SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 19, 1998
American Pacific Corporation
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(Exact name of registrant as specified in its charter)
DELAWARE 1-8137 59-6490478
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3770 Howard Hughes Parkway, Suite 300, Las Vegas, Nevada 89109
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Address of principal executive offices
Registrant's telephone number, including area code: (702) 735-2200
N/A
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(Former name or former address, if changed since last report.)
<PAGE>
This amended Current Report on Form 8-K amends the Current Report on
Form 8-K filed on March 3, 1998.
Item 5. OTHER EVENTS.
As announced on February 19, 1998, American Pacific Corporation (the
"Company") intends to effect an offering (the "Offering") of $75.0 million
principal amount of Senior Notes (the "Notes") pursuant to Rule 144A under the
Securities Act of 1933 during March 1998. The Company intends to use the net
proceeds of the Offering primarily to fund its acquisition (the "Acquisition")
of certain intangible assets and rights of Kerr-McGee Chemical Corporation
("Kerr-McGee") related to the production of ammonium perchlorate ("AP") and to
repurchase or defease the Company's outstanding 11% noncallable subordinated
secured term notes (the "Azide Notes"). There can be no assurance that the
Offering or the Acquisition will be consummated.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information (the "Pro Forma
Financial Information") is based on the consolidated financial statements of the
Company included as part of the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1997 (the "Consolidated Financial Statements")
and the Company's unaudited consolidated financial statements included as part
of the Company's Quarterly Report on Form 10-Q for the three months ended
December 31, 1997 (the "Unaudited Consolidated Financial Statements"), adjusted
to give effect to (i) the Acquisition, (ii) the repurchase of the Azide Notes,
(iii) the Offering and (iv) certain other adjustments (collectively, the "Pro
Forma Adjustments"). The Unaudited Consolidated Financial Statements have been
prepared by the company on a basis consistent with the audited financial
statements and include, in the opinion of the Company, all normal recurring
adjustments necessary for a fair presentation of the information. Operating
results for the three months ended December 31, 1997 are not necessarily
indicative of the results that will be achieved for future periods, including
for the fiscal year ending September 30, 1998.
The Pro Forma Statements of Operations and other data give effect to
the Pro Forma Adjustments as if the events giving rise thereto had occurred (i)
for the twelve months ended December 31, 1997, as of January 1, 1997, (ii) for
the fiscal year ended September 30, 1997, as of October 1, 1996, and (iii) for
the three months ended December 31, 1997, as of October 1, 1997. The Pro Forma
Balance Sheet gives effect to the Pro Forma Adjustments as if the events giving
rise thereto had occurred as of December 31, 1997. The Pro Forma Adjustments are
described in the accompanying notes. The Pro Forma Adjustments are based upon
available information and certain assumptions and estimates that the Company
believes are reasonable, including estimates as to the additional expenses that
the Company would have incurred and revenues that the Company would have
received in the applicable periods if the Company had produced the additional
volumes of AP actually produced by Kerr-McGee. These assumptions and estimates
are based on management's judgments, including judgments as to the allocation of
fixed and variable costs. These allocations are subject to material variances,
are inherently imprecise and are not subject to verification. There can be no
assurance that future operating results will be consistent with these
assumptions or estimates. In addition, the Pro Forma Financial Information does
not purport to represent what the Company's results of operations or financial
condition would actually have been had the events giving rise to the Pro Forma
Adjustments in fact occurred on such dates or to project the Company's results
of operations or financial condition for any future period or date. The Company
does not issue forecasts of future results of operations or financial condition
and the Pro Forma Financial Information should not be deemed such a forecast.
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The Pro Forma Financial Information should be read in conjunction with the
Consolidated Financial Statements and Unaudited Consolidated Financial
Statements.
