Balance Sheet Details

9 Months Ended

Jun. 30, 2019

Balance Sheet Details

Balance Sheet Details

Note 7 — Balance Sheet Details

Accounts Receivable

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

	June 30,		September 30,
	2019		2018
Accounts receivable
Billed	$	180,594	$	156,948
Unbilled		—		242,877
Allowance for doubtful accounts		(1,745)		(1,324)
Total accounts receivable		178,849		398,501
Less estimated amounts not currently due		—		(6,134)
Current accounts receivable	$	178,849	$	392,367

In our normal course of business, we may sell trade receivables to financial institutions as a cash management technique. We do not retain financial or legal obligations for these receivables that would result in material losses. Our ongoing involvement is limited to the remittance of customer payments to the financial institutions with respect to the sold trade receivables; therefore, our sold trade receivables are not included in our Condensed Consolidated Balance Sheet in any period presented. During the third quarter of fiscal 2019, we sold $25.0 million of trade receivables to a financial institution that had not been collected as of June 30, 2019.

Inventories

Inventories consist of the following (in thousands):

	June 30,		September 30,
	2019		2018
Finished products	$	12,745	$	7,099
Work in process and inventoried costs under long-term contracts		73,838		63,169
Materials and purchased parts		37,714		23,710
Customer advances		—		(9,779)
Net inventories	$	124,297	$	84,199

At June 30, 2019, work in process and inventoried costs under long-term contracts includes approximately $2.5 million in costs incurred outside the scope of work or in advance of a contract award compared to $0.9 million at September 30, 2018. We believe it is probable that we will recover the costs inventoried at June 30, 2019, plus a profit margin, under contract change orders or awards within the next year.

Property, Plant and Equipment

Significant components of property, plant and equipment are as follows (in thousands):

	June 30,		September 30,
	2019		2018
Land and land improvements	$	9,611	$	13,132
Buildings and improvements		32,343		57,959
Machinery and other equipment		94,447		81,727
Software		94,821		84,631
Leasehold improvements		17,351		11,991
Construction and internal-use software development in progress		18,069		12,888
Accumulated depreciation and amortization		(129,638)		(144,782)
	$	137,004	$	117,546

In fiscal 2019, we entered into agreements related to the construction and leasing of two buildings on our existing corporate campus in San Diego, California. Under these agreements, a financial institution will own the buildings, and we will lease the property for a term of five years upon their completion.

In the third quarter of fiscal 2019 we sold the land and buildings comprising our separate CTS campus in San Diego. We have entered into a lease with the buyer of this campus and CTS employees will continue to occupy this separate campus until the new buildings on our corporate campus are ready for occupancy in fiscal 2021. In the third quarter of fiscal 2019 we also sold land and buildings in Orlando, Florida and we are entering a lease for new space in Orlando to accommodate our employees and operations in Orlando. In connection with the sale of these real estate campuses we received total net proceeds of $44.9 million and recognized net gains on the sales totaling $32.6 million.

Capitalized Software

We capitalize certain costs associated with the development or purchase of internal-use software. The amounts capitalized are included in property, plant and equipment in our Condensed Consolidated Balance Sheets and are amortized on a straight-line basis over the estimated useful life of the software, which ranges from three to seven years. No amortization expense is recorded until the software is ready for its intended use.

As a part of our efforts to upgrade our current information systems, early in fiscal 2015 we purchased new enterprise resource planning (ERP) software and began the process of designing and configuring this software and other software applications to manage our operations. Various components of our ERP system became ready for their intended use and were placed into service in phases from fiscal 2016 through fiscal 2018. As each component became ready for its

intended use, the component’s costs were transferred into completed software and we began amortizing these costs over their seven-year estimated useful life.

Excluding businesses that we acquired in fiscal 2019, we completed the planned implementation of our ERP system in the fourth quarter of fiscal 2018. We continue to capitalize costs associated with the development of certain ERP features and upgrades that are not yet ready for their intended use. We capitalized costs related to ERP components in development totaling $0.1 million and $0.7 million for the three- and nine-month periods ended June 30, 2019, respectively, and $1.9 million and $6.5 million for the three- and nine-month periods ended June 30, 2018, respectively.

In addition to software costs that were capitalized, during the three- and nine-month periods ended June 30, 2019, we recognized expenses related to the development and implementation of our ERP system of $0.3 million and $1.3 million, respectively, compared to $2.8 million and $13.1 million during the three- and nine-month periods ended June 30, 2018, respectively, for costs that did not meet the requirements for capitalization. Amounts that were expensed in connection with the development and implementation of these systems are classified within selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Deferred Compensation Plan

We have a non-qualified deferred compensation plan offered to a select group of highly compensated employees. The plan provides participants with the opportunity to defer a portion of their compensation in a given plan year. The liabilities associated with the non-qualified deferred compensation plan are included in other long-term liabilities in our Condensed Consolidated Balance Sheets and totaled $11.1 million at June 30, 2019 and $11.5 million at September 30, 2018.

We have made contributions to a rabbi trust to provide a source of funds for satisfying a portion of these deferred compensation liabilities. The carrying values of assets set aside to fund deferred compensation liabilities totaled $6.3 million at June 30, 2019 and at September 30, 2018 and were comprised entirely of life insurance contracts. The carrying value of the life insurance contracts is based on the cash surrender value of the policies. Changes in the carrying value of the deferred compensation liability, and changes in the carrying value of the assets held in the rabbi trust are reflected in our Condensed Consolidated Statements of Operations.