Business Segment Information

12 Months Ended

Sep. 30, 2020

Business Segment Information

Business Segment Information

NOTE 16—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. In August 2020, we implemented a plan to realign and combine our CMS and CGD segments into Cubic Mission and Performance Solutions (CMPS). The realignment will leverage common technologies across the defense business, enhance collaboration and customer intimacy globally, reduce complexity and costs, and increase organizational efficiency. We performed an assessment of our operating and reportable segments as of September 30, 2020, which is based upon factors such as the nature of the business activities and customers, and the nature of the information presented to our chief operating decision maker. Based on this assessment, we have concluded that CTS, CMS and CGD each remain separate operating segments as of September 30, 2020. However, in the first quarter of fiscal 2021, additional aspects of resource allocation and performance assessment are expected to be made at the CMPS level and we anticipate that CMS and CGD will be combined into a single operating and reporting segment.

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 in Note 1. 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,
	2020		2019		2018
Sales:
Cubic Transportation Systems	$	840.9	$	849.8	$	670.7
Cubic Mission Solutions		337.1		328.8		207.0
Cubic Global Defense Systems		298.2		317.9		325.2
Total sales	$	1,476.2	$	1,496.5	$	1,202.9
Operating income (loss):
Cubic Transportation Systems	$	121.0	$	77.2	$	60.4
Cubic Mission Solutions		(26.7)		7.8		(0.1)
Cubic Global Defense Systems		22.9		23.0		16.6
Unallocated corporate expenses		(55.6)		(21.8)		(52.5)
Total operating income	$	61.6	$	86.2	$	24.4
Assets:
Cubic Transportation Systems	$	1,050.3	$	825.8	$	390.2
Cubic Mission Solutions		703.6		437.9		352.9
Cubic Global Defense		347.5		394.2		360.1
Corporate		222.8		189.3		201.7
Total assets	$	2,324.2	$	1,847.2	$	1,304.9
Depreciation and amortization:
Cubic Transportation Systems	$	29.5	$	30.7	$	12.0
Cubic Mission Solutions		47.8		23.3		22.4
Cubic Global Defense Systems		7.2		6.8		8.5
Corporate		4.0		3.9		3.7
Total depreciation and amortization	$	88.5	$	64.7	$	46.6
Capital expenditures:
Cubic Transportation Systems	$	6.3	$	6.6	$	3.2
Cubic Mission Solutions		15.8		11.1		2.1
Cubic Global Defense		11.7		4.5		9.4
Corporate		15.4		26.9		17.0
Total expenditures for long-lived assets	$	49.2	$	49.1	$	31.7

As of September 30,	2020		2019		2018
Long-lived assets, net:
United States	$	148.2	$	128.4	$	106.7
United Kingdom		7.1		5.9		5.7
Other foreign countries		11.0		10.7		12.0
Total long-lived assets, net	$	166.3	$	145.0	$	124.4

CGD and CMS segment sales include $434.0 million, $468.8 million and $365.8 million in 2020, 2019 and 2018, respectively, of sales to U.S. federal government agencies. In 2018, CTS segment sales include $158.5 million 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 can affect the nature, amount, timing, and uncertainty of our revenue and cash flows.

Sales by Geographic Region (in millions):

	Year Ended September 30, 2020
	CTS		CMS		CGD		Total
United States	$	495.6	$	329.4	$	106.4	$	931.4
United Kingdom		185.8		3.2		18.9		207.9
Australia		131.0		1.8		31.5		164.3
Far East/Middle East		1.6		0.9		98.5		101.0
Other		26.9		1.8		42.9		71.6
Total sales	$	840.9	$	337.1	$	298.2	$	1,476.2
	Year Ended September 30, 2019
	CTS		CMS		CGD		Total
United States	$	488.3	$	322.6	$	145.7	$	956.6
United Kingdom		196.5		1.6		20.1		218.2
Australia		131.9		2.6		29.0		163.5
Far East/Middle East		9.4		0.9		63.7		74.0
Other		23.7		1.1		59.4		84.2
Total sales	$	849.8	$	328.8	$	317.9	$	1,496.5
	Year Ended September 30, 2018
	CTS		CMS		CGD		Total
United States	$	273.4	$	199.8	$	154.6	$	627.8
United Kingdom		217.2		2.7		20.8		240.7
Australia		130.7		2.4		33.6		166.7
Far East/Middle East		9.8		1.2		75.4		86.4
Other		39.6		0.9		40.8		81.3
Total sales	$	670.7	$	207.0	$	325.2	$	1,202.9

