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FORM 10-K/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1996 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, P.O. BOX 1249 39215-1249
JACKSON, MISSISSIPPI (Zip code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (601) 948-7550
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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 CHICAGO STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
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. [ ]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant, September 9, 1996. $518,543,400
Common stock outstanding September 9, 1996. 20,614,491
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PART I
ITEM 1. BUSINESS
First Mississippi Corporation (the "Company") was incorporated in
Mississippi in 1957. The principal activities of the Company at June 30, 1996,
involve the production of chemicals for industry and agriculture, and related
products and services.
In fiscal 1993, the Company sold its oil and gas operations. These
operations were conducted primarily through First Energy Corporation of Houston,
Texas. Also in 1993, 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 fiscal 1994.
In fiscal 1996, the Company discontinued its gold operations through the
spinoff of its then 81% interest in Getchell Gold Corporation ("Getchell"),
formerly FirstMiss Gold Inc. Also in 1996, the Company adopted a plan to close
its aluminum dross processing operations at Millwood, West Virginia, which were
conducted through Plasma Processing Corporation.
At June 30, 1996, the Company had 1,205 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.
Recent Development
ON AUGUST 27, 1996, THE COMPANY ENTERED INTO A DEFINITIVE MERGER AGREEMENT
WITH MISSISSIPPI CHEMICAL CORPORATION ("MISSISSIPPI CHEMICAL"), UNDER WHICH
MISSISSIPPI CHEMICAL WILL ACQUIRE ALL THE FERTILIZER INTERESTS OF THE COMPANY.
THE TRANSACTION WILL OCCUR IN TWO STEPS: FIRST, THE SPINOFF TO SHAREHOLDERS OF
THE COMPANY'S CHEMICALS AND RELATED BUSINESSES IN THE FORM OF A NEW PUBLICLY
TRADED COMPANY; AND SECOND, THE MERGER OF THE COMPANY'S REMAINING FERTILIZER
OPERATIONS WITH A SUBSIDIARY OF MISSISSIPPI CHEMICAL. THE SPINOFF AND THE MERGER
ARE INTENDED TO BE TAX FREE. THE TRANSACTION IS SUBJECT TO, AMONG OTHER THINGS,
APPROVAL BY THE STOCKHOLDERS OF BOTH THE COMPANY AND MISSISSIPPI CHEMICAL AND
CUSTOMARY REGULATORY APPROVALS. IT IS EXPECTED THAT THE TRANSACTION WILL BE
CONSUMMATED BY DECEMBER 31, 1996.
The following contains further discussion of the Company's business and
properties as grouped under Chemicals, Fertilizer and Combustion, Thermal Plasma
and Other and should be read in conjunction with Notes 2, 5 and 13 to the
Consolidated Financial Statements and the "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
CHEMICALS
The Company's chemicals business is operated principally through three
subsidiaries: First Chemical Corporation ("FCC"); Quality Chemicals, Inc.
("Quality Chemicals"); and EKC Technology, Inc. ("EKC").
Production Facilities and Businesses
FCC, with production facilities located in Pascagoula, Mississippi,
operates facilities for the continuous production of aniline, nitrobenzene,
nitrotoluenes and toluidines, plus related storage, rail, truck, and barge
distribution facilities and quality control laboratories. The plant also
includes research laboratories, a pilot plant and multi-purpose batch facilities
for the development and production of specialty chemicals. FCC utilizes
state-of-the-art technology for nitration and proprietary processes for
continuous hydrogenation and N-alkylation. The Pascagoula facilities' total
nitrated aromatic production capacity is approximately 516 million pounds per
year. Actual fiscal 1996 production was 429 million pounds, approximately 83% of
average annual capacity.
FCC is among the largest merchant marketers of aniline in the United
States, and its Pascagoula complex is one of the largest aniline production
facilities in the United States. Aniline's primary end use is in
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rigid polyurethane foam, an insulation material that is widely used in
residential and commercial construction. Aniline is also used in the manufacture
of impact-resistant plastic that is used as a replacement for metal in
automobile parts such as bumpers where flexibility and impact resistance are
important. Aniline's other primary applications are in the production of an
antioxidizing (anti-cracking) agent used in the manufacture of synthetic rubber
and in a widely used herbicide for corn and soybeans. Most of FCC's aniline
production is sold under contracts containing price-adjustment mechanisms that
substantially protect FCC from fluctuations in the prices of raw materials.
FCC recently entered into a long-term agreement with Bayer Corporation
("Bayer") to build, own and operate a world scale nitrobenzene and aniline
facility at Bayer's Baytown, Texas, chemical complex. The facility will be an
integral part of Bayer's MDI (methylene diphenyl diisocyanate) manufacturing
operations. Completion of Phase I of the facility is scheduled for early 1998. A
large majority of FCC's current aniline production is sold to Bayer under a
long-term contract. It is intended that this contract will terminate if a
potential Phase II of the new facility is completed. The estimated cost of Phase
I is in excess of $50.0 million. The cost of Phase II is estimated to be
considerably less.
Quality Chemicals' production facilities, located in Tyrone, Pennsylvania,
and Dayton, Ohio, include equipment for multi-step batch processing to custom
produce complex fine chemicals used by chemical, agricultural and pharmaceutical
companies. Following capacity additions and plant modifications to the Tyrone
facility in fiscal 1996, annual production capacity is now between 4.5 million
and 6.0 million pounds, depending on the products being produced and the type of
custom processing required. Fiscal 1996 production was approximately 4.5 million
pounds. Annual production capacity for the Dayton facility 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 1996
production was approximately 1.1 million pounds.
EKC production facilities are located in Hayward, California and East
Kilbride, Scotland, United Kingdom ("U.K."), with marketing, technical and
administrative support located at both locations. Additional marketing and
technical support was added in Tokyo, Japan, during fiscal 1996. EKC
manufactures and sells electronic performance chemicals into the semiconductor
and related industries. These products include organic photoresist removers and
cleaning solutions which remove dry-etch residue during the manufacture of
semiconductors. Facilities include mixing vessels, cleanroom packaging
facilities, advanced quality control analytical laboratories and product
applications laboratories. A research and development laboratory was added in
California during 1996 to provide additional facilities for EKC's expanded
research staff. The California operation includes bulk storage facilities. In
Scotland, additional bulk storage facilities will be added by the end of fiscal
1997. The California facility is currently utilizing 65% of production
capability on a two-shift, five-day basis. This is unchanged from the prior year
with incremental increases in current year production accommodated through
improvements in cycle time. The Scotland facility is currently utilizing 40% of
production capability on a one-shift, five-day basis.
Research and Development
The Company conducts research and development to improve existing products
and to produce new specialty chemicals. Approximately $4.5 million, $5.3 million
and $4.3 million was spent on research and development in fiscal 1996, 1995 and
1994, respectively. Research facilities include laboratories, pilot plant and
semi-works for process research and development with gram to multi-pound sample
production capabilities. FCC also sponsors applied research at leading
universities in the United States and maintains a radiation curing applications
laboratory in Pascagoula to evaluate new products and provide customer technical
support. These closely directed programs have led to the development and
introduction of proprietary technology in fine chemicals and in the FirstCure(R)
line of performance polymer products. EKC conducts research and development
internally to improve existing products and to identify and develop new
chemistries. EKC also sponsors applied research at two leading universities in
the U.K. These closely directed programs led to the development of advanced
chemistries to meet the semiconductor industry's state of the art requirements.
In addition, EKC has entered into joint development agreements with a major
semiconductor manufacturer and an industry consortium to develop advanced
products to meet future semiconductor manufacturing technology.
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Raw Materials
Benzene and toluene, two of FCC's principal raw materials, are readily
available commodity by-products of oil refining. Like most commodities, the
prices of benzene and toluene are subject to fluctuation. The price of toluene,
an octane-enhancing additive for unleaded gasoline, is directly affected by the
demand for and price of unleaded gasoline. Benzene prices are affected by the
demand for a variety of products, principally including styrene and phenolic
resins. However, FCC is protected from fluctuations in raw material prices in
the contracts under which most of its aniline production is sold. The remainder
of its production is sold under short-term contracts or purchase orders at
prices that generally reflect its actual raw material cost.
Other significant FCC raw materials include ammonia, natural gas and
ethanol. FCC purchases ammonia and ethanol at market prices. FCC purchases
natural gas in the spot market for use in making the hydrogen necessary for its
manufacturing processes. This gas is transported into the Pascagoula plant
through an interstate pipeline. Prices paid by the Company for natural gas are
affected by the degree of interruptibility of the gas supply.
Quality Chemicals' primary raw materials include hydrogen, peroxide,
o-aminophenol, o-nitrophenol, formaldehyde, butaldehyde and natural gas. Quality
Chemicals obtains its raw materials from a number of different sources. The
Company does not believe that any one source of raw materials is material to
Quality Chemicals' business.
EKC's primary raw materials include hydroxylamine, DGA and NMP. With the
exception of hydroxylamine, raw materials are generally available in adequate
quantities from several suppliers, subject to market variation in price.
Hydroxylamine is currently available from one supplier, located in Japan. Two
major manufacturers have announced plans to construct facilities capable of
manufacturing aqueous hydroxylamine with production anticipated to begin within
the next three years.
Marketing and Sales
Chemicals are marketed globally. Approximately 9% of FCC's sales are
exports. FCC's products are sold in drums and in bulk as intermediates into the
construction, transportation, semiconductor, agricultural chemical,
pharmaceutical, pigment, photographic, specialty polymer and U.V. curing
markets. Exported product is shipped in ocean-going tankers in iso-containers or
drums to European, Japanese and South American markets. Domestic shipments are
by barge, rail or tank trucks. As discussed above, a significant amount of FCC's
sales are to a single customer under a long-term contract. See "Production
Facilities and Businesses."
Quality Chemicals' specialty chemical products are sold in drums into
pharmaceutical, electronic chemical, agricultural chemical and specialty polymer
markets. A significant amount of Quality Chemicals' sales are to three customers
under long-term contracts.
EKC's California facility services the semi-conductor industry in North
America and the Pacific Rim, and the U.K. facility services the European
community. Approximately 47% of EKC sales are international. Chemicals are
distributed in gallon, liter, returnable drum and tote bin containers.
Competitive Conditions
FCC is one of five major United States producers of aniline, with
approximately 18% of domestic capacity and an estimated 5% of world capacity.
FCC is the only United States producer of nitrotoluenes, with an estimated 10%
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, Quality Chemicals 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.
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EKC is one of the world's largest producers of post-metal cleaning
solutions, with an estimated 28% of the world market representing 34% in North
America, 40% in Europe and 20% in the Pacific Rim. Although there are
approximately 12 companies participating in this market worldwide, only EKC and
three others specialize in developing proprietary post-metal cleaning solutions
for the semiconductor and related industries. Competition is based on price,
service, product performance, quality and product development capabilities. EKC
is in negotiations with respect to an agreement whereby it would license its
HDA(TM) technology to a major competitor.
Seasonality of Business
Generally, chemical sales are not seasonal and working capital requirements
do not vary significantly from period to period.
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. Marketing and administration are conducted
by FirstMiss Fertilizer, Inc., a wholly owned subsidiary located 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 1996 production was
approximately 464,000 tons of ammonia and approximately 557,000 tons of urea.
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 1996 production was approximately 491,000 tons. Fiscal 1996 production
exceeded design capacity primarily due to above average on-stream operating
rates. In August 1995, AMPRO began an expansion project that is expected to be
completed in mid-December 1996. This project is expected to lower natural gas
consumption by 0.6 MMBtus per ton and increase ammonia production at the plant
by approximately 125,000 tons annually.
Transportation and storage capabilities were enhanced during fiscal 1996.
In July 1995, the Company invested in ammonia barges for river and inland
waterway shipments. These eleven barges are operated as the Arcadian/FMF Limited
Liability Company (LLC). The Company owns a 50% interest in this LLC through a
wholly owned subsidiary, FMF Barge, Inc. In April 1996, the Company acquired a
50% interest in an anhydrous ammonia terminal and related facilities in
Pasadena, Texas. This terminal consists of two 20,000 ton anhydrous ammonia
storage tanks. These facilities are operated as FirstMiss Fertilizer Limited
Partnership (LP). Two wholly owned subsidiaries own a 50% interest in this LP in
partnership with two wholly-owned subsidiaries of Arcadian Corporation. These
facilities will strengthen the Company's ability to distribute product to
industrial customers in the Texas Gulf Coast area.
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. Approximately 69% of the ammonia produced
by Triad in fiscal 1996
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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.
Forward Purchases
To secure fixed prices for a portion of its natural gas requirements, the
Company periodically contracts for the future delivery of natural gas on the New
York Mercantile Exchange ("NYMEX") up to 18 months forward. NYMEX contracts are
closed prior to expiration so that natural gas is not delivered. Increases or
decreases in the market value of the NYMEX contracts generally offset increases
and decreases in the spot market. At June 30, 1996, the Company had no open
futures contracts. The Company's accounting treatment for futures contracts is
outlined in Notes 1 and 11 to the Consolidated Financial Statements.
Marketing and Sales
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, which include adhesives,
pharmaceuticals, fibers, resins, plastics and explosives. Approximately 8% of
fiscal 1996 sales volume was attributed to international markets. Captive
production accounted for 74% of sales with the balance representing brokerage
transactions that involved the purchase and resale of products produced by
others.
Ammonia and urea are commodities subject to wide fluctuations in price.
Because prices are subject to a variety of factors beyond the Company's control,
there can be no assurance that the higher prices experienced in fiscal 1996 and
1995, resulting from tight supplies and increased demand, will continue.
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 the most efficient
U. S. producers with ideal geographic location for competitively priced
feedstock and distribution. Competitors include many large domestic and foreign
producers.
Seasonality and Cyclicality of Business
Fertilizer sales vary seasonally based upon 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.
COMBUSTION, THERMAL PLASMA AND OTHER
Combustion, Thermal Plasma and Other principally includes the development
and marketing of proprietary equipment and systems for industrial applications
and manufacturing processes. These include design and manufacture of low
emission burners, flares and incinerators; thermal plasma equipment and
processes; 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. Working capital requirements
rose during fiscal 1996 due to expansion of Combustion operations into new
markets. Firm backlog orders at June 30, 1996, and 1995, amounted to $39.3
million and $34.8 million, respectively. The backlog orders at June 30, 1996,
are expected to be filled during fiscal 1997.
Combustion Equipment and Services. 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 services. CTI also provides
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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, France,
Germany and Japan.
CTI markets worldwide to refining, petrochemical, chemical, wood products
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 price,
technological innovation 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 gas and liquids incineration
market. Primary competition in the solids waste systems market comes from
alternative technologies. CTI offers predictive emissions monitoring and process
optimization software services utilizing products licensed by CTI's customers.
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. Plasma Energy Corporation ("PEC"), a wholly owned
subsidiary, is the leading international supplier of plasma heating systems and
related processes to the metals and waste industries. PEC, a technology-based
engineering company, develops, manufactures, sells and services these systems
for use in steel manufacturing, specialty metals refinement and various
environmental waste recycling processes, including municipal solid waste ("MSW")
ash vitrification. PEC owns a testing facility used for system integration,
system and process development and customer training. A separate administrative
office is leased. Both facilities are located in Raleigh, North Carolina.
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.
PEC markets industrial-scale commercial systems for controlling temperature
in steel making and waste treatment and reduction. Marketing is performed
directly by PEC. International sales are supported by qualified overseas
representatives. Plasma heating systems are sold in both the domestic and
international markets. PEC has two principal domestic competitors and four
foreign competitors. Price competition is intense and competitors' pricing
strategies may impact PEC's operating results.
Steel. The Company operates a steel melting and production facility through
its wholly owned subsidiary FirstMiss Steel, Inc. ("FMS") in Hollsopple,
Pennsylvania. The Company is actively seeking a buyer for FMS. The approximately
400,000 square-foot facility is located about 100 miles east of Pittsburgh.
