Northrop Grumman Innovation Systems, Inc. - FORM 10-Q

Attached files

file	filename
EX-32 - EXHIBIT 32 - Northrop Grumman Innovation Systems, Inc.	oa-10042015xexhibit32.htm
EX-10.4 - EXHIBIT 10.4 - Northrop Grumman Innovation Systems, Inc.	oa-10042015xexhibit104.htm
EX-31.2 - EXHIBIT 31.2 - Northrop Grumman Innovation Systems, Inc.	oa-10042015xexhibit312.htm
EX-31.1 - EXHIBIT 31.1 - Northrop Grumman Innovation Systems, Inc.	oa-10042015xexhibit311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 4, 2015

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-10582

ORBITAL ATK, INC.

(Exact name of Registrant as specified in its charter)



Delaware (State or other jurisdiction of incorporation or organization)		41-1672694 (I.R.S. Employer Identification No.)
45101 Warp Drive
Dulles, Virginia		20166
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (703) 406-5000

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer ý	Accelerated Filer o	Non-Accelerated Filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of October 30, 2015, there were 58,828,770 shares of the registrant's common stock outstanding.

TABLE OF CONTENTS



		Page
PART I - Financial Information
Item 1.	Financial Statements	2
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	38
PART II - Other Information
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
SIGNATURES		42

Table of Contents

PART I— FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ORBITAL ATK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)



	Quarters Ended						Six Months Ended
(Amounts in thousands except per share data)	October 4, 2015			September 28, 2014			October 4, 2015			September 28, 2014
Sales	$	1,134,886		$	743,202		$	2,264,842		$	1,457,562
Cost of sales	884,734			579,818			1,760,265			1,131,528
Gross profit	250,152			163,384			504,577			326,034
Operating expenses:
Research and development	28,666			8,942			53,330			14,105
Selling	28,137			23,213			60,641			46,288
General and administrative	69,384			50,962			140,847			113,555
Income from continuing operations, before interest, income taxes and noncontrolling interest	123,965			80,267			249,759			152,086
Net interest expense	(24,293		)	(23,340		)	(39,655		)	(46,731		)
Income from continuing operations, before income taxes and noncontrolling interest	99,672			56,927			210,104			105,355
Income taxes	33,123			15,632			70,685			32,218
Income from continuing operations, before noncontrolling interest	66,549			41,295			139,419			73,137
Less net income attributable to noncontrolling interest	147			81			264			150
Income from continuing operations of Orbital ATK, Inc.	66,402			41,214			139,155			72,987
Discontinued operations:
Income from discontinued operations, before income taxes	—			80,411			—			164,147
Income taxes	—			26,516			—			56,427
Income from discontinued operations	—			53,895			—			107,720
Net income attributable to Orbital ATK, Inc.	$	66,402		$	95,109		$	139,155		$	180,707

Basic earnings per common share from:
Continuing operations	$	1.13		$	1.30		$	2.36		$	2.31
Discontinued operations	—			1.70			—			3.40
Net income attributable to Orbital ATK, Inc.	$	1.13		$	3.00		$	2.36		$	5.71
Weighted-average number of common shares outstanding	58,746			31,689			58,944			31,666
Diluted earnings per common share from:
Continuing operations	$	1.12		$	1.29		$	2.34		$	2.24
Discontinued operations	—			1.68			—			3.30
Net income attributable to Orbital ATK, Inc.	$	1.12		$	2.97		$	2.34		$	5.54
Weighted-average number of diluted common shares outstanding	59,304			32,058			59,526			32,605

Comprehensive income:
Net income attributable to Orbital ATK, Inc. and noncontrolling interest (from above)	$	66,549		$	95,190		$	139,419		$	180,857
Other comprehensive income (loss), net of tax:
Pension and other postretirement benefit liabilities:
Reclassification of prior service credits for pension and postretirement benefit plans recorded to net income, net of tax benefit of $2,691, $2,954, $5,382 and $5,909, respectively	(4,335		)	(4,761		)	(8,670		)	(9,524		)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax expense of $(14,196), $(11,582), $(28,806) and $(23,165), respectively	22,870			18,640			46,406			37,281
Change in fair value of derivatives, net of tax (expense) benefit of $1,896, $(407), $2,257 and $(2,508), respectively	(2,996		)	650			(3,567		)	4,006
Other, net of tax (expense) benefit of $55, $(54), $72 and $(154), respectively	(88		)	86			(115		)	246
Change in cumulative translation adjustment, net of tax expense of $0, $5,593, $0 and $4,844, respectively	—			(8,934		)	—			(7,738		)
Total other comprehensive income	15,451			5,681			34,054			24,271
Comprehensive income	82,000			100,871			173,473			205,128
Less comprehensive income attributable to noncontrolling interest	147			81			264			150
Comprehensive income attributable to Orbital ATK, Inc.	$	81,853		$	100,790		$	173,209		$	204,978

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

ORBITAL ATK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)



(Amounts in thousands except share data)	October 4, 2015			March 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	65,087		$	139,253
Net receivables	1,882,675			1,793,556
Net inventories	175,317			196,114
Income taxes receivable	—			31,415
Deferred income taxes	107,466			107,484
Prepaid expenses and other current assets	129,427			121,084
Total current assets	2,359,972			2,388,906
Net property, plant and equipment	797,524			807,057
Goodwill	1,875,269			1,875,269
Net intangibles	139,284			165,207
Deferred income taxes	121,319			140,321
Deferred charges and other noncurrent assets	117,280			127,642
Total assets	$	5,410,648		$	5,504,402
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	40,000		$	59,997
Accounts payable	227,051			158,137
Contract-related accruals	268,129			357,296
Contract advances and allowances	154,845			173,198
Accrued compensation	140,800			135,528
Other current liabilities	144,192			212,628
Total current liabilities	975,017			1,096,784
Long-term debt	1,497,000			1,528,504
Postretirement and postemployment benefits	70,342			74,658
Pension	811,459			851,001
Other noncurrent liabilities	150,619			165,795
Total liabilities	3,504,437			3,716,742
Commitments and contingencies (Notes 13 and 16)
Common stock—$.01 par value: authorized—180,000,000 shares; issued and outstanding— 58,898,248 shares at October 4, 2015 and 59,427,942 shares at March 31, 2015	589			594
Additional paid-in-capital	2,181,288			2,182,814
Retained earnings	1,284,063			1,160,272
Accumulated other comprehensive loss	(813,594		)	(847,648		)
Common stock in treasury, at cost—10,036,776 shares held at October 4, 2015 and 9,507,082 shares held at March 31, 2015	(757,061		)	(719,034		)
Total Orbital ATK, Inc. stockholders' equity	1,895,285			1,776,998
Noncontrolling interest	10,926			10,662
Total equity	1,906,211			1,787,660
Total liabilities and equity	$	5,410,648		$	5,504,402

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

ORBITAL ATK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



	Six Months Ended
(Amounts in thousands)	October 4, 2015			September 28, 2014
Operating Activities
Continuing operations:
Net income	$	139,419		$	180,857
Net income from discontinued operations	—			107,720
Income from continuing operations	139,419			73,137
Adjustments to reconcile income from continuing operations to cash provided by (used for) operating activities of continuing operations:
Depreciation	63,057			35,317
Amortization of intangible assets	26,241			1,547
Amortization of debt discount	—			3,212
Amortization and write-off of deferred financing costs	11,211			2,698
Deferred income taxes	(2,076		)	(7,353		)
(Gain) loss on disposal of property	802			1,008
Share-based plans expense	15,049			7,927
Excess tax benefits from share-based plans	(4,460		)	(6,783		)
Changes in assets and liabilities:
Net receivables	(89,119		)	(107,869		)
Net inventories	20,797			4,847
Accounts payable	64,703			54,635
Contract advances and allowances	(18,353		)	12,813
Accrued compensation	12,184			(36,126		)
Contract-related accruals	(89,167		)	19,999
Pension and other postretirement benefits	17,303			5,365
Other assets and liabilities	(37,614		)	(24,263		)
Cash provided by (used for) operating activities of continuing operations	129,977			40,111
Cash provided by (used for) operating activities of discontinued operations	—			(15,596		)
Cash provided by (used for) operating activities	129,977			24,515
Investing Activities
Continuing operations:
Capital expenditures	(53,424		)	(39,346		)
Proceeds from the disposition of property, plant and equipment	13			2,158
Cash provided by (used for) investing activities of continuing operations	(53,411		)	(37,188		)
Cash provided by (used for) investing activities of discontinued operations	—			(20,337		)
Cash provided by (used for) investing activities	(53,411		)	(57,525		)
Financing Activities
Borrowings on revolving credit facilities	775,000			410,000
Payments on revolving credit facilities	(725,000		)	(310,000		)
Payments made on bank debt	(14,999		)	(13,250		)
Payments made to extinguish debt	(1,373,502		)	(404,462		)
Proceeds from issuance of debt	1,287,000			150,000
Payments made for debt issuance costs	(9,078		)	(507		)
Purchase of treasury shares	(63,798		)	(8,451		)
Dividends paid	(30,815		)	(20,438		)
Excess tax benefits from share-based plans	4,460			6,783
Cash provided by (used for) financing activities	(150,732		)	(190,325		)
Effect of foreign exchange rate fluctuations on cash	—			(629		)
Decrease in cash and cash equivalents	(74,166		)	(223,964		)

Table of Contents



Cash and cash equivalents at beginning of period	139,253		266,632
Cash and cash equivalents at end of period	$	65,087	$	42,668

Supplemental Cash Flow Disclosures
Cash paid for:
Interest, net	$	35,811	$	36,340
Income taxes, net	16,036		69,439
Noncash investing and operating activity:
Capital expenditures included in accounts payable	$	5,296	$	3,423
Noncash financing and operating activity:
Debt issuance costs included in accounts payable	$	819	$	—
Treasury shares purchased included in accounts payable	2,159		—

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

ORBITAL ATK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)



(Amounts in thousands except share data)	Common Stock $.01 Par Value					Additional Paid-in- capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interest		Total Equity
(Amounts in thousands except share data)	Shares		Amount			Additional Paid-in- capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interest		Total Equity
Six months ended October 4, 2015
Balance, March 31, 2015	59,427,942		$	594		$	2,182,814		$	1,160,272		$	(847,648	)	$	(719,034	)	$	10,662	$	1,787,660
Comprehensive income	—		—			—			139,155			34,054			—			264		173,473
Exercise of stock options	110,197		1			(1,461		)	—			—			8,335			—		6,875
Restricted stock grants	72,125		1			(6,429		)	—			—			6,429			—		1
Share-based compensation	—		—			15,049			—			—			—			—		15,049
Treasury stock purchased	(825,986	)	(8		)	—			—			—			(60,769		)	—		(60,777		)
Shares issued net of treasury stock withheld	117,878		1			(14,183		)	—			—			9,357			—		(4,825		)
Tax benefit related to share-based plans and other	—		—			4,438			—			—			—			—		4,438
Dividends	—		—			—			(15,364		)	—			—			—		(15,364		)
Employee benefit plans and other	(3,908	)	—			1,060			—			—			(1,379		)	—		(319		)
Balance, October 4, 2015	58,898,248		$	589		$	2,181,288		$	1,284,063		$	(813,594	)	$	(757,061	)	$	10,926	$	1,906,211

Six months ended September 28, 2014
Balance, March 31, 2014	31,842,642		$	318		$	534,015		$	2,789,264		$	(680,809	)	$	(731,213	)	$	10,563	$	1,922,138
Comprehensive income	—		—			—			180,707			24,271			—			150		205,128
Restricted stock grants	29,497		—			(3,312		)	—			—			3,312			—		—
Share-based compensation	—		—			7,927			—			—			—			—		7,927
Shares issued net of treasury stock withheld	59,193		—			(7,388		)	—			—			1,581			—		(5,807		)
Tax benefit related to share-based plans and other	—		—			12,108			—			—			—			—		12,108
Dividends	—		—			—			(20,438		)	—			—			—		(20,438		)
Employee benefit plans and other	22		1			1,172			—			—			(3,815		)	—		(2,642		)
Convertible debt premium, net of tax $42,322	—		—			(112,555		)	—			—			—			—		(112,555		)
Balance, September 28, 2014	31,931,354		$	319		$	431,967		$	2,949,533		$	(656,538	)	$	(730,135	)	$	10,713	$	2,005,859

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data, unless otherwise indicated)

1. Basis of Presentation and Responsibility for Interim Financial Statements

The unaudited condensed consolidated financial statements of Orbital ATK, Inc. ("the Company" or "Orbital ATK") as set forth in this quarterly report have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States can be condensed or omitted. The Company’s accounting policies are described in the notes to the consolidated financial statements in its Annual Report on Form 10-K for the fiscal year ended March 31, 2015 ("fiscal 2015"). Management is responsible for the unaudited condensed consolidated financial statements included in this document. The condensed consolidated financial statements included in this document are unaudited but, in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position as of October 4, 2015, and its results of operations and cash flows for the quarters and six months ended October 4, 2015 and September 28, 2014.

On February 9, 2015, the Company completed a tax-free spin-off of and distribution of Sporting Group to its stockholders (the "Distribution") as a new public company called Vista Outdoor Inc. ("Vista Outdoor"). Immediately following the Distribution, the Company combined with Orbital Sciences Corporation ("Orbital") through the merger of a Company subsidiary with Orbital (the "Merger"). These transactions are discussed in greater detail in Note 4. Following the Distribution and Merger, the Company changed its name from Alliant Techsystems Inc. to Orbital ATK, Inc.

As a result of the Distribution, Sporting Group is no longer reported within the Company’s results from continuing operations but is reported as a discontinued operation for all prior periods presented. The Company used the acquisition method to account for the Merger; accordingly, the results of Orbital have been included in the Company's consolidated financial statements since the date of the Merger.

Following the Distribution and Merger, the Company reorganized its business groups and realigned its reporting segments. The Company’s remaining businesses, combined with the businesses of Orbital, are now reported in three segments: Flight Systems Group, Defense Systems Group and Space Systems Group, as discussed in Note 20. The business comprising Sporting Group is presented as a discontinued operation - see Note 4.

