8-K/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report: February 13, 2006
Date of earliest event reported: November 30, 2005

AMERICAN PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)

Delaware	1-8137	59-6490478
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

3770 Howard Hughes Parkway
Suite 300, Las Vegas, Nevada 89109
(Address of principal executive offices) (zip code)

(702) 735-2200
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-23

EX-99.1

EX-99.2

EX-99.3

Explanatory Paragraph

This Amendment No. 1 to American Pacific Corporation’s (the “Company” or “AMPAC”) Current Report on Form 8-K is filed to update Item 2.01 “Completion of Acquisition or Disposition of Assets” and Item 9.01 “Financial Statements and Exhibits” to include the required historical financial statements of Aerojet Fine Chemicals LLC, and Pro Forma Financial Statements.

Text, that is not affected by this Amendment No. 1, that was previously included under Item 1.01 “Entry into a Material Definitive Agreement”, Item 2.03 “Creating of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant”, and Item 7.01 “Regulation FD Disclosures”, has been omitted.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On November 30, 2005, the Company completed the previously announced purchase of the Aerojet Fine Chemicals fine chemicals business (the “Business”) of GenCorp Inc., an Ohio corporation (“GenCorp”) through the purchase of substantially all of the assets of the Aerojet Fine Chemicals LLC, a Delaware limited liability company (“Seller”) and the assumption of certain liabilities of the Business. Pursuant to the Purchase Agreement, dated as of July 12, 2005 (the “Purchase Agreement”), by and among American Pacific Corporation, Aerojet Fine Chemicals LLC, and Aerojet-General Corporation, an Ohio corporation (“Aerojet”), as amended by the First Amendment to Purchase Agreement, dated November 30, 2005 (the “First Amendment”), by and among AMPAC, Seller and Aerojet, AMPAC acquired substantially all of the assets of the Business and assumed certain liabilities related thereto. The First Amendment is filed as an exhibit to this Current Report on Form 8-K and incorporated herein by reference. The Purchase Agreement was filed as an exhibit to our Current Report on Form 8-K, filed on July 18, 2005.

On October 22, 2005, AMPAC assigned all of its rights, benefits, privileges, obligations and liabilities under the Purchase Agreement, to Ampac Fine Chemicals LLC, a wholly-owned California limited liability company subsidiary of AMPAC (“AMPAC AFC”). On November 30, 2005, this assignment was amended and restated to clarify that the obligations and liabilities under the Purchase Agreement, as amended, are assigned to AMPAC AFC. This assignment does not relieve the Company of any of its obligations, representations, warranties, indemnities or covenants under the Purchase Agreement, as amended. In addition, on November 30, 2005, the Company provided to Aerojet and Seller an unconditional, absolute and irrevocable guarantee of the obligations of AMPAC AFC under the Purchase Agreement, as amended, Ground Lease (as defined below) and Warehouse Lease (as defined below).

The purchase price for the Business was $114.0 million plus a contingent payment of up to $5.0 million and the assumption by AMPAC AFC of certain liabilities. Of this purchase price, $88.5 million was paid in cash at closing and $25.5 million was an unsecured subordinated seller note issued at closing. Interest on such note will accrue on a payment-in-kind basis. The contingent payment of up to $5.0 million will be based on the Business achieving specified earning targets in the twelve month period ending September 30, 2006 (the “Contingent Payment”). Additionally, if the Business fails to achieve specified earnings targets for the three-month period between October 1, 2005 and December 31, 2005, then Seller shall pay AMPAC AFC an amount equal to four times the difference between the specified earnings target for this period and the actual results achieved, up to a maximum of $1.0 million (“Interim Adjustment”). However, if the Business achieves the specified earning targets for the full twelve month period ending September 30, 2006, and Seller is entitled to the full Contingent Payment of $5.0 million, then AMPAC AFC shall return the Interim Adjustment upon payment of the Contingent Payment. In addition, AMPAC paid Seller approximately $17.4 million, subject to adjustments, as compensation for the capital investment that Seller incurred in excess of the $19.0 million threshold set forth in the Purchase Agreement, as amended. Furthermore, AMPAC paid Seller approximately $2.4 million, subject to adjustments, for net working capital received in excess of $10.0 million pursuant to the working capital adjustment set forth in the First Amendment. Net proceeds of approximately $83.3 million from the Credit

-1-

Facilities and $29.7 million of the Company’s cash on hand were used to finance all payments at closing.

Subsequent to the closing date, the Company reviewed the closing balance sheet for the Business and determined that the net working capital and capital investment payments should be reduced by $3.6 million. In addition, the Business did not meet the specified earnings target for the Interim Adjustment of $1.0 million. The aggregate balance due to the Company of $4.6 million is subject to review procedures by the Seller.

As part of the transactions contemplated by the Purchase Agreement, as amended, AMPAC AFC entered into a ground lease (the “Ground Lease”) with Aerojet for approximately 240 acres of land underlying the facilities of the Business. The approximately 240-acre leased land is located within a substantially larger tract of land owned by Aerojet and the Ground Lease grants AMPAC AFC access rights and other property rights to the leased land. The initial term of the Ground Lease is 30 years, and AMPAC AFC has an option to renew for a second 30-year term. The annual rent AMPAC AFC shall pay to Aerojet is $5,000 per annum for the first 5 years and no rent shall be due for the remainder of the term of the lease, including the second 30-year term. The Ground Lease contains an option in favor of AMPAC AFC to purchase the fee interest of the leased land, as well as any buildings or improvements on the site that AMPAC AFC does not at that time own, for an exercise price of $1,000. A condition precedent to the exercise of such option to purchase is that the leased land be de-listed by the U.S. Environmental Protection Agency as a Superfund site and that AMPAC AFC satisfy other payment obligations under the Purchase Agreement, as amended.

AMPAC is a supplier of perchlorate, an oxidant that is a key ingredient in solid rocket fuel, to Aerojet, which is a subsidiary of GenCorp. AMPAC also acquired the former Atlantic Research Corporation in-space propulsion business from Aerojet on October 1, 2004, as disclosed on the Current Report on Form 8-K, filed October 4, 2004. AMPAC and GenCorp conducted arms-length negotiations for six months to determine the amount of the consideration for the purchase of the Business. Other than as set forth above, there are no material relationships between AMPAC, GenCorp, Aerojet, Seller, or any of their affiliates, directors or officers, other than the transactions contemplated under the Purchase Agreement, as amended.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of business acquired.

     The following financial statements of Aerojet Fine Chemicals LLC are included as Exhibit 99.1:

• Audited balance sheets as of November 30, 2004 and 2003, and the related statements of operations and accumulated deficit and cash flows for each of the three years ended November 30, 2004.

     The following financial statements of Aerojet Fine Chemicals LLC are included as Exhibit 99.2:

• Unaudited balance sheets as of August 31, 2005, and the related statements of operations and cash flows for nine month periods ended August 31, 2005 and 2004.

(b) Pro forma financial information

     The following unaudited pro forma combined financial statements of the Company are included as Exhibit 99.3:

• Unaudited pro forma combined balance sheet as of September 30, 2005.

• Unaudited pro forma combined statement of operations for the year ended September 30, 2005.

-2-

(c) Exhibits

2.1	Purchase Agreement, dated as of July 12, 2005, by and among Aerojet Fine Chemicals LLC, Aerojet-General Corporation and American Pacific Corporation (incorporated by reference to Exhibit 2.1 in the Company’s Current Report on Form 8-K dated July 18, 2005)
2.2	First Amendment to Purchase Agreement, dated November 30, 2005, by and among American Pacific Corporation, Aerojet Fine Chemicals LLC and Aerojet-General Corporation (incorporated by reference to Exhibit 2.2 in the Company’s Current Report on Form 8-K dated November 30, 2005).
2.3	Assignment and Assumption Agreement, dated October 22, 2005, by and between American Pacific Corporation and Ampac Fine Chemicals LLC (incorporated by reference to Exhibit 2.3 in the Company’s Current Report on Form 8-K dated November 30, 2005).
2.4	Amended and Restated Assignment and Assumption Agreement, dated November 30, 2005, by and between American Pacific Corporation and Ampac Fine Chemicals LLC (incorporated by reference to Exhibit 2.4 in the Company’s Current Report on Form 8-K dated November 30, 2005).
2.5	Unconditional Guaranty of Payment and Performance, dated November 30, 2005, for the benefit of Aerojet-General Corporation and Aerojet Fine Chemicals LLC (incorporated by reference to Exhibit 2.5 in the Company’s Current Report on Form 8-K dated November 30, 2005).
10.4	American Pacific Corporation Subordinated Promissory Note, dated November 30, 2005, in the principal amount of $25,500,000 (incorporated by reference to Exhibit 10.4 in the Company’s Current Report on Form 8-K dated November 30, 2005).
10.5	Ground Lease, dated November 30, 2005, by and between Aerojet-General Corporation and Ampac Fine Chemicals LLC (incorporated by reference to Exhibit 10.5 in the Company’s Current Report on Form 8-K dated November 30, 2005).
23*	Consent of Independent Registered Public Accounting Firm.
99.1*	Audited historical financial statements of Aerojet Fine Chemicals LLC as of November 30, 2004 and 2003 and for the years then ended and for the year ended November 30, 2002.
99.2*	Unaudited historical financial statements of Aerojet Fine Chemicals LLC as of August 31, 2005 and for the nine months ended August 31, 2005 and 2004.
99.3*	Unaudited pro forma combined financial statements of the Company as of September 30, 2005 and for the year then ended.

* Filed herewith.

-3-

SIGNATURE

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 hereunto duly authorized.

Date: February 13, 2006

AMERCIAN PACIFIC CORPORATION
By:	/s/ Seth Van Voorhees
	Name:	Seth Van Voorhees
	Title:	Vice President, Chief Financial Officer and Treasurer

-4-

EX-23

Exhibit 23

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-8 File Nos. 333-62566, 333-104732, and 333-108790) of American Pacific Corporation of our report dated August 31, 2005, with respect to the consolidated financial statements of Aerojet Fine Chemicals LLC as of November 30, 2004 and 2003 and for the three years in the period ended November 30, 2004 included in this Current Report (Form 8-K/A) dated February 13, 2006.

