EXHIBIT 99.1
[GENCORP LOGO]
NEWS RELEASE
INVESTOR CONTACTS: YASMIN SEYAL
SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
GENCORP INC.
916-351-8585
PRESS CONTACTS: LINDA BEECH CUTLER
VICE PRESIDENT, CORPORATE COMMUNICATIONS
GENCORP INC.
916-351-8650
FOR IMMEDIATE RELEASE
GENCORP REPORTS FAVORABLE 2ND QUARTER 2002 EARNINGS
SACRAMENTO, CA - June 25, 2002 - GenCorp Inc. (NYSE:GY) today announced second
quarter earnings per diluted share of $0.23 excluding unusual items. GenCorp
reported segment operating profit of $21 million for the second quarter of 2002
as compared to $14 million for the second quarter of 2001.
Earnings per diluted share were $0.14 for the second quarter of 2002
compared to $0.12 for the second quarter of 2001. Results for the second quarter
of 2002 include a pre-tax $6 million unusual expense related to a purchase price
adjustment for Aerojet's Electronic and Information Systems (EIS) business, sold
to Northrop Grumman in October 2001. In May 2002, GenCorp entered into an
agreement with Northrop Grumman resolving a purchase price dispute with payment
of $6 million in two installments. Results for the second quarter of 2001
included a pre-tax $19 million restructuring charge related to the GDX
Automotive segment.
"I am pleased with the Company's results this quarter, especially the
ongoing performance improvements at GDX Automotive and Aerojet Fine Chemicals,"
said Bob Wolfe, Chairman and CEO. "Our Aerospace and Defense segment also posted
good results and is positioned for consistent performance given its backlog and
contract strength," he added.
In addition to financial results, the Company also announced a number
of strategic environmental, legal and personnel developments during the quarter,
including:
- Successful placement of $150 million of convertible
subordinated notes;
- Final approval from the United States District Court to remove
approximately 2,600 acres of land from the Sacramento
Superfund site designation, enhancing the value of this asset
for shareholders;
- Settlement of outstanding environmental claims and a
comprehensive agreement to restore the groundwater at the site
known as the Baldwin Park Operable Unit (BPOU) in Southern
California;
- The promotion of Terry Hall, currently Chief Operating
Officer, to President and CEO of GenCorp effective July 1,
2002, and Yasmin Seyal to Chief Financial Officer effective
May 16, 2002; and
- The announcement that Michael Bryant will be assuming the
Presidency of GDX Automotive.
GDX AUTOMOTIVE
Segment operating profit for second quarter 2002 was $14 million
compared to $11 million for second quarter 2001, an improvement of $3 million or
27% from the prior year. Operating margins for the quarter increased to 6.7%
compared to 4.8% for second quarter 2001. Increase in segment operating profit
reflects improved plant productivity driven by cost and personnel reductions.
Net sales for the Company's GDX Automotive segment decreased 8% to $209 million
for second quarter 2002 versus $227 million for second quarter 2001. The
decrease was due primarily to lower volumes in the segment's North American
business. The automotive market has begun to show signs of improvement,
particularly in North American market segments currently supplied by GDX
Automotive.
AEROSPACE AND DEFENSE
Aerojet's net sales for the quarter decreased to $84 million as
compared to $180 million for the comparable period in 2001, primarily
attributable to the divestiture of Aerojet's EIS business in October 2001.
Excluding EIS results, sales increased $18 million mainly due to the delivery of
a NASA X-38 De-Orbit Propulsion Stage. Aerojet's operating profit for the
quarter was $14 million versus $29 million for second quarter 2001. Excluding
results of EIS operations from the prior year and a decrease in pension income,
segment operating profit increased slightly from the same quarter in 2001.
