EXHIBIT 99.1
AMERICAN PACIFIC CORPORATION |
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Contact: Seth Van Voorhees – (702) 735-2200 ext. 166 |
E-mail: InvestorRelations@apfc.com Website: www. apfc.com |
AMERICAN PACIFIC REPORTS SECOND QUARTER RESULTS
LAS VEGAS, NEVADA, May 12, 2005 -- American Pacific Corporation (NASDAQ: APFC) today reported financial results for its fiscal 2005 second quarter ended March 31, 2005.
Operating Activities
For the three months ended March 31, 2005, sales decreased by $0.3 million, or 1% to $18.5 million from $18.8 million in the corresponding period of the prior year. Net income/(loss) was ($303,000), or ($0.04) diluted per share during the three month period ending March 31 as compared to $197,000, or $0.03 diluted per share, in the comparable period in the prior year.
The decrease in sales during the three month period ending March 31 was due to a decrease in Specialty Chemicals segment sales of $4.6 million in comparison to the comparable period in the prior year. The decline in Specialty Chemicals segment sales volume during the three month period ending March 31 was principally due to lower levels of perchlorate sales in comparison to the comparable period in the prior year.
In comparison to the comparable period in the prior year, decline in Specialty Chemicals segment sales was substantially offset by the $2.1 million of sales from (i) our recently acquired In-Space Propulsion business ("ISP" business) whose financial results are reported in our new Aerospace Equipment segment and (ii) the $2.2 million increase in Other Businesses segment sales. The increased sales volume of our Other Businesses segment was principally due to a higher level of real estate activity completed during the period in comparison to the comparable period in the prior year.
For the six months ended March 31, 2005, sales increased by $13.2 million, or 56% to $36.8 million from $23.6 million in comparison to the comparable period in the prior year. Net income/(loss) was $725,000, or $0.10 diluted per share during the six month period ending March 31 as compared to ($2,007,000), or ($0.28) diluted per share, in the comparable period in the prior year.
In comparison to the comparable period in the prior year, the increase in sales during the six month period ending March 31 was due to (i) an increase in Specialty Chemicals and Other Businesses segment sales of $4.4 million and $2.9 million respectively, and (ii) $5.9 million of sales from our ISP business whose financial results are reported in our new Aerospace Equipment segment.
The increase in Specialty Chemicals segment sales during the six month period ending March 31 resulted principally from higher sales volume of perchlorate chemicals and the inclusion of our packaged explosives sales in our financial results in fiscal 2005 in comparison to the comparable period in the prior year. The increased sales volume in our Other Business segment was principally due to a higher level of real estate activity completed during the period in comparison to the comparable period in the prior year.
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Cost of Sales:
Cost of sales increased $0.6 million, or 5%, in the three months ended March 31, 2005, to $12.0 million from $11.4 million in the comparable period in the prior year. As a percentage of sales, cost of sales was 65% in the second quarter of fiscal 2005, compared to 61% in the comparable period in the prior year.
The increase in cost of sales during in the three months ended March 31, 2005 versus the corresponding period ended March 31, 2004, was principally a result of higher cost of sales from our Aerospace Equipment and Other Businesses segments, which were partially offset by lower cost of sales from our Specialty Chemicals segment.
Cost of sales increased $8.8 million, or 56%, in the six months ended March 31, 2005, to $24.5 million from $15.7 million in the corresponding period of the prior year. As a percentage of sales, cost of sales was 67% in the first six months of fiscal 2005 and fiscal 2004.
The increase in cost of sales during in the six months ended March 31, 2005 versus the corresponding period ended March 31, 2004, was principally a result of higher Specialty Chemicals and Other Businesses segment sales respectively. In addition, our recently acquired ISP business also increased our cost of sales for the six months ended March 31, 2005.
Operating Expenses:
Operating (selling, general and administrative) expenses increased $1.0 million, or 17%, in the three months ended March 31, 2005, to $7.1 million from $6.1 million in the corresponding period of 2004. Operating expenses increased $3.9 million, or 40%, in the six months ended March 31, 2005, to $13.8 million from $9.9 million in the corresponding period of 2004. The increase in operating expenses for both the three month and six month periods ending March 31 was due primarily to: (i) the consolidation of our packaged explosive joint venture as of the third quarter of fiscal 2004, (ii) the addition of the ISP business into the newly formed Aerospace Equipment segment on October 1, 2004, (iii) an increase in environmental remediation expenditures, and (iv) corporate development costs.