/s/ Ernst & Young LLP
Sacramento, California
February 10, 2006

EX-99.1

Exhibit 99.1

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Financial Statements

As of November 30, 2004 and 2003 and
for the Years Then Ended and for the Year Ended November 30, 2002

Contents

Report of Independent Registered Public Accounting Firm	1
Audited Financial Statements:
Balance Sheets	2
Statements of Operations and Accumulated Deficit	3
Statements of Cash Flows	4
Notes to Financial Statements	5

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of GenCorp Inc.

Board of Directors and Members
Aerojet Fine Chemicals LLC

We have audited the accompanying balance sheets of Aerojet Fine Chemicals LLC as of November 30, 2004 and 2003, and the related statements of operations and accumulated deficit and cash flows for each of the three years in the period ended November 30, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Aerojet Fine Chemicals LLC at November 30, 2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2004, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP
August 31, 2005
Sacramento, California

-1-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Balance Sheets
(in thousands)

	As of November 30,
	2004			2003
Assets:
Current assets:
Cash	$	2		$	2
Accounts receivable, net of allowance for doubtful accounts of $25 as of November 30, 2003		7,638			3,762
Inventories, net		10,752			18,551
Prepaid expenses and other		498			441
Total current assets		18,890			22,756
Noncurrent assets:
Property, plant and equipment, net		71,300			70,220
Prepaid pension asset		3,003			2,504
Receivable from GenCorp Inc.		1,379			—
Other noncurrent assets		43			43
Total noncurrent assets		75,725			72,767
Total assets	$	94,615		$	95,523
Liabilities:
Current liabilities:
Accounts payable	$	6,085		$	4,679
Payroll and benefit-related liabilities		1,446			2,463
Customer deposits		1,015			—
Deferred revenues		120			1,419
Accrued expenses and other		1,789			1,742
Total current liabilities		10,455			10,303
Noncurrent liabilities:
Payable to GenCorp Inc.		—			4,104
Other noncurrent liabilities		1,160			1,066
Total noncurrent liabilities		1,160			5,170
Total liabilities		11,615			15,473
Shareholder’s investment:
Contributed capital		108,357			108,357
Accumulated deficit		(25,357	)		(28,307	)
Total shareholder’s investment		83,000			80,050
Total liabilities and shareholder’s investment	$	94,615		$	95,523

See accompanying notes to financial statements.

-2-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Statements of Operations and Accumulated Deficit
(in thousands)

	Year Ended November 30,
	2004			2003			2002
Net sales	$	65,469		$	58,042		$	51,820
Cost of sales		52,426			43,456			40,749
Gross profit		13,043			14,586			11,071
Operating expenses:
Selling, general and administrative		8,194			8,059			7,863
Research and development		1,353			1,318			1,223
Pension and postretirement benefit plan expense		736			311			255
Total operating expenses		10,283			9,688			9,341
Income before interest and other income		2,760			4,898			1,730
Interest expense to GenCorp Inc., net		232			559			1,496
Other income, net		(422	)		(1,712	)		(9	)
Net income		2,950			6,051			243
Accumulated deficit, beginning of period		(28,307	)		(34,358	)		(34,601	)
Accumulated deficit, end of period	$	(25,357	)	$	(28,307	)	$	(34,358	)

See accompanying notes to financial statements.

-3-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Statements of Cash Flows
(in thousands)

	Year Ended November 30,
	2004			2003			2002
Cash flows from operating activities:
Net income	$	2,950		$	6,051		$	243
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		7,952			7,729			7,062
Gain on sale of assets		(115	)		(23	)		—
Savings plan expense		397			252			—
Changes in certain assets and liabilities:
Accounts receivable, net		(3,876	)		5,342			6,139
Inventories, net		7,799			(6,611	)		(925	)
Prepaid expenses and other		(57	)		(29	)		(135	)
Prepaid pension assets		757			372			268
Accounts payable		(1,021	)		1,106			(1,007	)
Payroll and benefit-related liabilities		(1,017	)		292			(34	)
Other current liabilities		(237	)		(1,192	)		2,918
Noncurrent liabilities		94			12			(51	)
Net cash provided by operating activities		13,626			13,301			14,478
Cash flows from investing activities:
Capital expenditures		(6,605	)		(1,600	)		(4,078	)
Proceeds from sale of assets		115			23			—
Net cash used for investing activities		(6,490	)		(1,577	)		(4,078	)
Cash flows from financing activities:
Decrease in payable to GenCorp Inc.		(7,136	)		(11,724	)		(10,400	)
Net cash used for financing activities		(7,136	)		(11,724	)		(10,400	)
Increase in cash		—			—			—
Cash at beginning of year		2			2			2
Cash at end of year	$	2		$	2		$	2

See accompanying notes to financial statements.

-4-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements

November 30, 2004 and 2003

1. Basis of Presentation

     The accompanying financial statements reflect the assets, liabilities, sales and expenses of Aerojet Fine Chemicals LLC (Aerojet Fine Chemicals or “the Company”), a wholly-owned subsidiary of GenCorp Inc. (GenCorp). On December 1, 1998, the Company became a division of Aerojet-General Corporation (Aerojet), another wholly-owned subsidiary of GenCorp. On February 1, 1999, the Company was incorporated as a limited liability company and wholly-owned subsidiary of Aerojet. On October 1, 1999, ownership of the Company was transferred from Aerojet to GenCorp. GenCorp, incorporated in Ohio in 1915, is a multinational diversified technology-based company with operations in three business segments: (i) Aerospace and Defense; (ii) Fine Chemicals; and (iii) Real Estate.

     The Company’s sales are derived primarily from the sale of custom-manufactured active pharmaceutical ingredients (APIs) and advanced/registered intermediates to pharmaceutical and biotechnology companies. Customers use chemicals manufactured by AFC in products that are drug therapies for areas of neurology, oncology, viral (including HIV/AIDS), arthritis, and inflammatory conditions.

     The statements of operations and accumulated deficit include expenses recorded by the Company or directly charged to the Company by GenCorp or Aerojet. In addition, the statements of operations and accumulated deficit include an allocation of GenCorp’s and Aerojet’s general and administrative corporate expenses to reflect the services provided to the Company or benefits received by the Company. These services consisted primarily of general corporate management and governance, finance and accounting, treasury and risk management, legal, management information services and domestic tax services. The allocated expenses were $2,204,000, $1,808,000 and $1,805,000 for the years ended November 30, 2004, 2003, and 2002, respectively. These expenses are reported in the statement of operations and accumulated deficit as selling, general and administrative expenses. The allocations were determined based upon employee participation and time and costs on Company projects. Given that GenCorp and Aerojet provided such support services for the benefit of their entire organization, it would have been impractical to allocate such expenses in a more direct manner. Accordingly, management believes that this was a reasonable method for allocating such selling, general and administrative corporate expenses for those periods. However, as the scale of operations and nature of the business of GenCorp and Aerojet differed from that of the Company, these allocations are not necessarily representative of the operating expenses that would have been incurred had the Company operated on a stand-alone basis.

-5-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

1. Basis of Presentation (continued)

     The amount payable to GenCorp was $4,104,000 as of November 30, 2003. As of November 30, 2004, Aerojet Fine Chemicals had a receivable from GenCorp of $1,379,000. These amounts include the net effect of all other transactions between GenCorp and the Company, including the allocation of GenCorp’s and Aerojet’s general and administrative corporate expenses to Aerojet Fine Chemicals. Interest expense or income was recorded on these balances and included in the statements of operations and accumulated deficit under interest expense to GenCorp Inc, net. The Company paid interest of $232,000, $559,000 and $1,496,000 to GenCorp related to these balances for the years ended November 30, 2004, 2003 and 2002, respectively.

     The Company is organized as a limited liability company and is not subject to federal or state income taxes as an entity separate from GenCorp. Accordingly, there is no provision for income taxes included in the statements of operations and accumulated deficit.

     The Company participates in GenCorp’s centralized cash management system. Under this system, cash receipts are transferred to GenCorp and GenCorp funds cash disbursements. As such, the amount of cash does not represent the amount required or generated by the Company.

     In the opinion of management, all adjustments necessary for a fair presentation of financial position, results of operations and cash flows have been presented. The financial information included may not necessarily reflect the results of operations, financial position, or changes in shareholder’s investment in the future or what they would have been if the Company had been a separate, stand-alone company for the periods presented.

2. Summary of Significant Accounting Policies

a. Cash

     Cash consists of petty cash funds for all periods presented

b. Fair Value of Financial Instruments

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

-6-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

c. Concentration of Credit Risk

     Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade receivables. The Company operates in a specialty market niche within the pharmaceutical industry and is reliant on a small number of customers for a majority of its revenues. The Company is not able to predict changes in the stability of its customers. Any material change in the financial status of any one or a group of customers could have a material adverse effect on the Company’s results of operations and financial condition. Although losses resulting from uncollectible trade receivables have been minimal to date, there can be no assurance that the Company’s estimated allowance at November 30, 2004 will be adequate. As of November 30, 2004, three individually significant customers accounted for 52 percent, 25 percent and 14 percent of accounts receivable. As of November 30, 2003, two individually significant customers accounted for 74 percent and 17 percent of accounts receivable. During 2004, three individually significant customers accounted for 54 percent, 15 percent and 11 percent, of net sales. During 2003, two individually significant customers accounted for 73 percent and 15 percent of net sales. During 2002, three individually significant customers accounted for 55 percent, 17 percent and 16 percent, respectively, of net sales. The Company’s accounts receivable are generally unsecured and are not backed by collateral from its customers.

d. Inventories

     Inventories consist of raw materials, work-in-progress, finished goods and maintenance, repairs and operations (MRO) inventory that support the Company’s operating activities. With the exception of MRO inventory, inventory costs include materials, labor and manufacturing overhead. Inventories are stated at the lower of cost (determined using the average cost method) or market value.

e. Property, Plant and Equipment

     Property, plant and equipment are recorded at cost. Refurbishment costs are capitalized in the property accounts, whereas ordinary maintenance and repair costs are expensed as incurred. Depreciation is computed principally by the straight-line method. Depreciable lives on buildings is typically 30 years, building improvements are generally given a depreciable life equivalent to the remaining useful life of the related building and depreciable lives for machinery and equipment range from 3 years to 10 years.

