Restatement

As discussed in Note 2 of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2015, as filed with the SEC, the Company restated its consolidated financial statements for each of the fiscal years ended November 30, 2013 and 2014 and the unaudited quarterly financial information for the first three quarters in fiscal 2015 and each of the quarters in fiscal 2014 primarily related to the following matters: (i) purchase accounting associated with contracts acquired as part of the acquisition of the Rocketdyne Business; (ii) contract accounting related to subsequent modifications to one significant acquired contract; (iii) contract accounting related to the improper recognition of sales associated with incentives; and (iv) other individually immaterial items. A summary of the impact to pretax income (loss) from continuing operations by reporting period is presented below (in millions):



	Income (loss) before income taxes
Reporting Period	First nine months of fiscal 2015			Fiscal 2014			Fiscal 2013
Purchase accounting for contracts acquired as part of the acquisition of the Rocketdyne Business (1)	$	(0.5	)	$	3.1		$	(7.8	)
Contract accounting related to subsequent modifications to one significant acquired Rocketdyne Business contract (2)	1.3			2.9			—
Contract accounting related to improper recognition of sales incentives (3)	—			1.9			(2.0		)
Other individually immaterial items	(1.2		)	(1.5		)	0.3

___________

(1) The Company's errors associated with purchase accounting primarily related to the following: (i) fair value assessment of Rocketdyne Business acquired customer contracts at the acquisition date following the close of the transaction. The Company failed to fair value three acquired contracts in purchase accounting; and (ii) the estimates of the Rocketdyne Business contracts' percentage of completion used to recognize net sales should have been based on its estimate of remaining effort on such contracts at the acquisition date instead of the inception date of the contract.

(2) The Company did not appropriately account for one significant acquired Rocketdyne Business contract amendment. Instead of being accounted for as a modification, the amendment was accounted for as a new contract.

(3) The Company immediately recognized incentives as sales based on the full amount received rather than on the percentage of completion of the related contract.

The correction of the matters described above resulted in the following adjustments to the previously issued consolidated financial statements: (i) an increase of $0.3 million, or $0.00 loss per share, to net loss for the first nine months of fiscal 2015; (ii) a decrease of $3.0 million, or $0.06 loss per share, to net loss for fiscal 2014; and (iii) a decrease of $5.0 million, or $0.06 diluted income per share, to net income for fiscal 2013. A summary of the impact to the consolidated statements of operations by reporting period is presented below (in millions):



Reporting Period	Net (Loss) Income
First nine months of fiscal 2015	$	(0.3	)
Fiscal 2014	3.0
Fiscal 2013	(5.0		)

The Company also corrected previously disclosed immaterial out of period adjustments as part of this restatement and other balance sheet misclassifications. The Company concluded these errors were material in the aggregate to the prior reporting periods, and therefore, restatement of previously filed financial statements was necessary.

The following tables present the unaudited condensed consolidated quarterly financial information for the first quarter of fiscal 2015:

Unaudited Condensed Consolidated Statement of Operations

and Comprehensive Income



	Three Months Ended February 28, 2015
	As Reported			Adjustments		As Restated
	(In millions, except per share amounts)
Net sales	$	318.6		$	4.4	$	323.0
Operating costs and expenses:
Cost of sales (exclusive of items shown separately below)	282.8			2.6		285.4
Selling, general and administrative	15.5			0.1		15.6
Depreciation and amortization	16.0			0.3		16.3
Other expense, net:
Loss on debt repurchased	0.2			—		0.2
Other	1.5			—		1.5
Total operating costs and expenses	316.0			3.0		319.0
Operating income	2.6			1.4		4.0
Interest income	(0.1		)	—		(0.1		)
Interest expense	13.4			—		13.4
Total non-operating expense, net	13.3			—		13.3
Loss from continuing operations before income taxes	(10.7		)	1.4		(9.3		)
Income tax benefit	(6.6		)	0.8		(5.8		)
Loss from continuing operations	(4.1		)	0.6		(3.5		)
Income from discontinued operations, net of income taxes	0.2			—		0.2
Net loss	$	(3.9	)	$	0.6	$	(3.3	)
Loss per share of common stock
Basic and Diluted:
Loss per share from continuing operations	$	(0.07	)	$	0.01	$	(0.06	)
Income per share from discontinued operations, net of income taxes	—			—		—
Net loss per share	$	(0.07	)	$	0.01	$	(0.06	)
Weighted average shares of common stock outstanding, basic and diluted	58.9			—		58.9



	Three Months Ended February 28, 2015
	As Reported			Adjustments			As Restated
	(In millions)
Net loss	$	(3.9	)	$	0.6		$	(3.3	)
Other comprehensive income:
Amortization of actuarial losses and prior service credits, net of income taxes	12.2			(0.1		)	12.1
Comprehensive income	$	8.3		$	0.5		$	8.8

