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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1995 Commission File Number 1-1520
GENCORP INC.
(Exact name of registrant as specified in its charter)
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OHIO 34-0244000
(State of Incorporation) (I.R.S. Employer Identification No.)
175 GHENT ROAD, FAIRLAWN, OHIO 44333-3300
(Address of principal executive offices) (Zip Code)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (216) 869-4200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value 10c per share New York and Chicago
8% Convertible Subordinated Debentures New York and Chicago
due August 1, 2002
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of January 31, 1996, was $406,950,454.
As of January 31, 1996, there were 33,400,963 outstanding shares of the
Company's Common Stock, 10c par value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1996 Proxy Statement of GenCorp Inc. are incorporated into
Part III of this Report.
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GENCORP INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1995
TABLE OF CONTENTS
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ITEM
NUMBER PAGE
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PART I
1 Business................................................................... 1
2 Properties................................................................. 4
3 Legal Proceedings.......................................................... 6
4 Submission of Matters to a Vote of Security Holders........................ 6
Executive Officers of the Registrant....................................... 7
PART II
5 Market for Registrant's Common Equity and Related Stockholder Matters...... 8
6 Selected Financial Data.................................................... 8
7 Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................... 9
8 Consolidated Financial Statements and Supplementary Data................... 12
9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure..................................................... 12
PART III
10 Directors and Executive Officers of the Registrant......................... 37
11 Executive Compensation..................................................... 37
12 Security Ownership of Certain Beneficial Owners and Management............. 37
13 Certain Relationships and Related Transactions............................. 37
PART IV
14 Exhibits, Financial Statement Schedules and Reports on Form 8-K............ 37
Signatures................................................................. 38
Index to Financial Statements and Financial Statement Schedules............ GC-1
Exhibit Index.............................................................. i
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PART I
ITEM 1. BUSINESS
GenCorp Inc. (hereinafter the "Company" or "GenCorp") was incorporated in
Ohio in 1915 as The General Tire & Rubber Company. The Company's operations are
grouped into three business segments: its automotive business, its polymer
products business and its aerospace and defense business, Aerojet-General
Corporation ("Aerojet"). The divisions of these segments engage in such diverse
businesses as molded reinforced plastics, extruded and molded rubber products,
vinyl-coated fabrics, vinyl woodgrain laminates, plastic films, plastic
extrusions, decorative wallcoverings, single-ply roofing systems, tennis balls
and racquetballs, styrene and butadiene based specialty latices, liquid and
solid rocket propulsion systems, and defense electronics. As of November 30,
1995, the Company employed approximately 11,700 persons. (Financial information
relating to the Company's business segments appears on pages 31 through 33 of
this report.)
The Company and its businesses utilize the Corporate Technology Center in
Akron, Ohio to develop new products and improve existing products and processes.
The Center has a key role in the Company's technical activity and supports
design and development efforts across the Company. The corporate technology
staff is organized into seven Centers of Excellence with focused responsibility
for analytical services, mechanical dynamic testing, advanced materials,
engineering design and analysis, adhesives and coatings, structure composites
engineering, and advanced manufacturing process engineering. A number of design
and development centers focus on specific areas of various businesses and each
plant has dedicated engineering services. (Information relating to research and
development expense is set forth in Note E on page 19 of this report.)
The Company licenses technology and owns patents, which expire at various
times, relating to many of its products. The loss or expiration of any one or
more of them would not materially affect the business of the Company or any of
its segments. The important trademarks of the Company are registered in its
major marketing areas.
Although GenCorp's business is not seasonal in the traditional sense, the
aerospace and defense business' revenues and earnings have tended to concentrate
to some degree in the fourth quarter of each year reflecting delivery schedules
associated with that segment's mix of contracts. The automotive business'
revenues and earnings have tended to concentrate to some degree in the second
and fourth quarters of the Company's fiscal year, generally as a consequence of
seasonality in the automotive industry's build schedules and in response to
customers' preparation for annual model changes.
Compliance with laws and regulations relating to the discharge of materials
into the environment or the protection of the environment continues to affect
many of the Company's operating facilities. A discussion of capital and
noncapital environmental expenditures incurred in 1995 and forecasted for 1996
and 1997 for environmental compliance is included under the heading
Environmental Matters on pages 11 and 12 of this report. Environmental matters
discussed on pages 11 and 12 and in Note R beginning on page 28 of this report
are incorporated herein by reference.
AUTOMOTIVE
Revenues of the Company's automotive business are principally derived from
the development, manufacture and sale of highly engineered polymer products
developed for the original equipment automotive market. Applications include
extruded and molded rubber products for vehicle body and window sealing, molded
reinforced plastic panels for automobile and light and heavy truck bodies and
molded rubber-to-metal products for vibration control.
The Vehicle Sealing Division is a leading producer and supplier of extruded
and molded rubber products engineered to prevent air, moisture and noise from
penetrating windows, doors and other openings. This unit supplies products to
the major domestic automotive companies for use in a wide variety of vehicles
including the General Motors full-size pickup truck, the Suburban, Tahoe and
Yukon, the small pickup truck, Blazer and Jimmy, the Ford Ranger small pickup,
the Ford Explorer and the General Motors Achieva, GrandAm
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and Skylark. During 1994 GenCorp acquired the remaining 75.5% equity interest in
HENNIGES Elastomer-und Kunststofftechnik GmbH & Co. KG, and its related
companies. This division also manages a thermoplastics extrusion unit which is a
leading producer of gaskets, seals, trim and magnetic rolls for the appliance,
automotive and office equipment industries.
In December 1995, the Company announced it is pursuing options for its
Reinforced Plastics Division to offset the anticipated loss of the General
Motors' U-Van (Lumina) program. As previously announced, General Motors is
converting its U-Van composite components to steel for model years 1997 and
beyond. The Reinforced Plastics Division, a leader in Sheet Molding Compound
(SMC) composite components, has been producing composite lift gates, doors,
passenger side panels and other components for the U-Van since 1989. Production
of U-Van components is scheduled to end in mid-1996. Options being pursued
include strategic alliances, new market opportunities and consolidation with
other SMC molders through the merger or sale of the business.
On February 15, 1996, the Company announced that it had completed the sale
of its Vibration Control Division to BTR Antivibration Systems, Inc., a
subsidiary of BTR plc. The Vibration Control Division produces and supplies
molded rubber-to-metal products which counteract the impact and disturbance of
vibrations emanating from the power train and from road conditions.
During 1995, the Sensor Products Division was established with the opening
of an application engineering center in Bloomfield Hills, Michigan. The first
product of this new division is an Automotive Occupant Sensor (AOS) used to
control airbag deployment and derived from Aerojet's defense sensor and
electronics technology. A U.S. patent for the base technology was issued in
January 1996 and numerous ongoing product development programs with Original
Equipment Manufacturer (OEM) customers are under way. The Company is currently
pursuing a strategic partner to jointly develop, produce and/or market this
product line globally.
Automotive products are sold directly to OEM customers or their suppliers.
Automotive customers include the major domestic automobile manufacturers, the
loss of one or more of which would have a material adverse effect on this
segment. Sales to General Motors in 1995 were at least ten percent of the
Company's net sales.
The emergence of foreign vehicle manufacturing facilities in North America
has significantly changed the original equipment market in recent years.
Competition based upon price, quality, service, technology and reputation is
intense. Increased sales revenue due to the acquisition of Henniges in late 1994
was partially offset by reduced volume on a few key domestic platforms. The
domestic volume reduction coupled with continued OEM price pressures, increased
raw material costs, and start-up costs associated with the new Sensor Products
Division resulted in lower operating profit in 1995 versus 1994. Raw materials
required by this segment are generally in good supply.
POLYMER PRODUCTS
Revenues of the Company's polymer products business are generated through
the design, manufacture and sale of specialty polymers and decorative products
for a variety of industrial, commercial and consumer markets. The polymer
products business has a broad base of commercial and industrial customers, the
loss of any one of which would not have a material adverse effect on the
segment's business.
The Decorative and Building Products Division is a diverse supplier in
three product areas. The division is a major seller of vinyl coated fabrics for
the home furnishings and marine industries and for a variety of other industrial
and commercial industries. The division is also a leading seller of vinyl
woodgrain laminates for furniture and consumer electronics and double-polished
clear vinyl films for the office products and stationery markets. The division
also markets decorative and engineered thermoplastic films for manufacturers of
furniture, ceiling tiles, and industrial applications. In addition, the division
designs and sells material systems for a wide range of commercial roofing
applications.
The Wallcovering Division designs and markets a full line of decorative
products for commercial and residential wallcovering applications.
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The Designed Products Manufacturing Division consolidates all polymer
plastics manufacturing operations into one synergistic base to support the
Company's Wallcovering, Coated Fabrics, Plastic Films and Building Systems
businesses. This division features highly efficient thermoplastics manufacturing
including calendering, lamination, decorative printing and coating applications.
The Specialty Polymers Division produces and markets a comprehensive line
of specialty latices used as coatings for paper, as binding agents for carpets
and nonwoven fabrics and as tire cord adhesives. The division also produces
adhesives and in-mold coatings for automotive reinforced plastic applications.
Penn Racquet Sports is one of the world's largest manufacturers of tennis
balls and racquetballs. Tennis and racquetball accessories are purchased for
resale under the "Penn" trademark.
Methods of distribution utilized by the divisions of the polymer products
business segment vary widely depending on the nature of the products and the
industry or market served, with products being sold either directly or through
distributors. Penn products are marketed worldwide. The Company has an agreement
with Head Racquet Sports to distribute Penn(R) tennis balls in France, Italy,
Germany, Austria and Switzerland. In addition, the Company has entered into an
exclusive distribution agreement with Babolat S. A. France for North American
sale of racquet strings, professional stringing equipment and related
accessories.
Competition based upon price, quality, service, technology and reputation
is intense with respect to virtually all products marketed by this business
segment and, to a substantial degree, upon design and style in the wallcovering
and most other coated fabrics and plastic film products. The Company believes
that it continues to be a major competitor in the markets served by this
segment, and that the raw materials required are generally available. To date,
the Company has been successful in mitigating the effects of higher raw material
costs through productivity improvements, operating cost reductions and product
pricing. High raw material costs stabilized somewhat in the latter portion of
1995, a trend expected to continue into 1996, but which is very sensitive to,
and dependent on, worldwide demand.
AEROSPACE AND DEFENSE
Aerojet develops, manufactures and markets solid and liquid rocket
propulsion systems, smart munitions systems, electronic sensor surveillance
systems, earth sensing systems and related defense products and services.
Aerojet has concentrated for the past several years on obtaining contracts
that provide a balance between technology development and long-term production,
as well as between defense and space programs. More recently, efforts have been
expanded to include the pursuit of nondefense domestic and international market
opportunities that take advantage of the segment's technologies, engineering and
manufacturing expertise and capabilities. In this regard, Aerojet plans to
expand its commercial specialty chemical and materials product area.
The aerospace and defense business programs have included the Titan,
Minuteman, Standard Missile and Delta propulsion programs; satellite
surveillance sensor systems; the Sense and Destroy Armor (SADARM) program; earth
sensing systems; TOW 2B armaments; and ground data processing systems. Aerojet
is also active in a variety of new development and advanced programs related to
defense and space applications including satellite, launch, and armament
systems. Aerojet believes that its experience in these areas will enable it to
continue to participate in the future funding of these or similar programs. Most
of the sales of this business are made directly or indirectly to agencies of the
United States government pursuant to contracts or subcontracts which are subject
to termination for convenience (with compensation) by the government in
accordance with Federal Acquisition Regulations.
The Small ICBM program was terminated and new production under the
Peacekeeper program was canceled during 1992. During August 1995, Aerojet
negotiated a final contract termination settlement with the U.S. Air Force on
the Small ICBM program and recorded final termination sales. These two programs
accounted for sales of approximately $14 million in 1994. Close-out sales
activity in 1995 was $23 million.
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Aerojet was a major subcontractor to Lockheed for the ASRM program. The
program was officially terminated by NASA on October 27, 1993. During November
1994, Aerojet completed negotiation of a comprehensive termination settlement
with NASA and recorded final sales under the subcontract. Termination efforts
accounted for $68 million in sales in 1994.
Aerojet's direct and indirect sales to the United States Government and its
agencies (principally the Department of Defense) were approximately $490 million
in 1995, $578 million in 1994 and $847 million in 1993. Competition based upon
price, technology, quality and service is intense for all products and services
in this business segment and has increased with the decline in the national
defense budget and the continuing consolidation of the industry. There are
several other major companies with the technology and capacity to produce most
of the products manufactured and sold by Aerojet, and in some areas, the
government has its own manufacturing capabilities. With the termination of the
ASRM program and the sale of the majority of its Ordnance business, Aerojet
announced a major streamlining and restructuring effort late in 1993 that was
completed in mid 1994 and has also taken additional measures that have reduced
costs significantly in 1995. Aerojet believes it remains competitive in its
markets.
Backlog orders in the aerospace and defense businesses are commonplace and
significant. Aerojet's contract backlog was approximately $0.9 billion at
November 30, 1995, compared to $1.1 billion at November 30, 1994. Funded
backlog, which includes only the amount of those contracts for which money has
been authorized by Congress, totaled approximately $0.5 billion at November 30,
1995, compared with approximately $0.6 billion at November 30, 1994. Raw
materials required by this segment are generally in adequate supply.
ITEM 2. PROPERTIES
Operating, manufacturing, research, design and/or marketing facilities of
the Company and its businesses are set forth below.
FACILITIES
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Corporate Headquarters: Foreign Office:
GenCorp Inc. GenCorp Overseas Inc.
