GENCORP INC, 10-K405, 1997-02-13

GENCORP INC
10-K405, 1997-02-13
MOTOR VEHICLE PARTS & ACCESSORIES

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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, 1996 Commission File Number l-1520

GENCORP INC.
(Exact name of registrant as specified in its charter)

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)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (330) 869-4200

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

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 l, 2002

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, 1997, was $632,800,974.

As of January 31, 1997, there were 33,521,001 outstanding shares of the
Company's Common Stock, 10c par value.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 1997 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, 1996

TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM
NUMBER PAGE
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<S> <C> <C>
PART I

1 Business................................................................... 1
2 Properties................................................................. 4
3 Legal Proceedings.......................................................... 5
4 Submission of Matters to a Vote of Security Holders........................ 6
Executive Officers of the Registrant....................................... 6

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............................................................... 8
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
</TABLE>
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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 businesses and its aerospace and defense business, Aerojet-General
Corporation ("Aerojet"). Businesses within these segments produce diverse
products such as extruded and molded rubber products, vinyl-coated fabrics,
vinyl woodgrain laminates, plastic films and laminates, plastic extrusions,
decorative wallcoverings, single-ply roofing systems, tennis balls and
racquetballs, styrene and butadiene based specialty latices, liquid and solid
rocket propulsion systems, defense electronics and custom chemicals. As of
November 30, 1996, the Company employed approximately 8,950 persons. (Financial
information relating to the Company's business segments appears on pages 30
through 33 of this report.)

The Company and its businesses utilize the Corporate Technology Center in
Akron, Ohio to develop new products and to improve existing products and
processes. The Center has a key role in the Company's technical activity and
supports research and development efforts across the Company. Corporate
technology teams with the business units to create technology-enabled business
opportunities through leveraging core competencies in cross-cutting application
disciplines such as: (i) adhesives, coatings and printing inks; (ii) graphics
and information technology; and (iii) materials selection, substitution and
fabrication. A number of design and development centers at the segments focus on
specific areas of the businesses and each plant has dedicated engineering
services. (Information relating to research and development expense is set forth
in Note E on page 20 of this report.)

The Company licenses technology and owns patents, which expire at various
times, relating to its businesses. 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. 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 1996 and forecasted for 1997
and 1998 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 the vehicle body and window sealing.

The Vehicle Sealing business unit 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, the Mercedes-Benz All-Activity Vehicle and the
General Motors Achieva, GrandAm and Skylark. The international presence for
Vehicle Sealing continues to expand through its German subsidiary, HENNIGES,
which produces high quality vehicle sealing
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systems, encapsulated glass and molded rubber parts for major European customers
including Volkswagen, Opel, BMW, Audi and Mercedes-Benz. The Vehicle Sealing
business unit also manages a thermoplastics extrusion unit which is a major
producer of gaskets, seals, trim and magnetic rolls for the appliance,
automotive and office equipment industries.

On February 15, 1996, the Company completed the sale of its Vibration
Control automotive business unit to BTR Antivibration Systems, Inc., a
subsidiary of BTR plc. and on March 1, 1996 the sale of the Reinforced Plastics
automotive business unit to Cambridge Industries, Inc. was completed.

On June 21, 1996 the Company completed the sale of its Automotive Occupant
Sensor (AOS) business to the Robert Bosch Corporation. Consideration for the
sale included the right to receive certain future payments based on the
performance of the AOS business.

Automotive products are sold directly to Original Equipment Manufacturer
(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 1996 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 automotive market in recent years. Competition
based upon price, quality, service, technology and reputation is intense. Raw
materials required by this segment are generally in good supply.

POLYMER PRODUCTS

Revenues of the Company's polymer products businesses are generated through
the design, manufacture and sale of specialty polymers and decorative and
building products for a variety of industrial, commercial and consumer markets.
The polymer products segment 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.

Within the polymer products segment, the Decorative and Building Products
Group's four businesses are: (i) wallcovering (commercial and residential), (ii)
coated fabrics, (iii) films/laminates and (iv) building systems. This business
unit is a major supplier of vinyl coated fabrics for the home furnishings and
marine industries and for a variety of other industrial and commercial
industries. It 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. Decorative and engineered thermoplastic
films for use in furniture, ceiling tiles, and other industrial applications are
also produced and marketed. In addition, the production of single-ply membrane
systems for a wide range of commercial roofing applications is a growing part of
this business unit. Decorative and Building Products also offers a full line of
brand name wallcoverings for the commercial industry for new construction and
refurbishment, as well as residential wallcoverings for home applications.

Manufacturing for Decorative and Building Products is done in three
locations: Auburn, Pennsylvania, Columbus, Mississippi and Jeanette,
Pennsylvania. These highly efficient manufacturing operations include
calendering, lamination, decorative printing and coating.

Specialty Polymers is another key business unit within the polymer products
segment, producing and marketing a comprehensive line of specialty latices used
as coatings for paper, as binding agents for carpets and nonwoven fabrics and as
tire cord adhesives. Specialty Polymers also produces adhesives and in-mold
coatings for automotive, truck and marine industries. In August 1996, the
Lytron(R) polystyrene latex plastic pigment business was acquired from Morton
International and in November 1996 a small, non-strategic urethane adhesives
business was divested.

Penn Racquet Sports is the world's largest manufacturer of tennis balls and
a leading producer of racquetballs. Tennis and racquetball accessories are
purchased for resale under Penn trademarks. The Company also licenses the Penn
trademark for use in production of a variety of sportswear products for sale
worldwide.

Methods of distribution utilized by units within 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

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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 styling 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. Raw material costs are 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
focused on plans to expand Aerojet's custom chemicals business.

Aerospace and defense programs have included liquid and solid propulsion
systems for Titan, Minuteman, Standard Missile, HAWK and Delta programs;
satellite surveillance sensor systems; the Sense and Destroy Armor (SADARM)
program; earth sensing systems; armaments; and ground data processing systems.
In November 1996 Aerojet, as part of the Lockheed Martin team, received a
multi-year cost plus award fee contract for the Space Based Infrared System
(SBIRS). This contract could potentially result in $780 million of revenue for
Aerojet through the year 2003. Aerojet also received a five year follow-on
contract worth approximately $265 million for consolidation of the Defense
Support Program (DSP) post production activity. SBIRS is scheduled to replace
DSP around the year 2002 as the United States Air Force's next generation
satellite surveillance system.

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.

Aerojet's direct and indirect sales to the United States government and its
agencies (principally the Department of Defense) were approximately $465 million
in 1996, $490 million in 1995 and $578 million in 1994. 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. 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 $2.0 billion at
November 30, 1996, compared to $0.9 billion at November 30, 1995. Funded
backlog, which includes only the amount of those contracts for which money has
been authorized by Congress, totaled approximately $0.6 billion at November 30,
1996, compared with approximately $0.5 billion at November 30, 1995. Raw
materials required by this segment are generally in adequate supply.

3
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ITEM 2. PROPERTIES

Operating, manufacturing, research, design and/or marketing facilities of
the Company and its businesses are set forth below.

FACILITIES

<TABLE>
<S> <C> <C>
CORPORATE HEADQUARTERS

GenCorp Inc. GenCorp Overseas Inc.
175 Ghent Road 52 Telok Blangah Road
Fairlawn, Ohio 44333-3300 #02-04 Telok Blangah House
330/869-4200 Singapore 0409
(65) 275-5001

Corporate Technology Center
2990 Gilchrist Road
Akron, OH 44305-4489
330/794-6300

MANUFACTURING/RESEARCH/DESIGN/MARKETING LOCATIONS

AEROSPACE AND DEFENSE

Aerojet Design/Manufacturing Sales/Marketing Offices:
P.O. Box 13222 Facilities: Colorado Springs, CO
Sacramento, CA 95813-6000 Azusa, CA Huntsville, AL
916/355-1000 Jonesborough, TN Los Angeles, CA
Sacramento, CA Mt. Arlington, NJ
Socorro, NM Washington, DC

* * * * * * * * * *

AUTOMOTIVE

Vehicle Sealing Manufacturing Facilities: Sales/Marketing/Design
7221 Engle Road, Suite 240 Batesville, AR and Engineering:
Fort Wayne, IN 46804-2233 Berger, MO Farmington Hills, MI
219/434-9700 Evansville, IN 810/553-5300
Fort Smith, AR
Marion, IN
Wabash, IN
Welland, Ontario, Canada
HENNIGES, Rehburg,
Germany and Ballina,
Ireland
</TABLE>

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<TABLE>
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* * * * * * * * * *

POLYMER PRODUCTS

Decorative and Building Products Design/Manufacturing Sales/Marketing/Distribution
Group Facilities: Facilities:
175 Ghent Road Auburn, PA Hackensack NJ
Fairlawn, OH 44333-3300 Columbus, MS Maumee, OH
330/869-4380 Jeannette, PA New York, NY
Salem, NH Paris, France
Pine Brook, NJ

Penn Racquet Sports Sales/Manufacturing Facilities:
306 South 45th Avenue Phoenix, AZ
Phoenix, AZ 85043 Mullingar, Republic of Ireland
602/269-1492 Nurnberg, Germany

Specialty Polymers Sales/Manufacturing/Distribution
165 S. Cleveland Avenue Facilities:
Mogadore, OH 44260-1593 Dalton, GA
330/628-6550 Green Bay, WI
Mogadore, OH
</TABLE>

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 1996 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.

In April 1996, two class action suits were filed, one in Federal and one in
state court, collectively alleging: (i) breach of collective bargaining/pension
and insurance agreements under Section 301 of the Labor Management Relations
Act; (ii) breach of fiduciary duties under ERISA; and (iii) breach of individual
contracts, fraud and promissory estoppel under state law. Divine, et al. v.
GenCorp Inc., U.S.D.C., N.D. Ind. 3:96CV0296AS; Divine, et al. v. GenCorp Inc.,
Wabash County, Ind. Cir. Ct. 85C01-9605-CP-201. The suits were filed on behalf
of approximately 600 hourly retirees, spouses and surviving spouses from
GenCorp's Wabash, Indiana facility who are seeking damages and injunctive relief
to prevent proposed modifications to the GenCorp Hourly Retiree Medical Plan.
The proposed modifications include increases to retiree co-payments and
deductibles, retiree contributions once aggregate costs exceed specified cost
caps, and changes to Medicare offsets, drug coverage and maximum benefit
provisions. The modifications are being implemented to control escalating health
care costs, and to limit liabilities under SFAS 106.

The Complaint filed in state court was removed to Federal court, and
consolidated with U.S.D.C., N.D. Ind. 3:96CV0296AS. GenCorp filed a Motion for
Summary Judgment and Opposition to Plaintiffs' Motion for Class Certification.
On November 26, 1996, the court granted GenCorp's Motion for Summary Judgment on
all counts, rendering the class certification issue moot. Plaintiffs have filed
a Notice of Appeal to the U.S. Seventh Circuit Court of Appeals. Briefing is
scheduled for completion by April 1, 1997.

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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 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, 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 debarment 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,
1996.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following information is given as of January 31, 1997, and except as
otherwise indicated, each individual has held the same office during the
preceding five-year period.

John B. Yasinsky, age 57: 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).

Edward R. Dye, age 55: 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.

Samuel W. Harmon, age 46: Senior Vice President, Human Resources (since
February 1996); previously Vice President, Human Resources (from October 1995
until February 1996); formerly Vice President, Human Resources, AlliedSignal,
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).

Michael E. Hicks, age 38: Treasurer (since September 1994); formerly
Director, Treasury for the Company (since 1989) and Manager, Cash and Banking
(from 1988 to 1989).

James K. Lambert, age 46: Senior Vice President, Operations and Total
Quality (since March 1996); formerly Vice President, Worldwide Manufacturing,
AlliedSignal Automotive (since 1995), Vice President, Lean Manufacturing-Truck
Brake Systems, North American Operations (from 1991 to 1995) and Director of
European Operations, Bristol, England (from 1987 to 1991).

Nathaniel J. Mass, age 46: Senior Vice President, Strategic Growth (since
June 1996); formerly Partner and Director of the Business Dynamics Center,
McKinsey and Company (from 1994 to June 1996); Chief Executive Officer, Light
Sciences Inc. (from 1991 to 1993) and Director of Worldwide Strategic Planning,
Exxon Chemical Company (from 1988 to 1991).

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Kevin M. McMullen, age 36: Vice President of the Company and President,
Decorative and Building Products Group (since September 1996); previously
General Manager, General Electric Corporation's Lighting Division (since 1991)
and Senior Engagement Manager, McKinsey & Company (from 1985 to 1991).

P. David Mittiga, age 49: Vice President of the Company (since August
1994), and President of Decorative Films and Laminates, Coated Fabrics and
Building Systems within Decorative and Building Products Group (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).

William R. Phillips, age 54: Senior Vice President, Law; General Counsel
(since September 1996); previously Vice President, Law of Aerojet (since 1990)
and General Counsel, Group Counsel and Manager Legal Operations, General
Electric Aircraft Engines (from 1986 to 1989).

Roger I. Ramseier, age 60: Vice President of the Company (since February
1996 and from January 1989 to July 1994) and President of Aerojet (since January
1989); formerly Executive Vice President of the Company (from July 1994 to
February 1996) and previously President of Aerojet TechSystems.

Wayne A. Smith, age 49: Vice President of the Company (since August 1994),
also President of the Company's Vehicle Sealing business unit (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).

Philip A. Spanninger, age 53: 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. Michael Steuert, age 48: 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.

James W. Ward, age 54: Vice President of the Company (since August 1994),
also President of Wallcovering within Decorative and Building Products Group
(since 1989); formerly Vice President of contract sales/marketing of the
Wallcovering Division (from 1986 to 1989).

Gregg R. Weida, age 49: 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).

Dalton I. Windham, age 51: Vice President of the Company (since August
1994), also President of the Company's Decorative and Building Products
Manufacturing operations (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).

Rosemary Younts, age 41: Senior Vice President, Communications (since
February 1996); previously Vice President, Communications (since January 1995),
Director of Communications (from 1993 to 1995) and various communications
positions with Aerojet (from 1984 to 1993).

Marvin W. Zima, age 59: Vice President of the Company (since August 1994),
also President of the Company's Specialty Polymers business unit (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.

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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, 1996, there were approximately 13,800 holders of
record of the Company's common stock. During 1996, 1995 and 1994, 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 25 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.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Sales for continuing operations in 1996 totaled $1.5 billion, essentially
flat with 1995. Segment operating profit for continuing operations, excluding
unusual items in both 1996 and 1995, improved to $139 million from $109 million,
a 28 percent improvement over 1995 performance. Net income for continuing
operations, excluding unusual items in both 1996 and 1995, improved to $54
million from $39 million, a 38 percent improvement over 1995 performance.
Earnings per share for continuing operations, excluding unusual items, improved
to $1.44 in 1996 from $1.11 in 1995, on a fully diluted basis.

Total sales for GenCorp in 1996 decreased to $1.5 billion from $1.8 billion
in 1995 primarily due to the divestiture of the Vibration Control and Reinforced
Plastics business units. Total segment operating profit, including unusual
items, increased to $120 million in 1996 from $117 million in 1995, a 3 percent
improvement. Net income improved to $42 million in 1996 compared to $38 million
in 1995 or $1.15 per share compared to $1.10 per share for fully diluted
earnings per share in 1996 and 1995, respectively.

Interest expense in 1996 was $27 million compared to $34 million in 1995.
Interest expense was lower due to lower average interest rates and a lower
average level of debt outstanding throughout the year.

The Company recorded net corporate other expense of $7 million in 1996 as
compared to net corporate other income of $6 million in 1995. The $13 million
variance is primarily due to continuing pension and medical costs of divested
business units, litigation costs related to environmental matters and provision
for long-term incentive programs.

UNUSUAL ITEMS

During 1996, the Company recognized net unusual charges of $42 million.
These charges included a provision of $15 million for the Voluntary Early
Retirement Incentive Program for eligible employees at the Company's Fairlawn,
Ohio headquarters and Corporate Technology Center, the net loss on the sale of
divested businesses of $10 million (see Note D), a provision for environmental
remediation costs associated with the Company's Lawrence, Massachusetts facility
of $8 million (see Note R), a restructuring charge of $3 million for the
Company's Plastic Extrusions business unit, a charge of $2 million to reduce
fixed assets to net realizable value and a provision of $4 million for pension
and other related matters.

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 a
resort property.

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BUSINESS ACQUISITIONS AND DIVESTITURES

On February 15, 1996, the Company completed the sale of substantially all
of the assets and certain liabilities of its Vibration Control business unit to
BTR Antivibration Systems, Inc., a subsidiary of BTR plc. for an aggregate
consideration of approximately $84 million paid in cash.

On March 1, 1996, the Company completed the sale of substantially all of
the assets and certain liabilities of its Reinforced Plastics business unit to
Cambridge Industries, Inc. of Madison Heights, Michigan for an aggregate
consideration of approximately $42 million, of which approximately $18 million
was paid in cash at the closing, approximately $14 million of which was covered
by delivery of a Subordinated Promissory Note of Cambridge Industries Holdings,
Inc. and approximately $10 million of which was collected through the retention
of receivables. The sale was effective as of February 29, 1996.

On June 21, 1996, the Company completed the sale of substantially all of
the assets and certain liabilities of its Automotive Occupant Sensor (AOS)
business to Robert Bosch Corporation for an aggregate consideration of
approximately $3 million paid in cash at the closing and the right to receive
certain additional payments based on the future performance of the AOS business.

On November 19, 1996, the Company completed the sale of substantially all
of the assets and certain liabilities of its structural urethane adhesives
business to Ashland Inc. for an aggregate consideration of approximately $4
million paid in cash at the closing.

On August 23, 1996, the Company purchased the Lytron(R) polystyrene latex
plastic pigment business from Morton International for approximately $4 million.
Under the agreement, the Company acquired the Lytron(R) brand name, technology,
customer base and certain other assets. Lytron(R) plastic pigments are used
primarily in paper and paperboard coatings to improve gloss, brightness, opacity
and printability performance.

In 1995, the Company sold its Westward Look Resort and Rigid Plastics
business for $21 million which resulted in gains of $5 million.

FINANCIAL RESOURCES AND CAPITAL SPENDING

Cash flow provided from operating activities for fiscal 1996 was $59
million compared to $83 million in 1995 and $133 million in 1994. The decrease
in 1996 was primarily due to taxes paid for divested business units, an increase
in government contract inventories, payment of a discontinued operations lawsuit
settlement and expenditures related to environmental matters and restructuring
and early retirement programs. The decrease was partially offset by a federal
income tax refund. The decrease in 1995 was primarily due to reductions of
long-term liabilities for environmental and restructuring matters.

At November 30,1996, the Company's total debt was $306 million compared to
$404 million at the end of 1995. The decrease in debt resulted from the 1996
divestiture proceeds and tax refund.

Capital expenditures were made principally for capacity expansion and asset
replacement, cost reduction, safety and productivity improvements and
environmental protection. Capital expenditures totaled $47 million in 1996 and
$63 million in 1995 and 1994.

