BUSINESS SEGMENT INFORMATION

12 Months Ended

Sep. 30, 2013

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT INFORMATION

NOTE 17—BUSINESS SEGMENT INFORMATION

We have three primary business segments: Cubic Transportation Systems (CTS), Mission Support Services (MSS) and Cubic Defense Systems (CDS). CTS designs, produces, installs and services electronic revenue collection systems for mass transit projects, including railways and buses. MSS provides training, operations, intelligence, maintenance, technical and other services to the U.S. government and allied nations. CDS performs work under U.S. and foreign government contracts relating to electronic defense systems and equipment. Products include customized military range instrumentation, laser based training systems, virtual simulation systems, communications products including datalinks, power amplifiers, avionics systems, multi-band communication tracking devices, and cross domain hardware solutions to address multi-level security requirements.

We evaluate performance and allocate resources based on total segment operating profit or loss. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are immaterial and are eliminated in consolidation.

Our reportable segments are business units that offer different products and services and are each managed separately. 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):

Years ended September 30,	2013			2012			2011
	(As Restated)			(As Restated)			(As Restated)
Sales:
Transportation Systems	$	529.5		$	522.2		$	433.1
Mission Support Services	468.7			491.4			476.5
Defense Systems	363.0			389.4			390.7
Other	0.2			1.1			1.3
Total sales	$	1,361.4		$	1,404.1		$	1,301.6
Operating income (loss):
Transportation Systems	$	66.8		$	84.6		$	72.0
Mission Support Services	(36.1		)	21.1			23.9
Defense Systems	14.2			35.3			29.8
Unallocated corporate expenses and other	(4.2		)	(4.8		)	(7.1		)
Total operating income	$	40.7		$	136.2		$	118.6
Assets:
Transportation Systems	$	369.8		$	268.4		$	167.0
Mission Support Services	205.2			212.8			144.0
Defense Systems	228.9			211.2			213.0
Corporate and other	304.5			322.2			439.7
Total assets	$	1,108.4		$	1,014.6		$	963.7
Depreciation and amortization:
Transportation Systems	$	5.0		$	3.7		$	3.6
Mission Support Services	13.0			12.5			12.3
Defense Systems	6.1			5.5			5.4
Corporate and other	1.3			1.2			1.0
Total depreciation and amortization	$	25.4		$	22.9		$	22.3
Capital expenditures:
Transportation Systems	$	2.8		$	2.7		$	2.2
Mission Support Services	0.3			1.1			0.3
Defense Systems	4.6			8.9			5.5
Corporate and other	1.4			1.5			0.7
Total expenditures for long-lived assets	$	9.1		$	14.2		$	8.7

Years ended September 30,	2013		2012		2011
	(As Restated)		(As Restated)		(As Restated)
Geographic Information:
Sales (a):
United States	$	741.7	$	742.2	$	753.9
United Kingdom	267.4		283.2		250.9
Canada	30.4		54.8		27.5
Australia	148.5		181.9		100.3
Middle East	35.4		38.0		38.7
Far East	78.2		56.9		82.7
Other	59.8		47.1		47.6
Total sales	$	1,361.4	$	1,404.1	$	1,301.6

(a) Sales are attributed to countries or regions based on the location of customers.

Long-lived assets, net:
United States	$	43.9	$	42.4	$	40.5
United Kingdom	9.2		9.5		9.1
Other foreign countries	6.6		6.1		2.9
Total long-lived assets, net	$	59.7	$	58.0	$	52.5

MSS and CDS segment sales include $691.8 million, $699.4 million and $728.2 million in 2013, 2012 and 2011, respectively, of sales to U.S. government agencies. CTS segment sales include $193.4 million, $184.7 million and $174.8 million in 2013, 2012 and 2011, 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 $1.7 million in 2013, and increased operating income by approximately $15.7 million in 2012 and $17.3 million in 2011. These adjustments decreased net income by approximately $0.3 million ($0.01 per share) in 2013, and increased net income by approximately $10.7 million ($0.40 per share) in 2012 and $11.7 million ($0.44 per share) in 2011.

Certain of our transportation systems service contracts contain service level or system usage incentives, for which we recognize revenues when the incentive award is fixed or determinable. These contract incentives are generally based upon monthly service levels or monthly performance and become fixed or determinable on a monthly basis. However, one of our transportation systems service contracts contains annual system usage incentives which are based upon system usage compared to annual baseline amounts. For this contract the annual system usage incentives are not considered fixed or determinable until the end of the contract year for which the incentives are measured, which falls within the second quarter of our fiscal year. During the years ended September 30, 2013, 2012, and 2011, we recognized sales of $13.2 million, $12.2 million, and $6.6 million, respectively related to annual system usage incentives on this transportation systems contract which resulted in additional operating income of the same amounts in these respective periods.

In 2013, our CDS business implemented a restructuring plan to reduce global employee headcount by approximately 230 in order to rebalance our resources with work levels that have declined due to recent delays in contract awards and contract funding. CDS incurred resulting restructuring charges of $7.8 million. The total costs of the restructuring plan are not expected to be significantly greater than the charges incurred to date unless market conditions worsen. The workforce realignment was reflective of the current  mix of work and anticipated activity levels going forward. In addition, during 2013 we reduced corporate headcount by approximately 10 as part of a restructuring plan and incurred restructuring charges of $0.3 million.

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):

Liability as of September 30, 2012	$	—
Accrued costs	8,139
Cash payments	(5,919		)
Liability as of September 30, 2013	$	2,220