Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2018 | Nov. 01, 2018 | Mar. 31, 2018 | |
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, 2018 | ||
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 | $ 1,469,585,039 | ||
Entity Common Stock, Shares Outstanding | 27,337,991 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net sales: | |||
Products | $ 704,941 | $ 681,559 | $ 661,904 |
Services | 497,957 | 426,150 | 408,697 |
Total net sales | 1,202,898 | 1,107,709 | 1,070,601 |
Costs and expenses: | |||
Products | 472,698 | 473,670 | 473,444 |
Services | 362,694 | 305,653 | 293,033 |
Selling, general and administrative expenses | 258,644 | 240,601 | 253,163 |
Research and development | 52,398 | 52,652 | 31,976 |
Amortization of purchased intangibles | 27,064 | 30,245 | 29,356 |
Restructuring costs | 5,018 | 2,260 | 1,278 |
Total costs and expenses | 1,178,516 | 1,105,081 | 1,082,250 |
Operating income (loss) | 24,382 | 2,628 | (11,649) |
Other income (expense): | |||
Interest and dividend income | 1,615 | 953 | 1,416 |
Interest expense | (10,424) | (15,027) | (11,199) |
Pension settlement loss | (2,671) | ||
Other income (expense), net | (687) | 364 | (2,334) |
Income (loss) from continuing operations before income taxes | 14,886 | (11,082) | (26,437) |
Income tax (benefit) provision | 7,093 | 14,658 | (14,357) |
Net income (loss) from continuing operations | 7,793 | (25,740) | (12,080) |
Net income from discontinued operations | 4,243 | 14,531 | 13,815 |
Net income (loss) | 12,036 | (11,209) | 1,735 |
Less noncontrolling interest in income of VIE | (274) | ||
Net income (loss) attributable to Cubic | 12,310 | (11,209) | 1,735 |
Amounts attributable to Cubic: | |||
Net income (loss) from continuing operations | 8,067 | (25,740) | (12,080) |
Net income from discontinued operations | 4,243 | 14,531 | 13,815 |
Net income (loss) attributable to Cubic | $ 12,310 | $ (11,209) | $ 1,735 |
Basic | |||
Continuing operations attributable to Cubic (in dollars per share) | $ 0.30 | $ (0.95) | $ (0.45) |
Discontinued operations (in dollars per share) | 0.16 | 0.54 | 0.51 |
Basic earnings per share attributable to Cubic (in dollars per share) | 0.45 | (0.41) | 0.06 |
Diluted | |||
Continuing operations attributable to Cubic (in dollars per share) | 0.29 | (0.95) | (0.45) |
Discontinued operations (in dollars per share) | 0.16 | 0.54 | 0.51 |
Diluted earnings per share attributable to Cubic (in dollars per share) | $ 0.45 | $ (0.41) | $ 0.06 |
Weighted average shares used in per share calculations: | |||
Basic (in shares) | 27,229 | 27,106 | 26,976 |
Diluted (in shares) | 27,351 | 27,106 | 26,976 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ 12,036 | $ (11,209) | $ 1,735 |
Other comprehensive income (loss): | |||
Adjustment to pension liability, net of tax | (5,540) | (13,180) | 19,584 |
Foreign currency translation | (8,126) | 1,440 | (47,872) |
Change in unrealized gains/losses from cash flow hedges: | |||
Change in fair value of cash flow hedges, net of tax | 34 | (1,071) | 464 |
Adjustment for net gains/losses realized and included in net income, net of tax | 929 | (358) | (989) |
Total change in unrealized gains/losses realized from cash flow hedges, net of tax | 963 | (1,429) | (525) |
Total other comprehensive income (loss) | (1,623) | 13,191 | (67,981) |
Total comprehensive income (loss) | 10,413 | 1,982 | (66,246) |
Noncontrolling interest in comprehensive loss of consolidated VIE, net of tax | (274) | ||
Comprehensive income (loss) attributable to Cubic, net of tax | $ 10,687 | $ 1,982 | $ (66,246) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Sep. 30, 2017 |
Current assets: | ||
Restricted cash | $ 27,400 | $ 8,400 |
Accounts receivable: | ||
Long-term contracts | 393,691 | 354,476 |
Allowance for doubtful accounts | (1,324) | (436) |
Accounts receivable - net | 392,367 | 354,040 |
Recoverable income taxes | 91 | 5,360 |
Inventories | 84,199 | 87,715 |
Assets held for sale | 8,177 | |
Other current assets | 43,705 | 29,951 |
Current assets of discontinued operations | 75,900 | |
Total current assets | 668,147 | 621,543 |
Long-term contract receivables | 6,134 | 17,457 |
Property, plant and equipment, net | 117,546 | 113,220 |
Deferred income taxes | 4,713 | 7,385 |
Goodwill | 333,626 | 321,562 |
Purchased intangibles, net | 73,533 | 89,858 |
Noncurrent assets of discontinued operations | 98,274 | |
Total assets | 1,304,883 | 1,336,285 |
Current liabilities: | ||
Short-term borrowings | 55,000 | |
Customer advances | 75,941 | 56,132 |
Accrued compensation | 65,277 | 79,577 |
Other current liabilities | 52,956 | 50,549 |
Income taxes payable | 8,586 | 9,838 |
Current liabilities of discontinued operations | 36,862 | |
Total current liabilities | 328,339 | 376,479 |
Long-term debt | 199,793 | 199,761 |
Accrued pension liability | 7,802 | 25,375 |
Deferred compensation | 11,476 | 11,435 |
Income taxes payable | 2,406 | 7,465 |
Deferred income taxes | 2,689 | 10,407 |
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, 36,201 issued and 27,255 outstanding at September 30, 2018, 36,072 issued and 27,127 outstanding at September 30, 2017 | 45,008 | 37,850 |
Retained earnings | 801,834 | 794,485 |
Accumulated other comprehensive loss | (110,643) | (106,626) |
Treasury stock at cost - 8,945 shares | (36,078) | (36,078) |
Shareholders’ equity related to Cubic | 700,121 | 689,631 |
Total shareholders’ equity | 724,196 | 689,631 |
Total liabilities and shareholders' equity | 1,304,883 | 1,336,285 |
Cubic Corporation Excluding VIE | ||
Current assets: | ||
Cash and cash equivalents | 111,834 | 60,143 |
Restricted cash | 17,400 | 8,434 |
Accounts receivable: | ||
Long-term capitalized contract costs | 84,924 | 56,471 |
Other assets | 14,192 | 10,515 |
Current liabilities: | ||
Trade accounts payable | 125,414 | 88,521 |
Long-term debt | 199,793 | 199,761 |
Other noncurrent liabilities | 19,113 | $ 15,732 |
OpCo. | ||
Current assets: | ||
Cash and cash equivalents | 374 | |
Restricted cash | 10,000 | |
Accounts receivable: | ||
Long-term capitalized contract costs | 1,258 | |
Other assets | 810 | |
Current liabilities: | ||
Trade accounts payable | 165 | |
Long-term debt | 9,056 | |
Other noncurrent liabilities | 13 | |
Shareholders' equity: | ||
Noncontrolling interest in variable interest entity | $ 24,075 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2018 | Sep. 30, 2017 |
CONSOLIDATED BALANCE SHEETS | ||
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 | 36,201 | 36,072 |
Common stock, outstanding shares | 27,255 | 27,127 |
Treasury stock, shares | 8,945 | 8,945 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operating Activities: | |||
Net income (loss) | $ 12,036 | $ (11,209) | $ 1,735 |
Net income from discontinued operations | (4,243) | (14,531) | (13,815) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 46,600 | 48,045 | 40,323 |
Share-based compensation expense | 7,515 | 5,012 | 7,748 |
Change in fair value of contingent consideration | 1,029 | (3,878) | 1,274 |
Gain (loss) on disposal of assets | (1,474) | 405 | |
Deferred income taxes | (6,860) | (917) | (27,709) |
Net pension cost (benefit) | (2,770) | (1,046) | 1,102 |
Excess tax benefits from equity incentive plans | (35) | 3 | |
Changes in operating assets and liabilities, net of effects from acquisitions: | |||
Accounts receivable | (34,762) | (45,443) | (184) |
Inventories | 3,023 | (18,867) | (62) |
Prepaid expenses and other current assets | (15,455) | 7,286 | 4,494 |
Long-term capitalized contract costs | (29,552) | 8,911 | 7,635 |
Accounts payable and other current liabilities | 30,423 | 13,389 | 25,613 |
Customer advances | 21,566 | 7,383 | (24,908) |
Income taxes | (361) | 8,240 | (5,519) |
Other items, net | (18,126) | (5,756) | 6,294 |
NET CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES | 8,589 | (3,011) | 24,024 |
NET CASH PROVIDED BY OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS | 10,376 | 27,747 | 20,578 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 18,965 | 24,736 | 44,602 |
Investing Activities: | |||
Acquisition of businesses, net of cash acquired | (16,322) | (16,830) | (243,459) |
Purchases of marketable securities | (19,121) | (28,470) | |
Proceeds from sales or maturities of marketable securities | 31,868 | 43,456 | |
Purchases of property, plant and equipment | (31,696) | (36,916) | (32,093) |
Purchase of non-marketable debt and equity securities | (1,500) | (2,700) | |
Proceeds from the sale of assets | 2,400 | ||
NET CASH USED IN INVESTING ACTIVITIES FROM CONTINUING OPERATIONS | (47,118) | (43,699) | (260,566) |
NET CASH PROVIDED BY INVESTING ACTIVITIES FROM DISCONTINUED OPERATIONS | 133,795 | 1,217 | |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 86,677 | (42,482) | (260,566) |
Financing Activities: | |||
Proceeds from short-term borrowings | 269,770 | 130,780 | 288,900 |
Principal payments on short-term borrowings | (324,770) | (315,780) | (108,900) |
Principal payments on long-term debt | (978) | (494) | |
Proceeds from stock issued under employee stock purchase plan | 1,517 | 2,234 | |
Purchase of common stock | (2,449) | (2,444) | (1,563) |
Dividends paid | (7,355) | (7,341) | (7,285) |
Excess tax benefits from equity incentive plans | 35 | (3) | |
Contingent consideration payments related to acquisitions of businesses | (1,156) | (2,625) | (2,479) |
Equity contribution from Boston SPV partner | 24,349 | ||
Net change in restricted cash | (19,509) | 66,293 | (6,403) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (51,185) | (129,826) | 233,126 |
Effect of exchange rates on cash | (2,392) | 10,588 | (38,511) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 52,065 | (136,984) | (21,349) |
Cash and cash equivalents at the beginning of the period | 60,143 | 197,127 | 218,476 |
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 112,208 | 60,143 | 197,127 |
Shield Aviation | |||
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | 6,248 | ||
Deltenna | |||
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | 1,327 | ||
Vocality | |||
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | $ 271 | ||
GATR | |||
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | 6,788 | ||
TeraLogics | |||
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | 4,998 | ||
H4 Global | |||
Supplemental disclosure of non-cash investing and financing activities: | |||
Liability incurred to acquire, net | 952 | ||
Cubic Corporation Excluding VIE | |||
Financing Activities: | |||
Proceeds from long-term borrowings | 75,000 | ||
Deferred financing fees | $ (3,647) | ||
OpCo. | |||
Financing Activities: | |||
Proceeds from long-term borrowings | 13,196 | ||
Deferred financing fees | $ (4,778) |
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, 2015 | $ 25,560 | $ 818,642 | $ (51,836) | $ (36,078) | ||
Balance (in shares) at Sep. 30, 2015 | 26,883 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 1,735 | $ 1,735 | ||||
Other comprehensive income (loss), net of tax | (67,981) | (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 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | (11,209) | (11,209) | ||||
Other comprehensive income (loss), net of tax | 13,191 | 13,191 | ||||
Stock issued under equity incentive plans, shares | 158 | |||||
Stock issued under employee stock purchase plans, value | $ 2,234 | |||||
Stock issued under employee stock purchase plans, shares | 32 | |||||
Purchase of common stock, value | $ (2,444) | |||||
Purchase of common stock, shares | (55) | |||||
Stock- based compensation | $ 5,269 | |||||
Tax benefit (expense) from equity incentive plans | 35 | |||||
Cash dividends paid | (7,341) | |||||
Balance at Sep. 30, 2017 | $ 37,850 | 794,485 | (106,626) | (36,078) | 689,631 | |
Balance (in shares) at Sep. 30, 2017 | 27,127 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 12,310 | $ (274) | 12,310 | |||
Other comprehensive income (loss), net of tax | (1,623) | (1,623) | ||||
Stock issued under equity incentive plans, shares | 158 | |||||
Stock issued under employee stock purchase plans, value | $ 1,517 | |||||
Stock issued under employee stock purchase plans, shares | 26 | |||||
Purchase of common stock, value | $ (2,449) | |||||
Purchase of common stock, shares | (56) | |||||
Stock- based compensation | $ 8,090 | |||||
Equity contribution of noncontrolling interest | 24,349 | |||||
Cumulative effect of accounting standard adoption | 2,394 | (2,394) | ||||
Cash dividends paid | (7,355) | |||||
Balance at Sep. 30, 2018 | $ 45,008 | $ 801,834 | $ (110,643) | $ (36,078) | $ 24,075 | $ 724,196 |
Balance (in shares) at Sep. 30, 2018 | 27,255 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||
Cash dividends paid, per share of common stock | $ 0.27 | $ 0.27 | $ 0.27 |
Summary of Significant Accounti
Summary of Significant Accounting Polices | 12 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Polices | |
Summary of Significant Accounting Polices | CUBIC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENT September 30, 2018 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 the operation and maintenance of fare systems for mass transit customers. Through September 30, 2017 our principal lines of business were transportation fare collection systems and services, defense systems, and defense services. On April 18, 2018, we entered into a stock purchase agreement with Nova Global Supply & Services, LLC (Purchaser), an entity affiliated with GC Valiant, LP, under which we agreed to sell our Cubic Global Defense Services (CGD Services) business to Purchaser. The sale closed on May 31, 2018. As a result of the sale, the operating results and cash flows of CGD Services have been classified as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows for all periods presented and the assets and liabilities of CGD Services have been classified as assets and liabilities of discontinued operations in the Consolidated Balance Sheets for all periods presented. In addition, we concluded that Cubic Mission Solutions (CMS), which was formerly a part of our Cubic Global Defense Systems (CGD) operating segment, became a separate operating segment and reportable segment beginning on October 1, 2017. Applicable prior period amounts have been adjusted retrospectively to reflect the reportable segment change for all periods presented. Refer to “Note 2 – Acquisitions and Divestitures” for additional information about the sale of CGD Services and the related discontinued operation classification and “Note 17 – Business Segment Information” for additional information on the separate disclosure of operating and reportable segment information for CMS. Our transportation fare collection systems and services are sold primarily to large local government agencies worldwide. Our principal customers for defense products and services are the U.S. and foreign governments. 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 Operations 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 Operations as a component of other income (expense). Total transaction gains and losses, which are related primarily to advances to foreign subsidiaries and advances between foreign subsidiaries amounted to a loss of $2.2 million in 2018, a gain of $0.7 million in 2017, and a loss of $0.9 million in 2016. 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 and contingent consideration 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 noncurrent, depending upon the date of the lapse of the respective restriction. 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 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 use the units-of-delivery method to recognize revenue. 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 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. Once operation of the systems commence, the capitalized costs are 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. In cases that we determine that a pattern in which the intangible asset will be consumed can be reliably determined we use an amortization method that best matches that expected pattern. If we believe that such a pattern cannot be reliably determined, we use a straight-line method of amortization. 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, 2018, 2017 or 2016. 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 (loss) 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 the operation and maintenance of fare systems for mass transit customers and support specialized military training exercises mainly for international customers. We classify sales as products or services in our Consolidated Statements of Operations 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 the 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. 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. 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 non-U.S. government 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 (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. After the enactment of the Tax Cuts and Jobs Act of 2017 (Tax Act), we have provided for deferred taxes on unremitted earnings, as applicable. We include interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision. Accounting Standards Codification ( ASC) 740-20 requires total income tax expense or benefit to be allocated among continuing operations, discontinued operations, extraordinary items, other comprehensive income and items charged directly to shareholders’ equity. Net Income (Loss) Per Share: Basic net income (loss) per share (EPS) is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period, including vested RSUs. In periods with a net income from continuing operations, 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. 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. In periods with a net loss from continuing operations, common equivalent shares are not included in the computation of diluted EPS, because to do so would be anti-dilutive. The weighted-average number of shares outstanding used to compute net income (loss) per common share were as follows (in thousands): Year Ended September 30, 2018 2017 2016 Weighted average shares - basic 27,229 27,106 26,976 Effect of dilutive securities 122 — — Weighted average shares - diluted 27,351 27,106 26,976 Number of anti-dilutive securities — 967 825 Recent Accounting Pronouncements: Recently Adopted Accounting Pronouncements On December 22, 2017, the U.S. government enacted the Tax Act. Also in December 2017, the Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin 118, which was codified in March 2018 under Accounting Standards Update (ASU) 2018-05, which provides guidance on accounting for the tax effects of the Tax Act for which the accounting under Accounting Standards Codification (ASC) 740 is incomplete. A reporting entity must act in good faith and update provisional amounts as soon as more information becomes available, evaluated and prepared, during a measurement period that cannot exceed one year from the enactment date. Initial reasonable estimates and subsequent changes to provisional amounts must be reported in income tax expense or benefit from continuing operations in the period in which they are determined . As of September 30, 2018, we continue to consider the accounting for the transition tax on deferred foreign earnings to be provisional due to estimates of foreign earnings and profits for the year ended September 30, 2018. Accordingly, the impact of the Tax Act may be subject to adjustment in the first quarter of fiscal 2019. However, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. We will conclude the accounting for the enactment-date effects within the remaining prescribed SAB 118 measurement period. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which helps organizations reclassify certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Act enacted on December 22, 2017. ASU No. 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from tax reform. We adopted ASU 2018-02 in the fourth quarter of fiscal 2018. As a result of the adoption, we reclassified $2.4 million from accumulated other comprehensive loss into retained earnings. Recent Accounting Pronouncements – Not Yet Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers (commonly referred to as ASC 606) . ASC 606 outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance 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 will affect the timing of revenue recognition for many of our sales transactions. We will adopt ASC 606 using the “modified retrospective” method of adoption, meaning the cumulative effect of applying ASC 606 will be recognized as an adjustment to the opening retained earnings balance as of October 1, 2018. A task force within management is leading our implementation efforts and we have engaged outside advisors to assist. We have evaluated the impact of the adoption of the new standard on our active contracts across all our business segments, developed processes and tools to dual report financial results under both current GAAP and ASC 606, and assessed the impact to our internal control structure . Under ASC 606 , revenue is recognized as control transfers to the customer. As such, revenue for our fixed-price development and production contracts will generally be recognized over time as costs are incurred, which is consistent with the revenue recognition model we currently use for the majority of these contracts. For certain of our fixed-price production contracts where we currently recognize revenue as units are delivered, in most cases the accou |
Acquisitions and Divestitures
Acquisitions and Divestitures | 12 Months Ended |
Sep. 30, 2018 | |
Acquisitions and Divestitures | |
Acquisitions and Divestitures | NOTE 2—ACQUISITIONS AND DIVESTITURES Sale of CGD Services On April 18, 2018, we entered into a stock purchase agreement with Purchaser, an entity affiliated with GC Valiant, LP, under which we agreed to sell our CGD Services business to the Purchaser. The sale closed on May 31, 2018. In accordance with the terms of the stock purchase agreement, the Purchaser agreed to pay us $135.0 million in cash upon the closing of the transaction, adjusted for the estimated working capital of CGD Services at the date of the sale compared to a working capital target. In addition to the upfront cash payment, we are eligible to receive an additional cash payment of $3.0 million based on the achievement of pre-determined earn-out conditions related to the award of certain government contracts. In the third quarter of fiscal 2018, we received $133.8 million in connection with the sale and at September 30, 2018, we have recorded a receivable from the Purchaser of $3.7 million for the estimated amount due related to the working capital settlement. The working capital settlement has not yet been settled with the Purchaser. No amount has been recorded as a receivable related to the potential achievement of earn-out conditions based upon our probability assessment of the achievement of the required conditions. We concluded that the sale of the CGD Services business met all of the required conditions for discontinued operations presentation in the second quarter of fiscal 2018. As such, the CGD Services business financial results are reported within discontinued operations in our consolidated financial statements. The operating results and cash flows of CGD Services have been classified as discontinued operations in the Consolidated Statements of Income (Loss) and the Consolidated Statements of Cash Flows for all periods presented and the assets and liabilities of CGD Services have been classified as assets and liabilities of discontinued operations in the Consolidated Balance Sheet at September 30, 2017. In 2018, we recognized a $6.1 million loss within discontinued operations, which was calculated as the excess of the carrying value of the net assets of CGD Services less the sales price in the stock purchase agreement of $135.0 million less selling costs of $4. 5 million. The operations and cash flows of CGD Services are reflected in our consolidated Statements of Income and Consolidated Statements of Cash Flows as discontinued operations through May 31, 2018, the date of the sale. Income from discontinued operations, net of taxes, is comprised of the following for the years ended September 30, 2018, 2017 and 2016 (in thousands): Years Ended September 30, 2018 2017 2016 Net sales $ 262,228 $ 378,152 $ 391,064 Costs and expenses: Cost of sales 235,279 342,819 350,429 Selling, general and administrative expenses 11,365 17,487 16,430 Amortization of purchased intangibles 1,373 2,752 4,764 Restructuring costs 7 208 574 Other income (15) (46) (93) Earnings from discontinued operations before income taxes 14,219 14,932 18,960 Net loss on sale 6,131 — — Income tax provision 3,845 401 5,145 Net income from discontinued operations $ 4,243 $ 14,531 $ 13,815 The carrying amounts of CGD Services assets and liabilities that were classified as assets and liabilities of discontinued operations are as follows (in thousands): September 30, September 30, 2018 2017 Accounts receivable, net $ — $ 74,710 Other current assets — 1,190 Property and equipment, net — 466 Goodwill — 94,350 Purchased intangibles, net — 8,637 Other noncurrent assets — (5,179) Total assets — 174,174 Accounts payable and other liabilities — 36,862 Net assets $ — $ 137,312 Business 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. Shield Aviation, Inc. In July 2018, we acquired the assets of Shield Aviation (Shield), based in San Diego, California, a provider of autonomous aircraft systems (AAS) for intelligence, surveillance and reconnaissance (ISR) services. The addition of Shield expands our C4ISR portfolio for our CMS segment and will provide our customers with a rapidly deployable, medium AAS that offers unique mission enabling capabilities. We already provide the data link as well as the command and control link for the Shield AAS. Shield’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ — $ — $ — Operating loss (0.8) — — Net loss after taxes (0.6) — — Shield’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 0.1 $ — $ — Acquisition-related expenses 0.2 — — The acquisition-date fair value of consideration is $12.8 million, which is comprised of estimated fair value of contingent consideration of $5.6 million, extinguishment of secured loans and warrants due from Shield of $5.2 million, cash paid of $1.3 million, plus additional consideration to be paid in the future of $0.7 million. Under the purchase agreement, we will pay the sellers up to $10.0 million of contingent consideration if Shield meets certain sales goals from the date of acquisition through July 31, 2025. The contingent consideration liability will be re-measured to fair value at each reporting date until the contingencies are resolved and any subsequent changes in fair value are recognized in earnings. The acquisition of Shield was paid for with funds from existing cash resources. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Technology $ 6.0 Other net assets acquired 0.3 Net identifiable assets acquired 6.3 Goodwill 6.5 Net assets acquired $ 12.8 The estimated fair values of assets acquired and liabilities assumed, including purchased intangibles as well as the estimated fair value of contingent consideration are preliminary estimates pending the finalization of our valuation analyses. The estimated 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 technology asset valuation used the excess earnings approach. The intangible assets are being amortized using straight-line methods based on the expected period of cash flows that will be generated by the assets, over an average useful life of eight years from the date of acquisition. The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of Shield with our existing CMS business, and strengthening our capability of developing and integrating products and services in our CMS 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 CMS segment and is expected to be deductible for tax purposes. The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of Shield for fiscal years 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 0.8 2020 0.8 2021 0.8 2022 0.8 2023 0.8 Thereafter 1.9 MotionDSP In October 2017 we paid cash of $4.7 million to purchase 49% of the outstanding capital stock of MotionDSP, a private artificial intelligence software company based in Burlingame, California, which specializes in real-time video enhancement and computer vision analytics. On February 21, 2018, we paid net cash of $4.8 million to purchase the remaining outstanding capital stock of MotionDSP. The addition of MotionDSP enhances the capabilities in real-time video processing of our CMS business and expands our customer base in the public safety and other adjacent markets. MotionDSP’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 0.6 $ — $ — Operating loss (2.7) — — Net loss after taxes (1.9) — — MotionDSP’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 0.4 $ — $ — Acquisition-related expenses 0.8 0.2 — The acquisition of MotionDSP was paid for with funds from existing cash resources. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ 0.2 Technology 4.5 Trade name 0.1 Accounts payable and accrued expenses (0.3) Other noncurrent liabilities (0.8) Other net liabilities assumed (0.9) Net identifiable assets acquired 2.8 Goodwill 6.7 Net assets acquired $ 9.5 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 trade name valuation used the relief from royalty method, the customer relationships valuation used the with-and-without valuation method, and the technology valuation used the excess earnings method. The intangible assets are being amortized using straight-line methods based on the expected cash flows from the assets, over a useful life of seven years from the date of acquisition. The goodwill resulting from the acquisition was deemed to consist primarily of the synergies expected from combining the operations of MotionDSP with our CMS operating segment, enhancing our capabilities in real-time video processing and computer vision analytics of our CMS portfolio, as well as the value of the assembled workforce that became our employees following the close of the acquisition. The amount recorded as goodwill in connection with the acquisition of MotionDSP 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 MotionDSP for fiscal years 2019 through 2023 and thereafter is as follows (in millions) : Year Ended September 30, 2019 $ 0.7 2020 0.7 2021 0.7 2022 0.7 2023 0.7 Thereafter 0.9 Deltenna In July 2017, we acquired all of the outstanding capital stock of Deltenna Ltd (Deltenna), a wireless infrastructure company specializing in the design and delivery of radio and antenna communication solutions. Deltenna designs and manufactures cutting-edge integrated wireless products including compact LTE base stations, broadband range extenders for areas of poor coverage and rugged antennas. The addition of Deltenna, headquartered in Chippenham, U.K., will enhance tactical communication and training capabilities of our CGD businesses by effectively delivering high-capacity data networks within challenging and rigorous environments. Deltenna’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 0.3 $ 0.1 $ — Operating income (loss) 0.2 (0.2) — Net income (loss) after taxes 0.2 (0.2) — Deltenna’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 0.3 $ — $ — Gains from changes in fair value of contingent consideration (0.3) — — Acquisition-related expenses — 0.2 — The estimated acquisition-date fair value of consideration is $5.3 million, which is comprised of cash paid of $4.0 million plus the estimated fair value of contingent consideration of $1.3 million. Under the purchase agreement, we will pay the sellers up to $7.0 million of contingent consideration if Deltenna meets certain sales goals from the date of acquisition through the year ending September 30, 2022. 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 Deltenna was paid for with funds from existing cash resources. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ 1.0 Technology 1.1 Other net assets acquired (liabilities assumed) (0.3) Net identifiable assets acquired 1.8 Goodwill 3.5 Net assets acquired $ 5.3 The fair values of purchased intangibles were determined using the valuation methodology determined to be the most appropriate for each type of asset being valued. The customer relationships valuations used the excess earnings approach and the technology asset valuations used the relief from royalty approach. The intangible assets are being amortized using straight-line methods based on the expected period of cash flows from the assets, over a useful life of eight years from the date of acquisition. At the time of the acquisition, the goodwill resulting from the acquisition was deemed to consist primarily of the synergies expected from combining the operations of Deltenna with our legacy CGD operating segment, and strengthening our capability of developing and integrating products in our defense portfolio, as well as the value of the assembled workforce that became our employees following the close of the acquisition. The amount recorded as goodwill was assigned to our legacy CGD segment. As described in Note 17, we concluded that CMS became a separate operating segment beginning on October 1, 2017 distinct from our legacy CGD operating segment. In conjunction with the changes to reporting units, on October 1, 2017 we reassigned goodwill between CGD and CMS based on their relative fair values. The amount recorded as goodwill in connection with the acquisition of Deltenna 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 Deltenna for fiscal years 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 0.3 2020 0.3 2021 0.3 2022 0.3 2023 0.3 Thereafter 0.3 Vocality In November 2016, we acquired all of the outstanding capital stock of Vocality International (Vocality), based in Shackleford, U.K., a provider of embedded technology which unifies communications platforms, enhances voice quality, increases video performance and optimizes data throughput. Vocality contributes to our C4ISR portfolio of products for our CMS segment and expands our defense customer base. Vocality also sells its technology in the broadcast, oil and gas and maritime markets. Vocality’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 5.1 $ 1.5 $ — Operating loss (1.3) (2.9) — Net loss after taxes (1.2) (2.6) — Vocality’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 0.8 $ 0.6 $ — Acquisition-related expenses 0.6 1.6 — P rior to our acquisition of Vocality, Vocality had a number of share-based payment awards in place to its employees. Due to the structure of some of these share-based payment awards and the acceleration of vesting of certain of these awards in connection with our acquisition of Vocality, 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 $0.4 million of compensation expense within general and administrative expenses during the year ended September 30, 2017 related to this matter. This compensation is reflected in Vocality’s acquisition-related expenses and results of operations above for fiscal year 2017. The acquisition date fair value of consideration is $9.6 million, which is comprised of cash paid of $9.7 million plus additional held back consideration to be paid in the future estimated at $0.3 million, less the $0.4 million of cash paid to the seller recorded as compensation expense described above . The acquisition of Vocality was paid for with funds from existing cash resources. The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ 2.1 Technology 2.4 Trade name 0.4 Inventory 1.7 Accounts payable and accrued expenses (0.4) Other net assets acquired (liabilities assumed) (0.5) Net identifiable assets acquired 5.7 Goodwill 3.9 Net assets acquired $ 9.6 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 valuation used the excess earnings 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 useful life of nine years from the date of acquisition. At the time of the acquisition, the goodwill resulting from the acquisition was deemed to consist primarily of the synergies expected from combining the operations of Vocality with our legacy CGD operating segment, and strengthening our capability of developing and integrating products in our defense portfolio, as well as the value of the assembled workforce that became our employees following the close of the acquisition. The amount recorded as goodwill was assigned to our legacy CGD segment. As described in Note 17, we concluded that CMS became a separate operating segment beginning on October 1, 2017 distinct from our legacy CGD operating segment. In conjunction with the changes to reporting units, on October 1, 2017 we reassigned goodwill between CGD and CMS based on their relative fair values. The amount recorded as goodwill in connection with the acquisition of Vocality 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 Vocality for fiscal years 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 0.7 2020 0.6 2021 0.5 2022 0.5 2023 0.4 Thereafter 0.9 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 expeditionary satellite communication terminal solutions. GATR expands our satellite communications and networking applications technologies for our CMS segment and expands our customer base. GATR’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 111.1 $ 84.3 $ 43.1 Operating income (loss) 4.0 1.9 (26.4) Net income (loss) after taxes 2.9 1.4 (23.0) GATR’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 11.1 $ 12.7 $ 9.7 (Gains) losses for changes in fair value of contingent consideration — (3.2) 0.7 Acquisition-related expenses 0.4 0.6 22.0 GATR’s operating results for the year ended September 30, 2016 were 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 $18.5 million of compensation expense within general and administrative expenses during the year ended September 30, 2016 related to this matter. Of this $18.5 million amount, $15.4 million is not deductible for tax purposes. The acquisition-date fair value of consideration is $220.5 million, which is comprised of cash paid of $236.1 million plus the fair value of contingent consideration of $2.5 million, less $18.1 million of cash paid to the seller that was recognized as expense in fiscal 2016. The contingent consideration liability was re-measured to fair value at each reporting date until the contingencies were resolved and changes in fair value were recognized in earnings. The acquisition of GATR was paid for predominantly with the proceeds of borrowings on our revolving credit agreement in 2016. The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions): Customer relationships $ 51.7 Backlog 3.4 Technology 10.7 Non-compete agreements 1.2 Trade name 4.7 Accounts receivable 10.6 Inventory 3.4 Income tax receivable 5.1 Accounts payable and accrued expenses (2.4) Deferred tax liabilities (23.8) Net identifiable assets acquired 64.6 Goodwill 155.9 Net assets acquired $ 220.5 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 useful life of nine years from the date of acquisition. At the time of the acquisition, the goodwill resulting from the acquisition was deemed to consist primarily of the synergies expected from combining the operations of GATR with our legacy CGD business, including the synergies expected from combining its satellite communications and networking applications technologies with our C4ISR products and other products in our legacy CGD portfolio. The goodwill was also deemed to include the value of the assembled workforce that became our employees following the close of the acquisition and was allocated to our legacy CGD segment. As described in Note 17, we concluded that CMS became a separate operating segment beginning on October 1, 2017 distinct from our legacy CGD operating segment. In conjunction with the changes to reporting units, on October 1, 2017 we reassigned goodwill between CGD and CMS based on their relative fair values. The amount recorded as goodwill 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 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 9.8 2020 8.3 2021 6.9 2022 5.6 2023 3.8 Thereafter 3.8 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 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 CMS segment and expands our customer base. TeraLogics’ sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 23.7 $ 19.7 $ 14.2 Operating income (loss) 0.3 (1.8) (2.9) Net income (loss) after taxes 0.2 (1.2) (1.6) TeraLogics’ operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 2.8 $ 3.5 $ 3.0 Losses for changes in fair value of contingent consideration 1.3 1.3 1.5 Acquisition-related expenses — 0.2 2.3 During the year ended September 30, 2016 we incurred a $1.3 million charge for compensation expense incurred related to amounts paid to TeraLogics employees upon the close of the acquisition. This compensation expense is reflected in TeraLogics’ acquisition-related expenses and the results of TeraLogics’ operations above. The acquisition-date fair value of consideration is $33.9 million, which is comprised of cash paid of $28.9 million plus the acquisition-date fair value of contingent consideration of $5.0 million. The contingent consideration liability has been re-measured to fair value at each reporting date until the contingencies were resolved and changes in fair value have been recognized in earnings. The acquisition of TeraLogics was 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 $ 6.7 Backlog 5.6 Software 2.5 Non-compete agreements 0.1 Accounts receivable 1.4 Accounts payable and accrued expenses (0.5) Other net assets acquired (liabilities assumed) (0.1) Net identifiable assets acquired 15.7 Goodwill 18.2 Net assets acquired $ 33.9 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 useful life of seven years from the date of acquisition. At the time of the acquisition, the goodwill resulting from the acquisition was deemed to consist primarily of the synergies expected from combining the operations of TeraLogics with our legacy CGD business, including the synergies expected from combining TeraLogics real-time video capabilities with our existing tactical communications product portfolio, as well as the value of the assembled workforce who became our employees following the close of the acquisition. The amount recorded as goodwill was assigned to our legacy CGD segment. As described in Note 17, we concluded that CMS became a separate operating segment beginning on October 1, 2017 distinct from our legacy CGD operating segment. In conjunction with the changes to reporting units, on October 1, 2017 we reassigned goodwill between CGD and CMS based on their relative fair values. The amount recorded as goodwill in connection with the acquisition of TeraLogics 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 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 2.1 2020 1.4 2021 0.8 2022 0.5 2023 0.4 Thereafter 0.5 Acquisition of Trafficware Subsequent to September 30, 2018 In late October 2018, we acquired all of the outstanding capital stock of Advanced Traffic Solutions Inc. (Trafficware), a provider of intelligent traffic solutions for the transportation industry based in Sugar Land, Texas, which provides a fully integrated suite of software, Internet of Things (IoT) devices, and hardware solutions that provide customers with enhanced mobility and safety. Trafficware is expected to provide synergies from combining its capabilities with our existing CTS business. The purchase price is $235.7 million adjusted for the difference between net working capital acquired and a targeted working capital amount, and was financed primarily with proceeds from draws on our line of credit. The final determination of the purchase price allocation is expected to be completed as soon as practicable after consummation of the acquisition. Due to the limited time between the acquisition date and the filing of this report and due to the difference in fiscal year dates between Trafficware and Cubic, it is not practicable for us to disclose: (i) the allocation of purchase price to assets acquired and liabilities assumed as of the date of close, (ii) the methods of amortization and amortization periods of acquired intangible assets, and (iii) pro forma revenues and earnings of the combined company for the two years ended September 30, 2018. Pro forma information The following unaudited pro forma information presents our consolidated results of operations as if Shield Aviation, MotionDSP, Deltenna, Vocality, GATR and TeraLogics had been included in our consolidated results since October 1, 2016 (in millions): Year Ended September 30, 2018 2017 Net sales $ 1,204.0 $ 1,112.1 Net income (loss) $ 9.9 $ (29.5) 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, 2016, and it does not purport to project our future operating results. |
Variable Interest Entities
Variable Interest Entities | 12 Months Ended |
Sep. 30, 2018 | |
Variable Interest Entities | |
Variable Interest Entities | N OTE 3—VARIABLE INTEREST ENTITIES In accordance with ASC 810, Consolidation , we assess our partnerships and joint ventures at inception, and when there are changes in relevant factors to determine if any meet the qualifications of a variable interest entity (VIE). We consider a partnership or joint venture a VIE if it has any of the following characteristics: (a) the total equity investment is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the entity), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or their rights to receive the expected residual returns of the entity, and substantially all of the entity's activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. We perform a qualitative assessment of each VIE to determine if we are its primary beneficiary. We conclude that we are the primary beneficiary and consolidate the VIE if we have both (a) the power to direct the activities that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. We consider the VIE design, the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties in determining if we are the primary beneficiary. We also consider all parties that have direct or implicit variable interests when determining whether we are the primary beneficiary. As required by ASC 810, our primary beneficiary assessment is continuously performed. In March 2018, Cubic Transportation System (CTS), a wholly owned subsidiary of Cubic, and John Laing, an unrelated company that specializes in contracting under public-private partnerships (P3), jointly formed Boston AFC 2.0 HoldCo. LLC (HoldCo.). Also in March 2018, HoldCo. created a wholly owned entity, Boston AFC 2.0 OpCo. LLC (OpCo.) which entered into a contract with the Massachusetts Bay Transit Authority (MBTA) for the financing, development, and operation of a next-generation fare payment system in Boston (the MBTA Contract). HoldCo. is 90% owned by John Laing and 10% owned by CTS. Collectively, HoldCo. and OpCo. are referred to as the P3 Venture. Based on our assessment under ASC 810, we have concluded that OpCo. and HoldCo. are VIE’s and that we are the primary beneficiary of OpCo. Consequently, we have consolidated the financial statements of OpCo. within Cubic’s consolidated financial statements. We have concluded that we are not the primary beneficiary of HoldCo., and thus we have not consolidated the financial statements of HoldCo. within Cubic’s consolidated financial statements. The MBTA Contract consists of a design and build phase of approximately three years and an operate and maintain phase of approximately ten years. The design and build phase is planned to be completed in 2021 and the operate and maintain phase will span from 2021 through 2031. MBTA will make estimated payments of $664.0 million to OpCo. in connection with the MBTA Contract over the ten-year operate and maintain phase. All of OpCo.’s contractual responsibilities regarding the design and development and the operation and maintenance of the fare system have been subcontracted to CTS by OpCo. CTS will receive estimated payments of $510.0 million under its subcontract with OpCo. Upon creation of the P3 Venture, John Laing made a loan to HoldCo. of $24.3 million in the form of a bridge loan that is intended to be converted to equity in the future in accordance with its equity funding responsibilities. Concurrently, HoldCo. made a corresponding equity contribution to OpCo. in the same amount which is included within equity of Noncontrolling interest in VIE within Cubic’s consolidated financial statements. Also, upon creation of the P3 Venture, CTS issued a letter of credit for $2.7 million to HoldCo. in accordance with CTS’s equity funding responsibilities. HoldCo. is able to draw on the CTS letter of credit in certain liquidity instances, but no amounts have been drawn on this letter of credit as of September 30, 2018. Upon creation of the P3 Venture, OpCo. entered into a credit agreement with a group of financial institutions (the OpCo. Credit Agreement) which includes a long-term debt facility and a revolving credit facility. The long-term debt facility allows for draws up to a maximum amount of $212.4 million; draws may only be made during the design and build phase of the MBTA Contract. The long-term debt facility, including interest and fees incurred during the design and build phase, is required to be repaid on a fixed monthly schedule over the operate and maintain phase of the MBTA Contract. The long-term debt facility bears interest at variable rates of LIBOR plus 1.3% and LIBOR plus 1.55% over the design and build and operate and maintain phases of the MBTA Contract, respectively. At September 30, 2018, the outstanding balance on the long-term debt facility was $17.8 million, which is presented net of unamortized deferred financing costs of $8.7 million. The revolving credit facility allows for draws up to a maximum amount of $13.9 million and is only available to be drawn on during the operate and maintain phase of the MBTA Contract. OpCo.’s debt is nonrecourse with respect to Cubic and its subsidiaries. The fair value of the long-term debt facility approximates its carrying value. The OpCo. Credit Agreement contains a number of covenants which require that OpCo. and Cubic maintain progress on the delivery of the MBTA Contract within a specified timeline and budget and provide regular reporting on such progress. The OpCo. Credit Agreement also contains a number of customary events of default including, but not limited to , the successful delivery of a customized fare collection system to MBTA by a pre-determined date. Failure to meet such delivery date will result in OpCo., and Cubic via its subcontract with OpCo., to incur penalties due to the lenders. OpCo. has entered into pay-fixed/receive-variable interest rate swaps with a group of financial institutions to mitigate variable interest rate risk associated with its long-term debt. The interest rate swaps contain forward starting notional principal amounts which align with OpCo.’s expected draws on its long-term debt facility. At September 30, 2018, the outstanding notional principal amounts on open interest rate swaps were $38.6 million. The fair value of OpCo.’s interest rate swaps at September 30, 2018 was less than $0.1 million. OpCo.’s interest rate swaps were not designated as effective hedges at September 30, 2018 and as such any unrealized gains/losses are included in other income (expense), net. Unrealized gains/losses as a result of changes in the fair value of OpCo.’s interest rate swaps were not material for the year ended September 30, 2018. See Note 4 for a description of the measurement of fair value of derivative financial instruments, including OpCo.’s interest rate swaps. At September 30, 2018, OpCo. holds a $10.0 million restricted cash balance which is required by the MBTA Contract to allow for the delivery of future change orders and unplanned expansions as directed by MBTA. The assets and liabilities of OpCo. that are included in our consolidated balance sheet at September 30, 2018, excluding $20.8 million of assets that are eliminated in consolidation, are as follows: September 30, 2018 (in thousands) Cash $ 374 Restricted cash 10,000 Long-term capitalized contract costs 1,258 Other noncurrent assets 810 Total assets $ 12,442 Trade accounts payable $ 165 Other noncurrent liabilities 13 Long-term debt 9,056 Total liabilities 9,234 Total Cubic equity (304) Noncontrolling interests 24,348 Total liabilities and owners' equity $ 33,278 The assets of OpCo. are restricted for its use only and are not available for the general operations of Cubic. OpCo.’s debt is non-recourse to Cubic. Cubic’s maximum exposure to loss as a result of its equity interest in the P3 Venture is limited to the $2.7 million outstanding letter of credit, which will be converted to a cash contribution upon completion of the design and build phase of the MBTA Contract. Included within long-term capitalized contract costs at September 30, 2018 are $27.8 million of costs related to Cubic’s delivery of the design and build deliverables under the MBTA Contract and related subcontract between OpCo and Cubic. