##### Table of Contents



United States
Securities and Exchange Commission
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended September 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-08137
 AMERICAN PACIFIC CORPORATION
  
 Delaware
    
    59-6490478(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 3883 Howard Hughes Parkway, Suite 700
Las Vegas, Nevada 89169
 702) 735-2200
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, Par Value $0.10 Per Share
    
    The NASDAQ Stock Market LLC
  None
  o þ
  o þ
  þ o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS  PART IItem 1. Business (Dollars in Thousands)Item 1A. Risk Factors (Dollars in Thousands)Item 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of Operations (Dollars in Thousands)Item 7A. Quantitative and Qualitative Disclosures About Market Risk (Dollars in Thousands)Item 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A(T). Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accounting Fees and ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESEXHIBIT INDEXEX-21EX-23EX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 PART I
 FORWARD LOOKING STATEMENTS
   
 Item 1. Business (Dollars in Thousands)
 OUR COMPANY
   1




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Size (as a %of Fiscal 2009Industry / Market
    
    Products
    
    Business Segments
    
    Revenues)Pharmaceuticals
    
       Active Pharmaceutical Ingredients
    
       Fine Chemicals
    
    
    50
    %   Registered Intermediates
    
       Specialty Chemicals (Sodium Azide)   Sodium AzideAerospace & Defense
    
       Perchlorates
    
       Specialty Chemicals (Perchlorates)
    
    
    45
    %   Satellite Thrusters
    
       Aerospace Equipment   Propulsion Systems   Aerospace Valves   Launch Vehicle StructuresFire Suppression
    
       Halotron I
    
       Specialty Chemicals (Halotron)
    
    
    2
    %   Halotron IIWater Treatment
    
       On-site Hypochlorite Generation Systems
    
       Other Businesses (PEPCON Systems)
    
    
    3
    %
 www.apfc.com
 OUR BUSINESS SEGMENTS
  2




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2009
    
    2008
    
    2007Fine Chemicals
    
    
    48
    %
    
    
    61
    %
    
    
    57
    %Specialty Chemicals:Perchlorates
    
    
    28
    %
    
    
    26
    %
    
    
    28
    %Sodium azide
    
    
    2
    %
    
    
    0
    %*
    
    
    1
    %Halotron
    
    
    2
    %
    
    
    2
    %
    
    
    2
    %Total specialty chemicals
    
    
    32
    %
    
    
    28
    %
    
    
    31
    %Aerospace Equipment
    
    
    17
    %
    
    
    8
    %
    
    
    9
    %Other Businesses:Real estate
    
    
    0
    %*
    
    
    1
    %
    
    
    1
    %Water treatment equipment
    
    
    3
    %
    
    
    2
    %
    
    
    2
    %Total other businesses
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %Total revenues
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 
 *
    
    less than 1%  FINE CHEMICALS.
   
    
    Alternative Supply May Not Be Readily Available.We are currently the sole-source supplier
on several of our fine chemicals products.
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
    
    Regulatory Approval.Applications to and approvals from the FDA and other regulatory
authorities generally require the chemical contractor to be named. Switching contractors may
require additional regulatory approvals and could take as long as two years to complete.
 
    
    Significant Financial Costs.Switching contractors and amending various filings can result
in significant costs associated with technology transfer, process validation and re-filing
with the FDA and other regulatory authorities.
  SPECIALTY CHEMICALS. ®
    AEROSPACE EQUIPMENT.
 4




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OTHER BUSINESSES.
 OUR STRENGTHS
 LEADING MARKET POSITIONS WITH SIGNIFICANT BARRIERS TO ENTRY.
 Fine Chemicals.
  Specialty Chemicals.
 5




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Aerospace Equipment.
 STRATEGIC CUSTOMER RELATIONSHIPS.
 MANUFACTURING EXCELLENCE.
 Fine Chemicals.
 Specialty Chemicals.
 Aerospace Equipment.
 LONG-TERM CONTRACTS.
 6




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ATTRACTIVE PORTFOLIO OF PRODUCTS.
 OUR STRATEGY
 PURSUE ORGANIC GROWTH OPPORTUNITIES AND SELECTIVE ACQUISITIONS.
  LEVERAGE OUR EXISTING EXPERTISE TO MAINTAIN OUR LEADERSHIP POSITIONS.
 Fine Chemicals.
 Specialty Chemicals.
 7




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Aerospace Equipment.
 PRESERVE AND BUILD STRONG CUSTOMER RELATIONSHIPS.
 OUR FINE CHEMICALS SEGMENT
  Energetic and Specialty Processes.
 High Containment.
 8




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Simulated Moving Bed.
   Customers and Markets.
 ® ®
 Competition.
 9




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Energetic and SpecialtyHigh Containment
    
    Processes
    
    Simulated Moving BedSAFC (1)
    
    Group Novasep SAS
    
    Group Novasep SASHelsinn (2)
    
    OmniChem (3)
    
    SAFC (1)Cambrex Corp.
    
    ZaCh Systems (4)
    
    Diacel Chemical
Industries, Ltd.OmniChem (3)
    
    Orgomol (5)
 
 (1)
    
    the fine chemicals division of Sigma-Aldrich Corporation(2)
    
    the chemicals operations division of Helsinn Group(3)
    
    a component of the pharmaceuticals division of Ajinomoto Company(4)
    
    a subsidiary of the Zambon Company(5)
    
    a subsidiary of BASF OUR SPECIALTY CHEMICALS SEGMENT
 PERCHLORATE CHEMICALS.
 Market.
 10




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Customers and Markets.
   Manufacturing Capacity and Process.
 11




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Competition.
 SODIUM AZIDE.
 Market.
  Customers.
 Competition.
 HALOTRON.
  12




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Customers and Market
   Competition. ä
  OUR AEROSPACE EQUIPMENT SEGMENT
 Customers and Market.
 13




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Competition.
 Recent Acquisition.
   OUR OTHER BUSINESSES SEGMENT
 WATER TREATMENT EQUIPMENT.
    REAL ESTATE.
 14




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REGULATORY COMPLIANCE
 FEDERAL ACQUISITION REGULATIONS.
 FDA AND SIMILAR REGULATORY AGENCIES.
 ENVIRONMENTAL MATTERS.
 Regulatory Review of Perchlorates .
 Perchlorate Remediation Project in Henderson, Nevada .
  15




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Henderson Site Environmental Remediation Reserve .
   16




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AFC Environmental Matters.
 17




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OTHER MATTERS
 BACKLOG.
   INTELLECTUAL PROPERTY. ® ® ® ® ® ® ®
 RAW MATERIALS AND MANUFACTURING COSTS.
  18




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GOVERNMENT CONTRACTS SUBJECT TO TERMINATION.
 INSURANCE.
 EMPLOYEES.
  AVAILABLE INFORMATION.
 19




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Item 1A. Risk Factors (Dollars in Thousands)
  We depend on a limited number of customers for most of our sales in our Specialty Chemicals,
Aerospace Equipment and Fine Chemicals segments and the loss of one or more of these customers
could have a material adverse effect on our financial position, results of operations and cash
flows.
   The inherent limitations of our fixed-price or similar contracts may impact our profitability.
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The numerous and often complex laws and regulations and regulatory oversight to which our
operations and properties are subject, the cost of compliance, and the effect of any failure to
comply could reduce our profitability and liquidity.
   21




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A significant portion of our business depends on contracts with the government or its prime
contractors or subcontractors and these contracts are impacted by governmental priorities and are
subject to potential fluctuations in funding or early termination, including for convenience, any
of which could have a material adverse effect on our operating results, financial condition or cash
flows.
   22




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We may be subject to potentially material costs and liabilities in connection with environmental or
health matters.
  Review of Perchlorate Toxicity by the EPA.
 Perchlorate Remediation Project in Henderson, Nevada.
 23




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Henderson Site Environmental Remediation Reserve.
 Other Environmental Matters.
 24




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Although we have established an environmental reserve for remediation activities in Henderson,
Nevada, given the many uncertainties involved in assessing environmental liabilities, our
environmental-related risks may from time to time exceed any related reserves.
  For each of our Specialty Chemicals, Fine Chemicals and Aerospace Equipment segments, most
production is conducted in a single facility and any significant disruption or delay at a
particular facility could have a material adverse effect on our business, financial position and
results of operations.
  The release or explosion of dangerous materials used in our business could disrupt our operations
and cause us to incur additional costs and liabilities.
  25




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Disruptions in the supply of key raw materials and difficulties in the supplier qualification
process, as well as increases in prices of raw materials, could adversely impact our operations.
    Each of our Specialty Chemicals, Fine Chemicals and Aerospace Equipment segments may be unable to
comply with customer specifications and manufacturing instructions or may experience delays or
other problems with existing or new products, which could result in increased costs, losses of
sales and potential breach of customer contracts.
  26




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Successful commercialization of pharmaceutical products and product line extensions is very
difficult and subject to many uncertainties. If a customer is not able to successfully
commercialize its products for which AFC produces compounds or if a product is subsequently
recalled, then the operating results of AFC may be negatively impacted.
  A strike or other work stoppage, or the inability to renew collective bargaining agreements on
favorable terms, could have a material adverse effect on the cost structure and operational
capabilities of AFC.
  27




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The pharmaceutical fine chemicals industry is a capital-intensive industry and if AFC does not have
sufficient financial resources to finance the necessary capital expenditures, its business and
results of operations may be harmed.
  We may be subject to potential liability claims for our products or services that could affect our
earnings and financial condition and harm our reputation.
  Technology innovations in the markets that we serve may create alternatives to our products and
result in reduced sales.
  28




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We are subject to strong competition in certain industries in which we participate and therefore
may not be able to compete successfully.
  Due to the nature of our business, our sales levels may fluctuate causing our quarterly operating
results to fluctuate.
  The inherent volatility of the chemical industry affects our capacity utilization and causes
fluctuations in our results of operations.
  29




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A loss of key personnel or highly skilled employees, or the inability to attract and retain such
personnel, could disrupt our operations or impede our growth.
  We may continue to expand our operations in part through acquisitions, which could divert
managements attention and expose us to unanticipated liabilities and costs. We may experience
difficulties integrating the acquired operations, and we may incur costs relating to acquisitions
that are never consummated.
   We have a substantial amount of debt, and the cost of servicing that debt could adversely affect
our ability to take actions, our liquidity or our financial condition.
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
    
    make it more difficult for us to satisfy any other outstanding debt obligations;
 
    
    require us to dedicate a substantial portion of our cash flow from operations to payments
on our debt, reducing the amount of our cash flow available for working capital, capital
expenditures, acquisitions, developing our real estate assets and other general corporate
purposes;
 
    
    limit our flexibility in planning for, or reacting to, changes in the industries in which
we compete;
 
    
    place us at a competitive disadvantage compared to our competitors, some of which have
lower debt service obligations and greater financial resources than we do;
 
    
    limit our ability to borrow additional funds; or
 
    
    increase our vulnerability to general adverse economic and industry conditions.
 If we are unable to generate sufficient cash flow to service our debt and fund our operating costs,
our liquidity may be adversely affected.
  
    
    incur additional debt;
 
    
    pay dividends or make other restricted payments;
 
    
    create liens on assets to secure debt;
 
    
    incur dividend or other payment restrictions with regard to restricted subsidiaries;
 
    
    transfer or sell assets;
 
    
    enter into transactions with affiliates;
 
    
    enter into sale and leaseback transactions;
 
    
    create an unrestricted subsidiary;
 
    
    enter into certain business activities; or
 
    
    effect a consolidation, merger or sale of all or substantially all of our assets.
  Significant changes in discount rates, rates of return on pension assets, mortality tables and
other factors could affect our estimates of pension obligations, which in turn could affect future
funding requirements and related costs and impact our future earnings.
  Our shareholder rights plan, Restated Certificate of Incorporation, as amended, and Amended and
Restated By-laws discourage unsolicited takeover proposals and could prevent stockholders from
realizing a premium on their common stock.
 31




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
    
    a classified board of directors;
 
    
    the ability of our board of directors to designate the terms of and issue new series of
preferred stock;
 
    
    advance notice requirements for nominations for election to our board of directors; and
 
    
    special voting requirements for the amendment, in certain cases, of our Restated
Certificate of Incorporation, as amended, and our Amended and Restated By-laws.
  Our proprietary and intellectual property rights may be violated, compromised, circumvented or
invalidated, which could damage our operations.
  Our common stock price may fluctuate substantially, and a stockholders investment could
decline in value.
  
    
    actual or anticipated fluctuations in our results of operations;
    
    events or concerns related to our products or operations or those of our competitors, including public
health, environmental and safety concerns related to products and operations;
    
    material public announcements by us or our competitors;
    
    changes in government regulations or policies, such as new legislation, laws or
regulatory decisions that are adverse to us and/or our products;
    
    changes in key members of management;
    
    developments in our industries;
    
    changes in investors acceptable levels of risk;
    
    trading volume of our common stock; and
    
    general economic conditions.
  
 Item 1B. Unresolved Staff Comments
  32




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##### Table of Contents



Item 2. Properties
  Approximate Area
    
    
    
    ApproximateLocation
    
    Principal Use
    
    or Floor Space
    
    Status
    
    Annual Rent(a)(d)
    
    Iron County, UT
    
    Perchlorate and Water Treatment
Equipment Manufacturing Facility
    
    217 Acres
    
    Owned
    
    
    N/A(b)(d)
    
    Iron County, UT
    
    Sodium Azide Manufacturing Facility
    
    41 Acres
    
    Owned
    
    
    N/A(c)(d)
    
    Iron County, UT
    
    Halotron Manufacturing Facility
    
    6,720 sq. ft.
    
    Owned
    
    
    N/A(e)
    
    Las Vegas, NV
    
    Executive Offices
    
    22,531 sq.ft.
    
    Leased
    
    $
    916(f)
    
    Henderson, NV
    
    Goundwater Remediation Site
    
    1.75 Acres
    
    Owned
    
    
    N/A(g)
    
    Niagara Falls, NY
    
    Aerospace Equipment Manufacturing
Facility
    
    81,425 sq. ft.
    
    Leased
    
    $
    147(h)
    
    Westcott, Buckinghamshire, UK
    
    Aerospace Equipment Manufacturing
Facility
    
    40 Acres
    
    Leased
    
    $
    197(i)
    
    Rancho Cordova, CA
    
    Fine Chemicals Manufacturing
Facility
    
    241 Acres
    
    Owned/Leased
    
    $
    5(j)
    
    Chatsworth, CA
    
    Aerospace Equipment Offices
    
    3,495 sq. ft.
    
    Leased
    
    $
    69(h)
    
    Dublin, Ireland
    
    Aerospace Equipment Manufacturing
    
    15,000 sq. ft.
    
    Leased
    
    $
    182(h)
    
    Cheltenham, Gloucestershire, UK
    
    Aerospace Equipment Manufacturing
    
    8,000 sq. ft.
    
    Leased
    
    $
    55
 
 (a)
    
    This facility is shared by the Specialty Chemicals segment and our Other Businesses
segment for the production of perchlorate products and water treatment equipment. Presently,
this facility has significant remaining capacity.(b)
    
    This facility is used by the Specialty Chemicals segment for the production of sodium azide.
Presently, this facility has significant remaining capacity.(c)
    
    This facility is used by the Specialty Chemicals segment for the production of Halotron.
Presently, this facility has significant remaining capacity.(d)
    
    We own approximately 5000 acres of land that is utilized and adjacent to our Utah facilities.
The acreage indicated in the chart represents land currently utilized by our manufacturing
facilities.(e)
    
    These offices are used for our corporate office functions.(f)
    
    This facility is used for the groundwater remediation activities of the Company.(g)
    
    This facility is used for the design, manufacture and test of our Aerospace Equipment segment
products. Presently, this facility has adequate capacity available to support its operations
and expand, as may be required, through the addition of multiple labor shifts.(h)
    
    These facilities are used for the design, manufacture and test of our Aerospace Equipment
segment products. Presently, these facilities have adequate remaining capacity.(i)
    
    This facility is used by the Fine Chemicals segment for the production of active
pharmaceutical ingredients and registered intermediates. All buildings and improvements are
owned. The land is leased under a capital lease arrangement with a bargain purchase option.
Presently, this facility has adequate remaining capacity.(j)
    
    These offices are used for certain Aerospace Equipment segment business development and
engineering personnel.  
 Item 3. Legal Proceedings
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Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 STOCK LISTING.
 2009
    
    2008High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    13.58
    
    
    $
    7.58
    
    
    $
    19.20
    
    
    $
    13.37Second Quarter
    
    
    8.64
    
    
    
    3.90
    
    
    
    17.32
    
    
    
    13.61Third Quarter
    
    
    7.44
    
    
    
    4.55
    
    
    
    18.89
    
    
    
    15.45Fourth Quarter
    
    
    8.81
    
    
    
    6.44
    
    
    
    17.50
    
    
    
    12.60
  DIVIDENDS, UNREGISTERED SALES OF STOCK AND STOCK REPURCHASES.
 TRANSFER AGENT.
 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.
 Notwithstanding anything to the contrary set forth in any of our previous and future filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that
might incorporate filings made by the Company, including this annual report on Form 10-K, in whole
or in part, the following Performance Graph shall not be deemed to be soliciting material or
filed with the SEC or to be incorporated by reference into any prior or future filings made by
the Company.
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PERFORMANCE GRAPH.
 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 
  © ©
 35




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##### Table of Contents



Item 6. Selected Financial Data
  FIVE-YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA FOR THE YEARS ENDED SEPTEMBER 30,
(Dollars in Thousands, Except per Share Amounts)
 2009
    
    2008
    
    2007
    
    2006
    
    2005STATEMENT OF OPERATIONS DATA (a) (b):Revenues
    
    $
    197,148
    
    
    $
    203,129
    
    
    $
    183,928
    
    
    $
    141,904
    
    
    $
    67,813Cost of revenues
    
    
    136,295
    
    
    
    135,388
    
    
    
    120,230
    
    
    
    97,043
    
    
    
    43,916Gross profit
    
    
    60,853
    
    
    
    67,741
    
    
    
    63,698
    
    
    
    44,861
    
    
    
    23,897Operating expenses
    
    
    45,325
    
    
    
    42,865
    
    
    
    39,841
    
    
    
    38,202
    
    
    
    21,805Environmental remediation charges
    
    
    13,700
    
    
    
    
    
    
    
    
    
    
    
    3,600
    
    
    
    22,400Operating income (loss)
    
    
    1,828
    
    
    
    24,876
    
    
    
    23,857
    
    
    
    3,059
    
    
    
    (20,308
    )Interest and other expense (income), net
    
    
    10,589
    
    
    
    9,437
    
    
    
    11,352
    
    
    
    10,362
    
    
    
    (1,398
    )Debt repayment charges
    
    
    
    
    
    
    
    
    
    
    2,916
    
    
    
    
    
    
    
    Income (loss) from continuing operations
before income tax
    
    
    (8,761
    )
    
    
    15,439
    
    
    
    9,589
    
    
    
    (7,303
    )
    
    
    (18,910
    )Income tax expense (benefit)
    
    
    (2,802
    )
    
    
    6,488
    
    
    
    4,605
    
    
    
    (4,300
    )
    
    
    (8,367
    )Income (loss) from continuing operations
    
    $
    (5,959
    )
    
    $
    8,951
    
    
    $
    4,984
    
    
    $
    (3,003
    )
    
    $
    (10,543
    )Earnings (loss) per share from continuing operations:Basic
    
    $
    (0.80
    )
    
    $
    1.20
    
    
    $
    0.68
    
    
    $
    (0.41
    )
    
    $
    (1.45
    )Diluted
    
    $
    (0.80
    )
    
    $
    1.18
    
    
    $
    0.67
    
    
    $
    (0.41
    )
    
    $
    (1.45
    )Dividends declared per share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    BALANCE SHEET DATA (a) (b):Cash and cash equivalents
    
    $
    21,681
    
    
    $
    26,893
    
    
    $
    21,426
    
    
    $
    6,872
    
    
    $
    37,213Inventories and accounts receivable
    
    
    80,384
    
    
    
    67,802
    
    
    
    72,259
    
    
    
    59,229
    
    
    
    26,390Property, plant and equipment, net
    
    
    114,645
    
    
    
    118,608
    
    
    
    116,965
    
    
    
    119,746
    
    
    
    15,646Intangible assets, net
    
    
    3,553
    
    
    
    3,013
    
    
    
    5,767
    
    
    
    14,237
    
    
    
    9,763Goodwill
    
    
    3,144
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total assets
    
    
    264,841
    
    
    
    251,413
    
    
    
    249,407
    
    
    
    239,455
    
    
    
    115,000Working capital
    
    
    81,249
    
    
    
    77,651
    
    
    
    61,707
    
    
    
    33,421
    
    
    
    49,235Long-term debt (c)
    
    
    110,097
    
    
    
    110,120
    
    
    
    110,373
    
    
    
    97,771
    
    
    
    
 
 (a)
    
    As discussed in Note 2 to our consolidated financial statements included in Item 8 of this
report, effective October 1, 2008, we acquired Marotta Holdings Limited (subsequently renamed
Ampac ISP Holdings Limited) and its wholly-owned subsidiaries (collectively AMPAC ISP
Holdings). AMPAC ISP Holdings is a component of our Aerospace Equipment segment. We
acquired our Fine Chemicals segment effective on November 30, 2005.(b)
    
    Effective September 30, 2006, we sold our 50% interest in Energetic Systems, Inc. (ESI).
Revenues, expenses and cash flows associated with ESIs operations are classified as
discontinued operations for the years ended September 30, 2006 and 2005. ESI was formerly reported within our
Specialty Chemicals segment.(c)
    
    We entered into credit agreements in connection with our acquisition of our Fine Chemicals
segment in November 2005. These credit agreements were refinanced in February 2007. 36




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations (Dollars in Thousands)
  OUR COMPANY
   37




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OUR BUSINESS SEGMENTS
  2009
    
    2008
    
    2007Fine Chemicals
    
    
    48
    %
    
    
    61
    %
    
    
    57
    %Specialty Chemicals:Perchlorates
    
    
    28
    %
    
    
    26
    %
    
    
    28
    %Sodium azide
    
    
    2
    %
    
    
    0
    %*
    
    
    1
    %Halotron
    
    
    2
    %
    
    
    2
    %
    
    
    2
    %Total specialty chemicals
    
    
    32
    %
    
    
    28
    %
    
    
    31
    %Aerospace Equipment
    
    
    17
    %
    
    
    8
    %
    
    
    9
    %Other Businesses:Real estate
    
    
    0
    %*
    
    
    1
    %
    
    
    1
    %Water treatment equipment
    
    
    3
    %
    
    
    2
    %
    
    
    2
    %Total other businesses
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %Total revenues
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 
 *
    
    Less than 1% FINE CHEMICALS.
   38




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##### Table of Contents




    
    Alternative Supply May Not Be Readily Available.We are currently the sole-source supplier
on several of our fine chemicals products.
 