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 1996 for Aerojet were $494 million, a decrease of 5 percent from
1995 sales of $520 million. The decrease was due to lower volume in the Titan
and Standard Missile propulsion programs and Tube-Fired Optically Tracked Wire
(TOW 2B) warhead program. The lower volume was partially offset by increased
activity in the Advanced Meteorological Sounding Unit (AMSU), Space Based
Infrared System (SBIRS) and Minuteman programs and in the Custom Chemicals
product line. Also included in sales for 1995 was the final settlement of the
Small ICBM contract.

9
<PAGE> 12

During the fourth quarter of 1996, Aerojet received a multi-year cost plus
award fee contract which could potentially generate $780 million of sales
through the year 2003 for the SBIRS program. Aerojet also received a five year
follow-on contract worth approximately $265 million for consolidation of Defense
Support Program (DSP) post production activity. SBIRS is scheduled to replace
DSP around the year 2002 as the U.S. Air Force's next generation satellite
surveillance system.

Aerojet's segment operating profit in 1996 was $42 million, an increase of
40 percent compared to $30 million in 1995. The increase was due to improved
contract performance and lower health care costs. Aerojet's operating margin
improved to 8.5 percent in 1996 from 5.8 percent in 1995.

Contract backlog for Aerojet was $2.0 billion at the end of 1996, compared
to $0.9 billion at the end of 1995 and $1.1 billion in 1994. The significant
increase in contract backlog was due to the award of the SBIRS and DSP contracts
from the U.S. Air Force. Funded backlog, which includes only the amount of those
contracts for which money has been directly authorized by Congress, totaled $0.6
billion at the end of 1996 compared to $0.5 billion at the end of 1995 and $0.6
billion in 1994.

Outlook

Aerojet's contract base has continued to stabilize as the overall business
climate has improved. The SBIRS and DSP awards and other program developments
and awards in the last year will favorably affect all major product areas in
1997 and beyond.

1995 Results

Sales in 1995 were $520 million, a decrease of 12 percent from 1994 sales
of $594 million. The decrease was due to the 1994 sale of the medium caliber
ammunition and air dispensed munition businesses and the termination of the
Advanced Solid Rocket Motor (ASRM) program in 1994.

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 the 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.

AUTOMOTIVE

Sales and segment operating profit for the continuing automotive business
segment in 1996 totaled $400 million and $25 million, respectively, compared to
$410 million and $23 million in 1995. Sales and operating profit for the Vehicle
Sealing group were adversely affected by the 17 day General Motors strike in
March 1996 as well as the General Motors Canada strike in October 1996. Sales
volume and operating profit for the Plastic Extrusions business were affected by
lower volume and competitive pricing pressure in the refrigerator gasket
business.

Total sales and operating profit, excluding unusual items in 1996, were
$448 million and $19 million, respectively, compared to $662 million and $25
million in 1995. The decrease in sales and operating profit was primarily due to
the divestiture of the Vibration Control and Reinforced Plastics business units
in the first quarter of 1996.

Outlook

Sales in 1997 will be dependent on the level of vehicle production in North
American and European markets and segment operating profit should be favorably
affected by continued aggressive cost reduction programs. During 1996, the
Vehicle Sealing business received awards for future programs including the GM
large truck and passenger car programs, the 1998 Honda Accord, the Ford Explorer
replacement program, selected glass encapsulation applications for Volkswagen as
well as the Company's first award from Saturn. These new awards are expected to
favorably impact sales and segment operating profit in 1998 and beyond.

10
<PAGE> 13

1995 Results

Sales totaled $662 million for 1995, an increase of 9 percent over 1994
sales of $605 million. The increase was due primarily to the inclusion of a full
year of sales from HENNIGES. Segment operating profit in 1995 was $25 million, a
decrease of $12 million from 1994 operating profit of $37 million, excluding an
unusual charge of $4 million in 1994. The decrease was primarily due to
declining domestic sales volume and increased raw material pricing.

POLYMER PRODUCTS

Sales decreased 3 percent to $573 million in 1996 from $590 million in 1995
due primarily to the sale of the Company's Rigid Plastics business. Continuing
sales for Polymer Products were $573 million in 1996 compared to $569 million in
1995. Sales growth in the roofing and contract wallcovering product lines at
Decorative and Building Products offset a sales volume decline at Specialty
Polymers attributed to the softness of the paper industry and competitive
pricing pressure. Penn Racquet Sports' sales were essentially even with last
year.

Segment operating profit in 1996 was $72 million, a 24 percent increase
over 1995 segment operating profit of $58 million, excluding an unusual gain of
$4 million in 1995. Continuing segment operating profit was $56 million in 1995.
The Specialty Polymers and Decorative and Building Products businesses led the
earnings improvement. Specialty Polymers' operating profit increased due to cost
reduction programs and lower raw material costs. At Decorative and Building
Products, earnings improved due to aggressive manufacturing and operating cost
reduction programs, favorable raw material costs and bad debt reduction. The
earnings improvement at Decorative and Building Products and Specialty Polymers
was partially offset by lower earnings at Penn Racquet Sports due to higher
manufacturing expenses and lower tennis ball volume and prices in North America.
Polymer Products' continuing operating margin improved to 12.6 percent in 1996
from 9.8 percent in 1995.

Outlook

Polymer Products should continue to maintain strong market positions in
each of its businesses. Sales growth in 1997 will be dependent on the economic
conditions of the market and the Company's progress toward its growth
initiatives for the Polymer Products segment.

1995 Results

Sales for 1995 were $590 million, a 9 percent increase over 1994 sales of
$541 million. Each business unit contributed to the increase in sales growth.
Segment operating profit in 1995 was $58 million, excluding an unusual gain of
$4 million, a 16 percent increase over 1994 segment operating profit of $50
million, excluding an unusual charge of $8 million. The earnings improvement was
led by the Specialty Polymers and Penn Racquet Sports business units.

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 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 own plants. In addition, the Company has been designated a
potentially responsible party, with other companies, at sites undergoing
investigation and remediation.

In 1996, capital expenditures for projects related to the environment were
approximately $11 million, compared to $5 million in 1995 and $6 million in
1994. The Company currently forecasts that capital expenditures for
environmental projects will approximate $6 million and $4 million in 1997 and
1998, respectively. During 1996, noncapital expenditures for environmental
compliance and protection totaled

11
<PAGE> 14

$29 million of which $10 million was for recurring costs associated with
managing hazardous substances and pollution abatement in ongoing operations and
$19 million was for investigation and remediation efforts at other sites.
Similar noncapital expenditures were $30 million and $33 million in 1995 and
1994, 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, 1996 reflects accruals
of $260 million and amounts recoverable of $123 million from the U.S. government
and other third parties for such 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 liquidity, capital resources or 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 STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------
1996 1995 1994
------ ------ ------
(DOLLARS IN MILLIONS,
EXCEPT PER-SHARE DATA)
<S> <C> <C> <C>
NET SALES........................................................ $1,515 $1,772 $1,740
------ ------ ------
COSTS AND EXPENSES
Cost of products sold............................................ 1,200 1,430 1,391
Selling, general and administrative.............................. 143 174 179
Depreciation..................................................... 58 70 73
Interest expense................................................. 27 34 32
Other (income) expense, net...................................... 3 (5) 4
Unusual items (Note B)........................................... 42 5 83
------ ------ ------
1,473 1,708 1,762
------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES................................ 42 64 (22)
Income tax provision (benefit) (Note F).......................... -- 26 (9)
------ ------ ------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES..... 42 38 (13)
Cumulative effect of accounting changes (Note C)................. -- -- (213)
------ ------ ------
Net Income (Loss).............................................. $ 42 $ 38 $ (226)
====== ====== ======
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Primary:
Before cumulative effect of accounting changes................. $ 1.24 $ 1.17 $ (.41)
Cumulative effect of accounting changes........................ -- -- (6.69)
------ ------ ------
Earnings (Loss) Per Share...................................... $ 1.24 $ 1.17 $(7.10)
====== ====== ======
Fully Diluted:
Before cumulative effect of accounting changes................. $ 1.15 $ 1.10 $ (.41)
Cumulative effect of accounting changes........................ -- -- (6.69)
------ ------ ------
Earnings (Loss) Per Share...................................... $ 1.15 $ 1.10 $(7.10)
====== ====== ======
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.

13
<PAGE> 16

GENCORP INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
AT NOVEMBER 30,
-------------------
1996 1995
------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........................................ $ 22 $ 17
Accounts receivable (Note G)..................................... 207 242
Inventories (Note H)............................................. 158 161
Prepaid expenses and other....................................... 65 45
------ ------
Total Current Assets................................... 452 465
Investments and other assets (Note J)............................ 465 450
Property, plant and equipment, at cost
Land........................................................... 39 41
Buildings and building equipment............................... 288 309
Machinery and equipment........................................ 754 919
Construction in progress....................................... 21 33
------ ------
1,102 1,302
Accumulated depreciation....................................... (689) (759)
------ ------
Net property, plant and equipment........................... 413 543
------ ------
Total Assets........................................... $1,330 $1,458
====== ======

CURRENT LIABILITIES
Notes payable.................................................... $ 43 $ 21
Accounts payable -- trade........................................ 81 99
Income taxes (Note F)............................................ 27 5
Accrued expenses (Note K)........................................ 219 251
------ ------
Total Current Liabilities.............................. 370 376
Long-term debt (Note L).......................................... 263 383
Postretirement benefits other than pensions (Note I)............. 346 372
Other long-term liabilities (Note K)............................. 295 292
Contingencies (Note R)

SHAREHOLDERS' EQUITY
Preference stock -- $1.00 par value; 15 million shares
authorized; none outstanding................................... -- --
Common stock -- $.10 par value; 90 million shares authorized;
33.5 million shares outstanding (33.4 million in 1995)......... 3 3
Other capital.................................................... 22 22
Retained earnings................................................ 24 2
Cumulative currency translation adjustment....................... 7 8
------ ------
Total Shareholders' Equity............................. 56 35
------ ------
Total Liabilities and Shareholders' Equity............. $1,330 $1,458
====== ======
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.

14
<PAGE> 17

GENCORP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------
1996 1995 1994
----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss).................................................. $ 42 $ 38 $(226)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Cumulative effect of accounting changes....................... -- -- 213
Provision for unusual items................................... 32 10 114
Loss (gain) on sale of businesses............................. 10 (5) --
Savings plan stock contribution............................... -- 12 --
Depreciation, amortization and loss on disposal of fixed
assets....................................................... 65 76 77
Deferred income taxes......................................... (30) 15 (30)
Changes in operating assets and liabilities net of effects of
acquisitions and dispositions of businesses:
Accounts receivable......................................... 3 6 (11)
Inventories................................................. (18) (6) 35
Other current assets........................................ 2 1 (1)
Current liabilities......................................... (22) (11) (12)
Other non-current assets.................................... (3) (7) (31)
Other long-term liabilities................................. (22) (46) 5
---- ---- ----
Net Cash Provided by Operating Activities................ 59 83 133
---- ---- ----
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Capital expenditures............................................... (47) (63) (63)
Proceeds from asset dispositions................................... 125 27 29
Acquisitions....................................................... (4) -- (22)
Investments and other -- net....................................... (9) -- (1)
---- ---- ----
Net Cash Provided by (Used in) Investing Activities...... 65 (36) (57)
---- ---- ----
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Long-term debt incurred............................................ 370 255 341
Long-term debt paid................................................ (490) (248) (379)
Accounts receivable financing...................................... -- (60) --
Net short-term debt incurred (paid)................................ 22 14 (16)
Dividends.......................................................... (20) (20) (19)
Other equity transactions.......................................... (1) 7 3
---- ---- ----
Net Cash Used in Financing Activities.................... (119) (52) (70)
---- ---- ----
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............... 5 (5) 6
Cash and cash equivalents at beginning of year..................... 17 22 16
---- ---- ----
Cash and Cash Equivalents at End of Year................. $ 22 $ 17 $ 22
==== ==== ====
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.

15
<PAGE> 18

GENCORP INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<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, 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
Net income...................................... 42
Currency translation adjustment................. (1)
Cash dividends -- $.60 per share................ (20)
Shares issued under incentive programs.......... 77,198 -- --
---------- --- --- ---- ---
BALANCE AT NOVEMBER 30, 1996.................... 33,479,647 $ 3 $22 $ 24 $ 7
========== === === ==== ===
</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

ORGANIZATION -- The Company is a multinational manufacturing company
operating primarily in the United States. Information on the Company's
operations by segment and geographic area is provided in Note S.

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.

USE OF ESTIMATES -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

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 for its aerospace
and defense business segment 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.

FAIR VALUE OF FINANCIAL INSTRUMENTS -- The Company's cash and cash
equivalents and short and long-term bank debt bear interest at market rates and
therefore their carrying values approximate their fair values. The fair value of
the Company's debentures is based on the closing market price of such debt at
November 30, 1996.

INVENTORIES -- Inventories are stated at the lower of cost or market. The
automotive and polymer products segments use the last-in, first-out method. The
aerospace and defense 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 35 year period or less.

17
<PAGE> 20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

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.

STATEMENTS OF CASH FLOWS -- For the purposes of the statements of cash
flows, all highly liquid debt instruments purchased with an original 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% 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" and the Company intends to continue using this method.

RECLASSIFICATIONS -- Certain reclassifications have been made to conform
prior year's data to the current presentation.

NOTE B -- UNUSUAL ITEMS

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/NEW ACCOUNTING PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board (FASB) 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. The Company is not
required to adopt SFAS 121 until fiscal 1997 and does not expect the
implementation of this Statement to have a material impact on the consolidated
financial statements of the Company.

During October 1996, the American Institute of Certified Public Accountants
issued Statement of Position No. 96-1 "Environmental Remediation Liabilities"
(SOP 96-1). The Statement provides authorita-

18
<PAGE> 21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

tive guidance on the recognition, measurement, display and disclosure of
environmental remediation liabilities. The Company is not required to implement
the Statement until fiscal year 1998. Given that this Statement was recently
issued in October 1996 and the number of environmental sites with which the
Company is involved, the financial statement impact of its implementation has
not yet been determined.

Effective December 1, 1993, the Company adopted the provisions of
Statements of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (SFAS 106) and SFAS No. 109,
"Accounting for Income Taxes" (SFAS 109).

Under SFAS 106, the Company elected to recognize immediately the transition
obligation as a cumulative effect of an accounting change. This resulted in a
charge of $196 million or $6.16 per share (after a reduction for income taxes of
$131 million) in 1994. The cumulative effect of adopting SFAS 109 in 1994 was a
charge of $17 million or $.53 per share.

NOTE D -- ACQUISITIONS AND DIVESTITURES

On June 21, 1996, the Company completed the sale of substantially all of
the assets and certain liabilities of its Automotive Occupant Sensor (AOS)
business to the Robert Bosch Corporation for an aggregate consideration of
approximately $3 million paid in cash at the closing and the right to receive
certain additional payments based on the performance of the AOS business.

On November 19, 1996, the Company completed the sale of substantially all
of the assets and certain liabilities of its structural urethane adhesive
business to Ashland Inc. for an aggregate consideration of approximately $4
million paid in cash at the closing.

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
Elastomer- und Kunststofftechnik GmbH & Co. KG (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. 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.

19
<PAGE> 22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

In 1994, the Company sold its Aerojet Ordnance business' 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 $31 million in 1996, $38 million
in 1995 and $42 million in 1994. 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 $102 million in 1996, $76 million in 1995 and $72 million in 1994.

NOTE F -- INCOME TAXES

The income tax provision (benefit) consists of the following:

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------
1996 1995 1994
----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
CURRENT TAXES
U.S. federal............................................... $ 18 $ 4 $ 11
State and local............................................ 5 (2) 1
Foreign.................................................... 7 9 6
---- ---- ----
30 11 18
DEFERRED TAXES
U.S. federal............................................... (26) 13 (21)
State and local............................................ (4) 5 (6)
Foreign.................................................... -- (3) --
---- ---- ----
(30) 15 (27)
---- ---- ----
Income Tax Provision (Benefit)................... $ -- $ 26 $ (9)
==== ==== ====
</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,
-------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Statutory income tax rate.................................. 35.0% 35.0% (35.0)%
State and local income taxes, net of federal income tax
benefit.................................................. 1.5 3.0 (12.8)
Tax refund................................................. (39.0) -- --
Earnings of subsidiaries taxed at other than U.S. statutory
rate..................................................... 1.2 .3 (.3)
Adjustment to estimated income tax accruals................ -- .3 14.0
Other, net................................................. 1.3 1.4 (5.9)
---- ---- ----
Effective Income Tax Rate........................ --% 40.0% (40.0)%
==== ==== ====
</TABLE>

The Company reduced its 1996 income tax expense by $16 million due to the
receipt of a federal income tax refund related primarily to interest on the
timing of certain deductions.

20
<PAGE> 23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

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,
---------------------------------------------
1996 1995
-------------------- --------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------ ----------- ------ -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Accrued estimated costs....................... $101 $ -- $ 96 $ --
Long-term contract method..................... 9 -- -- 6
Depreciation.................................. -- 28 -- 51
Pension....................................... -- 37 -- 38
NOLs and tax credit carryforwards............. 7 -- 14 --
Other postretirement/employment benefits...... 156 -- 163 --
---- ---- ---- -----
Total............................... $273 $ 65 $273 $ 95
==== ==== ==== =====
</TABLE>

The balance sheets reflect deferred income taxes of $52 million and $30
million in prepaid expenses and other at November 30, 1996 and 1995,
respectively. Included in other long-term assets for 1996 and 1995 are deferred
income taxes of $156 million and $148 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 $18 million in 1996 and $17 million in
1995 and 1994. Cash paid during the year for income taxes was $29 million in
1996, $28 million in 1995 and $23 million in 1994.

NOTE G -- ACCOUNTS RECEIVABLE

Unbilled receivables of $22 million and $24 million at November 30, 1996
and 1995, 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, 1996 includes $9 million expected to be
collected in fiscal year 1997, and $13 million expected to be collected in
subsequent years.

At year-end, the amount of commercial receivables was $132 million and $165
million for 1996 and 1995, respectively. Receivables for the automotive segment
of $47 million and $81 million in 1996 and 1995, are due primarily from General
Motors, Ford and Chrysler. The amount of U.S. government receivables was $75
million and $77 million for 1996 and 1995, respectively. Included in the 1996
and 1995 U.S. government receivable is $5 million and $7 million, respectively,
for environmental remediation recovery (see Note R). The Company's receivables
are generally unsecured and are not backed by collateral from its customers.

