<PAGE> 1
Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
{X} Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarter Ended December 31, 1993
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or
{ } Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number: 1-7488
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First Mississippi Corporation
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Mississippi 64-0354930
- --------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 North Street, Jackson, MS 39202-3095
- ----------------------------------- -------------------------
(Address of principal (Zip Code)
executive offices)
</TABLE>
Registrant's Telephone Number, including Area Code: 601/948-7550
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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
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<TABLE>
<S> <C>
Class Outstanding at January 31, 1994
- --------------------------------- --------------------------------
Common Stock, $1 Par Value 20,029,740
</TABLE>
Page 1 of 13 sequentially numbered pages.
The Exhibit Index is on Page 12.
<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements.
First Mississippi Corporation
Consolidated Balance Sheets (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Dec. 31 June 30
1993 1993
-------- --------
<S> <C> <C>
Assets:
Current assets
Cash and short-term investments $ 4,735 15,878
Accounts receivable 54,424 41,012
Inventories:
Finished products 24,209 22,203
Work in process 17,542 13,187
Raw materials and supplies 20,898 17,821
Product exchange agreements 794 925
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Total inventories 63,443 54,136
------- -------
Prepaid expenses and other current assets 6,643 1,957
Net current assets of discontinued operations - 17,877
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Total current assets 129,245 130,860
------- -------
Investments and other assets 38,856 46,648
Property, plant and equipment 380,538 369,698
Less: accumulated depreciation,
depletion and amortization 177,860 163,587
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202,678 206,111
------- -------
$370,779 383,619
======= =======
Liabilities and Stockholders' Equity:
Current liabilities
Notes payable to banks $ 3,025 -
Current instalments of long-term debt 1,410 1,428
Deferred revenue 10,355 16,533
Accounts payable 37,410 46,358
Accrued expenses and other current liabilities 12,129 16,420
Net current liabilities of discontinued
operations 4,061 -
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Total current liabilities 68,390 80,739
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Long-term debt 112,180 113,531
Deferred revenue and other liabilities 10,849 9,439
Long-term liabilities of discontinued operations - 4,205
Deferred taxes 4,672 6,752
Minority interests 8,735 8,179
Stockholders' equity:
Common stock 19,992 19,980
Additional paid-in capital 2,519 2,424
Retained earnings 143,442 138,370
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Total stockholders' equity 165,953 160,774
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$370,779 383,619
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
First Mississippi Corporation
Consolidated Statements of Operations (Unaudited)
(In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
3 Months ended 6 Months ended
December 31 December 31
----------------- -----------------
1993 1992 1993 1992
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Sales $115,920 104,547 229,260 207,213
Loss on investments (147) (625) (225) (625)
Interest and other income 1,114 616 2,112 1,401
------- ------- ------- -------
116,887 104,538 231,147 207,989
------- ------- ------- -------
Costs and expenses:
Cost of sales 95,925 90,607 191,431 175,068
General, selling and
administrative expenses 10,511 9,570 21,230 19,386
Other operating expenses 2,036 1,695 4,425 4,021
Interest expense 2,610 3,204 5,440 6,449
------- ------- ------- -------
111,082 105,076 222,526 204,924
------- ------- ------- -------
Earnings (loss) before income taxes 5,805 (538) 8,621 3,065
Income tax expense 2,150 91 3,800 1,318
Minority interests (339) (2) (555) (408)
Equity in net loss of equity investees (248) (14) (396) (245)
------- ------- ------- -------
Earnings (loss) from continuing
operations 3,068 (645) 3,870 1,094
Loss from discontinued operations,
net of taxes - (755) - (2,506)
Loss on disposal of businesses, net
of taxes - (16,341) - (16,341)
Cumulative effect of change in
accounting principle - - 4,200 -
------- ------- ------- -------
Net earnings (loss) $ 3,068 (17,741) 8,070 (17,753)
======= ======= ======= =======
Earnings (loss) per common share:
Continuing operations $ 0.15 (0.03) 0.19 0.05
Discontinued operations - (0.86) - (0.94)
Cumulative effect of change in
accounting principle - - 0.21 -
------- ------- ------- -------
Earnings (loss) per common share $ 0.15 (0.89) 0.40 (0.89)
======= ======= ======= =======
Average shares outstanding 20,096 19,999 20,054 19,991
Cash dividend declared
per share $ 0.075 0.075 0.150 0.150
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
First Mississippi Corporation
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
