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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 11-K

 

 

ANNUAL REPORT PURSUANT TO SECTION 15(d)

OF THE SECURITIES ACT OF 1934

 

For the Fiscal Year Ended September 30, 2017

 

 

 

1-8931

Commission File Number

 

A.         Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

B.    Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

 

CUBIC CORPORATION

9333 Balboa Avenue

San Diego, California 92123

Telephone (858) 277-6780

 



Table of Contents

 

CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Financial Statements and Supplemental Schedule

 

September 30, 2017 and 2016

 

 

 

Table of Co ntents

 

 

Report of Independent Registered Public Accounting Firm

1

 

 

Financial Statements:

 

 

 

Statements of Net Assets Available for Benefits

2

 

 

Statement of Changes in Net Assets Available for Benefits

3

 

 

Notes to Financial Statements

4-15

 

 

* Supplemental Schedule:

 

 

 

Schedule H, line 4i – Schedule of Assets (Held at End of Year)

17

 

 

 

 

 

 

 

 

 

 

 

 

 

*     Other schedules required by Section 2520.103-10 of the United States Department of Labor ’s Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable.

 



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Report of Independent Registered Public Accounting Firm

 

To the Administrator and Participants of the

Cubic Corporation Employees’ Profit Sharing Plan:

 

We have audited the accompanying statements of net assets available for benefits of the Cubic Corporation Employees’ Profit Sharing Plan as of September 30, 2017 and 2016, and the related statement of changes in net assets available for benefits for the year ended September 30, 2017.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of September 30, 2017 and 2016, and the changes in net assets available for benefits for the year ended September 30, 2017, in conformity with accounting principles generally accepted in the United States of America.

 

The supplemental information in the accompanying Schedule of Assets (Held at End of Year) as of September 30, 2017, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but includes supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we have evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

/s/ MAYER HOFFMAN McCANN P.C.

 

San Diego, California

March 15, 2018

 



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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Statements of Net Assets Available for Benefits

 

September 30, 2017 and 2016

 

 

 

 

 

 

 

 

 

 

2017

 

2016

 

 

 

 

 

Assets:

 

 

 

 

Investments, at fair value:

 

 

 

 

Mutual funds

 

  $

322,347,115

 

  $

277,834,717

Common collective trust

 

23,559,372

 

22,392,086

Cubic Corporation common stock

 

3,658,794

 

3,453,883

Self-directed brokerage

 

785,521

 

870,320

 

 

350,350,802

 

304,551,006

Investments, at contract value:

 

 

 

 

Guaranteed interest account

 

84,134,105

 

80,217,708

Total investments

 

434,484,907

 

384,768,714

 

 

 

 

 

 

 

 

 

 

Receivables:

 

 

 

 

Employer’s contribution

 

1,882,467

 

1,015,232

Notes receivable from participants

 

5,678,610

 

5,788,760

 

 

 

 

 

Total receivables

 

7,561,077

 

6,803,992

 

 

 

 

 

 

 

 

 

 

Net assets available for benefits

 

  $

442,045,984

 

  $

391,572,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to financial statements.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Statement of Changes in Net Assets Available for Benefits

 

For the Year Ended September 30, 2017

 

 

 

 

 

Additions to net assets attributed to:

 

 

Investment income:

 

 

Net change in fair value of investments

 

  $

41,097,378

Interest and dividends

 

4,397,374

Interest on guaranteed interest account

 

2,409,737

 

 

 

Total investment income

 

47,904,489

 

 

 

Interest income on notes receivable from participants

 

257,926

 

 

 

Contributions:

 

 

Employer’s

 

10,569,806

Participants’

 

15,414,148

Participants’ rollovers from other qualified plans

 

2,075,057

 

 

 

Total contributions

 

28,059,011

 

 

 

Total additions

 

76,221,426

 

 

 

Deductions from net assets attributed to:

 

 

Benefits paid to participants

 

32,119,610

Administrative expenses

 

412,480

 

 

 

Total deductions

 

32,532,090

 

 

 

Net increase in assets available before transfers

 

43,689,336

Transfers from other plans

 

6,783,942

Net increase in assets available for benefits

 

50,473,278

 

 

 

Net assets available for benefits:

 

 

Beginning of year

 

391,572,706

 

 

 

End of year

 

  $

442,045,984

 

 

 

See the accompanying notes to financial statements.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(1)                   Plan Description

 

The following description of the Cubic Corporation Employees’ Profit Sharing Plan (the “Plan”) provides only general information.  Participants of the Plan should refer to the Plan agreement for a more complete description of the Plan.

