40888--2/12/2009--GENCORP

related topics

{cost, contract, operation}

{regulation, government, change}

{loan, real, estate}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{product, liability, claim}

{customer, product, revenue}

{acquisition, growth, future}

{capital, credit, financial}

{loss, insurance, financial}

{cost, operation, labor}

{stock, price, operating}

{product, market, service}

{personnel, key, retain}

{financial, litigation, operation}

{regulation, change, law}

Economic conditions could materially adversely affect our ability to refinance our debt, and we face the risks of either not being able to do so, or doing so at higher interest expense. We are obligated to comply with financial and other covenants outlined in our debt indentures and agreements that could restrict our operating activities and the failure to comply could result in defaults that accelerate the payment of our debt. If our operating subsidiaries do not generate sufficient cash flow or if they are not able to pay dividends or otherwise distribute their cash to us, or if we have insufficient funds on hand, we may not be able to service our debt. Our pension plan is currently underfunded and we expect to be required to make cash contributions, which may reduce the cash available for our businesses. The level of returns on retirement benefit plan assets, changes in interest rates, changes in legislation, and other factors could affect our financial results. Our operations and properties are currently the subject of significant environmental liabilities, and the numerous environmental and other government regulations to which we are subject may become more stringent in the future. Although some of our environmental costs may be recoverable and we have established reserves, given the many uncertainties involved in assessing liability for environmental claims, our reserves may not be sufficient which could adversely affect our financial results. We are from time to time subject to significant litigation, the outcome of which could adversely affect our financial results. The cancellation or material modification of one or more significant contracts could adversely affect our financial results. Future reductions or changes in U.S. government spending could adversely affect our financial results. A significant percentage of our sales are generated from fixed-price contracts. If we experience cost overruns on these contracts, we would have to absorb the excess costs which could adversely affect our financial results. Our success and growth in our Aerospace and Defense segment depends on our ability to secure contracts. Our Aerospace and Defense segment is subject to procurement and other related laws and regulations inherent in contracting with the U.S. government, non-compliance with which could adversely affect our financial results. Our inability to adapt to rapid technological changes could impair our ability to remain competitive. We may experience warranty claims for product failures, schedule delays or other problems with existing or new products and systems. The release or explosion of dangerous materials used in our business could disrupt our operations and could adversely affect our financial results. Future reductions in airbag propellant volume could adversely affect our financial results. Disruptions in the supply of key raw materials and difficulties in the supplier qualification process, as well as increases in prices of raw materials, could adversely affect our financial results. The real estate market is inherently risky. Substantially all of our real estate is located in Sacramento County, California making us vulnerable to changes in economic and other conditions in that particular market. We have limited experience in real estate activities. We may expand our operations through acquisitions, which may divert management s attention and expose us to unanticipated liabilities and costs. We may experience difficulties integrating any acquired operations, and we may incur costs relating to acquisitions that are never consummated. We may incur additional costs related to divestitures, which could adversely affect our financial results. A strike or other work stoppage, or our inability to renew collective bargaining agreements on favorable terms, could adversely affect our financial results. In order to be successful, we must attract and retain key employees. Due to the nature of our business, our sales levels may fluctuate causing our quarterly operating results to fluctuate. We face certain significant risk exposures and potential liabilities that may not be adequately covered by indemnity or insurance. We use estimates in accounting for most of our programs. Changes in our estimates could affect our future financial results.

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40888--2/12/2009--GENCORP_INC