Orbital ATK Announces Second Calendar Quarter 2015 Financial Results

Company Reports Revenue of $1.13 Billion and Adjusted Earnings Per Share of $1.28 in the Quarter

2015 Financial Guidance Updated With Increased Revenue, Operating Margin and Earnings Per Share Targets

Dulles, Virginia 6 August 2015 -- Orbital ATK, Inc. (NYSE: OA), a global leader in aerospace and defense technologies, today announced both GAAP and adjusted financial results for the second calendar quarter ended July 5, 2015. In addition to GAAP results, the company is presenting adjusted results because it believes these non-GAAP metrics are useful to understand the underlying operating performance of the company by including the pre-merger Orbital and ATK Aerospace and Defense results in comparable periods and excluding significant transaction and merger-related expenses and other non-operational expenses in all periods (for details see reconciliation tables at the end of this release).

Orbital ATK reported GAAP revenues of $1,130 million for the second quarter of 2015 compared to $714 million in the same quarter in 2014. GAAP operating income was $125.8 million in the quarter compared to operating income from continuing operations of $71.8 million in the comparable period last year. The company reported GAAP earnings per diluted share of $1.22 in the 2015 second quarter compared to earnings per diluted share of $0.96 in the comparable 2014 quarter. Free cash flow was negative $37.2 million in the quarter ended July 5, 2015.

The company reported adjusted revenues of $1,130 million in the second quarter of 2015 compared to adjusted revenues of $1,055 million in the comparable period of 2014. Adjusted operating income and adjusted profit margin were $131.6 million and 11.6%, respectively, in the second quarter of 2015 compared to $115.8 million and 11.0%, respectively, in the same quarter of 2014. Adjusted earnings per share in the quarter were $1.28 compared to $1.10 in the same period of 2014. Adjusted free cash flow was negative $5.5 million in the quarter ended July 5, 2015.

________
The adjusted financial results contained in this press release are non-GAAP financial measures and are adjusted to give effect to the merger of Orbital Sciences Corporation (Orbital) and Alliant Techsystems Inc. (ATK) on February 9, 2015 as if it had occurred on January 1, 2014. In addition, adjusted results exclude significant transaction and merger-related expenses and other non-operational expenses in all periods. Please refer to the reconciliation tables contained in this press release for more details on the nature and amount of those adjustments.

“Orbital ATK reported excellent second quarter financial results characterized by better-than-expected revenue and very strong earnings. These results benefited from outstanding new orders, as well as continued solid operational execution on our major programs. As a result, we are increasing the company’s outlook for sales and earnings this year and expanding our previously-announced capital deployment program as well,” said David W. Thompson, Orbital ATK’s President and Chief Executive Officer.

For the first six months of 2015, the company reported adjusted revenues of $2,246 million, adjusted operating income and profit margin of $248.3 million and 11.1%, respectively, adjusted earnings per share of $2.41 and adjusted free cash flow from continuing operations of $53.2 million.

Adjusted Consolidated Financial Highlights

Except as noted, all financial measures discussed below are non-GAAP adjusted financial results from continuing operations. See the reconciliation tables for details.

 
Second Quarter
 
First Six Months
(in millions, except per share data)
2015
 
2014
 
2015
 
2014
Revenues
$
1,130
 
 
$
1,055
 
 
$
2,246
 
 
$
2,210
 
Operating Income
132
 
 
116
 
 
248
 
 
190
 
Net Income
$
77
 
 
$
66
 
 
$
144
 
 
$
105
 
Diluted Earnings Per Share
$
1.28
 
 
$
1.10
 
 
$
2.41
 
 
$
1.76
 
 
 
 
 
 
 
 
 
Adjusted results. See reconciliation tables in the "Disclosure of Non-GAAP Financial Measures" section for details.

Revenues increased $75 million, or 7.1%, in the second quarter of 2015 compared to adjusted revenues in the same period in 2014, driven by a $31 million increase in the company’s Flight Systems Group (FSG) revenues and a $44 million increase in Space Systems Group (SSG) revenues. Defense Systems Group (DSG) revenues and corporate eliminations were flat compared to the same period in 2014.