    
    Regulatory Approval.Applications to and approvals from the FDA and other regulatory
authorities generally require the chemical contractor to be named. Switching contractors may
require additional regulatory approvals and could take as long as two years to complete.
 
    
    Significant Financial Costs.Switching contractors and amending various filings can result
in significant costs associated with technology transfer, process validation and re-filing
with the FDA and other regulatory authorities.
 SPECIALTY CHEMICALS . ®
   AEROSPACE EQUIPMENT.
   OTHER BUSINESSES.
 39




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##### Table of Contents



RESULTS OF OPERATIONS
 REVENUES
 Year Ended September 30,
    
    Percentage Change2009
    
    2008
    
    2007
    
    09 vs. 08
    
    08 vs. 07Fine Chemicals
    
    $
    95,484
    
    
    $
    124,187
    
    
    $
    104,441
    
    
    
    (23
    %)
    
    
    19
    %Specialty Chemicals
    
    
    62,210
    
    
    
    57,097
    
    
    
    57,088
    
    
    
    9
    %
    
    
    0
    %Aerospace Equipment
    
    
    33,488
    
    
    
    16,435
    
    
    
    17,348
    
    
    
    104
    %
    
    
    (5
    %)Other Businesses
    
    
    5,966
    
    
    
    5,410
    
    
    
    5,051
    
    
    
    10
    %
    
    
    7
    %Total Revenues
    
    $
    197,148
    
    
    $
    203,129
    
    
    $
    183,928
    
    
    
    (3
    %)
    
    
    10
    %
 Fine Chemicals .
   
    
    The volume for our largest (measured in terms of revenues) anti-viral product increased by
45% to support our customers increase in safety stock inventory of the final drug.
 
    
    Volume for our second largest anti-viral product increased by 21% in support of increases
in demand for our customers end product.
 
    
    Volume for our largest oncology product declined in Fiscal 2008 because Fiscal 2007
included additional quantities purchased by our customer to build on-hand safety stock
quantities.
  Specialty Chemicals .
 40




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##### Table of Contents




    
    A 17% decrease in perchlorate volume and a 27% increase in the related average price per
pound for Fiscal 2009.
 
    
    A 13% increase in perchlorate volume in Fiscal 2008 and a 10% decline in the related
average price per pound.
 
    
    Sodium azide revenues increased 398% in Fiscal 2009 and decreased 63% in Fiscal 2008, each
compared to the prior fiscal year.
 
    
    Halotron revenues decreased 14% in Fiscal 2009 and increased 4% in Fiscal 2008, each
compared to the prior fiscal year.
        Aerospace Equipment .
   41




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##### Table of Contents




    
    a contract to develop a liquid divert and attitude control system (DACS) for the
Ballistic Missile Defense System. The work applies proven component and subsystem design to
develop a modular and scalable DACS. The program leverages ISPs design for manufacturing
experience to develop a low cost, low risk propulsion system for interceptor kill vehicles.
The cost-plus-fixed-fee contract, of approximately $15,000, is anticipated to culminate in the
delivery of a qualification unit and two flight test units in September 2010. ISP is teamed
with Moog Inc. Space and Defense Group, East Aurora, New York, which will provide subsystem
design and component support.
 
    
    initial funding from General Dynamics Advanced Information Systems to initiate the Landsat
Data Continuity Mission contract. The expected value of the contract is approximately $4,000
to deliver a propulsion system for the Landsat satellite. This satellite is funded by NASA
Goddard and provides earth observation for land and water resource planning.
 
    
    a contract by Microsat Systems to provide 18 propulsion systems to be used on the Orbcomm
OG2 program. The initial multimillion dollar contract for 18 systems also has an option for
another 30 systems. Orbcomm satellites provide GPS data for tracking and global satellite data
communications.
 Other Businesses.
 COST OF REVENUES AND GROSS MARGIN
 Year Ended September 30,
    
    Percentage Change2009
    
    2008
    
    2007
    
    09 vs. 08
    
    08 vs. 07Revenues
    
    $
    197,148
    
    
    $
    203,129
    
    
    $
    183,928
    
    
    
    (3
    %)
    
    
    10
    %Cost of Revenues
    
    
    136,295
    
    
    
    135,388
    
    
    
    120,230
    
    
    
    1
    %
    
    
    13
    %Gross Margin
    
    $
    60,853
    
    
    $
    67,741
    
    
    $
    63,698
    
    
    
    (10
    %)
    
    
    6
    %Gross Margin Percentage
    
    
    31
    %
    
    
    33
    %
    
    
    35
    %
   
    
    Fine Chemicals segment gross margin percentage for Fiscal 2009 declined by approximately
eight points, reflecting the following:
 o
    
    A decrease in the gross margin percentage due to lower production volume and
the related impact on gross margin due to less absorption of fixed manufacturing costs
 42




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o
    
    During the fourth quarter of Fiscal 2008, the implementation of a new process
for a large-volume core anti-viral product which experienced start-up difficulties that
negatively impacted margins for this product for the first half of Fiscal 2009.o
    
    A decrease in revenues for central nervous system products, including a price
reduction for a large-volume core product.
 
    
    Specialty Chemicals segment gross margin percentage improved two points for Fiscal 2009
compared to the prior fiscal year primarily due to a reduction in amortization expense from
$1,517 for Fiscal 2008 to zero for Fiscal 2009. In mid-Fiscal 2008 second quarter, the
Specialty Chemicals segment completed the amortization of the value assigned to the
perchlorate customer list acquired in the fiscal year ended September 30, 1998.
 
    
    Aerospace Equipment segment gross margin percentage improved two points for Fiscal 2009
compared to the prior fiscal year. The improvement was primarily driven by the AMPAC ISP
Europe operations which experienced gross margin increases due to greater volumes. This
improvement was offset somewhat by lower aggregate margins due to a change in product mix to a
greater portion of propulsion systems in Fiscal 2009 as compared to engines in Fiscal 2008.
  
    
    Fine Chemicals segment gross margin percentage for Fiscal 2008 declined five points
compared to the prior fiscal year, reflecting the following:
 o
    
    Our product mix changed such that Fiscal 2008 contained a greater percentage of
lower-margin products than Fiscal 2007.
 o
    
    During the fourth quarter of Fiscal 2008, we implemented a new process for a
large-volume anti-viral product and experienced start-up difficulties. This negatively
impacted margins.
 
    
    Specialty Chemicals segment gross margin percentage improved approximately eight points for
Fiscal 2008 compared to the prior fiscal year, reflecting the following:
 o
    
    Mid Fiscal 2008 second quarter, the Specialty Chemicals segment completed the
amortization of the value assigned to the perchlorate customer list acquired in the
fiscal year ended September 30, 1998. This reduction in amortization expense improved
the Specialty Chemicals segment gross margin percentage by four points for Fiscal 2008.o
    
    The remaining improvement in the Specialty Chemicals segment gross margin
percentage reflects better absorption of fixed manufacturing costs due to the higher
production volume in Fiscal 2008.
 
    
    Aerospace Equipment segment gross margin percentage was the same in Fiscal 2008 and Fiscal
2007.
 OPERATING EXPENSES
 Year Ended September 30,
    
    Percentage Change2009
    
    2008
    
    2007
    
    09 vs. 08
    
    08 vs. 07Operating Expenses
    
    $
    45,325
    
    
    $
    42,865
    
    
    $
    39,841
    
    
    
    6
    %
    
    
    8
    %Percentage of Revenues
    
    
    23
    %
    
    
    21
    %
    
    
    22
    %
    
    
    9
    %
    
    
    (3
    %)
  
    
    A $914 decrease in Fine Chemicals segment incentive compensation, as a result of recording
no incentive compensation in Fiscal 2009.
 
    
    An increase in Specialty Chemicals segment operating expenses primarily due to an increase
of $329 in employee benefit costs and an increase of $305 in lab and research and development
costs.
 
    
    An increase in Aerospace Equipment segment operating expenses primarily due to additional
operating expenses in the amount of $2,496 resulting from the acquisition of AMPAC ISP
Holdings.
 43




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##### Table of Contents




    
    A decrease in corporate expenses, primarily including a decrease in incentive compensation
of $1,382 as a result of recording no incentive compensation in Fiscal 2009, offset partially
by increases in payroll and related costs of $718, rent of $593 and stock-based compensation
of $639.
 
    
    Other decreases of $324.
  
    
    A decrease in Fine Chemicals segment operating expenses including a decrease in incentive
compensation of $742 offset partially by an increase in recruiting and personnel relocation
expenses of $482.
 
    
    A $125 decrease in Specialty Chemicals segment operating expenses due to various
individually insignificant changes in general and administrative expenses.
 
    
    A $506 increase in Aerospace Equipment segment operating expenses due to various
individually insignificant changes in staffing and marketing expenses.
 
    
    An increase in corporate operating expenses including increases in supplemental executive
retirement expenses of $938, rent of $421, and legal and professional services of $437.
 ENVIRONMENTAL REMEDIATION CHARGES.
 SEGMENT OPERATING PROFIT AND OPERATING INCOME
 Year Ended September 30,
    
    Percentage Change2009
    
    2008
    
    2007
    
    09 vs. 08
    
    08 vs. 07Fine Chemicals
    
    $
    2,299
    
    
    $
    16,246
    
    
    $
    16,790
    
    
    
    (86
    %)
    
    
    (3
    %)Specialty Chemicals
    
    
    26,189
    
    
    
    23,128
    
    
    
    18,223
    
    
    
    13
    %
    
    
    27
    %Aerospace Equipment
    
    
    3,012
    
    
    
    736
    
    
    
    1,458
    
    
    
    309
    %
    
    
    (50
    %)Other Businesses
    
    
    195
    
    
    
    1,022
    
    
    
    1,210
    
    
    
    (81
    %)
    
    
    (16
    %)Total Segment Operating Profit
    
    
    31,695
    
    
    
    41,132
    
    
    
    37,681
    
    
    
    (23
    %)
    
    
    9
    %Corporate Expenses
    
    
    (16,167
    )
    
    
    (16,256
    )
    
    
    (13,824
    )
    
    
    (1
    %)
    
    
    18
    %Environmental Remediation Charges
    
    
    (13,700
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Income
    
    $
    1,828
    
    
    $
    24,876
    
    
    $
    23,857
    
    
    
    (93
    %)
    
    
    4
    %
  BACKLOG
   44




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INTEREST AND DEBT REPAYMENT CHARGES
 Year Ended September 30,
    
    Percentage Change2009
    
    2008
    
    2007
    
    09 vs. 08
    
    08 vs. 07Interest and Other Income:Interest Income
    
    $
    150
    
    
    $
    937
    
    
    $
    644
    
    
    
    (84
    %)
    
    
    45
    %Gain on Sale of Assets
    
    
    
    
    
    
    429
    
    
    
    
    
    
    
    (100
    %)
    
    
    Other
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    146
    
    
    $
    1,366
    
    
    $
    644
    
    
    
    (89
    %)
    
    
    112
    %Interest Expense
    
    $
    10,735
    
    
    $
    10,803
    
    
    $
    11,996
    
    
    
    (1
    %)
    
    
    (10
    %)Debt Repayment Charges
    
    $
    
    
    
    $
    
    
    
    $
    2,916
    
    
    
    
    
    
    
    (100
    %)
    INCOME TAXES.
  45




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2009
    
    2008
    
    2007Federal income tax at the statutory rate
    
    
    (35.0
    %)
    
    
    35.0
    %
    
    
    35.0
    %State income tax, net of federal benefit
    
    
    (5.0
    %)
    
    
    5.2
    %
    
    
    4.0
    %Nondeductible expenses
    
    
    3.9
    %
    
    
    1.5
    %
    
    
    1.3
    %Valuation allowance
    
    
    0.0
    %
    
    
    1.0
    %
    
    
    2.0
    %Change in effective state income tax rate
    
    
    0.0
    %
    
    
    (2.3
    %)
    
    
    5.4
    %Interest and penalties
    
    
    0.6
    %
    
    
    1.4
    %
    
    
    0.0
    %Foreign tax rate differential
    
    
    2.4
    %
    
    
    0.0
    %
    
    
    0.0
    %Other
    
    
    1.1
    %
    
    
    0.2
    %
    
    
    0.3
    %Effective tax rate
    
    
    (32.0
    %)
    
    
    42.0
    %
    
    
    48.0
    %
  2009
    
    2008Deferred tax assets:Environmental remediation reserves
    
    $
    11,955
    
    
    $
    7,386Pension obligations
    
    
    10,400
    
    
    
    5,447Tax credits and carryforwards
    
    
    3,589
    
    
    
    2,988Intangible assets
    
    
    2,899
    
    
    
    3,507Inventory
    
    
    4,660
    
    
    
    4,848Accrued expenses
    
    
    1,997
    
    
    
    2,292Other
    
    
    590
    
    
    
    529Subtotal
    
    
    36,090
    
    
    
    26,997Valuation allowance
    
    
    (1,157
    )
    
    
    (891
    )Deferred tax assets
    
    
    34,933
    
    
    
    26,106Deferred tax liabilities:Property, plant and equipment
    
    
    (6,698
    )
    
    
    (4,613
    )Prepaid expenses
    
    
    (623
    )
    
    
    (627
    )Other
    
    
    (302
    )
    
    
    (158
    )Deferred tax liabilities
    
    
    (7,623
    )
    
    
    (5,398
    )Net deferred tax assets
    
    $
    27,310
    
    
    $
    20,708
  2009
    
    2008Federal operating losses
    
    $
    1,382
    
    
    $
    1,911Federal R&D credits
    
    
    160
    
    
    
    160Federal AMT credits
    
    
    1,684
    
    
    
    1,970State operating losses
    
    
    1,205
    
    
    
    1,205U.K. operating losses
    
    
    2,514
    
    
    
    2,749Ireland operating losses
    
    
    3,548
    
    
    
    
  46




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LIQUIDITY AND CAPITAL RESOURCES
 CASH FLOWS
 Year Ended September 30,
    
    
    Percentage Change2009
    
    
    2008
    
    
    2007
    
    
    09 vs. 08
    
    
    08 vs. 07Cash Provided (Used) By:Operating activities
    
    $
    11,142
    
    
    $
    20,333
    
    
    $
    24,138
    
    
    
    (45
    %)
    
    
    (16
    %)Investing activities
    
    
    (16,183
    )
    
    
    (15,284
    )
    
    
    (6,911
    )
    
    
    6
    %
    
    
    121
    %Financing activities
    
    
    (316
    )
    
    
    418
    
    
    
    (2,673
    )
    
    
    (176
    %)
    
    
    (116
    %)Effect of changes in exchange rates on cash
    
    
    145
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net change in cash for period
    
    $
    (5,212
    )
    
    $
    5,467
    
    
    $
    14,554
    
    
    
    (195
    %)
    
    
    (62
    %)
 Operating Activities
 Fiscal 2009 compared to Fiscal 2008
   
    
    A decrease in cash due to a decline in cash profits generated by our operations of $10,216.
 
    
    An increase in cash used for working capital accounts of $7,572, excluding the effects of
interest and income taxes.
 
    
    A decrease in cash taxes paid of $5,743.
 
    
    A decrease in cash interest of $113.
 
    
    An increase in cash used for environmental remediation of $143.
 
    
    Other increases in cash provided by operating activities of $2,884.
     Fiscal 2008 compared to Fiscal 2007
  47




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
    
    A decrease in cash due to a decline in cash profits generated by our operations of $1,214.
 
    
    An improvement in cash used to fund working capital increases of $1,703 excluding the
effect of interest and income taxes.
 
    
    An increase in cash taxes paid of $4,147.
 
    
    An increase in cash used for interest payments of $1,378.
 
    
    A reduction in cash used for environmental remediation of $943.
 
    
    Other decreases in cash used for operating activities of $288.
     Investing Activities
 Fiscal 2009 compared to Fiscal 2008
 
    
    Capital expenditures decreased by $5,826 in Fiscal 2009 compared to the prior fiscal
year primarily due to reductions in growth capital spending for our Fine Chemicals segment. We
are anticipating our capital expenditures, which do not include environmental remediation
spending, for Fiscal 2010 to range from approximately $10,000 to approximately $14,000, most of
which is related to maintenance capital.
 
    
    Cash used for acquisition of business reflects the purchase of AMPAC ISP Holdings for
$7,196, net of cash acquired of $471.
 Fiscal 2008 compared to Fiscal 2007
  Financing Activities
   LIQUIDITY AND CAPITAL RESOURCES.
 48




---



##### Table of Contents




    
    current results of operations, cash flows and backlog;
 
    
    anticipated changes in operating trends, including anticipated changes in revenues and
margins; and
 
    
    cash requirements related to our debt agreements, pension plans and remediation activities.
   LONG TERM DEBT AND REVOLVING CREDIT FACILITIES
 Senior Notes.
 
    
    ranked equally in right of payment with all of our existing and future senior indebtedness;
 
    
    ranked senior in right of payment to all of our existing and future senior subordinated and
subordinated indebtedness;
    
    effectively junior to our existing and future secured debt to the extent of the value of
the assets securing such debt; and
 49




---



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
    
    structurally subordinated to all of the existing and future liabilities (including trade
payables) of each of our subsidiaries that do not guarantee the Senior Notes.
  
    
    at any time prior to February 1, 2011 at a price equal to 100% of the purchase amount of
the Senior Notes plus an applicable premium as defined in the related indenture;
 
    
    at any time on or after February 1, 2011 at redemption prices beginning at 104.5% of the
principal amount to be redeemed and reducing to 100% by February 1, 2013;
 
    
    until February 1, 2010, up to 35% of the principal amount of the Senior Notes at a
redemption price of 109% of the principal amount thereof, plus accrued and unpaid interest
thereon, with the proceeds of certain sales of our equity securities; and
 
    
    under certain changes of control, we must offer to purchase the Senior Notes at 101% of
their aggregate principal amount, plus accrued interest.
  
    
    incur additional debt;
 
    
    pay dividends or make other restricted payments;
 
    
    create liens on assets to secure debt;
 
    
    incur dividend or other payment restrictions with regard to restricted subsidiaries;
 
    
    transfer or sell assets;
 
    
    enter into transactions with affiliates;
 
    
    enter into sale and leaseback transactions;
 
    
    create an unrestricted subsidiary;
 
    
    enter into certain business activities; or
 
    
    effect a consolidation, merger or sale of all or substantially all of our assets.
  Revolving Credit Facility.
  50




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##### Table of Contents




    
    incur debt, incur contingent obligations and issue certain types of preferred stock;
 
    
    create liens;
 
    
    pay dividends, distributions or make other specified restricted payments;
 
    
    make certain investments and acquisitions;
 
    
    enter into certain transactions with affiliates;
 
    
    enter into sale and leaseback transactions; and
 
    
    merge or consolidate with any other entity or sell, assign, transfer, lease, convey or
otherwise dispose of assets.
    PENSION BENEFITS.
  51




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Debt Issue Costs and Debt Repayment Charges.
 ENVIRONMENTAL REMEDIATION  AMPAC HENDERSON SITE.
  52




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CONTRACTUAL OBLIGATIONS.
 Payments Due by Year Ending September 30,2010
    
    2011-2012
    
    2013-2014
    
    Thereafter
    
    TotalSenior Notes
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    110,000
    
    
    $
    110,000Interest on Senior Notes at 9% annually
    
    
    9,900
    
    
    
    19,800
    
    
    
    19,800
    
    
    
    3,300
    
    
    
    52,800Capital Leases
    
    
    148
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    248Interest on Capital Leases
    
    
    7
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    13Operating Leases
    
    
    1,615
    
    
    
    3,080
    
    
    
    2,852
    
    
    
    6,520
    
    
    
    14,067Total
    
    $
    11,670
    
    
    $
    22,986
    
    
    $
    22,652
    
    
    $
    119,820
    
    
    $
    177,128
  
    
    We have recorded an estimated liability for environmental remediation of $26,690 (see Note
11 to the consolidated financial statements included in Item 8 of this report). We expect to
spend approximately $2,522 for environmental remediation during Fiscal 2010.
 
    
    We have recorded aggregate Pension Plans and SERP obligations of $28,202 (see Note 10 to
the consolidated financial statements included in Item 8 of this report). We expect to
contribute $3,068 to our Pension Plans and SERP during Fiscal 2010.
 53




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
    
    We have uncertain tax positions totaling $652. We are unable to reasonably estimate the
timing of the related payments, if any.
 
    
    We also maintain the Revolving Credit Facility, which provides revolving credit in an
aggregate principal amount of up to $20,000 with an initial maturity in February 2012. At
September 30, 2009, we had no balance outstanding under the Revolving Credit Facility. We may
prepay and terminate the Revolving Credit Facility at any time.
 OFF-BALANCE SHEET ARRANGEMENTS
 Letters of Credit.
 Employee Agreements.
   INFLATION
  CRITICAL ACCOUNTING POLICIES
   SALES AND REVENUE RECOGNITION.
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DEPRECIABLE OR AMORTIZABLE LIVES OF LONG-LIVED ASSETS.
  IMPAIRMENT OF LONG-LIVED ASSETS .
 55




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GOODWILL.
 ENVIRONMENTAL COSTS .
  INCOME TAXES .
  56




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PENSION BENEFITS .
   RECENTLY ISSUED OR ADOPTED ACCOUNTING STANDARDS.
 57




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59




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Item 7A. Quantitative and Qualitative Disclosures About Market Risk (Dollars in
Thousands)
   
 Item 8. Financial Statements and Supplementary Data
  PageReport of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets
    
    
    F-2Consolidated Statements of Operations
    
    
    F-3Consolidated Statements of Changes in Stockholders Equity
    
    
    F-4Consolidated Statements of Cash Flows
    
    
    F-5Notes to Consolidated Financial Statements
    
    
    F-7
 60




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SUMMARIZED QUARTERLY FINANCIAL DATA
(unaudited)
(amounts in thousands except per share amounts)
 Quarters For Fiscal Year 20091st
    
    2nd
    
    3rd
    
    4th
    
    TotalRevenues
    
    $
    45,629
    
    
    $
    56,435
    
    
    $
    31,490
    
    
    $
    63,594
    
    
    $
    197,148Gross Profit
    
    
    14,734
    
    
    
    17,297
    
    
    
    7,263
    
    
    
    21,559
    
    
    
    60,853Net Income (Loss)
    
    
    457
    
    
    
    1,733
    
    
    
    (3,555
    )
    
    
    (4,594
    )
    
    
    (5,959
    )Basic Earnings (Loss) Per Share
    
    $
    0.06
    
    
    $
    0.23
    
    
    $
    (0.48
    )
    
    $
    (0.61
    )
    
    $
    (0.80
    )Diluted Earnings (Loss) Per Share
    
    $
    0.06
    
    
    $
    0.23
    
    
    $
    (0.48
    )
    
    $
    (0.61
    )
    
    $
    (0.80
    )
 Quarters For Fiscal Year 20081st
    
    2nd
    
    3rd
    
    4th
    
    TotalRevenues
    
    $
    46,890
    
    
    $
    48,347
    
    
    $
    36,740
    
    
    $
    71,152
    
    
    $
    203,129Gross Profit
    
    
    17,429
    
    
    
    16,610
    
    
    
    12,750
    
    
    
    20,952
    
    
    
    67,741Net Income
    
    
    2,863
    
    
    
    1,633
    
    
    
    128
    
    
    
    4,327
    
    
    
    8,951Basic Earnings Per Share
    
    $
    0.39
    
    
    $
    0.22
    
    
    $
    0.02
    
    
    $
    0.58
    
    
    $
    1.20Diluted Earnings Per Share
    
    $
    0.38
    
    
    $
    0.22
    
    
    $
    0.02
    
    
    $
    0.57
    
    
    $
    1.18
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
  
 Item 9A(T). Controls and Procedures
 DISCLOSURE CONTROLS AND PROCEDURES.
 CHANGES IN OUR INTERNAL CONTROL OVER FINANCIAL REPORTING
 61




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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
     Inadequate controls for non-routine transactions.
  
