summarizes the change in fair value of our Level 3 contingent consideration liability (in thousands): DTECH H4 TeraLogics (Contract Extensions) TeraLogics (Revenue Targets) GATR Total Balance as of September 30, 2014 $ — $ — $ — $ — $ — $ — Initial measurement recognized at acquisition — — — — Total remeasurement recognized in earnings — — — — Balance as of September 30, 2015 $ $ — $ — $ — $ — $ Initial measurement recognized at acquisition — Cash paid to seller — — — Adjustment to the provisional acquisition date valuation — — — Total remeasurement recognized in earnings Balance as of September 30, 2016 $ $ $ $ $ $ |
Summary of assets and liabilities measured and recorded at fair value on Balance Sheet on a recurring basis | The following table presents assets and liabilities measured and recorded at fair value on our balance sheets on a recurring basis (in thousands): September 30, 2016 September 30, 2015 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash equivalents $ $ — $ — $ $ $ — $ — $ Marketable securities — — — — Current derivative assets — — — — Noncurrent derivative assets — — — — Marketable securities in rabbi trust — — — — Total assets measured at fair value — — Liabilities Current derivative liabilities — — — — Noncurrent derivative liabilities — — — — Contingent consideration to seller of GATR — — — — — — Contingent consideration to seller of TeraLogics - contract extensions — — — — — — Contingent consideration to seller of TeraLogics - revenue targets — — — — — — Contingent consideration to seller of H4 Global — — — — — — Contingent consideration to seller of DTECH — — — — Total liabilities measured at fair value $ — $ $ $ $ — $ $ $ |
Schedule of estimated fair value and carrying value of our long-term debt | The following table presents the estimated fair value and carrying value of our long-term debt (in millions): September 30, September 30, 2016 2015 Fair value $ $ Carrying value $ $ |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
ACCOUNTS RECEIVABLE | |
Schedule of components of accounts receivable | The components of accounts receivable under long-term contracts are as follows (in thousands): September 30, 2016 2015 U.S. Government Contracts: Amounts billed $ $ Recoverable costs and accrued profits on progress completed--not billed Commercial Customers: Amounts billed Recoverable costs and accrued profits on progress completed--not billed Less unbilled amounts not currently due--commercial customers $ $ |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
INVENTORIES | |
Components of inventories | Significant components of inventories are as follows (in thousands): September 30, September 30, 2016 2015 Finished products $ $ Work in process and inventoried costs under long-term contracts Materials and purchased parts Customer advances Net inventories $ $ |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
PROPERTY, PLANT AND EQUIPMENT | |
Components of property, plant and equipment | Significant components of property, plant and equipment are as follows (in thousands): September 30, 2016 2015 Land and land improvements $ $ Buildings and improvements Machinery and other equipment Software Leasehold improvements Construction and internal-use software development in progress Accumulated depreciation and amortization $ $ |
GOODWILL AND PURCHASED INTANG33
GOODWILL AND PURCHASED INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
GOODWILL AND PURCHASED INTANGIBLE ASSETS | |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill for the two years ended September 30, 2016 are as follows (in thousands): Cubic Global Cubic Global Transportation Defense Defense Systems Systems Services Total Balances at October 1, 2014 $ $ $ $ Acquisitions (see Note 2) — — Foreign currency exchange rate changes — Balances at September 30, 2015 $ $ $ $ Acquisitions (see Note 2) — — Foreign currency exchange rate changes — Balances at September 30, 2016 $ $ $ $ |
Schedule of components of net goodwill | The components of the net goodwill balances at September 30, 2016 are as follows (in thousands): Cubic Global Cubic Global Transportation Defense Defense Systems Systems Services Total Goodwill $ $ $ $ Accumulated impairment charges — — Net balances $ $ $ $ |
Schedule of entity's purchased intangible assets | The table below summarizes our purchased intangible assets (in thousands): September 30, 2016 September 30, 2015 Gross Gross Carrying Accumulated Net Carrying Carrying Accumulated Net Carrying Amount Amortization Amount Amount Amortization Amount Contract and program intangibles $ $ $ $ Other purchased intangibles Total $ $ $ $ $ $ |
Schedule of expected amortization of purchased intangibles for each of the next five years | The table below shows our expected amortization of purchased intangibles as of September 30, 2016, for each of the next five years and thereafter (in thousands): Cubic Global Cubic Global Transportation Defense Defense Systems Systems Services Total 2017 $ $ $ $ 2018 2019 2020 2021 Thereafter $ $ $ $ |
FINANCING ARRANGEMENTS (Tables)
FINANCING ARRANGEMENTS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
FINANCING ARRANGEMENTS | |
Schedule of long-term debt | Long-term debt consists of the following (in thousands): September 30, 2016 2015 Series A senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% $ $ Series B senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% Series C senior unsecured notes payable to a group of insurance companies, interest fixed at 3.70% Series D senior unsecured notes payable to a group of insurance companies, interest fixed at 3.93% — Mortgage note from a U.K. financial institution, with quarterly installments of principal and interest at 6.48% Less current portion $ $ |
COMMITMENTS (Tables)
COMMITMENTS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
COMMITMENTS | |
Summary of future minimum payments, net of minimum sublease income, under noncancelable operating leases | Future minimum payments, net of minimum sublease income, under non-cancelable operating leases with initial terms of one year or more consist of the following for the next five years and thereafter, as of September 30, 2016 (in thousands): 2017 $ 2018 2019 2020 2021 Thereafter $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES | |
Components of income (loss) before income taxes | Income (loss) before income taxes includes the following components (in thousands): Years ended September 30, 2016 2015 2014 (in thousands) United States $ $ $ Foreign Total $ $ $ |
Significant components of the provision for income taxes | Significant components of the provision for income taxes are as follows: Years ended September 30, 2016 2015 2014 (in thousands) Current: Federal $ $ $ State Foreign Total current Deferred: Federal State Foreign Total deferred Provision for income taxes $ $ $ |
Reconciliation of income tax computed at the U.S. federal statutory tax rate to income tax expense | The reconciliation of income tax computed at the U.S. federal statutory tax rate to income tax expense is as follows: Years ended September 30, 2016 2015 2014 (in thousands) Tax expense at U.S. statutory rate $ $ $ State income taxes, net of federal tax effect Nondeductible expenses (1) Change in reserve for tax contingencies Change in deferred tax asset valuation allowance (2) Foreign income taxed at less than statutory rate Research and development credits (3) Other Provision for income taxes $ $ $ (1) In 2016, we recorded $6.3 million of tax expense related to nondeductible acquisition related compensation expenses (2) In 2016, we recorded a net tax benefit primarily related to a business combination in which we acquired significant U.S. deferred tax liabilities as well as a utilization and subsequent release of the deferred tax valuation allowance in Australia. In 2015, we recorded a full valuation allowance on U.S. net deferred tax assets with a charge to expense of $35.8 million. (3) In both 2016 and 2015, we recorded tax benefits of $1.0 million and $1.2 million, respectively, related to the reinstatement of the research and development tax credit. |
Significant components of deferred tax assets and liabilities | Significant components of our deferred tax assets and liabilities are as follows: September 30, 2016 2015 (in thousands) Deferred tax assets: Accrued employee benefits $ $ Long-term contracts and inventory valuation reductions Allowances for loss contingencies Deferred compensation Property, plant and equipment — Intangible assets — Retirement benefits Tax credit carryforwards Net operating losses carryforwards Other Total gross deferred tax assets Valuation allowance Total deferred tax assets Deferred tax liabilities: Deferred revenue Unremitted foreign earnings Property, plant and equipment — Intangible assets — Foreign currency mark-to-market — Other Total deferred tax liabilities Net deferred tax asset (liability) $ $ |
Expiration of tax credit carryforwards | Such credit carryforwards (in thousands) expire as follows: U.S. foreign tax credits $ 2023-2026 U.S. research and development tax credits 2035-2036 State research and development tax credits Do not expire |
Expiration of federal, state and foreign net operating losses | We have federal, state and foreign net operating losses (in thousands) which expire as follows: U.S. net operating loss carryforwards $ State net operating loss carryforwards 2020-2036 Foreign net operating loss carryforwards Do not expire |
Net changes in the liability for unrecognized tax benefits | During fiscal 2016 and 2015, the aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows: Years ended September 30, 2016 2015 (in thousands) Balance at beginning of year $ $ Additions (reductions) for tax positions taken in prior years: — Recognition of benefits from expiration of statutes Other — Additions for tax positions related to the current year Additions for tax positions related to current year acquisitions Balance at end of year $ $ |
DERIVATIVE INSTRUMENTS AND HE37
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
Schedule of notional principal amounts of the outstanding derivative instruments | The following table shows the notional principal amounts of our outstanding derivative instruments as of September 30, 2016 and 2015 (in thousands): Notional Principal September 30, 2016 September 30, 2015 Instruments designated as accounting hedges: Foreign currency forwards $ $ Instruments not designated as accounting hedges: Foreign currency forwards $ $ |