Operating income increased $15.8 million, or 13.6%, in the second quarter of 2015 compared to the same quarter in 2014 as a result of a $13.6 million increase in FSG, a $25.9 million increase in SSG, a $1.3 million decrease in DSG and a $22.4 million decrease in corporate income.

The increases in net income and earnings per share in the 2015 second quarter as compared to the same period last year were attributable to the improvement in adjusted operating income results. Net income and earnings per share for both quarters reflect interest expense at a blended rate of 3.6% on approximately $1.6 billion of debt and an income tax rate of 34%.

“In the second quarter of 2015, Orbital ATK posted solid results highlighted by strong improvements in year-over-year operating performance in both our Flight Systems Group and Space Systems Group,” said Garrett E. Pierce, the company’s Chief Financial Officer. “As a result of the company’s year-to-date performance and our positive outlook for the second half of 2015, we are increasing our financial guidance for calendar year 2015 revenues, operating margin and earnings per share. Also in the second quarter, we initiated our 2015 capital deployment plan with $25 million in share repurchases and the payment of our first quarterly dividend as a combined company to shareholders.”

Adjusted Segment Results

Orbital ATK conducts its operations in three business units: Flight Systems Group, Defense Systems Group and Space Systems Group. Each of these groups in turn consists of several product-line divisions. Segment operating results include pension expense recoverable under U.S. Government contracts as determined in accordance with government Cost Accounting Standards (CAS). The difference between pension expense recorded in accordance with GAAP Financial Accounting Standards (FAS) and pension costs recorded in accordance with CAS is recorded at the corporate level. The amortization of intangible assets recorded in connection with the merger of Orbital and ATK is also recorded in corporate results. All financial measures discussed below are adjusted financial results.

Flight Systems Group:

 
Second Quarter
 
First Six Months
(in millions)
2015
2014
% Change
 
2015
2014
% Change
Revenues
$
398.1
 
$
367.4
 
8.3
%
 
$
764.1
 
$
751.4
 
1.7
%
Operating Income
58.1
 
44.5
 
30.6
%
 
102.8
 
78.2
 
31.5
%
Operating Margin
14.6
%
12.1
%
 
 
13.4
%
10.4
%
 
 
 
 
 
 
 
 
 
Adjusted results. See reconciliation tables in the "Disclosure of Non-GAAP Financial Measures" section for details.
 

FSG revenues increased $31 million, or 8.3%, and operating income increased $13.6 million, or 30.6%, in the quarter, primarily from improved revenue and profit performance in the Launch Vehicles Division.

Defense Systems Group:

 
Second Quarter
 
First Six Months
(in millions)
2015
2014
% Change
 
2015
2014
% Change
Revenues
$
439.8
 
$
441.2
 
(0.3)
%
 
$
941.8
 
$
962.2
 
(2.1)
%
Operating Income
44.5
 
45.8
 
(2.9)
%
 
96.1
 
86.2
 
11.4
 %
Operating Margin
10.1
%
10.4
%
 
 
10.2
%
9.0
%
 
 
 
 
 
 
 
 
 
Adjusted results. See reconciliation tables in the "Disclosure of Non-GAAP Financial Measures" section for details.
 

DSG revenues decreased $1 million, or 0.3%, and operating income decreased $1.3 million, or 2.9%, in the quarter, primarily resulting from lower sales volume in the Small Caliber Systems Division largely offset by better performance in the Armament Systems Division.

Space Systems:

 
Second Quarter
 
First Six Months
(in millions)
2015
2014
% Change
 
2015
2014
% Change
Revenues
$
310.1
 
$
265.6
 
16.7
%
 
$
597.1
 
$
541.6
 
10.2
%
Operating Income
41.4
 
15.5
 
166.6
%
 
63.6
 
35.3
 
79.9
%
Operating Margin
13.4
%
5.9
%
 
 
10.6
%
6.5
%
 
 
 
 
 
 
 
 
 
Adjusted results. See reconciliation tables in the "Disclosure of Non-GAAP Financial Measures" section for details.
 

