<PAGE> 1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(MARK ONE)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarter Ended September 30, 1999
------------------
or
[ ] 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: 333-15789
---------
ChemFirst Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Mississippi 64-0679456
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 North Street, Jackson, MS 39202-3095
- --------------------------------------------------------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's Telephone Number, including Area Code: 601/948-7550
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
<TABLE>
<CAPTION>
Class Outstanding at October 31,1999
- -------------------------- ------------------------------
<S> <C>
Common Stock, $1 Par Value 18,218,165
</TABLE>
<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements
ChemFirst Inc.
Consolidated Balance Sheets (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
September 30 December 31
1999 1998
------------ -----------
<S> <C> <C>
Assets:
Current assets
Cash and cash equivalents $ 11,330 11,226
Accounts receivable 56,726 43,798
Inventories:
Finished products 39,932 32,872
Work in process 2,023 7,045
Raw materials and supplies 15,180 11,378
--------- ---------
Total inventories 57,135 51,295
--------- ---------
Prepaid expenses and other current assets 8,803 8,274
Net current assets of discontinued operations 31,998 46,309
--------- ---------
Total current assets 165,992 160,902
--------- ---------
Investments and other assets 20,589 49,131
Property, plant and equipment 382,512 366,814
Less: accumulated depreciation and amortization 157,609 139,413
--------- ---------
Property, plant and equipment, net 224,903 227,401
Noncurrent assets of discontinued operations -- 6,000
--------- ---------
$ 411,484 443,434
========= =========
Liabilities and Stockholders' Equity:
Current liabilities
Notes payable $ 7,575 5,354
Current instalments of long-term debt 4 251
Deferred revenue 563 104
Accounts payable 8,977 22,020
Accrued expenses and other current liabilities 21,148 16,237
--------- ---------
Total current liabilities 38,267 43,966
--------- ---------
Long-term debt 29,157 64,956
Other long-term liabilities 26,153 24,783
Deferred income taxes 17,977 13,501
Noncurrent liabilities of discontinued operations 10,097 10,097
Minority interest 649 649
Stockholders' equity:
Common stock 18,200 18,445
Additional paid-in capital 24,865 22,212
Retained earnings 246,337 245,118
Accumulated other comprehensive income (218) (293)
--------- ---------
Total stockholders' equity 289,184 285,482
--------- ---------
$ 411,484 443,434
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
ChemFirst Inc.
Consolidated Statements of Operations (Unaudited)
(In Thousands of Dollars and Shares, Except Per Share Amounts)
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
September 30 September 30
----------------------- ----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Sales $ 79,275 72,760 229,460 220,372
Interest and other income 496 1,947 3,651 12,586
-------- -------- -------- --------
79,771 74,707 233,111 232,958
-------- -------- -------- --------
Costs and expenses:
Cost of sales 54,514 51,522 163,066 161,598
General, selling and
administrative expenses 11,916 10,565 33,163 31,312
Other operating expenses 3,498 3,646 9,239 8,979
Interest expense 435 673 1,921 1,144
-------- -------- -------- --------
70,363 66,406 207,389 203,033
-------- -------- -------- --------
Earnings before income taxes 9,408 8,301 25,722 29,925
Income tax expense 3,446 3,195 9,646 11,520
-------- -------- -------- --------
Earnings from continuing operations 5,962 5,106 16,076 18,405
Loss from discontinued operations, net of tax benefit (844) (436)
Loss on disposal of business, net of tax benefit -- (11,950) -- (11,950)
-------- -------- -------- --------
Net earnings (loss) $ 5,962 (7,688) 16,076 6,019
======== ======== ======== ========
Earnings (loss) per common share:
Continuing operations $ 0.33 0.27 0.88 0.94
