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American Pacific Reports Fiscal 2010 Second Quarter Results

LAS VEGAS, May 6, 2010 /PRNewswire via COMTEX/ --American Pacific Corporation (Nasdaq: APFC) today reported financial results for its fiscal 2010 second quarter ended March 31, 2010.

We provide non-GAAP measures as a supplement to financial results based on GAAP. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is included in the accompanying supplemental data.

FINANCIAL SUMMARY

Quarter Ended March 31, 2010 Compared to Quarter Ended March 31, 2009

  • Revenues increased $3.0 million, or 5%, to $59.4 million from $56.4 million.
  • Operating income was $5.4 million compared to operating income of $6.2 million.
  • Adjusted EBITDA was $9.4 million compared to $10.3 million.
  • Net income was $1.1 million compared to $1.7 million.
  • Diluted earnings per share was $0.15 compared to $0.23.

Six Months Ended March 31, 2010 Compared to Six Months Ended March 31, 2009

  • Revenues decreased $8.6 million, or 8%, to $93.5 million from $102.1 million.
  • Operating income was $5.6 million compared to operating income of $9.7 million.
  • Adjusted EBITDA was $14.0 million compared to $17.9 million.
  • Net loss was $0.3 million compared to net income of $2.2 million.
  • Diluted loss per share was $0.04 compared to diluted earnings per share of $0.29.

CONSOLIDATED RESULTS OF OPERATIONS

Revenues - For our second quarter of the fiscal year ending September 30, 2010 ("Fiscal 2010"), revenues increased 5% to $59.4 million as compared to the second quarter of the fiscal year ended September 30, 2009 ("Fiscal 2009"), reflecting increases of 43% and 6% for our Aerospace Equipment segment and Fine Chemicals segment revenues, respectively, offset by a decrease of 18% in Specialty Chemicals segment revenues. For the Fiscal 2010 six-month period, revenues decreased 8% to $93.5 million as compared to the Fiscal 2009 six-month period, reflecting an increase of 43% for our Aerospace Equipment segment revenues, offset by decreases of 17% and 22% in Fine Chemicals segment and Specialty Chemicals segment revenues, respectively.

See further discussion under Segment Highlights.

Cost of Revenuesand Gross Margins - For our Fiscal 2010 second quarter, cost of revenues was $42.5 million compared to $39.1 million for the prior fiscal year second quarter. The consolidated gross margin percentage was 28% and 31% for our Fiscal 2010 and Fiscal 2009 second quarters, respectively. For the Fiscal 2010 six-month period, cost of revenues was $64.1 million compared to $70.0 million for the prior fiscal year six-month period. The consolidated gross margin percentage was 31% for both the Fiscal 2010 and Fiscal 2009 six-month periods.

One of the most significant factors that affects, and should continue to affect, the comparison of our consolidated gross margins from period to period is the change in revenue mix between our segments. The revenue contribution by each of our segments is indicated in the following table.

 

 

                                           Three Months          Six Months

                                              Ended                Ended

                                            March 31,            March 31,

                                          2010      2009     2010     2009

                                          ----      ----     ----     ----

 

    Fine Chemicals                          57%       56%      46%      51%

    Specialty Chemicals                     24%       31%      29%      34%

    Aerospace Equipment                     17%       13%      20%      13%

    Other Businesses                         2%    0%*          5%       2%

      Total Revenues                       100%      100%     100%     100%

                                           ===       ===      ===      ===

    * less than 1%

 

 

In addition, consolidated gross margins for our Fiscal 2010 periods reflect:

  • An increase in Fine Chemicals segment gross margin percentage primarily because manufacturing inefficiencies in the Fiscal 2009 periods did not recur in the Fiscal 2010 periods.
  • A decline in Aerospace Equipment segment gross margin percentage primarily due to increases in the estimated costs to complete certain of its systems contracts.

See further discussion under Segment Highlights.

Operating Expenses - For our Fiscal 2010 second quarter, operating expenses increased $0.3 million to $11.4 million from $11.1 million for the prior fiscal year second quarter. The most significant components of the net increase include:

  • An increase in Aerospace Equipment segment operating expenses of $0.6 million primarily due to additional management and organization structure which was added to support the segment's European growth strategy.
  • A decrease in corporate expenses primarily related to reduced strategic development costs.