Schedule of fair value of derivative financial instruments | The table below presents the fair value of our derivative financial instruments that qualify for hedge accounting as well as their classification on the consolidated balance sheets as of September 30, 2016 and 2015 (in thousands): Fair Value Balance Sheet Location September 30, 2016 September 30, 2015 Asset derivatives: Foreign currency forwards Other current assets $ $ Foreign currency forwards Other noncurrent assets $ $ Liability derivatives: Foreign currency forwards Other current liabilities $ $ Foreign currency forwards Other noncurrent liabilities Total $ $ |
Schedule of gains and losses recognized in other comprehensive loss on derivative financial instruments designated as cash flow hedges | The tables below present gains and losses recognized in OCI for the years ended September 30, 2016 and 2015 related to derivative financial instruments designated as cash flow hedges, as well as the amount of gains and losses reclassified into earnings during those periods (in thousands): Years ended September 30, 2016 2015 Gains (losses) Gains (losses) Gains (losses) reclassified into reclassified into recognized in earnings - Gains (losses) earnings - Derivative Type OCI Effective Portion recognized in OCI Effective Portion Foreign currency forwards $ $ $ $ |
PENSION, PROFIT SHARING AND O38
PENSION, PROFIT SHARING AND OTHER BENEFIT PLANS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Pension Plans | |
Schedule of projected benefit obligation, ABO and fair value of plan assets for the defined benefit pension plans in which the ABO was in excess of the fair value of plan assets | The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the defined benefit pension plans were as follows (in thousands): September 30, 2016 2015 Projected benefit obligation $ $ Accumulated benefit obligation Fair value of plan assets |
Schedule of changes in the projected benefit obligation and fair value of plan assets and the funded status | The following table sets forth changes in the projected benefit obligation and fair value of plan assets and the funded status for these defined benefit plans (in thousands): September 30, 2016 2015 Change in benefit obligations: Net benefit obligation at the beginning of the year $ $ Service cost Interest cost Actuarial loss Plan amendments — — Gross benefits paid Settlements — Foreign currency exchange rate changes Net benefit obligation at the end of the year Change in plan assets: Fair value of plan assets at the beginning of the year Actual return on plan assets Employer contributions Gross benefits paid Settlements — PBGC Premium paid — Administrative expenses Foreign currency exchange rate changes Fair value of plan assets at the end of the year Unfunded status of the plans Unrecognized net actuarial loss Net amount recognized $ $ Amounts recognized in Accumulated OCI Liability adjustment to OCI $ $ Deferred tax asset Valuation allowance on deferred tax asset Accumulated other comprehensive loss $ $ |
Components of net periodic pension cost (benefit) | The components of net periodic pension cost (benefit) were as follows (in thousands): Years ended September 30, 2016 2015 2014 Service cost $ $ $ Interest cost Expected return on plan assets Amortization of actuarial loss Settlement loss — — Administrative expenses Net pension cost (benefit) $ $ $ |
Schedule of weighted-average assumptions used to determine benefit obligation and net periodic benefit cost | Years ended September 30, 2016 2015 2014 Weighted-average assumptions used to determine benefit obligation at September 30: Discount rate Rate of compensation increase Weighted-average assumptions used to determine net periodic benefit cost for the years ended September 30: Discount rate Expected return on plan assets Rate of compensation increase |
Schedule of target ranges for each major category of the plans' assets | The target ranges for each major category of the plans’ assets at September 30, 2016 are as follows: Allocation Asset Category Range Equity securities 20% to 55% Debt securities 25% to 75% Cash 0% to 55% Real estate 0% to 10% |
Schedule of fair value of the assets of defined benefit pension plans by asset category and their level within the fair value hierarchy | September 30, 2016 September 30, 2015 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash equivalents $ $ $ — $ $ $ $ — $ Equity: U.S. equity securities — — — — Foreign equity securities — — — — Fixed Income: U.S. fixed-income funds — — — — U.K. fixed-income funds — — — — Diversified growth fund — — Real Estate — — — — Total $ $ $ $ $ $ $ $ |
Schedule of changes during the fiscal year in the fair value of plan assets categorized as Level 3 | The following table presents the changes in the fair value of plan assets categorized as Level 3 in the preceding table (in thousands): Real Estate Balance as of October 1, 2014 $ Realized and unrealized gains, net Purchases, sales and settlements, net Balance as of September 30, 2015 Realized and unrealized gains, net Purchases, sales and settlements, net Balance as of September 30, 2016 $ |
Schedule of expected pension benefit payments, which reflect expected future service | We expect to pay the following pension benefit payments, which reflect expected future service, as appropriate, (in thousands): 2017 $ 2018 2019 2020 2021 2022-2026 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
STOCKHOLDERS' EQUITY | |
Summary of RSU activity | The following table summarizes our RSU activity: Unvested Restricted Stock Units Weighted-Average Number of Shares Grant-Date Fair Value Unvested at October 1, 2014 $ Granted Vested Forfeited Unvested at September 30, 2015 $ Granted Vested Forfeited Unvested at September 30, 2016 $ |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
STOCK-BASED COMPENSATION | |
Schedule of stock-based compensation expense related to stock-based awards | We recorded non-cash compensation expense related to stock-based awards of $8.8 million for the year ended September 30, 2016, which was comprised of the following (in thousands): Cost of sales $ Selling, general and administrative $ |
BUSINESS SEGMENT INFORMATION (T
BUSINESS SEGMENT INFORMATION (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
BUSINESS SEGMENT INFORMATION | |
Schedule of business segment financial data | Business segment financial data is as follows (in millions): Year Ended September 30, 2016 2015 2014 Sales: Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services Total sales $ $ $ Operating income (loss): Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services Unallocated corporate expenses Total operating income $ $ $ Assets: Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services Corporate Total assets $ $ $ Depreciation and amortization: Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services Corporate Total depreciation and amortization $ $ $ Capital expenditures: Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services — — — Corporate Total expenditures for long-lived assets $ $ $ |
Schedule of sales by geographic area | Years ended September 30, 2016 2015 2014 Geographic Information: Sales (a): United States $ $ $ United Kingdom Canada Australia Middle East Far East Other Total sales $ $ $ (a) Sales are attributed to countries or regions based on the location of customers. |
Schedule of long-lived assets by country | Long-lived assets, net: United States $ $ $ United Kingdom Other foreign countries Total long-lived assets, net $ $ $ |
Schedule of restructuring charges (reversals) incurred by business segment | Restructuring charges (reversals) incurred by business segment were as follows (in millions): Year Ended September 30, 2016 2015 2014 Restructuring costs (reversals): Cubic Transportation Systems $ $ $ Cubic Global Defense Systems Cubic Global Defense Services — Unallocated corporate expenses and other — Total restructuring costs (reversals) $ $ $ |
Summary of the activity relating to the restructuring liability and employee separation expenses | A summary of the activity relating to the restructuring liability and employee separation expenses, which is included within accrued compensation and other current liabilities within our Consolidated Balance Sheet, is as follows (in thousands): Employee Separation Balance as of October 1, 2014 $ Accrued costs Cash payments Liability as of September 30, 2015 $ Accrued costs Cash payments Liability as of September 30, 2016 $ |
SUMMARY OF QUARTERLY RESULTS 42
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |
Summary of quarterly results of operations | Year Three Months Ended Ended Fiscal 2016 September 30 June 30 March 31 December 31 September 30 (in thousands, except per share data) Net sales $ $ $ $ $ Operating income (loss) Net income (loss) attributable to Cubic Net income (loss) per share, basic Net income (loss) per share, diluted year Three Months Ended Ended Fiscal 2015 September 30 June 30 March 31 December 31 September 30 (in thousands, except per share data) Net sales $ $ $ $ $ Operating income Net income (loss) attributable to Cubic Net income (loss) per share, basic Net income (loss) per share, diluted |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Foreign Currency Transactions and Translations | |||
Total transaction gains (losses) related primarily to advances to and between foreign subsidiaries | $ (0.9) | $ (3.2) | $ (1.3) |
Accounts Receivable | |||
Allowance for doubtful accounts | 0 | ||
Impairment of Long-Lived Assets | |||
Impairment of long-lived assets | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - EPS (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016USD ($)$ / shares | Jun. 30, 2016USD ($)$ / shares | Mar. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($)$ / shares | Sep. 30, 2015USD ($)$ / shares | Jun. 30, 2015USD ($)$ / shares | Mar. 31, 2015USD ($)$ / shares | Dec. 31, 2014USD ($)$ / shares | Sep. 30, 2016USD ($)item$ / sharesshares | Sep. 30, 2015USD ($)contract$ / sharesshares | Sep. 30, 2014USD ($)$ / sharesshares | |
Revenue Recognition | |||||||||||
Number of estimates, a change in which could have material effect on financial position or results of operations | item | 1 | ||||||||||
Allocation of arrangement consideration to the up-front deliverables | $ | $ 0 | ||||||||||
Revenue for the delivery of up-front units of accounting | $ | $ 0 | ||||||||||
Number of transportation systems service contracts, which contain annual system usage incentives | contract | 1 | ||||||||||
Stock-Based Compensation | |||||||||||
