Note 15. Condensed Consolidating Financial Information

The Company is providing unaudited condensed consolidating financial information for its domestic subsidiaries that have guaranteed the 7 ¹⁄₈% Notes, and for those subsidiaries that have not guaranteed the 7 ¹⁄₈% Notes. These 100% owned subsidiary guarantors have, jointly and severally, fully and unconditionally guaranteed the 7 ¹⁄₈% Notes subject to release under the following circumstances: (i) to enable the disposition of such property or assets to a party that is not the Company or a subsidiary guarantor to the extent permitted by and consummated in compliance with the indenture governing the 7 ¹⁄₈% Notes; (ii) in case of a subsidiary guarantor that is released from its subsidiary guarantee, the release of the property and assets of such subsidiary guarantor; (iii) as permitted or required by the intercreditor agreement; (iv) with the consent of the holder of at least a majority in principal amount of the outstanding 7 ¹⁄₈% Notes; or (v) when permitted or required by the indenture governing the 7 ¹⁄₈% Notes. Prior to the consummation of the Acquisition and escrow release date, the 7 ¹⁄₈% Notes were secured by a first priority security interest in the escrow account and all deposits and investment property therein. Following the consummation of the Acquisition and escrow release date on June 14, 2013, the subsidiary guarantees are a senior secured obligation of each subsidiary guarantor and rank (i) effectively junior to all of existing and future first-priority senior secured debt, including borrowings under the Senior Credit Facility, to the extent of the value of the assets securing such debt; (ii) effectively senior to all of the Company’s existing and future unsecured senior debt; (iii) senior in right of payment to all of the Company’s existing and future subordinated debt; and (iv) structurally subordinated to all existing and future liabilities of non-guarantor subsidiaries.

The Company has not presented separate financial and narrative information for each of the subsidiary guarantors, because it believes that such financial and narrative information would not provide investors with any additional information that would be material in evaluating the sufficiency of the guarantees. Therefore, the following condensed consolidating financial information summarizes the financial position, results of operations, and cash flows for the Company’s guarantor and non-guarantor subsidiaries.

Condensed Consolidating Statements of Operations and Comprehensive Income

(Unaudited)


Three Months Ended February 28, 2014 (In millions):	Parent			Guarantor Subsidiaries		Non-guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	323.1	$	6.6		$	—		$	329.7
Cost of sales (exclusive of items shown separately below)		—			280.5		5.7			(0.2	)		286.0
Selling, general and administrative		2.2			6.5		0.5			—			9.2
Depreciation and amortization		—			14.6		0.2			—			14.8
Interest expense		11.7			0.7		—			—			12.4
Other, net		4.9			3.0		(0.7	)		0.2			7.4

(Loss) income from continuing operations before income taxes		(18.8	)		17.8		0.9			—			(0.1	)
Income tax (benefit) provision		(4.8	)		6.4		0.4						2.0

(Loss) income from continuing operations		(14.0	)		11.4		0.5			—			(2.1	)
Income from discontinued operations		—			—		—			—			—

(Loss) income before equity income of subsidiaries		(14.0	)		11.4		0.5			—			(2.1	)
Equity income of subsidiaries		11.9			—		—			(11.9	)		—

Net (loss) income	$	(2.1	)	$	11.4	$	0.5		$	(11.9	)	$	(2.1	)

Comprehensive income	$	5.4		$	16.5	$	0.5		$	(17.0	)	$	5.4


Three Months Ended February 28, 2013 (In millions):	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	237.7		$	6.0		$	—		$	243.7
Cost of sales (exclusive of items shown separately below)		—			212.9			4.8			(0.2	)		217.5
Selling, general and administrative		8.3			3.9			0.1			—			12.3
Depreciation and amortization		—			5.8			0.3			—			6.1
Interest expense		10.6			0.6			—			—			11.2
Other, net		10.5			(4.4	)		(0.5	)		0.2			5.8

(Loss) income from continuing operations before income taxes		(29.4	)		18.9			1.3			—			(9.2	)
Income tax (benefit) provision		(6.4	)		12.3			(1.0	)		—			4.9

