Exhibit 99.2
Pro Forma Unaudited Consolidated Financial Statements of GenCorp Inc.
The following pro forma unaudited consolidated financial statements of GenCorp Inc. (GenCorp) are included herein:
1. Pro forma Consolidated Statement of Income for the six months ended May 31, 2004
2. Pro forma Consolidated Statement of Income for the year ended November 30, 2003
3. Pro forma Consolidated Statement of Income for the year ended November 30, 2002
4. Pro forma Consolidated Statement of Income for the year ended November 30, 2001
5. Pro forma Consolidated Balance Sheet as of May 31, 2004
6. Notes to the Pro forma Consolidated Financial Statements
The above referenced unaudited pro forma consolidated financial statements reflect the sale of substantially all of the assets of GenCorp that were used in the GDX Automotive business.
As previously described in Item 2.01, on August 31, 2004, GenCorp completed the sale of substantially all of its assets of the GDX Automotive business to Cerberus Capital Management, L.P.
The proceeds have been or will be used to:
• Extinguish debt
• Support general corporate purposes
On August 30, 2004, GenCorp entered into an amendment, consent and waiver with its lenders under its senior credit facilities that allows the net proceeds from the sale of the GDX Automotive business to be made available to GenCorp and applied as follows: (i) to repay the then outstanding revolving loans of $41 million under the senior credit facilities without a permanent reduction in the revolver commitment, and (ii) to deposit $70 million in a designated account with one of the lenders which shall be used to prepay on a pro rata basis, first, the term loans under the senior credit facilities and second, the revolving loans under the senior credit facilities on or prior to March 1, 2005. Additionally, GenCorp used the proceeds from the sale to extinguish its foreign credit facilities associated with the GDX Automotive business.
GenCorp retained approximately $30 million of the proceeds for general corporate purposes.
The unaudited pro forma consolidated financial statements have been prepared by applying pro forma adjustments to the consolidated financial statements included in GenCorp Inc.’s Annual Report on Form 10-K for the year ended November 30, 2003 and Quarterly Report on Form 10-Q for the six month period ended May 31, 2004. The unaudited pro forma consolidated statements of income reflect the sale of the GDX Automotive business and debt repayment, assuming the transactions had been consummated as of the beginning of the fiscal period presented. The unaudited pro forma consolidated balance sheet reflects the sale of the GDX Automotive business and debt repurchase, assuming the transactions had been consummated as of May 31, 2004.
The pro forma adjustments, as described in the notes to the unaudited pro forma consolidated financial statements, are estimates based on currently available information and certain adjustments that management believes are reasonable. The unaudited pro forma consolidated financial statements are presented for informational purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the sale of the GDX Automotive business had been consummated on, or as of the dates indicated, nor is it necessarily indicative of future operating results or financial position. The unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements and the related management’s discussion and analysis of financial condition and results of operations, which are contained in GenCorp Inc.’s Quarterly Report on Form 10-Q for the six month period ended May 31, 2004 and GenCorp Inc.’s Annual Report on Form 10-K for the year ended November 30, 2003.
GenCorp Inc.
Pro Forma Consolidated Statements of Income
For the Six Months Ended May 31, 2004
(Unaudited)
| | GenCorp
Consolidated | | GDX
Automotive
Business(1) | | Pro Forma
Adjustments | | GenCorp
Pro Forma
Consolidated | |
| | (Dollars in millions, except per share amounts) | |
| | | | | | | | | |
Net Sales | | $ | 260 | | $ | — | | $ | — | | $ | 260 | |
| | | | | | | | | |
Costs and Expenses | | | | | | | | | |
Cost of products sold | | 224 | | — | | — | | 224 | |
Selling, general and administrative | | 28 | | — | | — | | 28 | |
Depreciation and amortization | | 20 | | — | | — | | 20 | |
Interest expense | | 16 | | — | | (1 | )(2) | 15 | |
Other income, net | | (1 | ) | — | | — | | (1 | ) |
| | 287 | | — | | (1 | ) | 286 | |
Income (loss) from continuing operations before income taxes | | (27 | ) | — | | 1 | | (26 | ) |
Income tax provision | | 18 | | — | | — | | 18 | |
| | | | | | | | | |
Income (loss) from continuing operations | | $ | (45 | ) | $ | — | | $ | 1 | | $ | (44 | ) |
| | | | | | | | | |
Income (loss) from continuing operations per share of common stock: | | | | | | | | | |
| | | | | | | | | |
Basic | | $ | (1.03 | ) | $ | — | | $ | 0.02 | | $ | (1.00 | ) |
Diluted | | $ | (1.03 | ) | $ | — | | $ | 0.02 | | $ | (1.00 | ) |
| | | | | | | | | |
Weighted average shares of common stock outstanding | | 44.0 | | — | | — | | 44.0 | |
Weighted average shares of common stock outstanding, assuming dilution | | 44.0 | | — | | — | | 44.0 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
GenCorp Inc.
