Exhibit 99.1
GenCorp Reports 2004 1st Quarter Results
SACRAMENTO, Calif., March 31 /PRNewswire-FirstCall/ -- GenCorp Inc.
(NYSE: GY) today reported a first quarter net loss of $19 million ($0.43 per
share) compared to net income of $3 million ($0.07 per share) for the first
quarter 2003. The decrease in earnings from 2003 was driven by a $14 million
increase in non-cash pretax expense from employee retirement benefit plans and
a $16 million decline in GDX Automotive pre-tax operating results, excluding
employee retirement benefit plan expense. Sales for the first quarter 2004
were $308 million, compared to $271 million in 2003. The increase reflects
sales from the recently acquired propulsion business of Atlantic Research
Corporation (ARC).
"At the Aerospace & Defense business, we continue to see steady
performance improvement and increasing business opportunities as we integrate
the ARC business. We also continue to move forward in our planning to monetize
our real estate assets. The Fine Chemicals business was down in the first
quarter, but we expect this business to be profitable in subsequent quarters,"
said Terry L. Hall, chairman of the Board, president and CEO.
"GDX Automotive continues to struggle with OEM pricing pressures, new
product start-up costs, steel and petroleum-based material cost increases and
volume declines in certain platforms that are challenging in the short term.
However, we are progressing with our previously announced plan to reduce
capacity in Europe, which is one of several ongoing initiatives to reduce our
cost structure and improve operations," he stated.
"The senior management team and I are continuing to evaluate options to
enhance the value of our overall business portfolio," concluded Mr. Hall.
Operations Review
Aerospace and Defense Segment
First quarter 2004 sales were $113 million compared to $61 million in the
first quarter 2003. The increase primarily reflects $39 million in sales from
the ARC business and increased deliveries on the F/A-22 Raptor program.
First quarter segment performance in 2004 was $4 million compared to
$8 million in 2003. Excluding employee retirement benefit plan income or
expense, segment performance was $11 million in the first quarter 2004
compared to $7 million in the first quarter 2003. The increase reflects the
impact of higher sales and changes in program mix.
During the first quarter 2004, Aerojet was selected for contract award by
the Northrop Grumman and Raytheon team to provide the kill vehicle Liquid
Divert and Attitude Control System in support of the National Missile Defense
Kinetic Energy Interceptor program. In addition, Aerojet's recently acquired
ARC business was named by Raytheon to be the propulsion supplier for the
Variable Flow Ducted Rocket Flight Vehicle Concepts program.
As of February 29, 2004, Aerojet's contract backlog was $803 million
compared to $830 million as of November 30, 2003. Funded backlog, which
includes only the amount of those contracts for which money has been directly
authorized by the U.S. Congress, or for which a firm purchase order has been
received by a commercial customer, was approximately $416 million as of
February 29, 2004, compared to $425 million as of November 30, 2003.
Real Estate Segment
There were no sales of real estate assets in the first quarter of 2004 or
2003. Segment performance was $1 million in both periods. During the first
quarter 2004, we announced plans for a 1,390 acre master planned community
called Easton and filed applications for zoning with the County of Sacramento.
We expect the application process will take up to three years and that
construction could begin in 2007.
Fine Chemicals Segment
First quarter 2004 sales were $13 million compared to $17 million for the
first quarter 2003. The decrease reflects the timing of sales of certain
products currently under long-term manufacturing agreements.
First quarter segment performance for 2004 was break-even compared to
$2 million in the prior year period. The decrease reflects lower sales
volumes, changes in product mix and a delay caused by a late receipt of
customer furnished material.
As of February 29, 2004, Fine Chemicals' backlog was $49 million compared
to $57 million as of November 30, 2003. These amounts represent the unfilled
sales value of firm customer purchase orders.
GDX Automotive Segment
First quarter 2004 sales were $184 million compared to $191 million in
2003. The decrease reflects lower volumes and increased pricing concessions to
major customers, offset in part by foreign currency rates.
First quarter segment performance for 2004 was a loss of $14 million
compared to $5 million of income in the prior year. Excluding the expense from
employee retirement benefit plans, segment performance decreased by
$16 million compared to the first quarter 2003. The decline in segment
performance reflects lower volumes on certain platforms, new product start-up
costs, higher material costs, foreign currency rates and the impact of pricing
concessions, partially offset by lower production costs.
Other Information
Interest expense increased to $10 million in the first quarter 2004 from
$5 million in 2003 due to higher debt levels and higher average interest
rates. Additional debt includes amounts incurred to finance the ARC
acquisition. Total debt increased from $538 million as of November 30, 2003 to
$606 million as of February 29, 2004, and cash increased from $64 million as
of November 30, 2003 to $69 million as of February 29, 2004. The increase in
net debt reflects increased working capital needs in the first quarter for GDX
Automotive, Aerojet and Fine Chemicals, partially offset by the full payment
of an outstanding receivable in the amount of $20 million. Increased working
capital needs are driven primarily by tooling expenditures at GDX Automotive,
certain program requirements at Aerojet, production timing at Fine Chemicals,
and payment of certain current liabilities.
