Business Segment Information

12 Months Ended

Sep. 30, 2019

Business Segment Information

Business Segment Information

NOTE 18—BUSINESS 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 our CGD and CTS operating segments, which were also our reportable segments. In 2016, we formalized the structure of our CMS business unit within our CGD 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.

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):

	Years Ended September 30,
	2019		2018		2017
Sales:
Cubic Transportation Systems	$	849.8	$	670.7	$	578.6
Cubic Mission Solutions		328.8		207.0		168.9
Cubic Global Defense		317.9		325.2		360.2
Total sales	$	1,496.5	$	1,202.9	$	1,107.7
Operating income (loss):
Cubic Transportation Systems	$	77.2	$	60.4	$	39.8
Cubic Mission Solutions		7.8		(0.1)		(9.3)
Cubic Global Defense		23.0		16.6		28.1
Unallocated corporate expenses		(21.8)		(52.5)		(56.0)
Total operating income	$	86.2	$	24.4	$	2.6
Assets:
Cubic Transportation Systems	$	825.8	$	390.2	$	335.1
Cubic Mission Solutions		437.9		352.9		390.5
Cubic Global Defense		394.2		360.1		280.1
Corporate		189.3		201.7		156.4
Discontinued Operations		—		—		174.2
Total assets	$	1,847.2	$	1,304.9	$	1,336.3
Depreciation and amortization:
Cubic Transportation Systems	$	30.7	$	12.0	$	8.8
Cubic Mission Solutions		23.3		22.4		23.8
Cubic Global Defense		6.8		8.5		10.4
Corporate		3.9		3.7		5.0
Total depreciation and amortization	$	64.7	$	46.6	$	48.0
Capital expenditures:
Cubic Transportation Systems	$	6.6	$	3.2	$	6.9
Cubic Mission Solutions		11.1		2.1		1.7
Cubic Global Defense		4.5		9.4		5.9
Corporate		26.9		17.0		22.4
Total expenditures for long-lived assets	$	49.1	$	31.7	$	36.9

Years ended September 30,	2019		2018		2017
Long-lived assets, net:
United States	$	128.4	$	106.7	$	100.6
United Kingdom		5.9		5.7		11.7
Other foreign countries		10.7		12.0		7.3
Total long-lived assets, net	$	145.0	$	124.4	$	119.6

CGD and CMS segment sales include $468.8 million, $365.8 million and $327.8 million in 2019, 2018 and 2017, respectively, of sales to U.S. government agencies. CTS segment sales include $158.5 million and $147.3 million in 2018 and 2017, respectively, of sales under various contracts with our customer, Transport for London. No other customer accounts for 10% or more of our revenues for any periods presented.

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):

	Years Ended September 30,
	2019		2018		2017
United States	$	956.6	$	627.8	$	522.8
United Kingdom		218.2		240.7		219.4
Australia		163.5		166.7		175.6
Far East/Middle East		74.0		86.4		112.7
Other		84.2		81.3		77.2
Total sales	$	1,496.5	$	1,202.9	$	1,107.7

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):

	Years Ended September 30,
	2019		2018		2017
U.S. Federal Government and State and Local Municipalities	$	938.8	$	639.5	$	522.6
Other		557.7		563.4		585.1
Total sales	$	1,496.5	$	1,202.9	$	1,107.7

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):

	Years Ended September 30,
	2019		2018		2017
Fixed Price	$	1,452.4	$	1,146.2	$	1,036.9
Other		44.1		56.7		70.8
Total sales	$	1,496.5	$	1,202.9	$	1,107.7

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):

	Years Ended September 30,
	2019		2018		2017
Product	$	1,011.1	$	704.9	$	681.6
Service		485.4		498.0		426.1
Total sales	$	1,496.5	$	1,202.9	$	1,107.7

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

	September 30,
	2019
Point in Time	$	347.4
Over Time		1,149.1
Total sales	$	1,496.5