Retirement Benefits

12 Months Ended

Nov. 30, 2011

Retirement Benefits [Abstract]

Retirement Benefits

6. Retirement Benefits

a.  Plan Descriptions

Pension Benefits

On November 25, 2008, the Company decided to amend the defined benefit pension and benefits restoration plans to freeze future accruals under such plans. Effective February 1, 2009 and July 31, 2009, future benefit accruals for non-collective bargaining-unit employees and collective bargaining unit employees were discontinued, respectively. No employees lost their previously earned pension benefits.

As of the last measurement date at November 30, 2011, the total defined benefit pension plan assets, total projected benefit obligations, and the unfunded pension obligation for the qualified pension plan were approximately $1,296.8 million, $1,550.4 million, and $236.4 million, respectively. The Pension Protection Act (the “PPA”) requires underfunded pension plans to improve their funding ratios within prescribed intervals based on the funded status of the plan as of specified measurement dates. The funded ratio as of November 30, 2010 under the PPA for the Company’s tax-qualified defined benefit pension plan was 96.2% which was above the 96.0% ratio required under the PPA. The required ratio to be met as of the November 30, 2011 measurement date is 100%. The final calculated PPA funded ratio as of November 30, 2011 is expected to be completed in the second half of 2012.

In general, the PPA requires companies with underfunded plans to make up the shortfall over a seven year period. These values are based on assumptions specified by the IRS, and are typically not the same as the amounts used for corporate financial reporting. On June 25, 2010, the president signed the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (“Pension Relief Act”) into law. The Pension Relief Act allows pension plan sponsors to extend the shortfall amortization period from the seven years required under the PPA to either nine years (with interest-only payments for the first two years) or 15 years for shortfall amortization bases created during the years for which relief is elected. This election could be made for any two plan years during the period 2008-2011. The Company elected the funding relief for plan year beginning 2010 and expects to elect the funding relief for plan year beginning 2011 using the 15-year alternative amortization.

The value of the unfunded accrued benefits and amount of required contribution each year are based on a number of factors, including plan investment experience and interest rate environment and, as such, can fluctuate significantly from year to year. Companies may prepay contributions and, under certain circumstances, use those prepayment credits to satisfy the required funding of the pension plan’s annual required contribution thereby allowing the Company to defer cash payments into the pension plan. The Company has accumulated $59.5 million in such prepayment credits as of November 30, 2011. For fiscal 2012, the Company is not expecting to make a cash contribution to the pension plan.

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

Medical and Life Benefits

The Company provides medical and life insurance benefits to certain eligible retired employees, with varied coverage by employee group. Generally, employees hired after January 1, 1997 are not eligible for medical and life insurance benefits. The medical benefit plan provides for cost sharing between the Company and its retirees in the form of retiree contributions, deductibles, and coinsurance. Medical and life benefit obligations are unfunded.

Defined Contribution 401(k) Benefits

The Company sponsors a defined contribution 401(k) plan and participation in the plan is available to all employees. Company contributions to the plan generally have been based on a percentage of employee contributions and, prior to April 15, 2009, the Company’s contributions to the plan had been directed entirely in the GenCorp Stock Fund. Effective January 15, 2009, the Company discontinued the employer matching component to the defined contribution 401(k) plan for non-collective bargaining-unit employees. Effective March 15, 2009, transfers into the GenCorp Stock Fund were no longer permitted. Effective April 15, 2009, all future contribution investment elections directed into the GenCorp Stock Fund were redirected to other investment options and the Company’s collective bargaining-unit employee matching contributions are being made in cash. Effective the first full payroll commencing in July 2010, for non-collective bargaining-unit employees, the Company reinstated in cash its matching contributions at the same level in effect prior to January 15, 2009 and invested according to participants’ investment elections in effect at the time of contribution. The Company’s contributions to the 401(k) plan were $9.9 million in fiscal 2011, $3.7 million in fiscal 2010, and $2.0 million in fiscal 2009.

b. Plan Results

Summarized below is the balance sheet impact of the Company’s pension benefits and medical and life benefits. Pension benefits include the consolidated qualified plan and the unfunded non-qualified plan for benefits provided to employees beyond those provided by the Company’s qualified plans. Plan assets, benefit obligations, and the funded status of the plans were determined at November 30, 2011 and 2010 for fiscal 2011 and 2010, respectively.

