10-Q 1 cub-20181231x10q.htm 10-Q cub_Current folio_10Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Quarter Ended December 31, 2018

 

001-08931

Commission File Number

 

CUBIC CORPORATION

Exact Name of Registrant as Specified in its Charter

 

 

 

 

Delaware

 

95-1678055

State of Incorporation

 

IRS Employer Identification No.

 

9333 Balboa Avenue
San Diego, California 92123
Telephone (858) 277-6780

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

Large accelerated filer ☒

 

Accelerated filer ☐

 

 

 

Non-accelerated filer ☐

 

Small Reporting Company ☐

 

 

 

Emerging Growth Company ☐

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act). Yes ☐ No ☒

 

As of January 23, 2019, registrant had only one class of common stock of which there were 31,150,232 shares outstanding (after deducting 8,945,300 shares held as treasury stock).

 

 

 

 


 

CUBIC CORPORATION

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended December 31, 2018

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

    

    

Page

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1. 

Financial Statements (Unaudited)

 

3

 

 

Condensed Consolidated Statements of Income (Loss)

 

3

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss)

 

4

 

 

Condensed Consolidated Balance Sheets

 

5

 

 

Condensed Consolidated Statements of Cash Flows

 

6

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

42

 

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

 

50

 

Item 4. 

Controls and Procedures

 

50

 

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1. 

Legal Proceedings

 

52

 

Item 1A. 

Risk Factors

 

52

 

Item 6. 

Exhibits

 

53

 

 

 

 

2


 

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

 

CUBIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

(amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2018

    

2017

 

Net sales:

 

 

 

 

 

 

 

Products

 

$

182,253

 

$

131,743

 

Services

 

 

123,006

 

 

116,648

 

 

 

 

305,259

 

 

248,391

 

Costs and expenses:

 

 

 

 

 

 

 

Products

 

 

125,485

 

 

91,573

 

Services

 

 

92,785

 

 

86,217

 

Selling, general and administrative expenses

 

 

62,986

 

 

61,680

 

Research and development

 

 

12,012

 

 

11,977

 

Amortization of purchased intangibles

 

 

10,565

 

 

7,351

 

Restructuring costs

 

 

1,992

 

 

1,495

 

 

 

 

305,825

 

 

260,293

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(566)

 

 

(11,902)

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

Interest and dividend income

 

 

1,234

 

 

482

 

Interest expense

 

 

(4,032)

 

 

(2,674)

 

Other income (expense), net

 

 

(4,753)

 

 

(78)

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes

 

 

(8,117)

 

 

(14,172)

 

 

 

 

 

 

 

 

 

Income tax (benefit) provision

 

 

2,497

 

 

(2,737)

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

 

(10,614)

 

 

(11,435)

 

Net income from discontinued operations

 

 

 —

 

 

1,649

 

Net loss

 

 

(10,614)

 

 

(9,786)

 

 

 

 

 

 

 

 

 

Less noncontrolling interest in loss of VIE

 

 

(4,027)

 

 

 —

 

 

 

 

 

 

 

 

 

Net loss attributable to Cubic

 

$

(6,587)

 

$

(9,786)

 

 

 

 

 

 

 

 

 

Amounts attributable to Cubic:

 

 

 

 

 

 

 

Net loss from continuing operations

 

$

(6,587)

 

$

(11,435)

 

Net income from discontinued operations

 

 

 —

 

 

1,649

 

Net loss attributable to Cubic

 

$

(6,587)

 

$

(9,786)

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

       Continuing operations attributable to Cubic

 

$

(0.23)

 

$

(0.42)

 

       Discontinued operations

 

$

 —

 

$

0.06

 

Basic earnings per share attributable to Cubic

 

$

(0.23)

 

$

(0.36)

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

       Continuing operations attributable to Cubic

 

$

(0.23)

 

$

(0.42)

 

       Discontinued operations

 

$

 —

 

$

0.06

 

Diluted earnings per share attributable to Cubic

 

$

(0.23)

 

$

(0.36)

 

 

 

 

 

 

 

 

 

Weighted average shares used in per share calculations:

 

 

 

 

 

 

 

Basic

 

 

28,492

 

 

27,207

 

Diluted

 

 

28,492

 

 

27,207

 

 

See accompanying notes.