Interest Income/Interest and Other Expense:
Interest income decreased to $0.1 million in the three months ended March 31, 2005, from $0.3 million in the corresponding period of the prior year. Interest income decreased to $0.3 million in the six months ended March 31, 2005, from $0.5 million in the corresponding period of the prior year. The decline in interest income for both the three month and six month periods ending March 31 was primarily as a result of the elimination of interest and other expense from the consolidation of our packaged explosive joint venture.
Interest and other expense decreased to $42,000 in the three months ended March 31, 2005, from $0.1 million in the corresponding period of the prior year. Interest and other expense decreased to $0.1 million in the six months ended March 31, 2005, from $0.4 million in the corresponding period of the prior year. The decline in interest and other expense for both the three month and six month periods ending March 31 was primarily as a result of the elimination of interest and other expense from the consolidation of our packaged explosive joint venture.
Liquidity and Capital Resources
Cash flows provided by operating activities were $9.8 million and $7.1 million during the six months ended March 31, 2005 and 2004, respectively. The increase in cash flows from operating activities was primarily due to higher sales volumes. We believe that our cash flows from operations and existing cash balances will be adequate for the foreseeable future to satisfy the needs of our operations. However, the resolution of litigation and contingencies, and the timing, pricing and magnitude of orders for our products may have an effect on the use and availability of cash.
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Capital expenditures were $1.1 million and $0.8 million during the six months ended March 31, 2005 and 2004, respectively. Capital expenditures relate principally to specialty chemicals segment capital improvement projects. Capital expenditures are expected to be funded from existing cash balances and operating cash flows.
We did not repurchase any of our Common Stock during the six-month period ended March 31, 2005. As a result of the exercise of stock options, we issued 5,000 shares, for an aggregate price of $24,000, of our Common Stock during the six-month period ended March 31, 2005.
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 Grade I 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 three-month and twelve-month periods ended September 30, 2004, are not necessarily indicative of the results that will be achieved for future periods (see above).
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 has been involved in real estate development, although these real estate activities are winding down.
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AMERICAN PACIFIC CORPORATION
Condensed Consolidated Statements of Operations
For the Three Months ended March 31,
(unaudited)
| | For the three months ended
March 31, | | For the six months ended
March 31, | |
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| | 2005 | | 2004 | | 2005 | | 2004 | |
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Sales and Operating Revenues | | $ | 18,513,000 | | $ | 18,787,000 | | $ | 36,767,000 | | $ | 23,581,000 | |
Cost of Sales | | | 11,986,000 | | | 11,398,000 | | | 24,531,000 | | | 15,723,000 | |
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Gross Profit | | | 6,527,000 | | | 7,389,000 | | | 12,236,000 | | | 7,858,000 | |
Operating Expenses | | | 7,113,000 | | | 6,102,000 | | | 13,808,000 | | | 9,866,000 | |
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Operating Income (Loss) | | | (586,000 | ) | | 1,287,000 | | | (1,572,000 | ) | | (2,008,000 | ) |
Interest Income | | | 148,000 | | | 309,000 | | | 257,000 | | | 553,000 | |
Interest and Other Expense | | | 42,000 | | | 110,000 | | | 108,000 | | | 450,000 | |
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Income (Loss) Before Income Taxes, Extraordinary Item and Cumulative Effect | | | (480,000 | ) | | 1,486,000 | | | (1,423,000 | ) | | (1,905,000 | ) |
Income Taxes (Benefit) | | | (177,000 | ) | | 520,000 | | | (526,000 | ) | | (667,000 | ) |
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Income (Loss) Before Extraordinary Item and Cumulative Effect | | | (303,000 | ) | | 966,000 | | | (897,000 | ) | | (1,238,000 | ) |
Extraordinary Item, Net | | | | | | | | | 1,622,000 | | | | |
Cumulative Effect of Change in Accounting Principle | | | | | | 769,000 | | | | | | 769,000 | |
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Net Income (Loss) | | $ | (303,000 | ) | $ | 197,000 | | $ | 725,000 | | $ | (2,007,000 | ) |
