10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter Ended June 30, 2014

001-08931

Commission File Number

CUBIC CORPORATION

Exact Name of Registrant as Specified in its Charter

Delaware	95-1678055
State of Incorporation	IRS Employer Identification No.

9333 Balboa Avenue
San Diego, California 92123
Telephone (858) 277-6780

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Small Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act). Yes o No x

As of July 22, 2014, registrant had only one class of common stock of which there were 26,788,525 shares outstanding (after deducting 8,945,300 shares held as treasury stock).

CUBIC CORPORATION

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended June 30, 2014

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Income	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	40
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 6.	Exhibits	41

EXPLANATORY NOTE REGARDING RESTATEMENT

This Quarterly Report on Form 10-Q of Cubic Corporation (“Company”, “we”, and “us”) for the three- and nine-month periods ended June 30, 2014, includes our restated Condensed Consolidated Balance Sheet as of September 30, 2013 and our restated Condensed Consolidated Statements of Income, Comprehensive Income, and Cash Flows for the three- and nine-month periods ended June 30, 2013. The restatement resulted from our identification of certain errors in our recognition of revenue for one of our wholly owned subsidiaries. See Note 2, “Restatement of Condensed Consolidated Financial Statements” of the Notes to Condensed Consolidated Financial Statements in Part I Item 1 for a detailed discussion of the errors and effect of the restatement.

The restatement is more fully described in our Annual Report on Form 10-K/A for the year ended September 30, 2013.

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

CUBIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(amounts in thousands, except per share data)

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
				(As Restated)						(As Restated)
Net sales:
Products	$	405,419		$	429,436		$	136,649		$	127,682
Services	596,567			591,195			203,708			209,544
	1,001,986			1,020,631			340,357			337,226
Costs and expenses:
Products	305,245			310,043			108,301			91,011
Services	480,906			461,669			156,726			164,278
Selling, general and administrative	131,508			126,393			46,489			44,130
Restructuring costs	227			6,198			24			114
Research and development	13,822			19,346			3,949			6,426
Amortization of purchased intangibles	17,056			12,192			5,653			4,362
	948,764			935,841			321,142			310,321
Operating income	53,222			84,790			19,215			26,905
Other income (expense):
Interest and dividend income	958			1,279			595			530
Interest expense	(3,117		)	(2,447		)	(1,504		)	(925		)
Other income (expense) - net	(1,058		)	(764		)	(1,098		)	(813		)
Income before income taxes	50,005			82,858			17,208			25,697
Income taxes	13,240			20,437			4,992			7,292
Net income	36,765			62,421			12,216			18,405
Less noncontrolling interest in income of VIE	79			149			10			24
Net income attributable to Cubic	$	36,686		$	62,272		$	12,206		$	18,381
Net income per share attributable to Cubic
Basic	$	1.37		$	2.33		$	0.46		$	0.69
Diluted	$	1.36		$	2.33		$	0.45		$	0.69
Dividends per common share	$	0.12		$	0.12		$	—		$	—
Weighted average shares used in per share calculations:
Basic	26,786			26,736			26,789			26,736
Diluted	26,901			26,745			26,921			26,762

See accompanying notes.

3

CUBIC CORPORATION

CONDENSED CONSOLIDATED

STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
				(As Restated)						(As Restated)
Net income	$	36,765		$	62,421		$	12,216		$	18,405
Other comprehensive income (loss):
Foreign currency translation	19,107			(15,765		)	7,245			(1,776		)
Net unrealized gain (loss) on available-for-sale, net of tax	0			(5		)	0			(5		)
Change in net unrealized gains/losses from cash flow hedges:
Change in fair value of cash flow hedges, net of tax	(261		)	3,557			(80		)	4894
Adjustment for net gains/losses realized and included in net income, net of tax	(231		)	1,146			(208		)	(188		)
Total change in unrealized gains/losses from cash flow hedges, net of tax	(492		)	4703			(288		)	4,706
Total other comprehensive income (loss)	18,615			(11,067		)	6,957			2,925
Total comprehensive income	$	55,380		$	51,354		$	19,173		$	21,330

4

CUBIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

	June 30,			September 30,
	2014			2013
				(As Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	166,841		$	203,892
Restricted cash	69,028			69,381
Marketable securities	—			4,055
Accounts receivable - net	403,401			379,002
Recoverable income taxes	17,719			7,885
Inventories - net	53,768			59,746
Deferred income taxes and other current assets	30,844			18,638
Total current assets	741,601			742,599
Long-term contract receivables	16,690			19,021
Long-term capitalized contract costs	77,560			68,963
Property, plant and equipment - net	64,360			56,305
Deferred income taxes	18,057			19,322
Goodwill	187,595			136,094
Purchased intangibles - net	70,257			57,542
Other assets	11,527			9,772
	$	1,187,647		$	1,109,618
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	8,000		$	—
Trade accounts payable	23,527			40,310
Customer advances	84,338			84,307
Accrued compensation and other current liabilities	139,856			109,253
Income taxes payable	13,148			12,731
Current portion of long-term debt	591			557
Total current liabilities	269,460			247,158
Long-term debt	102,066			102,363
Other long-term liabilities	43,602			43,017
Shareholders’ equity:
Common stock	19,104			15,825
Retained earnings	773,468			740,002
Accumulated other comprehensive income (loss)	15,812			(2,803		)
Treasury stock at cost	(36,078		)	(36,078		)
Shareholders’ equity related to Cubic	772,306			716,946
Noncontrolling interest in variable interest entity	213			134
Total shareholders’ equity	772,519			717,080
	$	1,187,647		$	1,109,618

See accompanying notes.

5

CUBIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
				(As Restated)						(As Restated)
Operating Activities:
Net income	$	36,765		$	62,421		$	12,216		$	18,405
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	22,740			18,014			7,511			6,417
Share-based compensation expense	4,370			1,634			1,785			1,575
Changes in operating assets and liabilities, net of effects from acquisitions	(27,138		)	(88,899		)	44,524			22,744
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	36,737			(6,830		)	66,036			49,141
Investing Activities:
Acquisition of businesses, net of cash acquired	(83,456		)	(60,649		)	(3,773		)	(7,377		)
Purchases of property, plant and equipment	(13,536		)	(6,209		)	(2,589		)	(2,348		)
Purchases of marketable securities	—			(4,054		)	—			(4,054		)
Proceeds from sales or maturities of marketable securities	4,055			—			—			—
NET CASH USED IN INVESTING ACTIVITIES	(92,937		)	(70,912		)	(6,362		)	(13,779		)
Financing Activities:
Proceeds from short-term borrowings	38,000			70,000			8,000			—
Principal payments on short-term borrowings	(30,000		)	(70,000		)	(30,000		)	(25,000		)
Proceeds from long-term borrowings	—			100,000			—			50,000
Principal payments on long-term debt	(431		)	(8,407		)	(147		)	(134		)
Proceeds from issuance of common stock	113			—			—			—
Dividends paid	(3,215		)	(3,208		)	—			—
Net change in restricted cash	353			(104		)	(44		)	(20		)
Contingent consideration payments related to acquisitions of businessess	(2,368		)	(224		)	(1,251		)	(224		)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	2,452			88,057			(23,442		)	24,622
Effect of exchange rates on cash	16,697			(10,131		)	5,266			3,862
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(37,051		)	184			41,498			63,846
Cash and cash equivalents at the beginning of the period	203,892			212,267			125,343			148,605
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	$	166,841		$	212,451		$	166,841		$	212,451
Supplemental disclosure of non-cash investing and financing activities:
Liability incurred to acquire NEK, net	$	—		$	12,108		$	—		$	—
Liability incurred to acquire Intific, net	$	1,173		$	—		$	—		$	—

See accompanying notes.

6

CUBIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

June 30, 2014

Note 1 — Basis for Presentation

Cubic Corporation (“we”, “us”, and “Cubic”) has prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

In our opinion, all adjustments necessary for a fair presentation of these financial statements have been included, and are of a normal and recurring nature as well as all adjustments discussed in Note 2, “Restatement of Condensed Consolidated Financial Statements,” considered necessary to fairly state the financial position of Cubic Corporation at June 30, 2014 and September 30, 2013; the results of its operations for the three- and nine-month periods ended June 30, 2014 and 2013; and its cash flows for the three- and nine-month periods ended June 30, 2014 and 2013. Operating results for the three- and nine-month periods ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending September 30, 2014. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K/A for the year ended September 30, 2013.

The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

There have been no material changes to our significant accounting policies as compared with the significant accounting policies described in our Annual Report on Form 10-K/A for the year ended September 30, 2013.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. ASU 2014-09 will be effective for us starting in the first quarter of fiscal 2018. ASU 2014-09 allows for two methods of adoption: (a) “full retrospective” adoption, meaning the standard is applied to all periods presented, or (b) “modified retrospective” adoption, meaning the cumulative effect of applying ASU 2014-09 is recognized as an adjustment to the fiscal 2018 opening retained earnings balance. We are in the process of determining the adoption method as well as the effects the adoption of ASU 2014-09 will have on our consolidated financial statements.

Note 2—Restatement of Condensed Consolidated Financial Statements

As is more fully described in our Annual Report on Form 10-K/A for the year ended September 30, 2013, on May 12, 2014 we restated our Condensed Consolidated Balance Sheet at September 30, 2013 and our Condensed Consolidated Statements of Income, Comprehensive Income, and Cash Flows for the three- and nine-month periods ended June 30, 2013.

The cumulative adjustments to correct the errors in the consolidated financial statements for all periods prior to October 1, 2012 are recorded as adjustments to retained earnings and accumulated other comprehensive income (loss) at September 30, 2012. The cumulative effect of those adjustments increased previously reported retained earnings by $6.3 million and reduced previously reported accumulated other comprehensive loss by $0.5 million at September 30, 2012.

The following tables present the summary impacts of the restatement adjustments on our previously reported consolidated retained earnings at September 30, 2012 and consolidated net income for the three and nine months ended June 30, 2013 (in thousands):

Retained earnings at September 30, 2012 - As previously reported	$	715,043
Adjustments	6,290
Retained earnings at September 30, 2012 - As restated	$	721,333

7

	Nine Months Ended		Three Months Ended
	June 30,		June 30,
	2013		2013
Net Income - As previously reported	$	57,968	$	18,364
Adjustments	4,304		17
Net Income - As restated	$	62,272	$	18,381

Description of Adjustments

On February 10, 2014, we announced that we would be restating certain previously issued audited consolidated financial statements and unaudited condensed consolidated financial statements primarily to correct two errors in the recognition of revenue.

In 2012, we restated our financial statements for the years ended September 30, 2011, 2010 and 2009, the quarters ended March 31, 2012 and December 31, 2011 and each of the prior quarters of 2011 and 2010. This previous restatement was the result of our determination that we had made errors in the calculation of revenues for a significant number of our contracts due to incorrect application of GAAP. In the course of our financial statement closing process for the quarter ended December 31, 2013, we identified two errors related to revenue recognition for two contracts with the same customer that date back to the previous restatement period. The first error was related to the computation of revenues for a contract that was entered into in 2011. The error resulted from a miscalculation in a revenue recognition model that was created during the previous restatement activity. The second error relates to a contract entered into in 2007 and was the result of a failure to appropriately update the contract value in our revenue accounting system as well as a failure to properly account for a 2008 amendment to this contract. Upon modification of this second contract in 2008, the cost-to-cost percentage of completion method should no longer have been used, and revenue should have been recognized using a service-based model.

In addition to the errors described above, we also made adjustments related to other individually immaterial errors including certain corrections that had been previously identified but not recorded because they were not material, individually or in the aggregate, to our consolidated financial statements. These corrections included certain accrued liabilities and reserves and miscellaneous reclassification entries; adjustments to various income tax and indirect tax accrual accounts; and adjustments to sales and cost of sales to correct cutoff on immaterial revenue recognition transactions.

8

The following tables present the impact of the restatement on the our previously issued Condensed Consolidated Balance Sheet as of September 30, 2013, and our Condensed Consolidated Statements of Income, Comprehensive Income and Cash Flows for the three and nine months ended June 30, 2013:

	Condensed Consolidated Balance Sheet September 30, 2013
	Previously Reported			Adjustments			As Restated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	203,892		$	—		$	203,892
Restricted cash	69,381			—			69,381
Marketable securities	4,055			—			4,055
Accounts receivable - net	376,143			2,859			379,002
Recoverable income taxes	7,885			—			7,885
Inventories - net	54,400			5,346			59,746
Deferred income taxes and other current assets	18,638			—			18,638
Total current assets	734,394			8,205			742,599
Long-term contract receivables	19,249			(228		)	19,021
Long-term capitalized costs	75,520			(6,557		)	68,963
Property, plant and equipment - net	56,305			—			56,305
Deferred income taxes	19,322			—			19,322
Goodwill	136,094			—			136,094
Purchased intangibles - net	57,542			—			57,542
Other assets	9,772			—			9,772
	$	1,108,198		$	1,420		$	1,109,618
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	39,016		$	1,294		$	40,310
Customer advances	103,187			(18,880		)	84,307
Accrued compensation and other current liabilities	107,330			1,923			109,253
Income taxes payable	8,076			4,655			12,731
Current portion of long-term debt	557			—			557
Total current liabilities	258,166			(11,008		)	247,158
Long-term debt	102,363			—			102,363
Other long-term liabilities	42,742			275			43,017
Shareholders’ equity:
Common stock	15,825			—			15,825
Retained earnings	728,424			11,578			740,002
Accumulated other comprehensive loss	(3,378		)	575			(2,803		)
Treasury stock at cost	(36,078		)	—			(36,078		)
Shareholders’ equity related to Cubic	704,793			12,153			716,946
Noncontrolling interest in variable interest entity	134			—			134
Total shareholders’ equity	704,927			12,153			717,080
	$	1,108,198		$	1,420		$	1,109,618

9

	Condensed Consolidated Statement of Income									Condensed Consolidated Statement of Income
	Nine Months Ended June 30, 2013									Three Months Ended June 30, 2013
	Previously						As			Previously						As
	Reported			Adjustments			Restated			Reported			Adjustments			Restated
	(amounts in thousands, except per share data)									(amounts in thousands, except per share data)
Net sales:
Products	$	432,226		$	(2,790	)	$	429,436		$	131,557		$	(3,875	)	$	127,682
Services	585,895			5,300			591,195			208,888			656			209,544
	1,018,121			2,510			1,020,631			340,445			(3,219		)	337,226
Costs and expenses:
Products	311,964			(1,921		)	310,043			93,946			(2,935		)	91,011
Services	462,075			(406		)	461,669			164,458			(180		)	164,278
Selling, general and administrative	126,447			(54		)	126,393			44,130			—			44,130
Restructuring costs	6,198			—			6,198			114			—			114
Research and development	19,346			—			19,346			6,426			—			6,426
Amortization of purchased intangibles	12,192			—			12,192			4,362			—			4,362
	938,222			(2,381		)	935,841			313,436			(3,115		)	310,321
Operating income	79,899			4,891			84,790			27,009			(104		)	26,905
Other income (expense):
Interest and dividend income	1,279			—			1,279			530			—			530
Interest expense	(2,438		)	(9		)	(2,447		)	(922		)	(3		)	(925		)
Other income (expense) - net	(764		)	—			(764		)	(813		)	—			(813		)
Income before income taxes	77,976			4,882			82,858			25,804			(107		)	25,697
Income taxes	19,859			578			20,437			7,416			(124		)	7,292
Net income	58,117			4,304			62,421			18,388			17			18,405
Less noncontrolling interest in income of VIE	149			—			149			24			—			24
Net income attributable to Cubic	$	57,968		$	4,304		$	62,272		$	18,364		$	17		$	18,381
Net income per share attributable to Cubic:
Basic	$	2.17		$	0.16		$	2.33		$	0.69		$	0.00		$	0.69
Diluted	$	2.17		$	0.16		$	2.33		$	0.69		$	0.00		$	0.69
Dividends per common share	$	0.12		$	—		$	0.12		$	—		$	—		$	—
Weighted average shares used in per share calculations:
Basic	26,736			—			26,736			26,736			—			26,736
Diluted	26,745			—			26,745			26,762			—			26,762

	Condensed Consolidated Statement of Comprehensive Income									Condensed Consolidated Statement of Comprehensive Income
	Nine Months Ended June 30, 2013									Three Months Ended June 30, 2013
	Previously						As			Previously					As
	Reported			Adjustments			Restated			Reported			Adjustments		Restated
	(in thousands)									(in thousands)
Net income	$	58,117		$	4,304		$	62,421		$	18,388		$	17	$	18,405
Other comprehensive income:
Foreign currency translation	(15,185		)	(580		)	(15,765		)	(1,872		)	96		(1,776		)
Net unrealized gain (loss) on available-for-sale securities, net of tax	(5		)	—			(5		)	(5		)	—		(5		)
Change in net unrealized gains/losses from cash flow hedges:
Change in fair value of cash flow hedges, net of tax	3,557			—			3,557			4,894			—		4,894
Adjustment for net gains/losses realized and included in net income, net of tax	1,146			—			1,146			(188		)	—		(188		)
Total change in unrealized gains/losses realized from cash flow hedges, net of tax	4,703			—			4,703			4,706			—		4,706
Total other comprehensive income (loss)	(10,487		)	(580		)	(11,067		)	2,829			96		2,925
Total comprehensive income (loss)	47,630			3,724			51,354			21,217			113		21,330

10

	Condensed Consolidated Statement of Cash Flows									Condensed Consolidated Statement of Cash Flows
	Nine Months Ended June 30, 2013									Three Months Ended June 30, 2013
	Previously						As			Previously						As
	Reported			Adjustments			Restated			Reported			Adjustments			Restated
	(in thousands)									(in thousands)
Operating Activities:
Net income	$	58,117		$	4,304		$	62,421		$	18,388		$	17		$	18,405
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	18,014			—			18,014			6,417			—			6,417
Share-based compensation expense	1,634			—			1,634			1,575			—			1,575
Changes in operating assets and liabilities, net of effects from acquisitions	(84,595		)	(4,304		)	(88,899		)	22,761			(17		)	22,744
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(6,830		)	—			(6,830		)	49,141			—			49,141
Investing Activities:
Acquisition of businesses, net of cash acquired	(60,649		)	—			(60,649		)	(7,377		)	—			(7,377		)
Net additions to property, plant and equipment	(6,209		)	—			(6,209		)	(2,348		)	—			(2,348		)
Purchases of short-term investments	(4,054		)	—			(4,054		)	(4,054		)	—			(4,054		)
NET CASH USED IN INVESTING ACTIVITIES	(70,912		)	—			(70,912		)	(13,779		)	—			(13,779		)
Financing Activities:
Proceeds from short-term borrowings	70,000			—			70,000			—			—			—
Principal payments on short-term borrowings	(70,000		)	—			(70,000		)	(25,000		)	—			(25,000		)
Proceeds from long-term borrowings	100,000			—			100,000			50,000			—			50,000
Principal payments on long-term debt	(8,407		)	—			(8,407		)	(134		)	—			(134		)
Contingent consideration payments related to acquisitions of businesses	(224		)	—			(224		)	(224		)	—			(224		)
Dividends paid to shareholders	(3,208		)	—			(3,208		)	—			—			—
Change in restricted cash	(104		)	—			(104		)	(20		)	—			(20		)
NET CASH PROVIDED BY FINANCING ACTIVITIES	88,057			—			88,057			24,622			—			24,622
Effect of exchange rates on cash	(10,131		)	—			(10,131		)	3,862			—			3,862
NET INCREASE IN CASH AND CASH EQUIVALENTS	184			—			184			63,846			—			63,846
Cash and cash equivalents at the beginning of the period	212,267			—			212,267			148,605			—			148,605
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	$	212,451		$	—		$	212,451		$	212,451		$	—		$	212,451

Financial information in the accompanying footnotes to the condensed consolidated financial statements reflects the effects of the preceding discussions and tables.

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Note 3 — 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.

Intific

On February 28, 2014 we acquired all of the outstanding capital stock of Intific Inc. (Intific). Intific is focused on software and game-based solutions in modeling and simulation, training and education, cyber warfare, and neuroscience. The acquisition of Intific expands the portfolio of services and customer base of our Cubic Defense Systems (CDS) segment.

For the three months ended June 30, 2014, the amount of Intific’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $1.9 million and $1.7 million, respectively.

For the nine months ended June 30, 2014, the amount of Intific’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $2.7 million and $3.8 million, respectively. Included in Intific’s operating results for the nine months ended June 30, 2014 are $0.2 million of transaction and acquisition related costs, and $3.7 million of compensation expense which was paid to Intific employees upon the close of the acquisition.

The purchase agreement states that the cost of the acquisition is approximately $12.1 million, adjusted by the difference between the net working capital acquired and the targeted working capital amounts. The acquisition date fair value of the consideration transferred is estimated to be $12.4 million. Through June 30, 2014, we have paid cash of approximately $11.2 million to the seller and as of June 30, 2014 we have accrued a liability of $1.2 million as an estimate of the remaining cash to be paid.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	2.0
Technology	0.7
Backlog	0.7
Other intangible assets	0.2
Accounts receivable	1.5
Deferred tax liabilities, net	(0.5		)
Accounts payable and accrued expenses	(0.6		)
Other net assets acquired	0.7
Net identifiable assets acquired	4.7
Goodwill	7.7
Net assets acquired	$	12.4

The estimated fair values of the net deferred tax liabilities are preliminary estimates pending the finalization of our valuation analyses. The net deferred tax liabilities were primarily recorded to reflect the tax impact of amortization related to identified intangible assets that is not expected to be deductible for tax purposes, net of acquisition consideration that is a tax deductible expense.

The fair values of purchased intangibles were determined using the valuation methodology deemed to be the most appropriate for each type of asset being valued. The customer relationships and backlog valuation used the excess earnings approach and the technology valuation used the replacement cost approach.

The intangible assets will be amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of two years from the date of acquisition and is not expected to be deductible for tax purposes.

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of Intific with our existing CDS business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CDS segment and is not expected to be deductible for tax purposes.

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Based upon the preliminary estimate of the fair value of identifiable intangible assets, the estimated amortization expense related to the intangible assets recorded in connection with our acquisition of Intific for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	0.6
2015	0.9
2016	0.7
2017	0.6
2018	0.5

ITMS

On November 26, 2013 we acquired all of the outstanding capital stock of Intelligent Transport Management Solutions Limited (ITMS) from Serco Limited. ITMS is a provider of traffic management systems technology, traffic and road enforcement and maintenance of traffic signals, emergency equipment and other critical road and tunnel infrastructure. The acquisition of ITMS expands the portfolio of services and customer base of our Cubic Transportation Systems (CTS) segment.

For the three months ended June 30, 2014, the amount of ITMS’ sales and net income after taxes included in our Condensed Consolidated Statement of Income were $12.8 million and $0.5 million, respectively.

For the nine months ended June 30, 2014, the amount of ITMS’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $30.1 million and $0.2 million, respectively. Included in ITMS’ operating results are $0.5 million of transaction costs incurred during the nine months ended June 30, 2014.

The purchase agreement states that the cost of the acquisition is approximately $69.0 million, adjusted by the difference between the net working capital acquired and the targeted working capital amounts. The acquisition date fair value of the consideration transferred was estimated to be $72.2 million. In November 2013, we paid cash of $69.0 million and in May 2014, we paid cash of $3.2 million as settlement of the working capital with the seller.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	15.7
Intellectual property	1.6
Backlog	5.7
Supplier relationships	0.6
Agreements with seller	1.3
Accounts receivable - billed	4.4
Accounts receivable - unbilled	6.9
Deferred tax liabilities, net	(0.2		)
Deferred revenue	(2.6		)
Accounts payable and accrued expenses	(4.6		)
Other net assets acquired	2.6
Net identifiable assets acquired	31.4
Goodwill	40.8
Net assets acquired	$	72.2

The net deferred tax liabilities were primarily recorded to reflect the difference in timing of recognizing deferred revenue for tax purposes

The fair values of purchased intangibles were determined using the valuation methodology deemed to be the most appropriate for each type of asset being valued. The customer relationships and backlog valuation used the excess earnings approach and the non-compete agreement and seller agreements valuations used the with and without approach. The supplier relationship and intellectual property valuations used the replacement cost approach.

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The intangible assets will be amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of two years from the date of acquisition. Future amortization of approximately $19.2 million of purchased intangibles is not expected to be deductible for tax purposes.

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of ITMS with our existing CTS business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CTS segment and is expected to be deductible for tax purposes.

The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of ITMS for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	6.6
2015	6.2
2016	5.2
2017	4.1
2018	3.0

AIS

On July 1, 2013 we acquired certain assets of Advanced Interactive Systems (AIS) and all of the capital stock of its foreign subsidiaries through a bankruptcy auction. AIS is a supplier of live fire specialized range facilities, virtual simulation products, engineering design and project management services for counter-terrorism, law enforcement and military forces worldwide. For the three months ended June 30, 2014 the amount of AIS’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $3.1 million and $0.2 million, respectively. For the nine months ended June 30, 2014, the amounts of AIS’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $6.2 million and $0.6 million, respectively.

We paid cash of $2.0 million from our existing cash resources, net of cash acquired, for the assets of AIS. At September 30, 2013, the estimated fair value of liabilities for potential claims from customers were preliminary estimates pending the finalization of our valuation analyses. The finalization of the estimation of these values was completed in the quarter ended December 31, 2013 as further information was received from the customers as to the facts and circumstances that existed as of the July 1, 2013 acquisition date. As a result of this additional information, we have estimated that the fair value of the potential customer claims was $1.3 million. As a result, the carrying amount of the potential customer claims liabilities were retrospectively increased by $1.3 million on July 1, 2013, due to this new information, with a corresponding increase to goodwill.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date including the retrospective adjustments described above (in millions):

Customer relationships	$	1.4
Technology	0.9
Backlog	0.6
Other net liabilities assumed	(2.8		)
Net identifiable assets acquired	0.1
Goodwill	1.9
Net assets acquired	$	2.0

The amount recorded as goodwill is allocated to our CDS segment and is not expected to be deductible for tax purposes.

PSMC

On July 1, 2013 we acquired certain assets of PS Management Consultants Pty Ltd. (PSMC). PSMC is a specialist project management and engineering enterprise, based in Canberra, Australia. For the three months ended June 30, 2014 the amount of PSMC’s sales and net income after taxes included in our Condensed Consolidated Statement of Income were $1.7 million and $0.3 million, respectively. For the nine months ended June 30, 2014, the amounts of PSMC’s sales and net income after taxes included in our Condensed Consolidated Statement of Income were $2.9 million and $0.6 million, respectively.