3


 

CUBIC CORPORATION

CONDENSED CONSOLIDATED

STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

    

2018

    

2017

 

Net loss

 

$

(10,614)

 

$

(9,786)

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

Foreign currency translation

 

 

(3,318)

 

 

(192)

 

Change in unrealized gains/losses from cash flow hedges:

 

 

 

 

 

 

 

Change in fair value of cash flow hedges, net of tax

 

 

1,343

 

 

28

 

Adjustment for net gains/losses realized and included in net income, net of tax

 

 

(24)

 

 

503

 

Total change in unrealized gains/losses realized from cash flow hedges, net of tax

 

 

1,319

 

 

531

 

Total other comprehensive income (loss)

 

 

(1,999)

 

 

339

 

Total comprehensive loss

 

 

(12,613)

 

 

(9,447)

 

Noncontrolling interest in comprehensive loss of consolidated VIE, net of tax

 

 

(4,027)

 

 

 —

 

Comprehensive loss attributable to Cubic, net of tax

 

$

(8,586)

 

$

(9,447)

 

 

See accompanying notes.

 

 

 

4


 

CUBIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

 

    

2018

    

2018

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

75,174

 

$

111,834

 

Cash in consolidated VIE

 

 

421

 

 

374

 

Restricted cash

 

 

17,889

 

 

17,400

 

Restricted cash in consolidated VIE

 

 

10,000

 

 

10,000

 

Accounts receivable:

 

 

 

 

 

 

 

Long-term contracts

 

 

119,943

 

 

393,691

 

Allowance for doubtful accounts

 

 

(1,652)

 

 

(1,324)

 

 

 

 

118,291

 

 

392,367

 

 

 

 

 

 

 

 

 

Contract assets

 

 

320,277

 

 

 —

 

Recoverable income taxes

 

 

1,321

 

 

91

 

Inventories

 

 

92,201

 

 

84,199

 

Assets held for sale

 

 

8,177

 

 

8,177

 

Other current assets

 

 

40,924

 

 

43,705

 

Total current assets

 

 

684,675

 

 

668,147

 

 

 

 

 

 

 

 

 

Long-term contracts receivables

 

 

 —

 

 

6,134

 

Long-term contracts financing receivables

 

 

44,936

 

 

 —

 

Long-term contracts financing receivables in consolidated VIE

 

 

52,996

 

 

 —

 

Long-term capitalized contract costs

 

 

 —

 

 

84,924

 

Long-term capitalized contract costs in consolidated VIE

 

 

 —

 

 

1,258

 

Property, plant and equipment, net

 

 

125,298

 

 

117,546

 

Deferred income taxes

 

 

4,687

 

 

4,713

 

Goodwill

 

 

484,329

 

 

333,626

 

Purchased intangibles, net

 

 

137,201

 

 

73,533

 

Other assets

 

 

13,871

 

 

14,192

 

Other assets in consolidated VIE

 

 

962

 

 

810

 

Total assets

 

$

1,548,955

 

$

1,304,883

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Short-term borrowings

 

$

64,500

 

$

 —

 

Trade accounts payable

 

 

109,094

 

 

125,414

 

Trade accounts payable in consolidated VIE

 

 

205

 

 

165

 

Contract liability

 

 

69,713

 

 

 —

 

Customer advances

 

 

 —

 

 

75,941

 

Accrued compensation and other current liabilities

 

 

82,323

 

 

118,233

 

Income taxes payable

 

 

6,771

 

 

8,586

 

Total current liabilities

 

 

332,606

 

 

328,339

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

199,801

 

 

199,793

 

Long-term debt in consolidated VIE

 

 

15,357

 

 

9,056

 

Other long-term liabilities

 

 

43,838

 

 

43,486

 

Other long-term liabilities in consolidated VIE

 

 

6,146

 

 

13

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common stock

 

 

260,141

 

 

45,008

 

Retained earnings

 

 

815,083

 

 

801,834

 

Accumulated other comprehensive loss

 

 

(112,642)

 

 

(110,643)

 

Treasury stock at cost

 

 

(36,078)

 

 

(36,078)

 

Shareholders’ equity related to Cubic

 

 

926,504

 

 

700,121

 

Noncontrolling interest in consolidated VIE

 

 

24,703

 

 

24,075

 

Total shareholders’ equity

 

 

951,207

 

 

724,196

 

Total liabilities and shareholders’ equity

 

$

1,548,955

 

$

1,304,883

 

 

See accompanying notes.