-7-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

f. Impairment or Disposal of Long-lived Assets

     The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.

     Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as a specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

     The Company did not record any impairment losses for the years ended November 30, 2004, 2003 and 2002.

g. Revenue Recognition

     The Company generally recognizes revenue after products are shipped or customer acceptance has occurred, all other significant customer obligations have been met and collection is reasonably assured. Sales are recorded net of provisions for customer pricing allowances. The Company recognizes revenue under two contracts upon transfer of ownership and customer acceptance of the finished product, but before the finished product is delivered to the customers. These customers have specifically requested in writing pursuant to a contract that the Company invoice for the finished product and hold the finished product until a later date. As of November 30, 2004, 2003 and 2002, finished product totaling $16,569,000, $18,334,000 and $9,601,000, respectively, in sales had not yet shipped to the customer.

     In certain circumstances, the Company records sales when products are shipped, before customer acceptance has occurred because adequate controls are in place to ensure compliance with contractual product specifications and a substantial history of performance has been established. As of November 30, 2004, 2003 and 2002, revenue totaling $1,910,000, $0 and $1,861,000, respectively, was recognized under these circumstances.

-8-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

h. Research and Development

     Expenditures related to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred.

i. Environmental Costs

     The Company accounts for identified or potential environmental remediation liabilities in accordance with the American Institute of Certified Public Accountants’ Statement of Position 96-1, Environmental Remediation Liabilities, and Staff Accounting Bulletin No. 92, Accounting and Disclosures Relating to Loss Contingencies. Under this guidance, the Company expenses, on a current basis, costs associated with managing hazardous substances and pollution in ongoing operations. The Company accrues for costs associated with the remediation of environmental pollution when it becomes probable that a liability has been incurred and its proportionate share of the amount can be reasonably estimated. The Company did not record any expenses related to remediation of environmental pollution for the years ended November 30, 2004, 2003 and 2002 and no liabilities for remediation efforts were recorded at November 30, 2004 and 2003.

     The Company’s facility is located in Sacramento, California on land leased from Aerojet. The leased land is part of a tract of land owned by Aerojet that has been designated a “Superfund Site” under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). This land had been used by Aerojet and affiliated companies to and test rockets and related equipment since the 1950s and until the Company was established in 1999. In 1989, Aerojet entered into a Partial Consent Decree (Decree) with the federal government and the State of California that required Aerojet to conduct a Remedial Investigation/Feasibility Study of a portion of Aerojet’s Sacramento site, including the land leased to the Company. The Decree, as subsequently modified, requires Aerojet to take certain actions to remediate the site, including the land leased to the Company. In addition to Aerojet’s responsibilities under the Decree, the Decree, as modified, requires GenCorp to guarantee a substantial portion of the remediation activities at the Sacramento site. The Company is not a party to the Decree or any subsequent modifications to the Decree. Although the chemicals identified as contaminants on the leased land have not been used by Aerojet Fine Chemicals as part of its operations, CERCLA, among other things, provides for joint and severable liability for environmental liabilities including, for example, the environmental remediation expenses.

- 9 -

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

2.Summary of Significant Accounting Policies (continued)

i. Environmental Costs (continued)

     As part of the agreement to sell the Company to American Pacific Corporation, as discussed in Note 12, an Environmental Indemnity Agreement was entered into whereby GenCorp indemnified the Company against any and all environmental costs and liabilities arising out of or resulting from any violation of environmental law prior to the effective date of the sale, if and when completed, or any release of hazardous substances by the Company, Aerojet or GenCorp on the premises or Aerojet’s Sacramento site prior to the effective date of the sale, if and when completed.

j. Advertising Costs

     Expenditures related to advertising are expensed as incurred. Advertising costs were $130,000, $172,000 and $104,000 for the years ended November 30, 2004, 2003 and 2002, respectively.

k. Use of Estimates

     The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include the Company’s allowance for doubtful accounts, reserves for inventory obsolescence, expected long-term rate of return on assets and the discount rate applied to determine service cost and interest cost related to the Company’s pension plans, and amortization and recoverability of long-lived assets. Actual results could differ significantly from those estimates.

3. Inventories, Net

	November 30,
	2004		2003
	(in thousands)
Raw materials and supplies	$	4,046	$	6,017
Work-in-process		6,659		11,641
Finished goods		47		893
Inventories, net	$	10,752	$	18,551

     The above inventory balances are net of reserves of $781,000 and $1,729,000 as of November 30, 2004 and 2003, respectively.

- 10 -

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

3. Inventories, Net (continued)

     In fiscal year 2003, the Company received payments of $2,151,000 from a customer related to the customer’s deferral of deliveries of a particular product (the underlying contract included certain minimum orders and deliveries of the product). The payments were amortized over the period May 2003 though December 2003 at a rate of $308,000 per month and were included in the Company’s statements of operations as other income.

4. Property, Plant and Equipment, Net

	November 30,
	2004			2003
	(in thousands)
Machinery and equipment	$	69,526		$	67,570
Building and land improvements		44,976			42,478
Construction-in-progress		5,945			1,367
		120,447			111,415
Less: accumulated depreciation		(49,147	)		(41,195	)
	$	71,300		$	70,220

     Construction-in-progress consists primarily of expenditures related to expanding the Company’s production capabilities and supporting infrastructure. In 2002, Aerojet transferred $301,000 of fixed assets to the Company.

     Depreciation expense for 2004, 2003 and 2002 was $7,952,000, $7,729,000 and $7,062,000, respectively.

5. Accrued Expenses and Other Current Liabilities

	November 30,
	2004		2003
	(in thousands)
Accrued property taxes	$	1,073	$	1,093
Waste accrual		363		154
Accrued insurance		319		249
Other		34		246
	$	1,789	$	1,742

- 11 -

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

6. Employee Pension and Postretirement Benefit Plans

a. Defined Benefit and Other Postretirement Benefit Plans

     GenCorp has defined benefit pension plans covering substantially all of the Company’s salaried and hourly employees. Normal retirement age is 65, but certain plan provisions allow for earlier retirement. GenCorp’s funding policy complies with the funding requirements under applicable laws and regulations. Pension benefits are calculated under formulas principally based on average earnings and length of service for salaried employees and under negotiated non-wage based formulas for hourly employees.

     In addition to providing pension benefits, GenCorp provides healthcare and life insurance benefits (postretirement benefits) to certain retired employees, with varied coverage by employee group. Generally, employees hired after January 1, 1997 are not eligible for postretirement healthcare and insurance benefits. The healthcare plans generally provide for cost sharing between the Company and its retirees in the form of retiree contributions, deductibles and coinsurance. Postretirement benefit obligations are unfunded, and costs are accrued based on the date the employees become eligible for the benefits.

     The following information summarizes the balance sheet impacts allocated to Aerojet Fine Chemicals for defined benefit pension plans and other postretirement benefit plans. Assets and unrecognized gain/loss of the plan have been allocated based on the Company’s projected benefit obligation (PBO) as a percentage of the total plan’s PBO. Other components were directly calculated. The plan assets, benefit obligations and the funded status of the plans are determined at the annual measurement date of August 31 for each year presented below.

							Other
	Defined Benefit						Postretirement
	Pension Plans						Benefit Plans
	Year Ended November 30,
	2004			2003			2004			2003
	(in thousands)
Change in fair value of plan assets:
Fair value — beginning of year	$	3,990		$	2,798		$	—		$	—
Actual return on plan assets		242			1,197			—			—
Employer contributions		—			—			6			28
Benefits paid		(14	)		(5	)		(6	)		(28	)
Fair value — end of year	$	4,218		$	3,990		$	—		$	—

- 12 -

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

6. Employee Pension and Postretirement Benefit Plans (continued)

a. Defined Benefit and Other Postretirement Benefit Plans (continued)

							Other
	Defined Benefit						Postretirement
	Pension Plans						Benefit Plans
				Year Ended November 30,
	2004			2003			2004			2003
				(in thousands)
Change in benefit obligation:
Benefit obligation — beginning of year	$	(3,659	)	$	(2,406	)	$	(661	)	$	(512	)
Service cost		(566	)		(362	)		(13	)		(14	)
Interest cost		(237	)		(174	)		(37	)		(35	)
Amendments		(178	)		(19	)		—			—
Actuarial (loss) gain		770			(703	)		215			(128	)
Benefits paid		14			5			6			28
Benefit obligation — end of year	$	(3,856	)	$	(3,659	)	$	(490	)	$	(661	)

					Other
	Defined Benefit				Postretirement
	Pension Plans				Benefit Plans
			Year Ended November 30,
	2004		2003		2004			2003
			(in thousands)
Funded status of the plan	$	362	$	331	$	(490	)	$	(661	)
Unrecognized actuarial loss		1,626		1,233		(289	)		(93	)
Unrecognized prior service cost		1,015		940		(104	)		(156	)
Unrecognized transition amount		—		—		—			—
Minimum funding liability		—		—		—			—
Intangible assets		—		—		—			—
Employer contribution/benefit payments August 31 through November 30		—		—		1			7
Net asset (liability) recognized in the balance sheets	$	3,003	$	2,504	$	(882	)	$	(903	)

As of the August 31 measurement date, the accumulated benefit obligation for the defined benefit pension plans was $3,856,000 and $3,659,000 for 2004 and 2003, respectively.

- 13 -

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

6. Employee Pension and Postretirement Benefit Plans (continued)

a. Defined Benefit and Other Postretirement Benefit Plans (continued)

     Components of the amounts allocated to the Company’s balance sheets:

					Other
	Defined Benefit				Postretirement
	Pension Plans				Benefit Plans
			Year Ended November 30,
	2004		2003		2004			2003
			(in thousands)
Prepaid benefit cost	$	3,003	$	2,504	$	—		$	—
Other noncurrent liabilities		—		—		(882	)		(903	)
Net asset (liability) recognized in the balance sheets	$	3,003	$	2,504	$	(882	)	$	(903	)

     GenCorp used the following assumptions, calculated based on a weighted-average, to measure the benefit obligations and to compute the expected long-term return on assets for the Company’s employee pension and postretirement benefit plans:

							Other
	Defined Benefit						Postretirement
	Pension Plans						Benefit Plans
	2004			2003			2004			2003
Discount rate		6.25	%		6.50	%		6.00	%		6.25	%
Expected long-term rate of return on plan assets		8.75	%		8.75	%		*			*
Rate of compensation increase		4.50	%		4.50	%		*			*
Initial healthcare trend rate		*			*			10.00	%		11.60	%
Ultimate healthcare trend rate		*			*			5.00	%		5.10	%
Year ultimate rate attained		*			*			2011			2014

* Not applicable.