Sales, expenses, cash flows, assets and liabilities can and do vary during the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year.

This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its fiscal 2015 Annual Report on Form 10-K.

Fiscal Year. The Company's interim quarterly periods are based on 13-week periods and end on Sundays.

On March 10, 2015, the Company's Board of Directors approved a change in the Company's fiscal year end from March 31 to a fiscal year ending on December 31 of each year. The Company filed an Annual Report on Form 10-K for the fiscal year ended March 31, 2015. The period covered in this report on Form 10-Q will be included in the Company's transition period of April 1, 2015 to December 31, 2015 which will be reported on a Form 10-K.

2. New Accounting Pronouncements

The Company considers the applicability and impact of all accounting standards updates ("ASUs"). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's consolidated financial position or results of operations.

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance. On July 9, 2015 the FASB voted to approve a one year delay of the effective date of the new standard. Accordingly, the new standard will be effective for periods beginning after December 15, 2017, although companies may voluntarily adopt the new standard as of the original effective date. This guidance can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact this standard will have on the Company's consolidated financial statements or disclosures.

In February 2015, the FASB issued ASU No. 2015-02, "Amendments to the Consolidation Analysis." This update is intended to improve targeted areas of consolidation guidance by simplifying the consolidation evaluation process and by placing more emphasis on risk of loss when determining a controlling financial interest. The provisions of this ASU are

effective for interim and annual periods beginning after December 15, 2015. The Company is in the process of evaluating the impact this standard will have on the Company's consolidated financial statements or disclosures.

In May 2015, the FASB issued ASU No. 2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)." This ASU removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. Such investments should be disclosed separate from the fair value hierarchy. This ASU will be effective retrospectively for the Company for interim and annual periods beginning after December 15, 2015. The adoption of this guidance is not expected to have an impact on the Company's consolidated financial statements but will impact certain disclosures.

In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments." This ASU eliminates the requirement to restate prior period financial statements for measurement period adjustments in purchase accounting. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. This ASU will be effective for the Company for interim and annual periods beginning after December 15, 2015. The Company is in the process of evaluating the impact this standard will have on the Company's consolidated financial statements or disclosures.

3. Fair Value of Financial Instruments

The current authoritative guidance on fair value clarifies the definition of fair value, prescribes a framework for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about the use of fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

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

Level 1—Quoted prices for identical instruments in active markets.

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3—Significant inputs to the valuation model are unobservable.

The following section describes the valuation methodologies used by the Company to measure its financial instruments at fair value.

Investments in marketable securities—The Company's investments in marketable securities represent investments held in a common collective trust ("CCT") that primarily invests in fixed income securities which are used to pay benefits under a nonqualified supplemental executive retirement plan for certain executives and highly compensated employees. Investments in a collective investment vehicle are valued by multiplying the investee company's net asset value per share with the number of units or shares owned at the valuation date as determined by the investee company. Net asset value per share is determined by the investee company's custodian or fund administrator by deducting from the value of the assets of the investee company all of its liabilities and dividing the resulting number by the outstanding number of shares or units. Investments held by the CCT, including collateral invested for securities on loan, are valued on the basis of valuations furnished by a pricing service approved by the CCT's investment manager, which determines valuations using methods based on market transactions for comparable securities and various relationships between securities which are generally recognized by institutional traders, or at fair value as determined in good faith by the CCT's investment manager. The fair value of these securities is included within other current assets and deferred charges and other noncurrent assets on the consolidated balance sheet.

Derivative financial instruments and hedging activities—In order to manage its exposure to commodity pricing, foreign currency risk and interest rate risk on debt, the Company periodically utilizes commodity, foreign currency and interest rate derivatives, which are considered Level 2 instruments. As discussed further in Note 7, the Company has outstanding commodity forward contracts that were entered into to hedge forecasted purchases of copper and zinc, as well as outstanding foreign currency forward contracts that were entered into to hedge forecasted transactions denominated in a foreign currency. Commodity derivatives are valued based on prices of futures exchanges and recently reported transactions in the marketplace. During the fiscal year ended March 31, 2014 ("fiscal 2014"), the Company entered into five interest rate swaps. These swaps

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

are valued based on future LIBOR rates and the established fixed rate is based primarily on quotes from banks. Foreign currency derivatives are valued based on observable market transactions of spot currency rates and forward currency prices.

Long-term Debt—The fair value of the variable-rate long-term debt is calculated based on current market rates for debt of the same risk and maturities. The fair value of the fixed-rate debt is based on market quotes for each issuance. The Company has considered these to be Level 2 instruments.

The following table sets forth by level within the fair value hierarchy the Company's financial assets and liabilities that are measured at fair value on a recurring basis:



	October 4, 2015
	Fair Value Measurements Using Inputs Considered as
	Level 1		Level 2		Level 3
Assets:
Marketable securities	$	—	$	11,428	$	—
Derivatives	—		1,993		—
Liabilities:
Derivatives	$	—	$	11,132	$	—



	March 31, 2015
	Fair Value Measurements Using Inputs Considered as
	Level 1		Level 2		Level 3
Assets:
Marketable securities	$	—	$	10,327	$	—
Derivatives	—		7,823		—
Liabilities:
Derivatives	$	—	$	11,137	$	—

The following table presents the Company's assets and liabilities that are not measured at fair value on a recurring basis. The carrying values and estimated fair values were as follows:



	October 4, 2015				March 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed-rate debt	$	700,000	$	706,875	$	300,000	$	306,000
Variable-rate debt	837,000		837,000		1,288,501		1,283,539

4. Mergers, Acquisitions and Divestitures

On February 9, 2015, the Company completed the spin-off and Distribution of Sporting Group to its stockholders and merged with Orbital pursuant to a transaction agreement, dated April 28, 2014 (the "Transaction Agreement"). The Company completed the Merger with Orbital in order to create a global aerospace and defense company with greater technical and industrial capabilities and increased financial resources. Both the Distribution and Merger were structured to be tax-free to U.S. stockholders for U.S. federal income tax purposes. Under the Transaction Agreement, a subsidiary of the Company merged with and into Orbital, with Orbital continuing as a wholly-owned subsidiary of the Company.

Pursuant to the Distribution, Company stockholders received 2 shares of Vista Outdoor for each share of Company common stock held. The Company distributed a total of approximately 63.9 million shares of Vista Outdoor common stock to its stockholders of record as of the close of business on February 2, 2015 the record date for the Distribution. As a result of the Distribution, Sporting Group is no longer reported within the Company’s results from continuing operations but is reported as a discontinued operation for all prior periods presented in accordance with ASC Topic 205, "Presentation of Financial Statements."

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

In connection with the Merger, each outstanding share of Orbital common stock was converted into the right to receive 0.449 shares of Company common stock. The Company issued approximately 27.4 million shares of common stock to Orbital stockholders. Immediately following the Merger, Orbital stockholders owned 46.2% of the common stock of the Company and existing stockholders owned 53.8%. Based on the closing price of the Company's common stock following the Distribution on February 9, 2015 as reported on the New York Stock Exchange, the aggregate value of the consideration paid or payable to former holders of Orbital common stock was approximately $1.8 billion. The Company used the acquisition method to account for the Merger; accordingly, the results of Orbital have been included in the Company's consolidated financial statements since the date of the Merger.

Preliminary Valuation of Net Assets Acquired

Certain estimated values, including: goodwill, intangibles, property, plant and equipment, and deferred taxes, are not final and the preliminary purchase price allocations are subject to change as the Company completes the analysis of the fair value at the date of the Merger. The final determination of the fair value of assets and liabilities will be completed within the 12-month measurement period from the date of the Merger as required. Due to the significance of the Merger, the Company believes that it may use all of this measurement period to adequately analyze and assess the fair values of acquired assets and liabilities. This assessment includes the evaluation of the significant contractual and operational factors and assumptions associated with the fair values of contract-related intangibles and property, plant and equipment and the related tax impacts. No adjustments were made during the six-month period ended October 4, 2015 to the preliminary purchase price allocations recorded in the Company's financial statements as of March 31, 2015.

The consideration paid for Orbital's assets and liabilities was determined using the fair market value of the Company stock issued at the date of the Merger along with restricted stock awards granted to certain employees of Orbital.

The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed at the February 9, 2015 closing date of the Merger and the preliminary goodwill generated from the transaction:



Purchase Price:
Value of common shares issued to Orbital shareholders (1)	$	1,749,323
Value of replacement equity-based awards to holders of Orbital equity-based awards (2)	8,654
Total purchase price	$	1,757,977

Preliminary value of assets acquired and liabilities assumed:
Cash	$	253,734
Net receivables	562,639
Net inventories	75,294
Intangibles	164,000
Property, plant and equipment	281,654
Other assets	36,878
Goodwill	866,106
Accounts payable	(52,028		)
Deferred tax liabilities, net	(51,537		)
Other liabilities	(378,763		)
Total purchase price	$	1,757,977


(1)	Equals 27.4 million Orbital ATK shares issued to Orbital shareholders multiplied by $63.94, the closing share price of the Company’s common stock on the closing date of the Merger.


(2)	The fair value of replacement equity-based awards attributable to pre-Merger service was recorded as part of the consideration transferred in the Merger.

Goodwill recognized from the Merger primarily relates to the expanded market opportunities, expected synergies and benefits of increased scale and scope of combined human, physical and financial resources attributable to merging the operations of the two companies. As stated above, the Merger was a tax-free transaction and as such, goodwill is not amortized for tax purposes.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

In determining the fair values of identifiable assets acquired and liabilities assumed, a review was conducted for any significant contingent assets or liabilities existing as of the Merger date. The preliminary assessment did not identify any significant contingencies related to any legal or government action.

Discontinued Operations

Sales from discontinued operations totaled $530,047 and $1,091,077 for the quarter and six months ended September 28, 2014, respectively.

Ongoing Business with Vista Outdoor

In conjunction with the Distribution, the Company entered into two supply agreements and one transition services agreement ("TSA") with Vista Outdoor. The chairman and chief executive officer of Vista Outdoor is a member of the Company's board of directors. The supply agreements call for Vista Outdoor to purchase certain minimum quantities of ammunition and gun powder from the Company through March 2018. The supply agreements expire in 2017 and 2018 and may be extended in one-to-three year increments. Under the terms of the TSA, the Company provides various administrative services to Vista Outdoor for up to 12 months and tax assistance services for a term of 18 months that may be extended to 30 months. Costs incurred for services under the TSA are charged to Vista Outdoor.

Sales to Vista Outdoor under the supply agreements were $48,839 and $105,528 for the quarter and six months ended October 4, 2015, respectively. Sales to Sporting Group, previously reported as intercompany sales and eliminated in consolidation were $67,231 and $119,649 for the quarter and six months ended September 28, 2014, respectively.

5. Goodwill, Net Intangibles and Deferred Charges and Other Noncurrent Assets

The changes in the carrying amount of goodwill by segment were as follows:



	Flight Systems Group		Defense Systems Group		Space Systems Group		Total
Balance, March 31, 2015	$	799,362	$	366,947	$	708,960	$	1,875,269
No change	—		—		—		—
Balance, October 4, 2015	$	799,362	$	366,947	$	708,960	$	1,875,269

Net intangibles consisted of the following:



	October 4, 2015							March 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Intangibles		Gross Carrying Amount		Accumulated Amortization			Net Intangibles
Amortizing intangibles:
Contract backlog	$	164,000	$	(30,833	)	$	133,167	$	164,000	$	(6,167	)	$	157,833
Patented technology	11,018		(5,913		)	5,105		10,700		(5,350		)	5,350
Customer relationships and other	24,294		(23,282		)	1,012		24,294		(22,270		)	2,024
Intangibles	$	199,312	$	(60,028	)	$	139,284	$	198,994	$	(33,787	)	$	165,207

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

The assets in the table above are being amortized using a straight-line method over a weighted-average remaining period of 2.6 years. Amortization expense for the quarter and six months ended October 4, 2015 was $13,218 and $26,241, respectively. Amortization expense for the quarter and six months ended September 28, 2014 was $772 and $1,547, respectively. The Company expects amortization expense related to these assets to be as follows:



	Contract Backlog		Patents and Customer Relationships		Total
Remainder of 2015	$	12,333	$	800	$	13,133
2016	49,333		1,682		51,015
2017	49,333		1,176		50,509
2018	10,833		1,123		11,956
2019	5,335		1,068		6,403
Thereafter	6,000		268		6,268
Total	$	133,167	$	6,117	$	139,284

Deferred charges and other noncurrent assets consisted of the following:



	October 4, 2015			March 31, 2015
Gross debt issuance costs	$	17,829		$	22,280
Less accumulated amortization	(2,575		)	(5,712		)
Net debt issuance costs	15,254			16,568
Environmental remediation receivable	15,717			23,771
Other noncurrent assets	86,309			87,303
Total deferred charges and other noncurrent assets	$	117,280		$	127,642

6. Earnings Per Share Data

Basic earnings per share ("EPS") is computed based upon the weighted average number of common shares outstanding for each period. Diluted EPS is computed based on the weighted-average number of common shares and common equivalent shares outstanding for each period. Common equivalent shares represent the effect of stock-based awards and contingently issuable shares related to the Company's Convertible Senior Subordinated Notes during each period presented, which, if exercised, earned or converted, would have a dilutive effect on EPS (the Company's Convertible Senior Subordinated Notes were retired in the quarter ended September 28, 2014).

In computing EPS for the quarters and six months ended October 4, 2015 and September 28, 2014, earnings reported for each respective period were divided by weighted-average shares outstanding, determined as follows (in thousands):



	Quarters Ended		Six Months Ended
	October 4, 2015	September 28, 2014	October 4, 2015	September 28, 2014
Basic	58,746	31,689	58,944	31,666
Dilutive effect of stock-based awards	558	314	582	336
Dilutive effect of contingently issuable shares	—	55	—	603
Diluted	59,304	32,058	59,526	32,605
Anti-dilutive stock options excluded from the calculation of diluted shares	89	44	89	44

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data, unless otherwise indicated)

7. Derivative Financial Instruments

The Company is exposed to market risks arising from adverse changes in commodity prices affecting the cost of raw materials and energy, interest rates and foreign exchange risks. In the normal course of business, these risks are managed through a variety of strategies, including the use of derivative instruments. Commodity forward contracts are periodically used to hedge forecasted purchases of certain commodities, foreign currency exchange contracts are used to hedge forecasted transactions denominated in a foreign currency, and the Company periodically uses interest rate swaps to hedge forecasted interest payments and the risk associated with variable interest rates on long-term debt.