Following upgrades to one of FMS's two electric arc furnaces in January 1995,
annual capacity of the operation now includes 150,000 tons of carbon, alloy and
specialty grade, bottom-poured ingots and 50,000 tons of high-grade steel
billets through the caster. In 1996, the second electric arc furnace was removed
and a NOD converter was added. The NOD converter, combined with the newly
upgraded electric arc furnace and the existing VOD units, form the "Triplex"
process for producing stainless steel. This new process will increase stainless
steel capacity. Horizontally cast billets are produced for sale to the specialty
remelt and reroll markets. Production during fiscal 1996 totaled 110,000 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. 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.
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Carbon and alloy steel ingots are sold directly to the forging industry,
ring rollers, extruders, and integrated 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
primarily sold 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.
Aluminum Recovery. Plasma Processing Corporation ("PPC") was formed during
fiscal 1990 to commercialize patented technology developed by PEC and Alcan
International Limited ("Alcan") of Canada for the recovery of aluminum from
dross using thermal plasma technology. PPC completed construction of a dross
processing plant located in Millwood, West Virginia, in June 1991 utilizing the
technology. The plant also produced a co-product that can be utilized in
refractory industries. In June 1995, dross processing operations were curtailed
to concentrate on the development of the co-product markets. In May 1996, due in
part to historical and projected near-term losses, PPC announced the shutdown of
the facility and permanent exit from the dross processing business. Operations
will continue, however, at its joint venture ("Newminco") formed in August 1995
which manufactures lightweight aggregate materials based on technology licensed
by PPC.
In September 1996, the Company entered into a letter of intent providing
for the sale of substantially all of PPC's aluminum processing assets and
technology. Assets that are not part of this transaction will be liquidated. The
Company does not anticipate any material gain or loss related to these
dispositions.
OTHER OPERATIONS
The Company owns 50% of Power Sources, Inc. ("PSI") of Charlotte, North
Carolina, which burns wood residue and other biomass in industrial boilers to
create steam energy. The steam is sold under long-term contracts to industrial
users. PSI operates seven plants located in North Carolina, South Carolina,
Tennessee and Mississippi.
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 and regulations, or changing interpretations of existing laws
and regulations. Environmental capital expenditures for fiscal 1996 were $1.9
million. Projected environmental capital expenditures for fiscal 1997 and 1998
are $5.5 million and $2.3 million, respectively. While these expenditures are
necessary to comply with environmental laws and regulations, they may also
reduce operating expenses and improve efficiencies.
The Company has received notices from the EPA or a similar state agency
that it has been deemed a potentially responsible party ("PRP") under Superfund
or a comparable state statute at several sites and, thus, may be liable for a
share of the associated remediation cost. The Company contributed $183,000
toward cleanup of one of these sites during fiscal 1996. It is difficult to
estimate the Company's ultimate liability in these matters due to several
uncertainties such as, but not limited to, the method and extent of remediation,
the percentage of material attributable to the Company at the site relative to
that attributable to other parties, and the financial capabilities of the other
PRPs. Based on currently available information, however, the Company does not
believe that its future liability at these sites will be material to its
financial condition or cash flow.
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The current owner of a fertilizer manufacturing facility, previously
operated under lease by a subsidiary of the Company, has performed a feasibility
study and a remediation action plan for that site, subject to regulatory
approval. A previous owner takes the position that the Company has some
financial responsibility for the closure activities. The Company denies
liability in this matter.
At June 30, 1996, the Company was guarantor of $17.1 million in reclamation
bonds related to discontinued coal operations. Replacement bonds have been
submitted to the appropriate state authorities. The bonds guaranteed by the
Company should be released by the end of December 1996.
ITEM 2. PROPERTIES
A description of properties and the segments to which they relate is
included in the Business discussion located on pages 2 through 9 of this Form
10-K. The Company believes that its properties are suitable and adequate for the
purposes for which they are used.
ITEM 3. LEGAL PROCEEDINGS
On July 15, 1986, the first of 17 lawsuits was filed in the Twenty-First
Judicial District Court, Livingston Parish, Louisiana, against approximately 90
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 was
consolidated into a class action and removed to federal district court for the
Middle District of Louisiana. Despite assertions by certain third parties that
Triad sent waste to the Combustion site, Triad's records do not reflect that any
waste was sent to the site. During fiscal 1995, Triad and a majority of the
other defendants negotiated a settlement that would resolve the class action
plaintiffs' claims. Under the settlement, which was approved by the court in
fiscal 1996, Triad paid $600,000.
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
No items were submitted to a vote of security holders of the Company during
the fourth quarter of fiscal 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the New York, Philadelphia, Chicago
and Pacific Stock Exchanges under "FRM." The high and low recorded prices of the
Company's common stock and cash dividends declared during fiscal years 1996 and
1995 are presented in the table below. There were approximately 5,477
stockholders of record as of September 9, 1996.
<TABLE>
<CAPTION>
1996 1995
------------------------------ ------------------------------
DIVIDEND DIVIDEND
HIGH LOW RATE HIGH LOW RATE
------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
1st Quarter.................. $40.13 $31.75 $.10 $20.63 $14.25 $.075
*2nd Quarter.................. 41.38 20.25 .10 25.00 19.50 .0875
*3rd Quarter.................. 27.25 20.25 .10 26.88 22.50 .0875
*4th Quarter.................. 25.25 21.00 .10 34.13 20.75 .10
For the Year................. 41.38 20.25 .40 34.13 14.25 .35
</TABLE>
- ---------------
* Stock price reflects second quarter 1996 spinoff of Getchell Gold Corporation.
9
<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
------------------------------------------------------------------------------
1996 % 1995 % 1994 % 1993 % 1992 %
-------- --- ------- --- ------- --- ------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers:
Chemicals........................... $227,837 38 209,472 36 161,045 39 143,497 41 130,331 35
Fertilizer.......................... 224,390 37 239,549 42 163,984 39 141,642 40 184,108 49
Combustion, Thermal Plasma
and Other........................ 142,710 24 122,249 21 88,046 21 66,028 18 55,755 15
-------- --- ------- --- ------- --- ------- --- ------- ---
Total sales................. 594,937 99 571,270 99 413,075 99 351,167 99 370,194 99
Other revenues.............. 5,784 1 5,295 1 3,330 1 2,774 1 2,302 1
-------- --- ------- --- ------- --- ------- --- ------- ---
Total revenues.............. $600,721 100 576,565 100 416,405 100 353,941 100 372,496 100
======== === ======= === ======= === ======= === ======= ===
Operating profit (loss) before income
taxes, investee earnings (loss) and
cumulative effect of change in
accounting principle:
Chemicals........................... $ 44,058 55 40,019 33 30,295 72 24,434 96 15,333 45
Fertilizer.......................... 65,838 82 86,292 72 24,760 59 13,218 52 24,196 71
Combustion, Thermal Plasma
and Other........................ (29,612) (37) (6,203) (5) (12,763) (31) (12,187) (48) (5,656) (16)
-------- --- ------- --- ------- --- ------- --- ------- ---
80,284 100 120,108 100 42,292 100 25,465 100 33,873 100
=== === === === ===
Unallocated corporate expenses........ (15,015) (10,661) (8,435) (7,069) (7,461)
Interest expense, net................. (4,563) (5,256) (8,139) (10,907) (7,065)
Other income (expense), net........... (140) 7 (149) (28) 1,416
-------- ------- ------- ------- -------
60,566 104,198 25,569 7,461 20,763
Income taxes.......................... 23,550 40,425 11,250 2,909 7,822
Equity in net earnings (loss) of
equity investees.................... 1,033 934 (306) (431) 66
-------- ------- ------- ------- -------
Earnings from continuing operations... 38,049 64,707 14,013 4,121 13,007
Earnings (loss) from discontinued
operations, net of taxes............ (1,083) (6,913) 5,000 (4,349) (8,780)
Loss from disposal of businesses, net
of taxes............................ (1,746) -- -- (23,141) --
Cumulative effect of change in
accounting principle................ -- -- 2,850 -- --
-------- ------- ------- ------- -------
Net earnings (loss)......... $ 35,220 57,794 21,863 (23,369) 4,227
======== ======= ======= ======= =======
Earnings (loss) per common share:
Continuing operations............... $ 1.81 3.14 0.70 0.20 0.66
Discontinued operations............. (0.13) (0.34) 0.25 (1.37) (0.44)
Cumulative effect of change in
accounting principle............. -- -- 0.14 -- --
-------- ------- ------- ------- -------
Total earnings (loss) per common
share............................... $ 1.68 2.80 1.09 (1.17) 0.22
======== ======= ======= ======= =======
Net working capital................... $ 86,918 110,107 78,874 50,121 59,865
Long-term debt........................ $ 79,909 84,394 104,275 113,519 144,280
Total assets.......................... $437,308 444,717 369,397 364,136 441,995
Stockholders' equity.................. $230,267 232,996 177,687 160,774 188,378
Dividend payout rate.................. 24 13 28 * 136
Return on average equity -- continuing
operations.......................... 16 32 8 2 7
Return on sales -- continuing
operations.......................... 6 11 3 1 4
Long-term debt/equity ratio........... 0.35 0.36 0.59 0.71 0.77
Current ratio......................... 1.92 2.33 2.52 1.82 2.20
Dividends per share................... $ 0.40 0.35 0.30 0.30 0.30
Book value per share.................. $ 11.17 11.40 8.85 8.05 9.50
</TABLE>
- ---------------
* Computation not applicable due to loss
10
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
1996 VERSUS 1995
CONSOLIDATED RESULTS
Income from continuing operations for 1996 was $38.0 million, down $26.7
million from the prior year due to an $18.3 million ($11.7 million after tax)
provision for the shutdown of aluminum dross operations, lower gross margins and
increased general, selling and administrative expenses. Gross margins declined
$15.9 million despite a 4% increase in sales, primarily due to a decrease in
Fertilizer average unit margins on lower anhydrous ammonia prices and higher
natural gas cost. General, selling and administrative expenses were up $10.7
million due to higher corporate expenses and growth in Combustion operations.
SEGMENT OPERATIONS
Chemicals operating profits were up 10% to a record $44.1 million on a 9%
increase in sales primarily due to higher aniline and electronic chemicals
volumes. Aniline sales volume increased 13% due to increased production
following capacity additions in the prior year. Demand for aniline remains
strong due to its use in the production of methylene diphenyl diisocyanate
("MDI"), which is a key component in the production of polyurethane foams and
elastomers. In July 1996, the Company entered into an agreement with Bayer
Corporation to build, own and operate a world scale nitrobenzene and aniline
facility, which will be an integral part of Bayer's U.S. MDI manufacturing
operations. Startup for the facility is scheduled to be completed in 1998 with
initial aniline production capacity of approximately 250 million pounds per
year. In electronic chemicals, sales volume increased 26% driven by an 82%
increase in the hydroxylamine-based (HDA(TM)) products volume.
Fertilizer operating profits were down 24% to $65.8 million on lower
average sales prices and higher natural gas cost. Average fertilizer sales
prices declined 11% on 18% lower anhydrous ammonia prices, more than offsetting
a 16% increase in urea prices. Total sales volume remained about the same at 1.2
million tons with captive production accounting for about 74% of total volume,
up from 70% in the prior year. The higher production was primarily due to
scheduled maintenance in the prior year. The average price of natural gas
purchased at spot prices and consumed in production increased 36%; however,
hedging gains of $1.1 million in the current year, versus hedging losses of $5.9
million in the prior year, reduced the overall average gas cost increase to 17%.
At June 30, 1996, the Company had no open forward purchase contracts for natural
gas. A capacity expansion under way at AMPRO is ahead of schedule and expected
to be completed in December 1996. This project will increase AMPRO annual
production capacity by approximately 125,000 tons.
Losses from Combustion, Thermal Plasma and Other operations were up $23.4
million from the prior year, primarily due to the $18.3 million charge related
to the shutdown of the Company's single aluminum dross processing plant, of
which $12.3 million represents the write-down of the plant to its estimated
disposition value (See Note 5 to the Consolidated Financial Statements). In
addition, results in Combustion operations were down, despite a 34% increase in
sales, as gross margin declined $1.1 million due to cost overruns in several
large projects and general, selling and administrative expenses. The Company
does not anticipate combustion operations overhead growth to be as rapid in
fiscal 1997 with improvement in margin projected based on current order backlog.
Unallocated corporate expenses were up $4.4 million over the prior year,
primarily due to the spinoff of Getchell Gold Corporation ("Getchell"), formerly
FirstMiss Gold Inc., and expenses for potential acquisitions and environmental
compliance not directly allocable to subsidiary operations. Included in fiscal
1996 and 1995 are $2.5 million and $3.1 million, respectively, of compensation
expenses tied to appreciation of stock and debenture options. These payments are
not available for options granted on or after August 22, 1995. Net interest
expense for the year was down 13% from the prior year due to increased interest
income.
11
<PAGE> 12
1995 VERSUS 1994
CONSOLIDATED RESULTS
Income from continuing operations for 1995 increased $50.7 million over
1994, on higher Fertilizer and Chemicals earnings and improved performance from
Combustion, Thermal Plasma and Other operations. Sales were up 38% and gross
margin increased to 29% of sales from 20% prior year. Fertilizer operations
accounted for the largest share of the increased sales and gross margin, driven
primarily by higher anhydrous ammonia prices. Equity income was up $1.2 million
as results at Melamine Chemicals, Inc. improved due to higher revenues and
increased margins.
SEGMENT OPERATIONS
Chemicals sales and pretax operating results for 1995 were up 30% and 32%,
respectively, over 1994 on strong demand for electronic chemicals, custom
manufacturing services and intermediates. Intermediate sales, which accounted
for 46% of sales, increased on 20% higher volume, primarily nitrobenzene, and a
6% improvement in average unit price. Nitrobenzene volume was up due to a
multi-year contract entered into in late 1994 that will fully utilize
nitrobenzene capacity through 1999. Custom manufacturing services and electronic
chemicals sales for semiconductor production increased, primarily due to higher
volume.
Fertilizer operating profits for 1995 were up $61.5 million over 1994 to a
record $86.3 million due to higher prices, primarily ammonia, and lower
production cost. Sales increased 46% on a 57% increase in average price, which
offset lower volume. Ammonia prices averaged $210 per ton for 1995 versus $130
per ton for 1994, and urea prices averaged $163 per ton for 1995 versus $126 per
ton for 1994. Volume declined on lower brokerage sales. The ammonia
supply/demand balance remained tight through fiscal 1995. Agricultural demand
was strong in 1995, driven by high grain prices and low world inventories.
Industrial demand for production of fibers, plastics, and resins was also
strong. Urea prices increased on higher ammonia prices and strong offshore
demand. Production cost for ammonia and urea declined, primarily due to lower
prices for natural gas, which decreased 12% below 1994. Included in natural gas
cost for 1995 is $5.9 million in net futures contracts losses versus net gains
of $0.7 million in 1994.
Combustion, Thermal Plasma and Other results for 1995 improved 51% over
1994 as operating losses declined to $6.2 million from $12.8 million on
increased revenues and margins. In addition, 1994 results included $1.5 million
in costs for a successful Combustion patent defense and an accident at FirstMiss
Steel. Revenue increased 39%, primarily due to increased Combustion sales and
higher prices for steel. All businesses were profitable except for aluminum
recovery operations, where losses were up on increased costs for product and
market development.
Unallocated corporate expenses for 1995 were up over 1994 due to $3.1
million in compensation expenses tied to appreciation of stock and debenture
options. Expenses for 1994 included $1.3 million in additional interest related
to deferred compensation. Net interest expense for 1995 was down versus 1994 on
lower average debt and $1.2 million in additional interest income from increased
short-term investments.
DISCONTINUED OPERATIONS
On October 20, 1995, the Company completed the spinoff of its 81% owned
subsidiary, Getchell, to shareholders. Included in discontinued operations for
fiscal 1996 is $1.1 million in after tax losses, net of minority interest,
related to operations of Getchell for the period prior to the distribution.
