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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1994 COMMISSION FILE NUMBER 1-7488
FIRST MISSISSIPPI CORPORATION
(Exact name of Registrant as specified in its charter)
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MISSISSIPPI 64-0354930
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
700 NORTH STREET, P. O. BOX 1249 39215-1249
JACKSON, MISSISSIPPI (Zip Code)
(Address of principal executive offices)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (601) 948-7550
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK, PAR VALUE $1 NEW YORK STOCK EXCHANGE
PHILADELPHIA STOCK EXCHANGE
COMMON STOCK PURCHASE RIGHTS MIDWEST STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
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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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant, September 1, 1994. $312,817,585
Common stock outstanding September 1, 1994. 20,153,990
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DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for fiscal year ended June 30,
1994, are incorporated by reference into Part I and Part II of Form 10-K.
2. Portions of the Proxy Statement, which will be mailed to the SEC by October
3, 1994, are incorporated by reference into Part III of Form 10-K.
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FIRST MISSISSIPPI CORPORATION
SECURITIES AND EXCHANGE COMMISSION FORM 10-K
CROSS REFERENCE SHEET
LOCATION IN ANNUAL REPORT TO STOCKHOLDERS AND
DEFINITIVE PROXY STATEMENT OF ITEMS OF FORM 10-K
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ANNUAL REPORT DEFINITIVE
ITEM FORM 10-K TO STOCKHOLDERS PROXY STATEMENT
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PART I.
1. Businesses......................................... pp. 23-24; 31-33
PART II.
5. Market for Registrant's Common Equity and Related
Stockholder Matters.............................. p. 36
6. Selected Financial Data............................ p. 14
7. Management's Discussion and Analysis of Financial
Condition and Results of Operation............... pp. 15-17
8. Financial Statements and Supplementary Data........ pp. 18-34
PART III.
10. Directors and Executive Officers of the
Registrant....................................... pp. 3-6; 14
11. Executive Compensation............................. pp. 15-18
12. Security Ownership of Certain Beneficial Owners and
Management....................................... pp. 1; 6-12
13. Certain Relationships and Related Transactions..... pp.3-6; 11-12
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PART I
ITEM 1. BUSINESSES
First Mississippi Corporation (the "Company") was incorporated in
Mississippi in 1957. Principal activities as of June 30, 1994, are in the
following industry segments: Chemicals, Fertilizer, Gold, and Combustion,
Thermal Plasma and Other.
In December 1992, the Company adopted plans for discontinuing its coal
operations which were conducted through Pyramid Mining, Inc. ("PMI") based in
Owensboro, Kentucky. The disposition of PMI was completed in October 1993.
On June 29, 1993, the Company sold its oil and gas operations, which were
begun in the mid-1970's. These operations were conducted primarily through First
Energy Corporation of Houston, Texas.
At year-end 1994, the Company had 1,215 employees, which includes employees
of the parent company, all wholly owned subsidiaries and proportionate shares of
all employees at other subsidiaries and joint ventures, depending on ownership
interest.
In February 1990, the Company, which holds approximately 81% of the stock
of FirstMiss Gold Inc. ("FirstMiss Gold"), announced plans to distribute this
stock to its shareholders. The spin-off was subject to a favorable tax ruling
from the Internal Revenue Service and a favorable operating and financial
outlook. The required ruling was received in December 1990. However, in the
interim, gold prices had fallen and the spin-off was put on hold. In July 1994,
a new ruling was requested to permit a tax-free spin-off. Upon receipt of a
favorable ruling, the spin-off will be contingent on FirstMiss Gold's ability to
succeed as a viable, stand-alone company.
CHEMICALS
Production Facilities and Businesses
Production facilities are located in Pascagoula, Mississippi; Tyrone,
Pennsylvania; Dayton, Ohio; Hayward, California; and East Kilbride, Scotland,
U.K.
First Chemical Corporation ("FCC"), located in Pascagoula, Mississippi,
operates facilities for the continuous production of aniline, nitrobenzene,
nitrotoluenes, toluidine and other nitrated and aromatic chemicals, plus related
storage, rail and barge distribution facilities and quality control
laboratories. The plant also includes a research laboratory, a pilot plant,
semi-works equipment and batch facilities for the production of specialty
chemicals. The Pascagoula facilities' total nitrated aromatic production
capacity is approximately 450 million pounds per year. Actual fiscal 1994
production was 369 million pounds, approximately 82% of average annual capacity.
The Pascagoula complex is one of the largest aniline production facilities
in the United States. FCC is among the largest merchant marketers of aniline in
the United States.
The Company conducts research and development to improve existing products
and to produce new specialty chemicals. Approximately $4.3 million, $3.7 million
and $3.4 million was spent on research and development in fiscal 1994, 1993 and
1992, respectively. Research facilities include laboratories, pilot plant and
semi-works for process research and development with gram to multi-pound sample
production capabilities. The Company's first specialty chemical was produced in
June 1982 at the Pascagoula plant. Since then, 27 new products have been
introduced at FCC and 16 at Quality Chemicals, Inc. ("QCI"), a subsidiary. In
addition, research and development efforts during fiscal 1994 resulted in custom
manufacturing agreements with several new customers. The Company also sponsors
applied research at several leading universities in the United States and
Europe. These closely directed programs have led to the development and
introduction of patented technology in EKC Technology, Inc.'s ("EKC") line of
performance chemicals and in the FIRSTCURE(TM) line of performance polymer
products. The Company plans to spend approximately $12.0 million during fiscal
1995 to add facilities for the production of new specialty chemicals.
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The Company acquired QCI, located in Tyrone, Pennsylvania, in July 1986.
Facilities include multi-step batch processing to custom produce complex fine
chemicals used by chemical and pharmaceutical companies. Following capacity
additions and plant modifications in fiscal 1993, annual production capacity is
now between 2.5 million and 3.5 million pounds depending on the products being
produced and the type of custom processing required. Fiscal 1994 production was
approximately 2.1 million pounds.
In August 1992, FCC acquired a production facility in Dayton, Ohio, from
Monsanto Company. The facility is being operated by QCI and includes equipment
for multi-step batch processing to custom produce complex fine chemicals used by
chemical and pharmaceutical companies. Annual production capacity is between
approximately 1.5 million and 2.0 million pounds, depending on the products
being produced and the type of custom processing required. Fiscal 1994
production was approximately 0.4 million pounds.
FCC acquired EKC, located in Hayward, California, in September 1989. EKC is
a manufacturer of performance chemicals for the semiconductor industry and has
facilities in California and Scotland. EKC's California operations include bulk
storage and mixing vessels and an advanced quality control analytical lab. The
California facility is currently utilizing 95% of production capability on a
single shift basis.
Raw Materials
Primary raw materials for chemical production are benzene, toluene, natural
gas, ethanol and ammonia. The Company uses natural gas and ammonia,
respectively, to produce on site 98% of the hydrogen and 90% of the nitric acid
used in its chemical production. All raw materials are generally available in
adequate quantities from several suppliers, subject to market variation in
supply and price.
Marketing and Sales
Chemicals are marketed domestically and internationally. Approximately 15%
of FCC's sales are exports. Products are sold in drums and in bulk as
intermediates into the construction, transportation, agricultural chemical, dye,
photographic, specialty polymer and human health care markets. Most exported
product is shipped in ocean-going tankers. Domestic shipments are by barge, rail
or tank trucks. QCI's specialty chemical products are sold in drums into
pharmaceutical, electronic chemical, agricultural chemical and specialty polymer
markets. EKC's products are sold to the semiconductor industry with
approximately 39% representing exports. Performance chemicals are sold in gallon
and drum containers.
Competitive Conditions
FCC is one of five major United States producers of aniline with
approximately 17% of domestic capacity and an estimated 6% of world capacity.
FCC is the only United States producer of nitrotoluenes with an estimated 15% of
world capacity. Major competitors are large chemical companies. Competition is
based on price, service, quality, marketing and research and development support
capabilities. Based on market share, QCI is among the top 10 custom chemical
manufacturing companies in the United States. Major competitors are both smaller
and larger companies. Competition is based on service, quality, manufacturing
expertise in chemistries and processes, and research and development
capabilities. EKC is one of the largest producers of organic photoresist
strippers. Although there are approximately 15 companies participating in this
market worldwide, only EKC and three others specialize in organic stripping
solutions. Competition is based on service, quality and product development
capabilities. Performance chemicals are sold on function rather than chemical
specifications.
Seasonality of Business
Generally, chemical sales are not seasonal and working capital requirements
do not vary significantly from period to period.
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FERTILIZER
Production Facilities
The Company produces and sells anhydrous ammonia ("ammonia") and urea. Two
production facilities are located in Donaldsonville, Louisiana, and are owned by
Triad Chemical ("Triad"), an unincorporated 50% joint venture, and by AMPRO
Fertilizer, Inc. ("AMPRO"), a wholly owned subsidiary. The 50/50 joint venturers
of Triad participate equally in management and each markets one-half of
production. Each joint venturer shares equal responsibility for all obligations
of Triad. The AMPRO facility was formerly owned by a partnership, which was 50%
owned by the Company. In February 1989, the Company completed purchase of the
remaining 50% interest. Marketing and administration are conducted by FirstMiss
Fertilizer, Inc., in Jackson, Mississippi.
Triad facilities include a Kellogg process ammonia plant with annual
production design capacity of 420,000 tons and a urea plant with annual
production design capacity of 520,000 tons. Actual fiscal 1994 production was
approximately 478,000 tons of ammonia and approximately 510,000 tons of urea,
compared to 429,000 tons of ammonia and 541,000 tons of urea in fiscal 1993.
Ammonia production was up in fiscal 1994, primarily due to prior year outages
caused by Hurricane Andrew. Urea production was down in fiscal 1994, primarily
because of a maintenance turnaround. Ammonia production exceeded production
design capacity due to above average on-stream operating rate. Triad's
facilities include storage for 30,000 tons of ammonia and 40,000 tons of urea.
The Donaldsonville production complex, in which both Triad and AMPRO are
located, includes facilities for rail shipments, transmission via pipeline, bulk
and tank truck loading and direct loading of barges and ocean-going vessels on
the Mississippi River for transportation to domestic and export markets.
AMPRO facilities include a Kellogg process ammonia plant with annual
production design capacity of 446,000 tons and storage for 30,000 tons. Actual
fiscal 1994 production was approximately 500,000 tons, 33,000 tons more than
fiscal 1993. Fiscal 1994 production was up due to downtime in fiscal 1993 caused
by high natural gas prices and Hurricane Andrew. Fiscal 1994 production exceeded
design capacity primarily due to above average on-stream operating rate.
Raw Materials
Natural gas is the raw material in ammonia production. Ammonia and carbon
dioxide are the raw materials in urea production. A reliable supply of natural
gas at competitive prices and in sufficient quantities is currently available to
the Company. Both Triad and AMPRO purchase natural gas from several pipelines at
market price on short-term contracts. Additionally, the Company periodically
hedges anticipated purchases of natural gas. Sixty-one percent of the ammonia
produced by Triad in fiscal 1994 was used as a raw material in the production of
urea. Carbon dioxide needed for Triad's urea plant production is supplied by
Triad's ammonia plant, with a back-up supply available from AMPRO's ammonia
plant.
Marketing
The Company sells ammonia and urea for agricultural and industrial uses in
domestic and international markets. Domestic agricultural customers are
primarily large national accounts with extensive dealer and retail distribution
operations, cooperatives and other fertilizer producers, who operate as
wholesalers. The Company's domestic industrial customers use ammonia and urea as
raw materials in their production operations, including adhesives,
pharmaceuticals, fibers, resins, plastics and explosives. Approximately 10% of
sales volume was attributed to international markets, unchanged from last year.
Captive production accounted for 64% of sales, up from 62% last year. The
balance of sales was brokerage transactions that involved the purchase and
resale of products produced by others.
Competitive Conditions
Competitive factors include distribution, price, availability, service and
quality. Ammonia and urea are essentially undifferentiated commodities, both
physically and chemically. The Company believes it is among
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the most efficient U.S. producers with ideal geographic location for
competitively priced feedstock and distribution. Competitors include many large
domestic and foreign producers. No material part of the Company's business is
dependent on government contracts, a single customer or a few customers. Ammonia
and urea are commodities subject to wide fluctuations in price. In early 1994,
intermittent shortages of ammonia developed, resulting in a sharp increase in
domestic prices. Factors contributing to this shortage were increased corn
acreage due to prior year flooding in the midwest, excellent early planting
weather, strong industrial demand, several unplanned short-term plant outages,
and less merchant ammonia due to plant upgrades. International supplies were
also a factor due to continued disruptions of production and shipments out of
Russia and Ukraine, including an accident in the Bosphorous Straits that
temporarily blocked passage of ammonia vessels leaving the Black Sea. Because
prices are subject to a variety of factors beyond the Company's control, there
can be no assurance that prices experienced in fiscal 1994 will continue. Total
U.S. ammonia imports increased 15% during fiscal 1994 due to increased U.S.
demand as noted above. Total U.S. ammonia exports increased 13% primarily due to
supply shortages in the world market in early fiscal 1994. Total U.S. urea
imports were up 32% due to a weak world market. Total U.S. urea exports
increased 21% due primarily to a weakening of the U.S. market late in fiscal
1994, caused, in part, by excessive imports during the first half of the fiscal
year.
Seasonality and Cyclicality of Business
Fertilizer sales vary seasonally with geographic location, agronomic
considerations and weather. Domestic demand typically peaks in the spring, drops
off in the summer, increases in the fall and drops again in the winter. Prices
fluctuate with seasonal and longer cyclical variations due to industry supply
and demand balances. Cash and working capital requirements generally correlate
with the seasonality of the business.
GOLD
Properties and Production
The Company began a minerals exploration program in 1980 and acquired the
Getchell gold property (the "Getchell Property") in July 1983. In 1987, the
Getchell Property and other mineral related assets were assigned to a wholly
owned subsidiary, FirstMiss Gold Inc. FirstMiss Gold was incorporated for the
principal purpose of financing, developing and operating a gold mining project
and conducting mineral exploration. Subsequently, a public offering of 3,250,000
shares of FirstMiss Gold stock was completed in May 1988. The Company currently
owns approximately 81% of the outstanding stock of FirstMiss Gold.
The Getchell Property is located in the Potosi Mining District on the
eastern side of the Osgood Mountain Range, 35 miles northeast of the town of
Winnemucca, Nevada. (See map on page 13.) The Getchell Property consists of
approximately 18,900 acres of unpatented lode and mill site mining claims and
14,100 acres of fee land owned by the Company. Exploration activities on the
Getchell Property include drilling, geological mapping, geophysical and
geochemical surveys, aerial photo interpretation and soil and rock testing
programs.
The Getchell mill and ancillary facilities consist of an ore processing
plant using a pressure oxidation system (autoclaves), ancillary facilities for
milling refractory sulfide ores and open pit mining located on the Getchell
Property. The Getchell gold mill was designed to process an average daily
nominal throughput of 3,000 tons at an average recovery rate of 89%. Since
September 1991, liquid oxygen has been purchased to supplement oxygen produced
by an on-site plant. This additional oxygen has helped to increase average daily
throughput above nominal capacity. In fiscal 1994, the average daily mill
throughput was 3,268 tons. Gold recovery was 89%. Production from approximately
65% of the Getchell Property (all of the current production and proven and
probable reserves) is subject to a 2% net smelter royalty owned by a third
party. The Getchell mill and ancillary facilities were financed by proceeds from
a gold loan and the sale of FirstMiss Gold stock. FirstMiss Gold and FMG Inc.
("FMG"), a wholly owned subsidiary, entered into a limited recourse loan
facility, as well as a gold production purchase agreement, to provide a major
portion of the necessary financing and initial working capital requirements. The
gold loan and production purchase agreement expired on June 30, 1994.
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There are currently three open pit mines in operation on the Getchell
Property: the Main Pit, which produces sulfide mill feed, the Turquoise Ridge
Pit, which produces oxide ore for the heap leach operation and the recently
reactivated Hansen Creek Pit, which will also produce oxide ore for heap
leaching. Mining of the North Pit sulfide ore body was completed during the
year.
FirstMiss Gold heap leach operations consist of three active pads, five
ponds and a processing plant. A new leach pad is currently under construction.
In fiscal 1994, oxide ore for heap leaching was mined from the Turquoise Ridge
Pit, North Pit and Main Pit and old dumps and stockpiles. Heap leach recovery
has averaged 75% of the cyanide soluble gold for the last three years.
An underground sulfide operation is now nearing its operational phase. This
is FirstMiss Gold's first underground mine. Access to the underground workings
is via a 950 foot decline. Underground stope testing has begun and small
tonnages of development ore have been mined and milled. The mineralogy of the
underground ore is similar to that previously mined in the Main Pit, but carries
a higher gold grade averaging in excess of 0.300 ounces per ton. The underground
reserves are located immediately west and below the main pit, in tabular zones
sub-parallel to the Getchell Fault.
The underground operation will initially utilize a conventional
drift-and-fill method but will switch to open stoping when ground conditions
permit. Both methods are widely used for the mining of gold and other minerals.
Underground mining is inherently more difficult, more costly and more hazardous
than surface mining. Mining costs are higher than those of a surface pit
operation because smaller, less efficient mobile equipment is required by the
limited size of underground openings. Unanticipated changes in ore thickness,
orientation and stability can also add difficulty, affect production rates and
contribute to higher costs.
Mining in the Main Pit will be complete by mid-fiscal 1995 as underground
production commences. Portions of the remaining Main Pit ore will be stockpiled
and subsequently used, along with lower grade stockpiles, to supplement higher
grade underground ore for mill feedstock.
All mining is performed by independent contractors who also provide and
maintain substantially all of the mining equipment. Both open pit and
underground mining operations are performed under the direction of FirstMiss
Gold employees, who are responsible for mine design, planning, scheduling,
surveying, sampling and ore control.
Fiscal 1994 production was as follows:
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SULFIDE ORE
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TOTAL TOTAL
NORTH PIT MAIN PIT UNDERGROUND SULFIDE OXIDE ORE
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Tons Processed............................. 283,946 896,368 12,553 1,192,867 1,285,614
Grade...................................... 0.321 0.164 0.319 0.203 0.030
Recovery................................... 89.1% 88.9% 88.9% 88.9% 74%
Ounces produced............................ 81,212 130,591 3,560 215,363 28,463
Strip Ratio 1994........................... 12.3:1 17.3:1 N/A N/A 4.5:1*
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* Turquoise Ridge Pit
Ancillary Facilities and Raw Materials
Oxygen for the mill is produced by an on-site plant owned and operated by
an independent contractor who also provides supplemental liquid oxygen.
Electricity is provided by an independent utility company under an electric
services agreement. The mill uses reclaimed water pumped from the tailings pond
and from the dewatering of the pits and is supplemented by two existing wells on
the Getchell Property. Other materials necessary in the milling process are
available for purchase from more than one supplier and are hauled by truck to
the Getchell Property. These materials may be subject to shortages from time to
time resulting in higher costs.
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Sales and Marketing
Gold is traded on numerous commodity exchanges around the world with daily
adjustments to a market clearing price. Prices typically fluctuate over a wide
range in response to numerous factors, all of which are beyond FirstMiss Gold's
control, including expectations of inflation, interest rates, political and
monetary policies of various national governments, the needs of industrial and
jewelry manufacturers, trends in worldwide mine output and currency exchange
rates.
The aggregate effect of the above factors on gold prices is impossible to
predict. FirstMiss Gold's revenues, cash flow and operating results are all
materially impacted by gold prices. A prolonged downturn in gold prices could
also adversely affect the carrying value of various assets and FirstMiss Gold's
reserve position.
FirstMiss Gold has arrangements with two refineries for refining its dore.
FirstMiss Gold's dore can be sold to a large number of refiners or trading
companies throughout the world on a competitive basis. Gold is normally sold to
the refineries on the spot market.
FirstMiss Gold periodically employs hedging techniques to reduce the impact
of gold price fluctuations on earnings and cash flow. In August 1993, the
Company began selling gold using spot deferred forward contracts which allows
FirstMiss Gold to establish a forward price and delivery date, but also roll any
contracted delivery ahead to a new date and higher price while selling at the
spot price if the spot price is higher than the contract price on the scheduled
date of delivery. The new forward price equals the original contract price plus
the "contango," which is the difference between market interest rates and gold
loan borrowing rates. The contango compounds each time a contract is rolled
forward. The current hedging program is designed to cover 60% to 70% of the
ensuing 18 months' scheduled gold production. At June 30, 1994, 225,000 ounces
were hedged for fiscal 1995 delivery at an average price of $391 per ounce, and
92,000 ounces were hedged for fiscal 1996 delivery at an average price of $392
per ounce. See Note 11 to the Consolidated Financial Statements.
Working Capital Requirements and Seasonality of Business
Changes in ore inventory will typically have the most effect on working
capital requirements. Ore inventory tonnages fluctuate in response to various
factors including milling rates, ore availability, weather conditions and mining
rates.
Winter weather extremes may affect gold production, particularly heap leach
operations.
COMBUSTION, THERMAL PLASMA AND OTHER
Combustion, Thermal Plasma and Other, identified in prior years as
Other -- Technology, principally includes the development and marketing of
proprietary equipment and systems for environmental applications and
manufacturing processes. These include design and manufacture of burner, flare
and incinerator equipment and technology to reduce industrial emissions; thermal
plasma equipment and processes; aluminum recovery systems; and production of
steel ingots and billets. Raw materials and components for these operations are
available from numerous vendors. The businesses are not considered materially
seasonal, with working capital requirements remaining generally level throughout
the year.
BURNER, FLARE AND INCINERATOR EQUIPMENT AND TECHNOLOGY
Business, Properties and Products. Callidus Technologies Inc. ("CTI"), a
wholly owned subsidiary headquartered in Tulsa, Oklahoma, was organized in
fiscal 1990. CTI's principal products and services are custom designed and
fabricated gas/liquid incinerators, flares, solid waste systems, vapor recovery
units, burners and predictive emissions monitoring and process optimization
software. CTI also provides engineering and consulting services for
environmental and combustion applications. CTI leases office space in Tulsa and
owns a manufacturing and test facility in Beggs, Oklahoma, and has offices in
Belgium, England, Italy and France.
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Marketing. CTI markets worldwide to refining, petrochemical and other
industries requiring disposal of gas, liquid and solid wastes. Marketing is
primarily through a combination of manufacturers' representatives and company
personnel. The market is well established but growing through advancements of
existing technology, driven primarily by increasingly strict environmental
regulations both in the United States and abroad. Competition is based on a wide
variety of factors, with the most prominent being technological innovation,
price and delivery schedule. CTI competes with the John Zink Company, which has
a significant market share of the burner, flare and vapor recovery markets.
Numerous competitors exist in the solid waste systems market. CTI offers
predictive emissions monitoring and processing optimization software and has an
exclusive licensing agreement to market this software for applications to
furnaces in the refining and petrochemical industries. CTI is affected by a
variety of factors beyond its control, including governmental control of
environmental standards and compliance deadlines, competitor pricing strategies
and changing technology, any of which could impact CTI's operating results.
THERMAL PLASMA
Business and Properties. Plasma Energy Corporation ("PEC"), a wholly owned
subsidiary formed in January 1983, develops, manufactures, sells and services
thermal plasma heating systems and processes for use in steel manufacturing,
aluminum recovery, vacuum melting of titanium and various environmental uses,
including ash treatment and minimization. PEC owns an assembly and testing
facility and leases a separate administrative office, both located in Raleigh,
North Carolina.
Technology and Products. Thermal plasma heating systems convert electrical
energy into high temperature thermal energy using an ionized gas or "plasma."
These high temperatures are produced instantly with no combustion or combustion
by-products. A thermal plasma heating system typically consists of a torch,
power supply, cooling system and control panel. The torch usually operates
within a furnace or heating vessel, in which it can be inserted or retracted
according to operational requirements. PEC holds more than 20 patents in 10
countries, including several in steel, vacuum melting and waste applications.
Sales and Marketing. PEC has sold large-scale systems for tundish heating
in steel making, recovery of aluminum from dross, vacuum melting of titanium and
treatment of ash from incinerators. Marketing is principally performed directly
by PEC or through representatives overseas. Plasma heating systems have been
sold in both the domestic and international markets. PEC has two principal
domestic competitors and four foreign competitors involved in various
applications of thermal plasma heating systems. Price competition is intense and
competitors' pricing strategies may impact PEC's operating results.
ALUMINUM RECOVERY
Business and Properties. Plasma Processing Corporation ("PPC"), with its
principal offices near Nashville, Tennessee, was formed during fiscal 1990 to
commercialize patented technology developed by PEC and Alcan International
Limited ("Alcan") of Canada. PPC and Alcan entered into a cross license
agreement for recovery of aluminum from dross using thermal plasma energy. The
most recently issued applicable patents expire in 2007. PPC uses the technology
to recover aluminum from dross, a by-product of aluminum processing and
recycling. The conventional salt-flux process uses salt additives for recovering
aluminum from dross, creating a saltcake by-product which requires disposal in
landfills. PPC's aluminum dross recovery process does not use salt additives and
creates no known hazardous by-products, a major advantage over existing
processes. Recovered aluminum is returned to the customer. The process also
produces a co-product that potentially can be utilized in the metallurgical,
refractory, abrasives and ceramics industries. Markets for the co-product are in
the early stages of development. Annual North American production of aluminum
dross is estimated at approximately one million tons. Dross typically contains
30% to 80% aluminum by weight.