NOTE H -- INVENTORIES

Components of inventories are as follows:

<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1996 1995
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Raw materials and supplies........................................ $ 37 $ 47
Work-in-process................................................... 9 16
Finished products................................................. 62 65
---- ----
Approximate replacement cost of inventories....................... 108 128
Reserves, primarily LIFO.......................................... (40) (43)
Long-term contracts at average cost............................... 172 178
Progress payments................................................. (82) (102)
---- ----
Total Inventories....................................... $158 $161
==== ====
</TABLE>

21
<PAGE> 24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Aerojet's inventories applicable to government and other contracts include
general and administrative costs. The total of such costs incurred in 1996 and
1995 was $66 million and $61 million, respectively, and the amounts in inventory
at the end of those years are estimated at $24 million and $21 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 of consolidated
inventories at replacement cost at November 30, 1996 and 1995.

At November 30, 1996, Aerojet's contract accounting positions reflect the
expected recovery of approximately $72 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 canceled 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 majority of the Company's plan assets are invested in short-term
investments, listed stocks and bonds.

The components of net pension costs (income) are as follows:

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------
1996 1995 1994
----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Service cost -- benefits earned during the period.......... $ 17 $ 18 $ 21
Interest cost on projected benefit obligation.............. 125 117 118
Actual return on assets.................................... (314) (325) 13
Net amortization and deferral.............................. 163 184 (161)
Curtailment effect......................................... 15 -- --
----- ----- -----
Net Pension Costs (Income)............................ $ 6 $ (6) $ (9)
===== ===== =====
</TABLE>

During 1996, a special retirement program was offered to encourage early
retirements among certain salaried employees. Also during 1996, the Company sold
its Reinforced Plastics and Vibration Control business units. These events
resulted in a curtailment charge of $15 million during the year.

22
<PAGE> 25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

ACTUARIAL ASSUMPTIONS

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------
1996 1995 1994
---- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Discount rate............................................. 7 3/4% 7 1/2% 8%
Salary progression(1)..................................... 4 1/2% 4% 5%
Long-term rate of return(2)............................... 8 3/4% 9% 9%
Increase (Decrease) in projected benefit obligations from
assumption changes...................................... $(17) $ 44 $ --

(1) No benefit escalation assumption beyond negotiated benefits is assumed for
the hourly plans.

(2) Excludes a variable annuity program with an interest assumption of 8 percent
and assets of $837 million at November 30, 1996.

The following table presents the funded status of the plans:

</TABLE>

<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1996 1995
------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Plan assets at fair value.......................................... $2,074 $1,871
------ ------
Actuarial present value of plan benefits:
Vested........................................................... $1,670 $1,576
Non-vested....................................................... 42 51
------ ------
Accumulated benefit obligation..................................... 1,712 1,627
Effect of projected salary increases............................... 35 40
------ ------
Projected benefit obligation....................................... $1,747 $1,667
------ ------
Overfunded plans................................................... $ 327 $ 204
Unamortized balances:
Transition assets................................................ (27) (31)
Plan amendments.................................................. 30 33
Experience gains................................................. (223) (90)
Minimum funding liability........................................ (4) (6)
------ ------
Prepaid Pension Cost (Included in Investments and Other
Assets)................................................ $ 103 $ 110
====== ======
</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 $10 million in 1996, $11 million in 1995 and $12 million in
1994. 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:

<TABLE>
<CAPTION>
YEARS ENDED
NOVEMBER 30,
--------------------
NET PERIODIC COST 1996 1995 1994
---- --- ---
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
Service cost.................................................... $ 3 $ 4 $ 5
Interest cost................................................... 23 29 31
Net amortization and deferral................................... (6) (1) --
Net curtailment gain............................................ (15) (5) --
---- --- ---
Total Cost............................................ $ 5 $27 $36
==== === ===
</TABLE>

<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
BENEFIT OBLIGATION 1996 1995
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Retirees.......................................................... $245 $240
Fully eligible active plan participants........................... 30 45
Other active plan participants.................................... 26 47
---- ----
Projected benefit obligation...................................... 301 332
---- ----
Unamortized balances:
Plan amendments................................................. 66 65
Experience gains................................................ 9 5
---- ----
Accrued Benefit Obligation.............................. $376 $402
==== ====
</TABLE>

The projected benefit obligation and related benefit cost are determined by
the application of relevant actuarial assumptions. The Company utilized a
discount rate of 7.75 percent in 1996, 7.5 percent in 1995 and 8 percent in
1994. The effect of changing the discount rate was to increase the projected
benefit obligation by $6 million. The Company anticipates that its health care
cost trend rate will decline from 9 percent in 1996 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, 1996 by $2 million and
increase the aggregate of the service and interest cost components of net
periodic cost by $0.2 million. Plan design changes decreased the projected
benefit obligation by $9 million in 1996 and $69 million in 1995. Plan
amendments are being amortized over the average remaining service of the
affected active employees. A curtailment gain of $15 million and $5 million was
included in the gain on the sale of the Company's various business units during
1996 and 1995, respectively.

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,
-----------------
1996 1995
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Expected recoveries from U.S. government and third parties for
environmental remediation....................................... $118 $121
Deferred taxes.................................................... 156 148
Prepaid pension................................................... 103 110
Other............................................................. 88 71
---- ----
Total Investments and Other Assets...................... $465 $450
==== ====
</TABLE>

NOTE K -- ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES

The components of accrued expenses are as follows:

<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1996 1995
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Payable for goods, services and rights............................ $128 $108
Accrued compensation and employee benefits........................ 39 77
Environmental reserves............................................ 30 34
Restructuring and other reserves.................................. 10 15
Other............................................................. 12 17
---- ----
Total Accrued Expenses.................................. $219 $251
==== ====
</TABLE>

The components of other long-term liabilities are as follows:

<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1996 1995
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Environmental reserves............................................ $230 $232
Other............................................................. 65 60
---- ----
Total Other Long-term Liabilities....................... $295 $292
==== ====
</TABLE>

NOTE L -- LONG-TERM DEBT AND CREDIT LINES

Long-term debt and credit lines consist of the following:

<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1996 1995
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Revolving loans................................................... $140 $255
8% Unsecured convertible subordinated debentures maturing 2002.... 115 115
Other............................................................. 12 17
---- ----
Total debt........................................................ 267 387
Less amounts due within one year.................................. (4) (4)
---- ----
Total Long-term Debt and Credit Lines................... $263 $383
==== ====
</TABLE>

25
<PAGE> 28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

On May 17, 1996, the Company entered into a new five-year unsecured $400
million revolving credit facility (Facility) which expires in May 2001. As of
November 30, 1996, unused revolving lines of credit totaled $260 million. The
Company pays a variable commitment fee, which is currently 1/4 of one percent,
on the unused balance. Interest rates are variable, primarily based on LIBOR,
and are currently at an average rate of 6.2 percent. The Facility contains
various debt restrictions and provisions relating to net worth, interest
coverage and debt to earnings before interest, taxes, depreciation and
amortization (Debt/EBITDA) ratios. The Company is required to maintain
consolidated net worth of at least $23.5 million. Proceeds from divested
business units in 1996 were used to reduce outstanding debt.

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 fair market
value of the Debentures was $133 million at November 30, 1996.

At November 30, 1996, the Company had unsecured, uncommitted lines of
credit with several banks for short-term borrowings aggregating $81 million, of
which $22 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 $21 million at November 30, 1996.

The maturities of other debt decline from $4 million in 1997 to zero by
2001.

Cash paid during the year for interest was $28 million in 1996, $36 million
in 1995 and $31 million in 1994.

NOTE M -- DISCONTINUED OPERATIONS

The consolidated balance sheets include various current and long-term
reserves relating to operations discontinued in prior years. Those reserves
include estimates for postretirement benefits, environmental matters and other
accrued liabilities.

Discontinued operations reserves consist of the following:

<TABLE>
<CAPTION>
AT NOVEMBER 30,
-----------------
1996 1995
---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Accrued expenses.................................................. $ 26 $ 41
Postretirement benefits other than pensions....................... 56 59
Other long-term liabilities....................................... 41 34
---- ----
Total Discontinued Operations Reserves.................. $123 $134
==== ====
</TABLE>

NOTE N -- PREFERRED SHARE PURCHASE RIGHTS

During January 1997, the Board of Directors extended for ten additional
years GenCorp's Shareholder Rights Plan, as amended (Plan). When the Plan was
originally adopted 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, 1996 and 1995 were 33,479,647 and 33,402,449, respectively. The Plan, as
amended effective December 1987 and extended in January 1997, 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

26
<PAGE> 29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

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 under the extended Plan will expire February
18, 2007. 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, 1996, 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. In general, 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.

Information regarding this option plan is as follows:

<TABLE>
<CAPTION>
STOCK OPTION PLAN SUMMARY 1996 1995 1994
--------- --------- ----------
<S> <C> <C> <C>
Options outstanding, beginning of fiscal year.... 2,464,213 1,579,150 496,075
Granted.......................................... 453,000 1,077,500 1,169,650
Forfeited........................................ (485,711) (192,437) (86,575)
Exercised........................................ (21,625) -- --
--------- --------- ---------
Options outstanding, November 30................. 2,409,877 2,464,213 1,579,150
========= ========= =========
Options exercisable, November 30................. 1,435,461 806,518 220,135
Options available for grant, November 30......... 68,498 35,787 920,850
Per share range of prices of outstanding......... $ 10.75 to $ 10.75 to $ 12.625 to
options at end of year......................... $ 16.875 $ 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
$(0.2) million in 1996, $(4) million in 1995 and $2 million in 1994. The
liability for accrued stock incentive compensation was $2 million and $3 million
at November 30, 1996 and 1995, 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, 1996, 13,875,000 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.

27
<PAGE> 30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

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 $9 million in 1996, $11 million in 1995
and $10 million in 1994. Future minimum commitments at November 30, 1996 for
existing operating leases were $29 million with annual amounts declining from $7
million in 1997 to $3 million in 2000. The Company's current obligation for
leases after 2000 is $9 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.
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 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 under the Decree to
determine the nature and extent of contamination at the facility and to identify
the technologies that will likely be used to remediate the site. Based on
available facts, existing technology and current environmental 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 change as
work progresses, additional experience is gained and environmental standards are
revised.

At November 30, 1996, Aerojet had a reserve of $196 million for costs to
complete the RI/FS and remediate the site and has recognized $114 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 $35 million for estimated decontamination and long-term
operating and maintenance costs of this site. The reserve represents the
Company's best estimate for the remaining remediation costs. Estimates of future
remediation costs 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 7 to 12
years.

Muskegon, Michigan -- In a lawsuit filed by the U.S. Environmental
Protection Agency (EPA), the United States District Court ruled in 1992 that
Aerojet and its two inactive Cordova Chemical subsidiaries (Cordova) are liable
for remediation of Cordova's Muskegon, Michigan site, along with a former
owner/operator of an earlier chemical plant at the site. That decision has been
appealed to the United States Court of Appeals.

In a separate action, Aerojet and Cordova won indemnification for the
Muskegon site investigation and remediation costs from the State of Michigan in
the state court of claims. The Michigan Court of Appeals

28
<PAGE> 31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

affirmed on appeal, and the Michigan Supreme Court refused to hear the case. On
December 23, 1996, the Michigan Supreme Court denied the State's motion for
reconsideration. As a result, the Company believes that most of the $50 million
to $100 million in anticipated remediation costs will be paid by the State of
Michigan and the former owner/operator of the site. In addition, Aerojet
believes it has insurance coverage for the site.

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 possible site 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 presently 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 provide federal funding for 25
percent of the non-recurring costs and additional 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 28 other Superfund and non-superfund remediation 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 $16 million as of
November 30, 1996 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 liquidity, capital resources or 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.

29
<PAGE> 32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

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 remediation costs.

In late 1995, the Court hearing on the issue of joint and several liability
was completed, and in August 1996 the Court held hearings relative to
allocation. The Court has not yet rendered a decision. If the Court finds
GenCorp is liable, subsequent trial phases will address damages.

The Company is vigorously litigating this matter and believes that it has
meritorious defenses to Olin's claims. 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 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 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.

The automotive business segment designs and produces extruded rubber for
vehicle body and window sealing systems for the domestic, transplant and foreign
automotive manufacturers.

The polymer products business segment designs and manufactures specialty
polymers and decorative and building products for consumers and industry. The
segment is a leading producer of polymer-based products and operates three
businesses: Decorative and Building 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.

GenCorp sales in 1996, 1995 and 1994 to the U.S. government and its
agencies (principally the Department of Defense) totaled $466 million, $490
million and $578 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 $170 million in 1996, $286 million in
1995 and $281 million in 1994 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.

30
<PAGE> 33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

In 1996, the Company recognized an unusual loss of $13 million. The loss
consisted of $14 million from the divestiture of its Vibration Control and
Reinforced Plastics businesses and a provision of $3 million for the
restructuring of its Plastic Extrusions business unit offset by a gain of $4
million from the sale of its structural urethane business. The Vibration Control
and Reinforced Plastics businesses were part of the automotive business segment.
The Plastic Extrusions business unit is currently part of the automotive
business segment. The structural urethane business was part of the polymer
products business segment.

In 1995, the Company recognized a net unusual gain of $4 million from the
divestiture of its Rigid Plastics business. 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,
----------------------------
1996 1995 1994
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
NET SALES
Canada................................................... $ 91 $ 95 $ 81
Europe................................................... 131 123 33
United States............................................ 1,240 1,446 1,523
United States export sales............................... 53 108 103
------ ------ ------
$1,515 $1,772 $1,740
====== ====== ======
SEGMENT OPERATING PROFIT
Canada................................................... $ 16 $ 17 $ 14
Europe................................................... -- (3) (3)
United States............................................ 117 99 101
Unusual items............................................ (13) 4 (80)
------ ------ ------
$ 120 $ 117 $ 32
====== ====== ======
IDENTIFIABLE ASSETS
Canada................................................... $ 36 $ 36 $ 32
Europe................................................... 107 115 119
United States............................................ 933 1,005 1,132
------ ------ ------
1,076 1,156 1,283
Corporate assets......................................... 254 302 172
------ ------ ------
Total Assets................................... $1,330 $1,458 $1,455
====== ====== ======
</TABLE>

32
<PAGE> 35

GENCORP INC.

BUSINESS SEGMENT INFORMATION

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------
1996 1995 1994
------ ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
NET SALES
Aerospace and defense.......................................... $ 494 $ 520 $ 594
Automotive..................................................... 448 662 605
Polymer products............................................... 573 590 541
------ ------- -------
$1,515 $ 1,772 $ 1,740
====== ======= =======
INCOME
Aerospace and defense.......................................... $ 42 $ 30 $ 25
Automotive..................................................... 19 25 37
Polymer products............................................... 72 58 50
Unusual items.................................................. (13) 4 (80)
------ ------- -------
Segment Operating Profit.................................. 120 117 32
Interest expense............................................... (27) (34) (32)
Corporate other income (expense), net.......................... (7) 6 --
Corporate expenses............................................. (15) (16) (19)
Unusual items.................................................. (29) (9) (3)
------ ------- -------
Income (Loss) Before Income Taxes......................... $ 42 $ 64 $ (22)
====== ======= =======
ASSETS
Aerospace and defense.......................................... $ 615 $ 579 $ 605
Automotive..................................................... 208 352 380
Polymer products............................................... 253 225 298
------ ------- -------
Identifiable Assets....................................... 1,076 1,156 1,283
Marketable securities, cash and other corporate assets......... 254 302 172
------ ------- -------
Total Assets.............................................. $1,330 $ 1,458 $ 1,455
====== ======= =======
CAPITAL EXPENDITURES
Aerospace and defense.......................................... $ 15 $ 15 $ 18
Automotive..................................................... 15 33 25
Polymer products............................................... 16 13 19
Corporate...................................................... 1 2 1
------ ------- -------
$ 47 $ 63 $ 63
====== ======= =======
DEPRECIATION
Aerospace and defense.......................................... $ 23 $ 25 $ 34
Automotive..................................................... 14 27 21
Polymer products............................................... 15 15 16
Corporate...................................................... 6 3 2
------ ------- -------
$ 58 $ 70 $ 73
====== ======= =======
EMPLOYEES
Aerospace and defense.......................................... 3,010 3,070 3,390
Automotive..................................................... 3,490 6,020 6,570
Polymer products............................................... 2,270 2,340 2,540
Corporate...................................................... 180 270 470
------ ------- -------
8,950 11,700 12,970
====== ======= =======
</TABLE>

33
<PAGE> 36

GENCORP INC.

QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------
FEBRUARY 29 MAY 31 AUGUST 31 NOVEMBER 30
----------- ------ --------- -----------
(DOLLARS IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1996
Net sales................................................. $ 368.3 $378.0 $ 360.9 $ 407.4
------ ----- ----- -----
Gross profit.............................................. $ 56.0 $ 71.0 $ 70.9 $ 82.7
------ ----- ----- -----
Unusual items............................................. $ 24.8 $ .1 $ -- $ 17.6
------ ----- ----- -----
Income (Loss) before income taxes......................... $ (20.3) $ 23.5 $ 26.4 $ 11.9
------ ----- ----- -----
Net Income (Loss)......................................... $ (11.7) $ 14.1 $ 15.9 $ 23.4
------ ----- ----- -----
- ----------------------------------------------------------------------------------------------------------------
Earnings (Loss) per share of common stock
Primary................................................. $ (.35) $ .42 $ .47 $ .69
Fully diluted........................................... $ (.35) $ .38 $ .42 $ .60
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.......................... 13 3/8 15 7/8 15 1/2 18 5/8
-- low.......................... 11 1/8 11 1/2 12 1/2 13 5/8
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------
FEBRUARY 28 MAY 31 AUGUST 31 NOVEMBER 30
----------- ------ --------- -----------
(DOLLARS IN MILLIONS, EXCEPT FOR 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>

CAPITAL STOCK

The Company's common stock is listed on the New York and Chicago Stock
Exchanges. At November 30, 1996 and December 31, 1996, there were approximately
13,800 holders of record of the Company's common stock. During 1996, 1995 and
1994, 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,
--------------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS, EXCEPT
PER-SHARE AND RATIO DATA)
<S> <C> <C> <C> <C> <C>
NET SALES
Aerospace and defense......................... $ 494 $ 520 $ 594 $ 872 $1,019
Automotive.................................... 448 662 605 539 459
Polymer products.............................. 573 590 541 494 459
------ ------ ------ ------ ------
$1,515 $1,772 $1,740 $1,905 $1,937
====== ====== ====== ====== ======

SEGMENT OPERATING PROFIT
Aerospace and defense......................... $ 42 $ 30 $ 25 $ 53 $ 71
Automotive.................................... 19 25 37 24 16
Polymer products.............................. 72 58 50 47 49
Unusual items................................. (13) 4 (80) -- (22)
------ ------ ------ ------ ------
$ 120 $ 117 $ 32 $ 124 $ 114
====== ====== ====== ====== ======

OPERATIONS
Income (Loss) from operations................. $ 42 $ 38 $ (13) $ 43 $ 22
Cumulative effect of accounting changes....... -- -- (213) -- --
------ ------ ------ ------ ------
Net Income (Loss)........................ $ 42 $ 38 $ (226) $ 43 $ 22
====== ====== ====== ====== ======

EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Income (Loss) from operations................. $ 1.24 $ 1.17 $ (.41) $ 1.35 $ .70
Cumulative effect of accounting changes....... -- -- (6.69) -- --
------ ------ ------ ------ ------
Net income (loss) (primary)................... $ 1.24 $ 1.17 $(7.10) $ 1.35 $ .70
Net income (loss) (fully diluted)............. $ 1.15 $ 1.10 $(7.10) $ 1.24 $ .70
Cash dividends paid........................... $ .60 $ .60 $ .60 $ .60 $ .60

OPERATING RATIOS
Return on average assets employed............. 7.0% 6.4% 1.2% 9.3% 7.3%
Assets employed turnover...................... 1.8x 1.9x 2.3x 2.6x 2.7x
Income (Loss) from operations to net sales.... 2.8% 2.1% (.7)% 2.3% 1.1%

GENERAL
Capital expenditures.......................... $ 47 $ 63 $ 63 $ 67 $ 96
Depreciation.................................. 58 70 73 74 79
Total assets*................................. 1,330 1,458 1,455 1,213 1,131
Long-term debt................................ 263 383 378 416 344
</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, 1996 and 1995, and the related consolidated statements
of income, shareholders' equity and cash flows for each of the three years in
the period ended November 30, 1996. 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, 1996 and 1995, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended November 30,
1996, 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 and income taxes.