SSG revenues increased $44 million, or 16.7%, and operating income increased $25.9 million, or 166.6%, in the quarter, primarily due to higher revenues and margins in the Civil and Defense Satellites Division and the Commercial Satellites Division.

Corporate:

Intercompany revenue eliminations were essentially flat year over year, while corporate income decreased $22.4 million, due primarily to the absence of an insurance collection in the second quarter of 2014 and a lower FAS/CAS pension adjustment for the quarter as compared to the prior year.

Adjusted Free Cash Flow and Capital Allocation Plan

Adjusted free cash flow in the second quarter was negative $5.5 million. For the first six months of the year, adjusted free cash flow was positive $53.2 million, including $132.2 million of cash from continuing operations partially offset by $77.5 million of capital expenditures, and adjustments of $1.5 million (see non-GAAP reconciliation table for details).

The company also reported that it repurchased approximately $25 million worth of its stock in the second quarter as part of a previously announced share repurchase program. The Board of Directors, as announced yesterday, increased its authorization to purchase up to $100 million of company stock, an increase from $75 million approved earlier in the year. The Board also declared yesterday a $0.26 per share dividend for shareholders of record as of September 2, 2015, payable on September 24, 2015. Previously, on June 25, 2015, the company paid a $0.26 per share dividend to shareholders.

Operational Highlights

Orbital ATK’s strong operational execution led to the achievement of numerous milestones in the quarter. These included the following important events:

  • In the Flight Systems Group, Orbital ATK received a positive rating from NASA for recent progress on the Space Launch System’s solid rocket booster program. The company also supported an Atlas V rocket launch by providing important subsystems to United Launch Alliance and conducted three Coyote target missile flights for the U.S. Navy. In addition, an extensive series of certification and acceptance tests were successfully completed on the new first-stage propulsion system for the Antares space launch vehicle. The first ship-set of two engines was received at the company’s Wallops Island integration facilities in July, with all remaining hardware required for the vehicle’s next launch set to arrive at Wallops by mid-August.
  • In the Defense Systems Group, the company delivered more than 5,000 tactical missile rocket motors, warheads and related products, and approximately 300 million rounds of small- and medium-caliber ammunition in the second quarter. Several programs passed important testing milestones in the quarter, including our advanced 120 mm tactical round used to defeat adversary tank armor, which passed final customer testing enabling the program to transition into production. Similarly, the company’s hardened electronic void-sensing fuze also completed rigorous testing and is transitioning into production and the Precision Guidance Kit program achieved 100% success in verification and accuracy testing in the first three production lots.
  • In the Space Systems Group, the Orbital ATK-built SKYM-1 commercial communications satellite was launched, completed in-orbit testing and operational control was turned over to DIRECTV. Also in the second quarter, the company supplied several critical components that performed successfully for NASA’s Low Density Supersonic Decelerator program. Finally, the company-built Dawn spacecraft continued its reconnaissance of Ceres, using its ion propulsion system to descend to its third mapping orbit on its way to eventually reaching an altitude of just 230 miles above the dwarf planet by year end.

Commenting on second quarter 2015 operations, Chief Operating Officer Blake E. Larson said, “Orbital ATK’s operational performance remained solid in the second quarter, with excellent progress toward the introduction of new products, continued focus on achieving our merger-related cost synergy targets and a substantial increase in firm backlog to support future growth.”

New Business Summary

In the second quarter of 2015, Orbital ATK recorded approximately $1,360 million in new firm and option contract bookings. In addition, the company received approximately $810 million in option exercises under existing contracts. As of July 5, 2015, the company’s firm backlog was approximately $8.4 billion and its total backlog (including options, indefinite quantity contract and undefinitized orders) was approximately $12.2 billion.

Adjusted Calendar Year 2015 Financial Guidance

The company provided the following revised financial guidance for calendar year 2015. This guidance is adjusted to include Orbital’s results from January 1 to February 8, 2015 and to exclude transaction, restructuring and certain other expenses. The guidance also includes $50 million of annual non-cash intangible asset amortization expense resulting from the merger with Orbital in 2015.

