Condensed Consolidating Financial Information

The Company is providing unaudited condensed consolidating financial information for its domestic subsidiaries that have guaranteed the 7¹/₈% Notes, and for those subsidiaries that have not guaranteed the 7¹/₈% Notes. These 100% owned subsidiary guarantors (Aerojet Rocketdyne, Aerojet Rocketdyne of DE, Inc. (formerly PWR), Arde and Arde-Barinco) have, jointly and severally, fully and unconditionally guaranteed the 7¹/₈% Notes subject to release under the following circumstances: (i) to enable the disposition of such property or assets to a party that is not the Company or a subsidiary guarantor to the extent permitted by and consummated in compliance with the indenture governing the 7¹/₈% Notes; (ii) in case of a subsidiary guarantor that is released from its subsidiary guarantee, the release of the property and assets of such subsidiary guarantor; (iii) as permitted or required by the intercreditor agreement; (iv) with the consent of the holder of at least a majority in principal amount of the outstanding 7¹/₈% Notes; or (v) when permitted or required by the indenture governing the 7¹/₈% Notes. Prior to the consummation of the Acquisition and escrow release date, the 7¹/₈% Notes were secured by a first priority security interest in the escrow account and all deposits and investment property therein. Following the consummation of the Acquisition and escrow release date on June 14, 2013, the subsidiary guarantees are a senior secured obligation of each subsidiary guarantor and rank (i) effectively junior to all of existing and future first-priority senior secured debt, including borrowings under the Senior Credit Facility, to the extent of the value of the assets securing such debt; (ii) effectively senior to all of the Company’s existing and future unsecured senior debt; (iii) senior in right of payment to all of the Company’s existing and future subordinated debt; and (iv) structurally subordinated to all existing and future liabilities of non-guarantor subsidiaries.

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

The Company revised its unaudited condensed consolidating statement of cash flows for six months ended May 31, 2014 to correct for the misclassification of intercompany transactions between the Parent and the Guarantor Subsidiaries columns. The adjustments had no impact on the consolidated amounts previously reported.

The revision on the unaudited condensed consolidating statement of cash flows resulted in a decrease of $143.7 million to “net cash provided by operating activities” to the Parent column for the six months ended May 31, 2014, with a corresponding increase to “net cash provided by financing activities.” The Company also revised the Guarantor Subsidiaries column in the unaudited condensed consolidating statement of cash flows to increase “net cash provided by operating activities” by $143.7 million for the six months ended May 31, 2014, with a corresponding decrease to “net cash provided by financing activities.”

These revisions, which the Company determined are not material to any period presented, had no impact on any financial statements or footnotes, except for the Parent and Guarantor Subsidiaries columns of the unaudited condensed consolidating statement of cash flows for the six months ended May 31, 2014.

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)

(Unaudited)



Three months ended May 31, 2015	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net sales	$	—		$	442.2		$	14.7		$	—		$	456.9
Cost of sales (exclusive of items shown separately below)	—			363.9			8.8			(0.2		)	372.5
Selling, general and administrative	5.4			6.7			0.5			—			12.6
Depreciation and amortization	—			15.9			0.2			—			16.1
Interest expense	12.7			0.5			—			—			13.2
Other, net	6.4			(3.2		)	(0.6		)	0.2			2.8
(Loss) income from continuing operations before income taxes	(24.5		)	58.4			5.8			—			39.7
Income tax (benefit) provision	(6.8		)	24.5			3.6			—			21.3
(Loss) income before equity income of subsidiaries	(17.7		)	33.9			2.2			—			18.4
Equity income of subsidiaries	36.1			—			—			(36.1		)	—
Net income	$	18.4		$	33.9		$	2.2		$	(36.1	)	$	18.4
Comprehensive income	$	30.6		$	43.0		$	2.2		$	(45.2	)	$	30.6



