American Pacific Reports Fourth Quarter and Year-End Results
7 December 1999
American Pacific Reports Fourth Quarter and Year-End Results
LAS VEGAS, Dec. 7 -- American Pacific Corporation
today reported financial results for its fiscal 1999 fourth
quarter and the fiscal year ended September 30, 1999, and provided information
on the Company's operations.
Financial Results. The Company reported an increase in sales of
$4.6 million, or 33%, in the fourth quarter compared to last year's fourth
quarter. Sales were $18.4 million in the fourth quarter compared to sales of
$13.8 million during the same quarter in fiscal 1998. Net income before
extraordinary losses was $3.9 million or $0.48 diluted per share, compared to
$0.4 million or $0.05 diluted per share during the fourth quarter of fiscal
1998. After an extraordinary loss on debt extinguishment last year, net
income during the fourth quarter of fiscal 1998 was $0.2 million or
$0.03 diluted per share.
For the fiscal year, sales increased 20.5 million, or 39%, to
$72.8 million from $52.3 million in 1998. Net income before extraordinary
losses was $11.6 million or $1.41 diluted per share, compared to $3.2 million
or $0.38 diluted per share last year. After extraordinary losses, net income
during fiscal 1999 was $11.4 million or $1.39 diluted per share, compared to a
net loss of $2.0 million or $0.24 diluted per share last fiscal year.
In March 1998, the Company sold Senior Unsecured Notes (the "Notes") in
the principal amount of $75.0 million, acquired certain assets from Kerr-McGee
Chemical Corporation ("Kerr-McGee") (see below) for a cash purchase price of
$39.0 million and paid $28.2 million to repurchase the remaining $25.0 million
principal amount outstanding of certain indebtedness (the "Azide Notes"). In
connection with the Azide Notes repurchase, the Company recognized an
extraordinary loss on debt extinguishment of approximately $5.0 million. In
June 1999 and September 1998, the Company repurchased and retired $3.0 million
and $5.0 million, respectively, in principal amount of Notes. The Company
incurred extraordinary losses on each of these transactions of approximately
$0.2 million principally as a result of writing off costs associated with the
issuance of the Notes.
Operating expenses were $2.5 million in the fourth quarters of both this
year and last year. For the fiscal year, operating expenses were
$10.0 million compared to $9.2 million last year. Operating expenses in each
of fiscals 1999 and 1998 include approximately $1.0 million in costs related
to the investigation and evaluation of trace amounts of perchlorate chemicals
found in Lake Mead (see Contingencies below).
Net interest expense was $1.2 million during the three-month period ended
September 30, 1999, compared to $1.5 million during the same period last year.
Net interest expense was $5.4 million this fiscal year compared to
$4.4 million last year. The increase in net interest expense for the year was
attributable to the issuance of the Notes in March, 1998.
Earnings before interest, taxes, depreciation, and amortization ("EBITDA")
was approximately $7.1 million during the fourth quarter compared to EBITDA of
approximately $3.6 million during the fourth quarter of last year. EBITDA was
approximately $26.1 million in fiscal 1999 compared to $13.2 million last
year.
Perchlorate Chemicals. Perchlorate chemical sales were $48.7 million
during the fiscal year ended September 30, 1999, compared to $35.0 million
last year. On March 12, 1998, the Company consummated an acquisition
(the "Acquisition") of certain intangible assets from Kerr-McGee related to
its production of ammonium perchlorate ("AP") for a purchase price of
$39 million. Kerr-McGee agreed to cease the production and sale of AP,
although its production facilities may continue to be used by Kerr-McGee for
production of AP under certain limited circumstances. The increase in
perchlorate chemical sales in fiscal 1999 was primarily attributable to the
realization of a full year's sales volume resulting from the Acquisition.
Azide Chemicals. Sodium azide sales were $14.3 million during fiscal 1999
compared to $10.9 million in fiscal 1998. In fiscal 1999, the Company
benefited from strong demand from its principal customer for this product and
the settlement of a labor strike initiated in the summer of 1998 at certain
major automotive production facilities.
