_______________________________________________________________
U.S. Securities and Exchange Commission
Washington, D.C. 20549
_____________________________
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D)
OF THE EXCHANGE ACT
For the transition period from _______________ to ________________.
Commission file number 0-10634
_____________________________
Mining Services International Corporation
(Exact Name of Small Business issuer as specified in its charter)
Utah 87-0351702
(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization) Identification No.)
5284 South Commerce Drive, Suite C-244
Salt Lake City, Utah 84107-7930
(Address of principal executive offices)
Issuers telephone number: (801) 261-5666
_________________________
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ____
State the number of shares outstanding of each of the issuer's classes
of
common equity, as of the latest practicable date: November 10, 1995 - 5,511,095
Transitional Small Business Disclosure Format (check one): Yes ___ No
X_
____________________________________________________________________
INDEX
PART I. FINANCIAL INFORMATION
Page Number
Item 1 Financial Statements
Consolidated Balance Sheet as of September 30, 1995
and December 31, 1994 . . . . . . . . . . . . . . . . . . .1
Consolidated Statement of Operations for the 3 months ended
September 30, 1995 and September 30, 1994 . . . . . . . . . 2
Consolidated Statement of Operations for the 9 months ended
September 30, 1995 and September 30, 1994 . . . . . . . . . . 3
Consolidated Statement of Cash Flows for the 9 months ended
September 30, 1995 and September 30, 1994 . . . . . . . . . . 4
Notes to Financial Statements . . . . . . . . . . . . . . . . 5
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders . . 7
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Balance Sheet
<TABLE>
<S> <C> <C>
September 30, December 31,
1995 1994
ASSETS (unaudited) (audited)
Current assets:
Cash $1,500,000 $109,000
Accounts receivable, net 2,167,000 2,181,000
Inventories 937,000 528,000
Prepaid expenses 379,000 227,000
Total current assets 4,983,000 3,045,000
Property, plant and equipment, net 2,269,000 2,186,000
Investment in joint venture
(see Note 2) 7,113,000 6,294,000
Other assets 59,000 110,000
$14,424,000 $11,635,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued expenses $2,102,000 $1,460,000
Current portion of capital lease
and long term debt 246,000 246,000
Total current liabilities 2,348,000 1,706,000
Long-term debt 277,000 506,000
Deferred income taxes 1,134,000 859,000
Deferred gain on sale and leaseback 104,000 135,000
Total liabilities 3,863,000 3,206,000
Shareholders' equity:
Common stock, $.001 par value;
500,000,000 shares
authorized; 5,511,095
shares issued 6,000 6,000
Capital in excess of par value 4,780,000 4,607,000
Notes receivable from stock sales (469,000) (469,000)
Retained earnings 6,244,000 4,285,000
Total Shareholders' equity 10,561,000 8,429,000
$14,424,000 $11,635,000
See accompanying notes to financial statements
Page 1
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Statement of Operations
(Unaudited)
3 months ended 3 months ended
9/30/95 9/30/94
Revenues:
Net sales $4,441,000 $3,912,000
Royalties 470,000 225,000
Equity in earnings of
joint venture 1,025,000 361,000
5,936,000 4,498,000
Cost and expenses:
Cost of sales 4,074,000 3,335,000
Selling, general and
administrative 146,000 113,000
Research and development 267,000 239,000
Depreciation and amortization 208,000 148,000
4,695,000 3,884,000
Income before provision for
income taxes 1,241,000 553,000
Provision for income taxes
Current 313,000 33,000
Deferred 63,000 155,000
376,000 188,000
Net income $865,000 $365,000
Earnings per common and
common equivalent share $.15 $.07
Weighted average number of
common and common
equivalent shares 5,819,260 5,504,516
See accompanying notes to financial statements
Page 2
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Statement of Operations
(Unaudited)
9 months ended 9 months ended
9/30/95 9/30/94
Revenues:
Net sales $14,301,000 $11,196,000
Royalties 1,067,000 838,000
Equity in earnings of joint venture 2,269,000 1,256,000
17,637,000 13,290,000
Cost and expenses:
Cost of sales 12,875,000 10,377,000
