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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 March 31, 1994
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to ________________
Commission File Number: 1-7488
First Mississippi Corporation
(Exact name of registrant as specified in its charter)
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)
Registrant's Telephone Number, including Area Code: 601/948-7550
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
<TABLE>
<CAPTION>
Class Outstanding at April 30, 1994
- - --------------------------------- -------------------------------
<S> <C>
Common Stock, $1 Par Value 20,068,390
</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>
Mar. 31 June 30
1994 1993
-------- --------
<S> <C> <C>
Assets:
Current assets
Cash and short-term investments $ 4,058 15,878
Accounts receivable 68,668 41,012
Inventories:
Finished products 24,510 22,203
Work in process 18,478 13,187
Raw materials and supplies 22,385 17,821
Product exchange agreements 192 925
------- -------
Total inventories 65,565 54,136
------- -------
Prepaid expenses and other current assets 5,492 1,957
Net current assets of discontinued operations - 17,877
------- -------
Total current assets 143,783 130,860
------- -------
Investments and other assets 36,859 46,648
Property, plant and equipment 385,139 369,698
Less: accumulated depreciation,
depletion and amortization 182,526 163,587
------- -------
202,613 206,111
------- -------
$383,255 383,619
======= =======
Liabilities and Stockholders' Equity:
Current liabilities
Notes payable to banks $ 2,950 -
Current instalments of long-term debt 1,398 1,428
Deferred revenue 8,228 16,533
Accounts payable 43,988 46,358
Accrued expenses and other current liabilities 12,256 16,420
Net current liabilities of discontinued
operations 3,807 -
------- -------
Total current liabilities 72,627 80,739
------- -------
Long-term debt 114,055 113,531
Deferred revenue and other liabilities 10,930 9,439
Long-term liabilities of discontinued operations - 4,205
Deferred taxes 6,486 6,752
Minority interests 9,129 8,179
Stockholders' equity:
Common stock 20,068 19,980
Additional paid-in capital 3,169 2,424
Retained earnings 146,791 138,370
------- -------
Total stockholders' equity 170,028 160,774
------- -------
$383,255 383,619
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 3
First Mississippi Corporation
Consolidated Statements of Operations (Unaudited)
(In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
March 31 March 31
----------------- -----------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Sales $129,581 103,595 358,841 310,808
Loss on investments - - (225) (625)
Interest and other income 75 186 2,187 1,587
------- ------- ------- -------
129,656 103,781 360,803 311,770
------- ------- ------- -------
Costs and expenses:
Cost of sales 105,106 90,282 296,537 265,350
General, selling and
administrative expenses 11,180 9,884 32,410 29,270
Other operating expenses 2,025 1,925 6,450 5,946
Interest expense 2,689 3,278 8,129 9,727
------- ------- ------- -------
121,000 105,369 343,526 310,293
------- ------- ------- -------
Earnings (loss) before income taxes 8,656 (1,588) 17,277 1,477
Income tax expense (credit) 3,300 (815) 7,100 503
Minority interests (392) 729 (947) 321
Equity in net loss of equity investees (110) (21) (506) (266)
------- ------- ------- -------
Earnings (loss) from continuing
operations before cumulative effect
of change in accounting principle $ 4,854 (65) 8,724 1,029
Loss from discontinued operations,
net of taxes - (64) - (2,570)
Loss on disposal of businesses, net
of taxes - - - (16,341)
Cumulative effect of change in
accounting principle - - 4,200 -
------- ------- ------- -------
Net earnings (loss) $ 4,854 (129) 12,924 (17,882)
======= ======= ======= =======
Earnings (loss) per common share:
Earnings (loss) from continuing
operations before cumulative
effect of change in accounting
principle $ 0.24 (0.01) 0.43 0.05
Discontinued operations - (0.00) - (0.94)
Cumulative effect of change in
accounting principle - - 0.21 -
------- ------- ------- -------
Earnings (loss) per common share $ 0.24 (0.01) 0.64 (0.89)
======= ======= ======= =======
Average shares outstanding 20,288 20,010 20,132 19,997
Cash dividend declared
per share $ 0.075 0.075 0.225 0.225
</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>
9 Months Ended
March 31
-----------------
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 12,924 (17,882)
Adjustments to reconcile earnings (loss) to
net cash provided by (used in) operating activities:
Depreciation, depletion and amortization 27,969 30,603
Deferred taxes and other items 1,829 15,911
Change in current assets and liabilities, net
of effects of dispositions (33,624) 3,344
------- -------
Net cash provided by operating activities 9,098 31,976
------- -------
Cash flows from investing activities:
Proceeds from sale of subsidiary 4,965 -
Capital expenditures (20,525) (27,498)
Deferred stripping costs (4,473) (7,749)
Proceeds from sale of property, plant and equipment 438 4,330
Proceeds from disposition of investments and
other assets 7,594 321
Acquisition of investments and other assets (913) (1,448)
------- -------
Net cash used in investing activities (12,914) (32,044)
------- -------