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We paid cash of $1.3 million from our existing cash resources to acquire PSMC. The following table summarizes the estimated fair values of the assets acquired at the acquisition date (in millions):

Customer relationships	$	0.6
Backlog	0.1
Net identifiable assets acquired	0.7
Goodwill	0.6
Net assets acquired	$	1.3

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of PSMC and our CDS business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CDS segment and is not expected to be deductible for tax purposes.

NextBus

On January 24, 2013, we acquired all of the outstanding capital stock of NextBus, Inc. (NextBus) from Webtech Wireless, Inc. NextBus provides products and services to transit agencies which provide real-time passenger information to transit passengers, expanding the portfolio of services and customer base of our CTS segment. For the three months ended June 30, 2014 the amount of NextBus’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $2.1 million and $0.3 million, respectively. For the nine months ended June 30, 2014, the amounts of NextBus sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $6.8 million and $0.8 million, respectively.

For the three months ended June 30, 2013 NextBus’ sales included in our Condensed Consolidated Statement of Income were $3.1 million. NextBus had no significant gain or loss after taxes for the three months ended June 30, 2013. For the nine months ended June 30, 2013, the amounts of NextBus’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $4.6 million and $0.3 million, respectively.

We paid the seller cash of $20.2 million for NextBus from our 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	$	8.8
Accounts receivable, net	2.2
Backlog	1.7
Acquired technology	1.3
Corporate trade names	1.0
Accounts payable and accrued expenses	(1.1		)
Deferred tax liabilities, net	(3.3		)
Other net liabilities assumed	(1.2		)
Net identifiable assets acquired	9.4
Goodwill	10.8
Net assets acquired	$	20.2

The net deferred tax liabilities were primarily recorded to reflect the tax impact of the identified intangible assets that will not generate tax deductible amortization expense. 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. Each of the valuation methodologies used were various methods under the income approach. The customer relationships and backlog valuations used the excess earnings approach. The trade names and technology valuations used the relief from royalty approach.

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of NextBus and our CTS business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CTS segment and is not expected to be deductible for tax purposes.

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The intangible assets are being amortized using a combination of accelerated and straight-line based on the expected cash flows from the assets, over a weighted average useful life of 5 years from the date of acquisition. The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of NextBus for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	1.6
2015	1.5
2016	1.4
2017	1.3
2018	1.2

NEK

On December 14, 2012, we acquired from NEK Advanced Securities Group, Inc. (Seller) the customer contracts and operating assets of NEK Special Programs Group LLC (NEK), which consists of the Seller’s Special Operation Forces training business based in Fayetteville, North Carolina and Colorado Springs, Colorado.

For the three months ended June 30, 2014, the amounts of NEK’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $14.4 million and $0.1 million, respectively. For the three months ended June 30, 2013, the amounts of NEK’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $11.5 million and $0.5 million, respectively.

For the nine months ended June 30, 2014, the amounts of NEK’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $34.0 million and $0.5 million, respectively. For the nine months ended June 30, 2013, the amounts of NEK’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $21.1 million and $0.8 million, respectively.

Included in the NEK operating results are $0.4 million in transaction related costs incurred during the first quarter of fiscal 2013.

The acquisition agreement states that the cost of the acquisition will total $52.0 million, adjusted by the difference between the net working capital acquired and targeted working capital amounts, less amounts that will not be due if certain future events fail to occur. The acquisition-date fair value of consideration transferred is estimated to be $52.6 million. Through June 30, 2014 we have paid the Seller cash consideration of $52.0 million from our existing cash resources and we have recorded a current liability of approximately $0.6 million at June 30, 2014 as an estimate of additional cash consideration that is due to the Seller. A portion of the $52.0 million of cash consideration that was paid to the Seller was contingent upon certain events that occurred between the acquisition date and June 30, 2014, including the novation of certain of the Seller’s contracts to NEK.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	13.3
Corporate trade names	4.9
Non-compete agreements	0.2
Accounts receivable -billed	3.1
Accounts receivable -unbilled	7.7
Accounts payable	(3.0		)
Other net liabilities assumed	(0.4		)
Net identifiable assets acquired	25.8
Goodwill	26.8
Net assets acquired	$	52.6

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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. Each of the valuation methodologies used were various methods under the income approach. The trade names valuation used the relief from royalty approach. The customer relationships valuation used the excess earnings approach and the non-compete agreements valuation used the with and without approach. The intangible assets are being amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of four years from the date of acquisition.

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of NEK and our Mission Support Services (MSS) business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our MSS 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 NEK for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	3.4
2015	2.9
2016	2.4
2017	1.9
2018	1.4

Changes in goodwill for the nine months ended June 30, 2014 were as follows (in millions):

			Mission
	Transportation		Support		Defense
	Systems		Services		Systems		Total
Balances at September 30, 2013	$	18.3	$	94.4	$	23.4	$	136.1
Acquisitions	40.8		—		7.7		48.5
Foreign currency exchange rate changes	2.5		—		0.5		3.0
Balances at June 30, 2014	$	61.6	$	94.4	$	31.6	$	187.6

Pro forma information

The following unaudited pro forma information presents our consolidated results of operations as if Intific, ITMS, NEK, NextBus, AIS and PSMC had been included in our consolidated results since October 1, 2012 (in millions):

	Nine Months Ended				Three Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
			(As Restated)				(As Restated)
Net sales	$	1,014.7	$	1,102.8	$	340.4	$	358.2
Net income attributable to Cubic	$	36.3	$	68.1	$	12.2	$	20.1

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, 2012, and it does not purport to project our future operating results.

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Note 4 — Net Income Per Share

Basic net income per share (EPS) is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period, including vested restricted stock units (RSUs).

Diluted EPS is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of dilutive restricted stock units. Dilutive restricted stock units are calculated based on the average share price for each fiscal period using the treasury stock method. For RSUs with performance-based vesting, no common equivalent shares are included in the computation of diluted EPS until the related performance criteria have been met.

Basic and diluted EPS are computed as follows (amounts in thousands, except per share data).

	Nine Months Ended					Three Months Ended
	June 30,					June 30,
	2014			2013		2014			2013
				(As Restated)					(As Restated)
Net income attributable to Cubic	$	36,686		$	62,272	$	12,206		$	18,381
Weighted average shares - basic	26,786			26,736		26,789			26,736
Effect of dilutive securities	115			9		132			26
Weighted average shares - diluted	26,901			26,745		26,921			26,762
Net income per share attributable to Cubic, basic	$	1.37		$	2.33	$	0.46		$	0.69
Effect of dilutive securities	(0.01		)	—		(0.01		)	—
Net income per share attributable to Cubic, diluted	$	1.36		$	2.33	$	0.45		$	0.69
Anti-dilutive employee share-based awards	—			—		—			—

Note 5 — Balance Sheet Details

Marketable Securities

Marketable securities consist of exchange traded funds whose underlying assets consist of highly liquid debt instruments with short- term maturities. Marketable securities are classified and accounted for as available-for-sale.  These investments are recorded at fair value in the accompanying Condensed Consolidated Balance Sheets and the change in fair value is recorded, net of taxes, as a component of other comprehensive income. There have been no significant realized or unrealized gains or losses on these marketable securities to date. Marketable securities have been classified as current assets in the accompanying Condensed Consolidated Balance Sheets based upon the nature of the securities and availability for use in current operations.

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Accounts Receivable

The components of accounts receivable are as follows (in thousands):

	June 30,			September 30,
	2014			2013
				(As Restated)
Trade and other receivables	$	27,063		$	17,352
Long-term contracts:
Billed	118,662			98,983
Unbilled	274,850			282,346
Allowance for doubtful accounts	(484		)	(658		)
Total accounts receivable	420,091			398,023
Less estimated amounts not currently due	(16,690		)	(19,021		)
Current accounts receivable	$	403,401		$	379,002

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 June 30, 2014 under transportation systems contracts in the U.S. and Australia based upon the payment terms in the contracts. The non-current balance at September 30, 2013 represented non-current amounts due from customers under transportation systems contracts in the same locations.

Inventories

Inventories consist of the following (in thousands):

	June 30,			September 30,
	2014			2013
				(As Restated)
Work in process and inventoried costs under long-term contracts	$	79,346		$	80,918
Customer advances	(27,536		)	(21,865		)
Materials and purchased parts	1,958			693
Net inventories	$	53,768		$	59,746

Pursuant to contract provisions, agencies of the U.S. government and certain other customers have title to, or security interest in, inventories related to such contracts as a result of advances, performance-based payments, and progress payments. Contract advances, performance-based payments and progress payments received are recorded as an offset against the related inventory balances for contracts that that are accounted for on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. This determination is performed on a contract by contract basis. Any amount of payments received in excess of the cumulative amount of accounts receivable and inventoried costs for a contract is classified as customer advances, which is classified as a liability on the balance sheet.

At June 30, 2014, work in process and inventoried costs under long-term contracts includes approximately $1.7 million in costs incurred outside the scope of work or in advance of a contract award compared to $5.8 million at September 30, 2013. We believe it is probable that we will recover these costs, plus a profit margin, under contract change orders or awards within the next year.

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Long-term Capitalized Costs

Long-term capitalized contract costs consist of costs incurred on a contract to develop and manufacture a transportation fare system for a customer for which revenue recognition did not begin until the customer began operating the system in the fourth quarter of 2013. These capitalized costs are being recognized as cost of sales based upon the ratio of revenue recorded during the period compared to the revenue expected to be recognized over the term of the contract, which is through January 2024. Long-term capitalized costs that were recognized as cost of sales totaled $5.1 million and $6.1 million for the quarter and nine-month period ended June 30, 2014, respectively. No amounts of capitalized costs were recognized as cost of sales in fiscal year 2013. The long-term capitalized costs are expected to be recognized as cost of sales in approximately equal monthly amounts in future months through the term of the contract.

Note 6 — Fair Value of Financial Instruments

The valuation techniques required to determine fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. The two types of inputs create the following fair value hierarchy:

·Level 1 - Quoted prices for identical instruments in active markets.

·Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

·Level 3 - Significant inputs to the valuation model are unobservable.

The fair value of cash equivalents and short term borrowings approximates their cost. The fair value of our available for sale marketable securities is determined based on 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.

At September 30, 2013, the estimated fair value of the liability for contingent consideration payable to the seller of NEK was $3.5 million, which was equal to the maximum possible contingent payment. We paid the Seller $3.5 million during the nine months ended June 30, 2014 upon the resolution of the related contingencies and the liability was reduced to zero. Prior to the payment of the contingent consideration we had estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. There was no change in the fair value of the contingent consideration liability between the date of the acquisition of NEK and June 30, 2014 other than for payments of the contingent consideration amount to the Seller; therefore, there has been no change in contingent consideration recorded in operations.

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The following table presents assets and liabilities measured and recorded at fair value on our balance sheets on a recurring basis (in thousands):

	June 30, 2014
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	51,075	$	—	$	—	$	51,075
Current derivative assets	—		8,223		—		8,223
Noncurrent derivative assets	—		5,793		—		5,793
Total assets measured at fair value	$	51,075	$	14,016	$	—	$	65,091
Liabilities
Current derivative liabilities	$	—	$	8,811	$	—	$	8,811
Noncurrent derivative liabilities	—		5,832		—		5,832
Total liabilities measured at fair value	$	—	$	14,643	$	—	$	14,643

	September 30, 2013
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	125,512	$	—	$	—	$	125,512
Marketable securities	4,055		—		—		4,055
Current derivative assets	—		1,597		—		1,597
Noncurrent derivative assets	—		6,096		—		6,096
Total assets measured at fair value	$	129,567	$	7,693	$	—	$	137,260
Liabilities
Current derivative liabilities	$	—	$	2,360	$	—	$	2,360
Noncurrent derivative liabilities	—		5,366		—		5,366
Contingent consideration to Seller of NEK	—		—		3,485		3,485
Total liabilities measured at fair value	$	—	$	7,726	$	3,485	$	11,211

We did not have any significant non-financial assets or liabilities measured at fair value after initial recognition on a non-recurring basis during the three and nine months ended June 30, 2014 or 2013.

We carry financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities at cost, which we believe approximates fair value because of the short-term maturity of these instruments.

Long-term debt and short-term borrowings are carried at amortized cost. The amortized cost of short-term borrowings approximates fair value. 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):

	June 30,		September 30,
	2014		2013
Fair value	$	101.0	$	95.8
Carrying value	$	102.7	$	102.9

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Note 7 — Financing Arrangements

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. Interest on these notes is due semi-annually and principal payments are due from 2021 through 2025. In addition, pursuant to the agreement, through March 2016 we may from time to time issue and sell, and the purchasers may in their sole discretion purchase, additional senior notes in aggregate principal amount of up to $25.0 million that will have terms, including interest rate, as we and the purchasers may agree upon at the time of issuance.

We have a committed five-year revolving credit agreement (Revolving Credit Agreement) with a group of financial institutions in the amount of $200 million, which expires in May 2017. The available line of credit is reduced by any letters of credit issued under the Revolving Credit Agreement. As of June 30, 2014, there were borrowings totaling $8.0 million under this agreement and there were letters of credit outstanding totaling $34.2 million, which reduce the available line of credit to $157.8 million.

We have a secured letter of credit facility agreement with a bank (Secured Letter of Credit Facility) which is cancellable by us at any time upon the completion of certain conditions to the satisfaction of the bank. At June 30, 2014 there were letters of credit outstanding under this agreement of $62.2 million. Restricted cash at June 30, 2014 of $69.0 million was held on deposit in the U.K. as collateral in support of this Secured Letter of Credit Facility. We are required to leave the cash in the restricted account so long as the bank continues to maintain associated letters of credit under the facility. The maximum amount of letters of credit currently allowed by the facility is $62.7 million, and any increase above this amount would require bank approval and additional restricted funds to be placed on deposit. We may choose at any time to terminate the facility and move the associated letters of credit to another credit facility. Letters of credit outstanding under the Secured Letter of Credit Facility do not reduce the available line of credit under the Revolving Credit Agreement.

As of June 30, 2014, we had letters of credit and bank guarantees outstanding totaling $100.6 million, including the letters of credit outstanding under the Revolving Credit Agreement and the Secured Letter of Credit Facility described above, which guarantee either our performance or customer advances under certain contracts. In addition, we had financial letters of credit outstanding totaling $8.9 million as of June 30, 2014, which primarily guarantee our payment of certain self-insured liabilities. We have never had a drawing on a letter of credit instrument, nor are any anticipated; therefore, we estimate the fair value of these instruments to be zero.

We maintain short-term borrowing arrangements in New Zealand and Australia totaling $0.5 million New Zealand dollars (equivalent to approximately $0.4 million) and $3.0 million Australian dollars (equivalent to approximately $2.8 million) to help meet the short- term working capital requirements of our subsidiaries in those countries. At June 30, 2014, no amounts were outstanding under these borrowing arrangements.

The terms of certain of our lending and credit agreements include provisions that require and/or limit, among other financial ratios and measurements, the permitted levels of debt, coverage of cash interest expense, and under certain circumstances, payments of dividends or other distributions to shareholders. As of June 30, 2014 these agreements do not restrict such distributions to shareholders.

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 $8.5 million and $8.8 million as of June 30, 2014, and September 30, 2013, respectively.

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Note 8 — Pension Plans

The components of net periodic pension cost (benefit) are as follows (in thousands):

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Service cost	$	463		$	410		$	157		$	134
Interest cost	7,461			6,658			2,505			2,197
Expected return on plan assets	(9,869		)	(8,710		)	(3,313		)	(2,876		)
Amortization of actuarial loss	599			1,352			202			445
Administrative expenses	114			57			38			19
Net pension benefit	$	(1,232	)	$	(233	)	$	(411	)	$	(81	)

Note 9 - Stockholders’ Equity

Long Term Equity Incentive Plan

On March 21, 2013, the Executive Compensation Committee of the Board of Directors (Compensation Committee) approved a long- term equity incentive award program. Through June 30, 2014, the Compensation Committee has granted 405,847 RSU’s with time-based vesting and 314,656 RSU’s 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 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 June 30, 2014, Cubic has granted 720,503 restricted stock units of which 69,994 have vested. At June 30, 2014, 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 378,607.

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The following table summarizes our RSU activity for the nine months ended June 30, 2014. The weighted-average grant date fair value of each RSU represents the fair market value of one share of our common stock at the grant date:

	Unvested Restricted Stock Units
	Number of Shares		Weighted- Average Grant- Date Fair Value
Unvested at September 30, 2013	421,369		$	43.76
Granted	293,992		49.73
Vested	(69,994	)	43.76
Forfeited	(8,980	)	49.57
Unvested at June 30, 2014	636,387		$	46.44

Note 10 - Stock-Based Compensation

We recorded non-cash compensation expense related to stock-based awards for the three- and nine-month periods ended June 30, 2014 and 2013 as follows (in thousands):

	Nine Months Ended				Three Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of sales	$	397	$	123	$	192	$	119
Selling, general and administrative	3,973		1,511		1,593		1,456
	$	4,370	$	1,634	$	1,785	$	1,575

As of June 30, 2014, there was $25.0 million of unrecognized compensation cost related to unvested RSUs. This amount is expected to be recognized over a weighted-average period of 1.7 years. Based upon the expected forfeitures and the expected vesting of performance-based RSUs, the aggregate grant-date fair value of unvested RSUs at June 30, 2014 expected to ultimately vest is $17.8 million.

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 June 30, 2014. 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.

Note 11 — Income Taxes

Our effective tax rate for the three months ended June 30, 2014 was 29% as compared to 36% for the year ended September 30, 2013. The effective tax rate for the three months ended June 30, 2014 is lower than the year ended September 30, 2013, which had reflected the unfavorable impact related to the goodwill impairment loss as well as an increase in the valuation allowance against deferred tax assets.

The amount of unrecognized tax benefits was $4.7 million as of June 30, 2014 and $4.8 million as of September 30, 2013, exclusive of interest and penalties. At June 30, 2014, the amount of unrecognized tax benefits from permanent tax adjustments that, if recognized, would favorably impact the effective rate was $4.7 million. During the next 12 months, it is reasonably possible that resolution of reviews by taxing authorities, both domestic and international, could be reached with respect to approximately $0.1 million of the unrecognized tax benefits depending on the timing of examinations and expiration of statute of limitations, either because our tax positions are sustained or because we agree to their disallowance and pay the related income tax.

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We are subject to ongoing audits from various taxing authorities in the jurisdictions in which we do business. As of June 30, 2014, the tax years open under the statute of limitations in significant jurisdictions include fiscal years 2010-2013 in the U.K., 2009-2013 in New Zealand and 2011-2013 in the U.S. We believe we have adequately provided for uncertain tax issues that have not yet been resolved with federal, state and foreign tax authorities.

We are required to assess whether a valuation allowance should be recorded against our deferred tax assets (DTAs) by jurisdiction based on the consideration of all available evidence, with significant weight given to evidence that can be objectively verified and using a “more likely than not” realization standard. As of September 30, 2013, we evaluated our net DTAs, including an assessment of the cumulative income or loss over the prior three-year and future periods, to determine if a valuation allowance was required. With respect to Australia, we recorded a valuation allowance on net DTAs of approximately $4.0 million. As of June 30, 2014, we continue to assess the need for a valuation allowance on DTAs and will record the related tax effects in the quarter in which a change in circumstance occurs.

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 forwards. We do not use any derivative financial instruments for trading or other speculative purposes.

All derivatives are recorded at fair value, however, the classification of gains and losses resulting from changes in the fair values of derivatives are dependent on the intended use of the derivative and its resulting designation. If a derivative is designated as a fair value hedge, then a change in the fair value of the derivative is offset against the change in the fair value of the underlying hedged item and only the ineffective portion of the hedge, if any, is recognized in earnings. If a derivative is designated as a cash flow hedge, then the effective portion of a change in the fair value of the derivative is recognized as a component of accumulated other comprehensive income until the underlying hedged item is recognized in earnings, or the forecasted transaction is no longer probable of occurring. If a derivative does not qualify as a highly effective hedge, any change in fair value is immediately recognized in earnings. We formally document all hedging relationships for all derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transactions. We classify the fair value of all derivative contracts as current or non- current assets or liabilities, depending on the realized and unrealized gain or loss position of the hedged contract at the balance sheet date, and the timing of future cash flows. The cash flows from derivatives treated as hedges are classified in the Condensed 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 June 30, 2014 and September 30, 2013 (in thousands):

	Notional Principal
	June 30, 2014		September 30, 2013
Instruments designated as accounting hedges:
Foreign currency forwards	$	395,213	$	361,337
Forward starting swap	—		58,415
Instruments not designated as accounting hedges:
Foreign currency forwards	$	1,195	$	2,697
Forward starting swap	55,962		—

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 periods ended June 30, 2014 and September 30, 2013. Although the table above reflects the notional principal amounts of our forward starting swaps and foreign exchange instruments, it does not reflect the gains or losses associated with the exposures and transactions that the forward starting swaps and 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 June 30, 2014 or September 30, 2013.

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The table below presents the fair value of our derivative financial instruments that qualify for hedge accounting as well as their classification in the Condensed Consolidated Balance Sheets as of June 30, 2014 and September 30, 2013 (in thousands):

		Fair Value
	Balance Sheet Location	June 30, 2014		September 30, 2013
Asset derivatives:
Foreign currency forwards	Other current assets	$	8,223	$	1,597
Foreign currency forwards	Other noncurrent assets	5,629		4,957
Forward starting swap	Other noncurrent assets	164		1,139
		$	14,016	$	7,693
Liability derivatives:
Foreign currency forwards	Other current liabilities	$	8,811	$	2,360
Foreign currency forwards	Other noncurrent liabilities	5,832		5,366
Total		$	14,643	$	7,726

The tables below present gains and losses recognized in other comprehensive income (OCI) for the three and nine months ended June 30, 2014 and 2013 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):

	Nine Months Ended
	June 30, 2014					June 30, 2013						June 30, 2014		June 30, 2013
				Gains (losses)				Gains (losses)
	Gains (losses)			reclassified into		Gains (losses)		reclassified into				Gains (losses) recognized -Ineffective
	recognized in			earnings -		recognized in		earnings -				Portion and amount excluded from
Derivative Type	OCI			Effective Portion		OCI		Effective Portion			Location of gain (loss)	effectiveness testing
Foreign currency forwards	$	(757	)	$	355	$	4,020	$	(1,763	)	Other income/(expense), net	$	—	$	—
Forward starting swap	—			—		1,453		—			Other income/(expense), net	164		—
	$	(757	)	$	355	$	5,473	$	(1,763	)		$	164	$	—

	Three Months Ended
	June 30, 2014					June 30, 2013					June 30, 2014			June 30, 2013
				Gains (losses)				Gains (losses)
	Gains (losses)			reclassified into		Gains (losses)		reclassified into			Gains (losses) recognized -Ineffective
	recognized in			earnings -		recognized in		earnings -			Portion and amount excluded from
Derivative Type	OCI			Effective Portion		OCI		Effective Portion		Location of gain (loss)	effectiveness testing
Foreign currency forwards	$	(443	)	$	320	$	5,912	$	289	Other income/(expense), net	$	—		$	—
Forward starting swap	—			—		1,617		—		Other income/(expense), net	(673		)	—
	$	(443	)	$	320	$	7,529	$	289		$	(673	)	$	—

For the three and nine months ended June 30, 2014, we recognized a loss of $0.7 million and a gain of $0.2 million, respectively, related to derivative instruments classified as not highly effective. The amount of 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 three and nine months ended June 30, 2013. The amount of estimated unrealized net losses from cash flow hedges which are expected to be reclassified to earnings in the next twelve months is $0.4 million, net of income taxes.

Forward starting swap

In connection with a transportation systems contract that we entered in December 2011, we have incurred significant costs to develop the customer’s fare collection system before we begin receiving payments under the contract. In order to finance certain of these costs, we had planned to issue at least $83 million of 10-year fixed rate debt. Originally, the planned date of issuance of the debt was January 1, 2014. In the first quarter of fiscal 2014, we continued to believe that it was probable that we would issue the debt, but we revised our estimated date of the issuance to July 1, 2014. In the second quarter of fiscal 2014, we again revised our estimate such that we now believe that it is not probable that the debt issuance will occur. Instead, we believe that it is likely that the transportation contract will be monetized in a manner other than the originally contemplated debt issuance.

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Due to concern that market interest rates for the 10-year forward period of January 1, 2014 to January 1, 2024 would change through January 1, 2014, exposing the LIBOR benchmark component of each of the 20 projected semi-annual interest cash flows of that future 10-year period to risk of variability, in July 2012 we entered into a forward-starting 10-year swap contract with a bank to reduce the interest rate variability exposure of the projected interest cash flows on the planned debt issuance. This forward-starting swap had a termination date of January 1, 2014. On December 18, 2013, we modified the forward starting swap such that the termination was changed to July 1, 2014. The modified forward-starting swap has a notional amount of $56.0 million, and a pay 1.881% fixed rate, receive 3- month LIBOR, with fixed rate payments due semi-annually on the first day each June and December commencing June 1, 2014 through December 1, 2023, floating payments due quarterly on the first day of each quarter commencing March 1, 2014 through December 2023, and floating reset dates two days prior to the first day of each calculation period. The swap contracts accrual period, January 1, 2014 to December 1, 2023 was designed to match the tenor of the planned debt issuance.

Prior to the modification of the forward-starting swap on December 18, 2013, the forward starting swap was deemed to be a highly effective cash flow hedge. Upon modification of the forward-starting swap, we did not elect to designate the modified forward-starting swap as an accounting hedge. As such, an amount equal to the fair value of the forward-starting swap immediately prior to the modification of the instrument of $1.0 million was included in accumulated other comprehensive income at December 31, 2013 and changes in the fair value of the forward-starting swap subsequent to the date of the modification were recognized in earnings, within the other income (expense) line item in our CTS segment. The change in the fair value of the forward starting swap from the date of the modification to December 31, 2013 resulted in the recognition of income of $0.4 million in the first quarter of fiscal 2014. Changes in the fair value of the forward starting swap in the second quarter of fiscal 2014 resulted in the recognition of a loss of $0.6 million. Also, in the second fiscal quarter of 2014, upon making the assessment that it was no longer probable that the originally planned debt issuance would occur, the derivative gain of $1.0 million previously reported in accumulated other comprehensive income was reclassified into earnings. In the third quarter of fiscal 2014 we recognized a loss of $0.7 million related to the change in the fair value of the forward starting swap. As of June 30, the fair value of the forward starting swap was $0.2 million, and on July 1, 2014, at the termination date of the forward starting swap, we settled the forward starting swap and received $0.2 million from the counterparty.