Three months ended May 31, 2014	Parent			Guarantor Subsidiaries		Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net sales	$	—		$	397.7	$	6.8		$	—		$	404.5
Cost of sales (exclusive of items shown separately below)	—			362.3		7.2			(0.1		)	369.4
Selling, general and administrative	3.4			5.5		0.3			—			9.2
Depreciation and amortization	0.1			15.3		0.3			—			15.7
Interest expense	11.9			0.7		—			—			12.6
Other, net	44.6			4.0		(0.4		)	0.1			48.3
(Loss) income from continuing operations before income taxes	(60.0		)	9.9		(0.6		)	—			(50.7		)
Income tax (benefit) provision	(5.0		)	4.7		(0.3		)	—			(0.6		)
(Loss) income from continuing operations	(55.0		)	5.2		(0.3		)	—			(50.1		)
Loss from discontinued operations	(0.8		)	—		—			—			(0.8		)
(Loss) income before equity income of subsidiaries	(55.8		)	5.2		(0.3		)	—			(50.9		)
Equity income of subsidiaries	4.9			—		—			(4.9		)	—
Net (loss) income	$	(50.9	)	$	5.2	$	(0.3	)	$	(4.9	)	$	(50.9	)
Comprehensive (loss) income	$	(43.2	)	$	10.4	$	(0.3	)	$	(10.1	)	$	(43.2	)



Six months ended May 31, 2015	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net sales	$	—		$	755.5		$	20.0		$	—		$	775.5
Cost of sales (exclusive of items shown separately below)	—			643.0			12.6			(0.3		)	655.3
Selling, general and administrative	14.6			12.5			1.0			—			28.1
Depreciation and amortization	—			31.6			0.5			—			32.1
Interest expense	25.6			1.0			—			—			26.6
Other, net	8.4			(3.0		)	(1.3		)	0.3			4.4
(Loss) income from continuing operations before income taxes	(48.6		)	70.4			7.2			—			29.0
Income tax (benefit) provision	(16.0		)	26.9			3.8			—			14.7
(Loss) income from continuing operations	(32.6		)	43.5			3.4			—			14.3
Income from discontinued operations	0.2			—			—			—			0.2
(Loss) income before equity income of subsidiaries	(32.4		)	43.5			3.4			—			14.5
Equity income of subsidiaries	46.9									(46.9		)	—
Net income	$	14.5		$	43.5		$	3.4		$	(46.9	)	$	14.5
Comprehensive income	$	38.9		$	61.7		$	3.4		$	(65.1	)	$	38.9



Six months ended May 31, 2014	Parent			Guarantor Subsidiaries		Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net sales	$	—		$	723.2	$	13.4		$	—		$	736.6
Cost of sales (exclusive of items shown separately below)	—			645.3		12.9			(0.3		)	657.9
Selling, general and administrative	5.6			12.0		0.8			—			18.4
Depreciation and amortization	0.1			30.0		0.5			—			30.6
Interest expense	23.6			1.4		—			—			25.0
Other, net	49.5			7.2		(1.1		)	0.3			55.9
(Loss) income from continuing operations before income taxes	(78.8		)	27.3		0.3			—			(51.2		)
Income tax (benefit) provision	(9.8		)	10.9		0.1			—			1.2
(Loss) income from continuing operations	(69.0		)	16.4		0.2			—			(52.4		)
Loss from discontinued operations	(0.8		)	—		—			—			(0.8		)
(Loss) income before equity income of subsidiaries	(69.8		)	16.4		0.2			—			(53.2		)
Equity income of subsidiaries	16.6			—		—			(16.6		)	—
Net (loss) income	$	(53.2	)	$	16.4	$	0.2		$	(16.6	)	$	(53.2	)
Comprehensive (loss) income	$	(38.0	)	$	26.7	$	0.2		$	(26.9	)	$	(38.0	)

Condensed Consolidating Balance Sheets

(Unaudited)



