GENCORP INC (Form: 10-Q, Received: 10/10/2014 17:16:07)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: August 31, 2014



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-01520

GenCorp Inc.

(Exact name of registrant as specified in its charter)



Delaware		34-0244000
(State of Incorporation)		(I.R.S. Employer Identification No.)

2001 Aerojet Road Rancho Cordova, California		95742
(Address of Principal Executive Offices)		(Zip Code)

P.O. Box 537012 Sacramento, California		95853-7012
(Mailing Address)		(Zip Code)

Registrant’s telephone number, including area code (916) 355-4000

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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	ý	Accelerated filer	¨

Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

As of September 30, 2014 , there were 58.8 million outstanding shares of our Common Stock, including redeemable common stock and unvested common shares, $0.10 par value.

GenCorp Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended August 31, 2014

Table of Contents



Item Number		Page
PART I — FINANCIAL INFORMATION
1	Financial Statements	2
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
3	Quantitative and Qualitative Disclosures About Market Risk	58
4	Controls and Procedures	58
PART II — OTHER INFORMATION
1	Legal Proceedings	59
1A	Risk Factors	59
2	Unregistered Sales of Equity Securities and Use of Proceeds	59
3	Defaults Upon Senior Securities	59
4	Mine Safety Disclosures	59
5	Other Information	59
6	Exhibits	60
SIGNATURES
	Signatures	61
EXHIBIT INDEX
	Exhibit Index	62

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements

GenCorp Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



	Three months ended August 31,						Nine months ended August 31,
	2014			2013			2014			2013
	(In millions, except per share amounts)
Net sales	$	419.5		$	367.5		$	1,152.3		$	897.8
Operating costs and expenses:
Cost of sales (exclusive of items shown separately below)	374.2			326.7			1,027.2			798.6
Selling, general and administrative	9.7			14.1			28.1			39.9
Depreciation and amortization	15.7			15.2			45.9			26.6
Other expense, net:
Loss on debt repurchased	9.8			—			60.6			—
Other	6.5			8.1			11.6			24.5
Total operating costs and expenses	415.9			364.1			1,173.4			889.6
Operating income (loss)	3.6			3.4			(21.1		)	8.2
Non-operating (income) expense:
Interest income	—			—			—			(0.2		)
Interest expense	14.0			12.4			39.0			36.2
Total non-operating expense, net	14.0			12.4			39.0			36.0
Loss from continuing operations before income taxes	(10.4		)	(9.0		)	(60.1		)	(27.8		)
Income tax (benefit) provision	(0.7		)	(206.6		)	1.1			(199.6		)
(Loss) income from continuing operations	(9.7		)	197.6			(61.2		)	171.8
Income (loss) from discontinued operations, net of income taxes	0.2			(0.2		)	(0.6		)	(0.2		)
Net (loss) income	$	(9.5	)	$	197.4		$	(61.8	)	$	171.6
(Loss) Income Per Share of Common Stock
Basic
(Loss) income per share from continuing operations	$	(0.17	)	$	3.25		$	(1.05	)	$	2.83
Loss per share from discontinued operations, net of income taxes	—			—			(0.01		)	—
Net (loss) income per share	$	(0.17	)	$	3.25		$	(1.06	)	$	2.83
Diluted
(Loss) income per share from continuing operations	$	(0.17	)	$	2.39		$	(1.05	)	$	2.13
Loss per share from discontinued operations, net of income taxes	—			—			(0.01		)	—
Net (loss) income per share	$	(0.17	)	$	2.39		$	(1.06	)	$	2.13
Weighted average shares of common stock outstanding, basic	56.9			59.7			58.2			59.5
Weighted average shares of common stock outstanding, diluted	56.9			82.1			58.2			81.9

See Notes to Unaudited Condensed Consolidated Financial Statements.

GenCorp Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)



	Three months ended August 31,					Nine months ended August 31,
	2014			2013		2014			2013
	(In millions)
Net (loss) income	$	(9.5	)	$	197.4	$	(61.8	)	$	171.6
Other comprehensive income:
Amortization of actuarial losses and prior service credits, net of income taxes	7.5			23.0		22.7			68.8
Comprehensive (loss) income	$	(2.0	)	$	220.4	$	(39.1	)	$	240.4

See Notes to Unaudited Condensed Consolidated Financial Statements.

GenCorp Inc.

Condensed Consolidated Balance Sheets

(Unaudited)



	August 31, 2014			November 30, 2013
	(In millions, except per share and share amounts)
ASSETS
Current Assets
Cash and cash equivalents	$	154.9		$	197.6
Accounts receivable	214.7			214.1
Inventories	132.3			105.9
Recoverable from the U.S. government and other third parties for environmental remediation costs	20.1			20.4
Receivable from Northrop Grumman Corporation (“Northrop”)	6.0			6.0
Other receivables, prepaid expenses and other	26.7			22.4
Income taxes	13.4			12.6
Deferred income taxes	4.0			17.0
Total Current Assets	572.1			596.0
Noncurrent Assets
Property, plant and equipment, net	370.6			374.7
Real estate held for entitlement and leasing	87.3			80.2
Recoverable from the U.S. government and other third parties for environmental remediation costs	83.6			88.7
Receivable from Northrop	74.0			72.0
Deferred income taxes	180.0			175.7
Goodwill	164.4			159.6
Intangible assets	125.6			135.7
Other noncurrent assets, net	92.1			72.7
Total Noncurrent Assets	1,177.6			1,159.3
Total Assets	$	1,749.7		$	1,755.3
LIABILITIES, REDEEMABLE COMMON STOCK, AND SHAREHOLDERS’ (DEFICIT) EQUITY
Current Liabilities
Short-term borrowings and current portion of long-term debt	$	5.5		$	2.9
Accounts payable	115.4			122.5
Reserves for environmental remediation costs	35.0			36.6
Postretirement medical and life insurance benefits	7.2			7.3
Advance payments on contracts	122.4			104.4
Other current liabilities	216.4			206.0
Total Current Liabilities	501.9			479.7
Noncurrent Liabilities
Senior debt	95.0			42.5
Second-priority senior notes	460.0			460.0
Convertible subordinated notes	133.6			193.2
Other debt	89.4			0.6
Reserves for environmental remediation costs	133.6			134.7
Pension benefits	248.3			261.7
Postretirement medical and life insurance benefits	57.1			59.3
Other noncurrent liabilities	79.3			73.8
Total Noncurrent Liabilities	1,296.3			1,225.8
Total Liabilities	1,798.2			1,705.5
Commitments and contingencies (Note 8)
Redeemable common stock, par value of $0.10; less than 0.1 million shares issued and outstanding as of August 31, 2014 and November 30, 2013	0.2			0.2
Shareholders’ (Deficit) Equity
Preference stock, par value of $1.00; 15.0 million shares authorized; none issued or outstanding	—			—
Common stock, par value of $0.10; 150.0 million shares authorized; 56.9 million shares issued and outstanding as of August 31, 2014; 59.9 million shares issued and outstanding as of November 30, 2013	5.9			5.9
Other capital	285.4			280.1
Treasury stock at cost, 3.5 million shares as of August 31, 2014	(64.5		)	—
Accumulated deficit	(75.8		)	(14.0		)
Accumulated other comprehensive loss, net of income taxes	(199.7		)	(222.4		)
Total Shareholders’ (Deficit) Equity	(48.7		)	49.6
Total Liabilities, Redeemable Common Stock and Shareholders’ (Deficit) Equity	$	1,749.7		$	1,755.3

See Notes to Unaudited Condensed Consolidated Financial Statements.

GenCorp Inc.

Condensed Consolidated Statement of Shareholders’ Equity (Deficit)

(Unaudited)



	Common Stock												Accumulated Other			Total Shareholders'
					Other Capital		Treasury Stock			Accumulated Deficit			Comprehensive Loss			Equity (Deficit)
	Shares		Amount		Other Capital		Treasury Stock			Accumulated Deficit			Comprehensive Loss			Equity (Deficit)
	(In millions)
November 30, 2013	59.9		$	5.9	$	280.1	$	—		$	(14.0	)	$	(222.4	)	$	49.6
Net loss	—		—		—		—			(61.8		)	—			(61.8		)
Amortization of actuarial losses and prior service credits, net of income taxes	—		—		—		—			—			22.7			22.7
Tax benefit from shares issued under equity plans	—		—		1.5		—			—			—			1.5
Purchase of treasury stock	(3.5	)	—		—		(64.5		)	—			—			(64.5		)
Stock-based compensation and other, net	0.5		—		3.8		—			—			—			3.8
August 31, 2014	56.9		$	5.9	$	285.4	$	(64.5	)	$	(75.8	)	$	(199.7	)	$	(48.7	)

See Notes to Unaudited Condensed Consolidated Financial Statements.

GenCorp Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine months ended August 31,
	2014			2013
	(In millions)
Operating Activities
Net (loss) income	$	(61.8	)	$	171.6
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Loss from discontinued operations, net of income taxes	0.6			0.2
Depreciation and amortization	45.9			26.6
Amortization of debt discount and financing costs	2.7			3.6
Stock-based compensation	4.5			9.7
Retirement benefit expense	26.7			48.5
Loss on debt repurchased	60.6			—
Loss on bank amendment	0.2			—
Loss on disposal of long-lived assets	2.5			0.1
Tax benefit on stock-based awards	(1.5		)	(0.1		)
Changes in assets and liabilities:
Accounts receivable	(0.8		)	(36.9		)
Inventories	(27.2		)	(46.5		)
Other receivables, prepaid expenses and other	(3.5		)	5.5
Income tax receivable	1.4			(1.8		)
Real estate held for entitlement and leasing	(7.7		)	(2.8		)
Receivable from Northrop	(2.0		)	(0.8		)
Recoverable from the U.S. government and other third parties for environmental remediation costs	5.4			13.7
Other noncurrent assets	(24.0		)	(0.9		)
Accounts payable	(7.1		)	32.0
Postretirement medical and life benefits	(4.2		)	(4.3		)
Advance payments on contracts	18.0			(14.5		)
Other current liabilities	10.9			42.9
Deferred income taxes	(6.1		)	(204.7		)
Reserves for environmental remediation costs	(2.7		)	(10.4		)
Other noncurrent liabilities	3.4			(4.1		)
Net cash provided by continuing operations	34.2			26.6
Net cash used in discontinued operations	(0.1		)	(0.1		)
Net Cash Provided by Operating Activities	34.1			26.5
Investing Activities
Purchases of restricted cash investments	—			(470.0		)
Sale of restricted cash investments	—			470.0
Purchase of Rocketdyne Business	0.2			(411.2		)
Purchases of investments	—			(0.5		)
Capital expenditures	(31.9		)	(38.7		)
Net Cash Used in Investing Activities	(31.7		)	(450.4		)
Financing Activities
Proceeds from issuance of debt	189.0			460.0
Debt issuance costs	(4.2		)	(14.7		)
Debt repayments/repurchases	(165.0		)	(2.0		)
Proceeds from shares issued under equity plans, net	(1.9		)	0.3
Purchase of treasury stock	(64.5		)	—
Tax benefit on stock-based awards	1.5			0.1
Net Cash (Used in) Provided by Financing Activities	(45.1		)	443.7
Net (Decrease) Increase in Cash and Cash Equivalents	(42.7		)	19.8
Cash and Cash Equivalents at Beginning of Period	197.6			162.1
Cash and Cash Equivalents at End of Period	$	154.9		$	181.9
Supplemental disclosures of cash flow information
Cash paid for interest	$	27.8		$	16.0
Cash paid for income taxes	4.6			6.3
Conversion of debt to common stock	—			1.6

See Notes to Unaudited Condensed Consolidated Financial Statements.

GenCorp Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Basis of Presentation and Nature of Operations

GenCorp Inc. (“GenCorp” or the “Company”) has prepared the accompanying unaudited condensed consolidated financial statements, including its accounts and the accounts of its wholly-owned subsidiaries, in accordance with the instructions to Form 10-Q. The year-end condensed consolidated balance sheet was derived from audited financial statements but does not include all of the disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2013, as filed with the Securities and Exchange Commission (“SEC”). Certain reclassifications have been made to financial information for the prior year to conform to the current year’s presentation.

The Company believes the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring accruals, necessary for a fair statement of its financial position, results of operations, and cash flows for the periods presented. All significant intercompany balances and transactions have been eliminated in consolidation. The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In addition, the operating results for interim periods may not be indicative of the results of operations for a full year.

The Company is a manufacturer of aerospace and defense products and systems with a real estate segment that includes activities related to the re-zoning, entitlement, sale, and leasing of the Company’s excess real estate assets. The Company’s continuing operations are organized into two segments:

Aerospace and Defense — includes the operations of the Company’s wholly-owned subsidiary Aerojet Rocketdyne, Inc. (“Aerojet Rocketdyne”), a leading technology-based designer, developer and manufacturer of aerospace and defense products and systems for the United States (“U.S.”) government, including the Department of Defense (“DoD”), the National Aeronautics and Space Administration (“NASA”), major aerospace and defense prime contractors as well as portions of the commercial sector. Aerojet Rocketdyne is a world-recognized engineering and manufacturing company that specializes in the development and production of propulsion systems for defense and space applications, armament systems for precision tactical systems and munitions, and is considered a domestic market leader in launch propulsion, in-space propulsion, missile defense propulsion, tactical missile propulsion and hypersonic propulsion systems.

Real Estate — includes the activities of the Company’s wholly-owned subsidiary Easton Development Company, LLC (“Easton”) related to the re-zoning, entitlement, sale, and leasing of the Company’s excess real estate assets. The Company owns approximately 11,900 acres of land adjacent to U.S. Highway 50 between Rancho Cordova and Folsom, California east of Sacramento (“Sacramento Land”). The Company is currently in the process of seeking zoning changes and other governmental approvals on a portion of the Sacramento Land to optimize its value.

In July 2012, the Company signed a stock and asset purchase agreement (the “Original Purchase Agreement”) with United Technologies Corporation (“UTC”) to acquire the Pratt & Whitney Rocketdyne division (the “Rocketdyne Business”) from UTC for $550 million (the “Acquisition”). The Rocketdyne Business was the largest liquid rocket propulsion designer, developer, and manufacturer in the U.S. On June 10, 2013, the Federal Trade Commission (“FTC”) announced that it closed its investigation into the Acquisition under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. On June 12, 2013, the Company and UTC entered into an amended and restated stock and asset purchase agreement (the “Amended and Restated Purchase Agreement”), which amended and restated the Original Purchase Agreement, as amended. On June 14, 2013 , the Company completed the acquisition of substantially all of the Rocketdyne Business pursuant to the Amended and Restated Purchase Agreement. The aggregate consideration to UTC was $411 million which represents the initial purchase price of $550 million reduced by $55 million relating to the pending future acquisition of UTC’s 50% ownership interest of RD Amross, LLC (a joint venture with NPO Energomash of Khimki, Russia which sells RD-180 engines to RD Amross) and the portion of the UTC business that markets and supports the sale of RD-180 engines (the “RDA Acquisition”). The acquisition of UTC’s 50% ownership interest of RD Amross and UTC’s related business is contingent upon certain conditions including receipt of certain Russian governmental regulatory approvals, which may not be obtained. Pursuant to the terms of the Amended and Restated Purchase Agreement, either party to such agreement may terminate the obligations to consummate the RDA Acquisition on or after June 12, 2014 ; provided, however, that such termination date may be extended for up to four additional periods of three months each (with the final termination date extended until June 12, 2015 ). Subject to the terms of the Amended and Restated Purchase Agreement, in order to extend the termination date, either party may request the extension by providing written notice

to the other party at least five business days prior to the termination date, provided that the requesting party must have a reasonable belief at the time such notice is given that a certain authorization for completion of the RDA Acquisition from the Russian government will be forthcoming. On September 2, 2014, the Company elected the second option to extend the terms of the Amended and Restated Purchase Agreement for three months . The final purchase price was further adjusted for changes in advance payments on contracts and capital expenditures (see Note 5).

On August 31, 2004, the Company completed the sale of its GDX Automotive (“GDX”) business. On November 30, 2005, the Company completed the sale of the Fine Chemicals business (see Note 12).

The Company’s fiscal year ends on November 30 of each year. The fiscal year of the Company’s subsidiary, Aerojet Rocketdyne, ends on the last Saturday of November. As a result of the 2013 calendar, Aerojet Rocketdyne had 13 weeks of operations in the first quarter of fiscal 2014 compared to 14 weeks of operations in the first quarter of fiscal 2013. The additional week of operations in the first quarter of fiscal 2013 accounted for $27.8 million in additional net sales.

Revenue Recognition

In the Company’s Aerospace and Defense segment, recognition of profit on long-term contracts requires the use of assumptions and estimates related to the contract value or total contract revenue, the total cost at completion and the measurement of progress towards completion. Due to the nature of the programs, developing the estimated total cost at completion requires the use of significant judgment. Estimates are continually evaluated as work progresses and are revised as necessary. Factors that must be considered in estimating the work to be completed include labor productivity, the nature and technical complexity of the work to be performed, availability and cost volatility of materials, subcontractor and vendor performance, warranty costs, volume assumptions, anticipated labor agreements and inflationary trends, schedule and performance delays, availability of funding from the customer, and the recoverability of costs incurred outside the original contract included in any estimates to complete. The Company reviews contract performance and cost estimates for some contracts at least monthly and for others at least quarterly and more frequently when circumstances significantly change. When a change in estimate is determined to have an impact on contract profit, the Company will record a positive or negative adjustment to the statement of operations. Changes in estimates and assumptions related to the status of certain long-term contracts may have a material effect on the Company’s operating results. The following table summarizes the impact from changes in estimates and assumptions on the statements of operations on contracts, representing 85% of the Company’s net sales over the first nine months of fiscal 2014 and 2013, accounted for under the percentage-of-completion method of accounting:



	Three months ended August 31,					Nine months ended August 31,
	2014			2013		2014			2013
	(In millions, except per share amounts)
(Unfavorable) favorable effect of the changes in contract estimates on loss from continuing operations before income taxes	$	(5.3	)	$	11.0	$	(8.2	)	$	20.4
(Unfavorable) favorable effect of the changes in contract estimates on net (loss) income	(2.3		)	9.5		(3.9		)	14.4
(Unfavorable) favorable effect of the changes in contract estimates on basic net (loss) income per share	(0.04		)	0.16		(0.07		)	0.24
(Unfavorable) favorable effect of the changes in contract estimates on diluted net (loss) income per share	(0.04		)	0.14		(0.07		)	0.24

A detailed description of the Company’s significant accounting policies can be found in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended November 30, 2013.

Recently Adopted Accounting Pronouncement

In July 2013, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting guidance related to the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The guidance requires an unrecognized tax benefit to be presented as a decrease in a deferred tax asset where a net operating loss, a similar tax loss, or a tax credit carryforward exists and certain criteria are met. The Company adopted this guidance beginning in the first quarter of fiscal 2014. As the accounting standard only impacted presentation, the new standard did not have an impact on the Company’s financial position, results of operations, or cash flows.

Recently Issued Accounting Pronouncement

In April 2014, the FASB issued authoritative guidance which specifies that only disposals, such as a disposal of a major line of business, representing a strategic shift in operations should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. This guidance is effective for the Company prospectively in the first quarter of fiscal 2016. An entity should not apply the amendments in this new guidance to a component of an entity that is classified as held for sale before the effective date even if the component of an entity is disposed of after the effective date. As the accounting standard will only impact presentation, the new standard will not have an impact on the Company’s financial position, results of operations, or cash flows.

In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is required to adopt the amendments in the first quarter of fiscal 2018. Early adoption is not permitted. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating the impact of these amendments and the transition alternatives on its consolidated financial statements.

In August 2014, the FASB issued an amendment to the accounting guidance related to the evaluation of an entity to continue as a going concern. The amendment establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The update also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This guidance is effective for the Company as of November 30, 2017. The new guidance will not have an impact on the Company’s financial position, results of operations, or cash flows.

Note 2. (Loss) Income Per Share of Common Stock

A reconciliation of the numerator and denominator used to calculate basic and diluted (loss) income per share of common stock (“EPS”) is presented in the following table:



	Three months ended August 31,						Nine months ended August 31,
	2014			2013			2014			2013
	(In millions, except per share amounts)
Numerator:
(Loss) income from continuing operations	$	(9.7	)	$	197.6		$	(61.2	)	$	171.8
Income (loss) from discontinued operations, net of income taxes	0.2			(0.2		)	(0.6		)	(0.2		)
Net (loss) income	(9.5		)	197.4			(61.8		)	171.6
Income allocated to participating securities	—			(3.4		)	—			(3.3		)
Net (loss) income for basic earnings per share	(9.5		)	194.0			(61.8		)	168.3
Interest on convertible subordinated debentures	—			2.0			—			6.1
Net (loss) income for diluted earnings per share	(9.5		)	196.0			(61.8		)	174.4
Denominator:
Basic weighted average shares	56.9			59.7			58.2			59.5
Effect of:
Convertible subordinated notes	—			22.2			—			22.2
Employee stock options	—			0.2			—			0.2
Diluted weighted average shares	56.9			82.1			58.2			81.9
Basic
(Loss) income per share from continuing operations	$	(0.17	)	$	3.25		$	(1.05	)	$	2.83
Loss per share from discontinued operations, net of income taxes	—			—			(0.01		)	—
Net (loss) income per share	$	(0.17	)	$	3.25		$	(1.06	)	$	2.83
Diluted
(Loss) income per share from continuing operations	$	(0.17	)	$	2.39		$	(1.05	)	$	2.13
Loss per share from discontinued operations, net of income taxes	—			—			(0.01		)	—
Net (loss) income per share	$	(0.17	)	$	2.39		$	(1.06	)	$	2.13

The following table sets forth the potentially dilutive securities excluded from the computation because their effect would have been anti-dilutive:



	Three months ended August 31,		Nine months ended August 31,
	2014	2013	2014	2013
	(In millions)
4.0625% Convertible Subordinated Debentures ( “4 1/16% Debentures ”)	15.4	—	18.9	—
Employee stock options	0.2	—	0.2	—
Unvested restricted shares	1.9	1.0	1.6	1.1
Total potentially dilutive securities	17.5	1.0	20.7	1.1

Note 3. Stock-Based Compensation

Total stock-based compensation expense by type of award for the third quarter and first nine months of fiscal 2014 and 2013 was as follows:



	Three months ended August 31,					Nine months ended August 31,
	2014			2013		2014			2013
	(In millions)
Stock appreciation rights	$	(0.6	)	$	1.3	$	(1.1	)	$	6.0
Stock options	0.1			0.3		0.2			0.3
Restricted shares, service based	1.0			0.5		3.2			1.7
Restricted shares, performance based	1.0			1.3		2.2			1.7
Total stock-based compensation expense	$	1.5		$	3.4	$	4.5		$	9.7

Note 4. Balance Sheet Accounts

a. Fair Value of Financial Instruments

The accounting standards use a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The following are measured at fair value:



			Fair value measurement at August 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
Money market funds	$	147.2	$	147.2	$	—	$	—
			Fair value measurement at November 30, 2013
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
Money market funds	$	174.4	$	174.4	$	—	$	—

As of August 31, 2014, a summary of cash and cash equivalents and the grantor trust by investment type is as follows:



	Total		Cash and Cash Equivalents		Money Market Funds
	(In millions)
Cash and cash equivalents	$	154.9	$	19.2	$	135.7
Grantor trust (included as a component of other current and noncurrent assets)	11.5		—		11.5
	$	166.4	$	19.2	$	147.2

The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued compensation, and other accrued liabilities, approximate fair value because of their short maturities.

The estimated fair value and principal amount for the Company’s outstanding debt is presented below:



	Fair Value				Principal Amount
	August 31, 2014		November 30, 2013		August 31, 2014		November 30, 2013
	(In millions)
Term loan	$	100.0	$	45.0	$	100.0	$	45.0
7.125% Second-Priority Senior Secured Notes due 2021 (the “7 1/8% Notes”)	495.9		494.5		460.0		460.0
4 1/16% Debentures	275.2		398.1		133.6		193.2
Delayed draw term loan	89.0		—		89.0		—
Other debt	0.9		1.0		0.9		1.0
	$	961.0	$	938.6	$	783.5	$	699.2

The fair values of the 7 1/8% Notes and 4 1/16% Debentures were determined using broker quotes that are based on open markets for the Company’s debt securities as of August 31, 2014 and November 30, 2013 (both Level 2 securities). The fair value of the term loans and other debt was determined to approximate carrying value.

b. Accounts Receivable



	August 31, 2014			November 30, 2013
	(In millions)
Billed	$	78.4		$	96.3
Unbilled	153.3			138.0
Reserve for overhead rate disallowance	(17.4		)	(20.5		)
Total receivables under long-term contracts	214.3			213.8
Other receivables	0.4			0.3
Accounts receivable	$	214.7		$	214.1

c. Inventories



	August 31, 2014			November 30, 2013
	(In millions)
Long-term contracts at average cost	$	426.9		$	347.7
Progress payments	(296.0		)	(242.4		)
Total long-term contract inventories	130.9			105.3
Total other inventories	1.4			0.6
Inventories	$	132.3		$	105.9

d. Property, Plant and Equipment, net



	August 31, 2014			November 30, 2013
	(In millions)
Land	$	67.2		$	67.2
Buildings and improvements	275.4			219.5
Machinery and equipment	474.0			464.7
Construction-in-progress	37.0			76.1
	853.6			827.5
Less: accumulated depreciation	(483.0		)	(452.8		)
Property, plant and equipment, net	$	370.6		$	374.7

e. Goodwill

The goodwill balance at August 31, 2014 relates to the Company’s Aerospace and Defense segment. The changes in the carrying amount of goodwill since November 30, 2013 were as follows (in millions):



November 30, 2013	$	159.6
Purchase accounting adjustments related to Rocketdyne Business acquisition	4.8
August 31, 2014	$	164.4

The purchase accounting adjustments recorded during the first nine months of fiscal 2014 were during the measurement period of the assets acquired and liabilities assumed related to the Rocketdyne Business acquisition and had no impact on the Company’s unaudited condensed consolidated statement of operations.

f. Other Noncurrent Assets, net



	August 31, 2014		November 30, 2013
	(In millions)
Recoverable from the U.S. government for restructuring costs	$	34.9	$	13.3
Deferred financing costs	19.3		18.3
Recoverable from the U.S. government for conditional asset retirement obligations	17.1		15.6
Grantor trust	11.6		11.4
Indemnification receivable from UTC	6.8		10.0
Other	2.4		4.1
Other noncurrent assets, net	$	92.1	$	72.7

g. Other Current Liabilities



	August 31, 2014		November 30, 2013
	(In millions)
Accrued compensation and employee benefits	$	102.4	$	97.4
Payable to UTC primarily for Transition Service Agreements	12.0		20.4
Interest payable	20.3		12.3
Contract loss provisions	15.0		10.5
Other	66.7		65.4
Other current liabilities	$	216.4	$	206.0

h. Other Noncurrent Liabilities



	August 31, 2014		November 30, 2013
	(In millions)
Conditional asset retirement obligations	$	23.9	$	22.9
Pension benefits, non-qualified	17.0		17.2
Deferred compensation	11.7		9.8
Deferred revenue	7.6		8.0
Other	19.1		15.9
Other noncurrent liabilities	$	79.3	$	73.8

i. Accumulated Other Comprehensive Loss, Net of Income Taxes

Changes in accumulated other comprehensive loss by components, net of $14.8 million of income taxes, related to the Company’s retirement benefit plans are as follows:



	Actuarial Losses, Net			Prior Service Credits, Net			Total
	(In millions)
November 30, 2013	$	(226.2	)	$	3.8		$	(222.4	)
Amortization of actuarial losses and prior service credits, net of income taxes	23.1			(0.4		)	22.7
August 31, 2014	$	(203.1	)	$	3.4		$	(199.7	)

j. Redeemable Common Stock

The Company inadvertently failed to register with the SEC the issuance of certain of its common shares in its defined contribution 401(k) employee benefit plan (the “Plan”). As a result, certain Plan participants who purchased such securities pursuant to the Plan may have the right to rescind certain of their purchases for consideration equal to the purchase price paid for the securities (or if such security has been sold, to receive consideration with respect to any loss incurred on such sale) plus interest from the date of purchase. As of August 31, 2014 and November 30, 2013, the Company has classified less than 0.1 million shares as redeemable common stock because the redemption features are not within the control of the Company. The Company may also be subject to civil and other penalties by regulatory authorities as a result of the failure to register these shares. These shares have always been treated as outstanding for financial reporting purposes. In June 2008, the Company filed a registration statement on Form S-8 to register future transactions in the GenCorp Stock Fund in the Plan. During the first nine months of fiscal 2014 and fiscal 2013, the Company recorded $0.2 million and ($0.3) million for realized losses/(gains) and interest associated with this matter, respectively.

k. Treasury Stock

During the first nine months of fiscal 2014, the Company repurchased 3.5 million of its common shares at a cost of $64.5 million . The Company reflects stock repurchases in its financial statements on a “settlement” basis.

Note 5. Acquisition

In July 2012, the Company signed the Original Purchase Agreement with UTC to acquire the Rocketdyne Business from UTC for $550.0 million . On June 10, 2013, the FTC announced that it closed its investigation into the Acquisition under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. On June 12, 2013, the Company entered into an Amended and Restated Purchase Agreement with UTC, which amended and restated the Original Purchase Agreement, as amended. On June 14, 2013 , the Company completed the Acquisition of substantially all of the Rocketdyne Business pursuant to the Amended and Restated Purchase Agreement.

The aggregate consideration to UTC was $411.0 million which represents the initial purchase price of $550.0 million reduced by $55.0 million relating to the pending future acquisition of UTC’s 50% ownership interest of RD Amross (a joint venture with NPO Energomash of Khimki, Russia which sells RD-180 engines to RD Amross), and the portion of the UTC business that markets and supports the sale of RD-180 engines. The final purchase price was further adjusted for changes in

advance payments on contracts and capital expenditures. The components of the purchase price to UTC are as follows (in millions):



Purchase Price	$	495.0
Advance payments on contracts adjustment	(55.7		)
Capital expenditures adjustment	(28.3		)
Cash payment to UTC	$	411.0

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):



Current assets	$	105.0
Property, plant and equipment, net	203.8
Other non-current assets	4.2
Total tangible assets acquired	313.0
Intangible assets acquired	128.3
Deferred income taxes	12.9
Total assets acquired	454.2
Liabilities assumed, current	(105.5		)
Liabilities assumed, non-current	(7.2		)
Total identifiable net assets acquired	341.5
Goodwill (Cash payment less total identifiable net assets acquired)	$	69.5

The purchase price allocation resulted in the recognition of $69.5 million in goodwill, all of which is deductible for tax purposes and included within the Company’s Aerospace and Defense segment. Goodwill recognized from the Acquisition primarily relates to the expected contributions of the Rocketdyne Business to the Company’s overall corporate strategy.

The Company has a $7.3 million and $12.0 million indemnification receivable from and payable to UTC, respectively, as of August 31, 2014 . Pursuant to the terms of the Amended and Restated Purchase Agreement, the Company is indemnified for certain matters.

The unaudited pro forma information for the periods set forth below gives effect to the Acquisition as if it had occurred at the beginning of fiscal 2013. These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of the Rocketdyne Business to reflect depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied as at the beginning of fiscal 2013, together with the tax effects, as applicable. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the Acquisition been consummated as of that time or that may result in the future. The pro forma information for the third quarter and first nine months of fiscal 2013 is presented below:



	Three months ended		Nine months ended
	August 31, 2013		August 31, 2013
	(In millions, except per share amounts)
Net sales:
As reported	$	367.5	$	897.8
Pro forma	$	367.5	$	1,277.4
Net income:
As reported	$	197.4	$	171.6
Pro forma	$	13.2	$	26.7
Basic income per share
As reported	$	3.25	$	2.83
Pro forma	$	0.22	$	0.44
Diluted income per share
As reported	$	2.39	$	2.13
Pro forma	$	0.18	$	0.39

Note 6. Income Taxes

The income tax provision for the first nine months of fiscal 2014 and 2013 was as follows:



	Nine months ended August 31,
	2014			2013
	(In millions)
Federal and state current income tax expense	$	5.4		$	9.6
Net deferred benefit	(5.5		)	(207.2		)
Impact of change in research credit estimates	1.2			(2.0		)
Income tax provision (benefit)	$	1.1		$	(199.6	)
Cash paid for income taxes	$	4.6		$	6.3

The effective tax rate for the first nine months of fiscal 2014 is (1.8)% and differs from the federal statutory rate of 35% primarily due to the significant non-deductible premium on the 4 1/16% Debentures repurchased during the first nine months of fiscal 2014, which the Company has treated for tax purposes as a non-recurring, discrete event due to the inability to accurately estimate an annualized total, as well as the impacts from state income taxes, changes in estimates related to the fiscal 2012 research and development credits, and certain expenditures which are permanently not deductible for tax purposes. The effective benefit tax rate for the first nine months of fiscal 2013 was 718.0% and differs from the federal statutory tax rate of 35% primarily as a result of releasing a valuation allowance of $188.6 million in the third quarter of fiscal 2013 for previously provided for deferred tax assets.

