American Pacific Reports the Adoption of Dividend and Stock Repurchase Program and First Quarter Results
PR NEWSWIRE - January 29, 2003 15:01
LAS VEGAS, Jan 29, 2003 /PRNewswire-FirstCall via Comtex/ -- American Pacific Corporation (Nasdaq: APFC) today reported the adoption of the Company's Dividend and Stock Repurchase Program, reported financial results for its fiscal 2003 first quarter, and provided information on the Company's operations.
Dividend and Stock Repurchase Program. The Company's Board of Directors has approved a Dividend and Stock Repurchase Program (the "Program"). The Program is designed to allocate a portion of the Company's annual free cash flows (as calculated) for the purposes of paying cash dividends and repurchasing Common Stock. The amount available for these purposes each fiscal year will equal 25% of the Company's annual cash flows from operating activities less annual capital expenditures, plus the amount of cash received from the issuance of the Company's Common Stock resulting from the exercise of stock options. The total amount spent on the repurchase of Common Stock (if any) during the fiscal year will be subtracted from the total amount available under the Program, and the resultant amount will be paid as an annual cash dividend.
Any dividends under the Program will likely be declared and paid in November following the Company's September 30 fiscal year end and completion of the Company's annual audit. Had the Program been in place during fiscal 2002, approximately $5.8 million would have been available for dividends and the repurchase of Common Stock. Approximately $0.3 million was spent during the fiscal year 2002 on the repurchase of Common Stock. The remaining $5.5 million, or approximately $0.76 per share, would have been declared as a cash dividend in November 2002.
The Program is being implemented on a prospective basis (based initially on current fiscal year 2003 results) given the fact that, during the six-month period ending March 31, 2003, the Company will have used cash in the amount of $54.1 million to redeem all of its outstanding Unsecured Senior Notes (the "Notes") and for its investment in Energetic Systems Inc., LLC. The Company believes the Program will permit the continued pursuit of product development and enhancement programs and other activities designed to diversify the Company's mix of products and cash generating activities, while at the same time returning value to shareholders in the form of cash dividends or the repurchase of Common Stock. Consistent with the foregoing, the Company may continue to make purchases of its Common Stock from time to time in open market or private transactions (although not obligated to do so), subject to market conditions and periodic reviews of its financial position.
Operating Activities. The Company reported an increase in sales of $2.0 million, or 15%, in the first quarter compared to the same quarter last year. Sales were $15.1 million during the three-month period ended December 31, 2002, compared to $13.1 million during the same period last year. Net income was $1.2 million, or $.16 diluted per share, compared to a net loss of $5,000, or $0.00 diluted per share, during the first quarter of fiscal 2002.
Perchlorate chemical sales increased approximately 98% in the first quarter of fiscal 2003, compared to the first quarter of fiscal 2002. The Company's annual sales volumes for 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. Based principally upon information received from major customers, the Company estimates that annual AP demand will be between 16.0 million and 20.0 million pounds over the next five years. However, demand for AP is program specific and dependent upon, among other things, governmental appropriations. The Company has no ability to influence the demand for AP.
Sodium azide sales accounted for approximately 5% and 21% of revenues during the three-month periods ended December 31, 2002 and 2001, 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 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(R) amounted to approximately 4% and 6% of revenues during the three-month periods ended December 31, 2002 and 2001, respectively. Halotron(R) is designed to replace halon-based fire extinguishing systems. Accordingly, demand for Halotron(R) 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.
The Company had no real estate sales in the first quarter of fiscal 2003. Real estate sales were $3.0 million during the three-month period ended December 31, 2001. 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 9% and 2% of revenues during the three-month periods ended December 31, 2002 and 2001, respectively.
Operating expenses increased $0.7 million during the three months ended December 31, 2002, compared to the corresponding period in 2001. Operating expenses during the three-month periods ended December 31, 2002 and 2001, include approximately $0.5 million and $0.1 million, respectively, in costs associated with the investigation of the trace amounts of perchlorate chemicals found in Lake Mead. Most of the increase in the first quarter of fiscal 2003 relates to the Company's pilot remediation testing process to treat groundwater containing perchlorate at and near the Company's former Henderson site using a biological in situ method. The remaining increase in operating expenses relate principally to costs associated with product development activities.
Earnings before interest, taxes, depreciation, and amortization ("EBITDA") was approximately $4.0 million during the first quarter of both this year and last year.
Financing and Investing Activities. In December 2002, the Company advised the Trustee of its Notes that the Company had elected to redeem all of the outstanding Notes on March 1, 2003. The Trustee mailed a Notice of Redemption to each holder of the Notes in January 2003.
The redemption will be at a redemption price of 102.313% of the principal amount of the Notes, plus accrued interest to the date of redemption, as a result of which the total expected cost of redemption of the Notes, including interest payable, will be approximately $43.4 million. In January 2003, this amount was deposited with the Trustee. The Company will recognize 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 draws have been made under the line of credit.
During the three-month period ended December 31, 2002, the Company repurchased $1.6 million of its Common Stock. As discussed above, in the future the Company will repurchase its Common Stock and/or pay dividends in accordance with the Program. |
