Balance Sheet Accounts

a. Fair Value of Financial Instruments

The accounting standards use a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. The following are measured at fair value:



			Fair value measurement at May 31, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
Money market funds	$	203.4	$	203.4	$	—	$	—
			Fair value measurement at November 30, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
Money market funds	$	233.4	$	233.4	$	—	$	—

As of May 31, 2015, a summary of cash and cash equivalents and the grantor trust by investment type is as follows:



	Total		Cash and Cash Equivalents		Money Market Funds
	(In millions)
Cash and cash equivalents	$	253.5	$	60.6	$	192.9
Grantor trust (included as a component of other current and noncurrent assets)	10.5		—		10.5
	$	264.0	$	60.6	$	203.4

The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued compensation, and other accrued liabilities, approximate fair value because of their short maturities.

The estimated fair value and principal amount for the Company’s outstanding debt is presented below:



	Fair Value				Principal Amount
	May 31, 2015		November 30, 2014		May 31, 2015		November 30, 2014
	(In millions)
Term loan	$	96.3	$	98.8	$	96.3	$	98.8
7.125% Second-Priority Senior Secured Notes (“7¹/₈% Notes”)	494.5		483.6		460.0		460.0
4¹/₁₆% Debentures	224.5		248.2		97.8		133.6
Delayed draw term loan	63.0		89.0		63.0		89.0
Other debt	0.7		0.8		0.8		0.8
	$	879.0	$	920.4	$	717.9	$	782.2

The fair values of the 7¹/₈% Notes and 4¹/₁₆% Debentures were determined using broker quotes that are based on open markets for the Company’s debt securities as of May 31, 2015, and November 30, 2014 (both Level 2 securities). The fair value of the term loans and other debt was determined to approximate carrying value.

b. Accounts Receivable



	May 31, 2015			November 30, 2014
	(In millions)
Billed	$	94.7		$	69.3
Unbilled	109.9			126.1
Reserve for overhead rate disallowance	(31.6		)	(22.9		)
Total receivables under long-term contracts	173.0			172.5
Other receivables	0.7			0.4
Accounts receivable	$	173.7		$	172.9

c. Inventories



	May 31, 2015			November 30, 2014
	(In millions)
Long-term contracts at average cost	$	527.1		$	434.6
Progress payments	(378.0		)	(296.9		)
Total long-term contract inventories	149.1			137.7
Total other inventories	1.2			1.3
Inventories	$	150.3		$	139.0

d. Other Current Assets, net



	May 31, 2015		November 30, 2014
	(In millions)
Recoverable from the U.S. government for Rocketdyne Business integration costs (see Note 4(f))	$	10.5	$	10.5
Prepaid expenses	9.5		11.3
Recoverable from the U.S. government for Competitive Improvement Program severance obligations (see Note 9)	1.1		—
Receivables, net	15.5		4.5
Income taxes	1.4		2.1
Indemnification receivable from UTC	0.7		0.9
Other	6.7		8.7
Other current assets, net	$	45.4	$	38.0

e. Property, Plant and Equipment, net



	May 31, 2015			November 30, 2014
	(In millions)
Land	$	67.2		$	67.2
Buildings and improvements	285.4			276.9
Machinery and equipment	500.7			474.7
Construction-in-progress	17.1			41.2
	870.4			860.0
Less: accumulated depreciation	(514.1		)	(492.5		)
Property, plant and equipment, net	$	356.3		$	367.5

f. Other Noncurrent Assets, net



	May 31, 2015		November 30, 2014
	(In millions)
Recoverable from the U.S. government for Rocketdyne Business integration costs	$	31.3	$	28.0
Deferred financing costs	16.4		18.5
Recoverable from the U.S. government for Competitive Improvement Program severance obligations (see Note 9)	9.6		—
Recoverable from the U.S. government for conditional asset retirement obligations	15.9		17.7
Grantor trust	11.8		11.2
Indemnification receivable from UTC, net	7.0		7.5
Notes receivable, net	9.0		—
Other	8.8		8.7
Other noncurrent assets, net	$	109.8	$	91.6

The current and noncurrent Rocketdyne Business integration costs capitalized as of May 31, 2015 and November 30, 2014 totaled $41.8 million and $38.5 million, respectively. These integration costs are reimbursable by the U.S. government upon its audit and approval that the Company's planned integration savings will exceed its restructuring costs by a factor of at least two to one. In December 2014, the Company was informed that the Defense Contract Audit Agency had completed its audit of the Company’s restructuring proposal and indicated that the Company had achieved the required minimum two to one savings to restructuring cost ratio. Actual recovery of the previously deferred integration costs will take place after the final execution of an Advance Agreement with the Defense Contract Management Agency and determination from the Under Secretary of Defense that the audited restructuring savings exceed the costs by a factor of two to one. The Company believes these final two actions will be completed in fiscal 2015. The Company reviews on a quarterly basis the probability of recovery of these costs.

g. Assets Held for Sale

As of February 28, 2015, the Company classified approximately 550 acres of its Sacramento Land, known as Hillsborough and representing a portion of the 6,000 acre Easton Master Plan, as assets held for sale as a result of its plans to sell the Hillsborough land. The Hillsborough land was reported as real estate held for entitlement and leasing as of November 30, 2014. For operating segment reporting, the Hillsborough land has been reported as a part of the Real Estate segment.