For our Fiscal 2010 six-month period, operating expenses increased $1.4 million to $23.8 million from $22.4 million for the prior fiscal year six-month period primarily due to an increase in Aerospace Equipment segment operating expenses for management and organization structure which was added to support the segment's European growth strategy.

SEGMENT HIGHLIGHTS

Fine Chemicals Segment

Our Fine Chemicals segment reflects the operating results of our wholly-owned subsidiary Ampac Fine Chemicals LLC ("AFC").

Quarter Ended March 31, 2010 Compared to Quarter Ended March 31, 2009

  • Revenues were $33.7 million compared to revenuesof $31.7 million.
  • Operating income was $2.5 million compared to $1.4 million.
  • Segment EBITDA was $5.7 million, or 17% of segment revenues, compared to Segment EBITDA of $4.5 million, or 14% of segment revenues.

Six Months Ended March 31, 2010 Compared to Six Months Ended March 31, 2009

  • Revenues were $43.2 million compared to revenuesof $52.1 million.
  • Operating income was $1.8 million compared to $0.4 million.
  • Segment EBITDA was $8.3 million, or 19% of segment revenues, compared to Segment EBITDA of $6.7 million, or 13% of segment revenues.

The increase in Fine Chemicals segment revenues for the Fiscal 2010 second quarter compared to the prior fiscal year second quarter is primarily due to the timing of customer orders, and the resulting revenues, between our fiscal year quarterly periods.

The decrease in Fine Chemicals segment revenues for the Fiscal 2010 six-month period reflects reductions in orders for core products in each of our three primary therapeutic areas. The decline in segment revenues for the first half of Fiscal 2010 is consistent with our expectation that annual Fiscal 2010 revenues for this segment will decline in the range of 15% as compared to Fiscal 2009.

Operating income and Segment EBITDA for the Fiscal 2010 periods improved both in dollars and as a percentage of segment revenues, as compared to the prior fiscal year periods. The gross margin percentage improved by three points for the Fiscal 2010 second quarter and seven points for the Fiscal 2010 six-month period. The primary reason for the improvement is that manufacturing inefficiencies that affected the Fiscal 2009 periods did not recur in the Fiscal 2010 periods. Fine Chemicals segment operating expenses increased by approximately $0.3 million for both the Fiscal 2010 second quarter and six-month period primarily due to an increase in business development activities.

Recent AFC News:

  • AFC partnered with Codexis, Inc. to provide AFC access to certain of Codexis' biocatalysts that add to the technologies already available at AFC.
  • Inabata & Co., Ltd. was announced as AFC's exclusive agent in the country of Japan.
  • AFC expanded its manufacturing capacity through the purchase of a Fine Chemical facility in La Porte, Texas.

Specialty Chemicals Segment

Our Specialty Chemicals segment revenues include the operating results from our perchlorate, sodium azide and Halotron product lines, with perchlorates comprising 89% and 92% of Specialty Chemicals segment revenues in Fiscal 2010 and Fiscal 2009 six-month periods, respectively.

Quarter Ended March 31, 2010 Compared to Quarter Ended March 31, 2009

  • Revenues decreased to $14.1 million from $17.3 million.
  • Operating income was $6.5 million, or 46% of segment revenues, compared to $8.3 million, or 48% of segment revenues.
  • Segment EBITDA was $6.9 million, or 49% of segment revenues, compared to $8.6 million, or 50% of segment revenues.

Six Months Ended March 31, 2010 Compared to Six Months Ended March 31, 2009

  • Revenues decreased to $26.9 million from $34.6 million.
  • Operating income was $12.3 million, or 46% of segment revenues, compared to $15.9 million, also 46% of segment revenues.
  • Segment EBITDA was $12.9 million, or 48% of segment revenues, compared to $16.6 million, also 48% of segment revenues.

The variances in Specialty Chemicals segment revenues reflect the following factors:

  • A 29% decrease in perchlorate volume offset by a 13% increase in the related average price per pound for the Fiscal 2010 second quarter compared to the prior fiscal year second quarter.
  • A 38% decrease in perchlorate volume offset by a 20% increase in the related average price per pound for the Fiscal 2010 six-month period compared to the prior fiscal year six-month period.
  • Sodium azide revenues increased $0.5 million for the Fiscal 2010 six-month period, compared to the prior fiscal year six-month period, reflecting increased sales outside the U.S.
  • Halotron revenues were consistent between comparable second quarter and six-month periods.

