SEC Company Response from AMERICAN PACIFIC CORP (CIK 0000350832) — Apr 8, 2005
AMERICAN PACIFIC CORP (CIK 0000350832)
Date: April 8, 2005 · CIK: 0000350832 · Accession: 0000950149-05-000220
AI Filing Summary & Sentiment
Letter
Via EDGAR AND OVERNIGHT MAIL Division of Corporation Finance United States Securities and Exchange Commission Re: Form 10-K for the fiscal year ended September 30, 2004 Form 10-Q for the period ended December 31, 2004 File No. 1-8137
Dear Mr. Watkinson:
As we discussed yesterday, a page was inadvertently omitted from Supplement Number 6 contained in supplemental information filed on behalf of America Pacific Corporation with our letter to you dated March 25, 2005. We have filed a corrected version of the supplemental information under cover of this letter which includes the omitted page.
Should you have any further questions or comments regarding the above-referenced filing, please feel free to contact the undersigned at (702) 699-4166 or our counsel, John Campbell of Morrison & Foerster LLP at (415) 268-7197 or Lior Zorea of Morrison & Foerster LLP at (415) 268-6832. Thank you for your assistance.
Very truly yours,
/s/ Seth L. Van Voorhees
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[LETTERHEAD OF AMERICAN
PACIFIC CORPORATION]
April 7, 2005
Via EDGAR AND OVERNIGHT MAIL
Scott Watkinson
Division of Corporation Finance
United States Securities and Exchange Commission
Mail Stop 0304
450 Fifth Street, N.W.
Washington, D.C. 20549-0510
Re:
Form 10-K for the fiscal year ended September 30, 2004
Form 10-Q for the period ended December 31, 2004
File No. 1-8137
Dear Mr. Watkinson:
As we discussed yesterday, a page was inadvertently omitted from Supplement Number 6 contained
in supplemental information filed on behalf of America Pacific Corporation with our letter to you
dated March 25, 2005. We have filed a corrected version of the supplemental information under
cover of this letter which includes the omitted page.
Should you have any further questions or comments regarding the above-referenced filing,
please feel free to contact the undersigned at (702) 699-4166 or our counsel, John Campbell of
Morrison & Foerster LLP at (415) 268-7197 or Lior Zorea of Morrison & Foerster LLP at (415)
268-6832. Thank you for your assistance.
Very truly yours,
/s/ Seth L. Van Voorhees
Seth L. Van Voorhees,
Vice President, Treasurer, Chief Financial
Officer and Secretary
Supplements to SEC Response Letter
SUPPLEMENT 1
Item 6. Selected Financial Data
FIVE-YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA FOR THE YEARS ENDED SEPTEMBER 30,
2004 (1)
2003
2002
2001
2000
(in thousands except per share amounts)
STATEMENT OF OPERATIONS DATA:
Sales and operating revenues
$
59,489
$
68,866
$
73,588
$
63,089
$
67,369
Cost of sales
40,246
37,349
43,529
38,186
44,279
Gross profit
19,243
31,517
30,059
24,903
23,090
Operating expenses
21,493
14,480
13,776
10,050
10,236
Impairment charge
9,084
Operating (loss) income
(2,250
)
17,037
16,283
14,853
3,770
Interest income
1,102
912
945
1,877
1,987
Interest expense
532
1,696
4,180
4,467
5,568
Other expense (income)
450
760
Loss on Debt Extinguishments
1,522
149
1,594
Income (loss) before cumulative effect
(2,130
)
13,971
12,899
12,263
(1,405
)
Income taxes
(2,502
)
4,611
4,257
4,537
(15,136
)
Cumulative effect
769
Net (loss) income
(397
)
9,360
8,642
7,726
13,731
Basic net income per share
(0.05
)
1.29
1.21
1.10
1.88
Diluted net income per share
$
(0.05
)
$
1.27
$
1.18
$
1.10
$
1.86
BALANCE SHEET DATA:
Cash and cash equivalents
$
23,777
$
27,140
$
65,826
$
51,471
$
30,128
Inventories and receivables
30,058
22,885
21,156
19,736
20,813
Property, plant and equipment – net
16,573
9,223
7,918
7,503
7,460
Intangible assets – net
13,679
17,579
21,297
25,411
29,805
Deferred income taxes
11,905
10,307
10,128
11,103
15,406
Total assets
100,628
101,685
131,971
123,042
117,590
Working capital
44,691
42,599
81,783
67,426
43,362
Long-term debt
40,600
44,175
44,175
Shareholders’ equity
$
84,800
$
84,834
$
76,241
$
66,955
$
59,609
OTHER DATA:
Capital expenditures
$
1,093
$
3,119
$
2,080
$
1,624
$
2,458
Depreciation and amortization
$
5,737
$
5,794
$
6,384
$
6,303
$
8,931
Dividends per common share
$
0.42
$
0.00
$
0.00
$
0.00
$
0.00
Closing stock price
$
7.47
$
8.48
$
8.49
$
7.10
$
6.19
(1)
As discussed in Note 1 to our Consolidated Financial Statements, the consolidation of
the ES joint venture as of March 31, 2004 significantly changes various line items of our
balance sheet, statement of operations and cash flow presentations as compared to financial
presentations in earlier reports.