The Company's copper and zinc forward contracts essentially establish a fixed price for the underlying commodity and are designated and qualify as effective cash flow hedges of purchases of the commodity. Ineffectiveness is calculated as the amount by which the change in the fair value of the derivatives exceeds the change in the fair value of the anticipated commodity purchases.

The Company entered into interest rate swaps in fiscal 2014 whereby the Company pays a fixed rate on a total notional amount of $400,000 and receives one-month LIBOR. The fair value of interest rate swap agreements approximates the amount at which they could be settled, based on estimates obtained from the counterparties. The Company performs assessments of the effectiveness of hedge instruments on a quarterly basis and determined the hedges to be highly effective. The counterparties to the interest rate swap agreements expose the Company to credit risk in the event of nonperformance. However, at October 4, 2015, five of the outstanding swap agreements were in a net liability position which would require the Company to make the net settlement payments to the counterparties. The Company does not anticipate nonperformance by the Company's counterparties. The Company does not hold or issue derivative financial instruments for trading purposes.

The Company entered into foreign currency forward contracts during fiscal 2015 to hedge forecasted cash receipts from a customer and forecasted inventory purchases and subsequent payments. These transactions were designated and qualified as effective cash flow hedges.

Ineffectiveness with respect to forecasted inventory purchases or customer cash receipts was calculated based on changes in the forward rate until the anticipated purchase or cash receipt occurs; ineffectiveness of the hedge of the accounts payable was evaluated based on the change in fair value of its anticipated settlement.

The fair value of the commodity and foreign currency forward contracts is recorded within other assets or liabilities, as appropriate, and the effective portion is reflected in accumulated other comprehensive income (loss) in the financial statements. The gains or losses on the commodity forward contracts are recorded in inventory as the commodities are purchased. The gains or losses on the foreign currency forward contracts are recorded in earnings when the related inventory is sold.

As of October 4, 2015, the Company had the following outstanding commodity forward contracts which hedge forecasted purchases:



	Number of Pounds
Copper	11,200
Zinc	2,560

As of October 4, 2015, the Company had three outstanding interest rate swaps with notional amounts of $100,000 each with maturity dates in August 2016, 2017 and 2018, as well as two interest rate swaps with notional amounts of $50,000 each with maturity dates in November 2016 and 2017. See Note 12 for additional information.

As of October 4, 2015, the Company had the following outstanding foreign currency forward contracts in place:



	Quantity Hedged
Euros Sold	86,920
Euros Purchased	16,062

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data, unless otherwise indicated)

The table below presents the fair value and location of the Company's derivative instruments designated as hedging instruments in the consolidated balance sheets as of the periods presented.



		Asset Derivatives Fair Value				Liability Derivatives Fair Value
	Location	October 4, 2015		March 31, 2015		October 4, 2015		March 31, 2015
Commodity forward contracts	Other current assets / other current liabilities	$	—	$	1,054	$	3,850	$	899
Commodity forward contracts	Deferred charges and other noncurrent assets / other noncurrent liabilities	—		271		—		2
Foreign currency forward contracts	Other current assets / other current liabilities	1,123		2,664		1,962		5,101
Foreign currency forward contracts	Deferred charges and other noncurrent assets / other noncurrent liabilities	870		3,834		76		897
Interest rate contracts	Deferred charges and other noncurrent assets / other noncurrent liabilities	—		—		5,244		4,238
Total		$	1,993	$	7,823	$	11,132	$	11,137

Due to the nature of the Company's business, the benefits associated with the commodity contracts may be passed on to the customer and not realized by the Company.

For the periods presented below, the derivative gains and losses in the condensed consolidated statements of comprehensive income related to derivative instruments were as follows:



	Gain (Loss) Reclassified from AOCI				Gain (Loss) Recognized in Income (ineffective portion and amount excluded from effectiveness testing)
	Location	Amount			Location	Amount
Quarter ended October 4, 2015
Commodity forward contracts	Cost of Sales	$	(919	)	Cost of Sales	$	—
Interest rate contracts	Interest expense	(1,011		)	Interest expense	—
Foreign currency forward contracts	Cost of Sales	(834		)	Cost of Sales	—
Quarter ended September 28, 2014
Commodity forward contracts	Cost of Sales	$	752		Cost of Sales	$	—
Interest rate contracts	Interest expense	(929		)	Interest expense	—
Foreign currency forward contracts	Cost of Sales	—			Cost of Sales	—

Six months ended October 4, 2015
Commodity forward contracts	Cost of Sales	$	(1,109	)	Cost of Sales	$	—
Interest rate contracts	Interest expense	(2,031		)	Interest expense	—
Foreign currency forward contracts	Cost of Sales	(1,390		)	Cost of Sales	—
Six months ended September 28, 2014
Commodity forward contracts	Cost of Sales	$	(1,772	)	Cost of Sales	$	—
Interest rate contracts	Interest expense	(1,970		)	Interest expense	—
Foreign currency forward contracts	Cost of Sales	—			Cost of Sales	—

All derivatives used by the Company during the periods presented were designated as hedging instruments for accounting purposes.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data, unless otherwise indicated)

The Company expects the remaining unrealized losses will be realized and reported in cost of sales as the cost of the commodities is included in cost of sales. Estimated and actual gains or losses will change as market prices change.

8. Accumulated Other Comprehensive Income (Loss) ("AOCI")

The following table summarizes the components and changes in the balance of AOCI, net of income taxes:



	Quarter Ended October 4, 2015												Six Months Ended October 4, 2015
	Derivatives			Pension and Other Postretire- ment Benefits			Available-for-sale Securities			Total			Derivatives			Pension and Other Postretire- ment Benefits			Available-for-sale Securities			Total
Balance, beginning of period	$	(2,644	)	$	(827,444	)	$	1,043		$	(829,045	)	$	(2,073	)	$	(846,645	)	$	1,070		$	(847,648	)
Net change in fair value of derivatives	(4,696		)	—			—			(4,696		)	(6,356		)	—			—			(6,356		)
Net losses reclassified from AOCI, offsetting the price paid to suppliers (1)	1,700			—			—			1,700			2,789			—			—			2,789
Net actuarial losses reclassified from AOCI (2)	—			22,870			—			22,870			—			46,406			—			46,406
Prior service costs reclassified from AOCI (2)	—			(4,335		)	—			(4,335		)	—			(8,670		)	—			(8,670		)
Other	—			—			(88		)	(88		)	—			—			(115		)	(115		)
Balance, October 4, 2015	$	(5,640	)	$	(808,909	)	$	955		$	(813,594	)	$	(5,640	)	$	(808,909	)	$	955		$	(813,594	)


(1)	Amounts related to derivative instruments that were reclassified from AOCI and recorded as a component of cost of sales or interest expense for each period presented.


(2)	Amounts related to pension and other postretirement benefits that were reclassified from AOCI and recorded as a component of net periodic benefit cost for each period presented.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)



	Quarter Ended September 28, 2014														Six Months Ended September 28, 2014
	Derivatives			Pension and Other Postretire- ment Benefits			Available-for-sale Securities		Cumulative Translation Adjustment			Total			Derivatives			Pension and Other Postretire- ment Benefits			Available-for-sale Securities		Cumulative Translation Adjustment			Total
Balance, beginning of period	$	(1,666	)	$	(661,236	)	$	992	$	(309	)	$	(662,219	)	$	(5,022	)	$	(675,114	)	$	832	$	(1,505	)	$	(680,809	)
Net change in fair value of derivatives	541			—			—		—			541			1,705			—			—		—			1,705
Net losses reclassified from AOCI, offsetting the price paid to suppliers (1)	109			—			—		—			109			2,301			—			—		—			2,301
Net actuarial losses reclassified from AOCI (2)	—			18,640			—		—			18,640			—			37,281			—		—			37,281
Prior service costs reclassified from AOCI (2)	—			(4,761		)	—		—			(4,761		)	—			(9,524		)	—		—			(9,524		)
Net change in cumulative translation adjustment	—			—			—		(8,934		)	(8,934		)	—			—			—		(7,738		)	(7,738		)
Other	—			—			86		—			86			—			—			246		—			246
Balance, September 28, 2014	$	(1,016	)	$	(647,357	)	$	1,078	$	(9,243	)	$	(656,538	)	$	(1,016	)	$	(647,357	)	$	1,078	$	(9,243	)	$	(656,538	)


(1)	Amounts related to derivative instruments that were reclassified from AOCI and recorded as a component of cost of sales or interest expense for each period presented.


(2)	Amounts related to pension and other postretirement benefits that were reclassified from AOCI and recorded as a component of net periodic benefit cost for each period presented.

9. Net Receivables

Net receivables, including amounts due under long-term contracts, consisted of the following:



	October 4, 2015			March 31, 2015
Billed receivables	$	276,919		$	278,031
Unbilled receivables	1,606,839			1,520,217
Less allowance for doubtful accounts	(1,083		)	(4,692		)
Net receivables	$	1,882,675		$	1,793,556

Receivable balances are shown net of customer progress payments received of $549,526 as of October 4, 2015 and $585,932 as of March 31, 2015.

Unbilled receivables represent the balance of recoverable costs and accrued profit, comprised principally of revenue recognized on contracts for which billings have not been presented to the customer because the amounts were earned but not contractually billable as of the balance sheet date. As of October 4, 2015 and March 31, 2015, the net receivable balance includes contract-related unbilled receivables which the Company does not expect to collect within the next 12 months of $278,600 and $298,900, respectively.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

10. Net Inventories

Net inventories consisted of the following:



	October 4, 2015		March 31, 2015
Raw materials	$	76,886	$	69,112
Contracts in process	97,032		126,038
Finished goods	1,399		964
Net inventories	$	175,317	$	196,114

11. Other Current and Noncurrent Liabilities

Other current and noncurrent liabilities consisted of the following:



	October 4, 2015		March 31, 2015
Other current liabilities:
Employee benefits and insurance, including pension and other postretirement benefits	$	55,518	$	53,588
Deferred lease obligation	28,789		30,857
Warranty	5,524		9,555
Interest	441		7,801
Other	53,920		110,827
Total other current liabilities	$	144,192	$	212,628

Other noncurrent liabilities:
Environmental remediation	$	38,839	$	43,326
Income taxes	36,380		34,415
Deferred lease obligation	19,863		21,036
Management nonqualified deferred compensation plan	17,165		14,853
Other	38,372		52,165
Total other noncurrent liabilities	$	150,619	$	165,795

The Company provides product warranties, which entail repair or replacement of non-conforming items, in conjunction with sales of certain products. Estimated costs related to warranties are recorded in the period in which the related product sales occur. The warranty liability recorded at each balance sheet date reflects the estimated liability for warranty coverage for products delivered based on historical information and current trends. The following is a reconciliation of the changes in the Company's product warranty liability during the periods presented:



Balance, March 31, 2015	$	9,555
Payments made	(350		)
Warranties issued	57
Changes related to preexisting warranties	(3,517		)
Balance, July 5, 2015	5,745
Payments made	(61		)
Warranties issued	—
Changes related to preexisting warranties	(160		)
Balance, October 4, 2015	$	5,524

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

12. Long-term Debt

Long-term debt, including the current portion, consisted of the following:



	October 4, 2015		March 31, 2015
Senior Credit Facility:
Term Loan A due 2020	$	800,000	$	—
Revolving Credit Facility due 2020	37,000		—
5.25% Senior Notes due 2021	300,000		300,000
5.50% Senior Notes due 2023	400,000		—
Former Senior Credit Facility:
Term A Loan due 2018	—		946,875
Term A Loan due 2019	—		144,375
Term B Loan due 2020	—		197,251
Revolving Credit Facility due 2018	—		—
Carrying amount of long-term debt	1,537,000		1,588,501
Less: Current portion of long-term debt	40,000		59,997
Long-term debt	$	1,497,000	$	1,528,504

Senior Credit Facility

In September 2015, the Company refinanced its Former Senior Credit Facility (see below) with a new senior credit facility (the "Senior Credit Facility"), which is comprised of a term loan of $800,000 (the "Term Loan A") and a revolving credit facility of $1,000,000 (the "Revolving Credit Facility"), both of which mature in 2020. The Term Loan A is subject to quarterly principal payments of $10,000, with the remaining balance due on September 29, 2020. Substantially all tangible and intangible assets of the Company and certain domestic subsidiaries, excluding real property, are pledged as collateral under the Senior Credit Facility. Borrowings under the Senior Credit Facility bear interest at a per annum rate equal to either the sum of a base rate plus a margin or the sum of a LIBOR rate plus a margin. Each margin is based on the Company's total leverage ratio. Based on the Company's current total leverage ratio, the current base rate margin is 0.5% and the current LIBOR margin is 1.5%. The weighted-average interest rate for the Term Loan A, after taking into account the interest rate swaps discussed below, was 2.19% at October 4, 2015. The Company pays a quarterly commitment fee on the unused portion of the Revolving Credit Facility based on its total leverage ratio. Based on the Company's current total leverage ratio, this current fee is 0.25%. As of October 4, 2015, the Company had borrowings of $37,000 against the Revolving Credit Facility and had outstanding letters of credit of $152,894, which reduced amounts available on the Revolving Credit Facility to $810,106. As a result of this refinancing, the Company recorded a charge of $9,482, reported in net interest expense, to write off a portion of the unamortized debt issuance costs associated with the Former Senior Credit Facility. The remaining unamortized debt issuance costs associated with the Former Senior Credit Facility of $3,361 will be amortized to interest expense along with $3,903 of debt issuance costs incurred related to the Senior Credit Facility over five years, the term of the Senior Credit Facility.