Foreign currency forwards

In order to limit our exposure to foreign currency exchange rate risk we generally hedge those commitments greater than $50,000 by using foreign currency exchange forward and option contracts that are denominated in currencies other than the functional currency of the subsidiary responsible for the commitment, typically the British pound, Canadian dollar, Singapore dollar, euro, Swedish krona, New Zealand dollar and Australian dollar. These contracts are designed to be effective hedges regardless of the direction or magnitude of any foreign currency exchange rate change, because they result in an equal and opposite income or cost stream that offsets the change in the value of the underlying commitment.

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Note 13 — Segment Information

Business segment financial data is as follows (in millions):

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
				(As Restated)						(As Restated)
Sales:
Transportation Systems	$	429.1		$	398.4		$	153.0		$	134.8
Mission Support Services	291.7			359.4			91.8			123.8
Defense Systems	281.2			262.5			95.6			78.6
Other	—			0.3			—			—
Total sales	$	1,002.0		$	1,020.6		$	340.4		$	337.2
Operating income (loss):
Transportation Systems	$	35.2		$	69.5		$	15.3		$	19.0
Mission Support Services	6.0			11.4			1.8			3.6
Defense Systems	16.1			7.6			3.3			6.1
Unallocated corporate expenses and other	(4.1		)	(3.7		)	(1.2		)	(1.8		)
Total operating income	$	53.2		$	84.8		$	19.2		$	26.9
Depreciation and amortization:
Transportation Systems	$	8.5		$	2.7		$	2.7		$	1.2
Mission Support Services	8.5			10.0			2.7			3.5
Defense Systems	5.0			4.4			1.8			1.5
Other	0.7			0.9			0.3			0.2
Total depreciation and amortization	$	22.7		$	18.0		$	7.5		$	6.4

Changes in estimates on contracts for which revenue is recognized using the cost-to-cost-percentage-of-completion method decreased operating profit by $4.8 million for the three months ended June 30, 2014 and increased operating profit by $1.9 million for the three months ended June 30, 2013, and decreased operating profit by $3.8 million and $5.5 million for the nine months ended June 30, 2014 and 2013, respectively.

These adjustments decreased net income by approximately $2.0 million ($0.07 per share) for the three months ended June 30, 2014 and increased net income by approximately $0.9 million ($0.03 per share) for the three months ended June 30, 2013, and decreased net income by $0.3 million ($0.01 per share) and $4.4 million ($0.16 per share) for the nine months ended June 30, 2014 and 2013, respectively.

Note 14 — Legal Matters

In November 2011, we received a claim from a public transit authority customer which alleged that the authority incurred a loss of transit revenue due to the inappropriate and illegal actions of one of our former employees, who has pled guilty to the charges. This individual was employed to work on a contract we acquired in a business combination in 2009 and had allegedly been committing these illegal acts from almost two years prior to our acquisition of the contract, until his arrest in May 2011. The transit system was designed and installed by a company unrelated to us.

The transit authority sought recoupment from us of a total amount of $4.5 million for alleged lost revenue, fees and damages. In March 2012, the county superior court entered a default judgment against our former employee and others for $2.9 million based upon the estimated loss of revenue by the public transit authority customer. In 2012, we recorded an accrued cost of $2.9 million within general and administrative expense in the transportation systems segment based upon the court’s assessment of these losses. In July

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2014 we entered into a settlement agreement with the customer for a cash payment of $2.6 million plus an assignment of forty percent of any insurance proceeds we receive under relevant insurance policies. In June 2014 we reduced our accrued costs to $2.6 million. We have submitted our claim to our insurance carriers but have not yet resolved the level of coverage. Any potential insurance proceeds, and any related assignment of a portion of the proceeds to the customer, will not be recognized in the financial statements until receipt of any such insurance proceeds is probable.

In October and December of 2013, and January of 2014, lawsuits were filed in the United States District Court for the Northern District of Illinois, Eastern Division against us and one of our transit customers alleging variously, among other things, breach of contract, violation of the Illinois Consumer Fraud Act, unjust enrichment and violation of the Electronic Funds Act. In January 2014 these cases were consolidated into a single case and the Plaintiffs are seeking to have the case certified as a class action. Plaintiffs variously claim, among other things, that: (i) they were wrongly charged for calling the call center that we operate for patrons of our transit customer, (ii) they were wrongly charged for a transfer and a second fare, (iii) they were not credited the cost of a transit card even after registration of the card, as is required under the terms of the cardholder agreement, and (iv) they were double charged for rides taken. We are undertaking the defense of the transit customer pursuant to our contractual obligations to that customer. We are investigating the matter and plan to vigorously defend this lawsuit. Due to the preliminary nature of this case, we cannot estimate the probability of loss or any range of estimate of possible loss.

Also in October 2013, a lawsuit was filed in the Circuit Court of Cook County, Illinois, County Department, Chancery Division against our same transit customer alleging conversion and unjust enrichment. This lawsuit was later amended and refiled in May 2014.  The plaintiff alleges his bank debit card was charged two dollars and twenty-five cents for his ride on the transit system rather than the ride being charged to his transit fare card. This plaintiff is also seeking to have his case certified as a class action for all patrons whose bank cards were charged in the same manner. We are investigating the matter and we are undertaking the defense pursuant to our contractual obligations to our transit customer.  We plan to vigorously defend this lawsuit. Due to the preliminary nature of this case, we cannot estimate the probability of loss or any range of estimate of possible loss.

We are not a party to any other material pending proceedings and we consider all other matters to be ordinary proceedings incidental to the 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.

Note 15 — Subsequent Events

We have completed an evaluation of all subsequent events through the issuance date of these consolidated financial statements and concluded no subsequent events have occurred that require recognition or disclosure.

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CUBIC CORPORATION

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

June 30, 2014

We are a leading international provider of cost-effective systems and solutions that address the transportation and global defense markets’ most pressing and demanding requirements. We are engaged in the design, development, manufacture, integration, and sustainment of advanced technology systems and products. We also provide a broad range of engineering, training, technical, logistic, and information technology services. We serve the needs of various federal and regional government agencies in the U.S. and other allied nations around the world with products and services that have both defense and civil applications. Our main areas of focus are in transportation payment and information systems, defense, intelligence, homeland security, and information technology, including cyber security.

We operate in three reportable business segments: Cubic Transportation Systems (CTS), Mission Support Services (MSS) and Cubic Defense Systems (CDS). We organize our business segments based on the nature of the products and services offered.

CTS is a systems integrator that develops and provides fare collection infrastructure, services and technology, traffic management and road enforcement systems and services, and real-time passenger information systems and services for transportation authorities and operators worldwide. We offer fare collection devices, software systems and multiagency, multimodal transportation integration technologies, as well as a full suite of operational services that help agencies efficiently collect fares, manage operations, reduce revenue leakage and make transportation more convenient. We provide a wide range of services for transportation authorities in major markets worldwide, including computer hosting services, call center and web services, payment media issuance and distribution services, retail point of sale network management, payment processing and enforcement, financial clearing and settlement, software application support and outsourced asset operations and maintenance.

MSS is a leading provider of highly specialized support services to the U.S. government and allied nations. Services provided include live, virtual and constructive training, real-world mission rehearsal exercises, professional military education, intelligence support, information technology, information assurance and related cyber support, development of military doctrine, consequence management, infrastructure protection and force protection, as well as support to field operations, and logistics.

CDS is focused on two primary lines of business: Training Systems and Secure Communications. CDS is a diversified supplier of live and virtual military training systems, and secure communication systems and products to the U.S. Department of Defense, other U.S. government agencies and allied nations. We design and manufacture instrumented range systems for fighter aircraft, armored vehicles and infantry force-on-force live training weapons effects simulations, laser-based tactical and communication systems, and precision gunnery solutions. Our secure communications products are aimed at intelligence, surveillance, asset tracking and search and rescue markets.

Consolidated Overview

Sales for the quarter ended June 30, 2014 increased 1% to $340.4 million from $337.2 million last year. Sales from CTS and CDS increased 14% and 22%, respectively, while MSS sales decreased 26% compared to the third quarter of last year. For the first nine months of the fiscal year, sales decreased to $1.002 billion compared to $1.021 billion last year, a decrease of 2%. MSS sales decreased 19% compared to the first nine months of last year, while CTS and CDS sales increased 8% and 7%, respectively.  The sales generated by businesses we acquired during 2014 and 2013 totaled $36.0 million and $82.7 million for the three- and nine-month periods ended June 30, 2014 compared to $14.6 million and $25.7 million for the three- and nine-month periods ended June 30, 2013, respectively. See the segment discussions following for further analysis of segment sales.

Operating income was $19.2 million in the third quarter compared to $26.9 million in the third quarter of last year, a decrease of 29%. CTS, MSS and CDS operating income decreased 19%, 50% and 46%, respectively. Businesses we acquired during 2014 and 2013 contributed operating losses of $3.0 million for the three months ended June 30, 2014 compared to operating losses of $0.9 million for the three months ended June 30, 2013. Unallocated corporate and other costs for the third quarter of 2014 were $1.2 million compared to $1.8 million in 2013.

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Operating income for the nine-month period decreased 37% to $53.2 million from $84.8 million last year. CTS and MSS operating income decreased 49% and 47%, respectively, compared to the first nine months of last year, while CDS operating income increased 112%. CDS operating results for the nine-month period ended June 30, 2013 included restructuring costs of $6.2 million. Businesses we acquired in 2014 and 2013 generated operating losses of $8.9 million for the nine months ended June 30, 2014 and $1.7 million for the nine months ended June 30, 2013. Unallocated corporate and other expenses for the first nine months of the fiscal year were $4.1 million for 2014 and $3.7 million for 2013.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) decreased to $26.7 million in the quarter from $33.3 million in the third quarter of last year. For the first nine months of the fiscal year, Adjusted EBITDA decreased to $76.0 million compared to $102.8 million last year. The changes in Adjusted EBITDA for the quarter and nine-month period ended June 30, 2014 are primarily related to the changes in operating income for the corresponding periods. See below for a reconciliation of this non-GAAP metric to net income and an explanation of why we believe it to be an important measure of performance.

Net income attributable to Cubic for the third quarter of fiscal 2014 decreased to $12.2 million, or 45 cents per share, compared to $18.4 million, or 69 cents per share last year. Net income decreased for the quarter primarily due to the decrease in operating income described above partially offset by a decrease in income tax expense. In addition, interest expense increased due to the higher average outstanding debt balance over the quarter ended June 30, 2014 compared to the corresponding quarter of 2013. We recorded a loss of $0.7 million during the quarter ended June 30, 2014 related to changes in the fair value of our forward starting swap. No gains or losses related to our forward starting swap were recognized in fiscal year 2013.

For the first nine months of the year, net income attributable to Cubic decreased to $36.7 million, or $1.36 per share, from $62.3 million, or $2.33 per share last year. The decrease in net income for the nine-month period was primarily due to a decrease in operating income, partially offset by a decrease in income tax expense. In the first quarter of fiscal 2013, we recorded $0.6 million of interest expense related to a judgment against us, which required us to pay such amount of interest to the court on behalf of a party that had filed claims against us. Also, interest and dividend income decreased for the nine-month period based upon the decrease in our average cash balances over the periods. Included in other income was a net foreign currency exchange loss of $1.6 million in the first nine months this year compared to a loss of $1.2 million last year, before applicable income taxes. Net gains recognized in other income related to our forward starting swap totaled $0.2 million for the nine-month period ended June 30, 2014.

Our gross margin percentage on product sales decreased to 21% in the third quarter of 2014 from 29% last year, and decreased to 25% for the nine months ended June 30, 2014 from 28% last year. The decrease in the gross margin percentages in the third quarter of 2014 and for the nine months ended June 30, 2014 are primarily due to increased cost estimates on a contract to design and build a fare collection system in Vancouver which is further described in the CTS segment discussion below.

Our gross margin percentage on service sales decreased to 19% in the first nine months of 2014 from 22% last year. The decrease in the gross margin percentages on services sales for the nine-month period was primarily the result of increased costs of providing services on a transportation contract in Chicago. The provision of services under this contract began just prior to the end of fiscal 2013. Revenue recognized on this contract is limited to billable amounts, which were significantly less than costs incurred to provide these services until the billable amounts increased upon system acceptance, which occurred effective January 1, 2014.

For the three-month period ended June 30, 2014, our gross margin percentage on service sales increased to 23% compared to 22% last year, primarily because of revenue recognized on this transportation contract in Chicago. For this contract, although the customer system acceptance occurred effective January 1, 2014, we did not receive notice of this acceptance until our third fiscal quarter of 2014. Therefore, service revenue recognized in the quarter ended June 30, 2014 includes $7.5 million related to amounts that were billable for the months ended January 2014 through March 2014.

Selling, general and administrative (SG&A) expenses increased in the third quarter of 2014 to $46.5 million compared to $44.1 million in 2013. For the nine-month period, SG&A increased to $131.5 million compared to $126.4 million last year. As a percentage of sales, SG&A expenses were 14% for the third quarter and 13% for the nine-month period of fiscal 2014 compared to 13% and 12%, respectively, in 2013. The increase in SG&A expenses in the third quarter was primarily due to SG&A expenses associated with companies acquired in 2013 and 2014. In addition, share based compensation expense added $1.6 million and $4.0 million to SG&A expenses for the third quarter and first nine months of the year, respectively, compared to $1.5 million for each of the corresponding periods last year.

Company funded research and development expenditures, which relate to new defense and transportation technologies under development, decreased to $3.9 million for the third quarter compared to $6.4 million last year, and decreased to $13.8 million for the nine-month period this year compared to $19.3 million last year. Amortization of purchased intangibles increased for the third quarter of 2014 to $5.7 million compared to $4.4 million last year due to the increase in intangible assets related to businesses acquired during 2013 and 2014. Amortization of purchased intangibles for the first nine months of 2014 increased to $17.1 million from $12.2 million in 2013.

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We estimate our annual effective income tax rate for fiscal 2014 will be approximately 23%. The effective rate for fiscal 2014 could be affected by, among other factors, the mix of business between the U.S. and foreign jurisdictions, our ability to take advantage of available tax credits and audits of our records by taxing authorities.

Transportation Systems Segment (CTS)

	Nine Months Ended				Three Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
	(in millions)
			(As Restated)				(As Restated)
Transportation Systems Segment Sales	$	429.1	$	398.4	$	153.0	$	134.8
Transportation Systems Segment Operating Income	$	35.2	$	69.5	$	15.3	$	19.0

CTS sales increased 14% in the third quarter to $153.0 million compared to $134.8 million last year, and increased 8% for the nine- month period to $429.1 million from $398.4 million last year. Businesses acquired by CTS in fiscal years 2013 and 2014 contributed sales of $14.9 million and $36.9 million during the quarter and nine months ended June 30, 2014, respectively, compared to $3.1 million and $4.6 million for the quarter and nine months ended June 30, 2013.

During the quarter and nine months ended June 30, 2014 we increased cost estimates on a contract to design and build a system in Vancouver. Since we use the cost-to-cost percentage of completion method of accounting for the development and build of this system, increases in estimated total costs have an impact of reducing revenue and operating margin. Increases in cost estimates in the quarter ended June 30, 2014 reduced sales and operating income by $13.5 million for the quarter, and increases in cost estimates in the nine months ended June 30, 2014 reduced sales and operating income by $18.3 million for the nine-month period.

During the quarter ended June 30, 2014 our customer for a system development and services contract in Chicago determined that we had met the final criteria for system delivery effective January 1, 2014. According to our contract with this customer, monthly payments for this contract increase at the time that delivery of the system is completed and accepted. As such, in the quarter ended June 30, 2014 we billed and collected these increased contractual amounts for the months of January 2014 through June 2014. Revenue is being recognized for this contract based upon when amounts are billable to the customer. Therefore, revenue recognized in the quarter ended June 30, 2014 includes $7.5 million related to amounts that were billable for the months ended January 2014 through March 2014.

The average exchange rates between the prevailing currency in our foreign operations and the U.S. dollar resulted in an increase in sales of $5.3 million for the third quarter and an increase of $3.3 million for the nine-month period compared to the same periods last year.

CTS operating income decreased 19% in the third quarter to $15.3 million compared to $19.0 million last year, and decreased 49% for the nine-month period to $35.2 million from $69.5 million last year. CTS operating income for the quarter and nine months ended June 30, 2014 decreased due to the changes in cost estimates on the Vancouver contract described above. The decrease in CTS operating income for the nine-month period was also impacted by the increased costs of providing services on our transportation contract in Chicago. The provision of services under this contract began just prior to the end of fiscal 2013. Revenue recognized on this contract is limited to billable amounts, which were significantly less than costs incurred to provide these services until the billable amounts increased upon system acceptance, which occurred effective January 1, 2014. For the nine-month period ended June 30, 2014, the operating loss for this contract was $24.2 million.  However, as discussed above, for the quarter ended June 30, 2014, the operating margin on our contract in Chicago improved compared to the first half of the year due to the increase in the billable amounts effective January 1, 2014. The operating margin on this contract was $0.9 million for the quarter. The operating margin for the quarter includes $5.5 million of operating margin related to amounts that were billable for the months ended January 2014 through March 2014, net of the recognition in cost of sales of long-term capitalized costs incurred for those billable amounts.

We are also in a phase of the Sydney contract where we are continuing to install the system while transitioning to full operations and the costs incurred to provide services are greater than the billable revenues for those services. Profit margins are expected to improve as the Sydney system moves into full operations in the first half of next year. An increase in estimated development costs of a supplier for new rail ticketing technology for a customer in the U.K. also impacted the nine months ended June 30, 2014 by $3.4 million and we have since diversified the supply of development work for this contract. The decrease in operating income for the nine-month period was partially offset by increased system usage bonuses on our contract in London.

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Businesses acquired by CTS in 2013 and 2014 had operating losses of $0.4 million and $2.1 million, respectively, for the three- and nine-month periods ended June 30, 2014 compared to operating losses of $0.2 million and $0.5 million, respectively for the quarter and nine-month periods ended June 30, 2013. The average exchange rates between the prevailing currency in our foreign operations and the U.S. dollar resulted in increases in operating income of $2.6 million for the third quarter and $4.5 million for the nine-month periods compared to the same periods last year.

Mission Support Services Segment (MSS)

	Nine Months Ended				Three Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
	(in millions)
			(As Restated)				(As Restated)
Mission Support Services Segment Sales	$	291.7	$	359.4	$	91.8	$	123.8
Mission Support Services Segment Operating Income	$	6.0	$	11.4	$	1.8	$	3.6

MSS sales decreased 26% in the third quarter to $91.8 million compared to $123.8 million last year, and decreased 19% for the nine-month period to $291.7 million from $359.4 million last year. Sales for the first nine months of the fiscal year were lower due in part to the U.S. government’s shut down in October 2013. Sales for the quarter and nine months ended June 30, 2014 also decreased due to reductions in spending by the U.S. government.  The decrease in sales was also caused by the loss of a contract early in fiscal year 2014 due to a lower bid by a competitor. These reductions were partially offset by growth in the Simulator Training business area due to the win of a new contract in early fiscal 2014. NEK Special Programs Group LLC (NEK), a Special Operation Forces training business acquired in December 2012 had sales of $14.4 million and $34.0 million for the three- and nine-month periods ended June 30, 2014 compared to sales of $11.4 million and $21.1 million for the three- and nine-month periods ended June 30, 2013.

MSS operating income decreased 50% in the third quarter to $1.8 million compared to $3.6 million last year, and decreased 47% for the nine-month period to $6.0 million from $11.4 million last year. The decreased operating income for the quarter and nine-month period resulted from the sales decreases described above and reduced profit margins on contracts due to competitive pressures driving down bid prices. Operating income also decreased as a result of a focused investment we are making to increase our footprint in the Special Operations Forces market, which totaled $0.6 million for the quarter and $1.3 million for the nine months. NEK had an operating loss of $0.2 million for the quarter and $0.8 million for the nine-month period ended June 30, 2014 compared to $0.7 million for the quarter and $1.2 million for the nine-month period ended June 30, 2013, which had included $0.6 million of acquisition-related costs.

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Defense Systems Segment (CDS)

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
	(in millions)
				(As Restated)						(As Restated)
Defense Systems Segment Sales
Training systems	$	243.7		$	217.4		$	84.4		$	65.2
Secure communications	37.5			45.1			11.2			13.4
	$	281.2		$	262.5		$	95.6		$	78.6
Defense Systems Segment Operating Income
Training systems	$	19.3		$	16.8		$	6.9		$	7.9
Secure communications	(2.8		)	(3.0		)	(3.5		)	(1.7		)
Restructuring costs	(0.4		)	(6.2		)	(0.1		)	(0.1		)
	$	16.1		$	7.6		$	3.3		$	6.1

Training Systems

Training systems sales increased 29% in the third quarter to $84.4 million compared to $65.2 million last year, and increased 12% for the nine-month period to $243.7 million from $217.4 million last year. Businesses acquired by CDS in 2013 and 2014 contributed training system sales of $6.7 million and $11.8 million for the three- and nine-month periods ended June 30, 2014 and had no sales for the comparable periods ended June 30, 2013. Sales were higher for both the quarter and nine-month period from a new ground combat training system development contract in the Far East, from tactical engagement simulation system contracts and from simulator contracts, including a new contract to develop simulation trainers for the Littoral Combat Ships. These increases in sales were partially offset by lower sales of air combat training systems for the quarter and nine-month period.

Operating income decreased 13% in the third quarter to $6.9 million compared to $7.9 million last year, and increased 15% for the nine-month period to $19.3 million from $16.8 million last year. For the nine-month period ended June 30, 2014 increases in operating income of organic Training Systems business were partially offset by operating losses from businesses purchased in 2013 and 2014. For the quarter ended June 30, 2014 the operating losses from businesses purchased in 2013 and 2014 more than offset the increases in operating income from organic business.

For the quarter and for the nine month period ended June 30, 2014 Training Systems had higher operating income on increased sales from the ground combat training system, simulator and development contracts mentioned above. Profit margins on a number of Training Systems contracts improved in fiscal 2014 due to the restructuring activity in the third quarter of 2013, which reduced ongoing costs. The Training Systems business had decreased operating income on lower sales of air combat training systems during the three and nine-month periods ended June 30, 2014. Training system businesses acquired by CDS in 2013 and 2014 incurred operating losses of $1.8 million and $6.0 million for the three- and nine-month periods ended June 30, 2014, respectively, and had no operating losses in the comparable periods ended June 30, 2013. These operating losses for the nine-month period ended June 30, 2014 included $0.2 million of transaction costs and $3.7 million of compensation expense for amounts paid to Intific employees upon the close of the acquisition.

Secure Communications

Our secure communications products business supplies secure data links, search and rescue avionics, high power RF amplifiers, cyber security appliances, and asset tracking solutions for the U.S. military, government agencies, and allied nations.

Secure communications sales decreased 16% in the third quarter to $11.2 million compared to $13.4 million last year, and decreased 17% for the nine-month period to $37.5 million from $45.1 million last year. Sales were lower from personnel locator system and asset tracking products. Data link sales were slightly lower for the quarter but were higher for the nine-month period ended June 30, 2014.

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Secure communications operating loss was $3.5 million in the third quarter compared to an operating loss of $1.7 million last year. The operating loss decreased for the nine-month period to $2.8 million from an operating loss of $3.0 million last year. The primary contributors to our secure communications operating losses were losses incurred by our cyber security appliance and asset tracking product lines. Cyber security appliance operating losses were relatively consistent for the three- and nine-month periods in 2014 and the comparable periods in 2013, while operating losses on asset tracking products decreased for the three- and nine-month periods due to cost reduction efforts. In the quarter ended June 30, 2014 the secure communication operating loss was impacted by a research and development investment of $0.6 million that we made in wideband satellite communications technologies as well as $0.6 million of costs incurred related to a cyber behavior virtualization technology in development.

For the quarter and nine-month period ended June 30, 2014, operating profits were lower on decreased sales of personnel locator systems, and for the quarter operating profits were lower on decreased data link sales. For the nine month period ended June 30, 2013 the operating loss was impacted by cost increases of $2.6 million we experienced in the first half of fiscal 2013 on a U.S. government contract for data link products. This cost increase had no impact on the operating profit for the quarter ended June 30, 2014.

Backlog

	June 30,		September 30,
	2014		2013
	(in millions)
			(As Restated)
Total backlog
Transportation Systems	$	1,323.9	$	1,526.4
Mission Support Services	505.5		626.7
Defense Systems:
Training systems	553.5		457.8
Secure communications	45.3		35.7
Total Defense Systems	598.8		493.5
Total	$	2,428.2	$	2,646.6
Funded backlog
Transportation Systems	$	1,323.9	$	1,526.4
Mission Support Services	147.9		221.0
Defense Systems:
Training systems	553.5		457.8
Secure communications	45.3		35.7
Total Defense Systems	598.8		493.5
Total	$	2,070.6	$	2,240.9

Total backlog decreased $218.4 million from September 30, 2013 to June 30, 2014. Decreases in backlog for CTS and MSS were partially offset by an increase in backlog for CDS. The decrease at MSS primarily pertains to a decrease in unfunded backlog due to the Government recompeting the JRTC contract early. Changes in exchange rates between the prevailing currency in our foreign operations and the U.S. dollar as of the end of the quarter increased backlog by $27.4 million compared to September 30, 2013.

The difference between total backlog and funded backlog represents options under multiyear MSS service contracts. Funding for these contracts comes from annual operating budgets of the U.S. government and the options are normally exercised annually. Funded backlog includes unfilled firm orders for our products and services for which funding has been both authorized and appropriated by the customer (Congress, in the case of U.S. government agencies). Options for the purchase of additional systems or equipment are not included in backlog until exercised. In addition to the amounts identified above, we have been selected as a participant in or, in some cases, the sole contractor for several substantial indefinite delivery/ indefinite quantity (ID/IQ) contracts. ID/IQ contracts are not included in backlog until an order is received. In the past, many of the contracts we were awarded in MSS were long-term in nature, spanning periods of five to ten years. The U.S. Department of Defense now awards shorter-term contracts for the services we provide and increasingly relies upon ID/IQ contracts which can result in a lower backlog and/or lower funded backlog due to the shorter-term nature of Task Orders issued under these ID/IQ awards. We also have several service contracts in our transportation business that include contingent revenue provisions tied to meeting certain performance criteria. These variable revenues are also not included in the amounts identified above.