SUPPLEMENT 2
AMERICAN PACIFIC CORPORATION
Condensed Consolidated Statements of Operations
(unaudited)
For the three months ended
For the nine months ended
June 30,
June 30,
2005
2004
2005
2004
Sales and Operating Revenues
$
$
15,829,000
$
$
39,410,000
Cost of Sales
10,994,000
26,717,000
Gross Profit
4,835,000
12,693,000
Operating Expenses
5,638,000
15,505,000
Operating Income (Loss)
(803,000
)
(2,812,000
)
Interest Income
262,000
815,000
Interest Expense
265,000
265,000
Other Income (Expense)
—
450,000
Income (Loss) Before Income
Taxes and Cumulative Effect
(806,000
)
(2,712,000
)
Income Taxes (Benefit)
(282,000
)
(949,000
)
Cumulative Effect of
Accounting Adjustment
—
769,000
Net Income (Loss)
$
$
(524,000
)
$
$
(2,532,000
)
Basic Net Income (Loss) Per
Share
$
$
(0.07
)
$
$
(0.35
)
Basic Net Income (Loss)
Before Cumulative Effect
Per Share
$
$
(0.11
)
$
$
(0.37
)
Average Shares Outstanding
7,292,000
7,278,000
Diluted Net Income (Loss)
Per Share
$
$
(0.07
)
$
$
(0.35
)
Diluted Net Income (Loss)
Before Cumulative Effect
Per Share
$
$
(0.11
)
$
$
(0.37
)
Diluted Shares
7,292,000
7,278,000
See the accompanying Notes to Condensed Consolidated Financial Statements.
SUPPLEMENT 3
AMERICAN PACIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2004, 2003 AND 2002
2004
2003
2002
SALES AND OPERATING REVENUES
$
59,489,000
$
68,866,000
$
73,588,000
COST OF SALES
40,246,000
37,349,000
43,529,000
GROSS PROFIT
19,243,000
31,517,000
30,059,000
OPERATING EXPENSES
21,493,000
14,480,000
13,776,000
OPERATING (LOSS) INCOME
(2,250,000
)
17,037,000
16,283,000
INTEREST INCOME
1,102,000
912,000
945,000
INTEREST EXPENSE
532,000
1,696,000
4,180,000
OTHER EXPENSE (INCOME)
450,000
760,000
LOSS ON DEBT EXTINGUISHMENTS
1,522,000
149,000
(LOSS) INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT
(2,130,000
)
13,971,000
12,899,000
PROVISION (BENEFIT) FOR INCOME TAXES
(2,502,000
)
4,611,000
4,257,000
INCOME BEFORE CUMULATIVE EFFECT
372,000
9,360,000
8,642,000
CUMULATIVE EFFECT ACCOUNTING ADJUSTMENT
769,000
NET (LOSS) INCOME
$
(397,000
)
$
9,360,000
$
8,642,000
BASIC NET (LOSS) INCOME PER SHARE
$
(0.05
)
$
1.29
$
1.21
BASIC LOSS (INCOME) BEFORE CUMULATIVE EFFECT
$
0.05
$
1.29
$
1.21
AVERAGE SHARES OUTSTANDING
7,281,000
7,253,000
7,145,000
DILUTED NET (LOSS) INCOME PER SHARE
$
(0.05
)
$
1.27
$
1.18
DILUTED (LOSS) INCOME BEFORE CUMULATIVE
EFFECT PER SHARE
$
0.05
$
1.27
$
1.18
DILUTED SHARES
7,328,000
7,353,000
7,335,000
See Notes to Consolidated Financial Statements.
