The Complaint alleges that throughout the Class Period, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) Orbital lacked effective control over financial reporting; (ii) as a result, the Company failed to record an anticipated loss on the Lake City Contract after the loss became evident in 2015, as required by generally accepted accounting principles; and (iii) as a result of the foregoing, Orbital’s public statements were materially false and misleading at all relevant time.
On August 10, 2016, pre-market, Orbital announced that the Company would miss its Securities and Exchange Commission Form 10-Q filing deadline for its most recent quarter and that “the Company’s previously issued financial statements for the fiscal year ended March 31, 2015 (“fiscal 2015”), the nine-month transition period ended December 31, 2015 (“2015 transition period”), the quarters in fiscal 2015 and the 2015 transition period, and the quarter ended April 3, 2016 … should no longer be relied upon” as a result of misstatements relating primarily to the Contract. The Company advised investors that “[a]fter considering the misstatements … the Company believes that the Contract will result in a net loss over its 10-year term.” The Company further stated these issues “indicate the existence of one or more material weaknesses in its internal control over financial reporting.”
On this news, Orbital’s share price fell $17.98, or 20.25%, to close at $70.79 on August 10, 2016.
The Complaint also refers to the agreed upon merger on February 9, 2015 between Alliant Techsystems Inc. (“Alliant”) and Orbital Sciences Corporation (“Orbital Sciences”), pursuant to which Orbital Sciences Shareholders would receive 0.449 shares of Alliant stock for each share of Orbital Sciences stock held. Immediately following the merger, Alliant would change its name to Orbital ATK, Inc. It is alleged that the Joint Proxy Statement/Prospectus filed with the United States Securities and Exchange Commission on December 71, 2014 used to obtain approval of the merger was materially false and misleading. Specifically, it is alleged that the statement (i) included materially misstated financial statements for Alliant; (ii) omitted to disclose the massive loss from the Lake City Contract; (iii) represented Alliant’s compliance with GAAP and the effectiveness of Alliant’s internal controls, and (iv) included statements that the deal was fair to and in the best interests of Orbital Sciences shareholders. The false and misleading statements caused Alliant to be overvalued and impacted the Exchange Ratio to the determinant of Orbital Sciences shareholders, depriving them of their right to a fully informed shareholder vote and inducing them to vote their shares and accept inadequate consideration.
On behalf of all persons who (i) held stock in Orbital Sciences Corporation (“Orbital Sciences”) as of December 16, 2014 and exchanged shares of Orbital Sciences stock for shares of Orbital ATK, Inc. (“Orbital ATK” or the “Company”) common stock on or around February 9, 2015 in connection with the merger between Alliant Techsystems Inc. and Orbital Sciences; and/or (ii) purchased Orbital ATK common stock between May 28, 2015 and August 9, 2016.