Results for 1995 were a net loss of $6.9 million versus a net profit of $5.0
million in 1994. Loss on disposal of businesses for the current year reflects
estimated additional costs of $1.7 million after tax related to operations
discontinued in prior years.
FORWARD PURCHASES
In Fertilizer operations, natural gas is the key raw material in the
manufacturing of anhydrous ammonia. Natural gas is typically purchased for
delivery at market prices under short-term contracts. To secure fixed prices for
part of its natural gas requirements, the Company periodically contracts for the
future purchase of
12
<PAGE> 13
natural gas on the New York Mercantile Exchange ("NYMEX"). Increases or
decreases in the fair market value of the NYMEX contracts generally offset
changes in spot market prices. These activities have been designated hedging of
anticipated raw material purchases and are accounted for as such. During 1996,
the Company hedged approximately 13% its purchases of natural gas for fiscal
1996. At June 30, 1996, the Company had no open contracts.
ENVIRONMENTAL MATTERS
Company operations are subject to a wide variety of constantly changing
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, for which it must incur certain costs. Capital expenditures for
environmental protection were $1.9 million for 1996 and are projected to be
approximately $5.5 million and $2.3 million for 1997 and 1998, respectively.
Expenses related to the operation and maintenance of environmental facilities
and the disposal of hazardous and nonhazardous waste were approximately $3.5
million, $3.0 million and $2.7 million in 1996, 1995 and 1994, respectively. In
addition, the Company accrues for anticipated costs associated with
investigatory and remediation efforts relating to the environment. At June 30,
1996, the Company's accrued liability for these matters totaled $1.5 million.
At June 30, 1996, the Company was guarantor of $17.1 million in reclamation
bonds related to its disposed coal operations. Replacement bonds have been
submitted to the appropriate state authorities. The bonds guaranteed by the
Company should be released by the end of December 1996.
CAPITAL RESOURCES AND LIQUIDITY
Cash and short-term investments declined $35.2 million from June 30, 1995,
primarily due to increased investing activities and lower cash flow from
operations. Investing activities included higher capital expenditures, primarily
to increase Chemicals and Fertilizer production capacities, and investments in
new Fertilizer joint ventures to increase storage and barge transportation
capabilities. The note collection represented proceeds received from Getchell
following its spinoff in October 1995. Additional uses of cash included $5.5
million for the purchase of 235,900 shares of First Mississippi common stock,
which represented approximately 28% of the $20.0 million repurchase
authorization announced in May 1995. Cash provided by continuing operations
declined $37.4 million from the prior year primarily due to lower earnings and
increases in working capital in Chemicals and Combustion operations. At June 30,
1996, total debt had declined $5.0 million from the prior year-end. However,
total debt as a percentage of total debt and equity only declined from 30% to
29% due to the $31.3 million reduction in equity related to the distribution of
Getchell common stock.
Capital expenditures are projected to increase to approximately $110.0
million in 1997, primarily due to construction of the new aniline facility (See
"1996 Versus 1995 -- Segment Operations"). Sources of cash to fund these capital
additions, as well as further stock repurchases, include $5.3 million cash on
hand, cash flow from operations and $44.2 million of unutilized credit under the
Company's committed bank credit agreement. Additional proceeds could come from
new or expanded credit facilities or the successful disposition of the Company's
steel operations.
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," for fiscal years beginning after December
15, 1995. The provisions of Statement No. 121 require the Company to
review its long-lived assets for impairment on an exception basis whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be recoverable through future cash flows. Any loss will be
recognized in the income statement and certain disclosures regarding the
impairment are to be made in the financial statements. The Company is evaluating
the provisions of Statement No. 121 and does not anticipate a material effect on
its financial position or results of operations.
In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation," for fiscal years beginning after December 15, 1995.
Statement No. 123 allows companies to recognize compensa-
13
<PAGE> 14
tion expense for grants of stock, stock options and other equity instruments to
employees based upon fair value or permits them to continue to apply the
existing accounting rules contained in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB No. 25"). Companies
choosing to continue on APB No. 25 are required to disclose pro forma net income
and earnings per share data based on fair value. The Company anticipates
continuing to account for stock-based compensation in accordance with APB No. 25
and, therefore, the adoption of Statement No. 123 would not have an impact on
the Company's financial position or results of operations.
SUBSEQUENT EVENT
On August 27, 1996, the Company entered into a definitive merger agreement
with Mississippi Chemical, under which Mississippi Chemical will acquire all the
fertilizer interests of the Company. The transaction will occur in two steps:
first, the spinoff to the Company's shareholders of the Company's chemicals and
related businesses in the form of a new publicly traded company; and second, the
merger of the Company's fertilizer operations with a subsidiary of Mississippi
Chemical. The spinoff and the merger are intended to be tax free. In the merger,
Company stockholders will receive, subject to some adjustment, approximately 6.9
million shares of Mississippi Chemical stock, or 0.335 shares of Mississippi
Chemical stock for each share of Company stock. At closing the Company's debt
will be refinanced and increased to approximately $150.0 million. The debt will
become Mississippi Chemical's in the merger. An estimated loss of approximately
$6.0 million will be incurred in the refinancing. After this refinancing and the
payment of certain expenses, cash on hand, currently estimated at approximately
$50.0 million, will be transferred to the spun-off chemical company, which will
be essentially debt free when spun off. The transaction is subject to, among
other things, approval by the stockholders of both the Company and Mississippi
Chemical and customary regulatory approvals. It is expected that the transaction
will be consummated by December 31, 1996.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item are set forth on pages F-1
through F-23.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- -------------------------------------------
<S> <C> <C>
Daniel P. Anderson................. 44 Vice President, Health, Safety and
Environmental Affairs
Robert B. Barker................... 51 President, Quality Chemicals, Inc.
W. P. Bartlett..................... 58 President, Callidus Technologies Inc.
J. Steve Chustz.................... 48 General Counsel
Paul Jerry Coder................... 54 President, EKC Technology, Inc.
Charles R. Gibson.................. 59 President, FirstMiss Fertilizer, Inc.
Samir A. Hakooz.................... 49 President, Plasma Energy Corporation
James L. McArthur.................. 53 Secretary and Manager, Investor Relations
Terry L. Moore..................... 47 President, Plasma Processing Corporation
George M. Simmons.................. 53 President, First Chemical Corporation
R. Michael Summerford.............. 48 Vice President and Chief Financial Officer
Thomas G. Tepas.................... 49 President and Chief Operating Officer
J. Kelley Williams................. 62 Chairman of the Board and Chief Executive
Officer
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ --- -------------------------------------------
<S> <C> <C>
Frank D. Winter..................... 55 President and Chief Executive Officer,
FirstMiss Steel, Inc.
Richard P. Anderson................. 67 Director
Paul A. Becker...................... 57 Director
James W. Crook...................... 66 Director
James E. Fligg...................... 60 Director
Robert P. Guyton.................... 59 Director
Charles P. Moreton.................. 69 Director
Paul W. Murrill..................... 62 Director
William A. Percy, II................ 56 Director
Leland R. Speed..................... 64 Director
R. Gerald Turner.................... 50 Director
Michael J. Ferris................... 51 Nominee at the 1996 Annual Meeting
Dan F. Smith........................ 50 Nominee at the 1996 Annual Meeting
</TABLE>
Daniel P. Anderson. Mr. Anderson, 44, is Vice President, Health, Safety and
Environmental Affairs of the Company and has been since July 1995. From 1990 to
1995, he was Vice President, Environmental Affairs, of First Chemical
Corporation.
Robert B. Barker. Mr. Barker, 51, is President of Quality Chemicals, Inc.,
and has been since 1990.
W. P. Bartlett. Mr. Bartlett, 58, is President of Callidus Technologies
Inc. and has been since 1989. From 1983 to 1989 he was President of Penteco
Corporation.
J. Steve Chustz. Mr. Chustz, 48, is General Counsel of the Company and has
been since 1993, and was Interim General Counsel from May 1993 through November
1993. From 1987 to May 1993, he was Associate General Counsel of the Company.
Paul Jerry Coder. Mr. Coder, 54, is President of EKC Technology, Inc. and
has been since December 1992. From June 1992 to December 1992, he was Vice
President, Market Research, of EKC Technology, Inc. He was Vice President of KCI
Chemicals, Inc. from June 1987 to February 1992.
Charles R. Gibson. Mr. Gibson, 59, is President of FirstMiss Fertilizer,
Inc. and has been since 1989. From 1985 to 1989 he was a Vice President of the
Company.
Samir A. Hakooz. Mr. Hakooz, 49, is President of Plasma Energy Corporation
and has been since 1991. From July 1990 to 1991, he was Executive Vice President
and General Manager of Plasma Energy Corporation and was Vice President of
Marketing from April 1990 to July 1990.
James L. McArthur. Mr. McArthur, 53, is Secretary and Manager, Investor
Relations, of the Company. He was elected Secretary in 1993 and has been
Manager, Investor Relations since 1988.
Terry L. Moore. Mr. Moore, 47, is President of Plasma Processing
Corporation and has been since 1990. From 1985 to 1990 he was Vice President of
Marketing of Plasma Energy Corporation.
George M. Simmons. Mr. Simmons, 53, is President of First Chemical
Corporation and has been since July 1995. From 1985 to June 30, 1995 he was Vice
President, Marketing, of First Chemical Corporation.
R. Michael Summerford. Mr. Summerford, 48, is Vice President and Chief
Financial Officer of the Company and has been since 1988. From 1983 to 1988, he
was a Vice President of the Company.
Thomas G. Tepas. Mr. Tepas, 49, is President and Chief Operating Officer of
the Company and has been since August 1995. He held various senior management
positions with Hercules, Inc., including Senior Vice President from 1994 to
August 1995, Group Vice President and President of the Food and Functional
Products Division from 1992 to 1994 and President of the Flavor and Food
Ingredients Division from 1991 to 1992.
15
<PAGE> 16
J. Kelley Williams. Mr. Williams, 62, has been the Chairman of the Board
and Chief Executive Officer of the Company since 1988 and has been a Director of
the Company since 1971. From 1988 until August 1995, he was President, Chief
Executive Officer and Chairman of the Board. He was President and Chief
Executive Officer from 1971 until 1988. He is a Director of Deposit Guaranty
Corporation and Deposit Guaranty National Bank, Jackson, Mississippi, and
Chairman of the Board of Getchell Gold Corporation (formerly FirstMiss Gold
Inc.), Englewood, Colorado. He is Chairman of the Board of Callidus Technologies
Inc., FirstMiss Fertilizer, Inc., FirstMiss Steel, Inc., First Chemical
Corporation, Plasma Energy Corporation, Plasma Processing Corporation and Power
Sources, Inc. (50% owned), all subsidiaries of the Company.
Frank D. Winter. Mr. Winter, 55, is President and Chief Executive Officer
of FirstMiss Steel, Inc., and has been since 1992. From 1991 to 1992, he was a
self-employed consultant to FirstMiss Steel, Inc. Mr. Winter was President of
Atlas Specialty Steels from 1987 to 1991.
Richard P. Anderson. Mr. Anderson, 67, has been the President and Chief
Executive Officer of The Andersons, Inc., an agribusiness company in Maumee,
Ohio, since 1981, and has been a Director of the Company since 1987. He is a
Director of Centerior Energy Corporation, an electric utility company in
Cleveland, Ohio, and N-Viro International Corporation, a waste recycling company
in Toledo, Ohio. He is also a Director of Plasma Processing Corporation, a
subsidiary of the Company. He is a member of the Committee on Director Affairs
and Chairman of the Compensation & Human Resources Committee.
Paul A. Becker. Mr. Becker, 57, is a Managing Director of Mitchell Hutchins
Asset Management, Inc., an investment management company in New York City and
wholly owned by Paine Webber Group, Inc., and has been a Director of the Company
since 1985. He has been employed by Paine Webber Group, Inc. since 1978.
Mitchell Hutchins served as an investment manager for First Mississippi's
pension plan until August 1996. Mr. Becker is a member of the Audit Committee.
James W. Crook. Mr. Crook, 66, is Chairman of the Board of Melamine
Chemicals, Inc. ("MCI"), which manufactures melamine in Donaldsonville,
Louisiana, and has been since 1987. He has been a Director of the Company since
1971. The Company owns approximately 23% of the common stock of MCI. MCI obtains
all of its raw materials (urea) from Triad Chemical, a joint-venture between the
Company and Mississippi Chemical Corporation. During fiscal 1996, the Company
was paid approximately $11.6 million by MCI for urea. Mr. Crook is a retired
Vice President of First Mississippi, a position he held from 1965 to June 1985.
Mr. Crook is also a member of the Triad Chemical Management Committee and a
Director of FirstMiss Fertilizer, Inc. and FirstMiss Steel, Inc., subsidiaries
of the Company. He is a member of the Committee on Director Affairs and the
First Mississippi Corporation Foundation Advisory Committee.
James E. Fligg. Mr. Fligg, 60, has been a Senior Executive Vice President,
Strategic Planning and International Business Development, Amoco Corporation,
based in Chicago, Illinois, since October 1995 and has been a Director of the
Company since 1994. From July 1993 until October 1995, he was Executive Vice
President, Chemicals Sector, Amoco Corporation. He was President of Amoco
Chemical Company, an international chemical manufacturing and marketing
subsidiary of Amoco Corporation based in Chicago, Illinois, from July 1991 until
October 1995. He was a director of Amoco Chemical from 1984 until October 1995.
He was Executive Vice President, International Operations and Polymer Products,
from 1989 to July 1991. During fiscal 1996, two of the Company's subsidiaries
purchased a total of approximately $12.1 million in products from Amoco Chemical
Company or one of its affiliates. He is a member of the Compensation & Human
Resources Committee.
Robert P. Guyton. Mr. Guyton, 59, is Chairman and Chief Executive Officer
of Smart Choice Holdings, Inc., an owner and operator of automobile dealerships
and finance companies, a position he has held since July 1996. He was Vice
President and Financial Consultant for Raymond James & Associates, Inc., an
asset management and investment banking company in Atlanta, Georgia, a position
he held from August 1993 to July 1996, and has been a Director of the Company
since 1969. He was self-employed as a management consultant from June 1991 to
July 1993. He was Chairman and Chief Executive Officer of Bank South
Corporation, Atlanta, Georgia, from 1990 to 1991. He served as President and
Chief Executive Officer of Bank South Corporation from 1981 to 1990. He is a
member of the Board of Directors of Piccadilly
16
<PAGE> 17
Cafeterias, Inc., a restaurant chain, Baton Rouge, Louisiana. Mr. Guyton is a
Director of Power Sources, Inc., a 50% owned subsidiary of the Company. He is
Chairman of the Audit Committee.
Charles P. Moreton. Mr. Moreton, 69, has been a private investor, primarily
in the oil and gas business, since 1991 and has been a Director of the Company
since 1984. He was Chairman of the Board of Commet Resources, Inc., a natural
gas transmission and marketing company in Houston, Texas, from 1986 until its
dissolution in July 1991. He was a Director of Tanglewood Bancshares, Inc.,
Houston, Texas, until August 1, 1995. He is a Director of Plasma Processing
Corporation, a subsidiary of the Company. He is a member of the Audit Committee.
Paul W. Murrill. Dr. Murrill, 62, is a professional engineer and has been a
Director of the Company since 1969. He is Chairman of the Board of Directors of
Piccadilly Cafeterias, Inc., a restaurant chain, Baton Rouge, Louisiana. He has
been a director of Entergy Corporation since 1994, when it purchased Gulf States
Utilities Company, an electric and gas utility company in Beaumont, Texas, of
which Dr. Murrill was a director. Until March 1990, Dr. Murrill was also a
Special Advisor to the Chairman of the Board of Gulf States. Dr. Murrill had
also previously served as Chairman of the Board and Chief Executive Officer of
that company. He is a Director of ZYGO, a high precision instrument company,
Middlefield, Connecticut; Howell Corporation, a diversified energy company,
Houston, Texas; and Tidewater, Inc., an oil service company, New Orleans,
Louisiana. He is a director of FirstMiss Fertilizer, Inc., a subsidiary of the
Company. He is a member of the Audit Committee.