Vesting period of performance-based RSUs | 3 years | ||||||||||
Net Income Per Share | |||||||||||
Net income (loss) attributable to Cubic | $ | $ (7,493) | $ 4,498 | $ 10,144 | $ (5,414) | $ 19,977 | $ 8,780 | $ (11,024) | $ 5,152 | $ 1,735 | $ 22,885 | $ 69,491 |
Weighted average shares - basic | shares | 26,976 | 26,872 | 26,787 | ||||||||
Effect of dilutive securities (in shares) | shares | 64 | 66 | 58 | ||||||||
Weighted average shares - diluted | shares | 27,040 | 26,938 | 26,845 | ||||||||
Basic (in dollars per share) | $ / shares | $ (0.29) | $ 0.17 | $ 0.38 | $ (0.20) | $ 0.74 | $ 0.33 | $ (0.41) | $ 0.19 | $ 0.06 | $ 0.85 | $ 2.59 |
Diluted (in dollars per share) | $ / shares | $ (0.29) | $ 0.17 | $ 0.38 | $ (0.20) | $ 0.74 | $ 0.33 | $ (0.41) | $ 0.19 | $ 0.06 | $ 0.85 | $ 2.59 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Thousands | Feb. 02, 2016 | Dec. 21, 2015 | Nov. 04, 2015 | Sep. 30, 2015 | Dec. 16, 2014 | Feb. 28, 2014 | Nov. 26, 2013 | May 31, 2014 | Nov. 30, 2013 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2016 |
Acquisitions | |||||||||||||||||||||
Net sales | $ 406,588 | $ 375,240 | $ 366,024 | $ 313,813 | $ 425,917 | $ 347,806 | $ 338,834 | $ 318,488 | $ 1,461,665 | $ 1,431,045 | $ 1,398,352 | ||||||||||
Compensation expense not expected to be deductible for tax purposes | 6,300 | ||||||||||||||||||||
Amortization of purchased intangibles | 34,120 | 27,550 | 22,602 | ||||||||||||||||||
Change in fair value of contingent consideration | 1,274 | 3,607 | |||||||||||||||||||
Net income | 1,735 | 22,914 | 69,580 | ||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Goodwill | $ 237,899 | 406,946 | $ 237,899 | 406,946 | 237,899 | 184,141 | $ 406,946 | ||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||||
2,017 | 32,384 | 32,384 | 32,384 | ||||||||||||||||||
2,018 | 26,819 | 26,819 | 26,819 | ||||||||||||||||||
2,019 | 20,536 | 20,536 | 20,536 | ||||||||||||||||||
2,020 | 14,293 | 14,293 | 14,293 | ||||||||||||||||||
2,021 | 10,591 | 10,591 | 10,591 | ||||||||||||||||||
Thereafter | 18,780 | 18,780 | 18,780 | ||||||||||||||||||
Unaudited pro forma information | |||||||||||||||||||||
Net sales | 1,481,700 | 1,512,400 | |||||||||||||||||||
Net income attributable to Cubic | 800 | $ 23,100 | |||||||||||||||||||
Adjustments made for transaction expenses | 0 | ||||||||||||||||||||
Transaction Systems Limited (TranSys) | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Cash consideration paid | $ 1,000 | ||||||||||||||||||||
Ownership percentage | 50.00% | ||||||||||||||||||||
GATR | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Net sales | 42,900 | ||||||||||||||||||||
Compensation expense paid | 18,100 | ||||||||||||||||||||
Compensation expense not expected to be deductible for tax purposes | 15,800 | ||||||||||||||||||||
Amortization of purchased intangibles | 9,700 | ||||||||||||||||||||
Transaction and acquisition related costs | 500 | ||||||||||||||||||||
Change in fair value of contingent consideration | 700 | ||||||||||||||||||||
Net income | (23,000) | ||||||||||||||||||||
Fair value of consideration transferred | $ 220,500 | ||||||||||||||||||||
Cash consideration paid | 231,300 | ||||||||||||||||||||
Fair value of contingent consideration | 2,500 | ||||||||||||||||||||
Fair value of additional cash consideration due to the seller, including the Holdback Consideration and contingent consideration | 4,800 | ||||||||||||||||||||
Cash paid related to compensation expenses | 18,100 | ||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Accounts receivable | 10,600 | ||||||||||||||||||||
Inventory | 3,400 | ||||||||||||||||||||
Income tax receivable | 5,100 | ||||||||||||||||||||
Accounts payable and accrued expenses | (2,400) | ||||||||||||||||||||
Tax liabilities | (23,800) | ||||||||||||||||||||
Net identifiable assets acquired | 64,600 | ||||||||||||||||||||
Goodwill | 155,900 | ||||||||||||||||||||
Net assets acquired | $ 220,500 | ||||||||||||||||||||
Weighted average useful life of intangible assets | 9 years | ||||||||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||||
2,017 | 12,700 | 12,700 | 12,700 | ||||||||||||||||||
2,018 | 11,100 | 11,100 | 11,100 | ||||||||||||||||||
2,019 | 9,800 | 9,800 | 9,800 | ||||||||||||||||||
2,020 | 8,300 | 8,300 | 8,300 | ||||||||||||||||||
2,021 | 6,900 | 6,900 | 6,900 | ||||||||||||||||||
Thereafter | 13,200 | 13,200 | 13,200 | ||||||||||||||||||
GATR | Maximum | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Additional cash consideration accelerated if certain event occurs | $ 7,500 | ||||||||||||||||||||
GATR | Customer relationships | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 51,700 | ||||||||||||||||||||
GATR | Backlog | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 3,400 | ||||||||||||||||||||
GATR | Technology | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 10,700 | ||||||||||||||||||||
GATR | Non-compete agreements | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 1,200 | ||||||||||||||||||||
GATR | Trade names | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Other intangible assets | $ 4,700 | ||||||||||||||||||||
TeraLogics | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Net sales | 14,200 | ||||||||||||||||||||
Compensation expense paid | 1,300 | ||||||||||||||||||||
Amortization of purchased intangibles | 3,000 | ||||||||||||||||||||
Transaction and acquisition related costs | $ 900 | ||||||||||||||||||||
Net income | (1,700) | ||||||||||||||||||||
Fair value of consideration transferred | $ 33,900 | ||||||||||||||||||||
Cash consideration paid | 28,900 | ||||||||||||||||||||
Fair value of contingent consideration | 5,000 | ||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Accounts receivable | 1,400 | ||||||||||||||||||||
Accounts payable and accrued expenses | (500) | ||||||||||||||||||||
Other net liabilities assumed | (100) | ||||||||||||||||||||
Net identifiable assets acquired | 15,700 | ||||||||||||||||||||
Goodwill | 18,200 | ||||||||||||||||||||
Net assets acquired | $ 33,900 | ||||||||||||||||||||
Weighted average useful life of intangible assets | 7 years | ||||||||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||||
2,017 | 3,500 | 3,500 | 3,500 | ||||||||||||||||||
2,018 | 2,800 | 2,800 | 2,800 | ||||||||||||||||||
2,019 | 2,100 | 2,100 | 2,100 | ||||||||||||||||||
2,020 | 1,400 | 1,400 | 1,400 | ||||||||||||||||||
2,021 | 800 | 800 | 800 | ||||||||||||||||||
Thereafter | 1,400 | 1,400 | 1,400 | ||||||||||||||||||
TeraLogics | Maximum | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Additional cash consideration accelerated if certain event occurs | $ 9,000 | ||||||||||||||||||||
TeraLogics | Maximum | Revenue thresholds | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Additional cash consideration accelerated if certain event occurs | 6,000 | ||||||||||||||||||||
TeraLogics | Maximum | Contract extensions | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Additional cash consideration accelerated if certain event occurs | 3,000 | ||||||||||||||||||||
TeraLogics | Customer relationships | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 6,700 | ||||||||||||||||||||
TeraLogics | Backlog | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 5,600 | ||||||||||||||||||||
TeraLogics | Software | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 2,500 | ||||||||||||||||||||
TeraLogics | Non-compete agreements | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | $ 100 | ||||||||||||||||||||
H4 Global | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Net sales | 2,200 | ||||||||||||||||||||
Transaction and acquisition related costs | 100 | ||||||||||||||||||||
Net income | 400 | ||||||||||||||||||||
Fair value of consideration transferred | $ 1,900 | ||||||||||||||||||||
Cash consideration paid | 900 | ||||||||||||||||||||
Fair value of contingent consideration | $ 1,000 | ||||||||||||||||||||
Contingent consideration paid based upon contracts entered period | 5 years | ||||||||||||||||||||
H4 Global | Maximum | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Contingent consideration paid based upon the value of contracts entered | $ 4,100 | ||||||||||||||||||||
DTECH | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Net sales | 20,300 | $ 45,800 | |||||||||||||||||||
Amortization of purchased intangibles | 8,000 | ||||||||||||||||||||
Transaction and acquisition related costs | 800 | ||||||||||||||||||||
Change in fair value of contingent consideration | (500) | 3,600 | |||||||||||||||||||
Net income | 2,100 | 500 | |||||||||||||||||||
Fair value of consideration transferred | $ 99,400 | ||||||||||||||||||||
Cash consideration paid | 96,300 | ||||||||||||||||||||
Fair value of additional cash consideration due to the seller, including the Holdback Consideration and contingent consideration | 6,500 | 6,500 | 6,500 | ||||||||||||||||||
Additional cash consideration accelerated if certain event occurs | 4,700 | ||||||||||||||||||||
General and Administrative Expense | 3,600 | ||||||||||||||||||||
Fair value of the potential customer | 4,500 | ||||||||||||||||||||
Cost of acquisition net | 99,500 | ||||||||||||||||||||
Estimated fair value of the liability for contingent consideration | 3,900 | ||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Cash | 900 | ||||||||||||||||||||
Accounts receivable | 5,400 | ||||||||||||||||||||
Inventory | 4,200 | ||||||||||||||||||||
Warranty obligation | (400) | ||||||||||||||||||||
Accounts payable and accrued expenses | (3,400) | ||||||||||||||||||||
Tax liabilities | (3,300) | ||||||||||||||||||||
Other net assets acquired | 200 | ||||||||||||||||||||
Net identifiable assets acquired | 41,500 | ||||||||||||||||||||
Goodwill | 57,900 | ||||||||||||||||||||
Net assets acquired | $ 99,400 | ||||||||||||||||||||
Weighted average useful life of intangible assets | 7 years | ||||||||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||||
2,017 | 6,800 | 6,800 | 6,800 | ||||||||||||||||||
2,018 | 5,500 | 5,500 | 5,500 | ||||||||||||||||||
2,019 | 4,100 | 4,100 | 4,100 | ||||||||||||||||||
2,020 | 2,800 | 2,800 | 2,800 | ||||||||||||||||||
2,021 | 1,500 | 1,500 | 1,500 | ||||||||||||||||||
DTECH | Maximum | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Contingent Amount | $ 15,000 | ||||||||||||||||||||
DTECH | Customer relationships | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 35,100 | ||||||||||||||||||||
DTECH | Backlog | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 2,100 | ||||||||||||||||||||