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<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS AND OTHER DATA
TWELVE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENT PRO FORMA
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(dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Sales and operating revenues........................................... $ 46,922 $ 28,962(a) $72,169
(3,715)(b)
Cost of sales.......................................................... 37,443 6,127(c) 47,470
3,900(d)
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Gross profit........................................................... 9,479 15,220 24,699
Operating expenses..................................................... 9,329 --(e) 9,329
Fixed asset impairment charge (f)...................................... 52,605 -- 52,605
Employee separation and management reorganization costs (g)............ 3,616 -- 3,616
Equity in earnings of real estate venture.............................. 500 -- 500
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Operating income (loss)................................................ (55,571) 15,220 (40,351)
Interest and other income.............................................. 1,046 -- 1,046
Interest and other expense............................................. 2,405 5,711(h) 8,116
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Income (loss) before credit for income taxes........................... (56,930) 9,509 (47,421)
Credit for income taxes................................................ (9,661) --(i) (9,661)
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Net income (loss)...................................................... $(47,269) $9,509 $(37,760)
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Basic net income (loss) per share...................................... $(5.83) $1.18 $(4.65)
============= ============= =============
Diluted net income (loss) per share.................................... $(5.83) $1.18 $(4.65)
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1997
HISTORICAL ADJUSTMENT PRO FORMA
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(dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Sales and operating revenues........................................... $ 44,050 $ 28,962(a) $70,299
(2,713)(b)
Cost of sales.......................................................... 36,420 6,053(c) 46,373
3,900(d)
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Gross profit........................................................... 7,630 16,296 23,926
Operating expenses..................................................... 9,509 --(e) 9,509
Fixed asset impairment charge (f)...................................... 52,605 -- 52,605
Employee separation and management reorganization costs (g)............ 3,616 -- 3,616
Equity in earnings of real estate venture.............................. 200 -- 200
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Operating income (loss)................................................ (57,900) 16,296 (41,604)
Interest and other income.............................................. 1,115 -- 1,115
Interest and other expense............................................. 2,001 6,115(h) 8,116
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Income (loss) before credit for income taxes........................... (58,786) 10,181 (48,605)
Credit for income taxes................................................ (10,101) --(i) (10,101)
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Net income (loss)...................................................... $(48,685) $10,181 $(38,504)
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Basic net income (loss) per share...................................... $(6.01) $1.26 $(4.75)
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Diluted net income (loss) per share.................................... $(6.01) $1.26 $(4.75)
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</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, 1997
HISTORICAL ADJUSTMENT PRO FORMA
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(dollars in thousands, except per share amounts)
(dollars in thousands)
<S> <C> <C> <C>
Sales and operating revenues........................................... $ 11,268 $ 10,891(a) $21,073
(1,086)(b)
Cost of sales.......................................................... 8,106 2,147(c) 11,228
975(d)
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Gross profit........................................................... 3,162 6,683 9,845
Operating expenses..................................................... 2,183 --(e) 2,183
Equity in earnings of real estate venture.............................. 300 -- 300
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Operating income (loss)................................................ 1,279 6,683 7,962
Interest and other income.............................................. 270 -- 270
Interest and other expense............................................. 983 1,046(h) 2,029
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Income (loss) before credit for income taxes........................... 566 5,637 6,203
Credit for income taxes................................................ -- --(i) --
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Net income (loss)...................................................... $ 566 $ 5,637 $ 6,203
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Basic net income (loss) per share...................................... $.07 $.69 $.76
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Diluted net income (loss) per share.................................... $.07 $.69 $.76
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</TABLE>
NOTES TO THE PRO FORMA STATEMENTS OF OPERATIONS AND OTHER DATA
(a) If the Acquisition is consummated, the Company will effectively
acquire the AP market share of Kerr-McGee. For the twelve months ended December
31, 1997 and the Company's fiscal year 1997, revenues have been adjusted to give
effect to the sale by the Company of the volumes of AP actually sold by
Kerr-McGee during Kerr-McGee's fiscal year ended December 31, 1997 at the prices
received by Kerr-McGee. For the three months ended December 31, 1997, revenues
have been adjusted to give effect to the sale by the Company of the volumes of
AP actually sold by Kerr-McGee during the three months ended December 31, 1997
at the prices received by Kerr-McGee.
