GenCorp Reports 2008 Fourth Quarter and Annual Results
(NYSE: GY) today reported results for the fourth quarter and fiscal year ended
(Logo: http://www.newscom.com/cgi-bin/prnh/20010108/SFM125LOGO)
Sales for the fourth quarter of 2008 totaled
million
Net loss for the fourth quarter of 2008 was
per share, compared to net income of
per share for the fourth quarter 2007. The decrease in operating results was
primarily due to a charge of
defined benefit pension plan discussed below.
Net income for 2008 was
to net income of
The decrease in operating results was primarily the result of: (i)
million
a seller note and an earn-out payment associated with the divestiture of the
Fine Chemicals business in 2007; (ii)
to income tax settlements and the carryback of net operating losses to prior
years in 2007; (iii)
second amended and restated shareholder agreement with Steel Partners II L.P.
with respect to the election of Directors at the 2008 Annual Meeting and other
related matters; (iv) a charge of
of the defined benefit pension plan as described below, partially offset by a
On
pension and benefits restoration plans to freeze future accruals under such
plans. Effective
accruals for current salaried employees. No employees lost their previously
earned pension benefit. As a result of the amendment and freeze, the Company
incurred a curtailment charge of
primarily due to the immediate recognition of unrecognized prior service
costs.
“The year 2008 was one of significant transition, change and challenge for
the Company. However, we remained focused on delivering solid operational
performance,” said
“Sales in 2008 were
our highly profitable 50-year Titan business and a
transaction.
“Additionally, we reached a major milestone in our real estate strategy.
After more than four years of dedicated effort and without any public
opposition, the
Environmental Impact Report and County General Plan amendments for the
1,400 acre master-planned community called Glenborough at Easton and Easton
Place,” concluded Mr. Neish.
Operations Review
Aerospace and Defense Segment
Sales for the fourth quarter of 2008 decreased to
to
volume in defense programs partially offset by higher space propulsion volume.
Aerojet reports its fiscal year sales and income under a 52/53 week accounting
convention. Fiscal 2008 is a 53 week year compared to a 52 week year in
fiscal 2007. Sales for 2008 decreased to
program in 2007, partially offset by the additional week of net sales of
approximately
Segment performance for the fourth quarter of 2008 declined to
primarily due to the charge related to the freeze of the defined benefit
pension plan in the fourth quarter of 2008. Segment performance was income of
decrease in segment performance is primarily the result of: (i) the favorable
performance on the close-out of the Titan program in 2007; (ii) the charge in
2008 related to the freeze of the defined benefit pension plan; and (iii)
higher environmental remediation provision adjustments in 2008, partially
offset by decreased retirement benefit plan expense in 2008.
As of
those contracts for which money has been directly authorized by the U.S.
Congress, or for which a firm purchase order has been received from a
commercial customer, was
30, 2007
million
Real Estate Segment
Sales for both the fourth quarter of 2008 and 2007 were
related to rental property operations. Segment performance was
and
Sales for 2008 were
Segment performance was
respectively. The increases in sales and segment performance are primarily due
to the sale of 400 acres of the Rio Del Oro property to Elliott Homes Inc. for
Additional Information
Retirement benefit plan expense, which is mostly non-cash, for the fourth
quarter of 2008 was
quarter of 2007. Retirement benefit plan expense decreased to
2008 from
increase in the discount rate used to determine benefit obligations and a
reduction in the impact of amortizing prior years’ actuarial losses.
Corporate and other expenses for the fourth quarter of 2008 were
decrease was primarily related to the fourth quarter of 2008 reversal of
previously recognized stock-based compensation due to the lower fair value of
the stock appreciation rights. Corporate and other expenses decreased to
reversal of previously recognized stock-based compensation due to the lower
fair value of the stock appreciation rights, partially offset by higher
charges for estimated future environmental remediation obligations.
Total debt decreased to
million
cash decreased to
outstanding letters of credit issued under the
subfacility, and the Company’s
unused.
As of
and projected benefit obligations were
respectively. The Pension Protection Act, enacted in
require underfunded pension plans to improve their funding ratios within
prescribed intervals based on the level of their underfunding. The Company
may be required to make significant cash contributions in the future, a
portion of which the Company may not be able to charge immediately through its
government contracts.