DTECH | Non-compete agreements | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | $ 700 | ||||||||||||||||||||
Intific | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Net sales | 17,300 | 14,700 | |||||||||||||||||||
Net income | (800) | (1,800) | |||||||||||||||||||
Fair value of consideration transferred | $ 12,400 | ||||||||||||||||||||
Cash consideration paid | 1,200 | 11,200 | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Other intangible assets | 200 | ||||||||||||||||||||
Accounts receivable | 1,500 | ||||||||||||||||||||
Deferred tax assets | 1,500 | ||||||||||||||||||||
Accounts payable and accrued expenses | (600) | ||||||||||||||||||||
Tax liabilities | (1,500) | ||||||||||||||||||||
Other net assets acquired | 500 | ||||||||||||||||||||
Net identifiable assets acquired | 5,000 | ||||||||||||||||||||
Goodwill | 7,400 | ||||||||||||||||||||
Net assets acquired | $ 12,400 | ||||||||||||||||||||
Weighted average useful life of intangible assets | 2 years | ||||||||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||||
2,017 | 600 | 600 | 600 | ||||||||||||||||||
2,018 | 500 | 500 | 500 | ||||||||||||||||||
2,019 | 200 | 200 | 200 | ||||||||||||||||||
2,020 | 100 | 100 | 100 | ||||||||||||||||||
Intific | Customer relationships | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | $ 2,000 | ||||||||||||||||||||
Intific | Backlog | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 700 | ||||||||||||||||||||
Intific | Technology | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | $ 700 | ||||||||||||||||||||
ITMS | |||||||||||||||||||||
Acquisitions | |||||||||||||||||||||
Net sales | 41,300 | 47,000 | 43,700 | ||||||||||||||||||
Transaction and acquisition related costs | 500 | ||||||||||||||||||||
Net income | (7,000) | $ (3,000) | $ (2,300) | ||||||||||||||||||
Fair value of consideration transferred | $ 72,200 | ||||||||||||||||||||
Cash consideration paid | $ 3,200 | $ 69,000 | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Accounts receivable - billed | 4,400 | ||||||||||||||||||||
Accounts receivable - unbilled | 6,900 | ||||||||||||||||||||
Deferred tax liabilities, net | 200 | ||||||||||||||||||||
Deferred revenue | (2,600) | ||||||||||||||||||||
Accounts payable and accrued expenses | (4,600) | ||||||||||||||||||||
Other net assets acquired | 2,600 | ||||||||||||||||||||
Net identifiable assets acquired | 31,400 | ||||||||||||||||||||
Goodwill | 40,800 | ||||||||||||||||||||
Net assets acquired | $ 72,200 | ||||||||||||||||||||
Weighted average useful life of intangible assets | 2 years | ||||||||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||||
2,017 | 3,600 | 3,600 | 3,600 | ||||||||||||||||||
2,018 | 2,700 | 2,700 | 2,700 | ||||||||||||||||||
2,019 | 900 | 900 | 900 | ||||||||||||||||||
2,020 | $ 100 | $ 100 | $ 100 | ||||||||||||||||||
ITMS | Customer relationships | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | $ 15,700 | ||||||||||||||||||||
ITMS | Backlog | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 5,700 | ||||||||||||||||||||
ITMS | Intellectual property | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 1,600 | ||||||||||||||||||||
ITMS | Supplier relationships | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | 600 | ||||||||||||||||||||
ITMS | Agreements with Seller | |||||||||||||||||||||
Purchase price allocation | |||||||||||||||||||||
Amortizable intangible assets | $ 1,300 |
FAIR VALUE OF FINANCIAL INSTR46
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Feb. 02, 2016 | Dec. 21, 2015 | Nov. 04, 2015 | Oct. 01, 2015 | Dec. 16, 2014 | Sep. 30, 2016 | Sep. 30, 2015 |
Debt instruments | |||||||
Carrying value | $ 201,012 | $ 126,705 | |||||
TeraLogics | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Volatility for underlying earnings metrics used in determination of fair value of contingent consideration | 17.00% | ||||||
Initial measurement recognized at acquisition | $ 33,900 | ||||||
GATR | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Volatility for underlying earnings metrics used in determination of fair value of contingent consideration | 17.00% | ||||||
Initial measurement recognized at acquisition | $ 220,500 | ||||||
DTECH | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Volatility for underlying earnings metrics used in determination of fair value of contingent consideration | 18.00% | 22.00% | |||||
Initial measurement recognized at acquisition | $ 99,400 | ||||||
H4 Global | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Term of contingent consideration | 5 years | ||||||
Initial measurement recognized at acquisition | $ 1,900 | ||||||
H4 Global | Maximum | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Cash paid to seller | $ (4,100) | ||||||
Level 2 | |||||||
Debt instruments | |||||||
Fair Value | $ 210,000 | $ 125,800 | |||||
Carrying value | 201,000 | 126,700 | |||||
Level 3 | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Balance at the Beginning period | $ 7,507 | 7,507 | |||||
Initial measurement recognized at acquisition | 9,202 | 3,900 | |||||
Cash paid to seller | (6,000) | ||||||
Adjustment to the provisional acquisition date valuation | (716) | ||||||
Total remeasurement recognized in earnings | 1,274 | 3,607 | |||||
Balance at the ending period | 11,267 | 7,507 | |||||
Level 3 | GATR | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Initial measurement recognized at acquisition | 2,500 | ||||||
Total remeasurement recognized in earnings | 700 | ||||||
Balance at the ending period | 3,200 | ||||||
Level 3 | DTECH | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Balance at the Beginning period | $ 7,507 | 7,507 | |||||
Initial measurement recognized at acquisition | 3,900 | ||||||
Cash paid to seller | (5,000) | ||||||
Total remeasurement recognized in earnings | (507) | 3,607 | |||||
Balance at the ending period | 2,000 | 7,507 | |||||
Level 3 | H4 Global | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Initial measurement recognized at acquisition | 1,602 | ||||||
Adjustment to the provisional acquisition date valuation | (616) | ||||||
Total remeasurement recognized in earnings | (419) | ||||||
Balance at the ending period | 567 | ||||||
Assets and liabilities measured at fair value | Total | |||||||
Assets | |||||||
Cash equivalents | 57,455 | 68,194 | |||||
Marketable securities | 12,996 | 30,533 | |||||
Current derivative assets | 14,770 | 11,543 | |||||
Noncurrent derivative assets | 1,201 | 13,909 | |||||
Total assets measured at fair value | 86,426 | 125,171 | |||||
Liabilities | |||||||
Current derivative liabilities | 13,752 | 9,370 | |||||
Noncurrent derivative liabilities | 1,334 | 13,909 | |||||
Total liabilities measured at fair value | 26,353 | 30,786 | |||||
Assets and liabilities measured at fair value | GATR | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 3,200 | ||||||
Assets and liabilities measured at fair value | DTECH | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 2,000 | 7,507 | |||||
Assets and liabilities measured at fair value | H4 Global | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 567 | ||||||
Assets and liabilities measured at fair value | Rabbi trust | Total | |||||||
Assets | |||||||
Marketable securities in rabbi trust | 4 | 992 | |||||
Assets and liabilities measured at fair value | Level 1 | |||||||
Assets | |||||||
Cash equivalents | 57,455 | 68,194 | |||||
Total assets measured at fair value | 57,459 | 69,186 | |||||
Assets and liabilities measured at fair value | Level 1 | Rabbi trust | |||||||
Assets | |||||||
Marketable securities in rabbi trust | 4 | 992 | |||||
Assets and liabilities measured at fair value | Level 2 | |||||||
Assets | |||||||
Marketable securities | 12,996 | 30,533 | |||||
Current derivative assets | 14,770 | 11,543 | |||||
Noncurrent derivative assets | 1,201 | 13,909 | |||||
Total assets measured at fair value | 28,967 | 55,985 | |||||
Liabilities | |||||||
Current derivative liabilities | 13,752 | 9,370 | |||||
Noncurrent derivative liabilities | 1,334 | 13,909 | |||||
Total liabilities measured at fair value | 15,086 | 23,279 | |||||
Assets and liabilities measured at fair value | Level 3 | |||||||
Liabilities | |||||||
Total liabilities measured at fair value | 11,267 | 7,507 | |||||
Assets and liabilities measured at fair value | Level 3 | GATR | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 3,200 | ||||||
Assets and liabilities measured at fair value | Level 3 | DTECH | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 2,000 | $ 7,507 | |||||
Assets and liabilities measured at fair value | Level 3 | H4 Global | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 567 | ||||||
Contract extensions | Level 3 | TeraLogics | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Initial measurement recognized at acquisition | 2,000 | ||||||
Cash paid to seller | (1,000) | ||||||
Adjustment to the provisional acquisition date valuation | (100) | ||||||
Total remeasurement recognized in earnings | 500 | ||||||
Balance at the ending period | 1,400 | ||||||
Contract extensions | Assets and liabilities measured at fair value | TeraLogics | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 1,400 | ||||||
Contract extensions | Assets and liabilities measured at fair value | Level 3 | TeraLogics | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 1,400 | ||||||
Revenue Targets | Level 3 | TeraLogics | |||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||
Initial measurement recognized at acquisition | 3,100 | ||||||
Total remeasurement recognized in earnings | 1,000 | ||||||
Balance at the ending period | 4,100 | ||||||
Revenue Targets | Assets and liabilities measured at fair value | TeraLogics | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 4,100 | ||||||
Revenue Targets | Assets and liabilities measured at fair value | Level 3 | TeraLogics | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | $ 4,100 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 30, 2015 |
Components of accounts receivable under long-term contracts | ||
Total accounts receivable | $ 388,345 | $ 383,101 |
Less estimated amounts not currently due | (20,926) | (36,809) |
Accounts receivable under long-term contracts, current | 367,419 | 346,292 |
U.S. government contracts | ||
Components of accounts receivable under long-term contracts | ||
Amounts billed | 66,668 | 55,656 |
Recoverable costs and accrued profits on progress completed--not billed | 81,624 | 63,676 |
Total accounts receivable | 148,292 | 119,332 |
Commercial customers | ||