     Certain actuarial assumptions, such as the assumed discount rate, the long-term rate of return and the assumed healthcare cost trend rates, can have a significant effect on the amounts reported for the periodic cost of pension benefits and postretirement benefits, as well as the respective benefit obligation amounts.

- 14 -

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

6. Employee Pension and Postretirement Benefit Plans (continued)

a. Defined Benefit and Other Postretirement Benefit Plans (continued)

     The assumed discount rate represents the market rate available for investments in high-quality fixed income instruments based on the expected benefit payments for the pension and postretirement benefit plans. For 2004 pension benefit obligations, the discount rate was reduced to 6.25% and for postretirement benefit obligations the discount rate was reduced to 6.00% to reflect market interest rate conditions.

     The long-term rate of return for plan assets is based on current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. Best estimate assumptions are developed for each asset class by reviewing return forecasts of external investment management firms as well as historical returns for each asset class, including incremental returns achieved through active management and expected management fees and plan expenses. These assumptions are applied to the expected asset mix to determine the long-term rate of return assumption. The Company assumed an expected return on plan assets of 8.75% for 2004 benefit obligations, consistent with 2003.

     A one percentage point increase in the assumed trend rate for healthcare costs would have no effect on the postretirement accumulated benefit obligation or the service and interest cost components of expense. A one percentage point decrease in the assumed trend rate for healthcare costs would have no effect on the postretirement accumulated benefit obligation or the service and interest cost components of expense.

     The Company’s pension plans weighted average asset allocation and the investment policy ranges at August 31, 2004 and 2003 (the Plans measurement dates), by asset category is as follows:

							Target
	2004			2003			Allocation(1)
Domestic equity securities		63	%		61	%		64	%
International equity securities		16			16			17
Bonds		19			21			17
Real estate		2			2			2

⁽¹⁾ Target range is plus or minus 2%.

- 15 -

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

6. Employee Pension and Postretirement Benefit Plans (continued)

a. Defined Benefit and Other Postretirement Benefit Plans (continued)

     The Company’s investment strategy consists of a long-term, risk-controlled approach using diversified investment options with a minimal exposure to volatile investment options such as derivatives and includes the use of a diversified allocation of equity, bonds, and real estate exposures that are customized to each plan’s projected cash flow requirements.

     The Company did not make any contributions to the plan for the fiscal years ended November 30, 2004 and 2003. In addition, the Company does not have a statutory minimum funding requirement in 2005. However, the Company, at its discretion, may make voluntary contributions to the plan.

     The following presents estimated future benefit payments, including expected future service, as appropriate:

	Defined		Other
	Benefit		Postretirement
	Pension		Benefit
	Plans		Plans
	(in thousands)
Fiscal year 2005	$	61	$	32
Fiscal year 2006		73		31
Fiscal year 2007		92		31
Fiscal year 2008		118		31
Fiscal year 2009		138		31
Fiscal years 2010 – 2014		1,051		175

-16-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

6. Employee Pension and Postretirement Benefit Plans (continued)

a. Defined Benefit and Other Postretirement Benefit Plans (continued)

     Total periodic cost allocated to the Company for pension benefits and other postretirement benefits:

													Other
				Defined Benefit									Postretirement
				Pension Plans									Benefit Plans
							Year Ended November 30,
	2004			2003			2002			2004			2003			2002
							(in thousands)
Service cost	$	566		$	361		$	332		$	13		$	14		$	27
Interest cost on benefit obligation		237			174			130			37			35			43
Assumed return on plan assets (1)		(361	)		(294	)		(243	)		—			—			—
Amortization of transition obligation		—			(2	)		(8	)		—			—			—
Amortization of prior service cost		103			102			94			(52	)		(52	)		(52	)
Amortization of net (gains) losses		212			28			(37	)		(19	)		(55	)		(31	)
Net periodic benefit (income) expense	$	757		$	369		$	268		$	(21	)	$	(58	)	$	(13	)

⁽¹⁾ Actual returns on plan assets were $242,000 for the year ended November 30, 2004 and $1,197,000 for the year ended November 30, 2003.

     The market-related value of plan assets is averaged over a three-year period to determine the expected return-on-assets component of annual net pension costs. This methodology results in a calculated market-related value of plan assets that is close to current value, while still mitigating the effects of short-term market fluctuations. Unrecognized gains and losses are primarily a result of the disparity between actual and expected investment returns on pension plan assets and changes in the discount rate used to calculate the discounted cash flows for both pension and postretirement benefit costs. These unrecognized gains and losses are amortized over a five year period.

     In August 2004, the FASB issued Staff Position No. 106-2 (“FSP 106-2”), Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“the Prescription Drug Act”). The Prescription Drug Act introduces a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of post-retirement health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. FSP 106-2 provides authoritative guidance on the accounting for the federal

-17-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

6. Employee Pension and Postretirement Benefit Plans (continued)

a. Defined Benefit and Other Postretirement Benefit Plans (continued)

subsidy and specifies the disclosure requirements for employers who have adopted FSP 106-2, including those who are unable to determine whether benefits provided under its plan are actuarially equivalent to Medicare Part D. FSP 106-2 was effective for GenCorp in the fourth quarter of fiscal 2004. No subsidy was estimated for Aerojet Fine Chemicals.

b. Defined Contribution Pension Plans

     Substantially all U.S. employees of the Company are eligible for participation in GenCorp’s defined contribution benefit plan. GenCorp’s contributions to these plans generally are based on a percentage of employee contributions. Expenses recorded for the matching contributions under the plan were $397,000, $340,000 and $337,000 for the years ended November 30, 2004, 2003 and 2002, respectively. GenCorp’s contribution to the plans is invested entirely in the GenCorp Stock Fund and may be funded with cash or shares of GenCorp common stock.

c. Postemployment Benefits

     GenCorp provides certain postemployment benefits to the Company’s employees. Such benefits include disability-related and workers’ compensation benefits and severance payments for certain employees. The Company accrues for the cost of such benefit expenses once an appropriate triggering event has occurred.

7. Commitments and Contingencies

a. Operating Lease Commitments

     The Company leases certain facilities and equipment under long-term, non-cancelable operating leases, substantially all of which are with Aerojet. The leases generally provide for renewal options ranging from month-to-month renewal to 15 years and require the company to pay for utilities, insurance, taxes and maintenance. Rent expense associated with these leases was $677,000, $609,000 and $726,000 for the years ended November 30, 2004, 2003 and 2002, respectively.

-18-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

7. Commitments and Contingencies (continued)

a. Operating Lease Commitments (continued)

     The future minimum rental commitments under all non-cancelable operating leases in effect as of November 30, 2004 were as follows:

	Future
	Minimum
	Rental
	Commitments
	(in thousands)
Fiscal year 2005	$	407
Fiscal year 2006		367
Fiscal year 2007		363
Fiscal year 2008		363
Fiscal year 2009		363
Thereafter		1,510
	$	3,373

b. Guarantee of GenCorp Inc. Debt

     As of November 30, 2004, the Company, along with certain other GenCorp subsidiaries, was a guarantor for GenCorp’s $137 million Revolving Credit Facility (Revolver), $28 million Term Loan A, $113 million Term Loan B, and $150 million 9.5 percent Senior Subordinated Notes due August 2013 (9.5 percent Notes). In addition, the Company’s tangible and intangible property is pledged as security under the credit agreement. As of November 30, 2004 there were no borrowings under the Revolver.

     The Company is also a guarantor on approximately $1 million of equipment financing for GenCorp.

     In December 2004, GenCorp closed a new $180 million credit facility (New Credit Facility) which replaced the previous credit facility. The outstanding term loans totaling $141 million plus accrued interest under the previous credit facility were repaid in full using restricted cash on GenCorp’s balance sheet. The New Credit Facility provides an $80 million revolving credit facility, and $100 million credit-linked facility. The credit-linked facility consists of a funded $25 million

-19-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

7. Commitments and Contingencies (continued)

b. Guarantee of GenCorp Inc. Debt (continued)

term loan sub-facility and a $75 million letter of credit sub-facility. The Company, along with certain other GenCorp subsidiaries, was a guarantor of the New Credit Facility and the Company’s tangible and intangible property is pledged as security. In February 2005, GenCorp redeemed $53 million principal amount of its 9.5 percent Notes using restricted cash on GenCorp’s balance sheet.

c. Construction Purchase Commitments

     The Company had purchase commitments related to construction in progress contracts totaling $5,957,000 at November 30, 2004.

d. Legal

     The California Department of Toxic Substances Control (DTSC) Statewide Compliance Division-Northern California, contends that the Company’s neutralization or stabilization of several liquid stream processes within a closed loop manufacturing system constitutes treatment of a hazardous waste without a permit. The Company disagrees. On September 2, 2005, the DTSC Inspector issued an Inspection Report relevant to the June 2004 inspection of the Company’s facility. The Inspection Report concluded that the referenced activities constitute treatment of hazardous waste and directed Aerojet Fine Chemicals to submit an application for a permit modification to treat hazardous waste with the addition of caustic chemicals in certain manufacturing processes. DTSC extended the time in which the Company and GenCorp must respond to the Inspection Report to December 9, 2005. During that time, the Company and GenCorp will be working with American Pacific Corporation and DTSC in preparing a Consent Agreement which, upon close of the sale of Aerojet Fine Chemicals to American Pacific Corporation (see Note 12 “Subsequent Events” related to GenCorp’s plan to sell Aerojet Fine Chemicals to American Pacific Corporation), would authorize American Pacific Corporation to continue operations until the treatment issue can be resolved. DTSC indicates that it may take separate enforcement action against the Company, Aerojet and GenCorp for the violations alleged in its Inspection Report. The Company’s management believes that if the Company is ultimately required to obtain a permit to treat hazardous waste the effects on the Company’s operating results, liquidity and cash flow could be significant. Because the Company manufactures chemical compounds to customer specifications, the Company’s management believes that it may be difficult to change processes to perform more cost-effectively under a scenario where the Company is considered to be treating hazardous waste. In addition, the Company may not be able to pass along any increases in operating costs to customers.