5.50% Notes

In September 2015, the Company issued $400,000 aggregate principal amount of 5.50% Senior Notes (the "5.50% Notes") that mature on October 1, 2023. These notes are general unsecured obligations. Interest on these notes is payable on April 1 and October 1 of each year. The Company has the right to redeem some or all of these notes from time to time on or after October 1, 2018, at specified redemption prices. Prior to October 1, 2018, the Company may redeem some or all of these notes at a price equal to 100% of their principal amount plus accrued and unpaid interest to the date of redemption and a specified make-whole premium. In addition, prior to October 1, 2018, the Company may redeem up to 35% of the aggregate principal amount of these notes with the net cash proceeds of certain equity offerings, at a price equal to 105.5% of their principal amount plus accrued and unpaid interest to the date of redemption. Debt issuance costs of $5,994 related to these notes are being amortized to interest expense over eight years, the term of the notes.

5.25% Notes

In October 2013, the Company issued $300,000 aggregate principal amount of 5.25% Senior Notes (the "5.25% Notes") that mature on October 1, 2021. These notes are general unsecured obligations. Interest on these notes is payable on April 1 and

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

October 1 of each year. The Company has the right to redeem some or all of these notes from time to time on or after October 1, 2016, at specified redemption prices. Prior to October 1, 2016, the Company may redeem some or all of these notes at a price equal to 100% of their principal amount plus accrued and unpaid interest to the date of redemption and a specified make-whole premium. In addition, prior to October 1, 2016, the Company may redeem up to 35% of the aggregate principal amount of these notes with the net cash proceeds of certain equity offerings, at a price equal to 105.25% of their principal amount plus accrued and unpaid interest to the date of redemption. Debt issuance costs of approximately $2,625 related to these notes are being amortized to interest expense over eight years, the term of the notes.

Former Senior Credit Facility

In September 2015, the Company refinanced and paid off its former senior credit facility (the "Former Senior Credit Facility") which was comprised of a term loan of $1,160,000 (the "Former Term A Loan"), a term loan of $250,000 (the "Former Term B Loan") and a $700,000 revolving credit facility (the "Former Revolving Credit Facility"), all of which were to mature from 2018 to 2020. The Former Term A Loan and the Former Term B loan were subject to quarterly principal payments of $14,500 and $499, respectively. Substantially all domestic tangible and intangible assets of the Company and its subsidiaries were pledged as collateral under the Former Senior Credit Facility. Borrowings under the Former Senior Credit Facility were charged interest at a rate equal to either the sum of a base rate plus a margin or the sum of a Eurodollar rate plus a margin. Each margin was based on the Company's senior secured credit ratings. The Company paid an annual commitment fee on the unused portion of the Former Revolving Credit Facility based on its senior secured credit ratings.

Interest Rate Swaps

During fiscal 2014, the Company entered into five floating-to-fixed interest rate swap agreements in order to manage interest costs and the risk associated with variable interest rates. As of October 4, 2015, the Company had the following cash flow hedge interest rate swaps in place:



	Notional		Fair Value			Pay Fixed		Receive Floating		Maturity Date
Non-amortizing swap	$	100,000	$	(466	)	0.87	%	0.19	%	August 2016
Non-amortizing swap	100,000		(1,421		)	1.29	%	0.19	%	August 2017
Non-amortizing swap	100,000		(2,670		)	1.69	%	0.19	%	August 2018
Non-amortizing swap	50,000		(148		)	0.65	%	0.19	%	November 2016
Non-amortizing swap	50,000		(540		)	1.10	%	0.19	%	November 2017

The amount to be paid or received under these swaps is recorded as an adjustment to interest expense.

Rank and Guarantees

The 5.50% Notes and the 5.25% Notes are the Company’s general unsecured and unsubordinated obligations and rank equally in right of payment with all of the Company’s existing and future unsecured and unsubordinated indebtedness, rank senior in right of payment to all of the Company’s existing and future subordinated indebtedness and are effectively subordinated to all existing and future senior secured indebtedness, including the Senior Credit Facility, to the extent of the collateral. The 5.50% Notes and the 5.25% Notes are guaranteed on an unsecured basis, jointly and severally and fully and unconditionally, by substantially all of the Company's domestic subsidiaries. The Senior Credit Facility obligations are guaranteed on a secured basis, jointly and severally and fully and unconditionally, by substantially all of the Company's domestic subsidiaries. All of these guarantor subsidiaries are 100% owned by the Company. The Company, exclusive of these guarantor subsidiaries, has no independent operations or material assets. The guarantee by any Subsidiary Guarantor of the Company's obligations in respect of the 5.50% Notes and the 5.25% Notes will be released in each of the following circumstances:


•	if, as a result of the sale of its capital stock, such Subsidiary Guarantor ceases to be a Restricted Subsidiary;


•	if such Subsidiary Guarantor is designated as an "Unrestricted Subsidiary" with respect to the 5.25% Notes and the 5.50% Notes;


•	upon defeasance or satisfaction and discharge of the 5.25% Notes and the 5.50% Notes, as applicable; and


•	if such Subsidiary Guarantor has been released from its guarantees of indebtedness under the credit agreement governing the Senior Credit Facility (the "Credit Agreement") and all capital markets debt securities.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

Scheduled Minimum Loan Payments

The scheduled minimum loan payments on outstanding long-term debt are as follows:



Remainder of 2015	$	10,000
Calendar 2016	40,000
Calendar 2017	40,000
Calendar 2018	40,000
Calendar 2019	40,000
Thereafter	1,367,000
Total	$	1,537,000

Covenants and Default Provisions

The Company's Senior Credit Facility and the indentures governing the 5.50% Notes and the 5.25% Notes impose restrictions on the Company, including limitations on its ability to incur additional debt, enter into capital leases, grant liens, pay dividends and make certain other payments, sell assets, or merge or consolidate with or into another entity. In addition, the Senior Credit Facility limits the Company's ability to enter into sale-and-leaseback transactions. The 5.50% Notes and 5.25% Notes limit the aggregate sum of dividends, share repurchases, and other designated restricted payments to an amount based on the Company’s net income, stock issuance proceeds, and certain other items since April 1, 2001, less restricted payments made since that date. The Senior Credit Facility allows the Company to make unlimited "restricted payments" (as defined in the Credit Agreement), which, among other items, would allow payments for future stock repurchases, as long as the Company maintains a certain amount of liquidity and maintains certain senior secured debt limits, with a limit, when those senior secured debt limits are not met, of $250,000 plus proceeds of any equity issuances plus 50% of net income since October 7, 2010. The Senior Credit Facility also requires the Company to meet and maintain specified financial ratios, including a minimum interest coverage ratio and a maximum consolidated total leverage ratio. The Company's debt agreements contain cross-default provisions so that noncompliance with the covenants within one debt agreement could cause a default under other debt agreements as well. The Company's ability to comply with these covenants and to meet and maintain the financial ratios may be affected by events beyond its control. Borrowings under the Senior Credit Facility are subject to compliance with these covenants. As of October 4, 2015, the Company was in compliance with the financial covenants.

13. Employee Benefit Plans

The components of net periodic benefit cost are as follows:



	Pension Benefits
	Quarters Ended						Six Months Ended
	October 4, 2015			September 28, 2014			October 4, 2015			September 28, 2014
Service cost	$	4,815		$	5,849		$	9,630		$	11,698
Interest cost	30,348			32,596			60,696			65,193
Expected return on plan assets	(40,117		)	(41,803		)	(80,234		)	(83,607		)
Amortization of unrecognized net loss	37,690			29,814			75,379			59,629
Amortization of unrecognized prior service cost	(5,213		)	(5,622		)	(10,425		)	(11,245		)
Net periodic benefit cost	$	27,523		$	20,834		$	55,046		$	41,668

Table of Content

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

The components of net periodic benefit income are as follows:



	Other Postretirement Benefits
	Quarters Ended						Six Months Ended
	October 4, 2015			September 28, 2014			October 4, 2015			September 28, 2014
Service cost	$	1		$	1		$	1		$	2
Interest cost	1,126			1,203			2,252			2,407
Expected return on plan assets	(922		)	(888		)	(1,844		)	(1,776		)
Amortization of unrecognized net loss	495			409			991			818
Amortization of unrecognized prior service cost	(1,813		)	(2,094		)	(3,626		)	(4,188		)
Net periodic benefit income	$	(1,113	)	$	(1,369	)	$	(2,226	)	$	(2,737	)

Employer Contributions. During the six months ended October 4, 2015, the Company contributed $28,700 directly to the pension trust and $1,240 directly to retirees under its nonqualified supplemental executive retirement plan. The Company also contributed $4,431 to its other postretirement benefit plans. The Company anticipates making additional pension contributions of approximately $12,300 in order to meet the minimum required contributions for 2015. The Company anticipates making additional contributions of approximately $1,534 directly to retirees under the nonqualified plan and $1,892 to its other postretirement benefit plans during the remainder of 2015.

14. Income Taxes

The Company’s income taxes include federal, foreign and state income taxes. Income taxes for interim periods are based on estimated effective annual income tax rates.

The effective income tax rates for the quarters ended October 4, 2015 and September 28, 2014, were 33.2% and 27.5%, respectively. The increase in the rate from the prior-year quarter is primarily due to the absence of favorable true-ups of prior year taxes in the prior-year quarter, partially offset by a discrete revaluation of deferred tax liabilities resulting from a change in state tax apportionment method in the current-year quarter.

The effective income tax rates for the six months ended October 4, 2015 and September 28, 2014, were 33.6% and 30.6%, respectively. The increase in the rate from the prior-year period is primarily due to the absence of favorable true-ups of prior year taxes in the prior-year period, partially offset by a discrete revaluation of deferred tax liabilities resulting from a change in state tax apportionment method in the current-year period.

The IRS released final regulations relating to the capitalization of tangible personal property on September 13, 2013. The Company has substantially completed its analysis of the impact of these new regulations, with no material impact on the Company's financial statements.

The Company or one of its subsidiaries files income tax returns in the U.S. federal, various U.S. state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years prior to 2008. The IRS has completed the audits of the Company through fiscal 2012 and is currently auditing the Company's income tax returns for fiscal years 2013 and 2014. The Company believes appropriate provisions for all outstanding issues have been made for all remaining open years in all jurisdictions.

Although the timing and outcome of audit settlements are uncertain, it is reasonably possible that a $483 reduction of the uncertain tax benefits will occur in the next 12 months. The settlement of these unrecognized tax benefits could result in an increase in net income of $0 to $309.

15. Stockholders' Equity

The Company has authorized 5,000,000 shares of preferred stock, par value $1.00, none of which has been issued.

Total pretax stock-based compensation expense of $6,046 and $4,066 was recognized during the quarters ended October 4, 2015 and September 28, 2014, respectively and $15,049 and $7,927 was recognized during the six months ended October 4, 2015 and September 28, 2014, respectively.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

The total income tax benefit recognized in the income statement for share-based compensation was $2,194 and $1,560 during the quarters ended October 4, 2015 and September 28, 2014, respectively and $5,660 and $3,042 was recognized during the six months ended October 4, 2015 and September 28, 2014, respectively.

The Company sponsors six stock-based incentive plans: the Orbital ATK, Inc. 2015 Stock Incentive Plan (the "2015 Stock Incentive Plan"); three legacy ATK plans (the Alliant Techsystems Inc. 2005 Stock Incentive Plan, the Non-Employee Director Restricted Stock Plan and the 1990 Equity Incentive Plan); and two legacy Orbital plans, under which the Company assumed the obligation to issue Company common stock pursuant to the terms of the Transaction Agreement relating to the Merger (the Orbital Sciences Corporation 2005 Amended and Restated Stock Incentive Plan and the Orbital Sciences Corporation 1997 Stock Option and Incentive Plan). As of October 4, 2015, the Company authorized up to 3,750,000 common shares under the 2015 Stock Incentive Plan, of which 3,707,162 common shares were available to be granted. No new grants will be made out of the other five plans.

There are five types of awards outstanding under the Company's stock incentive plans: performance awards, total stockholder return performance awards ("TSR awards"), restricted stock units, restricted stock and stock options. The Company issues treasury shares upon (i) the payment of performance awards, TSR awards and restricted stock units, (ii) the grant of restricted stock, and (iii) the exercise of stock options.

Pursuant to the terms of the Transaction Agreement and under the terms of the ATK 2005 Stock Incentive Plan, all of the performance awards and TSR awards outstanding as of February 9, 2015 were converted into time-vesting restricted stock units in connection with the Distribution, with vesting periods corresponding to the respective performance periods. On March 31, 2015, 107,976 shares were paid upon the vesting of restricted stock units for the fiscal 2013-2015 performance period. As of March 31, 2015, there were 40,707 shares reserved for the vesting of restricted stock units for the fiscal 2014-2016 performance period on March 31, 2016 and 65,157 shares reserved for the vesting of restricted stock units for the fiscal 2015-2017 performance period on March 31, 2017.

As of October 4, 2015, there were 40,707 shares reserved for the vesting of restricted stock units for the fiscal 2014-2016 performance period on March 31, 2016 and 57,096 shares reserved for the vesting of restricted stock units for the fiscal 2015-2017 performance period on March 31, 2017.

As of October 4, 2015, there were up to 161,974 shares reserved for performance awards for executive officers and key employees. Performance shares are valued at the fair value of the Company stock as of the grant date and expense is recognized based on the number of shares expected to vest under the terms of the award under which they are granted. Of these shares:


•	up to 50% will become payable only upon achievement of a financial performance goal relating to absolute earnings per share growth for the performance period beginning April 1, 2015 and ending December 31, 2017; and


•	up to 50% will become payable only upon achievement of a performance goal relating to absolute sales growth for the performance period beginning April 1, 2015 and ending December 31, 2017.

The Company used an integrated Monte Carlo simulation model to determine the fair value of the TSR awards. The Monte Carlo model calculates the probability of satisfying the market conditions stipulated in the award. This probability is an input into the trinomial lattice model used to determine the fair value of the awards as well as the assumptions of other variables, including the risk-free interest rate and expected volatility of the Company's stock price in future periods. The risk-free rate is based on the U.S. dollar-denominated U.S. Treasury strip rate with a remaining term that approximates the life assumed at the date of grant. There were 820 TSR awards granted during the six months ended October 4, 2015.