175 Ghent Road 52 Telok Blangah Road
Fairlawn, Ohio 44333-3300 #02-04 Telok Blangah House
216/869-4200 Singapore 0409
(Note: area code will be changing to (65) 275-5001
330 effective March 1996)
Corporate Technology Facilities:
Corporate Technology Center Advanced Manufacturing Process Engineering
2990 Gilchrist Road 1525 Corporate Woods Parkway
Akron, OH 44305-4489 Suite 500
216/794-6300 Uniontown, OH 44685
(Note: area code will be changing to 216/896-2322
330 effective March 1996) (Note: area code will be changing to
330 effective March 1996)
* * * * * * * * * *
AEROSPACE AND DEFENSE
Headquarters: Manufacturing: Marketing/Sales Offices:
Aerojet Azusa, CA Colorado Springs, CO
P.O. Box 13222 Jonesborough, TN Huntsville, AL
Sacramento, CA 95813-6000 Sacramento, CA Los Angeles, CA
916/355-1000 Socorro, NM Mt. Arlington, NJ
Washington, DC
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AUTOMOTIVE
Marketing/Sales Offices: Research/Design:
Farmington Hills, MI Bloomfield Hills, MI
810/553-5300 (sensor products)
810/745-1500
Headquarters: Manufacturing:
Reinforced Plastics Division Ionia, MI
501 Northridge Drive Marion, IN
Shelbyville, IN 46176 Rushville, IN
317/392-8000 Shelbyville, IN
Headquarters: Manufacturing: Research/Design:
Vehicle Sealing Division Batesville, AR Troy, MI
7221 Engle Road, Suite 240 Berger, MO Wabash, IN
Fort Wayne, IN 46804-2233 Evansville, IN
219/434-9700 Fort Smith, AR
HENNIGES, Rehburg,
Germany and Ballina,
Ireland
Marion, IN
Wabash, IN
Welland, Ontario, Canada
* * * * * * * * * *
POLYMER PRODUCTS
Headquarters: Manufacturing: Marketing/Sales Offices:
Decorative & Building Auburn, PA Maumee, OH
Products Division Columbus, MS Paris, France
1722 Indian Woods Circle Jeannette, PA
Suite A
Maumee, OH 43537-4060
419/891-1500
Headquarters: Manufacturing:
Designed Products Auburn, PA
Manufacturing Division Columbus, MS
P.O. Box 191 Jeannette, PA
Columbus, MS 39703
601/327-1522
Headquarters: Manufacturing: Marketing/Sales Offices:
Penn Racquet Sports Division Phoenix, AZ Nurnberg, Germany
306 South 45th Avenue Mullingar, Republic
Phoenix, AZ 85043 of Ireland
602/269-1492
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Headquarters: Manufacturing: Distribution:
Specialty Polymers Division Green Bay, WI Dalton, GA
165 S. Cleveland Avenue Mogadore, OH
Mogadore, OH 44260-1593
216/628-6550
(Note: area code will be changing to
330 effective March 1996)
Headquarters: Manufacturing: Marketing/Sales Offices:
Wallcovering Division Columbus, MS New York, NY
Three University Plaza Paris, France
Suite 200 Distribution:
Hackensack, NJ 07601-6219 Pine Brook, NJ Design:
201/489-0100 Salem, NH
* * * * * * * * * *
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In addition, the Company and its businesses own and lease properties
(primarily machinery, warehouse and office facilities) in various sections of
the country for use in the ordinary course of its business. Data appearing in
Note Q on page 28 of this report with respect to leased properties is
incorporated herein by reference.
During 1995 the Company generally made effective use of its productive
capacity. The Company believes that the quality and productive capacity of its
properties are sufficient to maintain the Company's competitive position.
ITEM 3. LEGAL PROCEEDINGS
Information concerning legal proceedings, including proceedings relating to
environmental matters, which appears in Note R beginning on page 28 of this
report is incorporated herein by reference.
The U.S. Government frequently conducts investigations into allegedly
illegal or unethical activity in the performance of defense contracts.
Investigations of this nature are common to the aerospace and defense industries
in which Aerojet participates and lawsuits may result; possible consequences may
include civil and criminal fines and penalties, in some cases, double or treble
damages, and suspension or debarment from future government contracting. Aerojet
currently is subject to several U.S. Government investigations and a civil
lawsuit regarding business practices and cost classification from which
additional legal or administrative proceedings could result. While it is not
possible to predict with certainty the outcome of any such investigation or the
lawsuit, the Company does not believe, based upon the information available at
this time, that final resolution of any such matter will have a material adverse
effect on its consolidated financial condition or result in its suspension or
termination as a government contractor.
The Company and its subsidiaries are presently engaged in other litigation,
and additional litigation has been threatened. However, based upon information
presently available, none of such other litigation is believed to constitute a
"material pending legal proceeding" within the meaning of Item 103 of Regulation
S-K (17 CFR Reg. 229.103) and the Instructions thereto.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended November 30,
1995.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is given as of January 31, 1996, and except as
otherwise indicated, each individual has held the same office during the
preceding five-year period.
J. B. Yasinsky, age 56: Chairman of the Board (since March 1995), Chief
Executive Officer and President (since July 1994); formerly President and Chief
Operating Officer (since November 1993); previously Group President of
Westinghouse Electric Corporation (since February 1993), President, Westinghouse
Power Systems (from 1990 to 1993), Executive Vice President, Westinghouse, World
Resources and Technology (from 1989 to 1990), and Executive Vice President,
Westinghouse International (from 1987 to 1989).
W. E. Bachman, age 56: Executive Vice President of the Company (since July
1994); formerly Vice President of the Company and President of the Company's
polymer products business (since May 1993), Vice President--Operations for the
Company's polymer products business (since April 1993), President of the
Company's Fabricated Plastics Unit (from 1988 to April 1993) and President of
the Coated Fabrics Division (from 1987 to 1988).
M. L. Isles, age 50: Executive Vice President of the Company (since July
1994); formerly Vice President of the Company and President of the Company's
automotive business (since January 1988), previously President of the Company's
former Engineered Elastomers Division.
R. I. Ramseier, age 59: Executive Vice President of the Company (since July
1994) and President of Aerojet (since January 1989); also Vice President of the
Company (from January 1989 to July 1994), formerly President of Aerojet
TechSystems.
T. W. Arndt, age 44: Vice President of the Company (since August 1994),
also President of the Company's Vibration Control Division (since 1990);
formerly Vice President and Controller of the Company's automotive business.
E. R. Dye, age 54: Secretary (since September 1988) and Assistant General
Counsel (since January 1987); formerly Assistant Secretary (from November 1986
until September 1988), Associate General Counsel (from September 1985 until
January 1987) and Counsel prior to September 1985.
C. R. Ennis, age 63: Senior Vice President, Law and Environmental Affairs;
General Counsel (since August 1994); formerly Vice President and General Counsel
(since January 1986) (also Secretary from November 1986 to September 1988).
S. W. Harmon, age 45: Vice President, Human Resources (since October 16,
1995); formerly Vice President, Human Resources, Allied Signal, Inc. for its
European operations (since 1995) and for its Automotive Sector (from 1993 to
1995), and Group Director for the Heavy Duty Brake Division (from 1990 to 1993)
and Director, Employee Relations for the Autolite Division (from 1987 to 1990).
M. E. Hicks, age 37: Treasurer (since September 1994); formerly Director,
Treasury for the Company (since 1989) and Manager, Cash and Banking (from 1988
to 1989).
S. W. Hughes, age 50: Vice President of the Company, also President of the
Company's Reinforced Plastics Division (since May 1995); formerly General
Manager of the Division's Automotive Business Group (since 1994) and Plant
Manager of the Company's reinforced plastic manufacturing facility (from 1993 to
1994) and previously held various management positions with Weber Aircraft (from
1990 to 1993) and Fela America (from 1988 to 1990).
R. A. Livigni, age 61: Vice President, Corporate Technology (since November
1994); formerly Vice President and Director of Research (since January 1988).
P. D. Mittiga, age 48: Vice President of the Company (since August 1994),
also President of the Company's Decorative and Building Products Division (since
1993); formerly President and Chief Executive Officer of Reneer Films
Corporation (since 1989) and Marketing Manager of The Goodyear Tire & Rubber
Company's Film Division (since 1986).
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W. A. Smith, age 48: Vice President of the Company (since August 1994),
also President of the Company's Vehicle Sealing Division (since 1991); formerly
General Manager of the Company's Welland, Ontario vehicle sealing plant (from
1986 to 1991) and Vice President--Manufacturing (from 1985 to 1986).
P. A. Spanninger, age 52: Vice President, International of the Company
(since July 1994); formerly Vice President, International of the Company's
automotive business (since 1988) and previously Director of Technology and
Venture Management for The Goodyear Tire & Rubber Company.
D. M. Steuert, age 47: Senior Vice President and Chief Financial Officer
(since August 1994); formerly Vice President and Chief Financial Officer (since
June 1990) and Treasurer (since May 1986), previously Vice President -- Finance
and Planning (from May 1987 to June 1990) and Treasurer.
J. W. Ward, age 53: Vice President of the Company (since August 1994), also
President of the Company's Wallcovering Division (since 1989); formerly Vice
President of contract sales/marketing of the Wallcovering Division (from 1986 to
1989).
G. R. Weida, age 48: Vice President of the Company (since August 1994),
also President of Penn Racquet Sports (since 1991); formerly President of the
Company's Plastic Films Division (from 1987 to 1991), and General Manager of the
rigid plastics business (from 1986 to 1987).
D. I. Windham, age 50: Vice President of the Company (since August 1994),
also President of the Company's Designed Products Manufacturing Division (since
1993); formerly Plant Manager of the Company's Columbus, Mississippi vinyl
coated fabrics plant (from 1987 to 1993) and Technical Director (from 1980 to
1987).
R. Younts, age 40: Vice President, Communications (since January 1995);
previously Director of Communications (since July 1993) and various
communications positions with Aerojet (from 1984 to 1993).
M. W. Zima, age 58: Vice President of the Company (since August 1994), also
President of the Company's Specialty Polymers Division (since 1991); formerly
President and Chief Executive Officer of Uniroyal Engineered Products (from 1987
to 1991) and various other management positions with Uniroyal (from 1982 to
1987).
The Company's executive officers generally hold terms of office of one year
and/or until their successors are elected.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed on the New York and Chicago Stock
Exchanges. At December 31, 1995, there were approximately 14,500 holders of
record of the Company's common stock. During 1995, 1994 and 1993, the Company
paid quarterly cash dividends on common stock of $.15 per share. Information
regarding the high and low quarterly sales prices of common stock for the past
two years is contained in the Quarterly Financial Data (Unaudited) which
appears on page 34 of this report and is incorporated herein by reference.
Information concerning long-term debt, including restrictions and
provisions relating to distributions and cash dividends on the Company's Common
Stock, appears in Note L beginning on page 26 of this report and is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Financial data required under this section appears on page 35 of this
report and is incorporated herein by reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Sales for GenCorp in 1995 totaled $1.8 billion, 2 percent above the 1994
level. Segment operating profit increased to $113 million in 1995 from $108
million in 1994 excluding segment unusual items in both 1995 and 1994 (see Note
B). Segment operating profit including segment unusual items was $117 million
and $28 million in 1995 and 1994, respectively.
Net income, excluding unusual items and the cumulative effect of accounting
changes in both 1995 and 1994, increased 11 percent to $41 million in 1995
compared to $37 million in 1994 or $1.25 per share as compared to $1.16 per
share for primary earnings per share in 1995 and 1994, respectively.
Including the impact of unusual items and the cumulative effect of
accounting changes (see Note B and Note C, respectively), the Company reported
net income of $38 million in 1995 as compared to a loss of $226 million in 1994.
On a fully diluted basis, earnings per share were $1.10 per share in 1995
compared to a loss of $7.10 per share in 1994.
Interest expense in 1995 was $34 million compared to $32 million in 1994.
Interest expense for 1995 increased slightly due to a higher level of average
interest rates throughout the year and the expiration of the $60 million
receivable financing program, the cost of which was included in other income and
expense for 1994.
Other income and expense includes tooling, royalty and interest income and
the gain on sale of miscellaneous assets. Other income and expense in 1994 was
negatively impacted by the equity loss incurred at HENNIGES Elastomer- und
Kunststofftechnik GmbH & Co. KG (HENNIGES), costs associated with the receivable
financing program and lower tooling income.
UNUSUAL ITEMS
During 1995, the Company recognized a net charge of $5 million for unusual
items. This charge included $10 million for the settlement of a lawsuit and
other matters related to discontinued businesses, partially offset by gains of
$5 million from the divestitures of the Company's rigid plastics business and
resort property.
In 1994, the Company recognized net unusual charges of $83 million. These
charges included provisions for environmental remediation costs at Aerojet's
Sacramento, California facility (see Note R), environmental costs associated
with other sites, warranty and litigation costs, asset valuation reserves,
restructuring and other costs. These provisions were net of cash recoveries from
insurers and a litigation settlement from an investment banking firm.
The unusual charge in 1994 included a provision for restructuring of $12
million. This provision consisted of $5 million for restructuring the Company's
corporate and segment headquarters and $7 million for the Reinforced Plastics
division. The provision of $12 million included $4 million for the write-off of
related fixed assets, $3 million for facility demolition, $4 million for
severance and $1 million for lease termination costs. The restructuring reserve
balance was $7 million and $16 million at November 30, 1995 and 1994,
respectively. The remaining reserve of $7 million at November 30, 1995 includes
cost for the write-down of fixed assets and facility demolition in 1996.
BUSINESS ACQUISITIONS AND DIVESTITURES
During 1995, the Company sold its rigid plastics business and the Westward
Look Resort property (see Note D). The Company has also announced that it is
pursuing the possible sale of its Reinforced Plastics and Vibration Control
divisions.
During 1994, the Company enhanced its European automotive presence by
acquiring the remaining 75.5 percent equity interest in HENNIGES, a German
original equipment automotive supplier. This acquisition strengthened the
Company's ability to compete in the global automotive markets. Also during 1994,
the Company sold its Aerojet Ordnance division's medium caliber ammunition and
air dispensed munition businesses.
9
<PAGE> 12
FINANCIAL RESOURCES AND CAPITAL SPENDING
Cash flow provided from operating activities for fiscal 1995 was $83
million compared to $133 million in 1994. The decrease was primarily due to
reductions of long-term liabilities for environmental and restructuring matters.
Cash flow provided from operating activities for fiscal 1994 was $133 million
compared to $12 million in 1993. Working capital changes in 1993 included a $63
million payment of tax liabilities related to prior years.