    
    Developed and implemented a comprehensive Fine Chemicals segment revenue recognition
testing work program based on a risk assessment that determined the scope of transactions to
be tested.
 
    
    Reviewed manufacturing agreements, customer proposals and purchase orders, including
contractual arrangements documented outside of the customers
written contract or purchase order.
 
 62




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##### Table of Contents




    
    Reviewed applicable components of Fine Chemicals segments inventories for inappropriate zero or credit balances, unusual captions, and consistency with appropriate
revenue recognition.
    
    Conducted interviews with Fine Chemicals segment personnel, outside of the accounting and
finance department, who negotiate contractual arrangements with customers.
 
    
    Conducted confirmatory interviews with certain Fine Chemicals customers
 Remediation Plan.
 
    
    Improving the Fine Chemicals segment contract administration process to ensure the proper
approval and circulation of all sales arrangements, including non-standard commitments;
 
    
    Providing additional and on-going training to Fine Chemicals segment finance and accounting
staff on the application of technical accounting pronouncements, especially in the area of
revenue recognition. Additionally, we will provide training to Fine Chemicals segment product
managers and others involved in negotiating contractual arrangements with our customers to
heighten the awareness of revenue recognition concepts, with emphasis on non-standard
contracts; and
 
    
    Establishing a process whereby corporate finance personnel provide a second review of Fine
Chemicals segments accounting treatment for significant sales arrangements.
   
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  Code of Ethics www.apfc.com
 63




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##### Table of Contents



Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
  64




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    (1) Financial Statements
  Financial Statement Schedules
  Exhibits
  ExhibitNumber
    
    Description3.1
    
    Restated Certificate of Incorporation, as amended, of American Pacific Corporation
(incorporated by reference to Exhibit 4.(a) to the registrants Registration Statement on Form
S-3 (File No. 33-15674)).3.2
    
    Articles of Amendment to the Restated Certificate of Incorporation of American Pacific
Corporation, as filed with the Secretary of State, State of Delaware, on October 7, 1991
(incorporated by reference to Exhibit 4.3 to the registrants Registration Statement on Form
S-3 (File No. 33-52196)).3.3
    
    Articles of Amendment to the Restated Certificate of Incorporation of American Pacific
Corporation, as filed with the Secretary of State, State of Delaware, on April 21, 1992
(incorporated by reference to Exhibit 4.4 to the registrants Registration Statement on Form
S-3 (File No. 33-52196)).3.4
    
    American Pacific Corporation Amended and Restated By-laws (incorporated by reference to
Exhibit 3.1 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on September 15, 2008).3.5
    
    Rights Agreement, dated as of August 3, 1999, between American Pacific Corporation and
American Stock Transfer & Trust Company (incorporated by reference to Exhibit 1 to the
registrants Registration Statement on Form 8-A (File No. 001-08137) filed by the registrant
with the Securities and Exchange Commission on August 6, 1999).3.6
    
    Form of Letter to Stockholders that accompanied copies of the Summary of Rights to Purchase
Preferred Shares (incorporated by reference to Exhibit 2 to the registrants Registration
Statement on Form 8-A (File No. 001-08137) filed by the registrant with the Securities and
Exchange Commission on August 6, 1999).3.7
    
    Amendment, dated as of July 11, 2008, between American Pacific Corporation and American Stock
Transfer & Trust Company (incorporated by reference to Exhibit 4.1 to the registrants Current
Report on Form 8-K (File No. 001-08137) filed by the registrant with the Securities and
Exchange Commission on July 11, 2008).
 65




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ExhibitNumber
    
    Description4.1
    
    Form of 9% Senior Note due 2015 (incorporated by reference to Exhibit A of Exhibit 4.2 to the
registrants Current Report on Form 8-K (File No. 001-08137) filed by the registrant with the
Securities and Exchange Commission on February 6, 2007).4.2
    
    Indenture, dated as of February 6, 2007, by and among American Pacific Corporation, certain
subsidiaries thereof and Wells Fargo Bank, National Association (incorporated by reference to
Exhibit 4.2 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on February 6, 2007).10.1+
    
    Employment Agreement, effective October 15, 2006, between American Pacific Corporation and
Joseph Carleone, as amended and restated on November 14, 2008 (incorporated by reference to
Exhibit 10.1 to the registrants Annual Report on Form 10-K (File No. 001-08137) for the
fiscal year ended September 30, 2008).10.2+
    
    Notice of Eligibility for Dr. Aslam Malik under Ampac Fine Chemicals LLC Severance Pay Plan,
dated January 24, 2007 (incorporated by reference to Exhibit 10.2 to the registrants
Quarterly Report on Form 10-Q (File No. 001-08137) for the fiscal quarter ended March 31,
2007).10.3+
    
    Ampac Fine Chemicals LLC Severance Pay Plan (incorporated by reference to Exhibit 10.1 to
the registrants Quarterly Report on Form 10-Q (File No. 001-08137) for the fiscal quarter
ended March 31, 2007).10.4+
    
    Form of Indemnification Agreement between American Pacific Corporation and each Director of
American Pacific Corporation (incorporated by reference to Exhibit 3.6 to the registrants
Annual Report on Form 10-K (File No. 001-08137) for the fiscal year ended September 30, 2000).10.5+
    
    Amended and Restated American Pacific Corporation Defined Benefit Pension Plan, as Amended
and Restated Effective October 1, 2008, executed by American Pacific Corporation on June 12,
2009 (incorporated by reference to Exhibit 10.1 to the registrants Quarterly Report on Form
10-Q (File No. 001-08137) for the fiscal quarter ended June 30, 2009).10.6+
    
    American Pacific Corporation Supplemental Executive Retirement Plan, amended and restated
and effective on and after October 1, 2007 (incorporated by reference to Exhibit 10.1 to the
registrants Current Report on Form 8-K (File No. 001-08137) filed by the registrant with the
Securities and Exchange Commission on November 15, 2007).10.7+
    
    Trust Agreement for American Pacific Corporation Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit 10.6 to the registrants Annual Report on Form 10-K
(File No. 001-08137) for the fiscal year ended September 30, 1999).10.8++
    
    Long-Term Pricing Agreement, dated as of December 12, 1997, between Thiokol
Corporation-Propulsion Group and American Pacific Corporation (incorporated by reference to
Exhibit 10.1 to the registrants Quarterly Report on Form 10-Q (File No. 001-08137) for the
fiscal quarter ended March 31, 1998).10.9++
    
    Modification No. 1 to Long Term Pricing Agreement, dated September 13, 2000, between Thiokol
Propulsion and American Pacific Corporation (incorporated by reference to Exhibit 10.14 to the
registrants Annual Report on Form 10-K (File No. 001-08137) for the fiscal year ended
September 30, 2000).10.10
    
    Ground Lease, dated as of November 30, 2005, by and between Aerojet-General Corporation and
Ampac Fine Chemicals LLC (incorporated by reference to Exhibit 10.5 to
 66




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ExhibitNumber
    
    Descriptionthe registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on December 1, 2005).10.11++
    
    Modification #3 to the Thiokol Long Term Pricing Agreement, dated April 5, 2006
(incorporated by reference to Exhibit 10.1 to the registrants Quarterly Report on Form 10-Q
(File No. 001-08137) for the fiscal quarter ended March 31, 2006).10.12+
    
    Ampac Fine Chemicals LLC Pension Plan for Bargaining Unit Employees, as Amended and Restated
Effective October 1, 2007, executed by American Pacific Corporation on June 12, 2009
(incorporated by reference to Exhibit 10.2 to the registrants Quarterly Report on Form 10-Q
(File No. 001-08137) for the fiscal quarter ended June 30, 2009).10.13+
    
    Ampac Fine Chemicals LLC Pension Plan for Salaried Employees, as Amended and Restated
Effective October 1, 2007, executed by American Pacific Corporation on June 12, 2009
(incorporated by reference to Exhibit 10.3 to the registrants Quarterly Report on Form 10-Q
(File No. 001-08137) for the fiscal quarter ended June 30, 2009).10.14
    
    Amended and Restated Credit Agreement, dated as of February 6, 2007, among American Pacific
Corporation, certain subsidiaries thereof, the lenders party thereto, Wachovia Bank, National
Association and Bank of America, N.A. (incorporated by reference to Exhibit 10.3 to the
registrants Current Report on Form 8-K (File No. 001-08137) filed by the registrant with the
Securities and Exchange Commission on February 6, 2007).10.15
    
    First Amendment to Credit Agreement, dated as of July 7, 2009, by and among American Pacific
Corporation, certain subsidiaries thereof, the lenders party thereto, and Wachovia Bank,
National Association and Bank of America, N.A. (incorporated by reference to Exhibit 10.4 to
the registrants Quarterly Report on Form 10-Q (File No. 001-08137) for the fiscal quarter
ended June 30, 2009).10.16+
    
    American Pacific Corporation Amended and Restated 2001 Stock Option Plan (incorporated by
reference to Exhibit 4.1 to the registrants Registration Statement on Form S-8 (File No.
333-104732) filed by the registrant with the Securities and Exchange Commission on April 24,
2003).10.17+
    
    Form of Option Agreement under the American Pacific Corporation Amended and Restated 2001
Stock Option Plan (incorporated by reference to Exhibit 4.3 to the registrants Registration
Statement on Form S-8 (File No. 333-104732) filed by the registrant with the Securities and
Exchange Commission on April 24, 2003).10.18+
    
    American Pacific Corporation 2002 Directors Stock Option Plan, as amended and restated
(incorporated by reference to Exhibit 99.1 to the registrants Current Report on Form 8-K
(File No. 001-08137) filed by the registrant with the Securities and Exchange Commission on
October 25, 2005).10.19+
    
    Form of Option Agreement under the American Pacific Corporation 2002 Directors Stock Option
Plan (incorporated by reference to Exhibit 4.4 to the registrants Registration Statement on
Form S-8 (File No. 333-104732) filed by the registrant with the Securities and Exchange
Commission on April 24, 2003).10.20+
    
    American Pacific Corporation 2008 Stock Incentive Plan (incorporated by reference to Exhibit
10.1 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on March 17, 2008).10.21+
    
    Form of Notice of Stock Option Award and Stock Option Award Agreement under the American
Pacific Corporation 2008 Stock Incentive Plan (incorporated by reference to
 67




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##### Table of Contents



ExhibitNumber
    
    DescriptionExhibit 10.2 to the registrants Current Report on Form 8-K (File No. 001-08137)
filed by the registrant with the Securities and Exchange Commission on March 17,
2008).10.22+
    
    Form of Notice of Restricted Stock Bonus Award and Restricted Stock Bonus Award Agreement
under the American Pacific Corporation 2008 Stock Incentive Plan (incorporated by reference to
Exhibit 10.3 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on March 17, 2008).10.23+
    
    American Pacific Corporation Incentive Compensation Plan (incorporated by reference to
Exhibit 10.4 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on March 17, 2008).10.24+
    
    Severance Agreement, dated as of July 8, 2008, between American Pacific Corporation and
Linda G. Ferguson (incorporated by reference to Exhibit 10.1 to the registrants Current
Report on Form 8-K (File No. 001-08137) filed by the registrant with the Securities and
Exchange Commission on July 11, 2008).10.25+
    
    Severance Agreement, dated as of July 8, 2008, between American Pacific Corporation and Dana
M. Kelley (incorporated by reference to Exhibit 10.2 to the registrants Current Report on
Form 8-K (File No. 001-08137) filed by the registrant with the Securities and Exchange
Commission on July 11, 2008).*21
    
    Subsidiaries of the registrant.*23
    
    Consent of Independent Registered Public Accounting Firm.*24
    
    Powers of Attorney (included on the signature pages).*31.1
    
    Certification of Principal Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Principal Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.+
    
    Management contract or compensatory plan or arrangement.++
    
    Confidential treatment has been requested and obtained with regard to
certain portions of this document. Such portions have been omitted
from filing and have been filed separately with the Securities and
Exchange Commission. (b)
    
    See (a)(3) above.
 (c)
    
    None applicable.
 68




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##### Table of Contents



SIGNATURES
  Dated: December 29, 2009
    
    AMERICAN PACIFIC CORPORATION(Registrant)By:
    
    /s/ JOHN R. GIBSONJohn R. GibsonChairman of the Board and Chief Executive Officer(Principal Executive Officer)By:
    
    /s/ DANA M. KELLEYDana M. KelleyVice President, Chief FinancialOfficer, and Treasurer(Principal Financial and Accounting Officer)
 69




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##### Table of Contents



POWER OF ATTORNEY
   /s/ JOHN R. GIBSON
    
    Date:  December 29, 2009John R. Gibson, Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)/s/ DANA M. KELLEY
    
    Date:  December 29, 2009Dana M. Kelley, Vice President, 
Chief Financial Officer, and Treasurer
(Principal Financial and Accounting Officer)/s/ BARBARA SMITH CAMPBELL
    
    Date:  December 29, 2009Barbara Smith Campbell, Director/s/ JOSEPH CARLEONE
    
    Date:  December 29, 2009Joseph Carleone, Director/s/ FRED D. GIBSON, JR.
    
    Date:  December 29, 2009Fred D. Gibson, Jr., Director/s/ JAN H. LOEB
    
    Date:  December 29, 2009Jan H. Loeb, Director/s/ BERLYN D. MILLER
    
    Date:  December 29, 2009Berlyn D. Miller, Director/s/ WILLIAM F. READDY
    
    Date:  December 29, 2009William F. Readdy, Director/s/ C. KEITH ROOKER
    
    Date:  December 29, 2009C. Keith Rooker, Director/s/ DEAN M. WILLARD
    
    Date:  December 29, 2009Dean M. Willard, Director/s/ JANE L. WILLIAMS
    
    Date:  December 29, 2009Jane L. Williams, Director
 70




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    Restated Certificate of Incorporation, as amended, of American Pacific Corporation
(incorporated by reference to Exhibit 4.(a) to the registrants Registration Statement on Form
S-3 (File No. 33-15674)).3.2
    
    Articles of Amendment to the Restated Certificate of Incorporation of American Pacific
Corporation, as filed with the Secretary of State, State of Delaware, on October 7, 1991
(incorporated by reference to Exhibit 4.3 to the registrants Registration Statement on Form
S-3 (File No. 33-52196)).3.3
    
    Articles of Amendment to the Restated Certificate of Incorporation of American Pacific
Corporation, as filed with the Secretary of State, State of Delaware, on April 21, 1992
(incorporated by reference to Exhibit 4.4 to the registrants Registration Statement on Form
S-3 (File No. 33-52196)).3.4
    
    American Pacific Corporation Amended and Restated By-laws (incorporated by reference to
Exhibit 3.1 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on September 15, 2008).3.5
    
    Rights Agreement, dated as of August 3, 1999, between American Pacific Corporation and
American Stock Transfer & Trust Company (incorporated by reference to Exhibit 1 to the
registrants Registration Statement on Form 8-A (File No. 001-08137) filed by the registrant
with the Securities and Exchange Commission on August 6, 1999).3.6
    
    Form of Letter to Stockholders that accompanied copies of the Summary of Rights to Purchase
Preferred Shares (incorporated by reference to Exhibit 2 to the registrants Registration
Statement on Form 8-A (File No. 001-08137) filed by the registrant with the Securities and
Exchange Commission on August 6, 1999).3.7
    
    Amendment, dated as of July 11, 2008, between American Pacific Corporation and American Stock
Transfer & Trust Company (incorporated by reference to Exhibit 4.1 to the registrants Current
Report on Form 8-K (File No. 001-08137) filed by the registrant with the Securities and
Exchange Commission on July 11, 2008).4.1
    
    Form of 9% Senior Note due 2015 (incorporated by reference to Exhibit A of Exhibit 4.2 to the
registrants Current Report on Form 8-K (File No. 001-08137) filed by the registrant with the
Securities and Exchange Commission on February 6, 2007).4.2
    
    Indenture, dated as of February 6, 2007, by and among American Pacific Corporation, certain
subsidiaries thereof and Wells Fargo Bank, National Association (incorporated by reference to
Exhibit 4.2 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on February 6, 2007).10.1+
    
    Employment Agreement, effective October 15, 2006, between American Pacific Corporation and
Joseph Carleone, as amended and restated on November 14, 2008 (incorporated by reference to
Exhibit 10.1 to the registrants Annual Report on Form 10-K (File No. 001-08137) for the
fiscal year ended September 30, 2008).10.2+
    
    Notice of Eligibility for Dr. Aslam Malik under Ampac Fine Chemicals LLC Severance Pay Plan,
dated January 24, 2007 (incorporated by reference to Exhibit 10.2 to the
 71




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ExhibitNumber
    
    Descriptionregistrants
Quarterly Report on Form 10-Q (File No. 001-08137) for the fiscal quarter ended March 31,
2007).10.3+
    
    Ampac Fine Chemicals LLC Severance Pay Plan (incorporated by reference to Exhibit 10.1 to
the registrants Quarterly Report on Form 10-Q (File No. 001-08137) for the fiscal quarter
ended March 31, 2007).10.4+
    
    Form of Indemnification Agreement between American Pacific Corporation and each Director of
American Pacific Corporation (incorporated by reference to Exhibit 3.6 to the registrants
Annual Report on Form 10-K (File No. 001-08137) for the fiscal year ended September 30, 2000).10.5+
    
    Amended and Restated American Pacific Corporation Defined Benefit Pension Plan, as Amended
and Restated Effective October 1, 2008, executed by American Pacific Corporation on June 12,
2009 (incorporated by reference to Exhibit 10.1 to the registrants Quarterly Report on Form
10-Q (File No. 001-08137) for the fiscal quarter ended June 30, 2009).10.6+
    
    American Pacific Corporation Supplemental Executive Retirement Plan, amended and restated
and effective on and after October 1, 2007 (incorporated by reference to Exhibit 10.1 to the
registrants Current Report on Form 8-K (File No. 001-08137) filed by the registrant with the
Securities and Exchange Commission on November 15, 2007).10.7+
    
    Trust Agreement for American Pacific Corporation Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit 10.6 to the registrants Annual Report on Form 10-K
(File No. 001-08137) for the fiscal year ended September 30, 1999).10.8++
    
    Long-Term Pricing Agreement, dated as of December 12, 1997, between Thiokol
Corporation-Propulsion Group and American Pacific Corporation (incorporated by reference to
Exhibit 10.1 to the registrants Quarterly Report on Form 10-Q (File No. 001-08137) for the
fiscal quarter ended March 31, 1998).10.9++
    
    Modification No. 1 to Long Term Pricing Agreement, dated September 13, 2000, between Thiokol
Propulsion and American Pacific Corporation (incorporated by reference to Exhibit 10.14 to the
registrants Annual Report on Form 10-K (File No. 001-08137) for the fiscal year ended
September 30, 2000).10.10
    
    Ground Lease, dated as of November 30, 2005, by and between Aerojet-General Corporation and
Ampac Fine Chemicals LLC (incorporated by reference to Exhibit 10.5 to the registrants
Current Report on Form 8-K (File No. 001-08137) filed by the registrant with the Securities
and Exchange Commission on December 1, 2005).10.11++
    
    Modification #3 to the Thiokol Long Term Pricing Agreement, dated April 5, 2006
(incorporated by reference to Exhibit 10.1 to the registrants Quarterly Report on Form 10-Q
(File No. 001-08137) for the fiscal quarter ended March 31, 2006).10.12+
    
    Ampac Fine Chemicals LLC Pension Plan for Bargaining Unit Employees, as Amended and Restated
Effective October 1, 2007, executed by American Pacific Corporation on June 12, 2009
(incorporated by reference to Exhibit 10.2 to the registrants Quarterly Report on Form 10-Q
(File No. 001-08137) for the fiscal quarter ended June 30, 2009).10.13+
    
    Ampac Fine Chemicals LLC Pension Plan for Salaried Employees, as Amended and Restated
Effective October 1, 2007, executed by American Pacific Corporation on June 12, 2009
(incorporated by reference to Exhibit 10.3 to the registrants Quarterly Report on Form 10-Q
(File No. 001-08137) for the fiscal quarter ended June 30, 2009).
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ExhibitNumber
    
    Description10.14
    
    Amended and Restated Credit Agreement, dated as of February 6, 2007, among American Pacific
Corporation, certain subsidiaries thereof, the lenders party thereto, Wachovia Bank, National
Association and Bank of America, N.A. (incorporated by reference to Exhibit 10.3 to the
registrants Current Report on Form 8-K (File No. 001-08137) filed by the registrant with the
Securities and Exchange Commission on February 6, 2007).10.15
    
    First Amendment to Credit Agreement, dated as of July 7, 2009, by and among American Pacific
Corporation, certain subsidiaries thereof, the lenders party thereto, and Wachovia Bank,
National Association and Bank of America, N.A. (incorporated by reference to Exhibit 10.4 to
the registrants Quarterly Report on Form 10-Q (File No. 001-08137) for the fiscal quarter
ended June 30, 2009).10.16+
    
    American Pacific Corporation Amended and Restated 2001 Stock Option Plan (incorporated by
reference to Exhibit 4.1 to the registrants Registration Statement on Form S-8 (File No.
333-104732) filed by the registrant with the Securities and Exchange Commission on April 24,
2003).10.17+
    
    Form of Option Agreement under the American Pacific Corporation Amended and Restated 2001
Stock Option Plan (incorporated by reference to Exhibit 4.3 to the registrants Registration
Statement on Form S-8 (File No. 333-104732) filed by the registrant with the Securities and
Exchange Commission on April 24, 2003).10.18+
    
    American Pacific Corporation 2002 Directors Stock Option Plan, as amended and restated
(incorporated by reference to Exhibit 99.1 to the registrants Current Report on Form 8-K
(File No. 001-08137) filed by the registrant with the Securities and Exchange Commission on
October 25, 2005).10.19+
    