Restricted stock granted to non-employee directors and certain key employees totaled 15,645 shares during the quarter ended October 4, 2015. Restricted shares vest over periods generally ranging from one to three years from the date of award and are valued at the fair value of the Company's common stock as of the grant date.

Stock options may be granted periodically, with an exercise price equal to the fair market value of the Company's common stock on the date of grant, and generally vest from one to three years from the date of grant. Options are generally granted with seven-year or ten-year terms. The weighted-average fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model and represents the difference between fair market value on the date of grant and the estimated market value on the expected exercise date. The option pricing model requires the Company to make assumptions. The risk-free rate is based on U.S. Treasury zero-coupon issues with a remaining term that approximates the expected life assumed at the date of grant. Expected volatility is based on the historical volatility of the Company's stock over the past seven years. The expected option life is based on the contractual term of the stock option and expected employee

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

exercise and post-vesting employment termination trends. There were 1,443 stock options granted during the six months ended October 4, 2015 and no stock options granted during the six months ended September 28, 2014.

16. Contingencies

Litigation. From time to time, the Company is subject to various legal proceedings, including lawsuits, which arise out of, and are incidental to, the conduct of the Company's business. The Company does not consider any of such proceedings that are currently pending, individually or in the aggregate, notwithstanding that the unfavorable resolution of any matter may have a material effect on net earnings in any particular quarter, to be material to its business or likely to result in a material adverse effect on its operating results, financial condition or cash flows.

U.S. Government Investigations. The Company is also subject to U.S. Government investigations from which civil, criminal or administrative proceedings could result. Such proceedings could involve claims by the U.S. Government for fines, penalties, compensatory and treble damages, restitution and/or forfeitures. Under government regulations, a company, or one or more of its operating divisions or subdivisions, can also be suspended or debarred from government contracts, or lose its export privileges, based on the results of investigations. The Company believes, based upon all available information, that the outcome of any such pending government investigations will not have a material adverse effect on its operating results, financial condition or cash flows.

Claim Recovery. Profits expected to be realized on contracts are based on management's estimates of total contract sales value and costs at completion. Estimated amounts for contract changes and claims are included in contract sales only when realization is estimated to be probable. At October 4, 2015, based on progress to date on certain contracts, there was approximately $29,292 included in unbilled receivables for contract claims compared to $42,055 as of March 31, 2015.

Environmental Liabilities. The Company's operations and ownership or use of real property are subject to a number of federal, state, and local environmental laws and regulations, including those for discharge of hazardous materials, remediation of contaminated sites and restoration of damage to the environment. At certain sites that the Company owns or operates or formerly owned or operated, there is known or potential contamination that the Company is required to investigate or remediate. The Company could incur substantial costs, including remediation costs, resource restoration costs, fines, and penalties, or third party property damage or personal injury claims, as a result of liabilities associated with past practices or violations of environmental laws or noncompliance with environmental permits.

The liability for environmental remediation represents management's best estimate of the present value of the probable and reasonably estimable costs related to known remediation obligations. The receivable represents the present value of the amount that the Company expects to recover, as discussed below. Both the liability and receivable have been discounted to reflect the present value of the expected future cash flows, using a discount rate of 0.5% and 0.5% as of October 4, 2015 and March 31, 2015, respectively. The Company's discount rate is calculated using the 20-year Treasury constant maturities rate, net of an estimated inflationary factor of 1.9%, rounded to the nearest quarter percent. The following is a summary of the amounts recorded for environmental remediation:



	October 4, 2015						March 31, 2015
	Liability			Receivable			Liability			Receivable
Amounts (payable) receivable	$	(42,693	)	$	18,114		$	(51,749	)	$	26,506
Unamortized discount	1,223			(398		)	1,624			(750		)
Present value amounts (payable) receivable	$	(41,470	)	$	17,716		$	(50,125	)	$	25,756

Amounts expected to be paid or received in periods more than one year from the balance sheet date are classified as noncurrent. Of the $41,470 discounted liability as of October 4, 2015, $2,631 was recorded within other current liabilities and $38,839 was recorded within other long-term liabilities. Of the $17,716 discounted receivable, the Company recorded $1,999 within other current assets and $15,717 within other noncurrent assets. As of October 4, 2015, the estimated discounted range of reasonably possible costs of environmental remediation was $41,470 to $82,494.

The Company expects that a portion of its environmental compliance and remediation costs will be recoverable under U.S. Government contracts. Some of the remediation costs that are not recoverable from the U.S. Government that are associated with facilities purchased in a business acquisition may be covered by various indemnification agreements, as described in Note 13 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

The Company has been identified as a potentially responsible party ("PRP"), along with other parties, in several regulatory agency actions associated with hazardous waste sites. As a PRP, the Company may be required to pay a share of the costs of the investigation and clean-up of these sites. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, the Company has concluded that these matters, individually or in the aggregate, will not have a material adverse effect on the Company's operating results, financial condition or cash flows.

17. Share Repurchases

On March 11, 2015, the Company's Board of Directors authorized the Company to repurchase up to the lesser of $75 million or 1.0 million shares of its common stock through December 31, 2015. On August 4, 2015, the Board of Directors increased the amount authorized for repurchase to the lesser of $100 million or 1.4 million shares of the Company's common stock. On October 29, 2015, the Board of Directors increased the amount authorized for repurchase to the lesser of $250 million or 3.25 million shares and extended the repurchase period through December 31, 2016. Under the authorized repurchase program, shares of the Company common stock may be purchased from time to time in the open market, subject to compliance with applicable laws and regulations and the Company’s debt covenants, depending upon market conditions and other factors. The Company repurchased 497,145 shares for $36,275 and 825,986 for $60,777 during the quarter and six months ended October 4, 2015, respectively.

In accordance with the Transaction Agreement entered into on April 28, 2014, the Company did not repurchase any outstanding shares prior to the closing of the Distribution and Merger during fiscal 2015.

18. Changes in Estimates

The majority of the Company’s sales are accounted for as long-term contracts, which are accounted for using the percentage-of-completion method ("POC"). Accounting for contracts under POC requires judgment relative to assessing risks and estimating contract revenues and costs. Profits expected to be realized on contracts are based on management’s estimates of total contract sales value and costs at completion. Estimated amounts for contract changes, including scope and claims, are included in contract sales only when realization is estimated to be probable. Assumptions used for recording sales and earnings are adjusted in the period of change to reflect revisions in contract value and estimated costs. In the period in which it is determined that a loss will be incurred on a contract, the entire amount of the estimated gross margin loss is charged to cost of sales. Changes in estimates of contract sales, costs or profits are recognized using the cumulative catch-up method of accounting. The cumulative effect of a change in estimate is recognized in the period a change in estimate occurs. The effect of the changes on future periods of contract performance is recognized as if the revised estimate had been used since contract inception.

Changes in contract estimates occur for a variety of reasons including changes in contract scope, unforeseen changes in contract cost estimates due to unanticipated cost growth or risks affecting contract costs and/or the resolution of contract risks at lower costs than anticipated, as well as changes in contract overhead costs over the performance period. Changes in estimates could have a material effect on the Company’s consolidated financial position or annual results of operations. Aggregate net changes in contract estimates recognized using the cumulative catch-up method of accounting increased operating income by approximately $45 million and $24 million for the quarters ended October 4, 2015 and September 28, 2014, respectively. The changes in estimates for the quarter ended October 4, 2015 are primarily attributable to a favorable adjustment in connection with the Company’s Commercial Resupply Services (“CRS”) contract, discussed below, in addition to a favorable adjustment associated with a contract termination in Flight Systems Group. The prior-year quarter adjustments were primarily due to profit margin improvements in Flight Systems Group and Defense Systems Group.

Aggregate net changes in contract estimates recognized using the cumulative catch-up method of accounting increased operating income by approximately $70 million and $47 million for the six months ended October 4, 2015 and September 28, 2014, respectively. The current six-month changes in estimates are primarily attributable to the favorable cumulative adjustment pertaining to the CRS contract mentioned above, in addition to a favorable adjustment associated with a contract termination in Flight Systems Group. The prior-year six month adjustments were primarily due to profit margin improvements in Flight Systems Group and Defense Systems Group.

During the quarter ended October 4, 2015, the Company settled disputes related to its contract with a supplier, Aerojet-Rocketdyne Holdings, Inc. ("Aerojet"), which dealt with the purchase of engines for the Company’s Antares rocket. In connection with this settlement, Aerojet made a one-time $50 million cash payment to the Company in September 2015. As a result, the Company recorded a cost reduction and a corresponding revenue reduction on the Antares rocket program. The Antares rocket has been used in the execution of the CRS contract with NASA to deliver cargo to the International Space

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

Station. The financial results for the Antares rocket program are reported in Flight Systems Group and the financial results for the Cygnus spacecraft, which is also utilized in the execution of the CRS contract, are reported in Space Systems Group. The contract profit margin estimate for the CRS contract is determined as one rate for both the Antares and Cygnus programs. As a result of the Aerojet settlement and progress on the CRS contract, the Company increased its profit margin estimate on the CRS contract and recorded a favorable adjustment that is reflected in the results of Flight Systems Group and Space Systems Group in the quarter ended October 4, 2015.

19. Restructuring Costs

During the quarter ended October 4, 2015, the Company incurred a restructuring charge related to termination benefits offered to employees within Defense Systems Group. The following table summarizes activity pertaining to the Company's restructuring activities:



	Termination Benefits			Remaining Lease Rentals			Total
Balance, March 31, 2015	$	8,332		$	10,427		$	18,759
Expense	2,173			—			2,173
Cash paid	(8,431		)	(1,206		)	(9,637		)
Balance, October 4, 2015	$	2,074		$	9,221		$	11,295

20. Operating Segment Information

The Company operates its business structure within three operating segments. These operating segments ("groups") are defined based on the reporting and review process used by the Company's chief executive officer and other management. The operating structure aligns the Company's capabilities and resources with its customers and markets and positions the Company for long-term growth and improved profitability.

•

Flight Systems Group is comprised of a portion of the Company's former Aerospace Group (Aerospace Structures division and Space Systems Operations' Launch Systems business); and Orbital's former Launch Vehicles segment. Flight Systems Group develops rockets that are used as small- and medium-class space launch vehicles to place satellites into Earth orbit and escape trajectories, interceptor and target vehicles for missile defense systems and suborbital launch vehicles that place payloads into a variety of high-altitude trajectories. The group also develops and produces medium- and large-class rocket propulsion systems for human and satellite launch vehicles, strategic missiles, missile defense interceptors and target vehicles. Additionally, Flight Systems Group operates in the military and commercial aircraft and launch structures markets. Other products include illuminating flares and aircraft countermeasures.

•

Defense Systems Group is comprised of all of the Company's former Defense Group (Armament Systems, Defense Electronic Systems, Missile Products and Small-caliber Systems divisions). Defense Systems Group develops and produces small-, medium- and large-caliber ammunition, propulsion systems for tactical missiles and missile defense applications, strike weapons, precision weapons and munitions, high-performance gun systems, aircraft survivability systems, fuzes and warheads, energetic materials and special mission aircraft.

•

Space Systems Group is comprised of a portion of the Company's former Aerospace Group (Space Components division and part of Space Systems Operations division); and Orbital's former Advanced Space Programs and Satellite and Space Systems segments. Space Systems Group develops and produces small- and medium-class satellites that are used to enable global and regional communications and broadcasting, conduct space-related scientific research, and perform other activities related to national security. In addition, Space Systems Group develops and produces human-rated space systems for Earth-orbit and deep-space exploration, including re-supplying the International Space Station. This group is also a provider of spacecraft components and subsystems and specialized engineering and operations services to U.S. Government agencies.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

The following summarizes the Company's results by segment:



	Quarters Ended						Six Months Ended
	October 4, 2015			September 28, 2014			October 4, 2015			September 28, 2014
Sales to external customers:
Flight Systems Group	$	317,449		$	250,529		$	704,261		$	505,411
Defense Systems Group	451,120			418,816			888,900			806,131
Space Systems Group	366,317			73,857			671,681			146,020
Total external sales	1,134,886			743,202			2,264,842			1,457,562
Intercompany sales:
Flight Systems Group	7,173			1,715			18,433			4,081
Defense Systems Group	1,488			68,918			3,478			123,754
Space Systems Group	5,021			3,834			9,724			7,891
Corporate	(13,682		)	(74,467		)	(31,635		)	(135,726		)
Net intercompany sales	—			—			—			—
Total sales	$	1,134,886		$	743,202		$	2,264,842		$	1,457,562

Income from continuing operations, before interest, income taxes and noncontrolling interest:
Flight Systems Group	$	51,138		$	34,535		$	109,198		$	67,202
Defense Systems Group	35,294			50,342			74,458			95,486
Space Systems Group	41,552			4,812			82,981			10,523
Corporate	(4,019		)	(9,422		)	(16,878		)	(21,125		)
Total income from continuing operations, before interest, income taxes and noncontrolling interest	$	123,965		$	80,267		$	249,759		$	152,086



	October 4, 2015		March 31, 2015
Total assets:
Flight Systems Group	$	2,076,634	$	2,047,966
Defense Systems Group	1,411,867		1,320,425
Space Systems Group	1,477,639		1,467,948
Corporate	444,508		668,063
Total assets	$	5,410,648	$	5,504,402

Certain administrative functions are primarily managed by the Company at the corporate headquarters ("Corporate"). Some examples of such functions are human resources, pension and postretirement benefits, corporate accounting, legal, tax and treasury. Significant assets and liabilities managed at Corporate include those associated with debt, restructuring, pension and postretirement benefits, environmental liabilities, litigation liabilities, strategic growth costs and income taxes.

