EXHIBIT 99.2
[GENCORP LOGO] Rosemary B. Younts
Sr. VP, Communications
(916) 351-8650
(916) 804-7820
News Release
YASMIN SEYAL
Sr. VP, Finance
(916) 351-8585
FOR IMMEDIATE RELEASE
GenCorp Reports 2001 Earnings Per Diluted Share of $3 and
Restates Prior Quarters in 2001 and Fiscal Years 2000 and 1999
SACRAMENTO, CALIFORNIA, March 6, 2002 - GenCorp today announced fourth quarter
results and full year 2001 earnings per diluted share of $3.00. The Company also
announced that it is restating financial results for the first nine months of
2001, ended August 31, and the years 2000 and 1999, resulting from the
completion of a review of certain accounting issues at its GDX Automotive
segment. Financial results and comparisons reflect restated results. All
earnings per share amounts are tax-effected.
Fourth Quarter - Full Year 2001 Results
For fiscal year 2001, income from continuing operations was $128 million or
$3.00 per diluted share compared to $52 million or $1.23 per diluted share for
fiscal year 2000. Income in 2001 included a pre-tax gain on the sale of the
Company's EIS business of $206 million ($2.95 per diluted share); a write-down
and accrual totaling $48 million ($0.69 per diluted share) related to Aerojet's
participation as a propulsion supplier to a commercial launch vehicle
program; restructuring charges totaling $40 million ($0.57 per diluted share);
and a $9 million expense representing the portion of a tax refund that will be
repaid to the Company's defense customer ($0.13 per diluted share). In total,
these non-recurring items and other smaller non-recurring items described later
in this release, provided $1.58 to earnings per share in 2001.
Full year segment operating income, excluding unusual items and restructuring
charges, was $113 million, versus $119 million in 2000. The Company's effective
tax rate was 32% and was positively impacted by several settlements resulting in
tax refunds throughout 2001. This compares to an effective rate of 40% for FY
2000. Revenues for fiscal year 2001 were $1.49 billion compared to $1.05 billion
in 2000, a 42 percent increase.
Company revenues for the fourth quarter 2001 increased to $367 million from $277
million in the comparable 2000 quarter. Excluding unusual items and
restructuring charges, segment operating income in the fourth quarter 2001 was
$43 million compared to $29 million for the fourth quarter 2000. Earnings per
share for the fourth quarter 2001 were $2.47 compared to earnings per share of
$0.14 for fourth quarter 2000. Excluding the EIS gain, launch vehicle
program write-down, and fourth quarter restructuring charges, earnings for the
fourth quarter of 2001 were $0.51 per diluted share. Fourth quarter 2000
earnings included an $8 million pre-tax loss on a foreign currency option
contract purchased to hedge against market fluctuations in anticipation of the
Company's December 2000 acquisition of the Draftex International Car Body Seals
Division of the Laird Group Public Limited Company.
"While we are disappointed with the performance of our GDX Automotive unit and
our Aerojet Fine Chemicals business, the Company has made progress toward
achieving improvements in the cost structure of these two businesses," said
Chairman and CEO Bob Wolfe. "Three plants were closed and 1,300 positions
eliminated within the GDX Automotive segment. At Aerojet Fine Chemicals, the
workforce was reduced by approximately 40 percent. At the Corporate
Headquarters, 18 employees took advantage of an early retirement program,
prospectively reducing the Company's cost structure," he said.
"We are also much better positioned as a result of actions during the year to
grow our defense business and to realize significant value from our real estate
holdings," Wolfe added. "Our defense business, Aerojet, excluding EIS, received
over 50 new contract awards in 2001, 15 of which were competitive solicitations,
and should enjoy double digit growth in both revenues and operating income in
2002. In terms of our Sacramento land holdings, the Department of Justice has
filed a motion in Federal District Court to remove 2,600 acres of property from
the Superfund site designation. This motion is set for a hearing by the Court on
April 8, 2002."
Restated Financial Results
Following the evaluation of certain accounting issues, announced January 22,
2002, the Company is restating financial information for the first nine months
of 2001, ended August 31, and fiscal years 2000 and 1999. The effect of the
revisions on net income for the nine months ended August 31, 2001, was $3
million and decreased diluted earnings per share from $0.59 to $0.52. For the
year ended November 30, 2000, income from continuing operations and diluted
earnings per share from continuing operations are being restated respectively
from $55 million and $1.31 to $52 million and $1.23. For the year ended November
30, 1999, income from continuing operations and diluted earnings per share are
being restated respectively from $46 million and $1.09 to $45 million and $1.07.