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Adjusted EBITDA

Adjusted EBITDA represents net income attributable to Cubic before interest, taxes, non-operating income, goodwill impairment charges, depreciation and amortization. We believe that the presentation of Adjusted EBITDA included in this report provides useful information to investors with which to analyze our operating trends and performance and ability to service and incur debt. Also, Adjusted EBITDA is a factor we use in measuring our performance and compensating certain of our executives. Further, we believe Adjusted EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of property, plant and equipment (affecting relative depreciation expense), goodwill impairment charges and non-operating expenses which may vary for different companies for reasons unrelated to operating performance. In addition, we believe that Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an Adjusted EBITDA measure when reporting their results. Adjusted EBITDA is not a measurement of financial performance under U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income as a measure of performance. In addition, other companies may define Adjusted EBITDA differently and, as a result, our measure of Adjusted EBITDA may not be directly comparable to Adjusted EBITDA of other companies. Furthermore, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

·Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

·Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

·Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

·Adjusted EBITDA does not reflect our provision for income taxes, which may vary significantly from period to period; and

·Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. You are cautioned not to place undue reliance on Adjusted EBITDA.

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The following table reconciles Adjusted EBITDA to net income attributable to Cubic, which we consider to be the most directly comparable GAAP financial measure to Adjusted EBITDA:

	Nine Months Ended				Three Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
	(in thousands)
			(As Restated)				(As Restated)
Reconciliation:
Net income attributable to Cubic	$	36,686	$	62,272	$	12,206	$	18,381
Add:
Provision for income taxes	13,240		20,437		4,992		7,292
Interest expense, net	2,159		1,168		909		395
Other expense (income), net	1,058		764		1,098		813
Noncontrolling interest in income of VIE	79		149		10		24
Depreciation and amortization	22,740		18,014		7,511		6,417
ADJUSTED EBITDA	$	75,962	$	102,804	$	26,726	$	33,322

Liquidity and Capital Resources

Operating activities provided cash of $36.7 million for the nine-month period primarily due to the excess of cash received from customers over the cash paid to vendors and employees. The cash provided by operating activities was partially offset by an increase in long-term capitalized costs for the nine-month period and a decrease in accounts payable. Long-term capitalized contract costs consist of costs incurred on a contract to develop and manufacture a transportation fare system for a customer for which revenue recognition did not begin until the customer began operating the system in the fourth quarter of 2013. These capitalized costs are being recognized as cost of sales based upon the ratio of revenue recorded during the period compared to the revenue expected to be recognized over the term of the contract. Contract terms, including payment terms on our long-term development contracts, are customized for each contract based upon negotiations with the respective customer.

For the nine month period ended June 30, 2014, MSS and CDS provided cash from operating activities, while the operating activities of CTS used cash. For the quarter, all three segments provided cash from operating activities.

Investing activities for the nine-month period included $83.5 million of cash paid related to businesses acquired and capital expenditures of $13.5 million. Financing activities for the nine-month period consisted primarily of the net receipt of proceeds of $8.0 million from short-term borrowings, payment of dividends to shareholders of $3.2 million and a payment of $2.4 million related to the acquisition of NEK for contingent consideration.

A change in exchange rates between foreign currencies, primarily between the Australian dollar and the U.S. dollar and between the British Pound and the U.S. dollar, resulted in an increase of $16.7 million to our cash balance as of June 30, 2014 compared to September 30, 2013, and an increase in Accumulated Other Comprehensive Income of $19.1 million during the nine-month period.

We have a committed revolving credit agreement with a group of financial institutions in the amount of $200.0 million that expires in May 2017 (Revolving Credit Agreement). The available line of credit on the Revolving Credit Agreement is reduced by any letters of credit issued under the agreement. As of June 30, 2014, there were borrowings totaling $8.0 million under this agreement. Any borrowings under the Revolving Credit Agreement bear interest at a variable rate, which was 1.66% at June 30, 2014. At June 30, 2014 there were letters of credit outstanding under the Revolving Credit Agreement totaling $34.2 million, which reduce the available line of credit to $157.8 million.

We have a secured letter of credit facility agreement with a bank (Secured Letter of Credit Facility) which is cancellable by us at any time upon the completion of certain conditions to the satisfaction of the bank. At June 30, 2014, there were letters of credit outstanding under this agreement of $62.2 million. In support of the Secured Letter of Credit Facility, we placed $69.0 million of our cash on deposit in the U.K. as collateral in a restricted account with the bank providing the facility. We are required to leave the cash in the restricted account so long as the bank continues to maintain associated letters of credit under the facility. The maximum amount of letters of credit currently allowed by the facility is $62.7 million, and any increase above this amount would require bank approval and additional restricted funds to be placed on deposit. We may choose at any time to terminate the facility and move the associated letters of credit to another credit facility. Letters of credit outstanding under the Secured Letter of Credit Facility do not reduce the available line of credit available under the Revolving Credit Agreement.

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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. Interest on these notes is due semi-annually and principal payments are due from 2021 through 2025. In addition, pursuant to the agreement, through March 2016 we may from time to time issue and sell, and the purchasers may in their sole discretion purchase additional senior notes in aggregate principal amount of up to $25.0 million that will have terms, including interest rate, as we and the purchasers may agree upon at the time of issuance.

As of June 30, 2014, $144.2 million of the $166.8 million of our cash and cash equivalents was held by our foreign subsidiaries. We also had $69.0 million of restricted cash in the U.K. at September 30, 2013.If any of these funds held by our foreign subsidiaries are needed for our operations in the U.S., we would be required to accrue and pay U.S. taxes to repatriate these funds. However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate them to fund our U.S. operations.

Our financial condition remains strong with working capital of $472.1 million and a current ratio of 2.8 to 1 at June 30, 2014. We expect that cash on hand, cash flows from operations, and our unused lines of credit will be adequate to meet our liquidity requirements for the foreseeable future.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. ASU 2014-09 will be effective for us starting in the first quarter of fiscal 2018. ASU 2014-09 allows for two methods of adoption: (a) “full retrospective” adoption, meaning the standard is applied to all periods presented, or (b) “modified retrospective” adoption, meaning the cumulative effect of applying ASU 2014-09 is recognized as an adjustment to the fiscal 2018 opening retained earnings balance. We are in the process of determining the adoption method as well as the effects the adoption of ASU 2014-09 will have on our consolidated financial statements.

Critical Accounting Policies, Estimates and Judgments

Our financial statements are prepared in accordance with accounting principles that are generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments, the most critical of which are those related to revenue recognition, income taxes, valuation of goodwill, purchased intangibles, accounting for business combinations, and pension costs. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known.

Besides the estimates identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. All estimates, whether or not deemed critical affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.

For further information, refer to “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies, Estimates and Judgments” and the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K/A for the year ended September 30, 2013.

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING INFORMATION

This report, including the documents incorporated by reference herein, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor created by such Act. Any statements about our expectations, beliefs, plans, objectives, assumptions, future events or our future financial and/or operating performance are not historical and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as

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“may,” “will,” “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “predict,” “potential,” “opportunity” and similar words or phrases or the negatives of these words or phrases. These forward-looking statements involve risks, estimates, assumptions and uncertainties, including those discussed in “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K/A for the year ended September 30, 2013, and throughout this report that could cause actual results to differ materially from those expressed in these statements. Such risks, estimates, assumptions and uncertainties include, among others:

·unanticipated issues related to the restatement of our financial statements;

·our ability to develop and implement new processes and procedures to remediate the material weaknesses that exist in our internal control over financial reporting;

·our dependence on U.S. and foreign government contracts;

·delays in approving U.S. and foreign government budgets and cuts in U.S. and foreign government defense expenditures;

·the ability of certain government agencies to unilaterally terminate or modify our contracts with them;

·our ability to successfully integrate new companies into our business and to properly assess the effects of such integration on our financial condition;

·the U.S. government’s increased emphasis on awarding contracts to small businesses, and our ability to retain existing contracts or win new contracts under competitive bidding processes;

·negative audits by the U.S. government;

·the effects of politics and economic conditions on negotiations and business dealings in the various countries in which we do business or intend to do business;

·competition and technology changes in the defense and transportation industries;

·our ability to accurately estimate the time and resources necessary to satisfy obligations under our contracts;

·the effect of adverse regulatory changes on our ability to sell products and services;

·our ability to identify, attract and retain qualified employees;

·business disruptions due to cyber security threats, physical threats, terrorist acts, acts of nature and public health crises;

·our involvement in litigation, including litigation related to patents, proprietary rights and employee misconduct;

·our reliance on subcontractors and on a limited number of third parties to manufacture and supply our products;

·our ability to comply with our development contracts and to successfully develop, introduce and sell new products, systems and services in current and future markets;

·defects in, or a lack of adequate coverage by insurance or indemnity for, our products and systems;

·changes in U.S. and foreign tax laws, exchange rates or our economic assumptions regarding our pension plans; and

·other factors discussed elsewhere in this report.

Because the risks, estimates, assumptions and uncertainties referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance and you should not use our historical performance to anticipate results or future period trends. Further, any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

39

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risks at June 30, 2014 have not changed materially from those described under “Item 7A. Quantitative and Qualitative Disclosure about Market Risk” in our Annual Report on Form 10-K/A for the year ended September 30, 2013.

ITEM 4 - CONTROLS AND PROCEDURES

We performed an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2014. The evaluation was performed with the participation of senior management of each business segment and key corporate functions, and under the supervision of our Chief Executive Officer and our Chief Financial Officer. Based upon our evaluation we identified material weaknesses in internal control over financial reporting as of that date.

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) are designed to provide reasonable assurance that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (SEC) and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

As described below, management has identified material weaknesses in our internal control over financial reporting, which is an integral component of our disclosure controls and procedures. As a result of those material weaknesses, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2014.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In connection with management’s assessment of our internal control over financial reporting described above, management has identified the following deficiencies that constituted individually, or in the aggregate, material weaknesses in our internal control over financial reporting as of June 30, 2014:

·In our process of assessing the appropriate accounting treatment for revenue and costs for certain of our contracts with customers of one of our significant wholly owned subsidiaries, we did not maintain a sufficient number of personnel with an appropriate level of knowledge and experience or ongoing training in U.S. generally accepted accounting principles (GAAP) to challenge our application of GAAP commensurate with the number and complexity of this subsidiary’s contracts to prevent or detect material misstatements in revenue or cost of sales in a timely manner.

·Our policies for the review and approval of revenue recognition decisions required review and analysis by personnel with an appropriate level of GAAP knowledge and experience for contracts over certain materiality thresholds. For one of our significant wholly owned subsidiaries, these thresholds were not designed to ensure that sufficient review was being performed for revenue recognition decisions for this subsidiary that could have a material impact on our financial statements.

Because of these material weaknesses, management has concluded that we did not maintain effective internal control over financial reporting as of June 30, 2014.

Changes in Internal Control over Financial Reporting

To remediate the material weakness in our internal control over financial reporting described above, we are in the process of adding resources and we have implemented new control procedures regarding our accounting for revenue and costs on our contracts. The new control procedures include the development of new revenue and cost analytical tools, more extensive review and analysis of contract terms, revenue recognition models, and related reports by personnel with an appropriate level of GAAP knowledge and experience. Also, we have initiated additional training and education for personnel involved in financial processes that impact revenue and cost recognition.

We believe the steps taken to date have improved the effectiveness of our internal control over financial reporting. However, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

40

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

In November 2011, we received a claim from a public transit authority customer which alleged that the authority incurred a loss of transit revenue due to the inappropriate and illegal actions of one of our former employees, who has pled guilty to the charges. This individual was employed to work on a contract we acquired in a business combination in 2009 and had allegedly been committing these illegal acts from almost two years prior to our acquisition of the contract, until his arrest in May 2011. The transit system was designed and installed by a company unrelated to us. The transit authority sought recoupment from us of a total amount of $4.5 million for alleged lost revenue, fees and damages. In March 2012, the county superior court entered a default judgment against our former employee and others for $2.9 million based upon the estimated loss of revenue by the public transit authority customer. In 2012, we recorded an accrued cost of $2.9 million within general and administrative expense in the transportation systems segment based upon the court’s assessment of these losses. In July 2014 we entered into a settlement agreement with the customer for a cash payment of $2.6 million plus an assignment of forty percent of any insurance proceeds we receive under relevant insurance policies. In June 2014 we reduced our accrued costs to $2.6 million. We have submitted our claim to our insurance carriers but have not yet resolved the level of coverage. Any potential insurance proceeds, and any related assignment of a portion of the proceeds to the customer, will not be recognized in the financial statements until receipt of any such insurance proceeds is probable.

In October and December of 2013, and January of 2014, lawsuits were filed in the United States District Court for the Northern District of Illinois, Eastern Division against us and one of our transit customers alleging variously, among other things, breach of contract, violation of the Illinois Consumer Fraud Act, unjust enrichment and violation of the Electronic Funds Act. In January 2014 these cases were consolidated into a single case and the Plaintiffs are seeking to have the case certified as a class action. Plaintiffs variously claim, among other things, that: (i) they were wrongly charged for calling the call center that we operate for patrons of our transit customer, (ii) they were wrongly charged for a transfer and a second fare, (iii) they were not credited the cost of a transit card even after registration of the card, as is required under the terms of the cardholder agreement, and (iv) they were double charged for rides taken. We are undertaking the defense of the transit customer pursuant to our contractual obligations to that customer. We are investigating the matter and plan to vigorously defend this lawsuit. Due to the preliminary nature of this case, we cannot estimate the probability of loss or any range of estimate of possible loss.

Also in October 2013, a lawsuit was filed in the Circuit Court of Cook County, Illinois, County Department, Chancery Division against our same transit customer alleging conversion and unjust enrichment. This lawsuit was later amended and refiled in May 2014.  The plaintiff alleges his bank debit card was charged two dollars and twenty-five cents for his ride on the transit system rather than the ride being charged to his transit fare card. This plaintiff is also seeking to have his case certified as a class action for all patrons whose bank cards were charged in the same manner. We are investigating the matter and we are undertaking the defense pursuant to our contractual obligations to our transit customer. We plan to vigorously defend this lawsuit. Due to the preliminary nature of this case, we cannot estimate the probability of loss or any range of estimate of possible loss.

ITEM 1A - RISK FACTORS

There have been no material changes to the risk factors disclosed in “Part I - Item 1A. Risk Factors” of our Annual Report on Form 10-K/A for the year ended September 30, 2013.

ITEM 6 - EXHIBITS

(a) The following exhibits are included herein:

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation. Incorporated by reference to Form 10-Q for the quarter ended June, 30, 2006, file No. 001-08931, Exhibit 3.1.
3.2	Amended and Restated Bylaws. Incorporated by reference to Form 8-K filed April 22, 2014, file No. 001-08931, Exhibit 3.1.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101	Financial statements from the Cubic Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Statements of Income, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

41

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			CUBIC CORPORATION
Date	August 4, 2014		/s/ John D. Thomas
			John D. Thomas
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)
Date		August 4, 2014	/s/ Mark A. Harrison
			Mark A. Harrison
			Senior Vice President and Corporate Controller
			(Principal Accounting Officer)

42

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bradley H. Feldmann, certify that:

1)I have reviewed this quarterly report on Form 10-Q of Cubic Corporation;

2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Bradley H. Feldmann

Bradley H. Feldmann

President and Chief Executive Officer

Date: August 4, 2014

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John D. Thomas, certify that:

1)I have reviewed this quarterly report on Form 10-Q of Cubic Corporation;

2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John D. Thomas

John D. Thomas

Executive Vice President and Chief Financial Officer

Date: August 4, 2014

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350

The undersigned, in his capacity as an officer of Cubic Corporation (the “Registrant”) hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:

(1) The quarterly report of the Registrant on Form 10-Q for the period ended June 30, 2014, (the “Report”), which accompanies this certification, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Bradley H. Feldmann

Bradley H. Feldmann

President and Chief Executive Officer

Date: August 4, 2014

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350

The undersigned, in his capacity as an officer of Cubic Corporation (the “Registrant”) hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:

(1) The quarterly report of the Registrant on Form 10-Q for the period ended June 30, 2014, (the “Report”), which accompanies this certification, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ John D. Thomas

John D. Thomas

Executive Vice President and Chief Financial Officer

Date: August 4, 2014

XML

Balance Sheet Details (Details) (USD $)	3 Months Ended	9 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Sep. 30, 2013
Marketable Securities
Realized or unrealized gains or losses on marketable securities		$ 0
Accounts Receivable
Trade and other receivables	27,063,000	27,063,000	17,352,000
Long-term contracts:
Billed	118,662,000	118,662,000	98,983,000
Unbilled	274,850,000	274,850,000	282,346,000
Allowance for doubtful accounts	(484,000)	(484,000)	(658,000)
Total accounts receivable	420,091,000	420,091,000	398,023,000
Less estimated amounts not currently due	(16,690,000)	(16,690,000)	(19,021,000)
Current accounts receivable	403,401,000	403,401,000	379,002,000
Period that receivables will not be collected within to be classified as not currently due		1 year
Inventories
Work in process and inventoried costs under long-term contracts	79,346,000	79,346,000	80,918,000
Customer advances	(27,536,000)	(27,536,000)	(21,865,000)
Materials and purchased parts	1,958,000	1,958,000	693,000
Net inventories	53,768,000	53,768,000	59,746,000
Costs incurred outside the scope of work or in advance of a contract award	1,700,000	1,700,000	5,800,000
Long-term Capitalized Costs
Long-term capitalized costs being recognized as cost of sales	$ 5,100,000	$ 6,100,000	$ 0

XML

Derivative Instruments and Hedging Activities (Details 2) (Instruments designated as accounting hedges:, USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Sep. 30, 2013
Derivative instruments and hedging activities
Asset derivatives:	$ 14,016	$ 7,693
Liability derivatives:	14,643	7,726
Foreign currency forwards | Other current assets
Derivative instruments and hedging activities
Asset derivatives:	8,223	1,597
Foreign currency forwards | Other noncurrent assets
Derivative instruments and hedging activities
Asset derivatives:	5,629	4,957
Foreign currency forwards | Other current liabilities
Derivative instruments and hedging activities
Liability derivatives:	8,811	2,360
Foreign currency forwards | Other noncurrent liabilities
Derivative instruments and hedging activities
Liability derivatives:	5,832	5,366
Forward starting swap | Other noncurrent assets
Derivative instruments and hedging activities
Asset derivatives:	$ 164	$ 1,139

XML

Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Sep. 30, 2013
Income Taxes
Effective tax rate (as a percent)	29.00%		36.00%
Unrecognized tax benefits, exclusive of interest and penalties	$ 4.7	$ 4.7	$ 4.8
Unrecognized tax benefits from permanent tax adjustments that, if recognized, would affect the effective rate	4.7	4.7
Estimated unrecognized tax benefits resulting from possible resolution of reviews by domestic and international taxing authorities	0.1	0.1
Period of cumulative income or loss under assessment to determine if a valuation allowance is required		3 years
Valuation allowance on net deferred tax assets for Australia	$ 4.0	$ 4.0

XML

Restatement of Condensed Consolidated Financial Statements (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Mar. 31, 2014	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Sep. 30, 2012
Current assets:
Cash and cash equivalents	$ 166,841	$ 125,343	$ 203,892	$ 212,451	$ 148,605	$ 212,267
Restricted cash	69,028		69,381
Marketable securities			4,055
Accounts receivable - net	403,401		379,002
Recoverable income taxes	17,719		7,885
Inventories - net	53,768		59,746
Deferred income taxes and other current assets	30,844		18,638
Total current assets	741,601		742,599
Long-term contract receivables	16,690		19,021
Long-term capitalized costs	77,560		68,963
Property, plant and equipment - net	64,360		56,305
Deferred income taxes	18,057		19,322
Goodwill	187,595		136,094
Purchased intangibles - net	70,257		57,542
Other assets	11,527		9,772
Total assets	1,187,647		1,109,618
Current liabilities:
Trade accounts payable	23,527		40,310
Customer advances	84,338		84,307
Accrued compensation and other current liabilities	139,856		109,253
Income taxes payable	13,148		12,731
Current portion of long-term debt	591		557
Total current liabilities	269,460		247,158
Long-term debt	102,066		102,363
Other long-term liabilities	43,602		43,017
Shareholders' equity:
Common stock	19,104		15,825
Retained earnings	773,468		740,002			721,333
Accumulated other comprehensive loss	15,812		(2,803)
Treasury stock at cost	(36,078)		(36,078)
Shareholders' equity related to Cubic	772,306		716,946
Noncontrolling interest in variable interest entity	213		134
Total shareholders' equity	772,519		717,080
Total liabilities and shareholders' equity	1,187,647		1,109,618
Previously Reported
Current assets:
Cash and cash equivalents			203,892	212,451	148,605	212,267
Restricted cash			69,381
Marketable securities			4,055
Accounts receivable - net			376,143
Recoverable income taxes			7,885
Inventories - net			54,400
Deferred income taxes and other current assets			18,638
Total current assets			734,394
Long-term contract receivables			19,249
Long-term capitalized costs			75,520
Property, plant and equipment - net			56,305
Deferred income taxes			19,322
Goodwill			136,094
Purchased intangibles - net			57,542
Other assets			9,772
Total assets			1,108,198
Current liabilities:
Trade accounts payable			39,016
Customer advances			103,187
Accrued compensation and other current liabilities			107,330
Income taxes payable			8,076
Current portion of long-term debt			557
Total current liabilities			258,166
Long-term debt			102,363
Other long-term liabilities			42,742
Shareholders' equity:
Common stock			15,825
Retained earnings			728,424			715,043
Accumulated other comprehensive loss			(3,378)
Treasury stock at cost			(36,078)
Shareholders' equity related to Cubic			704,793
Noncontrolling interest in variable interest entity			134
Total shareholders' equity			704,927
Total liabilities and shareholders' equity			1,108,198
Adjustments
Current assets:
Accounts receivable - net			2,859
Inventories - net			5,346
Total current assets			8,205
Long-term contract receivables			(228)
Long-term capitalized costs			(6,557)
Total assets			1,420
Current liabilities:
Trade accounts payable			1,294
Customer advances			(18,880)
Accrued compensation and other current liabilities			1,923
Income taxes payable			4,655
Total current liabilities			(11,008)
Other long-term liabilities			275
Shareholders' equity:
Retained earnings			11,578			6,290
Accumulated other comprehensive loss			575			500
Shareholders' equity related to Cubic			12,153
Total shareholders' equity			12,153
Total liabilities and shareholders' equity			$ 1,420

XML

Balance Sheet Details (Tables)

9 Months Ended

Jun. 30, 2014

Balance Sheet Details

Schedule of components of accounts receivable

The components of accounts receivable are as follows (in thousands):

	June 30,			September 30,
	2014			2013
				(As Restated)
Trade and other receivables	$	27,063		$	17,352
Long-term contracts:
Billed	118,662			98,983
Unbilled	274,850			282,346
Allowance for doubtful accounts	(484		)	(658		)
Total accounts receivable	420,091			398,023
Less estimated amounts not currently due	(16,690		)	(19,021		)
Current accounts receivable	$	403,401		$	379,002

Components of inventories

Inventories consist of the following (in thousands):

	June 30,			September 30,
	2014			2013
				(As Restated)
Work in process and inventoried costs under long-term contracts	$	79,346		$	80,918
Customer advances	(27,536		)	(21,865		)
Materials and purchased parts	1,958			693
Net inventories	$	53,768		$	59,746

XML

Derivative Instruments and Hedging Activities (Details 4) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended			9 Months Ended	0 Months Ended	9 Months Ended	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Forward starting swap	Mar. 31, 2014 Forward starting swap	Dec. 31, 2013 Forward starting swap	Jun. 30, 2014 Forward starting swap item	Jul. 02, 2014 Forward starting swap Subsequent event	Jun. 30, 2014 Forward starting swap Minimum	Jun. 30, 2014 Foreign currency forwards	Jun. 30, 2013 Foreign currency forwards	Jun. 30, 2014 Foreign currency forwards	Jun. 30, 2013 Foreign currency forwards
Derivative instruments and hedging activities
Debt to be issued under derivative contacts										$ 83,000,000
Term of debt to be issued								10 years
Term of derivative contract								10 years
Number of semi-annual interest cash flows								20
Notional Principal outstanding derivative instruments					56,000,000			56,000,000
Fixed rate (as a percent)					1.881%			1.881%
Variable rate basis								3-month LIBOR
Number of days prior to the first day of each calculation period								2 days
Minimum commitment amount for hedging											50,000		50,000
Fair value of derivative					200,000		1,000,000	200,000
Change in the fair value of derivative					(700,000)	(600,000)	400,000
Amount received from counterparty									200,000
Derivative gain reclassified into earnings	$ 320,000	$ 289,000	$ 355,000	$ (1,763,000)		$ 1,000,000					$ 320,000	$ 289,000	$ 355,000	$ (1,763,000)

XML

Pension Plans (Details) (Defined Benefit Pension Plans, USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Defined Benefit Pension Plans
Components of net periodic pension cost (benefit)
Service cost	$ 157	$ 134	$ 463	$ 410
Interest cost	2,505	2,197	7,461	6,658
Expected return on plan assets	(3,313)	(2,876)	(9,869)	(8,710)
Amortization of actuarial loss	202	445	599	1,352
Administrative expenses	38	19	114	57
Net pension benefit	$ (411)	$ (81)	$ (1,232)	$ (233)