William A. Percy, II. Mr. Percy, 56, has been a partner of Trail Lake
Enterprises, a cotton and soybean farming operation in Arcola, Mississippi,
since 1986 and has been a Director of the Company since 1988. Since September
1992, he has been the Chairman of the Board of Staple Cotton Cooperative
Association in Greenwood, Mississippi. Until July 1, 1994, he was a Director of
Mississippi Chemical, which manufactures and sells fertilizer. First Mississippi
and Mississippi Chemical are engaged in a joint-venture, Triad Chemical, in
Donaldsonville, Louisiana. Mr. Percy is also President and Chief Executive
Officer of Greenville Compress Co., Greenville, Mississippi. He was a Director
of the Sunburst Bank of Mississippi, Grenada, Mississippi, until it was
purchased by Union Planters Bank in July 1995. He is also a Director of Callidus
Technologies Inc., FirstMiss Fertilizer, Inc., and Plasma Energy Corporation,
subsidiaries of the Company. He is a member of the Compensation & Human
Resources Committee and the First Mississippi Corporation Foundation Advisory
Committee.
Leland R. Speed. Mr. Speed, 64, is Chief Executive Officer and Chairman of
the Board of Parkway Properties, Inc. (formerly The Parkway Company), and
Chairman, Chief Executive Officer and Trustee of EastGroup Properties, real
estate investment companies, both of Jackson, Mississippi. He has been a
Director of the Company since 1965. He is Chairman and Director of Delta
Industries, Inc., a construction materials manufacturer and a Director of Farm
Fish, Inc. and Mississippi Valley Gas Company, all of Jackson, Mississippi. He
was Trustee and President of Eastover Corporation from 1977 through December
1994; President and Director of Congress Street Properties from 1984 through
November 1994; and President and Director of LNH REIT, INC. from 1991 through
May 1996. He was also President, Chief Executive Officer and Director of
Rockwood National Corporation, a real estate developer, from 1983 through June
1994. He was a Trustee of First Continental Investors REIT, Houston, Texas from
1983 through May 1994. He is also a Director of First Chemical Corporation, a
subsidiary of the Company. He is a member of the Committee on Director Affairs
and the First Mississippi Corporation Foundation Advisory Committee.
R. Gerald Turner. Dr. Turner, 50, is the President of Southern Methodist
University in Dallas, Texas, a position he assumed in June 1995, and has been a
Director of the Company since 1987. He was the Chancellor of the University of
Mississippi in Oxford, Mississippi, from 1984 through June 1995. He has been a
director of River Oaks Furniture, Inc., a furniture manufacturer based in
Fulton, Mississippi, since 1994, a Director of JC Penney Co., Inc., a retailer,
since 1995, and a Director of Mobile Telecommunications Technologies Corp., a
provider of nationwide paging and voice messaging services, since July 1996. Dr.
Turner is also a Director of Callidus Technologies Inc., a subsidiary of the
Company. He is Chairman of the Committee on Director Affairs and a member of the
First Mississippi Corporation Foundation Advisory Committee.
17
<PAGE> 18
Michael J. Ferris. Mr. Ferris, 51, is Executive Vice President, Chemicals
Group, of Vulcan Materials Company, a chemical manufacturer located in
Birmingham, Alabama. Vulcan serves principally the chemical, paper and water
treatment industries. Prior to becoming Executive Vice President of Vulcan in
1996, Mr. Ferris served in various positions at Vulcan Chemicals, a division of
Vulcan Materials Company, since 1974, including President and Executive Vice
President.
Dan F. Smith. Mr. Smith, 50, is President and Chief Operating Officer of
Lyondell Petrochemical Company of Houston, Texas, a position he has held since
August 1994. Lyondell manufactures and sells petrochemicals and refinery
products. From May 1993 until August 1994, he was Executive Vice President and
Chief Operating Officer of Lyondell. He was Vice President, Corporate Planning,
of Atlantic Richfield Company, Los Angeles, California, from October 1991 to May
1993. From July 1991 to October 1991, he was Executive Vice President and Chief
Financial Office of Lyondell. During fiscal 1996, a subsidiary of the Company
sold a total of approximately $308,000 in products to Lyondell Petrochemical
Company and its affiliates.
The COMMITTEE ON DIRECTOR AFFAIRS is composed of four (4) non-employee
Directors and is responsible for nominating new Board of Directors ("Board")
members, appointing members to Board Committees, assessing Board performance and
recommending Board compensation for action by the Board. The Chairman of this
committee also chairs executive sessions of the outside members of the Board.
The Committee on Director Affairs considers suggestions for Director nominations
from all sources. The Committee on Director Affairs met three (3) times during
fiscal 1996. Current members of the committee are Mr. Anderson, Mr. Crook, Mr.
Speed and Dr. Turner.
The AUDIT COMMITTEE is composed of four (4) non-employee Directors with
broad latitude for inquiry into all operations of the Company. Its primary
responsibilities include making a recommendation to the Board on the selection
of independent auditors, reviewing audit reports prepared by independent
auditors, internal auditors, insurance auditors and other consultants engaged by
the Company to examine specific areas of corporate operations, and examining the
adequacy of compliance with various governmental regulations and corporate
policies and procedures. The Audit Committee met four (4) times during fiscal
1996. Current members of the committee are Mr. Becker, Mr. Guyton, Mr. Moreton
and Dr. Murrill.
The COMPENSATION & HUMAN RESOURCES COMMITTEE is composed of three (3) non-
employee Directors and is charged with the responsibility of recommending to the
Board a program of overall compensation for the Company and its subsidiaries,
including Executive Officers and other Key Employees. These responsibilities
include administration of the Company's Long-Term Incentive Plans. The
Compensation & Human Resources Committee met five (5) times during fiscal 1996.
Current members of the committee are Mr. Anderson, Mr. Fligg and Mr. Percy.
Section 16(a) Reporting Delinquencies. Section 16(a) of the Securities
Exchange Act of 1934 requires Officers and Directors of the Company and persons
who own more than ten percent (10%) of a registered class of the Company's
equity securities to file reports of ownership and changes in their ownership
with the Securities and Exchange Commission and The New York Stock Exchange. The
Company monitors compliance and acts as the Compliance Officer for such filings
of its Officers and Directors and prepares and files reports for such persons
based on information supplied by them. Based solely on its review of such
information, the Company believes that for fiscal 1996, its Officers and
Directors were in compliance with all applicable filing requirements, except
that due to an administrative oversight, a report on Form 5 (Annual Statement of
Beneficial Ownership of Securities) was inadvertently filed late regarding two
transactions by Mr. Tepas in the Company's 401(k) Plan.
18
<PAGE> 19
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION(1) OPTIONS(2) COMPENSATION(3)
POSITION YEAR ($) ($) ($) (#) ($)
- ----------------------------- ---- ------- ------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams(4) 1996 475,000 324,400 1,886,548(5) 60,000 29,545(8)(9)(10)
Chairman & Chief 1995 450,000 360,000 127,697(5) 0 22,050
Executive Officer 1994 330,000 200,000 (6) 35,000 52,975
Thomas G. Tepas 1996 187,500 135,000 (6) 48,272* 48,921(9)(10)(11)
President & Chief
Operating Officer
Charles R. Gibson 1996 194,500 95,000 142,044(5) 14,007* 30,876(8)(9)(10)
President, FirstMiss 1995 181,113 86,100 401,783(5) 17,200 26,132
Fertilizer, Inc. 1994 168,916 82,800 35,393(5) 15,000 23,816
R. Michael Summerford 1996 196,271 95,500 858,782(5) 16,422* 12,100(8)(9)(10)
Vice President and 1995 191,725 86,900 212,965(5) 21,300 11,701
Chief Financial Officer 1994 182,458 73,400 (6) 25,000 11,357
George M. Simmons 1996 163,227 81,600 71,239(5)(7) 2,300 13,313(8)(9)(10)
President, First Chemical 1995 127,342 35,400 (6) 10,829
Corporation 1994 120,731 32,000 151,598(5)(7) 6,192
</TABLE>
- ---------------
* During fiscal 1996, the effective exercise price and number of underlying
securities for all stock options outstanding at the time of the Gold
Distribution were adjusted to reflect the distribution value of the
Getchell shares. Mr. Tepas', Mr. Gibson's and Mr. Summerford's option
awards so effected have been restated to reflect this adjustment. See
"Security Ownership of Certain Beneficial Owners and Management."
(1) Other Annual Compensation includes payouts under Performance Option
arrangements, direct cash payments related to tax reimbursements related to
long-term incentives, tax planning and tax return preparation services, and
imputed income and tax reimbursements resulting from the personal use of
Company automobiles and country clubs. Tax reimbursement payments represent
payments to eligible employees of thirty-seven percent (37%) of the
Company's federal income tax deduction resulting from the exercise of
Convertible Subordinated Debenture Options, Non-Qualified Stock Options
("NQSOs"), Incentive Stock Options and Performance Options. These payments
are not applicable for options granted since August 22, 1995.
(2) NQSOs were granted to Officers and certain key employees of the Company in
1996, 1995 and 1994. The options for 1996 were awarded under the 1995
Long-Term Incentive Plan. Options for 1995 and 1994 were granted under the
1988 Long-Term Incentive Plan, under which no further grants will be made.
No shares of Common Stock of the Company are available for the grant of
awards under the 1980 Long-Term Incentive Plan. The share amounts for a
particular fiscal year under this column reflect only the shares underlying
options which were granted during the respective fiscal year (that is,
shares underlying options granted subsequent to fiscal year-end but based
on performance in the prior fiscal year are included in the share amounts
for the subsequent year during which the related options were actually
granted).
(3) All Other Compensation is comprised of Company contributions related to the
Company's 401(k) Plan, including amounts provided by the Company's Benefits
Restoration Plan ("BRP"), executive life insurance, relocation expenses and
the above market portion of interest earned under the Deferred Income Plan
(Plan A). The BRP permits participants in the 401(k) Plan to make
contributions, and the Company to match the same, in amounts permitted by
the 401(k) Plan but which would otherwise be in excess of those permitted
by certain Internal Revenue Code limitations.
(4) Mr. Williams' base salary was reduced twenty-five percent (25%) at his
request from June 1, 1993 to July 1, 1994, in consideration of losses due
to restructuring in fiscal 1993.
(5) Tax reimbursement payments in fiscal 1996 to Mr. Williams, Mr. Gibson, Mr.
Summerford and Mr. Simmons were $1,856,591, $122,905, $844,060 and $16,304,
respectively. Tax reimbursement payments in fiscal 1995 to Mr. Williams,
Mr. Gibson and Mr. Summerford were $78,625, $386,803 and $196,493,
respectively. Tax reimbursement payments in fiscal 1994 to Mr. Gibson and
Mr. Simmons were $23,171 and $38,150, respectively.
19
<PAGE> 20
(6) Aggregate perquisites and other personal benefits were less than $50,000 or
ten percent (10%) of the total annual salary and bonus reported for the
named Executive Officer and thus are excluded from the table.
(7) Includes payments received by Mr. Simmons on exercise of Performance
Options of $44,064 in 1996 and $103,107 in 1994.
(8) Above market interest earned under the Deferred Income Plan in fiscal 1996
was $0, $19,805, $2,850 and $5,172 for Mr. Williams, Mr. Gibson, Mr.
Summerford and Mr. Simmons, respectively. Mr. Williams voluntarily reduced
the interest rate on his deferrals effective January 1, 1994 to one hundred
twenty percent (120%) of the applicable annual federal long-term rate as
specified in the Internal Revenue Code. See "Directors Compensation."
(9) Company contributions to the 401(k) Plan in fiscal 1996 were $6,000,
$1,200, $6,000, $6,000 and $6,000 for Mr. Williams, Mr. Tepas, Mr. Gibson,
Mr. Summerford and Mr. Simmons. Accruals to the 401(k) related BRP were
$13,000, $3,100, $1,780, $1,800 and $529 for Mr. Williams, Mr. Tepas, Mr.
Gibson, Mr. Summerford and Mr. Simmons, respectively.
(10) The Executive life insurance program was changed effective November 1,
1995, to provide cash subsidies to participants based on age-based premium
cost replacing a program under which the Company provided the insurance and
paid the premiums directly. Direct insurance payments in fiscal 1996 were
$1,425, $283, $585, $590 and $490 for Mr. Williams, Mr. Tepas, Mr. Gibson,
Mr. Summerford and Mr. Simmons, respectively. Cash subsidies in fiscal 1996
were $9,120, $1,080, $2,706, $860 and $1,122 for Mr. Williams, Mr. Tepas,
Mr. Gibson, Mr. Summerford and Mr. Simmons, respectively.
(11) Relocation expenses paid by the Company during 1996 on behalf of Mr. Tepas
were $43,258.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR TEN- YEAR
UNDERLYING GRANTED TO ALL EXERCISE OPTION TERM ($)(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
- --------------------------------- ---------- -------------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams............... 60,000 23.4% 23.13 11/10/05 872,591 2,211,318
Thomas G. Tepas.................. 23,800 9.3% 23.13 11/10/05 346,128 877,156
24,472 9.5% 20.38 08/22/05 313,661 794,879
Charles R. Gibson................ 14,007 5.5% 20.38 08/22/05 179,530 454,964
R. Michael Summerford............ 16,422 6.4% 20.38 08/22/05 210,483 533,406
George M. Simmons................ 2,300 0.9% 23.13 11/10/05 33,449 84,767
</TABLE>
- ---------------
(1) The share amounts under this column do not include 60,000, 21,300, 14,100,
16,900 and 5,100 shares underlying options which were granted on August 27,
1996 to Mr. Williams, Mr. Tepas, Mr. Gibson, Mr. Summerford and Mr. Simmons,
respectively.
(2) The dollar amounts under these columns represent the potential realizable
value of each grant, assuming that the market value of the Company's Common
Stock appreciates from the date of grant to the expiration of the option at
annualized rates of 5% and 10%. These assumed rates of appreciation have
been specified by the Securities and Exchange Commission for illustrative
purposes only and are not intended to forecast future financial performance
or possible future appreciation in the price of First Mississippi stock.
20
<PAGE> 21
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
AGGREGATE VALUE OF
NUMBER OF SECURITIES UNEXERCISED, IN-THE-MONEY
NUMBER OF UNDERLYING UNEXERCISED OPTIONS AT 6/30/96($)
SHARES OPTIONS AT 6/30/96 ----------------------------
ACQUIRED ON VALUE ---------------------------- EXERCISABLE UNEXERCISABLE
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE (1) (2)
- ----------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams................. 175,000 5,017,813 317,600 0 3,370,975 N/A
Thomas G. Tepas.................... -- -- 48,272 0 45,752 N/A
Charles R. Gibson.................. 17,200 332,175 14,007 0 26,187 N/A
R. Michael Summerford.............. 93,300 2,281,244 16,422 0 30,702 N/A
George M. Simmons.................. -- -- 18,400 0 204,788 N/A
</TABLE>
- ---------------
(1) Value was computed as the difference between the individual option price and
the per share closing price of First Mississippi Common Stock on June 30,
1996, as reported on the consolidated transaction system for New York Stock
Exchange issues. Only options with fair market values in excess of the
exercise price are reflected in this column.
(2) No value is shown because there were no unexercisable options at fiscal year
end.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER
PERIOD UNTIL
NUMBER OF MATURATION OR ESTIMATED
NAME SHARES/UNITS PAYOUT FUTURE PAYOUTS
- ------------------------------------------- ------------ -------------------- --------------
<S> <C> <C> <C>
George M. Simmons.......................... 9,600 (2) (3)
</TABLE>
- ---------------
(1) In fiscal 1996, the Company adopted a Performance Option Plan for First
Chemical Corporation providing for awards payable only in cash based on
appreciation in value of units, such appreciated value being based on the
subsidiary's pre-tax operating profit and the price earnings multiples of a
peer group of publicly held companies. Options shown in this table
represent performance units granted under this plan on August 22, 1995.