Ernst & Young LLP

Akron, Ohio
January 9, 1997

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 26, 1997 Annual Meeting of Shareholders is
set forth on pages 2 and 3 of the Company's 1997 Proxy Statement and is
incorporated herein by reference. Information with respect to directors of the
Company whose terms extend beyond the March 26, 1997 Annual Meeting of
Shareholders is set forth on pages 3 and 4 of the Company's 1997 Proxy Statement
and is incorporated herein by reference.

Also, see Executive Officers of the Registrant on pages 6 and 7 of this
report.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding executive compensation is set forth on pages 9
through 19 of the Company's 1997 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 1997 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 1997 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,
1996.

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 13, 1997
By /s/ W. R. PHILLIPS
-------------------------------
W. R. Phillips
Senior Vice President, Law;
General Counsel

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 13, 1997
- ---------------------------------------- and President
J. B. Yasinsky

/s/ D. M. STEUERT Senior Vice President and Chief February 13, 1997
- ---------------------------------------- Financial Officer
D. M. Steuert

/s/ P. J. PARR Director-Audit, Accounting & Tax February 13, 1997
- ---------------------------------------- (principal accounting officer)
P. J. Parr

* Director February 13, 1997
- ----------------------------------------
C. A. Corry

* Director February 13, 1997
- ----------------------------------------
W. K. Hall

* Director February 13, 1997
- ----------------------------------------
R. K. Jaedicke

* Director February 13, 1997
- ----------------------------------------
P. X. Kelley

* Director February 13, 1997
- ----------------------------------------
R. D. Kunisch

* Director February 13, 1997
- ----------------------------------------
D. E. McGarry

* Director February 13, 1997
- ----------------------------------------
J. M. Osterhoff

* Director February 13, 1997
- ----------------------------------------
P. J. Phoenix

* Director February 13, 1997
- ----------------------------------------
R. B. Pipes

* Director February 13, 1997
- ----------------------------------------
J. R. Stover

*Signed by the undersigned as
attorney-in-fact and agent for the
Directors indicated.

/s/ E. R. DYE February 13, 1997
- ----------------------------------------
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, 1996

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 Statements of Income for the years ended November 30, 1996, 1995 and
1994............................................................................... 13

Consolidated Balance Sheets at November 30, 1996 and 1995............................. 14

Consolidated Statements of Cash Flows for the years ended November 30, 1996, 1995 and
1994............................................................................... 15

Consolidated Statements of Shareholders' Equity for the years ended November 30, 1996,
1995 and 1994...................................................................... 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
9, 1997, with respect to the consolidated financial statements of GenCorp Inc.
included in this Annual Report (Form 10-K) for the year ended November 30, 1996.

Ernst & Young LLP

Akron, Ohio
February 13, 1997

GC-2
<PAGE> 44

EXHIBIT INDEX

<TABLE>
<CAPTION>
TABLE EXHIBIT EXHIBIT
ITEM NO. DESCRIPTION LETTER
- --------- ----------- -------
<S> <C> <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 was filed as
Exhibit A to the Company's Annual Report on Form 10-K for the fiscal
year ended November 30, 1995 (File No. 1-1520), and is incorporated
herein by reference. (3 pages)

Amendment to Rights Agreement between GenCorp Inc. and The Bank of New
York as successor Rights Agent, dated as of January 20, 1997 was filed
as Exhibit 4.1 to the Company's Current Report on Form 8-K Date of
Report January 20, 1997 (File No. 1-1520), and is incorporated herein
by reference. (3 pages)

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.

10. MATERIAL CONTRACTS

10.(iii)(A) MANAGEMENT CONTRACTS, COMPENSATORY PLANS OR ARRANGEMENTS

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)

Employment Agreement dated May 10, 1996 between the Company and
Nathaniel J. Mass. (5 pages) A
</TABLE>

i
<PAGE> 45

<TABLE>
<CAPTION>
TABLE EXHIBIT EXHIBIT
ITEM NO. DESCRIPTION LETTER
- --------- ----------- -------
<S> <C> <C>
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)

GenCorp 1996 Supplemental Retirement Plan for Management Employees
effective March 1, 1996. (15 pages) B

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)

Amendment to the GenCorp Inc. and Participating Subsidiaries Stock
Incentive Compensation Plan, effective July 13, 1995. (13 pages) C
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 and May 20, 1996. (22 pages) D

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)
</TABLE>

ii
<PAGE> 46

<TABLE>
<CAPTION>
TABLE EXHIBIT EXHIBIT
ITEM NO. DESCRIPTION LETTER
- --------- ----------- -------
<S> <C> <C>

GenCorp Inc. Executive Incentive Compensation Program, amended
September 8, 1995 to be effective for the 1996 fiscal year. (21 pages) E

11. STATEMENT RE COMPUTATION OF PER SHARE EARNINGS F

(1 page)

21. SUBSIDIARIES OF THE REGISTRANT G

Listing of Subsidiaries (1 page)

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 H

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)

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

May 10, 1996-Revised

Nathaniel J. Mass
768 Main Street
Hingham, MA 02043-3630

Dear Nat:

I am pleased on behalf of GenCorp Inc. to extend to you an offer of employment
on and subject to the terms and conditions set forth herein.

1. You will be employed as the Sr. V.P., Strategic Growth. In this
capacity, you will devote your full time and efforts to the performance
of those duties customarily performed in this capacity, subject to the
direction of the Chairman and Chief Executive Officer ("Chairman") and
the Board of Directors ("Directors") of GenCorp and in compliance with
GenCorp's published policies and directives. At the next meeting, the
Directors will elect you as a corporate officer.

2. You will commence employment with GenCorp on or before June 7, 1996.

3. Your compensation will comprise a base salary and an incentive bonus
for each fiscal year (i.e., December 1 through November 30) as follows:

(a) Your initial base salary for the first full year of employment will
be $300,000 and thereafter, will be subject to review and adjustment at
the end of GenCorp's 1996 fiscal year and each subsequent fiscal year
in accordance with GenCorp's established practice. Effective February
1, 1997, your base salary will be increased to at least $325,000. Your
base salary will be payable in twenty-four semi-monthly installments in
accordance with GenCorp's regular pay practices.

(b) You will receive a hiring bonus of $150,000 that will be paid upon
commencement of your employment with GenCorp. This bonus is in lieu of
the expected bonus payment from your current employer due in June 1996.

(c) You will be eligible to participate in GenCorp's Executive
Incentive Compensation Program, beginning with GenCorp's 1996 fiscal
year. Based on

<PAGE> 2

May 10, 1996-Revised
Page 2

GenCorp's achievement of specified objectives and GenCorp's evaluation
of your personal performance, you will have the opportunity to earn an
incentive bonus in an amount ranging up to 100% of your base salary and
payable in cash and shares of GenCorp's stock. Bonuses are payable in
January or February following the end of GenCorp's fiscal year and in
accordance with GenCorp's regular pay practices and discretion of the
CEO. Your 1996 bonus will be prorated with a minimum of $75,000.

(d) All bonus payments under the Executive Incentive Compensation
Program, require that you be employed by GenCorp on the date of
payment.

4. At the next regularly scheduled meeting of the Organization and
Compensation Committee of the Board of Directors we will recommend an
award of 75,000 shares of GenCorp's common stock pursuant to GenCorp's
1993 Stock Option Plan. The share price will be based on the market
price of GenCorp's shares on your commencement date.

5. You will be eligible to participate in GenCorp's Long Term Incentive
Program and you will be deemed to be a participant therein during the
entire 1996-1998 performance period. Performance targets will be set -
at which time a copy of the program will be given to our participants.
If GenCorp achieves specified performance goals, you will be entitled
to receive an incentive award of shares of GenCorp's stock having a
value which equals between 10% and 40% of your average annual
compensation during the performance period.

6. You will be eligible to participate in the GenCorp Retirement Savings
Plan. GenCorp currently matches up to 6% (first 3% at 100%, next 3% at
50%) of the participant's contributions from base salary and year-end
bonus compensation. The Retirement Savings Plan also allows
participants to make supplemental contributions from eligible
compensation on a pre-tax and after-tax basis. Your contribution rate
may be limited by certain restrictions imposed by the Internal Revenue
Code. GenCorp's matching contributions vest immediately.

7. You will be entitled to participate in GenCorp's Pension Plan for
Salaried Employees ("Pension Plan").

8. You will be eligible to participate in GenCorp's Benefit Restoration
Plan. The Benefit Restoration Plan's purpose is to restore retirement
plan benefits that you would otherwise lose because of certain Internal
Revenue Code limitations on participation in such plans. One of those
restrictions is a cap on the amount of

<PAGE> 3

May 10, 1996-Revised
Page 3

an individual employee's compensation upon which contributions to the
GenCorp Retirement Savings Plan may be based. The IRS compensation cap
for the current plan year (which began January 1, 1996) is $150,000.
The attached illustration (Attachment 1) assumes 5% salary growth, a
bonus of 58% of base pay and 8% return in the account. In addition,
you can contribute more than the 6% assumed for the GenCorp Retirement
Savings Plan (Attachment 2).

9. GenCorp will pay or reimburse you for reasonable expenses which you
incur in connection with your transfer and relocation of your home to
the Akron area pursuant to GenCorp's Relocation Directive, including
assistance in the sale of your current residence, transportation of
household goods, and purchase of a residence in the Akron area. A copy
of this program is enclosed. You will be treated under the transferred
employee provision of the plan. GenCorp will provide you with
temporary housing, including utilities, for a period of approximately
one year and a reasonable number of trips for you or your family
during this period.

10. You will be entitled to four weeks of vacation with pay during each
year of your employment. You may not carry forward to a subsequent year
any unused vacation nor will you be entitled to receive pay in lieu of
any unused vacation. Additionally, you will enjoy all paid holidays
which GenCorp designates for its salaried employees in the Fairlawn
area. GenCorp's practice in recent years has been to close its offices
during the period between Christmas and New Year's Day.

11. In addition to the above-mentioned employee benefit plans, you will be
eligible to participate in the other employee benefit plans which
GenCorp has established for its salaried employees (in each case,
subject to and in accordance with the provisions of the applicable
plan), including the following:

o Comprehensive Health Care
o Dental Care
o Life Insurance
o Supplemental Group Universal Life Insurance
o Long Term Disability Insurance

Nothing herein will be deemed to preclude GenCorp from changing or
terminating any employee benefit plan, program, or practice applicable
to you and other employees or require GenCorp to employ you for any
specific period of time. Participation in some of these plans is
voluntary and requires employee contributions.

<PAGE> 4

May 10, 1996-Revised
Page 4

You should enroll for medical coverage under COBRA with your current
employer upon resignation. GenCorp will reimburse you for the COBRA
charges.

12. The term of your employment will be indefinite in duration and,
therefore, subject to termination at will by notice from you or
GenCorp. In the event that (i) your employment is terminated by GenCorp
for reasons other than cause or due to disability or mandatory
retirement, and (ii) you execute an Enhanced Employment Separation
Agreement (as defined under the Involuntary Separation Plan), you will
be eligible to receive separation pay in the form of:

(a) continuing base salary at the rate in effect on the date of
termination, payable at the times regular salary payments are payable,
subject to normal tax withholding; plus

(b) continuing bonus payments, each in the annualized amount of your
last bonus payment preceding your date of termination (or bonus
guarantee, if an actual bonus has not yet be paid out), payable at the
time bonuses are normally payable, subject to normal tax withholding;

for a period not to exceed the shortest of (I) two (2) years from your
date of termination, (ii) until you obtain "Comparable Employment (as
determined under the Involuntary Separation Plan)."

The Company will also enter into a severance agreement with you
containing the standard terms and conditions utilized for the Company's
executive officers and containing an additional provision which
requires that any amount which may become payable under that severance
agreement be offset by any amount which may be paid under this
employment agreement as a results of the termination of your employment
due to a change in control.

It is the policy of GenCorp that all offers of employment are contingent upon
your submitting to a pre-employment medical examination and satisfying the
job-related physical requirements. We offer a drug-free work environment. A
pre-hire alcohol and drug screen is required and will be included in your
pre-employment medical examination.

<PAGE> 5

May 10, 1996-Revised
Page 5

If the foregoing is satisfactory to you, please indicate your agreement by
signing and remitting a duplicate copy of this letter.

Yours truly,

GENCORP INC.

By /s/ John B. Yasinsky
----------------------------
John B. Yasinsky
Agreed and accepted this
______ day of May, 1996
/s/ Nathaniel J. Mass
- -----------------------------
Nathaniel J. Mass MASS.OFR

Attachments

<PAGE> 1
EXHIBIT B

GENCORP 1996 SUPPLEMENTAL RETIREMENT
PLAN FOR MANAGEMENT EMPLOYEES

<PAGE> 2

GENCORP 1996 SUPPLEMENTAL RETIREMENT
PLAN FOR MANAGEMENT EMPLOYEES

TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S> <C> <C>
Article 1 Introduction................................................1

Article 2 Definitions.................................................2

Article 3 Eligibility.................................................4

Article 4 Supplemental Retirement Benefits............................5

4.1 Benefit Accruals Related to the Pension Plan................5
4.2 Lump Sum Supplemental Benefit...............................6

Article 5 Vesting.....................................................6

Article 6 Distribution of Benefits....................................6

6.1 Distribution of Benefits Accrued Under Section 4.1..........6
6.2 Distribution of Benefits Accrued Under Section 4.2..........7

Article 7 Claims Procedure............................................7

7.1 Claim.......................................................7
7.2 Denial......................................................7
7.3 Appeal......................................................8
7.4 Final Decision..............................................8
7.5 Form........................................................8
7.6 Legal Effect................................................8

Article 8 Effect of Fiduciary Action..................................9

Article 9 Miscellaneous..............................................10

9.1 Amendment and Termination..................................10
9.2 Source of Payments.........................................10
9.3 Non-Alienation Of Benefits.................................10
9.4 No Effect on Employment Rights.............................11
9.5 Other Plans................................................11
9.6 No Severance Benefits......................................11
9.7 Beneficiary................................................12
</TABLE>

- i -

<PAGE> 3

<TABLE>

<S> <C> <C>
9.8 Applicable Law...............................................12
9.9 Cost of Plan.................................................12

Article 10 Information Required by ERISA................................12

10.1 Name of Plan.................................................12
10.2 Type of Plan.................................................12
10.3 Plan Administrator...........................................13
10.4 Agent for Service of Legal Process...........................13
10.5 Statement of ERISA Rights....................................13
</TABLE>

- ii -

<PAGE> 4

GENCORP 1996 SUPPLEMENTAL RETIREMENT
PLAN FOR MANAGEMENT EMPLOYEES

Article 1: Introduction
------------

1.1 GenCorp Inc. hereby adopts this GenCorp 1996 Supplemental
Retirement Plan for Management Employees ("Plan") to provide supplemental
retirement benefits to certain employees of its Corporate Office and Corporate
Technology Center who elect to retire as herein provided. In so doing, GenCorp's
intention is that the Plan will be a pension plan within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"), but not a
tax-qualified plan, and the benefit herein provided will supplement the pension
benefits for which such employees are eligible under the Pension Plan for
Salaried Employees of GenCorp Inc. and Certain Subsidiary Companies ("Pension
Plan").

1.2 For purposes of the Plan, "retire," "to retire, " and "retirement"
mean the complete severance of employment with GenCorp for all purposes on the
applicable Retirement Date.

1.3 Retirement under the Plan will not prohibit or otherwise restrict
any employee from thereafter either working for another employer or, if rehired,
working for GenCorp.

1.4 This plan document contains all information required by law to be
provided to employees and will be filed with the U.S. Department of Labor as the
summary plan description for the Plan.
<PAGE> 5

1.5 The Plan is effective as of March 1, 1996.

Article 2: Definitions
-----------

2.1 "Beneficiary" means a named beneficiary, joint annuitant, or
surviving spouse of a deceased Participant. Notwithstanding the foregoing
sentence, the Beneficiary for benefits accrued under Article 4 shall be the same
beneficiary determined under the Pension Plan for benefits payable thereunder.

2.2 "Benefit Service" means Benefit Service as determined under the
Pension Plan.

2.3 "Change in Control" means the occurrence of any of the following
events:

(a) All or substantially all of the assets of the Company are
sold or transferred to another corporation or entity, or the Company
is merged, consolidated or reorganized into or with another
corporation or entity, with the result that upon conclusion of the
transaction less than 51% of the outstanding securities entitled to
vote generally in the election of directors or other capital interests
of the acquiring corporation or entity are owned, directly or
indirectly, by the shareholders of the Company generally prior to the
transaction; or

(b) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"),
disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule
13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of securities representing 30% or more of

-2-
<PAGE> 6

the combined voting power of the then-outstanding voting securities of
the Company; or

(c) The Company shall file a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Item 1 of Form 8-K thereunder or Item 5(f)
of Schedule 14A thereunder (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may
have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction; or

(d) The individuals who, at the beginning of any period of two
consecutive calendar years, constituted the Directors of the Company
cease for any reason to constitute at least a majority thereof unless
the nomination for election by the Company's stockholders of each new
Director of the Company was approved by a vote of at least two-thirds
of the Directors of the Company still in office who were Directors of
the Company at the beginning of any such period.

2.4 "Code" means the Internal Revenue Code of 1986, as presently in
effect or hereafter amended.

2.5 "Company" means GenCorp Inc.

2.6 "Committee" means the Administrative Committee designated under the
Pension Plan.

2.7 "Early Retirement Program" means the GenCorp 1996 Voluntary Early
Retirement Incentive Program (effective January 16, 1996).