Sales by End Customer: We are the prime contractor for the vast majority of our sales. Sales included in other end customers primarily represent sales to foreign governments and commercial customers. The table below presents total net sales disaggregated by end customer (in millions):

	Year Ended September 30, 2020
	CTS		CMS		CGD		Total
U.S. Federal Government and State and Local Municipalities	$	471.7	$	320.7	$	113.3	$	905.7
Other		369.2		16.4		184.9		570.5
Total sales	$	840.9	$	337.1	$	298.2	$	1,476.2
	Year Ended September 30, 2019
	CTS		CMS		CGD		Total
U.S. Federal Government and State and Local Municipalities	$	470.0	$	314.0	$	154.8	$	938.8
Other		379.8		14.8		163.1		557.7
Total sales	$	849.8	$	328.8	$	317.9	$	1,496.5
	Year Ended September 30, 2018
	CTS		CMS		CGD		Total
U.S. Federal Government and State and Local Municipalities	$	273.7	$	200.6	$	165.2	$	639.5
Other		397.0		6.4		160.0		563.4
Total sales	$	670.7	$	207.0	$	325.2	$	1,202.9

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

The table below presents total net sales disaggregated by contract type (in millions):

	Year Ended September 30, 2020
	CTS		CMS		CGD		Total
Fixed Price	$	828.6	$	305.0	$	264.3	$	1,397.9
Other		12.3		32.1		33.9		78.3
Total sales	$	840.9	$	337.1	$	298.2	$	1,476.2
	Year Ended September 30, 2019
	CTS		CMS		CGD		Total
Fixed Price	$	838.1	$	321.5	$	292.8	$	1,452.4
Other		11.7		7.3		25.1		44.1
Total sales	$	849.8	$	328.8	$	317.9	$	1,496.5
	Year Ended September 30, 2018
	CTS		CMS		CGD		Total
Fixed Price	$	653.8	$	206.1	$	286.3	$	1,146.2
Other		16.9		0.9		38.9		56.7
Total sales	$	670.7	$	207.0	$	325.2	$	1,202.9

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):

	Year Ended September 30, 2020
	CTS		CMS		CGD		Total
Product	$	459.7	$	301.8	$	186.3	$	947.8
Service		381.2		35.3		111.9		528.4
Total sales	$	840.9	$	337.1	$	298.2	$	1,476.2
	Year Ended September 30, 2019
	CTS		CMS		CGD		Total
Product	$	496.9	$	301.0	$	213.2	$	1,011.1
Service		352.9		27.8		104.7		485.4
Total sales	$	849.8	$	328.8	$	317.9	$	1,496.5
	Year Ended September 30, 2018
	CTS		CMS		CGD		Total
Product	$	288.1	$	187.5	$	229.3	$	704.9
Service		382.6		19.5		95.9		498.0
Total sales	$	670.7	$	207.0	$	325.2	$	1,202.9

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):

	Year Ended September 30. 2020
	CTS		CMS		CGD		Total
Point in Time	$	102.1	$	220.3	$	6.7	$	329.1
Over Time		738.8		116.8		291.5		1,147.1
Total sales	$	840.9	$	337.1	$	298.2	$	1,476.2
	Year Ended September 30. 2019
	CTS		CMS		CGD		Total
Point in Time	$	83.1	$	259.5	$	4.8	$	347.4
Over Time		766.7		69.3		313.1		1,149.1
Total sales	$	849.8	$	328.8	$	317.9	$	1,496.5