Selling, general and administrative 762,000 431,000
Research and development 581,000 387,000
Depreciation and amortization 564,000 452,000
14,782,000 11,647,000
Income before provision for income taxes 2,791,000 1,545,000
Provision for income taxes
Current 557,000 117,000
Deferred 275,000 408,000
832,000 525,000
Net income $1,959,000 $ 1,020,000
Earnings per common and common
equivalent share $.34 $.19
Weighted average number of common
and common equivalent shares 5,819,260 5,273,545
See accompanying notes to financial statements
Page 3
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
9 months ended 9 months ended
9/30/95 9/30/94
Cash flows from operating activities:
Net income $1,959,000 $1,020,000
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation and amortization 564,000 452,000
Distributions of joint venture
in excess of earnings
Undistributed earnings in joint venture (819,000) (357,000)
Change in assets and liabilities:
Decrease in accounts receivable 14,000 58,000
Increase in inventories (409,000) (37,000)
Increase in prepaid expenses (152,000) (66,000)
Increase (decrease) in accounts
payable and accrued
expenses 642,000 (418,000)
Increase in deferred income taxes 275,000 407,000
Decrease in deferred gain on
sale/leaseback (31,000) 0
Decrease in other assets 51,000 144,000
Net cash provided by operating activities 135,000 1,059,000
Cash flows from investing activities:
Proceeds from the sale of plant
and equipment 20,000 372,000
Purchase of plant and equipment (667,000) (1,382,000)
Decrease in other assets
Net cash used in investing activities (647,000) (866,000)
Cash flows from financing activities:
Proceeds from notes payable to bank 0 0
Proceeds from exercise of stock options 173,000 22,000
Payments on benefit payable 0 (33,000)
Payments on long-term debt and
capital lease obligations (229,000) (208,000)
Net cash provided by financing activities (56,000) (219,000)
Net increase (decrease) in cash 1,391,000 (26,000)
Cash, beginning of year 109,000 45,000
Cash, end of third quarter $1,500,000 $19,000
See accompanying notes to financial statements
Page 4
</TABLE>
MINING SERVICES INTERNATIONAL CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
(1) Description of Consolidated Financial Statements
Mining Services International Corporation (Company) and its wholly
owned subsidiaries, MSI-Fabrication Inc., Mine Chemical Services, Inc. (MCS),
Mining Services West Virginia, Inc., Mining Services (Namibia) (PTY) Ltd.,
Nevada Chemicals, Inc. (NCI), West Coast Explosives Ltd., and Dawn Holding
Company and its 51% owned incorporated Joint Venture, Turon-MSI Limited, are
primarily engaged in the development, manufacture and sale of mining chemicals
and related technology. In addition, NCI has a fifty percent interest in Cyanco
Company (Cyanco) a non-corporate joint venture, which is engaged in the
manufacture and sale of liquid sodium cyanide. These consolidated financial
statements are presented in accordance with the requirements for Form 10-QSB
and, consequently, may not include all the disclosures normally required by
generally accepted accounting principles or those normally made in the annual
Form 10-KSB filing. The Company's unaudited, consolidated interim financial
statements for the quarter ending September 30, 1995 include all appropriate
adjustments which in the opinion of Management are necessary in order to make
the financial statements not misleading.
(2) Significant Equity Investment
As of September 30, 1995, MSI's investment in Cyanco represented 49
percent of total consolidated assets and approximately 81 percent of income from
operations. The financial statements reflect the investment in Cyanco under the
equity method of accounting and include MSI's share of Cyanco's net income in
revenues. Summarized financial information for Cyanco is as follows:
For 9-month period ending For 9-month period ending
September 30, 1995 September 30, 1994
Sales $17,072,000 $13,529,000
Gross profit $4,440,000 $2,422,000
Net Income $4,538,000 $2,502,000
Cyanco reports "gross profit" as net income from operations. "Net income"
exceeds "gross profit" due primarily to interest income received on cash
invested in short-term investments.