-3-
<PAGE> 7

2.8 "Effective Date" means March 1, 1996.

2.9 "ERISA" means the Employee Retirement Income Security Act of 1974,
as presently in effect or as hereafter amended.

2.10 "Participant" means an employee of the Company who meets the
eligibility requirements for participation in the Plan as set forth in Section
3.

2.11 "Pension Plan" means the Pension Plan For Salaried Employees of
GenCorp, Inc. and Certain Subsidiaries.

2.12 "Plan" means the "GenCorp 1996 Supplemental Retirement Plan for
Management Employees," as set forth in this instrument.

2.13 "Plan Administrator" means the Company.

2.14 "Retirement Date" means the date (not sooner than March 8, 1996,
nor later than March 1, 1997) designated by the Company for the Participant to
retire pursuant to the Early Retirement Program.

2.15 "Vesting Service" means Vesting Service as determined under the
Pension Plan.

Article 3: Eligibility
-----------

In order to participate in this Plan and accrue benefits as described
in Article 4, an individual must (i) be actively employed as a salaried employee
of the Company's

-4-
<PAGE> 8

Corporate Office (excluding Flight Operations) or Corporate Technology Center
(including AMPE) as of March 1, 1996; (ii) as of March 1, 1996, have either (A)
attained age 50 and completed at least 5 years of Vesting Service, or (B)
completed 25 years of Vesting Service, regardless of age; (iii) be a participant
under the Pension Plan; (iv) retire pursuant to the Early Retirement Program on
his Retirement Date, but be ineligible to receive the benefit enhancements
provided thereunder through the Pension Plan; (v) sign a Release of Claims
against the Company; and (vi) be among a select group of management or highly
compensated employees within the meaning of Sections 201(2), 301(a)(3), and
401(a)(1) of ERISA. Once an eligible individual becomes a Participant, such
individual shall continue to be a Participant until the complete distribution to
the Participant (or Beneficiary, if applicable) of all benefits accrued under
the Plan.

Article 4: Supplemental Retirement Benefits
--------------------------------

4.1 BENEFIT ACCRUALS RELATED TO THE PENSION PLAN. A Participant shall
accrue a benefit equal to the difference between (a) and (b) where:

(a) equals the benefit to which a Participant would be entitled under
the Pension Plan if the Participant

(1) had 5 years added to his Benefit Service for purposes of
determining his Accrued Minimum Pension (under either the "basic
benefit" formula described in Section 4.1(c)(i) or the "update"
formula described in Section 4.1(c)(ii)) under the Pension Plan;

(2) had 5 years added to his Vesting Service under the Pension
Plan; and

(3) had 5 years added to his actual attained age in determining
(A) whether he has attained his fifty-fifth (55th) or sixty-second
(62nd)

-5-
<PAGE> 9

birthday for purposes of Section 3.2 of the Pension Plan, and (B) his
age as of his Early Retirement Date and/or Pension Commencement Date
for purposes of Sections 4.2(b) and (c) of the Pension Plan; and

(b) equals the Participant's actual accrued benefit under the Pension
Plan.

4.2 LUMP-SUM SUPPLEMENTAL BENEFIT. A Participant who retires in accordance
with Article 3 will receive, as a lump sum payment upon his retirement, a
supplemental benefit equal to 2% of his final base pay (as determined by the
Company in accordance with its normal pay practices) multiplied by the number of
his full or partial years of actual service with the Company, as determined by
the Company.

Article 5: Vesting
-------

Benefits accrued under Article 4 shall be at all times vested and not
subject to forfeiture.

Article 6: Distribution of Benefits
------------------------

6.1 DISTRIBUTION OF BENEFITS ACCRUED UNDER SECTION 4.1. Benefits accrued
under Section 4.1 shall be paid or distributed, in cash, in such manner, at such
time, and to such person(s) as prescribed under the terms of the Pension Plan as
if such benefits actually were paid under or by the Pension Plan.
Notwithstanding the foregoing sentence, in the event of a Change in Control,
benefits payable under this Section 6.1 shall be converted to an Actuarial
Equivalent single sum (as defined in the Pension Plan) and distributed to the
Participant either (i) immediately, or (ii) upon the

-6-
<PAGE> 10

Participant's Termination of Employment Date (determined under the Pension
Plan), if later.

6.2 DISTRIBUTION OF BENEFITS ACCRUED UNDER SECTION 4.2. Benefits accrued
under Section 4.2 shall be distributed to a Participant in a lump sum cash
payment upon the Participant's Retirement Date.

Article 7: Claims Procedure
----------------

7.1 CLAIM. If the Company fails to pay any supplemental retirement benefit
to which a Participant is entitled hereunder or if any Participant believes that
the Plan is not being administered or operated as to him or her in accordance
with its terms, such Participant may file a written claim in accordance with
this Article 7. The Participant shall present the claim to the Plan
Administrator in writing. GenCorp's Manager, Retirement Plans ("Claims
Official") shall consider the claim and shall issue a determination thereof in
writing. If the claim is granted, the appropriate payment shall be made.

7.2 DENIAL. If the claim is wholly or partially denied, the Claims Official
shall, within ninety (90) days of receipt of the claimant's written claim,
provide the claimant with written notice of the denial, setting forth, in a
manner calculated to be understood by the claimant,

(a) the specific reason or reasons for the denial,

(b) specific references to pertinent Plan provisions on which the denial
is based,

-7-
<PAGE> 11

(c) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why the
material or information is necessary, and

(d) an explanation of the Plan's claim review procedure.

If the Claims Official fails to respond to the claim within the period of time
specified in Section 7.2, the claim will be deemed denied.

7.3 APPEAL. Each claimant may appeal the denial of his or her claim to the
Committee within sixty (60) days after receipt of written notice of the claim
denial by filing with the Committee a written application for review. The
claimant may submit therewith pertinent documents, and a statement of facts and
issues.

7.4 FINAL DECISION. The decision by the Committee upon review of a claim
shall be made not later than sixty (60) days after the written request for
review is received by the Committee, unless special circumstances require an
extension of time for processing, in which case a decision shall be rendered as
soon as possible, but not later than one hundred twenty (120) days after receipt
of the request for review.

7.5 FORM. The Committee's decision upon review shall be in writing and
shall include specific reasons for the decision written in a manner calculated
to be understood by the claimant, with specific references to the pertinent Plan
provisions upon which the decision is based.

7.6 LEGAL EFFECT. No legal action for benefits under the Plan shall be
brought unless and until the claimant has exhausted his or her remedies under
this Article 7.

-8-
<PAGE> 12

Article 8: Effect of Fiduciary Action
--------------------------

(a) The Plan Administrator shall administer the Plan in accordance
with its terms. The Plan Administrator shall have the discretion to make
any findings of fact needed in the administration of the Plan.

(b) The Committee shall have the discretion to interpret or construe
the terms of the Plan and resolve any ambiguities, and to fashion any
remedy which the Committee, in its sole judgment, deems appropriate.

(c) If, due to errors in drafting, any Plan provision does not
accurately reflect its intended meaning, as demonstrated by consistent
interpretations or other evidence of intent, or as determined by the
Committee in its sole and exclusive judgment, the provision shall be
considered ambiguous and shall be interpreted by the Plan Administrator in
a fashion consistent with its intent, as determined by the Committee in its
sole discretion. The Committee, without the need for Board of Directors'
approval, may amend the Plan retroactively solely to cure any such
ambiguity.

(d) This Article 8 may not be invoked by any person to require the
Plan to be administered in a manner which is inconsistent with its
interpretation by the Committee.

(e) Actions taken and determinations made by the Committee shall be
final and binding upon the Company and upon all persons claiming any
interest in or under the Plan, unless a court with jurisdiction over the
matter determines that such decision was arbitrary and capricious.

-9-
<PAGE> 13

Article 9: Miscellaneous
-------------

9.1 AMENDMENT AND TERMINATION. The Company, by action of its Board of
Directors (or another person or entity which has been delegated appropriate
authority by the Board of Directors), may amend the Plan at any time, provided
that once an eligible employee has filed an election to retire under the Early
Retirement Program and signed a Release of Claims against the Company, no such
amendment shall change the eligibility requirements applicable to such eligible
employee under this Plan, and provided further that no such amendment shall
terminate the Plan, or reduce the amount or delay the distribution of benefits
under the Plan, until such time as all accrued benefits under the Plan have been
paid in full to all Participants and/or their Beneficiaries. Any such action
shall be documented in writing. No representative of the Company or any other
person has the authority to orally expand or otherwise change the written terms
of the Plan.

9.2 SOURCE OF PAYMENTS. Payments under this Plan shall be made by the
Company. The Plan shall be unfunded and the Company shall not be required to
establish any special or separate fund nor to make any other segregation of
assets in order to assure the payment of any amounts under the Plan. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business, assets
or equity of the Company to assume and agree to perform all of the Company's
obligations under the Plan.

9.3 NON-ALIENATION OF BENEFITS. No benefit payable at any time under the
Plan shall be subject in any manner to alienation, sale, transfer, assignment,
pledge, attachment or encumbrance of any kind. Any attempt to alienate, sell,
transfer, assign, pledge or otherwise encumber any such benefit, whether
presently or thereafter

-10-
<PAGE> 14

payable, shall be void. No benefit under this Plan shall in any manner be liable
for or subject to the debts or liabilities of any Participant or Beneficiary. If
a Participant or Beneficiary shall attempt to or shall alienate, sell, transfer,
assign, pledge or otherwise encumber benefits under the Plan or any part
thereof, or if by reason of bankruptcy or other event happening at any time,
such benefits would devolve upon anyone else or would not be enjoyed by such
Participant or Beneficiary, then the Committee in its discretion may terminate
such interest in any such benefit and hold or apply it to or for his or her
benefit or for the benefit of the Participant's spouse, children or other
dependents, or any of them, in such a manner as the Committee may deem proper.

9.4 NO EFFECT ON EMPLOYMENT RIGHTS. Employment rights with the Company
shall not be enlarged, increased, or otherwise affected hereby.

9.5 OTHER PLANS.

(a) Payment of any supplemental retirement benefit under the Plan will
not adversely affect a Participant's or Beneficiary's rights under any
other welfare or pension benefit plan of the Company. A Participant's or
Beneficiary's rights under such other plans shall be governed by the terms
thereof.

(b) No supplemental retirement benefit paid hereunder will be deemed
to be, or included in, compensation for purposes of determining benefits
under any other welfare or pension benefit plan of the Company.

9.6 NO SEVERANCE BENEFITS. A Participant will not be eligible to receive,
in connection with his retirement under the Early Retirement Program, any
severance pay or benefit payable under any plan, policy or practice of the
Company to employees who are laid off or discharged involuntarily due to lack of
work or other reason specified in

-11-
<PAGE> 15

such plan, policy or practice, including but not limited to the GenCorp
Involuntary Separation Pay Plan.

9.7 BENEFICIARY. If a Participant dies subsequent to his or her Retirement
Date but prior to payment of any supplemental retirement benefit due to such
Participant, the Company (i) will pay the benefits accrued under Section 4.1 to
the Participant's Beneficiary in accordance with the Participant's distribution
election under the Pension Plan, and (ii) will immediately pay the benefits
accrued under Section 4.2 to the Participant's Beneficiary.

9.8 APPLICABLE LAW. Except to the extent governed by ERISA, the validity,
interpretation, construction and performance of this Plan shall be governed by
the laws of the State of Ohio.

9.9 COSTS OF PLAN: The costs and expenses of administering the Plan shall
be borne by the Company.

Article 10: Information Required by ERISA
-----------------------------

10.1 NAME OF PLAN. The name of the Plan is the GenCorp 1996 Supplemental
Retirement Plan for Management Employees.

10.2 TYPE OF PLAN. This is a pension plan.

-12-
<PAGE> 16

10.3 PLAN ADMINISTRATOR. The Plan Administrator's name, address, telephone
number, employer identification number and plan number are as follows:

Name: GenCorp Inc.
Address: 175 Ghent Road
Fairlawn, Ohio 44333-3300

Telephone Number: 216-869-4200
EIN: 34-0244000
Plan Year: The twelve month period ending on November 30.
Contact: Manager, Retirement Plans (or successor)

10.4 AGENT FOR SERVICE OF LEGAL PROCESS. The name and address of the person
designated as agent for service of legal process is the General Counsel of
GenCorp Inc.. 175 Ghent Road, Fairlawn, Ohio 44333-3300.

10.5 STATEMENT OF ERISA RIGHTS.

(a) As a Participant in this Plan, you are entitled to certain rights
and protections under ERISA. ERISA provides that all Plan Participants
shall be entitled to:

-- Examine, without charge, at the Administrator's office, all Plan
documents, including the Plan instrument (which is this pamphlet), and
the Plan's annual report. Copies of these documents and other Plan
information may also be obtained upon written request to the Plan
Administrator; provided that a reasonable charge may be made for
copies.

-- Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish such Participant with a
copy of this summary annual report.

-13-
<PAGE> 17

(b) In addition to creating rights for Plan Participants, ERISA
imposes duties upon the people who are responsible for the operation of
this Plan. The people who operate your Plan, called "fiduciaries" of the
Plan, have a duty to do so prudently and in the interests of you and other
Plan Participants and beneficiaries. No one, including your employer, or
any other person may fire you or otherwise discriminate against you in any
way to prevent you from obtaining benefits or exercising your rights under
ERISA. If your claim for benefits is denied in whole or in part, you must
receive a written explanation of the reason for this denial. You have the
right to have the Plan Administrator review and reconsider your claim, as
described elsewhere in this pamphlet.

(c) Under ERISA, there are two steps you can take to enforce the above
rights. For instance, if you request certain materials required to be
furnished by the Plan and do not receive them within 30 days, you may file
suit in federal court. In such a case, the court may require that you be
provided with the materials and paid up to $100.00 a day until you receive
them, unless the materials were not sent because of reasons beyond the Plan
Administrator's control. If you have a claim for benefits which is denied
or ignored in whole or in part, you may file suit in a state or federal
court. If it should happen that the Plan's fiduciaries misused the Plan's
money, if any, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor or you
may file suit in a federal court. The Court will decide who should pay the
court costs and legal fees. If you are successful, the court may order the
person you have sued to pay these costs and fees. If you lose, the court
may order you to pay these costs and fees if, for example, it finds your
claim is frivolous.

(d) If you have any questions about this Plan, you should contact the
Plan Administrator. If you have any questions about this statement or about
your rights

-14-
<PAGE> 18

under ERISA, you should contact the nearest area office of the U.S.
Labor-Management Services Administration, Department of Labor.

This Plan is hereby adopted and approved effective March 1, 1996.

GENCORP INC.

By: /s/ Samuel W. Harmon
--------------------------------------
Samuel W. Harmon
Senior Vice President, Human Resources

-15-

<PAGE> 1

EXHIBIT C

APPENDIX A

GENCORP INC. AND PARTICIPATING SUBSIDIARIES
STOCK INCENTIVE COMPENSATION PLAN

AMENDMENT EFFECTIVE JULY 13, 1995

Recitals
--------

WHEREAS, on January 27, 1983, the Company's Board of Directors
("Directors") adopted the GenCorp Inc. and Participating Subsidiaries Stock
Incentive Compensation Plan ("Plan");

WHEREAS Section 9 of the Plan provides that, subject to certain
limitations not here material, the Directors may amend the Plan at any time; and

WHEREAS, on July 13, 1995, the Directors adopted certain amendments to
the Plan, and additionally, authorized the Company's Administrative Committee to
adopt other amendments to implement the July 13, 1995, resolutions of the
Directors.

WHEREFORE, effective as of July 13, 1995, the Plan is amended as set
forth below. The provisions of this Appendix A shall supersede any conflicting
prior provisions of the Plan, and all provisions of the Plan shall be
interpreted or deemed amended so as to carry out the intent of this Appendix A.

<PAGE> 2

- 2 -

1. Definition of Terms
----------------------

1.1 PLAN TERMS: As used herein, each term whose initial letter is
capitalized will have the meaning set forth therefor in Section 2 of the Plan,
if any. Each other term which is used herein and whose initial letter is
capitalized will have the meaning set forth in the text hereof or below,
respectively.

(a) "Company", as used in this Amendment, means GenCorp
Inc. and includes each Participating Subsidiary.

(b) "Conversion Date" means the day on which (i) GenCorp
receives notice from a Recipient to convert Incentive Unit Shares
pursuant to Section 4(c), (ii) Incentive Unit Shares are automatically
converted pursuant to Section 4(c), or (iii) a Recipient elects to
convert IAF Plan Shares to Shares pursuant to Section 2.3.

(c) "Market Value", when applied to a Share, means the closing
price (or, if no trading occurs on a trading day, the mean between the
closing bid and asked prices) of a Share as reported in the New York
Stock Exchange Composite Transactions in the Wall Street Journal (or,
if none, such other exchange on which Shares are then listed).

<PAGE> 3

- 3 -

(d) "Share" means one share of the Company's common stock,
each having a par value of $0.10, and "Shares" means any and all such
shares.

(e) "SICP Trust" means the trust which the Company has
established pursuant to the SICP Trust Agreement in connection with the
Plan.

(f) "Termination Date" means the day on which the Recipient's
employment with the Company terminates.

(g) "Trustee" means the person who serves as trustee of the
SICP Trust.

2. Conversion Into Shares
----------------------

2.1 CONVERTED INCENTIVE UNIT SHARES: Except as provided in Section 2.4,
effective as of July 13, 1995, all Incentive Unit Shares which previously were
converted pursuant to Section 4(c) but not previously paid pursuant to the Plan
(including, without limitation, any increases thereof occurring pursuant to the
Plan before July 13, 1995) hereby are converted into an equal number of Shares.
The number of Shares allocable to each Recipient as a result of such conversion
is shown in Exhibit A hereto.

<PAGE> 4

- 4 -

2.2 UNCONVERTED INCENTIVE UNIT SHARES: Any Incentive Unit Shares which
hereafter are converted pursuant to Section 4(c) will be converted into an
equivalent number of Shares as of the Conversion Date. The number of Shares will
be determined pursuant to Section 4(c) and will be equal to the reduced number
of Incentive Unit Shares resulting from conversion thereof pursuant to Section
4(c) on the applicable Conversion Date.

2.3 IAF PLAN SHARE ELECTION: The Company will accord to each Recipient
who has any IAF Plan Shares on July 13, 1995, a one-time election to convert all
of his or her IAF Plan Shares into a number of Shares equal to the quotient
derived by dividing the aggregate value of the Recipient's IAF Plan Shares on
the Conversion Date by the Market Value of a Share on the same day.

2.4 EXCLUSION: Other provisions hereof notwithstanding, neither the
Incentive Unit Shares nor the IAF Plan Shares of any Recipient whose employment
with the Company terminated and who was receiving installment payments under the
Plan before July 13, 1995, will be converted to Shares, and such Recipients will
continue to receive all payments under the Plan in cash.