(b) In connection with the Acquisition, the Company entered into a new
agreement with Thiokol Corporation ("Thiokol") and extended its existing
agreement with Alliant Techsystems, Inc. ("Alliant"). Revenues have been
adjusted to give effect to those agreements as follows:
(1) Revenues related to AP sold to Thiokol have been adjusted
to reflect the applicable volumes referred to in note (a) above, by
both the Company and Kerr-McGee at the price provided for under the
Company's agreement with Thiokol during the initial year of such
agreement, i.e., 1999. This price is less than the actual price paid by
Thiokol for AP to either the Company or Kerr-McGee during 1997.
(2) Revenues related to AP sold to Alliant have been adjusted
to reflect the applicable AP volumes referred to in note (a) above, by
both the Company and Kerr-McGee at the price provided for under the
Company's agreement with Alliant during the relevant period.
(c) Cost of sales has been adjusted to give effect to the additional
volumes of AP assumed to have been sold by the Company as described in note (a)
above. Management has estimated the additional costs of producing those volumes
based on certain judgments as to the Company's fixed and variable costs
associated with the production and sale of such incremental volumes. These
estimates are subject to material variance and are inherently imprecise. There
can be no assurance that future operating costs will be consistent with these
estimates.
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<PAGE>
(d) Cost of sales has been adjusted to include additional amortization
of $3.9 million for the twelve months ended December 31, 1997 and the fiscal
year ended September 30, 1997 and $975,000 for the three months ended December
31, 1997 related to the $39.0 million consideration to be paid to Kerr-McGee in
connection with the Acquisition (the "Acquisition Consideration") amortized on a
straight line basis over a 10-year period.
(e) The Company estimates that it would not have incurred any material
additional selling, general, administrative or other operating expenses related
to the additional volumes of AP assumed to have been sold by the Company as
described in note (a) above.
(f) During the fourth quarter of fiscal 1997, the Company concluded
that the cash flows associated with sodium azide operations would not be
sufficient to recover the Company's investment in sodium azide related fixed
assets and, accordingly, a non-cash impairment charge of $52.6 million was
recognized in such quarter. See Note 13 to the Consolidated Financial
Statements.
(g) During the fourth quarter of fiscal 1997, the Company recognized a
charge of $3.6 million to account for the costs associated with employee
separations and management reorganizations. See Note 16 to the Consolidated
Financial Statements.
(h) Represents (i) interest expense associated with the Notes (at an
assumed interest rate of 10.25% per annum), (ii) the amortization of debt issue
costs of the Notes (estimated to be $3.0 million) on a straight line basis over
seven years and (iii) the elimination of the historical interest expense related
to the Azide Notes as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1997 DECEMBER 31, 1997
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<S> <C> <C> <C>
Interest on the Notes........................... $7,687 $7,687 $1,922
Amortization of the Notes debt issue costs...... 429 429 107
Interest on the Azide Notes..................... (2,405) (2,001) (983)
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Totals........................ $5,711 $6,115 $1,046
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</TABLE>
A change in the interest rate of one-half percent (0.5%) with respect
to the Notes would change pro forma interest expense and pro forma net income
(loss) by $375,000, $375,000 and $94,000, for the twelve months ended December
31, 1997, the fiscal year ended September 30, 1997 and the three months ended
December 31, 1997, respectively.
(i) No provision for income taxes is recognized because the Company has
a deferred tax asset valuation allowance.