Page 5
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
For the three months ended September 30, 1995 compared to the three months ended
September 30, 1994.
Revenues for the third quarter of 1995 exceeded those of the prior
year's third
quarter by $1,438,000 which represents an increase of approximately 32 percent.
Net income before taxes also increased by $688,000, a 124 percent increase
over net income before taxes in the third quarter of 1994. The fully diluted
earnings per share increased from $.07 per share to $.15, an increase of over
114 percent. This increase was achieved
in spite of an increase in fully diluted shares from 5,584,516 to 5,819,260
from the third
quarter of 1994 to the third quarter of 1995. Cyanco continues to improve
its profitability
and market presence as it reaps the benefit of increased capacity during an
increasing
market demand for its products in the gold mining industry. The Company's
equity in
earnings from Cyanco for the three months ended September 30, 1995 represented
an
increase of 184 percent over the same period a year ago. Expenses increased 15
percent
from the third quarter of 1994 due to expenditures supporting expansion into
Uzbekistan
and other foreign markets which the Company believes will provide long-term
growth for
the explosives business.
For the nine months ended September 30, 1995 compared to the nine months ended
September 30, 1994.
Revenues for the nine months ended September 30, 1995 increased by
nearly $4.4
million or 33 percent over the comparable period ended September 30, 1994.
Income from
operations increased by approximately 74 percent or $1,212,000 for the
nine-month period
ending September 30,1995 compared to the same period for 1994. Depreciation
increased
25 percent compared to the same nine-month period in 1994 due primarily to the
increased
investment in capital and facilities as the Company continues to broaden its
ownership of
facilities and business opportunities rather than merely licensing its
technology. Research
and development expenses for the first nine months of 1995 were 50 percent
higher than
those incurred during the previous comparable period of 1994. The continued
focus on
research and development has proven to provide the Company with technological
and
market advantages as it seeks world-wide niche markets. Selling and
administrative
expenses have increased by 77 percent over the previous nine-month period
primarily due
to increased activity in Uzbekistan, Ghana and other markets including the
automation of
its business systems to accommodate the expected increase in international
activity.
Liquidity and Capital Resources
The Company's anticipated capital requirements for new capital and
ongoing
operations will be largely funded from operations. The Company has a line of
credit in the
amount of $1,400,000, subject to conditions with which the Company is in
compliance.
Currently, the Company has not drawn on its line of credit except for certain
letters of
credit required by ongoing business.
Cash generated from operations totaled $2,094,000 during the first
nine months of
1995. Total liabilities increased by $657,000 during the same period.
The Company's
liquidity and financial stability continued to strengthen during the nine
months ended
September 30, 1995.
Page 6
PART II: OTHER INFORMATION
Not applicable.
Page 7
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
MINING SERVICES INTERNATIONAL CORPORATION
(Registrant)
November 13 , 1995 ___________________________
(Date) Lex L. Udy
Vice Chairman and Secretary
___________________________
Duane W. Moss
Chief Financial Officer
Page 8
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
MINING SERVICES INTERNATIONAL CORPORATION
(Registrant)
November 13, 1995 /s/ Lex L. Udy____________
(Date) Lex L. Udy
Vice Chairman and Secretary
/s/ Duane W. Moss
Duane W. Moss
Chief Financial Officer
Page 8
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1500000
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<RECEIVABLES> 2167000
<ALLOWANCES> 5939
<INVENTORY> 937000
<CURRENT-ASSETS> 4983000
<PP&E> 8434998
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<CURRENT-LIABILITIES> 2348000
<BONDS> 277000
<COMMON> 6000
0
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<OTHER-SE> 10561000
<TOTAL-LIABILITY-AND-EQUITY> 14424000
<SALES> 14301000
<TOTAL-REVENUES> 17637000
<CGS> 12875000
<TOTAL-COSTS> 14782000
<OTHER-EXPENSES> 64000
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 2791000
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