<PAGE> 5

- 5 -

3. Contribution of Shares to Trust
-------------------------------

3.1 SICP TRUST: Effective as of July 13, 1995, the Company established
the SICP Trust which will be maintained and operated pursuant to the SICP Trust
Agreement which is incorporated herein by reference and made a part hereof.

3.2 CONTRIBUTION OF SHARES: For purposes of providing a source for
making payments of Shares converted pursuant to Section 2.1, the Company has
issued and contributed 340,185 Shares to the SICP Trust. Hereafter, as it may
elect, the Company may issue and contribute additional Shares to the SICP Trust
in respect of any Incentive Unit Shares and/or IAF Plan Shares which hereafter
are converted to Shares pursuant to Section 2.2 or Section 2.3 and for any other
purpose under the Plan, including, without limitation, paying dividends and
other distributions in respect of Shares held by the Trustee.

3.3 SHARE VOTING: The Company will make appropriate arrangements with
the Trustee to enable each Recipient to vote at meetings of the Company's
shareholders any Shares which are held in the SICP Trust and allocated to the
Recipient's account.

3.4 LIMITATION: Other provisions hereof notwithstanding, the
Company's intention in establishing the SICP Trust is that the Plan shall

<PAGE> 6

- 6 -

remain an unfunded arrangement and the SICP Trust will not affect the status of
the Plan as an unfunded plan maintained for purposes of providing deferred
compensation for a select group of management or highly compensated employees
pursuant to Title I of the Employee Retirement Income Security Act of 1974. For
that purpose, the SICP Trust provides that, in the event of Insolvency as
defined therein, the principal of the SICP Trust will be subject to the claims
of the Company's general creditors under federal and state law.

4. Dividends and Distributions
---------------------------

4.1 ADDITIONAL SHARES: If, after the conversion of any Incentive Unit
Shares and/or IAF Plan Shares to Shares pursuant to Article 2, the Company
declares any dividend or makes any other distribution in respect of Shares held
in the SICP Trust, whether in cash or in kind, the Company will issue and
contribute to the SICP Trust that number of additional Shares determined by
dividing the product of the aggregate dollar value of the dividend or other
distribution, multiplied by the number of Shares held in the SICP Trust on the
dividend or distribution payment date, by the Market Value of a Share on such
payment date.

<PAGE> 7

- 7 -

4.2 ALLOCATION TO ACCOUNTS: All additional Shares contributed to the
SICP Trust pursuant to Section 4.1 will be allocated to the accounts of
Recipients in proportion to the number of Shares in their respective accounts
immediately prior to payment of such dividend or distribution.

5. Recipient Accounts
------------------

5.1 SEPARATE ACCOUNTS: Pursuant to Section 4(g), the Company will
maintain, and require the Trustee to maintain, a separate plan account or
subaccount for each Recipient whose Incentive Unit Shares and/or IAF Plan Shares
have been converted to Shares pursuant to Article 2, which shows the number of
Shares that the Company has contributed to the SICP Trust for the account of
each such Recipient.

5.2 SHARE COMPUTATIONS: In allocating Shares contributed to the
SICP Trust to the accounts of Recipients, the number of such Shares will be
computed to the nearest one-thousandth of a Share.

6. Payments and Distributions
--------------------------

6.1 FORM OF PAYMENT: Effective as of July 13, 1995, the Company may
elect to make payments under the Plan to any Recipient who is an officer or
director in cash or in Shares, except the Company will pay in cash the value of
any fractional Share.

<PAGE> 8

- 8 -

6.2 PAYMENT ELECTION: The Company will accord to each Recipient who was
employed by the Company on July 13, 1995, a one-time opportunity to change (i)
any previous election to commence receiving a series of installment payments
after the Recipient's Termination Date to (ii) an election to receive a single
lump-sum payment after the Recipient's Termination Date.

6.3 PRE-TERMINATION PAYMENTS: The Company will pay to each Recipient
who elected payment of any Incentive Unit Shares or any IAF Plan Shares
commencing before the Recipient's Termination Date, whether in a single payment
or in installment payments, which payment will first commence after July 13,
1995, as follows:

(a) SHARES: The Company will distribute, or cause the Trustee
to distribute, to each such Recipient in respect of any such Incentive
Unit Shares and/or IAF Plan Shares, which have been converted pursuant
to Section 2.1 or Section 2.3, respectively, one or more stock
certificates for the number of whole Shares payable at the time each
such payment becomes due, and pay to each such Recipient in cash the
value of any fractional Share, based on the Market Value of a Share on
the payment date. The number of Shares in any installment

<PAGE> 9

- 9 -

payment will be determined by dividing the total number of Shares
payable in all installments by the number of installments designated by
the Recipient and adding thereto any additional Shares paid in respect
thereof as a dividend or other distribution.

(b) UNCONVERTED IAF PLAN SHARES: The Company will distribute
to each such Recipient who elects not to convert any such IAF Fund
Shares pursuant to Section 2.3 one or more stock certificates for that
number of whole Shares determined by dividing the aggregate value of
the number of such IAF Plan Shares to be paid on any payment date as
determined pursuant to the Plan, by the Market Value of a Share on
the payment date, and pay to such Recipient in cash the value of any
fractional Share, based on the Market Value of a Share on the payment
date.

6.4 POST-TERMINATION PAYMENTS: The Company will pay to each
Recipient who elected payment of any Incentive Unit Shares or any IAF Plan
Shares commencing after the Recipient's Termination Date, whether in a single
payment or in installment payments, which payment will be made or first commence
after July 13, 1995, as follows:

<PAGE> 10

- 10 -

(a) SHARES: The Company will distribute, and/or cause the
Trustee to distribute, to each such Recipient in respect of any such
Incentive Unit Shares and/or IAF Plan Shares which have been converted
pursuant to Section 2.1 or Section 2.3, respectively, one or more stock
certificates for the number of whole Shares payable at the time each
such payment becomes due and, with respect to any fractional Share,
either (i) pay the value thereof (based on the Market Value of a Share
on the payment date) to each such Recipient in cash or (ii) include
such value in the amount withheld for taxes pursuant to Section 6.5. If
the Recipient has elected a single payment pursuant to the Plan, such
distribution will be made within 30 days after the Recipient's
Termination Date. Otherwise, such distribution will be made at the
times specified in the Plan and the Recipient's applicable payment
election. The number of Shares in any installment payment will be
determined by dividing the total number of Shares payable in all
remaining installments due to be paid to the Recipient, including any
additional Shares paid in respect thereof as a dividend or other
distribution, by the number of such remaining installments.

<PAGE> 11

- 11 -

(b) UNCONVERTED IAF PLAN SHARES: The Company will distribute
to each such Recipient who has elected not to convert any such IAF Plan
Shares pursuant to Section 2.3 one or more stock certificates for the
number of whole Shares determined by dividing the aggregate value of
the number of such IAF Plan Shares to be paid on any payment date as
determined pursuant to the Plan, by the Market Value of a Share on the
payment date, and pay to such Recipient in cash the value of any
fractional Share, based on the Market Value of a Share on the payment
date. If the Recipient has elected a single payment pursuant to the
Plan, such distribution will be made within 30 days after the
Recipient's Termination Date. Otherwise, such distribution will be made
at the times specified in the Plan and the Recipient's applicable
payment election.

6.5 WITHHOLDING TAXES: All payments and distributions pursuant to
the Plan, whether made by the Company or the Trustee, will be subject to the
withholding of federal, state and local taxes as required by applicable law. The
Company or the Trustee, as the Company elects, may satisfy any such tax
withholding obligation in respect of any distribution of Shares by withholding a
number of Shares having an aggregate Market Value on the

<PAGE> 12

- 12 -

payment date that is equal to the aggregate amount of taxes required to be
withheld. At the request of a Recipient within five days after his Termination
Date, the Company, in its sole discretion, may permit a Recipient to pay to the
Company the amount of such taxes in lieu of the withholding of Shares for such
purposes.
7. Miscellaneous
-------------

7.1 INCORPORATION: The provisions of this Amendment are incorporated by
reference in, and made a part of, the Plan. All provisions of the Plan, whether
or not directly modified by provisions of this Amendment, hereafter will be
deemed modified to the extent required to implement the provisions of this
Amendment and interpreted accordingly.

7.2 CONFLICT: In the event of any conflict between the provisions of
this Amendment and those of the Plan, the provisions of this Amendment will be
deemed to have superseded the provisions of the Plan and exclusively will govern
the matter in question.

<PAGE> 13

- 13 -

Adopted by the Administrative Committee, effective as of July 13, 1995,
pursuant to the authorization of the Directors.

Administrative Committee

by: /s/ Samuel W. Harmon
-------------------------
Samuel W. Harmon
Chairman of the Committee

<PAGE> 1
EXHIBIT D

GENCORP INC.

LONG-TERM INCENTIVE PROGRAM

Effective January 27, 1993
And As
Amended March 31, 1993 and May 20, 1996

<PAGE> 2

GENCORP INC.
LONG-TERM INCENTIVE PROGRAM

Table of Contents

Page
----

<S> <C> <C>
Article 1 Establishment, Purpose and Duration of Program .................. 1

1.1 Establishment .................................................. 1
1.2 Purpose.......................................................... 1
1.3 Effective Date................................................... 1
1.4 Duration of Program.............................................. 1

Article 2 Definitions and Interpretation................................... 2

2.1 Definitions...................................................... 2
2.2 Gender and Number................................................ 5
2.3 Time of Exercise................................................. 5
2.4 Amendments....................................................... 5
2.5 Severability..................................................... 5

Article 3 Overview of Program.............................................. 6

Article 4 Performance Awards............................................... 6

4.1 Eligibility for Performance Awards............................... 6
4.2 Performance Criteria............................................. 7
4.3 Performance Goals................................................ 7
4.4 Amounts of Performance Awards.................................... 8
</TABLE>

-i-

<PAGE> 3

<TABLE>

<S> <C> <C>
Article 5 Performance Periods.............................. 9

Article 6 Payment of Awards................................ 9

6.1 Payment of Awards................................ 9
6.2 Nontransferability............................... 11
6.3 Tax Withholding.................................. 11

Article 7 Rights to Performance Awards After
Death, Disability, Retirement or Other
Termination of Employment........................ 11

7.1 Death............................................ 11
7.2 Disability....................................... 12
7.3 Retirement....................................... 12
7.4 Termination For Other Reasons................... 12

Article 8 Beneficiary Designation.......................... 13

8.1 Designation...................................... 13
8.2 Effectiveness.................................... 13
8.3 Revocation....................................... 13

Article 9 Rights of Employees.............................. 13

9.1 Participation.................................... 13
9.2 Employment....................................... 13
9.3 Transfer......................................... 14
9.4 Compensation..................................... 14

Article 10 Administration................................... 14

10.1 Committee........................................ 14
10.2 Power of the Committee........................... 14
10.3 Committee Decisions.............................. 14
10.4 Delegation....................................... 15

Article 11 Disputes......................................... 15

11.1 Disputes......................................... 15
11.2 Notice........................................... 15
11.3 Decision......................................... 15
11.4 Lawsuit.......................................... 16
</TABLE>

-ii-

<PAGE> 4

<TABLE>
<S> <C> <C>
Article 12 Amendment and Termination.......................... 16

12.1 Amendment and Termination.......................... 16
12.2 Performance Awards................................. 16

Article 13 Indemnification.................................... 16

13.1 Indemnity.......................................... 16
13.2 Additional Right................................... 17

Article 14 Miscellaneous...................................... 17

14.1 Unfunded Program................................... 17
14.2 Costs of Program................................... 17
14.3 Governing Law...................................... 17
</TABLE>

-iii-

<PAGE> 5

GENCORP INC.
LONG-TERM INCENTIVE PROGRAM
(As Amended March 31, 1993)

1. Establishment, Purpose and Duration of Program
----------------------------------------------

1.1 ESTABLISHMENT: GenCorp Inc. hereby establishes a long-term incentive
program, as set forth herein, which will be called "GenCorp Inc. Long-Term
Incentive Program".

1.2 PURPOSE: The purpose of the program is to promote the success and
enhance the value of the Company by linking the personal interests of
Participants to the interests of the Company's shareholders and providing to
Participants an incentive for outstanding performance. The program also is
intended to provide to the Company flexibility in its ability to hire, motivate,
and retain the services of Participants whose judgment, interest and efforts
contribute significantly to the successful conduct of the Company's business.

1.3 EFFECTIVE DATE: When approved by the Company's Board, the program will
become effective on the Effective Date, January 27, 1993.

1.4 DURATION OF PROGRAM: The program will commence on the Effective Date
and will remain in effect until terminated by the Board in accordance with
Section 12.1

<PAGE> 6

2. Definitions and Interpretation
------------------------------

2.1 DEFINITIONS: Whenever used in the program, the following words shall
have the meanings set forth in this Section 2.1 and, when such meaning is
intended, the initial letter of the word will be capitalized.

(a) ANNUAL COMPENSATION: The sum of (i) the base salary paid to a
Participant during a Fiscal Year while the Participant is employed in an
Eligible Position, and (ii) that portion of the Participant's payment
(including any part paid in Shares) for such Fiscal Year under the
Executive Incentive Compensation Program which is determined by the
Committee to be attributable to the Participant's employment in such
Eligible Position.

(b) AVERAGE ANNUAL COMPENSATION: If a Performance Period includes two
or more Fiscal Years, the sum of a Participant's Annual Compensation in
each such Fiscal Year, divided by the number of such Fiscal Years (even if
the Participant did not have Annual Compensation in all Fiscal Years in the
Performance Period).

Article 7.

(d) CODE: The Internal Revenue Code of 1986.

(e) COMMITTEE: The Organization and Compensation Committee of the
Board or such other committee of Outside Directors appointed annually by
the Board.

-2-

<PAGE> 7

(f) COMPANY: GenCorp Inc., an Ohio corporation having its registered
offices at 175 Ghent Road, Fairlawn, Ohio 44333-3300.

(g) BOARD: The Board of Directors of the Company.

(h) DISABILITY: A permanent and total disability, physical or mental,
as defined in the GenCorp Long-Term Disability program and as determined by
the Committee.

(i) ELIGIBLE POSITION: A position of employment with the Company
specified by the Board in Part A of the Appendix for each Performance
Period.

(j) EMPLOYEE: Each full-time salaried employee (including, without
limitation, a Director who also is an employee) of the Company or a
Participating Subsidiary, who is not in a bargaining unit represented by a
labor organization.

(k) FISCAL YEAR: The Company's fiscal year which is the annually
recurring period of twelve (12) consecutive calendar months, commencing on
December 1 and ending on November 30.

(l) PROGRAM: The GenCorp Inc. Long-Term Incentive Program, as
described in this document.

(m) PARTICIPANT: An Employee who is employed, during a Performance
Period, in an Eligible Position specified by the Board for such Performance
Period.

(n) PARTICIPATING SUBSIDIARY: Any domestic corporation in which the
Company owns directly, or indirectly through a subsidiary, at least fifty
percent (50%) of the total combined voting power of all classes of stock
and whose

-3-

<PAGE> 8

directors adopt and ratify the Program in a manner determined by the
Committee.

(o) PERFORMANCE AWARD: A dollar amount determined pursuant to Article
4 and paid to a Participant in Shares pursuant to Article 6.

(p) PERFORMANCE CRITERIA: The measures of economic achievement
selected by the Board for a specific Performance Period and set forth in
Part B of the Appendix for that Performance Period in accordance with
Section 4.2.

(q) PERFORMANCE GOALS: The specified levels of economic achievement,
based on the selected Performance Criteria, established by the Board and
set forth in Part C of the Appendix for each Performance Period in
accordance with Section 4.3.

(r) PERFORMANCE PERIOD: A period of three consecutive Fiscal Years
authorized by the Board in accordance with Section 5.1.

(s) OUTSIDE DIRECTOR: A member of the Board who

(i) is not a current employee of the Company or a Participating
Subsidiary;

(ii) is not a former employee of the Company or a Participating
Subsidiary who receives compensation for prior services (other than
benefits under a tax-qualified retirement plan) during the Fiscal
Year;

(iii) has not been an officer of the Company; and

-4-

<PAGE> 9

(iv) does not receive remuneration from the Company or a
participating Subsidiary in any capacity other than as a director.

(t) SHARE: A share of the voting common stock of the Company.

(u) Market Value: The closing price for Shares as reported in the New
York Stock Exchange Composite Transactions in the WALL STREET JOURNAL or
similar publication selected by the Committee for the relevant date if
Shares were traded on such day or, if none were then traded, the last prior
day on which Shares were so traded.

2.2 GENDER AND NUMBER: Except as otherwise indicated by the context, any
masculine term used herein also includes the feminine; any singular term
includes the plural thereof; and any plural term includes the singular thereof.

2.3 TIME OF EXERCISE: Any action or right specified in the Program may be
taken or exercised at any time and from time to time unless a specific time is
designated herein for the taking or exercise thereof.

2.4 AMENDMENTS: The Program and each law and/or regulation mentioned herein
will be deemed to include each and every amendment thereof.

2.5 SEVERABILITY: If any provision of the Program is held illegal or
invalid for any reason, the illegal or invalid provision will be severed and, to
the extent possible, the remaining provisions of the program will be enforced as
if such illegal or invalid provision had not been included herein.

-5-

<PAGE> 10

3. Overview of the Program
-----------------------

The Program is designed to allow Participants to earn Performance Awards
based upon attainment by the Company and/or the appropriate Participating
Subsidiary or division of specific Performance Goals established by the Board
for each Performance Period. For each Performance Period, the Board shall set
forth in an Appendix hereto (i) the Eligible Positions specified by the Board as
Participants in the Program, (ii) Performance Criteria (Section 4.2), (iii)
Performance Goals and a description of how the relative attainment of
Performance Goals by the Company and the operating divisions affect the
Performance Award for the holder of each Eligible Position (Section 4.3), and
(iv) a schedule of Participants' eligibility for Performance Awards based upon
the degree of attainment of Performance Goals (Section 4.4).

4. Performance Awards
------------------

4.1 ELIGIBILITY FOR PERFORMANCE AWARDS: Upon attainment and satisfaction of
the Performance Goals and other specific terms and conditions established in
accordance with this Article 4, each Participant shall be entitled to receive a
Performance Award following the conclusion of the applicable Performance Period.
A Performance Award shall constitute a dollar amount calculated as a percentage
of the Participant's Average Annual Compensation in accordance with Section 4.4,
and shall be paid in Shares in accordance with Section 6.1.

-6-

<PAGE> 11

4.2 PERFORMANCE CRITERIA: For the purpose of setting Performance Goals, the
Board shall establish Performance Criteria for each Performance Period. The
Board may use such measures as return on total capital, return on assets
employed, return on equity, earnings growth, revenue growth, cash flow,
comparisons to peer companies or such other measure or measures of performance
in such manner as the Board deem appropriate. Different Performance Criteria may
be established for each operating division and for the Company as a whole. The
Performance Criteria established by the Board for each Performance Period shall
be set forth in Part B of the Appendix applicable to that Performance Period.

