GENCORP LOGO GenCorp Logo. [TC] FARMINGTON
HILLS, CA USA 01/08/2001
SACRAMENTO, Calif., June 27 GenCorp reported
today net earnings for second quarter 2001 of $0.35 per share on a diluted
basis, excluding a $19 million restructuring charge ($12 million after-tax) at
its GDX Automotive segment. The Company had previously announced that it was
implementing a major restructuring and consolidation of GDX Automotive,
including closing its Marion, Indiana and Ballina, Ireland manufacturing
facilities. Including the restructuring charge, GenCorp's earnings for the
quarter were $0.08 per diluted share. The Company reported earnings for second
quarter 2000 of $0.45 per share on a diluted basis.
(Photo: http://www.newscom.com/cgi-bin/prnh/20010108/SFM125LOGO )
"Earnings for the second quarter exceeded consensus analysts'
expectations, but we remain concerned about the sluggish performance of our
automotive unit, due in large part to volume reductions and inefficiencies
experienced during new platform launches," said Chairman and CEO Bob Wolfe.
"Recently, GDX Automotive has experienced improvements in quality, costs and
productivity due to specific actions that have been implemented at all of its
plants, and we expect run rates to improve and volume to pick up later in the
year as a result," Wolfe said.
"We continue to be pleased with performance at Aerojet's defense business
unit and the significant success this business achieved during the quarter in
capturing new contract awards," Wolfe added. "Overall, revenues and operating
profit for the quarter were up at Aerojet's defense business unit as compared
to the same period in 2000. However, Aerojet's pharmaceutical fine chemicals
business unit, Aerojet Fine Chemicals, experienced lower than expected product
deliveries and an operating loss for the quarter."
For second quarter 2001, GenCorp's revenues increased 51% to $410 million,
versus $271 million for the comparable period in 2000. Aerojet's revenues
increased 29% and GDX Automotive's revenues increased 76% due in large part to
the acquisition of the Draftex International Car Body Seals Division of The
Laird Group in late December 2000. Excluding the restructuring charge and
other unusual items, GenCorp's operating profit was $32 million for the
quarter compared to $37 million for the second quarter 2000. Aerojet's
operating profit was relatively unchanged versus last year while
GDX Automotive's operating profit decreased $4 million.
Aerospace, Defense and Fine Chemicals
Aerojet's net sales for the quarter increased $41 million to $183 million
compared to $142 million for the comparable period in 2000. Increased revenues
from the Space Based Infrared System (SBIRS) program, Titan and Delta rocket
programs, and the Advanced Technology Microwave Sounder (ATMS) Program
accounted for the majority of the increase, partially offset by lower revenues
from the Sense and Destroy Armor (SADARM) program and Aerojet Fine Chemicals.
Aerojet's operating profit for the quarter was $24 million versus $25 million
for second quarter 2000. In general, favorable performance at the defense
business unit was offset by a loss for the pharmaceutical fine chemicals
business unit. Significant contract awards during the quarter included: a
$115 million award from NASA to the joint venture team of Aerojet and
Pratt & Whitney to develop booster engines in support of NASA's Space Launch
Initiative (SLI) program -- the first phase in building a new space shuttle by
the year 2010; a $31 million extension to the Titan rocket production and
launch operations contracts with Lockheed Martin; and, a $10 million follow-on
award from Boeing to manufacture certain components for a classified program.
In addition, Aerojet received contract awards related to designing, developing
and demonstrating a dual-thrust reaction control engine for NASA's Second
Generation Launch Vehicle program and refurbishing solid propellant engines
for Minuteman II ballistic missiles. During the quarter, Aerojet booked
contract award funding of $152 million with contract backlog at May 31, 2001
totaling $1.2 billion.
Operational highlights for Aerojet's defense business during the quarter
included two successful launches of Delta II rockets carrying NASA's Mars
Odyssey spacecraft on April 7th and an Air Force GeoLITE satellite on
May 18th. Aerojet manufactures the second stage engine used in the Delta II
rocket. In addition, on May 11th, Aerojet's propulsion business unit cast the
world's longest monolithic solid propellant motor in support of its Atlas V
rocket program.
Aerojet Fine Chemicals recorded a loss for the quarter, due primarily to
certain product deliveries slipping to the second half of the fiscal year. The
loss was partially mitigated by a labor force reduction and aggressive cost
cutting actions taken during the quarter. The benefits of these actions are
expected to be realized beginning in the third and fourth quarters of this
fiscal year.
GDX Automotive
Net sales for the Company's GDX Automotive segment increased 76% to
$227 million for second quarter 2001, versus $129 million for second quarter
2000. The increase was due primarily to the acquisition of Draftex, partially
offset by lower volumes in the segment's base North American business.
Operating profit for second quarter 2001 was $8 million compared to
$12 million for second quarter 2000. Operating profit margin for the quarter
decreased to 3% compared to 9% for second quarter 2000. The decrease in
operating profit was due to pricing and volume pressures, labor inefficiencies
relating primarily to the new 2002 Ford Explorer and increased employee health
care costs. Overall, volumes for light trucks and sport utility vehicles have
remained relatively stable but build rates have declined for certain passenger
cars for which GDX Automotive supplies parts.
