EXHIBIT 99.1
AMERICAN PACIFIC CORPORATION
Contact: David N. Keys – (702) 735-2200 ext. 166
E-mail: Investor@apfc.com Website: www.apfc.com
AMERICAN PACIFIC REPORTS THIRD QUARTER RESULTS
LAS VEGAS, NEVADA, July 31, 2003 — American Pacific Corporation (NASDAQ: APFC) today reported financial results for its fiscal 2003 third quarter, and provided information on the Company’s operations.
Operating Activities. The Company reported a decrease in sales of $4.7 million, or 25%, in the third quarter compared to the same quarter last year. Sales were $13.8 million during the three-month period ended June 30, 2003, compared to $18.5 million during the same period last year. Net income was $1.6 million, or $.22 diluted per share, compared to $2.0 million, or $0.27 diluted per share, during the third quarter of fiscal 2002.
For the first nine months of this year, sales decreased $3.3 million, or 6%, to $48.4 million from $51.7 million in the first nine months of fiscal 2002. Net income was $5.5 million or $0.74 diluted per share, compared to $4.6 million or $0.63 diluted per share, during the nine months ended June 30, 2002. Net income during the nine-month periods ended June 30, 2003 and 2002, includes charges before income taxes of $1.5 million and $0.1 million, respectively, for losses related to the extinguishment of debt.
Perchlorate chemical sales increased approximately 7% during the first nine months of fiscal 2003, compared to the same period of last year. The Company’s annual sales volumes of its top grade of ammonium perchlorate (“AP”) were approximately 20.2 million, 16.4 million, 12.6 million and 16.4 million pounds during the fiscal years ended September 30, 1999, 2000, 2001 and 2002, respectively. Prior to the tragic Space Shuttle Columbia disaster in January 2003, and based principally upon information the Company had received from its major customers, the Company estimated that annual demand for AP would range between 16.0 million and 20.0 million pounds over the next several years. The Company has not been instructed to curtail production and is producing and delivering product for the Space Shuttle program under its fiscal 2003 purchase order with Alliant Techsystems, Inc. Annual demand levels for AP over the next several years, however, may be significantly impacted by decisions regarding the Space Shuttle program. The Space Shuttle program has recently accounted for between 30% and 40% of the Company’s annual revenues. Any decision to limit or cancel Space Shuttle flights over an extended period of time would have a significant adverse effect on the Company’s results of operations and financial condition.
Sodium azide sales accounted for approximately 7% and 14% of revenues during the nine-month periods ended June 30, 2003 and 2002, respectively. Worldwide sodium azide demand has declined significantly during the last three fiscal years. Sodium azide sales volumes declined approximately 17% in both fiscal 2001 and 2000, and declined further by approximately 10% during fiscal 2002. Worldwide demand for sodium azide is substantially less than worldwide supply. Based principally upon market information received from airbag inflator manufacturers, the Company
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3770 HOWARD HUGHES PARKWAY· SUITE 300· LAS VEGAS, NV 89109
PHONE (702) 735-2200· FAX (702) 735-4876
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expects sodium azide use to continue to decline and that inflators using sodium azide will be phased out over some period of time.
Sales of Halotron® amounted to approximately 4% of revenues during the nine-month periods ended June 30, 2003 and 2002. Halotron® is designed to replace halon-based fire extinguishing systems. Accordingly, demand for Halotron® depends upon a number of factors including the willingness of consumers to switch from halon-based systems, as well as existing and potential governmental regulations.
Real estate sales amounted to approximately 3% and 9% of revenues during the nine-months periods ended June 30, 2003 and 2002, respectively. Real estate sales will decline substantially through fiscal 2004 and then cease as a result of the complete depletion of the Company’s Nevada properties that are currently held for sale.
Environmental protection equipment sales accounted for approximately 4% and 1% of revenues during the nine-month periods ended June 30, 2003 and 2002, respectively.
Operating expenses increased $0.6 million during the nine months ended June 30, 2003, compared to the corresponding period in 2002. Operating expenses during the nine-month period ended June 30, 2003 include approximately $1.4 million in costs associated with the issue of perchlorate chemicals found in the groundwater at and near the Company’s former Henderson site. A significant portion of these costs relate to the Company’s pilot remediation testing process to treat such groundwater using a biologicalin situ method. The Company has also experienced increased costs associated with insurance coverage. These increases were partially offset by decreased spending on corporate development activities.
Cash flows from operating activities were $3.8 million and $0.2 million during the nine months ended June 30, 2003 and 2002, respectively. The increase in cash flows resulted principally from an increase in operating income and a reduction in net working capital.