SUPPLEMENT 4
AMERICAN PACIFIC CORPORATION AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
For the Quarter ended
For the twelve months ended
December 31, 2003
March 31, 2004
June 30, 2004
September 30, 2004
September 30, 2004
SALES AND OPERATING REVENUES
$
4,794,000
$
18,787,000
$
15,829,000
$
20,079,000
$
59,489,000
COST OF SALES
4,324,000
11,398,000
10,994,000
13,530,000
40,246,000
GROSS PROFIT
470,000
7,389,000
4,835,000
6,549,000
19,243,000
OPERATING EXPENSES
3,764,000
6,102,000
5,638,000
5,989,000
21,493,000
OPERATING (LOSS) INCOME
(3,294,000
)
1,287,000
(803,000
)
560,000
(2,250,000
)
INTEREST INCOME
131,000
309,000
262,000
287,000
1,102,000
INTEREST EXPENSE
265,000
267,000
532,000
OTHER EXPENSE (INCOME)
340,000
110,000
450,000
(LOSS) INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
(3,390,000
)
1,486,000
(806,000
)
580,000
(2,130,000
)
PROVISION (BENEFIT) FOR INCOME TAXES
(1,186,000
)
520,000
(282,000
)
(1,554,000
)
(2,502,000
)
(LOSS) INCOME BEFORE CUMULATIVE EFFECT
(2,204,000
)
966,000
(524,000
)
2,134,000
372,000
CUMULATIVE EFFECT ACCOUNTING ADJUSTMENT
769,000
769,000
NET (LOSS) INCOME
$
(2,204,000
)
$
197,000
$
(524,000
)
$
2,134,000
( $397,000
)
BASIC NET (LOSS) INCOME PER SHARE
$
(0.30
)
$
0.13
$
(0.07
)
$
0.30
$
0.05
BASIC LOSS (INCOME) BEFORE CUMULATIVE EFFECT
$
(0.30
)
$
0.03
$
(0.07
)
$
0.30
$
(0.05
)
AVERAGE SHARES OUTSTANDING
7,256,000
7,285,000
7,292,000
7,145,000
7,145,000
DILUTED NET (LOSS) INCOME PER SHARE
$
(0.30
)
$
0.13
$
(0.07
)
$
0.30
$
0.05
DILUTED (LOSS) INCOME BEFORE CUMULATIVE EFFECT PER SHARE
$
(0.30
)
$
0.03
$
(0.07
)
$
0.30
$
(0.05
)
DILUTED SHARES
7,256,000
7,363,000
7,292,000
7,335,000
7,335,000
SUPPLEMENT 5
ENERGETIC SYSTEMS
For the Six Months
For the Fiscal Year
For the Fiscal Year
Ended March 30,
Ended September 30,
Ended September 30,
2004
2003
2002
Interest Income
$
402,000
$
620,000
$
—
Preferred Stock
Dividend Received
by the Company
$
—
$
—
$
—
SUPPLEMENT 6
Significant Subsidiary Test for Purposes of S-X Rule 3.09 and 4.08(g)
I. Investment Test
Investments in and advances (including current
and noncurrent) to potentially significant
subsidiary by—
Parent
(A
)
10,393,000
Parent’s other subsidiaries
(B
)
0
Total, (A) plus (B)
(C-1
)
10,393,000
Total for a group of unconsolidated subsidiaries
(C-2
)
10,393,000
II. Asset test
Consolidated assets (Note 1)
(D
)
101,685,000
10% of (D) =
(E-1
)
10,168,000
20% of (D) =
(E-2
)
20,337,000
Total assets of potentially significant
subsidiary (after intercompany eliminations)
(Note 2)
(F
)
12,242,000
Percent of ownership of potentially significant
subsidiary by parent and parent’s other
subsidiaries
(G
)
50
%
Proportionate share of total assets, (F) times (G)
(H-1
)
6,121,000
Proportionate share of total assets for a group
of unconsolidated subsidiaries calculated based
on the parent’s combined percentage ownership of
each unconsolidated subsidiary multiplied by
their respective total assets.
