<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, 1995
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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)
Mississippi 64-0354930
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 North Street, Jackson, MS 39202-3095
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(Address of principal (Zip Code)
executive offices)
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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Class Outstanding at October 31, 1995
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Common Stock, $1 Par Value 20,819,908
<PAGE> 2
Part I. Financial lnformation
Item 1. Financial Statements
First Mississippi Corporation
Consolidated Balance Sheets (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Sept. 30 June 30
1995 1995
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<S> <C> <C>
Assets:
Current assets
Cash and short-term investments $ 51,240 40,523
Accounts receivable 74,355 71,645
Inventories:
Finished products 25,647 24,850
Work in process 23,918 19,051
Raw materials and supplies 20,446 20,544
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Total inventories 70,011 64,445
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Prepaid expenses and other current assets 4,391 11,218
Net current assets of discontinued operations 8,420 4,904
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Total current assets 208,417 192,735
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Investments and other assets 42,149 38,829
Property, plant and equipment 287,210 282,433
Less: accumulated depreciation,
depletion and amortization 142,037 136,969
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145,173 145,464
Noncurrent assets of discontinued operations 68,926 67,689
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$ 464,665 444,717
========== =========
Liabilities and Stockholders' Equity:
Current liabilities
Current instalments of long-term debt $ 15,353 15,076
Deferred revenue 2,016 2,048
Accounts payable 54,971 45,576
Accrued expenses and other current liabilities 22,313 19,928
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Total current liabilities 94,653 82,628
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Long-term debt 83,256 84,394
Deferred revenue and other liabilities 12,418 12,289
Deferred taxes 17,791 23,377
Long-term liabilities and minority interest - discontinued operations 8,777 9,033
Stockholders' equity:
Common stock 20,635 20,438
Additional paid-in capital 11,811 7,656
Retained earnings 215,324 204,902
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Total stockholders' equity 247,770 232,996
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$ 464,665 444,717
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
First Mississippi Corporation
Consolidated Statements of Operations (Unaudited)
(In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
3 Months ended
Sept. 3
----------------------
1995 1994
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<S> <C> <C>
Revenues:
Sales $ 142,230 134,954
Interest and other income 2,368 798
----------- --------
144,598 135,752
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Costs and expenses:
Cost of sales 102,627 96,746
General, selling and
administrative expenses 16,039 11,304
Other operating expenses 1,643 1,687
Interest expense 2,369 2,448
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122,678 112,185
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Earnings before income taxes 21,920 23,567
Income tax expense 8,550 9,225
Equity in net earnings of equity investees 193 115
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Earnings from continuing operations $ 13,563 14,457
Earnings (loss) from discontinued operations, net (1,083) 566
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Net earnings $ 12,480 15,023
=========== ========
Earnings (loss) per common share:
Continuing operations $ 0.64 0.71
Discontinued operations (0.05) 0.03
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Earnings per common share $ 0.59 0.74
=========== ========
Average shares outstanding 21,048 20,393
Cash dividend declared
per share $ 0.100 0.075
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
First Mississippi Corporation
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months ended
Sept 30
----------------------
1995 1994
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 12,480 15,023
Adjustments to reconcile earnings to
net cash provided by operating activities:
Depreciation, depletion and amortization 5,618 4,939
Deferred taxes and other items 1,020 4,033
Change in current assets and liabilities, net
of effects of dispositions 6,045 (5,090)
Net (earnings) loss of discontinued operations 1,083 (566)
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Net cash provided by continuing operations 26,246 18,339
Net cash provided by (used in ) operating activities - discontinued operations (2,973) 4,962
----------- -------
Net cash provided by operations 23,273 23,301
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Cash flows from investing activities:
Capital expenditures (4,783) (3,447)
Investment in equity investees, net (3,664)
Other investing activities 92 (8)
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Net cash used in investing activities of continuing operations (8,355) (3,455)
Net cash used in investing activities - discontinued operations (3,176) (4,813)
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Net cash used in investing activities (11,531) (8,268)
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Cash flows from financing activities:
Principal repayments of long-term debt (270) (5,147)
Dividends (2,057) (1,514)
Proceeds from issuance of long-term debt 94
Proceeds from issuance of common stock 1,302 458
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Net cash used in financing activities (1,025) (6,109)
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Net increase in cash and cash equivalents 10,717 8,924
Cash and cash equivalents at beginning of period 40,523 2,973
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Cash and cash equivalents at end of period $ 51,240 11,897
=========== =======
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest, net of amounts capitalized $ 2,658 2,508
=========== =======
Income taxes, net $ 99 (4,366)
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</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
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, 1995.