 

 

5


 

CUBIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

    

2018

    

2017

 

Operating Activities:

 

 

 

 

 

 

 

Net loss

 

$

(10,614)

 

$

(9,786)

 

Net income from discontinued operations

 

 

 —

 

 

(1,649)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

16,011

 

 

12,433

 

Share-based compensation expense

 

 

2,720

 

 

1,627

 

Change in fair value of contingent consideration

 

 

429

 

 

298

 

Changes in operating assets and liabilities, net of effects from acquisitions:

 

 

(69,713)

 

 

(14,437)

 

NET CASH USED IN CONTINUING OPERATING ACTIVITIES

 

 

(61,167)

 

 

(11,514)

 

NET CASH USED IN OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS

 

 

 —

 

 

(15,424)

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(61,167)

 

 

(26,938)

 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

Acquisition of businesses, net of cash acquired

 

 

(247,150)

 

 

(4,650)

 

Purchases of property, plant and equipment

 

 

(12,045)

 

 

(6,318)

 

Purchase of non-marketable debt and equity securities

 

 

 —

 

 

(671)

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(259,195)

 

 

(11,639)

 

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

 

Proceeds from short-term borrowings

 

 

372,000

 

 

82,000

 

Principal payments on short-term borrowings

 

 

(307,500)

 

 

(49,000)

 

Proceeds from long-term borrowings in consolidated VIE

 

 

5,798

 

 

 —

 

Purchase of common stock

 

 

(3,419)

 

 

(2,256)

 

Contingent consideration payments related to acquisitions of businesses

 

 

(435)

 

 

(656)

 

Proceeds from equity offering, net

 

 

215,832

 

 

 —

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

282,276

 

 

30,088

 

 

 

 

 

 

 

 

 

Effect of exchange rates on cash

 

 

1,962

 

 

677

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(36,124)

 

 

(7,812)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

 

 

139,608

 

 

68,577

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

 

$

103,484

 

$

60,765

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

Receivable recognized in connection with the acquisition of Trafficware, net

 

$

1,588

 

$

 —

 

 

See accompanying notes.

6


 

 

CUBIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

December 31, 2018

 

Note 1 — Basis for Presentation

 

Cubic Corporation (“we”, “us”, and “Cubic”) has prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

 

In our opinion, the accompanying financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results for the interim periods presented. Operating results for the three-month period ended December 31, 2018 are not necessarily indicative of the results that may be expected for the year ending September 30, 2019. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended September 30, 2018.

 

The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Through September 30, 2017 our principal lines of business were transportation fare collection systems and services, defense systems, and defense services. On April 18, 2018, we entered into a stock purchase agreement with Nova Global Supply & Services, LLC (Purchaser), an entity affiliated with GC Valiant, LP, under which we agreed to sell our Cubic Global Defense Services (CGD Services) business to the Purchaser. The sale closed on May 31, 2018. As a result of the sale, the operating results and cash flows of CGD Services have been classified as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows for all periods presented. Refer to “Note 3 – Acquisitions and Divestitures” for additional information about the sale of CGD Services and the related discontinued operation classification.

 

Recently Adopted Accounting Pronouncements – Revenue Recognition

 

Revenue Recognition: Effective October 1, 2018, we adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606) using the modified retrospective transition method. The adoption of ASC 606 resulted in a change in our significant accounting policy regarding revenue recognition, and resulted in changes in our accounting policies regarding contract estimates, backlog, inventory, contract assets, long-term capitalized contract costs, and contract liabilities as described below.

 

The cumulative effect of applying the standard was an increase of $24.5 million to shareholders' equity as of October 1, 2018. Our Condensed Consolidated Statements of Income (Loss) for the quarter ended December 31, 2018 and our Condensed Consolidated Balance Sheet as of December 31, 2018 are presented under ASC 606, while our Condensed Consolidated Statements of Income (Loss) for the quarter ended December 31, 2017 and our Condensed Consolidated Balance Sheet as of September 30, 2018 are presented under the legacy revenue recognition guidance under ASC 605, Revenue Recognition. See Note 2 for disclosure of the impact of the adoption of ASC 606 on our Condensed Consolidated Statements of Income (Loss) and Condensed Consolidated Balance Sheet for the quarter ended December 31, 2018, and the effect of changes made to our Condensed Consolidated Balance Sheet as of October 1, 2018.