Pro Forma Consolidated Statements of Income
For the Year Ended November 30, 2003
(Unaudited)
| | GenCorp
Consolidated | | GDX
Automotive
Business(1)(4) | | Pro Forma
Adjustments | | GenCorp
Pro Forma
Consolidated | |
| | (Dollars in millions, except per share amounts) | |
| | | | | | | | | |
Net Sales | | $ | 1,175 | | $ | (769 | ) | $ | — | | $ | 406 | |
| | | | | | | | | |
Costs and Expenses | | | | | | | | | |
Cost of products sold | | 966 | | (667 | ) | — | | 299 | |
Selling, general and administrative | | 87 | | (45 | ) | — | | 42 | |
Depreciation and amortization | | 80 | | (44 | ) | — | | 36 | |
Interest expense | | 26 | | (6 | ) | (3 | )(2) | 17 | |
Other income, net | | (11 | ) | (2 | ) | — | | (13 | ) |
Unusual items, net | | 4 | | — | | — | | 4 | |
| | 1,152 | | (764 | ) | (3 | ) | 385 | |
Income (loss) from continuing operations before income taxes | | 23 | | (5 | ) | 3 | | 21 | |
Income tax (benefit) provision | | — | | — | | 1 | (3) | 1 | |
| | | | | | | | | |
Income (loss) from continuing operations | | $ | 23 | | $ | (5 | ) | $ | 2 | | $ | 20 | |
| | | | | | | | | |
Income (loss) from continuing operations per share of common stock: | | | | | | | | | |
| | | | | | | | | |
Basic | | $ | 0.53 | | $ | (0.12 | ) | $ | 0.05 | | $ | 0.46 | |
Diluted | | $ | 0.53 | | $ | (0.12 | ) | $ | 0.05 | | $ | 0.46 | |
| | | | | | | | | |
Weighted average shares of common stock outstanding | | 43.3 | | — | | — | | 43.3 | |
Weighted average shares of common stock outstanding, assuming dilution | | 43.4 | | — | | — | | 43.4 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
GenCorp Inc.
Pro Forma Consolidated Statements of Income
For the Year Ended November 30, 2002
(Unaudited)
| | GenCorp
Consolidated | | GDX
Automotive
Business(1)(4) | | Pro Forma
Adjustments | | GenCorp
Pro Forma
Consolidated | |
| | (Dollars in millions, except per share amounts) | |
| | | | | | | | | |
Net Sales | | $ | 1,114 | | $ | (785 | ) | $ | — | | $ | 329 | |
| | | | | | | | | |
Costs and Expenses | | | | | | | | | |
Cost of products sold | | 915 | | (672 | ) | — | | 243 | |
Selling, general and administrative | | 54 | | (47 | ) | — | | 7 | |
Depreciation and amortization | | 66 | | (37 | ) | — | | 29 | |
Interest expense | | 16 | | (1 | ) | (3 | )(2) | 12 | |
Other income, net | | 3 | | 2 | | — | | 5 | |
Restructuring charges | | 2 | | (2 | ) | — | | — | |
Unusual items, net | | 14 | | — | | — | | 14 | |
| | 1,070 | | (757 | ) | (3 | ) | 310 | |
Income (loss) from continuing operations before income taxes | | 44 | | (28 | ) | 3 | | 19 | |
Income tax (benefit) provision | | 12 | | (8 | ) | 1 | (3) | 5 | |
| | | | | | | | | |
Income (loss) from continuing operations | | $ | 32 | | $ | (20 | ) | $ | 2 | | $ | 14 | |
| | | | | | | | | |
Income (loss) from continuing operations per share of common stock: | | | | | | | | | |
| | | | | | | | | |
Basic | | $ | 0.75 | | $ | (0.47 | ) | $ | 0.05 | | $ | 0.33 | |
Diluted | | $ | 0.66 | | $ | (0.41 | ) | $ | 0.04 | | $ | 0.29 | |
| | | | | | | | | |
Weighted average shares of common stock outstanding | | 42.8 | | — | | — | | 42.8 | |
Weighted average shares of common stock outstanding, assuming dilution | | 48.6 | | — | | — | | 48.6 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
GenCorp Inc.