Fire Suppression Chemicals. Halotron(TM) sales were $1.5 million in
fiscal 1999 compared to $1.7 million in fiscal 1998. Although sales of the
Halotron(TM) product line have been relatively flat for the last three years,
the Company continues to increase the number of large OEM's that offer a line
of Halotron(TM) I portable fire extinguishers.
Real Estate. Real estate and related sales amounted to $6.2 million in
fiscal 1999 compared to $2.5 million in fiscal 1998. In addition, during
fiscal 1999, the Company received approximately $5.9 million in cash from its
residential joint venture, Gibson Ranch. At September 30, 1999, the Company
had approximately 80 acres of commercial/industrial land available for sale.
The Company's goal is to monetize its real estate assets as quickly and
efficiently as possible.
Environmental Protection Products. Environmental protection equipment
sales were approximately $2.1 million during both fiscal 1999 and 1998. As of
November 30, 1999, this segment had a backlog of approximately $2.6 million.
Treasury Stock. During the year ended September 30, 1999, pursuant to its
repurchase program, the Company repurchased approximately 428,700 shares of
its Common Stock for a total cost of approximately $3.5 million. The Company
has not determined how many additional shares will be repurchased or the time
period during which the purchases will be made. The Company is limited in the
number of shares it is permitted to purchase by the terms of the Indenture
governing the Notes.
Contingencies. Trace amounts of perchlorate chemicals have been found in
Lake Mead. Clark County, Nevada, where Lake Mead is situated, is the former
location of Kerr-McGee's AP operations, and was the location of the Company's
AP operations until May 1988. The Company is cooperating with State and local
agencies, and with Kerr-McGee and other interested firms, in the investigation
and evaluation of the source or sources of these trace amounts, possible
environmental impacts, and potential remediation methods. Until these
investigations and evaluations have reached definitive conclusions, it will
not be possible for the Company to determine the extent to which, if at all,
the Company may be called upon to contribute to or assist with future
remediation efforts, or the financial impacts, if any, of such cooperation,
contributions or assistance.
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 potential 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,
failure to satisfactorily integrate the Acquisition of the AP business of
Kerr-McGee, success or failure of government programs or governmental
customers, 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. In
addition, the operating results and cash flows for the three-month and
twelve-month periods ended September 30, 1999 are not necessarily indicative
of the results that will be achieved in 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 and fire extinguishment systems. The Company also designs and
manufactures environmental protection products and is involved in real estate
development.
AMERICAN PACIFIC CORPORATION
Condensed Consolidated Statements of Operations
For the three-months For the year ended
ended September 30, September 30,
1999 1998 1999 1998
Sales and Operating
Revenues $18,430,000 $13,816,000 $72,834,000 $52,339,000
Cost of Sales 10,847,000 9,510,000 45,834,000 35,792,000
Gross Profit 7,583,000 4,306,000 27,000,000 16,547,000
Operating Expenses 2,519,000 2,455,000 10,024,000 9,246,000
Operating Income 5,064,000 1,851,000 16,976,000 7,301,000
Equity in Earnings of
Real Estate Venture -- -- -- 300,000
Net Interest
and Other Expense 1,172,000 1,463,000 5,363,000 4,440,000
Income Before Income
Taxes 3,892,000 388,000 11,613,000 3,161,000
Income Taxes
Net Income Before