Guidance
Previous 2015 Guidance
Current 2015 Guidance
Revenues ($ in millions)
$4,350 - $4,450
$4,425 - $4,500
Operating Income Profit Margin
10.25% - 10.75%
10.50% - 11.00%
Diluted Earnings Per Share
$4.40 - $4.60
$4.60 - $4.80
Free Cash Flow ($ in millions)
$225 - $275
$225 - $275

Orbital ATK currently expects interest expense of approximately $60 million and an effective tax rate of approximately 34% for the year, assuming the retroactive extension of the federal research and development tax credit for the full year 2015. Pension funding is expected to be approximately $40 million and capital expenditures are projected at about $150 million for the year. Diluted weighted average shares outstanding are expected to be about 59 million this year.

Conference Call Information

Investors can listen to a live audio webcast of the conference call with analysts that Orbital ATK will host at 9:00 a.m. (EDT) today. To listen to the call, visit the company’s website at www.orbitalatk.com/investors.For those who cannot listen to the live webcast, a telephone recording of the conference call will be available by dialing (855) 859-2056 and using the conference ID 92058746. The recording will be available until August 13, 2015. Orbital ATK has also posted on its website a presentation of second quarter 2015 financial results and operational highlights.

Social Media Disclosure

Orbital ATK communicates material financial information to its investors using press releases, Securities and Exchange Commission filings, its investor relations website, public conference calls and webcasts. From time to time, Orbital ATK communicates information regarding its business and operations, such as new contract awards and mission updates, via Twitter and Facebook. It is possible that the information disclosed through such social media channels could be deemed to be material. Therefore, we encourage investors, the media and others interested in Orbital ATK to follow the information we post on Twitter at https://twitter.com/OrbitalATKand on Facebook at https://facebook.com/OrbitalATK.

About Orbital ATK

Orbital ATK is a global leader in aerospace and defense technologies. The company designs, builds and delivers space, defense and aviation systems for customers around the world, both as a prime contractor and merchant supplier. Its main products include launch vehicles and related propulsion systems; missile products, subsystems and defense electronics; precision weapons, armament systems and ammunition; satellites and associated space components and services; and advanced aerospace structures. Headquartered in Dulles, Virginia, Orbital ATK employs more than 12,000 people in 18 states across the United States and in several international locations. For more information, visit www.orbitalatk.com.

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements in this press release may be “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include the words “forecast,” “expect,” “believe,” “will,” “intend,” “plan,” and words of similar substance. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or performance to differ, including the following: potential difficulties in achieving expected merger synergies and efficiencies within the expected time-frames or at all; the integration of business operations being more difficult, time-consuming or costly than expected; operating costs, customer loss and business disruption that might result from the merger; potential difficulties in retaining key employees; the Company’s ability to maintain and grow its relationship with its customers; reductions or changes in U.S. Government military or NASA spending, including impacts of sequestration under the Budget Control Act of 2011; changes in cost and revenue estimates and/or timing of programs and payments; the potential termination of U.S. Government contracts; the impact of the Antares launch failure; failure to win or retain key contracts; costs of servicing debt, including cash requirements and interest rate fluctuations; the company’s capital deployment strategy, including share repurchases and dividend payments; actual pension asset returns and assumptions regarding future returns, discount rates and service costs; supply, availability, and costs of raw materials and components, including commodity price fluctuations; performance of subcontractors and other third parties; development of key technologies; and the costs and ultimate outcome of contingencies, including litigation, government investigations and other legal proceedings. Additional information concerning these and other factors can be found in Orbital ATK’s filings with the Securities and Exchange Commission. Orbital ATK undertakes no obligation to update any forward-looking statements.

Disclosure of Non-GAAP Financial Measures

We define free cash flow as GAAP (U.S. Generally Accepted Accounting Principles) net cash provided by (used in) operating activities less capital expenditures for property, plant and equipment. Management believes that the company’s presentation of free cash flow is useful because it provides investors with an important perspective on the company’s liquidity, financial flexibility and ability to fund operations and service debt.