-20-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

7. Commitments and Contingencies (continued)

d. Legal (continued)

     The Company’s facility is subject to several National Emissions Standards for Hazardous Air Pollutants under the Clean Air Act because of its location on property contiguous with Aerojet and common controlled under GenCorp. GenCorp is requesting the Environmental Protection Agency (EPA) to make a determination that, upon close of the sale of Aerojet Fine Chemicals to American Pacific Corporation, the Company’s facility is no longer subject to these requirements. Absent such a determination, Aerojet Fine Chemicals may be required to install additional equipment relative to its air emissions. The additional equipment may involve an investment in new equipment and resources that would be material to the Company’s financial position and results of operations. GenCorp and the Company are actively involved in discussions with the EPA regarding this issue, but the timing of any resolution or agreement is uncertain.

     The Company’s facility is located on land leased from Aerojet. The leased land is part of a tract of land owned by Aerojet designated as a “Superfund Site” under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). This land had been used by Aerojet and affiliated companies to manufacture and test rockets and related equipment since the 1950s and until the Company was established in 1999. Although the chemicals identified as contaminants on the leased land have not been used by Aerojet Fine Chemicals as part of its operations, CERCLA, among other things, provides for joint and severable liability for environmental liabilities including, for example, the environmental remediation expenses.

     As part of the agreement to sell the Company to American Pacific Corporation, as discussed in Note 12, an Environmental Indemnity Agreement was entered into whereby GenCorp indemnified the Company against any and all environmental cost and liabilities arising out of or resulting from any violation of environmental law prior to the effective date of the sale, if and when completed, or any release of hazardous substances by the Company, Aerojet or GenCorp on the premises or Aerojet’s Sacramento site prior to the effective date of the sale, if and when completed.

     The Company is, from time to time, involved in various legal actions and proceedings relating to a wide range of matters that arise in the normal course of business. In the opinion of management, after reviewing the information which is currently available with respect to such matters and consulting with the Company’s counsel, any liability which may ultimately be incurred with respect to these matters will not materially affect the financial condition of the Company.

-21-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

7. Commitments and Contingencies (continued)

e. Collective Bargaining Arrangements

     Approximately 56 percent of the Company’s employees are covered by a collective bargaining unit agreement as of November 30, 2004. This agreement expires in June 2007.

8. Contributed Capital

     Effective February 1, 1999, the Company became operational as a Limited Liability Corporation formed in the State of Delaware with a sole corporate member, GenCorp. On June 5, 2000, the Company became a two member LLC in connection with GenCorp’s sale and exchange of an aggregate 40 percent interest in the Company to NextPharma Technologies (NextPharma) for $25 million cash and a 35 percent equity interest in NextPharma. In December 2001, GenCorp reacquired the minority interest from NextPharma and the Company became a wholly owned subsidiary of GenCorp.

9. Stock-Based Compensation

     Certain Company employees participate in the GenCorp Stock Option Plans, which provide for GenCorp common stock to be purchased pursuant to stock options or to be subject to stock appreciation rights which may be granted to selected officers and key employees at prices equal to the market value of a share of common stock on the date of grant. In general, the options are exercisable in 25 percent increments at six months, one year, two years and three years from the date of grant. No stock appreciation rights have been granted.

     The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting For Stock Issued to Employees (APB 25) and related interpretations in accounting for employee stock options, as permitted by SFAS No. 123, Accounting For Stock-Based Compensation and SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure. Under APB 25, because the exercise price of the GenCorp employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized for stock options granted to the Company’s employees.

     If compensation cost for the GenCorp stock options granted to the Company’s employees had been based on the fair value method, the effect on net income would not have been significant. The fair value was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for both 2003 and 2002 (the Company’s employees did not

-22-

9. Stock-Based Compensation (continued)

receive any stock option grants during 2004): risk-free interest rate of 3.3 percent for 2003 and 3.1 percent for 2002, dividend yield of 1.5 percent for 2003 and 1.0 percent for 2002, volatility factor of the expected market price of GenCorp’s common stock of 0.44 in 2003 and 0.47 in 2002 and an expected option life of five years.

10. Operating Segments and Related Disclosures

     The Company operates in one industry segment: custom-manufacturer of active pharmaceutical ingredients (APIs) and advanced/registered intermediates to pharmaceutical and biotechnology companies. The Company’s continuing operations are located in the United States. Sales are attributed to regions based on the location of the sale origination:

	Year Ended November 30,
	2004		2003		2002
	(dollars in millions)
United States	$	45,113	$	51,745	$	19,829
Belgium		9,839		4,558		28,383
United Kingdom		5,691		993		1,725
Switzerland		3,289		410		—
Germany		1,175		—		1,760
All other regions		362		336		123
	$	65,469	$	58,042	$	51,820

11. New Accounting Pronouncements

     In October 2004, the FASB concluded that Statement 123R, Share Based Payment, which would require all companies to measure compensation cost for all share-based payments (including employee stock options) at fair value, would be effective for public companies for interim or annual periods beginning after June 15, 2005. The Company could adopt the new standard in one of two ways — the modified prospective transition method or the modified retrospective transition method. The Company does not anticipate that the adoption of the Statement 123R will have a significant effect on earnings or the financial position of the Company.

-23-

Aerojet Fine Chemicals LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Notes to Financial Statements (continued)

11. New Accounting Pronouncements (continued)

     In November 2004, the FASB issued Statement 151, Inventory Costs, an amendment of ARB No. 43, Chapter 4, which would be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The amendments made by Statement 151 will improve financial reporting by clarifying those abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and by requiring the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. The Company does not anticipate that the adoption of the Statement 151 will have a significant effect on earnings or the financial position of the Company.

12. Subsequent Events

     In July 2005, GenCorp announced its plan to sell the Company to American Pacific Corporation for $119 million, consisting of $100 million of cash and a seller note of $19 million and the assumption of certain liabilities. In October 2005, American Pacific Corporation and GenCorp agreed to amend the purchase agreement to modify the sale price and payment terms related to the sale of the Company. The revised purchase price consists of $89 million of cash payable at closing, seller note of $25 million delivered at closing, a contingent payment of up to $5 million if the Company achieves specified earnings targets in the twelve month period ending September 30, 2006, and the assumption by the buyer of certain liabilities.

-24-

EX-99.2

Exhibit 99.2

AEROJET FINE CHEMICALS LLC
(a wholly-owned subsidiary of GenCorp Inc.)

Condensed Financial Statements
(Unaudited)

As of August 31, 2005 and November 30, 2004 and
for the Nine Months Ended August 31, 2005 and 2004

Contents

Unaudited Condensed Financial Statements:
Balance Sheets	1
Statements of Operations	2
Statements of Cash Flows	3
Notes to Financial Statements	4

-1-

AEROJET FINE CHEMICALS LLC
(a wholly-owned subsidiary of GenCorp Inc.)
CONDENSED BALANCE SHEETS
(Unaudited, Dollars in Thousands)

	August 31,			November 30,
	2005			2004
ASSETS
Current Assets:
Cash	$	2		$	2
Accounts receivable		14,340			7,638
Inventories		21,688			10,752
Prepaid expenses and other		617			498
Total Current Assets		36,647			18,890
Property, Plant and Equipment, Net		92,625			71,300
Prepaid Pension Asset		2,529			3,003
Receivable from GenCorp Inc.		—			1,379
Other Assets		59			43
TOTAL ASSETS	$	131,860		$	94,615
LIABILITIES AND SHAREHOLDER’S INVESTMENT
Current Liabilities:
Accounts Payable	$	11,004		$	6,085
Accrued Liabilities		1,391			1,789
Employee Related Liabilities		1,430			1,446
Customer Deposits		4,822			1,015
Deferred Revenues		3,513			120
Total Current Liabilities		22,160			10,455
Payable to GenCorp Inc.		24,909			—
Other Non-current Liabilities		1,247			1,160
Total Liabilities		48,316			11,615
Commitments and Contingencies		—			—
Shareholder’s Investment
Contributed Capital		108,357			108,357
Accumulated Deficit		(24,813	)		(25,357	)
Total Shareholder’s Investment		83,544			83,000
TOTAL LIABILITIES AND SHAREHOLDER’S INVESTMENT	$	131,860		$	94,615

See Notes to Condensed Financial Statements

-2-

AEROJET FINE CHEMICALS LLC
(a wholly-owned subsidiary of GenCorp Inc.)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited, Dollars in Thousands)

	Nine Months Ended
	August 31,
	2005		2004
Net sales	$	41,106	$	42,007
Cost of sales		33,232		33,485
Gross Profit		7,874		8,522
Operating Expenses:
Selling, general and administrative		5,740		5,728
Research and development		995		930
Pensions and postretirement benefit plan expense		423		552
Total operating expenses		7,158		7,210
Operating Income		716		1,312
Interest expense to GenCorp., net		172		245
Other income, net		—		115
Net Income	$	544	$	1,182

See Notes to Condensed Financial Statements

-3-

AEROJET FINE CHEMICALS LLC
(a wholly-owned subsidiary of GenCorp Inc.)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, Dollars in Thousands)

	Nine Months Ended
	August 31,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	544		$	1,182
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
Depreciation		6,677			5,859
Gain on sale of assets		—			(115	)
Changes in certain assets and liabilities:
Accounts receivable, net		(6,702	)		(5,886	)
Inventories, net		(10,937	)		(201	)
Prepaid expenses and other		(119	)		(124	)
Prepaid pension asset		474			(688	)
Accounts payable		545			(816	)
Payroll and benefit-related liabilities		(16	)		(1,275	)
Other current liabilities		6,802			519
Non-current liabilities		87			(189	)
Net Cash Used In Operating Activities		(2,645	)		(1,734	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures		(23,643	)		(4,219	)
Proceeds from sale of assets		—			115
Net Cash Used in Investing Activities		(23,643	)		(4,104	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in payable to GenCorp Inc.		26,288			5,838
Net Cash Provided by Financing Activities		26,288			5,838
Net Increase In Cash and Cash Equivalents		—			—
Cash and Cash Equivalents, Beginning of Period		2			2
Cash and Cash Equivalents, End of Period	$	2		$	2