Loss from discontinued operations, net of tax benefit -- (0.05) -- (0.02)
Loss on disposal of business, net of tax benefit -- (0.63) -- (0.61)
-------- -------- -------- --------
Net earnings (loss) $ 0.33 (0.41) 0.88 0.31
======== ======== ======== ========
Average shares outstanding 18,152 18,926 18,266 19,435
Earnings (loss) per common share, assuming dilution:
Continuing operations $ 0.32 0.27 0.87 0.94
Loss from discontinued operations, net of tax benefit -- (0.04) -- (0.02)
Loss on disposal of business, net of tax benefit -- (0.63) -- (0.61)
-------- -------- -------- --------
Net earnings (loss) $ 0.32 (0.40) 0.87 0.31
======== ======== ======== ========
Average shares outstanding 18,411 19,088 18,482 19,695
Cash dividend declared
per share $ 0.10 0.10 0.30 0.30
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
ChemFirst Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
9 Months Ended
September 30
-----------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operations:
Net earnings $ 16,076 6,019
Adjustments to reconcile net earnings to
net cash provided by operations:
Depreciation and amortization 19,523 17,972
Provision for losses on receivables 133 53
Gain on sale of equity investee (750) (8,269)
Loss on disposal of business, net of tax benefit -- 11,950
Deferred taxes and other items 9,259 5,073
Change in current assets and liabilities, net
of effects of dispositions (26,410) (9,899)
Net earnings from discontinued operations -- 435
-------- --------
Net cash provided by continuing operations 17,831 23,334
Net cash provided by (used in) discontinued operations 20,312 (10,374)
-------- --------
Net cash provided by operating activities 38,143 12,960
-------- --------
Cash flows from investing activities:
Capital expenditures (16,932) (30,947)
Proceeds from sale of equity investee -- 18,986
Proceeds from collection of note 29,569 --
Other investing activities (3,000) 905
-------- --------
Net cash provided by (used in) investing activities, continuing operations 9,637 (11,056)
Net cash used in investing activities, discontinued operations -- (2,219)
-------- --------
Net cash provided by (used in) investing activities 9,637 (13,275)
-------- --------
Cash flows from financing activities:
Net borrowings (repayments) of notes payable (33,796) 45,000
Principal repayments of long-term debt -- (717)
Dividends (5,463) (5,791)
Purchase of common stock (9,830) (35,370)
Proceeds from issuance of common stock 1,338 1,579
-------- --------
Net cash provided by (used in) financing activities, continuing operations (47,751) 4,701
Net cash used in financing activities, discontinued operations -- (441)
-------- --------
Net cash provided by (used in) financing activities (47,751) 4,260
-------- --------
Effect of exchange rate changes on cash 75 --
-------- --------
Net increase in cash and cash equivalents 104 3,945
Cash and cash equivalents at beginning of period 11,226 7,767
-------- --------
Cash and cash equivalents at end of period $ 11,330 11,712
======== ========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest, net of amounts capitalized $ 1,909 1,175
======== ========
Income taxes, net $ 1,947 6,065
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
ChemFirst Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited. In Thousands of Dollars)
Note 1 - General
The financial statements included herein are unaudited and have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and Securities and Exchange Commission regulations. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. Certain prior year
amounts have been reclassified to conform to the 1999 presentation. In the
opinion of management, the financial statements reflect all adjustments (of a
normal and recurring nature) which are necessary to present fairly the financial
position, results of operations and cash flows for the interim periods. These
financial statements should be read in conjunction with the Annual Report of the
Company and Form 10-K for the year ended December 31, 1998.