 

(a)                   General

 

The Plan, which was effective June 15, 1956 and amended from time to time thereafter, is a defined contribution plan covering eligible full-time, part-time and temporary employees of Cubic Corporation and affiliated companies that have adopted participation in the Plan (collectively, the “Company”).  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

 

(b)                   Contributions

 

Plan participants may voluntarily contribute up to 30% of their pre-tax and after-tax annual compensation (up to the Internal Revenue Service (“IRS”) maximum allowable amount), as defined by the Plan, to the Plan.  Participants may also rollover amounts representing distributions from other eligible retirement plans. Participants direct their contributions, the Company’s discretionary contributions, and matching contributions in 1% increments in the Guaranteed Interest Account, mutual funds, Stable Value Fund, and/or the Company’s common stock.  Participants may also transfer up to 99% of their account balance to a Self-Directed Brokerage Account.  Participants may change their investment options daily. All contributions are held in a trust and invested by the Plan’s custodian in accordance with the options elected by the participants (i.e. all investments are participant directed). Contributions for each participant are limited in any calendar year to annual “regular” and “catch-up” contribution limits as determined by the IRS.

 

The Plan provides for a Company discretionary contribution, at the option of its Board of Directors.  Discretionary contributions to the Plan are allocated based on the ratio of each participant’s compensation to total compensation of all eligible participants.  Eligible Plan participants must be employed by the Company as of the Plan’s year end to be eligible for a discretionary contribution.

 

The Plan also provides a safe harbor matching contribution of 100% of the first 4% of salary deferrals as described by Section 401(K) (12) of the Internal Revenue Code .  Each participant is immediately fully vested in their safe harbor matching contributions.  The Plan was also amended to provide an additional discretionary contribution with immediate vesting for the benefit of Sub Plan participants effective October 1, 2014.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(1)                   Plan Description, Continued

 

(b)  Contributions, continued

 

Effective February 2, 2017, the Plan was amended to reflect that TeraLogics, Inc. (“TeraLogics”), a company acquired by Cubic Corporation on December 21, 2015, had assets totaling $6,783,942, transfer to the Plan as a result of a trustee to trustee asset merger.

 

Employees of Cubic Corporation’s wholly-owned subsidiaries Cubic Simulation Systems Division (“CSSD”), DTECH, TeraLogics, and employees who work for the Cyber Security and Intific subsets of Cubic Corporation’s wholly-owned subsidiary Cubic Defense Applications, Inc. (“CDA”) who participate in the Plan have different contribution and loan options as compared to other Plan participants. CSSD, DTECH, TeraLogics, Cyber Security, and Intific, employees who participate in the Plan are hereafter referred to as (“Sub Plan”) participants. Sub Plan participants can voluntarily contribute up to 100% of their compensation as pre-tax contributions and up to 5% of their compensation as after-tax contributions.  However, their combined pre-tax and after-tax contributions together cannot exceed 100% of their annual compensation (not to exceed the IRS maximum allowable amount), as defined by the Plan.  Sub Plan participants can also rollover amounts representing distributions from other eligible retirement plans.

 

(c)  Participants’ Accounts

 

Each participant’s account is credited with the participant’s contributions, his or her pro rata share of the Company’s discretionary contributions (if any), the Company’s matching contributions, rollovers and transfers from other plans and allocations of Plan earnings or losses including market value adjustments on Plan investments. Allocations are based on participant earnings or account balances, as defined in the Plan agreement.  Any non-vested portion of a participant’s Company discretionary contribution account will be forfeited as of the earlier of the date of termination of employment if he or she has no vested interest or the date on which he or she has five consecutive years of five hundred or less hours of service.  Any remaining forfeited balances of terminated participants’ non-vested accounts after payment of certain administrative expenses and restoration of forfeitures of re-employed participants are allocated to participants who are employed on the last day of the Plan year in the ratio that each eligible participant’s Company discretionary contribution bears to the Company discretionary contributions of all eligible participants.