NOTE 2 - DISCONTINUED OPERATIONS
On September 24, 1995, the board of directors of First Mississippi
Corporation approved the distribution of its 14,750,000 common shares of
FirstMiss Gold Inc. to its shareholders through a spin-off. First Mississippi
had received a ruling from the Internal Revenue Service in April 1995 that
allowed the distribution to take place with no federal income tax impact to
either First Mississippi or its shareholders. The distribution occurred
October 20, 1995. Each First Mississippi shareholder received approximately
seven-tenths of a common share of FirstMiss Gold Inc. for each share of First
Mississippi owned. Cash was paid for any resulting fractional shares created
due to the distribution ratio.
<PAGE> 6
The net assets and liabilities of the discontinued operations (primarily
FirstMiss Gold) have been segregated in the consolidated financial statements
presented. The following is the composition of those net assets and
liabilities:
<TABLE>
<CAPTION>
9/30/905 06/30/95
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<S> <C> <C>
Receivables $ 2,281 1,856
Inventories 9,570 9,554
Prepaid expenses and other current assets 1,524 1,176
Accounts payable (3,611) (6,522)
Accrued expenses and other current liabilities (1,344) (1,160)
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Net current assets of discontinued operations $ 8,420 4,904
=========== =======
Noncurrent assets of discontinued operations $ 68,926 67,689
=========== =======
Long-term liabilities of discontinued operations $ 3,061 3,032
=========== =======
Minority interest of discontinued operations $ 5,716 6,001
=========== =======
</TABLE>
The statements of operations have been reclassified to separate discontinued and
continuing operations. Revenues and net earnings (loss) of the discontinued
operations for the periods ended September 30, 1995, and September 30, 1994,
were as follows:
<TABLE>
<CAPTION>
3 Months Ended
September 30
1995 1994
---- ----
<S> <C> <C>
Revenues $ 17,961 21,991
======== ======
Earnings (loss) before taxes (2,118) 1,070
Income tax (expense) benefit 750 (375)
Minority interest 285 129
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Earnings (loss) from discontinued operations, net of taxes $ (1,083) 566
======== ======
</TABLE>
NOTE 3 - COMMITMENTS AND CONTINGENT LIABILITIES
At September 30, 1995, the Company had entered hedge contracts
representing approximately 17% of anticipated purchases of natural gas for the
period October 1, 1995, to June 30, 1996.
<TABLE>
<CAPTION>
Delivery Dates Average Price per MMBTU MMBTU (in 10,000's)
-------------- ----------------------- -------------------
<S> <C> <C>
10/1/95-6/30/96 $1.88 330
</TABLE>
The net unrealized loss on these natural gas contracts at September 30,
1995, is $226.
<PAGE> 7
Item 2. Management's Discussion and Analysis of Operations
RESULTS OF OPERATIONS
Three months ended September 30, 1995 compared
to the three months ended September 30, 1994
CONSOLIDATED RESULTS
Earnings for the three months ended September 30, 1995 were $12.5
million versus $15.0 million for the same period last year. Results for the
year declined on lower results from discontinued gold operations and higher
unallocated corporate expense. Sales were up 5% as higher sales in Chemicals
and Combustions, Thermal Plasma and Other offset a 9% decline in Fertilizer.
SEGMENT OPERATIONS
First Mississippi Corporation
Industry Segment Information
(In Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months ended Sept. 30
-----------------------
1995 1994
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<S> <C> <C>
Sales
Chemicals $ 54,344 49,509
Fertilizer 53,485 58,551
Combustion, Thermal Plasma, and Other 34,401 26,894
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Total $142,230 134,954
======== =======
Operating profit (loss) before income taxes
Chemicals $ 10,547 10,586
Fertilizer 18,662 18,721
Combustion, Thermal Plasma, and Other (802) (1,826)
-------- -------
28,317 27,481
Unallocated corporate expenses (5,685) (2,137)
Interest income (expense), net (685) (1,796)
Other income (expense), net (27) 19
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Total $ 21,920 23,567
======== =======
</TABLE>
Chemicals pretax operating profits for the quarter were $10.5 million
versus $10.6 million last year. Sales grew 10%, primarily due to higher
electronic chemicals sales. Results were down slightly despite the higher
electronic chemicals sales primarily due to completion of payments under a
facility reservation agreement at the Dayton, Ohio, custom manufacturing plant.
Electronic chemicals sales continue to be driven by patented hydroxlamine
products, which more than doubled in sales from last year due to strong demand
for semiconductor manufacturing.