Forward-Looking Statements
This release may contain certain “forward-looking statements” within the
meaning of the United States Private Securities Litigation Reform Act of 1995.
Such statements in this release and in subsequent discussions with the
Company’s management are based on management’s current expectations and are
subject to risks, uncertainty and changes in circumstances, which may cause
actual results, performance or achievements to differ materially from
anticipated results, performance or achievements. All statements contained
herein and in subsequent discussions with the Company’s management that are
not clearly historical in nature are forward-looking and the words
“anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions
are generally intended to identify forward-looking statements. A variety of
factors could cause actual results or outcomes to differ materially from those
expected and expressed in the Company’s forward-looking statements. Some
important risk factors that could cause actual results or outcomes to differ
from those expressed in the forward-looking statements include, but are not
limited to, the following:
-- effects of changes in board membership and management on the Company's
operations and/or business strategy;
-- the cost of servicing the Company's debt and compliance with financial
and other covenants;
-- economic conditions could affect our ability to refinance the Company's
debt;
-- the ability of the Company to obtain consent of its lenders under the
Senior Credit Facility to effect a rescission offer on terms favorable
to the Company and refinance other debt;
-- the Company's plans to effect a rescission offer relating to its 401(k)
employee benefit plan;
-- funding status of the Company's defined benefit pension plan;
-- effects of changes in discount rates, returns on plan assets, and
government regulations of defined benefit pension plans;
-- the possibility that environmental and other government regulations
that impact the Company become more stringent or subject the Company to
material liability in excess of its established reserves;
-- requirements to provide guarantees and/or letters of credit to
financially assure the Company's environmental or other obligations;
-- changes in the amount recoverable from environmental claims;
-- environmental claims related to the Company's current and former
businesses and operations;
-- the results of significant litigation;
-- cancellation or material modification of one or more significant
contracts;
-- future reductions or changes in U.S. government spending;
-- failure to comply with regulations applicable to contracts with the
U.S. government;
-- significant competition and the Company's inability to adapt to rapid
technological changes;
-- product failures, schedule delays or other problems with existing or
new products and systems or cost-overruns on the Company's fixed-price
contracts;
-- the release or explosion of dangerous materials used in the Company's
businesses;
-- reduction in airbag propellant sales volume;
-- disruptions in the supply of key raw materials and difficulties in the
supplier qualification process, as well as raw materials price
increases;
-- changes in economic and other conditions in the Sacramento metropolitan
area, California real estate market or changes in interest rates
affecting real estate values in that market;
-- the Company's limited experience in real estate activities and the
ability to execute its real estate business plan including the
Company's ability to obtain or caused to be obtained, the necessary
final governmental zoning, land use and environmental approvals and
building permits;
-- the Company's property being subject to federal, state and local
regulations and restrictions that may impose significant limitations on
the Company's plans, with much of the Company's property being raw land
located in areas that include the natural habitats of various
endangered or protected wildlife species;
-- costs and time commitment related to acquisition activities;
-- additional costs related to the Company's divestitures;
-- a strike or other work stoppage or the Company's inability to renew
collective bargaining agreements on favorable terms;
-- the loss of key employees and shortage of available skilled employees
to achieve anticipated growth;
-- fluctuations in sales levels causing the Company's quarterly operating
results to fluctuate;
-- occurrence of liabilities that are inadequately covered by indemnity or
insurance;
-- changes in the Company's contract-related accounting estimates;
-- new accounting standards that could result in changes to the Company's
methods of quantifying and recording accounting transactions;
-- failure to maintain effective internal controls in accordance with the
Sarbanes-Oxley Act; and
-- those risks detailed from time to time in the Company's reports filed
with the SEC.
About GenCorp
GenCorp is a leading technology-based manufacturer of aerospace and
defense products and systems with a real estate segment that includes
activities related to the entitlement, sale and leasing of the Company’s
excess real estate assets. Additional information about the Company can be
obtained by visiting the Company’s web site at http://www.GenCorp.com.
Contact information:
Investors: Kathy Redd, chief financial officer
916.355.2361
Media: Linda Cutler, vice president, corporate communications
916.351.8650
(Tables to follow)
GenCorp Inc.
