Arabian American Development Company (ARSD, Financial) filed Quarterly Report for the period ended 2010-06-30.
Arabian American Development Company has a market cap of $58.16 million; its shares were traded at around $2.48 with a P/E ratio of 248 and P/S ratio of 0.49.
The Company s net income for the first half of 2010 decreased by approximately $6,331,000 or 94.0% in 2010 as compared to the corresponding period of 2009. Major non-cash items affecting income included an increase in depreciation of approximately $20,000, a decrease in accretion of note receivable discounts of about $20,000, a decrease in the unrealized gain on derivative instruments of approximately $7,489,000, an increase in stock-based compensation of about $374,000, a decrease in deferred income taxes of roughly $5,183,000, a decrease in post retirement obligations of approximately $106,000, and an increase in the equity loss in AMAK of about $263,000.
Cash provided by financing activities during fiscal 2010 was approximately $300,000 versus cash used in financing activities of approximately $4,735,000 during the corresponding period of 2009. The Company made net principal payments on long-term debt during 2010 of $700,000 on the Company s term loan and borrowed $1,000,000 on its line of credit. In 2009 long term debt decreased due to payments on the line of credit of approximately $2.5 million.
On March 21, 2008, South Hampton entered into an interest rate swap agreement with Bank of America related to the $10.0 million term loan secured by plant, pipeline and equipment. The effective date of the interest rate swap agreement is August 15, 2008 and terminates on December 15, 2017. As part of the interest rate swap agreement South Hampton will pay an interest rate of 5.83% and receive interest based upon LIBOR or a base rate plus a markup from Bank of America. South Hampton has designated the transaction as a cash flow hedge according to ASC Topic 815, Derivatives and Hedging. Beginning on August 15, 2008, the derivative instrument was reported at fair value with any changes in fair value reported within other comprehensive income (loss) in the Company s Statement of Stockholders Equity. At June 30, 2010, Accumulated Other Comprehensive Loss net of $406,000 tax was $787,000 related to this transaction.
General and Administrative costs from the second quarter of 2009 to 2010 increased 50.7% due to higher administrative payroll costs, consulting fees, insurance premiums, directors fees, post retirement expense, legal fees and accounting fees. Payroll costs increased due to the addition of personnel and higher salaries due mainly to cost of living adjustments. Insurance premiums increased largely due to additional property coverage and an increase in health insurance premiums plus the addition of a foreign credit insurance policy. Consulting fees increased due to the investigation of potential acquisition targets and to efforts to meet and maintain compliance with SEC reporting guidelines. Other increases in general and administrative expenses from 2009 to 2010 were officers compensation of approximately $17,000, post retirement benefits of $62,000, directors fees of $130,000, accounting fees of $104,000, and legal fees of $178,000.
*Includes $1,137 and $1,116 for 2010 and 2009, respectively, which is included in operating expense
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Arabian American Development Company has a market cap of $58.16 million; its shares were traded at around $2.48 with a P/E ratio of 248 and P/S ratio of 0.49.
Highlight of Business Operations:
We reported year-to-date 2010 earnings of $405,663 down 94.0% or $6,331,182 from the first half of 2009. Earnings per share of $0.02 were down 92.9%. Sales volume of our petrochemical products excluding transloading increased by 8.7% from the first half of 2009.The Company s net income for the first half of 2010 decreased by approximately $6,331,000 or 94.0% in 2010 as compared to the corresponding period of 2009. Major non-cash items affecting income included an increase in depreciation of approximately $20,000, a decrease in accretion of note receivable discounts of about $20,000, a decrease in the unrealized gain on derivative instruments of approximately $7,489,000, an increase in stock-based compensation of about $374,000, a decrease in deferred income taxes of roughly $5,183,000, a decrease in post retirement obligations of approximately $106,000, and an increase in the equity loss in AMAK of about $263,000.
Cash provided by financing activities during fiscal 2010 was approximately $300,000 versus cash used in financing activities of approximately $4,735,000 during the corresponding period of 2009. The Company made net principal payments on long-term debt during 2010 of $700,000 on the Company s term loan and borrowed $1,000,000 on its line of credit. In 2009 long term debt decreased due to payments on the line of credit of approximately $2.5 million.
On March 21, 2008, South Hampton entered into an interest rate swap agreement with Bank of America related to the $10.0 million term loan secured by plant, pipeline and equipment. The effective date of the interest rate swap agreement is August 15, 2008 and terminates on December 15, 2017. As part of the interest rate swap agreement South Hampton will pay an interest rate of 5.83% and receive interest based upon LIBOR or a base rate plus a markup from Bank of America. South Hampton has designated the transaction as a cash flow hedge according to ASC Topic 815, Derivatives and Hedging. Beginning on August 15, 2008, the derivative instrument was reported at fair value with any changes in fair value reported within other comprehensive income (loss) in the Company s Statement of Stockholders Equity. At June 30, 2010, Accumulated Other Comprehensive Loss net of $406,000 tax was $787,000 related to this transaction.
General and Administrative costs from the second quarter of 2009 to 2010 increased 50.7% due to higher administrative payroll costs, consulting fees, insurance premiums, directors fees, post retirement expense, legal fees and accounting fees. Payroll costs increased due to the addition of personnel and higher salaries due mainly to cost of living adjustments. Insurance premiums increased largely due to additional property coverage and an increase in health insurance premiums plus the addition of a foreign credit insurance policy. Consulting fees increased due to the investigation of potential acquisition targets and to efforts to meet and maintain compliance with SEC reporting guidelines. Other increases in general and administrative expenses from 2009 to 2010 were officers compensation of approximately $17,000, post retirement benefits of $62,000, directors fees of $130,000, accounting fees of $104,000, and legal fees of $178,000.
*Includes $1,137 and $1,116 for 2010 and 2009, respectively, which is included in operating expense
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