    Form of Option Agreement under the American Pacific Corporation 2002 Directors Stock Option
Plan (incorporated by reference to Exhibit 4.4 to the registrants Registration Statement on
Form S-8 (File No. 333-104732) filed by the registrant with the Securities and Exchange
Commission on April 24, 2003).10.20+
    
    American Pacific Corporation 2008 Stock Incentive Plan (incorporated by reference to Exhibit
10.1 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on March 17, 2008).10.21+
    
    Form of Notice of Stock Option Award and Stock Option Award Agreement under the American
Pacific Corporation 2008 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to
the registrants Current Report on Form 8-K (File No. 001-08137) filed by the registrant with
the Securities and Exchange Commission on March 17, 2008).10.22+
    
    Form of Notice of Restricted Stock Bonus Award and Restricted Stock Bonus Award Agreement
under the American Pacific Corporation 2008 Stock Incentive Plan (incorporated by reference to
Exhibit 10.3 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on March 17, 2008).10.23+
    
    American Pacific Corporation Incentive Compensation Plan (incorporated by reference to
Exhibit 10.4 to the registrants Current Report on Form 8-K (File No. 001-08137) filed by the
registrant with the Securities and Exchange Commission on March 17, 2008).10.24+
    
    Severance Agreement, dated as of July 8, 2008, between American Pacific Corporation and
Linda G. Ferguson (incorporated by reference to Exhibit 10.1 to the registrants
Current Report on Form 8-K (File No. 001-08137) filed by the registrant with the
Securities and Exchange Commission on July 11, 2008).
 73




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##### Table of Contents



ExhibitNumber
    
    Description10.25+
    
    Severance Agreement, dated as of July 8, 2008, between American Pacific Corporation and Dana
M. Kelley (incorporated by reference to Exhibit 10.2 to the registrants Current Report on
Form 8-K (File No. 001-08137) filed by the registrant with the Securities and Exchange
Commission on July 11, 2008).*21
    
    Subsidiaries of the registrant.*23
    
    Consent of Independent Registered Public Accounting Firm.*24
    
    Powers of Attorney (included on the signature pages).*31.1
    
    Certification of Principal Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Principal Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.+
    
    Management contract or compensatory plan or arrangement.++
    
    Confidential treatment has been requested and obtained with regard to
certain portions of this document. Such portions have been omitted
from filing and have been filed separately with the Securities and
Exchange Commission. 74




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 F-1




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##### Table of Contents



AMERICAN PACIFIC CORPORATION
Consolidated Balance Sheets
September 30, 2009 and 2008
(Dollars in Thousands)
 2009
    
    2008ASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    21,681
    
    
    $
    26,893Accounts Receivable, Net
    
    
    44,028
    
    
    
    27,445Inventories
    
    
    36,356
    
    
    
    40,357Prepaid Expenses and Other Assets
    
    
    1,811
    
    
    
    3,392Income Taxes Receivable
    
    
    2,148
    
    
    
    1,804Deferred Income Taxes
    
    
    6,317
    
    
    
    6,859Total Current Assets
    
    
    112,341
    
    
    
    106,750Property, Plant and Equipment, Net
    
    
    114,645
    
    
    
    118,608Intangible Assets, Net
    
    
    3,553
    
    
    
    3,013Goodwill
    
    
    3,144
    
    
    
    Deferred Income Taxes
    
    
    21,121
    
    
    
    13,849Other Assets
    
    
    10,037
    
    
    
    9,193TOTAL ASSETS
    
    $
    264,841
    
    
    $
    251,413LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts Payable
    
    $
    7,444
    
    
    $
    10,554Accrued Liabilities
    
    
    5,295
    
    
    
    5,526Accrued Interest
    
    
    1,650
    
    
    
    1,650Employee Related Liabilities
    
    
    6,930
    
    
    
    6,917Income Taxes Payable
    
    
    189
    
    
    
    111Deferred Revenues and Customer Deposits
    
    
    6,911
    
    
    
    3,091Current Portion of Environmental Remediation Reserves
    
    
    2,522
    
    
    
    996Current Portion of Long-Term Debt
    
    
    151
    
    
    
    254Total Current Liabilities
    
    
    31,092
    
    
    
    29,099Long-Term Debt
    
    
    110,097
    
    
    
    110,120Environmental Remediation Reserves
    
    
    24,168
    
    
    
    13,282Pension Obligations
    
    
    27,720
    
    
    
    15,692Other Long-Term Liabilities
    
    
    667
    
    
    
    258Total Liabilities
    
    
    193,744
    
    
    
    168,451Commitments and ContingenciesShareholders EquityPreferred Stock  $1.00 par value; 3,000,000 authorized; none outstanding
    
    
    
    
    
    
    Common Stock  $0.10 par value; 20,000,000 shares authorized,
7,504,591 and 9,523,541 issued
    
    
    750
    
    
    
    952Capital in Excess of Par Value
    
    
    72,322
    
    
    
    88,496Retained Earnings
    
    
    9,997
    
    
    
    15,956Treasury Stock  none and 2,045,950 shares
    
    
    
    
    
    
    (17,175
    )Accumulated Other Comprehensive Loss
    
    
    (11,972
    )
    
    
    (5,267
    )Total Shareholders Equity
    
    
    71,097
    
    
    
    82,962TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    264,841
    
    
    $
    251,413
  F-2




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##### Table of Contents



AMERICAN PACIFIC CORPORATION
Consolidated Statements of Operations
For the Years Ended September 30, 2009, 2008, and 2007
(Dollars in Thousands, Except per Share Amounts)
 2009
    
    2008
    
    2007Revenues
    
    $
    197,148
    
    
    $
    203,129
    
    
    $
    183,928Cost of Revenues
    
    
    136,295
    
    
    
    135,388
    
    
    
    120,230Gross Profit
    
    
    60,853
    
    
    
    67,741
    
    
    
    63,698Operating Expenses
    
    
    45,325
    
    
    
    42,865
    
    
    
    39,841Environmental Remediation Charges
    
    
    13,700
    
    
    
    
    
    
    
    Operating Income
    
    
    1,828
    
    
    
    24,876
    
    
    
    23,857Interest and Other Income, Net
    
    
    146
    
    
    
    1,366
    
    
    
    644Interest Expense
    
    
    10,735
    
    
    
    10,803
    
    
    
    11,996Debt Repayment Charges
    
    
    
    
    
    
    
    
    
    
    2,916Income (Loss) before Income Taxes
    
    
    (8,761
    )
    
    
    15,439
    
    
    
    9,589Income Tax Expense (Benefit)
    
    
    (2,802
    )
    
    
    6,488
    
    
    
    4,605Net Income (Loss)
    
    $
    (5,959
    )
    
    $
    8,951
    
    
    $
    4,984Earnings (Loss) per Share:Basic
    
    $
    (0.80
    )
    
    $
    1.20
    
    
    $
    0.68Diluted
    
    $
    (0.80
    )
    
    $
    1.18
    
    
    $
    0.67Weighted Average Shares Outstanding:Basic
    
    
    7,482,000
    
    
    
    7,451,000
    
    
    
    7,365,000Diluted
    
    
    7,482,000
    
    
    
    7,599,000
    
    
    
    7,471,000
  F-3




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##### Table of Contents



AMERICAN PACIFIC CORPORATION
Consolidated Statements of Changes in Stockholders Equity
For the Years Ended September 30, 2009, 2008 and 2007
(Dollars in Thousands)
 CommonShares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedOutstanding,
    
    
    Par
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalNet of
    
    
    Value of
    
    
    Capital in
    
    
    
    
    
    
    
    
    
    
    Compre-
    
    
    Stock-Treasury
    
    
    Common
    
    
    Excess of
    
    
    Retained
    
    
    Treasury
    
    
    hensive
    
    
    holdersShares
    
    
    Stock
    
    
    Par Value
    
    
    Earnings
    
    
    Stock
    
    
    Loss
    
    
    EquityBALANCES, October 1, 2006
    
    
    7,324,171
    
    
    $
    933
    
    
    $
    86,724
    
    
    $
    2,312
    
    
    $
    (16,982
    )
    
    $
    (1,103
    )
    
    $
    71,884Comprehensive Income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,984
    
    
    
    
    
    
    
    
    
    
    
    4,984Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    62Additional Minimum PensionLiability, Net of Tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,094
    
    
    
    1,094Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,140Adoption of SFAS 158, Net of Tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,137
    )
    
    
    (3,137
    )Issuance of Common Stock
    
    
    104,500
    
    
    
    13
    
    
    
    682
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    695Tax Benefit From Stock Options
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Share-based Compensation
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75BALANCES, September 30, 2007
    
    
    7,428,671
    
    
    
    946
    
    
    
    87,513
    
    
    
    7,296
    
    
    
    (16,982
    )
    
    
    (3,084
    )
    
    
    75,689Comprehensive Income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,951
    
    
    
    
    
    
    
    
    
    
    
    8,951Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127
    )
    
    
    (127
    )Change in Unamortized BenefitPlan Costs, Net of Tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    296Retirement Plan Amendments, Net of Tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,352
    )
    
    
    (2,352
    )Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,768Adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (291
    )
    
    
    
    
    
    
    
    
    
    
    (291
    )Purchase of Treasury Stock
    
    
    (11,080
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (193
    )
    
    
    
    
    
    
    (193
    )Issuance of Common Stock
    
    
    60,000
    
    
    
    6
    
    
    
    375
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    381Tax Benefit From Stock Options
    
    
    
    
    
    
    
    
    
    
    481
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    481Share-based Compensation
    
    
    
    
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    127BALANCES, September 30, 2008
    
    
    7,477,591
    
    
    
    952
    
    
    
    88,496
    
    
    
    15,956
    
    
    
    (17,175
    )
    
    
    (5,267
    )
    
    
    82,962Comprehensive Income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,959
    )
    
    
    
    
    
    
    
    
    
    
    (5,959
    )Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (83
    )
    
    
    (83
    )Change in Unamortized Benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan Costs, Net of Tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,622
    )
    
    
    (6,622
    )Total Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,664
    )Retirement of Treasury Stock
    
    
    
    
    
    
    (205
    )
    
    
    (16,970
    )
    
    
    
    
    
    
    17,175
    
    
    
    
    
    
    
    Issuance of Common Stock
    
    
    5,000
    
    
    
    1
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Share-based Compensation
    
    
    22,000
    
    
    
    2
    
    
    
    765
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    767BALANCES, September 30, 2009
    
    
    7,504,591
    
    
    $
    750
    
    
    $
    72,322
    
    
    $
    9,997
    
    
    $
    
    
    
    $
    (11,972
    )
    
    $
    71,097
  F-4




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##### Table of Contents



AMERICAN PACIFIC CORPORATION
Consolidated Statements of Cash Flows
For the Years Ended September 30, 2009, 2008 and 2007
(Dollars in Thousands)
 2009
    
    2008
    
    2007Cash Flows from Operating Activities:Net Income (Loss)
    
    $
    (5,959
    )
    
    $
    8,951
    
    
    $
    4,984Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities:Depreciation and amortization
    
    
    16,166
    
    
    
    16,454
    
    
    
    19,461Non-cash interest expense
    
    
    632
    
    
    
    637
    
    
    
    2,142Share-based compensation
    
    
    767
    
    
    
    127
    
    
    
    75Deferred income taxes
    
    
    (2,405
    )
    
    
    3,355
    
    
    
    2,102Non-cash component of debt repayment charges
    
    
    
    
    
    
    
    
    
    
    2,309Excess tax benefit from stock option exercises
    
    
    
    
    
    
    (481
    )
    
    
    (32
    )Loss (Gain) on sale of assets
    
    
    76
    
    
    
    (416
    )
    
    
    22Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (14,437
    )
    
    
    (2,317
    )
    
    
    (5,712
    )Inventories
    
    
    2,974
    
    
    
    6,666
    
    
    
    (7,622
    )Prepaid expenses and other current assets
    
    
    1,620
    
    
    
    (1,510
    )
    
    
    (292
    )Accounts payable
    
    
    (3,474
    )
    
    
    (349
    )
    
    
    238Income taxes
    
    
    (266
    )
    
    
    (919
    )
    
    
    (63
    )Accrued liabilities
    
    
    (359
    )
    
    
    (1,765
    )
    
    
    2,621Accrued interest
    
    
    
    
    
    
    (36
    )
    
    
    1,637Employee related liabilities
    
    
    (461
    )
    
    
    (431
    )
    
    
    2,622Deferred revenues and customer deposits
    
    
    2,195
    
    
    
    (4,664
    )
    
    
    2,072Environmental remediation reserves
    
    
    12,412
    
    
    
    (1,145
    )
    
    
    (2,088
    )Pension obligations, net
    
    
    1,346
    
    
    
    277
    
    
    
    1,677Other
    
    
    315
    
    
    
    (2,101
    )
    
    
    (2,015
    )Net Cash Provided by Operating Activities
    
    
    11,142
    
    
    
    20,333
    
    
    
    24,138Cash Flows from Investing Activities:Capital expenditures
    
    
    (9,458
    )
    
    
    (15,284
    )
    
    
    (8,421
    )Acquisition of businesses and earnout adjustment
    
    
    (6,725
    )
    
    
    
    
    
    
    (6,000
    )Proceeds from sale of discontinued operations, net
    
    
    
    
    
    
    
    
    
    
    7,510Net Cash Used in Investing Activities
    
    
    (16,183
    )
    
    
    (15,284
    )
    
    
    (6,911
    )Cash Flows from Financing Activities:Proceeds from the issuance of long-term debt
    
    
    
    
    
    
    
    
    
    
    110,000Payments of long-term debt
    
    
    (348
    )
    
    
    (251
    )
    
    
    (108,586
    )Debt issuance costs
    
    
    
    
    
    
    
    
    
    
    (4,814
    )Issuance of common stock
    
    
    32
    
    
    
    381
    
    
    
    695Excess tax benefit from stock option exercises
    
    
    
    
    
    
    481
    
    
    
    32Purchase of treasury stock
    
    
    
    
    
    
    (193
    )
    
    
    Net Cash Provided (Used) by Financing Activities
    
    
    (316
    )
    
    
    418
    
    
    
    (2,673
    )Effect of Changes in Currency Exchange Rates on Cash
    
    
    145
    
    
    
    
    
    
    
    Net Change in Cash and Cash Equivalents
    
    
    (5,212
    )
    
    
    5,467
    
    
    
    14,554Cash and Cash Equivalents, Beginning of Year
    
    
    26,893
    
    
    
    21,426
    
    
    
    6,872Cash and Cash Equivalents, End of Year
    
    $
    21,681
    
    
    $
    26,893
    
    
    $
    21,426
  F-5




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##### Table of Contents



AMERICAN PACIFIC CORPORATION
Consolidated Statements of Cash Flows (Continued)
For the Years Ended September 30, 2009, 2008 and 2007
(Dollars in Thousands)
 2009
    
    2008
    
    2007Cash Paid For:Interest
    
    $
    10,089
    
    
    $
    10,141
    
    
    $
    8,217Income taxes
    
    
    (439
    )
    
    
    5,304
    
    
    
    1,157Non-Cash Investing and Financing Transactions:Capital leases originated
    
    
    
    
    
    
    
    
    
    
    346Additions to Property, Plant and Equipment not yet paid
    
    
    300
    
    
    
    119
    
    
    
    379
  F-6




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##### Table of Contents



AMERICAN PACIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2009, 2008 AND 2007
(Dollars in Thousands, Except Per Share Amounts)
 1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation.Our consolidated financial statements include the accounts of
American Pacific Corporation and our subsidiaries (the Company, we, us or our). All
intercompany accounts have been eliminated.
 We have evaluated subsequent events through December 29, 2009, the date these consolidated
financial statements were issued.
 Effective October 1, 2008, we acquired Marotta Holdings Limited (subsequently renamed Ampac ISP
Holdings Limited) and its wholly-owned subsidiaries (collectively AMPAC ISP Holdings). AMPAC
ISP Holdings is included in our consolidated financial statements beginning on October 1, 2008
and is a component of our Aerospace Equipment segment. See Note 2.
 Use of Estimates.The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities and the reported amounts of revenue and expenses. Judgments and
assessments of uncertainties are required in applying our accounting policies in many areas. For
example, key assumptions and estimates are particularly important when determining our projected
liabilities for pension benefits, useful lives for depreciable and amortizable assets, estimated
costs to complete long-term contracts, deferred tax assets and long-lived assets, including
intangible assets and goodwill. Other areas in which significant judgment exists include, but
are not limited to, costs that may be incurred in connection with environmental matters and the
resolution of litigation and other contingencies. Actual results may differ from estimates on
which our consolidated financial statements were prepared.
 Revenue Recognition.Revenues from our Specialty Chemicals segment, Fine Chemicals segment, and
Other Businesses segment are recognized when persuasive evidence of an arrangement exists,
delivery has occurred or services have been rendered, title passes, the price is fixed or
determinable and collectability is reasonably assured. Almost all products sold by our Fine
Chemicals segment are subject to customer acceptance periods. Specifically, these customers
have contractually negotiated acceptance periods from the time they receive certificates of
analysis and compliance (Certificates) to reject the material based on issues with the quality
of the product, as defined in the applicable agreement. At times we receive payment in advance
of customer acceptance. If we receive payment in advance of customer acceptance, we record
deferred revenues and deferred costs of revenue upon delivery of the product and recognize
revenues in the period when the acceptance period lapses or the customers acceptance has
occurred.
 Some of our perchlorate and fine chemicals products customers have requested that we store
materials purchased from us in our facilities (Bill and Hold transactions or arrangements). We
recognize revenue prior to shipment of these Bill and Hold transactions when we have satisfied
the applicable revenue recognition criteria, which include the point at which title and risk of
ownership transfer to our customers. These customers have specifically requested in writing,
pursuant to a contract, that we invoice for the finished product and hold the finished product
until a later date. For our Bill and Hold arrangements that contain customer acceptance
periods, we record deferred revenues and deferred costs of revenues when such products are
available for delivery and Certificates have been delivered to the customers. We recognize
revenue on our Bill and Hold transactions in the period when the acceptance period lapses or the
customers acceptance has occurred. The sales value of inventory, subject to Bill and Hold
arrangements, at our facilities was $25,882 and $29,022 as of September 30, 2009 and 2008,
respectively.
 F-7




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##### Table of Contents



1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Revenues from our Aerospace Equipment segment are derived from contracts that are accounted for
using the percentage-of-completion method and measure progress on a cost-to-cost basis. Contract
revenues include change orders and claims when approved by the customer. The
percentage-of-completion method recognizes revenue as work on a contract progresses. Revenues
are calculated based on the percentage of total costs incurred in relation to total estimated
costs at completion of the contract. For fixed-price and fixed-price-incentive contracts, if at
any time expected costs exceed the value of the contract, the loss is recognized immediately. We
do not incur material pre-contract costs.
 Deferred Revenues and Deferred Cost of Revenues.Deferred revenues represent payments received
from customers for products that have not met all revenue recognition requirements. Deferred
costs of revenues, which is a component of inventories, includes the cost of inventory that is
directly associated with deferred revenues. Deferred revenues and deferred costs of revenues are
recognized when all elements of the revenue recognition process have been met.
 Environmental Remediation.We are subject to environmental regulations that relate to our past
and current operations. We record liabilities for environmental remediation costs when our
assessments indicate that remediation efforts are probable and the costs can be reasonably
estimated. On a quarterly basis, we review our estimates of future costs that could be incurred
for remediation activities. In some cases, only a range of reasonably possible costs can be
estimated. In establishing our reserves, the most probable estimate is used; otherwise, we
accrue the minimum amount of the range. Estimates of liabilities are based on currently
available facts, existing technologies and presently enacted laws and regulations. These
estimates are subject to revision in future periods based on actual costs or new circumstances.
Accrued environmental remediation costs include the undiscounted cost of equipment, operating
and maintenance costs, and fees to outside law firms and consultants, for the estimated duration
of the remediation activity. Estimating environmental cost requires us to exercise substantial
judgment regarding the cost, effectiveness and duration of our remediation activities. Actual
future expenditures could differ materially from our current estimates.
 We evaluate potential claims for recoveries from other parties separately from our estimated
liabilities. We record an asset for expected recoveries when recoveries of the amounts are
probable.
 Related Party Transactions.Our related party transactions generally fall into the following
categories: payments of professional fees to firms affiliated with certain members of our board
of directors, and payments to certain directors for consulting services outside of the scope of
their duties as directors. For the years ended September 30, 2009, 2008 and 2007, such
transactions totaled approximately $4, $19 and $41, respectively.
 Cash and Cash Equivalents.All highly liquid investment securities with a maturity of three
months or less when acquired are considered to be cash equivalents. We maintain cash balances
that exceed federally insured limits; however, we have incurred no losses on such accounts.
 Fair Value Disclosure of Financial Instruments.We estimate the fair value of cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities approximate their
carrying values due to their short-term nature. We estimate the fair value of our fixed-rate
long-term debt to be approximately $100,650 based on the trade date closest to September 30,
2009, which was September 9, 2009.
 Concentration of Credit Risk.Financial instruments that have potential concentrations of
credit risk include cash and cash equivalents and accounts receivable. We place our cash and
cash equivalents with high quality credit institutions. Our accounts receivable have
concentration risk because significant amounts relate to customers in the aerospace and defense
or pharmaceutical industries. From time to time we make sales to a customer that exceed 10% of
our then outstanding
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1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 accounts receivable balance. The following table provides disclosure of the percentage of our
consolidated accounts receivable attributed to customers that exceed ten percent of the total
for the fiscal years ended September 30:
 2009
    
    2008
    
    2007Fine chemicals customer
    
    
    14
    %
    
    
    13
    %
    
    
    11
    %Fine chemicals customer
    
    
    
    
    
    
    19
    %Fine chemicals customer
    
    
    
    
    
    
    10
    %Specialty chemicals customer
    
    
    11
    %
    
    
    
    
    
    
    22
    %Specialty chemicals customer
    
    
    10
    %
    
    
    
    
    