Condensed Consolidated Statements of Operations
(in millions, Three Months Ended Year Ended
except November 30, November 30, November 30, November 30,
per-share amounts) 2008 2007 2008 2007
(Unaudited)
Net Sales $198.5 $203.8 $742.3 $745.4
Costs and Expenses
Cost of sales 171.7 184.1 645.4 657.8
Selling, general
and administrative - 3.0 1.9 14.4
Depreciation and
amortization 8.5 7.8 28.3 28.4
Interest expense 6.8 7.0 27.7 28.6
Interest income (0.9) (1.3) (4.2) (4.9)
Other expense
(income), net 0.4 (1.7) 7.6 (2.6)
Unusual items:
Shareholder
agreement and
related costs 3.0 - 16.8 -
Defined benefit
pension plan
amendment 14.6 - 14.6 -
Legal settlements
and estimated
loss on legal
matters 0.8 (0.6) 2.9 3.8
Customer
reimbursements
of tax matters - - - 2.3
Loss on repayment
of debt - - - 0.6
Gain on recoveries (1.2) (6.0) (1.2) (6.0)
(Loss) income from
continuing
operations before
income taxes (5.2) 11.5 2.5 23.0
Income tax provision
(benefit) 0.5 (2.5) 0.9 (18.1)
(Loss) income from
continuing
operations (5.7) 14.0 1.6 41.1
(Loss) income from
discontinued
operations, net of
income taxes - (1.6) (0.1) 27.9
Net (Loss) Income $(5.7) $12.4 $1.5 $69.0
(Loss) Income Per
Share of Common Stock
Basic:
(Loss) income per
share from
continuing
operations $(0.10) $0.25 $0.03 $0.73
(Loss) income per
share from
discontinued
operations, net
of income taxes - (0.03) - 0.50
Net (loss) income
per share $(0.10) $ 0.22 $0.03 $1.23
Diluted:
(Loss) income per
share from
continuing
operations $(0.10) $0.24 $0.03 $0.71
(Loss) income per
share from
discontinued
operations, net of
income taxes - (0.03) - 0.43
Net (loss) income
per share $(0.10) $ 0.21 $0.03 $1.14
Weighted average
shares of common
stock outstanding 57.7 56.5 57.2 56.2
Weighted average
shares of common
stock outstanding,
assuming dilution 57.7 64.8 57.2 64.6
GenCorp Inc.
Operating Segment Information
Three Months Ended Year Ended
November 30, November 30, November 30, November 30,
(in millions) 2008 2007 2008 2007
(Unaudited)
Net Sales:
Aerospace and
Defense $196.9 $202.2 $725.5 $739.1
Real Estate 1.6 1.6 16.8 6.3
Total Net Sales $198.5 $203.8 $742.3 $745.4
Segment Performance:
Aerospace and Defense
Segment performance
before environmental
remediation
provision
adjustments,
retirement benefit
plan expense, and
unusual items $23.3 $19.1 $78.0 $84.8
Environmental
remediation
provision
adjustments (0.9) 0.1 (5.0) 0.4
Retirement benefit
plan expense (4.2) (6.0) (15.7) (23.8)
Unusual items (14.4) 6.6 (16.5) (0.1)
Aerospace and
Defense 3.8 19.8 40.8 61.3
Real Estate 0.9 0.7 10.3 3.5
Total Segment
Performance $4.7 $20.5 $51.1 $64.8
Three Months Ended Year Ended
November 30, November 30, November 30, November 30,
(in millions) 2008 2007 2008 2007
(Unaudited)
Reconciliation of
segment performance to
(loss) income from
continuing operations
before income taxes:
Segment Performance $4.7 $20.5 $51.1 $64.8
Interest expense (6.8) (7.0) (27.7) (28.6)
Interest income 0.9 1.3 4.2 4.9
Corporate retirement
benefit plan income 1.9 0.6 7.7 2.2
Corporate and other
expenses (3.1) (3.9) (16.2) (19.7)
Corporate unusual
items (2.8) - (16.6) (0.6)
(Loss) income from
continuing operations
before income taxes $(5.2) $11.5 $2.5 $23.0
The Company evaluates its operating segments based on several factors,
of which the primary financial measure is segment performance. Segment
performance represents net sales from continuing operations less
applicable costs, expenses, and provisions for restructuring and unusual
items relating to operations. Segment performance excludes corporate
income and expenses, income or expenses related to divested businesses,
provisions for unusual items not related to the operations, interest
expense, interest income, cumulative effect of changes in accounting
principles, and income taxes. The Company believes that segment
performance provides information useful to investors in understanding its
underlying operational performance. Specifically, the Company believes
the exclusion of the items listed above permits an evaluation and a
comparison of results for on-going business operations. It is on this
basis that management internally assesses the financial performance of
its segments.
