Segment Information

9 Months Ended

Jun. 30, 2019

Segment Information

Segment Information

Note 14 — 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. We evaluate performance and allocate resources based on total segment operating income or loss. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are immaterial and are eliminated in consolidation.

Our reportable segments are business units that offer different products and services. Operating results for each segment are reported separately to senior corporate management to make decisions as to the allocation of corporate resources and to assess performance.

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

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Sales:
Cubic Transportation Systems	$	212.7	$	164.6	$	595.2	$	478.1
Cubic Mission Solutions		95.0		42.7		203.3		111.9
Cubic Global Defense		75.0		88.9		226.8		233.2
Total sales	$	382.7	$	296.2	$	1,025.3	$	823.2
Operating income (loss):
Cubic Transportation Systems	$	17.2	$	18.6	$	37.0	$	42.7
Cubic Mission Solutions		1.3		(0.5)		(12.1)		(17.2)
Cubic Global Defense		1.9		6.9		10.0		13.6
Unallocated corporate expenses		14.3		(14.7)		(7.3)		(42.4)
Total operating income (loss)	$	34.7	$	10.3	$	27.6	$	(3.3)
Depreciation and amortization:
Cubic Transportation Systems	$	6.9	$	2.8	$	24.1	$	9.1
Cubic Mission Solutions		6.0		4.7		17.2		15.8
Cubic Global Defense		1.7		2.0		5.4		6.1
Corporate		0.7		1.1		2.2		3.1
Total depreciation and amortization	$	15.3	$	10.6	$	48.9	$	34.1

Unallocated corporate expenses in the third quarter and first nine months of fiscal 2019 include gains totaling $32.6 million on the sales of land and buildings in San Diego, California and Orlando, Florida. Unallocated corporate expenses include costs of strategic and information technology (IT) system resource planning as part of our One Cubic Initiatives, which totaled $2.4 million in the third quarter of fiscal 2019 compared to $5.0 million in the third quarter of last year and $6.3 million in the first nine months of 2019 compared to $18.8 million in the first nine months of last year. As described in Note 3, the operating results of CGD Services have been classified as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented.

Disaggregation of Total Net Sales: We disaggregate our sales from contracts with customers by end customer, contract type, deliverable type and revenue recognition method for each of our segments, as we believe these factors affect the nature, amount, timing, and uncertainty of our revenue and cash flows.

Sales by Geographic Region (in millions):

	Three months ended June 30, 2019								Nine months ended June 30, 2019
	CTS		CMS		CGD		Total		CTS		CMS		CGD		Total
United States	$	128.9	$	94.0	$	31.6	$	254.5	$	327.3	$	200.1	$	101.3	$	628.7
United Kingdom		47.5		0.2		7.7		55.4		151.6		1.3		16.3		169.2
Australia		30.9		0.3		8.1		39.3		91.1		0.5		20.7		112.3
Far East/Middle East		0.7		0.1		15.2		16.0		8.5		0.7		45.8		55.0
Other		4.7		0.4		12.4		17.5		16.7		0.7		42.7		60.1
Total sales	$	212.7	$	95.0	$	75.0	$	382.7	$	595.2	$	203.3	$	226.8	$	1,025.3

Sales by End Customer: We are the prime contractor for the vast majority of our sales. The table below presents total net sales disaggregated by end customer (in millions):

	Three months ended June 30, 2019								Nine months ended June 30, 2019
	CTS		CMS		CGD		Total		CTS		CMS		CGD		Total
U.S. Federal Government and State and Local Municipalities	$	123.1	$	91.8	$	37.4	$	252.3	$	310.7	$	195.6	$	107.3	$	613.6
Other		89.6		3.2		37.6		130.4		284.5		7.7		119.5		411.7
Total sales	$	212.7	$	95.0	$	75.0	$	382.7	$	595.2	$	203.3	$	226.8	$	1,025.3

Sales by Contract Type: Substantially all of our contracts are fixed-price type contracts. Sales included in Other contract types represent cost plus and time and material type contracts.

On a fixed-price type contract, we agree to perform the contractual statement of work for a predetermined sales price. On a cost-plus type contract, we are paid our allowable incurred costs plus a profit which can be fixed or variable depending on the contract’s fee arrangement up to predetermined funding levels determined by the customer. On a time-and-material type contract, we are paid on the basis of direct labor hours expended at specified fixed-price hourly rates (that include wages, overhead, allowable general and administrative expenses and profit) and materials at cost. The table below presents total net sales disaggregated by contract type (in millions):

	Three months ended June 30, 2019								Nine months ended June 30, 2019
	CTS		CMS		CGD		Total		CTS		CMS		CGD		Total
Fixed Price	$	210.5	$	93.2	$	69.5	$	373.2	$	586.3	$	199.6	$	209.4	$	995.3
Other		2.2		1.8		5.5		9.5		8.9		3.7		17.4		30.0
Total sales	$	212.7	$	95.0	$	75.0	$	382.7	$	595.2	$	203.3	$	226.8	$	1,025.3

Sales by Deliverable Type: The table below presents total net sales disaggregated by the type of deliverable, which is determined by us at the performance obligation level (in millions):

	Three months ended June 30, 2019								Nine months ended June 30, 2019
	CTS		CMS		CGD		Total		CTS		CMS		CGD		Total
Product	$	122.8	$	87.3	$	45.8	$	255.9	$	328.7	$	183.9	$	148.3	$	660.9
Service		89.9		7.7		29.2		126.8		266.5		19.4		78.5		364.4
Total sales	$	212.7	$	95.0	$	75.0	$	382.7	$	595.2	$	203.3	$	226.8	$	1,025.3

Revenue Recognition Method: The table below presents total net sales disaggregated based on the revenue recognition method applied (in millions):

	Three months ended June 30, 2019								Nine months ended June 30, 2019
	CTS		CMS		CGD		Total		CTS		CMS		CGD		Total
Point in Time	$	29.7	$	76.0	$	1.0	$	106.7	$	68.2	$	169.2	$	2.9	$	240.3
Over Time		183.0		19.0		74.0		276.0		527.0		34.1		223.9		785.0
Total sales	$	212.7	$	95.0	$	75.0	$	382.7	$	595.2	$	203.3	$	226.8	$	1,025.3