Costs related to the administrative functions managed by Corporate are either recorded at Corporate or allocated to the business units based on the nature of the expense. The difference between pension and postretirement benefit expense calculated under Financial Accounting Standards and the expense calculated under U.S. Cost Accounting Standards is recorded at the corporate level which provides for greater clarity on the operating results of the business segments. Administrative expenses such as corporate accounting, legal and treasury costs are allocated out to the business segments. Environmental expenses are allocated to each segment based on the origin of the underlying environmental cost. Transactions between segments are recorded at the segment level, consistent with the Company's financial accounting policies. Intercompany balances and transactions involving different segments are eliminated at the Company's consolidated financial statements level

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Amounts in thousands except share and per share data and unless otherwise indicated)

and are shown above in Corporate. The amortization expense pertaining to intangible assets recorded in connection with the Merger is also reported in Corporate.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Amounts in thousands except share and per share data and unless otherwise indicated)

Forward-looking Information is Subject to Risk and Uncertainty

Some of the statements made and information contained in this report, excluding historical information, are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements give the Company's current expectations or forecasts of future events. Words such as "may," "will," "expected," "intend," "estimate," "anticipate," "believe," "project," or "continue," and similar expressions are used to identify forward-looking statements. From time to time, the Company also may provide oral or written forward-looking statements in other materials released to the public. Any or all forward-looking statements in this report and in any public statements the Company makes could be materially different. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Any change in the following factors may impact the achievement of results:


•	reductions or changes in NASA or U.S. Government military spending, timing of payments and budgetary policies, including impacts of sequestration under the Budget Control Act of 2011 and sourcing strategies,


•	intense competition for U.S. Government contracts and programs,


•	increases in costs, which the Company may not be able to react to due to the nature of its U.S. Government contracts,


•	changes in cost and revenue estimates and/or timing of programs,


•	the potential termination of U.S. Government contracts and the potential inability to recover termination costs,


•	other risks associated with U.S. Government contracts that might expose the Company to adverse consequences,


•	government laws and other rules and regulations applicable to the Company, including procurement and import-export control,


•	the novation of U.S. Government contracts,


•	reduction or change in demand and manufacturing costs for commercial ammunition,


•	the manufacture and sale of products that create exposure to potential product liability, warranty liability or personal injury claims and litigation,


•	risks associated with expansion into new and adjacent commercial markets,


•	results of the Merger or other acquisitions or transactions, including our ability to successfully integrate acquired businesses and realize anticipated synergies, cost savings and other benefits, and costs incurred for pursuits and proposed acquisitions,


•	greater risk associated with international business, including foreign currency exchange rates and fluctuations in those rates,


•	federal and state regulation of defense products and ammunition,


•	costs of servicing the Company's debt, including cash requirements and interest rate fluctuations,


•	actual pension and other postretirement plan asset returns and assumptions regarding future returns, discount rates, service costs, mortality rates and health care cost trend rates,


•	security threats, including cyber-security and other industrial and physical security threats, and other disruptions,

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•	supply, availability and costs of raw materials and components, including commodity price fluctuations,


•	performance of the Company's subcontractors,


•	development of key technologies and retention of a qualified workforce,


•	the performance of our products,


•	fires or explosions at any of the Company's facilities,


•	government investigations and audits,


•	environmental laws that govern current and past practices and rules and regulations, noncompliance with which may expose the Company to adverse consequences,


•	impacts of financial market disruptions or volatility to the Company's customers and vendors,


•	unanticipated changes in income taxes or exposure to additional tax liabilities, and


•	the costs and ultimate outcome of litigation matters, government investigations and other legal proceedings.

This list of factors is not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that would impact our business. We undertake no obligation to update any forward-looking statements, except as required by law. A more detailed description of risk factors can be found in Part 1, Item 1A, Risk Factors, of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015. Additional information regarding these factors may be contained in the Company's subsequent filings with the Securities and Exchange Commission, including Forms 10-Q and 8-K. All such risk factors are difficult to predict, contain material uncertainties that may affect actual results, and may be beyond our control.

Executive Summary

The Company is an aerospace and defense systems company and supplier of related products to the U.S. Government, allied nations and prime contractors. The Company is headquartered in Dulles, Virginia and has operating locations throughout the United States. On February 9, 2015, the Company completed a tax-free spin-off and distribution of Sporting Group to its stockholders (the "Distribution") as a new public company called Vista Outdoor Inc. ("Vista Outdoor"). Immediately following the Distribution, the Company combined with Orbital Sciences Corporation ("Orbital") through the merger of a Company subsidiary with Orbital (the "Merger"). Following the Distribution and Merger, the Company changed its name from Alliant Techsystems Inc. to Orbital ATK, Inc.

Following the Distribution and Merger, the Company reorganized its business groups and realigned its reporting segments. The Company’s remaining businesses, combined with the businesses of Orbital, are now reported in three segments: Flight Systems Group, Defense Systems Group and Space Systems Group. These segments are defined based on the reporting and review process used by the Company's chief executive officer and other senior management. All historical periods presented in this quarterly report on Form 10-Q reflect this change in the Company’s segment reporting.

•

Flight Systems Group is comprised of a portion of the Company's former Aerospace Group (Aerospace Structures division and Space Systems Operations' Launch Systems business) and Orbital's former Launch Vehicles segment. Flight Systems Group develops rockets that are used as small- and medium-class space launch vehicles to place satellites into Earth orbit and escape trajectories, interceptor and target vehicles for missile defense systems and suborbital launch vehicles that place payloads into a variety of high-altitude trajectories. The group also develops and produces medium- and large-class rocket propulsion systems for human and satellite launch vehicles, strategic missiles, missile defense interceptors and target vehicles. Additionally, Flight Systems Group operates in the military and commercial aircraft and launch structures markets. Other products include illuminating flares and aircraft countermeasures.


•	Defense Systems Group is comprised of all of the Company's former Defense Systems Group (Armament Systems, Defense Electronic Systems, Missile Products and Small-caliber Systems divisions). Defense Systems Group develops and produces small-, medium- and large-caliber ammunition, propulsion systems for tactical missiles and missile

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defense applications, strike weapons, precision weapons and munitions, high-performance gun systems, aircraft survivability systems, fuzes and warheads, energetic materials and special mission aircraft.

•

Space Systems Group is comprised of a portion of the Company's former Aerospace Group (Space Components division and part of Space Systems Components division) and Orbital's former Advanced Space Programs and Satellite and Space Systems segments. Space Systems Group develops and produces small- and medium-class satellites that are used to enable global and regional communications and broadcasting, conduct space-related scientific research, and perform other activities related to national security. In addition, this group develops and produces human-rated space systems for Earth-orbit and deep-space exploration, including re-supplying the International Space Station. This group is also a provider of spacecraft components and subsystems and specialized engineering and operations services to U.S. government agencies.

Financial Highlights for the Quarter Ended October 4, 2015


•	Quarterly sales of $1.13 billion.


•	Diluted earnings per share of $1.12.


•	New firm and option contract bookings of $2.8 billion and option exercises of $0.1 billion under existing contracts.


•	Total backlog of $13.8 billion at October 4, 2015.


•	Income from continuing operations, before interest, income taxes and noncontrolling interest as a percentage of sales of 10.9%.


•	Effective income tax rate of 33.2%.


•	The Company completed a refinancing transaction, described in Note 12 to the accompanying condensed consolidated financial statements.


•	The Company paid a quarterly dividend of $0.26 on September 24, 2015 to stockholders of record on September 2, 2015.


•	The Company repurchased 497,145 shares for $36,275 during the quarter ended October 4, 2015.

Critical Accounting Policies

The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2015 ("fiscal 2015") and the same accounting policies are used in preparing the Company’s interim consolidated financial statements.

In preparing the consolidated financial statements, the Company follows accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosure of contingent assets and liabilities. The Company re-evaluates its estimates on an on-going basis. The Company’s estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

More information on these policies can be found in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015.

Results of Operations

The following information should be read in conjunction with our consolidated financial statements. The key performance indicators that management uses in managing the business are sales, income from continuing operations before interest and income taxes, and cash flows.

Group Sales, Cost of Sales, and Income from Continuing Operations before Interest, Income Taxes and Noncontrolling Interest include intergroup sales and profit. Corporate and Eliminations include intergroup sales and profit eliminations and corporate expenses.

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As a general note, the significant increases in the results of Flight Systems Group and Space Systems Group discussed below were primarily attributable to the inclusion of Orbital’s results following the Merger. Our results for the quarter and six months ended October 4, 2015 include Orbital; however, the results for the quarter and six months ended September 28, 2014 do not include the results of Orbital since the Merger occurred after that date.

Sales



	Quarters Ended											Six Months Ended
	October 4, 2015			September 28, 2014			Change			Percent Change		October 4, 2015			September 28, 2014			Change			Percent Change
Flight Systems Group	$	324,622		$	252,244		$	72,378		28.7		$	722,694		$	509,492		$	213,202		41.8
Defense Systems Group	452,608			487,734			(35,126		)	(7.2	)	892,378			929,885			(37,507		)	(4.0	)
Space Systems Group	371,338			77,691			293,647			378.0		681,405			153,911			527,494			342.7
Eliminations	(13,682		)	(74,467		)	60,785			(81.6	)	(31,635		)	(135,726		)	104,091			(76.7	)
Total sales	$	1,134,886		$	743,202		$	391,684		52.7		$	2,264,842		$	1,457,562		$	807,280		55.4

Quarter:

Fluctuations in sales were driven by program-related changes within the groups and the impact of the Merger as described below.

Flight Systems Group. The increase in sales was due to the inclusion of Orbital's former Launch Vehicles segment, now referred to as the Launch Vehicles division, in our sales for the quarter ended October 4, 2015, as a result of the Merger. Launch Vehicles division sales were $96,000 in the quarter. Intragroup revenue eliminations increased $15,000 primarily attributable to contract activity between the Launch Vehicles Division and the other divisions in Flight Systems Group.

Defense Systems Group. The decrease in sales was driven primarily by reduced sales of approximately $50,000 in Small Caliber Systems principally due to lower sales volume, partially offset by an increase in Armament Systems revenues that reflected increased foreign sales.

Space Systems Group. The increase in sales was primarily due to the inclusion of Orbital's former Advanced Space Programs and Satellite and Space Systems segments in our sales for the quarter ended October 4, 2015, as a result of the Merger. The legacy Orbital Advanced Space Programs and commercial satellite businesses generated sales of approximately $293,000 in the quarter.

Corporate. The change in eliminations was driven primarily by lower intergroup sales from Defense Systems Group, due to the spin-off of Vista Outdoor as a result of the Distribution.

Six Months:

Fluctuations in sales were driven by program-related changes within the groups and the impact of the Merger as described below.

Flight Systems Group. The increase in sales was due to the inclusion of Orbital's former Launch Vehicles segment, now referred to as the Launch Vehicles division, in our sales for the six months ended October 4, 2015, as a result of the Merger. Launch Vehicles division sales were approximately $260,000 in the six month period. Intragroup revenue eliminations increased approximately $35,000 primarily attributable to contract activity between the Launch Vehicles Division and the other divisions in Flight Systems Group.

Defense Systems Group. The decrease in sales was driven primarily by reduced sales of approximately $60,000 in Small Caliber Systems principally due to lower sales volume, partially offset by an increase in Armament Systems revenues that reflected increased foreign sales.

Space Systems Group. The increase in sales was primarily due to the inclusion of Orbital's former Advanced Space Programs and Satellite and Space Systems segments in our sales for the six months ended October 4, 2015, as a result of the Merger. The legacy Orbital Advanced Space Programs and commercial satellite businesses generated sales of approximately $513,000 in the six months ended October 4, 2015.

Corporate. The change in eliminations was driven primarily by lower intergroup sales from Defense Systems Group, due to the spin-off of Vista Outdoor in the Distribution.

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Cost of Sales



	Quarters Ended											Six Months Ended
	October 4, 2015			September 28, 2014			Change			Percent Change		October 4, 2015			September 28, 2014			Change			Percent Change
Flight Systems Group	$	233,200		$	196,869		$	36,331		18.5		$	532,979		$	400,658		$	132,321		33.0
Defense Systems Group	375,506			394,935			(19,429		)	(4.9	)	735,743			751,572			(15,829		)	(2.1	)
Space Systems Group	299,049			64,330			234,719			364.9		536,554			126,435			410,119			324.4
Corporate/Eliminations	(23,021		)	(76,316		)	53,295			(69.8	)	(45,011		)	(147,137		)	102,126			(69.4	)
Total cost of sales	$	884,734		$	579,818		$	304,916		52.6		$	1,760,265		$	1,131,528		$	628,737		55.6

Quarter:

The fluctuation in cost of sales was driven by program-related changes within the operating segments and the impact of the Merger as described below.

Flight Systems Group. The increase in cost of sales was due to the inclusion of Orbital's former Launch Vehicles segment in our cost of sales for the quarter ended October 4, 2015, as a result of the Merger.

Defense Systems Group. The decrease in cost of sales was primarily driven by reduced cost of sales in Small Caliber Systems principally due to lower volume, partially offset by an increase in Armament Systems cost of sales that reflected increased foreign sales.

Space Systems Group. The increase in cost of sales was primarily due to the inclusion of Orbital's former Advanced Space Programs and Satellite and Space Systems segments in our cost of sales for the quarter ended October 4, 2015, as a result of the Merger.

Corporate. The change in corporate/eliminations was driven primarily by lower intergroup sales from Defense Systems Group, due to the spin-off of Vista Outdoor in the Distribution.

Six Months:

The fluctuation in cost of sales was driven by program-related changes within the operating segments and the impact of the Merger as described below.

Flight Systems Group. The increase in cost of sales was due to the inclusion of Orbital's former Launch Vehicles segment in our cost of sales for the six months ended October 4, 2015, as a result of the Merger.

Space Systems Group. The increase in cost of sales was primarily due to the inclusion of Orbital's former Advanced Space Programs and Satellite and Space Systems segments in our cost of sales for the six months ended October 4, 2015, as a result of the Merger.

Corporate. The change in corporate/eliminations was driven primarily by lower intergroup sales from Defense Systems Group, due to the spin-off of Vista Outdoor in the Distribution.