The decreases in volume for the Fiscal 2010 second quarter and six-month period are consistent with our expectation that total perchlorate volume for Fiscal 2010 is anticipated to decline by approximately 50% compared to the prior fiscal year. The increases in average prices per pound reflect two offsetting factors:

  • The average price per pound of Grade I ammonium perchlorate ("AP") increased approximately proportionate and inverse to the decrease in Grade I AP volume consistent with the contractual Grade I AP price-volume matrix and comparable in catalog pricing.
  • This was offset, in part, by our other lower-priced perchlorate products, such as sodium perchlorate and potassium perchlorate, which accounted for a greater percentage of all perchlorate product volume in the Fiscal 2010 periods. This change in the mix of perchlorate product sales had the effect of reducing the average price per pound of all perchlorate products.

Strategic and tactical missile programs accounted for the significant portion of perchlorate revenues in the Fiscal 2010 second quarter. In addition to the Fiscal 2010 second quarter activity, perchlorate revenues for the Fiscal 2010 six-month period include space related programs, primarily the Ares program. For the Fiscal 2009 second quarter and six-month period, the greatest contributor to segment revenues was product for the Space Shuttle Reusable Solid Rocket Motor ("RSRM") program.

Specialty Chemicals segment operating income as a percentage of segment revenues was consistent between Fiscal 2010 and the prior fiscal year for both the second quarter and the six-month period. Lower manufacturing volume in Fiscal 2010 and the related effects on unit cost of fixed manufacturing overhead have resulted in increases in manufacturing cost of AP per pound. These cost increases are consistent with the related price increases, and as a result, operating margin percentages have been maintained.

Operating expenses decreased $0.1 million for the Fiscal 2010 second quarter and $0.3 million for the Fiscal 2010 six-month period primarily due to decreases in employee related costs.

Aerospace Equipment Segment

Our Aerospace Equipment segment reflects the operating results of our wholly-owned subsidiary Ampac-ISP Corp. and its wholly-owned subsidiaries.

Quarter Ended March 31, 2010 Compared to Quarter Ended March 31, 2009

  • Revenues increased 43% to $10.2 million from $7.1 million.
  • Operating profit was breakeven compared to operating income of $0.7 million.
  • Segment EBITDA was $0.4 million compared to $1.1 million.

Six Months Ended March 31, 2010 Compared to Six Months Ended March 31, 2009

  • Revenues increased 43% to $18.5 million from $12.9 million.
  • Operating loss was $0.3 million compared to operating income of $1.2 million.
  • Segment EBITDA was $0.5 million compared to $1.8 million.

Aerospace Equipment segment revenues increased 43% for both the Fiscal 2010 second quarter and six-month period as compared to each of the prior fiscal year periods. Revenue growth for the Fiscal 2010 second quarter and six-month period was driven by revenues for in-space propulsion engines which increased primarily due to the high volume of material receipts in the Fiscal 2010 second quarter. We expect that Aerospace Equipment segment revenues for the full Fiscal 2010 year will grow by at least 10% compared to the prior fiscal year.

Operating profit and Segment EBITDA declined as a percentage of segment revenues for both the Fiscal 2010 second quarter and six-month periods. The gross margin percentage declined by eleven points in the Fiscal 2010 six-month period attributed primarily to increases in estimated costs to complete certain systems contracts. Aerospace Equipment segment operating expenses increased $1.2 million primarily as a result of additional management and organization structure which was added to support the segment's European growth strategy.

Our European growth strategy includes further development of our relationship with the Irish government. In recent months, our European operations secured a funded project for valve development.

CAPITAL AND LIQUIDITY HIGHLIGHTS

Liquidity - As of March 31, 2010, we had cash balances of $32.5 million and no cash borrowings against our $20.0 million revolving credit line. In addition, we were in compliance with the various covenants contained in our credit agreements.

Operating Cash Flows -Operating activities provided cash of $14.6 million for the Fiscal 2010 six-month period compared to $14.2 million for the prior fiscal year six-month period, resulting in an increase of $0.4 million.