 

We generate revenue from the sale of integrated solutions such as mass transit fare collection systems, air and ground combat training systems, and products with command, control, communication, computers, intelligence, surveillance and reconnaissance (C4ISR) capabilities. A significant portion of our revenues are generated from long-term fixed-price contracts with customers that require us to design, develop, manufacture, modify, upgrade, test and integrate complex systems according to the customer’s specifications. We also generate revenue from services we provide, such as the operation and maintenance of fare systems for mass transit customers and the support of specialized military training exercises mainly for international customers. Our contracts are primarily with the U.S. government, state and local

7


 

municipalities, and other international government customers and international local municipal transit agencies. We classify sales as products or services in our Condensed Consolidated Statements of Income (Loss) based on the attributes of the underlying contracts.

 

We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. For certain contracts that meet the foregoing requirements, primarily international direct commercial sale contracts, we are required to obtain certain regulatory approvals. In these cases where regulatory approval is required in addition to approval from both parties, we recognize revenue based on the likelihood of obtaining timely regulatory approvals based upon all known facts and circumstances.

 

To determine the proper revenue recognition method, we evaluate each contractual arrangement to identify all performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The majority of our contracts have a single performance obligation because the promise to transfer the individual good or service is not separately identifiable from other promises within the contract and is, therefore, not distinct. These contractual arrangements either require the use of a highly specialized engineering, development and manufacturing process to provide goods according to customer specifications or represent a bundle of contracted goods and services that are integrated and together represent a combined output, which may include the delivery of multiple units. Some of our contracts have multiple performance obligations, primarily (i) related to the provision of multiple goods or services or (ii) due to the contract covering multiple phases of the product lifecycle (for instance: development and engineering, production, maintenance and support). For contracts with more than one performance obligation, we evaluate whether the stated selling prices for the products or services represent their standalone selling prices. In cases where a contract requires a customized good or service, our primary method used to estimate the standalone selling price is the expected cost plus a margin approach. In cases where we sell a standard product or service offering, the standalone selling price is based on an observable standalone selling price. Our contracts with the U.S. government, including contracts under the U.S. Department of Defense’s Foreign Military Sales program (FMS Contracts), are subject to the Federal Acquisition Regulations (FAR) and the price is typically based on estimated or actual costs plus a reasonable profit margin. As a result of these regulations, the standalone selling price of products or services in our contracts with the U.S. government and FMS Contracts are typically equal to the selling price stated in the contract. Therefore, we typically do not need to allocate (or reallocate) the transaction price to multiple performance obligations in our contracts with the U.S. government.

 

The majority of our sales are from performance obligations satisfied over time. Sales are recognized over time when control is continuously transferred to the customer during the contract or the contracted good does not have alternative use to us. For U.S. government contracts, the continuous transfer of control to the customer is supported by contract clauses that provide for (i) progress or performance-based payments or (ii) the unilateral right of the customer to terminate the contract for its convenience, in which case we have the right to receive payment for costs incurred plus a reasonable profit for products and services that do not have alternative uses to us. Our contracts with international governments and local municipal transit agencies contain similar termination for convenience clauses, or we have a legally enforceable right to receive payment for costs incurred and a reasonable profit for products or services that do not have alternative uses to us.

 

For those contracts for which control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. For our design and build type contracts, we generally use the cost-to-cost measure of progress because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Contract costs include material, labor and subcontracting costs, as well as an allocation of indirect costs, and are generally expensed as incurred for these contracts. For contracts with the U.S. government, general and administrative costs are included in contract costs; however, for purposes of revenue measurement, general and administrative costs are not considered contract costs for any other customers.

 

We record sales under cost-reimbursement-type contracts as we incur the costs. For cost-reimbursement type contracts with the U.S. government, the FAR provides guidance on the types of costs that we will be reimbursed in establishing the contract price.

8


 

 

Sales under service contracts are generally recognized as services are performed or value is provided to our customers. We measure the delivery of value to our customers using a number of metrics including ridership, units of work performed, and costs incurred. We determine which metric represents the most meaningful measure of value delivery based on the nature of the underlying service activities required under each individual contract. In certain circumstances we recognize revenue based on the right to bill when such amounts correspond to the value being delivered in a billing cycle. Certain of our transportation systems service contracts contain service level penalties or bonuses, which we recognize in each period incurred or earned. These contract penalties or bonuses are generally incurred or earned on a monthly basis; however, certain contracts may be based on a quarterly or annual evaluation. Sales under service contracts that do not contain measurable units of work performed are recognized on a straight-line basis over the contractual service period, unless evidence suggests that the revenue is earned, or obligations fulfilled, in a different manner. Costs incurred under these service contracts are generally expensed as incurred.