This table does not include 6,700 performance units granted August 27,
1996.
(2) Performance units granted August 22, 1995 are exercisable no earlier than
six (6) months from date of grant and until ten (10) years from grant. The
units are valued on a quarterly basis and may be exercised by the
participant within fifteen (15) business days from the date of valuation.
(3) The performance options granted on August 22, 1995, have a base price of
$20.30 and may be exercised as noted above. Estimated future value will be
based on the appreciated value of the options on the exercise date and
cannot be reasonably estimated at this time. However, if unit values
appreciated at annual rates of 5% and 10%, the potential realizable value
at the end of their ten (10)-year term would be $122,559 and $310,589,
respectively.
21
<PAGE> 22
OTHER COMPENSATION
In 1970, the stockholders authorized the noncontributory retirement plan
for the employees of First Mississippi. Employees become one hundred percent
(100%) vested after five (5) years of employment. The plan provides for normal
retirement at age sixty-five (65) with actuarially adjusted provisions for early
and postponed retirement dates. Retirement benefits are based on years of
service and average compensation (wages and salary) of the five (5) highest
consecutive years during employment. The benefits listed in the table below are
not subject to any reduction for social security or other offset amounts.
The following table shows the estimated annual retirement benefit payable
to participating employees including Executive Officers based on earnings and
years of service classifications as indicated.
<TABLE>
<CAPTION>
AVERAGE ANNUAL COMPENSATION ESTIMATED ANNUAL BENEFITS FOR YEARS OF CREDITED SERVICE
(5 HIGHEST -------------------------------------------------------
CONSECUTIVE YEARS) 10 YEARS 20 YEARS 30 YEARS 40 YEARS
- --------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$100,000................................ $ 17,712 $ 35,424 $ 53,136 $ 70,848
150,000................................ 26,712 53,424 80,136 106,848
200,000................................ 35,712 71,424 107,136 142,848
300,000................................ 53,712 107,424 161,136 214,848
400,000................................ 71,712 143,424 215,136 286,848
450,000................................ 80,712 161,424 242,136 322,848
500,000................................ 89,712 179,424 269,136 358,848
</TABLE>
The table includes amounts that exceed limitations allowed under Section
415 of the Code. The Company's BRP provides that if a retired employee's
benefits calculated under the retirement plan exceed the maximum allowed under
the Code, the Company will supplement such employee's benefits to the extent
such benefit is in excess of the limitation.
Years of service for the Executive Officers listed in the Summary
Compensation Table are: J. Kelley Williams, thirty (30) years; Thomas G. Tepas,
one (1) year; Charles R. Gibson, twenty-six (26) years; R. Michael Summerford,
eighteen (18) years; and George M. Simmons, eleven (11) years.
Termination Agreements. During fiscal 1996, the Board approved and the
Company entered into Termination Agreements (the "Termination Agreements") with
the Executive Officers of the Company, including Mr. Williams, Mr. Tepas, Mr.
Gibson, Mr. Summerford and Mr. Simmons. The Termination Agreements are
contingent upon a Change of Control, as defined in the Termination Agreements,
and provide for three-year terms which are automatically extended unless the
Company determines not to renew or there is a Change of Control of the Company
during any three-year term. Each officer, other than the Chief Executive
Officer, would be paid upon termination of employment for reasons other than
cause, death or disability or upon resignation for good reason, subsequent to a
Change of Control during the term of the Termination Agreement, three (3) times
the sum of the five-year average of his annual base salary and bonus. The
Company's Chief Executive Officer is entitled to the same termination benefit as
described above for all other Executive Officers, except for the fact that the
Chief Executive Officer may resign for any reason, as opposed to "good reason,"
within thirty-six (36) months of a Change of Control and still be entitled to
the termination benefit. Upon termination, the individual would have the option,
unless he notifies the Company otherwise, to receive a cash payment equal to the
cash value of all his NQSOs, Debenture Options and Debentures, whether then
exercisable or not. Following termination, the Company will pay amounts
previously due to individuals for early stock disposition of grants issued in
1994 and earlier under the Company's tax sharing plan. No individual would
receive payments in the event of death, disability or termination for cause. In
addition, the Termination Agreements provide for an additional payment to be
made by the Company to the Chief Executive Officer if any of the severance
payments provided for by the Termination Agreements or any other payments made
pursuant to a Change of Control of the Company (the "Total Payments") become
subject to an additional tax ("Excise Tax") imposed by Section 4999 of the Code,
such that the net of all of the payments received by the Officer after the
imposition of the Excise Tax on the Total Payments and any federal income tax on
the additional payment shall be equal to the Total Payments.
22
<PAGE> 23
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Chief Executive Officer serves as a member ex-officio of the
Compensation & Human Resources Committee, but may not serve as Chairman or vote
or participate in or be present for Committee decisions regarding his own
compensation. He does not make recommendations about nor participate in
decisions regarding any aspect of his compensation.
In addition, Mr. Crook, who retired from First Mississippi as Vice
President in 1985, is Chairman of Melamine Chemicals ("MCI"), and Mr.
Summerford, an Executive Officer of First Mississippi, is a director of MCI.
DIRECTOR COMPENSATION
Directors who are not employees are compensated for their services with a
retainer of $16,000 per year. In addition, non-employee Directors receive fees
for attendance at duly called Board and committee meetings. Effective May 22,
1996, the fees paid are $1,000 per day for attendance at duly called Board and
committee meetings or a fee of $500 for half-day committee meetings except for
committee chairmen, who receive a fee of $1,250 per day for meetings and $625
for half-day meetings. Prior to this date, non-employee Directors' fees were
$900 per day for attendance at duly called Board meetings or a fee of $450 for
half-day committee meetings except for committee chairmen, who received a fee of
$1,200 per day for meetings and $600 for half-day meetings. This increase was
recommended by the Committee on Director Affairs to align board compensation
with peer companies. Travel expenses to and from meetings are reimbursed to all
Directors. No fees are paid for informal meetings. Attendance at meetings held
by telephone conference call are paid at the half-day rate. Directors performing
special services at the request of the Chief Executive Officer are paid a per
diem of $1,000 per day, except for committee chairmen, who are paid a per diem
of $1,250 per day.
Under the Company's 1988 Long-Term Incentive Plan, non-employee Directors
were automatically awarded for five (5) years, debenture options to purchase
Convertible Subordinated Debentures. Debenture options may be exercised any time
within ten (10) years after the date of grant to purchase Convertible
Subordinated Debentures. Each debenture may be converted six (6) months after
the date of grant of the applicable option into Convertible Preferred Stock at a
conversion price equal to the fair market value of First Mississippi Common
Stock on the date the debenture options were granted. Each share of Convertible
Preferred Stock is, in turn, immediately convertible into one (1) share of First
Mississippi Common Stock. There will be no further awards under this plan.
Under the Company's 1995 Long-Term Incentive Plan (the "1995 Plan"), each
non-employee Director will be eligible annually for a nonqualified stock option
grant. The number of shares subject to each such option shall be determined by
Company performance as measured by the Company's return on equity calculated as
the average two (2) year total net income divided by the average two (2) year
stockholder equity and measured as a rolling average of the two immediately
preceding fiscal years. However, no awards shall be awarded in the event of an
average return of less than 10% and in the event of an average return of 20% or
more, no more than 1,500 options may be granted to any non-employee Director in
any given year. The exercise price for each such option is the fair market value
of First Mississippi Common Stock as of the date of the grant of the option.
Each option vests six months after the date of grant and terminates on the tenth
anniversary of the date of grant. Accordingly, each non-employee Director
received options to purchase 1,500 shares of First Mississippi Common Stock in
November 1995 and will receive options to purchase an additional 1,500 shares
following the 1996 annual meeting.
Also under the 1995 Plan, non-employee Directors may make an irrevocable
election to receive share units in exchange for deferring all or some portion of
their annual retainer at a per share unit exchange price that is eighty-five
percent (85%) of the fair market value of First Mississippi Common Stock
determined as of the first day of the year during which all or a portion of the
deferred retainer was to be paid. Dividends earned pursuant to the share units
are reinvested in the form of additional share units.
In fiscal 1986, the Company established a Deferred Income Plan for
Directors, Officers and Key Employees ("Plan A") which superseded the previous
deferred income arrangement and pursuant to which
23
<PAGE> 24
deferral opportunities in any given year, up to a maximum of three (3) years,
were offered at the discretion of the Board. Amounts deferred under Plan A earn
interest at a prescribed rate which, as originally established, was twenty
percent (20%), compounded annually, subject to reduction as described below. The
Company is owner and beneficiary of life insurance policies covering most of the
participants in Plan A. The benefits associated with these policies are expected
to cover the Company's financial obligations incurred in connection with Plan A,
including the interest accrued on the amounts deferred thereunder in excess of
market rates, resulting in no net cost to the Company over the life of the plan.
Plan A provides that the interest rate may be reduced prospectively and, if
necessary, may be adjusted retroactively, due to severe economic changes
including, but not limited to, changes in tax law. However, no retroactive
changes in the rate of a return may occur unless such economic changes are
material, adverse and retroactive in nature. Further, in no event shall the
interest rate on amounts deferred under Plan A be reduced to a level lower than
the ten (10)-year Treasury Note Rate. Effective January 1, 1994, the Director
participants in Plan A still serving on the Board voluntarily reduced the
applicable interest rate to one hundred twenty percent (120%) of the applicable
annual federal long-term rate as specified in the Internal Revenue Code. At the
same time, the Board closed Plan A for any new participants or deferral
opportunities, subject to the existing rights and obligations thereunder. The
interest rate for the first six months of fiscal year 1994 for all Directors
remained at twenty percent (20%). In fiscal year 1989, the Company established a
successor Deferred Compensation Plan for Outside Directors ("Plan B") to insure
continuation of deferral opportunities for Directors. Plan B was amended
effective January 1, 1994, to change the interest rate prospectively to one
hundred twenty percent (120%) of the applicable annual federal long-term rate as
specified in the Internal Revenue Code. Amounts deferred under Plan B prior to
January 1, 1994 earned interest based on the Chase Manhattan Bank, N.A. Prime
Rate, less one percent (1%). The deferrals under both Plan A and Plan B are held
by the Company until retirement, resignation or other termination of services.
Director J. Kelley Williams participates only in Plan A (See Note 8 under
Summary Compensation Table).
The Company furnishes Directors with $100,000 accidental death and
dismemberment and $250,000 of business travel accident insurance. The Company
also has a Retirement Plan for its non-employee Directors under which all such
Directors who have served at least one (1) three-year term will, under certain
conditions, receive an annual retirement benefit equal to their annual retainer
at retirement for each year of service, not to exceed fifteen (15) years. The
amount of the retainer to be received after retirement shall be fixed at the
time of retirement. The plan also provides for a lump sum payment to a Director
under certain conditions in the event of a change of control and to his
beneficiary upon his death.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Gold Distribution. On October 20, 1995, the Company distributed to its
shareholders the shares of Getchell Gold Corporation ("Getchell"), formerly
FirstMiss Gold, Inc., held by First Mississippi (the "Gold Distribution").
Following the Gold Distribution, in accordance with the provisions of the
Long-Term Incentive Plans of the Company, the number of shares of Common Stock
underlying outstanding debentures, debenture options and NQSOs, as well as the
effective exercise prices relating thereto, were adjusted to reflect the
distribution value of the Getchell shares. This adjustment increased the number
of shares underlying the awards outstanding at the time of the Gold Distribution
and reduced the respective exercise prices by a factor of 1.61.
24
<PAGE> 25
The Directors and Officers of the Company beneficially own as of August 27,
1996, Convertible Subordinated Debentures Options, Convertible Preferred Stock,
NQSOs and Common Stock of the Company as follows:
<TABLE>
<CAPTION>
TOTAL COMMON
COMMON STOCK STOCK PERCENT
BENEFICIALLY PERCENT OF COMMON BENEFICIALLY OF
DIRECTOR/OFFICER OWNED (1) CLASS STOCK OWNED(2) CLASS
- -------------------------------- ------------ ---------- --------- ------------ -------
<S> <C> <C> <C> <C> <C>
Richard P. Anderson............. 9,450(3)
NQSO.......................... 1,500 10,950 *
Paul A. Becker.................. 10,000
1988-1 Series................. 1,610 20%
1989-2 Series................. 1,610 20%
1990-2 Series................. 1,610 20%
1991-2 Series................. 1,610 20%
1992-1 Series................. 1,610 20%
NQSO.......................... 1,500
------------
9,550 19,550 *
James W. Crook.................. 119,187(4)
NQSO.......................... 1,500 120,687 *
James E. Fligg.................. 500
1994-1 Series................. 1,610 100%
NQSO.......................... 1,500
------------
3,110 3,610 *
Robert P. Guyton................ 23,000
NQSO.......................... 1,500 24,500 *
Charles P. Moreton.............. 13,250
NQSO.......................... 1,500 14,750 *
Paul W. Murrill................. 7,900(5)
1988-1 Series................. 1,610 20%
1989-2 Series................. 1,610 20%
1990-2 Series................. 1,610 20%
1991-2 Series................. 1,610 20%
1992-1 Series................. 1,610 20%
NQSO.......................... 1,500
------------
9,550 17,450 *
William A. Percy, II............ 36,275(6)
1988-1 Series................. 1,610 20%
1989-2 Series................. 1,610 20%
1990-2 Series................. 1,610 20%
1991-2 Series................. 1,610 20%
1992-1 Series................. 1,610 20%
NQSO.......................... 1,500
------------
9,550 45,825 *
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
TOTAL COMMON
COMMON STOCK STOCK PERCENT
BENEFICIALLY PERCENT OF COMMON BENEFICIALLY OF
DIRECTOR/OFFICER OWNED (1) CLASS STOCK OWNED(2) CLASS
- -------------------------------- ------------ ---------- --------- ------------ -------
<S> <C> <C> <C> <C> <C>
Leland R. Speed................. 12,720
1988-1 Series................. 1,610 20%
1989-2 Series................. 1,610 20%
1990-2 Series................. 1,610 20%
1991-2 Series................. 1,610 20%
1992-1 Series................. 1,610 20%
NQSO.......................... 1,500
------------
9,550 22,270 *
R. Gerald Turner................ 7,900(7)
NQSO.......................... 1,500 9,400 *
J. Kelley Williams.............. 870,465(8)
1987-A Series................. 40,250 78%
1988-A Series................. 72,450 63%
1989-1 Series................. 72,450 100%
1990-1 Series................. 72,450 98%
NQSO.......................... 60,000
------------
317,600 1,188,065 5.6%
Charles R. Gibson............... 13,917(9)
NQSO.......................... 14,007 27,924 *
George M. Simmons............... 241
1988-A Series**............... 6,440 6%
1989-A Series................. 1,610 6%
NQSO.......................... 10,350
------------
18,400 18,641 *
R. Michael Summerford........... 70,546
NQSO.......................... 16,422 86,968 *
Thomas G . Tepas................ 1,500(10)
NQSO.......................... 48,272 49,772 *
All Directors and Executive
Officers as a Group (24
Persons)(11).................. 1,229,691
1987-A Series................. 48,300 94%
1988-A Series**............... 86,940 75%
1988-1 Series................. 6,440 80%
1989-A Series................. 4,025 15%
1989-1 Series................. 72,450 100%
1989-2 Series................. 6,440 80%
1990-1 Series................. 72,450 85%
1990-2 Series................. 6,440 80%
1991-1 Series................. 4,830 75%
1991-2 Series................. 6,440 80%
1992-1 Series................. 6,440 80%
1994-1 Series................. 1,610 100%
NQSO.......................... 222,960
------------
545,765 1,775,456 8.4%
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
TOTAL COMMON
COMMON STOCK STOCK PERCENT
BENEFICIALLY PERCENT OF COMMON BENEFICIALLY OF
DIRECTOR/OFFICER OWNED (1) CLASS STOCK OWNED(2) CLASS
- -------------------------------- ------------ ---------- --------- ------------ -------
<S> <C> <C> <C> <C> <C>
5% Beneficial Holder: Goldman
Sachs Group, L.P.(12)......... 1,771,091 8.5%
Goldman Sachs & Co.