May 31, 2015	Parent			Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
	(In millions)
Cash and cash equivalents	$	255.8		$	—	$	0.7	$	(3.0	)	$	253.5
Accounts receivable	—			169.8		3.9		—			173.7
Inventories	—			144.0		6.3		—			150.3
Recoverable from the U.S. government, Northrop, and other third parties for environmental remediation costs	0.1			29.6		—		—			29.7
Other current assets, net	20.7			40.4		1.2		(16.9		)	45.4
Deferred income taxes	5.6			18.4		0.8		—			24.8
Total current assets	282.2			402.2		12.9		(19.9		)	677.4
Property, plant and equipment, net	4.7			346.0		5.6		—			356.3
Recoverable from the U.S. government and other third parties for environmental remediation costs	0.7			76.1		—		—			76.8
Deferred income taxes	59.5			169.1		16.7		—			245.3
Goodwill	—			164.4		—		—			164.4
Intercompany receivable	—			115.7		32.6		(148.3		)	—
Investments in subsidiaries	568.2			—		—		(568.2		)	—
Other noncurrent assets and intangibles, net	26.8			294.0		57.1		—			377.9
Total assets	$	942.1		$	1,567.5	$	124.9	$	(736.4	)	$	1,898.1
Short-term borrowings and current portion of long-term debt	$	5.0		$	0.3	$	—	$	—		$	5.3
Accounts payable	1.6			85.0		4.0		(3.0		)	87.6
Reserves for environmental remediation costs	1.2			37.5		—		—			38.7
Other current liabilities and advance payments on contracts	32.6			373.8		6.3		(16.9		)	395.8
Postretirement medical and life insurance benefits	5.0			1.4		—		—			6.4
Total current liabilities	45.4			498.0		10.3		(19.9		)	533.8
Long-term debt	712.4			0.2		—		—			712.6
Reserves for environmental remediation costs	4.3			118.5		—		—			122.8
Pension benefits	69.7			405.7		—		—			475.4
Intercompany payable	148.3			—		—		(148.3		)	—
Postretirement medical and life insurance benefits	36.3			13.8		—		—			50.1
Other noncurrent liabilities	21.3			66.0		11.7		—			99.0
Total liabilities	1,037.7			1,102.2		22.0		(168.2		)	1,993.7
Commitments and contingencies (Note 7)
Redeemable common stock	0.1			—		—		—			0.1
Total stockholders’ (deficit) equity	(95.7		)	465.3		102.9		(568.2		)	(95.7		)
Total liabilities, redeemable common stock, and stockholders’ (deficit) equity	$	942.1		$	1,567.5	$	124.9	$	(736.4	)	$	1,898.1