 

The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.  Participant forfeitures amounted to $12,849 during the year ended September 30, 2017.  As of September 30, 2017 and 2016, Plan assets available for benefits that had not been credited to participant accounts, including unallocated forfeitures, amounted to $14,596 and $5,656, respectively.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(1)                   Plan Description, Continued

 

(d)  Vesting

 

Employee, Company matching, Sub Plan discretionary and rollover contributions plus or minus actual earnings or losses thereon have full and immediate vesting.  Employer discretionary contributions (and earnings or losses thereon) vest after one year of service at 20% and increase in 20% increments until fully vested after five years of service.

 

Participant accounts become fully vested upon death, disability, attainment of normal retirement age, termination due to lay-off by a participating employer, or upon termination of the Plan.  The Company may authorize a percentage of the Company’s discretionary contribution to be transferred to the pre-tax account of non-highly compensated participants, and the participants then become immediately vested in those contributions.

 

(e)                    Distribution of Participants’ Accounts

 

The entire vested balance of a participant’s account may be distributed at the date of the participant’s retirement from the Company, termination from service from the Company, death, or permanent and total disability.  Participants still employed are eligible for two distributions of their after-tax and rollover contributions each Plan year and up to 65% of their vested portion of the Company discretionary contributions once every five years.  Participants, including terminated participants, may request a withdrawal of their accounts, excluding their matching contributions, in cases of financial hardship.  The normal retirement age, as defined by the Plan, is the later date at which participants reach the age of 65 or have reached five years of service.  If a participant terminates employment with the Company before retirement, the participant will receive either a lump sum payment of their vested account balance or if the vested account exceeds $1,000, the participant may elect any distribution date up to age 70½.

 

(f)                      Notes Receivable from Participants

 

Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance.  A participant may not have more than two loans outstanding unless they are a Sub Plan participant (Sub Plan participants are allowed to have three loans outstanding) and no new loans may be made to a participant at a time when he or she is in default on any payment required to be made on a previous loan.  The loans bear interest at prime plus 1%, and the interest rate on loans that were outstanding at September 30, 2017 ranged from 4.25% to 5.25%.  Interest rates for new loans are determined on the first business day of each calendar quarter.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(1)                   Plan Description, Continued

 

(f)                      Notes Receivable from Participant, continued

 

These rates are effective for all new loans initiated on or after the first business day of the following quarter, and will remain in effect until a new rate is established.  Principal and interest are paid ratably through scheduled payroll deductions.  Participant loans are measured at their unpaid principal balance plus accrued but unpaid interest.  All loans are repaid within a period of five years and outstanding loans at September 30, 2017 have maturity dates ranging from October 2017 through October 2022.  Defaulted participant loans are reclassified as distributions based upon the terms of the Plan agreement.

 

(2)                   Summary of Significant Accounting Policies

 

(a)                   Basis of Accounting

 

The accompanying financial statements are prepared under the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

 

(b)   Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities at the date of the financial statements.  Actual results could differ from those estimates.

 

(c)   Investment Valuation and Income Recognition

 

The Plan’s mutual funds and the funds held in the Self-Directed Brokerage Account are stated at fair value, the Stable Value Fund is stated at the net asset value of units held as determined by Prudential Insurance Company of America (the “Custodian”).  The shares of Cubic Corporation common stock and the shares of the underlying securities in the Self-Direct Brokerage Account are valued at quoted market prices at year-end, as reported by the Custodian.

 

Investment contracts held in the Guaranteed Interest Account are valued at fair value which equals contract value, representing contributions, reinvested income, less any withdrawals, plus accrued interest.  Contract value represents the estimated proceeds that would have been paid had the contract been discontinued as of September 30, 2017.  When establishing interest crediting rates for this investment, the Custodian considers many factors, including external factors such as current economic and market conditions, the general interest rate environment and internal factors such as

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(2)                   Summary of Significant Accounting Policies, Continued

 

(c)   Investment Valuation and Income Recognition, continued

 

the expected and actual experience of a reference portfolio within the issuer’s general account.  While these rates are established without the use of a specific formula, the crediting rate can never be less than 3.00%.  The investment contracts are fully benefit-responsive because participants may direct withdrawals and transfers at contract value.