During the second quarter of fiscal 2015, the Company finalized the sale of the Hillsborough land for a total purchase price of $57.0 million which was comprised of $46.7 million cash and $10.3 million of promissory notes. The total acreage covered by the Hillsborough land transaction was approximately 700 acres, of which approximately 550 acres was recognized as a sale in the second quarter of fiscal 2015. At the initial closing, the buyer paid $40.0 million cash and executed a $9.0 million promissory note secured by a first lien Deed of Trust on a portion of the sale property which resulted in a gain of $30.6 million in the second quarter of fiscal 2015. The $9.0 million promissory note secured by a first lien Deed of Trust is divided into two components: (i) a $3.0 million 7% promissory note payable 7 years after close of escrow, which includes a possible $1.0 million reduction in principal if the Company is unable to obtain the necessary road and utility approvals, and (ii) a $6.0 million 7% promissory note payable 7 years after close of escrow and only payable after certain environmental clearances associated with "Area 40" (discussed below) are obtained by the Company. The sale also included a $1.3 million non-interest bearing promissory note secured by a first lien Deed of Trust on a portion of the sale property associated with the location of future city roads. In addition, approximately 150 acres of this land, including a 50-acre portion known as “Area 40,” was held back from the initial closing. Upon receipt of regulatory approvals, a closing will take place for the sale of the developable portions of such holdback acreage for a purchase price of $6.7 million in cash. A summary of the impact of the land sale on the unaudited condensed consolidated statement of operations for the second quarter and first half of fiscal 2015 is as follows (in millions):



Net sales from land sale	$	42.0
Cost of sales from land sale	11.4
Income from continuing operations before income taxes from land sale	30.6
Income tax provision related to land sale	12.7
Net income from land sale	$	17.9

In November 2014, the Company classified its energy business (the "Energy Business") as assets held for sale as a result of its plans to sell the business. The assets and liabilities of the Energy Business as of May 31, 2015 and November 30, 2014 were insignificant. The plan was a result of management’s decision to focus its capital and resources on its Aerospace and Defense and Real Estate operating segments. The net sales associated with the Energy Business totaled $0.4 million in the first half of fiscal 2015; net sales associated with the Energy Business totaled $0.6 million in fiscal 2014. For operating segment reporting, the Energy Business has been reported as a part of the Aerospace and Defense segment. In March 2015, the Company entered into an Asset Purchase Agreement (the "Agreement") to sell its Energy Business to TerraDyne Energy Technology Inc. (“TerraDyne"). TerraDyne was unable to meet the closing conditions and the Agreement was terminated. The Company divested the Energy Business in July 2015 for an insignificant amount of proceeds. The Company incurred approximately $2.5 million of expenses to divest its Energy Business.

h. Other Current Liabilities



	May 31, 2015		November 30, 2014
	(In millions)
Accrued compensation and employee benefits	$	94.6	$	96.1
Income taxes	16.0		14.1
Payable to UTC primarily for Transition Service Agreements	1.3		11.9
Interest payable	12.8		14.6
Contract loss provisions	14.1		13.4
Other	59.7		71.6
Other current liabilities	$	198.5	$	221.7

i. Other Noncurrent Liabilities



	May 31, 2015		November 30, 2014
	(In millions)
Conditional asset retirement obligations	$	27.7	$	24.4
Pension benefits, non-qualified	18.9		19.1
Deferred compensation	12.5		11.1
Deferred revenue	14.1		7.4
Competitive improvement program obligations (see Note 9)	9.6		—
Other	16.2		17.7
Other noncurrent liabilities	$	99.0	$	79.7

j. Accumulated Other Comprehensive Loss, Net of Income Taxes

Changes in accumulated other comprehensive loss by components, net of $15.1 million of income taxes, related to the Company’s retirement benefit plans are as follows:



	Actuarial Losses, Net			Prior Service Credits, Net			Total
	(In millions)
November 30, 2014	$	(337.5	)	$	3.3		$	(334.2	)
Amortization of actuarial losses and prior service credits, net of income taxes	24.7			(0.3		)	24.4
May 31, 2015	$	(312.8	)	$	3.0		$	(309.8	)

k. Redeemable Common Stock

The Company inadvertently failed to register with the SEC the issuance of certain of its common shares in its defined contribution 401(k) employee benefit plan (the “Plan”). As a result, certain Plan participants who purchased such securities pursuant to the Plan may have the right to rescind certain of their purchases for consideration equal to the purchase price paid for the securities (or if such security has been sold, to receive consideration with respect to any loss incurred on such sale) plus interest from the date of purchase. As of May 31, 2015 and November 30, 2014, the Company has classified less than 0.1 million and 0.1 million shares, respectively, as redeemable common stock because the redemption features are not within the control of the Company. The Company may also be subject to civil and other penalties by regulatory authorities as a result of the failure to register these shares. These shares have always been treated as outstanding for financial reporting purposes. In June 2008, the Company filed a registration statement on Form S-8 to register future transactions in the Company's stock fund in the Plan. During the first half of fiscal 2015, the Company recorded $0.7 million for realized gains and interest associated with this matter.

l. Treasury Stock

During fiscal 2014, the Company repurchased 3.5 million of its common shares at a cost of $64.5 million. The Company reflects stock repurchases in its financial statements on a “settlement” basis.