NOTE 17—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):


	Year Ended
	September 30,
	2018		2017		2016
Sales:
Cubic Transportation Systems	$	670.7	$	578.6	$	586.4
Cubic Global Defense		325.2		360.2		374.7
Cubic Mission Solutions		207.0		168.9		109.5
Total sales	$	1,202.9	$	1,107.7	$	1,070.6

Operating income (loss):
Cubic Transportation Systems	$	60.4	$	39.8	$	57.5
Cubic Global Defense		16.6		28.1		19.9
Cubic Mission Solutions		(0.1)		(9.3)		(37.0)
Unallocated corporate expenses		(52.5)		(56.0)		(52.0)
Total operating income (loss)	$	24.4	$	2.6	$	(11.6)

Assets:
Cubic Transportation Systems	$	390.2	$	335.1	$	338.2
Cubic Global Defense		360.1		280.1		211.8
Cubic Mission Solutions		352.9		390.5		404.4
Corporate		201.7		156.4		364.8
Discontinued Operations		—		174.2		185.5
Total assets	$	1,304.9	$	1,336.3	$	1,504.7

Depreciation and amortization:
Cubic Transportation Systems	$	12.0	$	8.8	$	8.2
Cubic Global Defense		8.5		10.4		7.5
Cubic Mission Solutions		22.4		23.8		21.2
Corporate		3.7		5.0		3.4
Total depreciation and amortization	$	46.6	$	48.0	$	40.3

Capital expenditures:
Cubic Transportation Systems	$	3.2	$	6.9	$	2.2
Cubic Global Defense		9.4		5.9		6.8
Cubic Mission Solutions		2.1		1.7		2.1
Corporate		17.0		22.4		21.0
Total expenditures for long-lived assets	$	31.7	$	36.9	$	32.1


Years ended September 30,	2018		2017		2016

Geographic Information:
Sales (a):
United States	$	627.8	$	522.8	$	471.6
United Kingdom		240.7		219.4		243.0
Canada		42.3		31.5		44.6
Australia		166.7		175.6		154.0
Middle East		36.3		64.8		71.0
Far East		50.1		47.9		40.0
Other		39.0		45.7		46.4
Total sales	$	1,202.9	$	1,107.7	$	1,070.6

(a)

Sales are attributed to countries or regions based on the location of customers.


Years ended September 30,	2018		2017		2016
Long-lived assets, net:
United States	$	106.7	$	100.6	$	83.9
United Kingdom		5.7		11.7		9.4
Other foreign countries		12.0		7.3		5.3
Total long-lived assets, net	$	124.4	$	119.6	$	98.6

CGD and CMS segment sales include $365.8 million, $327.8 million and $267.5 million in 2018, 2017 and 2016, respectively, of sales to U.S. government agencies. CTS segment sales include $158.5 million, $147.3 million and $156.3 million in 2018, 2017 and 2016, 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.

Changes in estimates on contracts for which revenue is recognized using the cost-to-cost percentage-of-completion method decreased operating income by approximately $7.0 million, increased operating income by approximately $5.7 million, and increased operating loss by approximately $0.9 million in 2018, 2017 and 2016 respectively. These adjustments decreased net income from continuing operations attributable to Cubic by approximately $5.1 million ($0.19 per share), decreased net loss from continuing operations attributable to Cubic by approximately $3.2 million ($0.12 per share) and decreased net income from continuing operations attributable to Cubic by approximately $0.5 million ($0.02 per share) in 2018, 2017 and 2016, respectively.

In fiscal years 2018, 2017, and 2016 we conducted a number of restructuring initiatives. In 2018, we incurred $5.0 million of charges related to restructuring. This included $3.1 million of unallocated corporate expenses, which were primarily incurred to establish a North American shared services center in order to standardize and change the management of certain of our North American financial and administrative functions. Restructuring costs in 2018 also included $1.3 million of restructuring charges incurred by our CGD business primarily related to the change in management structure for certain of portions of our ground training business.

In 2017, we incurred $2.3 million of charges for restructuring efforts which included $1.0 million of unallocated corporate expenses incurred to increase the centralization and efficiency of our manufacturing processes, and $0.9 million of restructuring charges incurred by our CGD businesses related to the elimination of a level of management in the CGD simulator business.

In 2016, we incurred $1.3 million of charges related to restructuring, which included $0.3 million incurred by our CGD segment as restructuring costs in connection with the formalization of our CMS business division described above. In addition, during fiscal 2016, our CTS business implemented a restructuring plan to reduce headcount by approximately 20 in order to rebalance our resources with work levels. CTS incurred resulting restructuring charges of $1.0 million in connection with this initiative.

Restructuring charges incurred by business segment were as follows (in millions):


	Year Ended
	September 30,
	2018		2017		2016

Restructuring costs:
Cubic Transportation Systems	$	0.4	$	0.4	$	1.0
Cubic Global Defense		1.3		0.9		0.3
Cubic Mission Solutions		0.2		—		—
Unallocated corporate expenses and other		3.1		1.0		—
Total restructuring costs	$	5.0	$	2.3	$	1.3

A summary of the activity relating to the restructuring liability and employee separation expenses, which is included within accrued compensation and other current liabilities within our Consolidated Balance Sheet, is as follows (in thousands):


	Employee Separation
Balance as of October 1, 2016	$	553
Accrued costs		2,260
Cash payments		(1,838)
Balance as of September 30, 2017		975
Accrued costs		5,018
Cash payments		(5,058)
Balance as of September 30, 2018	$	935

Certain restructuring costs are based upon estimates. Actual amounts paid may ultimately differ from these estimates. If additional costs are incurred or recognized amounts exceed costs, such changes in estimates will be recognized when incurred. The total costs of each of the restructuring plans described above are not expected to be significantly greater than the charges incurred to date.