In June 1991, PPC completed construction of its dross processing plant
located in Millwood, West Virginia. The plant is designed to process 73 million
pounds of aluminum dross per year. Fiscal 1994 throughput was 54 million pounds.
Production was limited primarily due to depressed aluminum industry conditions.
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Marketing. It is anticipated that the current baseload contract will
utilize 30% of the Millwood plant's processing capacity. Although PPC will
compete against numerous other dross processors in the United States, none of
these competitors currently use plasma technology. Markets are very fragmented
and freight-sensitive.
Except in aluminum plants in which Alcan has an equity interest, PPC has
the exclusive right to use the patented technology in the United States and
Canada. Alcan has the exclusive right to use the same technology in Europe.
Until mid-year 2000, PPC has the exclusive right to license the patented
technology to third parties worldwide, except in Europe. Beginning in mid-year
2000, both parties have the right to license the technology anywhere in the
world. Pursuant to the arrangement with Alcan, revenues from licensing or
sublicensing to third parties will be shared.
STEEL
The Company also operates a steel melting and production facility through
its wholly owned subsidiary FirstMiss Steel, Inc. ("FMS") in Hollsopple,
Pennsylvania. The approximately 400,000 square foot facility is located about
100 miles east of Pittsburgh. In late fiscal 1990, a horizontal billet caster
and a thermal plasma heating system were installed. Start-up of the caster
occurred during fiscal 1991. Annual capacity of the operation includes 125,000
tons of carbon, alloy and specialty grade bottom-poured ingots and 50,000 tons
of high-grade steel billets through the caster. Horizontally cast billets are
produced for sale to the specialty remelt and reroll markets. Production during
fiscal 1994 totaled 102,000 tons consisting primarily of cast ingots and
value-added products. The value-added product line was introduced in fiscal 1992
and includes specialty stainless and tool steel ingots or billets which are
converted into forged billets, bars and plate by outside processors. A new unit,
FirstMiss Alloys, was formed during fiscal 1993 to produce small quantities of
cobalt, nickel, copper and iron-based alloys in bars and wire produced from two
small horizontal continuous casters, small bottom-poured forging ingots, and
remelt sand ingots. Raw materials consist of steel scrap and various alloys, of
which there is an adequate supply in the North American market.
Carbon and alloy steel ingots and billets are sold directly to the forging
industry, integrated steel producers and mini-mill and tool steel producers. FMS
competes primarily with three other steel companies in this market and, within
the group, ranks second in total steel production capacity. Specialty steel
products are sold primarily to steel service centers and forgers. FirstMiss
Alloy products are sold as feedstock directly to forgers, extruders and
investment casters. There are numerous competitors, both domestic and foreign,
that compete with FMS in the specialty steel and ferrous and non-ferrous metals
markets. Competitive factors include price, quality and service. Carbon ingots
and billets are commodities and are extremely price competitive. FMS emphasizes
those grades that are technically difficult to produce on vertical casters.
See pages 31-33, Note 14 of the 1994 Annual Report for additional Industry
Segment Information.
OTHER OPERATIONS
The Company owns 50% of Power Sources, Inc. ("PSI") of Charlotte, North
Carolina, which burns wood waste in industrial boilers to create steam energy.
The steam is sold under long-term contracts to industrial users. PSI operates
four plants in North Carolina and South Carolina. A fifth plant is currently
under construction in Tennessee.
------------------------
ENVIRONMENTAL
Company operations are subject to a wide variety of environmental laws and
regulations governing emissions to the air, discharges to water sources, and the
handling, storage, treatment and disposal of waste materials, as well as other
laws and regulations concerning health and safety conditions. The Company holds
a number of environmental permits and licenses regulating air emissions, water
discharges and hazardous waste disposal and, to the best of its knowledge, is in
material compliance with such requirements at all locations. The Company makes
capital and other expenditures in a continuing effort to comply with
environmental laws
10
<PAGE> 11
and regulations, or changing interpretations of existing laws and regulations.
Environmental capital expenditures for fiscal 1994 were $1.3 million. Projected
capital expenditures for fiscal 1995 are $4.9 million. These projected capital
expenditures are primarily related to the chemicals and gold segments. While
these expenditures are necessary to comply with environmental laws and
regulations, they may also reduce operating expenses and improve efficiencies.
The Company monitors and participates in the environmental regulatory
development process which assists it in evaluating new laws and regulations. The
Company does not anticipate a material increase in expenses related to current
environmental regulations, but because federal and state environmental laws and
regulations are constantly changing, the Company is unable to predict their
future impact. Federal legislation has recently been proposed by both the U.S.
Senate and House of Representatives that would place extensive new environmental
and permitting restrictions on the mining industry. Other federal legislation
has been proposed which, if enacted, would extend federal regulation of surface
and groundwater quality and laws related to endangered species. Substantial
stiffening of applicable mine waste management requirements or the imposition of
substantially different environmental control regulations could have a material
adverse impact on the Company. The Company's domestic competitors are subject to
the same environmental laws and regulations, but foreign competitors are not,
which may give foreign competitors an advantage.
The Company has received notices from the EPA or a similar state agency
that it is a potentially responsible party ("PRP") under Superfund or a
comparable state statute and, thus, may be liable for a share of the costs
associated with cleaning up various hazardous waste sites. The EPA or state
agency has designated the Company as a PRP at seven sites. The Company currently
estimates its potential liability in these matters to be $0.5 million. This
estimate is affected by several uncertainties such as, but not limited to, the
method and extent of remediation, the percentage of material attributable to the
Company at the sites relative to that attributable to other parties, and the
financial capabilities of the other PRPs at most sites. This estimate is not
offset by any amounts projected to be received from insurance companies or other
third parties.
The current owner of a fertilizer manufacturing facility, previously
operated under lease by a subsidiary of the Company, is involved in developing a
closure plan and assessment at that site. Another previous owner has indicated
the Company may have some financial responsibility for the closure activities.
Any ultimate responsibilities and obligations of the parties are unknown due to
the early nature of the investigation and assessment.
In accordance with the State of Nevada Division of Environmental Protection
("NDEP"), FirstMiss Gold has submitted a plan to the NDEP for the eventual
closure and reclamation of the Getchell Property and is awaiting approval and
permitting. As of June 30, 1994, FirstMiss Gold had accrued a total of $3.0
million for reclamation and closure costs. FirstMiss Gold has begun reclamation
of surface mining disturbances and anticipates an ongoing program of additional
reclamation over the next several years. Activities have included regrading,
revegetation and soil stabilization.
The Company continues as guarantor on $29.2 million of reclamation bonds
related to the disposed coal operations until bonding is obtained by the
purchaser, which is not to be later than June 1996. The total reclamation
liability covered by the bonding is currently estimated at $5.5 million.
ITEM 2. PROPERTIES
A. General
A description of properties and the segments to which they relate is also
included in the Business discussion located on pages 3 through 12 of this Form
10-K. The Company believes that its properties are suitable and adequate for the
purposes for which they are used.
11
<PAGE> 12
B. Gold Ore Reserves
The following table sets forth the proven and probable mineable ore
reserves on the Getchell Property.
PROVEN AND PROBABLE MINEABLE RESERVES
CONFIRMED BY MINE DEVELOPMENT ASSOCIATES
AS OF JULY 1, 1994
<TABLE>
<CAPTION>
CONTAINED
ORE TONS GRADE GOLD OUNCES
-------- ------------------ -----------
(WEIGHTED AVERAGE)
<S> <C> <C> <C>
Sulfide..................................... 6,725,400 0.225 1,511,800
Oxide....................................... 2,860,800 0.028 79,900
--------- ----- ---------
Total....................................... 9,586,200 0.166 1,591,700
</TABLE>
Sulfide reserves assume a 0.100 ounce per ton cutoff for open pit reserves
and a 0.200 ounce per ton cutoff for underground reserves. Oxide reserves are
based on a 0.010 cyanide soluble cutoff grade. Included in sulfide reserves are
low-grade stockpiles containing 2,080,500 tons at an average grade of 0.115
ounces per ton, or 238,400 contained ounces. Also included in sulfide reserves
are 3,733,700 tons of underground ore at an average grade of 0.302 ounces per
ton, or 1,127,700 contained ounces. The proven and probable mineable ore reserve
ounces are "contained" ounces. Actual ounces expected to be recovered during
milling and heap leach processing will be less due to recovery process
inefficiencies.
Proven and probable mineable ore reserves reflect estimates of quantities
and grades of ore which can be economically recovered based on assumptions of a
$400 per ounce future gold price and projected future mining and milling costs.
Although FirstMiss Gold has carefully prepared and verified these reserves, such
figures are estimates. Prolonged decreases in gold prices may render uneconomic
the mining of various ore reserves containing low grades of mineralization.
During the year, proven and probable mineable sulfide ore reserves
increased 22% to 1,511,800 ounces at year-end and the average sulfide grade
increased 9% to 0.225 ounces per ton in 6,725,400 ore tons. Exploration added
558,700 new contained ounces of reserves during the year, while ore containing
280,000 ounces was processed through the mill and heap leach. Oxide proven and
probable mineable ore reserves increased slightly to 79,900 ounces from 76,600
ounces. Oxide reserves consist of 2,860,800 tons at an average grade of 0.028
ounces per ton.
Gold mineralization on the Getchell Property occurs in a series of discrete
zones associated with the north-trending Getchell Fault and with the
northeast-trending Turquoise Ridge Fault. Both systems cut through a thick
sequence of interbedded early paleozoic sedimentary and volcanic units. The
northwest-dipping Turquoise Ridge Fault and the eastward-dipping Getchell Fault
intersect in the Main Pit.
Gold sulfide mineral deposits are found at depth along the Getchell Fault
and in sedimentary units in contact with the Getchell Fault. Recent drilling has
identified similar gold sulfide mineral deposits in various sedimentary and
volcanic units in contact with the Turquoise Ridge Fault northeast of its
intersection with the Getchell Fault.
Oxidized gold mineral deposits are also associated with the Getchell and
Turquoise Ridge fault zones, typically occurring as discrete zones at depths
shallower than the sulfide mineralization.
A mineral deposit is a naturally occurring concentration of minerals that
may or may not be economically mineable. A mineable reserve is that part of a
mineral deposit that has been sufficiently drilled to define the tonnage and
grade, which may be extracted at a profit. Mineral deposits do not qualify as
commercially mineable ore bodies (proven and probable mineable reserves) under
Securities and Exchange Commission rules until a final and comprehensive
economic, technical and legal feasibility study based upon adequate test results
is concluded.
12
<PAGE> 13
(MAP)
GETCHELL MINE AREA
HUMBOLDT COUNTY, NEVADA
(See Appendix for narrative description of map to be included on this page.)
13
<PAGE> 14
ITEM 3. LEGAL PROCEEDINGS
On July 15, 1986, the first of seventeen lawsuits was filed in the
Twenty-First Judicial District Court, Livingston Parish, Louisiana, against
approximately ninety defendants, including Triad Chemical. The plaintiffs'
multi-billion dollar claims are based on alleged personal injuries and property
damage as a result of exposure to hazardous waste allegedly contributed by the
defendants to the Combustion Inc. site, which was operated as a waste and used
oil reclamation and reprocessing facility in Livingston Parish. The pending
litigation has been consolidated into a class action and removed to federal
district court for the Middle District of Louisiana. On April 20, 1993, one of
the defendants filed a third party claim against AMPRO Fertilizer, Inc. and 210
other entities seeking to have the new defendants pay a share of the claims made
by the plaintiffs and clean-up costs for the site. Triad and AMPRO are each
vigorously defending their positions and the Company considers their defenses
meritorious. Despite assertions by certain third parties that Triad and AMPRO
sent waste to the Combustion site, neither company's records reflect that any
waste was sent to the site.
Triad has received and responded to letters issued by the EPA under Section
104 of the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") relative to the possibility that Triad waste was disposed at the
Combustion site. Under CERCLA, generators of waste may be held responsible for
investigation and site cleanup costs. Triad is involved in discussions regarding
a possible de minimis settlement from cleanup liability.
Based upon facts known to date, the Company is of the opinion that the
ultimate disposition of the litigation and any site cleanup obligations should
not have a material effect upon the financial position or results of operation
of the Company.
Additionally, the Company has pending several claims incurred in the normal
course of business which, in the opinion of management and legal counsel, can be
disposed of without material effect on the Company's financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEMS 5-8. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS, SELECTED FINANCIAL DATA, MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION, AND
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by Part II, Items 5-8, has been included in the
Registrant's Annual Report to Stockholders for the year ended June 30, 1994,
which has been furnished to the Commission. See the Cross Reference Sheet on
Page 2 hereof for the locations of such information.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
14
<PAGE> 15
PART III
ITEMS 10-13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, EXECUTIVE
COMPENSATION, SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT, AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by Part III, Items 10-13, has been included in
the Registrant's definitive Proxy Statement, which will be mailed to the
Commission by October 3, 1994, pursuant to Regulation 14A, and is incorporated
herein by reference. See the Cross Reference Sheet on Page 2 hereof for the
location of such information.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
PAGES IN 1994 ANNUAL REPORT
TO STOCKHOLDERS
INCORPORATED
HEREIN BY REFERENCE
---------------------------
<S> <C>
Consolidated Balance Sheets as of June 30, 1994 and 1993..... 18
Consolidated Statements of Operations, years ended June 30,
1994, 1993 and 1992........................................ 19
Consolidated Statements of Stockholders' Equity, years ended
June 30, 1994, 1993 and 1992............................... 20
Consolidated Statements of Cash Flows, years ended June 30,
1994, 1993 and 1992........................................ 21
Notes to Consolidated Financial Statements................... 22-33
Report of Independent Auditors............................... 34
Quarterly Financial Data (Unaudited)......................... 33
</TABLE>
(a)(2) Financial Statement Schedules
<TABLE>
<CAPTION>
PAGE OF THIS
FORM 10-K
---------------------------
<S> <C>
Independent Auditors' Report on Schedules.................... 21
Schedule V -- Property, Plant and Equipment for Years Ended
June 30, 1994, 1993 and 1992............................... 22
Schedule VI -- Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment for Years
Ended June 30, 1994, 1993 and 1992......................... 23
Schedule VIII -- Valuation and Qualifying Accounts for Years
Ended June 30, 1994, 1993 and 1992......................... 24
Schedule IX -- Consolidated Short-Term Borrowings for Years
Ended June 30, 1994, 1993 and 1992......................... 25
Schedule X -- Supplementary Income Statement Information for
Years Ended June 30, 1994, 1993 and 1992................... 26
</TABLE>
15
<PAGE> 16
Schedules other than those listed above are omitted because they are not
required, are not applicable or the information required has been included
elsewhere herein.
(a)(3) Exhibits
<TABLE>
<S> <C>
3(a) -- Restated and Amended Charter of Incorporation of the Company was
filed as Exhibit 3(a) to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993, and is incorporated by
reference.
3(b) -- Bylaws of the Company, as amended November 12, 1993.
4(a) -- Articles IV, VIII, IX and X of the Company's Charter of Incorporation
and the Statements of Resolution establishing the Company's 1982-A,
1982-B, 1982-C, 1982-D, 1983-A, 1984-A, 1984-B, 1985-A, 1986-A,
1987-A, 1988-A, 1988-1, 1989-A, 1989-1, 1989-2, 1990-1, 1990-2,
1991-1, 1991-2 and 1992-1 Series Convertible Preferred Stock and the
Company's Series X Junior Participating Preferred Stock are included
in Exhibit 3(a) to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1993, and are incorporated by reference.
4(b) -- Articles II, V and VI of the Company's Bylaws are included in Exhibit
3(b) attached hereto.
4(c) -- First Mississippi Corporation 401(K) Thrift Plan, as amended and
restated on February 13, 1986, was filed as Exhibit 4.3 to
post-effective amendment No. 2 to the Company's Registration
Statement on Form S-8 (Registration No. 2-93585) and is incorporated
by reference.
4(d) -- First Amendment to the First Mississippi Corporation 401(K) Thrift
Plan, as previously amended and restated, dated May 22, 1987, was
filed on May 29, 1987, as Exhibit 4.4 to post-effective Amendment No.
3 to the Company's Registration Statement on Form S-8 (Registration
No. 2-93585) and is incorporated by reference.
4(e) -- Second Amendment to the First Mississippi Corporation 401(K) Thrift
Plan, as previously amended and restated, dated September 22, 1988,
was filed as Exhibit 4(e) to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1988, and is incorporated by
reference.
4(f) -- Third Amendment to the First Mississippi Corporation 401(K) Thrift
Plan, as previously amended and restated, dated November 14, 1991,
was filed as Exhibit 4(b) to Item 7 to the Company's Form 8-K dated
November 14, 1991, and is incorporated by reference.
4(g) -- Fourth Amendment to the First Mississippi Corporation 401(K) Thrift
Plan, as previously amended and restated, dated May 12, 1992, was
filed as Exhibit 4(g) to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993, and is incorporated by
reference.
4(h) -- The First Mississippi Corporation 401(K) Savings Plan, as amended and
restated, effective July 1, 1989, was filed as Exhibit 4 to the
Company's Form 8-K dated June 13, 1994, and is incorporated by
reference.
4(i) -- Amended and Restated Rights Agreement between the Company and
Ameritrust Company National Association, whose name has now been
changed to Society National Bank, was filed as an Exhibit to Item 7
to the Company's Form 8-K dated February 28, 1989, and is
incorporated by reference.
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
4(j) -- Amended and Restated Gold Loan Agreement, dated as of January 26,
1988, between MASE WESTPAC, INC. and FMG Inc., was filed as Exhibit
10.15 to the Amendment No. 2 to the Registration Statement on Form
S-1 (Registration No. 33-18249) of FirstMiss Gold Inc. and is
incorporated by reference.
4(k) -- Loan Agreement between the Company and FirstMiss Gold Inc., dated
March 29, 1990, was filed as Exhibit 4(p) to the Annual Report on
Form 10-K for FirstMiss Gold Inc. for the fiscal year ended June 30,
1991, and is incorporated by reference.
4(l) -- Amendment to Loan Agreement between the Company and FirstMiss Gold
Inc., dated August 27, 1991, was filed as Exhibit 4(q) to the Annual
Report on Form 10-K for FirstMiss Gold Inc. for the fiscal year ended
June 30, 1991, and is incorporated by reference.
4(m) -- Credit Agreement, dated as of December 30, 1987, by and among FMG
Inc., FirstMiss Gold Inc., and Westpac Banking Corporation, was filed
as Exhibit 10.17 to Amendment No. 1 to the Registration Statement on
Form S-1 (Registration No. 33-18249) of FirstMiss Gold Inc. and is
incorporated by reference.
4(n) -- First Amendment to the Credit Agreement, dated as of January 26,
1988, by and among FMG Inc., FirstMiss Gold Inc., and Westpac Banking
Corporation, was filed as Exhibit 10.23 to Amendment No. 2 to the
Registration Statement on Form S-1 (Registration No. 33-18249) of
FirstMiss Gold Inc. and is incorporated by reference.
4(o) -- Second Amendment to the Credit Agreement, dated as of April 14, 1988,
by and among FMG Inc., FirstMiss Gold Inc., and Westpac Banking
Corporation, was filed as Exhibit 10.24 to Amendment No. 4 to the
Registration Statement on Form S-1 (Registration No. 33-18249) of
FirstMiss Gold Inc. and is incorporated by reference.
4(p) -- Third Amendment to the Credit Agreement, dated as of March 30, 1989,
by and among FMG, Inc., First Miss Gold Inc., and Westpac Banking
Corporation, was filed as Exhibit 4(h) to the Annual Report on Form
10-K of FirstMiss Gold Inc. for fiscal year ended June 30, 1989, and
is incorporated by reference.
4(q) -- Fourth Amendment to the Credit Agreement, dated as of July 2, 1990,
by and among FMG, Inc., FirstMiss Gold Inc., and Westpac Banking
Corporation, was filed as Exhibit 4(m) to the Annual Report on Form
10-K of FirstMiss Gold Inc. for fiscal year ended June 30, 1991, and
is incorporated by reference.
4(r) -- Senior Note Purchase Agreement (composite conformed copy with
substantially all exhibits conformed as executed), dated as of June
1, 1992, between the Company and Connecticut General Life Insurance
Company, United Companies Life Insurance Company, Principal Mutual
Life Insurance Company, John Hancock Mutual Life Insurance Company,
The Ohio National Life Insurance Company, The Union Central Life
Insurance Company, The Manhattan Life Insurance Company and Modern
Woodmen of America, was filed as Exhibit 4(y) to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1992, and is
incorporated by reference.
4(s) -- Credit Agreement, dated as of February 9, 1993, between the Company,
the Banks party thereto and The Chase Manhattan Bank (National
Association), as Agent, was filed as Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1992, and is incorporated herein by reference.
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
4(t) -- Amendment No. 1, dated as of August 1, 1993, to the Credit Agreement
between the Company, the Banks party thereto and The Chase Manhattan
Bank (National Association), as Agent, was filed as Exhibit 4(s) to
the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1993, and is incorporated by reference.
4(u) -- Extension of commitment termination date, dated as of December 30,
1993, in accordance with the provisions of Section 2.04 of the Credit
Agreement dated as of February 9, 1993, between the Company, the
Banks party thereto and The Chase Manhattan Bank (National
Association), as Agent.
10(a)* -- Termination Agreement, dated July 1, 1989, between the Company and
its Chief Executive Officer, was filed as Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1990, and is incorporated by reference.
10(b)* -- Form of Termination Agreement, dated July 1, 1989, between the
Company and each of the following executive officers of the Company:
J. Steve Chustz, C. R. Gibson, Charles M. McAuley, R. Michael
Summerford and O. E. Wall (Company's Termination Agreement with each
such officer contains terms identical to those contained in the form
of Agreement filed), was filed as Exhibit 10(c) to the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1990,
and is incorporated by reference.
10(c)* -- First Mississippi Corporation 1980 Long-Term Incentive Plan, as
amended, was filed as Exhibit 10(a) to Item 7 of the Company's Form
8-K dated November 14, 1991, and is incorporated by reference.
10(d)* -- First Mississippi Corporation 1988 Long-Term Incentive Plan, as
amended, was filed as Exhibit 10(b) to Item 7 of the Company's Form
8-K dated November 14, 1991, and is incorporated by reference.
10(e)* -- The descriptions of certain arrangements for directors and executive
officers are described under the captions "Director Compensation" and
"Summary Compensation Table" of the Company's Proxy Statement for its
November 11, 1994 Annual Meeting of Stockholders, and are
incorporated by reference.
10(f)* -- 1991 Restatement of the First Mississippi Corporation Directors'
Retirement Plan, as revised and restated on May 14, 1991, was filed
as Exhibit 10(f) to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1991, and is incorporated by reference.
10(g)* -- First Mississippi Corporation 1989 Deferred Compensation Plan for
Outside Directors, as amended on May 14, 1991, was filed as Exhibit
10(g) to the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1991, and is incorporated by reference.
10(h) -- Amended and Restated Gold Loan Agreement, dated as of January 26,
1988, is listed as Exhibit 4(j).
10(i) -- Gold Production Purchase Agreement between MASE WESTPAC, INC. and FMG
Inc. was filed as Exhibit 10.16 to Amendment No. 1 to the
Registration Statement on Form S-1 (Registration No. 33-18249) of
FirstMiss Gold Inc., and is incorporated by reference.
10(j) -- Amendment No. 1 to the Gold Production Purchase Agreement, dated as
of January 26, 1988, between MASE WESTPAC, INC. and FMG Inc. was
filed as Exhibit 10.22 to Amendment No. 2 to the Registration
Statement on Form S-1 (Registration No. 33-18249) of FirstMiss Gold
Inc., and is incorporated by reference.
</TABLE>
18
<PAGE> 19
<TABLE>
<S> <C>
10(k) -- Form of Indemnification Agreement between the Company and the
following Directors or Officers of the Company (Company's
Indemnification Agreements with each such individual contains
identical provisions to those contained in the form): Richard P.
Anderson, Paul A. Becker, James W. Crook, Charles R. Gibson, Robert
P. Guyton, Charles P. Moreton, Paul W. Murrill, William A. Percy, II,
Maurice T. Reed, Jr., Frank G. Smith, Leland R. Speed, R. Gerald
Turner, J. Kelley Williams, R. Michael Summerford, O. E. Wall,
Charles M. McAuley and J. Steve Chustz was filed as Exhibit 10(t) to
the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1988, and is incorporated by reference.
10(l)* -- FirstMiss Gold Inc. Amended and Restated Long-Term Incentive Plan was
filed as Exhibit 10(i) to the Annual Report on Form 10-K for
FirstMiss Gold Inc. for the fiscal year ended June 30, 1993, and is
incorporated by reference.
10(m) -- Purchase and Sale Agreement between the Company, First Energy
Corporation, FRM, Inc., FEC Marketing, Inc. and JN Exploration &
Production Limited Partnership, dated June 16, 1993, relating to the
sale of the Company's oil and gas reserves and related assets, was
filed as Exhibit 10(n) to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993, and is incorporated by
reference.
