<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 September 30, 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
--- ---
Class Outstanding at October 31,1994
- - - --------------------------------- -------------------------------
Common Stock, $1 Par Value 20,217,490
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Part I. Financial Information
Item 1. Financial Statements
First Mississippi Corporation
Consolidated Balance Sheets (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Sept. 30 June 30
1994 1994
--------- -------
<S> <C> <C>
Assets:
Current assets
Cash and cash equivalents $ 14,532 4,952
Receivables, net 68,329 58,840
Inventories:
Finished products 22,414 25,334
Work in process 20,932 19,828
Raw materials and supplies 23,208 22,041
Product exchange agreements 77 933
-------- --------
Total inventories 66,631 68,136
-------- --------
Prepaid expenses and other current assets 11,009 6,907
-------- --------
Total current assets 160,501 138,835
-------- --------
Investments and other assets 36,182 36,850
Property, plant and equipment 397,905 391,931
Less: accumulated depreciation,
depletion and amortization 196,955 190,040
-------- --------
200,950 201,891
-------- --------
$397,633 377,576
======== ========
Liabilities and Stockholders' Equity:
Current liabilities
Current instalments of long-term debt $ 1,466 1,433
Deferred revenue 2,943 1,477
Accounts payable 42,383 41,291
Accrued expenses and other current liabilities 22,010 15,760
-------- --------
Total current liabilities 68,802 59,961
-------- --------
Long-term debt 98,708 104,287
Deferred revenue and other liabilities 12,661 12,491
Deferred taxes 15,906 13,922
Minority interests 9,357 9,228
Stockholders' equity:
Common stock 20,181 20,086
Additional paid-in capital 4,285 3,378
Retained earnings 167,733 154,223
-------- --------
Total stockholders' equity 192,199 177,687
-------- --------
$397,633 377,576
======== ========
</TABLE>
The accompanying notes are an integral part of the 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
September 30
1994 1993
-------- --------
<S> <C> <C>
Revenues:
Sales $156,894 113,340
Loss on investments - (78)
Interest and other income 250 998
-------- --------
157,144 114,260
-------- --------
Costs and expenses:
Cost of sales 114,881 95,506
General, selling and
administrative expenses 11,962 10,719
Other operating expenses 3,399 2,389
Interest expense 2,265 2,830
-------- --------
132,507 111,444
-------- --------
Earnings before income taxes, minority interests,
investee earnings (loss) and cumulative effect
of change in accounting principle 24,637 2,816
Income taxes 9,600 1,650
Minority interests (129) (216)
Equity in net earnings (loss) of equity investees 115 (148)
-------- --------
Earnings from operations before cumulative effect
of change in accounting principle 15,023 802
Cumulative effect of change in accounting principle - 4,200
-------- --------
Net earnings $ 15,023 5,002
======== ========
Earnings per common share:
Before cumulative effect of accounting change $ 0.74 0.04
Cumulative effect of change in accounting principle - 0.21
-------- --------
Earnings per common share $ 0.74 0.25
======== ========
Average shares outstanding 20,393 20,013
Cash dividend declared per share $ 0.075 0.075
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
First Mississippi Corporation
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months ended
September 30
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 15,023 5,002
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation, depletion and amortization 9,896 8,317
Deferred taxes and other items 4,191 (2,423)
Change in current assets and liabilities, net
of effects of dispositions (5,101) (18,166)
-------- --------
Net cash provided by (used in) operating activities 24,009 (7,270)
-------- --------
Cash flows from investing activities:
Capital expenditures (8,224) (5,489)
Deferred stripping costs (37) (1,063)
Proceeds from sale of property, plant and equipment 10 244
Acquisition of investments and other assets (18) (452)
-------- --------
Net cash used in investing activities (8,269) (6,760)
-------- --------
Cash flows from financing activities:
Net repayments of notes payable to banks - 2,000
Principal repayments of long-term debt (5,197) (5,920)
Dividends (1,514) (1,499)
Proceeds from issuance of long-term debt 94 14,000
Repayment of gold loan - (2,227)
Proceeds from issuance of common stock 457 -
-------- --------
Net cash provided by (used in) financing activities (6,160) 6,354
-------- --------
Net increase (decrease) in cash and cash equivalents 9,580 (7,676)
Cash and cash equivalents at beginning of period 4,952 15,878