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Acquisitions (Details) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		0 Months Ended	3 Months Ended	9 Months Ended				0 Months Ended	1 Months Ended	3 Months Ended	9 Months Ended							0 Months Ended	3 Months Ended	9 Months Ended				0 Months Ended	3 Months Ended	9 Months Ended			0 Months Ended	3 Months Ended		9 Months Ended						0 Months Ended	3 Months Ended			9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Transportation Systems	Jun. 30, 2013 Transportation Systems	Jun. 30, 2014 Transportation Systems	Jun. 30, 2013 Transportation Systems	Jun. 30, 2014 Defense Systems	Jun. 30, 2013 Defense Systems	Jun. 30, 2014 Defense Systems	Jun. 30, 2013 Defense Systems	Jun. 30, 2014 Mission Support Services	Jun. 30, 2013 Mission Support Services	Jun. 30, 2014 Mission Support Services	Jun. 30, 2013 Mission Support Services	Feb. 28, 2014 Intific Inc.	Jun. 30, 2014 Intific Inc.	Jun. 30, 2014 Intific Inc.	Feb. 28, 2014 Intific Inc. Customer relationships	Feb. 28, 2014 Intific Inc. Technology	Feb. 28, 2014 Intific Inc. Backlog	Nov. 26, 2013 ITMS	Nov. 30, 2013 ITMS	Jun. 30, 2014 ITMS	Jun. 30, 2014 ITMS	May 31, 2014 ITMS	Nov. 26, 2013 ITMS Customer relationships	Nov. 26, 2013 ITMS Intellectual property	Nov. 26, 2013 ITMS Backlog	Nov. 26, 2013 ITMS Supplier relationships	Nov. 26, 2013 ITMS Agreements with Seller	Jul. 02, 2013 AIS	Jun. 30, 2014 AIS	Jun. 30, 2014 AIS	Jul. 02, 2013 AIS Customer relationships	Jul. 02, 2013 AIS Technology	Jul. 02, 2013 AIS Backlog	Jul. 02, 2013 PSMC	Jun. 30, 2014 PSMC	Jun. 30, 2014 PSMC	Jul. 02, 2013 PSMC Customer relationships	Jul. 02, 2013 PSMC Backlog	Jan. 24, 2013 Next Bus	Jun. 30, 2014 Next Bus	Jun. 30, 2013 Next Bus	Jun. 30, 2014 Next Bus	Jun. 30, 2013 Next Bus	Jan. 24, 2013 Next Bus Customer relationships	Jan. 24, 2013 Next Bus Corporate trade names	Jan. 24, 2013 Next Bus Technology	Jan. 24, 2013 Next Bus Backlog	Dec. 14, 2012 NEK Special Programs Group LLC (NEK)	Jun. 30, 2014 NEK Special Programs Group LLC (NEK)	Jun. 30, 2013 NEK Special Programs Group LLC (NEK)	Dec. 31, 2012 NEK Special Programs Group LLC (NEK)	Jun. 30, 2014 NEK Special Programs Group LLC (NEK)	Jun. 30, 2013 NEK Special Programs Group LLC (NEK)	Jun. 30, 2014 NEK Special Programs Group LLC (NEK) Transportation Systems	Jun. 30, 2014 NEK Special Programs Group LLC (NEK) Defense Systems	Jun. 30, 2014 NEK Special Programs Group LLC (NEK) Mission Support Services	Sep. 30, 2013 NEK Special Programs Group LLC (NEK) Mission Support Services	Dec. 14, 2012 NEK Special Programs Group LLC (NEK) Customer relationships	Dec. 14, 2012 NEK Special Programs Group LLC (NEK) Corporate trade names	Dec. 14, 2012 NEK Special Programs Group LLC (NEK) Non-compete agreements
Acquisitions
Net sales	$ 340,357,000	$ 337,226,000	$ 1,001,986,000	$ 1,020,631,000	$ 153,000,000	$ 134,800,000	$ 429,100,000	$ 398,400,000	$ 95,600,000	$ 78,600,000	$ 281,200,000	$ 262,500,000	$ 91,800,000	$ 123,800,000	$ 291,700,000	$ 359,400,000		$ 1,900,000	$ 2,700,000						$ 12,800,000	$ 30,100,000								$ 3,100,000	$ 6,200,000					$ 1,700,000	$ 2,900,000				$ 2,100,000	$ 3,100,000	$ 6,800,000	$ 4,600,000						$ 14,400,000	$ 11,500,000		$ 34,000,000	$ 21,100,000
Net loss after taxes	12,216,000	18,405,000	36,765,000	62,421,000														(1,700,000)	(3,800,000)						500,000	(200,000)								(200,000)	(600,000)					300,000	600,000				(300,000)	0	(800,000)	(300,000)						(100,000)	(500,000)		(500,000)	(800,000)
Transaction and acquisition related costs																			200,000							500,000																														400,000
Compensation expense paid																			3,700,000
Cost of acquisition net																	12,100,000						69,000,000																														52,000,000
Fair value of consideration transferred																	12,400,000						72,200,000																														52,600,000
Cash consideration paid																			11,200,000					69,000,000									2,000,000						1,300,000					20,200,000													52,000,000
Estimated current liability of additional cash consideration																		1,200,000	1,200,000								3,200,000																											600,000			600,000
Fair value of additional contingent cash consideration																																	1,300,000
Purchase price allocation
Amortizable intangible assets																				2,000,000	700,000	700,000						15,700,000	1,600,000	5,700,000	600,000	1,300,000				1,400,000	900,000	600,000				600,000	100,000						8,800,000	1,000,000	1,300,000	1,700,000											13,300,000	4,900,000	200,000
Other intangible assets																	200,000
Accounts receivable - billed																							4,400,000																														3,100,000
Accounts receivable - unbilled																							6,900,000																														7,700,000
Accounts receivable, net																	1,500,000																											2,200,000
Accounts payable and accrued expenses																	(600,000)						(4,600,000)										(1,300,000)											(1,100,000)									(3,000,000)
Deferred tax liabilities, net																	(500,000)						(200,000)																					(3,300,000)
Deferred revenue																							(2,600,000)
Other net liabilities assumed																																	(2,800,000)											(1,200,000)									(400,000)
Other net assets acquired																	700,000						2,600,000
Net identifiable assets acquired																	4,700,000						31,400,000										100,000						700,000					9,400,000									25,800,000
Goodwill	187,595,000		187,595,000														7,700,000						40,800,000										1,900,000						600,000					10,800,000									26,800,000	187,600,000			187,600,000		61,600,000	31,600,000	94,400,000	94,400,000
Net assets acquired																	12,400,000						72,200,000										2,000,000						1,300,000					20,200,000									52,600,000
Future amortization of purchased intangibles not expected to be deductible for tax purposes																										19,200,000
Weighted average useful life of intangible assets																			2 years							2 years																					5 years										4 years
Estimated amortization expense related to the intangible assets
2014																	600,000						6,600,000																					1,600,000									3,400,000
2015																	900,000						6,200,000																					1,500,000									2,900,000
2016																	700,000						5,200,000																					1,400,000									2,400,000
2017																	600,000						4,100,000																					1,300,000									1,900,000
2018																	500,000						3,000,000																					1,200,000									1,400,000
Changes in the carrying amount of goodwill
Balance at the beginning of the period			136,094,000																																																						136,100,000		18,300,000	23,400,000	94,400,000	94,400,000
Acquisitions																																																									48,500,000		40,800,000	7,700,000
Foreign currency exchange rate changes																																																									3,000,000		2,500,000	500,000
Balance at the end of the period	187,595,000		187,595,000														7,700,000						40,800,000										1,900,000						600,000					10,800,000									26,800,000	187,600,000			187,600,000		61,600,000	31,600,000	94,400,000	94,400,000
Unaudited pro forma information
Net sales	340,400,000	358,200,000	1,014,700,000	1,102,800,000
Net income attributable to Cubic	12,200,000	20,100,000	36,300,000	68,100,000
Adjustments made for transaction expenses			$ 0

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Segment Information (Details 2) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenue recognition
Increase (decrease) in operating income	$ 19,215	$ 26,905	$ 53,222	$ 84,790
Increase (decrease) in net income	12,216	18,405	36,765	62,421
Increase (decrease) in net income per common share (in dollars per share)	$ 0.46	$ 0.69	$ 1.37	$ 2.33
Change in estimated total costs | Adjustment
Revenue recognition
Increase (decrease) in operating income	(4,800)	1,900	(3,800)	(5,500)
Increase (decrease) in net income	$ (2,000)	$ 900	$ (300)	$ (4,400)
Increase (decrease) in net income per common share (in dollars per share)	$ (0.07)	$ 0.03	$ (0.01)	$ (0.16)

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Derivative Instruments and Hedging Activities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Sep. 30, 2013
Forward starting swap
Derivative instruments and hedging activities
Notional Principal outstanding derivative instruments	$ 56,000
Instruments designated as accounting hedges: | Foreign currency forwards
Derivative instruments and hedging activities
Notional Principal outstanding derivative instruments	395,213	361,337
Instruments designated as accounting hedges: | Forward starting swap
Derivative instruments and hedging activities
Notional Principal outstanding derivative instruments		58,415
Instruments not designated as accounting hedges: | Foreign currency forwards
Derivative instruments and hedging activities
Notional Principal outstanding derivative instruments	1,195	2,697
Instruments not designated as accounting hedges: | Forward starting swap
Derivative instruments and hedging activities
Notional Principal outstanding derivative instruments	$ 55,962

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Net Income Per Share

9 Months Ended

Jun. 30, 2014

Net Income Per Share

Net Income Per Share

Note 4 — Net Income Per Share

Basic net income per share (EPS) is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period, including vested restricted stock units (RSUs).

Diluted EPS is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of dilutive restricted stock units. Dilutive restricted stock units are calculated based on the average share price for each fiscal period using the treasury stock method. For RSUs with performance-based vesting, no common equivalent shares are included in the computation of diluted EPS until the related performance criteria have been met.

Basic and diluted EPS are computed as follows (amounts in thousands, except per share data).

	Nine Months Ended					Three Months Ended
	June 30,					June 30,
	2014			2013		2014			2013
				(As Restated)					(As Restated)
Net income attributable to Cubic	$	36,686		$	62,272	$	12,206		$	18,381
Weighted average shares - basic	26,786			26,736		26,789			26,736
Effect of dilutive securities	115			9		132			26
Weighted average shares - diluted	26,901			26,745		26,921			26,762
Net income per share attributable to Cubic, basic	$	1.37		$	2.33	$	0.46		$	0.69
Effect of dilutive securities	(0.01		)	—		(0.01		)	—
Net income per share attributable to Cubic, diluted	$	1.36		$	2.33	$	0.45		$	0.69
Anti-dilutive employee share-based awards	—			—		—			—

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Stockholders' Equity (Details)	0 Months Ended	9 Months Ended
	Mar. 21, 2013	Jun. 30, 2014
RSUs
Stockholders' Equity
Number of units granted (in shares)		293,992
Number of units awarded (in shares)		720,503
Number of shares of common stock that each award holder has the contingent right to receive	1
Awards vested (in shares)		69,994
RSUs | Expected
Stockholders' Equity
Awards vested (in shares)		378,607
Time-based RSUs
Stockholders' Equity
Number of units granted (in shares)		405,847
Number of equal installments for vesting of stock awards	4
Performance-based RSUs
Stockholders' Equity
Number of units granted (in shares)		314,656
Vesting period		3 years
Number of vesting criteria's which has to be satisfied out of total vesting criteria's		1
Number of vesting criteria's		3

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Stock-Based Compensation (Tables)

9 Months Ended

Jun. 30, 2014

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 for the three- and nine-month periods ended June 30, 2014 and 2013 as follows (in thousands):

	Nine Months Ended				Three Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of sales	$	397	$	123	$	192	$	119
Selling, general and administrative	3,973		1,511		1,593		1,456
	$	4,370	$	1,634	$	1,785	$	1,575

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Stockholders' Equity (Tables)

9 Months Ended

Jun. 30, 2014

Stockholders' Equity

Summary of RSU activity

	Unvested Restricted Stock Units
	Number of Shares		Weighted- Average Grant- Date Fair Value
Unvested at September 30, 2013	421,369		$	43.76
Granted	293,992		49.73
Vested	(69,994	)	43.76
Forfeited	(8,980	)	49.57
Unvested at June 30, 2014	636,387		$	46.44

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Stockholders' Equity (Details 2) (RSUs, USD $)	9 Months Ended
	Jun. 30, 2014
RSUs
Number of Shares
Balance unvested at the beginning of the period (in shares)	421,369
Granted (in shares)	293,992
Vested (in shares)	(69,994)
Forfeited (in shares)	(8,980)
Balance unvested at the end of the period (in shares)	636,387
Weighted Average Grant-Date Fair Value
Balance unvested at the beginning of the period (in dollars per share)	$ 43.76
Granted (in dollars per share)	$ 49.73
Vested (in dollars per share)	$ 43.76
Forfeited (in dollars per share)	$ 49.57
Balance unvested at the end of the period (in dollars per share)	$ 46.44

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Jun. 30, 2014

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 June 30, 2014 and September 30, 2013 (in thousands):

	Notional Principal
	June 30, 2014		September 30, 2013
Instruments designated as accounting hedges:
Foreign currency forwards	$	395,213	$	361,337
Forward starting swap	—		58,415
Instruments not designated as accounting hedges:
Foreign currency forwards	$	1,195	$	2,697
Forward starting swap	55,962		—

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 Condensed Consolidated Balance Sheets as of June 30, 2014 and September 30, 2013 (in thousands):

		Fair Value
	Balance Sheet Location	June 30, 2014		September 30, 2013
Asset derivatives:
Foreign currency forwards	Other current assets	$	8,223	$	1,597
Foreign currency forwards	Other noncurrent assets	5,629		4,957
Forward starting swap	Other noncurrent assets	164		1,139
		$	14,016	$	7,693
Liability derivatives:
Foreign currency forwards	Other current liabilities	$	8,811	$	2,360
Foreign currency forwards	Other noncurrent liabilities	5,832		5,366
Total		$	14,643	$	7,726

Schedule of gains and losses recognized in other comprehensive income (OCI) on derivative financial instruments designated as cash flow hedges

The tables below present gains and losses recognized in other comprehensive income (OCI) for the three and nine months ended June 30, 2014 and 2013 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):

	Nine Months Ended
	June 30, 2014					June 30, 2013						June 30, 2014		June 30, 2013
				Gains (losses)				Gains (losses)
	Gains (losses)			reclassified into		Gains (losses)		reclassified into				Gains (losses) recognized -Ineffective
	recognized in			earnings -		recognized in		earnings -				Portion and amount excluded from
Derivative Type	OCI			Effective Portion		OCI		Effective Portion			Location of gain (loss)	effectiveness testing
Foreign currency forwards	$	(757	)	$	355	$	4,020	$	(1,763	)	Other income/(expense), net	$	—	$	—
Forward starting swap	—			—		1,453		—			Other income/(expense), net	164		—
	$	(757	)	$	355	$	5,473	$	(1,763	)		$	164	$	—

	Three Months Ended
	June 30, 2014					June 30, 2013					June 30, 2014			June 30, 2013
				Gains (losses)				Gains (losses)
	Gains (losses)			reclassified into		Gains (losses)		reclassified into			Gains (losses) recognized -Ineffective
	recognized in			earnings -		recognized in		earnings -			Portion and amount excluded from
Derivative Type	OCI			Effective Portion		OCI		Effective Portion		Location of gain (loss)	effectiveness testing
Foreign currency forwards	$	(443	)	$	320	$	5,912	$	289	Other income/(expense), net	$	—		$	—
Forward starting swap	—			—		1,617		—		Other income/(expense), net	(673		)	—
	$	(443	)	$	320	$	7,529	$	289		$	(673	)	$	—

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Segment Information (Tables)

9 Months Ended

Jun. 30, 2014

Segment Information

Schedule of business segment financial data

Business segment financial data is as follows (in millions):

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
				(As Restated)						(As Restated)
Sales:
Transportation Systems	$	429.1		$	398.4		$	153.0		$	134.8
Mission Support Services	291.7			359.4			91.8			123.8
Defense Systems	281.2			262.5			95.6			78.6
Other	—			0.3			—			—
Total sales	$	1,002.0		$	1,020.6		$	340.4		$	337.2
Operating income (loss):
Transportation Systems	$	35.2		$	69.5		$	15.3		$	19.0
Mission Support Services	6.0			11.4			1.8			3.6
Defense Systems	16.1			7.6			3.3			6.1
Unallocated corporate expenses and other	(4.1		)	(3.7		)	(1.2		)	(1.8		)
Total operating income	$	53.2		$	84.8		$	19.2		$	26.9
Depreciation and amortization:
Transportation Systems	$	8.5		$	2.7		$	2.7		$	1.2
Mission Support Services	8.5			10.0			2.7			3.5
Defense Systems	5.0			4.4			1.8			1.5
Other	0.7			0.9			0.3			0.2
Total depreciation and amortization	$	22.7		$	18.0		$	7.5		$	6.4

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Acquisitions

9 Months Ended

Jun. 30, 2014

Acquisitions

Acquisitions

Note 3 — 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.

Intific

On February 28, 2014 we acquired all of the outstanding capital stock of Intific Inc. (Intific). Intific is focused on software and game-based solutions in modeling and simulation, training and education, cyber warfare, and neuroscience. The acquisition of Intific expands the portfolio of services and customer base of our Cubic Defense Systems (CDS) segment.

For the three months ended June 30, 2014, the amount of Intific’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $1.9 million and $1.7 million, respectively.

For the nine months ended June 30, 2014, the amount of Intific’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $2.7 million and $3.8 million, respectively. Included in Intific’s operating results for the nine months ended June 30, 2014 are $0.2 million of transaction and acquisition related costs, and $3.7 million of compensation expense which was paid to Intific employees upon the close of the acquisition.

The purchase agreement states that the cost of the acquisition is approximately $12.1 million, adjusted by the difference between the net working capital acquired and the targeted working capital amounts. The acquisition date fair value of the consideration transferred is estimated to be $12.4 million. Through June 30, 2014, we have paid cash of approximately $11.2 million to the seller and as of June 30, 2014 we have accrued a liability of $1.2 million as an estimate of the remaining cash to be paid.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	2.0
Technology	0.7
Backlog	0.7
Other intangible assets	0.2
Accounts receivable	1.5
Deferred tax liabilities, net	(0.5		)
Accounts payable and accrued expenses	(0.6		)
Other net assets acquired	0.7
Net identifiable assets acquired	4.7
Goodwill	7.7
Net assets acquired	$	12.4

The estimated fair values of the net deferred tax liabilities are preliminary estimates pending the finalization of our valuation analyses. The net deferred tax liabilities were primarily recorded to reflect the tax impact of amortization related to identified intangible assets that is not expected to be deductible for tax purposes, net of acquisition consideration that is a tax deductible expense.

The fair values of purchased intangibles were determined using the valuation methodology deemed to be the most appropriate for each type of asset being valued. The customer relationships and backlog valuation used the excess earnings approach and the technology valuation used the replacement cost approach.

The intangible assets will be amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of two years from the date of acquisition and is not expected to be deductible for tax purposes.

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of Intific with our existing CDS business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CDS segment and is not expected to be deductible for tax purposes.

Based upon the preliminary estimate of the fair value of identifiable intangible assets, the estimated amortization expense related to the intangible assets recorded in connection with our acquisition of Intific for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	0.6
2015	0.9
2016	0.7
2017	0.6
2018	0.5

ITMS

On November 26, 2013 we acquired all of the outstanding capital stock of Intelligent Transport Management Solutions Limited (ITMS) from Serco Limited. ITMS is a provider of traffic management systems technology, traffic and road enforcement and maintenance of traffic signals, emergency equipment and other critical road and tunnel infrastructure. The acquisition of ITMS expands the portfolio of services and customer base of our Cubic Transportation Systems (CTS) segment.

For the three months ended June 30, 2014, the amount of ITMS’ sales and net income after taxes included in our Condensed Consolidated Statement of Income were $12.8 million and $0.5 million, respectively.

For the nine months ended June 30, 2014, the amount of ITMS’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $30.1 million and $0.2 million, respectively. Included in ITMS’ operating results are $0.5 million of transaction costs incurred during the nine months ended June 30, 2014.

The purchase agreement states that the cost of the acquisition is approximately $69.0 million, adjusted by the difference between the net working capital acquired and the targeted working capital amounts. The acquisition date fair value of the consideration transferred was estimated to be $72.2 million. In November 2013, we paid cash of $69.0 million and in May 2014, we paid cash of $3.2 million as settlement of the working capital with the seller.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	15.7
Intellectual property	1.6
Backlog	5.7
Supplier relationships	0.6
Agreements with seller	1.3
Accounts receivable - billed	4.4
Accounts receivable - unbilled	6.9
Deferred tax liabilities, net	(0.2		)
Deferred revenue	(2.6		)
Accounts payable and accrued expenses	(4.6		)
Other net assets acquired	2.6
Net identifiable assets acquired	31.4
Goodwill	40.8
Net assets acquired	$	72.2

The net deferred tax liabilities were primarily recorded to reflect the difference in timing of recognizing deferred revenue for tax purposes

The fair values of purchased intangibles were determined using the valuation methodology deemed to be the most appropriate for each type of asset being valued. The customer relationships and backlog valuation used the excess earnings approach and the non-compete agreement and seller agreements valuations used the with and without approach. The supplier relationship and intellectual property valuations used the replacement cost approach.

The intangible assets will be amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of two years from the date of acquisition. Future amortization of approximately $19.2 million of purchased intangibles is not expected to be deductible for tax purposes.

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of ITMS with our existing CTS business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CTS segment and is expected to be deductible for tax purposes.

The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of ITMS for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	6.6
2015	6.2
2016	5.2
2017	4.1
2018	3.0

AIS

On July 1, 2013 we acquired certain assets of Advanced Interactive Systems (AIS) and all of the capital stock of its foreign subsidiaries through a bankruptcy auction. AIS is a supplier of live fire specialized range facilities, virtual simulation products, engineering design and project management services for counter-terrorism, law enforcement and military forces worldwide. For the three months ended June 30, 2014 the amount of AIS’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $3.1 million and $0.2 million, respectively. For the nine months ended June 30, 2014, the amounts of AIS’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $6.2 million and $0.6 million, respectively.

We paid cash of $2.0 million from our existing cash resources, net of cash acquired, for the assets of AIS. At September 30, 2013, the estimated fair value of liabilities for potential claims from customers were preliminary estimates pending the finalization of our valuation analyses. The finalization of the estimation of these values was completed in the quarter ended December 31, 2013 as further information was received from the customers as to the facts and circumstances that existed as of the July 1, 2013 acquisition date. As a result of this additional information, we have estimated that the fair value of the potential customer claims was $1.3 million. As a result, the carrying amount of the potential customer claims liabilities were retrospectively increased by $1.3 million on July 1, 2013, due to this new information, with a corresponding increase to goodwill.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date including the retrospective adjustments described above (in millions):

Customer relationships	$	1.4
Technology	0.9
Backlog	0.6
Other net liabilities assumed	(2.8		)
Net identifiable assets acquired	0.1
Goodwill	1.9
Net assets acquired	$	2.0

The amount recorded as goodwill is allocated to our CDS segment and is not expected to be deductible for tax purposes.

PSMC

On July 1, 2013 we acquired certain assets of PS Management Consultants Pty Ltd. (PSMC). PSMC is a specialist project management and engineering enterprise, based in Canberra, Australia. For the three months ended June 30, 2014 the amount of PSMC’s sales and net income after taxes included in our Condensed Consolidated Statement of Income were $1.7 million and $0.3 million, respectively. For the nine months ended June 30, 2014, the amounts of PSMC’s sales and net income after taxes included in our Condensed Consolidated Statement of Income were $2.9 million and $0.6 million, respectively.

We paid cash of $1.3 million from our existing cash resources to acquire PSMC. The following table summarizes the estimated fair values of the assets acquired at the acquisition date (in millions):

Customer relationships	$	0.6
Backlog	0.1
Net identifiable assets acquired	0.7
Goodwill	0.6
Net assets acquired	$	1.3

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of PSMC and our CDS business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CDS segment and is not expected to be deductible for tax purposes.

NextBus

On January 24, 2013, we acquired all of the outstanding capital stock of NextBus, Inc. (NextBus) from Webtech Wireless, Inc. NextBus provides products and services to transit agencies which provide real-time passenger information to transit passengers, expanding the portfolio of services and customer base of our CTS segment. For the three months ended June 30, 2014 the amount of NextBus’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $2.1 million and $0.3 million, respectively. For the nine months ended June 30, 2014, the amounts of NextBus sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $6.8 million and $0.8 million, respectively.

For the three months ended June 30, 2013 NextBus’ sales included in our Condensed Consolidated Statement of Income were $3.1 million. NextBus had no significant gain or loss after taxes for the three months ended June 30, 2013. For the nine months ended June 30, 2013, the amounts of NextBus’ sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $4.6 million and $0.3 million, respectively.

We paid the seller cash of $20.2 million for NextBus from our 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	$	8.8
Accounts receivable, net	2.2
Backlog	1.7
Acquired technology	1.3
Corporate trade names	1.0
Accounts payable and accrued expenses	(1.1		)
Deferred tax liabilities, net	(3.3		)
Other net liabilities assumed	(1.2		)
Net identifiable assets acquired	9.4
Goodwill	10.8
Net assets acquired	$	20.2

The net deferred tax liabilities were primarily recorded to reflect the tax impact of the identified intangible assets that will not generate tax deductible amortization expense. 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. Each of the valuation methodologies used were various methods under the income approach. The customer relationships and backlog valuations used the excess earnings approach. The trade names and technology valuations used the relief from royalty approach.

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of NextBus and our CTS business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our CTS segment and is not expected to be deductible for tax purposes.

The intangible assets are being amortized using a combination of accelerated and straight-line based on the expected cash flows from the assets, over a weighted average useful life of 5 years from the date of acquisition. The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of NextBus for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	1.6
2015	1.5
2016	1.4
2017	1.3
2018	1.2

NEK

On December 14, 2012, we acquired from NEK Advanced Securities Group, Inc. (Seller) the customer contracts and operating assets of NEK Special Programs Group LLC (NEK), which consists of the Seller’s Special Operation Forces training business based in Fayetteville, North Carolina and Colorado Springs, Colorado.

For the three months ended June 30, 2014, the amounts of NEK’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $14.4 million and $0.1 million, respectively. For the three months ended June 30, 2013, the amounts of NEK’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $11.5 million and $0.5 million, respectively.

For the nine months ended June 30, 2014, the amounts of NEK’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $34.0 million and $0.5 million, respectively. For the nine months ended June 30, 2013, the amounts of NEK’s sales and net loss after taxes included in our Condensed Consolidated Statement of Income were $21.1 million and $0.8 million, respectively.

Included in the NEK operating results are $0.4 million in transaction related costs incurred during the first quarter of fiscal 2013.

The acquisition agreement states that the cost of the acquisition will total $52.0 million, adjusted by the difference between the net working capital acquired and targeted working capital amounts, less amounts that will not be due if certain future events fail to occur. The acquisition-date fair value of consideration transferred is estimated to be $52.6 million. Through June 30, 2014 we have paid the Seller cash consideration of $52.0 million from our existing cash resources and we have recorded a current liability of approximately $0.6 million at June 30, 2014 as an estimate of additional cash consideration that is due to the Seller. A portion of the $52.0 million of cash consideration that was paid to the Seller was contingent upon certain events that occurred between the acquisition date and June 30, 2014, including the novation of certain of the Seller’s contracts to NEK.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	13.3
Corporate trade names	4.9
Non-compete agreements	0.2
Accounts receivable -billed	3.1
Accounts receivable -unbilled	7.7
Accounts payable	(3.0		)
Other net liabilities assumed	(0.4		)
Net identifiable assets acquired	25.8
Goodwill	26.8
Net assets acquired	$	52.6

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. Each of the valuation methodologies used were various methods under the income approach. The trade names valuation used the relief from royalty approach. The customer relationships valuation used the excess earnings approach and the non-compete agreements valuation used the with and without approach. The intangible assets are being amortized using a combination of straight-line and accelerated methods based on the expected cash flows from the assets, over a weighted average useful life of four years from the date of acquisition.

