CHAP Chaparral Energy Inc

MIDLOTHIAN, Texas, Dec. 20 /PRNewswire-FirstCall/ -- Chaparral Steel Company (NASDAQ:CHAP) today reported record net income for the second quarter ended November 30, 2005 of $34.0 million ($1.44 per diluted share), an increase of $13.0 million compared to net income of $21.0 million ($0.92 per diluted share) for the second quarter of fiscal 2005 and $16.2 million better than net income of $17.8 million ($0.77 per diluted share) for the first quarter ended August 31, 2005. Record operating profit of $59.5 million increased 34% compared to the second quarter of fiscal 2005 and 70% compared to the first quarter of this fiscal year and exceeded the previous record set in the first quarter of fiscal 2005 by almost 8%. (Logo: http://www.newscom.com/cgi-bin/prnh/20050713/CHAPLOGO ) "The results for the second quarter were great; even though, our operations continue to be hampered by volatile energy costs," stated Tommy A. Valenta, President and Chief Executive Officer. "We are continuing to see signs of improvement in non-residential activity in the United States and we are well positioned to take advantage of that strong end user demand." Shipments of 548,000 tons for the quarter were 41% higher than the 389,000 tons shipped in the second quarter of fiscal 2005 and a decrease of 9% compared to the first quarter ended August 31, 2005. Average selling prices were down 1% from the second quarter of fiscal 2005 but up 13% from the first quarter of this fiscal year. Average metal margins of $409 per ton were down slightly from the second quarter of fiscal 2005 but increased over 11% from the first quarter of this year. Energy expense was up 25% from the first quarter. For the six months ended November 30, 2005, the Company also had record net income of $51.8 million ($2.22 per diluted share). This compares to net income of $49.1 million ($2.15 per diluted share) for the first six months of fiscal 2005. Average selling prices were down 3% compared to the first six months of fiscal 2005 while total shipments of 1.15 million tons increased over 30%. The Company ended the quarter with $113.4 million of cash, cash equivalents and short-term investments. On December 2, 2005, the Company completed its offer to exchange its outstanding 10% senior notes due 2013 that were issued in a private offering in July 2005, for 10% senior notes due 2013, which are registered under the Securities Act of 1933. The Company forecasts third quarter operating profit to be approximately $45 million. The Company believes that end user demand for its products will remain strong for the third quarter of fiscal 2006. However, slightly lower seasonally-adjusted volumes and continued high energy costs for the winter months are expected to result in margin compression in the third quarter compared to second quarter results. The Company's Second Quarter Earnings Teleconference will be held tomorrow, December 21, 2005 at 11:00 a.m. Eastern 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 producer of structural steel beams in North America. The Company is also a significant supplier of steel bar products. In addition, Chaparral is a leading North American recycling company. Additional information may be found at http://www.chapusa.com/ . For further information contact Cary D. Baetz at 972-779-1032 or Terresa Van Horn at 972-779-1033. CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share) (Unaudited) Three months ended Six months ended November 30, November 30, 2005 2004 2005 2004 Net sales $348,130 $249,119 $686,535 $539,900 Costs and expenses (income) Cost of products sold 283,247 199,850 580,441 428,165 Selling, general and administrative 9,484 6,287 16,923 14,056 Interest 7,982 11,973 16,146 23,904 Other income, net (4,091) (1,325) (5,393) (1,829) 296,622 216,785 608,117 464,296 Income before income taxes 51,508 32,334 78,418 75,604 Income taxes 17,505 11,320 26,664 26,468 Net income $34,003 $21,014 $51,754 $49,136 Earnings per share: Basic $1.49 $0.92 $2.27 $2.15 Diluted $1.44 $0.92 $2.22 $2.15 Average shares outstanding: Basic 22,805 22,804 22,805 22,804 Diluted 23,648 22,804 23,346 22,804 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES SUPPLEMENTAL OPERATING INFORMATION (Unaudited) Three Months Ended Six Months Ended November 30 August 31 November 30 2005 2004 2005 2005 2004 Net Sales (in 000's) 348,130 249,119 338,405 686,535 539,900 Operating Profit (in 000's) 59,490 44,307 35,074 94,564 99,508 Shipments (000's) Structural Mills 449 308 493 942 695 Bar Mill 99 81 110 209 187 Total 548 389 603 1,151 882 Price ($/Ton excluding delivery fees) Structural Mills $578 $568 $507 $541 $550 Bar Mill 590 665 553 571 623 Combined $580 $589 $515 $546 $565 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) November 30, May 31, 2005 2005 Assets Current assets: Cash and cash equivalents $70,632 $9,287 Short-term investments 42,775 --- Accounts receivable - net 131,795 127,383 Inventories 178,790 246,223 Receivable from TXI --- 40,734 Prepaid expenses 13,298 11,097 Total current assets 437,290 434,724 Other assets: Goodwill 85,166 85,166 Investments and deferred charges 16,758 5,099 101,924 90,265 Property, plant and equipment: Land and land improvements 95,617 93,937 Buildings 55,208 54,954 Machinery and equipment 1,028,711 1,025,475 Construction in process 31,427 28,074 1,210,963 1,202,440 Less depreciation 599,229 575,187 611,734 627,253 $1,150,948 $1,152,242 Liabilities and Stockholders' Equity Current liabilities: Trade accounts payable $82,311 $88,980 Accrued wages, taxes and other liabilities 57,585 20,933 Total current liabilities 139,896 109,913 Deferred income taxes and other credits 150,008 147,563 Long-term debt 300,000 --- Long-term payable to TXI --- 543,246 Stockholders' 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, 22,807,869 and 22,803,867 shares issued and outstanding 228 228 Additional paid-in capital 705,727 206,818 Retained earnings (deficit) (144,911) 144,474 Total stockholders' equity 561,044 351,520 $1,150,948 $1,152,242 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six months ended November 30, 2005 2004 Operating activities: Net income $51,754 $49,136 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 24,883 24,228 Deferred income taxes 1,358 16,752 Other - net 3,005 2,746 Changes in operating assets and liabilities Accounts receivable-net (4,412) 11,902 Inventories 67,433 (68,454) Prepaid expenses (2,201) (10,221) Accounts payable (6,079) (2,569) Accrued wages, taxes and other liabilities 37,405 1,941 Other credits 567 269 Receivable from or payable to TXI (10,286) (19,359) Net cash provided by operating activities 163,427 6,371 Investing activities: Capital expenditures (8,128) (10,027) Purchases of available-for-sale securities (317,130) --- Sales of available-for-sale securities 274,355 --- Other - net (595) (417) Net cash used by investing activities (51,498) (10,444) Financing activities: Long-term borrowings 350,000 --- Debt retirements (50,000) --- Debt issuance costs (9,469) --- Dividend paid to TXI (341,139) --- Issuance of common stock 24 --- Net cash used by financing activities (50,584) --- Increase (decrease) in cash and cash equivalents 61,345 (4,073) Cash and cash equivalents at beginning of period 9,287 8,575 Cash and cash equivalents at end of period $70,632 $4,502 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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