13 -- Annual Report to Stockholders for the year ended June 30, 1994. (Such
Annual Report is not, except for those portions thereof which are
expressly incorporated by reference, to be deemed "filed" as part of
this Form 10-K).
21 -- List of the subsidiaries of the Company.
23 -- Auditor's Consent regarding incorporation of reports into
Registration Statement Nos. 2-93584, 2-93585, 2-74337, 2-54048,
33-512, 33-9106, 33-17483, 33-24413, 33-24414, 33-26895, 33-31343,
33-33135, 33-37084, 33-39137, 33-43586, 33-43600, 33-45344 and
33-56026 is contained on Page 27 of this report.
27 -- Financial Data Schedule.
</TABLE>
- - - ---------------
* Indicates management contract or compensatory plan or arrangement.
Certain debt instruments have not been filed. The Company agrees to furnish
a copy of such agreement(s) to the Commission upon request.
(Note: The exhibits filed with the Commission are not included in this copy
of the Form 10-K. A copy of the exhibits will be provided upon
payment of a reasonable fee, to be specified at the time a request
is made).
(b) A Form 8-K dated June 13, 1994, was filed by the Company relating to the
First Mississippi Corporation 401(K) Savings Plan, as amended and restated,
effective July 1, 1989. (Please see Item 4(h) in (a)(3) above.)
(c) Please see (a)(3) above.
(d) Please see (a)(2) above.
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FIRST MISSISSIPPI CORPORATION
Date: September 23, 1994 By: /s/ J. KELLEY WILLIAMS
J. Kelley Williams, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - - --------------------------------------------- ---------------------------- -------------------
<S> <C> <C>
/s/ J. KELLEY WILLIAMS Chairman of the Board of September 23, 1994
J. Kelley Williams Directors, President,
Chief Executive Officer
(Principal Executive
Officer) and Director
/s/ R. MICHAEL SUMMERFORD Vice President and Chief September 23, 1994
R. Michael Summerford Financial Officer
(Principal Financial
Officer)
/s/ TROY B. BROWNING Controller (Principal September 23, 1994
Troy B. Browning Accounting Officer)
/s/ RICHARD P. ANDERSON Director September 23, 1994
Richard P. Anderson
/s/ PAUL A. BECKER Director September 23, 1994
Paul A. Becker
/s/ JAMES W. CROOK Director September 23, 1994
James W. Crook
/s/ ROBERT P. GUYTON Director September 23, 1994
Robert P. Guyton
/s/ CHARLES P. MORETON Director September 23, 1994
Charles P. Moreton
/s/ PAUL W. MURRILL Director September 23, 1994
Paul W. Murrill
/s/ WILLIAM A. PERCY, II Director September 23, 1994
William A. Percy, II
/s/ MAURICE T. REED, JR. Director September 23, 1994
Maurice T. Reed, Jr.
/s/ LELAND R. SPEED Director September 23, 1994
Leland R. Speed
/s/ R. GERALD TURNER Director September 23, 1994
R. Gerald Turner
</TABLE>
20
<PAGE> 21
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
The Board of Directors and Stockholders
First Mississippi Corporation:
Under date of September 9, 1994, we reported on the consolidated balance
sheets of First Mississippi Corporation and subsidiaries as of June 30, 1994 and
1993, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year period ended June
30, 1994, as contained in the 1994 Annual Report to Stockholders. These
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1994. In connection with our audits of
the aforementioned consolidated financial statements, we have audited the
financial statement schedules listed in Item 14(a)(2) of Form 10-K. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Jackson, Mississippi
September 9, 1994
21
<PAGE> 22
SCHEDULE V
FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED JUNE 30, 1994, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
TRANSFERS
BETWEEN
CLASSIFICATIONS
AND OTHER
ASSET
BALANCE AT CATEGORIES
BEGINNING RETIREMENTS INCREASE BALANCE AT
CLASSIFICATIONS OF YEAR ADDITIONS OR SALES (DECREASE) END OF YEAR
- - - -------------------------------------- ---------- --------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1994:
Land and land improvements.......... $ 13,440 1,837 169 (1,587) $ 13,521
Buildings........................... 19,434 630 0 161 20,225
Chemical plant facilities and
equipment........................ 159,836 10,840 25 0 170,651
Gold properties..................... 110,586 8,849 140 (10,604) 108,691
Other facilities and equipment...... 56,719 13,107 2,393 1,727 69,160
Under capital leases:
Land and land improvements....... 509 0 0 0 509
Buildings........................ 216 0 0 0 216
Other equipment.................. 8,958 0 0 0 8,958
--------- ------- -------- ---------- ---------
TOTAL....................... $ 369,698 35,263 2,727 (10,303)(A) $ 391,931
========= ======= ======== ========== =========
Year ended June 30, 1993:
Land and land improvements.......... $ 9,844 3,596 0 0 $ 13,440
Buildings........................... 19,244 190 0 0 19,434
Chemical plant facilities and
equipment........................ 145,178 14,658 0 0 159,836
Gold properties..................... 95,447 15,514 375 0 110,586
Other facilities and equipment...... 50,703 6,704 747 59 56,719
Under capital leases:
Land and land improvements....... 509 0 0 0 509
Buildings........................ 216 0 0 0 216
Other equipment.................. 9,017 0 0 (59) 8,958
--------- ------- -------- ---------- ---------
TOTAL....................... $ 330,158 40,662 1,122 0 $ 369,698
========= ======= ======== ========== =========
Year ended June 30, 1992:
Land and land improvements.......... $ 9,574 645 0 (375) $ 9,844
Buildings........................... 18,835 336 0 73 19,244
Chemical plant facilities and
equipment........................ 137,283 8,848 1,689 736 145,178
Gold properties..................... 92,519 2,961(b) 33 95,447
Other facilities and equipment...... 47,236 7,565 3,651 (447) 50,703
Under capital leases:
Land and land improvements....... 509 0 0 0 509
Buildings........................ 216 0 0 0 216
Other equipment.................. 9,004 0 0 13 9,017
--------- ------- -------- ---------- ---------
TOTAL....................... $ 315,176 20,355 5,373 0 $ 330,158
========= ======= ======== ========== =========
</TABLE>
- - - ---------------
(a) Includes $9,846 of deferred stripping costs reclassified to amortization
expense and $457 of certain spare parts reclassified to inventory.
(b) Includes capital project refund of $1,161 which reduced the cost basis of
certain property assets.
22
<PAGE> 23
SCHEDULE VI
FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
YEARS ENDED JUNE 30, 1994, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
TRANSFERS
BETWEEN
CLASSIFICATIONS
AND OTHER
ASSET
BALANCE AT CATEGORIES
BEGINNING RETIREMENTS INCREASE BALANCE AT
CLASSIFICATIONS OF YEAR ADDITIONS OR SALES (DECREASE) END OF YEAR
- - - -------------------------------------- ---------- --------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1994:
Land and land improvements.......... $ 3,486 953 0 0 $ 4,439
Buildings........................... 7,851 1,675 0 0 9,526
Chemical plant facilities and
equipment........................ 83,510 10,680 25 0 94,165
Gold properties..................... 46,662 11,040 276 57,426
Other facilities and equipment...... 19,693 4,243 2,386 21,556
Under capital leases:
Land and land improvements....... 22 5 0 0 27
Buildings........................ 47 11 0 0 58
Other equipment.................. 2,316 527 0 0 2,843
--------- ------- -------- ---------- ---------
TOTAL....................... $ 163,587 29,134 2,687 0 $ 190,040
========= ======= ======== ========== =========
Year ended June 30, 1993:
Land and land improvements.......... $ 2,725 761 0 0 $ 3,486
Buildings........................... 6,127 1,724 0 0 7,851
Chemical plant facilities and
equipment........................ 73,794 9,716 0 0 83,510
Gold properties..................... 35,551 11,191 80 0 46,662
Other facilities and equipment...... 16,118 3,918 343 0 19,693
Under capital leases:
Land and land improvements....... 17 5 0 0 22
Buildings........................ 36 11 0 0 47
Other equipment.................. 1,789 527 0 0 2,316
--------- ------- -------- ---------- ---------
TOTAL....................... $ 136,157 27,853 423 0 $ 163,587
========= ======= ======== ========== =========
Year ended June 30, 1992:
Land and land improvements.......... $ 1,857 888 0 (20) $ 2,725
Buildings........................... 4,094 1,995 0 38 6,127
Chemical plant facilities and
equipment........................ 65,945 9,148 1,365 66 73,794
Gold properties..................... 23,061 12,510 20 0 35,551
Other facilities and equipment...... 14,385 3,161 1,344 (84) 16,118
Under capital leases:
Land and land improvements....... 12 5 0 0 17
Buildings........................ 25 11 0 0 36
Other equipment.................. 1,242 547 0 0 1,789
--------- ------- -------- ---------- ---------
TOTAL....................... $ 110,621 28,265 2,729 0 $ 136,157
========= ======= ======== ========== =========
</TABLE>
23
<PAGE> 24
SCHEDULE VIII
FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED JUNE 30, 1994, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
OTHER
BALANCE AT CHARGED TO ADDITIONS BALANCE
BEGINNING COSTS AND (DEDUCTIONS), AT END
DESCRIPTION OF YEAR EXPENSES NET OF YEAR
- - - ----------------------------------------------- ---------- ---------- ------------- -------
<S> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1994:
Allowance for doubtful accounts.............. $ 4,565 $ 561 $ (4,405) $ 721
Allowance for restructuring costs............ $ 21,535 $ 0 $ (19,075) $ 2,460
Year ended June 30, 1993:
Allowance for doubtful accounts.............. $ 2,084 $ 2,589 $ (108) $ 4,565
Allowance for restructuring costs............ $ 0 $ 39,578 $ (18,043) $21,535
Year ended June 30, 1992:
Allowance for doubtful accounts.............. $ 360 $ 2,276 $ (552) $ 2,084
</TABLE>
24
<PAGE> 25
SCHEDULE IX
FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED SHORT-TERM BORROWINGS
THREE YEARS ENDED JUNE 30, 1994
(IN MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
BALANCE WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE AT END AVERAGE AT ANY DURING THE DURING THE
SHORT-TERM BORROWINGS OF PERIOD INTEREST RATE MONTH END PERIOD(1) PERIOD(2)
- - - --------------------------------- --------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
1994
Notes payable, banks........... $ 0 N/A $ 4.9 $ 1.6 4%
1993
Notes payable, banks........... $ 0 N/A $27.4 $10.7 4%
1992
Notes payable, banks........... $10 5% $18.8 $14.0 6%
</TABLE>
- - - ---------------
(1) Average of daily balances for 366 days in 1992 and 365 days in 1993 and
1994.
(2) Total interest accrued divided by average daily balance.
25
<PAGE> 26
SCHEDULE X
FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED JUNE 30, 1994, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Taxes, other than payroll and income taxes........................ $5,220 $5,157 $4,379
</TABLE>
26
<PAGE> 27
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
First Mississippi Corporation:
We consent to incorporation by reference in the Registration Statements on
Form S-8 (Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512, 33-9106, 33-17483,
33-24413, 33-24414, 33-26895, 33-31343, 33-33135, 33-37084, 33-39137, 33-43586,
33-43600, 33-45344 and 33-56026) of our reports dated September 9, 1994,
relating to the consolidated financial statements and financial statement
schedules of First Mississippi Corporation and subsidiaries as of June 30, 1994
and 1993 and for each of the years in the three-year period ended June 30, 1994,
which reports appear or are incorporated by reference in the June 30, 1994
annual report on Form 10-K of First Mississippi Corporation. Our report on the
consolidated financial statements refers to a change in the method of accounting
for income taxes.
KPMG PEAT MARWICK LLP
Jackson, Mississippi
September 27, 1994
27
<PAGE> 28
EXHIBITS
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- - - -----------
<S> <C> <C>
3(b) -- Bylaws, as amended November 12, 1993
4(u) -- Extension of commitment termination date, dated as of December 30, 1993,
in accordance with the provisions of Section 2.04 of the Credit Agreement
dated as of February 9, 1993, between the Company, the Banks party
thereto, and The Chase Manhattan Bank (National Association), as
Agent
13 -- Annual Report to Stockholders for year ended June 30, 1994. (Such Annual
Report is not, except for those portions thereof which are expressly
incorporated by reference herein, to be deemed "filed" as part of this
Form 10-K)
21 -- List of the subsidiaries of the Registrant
23 -- Auditor's Consent regarding incorporation of reports into registration
statement
Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512, 33-9106, 33-17483,
33-24413, 33-24414, 33-26895, 33-31343, 33-33135, 33-37084, 33-39137,
33-43586, 33-43600, 33-45344 and 33-56026 is contained on Page 27 of this
report
27 -- Financial Data Schedule
(Note: The exhibits filed with the Commission are not included in this copy of
the Form 10-K. A copy of the exhibits will be provided upon payment of a
reasonable fee, to be specified at the time a request is made).
</TABLE>
28
<PAGE> 29
APPENDIX
1. In the top right corner of Page 13 is an outline map of the state of Nevada
showing the location of the Getchell Property and the towns of Winnemucca and
Reno.
In the bottom left portion of the page is an outline map of the Getchell
Property showing property boundaries and the location of the underground
mine, pits, ridges, facilities and nearby competitors' operations.
29
<PAGE> 1
BYLAWS
OF
FIRST MISSISSIPPI CORPORATION
(With all Amendments through November 12, 1993)
ARTICLE I.
NAME AND OFFICES
1.1 The name of this corporation shall be FIRST
MISSISSIPPI CORPORATION.
1.2 The principal or home office shall be in the City of
Jackson, County of Hinds, State of Mississippi.
1.3 The corporation may also have offices at such other
places as the board of directors may from time to time appoint or as the
business of the corporation may require.
ARTICLE II.
STOCKHOLDERS' MEETINGS
2.1 The place of all meetings of the stockholders shall
be the principal office of the corporation in the City of Jackson, County of
Hinds, State of Mississippi, or such other place within or without the State of
Mississippi as shall be determined from time to time by the board of directors,
and the place at which such meeting shall be held shall be stated in the call
and notice of the meeting.
2.2 The annual meeting of the stockholders of the
corporation for the election of directors to succeed those whose terms expire
and for the transaction of such other business as may properly come before the
meeting shall be held each year upon such date as may be determined by the
board of directors. If the annual meeting of the stockholders is not held as
herein prescribed, or the election of directors shall not be had at such
meeting or an adjournment thereof, the election of directors may be held at any
meeting thereafter called pursuant to these bylaws.
2.3 The voting at all meetings of the stockholders may
be viva voce, but twenty five percent (25%) of the stockholders present in
person and by proxy may demand a stock vote whereupon such stock vote shall be
taken. Persons voting proxies certified to by the secretary or assistant
secretary of the corporation may vote the proxies as a whole. Persons voting
proxies not certified by the secretary or assistant secretary shall state the
name for whom the proxy is held and the number of shares voted by proxy.
Exhibit 3(b)
<PAGE> 2
2.4 Every stockholder shall have the right to vote in
person or by proxy the number of shares of stock owned by him for as many
persons as there are directors to be elected or to cumulate said shares so as
to give one candidate as many votes as the number of directors multiplied by
the number of his shares of stock shall equal or distribute them on the same
principle among as many candidates as he shall see fit.
2.5 At any meeting of the stockholders, every
stockholder having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing subscribed by such stockholder and
bearing a date not more than eleven months prior to said meeting, unless said
instrument provides for a longer period. Each stockholder shall have one vote
for each share of stock having voting power, registered in his name on the
books of the corporation, and except where the transfer books of the
corporation shall have been closed or a date has been fixed as a record date
for the determination of its stockholders entitled to vote, no share of stock
shall be voted at the annual meeting of the stockholders which shall have been
transferred on the books of the corporation within twenty days next preceding
such meeting. If more than one proxy shall be presented from the same
stockholder, the last one executed shall govern. The date shown thereon shall
be prima facie correct; but if any is found by the board of directors or by the
inspectors of election or by a committee appointed by the board of directors to
have been postdated, the same shall be void. In case of any conflict the action
of the board of directors thereon shall govern.
2.6 A complete list of the stockholders entitled to vote
at the annual meeting, arranged in alphabetical order, and the number of voting
shares held by each, shall be prepared by the Secretary, who shall have charge
of the stock ledger, and filed in the principal office of the Company or in the
office where the meeting is to be held, at least ten (10) days before every
annual meeting, and shall, during the usual hours for business, and during the
whole time of said meeting, be open to the examination of any stockholder.
2.7 Special meetings of the stockholders may be called
by the chairman of the board of directors or by the president or by majority of
the board of directors and shall be called at any time by the chairman of the
board of directors, the president or any vice president, or the secretary or
the treasurer, upon the written request of stockholders owning one-tenth (1/10)
of the outstanding stock of the corporation entitled to vote at such meeting.
The purpose or purposes for which a special meeting is called shall be stated
in the written or printed notice of the meeting.
2.8 Notice of the time and place of the annual meeting
of stockholders shall be given by mailing written or printed notice of the same
at least twenty (20) days, and not more than sixty (60) days, prior to the
meeting, and notice of the time and place of special meetings shall be given by
written or printed notice of the
2
<PAGE> 3
same at least ten (10) days and not more than sixty (60) days prior to the
meeting, with postage prepaid, to each stockholder of record of the corporation
entitled to vote at such meeting, and addressed to the address appearing on the
stock transfer books of the corporation. The board of directors may fix in
advance a date, not exceeding seventy (70) days preceding the date of any
annual meeting of stockholders, as a record date for the determination of the
stockholders entitled to notice of and to vote at any such meeting. No notice
need be given of any adjourned meeting of the stockholders except in the
instance named in Section 2.10.
2.9 A quorum at any annual or special meeting of
stockholders shall consist of stockholders representing, either in person or by
proxy, a majority of the outstanding capital stock of the corporation entitled
to vote at such meeting.
2.10 If a quorum is not present at an annual or a
properly called stockholders' meeting, the meeting may be adjourned by those
present, and if a notice for at least ten (10) days of such adjourned meeting
shall be mailed to all stockholders entitled to vote thereat, containing the
time and place of holding such adjourned meeting and a statement of the purpose
of the meeting (if it is a special meeting), that the previous meeting failed
for lack of a quorum, and that under the provisions of this section it is
proposed to hold the adjourned meeting with a quorum of those present, then, at
such adjourned meeting, one-third (1/3) of the shares entitled to vote thereat,
represented by person or by proxy, shall constitute a quorum, and the votes of
a majority in interest of those present at such meeting shall be sufficient to
transact business unless a greater vote is required by these bylaws, the
charter of incorporation or by law.
2.11 At each meeting of stockholders the board of
directors or the presiding officer shall have the right, at their sole option,
to appoint one or more inspectors of election. The inspectors shall receive all
proxies and ballots, determine all challenges and questions arising in
connection with the right to vote, and count and tabulate all votes, ballots or
consents and determine the result. If for any reason the board of directors or
the presiding officer fails to appoint at least one inspector, then in that
event the secretary of the corporation or any other corporate official
designated by the presiding officer shall be empowered with all of the
responsibilities and authority of the inspectors of election.
2.12 At the annual meeting of shareholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be
specified in the Notice of Meeting given by or at the direction of the board of
directors, otherwise properly brought before the meeting by or at the direction
of the board of directors or otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before the annual meeting by a
shareholder, including the nomination of a
3
<PAGE> 4
director, the shareholder must have given timely notice thereof in writing to
the Secretary-Treasurer of the Company. To be timely, a shareholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Company not more than five (5) business days after the giving of the
notice of the date and place of the meeting to the shareholders as required in
Section 2.8 of these bylaws. A shareholder's notice to the Secretary-Treasurer
shall inform as to each matter the shareholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of the shareholder proposing
such business, (iii) the class and numbers of shares of the Company which are
beneficially owned by the shareholder and (iv) any material interest of the
shareholder in such business. Notwithstanding anything in the Bylaws to the
contrary, no business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Section 2.12. The chairman of
the annual meeting shall, if the facts warrant, determine and declare at the
meeting that business was not properly brought before the meeting in accordance
with the provisions of this Section 2.12, and if he should so determine, he
shall so declare to the meeting and any such business not properly before the
meeting shall not be transacted.
ARTICLE III.
BOARD OF DIRECTORS
3.1 The management of the affairs, property, and
business of the corporation shall be vested in a board of directors, who shall
be chosen as hereinafter set forth and who shall hold office until their
successors are elected and qualify. Directors shall be stockholders and a
transfer by a director of all of his stock in the corporation shall operate as
a resignation of his office. In addition to the powers and authorities by these
bylaws and the charter of incorporation expressly conferred upon it, the board
of directors may exercise all such powers of the corporation and do all such
lawful acts and things as are not by law or by the charter or by these bylaws
required to be exercised or done by the stockholders.
3.2 The board of directors shall consist of eleven (11)
persons. No person shall be elected to serve on the board of directors after
attaining sixty-nine (69) years of age.
3.3 The first board of directors shall consist of three
groups, the terms of office thereof expiring as follows: The first group at the
annual stockholders' meeting in 1958; the second group at such meeting in 1959
and the third group at such meeting in 1960. Thereafter, the directors of the
corporation shall be divided into three groups which shall be as nearly equal
as may be possible. At each annual stockholders' meeting held thereafter,
4
<PAGE> 5
the successors of the group of directors whose terms expire in that year shall
be elected to hold office for a full term of three years, so that the term of
office of one group of directors shall expire each year; provided, however,
that the term of office of the directors of each group shall continue until the
election and qualification of the successors to the directors of such group.
After the division of directors into groups, any additional directors who may
be elected as herein provided shall be assigned to the various groups so as to
maintain the number in each group as nearly equal as possible.
3.4 The board of directors shall by resolution entered
on its minutes determine and fix the authority and duties of officers and
employees with respect to the signing on behalf of the Company of all checks,
drafts, deeds, leases, contracts, assignments, and other instruments, documents
and papers of every kind and character whatsoever.
3.5 All vacancies in the board of directors, whether
caused by resignation, death, increase in the number of directors, or
otherwise, shall be filled by election by the board of directors. If the term
of the replacement or new director extends beyond the next meeting of
stockholders, then the balance of the term beyond that stockholders' meeting is
subject to confirmation by a vote of the stockholders. Each such director
elected shall hold office until his successor is elected and qualifies.
3.6 Regular or special meetings of the board of
directors may be held at the principal office of the corporation or at such
other place or places, within or without the State of Mississippi, as the board
of directors may from time to time designate, and at such meetings any and all
business of the corporation may be transacted without the necessity of stating
in the call the matters to be considered.
3.7 Special meetings of the board of directors may be
called at any time by the chairman of the board or president or by two-thirds
(2/3) of the number of directors specified in Section 3.2, to be held at the
principal office of the corporation or at such other place within the State of
Mississippi, as may be designated in such call, and at such meetings any and
all business of the corporation may be transacted without the necessity of
stating in the call the matters to be considered.
3.8 Notice of all meetings of the board of directors
(except the first meeting and the annual meetings as provided in Section 3.6
(above) shall be given in writing to each director by not less than two (2)
days service of the same by telegram or in person or by not less than five (5)
days service of the same by letter. Provided, that by unanimous consent of the
directors executed before or after such meeting, meetings at any time or place
may be held without notice. And, provided further, that if, in the opinion of
the chairman of the board, chairman of the executive committee or the
president, there exists a reason to do
5
<PAGE> 6
so, the board may meet by a telephone conference hookup upon eight (8) hours
advance notice unless waived by unanimous consent of the directors executed
before or after such meeting. Such telephone meetings of the board shall be
valid and the action taken shall be binding if a reasonable effort was made to
have all directors on the telephone meeting and a quorum of directors
participate in the telephone meeting. All business presented and discussed at
said telephone meeting shall be set forth in the minutes of said meeting, and
the minutes shall be mailed to all directors as soon as possible following said
meeting.
3.9 A quorum at all meetings of the board of directors
shall consist of a majority of the whole board. The act of the majority of the
directors at a meeting at which a quorum is present shall be the act of the
board of directors, except for the following: (a) the affirmative vote of not
less than two-thirds (2/3) of all directors shall be required to approve any
plan of merger, consolidation or reorganization and to recommend to the
stockholders any merger, consolidation or reorganization of the Company into or
with any other corporation, domestic or foreign, (b) the affirmative vote of
not less than two-thirds (2/3) of all directors shall be required to modify,
add to or delete from these bylaws, and (c) the affirmative vote of not less
than four-fifths (4/5) of all directors shall be required to amend, modify or
delete Section 3.2 or Section 3.3 of these bylaws.
3.10 Standing or temporary committees may be appointed
from its own number by the board of directors from time to time, and the board
of directors may from time to time invest such committees with such powers as
it may see fit, subject to such conditions as may be prescribed by such board.
An executive committee may be appointed by resolution passed by a majority of
the whole board; it shall have all the powers vested in the board; provided,
however, that the executive committee shall not have the authority of the board
of directors in reference to amending the articles of incorporation, adopting a
plan of merger or consolidation, recommending to the stockholders the sale,
lease, exchange, mortgage, pledge or other disposition of all or substantially
all the property and assets of the corporation other than in the usual and
regular course of business, recommending to the stockholders a voluntary
dissolution of the corporation or a revocation thereof, or amending the bylaws
of the corporation.