As of August 31, 2014 , the total liability for uncertain income tax positions, including accrued interest and penalties, was $8.0 million . Due to the high degree of uncertainty regarding the timing of potential future cash flows associated with the respective liabilities, the Company is unable to make a reasonably reliable estimate of the amount and period in which these liabilities might be paid. It is reasonably possible that a reduction of up to $0.3 million of unrecognized tax benefits and related interest may occur within the next 12 months as a result of the expiration of certain statute of limitations.

Note 7. Long-term Debt



	August 31, 2014			November 30, 2013
	(In millions)
Term loan, bearing interest at variable rates (rate of 2.74% as of August 31, 2014), payable in quarterly installments of $1.3 million plus interest, maturing in May 2019	$	100.0		$	45.0
Total senior debt	100.0			45.0
Senior secured notes, bearing interest at 7.125% per annum, interest payments due in March and September, maturing in March 2021	460.0			460.0
Total senior secured notes	460.0			460.0
Convertible subordinated debentures, bearing interest at 2.25% per annum, interest payments due in May and November, maturing in November 2024	0.2			0.2
Convertible subordinated debentures, bearing interest at 4.0625% per annum, interest payments due in June and December, maturing in December 2039	133.6			193.2
Total convertible subordinated notes	133.8			193.4
Delayed draw term loan, bearing interest at variable rates (rate of 9.50% as of August 31, 2014), maturing in April 2022	89.0			—
Capital lease, payable in monthly installments, maturing in March 2017	0.7			0.8
Total other debt	89.7			0.8
Total debt	783.5			699.2
Less: Amounts due within one year	(5.5		)	(2.9		)
Total long-term debt	$	778.0		$	696.3

Senior Credit Facility

On November 18, 2011, the Company entered into the senior credit facility (the “Senior Credit Facility”) with the lenders identified therein and Wells Fargo Bank, National Association, as administrative agent, which replaced the Company’s prior credit facility.

On May 30, 2012, the Company executed an amendment (the “First Amendment”) to the Senior Credit Facility with the lenders identified therein, and Wells Fargo Bank, National Association, as administrative agent. The First Amendment, among other things, (1) provided for an incremental facility of up to $50.0 million through additional borrowings under the term loan facility and/or increases under the revolving credit facility, (2) provided greater flexibility with respect to the Company’s ability to incur indebtedness to support permitted acquisitions, and (3) increased the aggregate limitation on sale leasebacks from $20.0 million to $30.0 million during the term of the Senior Credit Facility.

On August 16, 2012, the Company executed an amendment (the “Second Amendment”) to the Senior Credit Facility with the lenders identified therein, and Wells Fargo Bank, National Association, as administrative agent. The Second Amendment, among other things, (1) allowed for the incurrence of up to $510 million of second lien indebtedness in connection with the Acquisition, and (2) provided for a committed delayed draw term loan facility of $50 million under which the Company was entitled to draw in connection with the Acquisition or up through August 9, 2013. This delayed draw term loan facility expired undrawn in August 2013.

On January 14, 2013, the Company, executed an amendment (the “Third Amendment”) to the Senior Credit Facility with the lenders identified therein, and Wells Fargo Bank, National Association, as administrative agent. The Third Amendment, among other things, allowed for the 7 1/8% Notes to be secured by a first priority security interest in the escrow account into which the proceeds of the 7 1/8% Notes offering were deposited pending the consummation of the Acquisition.

In connection with the consummation of the Acquisition, GenCorp added Pratt & Whitney Rocketdyne, Inc. (“PWR”), Arde, Inc. (“Arde”) and Arde-Barinco, Inc. (“Arde-Barinco”) as subsidiary guarantors under its Senior Credit Facility pursuant to that certain Joinder Agreement, dated as of June 14, 2013, by and among PWR, Arde, Arde-Barinco, GenCorp and Wells Fargo Bank, National Association, as administrative agent. In connection with the consummation of the Acquisition, the name of PWR was changed to Aerojet Rocketdyne of DE, Inc. and the name of Aerojet-General Corporation, an existing subsidiary guarantor at the time of the Acquisition, was changed to Aerojet Rocketdyne, Inc.

On May 30, 2014, the Company, with its wholly-owned subsidiaries Aerojet Rocketdyne, Inc., Aerojet Rocketdyne of DE, Inc., Arde, and Arde-Barinco as guarantors, executed an amendment to the Senior Credit Facility with the lenders

identified therein, and Wells Fargo Bank, National Association, as administrative agent. This amendment to the Senior Credit Facility replaces the Company’s prior credit facility and, among other things, (i) extends the maturity date to May 30, 2019 (which date may be accelerated in certain cases); and (ii) replaces the existing revolving credit facility and credit-linked facility with (x) a revolving credit facility in an aggregate principal amount of up to $200.0 million (with a $100.0 million subfacility for standby letters of credit and a $5.0 million subfacility for swingline loans) and (y) a term loan facility in an aggregate principal amount of up to $100.0 million . The term loan facility will amortize at a rate of 5.0% of the original principal amount per annum to be paid in equal quarterly installments with any remaining amounts due on the maturity date. Outstanding indebtedness under the Senior Credit Facility may be voluntarily prepaid at any time, in whole or in part, in general without premium or penalty.

The Company and the Guarantors (collectively, the “Loan Parties”) guarantee the payment obligations of the Company under the Senior Credit Facility. Any borrowings are further secured by (i) certain equity interests owned or held by the Loan Parties and 65% of the voting stock (and 100% of the non-voting stock) of all present and future first-tier foreign subsidiaries of the Loan Parties; (ii) substantially all of the tangible and intangible personal property and assets of the Loan Parties; and (iii) certain real property owned by the Loan Parties located in Culpeper, Virginia, Redmond, Washington and Canoga Park, California. All of the Company’s other real property is excluded from collateralization under the Senior Credit Facility.

As of August 31, 2014 , the Company had $58.1 million outstanding letters of credit under the $100.0 million subfacility for standby letters of credit and had $100.0 million outstanding under the term loan facility.

In general, borrowings under the Senior Credit Facility bear interest at a rate equal to LIBOR plus 250 basis points (subject to downward adjustment), or the base rate as it is defined in the credit agreement governing the Senior Credit Facility. In addition, the Company is charged a commitment fee of 50 basis points per annum on unused amounts of the revolving credit facility (subject to downward adjustment) and 250 basis points per annum (subject to downward adjustment), along with a fronting fee of 25 basis points per annum, on the undrawn amount of all outstanding letters of credit.

The Company is subject to certain limitations including the ability to incur additional debt, make certain investments and acquisitions, and make certain restricted payments, including stock repurchases and dividends. The Senior Credit Facility includes events of default usual and customary for facilities of this nature, the occurrence of which could lead to an acceleration of the Company’s obligations thereunder. Additionally, the Senior Credit Facility includes certain financial covenants, including that the Company maintain (i) a maximum total leverage ratio, calculated net of cash up to a maximum of $150.0 million , of 4.50 to 1.00 through fiscal periods ending November 30, 2015, 4.25 to 1.00 through fiscal periods ending November 30, 2017, and 4.00 to 1.00 thereafter; and (ii) a minimum interest coverage ratio of 2.40 to 1.00.



Financial Covenant	Actual Ratios as of August 31, 2014	Required Ratios
Interest coverage ratio, as defined under the Senior Credit Facility	3.39 to 1.00	Not less than: 2.40 to 1.00
Leverage ratio, as defined under the Senior Credit Facility	3.75 to 1.00	Not greater than: 4.50 to 1.00

The Company was in compliance with its financial and non-financial covenants as of August 31, 2014 .

Delayed Draw Term Loan

On April 18, 2014, the Company entered into a subordinated delayed draw credit agreement (the “Subordinated Credit Facility”) with the lenders identified therein, and The Bank of New York Mellon, as administrative agent.

The Subordinated Credit Facility provides a term loan facility in an aggregate principal amount of up to $100.0 million . Outstanding indebtedness under the Subordinated Credit Facility may be voluntarily prepaid at any time, in whole or in part, in general without premium or penalty.

In general, borrowings under the Subordinated Credit Facility bear interest at a rate equal to the sum of (x) the greater of LIBOR and 1.00% per annum plus (y) 8.50% , or in the case of base rate loans, the base rate as it is defined in the credit agreement governing the Subordinated Credit Facility plus 7.50% .

The Company is subject to certain limitations under the Subordinated Credit Facility including the ability to incur additional debt, make certain investments and acquisitions, and make certain restricted payments, including stock repurchases

and dividends. The Subordinated Credit Facility does not have any financial maintenance covenants. The Subordinated Credit Facility includes events of default usual and customary for facilities of this nature, the occurrence of which could lead to an acceleration of the Company’s obligations thereunder.

As of August 31, 2014 , the Company had $89.0 million outstanding under the term loan facility. The proceeds from the term loan facility were used to repurchase a portion of the outstanding 4 1/16% Debentures (see below).

4.0625% Convertible Subordinated Debentures

During the first nine months of fiscal 2014, the Company repurchased $59.6 million principal amount of its 4 1/16% Debentures at various prices ranging from 195% of par to 212% of par. A summary of the Company’s 4 1/16% Debentures repurchased during the first nine months of fiscal 2014 is as follows (in millions):



Principal amount repurchased	$	59.6
Cash repurchase price	(119.9		)
Write-off of deferred financing costs	(0.3		)
Loss on 4 1 / 16 % Debentures repurchased	$	(60.6	)

As of August 31, 2014 , the Company had $133.6 million outstanding principal of its 4 1/16% Debentures, convertible into 14.8 million of shares of common stock.

As of August 31, 2014 , the Company classified the 4 1/16% Debentures as noncurrent liabilities. The Company had the unilateral option to pay the 4 1/16% Debentures holders in equity and has the intent and ability to settle the 4 1/16% Debentures in equity rather than the use of current assets or short term funding as of August 31, 2014 .

Note 8. Commitments and Contingencies

a. Legal Matters

The Company and its subsidiaries are subject to legal proceedings, including litigation in U.S. federal and state courts, which arise out of, and are incidental to, the ordinary course of the Company’s on-going and historical businesses. The Company is also subject from time to time to governmental investigations by federal and state agencies. The Company cannot predict the outcome of such proceedings with any degree of certainty. Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. These estimates are often initially developed substantially earlier than when the ultimate loss is known, and are refined each quarterly reporting period as additional information becomes available. For legal settlements where there is no stated amount for interest, the Company will estimate an interest factor and discount the liability accordingly.

Asbestos Litigation

The Company has been, and continues to be, named as a defendant in lawsuits alleging personal injury or death due to exposure to asbestos in building materials, products, or in manufacturing operations. The majority of cases are pending in Texas and Pennsylvania. There were 125 asbestos cases pending as of August 31, 2014 .

Given the lack of any significant consistency to claims (i.e., as to product, operational site, or other relevant assertions) filed against the Company, the Company is unable to make a reasonable estimate of the future costs of pending claims or unasserted claims. Accordingly, no estimate of future liability has been accrued.

In 2011, Aerojet Rocketdyne received a letter demand from AMEC, plc, (“AMEC”) the successor entity to the 1981 purchaser of the business assets of Barnard & Burk, Inc., a former Aerojet Rocketdyne subsidiary, for Aerojet Rocketdyne to assume the defense of sixteen asbestos cases, involving 271 plaintiffs, pending in Louisiana, and reimbursement of over $1.7 million in past legal fees and expenses. AMEC is asserting that Aerojet Rocketdyne retained those liabilities when it sold the Barnard & Burk assets and agreed to indemnify the purchaser therefor. Under the relevant purchase agreement, the purchaser assumed only certain, specified liabilities relating to the operation of Barnard & Burk before the sale, with Barnard & Burk retaining all unassumed pre-closing liabilities, and Aerojet Rocketdyne agreed to indemnify the purchaser against unassumed liabilities that are asserted against it. Based on the information provided, Aerojet Rocketdyne declined to accept the liability and requested additional information from AMEC pertaining to the basis of the demand. On April 3, 2013, AMEC filed a complaint for breach of contract against Aerojet Rocketdyne in Sacramento County Superior Court, AMEC Construction Management, Inc. v. Aerojet-General Corporation, Case No. 342013001424718 . Aerojet Rocketdyne filed its answer to the

complaint denying AMEC’s allegations and discovery is ongoing. As of August 31, 2014, AMEC contends it has incurred approximately $2.7 million in past legal fees and expenses. The court has scheduled a trial date for May 18, 2015 . No estimate of liability has been accrued for this matter as of August 31, 2014 .

b. Environmental Matters

The Company is involved in over forty environmental matters under the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation Recovery Act, and other federal, state, local, and foreign laws relating to soil and groundwater contamination, hazardous waste management activities, and other environmental matters at some of its current and former facilities. The Company is also involved in a number of remedial activities at third party sites, not owned by the Company, where it is designated a potentially responsible party (“PRP”) by either the U.S. Environmental Protection Agency (“EPA”) and/or a state agency. In many of these matters, the Company is involved with other PRPs. 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 and costs are generally made based on relative contributions of waste or contamination. Anticipated costs associated with environmental remediation that are probable and estimable are accrued. In cases where a date to complete remedial activities at a particular site cannot be determined by reference to agreements or otherwise, the Company projects costs over an appropriate time period not exceeding fifteen years ; in such cases, generally the Company does not have the ability to reasonably estimate environmental remediation costs that are beyond this period. Factors that could result in changes to the Company’s estimates include completion of current and future soil and groundwater investigations, new claims, future agency demands, discovery of more or less contamination than expected, discovery of new contaminants, modification of planned remedial actions, changes in estimated time required to remediate, new technologies, and changes in laws and regulations.

As of August 31, 2014 , the aggregate range of these anticipated environmental costs was $168.6 million to $276.1 million and the accrued amount was $168.6 million . See Note 8(c) for a summary of the environmental reserve activity. Of these accrued liabilities, approximately 96% relates to the Company’s U.S. government contracting business and a portion of this liability is recoverable. The significant environmental sites are discussed below. The balance of the accrued liabilities relates to other sites for which the Company’s obligations are probable and estimable.

Sacramento, California Site

In 1989, a federal district court in California approved a Partial Consent Decree (“PCD”) requiring Aerojet Rocketdyne, among other things, to conduct a Remedial Investigation and Feasibility Study (“RI/FS”) to determine the nature and extent of impacts due to the release of chemicals from the Sacramento, California site, monitor the American River and offsite public water supply wells, operate Groundwater Extraction and Treatment facilities that collect groundwater at the site perimeter, and pay certain government oversight costs. The primary chemicals of concern for both on-site and off-site groundwater are trichloroethylene, perchlorate, and n-nitrosodimethylamine. The PCD has been revised several times, most recently in 2002. The 2002 PCD revision (a) separated the Sacramento site into multiple operable units to allow quicker implementation of remedy for critical areas; (b) required the Company to guarantee up to $75 million (in addition to a prior $20 million guarantee) to assure that Aerojet Rocketdyne’s Sacramento remediation activities are fully funded; and (c) removed approximately 2,600 acres of non-contaminated land from the EPA superfund designation.

Aerojet Rocketdyne is involved in various stages of soil and groundwater investigation, remedy selection, design, and remedy construction associated with the operable units. In 2002, the EPA issued a Unilateral Administrative Order (“UAO”) requiring Aerojet Rocketdyne to implement the EPA-approved remedial action in the Western Groundwater Operable Unit. An identical order was issued by the California Regional Water Quality Control Board, Central Valley (“Central Valley RWQCB”). On July 7, 2011, the EPA issued Aerojet Rocketdyne its Approval of Remedial Action Construction Completion Report for Western Groundwater Operable Unit and its Determination of Remedy as Operational and Functional. On September 20, 2011, the EPA issued two UAOs to Aerojet Rocketdyne to complete a remedial design and implement remedial action for the Perimeter Groundwater Operable Unit. One UAO addresses groundwater and the other addresses soils within the Perimeter Groundwater Operable Unit. Issuance of the UAOs is the next step in the superfund process for the Perimeter Groundwater Operable Unit. Aerojet Rocketdyne submitted a final Remedial Investigation Report for the Boundary Operable Unit in 2010 and a revised Feasibility Study for the Boundary Operable Unit in 2012. A Record of Decision is anticipated to be issued by EPA by the end of 2014. A draft Remedial Investigation Report for the Island Operable Unit was submitted in January 2013 and Final Remedial Investigation Report is anticipated for fall 2014. The remaining operable units are under various stages of investigation.

The entire southern portion of the site known as Rio Del Oro was under state orders issued in the 1990s from the Department of Toxic Substances Control (“DTSC”) to investigate and remediate environmental contamination in the soils and the Central Valley RWQCB to investigate and remediate groundwater environmental contamination. On March 14, 2008, the DTSC released all but approximately 400 acres of the Rio Del Oro property from DTSC’s environmental orders regarding soil contamination. Aerojet Rocketdyne expects the approximately 400 acres of Rio Del Oro property that remain subject to the DTSC orders to be released once the soil remediation has been completed. The Rio Del Oro property remains subject to the Central Valley RWQCB’s orders to investigate and remediate groundwater environmental contamination emanating offsite from such property. Pursuant to a settlement agreement entered into in 2009, Aerojet Rocketdyne and Boeing have defined responsibilities with respect to future costs and environmental projects relating to this property.

As of August 31, 2014 , the estimated range of anticipated costs discussed above for the Sacramento, California site was $130.2 million to $211.7 million and the accrued amount was $130.2 million included as a component of the Company’s environmental reserves. Expenditures associated with this matter are partially recoverable. See Note 8(c) below for further discussion on recoverability.

Baldwin Park Operable Unit (“BPOU”)

As a result of its former Azusa, California operations, in 1994 Aerojet Rocketdyne was named a PRP by the EPA in the area of the San Gabriel Valley Basin superfund site known as the BPOU. Between 1995 and 1997, the EPA issued Special Notice Letters to Aerojet Rocketdyne and eighteen other companies requesting that they implement a groundwater remedy. On June 30, 2000, the EPA issued a UAO ordering the PRPs to implement a remedy consistent with the 1994 record of decision. Aerojet Rocketdyne, along with seven other PRPs (“the Cooperating Respondents”) signed a Project Agreement in late March 2002 with the San Gabriel Basin Water Quality Authority, the Main San Gabriel Basin Watermaster, and five water companies. The Project Agreement, which has a period term of fifteen years , became effective May 9, 2002 and will terminate in May 2017 . It is uncertain as to what remedial actions will be required beyond May 2017. However, the Project Agreement stipulates that the parties agree to negotiate in good faith in an effort to reach agreement as to the terms and conditions of an extension of the term in the event that a Final Record of Decision anticipates, or any of the parties desire, the continued operation of all or a substantial portion of the project facilities. Pursuant to the Project Agreement, the Cooperating Respondents fund through an escrow account the capital, operational, maintenance, and administrative costs of certain treatment and water distribution facilities to be owned and operated by the water companies. There are also provisions in the Project Agreement for maintaining financial assurance.

Aerojet Rocketdyne and the other Cooperating Respondents entered into an interim allocation agreement, which was renewed effective March 28, 2014 , that establishes the interim payment obligations, subject to final reallocation, of the Cooperating Respondents for the costs incurred pursuant to the Project Agreement. Under the interim allocation, Aerojet Rocketdyne is responsible for approximately 70% (increased from approximately 68% ) of all project costs. Since entering into the Project Agreement, two of the Cooperating Respondents, Huffy Corporation (“Huffy”) and Fairchild Corporation (“Fairchild”), have filed for bankruptcy and are no longer participating in the Project Agreement. The interim allocation has been adjusted to account for their shares. On September 30, 2014, another of the Cooperating Respondents, Reichhold, Inc., filed for bankruptcy under Chapter 11. At this time, Reichhold has not indicated whether it intends to discontinue funding its interim allocation of Project Costs. If Reichhold stops paying, Aerojet Rocketdyne and the remaining Cooperating Respondents will be required to make up the Reichhold share. Prior to filing for bankruptcy, Fairchild filed suit against the other Cooperating Respondents (the “Fairchild Litigation”), but the litigation is dormant under a bankruptcy court stay, and has been the subject of the mediation and tentative settlement discussed below.

On June 24, 2010, Aerojet Rocketdyne filed a complaint against Chubb Custom Insurance Company in Los Angeles County Superior Court, Aerojet-General Corporation v. Chubb Custom Insurance Company Case No. BC440284, seeking declaratory relief and damages regarding Chubb’s failure to pay certain project modification costs and failure to issue an endorsement to add other water sources that may require treatment as required under insurance policies issued to Aerojet Rocketdyne and the other Cooperating Respondents. Aerojet Rocketdyne agreed to dismiss the case without prejudice and a settlement was reached with Chubb, but required Fairchild’s agreement. Attempts to obtain Fairchild’s agreement included a motion before the Fairchild Bankruptcy Court by the Cooperating Respondents (including Aerojet Rocketdyne) seeking approval of the settlement with Chubb. That motion was denied without prejudice, and the Court directed the parties to mediation in an effort to resolve the claims between the Cooperating Respondents and Fairchild over responsibility for the remediation costs previously paid by Fairchild and the Cooperating Respondents (involved in the Fairchild Litigation) and approval by Fairchild of the Chubb settlement. On October 2, 2014, the parties reached an agreement in principle that would resolve disputes between Fairchild and the remaining Cooperating Respondents (including Aerojet Rocketdyne). The settlement, when final, will require Fairchild to consent to the Chubb settlement and receive payment of a portion of the Chubb settlement, will provide for the filing of a consolidated proof of claim on behalf of the Cooperating Respondents in the

Fairchild Liquidating Trust and would resolve the Fairchild Litigation. This agreement is subject to execution of final agreements, which, among other matters, will require approval of the bankruptcy court overseeing the Reichhold bankruptcy.

As part of Aerojet Rocketdyne’s sale of its Electronics and Information Systems (“EIS”) business to Northrop in October 2001, the EPA approved a Prospective Purchaser Agreement with Northrop to absolve it of pre-closing liability for contamination caused by the Azusa, California operations, which liability remains with Aerojet Rocketdyne. As part of that agreement, the Company agreed to provide a $25 million guarantee of Aerojet Rocketdyne’s obligations under the Project Agreement.

As of August 31, 2014 , the estimated range of anticipated costs through the term of the Project Agreement for the BPOU site, which expires in 2017 , was $23.8 million to $35.7 million and the accrued amount was $23.8 million included as a component of the Company’s environmental reserves. As the Company is unable to reasonably estimate the costs and expenses of this matter after the expiration of the Project Agreement, no reserve has been accrued for this matter for the period after such expiration. The Company cannot yet estimate the future cost due to the uncertainty of project definition, participation and approval by numerous third parties and the regulatory agencies, and the length of a project agreement. Expenditures associated with this matter are partially recoverable. See Note 8(c) below for further discussion on recoverability.

Toledo, Ohio Site

The Company previously manufactured products for the automotive industry at a Toledo, Ohio site, which was adjacent to the Ottawa River. This facility was divested in 1990 and the Company indemnified the buyer for claims and liabilities arising out of certain pre-divestiture environmental matters. In August 2007, the Company, along with numerous other companies, received from the United States Department of Interior Fish and Wildlife Service a notice of a Natural Resource Damage (“NRD”) Assessment Plan for the Ottawa River and Northern Maumee Bay. A group of PRPs, including the Company, was formed to respond to the NRD assessment and to pursue funding from the Great Lakes Legacy Act for primary restoration. The restoration project performed by the group consisted of river dredging and land-filling river sediments with a total project cost in the range of approximately $47 million to $49 million , one half of which was funded through the Great Lakes Legacy Act and the net project costs to the PRP group was estimated at $23.5 million to $24.5 million . The dredging of the river that began in December 2009 has been completed. In February 2011, the parties reached an agreement on allocation. Still unresolved at this time is the actual NRD Assessment itself. In August 2013, the PRPs voted to accept the State and Federal Trustees’ proposal resolving the NRD Assessment and other claims which increased the Company’s share by $0.1 million . A Consent Decree must be negotiated and approved before the settlement becomes final. As of August 31, 2014 , the estimated range of the Company’s share of anticipated costs for the NRD matter was $0.2 million to $0.5 million and the accrued amount was $0.2 million . None of the expenditures related to this matter are recoverable from the U.S. government.

Wabash, Indiana Site

The Company owned and operated a former rubber processing plant in Wabash, Indiana from 1937 to 2004. Pursuant to a request from the Indiana Department of Environmental Management (“IDEM”), the Company conducted an initial site investigation of the soil and groundwater at the site and a report was submitted to IDEM. By letter of June 11, 2014, IDEM directed the Company to conduct additional investigation of the site, including a vapor intrusion investigation in areas in and around the site where trichloroethene levels in groundwater were found to exceed screening levels for vapor intrusion. The Company intends to conduct further investigations of the site in accordance with the IDEM request. The Company sent demands to other former owners/operators of the site to participate in the site work, but no party has agreed to participate as of yet. As of August 31, 2014 , the estimated range of the Company's share of anticipated costs for the Wabash, Indiana site was $0.8 million to $1.2 million and the accrued amount was $0.8 million . None of the expenditures related to this matter are recoverable from the U.S. government.

c. Environmental Reserves and Estimated Recoveries

Environmental Reserves

The Company reviews on a quarterly basis estimated future remediation costs and has an established practice of estimating environmental remediation costs over a fifteen year period, except for those environmental remediation costs with a specific contractual term. Environmental liabilities at the BPOU site are estimated through the term of the Project Agreement, which expires in May 2017 . As the period for which estimated environmental remediation costs increases, the reliability of such estimates decreases. These estimates consider the investigative work and analysis of engineers, outside environmental consultants, and the advice of legal staff regarding the status and anticipated results of various administrative and legal proceedings. In most cases, only a range of reasonably possible costs can be estimated. In establishing the Company’s reserves, the most probable estimate is used when determinable; otherwise, the minimum amount is used when no single amount in the

range is more probable. Accordingly, such estimates can change as the Company periodically evaluates and revises these estimates as new information becomes available. The Company cannot predict whether new information gained as projects progress will affect the estimated liability accrued. The timing of payment for estimated future environmental costs is influenced by a number of factors such as the regulatory approval process, and the time required to design, construct, and implement the remedy.

A summary of the Company’s environmental reserve activity is shown below:



	Aerojet Rocketdyne- Sacramento			Aerojet Rocketdyne- BPOU			Other Aerojet Rocketdyne Sites			Total Aerojet Rocketdyne			Other			Total Environmental Reserve
	(In millions)
November 30, 2013	$	128.0		$	26.9		$	8.2		$	163.1		$	8.2		$	171.3
Additions	17.6			3.7			2.6			23.9			1.6			25.5
Expenditures	(15.4		)	(6.8		)	(2.8		)	(25.0		)	(3.2		)	(28.2		)
August 31, 2014	$	130.2		$	23.8		$	8.0		$	162.0		$	6.6		$	168.6

The effect of the final resolution of environmental matters and the Company’s obligations for environmental remediation and compliance cannot be accurately predicted due to the uncertainty concerning both the amount and timing of future expenditures and due to regulatory or technological changes. The Company continues its efforts to mitigate past and future costs through pursuit of claims for recoveries from insurance coverage and other PRPs and continued investigation of new and more cost effective remediation alternatives and associated technologies.

As part of the acquisition of the Atlantic Research Corporation (“ARC”) propulsion business in 2003, Aerojet Rocketdyne entered into an agreement with ARC pursuant to which Aerojet Rocketdyne is responsible for up to $20.0 million of costs (“Pre-Close Environmental Costs”) associated with environmental issues that arose prior to Aerojet Rocketdyne’s acquisition of the ARC propulsion business. ARC is responsible for any cleanup costs relating to the ARC acquired businesses in excess of $20.0 million . Pursuant to a separate agreement with the U.S. government which was entered into prior to the completion of the ARC acquisition, these costs are recovered through the establishment of prices for Aerojet Rocketdyne’s products and services sold to the U.S. government. A summary of the Pre-Close Environmental Costs is shown below (in millions):



Pre-Close Environmental Costs	$	20.0
Amount spent through August 31, 2014	(16.9		)
Amount included as a component of reserves for environmental remediation costs in the unaudited condensed consolidated balance sheet as of August 31, 2014	(3.1		)
Remaining Pre-Close Environmental Costs	$	—

Estimated Recoveries

On January 12, 1999, Aerojet Rocketdyne and the U.S. government implemented the October 1997 Agreement in Principle (“Global Settlement”) resolving certain prior environmental and facility disagreements, with retroactive effect to December 1, 1998. Under the Global Settlement, Aerojet Rocketdyne and the U.S. government resolved disagreements about an appropriate cost-sharing ratio with respect to the clean-up costs of the environmental contamination at the Sacramento and the former Azusa sites. The Global Settlement cost-sharing ratio does not have a defined term over which costs will be recovered. Additionally, in conjunction with the sale of the EIS business in 2001, Aerojet Rocketdyne entered into an agreement with Northrop (the “Northrop Agreement”) whereby Aerojet Rocketdyne is reimbursed by Northrop for a portion of environmental expenditures eligible for recovery under the Global Settlement, subject to annual and cumulative limitations. The current annual billing limitation to Northrop is $6.0 million .

Pursuant to the Global Settlement, prior to the third quarter of fiscal 2010, approximately 12% of environmental costs related to Aerojet Rocketdyne’s Sacramento site and its former Azusa site were charged to the consolidated statements of operations. Subsequent to the third quarter of fiscal 2010, because the Company’s estimated environmental costs reached the reimbursement ceiling under the Northrop Agreement, approximately 37% of such costs will not be reimbursable and were therefore directly charged to the consolidated statements of operations.

Allowable environmental costs are charged to the Company’s contracts as the costs are incurred. Aerojet Rocketdyne’s mix of contracts can affect the actual reimbursement made by the U.S. government. Because these costs are recovered through

forward-pricing arrangements, the ability of Aerojet Rocketdyne to continue recovering these costs from the U.S. government depends on Aerojet Rocketdyne’s sustained business volume under U.S. government contracts and programs.

Pursuant to the Northrop Agreement, environmental expenditures to be reimbursed are subject to annual limitations and the total reimbursements are limited to a ceiling of $189.7 million . A summary of the Northrop Agreement activity is shown below (in millions):



Total reimbursable costs under the Northrop Agreement	$	189.7
Amount reimbursed to the Company through August 31, 2014	(105.7		)
Potential future cost reimbursements available (1)	84.0
Long-term receivable from Northrop in excess of the annual limitation included in the unaudited condensed consolidated balance sheet as of August 31, 2014	(74.0		)
Amounts recoverable from Northrop in future periods included as a component of recoverable from the U.S. government and other third parties for environmental remediation costs in the unaudited condensed consolidated balance sheet as of August 31, 2014	(10.0		)
Potential future recoverable amounts available under the Northrop Agreement	$	—


(1)	Includes the short-term receivable from Northrop of $6.0 million as of August 31, 2014 .

The Company’s applicable cost estimates reached the cumulative limitation under the Northrop Agreement during the third quarter of fiscal 2010. The Company has expensed $28.6 million of environmental remediation provision adjustments above the cumulative limitation under the Northrop Agreement through August 31, 2014 . Accordingly, subsequent to the third quarter of fiscal 2010, the Company has incurred a higher percentage of expense related to additions to the Sacramento site and BPOU site environmental reserve until, and if, an arrangement is reached with the U.S. government. While the Company is currently seeking an arrangement with the U.S. government to recover environmental expenditures in excess of the reimbursement ceiling identified in the Northrop Agreement, there can be no assurances that such a recovery will be obtained, or if not obtained, that such unreimbursed environmental expenditures will not have a materially adverse effect on the Company’s operating results, financial condition, and/or cash flows.

Environmental reserves and estimated recoveries impact to unaudited condensed consolidated statements of operations

The expenses associated with adjustments to the environmental reserves are recorded as a component of other expense, net in the unaudited condensed consolidated statements of operations. Summarized financial information for the impact of environmental reserves and recoveries to the unaudited condensed consolidated statements of operations is set forth below:



	Estimated Recoverable Amounts Under U.S. Government Contracts		Expense to Unaudited Condensed Consolidated Statement of Operations		Total Environmental Reserve Adjustments
	(In millions)
Three months ended August 31, 2014	$	9.8	$	5.4	$	15.2
Three months ended August 31, 2013	3.7		1.9		5.6
Nine months ended August 31, 2014	17.5		8.0		25.5
Nine months ended August 31, 2013	5.3		5.4		10.7

Note 9. Arrangements with Off-Balance Sheet Risk

As of August 31, 2014 , arrangements with off-balance sheet risk consisted of:


•	$58.1 million in outstanding commercial letters of credit expiring through September 2015, the majority of which may be renewed, primarily to collateralize obligations for environmental remediation and insurance coverage.


•	$43.7 million in outstanding surety bonds to satisfy indemnification obligations for environmental remediation coverage.


•	Up to $120.0 million aggregate in guarantees by GenCorp of Aerojet Rocketdyne’s obligations to U.S. government agencies for environmental remediation activities.


•	$55.0 million related to the pending future acquisition of UTC’s 50% ownership interest of RD Amross.


•	Guarantees, jointly and severally, by the Company’s material domestic subsidiaries of their obligations under the Senior Credit Facility and 7 1/8% Notes.