At November 30, 1995, the Company's total debt was $404 million compared to
$385 million at the end of 1994. The increase in debt was due to the refinancing
of the Company's $60 million off-balance sheet receivable financing program (see
Note G), which expired in December 1994. This increase was substantially offset
by positive cash flow from operations and proceeds from the sales of the rigid
plastics business and Westward Look Resort.
Capital expenditures were made principally for capacity expansion and asset
replacement, cost reduction, safety and productivity improvements and
environmental protection. Capital expenditure outlays totaled $63 million in
1995 and 1994 and $67 million in 1993.
Management believes that funds generated from operations and existing
borrowing capacity are adequate to finance planned capital expenditures,
company-sponsored research and development programs and dividend payments to
shareholders.
AEROSPACE AND DEFENSE
Sales in 1995 for Aerojet were $520 million, a decrease of 12 percent from
1994 sales of $594 million. The decrease is due to the residual impact of the
sale of the Ordnance medium caliber ammunition and air dispensed munition
businesses and the Advanced Solid Rocket Motor (ASRM) program termination in
1994. Sales in continuing program areas increased 10 percent to $487 million in
1995. Activity in the Titan, Delta, F22 and Defense Support Program areas
accounted for the increase.
Aerojet's segment operating profit in 1995 was $30 million, as compared to
$25 million in 1994, excluding an unusual charge of $68 million in 1994 for
environmental matters at its Sacramento, California facility. The increase was
due to the effect of charges taken in 1994 for cost growth associated with a
meteorological sensor program, a tactical rocket propulsion program and the
projected loss on the disposal of a small business, net of a gain on the
settlement of the early termination of the ASRM program.
Contract backlog for Aerojet was $0.9 billion at the end of 1995, compared
to $1.1 billion at the end of 1994 and $1.4 billion in 1993. Funded backlog,
which includes only the amount of those contracts for which money has been
directly authorized by Congress, totaled $0.5 billion at the end of 1995,
compared to $0.6 billion at the end of 1994 and $0.7 billion in 1993.
Outlook
Aerojet's contract base has stabilized at current levels. The major
streamlining and restructuring efforts previously undertaken, together with
strong technological competencies, should allow Aerojet to perform well on
current programs and compete effectively in 1996.
1994 Results
Sales in 1994 were $594 million, down 32 percent from 1993 sales of $872
million. Sales declines in the Sense and Destroy Armor (SADARM) and Tube-Fired
Optically Tracked Wire (TOW 2B) programs, the residual impact of the Peacekeeper
program cancellation, the Advanced Solid Rocket Motor (ASRM) program termination
and the sale of the Ordnance business accounted for the overall decrease.
Segment operating profit in 1994 was $25 million, excluding an unusual
charge of $68 million for environmental matters in 1994 compared to $53 million
in 1993, a decline of 53 percent. The decrease in operating profit was primarily
due to lower sales revenue and contract mix issues.
10
<PAGE> 13
AUTOMOTIVE
Sales for the automotive business segment totaled $633 million for 1995, an
increase of 10 percent over 1994 sales of $577 million. The increase was due
primarily to the inclusion of a full year of sales from HENNIGES.
Segment operating profit in 1995 was $24 million, a decrease of $8 million
from 1994 operating profit of $32 million, excluding an unusual charge of $4
million in 1994. The decrease was primarily due to declining domestic sales
volume, increased raw material pricing, continued pricing pressures from OEM
customers and start-up costs associated with the Company's Automotive Occupant
Sensor program.
Outlook
Sales in 1996 will be dependent on the level of vehicle production in both
the North American and European markets. Segment operating profit in 1996 will
be dependent on sales, continued cost reduction programs and productivity
improvements. In addition, sales and operating profit will be materially
impacted by the outcome of the options being pursued for the Reinforced Plastics
and Vibration Control divisions.
1994 Results
Sales in 1994 increased 12 percent to $577 million from $514 million in
1993. Segment operating profit in 1994 was $32 million excluding an unusual
charge of $4 million compared to $21 million in 1993.
The significant increase in sales for 1994 was due to higher volume for key
vehicle platforms and new program launches. The improvement in operating profit
was the result of increased sales volume and manufacturing efficiency gains
throughout the segment, partially offset by losses from HENNIGES.
POLYMER PRODUCTS
Polymer Products again achieved record levels of sales and segment
operating profit in 1995. Sales for 1995 were $619 million, a 9 percent increase
over 1994 sales of $569 million. Each division, Decorative Products, Penn
Racquet Sports and Specialty Polymers, contributed to the increase in sales
growth.
Segment operating profit in 1995 was $59 million, excluding an unusual gain
of $4 million, a 16 percent increase over 1994 segment operating profit of $51
million excluding an unusual charge of $8 million. The earnings improvement was
led by the Specialty Polymers and Penn Racquet Sports divisions, partially
offset by profit declines in the Decorative Products divisions due to higher
manufacturing and raw material costs.
Outlook
Polymer Products should continue to enhance its strong market positions in
its businesses. Sales growth in 1996 will also be dependent on economic
conditions of the market.
1994 Results
Sales in 1994 were $569 million, or 10 percent over 1993 sales of $519
million. The Specialty Polymers and Decorative Products divisions experienced
sales growth while sales at Penn Racquet Sports declined. Increased sales
resulted from market penetration gains along with a full year performance of
Reneer in the Decorative Products division.
Segment operating profit in 1994 was $51 million excluding an unusual
charge of $8 million, a 9 percent increase over $47 million in 1993. The
earnings improvement was achieved by gains in the Specialty Polymers and
Decorative Products divisions.
ENVIRONMENTAL MATTERS
GenCorp's policy is to conduct its businesses with due regard for the
preservation and protection of the environment. The Company devotes a
significant amount of resources and management attention to
11
<PAGE> 14
environmental matters and actively manages its ongoing processes to comply with
extensive environmental laws and regulations. The Company is involved in the
remediation of environmental conditions which resulted from previously accepted
manufacturing and disposal practices that date back to the 1950s and 1960s at
certain of its plants. In addition, the Company has been designated a
potentially responsible party, with other companies, at sites undergoing
investigation and remediation.
In 1995, capital expenditures for projects related to the environment were
approximately $5 million, compared to $6 million in 1994 and $7 million in 1993.
The Company currently forecasts that capital expenditures for environmental
projects will approximate $8 million and $2 million in 1996 and 1997,
respectively. During 1995, noncapital expenditures for environmental compliance
and protection totaled $30 million of which $12 million was for recurring costs
associated with managing hazardous substances and pollution abatement in ongoing
operations and $18 million was for investigation and remediation efforts at
other sites. Similar noncapital expenditures were $33 million and $40 million in
1994 and 1993, respectively. It is presently expected that noncapital
environmental expenditures will increase slightly for the next several years.
The nature of environmental investigation and cleanup activities often
makes it difficult to determine the timing and amount of any estimated future
costs that may be required for remedial measures. However, the Company reviews
these matters and accrues for costs associated with the remediation of
environmental pollution when it becomes probable that a liability has been
incurred and its proportionate share of the amount can be reasonably estimated.
The Company's Consolidated Balance Sheet at November 30, 1995 reflects accruals
of $266 million and amounts recoverable of $128 million from third parties for
remediation costs.
The effect of resolution of environmental matters on results of operations
cannot be predicted due to the uncertainty concerning both the amount and timing
of future expenditures and future results of operations. However, management
believes, on the basis of presently available information, that resolution of
these matters will not materially affect the consolidated financial condition of
the Company. The Company will continue its efforts to mitigate past and future
costs through pursuit of claims for insurance coverage and continued
investigation of new remediation alternatives and associated technologies. For
additional discussion of environmental matters, refer to Note R --
Contingencies.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information called for by this item is set forth beginning on the next page
(page 13) of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in accountants or disagreements with the
Company's independent accountants on accounting and financial disclosure matters
during the Company's two most recent fiscal years or during any period
subsequent to the date of the Company's most recent financial statements.
12
<PAGE> 15
GENCORP INC.
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------
1995 1994 1993
------ ------ ------
(DOLLARS IN MILLIONS,
EXCEPT PER-SHARE DATA)
<S> <C> <C> <C>
NET SALES........................................................ $1,772 $1,740 $1,905
------ ------ ------
COSTS AND EXPENSES
Cost of products sold............................................ 1,430 1,391 1,562
Selling, general and administrative.............................. 174 179 178
Depreciation..................................................... 70 73 74
Interest expense................................................. 34 32 26
Other (income) expense, net...................................... (5) 4 (5)
Unusual items (Note B)........................................... 5 83 --
------ ------ ------
1,708 1,762 1,835
------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES................................ 64 (22) 70
Income tax provision (benefit) (Note F).......................... 26 (9) 27
------ ------ ------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES..... 38 (13) 43
Cumulative effect of accounting changes (Note C)................. -- (213) --
------ ------ ------
Net Income (Loss).............................................. $ 38 $ (226) $ 43
====== ====== ======
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Primary:
Before cumulative effect of accounting changes................. $ 1.17 $ (.41) $ 1.35
Cumulative effect of accounting changes........................ -- (6.69) --
------ ------ ------
Earnings (Loss) Per Share...................................... $ 1.17 $(7.10) $ 1.35
====== ====== ======
Fully Diluted:
Before cumulative effect of accounting changes................. $ 1.10 $ (.41) $ 1.24
Cumulative effect of accounting changes........................ -- (6.69) --
------ ------ ------
Earnings (Loss) Per Share...................................... $ 1.10 $(7.10) $ 1.24
====== ====== ======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
13
<PAGE> 16
GENCORP INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AT NOVEMBER 30,
-------------------
1995 1994
------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents............................................. $ 17 $ 22
Accounts receivable (Note G)..................................... 242 190
Inventories (Note H)............................................. 161 158
Prepaid expenses and other....................................... 45 51
------ ------
Total Current Assets................................... 465 421
Investments and other assets (Note J)............................ 450 468
Property, plant and equipment, at cost
Land........................................................... 41 40
Buildings and building equipment............................... 309 310
Machinery and equipment........................................ 919 907
Construction in progress....................................... 33 37
------ ------
1,302 1,294
Accumulated depreciation....................................... (759) (728)
------ ------
Net property, plant and equipment........................... 543 566
------ ------
Total Assets........................................... $1,458 $1,455
====== ======
CURRENT LIABILITIES
Notes payable.................................................... $ 21 $ 7
Accounts payable -- trade........................................ 99 104
Income taxes (Note F)............................................ 5 19
Accrued expenses (Note K)........................................ 251 237
------ ------
Total Current Liabilities.............................. 376 367
Long-term debt (Note L).......................................... 383 378
Postretirement benefits other than pensions (Note I)............. 372 373
Other long-term liabilities (Note K)............................. 292 344
Contingencies (Note R)
SHAREHOLDERS' EQUITY (DEFICIT)
Preference stock -- $1.00 par value; 15 million shares
authorized; none outstanding................................... -- --
Common stock -- $.10 par value; 90 million shares authorized;
33.4 million shares outstanding (32.1 million in 1994)......... 3 3
Other capital.................................................... 22 5
Retained earnings (deficit)...................................... 2 (16)
Cumulative currency translation adjustment....................... 8 1
------ ------
Total Shareholders' Equity (Deficit)................... 35 (7)
------ ------
Total Liabilities and Shareholders' Equity (Deficit)... $1,458 $1,455
====== ======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
14
<PAGE> 17
GENCORP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------
1995 1994 1993
----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss).................................................. $ 38 $(226) $ 43
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Cumulative effect of accounting changes....................... -- 213 --
Provision for unusual items................................... 10 114 --
Gains on sale of businesses................................... (5) -- --
Savings plan stock contribution............................... 12 -- --
Depreciation, amortization and loss on disposal of fixed
assets....................................................... 76 77 86
Changes in operating assets and liabilities:
Deferred income taxes....................................... 15 (30) (5)
Accounts receivable......................................... 6 (11) (13)
Inventories................................................. (6) 35 5
Other current assets........................................ 1 (1) 5
Current liabilities......................................... (11) (12) (93)
Other non-current assets.................................... (7) (31) (14)
Other long-term liabilities................................. (46) 5 (2)
----- ----- -----
Net Cash Provided by Operating Activities........... 83 133 12
----- ----- -----
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Capital expenditures............................................... (63) (63) (67)
Proceeds from asset dispositions................................... 27 29 4
Acquisitions....................................................... -- (22) (43)
Net (increase) decrease in marketable securities................... -- (1) --
----- ----- -----
Net Cash Used in Investing Activities............... (36) (57) (106)
----- ----- -----
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Long-term debt incurred............................................ 255 341 360
Long-term debt paid................................................ (248) (379) (288)
Accounts receivable financing...................................... (60) -- 10
Net short-term debt incurred (paid)................................ 14 (16) 22
Dividends.......................................................... (20) (19) (19)
Other equity transactions.......................................... 7 3 (2)
----- ----- -----
Net Cash Provided by (Used In) Financing
Activities....................................... (52) (70) 83
----- ----- -----
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............... (5) 6 (11)
Cash and cash equivalents at beginning of year..................... 22 16 27
----- ----- -----
Cash and Cash Equivalents at End of Year............ $ 17 $ 22 $ 16
===== ===== =====
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
15
<PAGE> 18
GENCORP INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK RETAINED CUMULATIVE
------------------- OTHER EARNINGS TRANSLATION
SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT
---------- ------ ------- -------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE AT NOVEMBER 30, 1992.................... 31,729,205 $3 $ 1 $205 $ 4
Net income...................................... 43
Currency translation adjustment................. (2)
Cash dividends -- $.60 per share................ (19)
Shares issued under incentive programs.......... 811 -- --
Reacquired shares for incentive programs........ (158) -- --
---------- -- --- ---- ---
BALANCE AT NOVEMBER 30, 1993.................... 31,729,858 3 1 229 2
Net loss........................................ (226)
Currency translation adjustment................. (1)
Cash dividends -- $.60 per share................ (19)
Shares issued to employee saving plans.......... 336,461 -- 4
Shares issued under incentive programs.......... 8,881 -- --
Reacquired shares for incentive programs........ (18) -- --
---------- -- --- ---- ---
BALANCE AT NOVEMBER 30, 1994.................... 32,075,182 3 5 (16) 1
Net income...................................... 38
Currency translation adjustment................. 7
Cash dividends -- $.60 per share................ (20)
Shares issued to employee saving plans.......... 981,916 -- 12
Shares issued under incentive programs.......... 345,660 -- 5
Reacquired shares for incentive programs........ (309) -- --
---------- -- --- ---- ---
BALANCE AT NOVEMBER 30, 1995.................... 33,402,449 $3 $22 $ 2 $ 8
========== == === ==== ===
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
16
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION -- The consolidated financial statements of the Company
include the accounts of the parent company and its majority-owned subsidiaries.