85 Broad Street
New York, NY 10004
</TABLE>
- ---------------
* Represents less than one percent (1%) of class.
** Represents 6,440 shares of Common Stock underlying Convertible Subordinated
Debentures that have already been purchased through the exercise of
Debenture Options.
(1) Numbers represent shares of Common Stock of the Company underlying the
Convertible Subordinated Debentures and NQSOs beneficially owned by the
Directors and Officers. The Debentures are immediately convertible into the
specified number of shares of Convertible Preferred Stock of the same
series and then immediately convertible into the specified number of shares
of Common Stock of the Company. NQSOs are exercisable no earlier than six
(6) months from date of grant into shares of Common Stock of the Company
and presently all are exercisable.
(2) In connection with the Shareholder Rights Plan adopted by the Company on
February 27, 1996, which replaced an expiring plan, preferred stock
purchase rights were distributed to stockholders and are deemed to be
attached to the outstanding shares of Common Stock of the Company,
including the outstanding shares of Common Stock reported above as being
owned by Directors and Officers. Under certain conditions, each right may
be exercised to purchase one one-hundredth (1/100) of a share of a new
series of preferred stock, at an exercise price of $100 (subject to
adjustment). The rights, which do not have voting rights, expire in 2006
and may be redeemed by the Company at a price of $.01 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 10% or more
owners, which rights are voided) will entitle its holder to purchase shares
of Common Stock with a value of twice the then current exercise price.
(3) Shares voting and investment power of 3,700 shares with Mrs. Anderson.
(4) Included are 700 shares owned by Mrs. Crook of which Mr. Crook has no
voting and investment power and disclaims beneficial ownership.
(5) Included are 775 shares owned by Mrs. Murrill of which Dr. Murrill has no
voting and investment power and disclaims beneficial ownership.
(6) Included are 31,500 shares of which Mr. Percy has sole voting and
investment power as President of Greenville Compress Company and of which
he disclaims beneficial ownership.
(7) Shares voting and investment power of 7,800 shares with Mrs. Turner.
(8) Included are 171,518 shares of which Mr. Williams shares voting and
investment power, and 4,327 shares for which he has no voting and
investment power and disclaims beneficial ownership. Excluded are 61,750
shares held in the Jean P. Williams Revocable Trust, of which Mr. Williams
has no voting and investment power and disclaims beneficial ownership.
(9) Shares voting and investment power of 2,375 shares with Mrs. Gibson.
(10) Shares voting and investment power with Mrs. Tepas.
(11) Except for 2,000 shares, 200 shares, 2,000 shares and 100 shares for which
Mr. Daniel Anderson, Mr. Barker, Mr. Moore and Mr. Chustz, respectively,
have shared voting and investment power, and except for 12 shares owned by
Mr. McArthur's wife, of which he has no voting and investment power and
disclaims beneficial ownership, and except as otherwise indicated in these
notes, the shares
27
<PAGE> 28
beneficially owned by the persons indicated in the table above represent
sole voting and investment power.
(12) Based on Form 13G filed by the Investor with the Securities and Exchange
Commission. Included 1,762,991 shares as to shared voting power and 8,100
shares with no voting power.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion includes certain relationships and related
transactions which occurred during the Company's fiscal year ended June 30,
1996.
Gold Distribution. Until October 20, 1995, First Mississippi owned
14,750,000 shares of Common Stock of Getchell (approximately 81% of the
outstanding Common Stock). On that date, the Company distributed all of the
stock it owned in Getchell to its own shareholders. During fiscal 1996, Messrs.
Moreton, Summerford and Williams, who currently serve as a Director, Vice
President and Chief Financial Officer, and Chairman and Chief Executive Officer,
respectively, of First Mississippi, served as members of the board of Getchell,
with Mr. Williams serving as Chairman. In June 1996, Mr. Moreton resigned from
the Getchell Board. At August 31, 1996, Mr. Williams beneficially owned 613,165
shares of common stock of Getchell, or approximately 2.4% of the total number of
shares outstanding.
Debt Owed by Getchell. Prior to the spinoff, First Mississippi provided to
Getchell capital and operating advances from time to time. Effective the date of
the spinoff, the debt was $52.5 million and the Company and Getchell entered
into a new long-term loan agreement (the "Loan Agreement") which provided that
the total outstanding amount would be due in September 2000, that Getchell would
repay $15.0 million to the Company from the proceeds of a public common stock
offering prior to April 1996, that interest would accrue at a rate not exceeding
the London Interbank Offered Rate plus one percent, and that the interest would
not be paid in cash, but rather would be capitalized to the note. In November
1995, Getchell reduced the debt by $15.0 million, from proceeds of a common
stock offering. The debt was further reduced by the settlement of the Tax
Sharing Agreement (described below). At June 30, 1996, the total aggregate debt
owed by Getchell pursuant to the Loan Agreement was $24.7 million.
Tax Sharing Agreement. In October 1987, the Company and Getchell entered
into a Tax Sharing Agreement for the period during which Getchell was a member
of the affiliated group of corporations of which First Mississippi is the common
parent (the "Affiliated Group"). Under the agreement, Getchell accrued income
taxes (payable to the Company) as if Getchell and its subsidiaries were, since
the inception of the agreement on October 28, 1987, a separate affiliated group
of corporations filing consolidated income tax returns. In determining the
amount of such payments, Getchell was potentially bound by tax elections,
conventions, treatments or methods utilized by the Company in filing its
consolidated income tax returns. The Tax Sharing Agreement also provided for
payments in respect of net operating losses and certain other tax benefits by
the Company to Getchell or, under some circumstances, by Getchell to the
Company, in taxable years in which Getchell was no longer a member of the
Affiliated Group. Effective with the spinoff on October 20, 1995, the Tax
Sharing Agreement was terminated. In settlement of the Agreement, $13.9 million
was used to reduce the debt owed by Getchell to the Company.
Tax Ruling Agreement. The Company obtained a letter ruling from the
Internal Revenue Service in April 1995 providing for the tax-free distribution
to its shareholders of its shares of Getchell's Common Stock. In September 1995,
The Company and Getchell entered into the Tax Ruling Agreement which sets forth
certain covenants and agreements of Getchell relevant to maintaining the
tax-free nature of the distribution of the common stock.
The Tax Ruling Agreement provides that Getchell will complete an
underwritten public equity of common stock generating aggregate proceeds of at
least $50.0 million prior to April 1996. In late 1995, Getchell satisfied this
requirement by issuing common stock to the public which generated net proceeds
of approximately $137.5 million. The Tax Ruling Agreement also required Getchell
to repay at least $15.0 million of debt owed to the Company from the net
proceeds of the common equity issue, which repayment occurred in November 1995.
28
<PAGE> 29
The Tax Ruling Agreement provides also that Getchell will not, prior to one
year from the date of the spinoff, enter into any agreement to merge or
consolidate with or into any other corporation, to liquidate, to sell or
transfer all or substantially all of its assets, to redeem or repurchase any of
its capital stock (except for the redemption of the stock of one or more
Getchell employees upon his or her termination) or to issue additional shares of
its capital stock (except in connection with the public offering of common stock
described above, or issuances pursuant to Getchell's employee benefit or
compensation plans), unless it first obtains an opinion of counsel or a
supplemental ruling from the I.R.S. that such action does not interfere with the
Tax Ruling.
In the event Getchell takes such actions or solicits or assists any person
or group to commence a tender offer, if such person or group would acquire
ownership of 20% or more of Getchell's outstanding Common Stock without an
opinion or a supplemental I.R.S. ruling, Getchell agreed under the Tax Ruling
Agreement to indemnify and hold the Company and certain affiliated corporations
harmless against any and all federal, state and local taxes, interest penalties
and additions thereto imposed upon or incurred by such corporations as a result
of such action's effect on the tax free nature of the spinoff.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS AND SCHEDULES
(a)(1) The Financial Statements which are filed with this Form 10-K are set
forth in the Index to Financial Statements at page F-1, which immediately
precedes such financial statements.
(a)(2) No additional schedules are required under the applicable instructions or
are inapplicable and have therefore been omitted.
(a)(3) EXHIBITS
<TABLE>
<S> <C>
3(a) -- Restated and Amended Charter of Incorporation of the Company, as amended August
22, 1996.
3(b) -- Bylaws of the Company, as amended August 27, 1996.
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, 1992-1 and 1994-1 Series
Convertible Preferred Stock and the Company's Series X Junior Participating
Preferred Stock are included in Exhibit 3(a).
4(b) -- Articles II, V and VI of the Company's Bylaws are included in Exhibit 3(b).
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.
</TABLE>
29
<PAGE> 30
<TABLE>
<S> <C>
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 KeyCorp
Shareholder Services, Inc., was filed as an Exhibit to Item 7 to the Company's
Form 8-K dated February 28, 1989, and is incorporated by reference.
4(j) -- Rights Agreement between the Company and Society National Bank, whose name has
now been changed to KeyCorp Shareholder Services, Inc., dated February 27,
1996, was filed as Exhibit 4.1 to Item 7 to the Company's Form 8-K dated April
12, 1996.
4(k) -- Loan Agreement between the Company and FirstMiss Gold Inc., dated February 1,
1995, was filed as Exhibit 4(m) to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1995, and is incorporated by reference.
4(l) -- 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(m) -- 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 by reference.
4(n) -- Amendment, 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(o) -- 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, was filed as Exhibit 4(u) to
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1994, and is incorporated by reference.
4(p) -- Extension of commitment termination date, dated as of December 30, 1994 and
January 9, 1995, 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,
was filed as Exhibit 4(w) to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1995, and is incorporated by reference.
4(q) -- Waiver and Amendment, dated as of April 1, 1996, 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 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, and is
incorporated herein by reference.
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.
</TABLE>
30
<PAGE> 31
<TABLE>
<S> <C>
10(b)* -- Form of Termination Agreement, dated July 1, 1989, between the Company and each
of the following executive officers of the Company: William P. Bartlett, C. R.
Gibson, 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)* -- Termination Agreement, dated May 29, 1996 and effective June 1, 1996, between
the Company and its Chief Executive Officer.
10(d)* -- Form of Termination Agreement, dated May 29, 1996 and effective June 1, 1996,
between the Company and each of the following executive officers of the
Company: Daniel P. Anderson, Robert P. Barker, William P. Bartlett, J. Steven
Chustz, Paul J. Coder, Charles R. Gibson, Samir A. Hakooz, Terry L. Moore,
George M. Simmons, R. Michael Summerford and Thomas G. Tepas (Company's
Termination Agreement with each such officer contains terms identical to those
contained in the form of Agreement filed).
10(e)* -- 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(f)* -- 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(g)* -- First Mississippi Corporation 1995 Long-Term Incentive Plan was filed as
Appendix A to the Definitive Proxy Statement for the Annual Meeting of
Stockholders of the Corporation held on November 10, 1995.
10(h)* -- 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(i)* -- First Mississippi Corporation 1989 Deferred Compensation Plan for Outside
Directors, as amended on September 12, 1994, was filed as Exhibit 10(g) to the
Annual Report on Form 10-K for the fiscal year ended June 30, 1995, and is
incorporated by reference.
10(j) -- 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 substantially identical provisions to those
contained in the form): Richard P. Anderson, Paul A. Becker, James W. Crook,
James E. Fligg, 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, J. Steve Chustz, James L. McArthur, Danny P. Anderson
and Thomas G. Tepas 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(k)* -- 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(l) -- 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.
10(m) -- Joint Venture Agreement between INDRESCO Inc., d/b/a Harbison-Walker
Refractories, a division of INDRESCO Inc., and Plasma Processing Corporation
dated as of August 23, 1995, was filed as Exhibit 10(n) to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1995 and is incorporated
by reference.
</TABLE>
31
<PAGE> 32
<TABLE>
<S> <C>
10(n) -- Agreement and Plan of Merger and Reorganization dated as of August 27, 1996 by
and among Mississippi Chemical Corporation, Miss Sub, Inc, and First
Mississippi Corporation.
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, 33-56026, 33-57799 and 33-64239.
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.
(b) Reports on Form 8-K filed during the fourth quarter include the April 12,
1996, filing related to the dividend distribution of stock rights, based on
common shares held, to purchase junior participating preferred stock of the
Company and the June 4, 1996, filing regarding the Board's authorization of
a plan to close the Company's aluminum dross processing operations.
(c) Please see (a)(3) above.
The exhibits filed with the Commission are not included in the printed 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.
(d) Please see (a)(2) above.
32
<PAGE> 33
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: November 18, 1996 By: /s/ J. KELLEY WILLIAMS
--------------------------------
J. Kelley Williams
Chief Executive Officer
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
- --------------------------------------------- --------------------------- ------------------
<C> <S> <C>
/s/ J. KELLEY WILLIAMS Chairman of the Board of November 18, 1996
- --------------------------------------------- Directors, Chief
J. Kelley Williams Executive Officer
(Principal Executive
Officer) and Director
/s/ THOMAS G. TEPAS President and Chief November 18, 1996
- --------------------------------------------- Operating Officer
Thomas G. Tepas
/s/ R. MICHAEL SUMMERFORD Vice President and Chief November 18, 1996
- --------------------------------------------- Financial Officer
R. Michael Summerford (Principal Financial
Officer)
/s/ TROY B. BROWNING Controller (Principal November 18, 1996
- --------------------------------------------- Accounting Officer)
Troy B. Browning
/s/ RICHARD P. ANDERSON Director November 18, 1996
- ---------------------------------------------
Richard P. Anderson
/s/ PAUL A. BECKER Director November 18, 1996
- ---------------------------------------------
Paul A. Becker
/s/ JAMES W. CROOK Director November 18, 1996
- ---------------------------------------------
James W. Crook
/s/ JAMES E. FLIGG Director November 18, 1996
- ---------------------------------------------
James E. Fligg
/s/ ROBERT P. GUYTON Director November 18, 1996
- ---------------------------------------------
Robert P. Guyton
/s/ CHARLES P. MORETON Director November 18, 1996
- ---------------------------------------------
Charles P. Moreton
/s/ PAUL W. MURRILL Director November 18, 1996
- ---------------------------------------------
Paul W. Murrill
/s/ WILLIAM A. PERCY, II Director November 18, 1996
- ---------------------------------------------
William A. Percy, II
/s/ LELAND R. SPEED Director November 18, 1996
- ---------------------------------------------
Leland R. Speed
/s/ R. GERALD TURNER Director November 18, 1996
- ---------------------------------------------
R. Gerald Turner
</TABLE>
33
<PAGE> 34
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheets as of June 30, 1996 and 1995.............................. F-3
Consolidated Statements of Operations for the years ended June 30, 1996, 1995 and
1994................................................................................ F-4
Consolidated Statements of Stockholders' Equity for the years ended June 30, 1996,
1995
and 1994............................................................................ F-5
Consolidated Statements of Cash Flows for the years ended June 30, 1996, 1995 and
1994................................................................................ F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 35
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
First Mississippi Corporation:
We have audited the consolidated financial statements of First Mississippi
Corporation and subsidiaries as listed in the accompanying index. 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 subsidiaries as of June 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended June 30, 1996, in conformity with generally accepted
accounting principles.