Components of accounts receivable under long-term contracts | ||
Amounts billed | 79,955 | 71,808 |
Recoverable costs and accrued profits on progress completed--not billed | 160,098 | 191,961 |
Total accounts receivable | $ 240,053 | $ 263,769 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 30, 2015 |
INVENTORIES | ||
Finished products | $ 10,018 | $ 644 |
Work in process and inventoried costs under long-term contracts | 62,570 | 66,293 |
Materials and purchased parts | 12,102 | 2,733 |
Customer advances | (18,328) | (5,970) |
Net inventories | 66,362 | 63,700 |
Costs incurred outside the scope of work or in advance of a contract award | 700 | 1,900 |
General and administrative amounts for certain government contracts remaining in inventory | $ 2,300 | $ 1,800 |
PROPERTY, PLANT AND EQUIPMENT49
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | 24 Months Ended | ||
Mar. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2016 | |
PROPERTY, PLANT AND EQUIPMENT | |||||
Accumulated depreciation and amortization | $ (114,662) | $ (108,209) | $ (114,662) | ||
Property, plant and equipment - net | 96,316 | 74,690 | 96,316 | ||
Development expense | 31,976 | 17,992 | $ 17,959 | ||
Amortization of intangible assets | 34,120 | 27,550 | 22,602 | ||
Depreciation of plant and equipment and amortization of leasehold improvements | 11,400 | 10,100 | 7,800 | ||
Land and land improvements | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, Gross | 16,711 | 16,925 | 16,711 | ||
Buildings and improvements | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, Gross | 51,113 | 48,637 | 51,113 | ||
Machinery and other equipment | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, Gross | 70,547 | 65,948 | 70,547 | ||
Software | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, Gross | 51,191 | 21,633 | 51,191 | ||
Addition to capitalized software expenses | 5,000 | ||||
Amortization of intangible assets | $ 1,000 | 1,000 | $ 400 | ||
Software | Minimum | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Estimated useful life | P3Y | ||||
Software | Maximum | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Estimated useful life | P7Y | ||||
ERP | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Estimated useful life | P7Y | ||||
Costs related to the purchase and development of software | $ 45,200 | 72,700 | |||
Development expense | 24,900 | 11,500 | |||
Addition to capitalized software expenses | $ 20,300 | 16,000 | |||
Capitalized software, net | $ 28,400 | ||||
Leasehold improvements | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, Gross | $ 13,266 | 11,737 | 13,266 | ||
Leasehold improvements | Minimum | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, useful life | 15 years | ||||
Leasehold improvements | Maximum | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, useful life | 39 years | ||||
Machinery and equipment and software | Minimum | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, useful life | 5 years | ||||
Machinery and equipment and software | Maximum | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, useful life | 10 years | ||||
Construction and internal-use software development in progress | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||
Property, plant and equipment, Gross | $ 8,150 | $ 18,019 | $ 8,150 |
GOODWILL AND PURCHASED INTANG50
GOODWILL AND PURCHASED INTANGIBLE ASSETS - Goodwill (Details) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | |
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | $ 237,899 | $ 184,141 | |
Acquisitions | 175,150 | 57,875 | |
Foreign currency exchange rate changes | (6,103) | (4,117) | |
Balance at the end of the period | 406,946 | 237,899 | |
Components of net goodwill | |||
Goodwill | $ 457,811 | ||
Accumulated impairment charges | (50,865) | ||
Net balances | 237,899 | 184,141 | $ 406,946 |
Number of remaining reporting units whose estimated fair values exceeded carrying values | item | 3 | ||
Impairment of goodwill | 0 | ||
Cubic Transportation Systems | |||
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | 55,974 | 59,167 | |
Foreign currency exchange rate changes | (6,344) | (3,193) | |
Balance at the end of the period | 49,630 | 55,974 | |
Components of net goodwill | |||
Goodwill | $ 49,630 | ||
Net balances | $ 55,974 | 59,167 | 49,630 |
Cubic Transportation Systems | Minimum | |||
Components of net goodwill | |||
Estimated percentage of excess of fair value over carrying value | 20.00% | ||
Cubic Global Defense Systems | |||
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | $ 87,575 | 30,624 | |
Acquisitions | 175,150 | 57,875 | |
Foreign currency exchange rate changes | 241 | (924) | |
Balance at the end of the period | 262,966 | 87,575 | |
Components of net goodwill | |||
Goodwill | 262,966 | ||
Net balances | $ 87,575 | 30,624 | 262,966 |
Cubic Global Defense Systems | Minimum | |||
Components of net goodwill | |||
Estimated percentage of excess of fair value over carrying value | 20.00% | ||
Cubic Global Defense Services | |||
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | $ 94,350 | 94,350 | |
Acquisitions | |||
Foreign currency exchange rate changes | |||
Balance at the end of the period | 94,350 | 94,350 | |
Components of net goodwill | |||
Goodwill | 145,215 | ||
Accumulated impairment charges | (50,865) | ||
Net balances | $ 94,350 | $ 94,350 | $ 94,350 |
Cubic Global Defense Services | Minimum | |||
Components of net goodwill | |||
Estimated percentage of excess of fair value over carrying value | 15.00% |
GOODWILL AND PURCHASED INTANG51
GOODWILL AND PURCHASED INTANGIBLE ASSETS - Intangible assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Purchased intangible assets | |||
Gross Carrying Amount | $ 266,974 | $ 185,016 | |
Accumulated Amortization | (143,571) | (112,080) | |
Net Carrying Amount | 123,403 | 72,936 | |
Amortization expense | 34,120 | 27,550 | $ 22,602 |
Expected amortization for purchased intangibles for each of the next five years | |||
2,017 | 32,384 | ||
2,018 | 26,819 | ||
2,019 | 20,536 | ||
2,020 | 14,293 | ||
2,021 | 10,591 | ||
Thereafter | 18,780 | ||
Total expected amortization for purchased intangibles | 123,403 | ||
Contract and program intangibles | |||
Purchased intangible assets | |||
Gross Carrying Amount | 209,511 | 156,847 | |
Accumulated Amortization | (123,645) | (96,916) | |
Net Carrying Amount | 85,866 | 59,931 | |
Other purchased intangibles | |||
Purchased intangible assets | |||
Gross Carrying Amount | 57,463 | 28,169 | |
Accumulated Amortization | (19,926) | (15,164) | |
Net Carrying Amount | 37,537 | $ 13,005 | |
Cubic Transportation Systems | |||
Expected amortization for purchased intangibles for each of the next five years | |||
2,017 | 5,790 | ||
2,018 | 4,869 | ||
2,019 | 2,862 | ||
2,020 | 944 | ||
2,021 | 698 | ||
Thereafter | 543 | ||
Total expected amortization for purchased intangibles | 15,706 | ||
Cubic Global Defense Systems | |||
Expected amortization for purchased intangibles for each of the next five years | |||
2,017 | 23,842 | ||
2,018 | 19,875 | ||
2,019 | 16,240 | ||
2,020 | 12,559 | ||
2,021 | 9,186 | ||
Thereafter | 14,606 | ||
Total expected amortization for purchased intangibles | 96,308 | ||
Cubic Global Defense Services | |||
Expected amortization for purchased intangibles for each of the next five years | |||
2,017 | 2,752 | ||
2,018 | 2,075 | ||
2,019 | 1,434 | ||
2,020 | 790 | ||
2,021 | 707 | ||
Thereafter | 3,631 | ||
Total expected amortization for purchased intangibles | $ 11,389 |
FINANCING ARRANGEMENTS (Details
FINANCING ARRANGEMENTS (Details) $ in Thousands, NZD in Millions, AUD in Millions | Aug. 11, 2016USD ($) | Feb. 02, 2016USD ($) | Jul. 17, 2015USD ($) | Mar. 31, 2013USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2016NZD | Sep. 30, 2016AUD | Sep. 30, 2016USD ($) | Oct. 31, 2015USD ($) |
Financial arrangement | |||||||||||
Long-term debt | $ 126,705 | $ 201,012 | |||||||||
Less current portion | (525) | (450) | |||||||||
Long-term Debt, Excluding Current Maturities | 126,180 | 200,562 | |||||||||
Maturities of long-term debt | |||||||||||
2,017 | 500 | ||||||||||
2,018 | 500 | ||||||||||
2,019 | 100 | ||||||||||
2,020 | 10,700 | ||||||||||
2,021 | 35,700 | ||||||||||
Amount of interest paid | $ 11,000 | 4,800 | $ 4,100 | ||||||||
Short term borrowings | |||||||||||
Debt issuance costs incurred | $ 3,647 | ||||||||||
Maximum distrutions to shareholders | 48,700 | ||||||||||
Self-insurance liabilities | $ 8,800 | 8,200 | |||||||||
Letters of credit primarily for self-insured liabilities | |||||||||||
Short term borrowings | |||||||||||
Letters of Credit and bank guarantees outstanding | 16,600 | ||||||||||
Fair value of instruments | 0 | ||||||||||
Letters of credit and bank guarantees | |||||||||||
Short term borrowings | |||||||||||
Letters of Credit and bank guarantees outstanding | 79,200 | ||||||||||
New Zealand | |||||||||||
Short term borrowings | |||||||||||
Maximum borrowing capacity under credit agreement | NZD 0.5 | 400 | |||||||||
Borrowings outstanding | 0 | ||||||||||
Australia | |||||||||||
Short term borrowings | |||||||||||
Maximum borrowing capacity under credit agreement | AUD 3 | 2,300 | |||||||||
Borrowings outstanding | $ 0 | ||||||||||
Senior unsecured notes | |||||||||||
Financial arrangement | |||||||||||
Interest rate (as a percent) | 3.93% | 3.70% | 3.35% | ||||||||
Maturities of long-term debt | |||||||||||
Additional senior notes principal amount agreed to be issued | $ 75,000 | $ 25,000 | $ 100,000 | ||||||||
Series A senior unsecured notes | |||||||||||
Financial arrangement | |||||||||||
Interest rate (as a percent) | 3.35% | 3.35% | 3.35% | 3.35% | |||||||
Long-term debt | $ 50,000 | $ 50,000 | |||||||||
Series B senior unsecured notes | |||||||||||
Financial arrangement | |||||||||||
Interest rate (as a percent) | 3.35% | 3.35% | 3.35% | 3.35% | |||||||
Long-term debt | $ 50,000 | $ 50,000 | |||||||||
Series C senior unsecured notes | |||||||||||
Financial arrangement | |||||||||||
Interest rate (as a percent) | 3.70% | 3.70% | 3.70% | 3.70% | |||||||
Long-term debt | $ 25,000 | $ 25,000 | |||||||||
Series D senior unsecured notes | |||||||||||
Financial arrangement | |||||||||||
Interest rate (as a percent) | 3.93% | 3.93% | 3.93% | ||||||||
Long-term debt | $ 75,000 | ||||||||||
Mortgage notes | United Kingdom | |||||||||||
Financial arrangement | |||||||||||
Interest rate (as a percent) | 6.48% | 6.48% | 6.48% | 6.48% | |||||||
Long-term debt | $ 1,705 | $ 1,012 | |||||||||
Revolving credit agreement | |||||||||||