November 30, 2014	Parent			Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
	(In millions)
Cash and cash equivalents	$	271.6		$	—	$	—	$	(5.7	)	$	265.9
Accounts receivable	—			170.4		2.5		—			172.9
Inventories	—			133.6		5.4		—			139.0
Recoverable from the U.S. government, Northrop, and other third parties for environmental remediation costs	0.1			25.3		—		—			25.4
Other current assets, net	3.5			31.6		0.8		—			35.9
Income taxes	31.0			1.8		—		(30.7		)	2.1
Deferred income taxes	5.6			18.8		0.9		—			25.3
Total current assets	311.8			381.5		9.6		(36.4		)	666.5
Property, plant and equipment, net	4.7			356.9		5.9		—			367.5
Recoverable from the U.S. government and other third parties for environmental remediation costs	0.7			80.5		—		—			81.2
Deferred income taxes	57.7			183.4		17.9		—			259.0
Goodwill	—			164.4		—		—			164.4
Intercompany receivable	—			97.7		29.2		(126.9		)	—
Investments in subsidiaries	503.0			—		—		(503.0		)	—
Other noncurrent assets and intangibles, net	28.1			298.9		56.0		—			383.0
Total assets	$	906.0		$	1,563.3	$	118.6	$	(666.3	)	$	1,921.6
Short-term borrowings and current portion of long-term debt	$	5.0		$	0.3	$	—	$	—		$	5.3
Accounts payable	1.5			103.1		4.6		(5.7		)	103.5
Reserves for environmental remediation costs	1.0			30.9		—		—			31.9
Other current liabilities and advance payments on contracts	31.5			415.9		3.5		(30.7		)	420.2
Postretirement medical and life insurance benefits	5.0			1.4		—		—			6.4
Total current liabilities	44.0			551.6		8.1		(36.4		)	567.3
Long-term debt	776.6			0.3		—		—			776.9
Reserves for environmental remediation costs	4.8			129.3		—		—			134.1
Pension benefits	67.0			415.8		—		—			482.8
Intercompany payable	126.9			—		—		(126.9		)	—
Postretirement medical and life insurance benefits	37.7			14.0		—		—			51.7
Other noncurrent liabilities	19.9			48.2		11.6		—			79.7
Total liabilities	1,076.9			1,159.2		19.7		(163.3		)	2,092.5
Commitments and contingencies (Note 7)
Redeemable common stock	1.6			—		—		—			1.6
Total stockholders’ (deficit) equity	(172.5		)	404.1		98.9		(503.0		)	(172.5		)
Total liabilities, redeemable common stock, and stockholders’ (deficit) equity	$	906.0		$	1,563.3	$	118.6	$	(666.3	)	$	1,921.6

Condensed Consolidating Statements of Cash Flows

(Unaudited)



Six months ended May 31, 2015	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net cash (used in) provided by operating activities	$	(5.9	)	$	27.4		$	4.2		$	2.7		$	28.4
Cash flows from investing activities:
Capital expenditures	—			(9.3		)	(0.1		)	—			(9.4		)
Net cash used in investing activities	—			(9.3		)	(0.1		)	—			(9.4		)
Cash flows from financing activities:
Debt repayments / repurchases	(28.4		)	(0.1		)	—			—			(28.5		)
Net transfers from (to) parent	21.4			(18.0		)	(3.4		)	—			—
Other financing activities	(2.9		)	—			—			—			(2.9		)
Net cash used in financing activities	(9.9		)	(18.1		)	(3.4		)	—			(31.4		)
Net (decrease) increase in cash and cash equivalents	(15.8		)	—			0.7			2.7			(12.4		)
Cash and cash equivalents at beginning of year	271.6			—			—			(5.7		)	265.9
Cash and cash equivalents at end of period	$	255.8		$	—		$	0.7		$	(3.0	)	$	253.5



Six months ended May 31, 2014	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
	(In millions)
Net cash used in operating activities	$	(12.5	)	$	(4.7	)	$	(0.5	)	$	(4.6	)	$	(22.3	)
Cash flows from investing activities:
Capital expenditures	(0.1		)	(18.0		)	(0.4		)	—			(18.5		)
Net cash used in investing activities	(0.1		)	(18.0		)	(0.4		)	—			(18.5		)
Cash flows from financing activities:
Debt repayments / repurchases	(145.8		)	—			—			—			(145.8		)
Proceeds from issuance of debt	179.0			—			—			—			179.0
Debt issuance costs	(4.1		)	—			—			—			(4.1		)
Net transfers (to) from parent	(19.0		)	17.8			1.2			—			—
Other financing activities	(65.2		)	—			—			—			(65.2		)
Net cash (used in) provided by financing activities	(55.1		)	17.8			1.2			—			(36.1		)
Net (decrease) increase in cash and cash equivalents	(67.7		)	(4.9		)	0.3			(4.6		)	(76.9		)
Cash and cash equivalents at beginning of year	192.7			4.9			—			—			197.6
Cash and cash equivalents at end of period	$	125.0		$	—		$	0.3		$	(4.6	)	$	120.7