As discussed in notes 1 and 7, 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 6, 1996
F-2
<PAGE> 36
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30
--------------------
1996 1995
-------- -------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................................... $ 5,303 40,523
Receivables:
Trade, less allowance for doubtful accounts of $1,013 in 1996 and $1,029 in
1995......................................................................... 76,500 65,623
Affiliated companies (note 3)................................................. 2,915 1,917
Other (note 7)................................................................ 9,159 4,105
-------- -------
Total receivables........................................................ 88,574 71,645
-------- -------
Inventories:
Finished products............................................................. 25,822 24,850
Work in process............................................................... 28,494 19,051
Raw materials and supplies.................................................... 22,047 20,544
-------- -------
Total inventories........................................................ 76,363 64,445
-------- -------
Prepaid expenses and other current assets (note 7).............................. 10,864 9,228
Net current assets of discontinued operations (note 2).......................... -- 6,894
-------- -------
Total current assets..................................................... 181,104 192,735
-------- -------
Investments and other assets:
Investments in affiliated companies (note 3).................................... 37,480 21,502
Other investments (note 3)...................................................... 27,496 3,931
Intangible and other assets, at cost less applicable amortization (note 4)...... 11,404 13,396
-------- -------
Total investments and other assets....................................... 76,380 38,829
-------- -------
Property, plant and equipment, at cost less accumulated depreciation and
amortization (notes 5 and 6).................................................... 179,824 145,464
Noncurrent assets of discontinued operations (note 2)............................. -- 67,689
-------- -------
$437,308 444,717
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note 6)................................. $ 14,534 15,076
Deferred revenue................................................................ 2,097 2,048
Accounts payable:
Trade (including book overdrafts of $10,446 in 1996 and $9,334 in 1995)....... 45,286 41,983
Equity investees (note 3)..................................................... 5,343 3,593
-------- -------
Total accounts payable................................................... 50,629 45,576
-------- -------
Accrued expenses and other current liabilities (note 18)........................ 26,244 19,928
Net current liabilities of discontinued operations (note 2)..................... 682 --
-------- -------
Total current liabilities................................................ 94,186 82,628
-------- -------
Long-term debt, excluding current installments (note 6)........................... 79,909 84,394
Other long-term liabilities....................................................... 13,864 12,289
Long-term liabilities and minority interest of discontinued operations (note 2)... -- 9,033
Deferred income taxes (note 7).................................................... 19,082 23,377
Stockholders' equity (notes 6, 8 and 9):
Serial preferred stock. Authorized 20,000,000 shares; none issued............... -- --
Common stock of $1 par value. Authorized 100,000,000 shares; outstanding
20,614,491 shares in 1996 and 20,438,208 shares in 1995....................... 20,614 20,438
Additional paid-in capital...................................................... 14,234 7,656
Retained earnings............................................................... 195,419 204,902
-------- -------
Total stockholders' equity............................................... 230,267 232,996
-------- -------
Commitments and contingent liabilities (notes 7, 8, 10 and 11).................... $437,308 444,717
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 37
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
------------------------------
1996 1995 1994
-------- ------- -------
(IN THOUSANDS OF DOLLARS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues:
Sales (note 13).............................................. $594,937 571,270 413,075
Interest and other income, net (note 12)..................... 5,784 5,295 3,330
-------- ------- -------
600,721 576,565 416,405
-------- ------- -------
Costs and expenses:
Cost of sales................................................ 444,521 404,936 331,017
General, selling and administrative expenses................. 61,206 50,524 44,297
Other operating expenses..................................... 6,901 7,347 5,459
Provision for plant shut-down (note 5)....................... 18,256 -- --
Interest expense (note 6).................................... 9,271 9,560 10,063
-------- ------- -------
540,155 472,367 390,836
-------- ------- -------
Earnings from continuing operations before income taxes,
investee earnings (loss) and cumulative effect of change in
accounting principle......................................... 60,566 104,198 25,569
Income taxes (note 7).......................................... 23,550 40,425 11,250
Equity in net earnings (loss) of affiliated companies (note
3)........................................................... 1,033 934 (306)
-------- ------- -------
Earnings from continuing operations before cumulative effect of
change in accounting principle............................... 38,049 64,707 14,013
Earnings (loss) from discontinued operations, net of taxes
(note 2)..................................................... (1,083) (6,913) 5,000
Loss on disposal of business, net of taxes (note 2)............ (1,746) -- --
Cumulative effect of change in accounting principle (note 7)... -- -- 2,850
-------- ------- -------
Net earnings......................................... $ 35,220 57,794 21,863
======== ======= =======
Earnings (loss) per common share (note 9):
Continuing operations........................................ $ 1.81 3.14 .70
Discontinued operations...................................... (.13) (.34) .25
Cumulative effect of change in accounting principle.......... -- -- .14
-------- ------- -------
Total earnings per common share...................... $ 1.68 2.80 1.09
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 38
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
-----------------------------------------------
COMMON STOCK ADDITIONAL
--------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
---------- ------- ---------- --------
(IN THOUSANDS OF DOLLARS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
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
Net earnings........................................ -- -- -- 57,794
Dividends declared -- $.35 per share................ -- -- -- (7,115)
Common stock issued:
Employee stock options............................ 86,218 86 555 --
Convertible debentures............................ 265,900 266 2,917 --
Income tax benefit on exercise of stock options and
convertible debentures............................ -- -- 806 --
---------- ------- ------ -------
Balance, June 30, 1995.............................. 20,438,208 20,438 7,656 204,902
Net earnings........................................ -- -- -- 35,220
Dividends declared -- $.40 per share................ -- -- -- (8,161)
Distribution of common stock of Getchell Gold
Corp.............................................. -- -- -- (31,277)
Common stock issued:
Employee stock options............................ 111,483 111 878 --
Convertible debentures............................ 300,700 301 2,880 --
Purchase and retirement of common shares............ (235,900) (236) -- (5,265)
Income tax benefit on exercise of stock options and
convertible debentures............................ -- -- 2,820 --
---------- ------- ------ -------
Balance, June 30, 1996.............................. 20,614,491 $20,614 14,234 195,419
========== ======= ====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 39
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
------------------------------
1996 1995 1994
-------- ------- -------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings.................................................. $ 35,220 57,794 21,863
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization.............................. 20,955 20,087 18,314
Provision for plant shut-down.............................. 18,256 -- --
Provision for losses on receivables........................ 728 196 550
Deferred income taxes, net of effect of accounting change
in 1994.................................................. (3,350) 6,750 10,270
(Gain) loss on property, plant and equipment............... (642) 133 11
(Gain) loss on disposition of investments and other
assets................................................... (50) 19 286
Undistributed (earnings) loss of affiliates, net of
taxes.................................................... (1,033) (934) 306
Changes in current assets and liabilities, net of effects
of dispositions:
Receivables.............................................. (13,100) (15,453) 469
Inventories.............................................. (13,870) (9,063) (10,439)
Prepaid expenses......................................... (2,582) (2,463) (1,593)
Accounts payable......................................... 3,737 9,231 (2,704)
Accrued expenses and other current liabilities........... 434 8,770 (4,447)
Deferred revenue........................................... 1,642 3,316 (2,852)
Other, net................................................. (1,140) 117 17
Net (earnings) loss from discontinued operations........... 2,829 6,913 (5,000)
-------- ------- -------
Net cash provided by continuing operations................. 48,034 85,413 25,051
Net cash provided by (used in) discontinued operations..... (3,264) 20,958 912
-------- ------- -------
Net cash provided by operating activities............. 44,770 106,371 25,963
-------- ------- -------
Cash flows from investing activities:
Capital expenditures.......................................... (63,837) (28,025) (20,104)
Investment in equity investees, net........................... (14,630) -- 1
Acquisition of investments and other assets................... (177) (1,688) (1,027)
Collection of note receivable................................. 15,000 -- --
Proceeds from sale of property, plant and equipment........... 741 307 175
Proceeds from disposition of investments and other assets..... 630 -- 7,594
Proceeds from sale of subsidiaries............................ -- -- 8,462
-------- ------- -------
Net cash used in investing activities of continuing
operations................................................. (62,273) (29,406) (4,899)
Net cash used in investing activities of discontinued
operations................................................. (3,176) (26,999) (15,818)
-------- ------- -------
Net cash used in investing activities................. (65,449) (56,405) (20,717)
-------- ------- -------
Cash flows from financing activities:
Principal repayments of long-term debt........................ (15,550) (6,512) (11,100)
Dividends (note 9)............................................ (8,161) (8,622) (6,010)
Purchase of common stock...................................... (5,491) -- --
Proceeds from long-term borrowings............................ 11,000 151 1,706
Proceeds from issuance of common stock........................ 3,661 2,567 944
-------- ------- -------
Net cash used in financing activities................. (14,541) (12,416) (14,460)
-------- ------- -------
Net increase (decrease) in cash and cash equivalents............ (35,220) 37,550 (9,214)
Cash and cash equivalents at beginning of year.................. 40,523 2,973 12,187
-------- ------- -------
Cash and cash equivalents at end of year........................ $ 5,303 40,523 2,973
======== ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized....................... $ 9,635 9,572 10,182
======== ======= =======
Income taxes, net.......................................... $ 23,603 20,680 15,581
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 40
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996, 1995 AND 1994
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
First Mississippi Corporation ("the Company") produces chemicals for
industry and agriculture, and related products and services which are marketed
globally. Further descriptions of the Company's products and the relative
significance of its operations are included in this annual report in the
industry segment information data in note 13 to the financial statements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the 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.
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.
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.
Depreciation and Amortization
Depreciation of plant and equipment and depreciable investments is based on
cost and the estimated useful lives (or term of lease, if shorter) of the
separate units of property. 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.
Loan costs are amortized over the terms of related loans using the interest
method.
Income Taxes
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," 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.
F-7
<PAGE> 41
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
Stock Options
All stock options are nonqualified or incentive options and require no
charges against income upon grant or exercise. The tax benefit the Company
receives from dispositions that result in ordinary income to option recipients
is reflected in stockholders' equity.
Cash and Cash Equivalents
The Company considers all short-term investments with original maturities
of three months or less to be cash equivalents.
Investments
Realized gains and losses on investments are determined on the basis of
specific costs and are included in gain (loss) on investments, net. Equity
investments are carried at fair value in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities, ("SFAS No. 115"). Fair value is based on year end market
prices as quoted by the appropriate security exchange. Any significant
unrealized holding gains and losses for available-for-sale securities are
excluded from earnings and reported as a net amount in a separate component of
stockholders' equity until realized. The effect of applying SFAS No. 115 is not
material.
Forward Purchases
The fertilizer segment periodically purchases contracts for the future
delivery of natural gas, its principal raw material, on the New York Mercantile
Exchange ("NYMEX"). 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 sheets.
Contingencies
Estimates of loss contingencies, including environmental liability costs
for remediation, are charged to expense when it is probable an asset has been
impaired or a liability incurred and the amount can be reasonably estimated. If
a potentially material loss contingency is reasonably possible, or probable, but
cannot be estimated, then the nature of the contingency and an estimated range
of possible loss, if determinable and material, are disclosed.
Reclassifications
Certain consolidated financial statement amounts for 1995 and 1994 have
been reclassified for consistent presentation.
2. DISCONTINUED OPERATIONS
On October 20, 1995, the Company distributed to its shareholders its entire
ownership of Getchell Gold Corporation ("Getchell"), formerly known as FirstMiss
Gold Inc. The June 30, 1996 consolidated balance sheet includes a $31,277
reduction of retained earnings in connection with the distribution of Getchell.
Each
F-8
<PAGE> 42
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
First Mississippi shareholder received approximately seven-tenths of a common
share of Getchell for each share of First Mississippi owned.
The net assets and liabilities of the discontinued operations (primarily
Getchell) have been segregated in the consolidated financial statements. The
following is the composition of those net assets and liabilities at June 30,
1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Receivables...................................................... $ -- 1,856
Inventories...................................................... -- 9,554
Prepaid expenses and other current assets........................ 2,651 3,166
Accounts payable................................................. (38) (6,522)
Accrued expenses and other current liabilities................... (3,295) (1,160)
-------- -------
Net current assets (liabilities) of discontinued operations...... $ (682) 6,894
======== =======
Noncurrent assets of discontinued operations..................... $ -- 67,689
======== =======
Long-term liabilities and minority interest of discontinued
operations..................................................... $ -- 9,033
======== =======
</TABLE>
The statements of operations have been reclassified to separate
discontinued and continued operations. Revenues and net earnings (losses) of the
discontinued operations for the years ended June 30, 1996, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Revenues............................................... $17,961 71,617 95,300
======== ======== ========
Earnings (loss) before income taxes.................... (2,118) (17,929) 5,599
Income tax (expense) benefit........................... 750 7,550 (900)
Minority interest...................................... 285 3,466 (1,049)
Cumulative effect of change in accounting principle.... -- -- 1,350
------- ------- -------
Earnings (loss) from discontinued operations, net...... $(1,083) (6,913) 5,000
======= ======= =======
</TABLE>
A pretax loss of $2,700 was recorded in 1996 related to previously
discontinued businesses and is included in loss on disposal of business, net of
applicable income tax benefit of $954, in the accompanying consolidated
financial statements. Such losses resulted from revised estimates of
environmental remediation costs and settlements of operating costs related to
previously discontinued phosphate fertilizer (1982) and oil and gas (1993)
businesses.
3. INVESTMENTS
Investments in affiliated companies accounted for by the equity method were
$37,480 and $21,502, respectively, at June 30, 1996 and 1995. Equity earnings
(losses), net of taxes, were $1,033, $934 and $(306), respectively, for years
ended June 30, 1996, 1995 and 1994.
F-9
<PAGE> 43
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a summary of financial information related to affiliated
companies:
<TABLE>
<CAPTION>
JUNE 30
--------------------
1996 1995
------- ------
<S> <C> <C>
Current assets.................................................. $44,181 36,557
Noncurrent assets............................................... 82,567 48,680
Current liabilities............................................. 15,347 13,301
Noncurrent liabilities.......................................... 17,897 11,854
------- ------
Net equity...................................................... $93,504 60,082
======= ======
</TABLE>
During fiscal year 1996 the Company obtained a 50% interest in both
Arcadian/FirstMiss Fertilizer LLC, an ammonia barge transport company, and
FirstMiss Fertilizer, LP, an ammonia storage terminal facility.
The Company has a 50% ownership interest in Power Sources, Inc. which burns
wood residue and other biomass 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 $33,892 in 1996, $28,726 in 1995 and $33,563 in 1994.
The Company sells raw materials to and purchases production by-products
from Melamine Chemicals, Inc. ("MCI"), a 23.4% owned investment. Sales were
$16,861 in 1996, $12,525 in 1995 and $8,747 in 1994. Purchases were $5,235 in
1996, $5,305 in 1995 and $2,490 in 1994. The MCI investment had a quoted market
value of approximately $11,634 and $11,475, with carrying amounts of $8,153 and
$7,508, at June 30, 1996 and 1995, respectively.
Cash advances to Getchell for the period from July 1, 1995 to October 20,
1995, the spinoff date, were $8,850. At the date of the spinoff, the Company
received a promissory note in the amount of $52,507 from Getchell in settlement
of all prior cash advances. The note bears interest at a rate based on the
London Interbank Offered Rate (6.625% at June 30, 1996). Interest and principal
are due in September, 2000. Subsequent to the spinoff date, the note principal
amount was reduced by a cash repayment of $15,000 and an offset of $13,939
representing settlement of tax attributes utilized by the Company during the
time Getchell was included in the Company's consolidated income tax returns. The
aggregate unpaid principal amount of the note, including accrued interest, of
$24,733 at June 30, 1996 is included in other investments.
4. INTANGIBLE AND OTHER ASSETS
The major classes of intangible and other assets are summarized below:
<TABLE>
<CAPTION>
JUNE 30
------------------
1996 1995
------- ------
<S> <C> <C>
Goodwill.......................................................... $16,868 16,868
Other............................................................. 10,134 9,873
------- ------
27,002 26,741
Less accumulated amortization..................................... 15,598 13,345
------- ------
$11,404 13,396
======= ======
</TABLE>
The net carrying amount of goodwill at June 30, 1996 and 1995 was $9,778
and $10,872, respectively, and is all related to the chemicals segment.