The goodwill resulting from the acquisition consists primarily of the synergies expected from combining the operations of NEK and our Mission Support Services (MSS) business and the acquired assembled workforce. The anticipated synergies include the ability to expand services offerings and cost reductions. The amount recorded as goodwill is allocated to our MSS 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 NEK for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	3.4
2015	2.9
2016	2.4
2017	1.9
2018	1.4

Changes in goodwill for the nine months ended June 30, 2014 were as follows (in millions):

			Mission
	Transportation		Support		Defense
	Systems		Services		Systems		Total
Balances at September 30, 2013	$	18.3	$	94.4	$	23.4	$	136.1
Acquisitions	40.8		—		7.7		48.5
Foreign currency exchange rate changes	2.5		—		0.5		3.0
Balances at June 30, 2014	$	61.6	$	94.4	$	31.6	$	187.6

Pro forma information

The following unaudited pro forma information presents our consolidated results of operations as if Intific, ITMS, NEK, NextBus, AIS and PSMC had been included in our consolidated results since October 1, 2012 (in millions):

	Nine Months Ended				Three Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
			(As Restated)				(As Restated)
Net sales	$	1,014.7	$	1,102.8	$	340.4	$	358.2
Net income attributable to Cubic	$	36.3	$	68.1	$	12.2	$	20.1

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, 2012, and it does not purport to project our future operating results.

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Restatement of Condensed Consolidated Financial Statements (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended
	Jun. 30, 2014	Dec. 31, 2013 item	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Accumulated other comprehensive loss	$ 15,812			$ 15,812		$ (2,803)
Retained earnings	773,468			773,468		740,002	721,333
Net income attributable to Cubic	12,206		18,381	36,686	62,272
Number of revenue recognition related errors		2
Number of contracts regarding which there was revenue recognition related errors		2
Previously Reported
Accumulated other comprehensive loss						(3,378)
Retained earnings						728,424	715,043
Net income attributable to Cubic			18,364		57,968
Adjustments
Accumulated other comprehensive loss						575	500
Retained earnings						11,578	6,290
Net income attributable to Cubic			$ 17		$ 4,304

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Fair Value of Financial Instruments (Details) (USD $)	9 Months Ended	15 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Sep. 30, 2013
Debt instruments
Fair Value	$ 101,000,000	$ 101,000,000	$ 95,800,000
Carrying value	102,700,000	102,700,000	102,900,000
NEK Special Programs Group LLC (NEK)
Assets and liabilities measured at fair value on a recurring basis
Estimated fair value of the liability for contingent consideration payable to the seller of acquiree	0	0	3,500,000
Payments upon resolution of contingencies	3,500,000
Change in fair value of contingent consideration since the date of the acquisition		0
Contingent consideration expense	0
Assets and liabilities measured at fair value | Level 1
Assets
Cash equivalents	51,075,000	51,075,000	125,512,000
Marketable securities			4,055,000
Total assets measured at fair value	51,075,000	51,075,000	129,567,000
Assets and liabilities measured at fair value | Level 2
Assets
Current derivative assets	8,223,000	8,223,000	1,597,000
Noncurrent derivative assets	5,793,000	5,793,000	6,096,000
Total assets measured at fair value	14,016,000	14,016,000	7,693,000
Liabilities
Current derivative liabilities	8,811,000	8,811,000	2,360,000
Noncurrent derivative liabilities	5,832,000	5,832,000	5,366,000
Total liabilities measured at fair value	14,643,000	14,643,000	7,726,000
Assets and liabilities measured at fair value | Level 3
Liabilities
Total liabilities measured at fair value			3,485,000
Assets and liabilities measured at fair value | Level 3 | NEK Special Programs Group LLC (NEK)
Liabilities
Contingent consideration to Seller of NEK			3,485,000
Assets and liabilities measured at fair value | Total
Assets
Cash equivalents	51,075,000	51,075,000	125,512,000
Marketable securities			4,055,000
Current derivative assets	8,223,000	8,223,000	1,597,000
Noncurrent derivative assets	5,793,000	5,793,000	6,096,000
Total assets measured at fair value	65,091,000	65,091,000	137,260,000
Liabilities
Current derivative liabilities	8,811,000	8,811,000	2,360,000
Noncurrent derivative liabilities	5,832,000	5,832,000	5,366,000
Total liabilities measured at fair value	14,643,000	14,643,000	11,211,000
Assets and liabilities measured at fair value | Total | NEK Special Programs Group LLC (NEK)
Liabilities
Contingent consideration to Seller of NEK			$ 3,485,000

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Legal Matters (Details) (USD $)	1 Months Ended			1 Months Ended
	Mar. 31, 2012 Claim from public transit authority customer	Nov. 30, 2011 Claim from public transit authority customer item	Jun. 30, 2014 Claim from public transit authority customer	Jul. 31, 2014 Claim from public transit authority customer Subsequent event	Oct. 31, 2013 Lawsuit filed in state court against the transit customers alleging conversion and unjust enrichment
Legal Matters
Number of former employees alleged for loss of revenue due to inappropriate and illegal actions		1
Period prior to acquisition of contract during which a former employee was committing illegal acts		2 years
Amount of recoupment sought under claim for alleged lost revenue, fees and damages		$ 4,500,000
Default judgment award amount	2,900,000
Estimated loss of revenue	2,900,000		2,600,000
Percentage of insurance proceeds				40.00%
Amount to be paid under settlement agreement excluding percentage of insurance proceeds received				2,600,000
Amount charged on bank debit card for a ride on the transit system					$ 2.25

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net sales:
Products	$ 136,649	$ 127,682	$ 405,419	$ 429,436
Services	203,708	209,544	596,567	591,195
Total net sales	340,357	337,226	1,001,986	1,020,631
Costs and expenses:
Products	108,301	91,011	305,245	310,043
Services	156,726	164,278	480,906	461,669
Selling, general and administrative	46,489	44,130	131,508	126,393
Restructuring costs	24	114	227	6,198
Research and development	3,949	6,426	13,822	19,346
Amortization of purchased intangibles	5,653	4,362	17,056	12,192
Total costs and expenses	321,142	310,321	948,764	935,841
Operating income	19,215	26,905	53,222	84,790
Other income (expense):
Interest and dividend income	595	530	958	1,279
Interest expense	(1,504)	(925)	(3,117)	(2,447)
Other income (expense) - net	(1,098)	(813)	(1,058)	(764)
Income before income taxes	17,208	25,697	50,005	82,858
Income taxes	4,992	7,292	13,240	20,437
Net income	12,216	18,405	36,765	62,421
Less noncontrolling interest in income of VIE	10	24	79	149
Net income attributable to Cubic	$ 12,206	$ 18,381	$ 36,686	$ 62,272
Net income per share attributable to Cubic
Basic (in dollars per share)	$ 0.46	$ 0.69	$ 1.37	$ 2.33
Diluted (in dollars per share)	$ 0.45	$ 0.69	$ 1.36	$ 2.33
Dividends per common share (in dollars per share)			$ 0.12	$ 0.12
Weighted average shares used in per share calculations:
Basic (in shares)	26,789	26,736	26,786	26,736
Diluted (in shares)	26,921	26,762	26,901	26,745

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Stock-Based Compensation (Details) (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Stock-Based Compensation
Non-cash compensation expense related to stock-based awards	$ 1,785,000	$ 1,575,000	$ 4,370,000	$ 1,634,000
Estimated forfeiture rate (as a percent)			12.50%
RSUs
Stock-Based Compensation
Unrecognized compensation cost related to unvested awards	25,000,000		25,000,000
Weighted-average period of recognition			1 year 8 months 12 days
Aggregate fair value of awards			17,800,000
RSUs | Cost of sales
Stock-Based Compensation
Non-cash compensation expense related to stock-based awards	192,000	119,000	397,000	123,000
RSUs | Selling, general and administrative
Stock-Based Compensation
Non-cash compensation expense related to stock-based awards	$ 1,593,000	$ 1,456,000	$ 3,973,000	$ 1,511,000

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Basis for Presentation

9 Months Ended

Jun. 30, 2014

Basis for Presentation

Basis for Presentation

Note 1 — Basis for Presentation

Cubic Corporation (“we”, “us”, and “Cubic”) has prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

In our opinion, all adjustments necessary for a fair presentation of these financial statements have been included, and are of a normal and recurring nature as well as all adjustments discussed in Note 2, “Restatement of Condensed Consolidated Financial Statements,” considered necessary to fairly state the financial position of Cubic Corporation at June 30, 2014 and September 30, 2013; the results of its operations for the three- and nine-month periods ended June 30, 2014 and 2013; and its cash flows for the three- and nine-month periods ended June 30, 2014 and 2013. Operating results for the three- and nine-month periods ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending September 30, 2014. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K/A for the year ended September 30, 2013.

The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

There have been no material changes to our significant accounting policies as compared with the significant accounting policies described in our Annual Report on Form 10-K/A for the year ended September 30, 2013.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. ASU 2014-09 will be effective for us starting in the first quarter of fiscal 2018. ASU 2014-09 allows for two methods of adoption: (a) “full retrospective” adoption, meaning the standard is applied to all periods presented, or (b) “modified retrospective” adoption, meaning the cumulative effect of applying ASU 2014-09 is recognized as an adjustment to the fiscal 2018 opening retained earnings balance. We are in the process of determining the adoption method as well as the effects the adoption of ASU 2014-09 will have on our consolidated financial statements.

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Restatement of Condensed Consolidated Financial Statements (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net income	$ 12,216	$ 18,405	$ 36,765	$ 62,421
Other comprehensive income (loss):
Foreign currency translation	7,245	(1,776)	19,107	(15,765)
Net unrealized gain (loss) on available-for-sale securities, net of tax		(5)		(5)
Change in net unrealized gains/losses from cash flow hedges:
Change in fair value of cash flow hedges, net of tax	(80)	4,894	(261)	3,557
Adjustment for net gains/losses realized and included in net income, net of tax	(208)	(188)	(231)	1,146
Total change in unrealized gains/losses from cash flow hedges, net of tax	(288)	4,706	(492)	4,703
Total other comprehensive income (loss)	6,957	2,925	18,615	(11,067)
Total comprehensive income	19,173	21,330	55,380	51,354
Previously Reported
Net income		18,388		58,117
Other comprehensive income (loss):
Foreign currency translation		(1,872)		(15,185)
Net unrealized gain (loss) on available-for-sale securities, net of tax		(5)		(5)
Change in net unrealized gains/losses from cash flow hedges:
Change in fair value of cash flow hedges, net of tax		4,894		3,557
Adjustment for net gains/losses realized and included in net income, net of tax		(188)		1,146
Total change in unrealized gains/losses from cash flow hedges, net of tax		4,706		4,703
Total other comprehensive income (loss)		2,829		(10,487)
Total comprehensive income		21,217		47,630
Adjustments
Net income		17		4,304
Other comprehensive income (loss):
Foreign currency translation		96		(580)
Change in net unrealized gains/losses from cash flow hedges:
Total other comprehensive income (loss)		96		(580)
Total comprehensive income		$ 113		$ 3,724

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Restatement of Condensed Consolidated Financial Statements (Tables)

9 Months Ended

Jun. 30, 2014

Restatement of Condensed Consolidated Financial Statements

Summary of impacts of the restatement adjustments on the Company's previously reported consolidated retained earnings

The following tables present the summary impacts of the restatement adjustments on our previously reported consolidated retained earnings at September 30, 2012 and consolidated net income for the three and nine months ended June 30, 2013 (in thousands):

Retained earnings at September 30, 2012 - As previously reported	$	715,043
Adjustments	6,290
Retained earnings at September 30, 2012 - As restated	$	721,333

Summary of impacts of the restatement adjustments on the Company's previously reported consolidated net income

The following tables present the summary impacts of the restatement adjustments on our previously reported consolidated retained earnings at September 30, 2012 and consolidated net income for the three and nine months ended June 30, 2013 (in thousands):

	Nine Months Ended		Three Months Ended
	June 30,		June 30,
	2013		2013
Net Income - As previously reported	$	57,968	$	18,364
Adjustments	4,304		17
Net Income - As restated	$	62,272	$	18,381

Schedule of restatement of balance sheet

	Condensed Consolidated Balance Sheet September 30, 2013
	Previously Reported			Adjustments			As Restated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	203,892		$	—		$	203,892
Restricted cash	69,381			—			69,381
Marketable securities	4,055			—			4,055
Accounts receivable - net	376,143			2,859			379,002
Recoverable income taxes	7,885			—			7,885
Inventories - net	54,400			5,346			59,746
Deferred income taxes and other current assets	18,638			—			18,638
Total current assets	734,394			8,205			742,599
Long-term contract receivables	19,249			(228		)	19,021
Long-term capitalized costs	75,520			(6,557		)	68,963
Property, plant and equipment - net	56,305			—			56,305
Deferred income taxes	19,322			—			19,322
Goodwill	136,094			—			136,094
Purchased intangibles - net	57,542			—			57,542
Other assets	9,772			—			9,772
	$	1,108,198		$	1,420		$	1,109,618
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	39,016		$	1,294		$	40,310
Customer advances	103,187			(18,880		)	84,307
Accrued compensation and other current liabilities	107,330			1,923			109,253
Income taxes payable	8,076			4,655			12,731
Current portion of long-term debt	557			—			557
Total current liabilities	258,166			(11,008		)	247,158
Long-term debt	102,363			—			102,363
Other long-term liabilities	42,742			275			43,017
Shareholders’ equity:
Common stock	15,825			—			15,825
Retained earnings	728,424			11,578			740,002
Accumulated other comprehensive loss	(3,378		)	575			(2,803		)
Treasury stock at cost	(36,078		)	—			(36,078		)
Shareholders’ equity related to Cubic	704,793			12,153			716,946
Noncontrolling interest in variable interest entity	134			—			134
Total shareholders’ equity	704,927			12,153			717,080
	$	1,108,198		$	1,420		$	1,109,618

Schedule of restatement of income

	Condensed Consolidated Statement of Income									Condensed Consolidated Statement of Income
	Nine Months Ended June 30, 2013									Three Months Ended June 30, 2013
	Previously						As			Previously						As
	Reported			Adjustments			Restated			Reported			Adjustments			Restated
	(amounts in thousands, except per share data)									(amounts in thousands, except per share data)
Net sales:
Products	$	432,226		$	(2,790	)	$	429,436		$	131,557		$	(3,875	)	$	127,682
Services	585,895			5,300			591,195			208,888			656			209,544
	1,018,121			2,510			1,020,631			340,445			(3,219		)	337,226
Costs and expenses:
Products	311,964			(1,921		)	310,043			93,946			(2,935		)	91,011
Services	462,075			(406		)	461,669			164,458			(180		)	164,278
Selling, general and administrative	126,447			(54		)	126,393			44,130			—			44,130
Restructuring costs	6,198			—			6,198			114			—			114
Research and development	19,346			—			19,346			6,426			—			6,426
Amortization of purchased intangibles	12,192			—			12,192			4,362			—			4,362
	938,222			(2,381		)	935,841			313,436			(3,115		)	310,321
Operating income	79,899			4,891			84,790			27,009			(104		)	26,905
Other income (expense):
Interest and dividend income	1,279			—			1,279			530			—			530
Interest expense	(2,438		)	(9		)	(2,447		)	(922		)	(3		)	(925		)
Other income (expense) - net	(764		)	—			(764		)	(813		)	—			(813		)
Income before income taxes	77,976			4,882			82,858			25,804			(107		)	25,697
Income taxes	19,859			578			20,437			7,416			(124		)	7,292
Net income	58,117			4,304			62,421			18,388			17			18,405
Less noncontrolling interest in income of VIE	149			—			149			24			—			24
Net income attributable to Cubic	$	57,968		$	4,304		$	62,272		$	18,364		$	17		$	18,381
Net income per share attributable to Cubic:
Basic	$	2.17		$	0.16		$	2.33		$	0.69		$	0.00		$	0.69
Diluted	$	2.17		$	0.16		$	2.33		$	0.69		$	0.00		$	0.69
Dividends per common share	$	0.12		$	—		$	0.12		$	—		$	—		$	—
Weighted average shares used in per share calculations:
Basic	26,736			—			26,736			26,736			—			26,736
Diluted	26,745			—			26,745			26,762			—			26,762

Schedule of restatement of comprehensive income

	Condensed Consolidated Statement of Comprehensive Income									Condensed Consolidated Statement of Comprehensive Income
	Nine Months Ended June 30, 2013									Three Months Ended June 30, 2013
	Previously						As			Previously					As
	Reported			Adjustments			Restated			Reported			Adjustments		Restated
	(in thousands)									(in thousands)
Net income	$	58,117		$	4,304		$	62,421		$	18,388		$	17	$	18,405
Other comprehensive income:
Foreign currency translation	(15,185		)	(580		)	(15,765		)	(1,872		)	96		(1,776		)
Net unrealized gain (loss) on available-for-sale securities, net of tax	(5		)	—			(5		)	(5		)	—		(5		)
Change in net unrealized gains/losses from cash flow hedges:
Change in fair value of cash flow hedges, net of tax	3,557			—			3,557			4,894			—		4,894
Adjustment for net gains/losses realized and included in net income, net of tax	1,146			—			1,146			(188		)	—		(188		)
Total change in unrealized gains/losses realized from cash flow hedges, net of tax	4,703			—			4,703			4,706			—		4,706
Total other comprehensive income (loss)	(10,487		)	(580		)	(11,067		)	2,829			96		2,925
Total comprehensive income (loss)	47,630			3,724			51,354			21,217			113		21,330

Schedule of restatement of cash flows

	Condensed Consolidated Statement of Cash Flows									Condensed Consolidated Statement of Cash Flows
	Nine Months Ended June 30, 2013									Three Months Ended June 30, 2013
	Previously						As			Previously						As
	Reported			Adjustments			Restated			Reported			Adjustments			Restated
	(in thousands)									(in thousands)
Operating Activities:
Net income	$	58,117		$	4,304		$	62,421		$	18,388		$	17		$	18,405
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	18,014			—			18,014			6,417			—			6,417
Share-based compensation expense	1,634			—			1,634			1,575			—			1,575
Changes in operating assets and liabilities, net of effects from acquisitions	(84,595		)	(4,304		)	(88,899		)	22,761			(17		)	22,744
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(6,830		)	—			(6,830		)	49,141			—			49,141
Investing Activities:
Acquisition of businesses, net of cash acquired	(60,649		)	—			(60,649		)	(7,377		)	—			(7,377		)
Net additions to property, plant and equipment	(6,209		)	—			(6,209		)	(2,348		)	—			(2,348		)
Purchases of short-term investments	(4,054		)	—			(4,054		)	(4,054		)	—			(4,054		)
NET CASH USED IN INVESTING ACTIVITIES	(70,912		)	—			(70,912		)	(13,779		)	—			(13,779		)
Financing Activities:
Proceeds from short-term borrowings	70,000			—			70,000			—			—			—
Principal payments on short-term borrowings	(70,000		)	—			(70,000		)	(25,000		)	—			(25,000		)
Proceeds from long-term borrowings	100,000			—			100,000			50,000			—			50,000
Principal payments on long-term debt	(8,407		)	—			(8,407		)	(134		)	—			(134		)
Contingent consideration payments related to acquisitions of businesses	(224		)	—			(224		)	(224		)	—			(224		)
Dividends paid to shareholders	(3,208		)	—			(3,208		)	—			—			—
Change in restricted cash	(104		)	—			(104		)	(20		)	—			(20		)
NET CASH PROVIDED BY FINANCING ACTIVITIES	88,057			—			88,057			24,622			—			24,622
Effect of exchange rates on cash	(10,131		)	—			(10,131		)	3,862			—			3,862
NET INCREASE IN CASH AND CASH EQUIVALENTS	184			—			184			63,846			—			63,846
Cash and cash equivalents at the beginning of the period	212,267			—			212,267			148,605			—			148,605
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	$	212,451		$	—		$	212,451		$	212,451		$	—		$	212,451

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Restatement of Condensed Consolidated Financial Statements (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2013 Previously Reported	Jun. 30, 2013 Previously Reported	Sep. 30, 2013 Previously Reported	Jun. 30, 2013 Adjustments	Jun. 30, 2013 Adjustments
Operating Activities:
Net income	$ 12,216	$ 18,405	$ 36,765	$ 62,421	$ 18,388	$ 58,117		$ 17	$ 4,304
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	7,511	6,417	22,740	18,014	6,417	18,014
Share-based compensation expense	1,785	1,575	4,370	1,634	1,575	1,634
Changes in operating assets and liabilities, net of effects from acquisitions:
Changes in operating assets and liabilities net of effects from acquisitions:	44,524	22,744	(27,138)	(88,899)	22,761	(84,595)		(17)	(4,304)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	66,036	49,141	36,737	(6,830)	49,141	(6,830)
Investing Activities:
Acquisition of businesses, net of cash acquired	(3,773)	(7,377)	(83,456)	(60,649)	(7,377)	(60,649)
Net additions to property, plant and equipment	(2,589)	(2,348)	(13,536)	(6,209)	(2,348)	(6,209)
Purchases of short-term investments		(4,054)		(4,054)	(4,054)	(4,054)
NET CASH USED IN INVESTING ACTIVITIES	(6,362)	(13,779)	(92,937)	(70,912)	(13,779)	(70,912)
Financing Activities:
Proceeds from short-term borrowings	8,000		38,000	70,000		70,000
Principal payments on short-term borrowings	(30,000)	(25,000)	(30,000)	(70,000)	(25,000)	(70,000)
Proceeds from long-term borrowings		50,000		100,000	50,000	100,000
Principal payments on long-term debt	(147)	(134)	(431)	(8,407)	(134)	(8,407)
Contingent consideration payments related to acquisitions of businesses	(1,251)	(224)	(2,368)	(224)	(224)	(224)
Dividends paid to shareholders			(3,215)	(3,208)		(3,208)
Change in restricted cash	(44)	(20)	353	(104)	(20)	(104)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(23,442)	24,622	2,452	88,057	24,622	88,057
Effect of exchange rates on cash	5,266	3,862	16,697	(10,131)	3,862	(10,131)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	41,498	63,846	(37,051)	184	63,846	184
Cash and cash equivalents at the beginning of the period	125,343	148,605	203,892	212,267	148,605	212,267	203,892
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	$ 166,841	$ 212,451	$ 166,841	$ 212,451	$ 212,451	$ 212,451	$ 203,892

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Net Income Per Share (Tables)

9 Months Ended

Jun. 30, 2014

Net Income Per Share

Schedule of computation of basic and diluted EPS

Basic and diluted EPS are computed as follows (amounts in thousands, except per share data).

	Nine Months Ended					Three Months Ended
	June 30,					June 30,
	2014			2013		2014			2013
				(As Restated)					(As Restated)
Net income attributable to Cubic	$	36,686		$	62,272	$	12,206		$	18,381
Weighted average shares - basic	26,786			26,736		26,789			26,736
Effect of dilutive securities	115			9		132			26
Weighted average shares - diluted	26,901			26,745		26,921			26,762
Net income per share attributable to Cubic, basic	$	1.37		$	2.33	$	0.46		$	0.69
Effect of dilutive securities	(0.01		)	—		(0.01		)	—
Net income per share attributable to Cubic, diluted	$	1.36		$	2.33	$	0.45		$	0.69
Anti-dilutive employee share-based awards	—			—		—			—

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Restatement of Condensed Consolidated Financial Statements

9 Months Ended

Jun. 30, 2014

Restatement of Condensed Consolidated Financial Statements

Restatement of Condensed Consolidated Financial Statements

Note 2—Restatement of Condensed Consolidated Financial Statements

As is more fully described in our Annual Report on Form 10-K/A for the year ended September 30, 2013, on May 12, 2014 we restated our Condensed Consolidated Balance Sheet at September 30, 2013 and our Condensed Consolidated Statements of Income, Comprehensive Income, and Cash Flows for the three- and nine-month periods ended June 30, 2013.

The cumulative adjustments to correct the errors in the consolidated financial statements for all periods prior to October 1, 2012 are recorded as adjustments to retained earnings and accumulated other comprehensive income (loss) at September 30, 2012. The cumulative effect of those adjustments increased previously reported retained earnings by $6.3 million and reduced previously reported accumulated other comprehensive loss by $0.5 million at September 30, 2012.

The following tables present the summary impacts of the restatement adjustments on our previously reported consolidated retained earnings at September 30, 2012 and consolidated net income for the three and nine months ended June 30, 2013 (in thousands):

Retained earnings at September 30, 2012 - As previously reported	$	715,043
Adjustments	6,290
Retained earnings at September 30, 2012 - As restated	$	721,333

	Nine Months Ended		Three Months Ended
	June 30,		June 30,
	2013		2013
Net Income - As previously reported	$	57,968	$	18,364
Adjustments	4,304		17
Net Income - As restated	$	62,272	$	18,381

Description of Adjustments

On February 10, 2014, we announced that we would be restating certain previously issued audited consolidated financial statements and unaudited condensed consolidated financial statements primarily to correct two errors in the recognition of revenue.

In 2012, we restated our financial statements for the years ended September 30, 2011, 2010 and 2009, the quarters ended March 31, 2012 and December 31, 2011 and each of the prior quarters of 2011 and 2010. This previous restatement was the result of our determination that we had made errors in the calculation of revenues for a significant number of our contracts due to incorrect application of GAAP. In the course of our financial statement closing process for the quarter ended December 31, 2013, we identified two errors related to revenue recognition for two contracts with the same customer that date back to the previous restatement period. The first error was related to the computation of revenues for a contract that was entered into in 2011. The error resulted from a miscalculation in a revenue recognition model that was created during the previous restatement activity. The second error relates to a contract entered into in 2007 and was the result of a failure to appropriately update the contract value in our revenue accounting system as well as a failure to properly account for a 2008 amendment to this contract. Upon modification of this second contract in 2008, the cost-to-cost percentage of completion method should no longer have been used, and revenue should have been recognized using a service-based model.

In addition to the errors described above, we also made adjustments related to other individually immaterial errors including certain corrections that had been previously identified but not recorded because they were not material, individually or in the aggregate, to our consolidated financial statements. These corrections included certain accrued liabilities and reserves and miscellaneous reclassification entries; adjustments to various income tax and indirect tax accrual accounts; and adjustments to sales and cost of sales to correct cutoff on immaterial revenue recognition transactions.