-------- --------
Cash and cash equivalents at end of period $ 14,532 8,202
======== ========
Supplemental disclosures of cash flow information
Cash paid (received) during the period for:
Interest, net of amounts capitalized $ 2,508 3,020
======== ========
Income taxes, net $ (4,366) 6,140
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
First Mississippi Corporation
Industry Segment Information (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months ended
September 30
1994 1993
-------- --------
<S> <C> <C>
Sales:
Chemicals $ 49,509 39,614
Fertilizer 58,551 33,855
Gold 21,940 20,836
Combustion, Thermal Plasma and Other 26,894 19,035
-------- --------
Total $156,894 113,340
======== ========
Operating profit(loss)
before income taxes:
Chemicals $ 10,586 7,293
Fertilizer 18,721 2,306
Gold 1,435 (4)
Combustion, Thermal Plasma and Other (1,826) (2,351)
-------- --------
28,916 7,244
Unallocated corporate expenses (2,137) (1,717)
Interest income (expense), net (2,172) (2,773)
Other income (expense), net 30 62
-------- --------
Total $ 24,637 2,816
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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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, 1994.
6
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three months ended September 30, 1994 compared
to the three months ended September 30, 1993
Consolidated Results
Earnings for the three months ended September 30, 1994 were $15.0
million versus $5.0 million for the same period last year. Prior year earnings
included a $4.2 million benefit from an accounting change related to deferred
income taxes. The higher earnings reflected improved operating results in all
segments versus the prior year and lower interest expense due to lower average
debt for the period.
Segment Operations
Segment operating results and sales were up 299% and 38%,
respectively, over the prior year with increases in all segments, but most
significantly in the fertilizer segment.
Fertilizer pretax operating profits for the quarter were up $16.4
million and sales increased 73% from the prior year, primarily due to a 102%
increase in average ammonia price to $180 per ton. Results also reflect
greater urea volume and lower costs for natural gas. Ammonia volume was down
6% versus the prior year due to a five-day plant outage at AMPRO in July and
less ammonia available under purchase contracts. Urea volume was up 54% with
strong demand for use on wheat, while average price declined 4%. Unit
production cost was lower due to a decline in average natural gas cost, which
was 12% below last year. Ammonia prices continue to reflect a condition of
tight supplies and good demand for both industrial and agricultural use.
Chemicals pretax operating results and sales for the quarter were up
45% and 25%, respectively, over prior year. The improvement was due to higher
sales of specialty chemicals for agriculture and performance chemicals for the
semiconductor industry, additional nitrobenzene volume and higher aniline
prices. Contribution for specialties including performance chemicals increased
25% and represented 55% of total chemicals contribution versus 53% last year.
Intermediate contribution increased 14% and should continue to benefit from a
multi-year contract to supply nitrobenzene to a customer that will fully
utilize nitrobenzene capacity through 1999.
Gold pretax operating results for the quarter were a profit of $1.4
million versus a loss of $4,000 last year. The improvement was due to higher
mill feed grades and lower production costs. The following table highlights
sales and production information:
7
<PAGE> 8
<TABLE>
<CAPTION>
Three Months Ended
------------------
9/30/94 9/30/93
-------- --------
<S> <C> <C>
Ounces Sold 56,844 54,401
Average Realized Price/oz. $386 $383
Average Market Price/oz. $386 $370
Ounces Produced:
Mill 51,522 47,020
Heap Leach 5,322 7,381
Cash Cost/oz.:
Mill $274 $312
Heap Leach $241 $162
Combined $271 $292
Total Cost/oz.:
Mill $326 $382
Heap Leach $254 $172
Combined $319 $353
</TABLE>
Net sales rose 5% due to a 4% increase in ounces sold and a slight
increase in average realized gold price. Higher mill feed grades of 0.214
ounces per ton, versus 0.160 a year earlier, account for the improved sales
volume. Cost of sales were down $1.1 million from a year earlier due to lower
mill operating costs and lower depreciation. Mill throughput averaged 3,076
tons per day for the quarter, down from 3,551 per day last year due to
scheduled mill maintenance projects. Exploration expenses totaled $1.7 million
for the quarter, an increase of $0.6 million over the same period last year.