3.11 Directors shall be paid such compensation as shall
be fixed by resolution of the board of directors. In addition, a fixed per diem
plus expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of the board or for attending committee meetings.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
6
<PAGE> 7
ARTICLE IV.
OFFICERS
4.1 The officers of the Company shall be a chairman of
the board of directors, a president, such vice presidents as may be designated
by the board, a secretary, a treasurer, and a general counsel, each of whom
shall be elected by the affirmative vote of two-thirds (2/3) of all directors,
and who shall hold office for a term of one year and thereafter until their
successors are elected and qualify. The board of directors may also choose such
additional officers, including an executive vice- president, as they may deem
desirable. The chairman of the board and the president must be a member of the
board of directors. By resolution adopted by the board of directors, any two
offices may be united in one person except the offices of president and
secretary. Any officer may be removed by the affirmative vote of two-thirds
(2/3) of all directors.
4.2 The Chairman of the board shall preside at all
meetings of the directors, and shall be ex-officio member of all standing
committees of the board. He shall perform all such other duties as are incident
to his office or properly required of him by the board of directors.
4.3 The president shall preside at all meetings of the
stockholders and shall have general supervision of the affairs of the
corporation. He shall make reports to the board of directors and stockholders,
and shall perform all such other duties as are incident to his office or are
properly required of him by the board of directors.
4.4 The vice-presidents, in the order designated by the
board of directors, shall exercise the functions of the president during the
absence or disability of the president. Each vice-president, including an
executive vice-president, shall have such powers and discharge such duties as
may be assigned to him from time to time by the board of directors.
4.5 The secretary shall issue notices for all meetings,
except that the notice for special meetings of directors called at the request
of the required two-thirds (2/3) members as provided in Section 3.7 may be
issued by such directors, shall keep minutes of all meetings, shall have charge
of the seal and the corporate books, and shall make such reports and perform
such other duties as are incident to his office, or are properly required of
him by the board of directors.
4.6 The treasurer shall have the custody of all monies
and securities of the corporation and shall keep regular books of account.
Except as may be otherwise provided by the board of directors under Section
6.2, he shall disburse the funds of the corporation, or as may be ordered by
the board of directors, taking proper voucher for disbursement, and shall
render to the board of
7
<PAGE> 8
directors, from time to time as may be required of him, an account of all
transactions as treasurer and of the financial condition of the corporation. He
shall perform all duties incident to his office or which are properly required
of him by the board of directors.
4.7 The general counsel, subject to the supervision of
the board of directors, shall be responsible for all matters of legal import.
4.8 In the case of absence or inability or failure to
act of any officer of the corporation and of any person herein authorized to
act in his place, the board of directors may from time to time delegate the
powers or duties of such officer to any other officer, or any director or other
person whom it may select.
4.9 Vacancies in any office arising from any cause may
be filled by the directors at any regular or special meetings.
4.10 The board of directors may appoint such other
officers and agents as it shall deem necessary or expedient, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board of directors.
4.11 The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
4.12 The board of directors may by resolution require and
all of the officers to give bonds to the corporation with sufficient surety or
sureties, conditioned for the faithful performance of the duties of their
respective offices, and to comply with such other conditions as may from time
to time be required by the board of directors. The premiums and other cost of
such bonds may be paid by the corporation.
ARTICLE V.
STOCK
5.1 Certificates of common stock shall be issued in
numerical order and each stockholder shall be entitled to a certificate
certifying to the number of shares owned by him. Such certificates shall be
executed by such officers or agents (which may include a registrar and transfer
agents) as the board of directors may by resolution entered upon its minutes
determine, and the board may determine which, if any, of the signatures thereon
may be facsimile.
5.2 In case any officer who has signed, or whose
facsimile signature has been used on, a certificate, has ceased to be an
officer before the certificate has been delivered, such certificates may,
nevertheless, be adopted and issued and delivered
8
<PAGE> 9
by the corporation as though the officer who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be such officer of the corporation.
5.3 Transfer of stock shall be made only upon the
transfer books of the corporation, kept at the office of the corporation or at
the office of any transfer agents or registrar and before a new certificate is
issued, the old certificate shall be surrendered for cancellation.
5.4 Registered stockholders only shall be entitled to be
treated by the corporation as the holders in fact of the stock standing in
their respective names, and the corporation shall not be bound to recognize any
equitable or other claim to or interest in any shares on the part of any other
person, whether or not it shall have express or other notice thereof.
5.5 In case of loss or destruction of any certificate of
stock, another may be issued in its place upon proof of such loss or
destruction, and upon the giving of a satisfactory bond of indemnity to the
corporation in such sum as the board of directors may provide.
5.6 The board of directors shall have power and
authority to make all rules and regulations as it may deem expedient concerning
the issue, transfer, conversion, and registration of certificates for share of
the capital stock of the corporation, not inconsistent with the laws of
Mississippi, the charter of the corporation and these bylaws.
5.7 The board of directors shall have power to close the
stock transfer books of the corporation for a period not exceeding fifty (50)
days preceding the date of any meeting of stockholders, or the date when any
redemption or purchase of capital stock shall go into effect, or for a period
of not exceeding fifty (50) days in connection with obtaining the consent of
stockholders for any purpose, provided, however, that in lieu of closing the
stock transfer books as aforesaid, the board of directors may fix in advance a
date, not exceeding fifty (50) days preceding the date of any meeting of
stockholders, or the date when any redemption or purchase of capital stock
shall go into effect, or a date in connection with obtaining such consent, as a
record date for the determination of the stockholders entitled to notice of and
to vote at any such meeting, and any adjournment thereof, or to exercise the
rights in respect of any such redemption or purchase of capital stock, or to
give such consent, and in such case such stockholders of record on the date so
fixed shall be entitled to such notice of and to vote at such meeting, and any
adjournment thereof, or to exercise such rights, or to give such consent, as
the case may be, notwithstanding any transfer of stock on the books of the
corporation after any such record date fixed as aforesaid.
9
<PAGE> 10
5.8 The common stock of the corporation shall be issued
in such amounts and shall be sold at such price or prices, not less than par,
as the board of director may from time to time and at any time determine.
5.9 Dividends upon common stock shall be payable as and
when declared by the board of directors at its discretion.
ARTICLE VI.
MISCELLANEOUS
6.1 Any part of or all of the cash dividends payable
upon capital common stock may be applied, in the discretion of the board of
directors, to the payment of any indebtedness of such stockholder to the
corporation.
6.2 The monies of the corporation shall be deposited in
the name of the corporation in such bank or banks or trust company or trust
companies as the board of directors shall designate, and shall be drawn out
only by check signed by persons designated by resolution by the board of
directors.
6.3 The fiscal year of the corporation shall be
determined by the board of directors.
6.4 With the notice of the annual meeting of the
stockholders there shall be mailed a general report of the business of the
corporation and a report of the general financial condition of the corporation
and its property.
6.5 The affirmative vote of at least 80% of the
outstanding voting stock of the Company is required in order to authorize or
approve (a) a merger or consolidation with or into (b) the disposition of all
or substantially all of the assets of the Company or (c) the issuance of voting
securities of the Company in exchange or payment for the securities or assets
of, any other person or entity unless any such transaction has been approved by
the affirmative vote of not less than two-thirds (2/3) of all directors.
ARTICLE VII.
BOOKS AND RECORDS
7.1 The books, accounts and records of the corporation
shall be kept at the home office of the corporation except as the board of
directors may from time to time appoint. The board of director shall determine
whether and to what extent the accounts and books of the corporation, or any of
them, other than the stock ledger, shall be open to the inspection of the
stockholders, and no stockholder shall have any right to inspect any account or
book or
10
<PAGE> 11
document of the corporation except as conferred by law or by resolution of the
stockholders or directors.
ARTICLE VIII.
NOTICES
8.1 Whenever the provisions of the charter of these
bylaws require notice to be given to any director, officer, or stockholder,
such notice may be given in writing by handing a copy thereof to such person or
by depositing a copy thereof in a post office or letter box in postpaid, sealed
envelope, addressed to such director, officer, or stockholder at his or her
address as the same appears in the books of the corporation, and the time when
the same shall be mailed shall be deemed to be the time of the giving of such
notice. Any such notice may be contained in any periodic publication of the
corporation or any house organ thereof which is mailed as provided in this
article.
8.2 A waiver of any notice in writing, signed by a
stockholder, director, or officer, whether before or after the time stated in
said waiver for holding a meeting, shall be deemed equivalent to a notice
required to be given to any director, officer or stockholder.
ARTICLE IX.
SEAL
9.1 The corporate seal of the corporation shall consist
of two concentric circles, between which shall be the name of the corporation
and the year of its incorporation and in the center shall be inscribed the word
"Seal".
11
<PAGE> 1
THE CHASE MANHATTAN BANK, N.A. NICHOLAS J. CHIREKOS
1 Chase Manhattan Plaza, 4th Floor Vice President
New York, New York 10081
(LOGO) CHASE
December 30, 1993
Mr. R. Michael Summerford
Chief Financial Officer
First Mississippi Corporation
700 North Street
Jackson, Mississippi 39205
Dear Mike:
In accordance with the provisions of Section 2.04 of the Credit Agreement dated
February 9, 1993 between First Mississippi Corporation and The Chase Manhattan
Bank, N.A., as Agent, we hereby inform you that as a Bank, Chase has extended
its Tranche A Commitment Termination Date to February 9, 1997.
Sincerely,
/s/ NICHOLAS J. CHIREKOS
Exhibit 4(u)
<PAGE> 2
DEPOSIT GUARANTY NATIONAL BANK (LOGO)
One Deposit Guaranty Plaza
Post Office Box 1200
Jackson, Mississippi 39215-1200
Phone 601 968-4936
Telefax 601 354-8412
LOUIS B. FOURNET
Vice President
December 30, 1993
Mr. Nicholas J. Chirekos
Vice President
Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, NY 10081
RE: First Mississippi Corporation request for Extension.
Dear John:
As per Mike Summerford's written request for a one year extension to our
portion of Tranche A of the Credit Agreement dated February 9, 1993; Deposit
Guaranty National Bank has approved a one year extension of the termination
date to February 9, 1997 as provided for in the Loan Agreement Section 2.04.
Sincerely,
/s/ LOUIS B. FOURNET
Louis B. Fournet
Vice President
LBF:det
cc. Mr. Mike Summerford
<PAGE> 3
MICHAEL J. MCKENNEY
Vice President
Portfolio Management
(LOGO) CONTINENTAL BANK
December 30, 1993
Chase Manhattan Bank, N.A.
Primary Industries - 4th Floor
One Chase Manhattan Plaza
New York, NY 10081
Attention: Mr. Nicholas J. Chirekos
Dear Nick:
In accordance with the provisions of Section 2.04 of the Credit Agreement dated
February 9, 1993, between FIRST MISSISSIPPI CORPORATION and THE CHASE MANHATTAN
BANK, N.A., we hereby consent to the request that the Tranche A Commitment
Termination Date be extended for an additional year, to February 9, 1997.
Sincerely,
/s/ MICHAEL J. MCKENNEY
<PAGE> 1
First Mississippi Corporation
1994 Annual Report
<PAGE> 2
First Mississippi Corporation
First Mississippi Corporation produces -- Chemicals for industry and
agriculture -- Gold -- Combustion and thermal plasma equipment and services
First Mississippi has taken steps to prove its commitment to quality.
During the year, three of our Chemicals facilities, EKC Technology in Hayward,
California, and Glasgow, Scotland, and Quality Chemicals in Tyrone,
Pennsylvania, received ISO 9002 certification under the International Standards
Organization quality standards. In addition, QCI in Dayton, Ohio, has
implemented Good Manufacturing Practices for the planned production of
pharmaceutical intermediates. Our goal is to have all of our Chemicals
operations certified by the international benchmark during fiscal 1995.
<TABLE>
<S> <C>
Financial Highlights 1
To Our Stockholders 2
Chemicals 4
Fertilizer 7
Combustion and Thermal Plasma 10
Gold 12
Financial Review 14
Directors and Officers 35
Corporate Information 36
Subsidiaries Inside Back Cover
</TABLE>
(TOTAL ASSETS, CAPITAL EXPENDITURES AND CASH FLOWS PROVIDED
BY OPERATING ACTIVITIES GRAPHS)
<PAGE> 3
FIRST MISSISSIPPI CORPORATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In Thousands of Dollars,
Except Per Share Amounts)
-----------------------------------------
Years ended June 30
-----------------------------------------
1994 1993 1992
- - - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 508,225 429,940 453,242
Earnings from continuing operations $ 17,663 2,683 16,116
Loss from discontinued operations, net of taxes -- (26,052) (11,889)
Cumulative effect of change in accounting principle 4,200 -- --
--------- --------- ---------
Net earnings (loss) $ 21,863 (23,369) 4,227
========= ========= =========
Earnings (loss) per common share:
Continuing operations $ .88 .13 .81
Discontinued operations -- (1.30) (.60)
Cumulative effect of change in
accounting principle .21 -- --
--------- --------- ---------
Total earnings (loss) per common share $ 1.09 (1.17) .21
========= ========= =========
Net working capital $ 78,874 50,121 59,865
Long-term debt (including gold loan) $ 104,287 113,531 154,092
Total assets $ 377,576 383,619 461,534
Stockholders' equity $ 177,687 160,774 188,378
Return on average equity - continuing operations 10.4% 1.5% 8.6%
By business segment
Sales:
Chemicals $ 161,045 143,497 130,331
Fertilizer 163,984 141,642 184,108
Gold 95,150 78,773 83,048
Combustion, Thermal Plasma and Other 88,046 66,028 55,755
--------- --------- ---------
Total $ 508,225 429,940 453,242
========= ========= =========
Operating profit (loss) before income taxes,
minority interests and investee earnings (loss):
Chemicals $ 30,295 24,434 15,333
Fertilizer 24,760 13,218 24,196
Gold 7,225 (1,305) 7,874
Combustion, Thermal Plasma and Other (12,763) (12,187) (5,656)
--------- --------- ---------
Total $ 49,517 24,160 41,747
========= ========= =========
</TABLE>
1
<PAGE> 4
FIRST MISSISSIPPI CORPORATION
TO OUR STOCKHOLDERS
Fiscal 1994 earnings were $21.9 million, or $1.09 per share, including
$4.2 million, or 21 cents per share, from a required change in accounting for
deferred income taxes. Operating earnings of $17.7 million, or 88 cents per
share, were the best since 1981. Fiscal 1993 results were a loss of $23.4
million, or $1.17 per share, including a restructuring loss of $26.1 million,
or $1.30 per share.
RESTRUCTURING
The improvement was due in part to restructuring begun in 1992 including
the disposition of oil and gas and coal operations and the sale or shutdown of
several start-up businesses. Higher ammonia prices and better operating
results in Chemicals and Gold also drove FY 94 earnings. Total return to
stockholders from dividends and higher stock price in FY 94 was 62%. The
average for the S&P 500 was 1.4%. Return on equity from continuing operations
of 10% was the best in six years. We have a target of 20% ROE and expect to
show further improvement in FY 95. Total debt at year end was $106 million,
down from $180 million two years ago.
A ruling to permit the tax-free spin-off of FirstMiss Gold was requested
from the Internal Revenue Service in July. A response is expected within four
to six months. Assuming a favorable ruling, the spin-off hinges on FirstMiss
Gold's viability as a stand-alone company. Prospects improved this year with
better operating results, a 21% increase in reserves, and final payment on the
original 150,000-ounce gold loan.
SUMMARY OF BUSINESS ACTIVITIES
Operating results reflect better balance and focus in the current
business mix. Chemicals operating profits were up 24% to $30.3 million, the
second best year for this business segment. Improvement was primarily due to
higher specialty chemicals earnings. Specialties include fine and performance
chemicals, which have grown rapidly in recent years. Contribution from
specialties increased 25% in FY 94 and now represents 60% of total Chemicals
contribution. Contribution from other chemicals also grew 4%. Fine chemicals
and custom manufacturing are benefitting from the trend by major chemical and
pharmaceutical companies to focus on R&D and marketing, and to farm out
production to efficient, independent chemical manufacturers. We are
well-positioned to take advantage of this trend. Growth in personal computers,
cellular telephones, and other devices using integrated circuits is driving
demand for our proprietary HDA (trademark) hydroxylamine chemistries. These
products, first introduced in 1992, are now the fastest growing performance
products in the history of the company. Two patents were granted during the
year for HDA (trademark) products. Other patent applications have been filed.
These products are helping us penetrate Japanese and Pacific Rim markets,
which produce roughly half of all computer chips.
(SALES BY INDUSTRY SEGMENT GRAPH)
The outlook for our Chemicals segment is for continued growth and
improvement.
Anhydrous ammonia and urea have been a part of our business mix for
nearly 30 years. These nitrogen chemicals are used as fertilizers and
industrial feedstocks. These commodities are produced in world-scale, low-cost
facilities which have been maintained and upgraded to enable us to survive in
tough times and prosper in good times. We have been through some tough times
in recent years.
Times are better now. Operating profits from ammonia and urea increased
87% to $24.8 million, primarily due to higher ammonia prices which peaked at
$225 per ton in April. Ammonia margins are the best since the mid-1970s helped
by the low price of natural gas feedstock as well as high ammonia prices.
About 80% of our production is sold as ammonia, while the balance is upgraded
to urea. The outlook is for further improvement. The world ammonia
supply-demand balance is tight. Production from plants in Russia and Ukraine
has been curtailed due to deteriorating infrastructure and internal political
conflicts following break-up of the Soviet Union. Market forces are also
beginning to come into play there.
Operating losses from Combustion, Thermal Plasma and Other were a
disappointing $12.8 million. Results were hurt by low prices and margins, and
unusual items including a 15-day unplanned production outage at FirstMiss
Steel and heavy legal expenses for successful patent defense in our burner
business.
Despite the poor bottom line results, there was progress. Sales of
combustion equipment and services were up more than 30%, and year-end backlog
increased nearly 80%. We received an order for five plasma tundish heating
systems from one of China's largest steel makers. This was the fourth contract
in China and the largest order in the company's history. We have the dominant
position in this fast growing market. Aluminum dross throughput increased 30%,
and sales were up nearly 90% during one of the most severe depressions ever in
the aluminum industry. And at FirstMiss Steel, we regained volume lost last
year following bankruptcy of a major customer, sales increased 28% on better
product mix, and year-end backlog more than doubled.
Our proprietary combustion and thermal plasma businesses are approaching
full-scale commercial viability. Interest in our products and services is high
and industry conditions are improving.
2
<PAGE> 5
FIRST MISSISSIPPI CORPORATION
Results should be better in FY 95.
Gold operating profits were $7.2 million, up from a loss of $1.3 million
last year due to higher mill feed grade, higher realized price, and record
production.
Proven and probable mineable reserves increased 21% to 1.6 million ounces
due in part to a 54% increase in exploration expenditures.
Other mineral deposits containing nearly 1 million additonal ounces were also
identified on the Getchell property. Underground mine development below the
Getchell Main Pit began, and initial production is expected in early FY 95.
Underground mining is expected to reach 2,000 tons per day by fiscal year end.
Grade should improve as underground production increases. Recent exploration
results suggest further reserve additons are possible.
Restructuring,
higher ammonia prices,
and better operating results in
Chemicals and Gold
increased 1994 earnings.
Total return to
stockholders was 62%.
MANAGEMENT CHANGE
In August Charles M. McAuley retired as president and chief executive
officer of FirstMiss Gold. He had served as a director of FirstMiss Gold for
seven years and as president and chief executive officer since February 1992.
Charlie was succeeded by G.W. (Bill) Thompson, who has more than 25 years
experience in the mining industry. His knowledge and experience should help
ensure a smooth transition to underground operations.
CONSOLIDATED OUTLOOK
The outlook for FY 95 is favorable but is subject to unexpected events.
Fertilizer should benefit from higher ammonia prices. Chemicals growth should
continue with a healthy economy. Higher grade ore from underground production
and increased exploration efforts should help Gold. And, prospects for
Combustion and Thermal Plasma are better with high year-end backlogs.
J. Kelley Williams
Chairman of the Board
September 9, 1994
3
<PAGE> 6
FIRST MISSISSIPPI CORPORATION
CHEMICALS
Operations include production and sale of specialty chemicals and organic
chemical intermediates, and research and development for specialty chemicals
and production processes. Objectives include innovative development and
efficient production of high-value specialty chemicals and low-cost production
of chemical intermediates.
CHEMICALS RESULTS
Pretax operating profits were $30.3 million, up 24% from $24.4 million last
year, due to increased sales of specialties, primarily fine chemicals for
agriculture and performance chemicals for the semiconductor industry.
Contribution from specialty chemicals increased 25% from last year on
higher agricultural and electronic chemicals sales. Specialties share of total
contribution increased to nearly 60% from 55% last year. Contribution from
chemical intermediates increased 4% on good construction, automotive, and
agricultural demand.
Total sales were up 12% to $161.0 million. Exports accounted for 12% of
total sales, about the same as last year.
SPECIALTY CHEMICALS
The company manufactures specialty chemicals, including fine and
performance chemicals for use in agricultural, pharmaceutical, and
photosensitive chemicals, and for manufacture of semiconductor chips.
Innovative research and development, efficient production in continuous and
batch processes, and proprietary waste treatment technology give the company a
competitive advantage.
The demand for custom manufacturing is presently growing as major
chemical companies concentrate on research and marketing and farm out
production to high quality custom manufacturers that can efficiently scale up
laboratory processes to commercial production. Custom plants located in
Tyrone, Pennsylvania, and Dayton, Ohio, manufacture ne chemicals used
primarily in agricultural and pharmaceutical products. The company's technical
expertise, timely response, economic capacity, and support services also
provide competitive advantage. Custom manufactured chemicals are generally
sold as raw materials in drums and in bulk for further processing.
(CHEMICAL CONTRIBUTION INDEX BY PRODUCT GROUP GRAPH)
Acquisition of the Dayton facility in 1992 nearly doubled the company's
custom manufacturing capacity. Current custom manufacturing contracts at
Dayton include development work for Monsanto Agriculture, a long-term resins
project, intermediates for production at Tyrone, and initial development
quantities of new products. In addition, the company has implemented "Good Man
ufacturing Practices," a prerequisite for the planned production of bulk or
intermediate pharmaceutical chemicals.
Innovative technology and continuous process improvement provide
flexibility and enable the company to meet increased customer demand with
limited additional capital expenditures.
Expansion of the specialty nitration plant at Pascagoula, Mississippi,
was completed during the year. Modifications to the facility increased capacity
to manufacture specialty chemicals primarily for pharmaceutical, personal
care, and agricultural products.
In June 1994, Rohm & Haas acquired Monsanto's herbicide product line,
which includes Dimension (Registration Mark) turf grass herbicide. The active
ingredient for Dimension (Registration Mark) is manufactured at the Tyrone
facility.
Performance chemicals such as organic photoresist removers for
semiconductor manufacturing produced in Hayward, California, and Glasgow,
Scotland, are sold on product function, cleanness, and purity. The company
works closely with semiconductor manufacturers to formulate these special,
complex products which provide solutions to customers' manufacturing problems.
New technology developed through combined R&D efforts at Hayward and at
Pascagoula have expanded the photoresist product line to include silicon wafer
cleaners based on HDA (trademark) hydroxylamine chemistries for the improvement
of semiconductor manufacture. The HDA (trademark) products remove polymer
residues formed during dry etching of silicon wafers to increase yields and
improve chip performance. The company has been granted two patents for this
series of products. Other patent applications are pending.
(SALES, IDENTIFIABLE ASSETS, CAPITAL EXPENDITURES AND EMPLOYEES GRAPHS)
4
<PAGE> 7
FIRST MISSISSIPPI CORPORATION
The company currently has 20% of the worldwide market and and 40% of the
U.S. market for photoresist removers. The company is the largest supplier of
photoresist removers in the United States and the second largest in the world.
The HDA (trademark) product line is the fastest growing performance product in
the history of the company. It has solved a major industry problem and
established the company as a technical leader in this rapidly expanding market.
CHEMICAL INTERMEDIATES
Chemical intermediates include aniline and other nitrated aromatic amines
produced in low-cost, continuous process facilities in Pascagoula. These
products are primarily sold in large volumes to industrial customers for
further processing in pharmaceutical, automotive, agricultural, construction,
pigment, and photochemical applications.
Primary markets for aniline include manufacture of polyurethane foam for
insulation in commercial and residential construction and urethane elastomers
used in automobile body components. Other markets include tire and
agricultural chemicals. Nitrated aromatics and aromatic amines produced by the
company are used in pharmaceuticals, optical brighteners, and tire
manufacture. The company is one of the largest U.S. merchant marketers of
aniline, with approximately 17% of domestic capacity and 6% of world capacity.
Efficient production, favorable logistics, and readily available raw
materials make the company a competitive, low-cost producer. The Pascagoula
facility has ready access to barges and ocean-going tankers on the Gulf of
Mexico for receipt of raw materials and for export shipments. Rail car and
tank truck facilities are also available for domestic shipments. Benzene, one
of the major raw materials in aniline, is transported via pipeline from a
neighboring renery in Pascagoula. An on-site plant supplies nitric acid for
production of nitrated aromatics using anhydrous ammonia produced at company
operations near Baton Rouge, Louisiana.
