Implementation of the New Revenue Recognition Standard (Tables)

12 Months Ended

Sep. 30, 2019

ASU 2014-09

Schedule of cumulative effect of changes due to adoption of ASC 606

The table below presents the cumulative effect of the changes made to our Consolidated Balance Sheet as of October 1, 2018 due to the adoption of ASC 606 (in thousands):

	September 30,		Adjustments		October 1, 2018
	2018		Due to		As Adjusted
	Under ASC 605		ASC 606		Under ASC 606
ASSETS
Current assets:
Cash and cash equivalents	$	111,834	$	—	$	111,834
Cash in consolidated VIE		374		—		374
Restricted cash		17,400		—		17,400
Restricted cash in consolidated VIE		10,000		—		10,000
Accounts receivable, net		392,367		(236,743)		155,624
Contract assets		—		272,210		272,210
Recoverable income taxes		91		—		91
Inventories		84,199		(22,511)		61,688
Assets held for sale		8,177		—		8,177
Other current assets		43,705		—		43,705
Total current assets		668,147		12,956		681,103
Long-term contracts receivables		6,134		(6,134)		—
Long-term contracts financing receivables		—		56,228		56,228
Long-term contracts financing receivables in consolidated VIE		—		38,990		38,990
Long-term capitalized contract costs		84,924		(84,924)		—
Long-term capitalized contract costs in consolidated VIE		1,258		(1,258)		—
Property, plant and equipment, net		117,546		—		117,546
Deferred income taxes		4,713		389		5,102
Goodwill		333,626		—		333,626
Purchased intangibles, net		73,533		—		73,533
Other assets		14,192		—		14,192
Other assets in consolidated VIE		810		—		810
Total assets	$	1,304,883	$	16,247	$	1,321,130
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	—	$	—	$	—
Trade accounts payable		125,414		(3,011)		122,403
Trade accounts payable in consolidated VIE		165		—		165
Contract liabilities		—		70,127		70,127
Customer advances		75,941		(75,941)		—
Accrued compensation and other current liabilities		118,233		583		118,816
Income taxes payable		8,586		—		8,586
Total current liabilities		328,339		(8,242)		320,097
Long-term debt		199,793		—		199,793
Long-term debt in consolidated VIE		9,056		—		9,056
Accrued pension liability		7,802		—		7,802
Deferred compensation		11,476		—		11,476
Income taxes payable		2,406		—		2,406
Deferred income taxes		2,689		—		2,689
Other noncurrent liabilities		19,113		—		19,113
Other noncurrent liabilities in consolidated VIE		13		—		13
Shareholders’ equity:
Common stock		45,008		—		45,008
Retained earnings		801,834		19,834		821,668
Accumulated other comprehensive loss		(110,643)		—		(110,643)
Treasury stock at cost		(36,078)		—		(36,078)
Shareholders’ equity related to Cubic		700,121		19,834		719,955
Noncontrolling interest in VIE		24,075		4,655		28,730
Total shareholders’ equity		724,196		24,489		748,685
Total liabilities and shareholders’ equity	$	1,304,883	$	16,247	$	1,321,130

The table below presents how the adoption of ASC 606 affected our Consolidated Statement of Operations for the twelve months ended September 30, 2019 (in thousands, except per share data):

	Twelve months ended September 30, 2019
					As Reported
	Under		Effect of		Under
	ASC 605		ASC 606		ASC 606
Net sales:
Products	$	902,913	$	108,156	$	1,011,069
Services		484,363		1,043		485,406
		1,387,276		109,199		1,496,475
Costs and expenses:
Products		638,621		93,516		732,137
Services		332,923		—		332,923
Selling, general and administrative expenses		269,266		798		270,064
Research and development		50,132		—		50,132
Amortization of purchased intangibles		42,106		—		42,106
Gain on sale of fixed assets		(32,510)		—		(32,510)
Restructuring costs		15,386		—		15,386
		1,315,924		94,314		1,410,238
Operating income		71,352		14,885		86,237
Other income (expenses):
Interest and dividend income		394		6,125		6,519
Interest expense		(20,453)		—		(20,453)
Other income (expense), net		(19,957)		—		(19,957)
Income from continuing operations before income taxes		31,336		21,010		52,346
Income tax provision (benefit)		11,059		(19)		11,040
Income from continuing operations		20,277		21,029		41,306
Net loss from discontinued operations		(1,423)		—		(1,423)
Net income		18,854		21,029		39,883
Less noncontrolling interest in loss of VIE		(22,076)		12,265		(9,811)
Net income attributable to Cubic	$	40,930	$	8,764	$	49,694
Amounts attributable to Cubic:
Net income from continuing operations		42,353		8,764		51,117
Net loss from discontinued operations		(1,423)		—		(1,423)
Net income attributable to Cubic	$	40,930	$	8,764	$	49,694
Net income per share:
Basic earnings per share attributable to Cubic	$	1.34	$	0.29	$	1.63
Diluted earnings per share attributable to Cubic	$	1.34	$	0.29	$	1.62