The revisions relate primarily to the correction of errors in the accounting for
customer-owned tooling, inventory and the recognition of liabilities at one of
the Company's GDX Automotive manufacturing plants.
"Addressing this issue immediately in a proactive and meticulous manner was the
right and only course of action for the Company," Wolfe said. "The review was
comprehensive and quickly resolved, involving primarily one GDX Automotive plant
in North America. I am confident that this disappointing event is behind us."
Fourth Quarter, Full Year 2001 Highlights
"The major focus during the year for GenCorp was on implementing dramatic cost
and structural changes across the Company to improve the performance and growth
positions of our businesses," Wolfe added. "A number of highlights stand out:
- - A restructuring of the corporate headquarters via a Voluntary Enhanced
Retirement Program;
- - A downsizing in workforce at Aerojet Fine Chemicals and the purchase back
of 40 percent equity in the business from NextPharma Technologies USA Inc.
- - The restructuring of GDX Automotive to integrate Draftex, which resulted in
the elimination of approximately 1,300 positions, the closure of three
plants and the consolidation of other facilities.
- - The sale of the Aerojet Electronic and Information Systems business to
Northrop Grumman for $315 million which enables Aerojet management to focus
singly on growth of the Sacramento defense based operations; and
- - Federal and state regulatory approval of a carve out agreement that, when
approved by U.S. Federal District Court, expected as early as April 2002,
will allow us to set in motion our real estate strategy to begin monitizing
the tremendous value of our Sacramento land holdings."
GDX Automotive
Net sales for GDX Automotive in the fourth quarter of 2001 totaled $210 million,
a 63% increase over net sales of $129 million for fourth quarter 2000, primarily
the result of revenues gained through the Draftex acquisition. GDX Automotive
results reflect an operating loss of $3 million for the quarter. The focus for
GDX Automotive remained on consolidation efforts during the quarter, directed at
cost reduction actions, productivity improvements and realization of cost saving
synergies from the Draftex acquisition. In November, the President of GDX
Automotive left the Company and was replaced on an interim basis by Terry Hall,
the Company's Chief Operating Officer.
Aerospace and Defense
Net sales for the Company's Aerospace and Defense segment for fourth quarter
2001 were $129 million, an 10% decrease from net sales of $143 million for
fourth quarter 2000. The anticipated decrease in revenue is primarily the result
of the sale of Aerojet's Electronics and Information Systems (EIS) business unit
to Northrop Grumman in October 2001. Revenues for the Company's real estate
business unit increased $27 million quarter-over-quarter, primarily the result
of the sale of approximately 1,100 acres in Sacramento for $28 million. The
November 2001 sale resulted in a pre-tax gain of approximately $23 million. With
the real estate sale, the segment's operating profit for the quarter increased
substantially to $45 million versus $23 million for the comparative quarter in
2000. During the quarter, Aerojet booked contract awards totaling $37 million
and won an award for $13 million to develop a new liquid booster engine for U.S.
Army target vehicles. Contract backlog as of November 30, 2001 totaled $603
million. Financial results for Aerojet Fine Chemicals have been excluded from
Aerospace and Defense reporting and are now being reported as a separate
business segment.
Fine Chemicals
Beginning with this earnings release and prospectively, financial results for
Aerojet Fine Chemicals will be reported as a separate business segment. Revenues
for Aerojet Fine Chemicals (AFC) increased to $28 million, up substantially from
revenues of $5 million recorded in fourth quarter 2000. Fiscal year 2001
revenues were more than $38 million, an increase of 36% over fiscal 2000
revenues of $28 million. During fiscal year 2001, AFC incurred substantial start
up costs relating to the launch of four new chemical compounds. In the fourth
quarter, all four of these new compounds were in production. The majority of
AFC's 2001 revenues were recognized in the fourth quarter, reflecting both the
final completion of partially manufactured inventory in prior periods and
current quarter production. Operating profit for fourth quarter 2001 totaled $1
million, reflecting an improvement from a fourth quarter 2000 operating loss of
$7 million. Restructuring plans completed in November 2001 and additional cost
reduction activities are expected to align resources with business volume for
improved financial performance going forward.
In December 2001, the Company repurchased the 40% minority interest in Aerojet
Fine Chemicals held by NextPharma Technologies USA Inc. As part of this
transaction, other agreements between the two companies were terminated,
including a comprehensive sale and marketing agreement. With the termination of
these agreements, Aerojet Fine Chemicals reassumed responsibility for sales,
marketing and customer interface.