    
    17
    %Aerospace equipment customer
    
    
    13
    %
    
    
    12
    %
 Inventories.Inventories are stated at the lower of cost or market. Costs are removed from
inventories using the average-cost method. Inventoried costs include materials, labor and
manufacturing overhead. Inventoried costs also include certain overhead parts and supplies.
General and administrative costs are expensed as incurred. Raw materials costs are determined
on a moving average basis. We expense the cost of inventories which are considered to be excess
because on-hand inventory quantities exceed our estimates of future demand.
 Property, Plant and Equipment.Property, plant and equipment are carried at cost less
accumulated depreciation. Depreciation is computed on the straight-line method over the
estimated productive lives of the assets of 3 to 15 years for machinery and equipment and 7 to
30 years for buildings and improvements. Leasehold improvements are depreciated over the
shorter of the estimated productive life of 7 to 9 years or the term of the lease. Depreciation
expense of $13,566, $13,168, and $13,800 was classified as cost of revenues in our consolidated
statements of operations for the years ended September 30, 2009, 2008, and 2007, respectively.
Depreciation expense of $532, $532, and $523 was classified as operating expenses in our
consolidated statements of operations for the years ended September 30, 2009, 2008, and 2007,
respectively.
 Intangible Assets.Intangible assets are recorded at cost and are amortized using the
straight-line method over their estimated period of benefit of 1 to 6 years. Amortization
expense of zero, $1,517, and $3,900 was classified as cost of revenues in our consolidated
statements of operations for the years ended September 30, 2009, 2008, and 2007, respectively.
Amortization expense of $2,068, $1,237, and $1,238 was classified as operating expenses in our
consolidated statements of operations for the years ended September 30, 2009, 2008, and 2007,
respectively.
 We evaluate the recoverability of intangible assets periodically and take into account events or
circumstances that warrant revised estimates of useful lives or that indicate that impairment
exists. All of our intangible assets are subject to amortization. No impairments of intangible
assets have been recorded during any of the years presented.
 Goodwill.Goodwill is not amortized. We test goodwill for impairment at the reporting unit
level on an annual basis, as of September 30, or more frequently if an event occurs or
circumstances change that indicate that the fair value of a reporting unit could be below its
carrying amount. The impairment test consists of comparing the fair value of a reporting unit
with its carrying amount including goodwill, and, if the carrying amount of the reporting unit
exceeds its fair value, comparing the implied fair value of goodwill with its carrying amount.
An impairment loss would be recognized for the carrying amount of goodwill in excess of its
implied fair value. There was no goodwill impairment charge recorded in the fiscal year ended
September 30, 2009.
 Income Taxes. We account for income taxes under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured, separately for each
tax-paying entity in each tax jurisdiction, using enacted tax rates expected to apply to taxable
income in the years in which
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1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the period that includes the
enactment date.
 On October 1, 2007, the Company adopted an accounting standard which creates a single model to
address uncertainty in income tax positions and prescribes the minimum recognition threshold a
tax position is required to meet before being recognized in the financial statements. Under this
standard, the Company may recognize tax benefits from an uncertain position only if it is more
likely than not that the position will be sustained upon examination by taxing authorities based
on the technical merits of the issue. The amount recognized is the largest benefit that the
Company believes has greater than a 50% likelihood of being realized upon settlement.
 Impairment of Long-Lived Assets.We test our property, plant and equipment and amortizable
intangible assets for recoverability when events or changes in circumstances indicate that their
carrying amounts may not be recoverable. Examples of such circumstances include, but are not
limited to, operating or cash flow losses from the use of such assets or changes in our intended
uses of such assets. To test for recovery, we group assets (an Asset Group) in a manner that
represents the lowest level for which identifiable cash flows are largely independent of the
cash flows of other groups of assets and liabilities. Our Asset Groups are typically identified
by facility because each facility has a unique cost overhead and general and administrative
expense structure that is supported by cash flows from products produced at the facility. The
carrying amount of an Asset Group is not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and eventual disposition of the Asset Group.
 If we determine that an Asset Group is not recoverable, then we would record an impairment
charge if the carrying value of the Asset Group exceeds its fair value. Fair value is based on
estimated discounted future cash flows expected to be generated by the Asset Group. The
assumptions underlying cash flow projections would represent managements best estimates at the
time of the impairment review. Some of the factors that management would consider or estimate
include: industry and market conditions, sales volume and prices, costs to produce and
inflation. Changes in key assumptions or actual conditions which differ from estimates could
result in an impairment charge. We use reasonable and supportable assumptions when performing
impairment reviews but cannot predict the occurrence of future events and circumstances that
could result in impairment charges. We recorded no impairments of long-lived assets during the
years ended September 30, 2009, 2008 and 2007.
 Earnings (Loss) Per Share.Basic earnings (loss) per share is calculated by dividing net income
(loss) by the weighted average shares outstanding during the year. Diluted earnings (loss) per
share is calculated by dividing net income (loss) by the weighted average shares outstanding
plus the dilutive effect of common share equivalents, which is computed using the treasury stock
method.
 Foreign Currency.We translate our foreign subsidiaries assets and liabilities into U.S.
dollars using the year-end exchange rate. Revenue and expense amounts are translated at the
average monthly exchange rate. Foreign currency translation gains or losses are reported as
cumulative currency translation adjustments as a component of stockholders equity.
We recorded foreign currency transaction gains or losses as a component of interest and other income, net, on our consolidated statement of operations.
For the years ended September 30, 2009, 2008 and 2007, gains and losses resulting from transactions in foreign currencies were not material.
 Recently Issued or Adopted Accounting Standards.In September 2006, the Financial Accounting
Standards Board (the FASB) issued a new standard which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles in the United
States of America, and expands disclosures about fair value measurements. In February 2008, the
FASB
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1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 deferred this standard for one year as it applied to certain items, including assets and
liabilities initially measured at fair value in a business combination, reporting units and
certain assets and liabilities measured at fair value in connection with goodwill impairment
tests, and long-lived assets measured at fair value for impairment assessments. The standard
applies under other accounting pronouncements that require or permit fair value measurements,
the FASB having previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. This standard was effective for us on October 1, 2008; however,
we did not adopt all the provisions the standard as the FASB delayed the effective date of its
application to non-financial assets and liabilities. The remaining provisions became effective
for us beginning October 1, 2009. The adoption of this standard did not have a material impact
on our results of operations, financial position or cash flows.
 In December 2007, the FASB issued a new standard that will significantly change the accounting
for business combinations. Under the standard, an acquiring entity is required to recognize all
the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value
with limited exceptions. The standard also includes a substantial number of new disclosure
requirements. The standard applies to us prospectively for business combinations with
acquisition dates on or after October 1, 2009. We expect that it will have an impact on our
accounting for future business combinations, but the effect is dependent upon acquisitions at
that time.
 In December 2007, the FASB issued a new standard that establishes revised accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation
of a subsidiary. Specifically, the standard requires the recognition of a noncontrolling
interest (minority interest) as equity in the consolidated financial statements and separate
from the parents equity. The amount of net income attributable to the noncontrolling interest
will be included in consolidated net income on the face of the income statement. It also
clarifies that changes in a parents ownership interest in a subsidiary that do not result in
deconsolidation are equity transactions if the parent retains its controlling financial
interest. The standard requires that a parent recognize a gain or loss in net income when a
subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the
noncontrolling equity investment on the deconsolidation date. The standard also includes
expanded disclosure requirements regarding the interests of the parent and its noncontrolling
interest. The standard was effective for us beginning on October 1, 2009. We currently have no
entities or arrangements that were affected by the adoption of this standard.
 In April 2008, the FASB issued a new standard which amends the factors that should be considered
in developing renewal or extension assumptions used to determine the useful life of a recognized
intangible asset. The standard for determining the useful life of a recognized intangible
asset shall be applied prospectively to intangible assets acquired after the effective date.
However, the disclosure requirements must be applied prospectively to all intangible assets
recognized in the Companys financial statements as of the effective date. The standard was
effective for us beginning October 1, 2009. The adoption of this standard is not expected to
have a material impact on our results of operations, financial position or cash flows.
 In December 2008, the FASB issued a new standard that provides guidance on an employers
disclosures about plan assets of a defined benefit pension or other postretirement plan. The
objectives of the disclosures include disclosure of investment allocation decisions, major
categories of
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1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 plan assets, inputs and valuation techniques used to measure the fair value of plan assets, the
effect of certain fair value measurements, and significant concentrations of risk within plan
assets. The expanded disclosure requirements are effective for our fiscal year ending September
30, 2010. The adoption of this standard is not expected to have a material impact on our
results of operations, financial position or cash flows.
 In April 2009, a new standard was issued that provides additional guidance for estimating fair
value, when the volume and level of activity for the asset or liability have significantly
decreased. The standard also includes guidance on how to identify circumstances that indicate
that a transaction is not orderly and emphasizes that even if there has been a significant
decrease in the volume and level of activity for the asset or liability and regardless of the
valuation techniques used, the objective of a fair value measurement remains the same. The
standard was effective for us beginning with our interim period ended June 30, 2009. The
adoption of this standard did not have a material impact on our results of operations, financial
position or cash flows.
 In May 2009, the FASB issued a new standard that provides authoritative accounting literature
related to evaluating subsequent events that was previously addressed only in certain auditing
literature. The standard is similar to the current guidance with some exceptions that are not
intended to result in significant change to current practice. The standard defines subsequent
events and also requires the disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date. The Company adopted the disclosure provisions
under this new standard as of June 30, 2009. The adoption did not have an impact on our results
of operations, financial position, or cash flows.
 In June 2009, the FASB issued a standard that establishes the FASBs Accounting Standards
Codification (the Codification) as the source of authoritative U.S. generally accepted
accounting principles (GAAP) recognized by the FASB to be applied to nongovernmental entities,
and rules and interpretive releases of the Securities and Exchange Commission (SEC) as
authoritative GAAP for SEC registrants. The Codification supersedes all the existing non-SEC
accounting and reporting standards upon its effective date. The establishment of the
Codification is not intended to change or alter existing U.S. GAAP. The Codification changed the
references of financial standards in effect for the Company. Any specific references made to
GAAP in our consolidated financial statements use the new Codification numbering system
prescribed by the FASB. The Codification is effective in the first interim and annual periods
ending after September 15, 2009. We adopted the Codification for our financial statements
prepared as of September 30, 2009. The adoption did not have any impact on our results of
operations, financial position, and cash flows.
 2.
    
    ACQUISITION
 Effective October 1, 2008, we acquired AMPAC ISP Holdings for a cash purchase price, including
direct expenses and net of cash acquired, of $6,725. AMPAC ISP Holdings designs, develops and
manufactures high performance valves, pressure regulators, cold-gas propulsion systems, and
precision structures for space applications, especially in the European space market. These
products are used on various satellites and spacecraft, as well as on the Ariane 5 launch
vehicle. The business has two locations, Dublin, Ireland and Cheltenham, U.K.
 The acquisition of AMPAC ISP Holdings enhanced our opportunities to penetrate the European space
market and provided us with the opportunity to further expand our Aerospace Equipment segment
product offerings through the development and manufacture of additional space valves and space
structures. These factors resulted in the recognition of intangible assets for customer
relationships and goodwill.
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2.
    
    ACQUISITION (continued)
 We have accounted for this acquisition using the purchase method of accounting, under which the
total purchase price is allocated to the fair values of the assets acquired and liabilities
assumed. We engaged outside consultants to assist in the valuation of property, plant and
equipment and intangible assets.
 The following table indicates the amounts assigned to each major asset and liability caption of
AMPAC ISP Holdings as of the acquisition date:
 Accounts Receivable
    
    $
    2,291Inventory
    
    
    487Prepaid Expenses
    
    
    39Property, Plant and Equipment
    
    
    912Intangible Assets
    
    
    2,840Goodwill
    
    
    3,033Total Assets Acquired
    
    
    9,602Accounts Payable, Accrued Expenses and Other Current Liabilities
    
    
    894Customer Deposits
    
    
    1,625Long-Term Liabilities
    
    
    358Total Liabilities Assumed
    
    
    2,877Purchase Price
    
    $
    6,725
 Intangible assets, consisting of customer relationships (average life of 5 years) and
existing customer backlog (average life of 1.5 years), have definite lives and are being
amortized over their estimated useful lives using the straight-line method.
 3.
    
    SHARE-BASED COMPENSATION
 We account for our share-based compensation arrangements under an accounting standard which
requires us to measure the cost of employee services received in exchange for an award of equity
instruments based on the grant date fair value of the award. The fair values of awards are
recognized as additional compensation expense, which is classified as operating expenses,
proportionately over the vesting period of the awards.
 Our share-based compensation arrangements are designed to advance the long-term interests of the
Company, including by attracting and retaining employees and directors and aligning their
interests with those of our stockholders. The amount, frequency, and terms of share-based awards
may vary based on competitive practices, our operating results, government regulations and
availability under our equity incentive plans. Depending on the form of the share-based award,
new shares of our common stock may be issued upon grant, option exercise or vesting of the
award. We maintain three share based plans, each as discussed below.
 The American Pacific Corporation Amended and Restated 2001 Stock Option Plan (the 2001 Plan)
permits the granting of stock options to employees, officers, directors and consultants. Options
granted under the 2001 Plan generally vested 50% at the grant date and 50% on the one-year
anniversary of the grant date, and expire ten years from the date of grant. As of September 30,
2009, there were 20,000 shares available for grant under the 2001 Plan. This plan was approved
by our stockholders.
 The American Pacific Corporation 2002 Directors Stock Option Plan, as amended and restated (the
2002 Directors Plan) compensates non-employee directors with stock options granted annually or
upon other discretionary events. Options granted under the 2002 Directors Plan prior to
September 30, 2007 generally vested 50% at the grant date and 50% on the one-year anniversary of
the grant date, and expire ten years from the date of grant. Options granted under the 2002
Directors Plan in November 2007 vested 50% one year from the date of grant and 50% two years
from the date of
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3.
    
    SHARE-BASED COMPENSATION (continued)
 grant, and expire ten years from the date of grant. As of September 30, 2009, there were no
 shares available for grant under the 2002 Directors Plan. This plan was approved by our
stockholders.
 The American Pacific Corporation 2008 Stock Incentive Plan (the 2008 Plan) permits the
granting of stock options, restricted stock, restricted stock units and stock appreciation
rights to employees, directors and consultants. A total of 350,000 shares of common stock are
authorized for issuance under the 2008 Plan, provided that no more than 200,000 shares of common
stock may be granted pursuant to awards of restricted stock and restricted stock units. As of
September 30, 2009, there were 177,000 shares available for grant under the 2008 Plan. This plan
was approved by our stockholders.
 A summary of our outstanding and vested stock option and restricted stock activity for the year
ended September 30, 2009 is as follows:
 Stock Options
    
    Restricted StockOutstanding
    
    Non-Vested
    
    Outstanding and Non-VestedWeighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Fair
    
    
    
    
    
    FairPrice
    
    
    
    
    
    Value
    
    
    
    
    
    ValueShares
    
    Per Share
    
    Shares
    
    Per Share
    
    Shares
    
    Per ShareBalance, September 30, 2008
    
    
    394,997
    
    
    $
    7.72
    
    
    
    24,997
    
    
    $
    7.86
    
    
    
    
    
    
    $
    Granted
    
    
    156,000
    
    
    
    10.98
    
    
    
    156,000
    
    
    
    5.41
    
    
    
    22,000
    
    
    
    11.25Vested
    
    
    
    
    
    
    
    
    
    
    (14,287
    )
    
    
    7.88
    
    
    
    
    
    
    
    Exercised
    
    
    (5,000
    )
    
    
    6.34
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired / Cancelled
    
    
    (5,000
    )
    
    
    11.25
    
    
    
    (5,000
    )
    
    
    5.55
    
    
    
    
    
    
    
    Balance, September 30, 2009
    
    
    540,997
    
    
    
    8.64
    
    
    
    161,710
    
    
    
    5.57
    
    
    
    22,000
    
    
    
    11.25
 A summary of our exercisable stock options as of September 30, 2009 is as follows:
 Number of vested stock options
    
    
    379,287Weighted average exercise price per share
    
    $
    7.48Aggregate intrinsic value
    
    $
    326Weighted average remaining contractual term in years
    
    
    4.6
 We determine the fair value of stock option awards at their grant date, using a
Black-Scholes Option-Pricing model applying the assumptions in the following table. We determine
the fair value of restricted stock awards based on the fair market value of our common stock on
the grant date. Actual compensation, if any, ultimately realized by optionees may differ
significantly from the amount estimated using an option valuation model.
 The following stock option information is as of September 30:
 2009
    
    2008
    
    2007Weighted average grant date fair value per share of options granted
    
    $
    5.41
    
    
    $
    7.86
    
    
    $
    3.68Significant fair value assumptions:Expected term in years
    
    
    6.00
    
    
    
    5.75
    
    
    
    5.25Expected volatility
    
    
    48.7
    %
    
    
    44.5
    %
    
    
    47.0
    %Expected dividends
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rates
    
    
    2.7
    %
    
    
    3.4
    %
    
    
    4.7
    %Total intrinsic value of options exercised
    
    $
    21
    
    
    $
    629
    
    
    $
    760Aggregate cash received for option exercises
    
    $
    32
    
    
    $
    406
    
    
    $
    695
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3.
    
    SHARE-BASED COMPENSATION (continued)
 2009
    
    2008
    
    2007Compensation cost (included in operating expenses)Stock options
    
    $
    585
    
    
    $
    127
    
    
    $
    75Restricted stock
    
    
    182
    
    
    
    
    
    
    
    Total
    
    
    767
    
    
    
    127
    
    
    
    75Tax benefit recognized
    
    
    135
    
    
    
    50
    
    
    
    30Net compensation cost
    
    $
    632
    
    
    $
    77
    
    
    $
    45As of period end date:Total compensation cost for non-vested awards
not yet recognized:Stock options
    
    $
    303
    
    
    $
    70
    
    
    $
    1Restricted stock
    
    $
    65
    
    
    $
    
    
    
    $
    Weighted-average years to be recognizedStock options
    
    
    1.5
    
    
    
    0.6
    
    
    
    Restricted stock
    
    
    1.5
    
    
    
    
    
    
    
    
 For each year presented, the expected option term was determined using the simplified method
under the applicable accounting standard. Expected volatility is based on historical market
factors related to the Companys common stock. Risk-free interest rate is based on U.S. Treasury
rates appropriate for the expected term.
 Our share-based compensation plans permit us, but do not require us, to repurchase newly
exercised shares from optionees in settlement of the optionees exercise price obligation.
Shares are repurchased at a price equal to the closing price of our common stock on the date of
exercise. In June 2008, we repurchased 11,080 shares at an average price of $17.50 per share.
 4.
    
    BALANCE SHEET DATA
 The following tables provide additional disclosure for accounts receivable, inventories and
property, plant and equipment at September 30:
 2009
    
    2008Accounts Receivable:Trade receivables
    
    $
    35,942
    
    
    $
    23,201Unbilled receivables
    
    
    7,807
    
    
    
    3,827Employee and other receivables
    
    
    479
    
    
    
    491Allowance for bad debt
    
    
    (200
    )
    
    
    (74
    )Total
    
    $
    44,028
    
    
    $
    27,445
 Unbilled receivables represent unbilled costs and accrued profits related to revenues recognized
on contracts that we account for using the percentage-of-completion method. Substantially all
of these amounts are expected to be billed or invoiced within the next 12 months. We assess the
collectability of our accounts receivable based on historical collection experience and provide
allowances for estimated credit losses. Typically, our customers consist of large corporations
and government contractors procuring products from us on behalf of or for the benefit of
government agencies.
 2009
    
    2008Inventories:Finished goods
    
    $
    1,951
    
    
    $
    2,475Work-in-progress
    
    
    22,080
    
    
    
    22,698Raw materials and supplies
    
    
    9,930
    
    
    
    14,469Deferred cost of revenues
    
    
    2,395
    
    
    
    715Total
    
    $
    36,356
    
    
    $
    40,357
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4.
    
    BALANCE SHEET DATA (continued)
 2009
    
    2008Property, Plant and Equipment:Land and improvements
    
    $
    3,455
    
    
    $
    2,945Buildings and improvements
    
    
    47,548
    
    
    
    45,879Machinery and equipment
    
    
    127,116
    
    
    
    114,224Construction in progress
    
    
    2,325
    
    
    
    7,542Total Cost
    
    
    180,444
    
    
    
    170,590Less: accumulated depreciation
    
    
    (65,799
    )
    
    
    (51,982
    )Total
    
    $
    114,645
    
    
    $
    118,608
 5.
    
    INTANGIBLE ASSETS
 Intangible assets consist of the following as of September 30:
 2009
    
    2008Perchlorate customer list
    
    $
    38,697
    
    
    $
    38,697Less accumulated amortization
    
    
    (38,697
    )
    
    
    (38,697
    )
    
    
    
    Customer relationships
    
    
    9,018
    
    
    
    7,957Less accumulated amortization
    
    
    (6,182
    )
    
    
    (4,944
    )2,836
    
    
    
    3,013Backlog
    
    
    1,579
    
    
    
    Less accumulated amortization
    
    
    (862
    )
    
    
    717
    
    
    
    Total
    
    $
    3,553
    
    
    $
    3,013
 The perchlorate customer list is an asset of our Specialty Chemicals segment and was fully
amortized as of February 2008. Amortization expense was zero, $1,517 and $3,900 for years ended
September 30, 2009, 2008 and 2007, respectively.
 Customer relationships are assets of our Fine Chemicals and Aerospace Equipment segments and are
subject to amortization. Amortization expense was $1,238, $1,237 and $1,238 for the years ended
September 30, 2009, 2008 and 2007, respectively.
 Backlog is an asset of our Aerospace Equipment segment and is subject to amortization.
Amortization expense was $830, zero and zero for the years ended September 30, 2009, 2008 and
2007, respectively. On October 1, 2008, we removed $2,287 of fully amortized intangibles assets
for backlog that was associated with our Fine Chemicals segment because these assets were fully
amortized for all periods presented.
 In connection with our acquisition of AMPAC ISP Holdings (See Note 2), as of October 1, 2008, we
recorded customer relationships in the amount of $1,097 and backlog in the amount of $1,743.
 Estimated future amortization expense for our intangible assets is as follows:
 Years ending September 30:2010
    
    $
    2,1002011
    
    
    8432012
    
    
    3052013
    
    
    3052014
    
    
    Total
    
    $
    3,553
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6.
    