The adjusted financial results contained in this press release are non-GAAP financial measures adjusted to give effect to the merger of Orbital and ATK in all periods except the quarter ended July 5, 2015 and adjust for the impact of costs and expenses itemized in the tables below. In addition, the adjusted results reflect estimates of interest expense, the income tax rate and diluted shares that would be in effect for the periods as if the merger of Orbital and ATK and divestiture of ATK’s Sporting Group had occurred on January 1, 2014. Please refer to the reconciliation tables below for more details.

Adjusted measures are provided so investors can more easily compare current and prior period results of the combined companies. The reconciliation of GAAP results to adjusted results are as follows:

Consolidated Results

Quarter Ended July 5, 2015

 
 
 
Operating
 
Operating
(in millions, except per share data)
Revenue
 
Income
 
Margin
As Reported
$
1,130
 
 
$
125.8
 
 
11.1
%
Merger Related (1)
 
 
5.8
 
 
 
As Adjusted
$
1,130
 
 
$
131.6
 
 
11.6
%
 
 
 
 
 
 
Interest Expense as Reported
 
 
$
(15.4)
 
 
 
Taxes (2)
 
 
(39.5)
 
 
 
Adjusted Net Income
 
 
$
76.6
 
 
 
Adjusted EPS (3)
 
 
$
1.28
 
 
 
 
 
 
 
 
 
(1) Includes transaction expenses and the impact of merger related costs.
(2) Calculated using an effective tax rate of 34%.
(3) Calculated using a diluted share count of 59.75 million.

First Six Months 2015

 
 
 
Operating
 
Operating
(in millions, except per share data)
Revenue
 
Income
 
Margin
Continuing Operations, As Reported
$
2,100
 
 
$
124.7
 
 
5.9
%
Orbital Results for Jan. 1 to Feb. 8, 2015
129
 
 
(7.5)
 
 
 
 
$
2,229
 
 
$
117.2
 
 
5.3
%
Transaction Expenses
 
 
30.6
 
 
 
Severance and Accelerated Vesting
 
 
25.2
 
 
 
Intangible Amortization
 
 
(7.0)
 
 
 
Goodwill Impairment
 
 
34.3
 
 
 
Legal Settlement
 
 
25.0
 
 
 
Other (1)
17
 
 
23.0
 
 
 
 
$
2,246
 
 
$
248.3
 
 
11.1
%
 
 
 
 
 
 
Interest Expense (2)
 
 
(29.9)
 
 
 
Taxes (3)
 
 
(74.2)
 
 
 
Adjusted Net Income
 
 
$
144.2
 
 
 
Adjusted EPS (4)
 
 
$
2.41
 
 
 
 
 
 
 
 
 
(1) Includes change in intracompany eliminations, restructuring and other transaction impacts.
(2) Includes interest on $1.6 billion average outstanding debt at a blended interest rate of 3.6%.
(3) Calculated using an effective tax rate of 34%.
(4) Calculated using a diluted share count of 59.75 million.

Quarter Ended June 29, 2014

 
 
 
Operating
 
Operating
(in millions, except per share data)
Revenue
 
Income
 
Margin
Continuing Operations, As Reported
$
714
 
 
$
71.8
 
 
10.1
%
Orbital Results for April 1 to June 30, 2014 (1)
318
 
 
27.2
 
 
 
 
$
1,032
 
 
$
99.0
 
 
9.6
%
Intangible Amortization
 
 
(12.5)
 
 
 
Facility Rationalization
 
 
10.6
 
 
 
Transaction Expenses
 
 
12.2
 
 
 
Pension Close-out
(3)
 
 
(3.1)
 
 
 
Change in Intracompany Eliminations
25
 
 
9.6
 
 
 
As Adjusted
$
1,055
 
 
$
115.8
 
 
11.0
%
 
 
 
 
 
 
Interest Expense (2)
 
 
(16.00)
 
 
 
Taxes (3)
 
 
(33.90)
 
 
 
Adjusted Net Income
 
 
$
65.9
 
 
 
Adjusted EPS (4)
 
 
$
1.10
 
 
 
 
 
 
 
 
 
(1)  Per Orbital Sciences Corporation Form 10-Q for quarter ended June 30, 2014.
(2)  Includes interest on $1.6 billion average outstanding debt at a blended interest rate of 3.6%.
(3)  As adjusted includes effective tax rate of 34%.
(4) Adjusted EPS reflects diluted share count of 59.75 million.