In addition to the items discussed above, the Company has and will from time to time enter into certain types of contracts that require the Company to indemnify parties against potential third-party and other claims. These contracts primarily relate to: (i) divestiture agreements, under which the Company may provide customary indemnification to purchasers of its businesses or assets including, for example, claims arising from the operation of the businesses prior to disposition, and liability to investigate and remediate environmental contamination existing prior to disposition; (ii) certain real estate leases, under which the Company may be required to indemnify property owners for claims arising from the use of the applicable premises; and (iii) certain agreements with officers and directors, under which the Company may be required to indemnify such persons for liabilities arising out of their relationship with the Company. The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated.

Additionally, the Company issues purchase orders to suppliers for equipment, materials, and supplies in the normal course of business. These purchase commitments are generally for volumes consistent with anticipated requirements to fulfill purchase orders or contracts for product deliveries received, or expected to be received, from customers and would be subject to reimbursement if a cost-plus contract is terminated.

The Company provides product warranties in conjunction with certain product sales. The majority of the Company’s warranties are a one -year standard warranty for parts, workmanship, and compliance with specifications. On occasion, the Company has made commitments beyond the standard warranty obligation. While the Company has contracts with warranty provisions, there is not a history of any significant warranty claims experience. A reserve for warranty exposure is made on a product by product basis when it is both estimable and probable. These costs are included in the program’s estimate at completion and are expensed in accordance with the Company’s revenue recognition methodology as allowed under GAAP for that particular contract.

Note 10. Cost Reduction Plan

On January 30, 2014, the Company announced a cost reduction plan (the “Restructuring Plan”) which resulted in the reduction of the Company’s overall headcount by approximately 260 employees. In connection with the Restructuring Plan, the Company recorded a liability of $10.0 million in the first quarter of fiscal 2014, consisting of costs for severance, employee-related benefits and other associated expenses. The remaining liability as of August 31, 2014 is $0.6 million , which includes $0.4 million in payments to be made related to ongoing business volume and $0.2 million in payments to be made related to the acquisition of the Rocketdyne Business.

The costs of the Restructuring Plan related to ongoing business volume of $6.1 million were recovered as a component of overhead in the first nine months of fiscal 2014. These restructuring costs were a component of the Company’s fiscal 2014 U.S. government forward pricing rates, and therefore, were recovered through the pricing of the Company’s products and services to the U.S. government.

The costs of the Restructuring Plan related to the acquisition of the Rocketdyne Business, $3.0 million as of August 31, 2014 , have been capitalized and recorded in other noncurrent assets in the unaudited condensed consolidated balance sheet. Such costs are reimbursable costs and will be allocated to the Company’s U.S. government contracts based on the Company’s planned integration savings exceeding its restructuring costs by a factor of at least two to one. The Company believes that the anticipated restructuring savings will exceed restructuring costs by a factor of at least two to one; therefore, the costs were deferred as the Company believes that subsequent recovery of said costs through the pricing of the Company’s products and services to the U.S. government is probable. The Company reviews on a quarterly basis the probability of recovery of these costs.

Note 11. Retirement Benefits

Pension Benefits

As of the last measurement date at November 30, 2013, the Company’s total defined benefit pension plan assets, total projected benefit obligations, and unfunded pension obligation for the tax-qualified pension plans were approximately $1,258.4 million , $1,538.6 million , and $261.7 million , respectively. The discount rate to value the pension benefits as of November 30, 2013 was 4.54% .

The Company does not expect to make any significant cash contributions to its U.S. government contractor business segment, Aerojet Rocketdyne, tax-qualified defined benefit pension plan until fiscal 2015, which are recoverable through the

Company’s U.S. government contracts. Additionally, the Company does not expect to make any significant cash contributions to the GenCorp tax-qualified defined benefit pension plan until fiscal 2018 or later, which are not recoverable through the Company’s U.S. government contracts. The Company estimates that approximately 91% of its unfunded pension obligation as of November 30, 2013 is related to Aerojet Rocketdyne which will be recoverable through its U.S. government contracts.

On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (“MAP-21”) was signed into law by the U.S. government. MAP-21, in part, provides temporary relief for employers who sponsor defined benefit pension plans related to funding contributions under the Employee Retirement Income Security Act of 1974. Specifically, MAP-21 implemented a 25 -year average interest rate corridor around the 24 -month interest rate used for purposes of determining minimum funding obligations. This relief deferred minimum required pension funding. On August 8, 2014, the Highway and Transportation Funding Act was signed into law, which enacts the pension provision that delays the widening of the interest corridor under MAP-21. This law is expected to increase the interest rates for the plan year beginning December 1, 2013 and decrease the minimum funding requirement for Pension Protection Act ("PPA").

The PPA requires underfunded pension plans to improve their funding ratios based on the funded status of the plan as of specified measurement dates through contributions or application of prepayment credits. As of the last measurement date at November 30, 2013, the Company has accumulated $30.6 million in prepayment credits as a result of advanced funding.

The funded status of the pension plans may be adversely affected by the investment experience of the plans’ assets, by any changes in U.S. law and by changes in the statutory interest rates used by tax-qualified pension plans in the U.S. to calculate funding requirements. Accordingly, if the performance of the Company’s plans’ assets does not meet assumptions, if there are changes to the Internal Revenue Service regulations or other applicable law or if other actuarial assumptions are modified, future contributions to the underfunded pension plans could be higher than the Company expects.

Medical and Life Insurance Benefits

The Company provides medical and life insurance benefits to certain eligible retired employees, with varied coverage by employee group. Generally, employees hired after January 1, 1997 are not eligible for retiree medical and life insurance benefits. The medical benefit plan provides for cost sharing between the Company and its retirees in the form of retiree contributions, deductibles, and coinsurance. Medical and life insurance benefit obligations are unfunded. Medical and life insurance benefit cash payments for eligible retired Aerojet Rocketdyne and GenCorp employees are recoverable under the Company’s U.S. government contracts.

Components of retirement benefit expense (income) are:



	Pension Benefits						Postretirement Medical and Life Insurance Benefits
	Three months ended August 31,
	2014			2013			2014			2013
	(In millions)
Service cost	$	2.2		$	1.7		$	0.1		$	—
Interest cost on benefit obligation	16.8			15.3			0.6			0.6
Assumed return on plan assets	(23.3		)	(24.1		)	—			—
Amortization of prior service credits	—			—			(0.2		)	(0.2		)
Recognized net actuarial losses (gains)	13.5			23.7			(0.8		)	(0.5		)
Retirement benefit expense (income)	$	9.2		$	16.6		$	(0.3	)	$	(0.1	)



	Pension Benefits						Postretirement Medical and Life Insurance Benefits
	Nine months ended August 31,
	2014			2013			2014			2013
	(In millions)
Service cost	$	6.6		$	4.4		$	0.1		$	0.1
Interest cost on benefit obligation	50.3			45.7			1.9			1.8
Assumed return on plan assets	(69.7		)	(72.3		)	—			—
Amortization of prior service credits	—			—			(0.6		)	(0.6		)
Recognized net actuarial losses (gains)	40.4			71.0			(2.3		)	(1.6		)
Retirement benefit expense (income)	$	27.6		$	48.8		$	(0.9	)	$	(0.3	)

Note 12. Discontinued Operations

On August 31, 2004, the Company completed the sale of its GDX business. On November 30, 2005, the Company completed the sale of the Fine Chemicals business. Summarized financial information for discontinued operations is set forth below:



	Three months ended August 31,					Nine months ended August 31,
	2014		2013			2014			2013
	(In millions)
Net sales	$	—	$	—		$	—		$	—
Income (loss) before income taxes	0.1		(0.2		)	(1.3		)	(0.3		)
Income tax benefit	0.1		—			0.7			0.1
Net income (loss) from discontinued operations	0.2		(0.2		)	(0.6		)	(0.2		)

Note 13. Operating Segments and Related Disclosures

The Company’s operations are organized into two operating segments based on different products and customer bases: Aerospace and Defense and Real Estate.

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 unusual items relating to the segment operations. Segment performance excludes corporate income and expenses, legacy income or expenses, unusual items not related to the segment operations, interest expense, interest income, and income taxes.

Customers that represented more than 10% of net sales for the periods presented are as follows:



	Three months ended August 31,				Nine months ended August 31,
	2014		2013		2014		2013
Lockheed Martin	28	%	19	%	26	%	26	%
United Launch Alliance	27	%	20	%	26	%	14	%
Raytheon	15	%	27	%	17	%	36	%
NASA	11	%	12	%	12	%	*

________

* Less than 10%

Sales to the U.S. government and its agencies, including sales to the Company’s significant customers discussed above, were as follows (dollars in millions):



	U.S. Government Sales		Percentage of Net Sales
Three months ended August 31, 2014	$	395.8	94	%
Three months ended August 31, 2013	353.2		96	%
Nine months ended August 31, 2014	1,090.1		95	%
Nine months ended August 31, 2013	859.8		96	%

Selected financial information for each reportable segment is as follows:



	Three months ended August 31,						Nine months ended August 31,
	2014			2013			2014			2013
	(In millions)
Net Sales:
Aerospace and Defense	$	418.0		$	365.9		$	1,147.7		$	893.6
Real Estate	1.5			1.6			4.6			4.2
Total Net Sales	$	419.5		$	367.5		$	1,152.3		$	897.8
Segment Performance:
Aerospace and Defense	$	33.6		$	35.9		$	90.6		$	101.5
Environmental remediation provision adjustments	(4.7		)	(1.7		)	(6.6		)	(2.3		)
Retirement benefit plan expense	(6.1		)	(11.3		)	(18.3		)	(32.8		)
Unusual items	(0.1		)	(0.2		)	(0.2		)	(1.8		)
Aerospace and Defense Total	22.7			22.7			65.5			64.6
Real Estate	0.8			0.9			2.6			2.9
Total Segment Performance	$	23.5		$	23.6		$	68.1		$	67.5
Reconciliation of segment performance to loss from continuing operations before income taxes:
Segment performance	$	23.5		$	23.6		$	68.1		$	67.5
Interest expense	(14.0		)	(12.4		)	(39.0		)	(36.2		)
Interest income	—			—			—			0.2
Stock-based compensation expense	(1.5		)	(3.4		)	(4.5		)	(9.7		)
Corporate retirement benefit plan expense	(2.8		)	(5.2		)	(8.4		)	(15.7		)
Corporate and other	(5.8		)	(5.0		)	(15.5		)	(16.7		)
Unusual items	(9.8		)	(6.6		)	(60.8		)	(17.2		)
Loss from continuing operations before income taxes	$	(10.4	)	$	(9.0	)	$	(60.1	)	$	(27.8	)

Note 14. Unusual Items

Total unusual items expense, a component of other expense, net in the unaudited condensed consolidated statements of operations, for the third quarter and first nine months of fiscal 2014 and 2013 was as follows:



	Three months ended August 31,					Nine months ended August 31,
	2014		2013			2014		2013
	(In millions)
Unusual items
Legal related matters	$	0.1	$	(0.2	)	$	0.2	$	0.2
Loss on debt repurchased	9.8		—			60.6		—
Loss on bank amendment	—		—			0.2		—
Rocketdyne Business acquisition related costs(1)	—		7.0			—		18.8
	$	9.9	$	6.8		$	61.0	$	19.0

________


(1)	Includes a benefit of $3.6 million for the nine months ended August 31, 2013 related to the Company not being required to divest the Liquid Divert and Attitude Control Systems program .

First nine months of fiscal 2014 Activity :

A summary of the Company’s loss on the 4 1/16% Debentures repurchased during the first nine months of fiscal 2014 is as follows (in millions):



Principal amount repurchased	$	59.6
Cash repurchase price	(119.9		)
Write-off of deferred financing costs	(0.3		)
Loss on 4 1/16% Debentures repurchased	$	(60.6	)

During the first nine months of fiscal 2014, the Company recorded $0.2 million of losses related to an amendment to the Senior Credit Facility.

During the first nine months of fiscal 2014, the Company recorded $0.2 million for realized losses and interest associated with the failure to register with the SEC the issuance of certain of the Company’s common shares under the defined contribution 401(k) employee benefit plan.

First nine months of fiscal 2013 Activity:

During the first nine months of fiscal 2013, the Company recorded ($0.3) million for realized gains and interest associated with the failure to register with the SEC the issuance of certain of the Company’s common shares under the defined contribution 401(k) employee benefit plan. During the first quarter of fiscal 2013, the Company recorded a charge of $0.5 million related to a legal settlement.

The Company incurred expenses of $18.8 million , including internal labor costs of $1.7 million , related to the Rocketdyne Business acquisition in the first nine months of fiscal 2013.

Note 15. Condensed Consolidating Financial Information

The Company is providing unaudited condensed consolidating financial information for its domestic subsidiaries that have guaranteed the 7 1/8% Notes, and for those subsidiaries that have not guaranteed the 7 1/8% Notes. These 100% owned subsidiary guarantors have, jointly and severally, fully and unconditionally guaranteed the 7 1/8% Notes subject to release under the following circumstances: (i) to enable the disposition of such property or assets to a party that is not the Company or a subsidiary guarantor to the extent permitted by and consummated in compliance with the indenture governing the 7 1/8% Notes; (ii) in case of a subsidiary guarantor that is released from its subsidiary guarantee, the release of the property and assets of such subsidiary guarantor; (iii) as permitted or required by the intercreditor agreement; (iv) with the consent of the holder of at least a majority in principal amount of the outstanding 7 1/8% Notes; or (v) when permitted or required by the indenture governing the 7 1/8% Notes. Prior to the consummation of the Acquisition and escrow release date, the 7 1/8% Notes were secured by a first priority security interest in the escrow account and all deposits and investment property therein. Following the consummation of the Acquisition and escrow release date on June 14, 2013, the subsidiary guarantees are a senior secured obligation of each subsidiary guarantor and rank (i) effectively junior to all of existing and future first-priority senior secured debt, including borrowings under the Senior Credit Facility, to the extent of the value of the assets securing such debt; (ii) effectively senior to all of the Company’s existing and future unsecured senior debt; (iii) senior in right of payment to all of the Company’s existing and future subordinated debt; and (iv) structurally subordinated to all existing and future liabilities of non-guarantor subsidiaries.

The Company has not presented separate financial and narrative information for each of the subsidiary guarantors, because it believes that such financial and narrative information would not provide investors with any additional information that would be material in evaluating the sufficiency of the guarantees. Therefore, the following condensed consolidating financial information summarizes the financial position, results of operations, and cash flows for the Company’s guarantor and non-guarantor subsidiaries.

The Company revised its unaudited condensed consolidating balance sheet as of November 30, 2013 and statement of cash flows for the nine months ended August 31, 2013 to correct for the misclassification of intercompany transactions between the Parent and the Guarantor Subsidiaries columns. The adjustments had no impact on the consolidated amounts previously reported.

The revision on the unaudited condensed consolidating balance sheet as of November 30, 2013 resulted in the following: (i) a decrease of $38.0 million in intercompany receivable to the Parent column and a corresponding decrease of $38.0 million in intercompany payable to the Guarantor Subsidiaries column; and (ii) a decrease of $38.0 million in other current liabilities to the Parent column and a corresponding increase of $38.0 million in other current liabilities to the Guarantor Subsidiaries column.

In addition, the revision on the unaudited condensed consolidating statement of cash flows resulted in a decrease of $9.4 million to “net cash provided by operating activities” to the Parent column for the nine months ended August 31, 2013, with a corresponding increase to “net cash provided by financing activities.” The Company also revised the Guarantor Subsidiaries column in the unaudited condensed consolidating statement of cash flows to increase “net cash provided by operating activities” by $9.4 million for the nine months ended August 31, 2013, with a corresponding decrease to “net cash provided by financing activities.”

These revisions, which the Company determined are not material to any period presented, had no impact on any financial statements or footnotes, except for the Parent and Guarantor Subsidiaries columns of the unaudited condensed consolidating balance sheet as of November 30, 2013 and the statement of cash flows for the nine months ended August 31, 2013.

Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income

(Unaudited)



Three months ended August 31, 2014	Parent			Guarantor Subsidiaries		Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net sales	$	—		$	413.7	$	5.8		$	—		$	419.5
Cost of sales (exclusive of items shown separately below)	—			369.4		4.9			(0.1		)	374.2
Selling, general and administrative	3.4			5.9		0.4			—			9.7
Depreciation and amortization	—			15.4		0.3			—			15.7
Interest expense	13.5			0.5		—			—			14.0
Other, net	9.8			7.2		(0.8		)	0.1			16.3
(Loss) income from continuing operations before income taxes	(26.7		)	15.3		1.0			—			(10.4		)
Income tax (benefit) provision	(6.2		)	4.7		0.8			—			(0.7		)
(Loss) income from continuing operations	(20.5		)	10.6		0.2			—			(9.7		)
Income from discontinued operations	0.2			—		—			—			0.2
(Loss) income before equity income of subsidiaries	(20.3		)	10.6		0.2			—			(9.5		)
Equity income of subsidiaries	10.8			—		—			(10.8		)	—
Net (loss) income	$	(9.5	)	$	10.6	$	0.2		$	(10.8	)	$	(9.5	)
Comprehensive (loss) income	$	(2.0	)	$	15.8	$	0.2		$	(16.0	)	$	(2.0	)



Three months ended August 31, 2013	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net sales	$	—		$	361.4		$	6.1		$	—		$	367.5
Cost of sales (exclusive of items shown separately below)	—			322.3			4.6			(0.2		)	326.7
Selling, general and administrative	6.6			7.1			0.4			—			14.1
Depreciation and amortization	0.1			14.8			0.3			—			15.2
Interest expense	11.8			0.6			—			—			12.4
Other, net	4.2			2.9			0.8			0.2			8.1
(Loss) income from continuing operations before income taxes	(22.7		)	13.7			—			—			(9.0		)
Income tax benefit	(63.2		)	(136.9		)	(6.5		)	—			(206.6		)
Income from continuing operations	40.5			150.6			6.5			—			197.6
Loss from discontinued operations	(0.2		)	—			—			—			(0.2		)
Income before equity income of subsidiaries	40.3			150.6			6.5			—			197.4
Equity income of subsidiaries	157.1			—			—			(157.1		)	—
Net income	$	197.4		$	150.6		$	6.5		$	(157.1	)	$	197.4
Comprehensive income	$	220.4		$	166.8		$	6.5		$	(173.3	)	$	220.4



Nine months ended August 31, 2014	Parent			Guarantor Subsidiaries		Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net sales	$	—		$	1,133.1	$	19.2		$	—		$	1,152.3
Cost of sales (exclusive of items shown separately below)	—			1,009.8		17.8			(0.4		)	1,027.2
Selling, general and administrative	9.0			17.9		1.2			—			28.1
Depreciation and amortization	0.1			45.0		0.8			—			45.9
Interest expense	37.1			1.9		—			—			39.0
Other, net	59.3			14.4		(1.9		)	0.4			72.2
(Loss) income from continuing operations before income taxes	(105.5		)	44.1		1.3			—			(60.1		)
Income tax (benefit) provision	(16.0		)	16.2		0.9			—			1.1
(Loss) income from continuing operations	(89.5		)	27.9		0.4			—			(61.2		)
Loss from discontinued operations	(0.6		)	—		—			—			(0.6		)
(Loss) income before equity income of subsidiaries	(90.1		)	27.9		0.4			—			(61.8		)
Equity income of subsidiaries	28.3			—		—			(28.3		)	—
Net (loss) income	$	(61.8	)	$	27.9	$	0.4		$	(28.3	)	$	(61.8	)
Comprehensive (loss) income	$	(39.1	)	$	43.4	$	0.4		$	(43.8	)	$	(39.1	)



Nine months ended August 31, 2013	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net sales	$	—		$	878.8		$	19.0		$	—		$	897.8
Cost of sales (exclusive of items shown separately below)	—			784.5			14.6			(0.5		)	798.6
Selling, general and administrative	23.2			15.9			0.8			—			39.9
Depreciation and amortization	0.1			25.7			0.8			—			26.6
Interest expense	34.4			1.8			—			—			36.2
Other, net	26.9			(5.4		)	2.3			0.5			24.3
(Loss) income from continuing operations before income taxes	(84.6		)	56.3			0.5			—			(27.8		)
Income tax benefit	(75.3		)	(116.1		)	(8.2		)	—			(199.6		)
(Loss) income from continuing operations	(9.3		)	172.4			8.7			—			171.8
Loss from discontinued operations	(0.2		)	—			—			—			(0.2		)
(Loss) income before equity income of subsidiaries	(9.5		)	172.4			8.7			—			171.6
Equity income of subsidiaries	181.1			—			—			(181.1		)	—
Net income	$	171.6		$	172.4		$	8.7		$	(181.1	)	$	171.6
Comprehensive income	$	240.4		$	221.0		$	8.7		$	(229.7	)	$	240.4

Condensed Consolidating Balance Sheets

(Unaudited)



August 31, 2014	Parent			Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
	(In millions)
Cash and cash equivalents	$	154.9		$	—	$	0.2	$	(0.2	)	$	154.9
Accounts receivable	—			213.1		1.6		—			214.7
Inventories	—			126.4		5.9		—			132.3
Recoverable from the U.S. government, Northrop, and other third parties for environmental remediation costs	0.1			26.0		—		—			26.1
Other receivables, prepaid expenses and other	3.7			22.1		0.9		—			26.7
Income taxes	25.1			—		0.4		(12.1		)	13.4
Deferred income taxes	9.1			—		—		(5.1		)	4.0
Total current assets	192.9			387.6		9.0		(17.4		)	572.1
Property, plant and equipment, net	4.7			360.1		5.8		—			370.6
Recoverable from the U.S. government and other third parties for environmental remediation costs	0.7			82.9		—		—			83.6
Deferred income taxes	52.5			108.4		19.1		—			180.0
Goodwill	—			164.4		—		—			164.4
Intercompany receivable	10.6			—		30.4		(41.0		)	—
Investments in subsidiaries	577.8			—		—		(577.8		)	—
Other noncurrent assets and intangibles, net	29.3			300.1		49.6		—			379.0
Total assets	$	868.5		$	1,403.5	$	113.9	$	(636.2	)	$	1,749.7
Short-term borrowings and current portion of long-term debt	$	5.2		$	0.3	$	—	$	—		$	5.5
Accounts payable	1.8			112.6		1.2		(0.2		)	115.4
Reserves for environmental remediation costs	2.0			33.0		—		—			35.0
Income taxes	—			12.1		—		(12.1		)	—
Other current liabilities and advance payments on contracts	41.9			298.7		3.3		(5.1		)	338.8
Postretirement medical and life insurance benefits	5.5			1.7		—		—			7.2
Total current liabilities	56.4			458.4		4.5		(17.4		)	501.9
Long-term debt	777.6			0.4		—		—			778.0
Reserves for environmental remediation costs	4.5			129.1		—		—			133.6
Pension benefits	21.3			227.0		—		—			248.3
Intercompany payable	—			41.0		—		(41.0		)	—
Postretirement medical and life insurance benefits	37.8			19.3		—		—			57.1
Other noncurrent liabilities	19.4			47.7		12.2		—			79.3
Total liabilities	917.0			922.9		16.7		(58.4		)	1,798.2
Commitments and contingencies (Note 8)
Redeemable common stock	0.2			—		—		—			0.2
Total shareholders’ (deficit) equity	(48.7		)	480.6		97.2		(577.8		)	(48.7		)
Total liabilities, redeemable common stock, and shareholders’ (deficit) equity	$	868.5		$	1,403.5	$	113.9	$	(636.2	)	$	1,749.7



November 30, 2013	Parent		Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
	(In millions)
Cash and cash equivalents	$	192.7	$	4.9	$	—	$	—		$	197.6
Accounts receivable	—		211.4		2.7		—			214.1
Inventories	—		100.5		5.4		—			105.9
Recoverable from the U.S. government, Northrop, and other third parties for environmental remediation costs	0.4		26.0		—		—			26.4
Other receivables, prepaid expenses and other	2.6		18.8		1.0		—			22.4
Income taxes	30.1		—		—		(17.5		)	12.6
Deferred income taxes	10.9		4.9		1.2		—			17.0
Total current assets	236.7		366.5		10.3		(17.5		)	596.0
Property, plant and equipment, net	4.7		364.4		5.6		—			374.7
Recoverable from the U.S. government and other third parties for environmental remediation costs	0.4		88.3		—		—			88.7
Deferred income taxes	48.8		107.2		19.7		—			175.7
Goodwill	—		159.6		—		—			159.6
Intercompany receivable	33.5		—		32.2		(65.7		)	—
Investments in subsidiaries	534.5		—		—		(534.5		)	—
Other noncurrent assets and intangibles, net	27.7		289.0		43.9		—			360.6
Total assets	$	886.3	$	1,375.0	$	111.7	$	(617.7	)	$	1,755.3
Short-term borrowings and current portion of long-term debt	$	2.7	$	0.2	$	—	$	—		$	2.9
Accounts payable	2.2		119.1		1.2		—			122.5
Reserves for environmental remediation costs	3.8		32.8		—		—			36.6
Income taxes payable	—		16.9		0.6		(17.5		)	—
Postretirement medical and life insurance benefits	5.5		1.8		—		—			7.3
Other current liabilities and advance payments on contracts	41.7		265.9		2.8		—			310.4
Total current liabilities	55.9		436.7		4.6		(17.5		)	479.7
Long-term debt	695.7		0.6		—		—			696.3
Reserves for environmental remediation costs	4.3		130.4		—		—			134.7
Pension benefits	23.6		238.1		—		—			261.7
Intercompany payable	—		65.7		—		(65.7		)	—
Postretirement medical and life insurance benefits	39.8		19.5		—		—			59.3
Other noncurrent liabilities	17.2		45.1		11.5		—			73.8
Total liabilities	836.5		936.1		16.1		(83.2		)	1,705.5
Commitments and contingencies (Note 8)
Redeemable common stock	0.2		—		—		—			0.2
Total shareholders’ equity	49.6		438.9		95.6		(534.5		)	49.6
Total liabilities, redeemable common stock, and shareholders’ equity	$	886.3	$	1,375.0	$	111.7	$	(617.7	)	$	1,755.3

Condensed Consolidating Statements of Cash Flows

(Unaudited)



Nine months ended August 31, 2014	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net cash (used in) provided by operating activities	$	(15.9	)	$	51.2		$	(1.0	)	$	(0.2	)	$	34.1
Cash flows from investing activities:
Capital expenditures	(0.1		)	(31.2		)	(0.6		)	—			(31.9		)
Other investing activities	0.2			—			—			—			0.2
Net cash provided by (used in) investing activities	0.1			(31.2		)	(0.6		)	—			(31.7		)
Cash flows from financing activities:
Debt repayments / repurchases	(164.8		)	(0.2		)	—			—			(165.0		)
Proceeds from issuance of debt	189.0			—			—			—			189.0
Debt issuance costs	(4.2		)	—			—			—			(4.2		)
Net transfers from (to) parent	22.9			(24.7		)	1.8			—			—
Other financing activities	(64.9		)	—			—			—			(64.9		)
Net cash (used in) provided by financing activities	(22.0		)	(24.9		)	1.8			—			(45.1		)
Net (decrease) increase in cash and cash equivalents	(37.8		)	(4.9		)	0.2			(0.2		)	(42.7		)
Cash and cash equivalents at beginning of year	192.7			4.9			—			—			197.6
Cash and cash equivalents at end of period	$	154.9		$	—		$	0.2		$	(0.2	)	$	154.9



Nine months ended August 31, 2013	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net cash (used in) provided by operating activities	$	(7.3	)	$	25.7		$	(1.5	)	$	9.6		$	26.5
Cash flows from investing activities:
Purchase of Rocketdyne Business	—			(411.2		)	—			—			(411.2		)
Capital expenditures	—			(38.7		)	—			—			(38.7		)
Purchase of investments	—			(0.5		)	—			—			(0.5		)
Net cash used in investing activities	—			(450.4		)	—			—			(450.4		)
Cash flows from financing activities:
Debt repayments	(1.9		)	(0.1		)	—			—			(2.0		)
Proceeds from issuance of debt	460.0			—			—			—			460.0
Debt issuance costs	(14.7		)	—			—			—			(14.7		)
Net transfers (to) from parent	(426.3		)	424.8			1.5			—			—
Other financing activities	0.4			—			—			—			0.4
Net cash provided by financing activities	17.5			424.7			1.5			—			443.7
Net increase in cash and cash equivalents	10.2			—			—			9.6			19.8
Cash and cash equivalents at beginning of year	172.4			—			—			(10.3		)	162.1
Cash and cash equivalents at end of period	$	182.6		$	—		$	—		$	(0.7	)	$	181.9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless otherwise indicated or required by the context, as used in this Quarterly Report on Form 10-Q, the terms “the Company,” “we,” “our” and “us” refer to GenCorp Inc. and all of its subsidiaries that are consolidated in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In addition, our operating results for interim periods may not be indicative of the results of operations for a full year. This section contains a number of forward-looking statements, all of which are based on current expectations and are subject to risks and uncertainties including those described in this Quarterly Report under the heading “Forward-Looking Statements.” Actual results may differ materially. This section should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended November 30, 2013, and periodic reports subsequently filed with the Securities and Exchange Commission (“SEC”).

Overview

We are a manufacturer of aerospace and defense products and systems with a real estate segment that includes activities related to the re-zoning, entitlement, sale, and leasing of our excess real estate assets. We develop and manufacture propulsion systems for defense and space applications, and armaments for precision tactical and long range weapon systems applications. Our continuing operations are organized into two segments:

Aerospace and Defense — includes the operations of our wholly-owned subsidiary Aerojet Rocketdyne, Inc. (“Aerojet Rocketdyne”), a leading technology-based designer, developer and manufacturer of aerospace and defense products and systems for the United States (“U.S.”) government, including the Department of Defense (“DoD”), the National Aeronautics and Space Administration (“NASA”), major aerospace and defense prime contractors as well as portions of the commercial sector. Aerojet Rocketdyne is a world-recognized engineering and manufacturing company that specializes in the development and production of propulsion systems for defense and space applications, armament systems for precision tactical systems and munitions, and is considered a domestic market leader in launch propulsion, in-space propulsion, missile defense propulsion, tactical missile propulsion and hypersonic propulsion systems.

Real Estate — includes the activities of our wholly-owned subsidiary Easton Development Company, LLC related to the re-zoning, entitlement, sale, and leasing of our excess real estate assets. We own approximately 11,900 acres of land adjacent to U.S. Highway 50 between Rancho Cordova and Folsom, California east of Sacramento (“Sacramento Land”). We are currently in the process of seeking zoning changes and other governmental approvals on a portion of the Sacramento Land to optimize its value. In addition, we are currently in the process of performing several upgrade activities to the Sacramento Land to reduce the time a developer would have to hold the Sacramento Land before development could start.

A summary of the significant financial highlights for the third quarter of fiscal 2014 which management uses to evaluate our operating performance and financial condition is presented below.


•	Net sales for the third quarter of fiscal 2014 totaled $419.5 million compared to $367.5 million for the third quarter of fiscal 2013.

•

Net loss for the third quarter of fiscal 2014 was $(9.5) million , or $(0.17) loss per share, compared to a net income of $197.4 million , or $2.39 diluted income per share, for the third quarter of fiscal 2013. The net loss for the third quarter of fiscal 2014 included a pre-tax contract loss of $17.5 million on the Antares AJ-26 program and a pre-tax charge of $9.8 million related to the repurchase of $9.4 million of principal of our 4.0625% Convertible Subordinated Debentures ("4 1/16% Debentures"). The net income for the third quarter of fiscal 2013 included a $206.6 million income tax benefit primarily associated with the release of deferred tax asset valuation allowance reserves.


•	Adjusted EBITDAP (Non-GAAP measure) for the third quarter of fiscal 2014 was $38.1 million , or 9.1% of net sales, compared to $41.9 million , or 11.4% of net sales, for the third quarter of fiscal 2013.


•	Segment performance (Non-GAAP measure) before environmental remediation provision adjustments, retirement benefit plan expense, and unusual items was $34.4 million for the third quarter of fiscal 2014, compared to $36.8 million for the third quarter of fiscal 2013.


•	Cash provided by operating activities in the third quarter of fiscal 2014 totaled $56.4 million , compared to $7.6 million in the third quarter of fiscal 2013.


•	Free cash flow (Non-GAAP measure) in the third quarter of fiscal 2014 totaled $43.0 million , compared to $(9.4) million in the third quarter of fiscal 2013.


•	As of August 31, 2014 , we had $2.1 billion of funded backlog compared to $1.7 billion as of November 30, 2013 .


•	As of August 31, 2014 , we had $628.6 million in net debt (Non-GAAP measure) compared to $501.6 million as of November 30, 2013 .

Our fiscal year ends on November 30 of each year. The fiscal year of our subsidiary, Aerojet Rocketdyne, ends on the last Saturday of November. As a result of the 2013 calendar, Aerojet Rocketdyne had 14 weeks of operations in the first quarter of fiscal 2013 compared to 13 weeks of operations in the first quarter of fiscal 2014. The additional week of operations in the first quarter of fiscal 2013 accounted for $27.8 million in additional net sales.