 

Sales from performance obligations satisfied at a point in time are typically for standard goods and are recognized when the customer obtains control, which is generally upon delivery and acceptance. Costs of sales are recorded in the period in which revenue is recognized.

 

Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. It is common for our long-term contracts to contain bonuses, penalties, transactional variable based fees, or other provisions that can either increase or decrease the transaction price. These variable amounts generally are incurred or earned upon certain performance metrics, program milestones, transactional based activities and other similar contractual events. We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.

 

Billing timetables and payment terms on our contracts vary based on a number of factors, including the contract type. Typical payment terms under fixed-price contracts with the U.S. government provide that the customer pays either performance-based payments based on the achievement of contract milestones or progress payments based on a percentage of costs we incur. For the majority of our international contracts to deliver complex systems, we typically receive milestone payments that are paid in accordance with the terms of our contract as we perform. For the majority of our service contracts, we generally bill on a monthly basis which corresponds with the satisfaction of our monthly performance obligation under these contracts. We recognize a liability for payments in excess of revenue recognized, which is presented as a contract liability on the balance sheet. The portion of payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer from our failure to adequately complete some or all of the obligations under the contract. Payments received from customers in advance of revenue recognition are not considered to be significant financing components because they are used to meet working capital demands that can be higher in the early stages of a contract. For certain of our multiple-element arrangements, the contract specifies that we will not be paid upon the delivery of certain performance obligations, but rather we will be paid when subsequent performance obligations are satisfied. Generally, in these cases we have determined that a separate financing component exists as a performance obligation under the contract. In these instances, we allocate a portion of the transaction price to this financing component. We determine the value of the embedded financing component by discounting the repayment of the financed amount over the implied repayment term using the effective interest method. This discounting methodology uses an implied interest rate which reflects the credit quality of the customer and represents an interest rate that would be similar to what we would offer the customer in a separate financing transaction. Unpaid principal and interest amounts associated with the financed performance obligation and the value of the embedded financing component are presented as Long-term contracts financing receivables in our consolidated balance sheet. We recognize the allocated transaction price of the financing component as interest income over the implied financing term. 

 

For fixed-price and cost-reimbursable contracts, we present revenues recognized in excess of billings as contract assets on the balance sheet. Amounts billed and due from our customers under both contract types are classified as receivables on the balance sheet.

 

9


 

We only include amounts representing contract change orders, claims or other items in the contract value when we believe the rights and obligations become enforceable. Contract modifications routinely occur to account for changes in contract specifications or requirements. In most cases, contract modifications are for goods or services that are not distinct and, therefore, are accounted for as part of the existing contract. Transaction price estimates include additional consideration for submitted contract modifications or claims when we believe there is an enforceable right to the modification or claim, the amount can be reliably estimated, and its realization is reasonably assured. Amounts representing modifications accounted for as part of the existing contract are included in the transaction price and recognized as an adjustment to sales on a cumulative catch-up basis.

 

In addition, we are subject to audit of incurred costs related to many of our U.S. government contracts. These audits could produce different results than we have estimated for revenue recognized on our cost-based contracts with the U.S. government; however, our experience has been that our costs are acceptable to the government.

 

Contract Estimates: Use of the cost-to-cost or other similar methods of revenue recognition requires us to make reasonably dependable estimates regarding the revenue and cost associated with the design, manufacture and delivery of our products and services. Revisions or adjustments to estimates of the transaction price, estimated costs at completion and estimated profit or loss of a performance obligation are often required as work progresses under a contract, as experience is gained, as facts and circumstances change and as new information is obtained, even though the scope of work required under the contract may not change. Revisions or adjustments may also be required if contract modifications occur. The impact of revisions in profit or loss estimates are recognized on a cumulative catch-up basis in the period in which the revisions are made. The revisions in contract estimates, if significant, can materially affect our results of operations and cash flows, and in some cases result in liabilities to complete contracts in a loss position. The aggregate impact of net changes in contract estimates are presented in the table below (amounts in thousands).