Pro Forma Consolidated Statements of Income
For the Year Ended November 30, 2001
(Unaudited)
| | GenCorp
Consolidated
2001 | | GDX
Automotive
Business(1)(4) | | Pro Forma
Adjustments | | GenCorp
Pro Forma
Consolidated | |
| | (Dollars in millions, except per share amounts) | |
| | | | | | | | | |
Net Sales | | $ | 1,462 | | $ | (783 | ) | $ | — | | $ | 679 | |
| | | | | | | | | |
Costs and Expenses | | | | | | | | | |
Cost of products sold | | 1,302 | | (726 | ) | — | | 576 | |
Selling, general and administrative | | 42 | | (30 | ) | — | | 12 | |
Depreciation and amortization | | 76 | | (35 | ) | — | | 41 | |
Interest expense | | 33 | | — | | (3 | )(2) | 30 | |
Other income, net | | (22 | ) | 11 | | — | | (11 | ) |
Restructuring charges | | 40 | | (29 | ) | — | | 11 | |
Unusual items, net | | (199 | ) | — | | — | | (199 | ) |
| | 1,272 | | (809 | ) | (3 | ) | 460 | |
Income (loss) from continuing operations
before income taxes | | 190 | | 26 | | 3 | | 219 | |
Income tax (benefit) provision | | 60 | | 9 | | 1 | (3) | 70 | |
| | | | | | | | | |
Income (loss) from continuing operations | | $ | 130 | | $ | 17 | | $ | 2 | | $ | 149 | |
| | | | | | | | | |
Income (loss) from continuing operations per share of common stock: | | | | | | | | | |
| | | | | | | | | |
Basic | | $ | 3.68 | | $ | 0.40 | | $ | 0.05 | | $ | 3.53 | |
Diluted | | $ | 3.05 | | $ | 0.40 | | $ | 0.05 | | $ | 3.50 | |
| | | | | | | | | |
Weighted average shares of common stock outstanding | | 42.2 | | — | | — | | 42.2 | |
Weighted average shares of common stock outstanding, assuming dilution | | 42.6 | | — | | — | | 42.6 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
GENCORP INC.