6 Months ended
December 31
-----------------
1993 1992
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 8,070 (17,753)
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in) operating activities:
Depreciation, depletion and amortization 19,558 20,991
Deferred taxes and other items (1,267) 16,690
Change in current assets and liabilities net
of effects of dispositions (28,560) (9,720)
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Net cash provided by (used in) operating activities (2,199) 10,208
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Cash flows from investing activities:
Proceeds from sale of subsidiary 4,965 -
Capital expenditures (11,962) (17,995)
Deferred stripping costs (2,828) (3,285)
Proceeds from sale of property, plant and equipment 268 560
Proceeds from disposition of investments and
other assets 7,594 5
Acquisition of investments and other assets (838) (785)
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Net cash used in investing activities (2,801) (21,500)
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Cash flows from financing activities:
Net borrowings of notes payable to banks 3,025 9,850
Principal repayments of long-term debt (6,064) (1,588)
Dividends (2,998) (2,997)
Proceeds from issuance of long-term debt 4,241 2,521
Repayment of gold loan (4,454) (8,909)
Proceeds from issuance of common stock 107 896
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Net cash used in financing activities (6,143) (227)
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Net decrease in cash and cash equivalents (11,143) (11,519)
Cash and cash equivalents at beginning of period 15,878 19,062
------- -------
Cash and cash equivalents at end of period $ 4,735 7,543
======= =======
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest, net of amounts capitalized $ 5,581 5,947
======= =======
Income taxes, net $ 9,707 1,484
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 5
First Mississippi Corporation
Industry Segment Information (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months ended 6 Months ended
December 31 December 31
----------------- -----------------
1993 1992 1993 1992
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales
Chemicals $ 34,860 33,205 74,474 66,630
Fertilizer 36,050 35,581 69,905 67,359
Gold 24,495 22,529 45,331 44,283
Other 20,515 13,232 39,550 28,941
------- ------- ------- -------
Total $115,920 104,547 229,260 207,213
======= ======= ======= =======
Operating profit(loss)
before income taxes
Chemicals $ 7,129 6,408 14,422 11,466
Fertilizer 2,138 1,583 4,444 3,554
Gold 3,358 872 3,354 4,062
Other (2,273) (4,156) (4,624) (5,653)
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10,352 4,707 17,596 13,429
Unallocated corporate expenses (1,904) (1,648) (3,621) (3,833)
Interest income(expense), net (2,505) (3,147) (5,278) (6,244)
Other income(expense), net (138) (450) (76) (287)
------- ------- ------- -------
Total $ 5,805 (538) 8,621 3,065
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
First Mississippi Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited. In Thousands of Dollars)
NOTE 1 - GENERAL
The financial statements included herein are unaudited and have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting and Securities and Exchange Commission regulations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, the financial statements reflect all adjustments (of a
normal and recurring nature) which are necessary to present fairly the
financial position, results of operations and cash flows for the interim
periods. These financial statements should be read in conjunction with the
Annual Report of the Company and Form 10-K for the year ended June 30, 1993.
Note 2 - DISCONTINUED OPERATIONS
On October 15, 1993, the Company sold the stock of Pyramid Mining,
Inc. ("Pyramid") for $13.1 million. Proceeds of the transaction included cash
of $6.0 million, an 18 month promissory note for $4.0 million and working
capital of $3.1 million which has been liquidated. An overriding royalty
interest with a potential value of $3.0 million 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 $32.0 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 $7.8 million. Also in October 1993, the Company received $5.0 million from
an insurance claim related to coal operations.
The net liabilities of the discontinued businesses have been segregated in
the accompanying consolidated financial statements. The following is the
composition of this net liability:
<TABLE>
<CAPTION>
December 31
1993
-----------
<S> <C>
Receivables $ 180
Inventories 236
Prepaid expenses and other current assets 47
Property, plant and equipment, net 253
Current instalments of long-term debt (50)
Accounts payable (42)
Accrued expenses and other current liabilities (4,685)
-------
Net current liabilities of discontinued
operations $ 4,061
=======
</TABLE>
6
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Six months ended December 31, 1993, compared
to six months ended December 31, 1992
CONSOLIDATED RESULTS
Results for the six months ended December 31, 1993, were earnings of
$8.1 million versus a loss of $17.8 million for the same period prior year.