See Notes to Condensed Financial Statements

-4-

AEROJET FINE CHEMICALS LLC
(a wholly-owned subsidiary of GenCorp Inc.)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

1.	Basis of Presentation
	The accompanying financial statements reflect the assets, liabilities, sales and expenses of Aerojet Fine Chemicals LLC (Aerojet Fine Chemicals or “the Company”), a wholly-owned subsidiary of GenCorp Inc. (GenCorp). On December 1, 1998, the Company became a division of Aerojet-General Corporation (Aerojet), another wholly-owned subsidiary of GenCorp. On February 1, 1999, the Company was incorporated as a limited liability company and wholly-owned subsidiary of Aerojet. On October I, 1999, ownership of the Company was transferred from Aerojet to GenCorp. GenCorp, incorporated in Ohio in 1915, is a multinational diversified technology-based company with operations in three business segments: (i) Aerospace and Defense; (ii) Fine Chemicals; and (iii) Real Estate.
	The Company’s sales are derived primarily from the sale of custom-manufactured active pharmaceutical ingredients (APIs) and advanced/registered intermediates to pharmaceutical and biotechnology companies. Customers use chemicals manufactured by AFC in products that are drug therapies for areas of neurology, oncology, viral (including HIV/AIDS), arthritis, and inflammatory conditions.
	The statements of operations include expenses recorded by the Company or directly charged to the Company by GenCorp or Aerojet. In addition, the statements of operations include an allocation of GenCorp’s and Aerojet’s general and administrative corporate expenses to reflect the services provided to the Company or benefits received by the Company. These services consisted primarily of general corporate management and governance, finance and accounting, treasury and risk management, legal, management information services and domestic tax services. The allocated expenses were $1,247,000 and $1,160,000 for the nine months ended August 31, 2005 and 2004, respectively. These expenses are reported in the statement of operations as selling, general and administrative expenses. The allocations were determined based upon employee participation and time and costs on Company projects. Given that GenCorp and Aerojet provided such support services for the benefit of their entire organization, it would have been impractical to allocate such expenses in a more direct manner. Accordingly, management believes that this was a reasonable method for allocating such selling, general and administrative corporate expenses for those periods. However, as the scale of operations and nature of the business of GenCorp and Aerojet differed from that of the Company, these allocations are not necessarily representative of the operating expenses that would have been incurred had the Company operated on a stand-alone basis.
	The amount payable to GenCorp was $24,909,000 as of August 31, 2005. As of November 30, 2004, Aerojet Fine Chemicals had a receivable from GenCorp of $1,379,000. These amounts include the net effect of all other transactions between GenCorp and the Company, including the allocation of GenCorp’s and Aerojet’s general and administrative corporate expenses to Aerojet Fine Chemicals. Interest expense or income was recorded on these balances and included in the statements of operations under interest expense to GenCorp Inc, net. The Company paid interest of $411,000 and $270,000, including capitalized interest of $239,000 and $25,000, to GenCorp related to these balances for the nine months ended August 31, 2005, and 2004, respectively.
	The Company is organized as a limited liability company and is not subject to federal or state income taxes as an entity separate from GenCorp. Accordingly, there is no provision for income taxes included in the statements of operations and accumulated deficit.

-5-

	The Company participates in GenCorp’s centralized cash management system. Under this system, cash receipts are transferred to GenCorp and GenCorp funds cash disbursements. As such, the amount of cash does not represent the amount required or generated by the Company.
	In the opinion of management, all adjustments necessary for a fair presentation of financial position, results of operations and cash flows have been presented. The financial information included may not necessarily reflect the results of operations, financial position, or changes in shareholder’s investment in the future or what they would have been if the Company had been a separate, stand-alone company for the periods presented.
	The condensed financial statements of Aerojet Fine Chemicals are unaudited, but, in the opinion of management, include all adjustments (consisting only of normal adjustments) necessary for the fair presentation of the financial results for the interim periods. The Company’s results of operations for the interim periods presented are not necessarily indicative of the results to be expected for a full year of operations. These interim statements should be read in conjunction with the audited financial statements and notes thereto for the year ended November 30, 2004.
2.	Summary of Significant Accounting Policies
	Concentration of Credit Risk – Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade receivables. The Company operates in a specialty market niche within the pharmaceutical industry and is reliant on a small number of customers for a majority of its revenues. The Company is not able to predict changes in the stability of its customers. Any material change in the financial status of anyone or a group of customers could have a material adverse effect on the Company’s results of operations and financial condition. Although losses resulting from uncollectible trade receivables have been minimal to date, there can be no assurance that the Company’s estimated allowance at August 31, 2005 will be adequate. As of August 31, 2005, three individually significant customers accounted for 49 percent, 28 percent and 20 percent of accounts receivable. During the nine months ended August 31, 2005, three individually significant customers accounted for 34 percent, 29 percent and 18 percent, of net sales. As of November 30, 2004, three individually significant customers accounted for 52 percent, 25 percent and 14 percent of accounts receivable. During 2004, three individually significant customers accounted for 62 percent, 14 percent and 10 percent, of net sales.
	Revenue Recognition – The Company generally recognizes revenue after products are shipped or customer acceptance has occurred, all other significant customer obligations have been met and collection is reasonably assured. Sales are recorded net of provisions for customer pricing allowances. The Company recognizes revenue under two contracts upon transfer of ownership and customer acceptance of the finished product, but before the finished product is delivered to the customers. These customers have specifically requested in writing pursuant to a contract that the Company invoice for the finished product and hold the finished product until a later date. As of August 31, 2005 and November 30, 2004, finished product totaling $11,222,000 and $16,569,000, respectively, in sales had not yet shipped to the customer.
	In certain circumstances, the Company records sales when products are shipped, before customer acceptance has occurred because adequate controls are in place to ensure compliance with contractual product specifications and a substantial history of performance has been established. As of August 31, 2005 and November 30, 2004, revenue totaling $6,269,000 and $1,910,000, respectively, was recognized under these circumstances.
	Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

-6-

date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include the Company’s allowance for doubtful accounts, reserves for inventory obsolescence, expected long-term rate of return on assets and the discount rate applied to determine service cost and interest cost related to the Company’s pension plans, and amortization and recoverability of long-lived assets. Actual results could differ significantly from those estimates.

3.

Inventories, net

	August 31,		November 30,
	2005		2004
	(in thousands)
Raw materials and supplies	$	6,281	$	4,046
Work-in-process		12,384		6,659
Finished goods		3,023		47
Inventories, net	$	21,688	$	10,752

The above inventory balances are net of reserves of $1,064,000 and $781,000 as of August 31, 2005 and November 30, 2004, respectively.

4. Property, Plant and Equipment, net

	August 31,			November 30,
	2005			2004
	(in thousands)
Machinery and equipment	$	88,580		$	69,526
Building and land improvements		44,976			44,976
Construction-in-progress		14,869			5,945
		148,425			120,447
Less: accumulated depreciation		(55,800	)		(49,147	)
	$	92,625		$	71,300

Construction-in-progress consists primarily of expenditures related to expanding the Company’s production capabilities and supporting infrastructure.

Depreciation expense for the nine months ended August 31, 2005 and 2004, was $6,677,000 and $5,859,000, respectively. The Company capitalized interest of $239,000 and $25,000 during the nine months ended August 31, 2005 and 2004, respectively.

-7-

5. Accrued Expenses and Other Current Liabilities

	August 31,		November 30,
	2005		2004
	(in thousands)
Accrued property taxes	$	729	$	1,073
Waste accrual		478		363
Accrued insurance		10		319
Other		174		34
	$	1,391	$	1,789

6.	Employee Pension and Postretirement Benefit Plans
	Defined Benefit and Other Postretirement Benefit Plans – GenCorp has defined benefit pension plans covering substantially all of the Company’s salaried and hourly employees. Normal retirement age is 65, but certain plan provisions allow for earlier retirement. GenCorp’s funding policy complies with the funding requirements under applicable laws and regulations. Pension benefits are calculated under formulas principally based on average earnings and length of service for salaried employees and under negotiated non-wage based formulas for hourly employees.
	In addition to providing pension benefits, GenCorp provides healthcare and life insurance benefits (postretirement benefits) to certain retired employees, with varied coverage by employee group. Generally, employees hired after January 1, 1997 are not eligible for postretirement healthcare and insurance benefits. The healthcare plans generally provide for cost sharing between the Company and its retirees in the form of retiree contributions, deductibles and coinsurance. Postretirement benefit obligations are unfunded, and costs are accrued based on the date the employees become eligible for the benefits.
	Total periodic cost allocated to the Company for pension benefits and other postretirement benefits consist of the following:

	Nine Months Ended
	August 31,
	2005			2004
Defined Benefit Pension Plans:
Service Cost	$	315		$	425
Interest Cost		167			178
Expected Return on Plan Assets		(259	)		(271	)
Recognized Actuarial Losses		165			159
Amortization of Prior Service Costs		86			77
Net Periodic Pension Cost	$	474		$	568
Other Post Retirement Benefit Plans:
Service Cost	$	7		$	10
Interest Cost		21			28
Expected Return on Plan Assets		—			—
Recognized Actuarial Losses		(40	)		(15	)
Amortization of Prior Service Costs		(39	)		(39	)
Net Periodic Benefit Income	$	(51	)	$	(16	)

The Company did not make any contributions to the plan for the nine month periods ended August 31, 2005 and 2004.