(Loss) income from continuing operations		(23.0	)		6.6			2.3			—			(14.1	)
Income from discontinued operations		0.1			—			—			—			0.1

(Loss) income before equity income of subsidiaries		(22.9	)		6.6			2.3			—			(14.0	)
Equity income of subsidiaries		8.9			—			—			(8.9	)		—

Net (loss) income	$	(14.0	)	$	6.6		$	2.3		$	(8.9	)	$	(14.0	)

Comprehensive income	$	8.9		$	22.7		$	2.3		$	(25.0	)	$	8.9

Condensed Consolidating Balance Sheets


February 28, 2014 (In millions):	Parent		Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
Cash and cash equivalents	$	143.8	$	—	$	0.3	$	—		$	144.1
Accounts receivable		—		195.9		3.3		—			199.2
Inventories		—		133.8		5.4		—			139.2
Recoverable from the U.S. government, Northrop, and other third parties for environmental remediation costs		0.1		28.3		—		—			28.4
Other receivables, prepaid expenses and other		3.4		18.1		1.0		—			22.5
Income taxes		17.0		—		—		(11.2	)		5.8
Deferred income taxes		11.2		6.3		1.1		—			18.6

Total current assets		175.5		382.4		11.1		(11.2	)		557.8
Property, plant and equipment, net		4.7		362.2		5.8		—			372.7
Recoverable from the U.S. government and other third parties for environmental remediation costs		0.7		85.8		—		—			86.5
Deferred income taxes		48.3		108.2		19.4		—			175.9
Goodwill		—		159.4		—		—			159.4
Intercompany receivable		152.8		—		31.2		(184.0	)		—
Investments in subsidiaries		551.2		—		—		(551.2	)		—
Other noncurrent assets and intangibles, net		26.6		290.6		45.1		—			362.3

Total assets	$	959.8	$	1,388.6	$	112.6	$	(746.4	)	$	1,714.6

Short-term borrowings and current portion of long-term debt	$	2.7	$	0.3	$	—	$	—		$	3.0
Accounts payable		2.2		94.9		0.9		—			98.0
Reserves for environmental remediation costs		2.1		35.9		—		—			38.0
Income taxes		—		11.2		—		(11.2	)		—
Other current liabilities, advance payments on contracts, and postretirement medical and life insurance benefits		131.0		180.7		2.8		—			314.5

Total current liabilities		138.0		323.0		3.7		(11.2	)		453.5
Long-term debt		690.6		0.5		—		—			691.1
Reserves for environmental remediation costs		4.5		127.9		—		—			132.4
Pension benefits		22.4		234.8		—		—			257.2
Intercompany payable		—		184.0		—		(184.0	)		—
Other noncurrent liabilities		56.5		64.3		11.8		—			132.6

Total liabilities		912.0		934.5		15.5		(195.2	)		1,666.8
Commitments and contingencies (Note 8)
Redeemable common stock		0.1		—		—		—			0.1
Total shareholders’ equity		47.7		454.1		97.1		(551.2	)		47.7

Total liabilities, redeemable common stock, and shareholders’ equity	$	959.8	$	1,388.6	$	112.6	$	(746.4	)	$	1,714.6


November 30, 2013 (In millions):	Parent		Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
Cash and cash equivalents	$	192.7	$	4.9	$	—	$	—		$	197.6
Accounts receivable		—		211.4		2.7		—			214.1
Inventories		—		100.5		5.4		—			105.9
Recoverable from the U.S. government, Northrop, and other third parties for environmental remediation costs		0.4		26.0		—		—			26.4
Other receivables, prepaid expenses and other		2.6		18.8		1.0		—			22.4
Income taxes		30.1		—		—		(17.5	)		12.6
Deferred income taxes		10.9		4.9		1.2		—			17.0