Unusual Items and Restructuring Charges
Unusual items reflected in the Company's results of operations for the year
ended November 30, 2001 include the EIS gain of $206 million and the launch
vehicle write-down of $48 million recognized during the fourth quarter of 2001,
a $9 million expense representing the portion of tax settlements received by the
Company that will be repaid to the Company's defense customers (the benefit of
the tax refunds of $13 million was included in the Company's tax provision), and
a gain of $2 million related to an insurance settlement related to a
discontinued operation.
Restructuring charges during 2001 included $29 million ($10 million in the
fourth quarter) related to the restructuring and consolidation of the Company's
GDX Automotive segment. The fourth quarter increase primarily reflects a change
in estimate for the anticipated disposition of idled facilities and assets in
Marion, Indiana and an increase in estimated benefit costs resulting from the
closure. Also during 2001, the Company offered certain eligible employees a
Voluntary Enhanced Retirement Program (VERP), which resulted in a pre-tax
restructuring charge of $10 million. Additionally, the Company implemented a
restructuring program at AFC during the fourth quarter of 2001 which included
the elimination of approximately 50 employee positions and resulted in a charge
to expense of approximately $1 million.
Other
As of November 30, 2001, the Company's total debt was $214 million versus $481
million as of August 31, 2001. The decrease results primarily from the use of
proceeds from the sale of the EIS business unit to repay outstanding debt.
Interest expense decreased to $5 million for fourth quarter 2001 compared to $10
million for third quarter 2001, reflecting both a lower level of debt and a
lower effective interest rate.
Current Outlook
Excluding any unusual items, the Company expects earnings per share for fiscal
year 2002 to be in the range of $0.90 to $1.00. The effective tax rate for 2002
is expected to be 39%. The Company expects to provide additional guidance when
it announces first quarter earnings in late-March.
Although the Company's forecasts are subject to numerous variables and
uncertainties, the primary risks associated with achieving forecasted results
include: (i) automotive production rates; (ii) the timing of potential land
sales; (iii) the automotive segment's ability to achieve the anticipated
benefits resulting from restructuring actions taken during fiscal year 2001; and
(iv) the ability of Aerojet Fine Chemicals to achieve targeted product delivery
levels.
FORWARD-LOOKING STATEMENTS
This earnings release contains forward-looking statements as defined by 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. A
variety of factors, which are listed in the forward-looking statements section
of Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's 2000 Annual Report on Form 10-K and the Company's
Quarterly Report on Form 10-Q for the Quarter Ended August 31, 2001, both of
which have been filed
with the U.S. Securities and Exchange Commission, could cause actual results or
outcomes to differ materially from those expected by the Company and expressed
in the Company' forward-looking statements. Such factors include, but are not
limited to:
- - The reaction of the Company's employees, shareholders, customers and
lenders to the restatement of certain of the Company's financial
statements, including any litigation arising out of such restatement;
- - The ability of the Company to secure additional financing;
- - General economic conditions and trends affecting the Company's markets and
product offerings;
- - Changes in the short-term and long-term plans of major customers and
potential customers;
- - Governmental and regulatory policies, including environmental regulations,
and increases in the amount or timing of environmental remediation and
compliance costs;
- - An unexpected adverse result in the toxic tort or other litigation,
proceeding or investigation pending against the Company;
- - The Company's acquisition, disposition and joint venture activities;
- - Vehicle sales and production rates of major automotive programs in the U.S.
and abroad, particularly vehicles for which the Company supplies
components;
- - Department of Defense, NASA and other funding for certain aerospace
programs;
- - Future funding for commercial launch vehicles;
- - The ability of the Company to achieve the anticipated savings from
restructuring and other financial management programs;
- - The ability of the Company to successfully complete the entitlement process
and related pre-development activities for its real estate in Northern
California;
- - The market for the Company's real estate in Northern California;
- - Fluctuations in exchange rates of foreign currencies and other risks
associated with foreign operations;
- - The ability of the Company to satisfy contract performance criteria,
including due dates;
- - The ability of the Company to maintain a high level of product performance,
particularly related to the continued success of the Company's launch
vehicle platforms;
- - An adverse decision in any patent infringement suit, or settlement of a
patent infringement suit impacting Aerojet Fine Chemicals' right to utilize
new technology;
- - Intensified competition from the Company's competitors;
- - Pricing pressures from the Company's major customers, particularly in the
GDX Automotive segment;
- - The ability of the Company to successfully defend its position that there
are no purchase price adjustments for Aerojet's EIS business, a business
which was sold to Northrop Grumman in 2001;
- - Potential liabilities which could arise from any release or explosion of
dangerous materials;
- - Work stoppages at a Company facility or in the facility of one of the
Company's significant customers; and,
- - Cost escalation and availability of power in Northern California.