-8-

	Defined Contribution Pension Plans – Substantially all U.S. employees of the Company are eligible for participation in GenCorp’s defined contribution benefit plan. GenCorp’s contributions to these plans generally are based on a percentage of employee contributions. Expenses recorded for the matching contributions under the plan were $319,000 and $305,000 for the nine months ended August 31, 2005 and 2004, respectively. GenCorp’s contribution to the plans is invested entirely in the GenCorp Stock Fund and may be funded with cash or shares of GenCorp common stock.
7.	Commitments and Contingencies
	Guarantee of GenCorp Inc. Debt –
	In December 2004, GenCorp closed a new $180 million credit facility (New Credit Facility) which replaced the previous credit facility. The outstanding term loans totaling $141 million plus accrued interest under the previous credit facility were repaid in full using restricted cash on GenCorp’s balance sheet. The New Credit Facility provides an $80 million revolving credit facility, and $100 million credit-linked facility. The credit-linked facility consists of a funded $25 million term loan sub-facility and a $75 million letter of credit sub-facility. The Company, along with certain other GenCorp subsidiaries, was a guarantor of the New Credit Facility and the Company’s tangible and intangible property is pledged as security. In February 2005, GenCorp redeemed $53 million principal amount of its 9.5 percent Notes using restricted cash on GenCorp’s balance sheet.
	The Company is also a guarantor on approximately $1 million of equipment financing for GenCorp.
	Legal – The California Department of Toxic Substances Control (DTSC) contends that the Company’s neutralization or stabilization of several liquid stream processes within a closed loop manufacturing system constitutes treatment of a hazardous waste without the required authorizations from DTSC. The Company disagrees. On September 2, 2005, the DTSC Inspector issued an Inspection Report relevant to the DTSC’s June 2004 inspection of the Company’s facility. The Inspection Report concluded that the referenced activities constitute treatment of hazardous waste and directed Aerojet Fine Chemicals to submit an application for a permit modification to treat hazardous waste. DTSC extended the time in which to respond to the Inspection Report to January 9, 2006. During that extended time, GenCorp worked with American Pacific Corporation and DTSC in preparing a Consent Agreement.
	On November 28, 2005, Ampac Fine Chemicals LLC (“AFC”), a newly formed subsidiary of American Pacific Corporation, and DTSC entered into a Consent Agreement (“Consent Agreement”) which, upon close of the sale of the assets of the Company at AFC, authorizes AFC to continue operations for up to two years while the parties resolve whether the manufacturing processes are exempt from regulation by the DTSC. The Consent Agreement is deemed a full settlement of the DTSC Allegations and any other violations that could have been brought against AFC based upon information known to DTSC on the date of the Consent Agreement.
	The Company’s management believes that if the Company is ultimately required to obtain a permit to treat hazardous waste it may have to modify its facilities. The effects on the Company’s operating results, liquidity and cash flow could be significant. In addition, the Company may not be able to pass along any increases in operating costs to customers.
	The Company’s facility is subject to several National Emissions Standards for Hazardous Air Pollutants for pharmaceutical manufacturing under the Clean Air Act because of its location on property contiguous with Aerojet and under common control of GenCorp. The Company requested the United States Environmental Protection Agency (EPA) to make a determination that, upon close of the sale of Aerojet Fine Chemicals to American Pacific Corporation or its subsidiary, the Company’s facility would no longer be subject to these requirements.

-9-

	On December 1, 2005, the Air Division of the EPA Region IX notified the Company that, upon close of the sale of Aerojet Fine Chemicals to American Pacific Corporation, the Aerojet Fine Chemicals facility will no longer be a major source subject to National Emissions Standards for Hazardous Air Pollutants for pharmaceutical manufacturing under the Clean Air Act.
	The Company’s facility is located on land leased from Aerojet. The leased land is part of a tract of land owned by Aerojet designated as a “Superfund Site” under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). This land had been used by Aerojet and affiliated companies to manufacture and test rockets and related equipment since the 1950s. Although the chemicals identified as contaminants on the leased land have not been used by Aerojet Fine Chemicals as part of its operations, CERCLA, among other things, provides for joint and severable liability for environmental liabilities including, for example, the environmental remediation expenses.
	As part of the agreement to sell the assets of Company to AFC, as discussed in Note 11, an Environmental Indemnity Agreement was entered into whereby GenCorp agreed to indemnify American Pacific Corporation against any and all environmental cost and liabilities arising out of or resulting from any violation of environmental law prior to the effective date of the sale, or any release of hazardous substances by the Company, Aerojet or GenCorp on the premises or Aerojet’s Sacramento site prior to the effective date of the sale, if and when completed.
	On November 29, 2005, EPA Region IX provided American Pacific Corporation with a letter indicating that the USEPA does not intend to pursue any clean up or enforcement actions under CERCLA against future lessees of the Aerojet Fine Chemicals property for existing contamination, provided that the lessees have not contributed to or do not exacerbate existing contamination on or under the Aerojet Superfund site.
	The Company is, from time to time, involved in various legal actions and proceedings relating to a wide range of matters that arise in the natural course of business. In the opinion of management, after reviewing the information which is currently available with respect to such matters and consulting with the Company’s counsel, any liability which may ultimately be incurred with respect to these matters will not materially affect the financial condition of the Company.
8.	Stock-Based Compensation
	Certain Company employees participate in the GenCorp Stock Option Plans, which provide for GenCorp common stock to be purchased pursuant to stock options or to be subject to stock appreciation rights which may be granted to selected officers and key employees at prices equal to the market value of a share of common stock on the date of grant. In general, the options are exercisable in 25 percent increments at six months, one year, two years and three years from the date or grant. No stock appreciation rights have been granted.
	The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting For Stock Issued to Employees (APB 25) and related interpretations in accounting for employee stock options, as permitted by SFAS No. 123, Accounting For Stock-Based Compensation and SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. Under APB 25, because the exercise price of the GenCorp employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized for stock options granted to the Company’s employees.
	If compensation cost for the GenCorp stock options granted to the Company’s employees had been based on the fair value method, the effect on net income would not have been significant. The fair value was estimated at the date of grant using a Black-Scholes option pricing model. The Company’s

-10-

	employees did not receive any stock option grants during the nine months ended August 31, 2005 or 2004.
9.	Operating Segments and Related Disclosures
	The Company operates in one industry segment: custom-manufacturer of active pharmaceutical ingredients (APIs) and advanced/registered intermediates to pharmaceutical and biotechnology companies.
10.	New Accounting Pronouncements
	In October 2004, the FASB concluded that Statement 123R, Share Based Payment, which would require all companies to measure compensation cost for all share-based payments (including employee stock options) at fair value, would be effective for public companies for interim or annual periods beginning after June 15, 2005. The Company could adopt the new standard in one of two ways — the modified prospective transition method or the modified retrospective transition method. The Company does not anticipate that the adoption of the Statement 123R will have a significant effect on earnings or the financial position of the Company.
	In November 2004, the FASB issued Statement 151, Inventory Costs, an amendment of ARB No.43, Chapter 4, which would be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The amendments made by Statement 151 will improve financial reporting by clarifying those abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and by requiring the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. The Company docs not anticipate that the adoption of the Statement 151 will have a significant effect on earnings or the financial position of the Company.
11.	Subsequent Events – Sale of the Company to American Pacific Corporation
	In July 2005, GenCorp announced its plan to sell the Company to American Pacific Corporation for $119 million, consisting of $100 million of cash and a seller note of $19 million and the assumption of certain liabilities. In addition, the purchase agreement includes payments by American Pacific to the Company for capital investments and working capital, each as defined in the purchase agreement. In November 2005, American Pacific Corporation and GenCorp amended the purchase agreement to modify the sale price and payment terms related to the sale of the Company. The revised purchase price consists of $89 million of cash payable at closing, seller note of $25 million delivered at closing, a contingent payment of up to $5 million if the Company achieves specified earnings targets in the twelve month period ending September 30, 2006, and the assumption by the buyer of certain liabilities.

-11-

EX-99.3

Exhibit 99.3

AMERICAN PACIFIC CORPORATION
PRO FORMA COMBINED FINANCIAL STATEMENTS
(Unaudited, Dollars in Thousands)

In July 2005, American Pacific Corporation (the “Company”) entered into an agreement to acquire, and on November 30, 2005, the Company completed the acquisition of, the fine chemicals business (the “AFC Business”) of GenCorp Inc. (“GenCorp”) through the purchase of substantially all of the assets of Aerojet Fine Chemicals LLC (“Aerojet Fine Chemicals”) and the assumption of certain of its liabilities. The assets were acquired and liabilities assumed by our newly formed, wholly-owned subsidiary, Ampac Fine Chemicals (“AFC”). AFC is a manufacturer of active pharmaceutical ingredients and registered intermediates under cGMP guidelines for customers in the pharmaceutical industry. Its facilities in California offer specialized engineering capabilities including high containment for high potency compounds, energetic and nucleoside chemistries, and chiral separation using the first commercial-scale simulated moving bed in the United States.

The acquisition will be accounted for using the purchase method of accounting. The total estimated purchase price for the AFC Business acquisition is $127,775, composed of cash of $108,375 and a seller subordinated note with an estimated fair value of $19,400. The cash component includes a cash purchase price of $88,500, direct acquisition costs and adjustments for capital expenditures, working capital, and EBITDAP. Each element of the cash component of the purchase price is detailed in Note (a) to the pro forma combined financial statements. In connection with the AFC Business acquisition, the Company entered into Credit Facilities that resulted in net proceeds to the Company of $83,323 which were used to fund, in part, the acquisition.

The following unaudited pro forma combined financial statements have been prepared from the historical financial statements of the Company and Aerojet Fine Chemicals. The operations of Aerojet Fine Chemicals for the 12 month period ended August 31, 2005 have been combined with the Company’s operations for its fiscal year ended September 30, 2005. The pro forma combined statement of operations gives effect to the combination as if it had occurred on October 1, 2004. The pro forma combined balance sheet gives effect to the combination as if it had occurred on September 30, 2005. The pro forma adjustments are described in the accompanying notes presented on the following pages.

Under the purchase method of accounting, the purchase price is allocated to assets acquired and liabilities assumed based on their relative fair values, with the excess recorded as goodwill. These unaudited pro forma combined financial statements reflect preliminary estimates of the fair values of the purchase price, assets acquired and liabilities assumed. The Company is currently reviewing these preliminary estimates, including valuation studies for real property, machinery and equipment, intangible assets, and pension obligations. The final determination of the purchase price allocation may differ from the amounts assumed in these unaudited pro forma combined financial statements. There can be no assurances given that any adjustments will not be material.