 

There are no reserves against contract value for credit risk of the contract issuer or otherwise.  Participants may not transfer between the Guaranteed Interest Account and the Stable Value Fund without first investing in another investment option of the Plan for a period of 90 days.

 

Investment contracts held in the Stable Value Fund are valued at net asset value of units held in common collective trust, as determined by the Custodian, as a practical expedient to estimate fair value. Participants may direct withdrawals and transfers daily at contract value.  A 12 month redemption period and fair value calculation would only apply to a Plan Sponsor initiated withdrawal.

 

Interest income is recognized when earned.  Dividend income is recorded on the ex-dividend date.  Realized gains and losses on investments are recognized upon the sale of the related investments and unrealized appreciation or depreciation is recognized at period end when the carrying values of the related investments are adjusted to their estimated fair market value.  Purchases and sales of securities are reflected on a trade-date basis.

 

Earnings on investments are allocated on a pro rata basis to individual participant accounts based on the type of investment and the ratio of each participant’s individual account balance to the aggregate of participant account balances.  The portion of interest included in each loan payment made by a participant is recognized as interest income in the participant’s individual account.

 

(d)                   Net Change in Fair Value of Investments

 

The Plan presents in the statement of changes in net assets available for benefits the net change in the fair value of its investments, which consists of the realized gains and losses and the net unrealized gain (loss) on those investments.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(2)    Summary of Significant Accounting Policies, Continued

 

(e)      Fair Value Measurements

 

The valuation techniques required to determine fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. The two types of inputs create the following fair value hierarchy:

 

Level 1 – Valuation is based upon unadjusted quoted prices in active markets for identical assets or liabilities.

 

Level 2 – Valuation is based upon other significant observable inputs (including quoted prices for similar assets or liabilities in active markets, identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, etc.).

 

Level 3 – Valuation is based upon significant unobservable inputs.  These inputs reflect the reporting entity’s own assumptions about how market participants would price the asset or liability, including assumptions about risk in determining the fair value of the asset or liability.

 

The inputs or methodology used by valuing securities are not necessarily an indication of risk associated with investing in those securities.

 

The following is a description of the valuation methodologies used for investments measured at fair value.  There have been no changes in the methodologies used at September 30, 2017 and 2016.   Mutual funds, funds held in the Self-Directed Brokerage Account and Cubic Corporation common stock are valued at quoted prices for identical assets in active markets.  The Stable Value Fund is measured at NAV.

 

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(2)    Summary of Significant Accounting Policies, Continued

 

(e)      Fair Value Measurements, continued

 

The following is a summary of investments classified in accordance with the fair value hierarchy:

 

 

 

Assets at Fair Value as of September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

 

 

 

 

 

 

 

 

 

 

Mutual funds:

 

$

322,347,115

 

$

-

 

$

-

 

$

322,347,115

 

 

 

 

 

 

 

 

 

 

 

Cubic Corporation common stock:

 

3,658,794

 

-

 

-

 

3,658,794

 

 

 

 

 

 

 

 

 

 

 

Self-Directed Brokerage:

 

 

785,521

 

-

 

-

 

785,521

 

 

 

 

 

 

 

 

 

 

 

Total investments in the fair value hieracrchy

 

$

326,791,430

 

$

-

 

$

-

 

$

326,791,430

 

 

 

 

 

 

 

 

 

 

 

Common collective trust measured at NAV*

 

 

 

 

 

 

 

$

23,559,372

 

 

 

 

 

 

 

 

 

 

 

Total Investments Measured At Fair Value

 

 

 

 

 

 

 

$

350,350,802

 

 

* Certain investments that are measured at fair value using NAV (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy.  The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the statements of net assets available for benefits.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(2)                   Summary of Significant Accounting Policies, Continued

 

(e)                    Fair Value Measurements, continued

 

 

 

Assets at Fair Value as of September 30, 2016

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Mutual funds:

 

$

277,834,717

 

$

-

 

$

-

 

$

277,834,717

 

 

 

 

 