As of February 29, 2004, the Company had availability under its credit
facilities of $90 million.
Corporate and other expenses increased in the first quarter 2004 to
$8 million compared to $5 million in the first quarter 2003. Corporate and
other expenses in 2003 included $3 million in foreign currency exchange rate
gains, compared to nominal amounts in 2004. Corporate and other expenses
included amortization of debt financing costs of $2 million in the first
quarter 2004 and $1 million in the first quarter 2003.
Forward-Looking Statements
This earnings release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements in this release and in subsequent discussions with the Company's
management, other than historical information, may be deemed to be
forward-looking statements. These statements present (without limitation) the
expectations, beliefs, plans and objectives of management and future financial
performance and assumptions underlying, or judgments concerning, the matters
discussed in such statements. The words "believe," "estimate," "anticipate,"
"project" and "expect," and similar expressions, are intended to identify
forward-looking statements. Forward-looking statements involve certain risks,
estimates, assumptions and uncertainties, including with respect to future
sales and activity levels, cash flows, contract performance, the outcome of
litigation and contingencies, environmental remediation and anticipated costs
of capital. A variety of factors could cause actual results or outcomes to
differ materially from those expected and expressed in the Company's forward-
looking statements. Some important risk factors that could cause actual
results or outcomes to differ from those expressed in the forward-looking
statements include, but are not limited to, the following:
-- legal and regulatory developments that may have an adverse impact
on the Company or its segments. For example: 1) the Company's
operations and financial condition could be adversely impacted if
the judgment order in the amount of approximately $29 million
entered November 21, 2002 against GenCorp in GenCorp Inc. v. Olin
Corporation (U.S. District Court for the Northern District of Ohio,
Eastern Division), is upheld on appeal and the offsets to which the
Company believes it is entitled are not realized; 2) restrictions on
real estate development that could delay the Company's proposed real
estate development activities; 3) a change in toxic tort or asbestos
litigation trends that is adverse to the Company; or 4) changes in
international tax laws or currency controls;
-- changes in Company-wide or business segment strategies, which may
result in changes in the types or mix of business in which the
Company is involved or chooses to invest;
-- changes in U.S., global or regional economic conditions, which may
affect, among other things, 1) customer funding for the purchase of
aerospace and defense products, which may impact the Aerospace and
Defense segment's business base and, as a result, impact its ability
to recover environmental costs; 2) consumer spending on new
vehicles, which could reduce demand for products from the Company's
GDX Automotive segment; 3) healthcare spending and demand for the
pharmaceutical ingredients produced by the Fine Chemicals segment;
4) the Company's ability to successfully complete its real estate
activities; and 5) the funded status and costs related to the
Company's employee retirement benefit plans;
-- risks associated with the Company's Aerospace and Defense segment's
role as a defense contractor including: 1) the right of the U.S.
government to terminate any contract for convenience; 2)
modification or termination of U.S. government contracts due to lack
of congressional funding; and 3) the lack of assurance that bids for
new programs will be successful, or that customers will exercise
contract options or seek or follow-on contracts with the Company due
to the competitive marketplace in which the Company competes;
-- changes in U.S. and global financial and equity markets, including
market disruptions and significant currency or interest rate
fluctuations, that may impede the Company's access to, or increase
the cost of, external financing for its operations and investments
or materially affect the Company's results of operations and cash
flows;
-- increased competitive pressures, both domestically and
internationally, which may, among other things, affect the
performance of the Company's businesses; for example, the automotive
industry is increasingly outsourcing the production of key vehicle
sub-assemblies and, accordingly, industry suppliers, such as the
Company's GDX Automotive segment, will need to demonstrate the
ability to be a reliable supplier of integrated components to
maintain and expand its market share;
-- labor disputes, which may lead to increased costs or disruption of
operations in the Company's Aerospace and Defense, GDX Automotive
and Fine Chemicals segments;
-- changes in product mix, which may affect automotive vehicle
preferences and demand for the Company's GDX Automotive segment's
products;
-- technological developments or patent infringement claims; which may
impact the use of critical technologies in the Company's Aerospace
and Defense, GDX and Fine Chemicals segments leading to reduced
sales or increased costs; and
-- an unexpected adverse result or required cash outlay in the toxic
tort cases, environmental proceedings or other litigation, or change
in proceedings or investigations pending against the Company.