REVENUE RECOGNITION -- Generally, sales are recorded when products are
shipped or services are rendered. Sales and income under most government
fixed-price and fixed-price-incentive production type contracts are recorded as
deliveries are made. For contracts where relatively few deliverable units are
produced over a period of more than two years, revenue and income are recognized
at the completion of measurable tasks rather than upon delivery of the
individual units. Sales under cost reimbursement contracts are recorded as costs
are incurred and include estimated earned fees in the proportion that costs
incurred to date bear to total estimated costs. Certain government contracts
contain cost or performance incentive provisions which provide for increased or
decreased fees or profits based upon actual performance against established
targets or other criteria. Penalties and cost incentives are considered in
estimated sales and profit rates. Performance incentives are recorded when
measurable or when awards are made and provisions for estimated losses on
contracts are recorded when such losses become evident.
ENVIRONMENTAL COSTS -- The Company expenses, on a current basis, recurring
costs associated with managing hazardous substances and pollution in ongoing
operations. The Company also accrues for costs associated with the remediation
of environmental pollution when it becomes probable that a liability has been
incurred and its proportionate share of the amount can be reasonably estimated.
The Company recognizes amounts recoverable from insurance carriers, the U.S.
government or other third parties, when the collection of such amounts becomes
probable. Pursuant to U.S. government agreements or regulations, the Company
will recover a substantial portion of its environmental costs through the
establishment of prices of the Company's products and services sold to the U.S.
government. With the exception of applicable amounts representing current assets
and liabilities, recoverable amounts and accrued costs are included in other
assets and other long-term liabilities.
INVENTORIES -- Inventories are stated at the lower of cost or market. The
automotive and polymer products business segments use the last-in, first-out
method. The aerospace and defense business segment uses the average cost method.
Foreign operations use the first-in, first-out method.
Work-in-process on fixed-price contracts includes direct costs and overhead
less the estimated average cost of deliveries. Appropriate general and
administrative costs are allocated to government and certain other contracts.
PROPERTY, PLANT AND EQUIPMENT -- Refurbishment costs are capitalized in the
property accounts whereas ordinary maintenance and repair costs are expensed as
incurred. Depreciation for financial reporting is computed principally by
accelerated methods for the aerospace and defense business segment and by the
straight-line method for the remainder of the Company.
GOODWILL -- The excess of purchase price over the value of net assets
acquired is included in other assets and is amortized on a straight-line basis
over a 40-year period or less.
INCOME TAXES -- Deferred income taxes are provided for temporary
differences between the carrying amount of assets and liabilities for financial
reporting and income tax purposes.
STATEMENT OF CASH FLOWS -- For the purposes of the statement of cash flows,
all highly liquid debt instruments purchased with a maturity of three months or
less are considered to be cash equivalents.
EARNINGS PER SHARE -- Primary earnings per share of common stock are
calculated by dividing net income by the weighted average number of common
shares outstanding adjusted for the inclusion of stock options and shares to be
issued under other stock-based compensation programs. For fully diluted earnings
per share, net income and shares outstanding have also been adjusted as if the
Company's $115,000,000 8%
17
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Convertible Subordinated Debentures Due August 1, 2002 had been converted. (See
Note L for further information regarding the debentures.)
STOCK OPTIONS -- The Company accounts for stock options (see Note O) in
accordance with Accounting Principles Board Opinion No. 25 "Accounting for Stock
Issued to Employees".
RECLASSIFICATIONS -- Certain reclassifications have been made to conform
prior year's data to the current presentation.
NOTE B -- UNUSUAL ITEMS
During 1995, the Company recognized a net charge of $5 million for unusual
items. This charge included $10 million for the settlement of a lawsuit and
other matters related to discontinued businesses partially offset by gains of $5
million from the divestitures of the Company's rigid plastics business and
resort property.
During 1994, the Company recognized net unusual charges of $83 million.
These charges included provisions for environmental remediation costs at
Aerojet's Sacramento, California facility of $68 million, environmental costs
associated with other sites of $15 million, warranty costs related to
discontinued products of $6 million, estimated costs for pending litigation of
$5 million, write-downs of $8 million of fixed assets and investments to net
realizable value and restructuring charges of $12 million. These provisions are
net of $31 million of cash collected from insurers for recoveries of
environmental costs incurred by the automotive and polymer products segments and
a settlement of claims against an investment banking firm arising out of such
firm's participation in a 1987 unsolicited tender offer for GenCorp's stock.
NOTE C -- ACCOUNTING CHANGES
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of " (SFAS 121). SFAS 121 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. SFAS 121 also addresses the
accounting for long-lived assets that are expected to be disposed. The Company
is not required to adopt SFAS 121 until fiscal 1997. Due to the number of
operating facilities the Company maintains and the extensive number of estimates
that must be made to assess the impact of SFAS 121, the financial statement
impact of adoption has not yet been determined.
Effective December 1, 1993, the Company adopted the provisions of
Statements of Financial Accounting Standards SFAS No. 106 "Employers' Accounting
for Postretirement Benefits Other Than Pensions" (SFAS 106), SFAS No. 109
"Accounting for Income Taxes" (SFAS 109) and SFAS No. 112 "Employers' Accounting
for Postemployment Benefits" (SFAS 112).
SFAS 106 requires that the expected cost of providing postretirement health
care and life insurance benefits be charged to expense during the years that the
employees render service. Prior to 1994, the Company expensed the cost of these
benefits for continuing operations as they were paid. The Company elected to
recognize immediately the transition obligation, measured as of December 1,
1993, as the cumulative effect of an accounting change. This resulted in a
one-time charge of $196 million (after a reduction for income taxes of $131
million), which does not include amounts accrued in prior years for previously
divested businesses.
SFAS 109 requires the use of the liability method in accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Prior to the adoption of
SFAS 109, income tax expense was determined using the deferred tax method
required by Accounting Principles Board Opinion No. 11 "Accounting For Income
Taxes" (APB 11). As permitted under the new Statement, prior years' financial
18
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
statements have not been restated. The cumulative effect of adopting this
Statement as of December 1, 1993 was $17 million.
SFAS 112 requires the use of the accrual method of accounting for benefits
payable to employees that leave the Company other than by reason of retirement.
Implementation of this standard had an immaterial impact as most of these
benefits were accounted for in accordance with SFAS 112 prior to 1994.
The table below shows the components of the cumulative effect of the above
accounting changes implemented in 1994:
<TABLE>
<CAPTION>
AMOUNT PER SHARE
------ ---------
(DOLLARS IN MILLIONS,
EXCEPT PER-SHARE DATA)
<S> <C> <C>
Other postretirement benefits, net of $131 million in taxes... $(196) $ (6.16)
Income taxes.................................................. (17) (.53)
----- -------
Total............................................... $(213) $ (6.69)
====== =======
</TABLE>
The incremental impact of these changes in accounting methods decreased
earnings for the year ended November 30, 1994 by approximately $4 million.
NOTE D -- ACQUISITIONS AND DIVESTITURES
In 1995, the Company sold its Westward Look Resort and rigid plastics
business for $21 million which resulted in gains of $5 million.
The Company purchased an initial 24.5 percent equity interest in HENNIGES
in July 1993. During 1994, the Company completed its acquisition of HENNIGES
through two additional purchases of 24.5 percent in July 1994 and 51 percent in
September 1994. The combined purchase price of the remaining 75.5 percent equity
interest was approximately $22 million. The total acquisition cost for HENNIGES
was approximately $40 million. HENNIGES' principal business is the manufacture
and distribution of engineered molded and extruded rubber products for the major
German original equipment automotive manufacturers. The acquisition was
accounted for as a purchase in accordance with Accounting Principles Board
Opinion No. 16 and the investment was accounted for under the equity method
until the Company acquired a majority equity interest. The financial statements
of HENNIGES have been consolidated subsequent to such date. The acquisition
resulted in goodwill of $19 million which is being amortized over 35 years.
In 1994, the Company sold its Aerojet Ordnance division's medium caliber
ammunition and air dispensed munition business for $25 million which
approximated net book value.
NOTE E -- RESEARCH AND DEVELOPMENT EXPENSE
Research and Development (R&D) expense was $38 million in 1995, $42 million
in 1994 and $45 million in 1993. R&D expense includes the costs of technical
activities that are useful in developing new products, services, processes or
techniques, as well as those expenses that may significantly improve existing
products or processes.
Additional R&D expenditures which are funded under government contracts
totaled $76 million in 1995, $72 million in 1994 and $112 million in 1993.
NOTE F -- INCOME TAXES
Effective December 1, 1993, the Company adopted SFAS No. 109 "Accounting
for Income Taxes" (SFAS 109) (see Note C).
19
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The income tax provision (benefit) consists of the following:
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------
1995 1994 1993
---- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
CURRENT TAXES
U.S. federal.................................................. $ 4 $ 11 $16
State and local............................................... (2) 1 6
Foreign....................................................... 9 6 8
---- ---- ----
11 18 30
DEFERRED TAXES
U.S. federal.................................................. 13 (21) --
State and local............................................... 5 (6) (3)
Foreign....................................................... (3) -- --
---- ---- ----
15 (27) (3)
---- ---- ----
Income tax provision (benefit)........................... $26 (9) $27
==== ==== ====
</TABLE>
The difference between the statutory federal income tax rate and the
effective tax rate is attributable to the following:
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------
1995 1994 1993
----- ------ -----
<S> <C> <C> <C>
Statutory income tax rate.................................. 35.0% (35.0)% 34.9%
State and local income taxes, net of federal income tax
benefit.................................................. 3.0 (12.8) 2.1
Change in tax rate on deferred tax reversals............... -- -- .4
Earnings of subsidiaries taxed at other than U.S. statutory
rate..................................................... .3 (.3) 2.0
Adjustment to estimated income tax accruals................ .3 14.0 --
Other, net................................................. 1.4 (5.9) (.9)
----- ------ -----
Effective income tax rate............................. 40.0% (40.0)% 38.5%
===== ====== =====
</TABLE>
The table below is a summary of the significant components of the Company's
deferred tax assets and liabilities as of November 30:
<TABLE>
<CAPTION>
AT NOVEMBER 30
-------------------------------------------------
1995 1994
---------------------- ----------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------ ----------- ------ -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Accrued estimated costs........................ $ 96 $-- $107 $ --
Long-term contract method...................... -- 6 -- 11
Depreciation................................... -- 51 -- 52
Pension........................................ -- 38 -- 38
NOLs and tax credit carryforwards.............. 14 -- 18 --
Other postretirement/employment benefits....... 163 -- 169 --
----- --- ----- ----
Total..................................... $273 $95 $294 $101
===== === ===== ====
</TABLE>
20
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The balance sheet reflects deferred income taxes of $30 million and $35
million in prepaid expenses and other at November 30, 1995 and 1994,
respectively. Included in other long-term assets for 1995 and 1994 are deferred
income taxes of $148 million and $158 million, respectively. The majority of net
operating losses (NOLs) and tax credit carryforwards have an indefinite
carryforward period with the remaining portion expiring in years through 2007.
Pretax income of foreign subsidiaries was $17 million in 1995, $17 million in
1994 and $12 million in 1993. Cash paid during the year for income taxes was $28
million in 1995, $23 million in 1994 and $79 million in 1993.
NOTE G -- ACCOUNTS RECEIVABLE
Accounts receivable as shown in the Company's Consolidated Balance Sheet at
November 30, 1994 are net of $60 million representing the interests in
receivables sold under a receivable financing program. When this program expired
on December 31, 1994, the Company used its existing borrowing capacity to
repurchase outstanding receivables previously sold under this agreement.
Unbilled receivables of $24 million and $10 million at November 30, 1995
and 1994, respectively, relating to long-term government contracts are included
in accounts receivable from the U.S. government. Such amounts are billed either
upon delivery of completed units or settlement of contracts. The unbilled
receivables amount at November 30, 1995 includes $5 million expected to be
collected in fiscal year 1996, and $19 million expected to be collected in
subsequent years.
At year end, the amount of commercial and U.S. government receivables was
$165 million and $77 million for 1995 and $111 million and $79 million for 1994,
respectively. Included in the 1995 and 1994 U.S. government receivable is $7
million for environmental remediation (see Note R).
NOTE H -- INVENTORIES
Components of inventories are as follows:
<TABLE>
<CAPTION>
AT NOVEMBER 30,
---------------
1995 1994
----- -----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Raw materials and supplies.......................................... $ 47 $ 51
Work-in-process..................................................... 16 14
Finished products................................................... 65 67
----- -----
Approximate replacement cost of inventories......................... 128 132
Reserves, primarily LIFO............................................ (43) (42)
Long-term contracts at average cost................................. 178 206
Progress payments................................................... (102) (138)
----- -----
Total inventories.............................................. $ 161 $ 158
===== =====
</TABLE>
Aerojet's inventories applicable to government and other contracts include
general and administrative costs. The total of such costs incurred in 1995 and
1994 was $61 million and $108 million, respectively, and the amounts in
inventory at the end of those years are estimated at $21 million and $36
million, respectively. These estimates are based on costs being removed from
inventories on a basis proportional to the amounts of each cost element
projected through completion of the contract.
Inventories using the LIFO method represented 73 percent and 74 percent of
consolidated inventories at replacement cost at November 30, 1995 and 1994,
respectively.