Significant components of the change in cash flow from operating activities include:

  • A decrease in cash provided by Adjusted EBITDA of $3.9 million.
  • An increase in cash provided by working capital accounts of $4.4 million, excluding the effects of interest and income taxes.
  • An increase in cash taxes refunded of $0.2 million.
  • An increase in cash used for environmental remediation of $0.3 million.

The increase in cash provided by working capital accounts for the Fiscal 2010 six-month period is primarily due to timing. We consider these working capital changes to be routine and within the normal production cycle of our products. The production of most fine chemical products requires a length of time that exceeds one quarter. In addition, the timing of Aerospace Equipment segment revenues recognized under the percentage-of-completion method differs from the timing of the related billings to customers. Therefore, in any given quarter, accounts receivable, work-in-progress inventory or deferred revenues can increase or decrease significantly. We expect that our working capital may vary normally by as much as $10.0 million from quarter to quarter.

Investing Cash Flows - Capital expenditures decreased by $0.8 million in the Fiscal 2010 six-month period compared to the prior fiscal year six-month period due to the timing of expenditures. Capital expenditures in both periods were primarily maintenance capital related.

OUTLOOK

We are updating our guidance for Fiscal 2010. We expect consolidated revenues of at least $180.0 million and Adjusted EBITDA to range from $26.0 million to $28.0 million. The low end of our Fiscal 2010 guidance for Adjusted EBITDA is computed by adding estimated amounts for depreciation and amortization of $16.0 million, interest expense of $11.0 million, share-based compensation expense of $1.0 million and income tax benefit of $1.0 to estimated net loss of $1.0 million. We are anticipating our capital expenditures, which do not include environmental remediation spending, for Fiscal 2010 to range from approximately $10.0 million to approximately $14.0 million.

The changes in our guidance primarily reflect our updated expectation that Fine Chemicals segment revenues will decline by approximately 15% in Fiscal 2010 as compared to Fiscal 2009, and the corresponding effects on Adjusted EBITDA and net loss.

Change in Accounting Standard. Effective October 1, 2009, we adopted a revised accounting standard that requires us to expense acquisition related costs, such as legal fees, when incurred. Under the previous accounting standard, these costs were included in the total cost of an acquisition and capitalized. Our Fiscal 2010 guidance for Adjusted EBITDA includes no amounts for acquisition related costs. Accordingly, should we pursue an acquisition, direct costs associated with that action would be incremental to our guidance.

INVESTOR TELECONFERENCE

We invite you to participate in a teleconference with our executive management covering our Fiscal 2010 second quarter financial results. The investor teleconference will be held Thursday, May 6, 2010 at 1:30 p.m., Pacific Daylight Time. The teleconference will include a presentation by management followed by a question and answer session. The teleconference can be accessed by dialing 866-788-0544 between 1:15 and 1:30 p.m., Pacific Daylight Time. Please reference passcode #72994698. As is our customary practice, a live webcast of the teleconference is being provided by Thomson Reuters. A link to the webcast and the earnings release is available at our website at www.apfc.com, and will be available for replay until a few days before our next quarterly investor teleconference.

RISK FACTORS/FORWARD-LOOKING STATEMENTS

The unaudited financial results included in this release are preliminary. Statements contained in this earnings release that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation the statement regarding one of the significant factors that will affect comparisons of our consolidated gross margins in the future, the statement regarding anticipated Fiscal 2010 Fine Chemicals segment revenues, the statement regarding the anticipated total volume of perchlorate products to be sold in Fiscal 2010, the statement regarding anticipated Fiscal 2010 revenues for our Aerospace Equipment segment, statements regarding our working capital changes and future variations, and statements in the "Outlook" section of this earnings release. Words such as "anticipate", "expect", "should", "may", "can" and similar expressions are intended to identify forward-looking statements. The inclusion of forward-looking statements should not be regarded as a representation by us that any of our expectations will be achieved. Actual results may differ materially from future results or outcomes expressed or implied by forward-looking statements set forth in the release due to risks, uncertainties and other important factors inherent in our business. Factors that might cause actual results to differ include, but are not limited to, the following:

  • We depend on a limited number of customers for most of our sales in our Specialty Chemicals, Aerospace Equipment and Fine Chemicals segments and the loss of one or more of these customers could have a material adverse effect on our financial position, results of operations and cash flows.
  • The inherent limitations of our fixed-price or similar contracts may impact our profitability.
  • The numerous and often complex laws and regulations and regulatory oversight to which our operations and properties are subject, the cost of compliance, and the effect of any failure to comply could reduce our profitability and liquidity.
  • A significant portion of our business depends on contracts with the government or its prime contractors or subcontractors and these contracts are impacted by governmental priorities and are subject to potential fluctuations in funding or early termination, including for convenience, any of which could have a material adverse effect on our operating results, financial condition or cash flows.
  • We may be subject to potentially material costs and liabilities in connection with environmental or health matters.
  • Although we have established an environmental reserve for remediation activities in Henderson, Nevada, given the many uncertainties involved in assessing environmental liabilities, our environmental-related risks may from time to time exceed any related reserves.
  • For each of our Specialty Chemicals, Fine Chemicals and Aerospace Equipment segments, most production is conducted in a single facility and any significant disruption or delay at a particular facility could have a material adverse effect on our business, financial position and results of operations.
  • The release or explosion of dangerous materials used in our business could disrupt our operations and cause us to incur additional costs and liabilities.
  • Disruptions in the supply of key raw materials and difficulties in the supplier qualification process, as well as increases in prices of raw materials, could adversely impact our operations.
  • Each of our Specialty Chemicals, Fine Chemicals and Aerospace Equipment segments may be unable to comply with customer specifications and manufacturing instructions or may experience delays or other problems with existing or new products, which could result in increased costs, losses of sales and potential breach of customer contracts.
  • Successful commercialization of pharmaceutical products and product line extensions is very difficult and subject to many uncertainties. If a customer is not able to successfully commercialize its products for which AFC produces compounds or if a product is subsequently recalled, then the operating results of AFC may be negatively impacted.
  • A strike or other work stoppage, or the inability to renew collective bargaining agreements on favorable terms, could have a material adverse effect on the cost structure and operational capabilities of AFC.
  • The pharmaceutical fine chemicals industry is a capital-intensive industry and if AFC does not have sufficient financial resources to finance the necessary capital expenditures, its business and results of operations may be harmed.
  • We may be subject to potential liability claims for our products or services that could affect our earnings and financial condition and harm our reputation.
  • Technology innovations in the markets that we serve may create alternatives to our products and result in reduced sales.
  • We are subject to strong competition in certain industries in which we participate and therefore may not be able to compete successfully.
  • Due to the nature of our business, our sales levels may fluctuate causing our quarterly operating results to fluctuate.
  • The inherent volatility of the chemical industry affects our capacity utilization and causes fluctuations in our results of operations.
  • A loss of key personnel or highly skilled employees, or the inability to attract and retain such personnel, could disrupt our operations or impede our growth.
  • We may continue to expand our operations in part through acquisitions, which could divert management's attention and expose us to unanticipated liabilities and costs. We may experience difficulties integrating the acquired operations, and we may incur costs relating to acquisitions that are never consummated.
  • We have a substantial amount of debt, and the cost of servicing that debt could adversely affect our ability to take actions, our liquidity or our financial condition.
  • If we are unable to generate sufficient cash flow to service our debt and fund our operating costs, our liquidity may be adversely affected.
  • Significantchanges in discount rates, rates of return on pension assets, mortality tables and other factors could affect our estimates of pension obligations, which in turn could affect future funding requirements and related costs and impact our future earnings.
  • Our shareholder rights plan, Restated Certificate of Incorporation, as amended, and Amended and Restated By-laws discourage unsolicited takeover proposals and could prevent stockholders from realizing a premium on their common stock.
  • Our proprietary and intellectual property rights may be violated, compromised, circumvented or invalidated, which could damage our operations.
  • Our common stock price may fluctuate substantially, and a stockholder's investment could decline in value.

Readers of this earnings release are referred to our Annual Report on Form 10-K for Fiscal 2009, our Quarterly Report on Form 10-Q for the quarter ended December 31, 2009 and our other filings with the Securities and Exchange Commission for further discussion of these and other factors that could affect our future results. The forward-looking statements contained in this earnings release are made as of the date hereof and we assume no obligation to update for actual results or to update the reasons why actual results could differ materially from those projected in the forward-looking statements, except as required by law. In addition, the operating results for the quarter and six months ended March 31, 2010 and cash flows for the six months ended March 31, 2010 are not necessarily indicative of the results that will be achieved for future periods.