Most of the exploration spending was related to the Turquoise Ridge trend,
where drilling continues to expand the mineralized areas discovered during the
last one and one-half years.
Underground test stoping and core drilling on the Getchell Main
Underground ore body have now indicated that a drift-and- fill mining method
will be required rather than open stope mining as initially planned. As a
result, start-up of the Getchell Main Underground operation will be delayed
until mid-fiscal 1995. The planned underground production rate has been
reduced from 2,000 tons per day to approximately 1,000 tons per day. Average
mill feed grade and operating earnings are expected to decrease as a result of
lower underground production and additional blending of lower grade stockpiles.
In addition, mining in the Getchell Main Pit has been slowed by congested
working conditions in the narrowing pit floor. As a result, pit ore production
will be extended into the spring of 1995.
Combustion, thermal plasma and other pretax operating losses decreased
22% from the prior year. The improvement was primarily due to higher sales and
margins for combustion products and increased sales of thermal plasma systems.
Sales were up 41% with increases in all operations, primarily steel. Steel
operating results remained about the same, however, due to increased raw
material cost.
8
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Capital Resources and Liquidity
Cash flow from operations was $24.0 million, driven by strong net
earnings, and generated a $9.6 million increase in cash and cash equivalents
for the quarter. As of September 30, 1994, total debt as a percentage of total
debt and equity was 34% versus 37% at prior year-end.
9
<PAGE> 10
Part II
Item 1. Legal Proceedings
On November 3, 1994, Thunderbird Energy, Inc. ("Thunderbird") and
Samuel Francis brought suit against First Mississippi Corporation
("FRM"), alleging, among other things, fraudulent inducement, negligent
misrepresentation and breach of contract in connection with FRM's sale
of its coal operations (Pyramid Mining, Inc.) in fiscal 1994. The
suit, which is filed in Davies County Circuit Court in Kentucky, seeks
an unspecified amount of damages and/or rescission of the sale. Samuel
Francis is the guarantor of the indebtedness Thunderbird owes to FRM
from the sale. Based on its investigation as of the date of this
Report on Form 10-Q, FRM believes the allegations to be without merit
and intends to defend the suit vigorously. On October 14, 1994, FRM
brought suit in the United States District Court for the Southern
District of Mississippi against Thunderbird, Pyramid Mining and Samuel
Francis, to collect various amounts owed to FRM arising out of the
Pyramid sale. That lawsuit also seeks a declaratory judgment that any
allegations of misrepresentation by FRM raised by Thunderbird, Pyramid
Mining or Francis are without merit.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedules
(b) Reports on Form 8-K.
No report on Form 8-K was filed by the Registrant during the
three months ended September 30, 1994.
10
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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
November 10, 1994 /s/ J. Kelley Williams
Date J. Kelley Williams
Chairman and Chief Executive Officer
November 10, 1994 /s/ R. Michael Summerford
Date R. Michael Summerford
Vice President and Chief Financial Officer
11
<PAGE> 12
EXHIBIT INDEX
EXHIBITS
27 Financial Data Schedules
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 14,532
<SECURITIES> 0
<RECEIVABLES> 69,139
<ALLOWANCES> 810
<INVENTORY> 66,631
<CURRENT-ASSETS> 160,501
<PP&E> 397,905
<DEPRECIATION> 196,955
<TOTAL-ASSETS> 397,633
<CURRENT-LIABILITIES> 68,802
<BONDS> 98,708
<COMMON> 20,181
0
0
<OTHER-SE> 172,018
<TOTAL-LIABILITY-AND-EQUITY> 397,633
<SALES> 156,894
<TOTAL-REVENUES> 157,144
<CGS> 114,881
<TOTAL-COSTS> 114,881
<OTHER-EXPENSES> 15,323
<LOSS-PROVISION> 38
<INTEREST-EXPENSE> 2,265
<INCOME-PRETAX> 24,637
<INCOME-TAX> 9,600
<INCOME-CONTINUING> 15,023
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,023
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.74
</TABLE>