21
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
At November 30, 1995, Aerojet's contract accounting positions reflect the
expected recovery of approximately $54 million in pending claims on numerous
contracts with the U.S. government. These claims are in varying stages of
negotiation, and relate principally to requests for price adjustments related to
customer-caused issues or contracts terminated or cancelled at the customer's
convenience. Management believes that the resolution of these claims, in the
aggregate, will not have a material effect on the consolidated financial
condition of the Company.
NOTE I -- EMPLOYEE BENEFIT PLANS
PENSION PLANS -- The Company has a number of defined benefit pension plans
which cover substantially all salaried and hourly employees. Normal retirement
age generally is 65, but certain plan provisions allow for earlier retirement.
The Company's funding policy is consistent with the funding requirements of
federal law. The pension plans provide for pension benefits, the amounts of
which are calculated under formulas principally based on average earnings and
length of service for salaried employees and under negotiated non-wage based
formulas for hourly employees.
The components of net pension costs (income) are as follows:
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------
1995 1994 1993
----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Service cost -- benefits earned during the period.......... $ 18 $ 21 $ 20
Interest cost on projected benefit obligation.............. 117 118 111
Actual return on assets.................................... (325) 13 (231)
Net amortization and deferral.............................. 184 (161) 93
----- ----- -----
Net pension costs (income)....................... $ (6) $ (9) $ (7)
===== ===== =====
</TABLE>
The assumptions used in calculating the present value of the accrued
defined benefit pension plan benefits and pension cost at November 30, 1995,
1994 and 1993 and for the years then ended were determined in consultation with
the Company's actuary. Excluding a variable annuity program with an interest
assumption of 8 percent and assets at November 30, 1995 of $774 million, the
weighted average expected rate of return on plan assets for all plans was 9
percent for all years presented. The assumed weighted average discount rate was
7.5 percent for 1995 and 8 percent for 1994 and 1993. The assumed weighted
average rate of salary progression was 4 percent for 1995 and 5 percent for 1994
and 1993. The effect of changing the discount and salary progression rates was
to increase the projected benefit obligation by $44 million and pension income
by $1 million, respectively. Benefits under the hourly plans are not based on
wages. Therefore, no benefit escalation assumption beyond negotiated increases
is provided. The majority of the Company's plan assets are invested in
short-term investments, listed stocks and bonds.
22
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The following table presents the funded status of the plans:
<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1995 1994
------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Plan assets at fair value.......................................... $1,871 $1,647
------ ------
Actuarial present value of plan benefits:
Vested........................................................... $1,576 $1,405
Non-vested....................................................... 51 51
------ ------
Accumulated benefit obligation..................................... 1,627 1,456
Effect of projected salary increases............................... 40 50
------ ------
Projected benefit obligation....................................... $1,667 $1,506
------ ------
Overfunded plans................................................... $ 204 $ 141
Unamortized balances:
Transition assets................................................ (31) (35)
Plan amendments.................................................. 33 31
Experience gains................................................. (90) (28)
Minimum funding liability........................................ (6) (7)
------ ------
Prepaid pension cost (included in investments and other
assets)................................................ $ 110 $ 102
====== ======
</TABLE>
The Company also sponsors a number of defined contribution pension plans.
Participation in these plans is available to substantially all salaried
employees and to certain groups of hourly employees. Company contributions to
these plans are based on either a percentage of employee contributions or on a
specified amount per hour based on the provisions of each plan. The cost of
these plans was $11 million in 1995, $12 million in 1994 and $14 million in
1993. The Company funds its contribution to the salaried plan with either
GenCorp common stock or cash.
HEALTH CARE PLANS -- In addition to providing pension benefits, the Company
currently provides certain health care and life insurance benefits to most
retired employees in the United States with varied coverage by employee groups.
The health care plans generally provide for cost sharing in the form of employee
contributions, deductibles and coinsurance between the Company and its retirees.
Retirees in certain other countries are provided similar benefits by plans
sponsored by their governments. Effective December 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (SFAS 106) (see Note C).
23
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The table below sets forth the components of the net periodic cost and
benefit obligation for postretirement benefits other than pensions:
NET PERIODIC COST
<TABLE>
<CAPTION>
YEARS ENDED
NOVEMBER 30,
---------------
1995 1994
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Service cost........................................................ $ 4 $ 5
Interest cost....................................................... 29 31
Net curtailment gain, amortization and deferral..................... (6) --
---- ----
Total cost........................................................ $ 27 $ 36
==== ====
</TABLE>
BENEFIT OBLIGATION
<TABLE>
<CAPTION>
AT NOVEMBER 30,
---------------
1995 1994
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Retirees............................................................ $240 $294
Fully eligible active plan participants............................. 45 52
Other active plan participants...................................... 47 60
---- ----
Projected benefit obligation........................................ 332 406
---- ----
Unamortized balances:
Plan amendments................................................... 65 --
Experience gains.................................................. 5 --
---- ----
Accrued benefit obligation........................................ $402 $406
==== ====
</TABLE>
The projected benefit obligation and related benefit cost are determined by
the application of relevant actuarial assumptions. The Company utilized a 7.5
percent and an 8.0 percent discount rate in 1995 and 1994, respectively. The
effect of changing the discount rate was to increase the projected benefit
obligation by $14 million. The Company anticipates that its health care cost
trend rate will decline from 9 percent in 1995 to 6 percent in 2003, after which
the trend rate is expected to stabilize. The effect of a one percentage point
increase in the assumed health care cost trend rate for each future year would
increase the benefit obligation at November 30, 1995 by $8 million and increase
the aggregate of the service and interest cost components of net periodic cost
by $1 million. Plan design changes decreased the projected benefit obligation by
$80 million in 1995. Unrecognized prior service cost is being amortized over the
average remaining service of the affected active employees. A curtailment gain
of $5 million was included in the gain on sale of the Company's rigid plastics
business in 1995.
The cost of retiree health care and life insurance benefits in 1993
amounted to $30 million.
24
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE J -- INVESTMENTS AND OTHER ASSETS
The components of investments and other assets are as follows:
<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1995 1994
---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C>
Recoverable from U.S. government and third parties for
environmental remediation....................................... $121 $125
Deferred taxes.................................................... 148 158
Prepaid pension................................................... 110 102
Other............................................................. 71 83
---- ----
Total investments and other assets.............................. $450 $468
==== ====
</TABLE>
NOTE K -- ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES
The components of accrued expenses are as follows:
<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1995 1994
---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C>
Payable for goods, services and rights............................ $108 $ 98
Accrued compensation and employee benefits........................ 77 85
Environmental reserves............................................ 34 27
Restructuring and other reserves.................................. 15 12
Other............................................................. 17 15
---- ----
Total accrued expenses.......................................... $251 $237
==== ====
</TABLE>
The components of other long-term liabilities are as follows:
<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1995 1994
---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C>
Environmental reserves............................................ $232 $255
Other............................................................. 60 89
---- ----
Total other long-term liabilities............................... $292 $344
==== ====
</TABLE>
25
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE L -- LONG-TERM DEBT AND CREDIT LINES
Long-term debt and credit lines consist of the following:
<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1995 1994
---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C>
Revolving loans................................................... $255 $240
8% Unsecured convertible subordinated
debentures maturing 2002........................................ 115 115
Other............................................................. 17 25
---- ----
Total debt........................................................ 387 380
Less amounts due within one year.................................. (4) (2)
---- ----
Total long-term debt and credit lines........................... $383 $378
==== ====
</TABLE>
The Company has a $445 million unsecured revolving credit facility
(Facility) which expires in April 1997. As of November 30, 1995, unused
revolving lines of credit totaled $190 million. The Company pays commitment fees
of 3/8 of one percent on the unused balance. Interest rates are variable,
primarily based on LIBOR, and was at an average rate of 6.8 percent at November
30, 1995.
The Facility contains various debt restrictions and provisions relating to
net worth and interest coverage ratios. The Company is required to maintain
consolidated net worth of not less than $271 million, excluding the impact of
the accounting standards discussed in Note C and certain unusual items recorded
in 1994, pursuant to an amendment to the Facility. Excluding the impact of these
items, the Company had net worth of $306 million at November 30, 1995 and was in
compliance with the amended agreement.
The $115,000,000 8% Convertible Subordinated Debentures Due August 1, 2002
(Debentures) are redeemable at the option of the Company, in whole or in part,
at any time on or after August 10, 1996. The Debentures are convertible at any
time prior to maturity, unless previously redeemed, into shares of common stock
at a conversion price of $16.065 per share (equivalent to a conversion rate of
approximately 62.247 shares of Common Stock per $1,000 principal amount of
Debentures) subject to adjustment in certain circumstances. The quoted market
value of the Debentures was $116 million at November 30, 1995.
At November 30, 1995, the Company had unsecured, uncommitted lines of
credit with several banks for short-term borrowings aggregating $47 million, of
which $16 million was outstanding. Borrowings under such lines generally bear
interest at money market rates and are payable on demand. The Company also had
outstanding letters of credit totaling $28 million at November 30, 1995.
The maturities of other debt decline from $5 million in 1996 to $1 million
in 2000.
Cash paid during the year for interest was $36 million in 1995, $31 million
in 1994 and $28 million in 1993.
NOTE M -- DISCONTINUED OPERATIONS
The balance sheet includes various current and long-term reserves relating
to operations discontinued in prior years. Those reserves include estimates for
postretirement benefits (General Tire), environmental matters (Lawrence, MA and
Muskegon, MI) and other accrued liabilities (RKO General).
26
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Discontinued operations reserves consist of the following:
<TABLE>
<CAPTION>
AT NOVEMBER
30,
-------------
1995 1994
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Accrued expenses...................................................... $ 41 $ 24
Postretirement benefits other than pensions............................ 59 60
Other long-term liabilities........................................... 34 50
---- ----
Total discontinued operations reserves........................... $134 $134
==== ====
</TABLE>
NOTE N -- PREFERRED SHARE PURCHASE RIGHTS
In 1987, the Directors declared a dividend of one Preferred Share Purchase
Right (Right) on each outstanding share of common stock, payable to shareholders
of record on February 27, 1987. Rights outstanding at November 30, 1995 and 1994
were 33,402,449 and 32,075,182, respectively. The Shareholder Rights Plan, as
amended effective December 1987, provides that under certain circumstances each
Right will entitle shareholders to buy one one-hundredth of a share of a new
Series A Cumulative Preference Stock at an exercise price of $100. The Rights
will be exercisable only if a person or group acquires 20 percent or more of
GenCorp's common stock or announces a tender or exchange offer that will result
in such person or group acquiring 30 percent or more of the common stock.
GenCorp will be entitled to redeem the Rights at two cents per Right at any time
until ten days after a 20 percent position has been acquired (unless the Board
elects to extend such time period, which in no event may exceed thirty days). If
the Company is involved in certain transactions after the Rights become
exercisable, a holder of Rights (other than Rights beneficially owned by a
shareholder who has acquired 20 percent or more of GenCorp's common stock, which
Rights become void) is entitled to buy a number of the acquiring company's
common shares, or GenCorp's common stock, as the case may be, having a market
value of twice the exercise price of each Right. A potential dilutive effect may
exist upon the exercise of the Rights. The Rights will expire February 18, 1997.
Until a Right is exercised, the holder will have no rights as a stockholder of
the Company including, without limitation, the right to vote as a stockholder or
to receive dividends.
At November 30, 1995, 575,000 shares of $1 par value Series A Cumulative
Preference Stock were reserved for issuance upon exercise of Preferred Share
Purchase Rights.
NOTE O -- STOCK-BASED COMPENSATION PLANS
The GenCorp Inc. 1993 Stock Option Plan provides for an aggregate of
2,500,000 shares of the Company's common stock to be purchased pursuant to stock
options or to be subject to stock appreciation rights (SARs) which may be
granted to selected officers and key employees at prices equal to the market
value of a share of common stock on the date of grant. The options are
exercisable in 25 percent increments at six months, one year, two years and
three years from date of grant. No stock appreciation rights have been granted.
27
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Information regarding this option plan is as follows:
<TABLE>
<CAPTION>
STOCK OPTION PLAN SUMMARY 1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Options outstanding, beginning of fiscal year..... 1,579,150 496,075 --
Granted........................................... 1,077,500 1,169,650 501,575
Forfeited......................................... (192,437) (86,575) (5,500)
--------- --------- ---------
Options outstanding, November 30.................. 2,464,213 1,579,150 496,075
========= ========= =========
Options exercisable, November 30.................. 806,518 220,135 --
Options available for grant, November 30.......... 35,787 920,850 2,003,925
Per share range of prices of outstanding $ 10.75 to $ 12.625 to $ 16.00 to
options at end of year.......................... $ 16.625 $ 16.625 $ 16.625
</TABLE>
The Stock Incentive Compensation Plan (SIC Plan) adopted in 1983 is based
on a formula which values incentive awards payable in cash or stock based upon
changes in the market value of the Company's common stock. The SIC Plan is
compensatory, and compensation (income)/expense attributable to the SIC Plan was
($4) million in 1995, $2 million in 1994 and $5 million in 1993. The liability
for accrued stock incentive compensation was $3 million and $15 million at
November 30, 1995 and 1994, respectively. During 1995, the Company converted
certain interests under the SIC Plan from phantom shares payable in cash or
stock into shares of common stock to be held in trust until payment pursuant to
elections made at the time of grant. The conversion of this Plan resulted in a
$5 million increase in shareholders' equity. No awards may be granted under the
SIC Plan after March 1, 1993.
NOTE P -- COMMON STOCK
At November 30, 1995, 13,982,000 shares of $.10 par value common stock were
reserved for future issuance for conversion of the 8% Convertible Subordinated
Debentures, payments of the Retirement Savings Plan contributions and exercise
of options or payments of awards under stock-based compensation plans.
NOTE Q -- LEASE COMMITMENTS
The Company and its subsidiaries lease certain manufacturing plant
facilities, machinery and equipment and office buildings under long-term,
noncancelable leases. The leases generally provide for renewal options ranging
from five to ten years and require the Company to pay for utilities, insurance,
taxes and maintenance. Rent expense was $11 million in 1995, $10 million in 1994
and $14 million in 1993. Future minimum commitments at November 30, 1995 for
existing operating leases were $33 million with annual amounts declining from $9
million in 1996 to $3 million in 1999. The Company's current obligation for
leases after 1999 is $10 million.