This list of factors that may affect future performance and the accuracy
of forward-looking statements is illustrative, but by no means exhaustive.
These and other factors are described in more detail in the Company's Annual
Report on Form 10-K for the year ended November 30, 2003 and its subsequent
filings with the U.S. Securities and Exchange Commission. Additional risks may
be described from time-to-time in future filings with the U.S. Securities and
Exchange Commission. Accordingly, all forward-looking statements should be
evaluated with the understanding of their inherent uncertainty. All such risk
factors are difficult to predict, contain material uncertainties that may
affect actual results and may be beyond the Company's control.
GenCorp is a technology-based manufacturer with positions in the aerospace
and defense, pharmaceutical fine chemicals, real estate and automotive
industries. Additional information about GenCorp can be obtained by visiting
the Company's web site at www.GenCorp.com.
Consolidated Statements of Income
GenCorp Inc.
Three Months Ended
February 29, February 28,
(Dollars in millions, except per-share data) 2004 2003
(Unaudited)
Net Sales $308 $271
Costs and Expenses:
Cost of products sold 280 228
Selling, general and administrative 26 18
Depreciation and amortization 22 18
Interest expense 10 5
Other expense (income), net 1 (3)
Income (Loss) Before Income Taxes (31) 5
Income tax benefit (provision) 12 (2)
Net Income (Loss) $(19) $3
Basic earnings (loss) per common share: $(0.43) $0.07
Diluted earnings (loss) per common share: $(0.43) $0.07
Shares used for calculation of earnings
(loss) per share (in millions)
Basic 43.9 43.0
Diluted 43.9 43.1
Capital expenditures $14 $9
Business Segment Information
GenCorp Inc.
Three Months Ended
February 29, February 28,
(Dollars in millions) 2004 2003
(Unaudited)
Net Sales:
Aerospace and Defense $113 $61
Real Estate 1 2
Fine Chemicals 13 17
GDX Automotive 184 191
Intersegment sales elimination (3) --
Total $308 $271
Segment Performance:
Aerospace and Defense $11 $7
Retirement benefit plan (expense) income (7) 1
Aerospace and Defense Total 4 8
Gross margin on Real Estate asset sales -- --
Leasing and other activities and expenses 1 1
Real Estate Total 1 1
Fine Chemicals -- 2
Retirement benefit plan expense -- --
Fine Chemicals Total -- 2
GDX Automotive (10) 6
Retirement benefit plan expense (4) (1)
GDX Automotive Total (14) 5
Total Segment Performance (9) 16
Interest expense (10) (5)
Corporate retirement benefit plan expense (4) (1)
Corporate and other expenses (8) (5)
Income (Loss) Before Income Taxes (31) 5
Income tax benefit (provision) 12 (2)
Net Income (Loss) $(19) $3
Segment performance represents net sales from continuing operations less
applicable costs, expenses, retirement benefit plan income (expense), and
provisions for restructuring and unusual items relating to operations. Segment
performance excludes corporate retirement benefit plan expense, corporate
income and expenses, provisions for unusual items not related to the
operations, interest expense, income taxes and minority interest.
Condensed Consolidated Balance Sheets
GenCorp Inc.
February 29, November 30,
(Dollars in millions) 2004 2003
(Unaudited)
Assets
Cash and equivalents $69 $64
Accounts receivable 177 176
Inventories, net 230 211
Recoverable from U.S. government and
other third parties for
environmental remediation costs 37 37
Current deferred income tax 14 7
Prepaid expenses and other 19 21
Total Current Assets 546 516
Property, plant and equipment, net 516 516
Recoverable from U.S. government and
other third parties for
environmental remediation costs 178 183
Deferred income taxes 1 10
Prepaid pension asset 334 345
Goodwill, net 201 197
Other noncurrent assets, net 127 140
$1,903 $1,907
Liabilities and Shareholders' Equity
Short-term borrowings and
current portion of long-term debt $30 $52
Accounts payable 100 114
Reserves for environmental remediation 53 53
Income taxes payable 5 23
Other current liabilities 215 245
Total Current Liabilities 403 487
Long-term debt, net of current portion 576 486
Reserves for environmental remediation 255 262
Postretirement benefits other than pensions 164 162
Other noncurrent liabilities 86 82
Total shareholders' equity 419 428
$1,903 $1,907
SOURCE GenCorp Inc.
-0- 03/31/2004
/CONTACT: investors, Yasmin Seyal, senior vice president & chief
financial officer, +1-916-351-8585, or press, Linda Beech Cutler, vice
president, Corporate Communications, +1-916-351-8650, both of GenCorp Inc./
/Web site: http://www.gencorp.com/
(GY)
CO: GenCorp Inc.
ST: California
IN: ARO CPR CHM REA
SU: ERN