GenCorp Inc.
Condensed Consolidated Balance Sheets
November 30, November 30,
(in millions) 2008 2007
Current Assets
Cash and cash equivalents $92.7 $92.3
Accounts receivable 97.3 99.2
Inventories 70.4 67.5
Recoverable from U.S. government and
other third parties for environmental
remediation costs and other 43.7 46.5
Grantor trust 1.6 -
Prepaid expenses and other 17.6 17.4
Income tax receivable 10.6 -
Assets of discontinued operations 0.1 0.1
Total Current Assets 334.0 323.0
Noncurrent Assets
Property, plant and equipment, net 137.9 139.8
Real estate held for entitlement and leasing 49.3 45.3
Recoverable from U.S. government and
other third parties for environmental
remediation costs and other 169.8 179.0
Prepaid pension asset 76.5 101.0
Grantor trust 29.3 -
Goodwill 94.9 94.9
Intangible assets 20.1 21.7
Other noncurrent assets, net 93.9 90.5
Total Noncurrent Assets 671.7 672.2
Total Assets $1,005.7 $995.2
Liabilities and Shareholders' Deficit
Short-term borrowings and current portion
of long-term debt $2.0 $1.5
Accounts payable 32.7 28.9
Reserves for environmental remediation costs 65.2 66.1
Income taxes payable - 6.2
Postretirement medical and life insurance benefits 7.1 8.8
Advance payments on contracts 46.7 49.1
Other current liabilities 93.7 84.3
Liabilities of discontinued operations 1.0 1.0
Total Current Liabilities 248.4 245.9
Noncurrent Liabilities
Senior debt 68.3 73.1
Senior subordinated notes 97.5 97.5
Convertible subordinated notes 271.4 271.4
Other debt 1.4 2.8
Deferred income taxes 8.3 0.3
Reserves for environmental remediation costs 193.0 203.9
Postretirement medical and life insurance
benefits 66.8 78.5
Other noncurrent liabilities 78.1 73.8
Total Noncurrent Liabilities 784.8 801.3
Total Liabilities 1,033.2 1,047.2
Redeemable Common Stock 7.6 -
Total Shareholders' Deficit (35.1) (52.0)
Total Liabilities and Shareholders' Deficit $1,005.7 $995.2
GenCorp Inc.
Condensed Consolidated Statements of Cash Flows
Year Ended
November 30, November 30,
(in millions) 2008 2007
Operating Activities
Net income $1.5 $69.0
Adjustments to reconcile net income
to net cash provided by operating
activities:
Loss (income) from discontinued operations 0.1 (27.9)
Depreciation and amortization 28.3 28.4
Stock-based compensation and savings
plan expense, net 9.4 10.6
Changes in assets and liabilities other
than grantor trust activity 20.4 (53.9)
Grantor trust activity (30.9) -
Net cash provided by continuing operations 28.8 26.2
Net cash used in discontinued operations (0.8) (2.4)
Net Cash Provided by Operating Activities 28.0 23.8
Investing Activities
Capital expenditures (21.3) (21.8)
Restricted cash - 19.8
Proceeds from sale of discontinued operations - 29.7
Net Cash (Used in) Provided by Investing
Activities (21.3) 27.7
Financing Activities
Debt activity, net (6.3) (20.8)
Proceeds from shares issued under stock
option and equity incentive plans - 0.4
Net Cash Used in Financing Activities (6.3) (20.4)
Net Increase in Cash and Cash Equivalents 0.4 31.1
Cash and Cash Equivalents at Beginning of Period 92.3 61.2
Cash and Cash Equivalents at End of Period $92.7 $92.3
Supplemental Disclosures of Cash Flow Information
Cash paid for interest $25.3 $27.6
Cash paid for income taxes 0.5 0.8
Financing of an environmental remediation
settlement with a promissory
note 0.6 -
Capital expenditure purchased with a promissory note - 2.8
SOURCE GenCorp Inc.