NOTE R -- CONTINGENCIES
ENVIRONMENTAL MATTERS
Sacramento, California -- In June 1989, the United States District Court
approved a Partial Consent Decree (Decree) requiring Aerojet to conduct a
Remedial Investigation/Feasibility Study (RI/FS) of Aerojet's Sacramento,
California site and prepare an RI/FS report on specific environmental conditions
present at the site and alternatives available to remedy such conditions. The
Decree does not require Aerojet to remediate the site. Aerojet also is required
to pay for certain government oversight costs associated with compliance with
the Decree.
In September 1993, Aerojet reached a settlement with the U.S. government
whereby Aerojet recovered approximately $18 million for costs incurred at the
site from July 1989 through November 1992. The
28
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
settlement also provides that 65 percent of covered costs incurred after
November 1992, net of insurance recoveries, will be added to the pricing of
government contracts.
Aerojet has substantially completed its efforts to determine the nature and
extent of contamination at the facility and has identified the technologies that
will likely be used to remediate the site. Based on available facts, existing
technology and enacted laws and regulations, Aerojet recorded a net $68 million
charge in 1994 to remediate the site. These remediation costs are principally
for design, construction and enhancement of groundwater and soil treatment
facilities, ongoing project management and regulatory oversight, and are
expected to be incurred over a period of approximately 20 years. This estimate
will be subject to changes as work progresses and additional experience is
gained.
At November 30, 1995, Aerojet had a reserve of $204 million for costs to
complete the RI/FS and remediate the site and has recognized $119 million for
probable future recoveries under the 1993 settlement agreement with the U.S.
government.
Legal proceedings to obtain reimbursements of environmental costs from
insurers are continuing.
Lawrence, Massachusetts -- The Company has studied remediation alternatives
for its closed Lawrence, Massachusetts facility, which was contaminated with
PCBs, and has begun site remediation and off-site disposal of debris. The
Company has a reserve of $30 million for decontamination and long-term operating
and maintenance costs of this site. The reserve represents the Company's best
estimate for the remaining remediation cost. Future remediation cost could range
as high as $56 million depending on the results of future testing and the
ultimate remediation alternatives undertaken at the site. The time frame for
remediation is currently estimated to range from 4 to 8 years.
Muskegon, Michigan -- The United States District Court has ruled that
Aerojet and its two inactive Cordova Chemical subsidiaries (Cordova) are liable
with a former owner/operator of a former Cordova site in Muskegon, Michigan for
remediation at the site. Subsequently, the United States District Court's
decision has been appealed to the United States Court of Appeals. Separately,
the State of Michigan Court of Claims previously ruled that the State of
Michigan is obligated to indemnify Aerojet and Cordova for remediation costs at
the site. On July 14, 1995, the Michigan Court of Appeals affirmed the decision
of the Court of Claims, and on September 20, 1995, the Michigan Court of Appeals
denied the State of Michigan's motion for a rehearing. The State has petitioned
the Michigan State Supreme Court for review.
The Company believes that most of the $50 million to $100 million in
anticipated remediation costs will be paid by the State of Michigan or the
former owner/operator and that its $14 million reserve will be adequate to cover
the Company's costs associated with this matter. Included in investments and
other assets is $9 million to be recovered from insurance companies.
San Gabriel Valley Basin, California -- Aerojet, through its Azusa
facility, is considered to be a potentially responsible party (PRP) in the
portion of the San Gabriel Valley Superfund Site known as the Baldwin Park
Operable Unit (BPOU). Regulatory action involves possible regional groundwater
remediation, site specific investigation and cleanup.
Aerojet's investigation concluded that the principal groundwater
contamination is upgradient of Aerojet's property and that only low
concentrations of contaminants are present in the soils of Aerojet's presently
and historically owned properties. The EPA contends that Aerojet is one of the
four largest sources of groundwater contamination at the BPOU of the sixteen
PRPs identified by the EPA. Aerojet contests the EPA's position regarding the
source of contamination and the number of responsible PRPs.
The EPA has issued a Record of Decision requiring groundwater remediation
for the BPOU, estimated to cost $47 million in non-recurring costs and $4
million to $5 million in annual operating expense. Aerojet is participating in
an effort to develop an alternative "consensus" plan in which certain water
supply entities would integrate the remedial requirements into a water supply
project. If implemented, the consensus plan will
29
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
provide federal funding and funding from water supply entities receiving benefit
from the project, thus reducing the PRPs' costs.
Aerojet's cost exposure cannot be estimated at this time. However,
management believes, on the basis of presently available information, that
resolution of this matter will not materially affect the consolidated financial
condition of the Company. Among the factors considered by management are the
following: the number of other viable PRPs; the potential for federal funding or
cost sharing with water supply interests; Aerojet's site-specific investigation;
and the fact that, to date, Aerojet's San Gabriel Valley costs are being
recovered from the government in the pricing of Aerojet's contracts.
Additionally, Aerojet has filed suit against its insurers for recovery of such
costs.
Other Sites -- The Company is also currently involved, together with other
companies, in 13 other Superfund sites on the National Priority List under the
federal Comprehensive Environmental Response, Compensation, and Liability Act
(Superfund) and 22 other non-Superfund sites. In many instances, the Company's
liability and proportionate share of costs have not been determined largely due
to uncertainties as to the nature and extent of site conditions and the
Company's involvement. While government agencies frequently claim PRPs are
jointly and severally liable at such sites, in the Company's experience, interim
and final allocations of liability costs are generally made based on relative
contributions of waste. Based on the Company's previous experience, its
allocated share has frequently been minimal, in many instances less than 1
percent. The Company has reserves of approximately $18 million as of November
30, 1995 which it believes are sufficient to cover its best estimate of its
share of the environmental remediation costs at these other sites. Also, the
Company is seeking recovery of its costs from its insurers.
ENVIRONMENTAL SUMMARY
In regard to the sites discussed above, management believes, on the basis
of presently available information, that resolution of these matters will not
materially affect the consolidated financial condition of the Company. The
effect of resolution of these matters on results of operations cannot be
predicted due to the uncertainty concerning both the amount and timing of future
expenditures and future results of operations.
OTHER LEGAL MATTERS
In August 1991, Olin Corporation (Olin) advised GenCorp that Olin believed
GenCorp to be jointly and severally liable for certain Superfund remediation
costs, estimated by Olin to be $70 million, associated with a former Olin
manufacturing facility and waste disposal sites in Ashtabula County, Ohio.
In 1993, GenCorp sought declaratory judgment in the United States District
Court for the Northern District of Ohio that the Company is not responsible for
environmental remediation costs associated with the former Olin facility and
Superfund sites. Olin counterclaimed seeking a judgment that GenCorp is jointly
and severally liable for a share of the remediation costs.
In late 1995, the Court hearing on the first phase of the case relative to
the issue of joint and several liability was completed, but the Court has not
yet rendered a decision. If the Court finds GenCorp is liable, subsequent trial
phases will address allocation and damages.
The Company is vigorously litigating this matter and believes that it has
meritorious defenses to the claims raised by Olin. While there can be no
certainty regarding the outcome of any litigation, in the opinion of management,
after reviewing the information currently available with respect to this matter
and consulting with the Company's counsel, any liability which may ultimately be
incurred will not materially affect the consolidated financial condition of the
Company.
The Company and its subsidiaries are subject to various other legal
actions, governmental investigations, and proceedings relating to a wide range
of matters in addition to those discussed above. In the opinion of management,
after reviewing the information which is currently available with respect to
such matters and consulting with the Company's counsel, any liability which may
ultimately be incurred with respect to these
30
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
additional matters will not materially affect the consolidated financial
condition of the Company. The effect of resolution of these matters on results
of operations cannot be predicted because any such effect depends on both future
results of operations and the amount and timing of the resolution of such
matters.
NOTE S -- BUSINESS SEGMENT INFORMATION
The automotive business segment designs and produces original equipment
components and systems for the domestic, transplant and foreign automotive
industries in Vehicle Sealing, Vibration Control and Reinforced Plastics.
Specifically, these products include extruded rubber for vehicle body and window
sealing systems, molded rubber for vibration control components and reinforced
plastic body panels for passenger cars and trucks.
The polymer products business segment designs and manufactures specialty
polymers and decorative products for consumers and industry. The segment is a
leading producer of polymer-based products and operates three businesses:
Decorative Products, Penn Racquet Sports and Specialty Polymers. The principal
markets include the paper industry, residential and commercial construction and
the sporting goods industry, as well as varied consumer and industrial markets
that demand a broad range of thermoplastic products.
The aerospace and defense business segment designs, develops and
manufactures propulsion systems and electronic sensor systems for the Department
of Defense and National Aeronautics and Space Administration. Its primary
businesses are Propulsion and Electronic Systems.
GenCorp sales in 1995, 1994 and 1993 to the U.S. government and its
agencies (principally the Department of Defense) totaled $490 million, $578
million and $847 million, respectively, and were generated almost entirely by
the aerospace and defense business segment. Sales to General Motors, primarily
by the automotive business segment, of $286 million in 1995, $281 million in
1994 and $250 million in 1993 were at least 10 percent of the Company's net
sales. Intersegment sales were not material.
Segment operating profit represents net sales less applicable costs,
expenses and provisions for restructuring and unusual items relating to
operations. Segment operating profit excludes corporate income and expenses,
provisions for unusual items, interest expense and income taxes.
In 1995, the Company recognized a net unusual gain of $4 million from the
divestiture of its rigid plastics facility in Newcomerstown, Ohio. The rigid
plastics unit was part of the polymer products business segment.
In 1994, the Company recognized net unusual charges of $83 million, of
which $80 million related to the Company's three business segments as follows:
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS) AEROSPACE AND DEFENSE AUTOMOTIVE POLYMER PRODUCTS
----------------------------- --------------------- ---------- ----------------
<S> <C> <C> <C>
Environmental................ $68 $2 $6
Warranty costs............... -- -- 5
Asset write-downs............ -- -- 3
Restructuring charges........ -- 7 --
Recoveries from insurers..... -- (5) (6)
--- -- --
Total unusual items..... $68 $4 $8
=== == ==
</TABLE>
Identifiable assets are those assets that are used by the business segments
and exclude corporate assets consisting principally of cash and marketable
securities, certain investments and headquarters' fixed assets.
31
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
GEOGRAPHIC SEGMENTS
GenCorp's operations are located primarily in Canada, Europe and the United
States. Inter-area sales are not significant to the total revenue of any
geographic area. Unusual items included in operating profit pertained to United
States operations.
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------
1995 1994 1993
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
NET SALES
Canada................................................... $ 95 $ 81 $ 72
Europe................................................... 123 33 15
United States............................................ 1,446 1,523 1,729
United States export sales............................... 108 103 89
------ ------ ------
$1,772 $1,740 $1,905
====== ====== ======
SEGMENT OPERATING PROFIT
Canada................................................... $ 17 $ 14 $ 12
Europe................................................... (3) (3) 2
United States............................................ 99 97 107
Unusual items............................................ 4 (80) --
------ ------ ------
$ 117 $ 28 $ 121
====== ====== ======
IDENTIFIABLE ASSETS
Canada................................................... $ 36 $ 32 $ 32
Europe................................................... 115 119 11
United States............................................ 1,010 1,150 1,047
------ ------ ------
1,161 1,301 1,090
------ ------ ------
Corporate assets......................................... 297 154 123
------ ------ ------
Total Assets................................... $1,458 $1,455 $1,213
====== ====== ======
</TABLE>
32
<PAGE> 35
GENCORP INC.
BUSINESS SEGMENT INFORMATION
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------------
1995 1994 1993
------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
NET SALES
Aerospace and defense......................................... $ 520 $ 594 $ 872
Automotive.................................................... 633 577 514
Polymer products.............................................. 619 569 519
------- ------- -------
$ 1,772 $ 1,740 $ 1,905
======= ======= =======
SEGMENT OPERATING PROFIT
Aerospace and defense......................................... $ 30 $ 25 $ 53
Automotive.................................................... 24 32 21
Polymer products.............................................. 59 51 47
Unusual items................................................. 4 (80) --
------- ------- -------
Segment Operating Profit................................. 117 28 121
Interest expense.............................................. (34) (32) (26)
Corporate other (income) expense, net......................... 6 4 --
Corporate expenses............................................ (16) (19) (25)
Unusual items................................................. (9) (3) --
------- ------- -------
Income (Loss) Before Income Taxes........................ $ 64 $ (22) $ 70
======= ======= =======
ASSETS
Aerospace and defense......................................... $ 579 $ 605 $ 538
Automotive.................................................... 346 375 270
Polymer products.............................................. 236 321 282
------- ------- -------
Identifiable Assets...................................... 1,161 1,301 1,090
Marketable securities, cash and other corporate assets........ 297 154 123
------- ------- -------
Total Assets............................................. $ 1,458 $ 1,455 $ 1,213
======= ======= =======
CAPITAL EXPENDITURES
Aerospace and defense......................................... $ 15 $ 18 $ 20
Automotive.................................................... 33 23 28
Polymer products.............................................. 13 21 18
Corporate..................................................... 2 1 1
------- ------- -------
$ 63 $ 63 $ 67
======= ======= =======
DEPRECIATION
Aerospace and defense......................................... $ 25 $ 34 $ 40
Automotive.................................................... 27 21 19
Polymer products.............................................. 15 16 13
Corporate..................................................... 3 2 2
------- ------- -------
$ 70 $ 73 $ 74
======= ======= =======
EMPLOYEES
Aerospace and defense......................................... 3,070 3,390 4,670
Automotive.................................................... 5,660 6,260 5,260
Polymer products.............................................. 2,700 2,850 2,930
Corporate..................................................... 270 470 440
------- ------- -------
11,700 12,970 13,300
======= ======= =======
</TABLE>
33
<PAGE> 36
GENCORP INC.
QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------
FEBRUARY MAY AUGUST NOVEMBER
28 31 31 30
-------- --- ------ --------
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1995
Net sales................................................. $ 428.1 $461.9 $ 431.4 $ 450.1
------- ------ ------- -------
Gross profit.............................................. $ 61.3 $ 79.0 $ 61.9 $ 72.6
------- ------ ------- -------
Unusual items............................................. $ -- $ -- $ -- $ (5.4)
------- ------ ------- -------
Income before income taxes................................ $ 11.6 $ 27.2 $ 13.3 $ 11.7
------- ------ ------- -------
Net income................................................ $ 7.0 $ 16.3 $ 8.0 $ 7.0
------- ------ ------- -------
- ------------------------------------------------------------------------------------------------------------------
Earnings per share of common stock
Primary................................................. $ .22 $ .50 $ .24 $ .21
Fully diluted........................................... $ .21 $ .45 $ .23 $ .21
The sum of the quarterly E.P.S. amounts may not equal the annual amount due to changes in the number of shares
outstanding during the year.
Common stock price range -- high.......................... 14 1/8 13 1/4 13 1/8 11 7/8
-- low........................... 10 12 1/4 10 5/8 10 1/4
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------
FEBRUARY MAY AUGUST NOVEMBER
28 31 31 30
-------- --- ------ --------
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1994
Net sales................................................. $ 401.7 $467.7 $ 374.4 $ 495.7
------- ------ ------- -------
Gross profit.............................................. $ 46.6 $ 80.1 $ 64.0 $ 23.6
------- ------ ------- -------
Unusual items............................................. $ -- $ -- $ -- $ (82.9)
------- ------ ------- -------
Income (Loss) before income taxes......................... $ (5.3) $ 23.7 $ 10.6 $ (50.7)
------- ------ ------- -------
Income (Loss) before cumulative effect of accounting
changes................................................. $ (3.2) $ 14.2 $ 6.4 $ (30.4)
------- ------ ------- -------
Net income (loss)......................................... $(216.0) $ 14.2 $ 6.4 $ (30.4)
------- ------ ------- -------
- -------------------------------------------------------------------------------------------------------------------
Earnings (Loss) per share of common stock
Primary:
Before cumulative effect of accounting changes........ $ (.10) $ .45 $ .20 $ (.95)
Cumulative effect of accounting changes............... (6.71) -- -- --
------- ------ ------- -------
Earnings (Loss) per share............................. $ (6.81) $ .45 $ .20 $ (.95)
------- ------ ------- -------
Fully diluted:
Before cumulative effect of accounting changes........ $ (.10) $ .40 $ .20 $ (.95)
Cumulative effect of accounting changes............... (6.71) -- -- --
------- ------ ------- -------
Earnings (Loss) per share............................. $ (6.81) $ .40 $ .20 $ (.95)
------- ------ ------- -------
The sum of the quarterly E.P.S. amounts may not equal the annual amount due to changes in the number of shares
outstanding during the year.
Common stock price range -- high.......................... 16 3/8 15 1/2 14 1/2 14 3/8
-- low........................... 13 1/4 12 11 1/2 10
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
CAPITAL STOCK
The Company's common stock is listed on the New York and Chicago Stock
Exchanges. At November 30, 1995 and December 31, 1995, there were approximately
14,500 holders of record of the Company's common stock. During 1995, 1994 and
1993, the Company paid quarterly cash dividends on common stock of $.15 per
share.
34
<PAGE> 37
GENCORP INC.
SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE AND RATIO
DATA)
<S> <C> <C> <C> <C> <C>
NET SALES
Aerospace and defense................................... $ 520 $ 594 $ 872 $1,019 $1,142
Automotive.............................................. 633 577 514 436 368
Polymer products........................................ 619 569 519 482 483
------ ------ ------ ------ ------
$1,772 $1,740 $1,905 $1,937 $1,993
====== ====== ====== ====== ======
SEGMENT OPERATING PROFIT
Aerospace and defense................................... $ 30 $ 25 $ 53 $ 71 $ 75
Automotive.............................................. 24 32 21 9 (5)
Polymer products........................................ 59 51 47 45 41
Unusual items........................................... 4 (80) -- (22) --
------ ------ ------ ------ ------
$ 117 $ 28 $ 121 $ 103 $ 111
====== ====== ====== ====== ======
OPERATIONS
Income (Loss) from operations........................... $ 38 $ (13) $ 43 $ 22 $ 32
Cumulative effect of accounting changes................. -- (213) -- -- --
------ ------ ------ ------ ------
Net Income (Loss)................................... $ 38 $ (226) $ 43 $ 22 $ 32
====== ====== ====== ====== ======
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Income (Loss) from operations........................... $ 1.17 $ (.41) $ 1.35 $ .70 $ 1.00
Cumulative effect of accounting changes................. -- (6.69) -- -- --
------ ------ ------ ------ ------
Net income (loss) (primary)............................. $ 1.17 $(7.10) $ 1.35 $ .70 $ 1.00
Net income (loss) (fully diluted)....................... $ 1.10 $(7.10) $ 1.24 $ .70 $ 1.00
Cash dividends paid..................................... $ .60 $ .60 $ .60 $ .60 $ .60
OPERATING RATIOS
Return on average assets employed....................... 6.4% 1.2% 9.3% 7.3% 9.4%
Assets employed turnover................................ 1.9x 2.3x 2.6x 2.7x 2.9x
Income (Loss) from operations to net sales.............. 2.1% (.7)% 2.3% 1.1% 1.6%
GENERAL
Capital expenditures.................................... $ 63 $ 63 $ 67 $ 96 $ 93
Depreciation............................................ 70 73 74 79 77
Total assets*........................................... 1,458 1,455 1,213 1,131 1,113
Long-term debt.......................................... 383 378 416 344 355
</TABLE>
*Prior to 1993, the Company recorded environmental liabilities net of probable
future recoveries from third parties.
35
<PAGE> 38
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of GenCorp Inc.:
We have audited the accompanying consolidated balance sheets of GenCorp
Inc. as of November 30, 1995 and 1994, and the related consolidated statements
of income, shareholders' equity (deficit), and cash flows for each of the three
years in the period ended November 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of GenCorp Inc. at
November 30, 1995 and 1994, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended November 30,
1995, in conformity with generally accepted accounting principles.
As discussed in Note C to the consolidated financial statements, in 1994
the Company changed its method of accounting for postretirement benefits other
than pensions, income taxes and postemployment benefits.
ERNST & YOUNG LLP
Akron, Ohio
January 15, 1996
36
<PAGE> 39
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to nominees who will stand for election as a
director of the Company at the March 27, 1996 Annual Meeting of Shareholders is
set forth on pages 2 and 3 of the Company's 1996 Proxy Statement and is
incorporated herein by reference. Information with respect to directors of the
Company whose terms extend beyond the March 27, 1996 Annual Meeting of
Shareholders is set forth on pages 3 and 4 of the Company's 1996 Proxy Statement
and is incorporated herein by reference.
Also, see Executive Officers of the Registrant on pages 7 and 8 of this
report.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is set forth on pages 9
through 19 of the Company's 1996 Proxy Statement and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding the security ownership of certain beneficial owners
and management is set forth on pages 5 and 6 of the Company's 1996 Proxy
Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain transactions and employment arrangements with
management is set forth on pages 14 and 15 of the Company's 1996 Proxy Statement
and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) and (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
A list of financial statements and financial statement schedules is set
forth in a separate section of this report beginning on page GC-1.
(a)(3) LISTING OF EXHIBITS
An index of exhibits begins on page -i- of this report.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended November 30,
1995.
(c) EXHIBITS
The response to this portion of Item 14 is set forth in a separate section
of this report immediately following the Exhibit Index.
(d) FINANCIAL STATEMENT SCHEDULES
All financial statement schedules have been omitted because they are
inapplicable, not required by the instructions or the information is included in
the consolidated financial statements or notes thereto.
37
<PAGE> 40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GENCORP INC.
February 16, 1996
By /s/ D. M STEUERT
------------------------------------------
D. M Steuert, Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ---------------------------------- ------------------
<S> <C> <C>
/s/ J. B. YASINSKY Chairman, Chief Executive Officer February 16, 1996
- ---------------------------------------- and President
J. B. Yasinsky
/s/ D. M. STEUERT Senior Vice President and Chief February 16, 1996
- ---------------------------------------- Financial Officer
D. M. Steuert
/s/ P. J. PARR Director-Audit, Accounting & Tax February 16, 1996
- ---------------------------------------- (principal accounting officer)
P. J. Parr
* Director February 16, 1996
- ----------------------------------------
C. A. Corry
* Director February 16, 1996
- ----------------------------------------
W. K. Hall
* Director February 16, 1996
- ----------------------------------------
R. K. Jaedicke
* Director February 16, 1996
- ----------------------------------------
P. X. Kelley
* Director February 16, 1996
- ----------------------------------------
R. D. Kunisch
* Director February 16, 1996
- ----------------------------------------
D. E. McGarry
* Director February 16, 1996
- ----------------------------------------
J. M. Osterhoff
* Director February 16, 1996
- ----------------------------------------
P. J. Phoenix
* Director February 16, 1996
- ----------------------------------------
R. B. Pipes
* Director February 16, 1996
- ----------------------------------------
J. R. Stover
*Signed by the undersigned as attorney-in-
fact and agent for the Directors indicated.
/s/ E. R. DYE February 16, 1996
- ----------------------------------------
E. R. Dye
</TABLE>
38
<PAGE> 41
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1)(2) AND (3), (c) AND (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT INDEX
CERTAIN EXHIBITS
FISCAL YEAR ENDED NOVEMBER 30, 1995
GENCORP INC.
FAIRLAWN, OHIO 44333-3300
<PAGE> 42
GENCORP INC.
ITEM 14(a)(1) AND (2)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
(1) FINANCIAL STATEMENTS:
The following consolidated financial statements of GenCorp Inc. are included in Item 8:
Consolidated Statement of Income for the years ended November 30, 1995, 1994 and 1993..... 13
Consolidated Balance Sheet at November 30, 1995 and 1994.................................. 14
Consolidated Statement of Cash Flows for the years ended November 30, 1995, 1994 and
1993.................................................................................... 15
Consolidated Statement of Shareholders' Equity (Deficit) for the years ended November 30,
1995, 1994 and 1993..................................................................... 16
Notes to Consolidated Financial Statements.................................................. 17
</TABLE>
(2) FINANCIAL STATEMENT SCHEDULES:
All consolidated financial statement schedules are omitted because they are
inapplicable, not required by the instructions or the information is included in
the consolidated financial statements or notes thereto.
GC-1
<PAGE> 43
CONSENT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
GenCorp Inc.
We consent to the incorporation by reference in the Prospectuses
constituting part of GenCorp Inc.'s Registration Statements No. 33-61928,
33-28056 and 2-98730 on Form S-8, Post Effective Amendment No. 1 to Registration
Statements No. 2-80440 and 2-83133 on Form S-8, and Post Effective Amendment No.
4 to Registration Statement No. 2-66840 on Form S-8 of our report dated January
15, 1996, with respect to the consolidated financial statements of GenCorp Inc.
included in this Annual Report (Form 10-K) for the year ended November 30, 1995.
ERNST & YOUNG LLP
Akron, Ohio
February 16, 1996
GC-2
<PAGE> 44
EXHIBIT INDEX
<TABLE>
<CAPTION>
TABLE EXHIBIT EXHIBIT
ITEM NO. DESCRIPTION LETTER
- --------- ----------- -------
<C> <S> <C>
3. ARTICLES OF INCORPORATION AND BY-LAWS
The Amended Articles of Incorporation of GenCorp Inc., as amended as of
December 7, 1987, were filed as Exhibit A to the Company's Annual
Report on Form 10-K for the fiscal year ended November 30, 1988 (File
No. 1-1520), and are incorporated herein by reference. (17 pages)
The Code of Regulations of GenCorp Inc., as amended November 25, 1987,
were filed as Exhibit B to the Company's Annual Report on Form 10-K for
the fiscal year ended November 30, 1988 (File No. 1-1520), and are
incorporated herein by reference. (16 pages)
4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
Amended and Restated Rights Agreement (with exhibits) dated as of
December 7, 1987 between GenCorp Inc. and Morgan Shareholder Services
Trust Company as Rights Agent was filed as Exhibit D to the Company's
Annual Report on Form 10-K for the fiscal year ended November 30, 1987
(File No. 1-1520), and is incorporated herein by reference. (86 pages)
Amendment to Rights Agreement among GenCorp Inc., The First Chicago
Trust Company of New York, as resigning Rights Agent and The Bank of
New York, as successor Rights Agent, dated August 21, 1995. (3 pages) A
Information relating to the Company's long-term debt is set forth in
Note L of this report, which information is incorporated herein by
reference. The Indenture, dated as of July 1, 1992, between GenCorp and
the Bank of New York as trustee relating to the Company's $115,000,000
8% Convertible Subordinated Debentures due August 1, 2002 and the form
of Debenture were filed as Exhibits A and B to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 31, 1992 (File No.
1-1520) and are incorporated herein by reference. (107 pages)
Instruments defining the rights of holders of other long-term debt are
not filed herewith since no such single debt item exceeds 10 percent of
consolidated assets. The Company agrees, however, to furnish a copy of
any such agreement or instrument to the Commission upon request.
</TABLE>
i
<PAGE> 45
<TABLE>
<CAPTION>
TABLE EXHIBIT EXHIBIT
ITEM NO. DESCRIPTION LETTER
- --------- ----------------------------------------------------------------------- -------
<C> <S> <C>
10. MATERIAL CONTRACTS
10.(iii)(A) MANAGEMENT CONTRACTS, COMPENSATORY PLANS OR ARRANGEMENTS
Transition and Consulting Agreement dated June 29, 1994, as amended
October 19, 1994 between the Company and A. William Reynolds, Chairman
and Chief Executive Officer and a Director of the Company was filed as
Exhibit A to the Company's Annual Report on Form 10-K for the fiscal
year ended November 30, 1994 (File No. 1-1520), and is incorporated
herein by reference. (8 pages)
An Employment Agreement dated October 15, 1993 between the Company and
J. B. Yasinsky, President and Chief Operating Officer of the Company
was filed as Exhibit A to the Company's Annual Report on Form 10-K for
the fiscal year ended November 30, 1993 (File No. 1-1520), and is
incorporated herein by reference. (4 pages)
Form of Severance Agreement granted to executive officers of the
Company to provide for payment of an amount equal to 125 percent of
base salary multiplied by a factor of 3 if their employment should
terminate for any reason other than death, disability, willful
misconduct or retirement within three years after a change in control,
as such term is defined in such agreement was filed as Exhibit A to the
Company's Annual Report on Form 10-K for the fiscal year ended November
30, 1990 (File No. 1-1520), and is incorporated herein by reference.