	Pension Benefits						Medical and Life Benefits
	As of November 30,
	2011			2010			2011			2010
	(In millions)
Change in fair value of plan assets:
Fair value — beginning of year	$	1,374.3		$	1,335.5		$	—		$	—
Gain on plan assets		54.5			172.3			—			—
Employer contributions		1.5			1.2			5.5			5.9
Benefits paid(1)		(133.5	)		(134.7	)		(5.5	)		(5.9	)
Fair Value — end of year	$	1,296.8		$	1,374.3		$	—		$	—
Change in benefit obligation:
Benefit obligation — beginning of year	$	1,566.6		$	1,561.6		$	78.9		$	82.9
Service cost(2)		3.9			4.4			0.1			0.2
Interest cost		78.4			86.1			3.5			4.0
Actuarial losses (gains)		35.0			49.2			(1.8	)		(2.3	)
Benefits paid		(133.5	)		(134.7	)		(5.5	)		(5.9	)
Benefit obligation — end of year(3)	$	1,550.4		$	1,566.6		$	75.2		$	78.9
Funded status of the plans	$	(253.6	)	$	(192.3	)	$	(75.2	)	$	(78.9	)
Amounts Recognized in the Consolidated Balance Sheets:
Postretirement medical and life benefits, current							$	(6.8	)	$	(7.1	)
Postretirement medical and life benefits, noncurrent								(68.4	)		(71.8	)
Pension liability, current (component of other current liabilities)	$	(1.1	)	$	(1.2	)
Pension liability, non-qualified (component of other noncurrent liabilities)		(16.1	)		(15.6	)
Pension benefits, noncurrent		(236.4	)		(175.5	)
Net Liability Recognized in the Consolidated Balance Sheets	$	(253.6	)	$	(192.3	)	$	(75.2	)	$	(78.9	)

(1) Benefits paid for medical and life benefits are net of the Medicare Part D Subsidy of $0.5 million and $0.6 million received in fiscal 2011 and 2010, respectively.

(2) For fiscal 2011 and 2010, service cost for pension benefits represents the administrative costs of the pension plan.

(3) Pension amounts include $17.2 million in fiscal 2011 and $16.8 million in fiscal 2010 for unfunded plans.

Due to freezing of the plan benefits in fiscal 2009, the accumulated benefit obligation for the defined benefit pension plans was equal to the benefit obligation as of the November 30, 2011 and 2010 measurement dates.

Components of net periodic benefit expense (income) for continuing operations are as follows:

	Pension Benefits									Medical and Life Benefits
	Year Ended
	2011			2010			2009			2011			2010			2009
	(In millions)
Service cost(1)	$	3.9		$	4.4		$	6.3		$	0.1		$	0.2		$	0.2
Interest cost on benefit obligation		78.4			86.1			89.3			3.5			4.0			5.0
Assumed return on plan assets(2)		(102.4	)		(107.8	)		(103.8	)		—			—			—
Amortization of prior service costs		—			—			—			0.1			0.1			0.1
Amortization of net losses (gains)		66.4			58.8			(1.0	)		(3.6	)		(3.9	)		(8.0	)
Net periodic benefit expense (income)	$	46.3		$	41.5		$	(9.2	)	$	0.1		$	0.4		$	(2.7	)

(1) For fiscal 2011 and 2010, service cost for pension benefits represents the administrative costs of the pension plan. For fiscal 2009, service cost for pension benefits include administrative costs and service cost for non-collective bargaining-unit employees until February 1, 2009 and collective bargaining-unit employees until July 31, 2009.

(2) The actual return (loss) and rate of return (loss) on plan assets are as follows:

	Year Ended
	2011			2010			2009
	(In millions)
Actual return (loss) on plan assets	$	54.5		$	172.3		$	(46.6	)
Actual rate of return (loss) on plan assets		3.8	%		13.7	%		(1.9	)%

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

c.  Plan Assumptions

The Company used the following assumptions, calculated based on a weighted-average, to determine the benefit obligations and net periodic benefit expense for the applicable fiscal year.