ABOUT AMERICAN PACIFIC CORPORATION

American Pacific Corporation (AMPAC) is a leading custom manufacturer of fine chemicals, specialty chemicals and propulsion products within its focused markets. We supply active pharmaceutical ingredients and advanced intermediates to the pharmaceutical industry. For the aerospace and defense industry we provide specialty chemicals used in solid rocket motors for space launch and military missiles. AMPAC also designs and manufactures liquid propulsion systems, valves and structures for space and missile defense applications. We produce clean agent chemicals for the fire protection industry, as well as electro-chemical equipment for the water treatment industry. Our products are designed to meet customer specifications and often must meet certain governmental and regulatory approvals. Additional information about us can be obtained by visiting our web site at www.apfc.com.

 

    AMERICAN PACIFIC CORPORATION

    Condensed Consolidated Statements of Operations

    (Unaudited, Dollars in Thousands, Except per Share Amounts)

 

 

                                    Three Months Ended        Six Months Ended

                                         March 31,                March 31,

                                       2010        2009       2010        2009

                                       ----        ----       ----        ----

 

    Revenues                        $59,395     $56,435    $93,459    $102,064

    Cost of Revenues                 42,516      39,138     64,134      70,033

                                     ------      ------     ------      ------

      Gross Profit                   16,879      17,297     29,325      32,031

    Operating Expenses               11,444      11,071     23,751      22,380

                                     ------      ------     ------      ------

      Operating Income                5,435       6,226      5,574       9,651

    Interest and Other Income

     (Expense), Net                    (260)        (19)      (268)         42

    Interest Expense                  2,740       2,684      5,431       5,378

                                      -----       -----      -----       -----

      Income (Loss) before Income

       Tax                            2,435       3,523       (125)      4,315

    Income Tax Expense                1,319       1,790        199       2,125

                                      -----       -----        ---       -----

      Net Income (Loss)              $1,116      $1,733      $(324)     $2,190

                                     ======      ======      =====      ======

 

 

    Earnings (Loss) per Share:

      Basic                           $0.15       $0.23     $(0.04)      $0.29

      Diluted                         $0.15       $0.23     $(0.04)      $0.29

 

    Weighted Average Shares

     Outstanding:

      Basic                       7,490,000   7,483,000  7,489,000   7,481,000

      Diluted                     7,539,000   7,522,000  7,489,000   7,545,000

 

 

 

    AMERICAN PACIFIC CORPORATION

    Condensed Consolidated Balance Sheets

    (Unaudited, Dollars in Thousands, Except per Share Amounts)

 

 

 

                                                                   September

                                                       March 31,      30,

                                                             2010        2009

                                                             ----        ----

    ASSETS

    Current Assets:

      Cash and Cash Equivalents                           $32,514     $21,681

      Accounts Receivable, Net                             41,468      44,028

      Inventories                                          36,430      36,356

      Prepaid Expenses and Other Assets                     2,391       1,811

      Income Taxes Receivable                               1,467       2,148

      Deferred Income Taxes                                 6,317       6,317

                                                            -----       -----

        Total Current Assets                              120,587     112,341

    Property, Plant and Equipment, Net                    111,148     114,645

    Intangible Assets, Net                                  2,418       3,553

    Goodwill                                                2,899       3,144

    Deferred Income Taxes                                  21,124      21,121

    Other Assets                                           10,420      10,037

                                                           ------      ------

        TOTAL ASSETS                                     $268,596    $264,841

                                                         ========    ========

 

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current Liabilities:

      Accounts Payable                                     $8,868      $7,444

      Accrued Liabilities                                   6,319       5,295

      Accrued Interest                                      1,650       1,650

      Employee Related Liabilities                          5,600       6,930

      Income Taxes Payable                                    397         189

      Deferred Revenues and Customer Deposits               9,208       6,911

      Current Portion of Environmental

       Remediation Reserves                                 2,101       2,522

      Current Portion of Long-Term Debt                       112         151

                                                              ---         ---

        Total Current Liabilities                          34,255      31,092

    Long-Term Debt                                        110,135     110,097

    Environmental Remediation Reserves                     23,610      24,168

    Pension Obligations                                    29,120      27,720

    Other Long-Term Liabilities                               596         667

                                                              ---         ---

        Total Liabilities                                 197,716     193,744

                                                          -------     -------

    Commitments and Contingencies

    Shareholders' Equity

      Preferred Stock -$1.00 par value;