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2018

    

2017

 

Operating income (loss)

 

$

1,814

 

$

(929)

 

Net income (loss) from continuing operations

 

 

1,271

 

 

(736)

 

Diluted earnings per share

 

 

0.04

 

 

(0.03)

 

 

Backlog: Backlog (i.e., unfulfilled or remaining performance obligations) represents the sales we expect to recognize for our products and services for which control has not yet transferred to the customer. It comprises both funded backlog (firm orders for which funding is authorized and appropriated) and unfunded backlog. Unexercised contract options and indefinite delivery indefinite quantity (IDIQ) contracts are not included in backlog until the time the option or IDIQ task order is exercised or awarded. For our cost-reimbursable and fixed-priced-incentive contracts, the estimated consideration we expect to receive pursuant to the terms of the contract may exceed the contractual award amount. The estimated consideration is determined at the outset of the contract and is continuously reviewed throughout the contract period. In determining the estimated consideration, we consider the risks related to the technical, schedule and cost impacts to complete the contract and an estimate of any variable consideration. Periodically, we review these risks and may increase or decrease backlog accordingly As of December 31, 2018, our ending backlog was $3.814 billion. We expect to recognize approximately 25% of our December 31, 2018 backlog over the next 12 months and approximately 40% over the next 24 months as revenue, with the remainder recognized thereafter.

 

Disaggregation of Revenue:  See Note 14 for information regarding our sales by customer type, contract type and geographic region for each of our segments. We believe those categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

 

Accounts Receivable: Receivables consist of billed amounts due from our customers. Due to the nature of our customers, we generally do not require collateral. We have limited exposure to credit risk as we have historically collected substantially all of our receivables. We generally require minimal allowance for doubtful accounts for our customers, which amounted to $1.7 million and $1.3 million as of December 31, 2018 and September 30, 2018, respectively.

 

Inventories: We state our inventories at the lower of cost or market. We determine cost using the first-in, first-out (FIFO) method, which approximates current replacement cost. We value our work in process at the actual production and

10


 

engineering costs incurred to date, including applicable overhead. Any inventoried costs in excess of estimated realizable value are immediately charged to cost of sales.

 

Contract Assets:  Contract assets include unbilled amounts typically resulting from sales under contracts when the percentage-of-completion cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. The amounts may not exceed their estimated net realizable value. Contract assets are classified as current assets and, in accordance with industry practice, include amounts that may be billed and collected beyond one year due to the long-cycle nature of many of our contracts.

 

Long-term Capitalized Contract Costs: Through September 30, 2018, long-term capitalized contract costs included costs incurred on contracts to develop and manufacture transportation systems for customers for which revenue recognition did not begin until the customers begin operating the systems prior to the adoption of ASC 606. Upon adoption of ASC 606, revenue recognition and cost recognition are no longer deferred in these situations and therefore we no longer have long-term capitalized contract costs.

 

Contract Liabilities:  Contract liabilities (formerly referred to as customer advances prior to the adoption of ASC 606) include advance payments and billings in excess of revenue recognized. Contract liabilities are classified as current liabilities based on our contract operating cycle and calculated on a contract-by-contract basis, net of revenue recognized, at the end of each reporting period.

 

Recently Adopted Accounting Pronouncements – Income Taxes

 

On December 22, 2017 the U.S. government enacted the “Tax Cuts and Jobs Act of 2017” (Tax Act). Due to the complexity of the Tax Act, the SEC issued guidance in SAB 118 which clarified the accounting for income taxes under ASC 740 if certain information was not yet available, prepared or analyzed, in reasonable detail to complete the accounting for income tax effects of the Tax Act. SAB 118 provided for a measurement period of up to one year after the enactment of the Tax Act, during which time the required analyses and accounting must be completed. During fiscal year 2018, we recorded provisional amounts for the income tax effects of the changes in tax law and tax rates, as reasonable estimates were determined by management during this period. During the first quarter of fiscal year 2019, we did not adjust provisional amounts recorded in the prior fiscal year and the SAB 118 measurement period subsequently ended on December 22, 2018. Although we no longer considers these amounts to be provisional, the determination of the Tax Act’s income tax effects may change following future legislation or further interpretation of the Tax Act based on the publication of recently proposed U.S. Treasury regulations and guidance from the Internal Revenue Service and state tax authorities.

 

Recently Adopted Accounting Pronouncements – Other

 

In October 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.  ASU 2016-16 was effective for us beginning October 1, 2018 and did not have any significant impact on our consolidated financial statements.

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10), which requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for entities to disclose the methods and significant assumptions used to estimate the fair value that is currently required to be disclosed for financial instruments measured at amortized cost. ASU 2016-01 was adopted by us beginning October 1, 2018 and did not have any significant impact on our consolidated financial statements.