Additional risk factors are included in the Company's Fiscal Year Form 10-K
filed with the Securities and Exchange Commission on March 6, 2002 and may be
described from time to time in the Company's other filings with the U.S.
Securities and Exchange Commission. 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 leading positions in the
aerospace and defense, pharmaceutical fine chemicals and automotive industries.
Additional information about GenCorp can be obtained by visiting the Company's
web-site at http://www.GenCorp.com.
BUSINESS SEGMENT INFORMATION (UNAUDITED)
GENCORP INC.
Three Months Ended TWELVE MONTHS ENDED
------------------------------ -----------------------------
NOVEMBER 30, November 30, NOVEMBER 30, November 30,
(Dollars in millions, 2001 2000 2001 2000
except per-share data) (Restated) (Restated)
------------------------------ -----------------------------
NET SALES
GDX Automotive $210 $129 $808 $485
Aerospace and Defense 129 143 640 534
Fine Chemicals 28 5 38 28
------ ------ ------ ------
$367 $277 $1,486 $1,047
------ ------ ------ ------
INCOME FROM OPERATIONS
GDX Automotive $(3) $13 $(4) $29
Aerospace and Defense 45 23 131 104
Fine Chemicals 1 (7) (14) (14)
Restructuring charge (11) -- (30) --
Unusual items 158 -- 149 --
------ ------ ------ ------
SEGMENT OPERATING PROFIT 190 29 232 119
Interest expense (5) (6) (33) (18)
Corporate and other expenses (4) (3) (15) (10)
Foreign exchange gain (loss) -- (8) 11 (8)
Restructuring charge (10) -- (10) --
Unusual items 1 (1) 2 4
Income tax provision (66) (4) (59) (35)
------ ------ ------ ------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 106 7 128 52
Cumulative effect of accounting change, net of tax -- -- -- 74
------ ------ ------ ------
NET INCOME $106 $7 $128 $126
------ ------ ------ ------
BASIC EARNINGS PER COMMON SHARE:
Income before cumulative effect of accounting change $2.49 $0.14 $3.03 $1.24
Effect of accounting change -- -- -- 1.76
------ ------ ------ ------
Total $2.49 $0.14 $3.03 $3.00
------ ------ ------ ------
DILUTED EARNINGS PER COMMON SHARE:
Income before cumulative effect of accounting change $2.47 $0.14 $3.00 $1.23
Effect of accounting change -- -- -- 1.76
------ ------ ------ ------
Total $2.47 $0.14 $3.00 $2.99
------ ------ ------ ------
SHARES USED FOR CALCULATION OF EARNINGS PER COMMON
SHARE (IN THOUSANDS):
Basic 42,518 41,967 42,228 41,933
Diluted 42,911 42,124 42,583 42,052
------ ------ ------ ------
Capital expenditures $20 $23 $49 $82
Depreciation and amortization $19 $11 $77 $50
------ ------ ------ ------
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
GENCORP INC.
NOVEMBER 30, November 30,
(Dollars in millions) 2001 2000
(Restated)
ASSETS
Cash and equivalents $44 $17
Accounts receivable 189 135
Inventories, net 167 182
Prepaid expenses and other 18 12
------- -------
TOTAL CURRENT ASSETS 418 346
Recoverable from U.S. government and other third parties for
environmental remediation 138 203
Deferred income taxes 6 78
Prepaid pension asset 287 281
Goodwill, net 65 8
Property, plant and equipment, net 454 366
Other noncurrent assets, net 96 43
------- -------
$1,464 $1,325
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings and current portion of long-term debt $17 $-
Accounts payable 83 54
Income taxes payable 29 5
Other current liabilities 336 272
------- -------
TOTAL CURRENT LIABILITIES 465 331
Long-term debt, net of current portion 197 190
Postretirement benefits other than pensions 194 236
Reserves for environmental remediation 244 328
Other noncurrent liabilities 54 54
Total shareholders' equity 310 186
------- -------
$1,464 $1,325
------- -------
Restated Quarterly Business Segment Information (Unaudited)
GENCORP INC.
