American Pacific Reports Revenue Increase of 34% and Net Income of $2.9 Million for Fiscal 2008 First Quarter

Friday, February 8, 2008 General News
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LAS VEGAS, Feb. 7 American Pacific Corporation(Nasdaq: APFC) today reported financial results for its first fiscal quarterended December 31, 2007.

We provide non-GAAP measures as a supplement to financial results based onGAAP. A reconciliation of the non-GAAP measures to the most directlycomparable GAAP measures is included in the accompanying supplemental data.

FINANCIAL HIGHLIGHTS

Quarter Ended December 31, 2007 Compared to Quarter EndedDecember 31, 2006

CONSOLIDATED RESULTS OF OPERATIONS

Revenues -- Revenues for our fiscal 2008 first quarter increased 34% to$46.9 million reflecting revenue growth from our Specialty Chemicals and FineChemicals segments.

See further discussion under our Segment Highlights.

Cost of Revenues and Gross Margins -- For our fiscal 2008 first quarter,cost of revenues was $29.5 million compared to $22.0 million for the prioryear first quarter. The consolidated gross margin percentage was 37% for bothperiods.

One of the significant factors that affects, and should continue toaffect, the comparison of our consolidated gross margins from period to periodis the change in product mix between our two largest segments. Our SpecialtyChemicals segment typically has higher gross margins than our Fine Chemicalssegment. Measured in terms of revenues, Specialty Chemicals accounted for 33%and 34% of our operations during the fiscal 2008 and 2007 first quarters,respectively. Fine Chemicals has grown as a percentage of total revenues,comprising 57% and 51% of consolidated revenues in the fiscal 2008 and 2007first quarters, respectively.

In addition, our fiscal 2008 first quarter consolidated gross marginreflects:

Operating Expenses -- For our fiscal 2008 first quarter, operatingexpenses increased $1.7 million to $10.2 million from $8.5 million in thefirst quarter of fiscal year 2007, primarily due to:

Our Specialty Chemicals segment revenues include the operating resultsfrom our perchlorate, sodium azide and Halotron product lines, withperchlorates comprising 95% and 85% of Specialty Chemicals revenues in thefiscal 2008 and 2007 first quarters, respectively.

Quarter Ended December 31, 2007 Compared to Quarter Ended December 31,2006

The first quarter variances in Specialty Chemicals revenues reflect thefollowing factors:

The increase in Grade I AP volume for the fiscal 2008 first quartercompared to the prior fiscal year first quarter reflects the timing ofcustomer orders. The fiscal 2008 first quarter included a greater percentageof our expected annual volume for fiscal 2008. On an annual basis, we expectfiscal 2008 volume to be comparable to fiscal 2007. There are numerousvariations of Grade I AP that we produce for our customers. The decrease inthe average price per pound of Grade I AP sold in the fiscal 2008 firstquarter reflects a product mix that included more of the standard blend ofGrade I AP than specialized blends.

Over the longer term, we expect demand for Grade I AP to be within theranges of fiscal years 2006 and 2007. In addition, Grade I AP revenues aretypically derived from a relatively few large orders. As a result, quarterlyrevenue amounts can vary significantly depending on the timing of individualorders throughout the year. Average price per pound may continue to fluctuatesomewhat in future periods, depending upon product mix and volume.

The decrease in sodium azide revenues in the fiscal 2008 first quarter isdue to a reduction in volume for sodium azide used in a pharmaceuticalapplication. We do not anticipate an increase in demand for sodium azide inthe near future.

The decrease in Halotron revenues is driven by timing of customer orders.Halotron volumes are expected to be relatively consistent in fiscal 2008 ascompared to fiscal 2007.

Specialty Chemicals operating


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