    DEBT
 Our outstanding debt balances consist of the following as of September 30:
 2009
    
    2008Senior Notes, 9%, due 2015
    
    $
    110,000
    
    
    $
    110,000Capital Leases, due 2012
    
    
    248
    
    
    
    374Total Debt
    
    
    110,248
    
    
    
    110,374Less Current Portion
    
    
    (151
    )
    
    
    (254
    )Total Long-term Debt
    
    $
    110,097
    
    
    $
    110,120
 Senior Notes.In February 2007, we issued and sold $110,000 aggregate principal amount of 9.0%
Senior Notes due February 1, 2015 (collectively, with the exchange notes issued in August 2007
as referenced below, the Senior Notes). Proceeds from the issuance of the Senior Notes were
used to repay our former credit facilities. The Senior Notes accrue interest at an annual rate
of 9.0%, payable semi-annually in February and August. The Senior Notes are guaranteed on a
senior unsecured basis by all of our existing and future material U.S. subsidiaries. The Senior
Notes are:
 
    
    ranked equally in right of payment with all of our existing and future senior
indebtedness;
    
    ranked senior in right of payment to all of our existing and future senior subordinated
and subordinated indebtedness;
    
    effectively junior to our existing and future secured debt to the extent of the value of
the assets securing such debt; and
    
    structurally subordinated to all of the existing and future liabilities (including trade
payables) of each of our subsidiaries that do not guarantee the Senior Notes.
 The Senior Notes may be redeemed by the Company, in whole or in part, under the following
circumstances:
 
    
    at any time prior to February 1, 2011 at a price equal to 100% of the purchase amount of
the Senior Notes plus an applicable premium as defined in the related indenture;
    
    at any time on or after February 1, 2011 at redemption prices beginning at 104.5% of the
principal amount to be redeemed and reducing to 100% by February 1, 2013;
    
    until February 1, 2010, up to 35% of the principal amount of the Senior Notes at a
redemption price of 109% of the principal amount thereof, plus accrued and unpaid interest
thereon, with the proceeds of certain sales of our equity securities; and
    
    under certain changes of control, we must offer to purchase the Senior Notes at 101% of
their aggregate principal amount, plus accrued interest.
 The Senior Notes were issued pursuant to an indenture which contains certain customary events of
default, including cross default provisions if we default under our existing and future debt
agreements having, individually or in the aggregate, a principal or similar amount outstanding
of at least $10,000, and certain other covenants limiting, subject to exceptions, carve-outs and
qualifications, our ability to:
 
    
    incur additional debt;
    
    pay dividends or make other restricted payments;
    
    create liens on assets to secure debt;
    
    incur dividend or other payment restrictions with regard to restricted subsidiaries;
    
    transfer or sell assets;
    
    enter into transactions with affiliates;
    
    enter into sale and leaseback transactions;
    
    create an unrestricted subsidiary;
    
    enter into certain business activities; or
    
    effect a consolidation, merger or sale of all or substantially all of our assets.
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6.
    
    DEBT (continued)
 In connection with the closing of the sale of the Senior Notes, we entered into a registration
rights agreement which required us to file a registration statement to offer to exchange the
Senior Notes for notes that have substantially identical terms as the Senior Notes and are
registered under the Securities Act of 1933, as amended. In July 2007, we filed a registration
statement with the SEC with respect to an offer to exchange the Senior Notes as required by the
registration rights agreement, which registration statement was declared effective by the SEC.
In August 2007, we completed the exchange of 100% of the Senior Notes for substantially
identical notes which are registered under the Securities Act of 1933, as amended.
 Revolving Credit Facility.In February 2007, we entered into an Amended and Restated Credit
Agreement, as amended as of July 7, 2009 (the Revolving Credit Facility), with Wachovia Bank,
National Association, and certain other lenders, which provides a secured revolving credit
facility in an aggregate principal amount of up to $20,000 with an initial maturity of 5 years.
We may prepay and terminate the Revolving Credit Facility at any time. The annual interest
rates applicable to loans under the Revolving Credit Facility are, at our option, either the
Alternate Base Rate or LIBOR Rate (each as defined in the Revolving Credit Facility) plus, in
each case, an applicable margin. The applicable margin is tied to our total leverage ratio (as
defined in the Revolving Credit Facility). In addition, we pay commitment fees, other fees
related to the issuance and maintenance of letters of credit, and certain agency fees.
 The Revolving Credit Facility is guaranteed by and secured by substantially all of the assets of
our current and future domestic subsidiaries, subject to certain exceptions as set forth in the
Revolving Credit Facility. The Revolving Credit Facility contains certain negative covenants
restricting and limiting our ability to, among other things:
 
    
    incur debt, incur contingent obligations and issue certain types of preferred stock;
    
    create liens;
    
    pay dividends, distributions or make other specified restricted payments;
    
    make certain investments and acquisitions;
    
    enter into certain transactions with affiliates;
    
    enter into sale and leaseback transactions; and
    
    merge or consolidate with any other entity or sell, assign, transfer, lease, convey or
otherwise dispose of assets.
 Financial covenants under the Revolving Credit Facility include quarterly requirements for total
leverage ratio of less than or equal to 5.25 to 1.00 (Total Leverage Ratio), and interest
coverage ratio of at least 2.50 to 1.00 (Interest Coverage Ratio). The Revolving Credit
Facility defines Total Leverage Ratio as the ratio of Consolidated Funded Debt to Consolidated
EBITDA and Interest Coverage Ratio as the ratio of Consolidated EBITDA to Consolidated Interest
Expense. With respect to these covenant compliance calculations, Consolidated EBITDA, as defined
in the Revolving Credit Facility (hereinafter, referred to as Credit Facility EBITDA), differs
from typical EBITDA calculations and our calculation of Adjusted EBITDA, which is used in
certain of our public releases and in connection with our incentive compensation plan. The most
significant difference in the Credit Facility EBITDA calculation is the inclusion of cash
payments for environmental remediation as part of the calculation. The following statements
summarize the elements of those definitions that are material to our computations. Consolidated
Funded Debt generally includes principal amounts outstanding under our Senior Notes, Revolving
Credit Facility, capital leases and notional amounts for outstanding letters of credit. Credit
Facility EBITDA is generally computed as consolidated net income plus income tax expense,
interest expense, depreciation and amortization, and stock-based compensation expense and less
cash payments for environmental remediation and other non-recurring gains in excess of $50. In
accordance with the definitions contained in the Revolving Credit Facility, as of September 30,
2009, our Total Leverage Ratio was 3.51 to 1.00 and our Interest Coverage Ratio was 3.17 to
1.00.
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6.
    
    DEBT (continued)
 The Revolving Credit Facility also contains usual and customary events of default
(subject to certain threshold amounts and grace periods), including cross-default provisions
that include our Senior Notes. If an event of default occurs and is continuing, we may be
required to repay the obligations under the Revolving Credit Facility prior to its stated
maturity and the related commitments may be terminated.
 As of September 30, 2009, under our Revolving Credit Facility, we had no borrowings outstanding,
availability of $17,968, and we were in compliance with its various financial covenants.
Availability is computed as the total commitment of $20,000 less outstanding borrowings and
outstanding letters of credit, if any.
 Principal Maturities. Principal maturities for our outstanding debt as of September 30, 2009
are as follows:
 Years ending September 30:2010
    
    $
    1512011
    
    
    492012
    
    
    482013
    
    
    2014
    
    
    Thereafter
    
    
    110,000Total
    
    $
    110,248
 Debt Issue Costs and Debt Repayment Charges.In connection with the repayment of our prior
credit facilities in February 2007, we recorded a charge for approximately $2,300 to write-off
the unamortized balance of debt issue costs associated with those facilities. In addition, we
paid a pre-payment penalty of $607 to terminate our second lien credit facility. These charges
are presented as debt repayment charges in our statement of operations. In connection with the
issuance of the Senior Notes, we incurred debt issuance costs of approximately $4,814 which were
capitalized and classified as other assets on the balance sheet. These costs are being
amortized as additional interest expense over the eight year term on the Senior Notes.
 Letters of Credit.As of September 30, 2009, we had $2,032 in outstanding standby letters of
credit which mature through July 2013. These letters of credit principally secure performance of
certain water treatment equipment sold by us and payment of fees associated with the delivery of
natural gas and power.
 7.
    
    EARNINGS (LOSS) PER SHARE
 Shares used to compute earnings (loss) per share from continuing operations are as follows for
the years ended September 30:
 2009
    
    2008
    
    2007Net Income (Loss)
    
    $
    (5,959
    )
    
    $
    8,951
    
    
    $
    4,984Basic Weighted Average Shares
    
    
    7,482,000
    
    
    
    7,451,000
    
    
    
    7,365,000Diluted:Weighted Average Shares, Basic
    
    
    7,482,000
    
    
    
    7,451,000
    
    
    
    7,365,000Dilutive Effect of Stock Options
    
    
    
    
    
    
    148,000
    
    
    
    106,000Weighted Average Shares, Diluted
    
    
    7,482,000
    
    
    
    7,599,000
    
    
    
    7,471,000Basic Earnings (Loss) per Share
    
    $
    (0.80
    )
    
    $
    1.20
    
    
    $
    0.68Diluted Earnings (Loss) per Share
    
    $
    (0.80
    )
    
    $
    1.18
    
    
    $
    0.67
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7.
    
    EARNINGS (LOSS) PER SHARE (continued)
 As of September 30, 2009 and 2008, respectively, we had 540,997 and 24,997 antidilutive options
outstanding.
 8.
    
    STOCKHOLDERS EQUITY
 Preferred Stock.We have authorized 3,000,000 shares of preferred stock, par value $1.00 per
share. At September 30, 2009 and 2008, no shares of preferred stock are issued and outstanding.
 Shareholder Rights Plan.In August 1999, we adopted a shareholder rights plan under which each
share of the Companys common stock carries one preference share purchase right (a Right). In
July 2008, our board of directors approved the extension of the shareholder rights plan to
August 2, 2019. Aspects of the Rights, which may be amended under certain conditions by our
board of directors, include, among other things, the following:
 The Rights:
 
    
    are attached to and trade with the outstanding shares of common stock.
 
    
    generally become exercisable if a person or group of affiliated persons becomes an
Acquiring Person by acquiring or commencing a tender offer to acquire 20% or more of the
outstanding shares of our common stock.
 
    
    do not become exercisable in the case of Qualifying Offers or Permitted Offers,
which include, among others, tender or exchange offers for all outstanding common stock of
the Company, the terms of which are approved by at least a majority of the non-employee
directors on our board of directors.
 Upon exercise of a Right, the holder (other than an Acquiring Person) shall have the right to
purchase from the Company shares of our common stock having a market value of two times the
exercise price of the Right. For example, at an exercise price of $24.00 per Right, each Right
would entitle its holder to purchase $48.00 worth of common stock for $24.00. If there are
insufficient shares of common stock available to permit the exercise in full of the Rights for
common stock, then each Right shall entitle the holder thereof to purchase from the Company one
one-hundredth of a share of Series D Participating Preference Stock, par value $1.00 per share
(the Preference Shares), at a price of $24.00 per one one-hundredth of a Preference Share,
subject to customary antidilution provisions.
 Three hundred and fifty-thousand (350,000) Preference Shares are designated and reserved for
issuance under our shareholder rights plan.
 Preference Shares:
 
    
    have 100 votes each, voting together with the common stock.
 
    
    are entitled to receive the greater of a declared dividend payment of $1.00 per share or
a dividend of 100 times the dividend declared per share of common stock.
 
    
    are, in the event of a liquidation of the Company, entitled to the greater of $100 per
share, plus any accrued and unpaid dividends, or 100 times the aggregate amount per share
payable to holders of common stock.
 Treasury Stock.In July 2009, our board of directors approved a resolution to retire the
2,045,950 shares of treasury stock held by the Company. The transaction resulted in a reduction
in Treasury Stock in the amount of $17,175 and a corresponding reduction in Capital in Excess of
Par Value on our consolidated balance sheet as of September 30, 2009.
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9.
    
    INCOME TAXES
 Income (loss) before income taxes for domestic and foreign operations is as follows for the
years ended September 30:
 2009
    
    2008
    
    2007United States
    
    $
    (8,456
    )
    
    $
    15,934
    
    
    $
    10,228Foreign
    
    
    (305
    )
    
    
    (495
    )
    
    
    (639
    )Total
    
    $
    (8,761
    )
    
    $
    15,439
    
    
    $
    9,589
 The components of the income tax expense (benefit) are as follows for the years ended
September 30:
 2009
    
    2008
    
    2007Current
    
    $
    429
    
    
    $
    1,580
    
    
    $
    1,355Deferred
    
    
    (3,231
    )
    
    
    4,908
    
    
    
    3,250Income tax expense (benefit)
    
    $
    (2,802
    )
    
    $
    6,488
    
    
    $
    4,605
 Deferred tax assets are comprised of the following at September 30:
 2009
    
    2008Deferred tax assets:Environmental remediation reserves
    
    $
    11,955
    
    
    $
    7,386Pension obligations
    
    
    10,400
    
    
    
    5,447Tax credits and carryforwards
    
    
    3,589
    
    
    
    2,988Intangible assets
    
    
    2,899
    
    
    
    3,507Inventory
    
    
    4,660
    
    
    
    4,848Accrued expenses
    
    
    1,997
    
    
    
    2,292Other
    
    
    590
    
    
    
    529Subtotal
    
    
    36,090
    
    
    
    26,997Valuation allowance
    
    
    (1,157
    )
    
    
    (891
    )Deferred tax assets
    
    
    34,933
    
    
    
    26,106Deferred tax liabilities:Property, plant and equipment
    
    
    (6,698
    )
    
    
    (4,613
    )Prepaid expenses
    
    
    (623
    )
    
    
    (627
    )Other
    
    
    (302
    )
    
    
    (158
    )Deferred tax liabilities
    
    
    (7,623
    )
    
    
    (5,398
    )Net deferred tax assets
    
    $
    27,310
    
    
    $
    20,708
 The following summarizes our gross tax credits and carryforwards as of September 30:
 2009
    
    2008Federal operating losses
    
    $
    1,382
    
    
    $
    1,911Federal R&D credits
    
    
    160
    
    
    
    160Federal AMT credits
    
    
    1,684
    
    
    
    1,970State operating losses
    
    
    1,205
    
    
    
    1,205U.K. operating losses
    
    
    2,514
    
    
    
    2,749Ireland operating losses
    
    
    3,548
    
    
    
    
 Federal operating loss carryforwards, expiring in 2029, federal R&D credits and federal AMT
credits are available to reduce future federal taxable income. We do not anticipate future
taxable income in the states that have operating loss carryforwards and have provided a full
valuation allowance of $66 as of September 30, 2009 and 2008. Because of a history of losses in
foreign tax jurisdictions, we
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9.
    
    INCOME TAXES (continued)
 have concluded that it is more likely than not that we will not utilize these operating loss
carryforwards and, accordingly, have provided aggregate valuation allowances of $1,091 and $825
as of September 30, 2009 and 2008, respectively. We have not provided a U.S. federal income tax
for our foreign operations because we intend to permanently reinvest any foreign earnings.
 A reconciliation of the federal statutory rate to our effective tax (benefit) rate is as follows
for the years ended September 30:
 2009
    
    2008
    
    2007Federal income tax at the statutory rate
    
    
    (35.0
    %)
    
    
    35.0
    %
    
    
    35.0
    %State income tax, net of federal benefit
    
    
    (5.0
    %)
    
    
    5.2
    %
    
    
    4.0
    %Nondeductible expenses
    
    
    3.9
    %
    
    
    1.5
    %
    
    
    1.3
    %Valuation allowance
    
    
    0.0
    %
    
    
    1.0
    %
    
    
    2.0
    %Change in effective state income tax rate
    
    
    0.0
    %
    
    
    (2.3
    %)
    
    
    5.4
    %Interest and penalties
    
    
    0.6
    %
    
    
    1.4
    %
    
    
    0.0
    %Foreign tax rate differential
    
    
    2.4
    %
    
    
    0.0
    %
    
    
    0.0
    %Other
    
    
    1.1
    %
    
    
    0.2
    %
    
    
    0.3
    %Effective tax rate
    
    
    (32.0
    %)
    
    
    42.0
    %
    
    
    48.0
    %
 We review our portfolio of uncertain tax positions and recorded liabilities based on the
applicable recognition standards. In this regard, an uncertain tax position represents our
expected treatment of a tax position taken in a filed tax return, or planned to be taken in a
future tax return, that has not been reflected in measuring income tax expense for financial
reporting purposes. We classify uncertain tax positions as non-current income tax liabilities
unless expected to be settled within one year.
 We adopted the accounting standard for uncertain tax positions on October 1, 2007. The
cumulative effects of applying this interpretation were recorded as a decrease of $291 to
retained earnings, an increase of $1,179 to net deferred tax assets and an increase of $1,470 to
non-current income taxes liabilities (a component of other long-term liabilities) as of October
1, 2007.
 As of September 30, 2009 and 2008, the total amount of unrecognized tax benefits was $652 and
$313, respectively, of which $335 and $241, respectively, would affect the effective tax rate,
if recognized. The remaining balance is related to deferred tax items which only impact the
timing of tax payments. In the fiscal year ending September 30, 2010, it is reasonably possible
that the gross liability for unrecognized tax benefits will decrease by $323 primarily as a
result of a change in accounting methods for tax purposes and the lapsing of statutes of
limitations.
 A reconciliation of the beginning and ending amount of unrecognized tax benefits as of September
30 is as follows:
 2009
    
    2008Unrecognized Tax Benefits  Beginning of Year
    
    $
    313
    
    
    $
    3,949Additions for tax positions of prior years
    
    
    392
    
    
    
    998Reductions for tax positions of prior years
    
    
    
    
    
    
    (4,572
    )Gross increases  Current period tax positions
    
    
    
    
    
    
    Settlements with taxing authorities
    
    
    
    
    
    
    Lapse of statute of limitations
    
    
    (53
    )
    
    
    (62
    )Unrecognized Tax Benefits  End of Year
    
    $
    652
    
    
    $
    313
 We recognize accrued interest and penalties related to unrecognized tax benefits in income
tax expense. As of September 30, 2009 and 2008, respectively, we had accrued $164 and $225,
respectively, for the payment of tax-related interest and penalties. For the years ended
September 30, 2009 and 2008, respectively, income tax expense includes an expense of $52 and
$253 for interest and penalties.
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9.
    
    INCOME TAXES (continued)
 We file income tax returns in the U.S. federal jurisdiction, various states and foreign
jurisdictions. With few exceptions, we are no longer subject to federal or state income tax
examinations for the years before 2006.
 10.
    
    EMPLOYEE BENEFIT PLANS
 We maintain three defined benefit pension plans which cover substantially all of our U.S.
employees, excluding employees of our Aerospace Equipment segment: the Amended and Restated
American Pacific Corporation Defined Benefit Pension Plan (the AMPAC Plan), the Ampac Fine
Chemicals LLC Pension Plan for Salaried Employees (the AFC Salaried Plan), and the Ampac Fine
Chemicals LLC Pension Plan for Bargaining Unit Employees (the AFC Bargaining Plan), each as
amended and restated. Collectively, these three plans are referred to as the Pension Plans.
Pension Plans benefits are paid based on an average of earnings, retirement age, and length of
service, among other factors. In addition, we have the American Pacific Corporation
Supplemental Executive Retirement Plan (the SERP) that as of September 30, 2009, includes four
executive officers and one former executive officer. We use a measurement date of September 30
to account for our Pension Plans and SERP.
 In November 2007, our board of directors approved an amendment and restatement of the SERP.
Under the terms of the amended and restated SERP, certain of our officers and their
beneficiaries are entitled to receive a monthly annuity benefit following their retirement from
the Company. The amendment and restatement of the SERP, which was effective as of October 1,
2007, amended, among other provisions, the list of participants in the SERP to include three
additional executive officers of the Company and the method of calculating a participants
benefit under the SERP.
 We maintain two 401(k) plans in which participating employees may make contributions. One covers
substantially all U.S. employees except bargaining unit employees of Ampac Fine Chemicals LLC
(AFC) and the other covers AFC bargaining unit employees (collectively, the 401(k) Plans).
We make matching contributions for AFC employees and U.S. employees of our Aerospace Equipment
segment. In addition, we make a profit sharing contribution for U.S. employees of our Aerospace
Equipment segment. We made total contributions of $1,130 and $993 to the 401(k) Plans during
the years ended September 30, 2009 and 2008, respectively.
 We provide healthcare and life insurance benefits to substantially all of our employees.
 Effective September 30, 2007, we adopted an accounting standard which requires the recognition
of the funded status of a defined benefit plan on our consolidated balance sheet. Upon
adoption, we recorded an adjustment of $3,137 to the end-of-year balance of accumulated other
comprehensive income in stockholders equity to recognize unamortized pension net losses and
prior service costs as components of the ending balance of accumulated other comprehensive
income, net of tax.
 The following table summarizes changes in the components of unrecognized benefit plan costs for
the year ended September 30, 2009:
 Pension Plans
    
    SERP2009
    
    2008
    
    2009
    
    2008Net actuarial loss (gain)
    
    $
    11,648
    
    
    $
    685
    
    
    $
    409
    
    
    $
    (184
    )Prior service costs
    
    
    
    
    
    
    242
    
    
    
    
    
    
    
    3,516Amortization of:Net actuarial loss from previous years
    
    
    (509
    )
    
    
    (296
    )
    
    
    
    
    
    
    Prior service costs
    
    
    (76
    )
    
    
    (76
    )
    
    
    (434
    )
    
    
    (434
    )Income tax benefits related to above items
    
    
    (4,426
    )
    
    
    (238
    )
    
    
    10
    
    
    
    (1,159
    )Changes in unrecognized benefit plan costs
    
    $
    6,637
    
    
    $
    317
    
    
    $
    (15
    )
    
    $
    1,739
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10.
    
    EMPLOYEE BENEFIT PLANS (continued)
 The following table sets forth the amounts recognized as components of accumulated other
comprehensive loss at September 30:
 Pension Plans
    
    SERP2009
    
    2008
    
    2009
    
    2008Net actuarial loss (gain)
    
    $
    16,481
    
    
    $
    5,343
    
    
    $
    279
    
    
    $
    (130
    )Prior service costs
    
    
    322
    
    
    
    398
    
    
    
    2,662
    
    
    
    3,096Income tax benefits related to above items
    
    
    (6,721
    )
    
    
    (2,296
    )
    
    
    (1,176
    )
    
    
    (1,186
    )Unrecognized benefit plan costs, net of tax
    
    $
    10,082
    
    
    $
    3,445
    
    
    $
    1,765
    
    
    $
    1,780
 The table below sets forth the amounts in accumulated other comprehensive loss at
September 30, 2009 that we expect to recognize in periodic pension cost in the year ending
September 30, 2010.
 Pension Plans
    
    SERPAmortization of net actuarial loss
    
    $
    1,052
    
    
    $
    Amortization of prior service costs
    
    
    76
    
    
    
    420Total
    
    $
    1,128
    
    
    $
    420
 The table below presents the annual changes in benefit obligations and plan assets and the
funded status of our Pension Plans and SERP as of and for the fiscal years ended September 30:
 Pension Plans
    
    SERP2009
    
    2008
    
    2009
    
    2008Change in Benefit Obligation:Benefit obligation, beginning of year
    
    $
    37,392
    
    
    $
    39,694
    
    
    $
    5,979
    
    
    $
    2,076Service cost
    
    
    1,983
    
    
    
    2,078
    
    
    
    350
    
    
    
    351Interest cost
    
    
    2,892
    
    
    
    2,526
    
    
    
    370
    
    
    
    346Amendments
    
    
    
    
    
    
    241
    
    
    
    
    
    
    
    3,516Actuarial losses (gains)
    
    
    9,468
    
    
    
    (6,021
    )
    
    
    409
    
    
    
    (184
    )Benefits paid
    
    
    (1,220
    )
    
    
    (1,126
    )
    
    
    (127
    )
    
    
    (126
    )Benefit obligation, end of year
    
    
    50,515
    
    
    
    37,392
    
    
    
    6,981
    
    
    
    5,979Change in Plan Assets:Fair value of plan assets, beginning of year
    
    
    27,552
    
    
    
    29,908
    
    
    
    
    
    
    
    Actual return on plan assets
    
    
    21
    
    
    
    (4,241
    )
    
    
    
    
    
    
    Employer contributions
    
    
    2,941
    
    
    
    3,011
    
    
    
    127
    
    
    
    126Benefits paid
    
    
    (1,220
    )
    
    
    (1,126
    )
    
    
    (127
    )
    
    
    (126
    )Fair value of plan assets, end of year
    
    
    29,294
    
    
    
    27,552
    
    
    
    
    
    
    
    Funded status
    
    $
    (21,221
    )
    
    $
    (9,840
    )
    
    $
    (6,981
    )
    
    $
    (5,979
    )
  Pension Plans
    
    SERP2009
    
    2008
    
    2009
    
    2008Employee related liabilities
    
    $
    
    
    
    $
    
    
    
    $
    (482
    )
    
    $
    (126
    )Pension obligations and other long-term liabilities
    
    
    (21,221
    )
    
    
    (9,840
    )
    
    
    (6,499
    )
    
    
    (5,853
    )Net amount recognized
    
    $
    (21,221
    )
    
    $
    (9,840
    )
    
    $
    (6,981
    )
    
    $
    (5,979
    )
 F-24




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##### Table of Contents



10.
    
