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American Pacific Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 12, 2011 12:37PM
American Pacific Corp. (APFC) filed Quarterly Report for the period ended 2011-06-30.
Highlight of Business Operations:
For our Fiscal 2011 nine-month period, operating expenses decreased $2,643 to $33,054 from $35,697 for the prior fiscal year nine-month period as a result of our company-wide cost savings initiatives.
For our Fiscal 2011 third quarter, operating expenses decreased $2,135 to $9,811 from $11,946 for the prior fiscal year third quarter. The quarterly variance is largely due to the timing of the above-mentioned cost reductions.
Late in the fiscal year ended September 30, 2009 (Fiscal 2009), we expanded the planned scope of our remediation efforts in Henderson, Nevada to include installation of additional groundwater extraction wells, construction of a pipeline to move extracted groundwater to our treatment facility, and the addition of above-ground ex situ bioremediation treatment equipment (the Expansion Project). Through June 2011, and in cooperation with the Nevada Division of Environmental Protection (NDEP), we worked to develop the formal design, engineering and permitting of the Expansion Project. Based on data obtained to date, which is largely comprised of firm quotations, we determined that significant modifications to our Fiscal 2009 assumptions were required. As a result, in June 2011, we accrued an additional $6,000 for the estimated increase in cost of the capital component of the Expansion Project, offset slightly by reductions in operating and maintenance (O&M) cost estimates. The estimated capital costs of the Expansion Project increased by approximately $6,400. The increase reflects (i) an increase in the capacity of the above-ground treatment equipment to accommodate technical requirements based on the testing of new extraction wells in the fall of 2010, and (ii) higher than initially anticipated cost associated with the installation of the equipment and construction of the pipeline. Our estimate of total O&M costs was reduced by approximately $400. This change in estimate reflects (i) a reduction in the estimated life of the project by four years, offset by (ii) an increase in the estimated annual O&M cost to approximately $1,900 per year once the Expansion Project is placed in service. We anticipate that the Expansion Project will be placed in service during the spring of 2012. Due to uncertainties inherent in making estimates, our estimates of capital and O&M costs may later require significant revision as new facts become available and circumstances change.
Including this $6,000 increase in our accruals, our total estimated cost of the Henderson, Nevada remediation activities is $45,700, of which, approximately $19,000 was spent from September 2005 through June 2011. We anticipate that the project will take at least eight years to complete. See further discussion below under the heading Environmental Remediation AMPAC Henderson Site.
Stocks Discussed: APFC,