	Pension Benefits						Medical and Life Benefits
	2011			2010			2011			2010
Discount rate (benefit obligations)		4.95	%		5.21	%		4.58	%		4.65	%
Discount rate (benefit restoration plan benefit obligations)		4.98	%		5.34	%		*			*
Discount rate (net periodic benefit expense)		5.21	%		5.65	%		4.65	%		5.09	%
Expected long-term rate of return on plan assets		8.00	%		8.00	%		*			*
Ultimate healthcare trend rate		*			*			5.00	%		5.00	%
Initial healthcare trend rate (pre-65)		*			*			9.00	%		9.00	%
Year ultimate rate attained (pre-65)		*			*			2021			2021
Initial healthcare trend rate (post 65)		*			*			9.00	%		9.00	%
Year ultimate rate attained (post 65)		*			*			2021			2021

* Not applicable.

Certain actuarial assumptions, such as assumed discount rate, long-term rate of return, and assumed healthcare cost trend rates can have a significant effect on amounts reported for periodic cost of pension benefits and medical and life benefits, as well as respective benefit obligation amounts. The assumed discount rate represents the market rate available for investments in high-quality fixed income instruments with maturities matched to the expected benefit payments for pension and medical and life benefit plans.

The expected long-term rate of return on plan assets represents the rate of earnings expected in the funds invested, and funds to be invested, to provide for anticipated benefit payments to plan participants. The Company evaluated the plan’s historical investment performance, its current and expected asset allocation, and, with input from the Company’s external advisors and investment managers, developed best estimates of future investment performance of the plan’s assets. Based on this analysis, the Company has assumed a long term rate of return on plan assets of 8.00%.

The Company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates for the medical benefit plans. For fiscal 2011 medical benefit obligations, the Company assumed a 9.0% annual rate of increase for pre and post 65 participants in the per capita cost of covered healthcare claims with the rate decreasing over nine years until reaching 5.0%.

A one percentage point change in the key assumptions would have the following effects on the projected benefit obligations as of November 30, 2011 and on expense for fiscal 2011:

	Pension Benefits and Medical and Life Benefits Discount Rate						Expected Long-term Rate of Return			Assumed Healthcare Cost Trend Rate
	Net Periodic Benefit Expense			Projected Benefit Obligation			Net Periodic Pension Benefit Expense			Net Periodic Medical and Life Benefit Expense			Accumulated Benefit Obligation
	(In millions)
1% decrease	$	21.3		$	160.8		$	12.8		$	(0.1	)	$	(2.0	)
1% increase		(20.9	)		(135.8	)		(12.8	)		0.1			2.2

d.  Plan Assets and Investment Policy

The Company’s investment policy is to maximize the total rate of return with a view toward long-term funding objectives of the plan to ensure that funds are available to meet benefit obligations when due. The plan assets are diversified to the extent necessary to minimize risk and to achieve an optimal balance between risk and return. The Company’s investment strategy focuses on higher return seeking investments in actively managed investment vehicles with an emphasis toward alternative investment strategies and allows for diversification as to the type of assets, investment strategies employed, and number of investment managers used to carry out this strategy. These strategies are achieved using diversified asset types, which may include cash, equities, fixed income, real estate, private equity holdings and derivatives. Allocations between these asset types may change as a result of changing market conditions and tactical investment opportunities.

The Company’s pension plans weighted average asset allocation and the investment policy asset allocation targets at November 30, 2011, by asset category, are as follows:

	2011
	Actual			Target(1)
Cash and cash equivalents		24	%		—	%
Equity securities		24			32
Fixed income		24			50
Real estate investments		2			2
Private equity holdings		6			—
Alternative investments		20			16
		100	%		100	%

(1) Assets rebalanced periodically to remain within a reasonable range of the target. The Company is in the process of evaluating and updating its overall investment strategy and asset allocation targets.