Short term borrowings | |||||||||||
Maximum borrowing capacity under credit agreement | 400,000 | $ 200,000 | |||||||||
Amount borrowed | 150,000 | ||||||||||
Borrowings outstanding | 240,000 | ||||||||||
Letters of credit outstanding | 20,700 | ||||||||||
Available amount under line of credit | $ 139,300 | ||||||||||
Weighted average interest rate on outstanding borrowings | 2.50% | 2.50% | 2.50% | ||||||||
Debt issuance costs incurred | $ 1,300 | $ 2,300 | |||||||||
Unamortized debt issuance costs | $ 2,900 | ||||||||||
Secured letter of credit agreement | |||||||||||
Short term borrowings | |||||||||||
Maximum borrowing capacity under credit agreement | 63,100 | ||||||||||
Letters of credit outstanding | 62,700 | ||||||||||
Secured letter of credit agreement | United Kingdom | |||||||||||
Short term borrowings | |||||||||||
Cash on deposit as collateral | $ 69,400 |
COMMITMENTS (Details)
COMMITMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Commitments | |||
Sublease income | $ 300 | $ 300 | $ 200 |
Rental expense, net of sublease income | 12,700 | $ 11,900 | $ 12,000 |
Future minimum payments, net of minimum sublease income, under noncancelable operating leases | |||
2,017 | 12,397 | ||
2,018 | 11,132 | ||
2,019 | 8,514 | ||
2,020 | 6,599 | ||
2,021 | 6,097 | ||
Thereafter | 15,263 | ||
Total future minimum payments, net of minimum sublease income | $ 60,002 | ||
Maximum | |||
Commitments | |||
Term of lease | 10 years |
INCOME TAXES - Components of in
INCOME TAXES - Components of income (loss) and provision for income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Components of income (loss) before income taxes | |||
United States | $ (57,176) | $ (18,712) | $ (22,788) |
Foreign | 49,699 | 90,623 | 112,199 |
Income (loss) before income taxes | (7,477) | 71,911 | 89,411 |
Current: | |||
Federal | 2,469 | (2,433) | (8,049) |
State | (231) | 723 | 918 |
Foreign | 8,249 | 20,266 | 25,705 |
Total current | 10,487 | 18,556 | 18,574 |
Deferred: | |||
Federal | (15,614) | 24,112 | 1,296 |
State | (4,365) | 5,710 | (1,232) |
Foreign | 280 | 619 | 1,193 |
Total deferred | (19,699) | 30,441 | 1,257 |
Provision for income taxes | $ (9,212) | $ 48,997 | $ 19,831 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of income tax and unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliation of income tax computed at the U.S. federal statutory tax rate to income tax expense | |||
Tax expense at U.S. statutory rate | $ (2,616) | $ 25,169 | $ 31,294 |
State income taxes, net of federal tax effect | (1,199) | (34) | 111 |
Nondeductible expenses | 7,828 | 1,555 | 1,319 |
Change in reserve for tax contingencies | 1,320 | (1,192) | (601) |
Change in deferred tax asset valuation allowance | (9,228) | 37,589 | 921 |
Foreign income taxed at less than statutory rate | (2,999) | (11,924) | (12,783) |
Research and development credits | (2,542) | (2,248) | (584) |
Other | 224 | 82 | 154 |
Provision for income taxes | (9,212) | 48,997 | $ 19,831 |
Compensation expense not expected to be deductible for tax purposes | 6,300 | ||
Change in valuation allowance | 6,900 | 35,800 | |
Research tax credit | $ 1,000 | $ 1,200 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2016 | |
Deferred tax assets: | ||
Accrued employee benefits | $ 12,597 | $ 15,133 |
Long-term contracts and inventory valuation reductions | 13,297 | 12,697 |
Allowances for loss contingencies | 3,793 | 5,754 |
Deferred compensation | 4,252 | 4,369 |
Property, plant and equipment | 1,611 | |
Intangible assets | 8,037 | |
Retirement benefits | 8,040 | 12,282 |
Tax credit carryforwards | 11,151 | 16,512 |
Net operating losses carryforwards | 14,795 | 12,713 |
Other | 1,380 | 2,796 |
Total gross deferred tax assets | 78,953 | 82,256 |
Valuation allowance | (54,759) | (47,887) |
Total deferred tax assets | 24,194 | 34,369 |
Deferred tax liabilities: | ||
Deferred revenue | (23,981) | (19,952) |
Unremitted foreign earnings | (535) | (2,347) |
Property, plant and equipment | (33) | |
Intangible assets | (12,894) | |
Foreign currency mark-to-market | (191) | |
Other | (2,226) | (740) |
Total deferred tax liabilities | (26,742) | (36,157) |
Net deferred tax liabilities | (2,548) | $ (1,788) |
Reclassification of unremitted foreign earnings | 500 | |
Reclassification of charitable contribution carryovers | $ 500 |
INCOME TAXES - Tax credit carry
INCOME TAXES - Tax credit carryforwards (Details) $ in Thousands | Sep. 30, 2016USD ($) |
U.S. | |
Income tax credit carryforwards | |
Income tax credit carryforward | $ 8,200 |
U.S. | Foreign Tax Credits | |
Income tax credit carryforwards | |
Income tax credit carryforward | 4,818 |
U.S. | Research and Development Tax Credits | |
Income tax credit carryforwards | |
Income tax credit carryforward | 3,405 |
State | |
Income tax credit carryforwards | |
Income tax credit carryforward | 17,900 |
State | Research and Development Tax Credits | |
Income tax credit carryforwards | |
Income tax credit carryforward | $ 17,911 |
INCOME TAXES - Operating loss c
INCOME TAXES - Operating loss carryforwards (Details) $ in Thousands | Sep. 30, 2016USD ($) |
U.S. | |
Operating loss carryforwards | |
Operating Loss Carryforwards | $ 12,933 |
State | |
Operating loss carryforwards | |
Operating Loss Carryforwards | 51,791 |
Foreign | |
Operating loss carryforwards | |
Operating Loss Carryforwards | $ 23,046 |
INCOME TAXES - Tax valuation al
INCOME TAXES - Tax valuation allowance (Details) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | |
Tax valuation allowance | |||
Change in valuation allowance | $ 6,900 | $ 35,800 | |
Deferred tax asset valuation allowance | 47,887 | 54,759 | |
Net tax benefit before offset by amounts recorded through OCI | 9,200 | ||
Accumulated earnings | 813,035 | 818,642 | |
Income tax accounting corrections | |||
Income tax expense (benefit) | $ (9,212) | 48,997 | $ 19,831 |
Income Tax Accounting Errors | |||
Income tax accounting corrections | |||
Number of income tax accouting errors identified | item | 2 | ||
Income Tax Accounting Errors | Previously Reported | |||
Income tax accounting corrections | |||
Income tax expense (benefit) | (3,000) | ||
Income Tax Accounting Errors | Adjustments | |||
Income tax accounting corrections | |||
Income tax expense (benefit) | $ 3,000 | ||
Australia | |||
Tax valuation allowance | |||
Change in valuation allowance | (3,100) | ||
Foreign | |||
Tax valuation allowance | |||
Foreign subsidiaries earnings on which income tax not provided | 389,500 | ||
United Kingdom | |||
Tax valuation allowance | |||
Foreign subsidiaries earnings on which income tax not provided | 360,000 | ||
U.S. | |||
Tax valuation allowance | |||
Change in valuation allowance | (3,800) | 35,800 | |
Deferred tax asset valuation allowance | 43,700 | $ 47,500 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities, Current | 23,800 | ||
Annual valuation allowance activity | $ 20,000 |
INCOME TAXES - Unrecognized tax
INCOME TAXES - Unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net changes in the liability for unrecognized tax benefits | |||
Balance at the beginning of the period | $ 12,619 | $ 7,306 | |
Additions (reductions) for tax positions taken in prior years | 3,641 | ||
Recognition of benefits from expiration of statutes | (359) | (1,068) | |
Other | (3,125) | ||
Additions for tax positions related to the current year | 986 | 472 | |
Additions for tax positions related to current year acquisitions | 45 | 2,784 | |
Balance at the end of the period | 16,932 | 12,619 | $ 7,306 |
Unrecognized tax benefits from permanent tax adjustments that, if recognized, would affect the effective rate | 7,500 | 4,500 | |
Unrecognized tax benefits related to settlements with taxing authorities | 4,400 | ||
Interest and penalties accrued | 1,600 | 1,200 | |
Total liability for uncertain tax issues | 15,500 | 10,900 | |
Cash amounts paid for income taxes, net of refunds received | $ 14,200 | $ 15,200 | $ 27,300 |
DERIVATIVE INSTRUMENTS AND HE61
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Notional principal amounts (Details) - Foreign currency forwards - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities | ||
Minimum commitment amount for hedging | $ 50,000 | |
Unrealized gain (loss) on derivative | $ (8,200,000) | $ 5,300,000 |
Maximum | ||
Derivative Instruments and Hedging Activities | ||
Term of derivative contract | 3 years | |
Instruments designated as accounting hedges: | ||
Derivative Instruments and Hedging Activities | ||
Notional principal outstanding derivative instruments | $ 158,664,000 | 217,796,000 |
Instruments not designated as accounting hedges: | ||
Derivative Instruments and Hedging Activities | ||
Notional principal outstanding derivative instruments | 115,070,000 | 142,820,000 |
Notional principal outstanding derivative instruments designed to manage exposure | $ 78,400,000 | $ 117,800,000 |
DERIVATIVE INSTRUMENTS AND HE62
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Fair value of derivative financial instruments (Details) - Instruments designated as accounting hedges: - Foreign currency forwards - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 30, 2015 |
Derivative Instruments and Hedging Activities | ||
Asset derivatives | $ 15,970 | $ 25,230 |
Liability derivatives | 15,085 | 23,279 |
Other current assets | ||
Derivative Instruments and Hedging Activities | ||
Asset derivatives | 14,769 | 11,321 |
Other noncurrent assets | ||
Derivative Instruments and Hedging Activities | ||
Asset derivatives | 1,201 | 13,909 |
Other current liabilities | ||
Derivative Instruments and Hedging Activities | ||
Liability derivatives | 13,752 | 9,370 |
Other noncurrent liabilities | ||
Derivative Instruments and Hedging Activities | ||
Liability derivatives | $ 1,333 | $ 13,909 |
DERIVATIVE INSTRUMENTS AND HE63
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Gains and losses recognized (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative instruments and hedging activities | ||
Estimated unrealized net gains from cash flow hedges which are expected to be reclassified into earnings in the next twelve months | $ 700 | |
Foreign currency forwards | Other income/(expense), net | ||
Derivative instruments and hedging activities | ||
Gains (losses) recognized in OCI | (806) | $ 1,165 |
Gains (losses) reclassified into earnings - Effective Portion | 1,522 | 1,257 |
Gain (losses) recognized - Ineffective Portion and Amount excluded from effectiveness testing | $ 100 | $ 100 |
PENSION, PROFIT SHARING AND O64