    EMPLOYEE BENEFIT PLANS (continued)
 The table below provides data for our defined benefit plans as of September 30:
 2009
    
    2008Plan Assets:Ampac Plan
    
    $
    23,650
    
    
    $
    22,929AFC Salaried Plan
    
    
    3,431
    
    
    
    2,978AFC Bargaining Plan
    
    
    2,213
    
    
    
    1,645Accumulated Benefit Obligation:Ampac Plan
    
    
    32,826
    
    
    
    25,948AFC Salaried Plan
    
    
    4,684
    
    
    
    3,285AFC Bargaining Plan
    
    
    2,896
    
    
    
    2,067Projected Benefit Obligation:Ampac Plan
    
    
    41,769
    
    
    
    31,148AFC Salaried Plan
    
    
    5,850
    
    
    
    4,177AFC Bargaining Plan
    
    
    2,896
    
    
    
    2,067
 The Pension Plans assets include no shares of our common stock. We developed assumptions
for expected long-term returns for the targeted asset classes of each of the Pension Plans based
on factors that include current market data such as yields/price-earnings ratios, and historical
market returns over long periods. Using policy target allocation percentages and the asset class
expected returns, a weighted average expected return was calculated. The actual and target
asset allocation for the Pension Plans is as follows at September 30:
 Target
    
    Actual2009
    
    2009
    
    2008Equity securities
    
    
    70
    %
    
    
    65
    %
    
    
    62
    %Debt securities
    
    
    27
    %
    
    
    25
    %
    
    
    23
    %Cash and marketable securities
    
    
    3
    %
    
    
    10
    %
    
    
    15
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Net periodic pension expense is comprised of the following for the years ended September 30:
 Pension Plans
    
    SERP2009
    
    2008
    
    2007
    
    2009
    
    2008
    
    2007Net Periodic Pension Cost:Service cost
    
    $
    1,983
    
    
    $
    2,078
    
    
    $
    2,027
    
    
    $
    350
    
    
    $
    351
    
    
    $
    Interest cost
    
    
    2,892
    
    
    
    2,526
    
    
    
    2,252
    
    
    
    370
    
    
    
    346
    
    
    
    138Expected return on plan assets
    
    
    (2,201
    )
    
    
    (2,466
    )
    
    
    (2,084
    )
    
    
    
    
    
    
    
    
    
    
    Recognized actuarial losses
    
    
    509
    
    
    
    296
    
    
    
    429
    
    
    
    
    
    
    
    
    
    
    
    11Amortization of prior service costs
    
    
    76
    
    
    
    76
    
    
    
    58
    
    
    
    434
    
    
    
    434
    
    
    
    43Net periodic pension cost
    
    $
    3,259
    
    
    $
    2,510
    
    
    $
    2,682
    
    
    $
    1,154
    
    
    $
    1,131
    
    
    $
    192Weighted-Average Actuarial Assumptions:Discount rate
    
    
    6.40
    %
    
    
    7.25
    %
    
    
    6.25
    %
    
    
    5.60
    %
    
    
    7.25
    %
    
    
    6.25
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.50
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.50
    %Expected return on plan assets
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    
    
    
    
    
    
    
    
    
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##### Table of Contents



10.
    
    EMPLOYEE BENEFIT PLANS (continued)
 During the year ending September 30, 2010, we expect to contribute $2,568 to the Pension Plans
and $500 to the SERP. The table below sets forth expected future benefit payments for the years
ending September 30:
 Pension Plans
    
    SERPYears ending September 30:2010
    
    $
    1,626
    
    
    $
    4822011
    
    
    1,663
    
    
    
    5762012
    
    
    1,733
    
    
    
    5532013
    
    
    1,915
    
    
    
    8482014
    
    
    2,043
    
    
    
    8162015-2019
    
    
    13,074
    
    
    
    3,548
 11.
    
    COMMITMENTS AND CONTINGENCIES
 Operating Leases.We lease our corporate offices and production facilities for our Aerospace
Equipment segment under operating leases with lease periods extending through 2018. Certain of
our operating leases contain step rent provisions and escalation clauses and also provide for
cash allowances toward the funding of capital improvements. Our minimum lease payments include
these considerations. Total rental expense under operating leases was $2,114, $1,574, and $1,117
for the years ended September 30, 2009, 2008, and 2007, respectively.
 Minimum lease payments are recognized as rental expense on a straight-line basis over the
minimum lease term. Estimated future minimum lease payments under operating leases as of
September 30, 2009, are as follows:
 Years ending September 30:2009
    
    $
    1,6152010
    
    
    1,5392011
    
    
    1,5412012
    
    
    1,4372013
    
    
    1,415Thereafter
    
    
    6,520Total
    
    $
    14,067
 Purchase Commitments.Purchase commitments represent obligations under agreements which are
not unilaterally cancelable by us, are legally enforceable, and specify fixed or minimum amounts
or quantities of goods or services at fixed or minimum prices. As of September 30, 2009, our
purchase commitments were not material.
 Employee Agreements.We have an employment agreement with Dr. Joseph Carleone, our Chief
Executive Officer as of January 1, 2010. The term of the employment agreement currently ends on
September 30, 2012, unless amended or extended in accordance with the terms of the agreement or
otherwise. Significant contract provisions include annual base salary, health care benefits,
and non-compete provisions. The employment agreement is primarily an at will employment
agreement, under which we may terminate the executive officers employment for any or no reason.
Generally, the agreement provides that a termination without cause obligates us to pay certain
severance benefits specified in the contract.
 Effective as of July 8, 2008, we entered into severance agreements with each of our Vice
President, Administration and our Chief Financial Officer, which, generally, provide that a
termination of the executive without cause obligates us to pay certain severance benefits
specified in the contract.
 In addition, certain other key divisional executives are eligible for severance benefits.
Estimated minimum aggregate severance benefits under all of these agreements and arrangements
were approximately $4,200 as of September 30, 2009.
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##### Table of Contents



11.
    
    COMMITMENTS AND CONTINGENCIES (continued)
 Environmental Matters.
 Regulatory Review of Perchlorates.Our Specialty Chemicals segment manufactures and sells
products that contain perchlorates. Federal and state regulators continue to review the effects
of perchlorate, if any, on human health and the related allowable maximum level of contaminant
from perchlorate. While the presence of regulatory review presents general business risk to the
Company, we are currently unaware of any regulatory proposal that would have a material effect
on our results of operations and financial position or that would cause us to significantly
modify or curtail our business practices, including our remediation activities discussed below.
 Perchlorate Remediation Project in Henderson, Nevada.We commercially manufactured perchlorate
chemicals at a facility in Henderson, Nevada (AMPAC Henderson Site) from 1958 until the
facility was destroyed in May 1988, after which we relocated our production to a new facility in
Iron County, Utah. Kerr-McGee Chemical Corporation (KMCC) also operated a perchlorate
production facility in Henderson, Nevada (the KMCC Site) from 1967 to 1998. In addition,
between 1956 and 1967, American Potash operated a perchlorate production facility and, for many
years prior to 1956, other entities also manufactured perchlorate chemicals at the KMCC Site.
As a result of a longer production history in Henderson, KMCC and its predecessor operations
manufactured significantly greater amounts of perchlorate over time than we did at the AMPAC
Henderson Site.
 In 1997, the Southern Nevada Water Authority (SNWA) detected trace amounts of the perchlorate
anion in Lake Mead and the Las Vegas Wash. Lake Mead is a source of drinking water for Southern
Nevada and areas of Southern California. The Las Vegas Wash flows into Lake Mead from the Las
Vegas valley.
 In response to this discovery by SNWA, and at the request of the Nevada Division of
Environmental Protection (NDEP), we engaged in an investigation of groundwater near the AMPAC
Henderson Site and down gradient toward the Las Vegas Wash. The investigation and related
characterization, which lasted more than six years, employed experts in the field of
hydrogeology. This investigation concluded that although there is perchlorate in the groundwater
in the vicinity of the AMPAC Henderson Site up to 700 parts per million, perchlorate from this
site does not materially impact, if at all, water flowing in the Las Vegas Wash toward Lake
Mead. It has been well established, however, by data generated by SNWA and NDEP, that
perchlorate from the KMCC Site did impact the Las Vegas Wash and Lake Mead. KMCCs successor,
Tronox LLC, operates an above ground perchlorate groundwater remediation facility at their
Henderson site. Recent measurements of perchlorate in Lake Mead made by SNWA have been less than
10 parts per billion.
 Notwithstanding these facts, and at the direction of NDEP and the U.S. Environmental Protection
Agency (the EPA), we conducted an investigation of remediation technologies for perchlorate in
groundwater with the intention of remediating groundwater near the AMPAC Henderson Site. The
technology that was chosen as most efficient and appropriate was in situ bioremediation (ISB).
ISB reduces perchlorate in the groundwater by precise addition of an appropriate carbon source
to the groundwater itself while it is still in the ground (as opposed to an above ground, more
conventional, ex situ process). This induces naturally occurring organisms in the groundwater
to reduce the perchlorate among other oxygen containing compounds.
 In 2002, we conducted a pilot test in the field of the ISB technology and it was successful. On
the basis of the successful test and other evaluations, in the fiscal year ended September 30,
2005 (fiscal 2005) we submitted a work plan to NDEP for the construction of a remediation
facility near the AMPAC Henderson Site. The conditional approval of the work plan by NDEP in
our third quarter of fiscal 2005 allowed us to generate estimated costs for the installation and
operation of the remediation facility to address perchlorate at the AMPAC Henderson Site. We
commenced construction in July 2005. In December 2006, we began operations. The location of
this facility is several miles, in the direction of ground water flow, from the AMPAC Henderson
Site.
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11.
    
    COMMITMENTS AND CONTINGENCIES (continued)
 At the request of the NDEP, we recently renewed discussions to formalize our remediation efforts
in a voluntary agreement that, if negotiated and executed, would provide more detailed
regulatory guidance on environmental characterization and remedies at the AMPAC Henderson Site
and vicinity. The agreement under discussion would be expected to be similar to others
previously executed by the NDEP with other companies under similar circumstances. Typically,
such agreements generally cover such matters as the scope of work plans, schedules,
deliverables, remedies for non compliance, and reimbursement to the State of Nevada for past and
future oversight.
 Henderson Site Environmental Remediation Reserve.We accrue for anticipated costs associated
with environmental remediation that are probable and estimable. On a quarterly basis, we review
our estimates of future costs that could be incurred for remediation activities. In some cases,
only a range of reasonably possible costs can be estimated. In establishing our reserves, the
most probable estimate is used; otherwise, we accrue the minimum amount of the range.
 During our fiscal 2005 third quarter, we recorded a charge for $22,400 representing our estimate
of the probable costs of our remediation efforts at the AMPAC Henderson Site, including the
costs for capital equipment, operating and maintenance (O&M), and consultants. The project
consisted of two primary phases: the initial construction of the remediation equipment phase and
the O&M phase. During the fiscal year ended September 30, 2006, we increased our total cost
estimate of probable costs for the construction phase by $3,600 due primarily to changes in the
engineering designs, delays in receiving permits and the resulting extension of construction
time.
 ISB is a new technology on the scale being used at the AMPAC Henderson Site. Accordingly, as we
gain ISB operational experience, we have been and are observing certain conditions, operating
results and other data which we consider in updating the assumptions used to determine our costs
estimates. The two most significant assumptions are the estimated speed of groundwater flowing
to our remediation extraction wells and the estimated annual O&M costs.
 Late in the fiscal year ended September 30, 2009 (fiscal 2009), we gained additional
information from groundwater modeling that indicates groundwater emanating from the AMPAC
Henderson Site in certain areas in deeper zones (more than 150 feet below ground surface) is
moving toward our existing remediation facility at a much slower pace than previously estimated.
Utilization of our existing facilities alone, at this lower groundwater pace, could, according
to this recently created groundwater model, extend the life of our remediation project to well
in excess of fifty years. As a result of this additional data, we re-evaluated our remediation
operations. This evaluation indicates that we should be able to significantly reduce the total
project time, and ultimately the total cost of the project, by installing additional groundwater
extraction wells in the deeper, more concentrated areas, thereby providing for a more aggressive
remediation treatment. The additional wells and related remediation equipment will incorporate
above ground treatment to supplement or possibly replace by consolidation our existing ISB
process. With the additional extraction wells and equipment, we estimate that the total
remaining project life for the existing and new, more aggressive deep zone systems could range
from 10 to 29 years. Within that range, we estimate that a range of 13 to 23 years is more
likely. Groundwater speed, perchlorate concentrations, aquifer characteristics and forecasted
groundwater extraction rates continue to be key variables underlying our estimate of the life of
the project. If additional information becomes available in the future that is different than
information currently available to us, our estimate of the resulting project life could change
significantly.
 We currently estimate that the cost to engineer, design, and install this additional equipment
is approximately $9,600 and we anticipate that these amounts will be spent and the new equipment
operational in approximately two years. However, because we are in the early design and
engineering steps, this estimate involves a number of significant assumptions. Due to
uncertainties inherent in making early stage estimates, our estimate may later require
significant revision as new facts become available and circumstances change.
 F-28




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11.
    
    COMMITMENTS AND CONTINGENCIES (continued)
 In addition to accruing approximately $9,600 for engineering, design, installation and cost of
additional equipment, we increased our estimate of total remaining O&M costs by $4,100 due
primarily to incremental O&M costs to operate and maintain the additional equipment once
installed. The sum of the estimated costs for the additional equipment and incremental O&M
totals $13,700 which was recorded as a charge to earnings in our fiscal 2009 fourth quarter.
Total O&M expenses are currently estimated at approximately $1,000 per year and estimated to
increase to approximately $1,300 per year after the additional equipment becomes operational.
To estimate O&M costs, we consider, among other factors, the project scope and historical
expense rates to develop assumptions regarding labor, utilities, repairs, maintenance supplies
and professional service costs. If additional information becomes available in the future that
is different than information currently available to us and thereby lead us to different
conclusions, our estimate of O&M expenses could change significantly.
 In addition, certain remediation activities are conducted on public lands under operating
permits. In general, these permits require us to return the land to its original condition at
the end of the permit period. Estimated costs associated with removal of remediation equipment
from the land are not material and are included in our range of estimated costs.
 As of September 30, 2009, the aggregate range of anticipated environmental remediation costs was
from approximately $22,900 to approximately $47,100 based on a possible total remaining life of
the project ranging from 10 to 29 years. The accrued amount was $26,690, based on 13 years, or
the low end of the more likely range of 13 to 23 years as no amount within the range was more
likely. These estimates are based on information currently available to us and may be subject to
material adjustment upward or downward in future periods as new facts or circumstances may
indicate. A summary of our environmental reserve activity for fiscal 2009 is shown below:
 Balance, September 30, 2008
    
    $
    14,278Additions or adjustments
    
    
    13,700Expenditures
    
    
    (1,288
    )Balance, September 30, 2009
    
    $
    26,690
 AFC Environmental Matters.Our Fine Chemicals segment, AFC, is located on land leased from
Aerojet-General Corporation (Aerojet). The leased land is part of a tract of land owned by
Aerojet designated as a Superfund site under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA). The tract of land had been used by Aerojet
and affiliated companies to manufacture and test rockets and related equipment since the 1950s.
Although the chemicals identified as contaminants on the leased land were not used by Aerojet
Fine Chemicals LLC as part of its operations, CERCLA, among other things, provides for joint and
severable liability for environmental liabilities including, for example, environmental
remediation expenses.
 As part of the agreement by which we acquired the business of AFC from GenCorp, an Environmental
Indemnity Agreement was entered into whereby GenCorp agreed to indemnify us against any and all
environmental costs and liabilities arising out of or resulting from any violation of
environmental law prior to the effective date of the sale, or any release of hazardous
substances by Aerojet Fine Chemicals LLC, Aerojet or GenCorp on the AFC premises or
Aerojets Sacramento site prior to the effective date of the sale.
 On November 29, 2005, EPA Region IX provided us with a letter indicating that the EPA does not
intend to pursue any clean up or enforcement actions under CERCLA against future lessees of the
Aerojet property for existing contamination, provided that the lessees do not contribute to or
do not exacerbate existing contamination on or under the Aerojet Superfund site.
 F-29




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##### Table of Contents



11.
    
    COMMITMENTS AND CONTINGENCIES (continued)
 Other Matters.Although we are not currently party to any material pending legal proceedings,
we are from time to time subject to claims and lawsuits related to our business operations. We
accrue for loss contingencies when a loss is probable and the amount can be reasonably
estimated. Legal fees, which can be material in any given period, are expensed as incurred. We
believe that current claims or lawsuits against us, individually and in the aggregate, will not
result in loss contingencies that will have a material adverse effect on our financial
condition, cash flows or results of operations.
 12.
    
    SEGMENT INFORMATION
 We report our business in four operating segments: Fine Chemicals, Specialty Chemicals,
Aerospace Equipment and Other Businesses. These segments are based upon business units that
offer distinct products and services, are operationally managed separately and produce products
using different production methods. Segment operating income or loss includes all sales and
expenses directly associated with each segment. Environmental remediation charges, corporate
general and administrative costs, which consist primarily of executive, investor relations,
accounting, human resources and information technology expenses, and interest are not allocated
to segment operating results.
 Fine Chemicals.Our Fine Chemicals segment includes the operating results of our wholly-owned
subsidiary Ampac Fine Chemicals LLC or AFC. AFC is a custom manufacturer of active
pharmaceutical ingredients and registered intermediates under current Good Manufacturing
Practices guidelines for commercial customers in the pharmaceutical industry. AFC has
distinctive competencies and specialized engineering capabilities in performing chiral
separations, manufacturing chemical compounds that require high containment and performing
energetic chemistries at commercial scale.
 Specialty Chemicals.Our Specialty Chemicals segment manufactures and sells: (i) perchlorate
chemicals, used principally in solid rocket propellants for the Space Shuttle and defense
programs, (ii) sodium azide, a chemical used in pharmaceutical manufacturing, and (iii)
Halotronâ, a series of clean fire extinguishing agents used in fire extinguishing products
ranging from portable fire extinguishers to total flooding systems.
 Aerospace Equipment. Our Aerospace Equipment segment includes the operating results of our
wholly-owned subsidiary Ampac-ISP Corp. (ISP). ISP manufactures monopropellant and
bipropellant liquid propulsion systems and thrusters for satellites, launch vehicles, and
interceptors.
 Effective October 1, 2008, we acquired AMPAC ISP Holdings. AMPAC ISP Holdings is included in
our consolidated financial statements beginning on October 1, 2008 and is a component of our
Aerospace Equipment segment. AMPAC ISP Holdings designs, develops and manufactures high
performance valves, pressure regulators, cold-gas propulsion systems, and precision structures
for space applications, especially in the European space market. These products are used on
various satellites and spacecraft, as well as on the Ariane 5 launch vehicle. See Note 2.
 Other Businesses.Our Other Businesses segment contains our water treatment equipment and real
estate activities. Our water treatment equipment business designs, manufactures and markets
systems for the control of noxious odors, the disinfection of water streams and the treatment of
seawater. Our real estate activities are not material.
 Our revenues are characterized by individually significant orders and relatively few customers.
As a result, in any given reporting period, certain customers may account for more than ten
percent of our consolidated revenues. The following table provides disclosure of the percentage
of our consolidated
 F-30




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##### Table of Contents



12.  SEGMENT INFORMATION (continued)
 revenues attributed to customers that exceed ten percent of the total in each of the
fiscal years ended September 30:
 2009
    
    2008
    
    2007Fine chemicals customer
    
    
    24
    %
    
    
    13
    %
    
    
    11
    %Fine chemicals customer
    
    
    
    
    
    
    31
    %
    
    
    25
    %Fine chemicals customer
    
    
    
    
    
    
    10
    %
    
    
    10
    %Specialty chemicals customer
    
    
    15
    %
    
    
    16
    %
    
    
    15
    %Specialty chemicals customer
    
    
    11
    %
    
    
    
    
    
    
    10
    %
 The following provides financial information about our segment operations for the fiscal
years ended September 30:
 2009
    
    2008
    
    2007Revenues:Fine Chemicals
    
    $
    95,484
    
    
    $
    124,187
    
    
    $
    104,441Specialty Chemicals
    
    
    62,210
    
    
    
    57,097
    
    
    
    57,088Aerospace Equipment
    
    
    33,488
    
    
    
    16,435
    
    
    
    17,348Other Businesses
    
    
    5,966
    
    
    
    5,410
    
    
    
    5,051Total Revenues
    
    $
    197,148
    
    
    $
    203,129
    
    
    $
    183,928Segment Operating Income:Fine Chemicals
    
    $
    2,299
    
    
    $
    16,246
    
    
    $
    16,790Specialty Chemicals
    
    
    26,189
    
    
    
    23,128
    
    
    
    18,223Aerospace Equipment
    
    
    3,012
    
    
    
    736
    
    
    
    1,458Other Businesses
    
    
    195
    
    
    
    1,022
    
    
    
    1,210Total Segment Operating Income
    
    
    31,695
    
    
    
    41,132
    
    
    
    37,681Corporate Expenses
    
    
    (16,167
    )
    
    
    (16,256
    )
    
    
    (13,824
    )Environmental Remediation Charges
    
    
    (13,700
    )
    
    
    
    
    