In July 2012, we signed a stock and asset purchase agreement (the “Original Purchase Agreement”) with United Technologies Corporation (“UTC”) to acquire the Pratt & Whitney Rocketdyne division (the “Rocketdyne Business”) from UTC for $550 million (the “Acquisition”). On June 10, 2013, the Federal Trade Commission (“FTC”) announced that it closed its investigation into the Acquisition under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. On June 12, 2013, we entered into an amended and restated stock and asset purchase agreement, (the “Amended and Restated Purchase Agreement”) with UTC, which amended and restated the Original Purchase Agreement, as amended. On June 14, 2013, we completed the acquisition of substantially all of the Rocketdyne Business pursuant to the Amended and Restated Purchase Agreement. The aggregate consideration to UTC was $411 million which represents the initial purchase price of $550 million reduced by $55 million relating to the pending future acquisition of UTC’s 50% ownership interest of RD Amross, LLC (“RD Amross” a joint venture with NPO Energomash of Khimki, Russia which sells RD-180 engines to RD Amross), and the portion of the UTC business that markets and supports the sale of RD-180 engines (the “RDA Acquisition”). The acquisition of UTC’s 50% ownership interest of RD Amross and UTC’s related business is contingent upon certain conditions including receipt of certain Russian governmental regulatory approvals, which may not be obtained. Pursuant to the terms of the Amended and Restated Purchase Agreement, either party to such agreement may terminate the obligations to consummate the RDA Acquisition on or after June 12, 2014; provided, however, that such termination date may be extended for up to four additional three-month periods (with the final termination date extended until June 12, 2015). On September 2, 2014, we elected the second option to extend the terms of the Amended and Restated Purchase Agreement for three months. Subject to the terms of Amended and Restated Purchase Agreement, in order to extend the termination date, either party may request the extension by providing written notice to the other party at least five business days prior to the termination date, provided that the requesting party must have a reasonable belief at the time such notice is given that a certain authorization from the Russian government will be forthcoming for completion of the RDA Acquisition. The final purchase price was further adjusted for advance payments on contracts and capital expenditures.

The Rocketdyne Business integration costs incurred and capitalized through August 31, 2014 , all of which we believe will be allocated to our U.S. government contracts, totaled $30.2 million . Such costs are reimbursable costs and will be allocated to our U.S. government contracts based on our planned integration savings exceeding the restructuring costs by a factor of at least two to one. We believe that the anticipated restructuring savings will exceed restructuring costs by a factor of at least two to one; therefore, the costs were deferred as we believe that subsequent recovery of said costs through the pricing of our products and services to the U.S. government is probable. We review on a quarterly basis the probability of recovery of these costs.

The unaudited pro forma information for the periods set forth below gives effect to the Acquisition as if it had occurred at the beginning of fiscal 2013. These amounts have been calculated after applying our accounting policies and adjusting the results of the Rocketdyne Business to reflect depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied as at the beginning of fiscal 2013, together with the tax effects, as applicable. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the Acquisition been consummated as of that time or that may result in the future. The pro forma information for the third quarter and first nine months of fiscal 2013 is presented below:



	Three months ended		Nine months ended
	August 31, 2013		August 31, 2013
	(In millions, except per share amounts)
Net sales:
As reported	$	367.5	$	897.8
Pro forma	$	367.5	$	1,277.4
Net income:
As reported	$	197.4	$	171.6
Pro forma	$	13.2	$	26.7
Basic income per share
As reported	$	3.25	$	2.83
Pro forma	$	0.22	$	0.44
Diluted income per share
As reported	$	2.39	$	2.13
Pro forma	$	0.18	$	0.39

We provide Non-GAAP measures as a supplement to financial results based on GAAP. A reconciliation of the Non-GAAP measures to the most directly comparable GAAP measures is presented later in the Management’s Discussion and Analysis under the heading “Operating Segment Information” and “Use of Non-GAAP Financial Measures.”

We are operating in an environment that is characterized by both increasing complexity in the global security environment, as well as continuing worldwide economic pressures. A significant component of our strategy in this environment is to focus on delivering excellent performance to our customers, driving improvements and efficiencies across our operations, and creating value through the enhancement and expansion of our business.

Some of the significant challenges we face are as follows: dependence upon U.S. government programs and contracts, future reductions or changes in U.S. government spending in our industry, integration of the Rocketdyne Business (including integration into our enterprise resource planning (“ERP”) system), environmental matters, capital structure and an underfunded pension plan. Some of these matters are discussed in more detail below.

Major Customers

The principal end user customers of our products and technology are agencies of the U.S. government. Since a majority of our sales are, directly or indirectly, to the U.S. government, funding for the purchase of our products and services generally follows trends in U.S. aerospace and defense spending. However, individual U.S. government agencies, which include the military services, NASA, the Missile Defense Agency, and the prime contractors that serve these agencies, exercise independent purchasing power within “budget top-line” limits. Therefore, sales to the U.S. government are not regarded as sales to one customer, but rather each contracting agency is viewed as a separate customer.

Customers that represented more than 10% of net sales for the periods presented are as follows:



	Three months ended August 31,				Nine months ended August 31,
	2014		2013		2014		2013
Lockheed Martin	28	%	19	%	26	%	26	%
United Launch Alliance	27	%	20	%	26	%	14	%
Raytheon	15	%	27	%	17	%	36	%
NASA	11	%	12	%	12	%	*

_______

* Less than 10%

Sales to the U.S. government and its agencies, including sales to our significant customers discussed above, were as follows (dollars in millions):



	U.S. Government Sales		Percentage of Net Sales
Three months ended August 31, 2014	$	395.8	94	%
Three months ended August 31, 2013	353.2		96	%
Nine months ended August 31, 2014	1,090.1		95	%
Nine months ended August 31, 2013	859.8		96	%

The Standard Missile program, which is included in the U.S. government sales, represented 11% and 17% of net sales for the third quarter of fiscal 2014 and 2013, respectively. The Standard Missile program represented 12% and 26% of net sales for the first nine months of fiscal 2014 and 2013, respectively.

Industry Update

Our primary aerospace and defense customers include the DoD and its agencies, NASA, and the prime contractors that supply products to these customers. We are seeing more opportunities for commercial launch and in-space business. In addition, sales to our aerospace and defense customers that provide products to international customers continue to grow. However, we rely on particular levels of U.S. government spending on propulsion systems for defense, space and armament systems for precision tactical weapon systems and munitions applications, and our backlog depends, in large part, on continued funding by the U.S. government for the programs in which we are involved. These funding levels are not generally correlated with any specific economic cycle, but rather follow the cycle of general public policy and political support for this type of funding. Moreover, although our contracts often contemplate that our services will be performed over a period of several years, the U.S. President must propose and Congress must appropriate funds for a given program each government fiscal year (“GFY”) and may significantly increase, decrease or eliminate, funding for a program. A decrease in DoD and/or NASA expenditures, the elimination or curtailment of a material program in which we are or hope to be involved, or changes in payment patterns of our customers as a result of changes in U.S. government outlays, could have a material adverse effect on our operating results, financial condition, and/or cash flows.

The Bipartisan Budget Act of 2013 set overall discretionary spending levels for GFY 2014 and 2015 and eased sequestration spending cuts to the DoD and other federal agencies (e.g., NASA) for GFY 2014 and 2015, paving the way for an eventual agreement on GFY 2014 Appropriations for all federal agencies. Despite early action in the House of Representatives to pass GFY15 Defense and NASA Appropriations bills, the Senate has not yet been able to pass any appropriations bills. Congress recently passed a continuing resolution to fund the U.S. government at GFY14 levels through December 11, 2014. It is not yet clear what impact global unrest, particularly in the Ukraine and Middle East, will have on overall defense spending or specific Aerojet Rocketdyne programs.

Despite overall U.S. government budget pressures, we believe we are well-positioned to benefit from funding in DoD and NASA priority areas. This view reflects the DoD’s strategic guidance report released in January 2012, and the recently released 2014 Quadrennial Defense Review (“QDR”) which affirms support for many of our core programs and points toward continued DoD investment in: access to space — in order to ensure access to this highly congested and contested “global commons”; missile defense — in order to protect the homeland, counter weapons of mass destruction and enhance space-based capabilities; and power projection by tactical missile systems. The QDR explicitly states Missile Defense, Space, Nuclear Deterrence, and Precision Strike as key capabilities for the DoD to preserve.

During 2013, Congress began consideration of a new NASA Authorization Act, addressing NASA funding for the next several years, starting with GFY 2014. Ultimately, Congress did not complete action on a new NASA Authorization Act in 2013 and resumed consideration in 2014; however, thus far, only the House of Representative has passed a NASA Authorization bill. In 2010, the NASA Authorization Act, which remains in effect, impacted GFYs 2011-2013. NASA has again identified the Space Launch System (“SLS”) program as one of its top priorities in the NASA portion of the GFY 2015 President’s Budget Request. The SLS program also enjoys wide bipartisan support in both chambers of Congress. We maintain a strong relationship with NASA and our propulsion systems have been powering NASA launch vehicles and spacecraft since the inception of the U.S. space program. Our booster and upper stage propulsion systems are currently baselined on the new SLS vehicle and both upper stage and booster engines are in development for future SLS variants. Due to the retirement of the space shuttle fleet, U.S. astronauts are now dependent on Russian Soyuz flights for access to and from the International Space Station (“ISS”) for the better part of this decade. NASA has indicated that it is working to re-establish U.S. manned space capability as soon as possible through development of the commercial cargo and crew ISS resupply capability and the heavy lift SLS designed for manned deep space exploration. In both instances, we have significant propulsion content.

Environmental Matters

Our current and former business operations are subject to, and affected by, federal, state, local, and foreign environmental laws and regulations relating to the discharge, treatment, storage, disposal, investigation, and remediation of certain materials, substances, and wastes. Our policy is to conduct our business with due regard for the preservation and protection of the environment. We continually assess compliance with these regulations and we believe our current operations are materially in compliance with all applicable environmental laws and regulations.

We review on a quarterly basis estimated future remediation costs that could be incurred over the contractual term or the next fifteen years of the expected remediation. These liabilities have not been discounted to their present value as the timing of cash payments is not fixed or reliably determinable. We have an established practice of estimating environmental remediation costs over a fifteen year period, except for those environmental remediation costs with a specific contractual term. With respect to the Baldwin Park Operable Unit (“BPOU”) site, our estimates of anticipated environmental remediation costs only extend through the term of the project agreement for such site, which expires in 2017, since we are unable to reasonably estimate the related costs after the expiration of such agreement. Therefore no reserve has been accrued for this site for the period after the expiration of the project agreement and we will reevaluate the environmental reserves related to the BPOU site once the terms of a new agreement related to the site are available and we are able to reasonably estimate the related environmental remediation costs. At that time, the amount of reserves accrued following such reevaluation may be significant. As the period for which estimated environmental remediation costs increase, the reliability of such estimates decrease. These estimates consider the investigative work and analysis of engineers, outside environmental consultants, and the advice of legal staff regarding the status and anticipated results of various administrative and legal proceedings. In most cases, only a range of reasonably possible costs can be estimated. In establishing our reserves, the most probable estimate is used when determinable; otherwise, the minimum amount is used when no single amount in the range is more probable. Accordingly, such estimates can change as we periodically evaluate and revise such estimates as new information becomes available. We cannot predict whether new information gained as projects progress will affect the estimated liability accrued. The timing of payment for estimated future environmental costs is influenced by a number of factors such as the regulatory approval process and the time required to design, construct, and implement the remedy.

A summary of our recoverable amounts, environmental reserves, and range of liability, as of August 31, 2014 is presented below:



	Recoverable Amount(1)		Reserve		Estimated Range of Liability
	(In millions)
Sacramento	$	85.6	$	130.2	$130.2 – $211.7
BPOU	15.6		23.8		23.8 – 35.7
Other Aerojet Rocketdyne sites	7.6		8.0		8.0 – 19.9
Other sites	0.9		6.6		6.6 – 8.8
Total	$	109.7	$	168.6	$168.6 – $276.1


(1)	Excludes the long-term receivable from Northrop Grumman Corporation (“Northrop”) of $ 74.0 million as of August 31, 2014 related to environmental costs already paid (and therefore not reserved) by the Company in prior years that are expected to be reimbursed by Northrop.

Most of our environmental costs are incurred by our Aerospace and Defense segment, and certain of these future costs are allowable to be included in our contracts with the U.S. government and allocable to Northrop until the cumulative expenditure limitation is reached (discussed below).

On January 12, 1999, Aerojet Rocketdyne and the U.S. government implemented the October 1997 Agreement in Principle (“Global Settlement”) resolving certain prior environmental and facility disagreements, with retroactive effect to December 1, 1998. Under the Global Settlement, Aerojet Rocketdyne and the U.S. government resolved disagreements about an appropriate cost-sharing ratio with respect to the cleanup costs of the environmental contamination at the Sacramento and Azusa sites. The Global Settlement cost-sharing ratio does not have a defined term over which costs will be recovered. Additionally, in conjunction with the sale of the EIS business in 2001, Aerojet Rocketdyne entered into an agreement with Northrop (the “Northrop Agreement”) whereby Aerojet Rocketdyne is reimbursed by Northrop for a portion of environmental expenditures eligible for recovery under the Global Settlement, subject to annual and cumulative limitations.

operations. Subsequent to the third quarter of fiscal 2010, because our estimated environmental costs have reached the reimbursement ceiling under the Northrop Agreement, approximately 37% of such costs will not be reimbursable and were therefore directly charged to the consolidated statements of operations. However, we are seeking to amend our agreement with the U.S. government to increase the amount allocable to U.S. government contracts. There can be no assurances as to when or if we will be successful in this pursuit.

Allowable environmental costs are charged to our contracts as the costs are incurred. Aerojet Rocketdyne’s mix of contracts can affect the actual reimbursement made by the U.S. government. Because these costs are recovered through forward-pricing arrangements, the ability of Aerojet Rocketdyne to continue recovering these costs from the U.S. government depends on Aerojet Rocketdyne’s sustained business volume under U.S. government contracts and programs. Additionally, we are reviewing the percentage of Global Settlement environmental costs allocable to our Aerojet Rocketdyne business and Northrop. Any change in the percentage allocable will require approval from the U.S. government and if received, this change may materially and favorably affect our results of operations and cash flows in the period received along with future periods.

The inclusion of such environmental costs in our contracts with the U.S. government impacts our competitive pricing and earnings; however, we believe that this impact is mitigated by driving improvements and efficiencies across our operations as well as our ability to deliver innovative and quality products to our customers.

Capital Structure

We have a substantial amount of debt for which we are required to make interest and principal payments. Interest on long-term financing is not a recoverable cost under our U.S. government contracts. As of August 31, 2014 , we had $ 783.5 million of debt principal outstanding. The fair value of the debt outstanding at August 31, 2014 was $961.0 million .

Retirement Benefits

We do not expect to make any significant cash contributions to our U.S. government contractor business segment, Aerojet Rocketdyne, tax-qualified defined benefit pension plan until fiscal 2015, which will be recoverable through our U.S government contracts. Additionally, we do not expect to make any significant cash contributions to the GenCorp tax-qualified defined benefit pension plan until fiscal 2018 or later, which will not be recoverable through our U.S. government contracts.

We estimate that approximately 91% of our unfunded pension obligation as of November 30, 2013 is related to Aerojet Rocketdyne which will be recoverable through our U.S. government contracts.

On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (“MAP-21”) was signed into law by the U.S. government. MAP-21, in part, provides temporary relief for employers who sponsor defined benefit pension plans related to funding contributions under ERISA. Specifically, MAP-21 implemented a 25-year average interest rate corridor around the 24-month interest rate used for purposes of determining minimum funding obligations. This relief deferred minimum required pension funding. On August 8, 2014, the Highway and Transportation Funding Act was signed into law, which enacts the pension provision that delays the widening of the interest corridor under MAP-21. This law is expected to increase the interest rates for plan year 2013 and decrease the minimum funding requirement under the Pension Protection Act ("PPA").

The funded status of our pension plans may be adversely affected by the investment experience of the plans’ assets, by any changes in U.S. law and by changes in the statutory interest rates used by tax-qualified pension plans in the U.S. to calculate funding requirements. Accordingly, if the performance of our plans’ assets does not meet our assumptions, if there are changes to the Internal Revenue Service regulations or other applicable law or if other actuarial assumptions are modified, our future contributions to our underfunded pension plans could be higher than we expect.

Additionally, the level of returns on retirement benefit plan assets, changes in interest rates, changes in legislation, and other factors affects our financial results. The timing of recognition of pension expense or income in our financial statements differs from the timing of the required pension funding under PPA or the amount of funding that can be recorded in our overhead rates through our U.S. government contracting business. Our earnings are positively or negatively impacted by the amount of expense or income we record for our employee retirement benefit plans.

Rocketdyne Business ERP Integration

The integration of the Rocketdyne Business into our ERP system is scheduled to be complete by the first half of 2015. Any extension beyond January 1, 2015 will result in additional implementation costs and fees paid to UTC for additional transitional services costs.

Results of Operations

Net Sales:



	Three months ended August 31,						Nine months ended August 31,
	2014		2013		Change*		2014		2013		Change**
	(In millions)
Net sales	$	419.5	$	367.5	$	52.0	$	1,152.3	$	897.8	$	254.5

* Primary reason for change. The increase in net sales was primarily due to increased deliveries on the Terminal High Altitude Area Defense (“THAAD”), Atlas V, and RL-10 programs generating $ 75.8 million in additional net sales. The increase in net sales was partially offset by (i) a decrease of $ 15.8 million in the various Standard Missile contracts primarily from the transitioning of the Standard Missile-3 Block IB contract from development activities to low-rate initial production, decreased development activities for the Throttling Divert and Attitude Control System for the Standard Missile-3 Block IIA contract, and the cessation of deliveries on the Standard Missile-1 Regrain contract earlier in the year as a result of contract completion and (ii) a decrease of $ 12.1 million from lower deliveries and changes in the estimated measurement of progress toward completion on the Antares program. See net sales information below:



	Three months ended August 31,
	2014			2013		Change
	(In millions)
THAAD	$	50.0		$	5.5	$	44.5
Standard Missile	47.1			62.9		(15.8		)
Atlas V	37.7			17.2		20.5
RL-10	37.1			26.3		10.8
Antares	(2.4		)	9.7		(12.1		)
All other Aerospace and Defense programs	248.5			244.3		4.2
Real estate	1.5			1.6		(0.1		)
	$	419.5		$	367.5	$	52.0

** Primary reason for change. The increase in net sales was primarily due to sales from the Rocketdyne Business which was acquired on June 14, 2013. Beginning in the third quarter of fiscal 2013, net sales included the Rocketdyne Business. The increase in net sales was partially offset by (i) a decrease of $93.3 million in the various Standard Missile contracts primarily from the transitioning of the Standard Missile-3 Block IB contract from development activities to low-rate initial production, decreased development activities for the Throttling Divert and Attitude Control System for the Standard Missile-3 Block IIA contract, and the cessation of deliveries on the Standard Missile-1 Regrain contract earlier in the year as a result of contract completion; (ii) an additional week of operations in the first quarter of fiscal 2013 resulting in $27.8 million in net sales; (iii) a decrease of $20.0 million as a result of the completion of the Triple Target Terminator (“T3”) IIA and IIB contracts; and (iv) a decrease of $23.9 million from lower deliveries and changes in the estimated measurement of progress toward completion on the Antares program. See net sales information below:



	Nine months ended August 31,
	2014		2013		Change
	(In millions)
Aerojet
Standard Missile	$	137.4	$	230.7	$	(93.3	)
Atlas V	78.8		63.1		15.7
Antares	3.5		27.4		(23.9		)
T3 IIA and IIB	10.9		30.9		(20.0		)
Extra week of sales in fiscal 2013	—		27.8		(27.8		)
All other Aerojet programs	394.6		376.9		17.7
Rocketdyne (1)	522.5		136.8		385.7
Real estate	4.6		4.2		0.4
	$	1,152.3	$	897.8	$	254.5

______

(1) Includes net sales beginning June 14, 2013 from the Rocketdyne Business (acquisition date).

Cost of Sales (exclusive of items shown separately below):



	Three months ended August 31,									Nine months ended August 31,
	2014			2013			Change*			2014			2013			Change**
	(In millions, except percentage amounts)
Cost of sales:	$	374.2		$	326.7		$	47.5		$	1,027.2		$	798.6		$	228.6
Percentage of net sales	89.2		%	88.9		%				89.1		%	89.0		%
Percentage of net sales excluding retirement benefit expense and step-up in fair value of inventory	87.4		%	85.5		%				87.3		%	85.2		%
Components of cost of sales:
Cost of sales excluding retirement benefit expense and step-up in fair value of inventory	$	366.8		$	314.1		$	52.7		$	1,005.7		$	764.5		$	241.2
Cost of sales associated with the Acquisition step-up in fair value of inventory not allocable to our U.S. government contracts	1.3			1.3			—			3.2			1.3			1.9
Retirement benefit expense	6.1			11.3			(5.2		)	18.3			32.8			(14.5		)
Cost of sales	$	374.2		$	326.7		$	47.5		$	1,027.2		$	798.6		$	228.6

* Primary reason for change. The increase in cost of sales as a percentage of net sales excluding retirement benefit expense and the step-up in fair value of inventory was primarily due to $ 17.3 million , 4.1% of net sales, of cost growth on the Antares AJ-26 program, including the cost to repair or replace engines as necessary in light of the previously reported engine test failures, an associated increase in hardware inspections and corrective actions on the remaining engines to be delivered, costs to repair the test stand, and for costs resulting from delayed deliveries. Under the Antares AJ-26 program, we are modifying and upgrading 20 engines that were originally manufactured in the 1970s by a foreign rocket manufacturer. We have delivered 10 engines under the Antares AJ-26 contract and 10 more deliveries are required to complete the current contract. There can be no assurance that we will not experience any further issues with one or more of the remaining 10 engines. The cost growth on the Antares AJ-26 program was partially offset by favorable performance on the Atlas V program related to close-out activities on two Atlas V contracts.

** Primary reason for change. The increase in cost of sales excluding retirement benefit expense and step-up in fair value of inventory as a percentage of net sales was primarily due to $ 30.8 million , 2.7% of net sales, of cost growth on the Antares AJ-26 program, including the cost to repair or replace engines as necessary in light of the previously reported engine test failures, an associated increase in hardware inspections and corrective actions on the remaining engines to be delivered, costs to repair the test stand, and for costs resulting from delayed deliveries. Under the Antares AJ-26 program, we are modifying and upgrading 20 engines that were originally manufactured in the 1970s by a foreign rocket manufacturer. We have delivered 10 engines under the Antares AJ-26 contract and 10 more deliveries are required to complete the current contract. There can be no assurance that we will not experience any further issues with one or more of the remaining 10 engines.

Selling, General and Administrative (“SG&A”):



	Three months ended August 31,									Nine months ended August 31,
	2014			2013			Change*			2014			2013			Change**
	(In millions, except percentage amounts)
SG&A:	$	9.7		$	14.1		$	(4.4	)	$	28.1		$	39.9		$	(11.8	)
Percentage of net sales	2.3		%	3.8		%				2.4		%	4.4		%
Components of SG&A:
SG&A excluding retirement benefit expense and stock- based compensation	$	5.4		$	5.5		$	(0.1	)	$	15.2		$	14.5		$	0.7
Stock-based compensation	1.5			3.4			(1.9		)	4.5			9.7			(5.2		)
Retirement benefit expense	2.8			5.2			(2.4		)	8.4			15.7			(7.3		)
SG&A	$	9.7		$	14.1		$	(4.4	)	$	28.1		$	39.9		$	(11.8	)

* Primary reason for change. The decrease in SG&A expense was primarily driven by (i) lower non-cash retirement benefit plan expense (see discussion of “Retirement Benefit Plans” below) and (ii) a decrease of $1.9 million in stock-based compensation primarily as a result of increases in the fair value of the stock appreciation rights in the third quarter of fiscal 2013.

** Primary reason for change. The decrease in SG&A expense was primarily driven by (i) lower non-cash retirement benefit plan expense (see discussion of “Retirement Benefit Plans” below) and (ii) a decrease of $5.2 million in stock-based compensation primarily as a result of increases in the fair value of the stock appreciation rights in the first nine months of fiscal 2013.

Depreciation and Amortization:



	Three months ended August 31,							Nine months ended August 31,
	2014		2013		Change*			2014		2013		Change**
	(In millions)
Depreciation and amortization:	$	15.7	$	15.2	$	0.5		$	45.9	$	26.6	$	19.3
Components of depreciation and amortization:
Depreciation	$	12.3	$	12.5	$	(0.2	)	$	35.8	$	23.2	$	12.6
Amortization	3.4		2.7		0.7			10.1		3.4		6.7

* Primary reason for change. Depreciation and amortization was essentially unchanged for the period presented.

** Primary reason for change. The increase in depreciation and amortization is primarily due to (i) an increase of $10.1 million of depreciation expense related to the Rocketdyne Business since the acquisition; (ii) an increase $6.7 million of amortization of intangible assets associated with the Rocketdyne Business which is not allocable to our U.S. government contracts; and (iii) an increase of $2.8 million of depreciation expense associated with the ERP system which was placed into service in June 2013.

Other Expense, net:



	Three months ended August 31,						Nine months ended August 31,
	2014		2013		Change*		2014		2013		Change**
	(In millions)
Other expense, net:	$	16.3	$	8.1	$	8.2	$	72.2	$	24.5	$	47.7

* Primary reason for change. The increase in other expense, net was primarily due to (i) an increase of $ 3.1 million in unusual item charges; (ii) an increase of $ 3.5 million in environmental remediation expenses; and (iii) an increase of $0.7 million in losses on the disposal of long-lived assets. See Notes 8(b) and 8(c) in Notes to Unaudited Condensed Consolidated Financial Statements for additional discussion of environmental remediation matters. See discussion of unusual items below.

** Primary reason for change. The increase in other expense, net was primarily due to (i) an increase of $ 42.0 million in unusual item charges; (ii) an increase of $ 2.6 million in environmental remediation expenses; and (iii) an increase of $ 2.4 million in losses on the disposal of long-lived assets. See Notes 8(b) and 8(c) in Notes to Unaudited Condensed Consolidated Financial Statements for additional discussion of environmental remediation matters. See discussion of unusual items below.



	Three months ended August 31,					Nine months ended August 31,
	2014		2013			2014		2013
	(In millions)
Unusual items:
Legal related matters	$	0.1	$	(0.2	)	$	0.2	$	0.2
Loss on debt repurchased	9.8		—			60.6		—
Loss on bank amendment	—		—			0.2		—
Rocketdyne Business acquisition related costs(1)	—		7.0			—		18.8
	$	9.9	$	6.8		$	61.0	$	19.0

_______


(1)	Includes a benefit of $3.6 million for the nine months ended August 31, 2013 related to us not being required to divest the Liquid Divert and Attitude Control Systems program.

First nine months of fiscal 2014 Activity :

A summary of the loss on the 4 1/16% Debentures repurchased during the first nine months of fiscal 2014 is as follows (in millions):



Principal amount repurchased	$	59.6
Cash repurchase price	(119.9		)
Write-off of deferred financing costs	(0.3		)
Loss on 4 1/16% Debentures repurchased	$	(60.6	)

During the first nine months of fiscal 2014, we recorded $0.2 million of losses related to an amendment to the Senior Credit Facility.

During the first nine months of fiscal 2014, we recorded $0.2 million for realized losses and interest associated with the failure to register with the SEC the issuance of certain of our common shares under the defined contribution 401(k) employee benefit plan.

First nine months of fiscal 2013 Activity:

During the first nine months of fiscal 2013, we recorded ($0.3) million for realized gains and interest associated with the failure to register with the SEC the issuance of certain of our common shares under the defined contribution 401(k) employee benefit plan. During the first quarter of fiscal 2013, we recorded a charge of $0.5 million related to a legal settlement.

We incurred expenses of $18.8 million, including internal labor costs of $1.7 million, related to the Rocketdyne Business acquisition in the first nine months of fiscal 2013.

Interest Income:



	Three months ended August 31,						Nine months ended August 31,
	2014		2013		Change*		2014		2013			Change*
	(In millions)
Interest income:	$	—	$	—	$	—	$	—	$	(0.2	)	$	(0.2	)

* Primary reason for change. Interest income was essentially unchanged for the periods presented.

Interest Expense:



	Three months ended August 31,						Nine months ended August 31,
	2014		2013		Change*		2014		2013		Change**
	(In millions)
Interest expense:	$	14.0	$	12.4	$	1.6	$	39.0	$	36.2	$	2.8
Components of interest expense:
Contractual interest and other	13.1		11.5		1.6		36.3		32.6		3.7
Amortization of deferred financing costs	0.9		0.9		—		2.7		3.6		(0.9		)
Interest expense	$	14.0	$	12.4	$	1.6	$	39.0	$	36.2	$	2.8

* Primary reason for change. The increase in interest expense was primarily due to the issuance of $89.0 million under the subordinated delayed draw term loan facility in fiscal 2014. The proceeds from the delayed draw term loan facility were used to repurchase a portion of the 4 1/16% Debentures.

** Primary reason for change. The increase in interest expense was primarily due to (i) the issuance of the 7.125% Second-Priority Senior Secured Notes due 2021 (the “7 1/8% Notes”) in January 2013 related to the acquisition of the Rocketdyne Business and (ii) the issuance of $89.0 million under the subordinated delayed draw term loan facility in fiscal 2014. These increases were partially offset by the amortization in the first quarter of fiscal 2013 of the commitment fee for the $510 million of debt financing with Morgan Stanley Senior Funding, Inc. and Citigroup Global Markets Inc. entered into in July 2012.

Income Tax Provision:

The income tax provision for the first nine months of fiscal 2014 and 2013 was as follows:



	Nine months ended August 31,
	2014			2013
	(In millions)
Federal and state current income tax expense	$	5.4		$	9.6
Net deferred benefit	(5.5		)	(207.2		)
Impact of change in research credit estimates	1.2			(2.0		)
Income tax provision (benefit)	$	1.1		$	(199.6	)
Cash paid for income taxes	$	4.6		$	6.3

The effective tax rate for the first nine months of fiscal 2014 is (1.8)% and differs from the federal statutory rate of 35% primarily due to the significant non-deductible premium on the 4 1/16% Debentures repurchased during the first nine months of fiscal 2014, which we have treated for tax purposes as a non-recurring, discrete event due to the inability to accurately estimate an annualized total, as well as the impacts from state income taxes, changes in estimates related to the fiscal 2012 research and development credits, and certain expenditures which are permanently not deductible for tax purposes. The effective tax rate for the first nine months of fiscal 2013 was 718.0% and differs from the federal statutory tax rate of 35% primarily as a result of releasing a valuation allowance of $188.6 million in the third quarter of fiscal 2013 for previously provided for deferred tax assets.

As of August 31, 2014, the total liability for uncertain income tax positions, including accrued interest and penalties, was $8.0 million . Due to the high degree of uncertainty regarding the timing of potential future cash flows associated with the respective liabilities, we have been unable to make a reasonably reliable estimate of the amount and period in which these liabilities might be paid. It is reasonably possible that a reduction of up to $0.3 million of unrecognized tax benefits and related interest may occur within the next 12 months as a result of the expiration of certain statute of limitations.

Discontinued Operations:

On August 31, 2004, we completed the sale of our GDX Automotive (“GDX”) business. On November 30, 2005, we completed the sale of the Fine Chemicals business. Summarized financial information for discontinued operations is set forth below:



	Three months ended August 31,					Nine months ended August 31,
	2014		2013			2014			2013
	(In millions)
Net sales	$	—	$	—		$	—		$	—
Income (loss) before income taxes	0.1		(0.2		)	(1.3		)	(0.3		)
Income tax benefit	0.1		—			0.7			0.1
Net income (loss) from discontinued operations	0.2		(0.2		)	(0.6		)	(0.2		)

Retirement Benefit Plans:

Components of retirement benefit expense are:



	Three months ended August 31,						Nine months ended August 31,
	2014			2013			2014			2013
	(In millions)
Service cost	$	2.3		$	1.7		$	6.7		$	4.5
Interest cost on benefit obligation	17.4			15.9			52.2			47.5
Assumed return on plan assets	(23.3		)	(24.1		)	(69.7		)	(72.3		)
Amortization of prior service credits	(0.2		)	(0.2		)	(0.6		)	(0.6		)
Recognized net actuarial losses	12.7			23.2			38.1			69.4
Retirement benefit expense	$	8.9		$	16.5		$	26.7		$	48.5

The decrease in retirement benefit expense was primarily due to lower actuarial losses recognized in the third quarter and first nine months of fiscal 2014 compared to the comparable fiscal 2013 periods. The decrease in actuarial losses was primarily the result of better than expected investment returns on pension plan assets and an increase in the discount rate due to higher market interest rates used to determine our retirement benefit obligation. Actual rate of return on pension plan assets was 12.5% in fiscal 2013 compared to an assumed rate of 8% in fiscal 2013. The discount rate was 4.54% as of November 30, 2013 compared to 3.68% as of November 30, 2012.

Market conditions and interest rates significantly affect the assets and liabilities of our pension plans. Pension accounting permits market gains and losses to be deferred and recognized over a period of years. This “smoothing” results in the creation of other accumulated income or losses which will be amortized to retirement benefit expense or benefit in future years. The accounting method we utilize recognizes one-fifth of the unamortized gains and losses associated with the market-related value of pension assets and all other gains and losses, including changes in the discount rate used to calculate benefit costs each year. Investment gains or losses for this purpose are the difference between the expected return and the actual return on the market-related value of assets which smoothes asset values over three years. Although the smoothing period mitigates some volatility in the calculation of annual retirement benefit expense, future expenses are impacted by changes in the market value of pension plan assets and changes in interest rates.