Significant contract awards during the quarter included: negotiation of
a $71 million contract with Raytheon for 30 Divert and Attitude Control Systems
with deliveries through 2005; exercise of an option by Boeing to produce six
additional Delta engine systems with a total value of approximately $23 million;
receipt of a new contract from the Air Force Propulsion Lab to develop
technologies for an Advanced Lightweight Chamber and Nozzle applicable to
hydrogen and hydrocarbon booster engines valued at $10 million including
options; and an award of a $12 million contract from Raytheon related to a Solid
Divert Attitude Control System.
During the quarter Aerojet participated in the successful mission by an
Exoatmospheric Kill Vehicle using Aerojet's Divert and Attitude Control System,
and launch of a former Minuteman II second-stage motor produced by Aerojet to
successfully boost a target vehicle supporting the Patriot Advanced Capability 3
(PAC-3) missile interceptor mission. Contract and funded backlog totaled $550
million and $350 million respectively at May 31, 2002.
FINE CHEMICALS SEGMENT
Revenues for Aerojet Fine Chemicals (AFC) increased to $10 million in
the second quarter of 2002 compared to $3 million in the second quarter of 2001,
reflecting increased production levels. AFC reported a loss of $1 million as
compared to a loss of $5 million in the second quarter of 2001. This segment
continues to make progress toward profitability by increasing productivity and
controlling costs. Contract backlog totaled $57 million at May 31, 2002, an
increase of $21 million over the previous quarter. The Company currently is
forecasting that AFC will be profitable for the remainder of fiscal year 2002.
OTHER INFORMATION AND UNUSUAL ITEMS
Results for the second quarter 2002 include a pretax $6 million
purchase price adjustment related to the divestiture of Aerojet's EIS business
and the write-off of bank fees associated with termination of a term loan.
Results for the second quarter of 2001 included a pre-tax $19 million
restructuring charge for the GDX Automotive segment and a pre-tax $2 million
charge related to the portion of tax refunds repayable to the Company's defense
customers.
Interest expense decreased to $4 million in the second quarter 2002
compared to $9 million in the comparable quarter of 2001. This substantial
improvement reflects a lower outstanding debt level due primarily to repayment
of debt with EIS sales proceeds. As of May 31, 2002, GenCorp's debt totaled $271
million versus $246 million as of February 28, 2002. The increase in debt from
the first quarter of 2002 was due primarily to working capital requirements for
Aerojet's Atlas V Solid Rocket Motor contract.
Net pension income was $6 million after tax for the quarter.
SUBSEQUENT EVENTS
On June 21, 2002 the Company filed a universal shelf registration with
the Securities and Exchange Commission relating to the possible future issuance
of up to $300 million of securities. The filing of the registration statement
allows the Company flexibility as to the types of securities it may choose to
sell, and will enable the Company to react quickly to market opportunities as
they arise.
CURRENT OUTLOOK
For the third quarter of 2002, the Company is forecasting earnings per
share in the range of $0.14 to $0.16. Excluding any unusual items, the Company
currently expects earnings per share for fiscal year 2002 to be in the range of
$0.90 to $1.00.
Although the Company's forecasts are subject to numerous variables and
uncertainties, at this time, the main risks in achieving the forecasted results
are: (i) the timing of potential real estate transactions; (ii) the ability of
Aerojet to, on a timely basis, complete qualification of the Atlas V Solid
Rocket Motor and transition to production; and (iii) the ability of Aerojet Fine
Chemicals to achieve targeted product delivery levels.
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. A variety of factors could cause actual results or outcomes to
differ materially from those expected by the Company and expressed in the
Company's forward-looking statements.
