_______________________________________________________________
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 June 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: August 21, 1995 - 5,492,870
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 June 30, 1995
and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations for the 3 months ended
June 30, 1995 and June 30, 1994 . . . . . . . . . . . . . . . . 2
Consolidated Statement of Operations for the 6 months ended
June 30, 1995 and June 30, 1994 . . . . . . . . . . . . . . . 3
Consolidated Statement of Cash Flows for the 6 months ended
June 30, 1995 and June 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
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Balance Sheet
June 30,
1995
December 31,
1994
ASSETS
(unaudited)
(audited)
Current assets:
Cash
$ 708,000
$ 109,000
Accounts receivable, net
2483000
2181000
Inventories
602000
528000
Prepaid expenses
284000
227000
Total current assets
4077000
3045000
Property, plant and equipment, net
2393000
2186000
Investment in joint venture (see Note 2)
7538000
6294000
Other assets
61000
110000
$14,069,000
$1,635,000
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses
$2,593,000
$1,460,000
Notes payable
25000
-
Current portion of capital lease and long
term debt
246000
246000
Total current liabilities
2864000
1706000
Long-term debt
320000
506000
Deferred income taxes
1086000
859000
Deferred gain on sale and leaseback
122000
135000
Total liabilities
4392000
3206000
Shareholders' equity:
Common stock, $.001 par value;
500,000,000 shares
authorized; 5,492,870 shares issued
6000
6000
Capital in excess of par value
4851000
4697000
Notes receivable from stock sales
-469000
-469000
Retained earnings
5379000
4285000
9767000
8519000
Less 72,000 shares of treasury stock, at
cost
-90000
-90000
Total Shareholders' equity
9677000
8429000
$14,069,000
$11,635,000
See accompanying notes to financial statements
Page 1
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Statement of Operations
(Unaudited)
3 months ended
6/30/95
3 months ended
6/30/94
Revenues:
Net sales
$ 4,877,000
$ 3,501,000
Royalties
320000
274000
Equity in earnings of joint
venture
839000
623000
6036000
4398000
Cost and expenses:
Cost of sales
4360000
3310000
Selling, general and administrative
310000
228000
Research and development
229000
77000
Depreciation and
amortization
179000
54000
5078000
3669000
Income from operations
958000
729000
Other income (expense)
-30000
-20000
Income before provision for
income taxes
928000
709000
Provision for income taxes
Current
184000
49000
Deferred
92000
192000
276000
241000
Net income
$ 652,000
$ 468,000
Earnings per common and common
equivalent share
$ .11
$ .09
Weighted average number of common and
common
equivalent shares
5819260
5289856
See accompanying notes to financial statements
Page 2
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Statement of Operations
(Unaudited)
6 months ended
6/30/95
6 months
ended 6/30/94
Revenues:
Net sales
$ 9,860,000
$ 7,284,000
Royalties
597000
613000
Equity in earnings of joint
venture
1244000
895000
11701000
8792000
Cost and expenses:
Cost of sales
8802000
7068000
Selling, general and
administrative
615000
447000
Research and development
314000
148000
Depreciation and
amortization
356000
100000
10087000
7763000
Income from operations
1614000
1029000
Other income (expense)
-64000
-37000
Income before provision for
income taxes
1550000
992000
Provision for income taxes
Current
244000
84000
Deferred
212000
253000
456000
337000
Net income
$ 1,094,000
$ 655,000
Earnings per common and common
equivalent share
$ .19
$ .12
Weighted average number of common and
common
equivalent shares
5819260
5232856
See accompanying notes to financial statements
Page 3
MINING SERVICES INTERNATIONAL CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
6 months
ended
6/30/95
6 months
ended
6/30/94
Cash flows from operating activities:
Net income
$ 1,094,000
$ 656,000
Adjustments to reconcile net income to
net cash
provided by operating activities:
Depreciation and amortization
356000
304000
Distributions of joint venture in
excess of earnings
-
Undistributed earnings in joint
venture
-1244000
4000
Change in assets and liabilities:
Decrease (increase) in accounts
receivable
-302000
561000
(Increase) decrease in
inventories
-74000
53000
Increase in prepaid expenses
-57000
-23000
Increase (decrease) in accounts
payable and accrued expenses
1133000
-822000
Increase in deferred income
taxes
227000
252000
Decrease in deferred gain on
sale/leaseback
-13000
-