Additionally, we sponsor a defined contribution 401(k) plan and participation in the plan is available to all employees. The cost of the 401(k) plan was $15.4 million and $9.3 million, respectively, in the first nine months of fiscal 2014 and 2013. The cost is recoverable through our U.S. government contracts.

Operating Segment Information:

We evaluate our operating segments based on several factors, of which the primary financial measure is segment performance. Segment performance, which is a non-GAAP financial measure, represents net sales from continuing operations less applicable costs, expenses and provisions for unusual items relating to the segment. Excluded from segment performance are: corporate income and expenses, interest expense, interest income, income taxes, legacy income or expenses, and unusual items not related to the segment. We believe that segment performance provides information useful to investors in understanding our underlying operational performance. In addition, we provide the Non-GAAP financial measure of our operational performance called segment performance before environmental remediation provision adjustments, retirement benefit plan expense, Rocketdyne purchase accounting adjustments, and unusual items. We believe the exclusion of the items listed above permits an evaluation and a comparison of results for ongoing business operations, and it is on this basis that management internally assesses operational performance.

Aerospace and Defense Segment



	Three months ended August 31,									Nine months ended August 31,
	2014			2013			Change*			2014			2013			Change**
	(In millions, except percentage amounts)
Net sales	$	418.0		$	365.9		$	52.1		$	1,147.7		$	893.6		$	254.1
Segment performance (Non-GAAP measure)	22.7			22.7			—			65.5			64.6			0.9
Segment margin (Non-GAAP measure)	5.4		%	6.2		%				5.7		%	7.2		%
Segment margin before environmental remediation provision adjustments, retirement benefit plan expense, Rocketdyne purchase accounting adjustments, and unusual items (Non-GAAP measure)	9.9		%	12.2		%				9.8		%	12.3		%
Components of segment performance:
Aerospace and Defense	$	41.4		$	44.7		$	(3.3	)	$	112.0		$	110.3		$	1.7
Environmental remediation provision adjustments	(4.7		)	(1.7		)	(3.0		)	(6.6		)	(2.3		)	(4.3		)
Retirement benefit plan expense	(6.1		)	(11.3		)	5.2			(18.3		)	(32.8		)	14.5
Unusual items	(0.1		)	(0.2		)	0.1			(0.2		)	(1.8		)	1.6
Rocketdyne purchase accounting adjustments not allocable to our U.S. government contracts:
Amortization of the Rocketdyne Business’ intangible assets	(3.0		)	(2.3		)	(0.7		)	(9.0		)	(2.3		)	(6.7		)
Depreciation associated with the step-up in the fair value of the Rocketdyne Business’ tangible assets	(3.5		)	(5.2		)	1.7			(9.2		)	(5.2		)	(4.0		)
Cost of sales associated with the step-up in the fair value of the Rocketdyne Business’ inventory	(1.3		)	(1.3		)	—			(3.2		)	(1.3		)	(1.9		)
Aerospace and Defense total	$	22.7		$	22.7		$	—		$	65.5		$	64.6		$	0.9

* Primary reason for change. The increase in net sales was primarily due to increased deliveries on the THAAD, Atlas V, and RL-10 programs generating $ 75.8 million in additional net sales. The increase in net sales was partially offset by (i) a decrease of $ 15.8 million in the various Standard Missile contracts primarily from the transitioning of the Standard Missile-3 Block IB contract from development activities to low-rate initial production, decreased development activities for the Throttling Divert and Attitude Control System for the Standard Missile-3 Block IIA contract, and the cessation of deliveries on the Standard Missile-1 Regrain contract earlier in the year as a result of contract completion and (ii) a decrease of $ 12.1 million from lower deliveries and changes in the estimated measurement of progress toward completion on the Antares program. See net sales information below:



	Three months ended August 31,
	2014			2013		Change
	(In millions)
THAAD	$	50.0		$	5.5	$	44.5
Standard Missile	47.1			62.9		(15.8		)
Atlas V	37.7			17.2		20.5
RL-10	37.1			26.3		10.8
Antares	(2.4		)	9.7		(12.1		)
All other Aerospace and Defense programs	248.5			244.3		4.2
	$	418.0		$	365.9	$	52.1

The decrease in segment margin before environmental remediation provision adjustments, retirement benefit plan expense, Rocketdyne purchase accounting adjustments, and unusual items in the third quarter of fiscal 2014 compared to the third quarter of fiscal 2013 was primarily due to $ 17.3 million , 4.1% of net sales, of cost growth on the Antares AJ-26 program, including the cost to repair or replace engines as necessary in light of the previously reported engine test failures, an associated increase in hardware inspections and corrective actions on the remaining engines to be delivered, costs to repair the test stand, and for costs resulting from delayed deliveries. Under the Antares AJ-26 program, we are modifying and upgrading 20 engines that were originally manufactured in the 1970s by a foreign rocket manufacturer. We have delivered 10 engines under the Antares AJ-26 contract and 10 more deliveries are required to complete the current contract. There can be no assurance that we will not experience any further issues with one or more of the remaining 10 engines.

** Primary reason for change. The increase in net sales was primarily due to sales from the Rocketdyne Business which was acquired on June 14, 2013. The net sales beginning in the third quarter of fiscal 2013 included the Rocketdyne Business. The increase in net sales was partially offset by (i) a decrease of $93.3 million in the various Standard Missile contracts primarily from the transitioning of the Standard Missile-3 Block IB contract from development activities to low-rate initial production, decreased development activities for the Throttling Divert and Attitude Control System for the Standard Missile-3 Block IIA contract, and the cessation of deliveries on the Standard Missile-1 Regrain contract earlier in the year as a result of contract completion; (ii) an additional week of operations in the first quarter of fiscal 2013 resulting in $27.8 million in net sales; (iii) a decrease of $20.0 million as a result of the completion of the T3 IIA and IIB contracts; and (iv) a decrease of $23.9 million from lower deliveries and changes in the estimated measurement of progress toward completion on the Antares program. See net sales information below:



	Nine months ended August 31,
	2014		2013		Change
	(In millions)
Aerojet
Standard Missile	$	137.4	$	230.7	$	(93.3	)
Atlas V	78.8		63.1		15.7
Antares	3.5		27.4		(23.9		)
T3 IIA and IIB	10.9		30.9		(20.0		)
Extra week of sales in fiscal 2013	—		27.8		(27.8		)
All other Aerojet programs	394.6		376.9		17.7
Rocketdyne (1)	522.5		136.8		385.7
	$	1,147.7	$	893.6	$	254.1

______

(1) Includes net sales beginning June 14, 2013 from the Rocketdyne Business (acquisition date).

The decrease in the segment margin before environmental remediation provision adjustments, retirement benefit plan expense, Rocketdyne purchase accounting adjustments, and unusual items in the first nine months of fiscal 2014 compared to the first nine months of fiscal 2013, was primarily due to $ 30.8 million , 2.7% of net sales, of cost growth on the Antares AJ-26 program, including the cost to repair or replace engines as necessary in light of the previously reported engine test failures, an associated increase in hardware inspections and corrective actions on the remaining engines to be delivered, costs to repair the test stand, and for costs resulting from delayed deliveries. Under the Antares AJ-26 program, we are modifying and upgrading 20 engines that were originally manufactured in the 1970s by a foreign rocket manufacturer. We have delivered 10 engines under the Antares AJ-26 contract and 10 more deliveries are required to complete the current contract. There can be no assurance that we will not experience any further issues with one or more of the remaining 10 engines.

A summary of our backlog is as follows:



	August 31, 2014		November 30, 2013
	(In billions)
Funded backlog	$	2.1	$	1.7
Unfunded backlog	0.9		0.8
Total contract backlog	$	3.0	$	2.5

The increase in backlog from November 30, 2013 is primarily due to the receipt of large, multi-year awards on several programs including RS-68, RS-27, Atlas V, and THAAD.

Total backlog includes both funded backlog (unfilled orders for which funding is authorized, appropriated and contractually obligated by the customer) and unfunded backlog (firm orders for which funding has not been appropriated). Indefinite delivery and quantity contracts and unexercised options are not reported in total backlog. Backlog is subject to funding delays or program restructurings/cancellations which are beyond our control. Of our August 31, 2014 total contract backlog, approximately 47%, or $1.4 billion, is expected to be filled within one year.

Real Estate Segment



	Three months ended August 31,							Nine months ended August 31,
	2014		2013		Change*			2014		2013		Change*
	(In millions)
Net sales	$	1.5	$	1.6	$	(0.1	)	$	4.6	$	4.2	$	0.4
Segment performance	0.8		0.9		(0.1		)	2.6		2.9		(0.3		)

* Primary reason for change. Net sales and segment performance consist primarily of rental property operations, and were essentially unchanged for the periods presented.

Use of Non-GAAP Financial Measures

In addition to segment performance (discussed above), we provide the Non-GAAP financial measure of our operational performance called Adjusted EBITDAP. We use this metric to further our understanding of the historical and prospective consolidated core operating performance of our segments, net of expenses resulting from our corporate activities in the ordinary, on-going and customary course of our operations. Further, we believe that to effectively compare the core operating performance metric from period to period on a historical and prospective basis, the metric should exclude items relating to retirement benefits (pension and postretirement benefits), significant non-cash expenses, the impacts of financing decisions on earnings, and items incurred outside the ordinary, on-going and customary course of our operations. Accordingly, we define Adjusted EBITDAP as GAAP loss from continuing operations before income taxes adjusted by interest expense, interest income, depreciation and amortization, retirement benefit expense, and unusual items which we do not believe are reflective of such ordinary, on-going and customary course activities. Adjusted EBITDAP does not represent, and should not be considered an alternative to, net (loss) income, as determined in accordance with GAAP.



	Three months ended August 31,						Nine months ended August 31,
	2014			2013			2014			2013
	(In millions, except percentage amounts)
Loss from continuing operations before income taxes	$	(10.4	)	$	(9.0	)	$	(60.1	)	$	(27.8	)
Interest expense	14.0			12.4			39.0			36.2
Interest income	—			—			—			(0.2		)
Depreciation and amortization	15.7			15.2			45.9			26.6
Retirement benefit expense	8.9			16.5			26.7			48.5
Unusual items	9.9			6.8			61.0			19.0
Adjusted EBITDAP	$	38.1		$	41.9		$	112.5		$	102.3
Adjusted EBITDAP as a percentage of net sales	9.1		%	11.4		%	9.8		%	11.4		%

In addition to segment performance and Adjusted EBITDAP, we provide the Non-GAAP financial measures of free cash flow and net debt. We use these financial measures, both in presenting our results to stakeholders and the investment community, and in our internal evaluation and management of the business. Management believes that these financial measures are useful because it presents our business using the same tools that management uses to evaluate progress in achieving our goals.



	Three months ended August 31,						Nine months ended August 31,
	2014			2013			2014			2013
	(In millions)
Cash provided by operating activities	$	56.4		$	7.6		$	34.1		$	26.5
Capital expenditures	(13.4		)	(17.0		)	(31.9		)	(38.7		)
Free cash flow(1)	$	43.0		$	(9.4	)	$	2.2		$	(12.2	)

(1)

Free Cash Flow, a Non-GAAP financial measure, is defined as cash flow from operating activities less capital expenditures. Free Cash Flow excludes any mandatory debt service requirements and other non-discretionary expenditures. Free Cash Flow should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to cash flows from operations presented in accordance with GAAP. The Company believes Free Cash Flow is useful as it provides supplemental information to assist investors in viewing the business using the same tools that management uses to evaluate progress in achieving the Company’s goals.



	August 31, 2014			August 31, 2013
	(In millions)
Debt principal	$	783.5		$	705.1
Cash and cash equivalents	(154.9		)	(181.9		)
Net debt	$	628.6		$	523.2

Because our method for calculating the Non-GAAP measures may differ from other companies’ methods, the Non-GAAP measures presented above may not be comparable to similarly titled measures reported by other companies. These measures are not recognized in accordance with GAAP, and we do not intend for this information to be considered in isolation or as a substitute for GAAP measures.

Other Information

Recently Adopted Accounting Pronouncement

In July 2013, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting guidance related to the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The guidance requires an unrecognized tax benefit to be presented as a decrease in a deferred tax asset where a net operating loss, a similar tax loss, or a tax credit carryforward exists and certain criteria are met. We adopted this guidance beginning in the first quarter of fiscal 2014. As the accounting standard only impacted presentation, the new standard did not have an impact on our financial position, results of operations, or cash flows.

Recently Issued Accounting Pronouncement

In April 2014, the FASB issued authoritative guidance which specifies that only disposals, such as a disposal of a major line of business, representing a strategic shift in operations should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. This guidance is effective for us prospectively in the first quarter of fiscal 2016. An entity should not apply the amendments in this new guidance to a component of an entity that is classified as held for sale before the effective date even if the component of an entity is disposed of after the effective date. As the accounting standard will only impact presentation, the new standard will not have an impact on our financial position, results of operations, or cash flows.

In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We are required to adopt the amendments in the first quarter of fiscal 2018. Early adoption is not permitted. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. We are currently evaluating the impact of these amendments and the transition alternatives on our consolidated financial statements.

and interim reporting period. The update also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This guidance is effective for us as of November 30, 2017. The new guidance will not have an impact on our financial position, results of operations, or cash flows.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America that offer acceptable alternative methods for accounting for certain items affecting our financial results, such as determining inventory cost, deferring certain costs, depreciating long-lived assets, recognizing pension benefits, and recognizing revenues.

The preparation of financial statements requires the use of estimates, assumptions, judgments, and interpretations that can affect the reported amounts of assets, liabilities, revenues, and expenses, the disclosure of contingent assets and liabilities and other supplemental disclosures. The development of accounting estimates is the responsibility of our management. Management discusses those areas that require significant judgment with the audit committee of our board of directors. The audit committee has reviewed all financial disclosures in our filings with the SEC. Although we believe the positions we have taken with regard to uncertainties are reasonable, others might reach different conclusions and our positions can change over time as more information becomes available. If an accounting estimate changes, its effects are accounted for prospectively and, if significant, disclosed in the Notes to Unaudited Condensed Consolidated Financial Statements.

The areas that are most affected by our accounting policies and estimates are revenue recognition for long-term contracts, other contract considerations, goodwill, retirement benefit plans, litigation reserves, environmental remediation costs and recoveries, and income taxes. Except for income taxes, which are not allocated to our operating segments, these areas affect the financial results of our business segments.

In our Aerospace and Defense segment, recognition of profit on long-term contracts requires the use of assumptions and estimates related to the contract value or total contract revenue, the total cost at completion and the measurement of progress towards completion. Due to the nature of the programs, developing the estimated total cost at completion requires the use of significant judgment. Estimates are continually evaluated as work progresses and are revised as necessary. Factors that must be considered in estimating the work to be completed include labor productivity, the nature and technical complexity of the work to be performed, availability and cost volatility of materials, subcontractor and vendor performance, warranty costs, volume assumptions, anticipated labor agreements and inflationary trends, schedule and performance delays, availability of funding from the customer, and the recoverability of costs incurred outside the original contract included in any estimates to complete. We review contract performance and cost estimates for some contracts at least monthly and for others at least quarterly and more frequently when circumstances significantly change. When a change in estimate is determined to have an impact on contract profit, we will record a positive or negative adjustment to the statement of operations. Changes in estimates and assumptions related to the status of certain long-term contracts may have a material effect on our operating results. The following table summarizes the impact from changes in estimates and assumptions on the statements of operations on contracts, representing 85% of our net sales over the first nine months of fiscal 2014 and 2013, accounted for under the percentage-of-completion method of accounting:



	Three months ended August 31,					Nine months ended August 31,
	2014			2013		2014			2013
	(In millions, except per share amounts)
(Unfavorable) favorable effect of the changes in contract estimates on loss from continuing operations before income taxes	$	(5.3	)	$	11.0	$	(8.2	)	$	20.4
(Unfavorable) favorable effect of the changes in contract estimates on net (loss) income	(2.3		)	9.5		(3.9		)	14.4
(Unfavorable) favorable effect of the changes in contract estimates on basic net (loss) income per share	(0.04		)	0.16		(0.07		)	0.24
(Unfavorable) favorable effect of the changes in contract estimates on diluted net (loss) income per share	(0.04		)	0.14		(0.07		)	0.24

A detailed description of our significant accounting policies can be found in our most recent Annual Report on Form 10-K for the fiscal year ended November 30, 2013.

Arrangements with Off-Balance Sheet Risk

As of August 31, 2014 , arrangements with off-balance sheet risk consisted of:


•	$58.1 million in outstanding commercial letters of credit expiring through September 2015, the majority of which may be renewed, primarily to collateralize obligations for environmental remediation and insurance coverage.


•	$43.7 million in outstanding surety bonds to primarily satisfy indemnification obligations for environmental remediation coverage.


•	Up to $120.0 million aggregate in guarantees by GenCorp of Aerojet Rocketdyne’s obligations to U.S. government agencies for environmental remediation activities.


•	$55.0 million related to the pending future acquisition of UTC’s 50% ownership interest of RD Amross.


•	Guarantees, jointly and severally, by our material domestic subsidiaries of their obligations under our Senior Credit Facility and 7 1/8% Notes.

In addition to the items discussed above, we have and will from time to time enter into certain types of contracts that require us to indemnify parties against potential third-party and other claims. These contracts primarily relate to: (i) divestiture agreements, under which we may provide customary indemnification to purchasers of our businesses or assets including, for example, claims arising from the operation of the businesses prior to disposition, liability to investigate and remediate environmental contamination existing prior to disposition; (ii) certain real estate leases, under which we may be required to indemnify property owners for claims arising from the use of the applicable premises; and (iii) certain agreements with officers and directors, under which we may be required to indemnify such persons for liabilities arising out of their relationship with us. The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated.

Additionally, we issue purchase orders and make other commitments to suppliers for equipment, materials, and supplies in the normal course of business. These purchase commitments are generally for volumes consistent with anticipated requirements to fulfill purchase orders or contracts for product deliveries received, or expected to be received, from customers and would be subject to reimbursement if contract is terminated.

We provide product warranties in conjunction with certain product sales. The majority of our warranties are one-year standard warranties for parts, workmanship, and compliance with specifications. On occasion, we have made commitments beyond the standard warranty obligation. While we have contracts with warranty provisions, there is not a history of any significant warranty claims experience. A reserve for warranty exposure is made on a product by product basis when it is both estimable and probable . These costs are included in the program’s estimate at completion and are expensed in accordance with our revenue recognition methodology as allowed under GAAP for that particular contract.

Liquidity and Capital Resources

Net Cash (Used in) Provided by Operating, Investing, and Financing Activities

The change in cash and cash equivalents was as follows:



	Nine months ended August 31,
	2014			2013
	(In millions)
Net Cash Provided by Operating Activities	$	34.1		$	26.5
Net Cash Used in Investing Activities	(31.7		)	(450.4		)
Net Cash (Used in) Provided by Financing Activities	(45.1		)	443.7
Net (Decrease) Increase in Cash and Cash Equivalents	$	(42.7	)	$	19.8

Net Cash Provided by Operating Activities

The $34.1 million of cash provided by operating activities in the first nine months of fiscal 2014 was primarily the result of loss from continuing operations before income taxes adjusted for non-operating cash adjustments which generated $ 82.1 million . This amount was partially offset by cash used to fund working capital (defined as accounts receivables, inventories, restructuring, accounts payable, contract advances, real estate activities, and other liabilities) and future recoverable restructuring costs of $ 35.5 million . The funding of working capital is primarily due to (i) an increase of $ 27.2 million in inventories primarily related to the Standard Missile and Atlas V programs and (ii) increased Rocketdyne Business integration costs including the $ 21.6 million related to future recoverable restructuring costs. In addition, we paid $ 4.6 million for income tax in the first nine months of fiscal 2014.

The $26.5 million of cash provided by operating activities in the first nine months of fiscal 2013 was primarily the result of loss from continuing operations before income taxes adjusted for non-operating cash adjustments which generated $60.7 million. This amount was partially offset by cash used to fund working capital (defined as accounts receivables, inventories, accounts payable, contract advances, real estate activities, and other liabilities) of $25.8 million. The funding of working capital is due to (i) an increase in inventories primarily due to the timing of deliveries under the Atlas V program and (ii) an increase in accounts receivables due to timing of sales and billing during the quarter. These factors were partially offset by (i) an increase in accounts payable related to the increase in cost-reimbursable contract sales and timing of payments and (ii) an increase in other current liabilities primarily related to the timing of payments.

Net Cash Used In Investing Activities

During the first nine months of fiscal 2014 and 2013, we had capital expenditures of $ 31.9 million and $ 38.7 million , respectively. During the first nine months of fiscal 2013, capital expenditures included $16.5 million related to our ERP implementation.

During the third quarter of fiscal 2013, we purchased the Rocketdyne business for $411.2 million (see Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements.) During the third quarter of fiscal 2014, we received $0.2 million for a purchase price adjustment for the Rocketdyne Business.

Net Cash (Used in) Provided by Financing Activities

During the first nine months of fiscal 2014, we repurchased 3.5 million of our common shares at a cost of $64.5 million . We also issued $ 189.0 million of debt and had $ 165.0 million in debt cash payments (see below). In addition, we incurred $ 4.2 million of debt issuance costs.

During the first nine months of fiscal 2013, we issued $ 460.0 million of debt and had $ 2.0 million in debt repayments. In addition, we incurred $ 14.7 million of debt issuance costs.

Debt Activity and Covenants

Our debt activity during the first nine months of fiscal 2014 was as follows:



	November 30, 2013		Additions		Cash Payments			Non-cash Activity		August 31, 2014
	(In millions)
Term loan	$	45.0	$	100.0	$	(45.0	)	$	—	$	100.0
7 1/8% Notes	460.0		—		—			—		460.0
4 1/16% Debentures	193.2		—		(119.9		)	60.3		133.6
2 1/4% Convertible Subordinated Debentures	0.2		—		—			—		0.2
Delayed draw term loan	—		89.0		—			—		89.0
Other debt	0.8		—		(0.1		)	—		0.7
Total Debt and Borrowing Activity	$	699.2	$	189.0	$	(165.0	)	$	60.3	$	783.5

We are subject to certain limitations including the ability to incur additional debt, make certain investments and acquisitions, and make certain restricted payments, including stock repurchases and dividends. The Senior Credit Facility includes events of default usual and customary for facilities of this nature, the occurrence of which could lead to an acceleration of our obligations thereunder. Additionally, the Senior Credit Facility includes certain financial covenants, including that we maintain (i) a maximum total leverage ratio, calculated net of cash up to a maximum of $150.0 million, of 4.50 to 1.00 through fiscal periods ending November 30, 2015, 4.25 to 1.00 through fiscal periods ending November 30, 2017, and 4.00 to 1.00 thereafter; and (ii) a minimum interest coverage ratio of 2.40 to 1.00.



Financial Covenant	Actual Ratios as of August 31, 2014	Required Ratios
Interest coverage ratio, as defined under the Senior Credit Facility	3.39 to 1.00	Not less than: 2.40 to 1.00
Leverage ratio, as defined under the Senior Credit Facility	3.75 to 1.00	Not greater than: 4.50 to 1.00

We were in compliance with our financial and non-financial covenants as of August 31, 2014 .

Outlook

Short-term liquidity requirements consist primarily of recurring operating expenses, including but not limited to costs related to our capital and environmental expenditures, integration costs of the Rocketdyne Business, debt service requirements, and retirement benefit plans. We believe that our existing cash and cash equivalents and existing credit facilities will provide sufficient funds to meet our operating plan for the next twelve months. The operating plan for this period provides for full operation of our businesses, and interest and principal payments on our debt. As of August 31, 2014 , we had $152.9 million of available borrowings under our Senior Credit Facility and Subordinated Credit Facility. Based on our existing debt agreements, we were in compliance with our financial and non-financial covenants as of August 31, 2014 . Our failure to comply with these covenants could result in an event of default that, if not cured or waived, could result in the acceleration of the Senior Credit Facility, the Subordinated Credit Facility, the 7 1/8% Notes, and the 4 1/16% Debentures. In addition, our failure to pay principal and interest when due is a default under the Senior Credit Facility, and in certain cases, would cause cross defaults on the Subordinated Credit Facility, 7 1/8% Notes and 4 1/16% Debentures.

We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business, our growth strategy and to withstand unanticipated business volatility. We believe that cash generated from operations, together with our current levels of cash and investments as well as availability under our revolving credit facility and delayed draw term loan, should be sufficient to maintain our ongoing operations, support working capital requirements and fund anticipated capital expenditures related to projected business growth. Our cash management strategy includes maintaining the flexibility to pay down debt and/or repurchase shares depending on economic and other conditions. In connection with the implementation of our cash management strategy, our Board of Directors and management may seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise if we believe that it is in our best interests. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

As disclosed in Note 9 of the Notes to Unaudited Condensed Consolidated Financial Statements, we have a $55.0 million commitment associated with the pending future acquisition of UTC’s 50% ownership interest of RD Amross.

As disclosed in Notes 8(a) and 8(b) of the Notes to Unaudited Condensed Consolidated Financial Statements, we have exposure for certain legal and environmental matters. We believe that it is currently not possible to estimate the impact, if any, that the ultimate resolution of certain of these matters will have on our financial position, results of operations, or cash flows.

Major factors that could adversely impact our forecasted operating cash and our financial condition are described in the section “Risk Factors” in Item 1A of our Annual Report to the SEC on Form 10-K for the fiscal year ended November 30, 2013. In addition, our liquidity and financial condition will continue to be affected by changes in prevailing interest rates on the portion of debt that bears interest at variable interest rates.

Forward-Looking Statements

Certain information contained in this report should be considered “forward-looking statements” as defined by Section 21E of the Private Securities Litigation Reform Act of 1995. All statements in this report other than historical information may be deemed forward-looking statements. These statements present (without limitation) the expectations, beliefs, plans and objectives of management and future financial performance and assumptions underlying, or judgments concerning, the matters discussed in the statements. The words “believe,” “estimate,” “anticipate,” “project” and “expect,” and similar expressions, are intended to identify forward-looking statements. Forward-looking statements involve certain risks, estimates, assumptions and uncertainties, including with respect to future sales and activity levels, cash flows, contract performance, the outcome of litigation and contingencies, environmental remediation and anticipated costs of capital. A variety of factors could cause actual results or outcomes to differ materially from those expected and expressed in our forward-looking statements. Important risk factors that could cause actual results or outcomes to differ from those expressed in the forward-looking statements are described in the section “Risk Factors” in Item 1A of our Annual Report to the SEC on Form 10-K for the fiscal year ended November 30, 2013 include the following:


•	future reductions or changes in U.S. government spending;


•	cancellation or material modification of one or more significant contracts;


•	negative audit of the Company’s business by the U.S. government;


•	the integration difficulties or inability to integrate the Rocketdyne Business into the Company’s existing operations successfully or to realize the anticipated benefits of the acquisition;


•	ability to manage effectively the Company’s expanded operations following the acquisition of the Rocketdyne Business;


•	the increase in the Company’s leverage and debt service obligations as a result of the acquisition of the Rocketdyne Business and the Company’s recent capital transactions;


•	the Rocketdyne Business’s international sales are subject to applicable laws relating to export controls, the violation of which could adversely affect its operations;


•	the acquisition of RD Amross is subject to a number of conditions which could delay or materially adversely affect the timing of its completion, or prevent it from occurring;


•	cost overruns on the Company’s contracts that require the Company to absorb excess costs;


•	failure of the Company’s subcontractors or suppliers to perform their contractual obligations;


•	failure to secure contracts;


•	failure to comply with regulations applicable to contracts with the U.S. government;


•	failure to comply with applicable laws, including laws relating to export controls and anti-corruption or bribery laws;


•	costs and time commitment related to potential acquisition activities;


•	the Company’s inability to adapt to rapid technological changes;


•	failure of the Company’s information technology infrastructure;


•	failure to effectively integrate the Rocketdyne Business into the Company’s ERP system;


•	product failures, schedule delays or other problems with existing or new products and systems, including without limitation any further issues on the Antares AJ-26 program;


•	the release, or explosion, or unplanned ignition of dangerous materials used in the Company’s businesses;


•	loss of key qualified suppliers of technologies, components, and materials;


•	the funded status of the Company’s defined benefit pension plan and the Company’s obligation to make cash contributions in excess of the amount that the Company can recover in its current period overhead rates;


•	effects of changes in discount rates, actual 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;


•	environmental claims related to the Company’s current and former businesses and operations including the inability to protect or enforce previously executed environmental agreements;


•	reductions in the amount recoverable from environmental claims;


•	the results of significant litigation;


•	occurrence of liabilities that are inadequately covered by indemnity or insurance;


•	inability to protect the Company’s patents and proprietary rights;


•	business disruptions;


•	the earnings and cash flow of the Company’s subsidiaries and the distribution of those earnings to the Company;


•	the substantial amount of debt which places significant demands on the Company’s cash resources and could limit the Company’s ability to borrow additional funds or expand its operations;


•	the Company’s ability to comply with the financial and other covenants contained in the Company’s debt agreements;


•	risks inherent to the real estate market;


•	changes in economic and other conditions in the Sacramento, California metropolitan area real estate market or changes in interest rates affecting real estate values in that market;


•	additional costs related to the Company’s discontinued operations;


•	the loss of key employees and shortage of available skilled employees to achieve anticipated growth;


•	a strike or other work stoppage or the Company’s inability to renew collective bargaining agreements on favorable terms;


•	fluctuations in sales levels causing the Company’s quarterly operating results and cash flows to fluctuate;


•	failure to maintain effective internal controls in accordance with the Sarbanes-Oxley Act; and


•	those risks detailed in the Company’s reports filed with the SEC.

Additional risk factors may be described from time to time in our future filings with the SEC. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All such risk factors are difficult to predict, contain material uncertainties that may affect actual results and may be beyond our control.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our disclosures related to certain market risks as reported under Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report to the SEC on Form 10-K for the fiscal year ended November 30, 2013.

Interest Rate Risk

We are exposed to market risk principally due to changes in interest rates. Debt with interest rate risk includes borrowings under our Senior Credit Facility and Subordinated Credit Facility. Other than pension assets and liabilities, we do not have any significant exposure to interest rate risk related to our investments.

As of August 31, 2014 , our debt totaled $783.5 million : $594.5 million, or 76%, was at an average fixed rate of 6.44%; and $189.0 million, or 24%, was at a variable rate of 5.92%.

The estimated fair value and principal amount of our outstanding debt is presented below:



	Fair Value				Principal Amount
	August 31, 2014		November 30, 2013		August 31, 2014		November 30, 2013
	(In millions)
Term loan	$	100.0	$	45.0	$	100.0	$	45.0
7 1/8% Notes	495.9		494.5		460.0		460.0
4 1/16% Debentures	275.2		398.1		133.6		193.2
Delayed draw term loan	89.0		—		89.0		—
Other debt	0.9		1.0		0.9		1.0
	$	961.0	$	938.6	$	783.5	$	699.2

The fair values of the 7 1/8% Notes and 4 1/16% Debentures were determined using broker quotes that are based on open markets of our debt securities as of August 31, 2014 and November 30, 2013. The fair value of the term loans and other debt was determined to approximate carrying value .

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“the Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

Other than including the Rocketdyne Business in management’s assessment of the effectiveness of our internal control over financial reporting, there were no other material changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the most recent fiscal quarter that have materially, or are reasonably likely to materially affect, the effectiveness of our internal controls over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Except as disclosed in Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements, which is incorporated herein by reference, there have been no significant developments in the pending legal proceedings as previously reported in Part 1, Item 3, Legal Proceedings in our Annual Report on Form 10-K for the fiscal year ended November 30, 2013.

Asbestos Cases. The following table sets forth information related to our historical product liability costs associated with our asbestos litigation cases for the first nine months of fiscal 2014:



Claims filed as of November 30, 2013	129
Claims filed*	9
Claims dismissed	13
Claims pending as of August 31, 2014	125

_______

* This number is net of one case tendered to a third party under a contractual indemnity obligation.

Legal and administrative fees for the asbestos cases for the first nine months of fiscal 2014 were $0.3 million.

Item 1A. Risk Factors

There have been no material changes from our risk factors as previously reported in our Annual Report to the SEC on Form 10-K for the fiscal year ended November 30, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine safety disclosures

Not applicable.

Item 5. Other Information

On June 24, 2014, the Company amended and restated its 2013 Employee Stock Purchase Plan, Deferred Compensation Plan for Nonemployee directors and 2009 Equity and Performance Incentive Plan solely to reflect the Company’s reincorporation to the State of Delaware, which was completed on April 11, 2014.