Unaudited Condensed Consolidated Balance Sheet



	February 28, 2015
	As Reported			Adjustments			As Restated
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	215.7		$	—		$	215.7
Accounts receivable	206.1			(16.1		)	190.0
Inventories	161.4			0.1			161.5
Recoverable from the U.S. government and other third parties for environmental remediation costs	23.5			—			23.5
Receivable from Northrop	6.0			—			6.0
Other current assets, net	42.5			1.2			43.7
Income taxes	1.9			0.4			2.3
Deferred income taxes	22.5			(3.8		)	18.7
Total Current Assets	679.6			(18.2		)	661.4
Noncurrent Assets
Property, plant and equipment, net	358.8			(1.6		)	357.2
Real estate held for entitlement and leasing	81.5			—			81.5
Recoverable from the U.S. government and other third parties for environmental remediation costs	79.3			—			79.3
Receivable from Northrop	69.4			—			69.4
Deferred income taxes	254.5			1.5			256.0
Goodwill	164.4			(6.3		)	158.1
Intangible assets	118.8			—			118.8
Assets held for sale	14.2			—			14.2
Other noncurrent assets, net	76.3			8.6			84.9
Total Noncurrent Assets	1,217.2			2.2			1,219.4
Total Assets	$	1,896.8		$	(16.0	)	$	1,880.8
LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Short-term borrowings and current portion of long-term debt	$	5.2		$	—		$	5.2
Accounts payable	84.5			0.5			85.0
Reserves for environmental remediation costs	38.3			—			38.3
Postretirement medical and life insurance benefits	6.4			—			6.4
Advance payments on contracts	224.0			(17.0		)	207.0
Other current liabilities	211.3			2.2			213.5
Total Current Liabilities	569.7			(14.3		)	555.4
Noncurrent Liabilities
Senior debt	91.6			—			91.6
Second-priority senior notes	448.2			—			448.2
Convertible subordinated notes	99.4			—			99.4
Other debt	79.2			—			79.2
Reserves for environmental remediation costs	124.3			—			124.3
Pension benefits	479.1			—			479.1
Postretirement medical and life insurance benefits	50.6			—			50.6
Other noncurrent liabilities	81.1			0.7			81.8
Total Noncurrent Liabilities	1,453.5			0.7			1,454.2
Total Liabilities	2,023.2			(13.6		)	2,009.6
Redeemable common stock	0.1			—			0.1
Stockholders’ Deficit
Common stock	6.3			—			6.3
Other capital	324.6			—			324.6
Treasury stock	(64.5		)	—			(64.5		)
Accumulated deficit	(70.9		)	(3.0		)	(73.9		)
Accumulated other comprehensive loss, net of income taxes	(322.0		)	0.6			(321.4		)
Total Stockholders’ Deficit	(126.5		)	(2.4		)	(128.9		)
Total Liabilities, Redeemable Common Stock and Stockholders’ Deficit	$	1,896.8		$	(16.0	)	$	1,880.8

Unaudited Condensed Consolidated Statement of Cash Flows



	Three Months Ended February 28, 2015
	As Reported			Adjustments			As Restated
	(In millions)
Operating Activities
Net loss	$	(3.9	)	$	0.6		$	(3.3	)
Adjustments to reconcile net loss to net cash used in by operating activities:
Income from discontinued operations, net of income taxes	(0.2		)	—			(0.2		)
Depreciation and amortization	16.0			0.3			16.3
Amortization of financing costs	0.7			—			0.7
Stock-based compensation	5.3			—			5.3
Retirement benefit expense	16.6			0.2			16.8
Loss on debt repurchased	0.2			—			0.2
Loss on disposal of long-lived assets	0.2			—			0.2
Tax benefit on stock-based awards	(1.4		)	—			(1.4		)
Changes in assets and liabilities, net of effects from acquisition:
Accounts receivable	(33.2		)	13.7			(19.5		)
Inventories	(22.4		)	(1.1		)	(23.5		)
Other current assets, net	(6.2		)	0.9			(5.3		)
Real estate held for entitlement and leasing	(1.5		)	—			(1.5		)
Receivable from Northrop	5.4			(6.0		)	(0.6		)
Recoverable from the U.S. government and other third parties for environmental remediation costs	(2.2		)	6.0			3.8
Other noncurrent assets	14.3			(0.9		)	13.4
Assets held for sale	(14.2		)	—			(14.2		)
Accounts payable	(19.0		)	—			(19.0		)
Retirement benefits	(1.6		)	—			(1.6		)
Advance payments on contracts	25.5			(15.9		)	9.6
Other current liabilities	(11.3		)	3.4			(7.9		)
Deferred income taxes	(0.3		)	(0.8		)	(1.1		)
Reserves for environmental remediation costs	(3.4		)	—			(3.4		)
Other noncurrent liabilities and other	1.0			(0.4		)	0.6
Net cash used in continuing operations	(35.6		)	—			(35.6		)
Net cash used in discontinued operations	—			—			—
Net Cash Used in Operating Activities	(35.6		)	—			(35.6		)
Investing Activities
Capital expenditures	(4.3		)	—			(4.3		)
Net Cash Used in Investing Activities	(4.3		)	—			(4.3		)
Financing Activities
Debt repayments/repurchases	(9.3		)	—			(9.3		)
Repurchase of shares to satisfy tax withholding obligations	(2.4		)	—			(2.4		)
Tax benefit on stock-based awards	1.4			—			1.4
Net Cash Used in Financing Activities	(10.3		)	—			(10.3		)
Net Decrease in Cash and Cash Equivalents	(50.2		)	—			(50.2		)
Cash and Cash Equivalents at Beginning of Period	265.9			—			265.9
Cash and Cash Equivalents at End of Period	$	215.7		$	—		$	215.7