Financing and Investing Activities. On March 1, 2003 the Company redeemed all of its outstanding 9¼% Senior Unsecured Notes (the “Notes”). The redemption was at a price of 102.313% of the principal amount of the Notes, plus accrued interest to the date of redemption, or in the amount of approximately $43.4 million. The Company recognized a loss on the redemption of $1.5 million, including a non-cash charge of $0.6 million to write-off remaining debt issue costs. Assuming current interest rates, redemption of the Notes will save the Company approximately $2.0 million in annual after-tax net interest costs.
In December 2002, the Company entered into a revolving line of credit with a major bank. The maximum available credit under the line is the lesser of $10.0 million, or the sum of 85% of eligible receivables and 50% of qualifying inventory. No funds have been borrowed under the line of credit.
During the nine-month period ended June 30, 2003, the Company repurchased $1.7 million of its Common Stock. In the future the Company will repurchase its Common Stock and/or pay dividends in accordance with its previously announced Dividend and Stock Repurchase Program.
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AMERICAN PACIFIC CORPORATION
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Risk Factors/Forward Looking Statements
Except for the historical information contained herein, this News Release may contain Forward Looking Statements that are subject to risks and uncertainties, including the status of the Space Shuttle program; low or declining demand and/or downward pricing pressures for the Company’s products; governmental budget constraints and/or decreases affecting the U.S. Department of Defense or NASA which would cause a decrease in demand for AP; technological advances or new competitive products causing a reduction or elimination of demand for the Company’s products; success or failure of government programs or governmental customers; the Company’s ability to profitably integrate, manage and operate new businesses and/or investments competitively and cost effectively; the Company’s continued ability to generate cash flows sufficient to support its Dividend and Stock Repurchase Program; and the litigation and contingencies (including the costs and effects thereof), as well as other risks detailed from time to time in the Company’s SEC reports, including the most recent Form 10-K and 10-Q Reports (which are incorporated herein by reference). In addition, the operating results and cash flows for the nine-month period ended June 30, 2003, are not necessarily indicative of the results that will be achieved for the full fiscal year or for future periods.
American Pacific Corporation is a specialty chemical company that produces products used primarily in space flight and defense systems, automotive airbag safety systems, fire extinguishment systems and energetic materials. The Company also designs and manufactures environmental protection products and is involved in real estate development.
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AMERICAN PACIFIC CORPORATION
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AMERICAN PACIFIC CORPORATION
Condensed Consolidated Income Statements
(Unaudited)
| | | For the three months ended
June 30,
| | For the nine months ended June 30,
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| | | 2003
| | | 2002
| | 2003
| | 2002
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Sales and Operating Revenues | | $ | 13,809,000 | | | $ | 18,542,000 | | $ | 48,422,000 | | $ | 51,705,000 |
Cost of Sales | | | 8,307,000 | | | | 11,159,000 | | | 27,169,000 | | | 32,596,000 |
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Gross Profit | | | 5,502,000 | | | | 7,383,000 | | | 21,253,000 | | | 19,109,000 |
Operating Expenses | | | 3,289,000 | | | | 3,589,000 | | | 10,305,000 | | | 9,666,000 |
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Operating Income | | | 2,213,000 | | | | 3,794,000 | | | 10,948,000 | | | 9,443,000 |
Net Interest and Other | | | (175,000 | ) | | | 822,000 | | | 1,258,000 | | | 2,500,000 |
Loss on Debt Extinguishment | | | | | | | | | | 1,522,000 | | | 149,000 |
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Income Before Income Taxes | | | 2,388,000 | | | | 2,972,000 | | | 8,168,000 | | | 6,794,000 |
Income Taxes | | | 788,000 | | | | 981,000 | | | 2,695,000 | | | 2,242,000 |
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Net Income | | $ | 1,600,000 | | | $ | 1,991,000 | | $ | 5,473,000 | | $ | 4,552,000 |
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Basic Net Income Per Share | | $ | .22 | | | $ | .28 | | $ | .75 | | $ | .64 |
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Average Shares Outstanding | | | 7,255,000 | | | | 7,212,000 | | | 7,255,000 | | | 7,108,000 |
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Diluted Net Income Per Share | | $ | .22 | | | $ | .27 | | $ | .74 | | $ | .63 |
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Diluted Shares | | | 7,322,000 | | | | 7,467,000 | | | 7,358,000 | | | 7,310,000 |