Item 6. Exhibits



No.		Description

10.1*		Amended and Restated 2013 Employee Stock Purchase Plan, dated as of June 24, 2014
10.2*		Amended and Restated Deferred Compensation Plan for Nonemployee directors, dated as of June 24, 2014
10.3*		Amended and Restated 2009 Equity and Performance Incentive Plan, dated as of June 24, 2014
10.4*		Form of Restricted Stock Agreement between the Company and Employees for grants of time-based vesting of restricted stock under the GenCorp Inc. Amended and Restated 2009 Equity and Performance Incentive Plan
10.5*		Form of Unrestricted Stock Agreement between the Company and Directors for grants of common stock under the GenCorp Inc. Amended and Restated 2009 Equity and Performance Incentive Plan
10.6*		Form of Director Nonqualified Stock Option Agreement between the Company and Directors for grants of nonqualified stock options under the GenCorp Inc. Amended and Restated 2009 Equity and Performance Incentive Plan
31.1*		Certification of Principal Executive Officer pursuant to Rule 13a — 14 (a) of the Securities Exchange Act of 1934, as amended.
31.2*		Certification of Principal Financial Officer pursuant to Rule 13a — 14 (a) of the Securities Exchange Act of 1934, as amended.
32.1*		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a — 14(b) of the Securities and Exchange Act of 1934, as amended, and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2014, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statement of Shareholders’ Deficit, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.

* Filed herewith.

Pursuant to the requirements 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.

Date:	October 10, 2014	By:	/s/ Scott J. Seymour
			Scott J. Seymour President and Chief Executive Officer (Principal Executive Officer)

Date:	October 10, 2014	By:	/s/ Kathleen E. Redd
			Kathleen E. Redd
			Vice President, Chief Financial Officer and Assistant Secretary (Principal Financial Officer and Principal Accounting Officer)

EXHIBIT INDEX



No.		Description

10.1*		Amended and Restated 2013 Employee Stock Purchase Plan, dated as of June 24, 2014
10.2*		Amended and Restated Deferred Compensation Plan for Nonemployee directors, dated as of June 24, 2014
10.3*		Amended and Restated 2009 Equity and Performance Incentive Plan, dated as of June 24, 2014
10.4*		Form of Restricted Stock Agreement between the Company and Employees for grants of time-based vesting of restricted stock under the GenCorp Inc. Amended and Restated 2009 Equity and Performance Incentive Plan
10.5*		Form of Unrestricted Stock Agreement between the Company and Directors for grants of common stock under the GenCorp Inc. Amended and Restated 2009 Equity and Performance Incentive Plan
10.6*		Form of Director Nonqualified Stock Option Agreement between the Company and Directors for grants of nonqualified stock options under the GenCorp Inc. Amended and Restated 2009 Equity and Performance Incentive Plan
31.1*		Certification of Principal Executive Officer pursuant to Rule 13a — 14 (a) of the Securities Exchange Act of 1934, as amended.
31.2*		Certification of Principal Financial Officer pursuant to Rule 13a — 14 (a) of the Securities Exchange Act of 1934, as amended.
32.1*		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a — 14(b) of the Securities and Exchange Act of 1934, as amended, and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2014, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statement of Shareholders’ Deficit, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.

* Filed herewith.

Exhibit 10.1

GenCorp Inc.

Amended and Restated 2013 Employee Stock Purchase Plan

Approved by Shareholders on March 27, 2013

and as amended by the Board of Directors

on January 21, 2014

and as last amended by the Board of Directors

on July 24, 2014

GENCORP INC.

2013 EMPLOYEE STOCK PURCHASE PLAN


1	PURPOSE .

The purpose of this Plan is to provide an opportunity for Employees of GenCorp Inc. (the “Corporation”) and its Designated Affiliates to purchase Common Stock of the Corporation and thereby to have an additional incentive to contribute to the prosperity of the Corporation. It is the intention of the Corporation that the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended, although the Corporation makes no undertaking nor representation to maintain such qualification. In addition, this Plan document authorizes the grant of options under a non-423 Plan which do not qualify under Section 423 of the Code pursuant to rules, procedures or sub-plans adopted by the Board (or its designate) designed to achieve desired tax or other objectives.


2	DEFINITIONS .


(a)	“Affiliate” shall mean any (i) Subsidiary and (ii) any other entity other than the Corporation in an unbroken chain of entities beginning with the Corporation if, at the time of the granting of the option, each of the entities, other than the last entity in the unbroken chain, owns or controls 50 percent or more of the total ownership interest in one of the other entities in such chain.


(b)	“Board” shall mean the Board of Directors of the Corporation.


(c)	“Code” shall mean the Internal Revenue Code of 1986, of the USA, as amended. Any reference to a section of the Code herein shall be a reference to any successor or amended section of the Code.


(d)	“Code Section 423 Plan” shall mean an employee stock purchase plan which is designed to meet the requirements set forth in Code Section 423.


(e)	“Committee” shall mean the committee appointed by the Board in accordance with Section 14 of the Plan.


(f)	“Common Stock” shall mean the Common Stock of the Corporation, or any stock into which such Common Stock may be converted.

(g)

“Compensation” shall mean an Employee’s base cash compensation, commissions and shift premiums paid on account of personal services rendered by the Employee to the Corporation or a Designated Affiliate, but shall exclude payments for overtime, incentive compensation, incentive payments and bonuses, with any modifications determined by the Committee. The Committee shall have the authority to determine and approve all forms of pay to be included in the definition of Compensation and may change the definition on a prospective basis.


(h)	“Contributions” shall mean the payroll deductions (to the extent permitted under applicable local law) and other additional payments that the Corporation may allow to be made by a Participant to fund the exercise of options granted pursuant to the Plan if payroll deductions are not permitted under applicable local law.


(i)	“Corporation” shall mean GenCorp Inc., a Delaware corporation.


(j)	“Designated Affiliate” shall mean an Affiliate that has been designated by the Committee as eligible to participate in the Plan with respect to its Employees. In the event the Designated Affiliate is not a Subsidiary, it shall be designated for participation in the Non-423 Plan.

(k)

“Employee” shall mean an individual classified as an employee (within the meaning of Code Section 3401(c) and the regulations thereunder or as otherwise determined under applicable local law) by the Corporation or a Designated Affiliate on the Corporation’s or such Designated Affiliate’s payroll records during the relevant participation period. Employees shall not include individuals whose customary employment is for not more than five (5) months in any calendar year (except those Employees in such category the exclusion of whom is not permitted under applicable local law) or individuals classified as independent contractors.


(l)	“Entry Date” shall mean the first Trading Day of the Offering Period.

(m)

“Fair Market Value” shall be the closing sales price for the Common Stock (or the closing bid, if no sales were reported) as quoted on the New York Stock Exchange on the date of determination if that date is a Trading Day, or if the date of determination is not a Trading Day, the last market Trading Day prior to the date of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable.


(n)	“Non-423 Plan” shall mean an employee stock purchase plan which does not meet the requirements set forth in Code Section 423.


(o)	“Offering Period” shall mean the period of six (6) months during which an option granted pursuant to the Plan may be exercised, commencing on the first Trading Day on or after January 1 and July 1, respectively. The duration and

timing of Offering Periods may be changed or modified by the Committee.


(p)	“Participant” shall mean a participant in the Plan as described in Section 5 of the Plan.


(q)	“Plan” shall mean this Employee Stock Purchase Plan which includes: (i) a Code Section 423 Plan and (ii) a Non-423 Plan.


(r)	“Purchase Date” shall mean the last Trading Day of each Offering Period.


(s)	“Purchase Price” shall mean 85% of the Fair Market Value of a share of Common Stock on the Purchase Date; provided however, that the Purchase Price may be adjusted by the Committee pursuant to Section 7.4.


(t)	“Shareowner” shall mean a record holder of shares entitled to vote shares of Common Stock under the Corporation’s Code of Regulations.


(u)	“Subsidiary” shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, as described in Code Section 424(f).


(v)	“Trading Day” shall mean a day on which U.S. national stock exchanges and the national market system are open for trading.


3	ELIGIBILITY .

Any Employee regularly employed on a full-time or part-time (20 hours or more per week on a regular schedule) basis, or on any other basis as determined by the Corporation (if required under applicable local law) for purposes of the Non-423 Plan or any separate offering under the Code Section 423 Plan, by the Corporation or by any Designated Affiliate on an Entry Date shall be eligible to participate in the Plan with respect to the Offering Period commencing on such Entry Date, provided that the Committee may establish administrative rules requiring that employment commence some minimum period (e.g., one pay period) prior to an Entry Date to be eligible to participate with respect to the Offering Period beginning on that Entry Date. The Committee may also determine that a designated group of highly compensated Employees are ineligible to participate in the Plan so long as the excluded category fits within the definition of “highly compensated employee” in Code Section 414(q). No Employee may participate in the Plan if immediately after an option is granted the Employee owns or is considered to own (within the meaning of Code Section 424(d)) shares of stock, including stock which the Employee may purchase by conversion of convertible securities or under outstanding options granted by the Corporation, possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Corporation or of any of its Subsidiaries. All Employees who participate in the same offering under the Plan shall have the same rights and privileges under such offering, except for differences that may be needed to facilitate compliance with applicable local law, as determined by the Corporation and that are consistent with Code Section 423(b)(5); provided, however, that Employees participating in the Non-423 Plan by means of rules, procedures or sub-plans adopted pursuant to Section 15 need not have the same rights and privileges as Employees participating in the Code Section 423 Plan. The Board may impose restrictions on eligibility and participation of Employees who are officers and directors to facilitate compliance with federal or state securities laws or foreign laws.

If a Participant receives a hardship distribution from the Corporation’s or a Designated Affiliate’s qualified cash or deferred arrangement, such Participant shall cease participation in the Plan and shall be unable to resume participation in the Plan until the later of six months from the date of the hardship distribution or such later date as provided in the Corporation’s or a Designated Affiliate’s qualified cash or deferred arrangement.


4	OFFERING PERIODS .

The Plan shall be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after January 1 and July 1 of each year, or on such other date as the Committee shall determine, and continuing thereafter for six (6) months or until terminated pursuant to Section 13 hereof. The Committee shall have the authority to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without Shareowner approval if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected thereafter.


5	PARTICIPATION .

5.1

An Employee who is eligible to participate in the Plan in accordance with Section 3 may become a Participant by completing and submitting, on a date prescribed by the Committee prior to an applicable Entry Date, a completed payroll deduction authorization or, if applicable local law prohibits payroll deductions for the purpose of the Plan, other authorization stating the amount of Contributions to the Plan expressed as any whole percentage up to ten percent (10%) of the eligible Employee’s Compensation and Plan enrollment form provided by the Corporation or by following an electronic or other enrollment process as prescribed by the Committee. Where applicable local law prohibits payroll deductions for the purpose of the Plan, the Corporation may permit a Participant to contribute amounts to the Plan through payment by cash, check or other means set forth in the Plan enrollment form prior to each Purchase Date of each Offering Period. An eligible Employee may authorize Contributions at the rate of any whole percentage of the

Employee’s Compensation, not to exceed ten percent (10%) of the Employee’s Compensation. All payroll deductions may be held by the Corporation and commingled with its other corporate funds where administratively appropriate, except where applicable local law requires that Contributions to the Plan from Participants be segregated from the general corporate funds and/or deposited with an independent third party. No interest shall be paid or credited to the Participant with respect to such Contributions, unless required by local law. The Corporation shall maintain a separate bookkeeping account for each Participant under the Plan and the amount of each Participant’s Contributions shall be credited to such account. A Participant may not make any additional payments into such account.

5.2

Under procedures established by the Committee, a Participant may withdraw from the Plan during an Offering Period, by completing and filing a new payroll deduction authorization or, if applicable local law prohibits payroll deductions for the purpose of the Plan, other Contribution authorization and Plan enrollment form with the Corporation or by following electronic or other procedures prescribed by the Committee, prior to the change enrollment deadline established by the Corporation. If a Participant withdraws from the Plan during an Offering Period, his or her accumulated Contributions will be refunded to the Participant without interest (unless required by local law). The Committee may, subject to the requirements applicable to qualified cash or deferred arrangements set forth in the last paragraph of Section 3 hereof, establish rules limiting the frequency with which Participants may withdraw and re-enroll in the Plan and may impose a waiting period on Participants wishing to re-enroll following withdrawal.

5.3

A Participant may change his or her rate of Contributions at any time by filing a new payroll deduction authorization or, if applicable local law prohibits payroll deductions for the purpose of the Plan, other authorization stating the amount of Contributions to the Plan expressed as any whole percentage up to ten percent (10%) of the eligible Employee’s Compensation and Plan enrollment form or by following electronic or other procedures prescribed by the Committee; provided that, (i) during the initial Offering Period, commencing on April 1 and ending on June 30, 2014, each Participant shall not be entitled to change his or her Contribution rate; and (ii) in any subsequent Offering Period, each Participant shall be entitled to change his or her Contribution rate only once. If a Participant has not followed such procedures to change the rate of Contributions, the rate of Contributions shall continue at the originally elected rate throughout the Offering Period and future Offering Periods. In accordance with Section 423(b)(8) of the Code, the Committee may reduce a Participant’s Contributions to zero percent (0%) at any time during an Offering Period.


6	TERMINATION OF EMPLOYMENT .

In the event any Participant terminates employment with the Corporation or any of its Designated Affiliates for any reason (including death) prior to the expiration of an Offering Period, the Participant’s participation in the Plan shall terminate and all amounts credited to the Participant’s account shall be paid to the Participant or, in the case of death, to the Participant’s heirs or estate, without interest. Whether a termination of employment has occurred shall be determined by the Committee (subject to any post-employment participation period required by law). The Committee may also establish rules regarding when leaves of absence or changes of employment status will be considered to be a termination of employment, including rules regarding transfer of employment among Designated Affiliates, Affiliates and the Corporation, and the Committee may establish termination-of-employment procedures for this Plan that are independent of similar rules established under other benefit plans of the Corporation and its Affiliates.


7	OFFERING .

7.1

Subject to adjustment as set forth in Section 10, the maximum number of shares of Common Stock that may be issued pursuant to the Plan shall be 1,500,000 shares. If, on a given Purchase Date, the number of shares with respect to which options are to be exercised exceeds the number of shares then available under the Plan, the Corporation shall make a pro rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable.

7.2

Each Offering Period shall be determined by the Committee. Unless otherwise determined by the Committee, the Plan will operate with successive six (6) month Offering Periods commencing at the beginning of each fiscal year half. The Committee shall have the power to change the duration of future Offering Periods, without Shareowner approval, and without regard to the expectations of any Participants.

7.3

Each eligible Employee who has elected to participate as provided in Section 5.1 shall be granted an option to purchase that number of shares of Common Stock (not to exceed 500 shares, subject to adjustment under Section 10 of the Plan) which may be purchased with the Contributions accumulated on behalf of such Employee during each Offering Period at the Purchase Price specified in Section 7.4 below, subject to the additional limitation that no Employee shall be granted an option to purchase Common Stock under the Plan and all employee stock purchase plans of the Corporation and its Subsidiaries intended to be Code Section 423 plans, at a rate which exceeds U.S. twenty-five thousand dollars (U.S. $25,000) of the Fair Market Value of such Common Stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time. Notwithstanding the foregoing, stock purchase under a Non-423 Plan shall not limit the amount that a Participant may purchase under Section 7.3. For purposes of the Plan,

an option is “granted” on a Participant’s Entry Date. An option will expire upon the earlier to occur of (i) the termination of a Participant’s participation in the Plan; or (ii) the termination of an Offering Period. This section shall be interpreted so as to comply with Code Section 423(b)(8). To the extent permissible under Code Section 423 and the regulations thereunder, any amounts that remain in the Participant’s Account because of a share limitation shall be carried over to the next Offering Period.

7.4

The Purchase Price under each option shall be a percentage (not less than eighty-five percent (85%)) established by the Committee (“Designated Percentage”) of the Fair Market Value of the Common Stock on the Purchase Date on which the Common Stock is purchased. The Committee may change the Designated Percentage with respect to any future Offering Period, but not below eighty-five percent (85%), and the Committee may determine with respect to any prospective Offering Period that the option price shall be the Designated Percentage of the Fair Market Value of the Common Stock on the Purchase Date.


7.5	For purposes of the Code Section 423 Plan only, and unless the Committee otherwise determines, each Designated Affiliate shall be deemed to participate in a separate offering from the Corporation or any other Designated Affiliate, provided that the terms of participation within any such offering are the same for all Participants in such offering, as determined under Code Section 423.


8	PURCHASE OF STOCK .

Upon the expiration of each Offering Period, a Participant’s option shall be exercised automatically for the purchase of that number of whole shares of Common Stock which the accumulated Contributions credited to the Participant’s account at that time shall purchase at the applicable Purchase Price. Any amounts that remain in the Participant’s Account shall be carried over to the next Offering Period. Notwithstanding the foregoing, the Corporation or its designee may make such provisions and take such action as it deems necessary or appropriate for the withholding of taxes and/or social insurance contributions which the Corporation or its Designated Affiliate is required or permitted by applicable law or regulation of any governmental authority to withhold. Each Participant, however, shall be responsible for payment of all individual tax and social insurance contribution liabilities arising under the Plan.


9	PAYMENT AND DELIVERY .

As soon as practicable after the exercise of an option, the Corporation shall deliver to the Participant a record of the Common Stock purchased and the balance of any amount of Contributions credited to the Participant’s account not used for the purchase, except as specified below. The Committee may permit or require that shares be deposited directly with a broker designated by the Committee or to a designated agent of the Corporation, and the Committee may utilize electronic or automated methods of share transfer. The shares shall be retained with such broker or agent for a thirty (30) day period of time or such longer period of time as may be required by the Committee. The Committee may establish other procedures to permit tracking of disqualifying dispositions of such shares. The Corporation shall retain the amount of payroll deductions used to purchase Common Stock as full payment for the Common Stock and the Common Stock shall then be fully paid and non-assessable. Except as otherwise provided herein, no Participant shall have any voting, dividend, or other Shareowner rights with respect to shares subject to any option granted under the Plan until the shares subject to the option have been purchased and delivered to the Participant as provided in this Section 9.


10	RECAPITALIZATION .

If after the grant of an option, but prior to the purchase of Common Stock under the option, there is any increase or decrease in the number of outstanding shares of Common Stock because of a stock split, stock dividend, combination or recapitalization of shares subject to options, the number of shares to be purchased pursuant to an option, the price per share of Common Stock covered by an option and the maximum number of shares specified in Section 7.1 may be appropriately adjusted by the Board, and the Board shall take any further actions which, in the exercise of its discretion, may be necessary or appropriate under the circumstances.

The Board’s determinations under this Section 10 shall be conclusive and binding on all parties.


11	MERGER, LIQUIDATION, OTHER CORPORATION TRANSACTIONS .

In the event of the proposed liquidation or dissolution of the Corporation, the Offering Period will terminate immediately prior to the consummation of such proposed transaction, unless otherwise provided by the Board in its sole discretion, and all outstanding options shall automatically terminate and the amounts of all payroll deductions will be refunded without interest (except as may be required by applicable local law, as determined by the Corporation) to the Participants.

In the event of a proposed sale of all or substantially all of the assets of the Corporation, or the merger or consolidation of the Corporation with or into another corporation, then in the sole discretion of the Board, (1) each option shall be assumed or an equivalent option shall be substituted by the successor corporation or parent or subsidiary of such successor corporation, (2) a

date established by the Board on or before the date of consummation of such merger, consolidation or sale shall be treated as a Purchase Date, and all outstanding options shall be exercised on such date, or (3) all outstanding options shall terminate and the accumulated Contributions will be refunded without interest to the Participants.


12	TRANSFERABILITY .

Options granted to Participants may not be voluntarily or involuntarily assigned, transferred, pledged, or otherwise disposed of in any way, and any attempted assignment, transfer, pledge, or other disposition shall be null and void and without effect. If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interests under the Plan, other than as set forth in Section 22 and as permitted by the Code, such act shall be treated as an election by the Participant to discontinue participation in the Plan pursuant to Section 5.2.


13	AMENDMENT OR TERMINATION OF THE PLAN .


13.1	The Plan shall continue until January 1, 2024 unless otherwise terminated in accordance with Section 13.2.

13.2

The Board may, in its sole discretion, insofar as permitted by law, terminate or suspend the Plan, or revise or amend it in any respect whatsoever; provided that the Plan may not be amended in any way that would cause the Plan, if such amendment were not approved by the Corporation’s shareholders, to fail to comply with (i) the requirements for employee stock purchase plans under Section 423 of the Code (except as may relate to a Non-423 Plan) or (ii) any other requirement of applicable law or regulation, unless and until shareholder approval is obtained.


14	ADMINISTRATION.

The Board shall appoint a Committee consisting of at least two members who will serve for such period of time as the Board may specify and whom the Board may remove at any time. The Committee will have the authority and responsibility for the day-to-day administration of the Plan, the authority and responsibility specifically provided in this Plan and any additional duty, responsibility and authority delegated to the Committee by the Board, which may include any of the functions assigned to the Board in this Plan. The Committee may delegate to one or more individuals the day-to-day administration of the Plan. The Committee shall have full power and authority to promulgate any rules and regulations which it deems necessary for the proper administration of the Plan, to interpret the provisions and supervise the administration of the Plan, to make factual determinations relevant to Plan entitlements and to take all action in connection with administration of the Plan as it deems necessary or advisable, consistent with the delegation from the Board. Decisions of the Board and the Committee shall be final and binding upon all participants. Any decision reduced to writing and signed by a majority of the members of the Committee shall be fully effective as if it had been made at a meeting of the Committee duly held. The Corporation shall pay all expenses incurred in the administration of the Plan. No Board or Committee member shall be liable for any action or determination made in good faith with respect to the Plan or any option granted hereunder.


15	COMMITTEE RULES FOR FOREIGN JURISDICTIONS AND THE NON-423 PLAN .

15.1

The Committee may adopt rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules and procedures regarding handling of Contributions, payment of interest, conversion of local currency, payroll tax, withholding procedures and handling of stock certificates which vary with local legal requirements.

15.2

The Committee may also adopt rules, procedures or sub-plans applicable to particular Affiliates or locations, which rules, procedures or sub-plans may be designed to be outside the scope of Code Section 423. The terms of such rules, procedures or sub-plans may take precedence over other provisions of this Plan, with the exception of Section 7.1, but unless otherwise expressly superseded by the terms of such rule, procedure or sub-plan, the provisions of this Plan shall govern the operation of the Plan. To the extent inconsistent with the requirements of Code Section 423, such rules, procedures or sub-plans shall be considered part of the Non-423 Plan, and the options granted thereunder shall not be considered to comply with Section 423.


16	SECURITIES LAWS REQUIREMENTS .

The Corporation shall not be under any obligation to issue Common Stock upon the exercise of any option unless and until the Corporation has determined that: (i) it and the Participant have taken all actions required to register the Common Stock under the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder or to perfect an exemption from the registration requirements thereof; (ii) any applicable listing requirement of any stock exchange on which the Common Stock is listed has been satisfied; and (iii) all other applicable provisions of state, federal and applicable foreign law have been satisfied.


17	GOVERNMENTAL REGULATIONS.

This Plan and the Corporation’s obligation to sell and deliver shares of its stock under the Plan shall be subject to the approval of any governmental authority required in connection with the Plan or the authorization, issuance, sale, or delivery of stock hereunder.


18	NO ENLARGEMENT OF EMPLOYEE RIGHTS .

Nothing contained in this Plan shall be deemed to give any Employee the right to be retained in the employ or service of the Corporation or any Designated Affiliate or to interfere with the right of the Corporation or Designated Affiliate to discharge any Employee at any time.


19	GOVERNING LAW .

This Plan shall be governed by the laws of the State of Delaware, U.S.A., without regard to that State’s choice of law rules.

20 EFFECTIVE DATE .

This Plan shall be effective January 1, 2014, subject to approval of the Shareowners of the Corporation within 12 months before or after its adoption by the Board.


21	REPORTS.

Individual accounts shall be maintained for each Participant in the Plan. Statements of account shall be given to Participants at least annually, which statements shall set forth the amounts of Contributions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any. The Committee shall also file the appropriate reports with the IRS required under Code Section 6039(a) and provide the statements to Participants required under Code Section 6039(b).


22	DESIGNATION OF BENEFICIARY FOR OWNED SHARES .

Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Corporation during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

Exhibit 10.2

GENCORP INC.

DEFERRED COMPENSATION PLAN

FOR NONEMPLOYEE DIRECTORS

(Effective January 1, 1992)

as adopted by the Board of Directors

November 13, 1991

Approved by Shareholders

March 25, 1992

and

as last amended by the

Board of Directors

effective June 24, 2014

GENCORP INC.

DEFERRED COMPENSATION PLAN

FOR NONEMPLOYEE DIRECTORS

TABLE OF CONTENTS

Article Section Page

1 Establishment of Plan 1

2 Definitions and Construction

2.1 Definitions 1

2.2 Construction 3

3 Eligibility and Participation 4

4 Deferral of Director Pay

4.1 Deferral Election 4

4.2 Irrevocability 5

5 Investment Programs for Cash Deferrals

5.1 Individual Accounts 5

5.2 No Trust Fund 6

5.3 Description of Investment Programs 6

5.4 Responsibility for Investment Choices 7

6 Distribution of Deferred Amounts

6.1 Distribution 8

6.2 Survivor Benefits 8

6.3 Change in Control 8

6.4 Conversion and Adjustment in

Event of Recapitalization 9

7 Miscellaneous

7.1 Finality of Determinations 9

7.2 Plan Administration 10

7.3 Amendment, Suspension or

Termination of the Plan 10

7.4 Limitations on Transfer 10

7.5 Governing Law 10

7.6 Expenses of Administration 10

7.7 Rabbi Trust 10

GENCORP INC.

DEFERRED COMPENSATION PLAN

FOR NONEMPLOYEE DIRECTORS

Article 1

Establishment of Plan

GenCorp Inc. ("Company"), hereby adopts the deferred compensation plan set forth herein, effective as of January 1, 1992, provided that the provisions for the GenCorp Stock Fund shall be effective only upon approval by the Company's shareholders. The purpose of the Plan is to provide the Company's Nonemployee Directors with the opportunity to defer the receipt of Director Pay on a pre‑tax basis and to earn investment income on the amount of their deferred pay. The Plan predates the effective date of Section 409A of the Internal Revenue Code. The terms and conditions of the Plan as in effect on October 3, 2004, continue to apply to deferrals that were vested as of December 31, 2004 (and earnings thereon). For ease of reference, a copy of the Plan, as in effect on that date, is attached hereto as Appendix 1.

Article 2

Definitions and Construction

2.1 Definitions . The following capitalized words and phrases when used in the text of the Plan shall have the meanings set forth below:


(a)	"Board" means the Board of Directors of the Company.


(b)	"Calendar Year" means each consecutive twelve‑month period commencing January 1 and ending December 31.


(c)	“Change in Control” means the occurrence of any of the following events:


(1)	All or substantially all (meaning having a total gross fair market value at least equal to 50.1% of the total gross fair market value of all of the Company’s assets immediately before such acquisition or acquisitions) of the assets of the Company are acquired by a Person (during a twelve month period ending on the date of the most recent acquisition by such person); or

(2)

the Company is merged, consolidated or reorganized into or with another corporation or entity during a twelve-month period with the result that upon the conclusion of the transaction less than 50.1% of the outstanding securities entitled to vote generally in the election of directors or other capital interests of the surviving, resulting or acquiring corporation are beneficially owned (as that term is defined in Rule 13-d 3 under the Exchange Act) by the shareholders of the Company immediately prior to the completion of the transaction.


	(d) "Company" means GenCorp Inc.


(e)	"Deferral Dates" means the dates on which Director payments are made, are paid, namely January 15, April 15, July 15 and October 15.

(f) "Director" means a member of the Board.


(g)	"Director Pay" means the aggregate compensation payable by the Company to a Director, including committee chair and membership pay whether payable in cash or GenCorp Common Stock, including restricted GenCorp Common Stock payable as a matching grant or other stock grants.


(h)	"Effective Date" means January 1, 1992 (except the provisions for the GenCorp Stock Fund which will become effective upon approval of the Plan by the Company's shareholders).


(i)	"Market Value" means


	(1) in the case of shares of GenCorp Common Stock (except as otherwise provided in Section

6.3 hereof), the closing price (or if no trading occurs on any trading day, the mean between the closing bid and asked prices) as quoted in the New York Stock Exchange Composite Transactions as published in the Wall Street Journal (or, if not so listed, as quoted on such other exchange on which such securities shall then be listed, or if unlisted, the mean average between the over‑the‑counter high bid and low asked quotation) on the day for which the determination is to be made, or if such day is not a trading day, the trading day immediately preceding such day, and as used in Section 6.4 hereof, in the event of a Recapitalization, the weighted average of the trading prices on the day (or the weighted average of such trading prices on such trading days) following the occurrence thereof as determined by the Organization and Compensation Committee of the Board in its discretion, or in the event of an issuer tender offer in connection with a Recapitalization, the weighted average of the trading prices on the trading day immediately following the termination date of such issuer tender offer, or any extensions thereof (or the weighted average of such trading prices on the five trading days immediately following such termination date) as determined by the Organization and Compensation Committee in its discretion; and

(2) in the case of shares of the Designated Equity Fund (i) for a bank commingled fund, the closing price of a share as determined by the trustee of such fund, (ii) for a closed‑end fund, the closing price of a share on the New York Stock Exchange, or (iii) for an open‑end mutual fund, the net asset value per share of a share as determined by such fund, on the date for which the determination is to be made, or if such date is not a trading day, the trading day immediately preceding such determination date.


(j)	"Nonemployee Director" means a Director who is not an employee of the Company.


(k)	"Participant" means a Nonemployee Director who elects to defer all or a portion of his Director Pay in accordance with Article 4.

(l)

"Plan" means the GenCorp Inc. Deferred Compensation Plan for Nonemployee Directors described in this document, as approved by the Board on November 13, 1991 and as amended from time to time; provided further that with respect to deferrals vested prior to January 1, 2005, “Plan” means the GenCorp Inc. Deferred Compensation Plan for Nonemployee Directors as in effect on October 3, 2004 (and including any non-material amendments made thereafter) and attached hereto as Appendix 1.

(m) "Recapitalization" means a significant change in the capital structure of the Company (which may include an issuer tender offer made to all of the Company's shareholders to purchase outstanding shares of the

Company's Common Stock), as determined in the discretion of the Board as constituted immediately prior to the occurrence thereof.

2.2 Construction . Whenever any word is used herein in the singular form, it shall be construed as though it were also used in the plural form in all cases where it would so apply. Headings of articles and sections are inserted for convenience and reference, and they constitute no part of the Plan. Except where otherwise indicated by the context, any masculine terminology herein shall include the feminine and neuter.

Article 3

Eligibility and Participation

Any Nonemployee Director shall be eligible to participate in the Plan. A Nonemployee Director may become a Participant in the Plan by electing to defer all or a portion of his Director Pay in accordance with Article 4.

Article 4

Deferral of Director Pay

4.1 Deferral Election . By written notice to the Secretary of the Company which is either received by the Secretary or postmarked no later than 30 days after a director’s initial appointment or subsequent annual reappointment, any Nonemployee Director may elect to defer all or a portion of the Director Pay which may be payable to him for services rendered during such term and to have such deferred Director Pay held for his benefit under the terms of the Plan. Notwithstanding the foregoing, if the term of a director’s appointment exceeds one year, then any deferral of Director Pay for services after the one year term must be received no later than the December 31st of the calendar year preceding the beginning

of the subsequent term. Any election made by a Participant pursuant to this Section 4.1 must specify his amount of deferral, investment choice[s] and time and manner of distribution, as described in subsections (a), (b) and (c) below:


(a)	Amount of Deferral . Subject to a minimum annual deferral of $5,000, a Participant must specify the amount of his deferral as


(1)	his total Director Pay for the Calendar Year,


(2)	a percentage of his total Director Pay for the Calendar Year, or


(3)	a flat annual dollar amount not in excess of his total Director Pay for the Calendar Year.

If a Participant elects to defer less than 100 percent of his Director Pay, deferrals pursuant to paragraphs (2) or (3) will be deducted by the Company on a pro rata basis from the regular quarterly payments of Director Pay.


(b)	Investment Choices . A Participant must specify the amount or percentage of his deferred Director Pay to be applied to one or more of the following investment programs as further described in Article 5:


(1)	GenCorp Stock Fund, but only for amounts deferred prior to November 30, 2009 and on or after March 24, 2010;


(2)	Designated Equity Fund;


(3)	Cash Deposit Fund.


	(c) Distribution . A Participant must elect to receive the cash value of his deferred Director Pay, plus earnings thereon,


(1)	in either (i) a single payment, or (ii) in two or more approximately equal annual installments, not to exceed ten; and

(2)

commencing, at his election, (i) 30 days following the date he ceases to be a Director and has a “separation from service” (as defined in Treas. Reg. 1.409A-1(h)), provided that if the Director is then a "specified employee" as defined in Section 409A of the Internal Revenue Code, this shall be the first day of the seventh month following the end of the month in which occurs such separation from service, (ii) on a fixed future date specified in the written election notice, or (iii) upon the Participant's attainment of an age specified by him in the written election notice.

In addition, a Participant may elect to have the cash value of his deferred Director Pay, plus earnings thereon, distributed in the event of his death as a single payment on the first day of the month following the month in which death occurs, notwithstanding any election made by the Participant pursuant to paragraphs (1) and (2) above.

4.2 Irrevocability . Except to the extent permissible under Code Section 409A and the regulations thereunder, all deferral elections under Section 4.1 shall be irrevocable.