The following tables present the impact of the restatement on the our previously issued Condensed Consolidated Balance Sheet as of September 30, 2013, and our Condensed Consolidated Statements of Income, Comprehensive Income and Cash Flows for the three and nine months ended June 30, 2013:

	Condensed Consolidated Balance Sheet September 30, 2013
	Previously Reported			Adjustments			As Restated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	203,892		$	—		$	203,892
Restricted cash	69,381			—			69,381
Marketable securities	4,055			—			4,055
Accounts receivable - net	376,143			2,859			379,002
Recoverable income taxes	7,885			—			7,885
Inventories - net	54,400			5,346			59,746
Deferred income taxes and other current assets	18,638			—			18,638
Total current assets	734,394			8,205			742,599
Long-term contract receivables	19,249			(228		)	19,021
Long-term capitalized costs	75,520			(6,557		)	68,963
Property, plant and equipment - net	56,305			—			56,305
Deferred income taxes	19,322			—			19,322
Goodwill	136,094			—			136,094
Purchased intangibles - net	57,542			—			57,542
Other assets	9,772			—			9,772
	$	1,108,198		$	1,420		$	1,109,618
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	39,016		$	1,294		$	40,310
Customer advances	103,187			(18,880		)	84,307
Accrued compensation and other current liabilities	107,330			1,923			109,253
Income taxes payable	8,076			4,655			12,731
Current portion of long-term debt	557			—			557
Total current liabilities	258,166			(11,008		)	247,158
Long-term debt	102,363			—			102,363
Other long-term liabilities	42,742			275			43,017
Shareholders’ equity:
Common stock	15,825			—			15,825
Retained earnings	728,424			11,578			740,002
Accumulated other comprehensive loss	(3,378		)	575			(2,803		)
Treasury stock at cost	(36,078		)	—			(36,078		)
Shareholders’ equity related to Cubic	704,793			12,153			716,946
Noncontrolling interest in variable interest entity	134			—			134
Total shareholders’ equity	704,927			12,153			717,080
	$	1,108,198		$	1,420		$	1,109,618

	Condensed Consolidated Statement of Income									Condensed Consolidated Statement of Income
	Nine Months Ended June 30, 2013									Three Months Ended June 30, 2013
	Previously						As			Previously						As
	Reported			Adjustments			Restated			Reported			Adjustments			Restated
	(amounts in thousands, except per share data)									(amounts in thousands, except per share data)
Net sales:
Products	$	432,226		$	(2,790	)	$	429,436		$	131,557		$	(3,875	)	$	127,682
Services	585,895			5,300			591,195			208,888			656			209,544
	1,018,121			2,510			1,020,631			340,445			(3,219		)	337,226
Costs and expenses:
Products	311,964			(1,921		)	310,043			93,946			(2,935		)	91,011
Services	462,075			(406		)	461,669			164,458			(180		)	164,278
Selling, general and administrative	126,447			(54		)	126,393			44,130			—			44,130
Restructuring costs	6,198			—			6,198			114			—			114
Research and development	19,346			—			19,346			6,426			—			6,426
Amortization of purchased intangibles	12,192			—			12,192			4,362			—			4,362
	938,222			(2,381		)	935,841			313,436			(3,115		)	310,321
Operating income	79,899			4,891			84,790			27,009			(104		)	26,905
Other income (expense):
Interest and dividend income	1,279			—			1,279			530			—			530
Interest expense	(2,438		)	(9		)	(2,447		)	(922		)	(3		)	(925		)
Other income (expense) - net	(764		)	—			(764		)	(813		)	—			(813		)
Income before income taxes	77,976			4,882			82,858			25,804			(107		)	25,697
Income taxes	19,859			578			20,437			7,416			(124		)	7,292
Net income	58,117			4,304			62,421			18,388			17			18,405
Less noncontrolling interest in income of VIE	149			—			149			24			—			24
Net income attributable to Cubic	$	57,968		$	4,304		$	62,272		$	18,364		$	17		$	18,381
Net income per share attributable to Cubic:
Basic	$	2.17		$	0.16		$	2.33		$	0.69		$	0.00		$	0.69
Diluted	$	2.17		$	0.16		$	2.33		$	0.69		$	0.00		$	0.69
Dividends per common share	$	0.12		$	—		$	0.12		$	—		$	—		$	—
Weighted average shares used in per share calculations:
Basic	26,736			—			26,736			26,736			—			26,736
Diluted	26,745			—			26,745			26,762			—			26,762

	Condensed Consolidated Statement of Comprehensive Income									Condensed Consolidated Statement of Comprehensive Income
	Nine Months Ended June 30, 2013									Three Months Ended June 30, 2013
	Previously						As			Previously					As
	Reported			Adjustments			Restated			Reported			Adjustments		Restated
	(in thousands)									(in thousands)
Net income	$	58,117		$	4,304		$	62,421		$	18,388		$	17	$	18,405
Other comprehensive income:
Foreign currency translation	(15,185		)	(580		)	(15,765		)	(1,872		)	96		(1,776		)
Net unrealized gain (loss) on available-for-sale securities, net of tax	(5		)	—			(5		)	(5		)	—		(5		)
Change in net unrealized gains/losses from cash flow hedges:
Change in fair value of cash flow hedges, net of tax	3,557			—			3,557			4,894			—		4,894
Adjustment for net gains/losses realized and included in net income, net of tax	1,146			—			1,146			(188		)	—		(188		)
Total change in unrealized gains/losses realized from cash flow hedges, net of tax	4,703			—			4,703			4,706			—		4,706
Total other comprehensive income (loss)	(10,487		)	(580		)	(11,067		)	2,829			96		2,925
Total comprehensive income (loss)	47,630			3,724			51,354			21,217			113		21,330

	Condensed Consolidated Statement of Cash Flows									Condensed Consolidated Statement of Cash Flows
	Nine Months Ended June 30, 2013									Three Months Ended June 30, 2013
	Previously						As			Previously						As
	Reported			Adjustments			Restated			Reported			Adjustments			Restated
	(in thousands)									(in thousands)
Operating Activities:
Net income	$	58,117		$	4,304		$	62,421		$	18,388		$	17		$	18,405
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	18,014			—			18,014			6,417			—			6,417
Share-based compensation expense	1,634			—			1,634			1,575			—			1,575
Changes in operating assets and liabilities, net of effects from acquisitions	(84,595		)	(4,304		)	(88,899		)	22,761			(17		)	22,744
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(6,830		)	—			(6,830		)	49,141			—			49,141
Investing Activities:
Acquisition of businesses, net of cash acquired	(60,649		)	—			(60,649		)	(7,377		)	—			(7,377		)
Net additions to property, plant and equipment	(6,209		)	—			(6,209		)	(2,348		)	—			(2,348		)
Purchases of short-term investments	(4,054		)	—			(4,054		)	(4,054		)	—			(4,054		)
NET CASH USED IN INVESTING ACTIVITIES	(70,912		)	—			(70,912		)	(13,779		)	—			(13,779		)
Financing Activities:
Proceeds from short-term borrowings	70,000			—			70,000			—			—			—
Principal payments on short-term borrowings	(70,000		)	—			(70,000		)	(25,000		)	—			(25,000		)
Proceeds from long-term borrowings	100,000			—			100,000			50,000			—			50,000
Principal payments on long-term debt	(8,407		)	—			(8,407		)	(134		)	—			(134		)
Contingent consideration payments related to acquisitions of businesses	(224		)	—			(224		)	(224		)	—			(224		)
Dividends paid to shareholders	(3,208		)	—			(3,208		)	—			—			—
Change in restricted cash	(104		)	—			(104		)	(20		)	—			(20		)
NET CASH PROVIDED BY FINANCING ACTIVITIES	88,057			—			88,057			24,622			—			24,622
Effect of exchange rates on cash	(10,131		)	—			(10,131		)	3,862			—			3,862
NET INCREASE IN CASH AND CASH EQUIVALENTS	184			—			184			63,846			—			63,846
Cash and cash equivalents at the beginning of the period	212,267			—			212,267			148,605			—			148,605
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	$	212,451		$	—		$	212,451		$	212,451		$	—		$	212,451

Financial information in the accompanying footnotes to the condensed consolidated financial statements reflects the effects of the preceding discussions and tables.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 12,216	$ 18,405	$ 36,765	$ 62,421
Other comprehensive income (loss):
Foreign currency translation	7,245	(1,776)	19,107	(15,765)
Net unrealized gain (loss) on available-for-sale securities, net of tax		(5)		(5)
Change in net unrealized gains/losses from cash flow hedges:
Change in fair value of cash flow hedges, net of tax	(80)	4,894	(261)	3,557
Adjustment for net gains/losses realized and included in net income, net of tax	(208)	(188)	(231)	1,146
Total change in unrealized gains/losses from cash flow hedges, net of tax	(288)	4,706	(492)	4,703
Total other comprehensive income (loss)	6,957	2,925	18,615	(11,067)
Total comprehensive income	$ 19,173	$ 21,330	$ 55,380	$ 51,354

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Derivative Instruments and Hedging Activities

9 Months Ended

Jun. 30, 2014

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 forwards. We do not use any derivative financial instruments for trading or other speculative purposes.

All derivatives are recorded at fair value, however, the classification of gains and losses resulting from changes in the fair values of derivatives are dependent on the intended use of the derivative and its resulting designation. If a derivative is designated as a fair value hedge, then a change in the fair value of the derivative is offset against the change in the fair value of the underlying hedged item and only the ineffective portion of the hedge, if any, is recognized in earnings. If a derivative is designated as a cash flow hedge, then the effective portion of a change in the fair value of the derivative is recognized as a component of accumulated other comprehensive income until the underlying hedged item is recognized in earnings, or the forecasted transaction is no longer probable of occurring. If a derivative does not qualify as a highly effective hedge, any change in fair value is immediately recognized in earnings. We formally document all hedging relationships for all derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transactions. We classify the fair value of all derivative contracts as current or non- current assets or liabilities, depending on the realized and unrealized gain or loss position of the hedged contract at the balance sheet date, and the timing of future cash flows. The cash flows from derivatives treated as hedges are classified in the Condensed 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 June 30, 2014 and September 30, 2013 (in thousands):

	Notional Principal
	June 30, 2014		September 30, 2013
Instruments designated as accounting hedges:
Foreign currency forwards	$	395,213	$	361,337
Forward starting swap	—		58,415
Instruments not designated as accounting hedges:
Foreign currency forwards	$	1,195	$	2,697
Forward starting swap	55,962		—

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 periods ended June 30, 2014 and September 30, 2013. Although the table above reflects the notional principal amounts of our forward starting swaps and foreign exchange instruments, it does not reflect the gains or losses associated with the exposures and transactions that the forward starting swaps and 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 June 30, 2014 or September 30, 2013.

The table below presents the fair value of our derivative financial instruments that qualify for hedge accounting as well as their classification in the Condensed Consolidated Balance Sheets as of June 30, 2014 and September 30, 2013 (in thousands):

		Fair Value
	Balance Sheet Location	June 30, 2014		September 30, 2013
Asset derivatives:
Foreign currency forwards	Other current assets	$	8,223	$	1,597
Foreign currency forwards	Other noncurrent assets	5,629		4,957
Forward starting swap	Other noncurrent assets	164		1,139
		$	14,016	$	7,693
Liability derivatives:
Foreign currency forwards	Other current liabilities	$	8,811	$	2,360
Foreign currency forwards	Other noncurrent liabilities	5,832		5,366
Total		$	14,643	$	7,726

The tables below present gains and losses recognized in other comprehensive income (OCI) for the three and nine months ended June 30, 2014 and 2013 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):

	Nine Months Ended
	June 30, 2014					June 30, 2013						June 30, 2014		June 30, 2013
				Gains (losses)				Gains (losses)
	Gains (losses)			reclassified into		Gains (losses)		reclassified into				Gains (losses) recognized -Ineffective
	recognized in			earnings -		recognized in		earnings -				Portion and amount excluded from
Derivative Type	OCI			Effective Portion		OCI		Effective Portion			Location of gain (loss)	effectiveness testing
Foreign currency forwards	$	(757	)	$	355	$	4,020	$	(1,763	)	Other income/(expense), net	$	—	$	—
Forward starting swap	—			—		1,453		—			Other income/(expense), net	164		—
	$	(757	)	$	355	$	5,473	$	(1,763	)		$	164	$	—

	Three Months Ended
	June 30, 2014					June 30, 2013					June 30, 2014			June 30, 2013
				Gains (losses)				Gains (losses)
	Gains (losses)			reclassified into		Gains (losses)		reclassified into			Gains (losses) recognized -Ineffective
	recognized in			earnings -		recognized in		earnings -			Portion and amount excluded from
Derivative Type	OCI			Effective Portion		OCI		Effective Portion		Location of gain (loss)	effectiveness testing
Foreign currency forwards	$	(443	)	$	320	$	5,912	$	289	Other income/(expense), net	$	—		$	—
Forward starting swap	—			—		1,617		—		Other income/(expense), net	(673		)	—
	$	(443	)	$	320	$	7,529	$	289		$	(673	)	$	—

For the three and nine months ended June 30, 2014, we recognized a loss of $0.7 million and a gain of $0.2 million, respectively, related to derivative instruments classified as not highly effective. The amount of 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 three and nine months ended June 30, 2013. The amount of estimated unrealized net losses from cash flow hedges which are expected to be reclassified to earnings in the next twelve months is $0.4 million, net of income taxes.

Forward starting swap

In connection with a transportation systems contract that we entered in December 2011, we have incurred significant costs to develop the customer’s fare collection system before we begin receiving payments under the contract. In order to finance certain of these costs, we had planned to issue at least $83 million of 10-year fixed rate debt. Originally, the planned date of issuance of the debt was January 1, 2014. In the first quarter of fiscal 2014, we continued to believe that it was probable that we would issue the debt, but we revised our estimated date of the issuance to July 1, 2014. In the second quarter of fiscal 2014, we again revised our estimate such that we now believe that it is not probable that the debt issuance will occur. Instead, we believe that it is likely that the transportation contract will be monetized in a manner other than the originally contemplated debt issuance.

Due to concern that market interest rates for the 10-year forward period of January 1, 2014 to January 1, 2024 would change through January 1, 2014, exposing the LIBOR benchmark component of each of the 20 projected semi-annual interest cash flows of that future 10-year period to risk of variability, in July 2012 we entered into a forward-starting 10-year swap contract with a bank to reduce the interest rate variability exposure of the projected interest cash flows on the planned debt issuance. This forward-starting swap had a termination date of January 1, 2014. On December 18, 2013, we modified the forward starting swap such that the termination was changed to July 1, 2014. The modified forward-starting swap has a notional amount of $56.0 million, and a pay 1.881% fixed rate, receive 3- month LIBOR, with fixed rate payments due semi-annually on the first day each June and December commencing June 1, 2014 through December 1, 2023, floating payments due quarterly on the first day of each quarter commencing March 1, 2014 through December 2023, and floating reset dates two days prior to the first day of each calculation period. The swap contracts accrual period, January 1, 2014 to December 1, 2023 was designed to match the tenor of the planned debt issuance.

Prior to the modification of the forward-starting swap on December 18, 2013, the forward starting swap was deemed to be a highly effective cash flow hedge. Upon modification of the forward-starting swap, we did not elect to designate the modified forward-starting swap as an accounting hedge. As such, an amount equal to the fair value of the forward-starting swap immediately prior to the modification of the instrument of $1.0 million was included in accumulated other comprehensive income at December 31, 2013 and changes in the fair value of the forward-starting swap subsequent to the date of the modification were recognized in earnings, within the other income (expense) line item in our CTS segment. The change in the fair value of the forward starting swap from the date of the modification to December 31, 2013 resulted in the recognition of income of $0.4 million in the first quarter of fiscal 2014. Changes in the fair value of the forward starting swap in the second quarter of fiscal 2014 resulted in the recognition of a loss of $0.6 million. Also, in the second fiscal quarter of 2014, upon making the assessment that it was no longer probable that the originally planned debt issuance would occur, the derivative gain of $1.0 million previously reported in accumulated other comprehensive income was reclassified into earnings. In the third quarter of fiscal 2014 we recognized a loss of $0.7 million related to the change in the fair value of the forward starting swap. As of June 30, the fair value of the forward starting swap was $0.2 million, and on July 1, 2014, at the termination date of the forward starting swap, we settled the forward starting swap and received $0.2 million from the counterparty.

Foreign currency forwards

In order to limit our exposure to foreign currency exchange rate risk we generally hedge those commitments greater than $50,000 by using foreign currency exchange forward and option contracts that are denominated in currencies other than the functional currency of the subsidiary responsible for the commitment, typically the British pound, Canadian dollar, Singapore dollar, euro, Swedish krona, New Zealand dollar and Australian dollar. These contracts are designed to be effective hedges regardless of the direction or magnitude of any foreign currency exchange rate change, because they result in an equal and opposite income or cost stream that offsets the change in the value of the underlying commitment.

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Document and Entity Information	9 Months Ended
	Jun. 30, 2014	Jul. 22, 2014
Document and Entity Information
Entity Registrant Name	CUBIC CORP /DE/
Entity Central Index Key	0000026076
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		26,788,525
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Segment Information

9 Months Ended

Jun. 30, 2014

Segment Information

Segment Information

Note 13 — Segment Information

Business segment financial data is as follows (in millions):

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
				(As Restated)						(As Restated)
Sales:
Transportation Systems	$	429.1		$	398.4		$	153.0		$	134.8
Mission Support Services	291.7			359.4			91.8			123.8
Defense Systems	281.2			262.5			95.6			78.6
Other	—			0.3			—			—
Total sales	$	1,002.0		$	1,020.6		$	340.4		$	337.2
Operating income (loss):
Transportation Systems	$	35.2		$	69.5		$	15.3		$	19.0
Mission Support Services	6.0			11.4			1.8			3.6
Defense Systems	16.1			7.6			3.3			6.1
Unallocated corporate expenses and other	(4.1		)	(3.7		)	(1.2		)	(1.8		)
Total operating income	$	53.2		$	84.8		$	19.2		$	26.9
Depreciation and amortization:
Transportation Systems	$	8.5		$	2.7		$	2.7		$	1.2
Mission Support Services	8.5			10.0			2.7			3.5
Defense Systems	5.0			4.4			1.8			1.5
Other	0.7			0.9			0.3			0.2
Total depreciation and amortization	$	22.7		$	18.0		$	7.5		$	6.4

Changes in estimates on contracts for which revenue is recognized using the cost-to-cost-percentage-of-completion method decreased operating profit by $4.8 million for the three months ended June 30, 2014 and increased operating profit by $1.9 million for the three months ended June 30, 2013, and decreased operating profit by $3.8 million and $5.5 million for the nine months ended June 30, 2014 and 2013, respectively.

These adjustments decreased net income by approximately $2.0 million ($0.07 per share) for the three months ended June 30, 2014 and increased net income by approximately $0.9 million ($0.03 per share) for the three months ended June 30, 2013, and decreased net income by $0.3 million ($0.01 per share) and $4.4 million ($0.16 per share) for the nine months ended June 30, 2014 and 2013, respectively.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Current assets:
Cash and cash equivalents	$ 166,841
Restricted cash	69,028
Accounts receivable - net	403,401
Recoverable income taxes	17,719
Inventories - net	53,768
Deferred income taxes and other current assets	30,844
Total current assets	741,601
Long-term contract receivables	16,690
Long-term capitalized contract costs	77,560
Property, plant and equipment - net	64,360
Deferred income taxes	18,057
Goodwill	187,595
Purchased intangibles - net	70,257
Other assets	11,527
Total assets	1,187,647
Current liabilities:
Short-term borrowings	8,000
Trade accounts payable	23,527
Customer advances	84,338
Accrued compensation and other current liabilities	139,856
Income taxes payable	13,148
Current portion of long-term debt	591
Total current liabilities	269,460
Long-term debt	102,066
Other long-term liabilities	43,602
Shareholders' equity:
Common stock	19,104
Retained earnings	773,468
Accumulated other comprehensive income (loss)	15,812
Treasury stock at cost	(36,078)
Shareholders' equity related to Cubic	772,306
Noncontrolling interest in variable interest entity	213
Total shareholders' equity	772,519
Total liabilities and shareholders' equity	$ 1,187,647

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Financing Arrangements

9 Months Ended

Jun. 30, 2014

Financing Arrangements

Financing Arrangements

Note 7 — Financing Arrangements

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. Interest on these notes is due semi-annually and principal payments are due from 2021 through 2025. In addition, pursuant to the agreement, through March 2016 we may from time to time issue and sell, and the purchasers may in their sole discretion purchase, additional senior notes in aggregate principal amount of up to $25.0 million that will have terms, including interest rate, as we and the purchasers may agree upon at the time of issuance.

We have a committed five-year revolving credit agreement (Revolving Credit Agreement) with a group of financial institutions in the amount of $200 million, which expires in May 2017. The available line of credit is reduced by any letters of credit issued under the Revolving Credit Agreement. As of June 30, 2014, there were borrowings totaling $8.0 million under this agreement and there were letters of credit outstanding totaling $34.2 million, which reduce the available line of credit to $157.8 million.

We have a secured letter of credit facility agreement with a bank (Secured Letter of Credit Facility) which is cancellable by us at any time upon the completion of certain conditions to the satisfaction of the bank. At June 30, 2014 there were letters of credit outstanding under this agreement of $62.2 million. Restricted cash at June 30, 2014 of $69.0 million was held on deposit in the U.K. as collateral in support of this Secured Letter of Credit Facility. We are required to leave the cash in the restricted account so long as the bank continues to maintain associated letters of credit under the facility. The maximum amount of letters of credit currently allowed by the facility is $62.7 million, and any increase above this amount would require bank approval and additional restricted funds to be placed on deposit. We may choose at any time to terminate the facility and move the associated letters of credit to another credit facility. Letters of credit outstanding under the Secured Letter of Credit Facility do not reduce the available line of credit under the Revolving Credit Agreement.

As of June 30, 2014, we had letters of credit and bank guarantees outstanding totaling $100.6 million, including the letters of credit outstanding under the Revolving Credit Agreement and the Secured Letter of Credit Facility described above, which guarantee either our performance or customer advances under certain contracts. In addition, we had financial letters of credit outstanding totaling $8.9 million as of June 30, 2014, which primarily guarantee our payment of certain self-insured liabilities. We have never had a drawing on a letter of credit instrument, nor are any anticipated; therefore, we estimate the fair value of these instruments to be zero.

We maintain short-term borrowing arrangements in New Zealand and Australia totaling $0.5 million New Zealand dollars (equivalent to approximately $0.4 million) and $3.0 million Australian dollars (equivalent to approximately $2.8 million) to help meet the short- term working capital requirements of our subsidiaries in those countries. At June 30, 2014, no amounts were outstanding under these borrowing arrangements.

The terms of certain of our lending and credit agreements include provisions that require and/or limit, among other financial ratios and measurements, the permitted levels of debt, coverage of cash interest expense, and under certain circumstances, payments of dividends or other distributions to shareholders. As of June 30, 2014 these agreements do not restrict such distributions to shareholders.

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 $8.5 million and $8.8 million as of June 30, 2014, and September 30, 2013, respectively.

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Fair Value of Financial Instruments

9 Months Ended

Jun. 30, 2014

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Note 6 — Fair Value of Financial Instruments

The valuation techniques required to determine fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. The two types of inputs create the following fair value hierarchy:

· Level 1 - Quoted prices for identical instruments in active markets.

· Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

· Level 3 - Significant inputs to the valuation model are unobservable.

The fair value of cash equivalents and short term borrowings approximates their cost. The fair value of our available for sale marketable securities is determined based on 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.

At September 30, 2013, the estimated fair value of the liability for contingent consideration payable to the seller of NEK was $3.5 million, which was equal to the maximum possible contingent payment. We paid the Seller $3.5 million during the nine months ended June 30, 2014 upon the resolution of the related contingencies and the liability was reduced to zero. Prior to the payment of the contingent consideration we had estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. There was no change in the fair value of the contingent consideration liability between the date of the acquisition of NEK and June 30, 2014 other than for payments of the contingent consideration amount to the Seller; therefore, there has been no change in contingent consideration recorded in operations.

The following table presents assets and liabilities measured and recorded at fair value on our balance sheets on a recurring basis (in thousands):

	June 30, 2014
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	51,075	$	—	$	—	$	51,075
Current derivative assets	—		8,223		—		8,223
Noncurrent derivative assets	—		5,793		—		5,793
Total assets measured at fair value	$	51,075	$	14,016	$	—	$	65,091
Liabilities
Current derivative liabilities	$	—	$	8,811	$	—	$	8,811
Noncurrent derivative liabilities	—		5,832		—		5,832
Total liabilities measured at fair value	$	—	$	14,643	$	—	$	14,643

	September 30, 2013
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	125,512	$	—	$	—	$	125,512
Marketable securities	4,055		—		—		4,055
Current derivative assets	—		1,597		—		1,597
Noncurrent derivative assets	—		6,096		—		6,096
Total assets measured at fair value	$	129,567	$	7,693	$	—	$	137,260
Liabilities
Current derivative liabilities	$	—	$	2,360	$	—	$	2,360
Noncurrent derivative liabilities	—		5,366		—		5,366
Contingent consideration to Seller of NEK	—		—		3,485		3,485
Total liabilities measured at fair value	$	—	$	7,726	$	3,485	$	11,211

We did not have any significant non-financial assets or liabilities measured at fair value after initial recognition on a non-recurring basis during the three and nine months ended June 30, 2014 or 2013.

We carry financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities at cost, which we believe approximates fair value because of the short-term maturity of these instruments.

Long-term debt and short-term borrowings are carried at amortized cost. The amortized cost of short-term borrowings approximates fair value. 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):

	June 30,		September 30,
	2014		2013
Fair value	$	101.0	$	95.8
Carrying value	$	102.7	$	102.9

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Acquisitions (Tables)

9 Months Ended

Jun. 30, 2014

Acquisitions

Schedule of changes in the carrying amount of goodwill

Changes in goodwill for the nine months ended June 30, 2014 were as follows (in millions):

			Mission
	Transportation		Support		Defense
	Systems		Services		Systems		Total
Balances at September 30, 2013	$	18.3	$	94.4	$	23.4	$	136.1
Acquisitions	40.8		—		7.7		48.5
Foreign currency exchange rate changes	2.5		—		0.5		3.0
Balances at June 30, 2014	$	61.6	$	94.4	$	31.6	$	187.6

Schedule of unaudited pro forma information

The following unaudited pro forma information presents our consolidated results of operations as if Intific, ITMS, NEK, NextBus, AIS and PSMC had been included in our consolidated results since October 1, 2012 (in millions):

	Nine Months Ended				Three Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
			(As Restated)				(As Restated)
Net sales	$	1,014.7	$	1,102.8	$	340.4	$	358.2
Net income attributable to Cubic	$	36.3	$	68.1	$	12.2	$	20.1

Intific Inc.