Three Months Ended
FEBRUARY 28, MAY 31, AUGUST 31,
(Dollars in millions, 2001 2001 2001
except per-share data)
NET SALES
GDX Automotive $ 181 $ 227 $ 190
Aerospace and Defense 170 180 161
Fine Chemicals 2 3 5
-------- -------- --------
$ 353 $ 410 $ 356
-------- -------- --------
INCOME FROM OPERATIONS
GDX Automotive $ (7) $ 11 $ (5)
Aerospace and Defense 27 29 30
Fine Chemicals (4) (5) (6)
Restructuring charge -- (19) --
Unusual items (7) (2) --
-------- -------- --------
SEGMENT OPERATING PROFIT 9 14 19
Interest expense (9) (9) (10)
Corporate and other expenses (4) (3) (4)
Foreign exchange gain (loss) 11 -- --
Restructuring charge -- -- --
Unusual items 1 -- --
Income tax (provision) benefit 6 3 (2)
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 14 5 3
Cumulative effect of accounting change, net of tax -- -- --
-------- -------- --------
NET INCOME $ 14 $ 5 $ 3
-------- -------- --------
BASIC EARNINGS PER COMMON SHARE:
Income before cumulative effect of accounting change $ 0.33 $ 0.12 $ 0.07
Effect of accounting change -- -- --
-------- -------- --------
Total $ 0.33 $ 0.12 $ 0.07
-------- -------- --------
DILUTED EARNINGS PER COMMON SHARE:
Income before cumulative effect of accounting change $ 0.33 $ 0.12 $ 0.07
Effect of accounting change -- -- --
-------- -------- --------
Total $ 0.33 $ 0.12 $ 0.07
-------- -------- --------
SHARES USED FOR CALCULATION OF EARNINGS PER COMMON
SHARE (IN THOUSANDS):
Basic 42,010 42,147 42,254
Diluted 42,332 42,565 42,792
-------- -------- --------
Capital expenditures $ 6 $ 10 $ 13
Depreciation and amortization $ 17 $ 20 $ 21
-------- -------- --------
Restated Quarterly Business Segment Information
(UNAUDITED)
GENCORP INC.
Three Months Ended
FEBRUARY 29, MAY 31, AUGUST 31, NOVEMBER 30,
(Dollars in millions, 2000 2000 2000 2000
except per-share data)
---------------------------------------------------------------
NET SALES
GDX Automotive $112 $129 $115 $129
Aerospace and Defense 121 131 139 143
Fine Chemicals 6 11 6 5
------ ------ ------ ------
$239 $271 $260 $277
------ ------ ------ ------
INCOME FROM OPERATIONS
GDX Automotive $4 $9 $3 $13
Aerospace and Defense 24 23 34 23
Fine Chemicals (4) 2 (5) (7)
Restructuring charge -- -- -- --
Unusual items -- -- -- --
------ ------ ------ ------
SEGMENT OPERATING PROFIT 24 34 32 29
Interest expense (3) (4) (5) (6)
Corporate and other expenses (3) (1) (3) (3)
Foreign exchange gain (loss) -- -- -- (8)
Restructuring charge -- -- -- --
Unusual items (1) -- 6 (1)
Income tax provision (7) (12) (12) (4)
------ ------ ------ ------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 10 17 18 7
Cumulative effect of accounting change, net of tax 74 -- -- --
------ ------ ------ ------
NET INCOME $84 $17 $18 $7
------ ------ ------ ------
BASIC EARNINGS PER COMMON SHARE:
Income before cumulative effect of accounting change $0.25 $0.41 $0.43 $0.14
Effect of accounting change 1.76 -- -- --
------ ------ ------ ------
Total $2.01 $0.41 $0.43 $0.14
------ ------ ------ ------
DILUTED EARNINGS PER COMMON SHARE:
Income before cumulative effect of accounting change $0.25 $0.41 $0.43 $0.14
Effect of accounting change 1.76 -- -- --
------ ------ ------ ------
Total $2.01 $0.41 $0.43 $0.14
------ ------ ------ ------
SHARES USED FOR CALCULATION OF EARNINGS PER COMMON
SHARE (IN THOUSANDS):
Basic 41,864 41,933 41,967 41,967
Diluted 41,980 42,060 42,045 42,124
------ ------ ------ ------
Capital expenditures $19 $21 $19 $23
Depreciation and amortization $13 $13 $13 $11
------ ------ ------ ------