This year the company entered into a multi-year contract to supply
nitrobenzene to a major customer that will fully utilize existing nitrobenzene
capacity through 1999. High operating rates and near capacity utilization
enable the company to accomplish efficient, low-cost production of chemical
intermediates.
RESEARCH AND DEVELOPMENT
(TWO PHOTO'S OF RESEARCH AND DEVELOPMENT FACILITIES)
R&D facilities include laboratories, pilot plant, and semi-works with
gram to multi-pound sample production capabilities. Facilities and support
services are available to scale up customer laboratory processes to initial or
full-scale commercial production.
R&D activities identify new market opportunities, new process
technologies, and improvements to existing technologies. A third addition to
the Pascagoula R&D facility was recently completed. Facilities include
laboratories, pilot plant, and semi-works for process R&D with gram to
multi-pound sample production capabilities.
Continued on page 6
5
<PAGE> 8
FIRST MISSISSIPPI CORPORATION
Continued from page 5
Cooperative university programs complement in-house efforts. The company
sponsors applied research at several leading universities in the United States
and Europe. These closely directed programs have led to the development and
introduction of patented semiconductor wafer cleaning products and performance
polymers. Since 1989, R&D spending has increased 99%, and 19 new specialty
products have been introduced.
ENVIRONMENT AND SAFETY
Environmental and community responsibility and protection of employee
health and safety is top priority. The company strives to reduce waste and
emissions through new technology, careful maintenance of equipment and
facilities, and process improvements. In Pascagoula, an on-site hazardous
waste incinerator eliminates transportation of wastes and provides economic
and environmentally safe disposal.
The Pascagoula plant is the third in the nation to be accepted in the
Credit for Early Reduction provision under Title III of the Clean Air Act.
This provision rewards companies for voluntarily achieving a 90% reduction in
toxic air emissions prior to full implementation of the Clean Air Act
regulations. Participants may defer subsequent modifications until 2001 to avoid
unnecessary investment.
The company endorses and is actively implementing the Chemical
Manufacturers Association's Responsible Care Registration Mark initiative, a
multi-step, continuous improvement process to implement codes of management
practices and exhibit responsibility in the following areas: community
awareness and emergency response, pollution prevention, process safety,
distribution, employee health and safety, and product stewardship. This means
setting and meeting strict internal health, safety, and environmental criteria
for raw materials, manufacturing processes, finished products, and waste
handling.
The Pascagoula plant was recently named "The Industrial EMS System of the
Year" by Industrial Fire World for support of the local Emergency Medical
Service district. The plant has provided facilities and training for emergency
medical technicians in the area over the past three years. Pascagoula was one
of 90 major industrial sites in the U.S. nominated for the award.
Facilities at Hayward, Glasgow, and Tyrone have been certified under the
International Organization for Standardization ISO 9002 program. These
facilities were inspected by independent auditors for high standards of
quality management systems in the areas of purchasing, production, packaging,
handling, storage, and delivery. The ISO 9000 benchmark is rapidly becoming a
world standard and in some cases a requirement for securing new business.
During fiscal 1995, the company hopes to complete the quality certication
process for all Chemicals locations.
CHEMICALS OUTLOOK
The outlook continues favorable. Specialty chemicals growth should
continue based on new custom manufacturing contracts and growing market share
for proprietary electronic chemicals. Chemical intermediates should benefit
from demand for commercial and residential construction, automobiles, and
agriculture.
(Before and After Photo)
BEFORE
These photos, enlarged 10,000 times, show the effectiveness of the
company's proprietary HDA (trademark) hydroxylamine products in removing
residue formed by dry etching during silicon wafer fabrication.
AFTER
6
<PAGE> 9
FIRST MISSISSIPPI CORPORATION
FERTILIZER
Operations include production and sale of anhydrous ammonia and urea for
agriculture and industry in domestic and world markets. Activities also
include the purchase and resale of fertilizers. Objectives are to be a
low-cost producer and efficient marketer. Two world class production and
storage facilities are located on the Mississippi River at Donaldsonville,
Louisiana. AMPRO Fertilizer, Inc., a wholly owned subsidiary with 446,000 tons
annual capacity, produces anhydrous ammonia. Triad Chemical, a 50% joint
venture, produces both anhydrous ammonia and urea, with annual capacity of
420,000 tons ammonia and 520,000 tons urea. About 61% of Triad's 1994 ammonia
production was used in the production of urea.
Facilities can load ocean-going vessels for export shipments and trucks,
rail cars, and barges for domestic shipments. Anhydrous ammonia can also be
shipped by pipeline to midwestern markets. Marketing and administration are
headquartered in Jackson, Mississippi.
OPERATING RESULTS
Fertilizer pretax operating profits were up 87% to $24.8 million versus
$13.2 million last year primarily due to higher ammonia prices. U.S. Gulf
ammonia prices increased from a low of $85 per ton in the first quarter to a
20-year high of $225 in April as a result of increased domestic consumption
and reduced exports from Russia and Ukraine. Average ammonia price for the
year was $130 per ton, up nearly 30% from last year. Average unit cost
increased 11% due to higher cost for brokered product. Unit margins increased
$18 per ton and were the highest since the mid-1970s. Average urea price for
the year was $126 per ton versus $133 last year. Unit margins were down 30%
due to lower prices and $4 per ton higher cost.
Total fertilizer volume was down slightly from last year to 1.2 million
tons. Captive production accounted for 64% of volume. Exports were 10% of
total, about the same as last year.
(PHOTO OF CORN FIELD)
Greater domestic corn acreage this year resulted in increased demand for
anhydrous ammonia. The company is a major U.S. producer of ammonia for direct
application as a crop fertilizer.
Continued on page 8
7
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FIRST MISSISSIPPI CORPORATION
Continued from page 7
FERTILIZER TRADE
Domestic ammonia demand was strong in 1994. Beginning corn inventories
were at an 18-year low due to severe flooding in the Midwest last year. Corn
acreage increased 7%. Favorable weather conditions encouraged direct
application of anhydrous ammonia. Industrial demand for ammonia for production
of plastics, resins, fibers, and explosives also improved.
Ammonia prices jumped on strong demand and tight supplies. U.S. capacity
has decreased in recent years as marginal production facilities have been shut
down or converted to other uses. Several U.S. producers have added capacity to
upgrade ammonia to urea and nitrogen solutions. This has reduced "free" U.S.
ammonia capacity 6% below 1992 levels. A further 3-4% reduction in free
ammonia is expected in the next two years due to planned upgrading projects.
Exports from Russia and Ukraine were also lower this year due to production
and distribution problems and political instability and conflicts among the
independent states.
Urea prices fell slightly as China reduced purchases due to foreign
exchange constraints.
Privatization of fertilizer plants in Latin America, Mexico, and central
Europe, and shutdown of noneconomic operations continues.
FERTILIZER SALES VOLUME GRAPH
OPERATIONS
Both AMPRO and Triad ammonia plants had record production. AMPRO produced
499,718 tons of ammonia versus 466,798 last year and had an on-stream rate of
99.7%. Triad ammonia production was 478,186 tons versus 428,818 tons last
year. The ammonia plant on-stream rate was 98.5%, up from 88.9% last year
primarily due to prior year outages caused by Hurricane Andrew. The
WORLD MAP OF FERTILIZER PRODUCTION
SALES, IDENTIFIABLE ASSETS, CAPITAL EXPENDITURES AND EMPLOYEES GRAPH
8
<PAGE> 11
FIRST MISSISSIPPI CORPORATION
urea plant on-stream rate fell to 91.3% versus 95.7% last year because of
schedled maintenance. The company receives one-half of Triad production.
ENVIRONMENT AND SAFETY
The company is committed to safe working conditions for employees and
environmentally responsible operations for the community. Triad received its
fourth "Award of Merit" from the National Safety Council and has completed
over 1.8 million man-hours without an Occupational Safety and Health
Administration (OSHA) lost-time accident. AMPRO has operated 14 years without
a lost-time accident and has qualified for exemption from OSHA programmed
inspections. From 1987 through 1993, Triad reduced ammonia air emissions 87%
and total water emissions 54%. AMPRO reduced ammonia air emissions 98% and
total water emissions 78% during the same period.
Population growth and rising living standards, coupled with reduced
exports from Russia and Ukraine and closure of some noneconomic production
facilities, have tightened the ammonia supply/demand balance causing higher
prices.
FERTILIZER OUTLOOK
The near term outlook for ammonia is good. Lower exports from Russia and
Ukraine, limited capacity additions in other parts of the world, and the
response of newly privatized operations to real world market factors should
keep ammonia supplies tight. Urea may continue to suffer from oversupply until
China imports return to previous levels.
Use of ethanol, produced from corn and now required as an oxygenate in
reformulated gasolines, may also be a factor. Natural gas prices, weather, and
political and economic developments in Russia, Asia, and Europe continue to
have important and unpredictable influence on operating results.
9
<PAGE> 12
FIRST MISSISSIPPI CORPORATION
COMBUSTION, THERMAL PLASMA AND OTHER
The company develops and markets proprietary combustion and thermal
plasma equipment and services primarily for environmental applications and
manufacturing. Products include low-emission burners, flares, and incinerators,
thermal plasma equipment for waste treatment and steel production, and thermal
plasma systems for aluminum recovery.
Objectives are to develop proprietary products for high growth
environmental and industrial applications.
RESULTS OF OPERATIONS
Results were a pretax operating loss of $12.8 million versus a loss of
$12.2 million last year. Sales were up 33% over last year to $88.0 million.
Results were hurt by low prices and margins, and unusual items including a
15-day unplanned production outage at FirstMiss Steel and heavy legal expenses
for patent defense.
Combustion technology sales grew 31% despite patent litigation with a
major competitor which was successfully settled at year end. Thermal plasma
sales almost doubled over last year primarily due to demand for tundish
heating systems in China and other developing countries. Steel demand and
prices were up, but margins were squeezed by high scrap metal prices, and
production was hurt by severe winter weather and an accident late in the
fourth quarter.
OUTLOOK
Growing environmental concerns and stricter regulations are creating
opportunities for environmental processes and applications utilizing thermal
plasma and low-emission combustion equipment. Backlogs are at an all-time
high. Margins are increasing on most products. Operating results should
improve on better margins and higher sales.
COMBUSTION EQUIPMENT AND SERVICES
Products for environmental and combustion applications include:
/ low-emission burners for process heaters and refinery
/ petrochemical combustion applications;
/ flare systems for destruction of hydrocarbon emissions from refineries,
petrochemical and chemical plants, and marine loading terminals;
/ gas, liquid, and solid waste incinerators; emissions monitoring and
process optimization software for refineries and chemical plants.
The company's proprietary low-emission burners signicantly reduce
nitrogen oxide (NOx) emissions from process heaters in refineries and
petrochemical plants. California's mandate to reduce NOx emissions is
spreading to other states, particularly in the Gulf Coast region.
Flare systems for marine terminals destroy vapors generated during
loading of refined products and light crudes. Vapor recovery systems collect
gasoline and petrochemical vapors at loading facilities for return to storage.
These systems meet current air pollution regulations for the shipment and
transfer of gasoline and other petrochemical products.
Incineration systems dispose of gas, liquid, and solid wastes. Rotary
kiln system applications include treatment of contaminated soils for site
remediation, liquid and solid chemical hazardous wastes, sludge and
wastewater, and disposal of munitions.
Combustion equipment is developed and demonstrated in modern test
facilities under variable conditions of fuel, temperature, and excess air to
meet customer needs. Computerized data acquisition systems permit fast,
accurate analysis of test results.
The company offers Continuous Emissions Monitoring services for refineries
and chemical plants based on an exclusive software license. This predictive
model calculates emissions from process operating data and is more accurate,
less expensive, and more reliable than stack gas analyzers.
Marketing efforts are currently directed at U.S., European, and Pacic Rim
industries that require reduced- or low-emission burners, flares and
incinerators, rotary kilns, and hydrocarbon recovery equipment. Year-end
backlog was up 85%, and was the highest in the company's history.
THERMAL PLASMA
Thermal plasma torches convert electricity into thermal energy using an
ionized gas, or "plasma," generating much higher temperatures than fossil fuel
combustion. Different ionizing gases are used to meet specic process
requirements. Other advantages include energy efficiency, precision, and rapid
response temperature and process control. Torches range from small 96 kilowatt
convertible torches that may run in transferred or non-transferred mode for
use in research laboratories, up to 4 megawatt systems for large commercial
applications.
Plasma torches are ideal for waste treatment and reduction. In
(PHOTO OF THERMAL PLASMA TORCH)
Thermal plasma torches convert electricity into thermal energy,
providing efficient, precise, and rapid response temperature and process
control for a variety of industrial and waste trestment applications.
(SALES, INDENTIFIABLE ASSETS, CAPITAL EXPENDITURES AND EMPLOYEES GRAPHS)
10
<PAGE> 13
FIRST MISSISSIPPI CORPORATION
Japan, the company's plasma systems have been installed in the newest and
largest installations for vitrication of ash residues from municipal waste
incinerators. Vitrication reduces ash volume and creates a slag that does not
leach or require special disposal and which may be used as a raw material for
bricks and ceramic products. Other potential applications include treatment of
medical, low-level radioactive, and industrial chemical wastes.
Industrial applications include ladle and tundish heating for steel
production to improve quality and increase productivity in continuous casters.
Systems for steel production have been sold in the United States, Japan,
China, Germany, and Australia.
ALUMINUM RECOVERY
The company, in cooperation with Alcan International Limited, Canada's
largest primary aluminum producer, developed patented thermal plasma
technology for recovering aluminum metal from aluminum dross. The plasma
process creates no hazardous waste by-product and is cleaner, safer, and more
energy efficient than competing processes.
Dross is a by-product of aluminum processing, containing 30% to 80%
aluminum. Since it is more economical to recover aluminum from dross than to
produce primary aluminum, almost all of the 2 billion pounds of dross produced
each year in North America is processed to recover aluminum.
In addition to recovering 90% of the available aluminum, this total
recycle process produces marketable by-products for refractories, ceramics,
abrasives, and steel production. Competing processes create a saltcake
by-product that requires landfill disposal, a source of concern in the industry.
The company has exclusive worldwide rights to use and license the plasma
technology except in Europe and within Alcan.
OTHER OPERATIONS
The company operates a steel melting and production facility near
Johnstown, Pennsylvania, that utilizes proprietary plasma heating and
horizontal continuous casting. The 400,000-square-foot plant has annual
capacity of 50,000 tons of cast high-grade steel billets and 125,000 tons of
carbon, alloy, and specialty grade bottom-poured ingots. Volume in fiscal 1994
decreased slightly from last year to 96,575 tons. Some ingots are upgraded,
using outside processors, for sale as bar, billet, plate, and wire rod. A
4-metric-ton furnace and plasma ladle reheat facility is used for specialty
metal refining and casting through an existing horizontal bar caster to meet
demand for small quantities of special steel grades.
The company also participates in the growing waste-to-energy field through
50% ownership in five plants in the southeastern United States that burn wood
scrap and other wastes to produce steam for industrial users under long-term
contracts.
(PHOTO OF COMBUSTION EQUIPMENT)
(PHOTO OF TEST FACILITY)
Combustion equipment is developed and fabricated to meet specific
customer requirements. Effectiveness and efficiency are demonstrated in modern
test facilities under simulated operating conditions.
11
<PAGE> 14
FIRST MISSISSIPPI CORPORATION
GOLD
The company owns approximately 81% of the shares of FirstMiss Gold Inc.,
a gold exploration, mining, and production company with headquarters in Reno,
Nevada. Shares in FirstMiss Gold are traded over the counter and listed on The
NASDAQ Stock Market as "FRMG."
The principal property is the Getchell mine in north central Nevada
acquired by the company in 1983. Getchell has been the site of intermittent
gold production since 1938 and at one time was the largest gold producer in
Nevada. Approximately 1 million ounces of gold were produced on the property
prior to FirstMiss Gold's operation. The company produced 1 million ounces in
nine years.
(PHOTO OF TURQUOISE RIDGE)
Much of this year's exploration expenditures targeted Turquoise Ridge, where
multiple core holes intercepted high grade sulfide mineralization similar to
that found in the underground mine. Additional exploration drilling is planned
to define this deposit. If results indicate a potential economic ore body,
engineering studies will be conducted to determine the feasibility of opening a
new underground mine.
Operations include open pit and underground mining, heap leaching, and
milling using pressure oxidation. Dore bars are sold to refiners at world market
prices. Exploration is focused on 33,000 acres at Getchell to increase proven
and probable mineable gold reserves.The company owns approximately 14,100
acres, or 43% of the property, while the remaining 18,900 acres are controlled
by unpatented mining claims located on public land.
Objectives are to be a low-cost gold producer and to increase reserves
through exploration.
OPERATING RESULTS
Pretax operating profits were $7.2 million, up from a loss of $1.3 million
prior year due to higher mill feed grade, higher realized price, and increased
production. Results last year suffered from severe winter weather and mill
mechanical problems.
Sales increased 21% to $95.2 million on record gold production of 243,826
ounces. Average realized price was $390 per ounce versus $374 last year.
Average realized price was higher than the average market price of $379 per
ounce due to hedged sales and gold loan repayments. Sales included 20,625
ounces of gold loan repayments at $475 per ounce and hedged sales of 47,000
ounces at $400 per ounce. The original gold loan of 150,000 ounces was paid in
full in June 1994.
HEDGING
The company periodically sells gold production forward using spot
deferred contracts. When these contracts mature, delivery may be rolled
forward to take advantage of higher spot market prices. As of June 30, 1994,
225,000 ounces were hedged for fiscal 1995 at an average price of $391 per
ounce, and 92,000 ounces were hedged for fiscal 1996 at $392 per ounce.
MILL OPERATIONS
Mill throughput was 1.2 million tons, down slightly from last year.
Recovery was 88.9% versus 88.5% last year. Gold production increased 15% to
215,363 ounces as average mill feed grade increased to 0.203 ounces per ton
from 0.169 with the return to normal mining following the severe winter last
year and the addition of North Pit ore to the mill feed. Mill cash cost was
unchanged at $290 per ounce.
HEAP LEACH OPERATIONS
Low grade oxide ore is processed using conventional heap leach methods.
Production increased 20% to 28,463 ounces versus 23,666 ounces last year on
175,000 tons more ore volume. Cash production cost decreased 9% to $183 per
ounce.
An additional pad was completed in September with capacity to leach an
additional 1.5 million tons of ore.
MINING
Mine operations include open pit and underground mining. Company mining
engineers plan and manage mining by independent contractors. More than 26.6
million tons of material were mined this year, including 3.8 million tons from
the North Pit, 21.3
(SALES, IDENTIFIABLE ASSETS, CAPITAL EXPENDITURES AND EMPLOYEES GRAPHS)
12
<PAGE> 15
FIRST MISSISSIPPI CORPORATION
million tons from the Main Pit, and 1.6 million tons from Turquoise Ridge to
recover 1.7 million tons of sulfide and oxide ore.
Development work is proceeding on five levels in the Getchell Main
Underground mine. Access is via a 950-foot decline which links production
levels extending north along the footwall of the Getchell fault zone, below
and to the west of the Main Pit. Production is scheduled to begin during the
second quarter of fiscal 1995 using drift and fill mining and should reach
about 2,000 tons per day by fiscal year end. Average ore grade from the
underground is expected to exceed 0.300 ounces per ton. Remaining open pit ore
from the Main Pit will be mined by mid-fiscal 1995. A portion of this ore will
be stockpiled and blended with higher grade underground ore to maintain grade
and throughput at levels similar to the last three quarters.
EXPLORATION
Exploration objectives are to add reserves and increase ore grade to
improve economics and extend mine life. In fiscal 1994, exploration efforts were
accelerated and total expenditures increased 54% to $5.7 million. Exploration
expenditures in fiscal 1995 will be about the same.
Total drilling to date has identified approximately 4 million tons of
sulfide mineral deposits containing an estimated 1 million ounces of gold not
included in proven and probable mineable reserves. These mineral deposits
include an estimated 400,000 ounces located below the Getchell Main Underground
mine, 300,000 ounces at Turquoise Ridge, and 140,000 ounces in two other
locations on the property. Further drilling and economic evaluation is required
to determine if these deposits may be classied as proven and probable mineable
reserves.
RESERVES
Proven and probable gold reserves at year end were up 21% to 1,591,700
ounces versus last year. Over 80% of current reserves are underground at
Getchell.
(PHOTO OF UNDERGROUND MINE)
Development of the Getchell Main Underground mine was initiated during
the year for economic mining of high grade sulfide ore below the Main Pit. The
underground ore body is open laterally and at depth.
Proven and Probable Mineable Reserves
<TABLE>
<CAPTION>
Contained
Gold
Tons Grade Ounces
<S> <C> <C> <C>
Sulfide 6,725,400 0.225 1,511,800
Oxide 2,860,800 0.028 79,900
Total 9,586,200 0.166 1,591,700
</TABLE>
GOLD OUTLOOK
Grade should continue to improve with the addition of underground ore.
Exploration efforts should increase reserves and extend mine life.
13
<PAGE> 16
FIRST MISSISSIPPI CORPORATION
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years ended June 30
(In Thousands of Dollars Except Per Share Amounts)
-------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------------------------------------------------
% % % % %
- - - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers:
Chemicals $161,045 32 143,497 33 130,331 29 130,494 29 135,096 34
Fertilizer 163,984 32 141,642 33 184,108 41 196,128 44 159,810 40
Gold 95,150 19 78,773 18 83,048 18 73,464 17 62,042 16
Combustion, Thermal Plasma
and Other 88,046 17 66,028 15 55,755 12 43,273 10 37,725 10
-------- --- ------- --- ------- --- ------- --- ------- ---
Total sales 508,225 100 429,940 99 453,242 100 443,359 100 394,673 100
Other revenues 1,750 -- 1,635 1 1,669 -- (97) -- 1,698 --
-------- --- ------- --- ------- --- ------- --- ------- ---
Total revenues $509,975 100 431,575 100 454,911 100 443,262 100 396,371 100
======== === ======= === ======= === ======= === ======= ===
Operating profit (loss) from
continuing operations:
Chemicals $ 30,295 61 24,434 100 15,333 36 16,214 50 27,192 134
Fertilizer 24,760 50 13,218 55 24,196 58 20,127 63 (4,221) (20)
Gold 7,225 15 (1,305) (5) 7,874 19 2,540 8 1,707 8
Combustion, Thermal Plasma
and Other (12,763) (26) (12,187) (50) (5,656) (13) (6,818) (21) (4,480) (22)
-------- --- ------- --- ------- --- ------- --- ------- ---
49,517 100 24,160 100 41,747 100 32,063 100 20,198 100
=== === === === ===
Unallocated corporate expenses (8,435) (7,069) (7,461) (7,005) (7,544)
Interest expense, net (9,782) (12,445) (9,005) (12,531) (11,442)
Other income (expense), net (132) (271) 1,410 (577) 386
-------- ------- ------- ------- -------
31,168 4,375 26,691 11,950 1,598
Income taxes 12,150 1,719 9,872 4,788 577
Minority interests in net (earnings)
loss of consolidated subsidiaries (1,049) 458 (769) (16) (28)
Equity in net earnings (loss) of
equity investees (306) (431) 66 810 1,301
-------- ------- ------- ------- -------
Earnings from continuing operations 17,663 2,683 16,116 7,956 2,294
Earnings (loss) from discontinued
operations, net of taxes -- (26,052) (11,889) (2,647) 2,080
Cumulative effect of change in
accounting principle 4,200 -- -- -- --
-------- ------- ------- ------- -------
Net earnings (loss) $ 21,863 (23,369) 4,227 5,309 4,374
======== ======= ======= ======= =======
Earnings (loss) per common share:
Continuing operations $ .88 .13 .81 .40 .12
Discontinued operations -- (1.30) (.60) (.13) .10
Cumulative effect of change
in accounting principle .21 -- -- -- --
-------- ------- ------- ------- -------
Total earnings (loss)
per common share $ 1.09 (1.17) .21 .27 .22
======== ======= ======= ======= =======
Net working capital $ 78,874 50,121 59,865 32,476 53,269
Long-term debt
(including gold loan) $104,287 113,531 154,092 142,107 165,067
Total assets $377,576 383,619 461,534 462,260 498,071
Stockholders' equity $177,687 160,774 188,378 187,928 189,591
Dividend payout rate 27 * 140 111 135
Return on average equity -
continuing operations 10 2 9 4 1
Return on sales -
continuing operations 3 1 4 2 1
Long-term debt/equity ratio .59 .71 .82 .76 .87
Current ratio 2.32 1.62 1.86 1.41 1.64
Dividends per share $ .30 .30 .30 .30 .30
Book value per share $ 8.85 8.05 9.50 9.56 9.65
</TABLE>
*Computation not applicable due to loss
14
<PAGE> 17
FIRST MISSISSIPPI CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1994 VERSUS 1993
CONSOLIDATED RESULTS
Results for 1994 were up sharply reflecting higher earnings from
continuing operations and a $4.2 million benefit from an accounting change. In
addition, prior year results included $26.1 million in after-tax losses
related to discontinued operations. Earnings from continuing operations
increased on improvement in segment operations and lower interest expense.