(H-2
)
6,121,000
TEST IS
MET
50%-or-Less-Owned Persons:
YES
NO
On an individual basis,
if (C-1) is greater than
(E-1) or (H-1) is greater
than (E-1), the test is
met, the potentially
significant subsidiary is
significant, and
summarized financial
information must be
furnished in the
footnotes to the
consolidated financial
statements.
X
On a group basis, if
(C-2) is greater than
(E-1) or (H-2) is greater
than (E-1), the test is
met, the group is
significant, and
summarized financial
information must be
furnished in the
footnotes to the
consolidated financial
statements.
X
On an individual basis,
if C-1 is greater than
E-2, the test is met, the
potentially significant
subsidiary is
significant, and separate
statements must be filed.
X
Subsidiaries Not Consolidated:
Rule 4.08(g)—Summarized
financial information
must be furnished in the
footnotes to the
consolidated financial
statements.
X
Rule 3.09(a)—On an
individual basis, if C-1
is greater than E-2 or
H-1 is greater than E-2,
the test is met, the
potentially significant
subsidiary is
significant, and separate
statements must be filed.
X
Notes to Test:
1.
After normal intercompany eliminations, but without elimination of investments in and advances to
unconsolidated subsidiaries or 50%-or-less persons.
2.
a.
If tested subsidiary (or group) has an equity interest in other unconsolidated subsidiaries (or an
equity interest in 50%-or-less-owned persons), do not substitute its proportional share of their assets for
investments in and advances to those companies.
b.
Reduce the tested subsidiary’s total assets for any receivables from companies included in the
consolidated statements.
c.
Do not eliminate receivables from other unconsolidated and 50%-or-less-owned persons.
Income Test
(1
)
Consolidated income (loss)
From continuing operations (before income taxes,
13,971,000
extraordinary items, and the cumulative effect of
an accounting change). This amount includes
pretax equity income of unconsolidated
subsidiaries and 50%-or-less-owned companies whose
operations are continuing.
(I-1)
Enter amount from (T) here
(I-2)
10,114,400
Using the greater of the (I-1) or (I-2), calculate:
2,794,200
1,397,100
20% of (I)-10% (I)
(J-1)
(J-2)
(2
)
Income (loss) of tested subsidiary
NA
Continuing operations of tested subsidiary (before
income taxes, extraordinary items, and the
cumulative effect of an accounting change).
(K)
Intercompany profits of tested subsidiary, before
NA
income taxes.
(L)
Total, (K) less (L)
(M)
(1,515,000
)
Proportionate share of income, (M) times (D)
(N-1)
(760,000
)
Proportionate share of income for a group of
(760,000
)
unconsolidated subsidiaries calculated based on
the parent’s combined ownership of each
unconsolidated subsidiary times their respective
income
(N-2)
TEST IS
MET
YES
NO
On an individual basis, if both (N-1) and (J-1) are positive
figures and (N-1) is greater than (J-1), the test is met—the
subsidiary is significant and separate financial statements
are filed.
X
For the group of unconsolidated subsidiaries, if (N-2) and
(J-2) are positive figures and (N-2) is greater than (J-2),
the group is significant and summarized financial
information must be furnished in the footnotes to the
consolidated financial statements.
X
(3
)
If either (N) or (J), but not both, are loss figures,
the test is made by comparing the potentially significant
subsidiary (N-1) with the consolidated figures excluding the
income or loss of the potentially significant subsidiary—as
follows:
Consolidated income (loss) using t