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Sep. 30, 2018 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | NOTE 4—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 following table presents assets and liabilities measured and recorded at fair value on our balance sheets on a recurring basis (in thousands): September 30, 2018 September 30, 2017 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 9,000 $ — $ — $ 9,000 $ 8,501 $ — $ — $ 8,501 Current derivative assets — 1,803 — 1,803 — 2,591 — 2,591 Noncurrent derivative assets — 314 — 314 — 1,128 — 1,128 Total assets measured at fair value $ 9,000 $ 2,117 $ — $ 11,117 $ 8,501 $ 3,719 $ — $ 12,220 Liabilities Current derivative liabilities — 1,657 — 1,657 — 3,456 — 3,456 Noncurrent derivative liabilities — 75 — 75 — 1,128 — 1,128 Contingent consideration to seller of Deltenna — — 1,081 1,081 — — 1,376 1,376 Contingent consideration to seller of Shield Aviation — — 5,618 5,618 — — — — Contingent consideration to seller of TeraLogics - contract extensions — — — — — — 800 800 Contingent consideration to seller of TeraLogics - revenue targets — — 1,750 1,750 — — 2,450 2,450 Contingent consideration to seller of H4 Global — — 665 665 — — 591 591 Total liabilities measured at fair value $ — $ 1,732 $ 9,114 $ 10,846 $ — $ 4,584 $ 5,217 $ 9,801 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 Deltenna contingent consideration is based upon revenue targets and one of the TeraLogics contingent consideration measurements is based upon revenue targets. Until the contingencies are resolved for these measurements, the fair values of these contingent consideration liabilities are valued using a real option approach. Under this approach, each payment was modeled using long digital options written on the underlying revenue metric. The strike price for each option is the respective revenue as specified in the related agreement, and the spot price is calibrated to the revenue forecast by calculating the present value of the corresponding projected revenues 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, 2018 valuation was 53% for Deltenna. The volatility factor used in the September 30, 2017 valuations was 40% for Deltenna and 15% for TeraLogics. The risk-free rate was selected based on the quoted yields for U.S. Treasury securities with terms matching the earn-out payment period. At September 30, 2018, the contingencies were resolved for the TeraLogics revenue earn-out and the liability at September 30, 2018 represents the amount earned as of that date. 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. This portion of TeraLogics’ contingent consideration was fully paid out as of September 30, 2018 based on its achievement of the contract extensions. The fair value of the Shield contingent consideration was estimated based on Monte Carlo simulations. Under the purchase agreement, we will pay the sellers up to $10.0 million if Shield meets certain sales goals from the date of acquisition through July 31, 2025. The fair value of the contingent consideration was determined based upon a probability distribution of values based on 100,000 iterations. Key inputs for the simulation include projected revenues, assumed discount rates for projected revenue and cash flows, and volatility. The volatility and revenue risk adjustment factors used as of September 30, 2018 were 20% and 14.5%, respectively, and were determined based on analysis of publicly traded comparable companies. The discount rate used as of September 30, 2018 was based on our expected borrowing rate under our financing arrangements, which was determined to be 3.9% at September 30, 2018. The maximum remaining payout to the sellers of H4 Global is $3.3 million at September 30, 2018, and is based upon the value of contracts entered into over the five-year period ending September 30, 2020. 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, 2018, 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 Deltenna Shield Aviation Total Balance as of September 30, 2016 $ 2,000 $ 567 $ 1,400 $ 4,100 $ 3,200 $ — $ — $ 11,267 Initial measurement recognized at acquisition — — — — — 1,328 — 1,328 Cash paid to seller — — (1,000) (2,500) — — — (3,500) Total remeasurement (gain) loss recognized in earnings (2,000) 24 400 850 (3,200) 48 — (3,878) Balance as of September 30, 2017 $ — $ 591 $ 800 $ 2,450 $ — $ 1,376 $ — $ 5,217 Initial measurement recognized at acquisition — — — — — — 5,618 5,618 Cash paid to seller — — (1,000) (1,750) — — — (2,750) Total remeasurement (gain) loss recognized in earnings — 74 200 1,050 — (295) — 1,029 Balance as of September 30, 2018 $ — $ 665 $ — $ 1,750 $ — $ 1,081 $ 5,618 $ 9,114 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, 2018 2017 Fair value $ 193.7 $ 202.1 Carrying value $ 200.0 $ 200.0 We did not have any significant non-financial assets or liabilities measured at fair value on a non-recurring basis in 2018, 2017, or 2016 other than assets and liabilities acquired in business acquisitions. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Sep. 30, 2018 | |
Accounts Receivable | |
Accounts Receivable | NOTE 5—ACCOUNTS RECEIVABLE The components of accounts receivable under long-term contracts are as follows (in thousands): September 30, 2018 2017 U.S. Government Contracts: Amounts billed $ 80,547 $ 53,450 Recoverable costs and accrued profits on progress completed--not billed 62,665 36,341 143,212 89,791 Commercial Customers: Amounts billed 76,401 131,532 Recoverable costs and accrued profits on progress completed--not billed 180,212 150,610 256,613 282,142 399,825 371,933 Less unbilled amounts not currently due--commercial customers (6,134) (17,457) $ 393,691 $ 354,476 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 2019. 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, 2018 under transportation systems contracts in the U.S. and Australia, and under a CGD contract in Italy based upon the payment terms in the contracts. |
Inventories
Inventories | 12 Months Ended |
Sep. 30, 2018 | |
Inventories | |
Inventories | NOTE 6—INVENTORIES Significant components of inventories are as follows (in thousands): September 30, September 30, 2018 2017 Finished products $ 7,099 $ 4,369 Work in process and inventoried costs under long-term contracts 63,169 84,131 Materials and purchased parts 23,710 10,163 Customer advances (9,779) (10,948) Net inventories $ 84,199 $ 87,715 At September 30, 2018, work in process and inventoried costs under long-term contracts includes approximately $0.9 million in costs incurred outside the scope of work or in advance of a contract award, compared to $4.3 million as of September 30, 2017. We believe it is probable that we will recover the costs inventoried at September 30, 2018, 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, 2018 and 2017 were $2.0 million and $2.5 million, respectively. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment | |
Property, Plant and Equipment | NOTE 7—PROPERTY, PLANT AND EQUIPMENT Significant components of property, plant and equipment are as follows (in thousands): September 30, 2018 2017 Land and land improvements $ 13,132 $ 16,139 Buildings and improvements 57,959 52,625 Machinery and other equipment 81,727 73,235 Software 84,631 62,297 Leasehold improvements 11,991 13,298 Construction and internal-use software development in progress 12,888 23,156 Accumulated depreciation and amortization (144,782) (127,530) $ 117,546 $ 113,220 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, or that are types of costs that do not meet the capitalization requirements, are expensed as incurred. 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, 2018 we have incurred costs of $135.8 million related to the purchase and development of our ERP system, including $22.5 million, $40.6 million, and $45.2 million of costs incurred during fiscal years 2018, 2017 and 2016, respectively. We have capitalized $7.5 million, $16.7 million, and $20.3 million of qualifying software development costs as internal-use software development in progress during fiscal years 2018, 2017, and 2016, respectively. We have recognized expense for $15.0 million, $23.9 million, and $24.9 million of these costs in fiscal years 2018, 2017, and 2016, 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 Operations. Various components of our ERP system became ready for their intended use and were placed into service on April 1, 2016, October 1, 2016, October 1, 2017, and April 1, 2018. As each component became ready for its intended use, the component’s costs were transferred into completed software and we began amortizing these costs over their seven-year estimated useful life. We continue to capitalize costs associated with the development of other ERP components that are not yet ready for their intended use. The final phase of implementation will begin in early fiscal 2019. Our provisions for depreciation of plant and equipment and amortization of leasehold improvements and software amounted to $19.5 million, $17.8 million and $11.0 million in 2018, 2017 and 2016, 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, 2018 | |
Goodwill and Purchased Intangible Assets | |
Goodwill and Purchased Intangible Assets | NOTE 8—GOODWILL AND PURCHASED INTANGIBLE ASSETS The changes in the carrying amount of goodwill for the two years ended September 30, 2018 are as follows (in thousands): Transportation Cubic Global Cubic Mission Systems Defense Solutions Total Net balances at October 1, 2016 $ 49,630 $ 262,966 $ — $ 312,596 Acquisitions (see Note 2) — 5,885 — 5,885 Foreign currency exchange rate changes 1,240 1,841 — 3,081 Net balances at September 30, 2017 50,870 270,692 — 321,562 Reassignment on October 1, 2017 — (125,321) 125,321 — Acquisitions — 665 13,085 13,750 Foreign currency exchange rate changes (1,084) (323) (279) (1,686) Net balances at September 30, 2018 $ 49,786 $ 145,713 $ 138,127 $ 333,626 As described in Note 17, we concluded that CMS became a separate operating segment beginning on October 1, 2017. In conjunction with the changes to reporting units, we reassigned goodwill between CGD and CMS based on their relative fair values on October 1, 2017. We complete our annual goodwill impairment test each year as of July 1 at the reporting unit level. Until October 1, 2017 the goodwill impairment tests were performed at the reporting units that existed through September 30, 2017 including our legacy CGD reporting unit. In 2018, the goodwill impairment tests were performed separately for our CTS, CGD and CMS reporting units. 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 2018 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 2018. The estimated fair value for our CTS reporting unit exceeded its carrying value by over 100%, while the estimated fair values of our CGD and CMS reporting units each exceeded their carrying values by over 40%. 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. Although we believe our underlying assumptions supporting these assessments 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 interim analyses in 2019 that could expose us to material impairment charges in the future. Purchased Intangible Assets: The table below summarizes our purchased intangible assets (in thousands): September 30, 2018 September 30, 2017 Gross Gross Carrying Accumulated Net Carrying Carrying Accumulated Net Carrying Amount Amortization Amount Amount Amortization Amount Contract and program intangibles $ 151,965 $ (112,399) $ 39,566 $ 151,602 $ (90,988) $ 60,614 Other purchased intangibles 52,851 (18,884) 33,967 42,813 (13,569) 29,244 Total $ 204,816 $ (131,283) $ 73,533 $ 194,415 $ (104,557) $ 89,858 Total amortization expense for 2018, 2017 and 2016 was $27.1 million, $30.2 million and $29.4 million, respectively. The table below shows our expected amortization of purchased intangibles as of September 30, 2018, for each of the next five years and thereafter (in thousands): Transportation Cubic Global Cubic Mission Systems Defense Solutions Total 2019 $ 1,153 $ 673 $ 18,336 $ 20,162 2020 944 254 14,687 15,885 2021 698 254 11,259 12,211 2022 598 254 8,129 8,981 2023 499 254 6,042 6,795 Thereafter 989 626 7,884 9,499 $ 4,881 $ 2,315 $ 66,337 $ 73,533 |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
Sep. 30, 2018 | |
Financing Arrangements | |
Financing Arrangements | NOTE 9—FINANCING ARRANGEMENTS Long-term debt consists of the following (in thousands): September 30, 2018 2017 Series A senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% $ 50,000 $ 50,000 Series B senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% 50,000 50,000 Series C senior unsecured notes payable to a group of insurance companies, interest fixed at 3.70% 25,000 25,000 Series D senior unsecured notes payable to a group of insurance companies, interest fixed at 3.93% 75,000 75,000 200,000 200,000 Less unamortized debt issuance costs (207) (239) $ 199,793 $ 199,761 Maturities of long-term debt for each of the five years in the period ending September 30, 2023, are as follows: 2019 — $0.0 million; 2020 — $10.7 million; 2021 — $35.7 million; 2022 — $35.7 million; 2023 — $35.7 million. Interest paid amounted to $10.0 million, $14.8 million and $11.0 million in 2018, 2017 and 2016, 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. The agreement pertaining to the aforementioned notes also contained a provision that the coupon rate would increase by a further 0.50% should the company’s leverage ratio exceed a certain level. 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 this 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. We have a committed revolving credit agreement with a group of financial institutions in the amount of $400.0 million which expires in August 2021 (Revolving Credit Agreement). Debt issuance and modification 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. Costs incurred in connection with establishment of and amendments to this credit agreement are recorded in other assets on our Consolidated Balance Sheets, and are being amortized as interest expense using the effective interest method over the stated term of the Revolving Credit Agreement. At September 30, 2018, our total debt issuance costs have an unamortized balance of $1.9 million. The available line of credit is reduced by any letters of credit issued under the Revolving Credit Agreement. As of September 30, 2018, there were no borrowings under this agreement and there were letters of credit outstanding totaling $29.0 million, which reduce the available line of credit to $371.0 million. The $29.0 million of letters of credit includes both financial letters of credit and performance guarantees. Until June 2017, we had a secured letter of credit facility agreement with a bank in the U.K. 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 facility. In June 2017, this agreement was terminated and the associated letters of credit were transferred to the Revolving Credit Agreement described above. The cash that formerly collateralized the secured credit facility was used to make principal payments to reduce our outstanding short-term borrowings. Our Revolving Credit Agreement and note purchase and private shelf agreement each contain a number of customary covenants, including requirements for us to maintain certain interest coverage and leverage ratios and restrictions on our and certain of our subsidiaries’ abilities to, among other things, incur additional debt, create liens, consolidate or merge with any other entity, or transfer or sell substantially all of their assets, in each case subject to certain exceptions and limitations. The occurrence of any event of default under these agreements may result in all of the indebtedness then outstanding becoming immediately due and payable. At March 31, 2017 we did not maintain the required leverage ratio. Therefore in May 2017 certain terms and conditions of the revolving credit agreement and note purchase and private shelf agreement were further revised to allow us to maintain a higher level of leverage as of March 31, 2017 and for the remainder of the 2017 fiscal year. The revisions to the agreements do not impact the required leverage ratios in fiscal 2018 and subsequent years. This revision also contains a provision that the coupon rate may increase on all of the term notes discussed above by up to 0.75% should our leverage ratio exceed certain levels. In connection with this revision, we incurred $0.4 million of costs, primarily for amounts charged by our lenders in connection with these modifications. These costs were recorded in May 2017 as a reduction in the carrying value of the related debt liability and which will be amortized into additional interest expense over the life of the related debt. 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, 2018 was $17.4 million and is classified as restricted cash in our Consolidated Balance Sheets. As of September 30, 2018, we had letters of credit and bank guarantees outstanding totaling $41.8 million, which includes the $29.0 million of letters of credit on the Revolving Credit Agreement above and $12.8 million of letters of credit issued under other facilities. The total of $41.8 million of letters of credit and bank guarantees includes $33.5 million that guarantees either our performance or customer advances under certain contracts, and financial letters of credit of $8.3 million 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 have entered into a short-term borrowing arrangement in the U.K. in the amount of £20.0 million British pounds (equivalent to approximately $26.1 million) to help meet the short-term working capital requirements of our subsidiary. At September 30, 2018, no amounts were outstanding under this borrowing arrangement. 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, 2018, these agreements have no restrictions on distributions to shareholders, subject to certain tests in these agreements. 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 $8.6 million and $7.6 million as of September 30, 2018 and 2017, respectively. |
Commitments
Commitments | 12 Months Ended |
Sep. 30, 2018 | |
Commitments | |
Commitments | NOTE 10—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 $0.2 million in 2018, $0.2 million in 2017 and $0.3 million in 2016) for all operating leases amounted to $11.6 million, $10.5 million and $9.6 million in 2018, 2017 and 2016, 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, 2018 (in thousands): 2019 $ 11,310 2020 9,954 2021 8,812 2022 7,271 2023 5,459 Thereafter 16,991 $ 59,797 |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2018 | |
Income Taxes | |
Income Taxes | NOTE 11—INCOME TAXES On December 22, 2017, the U.S. government enacted the Tax Act. The legislation significantly revises the U.S. corporate income tax system by, among other things, reducing the current corporate federal income tax rate to 21% from 35%, adopting a modified territorial regime, imposing a one-time transitional tax on deemed repatriated earnings of foreign subsidiaries, and creating new taxes on certain foreign sourced earnings. The rate reduction is effective January 1, 2018 resulting in a U.S. statutory rate for fiscal year 2018 of 24.5% and 21% for subsequent fiscal years. The final transition impact of the Tax Act may differ from the estimates provided, due to, among other things, changes in interpretations of the Tax Act, regulatory guidance that may be issued, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have utilized to calculate the impact . The SEC has issued Staff Accounting Bulletin (SAB) No. 118, which was codified in March 2018 under ASU 2018-05, that allows for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. As of September 30, 2018, we continue to consider the accounting for the transition tax on deferred foreign earnings to be provisional as we have not finalized the inputs to the foreign earnings and profits calculations, the basis on which income taxes are determined, and as we continue to analyze the impact of additional implementation guidance. Accordingly, the impact of the Tax Act may be subject to adjustment in the first quarter of fiscal 2019. However, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. We will conclude the accounting for the enactment-date effects within the remaining prescribed SAB 118 measurement period. Based on our assessment, a discrete tax benefit of $7.1 million has been recorded for the year ended September 30, 2018 related to the re-measurement of U.S. net deferred tax liabilities at the lower enacted corporate tax rate and other effects of enactment of the Tax Act. While other deferred tax assets and liabilities were also reduced, such reduction was offset by changes to our U.S. valuation allowance. The one-time transition tax is based on post-1986 earnings and profits that we previously deferred from U.S. income taxes. At present, we do not anticipate a material impact on the income statement from the one-time transition tax and therefore have recorded a provisional amount of $0 as of September 30, 2018. The provisional amount includes a $10.2 million benefit related to the U.S. taxation of deemed foreign dividends in the transition fiscal year. This benefit may be reduced or eliminated in future legislation. If such legislation is enacted, we will record the impact of the legislation in the quarter of enactment, however, we anticipate that available foreign tax credits would offset the impact of the change in legislation and will not result in future cash payments . Income (loss) from continuing operations before income taxes includes the following components (in thousands): Years ended September 30, 2018 2017 2016 (in thousands) United States $ (51,049) $ (70,566) $ (76,136) Foreign 65,935 59,484 49,699 Total $ 14,886 $ (11,082) $ (26,437) Significant components of the provision (benefit) for income taxes from continuing operations are as follows: Years ended September 30, 2018 2017 2016 (in thousands) Current: Federal $ (4,775) $ (4,070) $ (1,679) State 976 878 (618) Foreign 19,882 13,869 8,249 Total current 16,083 10,677 5,952 Deferred: Federal (7,874) 2,257 (16,256) State 482 569 (4,333) Foreign (1,598) 1,155 280 Total deferred (8,990) 3,981 (20,309) Provision for income taxes $ 7,093 $ 14,658 $ (14,357) 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, 2018 2017 2016 (in thousands) Tax expense at U.S. statutory rate $ 3,124 $ (3,877) $ (9,252) State income taxes, net of federal tax effect (237) (923) (1,754) Nondeductible expenses (1) 1,186 (169) 7,765 Change in reserve for tax contingencies (1,047) (4,435) 27 Change in deferred tax asset valuation allowance (2) 8,784 17,374 (5,382) Foreign rate differential (3) 5,684 9,912 (2,999) Impact of US Tax Reform (4) (7,053) — — Research and development credits (5) (2,656) (3,459) (2,542) Other (692) 235 (220) Provision for income taxes $ 7,093 $ 14,658 $ (14,357) (1) In 2016, we recorded $6.3 million of tax expense related to nondeductible acquisition-related compensation expenses. (2) In 2018, the increase in valuation allowance primarily related to the U.S. net operating loss for which no tax benefit was recognized. In 2017, we recorded $13.1 million of tax expense related to an increase in the valuation allowance related to tax credit carryforwards generated in the current year. 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. (3) In 2018, we recorded $3.5 million of tax expense related to foreign earnings which were not permanently reinvested prior to the enactment of the U.S. Tax Act. After enactment, certain foreign earnings are taxed at higher statutory rates than the U.S. which results in $2.1 million of tax expense. In 2017, we provided for deferred taxes on all cumulative unremitted foreign earnings, as the earnings were no longer considered permanently reinvested resulting in a charge of $9.5 million. (4) In 2018, a tax benefit of $7.1 million was recorded in connection with the enactment of the U.S. Tax Act as a result of remeasuring deferred taxes. (5) In 2016, we recorded tax benefits of $1.0 million 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, 2018 2017 (in thousands) Deferred tax assets: Accrued employee benefits $ 8,285 $ 15,863 Long-term contracts and inventory valuation reductions 8,238 13,974 Allowances for loss contingencies 3,232 4,212 Deferred compensation 3,272 4,830 Intangible assets 1,361 — Retirement benefits 1,398 6,214 Tax credit carryforwards 35,137 31,161 Loss carryforwards 29,097 3,715 Other 2,173 2,762 Total gross deferred tax assets 92,193 82,731 Valuation allowance (81,839) (57,106) Total deferred tax assets 10,354 25,625 Deferred tax liabilities: Deferred revenue (2,351) (3,729) Unremitted foreign earnings (687) (11,910) Property, plant and equipment (5,079) (3,137) Intangible assets — (9,713) Other (213) (158) Total deferred tax liabilities (8,330) (28,647) Net deferred tax liability $ 2,024 $ (3,022) The deferred tax assets and liabilities for fiscal 2018 and 2017 include amounts related to various acquisitions. The total change in deferred tax assets and liabilities in fiscal 2018 includes changes that are recorded to other comprehensive income (loss) 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. At September 30, 2018, we have federal and state income tax credit carryforwards (in thousands) which expire as follows: U.S. foreign tax credits $ 14,629 U.S. research and development tax credits 9,158 2035-2038 State research and development tax credits 22,592 Do not expire We have federal, state and foreign capital and net operating losses (in thousands) which expire as follows: U.S. net operating loss carryforwards $ 68,730 U.S. capital loss carryforwards 37,238 State loss carryforwards 50,836 2020-2038 State capital loss carryforwards 54,825 Beginning 2023 Foreign net operating loss carryforwards 9,430 Do not expire During 2015, we evaluated our net U.S. deferred income taxes, which included an assessment of the cumulative income or loss over the prior three-year period and future periods and concluded that a valuation allowance was required. After consideration of our recent history of U.S. losses, we continue to maintain a valuation allowance on net U.S. deferred tax assets as of September 30, 2018. As of September 30, 2018, a total valuation allowance of $81.8 million has been established against U.S. deferred tax assets, certain foreign operating losses and other foreign assets. For fiscal 2018, the valuation allowance was increased by $24.7 million, of which $21.1 million was recorded as a net tax expense in our Consolidated Statement of Operations, offset by amounts recorded to other components of income. 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 Operations for future periods will be offset by decreases or increases in the valuation allowance with no net effect on the Consolidated Statement of Operations. 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. Prior to the Tax Act, we provided deferred taxes on all undistributed foreign earnings, as we did not consider these amounts permanently reinvested. Under the transition to a modified territorial tax system, all previously untaxed undistributed foreign earnings are subject to a transition tax charge at reduced rates and future repatriations of foreign earnings will generally be exempt from U.S. tax. We will continue to provide applicable deferred taxes based on the tax liability or withholding taxes that would be due upon repatriation of the undistributed foreign earnings. As of September 30, 2018, we have recorded a deferred tax liability of $0.7 million related to future taxes on our unremitted foreign earnings. Accounting for Uncertainty in Income Taxes During fiscal 2018 and 2017, the aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows: Years ended September 30, 2018 2017 (in thousands) Balance at beginning of year $ 13,248 $ 16,932 Additions (reductions) for tax positions taken in prior years (80) 399 Recognition of benefits from expiration of statutes (1,770) (26) Recognition of benefits from open years effectively settled — (5,359) Additions for tax positions related to the current year 713 1,302 Additions (reductions) for tax positions related to acquisitions (2,169) — Balance at end of year $ 9,942 $ 13,248 At September 30, 2018 and 2017, the amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $1.8 million and $3.7 million, respectively. During fiscal year 2019, it is reasonably possible that resolution of reviews by taxing authorities, both domestic and foreign, could be reached with respect to approximately $1.1 million of net unrecognized tax benefits depending on the timing of examinations or expiration of statutes 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 fiscal 2018 and 2017 were not material. We are subject to ongoing audits from various taxing authorities in the jurisdictions in which we do business. As of September 30, 2018, the fiscal years open under the statute of limitations in significant jurisdictions include 2015 through 2018 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 $15.7 million, $1.6 million and $14.2 million in 2018, 2017 and 2016, respectively. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 12 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities | |
Derivative Instruments and Hedging Activities | NOTE 12—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In order to manage our exposure to fluctuations in interest and foreign currency exchange rates we utilize derivative financial instruments such as forward starting swaps and foreign currency exchange forwards for periods typically up to three years. 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 (loss) 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 noncurrent 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, 2018 and 2017 (in thousands): Notional Principal September 30, 2018 September 30, 2017 Instruments designated as accounting hedges: Foreign currency forwards $ 169,406 $ 125,486 Instruments not designated as accounting hedges: Foreign currency forwards $ 27,909 $ 35,117 Included in the amounts not designated as accounting hedges at September 30, 2018 and 2017 were foreign currency forwards with notional principal amounts of $14.7 million and $18.5 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 gains of $0.2 million and $0.1 million were recognized in other income (expense), net for the fiscal years ended September 30, 2018 and 2017, respectively, related to foreign currency forward contracts not designated as accounting hedges. 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, 2018 and 2017. 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, 2018 or 2017. The table below presents the fair value of our derivative financial instruments that qualify for hedge accounting as well as their classification in the consolidated balance sheets as of September 30, 2018 and 2017 (in thousands): Fair Value Balance Sheet Location September 30, 2018 September 30, 2017 Asset derivatives: Foreign currency forwards Other current assets $ 1,803 $ 2,591 Foreign currency forwards Other noncurrent assets 314 1,128 $ 2,117 $ 3,719 Liability derivatives: Foreign currency forwards Other current liabilities $ 1,657 $ 3,456 Foreign currency forwards Other noncurrent liabilities 75 1,128 Total $ 1,732 $ 4,584 The tables below present gains and losses recognized in other comprehensive income (loss) for the years ended September 30, 2018 and 2017 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): Year Ended September 30, 2018 September 30, 2017 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 $ (45) $ (1,239) $ (2,200) $ 551 The amount of unrealized gains and losses from derivative instruments and hedging activities classified as not highly effective did not have a material impact on the results of operations for the years ended September 30, 2018 or 2017. 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 $0.3 million, net of income taxes. |
Pension, Profit Sharing and Oth
Pension, Profit Sharing and Other Benefit Plans | 12 Months Ended |
Sep. 30, 2018 | |
Pension Plans | |
Pension, Profit Sharing and Other Benefit Plans | NOTE 13—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 $11.5 million and $11.4 million at September 30, 2018 and 2017, 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 as of September 30, 2018 and 2017 were $6.4 million and $5.3 million, respectively, which were comprised entirely of life insurance contracts. The carrying value of the life insurance contracts is based on the cash surrender value of the policies. 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 Operations. 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 $16.4 million, $13.3 million and $12.1 million in 2018, 2017 and 2016, respectively. Employee Stock Purchase Plan We sponsor a noncompensatory Employee Stock Purchase Plan, which allows eligible employees to purchase common stock of the Company at a discount rate of 5% of the market price per share on the last trading day of the offering period. Annual employee contributions are limited to $25,000, are voluntary, and made through a bi-weekly payroll deduction. 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 the 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, 2018, we expect to make contributions of approximately $5.0 million in 2019. 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, 2018 and expected to be recognized in net pension cost during fiscal 2019 is a loss of $2.3 million ($1.8 million net of income tax). The unrecognized actuarial gain was $9.4 million in fiscal year 2018, which was primarily driven by an increase in discount rates used in the calculation of the net benefit obligation, changes in mortality assumptions, and higher investment returns on plan assets. No plan assets are expected to be returned to us in 2019. 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, 2018 2017 Projected benefit obligation $ 222,332 $ 235,097 Accumulated benefit obligation 222,332 235,097 Fair value of plan assets 214,530 209,722 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, 2018 2017 Change in benefit obligations: Net benefit obligation at the beginning of the year $ 235,097 $ 241,117 Service cost 606 617 Interest cost 7,529 7,091 Actuarial (gain) loss (9,449) (10,082) Gross benefits paid (8,034) (7,549) Foreign currency exchange rate changes (3,417) 3,903 Net benefit obligation at the end of the year 222,332 235,097 Change in plan assets: Fair value of plan assets at the beginning of the year 209,722 194,253 Actual return on plan assets 11,998 14,915 Employer contributions 5,117 5,354 Gross benefits paid (8,034) (7,549) PBGC Premium paid (286) (348) Administrative expenses (698) (547) Foreign currency exchange rate changes (3,289) 3,644 Fair value of plan assets at the end of the year 214,530 209,722 Unfunded status of the plans (7,802) (25,375) Unrecognized net actuarial loss 48,081 58,572 Net amount recognized $ 40,279 $ 33,197 Amounts recognized in Accumulated OCI Liability adjustment to OCI $ (48,081) $ (58,572) Deferred tax asset 7,365 15,033 Valuation allowance on deferred tax asset 610 (2,107) Accumulated other comprehensive loss $ (40,106) $ (45,646) The components of net periodic pension cost (benefit) were as follows (in thousands): September 30, 2018 2017 2016 Service cost $ 606 $ 617 $ 595 Interest cost 7,529 7,091 8,972 Expected return on plan assets (14,120) (12,928) (13,182) Amortization of actuarial loss 2,777 3,700 1,869 Settlement loss — — 2,671 Administrative expenses 438 474 177 Net pension cost (benefit) $ (2,770) $ (1,046) $ 1,102 Years ended September 30, 2018 2017 2016 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, 2018 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. Our plans also invest in diversified growth funds that hold underlying investments in equities, fixed-income securities, commodities, and real estate. The following table presents 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 4 for a description of each level within the fair value hierarchy. All assets measured at the net asset value (NAV) practical expedient 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. September 30, 2018 September 30, 2017 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Plan assets held at fair value: Cash equivalents $ 19,314 $ — $ — $ 19,314 $ 2,665 $ — $ — $ 2,665 Plan assets held at net asset value practical expedient*: Equity Funds 107,424 101,433 Fixed Income Funds 73,533 84,188 Diversified Growth Funds 14,259 16,646 Real Estate Funds — 4,790 Total assets held at net asset value practical expedient: $ 195,216 $ 207,057 Total Plan Assets $ 214,530 $ 209,722 * Plan assets measured at fair value using NAV (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy. The pension plans held no direct positions in Cubic Corporation common stock as of September 30, 2018 and 2017. We expect to pay the following pension benefit payments, which reflect expected future service, as appropriate, (in thousands): 2019 $ 9,033 2020 9,261 2021 9,577 2022 9,622 2023 9,638 2024-2028 53,424 |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Sep. 30, 2018 | |
Stockholders’ Equity | |
Stockholders’ Equity | NOTE 14—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, 2018, the Compensation Committee has granted 1,089,876 RSUs with time-based vesting and 1,172,464 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, 2018, Cubic has granted 2,262,340 RSUs of which 645,989 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, 2018, 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 448,548. The following table summarizes our RSU activity: Unvested Restricted Stock Units Weighted-Average Number of Shares Grant-Date Fair Value Unvested at October 1, 2016 889,129 $ 45.98 Granted 395,913 46.20 Vested (158,243) 46.15 Forfeited (81,612) 48.32 Unvested at September 30, 2017 1,045,187 $ 45.86 Granted 344,433 61.19 Vested (147,832) 46.88 Forfeited (239,700) 48.42 Unvested at September 30, 2018 1,002,088 $ 50.32 As of September 30, 2018, approximately 536,067 shares remained available for future grants under our long-term equity incentive plan. On October 1, 2018, 128,947 RSUs vested. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | NOTE 15—STOCK-BASED COMPENSATION We recorded non-cash compensation expense related to stock-based awards as follows (in thousands): 2018 2017 2016 Cost of sales $ 1,096 $ 338 $ 513 Selling, general and administrative 6,419 4,674 7,235 $ 7,515 $ 5,012 $ 7,748 As of September 30, 2018, there was $41.1 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 $24.5 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, 2018. 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, 2018 | |
Legal Matters | |
Legal Matters | NOTE 16—LEGAL MATTERS A former reseller of our air combat training systems in the Far East filed a demand for arbitration seeking monetary damages for claims including breach of contract. In the fourth quarter of fiscal 2018, the arbitrator awarded $1.7 million to the former reseller. This amount was recorded as selling, general, and administrative expenses in our CGD segment during fiscal 2018 and these arbitration proceedings now are closed. 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, 2018 | |
Business Segment Information | |
Business Segment Information | NOTE 17—BUSINESS SEGMENT INFORMATION We define our operating segments and reportable segments based on the way our chief executive officer, who we have concluded is our chief operating decision maker, manages our operations for purposes of allocating resources and assessing performance and we continually reassess our operating segment and reportable segment designation based upon these criteria. Through September 30, 2017, our company was aligned in our CGD and CTS operating segments, which were also our reportable segments . In 2016, we formalized the structure of our CMS business unit within our CGD operating segment. CMS combines and integrates our C4ISR and secure communications operations. Through September 30, 2017, we concluded that CMS was not a separate operating segment based upon factors including the nature of information presented to our chief executive officer and Board of Directors and the consequential level at which certain resource allocations and performance assessments were made. In the first quarter of fiscal 2018, we began providing additional financial information to our chief executive officer and Board of Directors at the CMS level, which allowed greater resource allocation decisions and performance assessments to be made at that level. As such, we concluded that CMS became a separate operating segment beginning on October 1, 2017. Applicable prior period amounts have been adjusted retrospectively to reflect the reportable segment change. We evaluate performance and allocate resources based on total segment operating income 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, 2018 2017 2016 Sales: Cubic Transportation Systems $ 670.7 $ 578.6 $ 586.4 Cubic Global Defense 325.2 360.2 374.7 Cubic Mission Solutions 207.0 168.9 109.5 Total sales $ 1,202.9 $ 1,107.7 $ 1,070.6 Operating income (loss): Cubic Transportation Systems $ 60.4 $ 39.8 $ 57.5 Cubic Global Defense 16.6 28.1 19.9 Cubic Mission Solutions (0.1) (9.3) (37.0) Unallocated corporate expenses (52.5) (56.0) (52.0) Total operating income (loss) $ 24.4 $ 2.6 $ (11.6) Assets: Cubic Transportation Systems $ 390.2 $ 335.1 $ 338.2 Cubic Global Defense 360.1 280.1 211.8 Cubic Mission Solutions 352.9 390.5 404.4 Corporate 201.7 156.4 364.8 Discontinued Operations — 174.2 185.5 Total assets $ 1,304.9 $ 1,336.3 $ 1,504.7 Depreciation and amortization: Cubic Transportation Systems $ 12.0 $ 8.8 $ 8.2 Cubic Global Defense 8.5 10.4 7.5 Cubic Mission Solutions 22.4 23.8 21.2 Corporate 3.7 5.0 3.4 Total depreciation and amortization $ 46.6 $ 48.0 $ 40.3 Capital expenditures: Cubic Transportation Systems $ 3.2 $ 6.9 $ 2.2 Cubic Global Defense 9.4 5.9 6.8 Cubic Mission Solutions 2.1 1.7 2.1 Corporate 17.0 22.4 21.0 Total expenditures for long-lived assets $ 31.7 $ 36.9 $ 32.1 Years ended September 30, 2018 2017 2016 Geographic Information: Sales (a): United States $ 627.8 $ 522.8 $ 471.6 United Kingdom 240.7 219.4 243.0 Canada 42.3 31.5 44.6 Australia 166.7 175.6 154.0 Middle East 36.3 64.8 71.0 Far East 50.1 47.9 40.0 Other 39.0 45.7 46.4 Total sales $ 1,202.9 $ 1,107.7 $ 1,070.6 (a) Sales are attributed to countries or regions based on the location of customers. Years ended September 30, 2018 2017 2016 Long-lived assets, net: United States $ 106.7 $ 100.6 $ 83.9 United Kingdom 5.7 11.7 9.4 Other foreign countries 12.0 7.3 5.3 Total long-lived assets, net $ 124.4 $ 119.6 $ 98.6 CGD and CMS segment sales include $365.8 million, $327.8 million and $267.5 million in 2018, 2017 and 2016, respectively, of sales to U.S. government agencies. CTS segment sales include $158.5 million, $147.3 million and $156.3 million in 2018, 2017 and 2016, respectively, of sales under various contracts with our customer, Transport for London. 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 $7.0 million, increased operating income by approximately $5.7 million, and increased operating loss by approximately $0.9 million in 2018, 2017 and 2016 respectively. These adjustments decreased net income from continuing operations attributable to Cubic by approximately $5.1 million ($0.19 per share), decreased net loss from continuing operations attributable to Cubic by approximately $3.2 million ($0.12 per share) and decreased net income from continuing operations attributable to Cubic by approximately $0.5 million ($0.02 per share) in 2018, 2017 and 2016, respectively. In fiscal years 2018, 2017, and 2016 we conducted a number of restructuring initiatives. In 2018, we incurred $5.0 million of charges related to restructuring. This included $3.1 million of unallocated corporate expenses, which were primarily incurred to establish a North American shared services center in order to standardize and change the management of certain of our North American financial and administrative functions. Restructuring costs in 2018 also included $1.3 million of restructuring charges incurred by our CGD business primarily related to the change in management structure for certain of portions of our ground training business. In 2017, we incurred $2.3 million of charges for restructuring efforts which included $1.0 million of unallocated corporate expenses incurred to increase the centralization and efficiency of our manufacturing processes, and $0.9 million of restructuring charges incurred by our CGD businesses related to the elimination of a level of management in the CGD simulator business. In 2016, we incurred $1.3 million of charges related to restructuring, which included $0.3 million incurred by our CGD segment as restructuring costs in connection with the formalization of our CMS business division described above. 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. Restructuring charges incurred by business segment were as follows (in millions): Year Ended September 30, 2018 2017 2016 Restructuring costs: Cubic Transportation Systems $ 0.4 $ 0.4 $ 1.0 Cubic Global Defense 1.3 0.9 0.3 Cubic Mission Solutions 0.2 — — Unallocated corporate expenses and other 3.1 1.0 — Total restructuring costs $ 5.0 $ 2.3 $ 1.3 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, 2016 $ 553 Accrued costs 2,260 Cash payments (1,838) Balance as of September 30, 2017 975 Accrued costs 5,018 Cash payments (5,058) Balance as of September 30, 2018 $ 935 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, 2018 | |
Summary of Quarterly Results of Operations (Unaudited) | |
Summary of Quarterly Results of Operations (Unaudited) | NOTE 18—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, 2018 and 2017: Year Three Months Ended Ended Fiscal 2018 September 30 June 30 March 31 December 31 September 30 (in thousands, except per share data) Net sales $ 379,709 $ 296,212 $ 278,586 $ 248,391 $ 1,202,898 Operating income (loss) 27,673 10,290 (1,679) (11,902) 24,382 Net income (loss) 17,816 6,291 (2,011) (9,786) 12,310 Net income (loss) per share, basic 0.65 0.23 (0.07) (0.36) 0.45 Net income (loss) per share, diluted 0.65 0.23 (0.07) (0.36) 0.45 Year Three Months Ended Ended Fiscal 2017 September 30 June 30 March 31 December 31 September 30 (in thousands, except per share data) Net sales $ 349,115 $ 266,184 $ 248,040 $ 244,370 $ 1,107,709 Operating income (loss) 21,207 (6,872) (6,084) (5,623) 2,628 Net income (loss) 13,155 (21,957) 461 (2,868) (11,209) Net income (loss) per share, basic 0.49 (0.81) 0.02 (0.11) (0.41) Net income (loss) per share, diluted 0.49 (0.81) 0.02 (0.11) (0.41) Changes in estimates on contracts for which revenue is recognized using the cost-to-cost-percentage-of-completion method decreased operating income by approximately $4.2 million and $1.6 million in the three months ended September 30, 2018 and 2017, respectively. These adjustments decreased net income from continuing operations attributable to Cubic by approximately $3.1 million ($0.12 per share) and $1.1 million ($0.04 per share) in the three months ended September 30, 2018 and 2017, respectively. |
Summary of Significant Accoun_2
Summary of Significant Accounting Polices (Policies) | 12 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Polices | |
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 the operation and maintenance of fare systems for mass transit customers. Through September 30, 2017 our principal lines of business were transportation fare collection systems and services, defense systems, and defense services. On April 18, 2018, we entered into a stock purchase agreement with Nova Global Supply & Services, LLC (Purchaser), an entity affiliated with GC Valiant, LP, under which we agreed to sell our Cubic Global Defense Services (CGD Services) business to Purchaser. The sale closed on May 31, 2018. As a result of the sale, the operating results and cash flows of CGD Services have been classified as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows for all periods presented and the assets and liabilities of CGD Services have been classified as assets and liabilities of discontinued operations in the Consolidated Balance Sheets for all periods presented. In addition, we concluded that Cubic Mission Solutions (CMS), which was formerly a part of our Cubic Global Defense Systems (CGD) operating segment, became a separate operating segment and reportable segment beginning on October 1, 2017. Applicable prior period amounts have been adjusted retrospectively to reflect the reportable segment change for all periods presented. Refer to “Note 2 – Acquisitions and Divestitures” for additional information about the sale of CGD Services and the related discontinued operation classification and “Note 17 – Business Segment Information” for additional information on the separate disclosure of operating and reportable segment information for CMS. Our transportation fare collection systems and services are sold primarily to large local government agencies worldwide. Our principal customers for defense products and services are the U.S. and foreign governments. |
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 Operations 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 Operations as a component of other income (expense). Total transaction gains and losses, which are related primarily to advances to foreign subsidiaries and advances between foreign subsidiaries amounted to a loss of $2.2 million in 2018, a gain of $0.7 million in 2017, and a loss of $0.9 million in 2016. |
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 and contingent consideration 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 noncurrent, depending upon the date of the lapse of the respective restriction. |
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 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 use the units-of-delivery method to recognize revenue. 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 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. Once operation of the systems commence, the capitalized costs are 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. In cases that we determine that a pattern in which the intangible asset will be consumed can be reliably determined we use an amortization method that best matches that expected pattern. If we believe that such a pattern cannot be reliably determined, we use a straight-line method of amortization. |
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, 2018, 2017 or 2016. |