Interest expense declined due to lower average outstanding debt following the
disposition of oil and gas operations in June 1993. Effective July 1, 1993,
the Company adopted Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes," which resulted in a $4.2 million benefit.
In addition, $0.6 million in tax expense was recorded during the first
quarter, as required by this new accounting principle, to adjust deferred
taxes to reflect the increase in federal tax rates which occurred in August
1993 (See Note 8 to Financial Statements).
Results of equity investees improved slightly for the year, primarily due
to a nonrecurring technology sale by Melamine Chemicals, Inc. Minority
interest results reflect the earnings at 81% owned FirstMiss Gold versus a
loss in the prior year.
SEGMENT OPERATIONS
Segment pretax operating profits were $49.5 million, more than double the
previous year, reflecting improvement in chemicals, fertilizer and gold
operations. Sales were up 18% and increased in all segments.
Chemicals pretax operating results were up 24% over 1993. The improvement
was due to increased specialty chemicals sales, primarily fine chemicals for
agriculture and performance chemicals for the semiconductor industry.
Contribution from specialties increased 25% and represented 60% of total
contribution versus 55% last year. Contribution from intermediate chemicals
rose slightly. Chemicals sales increased 12%, primarily on higher specialty
sales.
Fertilizer pretax operating results for 1994 were up 87% and sales
increased 16%, primarily due to higher ammonia prices. Average ammonia price
for the year was $130 a ton, up 29% from the prior year. Volume remained about
the same. Urea price declined 5% due to an increase in imports and volume
declined 10% due to lower production caused by a 26-day routine maintenance
turnaround in the second quarter. Fourth quarter results for fertilizer
accounted for 60% of fertilizer's profits for the current year. Ammonia prices
rose to a high of $225 per ton during the quarter and averaged $192 per ton
versus $101 fourth quarter prior year. Prices rose on strong demand driven by
increased corn acreage due to prior year flooding in the Midwest, excellent
early planting weather and strong industrial demand. Supplies were also tight
due to several unplanned short-term plant outages by other producers, less
merchant ammonia due to plant upgrades, and disruptions of production and
shipments out of Russia and Ukraine, including an accident in the Bosphorous
Straits that temporarily blocked passage of ammonia vessels leaving the Black
Sea. As fiscal 1995 begins, ammonia prices have remained at relatively high
levels. Unit production cost was virtually unchanged in 1994 versus 1993 as a
9% increase in average natural gas cost was offset by lower fixed costs. Gas
cost for 1994 and 1993 included $0.7 million and $3.3 million, respectively,
in futures contracts gains (See Note 1(k) to Financial Statements). At June
30, 1994, the Company had entered into futures contracts for approximately 38%
of anticipated purchases of natural gas for the period July 1994 to June 1995
at an average price of $2.22 per MMBTU.
Gold pretax operating results were up $8.5 million from 1993, primarily
due to higher ore grade and higher prices. Average ore grade for 1994
increased to 0.203 ounces per ton from 0.169 in 1993 due to the milling of
high grade North Pit ore during the third and early fourth quarters. The grade
for 1993 was 8% below 1992 and 1991 average grades, however, due to the use of
low grade ore stockpiles as severe winter weather disrupted normal mining
operations. Production for the year was up 16% to 243,826 ounces due to the
higher ore grade, which more than offset a 4% decline in mill throughput which
averaged 3,268 tons per day. Sales for the year were up 21% due to the
increase in production and an increase in average realized price from $374 to
$390 per ounce. Sales for 1994 and 1993 included gold loan payments of 20,625
ounces and 28,125 ounces, respectively, at $475 per ounce. In addition, in
1994 and 1993, the Company exercised options for the sale of 47,000 ounces and
40,000 ounces, respectively, at $400 per ounce. The above gold loan payments
and options were the final payments and options related to the 1988 gold loan.
Exploration expense for the year increased $1.2 million with activities
concentrated on the Turquoise Ridge Fault zone. Proven and probable reserves
increased 21% for the year to 1.6 million ounces at June 30, 1994.
In August 1993, the Company began selling gold forward using spot
deferred contracts. As of June 30, 1994, approximately 74% of planned
production has been sold for delivery over the next one and one-half years
using spot deferred contracts at prices ranging between $381 and $399 per
ounce. Under these contracts, if prices rise the Company may roll delivery
dates forward and sell into the spot market.
Development work is continuing on the underground mine. Initial
production from the first underground level is expected to be established in
the second quarter of fiscal 1995 with mining costs and grades anticipated to
be higher than open pit ore.
In February 1990, the Company, which holds approximately
Continued on page 16
15
<PAGE> 18
FIRST MISSISSIPPI CORPORATION
Continued from page 15
Management's Discussion and
Analysis of Financial Condition and Results of Operations continued
81% of the stock of FirstMiss Gold Inc. ("FRMG"), announced plans to distribute
this stock to shareholders. The spin-off was subject to a favorable tax ruling
from the Internal Revenue Service and a favorable operating and financial
outlook. The required favorable ruling was received in December 1990. However,
in the interim, gold prices had fallen and the spin-off was put on hold. In
July 1994, a new ruling was requested to permit a tax-free spin-off. Upon
receipt of a favorable ruling, the spin-off will be contingent on FRMG's
ability to succeed as a viable, stand-alone company.
Combustion, thermal plasma and other pretax operating losses increased 5%
primarily due to lower margins and increased legal expenses related to
combustion products. Margins on combustion products declined on lower sales
prices for burners, flares and vapor recovery systems due to competitive
market pressure. Margins are projected to improve in 1995, however, on
improved product mix and technological advances. Legal expenses were related
to defense of a patent claim, which has been settled. Losses from aluminum
recovery operations were slightly lower than prior year. Tolling volume
increased 31% for the year, however unit toll prices declined 7%. Total group
sales for the year increased 33%, primarily due to increased sales of
combustion products and higher priced value-added steel products. Steel volume
remained the same, but margins declined due to higher raw material and fixed
costs. Steel margins were also hurt by a 15-day production outage in the
fourth quarter following a plant accident. Prior year results included a $2.4
million receivable loss. Margins on thermal plasma systems improved for the
year as sales increased over the prior year.
Unallocated corporate expenses were up 19% for the year, primarily due to
$1.3 million in additional interest related to a deferred compensation plan
begun in 1986. Interest expense, net, for 1994 declined $2.7 million due to
lower average outstanding debt.
1993 VERSUS 1992
CONSOLIDATED RESULTS
Results for 1993 were down from 1992, reflecting losses on the disposal
of businesses and an 83% decline in results of continuing operations.
Continuing operations declined on lower margins in gold and fertilizer,
increased losses in start-up businesses and higher interest expense. Interest
expense increased 34% in 1993 primarily due to higher average interest rates
following the Company's issuance of senior long-term debt in June of 1992.
The loss on investments in 1993 was due to the write-down of System
Industries, Inc. ("SII") stock following a 58% decline in SII stock price.
Results for 1992 reflect net gains from the sale of stock investments.
Interest and other income for 1993 increased $1.1 million over 1992 on
increased license and fee income in chemicals and fertilizer operations.
Results for 1992 included a $0.8 million gain from the sale of FRM
Agricultural Sciences Partnership (See Note 13 to Financial Statements).
Results of equity investees for 1993 declined from 1992, primarily due to
increased losses at MCI. Higher losses at MCI resulted from 15% lower selling
prices, the result of worldwide over-capacity and weak demand.
Minority interest results reflect the loss at 81% owned FirstMiss Gold
for 1993 versus earnings in 1992.
SEGMENT OPERATIONS
Segment operating profits decreased in 1993 as lower results in
fertilizer, gold and combustion, thermal plasma and other operations offset
improvement in chemicals. Sales for 1993 declined 5%, primarily due to lower
fertilizer volume.
Chemicals pretax operating profits for 1993 were up 59% and sales were up
10%, primarily due to increased sales and contribution from specialty
products. Specialty contribution increased 39% on new product sales and custom
manufacturing contracts. In August 1992, the Company acquired a Dayton, Ohio,
facility from Monsanto, increasing custom manufacturing capacity, and entered
into a three-year production agreement with Monsanto's Agricultural Group.
Contribution from chemical intermediates, which includes aniline, improved
nearly 9%, reflecting good demand from agricultural and construction markets.
Fertilizer pretax operating profits for 1993 declined 45%, primarily due
to higher natural gas prices. Sales declined on 24% lower ammonia brokerage
volume as a result of the June 30, 1992, termination of an ammonia purchase
agreement. Total captive production remained about the same and accounted for
62% of sales. Average ammonia price for 1993 was $101 per ton versus $99 in
1992. Average unit production cost increased nearly 30% on a 32% increase in
average natural gas price, net of $3.3 million in natural gas futures
contracts gains. Unit margins declined $7 per ton. Average urea price for the
1993 was $133 per ton versus $130 per ton for 1992. Average unit cost was up
20% and unit margins were down $13 per ton.
Gold pretax operating results for 1993 declined $9.2 million, primarily
due to higher unit cost, lower production and increased exploration expenses.
Total unit costs increased from $328 per ounce to $357 per ounce as mill feed
grade decreased 8% to 0.169 ounces per ton. This resulted primarily from the
unscheduled use of low grade ore stockpiles to supplement mill feed as severe
winter weather disrupted normal mining operations. Remaining stockpiled
inventory was written down $1.5 million during the year due to an increase in
estimated cost to process the ore. Total production for 1993 declined 4% to
210,465 ounces due to the low mill feed grade, despite a 4% increase in
average daily throughput to 3,397 tons per day. Heap leach production,
however, was up due to an increase in tons processed. Sales in 1993 and 1992
included gold loan repayments of 28,125 ounces and 37,500 ounces,
respectively, at $475 per ounce. Also included were hedged sales at $400 per
ounce of 40,000 ounces in 1993 and 1992. Sales for 1993
16
<PAGE> 19
decreased 5% due to lower production and a 2% reduction in the average
realized sales price. Exploration expenses for 1993 increased $1.7 million,
reflecting increased exploration activity at the Getchell Property. Deferred
stripping charges for 1993 were $11.2 million versus $2.3 million in the prior
year.
Combustion, thermal plasma and other pretax operating results for 1993
declined $6.5 million from 1992 as increased losses from aluminum recovery,
steel production and the sale of thermal plasma systems offset improvement in
combustion technology. Sales for this group increased 18% due to increased
combustion technology and steel sales. Aluminum recovery losses, which
accounted for almost half of this group's losses, reflected low throughput and
cancellation of a baseload contract during the second quarter. This contract
was renegotiated and shipments resumed on July 1, 1993. The decline in steel
results was due to lower unit margins and a $2.4 million receivable write-off.
A $1.7 million bad debt allowance was established for this customer in 1992
following their bankruptcy. Under terms of the bankruptcy proceedings, the
Company provided additional trade credit, but the customer's operating results
deteriorated further, and during the fourth quarter of fiscal 1993 they ceased
operations. Steel sales for 1993 increased as unit sale price and volume
increased 8% each. Margins declined, however, due to increased scrap steel
cost. Combustion technology was profitable for 1993 and improved over 1992 due
to increased sales. Growth in combustion operations accounted for most of the
increase in consolidated general, selling and administrative expense in 1993.
Losses related to thermal plasma systems reflected lower orders for the year.
DISCONTINUED OPERATIONS
In December 1992, a plan was approved to discontinue o perations in coal
mining, industrial insulation and certain other operations. An after tax
write-down of $16.3 million was recorded in the second quarter of 1993 for
these dispositions. An additional $3.3 million estimated after tax write-down
was recorded in the fourth quarter of 1993 following a review of the plan
assumptions at year end. Also in the fourth quarter of 1993, the Company
discontinued oil and gas operations with the sale of assets and reserves for
cash proceeds of $52.0 million. A $3.5 million after tax loss was recorded on
this transaction. Losses in coal operations and $8.2 million in after tax
write-downs of oil and gas assets in the third quarter of 1992 accounted for
the majority of discontinued operations results for 1993 and 1992. The oil and
gas write-down was required under full-cost accounting rules. In October 1993,
the Company completed the disposition of the coal operations. The Company
continues as guarantor on $29.2 million in reclamation bonds until bonding is
obtained by the purchaser, which is not to be later than June 1996. The total
reclamation liability covered by the bonding is currently estimated at $5.5
million. The Company believes all of the requisite bonds will be obtained by
the purchaser (See Note 2 to Financial Statements).
CAPITAL RESOURCES AND LIQUIDITY
As of June 30, 1994, the Company's total debt was $105.7 million, down
$19.0 million from the prior year end, when including the gold loan. Total
debt as a percentage of total debt and equity was 37%, down from 44% prior
year, and the lowest since 1988. The lower total debt reflects strong cash
flow from operations and $16.0 million in proceeds from the disposition of
coal operations and other assets. Depreciation, depletion and amortization
expense increased 6% as additional expense related to amortization of deferred
mining costs at gold operations more than offset the loss of depreciation from
discontinued operations. Working capital was up over the prior year end as
higher sales resulted in increases in receivables and inventory at chemicals,
steel and gold, more than offsetting the liquidation of working capital
related to discontinued operations.
During the year the Company completed the disposition of coal operations.
This disposition generated cash proceeds of $8.4 million in addition to the
liquidation of related working capital. Also, during the year the Company
borrowed $7.6 million against life insurance policies to which the Company is
owner and beneficiary. Capital expenditures declined 20% for the year,
primarily due to lower chemicals capital expenditures. Capital expenditures
are projected to be $56.0 million in 1995, up 80% due to increased
expenditures for chemicals projects and underground mine development in gold.
Deferred stripping costs were lower in 1994 versus 1993 as the stripping
ratios related to open pit mining declined during the year. Environmental
capital expenditures for fiscal 1994 were $1.3 million. Projected
environmental capital expenditures for 1995 are $3.0 million and are primarily
related to the chemicals segment.
At June 30, 1994, the Company had access to an additional $60.0 million
under its committed long-term credit facility. The Company believes its access
to this facility, plus cash flow from operations, is adequate to meet current
and future capital requirements. A spin-off of FRMG is not projected to have a
material effect on the Company's liquidity or capital resources. Creditor
consents, or restructuring of credit facilities, however, would be required.
In November 1992, the Financial Accounting Standards Board ("FASB")
issued Statement No. 112, "Employers' Accounting for Postemployment Benefits."
This Statement established accounting standards for employers who provide
benefits to former or inactive employees after employment but before
retirement. This Statement is effective for fiscal years beginning after
December 15, 1993. The adoption of this standard in fiscal 1995 is not project
ed to have a material impact on the Company.
In May 1993, the FASB issued Statement No. 115 "Accounting for Certain
Investments in Debt and Equity Securities." Statement No. 115 is required to
be implemented for fiscal years beginning after December 15, 1993. The effects
of implementing Statement No. 115 will not have a material effect on the
Company based on current investments.
17
<PAGE> 20
FIRST MISSISSIPPI CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In Thousands
of Dollars)
-------------------
June 30
-------------------
1994 1993
- - - ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents (note 7) $ 4,952 15,878
Receivables:
Trade, less allowance for doubtful accounts of $721 in 1994 and $4,565 in 1993 49,629 39,500
Equity investees (note 3) 1,229 1,312
Other (note 8) 7,982 200
-------- -------
Total receivables 58,840 41,012
-------- -------
Inventories:
Finished products 25,334 22,203
Work in process 19,828 13,187
Raw materials and supplies 22,041 17,821
Product exchange agreements 933 925
-------- -------
Total inventories 68,136 54,136
-------- -------
Prepaid expenses and other current assets (note 8) 6,907 1,957
Net current assets of discontinued operations (note 2) -- 17,877
-------- -------
Total current assets 138,835 130,860
-------- -------
Investments and other assets:
Investments in equity investees (note 3) 19,974 20,461
Other investments (note 3) 1,300 8,820
Intangible and other assets, at cost less applicable amortization (note 4) 15,576 17,367
-------- -------
Total investments and other assets 36,850 46,648
-------- -------
Property, plant and equipment, at cost less accumulated depreciation, depletion
and amortization (notes 5, 6 and 7) 201,891 206,111
-------- -------
$377,576 383,619
======== =======
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt (note 6) $ 1,433 1,428
Deferred revenue (note 7) 1,477 16,533
Accounts payable:
Trade (including book overdrafts of $5,948 in 1994 and $9,796 in 1993) 36,781 43,359
Equity investees (note 3) 4,510 2,999
-------- -------
Total accounts payable 41,291 46,358
-------- -------
Accrued expenses and other current liabilities (note 8) 13,300 16,420
Net current liabilities of discontinued operations (note 2) 2,460 --
-------- -------
Total current liabilities 59,961 80,739
-------- -------
Long-term debt, excluding current installments (note 6) 104,287 113,531
Other long-term liabilities 12,491 9,439
Long-term liabilities of discontinued operations (note 2) -- 4,205
Deferred taxes (note 8) 13,922 6,752
Minority interests 9,228 8,179
Stockholders' equity (notes 6, 9 and 10):
Serial preferred stock. Authorized 20,000,000 shares; none issued -- --
Common stock of $1 par value. Authorized 100,000,000 shares; outstanding
20,086,090 shares in 1994 and 19,980,440 shares in 1993 20,086 19,980
Additional paid-in capital 3,378 2,424
Retained earnings 154,223 138,370
-------- -------
Total stockholders' equity 177,687 160,774
-------- -------
Commitments and contingent liabilities (notes 7, 8, 9, 11 and 12) $377,576 383,619
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
18
<PAGE> 21
FIRST MISSISSIPPI CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(In Thousands of Dollars,
Except Per Share Amounts)
-----------------------------------
Years ended June 30
-----------------------------------
1994 1993 1992
--------- ------- -------
<S> <C> <C> <C>
Revenues:
Sales (note 14) $ 508,225 429,940 453,242
Gain (loss) on investments, net (note 3) (286) (670) 500
Interest and other income (note 13) 2,036 2,305 1,169
--------- ------- -------
509,975 431,575 454,911
--------- ------- -------
Costs and expenses:
Cost of sales 413,148 363,818 375,752
General, selling and administrative expenses 46,042 42,350 37,460
Other operating expenses 9,508 8,273 5,473
Interest expense (note 6) 10,109 12,759 9,535
--------- ------- -------
478,807 427,200 428,220
--------- ------- -------
Earnings from continuing operations before income taxes,
minority interests, investee earnings (loss) and cumulative
effect of change in accounting principle 31,168 4,375 26,691
Income taxes (note 8) 12,150 1,719 9,872
Minority interests in net (earnings) loss of consolidated subsidiaries (1,049) 458 (769)
Equity in net earnings (loss) of equity investees (note 3) (306) (431) 66
--------- ------- -------
Earnings from continuing operations before cumulative
effect of change in accounting principle 17,663 2,683 16,116
Loss from discontinued operations, net of taxes (note 2) -- (2,911) (11,889)
Loss on disposal of businesses, net of taxes (note 2) -- (23,141) --
Cumulative effect of change in accounting principle (note 8) 4,200 -- --
--------- ------- -------
Net earnings (loss) $ 21,863 (23,369) 4,227
========= ======= =======
Earnings (loss) per common share (note 10):
Continuing operations $ .88 .13 .81
Discontinued operations -- (1.30) (.60)
Cumulative effect of change in accounting principle .21 -- --
--------- ------- -------
Total earnings (loss) per common share $ 1.09 (1.17) .21
========= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE> 22
FIRST MISSISSIPPI CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(In Thousands of Dollars, Except Per Share Amounts)
-----------------------------------------------------------------
Years ended June 30, 1994, 1993 and 1992
-----------------------------------------------------------------
Unrealized
loss on
Common stock Additional marketable
----------------------- paid-in Retained equity
Shares Amount capital earnings securities
- - - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1991 19,648,540 $ 19,648 -- 169,426 (1,146)
Net earnings -- -- -- 4,227 --
Dividends declared - $.30 per share -- -- -- (5,920) --
Common stock issued:
Employee stock options 28,562 29 199 -- --
Convertible debentures 147,200 147 978 -- --
Change in unrealized loss on marketable
equity securities -- -- -- -- 790
---------- ---------- ----- ------- ------
Balance, June 30, 1992 19,824,302 19,824 1,177 167,733 (356)
Net loss -- -- -- (23,369) --
Dividends declared - $.30 per share -- -- -- (5,994) --
Common stock issued:
Employee stock options 15,038 15 80 -- --
Convertible debentures 141,100 141 764 -- --
Income tax benefit on exercise of
convertible debentures -- -- 403 -- --
Change in unrealized loss on marketable
equity securities -- -- -- -- 356
---------- ---------- ----- ------- ------
Balance, June 30, 1993 19,980,440 19,980 2,424 138,370 --
Net earnings -- -- -- 21,863 --
Dividends declared - $.30 per share -- -- -- (6,010) --
Common stock issued:
Employee stock options 39,350 39 351 -- --
Convertible debentures 66,300 67 561 -- --
Income tax benefit on exercise of stock
options and convertible debentures -- -- 42 -- --
---------- ---------- ----- ------- ------
Balance, June 30, 1994 20,086,090 $ 20,086 3,378 154,223 --
========== ========== ===== ======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
20
<PAGE> 23
FIRST MISSISSIPPI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In Thousands of Dollars)
---------------------------------
Years ended June 30
---------------------------------
1994 1993 1992
- - - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 21,863 (23,369) 4,227
Adjustments to reconcile net earnings (loss) to net cash provided
by operating activities:
Depreciation, depletion and amortization 42,248 39,748 53,016
Provision for losses on receivables 561 2,589 2,276
Deferred taxes 3,703 (23,791) (5,068)
Gain on sale of subsidiary -- -- (842)
(Gain) loss on sale of property, plant and equipment (80) 20,237 74
Investment income (153) (1,619) (1,560)
(Gain) loss on disposition of investments and other assets 286 4,616 (244)
Undistributed (earnings) loss of affiliates 487 685 (9)
Minority interests in net earnings (loss) of consolidated subsidiaries 1,049 (458) 769
Changes in current assets and liabilities, net of effects of dispositions:
(Increase) decrease in receivables (4,465) 2,069 (3,053)
(Increase) decrease in inventories (13,200) (5,346) 2,190
(Increase) decrease in prepaid expenses (1,723) 1,823 (1,066)
Increase (decrease) in accounts payable (7,522) 15,200 (12,560)
Increase (decrease) in accrued expenses and other current liabilities (6,385) 10,676 1,162
Deferred revenue (2,488) 10,980 (134)
Other, net 170 507 (487)
-------- ------- -------
Net cash provided by operating activities 34,351 54,547 38,691
-------- ------- -------
Cash flows from investing activities:
Proceeds from sale of subsidiaries 8,448 -- 2,006
Capital expenditures (31,113) (39,070) (33,646)
Deferred stripping costs (4,612) (11,244) (2,315)
Proceeds from sale of property, plant and equipment 442 54,739 1,935
Proceeds from disposition of investments and other assets 7,594 335 5,820
Acquisition of investments and other assets (1,476) (1,923) (4,407)
Investment in equity investees, net -- -- 232
-------- ------- -------
Net cash provided by (used in) investing activities (20,717) 2,837 (30,375)
-------- ------- -------
Cash flows from financing activities:
Net borrowings (repayments) of notes payable to banks -- (10,000) 3,000
Principal repayments of long-term debt (11,400) (32,127) (71,736)
Proceeds from issuance of long-term debt 1,706 20 94,279
Purchase of gold for repayment of gold loan (9,800) (13,363) (17,818)
Dividends (6,010) (5,994) (5,920)
Proceeds from issuance of common stock 944 896 764
-------- ------- -------
Net cash provided by (used in) financing activities (24,560) (60,568) 2,569
-------- ------- -------
Net increase (decrease) in cash and cash equivalents (10,926) (3,184) 10,885
Cash and cash equivalents at beginning of year 15,878 19,062 8,177
-------- ------- -------
Cash and cash equivalents at end of year $ 4,952 15,878 19,062
======== ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized $ 10,182 12,302 10,059
======== ======= =======
Income taxes, net $ 15,581 1,748 11,455
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE> 24
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1994, 1993 and 1992
(In Thousands of Dollars, Except Amounts Per Share and Per Ounce)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial statements include the accounts of the parent
company and its subsidiaries. Intercompany balances and transactions have been
eliminated in consolidation. Investments in joint ventures, partnerships and
other equity investments are accounted for by the equity method.
(b) Recognition of Revenue
Revenues generally are recorded when title and risk of ownership pass,
except for long-term construction type contracts, which are accounted for
under the percentage of completion method. Revenues from shipments using
forward sales agreements are recorded at the settlement date of the
agreements.
(c) Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out and weighted average methods for purchased
inventories of finished product, and using the average cost method with respect
to all other inventories.
(d) Depreciation, Depletion and Amortization
Depreciation of plant and equipment and depreciable investments is based
on cost and the estimated useful lives of the separate units of property.