Article 5

Investment Programs for Cash Deferrals

5.1 Individual Accounts . When a Participant has made a cash deferral election pursuant to Section 4.1, the Company shall establish an account on its books in his name and shall, in the case of the investment programs described in Sections 5.3(a) and (b), cause to be credited to such account as of each Deferral Date the number of full and fractional phantom shares which could be purchased with the amount deferred on such Deferral Date and, in the case of the investment program described in Section 5.3(c), cause to be credited to such account as of each Deferral Date the dollar amount deferred on such Deferral Date.

5.2 No Trust Fund . The Company shall not be required to reserve or otherwise set aside funds for the payment of any amounts credited to any account created hereunder. In addition, the Company shall not, and shall not be required to, actually purchase any stock, security or mutual fund units described in Sections 5.3 (a) and (b).

5.3 Description of Investment Programs .

(a)

GenCorp Stock Fund . Under this investment program, the Participant's account shall be credited with the number of full and fractional phantom shares of GenCorp Common Stock which could be purchased at the Market Value on the Deferral Date with the deferred amount designated for this investment program. The provisions of this Section 5.3(a) will not apply to any amounts deferred on or after November 30, 2009 and before March 24, 2010.

(1) In the event that the shares of GenCorp Common Stock shall be increased or decreased or changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization, merger, consolidation, recapitalization, stock split‑up, combination of shares, stock offerings, spin‑off or otherwise, such number of phantom shares of GenCorp Common Stock as shall be credited to the account of any Participant as of the record date for such action shall be proportionately or appropriately adjusted as of the payment or effective date to reflect such action. If any such adjustment shall result in a fractional share, such fractional phantom share shall also be credited to the account of the Participant.

(2)

The Participant's account shall further be credited with the number of phantom shares, including fractions, which would be purchasable at the Market Value on the date a dividend is paid on GenCorp Common Stock, with an aggregate amount equal to any dividend or the value of any other distribution (other than a distribution for which an adjustment in the number of phantom shares in the account is made pursuant to paragraph (1)) paid on that number of shares of GenCorp Common Stock which is equivalent to the number of phantom shares credited to the Participant's account on the record date of such dividend or other distribution.


(b)	Designated Equity Fund .

(1)

The Designated Equity Fund initially shall be the Northern Trust Company’s Collective Daily S&P 500 Equity Index Fund - Lending, which is designed to match the performance of and changes in Standard and Poor's 500 Index. The Designated Equity Fund may be changed from time to time by action of the Board, except that such change shall be only for future application and shall not affect the phantom shares previously credited to the account of any Participant.


(2)	Under this program, the Participant's account is credited with the number of full and fractional phantom shares of the Designated Equity Fund, which could be purchased at the Market Value on the Deferral Date with the deferred amount designated for this investment program.

(3) If and when any dividend is declared and paid, the Participant's account shall further be credited with the number of phantom shares, including fractions, which could be purchased at the Market Value on the dividend payment date with an aggregate amount equal to any ordinary or capital cash dividend paid on that number of shares of the Designated Equity Fund which is equivalent to the number of phantom shares credited to the Participant's account on the dividend record date.

(c)

Cash Deposit Fund . Under this program, the Participant's account is credited on the Deferral Date with that deferred dollar amount designated for this investment program. After the end of each Calendar Year quarter, there shall further be credited to each Participant's account an amount equal to three months' interest on the average balance credited to such account during such quarter computed at the prime interest rate payable by the Company at the beginning of each such quarter as determined by the Treasurer of the Company.

5.4 Responsibility For Investment Choices . Each Nonemployee Director is solely responsible for his decision to participate in the Plan and accepts all investment risks entailed by his participation and/or selection of an investment program, including the risk of loss of and a decrease in the value of his deferred Director Pay.

Article 6

Distribution of Deferred Amounts

6.1 Distribution . Subject to the terms of Sections 6.2, 6.3, 6.4 and 6.5, a Participant's interests in the Plan shall be distributed to him in accordance with his elections made pursuant to Section 4.1(c). All amounts shall be distributed in cash.

In the case of phantom shares credited to a Participant's account in the GenCorp Stock Fund or Designated Equity Fund of the Plan, the value of a Participant's interest on any distribution date elected by a Participant, whether such distribution is to be made in a single payment or in annual installments, will be the product of the pro rata portion of the Participant's phantom shares which is to be distributed on such date multiplied by the Market Value of GenCorp Common Stock or shares of the Designated Equity Fund, as the case may be, on such distribution date. In the case of annual installments, the value of a Participant's interest on each annual distribution date after the initial distribution will be calculated in a like manner based upon the applicable Market Value on each subsequent distribution date.

In the case of the Cash Deposit Fund, if a single payment has been elected, the entire cash value of a Participant's account on the distribution date will be paid in a single payment. Where annual installments have been elected, the cash value of the pro rata portion of the Participant's account balance to be distributed on such date (plus accrued interest thereon), shall be paid to the Participant on each annual installment distribution date.

6.2 Survivor Benefits . If a Participant dies before all or any portion of his interests under the Plan have been distributed to him, the interests remaining to be paid shall be distributed, on the date or dates and in the manner specified in such Participant's written deferral elections, to such beneficiary or beneficiaries as the Participant may have designated in writing to the Company or, in the absence of any such designation to his estate or to, or as directed by, his legal representatives.

6.3 Change in Control .


(a)	Notwithstanding any other provisions of the Plan, in the event of a Change in Control, such Director shall be immediately paid, in a single payment, the sum of (1) the Cash Value of his GenCorp Stock Fund account, (2) the Market Value of his Designated Equity Fund account and (3) the cash value of his Cash Deposit Fund account.

(b)

For purposes of this Section 6.3, the Cash Value of a Participant's GenCorp Stock Fund account shall be determined using as a conversion price the greater of (1) the tender offer or exchange offer price (if any), or (2) the highest market value of GenCorp Common Stock (or other security for which GenCorp Common Stock may have been exchanged pursuant to Section 5.3(a)(1)) during the ninety-day period preceding the Change in Control.

6.4 Conversion and Adjustment in Event of Recapitalization .

Notwithstanding any other provisions of the Plan, upon the occurrence of a Recapitalization, all shares credited to the Participant's account in the GenCorp Stock Fund ("Shares") shall first be adjusted to a Cash Value either (x) in the event of a Recapitalization not occurring in connection with an issuer tender offer, by multiplying the aggregate number of Shares by an amount, on a per share basis, equal to the prorated value as determined by the Organization and Compensation Committee of the Board of the (A) Cash and Market Value of any security or property distributed to shareholders in connection with the Recapitalization, (B) Cash and Market Value of any security or property paid to shareholders in exchange for GenCorp Common Stock in connection with the Recapitalization, and (C) Market Value of GenCorp Common Stock (or its successor), or (y) in the event of a Recapitalization occurring in connection with an issuer tender offer, by determining the sum of A + B obtained pursuant to the following calculations:

Tender Offer

Aggregate X Proration X Tender = A

Shares Rate Offer Price

and

Tender Offer

Aggregate X one ‑ Proration X Market = B

Shares Rate Value

For purposes of the foregoing calculations, the term Tender Offer Proration Rate shall mean the ratio (excluding consideration of any odd lot shares tendered or repurchased) of the number of shares repurchased by the Company in an issuer tender offer to the number of shares tendered to the Company in connection with such offer.

Article 7

Miscellaneous

7.1 Finality of Determinations . Authority to determine contested issues or claims arising under the Plan shall be vested in the GenCorp Administrative Committee, and any determination by the Administrative Committee pursuant to such authority shall be final and binding for all purposes and upon all interested persons and their heirs, successors, and personal representatives.

7.2 Plan Administration . Authority and responsibility for administration of the Plan, including maintenance of Participants' accounts hereunder and preparation and delivery of individual annual account statements to Participants, shall be vested in the GenCorp Organization & Compensation Committee. Responsibility for oversight of investment programs, and reporting on the performance thereof to the Board, shall be vested in the GenCorp Benefits Management Committee.

7.3 Amendment, Suspension or Termination of the Plan . The Board may amend, suspend or terminate the Plan in whole or in part at any time, provided that such amendment, suspension or termination shall not adversely affect rights or obligations with respect to funds or interests previously credited to the account of any Participant.

7.4 Limitations on Transfer . Participants shall have no rights to any funds or interests credited to their accounts except as set forth in this Plan. Such rights may not be anticipated, assigned, alienated or transferred, except in writing to a designated beneficiary or beneficiaries or by will or by the laws of descent and distribution. Any attempt to alienate, sell, exchange, transfer, assign, pledge, hypothecate or otherwise encumber or dispose of any such funds or interests by a Participant shall be void and of no effect. The foregoing limitations shall apply with equal force and effect to any beneficiary or beneficiaries designated by a Participant hereunder.

7.5 Governing Law . The Plan shall be governed by the laws of the State of Delaware. The Plan is not governed by the Employee Retirement Income Security Act of 1974.

7.6 Expenses of Administration . All costs and expenses incurred in the operation and administration of this Plan shall be borne by the Company.

7.7 Rabbi Trust . In the case of a GenCorp Common Stock deferral, and notwithstanding Section 5.2 herein, the Board may, in its sole discretion, cause the Company to establish one or more so-called “rabbi trusts” (as described in Revenue Procedure 92-64, I.R.B. 1992-33, 11, as modified by Notice 2000-56), to which shares of GenCorp Common Stock shall, to the extent permissible under Code Section 409A(b)(3), be contributed with respect to such Participant. In such event, references to “phantom stock” herein shall refer to GenCorp Common Stock so transferred to the rabbi trust. Distributions of deferred amounts shall be payable solely in shares of GenCorp Common Stock (notwithstanding Section 4.1(c) herein), subject to any limitations set forth in the rabbi trust agreement, in addition to the provisions set forth in Article 6 herein, and in the case of any inconsistency, the terms set forth in the rabbi trust agreement shall apply. Each Nonemployee Director is solely responsible for his decision to defer shares of GenCorp Common Stock into a rabbi trust and accepts all risks entailed by his participation in investment.

Appendix 1

Appendix 1 is the GenCorp Inc. Deferred Compensation Plan for Nonemployee Directors as in effect on October 3, 2004 (and including any non-material amendments made thereafter). A copy of Appendix 1 will be provided by the Company upon request.

Exhibit 10.3

GenCorp Inc.

Amended and Restated

2009 Equity and Performance Incentive Plan

Approved by Shareholders on March 25, 2009

and

as last amended by Shareholders on March 28, 2012

and

as last amended by the Board of Directors on June 24, 2014

Table of Contents



Article 1.	Establishment, Purpose, and Duration	1
Article 2.	Definitions	1
Article 3.	Administration	4
Article 4.	Shares Subject to the Plan and Maximum Awards	5
Article 5.	Eligibility and Participation	7
Article 6.	Options	7
Article 7.	Stock Appreciation Rights	9
Article 8.	Restricted Stock and Restricted Stock Units	10
Article 9.	Performance Units/Performance Shares	11
Article 10.	Cash-Based Awards and Other Stock-Based Awards	12
Article 11.	Performance Measures	13
Article 12.	Beneficiary Designation	15
Article 13.	Deferrals	15
Article 14.	Rights of Participants	15
Article 15.	Change in Control	16
Article 16.	Amendment, Modification, Suspension, and Termination	16
Article 17.	Withholding	17
Article 18.	Successors	17
Article 19.	General Provisions	17

GenCorp Inc.

Amended and Restated 2009 Equity and Performance Incentive Plan

ARTICLE 1.

Establishment, Purpose, and Duration

1.1 Establishment. GenCorp Inc., a Delaware corporation (hereinafter referred to as the “Company”), establishes an incentive compensation plan to be known as the 2009 Equity and Performance Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this document.

The Plan permits the grant of Cash-Based Awards, Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Other Stock-Based Awards.

The Plan shall become effective upon shareholder approval (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.

1.2 Purpose of the Plan. The purpose of the Plan is to promote the interests of the Company and its shareholders by strengthening the Company’s ability to attract, motivate, and retain Employees and Directors upon whose judgment, initiative, and efforts the financial success and growth of the business of the Company largely depend, and to provide an additional incentive for such individuals through stock ownership and other rights that promote and recognize the financial success and growth of the Company and create value for shareholders.

1.3 Duration of the Plan. Unless sooner terminated as provided herein, the Plan shall terminate ten years from the Effective Date. After the Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions.

ARTICLE 2.

Definitions

Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

2.1 “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 promulgated under the General Rules and Regulations of the Exchange Act.

2.2 “Annual Award Limit” or “Annual Award Limits” have the meaning set forth in Section 4.3.

2.3 “Award” means, individually or collectively, a grant under this Plan of Cash-Based Awards, Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units or Other Stock-Based Awards, in each case subject to the terms of this Plan. Awards shall also include, if approved by the Committee, any Nonqualified Stock Options, Incentive Stock Options, or Performance Shares that could not be fully awarded under the 1999 GenCorp Inc. Equity and Performance Incentive Plan because of any numerical limit on Awards set forth thereunder.

2.4 “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the General Rules and Regulations under the Exchange Act.

2.5 “Board” or “Board of Directors” means the Board of Directors of the Company.

2.6 “Cash-Based Award” means an Award granted to a Participant as described in Article 10.

2.7 “Change in Control” means a Change in Control as defined in Article 15.

2.8 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.9. “Committee” means the Organization and Compensation Committee of the Board, or any other committee designated by the Board to administer this Plan. The members of the Committee shall be appointed from time to time by and shall serve at the

discretion of the Board. The Committee shall consist of two or more directors who are Nonemployee Directors and “Outside Directors” (as such term is defined in Section 162(m) of the Code).

2.10 “Company” means GenCorp Inc., a Delaware corporation, and any successor thereto as provided in Article 18 herein.

2.11 “Consolidated Operating Earnings” means the consolidated earnings before income taxes of the Company, computed in accordance with generally accepted accounting principles, but shall exclude the effects of Extraordinary Items.

2.12 “Covered Employee” means a Participant who is a “covered employee,” as defined in Section 162(m) of the Code and the regulations promulgated under Section 162(m) of the Code, or any successor statute.

2.13 “Director” means a member of the Board of Directors of the Company and/or any of its Affiliates and/or Subsidiaries.

2.14 “ Director Pay Date” means January 15, April 15, July 15 and October 15 (or the next succeeding day the principal national securities exchange in the United States on which the Shares are then traded (“NYSE”) is open if any Director Pay Date is a day the NYSE is closed).

2.15 “Effective Date” has the meaning set forth in Section 1.1.

2.16 “Employee” means any employee of the Company, its Affiliates and/or Subsidiaries.

2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

2.18 “Extraordinary Items” means (i) extraordinary, unusual and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) changes in tax or accounting regulations or laws; or (iv) the effect of a merger or acquisition, all of which must be identified in the audited financial statements, including footnotes, or Management Discussion and Analysis section of the Company’s annual report.

2.19 “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee which sets forth the terms and conditions of an Award. An Evidence of Award may be in any electronic medium, may be limited to a notation on the books and records of the Company and, with the approval of the Committee, need not be signed by a representative of the Company or a Participant.

2.20 “Fair Market Value” or “FMV” means the last sales price reported for the Shares on the applicable date as reported on the principal national securities exchange in the United States on which it is then traded or The NASDAQ Stock Market (if the Shares are so listed), or, if such date is not a trading day, the last prior day on which the Shares were so traded; or if not so listed, the mean between the closing bid and asked prices of publicly traded Shares in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Committee in a manner consistent with the provisions of the Code. If, however, the required accounting standards used to account for equity Awards granted to Participants are substantially modified subsequent to the Effective Date of the Plan such that fair value accounting for such Awards becomes required, the Committee shall have the ability to determine an Award’s FMV based on the relevant facts and circumstances.

2.21 “Full Value Award” means an Award other than in the form of an Option or SAR, and which is settled by the issuance of Shares.

2.22 “Freestanding SAR” means an SAR that is granted independently of any Options, as described in Article 7.

2.23 “Grant Price” means the price established at the time of grant of a SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.

2.24 “Incentive Stock Option” means an Option that is intended to qualify as an “incentive stock option” under Section 422 of the Code or any successor provision.

2.25 “Insider” shall mean an individual who is, on the relevant date, an officer, Director, or more than ten percent (10%) Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.

2.26 “Net Income” means the consolidated net income before taxes for the Plan Year, as reported in the Company’s annual

report to shareholders or as otherwise reported to shareholders.

2.27 “Nonemployee Director” has the same meaning set forth in Rule 16b-3 promulgated under the Exchange Act, or any successor definition adopted by the United States Securities and Exchange Commission.

2.28 “Nonqualified Stock Option” means an Option that is not intended to meet the requirements of Section 422 of the Code, or that otherwise does not meet such requirements.

2.29 “Operating Cash Flow” means cash flow from operating activities as defined in Statement of Financial Accounting Standards Number 95, Statement of Cash Flows.

2.30 “Option” means the right to purchase Shares granted to a Participant in accordance with Article 6. Options granted under this Plan may be Nonqualified Stock Options, Incentive Stock Option or a combination thereof.

2.31 “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

2.32 “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.

2.33 “Participant” means any eligible person as set forth in Article 5 to whom an Award is granted.

2.34 “Performance-Based Compensation” means compensation under an Award that satisfies the requirements of Section 162(m) of the Code for deductibility of remuneration paid to Covered Employees.

2.35 “Performance Measures” means measures as described in Article 11 on which the performance goals are based and which are approved by the Company’s shareholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation.

2.36 “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

2.37 “Performance Share” means an Award granted to a Participant, as described in Article 9.

2.38 “Performance Unit” means an Award granted to a Participant, as described in Article 9.

2.39 “Period of Restriction” means the period when Restricted Stock or Restricted Stock Units are subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article 8.

2.40 “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

2.41 “Plan” means the GenCorp Inc. 2009 Equity and Performance Incentive Plan.

2.42 “Plan Year” means the Company’s fiscal year that begins December 1 and ends November 30.

2.43 “Restricted Stock” means Shares granted or sold to a Participant pursuant to Article 8 as to which the Period of Restriction has not lapsed.

2.44 “Restricted Stock Unit” means a unit granted or sold to a Participant pursuant to Article 8 as to which the Period of Restriction has not lapsed.

2.45 “Section 409A Rules” means the provisions of Section 409A of the Code and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder.

2.46 “Share” means a share of common stock of the Company, $.10 par value per share.

2.47 “Stock Appreciation Right” or “SAR” means an Award, designated as a SAR and granted pursuant to the terms of Article 7 herein.

2.48 “Subsidiary” means a corporation, company or other entity (i) more than 50 percent (50%) of whose outstanding shares

or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50 percent (50%) of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company, except that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50 percent (50%) of the total combined voting power represented by all classes of stock issued by such corporation.

ARTICLE 3.

Administration

3.1 General. The Committee shall be responsible for administering the Plan, subject to this Article 3 and the other provisions of the Plan. The act or determination of a majority of the Committee shall be the act or determination of the Committee and any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority at a meeting duly held. The Committee may employ attorneys, consultants, accountants, agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested persons.

3.2 Authority of the Committee. The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of the Plan and any Evidence of Award or other agreement or document ancillary to or in connection with the Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering the Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions, including the terms and conditions set forth in an Evidence of Award, and, subject to Article 16, adopting modifications and amendments to the Plan or any Evidence of Award, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries operate. In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, Award or other acquisition under the Plan does not consist of two or more Nonemployee Directors, or if there shall be no such Committee, then the Plan shall be administered by the Board, and references herein to the Committee (except in the proviso to this sentence) shall be deemed to be references to the Board.

ARTICLE 4.

Shares Subject to the Plan and Maximum Awards

4.1 Number of Shares Available for Awards .

(a) Subject to adjustment as provided in Section 4.4 herein, the maximum number of Shares available for issuance to Participants under the Plan (the “Share Authorization”) shall be five million (5,000,000) Shares, all of which may be Incentive Stock Options;

(b) Of the Shares reserved for issuance under Section 4.1(a) of the Plan, all of the reserved Shares may be issued pursuant to Full Value Awards.

(c) Subject to the limit set forth in Section 4.1(a) on the number of Shares that may be issued in the aggregate under the Plan, the maximum number of Shares that may be issued to each Nonemployee Director shall be two hundred thousand (200,000) Shares, and each Nonemployee Director may not receive more than one hundred fifty thousand (150,000) Shares in any Plan Year.

(d) For purposes of this Section, to the extent any SAR is settled, in whole or in part, in cash, the number of shares available for issuance under this Section shall not be reduced.

4.2 Share Usage. Shares covered by an Award shall only be counted as used to the extent they are actually issued. Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under the Plan. Moreover, if the Option Price of any Option granted under the Plan or the tax withholding requirements with respect to any Award granted under the Plan are satisfied by tendering Shares to the Company (by either actual delivery or by attestation), or if an SAR is exercised, only the number of Shares issued, net of

the Shares tendered, if any, will be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Plan and any Shares so tendered shall again be available for issuance under the Plan. The maximum number of Shares available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional Shares or credited as additional Restricted Stock, Restricted Stock Units, Performance Shares, or Stock-Based Awards. The Shares available for issuance under the Plan may be authorized and unissued Shares, treasury Shares or a combination thereof.

4.3 Annual Award Limits. Subject to the terms of Section 4.1 hereof and unless and until the Committee determines that an Award to a Covered Employee shall not be designed to qualify as Performance-Based Compensation, the following limits (each an “Annual Award Limit,” and, collectively, “Annual Award Limits”) shall apply to grants of such Awards under the Plan:

(a) Options: The maximum aggregate number of Shares subject to Options granted in any one Plan Year to any one Participant shall be two hundred thousand (200,000).

(b) Incentive Stock Options: The maximum aggregate number of Shares subject to Incentive Stock Options granted under the Plan to any one Participant shall be two hundred thousand (200,000).

(c) SARs: The maximum number of Shares subject to Stock Appreciation Rights granted in any one Plan Year to any one Participant, whether settled in cash or stock, shall be two hundred thousand (200,000).

(d) Restricted Stock or Restricted Stock Units: The maximum aggregate grant with respect to Awards of Restricted Stock or Restricted Stock Units in any one Plan Year to any one Participant shall be two hundred thousand (200,000).

(e) Performance Units or Performance Shares: The maximum aggregate Award of Performance Units or Performance Shares that any one Participant may receive in any one Plan Year shall be two hundred thousand (200,000) Shares, or equal to the value of two hundred thousand (200,000) Shares determined as of the date of vesting or payout, as applicable.

(f) Cash-Based Awards: The maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any one Participant in any one Plan Year may not exceed the value of one hundred thousand dollars ($100,000) determined as of the date of vesting or payout, as applicable.

(g) Other Stock-Based Awards. The maximum aggregate grant with respect to other Stock-Based Awards pursuant to Section 10.2 in any one Plan Year to any one Participant shall be one hundred thousand (100,000) Shares.

4.4 Adjustments in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a change in the shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under the Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under the Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award Limits, and other value determinations applicable to outstanding Awards.

Except as otherwise provided by Section 162(m) of the Code, the Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards under the Plan to reflect or related to such changes or distributions and to modify any other terms of outstanding Awards, including modifications of performance goals and changes in the length of Performance Periods. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan.

Subject to the provisions of Article 16, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with the rules under Section 422 of the Code and the Section 409A Rules, where applicable.

To the extent that any Award hereunder is one that is made solely because of a limitation on awards under the 1999 GenCorp Inc. Equity and Performance Incentive Plan such Award shall reduce on a Share for Share basis, as applicable, any limit on Shares set forth in this Section 4.

ARTICLE 5.

Eligibility and Participation

5.1 Eligibility. Individuals eligible to participate in this Plan include all Employees and Nonemployee Directors.

5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible individuals, those to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of each Award. In making this determination, the Committee may consider any factors it deems relevant, including without limitation, the office or position held by a Participant or the Participant’s relationship to the Company, the Participant’s degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary or Affiliate, the Participant’s length of service, promotions and potential.

ARTICLE 6.

Options

6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion.

6.2 Evidence of Award. Each Option grant shall be evidenced by an Evidence of Award that shall specify the Option Price, the maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of the Plan.

6.3 Option Price. The Option Price for each grant of an Option under this Plan shall be as determined by the Committee and shall be specified in the Evidence of Award. The Option Price may not be less than 100% of the Fair Market Value of the Shares on the date of grant; provided, however, that an Option granted outside the United States to a person who is a non-U.S. taxpayer may be granted with a Option Price less than the Fair Market Value of the underlying Shares on the date of grant if necessary to utilize a locally available tax advantage.

6.4 Duration of Options. Except as otherwise provided in Section 422 of the Code, each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant and specify in the Evidence of Award; provided, however, that no Option shall be exercisable later than the seventh (7th) anniversary date of its grant. Notwithstanding the foregoing, for Options granted to Participants outside the United States who are non-U.S. taxpayers, the Committee has the authority to grant Options that have a term greater than seven (7) years.

6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve and specify in the Evidence of Award, which terms and restrictions need not be the same for each grant or for each Participant. The Committee may provide in the Evidence of Award for the acceleration of the vesting and exercisability of outstanding Options, in whole or in part, as determined by the Committee in its sole discretion, in the event of a Change in Control.

6.6 Payment. Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price (provided that except as otherwise determined by the Committee, the Shares that are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price or have been purchased on the open market); (c) by a combination of (a) and (b); or (d) any other method approved or accepted by the Committee in its sole discretion, including, without limitation, if the Committee so determines, (i) a cashless (broker-assisted) exercise, or (ii) a reduction in the number of Shares that would otherwise be issued by such number of Shares having in the aggregate a Fair Market Value at the time of exercise equal to the portion of the Option Price being so paid.

Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full

payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).

Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.

6.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable and specify in the Evidence of Award, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.

6.8 Termination of Employment. Each Participant’s Evidence of Award shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment or provision of services to the Company, its Affiliates, its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

6.9 Transferability of Options. Except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, no Option granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law; provided that the Board or Committee may permit further transferability, on a general or a specific basis, and may impose conditions and limitations on any permitted transferability. Further, except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, or unless the Board or Committee decides to permit further transferability, all Options granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant. With respect to those Options, if any, that are permitted to be transferred to another person, references in the Plan to exercise or payment of the Option Price by the Participant shall be deemed to include, as determined by the Committee, the Participant’s permitted transferee.

ARTICLE 7.

Stock Appreciation Rights

7.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs, including Freestanding SARs, may be granted to Participants at any time and from time to time as shall be determined by the Committee.

Subject to the terms and conditions of the Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.

The Grant Price for each grant of a Freestanding SAR shall be determined by the Committee and shall be specified in the Evidence of Award. The Grant Price may include (but not be limited to) a Grant Price based on one hundred percent (100%) of the FMV of the Shares on the date of grant, a Grant Price that is set at a premium to the FMV of the Shares on the date of grant, or is indexed to the FMV of the Shares on the date of grant, with the index determined by the Committee, in its discretion to the extent consistent with the Section 409A Rules.

7.2 SAR Agreement. Each SAR Award shall be evidenced by an Evidence of Award that shall specify the Grant Price, the term of the SAR, and such other provisions as the Committee shall determine.

7.3 Term of SAR. The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion, and except as determined otherwise by the Committee and specified in the SAR Evidence of Award, no SAR shall be exercisable later than the seventh (7th) anniversary date of its grant. Notwithstanding the foregoing, for SARs granted to Participants who are non-U.S. taxpayers, the Committee has the authority to grant SARs that have a term greater than seven (7) years.

7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes and specifies in the Evidence of Award. The Committee may provide in the Evidence of Award for the earlier exercise of Freestanding SARS in the event of a Change in Control.

7.5. Payment of SAR Amount. Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company

in an amount determined by multiplying:

(a) The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by

(b) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon SAR exercise may be in cash, Shares, or any combination thereof, or in any other manner approved by the Committee in its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set forth in the Evidence of Award pertaining to the grant of the SAR.

7.6 Termination of Employment. Each Evidence of Award shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with Participants, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

7.7 Nontransferability of SARs. Except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law. Further, except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. With respect to those SARs, if any, that are permitted to be transferred to another person, references in the Plan to exercise of the SAR by the Participant or payment of any amount to the Participant shall be deemed to include, as determined by the Committee, the Participant’s permitted transferee.

7.8 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares received upon exercise of a SAR granted pursuant to the Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received upon exercise of a SAR for a specified period of time.

ARTICLE 8.

Restricted Stock and Restricted Stock Units

8.1 Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine. Restricted Stock Units shall represent the right of a Participant to receive payment upon the lapse of the Period of Restriction.

8.2 Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Evidence of Award that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.

8.3 Transferability. Except as provided in this Plan or an Evidence of Award, the Shares of Restricted Stock and/or Restricted Stock Units granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Evidence of Award (and in the case of Restricted Stock Units until the date of delivery or other payment), or upon earlier satisfaction of any other conditions, as specified by the Committee, in its sole discretion, and set forth in the Evidence of Award or otherwise at any time by the Committee. All rights with respect to the Restricted Stock and/or Restricted Stock Units granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant, except as otherwise provided in an Evidence of Award or at any time by the Committee.

8.4 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.

Except with respect to a maximum of five percent (5%) of the Shares authorized in Section 4.1(a), or as otherwise provided in

Section 8.7 hereto, any Awards of Restricted Stock or Restricted Stock Units which vest on the basis of the Participant’s continued employment with or provision of service to the Company shall not provide for vesting which is any more rapid than annual pro rata vesting over a three (3) year period and any Awards of Restricted Stock or Restricted Stock Units which vest upon the attainment of performance goals shall provide for a performance period of at least twelve (12) months. The Committee may provide in the Evidence of Award for immediate vesting of Restricted Stock or Restricted Stock Units, in whole or in part, in the event of a Change in Control.

In the event that the vesting date occurs on a date which is not a trading day on the principal securities exchange on which the Shares are then traded, the Fair Market Value on the last prior trading date will be utilized for cost basis.

To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Committee, in its sole discretion shall determine.

8.5 Certificate Legend. In addition to any legends placed on certificates pursuant to Section 8.4, each certificate representing Shares of Restricted Stock granted pursuant to the Plan may bear a legend as determined by the Committee in its sole discretion.

8.6 Voting Rights. Unless otherwise determined by the Committee and set forth in a Participant’s Evidence of Award, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.

8.7 Termination of Employment. To the extent consistent with the Section 409A Rules, each Evidence of Award shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

ARTICLE 9.

Performance Units/Performance Shares

9.1 Grant of Performance Units/Performance Shares. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Performance Units and/or Performance Shares to Participants in such amounts and upon such terms as the Committee shall determine.

9.2 Value of Performance Units/Performance Shares. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in its discretion as described in Section 11.4 which, depending on the extent to which they are met, will determine the value and/or number of Performance Units/Performance Shares that will be paid out to the Participant.

9.3 Earning of Performance Units/Performance Shares. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and number of Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

9.4 Form and Timing of Payment of Performance Units/Performance Shares. Payment of earned Performance Units/Performance Shares shall be as determined by the Committee and as evidenced in the Evidence of Award. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Performance Units/Performance Shares in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Units/Performance Shares at the close of the applicable Performance Period, or as soon as practicable after the end of the Performance Period. Any Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form

of payout of such Awards shall be set forth in the Evidence of Award pertaining to the grant of the Award.

9.5 Termination of Employment. To the extent consistent with the Section 409A Rules and Section 162(m) of the Code, each Evidence of Award shall set forth the extent to which the Participant shall have the right to retain Performance Units and/or Performance Shares following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with each Participant, need not be uniform among all Awards of Performance Units or Performance Shares issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

9.6 Nontransferability. Except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, Performance Units/Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law. Further, except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, a Participant’s rights under the Plan shall be exercisable during his or her lifetime only by such Participant.

ARTICLE 10.

Cash-Based Awards and Other Stock-Based Awards

10.1 Grant of Cash-Based Awards. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms as the Committee may determine.

10.2 Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

10.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee. The Committee may design Cash-Based Awards and Other Stock-Based Awards to qualify as Performance-Based Compensation and may design Cash-Based Awards and Other Stock-Based Awards to not qualify as Performance-Based Compensation. If the Committee exercises its discretion to establish Cash-Based Awards and Other Stock-Based Awards as Performance-Based Compensation, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the Performance Measures are met.

10.4 Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash, Shares or a combination thereof, as the Committee determines.

10.5 Termination of Employment. The Committee shall determine the extent to which the Participant shall have the right to receive Cash-Based Awards following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, such provisions may be included in an agreement entered into with each Participant, but need not be uniform among all Awards of Cash-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

10.6 Nontransferability. Except as otherwise determined by the Committee, neither Cash-Based Awards nor Other Stock-Based Awards may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided by the Committee, a Participant’s rights under the Plan, if exercisable, shall be exercisable during his or her lifetime only by such Participant. With respect to those Cash-Based Awards or Other Stock-Based Awards, if any, that are permitted to be transferred to another person, references in the Plan to exercise or payment of such Awards by or to the Participant shall be deemed to include, as determined by the Committee, the Participant’s permitted transferee.

ARTICLE 11.