4.3 PERFORMANCE GOALS: Based upon the Performance Criteria chosen for a
Performance Period, the Outside Directors shall establish precise measures of
achievement as specified Performance Goals for that Performance Period.

(a) The Outside Directors may specify different Performance Goals for
each division, and for the Company as a whole and may determine separately
the applicability and relative weighting of such different Performance
Goals for each Eligible Position.

(b) The Outside Directors shall establish Performance Goals for any
Performance Period in two steps: (i) for the first Fiscal Year thereof,
within the first 90 days of such Fiscal Year and based upon management's
Annual Operating Plan for such Fiscal Year, and (ii) for the entire
Performance Period, within the first nine months thereof and based upon
both the preestablished

-7-

<PAGE> 12

Performance Goals for the first Fiscal Year and management's Strategic Plan
for the entire Performance Period.

(c) Such Performance Goals and the application and weighting of such
Performance Goals for each Eligible Position shall be set forth in Part C
of the Appendix for each Performance Period.

A Participant who occupies, successively, more than one Eligible Position during
a Performance Period shall have his Performance Award determined on a pro rata
basis based upon the Performance Goals applicable to each such Eligible
Position.

4.4 AMOUNTS OF PERFORMANCE AWARDS: The amount of a Participant's
Performance Award, if any, shall be determined in accordance with a schedule set
forth in Part D of the Appendix for each Performance Period. Such schedule will
be determined by the Board for each Performance Period, and generally will
provide a Performance Award payable as either (i) a specified percentage of the
Participant's Average Annual Compensation for attainment of the threshold,
target or maximum Performance Goal established by the Board, (ii) a prorated
percentage of the Participant's Average Annual Compensation upon attainment of a
level of economic achievement greater than the threshold Performance Goal but
less than the target Performance Goal, or (iii) a prorated percentage of the
Participant's Average Annual Compensation upon attainment of a level of economic
achievement greater than the target Performance Goal but less than the maximum
Performance Goal.

-8-

<PAGE> 13

5. Performance Periods
-------------------

5.1 PERFORMANCE PERIOD: Subject to the Board's adoption of Performance
Criteria and Performance Goals pursuant to Article 4, there shall be successive
and overlapping Performance Periods having a duration of three fiscal years
each. The First Performance Period shall commence on December 1, 1992 and
terminate on November 30, 1995.

6. Payment of Awards
-----------------

6.1 PAYMENT OF AWARDS: Following the conclusion of a Performance Period,
payment in settlement of a Participant's Performance Award, if any, for such
Performance Period shall be made in Shares, subject to the following conditions:

(a) Prior to converting the dollar amount of the Participant's
Performance Award into Shares, the Company shall first deduct and pay over
to the applicable taxing authority any federal, state or local taxes of any
kind required by law to be withheld with respect to such payments.

(b) The net dollar amount of the Participant's Performance Award after
withholding of taxes in accordance with subsection (a) shall be converted
into a number of Shares having a Market Value, on the date determined by
the Committee, equal to the amount of the payment to be made.

-9-

<PAGE> 14

(c) Shares payable to a Participant in respect of a Performance Award
shall be divided into four equal parts and issued in the name of the
Participant on four separate stock certificates. The certificates shall be
held by the Company and released to the Participant in accordance with the
following schedule:
<TABLE>
<CAPTION>

Certificate Portion of Shares Release Date
----------- ----------------- ------------
<S> <C> <C>
First Certificate 25% Following conclusion
of Performance Period

Second Certificate 25% 1 year after conclusion
of Performance Period

Third Certificate 25% 2 years after
conclusion of
Performance Period

Fourth Certificate 25% 3 years after
conclusion of
Performance Period
</TABLE>

(d) Notwithstanding subsection (c), Shares payable to a Participant in
respect of a Performance Award shall be released to a Participant (1) upon
the Participant's termination of employment with the Company for any
reason, or (2) with the consent of the Company's Chief Executive Officer
following a request by the Participant for an early release of Shares due
to hardship.

(e) Dividends payable on Shares held on a Participant's behalf by the
Company shall be automatically contributed on the Participant's behalf to
the Company's Dividend Reinvestment Plan.

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<PAGE> 15

(f) A Participant for whom Shares are held hereunder by the Company
shall have the same voting rights with respect to such Shares as if he had
the certificates in his possession.

6.2 NONTRANSFERABILITY: All rights to payment under Performance Awards
shall be nontransferable other than by will or by the laws of descent and
distribution in accordance with Article 6 hereof.

6.3 TAX WITHHOLDING: The Company shall have the right to deduct from any
payment made under the program any federal, state or local taxes of any kind
required by law to be withheld with respect to such payments or to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligation for the payment of such taxes.

7. Rights to Performance Awards After Death, Disability,
Retirement or Other Termination of Employment
-----------------------------------------------------

7.1 DEATH: If a Participant's employment with the Company or a
Participating Subsidiary terminates by reason of death, the Participant's
Beneficiary shall be entitled to receive, at such times as normally payable, (i)
any Performance Award due to the Participant at the time of his death for any
Performance Period already completed, and (ii) a prorated Performance Award
which would become payable for any Performance Period which has not been
completed at the time of his death.

-11-

<PAGE> 16

7.2 DISABILITY: If a Participant's employment with the Company or a
Participating Subsidiary terminates by reason of disability, the Participant
shall be entitled to receive, as such times as normally payable, (i) any
Performance Award due to the Participant at the time of his employment
termination for any Performance Period already completed, and (ii) a prorated
Performance Award which would become payable for any Performance Period which
has not been completed at the time of his employment termination.

7.3 RETIREMENT: If a Participant's employment with the Company or a
Participating Subsidiary terminates by reason of retirement, the Participant
shall be entitled to receive, as such times as normally payable, (i) any
Performance Award due to the Participant at the time of his retirement for any
Performance Period already completed, and (ii) a prorated Performance Award
which would become payable for any Performance Period which has not been
completed at the time of his retirement.

7.4 TERMINATION FOR OTHER REASONS: Upon termination of a Participant's
employment with the Company or a Participating Subsidiary for any reason other
than those specified in Sections 7.1 through 7.3 above, the Participant shall be
entitled to receive, at such times as normally payable, any Performance Award
due to him for any Performance Period already completed. However, the
Participant shall not be entitled to receive any Performance Award for any
current Performance Period.

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<PAGE> 17

8. Beneficiary Designation
-----------------------

8.1 DESIGNATION: A Participant may name any Beneficiary (contingently or
successively) to whom any benefit under the Program is to be paid if the
Participant dies before receiving such benefit. Absent such designation, any
benefit which is due but not paid to a Participant under the program during his
lifetime will be payable to the Participant's estate.

8.2 EFFECTIVENESS: The designation of a Beneficiary will be effective only
when the Participant designates his Beneficiary in the form prescribed by the
Company and delivers it to the Company's Secretary during the Participant's
lifetime.

8.3 REVOCATION: The designation of a Beneficiary as herein provided will
revoke each prior designation of a Beneficiary by the Participant.

9. Rights of Employees
-------------------

9.1 PARTICIPATION: Except as provided in Article 4, no Employee will have
the right to participate in the Program or, having been a Participant for any
Performance Period, to continue to be a Participant in any subsequent
Performance Period.

9.2 EMPLOYMENT: Nothing in the Program will interfere with or limit the
right of the Company or a Participating Subsidiary to terminate any
Participant's employment, nor confer to any Participant any right to continue in
the employ of the Company or a Participating Subsidiary.

-13-

<PAGE> 18

9.3 TRANSFER: For purposes of the program, transfer of a Participant's
employment between the Company and a Participating Subsidiary or between
Participating Subsidiaries will not be deemed a termination of employment.

9.4 COMPENSATION: No benefit or other amount paid to a Participant pursuant
to the Program will be included in the Participant's compensation or earnings
for purposes of any pension or other employee benefit program of the Company or
any Participating Subsidiary.

10. Administration
--------------

10.1 COMMITTEE: The Committee will administer the Program.

10.2 POWER OF THE COMMITTEE: The Committee will have full authority and
power to (i) interpret and construe the Program; and (ii) establish, amend
and/or waive rules and regulations for the Program's administration.

10.3 COMMITTEE DECISIONS: The Committee will make all determinations and
decisions hereunder by not less than a majority of its members. The Committee
may act or take action by written instrument or vote at a meeting convened after
reasonable notice. The Committee's determinations and decisions hereunder, and
related orders or resolutions of the Board, will be final, binding and
conclusive on all persons, including the Company, its stockholders,
Participating Subsidiaries, employees, Participants and Beneficiaries.

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<PAGE> 19

10.4 DELEGATION: The Committee may delegate any authority or power
conferred to it under the Program as and to the extent permitted by law.

11. Disputes
--------

11.1 DISPUTES: The Committee will have full and exclusive authority to
determine all disputes and controversies concerning the interpretation of the
Program to the fullest extent permitted by law.

11.2 NOTICE: If any Participant disputes any decision or determination by
the Committee, the Company or any Participating Subsidiary concerning the
administration of the Program or any provision of the Program, the Participant
must give written notice to the Committee as to such dispute at least ninety
(90) days prior to commencing any lawsuit or legal proceeding in connection
therewith. The Participant must give such notice of dispute by delivering to the
Company's Secretary written notice which identifies the dispute and any
provision of the Program in question. Such notice will be a condition of
participation in the Program and failure to satisfy such condition will
extinguish all rights of the Participant to any payment pursuant to the Program.

11.3 DECISION: Promptly (but within seventy-five (75) days after notice of
dispute), the Committee will review and decide the dispute and give the
Participant written notice of its decision. Except as provided in Section 11.4,
the Committee's decision will be final and binding on the Company, the Company's
shareholders, Participating Subsidiaries, and the Participant (including his
Beneficiary).

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<PAGE> 20

11.4 LAWSUIT: A Participant may institute a lawsuit in connection with the
Committee's decision involving his rights under the Program within one hundred
and eighty (180) days after receiving the Committee's decision, but such lawsuit
will be limited to whether the Committee acted in good faith and its decision
was reasonable under the circumstances and in light of the information available
to and considered by the Committee.

12. Amendment and Termination
-------------------------

12.1 AMENDMENT AND TERMINATION: The Board may terminate, amend, or modify
the Program at any time or for any reason.

12.2 PERFORMANCE AWARDS: No termination, amendment, or modification of the
Program will in any manner adversely affect any Participant's rights to receive
a Performance Award previously earned under the Program.

13. Indemnification
---------------

13.1 INDEMNITY: The Company will defend and indemnify each person who is or
has been a member of the Committee in respect of any claim which is asserted
against him and is based on his action or failure to take action under or in
connection with the program or any agreement related to the Program; provided
that such person gives the Company notice of such claim, cooperates with the
Company in defense of such claim, permits the Company to control the defense of
such claim prior to his

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<PAGE> 21

undertaking any defense on his own behalf and confers to the Company full
authority to compromise and settle the claim.

13.2 ADDITIONAL RIGHT: The indemnity provided under Section 13.1 will be in
addition to, and not in lieu of, any other right of indemnification to which
such person may be entitled under the Company's Code of Regulations, as a matter
of law or otherwise, and will not exclude any other power that the Company may
have to defend and indemnify him.

14. Miscellaneous
-------------

14.1 UNFUNDED PROGRAM: The Program shall be unfunded and the Company shall
not be required to segregate any assets that may at any time be represented by
Performance Awards under the program. Any liability of the Company to any person
with respect to any Performance Award under the Program shall be based solely
upon any contractual obligations that may be effected pursuant to the Program.
No such obligation of the Company shall be deemed to be secured by any pledge
of, or other encumbrance on, any property of the Company.

14.2 COSTS OF PROGRAM: The costs and expenses of administering the Program
shall be borne by the Company.

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<PAGE> 22

14.3 GOVERNING LAW: To the extent not preempted by federal law, the Program
and all agreements hereunder will be governed by and interpreted in accordance
with the laws of the State of Ohio.

-18-

<PAGE> 1
EXHIBIT E

GENCORP INC.

EXECUTIVE INCENTIVE COMPENSATION PROGRAM

<PAGE> 2

GENCORP INC.
EXECUTIVE INCENTIVE COMPENSATION PROGRAM

Table of Contents
<TABLE>
<CAPTION>

Page
----
<S> <C>
1. Establishment, Purpose and Duration of Program.................... 1

1.1 Establishment....................................... 1

1.2 Purpose............................................. 1

1.3 Effective Date...................................... 1

1.4 Duration of Program................................. 1

2. Definitions and Interpretation.................................... 2

2.1 Definitions......................................... 2

2.2 Gender and Number................................... 5

2.3 Time of Exercise.................................... 5

2.4 Amendments.......................................... 5

2.5 Severability........................................ 6

3. Overview of the Program........................................... 6

4. Incentive Bonus................................................... 6

4.1 Eligibility for Incentive Bonus..................... 6

4.2 Performance Objectives.............................. 7

4.3 Incentive Opportunity .............................. 7

4.4 Amount of Incentive Bonus........................... 8
</TABLE>

<PAGE> 3

<TABLE>
<S> <C>
5. Payment of Incentive Bonus....................................... 8

5.1 Payment of Incentive Bonus......................... 8

5.2 Nontransferability................................. 10

5.3 Tax Withholding.................................... 10

6. Rights to Incentive Bonus After Death, Disability,
Retirement or Other Termination of Employment................... 10

6.1 Death.............................................. 10

6.2 Disability......................................... 11

6.3 Retirement......................................... 11

6.4 Involuntary Termination ........................... 11

6.5 Termination for Other Reasons...................... 12

7. Beneficiary Designation.......................................... 12

7.1 Designation........................................ 12

7.2 Effectiveness...................................... 12

7.3 Revocation......................................... 12

8. Rights of Employees.............................................. 13

8.1 Participation...................................... 13

8.2 Employment......................................... 13

8.3 Transfer........................................... 13

9. Administration................................................... 13

9.1 Committee.......................................... 13

9.2 Power of the Committee............................. 14
</TABLE>

<PAGE> 4

9.3 Committee Decisions................................ 14

9.4 Delegation......................................... 14

10. Disputes........................................................ 14

10.1 Disputes........................................... 14

10.2 Notice............................................. 15

10.3 Decision........................................... 15

10.4 Lawsuit............................................ 15

11. Amendment and Termination....................................... 16

11.1 Amendment and Termination.......................... 16

11.2 Amendment.......................................... 16

12. Indemnification................................................. 16

12.1 Indemnity.......................................... 16

12.2 Additional Right................................... 16

13. Miscellaneous................................................... 17

13.1 Unfunded Program................................... 17

13.2 Costs of Program................................... 17

13.3 Governing Law...................................... 17
</TABLE>

iii

<PAGE> 5

GENCORP INC.
EXECUTIVE INCENTIVE COMPENSATION PROGRAM

1. Establishment, Purpose and Duration of Program
----------------------------------------------

1.1 ESTABLISHMENT: GenCorp Inc. hereby establishes a bonus program, as set
forth herein, which will be called the "GenCorp Inc. Executive Incentive
Compensation Program."

1.2 PURPOSE: The purpose of the Program is to motivate Participants to
achieve key team and individual performance targets, to reward Participants for
outstanding performance, and to enhance the value of the Company by linking the
personal interests of Participants to the interests of the Company's
shareholders. The Program also is intended to provide to the Company flexibility
in its ability to hire, motivate, and retain the services of Participants whose
judgment, interest and efforts contribute significantly to the successful
conduct of the Company's business.

1.3 EFFECTIVE DATE: The Program was adopted effective December 1, 1994. The
provisions of the Program requiring partial payment of bonuses in Shares became
effective for Fiscal Years commencing on or after December 1, 1995.

1.4 DURATION OF PROGRAM: The Program will remain in effect until terminated
by the Committee in accordance with Section 11.1.

<PAGE> 6

2. Definitions and Interpretation
------------------------------

2.1 DEFINITIONS: Whenever used in the Program, the following words shall
have the meanings set forth in this Section 2.1 and, when such meaning is
intended, the initial letter of the word will be capitalized.

(a) BASE PAY: An amount equal to the annual base salary (excluding
bonus, commissions, expense reimbursements, employee benefits, and all
other non-base salary amounts) paid to a Participant in a Fiscal Year.

(b) BENEFICIARY: The person or persons determined in accordance with
Article 8.

(d) CHIEF EXECUTIVE OFFICER: The Chief Executive Officer of the
Company.

(e) CODE: The Internal Revenue Code of 1986.

(f) COMMITTEE: The Organization and Compensation Committee of the
Board, or such other committee of Outside Directors appointed annually by
the Board.

(g) Company: GenCorp Inc., an Ohio corporation, having its registered
offices at 175 Ghent Road, Fairlawn, Ohio 44333-3300.

(h) EFFECTIVE DATE: December 1, 1994, except as otherwise provided
herein.

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<PAGE> 7

(i) EMPLOYEE: A full-time salaried employee (including, without
limitation, a director who also is an employee) of the Company or a
Participating Subsidiary, who is not in a bargaining unit represented by a
labor organization.

(j) FISCAL YEAR: The Company's fiscal year which is the annually
recurring period of twelve (12) consecutive calendar months, commencing on
December 1 and ending on November 30.

(k) INCENTIVE BONUS: A dollar amount determined pursuant to Article 4
and paid to a Participant pursuant to Article 5.

(l) INCENTIVE OPPORTUNITY: An amount expressed as a percentage of a
Participant's Base Pay which shall be determined by the Chief Executive
Officer, with the approval of the Committee, for each Participant for each
Fiscal Year as the maximum Incentive Bonus for which the Participant shall
be eligible for the Fiscal Year.

(m) MARKET VALUE: The closing price for Shares as reported in the New
York Stock Exchange Composite Transactions in the WALL STREET JOURNAL or
similar publication selected by the Committee for the relevant date if
Shares were traded on such day or, if none were then traded, the last prior
day on which Shares were so traded.

(n) NET BONUS: The amount of a Participant's Incentive Bonus, after
deduction of (i) any pre-tax contribution pursuant to any election which
the Participant may have in effect under the terms of any employee benefit
plan of the Company, (ii) any federal, state or local taxes of any kind
required by law to

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<PAGE> 8

be withheld, and (iii) any after-tax contribution pursuant to any election
which the Participant may have in effect under the terms of any employee
benefit plan of the Company.

(o) OUTSIDE DIRECTOR: A member of the Board who

(i) is not a current employee of the Company or a Participating
Subsidiary;

(iii) has not been an officer of the Company; and

(iv) does not receive remuneration from the Company or a
Participating Subsidiary in any capacity other than as a director.

(p) PROGRAM: The GenCorp Inc. Executive Incentive Compensation
Program, as described in this document.

(q) PARTICIPANT: An Employee who is employed, during a Fiscal Year, in
a position determined by the Chief Executive Officer to have sufficient
scope, authority and impact on the Company's performance to qualify for
participation in the Program.