Decrease in other assets
49000
-
Net cash provided by
operating activities
75000
-
Cash flows from investing activities:
Proceeds from the sale of plant and
equipment
20000
97000
Purchase of plant and equipment
-583000
-862000
Net cash used in investing
activities
-563000
-691000
Cash flows from financing activities:
Proceeds from notes payable to bank
25000
-
Proceeds from exercise of stock
options
154000
11000
Payments on long-term debt and capital
lease obligations
-186000
-144000
Net cash provided by
financing activities
-7000
-153000
Net increase (decrease) in cash
599000
141000
Cash, beginning of year
109000
45000
Cash, end of first quarter
$ 708,000
$ 186,000
See accompanying notes to financial statements
Page 4
<PAGE>
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 June 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 June 30, 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 3-month period ending June 30, 1995 For 6-month period ending June 30,
1995
Sales $5,470,000 $9,666,000
Gross profit $1,666,000 $2,462,000
Net Income $1,677,000 $2,488,000
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 June 30, 9y5 compared to the Three months Ended
June 30, 1994.
Revenues for the second quarter of 1995 exceeded those of the prior year's
second quarter by $1,638,000 which represents an increase of approximately
37%. Net
income before taxes also increased by $219,000, a 31% increase over net income
before
taxes in the second quarter of 1994. The fully diluted earnings per share
increased from
$.09 per share to $.11, an increase of 22%. The earnings per share were
significantly
impacted by a 5 percent stock dividend issued by the Company to its
shareholders
effective June 30, 1995. Fully diluted shares increased from 5,232,856 to
5,819,260
from the second quarter of 1994 to the second quarter of 1995. The increase
in revenues
and the resultant net income occurred in both the explosives division of the
Company as
well as in Cyanco. 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 expenditures for
research
and
development doubled for the second quarter of 1995 compared to the second
quarter of
1994. This increase reflects a continued commitment by the Company to pursue
and
develop opportunities in niche markets in the mining industry world-wide.
For the Six Months Ended June 30, 1995 compared to the Six Months Ended
June 30,
1994.
Revenues for the six months ended June 30, 1995 increased by nearly
$3,000,000
or 33 percent over the comparable period ended June 30, 1994. Net income
increased by
approximately 67 percent or $439,000 for the six month period ending
June 30,1995
compared to the same period for 1994. Depreciation more than tripled in
1995 compared
to the same six-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 six months of 1995 more than doubled those incurred
during the
previous comparable period of 1994. The focus on research and development
has
proven
to provide the Company with continued technological advantages as it caters to
world-wide
niche markets.
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 with
Zions Bank 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. The Company used its
revolving
line of credit up to $400,000 during the spring of 1995 to meet increased
sales and supply
demands.
Cash from operations totaled $75,000 during the first six months of 1995.
Total
liabilities increased by $1,133,000 during the same period. The Company's
liquidity and
financial strength continued to improve during the six months ended
June 30, 1995.
Page 6
PART II
Submission of Matters to a Vote of Security Holders
At the annual meeting of shareholders of the Company held on May 23, 1995,
the following directors were re-elected as directors:
Edward N. Bagley - Chairman
John T. Day - Director, Chief Executive Officer
Lex L. Udy - Director, Vice Chairman, Secretary
Edward Dallin Bagley - Director
Nathan L. Wade - Director
All votes were properly taken with 61.3% of the shares present or
represented by
proxy. As to each director, all of shares present to vote or which voted by
proxy (total
count at the shareholders meeting was 3,178,850 shares) voted unanimously for
each
director. There were no abstentions or negative votes cast.
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)
August 21, 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)
August 21, 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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<NAME> MINING SERVICES INT'L CORP
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