First Six Months 2014

 
 
 
Operating
 
Operating
(in millions, except per share data)
Revenue
 
Income
 
Margin
Continuing Operations, As Reported
$
1,505
 
 
$
149.9
 
 
10.0
%
Orbital Results for April 1 to June 30, 2014 (1)
641
 
 
50.2
 
 
 
 
$
2,146
 
 
$
200.1
 
 
9.3
%
Transaction Expenses
 
 
13.3
 
 
 
Intangible Amortization
 
 
(25.0)
 
 
 
Pension Close-out
(30)
 
 
(30.5)
 
 
 
Environmental Settlement
 
 
5.2
 
 
 
Change in Intracompany Eliminations
93
 
 
16.4
 
 
 
Facility Rationalization
 
 
10.6
 
 
 
As Adjusted
$
2,210
 
 
$
190.1
 
 
8.6
%
 
 
 
 
 
 
Interest Expense (2)
 
 
(30.50)
 
 
 
Taxes (3)
 
 
(54.20)
 
 
 
Adjusted Net Income
 
 
$
105.4
 
 
 
Adjusted EPS (4)
 
 
$
1.76
 
 
 
 
 
 
 
 
 
(1)  Per Orbital Sciences Corporation Form 10-Q for quarter ended June 30, 2014.
(2)  Includes interest on $1.6 billion average outstanding debt at a blended interest rate of 3.6%.
(3)  As adjusted includes effective tax rate of 34%.
(4) Adjusted EPS reflects diluted share count of 59.75 million.

Flight Systems Group

 
Second Quarter 2015
 
First Six Months 2015
(in millions)
Revenue
Operating Income
Operating Margin
 
Revenue
Operating Income
Operating Margin
As Reported
$
398
 
$
58.1
 
14.6
%
 
$
728
 
$
100.8
 
13.9
%
Orbital Results for Jan. 1 to Feb. 8, 2015
 
 
 
 
38
 
2.0
 
 
As Adjusted
$
398
 
$
58.1
 
14.6
%
 
$
764
 
$
102.8
 
13.4
%
 
Second Quarter 2014
 
First Six Months 2014
(in millions)
Revenue
Operating Income
Operating Margin
 
Revenue
Operating Income
Operating Margin
As Reported
$
257
 
$
32.7
 
12.7
%
 
$
504
 
$
54.7
 
10.8
%
Orbital Results (1)
126
 
11.0
 
 
 
263
 
22.7
 
 
As Adjusted
$
383
 
$
43.7
 
11.4
%
 
$
767
 
$
77.4
 
10.1
%
 
 
 
 
 
 
 
 
(1) Per Orbital Sciences Corporation Form 10-Q for quarter ended June 30, 2014

Defense Systems Group

 
Second Quarter 2015
 
First Six Months 2015
(in millions)
Revenue
Operating Income
Operating Margin
 
Revenue
Operating Income
Operating Margin
As Reported
$
439.8
 
$
39.2
 
8.9
%
 
$
935.0
 
$
84.1
 
9.0
%
Transaction-related Impacts
 
5.3
 
 
 
7.0
 
12.0
 
 
As Adjusted
$
439.8
 
$
44.5
 
10.1
%
 
$
942
 
$
96.1
 
10.2
%
 
Second Quarter 2014
 
First Six Months 2014
(in millions)
Revenue
Operating Income
Operating Margin
 
Revenue
Operating Income
Operating Margin
As Reported
$
442
 
$
45.1
 
10.2
%
 
$
990.0
 
$
85.5
 
8.6
%
Pension Close-out and Other Eliminations
(1)
 
0.7
 
 
 
(28.0)
 
0.7
 
 
As Adjusted
$
441
 
$
45.8
 
10.4
%
 
$
962
 
$
86.2
 
9.0
%

Space Systems Group

 
Second Quarter 2015
 
First Six Months 2015
(in millions)
Revenue
Operating Income
Operating Margin
 
Revenue
Operating Income
Operating Margin
As Reported
$
310
 
$
41.4
 
13.4
%
 
$
501
 
$
22.9
 
4.6
%
Orbital Results for Jan. 1 to Feb. 8, 2015
 
 
 