 

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which provides clarifying guidance on how entities should classify cash receipts and cash payments from specific types of transactions on the statement of cash flows. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. ASU 2016-15 was

11


 

effective for us beginning October 1, 2018 and did not have any significant impact on our consolidated financial statements.

 

In November 2016, the FASB issued ASU 2016-18, Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-18 was adopted by us beginning October 1, 2018. The application of this accounting standard update did not impact financial results, but resulted in a retrospective change in the presentation of restricted cash, including the inclusion of $27.4 million and $11.8 million of restricted cash on hand at September 30, 2018 and December 31, 2017, respectively, within the beginning and ending amounts of cash and cash equivalents in our Statements of Cash Flows. In addition, changes in the total of cash, cash equivalents and restricted cash are now reflected in our Statements of Cash Flows for all periods presented.

 

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets transferred is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. ASU 2017-01 was adopted by us on October 1, 2018 and did not have any immediate impact on our consolidated financial statements. However, adoption of ASU 2017-01 could impact the accounting for future acquisitions or disposals of assets and activities because the accounting for a business combination differs significantly from that of an asset acquisition.

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service cost/credit and actuarial gain/loss, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement. We adopted ASU 2017-07 beginning October 1, 2018 and it did not have any significant impact on our consolidated financial statements. The components of net periodic benefit cost, other than the service cost component, are included in other income (expense) in our condensed consolidated statements of income (loss).

Recent Accounting Pronouncements – Not Yet Adopted

 

In February 2016, the FASB issued ASU 2016-02, Leases. Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The ASU will be effective for us beginning October 1, 2019 with early adoption permitted. ASU 2016-02 will be adopted on a modified retrospective transition basis for leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the impact of the application of this accounting standard update on our consolidated financial statements and we have determined we will not adopt the new guidance early.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. This standard removes the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit was needed to measure the goodwill impairment. Under this updated standard, goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance will be effective for us in our fiscal year beginning October 1, 2020 with early adoption permitted. Adoption of ASU 2017-04 will have no immediate impact on our consolidated financial statements and would only have the potential to impact the amount of any goodwill impairment recorded after the adoption of the ASU. We are currently evaluating whether to adopt the guidance early.

12


 

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which aims to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments in this ASU are intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To satisfy that objective, the amendments expand and refine hedge accounting for both non-financial and financial risk components, and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. Additionally, the amendments (1) permit hedge accounting for risk components in hedging relationships involving non-financial risk and interest rate risk; (2) change the guidance for designating fair value hedges of interest rate risk and for measuring the change in fair value of the hedged item in fair value hedges of interest rate risk; (3) continue to allow an entity to exclude option premiums and forward points from the assessment of hedge effectiveness; and (4) permit an entity to exclude the portion of the change in fair value of a currency swap that is attributable to a cross-currency basis spread from the assessment of hedge effectiveness. The amendments in this ASU are effective for us in our annual period beginning October 1, 2019 and interim periods within that year, with early adoption permitted. We are currently evaluating the impact of the application of this accounting standard update on our consolidated financial statements as well as whether to adopt the new guidance early.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance modifies the disclosure requirements on fair value measurements. The amendments in this accounting standard update are effective for us in our annual period beginning October 1, 2020 and interim periods within that annual period. Early adoption is permitted for any removed or modified disclosures. We are currently evaluating the impact of the application of this accounting standard update on our consolidated financial statements as well as whether to adopt the new guidance early.

In August 2018, the FASB issued ASU 2018-14, Defined Benefit Plan - Disclosure Framework (Topic 715), which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. The amendments in this accounting standard update are effective for us in our annual period beginning October 1, 2020. Early adoption is permitted. We are currently evaluating the impact of the application of this accounting standard update on our consolidated financial statements as well as whether to adopt the new guidance early.

 

Note 2 — New Accounting Standards Implemented

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606), which replaces numerous requirements in U.S. GAAP, including industry-specific requirements, and provides companies with a single revenue recognition model for recognizing revenue from contracts with customers and significantly expands the disclosure requirements for revenue arrangements. The new standard, as amended, was effective for us beginning on October 1, 2018.

