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_____________________________________________________________________
_____________
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 March 31, 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: April
27, 1995 - 5,195,728
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 March 31, 1995
and December 31, 1994 . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations for the 3 months ended
March 31, 1995 and March 31, 1994 . . . . . . . . . . 2
Consolidated Statement of Cash Flows for the 3 months ended
March 31, 1995 and March 31, 1994 . . . . . . . . . . 3
Notes to Financial Statements . . . . . . . . . . . . 4
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . 5
PART II. OTHER INFORMATION
No information reported
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Balance Sheet
March 31, December
1995 31, 1994
ASSETS (unaudited) (audited)
Current assets:
Cash $413,000 $109,000
Accounts receivable, net 2,575,000 2,181,000
Inventories 556,000 528,000
Prepaid expenses 148,000 227,000
Total current assets 3,692,000 3,045,000
Property, plant and equipment, net 2,306,000 2,186,000
Investment in joint venture (see Note 2) 6,699,000 6,294,000
Other assets 49,000 110,000
$12,746,000 $11,635,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $1,846,000 $1,460,000
Notes payable 200,000 -
Current portion of capital lease and 246,000 246,000
long term debt
Total current liabilities 2,292,000 1,706,000
Long-term debt 463,000 506,000
Deferred income taxes 979,000 859,000
Deferred gain on sale and leaseback 122,000 135,000
Total liabilities 3,856,000 3,206,000
Shareholders' equity:
Common stock, $.001 par value;
500,000,000 shares authorized;
5,195,728 shares issued 6,000 6,000
Capital in excess of par value 4,716,000 4,697,000
Notes receivable from stock sales (469,000) (469,000)
Retained earnings 4,727,000 4,285,000
8,980,000 8,519,000
Less 72,000 shares of treasury stock,
at cost (90,000) (90,000)
Total Shareholders' equity 8,890,000 8,429,000
$ 12,746,000 $ 11,635,000
See accompanying notes to financial statements
Page 1
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Statement of Operations
(Unaudited)
3 months 3 months
ended ended
3/31/95 3/31/94
Revenues:
Net sales $4,983,000 $ 3,783,000
Royalties 277,000 339,000
Equity in earnings of
joint venture 405,000 272,000
5,665,000 4,394,000
Cost and expenses:
Cost of sales 4,442,000 3,758,000
Selling, general and administrative 305,000 219,000
Research and development 85,000 71,000
Depreciation and amortization 177,000 46,000
5,009,000 4,094,000
Income from operations 656,000 300,000
Other income (expense):
Interest expense (24,000) (19,000)
Other income (expense) (10,000) 2,000
Income before provision for
income taxes 622,000 283,000
Provision for income taxes
Current 60,000 35,000
Deferred 120,000 61,000
180,000 96,000
Net income $442,000 $ 187,000
Earnings per common and common equivalent
share $.08 $.04
Weighted average number of common and common
equivalent shares 5,312,970 5,174,535
See accompanying notes to financial statements
Page 2
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
3 months 3 months
ended ended
3/31/95 3/31/94
Cash flows from operating activities:
Net income $442,000 $187,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 177,000 150,000
Distributions of joint venture in
excess of earnings - 127,000
Undistributed earnings in joint
venture (405,000) -
Change in assets and liabilities:
Decrease (increase) in
accounts receivable (394,000) 586,000
Decrease (increase) in
inventories (28,000) (42,000)
Decrease (increase) in
prepaid expenses 79,000 (17,000)
Increase (decrease) in
accounts payable and accrued
expenses 386,000 (585,000)
Increase in deferred income
taxes 120,000 61,000
Decrease in deferred gain on
sale/leaseback (13,000) -
Decrease in other assets 61,000 26,000
Net cash provided by
operating activities 425,000 467,000
Cash flows from investing activities:
Proceeds from the sale of plant and
equipment 13,000 97,000
Purchase of plant and equipment (310,000) (382,000)
Net cash used in
investing activities (297,000) (259,000)
Cash flows from financing activities:
Proceeds from notes payable to bank 200,000 -
Proceeds from exercise of stock options 19,000 5,000
Payments on long-term debt and capital
lease obligations (43,000) (73,000)
Net cash provided by
financing activities 176,000 (68,000)
Net increase (decrease) in cash 304,000 140,000
Cash, beginning of year 109,000 45,000
Cash, end of first quarter $413,000 $185,000
See accompanying notes to financial statements
Page 3
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 Ltd., 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 March 31, 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 March 31, 1995, MSI's investment in Cyanco represented
52% of total consolidated Assets and approximately 61% 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 the periods ending
March 31, 1995 March 31, 1994
Sales $4,196,000 $3,944,000
Gross profit 796,000 500,000
Net Income 811,000 543,000
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 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Net income for the first quarter of 1995 more than doubled over
that of the same period in 1994. Earnings for the first quarter were
$442,000 or $.08 per share for 1995 compared to $187,000 or $.04 per
share for the same period in 1994. The Company achieved a major goal
during the first quarter of 1995: To significantly increase
operating margins. Net income before taxes attributable to the
explosives business increased from approximately $11,000 during the
first quarter of 1994 to $217,000 for the same quarter in 1995. The
Company's net income before taxes attributable to Cyanco also
increased from $272,000 during the first quarter of 1994 to $405,000
for the same quarter in 1995. The effective tax rate for the current
first quarter tax provision is approximately 40% including state and
federal income taxes compared to 34% for the same period in 1994. It
is likely that the advantageous tax benefits from prior year
carryforwards will not be available to decrease the effective tax
rate for all of 1995, therefore the effective tax rate has increased.