Cash flows from financing activities:
Net borrowings of notes payable to banks 2,950 5,000
Principal repayments of long-term debt (6,208) (1,855)
Dividends (4,503) (4,496)
Proceeds from issuance of long-term debt 6,181 16,020
Repayment of gold loan (7,127) (11,136)
Proceeds from issuance of common stock 703 896
------- -------
Net cash used in financing activities (8,004) (5,571)
------- -------
Net decrease in cash and cash equivalents (11,820) (5,639)
Cash and cash equivalents at beginning of period 15,878 19,062
------- -------
Cash and cash equivalents at end of period $ 4,058 13,423
======= =======
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest, net of amounts capitalized $ 8,223 9,420
======= =======
Income taxes, net $ 11,384 1,791
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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First Mississippi Corporation
Industry Segment Information (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
March 31 March 31
----------------- ----------------
1994 1993 1994 1993
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Sales
Chemicals $ 42,264 36,818 116,738 103,448
Fertilizer 40,214 37,358 110,119 104,717
Gold 24,658 13,783 69,989 58,066
Other 22,445 15,636 61,995 44,577
------- ------- ------- -------
Total $129,581 103,595 358,841 310,808
======= ======= ======= =======
Operating profit(loss)
before income taxes
Chemicals $ 7,785 6,708 22,207 18,174
Fertilizer 5,531 4,803 9,975 8,357
Gold 2,984 (5,173) 6,338 (1,111)
Other (2,797) (3,126) (7,421) (8,779)
------- ------- ------- -------
13,503 3,212 31,099 16,641
Unallocated corporate expenses (2,186) (1,641) (5,807) (5,474)
Interest income(expense), net (2,611) (3,228) (7,889) (9,472)
Other income(expense), net (50) 69 (126) (218)
------- ------- ------- -------
Total $ 8,656 (1,588) 17,277 1,477
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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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. In April 1994, $3.0 million
of this promissory note was prepaid with the balance rescheduled over the
remaining original term.
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<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Nine months ended March 31, 1994 compared
to nine months ended March 31, 1993
CONSOLIDATED RESULTS
Results for the nine months ended March 31, 1994, were earnings of
$12.9 million versus a loss of $17.9 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 $18.9 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. Interest expense
declined from the prior year as proceeds related to the disposition of
discontinued operations were used to reduce debt.
SEGMENT OPERATIONS
Segment pretax operating results increased 87% and sales increased 15%
on improvement in all operations.
Chemicals pretax operating results were up 22% and sales were up 13%
on higher intermediate volume and improvement in specialty chemicals.
Intermediate chemicals volume increased 19% 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 19% as a $9/ton increase
in average ammonia prices to $110/ton more than offset a 10% increase in
natural gas prices and lower urea margins. Urea margins decreased due to
lower average prices, lower volume and increased costs related to scheduled
maintenance in the second quarter. During April 1994, spot market anhydrous
ammonia prices hit $225/ton. The higher prices appear to be driven by
increased industrial demand, early spring movement for agricultural market and
reduced imports. Ammonia prices are expected to decline following peak spring
demand. However, tighter supplies may support higher seasonal lows.
The fertilizer segment follows a policy of periodically hedging,
through commodities futures contracts, its anticipated requirements of natural
gas. At April 30, 1994, the Company had entered contracts representing
approximately 33% of anticipated purchases of natural gas for the period May
1994 to June 1995 at an average price of $2.20 MMBTU.
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Gold pretax operating results were up $7.4 million from the prior year
due to higher gross margins. The following table highlights sales and
production information:
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
3/31/94 3/31/93
------- -------
<S> <C> <C>
Ounces Sold 179,781 156,057
Average Realized Price/oz. $389 $372
Average Market Price/oz. $378 $339
Ounces Produced:
Mill 158,229 140,558
Heap Leach 21,652 15,515
Cash Cost/oz:
Mill $289 $289
Heap Leach $177 $224
Combined $276 $282
Total Cost/oz:
Mill $352 $368
Heap Leach $188 $254
Combined $333 $357
</TABLE>
The improvement in gross margin is due to higher gold prices and
higher production volume. Realized price per ounce rose to $389 from $372
prior year, and increases in heap leach and mill output combined to yield a 15%
improvement in sales volume. Gold production rose sharply versus the prior
year as high grade North Pit ore was blended into mill feed. Lower production
a year ago, related to winter weather and mechanical problems, also contributed
to the increase in gold output. Mill feed grade averaged 0.204 ounces per ton
for the nine months compared to 0.176 per ton a year earlier. Mill recovery
and throughput were essentially unchanged.