Except for the gold segment, where the units-of-production method is also
used, the straight-line and accelerated methods are primarily used in
determining the amount of depreciation charged to expense. Goodwill of
businesses acquired is amortized generally over 20 years using the
straight-line method. Other intangibles are amortized over their estimated
useful lives (5-17 years) using the straight-line method.
Amortization of deferred stripping costs is based on the tons of ore
mined in the period and the estimated average stripping ratio for the life of
each individual open pit.
Loan costs are amortized over the terms of related loans using the
interest method.
(e) Gold Properties
Mine development expenditures for commercially feasible mining properties
not yet producing are capitalized. Estimated reserves for mine reclamation
costs have been established by charges to earnings over estimated mine lives
for restoring certain disturbed mining and milling areas to comply with
existing reclamation standards of various government agencies.
(f) Income Taxes
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," (SFAS No. 109)
which requires the recognition of deferred tax liabilities and assets for
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Prior to July 1993, the deferred income tax provision was based on the
differences in the timing of recognizing transactions for financial and tax
reporting as required by APB Opinion No. 11.
(g) Pension Plans
Pension cost is determined using the "projected unit credit" actuarial
method for reporting purposes. The Company's funding policy is to contribute
annually at amounts not less than the minimum requirements of the Employee
Retirement Income Security Act of 1974.
(h) Stock Options
All stock options are nonqualified or incentive options and require no
charges against income upon grant or exercise. The Company receives a tax
benefit from dispositions that result in ordinary income to option recipients
that is reflected in stockholders' equity.
(i) Cash and Cash Equivalents
The Company considers all short-term investments with original maturities
of three months or less to be cash equivalents.
(j) Investments
Realized gains and losses on investments are determined on the basis of
specific costs and included in gain (loss) on investments, net. Unrealized gains
and losses on noncurrent marketable equity securities were included in
stockholders' equity. All investments were carried at the lower of aggregate
cost or market. Future equity investments will be carried at fair value in
accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
22
<PAGE> 25
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(k) Futures Contracts
The fertilizer segment periodically purchases contracts for the future
delivery of natural gas, its key raw material, on the New York Mercantile
Exchange. Gains and losses on these contracts are treated as inventory
adjustments and recognized in income when finished product is sold. Unrealized
gains and losses are deferred and reflected in the balance sheet.
The gold segment enters into spot deferred sales contracts for a portion
of planned production. Under such contracts, the Company has the option to
roll forward delivery dates and sell current production into the spot market.
Unrealized gains and losses on such contracts are deferred until settlement of
the contract.
(l) Reclassifications
Certain consolidated financial statement amounts have been reclassified for
consistent presentation.
2. DISCONTINUED OPERATIONS
In December 1992, the Board of Directors of the Company approved a plan
to discontinue operations in coal mining and certain other ventures effective
December 31, 1992. Cash proceeds of approximately $4,400 and noncash proceeds
of $416 were received from the sale of assets of the above operations in 1993.
In October 1993, the Company completed the coal discontinuance with the
sale of Pyramid Mining Inc. Proceeds of the transaction included cash of
$6,000 and an 18-month promissory note for $4,000. In addition, the Company
has liquidated all working capital associated with the coal operations. In
April 1994, $3,000 of the promissory note was prepaid with the balance
rescheduled over the remaining original term. An overriding royalty with a
potential value of $3,000 was also received related to the disposition, but
not accrued due to its contingent nature.
While the sale effectively completes the disposition of the coal
operations and transfers the liability for reclamation to the purchaser, the
Company continues as guarantor on $29,200 of reclamation bonds until bonding
is obtained by the purchaser, which is not to be later than June 1996. The
total reclamation liability covered by the bonding is currently estimated at
$5,500.
In June 1993, the Company sold the reserves and related assets of its oil
and gas segment for $52,000 cash, effective May 1, 1993.
A pretax loss of $39,578 was recorded in 1993 related to the above
transactions, and is included in loss on disposal of businesses, net of
applicable income tax benefit of $16,437, in the accompanying consolidated
financial statements. The tax benefit includes $3,173 of income realized on the
reversal of deferred income taxes related to oil and gas operations that were
originally recorded at tax rates higher than the current provisions of enacted
tax laws. The pretax loss at June 30, 1993 included the following:
<TABLE>
<CAPTION>
Coal Oil and Gas Other Total
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loss on property, plant
and equipment $ 12,715 6,515 834 20,064
Loss on investment
and other assets 925 -- 3,027 3,952
Severance 1,115 970 172 2,257
Reclamation 6,705 -- -- 6,705
Commitments and
other accruals 2,675 2,333 1,592 6,600
-------- -------- -------- --------
$ 24,135 9,818 5,625 39,578
======== ======== ======== ========
</TABLE>
The net assets and liabilities of the discontinued businesses have been
segregated in the accompanying consolidated financial statements. The following
is the composition of these net assets and liabilities:
<TABLE>
<CAPTION>
June 30
------------------
1994 1993
-------------------------------------------------------------------
<S> <C> <C>
Receivables $ 105 13,911
Inventories -- 2,657
Prepaid expenses and other current assets 44 1,009
Investments and other assets -- 2,751
Property, plant and equipment, net 121 10,564
Current installments of long-term debt (50) (300)
Accounts payable (41) (4,322)
Accrued expenses and other current liabilities (2,639) (8,393)
------- -------
Net current assets (liabilities)
of discontinued operations $(2,460) 17,877
======= =======
Long-term reclamation and other liabilities $ -- 4,155
Long-term debt, excluding current
installments -- 50
------- -------
Long-term liabilities of discontinued
operations $ -- 4,205
======= =======
</TABLE>
23
<PAGE> 26
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The statements of operations have been reclassified to separate
discontinued and continuing operations. Revenues and net loss of the
discontinued operations for the period of 1993 prior to discontinuance and for
the year ended June 30, 1992 were as follows:
<TABLE>
<CAPTION>
1993 1992
---------------------------------------------------------------
<S> <C> <C>
Revenues $ 50,837 71,522
========= =========
Loss before income taxes $ (4,438) (18,871)
Income tax benefit 1,527 6,982
--------- ---------
Loss from discontinued operations,
net of taxes $ (2,911) (11,889)
========= =========
</TABLE>
3. INVESTMENTS
The following is a summary of financial information related to affiliated
companies:
<TABLE>
<CAPTION>
Years ended June 30
---------------------------
1994 1993 1992
----------------------------------------------------------------------
<S> <C> <C> <C>
After tax equity in net earnings (loss):
Melamine Chemicals, Inc. $ (468) (574) (143)
Triad Chemical (57) (74) (8)
Power Sources, Inc. 219 217 219
Other -- -- (2)
------ ------ ------
$ (306) (431) 66
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
June 30
----------------------
1994 1993
----------------------------------------------------------
<S> <C> <C>
Investments, at equity:
Melamine Chemicals, Inc. $ 6,729 7,471
Triad Chemical 9,127 9,219
Power Sources, Inc. 4,118 3,771
--------- ---------
$ 19,974 20,461
========= =========
Net assets per books of affiliates:
Current assets $ 29,801 35,055
Noncurrent assets 44,880 43,975
Current liabilities (11,015) (12,215)
Noncurrent liabilities (8,415) (9,568)
--------- ---------
$ 55,251 57,247
========= =========
</TABLE>
The Company has a 50% ownership interest in Power Sources, Inc. which
burns wood waste to create steam for industrial users.
The Company also has a 50% ownership interest in Triad Chemical, an
unincorporated joint venture. The Company is entitled to purchase, at cost of
production, one-half of all anhydrous ammonia and urea produced by the Triad
plant. Purchases were $33,563 in 1994, $31,308 in 1993 and $25,975 in 1992.
The Company sells raw materials to and purchases production by-products
from Melamine Chemicals, Inc. (MCI), a 23.4% owned investment. Sales were
$8,747 in 1994, $9,886 in 1993 and $8,511 in 1992. Purchases were $2,490 in
1994, $2,346 in 1993 and $1,973 in 1992. The MCI investment had a quoted
market value of approximately $7,849 and $6,694 at June 30, 1994 and 1993,
respectively.
Included in other investments at June 30, 1993 were noncurrent marketable
equity securities with an aggregate cost of $225 and a market value of
approximately $225. The Company wrote off these investments in 1994. The
portfolio of noncurrent marketable equity securities included gross unrealized
losses of $356 in 1992, which is reflected in stockholders' equity in the
accompanying consolidated financial statements.
Gain (loss) on investments, net, includes realized gains on sales of
marketable equity securities of $500 in 1992. The 1994 and 1993 loss on
investments resulted from write-downs of $286 and $670, respectively, on
securities whose decline in value was deemed to be other than temporary.
4. INTANGIBLE AND OTHER ASSETS
The major classes of intangible and other assets are summarized below:
<TABLE>
<CAPTION>
June 30
-----------------
1994 1993
-------------------------------------------------
<S> <C> <C>
Goodwill $16,868 17,962
Other 12,553 10,704
------- ------
29,421 28,666
Less accumulated amortization 13,845 11,299
------- ------
$15,576 17,367
======= ======
</TABLE>
24
<PAGE> 27
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The net carrying value of goodwill at June 30, 1994 and 1993 was $11,966
and $13,713, respectively, and is all related to the chemical segment.
Amortization expense, exclusive of discontinued operations, related to
the above amounted to $2,757 in 1994, $2,889 in 1993 and $2,665 in 1992.
5. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
June 30
-------------------
1994 1993
--------------------------------------------------------------
<S> <C> <C>
Land and land improvements $ 13,521 13,440
Buildings 20,225 19,434
Chemical plant facilities and equipment 170,651 159,836
Gold properties and equipment 108,691 110,586
Other facilities and equipment 69,160 56,719
Under capital leases:
Land and land improvements 509 509
Buildings 216 216
Other facilities and equipment 8,958 8,958
-------- -------
391,931 369,698
Less accumulated depreciation, depletion
and amortization 190,040 163,587
-------- -------
$201,891 206,111
======== =======
</TABLE>
Included in the gold properties and equipment caption above are deferred
stripping costs of $8,325 and $13,559 at June 30, 1994 and June 30, 1993,
respectively.
Through December 1991, gold mining costs associated with waste rock
removal were charged to operating costs using an annualized stripping ratio.
During the year ended June 30, 1992, the Company began a significant waste
removal effort which will benefit future years. To properly match waste removal
costs with revenues from gold sales, in January 1992, the Company began
accounting for mining costs associated with waste rock removal on the basis of
the average stripping ratio for the life of each individual open pit. The
average stripping ratio is calculated as a ratio of the tons of waste rock
material estimated to be removed to the estimated recoverable ore tons. If this
change in accounting estimate had not been made, 1992 pretax earnings from
continuing operations would have been $1,719 less.
Construction in progress included in the above property captions at June
30, 1994 and 1993 amounted to $8,108 and $9,889, respectively.
Depreciation, depletion and amortization expense related to the above,
exclusive of discontinued operations, amounted to $38,979 in 1994, $27,853 in
1993 and $28,265 in 1992. Maintenance and repairs, exclusive of discontinued
operations, amounted to $16,740 in 1994, $18,312 in 1993 and $15,440 in 1992.
Interest capitalized amounted to $618 in 1994, $252 in 1993 and $183 in
1992.
6. NOTES PAYABLE AND LONG-TERM DEBT
A summary of long-term debt follows:
<TABLE>
<CAPTION>
June 30
--------------------
1994 1993
----------------------------------------------------------------------
<S> <C> <C>
Unsecured:
9.42% senior notes payable to institutional
investors, due in annual installments
of $13,286 from June 1996
to June 2002 $ 93,000 93,000
Notes payable under revolving credit
facility, payable February 1997 5,000 10,000
Other notes 3,588 2,418
Secured:
Capital lease obligations, interest ranging
from 4.0% to 8.75%, due in monthly
installments through May 2000 3,409 8,705
Other notes 723 836
-------- -------
105,720 114,959
Less current installments of long-term debt 1,433 1,428
-------- -------
Long-term debt, excluding current
installments $104,287 113,531
======== =======
</TABLE>
Under loan agreements in effect at June 30, 1994, there were no
compensating balance requirements. The above obligations mature in various
amounts through 2002, including approximately $1,433 in 1995, $15,280 in 1996,
$18,923 in 1997, $14,003 in 1998 and $14,549 in 1999.
In February 1993, the Company entered a new bank revolving credit
facility totaling $80,000. Facility funds of $65,000 were committed for a
period of three years, with two one-year options for renewal. The $15,000
balance of the facility, originally committed for a period of 364 days, was
canceled by the Company in August 1993.
25
<PAGE> 28
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In December 1993, the Company exercised its first one-year option which
extended the facility until February 1997. Borrowings under the facility are
priced at the London Interbank Offered Rate plus .75% to 1.25%, prime rate, or
prime plus .25%, based on the Company's debt-to-equity ratio. A commitment fee
of 3/8 of 1% per annum is charged on the daily average unused commitment under
the revolving credit facility. Commitment fees for the twelve months ended
June 30, 1994, 1993 and 1992 totaled $189, $90 and $22, respectively.
The senior notes and bank credit agreements contain various restrictions
related to working capital, funded debt, net worth, fixed charged coverage,
distributions, repurchase of stock and dispositions of assets. At June 30,
1994, the Company was in compliance with these covenants.
At June 30, 1994, the fair value of the 9.42% senior notes payable to
institutional investors was $92,866. The fair value is estimated by
discounting the future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit ratings for the same remaining
maturities. The recorded amounts for all other long-term debt of the Company
approximate fair values.
Total interest costs incurred for the years ended June 30, 1994, 1993 and
1992 were $10,727, $13,011 and $9,718, respectively.
7. GOLD LOAN
FirstMiss Gold's wholly owned subsidiary, FMG Inc. (FMG), had agreements
with certain lenders who provided a limited-recourse gold loan facility and a
limited-recourse credit agreement (the loan agreements) for the purpose of
mill construction, mine development, financing costs and working capital
requirements.
Under the gold loan, FMG borrowed a total of 150,000 ounces of gold which
provided $71,270. Proceeds from the gold loan were accounted for as deferred
revenue and recognized in income at the rate of $475 per ounce of gold as
shipments were made to repay the loan. During 1994, 1993 and 1992, FMG repaid
20,625, 28,125 and 37,500 ounces, respectively. Total ounces of gold sold were
243,826, 210,644 and 218,821 for 1994, 1993 and 1992, respectively.
Current deferred revenue under the gold loan included in the accompanying
consolidated balance sheets was $9,800 at June 30, 1993.
Final payment of the gold loan was made on June 30, 1994. During the loan
agreement period the loan was secured by substantially all the assets of FMG
related to the Getchell mine and mill. Cash and cash equivalents of FMG were
restricted by the loan agreements for payments of accounts payable for FMG
expenditures.
Pursuant to the loan agreements, the lenders provided a letter of credit
to secure FMG's obligation relating to the gold loan. The fee for this letter
of credit was 1.50% per year until the Getchell mine and mill achieved
completion and 1.25% per year thereafter. Prior to repayment of the gold loan
on June 30, 1994, the lenders provided a $10,000 standby letter of credit to
secure the gold production purchase agreement and letters of credit for the
benefit of vendors to FMG. Total fees for letters of credit amounted to $96,
$205 and $403 in 1994, 1993 and 1992, respectively.
Also, in accordance with the loan agreements, FMG was required to enter
into a gold production purchase agreement, which was a forward sales
arrangement, covering 202,600 ounces of gold. Under this agreement, during
1994, 1993 and 1992, FMG sold 47,000, 40,000 and 40,000 ounces, respectively,
at $400 per ounce. All commitments under the agreement were fulfilled at June
30, 1994.
8. INCOME TAXES
The Company adopted SFAS No. 109, "Accounting for Income Taxes" as of
July 1, 1993. Statement No. 109 has as its basic objective the recognition of
current and deferred income tax assets and liabilities based upon all events
that have been recognized in the consolidated financial statements as measured
by the provisions of the enacted tax laws. Prior years' financial statements
have not been restated to apply the provisions of SFAS No. 109. The cumulative
effect of this change in accounting for income taxes resulted in a benefit of
$4,200 and is reported as a cumulative effect of a change in accounting
principle in the accompanying consolidated financial statements.
Consolidated income tax expense (benefit) differs from the statutory
federal rate (35% for the year ended June 30, 1994, and 34% for the years
ended June 30, 1993 and 1992) applied to earnings from continuing operations
before income taxes, minority interests, investee earnings (loss) and
cumulative effect of change in accounting principle as follows:
26
<PAGE> 29
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Years ended June 30
--------------------------------
1994 1993 1992
--------------------------------------------------------------------
<S> <C> <C> <C>
Computed "expected"
tax expense $ 10,909 1,488 9,075
State income taxes, net of
federal income tax benefit 1,013 676 700
Excess of percentage depletion
over cost depletion, net (1,080) -- (284)
Loss from operations of foreign
subsidiaries 423 299 --
Amortization of goodwill 423 399 293
Exempt earnings of Foreign
Sales Corporation (147) (238) (296)
Net cash surrender value
increase of life insurance (232) (207) (187)
Tax provision adjustment for
pending Internal Revenue
Service (IRS) matters -- (900) 100
Reversal of deferred taxes on
disposed operations -- 228 --
Adjustment to deferred tax assets
and liabilities for enacted
change in tax law and rates 603 -- --
Other, net 238 (26) 471
-------- -------- --------
Actual tax expense -
continuing operations 12,150 1,719 9,872
Actual tax benefit -
discontinued operations -- (17,964) (6,982)
-------- -------- --------
$ 12,150 (16,245) 2,890
======== ======== ========
</TABLE>
Components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
Years ended June 30
--------------------------------
1994 1993 1992
----------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 9,072 6,761 6,739
State 1,781 1,015 1,066
Foreign (205) (21) (72)
-------- -------- --------
10,648 7,755 7,733
======== ======== ========
Deferred:
Federal 1,725 (24,010) (4,837)
State (223) 10 (6)
-------- -------- --------
1,502 (24,000) (4,843)
======== ======== ========
Total:
Federal 10,797 (17,249) 1,902
State 1,558 1,025 1,060
Foreign (205) (21) (72)
-------- -------- --------
$ 12,150 (16,245) 2,890
======== ======== ========
</TABLE>
The significant components of deferred income tax expense attributable to
income from continuing operations for the year ended June 30, 1994 are as
follows:
<TABLE>
<S> <C>
Deferred tax expense from changes
in temporary differences $ 899
Adjustment to deferred tax assets and liabilities
for enacted change in tax law and rates 603
------
$1,502
======
</TABLE>
For the years ended June 30, 1993 and 1992, deferred income tax expense
(benefit) resulted from timing differences in the recognition of revenues and
expenses for tax and financial reporting purposes. The sources of these
differences and the tax effect of each are as follows:
27
<PAGE> 30
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Years ended June 30
-----------------------
1993 1992
------------------------------------------------------------------------
<S> <C> <C>
Capitalized exploration and development costs, net of related amortiza-
tion:
Oil and gas $ 1,443 (354)
Gold 3,776 556
Coal (60) 1,113
Depreciation (397) 3,823
Loss accruals (10,705) 48
Mining reclamation 309 276
Write-down of assets (1,463) (4,941)
Alternative minimum tax (AMT) (2,005) (2,769)
Costs capitalized to
self-constructed assets (357) (157)
Deferred compensation (268) (293)
Pension expense (510) (445)
Sale of assets (11,710) (1,717)
Capitalized expenses,
net of amortization 325 779
Bad debts (1,015) (660)
Other, net (1,363) (102)
-------- --------
$(24,000) (4,843)
======== ========
</TABLE>
The tax effects of temporary differences that give rise to signicant
portions of the deferred tax assets and the deferred tax liabilities at June
30, 1994 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Accounts receivable, principally due to
allowance for doubtful accounts $ 266
Deferred compensation 2,381
Accrued reclamation costs 3,388
Accrual for discontinuance losses, net 910
State net operating loss (NOL) carryforward 3,287
Alternative minimum tax credit carryforward 17,021
Accrued vacation costs 591
Accrued pension costs 1,150
Deferred stripping costs 2,256
Other, net 8,920
---------
Total gross deferred tax assets 40,170
Less: valuation allowance (3,074)
---------
Net deferred tax assets 37,096
---------
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation (22,664)
Capitalized exploration and development costs
and related amortization (11,860)
Investment in affiliated companies, principally due
to undistributed earnings (8,705)
State income taxes (1,475)
Other, net (2,847)
---------
Total gross deferred tax liabilities (47,551)
---------
Net deferred tax liability $ (10,455)
=========
</TABLE>
The net deferred tax liability at June 30, 1994 consists of a long-term
deferred tax liability of $13,922 and a current deferred tax asset of $3,467.
This current deferred tax asset is included in the "Prepaid expenses and other
current assets" section of the June 30, 1994, consolidated balance sheet.
The valuation allowance for the gross deferred tax assets as of July 1,
1993 was $2,625. The net change in the total valuation allowance for the year
ended June 30, 1994 was an increase of $449. The valuation allowance is
related to certain state net operating losses, which the Company believes are
less than likely to be recognized. Subsequently recognized tax benefits relating
to the valuation allowance for deferred tax assets will be reported in the
consolidated statements of operations.
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, recoverable
taxes paid, projected future taxable income and tax planning strategies in
making this assessment. Based on the level of historical taxable income, the
reversal of existing deferred tax liabilities and projections for future
taxable income over the periods which the deferred tax assets are deductible,
management believes it is more likely than not the Company will realize the
benefits of these deductible differences, net of the existing valuation
allowance at June 30, 1994.
28
<PAGE> 31
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company has AMT credit carryforwards of $17,021 for income tax
reporting purposes at June 30, 1994. Refundable income taxes of $7,304 at June
30, 1994 and income taxes payable of $2,816 at June 30, 1993 are included in
other current receivables and other current liabilities, respectively, in the
accompanying consolidated financial statements.
The Company has received final audit reports from the IRS for its tax years
ended June 30, 1983 through June 30, 1988. The settlement of these years
resulted in a net refund to the Company. On August 15, 1994, the Company
received a revised audit report from the IRS for its June 30, 1989 and 1990
years, proposing tax deficiencies of $3,465, plus interest, which will be
appealed by the Company. In addition, the Company received an audit report in
1990 from the Kentucky Revenue Cabinet for its June 30, 1985 through 1988
years, proposing tax deficiencies of $807, which has been disputed by the
Company. Management is of the opinion that these issues, once resolved, will
not result in a material liability to the Company.
9. PENSION, 401(K) THRIFT AND INCENTIVE PLANS
The Company has noncontributory pension plans covering substantially all
full-time permanent employees. The benefits are based on years of service and
participants' compensation during the last five years of employment.
Net annual pension expense for the years ended June 30, 1994, 1993 and
1992 included the following components:
<TABLE>
<CAPTION>
Years ended June 30
-----------------------------
1994 1993 1992
-------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 1,876 1,777 1,715
Interest cost 1,503 1,323 1,141
Actual return on plan assets (481) (2,638) (1,755)
Net amortization and deferral (1,697) 759 30
------- ------- -------
Net annual pension expense $ 1,201 1,221 1,131
======= ======= =======
</TABLE>
The assumptions used in calculating the expense for 1994, 1993 and 1992
included a discount rate of 7.75%, a rate of increase in compensation levels
of 4.5% and a 9% expected long-term rate of return on assets. Net annual
pension expense included above and allocated to discontinued operations was
$4, $197 and $243 for 1994, 1993 and 1992, respectively. Plan assets are
invested primarily in equity securities and U.S. bonds.
The following table sets forth the funded status of the plans at June 30,
1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
--------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations $ 13,447 12,386
======== ========
Accumulated benefit obligations $ 15,672 14,623
======== ========
Projected benefit obligation $ 21,635 20,027
Plan assets at fair value 21,253 20,837
-------- --------
Plan assets in excess of (less than)
projected benefit obligation (382) 810
Unrecognized net gain from past experience (499) (251)
Unrecognized prior service cost 869 638
Unrecognized transition credit, net (3,261) (3,573)
-------- --------
Pension liability $ (3,273) (2,376)
======== ========
</TABLE>
The Company has a non-qualied supplemental pension plan. This plan
provides for incremental pension payments from the Company's funds to restore
those pension benefits earned, but reduced due to income tax regulations. The
total accrual at June 30, 1994 and 1993, relating to this unfunded plan was
$746 and $616, respectively. Expenses of the plan were $82 in 1994, $98 in
1993 and $113 in 1992.
The Company has a contributory 401(k) thrift plan covering substantially
all eligible employees who have completed six months of service. Total expense
under the plan amounted to approximately $1,250 in 1994, $1,137 in 1993 and
$1,003 in 1992.