Pro Forma Condensed Consolidated Balance Sheet
As of May 31, 2004
(Unaudited)
| | GenCorp
Consolidated | | GDX
Automotive
Business(1)(5) | | Pro Forma
Adjustments(6) | | GenCorp
Pro Forma
Consolidated | |
| | (Dollars in millions) | |
| | | | | | | | | |
ASSETS | | | | | | | | | |
Current Assets | | | | | | | | | |
Cash and cash equivalents | | $ | 51 | | $ | 57 | | $ | (26 | ) | $ | 82 | |
Restricted cash | | — | | 70 | | — | | 70 | |
Accounts receivable | | 91 | | — | | — | | 91 | |
Inventories, net | | 197 | | — | | — | | 197 | |
Recoverable from the U.S. government and other third parties for environmental remediation costs | | 32 | | — | | — | | 32 | |
Current deferred income taxes | | — | | — | | — | | — | |
Prepaid expenses and other | | 8 | | — | | — | | 8 | |
Assets of discontinued operations | | 319 | | (308 | ) | — | | 11 | |
Total Current Assets | | 698 | | 181 | | (26 | ) | 491 | |
Noncurrent Assets | | | | | | | | | |
Property, plant and equipment, net | | 211 | | — | | — | | 211 | |
Recoverable from the U.S. government and other third parties for environmental remediation costs | | 176 | | — | | — | | 176 | |
Deferred income taxes | | — | | — | | — | | — | |
Prepaid pension asset | | 302 | | — | | — | | 302 | |
Goodwill | | 103 | | — | | — | | 103 | |
Other noncurrent assets, net | | 107 | | — | | — | | 107 | |
Total Noncurrent Assets | | 899 | | — | | — | | 899 | |
Total Assets | | $ | 1,597 | | $ | (181 | ) | $ | (26 | ) | $ | 1,390 | |
| | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | |
Current Liabilities | | | | | | | | | |
Short-term borrowings and current portion of long-term debt | | $ | 28 | | $ | — | | $ | (17 | ) | $ | 11 | |
Accounts payable | | 29 | | — | | — | | 29 | |
Reserves for environmental remediation | | 47 | | — | | — | | 47 | |
Income taxes payable | | 41 | | — | | — | | 41 | |
Other current liabilities | | 158 | | — | | — | | 158 | |
Liabilities of discontinued operations | | 154 | | (148 | ) | — | | 6 | |
Total Current Liabilities | | 457 | | (148 | ) | (17 | ) | 292 | |
Noncurrent Liabilities | | | | | | | | | |
Debt | | 567 | | — | | (9 | ) | 558 | |
Reserves for environmental remediation | | 250 | | — | | — | | 250 | |
Postretirement benefits other than pensions | | 148 | | — | | — | | 148 | |
Other noncurrent liabilities | | 76 | | — | | — | | 76 | |
Total Noncurrent Liabilities | | 1,041 | | — | | (9 | ) | 1,032 | |
Total Liabilities | | 1,498 | | (148 | ) | (26 | ) | 1,324 | |
Commitments and Contingent Liabilities | | | | | | | | | |
Shareholders’ Equity | | | | | | | | | |
Preference stock, | | — | | — | | — | | — | |
Common stock, | | 4 | | — | | — | | 4 | |
Other capital | | 25 | | — | | — | | 25 | |
Retained earnings | | 39 | | 261 | | — | | 39 | |
| | | | (261 | ) | | | | |
Accumulated other comprehensive income, net of income taxes | | 31 | | (33 | ) | — | | (2 | ) |
Total Shareholders’ Equity | | 99 | | (33 | ) | — | | 66 | |
Total Liabilities and Shareholders’ Equity | | $ | 1,597 | | $ | (181 | ) | $ | (26 | ) | $ | 1,390 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
GenCorp Inc.
Notes to the Unaudited Pro Forma Consolidated Financial Statements
(in millions)
(1) In accordance with Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the GDX Automotive business was presented as a Discontinued Operation effective May 31, 2004 and its results were included in Income from Discontinued Operations for the six month period ended May 31, 2004 and its assets and liabilities were separately classified as relating to discontinued operations. GDX Automotive business results were included in Income from Continuing Operations for the years ended November 30, 2003, 2002 and 2001 because the SFAS 144 criteria requiring discontinued operations presentation had not been met during these periods.
(2) Reflects estimated decrease in interest expense resulting from repayment of debt utilizing net cash proceeds from the sale of the GDX Automotive business assuming the repayment of GenCorp's revolving credit facility and foreign credit facilities.
(3) Reflects income tax effect of pro forma adjustments at a 35% tax rate.
(4) Reflects the elimination of results of the GDX Automotive business sold on August 31, 2004.
(5) Reflects the elimination of assets and liabilities of the GDX Automotive business, including the resulting cumulative loss on the sale (subject to post-closing adjustments) as follows:
Net proceeds from the sale of the GDX Automotive business | | $ | 127 | |
Net assets of the GDX Automotive business and estimated loss on disposition | | (421 | ) |
Cumulative Translation adjustment | | 33 | |
Cumulative after tax loss | | 261 | |
losses previously reported | | (261 | ) |
Net after tax loss at close of sale | | $ | — | |
(6) Reflects the extinguishment of the foreign credit facilities.