Acquisitions

Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	2.0
Technology	0.7
Backlog	0.7
Other intangible assets	0.2
Accounts receivable	1.5
Deferred tax liabilities, net	(0.5		)
Accounts payable and accrued expenses	(0.6		)
Other net assets acquired	0.7
Net identifiable assets acquired	4.7
Goodwill	7.7
Net assets acquired	$	12.4

Schedule of estimated amortization expense related to acquisition

Based upon the preliminary estimate of the fair value of identifiable intangible assets, the estimated amortization expense related to the intangible assets recorded in connection with our acquisition of Intific for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	0.6
2015	0.9
2016	0.7
2017	0.6
2018	0.5

ITMS

Acquisitions

Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	15.7
Intellectual property	1.6
Backlog	5.7
Supplier relationships	0.6
Agreements with seller	1.3
Accounts receivable - billed	4.4
Accounts receivable - unbilled	6.9
Deferred tax liabilities, net	(0.2		)
Deferred revenue	(2.6		)
Accounts payable and accrued expenses	(4.6		)
Other net assets acquired	2.6
Net identifiable assets acquired	31.4
Goodwill	40.8
Net assets acquired	$	72.2

Schedule of estimated amortization expense related to acquisition

The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of ITMS for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	6.6
2015	6.2
2016	5.2
2017	4.1
2018	3.0

AIS

Acquisitions

Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date including the retrospective adjustments described above (in millions):

Customer relationships	$	1.4
Technology	0.9
Backlog	0.6
Other net liabilities assumed	(2.8		)
Net identifiable assets acquired	0.1
Goodwill	1.9
Net assets acquired	$	2.0

PSMC

Acquisitions

Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date

The following table summarizes the estimated fair values of the assets acquired at the acquisition date (in millions):

Customer relationships	$	0.6
Backlog	0.1
Net identifiable assets acquired	0.7
Goodwill	0.6
Net assets acquired	$	1.3

Next Bus

Acquisitions

Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	8.8
Accounts receivable, net	2.2
Backlog	1.7
Acquired technology	1.3
Corporate trade names	1.0
Accounts payable and accrued expenses	(1.1		)
Deferred tax liabilities, net	(3.3		)
Other net liabilities assumed	(1.2		)
Net identifiable assets acquired	9.4
Goodwill	10.8
Net assets acquired	$	20.2

Schedule of estimated amortization expense related to acquisition

The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of NextBus for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	1.6
2015	1.5
2016	1.4
2017	1.3
2018	1.2

NEK Special Programs Group LLC (NEK)

Acquisitions

Schedule of estimated fair values of the assets acquired and liabilities assumed at the acquisition date

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Customer relationships	$	13.3
Corporate trade names	4.9
Non-compete agreements	0.2
Accounts receivable -billed	3.1
Accounts receivable -unbilled	7.7
Accounts payable	(3.0		)
Other net liabilities assumed	(0.4		)
Net identifiable assets acquired	25.8
Goodwill	26.8
Net assets acquired	$	52.6

Schedule of estimated amortization expense related to acquisition

The estimated amortization expense related to the intangible assets recorded in connection with our acquisition of NEK for fiscal years 2014 through 2018 is as follows (in millions):

Year Ended September 30,
2014	$	3.4
2015	2.9
2016	2.4
2017	1.9
2018	1.4

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Legal Matters

9 Months Ended

Jun. 30, 2014

Legal Matters

Legal Matters

Note 14 — Legal Matters

In November 2011, we received a claim from a public transit authority customer which alleged that the authority incurred a loss of transit revenue due to the inappropriate and illegal actions of one of our former employees, who has pled guilty to the charges. This individual was employed to work on a contract we acquired in a business combination in 2009 and had allegedly been committing these illegal acts from almost two years prior to our acquisition of the contract, until his arrest in May 2011. The transit system was designed and installed by a company unrelated to us.

The transit authority sought recoupment from us of a total amount of $4.5 million for alleged lost revenue, fees and damages. In March 2012, the county superior court entered a default judgment against our former employee and others for $2.9 million based upon the estimated loss of revenue by the public transit authority customer. In 2012, we recorded an accrued cost of $2.9 million within general and administrative expense in the transportation systems segment based upon the court’s assessment of these losses. In July 2014 we entered into a settlement agreement with the customer for a cash payment of $2.6 million plus an assignment of forty percent of any insurance proceeds we receive under relevant insurance policies. In June 2014 we reduced our accrued costs to $2.6 million. We have submitted our claim to our insurance carriers but have not yet resolved the level of coverage. Any potential insurance proceeds, and any related assignment of a portion of the proceeds to the customer, will not be recognized in the financial statements until receipt of any such insurance proceeds is probable.

In October and December of 2013, and January of 2014, lawsuits were filed in the United States District Court for the Northern District of Illinois, Eastern Division against us and one of our transit customers alleging variously, among other things, breach of contract, violation of the Illinois Consumer Fraud Act, unjust enrichment and violation of the Electronic Funds Act. In January 2014 these cases were consolidated into a single case and the Plaintiffs are seeking to have the case certified as a class action. Plaintiffs variously claim, among other things, that: (i) they were wrongly charged for calling the call center that we operate for patrons of our transit customer, (ii) they were wrongly charged for a transfer and a second fare, (iii) they were not credited the cost of a transit card even after registration of the card, as is required under the terms of the cardholder agreement, and (iv) they were double charged for rides taken. We are undertaking the defense of the transit customer pursuant to our contractual obligations to that customer. We are investigating the matter and plan to vigorously defend this lawsuit. Due to the preliminary nature of this case, we cannot estimate the probability of loss or any range of estimate of possible loss.

Also in October 2013, a lawsuit was filed in the Circuit Court of Cook County, Illinois, County Department, Chancery Division against our same transit customer alleging conversion and unjust enrichment. This lawsuit was later amended and refiled in May 2014.  The plaintiff alleges his bank debit card was charged two dollars and twenty-five cents for his ride on the transit system rather than the ride being charged to his transit fare card. This plaintiff is also seeking to have his case certified as a class action for all patrons whose bank cards were charged in the same manner. We are investigating the matter and we are undertaking the defense pursuant to our contractual obligations to our transit customer.  We plan to vigorously defend this lawsuit. Due to the preliminary nature of this case, we cannot estimate the probability of loss or any range of estimate of possible loss.

We are not a party to any other material pending proceedings and we consider all other matters to be ordinary proceedings incidental to the 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.

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Stock-Based Compensation

9 Months Ended

Jun. 30, 2014

Stock-Based Compensation

Stock-Based Compensation

Note 10 - Stock-Based Compensation

We recorded non-cash compensation expense related to stock-based awards for the three- and nine-month periods ended June 30, 2014 and 2013 as follows (in thousands):

	Nine Months Ended				Three Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of sales	$	397	$	123	$	192	$	119
Selling, general and administrative	3,973		1,511		1,593		1,456
	$	4,370	$	1,634	$	1,785	$	1,575

As of June 30, 2014, there was $25.0 million of unrecognized compensation cost related to unvested RSUs. This amount is expected to be recognized over a weighted-average period of 1.7 years. Based upon the expected forfeitures and the expected vesting of performance-based RSUs, the aggregate grant-date fair value of unvested RSUs at June 30, 2014 expected to ultimately vest is $17.8 million.

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 June 30, 2014. 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.

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Pension Plans

9 Months Ended

Jun. 30, 2014

Pension Plans

Pension Plans

Note 8 — Pension Plans

The components of net periodic pension cost (benefit) are as follows (in thousands):

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Service cost	$	463		$	410		$	157		$	134
Interest cost	7,461			6,658			2,505			2,197
Expected return on plan assets	(9,869		)	(8,710		)	(3,313		)	(2,876		)
Amortization of actuarial loss	599			1,352			202			445
Administrative expenses	114			57			38			19
Net pension benefit	$	(1,232	)	$	(233	)	$	(411	)	$	(81	)

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Stockholders' Equity

9 Months Ended

Jun. 30, 2014

Stockholders' Equity

Stockholders' Equity

Note 9 - Stockholders’ Equity

Long Term Equity Incentive Plan

On March 21, 2013, the Executive Compensation Committee of the Board of Directors (Compensation Committee) approved a long- term equity incentive award program. Through June 30, 2014, the Compensation Committee has granted 405,847 RSU’s with time-based vesting and 314,656 RSU’s 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 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 June 30, 2014, Cubic has granted 720,503 restricted stock units of which 69,994 have vested. At June 30, 2014, 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 378,607.

The following table summarizes our RSU activity for the nine months ended June 30, 2014. The weighted-average grant date fair value of each RSU represents the fair market value of one share of our common stock at the grant date:

	Unvested Restricted Stock Units
	Number of Shares		Weighted- Average Grant- Date Fair Value
Unvested at September 30, 2013	421,369		$	43.76
Granted	293,992		49.73
Vested	(69,994	)	43.76
Forfeited	(8,980	)	49.57
Unvested at June 30, 2014	636,387		$	46.44

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Income Taxes

9 Months Ended

Jun. 30, 2014

Income Taxes

Income Taxes

Note 11 — Income Taxes

Our effective tax rate for the three months ended June 30, 2014 was 29% as compared to 36% for the year ended September 30, 2013. The effective tax rate for the three months ended June 30, 2014 is lower than the year ended September 30, 2013, which had reflected the unfavorable impact related to the goodwill impairment loss as well as an increase in the valuation allowance against deferred tax assets.

The amount of unrecognized tax benefits was $4.7 million as of June 30, 2014 and $4.8 million as of September 30, 2013, exclusive of interest and penalties. At June 30, 2014, the amount of unrecognized tax benefits from permanent tax adjustments that, if recognized, would favorably impact the effective rate was $4.7 million. During the next 12 months, it is reasonably possible that resolution of reviews by taxing authorities, both domestic and international, could be reached with respect to approximately $0.1 million of the unrecognized tax benefits depending on the timing of examinations and expiration of statute of limitations, either because our tax positions are sustained or because we agree to their disallowance and pay the related income tax.

We are subject to ongoing audits from various taxing authorities in the jurisdictions in which we do business. As of June 30, 2014, the tax years open under the statute of limitations in significant jurisdictions include fiscal years 2010-2013 in the U.K., 2009-2013 in New Zealand and 2011-2013 in the U.S. We believe we have adequately provided for uncertain tax issues that have not yet been resolved with federal, state and foreign tax authorities.

We are required to assess whether a valuation allowance should be recorded against our deferred tax assets (DTAs) by jurisdiction based on the consideration of all available evidence, with significant weight given to evidence that can be objectively verified and using a “more likely than not” realization standard. As of September 30, 2013, we evaluated our net DTAs, including an assessment of the cumulative income or loss over the prior three-year and future periods, to determine if a valuation allowance was required. With respect to Australia, we recorded a valuation allowance on net DTAs of approximately $4.0 million. As of June 30, 2014, we continue to assess the need for a valuation allowance on DTAs and will record the related tax effects in the quarter in which a change in circumstance occurs.

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Restatement of Condensed Consolidated Financial Statements (Details 3) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net sales:
Products	$ 136,649	$ 127,682	$ 405,419	$ 429,436
Services	203,708	209,544	596,567	591,195
Total net sales	340,357	337,226	1,001,986	1,020,631
Costs and expenses:
Products	108,301	91,011	305,245	310,043
Services	156,726	164,278	480,906	461,669
Selling, general and administrative	46,489	44,130	131,508	126,393
Restructuring costs	24	114	227	6,198
Research and development	3,949	6,426	13,822	19,346
Amortization of purchased intangibles	5,653	4,362	17,056	12,192
Total costs and expenses	321,142	310,321	948,764	935,841
Operating income	19,215	26,905	53,222	84,790
Other income (expense):
Interest and dividend income	595	530	958	1,279
Interest expense	(1,504)	(925)	(3,117)	(2,447)
Other income (expense) - net	(1,098)	(813)	(1,058)	(764)
Income before income taxes	17,208	25,697	50,005	82,858
Income taxes	4,992	7,292	13,240	20,437
Net income	12,216	18,405	36,765	62,421
Less noncontrolling interest in income of VIE	10	24	79	149
Net income attributable to Cubic	12,206	18,381	36,686	62,272
Net income per share attributable to Cubic:
Basic (in dollars per share)	$ 0.46	$ 0.69	$ 1.37	$ 2.33
Diluted (in dollars per share)	$ 0.45	$ 0.69	$ 1.36	$ 2.33
Dividends per common share (in dollars per share)			$ 0.12	$ 0.12
Weighted average shares used in per share calculations:
Basic (in shares)	26,789	26,736	26,786	26,736
Diluted (in shares)	26,921	26,762	26,901	26,745
Previously Reported
Net sales:
Products		131,557		432,226
Services		208,888		585,895
Total net sales		340,445		1,018,121
Costs and expenses:
Products		93,946		311,964
Services		164,458		462,075
Selling, general and administrative		44,130		126,447
Restructuring costs		114		6,198
Research and development		6,426		19,346
Amortization of purchased intangibles		4,362		12,192
Total costs and expenses		313,436		938,222
Operating income		27,009		79,899
Other income (expense):
Interest and dividend income		530		1,279
Interest expense		(922)		(2,438)
Other income (expense) - net		(813)		(764)
Income before income taxes		25,804		77,976
Income taxes		7,416		19,859
Net income		18,388		58,117
Less noncontrolling interest in income of VIE		24		149
Net income attributable to Cubic		18,364		57,968
Net income per share attributable to Cubic:
Basic (in dollars per share)		$ 0.69		$ 2.17
Diluted (in dollars per share)		$ 0.69		$ 2.17
Dividends per common share (in dollars per share)				$ 0.12
Weighted average shares used in per share calculations:
Basic (in shares)		26,736		26,736
Diluted (in shares)		26,762		26,745
Adjustments
Net sales:
Products		(3,875)		(2,790)
Services		656		5,300
Total net sales		(3,219)		2,510
Costs and expenses:
Products		(2,935)		(1,921)
Services		(180)		(406)
Selling, general and administrative				(54)
Total costs and expenses		(3,115)		(2,381)
Operating income		(104)		4,891
Other income (expense):
Interest expense		(3)		(9)
Income before income taxes		(107)		4,882
Income taxes		(124)		578
Net income		17		4,304
Net income attributable to Cubic		$ 17		$ 4,304
Net income per share attributable to Cubic:
Basic (in dollars per share)		$ 0.00		$ 0.16
Diluted (in dollars per share)		$ 0.00		$ 0.16

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenue recognition
Sales	$ 340,357	$ 337,226	$ 1,001,986	$ 1,020,631
Operating income (loss)	19,215	26,905	53,222	84,790
Depreciation and amortization	7,511	6,417	22,740	18,014
Transportation Systems
Revenue recognition
Sales	153,000	134,800	429,100	398,400
Operating income (loss)	15,300	19,000	35,200	69,500
Depreciation and amortization	2,700	1,200	8,500	2,700
Mission Support Services
Revenue recognition
Sales	91,800	123,800	291,700	359,400
Operating income (loss)	1,800	3,600	6,000	11,400
Depreciation and amortization	2,700	3,500	8,500	10,000
Defense Systems
Revenue recognition
Sales	95,600	78,600	281,200	262,500
Operating income (loss)	3,300	6,100	16,100	7,600
Depreciation and amortization	1,800	1,500	5,000	4,400
Other
Revenue recognition
Sales				300
Depreciation and amortization	300	200	700	900
Unallocated corporate expenses and other
Revenue recognition
Operating income (loss)	$ (1,200)	$ (1,800)	$ (4,100)	$ (3,700)

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Basis for Presentation (Policies)

9 Months Ended

Jun. 30, 2014

Basis for Presentation

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. ASU 2014-09 will be effective for us starting in the first quarter of fiscal 2018. ASU 2014-09 allows for two methods of adoption: (a) “full retrospective” adoption, meaning the standard is applied to all periods presented, or (b) “modified retrospective” adoption, meaning the cumulative effect of applying ASU 2014-09 is recognized as an adjustment to the fiscal 2018 opening retained earnings balance. We are in the process of determining the adoption method as well as the effects the adoption of ASU 2014-09 will have on our consolidated financial statements.

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Jun. 30, 2014

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):

	June 30, 2014
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	51,075	$	—	$	—	$	51,075
Current derivative assets	—		8,223		—		8,223
Noncurrent derivative assets	—		5,793		—		5,793
Total assets measured at fair value	$	51,075	$	14,016	$	—	$	65,091
Liabilities
Current derivative liabilities	$	—	$	8,811	$	—	$	8,811
Noncurrent derivative liabilities	—		5,832		—		5,832
Total liabilities measured at fair value	$	—	$	14,643	$	—	$	14,643

	September 30, 2013
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	125,512	$	—	$	—	$	125,512
Marketable securities	4,055		—		—		4,055
Current derivative assets	—		1,597		—		1,597
Noncurrent derivative assets	—		6,096		—		6,096
Total assets measured at fair value	$	129,567	$	7,693	$	—	$	137,260
Liabilities
Current derivative liabilities	$	—	$	2,360	$	—	$	2,360
Noncurrent derivative liabilities	—		5,366		—		5,366
Contingent consideration to Seller of NEK	—		—		3,485		3,485
Total liabilities measured at fair value	$	—	$	7,726	$	3,485	$	11,211

Schedule of estimated fair value and carrying value of long-term debt

The following table presents the estimated fair value and carrying value of our long-term debt (in millions):

	June 30,		September 30,
	2014		2013
Fair value	$	101.0	$	95.8
Carrying value	$	102.7	$	102.9

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Derivative Instruments and Hedging Activities (Details 3) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended	3 Months Ended	9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Foreign currency forwards	Jun. 30, 2013 Foreign currency forwards	Jun. 30, 2014 Foreign currency forwards	Jun. 30, 2013 Foreign currency forwards	Mar. 31, 2014 Forward starting swap	Jun. 30, 2013 Forward starting swap	Jun. 30, 2013 Forward starting swap	Jun. 30, 2014 Forward starting swap Other income/(expense), net	Jun. 30, 2014 Forward starting swap Other income/(expense), net
Derivative instruments and hedging activities
Gains (losses) recognized in OCI	$ (443,000)	$ 7,529,000	$ (757,000)	$ 5,473,000	$ (443,000)	$ 5,912,000	$ (757,000)	$ 4,020,000		$ 1,617,000	$ 1,453,000
Gains (losses) reclassified into earnings - Effective Portion	320,000	289,000	355,000	(1,763,000)	320,000	289,000	355,000	(1,763,000)	1,000,000
Gain (loss) related to derivative instruments classified as not highly effective	(673,000)		164,000									(673,000)	164,000
Estimated unrealized net losses from cash flow hedges which are expected to be reclassified into earnings in the next twelve months	$ 400,000		$ 400,000

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Financing Arrangements (Details)										1 Months Ended	9 Months Ended
	Jun. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Jun. 30, 2014 Letters of credit primarily for self-insured liabilities USD ($)	Jun. 30, 2014 Letters of credit and bank guarantees USD ($)	Jun. 30, 2014 New Zealand USD ($)	Jun. 30, 2014 New Zealand NZD	Jun. 30, 2014 Australia USD ($)	Jun. 30, 2014 Australia AUD	Mar. 31, 2013 Senior unsecured notes USD ($)	Mar. 31, 2013 Senior unsecured notes Maximum USD ($)	Jun. 30, 2014 Revolving credit agreement USD ($)	Jun. 30, 2014 Secured letter of credit agreement USD ($)
Financial arrangement
Interest rate (as a percent)									3.35%
Additional senior notes principal amount agreed to be issued within the next three years										$ 25,000,000
Short term borrowings
Maximum borrowing capacity under credit agreement					400,000	500,000	2,800,000	3,000,000			200,000,000	62,700,000
Term under revolving credit or letter of agreement											5 years
Borrowings outstanding					0		0				8,000,000
Letters of credit outstanding											34,200,000	62,200,000
Restricted cash	69,028,000	69,381,000
Available amount under line of credit											157,800,000
Principal amount of debt instrument									100,000,000
Letters of Credit and bank guarantees outstanding			8,900,000	100,600,000
Fair value of instruments			0
Self-insurance liabilities	$ 8,500,000	$ 8,800,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Operating Activities:
Net income	$ 18,405	$ 36,765	$ 62,421
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	6,417	22,740	18,014
Share-based compensation expense	1,575	4,370	1,634
Changes in operating assets and liabilities, net of effects from acquisitions	22,744	(27,138)	(88,899)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	49,141	36,737	(6,830)
Investing Activities:
Acquisition of businesses, net of cash acquired	(7,377)	(83,456)	(60,649)
Purchases of property, plant and equipment	(2,348)	(13,536)	(6,209)
Purchases of marketable securities	(4,054)		(4,054)
Proceeds from sales or maturities of marketable securities		4,055
NET CASH USED IN INVESTING ACTIVITIES	(13,779)	(92,937)	(70,912)
Financing Activities:
Proceeds from short-term borrowings		38,000	70,000
Principal payments on short-term borrowings	(25,000)	(30,000)	(70,000)
Proceeds from long-term borrowings	50,000		100,000
Principal payments on long-term debt	(134)	(431)	(8,407)
Proceeds from issuance of common stock		113
Dividends paid		(3,215)	(3,208)
Net change in restricted cash	(20)	353	(104)
Contingent consideration payments related to acquisitions of businessess	(224)	(2,368)	(224)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	24,622	2,452	88,057
Effect of exchange rates on cash	3,862	16,697	(10,131)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	63,846	(37,051)	184
Cash and cash equivalents at the beginning of the period	148,605	203,892	212,267
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	212,451	166,841	212,451
NEK
Operating Activities:
Net income	(500)	(500)	(800)
Supplemental disclosure of non-cash investing and financing activities:
Liability incurred to acquire, net			12,108
Intific Inc.
Operating Activities:
Net income		(3,800)
Supplemental disclosure of non-cash investing and financing activities:
Liability incurred to acquire, net		1,173
ITMS
Operating Activities:
Net income		$ (200)

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Balance Sheet Details

9 Months Ended

Jun. 30, 2014

Balance Sheet Details

Balance Sheet Details

Note 5 — Balance Sheet Details

Marketable Securities

Marketable securities consist of exchange traded funds whose underlying assets consist of highly liquid debt instruments with short- term maturities. Marketable securities are classified and accounted for as available-for-sale.  These investments are recorded at fair value in the accompanying Condensed Consolidated Balance Sheets and the change in fair value is recorded, net of taxes, as a component of other comprehensive income. There have been no significant realized or unrealized gains or losses on these marketable securities to date. Marketable securities have been classified as current assets in the accompanying Condensed Consolidated Balance Sheets based upon the nature of the securities and availability for use in current operations.

Accounts Receivable

The components of accounts receivable are as follows (in thousands):

	June 30,			September 30,
	2014			2013
				(As Restated)
Trade and other receivables	$	27,063		$	17,352
Long-term contracts:
Billed	118,662			98,983
Unbilled	274,850			282,346
Allowance for doubtful accounts	(484		)	(658		)
Total accounts receivable	420,091			398,023
Less estimated amounts not currently due	(16,690		)	(19,021		)
Current accounts receivable	$	403,401		$	379,002

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 June 30, 2014 under transportation systems contracts in the U.S. and Australia based upon the payment terms in the contracts. The non-current balance at September 30, 2013 represented non-current amounts due from customers under transportation systems contracts in the same locations.

Inventories

Inventories consist of the following (in thousands):

	June 30,			September 30,
	2014			2013
				(As Restated)
Work in process and inventoried costs under long-term contracts	$	79,346		$	80,918
Customer advances	(27,536		)	(21,865		)
Materials and purchased parts	1,958			693
Net inventories	$	53,768		$	59,746

Pursuant to contract provisions, agencies of the U.S. government and certain other customers have title to, or security interest in, inventories related to such contracts as a result of advances, performance-based payments, and progress payments. Contract advances, performance-based payments and progress payments received are recorded as an offset against the related inventory balances for contracts that that are accounted for on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. This determination is performed on a contract by contract basis. Any amount of payments received in excess of the cumulative amount of accounts receivable and inventoried costs for a contract is classified as customer advances, which is classified as a liability on the balance sheet.

At June 30, 2014, work in process and inventoried costs under long-term contracts includes approximately $1.7 million in costs incurred outside the scope of work or in advance of a contract award compared to $5.8 million at September 30, 2013. We believe it is probable that we will recover these costs, plus a profit margin, under contract change orders or awards within the next year.

Long-term Capitalized Costs

Long-term capitalized contract costs consist of costs incurred on a contract to develop and manufacture a transportation fare system for a customer for which revenue recognition did not begin until the customer began operating the system in the fourth quarter of 2013. These capitalized costs are being recognized as cost of sales based upon the ratio of revenue recorded during the period compared to the revenue expected to be recognized over the term of the contract, which is through January 2024. Long-term capitalized costs that were recognized as cost of sales totaled $5.1 million and $6.1 million for the quarter and nine-month period ended June 30, 2014, respectively. No amounts of capitalized costs were recognized as cost of sales in fiscal year 2013. The long-term capitalized costs are expected to be recognized as cost of sales in approximately equal monthly amounts in future months through the term of the contract.

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Pension Plans (Tables)

9 Months Ended

Jun. 30, 2014

Pension Plans

Components of net periodic pension cost (benefit)

The components of net periodic pension cost (benefit) are as follows (in thousands):

	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Service cost	$	463		$	410		$	157		$	134
Interest cost	7,461			6,658			2,505			2,197
Expected return on plan assets	(9,869		)	(8,710		)	(3,313		)	(2,876		)
Amortization of actuarial loss	599			1,352			202			445
Administrative expenses	114			57			38			19
Net pension benefit	$	(1,232	)	$	(233	)	$	(411	)	$	(81	)

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Net Income Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net Income Per Share
Net income attributable to Cubic	$ 12,206	$ 18,381	$ 36,686	$ 62,272
Weighted average shares - basic	26,789	26,736	26,786	26,736
Effect of dilutive securities (in shares)	132	26	115	9
Weighted average shares - diluted	26,921	26,762	26,901	26,745
Net income per share attributable to Cubic, basic (in dollars per share)	$ 0.46	$ 0.69	$ 1.37	$ 2.33
Effect of dilutive securities (in dollars per share)	$ (0.01)		$ (0.01)
Net income per share attributable to Cubic, diluted (in dollars per share)	$ 0.45	$ 0.69	$ 1.36	$ 2.33

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Subsequent Events

9 Months Ended

Jun. 30, 2014

Subsequent Events

Subsequent Events

Note 15 — Subsequent Events

We have completed an evaluation of all subsequent events through the issuance date of these consolidated financial statements and concluded no subsequent events have occurred that require recognition or disclosure.