Extraordinary Losses 3,892,000 388,000 11,613,000 3,161,000
Extraordinary Loss-Debt
Extinguishments -- 167,000 174,000 5,172,000
Net Income (Loss) $3,892,000 $221,000 $11,439,000 $(2,011,000)
Basic Net Income
(Loss) Per Share:
Income Before
Extraordinary Loss $.48 $.05 $1.43 $.39
Extraordinary Loss $ -- $(.02) $(.02) $(.63)
Net Income (Loss) $.48 $.03 $1.41 $(.24)
Average Shares
Outstanding 7,978,000 8,238,000 8,111,000 8,198,000
Diluted Net Income
(Loss) Per Share:
Income Before
Extraordinary Loss $.48 $.05 $1.41 $.38
Extraordinary Loss $ -- $(.02) $(.02) $(.62)
Net Income (Loss) $.48 $.03 $1.39 $(.24)
Diluted Shares 8,136,000 8,447,000 8,236,000 8,321,000
AMERICAN PACIFIC CORPORATION
Condensed Consolidated Balance Sheets
September 30, September 30,
1999 1998
ASSETS
Current Assets:
Cash and Cash Equivalents $40,434,000 $20,389,000
Accounts and Notes Receivable 8,859,000 8,927,000
Related Party Notes Receivable 447,000 536,000
Inventories 9,577,000 13,730,000
Prepaid Expenses and Other
Assets 680,000 839,000
Restricted Cash 1,195,000 1,176,000
Total Current Assets 61,192,000 45,597,000
Property, Plant and Equipment,
Net 17,254,000 19,529,000
Intangible Assets 34,210,000 38,252,000
Real Estate Equity Investments 11,237,000 17,112,000
Development Property 6,440,000 7,036,000
Debt Issue Costs, Net 2,547,000 3,156,000
Other Assets 2,000 77,000
TOTAL ASSETS $132,882,000 $130,759,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued
Liabilities $6,909,000 $9,635,000
Current Portion of Long-Term
Debt 1,195,000 1,176,000
Total Current Liabilities 8,104,000 10,811,000
Long-Term Payables 2,005,000 2,350,000
Long-Term Debt 67,000,000 70,000,000
TOTAL LIABILITIES 77,109,000 83,161,000
Commitments and Contingencies
Warrants to Purchase Common Stock 3,569,000 3,569,000
Shareholders' Equity:
Common Stock 847,000 842,000
Capital in Excess of Par Value 79,757,000 79,488,000
Accumulated Deficit (23,279,000) (34,718,000)
Treasury Stock (5,034,000) (1,486,000)
Note Receivable from the Sale
of Stock (87,000) (97,000)
TOTAL SHAREHOLDERS' EQUITY 52,204,000 44,029,000
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $132,882,000 $130,759,000
AMERICAN PACIFIC CORPORATION
Condensed Consolidated Cash Flow Statements
For the year ended September 30,
1999 1998
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) $11,439,000 $(2,011,000)
Adjustments to reconcile net
income (loss) to net cash from
operating activities:
Depreciation and amortization 7,684,000 5,322,000
Basis in development property
sold 1,913,000 822,000
Development property additions (96,000) (496,000)
Equity in real estate venture -- (300,000)
Cash received on equity in real
estate venture -- 300,000
Extraordinary debt charges 174,000 5,172,000
Changes in assets and liabilities:
Accounts and notes receivable 167,000 (3,275,000)
Inventories 4,153,000 (2,614,000)
Restricted cash -- 2,404,000
Prepaid expenses and other 234,000 188,000
Accounts payable and accrued
liabilities (3,071,000) 2,148,000
Total adjustments 11,158,000 9,671,000
Net cash from operating
activities 22,597,000 7,660,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,100,000) (2,766,000)
Payment for acquisition
intangible -- (39,000,000)
Return of capital on real estate
equity advances 5,875,000 3,135,000
Net cash from investing
activities 3,775,000 (38,631,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt related payments (3,053,000) (39,416,000)
Issuance of common stock 274,000 940,000
Treasury stock acquired (3,548,000) (451,000)
Issuance of notes -- 75,000,000
Debt issue costs -- (3,594,000)
Net cash from financing
activities (6,327,000) 32,479,000
NET INCREASE IN CASH AND CASH
EQUIVALENTS 20,045,000 1,508,000
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 20,389,000 18,881,000
CASH AND CASH EQUIVALENTS,
END OF YEAR $40,434,000 $20,389,000