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Operating Expenses



	Quarters Ended								Six Months Ended
	October 4, 2015		Percent of Sales	September 28, 2014		Percent of Sales	Change		October 4, 2015		Percent of Sales	September 28, 2014		Percent of Sales	Change
Research and development	$	28,666	2.5	$	8,942	1.2	$	19,724	$	53,330	2.4	$	14,105	1.0	$	39,225
Selling	28,137		2.5	23,213		3.1	4,924		60,641		2.7	46,288		3.2	14,353
General and administrative	69,384		6.1	50,962		6.9	18,422		140,847		6.2	113,555		7.8	27,292
Total operating expenses	$	126,187	11.1	$	83,117	11.2	$	43,070	$	254,818	11.3	$	173,948	12.0	$	80,870

Quarter:

Operating expenses increased by $43,070 in the quarter ended October 4, 2015 compared to the quarter ended September 28, 2014 primarily due inclusion of legacy Orbital research and development, selling and general and administrative costs in the current quarter.

Six Months:

Operating expenses increased by $80,870 primarily due to inclusion of legacy Orbital research and development, selling and general and administrative costs in the six months ended October 4, 2015.

Income from Continuing Operations, Before Interest, Income Taxes and Noncontrolling Interest



	Quarters Ended									Six Months Ended
	October 4, 2015			September 28, 2014			Change			October 4, 2015			September 28, 2014			Change
Flight Systems Group	$	51,138		$	34,535		$	16,603		$	109,198		$	67,202		$	41,996
Defense Systems Group	35,294			50,342			(15,048		)	74,458			95,486			(21,028		)
Space Systems Group	41,552			4,812			36,740			82,981			10,523			72,458
Corporate/Eliminations	(4,019		)	(9,422		)	5,403			(16,878		)	(21,125		)	4,247
Total	$	123,965		$	80,267		$	43,698		$	249,759		$	152,086		$	97,673

Quarter:

The fluctuations in income from continuing operations, before interest, income taxes and noncontrolling interest are described as follows:

Flight Systems Group. The increase in income was due to the inclusion of Orbital's former Launch Vehicles segment in our results for the quarter ended October 4, 2015, as a result of the Merger. Flight Systems Group results for the quarter ended October 4, 2015 included the impact of a favorable adjustment in connection with our Commercial Resupply Services ("CRS") contract, discussed below in "Changes in Estimates."

Defense Systems Group. The decrease in income was driven primarily by reduced income in Small Caliber Systems principally due to lower volume.

Space Systems Group. The increase in income was primarily due to the inclusion of Orbital's former Advanced Space Programs and Satellite and Space Systems segments in our results for the quarter ended October 4, 2015, as a result of the Merger. Space Systems Group results for the quarter ended October 4, 2015 included the impact of a favorable adjustment in connection with our CRS contract, discussed below in "Changes in Estimates."

Six Months:

The fluctuations in income from continuing operations, before interest, income taxes and noncontrolling interest are described as follows:

Flight Systems Group. The increase in income was due to the inclusion of Orbital's former Launch Vehicles segment in our results for the six months ended October 4, 2015, as a result of the Merger. Flight Systems Group results for the six months

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ended October 4, 2015 included the impact of a favorable adjustment in connection with our CRS contract, discussed below in "Changes in Estimates."

Defense Systems Group. The decrease in income was driven largely by reduced income in Small Caliber Systems principally due to lower volume.

Space Systems Group. The increase in income was primarily due to the inclusion of Orbital's former Advanced Space Programs and Satellite and Space Systems segments in our results for the six months ended October 4, 2015 as a result of the Merger. Space Systems Group results for the six months ended October 4, 2015 included the impact of a favorable adjustment in connection with our CRS contract, discussed below in "Changes in Estimates."

Changes in Estimates. The majority of our sales are accounted for as long-term contracts, which are accounted for using the percentage-of-completion method ("POC"). Accounting for contracts under POC requires judgment relative to assessing risks and estimating contract revenues and costs. Profits expected to be realized on contracts are based on management’s estimates of total contract sales value and costs at completion. Estimated amounts for contract changes, including scope and claims, are included in contract sales only when realization is estimated to be probable. Assumptions used for recording sales and earnings are adjusted in the period of change to reflect revisions in contract value and estimated costs. In the period in which it is determined that a loss will be incurred on a contract, the entire amount of the estimated gross margin loss is charged to cost of sales. Changes in estimates of contract sales, costs or profits are recognized using the cumulative catch-up method of accounting. The cumulative effect of a change in estimate is recognized in the period a change in estimate occurs. The effect of the changes on future periods of contract performance is recognized as if the revised estimate had been used since contract inception.

Changes in contract estimates occur for a variety of reasons including changes in contract scope, unforeseen changes in contract cost estimates due to unanticipated cost growth or risks affecting contract costs and/or the resolution of contract risks at lower costs than anticipated, as well as changes in contract overhead costs over the performance period. Changes in estimates could have a material effect on our consolidated financial position or annual results of operations. Aggregate net changes in contract estimates recognized using the cumulative catch-up method of accounting increased operating income by approximately $45 million and $24 million for the quarters ended October 4, 2015 and September 28, 2014, respectively. The changes in estimates for the quarter ended October 4, 2015 are primarily attributable to a favorable adjustment in connection with our Commercial Resupply Services (“CRS”) contract, discussed below, in addition to a favorable adjustment associated with a contract termination in Flight Systems Group. The prior-year quarter adjustments were primarily due to profit margin improvements in Flight Systems Group and Defense Systems Group.

During the quarter ended October 4, 2015, we settled disputes related to our contract with a supplier, Aerojet-Rocketdyne Holdings, Inc. ("Aerojet"), which dealt with the purchase of engines for our Antares rocket. In connection with this settlement, Aerojet made a one-time $50 million cash payment to us in September 2015. As a result, we recorded a cost reduction and a corresponding revenue reduction on the Antares rocket program. The Antares rocket has been used in the execution of the CRS contract with NASA to deliver cargo to the International Space Station. The financial results for the Antares rocket program are reported in Flight Systems Group and the financial results for the Cygnus spacecraft, which is also utilized in the execution of the CRS contract, are reported in Space Systems Group. The contract profit margin estimate for the CRS contract is determined as one rate for both the Antares and Cygnus programs. As a result of the Aerojet settlement and progress on the CRS contract, we increased our profit margin estimate on the CRS contract and recorded a favorable adjustment that is reflected in the results of Flight Systems Group and Space Systems Group in the quarter ended October 4, 2015.

Corporate. Results reflect unallocated expenses incurred for administrative functions that are performed centrally at the corporate headquarters, the difference between pension and postretirement benefit expense calculated under Financial Accounting Standards ("FAS") and the expense calculated under U.S. Cost Accounting Standards ("CAS"), transaction-related costs, amortization of intangible assets recorded in connection with the Merger, and the elimination of intercompany profits. The increase in corporate expenses in the quarter ended October 4, 2015 compared to the quarter ended September 28, 2014 was largely driven by amortization expense recorded in the quarter ended October 4, 2015 related to the Merger, partially offset by corporate restructuring costs that were recorded in the quarter ended September 28, 2014 that did not recur in the current quarter. The increase in corporate expenses in the six months ended October 4, 2015 was largely driven by amortization expense related to the Merger.

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Net Interest Expense

Quarter:

Net interest expense for the quarter ended October 4, 2015 was $24,293, an increase of $953 compared to $23,340 in the quarter ended September 28, 2014. The increase was due to accelerated amortization of deferred debt issuance costs related to refinancing our debt during the quarter, mostly offset by the impact of lower debt outstanding as a result of the repayment of certain indebtedness in connection with the Distribution and Merger.

Six Months:

Net interest expense for the six months ended October 4, 2015 was $39,655, a decrease of $7,076 compared to $46,731 in the six months ended September 28, 2014. The decrease was due to the impact of lower debt outstanding as a result of the repayment of certain indebtedness in connection with the Distribution and Merger, partially offset by accelerated amortization of deferred debt issuance costs related to refinancing our debt during the six months ended October 4, 2015.

Income Taxes (from Continuing Operations)



	Quarters Ended										Six Months Ended
	October 4, 2015		Effective Rate		September 28, 2014		Effective Rate		Change		October 4, 2015		Effective Rate		September 28, 2014		Effective Rate		Change
Income taxes	$	33,123	33.2	%	$	15,632	27.5	%	$	17,491	$	70,685	33.6	%	$	32,218	30.6	%	$	38,467

Quarter:

Six Months:

Income From Continuing Operations, Before Noncontrolling Interest

Net income from continuing operations before noncontrolling interest for the quarter ended October 4, 2015 was $66,549, an increase of $25,254 compared to $41,295 in the quarter ended September 28, 2014. This increase was driven by inclusion of Orbital results in the quarter ended October 4, 2015 due to the Merger.

Net income from continuing operations before noncontrolling interest for the six months ended October 4, 2015 was $139,419, an increase of $66,282 compared to $73,137 in the six months ended September 28, 2014. This increase was driven by inclusion of Orbital results in the current year period due to the Merger.

Noncontrolling Interest

Noncontrolling interest represents the noncontrolling owner's portion of the income of a joint venture, COI Ceramics, Inc., in which we are the primary owner. This joint venture is consolidated into our financial statements.

Liquidity and Capital Resources

We manage our business to maximize operating cash flows as the primary source of liquidity. In addition to cash on hand and cash generated by operations, sources of liquidity include our Senior Credit Facility, long-term borrowings, and access to the public debt and equity markets. We use our cash to fund investments in our existing core businesses and for debt repayment, cash dividends, share repurchases, acquisitions and other activities.

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Cash Flow Summary

Our cash flows from continuing operations for operating, investing and financing activities, as reflected in the Condensed Consolidated Statements of Cash Flows are summarized as follows:



	Six Months Ended
	October 4, 2015			September 28, 2014
Cash provided by (used for) operating activities of continuing operations	$	129,977		$	40,111
Cash provided by (used for) investing activities of continuing operations	(53,411		)	(37,188		)
Cash provided by (used for) financing activities of continuing operations	(150,732		)	(190,325		)
Net cash flows from continuing operations	$	(74,166	)	$	(187,402	)

Operating Activities

Net cash from operating activities of continuing operations increased $89,866 during the six months ended October 4, 2015, compared to the prior-year period. This improvement was driven primarily by higher income from continuing operations of $66,282 and higher non-cash adjustments to income from continuing operations of $72,251, partially offset by a $48,667 increase in the use of cash for changes in assets and liabilities. The increase in non-cash adjustments to income from continuing operations was primarily due to higher depreciation and amortization expense resulting from the Merger. During the six months ended October 4, 2015, net uses of cash for changes in assets and liabilities was $119,266, comprised of a $89,119 increase in net receivables and an $89,167 decrease in contract-related accruals, partially offset by a $59,020 net increase in cash attributable to changes in other assets and liabilities. In the six months ended September 28, 2014, net uses of cash for changes in assets and liabilities was $70,599, comprised of a $107,869 increase in net receivables, a $36,126 decrease in accrued compensation and a $1,238 net decrease in cash attributable to changes in certain other assets and liabilities, partially offset by a $54,635 increase in accounts payable and a $19,999 increase in contract-related accruals.

Investing Activities

Net cash used for investing activities of continuing operations increased $16,223 for the six months ended October 4, 2015 compared to the prior-year period. This increase was due to capital expenditures attributable to Orbital's businesses included in the current-year period.

Financing Activities

Net cash used for financing activities decreased $39,593 for the six months ended October 4, 2015, compared to the prior-year period. This decrease was driven primarily by increased repurchases of our common stock and increased dividends paid to our shareholders.

Liquidity

In addition to our normal operating cash requirements, our principal future cash requirements will be to fund capital expenditures, debt repayments, employee benefit obligations, share repurchases, dividends and any strategic acquisitions. Our short-term cash requirements for operations are expected to consist mainly of capital expenditures to maintain and expand production facilities and working capital requirements. Our debt service requirements over the next two years consist of principal payments due under the Senior Credit Facility, as discussed further below. Our other debt service requirements consist of interest expense on our debt.

During the six months ended October 4, 2015, we paid dividends totaling $30,815. On October 29, 2015, the Board of Directors declared a dividend of $0.26 per share, to be paid on December 10, 2015 to stockholders of record as of November 18, 2015. The payment and amount of any future dividends are at the discretion of our Board of Directors and will be based on a number of factors, including our earnings, liquidity position, financial condition, capital requirements, credit ratings and the availability and cost of obtaining new debt. We cannot be certain that we will continue to declare dividends in the future and, as such, the amount and timing of any future dividends are not determinable.

Based on our current financial condition, we believe our cash position, combined with anticipated generation of cash flows, as well as the availability of funding, if needed, through our Senior Credit Facility, access to debt and equity markets, and potential future sources of funding such as additional bank financing and debt markets, will be adequate to fund future growth as well as service our anticipated long-term debt and pension obligations, make capital expenditures and pay dividends over the next 12 months.

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We do not expect our access to liquidity sources will be materially impacted in the near future. There can be no assurance, however, that the cost or availability of future borrowings, if any, will not be materially impacted by capital market conditions.

Long-term Debt and Credit Facilities

As of October 4, 2015, we had outstanding total indebtedness of $1,537,000. Our Revolving Credit Facility provided for the potential of additional borrowings up to $810,106 (reduced by outstanding borrowings of $37,000 and letters of credit of $152,894 ).

Our indebtedness consisted of the following:



	October 4, 2015		March 31, 2015
Senior Credit Facility:
Term Loan A due 2020	$	800,000	$	—
Revolving Credit Facility due 2020	37,000		—
5.25% Senior Notes due 2021	300,000		300,000
5.50% Senior Notes due 2023	400,000		—
Former Senior Credit Facility:
Term A Loan due 2018	—		946,875
Term A Loan due 2019	—		144,375
Term B Loan due 2020	—		197,251
Revolving Credit Facility due 2018	—		—
Carrying amount of long-term debt	1,537,000		1,588,501
Less: Current portion of long-term debt	40,000		59,997
Long-term debt	$	1,497,000	$	1,528,504

See Note 12 "Long-term Debt" to the condensed consolidated financial statements in Part I, Item 1 for a detailed discussion of these borrowings.

