Segment Information

3 Months Ended

Dec. 31, 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
	December 31,
	2019		2018
Sales:
Cubic Transportation Systems	$	188.6	$	181.8
Cubic Mission Solutions		58.7		46.4
Cubic Global Defense Systems		81.5		77.1
Total sales	$	328.8	$	305.3
Operating income (loss):
Cubic Transportation Systems	$	14.3	$	11.0
Cubic Mission Solutions		(14.9)		(4.9)
Cubic Global Defense Systems		6.3		2.9
Unallocated corporate expenses		(12.2)		(9.6)
Total operating income (loss)	$	(6.5)	$	(0.6)
Depreciation and amortization:
Cubic Transportation Systems	$	7.1	$	7.7
Cubic Mission Solutions		7.5		5.4
Cubic Global Defense Systems		1.7		2.2
Corporate		0.7		0.7
Total depreciation and amortization	$	17.0	$	16.0

Unallocated corporate expenses include costs of strategic and information technology (IT) system resource planning as part of our One Cubic Initiatives, which totaled $1.1 million in the first quarter of fiscal 2020 compared to $1.6 million in the first quarter of last year.

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 December 31, 2019
	CTS		CMS		CGD		Total
United States	$	96.7	$	56.2	$	22.8	$	175.7
United Kingdom		47.6		0.2		4.3		52.1
Australia		36.4		1.3		6.5		44.2
Far East/Middle East		1.3		0.4		36.3		38.0
Other		6.6		0.6		11.6		18.8
Total sales	$	188.6	$	58.7	$	81.5	$	328.8

	Three months ended December 31, 2018
	CTS		CMS		CGD		Total
United States	$	91.3	$	45.5	$	35.7	$	172.5
United Kingdom		50.9		0.4		4.3		55.6
Australia		29.8		0.1		5.6		35.5
Far East/Middle East		4.4		0.4		18.4		23.2
Other		5.4		—		13.1		18.5
Total sales	$	181.8	$	46.4	$	77.1	$	305.3

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 December 31, 2019
	CTS		CMS		CGD		Total
U.S. Federal Government and State and Local Municipalities	$	93.5	$	55.2	$	26.8	$	175.5
Other		95.1		3.5		54.7		153.3
Total sales	$	188.6	$	58.7	$	81.5	$	328.8

	Three months ended December 31, 2018
	CTS		CMS		CGD		Total
U.S. Federal Government and State and Local Municipalities	$	90.8	$	45.8	$	32.4	$	169.0
Other		91.0		0.6		44.7		136.3
Total sales	$	181.8	$	46.4	$	77.1	$	305.3

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 December 31, 2019
	CTS		CMS		CGD		Total
Fixed Price	$	184.5	$	50.5	$	74.3	$	309.3
Other		4.1		8.2		7.2		19.5
Total sales	$	188.6	$	58.7	$	81.5	$	328.8

	Three months ended December 31, 2018
	CTS		CMS		CGD		Total
Fixed Price	$	178.2	$	45.8	$	71.6	$	295.6
Other		3.6		0.6		5.5		9.7
Total sales	$	181.8	$	46.4	$	77.1	$	305.3

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 December 31, 2019
	CTS		CMS		CGD		Total
Product	$	93.4	$	51.2	$	56.0	$	200.6
Service		95.2		7.5		25.5		128.2
Total sales	$	188.6	$	58.7	$	81.5	$	328.8

	Three months ended December 31, 2018
	CTS		CMS		CGD		Total
Product	$	92.0	$	40.6	$	49.7	$	182.3
Service		89.8		5.8		27.4		123.0
Total sales	$	181.8	$	46.4	$	77.1	$	305.3

Revenue Recognition Method: Sales recognized at a point in time are typically for standard goods with a short production cycle and are recognized when the customer obtains control, which is generally upon delivery and acceptance. Sales for services and for products with a long production cycle, which often include significant customization and development, are recognized over time. The table below presents total net sales disaggregated based on the revenue recognition method applied (in millions):

	Three months ended December 31, 2019
	CTS		CMS		CGD		Total
Point in Time	$	17.7	$	38.3	$	1.0	$	57.0
Over Time		170.9		20.4		80.5		271.8
Total sales	$	188.6	$	58.7	$	81.5	$	328.8

	Three months ended December 31, 2018
	CTS		CMS		CGD		Total
Point in Time	$	16.7	$	34.4	$	0.5	$	51.6
Over Time		165.1		12.0		76.6		253.7
Total sales	$	181.8	$	46.4	$	77.1	$	305.3