Note 2 - Discontinued Operations
The net assets and liabilities of discontinued operations included in
the consolidated financial statements are classified as current assets,
noncurrent assets and noncurrent liabilities at September 30, 1999 and December
31,1998, respectively, as follows:
<TABLE>
<CAPTION>
Engineered Products
and Services
Steel and Other Totals
-------- ------------------- --------
<S> <C> <C> <C>
At September 30, 1999:
Net current assets of disc. operations $ 16,050 15,948 31,998
======== ======== ========
Noncurrent assets of disc. operations $ -- -- --
======== ======== ========
Noncurrent liabilities of disc. operations $ -- 10,097 10,097
======== ======== ========
At December 31, 1998:
Net current assets of disc. operations $ 26,565 19,744 46,309
======== ======== ========
Noncurrent assets of disc. operations $ -- 6,000 6,000
======== ======== ========
Noncurrent liabilities of disc. operations $ -- 10,097 10,097
======== ======== ========
</TABLE>
5
<PAGE> 6
The statements of operations have been reclassified to separate
discontinued and continuing operations. Earnings (loss) from discontinued
operations includes interest expense allocations, based on the ratio of net
assets of discontinued operations to consolidated net assets plus debt, of $64
and $132 for the three and nine month periods ending September 30, 1998,
respectively. Revenues and net earnings (loss) of discontinued operations for
the three and nine month periods ended September 30, 1998 were as follows:
<TABLE>
<CAPTION>
Three Months ended September 30, 1998: Engineered Products
and Services
Steel and Other Totals
-------- ------------------- --------
<S> <C> <C> <C>
Sales and revenues $ 13,810 18,004 31,814
======== ======== ========
Earnings (loss) from operations before taxes $ (1,856) 541 (1,315)
Income tax expense (benefit) (726) 255 (471)
-------- -------- --------
Earnings (loss) from discontinued operations, net $ (1,130) 286 (844)
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Nine Months ended September 30, 1998: Engineered Products
and Services
Steel and Other Totals
-------- ------------------- --------
<S> <C> <C> <C>
Sales and revenues $ 54,620 52,248 106,868
======== ======== ========
Earnings (loss) from operations before taxes $ (1,626) 1,159 (467)
Income tax expense (benefit) (635) 604 (31)
-------- -------- --------
Earnings (loss) from discontinued operations, net $ (991) 555 (436)
======== ======== ========
</TABLE>
Note 3 - Change from Reporting Gross Sales to Net Sales Basis
Beginning with calendar year 1999 the Company elected to present sales
on a net of freight basis by reclassing freight-out expense from cost of sales
to sales. Prior periods have been reclassified to consistently reflect this
presentation. Freight-out expense reclassed for the three and nine month periods
ended September 30,1998 from cost of sales to net sales was $1,911 and $6,655,
respectively.
6
<PAGE> 7
Note 4 - Effect Of Adopting Accounting Changes
In March 1998, the Accounting Standards Executive Committee ("AcSEC")
released Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The SOP identifies
the characteristics of internal-use software and provides guidance for
accounting treatment of costs for computer software developed or obtained for
internal use as related to capitalization or expense decisions. The statement
was effective for fiscal years beginning after December 15, 1998. In April 1998,
AcSEC released SOP 98-5, "Reporting on the Costs of Start-Up Activities." The
SOP broadly defines start-up activities and provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs of
start-up activities and organization costs to be expensed as incurred. The
statement was effective for fiscal years beginning after December 15, 1998.
Information has been presented on the basis required by these two statements and
is immaterial to operations.
Statement of Financial Accounting Standards ("SFAS") No. 133 - "Accounting
for Derivative Instruments and Hedging Activities," was issued in June 1998,
effective for all fiscal quarters of all fiscal years beginning after June 15,
1999. In June 1999, SFAS No.137 - "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of SFAS No. 133," was
issued, amending the effective date to all fiscal quarters of all fiscal years
beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments and for hedging activities. All derivatives
are required to be recognized as either assets or liabilities in the statement
of financial position and measured at fair value. Changes in fair value will be
reported either in earnings or outside earnings depending on the intended use of
the derivative and the resulting designation. Entities applying hedge accounting
are required to establish at the inception of the hedge the method used to
assess the effectiveness of the hedging derivative and the measurement approach
for determining the ineffective aspect of the hedge. The Company currently
hedges certain foreign currency transactions by entering into forward exchange
contracts. Gains and losses associated with currency rate changes on forward
contracts hedging foreign currency transactions are recorded in income and
generally offset the transaction losses or gains on the foreign currency cash
flows that they are intended to hedge. The Company has not completed its
analysis of SFAS No. 133 and, accordingly, has not determined what additional
effect, if any, it may have on future operations and financial statement
disclosure.
