Fiscal 2018
Fiscal 2017
% Change
(in millions)
Sales
$  325.2
$  360.2
(10)%
Operating income
16.6
28.1
(41)
Adjusted EBITDA
26.3
39.4
(33)

text: Cubic Global Defense
text: Sales: CGD sales decreased 10% to $325.2 million in 2018 compared to $360.2 million in 2017. The year-over-year comparative sales and operating income were significantly impacted by an $8.0 million gain recognized on an equitable contract adjustment in fiscal 2017 for our littoral combat ship virtual training contract with the U.S. Navy. Sales were lower in fiscal 2018 on virtual training sales, air combat training system sales, and ground combat training system sales, while sales of international training support services increased between fiscal 2017 and 2018. The average exchange rates between the prevailing currency in our foreign operations and the U.S. dollar had no significant impact on CGD sales between 2017 and 2018.
text: Amortization of Purchased Intangibles: Amortization of purchased intangibles included in the CGD results amounted to $1.1 million in 2018 and $0.9 million in 2017.
text: Operating Income: CGD had operating income of $16.6 million in 2018 compared to $28.1 million in 2017. The decrease in operating income was primarily caused by the gain of $8.0 million recognized in fiscal 2017 due to the approval of a contract adjustment with the U.S. Navy described above. In fiscal 2018 an arbitrator awarded $1.7 million to a former reseller of our air combat training systems in the Far East, which was recorded as SG&A expense by CGD in 2018. In addition, CGD’s R&D expenditures increased approximately $1.8 million year-over-year. The increase in R&D expenditures is indicative of the acceleration of our development of next generation live, virtual, constructive, and game-based training systems. These decreases in operating income in fiscal 2018 were partially offset by increased operating income from ground combat training systems, which was higher primarily due to improvements in expected total costs for the development of two ground combat training system contracts in the Far East. The average exchange rates between the prevailing currency in our foreign operations and the U.S. dollar had no significant impact on CGD operating income between 2017 and 2018.
text: Adjusted EBITDA: CGD Adjusted EBITDA was $26.3 million in 2018 compared to $39.4 million in 2017. The decrease in Adjusted EBITDA was primarily driven by the same factors that drove the decrease in operating income described above excluding the increase in amortization which is excluded from Adjusted EBITDA.

Questions:
question: What is the percentage change in CGD sales in 2018?
answer: decreased 10%
question: What is the increase in R&D expenditures indicative of?
answer: the acceleration of our development of next generation live, virtual, constructive, and game-based training systems
question: For which years is the amortization of purchased intangibles included in the CGD results recorded?
answer: 2018
2017
question: In which year is the amortization of purchased intangibles included in the CGD results larger?
answer: 2018
derivation: 1.1>0.9
question: What is the change in operating income from 2017 to 2018?
answer: -11.5
derivation: 16.6-28.1
scale: million
question: What is the average adjusted EBITDA in 2017 and 2018?
answer: 32.85
derivation: (26.3+39.4)/2
scale: million