 
92
 
2.3
 
 
As Adjusted
$
310
 
$
41.4
 
13.4
%
 
$
594
 
$
25.3
 
4.3
%
 
Second Quarter 2014
 
First Six Months 2014
(in millions)
Revenue
Operating Income
Operating Margin
 
Revenue
Operating Income
Operating Margin
As Reported
$
76
 
$
5.7
 
7.5
%
 
$
162
 
$
14.3
 
8.8
%
Orbital Results (1)
197
 
10.8
 
 
 
388
 
22.1
 
 
As Adjusted
$
274
 
$
16.5
 
6.0
%
 
$
550
 
$
36.4
 
6.6
%
 
 
 
 
 
 
 
 
Other Eliminations
(8)
 
(1.0)
 
 
 
(8)
 
(1)
 
 
As Adjusted
$
266
 
15.5
 
5.9
%
 
$
542
 
$
35.6
 
6.5
%
 
 
 
 
 
 
 
 
(1) Per Orbital Sciences Corporation Form 10-Q for quarter ended June 30, 2014

Free Cash Flow

(in millions)
2015
 
2015
 
Net Cash Provided by Operating Activities
$
(11.0)
 
 
$
132.2
 
 
Capital Expenditures
(26.2)
 
 
(77.5)
 
 
 
(37.2)
 
 
54.7
 
 
 
 
 
 
 
Adjustments
31.7
 
(1) 
(1.5)
 
(2) 
Adjusted Free Cash Flow
$
(5.5)
 
 
53.2
 
 
 
 
(1) Excludes litigation settlement and merger cash expenditures.
 
 
 
 
(2) Includes Orbital cash flow for pre-merger period; excludes merger, litigation settlement and other nonrecurring cash expenditures and adjusts for the timing of certain significant cash expenditures.
 

Condensed Consolidated Statements of Income GAAP As Reported

 
Second Quarter
(in thousands, except per share data)
2015
 
2014
Sales
$
1,129,957
 
 
$
714,360
 
Cost of sales
875,532
 
 
551,710
 
Gross profit
254,425
 
 
162,650
 
Operating expenses
 
 
 
     Research and development
24,664
 
 
5,163
 
     Selling
32,504
 
 
23,075
 
     General and administrative
71,463
 
 
62,593
 
Income from continuing operations, before interest, income taxes and noncontrolling interest
125,794
 
 
71,819
 
     Interest expense
(15,361)
 
 
(23,391)
 
Income from continuing operations, before income taxes and noncontrolling interest
110,433
 
 
48,428
 
     Income taxes
37,563
 
 
16,586
 
Income from continuing operations, before noncontrolling interest
72,870
 
 
31,842
 
     Less net income attributable to noncontrolling interest
117
 
 
69
 
Income from continuing operations of Orbital ATK, Inc.
72,753
 
 
31,773
 
 
 
 
 
Discontinued operations:
 
 
 
     Income from discontinued operations, before income taxes
 
 
83,736
 
     Income taxes
 
 
29,911
 
     Income from discontinued operations
 
 
53,825
 
Net income attributable to Orbital ATK, Inc.
$
72,753
 
 
$
85,598
 
 
 
 
 
Basic earnings per common share:
 
 
 
     Continuing operations
$
1.23
 
 
$
1.10
 
     Discontinued operations
 
 
1.70
 
     Net income attributable to Orbital ATK, Inc.
$
1.23
 
 
$
2.71
 
     Weighted-average number of common shares outstanding
59,144
 
 
31,640
 
Diluted earnings per common share:
 
 
 
     Continuing operations
$
1.22
 
 
$
0.96
 
     Discontinued operations
 
 
1.63
 
     Net income attributable to Orbital ATK, Inc.
$
1.22
 
 
$
2.59
 
     Weighted-average number of diluted common shares outstanding
59,749
 
 
33,108
 

Condensed Consolidated Balance Sheets GAAP As Reported

(in thousands)
July 5, 2015
 
June 28, 2014
Assets
 
 
 