7
<PAGE> 8
Note 5 - Earnings Per Share
Basic EPS is based on the average number of common shares outstanding
during each period. Diluted EPS includes the effect of outstanding common stock
equivalents ("CSEs"). The following is a reconciliation of the numerators
(income) and denominators (weighted-average shares) of the basic and diluted per
share computations for income from continuing operations:
<TABLE>
<CAPTION>
Three Months Ended September 30
1999 1998
----------------------------- -----------------------------
Income Shares EPS Income Shares EPS
------- ------- ------- ------- ------- -------
(Thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Earnings per Common Share:
Basic $ 5,962 18,152 $ 0.33 $ 5,106 18,926 $ 0.27
Dilutive effect of CSEs -- 259 (0.01) -- 162 --
------- ------- ------- ------- ------- -------
Diluted $ 5,962 18,411 $ 0.32 $ 3,853 19,088 $ 0.27
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30
1999 1998
----------------------------- -----------------------------
Income Shares EPS Income Shares EPS
------- ------- ------- ------- ------- -------
(Thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Earnings per Common Share:
Basic $16,076 18,266 $ 0.88 $18,405 19,435 $ 0.94
Dilutive effect of CSEs -- 216 (0.01) -- 260 --
------- ------- ------- ------- ------- -------
Diluted $16,076 18,482 $ 0.87 $18,405 19,695 $ 0.94
======= ======= ======= ======= ======= =======
</TABLE>
Note 6 - Comprehensive Income
Total comprehensive income (loss) for the three months ended September
30, 1999 and 1998, was $6.0 million and $(7.7) million, respectively.
Comprehensive income for the nine months ended September 30, 1999 and 1998, was
$15.9 million and $5.7 million, respectively. Total comprehensive income for the
Company includes net income and foreign currency translation adjustments.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations - Nine months ended September 30, 1999
compared to the nine months ended September 30, 1998
Consolidated Results
Earnings from continuing operations for the nine months ended September
30, 1999, were $16.1 million versus $18.4 million for the same period of the
prior year. Prior year results include a $5.0 million gain on the January 1998
sale of Power Sources, Inc. Excluding the Power Sources gain, earnings from
continuing operations for the current year were up 20%, due to increased profits
in the polyurethane chemicals segment, which added the Baytown aniline facility
in the second quarter of 1998.
Segment Operations
Segment Information
(In Thousands of Dollars)
<TABLE>
<CAPTION>
9 Months Ended
September 30
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
Sales:
Electronic and Other Specialty Chemicals $ 126,646 131,747
Polyurethane Chemicals 102,814 88,625
--------- ---------
Total $ 229,460 220,372
========= =========
Operating profit before income taxes:
Electronic and Other Specialty Chemicals $ 12,092 13,295
Polyurethane Chemicals 24,060 15,017
--------- ---------
36,152 28,312
Unallocated corporate expenses (9,117) (7,058)
Interest income (expense), net (976) 507
Other income (expense), net (337) 8,164
--------- ---------
Total $ 25,722 29,925
========= =========
</TABLE>
9
<PAGE> 10
Electronic and Other Specialty Chemicals pretax operating profits for
the current year were down 9% versus the same period of the prior year to $12.1
million, while sales declined 4%. The decline in operating profits was primarily
due to additional expenses for electronic chemicals product development and
research and development and applications engineering facilities added last
year. Sales declined on lower electronic chemicals prices and other specialty
chemical volume.
Polyurethane Chemicals pretax operating profits for the current year
were up 60% versus the same period of the prior year to $24.1 million, primarily
due to additional aniline volume from the new Baytown, TX plant which came on
stream in the second quarter of last year. Also, prior year results were hurt by
higher expenses, primarily the result of plant maintenance in the first and
second quarter at the Pascagoula facility. Sales for the year were up 16% due to
the addition of Baytown production.
Unallocated corporate expenses for the current year were $9.1 million
versus $7.1 million in the prior year. The increase was primarily due to an
increase in that portion of compensation expense indexed to the Company's stock
price. Net interest expense for the current year was $1.0 million versus net
interest income of $0.5 million in the prior year due primarily to $0.8 million
in higher net interest expense caused by increased borrowings and lower
capitalized interest. Other income and expense for the prior year included $8.2
million in pretax gain from the sale of Power Sources, Inc.