Current year results reflect increased earnings from continuing operations and
a $4.2 million gain from the required change in accounting for deferred income
taxes. Prior year results include $18.8 million in operating losses and
write-downs related to discontinued operations.
CONTINUING OPERATIONS
Earnings from continuing operations were above prior year on higher
segment operating results and lower interest expense. An additional $0.6
million in tax expense was recorded during the first quarter as required by the
above referenced change in accounting principle to adjust deferred taxes to
reflect the increase in Federal tax rates which occurred in August 1993.
Interest expense declined from the prior year as proceeds related to the
disposition of oil and gas and coal assets were used to reduce debt.
SEGMENT OPERATIONS
Segment pretax operating results increased 31% on improved chemicals
and fertilizer operations. Total sales increased 11% due to higher sales for
chemicals and other operations.
Chemicals pretax operating results were up 26% on higher volume from
intermediates and improvement in specialty chemicals. Intermediate chemicals
volume increased 18% on strong housing and agricultural demand. Specialty
chemicals results improved on increased performance chemicals sales for the
semiconductor industry.
Fertilizer pretax operating results were up 25% as higher ammonia
prices more than offset higher gas prices and a 5% drop in average urea price.
Sales were up for the period on a 3% increase in average ammonia and urea
prices. Ammonia production for the six months was up 9% due to prior year
outages. Urea production was down 12% over prior year due to scheduled
turnaround in October and subsequent reduced operating rates in November.
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<PAGE> 8
Gold results were down 17% on lower gross profit and increased
exploration expense. The following table highlights sales and production
information:
<TABLE>
<CAPTION>
Six Months Ended
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12/31/93 12/31/92
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<S> <C> <C>
Ounces sold 117,263 117,594
Average Realized Price/oz. $387 $377
Ounces Produced:
Mill 101,991 106,500
Heap Leach 15,323 10,914
Cash Cost/oz.:
Mill $291 $260
Heap Leach $179 $209
Combined $276 $255
Total Cost/Oz.:
Mill $356 $329
Heap Leach $189 $236
Combined $334 $321
</TABLE>
Gold gross profit was down 7% from the prior year as increased mining
cost more than offset a $10 increase in average realized price. Exploration
expense was up 25% to $1.9 million versus last year reflecting a continuation
of the expanded exploration efforts at Getchell.
As of December 31, 1993, 320,000 ounces, or approximately 83% of
planned gold production has been sold for delivery over the next one and
one-half years using spot deferred contracts at prices ranging between $372 and
$396 per ounce. Under these contracts, the Company may roll delivery dates
forward and sell into the spot market.
Losses from other operations decreased 18% primarily due to improved
thermal plasma results. Although sales increased 37% on higher combustion
technology and steel sales, margins on combustion technology products were
lower versus the prior year due to intense competitive pressure. Aluminum
recovery operations continue to represent the largest share of other operations
losses due to low volume and depressed industry conditions. Order backlogs for
these operations continue to increase.
Three months ended December 31, 1993, compared to
three months ended December 31, 1992
CONSOLIDATED RESULTS
Results for the three months ended December 31, 1993, were earnings of
$3.1 million versus a net loss of $17.7 million for the same period prior year.
The current quarter results reflect improvement in continuing operations while
prior year results include $17.1 million in operating losses and write-downs
related to discontinued operations.
CONTINUING OPERATIONS
Results from continuing operations were up over the prior year on
improvement in segment operating results, lower interest expense and a lower
loss on investments. Interest expense declined from the prior year as proceeds
related to the disposition of oil and gas and coal assets
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<PAGE> 9
were used to reduce debt. Loss on investments represents declines in the value
of System Industry's stock. The current year loss for this stock reflected
continued deterioration of the company which led to complete write-off of the
stock.
SEGMENT OPERATIONS
Chemicals pretax operating results were up 11%. Included in results
for the current quarter was a $1.0 million license fee for nitrobenzene
technology. Sales were up for the period as intermediate chemicals volume
increased 15% due to strong housing and agricultural demand.