The fair value of the Company’s pension plan assets and liabilities by asset category and by level at November 30, 2011 and 2010 is as follows:

	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
November 30, 2011		(In millions)
Cash and cash equivalents	$	302.2		$	137.5		$	164.7		$	—
Equity securities:
Domestic equity securities		304.3			299.1			4.8			0.4
International equity securities		147.9			147.6			0.3			—
Derivatives:
Purchased options		0.4			0.4			—			—
Written options		(2.6	)		(2.6	)		—			—
Investments sold short		(141.9	)		(141.9	)		—			—
Fixed income:
U.S. government securities		20.7			8.1			12.6			—
Foreign government securities		0.2			—			—			0.2
Corporate debt securities		102.5			1.3			94.5			6.7
Asset-backed securities		199.8			—			199.8			—
Investments sold short		(6.6	)		(3.4	)		(3.2	)		—
Forward exchange contracts		0.2			—			0.2			—
Real estate investments		19.6			—			—			19.6
Private equity holdings		72.0			—			—			72.0
Alternative investments		259.1			—			—			259.1
Total		1,277.8		$	446.1		$	473.7		$	358.0
Receivables		43.2
Payables		(24.2	)
Total	$	1,296.8
November 30, 2010
Cash and cash equivalents	$	238.7		$	127.1		$	111.6		$	—
Equity securities:
Domestic equity securities		376.1			310.3			65.8			—
International equity securities		174.8			36.7			138.1			—
Derivatives:
Purchased options		0.5			0.5			—			—
Written options		(0.1	)		(0.1	)		—			—
Investments sold short		(76.2	)		(76.2	)		—			—
Fixed income:
U.S. government securities		5.7			—			5.7			—
Foreign government securities		0.2			—			—			0.2
Corporate debt securities		170.1			2.0			168.1			—
Asset-backed securities		247.0			—			245.6			1.4
Investments sold short		(3.0	)		(1.3	)		(1.7	)		—
Real estate investments		21.6			—			—			21.6
Private equity holdings		83.1			—			—			83.1
Alternative investments		137.1			—			—			137.1
Total		1,375.6		$	399.0		$	733.2		$	243.4
Receivables		13.1
Payables		(14.4	)
Total	$	1,374.3

The following is a description of the significant investment strategies and valuation methodologies used for the investments measured at fair value, including the general classification of such investments pursuant to the valuation hierarchy.

Cash and cash equivalents

Cash and cash equivalents are held in money market accounts or invested in Short-Term Investment Funds (“STIFs”). Cash and cash equivalents held in money market accounts are classified as Level 1 investments. STIFs are not traded on an exchange and active market, and therefore are classified as Level 2 investments.

Equity securities

Equity securities are invested broadly in U.S. and non-U.S. companies which are in various industries and through a range of market capitalization in common stocks and Common Collective Trusts (“CCTs”). Common stocks are stated at fair value as quoted on a recognized securities exchange and are valued at the last reported sales price on the last business day of the fiscal year and are classified as Level 1 investments. CCTs are not traded on an exchange and active market, however, the fair value is determined based on the underlying investments as traded in an exchange and active market, and therefore are classified as Level 2 investments. Derivatives primarily include options and short equity positions, which are all listed on an exchange and active market and classified as Level 1 investments. Derivatives include call and put options, which are all listed on an exchange and active market and classified as Level 1 investments. Investments sold short are short equity positions which are all listed on an exchange and active market and classified as Level 1 investments.

Fixed income securities

Fixed income securities are invested in a variety of instruments including but not limited to government securities, corporate debt securities, and asset-backed securities.

U.S. government securities are valued at bid evaluations which are evaluated prices using observable and market-based inputs and are classified as Level 2 investments. Foreign government securities are priced by investment managers using unobservable inputs such as extrapolated data, proprietary models, or indicative quotes and are classified as Level 3 investments.

Corporate debt securities are invested in corporate bonds and CCTs. Corporate bonds that are actively traded in a robust and visible market are classified as Level 1 investments. Corporate bonds that are valued at bid evaluations using observable and market-based inputs are classified as Level 2 investments. CCTs are priced by investment managers using observable inputs of the underlying bond securities and are classified as Level 2 investments.

Asset-backed securities, including government-backed mortgage securities, non-government-backed collateralized mortgage obligations, asset-backed securities, and commercial mortgage-backed securities, are valued at bid evaluations which are evaluated prices using observable or unobservable inputs. These securities are classified as Level 2 investments if the evaluated prices are calculated using observable and market-based inputs and are classified as Level 3 investments if the evaluated prices are calculated using unobservable inputs such as extrapolated data, proprietary models, or indicative quotes.