Underground ore production is scheduled to begin in the fourth quarter
of this year. Output is initially targeted at 1,000 tons per day increasing to
approximately 2,000 tons per day later in fiscal 1995 with production from a
second underground level. Underground ore grades are expected to run higher
than historical open pit grades.
The spot deferred hedging program now covers approximately 76% of the
anticipated gold output of the next 18 months at an average forward price of
$388 per ounce. Under these contracts, the Company may roll delivery dates
forward and sell into the spot market.
Losses from other operations decreased 15% as improved thermal plasma
results offset lower margins for combustion technology products caused by
competitive pressure. Although dross processing volume increased 18% over the
prior year, aluminum operations continue to suffer from depressed industry
conditions. Sales for other operations increased for the period primarily due
to increased combustion technology and steel
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<PAGE> 9
sales. Steel sales increased due to increased sales of value added products;
however, total unit margins were unchanged.
Three months ended March 31, 1994, compared to
three months ended March 31, 1993
CONSOLIDATED RESULTS
Consolidated results for the three months ended March 31, 1994, were
earnings of $4.9 million versus a loss of $.1 million for the same period prior
year. The improvement over the prior year is primarily due to a $10.3 increase
in segment operating results, mostly in gold operations.
SEGMENT OPERATIONS
Chemical pretax operating results were up 16% primarily due to
increased sales of intermediate chemicals and performance chemicals for the
semiconductor industry. Intermediate chemicals sales volume increased 22% due
to strong demand in agriculture and construction.
Fertilizer pretax operating results were up 15% as a $17/ton increase
in average ammonia prices more than offset higher natural gas costs and lower
urea margins. Average natural gas prices were up 18% versus the prior year.
Urea margins declined on a 5% decrease in average unit price and a 4% increase
in unit cost. Total fertilizer sales were up for the quarter reflecting a 3%
increase in volume and 7% increase in average net unit prices.
9
<PAGE> 10
Gold pretax operating results were up $8.2 million from the prior year
on increased gross profit. The following table highlights sales and production
information:
<TABLE>
<CAPTION>
Three Months Ended
------------------
3/31/94 3/31/93
------- -------
<S> <C> <C>
Ounces Sold 62,518 38,464
Average Realized Price/oz. $394 $358
Average Market Price/oz. $385 $329
Ounces Produced:
Mill 56,238 34,058
Heap Leach 6,329 4,601
Cash Cost/oz:
Mill $287 $378
Heap Leach $172 $261
Combined $276 $364
Total Cost/oz:
Mill $346 $490
Heap Leach $186 $296
Combined $330 $467
</TABLE>
Gold gross profit improvement for the quarter is the result of
increased production, lower unit cost and higher realized gold prices. Gold
production in the third quarter was up sharply from last year when winter
weather and mechanical problems in the mill hurt production and increased
costs. In addition, during the current quarter, high grade North Pit ore was
blended into the mill feed.
Losses from other operations were down 11% from the prior year as
improvement in thermal plasma operations more than offset lower combustion
technology margins. Thermal plasma results improved primarily due to higher
sales and lower operating expenses. Combustion technology margins declined as
competitors cut prices to protect market share.
CAPITAL RESOURCES AND LIQUIDITY
Cash flow from operations was positive for the nine months but below
last year as receivables and inventory increased, primarily due to business
growth. Cash flow used in investing activities declined reflecting proceeds in
the current year from the liquidation of coal and other assets. Total debt,
including the gold loan, was down $3.7 million from June 30, 1993.
Capital expenditures declined 25%, 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. Other Information
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. No report on Form 8-K was filed by the
registrant during the three months ended March 31, 1994.
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EXHIBIT INDEX
EXHIBITS
No exhibits are filed with this Form 10-Q.
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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
May 11, 1994 /s/ J. Kelley Williams
Date J. Kelley Williams
Chairman and Chief Executive Officer
May 11, 1994 /s/ R. Michael Summerford
Date R. Michael Summerford
Vice President and Chief Financial Officer
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