(r) PARTICIPATING SUBSIDIARY: Any domestic corporation in which the
Company owns directly, or indirectly through a subsidiary, at least fifty
percent (50%) of the total combined voting power of all classes of stock
and whose

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<PAGE> 9

directors adopt and ratify the Program in a manner determined by the
Committee.

(s) PERFORMANCE OBJECTIVES: The measures of achievement in the
categories of Financial Results, Continuous Improvement, Special Objectives
and Leadership determined by the Chief Executive Officer to apply to a
Participant for a specific Fiscal Year and set forth in the Performance
Objectives Worksheet for that Fiscal Year in accordance with Section 4.2.

(t) SHARE: A share of the Company's ten-cent (10(cent)) par-value
common stock.

2.4 AMENDMENTS: The Program and each law and/or regulation mentioned herein
will be deemed to include each and every amendment thereof.

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<PAGE> 10

2.5 SEVERABILITY: If any provision of the Program is held illegal or
invalid for any reason, the illegal or invalid provision will be severed and, to
the extent possible, the remaining provisions of the Program will be enforced as
if such illegal or invalid provision had not been included herein.

3. Overview of the Program
-----------------------

The Program is designed to allow a Participant to earn an Incentive Bonus
based upon attainment by the Company and/or the Participant of specific
Performance Objectives. Each Fiscal Year, the Chief Executive Officer, with the
approval of the Committee, will determine for each Participant (i) the
Performance Objectives, (ii) the Incentive Opportunity, (iii) the degree to
which the Performance Objectives are achieved, and (iv) the amount of the
Incentive Bonus. Under certain conditions as set forth in Section 5.1, each
Participant who is a member of the GenCorp Leadership Council will have part of
his Incentive Bonus paid in the form of Shares.

4. Incentive Bonus
---------------

4.1 ELIGIBILITY FOR INCENTIVE BONUS: Upon a determination by the Committee
that the applicable Performance Objectives and other specific terms and
conditions established in accordance with this Article 4 have been achieved,
each Participant shall

-6-

<PAGE> 11

be eligible to receive an Incentive Bonus following the conclusion of the
applicable Fiscal Year.

4.2 PERFORMANCE OBJECTIVES: Within a reasonable period after the beginning
of each Fiscal Year, the Chief Executive Officer, with the approval of the
Committee, shall determine and communicate to each Participant the Performance
Objectives for the Participant for such Fiscal Year in the categories of
Financial Results, Continuous Improvement, Special Objectives and Leadership.
Different Performance Objectives may be established for each Participant.
Performance Objectives for each Participant for each Fiscal Year shall be set
forth in the Participant's Performance Objectives Worksheet.

4.3 INCENTIVE OPPORTUNITY: Within a reasonable period after the beginning
of each Fiscal Year, the Chief Executive Officer, with the approval of the
Committee, shall determine and communicate to each Participant the Incentive
Opportunity for the Participant for such Fiscal Year, expressed as a percentage
of a Participant's Base Pay for the Fiscal Year. Each Participant's aggregate
Incentive Opportunity for a Fiscal Year may be the sum of separate percentages
specified for the Performance Objective categories of Financial Results,
Continuous Improvement, Special Objectives and Leadership. The Incentive
Opportunity for each Participant for each Fiscal Year shall be set forth in the
Participant's Performance Objectives Worksheet.

-7-

<PAGE> 12

4.4 Amount of Incentive Bonus: The amount of Incentive Bonus that may be
paid to a Participant for any Fiscal Year shall be determined as a dollar amount
for each Participant by the Committee within 90 days after the end of such
Fiscal Year.

5. Payment of Incentive Bonus
--------------------------

5.1 PAYMENT OF INCENTIVE BONUS: Following the conclusion of a Fiscal Year,
payment in settlement of a Participant's Incentive Bonus, if any, for such
Fiscal Year shall be made in cash, except as provided hereafter in this Section
5.1. Effective for Fiscal Years commencing on or after December 1, 1995, if a
Participant is a member of the GenCorp Leadership Council and such Participant's
Incentive Bonus is an amount greater than (i) 35% of the Participant's Base Pay
if the Participant's Incentive Opportunity is no greater than 50% of the
Participant's Base Pay, or (ii) 50% of the Participant's Base Pay if the
Participant's Incentive Opportunity is greater than 50% of the Participant's
Base Pay, then a portion of the Participant's Incentive Bonus shall be paid in
Shares, subject to the following conditions:

(a) Prior to converting any portion of the Participant's Incentive
Bonus into Shares, the Company shall, with respect to the entire dollar
amount of the Participant's Incentive Bonus, first (i) deduct any pre-tax
contribution pursuant to any election which the Participant may have in
effect under the terms of any employee benefit plan of the Company, (ii)
deduct and pay over to the applicable taxing authority any federal, state
or local taxes of any kind required by law to be

-8-

<PAGE> 13

withheld, and (iii) deduct any after-tax contribution pursuant to any
election which the Participant may have in effect under the terms of any
employee benefit plan of the Company. The amount remaining after the
foregoing deductions shall be the Participant's "Net Bonus."

(b) A Participant's Net Bonus shall be divided into two parts -- (i)
an amount to be paid in cash and (ii) an amount to be converted to a number
of Shares having a Market Value, on the date determined by the Committee,
equal to the amount of the payment to be made. The cash amount shall be
determined by multiplying such net dollar amount by a ratio, the numerator
of which is 35% (or 50%, as the case may be), and the denominator of which
is the percentage of the Participant's Base Pay represented by the
Participant's entire Incentive Bonus. The amount to be converted to Shares
shall be the difference between the Net Bonus and the cash amount.

(c) Shares payable to a Participant in respect of an Incentive Bonus
for any Fiscal Year shall be issued in the name of the Participant on one
stock certificate, and such stock certificate shall be delivered to the
Participant. Except with the consent of the Chief Executive Officer or upon
the Participant's termination of employment with the Company for any
reason, the Participant shall be expected to refrain from selling the
Shares represented by such stock certificate for a period of two years from
the date of issue.

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<PAGE> 14

(d) Dividends payable on Shares held by a Participant during the
two-year holding period described in subsection (c) shall automatically be
contributed on the Participant's behalf to the Company's Dividend
Reinvestment Plan.

5.2 NONTRANSFERABILITY: All rights to payment under an Incentive Bonus
shall be nontransferable other than by will or by the laws of descent and
distribution in accordance with Article 6 hereof.

5.3 TAX WITHHOLDING: The Company shall have the right to deduct from any
payment made under the Program any federal, state or local taxes of any kind
required by law to be withheld with respect to such payments or to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes.

6. Rights to Incentive Bonus After Death, Disability,
Retirement or Other Termination of Employment
--------------------------------------------------

6.1 DEATH: If a Participant's employment with the Company or a
Participating Subsidiary terminates by reason of death, the Participant's
Beneficiary shall be entitled to receive, at such times as normally payable, (i)
any Incentive Bonus due to the Participant at the time of his death for any
Fiscal Year already completed, and (ii) a prorated Incentive Bonus for any
Fiscal Year which has not been completed at the time of his death.

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<PAGE> 15

6.2 DISABILITY: If a Participant's employment with the Company or a
Participating Subsidiary terminates by reason of disability, the Participant
shall be entitled to receive, at such times as normally payable, (i) any
Incentive Bonus due to the Participant at the time of his employment termination
for any Fiscal Year already completed, and (ii) a prorated Incentive Bonus for
any Fiscal Year which has not been completed at the time of his employment
termination.

6.3 RETIREMENT: If a Participant's employment with the Company or a
Participating Subsidiary terminates by reason of retirement, the Participant
shall be entitled to receive, at such times as normally payable, (i) any
Incentive Bonus due to the Participant at the time of his retirement for any
Fiscal Year already completed, and (ii) a prorated Incentive Bonus for any
Fiscal Year which has not been completed at the time of his retirement.

6.4 INVOLUNTARY TERMINATION: If a Participant's employment with the Company
or a Participating Subsidiary is involuntarily terminated due to action by the
Company or the Participating Subsidiary, the Participant shall be entitled to
receive, at such times as normally payable, any Incentive Bonus due to the
Participant at the time of his termination for any Fiscal Year already
completed.

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<PAGE> 16

6.5 TERMINATION FOR OTHER REASONS: Upon termination of a Participant's
employment with the Company or a Participating Subsidiary for any reason other
than those specified in Sections 6.1 through 6.4 above, the Participant shall
not be entitled to receive any Incentive Bonus for any Fiscal Year already
completed or for any current Fiscal Year.

7. Beneficiary Designation
-----------------------

7.1 DESIGNATION: A Participant may name any Beneficiary (contingently or
successively) to whom any benefit under the Program is to be paid if the
Participant dies before receiving such benefit. Absent such designation, any
benefit which is due but not paid to a Participant under the Program during his
lifetime will be payable to the Participant's estate.

7.2 EFFECTIVENESS: The designation of a Beneficiary will be effective only
when the Participant designates his Beneficiary in the form prescribed by the
Company and delivers it to the Company's Secretary during the Participant's
lifetime.

7.3 REVOCATION: The designation of a Beneficiary as herein provided will
revoke each prior designation of a Beneficiary by the Participant.

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<PAGE> 17

8. Rights of Employees
-------------------

8.1 PARTICIPATION: Except as provided in Article 4, no Employee will have
the right to participate in the Program or, having been a Participant for any
Fiscal Year, to continue to be a Participant in any subsequent Fiscal Year.

8.2 EMPLOYMENT: Nothing in the Program will interfere with or limit the
right of the Company or a Participating Subsidiary to terminate any
Participant's employment, nor confer to any Participant any right to continue in
the employ of the Company or a Participating Subsidiary.

8.3 TRANSFER: For purposes of the Program, transfer of a Participant's
employment between the Company and a Participating Subsidiary or between
Participating Subsidiaries will not be deemed a termination of employment.

9. Administration
--------------

9.1 COMMITTEE: The Compensation Committee of the Board will administer the
Program. No member of the Committee may be an Employee.

-13-

<PAGE> 18

9.2 POWER OF THE COMMITTEE: The Committee will have full authority and
power to (i) interpret and construe the Program; and (ii) establish, amend
and/or waive rules and regulations for the Program's administration.

9.3 COMMITTEE DECISIONS: The Committee will make all determinations and
decisions hereunder by not less than a majority of its members. The Committee
may act or take action by written instrument or vote at a meeting convened after
reasonable notice. The Committee's determinations and decisions hereunder, and
related orders or resolutions of the Board, will be final, binding and
conclusive on all persons, including the Company, its stockholders,
Participating Subsidiaries, employees, Participants and Beneficiaries.

9.4 DELEGATION: The Committee may delegate any authority or power conferred
to it under the Program as and to the extent permitted by law.

10. Disputes
--------

10.1 DISPUTES: The Committee will have full and exclusive authority to
determine all disputes and controversies concerning the interpretation of the
Program to the fullest extent permitted by law.

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<PAGE> 19

10.2 NOTICE: If any Participant disputes any decision or determination by
the Committee, the Company or any Participating Subsidiary concerning the
administration of the Program or any provision of the Program, the Participant
must give written notice to the Committee as to such dispute at least ninety
(90) days prior to commencing any lawsuit or legal proceeding in connection
therewith. The Participant must give such notice of dispute by delivering to the
Company's Secretary written notice which identifies the dispute and any
provision of the Program in question. Such notice will be a condition of
participation in the Program, and failure to satisfy such condition will
extinguish all rights of the Participant to any payment pursuant to the Program.

10.3 DECISION: Promptly (but within seventy-five (75) days after notice of
dispute), the Committee will review and decide the dispute and give the
Participant written notice of its decision. Except as provided in Section 11.4,
the Committee's decision will be final and binding on the Company, the Company's
stockholders Participating Subsidiaries, and the Participant (including his
Beneficiary).

10.4 LAWSUIT: A Participant may institute a lawsuit in connection with the
Committee's decision involving his rights under the Program within one hundred
and eighty (180) days after receiving the Committee's decision, but such lawsuit
will be limited to whether the Committee acted in good faith and whether its
decision was reasonable under the circumstances and in light of the information
available to and considered by the Committee.

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<PAGE> 20

11. Amendment and Termination
-------------------------

11.1 AMENDMENT AND TERMINATION: The Committee may terminate, amend or
modify the Program at any time or for any reason.

11.2 INCENTIVE BONUSES: No termination, amendment, or modification of the
Program will in any manner adversely affect any Participant's rights to receive
an Incentive Bonus previously earned under the Program.

12. Indemnification
---------------

12.1 INDEMNITY: The Company will defend and indemnify each person who is or
has been a member of the Committee in respect of any claim which is asserted
against him and is based on his action or failure to take action under or in
connection with the Program or any agreement related to the Program; provided
that such person gives the Company notice of such claim, cooperates with the
Company in defense of such claim, permits the Company to control the defense of
such claim prior to his undertaking any defense on his own behalf and confers to
the Company full authority to compromise and settle the claim.

12.2 ADDITIONAL RIGHT: The indemnity provided under Section 12.1 will be in
addition to, and not in lieu of, any other right of indemnification to which
such person

-16-

<PAGE> 21

may be entitled under the Company's Code of Regulations, as a matter of law or
otherwise, and will not exclude any other power that the Company may have to
defend and indemnify him.

13. Miscellaneous
-------------

13.1 UNFUNDED PROGRAM: The Program shall be unfunded and the Company shall
not be required to segregate any assets that may at any time be represented by
Incentive Bonuses under the Program. Any liability of the Company to any person
with respect to any Incentive Bonus under the Program shall be based solely upon
any contractual obligations that may be effected pursuant to the Program. No
such obligation of the Company shall be deemed to be secured by any pledge of,
or other encumbrance on, any property of the Company.

13.2 COSTS OF PROGRAM: The costs and expenses of administering the Program
shall be borne by the Company or the Participating Subsidiary.

13.3 GOVERNING LAW: To the extent not preempted by federal law, the Program
and all agreements hereunder will be governed by and interpreted in accordance
with the laws of the State of Ohio.

-17-

<PAGE> 1

EXHIBIT F

GENCORP INC.
COMPUTATION OF EARNINGS PER COMMON SHARE

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
EARNINGS (LOSS) (Dollars in Millions)
Income (Loss) Before Cumulative Effect of Accounting
Changes............................................. $ 41.7 $ 38.3 $ (13.0)
Cumulative Effect of Accounting Changes............... -- -- (212.7)
------- ------- -------
Net Income (Loss) for Primary Earnings Per Share...... $ 41.7 $ 38.3 $(225.7)
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............................................... $ 47.2 $ 43.8 $(220.2)
======= ======= =======

SHARES (in thousands)
Weighted Average Number of Common Shares Outstanding
for Primary Earnings Per Share...................... 33,672 32,814 31,797
Additional Shares Issuable Under Stock Options for
Fully Diluted Earnings Per Share.................... 428 -- --
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................ 41,258 39,972 38,955
======= ======= =======

EARNINGS (LOSS) PER SHARE
Income (Loss) Before Cumulative Effect of Accounting
Changes............................................. $ 1.24 $ 1.17 $ (.41)
Cumulative Effect of Accounting Changes............... -- -- (6.69)
------- ------- -------
Net Income (Loss) for Primary Earnings Per Share...... $ 1.24 $ 1.17 $ (7.10)
======= ======= =======
Fully Diluted Earnings (Loss) Per Share............... $ 1.15 $ 1.10 $ (7.10)
======= ======= =======
</TABLE>

<PAGE> 1

EXHIBIT G

LISTING OF GENCORP INC. SUBSIDIARIES(1)

<TABLE>
<CAPTION>
STATE OR PERCENTAGE
JURISDICTION OF OF VOTING
INCORPORATION OWNERSHIP
---------------- ----------
<S> <C> <C>
Aerojet-General Corporation(2).................................... Ohio 100.

Aerojet Ordnance Tennessee, Inc................................... Tennessee 100.

Aerojet Services Co............................................... Ohio 100.

Chemical Construction Corporation................................. Delaware 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.

General Applied Science Laboratories, Inc......................... New York 100.

HENNIGES Elastomer- und Kunststofftechnik 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.
<FN>
(1) GenCorp Inc. conducts business using the names GenCorp, GenCorp Automotive
and GenCorp Polymer Products.

(2) Aerojet-General Corporation conducts business using the names Aerojet ASRM
Division, Aerojet Electronics Division and Aerojet Propulsion Division.
</TABLE>

G-1

<PAGE> 1
EXHIBIT H

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
GenCorp Inc. hereby constitutes and appoints W. R. Phillips 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, 1996 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, 1997.

/s/ C. A. Corry
-------------------------
C. A. Corry, Director

Dated: January 20, 1997
-------------------

<PAGE> 2

POWER OF ATTORNEY

/s/ W. K. Hall
--------------------------
W. K. Hall, Director

Dated: January 20, 1997
--------------------

<PAGE> 3

POWER OF ATTORNEY

/s/ R. K. Jaedicke
--------------------------
R. K. Jaedicke, Director

Dated: January 20, 1997
--------------------

<PAGE> 4

POWER OF ATTORNEY

/s/ P. X. Kelley
-------------------------
P. X. Kelley, Director

Dated: January 20, 1997
-------------------

<PAGE> 5

POWER OF ATTORNEY

/s/ R. D. Kunisch
-------------------------
R. D. Kunisch, Director

Dated: January 20, 1997
-------------------

<PAGE> 6

POWER OF ATTORNEY

/s/ D. E. McGarry
-------------------------
D. E. McGarry, Director

Dated: January 20, 1997
-------------------

<PAGE> 7

POWER OF ATTORNEY

/s/ J. M. Osterhoff
----------------------------
J. M. Osterhoff, Director

Dated: January 20, 1997
----------------------

<PAGE> 8

POWER OF ATTORNEY

/s/ P. J. Phoenix
-------------------------
P. J. Phoenix, Director

Dated: January 20, 1997
-------------------

<PAGE> 9

POWER OF ATTORNEY

/s/ R. B. Pipes
-------------------------
R. B. Pipes, Director

Dated: January 20, 1997
-------------------

<PAGE> 10

POWER OF ATTORNEY

/s/ J. R. Stover
------------------------
J. R. Stover, Director

Dated: January 20, 1997
------------------

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<CASH> 22,000
<SECURITIES> 0
<RECEIVABLES> 207,000
<ALLOWANCES> 0
<INVENTORY> 158,000
<CURRENT-ASSETS> 452,000
<PP&E> 1,102,000
<DEPRECIATION> 689,000
<TOTAL-ASSETS> 1,330,000
<CURRENT-LIABILITIES> 370,000
<BONDS> 115,000
<COMMON> 3,000
0
0
<OTHER-SE> 53,000
<TOTAL-LIABILITY-AND-EQUITY> 1,330,000
<SALES> 1,515,000
<TOTAL-REVENUES> 1,515,000
<CGS> 1,200,000
<TOTAL-COSTS> 1,443,000
<OTHER-EXPENSES> 3,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,000
<INCOME-PRETAX> 42,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 42,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,000
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.15

</TABLE>