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Basic Income (Loss) Before Extraordinary Item and Cumulative Effect Per Share | | $ | (0.04 | ) | $ | 0.13 | | $ | (0.12 | ) | $ | (0.17 | ) |
Basic Net Income (Loss) Per Share | | $ | (0.04 | ) | $ | 0.03 | | $ | 0.10 | | $ | (0.28 | ) |
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Average Shares Outstanding | | | 7,292,000 | | | 7,285,000 | | | 7,292,000 | | | 7,270,000 | |
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Diluted Net Income (Loss) Before Extraordinary Item and Cumulative Effect Per Share | | $ | (0.04 | ) | $ | 0.13 | | $ | (0.12 | ) | $ | (0.17 | ) |
Diluted Net Income (Loss) Per Share | | $ | (0.04 | ) | $ | 0.03 | | $ | 0.10 | | $ | (0.28 | ) |
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Diluted Shares | | | 7,312,000 | | | 7,363,000 | | | 7,313,000 | | | 7,270,000 | |
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AMERICAN PACIFIC CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)
| | March 31,
2005 | | September 30,
2004 | |
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ASSETS | | | | | | | |
Current Assets: | | | | | | | |
Cash and Cash Equivalents | | $ | 28,446,000 | | $ | 23,777,000 | |
Accounts and Notes Receivable | | | 12,434,000 | | | 15,963,000 | |
Related Party Notes and Accrued Interest Receivable | | | 274,000 | | | 268,000 | |
Inventories | | | 17,200,000 | | | 13,827,000 | |
Prepaid Expenses and Other Assets | | | 1,505,000 | | | 666,000 | |
Deferred Income Taxes | | | 526,000 | | | 320,000 | |
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Total Current Assets | | | 60,385,000 | | | 54,821,000 | |
Property, Plant and Equipment, Net | | | 16,517,000 | | | 16,573,000 | |
Intangible Assets, Net | | | 11,813,000 | | | 13,679,000 | |
Investment in Joint Venture | | | 22,000 | | | 227,000 | |
Deferred Income Taxes | | | 10,776,000 | | | 11,585,000 | |
Other Assets, Net | | | 3,421,000 | | | 3,743,000 | |
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TOTAL ASSETS | | $ | 102,934,000 | | $ | 100,628,000 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | |
Current Liabilities: | | | | | | | |
Accounts Payable | | $ | 5,023,000 | | $ | 4,481,000 | |
Accrued Liabilities | | | 6,166,000 | | | 5,649,000 | |
Other Long-Term Liabilities | | | 5,938,000 | | | 5,698,000 | |
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TOTAL LIABILITIES | | | 17,127,000 | | | 15,828,000 | |
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Commitments and Contingencies | | | | | | | |
Shareholders’ Equity: | | | | | | | |
Common Stock | | | 932,000 | | | 932,000 | |
Capital in Excess of Par Value | | | 86,171,000 | | | 86,148,000 | |
Retained Earnings | | | 16,643,000 | | | 15,897,000 | |
Treasury Stock | | | (16,982,000 | ) | | (16,982,000 | ) |
Accumulated Other Comprehensive Loss | | | (957,000 | ) | | (1,195,000 | ) |
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Total Shareholders’ Equity | | | 85,807,000 | | | 84,800,000 | |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 102,934,000 | | $ | 100,628,000 | |
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AMERICAN PACIFIC CORPORATION
Condensed Consolidated Cash Flow Statements
For the Three Months ended March 31,
(unaudited)
| | For the six months
ended March 31, | |
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| | 2005 | | 2004 | |
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Cash Flows From Operating Activities | | $ | 9,806,000 | | $ | 7,055,000 | |
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Cash Flows For Investing Activities: | | | | | | | |
Capital Expenditures | | | (1,147,000 | ) | | (788,000 | ) |
Asset Purchase | | | (4,468,000 | ) | | | |
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Net Cash Used in Investing Activities | | | (5,615,000 | ) | | (788,000 | ) |
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Cash Flows For Financing Activities: | | | | | | | |
Dividends | | | | | | (3,055,000 | ) |
Equity Purchased by Minority Shareholders | | | 125,000 | | | | |
Proceeds from Issuance of Debt | | | 300,000 | | | | |
Issuance of Common Stock | | | 24,000 | | | 2,290,000 | |
Treasury Stock Acquired | | | | | | (2,752,000 | ) |
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Net Cash Provided by (Used in) Financing Activities | | | 449,000 | | | (3,517,000 | ) |
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Effect of foreign currency exchange rate changes on cash | | | 29,000 | | | | |
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Net Change in Cash and Cash Equivalents | | | 4,669,000 | | | 2,750,000 | |
Cash and Cash Equivalents, Beginning of Period | | | 23,777,000 | | | 27,140,000 | |
Cash and Cash Equivalents, End of Period | | $ | 28,446,000 | | $ | 29,890,000 | |
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