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 (loss) 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 the operation and maintenance of fare systems for mass transit customers and support specialized military training exercises mainly for international customers. We classify sales as products or services in our Consolidated Statements of Operations 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 the 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. 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. 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 non-U.S. government 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 (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. After the enactment of the Tax Cuts and Jobs Act of 2017 (Tax Act), we have provided for deferred taxes on unremitted earnings, as applicable. We include interest and penalties related to income taxes, including unrecognized tax benefits, within the income tax provision. Accounting Standards Codification ( ASC) 740-20 requires total income tax expense or benefit to be allocated among continuing operations, discontinued operations, extraordinary items, other comprehensive income and items charged directly to shareholders’ equity. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share: Basic net income (loss) per share (EPS) is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period, including vested RSUs. In periods with a net income from continuing operations, 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. 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. In periods with a net loss from continuing operations, common equivalent shares are not included in the computation of diluted EPS, because to do so would be anti-dilutive. The weighted-average number of shares outstanding used to compute net income (loss) per common share were as follows (in thousands): Year Ended September 30, 2018 2017 2016 Weighted average shares - basic 27,229 27,106 26,976 Effect of dilutive securities 122 — — Weighted average shares - diluted 27,351 27,106 26,976 Number of anti-dilutive securities — 967 825 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements: Recently Adopted Accounting Pronouncements On December 22, 2017, the U.S. government enacted the Tax Act. Also in December 2017, the Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin 118, which was codified in March 2018 under Accounting Standards Update (ASU) 2018-05, which provides guidance on accounting for the tax effects of the Tax Act for which the accounting under Accounting Standards Codification (ASC) 740 is incomplete. A reporting entity must act in good faith and update provisional amounts as soon as more information becomes available, evaluated and prepared, during a measurement period that cannot exceed one year from the enactment date. Initial reasonable estimates and subsequent changes to provisional amounts must be reported in income tax expense or benefit from continuing operations in the period in which they are determined . As of September 30, 2018, we continue to consider the accounting for the transition tax on deferred foreign earnings to be provisional due to estimates of foreign earnings and profits for the year ended September 30, 2018. Accordingly, the impact of the Tax Act may be subject to adjustment in the first quarter of fiscal 2019. However, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. We will conclude the accounting for the enactment-date effects within the remaining prescribed SAB 118 measurement period. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which helps organizations reclassify certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Act enacted on December 22, 2017. ASU No. 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from tax reform. We adopted ASU 2018-02 in the fourth quarter of fiscal 2018. As a result of the adoption, we reclassified $2.4 million from accumulated other comprehensive loss into retained earnings. Recent Accounting Pronouncements – Not Yet Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers (commonly referred to as ASC 606) . ASC 606 outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance 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 will affect the timing of revenue recognition for many of our sales transactions. We will adopt ASC 606 using the “modified retrospective” method of adoption, meaning the cumulative effect of applying ASC 606 will be recognized as an adjustment to the opening retained earnings balance as of October 1, 2018. A task force within management is leading our implementation efforts and we have engaged outside advisors to assist. We have evaluated the impact of the adoption of the new standard on our active contracts across all our business segments, developed processes and tools to dual report financial results under both current GAAP and ASC 606, and assessed the impact to our internal control structure . Under ASC 606 , revenue is recognized as control transfers to the customer. As such, revenue for our fixed-price development and production contracts will generally be recognized over time as costs are incurred, which is consistent with the revenue recognition model we currently use for the majority of these contracts. For certain of our fixed-price production contracts where we currently recognize revenue as units are delivered, in most cases the accounting for those contracts will change under ASC 606 such that we will recognize revenue as costs are incurred. This change will generally result in an acceleration of revenue as compared with our current revenue recognition method for those contracts. For certain of our multiple-element transportation contracts, we are currently required to defer the recognition of revenue, and in many circumstances the related costs, during the design and build phase, as the collection of some or all customer payments attributable to the design and build revenue occurs during the subsequent operate and maintain phase. Under ASC 606, deferral of such revenue and costs is not required. As a result, this change will also result in an acceleration of revenue as compared to our current revenue recognition for these contracts. Additionally, the deferred customer-payment feature of these contracts will require identification of an embedded financing component under ASC 606 which will result in the recognition of financing income for amounts which would have otherwise been recognized as revenue under the legacy standard. Based on contracts in process at September 30, 2018, we will record a net change to retained earnings calculated as the difference between acceleration of sales and the related cost of sales that results from the adoption of ASC 606. The determination of the adjustment to retained earnings and the calculation of the acceleration of sales and cost of sales at September 30, 2018 are not yet completed as we are currently finalizing our assessment of new contracts executed prior to September 30, 2018 and implementing ASC 606 for newly acquired businesses. The adjustment to retained earnings is expected to primarily relate to multiple element transportation contracts that previously required the deferral of revenue and costs during the design and build phase, as the collection of some or all customer payments attributable to design and build revenue occurs during the subsequent operate and maintain phase. Under ASC 606, deferral of such revenue and costs is not required. In addition, an adjustment to retained earnings is expected due to contracts previously accounted for under the units-of-delivery method, which are now recognized under ASC 606 earlier in the performance period as costs are incurred, as opposed to when the units are delivered under the legacy standard. We will make certain presentation changes on our Consolidated Balance Sheets to comply with ASC 606. The component of accounts receivable which currently relates to unbilled accounts receivable will be presented separately as contract assets. Advance payments and deferred revenue, previously primarily classified in customer advances, will be combined and presented as contract liabilities. The adoption of ASC 606 will result in an increase in unbilled accounts receivables (referred to as contract assets under ASC 606) primarily from converting contracts previously applying the units-of-delivery method to the cost-to-cost method with a corresponding reduction in inventoried contract costs. Additionally, the adoption of ASC 606 will result in an increase in unbilled accounts receivables from converting multiple element transportation contracts that previously deferred all revenue and costs during the design and build phase, with a corresponding reduction in long term capitalized contract costs. Additionally, we have updated our accounting policies affected by ASC 606, redesigned our internal controls over financial reporting related to the standard, and determined the extent of the expanded disclosure requirements. We have substantially completed the evaluation of the impact of the accounting and disclosure changes on our business processes, controls and systems and have implemented the necessary changes to such business processes, controls and systems. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) which requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for entities to disclose the methods and significant assumptions used to estimate the fair value that is currently required to be disclosed for financial instruments measured at amortized cost. ASU 2016-01 will be effective for us beginning October 1, 2018 and is not expected to have any significant impact on our consolidated financial statements. In February 2016, the FASB issued ASU 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 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 cash receipts and cash payments from specific types of transactions 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. ASU 2016-15 is effective for us beginning October 1, 2018 and is not expected to have any significant impact on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs . ASU 2016-16 is effective for us beginning October 1, 2018 and is not expected to have any significant impact on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Restricted Cash , which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. Adoption of ASU 2016-18 is required for us in our fiscal year beginning October 1, 2018. Beginning October 1, 2018 application of this accounting standard update will not impact financial results, but will result in a retrospective change in the presentation of restricted cash, including the inclusion of $27.4 million and $8.4 million of restricted cash on hand at September 30, 2018 and September 30, 2017, respectively, within the beginning and ending amounts of cash and cash equivalents in our Statements of Cash Flows . In addition, upon adoption of this standard, changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents will be reflected in our Statements of Cash Flows. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business . This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets transferred is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. Adoption of ASU 2017-01 is required for us beginning October 1, 2018 and is not expected to have any significant impact on our consolidated financial statements. However, adoption of ASU 2017-01 could impact the accounting for future acquisitions or disposals of assets and activities because the accounting for a business combination differs significantly from that of an asset acquisition. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. This standard removes the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit was needed to measure the goodwill impairment. Under this updated standard, goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance will be effective for us in our fiscal year beginning October 1, 2020 with early adoption permitted. Adoption of ASU 2017-04 will have no immediate impact on our financial statements and would only have the potential to impact the amount of any goodwill impairment recorded after the adoption of the ASU. We are currently evaluating whether to adopt the guidance early. In March 2017, the FASB issued ASU 2017-07 , Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . The update requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service cost/credit and actuarial gain/loss, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement . Adoption of ASU 2017-07 will be required for us beginning October 1, 2018 and is not expected to have any significant impact on our consolidated financial statements. In August 2017, the FASB has issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities , which aims to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments in this ASU are intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To satisfy that objective, the amendments expand and refine hedge accounting for both non-financial and financial risk components, and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. Additionally, the amendments (1) permit hedge accounting for risk components in hedging relationships involving non-financial risk and interest rate risk; (2) change the guidance for designating fair value hedges of interest rate risk and for measuring the change in fair value of the hedged item in fair value hedges of interest rate risk; (3) continue to allow an entity to exclude option premiums and forward points from the assessment of hedge effectiveness; and (4) permit an entity to exclude the portion of the change in fair value of a currency swap that is attributable to a cross-currency basis spread from the assessment of hedge effectiveness. The amendments in this ASU are effective for us in our annual period beginning October 1, 2019 and interim periods within that year, 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 2018, the FASB issued ASU 2018-13 , Fair Value Measurement - Disclosure Framework (Topic 820) . The updated guidance modifies the disclosure requirements on fair value measurements. The amendments in this accounting standard update are effective for us in our annual period beginning October 1, 2020 and interim periods within that annual period. Early adoption is permitted for any removed or modified disclosures. 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 2018, the FASB issued ASU 2018-14, Defined Benefit Plan - Disclosure Framework (Topic 715) , which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. The amendments in this accounting standard update are effective for us in our annual period beginning October 1, 2020. 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 Accoun_3
Summary of Significant Accounting Polices (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Polices | |
Schedule of computation of basic and diluted EPS | The weighted-average number of shares outstanding used to compute net income (loss) per common share were as follows (in thousands): Year Ended September 30, 2018 2017 2016 Weighted average shares - basic 27,229 27,106 26,976 Effect of dilutive securities 122 — — Weighted average shares - diluted 27,351 27,106 26,976 Number of anti-dilutive securities — 967 825 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Acquisitions | |
Schedule of income (loss) and carrying amounts of assets and liabilities from discontinued operations | Years Ended September 30, 2018 2017 2016 Net sales $ 262,228 $ 378,152 $ 391,064 Costs and expenses: Cost of sales 235,279 342,819 350,429 Selling, general and administrative expenses 11,365 17,487 16,430 Amortization of purchased intangibles 1,373 2,752 4,764 Restructuring costs 7 208 574 Other income (15) (46) (93) Earnings from discontinued operations before income taxes 14,219 14,932 18,960 Net loss on sale 6,131 — — Income tax provision 3,845 401 5,145 Net income from discontinued operations $ 4,243 $ 14,531 $ 13,815 The carrying amounts of CGD Services assets and liabilities that were classified as assets and liabilities of discontinued operations are as follows (in thousands): September 30, September 30, 2018 2017 Accounts receivable, net $ — $ 74,710 Other current assets — 1,190 Property and equipment, net — 466 Goodwill — 94,350 Purchased intangibles, net — 8,637 Other noncurrent assets — (5,179) Total assets — 174,174 Accounts payable and other liabilities — 36,862 Net assets $ — $ 137,312 |
Schedule of estimated amortization expense related to acquisition | The table below shows our expected amortization of purchased intangibles as of September 30, 2018, for each of the next five years and thereafter (in thousands): Transportation Cubic Global Cubic Mission Systems Defense Solutions Total 2019 $ 1,153 $ 673 $ 18,336 $ 20,162 2020 944 254 14,687 15,885 2021 698 254 11,259 12,211 2022 598 254 8,129 8,981 2023 499 254 6,042 6,795 Thereafter 989 626 7,884 9,499 $ 4,881 $ 2,315 $ 66,337 $ 73,533 |
Schedule of unaudited pro forma information | The following unaudited pro forma information presents our consolidated results of operations as if Shield Aviation, MotionDSP, Deltenna, Vocality, GATR and TeraLogics had been included in our consolidated results since October 1, 2016 (in millions): Year Ended September 30, 2018 2017 Net sales $ 1,204.0 $ 1,112.1 Net income (loss) $ 9.9 $ (29.5) |
Shield Aviation | |
Acquisitions | |
Schedule of Business Combination Operating Results | Shield’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ — $ — $ — Operating loss (0.8) — — Net loss after taxes (0.6) — — |
Schedule of Business Combination components of operating results | Shield’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 0.1 $ — $ — Acquisition-related expenses 0.2 — — |
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): Technology $ 6.0 Other net assets acquired 0.3 Net identifiable assets acquired 6.3 Goodwill 6.5 Net assets acquired $ 12.8 |
Schedule of estimated amortization expense related to acquisition | The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of Shield for fiscal years 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 0.8 2020 0.8 2021 0.8 2022 0.8 2023 0.8 Thereafter 1.9 |
MotionDSP | |
Acquisitions | |
Schedule of Business Combination Operating Results | MotionDSP’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 0.6 $ — $ — Operating loss (2.7) — — Net loss after taxes (1.9) — — |
Schedule of Business Combination components of operating results | MotionDSP’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 0.4 $ — $ — Acquisition-related expenses 0.8 0.2 — |
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 $ 0.2 Technology 4.5 Trade name 0.1 Accounts payable and accrued expenses (0.3) Other noncurrent liabilities (0.8) Other net liabilities assumed (0.9) Net identifiable assets acquired 2.8 Goodwill 6.7 Net assets acquired $ 9.5 |
Schedule of estimated amortization expense related to acquisition | The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of MotionDSP for fiscal years 2019 through 2023 and thereafter is as follows (in millions) : Year Ended September 30, 2019 $ 0.7 2020 0.7 2021 0.7 2022 0.7 2023 0.7 Thereafter 0.9 |
Deltenna | |
Acquisitions | |
Schedule of Business Combination Operating Results | Deltenna’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 0.3 $ 0.1 $ — Operating income (loss) 0.2 (0.2) — Net income (loss) after taxes 0.2 (0.2) — |
Schedule of Business Combination components of operating results | Deltenna’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 0.3 $ — $ — Gains from changes in fair value of contingent consideration (0.3) — — Acquisition-related expenses — 0.2 — |
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 $ 1.0 Technology 1.1 Other net assets acquired (liabilities assumed) (0.3) Net identifiable assets acquired 1.8 Goodwill 3.5 Net assets acquired $ 5.3 |
Schedule of estimated amortization expense related to acquisition | The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of Deltenna for fiscal years 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 0.3 2020 0.3 2021 0.3 2022 0.3 2023 0.3 Thereafter 0.3 |
Vocality | |
Acquisitions | |
Schedule of Business Combination Operating Results | Vocality’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 5.1 $ 1.5 $ — Operating loss (1.3) (2.9) — Net loss after taxes (1.2) (2.6) — |
Schedule of Business Combination components of operating results | Vocality’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 0.8 $ 0.6 $ — Acquisition-related expenses 0.6 1.6 — |
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 $ 2.1 Technology 2.4 Trade name 0.4 Inventory 1.7 Accounts payable and accrued expenses (0.4) Other net assets acquired (liabilities assumed) (0.5) Net identifiable assets acquired 5.7 Goodwill 3.9 Net assets acquired $ 9.6 |
Schedule of estimated amortization expense related to acquisition | The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of Vocality for fiscal years 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 0.7 2020 0.6 2021 0.5 2022 0.5 2023 0.4 Thereafter 0.9 |
GATR | |
Acquisitions | |
Schedule of Business Combination Operating Results | GATR’s sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 111.1 $ 84.3 $ 43.1 Operating income (loss) 4.0 1.9 (26.4) Net income (loss) after taxes 2.9 1.4 (23.0) |
Schedule of Business Combination components of operating results | GATR’s operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 11.1 $ 12.7 $ 9.7 (Gains) losses for changes in fair value of contingent consideration — (3.2) 0.7 Acquisition-related expenses 0.4 0.6 22.0 |
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 $ 51.7 Backlog 3.4 Technology 10.7 Non-compete agreements 1.2 Trade name 4.7 Accounts receivable 10.6 Inventory 3.4 Income tax receivable 5.1 Accounts payable and accrued expenses (2.4) Deferred tax liabilities (23.8) Net identifiable assets acquired 64.6 Goodwill 155.9 Net assets acquired $ 220.5 |
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 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 9.8 2020 8.3 2021 6.9 2022 5.6 2023 3.8 Thereafter 3.8 |
TeraLogics | |
Acquisitions | |
Schedule of Business Combination Operating Results | TeraLogics’ sales and results of operations included in our operating results for the years ended September 30, 2018, 2017 and 2016 were as follows (in millions): September 30, 2018 2017 2016 Sales $ 23.7 $ 19.7 $ 14.2 Operating income (loss) 0.3 (1.8) (2.9) Net income (loss) after taxes 0.2 (1.2) (1.6) |
Schedule of Business Combination components of operating results | TeraLogics’ operating results above included the following amounts for the years ended September 30, 2018, 2017 and 2016 (in millions): September 30, 2018 2017 2016 Amortization $ 2.8 $ 3.5 $ 3.0 Losses for changes in fair value of contingent consideration 1.3 1.3 1.5 Acquisition-related expenses — 0.2 2.3 |
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 $ 6.7 Backlog 5.6 Software 2.5 Non-compete agreements 0.1 Accounts receivable 1.4 Accounts payable and accrued expenses (0.5) Other net assets acquired (liabilities assumed) (0.1) Net identifiable assets acquired 15.7 Goodwill 18.2 Net assets acquired $ 33.9 |
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 2019 through 2023 and thereafter is as follows (in millions): Year Ended September 30, 2019 $ 2.1 2020 1.4 2021 0.8 2022 0.5 2023 0.4 Thereafter 0.5 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Variable Interest Entities | |
Schedule of summary of the consolidated net assets and liabilities | The assets and liabilities of OpCo. that are included in our consolidated balance sheet at September 30, 2018, excluding $20.8 million of assets that are eliminated in consolidation, are as follows: September 30, 2018 (in thousands) Cash $ 374 Restricted cash 10,000 Long-term capitalized contract costs 1,258 Other noncurrent assets 810 Total assets $ 12,442 Trade accounts payable $ 165 Other noncurrent liabilities 13 Long-term debt 9,056 Total liabilities 9,234 Total Cubic equity (304) Noncontrolling interests 24,348 Total liabilities and owners' equity $ 33,278 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Fair Value of Financial Instruments | |
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, 2018 September 30, 2017 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 9,000 $ — $ — $ 9,000 $ 8,501 $ — $ — $ 8,501 Current derivative assets — 1,803 — 1,803 — 2,591 — 2,591 Noncurrent derivative assets — 314 — 314 — 1,128 — 1,128 Total assets measured at fair value $ 9,000 $ 2,117 $ — $ 11,117 $ 8,501 $ 3,719 $ — $ 12,220 Liabilities Current derivative liabilities — 1,657 — 1,657 — 3,456 — 3,456 Noncurrent derivative liabilities — 75 — 75 — 1,128 — 1,128 Contingent consideration to seller of Deltenna — — 1,081 1,081 — — 1,376 1,376 Contingent consideration to seller of Shield Aviation — — 5,618 5,618 — — — — Contingent consideration to seller of TeraLogics - contract extensions — — — — — — 800 800 Contingent consideration to seller of TeraLogics - revenue targets — — 1,750 1,750 — — 2,450 2,450 Contingent consideration to seller of H4 Global — — 665 665 — — 591 591 Total liabilities measured at fair value $ — $ 1,732 $ 9,114 $ 10,846 $ — $ 4,584 $ 5,217 $ 9,801 |
Summary of change in fair value of contingent consideration liability | As of September 30, 2018, 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 Deltenna Shield Aviation Total Balance as of September 30, 2016 $ 2,000 $ 567 $ 1,400 $ 4,100 $ 3,200 $ — $ — $ 11,267 Initial measurement recognized at acquisition — — — — — 1,328 — 1,328 Cash paid to seller — — (1,000) (2,500) — — — (3,500) Total remeasurement (gain) loss recognized in earnings (2,000) 24 400 850 (3,200) 48 — (3,878) Balance as of September 30, 2017 $ — $ 591 $ 800 $ 2,450 $ — $ 1,376 $ — $ 5,217 Initial measurement recognized at acquisition — — — — — — 5,618 5,618 Cash paid to seller — — (1,000) (1,750) — — — (2,750) Total remeasurement (gain) loss recognized in earnings — 74 200 1,050 — (295) — 1,029 Balance as of September 30, 2018 $ — $ 665 $ — $ 1,750 $ — $ 1,081 $ 5,618 $ 9,114 |
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, 2018 2017 Fair value $ 193.7 $ 202.1 Carrying value $ 200.0 $ 200.0 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Accounts Receivable | |
Schedule of components of accounts receivable | The components of accounts receivable under long-term contracts are as follows (in thousands): September 30, 2018 2017 U.S. Government Contracts: Amounts billed $ 80,547 $ 53,450 Recoverable costs and accrued profits on progress completed--not billed 62,665 36,341 143,212 89,791 Commercial Customers: Amounts billed 76,401 131,532 Recoverable costs and accrued profits on progress completed--not billed 180,212 150,610 256,613 282,142 399,825 371,933 Less unbilled amounts not currently due--commercial customers (6,134) (17,457) $ 393,691 $ 354,476 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Inventories | |
Components of inventories | Significant components of inventories are as follows (in thousands): September 30, September 30, 2018 2017 Finished products $ 7,099 $ 4,369 Work in process and inventoried costs under long-term contracts 63,169 84,131 Materials and purchased parts 23,710 10,163 Customer advances (9,779) (10,948) Net inventories $ 84,199 $ 87,715 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment | |
Components of property, plant and equipment | Significant components of property, plant and equipment are as follows (in thousands): September 30, 2018 2017 Land and land improvements $ 13,132 $ 16,139 Buildings and improvements 57,959 52,625 Machinery and other equipment 81,727 73,235 Software 84,631 62,297 Leasehold improvements 11,991 13,298 Construction and internal-use software development in progress 12,888 23,156 Accumulated depreciation and amortization (144,782) (127,530) $ 117,546 $ 113,220 |
Goodwill and Purchased Intang_2
Goodwill and Purchased Intangible Assets (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
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, 2018 are as follows (in thousands): Transportation Cubic Global Cubic Mission Systems Defense Solutions Total Net balances at October 1, 2016 $ 49,630 $ 262,966 $ — $ 312,596 Acquisitions (see Note 2) — 5,885 — 5,885 Foreign currency exchange rate changes 1,240 1,841 — 3,081 Net balances at September 30, 2017 50,870 270,692 — 321,562 Reassignment on October 1, 2017 — (125,321) 125,321 — Acquisitions — 665 13,085 13,750 Foreign currency exchange rate changes (1,084) (323) (279) (1,686) Net balances at September 30, 2018 $ 49,786 $ 145,713 $ 138,127 $ 333,626 |
Schedule of entity's purchased intangible assets | The table below summarizes our purchased intangible assets (in thousands): September 30, 2018 September 30, 2017 Gross Gross Carrying Accumulated Net Carrying Carrying Accumulated Net Carrying Amount Amortization Amount Amount Amortization Amount Contract and program intangibles $ 151,965 $ (112,399) $ 39,566 $ 151,602 $ (90,988) $ 60,614 Other purchased intangibles 52,851 (18,884) 33,967 42,813 (13,569) 29,244 Total $ 204,816 $ (131,283) $ 73,533 $ 194,415 $ (104,557) $ 89,858 |