10
<PAGE> 11
Results of Operations - Three months ended September 30, 1999
compared to the three months ended September 30, 1998
Consolidated Results
Earnings from continuing operations for the three months ended
September 30, 1999, were $6.0 million, up 17% from $5.1 million for the same
period of the prior year. The earnings improvement was due to higher sales of
polyurethane chemicals from the Baytown, TX aniline facility and higher
production and lower cost at the Pascagoula, MS aniline plant.
Segment Operations
Segment Information
(In Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months Ended
September 30
---------------------
1999 1998
-------- --------
<S> <C> <C>
Sales:
Electronic and Other Specialty Chemicals $ 39,231 39,965
Polyurethane Chemicals 40,044 32,795
-------- --------
Total $ 79,275 72,760
======== ========
Operating profit before income taxes:
Electronic and Other Specialty Chemicals $ 4,251 3,298
Polyurethane Chemicals 8,815 7,138
-------- --------
13,066 10,436
Unallocated corporate expenses (3,236) (1,956)
Interest income (expense), net (313) (147)
Other expense, net (109) (32)
-------- --------
Total $ 9,408 8,301
======== ========
</TABLE>
Electronic and Other Specialty Chemicals pretax operating profits for
the current year were $4.3 million, up $1.0 million versus the same period of
the prior year on better custom manufacturing results. Sales for the quarter
were down 2%, primarily due to lower prices.
11
<PAGE> 12
Polyurethane Chemicals pretax operating profits for the current year
were $8.8 million, up 23% versus the same quarter of the prior year on a 22%
increase in sales. Sales were up on increased production at both the Pascagoula
and Baytown sites. Current quarter sales include $3.4 million in spot sales,
which are not anticipated for the fourth quarter. In addition, prior year
results were hurt by Hurricane Georges which struck the Pascagoula facility on
September 28, 1998.
Unallocated corporate expenses for the current year were $3.2 million,
up $1.3 million from the prior year primarily due to increased compensation
expense indexed to the Company's stock price. Net interest expense for the
current year was $0.3 million versus $0.1 million in the prior year, up
primarily due to higher interest expense caused by increased borrowings.
Discontinued Operations
Discontinued operations include Steel and Engineered Products and
Services and Other. In the third quarter of 1998, a plan was approved to
discontinue steel operations through a disposal of the steel segment's assets .
The carrying amount of these assets was written down by $14.9 million to an
estimated net realizable amount. Additionally, accruals of $3.1 million were
recorded for estimated costs of exiting the business. Negotiations with
potential buyers continue regarding steel assets, as do ongoing efforts to
liquidate inventories and collect receivables. The Company is also in
discussions with buyers interested in Engineered Products and Services.
Capital Resources and Liquidity
Cash flow from continuing operations for the current year was $17.8
million, down from $23.3 million in the prior year primarily due to increased
accounts receivable. Capital expenditures during the current year were down 45%
from the prior year, which included final expenditures on the Baytown, TX
aniline facility. Net cash provided by investing activities in the current year
included $29.6 million from the collection of the Company's note with Getchell
Gold. These proceeds were used to reduce outstanding borrowings. Prior year
investing activities includes $19.0 million in pretax proceeds from the
Company's sale of its interest in Power Sources, Inc.
Year 2000
In 1996, the Company began a study which led to the purchase in 1997 of
a company-wide Enterprise Resource Planning ("ERP") system to integrate the
Company's information systems, replacing small, stand-alone purchased systems.
The ERP system will be Year 2000 compliant. As of September 30, 1999, the
Company has spent $10.9 million on this project and is projecting to spend
approximately $1.3 million for the remainder of 1999. As of November 1, all
sites scheduled were operating under this system. A remaining site, which is
already Year 2000 compliant, will be implemented under the ERP system next year.
12
<PAGE> 13
A corporate-wide survey and assessment of other information technology
("IT") and non-IT equipment and systems utilizing date or time functions has
been completed. The current estimated cost to perform necessary remediations is
approximately $0.3 million of which approximately $0.2 million has been spent to
date. Most of this cost is related to process control systems, the majority of
which have now been remediated and successfully tested. Final remediations are
scheduled to occur the first week of December. Contingency plans have been
developed in the event the remaining remediations do not occur or are delayed.