PENSION, PROFIT SHARING AND OTHER BENEFIT PLANS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2010 | |
Defined Contribution Plans | ||||
Company contributions to defined contribution plan | $ 15,600 | $ 14,200 | $ 19,600 | |
Amounts recognized in Accumulated OCI | ||||
Valuation allowance on deffered tax asset | (47,887) | (54,759) | ||
Components of net periodic pension cost (benefit) | ||||
Settlement loss | $ 2,671 | |||
Equity securities | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage, minimum | 20.00% | |||
Target allocation percentage, maximum | 55.00% | |||
Debt securities | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage, minimum | 25.00% | |||
Target allocation percentage, maximum | 75.00% | |||
Cash | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage, minimum | 0.00% | |||
Target allocation percentage, maximum | 55.00% | |||
Real Estate | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage, minimum | 0.00% | |||
Target allocation percentage, maximum | 10.00% | |||
Defined Benefit Pension Plans | ||||
Defined Contribution Plans | ||||
Number of European employees covered by contributory defined benefit pension plan for which benefits were frozen (as a percent) | 50.00% | |||
Expected contribution to defined benefit pension plans in next fiscal year | $ 3,900 | |||
Unrecognized actuarial loss expected to be recognized in net pension cost over next fiscal year | 4,200 | |||
Unrecognized actuarial loss expected to be recognized in net pension cost over next fiscal year, net of tax | 3,200 | |||
Projected benefit obligation, ABO and fair value of plan assets for the defined benefit pension plans in which the ABO was in excess of the fair value of plan assets | ||||
Projected benefit obligation | 241,117 | 227,527 | ||
Accumulated benefit obligation | 241,117 | 227,527 | ||
Fair value of plan assets | 194,253 | 201,502 | ||
Change in benefit obligations: | ||||
Net benefit obligation at the beginning of the year | 227,527 | 224,201 | ||
Service cost | 595 | 670 | 636 | |
Interest cost | 8,972 | 9,073 | 9,967 | |
Actuarial loss | 41,583 | 8,203 | ||
Gross benefits paid | (8,365) | (7,047) | ||
Settlements | (10,424) | |||
Foreign currency exchange rate changes | (18,771) | (7,573) | ||
Net benefit obligation at the end of the year | 241,117 | 227,527 | 224,201 | |
Change in plan assets: | ||||
Fair value of plan assets at the beginning of the year | 201,502 | 206,982 | ||
Actual return on plan assets | 23,775 | 2,815 | ||
Employer contributions | 4,271 | 6,206 | ||
Gross benefits paid | (8,365) | (7,047) | ||
Settlements | (10,424) | |||
PBGC Premium paid | (362) | |||
Administrative expenses | (925) | (682) | ||
Foreign currency exchange rate changes | (15,219) | (6,772) | ||
Fair value of plan assets at the end of the year | 194,253 | 201,502 | 206,982 | |
Unfunded status of the plans | (46,864) | (26,025) | ||
Unrecognized net actuarial loss | 72,909 | 51,087 | ||
Net amount recognized | 26,045 | 25,062 | ||
Amounts recognized in Accumulated OCI | ||||
Liability adjustment to OCI | (72,909) | (51,087) | ||
Deferred tax asset | 19,236 | 15,260 | ||
Valuation allowance on deffered tax asset | (5,153) | (3,415) | ||
Accumulated other comprehensive loss | (58,826) | (39,242) | ||
Components of net periodic pension cost (benefit) | ||||
Service cost | 595 | 670 | 636 | |
Interest cost | 8,972 | 9,073 | 9,967 | |
Expected return on plan assets | (13,182) | (13,835) | (13,183) | |
Amortization of actuarial loss | 1,869 | 705 | 802 | |
Settlement loss | 2,671 | |||
Administrative expenses | 177 | 163 | 152 | |
Net pension benefit | $ 1,102 | $ (3,224) | $ (1,626) | |
Weighted-average assumptions used to determine benefit obligation at the end of the year | ||||
Discount rate (as a percent) | 3.00% | 4.10% | 4.20% | |
Rate of compensation increase (as a percent) | 3.10% | 3.10% | 3.20% | |
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Discount rate (as a percent) | 4.10% | 4.20% | 4.80% | |
Expected return on plan assets (as a percent) | 6.80% | 6.90% | 7.00% | |
Rate of compensation increase (as a percent) | 3.10% | 3.20% | 4.40% | |
Defined Benefit Pension Plans | Real Estate | ||||
Change in plan assets: | ||||
Fair value of plan assets at the beginning of the year | $ 8,166 | |||
Fair value of plan assets at the end of the year | 7,561 | $ 8,166 | ||
Non-qualified deferred compensation plan | ||||
Deferred compensation plans | ||||
Liabilities associated with the non-qualified deferred compensation plan | 10,600 | 9,900 | ||
Assets set aside to fund deferred compensation liabilities | $ 3,600 | 2,900 | ||
Non-qualified deferred compensation plan | Life insurance contracts | ||||
Deferred compensation plans | ||||
Assets set aside to fund deferred compensation liabilities | 1,900 | |||
Non-qualified deferred compensation plan | Marketable securities | ||||
Deferred compensation plans | ||||
Assets set aside to fund deferred compensation liabilities | $ 1,000 |
PENSION, PROFIT SHARING AND O65
PENSION, PROFIT SHARING AND OTHER BENEFIT PLANS - Fair value by asset category and hierarchy (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 |
Cash and cash equivalents | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | $ 3,071 | $ 1,754 | |
Cash and cash equivalents | Level 1 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 1,496 | 766 | |
Cash and cash equivalents | Level 2 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 1,575 | 988 | |
Defined Benefit Pension Plans | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 194,253 | 201,502 | $ 206,982 |
Defined Benefit Pension Plans | Level 1 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 1,496 | 766 | |
Defined Benefit Pension Plans | Level 2 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 185,196 | 192,570 | |
Defined Benefit Pension Plans | Level 3 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 7,561 | 8,166 | $ 7,096 |
Defined Benefit Pension Plans | Equity securities | United States | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 35,589 | 38,912 | |
Defined Benefit Pension Plans | Equity securities | United States | Level 2 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 35,589 | 38,912 | |
Defined Benefit Pension Plans | Equity securities | Other foreign countries | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 48,288 | 45,120 | |
Defined Benefit Pension Plans | Equity securities | Other foreign countries | Level 2 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 48,288 | 45,120 | |
Defined Benefit Pension Plans | Fixed-income funds | United States | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 46,292 | 49,744 | |
Defined Benefit Pension Plans | Fixed-income funds | United States | Level 2 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 46,292 | 49,744 | |
Defined Benefit Pension Plans | Fixed-income funds | United Kingdom | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 25,927 | 24,707 | |
Defined Benefit Pension Plans | Fixed-income funds | United Kingdom | Level 2 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 25,927 | 24,707 | |
Defined Benefit Pension Plans | Diversified growth fund | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 27,525 | 33,099 | |
Defined Benefit Pension Plans | Diversified growth fund | Level 2 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 27,525 | 33,099 | |
Defined Benefit Pension Plans | Real Estate | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 7,561 | 8,166 | |
Defined Benefit Pension Plans | Real Estate | Level 3 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | $ 7,561 | $ 8,166 |
PENSION, PROFIT SHARING AND O66
PENSION, PROFIT SHARING AND OTHER BENEFIT PLANS - Changes in assets categorized as Level 3 (Details) - Defined Benefit Pension Plans - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Changes in the fair value of plan assets categorized as Level 3 | ||
Fair value of plan assets at the beginning of the year | $ 201,502 | $ 206,982 |
Realized and unrealized gains, net | 23,775 | 2,815 |
Fair value of plan assets at the end of the year | 194,253 | 201,502 |
Level 3 | ||
Changes in the fair value of plan assets categorized as Level 3 | ||
Fair value of plan assets at the beginning of the year | 8,166 | 7,096 |
Realized and unrealized gains, net | 859 | 1,142 |
Purchase, sales and settlements, net | (1,464) | (72) |
Fair value of plan assets at the end of the year | $ 7,561 | $ 8,166 |
PENSION, PROFIT SHARING AND O67
PENSION, PROFIT SHARING AND OTHER BENEFIT PLANS - Expected benefit payments (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Expected pension benefit payments | |
2,017 | $ 8,073 |
2,018 | 8,229 |
2,019 | 8,646 |
2,020 | 9,067 |
2,021 | 9,289 |
2022-2026 | $ 49,574 |
STOCKHOLDERS_ EQUITY (Details)
STOCKHOLDERS’ EQUITY (Details) | 12 Months Ended |
Sep. 30, 2016categoryitemshares | |
Stockholders' Equity | |
Vesting period | 3 years |
RSUs | |
Stockholders' Equity | |
Number of units awarded (in shares) | 1,525,640 |
Number of shares of common stock that each award holder has the contingent right to receive | 1 |
Total number of unvested awards ultimately expected to vest (in shares) | 409,619 |
Vested awards to date | 345,318 |
Time-based RSUs | |
Stockholders' Equity | |
Number of units awarded (in shares) | 740,384 |
Number of equal installments for vesting of stock awards | item | 4 |
Performance-based RSUs | |
Stockholders' Equity | |
Number of units awarded (in shares) | 785,256 |
Vesting period | 3 years |
Number of vesting criteria which have to be satisfied out of total vesting criteria | category | 1 |
Number of vesting criteria | category | 3 |
STOCKHOLDERS_ EQUITY - RSU acti
STOCKHOLDERS’ EQUITY - RSU activity (Details) - RSUs - $ / shares | Oct. 01, 2016 | Sep. 30, 2016 | Sep. 30, 2015 |
Number of Shares | |||
Balance unvested at the beginning of the period (in shares) | 889,129 | 759,902 | 642,949 |
Granted (in shares) | 471,627 | 322,428 | |
Vested (in shares) | (130,678) | (160,499) | |
Forfeited (in shares) | (211,722) | (44,976) | |
Balance unvested at the end of the period (in shares) | 889,129 | 759,902 | |
Weighted Average Grant-Date Fair Value | |||
Balance unvested at the beginning of the period (in dollars per share) | $ 45.98 | $ 47.24 | $ 43.76 |
Granted (in dollars per share) | 43.72 | 48.10 | |
Vested (in dollars per share) | 46.94 | 45.91 | |
Forfeited (in dollars per share) | 44.86 | 46.65 | |
Balance unvested at the end of the period (in dollars per share) | $ 45.98 | $ 47.24 | |
Shares available for future grants | 914,701 | ||