(12 pages)
Benefits Restoration Plan for Salaried Employees of GenCorp Inc. and
Certain Subsidiary Companies as amended and restated effective December
1, 1986, was filed as Exhibit G to the Company's Annual Report on Form
10-K for the fiscal year ended November 30, 1987 (File No. 1-1520), and
is incorporated herein by reference. (6 pages)
The Stock Incentive Compensation Plan of GenCorp Inc. (as amended
effective October 1, 1985) was filed as Exhibit B to the Company's
Annual Report on Form 10-K for the fiscal year ended November 30, 1985
(File No. 1-1520), and is incorporated herein by reference. (21 pages)
Amendment to the GenCorp Inc. and Participating Subsidiaries Stock
Incentive Compensation Plan, effective as of April 5, 1987, was filed
as Exhibit H to the Company's Annual Report on Form 10-K for the fiscal
year ended November 30, 1987 (File No. 1-1520), and is incorporated
herein by reference. (6 pages)
Information relating to the Deferred Bonus Plan of GenCorp Inc. is
contained in Post-Effective Amendment No. 1 to Form S-8 Registration
Statement No. 2-83133 dated April 18, 1986 and is incorporated herein
by reference. (16 pages)
Amendment to the Deferred Bonus Plan of GenCorp Inc. effective as of
April 5, 1987, was filed as Exhibit I to the Company's Annual Report on
Form 10-K for the fiscal year ended November 30, 1987 (File No.
1-1520), and is incorporated herein by reference. (3 pages)
GenCorp Inc. Deferred Compensation Plan for Nonemployee Directors
effective January 1, 1992 was filed as Exhibit A to the Company's
Annual Report on Form 10-K for the fiscal year ended November 30, 1991
(File No. 1-1520), and is incorporated herein by reference. (18 pages)
GenCorp Inc. Long-Term Incentive Program effective January 27, 1993 and
as amended March 31, 1993 was filed as Exhibit D to the Company's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(File No. 1-1520), and is incorporated herein by reference. (20 pages)
</TABLE>
ii
<PAGE> 46
<TABLE>
<CAPTION>
TABLE EXHIBIT EXHIBIT
ITEM NO. DESCRIPTION LETTER
- --------- ----------------------------------------------------------------------- -------
<C> <S> <C>
GenCorp Inc. 1993 Stock Option Plan effective March 31, 1993 was filed
as Exhibit 4.1 to Form S-8 Registration Statement No. 33-61928 dated
April 30, 1993 and is incorporated herein by reference. (11 pages)
Form of Restricted Stock Agreement between the Company and Nonemployee
Directors providing for payment of part of Directors' compensation for
service on the Board of Directors in Company stock was filed as Exhibit
E to the Company's Annual Report on Form 10-K for the fiscal year ended
November 30, 1994 (File No. 1-1520), and is incorporated herein by
reference. (4 pages)
11. STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(1 page) B
21. SUBSIDIARIES OF THE REGISTRANT
Listing of Subsidiaries (1 page) C
23. CONSENTS OF EXPERTS
Consent of Ernst & Young LLP is contained on page GC-2 of this Form
10-K and is incorporated herein by reference.
24. POWER OF ATTORNEY
Powers of Attorney executed by C. A. Corry, W. K. Hall, R. K. Jaedicke,
P. X. Kelley, R. D. Kunisch, D. E. McGarry, J.M. Osterhoff, P. J.
Phoenix, R. B. Pipes and J. R. Stover, Directors of the Company. (10
pages) D
27. FINANCIAL DATA SCHEDULE
(Filed for EDGAR only)
The Company will supply copies of any of the foregoing exhibits to any
shareholder upon receipt of a written request addressed to GenCorp
Inc., 175 Ghent Road, Fairlawn, Ohio 44333-3300--Attention: Secretary,
and payment of $1 per page to help defray the costs of handling,
copying and return postage.
</TABLE>
iii
<PAGE> 1
EXHIBIT A
AMENDMENT TO RIGHTS AGREEMENT
This Amendment, dated as of August 21, 1995, is among GenCorp Inc., an Ohio
corporation (the "Company"), The First Chicago Trust Company of New York (the
"Resigning Rights Agent") and The Bank of New York, a New York banking
corporation (the "Successor Rights Agent"), and amends the Rights Agreement
dated as of February 18, 1987, as amended on December 7, 1987, (the "Rights
Agreement"), between the Company and the Resigning Rights Agent.
RECITALS
A. The Company and the Resigning Rights Agent are currently parties to the
Rights Agreement, under which the Resigning Rights Agent serves as Rights Agent.
B. The Resigning Rights Agent intends to resign as Rights Agent; the
Company intends to appoint the Successor Rights Agent to succeed the Resigning
Rights Agent as Rights Agent; the Successor Rights Agent wishes to accept
appointment as successor Rights Agent; and the parties hereto wish to make
certain changes to the Rights Agreement to facilitate this succession.
C. Section 5.4 of the Rights Agreement provides that the Company and the
Rights Agent may amend the Rights Agreement to make changes which do not
materially adversely affect the interests of the holders of Rights.
NOW, THEREFORE, the Company, the Resigning Rights Agent and the Successor
Rights Agent agree as follows:
1. Resigning Rights Agent
Pursuant to Section 4.4 of the Rights Agreement, the Resigning Rights Agent
hereby notifies the Company that it is resigning as Rights Agent under the
Rights Agreement, its resignation to be effective as of 12:00 a.m., New York
time, August 31, 1995. The Company hereby accepts the resignation of the
Resigning Rights Agent and waives the requirement that 90 days' notice in
writing of such resignation be provided by the Resigning Rights Agent.
2. Appointment of Successor Rights Agent
The company hereby appoints the Successor Rights Agent as Successor Rights
Agent under the Rights Agreement, effective as of 12:01 a.m., New York time,
September 1, 1995, and the Successor Rights Agent hereby accepts such
appointment, subject to all the terms and conditions of the Rights Agreement as
amended hereby.
3. Amendments to Rights Agreement
The parties hereto agree that the Rights Agreement shall be amended as
provided below, effective as of the date of this Amendment except as may
otherwise be provided below;
(a) From and after the time that the appointment of the Successor Rights
Agent as successor Rights Agent is effective, all references to the Resigning
Rights Agent as Rights Agent in the Rights Agreement (including all exhibits
thereto) shall be deemed to refer to the Successor Rights Agent as successor
Rights Agent. From and after the effective date of this Amendment, all
references in the Rights Agreement to the Rights Agreement shall be deemed to
refer to the Rights Agreement as amended by this Amendment.
(b) Section 5.9 of the Rights Agreement is amended by deleting the name and
address of the Resigning Rights Agent and substituting therefor the following:
<PAGE> 2
The Bank of New York
101 Barclay Street, 12 West
New York, NY 10286
Attention: John Sivertsen, Vice President
4. Miscellaneous
(a) Except as otherwise expressly provided, or unless the context otherwise
requires, all terms used herein have the meanings assigned to them in the Rights
Agreement.
(b) Each party hereto waives any requirement under the Rights Agreement
that any additional notice be provided to it pertaining to the matters covered
by this Amendment.
(c) This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which counterparts shall together
constitute but one and the same document.
A-2
<PAGE> 3
IN WITNESS WHEREOF, the parties have caused this amendment to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first written above.
<TABLE>
<S> <C>
ATTEST: GENCORP INC.
By: ___________________ By: ___________________
Name: Edward R. Dye Name: Michael E. Hicks
Title: Secretary Title: Treasurer
THE BANK OF NEW YORK,
ATTEST: AS RIGHTS AGENT
By: ___________________ By: ___________________
Name: _________________ Name: _________________
Title: ________________ Title: ________________
THE FIRST CHICAGO TRUST
COMPANY OF NEW YORK
ATTEST: AS RESIGNING RIGHTS AGENT
By: ___________________ By: ___________________
Name: _________________ Name: _________________
Title: ________________ Title: ________________
</TABLE>
iv
<PAGE> 1
EXHIBIT B
GENCORP INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30
-------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
EARNINGS (LOSS) (Dollars in Millions)
- ---------------
Income (Loss) Before Cumulative Effect of Accounting Changes.. $ 38.3 $ (13.0) $ 42.8
Cumulative Effect of Accounting Changes....................... -- (212.7) --
------- ------- -------
Net Income (Loss) for Primary Earnings Per Share.............. $ 38.3 $(225.7) $ 42.8
Tax Affected Interest Expense Applicable to 8% Convertible
Subordinated Debentures..................................... 5.5 5.5 5.5
------- ------- -------
Net Income (Loss) for Fully Diluted Earnings Per Share........ $ 43.8 $(220.2) $ 48.3
======= ======= =======
SHARES (In Thousands)
- ------
Weighted Average Number of Common Shares Outstanding for
Primary Earnings Per Share.................................. 32,814 31,797 31,730
Assuming Conversion of 8% Convertible Subordinated
Debentures.................................................. 7,158 7,158 7,158
------- ------- -------
Weighted Average Number of Common Shares Outstanding for Fully
Diluted Earnings Per Share.................................. 39,972 38,955 38,888
======= ======= =======
EARNINGS (LOSS) PER SHARE
- -------------------------
Income (Loss) Before Cumulative Effect of Accounting Changes.. $ 1.17 $ (.41) $ 1.35
Cumulative Effect of Accounting Changes....................... -- (6.69) --
------- ------- -------
Net Income (Loss) for Primary Earnings Per Share.............. $ 1.17 $ (7.10) $ 1.35
======= ======= =======
Fully Diluted Earnings (Loss) Per Share....................... $ 1.10 $ (7.10) $ 1.24
======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT C
LISTING OF GENCORP INC. SUBSIDIARIES(1)
<TABLE>
<CAPTION>
STATE OR PERCENTAGE
JURISDICTION OF OF VOTING
INCORPORATION OWNERSHIP
--------------- ----------
<S> <C> <C>
Aerojet-General Corporation...................................... Ohio 100.
Aerojet Ordnance Tennessee, Inc................................ Tennessee 100.
Genco Insurance Limited.......................................... Bermuda 100.
GenCorp Canada Inc............................................... Canada 100.
GenCorp Export Corporation....................................... Virgin Islands 100.
GenCorp Investment Management, Inc............................... Ohio 100.
GenCorp Overseas Inc............................................. Ohio 100.
GenCorp Polymer Products S.A.R.L................................. France 100.
HENNIGES Elastomer- und Kuntstofftechnik GmbH & Co. KG........... Germany 100.
Penn Europe GmbH................................................. Germany 100.
Penn International Inc........................................... Ohio 100.
Penn Nominal Holdings Inc........................................ Ohio 100.
Penn Racquet Sports Co. (Ireland)................................ Ireland 100.
RKO General, Inc................................................. Delaware 100.
RKO Hotel Group, Inc............................................. Delaware 100.
GKK Automotive Co., Ltd.......................................... Ohio 60.
GT Automotive Co., Ltd........................................... Ohio 60.
</TABLE>
- ---------------
(1) GenCorp Inc. conducts business using the names GenCorp, GenCorp Automotive
and GenCorp Polymer Products.
<PAGE> 1
EXHIBIT D
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ C. A. CORRY
-----------------------------------
C. A. Corry, Director
Dated: February 8, 1996
----------------------------
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ W. K. HALL
---------------------------
W. K. Hall, Director
Dated: January 31, 1996
----------------------------
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ R. K. JAEDICKE
---------------------------
R. K. Jaedicke, Director
Dated: January 31, 1996
---------------------------
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ P. X. KELLEY
----------------------------
P. X. Kelley, Director
Dated: February 4, 1996
----------------------------
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ R. D. KUNISCH
----------------------------
R. D. Kunisch, Director
Dated: January 31, 1996
---------------------------
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ D. E. MCGARRY
-------------------------------
D. E. McGarry, Director
Dated: February 3, 1996
-----------------------------
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ J. M. OSTERHOFF
---------------------------
J. M. Osterhoff, Director
Dated: January 31, 1996
-----------------------------
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ P. J. PHOENIX
--------------------------------
P. J. Phoenix, Director
Dated: January 31, 1996
-----------------------------
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ R. B. PIPES
--------------------------------
R. B. Pipes, Director
Dated: January 31, 1996
-----------------------------
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of GenCorp
Inc. hereby constitutes and appoints C. R. Ennis and E. R. Dye, and each of them
(each with full power to act alone), his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of GenCorp Inc. for the fiscal year ended November 30, 1995 on his
behalf, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This Power of Attorney expires March 1, 1996.
/s/ J. R. STOVER
-------------------------------
J. R. Stover, Director
Dated: January 31, 1996
------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<CASH> 17,000
<SECURITIES> 0
<RECEIVABLES> 242,000
<ALLOWANCES> 0
<INVENTORY> 161,000
<CURRENT-ASSETS> 465,000
<PP&E> 1,302,000
<DEPRECIATION> 759,000
<TOTAL-ASSETS> 1,458,000
<CURRENT-LIABILITIES> 376,000
<BONDS> 115,000
<COMMON> 3,000
0
0
<OTHER-SE> 32,000
<TOTAL-LIABILITY-AND-EQUITY> 1,458,000
<SALES> 1,772,000
<TOTAL-REVENUES> 1,772,000
<CGS> 1,430,000
<TOTAL-COSTS> 1,679,000
<OTHER-EXPENSES> (5,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,000
<INCOME-PRETAX> 64,000
<INCOME-TAX> 26,000
<INCOME-CONTINUING> 38,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,000
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.10
</TABLE>