Covenants

As of October 4, 2015, we were in compliance with all of the covenants in our debt agreements, including specified financial ratios that our Senior Credit Facility requires us to meet as follows:



	Total Leverage Ratio (1)	Interest Coverage Ratio (2)
Requirement	4.00	3.00
Actual at October 4, 2015	2.31	8.90
(1) Not to exceed the required financial ratio
(2) Not to be below the required financial ratio

The Total Leverage Ratio is the sum of our total debt plus financial letters of credit, net of up to $100,000 of cash, divided by Covenant EBITDA (which includes adjustments for items such as non-recurring or extraordinary non-cash items, non-cash charges related to stock-based compensation, and intangible asset impairment charges, as well as inclusion of EBITDA of acquired companies on a pro forma basis) for the past four fiscal quarters.

See Note 12 "Long-term Debt" to the condensed consolidated financial statements in Part I, Item 1 for further discussion of the covenants in our debt agreements.

Many of our debt agreements contain cross-default provisions so that non-compliance with the covenants within one debt agreement could cause a default under other debt agreements as well. Our ability to comply with these covenants in the future and to meet and maintain the requisite financial ratios may be affected by events beyond our control.

Share Repurchases

On March 11, 2015, our Board of Directors authorized us to repurchase up to the lesser of $75 million or 1.0 million shares of our common stock through December 31, 2015. On August 4, 2015, the Board of Directors increased the amount

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authorized for repurchase to the lesser of $100 million or 1.4 million shares. On October 29, 2015, the Board of Directors increased the amount authorized for repurchase to the lesser of $250 million or 3.25 million shares and extended the repurchase period to December 31, 2016. Under the authorized repurchase program, shares of our common stock may be purchased from time to time in the open market, subject to compliance with applicable laws and regulations and our debt covenants, depending upon market conditions and other factors. We repurchased 497,145 shares for $36,275 and 825,986 shares for $60,777 during the quarter and six months ended October 4, 2015, respectively.

In accordance with the Transaction Agreement entered into on April 28, 2014, we did not repurchase any outstanding shares prior to the closing of the Distribution and Merger during fiscal 2015.

Authorized repurchases of our shares are subject to market conditions, our compliance with our debt covenants and the limitations imposed by the tax treatment of the Distribution and the related Tax Matters Agreement between us and Vista Outdoor. Our 5.25% Notes and 5.50% Notes limit the aggregate sum of dividends, share repurchases, and other designated restricted payments to an amount based on our net income, stock issuance proceeds, and certain other items since April 1, 2001, less restricted payments made since that date. As of October 4, 2015, the Senior Credit Facility allows us to make unlimited "restricted payments" (as defined in the Credit Agreement), which, among other items, allows payments for future share repurchases, as long as we maintain a certain amount of liquidity and maintain certain senior secured debt limits. When those requirements are not met, the limit is equal to $250,000 plus proceeds of any equity issuances plus 50% of net income since October 7, 2010. The Credit Agreement also prohibits dividend payments if loan defaults exist or the financial covenants contained in the agreement are not met.

Contractual Obligations and Commercial Commitments

There have been no material changes with respect to the contractual obligations and commitments or off-balance sheet arrangements described in the Company’s Annual Report on Form 10-K for fiscal 2015.

Contingencies

Environmental Liabilities. Our operations and ownership or use of real property are subject to a number of federal, state, and local environmental laws and regulations, as well as applicable foreign laws and regulations, including those for discharge of hazardous materials, remediation of contaminated sites and restoration of damage to the environment. At certain sites that we own or operate or formerly owned or operated, there is known or potential contamination that we are required to investigate or remediate. We could incur substantial costs, including remediation costs, resource restoration costs, fines, and penalties, or third party property damage or personal injury claims, as a result of liabilities associated with past practices or violations of environmental laws or non-compliance with environmental permits.

The liability for environmental remediation represents management's best estimate of the present value of the probable and reasonably estimable costs related to known remediation obligations. The receivable represents the present value of the amount that the Company expects to recover, as discussed below. Both the liability and receivable have been discounted to reflect the present value of the expected future cash flows, using a discount rate of 0.50% as of October 4, 2015 and March 31, 2015. Our discount rate is calculated using the 20-year Treasury constant maturities rate, net of an estimated inflationary factor of 1.9%, rounded to the nearest quarter percent. The following is a summary of the amounts recorded for environmental remediation:



	October 4, 2015						March 31, 2015
	Liability			Receivable			Liability			Receivable
Amounts (payable) receivable	$	(42,693	)	$	18,114		$	(51,749	)	$	26,506
Unamortized discount	1,223			(398		)	1,624			(750		)
Present value amounts (payable) receivable	$	(41,470	)	$	17,716		$	(50,125	)	$	25,756

As of October 4, 2015, the estimated discounted range of reasonably possible costs of environmental remediation was $41,470 to $82,494.

We expect that a portion of our environmental compliance and remediation costs will be recoverable under U.S. Government contracts. Some of the remediation costs that are not recoverable from the U.S. Government that are associated with facilities purchased in a business acquisition may be covered by various indemnification agreements, as described in Note 13 to the audited consolidated financial statements included in our Annual Report on Form 10-K for fiscal 2015.

We have been identified as a potentially responsible party ("PRP"), along with other parties, in several regulatory agency actions associated with hazardous waste sites. As a PRP, we may be required to pay a share of the costs of the investigation and

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clean-up of these sites. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, will not have a material adverse effect on our operating results, financial condition or cash flows.

Other Contingencies. We are also subject to a number of other potential risks and contingencies. These risks and contingencies are described in Item 1A of Part I of our Annual Report on Form 10-K for fiscal 2015.

New Accounting Pronouncements

See Note 2 to the unaudited condensed consolidated financial statements in Item 1 of Part I of this report.

Inflation

In management's opinion, inflation has not had a significant impact upon the results of our operations. The selling prices under contracts, the majority of which are long term, generally include estimated costs to be incurred in future periods. These cost projections can generally be negotiated into new buys under fixed-price government contracts, while actual cost increases are recoverable on cost-type contracts.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in the Company’s market risk during the quarter ended October 4, 2015. For additional information, refer to Item 7A of Part II of the Company’s Annual Report on Form 10-K for fiscal 2015.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of October 4, 2015, the Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) and have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports the Company files or submits is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During fiscal 2015, the Company completed the acquisition of Orbital, which is being integrated into the Company’s Flight Systems Group and Space Systems Group. As part of the Company's ongoing integration activities, we are continuing to incorporate our controls and procedures into the Orbital business and to augment the Company-wide controls to reflect the risks inherent in an acquisition of this magnitude and complexity. Other than the Company's ongoing integration activities noted above, during the quarter ended October 4, 2015 there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company’s report on internal control over financial reporting in the Annual Report on Form 10-K for the year ending March 31, 2015, included a scope exception that excluded the acquired Orbital business in order for management to have sufficient time to evaluate and implement the Company's internal control over financial reporting. The Company’s report on the Company's internal control over financial reporting in the Annual Report on Form 10-K for the transition period ending December 31, 2015 will not have this exception as the Company's internal controls over financial reporting will be implemented within the Orbital business prior to December 31, 2015.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company is subject to various legal proceedings, including lawsuits, which arise out of, and are incidental to, the conduct of the Company's business. The Company does not consider any of such proceedings that are currently pending, individually or in the aggregate, notwithstanding that the unfavorable resolution of any matter may have a material effect on our net earnings in any particular quarter, to be material to its business or likely to result in a material adverse effect on its future operating results, financial condition or cash flows.

On November 4, 2013, the Company filed a lawsuit against Spirit Aerosystems Inc. in the Second District Court in Farmington, Utah alleging various claims, including breach of contract, in connection with a contract for the manufacture of aircraft parts. On September 18, 2015, the parties entered into a settlement agreement resolving all matters at issue in the litigation, and the case was dismissed.

Putative class action and derivative lawsuits challenging the Merger were filed in the Court of Chancery of the State of Delaware in May 2014, naming Orbital, the Company and Orbital's directors. On November 14, 2014, the lawsuits were consolidated by the court under the caption In Re Orbital Corporation Stockholder Litigation (the "Consolidated Lawsuit"). The plaintiffs alleged, among other things, that the directors of Orbital breached their fiduciary duties in connection with the Merger, and alleged that the Company aided and abetted such breaches of fiduciary duty. On January 16, 2015, the parties entered into a memorandum of understanding (the "MOU") regarding the settlement of this matter. If the court approves the settlement contemplated by the MOU, the Consolidated Lawsuit will be dismissed with prejudice. Under the terms of the MOU, the parties agreed to settle the Consolidated Lawsuit and release the defendants from all claims relating to the Merger, subject to court approval. Pursuant to the terms of the MOU, Orbital and the Company agreed to make available additional information to Orbital's stockholders in connection with the Merger vote, and the defendants agreed to negotiate regarding an appropriate amount of fees to be paid to plaintiffs’ counsel by Orbital or its successor.

Environmental Liabilities. The Company's operations and ownership or use of real property are subject to a number of federal, state, and local laws and regulations, including those for discharge of hazardous materials, remediation of contaminated sites, and restoration of damage to the environment. Due in part to their complexity and pervasiveness, such laws and regulations have resulted in the Company being involved with a number of related legal proceedings, claims and remediation obligations. The Company routinely assesses, based on in-depth studies, expert analyses and legal reviews, its contingencies, obligations, and commitments for remediation of contaminated sites and past practices, including assessments of ranges and probabilities of recoveries from other responsible parties. The Company's policy is to accrue and charge to expense in the current period any identified exposures related to environmental liabilities based on estimates of investigation, cleanup, monitoring and resource restoration costs to be incurred.

The Company has been identified as a potentially responsible party ("PRP"), along with other parties, in several regulatory agency actions associated with hazardous waste sites. As a PRP, we may be required to pay a share of the costs of the investigation and clean-up of these sites. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, will not have a material adverse effect on our operating results, financial condition or cash flows.

The Company could incur substantial costs, including cleanup costs, resource restoration, fines, and penalties or third-party property damage or personal injury claims, as a result of violations or liabilities under environmental laws or noncompliance with environmental permits. While environmental laws and regulations have not had a material adverse effect on the Company's operating results, financial condition or cash flows in the past, and the Company has environmental management programs in place to mitigate these risks, it is difficult to predict whether they will have a material impact in the future.

The description of certain environmental matters contained in Part I, Item 2, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Contingencies," is incorporated herein by reference.

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ITEM 1A. RISK FACTORS

While the Company attempts to identify, manage and mitigate risks and uncertainties associated with its business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Item 1A of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015 describes all known material risks and uncertainties associated with its business. These risks and uncertainties have the potential to materially affect the Company’s business, financial condition, results of operations, cash flows, projected results and future prospects.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (2)	Maximum Number of Shares that May Yet Be Purchased Under the Program (3)
July 6 - August 2	266,076	$	70.60	200,000
August 3 - August 30	67,476	73.26		67,476
August 31 - October 4	233,015	74.52		229,669
Fiscal quarter ended October 4, 2015	566,567	72.46		497,145	2,424,014

____________________________________________________________


(1)	The 566,567 shares purchased include shares repurchased during the quarter (see (2) below) and shares withheld to pay taxes upon vesting of shares of restricted stock and restricted stock units or payment of performance shares that were granted under the Company's incentive compensation plans.

(2)


(3)	The maximum number of shares that may yet be purchased under the program was calculated using the Orbital ATK closing stock price of $74.31 on October 2, 2015.

The discussion of limitations upon the payment of dividends as a result of the indentures governing the Company's debt instruments as discussed in Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Long-term Debt and Credit Facilities," is incorporated herein by reference.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS



Exhibit Number		Description of Exhibit (and document from which incorporated by reference, if applicable)

4.1		Indenture, dated as of September 29, 2015, among the Registrant, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee (Exhibit 4.1 to Form 8-K dated September 29, 2015).

4.2		Form of 5.50% Senior Notes due 2023 (Exhibit A to Exhibit 4.1 to Form 8-K dated September 29, 2015).

4.3		Registration Rights Agreement, dated September 29, 2015, by and among the Registrant, the subsidiaries of the Registrant party thereto and Wells Fargo Securities, LLC, as representative of the several initial purchasers named therein (Exhibit 4.3 to Form 8-K dated September 29, 2015).

10.1		Credit Agreement, dated as of September 29, 2015, by and among the Registrant, as Borrower, the subsidiaries of the Borrower party thereto as Guarantors, the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, Wells Fargo Bank, National Association, Citibank, N.A., Bank of America, N.A., JPMorgan Chase Bank, N.A., U.S. Bank, National Association and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Issuing Lenders, Wells Fargo Bank, National Association and U.S. Bank, National Association, as Swingline Lenders, Wells Fargo Securities, LLC, CitiGroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, U.S. Bank, National Association, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and SunTrust Robinson Humphrey, Inc., as Joint Lead Arrangers and Joint Bookrunners, CitiGroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as Co-Syndication Agents, and U.S. Bank, National Association, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and SunTrust Bank, as Co-Documentation Agents (Exhibit 10.1 to Form 8-K dated September 29, 2015).

10.2		Security and Pledge Agreement, dated as of September 29, 2015, among the Registrant, the other Obligors party thereto and Wells Fargo Bank, National Association, as Administrative Agent (Exhibit 10.2 to Form 8-K dated September 29, 2015).

10.3		Orbital ATK, Inc. 2015 Stock Incentive Plan (Exhibit 4.2 to the Registration Statement on Form S-8 (File No. 333-206123 filed August 5, 2015).

10.4		Non-Employee Director Stock Program under the Orbital ATK, Inc. 2015 Stock Incentive Plan.

31.1		Certification of Chief Executive Officer.

31.2		Certification of Chief Financial Officer.

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	ORBITAL ATK, INC.
November 4, 2015	By:	/s/ David W. Thompson
	Name:	David W. Thompson
	Title:	President and Chief Executive Officer
		(duly authorized and principal executive officer)



November 4, 2015	By:	/s/ Garrett E. Pierce
	Name:	Garrett E. Pierce
	Title:	Chief Financial Officer
		(principal financial officer)

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