Subsequent event | |||
Number of Shares | |||
Vested (in shares) | (143,726) |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) $ in Thousands | 12 Months Ended |
Sep. 30, 2016USD ($) | |
Stock-Based Compensation | |
Non-cash compensation expense related to stock-based awards | $ 8,762 |
Estimated forfeiture rate (as a percent) | 12.50% |
Cost of sales | |
Stock-Based Compensation | |
Non-cash compensation expense related to stock-based awards | $ 1,043 |
Selling, general and administrative | |
Stock-Based Compensation | |
Non-cash compensation expense related to stock-based awards | 7,719 |
RSUs | |
Stock-Based Compensation | |
Unrecognized compensation cost related to unvested awards | 35,700 |
Aggregate fair value of awards | $ 18,800 |
Weighted-average period of recognition | 1 year 8 months 12 days |
LEGAL MATTERS (Details)
LEGAL MATTERS (Details) | 1 Months Ended |
Oct. 31, 2014item | |
LEGAL MATTERS | |
Number of transit customers included as defendants in lawsuit | 1 |
BUSINESS SEGMENT INFORMATION -
BUSINESS SEGMENT INFORMATION - Financial data (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2016USD ($)segment | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | |
Revenue recognition | |||||||||||
Number of primary business segments | segment | 3 | ||||||||||
Sales | $ 406,588 | $ 375,240 | $ 366,024 | $ 313,813 | $ 425,917 | $ 347,806 | $ 338,834 | $ 318,488 | $ 1,461,665 | $ 1,431,045 | $ 1,398,352 |
Operating income (loss) | 10,488 | $ 13,893 | $ (9,086) | $ (8,077) | 34,709 | $ 10,293 | $ 23,206 | $ 7,179 | 7,218 | 75,387 | 92,490 |
Assets | 1,504,679 | 1,300,276 | 1,504,679 | 1,300,276 | 1,194,600 | ||||||
Depreciation and amortization | 45,478 | 37,662 | 30,440 | ||||||||
Capital expenditures | 32,093 | 22,202 | 16,620 | ||||||||
Cubic Transportation Systems | |||||||||||
Revenue recognition | |||||||||||
Sales | 586,400 | 566,800 | 599,700 | ||||||||
Operating income (loss) | 57,500 | 75,900 | 65,900 | ||||||||
Assets | 338,200 | 410,000 | 338,200 | 410,000 | 422,200 | ||||||
Depreciation and amortization | 8,200 | 10,800 | 11,500 | ||||||||
Capital expenditures | 2,200 | 2,000 | 1,800 | ||||||||
Cubic Global Defense Systems | |||||||||||
Revenue recognition | |||||||||||
Sales | 484,200 | 462,100 | 400,600 | ||||||||
Operating income (loss) | (17,100) | 18,400 | 26,800 | ||||||||
Assets | 616,200 | 341,200 | 616,200 | 341,200 | 252,400 | ||||||
Depreciation and amortization | 28,700 | 17,100 | 7,400 | ||||||||
Capital expenditures | 8,900 | 600 | 13,200 | ||||||||
Cubic Global Defense Services | |||||||||||
Revenue recognition | |||||||||||
Sales | 391,100 | 402,100 | 398,100 | ||||||||
Operating income (loss) | 11,200 | 6,600 | 7,800 | ||||||||
Assets | 191,200 | 200,700 | 191,200 | 200,700 | 195,800 | ||||||
Depreciation and amortization | 5,200 | 8,500 | 10,700 | ||||||||
Corporate | |||||||||||
Revenue recognition | |||||||||||
Assets | $ 359,100 | $ 348,400 | 359,100 | 348,400 | 324,200 | ||||||
Depreciation and amortization | 3,400 | 1,300 | 800 | ||||||||
Capital expenditures | 21,000 | 19,600 | 1,600 | ||||||||
Unallocated corporate expenses and other | |||||||||||
Revenue recognition | |||||||||||
Operating income (loss) | $ (44,400) | $ (25,500) | $ (8,000) |
BUSINESS SEGMENT INFORMATION 73
BUSINESS SEGMENT INFORMATION - Geographic information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Business segment financial data | |||||||||||
Sales | $ 406,588 | $ 375,240 | $ 366,024 | $ 313,813 | $ 425,917 | $ 347,806 | $ 338,834 | $ 318,488 | $ 1,461,665 | $ 1,431,045 | $ 1,398,352 |
Long-lived assets, net | 101,000 | 78,700 | 101,000 | 78,700 | 65,400 | ||||||
United States | |||||||||||
Business segment financial data | |||||||||||
Sales | 827,000 | 765,000 | 749,900 | ||||||||
Long-lived assets, net | 86,300 | 65,800 | 86,300 | 65,800 | 49,800 | ||||||
United Kingdom | |||||||||||
Business segment financial data | |||||||||||
Sales | 243,000 | 282,400 | 294,400 | ||||||||
Long-lived assets, net | 5,300 | 8,600 | 5,300 | 8,600 | 9,300 | ||||||
Canada | |||||||||||
Business segment financial data | |||||||||||
Sales | 44,600 | 17,600 | 9,000 | ||||||||
Australia | |||||||||||
Business segment financial data | |||||||||||
Sales | 154,000 | 164,600 | 161,900 | ||||||||
Middle East | |||||||||||
Business segment financial data | |||||||||||
Sales | 71,000 | 67,700 | 42,000 | ||||||||
Far East | |||||||||||
Business segment financial data | |||||||||||
Sales | 57,400 | 55,300 | 76,600 | ||||||||
Other foreign countries | |||||||||||
Business segment financial data | |||||||||||
Sales | 64,700 | 78,400 | 64,600 | ||||||||
Long-lived assets, net | $ 9,400 | $ 4,300 | $ 9,400 | $ 4,300 | $ 6,300 |
BUSINESS SEGMENT INFORMATION 74
BUSINESS SEGMENT INFORMATION - Narrative (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||
Aug. 31, 2015USD ($) | Sep. 30, 2014item | Sep. 30, 2016USD ($)$ / shares | Jun. 30, 2016USD ($)$ / shares | Mar. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($)$ / shares | Sep. 30, 2015USD ($)$ / shares | Jun. 30, 2015USD ($)$ / shares | Mar. 31, 2015USD ($)$ / shares | Dec. 31, 2014USD ($)$ / shares | Mar. 31, 2014USD ($) | Sep. 30, 2016USD ($)item$ / shares | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2014USD ($)$ / shares | |
Revenue recognition | ||||||||||||||
Increase (decrease) in operating income | $ 10,488 | $ 13,893 | $ (9,086) | $ (8,077) | $ 34,709 | $ 10,293 | $ 23,206 | $ 7,179 | $ 7,218 | $ 75,387 | $ 92,490 | |||
Increase (decrease) in net income | $ 1,735 | $ 22,914 | $ 69,580 | |||||||||||
Increase (decrease) in net income per common share (in dollars per share) | $ / shares | $ (0.29) | $ 0.17 | $ 0.38 | $ (0.20) | $ 0.74 | $ 0.33 | $ (0.41) | $ 0.19 | $ 0.06 | $ 0.85 | $ 2.59 | |||
Sales related to annual system usage incentives | $ 3,100 | $ 9,300 | $ 12,200 | |||||||||||
Restructuring costs | $ 1,852 | $ 6,272 | $ 1,094 | |||||||||||
Cubic Transportation Systems | ||||||||||||||
Revenue recognition | ||||||||||||||
Sales to Transport for London | 156,300 | 183,200 | 213,200 | |||||||||||
Increase (decrease) in operating income | 57,500 | 75,900 | 65,900 | |||||||||||
Restructuring costs | $ 1,000 | 600 | 700 | |||||||||||
Reduction in employee headcount | item | 20 | 20 | ||||||||||||
Cubic Global Defense Systems | ||||||||||||||
Revenue recognition | ||||||||||||||
Increase (decrease) in operating income | $ (17,100) | 18,400 | 26,800 | |||||||||||
Restructuring costs | 300 | 4,600 | 500 | |||||||||||
Cubic Global Defense Services | ||||||||||||||
Revenue recognition | ||||||||||||||
Increase (decrease) in operating income | 11,200 | 6,600 | 7,800 | |||||||||||
Restructuring costs | 600 | 600 | ||||||||||||
CGD services and CGD systems segments | ||||||||||||||
Revenue recognition | ||||||||||||||
Sales to U.S. government agencies | 657,900 | 670,000 | 651,100 | |||||||||||
Restructuring costs | 900 | |||||||||||||
Unallocated corporate expenses and other | ||||||||||||||
Revenue recognition | ||||||||||||||
Increase (decrease) in operating income | (44,400) | (25,500) | (8,000) | |||||||||||
Restructuring costs | 500 | (100) | ||||||||||||
Change in estimated total costs | Adjustment | ||||||||||||||
Revenue recognition | ||||||||||||||
Increase (decrease) in operating income | $ 1,300 | $ 700 | (2,800) | (14,500) | 1,300 | |||||||||
Increase (decrease) in net income | $ 900 | $ 500 | $ (1,600) | $ (8,000) | $ 3,500 | |||||||||
Increase (decrease) in net income per common share (in dollars per share) | $ / shares | $ 0.03 | $ 0.02 | $ (0.06) | $ (0.30) | $ 0.13 |
BUSINESS SEGMENT INFORMATION 75
BUSINESS SEGMENT INFORMATION - Restructuring charges incurred by business segment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring plan | |||
Restructuring costs | $ 1,852 | $ 6,272 | $ 1,094 |
Unallocated corporate expenses and other | |||
Restructuring plan | |||
Restructuring costs | 500 | (100) | |
Cubic Transportation Systems | |||
Restructuring plan | |||
Restructuring costs | 1,000 | 600 | 700 |
Cubic Global Defense Systems | |||
Restructuring plan | |||
Restructuring costs | 300 | 4,600 | $ 500 |
Cubic Global Defense Services | |||
Restructuring plan | |||
Restructuring costs | $ 600 | $ 600 |
BUSINESS SEGMENT INFORMATION 76
BUSINESS SEGMENT INFORMATION - Restructuring liabilitiy and employee separation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring liability | |||
Balance at the beginning of the period | $ 1,893 | $ 776 | |
Accrued costs | 1,852 | 6,272 | $ 1,094 |
Cash payments | (3,096) | (5,155) | |
Liability at the end of the period | $ 649 | $ 1,893 | $ 776 |
SUMMARY OF QUARTERLY RESULTS 77
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) - Quarterly results (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |||||||||||
Net sales | $ 406,588 | $ 375,240 | $ 366,024 | $ 313,813 | $ 425,917 | $ 347,806 | $ 338,834 | $ 318,488 | $ 1,461,665 | $ 1,431,045 | $ 1,398,352 |
Operating income (loss) | 10,488 | 13,893 | (9,086) | (8,077) | 34,709 | 10,293 | 23,206 | 7,179 | 7,218 | 75,387 | 92,490 |
Net income (loss) attributable to Cubic | $ (7,493) | $ 4,498 | $ 10,144 | $ (5,414) | $ 19,977 | $ 8,780 | $ (11,024) | $ 5,152 | $ 1,735 | $ 22,885 | $ 69,491 |
Net income (loss) per share, basic (in dollars per share) | $ (0.29) | $ 0.17 | $ 0.38 | $ (0.20) | $ 0.74 | $ 0.33 | $ (0.41) | $ 0.19 | $ 0.06 | $ 0.85 | $ 2.59 |
Net income (loss) per share, diluted (in dollars per share) | $ (0.29) | $ 0.17 | $ 0.38 | $ (0.20) | $ 0.74 | $ 0.33 | $ (0.41) | $ 0.19 | $ 0.06 | $ 0.85 | $ 2.59 |
SUMMARY OF QUARTERLY RESULTS 78
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Summary Of quarterly results of operations | |||||||||||
Increase (decrease) in operating income | $ 10,488 | $ 13,893 | $ (9,086) | $ (8,077) | $ 34,709 | $ 10,293 | $ 23,206 | $ 7,179 | $ 7,218 | $ 75,387 | $ 92,490 |
Increase (decrease) in net income | $ 1,735 | $ 22,914 | $ 69,580 | ||||||||
Increase (decrease) in net income per common share (in dollars per share) | $ (0.29) | $ 0.17 | $ 0.38 | $ (0.20) | $ 0.74 | $ 0.33 | $ (0.41) | $ 0.19 | $ 0.06 | $ 0.85 | $ 2.59 |
Change in estimated total costs | Adjustment | |||||||||||
Summary Of quarterly results of operations | |||||||||||
Increase (decrease) in operating income | $ 1,300 | $ 700 | $ (2,800) | $ (14,500) | $ 1,300 | ||||||
Increase (decrease) in net income | $ 900 | $ 500 | $ (1,600) | $ (8,000) | $ 3,500 | ||||||
Increase (decrease) in net income per common share (in dollars per share) | $ 0.03 | $ 0.02 | $ (0.06) | $ (0.30) | $ 0.13 |