The unaudited pro forma combined financial statements are not necessarily indicative of what the financial position or results of operations would have been if the combination had occurred on the above-mentioned dates. Additionally, they are not indicative of future results of operations or financial position and do not reflect any synergies or other changes that may occur as a result of the acquisition. The unaudited pro forma combined financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended September 30, 2005 and Aerojet Fine Chemical’s audited financial statements for the year ended November 30, 2004, included as Exhibit 99.1 herein.

-1-

AMERICAN PACIFIC CORPORATION
PRO FORMA COMBINED BALANCE SHEET
(Unaudited, Dollars in Thousands)

	American			Aerojet						Pro Forma
	Pacific			Fine						Combined
	Corporation			Chemicals						Balance Sheet
	September 30,			August 31,			Pro Forma			September 30,
	2005			2005			Adjustments			2005
ASSETS
Current Assets:
Cash	$	37,213		$	2		$	(20,340	)(a)(c)	$	16,875
Accounts receivable		12,572			14,340						26,912
Inventories		13,818			21,688			774	(a)		36,280
Prepaid expenses and other		1,365			617			(20	)(a)		1,962
Deferred income taxes		834			—						834
Total Current Assets		65,802			36,647			(19,586	)		82,863
Property, Plant and Equipment, Net		15,646			92,625			(2,044	)(a)		106,227
Intangible Assets, Net		9,763			—			18,100	(a)		27,863
Deferred Income Taxes		19,312			—						19,312
Prepaid Pension Asset		—			2,529			(1,248	)(a)		1,281
Other Assets		4,477			59			653	(a)(c)		5,189
TOTAL ASSETS	$	115,000		$	131,860		$	(4,125	)	$	242,735
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	5,231		$	11,004		$	(3,760	)(b)	$	12,475
Accrued liabilities		2,786			1,391			3,688	(a)		7,865
Employee related liabilities		2,023			1,430						3,453
Environmental remediation reserves		4,967			—						4,967
Customer Deposits and Deferred Revenues		792			8,335						9,127
Notes payable and current portion of long-tern debt		768			—			650	(c)		1,418
Total Current Liabilities		16,567			22,160			578			39,305
Long-Term Debt		—			—			103,750	(a)(c)		103,750
Environmental Remediation Reserves		15,620			—						15,620
Pension Obligations		8,144			—						8,144
Payable to GenCorp Inc.		—			24,909			(24,909	)(b)		—
Other Non-current Liabilities		—			1,247						1,247
Total Liabilities		40,331			48,316			79,419			168,066
Commitments and Contingencies		—			—
Shareholders’ Equity
Preferred stock		—			—						—
Common stock		932			—						932
Capital in excess of par value		86,187			108,357			(108,357	)(b)		86,187
Retained earnings (accumulated deficit)		6,206			(24,813	)		24,813	(b)		6,206
Treasury stock		(16,982	)		—						(16,982	)
Accumulated other comprehensive loss		(1,674	)		—						(1,674	)
Total Shareholders Equity		74,669			83,544			(83,544	)		74,669
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	115,000		$	131,860		$	(4,125	)	$	242,735

See Notes to Unaudited Pro Forma Combined Financial Statements

-2-

AMERICAN PACIFIC CORPORATION
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(Unaudited, Dollars in Thousands)

				Year Ended
	American			Aerojet
	Pacific			Fine					Pro Forma
	Corporation			Chemicals					Combined
	September 30,			August 31,		Pro Forma			September 30,
	2005			2005		Adjustments			2005
Revenues	$	83,347		$	64,568	$	(124	)(d)	$	147,791
Cost of Revenues		55,669			52,173		5,583	(d)(e)		113,425
Gross Profit		27,678			12,395		(5,707	)		34,366
Operating Expenses		26,320			10,231					36,551
Environmental Remediation Charge		22,400			—					22,400
Operating Income (Loss)		(21,042	)		2,164		(5,707	)		(24,585	)
Interest and Other Income		1,398			307					1,705
Interest Expense		274			159		11,372	(f)(g)		11,805
Income (Loss) Before Income Taxes and Extraordinary Gain		(19,918	)		2,312		(17,079	)		(34,685	)
Income Tax Benefit		(8,673	)		—		(5,027	)(h)		(13,700	)
Income (Loss) Before Extraordinary Gain	$	(11,245	)	$	2,312	$	(12,052	)	$	(20,985	)
Income (Loss) Before Extraordinary Gain Per Share:
Basic	$	(1.54	)						$	(2.88	)
Diluted	$	(1.54	)						$	(2.88	)
Weighted Average Shares Outstanding:
Basic		7,294,000								7,294,000
Diluted		7,294,000								7,294,000

See Notes to Unaudited Pro Forma Combined Financial Statements

-3-

AMERICAN PACIFIC CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(Unaudited, Dollars in Thousands)

(a)	Adjustment to record the acquisition of Aerojet Fine Chemicals and the preliminary allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed.
	The acquisition is being accounted for as a purchase. Total estimated consideration is comprised of:

Cash to Seller
Cash purchase price	$	88,500
Capital expenditures adjustment		17,431
Working capital adjustment		(1,268	)
EBITDAP adjustment		(1,000	)
Total cash to seller		103,663
Direct Acquisition Costs
Incurred through September 30, 2005		1,024
Accrued		3,688
Total direct acquisition costs		4,712
Fair Value of Seller Subordinated Note (Face value $25,500)		19,400
Total purchase price	$	127,775

Capital Expenditures Adjustment – The capital expenditures adjustment represents reimbursements to GenCorp for their cash capital investments, as defined in the acquisition agreements, during the period July 2005 through the closing date on November 30, 2005. This amount is subject to adjustment based on post-closing documents and analyses.

Working Capital Adjustment – The working capital adjustment represents an estimated adjustment to the purchase price based on actual working capital as of the closing date compared to a target working capital amount specified in the acquisition agreements. This amount is subject to adjustment based on post-closing documents and analyses.

EBITDAP Adjustment – The acquisition agreements include a reduction of the purchase price of $1,000 if AFC does not achieve a specified level of earnings before interest, taxes, depreciation, amortization, and pension expense (“EBITDAP”) for the three months ended December 31, 2005, equal to four times the difference between the targeted EBITDAP and the actual EBITDAP achieved, not to exceed $1,000. This target was not met, and accordingly, is reflected as a reduction of the purchase price. This adjustment is subject to review by the seller.

Subordinated Seller Note – The fair value of the Seller Subordinated Note was determined by discounting the required principal and interest payments at a rate of 15%, which the Company believes is appropriate for instruments with comparable terms.

Direct Acquisition Costs – The Company estimates its total direct acquisition costs, consisting primarily of legal and due diligence fees, to be approximately $4,712. Of this amount, $1,024 was incurred prior September 30, 2005 and was capitalized as other assets.

Earnout Adjustment – In addition to the amounts included in the purchase price above, the purchase price is subject to an additional contingent cash payment of up to $5,000 based on targeted financial performance of AFC during the year ended September 30, 2006. In addition, if the full Earnout Adjustment becomes payable to the seller, the EBITDAP Adjustment will also be returned to the seller.

-4-

AMERICAN PACIFIC CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited, Dollars in Thousands)

The pro forma allocation of the purchase price and the related determination of the useful lives of acquired assets is preliminary and subject to change based on a final valuation of the assets acquired and liabilities assumed. The allocation is preliminary pending completion of inventory, fixed asset and intangible asset appraisals and the actuarial calculation of the defined benefit pension plan obligation.

Historical book value of Aerojet Fine Chemicals as of August 31, 2005	$	83,544
Less liabilities not acquired
Payable to GenCorp		24,909
Cash overdraft		3,760
Adjusted historical book value of Aerojet Fine Chemicals as of August 31, 2005		112,213
Estimated fair value adjustments relating to:
Inventories		774
Prepaid expenses		(20	)
Property, plant and equipment		(2,044	)
Customer relationships, average life of 5.5 years		13,300
Backlog, average life of 1.5 years		4,800
Prepaid pension asset		(1,248	)
	$	127,775

	Intangible assets, consisting of customer relationships and existing customer backlog, have definite lives and will be amortized over their estimated useful lives using the straight-line method.
(b)	Adjustment to eliminate the historical equity of Aerojet Fine Chemicals and historical liabilities not assumed, comprised of the payable to GenCorp of $24,909 and cash overdraft of $3,760.
(c)	Adjustment to record net proceeds to Company from the issuance of bank debt to partially fund the Aerojet Fine Chemical acquisition.
	In connection with the acquisition, the Company entered a First Lien Credit Agreement that includes a $65,000 Term Loan and a $10,000 Revolving Credit Line and a Second Lien Credit Agreement comprised of a $20,000 Term Loan (collectively, the “Credit Facilities”). The Credit Facilities include various restrictions and covenants, and are discussed in detail in the Company’s Current Report on Form 8-K dated November 30, 2005. Net proceeds from these credit agreement were $83,323 comprised of the following:

First Lien Term Loan — current portion	$	650
First Lien Term Loan — noncurrent portion		64,350
Second Lien Term Loan		20,000
Total Long-term		84,350
Total bank debt issued		85,000
Less debt issue costs		(1,677	)
Net proceeds to the Company	$	83,323

(d) Adjustment to eliminate sales from the Company’s Specialty Chemicals segment to Aerojet Fine Chemicals of $124.

-5-

AMERICAN PACIFIC CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited, Dollars in Thousands)

(e) Adjustment to record amortization expenses of $5,707 for acquired intangible assets based on the method described above assuming these assets were acquired on October 1, 2004. The estimated depreciation expense based on the fair value of fixed assets acquired approximates historical depreciation expense. Accordingly, no pro forma adjustment to depreciation expense is recorded.

(f) Adjustment to record interest on borrowings under the Credit Facilities and the Seller Subordinated Note assuming these borrowings were outstanding beginning on October 1, 2004, comprised of the following:

Pro forma interest expense:
First lien term loan	$	5,513
Second lien term loan		2,714
Seller subordinated note		2,439
Amortization of seller subordinate note discount		503
Amortization of debt issue costs		311
Revolving loan availability		51
Total pro forma interest expense	$	11,531

(g) Adjustment to eliminate Aerojet Fine Chemical’s historical interest expense of $159 that related to intercompany amounts payable to GenCorp.

(h) Adjustment to record the tax effects of pro forma entries and adjust the pro forma effective annual tax rate to 39.5%.

-6-