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<PAGE>
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENT PRO FORMA
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(IN THOUSANDS)
ASSETS
<S> <C> <C> <C>
Cash................................................................... $ 12,989 $ 6,994(a) $19,983
Accounts and notes receivable.......................................... 10,517 -- 10,517
Inventories............................................................ 10,880 -- 10,880
Prepaid expenses....................................................... 1,511 -- 1,511
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Current assets..................................................... 35,897 6,994 42,891
Property, plant and equipment, net..................................... 19,632 -- 19,632
Development property................................................... 7,053 -- 7,053
Real estate equity investments......................................... 18,535 -- 18,535
Other assets........................................................... 88 -- 88
Restricted cash........................................................ 6,408 (5,244)(b) 1,164
Azide Notes issue costs................................................ 728 (728)(c) --
Notes issue costs...................................................... -- 3,000(d) 3,000
Acquisition intangibles................................................ -- 39,000(e) 39,000
Intangible assets..................................................... 1,513 -- 1,513
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Total assets....................................................... $89,854 $43,022 $132,876
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LIABILITIES
Accounts payable and accrued liabilities............................... $ 7,229 $ -- $ 7,229
The Notes.............................................................. -- 75,000(f) 75,000
Azide Notes............................................................ 28,842 (28,842)(g) --
Indemnity obligation................................................... 1,164 -- 1,164
Long-term payables..................................................... 2,933 -- 2,933
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Total liabilities.................................................. 40,168 46,158 86,326
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Common Stock warrants.................................................. 3,569 -- 3,569
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SHAREHOLDERS' EQUITY
Common stock and capital in excess of par.............................. 79,293 -- 79,293
Treasury stock......................................................... (1,035) -- (1,035)
Accumulated deficit.................................................... (32,141) (3,136)(h) (35,277)
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Total shareholders' equity......................................... 46,117 (3,136) 42,981
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Total liabilities and shareholders' equity..................... $ 89,854 $ 43,022 $132,876
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</TABLE>
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<PAGE>
Notes to the Pro Forma Balance Sheet
(a) Represents the sum of (i) the difference between the net proceeds
of the Offering (estimated to be $72.0 million) and the portion of such proceeds
expected to be applied to pay the Acquisition Consideration ($39.0 million) and
to repurchase the Azide Notes at an assumed price of 105% of the principal
amount thereof ($26.2 million after giving effect to the scheduled principal
payment thereon made on February 21, 1998) and (ii) the amount of restricted
cash ($244,000) released upon repurchase of the Azide Notes. To the extent that
the Azide Notes are not repurchased, the Company intends to defease the Azide
Notes in accordance with their terms. In the event that the Company defeases all
of the Azide Notes, the Company estimates that the additional cost to the
Company to acquire the securities to be deposited in the defeasance trust for
the benefit of the holders of the Azide Notes will be approximately $1.1
million.
(b) Represents the sum of (i) a $5.0 million scheduled principal
payment the Company made on February 21, 1998 with respect to the Azide Notes
and (ii) the amount of restricted cash ($244,000) released upon the repurchase
of the Azide Notes.
(c) Represents the write-off of the remaining unamortized amount of
debt issue costs associated with the issuance of the Azide Notes.
(d) Represents debt issue costs related to the Notes, estimated to be
$3.0 million.
(e) Represents the recognition of an intangible asset of $39.0 million
related to the Acquisition Consideration.
(f) Represents the issuance of the Notes.
(g) Represents (i) the scheduled principal payment of $5.0 million on
the Azide Notes made on February 21, 1998 and (ii) the repurchase of the
remaining outstanding principal balance of the Azide Notes.
(h) Represents a reduction in shareholders' equity for the debt
extinguishment extraordinary item consisting of (i) the cost to repurchase the
Azide Notes at 105% of the principal amount thereof (approximately $1.25
million), (ii) the write-off of the remaining unamortized discount related to
certain warrants issued in conjunction with the Azide Notes (approximately $1.16
million) and (iii) the write-off of the remaining unamortized debt issue costs
associated with the issuance of the Azide Notes ($728,000).
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<PAGE>
EXHIBIT NO. EXHIBITS
*99.1 Asset Purchase Agreement dated as of October 10, 1997 between
AMPAC, Inc. and Kerr-McGee Chemical Corporation.
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* Previously filed
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
American Pacific Corporation
Dated: June 12, 1998 By: /s/ David N. Keys
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Name: David N. Keys
Title: Senior Vice President and
Chief Financial Officer
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