Total current assets		236.7		366.5		10.3		(17.5	)		596.0
Property, plant and equipment, net		4.7		364.4		5.6		—			374.7
Recoverable from the U.S. government and other third parties for environmental remediation costs		0.4		88.3		—		—			88.7
Deferred income taxes		48.8		107.2		19.7		—			175.7
Goodwill		—		159.6		—		—			159.6
Intercompany receivable		71.5		—		32.2		(103.7	)		—
Investments in subsidiaries		534.5		—		—		(534.5	)		—
Other noncurrent assets and intangibles, net		27.7		289.0		43.9		—			360.6

Total assets	$	924.3	$	1,375.0	$	111.7	$	(655.7	)	$	1,755.3

Short-term borrowings and current portion of long-term debt	$	2.7	$	0.2	$	—	$	—		$	2.9
Accounts payable		2.2		119.1		1.2		—			122.5
Reserves for environmental remediation costs		3.8		32.8		—		—			36.6
Income taxes payable		—		16.9		0.6		(17.5	)		—
Other current liabilities, advance payments on contracts, and postretirement medical and life insurance benefits		85.2		229.7		2.8		—			317.7

Total current liabilities		93.9		398.7		4.6		(17.5	)		479.7
Long-term debt		695.7		0.6		—		—			696.3
Reserves for environmental remediation costs		4.3		130.4		—		—			134.7
Pension benefits		23.6		238.1		—		—			261.7
Intercompany payable		—		103.7		—		(103.7	)		—
Other noncurrent liabilities		57.0		64.6		11.5		—			133.1

Total liabilities		874.5		936.1		16.1		(121.2	)		1,705.5
Commitments and contingencies (Note 8)
Redeemable common stock		0.2		—		—		—			0.2
Total shareholders’ equity		49.6		438.9		95.6		(534.5	)		49.6

Total liabilities, redeemable common stock, and shareholders’ equity	$	924.3	$	1,375.0	$	111.7	$	(655.7	)	$	1,755.3

Condensed Consolidating Statements of Cash Flows


Three Months Ended February 28, 2014 (In millions):	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	51.2		$	(76.2	)	$	(0.3	)	$	—	$	(25.3	)
Cash flows from investing activities:		—
Capital expenditures		—			(8.9	)		(0.4	)		—		(9.3	)

Net cash used in investing activities		—			(8.9	)		(0.4	)		—		(9.3	)
Cash flows from financing activities:								—
Repayments on debt		(10.0	)		—			—			—		(10.0	)
Net transfers (to) from parent		(81.2	)		80.2			1.0			—		—
Other financing activities		(8.9	)		—			—			—		(8.9	)

Net cash (used in) provided by financing activities		(100.1	)		80.2			1.0			—		(18.9	)

Net (decrease) increase in cash and cash equivalents		(48.9	)		(4.9	)		0.3			—		(53.5	)
Cash and cash equivalents at beginning of year		192.7			4.9			—			—		197.6

Cash and cash equivalents at end of period	$	143.8		$	—		$	0.3		$	—	$	144.1


Three Months Ended February 28, 2013 (In millions):	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	13.0		$	(11.0	)	$	—		$	4.9		$	6.9
Cash flows from investing activities:
Capital expenditures		—			(9.0	)		(0.1	)		—			(9.1	)
Other investing activities		(466.1	)		(0.4	)		—			—			(466.5	)

Net cash used in investing activities		(466.1	)		(9.4	)		(0.1	)		—			(475.6	)
Cash flows from financing activities:
Repayments on debt		(0.6	)		—			—			—			(0.6	)
Proceeds from issuance of debt		460.0			—			—			—			460.0
Debt issuance costs		(12.3	)		—			—			—			(12.3	)
Net transfers (to) from parent		(20.5	)		20.4			0.1			—			—
Other financing activities		0.2			—			—			—			0.2

Net cash provided by financing activities		426.8			20.4			0.1			—			447.3

Net (decrease) increase in cash and cash equivalents		(26.3	)		—			—			4.9			(21.4	)
Cash and cash equivalents at beginning of year		172.4			—			—			(10.3	)		162.1

Cash and cash equivalents at end of period	$	146.1		$	—		$	—		$	(5.4	)		140.7