       3,000,000 authorized; none outstanding                   -           -

      Common Stock -$0.10 par value; 20,000,000 shares

       authorized,

        7,540,591 and 7,504,591 issued                        754         750

      Capital in Excess of Par Value                       72,807      72,322

      Retained Earnings                                     9,673       9,997

      Accumulated Other Comprehensive Loss                (12,354)    (11,972)

                                                          -------     -------

        Total Shareholders' Equity                         70,880      71,097

                                                           ------      ------

        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $268,596    $264,841

                                                         ========    ========

 

 

 

 

    AMERICAN PACIFIC CORPORATION

    Condensed Consolidated Statements of Cash Flows

    (Unaudited, Dollars in Thousands)

 

 

 

                                                          Six Months Ended

                                                             March 31,

                                                           2010       2009

                                                           ----       ----

    Cash Flows from Operating Activities:

      Net Income (Loss)                                   $(324)    $2,190

      Adjustments to Reconcile Net Income (Loss)

        to Net Cash Provided by Operating Activities:

          Depreciation and amortization                   8,176      7,870

          Non-cash interest expense                         315        315

          Share-based compensation                          489        305

          Excess tax benefit from stock option

           exercises                                          -         (3)

          Deferred income taxes                             (81)       (68)

          Loss on sale of assets                              5         53

          Changes in operating assets and liabilities:

            Accounts receivable, net                      2,375     (1,220)

            Inventories                                    (136)     5,058

            Prepaid expenses and other current assets      (591)     1,019

            Accounts payable                              1,395     (3,032)

            Income taxes                                    900      2,502

            Accrued liabilities                           1,039        287

            Accrued interest                                  -          -

            Employee related liabilities                 (1,457)    (2,125)

            Deferred revenues and customer deposits       2,418        625

            Environmental remediation reserves             (979)      (717)

            Pension obligations, net                      1,546      1,008

            Other                                          (496)        85

              Net Cash Provided by Operating Activities  14,594     14,152

                                                         ------     ------

 

    Cash Flows from Investing Activities:

      Capital expenditures                               (3,588)    (4,412)

      Acquisition of business, net of cash acquired           -     (6,661)

                                                            ---     ------

              Net Cash Used by Investing Activities      (3,588)   (11,073)

                                                         ------    -------

 

    Cash Flows from Financing Activities:

      Payments of long-term debt                            (89)      (172)

      Issuances of common stock, net                          -         32

      Excess tax benefit from stock option

       exercises                                              -          3

                                                            ---        ---

          Net Cash Used by Financing Activities             (89)      (137)

                                                            ---       ----

 

    Effect of Changes in Currency Exchange Rates

     on Cash                                                (84)         -

                                                            ---        ---

 

    Net Change in Cash and Cash Equivalents              10,833      2,942

    Cash and Cash Equivalents, Beginning of

     Period                                              21,681     26,893

    Cash and Cash Equivalents, End of Period            $32,514    $29,835

                                                        =======    =======

 

 

 

 

    AMERICAN PACIFIC CORPORATION

    Supplemental Data

    (Unaudited, Dollars in Thousands)

 

                                                  Three Months

                                                     Ended

                                                   March 31,

                                                 2010      2009

                                                 ----      ----

 

    Operating Segment Data:

 

    Revenues:

      Fine Chemicals                          $33,673   $31,738

      Specialty Chemicals                      14,086    17,283

      Aerospace Equipment                      10,168     7,135

      Other Businesses                          1,468       279

                                                -----       ---

        Total Revenues                        $59,395   $56,435

                                              =======   =======

 

    Segment Operating Income (Loss):

      Fine Chemicals                           $2,500    $1,406

      Specialty Chemicals                       6,513     8,325

      Aerospace Equipment                          25       743

      Other Businesses                             69      (167)

                                                  ---      ----

        Total Segment Operating Income          9,107    10,307

    Corporate Expenses                         (3,672)   (4,081)

    Operating Income                           $5,435    $6,226

                                               ======    ======

 

    Depreciation and Amortization:

      Fine Chemicals                           $3,194     3,136

      Specialty Chemicals                         406       323

      Aerospace Equipment                         392       323

      Other Businesses                              4         3

      Corporate                                   127       116

                                                  ---       ---

        Total Depreciation and Amortization    $4,123    $3,901

                                               ======    ======

 