Current assets:
 
 
 
    Cash
$
49,595
 
 
$
139,253
 
    Net receivables
1,891,338
 
 
1,793,556
 
    Net inventories
182,276
 
 
196,114
 
    Income tax receivables
 
 
31,415
 
    Deferred income taxes
107,466
 
 
107,484
 
    Prepaid expenses and other current assets
130,922
 
 
121,084
 
         Total current assets
2,361,597
 
 
2,388,906
 
Net property, plant and equipment
802,134
 
 
807,057
 
Goodwill
1,875,269
 
 
1,875,269
 
Net intangibles
152,184
 
 
165,207
 
Deferred income taxes
129,220
 
 
140,321
 
Deferred charges and other noncurrent assets
122,509
 
 
127642
 
          Total assets
$
5,442,913
 
 
$
5,504,402
 
 
 
 
 
Liabilities and Equity
 
 
 
Current liabilities:
 
 
 
     Current portion of long-term debt
$
59,997
 
 
$
59,997
 
     Accounts payable
168,827
 
 
158,137
 
     Contract-related accruals
314,642
 
 
357,296
 
     Contract advances and allowances
178,182
 
 
173,198
 
     Accrued compensation
99,458
 
 
135,528
 
     Other current liabilities
167,847
 
 
212,628
 
         Total current liabilities
988,953
 
 
1,096,784
 
Long-term debt
1,513,505
 
 
1,528,504
 
Postretirement and postemployment benefits
72,353
 
 
74,658
 
Accrued pension liability
845,562
 
 
851,001
 
Other noncurrent liabilities
149,797
 
 
165,795
 
          Total liabilities
3,570,170
 
 
3,716,742
 
Total equity
1,872,743
 
 
1,787,660
 
          Total liabilities and equity
$
5,442,913
 
 
$
5,504,402
 
 
 
 
 

Condensed Consolidated Statements of Cash Flows GAAP As Reported

 
Second Quarter
(in thousands)
July 5, 2015
 
June 28, 2014
Operating activities
 
 
 
Continuing operations
 
 
 
    Net income
$
72,870
 
 
$
85,667
 
    Net income from discontinued operations
 
 
53,825
 
    Income from continuing operations
72,870
 
 
31,842
 
    Depreciation
31,955
 
 
17,644
 
    Amortization of intangible assets
13,023
 
 
775
 
    Amortization of debt related costs
1,021
 
 
3,101
 
    Changes in assets and liabilities
(136,056)
 
 
(75,372)
 
    Other
6,166
 
 
(362)
 
Cash used for operating activities of continuing operations
(11,021)
 
 
(22,372)
 
Cash used for operating activities of discontinued operations
 
 
(69,108)
 
Cash used for operating activities
(11,021)
 
 
(91,480)
 
Investing activities
 
 
 
Continuing operations:
 
 
 
    Capital expenditures
(26,180)
 
 
(18,473)
 
     Proceeds from the disposition of property, plant and equipment
6
 
 
$
2,153
 
Cash used for investing activities of continuing operations
(26,174)
 
 
(16,320)
 
Cash used for investing activities of discontinued operations
 
 
(11,013)
 
Cash used for investing activities
(26,174)
 
 
(27,333)
 
Financing activities
 
 
 
Cash used for financing activities
(52,463)
 
 
(15,329)
 
Effect of foreign exchange rate fluctuations on cash
 
 
249
 
Decrease in cash and cash equivalents
(89,658)
 
 
(133,893)
 
Cash and cash equivalents at beginning of period
139,253
 
 
266,632
 
Cash and cash equivalents at end of period
$
49,595
 
 
$
132,739
 

 

Print Press Release

Media Contact
Barron Beneski
(703) 406-5528
barron.beneski@orbitalatk.com
Investor Contact
Barron Beneski
(703) 406-5528
barron.beneski@orbitalatk.com
Media Contact
Barron Beneski
(703) 406-5528
barron.beneski@orbitalatk.com
Investor Contact
Barron Beneski
(703) 406-5528
barron.beneski@orbitalatk.com