 

 

 

 

 

 

Cubic Corporation common stock:

 

3,453,883

 

-

 

-

 

3,453,883

 

 

 

 

 

 

 

 

 

 

 

Self-Directed Brokerage:

 

870,320

 

-

 

-

 

870,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments in the fair value hieracrchy

 

$

282,158,920

 

$

-

 

$

-

 

$

282,158,920

 

 

 

 

 

 

 

 

 

 

 

Common collective trust measured at NAV*

 

 

 

 

 

 

 

$

22,392,086

 

 

 

 

 

 

 

 

 

 

 

Total Investments Measured At Fair Value

 

 

 

 

 

 

 

$

304,551,006

 

 

* Certain investments that are measured at fair value using NAV (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy.  The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the statements of net assets available for benefits.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(2)                   Summary of Significant Accounting Policies, Continued

 

(e)                    Fair Value Measurements, continued

 

The following table summarizes investments measured at fair value based on net asset value (NAV) per share as of September 30, 2017 and 2016, respectively.

 

 

Fair Value of Investments in Entities that Calculate Net Asset Value per Share (or its Equivalent)

 

September 30, 2017

Fair Value

Unfunded
Commitments

Redemption
Frequency

Redemption
Notice Period

Stable Value Fund

$

23,559,372

n/a

Daily

*12 months

 

 

 

 

 

 

 

 

 

 

 

September 30, 2016

Fair Value

Unfunded
Commitments

Redemption
Frequency

Redemption
Notice Period

Stable Value Fund

$

22,392,086

n/a

Daily

*12 months

 

 

 

 

 

 

*  The daily NAV reflects contract value and is fully benefit-responsive.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(2)                   Summary of Significant Accounting Policies, Continued

 

(f)

Risks and Uncertainties

 

 

 

The Plan provides for various investment options in a Guaranteed Interest Account, mutual funds, a Stable Value Fund, Cubic Corporation common stock and a Self-Directed Brokerage Account option. These investment securities are exposed to various risks, such as interest rate, market, and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the values of the investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term, and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits.

 

 

(g)

Concentration of Credit Risk

 

 

 

All of the Plan’s investments are financial instruments which potentially subject the Plan to concentrations of credit risk. Management believes that the Custodian maintains the Plan’s investments with high credit quality institutions and attempts to limit the credit exposure to any particular investment.

 

 

(h)

Payments of Benefits

 

 

 

Benefits payments are recorded when paid.

 

 

(i)

Administrative Expenses

 

 

 

The Company provides certain administrative and accounting services to the Plan at no cost. Most administrative expenses are paid directly by the Plan and include audit fees and certain legal fees. Administrative expenses incurred by the Plan include loan and Self-Directed Brokerage Account fees charged directly to the participants’ accounts and investment management fees which are netted against investment returns.

 

 

(j)

Recent Accounting Pronouncements

 

 

 

In May 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2015-07, “Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or its Equivalent).” This ASU removes the requirement to make certain disclosures as well as categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per practical expedient. The provisions of this ASU are effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years.

 

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CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(2)                   Summary of Significant Accounting Policies, Continued

 

(j)

Recent Accounting Pronouncements, continued

 

 

 

Effective October 1, 2016, the Plan adopted this guidance and applied it retrospectively to all periods presented in the accompanying financial statements.

 

In July 2015, the FASB issued ASU No. 2015-12, “Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient.” Part I of this ASU eliminates the requirements to measure fully benefit-responsive investment contracts at fair value. Contract value will be the only required measure for fully benefit-responsive investment contracts. Part II of this ASU eliminates the requirements to disclose (i) individual investments that represent 5% or more of net assets available for benefits and (ii) the net appreciation or depreciation in fair value of investments by general type. In addition, the disclosure of information about fair value measurements shall be provided by general type of investment. Part III of this ASU is not applicable to the Plan. Effective October 1, 2016, the Plan adopted this guidance and applied it retrospectively to all periods presented in the accompanying financial statements.