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AMERICAN PACIFIC CORPORATION
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AMERICAN PACIFIC CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
| | | June 30, 2003
| | | September 30,
2002
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ASSETS | | | | | | | | |
Current Assets: | | | | | | | | |
Cash and Cash Equivalents | | $ | 14,337,000 | | | $ | 65,826,000 | |
Accounts and Notes Receivable | | | 12,506,000 | | | | 6,787,000 | |
Related Party Notes and Accrued Interest Receivable | | | 334,000 | | | | 380,000 | |
Inventories | | | 13,972,000 | | | | 13,989,000 | |
Prepaid Expenses and Other Assets | | | 1,128,000 | | | | 841,000 | |
Deferred Income Taxes | | | 400,000 | | | | 435,000 | |
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Total Current Assets | | | 42,677,000 | | | | 88,258,000 | |
Property, Plant and Equipment, Net | | | 9,375,000 | | | | 7,522,000 | |
Intangible Assets, Net | | | 18,092,000 | | | | 21,017,000 | |
Investment in and Advances to Joint Venture | | | 10,760,000 | | | | | |
Deferred Income Taxes | | | 9,960,000 | | | | 9,693,000 | |
Other Assets, Net | | | 4,036,000 | | | | 5,481,000 | |
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TOTAL ASSETS | | $ | 94,900,000 | | | $ | 131,971,000 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
Current Liabilities: | | | | | | | | |
Accounts Payable and Accrued Liabilities | | $ | 4,906,000 | | | $ | 6,079,000 | |
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Total Current Liabilities | | | 4,906,000 | | | | 6,079,000 | |
Long-Term Debt | | | | | | | 40,600,000 | |
Other Long-Term Liabilities | | | 5,245,000 | | | | 6,086,000 | |
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TOTAL LIABILITIES | | | 10,151,000 | | | | 52,765,000 | |
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Commitments and Contingencies | | | | | | | | |
Warrants to Purchase Common Stock | | | 3,569,000 | | | | 3,569,000 | |
Shareholders’ Equity: | | | | | | | | |
Common Stock | | | 898,000 | | | | 881,000 | |
Capital in Excess of Par Value | | | 83,377,000 | | | | 82,249,000 | |
Retained Earnings | | | 12,293,000 | | | | 6,820,000 | |
Treasury Stock | | | (14,135,000 | ) | | | (12,483,000 | ) |
Accumulated Other Comprehensive Loss | | | (1,253,000 | ) | | | (1,830,000 | ) |
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Total Shareholders’ Equity | | | 81,180,000 | | | | 75,637,000 | |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 94,900,000 | | | $ | 131,971,000 | |
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AMERICAN PACIFIC CORPORATION
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AMERICAN PACIFIC CORPORATION
Condensed Consolidated Cash Flow Statements
(Unaudited)
| | | For the three months ended June 30,
| | | For the nine months ended June 30,
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| | | 2003
| | | 2002
| | | 2003
| | | 2002
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Cash Flows For Operating Activities | | $ | (5,040,000 | ) | | $ | 2,640,000 | | | $ | 3,832,000 | | | $ | 231,000 | |
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Cash Flows For Investing Activities: | | | | | | | | | | | | | | | | |
Capital Expenditures | | | (748,000 | ) | | | (659,000 | ) | | | (2,765,000 | ) | | | (1,353,000 | ) |
Investment in and Advances to Joint Venture | | | 123,000 | | | | | | | | (10,510,000 | ) | | | | |
Real Estate Equity Returns | | | | | | | | | | | | | | | 1,385,000 | |
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Net Cash For Investing Activities | | | (625,000 | ) | | | (659,000 | ) | | | (13,275,000 | ) | | | 32,000 | |
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Cash Flows For Financing Activities: | | | | | | | | | | | | | | | | |
Debt Related Payments | | | | | | | | | | | (41,539,000 | ) | | | (3,647,000 | ) |
Issuance of Common Stock | | | | | | | 713,000 | | | | 1,145,000 | | | | 1,903,000 | |
Treasury Stock Acquired | | | | | | | (83,000 | ) | | | (1,652,000 | ) | | | (313,000 | ) |
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Net Cash For Financing Activities | | | | | | | 630,000 | | | | (42,046,000 | ) | | | (2,057,000 | ) |
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Net Change in Cash and Cash Equivalents | | | (5,665,000 | ) | | | 2,611,000 | | | | (51,489,000 | ) | | | (1,794,000 | ) |
Cash and Cash Equivalents, Beginning of Period | | | 20,002,000 | | | | 47,066,000 | | | | 65,826,000 | | | | 51,471,000 | |
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Cash and Cash Equivalents, End of Period | | $ | 14,337,000 | | | $ | 49,677,000 | | | $ | 14,337,000 | | | $ | 49,677,000 | |
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Supplemental Disclosure of Cash Flow Information: | | | | | | | | | | | | | | | | |
Interest Paid | | $ | | | | $ | | | | $ | 1,875,000 | | | $ | 1,875,000 | |
Income Taxes Paid | | $ | 1,000,000 | | | $ | 500,000 | | | $ | 3,300,000 | | | $ | 1,000,000 | |
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AMERICAN PACIFIC CORPORATION
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