Other Information
The Company believes that it has now resolved most of the issues with the
regulatory agencies related to the carve-out of 3,100 uncontaminated acres at
the Company's Sacramento site from the Superfund order. The carve-out of this
property from the Superfund order would enable the Company to continue efforts
directed at development of this property including office, commercial and
light industrial use. The Company estimates that a final agreement with the
regulatory agencies should be reached within the next couple of months.
During second quarter 2001, the Company settled outstanding tax claims
with the Internal Revenue Service and the State of California. The portion of
the settlement with the State of California that the Company will repay to its
defense customers is reflected in segment income as an unusual expense item of
$2 million. The income retained by the Company, $2 million on an after-tax
basis, is reflected as an income tax benefit for the quarter.
As of May 31, 2001, GenCorp's total debt increased $15 million to
$461 million versus $446 million as of February 28, 2001. The increase was due
primarily to certain working capital needs. Interest expense increased to
$9 million for second quarter 2001 compared to $4 million for second quarter
2000 due to higher debt levels, primarily related to the Draftex acquisition,
and increased borrowing rates.
Current Outlook
On April 20, 2001, the Company announced the sale of its
Aerojet Electronics and Information Systems (EIS) business unit to Northrop
Grumman for $315 million in cash. The sale is expected to close late this
summer. Excluding the anticipated gain from the sale, the Company continues to
estimate earnings per share for its fiscal year 2001 at the lower end of the
guidance level given at the last earnings conference call, which was $1.54 to
$1.64. Although the Company's forecasts are subject to numerous variables and
uncertainties, the main risks in achieving the forecasted results include:
(i) the continued stability of automotive production rates; (ii) our ability
to reduce inefficiencies and meet seal build rates for the new 2002 Ford
Explorer; (iii) our ability to achieve targeted product delivery levels at
Aerojet Fine Chemicals; (iv) the timing of potential land sales in Sacramento.
This earnings release contains forward-looking statements as defined by
the Private Securities Litigation Reform Act of 1995. All statements in this
release and in subsequent discussions with the Company's management, other
than historical information, may be deemed to be forward-looking statements. A
variety of factors, which are listed in the forward-looking statements section
of Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's 2000 Annual Report on Form 10-K and the Company's
Quarterly Report on Form 10-Q for the Quarter Ended February 28, 2001, both of
which have been filed with the U.S. Securities and Exchange Commission, could
cause actual results or outcomes to differ materially from those expected by
the Company and expressed in the Company's forward-looking statements.
GenCorp is a technology-based manufacturer with leading positions in the
aerospace and defense, pharmaceutical fine chemicals and automotive
industries. Additional information about GenCorp can be obtained by visiting
the Company's web-site at http://www.GenCorp.com .
Business Segment Information (Unaudited)
GenCorp Inc.
Three Months Ended Six Months Ended
(Dollars in millions, May 31, May 31, May 31, May 31,
except per-share data) 2001 2000 2001 2000
Net Sales
Aerospace, defense
and fine chemicals $183 $142 $355 $269
GDX Automotive 227 129 408 241
$410 $271 $763 $510
Income from Operations
Aerospace, defense
and fine chemicals $24 $25 $47 $44
GDX Automotive 8 12 4 16
Restructuring Charge (19) -- (19) --
Unusual items (2) -- (9) --
Segment Operating Profit 11 37 23 60
Interest expense (9) (4) (18) (7)
Corporate other income
and (expense), net (4) 1 (5) --
Corporate expenses 1 (2) (1) (3)
Unusual items, net -- -- 1 (1)
Foreign currency
transaction gain -- -- 11 --
Income tax (provision)
benefit 4 (13) 9 (20)
Income before cumulative
effect of accounting
change 3 19 20 29
Cumulative effect of
accounting change,
net of tax -- -- -- 74
Net Income $3 $19 $20 $103
Basic earnings per common share:
Income before cumulative
effect of accounting
change $0.08 $0.45 $0.47 $0.70
Effect of accounting
change -- -- -- 1.76
Total $0.08 $0.45 $0.47 $2.46
Diluted earnings per
common share:
Income before cumulative
effect of accounting
change $0.08 $0.45 $0.46 $0.70
Effect of accounting
change -- -- -- 1.76
Total $0.08 $0.45 $0.46 $2.46
Shares used for
calculation of
earnings per common
share (in thousands):
Basic 42,147 41,933 42,070 41,903
Diluted 42,565 42,060 42,437 42,021
Capital expenditures $10 $21 $16 $40
Depreciation and
amortization $20 $13 $38 $26
Condensed Consolidated Balance Sheet (Unaudited)
GenCorp Inc.
May 31, Nov. 30,
(Dollars in millions) 2001 2000
Assets
Cash and equivalents $33 $17
Accounts receivable 235 135
Inventories 203 182
Prepaid expenses and other 44 12
Total Current Assets 515 346
Recoverable from U.S. government and
other third parties for
Environmental remediation 195 203
Deferred income taxes 52 76
Prepaid pension 318 281
Investments and other assets 159 53
Property, plant and equipment,
less accumulated Depreciation 511 365
$1,750 $1,324
Liabilities and Shareholders' Equity
Notes payable and current portion
of long-term debt $30 $--
Accounts payable-trade 85 47
Income taxes 23 8
Other current liabilities 373 273
Total Current Liabilities 511 328
Long-term debt 431 190
Postretirement benefits other than pensions 229 230
Environmental reserves 321 328
Other liabilities 58 53
Total shareholders' equity 200 195
$1,750 $1,324
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