 

(3)                   Tax Status

 

The Plan received a favorable tax determination letter from the IRS dated May 4, 2004, which states that the Plan qualifies under the applicable provisions of the Internal Revenue Code and that it is therefore exempt from federal income taxes.  The Plan was amended since receiving this determination letter and received a favorable tax determination letter dated November 17, 2017.  In the opinion of the Company, the Plan continues to meet the Internal Revenue Code requirements and is currently operating such that its exempt status has been maintained.  Accordingly, no provision for income taxes has been included in the accompanying financial statements.

 

Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2015.

 

14



Table of Contents

 

CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Notes to Financial Statements

 

For the Year Ended September 30, 2017

 

(4)                   Plan Termination and Amendment

 

Although the Company has not expressed any intent to do so, the Company has the right, under the Plan agreement, to amend any or all provisions of the Plan as well as discontinue contributions and terminate the Plan at any time subject to the provisions of ERISA.  In the event of Plan termination, participants will become vested 100% in their accounts, and the net assets of the Plan must be allocated among the participants and beneficiaries of the Plan in the order provided for by ERISA.

 

(5)                   Parties-In-Interest

 

Section 3(14) of ERISA defines a party-in-interest to include, among others, fiduciaries or employees of the Plan, any person who provides services to the Plan, or an employer whose employees are covered by the Plan.  Certain Plan investments are managed by Prudential Insurance Company of America. The Jennison Dryden Funds are owned by the Prudential Insurance Company of America.  Prudential Insurance Company of America is the Custodian as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.  Wells Fargo manages the Prudential Stable Value Fund and, therefore, these transactions qualify as party-in-interest transactions also.  Six Board of Trustees members are currently participants in the Plan and an officer of the Company serves as the trustee and Plan administrator of the Plan.  In addition, Plan investments include investments in the Company’s common stock; therefore, these transactions also qualify as party-in-interest transactions.  The Plan purchased and sold 6,430 and 8,485 shares, respectively, of the Company’s common stock during the year ended September 30, 2017.

 

(6)                   Form 5500

 

There were no differences between the accompanying financial statements as of September 30, 2017 and 2016 and the financial information reported on the Form 5500.

 

(7)                   Subsequent Events

 

The Company acquired GATR Technologies, Inc. in February 2016 and as part of this acquisition, the Plan was amended to receive assets from the GATR Technologies 401(k) Plan.  The trustee to trustee asset merger occurred on January 16, 2018, and resulted in the plan receiving $8,344,480 in assets.

 

15



Table of Contents

 

SUPPLEMENTAL SCHEDULE

 

16



Table of Contents

 

CUBIC CORPORATION EMPLOYEES’ PROFIT SHARING PLAN

 

Schedule H, line 4i – Schedule of Assets (Held at End of Year)

 

September 30, 2017

 

EIN #95-1678055

Plan #001

 

 

 

 

 

(c)

 

 

 

 

 

 

 

 

Description of investment

 

 

 

 

 

 

(b)

 

including maturity date,

 

 

 

(e)

 

 

Identity of issue, borrower,

 

Rate of interest, collateral,

 

(d)

 

Current

(a)

 

lessor, or similar party

 

par, or maturity value

 

Cost**

 

value

 

 

 

 

 

 

 

 

 

*

 

The Prudential Insurance Company of America

 

Guaranteed Interest Fund

 

 

 

 

 

 

 

 

Prudential Guaranteed Interest Account

 

$

-        

 

$

84,134,105

 

 

American Funds

 

Mutual fund

 

 

 

 

 

 

 

 

American Euro Pac Gr R5

 

-        

 

45,809,846

 

 

Vanguard Funds

 

Mutual fund

 

 

 

 

 

 

 

 

Vanguard Wellington Admiral

 

-        

 

45,509,837

*

 

Prudential Fund

 

Mutual fund

 

 

 

 

 

 

 

 

Prudential Jenn Growth Fund Z

 

-        

 

34,989,222

 

 

JP Morgan Fund

 

Mutual fund

 

 

 

 

 

 

 

 

JPMorgan US Equity Select

 

-        

 

26,795,385

*

 

Well Fargo Bank Minnesota, N.A.