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, 2018, for each of the next five years and thereafter (in thousands): Transportation Cubic Global Cubic Mission Systems Defense Solutions Total 2019 $ 1,153 $ 673 $ 18,336 $ 20,162 2020 944 254 14,687 15,885 2021 698 254 11,259 12,211 2022 598 254 8,129 8,981 2023 499 254 6,042 6,795 Thereafter 989 626 7,884 9,499 $ 4,881 $ 2,315 $ 66,337 $ 73,533 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Financing Arrangements | |
Schedule of long-term debt | Long-term debt consists of the following (in thousands): September 30, 2018 2017 Series A senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% $ 50,000 $ 50,000 Series B senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% 50,000 50,000 Series C senior unsecured notes payable to a group of insurance companies, interest fixed at 3.70% 25,000 25,000 Series D senior unsecured notes payable to a group of insurance companies, interest fixed at 3.93% 75,000 75,000 200,000 200,000 Less unamortized debt issuance costs (207) (239) $ 199,793 $ 199,761 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
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, 2018 (in thousands): 2019 $ 11,310 2020 9,954 2021 8,812 2022 7,271 2023 5,459 Thereafter 16,991 $ 59,797 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Income Taxes | |
Components of income (loss) before income taxes | Income (loss) from continuing operations before income taxes includes the following components (in thousands): Years ended September 30, 2018 2017 2016 (in thousands) United States $ (51,049) $ (70,566) $ (76,136) Foreign 65,935 59,484 49,699 Total $ 14,886 $ (11,082) $ (26,437) |
Significant components of the provision for income taxes | Significant components of the provision (benefit) for income taxes from continuing operations are as follows: Years ended September 30, 2018 2017 2016 (in thousands) Current: Federal $ (4,775) $ (4,070) $ (1,679) State 976 878 (618) Foreign 19,882 13,869 8,249 Total current 16,083 10,677 5,952 Deferred: Federal (7,874) 2,257 (16,256) State 482 569 (4,333) Foreign (1,598) 1,155 280 Total deferred (8,990) 3,981 (20,309) Provision for income taxes $ 7,093 $ 14,658 $ (14,357) |
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, 2018 2017 2016 (in thousands) Tax expense at U.S. statutory rate $ 3,124 $ (3,877) $ (9,252) State income taxes, net of federal tax effect (237) (923) (1,754) Nondeductible expenses (1) 1,186 (169) 7,765 Change in reserve for tax contingencies (1,047) (4,435) 27 Change in deferred tax asset valuation allowance (2) 8,784 17,374 (5,382) Foreign rate differential (3) 5,684 9,912 (2,999) Impact of US Tax Reform (4) (7,053) — — Research and development credits (5) (2,656) (3,459) (2,542) Other (692) 235 (220) Provision for income taxes $ 7,093 $ 14,658 $ (14,357) (1) In 2016, we recorded $6.3 million of tax expense related to nondeductible acquisition-related compensation expenses. (2) In 2018, the increase in valuation allowance primarily related to the U.S. net operating loss for which no tax benefit was recognized. In 2017, we recorded $13.1 million of tax expense related to an increase in the valuation allowance related to tax credit carryforwards generated in the current year. 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. (3) In 2018, we recorded $3.5 million of tax expense related to foreign earnings which were not permanently reinvested prior to the enactment of the U.S. Tax Act. After enactment, certain foreign earnings are taxed at higher statutory rates than the U.S. which results in $2.1 million of tax expense. In 2017, we provided for deferred taxes on all cumulative unremitted foreign earnings, as the earnings were no longer considered permanently reinvested resulting in a charge of $9.5 million. (4) In 2018, a tax benefit of $7.1 million was recorded in connection with the enactment of the U.S. Tax Act as a result of remeasuring deferred taxes. (5) In 2016, we recorded tax benefits of $1.0 million 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, 2018 2017 (in thousands) Deferred tax assets: Accrued employee benefits $ 8,285 $ 15,863 Long-term contracts and inventory valuation reductions 8,238 13,974 Allowances for loss contingencies 3,232 4,212 Deferred compensation 3,272 4,830 Intangible assets 1,361 — Retirement benefits 1,398 6,214 Tax credit carryforwards 35,137 31,161 Loss carryforwards 29,097 3,715 Other 2,173 2,762 Total gross deferred tax assets 92,193 82,731 Valuation allowance (81,839) (57,106) Total deferred tax assets 10,354 25,625 Deferred tax liabilities: Deferred revenue (2,351) (3,729) Unremitted foreign earnings (687) (11,910) Property, plant and equipment (5,079) (3,137) Intangible assets — (9,713) Other (213) (158) Total deferred tax liabilities (8,330) (28,647) Net deferred tax liability $ 2,024 $ (3,022) |
Expiration of tax credit carryforwards | At September 30, 2018, we have federal and state income tax credit carryforwards (in thousands) which expire as follows: U.S. foreign tax credits $ 14,629 U.S. research and development tax credits 9,158 2035-2038 State research and development tax credits 22,592 Do not expire |
Expiration of federal, state and foreign net operating losses | We have federal, state and foreign capital and net operating losses (in thousands) which expire as follows: U.S. net operating loss carryforwards $ 68,730 U.S. capital loss carryforwards 37,238 State loss carryforwards 50,836 2020-2038 State capital loss carryforwards 54,825 Beginning 2023 Foreign net operating loss carryforwards 9,430 Do not expire |
Aggregate changes in the total gross unrecognized tax benefits | During fiscal 2018 and 2017, the aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows: Years ended September 30, 2018 2017 (in thousands) Balance at beginning of year $ 13,248 $ 16,932 Additions (reductions) for tax positions taken in prior years (80) 399 Recognition of benefits from expiration of statutes (1,770) (26) Recognition of benefits from open years effectively settled — (5,359) Additions for tax positions related to the current year 713 1,302 Additions (reductions) for tax positions related to acquisitions (2,169) — Balance at end of year $ 9,942 $ 13,248 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
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, 2018 and 2017 (in thousands): Notional Principal September 30, 2018 September 30, 2017 Instruments designated as accounting hedges: Foreign currency forwards $ 169,406 $ 125,486 Instruments not designated as accounting hedges: Foreign currency forwards $ 27,909 $ 35,117 |
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 in the consolidated balance sheets as of September 30, 2018 and 2017 (in thousands): Fair Value Balance Sheet Location September 30, 2018 September 30, 2017 Asset derivatives: Foreign currency forwards Other current assets $ 1,803 $ 2,591 Foreign currency forwards Other noncurrent assets 314 1,128 $ 2,117 $ 3,719 Liability derivatives: Foreign currency forwards Other current liabilities $ 1,657 $ 3,456 Foreign currency forwards Other noncurrent liabilities 75 1,128 Total $ 1,732 $ 4,584 |
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 other comprehensive income (loss) for the years ended September 30, 2018 and 2017 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): Year Ended September 30, 2018 September 30, 2017 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 $ (45) $ (1,239) $ (2,200) $ 551 |
Pension, Profit Sharing and O_2
Pension, Profit Sharing and Other Benefit Plans (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Pension Plans | |
Schedule of projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the defined benefit pension plans | 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, 2018 2017 Projected benefit obligation $ 222,332 $ 235,097 Accumulated benefit obligation 222,332 235,097 Fair value of plan assets 214,530 209,722 |
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, 2018 2017 Change in benefit obligations: Net benefit obligation at the beginning of the year $ 235,097 $ 241,117 Service cost 606 617 Interest cost 7,529 7,091 Actuarial (gain) loss (9,449) (10,082) Gross benefits paid (8,034) (7,549) Foreign currency exchange rate changes (3,417) 3,903 Net benefit obligation at the end of the year 222,332 235,097 Change in plan assets: Fair value of plan assets at the beginning of the year 209,722 194,253 Actual return on plan assets 11,998 14,915 Employer contributions 5,117 5,354 Gross benefits paid (8,034) (7,549) PBGC Premium paid (286) (348) Administrative expenses (698) (547) Foreign currency exchange rate changes (3,289) 3,644 Fair value of plan assets at the end of the year 214,530 209,722 Unfunded status of the plans (7,802) (25,375) Unrecognized net actuarial loss 48,081 58,572 Net amount recognized $ 40,279 $ 33,197 Amounts recognized in Accumulated OCI Liability adjustment to OCI $ (48,081) $ (58,572) Deferred tax asset 7,365 15,033 Valuation allowance on deferred tax asset 610 (2,107) Accumulated other comprehensive loss $ (40,106) $ (45,646) |
Components of net periodic pension cost (benefit) | The components of net periodic pension cost (benefit) were as follows (in thousands): September 30, 2018 2017 2016 Service cost $ 606 $ 617 $ 595 Interest cost 7,529 7,091 8,972 Expected return on plan assets (14,120) (12,928) (13,182) Amortization of actuarial loss 2,777 3,700 1,869 Settlement loss — — 2,671 Administrative expenses 438 474 177 Net pension cost (benefit) $ (2,770) $ (1,046) $ 1,102 |
Schedule of weighted-average assumptions used to determine benefit obligation and net periodic benefit cost | Years ended September 30, 2018 2017 2016 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, 2018 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 | 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. September 30, 2018 September 30, 2017 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Plan assets held at fair value: Cash equivalents $ 19,314 $ — $ — $ 19,314 $ 2,665 $ — $ — $ 2,665 Plan assets held at net asset value practical expedient*: Equity Funds 107,424 101,433 Fixed Income Funds 73,533 84,188 Diversified Growth Funds 14,259 16,646 Real Estate Funds — 4,790 Total assets held at net asset value practical expedient: $ 195,216 $ 207,057 Total Plan Assets $ 214,530 $ 209,722 * Plan assets measured at fair value using NAV (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy. |
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): 2019 $ 9,033 2020 9,261 2021 9,577 2022 9,622 2023 9,638 2024-2028 53,424 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
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, 2016 889,129 $ 45.98 Granted 395,913 46.20 Vested (158,243) 46.15 Forfeited (81,612) 48.32 Unvested at September 30, 2017 1,045,187 $ 45.86 Granted 344,433 61.19 Vested (147,832) 46.88 Forfeited (239,700) 48.42 Unvested at September 30, 2018 1,002,088 $ 50.32 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
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 as follows (in thousands): 2018 2017 2016 Cost of sales $ 1,096 $ 338 $ 513 Selling, general and administrative 6,419 4,674 7,235 $ 7,515 $ 5,012 $ 7,748 |
Business Segment Information (T
Business Segment Information (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Business Segment Information | |
Schedule of business segment financial data | Business segment financial data is as follows (in millions): Year Ended September 30, 2018 2017 2016 Sales: Cubic Transportation Systems $ 670.7 $ 578.6 $ 586.4 Cubic Global Defense 325.2 360.2 374.7 Cubic Mission Solutions 207.0 168.9 109.5 Total sales $ 1,202.9 $ 1,107.7 $ 1,070.6 Operating income (loss): Cubic Transportation Systems $ 60.4 $ 39.8 $ 57.5 Cubic Global Defense 16.6 28.1 19.9 Cubic Mission Solutions (0.1) (9.3) (37.0) Unallocated corporate expenses (52.5) (56.0) (52.0) Total operating income (loss) $ 24.4 $ 2.6 $ (11.6) Assets: Cubic Transportation Systems $ 390.2 $ 335.1 $ 338.2 Cubic Global Defense 360.1 280.1 211.8 Cubic Mission Solutions 352.9 390.5 404.4 Corporate 201.7 156.4 364.8 Discontinued Operations — 174.2 185.5 Total assets $ 1,304.9 $ 1,336.3 $ 1,504.7 Depreciation and amortization: Cubic Transportation Systems $ 12.0 $ 8.8 $ 8.2 Cubic Global Defense 8.5 10.4 7.5 Cubic Mission Solutions 22.4 23.8 21.2 Corporate 3.7 5.0 3.4 Total depreciation and amortization $ 46.6 $ 48.0 $ 40.3 Capital expenditures: Cubic Transportation Systems $ 3.2 $ 6.9 $ 2.2 Cubic Global Defense 9.4 5.9 6.8 Cubic Mission Solutions 2.1 1.7 2.1 Corporate 17.0 22.4 21.0 Total expenditures for long-lived assets $ 31.7 $ 36.9 $ 32.1 |
Schedule of sales by geographic area | Years ended September 30, 2018 2017 2016 Geographic Information: Sales (a): United States $ 627.8 $ 522.8 $ 471.6 United Kingdom 240.7 219.4 243.0 Canada 42.3 31.5 44.6 Australia 166.7 175.6 154.0 Middle East 36.3 64.8 71.0 Far East 50.1 47.9 40.0 Other 39.0 45.7 46.4 Total sales $ 1,202.9 $ 1,107.7 $ 1,070.6 (a) Sales are attributed to countries or regions based on the location of customers. |
Schedule of long-lived assets by country | Years ended September 30, 2018 2017 2016 Long-lived assets, net: United States $ 106.7 $ 100.6 $ 83.9 United Kingdom 5.7 11.7 9.4 Other foreign countries 12.0 7.3 5.3 Total long-lived assets, net $ 124.4 $ 119.6 $ 98.6 |
Schedule of restructuring charges (reversals) incurred by business segment | Restructuring charges incurred by business segment were as follows (in millions): Year Ended September 30, 2018 2017 2016 Restructuring costs: Cubic Transportation Systems $ 0.4 $ 0.4 $ 1.0 Cubic Global Defense 1.3 0.9 0.3 Cubic Mission Solutions 0.2 — — Unallocated corporate expenses and other 3.1 1.0 — Total restructuring costs $ 5.0 $ 2.3 $ 1.3 |
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, 2016 $ 553 Accrued costs 2,260 Cash payments (1,838) Balance as of September 30, 2017 975 Accrued costs 5,018 Cash payments (5,058) Balance as of September 30, 2018 $ 935 |
Summary of Quarterly Results _2
Summary of Quarterly Results of Operations (Unaudited) (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Summary of Quarterly Results of Operations (Unaudited) | |
Summary of quarterly results of operations | Year Three Months Ended Ended Fiscal 2018 September 30 June 30 March 31 December 31 September 30 (in thousands, except per share data) Net sales $ 379,709 $ 296,212 $ 278,586 $ 248,391 $ 1,202,898 Operating income (loss) 27,673 10,290 (1,679) (11,902) 24,382 Net income (loss) 17,816 6,291 (2,011) (9,786) 12,310 Net income (loss) per share, basic 0.65 0.23 (0.07) (0.36) 0.45 Net income (loss) per share, diluted 0.65 0.23 (0.07) (0.36) 0.45 Year Three Months Ended Ended Fiscal 2017 September 30 June 30 March 31 December 31 September 30 (in thousands, except per share data) Net sales $ 349,115 $ 266,184 $ 248,040 $ 244,370 $ 1,107,709 Operating income (loss) 21,207 (6,872) (6,084) (5,623) 2,628 Net income (loss) 13,155 (21,957) 461 (2,868) (11,209) Net income (loss) per share, basic 0.49 (0.81) 0.02 (0.11) (0.41) Net income (loss) per share, diluted 0.49 (0.81) 0.02 (0.11) (0.41) |
Summary of Significant Accoun_4
Summary of Significant Accounting Polices - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Foreign Currency Transactions and Translations | |||
Total transaction gains (losses) related primarily to advances to and between foreign subsidiaries | $ (2.2) | $ 0.7 | $ (0.9) |
Accounts Receivable | |||
Allowance for doubtful accounts | 0 | ||
Impairment of Long-Lived Assets | |||
Impairment of long-lived assets | $ 0 | $ 0 | $ 0 |
Software | Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 3 years | ||
Software | Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 7 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Polices - EPS (Details) shares in Thousands, $ in Millions | 12 Months Ended | ||
Sep. 30, 2018USD ($)itemshares | Sep. 30, 2017shares | Sep. 30, 2016shares | |
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 | ||
Stock-Based Compensation | |||
Vesting period of performance-based RSUs | 3 years | ||
Net Income Per Share | |||
Weighted average shares - basic | 27,229 | 27,106 | 26,976 |
Effect of dilutive securities | 122 | ||
Weighted average shares - diluted | 27,351 | 27,106 | 26,976 |
Number of anti-dilutive securities | 967 | 825 |
Summary of Significant Accoun_6
Summary of Significant Accounting Polices - New Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Recent Accounting Pronouncements | |||
Restricted cash | $ 27,400 | $ 27,400 | $ 8,400 |
Retained Earnings | |||
Recent Accounting Pronouncements | |||
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings, Tax Effect | 2,394 | ||
Accumulated Other Comprehensive Income (Loss) | |||
Recent Accounting Pronouncements | |||
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings, Tax Effect | $ (2,394) | ||
ASU 2018-02 | Retained Earnings | |||
Recent Accounting Pronouncements | |||
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings, Tax Effect | (2,400) | ||
ASU 2018-02 | Accumulated Other Comprehensive Income (Loss) | |||
Recent Accounting Pronouncements | |||
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings, Tax Effect | $ 2,400 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - CGD Services - Income (loss) from discontinued operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2018 | Apr. 18, 2018 | |
Costs and expenses: | |||||
Net income from discontinued operations | $ 4,243 | $ 14,531 | $ 13,815 | ||
Cubic Global Defense Services | Discontinued operations held-for-sale | |||||
Divestitures | |||||
Consideration from sale | $ 135,000 | ||||
Receivable for estimated amount due from purchaser | $ 3,000 | ||||
Cubic Global Defense Services | Disposed of by sale | |||||
Divestitures | |||||
Consideration from sale | $ 133,800 | ||||
Receivable for estimated amount due from purchaser | 3,700 | ||||
Estimated selling costs | 4,500 | ||||
Income (loss) from discontinued operations | |||||
Net sales | 262,228 | 378,152 | 391,064 | ||
Costs and expenses: | |||||
Cost of sales | 235,279 | 342,819 | 350,429 | ||
Selling, general and administrative expenses | 11,365 | 17,487 | 16,430 | ||
Amortization of purchased intangibles | 1,373 | 2,752 | 4,764 | ||
Restructuring costs | 7 | 208 | 574 | ||
Other income | (15) | (46) | (93) | ||
Earnings from discontinued operations before income taxes | 14,219 | 14,932 | 18,960 | ||
Net (gain) loss on sale | 6,131 | ||||
Income tax provision (benefit) | 3,845 | 401 | 5,145 | ||
Net income from discontinued operations | $ 4,243 | $ 14,531 | $ 13,815 |
Acquisitions and Divestitures_2
Acquisitions and Divestitures - CGD Services - Assets and liabilities of discontinued (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 |
Assets and liabilities | ||
Total assets | $ 174,200 | $ 185,500 |
Disposed of by sale | Cubic Global Defense Services | ||
Assets and liabilities | ||
Accounts receivable, net | 74,710 | |
Other current assets | 1,190 | |
Property and equipment, net | 466 | |
Goodwill | 94,350 | |
Purchased intangibles, net | 8,637 | |
Other noncurrent assets | (5,179) | |
Total assets | 174,174 | |
Accounts payable and other liabilities | 36,862 | |
Net assets | $ 137,312 |
Acquisitions and Divestitures_3
Acquisitions and Divestitures - Consolidated Business Acquisitions (Details) - USD ($) $ in Thousands | Feb. 21, 2018 | Nov. 30, 2016 | Feb. 02, 2016 | Dec. 21, 2015 | Oct. 31, 2018 | Jul. 31, 2018 | Jul. 31, 2017 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Oct. 31, 2017 |
Sales and results of operations | |||||||||||||||||||
Sales | $ 379,709 | $ 296,212 | $ 278,586 | $ 248,391 | $ 349,115 | $ 266,184 | $ 248,040 | $ 244,370 | $ 1,202,898 | $ 1,107,709 | $ 1,070,601 | ||||||||
Operating income (loss) | 27,673 | 10,290 | (1,679) | (11,902) | 21,207 | (6,872) | (6,084) | (5,623) | 24,382 | 2,628 | (11,649) | ||||||||
Net income (loss) after taxes | 17,816 | $ 6,291 | $ (2,011) | $ (9,786) | 13,155 | $ (21,957) | $ 461 | $ (2,868) | 12,310 | (11,209) | 1,735 | ||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Compensation expense | 7,515 | 5,012 | 7,748 | ||||||||||||||||
Compensation expense not expected to be deductible for tax purposes | 6,300 | ||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Goodwill | 333,626 | $ 321,562 | 333,626 | 321,562 | 312,596 | ||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||
2,019 | 20,162 | 20,162 | |||||||||||||||||
2,020 | 15,885 | 15,885 | |||||||||||||||||
2,021 | 12,211 | 12,211 | |||||||||||||||||
2,022 | 8,981 | 8,981 | |||||||||||||||||
2,023 | 6,795 | 6,795 | |||||||||||||||||
Thereafter | 9,499 | 9,499 | |||||||||||||||||
Shield Aviation | |||||||||||||||||||
Sales and results of operations | |||||||||||||||||||
Operating income (loss) | (800) | ||||||||||||||||||
Net income (loss) after taxes | (600) | ||||||||||||||||||
Amortization | 100 | ||||||||||||||||||
Acquisition-related (benefit) expenses | 200 | ||||||||||||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Fair value of consideration transferred | $ 12,800 | ||||||||||||||||||
Extinguishment of debt | 5,200 | ||||||||||||||||||
Cash consideration paid | 1,300 | ||||||||||||||||||
Hold back consideration | 700 | ||||||||||||||||||
Contingent consideration | 5,600 | ||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Other net assets acquired | 300 | ||||||||||||||||||
Net identifiable assets acquired | 6,300 | ||||||||||||||||||
Goodwill | 6,500 | ||||||||||||||||||
Net assets acquired | $ 12,800 | ||||||||||||||||||
Weighted average useful life of intangible assets | 8 years | ||||||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||
2,019 | 800 | 800 | |||||||||||||||||
2,020 | 800 | 800 | |||||||||||||||||
2,021 | 800 | 800 | |||||||||||||||||
2,022 | 800 | 800 | |||||||||||||||||
2,023 | 800 | 800 | |||||||||||||||||
Thereafter | 1,900 | 1,900 | |||||||||||||||||
Shield Aviation | Maximum | |||||||||||||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Contingent consideration | $ 10,000 | ||||||||||||||||||
Shield Aviation | Technology | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Amortizable intangible assets | $ 6,000 | ||||||||||||||||||
MotionDSP | |||||||||||||||||||
Sales and results of operations | |||||||||||||||||||
Sales | 600 | ||||||||||||||||||
Operating income (loss) | (2,700) | ||||||||||||||||||
Net income (loss) after taxes | (1,900) | ||||||||||||||||||
Amortization | 400 | ||||||||||||||||||
Acquisition-related (benefit) expenses | 800 | 200 | |||||||||||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Cash consideration paid | $ 4,800 | ||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Accounts payable and accrued expenses | (300) | ||||||||||||||||||
Other noncurrent liabilities | (800) | ||||||||||||||||||
Other net assets acquired (liabilities assumed) | (900) | ||||||||||||||||||
Net identifiable assets acquired | 2,800 | ||||||||||||||||||
Goodwill | 6,700 | ||||||||||||||||||
Net assets acquired | $ 9,500 | ||||||||||||||||||
Weighted average useful life of intangible assets | 7 years | ||||||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||
2,019 | 700 | 700 | |||||||||||||||||
2,020 | 700 | 700 | |||||||||||||||||
2,021 | 700 | 700 | |||||||||||||||||
2,022 | 700 | 700 | |||||||||||||||||
2,023 | 700 | 700 | |||||||||||||||||
Thereafter | 900 | 900 | |||||||||||||||||
MotionDSP | Trade names | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Indefinite intangible assets | $ 100 | ||||||||||||||||||
MotionDSP | Customer relationships | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Amortizable intangible assets | 200 | ||||||||||||||||||
MotionDSP | Technology | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Amortizable intangible assets | $ 4,500 | ||||||||||||||||||
Deltenna | |||||||||||||||||||
Sales and results of operations | |||||||||||||||||||
Sales | 300 | 100 | |||||||||||||||||
Operating income (loss) | 200 | (200) | |||||||||||||||||
Net income (loss) after taxes | 200 | (200) | |||||||||||||||||
Amortization | 300 | ||||||||||||||||||
Gains (losses) for changes in fair value of contingent consideration | (300) | ||||||||||||||||||
Acquisition-related (benefit) expenses | 200 | ||||||||||||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Fair value of consideration transferred | $ 5,300 | ||||||||||||||||||
Cash consideration paid | 4,000 | ||||||||||||||||||
Contingent consideration | 1,300 | ||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Other noncurrent liabilities | (300) | ||||||||||||||||||
Net identifiable assets acquired | 1,800 | ||||||||||||||||||
Goodwill | 3,500 | ||||||||||||||||||
Net assets acquired | $ 5,300 | ||||||||||||||||||
Weighted average useful life of intangible assets | 8 years | ||||||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||
2,019 | 300 | 300 | |||||||||||||||||
2,020 | 300 | 300 | |||||||||||||||||
2,021 | 300 | 300 | |||||||||||||||||
2,022 | 300 | 300 | |||||||||||||||||
2,023 | 300 | 300 | |||||||||||||||||
Thereafter | 300 | 300 | |||||||||||||||||
Deltenna | Maximum | |||||||||||||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Contingent consideration | $ 7,000 | ||||||||||||||||||
Deltenna | Customer relationships | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Amortizable intangible assets | 1,000 | ||||||||||||||||||
Deltenna | Technology | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Amortizable intangible assets | $ 1,100 | ||||||||||||||||||
Vocality | |||||||||||||||||||
Sales and results of operations | |||||||||||||||||||
Sales | 5,100 | 1,500 | |||||||||||||||||
Operating income (loss) | (1,300) | (2,900) | |||||||||||||||||
Net income (loss) after taxes | (1,200) | (2,600) | |||||||||||||||||
Amortization | 800 | 600 | |||||||||||||||||
Acquisition-related (benefit) expenses | 600 | 1,600 | |||||||||||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Compensation expense | 400 | ||||||||||||||||||
Fair value of consideration transferred | $ 9,600 | ||||||||||||||||||
Cash consideration paid | 9,700 | ||||||||||||||||||
Contingent consideration | 300 | ||||||||||||||||||
Cash paid related to compensation expenses | 400 | ||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Inventory | 1,700 | ||||||||||||||||||
Accounts payable and accrued expenses | (400) | ||||||||||||||||||
Other noncurrent liabilities | (500) | ||||||||||||||||||
Net identifiable assets acquired | 5,700 | ||||||||||||||||||
Goodwill | 3,900 | ||||||||||||||||||
Net assets acquired | $ 9,600 | ||||||||||||||||||
Weighted average useful life of intangible assets | 9 years | ||||||||||||||||||