29
<PAGE> 32
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Directors, officers and certain key employees of the Company participate in
the long-term incentive plans (the Plans) under which the Company has reserved
shares of common stock for issuance. Awards under the Plans include stock
options, options to purchase debentures convertible into preferred stock and
then convertible into common stock of the Company, stock appreciation rights,
performance units, restricted stock, supplemental cash and such other forms as
the Board of Directors may direct. Options under all plans are granted at the
market price of the shares on the date of the grants. As of June 30, 1994,
384,500 shares remained available for granting. Additional information
follows:
<TABLE>
<CAPTION>
Stock options Debenture options
--------------------- ----------------------
Average Average
Number option price Number option price
of shares per share of shares per share
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance,
June 30, 1991 113,550 $ 10.83 899,800 $ 11.79
Options granted -- -- 166,000 9.78
Options
exercised (28,562) 7.54 (76,200) 7.70
-------- ------- -------- -------
Balance,
June 30, 1992 84,988 11.80 989,600 11.77
Options granted 96,000 9.31 11,000 7.81
Options
exercised (15,038) 6.31 (126,600) 6.30
Options forfeited (2,200) 11.00 (11,000) 13.86
-------- ------- -------- -------
Balance,
June 30, 1993 163,750 10.86 863,000 12.49
Options granted 113,000 9.41 -- --
Options
exercised (39,350) 9.90 (177,800) 12.71
Options forfeited (45,800) 12.98 (58,000) 13.73
-------- ------- -------- -------
BALANCE,
JUNE 30, 1994 191,600 $ 9.69 627,200 $ 12.31
======== ======= ======== =======
EXERCISABLE,
JUNE 30, 1994 191,600 627,200
======== ========
</TABLE>
10. STOCKHOLDERS' EQUITY
Earnings per share calculations are based on the weighted average number
of common shares and common share equivalents outstanding during each year,
20,126,093 in 1994, 20,003,190 in 1993 and 19,852,958 in 1992.
In connection with the Shareholder Rights Plan adopted by the Company on
May 12, 1986, and amended February 14, 1989, one preferred stock purchase
right was distributed on each outstanding share of common stock. Under certain
conditions, each right may be exercised to purchase 1/100 of a share of a new
series of preferred stock, at an exercise price of $30 (subject to
adjustment). The rights, which do not have voting rights, expire in 1996 and
may be redeemed by the Company at a price of $.05 per right prior to a specified
period of time after the occurrence of certain events. In certain events, each
right (except certain rights beneficially owned by 20% or more owners, which
rights are voided) will entitle its holder to purchase Company common shares
with a value of twice the then current exercise price.
11. COMMITMENTS AND CONTINGENT LIABILITIES
The Company has entered into various capital and operating leases for
transportation equipment (primarily railroad tank cars), chemical and
fertilizer pipelines and storage facilities, office buildings and land and other
miscellaneous items of equipment.
The following is a schedule by years of future minimum rental payments
under leases that have initial or remaining noncancelable terms in excess of
one year as of June 30, 1994:
<TABLE>
<CAPTION>
Years ending Operating Capital
June 30 leases leases
- - - ------------------------------------------------------------------
<S> <C> <C>
1995 $1,413 641
1996 1,285 641
1997 871 641
1998 558 641
1999 401 641
Later years 40 632
------ ------
Total minimum payments required $4,568 3,837
======
Less imputed interest 428
------
$3,409
======
</TABLE>
30
<PAGE> 33
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Provisions applicable to certain transportation equipment leases provide
for mileage credits computed on the basis of usage. No recognition has been
given to the effect of such credits in the amounts presented above.
Rental expense, including short-term rentals (net of mileage credits and
short-term subleases of approximately $258 in 1994, $267 in 1993 and $61 in
1992), was approximately $5,187 in 1994, $3,300 in 1993 and $3,079 in 1992. In
most cases, management expects that, in the normal course of business, leases
will be renewed or replaced by other leases.
The Company's fertilizer segment has entered into an agreement to
purchase anhydrous ammonia. The purchase price under this contract is based on
a market price formula. Take-or-pay obligations under this purchase commitment
are based on a specific component of the seller's cost of production. Estimated
take-or-pay obligations based on current market conditions are approximately
$6,145 in 1995. Total purchases under this agreement were $13,989 in 1994,
$10,133 in 1993 and $11,335 in 1992. The present value of take-or-pay
obligations at June 30, 1994 was $5,897.
At June 30, 1994, the Company had entered contracts representing
approximately 38% of anticipated purchases of natural gas related to
fertilizer operations for the period July 1994 to June 1995. The unrealized
loss on these contracts at June 30, 1994 was $171.
FirstMiss Gold and its wholly owned subsidiary, FMG, have an agreement
with an independent contractor to own and operate an oxygen plant to provide
oxygen for the mill. The agreement requires, among other things, that
FirstMiss Gold must generally pay the independent contractor at a rate of
approximately $275 a month in 1995 (subject to adjustment for inflation) and
that FirstMiss Gold pay a termination fee, if the contract is terminated prior
to January 2004, of approximately $3,600 in 1995, decreasing each year
thereafter to approximately $400 in the last year of the contract.
At June 30, 1994, the Company had commitments under spot deferred sales
contracts for delivery of 225,000 ounces of gold at an average price of $391
in 1995 and 92,000 ounces at an average price of $392 in 1996. The net
unrealized loss on these contracts at June 30, 1994, was $1,637.
12. LITIGATION
The Company has pending several claims incurred in the normal course of
business which, in the opinion of management and legal counsel, can be
disposed of without material effect on the accompanying financial statements.
13. INTEREST AND OTHER INCOME
Interest and other income (expense) items are as follows:
<TABLE>
<CAPTION>
Years ended June 30
-----------------------------
1994 1993 1992
----------------------------------------------------------------
<S> <C> <C> <C>
Interest income $ 327 314 530
Royalty, license, rental and fee
income (expense) 1,506 1,592 (271)
Gain (loss) on disposition of
noncurrent assets (19) (282) 597
Other 222 681 313
------- ------- -------
$ 2,036 2,305 1,169
======= ======= =======
</TABLE>
14. INDUSTRY SEGMENT INFORMATION
As of June 30, 1994, the Company operated principally in the following
industry segments: Chemicals, Fertilizer, Gold and Combustion, Thermal Plasma
and Other. Operations in the chemicals segment include production and sale of
specialty chemicals and organic chemical intermediates, and research and
development for specialty chemicals. Operations in the fertilizer segment
involve the sale of produced and purchased urea and anhydrous ammonia. The
gold segment concentrates on gold mining, exploration and production. At June
30, 1994, the classification Combustion, Thermal Plasma and Other, in prior
years identified as Technology - Other, includes the operations of Plasma
Energy, Callidus Technologies, Plasma Processing, and FirstMiss Steel.
Sales to unaffiliated major customers in 1994, 1993 and 1992 were $84,699,
$52,280 and $51,064, respectively, by the gold segment.
31
<PAGE> 34
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following is a breakdown by industry segment of the Company's
consolidated financial statements for the three years ended June 30, 1994:
<TABLE>
<CAPTION>
Years ended June 30
-----------------------------------
1994 1993 1992
--------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Chemicals $ 161,045 143,497 130,331
Fertilizer 163,984 141,642 184,108
Gold 95,150 78,773 83,048
Combustion, Thermal Plasma
and Other 88,046 66,028 55,755
Transfers between business segments:
Fertilizer 9,007 3,288 2,946
Intercompany eliminations (9,007) (3,288) (2,946)
--------- --------- ---------
Total $ 508,225 429,940 453,242
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Years ended June 30
--------------------------------
1994 1993 1992
-------------------------------------------------------------------
<S> <C> <C> <C>
Operating profit (loss) before
income taxes, minority
interests, investee earnings
(loss) and cumulative effect
of change in accounting
principle:
Chemicals $ 30,295 24,434 15,333
Fertilizer 24,760 13,218 24,196
Gold 7,225 (1,305) 7,874
Combustion, Thermal Plasma
and Other (12,763) (12,187) (5,656)
-------- -------- --------
49,517 24,160 41,747
Unallocated corporate expenses (8,435) (7,069) (7,461)
Interest expense, net (9,782) (12,445) (9,005)
Other income (expense), net (132) (271) 1,410
-------- -------- --------
Total $ 31,168 4,375 26,691
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Years ended June 30
------------------------------
1994 1993 1992
----------------------------------------------------------------------
<S> <C> <C> <C>
Identifiable assets:
Chemicals $132,739 124,458 112,151
Fertilizer 44,794 43,323 53,230
Gold 81,936 90,614 93,356
Combustion, Thermal Plasma
and Other 86,043 72,473 60,932
-------- -------- --------
345,512 330,868 319,669
Corporate assets and investments 32,064 34,874 37,325
Discontinued operations -- 17,877 104,540
-------- -------- --------
Total $377,576 383,619 461,534
======== ======== ========
Depreciation, depletion and
amortization:
Chemicals $ 10,723 9,708 8,924
Fertilizer 2,552 2,613 2,682
Gold 23,380 13,728 15,657
Combustion, Thermal Plasma
and Other 4,570 4,051 3,053
Corporate 642 642 614
Discontinued operations 381 9,006 22,086
-------- -------- --------
Total $ 42,248 39,748 53,016
======== ======== ========
Capital expenditures:
Chemicals $ 11,735 17,567 9,025
Fertilizer 329 43 1,228
Gold 10,451 5,555 2,035
Combustion, Thermal Plasma
and Other 7,357 5,514 5,678
Corporate 682 438 192
Discontinued operations 559 9,953 15,488
-------- -------- --------
Total $ 31,113 39,070 33,646
======== ======== ========
Export sales to unaffiliated customers:
North, Central and
South America $ 5,134 3,435 33,433
Europe and Asia 30,353 44,126 34,656
Africa and Australia 8,194 11,390 12,184
-------- -------- --------
Total $ 43,681 58,951 80,273
======== ======== ========
</TABLE>
32
<PAGE> 35
FIRST MISSISSIPPI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Certain corporate expenses, primarily those related to the overall
management of the Company, were not allocated to the operating segments. Total
research and development expenses were $5,401 in 1994, $5,342 in 1993 and
$4,081 in 1992.
During the first quarter of 1992, the Company, in separate transactions,
sold the stock of two wholly owned subsidiaries - FMC of Delaware, Inc. and
Industrial Insulations, Inc. Proceeds from the transactions included cash of
$2,006 and $550 in stock of one of the acquiring companies. A pretax gain of
$842 was recognized on the transactions.
Identifiable assets by industry segment are those assets used in the
Company's operations in each industry and include investments in joint
ventures and partnerships. Corporate assets are principally cash and
short-term investments excluding nontrade receivables and certain other
investments. Corporate assets excluded cash and short-term investments held by
gold in 1993 and 1992 prior to the gold loan repayment.
The Company's trade receivables are primarily concentrated with the
chemicals and fertilizer segments. The Company performs ongoing credit
evaluations of its customers and generally does not require collateral on
trade receivables. The Company believes that consolidated trade receivables
are well diversied, thereby reducing potential credit risk, and that adequate
allowances for any uncollectible trade receivables are maintained.
15. QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data follow:
<TABLE>
<CAPTION>
Quarters ended
-------------------------------------------- Years ended
September 30 December 31 March 31 June 30 June 30
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994:
Sales $ 113,340 115,920 129,581 149,384 508,225
============== ======= ======= ======= =======
Gross profit $ 17,834 19,995 24,475 32,773 95,077
============== ======= ======= ======= =======
Net earnings
from
continuing
operations $ 802 3,068 4,854 8,939 17,663
============== ======= ======= ======= =======
Net earnings $ 5,002 3,068 4,854 8,939 21,863
============== ======= ======= ======= =======
Earnings per share:
Continuing
operations $ .04 .15 .24 .44 .88
============== ======= ======= ======= =======
Net earnings $ .25 .15 .24 .44 1.09
============== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Quarters ended
-------------------------------------------- Years ended
September 30 December 31 March 31 June 30 June 30
- - - ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993:
Sales $ 102,666 104,547 103,595 119,132 429,940
========== ======= ======= ======= ========
Gross profit $ 18,205 13,940 13,313 20,664 66,122
========== ======= ======= ======= ========
Net earnings
(loss) from
continuing
operations $ 1,739 (645) (65) 1,654 2,683
========== ======= ======= ======= ========
Net loss $ (12) (17,741) (129) (5,487) (23,369)
========== ======= ======= ======= ========
Earnings (loss) per share:
Continuing
operations $ .09 (.03) (.01) .08 .13
========== ======= ======= ======= ========
Net loss -- (.89) (.01) (.27) (1.17)
========== ======= ======= ======= ========
</TABLE>
Included in net earnings (loss) are the cumulative effect of change in
accounting principle in the first quarter of 1994 and the discontinued
operations in the second and fourth quarters of 1993 as discussed in footnotes
8 and 2, respectively.
The above quarterly earnings (loss) per share calculations are based on
the weighted average shares outstanding during each quarter whereas the annual
earnings (loss) per share calculations are based on the weighted average
shares outstanding during the year.
33
<PAGE> 36
FIRST MISSISSIPPI CORPORATION
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
First Mississippi Corporation:
We have audited the accompanying consolidated balance sheets of First
Mississippi Corporation and consolidated subsidiaries as of June 30, 1994 and
1993, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year period ended June
30, 1994. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of First
Mississippi Corporation and consolidated subsidiaries as of June 30, 1994 and
1993, and the results of their operations and their cash flows for each of the
years in the three-year period ended June 30, 1994, in conformity with
generally accepted accounting principles.
As discussed in notes 1 and 8, the Company changed its method of
accounting for income taxes as of July 1, 1993 to adopt the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
KPMG PEAT MARWICK LLP
Jackson, Mississippi
September 9, 1994
34
<PAGE> 37
FIRST MISSISSIPPI CORPORATION
DIRECTORS
Richard P. Anderson(2),(3)
Maumee, Ohio
President and Chief Executive Officer,
The Andersons Management Corporation
Agribusiness
Paul A. Becker(1)
New York, New York
Managing Director,
Mitchell Hutchins Asset Management, Inc.
James W. Crook(3),(4)
Yazoo City, Mississippi
Chairman of the Board,
Melamine Chemicals, Inc.
Robert P. Guyton(1)
Atlanta, Georgia
Vice President and Financial Consultant,
Raymond James & Associates, Inc.
Asset Management and Investment Banking Company
Charles P. Moreton(2)
Houston, Texas
Private Investor, Oil and Gas Business
Director, Tanglewood Bancshares
Dr. Paul W. Murrill(1)
Baton Rouge, Louisiana
Professional Engineer
William A. Percy, II(1),(4)
Greenville, Mississippi
Managing Partner, Trail Lake Enterprises
President, Greenville Compress Company
Chairman of the Board,
Staple Cotton Cooperative Association
Maurice T. Reed, Jr.(2)
Jackson, Mississippi
Private Investor
Leland R. Speed(3),(4)
Jackson, Mississippi
Chairman and Chief Executive Officer,
The Eastover Group of Companies
Real Estate Investment Trust
Dr. R. Gerald Turner(3),(4)
University, Mississippi
Chancellor, University of Mississippi
J. Kelley Williams
Jackson, Mississippi
Chairman and Chief Executive Officer,
First Mississippi Corporation
TRANSFER AGENTS FOR COMMON STOCK
(1) Audit Committee
(2) Compensation and Human Resources Committee
(3) Committee on Director Affairs
(4) First Mississippi Corp.
Foundation Advisory Committee
OFFICERS
J. Kelley Williams
Chairman and Chief Executive Officer
R. Michael Summerford
Vice President and Chief Financial Officer
J. Steve Chustz
General Counsel
James L. McArthur
Secretary and Manager, Investor Relations
35
<PAGE> 38
FIRST MISSISSIPPI CORPORATION
CORPORATE INFORMATION
Society National Bank
P.O. Box 6477
Cleveland, Ohio 44101-1477
(216) 737-5745
First Mississippi Corporation
Stock Transfer Department
P.O. Box 1249
Jackson, Mississippi 39215-1249
(601) 948-7550
COMMON STOCK REGISTRARS
Society National Bank
P.O. Box 6477
Cleveland, Ohio 44101-1477
Deposit Guaranty National Bank
One Deposit Guaranty Plaza
Jackson, Mississippi 39205-1200
STOCK LISTINGS
New York Stock Exchange
Philadelphia Stock Exchange
Pacific Stock Exchange
Midwest Stock Exchange
TRADING SYMBOL: FRM
Note: The Wall Street Journal and many other major daily newspapers list the
stock as FstMiss.
STOCKHOLDER REPORTS
Stockholders with stock in brokerage accounts who wish to receive quarterly
stockholder reports and other information directly from the Company, may do
so by writing or calling the Company's Investor Relations Department.
INVESTOR RELATIONS
If you have questions concerning First Mississippi Corporation or your
investment in the Company, we will be pleased to assist you. Contact:
James L. McArthur
Secretary and Manager, Investor Relations
First Mississippi Corporation
P.O. Box 1249
Jackson, Mississippi 39215-1249
(601) 949-0285 or (601) 948-7550
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP
1100 One Jackson Place
Jackson, Mississippi 39201-9988
FORM 10-K
Stockholders may obtain without charge a copy of the First Mississippi
Corporation Form 10-K filed with the Securities and Exchange Commission by
calling or writing the Company's Investor Relations Department.
DIVIDEND INVESTMENT PLAN
The Company offers its stockholders a convenient and economical way to
increase their investment in First Mississippi Corporation common stock. The
Automatic Dividend Investment and Cash Payment Plan, administered by Society
National Bank, allows stockholders to purchase additional shares with
quarterly dividends or optional cash payments. For information about the
Plan, contact the Company's Investor Relations Department.
ANNUAL MEETING
The Annual Meeting of Stockholders will be held November 11, 1994, at 2:00
p.m., in the Garden Room at Dennery's, 330 Greymont Avenue, Jackson,
Mississippi.
Stockholders are cordially invited to attend and participate in the
business of the meeting. Those who are unable to attend are requested to
return their proxy cards to the Registrar in the envelope that accompanies the
proxy.
STOCK MARKET INFORMATION
The high and low recorded prices of the Company's common stock and cash
dividends declared during fiscal years 1994 and 1993 are presented in the table
below. There were approximately 6,052 stockholders of record as of September
6, 1994.
<TABLE>
<CAPTION>
1994 1993
- - - -----------------------------------------------------------------
Dividend Dividend
High Low Rate High Low Rate
- - - -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st Quarter $ 11.00 $ 8.50 $ .075 $ 11.75 $ 7.88 $ .075
2nd Quarter 13.25 8.50 .075 9.75 7.25 .075
3rd Quarter 17.00 12.75 .075 10.13 8.38 .075
4th Quarter 16.88 $ 14.00 .075 11.00 9.00 .075
For the Year 17.00 8.50 .30 11.75 7.25 .30
</TABLE>
36
<PAGE> 39
FIRST MISSISSIPPI CORPORATION
SUBSIDIARIES
CHEMICALS
First Chemical Corporation
(Industrial and Specialty Chemicals)
P.O. Box 7005
Pascagoula, Mississippi 39568-7005
O. Edward Wall, President
Quality Chemicals, Inc.
(Fine Chemicals, Custom Manufacturing)
P.O. Box 216
Tyrone, Pennsylvania 16686-0216
-and-
1515 Nicholas Road
Dayton, Ohio 45418
Robert B. Barker, President
EKC Technology, Inc.
(Performance Chemicals)
2520 Barrington Court
Hayward, California 94545-3703
P. Jerry Coder, President
FERTILIZER
FirstMiss Fertilizer, Inc.
(Fertilizer Marketing)
P.O. Box 1249
Jackson, Mississippi 39215-1249
Charles R. Gibson, President
AMPRO Fertilizer, Inc.
(Ammonia Production)
P.O. Box 392
Donaldsonville, Louisiana 70346-0392
B. K. Shackelford, Vice President and Complex Manager
Triad Chemical
(Ammonia and Urea Production)
(50% Joint Venture)
P.O. Box 310
Donaldsonville, Louisiana 70346-0310
B. K. Shackelford, Complex Manager
GOLD
FirstMiss Gold Inc.
(Gold Exploration, Mining, and Production)
(81.4% Owned Subsidiary)
5190 Neil Road, Suite 310
Reno, Nevada 89502-6503
G.W. (Bill) Thompson, President
COMBUSTION THERMAL PLASMA AND OTHER
Callidus Technologies Inc.
(Burners, Flares, and Incinerators)
7130 South Lewis, Suite 635
Tulsa, Oklahoma 74136-5488
William P. Bartlett, President
FirstMiss Steel, Inc.
(Steel Melting and Casting)
P.O. Box 509
Hollsopple, Pennsylvania 15935-0509
Frank D. Winter, Chairman
Plasma Energy Corporation
(Thermal Plasma Technology)
7516 Precision Drive
Raleigh, North Carolina 27613-4715
Samir A. Hakooz, President
Plasma Processing Corporation
(Aluminum Dross Processing)
109 Westpark Drive, Suite 180
Brentwood, Tennessee 37027
Terry L. Moore, President
EQUITY AFFILIATE
Power Sources, Inc.
(Waste-to-Energy Steam Generation)
(50% Owned Subsidiary)
9140 Arrow Point Boulevard, Suite 370
Charlotte, North Carolina 28273-8118
Gerald W. Caughman, President
<PAGE> 40
(BACK COVER)
FIRST MISSISSIPPI CORPORATION
Post Office Box 1249
Jackson, Mississippi 39215-1249
<PAGE> 41
APPENDIX
<TABLE>
<CAPTION>
Page In Annual Report
---------------------
<S> <C>
GRAPH 1 INSIDE FRONT COVER
GRAPH 2 2
GRAPH 3 4
GRAPH 4 4
PHOTO 1 5
PHOTO 2 5
PHOTO 3 6
PHOTO 4 7
GRAPH 5 8
GRAPH 6 8
GRAPH 7 8
PHOTO 5 10
GRAPH 8 10
PHOTO 6 11
PHOTO 7 11
PHOTO 8 12
GRAPH 9 12
PHOTO 9 13
</TABLE>
<PAGE> 1
SUBSIDIARIES OF FIRST MISSISSIPPI CORPORATION
<TABLE>
<CAPTION>
State of
Company Name Incorporation
------------ -------------
<S> <C>
AMPRO Fertilizer, Inc. Louisiana
Burmar Chemical, Inc. California
Callidus Technologies Inc. Oklahoma
Callidus Technologies International, Inc. Delaware
Dew Resources, Inc. Florida
EKC Technology, Inc. California
EKC Technology, Ltd. Scotland
FCC Acquisition Corporation California
FEC Marketing, Inc. Texas
First Chemical Corporation Mississippi
First Energy Corporation Mississippi
FirstMiss Fertilizer, Inc. Mississippi
FirstMiss, Inc. Iowa
FirstMiss Gold Inc. Nevada
FirstMiss Seed, Inc. Delaware
FirstMiss Steel, Inc. Pennsylvania
First Mississippi Corporation Foundation, Inc. Mississippi
FMG Inc. Nevada
FRM, Inc. Mississippi
FRM Industries, Inc. Delaware
FRM International, Inc. U.S. Virgin Islands
</TABLE>
Exhibit 21
<PAGE> 2
<TABLE>
<CAPTION>
State of
Company Name Incorporation
------------ -------------
<S> <C>
Industrial Insulations of Texas, Inc. Texas
Maxadyne Corporation California
Maxadyne Corporation of Louisiana Louisiana
Micropel, Inc. California
Mycosil, Inc. California
OMNIRAD, INC. Mississippi
Plasma Energy Corporation North Carolina
Plasma Energy Technologies Corporation North Carolina
Plasma Processing Corporation Delaware
Power Sources, Inc. North Carolina
Quality Chemicals, Inc. Pennsylvania
Star Corrosion & Refractory, Inc. Louisiana
SCE Technologies, Inc. Delaware
Triad Chemical (Partnership) Louisiana
</TABLE>
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
First Mississippi Corporation:
We consent to incorporation by reference in the Registration
Statements on Form S-8 (Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512,
33-9106, 33-17483, 33-24413, 33-24414, 33-26895, 33-31343, 33-33135, 33-37084,
33-39137, 33-43586, 33-43600, 33-45344 and 33-56026) of our reports dated
September 9, 1994, relating to the consolidated financial statements and
financial statement schedules of First Mississippi Corporation and subsidiaries
as of June 30, 1994 and 1993 and for each of the years in the three-year period
ended June 30, 1994, which reports appear or are incorporated by reference in
the June 30, 1994 annual report on Form 10-K of First Mississippi Corporation.
Our report on the consolidated financial statements refers to a change in the
method of accounting for income taxes.
Jackson, Mississippi
September 27, 1994 KPMG Peat Marwick LLP
Exhibit 23
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-START> JUL-01-1993
<PERIOD-END> JUN-30-1994
<CASH> 4,952
<SECURITIES> 0
<RECEIVABLES> 50,350
<ALLOWANCES> 721
<INVENTORY> 68,136
<CURRENT-ASSETS> 138,835
<PP&E> 391,931
<DEPRECIATION> 190,040
<TOTAL-ASSETS> 377,576
<CURRENT-LIABILITIES> 59,961
<BONDS> 104,287
<COMMON> 20,086
0
0
<OTHER-SE> 157,601
<TOTAL-LIABILITY-AND-EQUITY> 377,576
<SALES> 508,225
<TOTAL-REVENUES> 509,975
<CGS> 413,148
<TOTAL-COSTS> 413,148
<OTHER-EXPENSES> 54,989
<LOSS-PROVISION> 561
<INTEREST-EXPENSE> 10,109
<INCOME-PRETAX> 31,168
<INCOME-TAX> 12,150
<INCOME-CONTINUING> 17,663
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 4,200
<NET-INCOME> 21,863
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
</TABLE>