Delay or failure to complete the remaining remediations, although not expected,
could have a material effect on the Company's financial condition and results of
operations.
Although monitoring will continue, the Company has essentially completed
its assessment of critical key customers, as well as service and raw material
suppliers, regarding their Year 2000 readiness. Contingency plans have been
developed, addressing potential shortfalls related to Year 2000 readiness with
respect to individual critical key suppliers and customers. Although the Company
cannot quantify the precise effect, significant or prolonged disruptions of key
customers or suppliers could have a material effect on the Company's financial
condition and results of operations. Based on information to date and assuming
no major disruptions by critical third parties or delays in remaining
remediations, the Company believes that the most likely worst case scenario
would involve temporary interruptions in manufacturing capability and that these
should not have a material adverse effect on the Company's financial position,
operations or cash flow.
Forward-Looking Statements
Certain statements included in this Form 10-Q which relate to the Year
2000, proceeds from the discontinuance of the steel and engineered products and
services operations, as well as, other statements in this Form 10-Q that are not
historical in nature, may constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements, as well as other forward-looking statements made
from time to time by the Company, or in the Company's press releases and filings
with the U.S. Securities and Exchange Commission, are based on certain
underlying assumptions and expectations of management. These forward-looking
statements are subject to risks and uncertainties which could cause actual
results to differ materially from those expressed in such forward-looking
statements. Such risks and uncertainties include, but are not limited to,
general economic conditions, availability and pricing of raw materials,
supply/demand balance for key products, new product development, manufacturing
efficiencies, conditions of and product demand by key customers, the timely
completion and start up of construction projects, pricing pressure as a result
of the downturn in Asian or other foreign markets, successful installation of
the Company's ERP system, the inability of the Company to either resolve its
Year 2000 issues or to accurately estimate the costs associated with Year 2000
compliance and other factors as may be discussed in the company's Form 10-K for
the fiscal year ended December 31, 1998.
13
<PAGE> 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to changes in financial market conditions in the
normal course of its business, including changes in interest rates and foreign
currency exchange rates. At September 30, 1999, the Company's derivative and
other financial instruments included long-term debt denominated in U.S. dollars
and short-term debt denominated in Japanese yen and a series of short-term
forward sales of Japanese yen. Due to the short-term nature and size of these
yen obligations, the Company does not consider its exposure to foreign currency
or interest rate fluctuations on these instruments to be material.
The Company utilizes fixed and variable-rate debt to maintain liquidity
and fund its business operations, with the terms and amounts based on business
requirements, market conditions and other factors. At September 30,1999, the
market value of the Company's fixed rate borrowings was approximately $24.0
million. A 100 basis point change in interest rates (all other variables held
constant) as of September 30, 1999, would result in an approximate $1.0 million
change in fair market value, but would not affect interest expense or cash flow.
At September 30, 1999, the Company had $12.6 million in variable-rate debt. A
100 basis point change in interest rates (all other variables held constant) on
this portion of the Company's debt would result in a change in interest expense
of approximately $0.1 million.
14
<PAGE> 15
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
Exhibit 27.1 - Restated Financial Data Schedule
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Registrant during the
three months ended September 30, 1999.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHEMFIRST INC.
November 11, 1999 /s/ J. Kelley Williams
- ------------------ -----------------------------------------
Date J. Kelley Williams
Chairman and Chief Executive Officer
November 11, 1999 /s/ Troy B. Browning
- ------------------ -----------------------------------------
Date Troy B. Browning
Controller (Principal Accounting Officer)
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedules
27.1 Restated Financial Data Schedules
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 11,330
<SECURITIES> 0
<RECEIVABLES> 56,789
<ALLOWANCES> 63
<INVENTORY> 57,135
<CURRENT-ASSETS> 165,992
<PP&E> 382,512
<DEPRECIATION> 157,609
<TOTAL-ASSETS> 411,484
<CURRENT-LIABILITIES> 38,267
<BONDS> 29,157
0
0
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