<PAGE> 8
Fertilizer pretax operating profits for the quarter were $18.7 million,
about the same as last year as lower sales were offset by lower production
cost. Sales decreased 9% from the prior year, as a 14% decrease in ammonia
and urea volume was partially offset by higher average price. Production cost
declined on lower average natural gas cost, which was 19% below last year.
Included in natural gas cost for the quarter ended September 30, 1994, is $0.7
million in net futures contracts losses.
Combustion, thermal plasma and other pretax operating losses decreased
56% from the prior year. The improvement was primarily due to higher combustion
sales and improved steel margins. Sales were up 28% on a 94% increase in
combustion sales and a 23% increase in average steel price.
Unallocated corporate expense was up over prior year primarily due to
expenses related to the FirstMiss Gold spin-off and incentive payments tied to
stock appreciation. Any additional expense of this incentive program, which
accounted for approximately half of the increase, should not significantly
affect any future period. Net interest expense for the quarter was lower than
prior year due to increased interest income.
DISCONTINUED OPERATIONS
On September 24, 1995, the board of directors of First Mississippi
Corporation approved the distribution of its 14,750,000 common shares of
FirstMiss Gold Inc. to its shareholders. The distribution was made on October
20, 1995. Results of these discontinued operations, net of tax and minority
interest, were a loss of $1.1 million for the current year versus a profit of
$0.6 million prior year. The lower results were due to lower production, caused
by lower average mill feed grade. Mill feed grade averaged 0.165 ounces per
ton, down from 0.214 ounces per ton a year ago, due to increased milling of
lower grade stockpile ores.
On September 24, 1995, First Mississippi and FirstMiss Gold entered into
certain agreements related to the distribution, which were summarized as part of
Form 8-K filed as of that date.
CAPITAL RESOURCES AND LIQUIDITY
Cash flow from operations was unchanged from the prior year as increased
cash flow from continuing operations was offset by cash used in discontinued
Gold operations. Cash flow from continuing operations was up primarily due to
an increase in payables related to Fertilizer operations. The net increase in
cash and cash equivalents for the current quarter was $10.7 million, up 20% over
the same period prior year, primarily due to less debt repayment.
On October 20, 1995, a promissory note was executed related to the
FirstMiss Gold loan agreement dated September 24, 1995, for $52.5 million, with
repayment scheduled on April 27, 2000. This represented the total advances and
interest due from FirstMiss Gold under prior loan agreements as of that date.
The loan agreement requires $15 million in principal of the loan to be repaid
following the consummation of any public offering by FirstMiss Gold.
<PAGE> 9
Under terms of the Amended Tax Sharing Agreement executed on September
24, 1995, First Mississippi is obligated to pay FirstMiss Gold (by either an
actual payment or a reduction in FirstMiss Gold's outstanding indebtedness to
First Mississippi) an agreed upon amount (approximately $13.8 million as of
September 30, 1995) representing the tax benefit received by the affiliated
group of which First Mississippi is the common parent corporation from its use
of FirstMiss Gold's losses, deductions, credits and allowances in pre-spin-off
periods.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedules
(b) Reports on Form 8-K
Registrant filed a current Report on Form 8-K dated September
24, 1995 with information under "Acquisition or Disposition of
Assets" and "Proforma Financial Information and Exhibits" relative
to the spin-off and distribution of its 81.1 percent ownership of
FirstMiss Gold Inc. to its shareholders.
<PAGE> 10
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 14, 1995 /s/ J. Kelley Williams
- -------------------------- ----------------------------------------
Date J. Kelley Williams
Chairman and Chief Executive Officer
November 14, 1995 /s/ R. Michael Summerford
- -------------------------- ----------------------------------------
Date R. Michael Summerford
Vice President & Chief Financial Officer
<PAGE> 11
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-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 51,240
<SECURITIES> 0
<RECEIVABLES> 75,431
<ALLOWANCES> 1,076
<INVENTORY> 70,011
<CURRENT-ASSETS> 208,417
<PP&E> 287,210
<DEPRECIATION> 142,037
<TOTAL-ASSETS> 464,665
<CURRENT-LIABILITIES> 94,653
<BONDS> 83,256
<COMMON> 20,635
0
0
<OTHER-SE> 227,135
<TOTAL-LIABILITY-AND-EQUITY> 464,665
<SALES> 142,230
<TOTAL-REVENUES> 144,598
<CGS> 102,627
<TOTAL-COSTS> 102,627
<OTHER-EXPENSES> 17,602
<LOSS-PROVISION> 80
<INTEREST-EXPENSE> 2,369
<INCOME-PRETAX> 21,920
<INCOME-TAX> 8,550
<INCOME-CONTINUING> 13,563
<DISCONTINUED> (1,083)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,480
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
</TABLE>