Estimated amortization expense related to the intangible assets | |||||||||||||||||||
2,019 | 700 | 700 | |||||||||||||||||
2,020 | 600 | 600 | |||||||||||||||||
2,021 | 500 | 500 | |||||||||||||||||
2,022 | 500 | 500 | |||||||||||||||||
2,023 | 400 | 400 | |||||||||||||||||
Thereafter | 900 | 900 | |||||||||||||||||
Vocality | Trade names | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Indefinite intangible assets | $ 400 | ||||||||||||||||||
Vocality | Customer relationships | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Amortizable intangible assets | 2,100 | ||||||||||||||||||
Vocality | Technology | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Amortizable intangible assets | $ 2,400 | ||||||||||||||||||
GATR | |||||||||||||||||||
Sales and results of operations | |||||||||||||||||||
Sales | 111,100 | 84,300 | 43,100 | ||||||||||||||||
Operating income (loss) | 4,000 | 1,900 | (26,400) | ||||||||||||||||
Net income (loss) after taxes | 2,900 | 1,400 | (23,000) | ||||||||||||||||
Amortization | 11,100 | 12,700 | 9,700 | ||||||||||||||||
Gains (losses) for changes in fair value of contingent consideration | (3,200) | 700 | |||||||||||||||||
Acquisition-related (benefit) expenses | 400 | 600 | 22,000 | ||||||||||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Compensation expense | 18,500 | ||||||||||||||||||
Compensation expense not expected to be deductible for tax purposes | 15,400 | ||||||||||||||||||
Fair value of consideration transferred | $ 220,500 | ||||||||||||||||||
Cash consideration paid | 236,100 | ||||||||||||||||||
Contingent consideration | 2,500 | ||||||||||||||||||
Cash paid related to compensation expenses | 18,100 | ||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Accounts receivable | 10,600 | ||||||||||||||||||
Inventory | 3,400 | ||||||||||||||||||
Income tax receivable | 5,100 | ||||||||||||||||||
Deferred tax liabilities | 23,800 | ||||||||||||||||||
Accounts payable and accrued expenses | (2,400) | ||||||||||||||||||
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 | |||||||||||||||||||
2,019 | 9,800 | 9,800 | |||||||||||||||||
2,020 | 8,300 | 8,300 | |||||||||||||||||
2,021 | 6,900 | 6,900 | |||||||||||||||||
2,022 | 5,600 | 5,600 | |||||||||||||||||
2,023 | 3,800 | 3,800 | |||||||||||||||||
Thereafter | 3,800 | 3,800 | |||||||||||||||||
GATR | Trade names | |||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Indefinite intangible assets | $ 4,700 | ||||||||||||||||||
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 | ||||||||||||||||||
TeraLogics | |||||||||||||||||||
Sales and results of operations | |||||||||||||||||||
Sales | 23,700 | 19,700 | 14,200 | ||||||||||||||||
Operating income (loss) | 300 | (1,800) | (2,900) | ||||||||||||||||
Net income (loss) after taxes | 200 | (1,200) | (1,600) | ||||||||||||||||
Amortization | 2,800 | 3,500 | 3,000 | ||||||||||||||||
Gains (losses) for changes in fair value of contingent consideration | 1,300 | 1,300 | 1,500 | ||||||||||||||||
Acquisition-related (benefit) expenses | $ 200 | 2,300 | |||||||||||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Compensation expense | $ 1,300 | ||||||||||||||||||
Fair value of consideration transferred | $ 33,900 | ||||||||||||||||||
Cash consideration paid | 28,900 | ||||||||||||||||||
Contingent consideration | 5,000 | ||||||||||||||||||
Purchase price allocation | |||||||||||||||||||
Accounts receivable | 1,400 | ||||||||||||||||||
Accounts payable and accrued expenses | (500) | ||||||||||||||||||
Other net assets acquired (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 | |||||||||||||||||||
2,019 | 2,100 | 2,100 | |||||||||||||||||
2,020 | 1,400 | 1,400 | |||||||||||||||||
2,021 | 800 | 800 | |||||||||||||||||
2,022 | 500 | 500 | |||||||||||||||||
2,023 | 400 | 400 | |||||||||||||||||
Thereafter | $ 500 | $ 500 | |||||||||||||||||
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 | ||||||||||||||||||
Trafficware | Subsequent event | |||||||||||||||||||
Estimated acquisition-date fair value of consideration | |||||||||||||||||||
Fair value of consideration transferred | $ 235,700 | ||||||||||||||||||
MotionDSP | |||||||||||||||||||
Acquisitions | |||||||||||||||||||
Purchase price of capital stock | $ 4,700 | ||||||||||||||||||
Ownership percentage | 49.00% |
Acquisitions and Divestitures_4
Acquisitions and Divestitures - Pro forma information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Acquisitions and Divestitures | ||
Net sales | $ 1,204 | $ 1,112.1 |
Net loss from continuing operations | 9.9 | $ (29.5) |
Adjustments made for transaction expenses | $ 0 |
Variable Interest Entities - Na
Variable Interest Entities - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue recognition | |||
Restricted cash | $ 27,400 | $ 8,400 | |
MBTA | Design and Build Phase | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |||
Revenue recognition | |||
Contract term | 3 years | ||
MBTA | Operate and Maintain Phase | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01 | |||
Revenue recognition | |||
Contract term | 10 years | ||
Cubic Corporation Excluding VIE | |||
Revenue recognition | |||
Restricted cash | $ 17,400 | 8,434 | |
Long-term capitalized contract costs | 84,924 | $ 56,471 | |
Cubic Corporation Excluding VIE | MBTA | |||
Revenue recognition | |||
Long-term capitalized contract costs | 27,800 | ||
OpCo. | |||
Revenue recognition | |||
Restricted cash | 10,000 | ||
Long-term capitalized contract costs | 1,258 | ||
OpCo. | Interest Rate Swaps | Not Designated as Hedging Instrument | |||
Revenue recognition | |||
Notional principal outstanding derivative instruments | 38,600 | ||
Fair value interest rate swaps | 100 | ||
OpCo. | P3 Credit Agreement | Revolving Credit Agreement | |||
Revenue recognition | |||
Maximum borrowing capacity under credit agreement | 13,900 | ||
OpCo. | P3 Credit Agreement | Long-term Debt Facility | |||
Revenue recognition | |||
Loan amount | $ 212,400 | ||
Carrying value | 17,800 | ||
Unamortized deferred financing costs | 8,700 | ||
OpCo. | Design and Build Phase | P3 Credit Agreement | Long-term Debt Facility | LIBOR | |||
Revenue recognition | |||
Variable interest rate (as a percent) | 1.30% | ||
OpCo. | Operate and Maintain Phase | P3 Credit Agreement | Long-term Debt Facility | LIBOR | |||
Revenue recognition | |||
Variable interest rate (as a percent) | 1.55% | ||
OpCo. | MBTA | |||
Revenue recognition | |||
Expected contract revenue | 664,000 | ||
P3 Joint Venture | |||
Revenue recognition | |||
Maximum exposure to loss | 2,700 | ||
Transportation Systems | OpCo. | |||
Revenue recognition | |||
Expected contract revenue | $ 510,000 | ||
Transportation Systems | HoldCo. | |||
Revenue recognition | |||
Ownership percentage | 10.00% | ||
Transportation Systems | HoldCo. | Letter of credit agreement | |||
Revenue recognition | |||
Maximum borrowing capacity under credit agreement | $ 2,700 | ||
Borrowings outstanding | $ 0 | ||
John Laing | HoldCo. | |||
Revenue recognition | |||
Ownership percentage | 90.00% | ||
John Laing | HoldCo. | Equity Bridge Loan | |||
Revenue recognition | |||
Loan amount | $ 24,300 | ||
VIE | |||
Revenue recognition | |||
Restricted cash | $ 10,000 | ||
Long-term capitalized contract costs | $ 1,258 |
Variable Interest Entities - Ne
Variable Interest Entities - Net assets and liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 |
ASSETS | |||
Restricted cash | $ 27,400 | $ 8,400 | |
Total assets | 1,304,883 | 1,336,285 | $ 1,504,700 |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Long-term debt | 199,793 | 199,761 | |
Total Cubic equity | 700,121 | 689,631 | |
Total liabilities and shareholders' equity | 1,304,883 | $ 1,336,285 | |
VIE | |||
ASSETS | |||
Cash | 374 | ||
Restricted cash | 10,000 | ||
Long-term capitalized contract costs | 1,258 | ||
Other noncurrent assets | 810 | ||
Total assets | 12,442 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Trade accounts payable | 165 | ||
Other noncurrent liabilities | 13 | ||
Long-term debt | 9,056 | ||
Total liabilities | 9,234 | ||
Total Cubic equity | (304) | ||
Noncontrolling interests | 24,348 | ||
Total liabilities and shareholders' equity | 33,278 | ||
VIE | Consolidation Eliminations | |||
ASSETS | |||
Total assets | $ (20,800) |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) $ in Thousands | Feb. 02, 2016USD ($) | Dec. 21, 2015USD ($) | Oct. 01, 2015 | Jul. 31, 2018USD ($)item | Jul. 31, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) |
Level 2 | |||||||
Debt instruments | |||||||
Fair Value | $ 193,700 | $ 202,100 | |||||
Carrying value | 200,000 | 200,000 | |||||
Level 3 | |||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Balance at the Beginning period | 5,217 | 11,267 | |||||
Initial measurement recognized at acquisition | 5,618 | 1,328 | |||||
Cash paid to seller | (2,750) | (3,500) | |||||
Total remeasurement (gain) loss recognized in earnings | 1,029 | (3,878) | |||||
Balance at the ending period | 9,114 | 5,217 | |||||
Assets and liabilities measured at fair value | Total | |||||||
Assets | |||||||
Cash equivalents | 9,000 | 8,501 | |||||
Current derivative assets | 1,803 | 2,591 | |||||
Noncurrent derivative assets | 314 | 1,128 | |||||
Total assets measured at fair value | 11,117 | 12,220 | |||||
Liabilities | |||||||
Current derivative liabilities | 1,657 | 3,456 | |||||
Noncurrent derivative liabilities | 75 | 1,128 | |||||
Total liabilities measured at fair value | 10,846 | 9,801 | |||||
Assets and liabilities measured at fair value | Level 1 | |||||||
Assets | |||||||
Cash equivalents | 9,000 | 8,501 | |||||
Total assets measured at fair value | 9,000 | 8,501 | |||||
Assets and liabilities measured at fair value | Level 2 | |||||||
Assets | |||||||
Current derivative assets | 1,803 | 2,591 | |||||
Noncurrent derivative assets | 314 | 1,128 | |||||
Total assets measured at fair value | 2,117 | 3,719 | |||||
Liabilities | |||||||
Current derivative liabilities | 1,657 | 3,456 | |||||
Noncurrent derivative liabilities | 75 | 1,128 | |||||
Total liabilities measured at fair value | 1,732 | 4,584 | |||||
Assets and liabilities measured at fair value | Level 3 | |||||||
Liabilities | |||||||
Total liabilities measured at fair value | $ 9,114 | $ 5,217 | |||||
Deltenna | |||||||
Contingent consideration | |||||||
Contingent consideration | $ 1,300 | ||||||
Volatility for underlying earnings metrics used in determination of fair value of contingent consideration | 53.00% | 40.00% | |||||
Change in fair value of our Level 3 contingent consideration | |||||||
Initial measurement recognized at acquisition | 5,300 | ||||||
Deltenna | Maximum | |||||||
Contingent consideration | |||||||
Contingent consideration | $ 7,000 | ||||||
Deltenna | Level 3 | |||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Balance at the Beginning period | $ 1,376 | ||||||
Initial measurement recognized at acquisition | $ 1,328 | ||||||
Total remeasurement (gain) loss recognized in earnings | (295) | 48 | |||||
Balance at the ending period | 1,081 | 1,376 | |||||
Deltenna | Assets and liabilities measured at fair value | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 1,081 | 1,376 | |||||
Deltenna | Assets and liabilities measured at fair value | Level 3 | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | $ 1,081 | $ 1,376 | |||||
Shield Aviation | |||||||
Contingent consideration | |||||||
Contingent consideration | $ 5,600 | ||||||
Iterations used in determination of fair value of contingent consideration | item | 100,000 | ||||||
Volatility for underlying earnings metrics used in determination of fair value of contingent consideration | 20.00% | ||||||
Revenue risk adjustment used in determination of fair value of contingent consideration | 14.50% | ||||||
Discount rate (as a percent) | 3.90% | ||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Initial measurement recognized at acquisition | $ 12,800 | ||||||
Shield Aviation | Maximum | |||||||
Contingent consideration | |||||||
Contingent consideration | $ 10,000 | ||||||
Shield Aviation | Level 3 | |||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Balance at the Beginning period | |||||||
Initial measurement recognized at acquisition | $ 5,618 | ||||||
Balance at the ending period | 5,618 | ||||||
Shield Aviation | Assets and liabilities measured at fair value | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 5,618 | ||||||
Shield Aviation | Assets and liabilities measured at fair value | Level 3 | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 5,618 | ||||||
TeraLogics | |||||||
Contingent consideration | |||||||
Contingent consideration | $ 5,000 | ||||||
Volatility for underlying earnings metrics used in determination of fair value of contingent consideration | 15.00% | ||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Initial measurement recognized at acquisition | $ 33,900 | ||||||
TeraLogics | Contract extensions | Level 3 | |||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Balance at the Beginning period | 800 | $ 1,400 | |||||
Cash paid to seller | (1,000) | (1,000) | |||||
Total remeasurement (gain) loss recognized in earnings | 200 | 400 | |||||
Balance at the ending period | 800 | ||||||
TeraLogics | Contract extensions | Assets and liabilities measured at fair value | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 800 | ||||||
TeraLogics | Contract extensions | Assets and liabilities measured at fair value | Level 3 | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 800 | ||||||
TeraLogics | Revenue Targets | Level 3 | |||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Balance at the Beginning period | 2,450 | 4,100 | |||||
Cash paid to seller | (1,750) | (2,500) | |||||
Total remeasurement (gain) loss recognized in earnings | 1,050 | 850 | |||||
Balance at the ending period | 1,750 | 2,450 | |||||
TeraLogics | Revenue Targets | Assets and liabilities measured at fair value | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 1,750 | 2,450 | |||||
TeraLogics | Revenue Targets | Assets and liabilities measured at fair value | Level 3 | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 1,750 | 2,450 | |||||
GATR | |||||||
Contingent consideration | |||||||
Contingent consideration | $ 2,500 | ||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Initial measurement recognized at acquisition | $ 220,500 | ||||||
GATR | Level 3 | |||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Balance at the Beginning period | 3,200 | ||||||
Total remeasurement (gain) loss recognized in earnings | (3,200) | ||||||
DTECH | Level 3 | |||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Balance at the Beginning period | 2,000 | ||||||
Total remeasurement (gain) loss recognized in earnings | (2,000) | ||||||
H4 Global | |||||||
Contingent consideration | |||||||
Term of contingent consideration | 5 years | ||||||
H4 Global | Maximum | |||||||
Contingent consideration | |||||||
Contingent consideration | 3,300 | ||||||
H4 Global | Level 3 | |||||||
Change in fair value of our Level 3 contingent consideration | |||||||
Balance at the Beginning period | 591 | 567 | |||||
Total remeasurement (gain) loss recognized in earnings | 74 | 24 | |||||
Balance at the ending period | 665 | 591 | |||||
H4 Global | Assets and liabilities measured at fair value | Total | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | 665 | 591 | |||||
H4 Global | Assets and liabilities measured at fair value | Level 3 | |||||||
Liabilities | |||||||
Noncurrent contingent consideration to seller | $ 665 | $ 591 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Sep. 30, 2017 |
Components of accounts receivable under long-term contracts | ||
Total accounts receivable | $ 399,825 | $ 371,933 |
Less estimated amounts not currently due | (6,134) | (17,457) |
Accounts receivable under long-term contracts, current | 393,691 | 354,476 |
U.S. government contracts | ||
Components of accounts receivable under long-term contracts | ||
Amounts billed | 80,547 | 53,450 |
Recoverable costs and accrued profits on progress completed--not billed | 62,665 | 36,341 |
Total accounts receivable | 143,212 | 89,791 |
Commercial customers | ||
Components of accounts receivable under long-term contracts | ||
Amounts billed | 76,401 | 131,532 |
Recoverable costs and accrued profits on progress completed--not billed | 180,212 | 150,610 |
Total accounts receivable | $ 256,613 | $ 282,142 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Sep. 30, 2017 |
Inventories | ||
Finished products | $ 7,099 | $ 4,369 |
Work in process and inventoried costs under long-term contracts | 63,169 | 84,131 |
Materials and purchased parts | 23,710 | 10,163 |
Customer advances | (9,779) | (10,948) |
Net inventories | 84,199 | 87,715 |
Costs incurred outside the scope of work or in advance of a contract award | 900 | 4,300 |
General and administrative amounts for certain government contracts remaining in inventory | $ 2,000 | $ 2,500 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | 48 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2018 | |
PROPERTY, PLANT AND EQUIPMENT | ||||
Accumulated depreciation and amortization | $ (144,782) | $ (127,530) | $ (144,782) | |
Property, plant and equipment - net | 117,546 | 113,220 | 117,546 | |
Development expense | 52,398 | 52,652 | $ 31,976 | |
Depreciation of plant and equipment and amortization of leasehold improvements | 19,500 | 17,800 | 11,000 | |
Land and land improvements | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Property, plant and equipment, Gross | 13,132 | 16,139 | 13,132 | |
Buildings and improvements | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Property, plant and equipment, Gross | $ 57,959 | 52,625 | 57,959 | |
Buildings and improvements | Minimum | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Estimated useful life | P15Y | |||
Buildings and improvements | Maximum | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Estimated useful life | P39Y | |||
Machinery and other equipment | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Property, plant and equipment, Gross | $ 81,727 | 73,235 | 81,727 | |
Machinery and other equipment | Minimum | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Estimated useful life | P5Y | |||
Machinery and other equipment | Maximum | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Estimated useful life | P10Y | |||
Software | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Property, plant and equipment, Gross | $ 84,631 | 62,297 | 84,631 | |
Costs related to the purchase and development of software | 22,500 | 40,600 | 45,200 | 135,800 |
Addition to capitalized software expenses | 7,500 | 16,700 | 20,300 | |
Development expense | $ 15,000 | 23,900 | $ 24,900 | |
Software | Minimum | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Estimated useful life | P3Y | |||
Software | Maximum | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Estimated useful life | P7Y | |||
Leasehold improvements | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Property, plant and equipment, Gross | $ 11,991 | 13,298 | 11,991 | |
Construction and internal-use software development in progress | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||
Property, plant and equipment, Gross | $ 12,888 | $ 23,156 | $ 12,888 |
Goodwill and Purchased Intang_3
Goodwill and Purchased Intangible Assets - Goodwill (Details) $ in Thousands | 12 Months Ended | |
Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | |
Changes in the carrying amount of goodwill | ||
Net balances at the beginning of the period | $ 321,562 | $ 312,596 |
Acquisitions | 13,750 | 5,885 |
Foreign currency exchange rate changes | (1,686) | 3,081 |
Net balance at the end of the period | $ 333,626 | 321,562 |
Number of reporting segments | item | 3 | |
Impairment of goodwill | $ 0 | |
Transportation Systems | ||
Changes in the carrying amount of goodwill | ||
Net balances at the beginning of the period | 50,870 | 49,630 |
Foreign currency exchange rate changes | (1,084) | 1,240 |
Net balance at the end of the period | $ 49,786 | 50,870 |
Transportation Systems | Minimum | ||
Changes in the carrying amount of goodwill | ||
Estimated percentage of excess of fair value over carrying value | 100.00% | |
Cubic Global Defense | ||
Changes in the carrying amount of goodwill | ||
Net balances at the beginning of the period | $ 270,692 | 262,966 |
Reassignment on October 1, 2017 | (125,321) | |
Acquisitions | 665 | 5,885 |
Foreign currency exchange rate changes | (323) | 1,841 |
Net balance at the end of the period | $ 145,713 | $ 270,692 |
Cubic Global Defense | Minimum | ||
Changes in the carrying amount of goodwill | ||
Estimated percentage of excess of fair value over carrying value | 40.00% | |
Cubic Mission Solutions | ||
Changes in the carrying amount of goodwill | ||
Reassignment on October 1, 2017 | $ 125,321 | |
Acquisitions | 13,085 | |
Foreign currency exchange rate changes | (279) | |
Net balance at the end of the period | $ 138,127 | |
Cubic Mission Solutions | Minimum | ||
Changes in the carrying amount of goodwill | ||
Estimated percentage of excess of fair value over carrying value | 40.00% |
Goodwill and Purchased Intang_4
Goodwill and Purchased Intangible Assets - Intangible assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Purchased intangible assets | |||
Gross Carrying Amount | $ 204,816 | $ 194,415 | |
Accumulated Amortization | (131,283) | (104,557) | |
Net Carrying Amount | 73,533 | 89,858 | |
Amortization expense | 27,064 | 30,245 | $ 29,356 |
Expected amortization for purchased intangibles for each of the next five years | |||
2,019 | 20,162 | ||
2,020 | 15,885 | ||
2,021 | 12,211 | ||
2,022 | 8,981 | ||
2,023 | 6,795 | ||
Thereafter | 9,499 | ||
Total expected amortization for purchased intangibles | 73,533 | ||
Contract and program intangibles | |||
Purchased intangible assets | |||
Gross Carrying Amount | 151,965 | 151,602 | |
Accumulated Amortization | (112,399) | (90,988) | |
Net Carrying Amount | 39,566 | 60,614 | |
Other purchased intangibles | |||
Purchased intangible assets | |||
Gross Carrying Amount | 52,851 | 42,813 | |
Accumulated Amortization | (18,884) | (13,569) | |
Net Carrying Amount | 33,967 | $ 29,244 | |
Transportation Systems | |||
Expected amortization for purchased intangibles for each of the next five years | |||
2,019 | 1,153 | ||
2,020 | 944 | ||
2,021 | 698 | ||
2,022 | 598 | ||
2,023 | 499 | ||
Thereafter | 989 | ||
Total expected amortization for purchased intangibles | 4,881 | ||
Cubic Global Defense | |||
Expected amortization for purchased intangibles for each of the next five years | |||
2,019 | 673 | ||
2,020 | 254 | ||
2,021 | 254 | ||
2,022 | 254 | ||
2,023 | 254 | ||
Thereafter | 626 | ||
Total expected amortization for purchased intangibles | 2,315 | ||
Cubic Mission Solutions | |||
Expected amortization for purchased intangibles for each of the next five years | |||
2,019 | 18,336 | ||
2,020 | 14,687 | ||
2,021 | 11,259 | ||
2,022 | 8,129 | ||
2,023 | 6,042 | ||
Thereafter | 7,884 | ||
Total expected amortization for purchased intangibles | $ 66,337 |
Financing Arrangements (Details
Financing Arrangements (Details) $ in Thousands, £ in Millions | Aug. 11, 2016USD ($) | Feb. 02, 2016USD ($) | Jul. 17, 2015USD ($) | May 31, 2017USD ($) | Mar. 31, 2013USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2018GBP (£) | Sep. 30, 2018USD ($) |
Financial arrangement | ||||||||||
Long-term debt, gross | $ 200,000 | $ 200,000 | ||||||||
Less unamortized debt issuance costs | (239) | (207) | ||||||||
Long-term debt | 199,761 | 199,793 | ||||||||
Maturities of long-term debt | ||||||||||
2,019 | 0 | |||||||||
2,020 | 10,700 | |||||||||
2,021 | 35,700 | |||||||||
2,022 | 35,700 | |||||||||
2,023 | 35,700 | |||||||||
Amount of interest paid | $ 10,000 | 14,800 | $ 11,000 | |||||||
Short term borrowings | ||||||||||
Letters of credit outstanding | 41,800 | |||||||||
Self-insurance liabilities | $ 7,600 | 8,600 | ||||||||
Letters of credit primarily for self-insured liabilities | ||||||||||
Short term borrowings | ||||||||||
Letters of Credit and bank guarantees outstanding | 8,300 | |||||||||
Fair value of instruments | 0 | |||||||||
Letters of credit and bank guarantees | ||||||||||
Short term borrowings | ||||||||||
Letters of Credit and bank guarantees outstanding | 33,500 | |||||||||
United Kingdom | ||||||||||
Short term borrowings | ||||||||||
Maximum borrowing capacity under credit agreement | £ 20 | 26,100 | ||||||||
Borrowings outstanding | $ 0 | |||||||||
Senior unsecured notes | ||||||||||
Financial arrangement | ||||||||||
Interest rate (as a percent) | 3.35% | |||||||||
Principal amount of debt instrument | $ 100,000 | |||||||||
Short term borrowings | ||||||||||
Coupon rate increase based on leverage ratio (as a percent) | 0.50% | |||||||||
Series A senior unsecured notes | ||||||||||
Financial arrangement | ||||||||||
Interest rate (as a percent) | 3.35% | 3.35% | 3.35% | |||||||
Long-term debt, gross | $ 50,000 | $ 50,000 | ||||||||
Series B senior unsecured notes | ||||||||||
Financial arrangement | ||||||||||
Interest rate (as a percent) | 3.35% | 3.35% | 3.35% | |||||||
Long-term debt, gross | $ 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, gross | $ 25,000 | $ 25,000 | ||||||||
Principal amount of debt instrument | $ 25,000 | |||||||||
Short term borrowings | ||||||||||
Coupon rate increase based on leverage ratio (as a percent) | 0.50% | |||||||||
Series D senior unsecured notes | ||||||||||
Financial arrangement | ||||||||||
Interest rate (as a percent) | 3.93% | 3.93% | 3.93% | 3.93% | ||||||
Long-term debt, gross | $ 75,000 | $ 75,000 | ||||||||
Principal amount of debt instrument | $ 75,000 | |||||||||
Revolving credit agreement | ||||||||||
Short term borrowings | ||||||||||
Maximum borrowing capacity under credit agreement | 400,000 | |||||||||
Borrowings outstanding | 0 | |||||||||
Letters of credit outstanding | 29,000 | |||||||||
Available amount under line of credit | 371,000 | |||||||||
Coupon rate increase based on leverage ratio (as a percent) | 0.75% | |||||||||
Cost of debt revision | $ 400 | |||||||||
Debt issuance costs incurred | $ 1,300 | $ 2,300 | ||||||||
Unamortized debt issuance costs | 1,900 | |||||||||
Revolving credit agreement | United Kingdom | ||||||||||
Short term borrowings | ||||||||||
Cash on deposit as collateral | 17,400 | |||||||||
Other revolving credit facilities | ||||||||||
Short term borrowings | ||||||||||
Letters of credit outstanding | $ 12,800 | |||||||||
Letter of credit agreement | United Kingdom | ||||||||||
Short term borrowings | ||||||||||
Borrowings outstanding | 62,700 | |||||||||