Performance Measures

11.1 Performance Measures. Unless and until the Committee proposes for shareholder vote and the shareholders approve a change in the general Performance Measures set forth in this Article 11, the performance goals upon which the payment or vesting

of an Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to one or more of the following Performance Measures:

(a) Net earnings or net income (before or after taxes and interest/investments);

(b) Earnings per share;

(d) Net sales growth;

(e) Net earnings or net income growth (before or after taxes and interest/investment);

(f) Net operating profit;

(g) Return measures (including return on assets, capital, equity, or sales);

(h) Cash flow (including operating cash flow , free cash flow, and cash flow return on capital);

(i) Earnings before or after taxes, interest, depreciation, and/or amortization;

(j) Gross or operating margins or growth thereof;

(k) Productivity ratios;

(l) Share price (including growth measures and total shareholder return);

(m) Expense targets;

(n) Operating efficiency;

(o) Customer satisfaction;

(p) Revenue or Revenue growth;

(q) Operating profit growth;

(r) Working capital targets;

(s) Economic value added;

(t) Real estate management objectives;

(u) Sale or disposition of assets; and

(v) Acquisition of key assets.

Any Performance Measure(s) may be used to measure the performance of the Company, Subsidiary, and/or Affiliate as a whole or any business unit of the Company, Subsidiary, and/or Affiliate or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparable companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure (l) above as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Article 11.

To the extent that any Award hereunder is one that is made solely because of a limitation on awards under the 1999 GenCorp Inc. Equity and Performance Incentive Plan, the Performance Measurement shall be the same as under the 1999 GenCorp Inc. Equity and Performance Incentive Plan.

11.2 Evaluation of Performance. The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year, (f) acquisitions or divestitures and (g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Section 162(m) of the Code for deductibility.

11.3 Adjustment of Performance-Based Compensation. The terms of Awards that are designed to qualify as Performance-Based Compensation, and that are held by Covered Employees, may not be modified, except to the extent that after such modification the Award would continue to constitute Performance-Based Compensation. The Committee shall retain the discretion to reduce the amount of any payment under an Award that is designed to qualify as Performance-Based Compensation that would otherwise be payable to a Covered Employee, either on a formula or discretionary basis or any combination, as the Committee determines.

11.4 Committee Discretion. In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Section 162(m) of the Code and may base vesting on Performance Measures other than those set forth in Section 11.1.

ARTICLE 12.

Beneficiary Designation

Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

ARTICLE 13.

Deferrals

To the extent permitted by the Section 409A Rules, the Committee may permit or require a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units, or the satisfaction of any requirements or performance goals with respect to Performance Shares, Performance Units, Cash-Based Awards or Other Stock-Based Awards. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals, consistent with the Section 409A Rules.

ARTICLE 14.

Rights of Participants

14.1 Employment. Nothing in the Plan or an Evidence of Award shall interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries, to terminate any Participant’s employment or service on the Board at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his or her employment or service for any specified period of time.

Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to Articles 3 and 16, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates, and/or its Subsidiaries.

14.2 Participation. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so

selected, to be selected to receive a future Award.

14.3 Rights as a Shareholder. Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

ARTICLE 15.

Change in Control

15.1 Change in Control. For purposes of this Plan, a “Change in Control” shall mean the occurrence during the term of any of the following events:

(a) All or substantially all (meaning having a total gross fair market value at least equal to 50.1% of the total gross fair market value of all of the Company’s assets immediately before such acquisition or acquisitions) of the assets of the Company are acquired by a Person (during a twelve month period ending on the date of the most recent acquisition by such Person); or

(b) The Company is merged, consolidated, or reorganized into or with another corporation or entity during a twelve-month period with the result that upon the conclusion of the transaction less than 50.1% of the outstanding securities entitled to vote generally in the election of directors or other capital interests of the surviving, resulting or acquiring corporation are beneficially owned (as that term is defined in Rule 13-d 3 under the Exchange Act) by the shareholders of the Company immediately prior to the completion of the transaction.

ARTICLE 16.

Amendment, Modification, Suspension, and Termination

16.1 Amendment, Modification, Suspension, and Termination. Subject to Section 16.3 and 16.4, the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and any Evidence of Award in whole or in part; provided, however, that, without the prior approval of the Company’s shareholders, Options issued under the Plan will not be repriced, replaced, or regranted through cancellation, and no amendment of the Plan shall be made without shareholder approval if shareholder approval is required by law, regulation, or stock exchange rule.

16.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments, consistent with Section 162(m) of the Code and the Section 409A Rules, in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan.

16.3 Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, suspension, or modification of the Plan or an Evidence of Award shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award except as required under the tax laws.

16.4 Compliance with the Section 409A Rules. It is the intention of the Board that the Plan comply strictly with the Section 409A Rules and the Committee shall exercise its discretion in granting Awards hereunder (and the terms of such grants), accordingly. The Plan and any grant of an Award hereunder may be amended from time to time as may be necessary or appropriate to comply with the Section 409A Rules.

ARTICLE 17.

Withholding

17.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or

regulation to be withheld with respect to any taxable event arising as a result of this Plan.

17.2 Share Withholding. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction. All such elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

ARTICLE 18.

Successors

All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

ARTICLE 19.

General Provisions

19.1 Forfeiture Events .

(a) The Committee may specify in an Evidence of Award that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for cause, termination of the Participant’s provision of services to the Company, Affiliate, and/or Subsidiary, violation of material Company, Affiliate, and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.

(b) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is one of the persons subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the twelve-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever just occurred) of the financial document embodying such financial reporting requirement.

19.2 Legend. The certificates for Shares may include any legend, which the Committee deems appropriate in its sole discretion to reflect any restrictions on transfer of such Shares.

19.3 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

19.4 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. To the extent that any provision of this Plan would prevent any Option that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision shall be null and void with respect to such Option. Such provision, however, shall remain in effect for other Options and there shall be no further effect on any provision of this Plan.

19.5 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

19.6 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to:

(a) Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

(b) Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

19.7 Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

19.8 Investment Representations. The Committee may require any person receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the person is acquiring the securities for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.

19.9 Employees Based Outside of the United States. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company, its Affiliates, and/or its Subsidiaries operate or have Employees or Directors, the Committee, in its sole discretion, shall have the power and authority to:

(a) Determine which Affiliates and Subsidiaries shall be covered by the Plan;

(b) Determine which Employees and/or Nonemployee Directors outside the United States are eligible to participate in the Plan;

(c) Modify the terms and conditions of any Award granted to Employees and/or Nonemployee Directors outside the United States to comply with applicable foreign laws;

(d) Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 19.9 by the Committee shall be attached to this Plan document as appendices; and

(e) Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.

Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law.

19.10 Uncertificated Shares. To the extent that the Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

19.11 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries, and/or Affiliates may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other person. To the extent that any person acquires a right to receive payments from the Company, and/or its Subsidiaries, and/or Affiliates under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, a Subsidiary, or an Affiliate, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not subject to ERISA.

19.12 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

19.13 Retirement and Welfare Plans. Neither Awards made under the Plan nor Shares or cash paid pursuant to such Awards will be included as “compensation” for purposes of computing the benefits payable to any Participant under the Company’s or any Subsidiary’s or Affiliate’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a participant’s benefit.

19.14 Nonexclusivity of the Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.

19.15 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or a Subsidiary’s or an Affiliate’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or a Subsidiary or an Affiliate to take any action which such entity deems to be necessary or appropriate.

19.16 Governing Law. The Plan and each Evidence of Award shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Evidence of Award, recipients of an Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware, to resolve any and all issues that may arise out of or relate to the Plan or any related Evidence of Award.

Exhibit 10.4

______ Match Grant

GENCORP INC.

AMENDED AND RESTATED

2009 EQUITY AND PERFORMANCE INCENTIVE PLAN

Restricted Stock Agreement

WHEREAS, __________________ (the “Grantee”) is a Director of GenCorp Inc. (the “Company”);

[Match Program]

WHEREAS, the grant of restricted stock to the Grantee has been duly authorized by a resolution of the Board of Directors (the “Board”) of the Company duly adopted on March 24, 2010 and by a resolution of the Organization & Compensation Committee (the “Committee”) duly adopted on January 14, 2011 ;

WHEREAS, on April 11, 2013, the Company reinstated the GenCorp Inc. Deferred Compensation Plan for Nonemployee Directors (as amended and restated, the “Deferred Compensation Plan”) as of March 27, 2013; and

WHEREAS, the Deferred Compensation Plan allows for the establishment of one or more “rabbi trusts” (the “Rabbi Trust”), which will be governed by a Rabbi Trust agreement (the “Rabbi Trust Agreement”), to which shares of the Company’s common stock, par value $0.10 per share (the “Stock”) may be contributed with respect to participants in the Deferred Compensation Plan and vests authority and responsibility for administration of the Deferred Compensation Plan in the Organization & Compensation Committee (the “Committee”).

NOW, THEREFORE, pursuant to the Company’s Amended and Restated 2009 Equity and Performance Incentive Plan (the “Plan”), the Company hereby grants to the Grantee, as of ________, 20__ (the “Date of Grant”), ___________________ (___) shares of Stock, subject to the terms and conditions of the Plan and pursuant to this Restricted Stock Agreement (this “Agreement”); and, when applicable, subject to the terms and conditions of the Rabbi Trust Agreement and Deferred Compensation Plan.

1. Issuance of Stock . At the election of Grantee, the Stock covered by this Agreement shall either: (a) upon Grantee making an election to defer (a “Deferral Election”), be issued in book entry form in the name of Wells Fargo Bank, National Association, the trustee of the Rabbi Trust (the “Trustee”), and the distribution to Grantee of such Stock shall be governed by the terms of the Rabbi Trust Agreement, the Deferred Compensation Plan and any election pursuant to the Deferred Compensation Plan, or (b) be issued to Grantee and be represented in book-entry in the transfer agent’s GenCorp Inc. Restricted Unvested Shares Nominee Balance Account registered in the name of the Grantee. All Stock issued pursuant to this Agreement shall be fully paid and nonassessable.

2. Restrictions on Transfer of Stock . The Stock subject to this Agreement may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by the Grantee, except to the Company, unless and until it has become vested in accordance with Section 3 or, with respect to Stock subject to a Deferral Election, as otherwise provided by the Rabbi Trust Agreement and the Deferred Compensation Plan; provided, however, that the Grantee’s interest in the Stock covered by this Agreement may be transferred at any time by will or the laws of descent and distribution. Any purported transfer, encumbrance or other disposition of the Stock covered by this Agreement that is in violation of this Section 2 will be null and void, and the other party to any such purported transaction will not obtain any rights to or interest in the Stock covered by this Agreement. When and as permitted by the Plan, the Company may waive the restrictions set forth in this Section 2 with respect to all or any portion of the Stock covered by this Agreement.

3. Vesting of Stock . Except as provided by the terms of the Rabbi Trust Agreement and the Deferred Compensation Plan with respect to Stock subject to a Deferral Election:

(a) The Stock covered by this Agreement will become nonforfeitable on the earlier of (i) the date of the Director’s retirement from the Board, or (ii) one year after the grant date.

(b) Notwithstanding the provisions of Subsection (a) of this Section, all of the Stock covered by this Agreement will become immediately nonforfeitable upon the occurrence of a change in control (as defined under the Plan).

4. Forfeiture of Stock . Any of the Stock covered by this Agreement that has not become vested in accordance with Section 3 will be forfeited unless the Board determines to provide otherwise. In the event of a forfeiture, the Stock covered by this Agreement that has not become vested in accordance with Section 3 shall be cancelled or, with respect to Stock subject to a Deferral Election, as otherwise provided by the Rabbi Trust Agreement and the Deferred Compensation Plan.

5. Dividend, Voting and Other Rights . Except as provided by the terms of the Rabbi Trust Agreement and the Deferred Compensation Plan with respect to Stock subject to a Deferral Election, the Grantee will have all of the rights of a shareholder with respect to the Stock covered by this Agreement that has not been forfeited, including the right to vote such Stock and receive any dividends that may be paid thereon. Any additional Stock that the Grantee may become entitled to receive pursuant to a share dividend or a merger or reorganization in which the Company is the surviving Company or any other change in the capital structure of the Company shall be subject to the same restrictions as the Stock covered by this Agreement.

6. Compliance with Law . The Company will make reasonable efforts to comply with all applicable federal and state securities laws; provided, however, notwithstanding any other provision of this Agreement, the Company shall not be obligated to issue any restricted or unrestricted Stock pursuant to this Agreement if the issuance thereof would result in a violation of any such law.

7. Adjustments . The Board may make adjustments, consistent with Section 162(m) of the Internal Revenue Code of 1986 and the Section 409A Rules, in the terms and conditions of, and the criteria included in, this Agreement, in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 of the Plan) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. The determination of the Board as to the foregoing adjustments, if any, shall be conclusive and binding on the Grantee under the Plan.

8. Withholding Taxes .

(a) Except as provided in Section 8(c), upon the vesting of any portion of the Stock, the Grantee shall be required to pay to the Company any applicable Federal, state, local or foreign withholding tax due, if any, as a result of such vesting. The Company’s obligation to deliver the Stock shall be subject to such payment. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Grantee the minimum statutory amount to satisfy Federal, state, local or foreign withholding taxes due with respect to such vesting.

(b) Subject to (i) the Committee’s right to disapprove any such election and require the Grantee to pay the required withholding tax, if any, in cash, (ii) any Company policies, and (iii) applicable laws, the Grantee shall have the right to elect to pay the minimum required withholding tax in shares of Stock to be received upon vesting. Any such election shall be irrevocable, made in writing and signed by the Grantee. Shares of Stock used to pay any required withholding tax shall be valued at the same time and in the same manner that vested shares of Stock are valued for purposes of determining the required withholding taxes.

(c) In the case of a Nonemployee Director with respect to the vesting of any part of the Stock covered by this Agreement, the Grantee shall be responsible for the payment of all federal, state, local or foreign tax due upon the vesting of any portion of the Stock, or in the case of Stock subject to a Deferral Election, upon distribution of the Stock to Grantee.

9. Retention Rights . The Plan and this Agreement will not confer upon the Grantee any right with respect to the continuance of service as a Director with the Company and will not interfere in any way with any right that the Company would otherwise have to terminate the service of the Grantee as a Director at any time.

10. Relation to Other Benefits . Any economic or other benefit to the Grantee under this Agreement shall not be taken into account in determining any benefits to which the Grantee may be entitled under any retirement or other benefit or compensation plan maintained by the Company.

11. Notices . Any notice necessary under this Agreement will be addressed to the Company or the

Committee at the principal executive office of the Company and to the Grantee at the address appearing in the personnel records of the Company for such Grantee, or to either party at such other address as either party may designate in writing to the other. Any such notice will be deemed effective upon receipt thereof by the addressee.

12. Agreement Subject to the Plan . The Stock granted under this Agreement and all of the terms and conditions hereof are subject to all of the terms and conditions of the Plan and, to the extent deferred, the Rabbi Trust Agreement and the Deferred Compensation Plan. In the event of any inconsistency between this Agreement and the Plan, the terms of the Plan shall govern. In the event Grantee makes a Deferral Election for Stock covered by this Agreement, and there is an inconsistency or conflict between this Agreement and the Rabbi Trust Agreement or the Deferred Compensation Plan, the terms of Rabbi Trust Agreement and the Deferred Compensation Plan shall govern.

13. Amendments . The Committee may amend this Agreement. Any amendment to the Plan will be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the rights of the Grantee under this Agreement without the Grantee’s consent, except as required under the tax laws.

14. Severability . In the event that one or more of the provisions of this Agreement is invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof will continue to be valid and fully enforceable.

15. Governing Law . This Agreement will be construed and governed in accordance with the laws of the State of Delaware without regard to its conflict of laws principles.

16. Certain Defined Terms . In addition to the terms defined elsewhere herein, when used in the Agreement, terms with initial capital letters have the meaning given such term under the Plan, as in effect from time to time.

This Agreement is effective as of the ___ day of _____ 20__.

GENCORP INC.

By:________________________________

S. J. Seymour

President and Chief Executive Officer

The undersigned Grantee hereby acknowledges receipt of an executed original of this Restricted Stock Agreement and accepts the right to receive the Stock subject to the terms and conditions of the Plan and the terms and conditions hereinabove set forth.

[Grantee Name]

Stock Power

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ___________________________ , ________ shares of Common Stock of GenCorp. Inc., a Delaware corporation, issued pursuant to a Director Restricted Stock Agreement between GenCorp. Inc. and the undersigned, dated ________________ and standing in the name of the undersigned on the books of said corporation, represented by book-entry in the transfer agent’s GenCorp Inc. Restricted Unvested Shares Nominee Balance Account in the name of the undersigned, and does hereby irrevocably constitute and appoint GenCorp. Inc. as the undersigned’s true and lawful attorney, for it and in its name and stead, to sell, assign and transfer the said stock on the books of said corporation with full power of substitution in the premises.

Dated:___________________ __________________________

[ grantee name]

Exhibit 10.5

_______, 2014 Match Grant

GENCORP INC.

AMENDED AND RESTATED

2009 EQUITY AND PERFORMANCE INCENTIVE PLAN

Unrestricted Stock Agreement

WHEREAS, ________________ (the “Grantee”) is a Director of GenCorp Inc. (the “Company”);

WHEREAS, the grant of unrestricted stock to the Grantee has been duly authorized by a resolution of the Board of Directors (the “Board”) of the Company duly adopted on March 24, 2010 and by a resolution of the Organization & Compensation Committee (the “Committee”) duly adopted on January 14, 2011;

WHEREAS, the Grantee has elected to receive all or a part of his compensation for his one-year term of service as a Director commencing in 201__ (Director Pay) in shares of the Company’s common stock, par value $0.10 per share (the “Stock”);

WHEREAS, the Deferred Compensation Plan allows for the establishment of one or more “rabbi trusts” (the “Rabbi Trust”), which will be governed by a Rabbi Trust agreement (the “Rabbi Trust Agreement”), to which shares Stock may be contributed with respect to participants in the Deferred Compensation Plan and vests authority and responsibility for administration of the Deferred Compensation Plan in the Committee.

NOW, THEREFORE, pursuant to the Company’s Amended and Restated 2009 Equity and Performance Incentive Plan (the “Plan”), the Company hereby grants to the Grantee, as of _______________ (the “Date of Grant”), ________________ (____) shares of Stock, subject to the terms and conditions of the Plan and pursuant to this Unrestricted Stock Agreement (this “Agreement”); and, when applicable, subject to the terms and conditions of the Rabbi Trust Agreement and Deferred Compensation Plan.

1. Issuance of Stock . At the election of Grantee, the Stock covered by this Agreement shall either: (a) upon Grantee making an election to defer (a “Deferral Election”), be issued in book entry form in the name of Wells Fargo Bank, National Association, the trustee of the Rabbi Trust (the “Trustee”), and the distribution to Grantee of such Stock shall be governed by the terms of the Rabbi Trust Agreement, the Deferred Compensation Plan and any election pursuant to the Deferred Compensation Plan, or (b) be issued to Grantee at the Grantee’s election, by either certificates registered in the name of the Grantee or electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. All Stock issued pursuant to this Agreement shall be fully paid and nonassessable.

2. Restrictions on Transfer of Stock . The Stock subject to this Agreement, other than Stock subject to a Deferral Election, is not subject to any restrictions on transfer. Restrictions on the transfer of Stock subject to a Deferral Election shall be set forth in the Deferral Election, the Rabbi Trust Agreement or the Deferred Compensation Plan.

3. Vesting of Stock . Except as provided by the terms of the Rabbi Trust Agreement and the Deferred Compensation Plan with respect to Stock subject to a Deferral Election, the Stock covered by this Agreement will be immediately nonforfeitable on the Date of Grant.

4. Dividend, Voting and Other Rights . Except as provided by the terms of the Rabbi Trust Agreement and the Deferred Compensation Plan with respect to Stock subject to a Deferral Election, the Grantee will have all of the rights of a shareholder with respect to the Stock covered by this Agreement, including the right to vote such Stock and receive any dividends that may be paid thereon. Any additional Stock that the Grantee may become entitled to receive pursuant to a share dividend or a merger or reorganization in which the Company is the surviving Company or any other change in the capital structure of the Company shall be subject to the same restrictions as the Stock covered by this Agreement.

5. Compliance with Law . The Company will make reasonable efforts to comply with all applicable federal and state securities laws; provided, however, notwithstanding any other provision of this Agreement, the Company shall not be obligated to issue any unrestricted Stock pursuant to this Agreement if the issuance thereof would result in a violation of any such law.

6. Adjustments . The Board may make adjustments, consistent with Section 162(m) of the Internal Revenue Code of 1986 and the Section 409A Rules, in the terms and conditions of, and the criteria included in, this Agreement, in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 of the Plan) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. The determination of the Board as to the foregoing adjustments, if any, shall be conclusive and binding on the Grantee under the Plan.

7. Withholding Taxes .

(a) Except as provided in Section 7(c), upon grant, the Grantee shall be required to pay to the Company any applicable Federal, state, local or foreign withholding tax due, if any. The Company’s obligation to deliver the Stock shall be subject to such payment. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Grantee the minimum statutory amount to satisfy Federal, state, local or foreign withholding taxes due.

(b) Subject to (i) the Committee’s right to disapprove any such election and require the Grantee to pay the required withholding tax, if any, in cash, (ii) any Company policies, and (iii) applicable laws, the Grantee shall have the right to elect to pay the minimum required withholding tax in shares of Stock to be received upon grant. Shares of Stock used to pay any required withholding tax shall be valued at the same time and in the same manner that shares of Stock are valued for purposes of determining the required withholding taxes.

(c) In the case of a Nonemployee Director, with respect to any part of the Stock covered by this Agreement, the Grantee shall be responsible for the payment of all federal, state, local or foreign tax due upon grant, or in the case of Stock subject to a Deferral Election, distribution of any portion of the Stock to Grantee.

8. Retention Rights . The Plan and this Agreement will not confer upon the Grantee any right with respect to the continuance of service as a Director with the Company and will not interfere in any way with any right that the Company would otherwise have to terminate the service of the Grantee as a Director at any time.

9. Notices . Any notice necessary under this Agreement will be addressed to the Company or the Committee at the principal executive office of the Company and to the Grantee at the address appearing in the personnel records of the Company for such Grantee, or to either party at such other address as either party may designate in writing to the other. Any such notice will be deemed effective upon receipt thereof by the addressee.

11. Agreement Subject to the Plan . The Stock granted under this Agreement and all of the terms and conditions hereof are subject to all of the terms and conditions of the Plan and, to the extent deferred, the Rabbi Trust Agreement and the Deferred Compensation Plan. In the event of any inconsistency between this Agreement and the Plan, the terms of the Plan shall govern. In the event Grantee makes a Deferral Election for Stock covered by this Agreement, and there is an inconsistency or conflict between this Agreement and the Rabbi Trust Agreement or the Deferred Compensation Plan, the terms of Rabbi Trust Agreement and the Deferred Compensation Plan shall govern.

12. Amendments . The Committee may amend this Agreement. Any amendment to the Plan will be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the rights of the Grantee under this Agreement without the Grantee’s consent, except as required under the tax laws.

13. Severability . In the event that one or more of the provisions of this Agreement is invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions

hereof, and the remaining provisions hereof will continue to be valid and fully enforceable.

14. Governing Law . This Agreement will be construed and governed in accordance with the laws of the State of Delaware without regard to its conflict of laws principles.

15. Certain Defined Terms . In addition to the terms defined elsewhere herein, when used in the Agreement, terms with initial capital letters have the meaning given such term under the Plan, as in effect from time to time.

This Agreement is effective as of the ___ day of _____, 20__.

GENCORP INC.

By:

S. J. Seymour

President and Chief Executive Officer

The undersigned Grantee hereby acknowledges receipt of an executed original of this Stock-Based Agreement and accepts the right to receive the Stock subject to the terms and conditions of the Plan and the terms and conditions hereinabove set forth.

Grantee

Exhibit 10.6

GENCORP INC.

AMENDED AND RESTATED

2009 EQUITY AND PERFORMANCE INCENTIVE PLAN

Nonqualified Stock Option Agreement - Director

WHEREAS, _____________ (the “Optionee”) is a Director of GenCorp Inc. (the “Company”);

WHEREAS, the grant of a stock option to the Optionee has been duly authorized by a resolution of the Board of Directors (the “Board”) of the Company duly adopted on ___________, 20__; and

WHEREAS, the option granted hereunder is intended to be a nonqualified stock option and will not be treated as an “incentive stock option” within the meaning of that term under Section 422 of the Internal Revenue Code of 1986.

NOW, THEREFORE, pursuant to the Company’s Amended and Restated 2009 Equity and Performance Incentive Plan (the “Plan”), the Company hereby grants to the Optionee , as of __________, 20__ (the “Date of Grant”), an option (the “Option”) to purchase ______________ (____) shares of the Company’s common stock, par value $.10 per share (“Stock”), at the price of ________________ ($____) per share (the “Option Price”), and agrees to cause shares of Stock purchased hereunder to be delivered to the Optionee upon full payment of the Option Price, subject to the terms and conditions of the Plan and pursuant to this Nonqualified Stock Option Agreement (the “Agreement”).

1. Exercisability of Option .

(a) Unless and until terminated as hereinafter provided, the Option will become exercisable (i) to the extent of one-half of the shares of Stock specified above on the date which is six months after the Date of Grant, and (ii) with respect to the remaining one-half of such shares of Stock, on the date which is one year after the Date of Grant, on the condition that the Optionee remains a Director of the Company on such dates. To the extent that the Option will have so become exercisable, it may be exercised in whole or in part from time to time.

(b) Notwithstanding the provisions of Subsection (a) of this Section, the Option will become immediately exercisable in full upon the occurrence of a Change in Control that shall occur while the Optionee remains a Director of the Company. For the purposes of this Agreement, the term “change in control” will have the meaning given such term under the Plan as in effect on the Date of Grant.

2. Exercise of Option .

(a) The Option may be exercised only by (i) delivery of a signed and dated Stock Option Exercise Form to the Company in accordance with instructions provided therewith, and (ii) payment of the Option Price in accordance with Section 3. For all purposes, including the determination of applicable tax reporting and withholding, the Exercise Date will be the date entered next to the Optionee’s signature on the Stock Option Exercise Form (the “Exercise Date”). The Company will not fill in the Exercise Date under any circumstances.

(b) The Exercise Date can be no earlier than the date the Stock Option Exercise Form is delivered to the Company regardless of the method of delivery (i.e., by fax, by hand, by overnight courier, etc.)

3. Payment of Option Price .

The Option Price is payable:

(a) in cash or by certified or cashier’s check or other cash equivalent acceptable to the Company payable to the order of the Company;

(b) by Stock (including by attestation) owned by the Optionee for (i) more than one year prior to the date of exercise and for more than 2 years from the date on which the option was granted, if they were originally acquired by the Optionee pursuant to the exercise of an incentive stock option, or (ii) more than 6 months prior to the date of exercise, if they were originally acquired by the Optionee other than pursuant to the exercise of an incentive stock option;

(b) by a combination of Stock and cash or certified or cashier’s check; or

(c) through arrangements (satisfactory to the Company) made by the Optionee with a bank or broker that is subject to the Financial Industry Regulatory Authority to sell on the date of exercise a sufficient number of shares of Stock being purchased so that the net proceeds of the sale transaction will at least equal the aggregate Option Price and pursuant to which the bank or broker undertakes to deliver the aggregate Option Price to the Company not later than the date on which the sale transaction will settle in the ordinary course of business.

4. Term of Option .

(a) Exercisable Option. To the extent it has become exercisable, the Option will terminate on the date which is seven years from the Date of Grant.

(b) Option Not Yet Exercisable. To the extent it has not become exercisable prior to the termination of the Optionee’s service as a Director of the Company for any reason, the Option will terminate on the date of termination of such service.

(c) In the event that the Optionee's service as a Director of the Company is terminated for cause, the entire Option will terminate as of the time of such termination, notwithstanding any other provision of this Agreement.

5. Transferability .

(a) The Option may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law, and may only be exercised during the lifetime of the Optionee by the Optionee or the Optionee’s guardian or legal representative acting on behalf of the Optionee in a fiduciary capacity under state law and court supervision.

(b) Notwithstanding the provisions of Section 5(a), the Option shall be transferable by a Optionee without payment of consideration therefor by the transferee, to any one or more members of the Optionee’s Immediate Family (“Immediate Family” as defined in Rule 16a-1(e) under the Securities Exchange Act of 1934, as amended, or any successor rule to the same effect, as in effect from time to time) (or to one or more trusts established solely for the benefit of such Optionee and/or one or more members of the Optionee’s Immediate Family or to one or more partnerships in which the only partners are such Optionee and/or members of the Optionee’s Immediate Family); provided, however, that (i) no such transfer shall be effective unless reasonable prior notice thereof is delivered to the Company and such transfer is thereafter effected in accordance with any terms and conditions that shall have been made applicable thereto by the Company or the Board and (ii) any such transferee shall be subject to the same terms and conditions hereunder as the Optionee. Following transfer, any such Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that the term “Optionee” shall be deemed to refer to the transferee. The original Optionee’s continuation or termination of service as a Director shall determine the exercisability and/or termination of such Option under Sections 1 and 4; thereafter, the Option shall be exercisable by the transferee only to the extent, and for the period specified in this Agreement.

6. Compliance with Law . The Company shall make reasonable efforts to comply with all applicable federal and state securities laws; provided, however, notwithstanding any other provision of this Agreement, the Company shall not be obligated to issue any Stock pursuant to this Agreement if the issuance thereof would result in a violation of any such law.

8. Taxes/Withholding .

(a) To the extent required by law, the Company will report all taxable income and will compute and report all taxes related to an exercise of an Option based upon the Fair Market Value of the shares of Stock on the Exercise Date. Fair Market Value is defined under the Plan as the last sales price reported for the shares of Stock on the Exercise Date as reported on the principal national securities exchange in the United States on which it is then traded or The NASDAQ Stock Market (if the shares of Stock are so listed), or, if not so listed, the mean between the closing bid and asked prices of publicly traded shares of Stock in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Board in a manner consistent with

the provisions of the Internal Revenue Code of 1986.

(b) If tax withholding is required, and subject to (i) the Board’s right to disapprove any such election and require the Optionee to pay the required withholding tax in cash, (ii) any Company policies, and (iii) applicable laws, the Optionee shall have the right to elect to pay the minimum required withholding tax in shares of Stock to be received upon exercise of an Option. Any such election shall be irrevocable, made in writing, and signed by the Optionee. Shares of Stock used to pay any required withholding tax shall be valued at the same time and in the same manner that vested shares of Stock are valued for purposes of determining an Optionee’s taxable income and the required withholding taxes.

9. Retention Rights . The Plan and this Agreement will not confer upon the Optionee any right with respect to the continuance of service as a Director of the Company and shall not interfere in any way with any right that the Company would otherwise have to terminate the service of the Optionee as a Director at any time.

10. Relation to Other Benefits . Any economic or other benefit to the Optionee under this Agreement will not be taken into account in determining any benefits to which the Optionee may be entitled under any retirement or other compensation plan maintained by the Company.

11. Notices . Any notice necessary under this Agreement will be addressed to the Company or the Committee at the principal executive office of the Company and to the Optionee at the address appearing in the records of the Company for such Optionee, or to either party at such other address as either party may designate in writing to the other. Any such notice will be deemed effective upon receipt thereof by the addressee.

12. Agreement Subject to the Plan . The Option Rights granted under this Agreement and all of the terms and conditions hereof are subject to all of the terms and conditions of the Plan. In the event of any inconsistency between this Agreement and the Plan, the terms of the Plan will govern.

13. Amendments . The Company may amend this Agreement. Any amendment to the Plan will be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment will adversely affect the rights of the Optionee under this Agreement without the Optionee’s consent, except as required under the tax laws.

14. Severability . In the event that one or more of the provisions of this Agreement is invalidated for any reason by a court of competent jurisdiction, any provision so invalidated will be deemed to be separable from the other provisions hereof, and the remaining provisions hereof will continue to be valid and fully enforceable.

15. Governing Law . This Agreement will be construed and governed in accordance with the laws of the State of Ohio without regard to its conflict of laws principles.

This Agreement is effective as of the ___ day of _______ 20__.

GENCORP INC.

By:________________________________

S. J. Seymour

President and Chief Executive Officer

The undersigned Optionee hereby acknowledges receipt of an executed original of this Nonqualified Stock Option Agreement and accepts the Option subject to the applicable terms and conditions of the Plan and the terms and conditions hereinabove set forth.

________________________________

[Optionee Name]

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott J. Seymour, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of GenCorp Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 10, 2014

/s/ Scott J. Seymour

Scott J. Seymour

President and Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kathleen E. Redd, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of GenCorp Inc.;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 10, 2014

/s/ Kathleen E. Redd

Kathleen E. Redd

Vice President, Chief Financial Officer and Assistant Secretary

(Principal Financial Officer and Principal

Accounting Officer)

Exhibit 32.1

CERTIFICATIONS

PURSUANT TO 18 UNITED STATES CODE §1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies that to his knowledge the quarterly report on Form 10-Q of GenCorp Inc. for the period ended August 31, 2014 (the Report), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company, as of the dates and the periods expressed in the Report.

/s/ Scott J. Seymour

Scott J. Seymour

President and Chief Executive Officer

(Principal Executive Officer)

Date: October 10, 2014

The undersigned hereby certifies that to her knowledge the quarterly report on Form 10-Q of GenCorp Inc. for the period ended August 31, 2014 (the Report), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company, as of the dates and the periods expressed in the Report.

/s/ Kathleen E. Redd

Kathleen E. Redd

Vice President, Chief Financial Officer and Assistant Secretary

(Principal Financial Officer and Principal

Accounting Officer)

Date: October 10, 2014