Segment Information

3 Months Ended

Dec. 31, 2017

Segment Information

Segment Information

Note 12 — Segment Information

We define our operating segments and reportable segments based on the way our chief executive officer, who we have concluded is our chief operating decision maker, manages our operations for purposes of allocating resources and assessing performance and we continually reassess our operating segment and reportable segment designation based upon these criteria. Through September 30, 2017, our company was aligned in three operating segments, which were also our reportable segments: CTS, CGD Systems, and CGD Services.In 2016 we formalized the structure of our CMS business unit within our CGD Systems operating segment. CMS combines and integrates our C4ISR and secure communications operations. Through September 30, 2017, we concluded that CMS was not a separate operating segment based upon factors including the nature of information presented to our chief executive officer and Board of Directors and the consequential level at which certain resource allocations and performance assessments were made. In the first quarter of fiscal 2018, we began providing additional financial information to our chief executive officer and Board of Directors at the CMS level, which allowed greater resource allocation decisions and performance assessments to be made at that level. As such, we concluded that CMS became a separate operating segment beginning on October 1, 2017. Applicable prior period amounts have been adjusted retrospectively to reflect the reportable segment change.

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

	Three Months Ended
	December 31,
	2017		2016
Sales:
Cubic Transportation Systems	$	146.5	$	131.9
Cubic Global Defense Systems		68.8		78.6
Cubic Mission Solutions		33.1		33.9
Cubic Global Defense Services		92.3		90.3
Total sales	$	340.7	$	334.7
Operating income (loss):
Cubic Transportation Systems	$	9.9	$	9.7
Cubic Global Defense Systems		1.4		3.3
Cubic Mission Solutions		(8.9)		(3.8)
Cubic Global Defense Services		2.9		(0.4)
Unallocated corporate expenses		(12.3)		(12.9)
Total operating loss	$	(7.0)	$	(4.1)
Depreciation and amortization:
Cubic Transportation Systems	$	3.2	$	2.4
Cubic Global Defense Systems		1.7		2.0
Cubic Mission Solutions		5.9		6.8
Cubic Global Defense Services		0.7		1.0
Corporate		1.6		1.2
Total depreciation and amortization	$	13.1	$	13.4

Unallocated corporate costs in the first quarter of 2018 include costs of strategic and IT system resource planning as part of our One Cubic Initiatives, which totaled $8.1 million compared to $8.7 million in the first quarter of last year.

Changes in estimates on contracts for which revenue is recognized using the cost-to-cost-percentage-of-completion method increased operating loss by $0.6 million and $6.4 million for the three months ended December 31, 2017 and 2016, respectively. These adjustments increased our net loss by $0.5 million ($0.02 per share) and by $3.9 million ($0.14 per share) for the three months ended December 31, 2017 and 2016, respectively.

As of December 31, 2017 our CMS segment had total loans outstanding of $3.4 million to a private company in the U.S. that develops technologies for unmanned aircraft systems. CMS also obtained warrants in the private company in connection with this debt financing. The note receivable is classified within other current assets and the warrants are classified within non-current other assets on our Condensed Consolidated Balance Sheets. The note receivable is held at amortized cost and the warrants are held at their historical cost. On a quarterly basis we consider whether any portion of the value of the warrants or note receivable may have been impaired. No such impairments were identified during the quarter ended December 31, 2017. However, if the private company that we financed does not successfully develop or commercialize its technologies we could be required to recognize impairments in the future.