Fertilizer pretax operating results were up 35% as improved ammonia
margins more than offset a decline in urea margins. Ammonia margins improved
on a 6% increase in unit price and a 4% decrease in unit cost due to lower
natural gas prices. Urea margins declined on a 9% decrease in unit sales price
and a 17% increase in unit cost due to plant turnaround in October and reduced
operating rates during the first half of November. Total sales increased for
the period due to a 2% increase in average unit price as volume remained even.
Gold pretax operating results were up $2.5 million on increased gross
profit. The following table highlights sales and production information:
<TABLE>
<CAPTION>
Three Months Ended
------------------
12/31/93 12/31/92
-------- --------
<S> <C> <C>
Ounces sold 62,862 59,171
Average Realized Price/oz. $390 $381
Ounces Produced:
Mill 54,971 48,249
Heap Leach 7,942 6,204
Cash Cost/oz.:
Mill $272 $287
Heap Leach $196 $241
Combined $262 $282
Total Cost/Oz.:
Mill $334 $365
Heap Leach $205 $265
Combined $318 $353
</TABLE>
Gross profit was up 128% for the quarter on higher sales prices,
increased production and lower unit cost. Gold production increased and unit
cost declined as the high grade North Pit ore body came into production,
raising mill feed grade to 0.222 ounces per ton from 0.172 ounces per ton a
year ago. Total sales for the period increased 9% as sales volume increased 6%
and average realized sales price increased $9 per ton.
Losses from other operations declined 45% as thermal plasma operations
moved to breakeven versus the same period prior year when no sales were made.
Total sales for other operations were up 55% due primarily to increased steel
sales. Steel sales increased on higher sales of value-added products; however,
results were up only slightly due to lower cast volume and margins.
9
<PAGE> 10
DISCONTINUED OPERATIONS
Prior year results include the estimated loss on disposition and
operating losses related to discontinued operations. Discontinued plans
results to date are within earlier estimates. In October 1993, the Company
sold the stock of Pyramid Mining, Inc. (See note 2 to Financial Statements.)
CAPITAL RESOURCES AND LIQUIDITY
Working capital was up for the current six month period, as increases
at chemicals, steel and gold operations more than offset the liquidation of
working capital related to discontinued operations. This increased working
capital was primarily funded through operating cash flow. Proceeds from
investing activities included $5.0 million in net cash received related to the
disposition of coal operations and $7.6 million in proceeds from borrowings
against the cash surrender value of life insurance policies. The Company is
owner and beneficiary of life insurance policies that cover participants in
certain deferred compensation plans. For the six months ended December 31,
1993, total debt, including the gold loan, declined $2.8 million.
Capital expenditures declined 34%, primarily due to the disposition of
oil and gas and coal operations. Depreciation, depletion and amortization also
declined due to disposition of these operations, but was partially offset by
increased amortization of deferred stripping costs at gold operations.
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<PAGE> 11
Part II
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders on November 12, 1993, the
Company stockholders, pursuant to proxies solicited under Regulation
14A, elected three directors for terms to expire in 1996, or until
their successors are elected and qualify. The following votes were
cast:
Director:
Robert P. Guyton 15,701,108 shares voted for
885,756 shares withheld
N/A shares broker nonvotes
Paul W. Murrill 15,708,234 shares voted for
878,630 shares withheld
N/A shares broker nonvotes
J. Kelley Williams 15,695,245 shares voted for
891,619 shares withheld
N/A shares broker nonvotes
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
No exhibits are filed with this Form 10-Q.
(b) Reports on Form 8-K.
Registrant filed a current Report on Form 8-K dated October 29, 1993
listing under "Acquisition or Disposition of Assets" information
relative to the sale of the Company's wholly owned subsidiary, Pyramid
Mining, Inc.
11
<PAGE> 12
EXHIBIT INDEX
EXHIBITS
No exhibits are filed with this Form 10-Q.
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST MISSISSIPPI CORPORATION
2/11/94 /s/ J. Kelley Williams
- ----------- --------------------------------------
Date J. Kelley Williams
Chairman and Chief Executive Officer
2/11/94 /s/ R. Michael Summerford
- ----------- --------------------------------------
Date R. Michael Summerford
Vice President and Chief Financial Officer
13