    Segment EBITDA (a):

      Fine Chemicals                           $5,694    $4,542

      Specialty Chemicals                       6,919     8,648

      Aerospace Equipment                         417     1,066

      Other Businesses                             73      (164)

                                                  ---      ----

        Total Segment EBITDA                   13,103    14,092

    Less: Corporate Expenses, Excluding

     Depreciation                              (3,545)   (3,965)

    Plus: Share-based Compensation                143       173

    Plus: Interest and Other Income, Net         (260)      (19)

    Adjusted EBITDA (b)                        $9,441   $10,281

                                               ======   =======

 

    Reconciliation of Net Income (Loss) to

     Adjusted EBITDA (b):

 

    Net Income (Loss)                          $1,116    $1,733

    Add Back:

      Income Tax Expense                        1,319     1,790

      Interest Expense                          2,740     2,684

      Depreciation and Amortization             4,123     3,901

      Share-based Compensation                    143       173

                                                  ---       ---

    Adjusted EBITDA                            $9,441   $10,281

                                               ======   =======

 

 

 

                                                Six Months Ended

                                                   March 31,

                                                 2010       2009

                                                 ----       ----

 

    Operating Segment Data:

 

    Revenues:

      Fine Chemicals                          $43,177    $52,122

      Specialty Chemicals                      26,889     34,641

      Aerospace Equipment                      18,493     12,892

      Other Businesses                          4,900      2,409

                                                -----      -----

        Total Revenues                        $93,459   $102,064

                                              =======   ========

 

    Segment Operating Income (Loss):

      Fine Chemicals                           $1,760       $382

      Specialty Chemicals                      12,344     15,931

      Aerospace Equipment                        (337)     1,153

      Other Businesses                             52        378

                                                  ---        ---

        Total Segment Operating Income         13,819     17,844

    Corporate Expenses                         (8,245)    (8,193)

    Operating Income                           $5,574     $9,651

                                               ======     ======

 

    Depreciation and Amortization:

      Fine Chemicals                           $6,522      6,344

      Specialty Chemicals                         577        627

      Aerospace Equipment                         815        654

      Other Businesses                              8          6

      Corporate                                   254        239

                                                  ---        ---

        Total Depreciation and Amortization    $8,176     $7,870

                                               ======     ======

 

    Segment EBITDA (a):

      Fine Chemicals                           $8,282     $6,726

      Specialty Chemicals                      12,921     16,558

      Aerospace Equipment                         478      1,807

      Other Businesses                             60        384

                                                  ---        ---

        Total Segment EBITDA                   21,741     25,475

    Less: Corporate Expenses, Excluding

     Depreciation                              (7,991)    (7,954)

    Plus: Share-based Compensation                489        305

    Plus: Interest and Other Income, Net         (268)        42

    Adjusted EBITDA (b)                       $13,971    $17,868

                                              =======    =======

 

    Reconciliation of Net Income (Loss) to

     Adjusted EBITDA (b):

 

    Net Income (Loss)                           $(324)    $2,190

    Add Back:

      Income Tax Expense                          199      2,125

      Interest Expense                          5,431      5,378

      Depreciation and Amortization             8,176      7,870

      Share-based Compensation                    489        305

                                                  ---        ---

    Adjusted EBITDA                           $13,971    $17,868

                                              =======    =======

 

 

 

 

    (a)  Segment EBITDA is defined as segment operating income (loss)

    plus depreciation and amortization.

    (b)  Adjusted EBITDA is defined as net income (loss) before income

    tax expense (benefit), interest expense, depreciation and

    amortization, share-based compensation and environmental

    remediation charges (if any).

    Segment EBITDA and Adjusted EBITDA are not financial measures

    calculated in accordance with GAAP and should not be considered as

    an alternative to income (loss) from operations as performance

    measures.  Each EBITDA measure is presented solely as a supplemental

    disclosure because management believes that each is a useful

    performance measure that is widely used within the industries in

    which we operate. In addition, EBITDA measures are significant

    measurements for covenant compliance under our revolving credit

    facility.  Each EBITDA measure is not calculated in the same manner

    by all companies and, accordingly, may not be an appropriate measure

    for comparison.

 

 

SOURCE American Pacific Corporation