CHAP Chaparral Energy Inc

MIDLOTHIAN, Texas, Sept. 21 /PRNewswire-FirstCall/ -- Chaparral Steel Company (NASDAQ:CHAP) today reported operating profit of $35.1 million resulting in net income for the first quarter ended August 31, 2005 of $17.8 million ($0.77 per diluted share). Net income increased $3 million over the fourth quarter of fiscal year 2005 but was down from the record-setting $28.1 million ($1.23 per diluted share) of the prior year first quarter. "We are starting to see some signs of improvement in non-residential activity in the United States. This improvement contributed to record shipments for the quarter. Our results remain consistent despite volatility in raw material and energy prices," stated Tommy A. Valenta, President and Chief Executive Officer. "Current market and industry conditions should support the continuation of solid financial results." Record shipments for the quarter of 603,000 tons represent a 22% increase compared to the first quarter of 2005. However, the improvement in shipments was more than offset by a 6% decrease in realized prices, a 5% increase in scrap expense, and a 22% increase in energy expense. The Company continues to make significant strides with its PZC sheet piling with production and shipments over four times greater than the first quarter of 2005. Since the successful spin-off from Texas Industries, Inc., on July 29, 2005, the company has repaid the $50 million outstanding on its revolving credit facility. "We generated significant cash in August from a reduction in inventory. The contributing factors to the reduction were record shipments in the month of August and production being occasionally curtailed due to high energy cost," added Valenta. The Company's First Quarter Teleconference will be held today, September 21, 2005 at 2:00 p.m. Central Time. A real-time webcast of the conference is available by logging on to Chaparral's website at http://www.chapusa.com/ . Certain statements contained in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. Potential risks and uncertainties include, but are not limited to, the impact of competitive pressures and changing economic and financial conditions on the Company's business, construction activity in the Company's markets, changes in costs of raw materials, fuel and energy, the impact of environmental laws, unexpected equipment failures, the effect of foreign currencies valuations and other regulations as more fully described in the Company's Annual Report on SEC Form 10-K. Chaparral Steel Company, headquartered in Midlothian, Texas, is the second largest supplier of structural steel products in North America with locations in Midlothian, Texas and Dinwiddie County, Virginia. Chaparral follows a market mill concept, making a wide variety of products including structural beams, specialty bar and piling products, all at low cost. The two mills have a combined production capacity of approximately 2.8 million tons of steel per year. For further information contact Cary D. Baetz at 972-779-1032 or Terresa Van Horn at 972-779-1033 or visit our website at http://www.chapusa.com/ . CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share) (Unaudited) Three months ended August 31, 2005 2004 NET SALES $338,405 $290,781 COSTS AND EXPENSES (INCOME) Cost of products sold 297,194 228,315 Selling, general and administrative 7,439 7,769 Interest 8,164 11,931 Other income (1,302) (504) 311,495 247,511 INCOME BEFORE INCOME TAXES 26,910 43,270 Income taxes 9,159 15,148 NET INCOME $17,751 $28,122 Earnings per share: Basic $.78 $1.23 Diluted $.77 $1.23 Average shares outstanding: Basic 22,804 22,804 Diluted 23,043 22,804 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES SUPPLEMENTAL OPERATING INFORMATION (Unaudited) Three Months Ended: August 31, August 31, May 31, 2005 2004 2005 Net Sales (in $000's) 338,405 290,781 317,357 Operating Profit (in $000's) 35,074 55,201 33,850 Shipments (000's Tons) Structural Mills 493 387 412 Bar Mill 110 106 100 Total 603 493 512 Price ($/Ton excluding delivery fees) Structural Mills $507 $535 $549 Bar Mill 553 591 658 Combined $515 $547 $570 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) August 31, May 31, 2005 2005 Assets Current assets: Cash and cash equivalents $16,690 $9,287 Accounts receivable - net 143,292 127,383 Inventories 185,912 246,223 Receivable from TXI --- 40,734 Prepaid expenses 9,462 11,097 Total current assets 355,356 434,724 Other assets: Goodwill 85,166 85,166 Investments and deferred charges 16,559 5,099 101,725 90,265 Property, plant and equipment: Land and land improvements 95,596 93,937 Buildings 55,208 54,954 Machinery and equipment 1,027,619 1,025,475 Construction in process 29,242 28,074 1,207,665 1,202,440 Less depreciation 586,916 575,187 620,749 627,253 $1,077,830 $1,152,242 Liabilities and Stockholder's Equity Current liabilities: Trade accounts payable $68,210 $88,980 Accrued wages, taxes and other liabilities 32,551 20,933 Total current liabilities 100,761 109,913 Deferred income taxes and other credits 149,000 147,563 Long-term debt 300,000 --- Long-term payable to TXI --- 543,246 Stockholder's equity: Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued --- --- Common stock, $0.01 par value; 100,000,000 shares authorized, 22,803,867 shares issued and outstanding 228 228 Additional paid-in capital 706,755 206,818 Retained earnings (deficit) (178,914) 144,474 528,069 351,520 $1,077,830 $1,152,242 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three months ended August 31, 2005 2004 Operating activities: Net income $ 17,751 $ 28,122 Adjustments to reconcile net income to net cash Depreciation 12,513 12,151 Deferred income taxes 713 6,030 Other - net 291 308 Changes in operating assets and liabilities Accounts receivable (15,908) 253 Inventories 60,310 (27,704) Prepaid expenses 1,634 133 Accounts payable (20,770) 4,908 Accrued wages, taxes and other liabilities 11,618 727 Other credits 204 27 Receivable from or payable to TXI (5,810) (25,633) Net cash provided (used) by operating activities 62,546 (678) Investing activities: Capital expenditures (4,669) (3,569) Other - net (38) (497) Net cash used by investing activities (4,707) (4,066) Financing activities: Long-term borrowings 350,000 --- Debt issuance costs (9,297) --- Debt retirements (50,000) --- Dividend paid to TXI (341,139) --- Net cash used by financing activities (50,436) --- Increase (decrease) in cash and cash equivalents 7,403 (4,744) Cash and cash equivalents beginning of period 9,287 8,575 Cash and cash equivalents at end of period $16,690 $ 3,831 Cary D. Baetz Vice President and Treasurer 972.779.1032 Fax 972.779.1951 http://www.newscom.com/cgi-bin/prnh/20050713/CHAPLOGO http://photoarchive.ap.org/ DATASOURCE: Chaparral Steel Company CONTACT: Cary D. Baetz, +1-972-779-1032, or fax, +1-972-779-1951, or , or Terresa Van Horn, +1-972-779-1033, both of Chaparral Steel Company Web site: http://www.chapusa.com/

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