Revenues increased by 29% for the first quarter of 1995
compared to revenues for the first quarter of 1994. The increase in
revenues by nearly $1.27 million was substantially the results of
increased sales of explosives in the United States and Canada.
Royalties from foreign licensees decreased slightly from $399,000 in
the first quarter of 1994 to $277,000 for the same quarter in 1995.
To accurately demonstrate the effect of Cyanco's income on revenues
the following table is prepared:
<C> <C> <C> <C> <C> <C> <C>
MSI's Cyanco Income MSI Explosive
Period Cyanco Sales Cyanco Income Co's % Included in MSI Revenue Revenue Total Revenue
1995
1st Qtr $4,196,000 $811,000 50% $405,000 $5,260,000 $5,615,000
1994
1st Qtr $3,944,000 $544,000 50% $272,000 $4,122,000 $4,394,000
During the first quarter of 1995, the Company reaped the benefit
of concentrating on niche marketing and increasing profitable sales
in the U.S. and Canada. The Company has continued its efforts to
increase operating margins by decreasing costs and increasing
efficiencies at its manufacturing plants. Operating Income as a
percentage of sales for the first quarter of 1995 was approximately
12% compared to 7% for the same quarter in 1994, an increase of 5%.
Even though Cyanco's sales have been affected by the loss of a
major customer during 1995, the sales have been largely replaced by
other contracts. During 1995, Cyanco expects to expand its freight
logical market where significant new mines have demanded liquid
sodium cyanide.
Liquidity and Capital Resources
It is anticipated that the Company's capital requirements for
capital expansion as well as increased working capital will be funded
from operations. However, it is likely that timing of the capital
expenditures may require utilizing the Company's revolving line of
credit with Zions Bank on a temporary basis. Year to date, the
Company used its revolving line of credit with Zions Bank up to
$400,000 in order to provide added working capital to support record
sales for the first quarter.
Page 5
Currently, the line of credit is virtually unutilized having been
substantially paid down in April 1995. The line of credit matured on
April 30, 1995 and is being renewed effective May 1, 1995 with
provisions to enhance the revolving line of credit for the Company.
Cash from operations totaled $425,000 in the first quarter of
1995 without any cash distribution from Cyanco. Cash provided during
the same period for 1994 was $140,000 primarily achieved from
$127,000 distribution from Cyanco and from downsizing the explosives
business to posture for more profitability which provided
approximately $467,000 in working capital which was offset largely by
reinvesting in capital equipment at mine sites and plant facilities.
Total Assets increased during the first quarter of 1995 by
approximately $1,061,000 while total liabilities increased $600,000,
thus improving the overall stability of the Company's balance sheet
by approximately $340,000 or $.064 per share. The current ratio,
defined as the relationship between current assets and current
liabilities decreased slightly from 1.78 at the end of the year 1994
to the quarter ending March 31, 1995 of approximately 1.61. Total
stockholders' equity increased during the quarter from $8,429,000 or
$1.59 per share to $8,890,000 or $1.67 per share.
For the remainder of 1995, the Company will continue its
commitments to the explosives business in the U.S. and Canada while
continuing its expansion efforts in expanding in Ghana and Uzbekistan
as well as other niche markets on a global scope. The Company has
begun an active marketing campaign to market its EMGEL products.
Furthermore, Cyanco, having recently completed its project to
increase annual capacity to approximately 40,000,000 lbs. of liquid
sodium cyanide, and is planning to generate its own electricity from
its by-product (waste) gas at the plant site which will result in
additional cost savings and improve environmental benefits.
In management's opinion the Company has sufficient capital
resources for current operations and planned capital expenditures.
Page 6
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)
May 5, 1995 /s/ Lex L. Udy
(Date) Lex L. Udy
Vice Chairman and Secretary
/s/ Duane W. Moss
Duane W. Moss
Chief Financial Officer
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