Investments sold short are short fixed income positions which are classified as Level 1 investments if they are listed on an exchange and active market, and are classified as Level 2 investments if they are valued at bid evaluation using observable and market-based inputs.

Forward exchange contracts

Forward exchange contracts are not exchange-traded but are priced based on observable input. They are classified as Level 2 investments.

Real estate investments

Real estate investments are interests in real property holdings where the underlying properties are valued by independent appraisers employing valuation techniques such as capitalization of future rental income and/or sales of comparable properties. If applicable, the properties may also be valued based on current indicative interest received by the Company from third parties. These investments are classified as Level 3 investments.

Private equity holdings

Private equity holdings are primarily limited partnerships and fund-of-funds that mainly invest in U.S. and non-U.S. leveraged buyout, venture capital and special situation strategies. Private equity holdings are valued at Net Asset Value (“NAV”), which are estimated by investment managers using inputs in which little or no public market data exists. These investments are classified as Level 3 investments.

Alternative investments

Alternative investments consist of hedge funds that employ a variety of investment strategies. These funds invest across a range of equity and debt securities in a variety of industry sectors. Alternative investments are valued at NAV calculated by investment managers using a variety of valuation techniques for the underlying investments. Since many of these valuations are based on unobservable inputs, they are classified as Level 3 investments.

Changes in the fair value of the Level 3 investments during the year ended November 30, 2011 and 2010 were as follows:

		$(111.1)		$(111.1)			$(111.1)			$(111.1)			$(111.1)			$(111.1)
	November 30, 2010		Unrealized Gains(Losses) on Plan Assets			Realized Gains(Losses) on Plan Assets			Purchases, Issuances,  and Settlements			Transfers out of Level 3			November 30, 2011
	(In millions)
Equity securities:
Domestic equity securities	$	—	$	0.2		$	—		$	0.2		$	—		$	0.4
Fixed income:
Foreign government securities		0.2		—			—			—			—			0.2
Corporate securities		—		(0.1	)		—			6.8			—			6.7
Asset-backed securities		1.4		0.1			(0.1	)		(0.5	)		(0.9	)		—
Real estate investments		21.6		—			—			(2.0	)		—			19.6
Private equity holdings		83.1		4.6			—			(15.7	)		—			72.0
Alternative investments		137.1		8.0			(0.9	)		114.9			—			259.1
Total	$	243.4	$	12.8		$	(1.0	)	$	103.7		$	(0.9	)	$	358.0

		$(111.1)		$(111.1)			$(111.1)		$(111.1)			$(111.1)			$(111.1)
	November 30, 2009		Unrealized Gains(Losses) on Plan Assets			Realized Gains on Plan Assets		Purchases, Issuances,  and Settlements			Transfers out of Level 3			November 30, 2010
	(In millions)
Fixed income:
Foreign government securities	$	0.4	$	—		$	—	$	(0.2	)	$	—		$	0.2
Corporate securities		0.2		—			—		(0.2	)		—			—
Asset-backed securities		5.3		(0.6	)		1.2		(3.5	)		(1.0	)		1.4
Real estate investments		26.8		(5.2	)		—		—			—			21.6
Private equity holdings		71.2		11.1			—		0.8			—			83.1
Alternative investments		128.8		0.8			13.5		(6.0	)		—			137.1
Total	$	232.7	$	6.1		$	14.7	$	(9.1	)	$	(1.0	)	$	243.4

e.  Benefit Payments

The following presents estimated future benefit payments:

	Pension Benefit Payments		Medical and Life Benefits
Year Ending November 30,			Gross Benefit Payments		Medicare D Subsidy		Net Benefit Payments
	(In millions)
2012	$	131.1	$	7.4	$	0.6	$	6.8
2013		129.2		8.7		0.6		8.1
2014		126.6		8.5		0.6		7.9
2015		123.5		8.2		0.3		7.9
2016		120.3		7.9		0.3		7.6
Years 2017 — 2021		550.6		32.6		1.3		31.3