Cash on deposit as collateral | $ 69,400 |
Commitments (Details)
Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Commitments | |||
Sublease income | $ 200 | $ 200 | $ 300 |
Rental expense, net of sublease income | 11,600 | $ 10,500 | $ 9,600 |
Future minimum payments, net of minimum sublease income, under noncancelable operating leases | |||
2,019 | 11,310 | ||
2,020 | 9,954 | ||
2,021 | 8,812 | ||
2,022 | 7,271 | ||
2,023 | 5,459 | ||
Thereafter | 16,991 | ||
Total future minimum payments, net of minimum sublease income | $ 59,797 | ||
Maximum | |||
Commitments | |||
Term of lease | 10 years |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | |
U.S. statutory tax rate (as a percent) | 21.00% | 24.50% | 35.00% | |
Provisional discrete tax benefit | $ 7.1 | |||
Provisional transition tax | 0 | |||
Provisional transition tax benefit | $ 10.2 | |||
Subsequent event | ||||
U.S. statutory tax rate (as a percent) | 21.00% |
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, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Components of income (loss) before income taxes | |||
United States | $ (51,049) | $ (70,566) | $ (76,136) |
Foreign | 65,935 | 59,484 | 49,699 |
Income (loss) from continuing operations before income taxes | 14,886 | (11,082) | (26,437) |
Current: | |||
Federal | (4,775) | (4,070) | (1,679) |
State | 976 | 878 | (618) |
Foreign | 19,882 | 13,869 | 8,249 |
Total current | 16,083 | 10,677 | 5,952 |
Deferred: | |||
Federal | (7,874) | 2,257 | (16,256) |
State | 482 | 569 | (4,333) |
Foreign | (1,598) | 1,155 | 280 |
Total deferred | (8,990) | 3,981 | (20,309) |
Provision for income taxes | $ 7,093 | $ 14,658 | $ (14,357) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of income tax and unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Reconciliation of income tax computed at the U.S. federal statutory tax rate to income tax expense | |||
Tax expense at U.S. statutory rate | $ 3,124 | $ (3,877) | $ (9,252) |
State income taxes, net of federal tax effect | (237) | (923) | (1,754) |
Nondeductible expenses | 1,186 | (169) | 7,765 |
Change in reserve for tax contingencies | (1,047) | (4,435) | 27 |
Change in deferred tax asset valuation allowance | 8,784 | 17,374 | (5,382) |
Foreign rate differential | 5,684 | 9,912 | (2,999) |
Impact of US Tax Reform | (7,053) | ||
Research and development credits | (2,656) | (3,459) | (2,542) |
Other | (692) | 235 | (220) |
Provision for income taxes | 7,093 | 14,658 | (14,357) |
Compensation expense not expected to be deductible for tax purposes | 6,300 | ||
Change in deferred tax asset valuation allowance, tax credit carryforwards | 0 | 13,100 | |
Tax charge from deferred taxes on unremitted foreign earnings | 3,500 | $ 9,500 | |
Additional tax expenses relating to foreign earnings after enactment | 2,100 | ||
Tax benefit due to remeasurement of deferred taxes | $ 7,100 | ||
Research tax credit | $ 1,000 |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Sep. 30, 2017 |
Deferred tax assets: | ||
Accrued employee benefits | $ 8,285 | $ 15,863 |
Long-term contracts and inventory valuation reductions | 8,238 | 13,974 |
Allowances for loss contingencies | 3,232 | 4,212 |
Deferred compensation | 3,272 | 4,830 |
Intangible assets | 1,361 | |
Retirement benefits | 1,398 | 6,214 |
Tax credit carryforwards | 35,137 | 31,161 |
Net operating losses carryforwards | 29,097 | 3,715 |
Other | 2,173 | 2,762 |
Total gross deferred tax assets | 92,193 | 82,731 |
Valuation allowance | (81,839) | (57,106) |
Total deferred tax assets | 10,354 | 25,625 |
Deferred tax liabilities: | ||
Deferred revenue | (2,351) | (3,729) |
Unremitted foreign earnings | (687) | (11,910) |
Property, plant and equipment | (5,079) | (3,137) |
Intangible assets | (9,713) | |
Other | (213) | (158) |
Total deferred tax liabilities | (8,330) | (28,647) |
Net deferred tax asset | $ 2,024 | |
Net deferred tax liabilities | $ (3,022) |
Income Taxes - Tax credit carry
Income Taxes - Tax credit carryforwards (Details) $ in Thousands | Sep. 30, 2018USD ($) |
U.S. | Foreign Tax Credits | |
Income tax credit carryforwards | |
Income tax credit carryforward | $ 14,629 |
U.S. | Research and Development Tax Credits | |
Income tax credit carryforwards | |
Income tax credit carryforward | 9,158 |
State | Research and Development Tax Credits | |
Income tax credit carryforwards | |
Income tax credit carryforward | $ 22,592 |
Income Taxes - Operating loss c
Income Taxes - Operating loss carryforwards (Details) $ in Thousands | Sep. 30, 2018USD ($) |
U.S. | |
Operating loss carryforwards | |
Operating Loss Carryforwards | $ 68,730 |
Capital loss carryforwards | 37,238 |
State | |
Operating loss carryforwards | |
Operating Loss Carryforwards | 50,836 |
Capital loss carryforwards | 54,825 |
Foreign | |
Operating loss carryforwards | |
Operating Loss Carryforwards | $ 9,430 |
Income Taxes - Tax valuation al
Income Taxes - Tax valuation allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Tax valuation allowance | ||
Deferred tax asset valuation allowance | $ 81,839 | $ 57,106 |
Change in valuation allowance | 24,700 | |
Net tax benefit before offset by amounts recorded through OCI | 21,100 | |
Deferred tax liability | 8,330 | $ 28,647 |
Foreign | ||
Tax valuation allowance | ||
Deferred tax liability | $ 700 |
Income Taxes - Unrecognized tax
Income Taxes - Unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net changes in the liability for unrecognized tax benefits | |||
Balance at the beginning of the period | $ 13,248 | $ 16,932 | |
Additions (reductions) for tax positions taken in prior years | 399 | ||
Reductions for tax positions taken in prior years | (80) | ||
Recognition of benefits from expiration of statutes | (1,770) | (26) | |
Recognition of benefits from open years effectively settled | (5,359) | ||
Additions for tax positions related to the current year | 713 | 1,302 | |
Additions (reductions) for tax positions related to current year acquisitions | (2,169) | ||
Balance at the end of the period | 9,942 | 13,248 | $ 16,932 |
Unrecognized tax benefits from permanent tax adjustments that, if recognized, would affect the effective rate | 1,800 | 3,700 | |
Unrecognized tax benefits related to settlements with taxing authorities | 1,100 | ||
Cash amounts paid for income taxes, net of refunds received | $ 15,700 | $ 1,600 | $ 14,200 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Notional principal amounts (Details) - Foreign currency forwards - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Instruments designated as accounting hedges: | ||
Derivative Instruments and Hedging Activities | ||
Notional principal outstanding derivative instruments | $ 169,406 | $ 125,486 |
Instruments not designated as accounting hedges: | ||
Derivative Instruments and Hedging Activities | ||
Notional principal outstanding derivative instruments | 27,909 | 35,117 |
Notional principal outstanding derivative instruments designed to manage exposure | 14,700 | 18,500 |
Unrealized gain (loss) on derivative | $ 200 | $ 100 |
Derivative Instruments and He_4
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, 2018 | Sep. 30, 2017 |
Derivative Instruments and Hedging Activities | ||
Asset derivatives | $ 2,117 | $ 3,719 |
Liability derivatives | 1,732 | 4,584 |
Other current assets | ||
Derivative Instruments and Hedging Activities | ||
Asset derivatives | 1,803 | 2,591 |
Other noncurrent assets | ||
Derivative Instruments and Hedging Activities | ||
Asset derivatives | 314 | 1,128 |
Other current liabilities | ||
Derivative Instruments and Hedging Activities | ||
Liability derivatives | 1,657 | 3,456 |
Other noncurrent liabilities | ||
Derivative Instruments and Hedging Activities | ||
Liability derivatives | $ 75 | $ 1,128 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities - Gains and losses recognized (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative instruments and hedging activities | ||
Estimated unrealized net gains (losses) from cash flow hedges which are expected to be reclassified into earnings in the next twelve months | $ 300 | |
Foreign currency forwards | Other income/(expense), net | ||
Derivative instruments and hedging activities | ||
Gains (losses) recognized in OCI | (45) | $ (2,200) |
Gains (losses) reclassified into earnings - Effective Portion | $ (1,239) | $ 551 |
Pension, Profit Sharing and O_3
Pension, Profit Sharing and Other Benefit Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2010 | |
Defined Contribution Plans | ||||
Company contributions to defined contribution plan | $ 16,400 | $ 13,300 | $ 12,100 | |
Components of net periodic pension cost (benefit) | ||||
Settlement loss | 2,671 | |||
Equity securities | Minimum | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage | 20.00% | |||
Equity securities | Maximum | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage | 55.00% | |||
Debt securities | Minimum | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage | 25.00% | |||
Debt securities | Maximum | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage | 75.00% | |||
Cash | Minimum | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage | 0.00% | |||
Cash | Maximum | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage | 55.00% | |||
Real Estate | Minimum | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage | 0.00% | |||
Real Estate | Maximum | ||||
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Target allocation percentage | 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 | $ 5,000 | |||
Unrecognized actuarial loss expected to be recognized in net pension cost over next fiscal year | (2,300) | |||
Unrecognized actuarial loss expected to be recognized in net pension cost over next fiscal year, net of tax | 1,800 | |||
Plan assets expected to be returned in 2018 | 0 | |||
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 | 222,332 | 235,097 | ||
Accumulated benefit obligation | 222,332 | 235,097 | ||
Fair value of plan assets | 214,530 | 209,722 | ||
Change in benefit obligations: | ||||
Net benefit obligation at the beginning of the year | 235,097 | 241,117 | ||
Service cost | 606 | 617 | 595 | |
Interest cost | 7,529 | 7,091 | 8,972 | |
Actuarial (gain) loss | (9,449) | (10,082) | ||
Gross benefits paid | (8,034) | (7,549) | ||
Foreign currency exchange rate changes | (3,417) | 3,903 | ||
Net benefit obligation at the end of the year | 222,332 | 235,097 | 241,117 | |
Change in plan assets: | ||||
Fair value of plan assets at the beginning of the year | 209,722 | 194,253 | ||
Actual return on plan assets | 11,998 | 14,915 | ||
Employer contributions | 5,117 | 5,354 | ||
Gross benefits paid | (8,034) | (7,549) | ||
PBGC Premium paid | (286) | (348) | ||
Administrative expenses | (698) | (547) | ||
Foreign currency exchange rate changes | (3,289) | 3,644 | ||
Fair value of plan assets at the end of the year | 214,530 | 209,722 | 194,253 | |
Unfunded status of the plans | (7,802) | (25,375) | ||
Unrecognized net actuarial loss | 48,081 | 58,572 | ||
Net amount recognized | 40,279 | 33,197 | ||
Amounts recognized in Accumulated OCI | ||||
Liability adjustment to OCI | (48,081) | (58,572) | ||
Deferred tax asset | 7,365 | 15,033 | ||
Valuation allowance on deferred tax asset | 610 | (2,107) | ||
Accumulated other comprehensive loss | (40,106) | (45,646) | ||
Components of net periodic pension cost (benefit) | ||||
Service cost | 606 | 617 | 595 | |
Interest cost | 7,529 | 7,091 | 8,972 | |
Expected return on plan assets | (14,120) | (12,928) | (13,182) | |
Amortization of actuarial loss | 2,777 | 3,700 | 1,869 | |
Settlement loss | 2,671 | |||
Administrative expenses | 438 | 474 | 177 | |
Net pension cost (benefit) | $ (2,770) | $ (1,046) | $ 1,102 | |
Weighted-average assumptions used to determine benefit obligation at the end of the year | ||||
Discount rate (as a percent) | 3.60% | 3.30% | 3.00% | |
Rate of compensation increase (as a percent) | 3.30% | 3.20% | 3.10% | |
Weighted-average assumptions used to determine net periodic benefit cost at the end of the year | ||||
Discount rate (as a percent) | 3.30% | 3.00% | 4.10% | |
Expected return on plan assets (as a percent) | 6.80% | 6.80% | 6.80% | |
Rate of compensation increase (as a percent) | 3.20% | 3.10% | 3.10% | |
Defined Benefit Pension Plans | Equity securities | ||||
Change in plan assets: | ||||
Fair value of plan assets at the beginning of the year | $ 101,433 | |||
Fair value of plan assets at the end of the year | 107,424 | $ 101,433 | ||
Defined Benefit Pension Plans | Real Estate | ||||
Change in plan assets: | ||||
Fair value of plan assets at the beginning of the year | 4,790 | |||
Fair value of plan assets at the end of the year | 4,790 | |||
Non-qualified deferred compensation plan | ||||
Deferred compensation plans | ||||
Liabilities associated with the non-qualified deferred compensation plan | 11,500 | 11,400 | ||
Assets set aside to fund deferred compensation liabilities | $ 6,400 | $ 5,300 | ||
Employee Stock Purchase Plan | ||||
Employee Stock Purchase Plan | ||||
ESPP discount rate (as a percent) | 5.00% | |||
Maximum annual employee contributions | $ 25,000 |
Pension, Profit Sharing and O_4
Pension, Profit Sharing and Other Benefit Plans - Fair value by asset category and hierarchy (Details) - Defined Benefit Pension Plans - USD ($) $ in Thousands | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 |
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | $ 214,530 | $ 209,722 | $ 194,253 |
Net Asset Value | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 195,216 | 207,057 | |
Cash and cash equivalents | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 19,314 | 2,665 | |
Cash and cash equivalents | Level 1 | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 19,314 | 2,665 | |
Equity securities | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 107,424 | 101,433 | |
Equity securities | Net Asset Value | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 107,424 | 101,433 | |
Fixed-income funds | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 73,533 | 84,188 | |
Fixed-income funds | Net Asset Value | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 73,533 | 84,188 | |
Diversified growth fund | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 14,259 | 16,646 | |
Diversified growth fund | Net Asset Value | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | $ 14,259 | 16,646 | |
Real Estate | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | 4,790 | ||
Real Estate | Net Asset Value | |||
Fair value of assets of defined benefit pension plans by asset category | |||
Fair value of the assets | $ 4,790 |
Pension, Profit Sharing and O_5
Pension, Profit Sharing and Other Benefit Plans - Expected benefit payments (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Expected pension benefit payments | |
2,019 | $ 9,033 |
2,020 | 9,261 |
2,021 | 9,577 |
2,022 | 9,622 |
2,023 | 9,638 |
2024-2028 | $ 53,424 |
Stockholders_ Equity - Narrativ
Stockholders’ Equity - Narrative (Details) | 12 Months Ended | 72 Months Ended |
Sep. 30, 2018categoryitemshares | Sep. 30, 2018shares | |
Stockholders' Equity | ||
Vesting period | 3 years | |
RSUs | ||
Stockholders' Equity | ||
Number of units awarded (in shares) | 2,262,340 | |
Number of shares of common stock that each award holder has the contingent right to receive | 1 | |
Vested awards to date | 645,989 | 645,989 |
Expected awards vested (in shares) | 448,548 | |
Time-based RSUs | ||
Stockholders' Equity | ||
Number of units awarded (in shares) | 1,089,876 | |
Number of equal installments for vesting of stock awards | item | 4 | |
Performance-based RSUs | ||
Stockholders' Equity | ||
Number of units awarded (in shares) | 1,172,464 | |
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, 2018 | Sep. 30, 2018 | Sep. 30, 2017 |
Number of Shares | |||
Balance unvested at the beginning of the period (in shares) | 1,002,088 | 1,045,187 | 889,129 |
Granted (in shares) | 344,433 | 395,913 | |
Vested (in shares) | (147,832) | (158,243) | |
Forfeited (in shares) | (239,700) | (81,612) | |
Balance unvested at the end of the period (in shares) | 1,002,088 | 1,045,187 | |
Weighted Average Grant-Date Fair Value | |||
Balance unvested at the beginning of the period (in dollars per share) | $ 50.32 | $ 45.86 | $ 45.98 |
Granted (in dollars per share) | 61.19 | 46.20 | |
Vested (in dollars per share) | 46.88 | 46.15 | |
Forfeited (in dollars per share) | 48.42 | 48.32 | |
Balance unvested at the end of the period (in dollars per share) | $ 50.32 | $ 45.86 | |
Shares available for future grants | 536,067 | ||
Subsequent event | |||
Number of Shares | |||
Vested (in shares) | (128,947) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock-Based Compensation | |||
Non-cash compensation expense related to stock-based awards | $ 7,515 | $ 5,012 | $ 7,748 |
Estimated forfeiture rate (as a percent) | 12.50% | ||
Cost of sales | |||
Stock-Based Compensation | |||
Non-cash compensation expense related to stock-based awards | $ 1,096 | 338 | 513 |
Selling, general and administrative | |||
Stock-Based Compensation | |||
Non-cash compensation expense related to stock-based awards | 6,419 | $ 4,674 | $ 7,235 |
RSUs | |||
Stock-Based Compensation | |||
Unrecognized compensation cost related to unvested awards | 41,100 | ||
Aggregate fair value of awards | $ 24,500 | ||
Weighted-average period of recognition | 1 year 8 months 12 days |
Legal Matters (Details)
Legal Matters (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2018USD ($) | |
Legal Matters | |
Amount awarded by arbitrator to former reseller | $ 1.7 |
Business Segment Information -
Business Segment Information - Financial data (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Information | |||||||||||
Sales | $ 379,709 | $ 296,212 | $ 278,586 | $ 248,391 | $ 349,115 | $ 266,184 | $ 248,040 | $ 244,370 | $ 1,202,898 | $ 1,107,709 | $ 1,070,601 |
Operating income (loss) | 27,673 | $ 10,290 | $ (1,679) | $ (11,902) | 21,207 | $ (6,872) | $ (6,084) | $ (5,623) | 24,382 | 2,628 | (11,649) |
Assets | 1,304,883 | 1,336,285 | 1,304,883 | 1,336,285 | 1,504,700 | ||||||
Assets - Discontinued Operations | 174,200 | 174,200 | 185,500 | ||||||||
Depreciation and amortization | 46,600 | 48,045 | 40,323 | ||||||||
Capital expenditures | 31,696 | 36,916 | 32,093 | ||||||||
Transportation Systems | |||||||||||
Segment Information | |||||||||||
Sales | 670,700 | 578,600 | 586,400 | ||||||||
Operating income (loss) | 60,400 | 39,800 | 57,500 | ||||||||
Assets | 390,200 | 335,100 | 390,200 | 335,100 | 338,200 | ||||||
Depreciation and amortization | 12,000 | 8,800 | 8,200 | ||||||||
Capital expenditures | 3,200 | 6,900 | 2,200 | ||||||||
Cubic Global Defense | |||||||||||
Segment Information | |||||||||||
Sales | 325,200 | 360,200 | 374,700 | ||||||||
Operating income (loss) | 16,600 | 28,100 | 19,900 | ||||||||
Assets | 360,100 | 280,100 | 360,100 | 280,100 | 211,800 | ||||||
Depreciation and amortization | 8,500 | 10,400 | 7,500 | ||||||||
Capital expenditures | 9,400 | 5,900 | 6,800 | ||||||||
Cubic Mission Solutions | |||||||||||
Segment Information | |||||||||||
Sales | 207,000 | 168,900 | 109,500 | ||||||||
Operating income (loss) | (100) | (9,300) | (37,000) | ||||||||
Assets | 352,900 | 390,500 | 352,900 | 390,500 | 404,400 | ||||||
Depreciation and amortization | 22,400 | 23,800 | 21,200 | ||||||||
Capital expenditures | 2,100 | 1,700 | 2,100 | ||||||||
Corporate | |||||||||||
Segment Information | |||||||||||
Assets | $ 201,700 | $ 156,400 | 201,700 | 156,400 | 364,800 | ||||||
Depreciation and amortization | 3,700 | 5,000 | 3,400 | ||||||||
Capital expenditures | 17,000 | 22,400 | 21,000 | ||||||||
Unallocated corporate expenses and other | |||||||||||
Segment Information | |||||||||||
Operating income (loss) | $ (52,500) | $ (56,000) | $ (52,000) |
Business Segment Information _2
Business Segment Information - Geographic information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Business segment financial data | |||||||||||
Sales | $ 379,709 | $ 296,212 | $ 278,586 | $ 248,391 | $ 349,115 | $ 266,184 | $ 248,040 | $ 244,370 | $ 1,202,898 | $ 1,107,709 | $ 1,070,601 |
Long-lived assets, net | 124,400 | 119,600 | 124,400 | 119,600 | 98,600 | ||||||
United States | |||||||||||
Business segment financial data | |||||||||||
Sales | 627,800 | 522,800 | 471,600 | ||||||||
Long-lived assets, net | 106,700 | 100,600 | 106,700 | 100,600 | 83,900 | ||||||
United Kingdom | |||||||||||
Business segment financial data | |||||||||||
Sales | 240,700 | 219,400 | 243,000 | ||||||||
Long-lived assets, net | 5,700 | 11,700 | 5,700 | 11,700 | 9,400 | ||||||
Canada | |||||||||||
Business segment financial data | |||||||||||
Sales | 42,300 | 31,500 | 44,600 | ||||||||
Australia | |||||||||||
Business segment financial data | |||||||||||
Sales | 166,700 | 175,600 | 154,000 | ||||||||
Middle East | |||||||||||
Business segment financial data | |||||||||||
Sales | 36,300 | 64,800 | 71,000 | ||||||||
Far East | |||||||||||
Business segment financial data | |||||||||||
Sales | 50,100 | 47,900 | 40,000 | ||||||||
Other foreign countries | |||||||||||
Business segment financial data | |||||||||||
Sales | 39,000 | 45,700 | 46,400 | ||||||||
Long-lived assets, net | $ 12,000 | $ 7,300 | $ 12,000 | $ 7,300 | $ 5,300 |
Business Segment Information _3
Business Segment Information - Customer concentration (Details) - Sales Revenue - Customer Concentration - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
U.S. Government Agencies | |||
Customer sales concentration | |||
Sales revenue | $ 365.8 | $ 327.8 | $ 267.5 |
Transport for London (TfL) | |||
Customer sales concentration | |||
Sales revenue | $ 158.5 | $ 147.3 | $ 156.3 |
Business Segment Information _4
Business Segment Information - Narrative (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018USD ($)$ / shares | Jun. 30, 2018USD ($)$ / shares | Mar. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)$ / shares | Sep. 30, 2017USD ($)$ / shares | Jun. 30, 2017USD ($)$ / shares | Mar. 31, 2017USD ($)$ / shares | Dec. 31, 2016USD ($)$ / shares | Sep. 30, 2018USD ($)$ / shares | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2016USD ($)item$ / shares | |
Revenue recognition | |||||||||||
Increase (decrease) in operating income | $ 27,673 | $ 10,290 | $ (1,679) | $ (11,902) | $ 21,207 | $ (6,872) | $ (6,084) | $ (5,623) | $ 24,382 | $ 2,628 | $ (11,649) |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 12,036 | $ (11,209) | $ 1,735 | ||||||||
Increase (decrease) in net income per common share (in dollars per share) | $ / shares | $ 0.65 | $ 0.23 | $ (0.07) | $ (0.36) | $ 0.49 | $ (0.81) | $ 0.02 | $ (0.11) | $ 0.45 | $ (0.41) | $ 0.06 |
Restructuring costs | $ 5,018 | $ 2,260 | $ 1,278 | ||||||||
Cubic Global Defense | |||||||||||
Revenue recognition | |||||||||||
Increase (decrease) in operating income | 16,600 | 28,100 | 19,900 | ||||||||
Restructuring costs | 1,300 | 900 | 300 | ||||||||
Transportation Systems | |||||||||||
Revenue recognition | |||||||||||
Increase (decrease) in operating income | 60,400 | 39,800 | 57,500 | ||||||||
Restructuring costs | 400 | 400 | $ 1,000 | ||||||||
Reduction in employee headcount | item | 20 | ||||||||||
Cubic Mission Solutions | |||||||||||
Revenue recognition | |||||||||||
Increase (decrease) in operating income | (100) | (9,300) | $ (37,000) | ||||||||
Restructuring costs | 200 | ||||||||||
Unallocated corporate expenses and other | |||||||||||
Revenue recognition | |||||||||||
Increase (decrease) in operating income | (52,500) | (56,000) | (52,000) | ||||||||
Restructuring costs | 3,100 | 1,000 | |||||||||
Change in estimated total costs | Adjustment | |||||||||||
Revenue recognition | |||||||||||
Increase (decrease) in operating income | $ (4,200) | $ (1,600) | (7,000) | 5,700 | (900) | ||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (3,100) | $ (1,100) | $ (5,100) | $ 3,200 | $ (500) | ||||||
Increase (decrease) in net income per common share (in dollars per share) | $ / shares | $ (0.12) | $ (0.04) | $ (0.19) | $ 0.12 | $ (0.02) |
Business Segment Information _5
Business Segment Information - Restructuring liability and employee separation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring liability | |||
Balance as of the beginning of the period | $ 975 | $ 553 | |
Accrued costs | 5,018 | 2,260 | $ 1,278 |
Cash payments | (5,058) | (1,838) | |
Balance as of the end of the period | $ 935 | $ 975 | $ 553 |
Summary of Quarterly Results _3
Summary of Quarterly Results of Operations (Unaudited)) - Quarterly results (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Summary of Quarterly Results of Operations (Unaudited) | |||||||||||
Net sales | $ 379,709 | $ 296,212 | $ 278,586 | $ 248,391 | $ 349,115 | $ 266,184 | $ 248,040 | $ 244,370 | $ 1,202,898 | $ 1,107,709 | $ 1,070,601 |
Operating income (loss) | 27,673 | 10,290 | (1,679) | (11,902) | 21,207 | (6,872) | (6,084) | (5,623) | 24,382 | 2,628 | (11,649) |
Net income (loss) | $ 17,816 | $ 6,291 | $ (2,011) | $ (9,786) | $ 13,155 | $ (21,957) | $ 461 | $ (2,868) | $ 12,310 | $ (11,209) | $ 1,735 |
Net income (loss) per share, basic (in dollars per share) | $ 0.65 | $ 0.23 | $ (0.07) | $ (0.36) | $ 0.49 | $ (0.81) | $ 0.02 | $ (0.11) | $ 0.45 | $ (0.41) | $ 0.06 |
Net income (loss) per share, diluted (in dollars per share) | $ 0.65 | $ 0.23 | $ (0.07) | $ (0.36) | $ 0.49 | $ (0.81) | $ 0.02 | $ (0.11) | $ 0.45 | $ (0.41) | $ 0.06 |
Summary of Quarterly Results _4
Summary of Quarterly Results of Operations (Unaudited) - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Summary Of quarterly results of operations | |||||||||||
Increase (decrease) in operating income | $ 27,673 | $ 10,290 | $ (1,679) | $ (11,902) | $ 21,207 | $ (6,872) | $ (6,084) | $ (5,623) | $ 24,382 | $ 2,628 | $ (11,649) |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 12,036 | (11,209) | 1,735 | ||||||||
Net income (loss) after taxes | $ 17,816 | $ 6,291 | $ (2,011) | $ (9,786) | $ 13,155 | $ (21,957) | $ 461 | $ (2,868) | $ 12,310 | $ (11,209) | $ 1,735 |
Increase (decrease) in net income per common share (in dollars per share) | $ 0.65 | $ 0.23 | $ (0.07) | $ (0.36) | $ 0.49 | $ (0.81) | $ 0.02 | $ (0.11) | $ 0.45 | $ (0.41) | $ 0.06 |
Change in estimated total costs | Adjustment | |||||||||||
Summary Of quarterly results of operations | |||||||||||
Increase (decrease) in operating income | $ (4,200) | $ (1,600) | $ (7,000) | $ 5,700 | $ (900) | ||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (3,100) | $ (1,100) | $ (5,100) | $ 3,200 | $ (500) | ||||||
Increase (decrease) in net income per common share (in dollars per share) | $ (0.12) | $ (0.04) | $ (0.19) | $ 0.12 | $ (0.02) |