 

Common Collective Trust

 

 

 

 

 

 

 

 

Prudential Stable Value Fund

 

-        

 

23,559,372

 

 

Vanguard Funds

 

Mutual fund

 

 

 

 

 

 

 

 

Vanguard Growth Index Signal

 

-        

 

21,603,816

 

 

Metwest Fund

 

Mutual fund

 

 

 

 

 

 

 

 

Metwest Ttl Retrn Bnd Cl

 

-        

 

20,577,415

 

 

T. Rowe Price

 

Mutual fund

 

 

 

 

 

 

 

 

T. Rowe Price Mid Cap Growth

 

-        

 

20,385,216

 

 

American Beacon

 

Mutual fund

 

 

 

 

 

 

 

 

American Beacon Large Cap Value Fund

 

-        

 

19,190,673

 

 

Vanguard Funds

 

Mutual fund

 

 

 

 

 

 

 

 

Vanguard Institutional Index

 

-        

 

17,562,151

 

 

Goldman Sachs

 

Mutual fund

 

 

 

 

 

 

 

 

Goldman Sachs Mid Cap Institutional Fund

 

-        

 

13,005,395

 

 

Vanguard Funds

 

Mutual fund

 

 

 

 

 

 

 

 

Vanguard Small Cap Index

 

-        

 

9,124,276

 

 

Vanguard Funds

 

Mutual fund

 

 

 

 

 

 

 

 

Vanguard Mid Cap Index Fund

 

-        

 

8,937,188

*

 

Prudential Fund

 

Mutual fund

 

 

 

 

 

 

 

 

Money Market Assets Fund Z

 

-        

 

7,831,686

 

 

Thornburg Investments

 

Mutual fund

 

 

 

 

 

 

 

 

Thornburg Core Growth Fund I

 

-        

 

7,300,961

 

 

Vanguard Funds

 

Mutual fund

 

 

 

 

 

 

 

 

Vanguard Value Inst Cl Sh

 

-        

 

5,422,522

 

 

American Century Investments

 

Mutual fund

 

 

 

 

 

 

 

 

American Century Government Fund

 

-        

 

4,314,657

*

 

Cubic Corporation

 

Equity Securities

 

 

 

 

 

 

 

 

Cubic Corporation Common Stock

 

-        

 

3,658,794

 

 

ClearBridge Funds

 

Mutual funds

 

 

 

 

 

 

 

 

Clearbridge Sm Cap Growth Fund

 

-        

 

3,622,812

 

 

Vanguard Funds

 

Mutual funds

 

 

 

 

 

 

 

 

Vanguard REIT Index Fund

 

-        

 

3,041,878

 

 

Templeton Fund

 

Mutual fund

 

 

 

 

 

 

 

 

Templeton Global Bond

 

-        

 

2,241,614

 

 

Royce Funds

 

Mutual fund

 

 

 

 

 

 

 

 

Royce Total Return Fund

 

-        

 

2,107,589

 

 

Vanguard Funds

 

Mutual fund

 

 

 

 

 

 

 

 

Vanguard Inflation Protection Securities

 

-        

 

1,528,526

 

 

DFA Fund

 

Mutual fund

 

 

 

 

 

 

 

 

DFA US Trgt Val Port

 

-        

 

892,646

 

 

Self-Directed Brokerage Account

 

Mutual funds

 

 

 

 

 

 

 

 

Self-Directed Brokerage Account

 

-        

 

785,521

 

 

Dodge & Cox Fund

 

Mutual fund

 

 

 

 

 

 

 

 

Dodge & Cox Income Fund

 

-        

 

551,804

 

 

 

 

 

 

 

 

 

*

 

Notes Receivable from Participants

 

Various maturities (Interest rates from 4.25% - 5.25%)

 

-        

 

5,678,610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

-        

 

$

440,163,517 

 

*

Party-in-interest

**

Historical cost is not required as all investments are participant-directed.

 

17



Table of Contents

 

B. Exhibit List.

 

Exhibit 23.1

 

Consent of Mayer Hoffman McCann P.C.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Cubic Corporation Employees’ Profit Sharing Plan has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Cubic Corporation Employees’ Profit Sharing Plan

 

 

Date: March 15, 2018

By:

/s/ Anshooman Aga

 

 

 

 

Anshooman Aga

 

 

 

Executive Vice President and Chief Financial Officer and Plan Administrative Committee Member

 

 


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