The table below quantifies the impact of adopting ASC 606 on segment net sales and operating income (loss) for the twelve months ended September 30, 2019 (in thousands):

	Twelve months ended September 30, 2019
					As Reported
	Under		Effect of		Under
	ASC 605		ASC 606		ASC 606
Sales:
Cubic Transportation Systems	$	787,936	$	61,843	$	849,779
Cubic Mission Solutions		327,139		1,632		328,771
Cubic Global Defense		272,201		45,724		317,925
Total sales	$	1,387,276	$	109,199	$	1,496,475
Operating income:
Cubic Transportation Systems	$	65,974	$	11,259	$	77,233
Cubic Mission Solutions		7,244		515		7,759
Cubic Global Defense		19,858		3,111		22,969
Unallocated corporate expenses		(21,724)		—		(21,724)
Total operating income	$	71,352	$	14,885	$	86,237

The table below presents how the impact of the adoption of ASC 606 affected certain line items on our Consolidated Balance Sheet at September 30, 2019 (in thousands):

					As Reported
	Under		Effect of		Under
	ASC 605		ASC 606		ASC 606
ASSETS
Current assets:
Cash and cash equivalents	$	65,800	$	—	$	65,800
Cash in consolidated VIE		347		—		347
Restricted cash		19,507		—		19,507
Restricted cash in consolidated VIE		9,967		—		9,967
Accounts receivable, net		399,639		(273,625)		126,014
Contract assets		—		349,559		349,559
Recoverable income taxes		6,725		1,029		7,754
Inventories		158,713		(51,919)		106,794
Assets held for sale		—		—		—
Other current assets		38,534		—		38,534
Other current assets in consolidated VIE		33		—		33
Total current assets		699,265		25,044		724,309
Long-term contracts receivables		3,077		(3,077)		—
Long-term contracts financing receivables		—		36,285		36,285
Long-term contracts financing receivables in consolidated VIE		—		115,508		115,508
Long-term capitalized contract costs		136,804		(136,804)		—
Long-term capitalized contract costs in consolidated VIE		2,545		(2,545)		—
Property, plant and equipment, net		144,969		—		144,969
Deferred income taxes		4,098		—		4,098
Goodwill		578,097		—		578,097
Purchased intangibles, net		165,613		—		165,613
Other assets		76,872		—		76,872
Other assets in consolidated VIE		1,419		—		1,419
Total assets	$	1,812,759	$	34,411	$	1,847,170
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	195,500	$	—	$	195,500
Trade accounts payable		182,671		(1,898)		180,773
Trade accounts payable in consolidated VIE		25		—		25
Contract liabilities		—		46,170		46,170
Customer advances		56,001		(56,001)		—
Accrued compensation		58,343		—		58,343
Other current liabilities		36,670		—		36,670
Other current liabilities in consolidated VIE		191		—		191
Income taxes payable		152		621		773
Current portion of long-term debt		10,714		—		10,714
Total current liabilities		540,267		(11,108)		529,159
Long-term debt		189,110		—		189,110
Long-term debt in consolidated VIE		61,994		—		61,994
Accrued pension liability		25,386		—		25,386
Deferred compensation		11,040		—		11,040
Income taxes payable		937		—		937
Deferred income taxes		4,554		—		4,554
Other noncurrent liabilities		22,817		—		22,817
Other noncurrent liabilities in consolidated VIE		21,605		—		21,605
Shareholders’ equity:
Common stock		274,472		—		274,472
Retained earnings		834,349		28,599		862,948
Accumulated other comprehensive loss		(139,693)		—		(139,693)
Treasury stock at cost		(36,078)		—		(36,078)
Shareholders’ equity related to Cubic		933,050		28,599		961,649
Noncontrolling interest in VIE		1,999		16,920		18,919
Total shareholders’ equity		935,049		45,519		980,568
Total liabilities and shareholders’ equity	$	1,812,759	$	34,411	$	1,847,170