Some of these factors include, but are not limited to, the following:
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 or
required cash outlay in the toxic tort or other environmental or other
litigation, proceeding or investigation pending against the Company; the
reaction of our employees, shareholders, customers and lenders to the
restatement of certain of our financials statements including any litigation
arising from the restatement; the Company's ability to secure additional
financing as needed; 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 aerospace and
defense programs for which the Company is a supplier or competes for new
business; future funding for commercial launch vehicles and propulsion systems;
the ability of the Company to achieve the anticipated savings from ongoing
restructuring and other financial management programs; restrictions on the
Company's operating activities imposed from time to time by the agreements
relating to the indebtedness; 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, particularly in the GDX
Automotive segment which delivers a significant amount of sales overseas; the
ability of the Company to satisfy contract performance criteria; the ability of
the Company to maintain a high level of product performance, particularly
related to the continued success of the Company's propulsion systems for launch
vehicle platforms; the Company's mix of fixed price and cost-plus contracts; an
unexpected adverse decision in any patent infringement suit, or settlement of a
patent infringement suit impacting the Company's right to utilize technology,
particularly in the Fine Chemicals segment; intensified competition; pricing
pressures from the Company's major customers, particularly in the GDX Automotive
segment; 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.
These factors are described in more detail in the Company's Annual
Report on Form 10-K for the year ended November 30, 2001 and its other filings
with the Securities and Exchange Commission. Additional risks may be described
from time to time in future 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
GenCorp Inc.
Three Months Ended SIX MONTHS ENDED
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MAY 31, May 31, MAY 31, May 31,
(Dollars in millions, 2002 2001 2002 2001
except per-share data) (UNAUDITED) (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------
NET SALES
GDX Automotive $ 209 $ 227 $ 399 $ 408
Aerospace and Defense 84 180 138 350
Fine Chemicals 10 3 15 5
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$ 303 $ 410 $ 552 $ 763
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INCOME FROM OPERATIONS
GDX Automotive $ 14 $ 11 $ 20 $ 4
Aerospace and Defense 14 29 30 56
Fine Chemicals (1) (5) (4) (9)
Restructuring Charge - (19) - (19)
Unusual items (6) (2) (6) (9)
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SEGMENT OPERATING PROFIT 21 14 40 23
Interest expense (4) (9) (7) (18)
Corporate, other expenses and foreign exchange
gains & losses (6) (3) (15) 4
Unusual items (1) - (3) 1
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INCOME BEFORE INCOME TAXES 10 2 15 10
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Income tax (provision) benefit (4) 3 (6) 9
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NET INCOME $ 6 $ 5 $ 9 $ 19
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BASIC EARNINGS PER COMMON SHARE: $ 0.14 $ 0.12 $ 0.21 $ 0.45
DILUTED EARNINGS PER COMMON SHARE: $ 0.14 $ 0.12 $ 0.21 $ 0.44
SHARES USED FOR CALCULATION OF EARNINGS PER COMMON
SHARE (IN THOUSANDS):
Basic 42,795 42,147 42,723 42,070
Diluted* 43,327 42,565 43,166 42,437
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Capital expenditures $ 8 $ 10 $ 14 $ 16
Depreciation and amortization $ 16 $ 20 $ 30 $ 37
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* Excludes convertible notes that are anti-dilutive
CONDENSED CONSOLIDATED BALANCE SHEET
GenCorp Inc.
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MAY 31, November 30,
(Dollars in millions) 2002 2001
(UNAUDITED)
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ASSETS
Cash and equivalents $ 36 $ 44
Accounts receivable 160 189
Inventories, net 170 167
Current deferred income tax - 14
Prepaid expenses and other 7 4
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TOTAL CURRENT ASSETS 373 418
Recoverable from U.S. government and other third parties for
environmental remediation 119 138
Deferred income taxes - 6
Prepaid pension asset 313 287
Goodwill, net 81 65
Property, plant and equipment, net 444 454
Other noncurrent assets, net 73 96
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$ 1,403 $ 1,464
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LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings and current portion of long-term debt $ 24 $ 17
Accounts payable 80 83
Income taxes payable 2 29
Other current liabilities 282 336
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TOTAL CURRENT LIABILITIES 388 465
Long-term debt, net of current portion 247 197
Postretirement benefits other than pensions 183 194
Reserves for environmental remediation 218 244
Deferred income taxes 5 -
Other noncurrent liabilities 33 54
Total shareholders' equity 329 310
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$ 1,403 $ 1,464
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