 

As discussed in Note 1, we adopted ASC 606 using the modified retrospective transition method. Results for reporting periods beginning after September 30, 2018 are presented under ASC 606, while prior period comparative information has not been restated and continues to be reported in accordance with ASC 605, the accounting standard in effect for periods ending prior to October 1, 2018. The adoption of ASC 606 primarily impacted certain (i) multiple-element transportation contracts that previously deferred the recognition of all revenue and related costs during the design and build phase, as the collection of payment occurred during the subsequent operate and maintain phase, and (ii) contracts previously covered by contract accounting standards that recognized revenue using the units-of-delivery method. Under ASC 606, we now recognize sales on these contracts over time by using the cost-to-cost method.

    

Based on contracts in process at September 30, 2018, upon adoption of ASC 606 we recorded a net increase to retained earnings of $24.5 million, which includes the acceleration of net sales of approximately $114.9 million and the related cost of sales. The adjustment to retained earnings primarily relates to multiple element transportation contracts that previously required the deferral of revenue and costs during the design and build phase, as the collection of all customer payments occurs during the subsequent operate and maintain phase. Under ASC 606, deferral of such revenue and costs is not required. In addition, the adjustment to retained earnings is attributed to contracts previously accounted for under the units-of-delivery method, which are now recognized under ASC 606 earlier in the performance period as costs are incurred, as opposed to when the units are delivered under ASC 605. In accordance with the modified retrospective

13


 

transition provisions of ASC 606, we will not recognize any of the accelerated net sales and related cost of sales through October 1, 2018 in our Condensed Consolidated Statements of Income (Loss) for any historical or future period.

 

We made certain presentation changes to our Consolidated Balance Sheet on October 1, 2018 to comply with ASC 606. The component of accounts receivable as reported under ASC 605, which included unbilled contract receivables, has been reclassified as contract assets under ASC 606, after certain adjustments described below. The adoption of ASC 606 resulted in an increase in unbilled contract receivables (referred to as contract assets under ASC 606) primarily from converting contracts previously applying the units-of-delivery method to the cost-to-cost method with a corresponding reduction in inventoried contract costs. Additionally, the adoption of ASC 606 resulted in an increase in unbilled receivables from converting multiple element transportation contracts that previously deferred all revenue and costs during the design and build phase, with a corresponding reduction in long-term capitalized contract costs. Advance payments and deferred revenue, previously primarily classified in customer advances, are now presented as contract liabilities.

 

14


 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments

 

October 1, 2018

 

 

 

September 30,

 

Due to

 

As Adjusted

 

 

    

2018

    

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 noncurrent 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 liability

 

 

 —

 

 

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

 

Other long-term liabilities

 

 

43,486

 

 

 —

 

 

43,486

 

Other long-term 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

 

 

15


 

The table below presents how the adoption of ASC 606 affected certain line items on our Condensed Consolidated Statements of Income (Loss) for the three months ended December 31, 2018 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended December 31, 2018

 

 

 

 

 

 

 

 

 

As Reported

 

 

 

Under

 

Effect of

 

Under

 

 

 

ASC 605

    

ASC 606

    

ASC 606

 

Net sales:

 

 

 

 

 

 

 

 

 

 

Products

 

$

152,562

 

$

29,691

 

$

182,253

 

Services

 

 

124,262

 

 

(1,256)

 

 

123,006

 

 

 

 

276,824

 

 

28,435

 

 

305,259

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

Products

 

 

100,544

 

 

24,941

 

 

125,485

 

Services

 

 

92,785

 

 

 —

 

 

92,785

 

Selling, general and administrative expenses

 

 

62,823

 

 

163

 

 

62,986

 

Research and development

 

 

12,012

 

 

 —

 

 

12,012

 

Amortization of purchased intangibles

 

 

10,565

 

 

 —

 

 

10,565

 

Restructuring costs

 

 

1,992

 

 

 —

 

 

1,992

 

 

 

 

280,721

 

 

25,104

 

 

305,825

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(3,897)

 

 

3,331

 

 

(566)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

56

 

 

1,178

 

 

1,234

 

Interest expense

 

 

(4,032)

 

 

 —

 

 

(4,032)

 

Other income (expense), net

 

 

(4,753)

 

 

 —

 

 

(4,753)

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes

 

 

(12,626)

 

 

4,509

 

 

(8,117)

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

 

2,473

 

 

24

 

 

2,497

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(15,099)

 

 

4,485

 

 

(10,614)

 

 

 

 

 

 

 

 

 

 

 

 

Less noncontrolling interest in loss of VIE

 

 

(5,981)

 

 

1,954

 

 

(4,027)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Cubic

 

$

(9,118)