    
    Operating Income
    
    $
    1,828
    
    
    $
    24,876
    
    
    $
    23,857Depreciation and Amortization:Fine Chemicals
    
    $
    12,943
    
    
    $
    12,876
    
    
    $
    13,637Specialty Chemicals
    
    
    1,274
    
    
    
    2,825
    
    
    
    5,159Aerospace Equipment
    
    
    1,461
    
    
    
    222
    
    
    
    142Other Businesses
    
    
    12
    
    
    
    12
    
    
    
    12Corporate
    
    
    476
    
    
    
    519
    
    
    
    511Total
    
    $
    16,166
    
    
    $
    16,454
    
    
    $
    19,461Capital Expenditures:Fine Chemicals
    
    $
    6,438
    
    
    $
    10,667
    
    
    $
    7,004Specialty Chemicals
    
    
    1,503
    
    
    
    1,687
    
    
    
    1,026Aerospace Equipment
    
    
    1,318
    
    
    
    686
    
    
    
    337Other Businesses
    
    
    13
    
    
    
    1
    
    
    
    Corporate
    
    
    186
    
    
    
    2,243
    
    
    
    54Total
    
    $
    9,458
    
    
    $
    15,284
    
    
    $
    8,421Assets, at year end:Fine Chemicals
    
    $
    143,600
    
    
    $
    155,807
    
    
    $
    156,370Specialty Chemicals
    
    
    25,237
    
    
    
    18,282
    
    
    
    28,058Aerospace Equipment
    
    
    27,769
    
    
    
    10,563
    
    
    
    8,989Other Businesses
    
    
    8,233
    
    
    
    4,963
    
    
    
    3,946Corporate
    
    
    60,002
    
    
    
    61,798
    
    
    
    52,044Total
    
    $
    264,841
    
    
    $
    251,413
    
    
    $
    249,407
 F-31




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##### Table of Contents



12.  SEGMENT INFORMATION (continued)
 Substantially all of our operations are located in the United States. Our operations in the
U.K. and Ireland represent less than 10% of our consolidated assets, revenues and net loss.
Export sales consist mostly of fine chemicals and water treatment equipment sales. For the
year ended September 30, 2009, sales outside the U.S. represented 26% of consolidated revenues,
with no country representing more than 10%. For the year ended September 30, 2008, sales
outside the U.S. represented 48% of consolidated revenues, with the U.K. and Belgium
representing 32% and 10%, respectively. Sales outside the U.S. represented 40% of consolidated
revenues for the year ended September 30, 2007, with the U.K. representing 25% of consolidated
revenues.
 13.  INTEREST AND OTHER INCOME, NET
 Interest and other income, net, consists of the following:
 2009
    
    2008
    
    2007Interest Income
    
    $
    150
    
    
    $
    937
    
    
    $
    644Gain in Sales of Assets
    
    
    
    
    
    
    429
    
    
    
    Other
    
    
    (4
    )$
    146
    
    
    $
    1,366
    
    
    $
    644
 14.  GUARANTOR SUBSIDIARIES
 As discussed in Note 6, in February 2007, American Pacific Corporation, a Delaware
corporation (Parent) issued and sold $110,000 aggregate principal amount of Senior Notes. In
connection with the issuance of the Senior Notes, the Parents U.S. subsidiaries (Guarantor
Subsidiaries) jointly, fully, severally, and unconditionally guaranteed the Senior Notes. The
Parents foreign subsidiaries (through October 1, 2008, Ampac ISP UK Westcott Limited, and
thereafter, together with certain additional entities, collectively, Non-Guarantor
Subsidiaries) are not guarantors of the Senior Notes. Each of the Parents subsidiaries is
100% owned. The Parent has no independent assets or operations. The following presents
condensed consolidating financial information separately for the Parent, Guarantor Subsidiaries
and Non-Guarantor Subsidiaries.
 F-32




---



##### Table of Contents



14. GUARANTOR SUBSIDIARIES (continued)
 Condensed Consolidating Balance Sheet  September 30, 2009
 Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedAssets:Cash and Cash Equivalents
    
    $
    
    
    
    $
    20,046
    
    
    $
    1,635
    
    
    $
    
    
    
    $
    21,681Accounts Receivable, Net
    
    
    
    
    
    
    40,399
    
    
    
    3,951
    
    
    
    (322
    )
    
    
    44,028Inventories
    
    
    
    
    
    
    35,223
    
    
    
    1,133
    
    
    
    
    
    
    
    36,356Prepaid Expenses and Other Assets
    
    
    
    
    
    
    1,645
    
    
    
    166
    
    
    
    
    
    
    
    1,811Income Taxes Receivable and Deferred Income Taxes
    
    
    
    
    
    
    8,465
    
    
    
    
    
    
    
    
    
    
    
    8,465Total Current Assets
    
    
    
    
    
    
    105,778
    
    
    
    6,885
    
    
    
    (322
    )
    
    
    112,341Property, Plant and Equipment, Net
    
    
    
    
    
    
    113,143
    
    
    
    1,502
    
    
    
    
    
    
    
    114,645Intangible Assets, Net
    
    
    
    
    
    
    1,775
    
    
    
    1,778
    
    
    
    
    
    
    
    3,553Goodwill
    
    
    
    
    
    
    
    
    
    
    3,144
    
    
    
    
    
    
    
    3,144Deferred Income Taxes
    
    
    
    
    
    
    21,121
    
    
    
    
    
    
    
    
    
    
    
    21,121Other Assets
    
    
    
    
    
    
    10,037
    
    
    
    
    
    
    
    
    
    
    
    10,037Intercompany Advances
    
    
    79,918
    
    
    
    2,535
    
    
    
    
    
    
    
    (82,453
    )
    
    
    Investment in Subsidiaries, Net
    
    
    101,179
    
    
    
    6,229
    
    
    
    
    
    
    
    (107,408
    )
    
    
    Total Assets
    
    $
    181,097
    
    
    $
    260,618
    
    
    $
    13,309
    
    
    $
    (190,183
    )
    
    $
    264,841Liabilities and Stockholders Equity:Accounts Payable and Other Current Liabilities
    
    $
    
    
    
    $
    19,894
    
    
    $
    1,936
    
    
    $
    (322
    )
    
    $
    21,508Environmental Remediation Reserves
    
    
    
    
    
    
    2,522
    
    
    
    
    
    
    
    
    
    
    
    2,522Deferred Revenues and Customer Deposits
    
    
    
    
    
    
    4,579
    
    
    
    2,332
    
    
    
    
    
    
    
    6,911Current Portion of Long-Term Debt
    
    
    
    
    
    
    99
    
    
    
    52
    
    
    
    
    
    
    
    151Intercompany Advances
    
    
    
    
    
    
    79,918
    
    
    
    2,535
    
    
    
    (82,453
    )
    
    
    Total Current Liabilities
    
    
    
    
    
    
    107,012
    
    
    
    6,855
    
    
    
    (82,775
    )
    
    
    31,092Long-Term Debt
    
    
    110,000
    
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    110,097Environmental Remediation Reserves
    
    
    
    
    
    
    24,168
    
    
    
    
    
    
    
    
    
    
    
    24,168Pension Obligations and Other Long-Term Liabilities
    
    
    
    
    
    
    28,259
    
    
    
    128
    
    
    
    
    
    
    
    28,387Total Liabilities
    
    
    110,000
    
    
    
    159,439
    
    
    
    7,080
    
    
    
    (82,775
    )
    
    
    193,744Total Shareholders Equity
    
    
    71,097
    
    
    
    101,179
    
    
    
    6,229
    
    
    
    (107,408
    )
    
    
    71,097Total Liabilities and Shareholders Equity
    
    $
    181,097
    
    
    $
    260,618
    
    
    $
    13,309
    
    
    $
    (190,183
    )
    
    $
    264,841
 Condensed Consolidating Balance Sheet  September 30, 2008
 Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiary
    
    Eliminations
    
    ConsolidatedAssets:Cash and Cash Equivalents
    
    $
    
    
    
    $
    26,664
    
    
    $
    229
    
    
    $
    
    
    
    $
    26,893Accounts Receivable, Net
    
    
    
    
    
    
    27,083
    
    
    
    649
    
    
    
    (287
    )
    
    
    27,445Inventories
    
    
    
    
    
    
    39,669
    
    
    
    688
    
    
    
    
    
    
    
    40,357Prepaid Expenses and Other Assets
    
    
    
    
    
    
    5,085
    
    
    
    111
    
    
    
    
    
    
    
    5,196Deferred Income Taxes
    
    
    
    
    
    
    6,859
    
    
    
    
    
    
    
    
    
    
    
    6,859Total Current Assets
    
    
    
    
    
    
    105,360
    
    
    
    1,677
    
    
    
    (287
    )
    
    
    106,750Property, Plant and Equipment, Net
    
    
    
    
    
    
    118,437
    
    
    
    171
    
    
    
    
    
    
    
    118,608Intangible Assets, Net
    
    
    
    
    
    
    3,013
    
    
    
    
    
    
    
    
    
    
    
    3,013Deferred Income Taxes
    
    
    
    
    
    
    13,849
    
    
    
    
    
    
    
    
    
    
    
    13,849Other Assets
    
    
    
    
    
    
    9,193
    
    
    
    
    
    
    
    
    
    
    
    9,193Intercompany Advances
    
    
    79,886
    
    
    
    2,664
    
    
    
    
    
    
    
    (82,550
    )
    
    
    Investment in Subsidiaries, Net
    
    
    113,076
    
    
    
    (1,143
    )
    
    
    
    
    
    
    (111,933
    )
    
    
    Total Assets
    
    $
    192,962
    
    
    $
    251,373
    
    
    $
    1,848
    
    
    $
    (194,770
    )
    
    $
    251,413Liabilities and Shareholders Equity:Accounts Payable and Other Current Liabilities
    
    $
    
    
    
    $
    24,718
    
    
    $
    327
    
    
    $
    (287
    )
    
    $
    24,758Environmental Remediation Reserves
    
    
    
    
    
    
    996
    
    
    
    
    
    
    
    
    
    
    
    996Deferred Revenues and Customer Deposits
    
    
    
    
    
    
    3,091
    
    
    
    
    
    
    
    
    
    
    
    3,091Current Portion of Long-Term Debt
    
    
    
    
    
    
    254
    
    
    
    
    
    
    
    
    
    
    
    254Intercompany Advances
    
    
    
    
    
    
    79,886
    
    
    
    2,664
    
    
    
    (82,550
    )
    
    
    Total Current Liabilities
    
    
    
    
    
    
    108,945
    
    
    
    2,991
    
    
    
    (82,837
    )
    
    
    29,099Long-Term Debt
    
    
    110,000
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    110,120Environmental Remediation Reserves
    
    
    
    
    
    
    13,282
    
    
    
    
    
    
    
    
    
    
    
    13,282Pension Obligations and Other Long-Term Liabilities
    
    
    
    
    
    
    15,950
    
    
    
    
    
    
    
    
    
    
    
    15,950Total Liabilities
    
    
    110,000
    
    
    
    138,297
    
    
    
    2,991
    
    
    
    (82,837
    )
    
    
    168,451Total Shareholders Equity
    
    
    82,962
    
    
    
    113,076
    
    
    
    (1,143
    )
    
    
    (111,933
    )
    
    
    82,962Total Liabilities and Shareholders Equity
    
    $
    192,962
    
    
    $
    251,373
    
    
    $
    1,848
    
    
    $
    (194,770
    )
    
    $
    251,413
 F-33




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##### Table of Contents



14.  GUARANTOR SUBSIDIARIES (continued)
 Condensed Consolidating Statement of Operations  Year Ended September 30, 2009
 Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiary
    
    Eliminations
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    187,854
    
    
    $
    9,492
    
    
    $
    (198
    )
    
    $
    197,148Cost of Revenues
    
    
    
    
    
    
    129,851
    
    
    
    6,642
    
    
    
    (198
    )
    
    
    136,295Gross Profit
    
    
    
    
    
    
    58,003
    
    
    
    2,850
    
    
    
    
    
    
    
    60,853Operating Expenses
    
    
    
    
    
    
    55,921
    
    
    
    3,104
    
    
    
    
    
    
    
    59,025Operating Income (Loss)
    
    
    
    
    
    
    2,082
    
    
    
    (254
    )
    
    
    
    
    
    
    1,828Interest and Other Income, Net
    
    
    10,668
    
    
    
    185
    
    
    
    (2
    )
    
    
    (10,705
    )
    
    
    146Interest and Other Expense
    
    
    10,668
    
    
    
    10,723
    
    
    
    49
    
    
    
    (10,705
    )
    
    
    10,735Loss before Income Tax and
Equity Account for Subsidiaries
    
    
    
    
    
    
    (8,456
    )
    
    
    (305
    )
    
    
    
    
    
    
    (8,761
    )Income Tax Expense (Benefit)
    
    
    
    
    
    
    (2,906
    )
    
    
    104
    
    
    
    
    
    
    
    (2,802
    )Net Loss before
Equity Account for Subsidiaries
    
    
    
    
    
    
    (5,550
    )
    
    
    (409
    )
    
    
    
    
    
    
    (5,959
    )Equity Account for Subsidiaries
    
    
    (5,959
    )
    
    
    (409
    )
    
    
    
    
    
    
    6,368
    
    
    
    Net Loss
    
    $
    (5,959
    )
    
    $
    (5,959
    )
    
    $
    (409
    )
    
    $
    6,368
    
    
    $
    (5,959
    )Condensed Consolidating Statement of Operations  Year Ended September 30, 2008Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiary
    
    Eliminations
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    200,611
    
    
    $
    2,742
    
    
    $
    (224
    )
    
    $
    203,129Cost of Revenues
    
    
    
    
    
    
    133,043
    
    
    
    2,569
    
    
    
    (224
    )
    
    
    135,388Gross Profit
    
    
    
    
    
    
    67,568
    
    
    
    173
    
    
    
    
    
    
    
    67,741Operating Expenses
    
    
    
    
    
    
    42,245
    
    
    
    620
    
    
    
    
    
    
    
    42,865Operating Income (Loss)
    
    
    
    
    
    
    25,323
    
    
    
    (447
    )
    
    
    
    
    
    
    24,876Interest and Other Income, Net
    
    
    10,654
    
    
    
    1,353
    
    
    
    13
    
    
    
    (10,654
    )
    
    
    1,366Interest and Other Expense
    
    
    10,654
    
    
    
    10,742
    
    
    
    61
    
    
    
    (10,654
    )
    
    
    10,803Income (Loss) before Income Tax and
Equity Account for Subsidiaries
    
    
    
    
    
    
    15,934
    
    
    
    (495
    )
    
    
    
    
    
    
    15,439Income Tax Expense
    
    
    
    
    
    
    6,488
    
    
    
    
    
    
    
    
    
    
    
    6,488Income (Loss) before
Equity Account for Subsidiaries
    
    
    
    
    
    
    9,446
    
    
    
    (495
    )
    
    
    
    
    
    
    8,951Equity Account for Subsidiaries
    
    
    8,951
    
    
    
    (495
    )
    
    
    
    
    
    
    (8,456
    )
    
    
    Net Income (Loss)
    
    $
    8,951
    
    
    $
    8,951
    
    
    $
    (495
    )
    
    $
    (8,456
    )
    
    $
    8,951Condensed Consolidating Statement of Operations  Year Ended September 30, 2007Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiary
    
    Eliminations
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    182,458
    
    
    $
    1,699
    
    
    $
    (229
    )
    
    $
    183,928Cost of Revenues
    
    
    
    
    
    
    118,710
    
    
    
    1,749
    
    
    
    (229
    )
    
    
    120,230Gross Profit
    
    
    
    
    
    
    63,748
    
    
    
    (50
    )
    
    
    
    
    
    
    63,698Operating Expenses
    
    
    
    
    
    
    39,247
    
    
    
    594
    
    
    
    
    
    
    
    39,841Operating Income (Loss)
    
    
    
    
    
    
    24,501
    
    
    
    (644
    )
    
    
    
    
    
    
    23,857Interest and Other Income, Net
    
    
    11,846
    
    
    
    639
    
    
    
    5
    
    
    
    (11,846
    )
    
    
    644Interest Expense and Debt Refinance Charges
    
    
    11,846
    
    
    
    14,912
    
    
    
    
    
    
    
    (11,846
    )
    
    
    14,912Income (Loss) before Income Tax and
and Equity Account for Subsidiaries
    
    
    
    
    
    
    10,228
    
    
    
    (639
    )
    
    
    
    
    
    
    9,589Income Tax Expense
    
    
    
    
    
    
    4,605
    
    
    
    
    
    
    
    
    
    
    
    4,605Income (Loss) before
Equity Account for Subsidiaries
    
    
    
    
    
    
    5,623
    
    
    
    (639
    )
    
    
    
    
    
    
    4,984Equity Account for Subsidiaries
    
    
    4,984
    
    
    
    (639
    )
    
    
    
    
    
    
    (4,345
    )
    
    
    Net Income (Loss)
    
    $
    4,984
    
    
    $
    4,984
    
    
    $
    (639
    )
    
    $
    (4,345
    )
    
    $
    4,984
 F-34




---



##### Table of Contents



14. GUARANTOR SUBSIDIARIES (continued)
 Condensed Consolidating Statement of Cash Flows  Year Ended September 30, 2009
 Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiary
    
    Eliminations
    
    ConsolidatedNet cash Provided by Operating Activities
    
    $
    
    
    
    $
    10,101
    
    
    $
    1,041
    
    
    $
    
    
    
    $
    11,142Cash Flows from Investing Activities:Acquisition of business
    
    
    
    
    
    
    (7,196
    )
    
    
    471
    
    
    
    
    
    
    
    (6,725
    )Capital expenditures
    
    
    
    
    
    
    (8,741
    )
    
    
    (717
    )
    
    
    
    
    
    
    (9,458
    )Net Cash Used in Investing Activities
    
    
    
    
    
    
    (15,937
    )
    
    
    (246
    )
    
    
    
    
    
    
    (16,183
    )Cash Flows from Financing Activities:Payments of long-term debt
    
    
    
    
    
    
    (275
    )
    
    
    (73
    )
    
    
    
    
    
    
    (348
    )Issuance of common stock
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Intercompany advances, net
    
    
    (32
    )
    
    
    (507
    )
    
    
    539
    
    
    
    
    
    
    
    Net Cash Provided (Used) by Financing Activities
    
    
    
    
    
    
    (782
    )
    
    
    466
    
    
    
    
    
    
    
    (316
    )Effect of Changes in Currency Exchange Rates
    
    
    
    
    
    
    
    
    
    
    145
    
    
    
    
    
    
    
    145Net Change in Cash and Cash Equivalents
    
    
    
    
    
    
    (6,618
    )
    
    
    1,406
    
    
    
    
    
    
    
    (5,212
    )Cash and Cash Equivalents, Beginning of Period
    
    
    
    
    
    
    26,664
    
    
    
    229
    
    
    
    
    
    
    
    26,893Cash and Cash Equivalents, End of Period
    
    $
    
    
    
    $
    20,046
    
    
    $
    1,635
    
    
    $
    
    
    
    $
    21,681Condensed
Consolidating Statement of Cash Flows  Year Ended September 30, 2008Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiary
    
    Eliminations
    
    ConsolidatedNet cash Provided (Used) by Operating Activities
    
    $
    
    
    
    $
    20,960
    
    
    $
    (627
    )
    
    $
    
    
    
    $
    20,333Cash Flows from Investing Activities:Capital expenditures
    
    
    
    
    
    
    (15,242
    )
    
    
    (42
    )
    
    
    
    
    
    
    (15,284
    )Net Cash Used in Investing Activities
    
    
    
    
    
    
    (15,242
    )
    
    
    (42
    )
    
    
    
    
    
    
    (15,284
    )Cash Flows from Financing Activities:Payments of long-term debt
    
    
    
    
    
    
    (251
    )
    
    
    
    
    
    
    
    
    
    
    (251
    )Issuance of common stock
    
    
    381
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    381Excess tax benefit from stock option exercises
    
    
    481
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    481Purchases of treasury stock
    
    
    (193
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (193
    )Intercompany advances, net
    
    
    (669
    )
    
    
    (155
    )
    
    
    824
    
    
    
    
    
    
    
    Net Cash Provided (Used) by Financing Activities
    
    
    
    
    
    
    (406
    )
    
    
    824
    
    
    
    
    
    
    
    418Net Change in Cash and Cash Equivalents
    
    
    
    
    
    
    5,312
    
    
    
    155
    
    
    
    
    
    
    
    5,467Cash and Cash Equivalents, Beginning of Period
    
    
    
    
    
    
    21,352
    
    
    
    74
    
    
    
    
    
    
    
    21,426Cash and Cash Equivalents, End of Period
    
    $
    
    
    
    $
    26,664
    
    
    $
    229
    
    
    $
    
    
    
    $
    26,893Condensed Consolidating Statement of Cash Flows  Year Ended September 30, 2007Guarantor
    
    Non-GuarantorParent
    
    Subsidiaries
    
    Subsidiary
    
    Eliminations
    
    ConsolidatedNet cash provided (used) by operating activities
    
    $
    
    
    
    $
    24,984
    
    
    $
    (846
    )
    
    $
    
    
    
    $
    24,138Cash Flows from Investing Activities:Acquisition of businesses
    
    
    
    
    
    
    (6,000
    )
    
    
    
    
    
    
    
    
    
    
    (6,000
    )Capital expenditures
    
    
    
    
    
    
    (8,362
    )
    
    
    (59
    )
    
    
    
    
    
    
    (8,421
    )Discontinued operations, net
    
    
    
    
    
    
    7,510
    
    
    
    
    
    
    
    
    
    
    
    7,510Net Cash Used in Investing Activities
    
    
    
    
    
    
    (6,852
    )
    
    
    (59
    )
    
    
    
    
    
    
    (6,911
    )Cash Flows from Financing Activities:Proceeds from the issuance of long-term debt
    
    
    110,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,000Payments of long-term debt
    
    
    (108,326
    )
    
    
    (260
    )
    
    
    
    
    
    
    
    
    
    
    (108,586
    )Debt issuance costs
    
    
    (4,814
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,814
    )Issuance of common stock
    
    
    727
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    727Intercompany advances, net
    
    
    2,413
    
    
    
    (3,278
    )
    
    
    865
    
    
    
    
    
    
    
    Net Cash Provided (Used) by Financing Activities
    
    
    
    
    
    
    (3,538
    )
    
    
    865
    
    
    
    
    
    
    
    (2,673
    )Net Change in Cash and Cash Equivalents
    
    
    
    
    
    
    14,594
    
    
    
    (40
    )
    
    
    
    
    
    
    14,554Cash and Cash Equivalents, Beginning of Year
    
    
    
    
    
    
    6,758
    
    
    
    114
    
    
    
    
    
    
    
    6,872Cash and Cash Equivalents, End of Year
    
    $
    
    
    
    $
    21,352
    
    
    $
    74
    
    
    $
    
    
    
    $
    21,426
 F-35