F-10
<PAGE> 44
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Amortization expense related to the above amounted to $1,959 in 1996,
$2,699 in 1995 and $2,640 in 1994.
5. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
JUNE 30
ESTIMATED --------------------
USEFUL LIVES 1996 1995
------------ -------- -------
<S> <C> <C> <C>
Assets owned:
Land and land improvements....................... 10-20 $ 7,082 5,676
Buildings........................................ 20-45 11,879 6,759
Plant facilities and equipment................... 5-15 200,162 180,944
Other facilities and equipment................... 5-12 80,808 72,140
Construction in progress......................... 37,916 7,231
-------- -------
Total assets owned....................... 337,847 272,750
-------- -------
Assets leased:
Land improvements................................ 10-20 509 509
Buildings........................................ 10 216 216
Other facilities and equipment................... 20 8,958 8,958
-------- -------
Total capital leases..................... 9,683 9,683
-------- -------
Total property, plant and equipment...... 347,530 282,433
Less accumulated depreciation and amortization..... 167,706 136,969
-------- -------
Net property, plant and equipment................ $179,824 145,464
======== =======
</TABLE>
Depreciation and amortization expense related to the above, amounted to
$18,996 in 1996, $17,388 in 1995 and $15,674 in 1994.
Interest capitalized amounted to $186 in 1996, $135 in 1995 and $396 in
1994.
On May 21, 1996, the Board of Directors of the Company authorized a plan to
close its aluminum dross processing facility at Millwood, West Virginia, which
was operated by its wholly owned subsidiary Plasma Processing Corporation,
("PPC"). PPC's operations are included in the Company's Combustion, Thermal
Plasma and Other segment. This facility, completed in June 1991, was built to
process aluminum dross using patented thermal plasma technology. The decision to
close the Millwood facility, which operated at a loss since inception, was based
in part on projections that indicated operations were unlikely to be profitable
in the near future. The plan assumes the plant will operate for a portion of the
first quarter of fiscal 1997 to fulfill contractual obligations then cease
operations and be held for disposition by sale if possible. As a result of this
plan, the Company incurred a pretax charge of $18,256 ($11,706 after tax) during
the fourth quarter of fiscal 1996. The charge included write-downs, to reduce
carrying values to estimated net realizable values (estimated fair values less
costs to sell) of $12,271 for property, plant and equipment, $570 for spare
parts, $350 for inventory and $5,065 in accruals for other estimated costs to be
incurred related to the closure. The majority of the accrual represents the
estimated cost of $3,100 in excess of market value to process inventory to meet
contractual obligations and $500 for disposal of unmarketable inventory. In
addition, the accrual includes $525 for severance, $200 for contract
cancellations and $740 in other estimated costs. Excluding the above charge,
operating losses for PPC were approximately $9,000, $8,400 and $5,700 in 1996,
1995 and 1994, respectively.
In September 1996, the Company executed a letter of intent for the sale of
substantially all of PPC's assets. Assets that are not part of the transactions
will be liquidated by the Company. The Company does not
F-11
<PAGE> 45
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
anticipate any material gain or loss related to these dispositions. The carrying
value of PPC's net assets at June 30, 1996, was approximately $6,000.
Although the Company does not have a formal plan or timetable for disposal,
it is also seeking a buyer of its steel melting and production facility operated
by FirstMiss Steel, Inc. The Company has had negotiations with potential buyers,
but the Company is uncertain as to whether a sale of the steel operations to
such potential buyers can be completed on terms acceptable to the Company. The
Company believes it will not incur a material loss if a sale is closed.
6. LONG-TERM DEBT
A summary of long-term debt follows:
<TABLE>
<CAPTION>
JUNE 30
------------------
1996 1995
------- ------
<S> <C> <C>
Unsecured:
9.42% senior notes payable to institutional investors, due in
annual installments of $13,286 through June 2002............. $79,714 93,000
Notes payable under revolving credit facility, due February
1998......................................................... 11,000 --
Other notes..................................................... 1,100 3,078
Secured:
Capital lease obligations, with interest rates at 4.0%, due in
monthly installments through May 2000........................ 2,360 2,703
Other notes..................................................... 269 289
------- ------
94,443 99,470
Less current installments of long-term debt....................... 14,534 15,076
------- ------
Long-term debt, excluding current installments.......... $79,909 84,394
======= ======
</TABLE>
Under loan agreements in effect at June 30, 1996, there were no
compensating balance requirements. The above obligations mature in various
amounts through 2002, including approximately, $14,534 in 1997, $24,915 in 1998,
$14,199 in 1999, $14,144 in 2000 and $13,367 in 2001.
The Company has a bank revolving credit facility totaling $65,000 which is
committed until February 1998. Borrowings under the facility are priced at a
rate based on either the London Interbank Offered Rate, or the prime rate,
contingent on the Company's debt-to-equity ratio. A commitment fee ranging from
.225 to .375 of 1% per annum is charged on the daily average unused commitment
under the revolving credit facility and is also based on the debt-to-equity
ratio. Commitment fees for the years ended June 30, 1996, 1995 and 1994 totaled
$183, $216 and $189, respectively.
The senior notes and bank credit agreements contain various restrictions
related to working capital, funded debt, net worth, fixed charges coverage,
distributions, repurchases of stock and dispositions of assets. At June 30, 1996
and 1995, the Company was in compliance with these covenants.
At June 30, 1996, the fair value of the 9.42% senior notes payable to
institutional investors approximates carrying value due to penalties and fees
which are due in the event of prepayment. The recorded amounts for all other
long-term debt of the Company approximate fair values as well.
Total interest costs incurred for the years ended June 30, 1996, 1995 and
1994 were $9,457, $9,695 and $10,459, respectively.
F-12
<PAGE> 46
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES
The cumulative effect of the change in accounting for income taxes of
continuing operations described in note 1 resulted in a benefit of $2,850 and
was reported as a cumulative effect of a change in accounting principle in the
June 30, 1994 consolidated financial statements.
Total income tax expense (benefit) for the years ended June 30, 1996, 1995
and 1994 was allocated as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
-----------------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Continuing operations................................... $23,550 40,425 11,250
Discontinued operations................................. (1,704) (7,550) 900
Stockholders' equity, for compensation expense for tax
purposes in excess of amounts recognized for financial
reporting purposes.................................... (2,820) (806) (42)
------- ------ ------
$19,026 32,069 12,108
======= ====== ======
</TABLE>
Income tax expense (benefit) differs from the statutory federal rate of 35%
applied to earnings from continuing operations before income taxes, minority
interests and investee earnings (loss) for the years ended June 30, 1996, 1995
and 1994 as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
-----------------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Computed "expected" tax expense......................... $21,198 36,469 8,949
State income taxes, net of federal income tax benefit... 2,090 2,228 1,013
(Increase) decrease in state net operating loss
benefit............................................... (1,442) 1,812 (449)
Loss from operations of foreign subsidiaries............ -- 444 423
Amortization of goodwill................................ 411 392 423
Exempt earnings of Foreign Sales Corporation............ (212) (265) (147)
Increase in net cash surrender value of life
insurance............................................. (324) (254) (232)
Tax provision adjustments for pending Internal Revenue
Service matters....................................... 150 1,275 --
Adjustment to deferred tax assets and liabilities for
enacted change in tax law and rates................... -- -- 502
Increase (decrease) in valuation allowance.............. 1,317 (1,812) 449
Other, net.............................................. 362 136 319
------- ------ ------
Actual tax expense -- continuing operations... $23,550 40,425 11,250
======= ====== ======
</TABLE>
F-13
<PAGE> 47
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Components of income tax expense (credit) are as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
-----------------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Current:
Federal............................................... $24,868 30,179 (597)
State................................................. 2,390 3,386 1,782
Foreign............................................... (358) 110 (205)
------- ------ ------
26,900 33,675 980
------- ------ ------
Deferred:
Federal............................................... (3,984) 6,879 12,449
State................................................. 634 (111) (2,179)
Foreign............................................... -- (18) --
------- ------ ------
(3,350) 6,750 10,270
------- ------ ------
Total:
Federal............................................... $20,884 37,058 11,852
State................................................. 3,024 3,275 (397)
Foreign............................................... (358) 92 (205)
------- ------ ------
$23,550 40,425 11,250
======= ====== ======
</TABLE>
The significant components of deferred income tax expense attributable to
income from continuing operations for the years ended June 30, 1996, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
--------------------------
1996 1995 1994
------- ----- ------
<S> <C> <C> <C>
Deferred tax expense from changes in temporary differences
and the valuation allowance.............................. $(3,350) 6,750 9,768
Adjustment to deferred tax assets and liabilities for
enacted change in tax law and rates...................... -- -- 502
------- ----- ------
$(3,350) 6,750 10,270
======= ===== ======
</TABLE>
F-14
<PAGE> 48
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and the deferred tax liabilities at June 30,
1996 and 1995, are as follows:
<TABLE>
<CAPTION>
JUNE 30
--------------------
1996 1995
-------- -------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful
accounts................................................... $ 448 243
Deferred compensation......................................... 3,178 2,778
Incentive compensation accrual................................ 667 882
Inventory costs............................................... 1,121 617
State net operating loss carryforward......................... 2,687 1,364
Alternative minimum tax credit carryforward................... -- 5,383
Accrued vacation costs........................................ 647 577
Accrued pension costs......................................... 925 791
Other, net.................................................... 4,528 3,785
-------- -------
Total gross deferred tax assets....................... 14,201 16,420
Less: valuation allowance............................. (2,579) (1,262)
-------- -------
Net deferred tax assets............................... 11,622 15,158
-------- -------
Deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation............................................... (13,036) (20,864)
Investment in affiliated companies, principally due to
undistributed earnings..................................... (12,946) (12,946)
State income taxes............................................ (2,205) (1,263)
-------- -------
Total gross deferred tax liabilities.................. (28,187) (35,073)
-------- -------
Net deferred tax liability............................ $(16,565) (19,915)
======== =======
</TABLE>
The net deferred tax liability at June 30, 1996 and 1995, consists of a
long-term deferred tax liability of $19,082 and $23,377, respectively, and a
current deferred tax asset of $2,517 and $3,462, respectively. The current
deferred tax asset is included in prepaid expenses and other current assets in
the consolidated balance sheets.
The valuation allowance is related to certain state net operating losses,
which the Company believes are less than likely to be recognized. The decrease
in the valuation allowance for the year ended June 30, 1995 is attributable to a
reduction in state net operating loss carryforwards for states where the Company
is no longer required to file income tax returns. Subsequently recognized tax
benefits relating to the 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 taxable income and tax planning strategies in making this assessment.
Based on 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 benefit of these deductible differences, net of the existing
valuation allowance at June 30, 1996.
Refundable income taxes of $6,020 and $3,236 at June 30, 1996 and 1995,
respectively, are included in other current receivables in the accompanying
consolidated financial statements.
F-15
<PAGE> 49
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's federal income tax returns have been examined through June
30, 1992, and all years prior to June 30, 1989 are closed. Federal income tax
returns for the years ended June 30, 1993 and 1994 are currently under
examination. Issues relating to the years ended June 30, 1989 through June 30,
1992 are being contested through various stages of administrative appeal. In
addition, the Company has various state income tax returns in the process of
examination or administrative appeal. Management believes that adequate
provision has been made for any adjustments which might be assessed for open
years through June 30, 1996.
Prior to the spinoff, the Company filed a consolidated federal income tax
return which included Getchell. In accordance with a Tax Sharing Agreement dated
October 1, 1987 between the Company and Getchell, Getchell recomputed its income
tax provision each year on a separate return basis and paid to the Company
amounts approximating the federal income taxes Getchell would have paid if
Getchell filed an independent consolidated return. The Tax Sharing Agreement
also applied to certain state and franchise tax returns which the Company filed
on a combined or consolidated basis. Based on the June 30, 1995 income tax
returns, Getchell had approximately $19,472 of unused tax assets which the
Company was required to reimburse under the terms of the Tax Sharing Agreement.
Prior to the distribution of Getchell to Company shareholders, the Company and
Getchell negotiated a settlement of $13,939 in cancellation of the Tax Sharing
Agreement.
8. EMPLOYEE BENEFIT AND INCENTIVE PLANS
The Company has a noncontributory defined benefit pension plan 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 this plan for the years ended June 30, 1996,
1995 and 1994, included the following components:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
---------------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Service cost.............................................. $ 2,055 1,987 1,876
Interest cost............................................. 1,807 1,697 1,503
Actual return on plan assets.............................. (3,317) (4,478) (481)
Net amortization and deferral............................. 854 2,358 (1,697)
------- ------ ------
Net annual pension expense................................ $ 1,399 1,564 1,201
======= ====== ======
</TABLE>
The assumptions used in calculating the expense for 1996, 1995 and 1994
included a discount rate of 7.75%, a rate of increase in compensation levels of
4%, 4% and 4.5%, respectively, and a 9% expected long-term rate of return on
assets. Net annual pension expense included above and allocated to discontinued
operations was $180, $385 and $343 for 1996, 1995 and 1994, respectively. Plan
assets are invested primarily in equity securities and U.S. government and
corporate bonds.
F-16
<PAGE> 50
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the funded status of the plan at June 30,
1996 and 1995:
<TABLE>
<CAPTION>
JUNE 30
------------------
1996 1995
------- ------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations...................................... $19,300 15,974
======= ======
Accumulated benefit obligations................................. $22,401 18,453
======= ======
Projected benefit obligation...................................... $30,838 25,048
Plan assets at fair value......................................... 27,947 25,257
------- ------
Plan assets in excess of (less than) projected benefit
obligation...................................................... (2,891) 209
Unrecognized net gain from past experience........................ (730) (3,030)
Unrecognized prior service cost................................... 1,077 1,159
Unrecognized transition credit, net............................... (2,634) (2,947)
------- ------
Pension liability....................................... $(5,178) (4,609)
======= ======
</TABLE>
The Company also has a nonqualified 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, 1996 and 1995, relating to this unfunded plan was
$1,177 and $933, respectively. Net annual pension expense for this plan was $245
in 1996, $187 in 1995 and $82 in 1994; including expenses allocated to
discontinued operations for those years of $29, $6 and $0, respectively.
The Company has a contributory 401(k) savings plan and an employee stock
ownership plan, both of which cover substantially all eligible employees who
have completed six months of service. Total expense under the plans amounted to
approximately $1,568 in 1996, $1,396 in 1995 and $1,195 in 1994. These plans and
the pension plan invest in the Company's stock. The total number of shares held
by the plans at June 30, 1996 and 1995, was approximately 357,000 and 337,000,
respectively.
F-17
<PAGE> 51
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
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, 1996,
858,150 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, 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
Options granted............................. 63,600 15.06 1,000 21.31
Options exercised........................... (102,400) 9.77 (172,200) 12.04
-------- ------ -------- ------
Balance, June 30, 1995........................ 152,800 11.87 456,000 12.43
Options granted before spinoff.............. 93,600 32.81 -- --
Options exercised before spinoff............ (123,400) 11.47 (247,200) 10.80
Option conversion adjustment*............... 75,034 -- 127,368 --
Options granted after spinoff............... 123,200 23.21 -- --
Options exercised after spinoff............. (483) 9.36 -- --
Options forfeited........................... (550) 23.13 -- --
-------- ------ -------- ------
Balance, June 30, 1996........................ 320,201 $19.71 336,168 $ 8.92
======== ====== ======== ======
Exercisable, June 30, 1996.................... 320,201 336,168
======== ========
</TABLE>
- ---------------
* The number of shares of common stock underlying outstanding debentures,
debenture options and nonqualifying stock options, as well as stock option
prices, were adjusted to reflect the distribution value (note 2) of the
Getchell shares. This adjustment increased the number of shares underlying
the outstanding awards and reduced the exercise prices by a factor of 1.61.
9. STOCKHOLDERS' EQUITY
Earnings per share calculations are based on the weighted average number of
common shares and common share equivalents outstanding during each year,
20,980,439 in 1996, 20,632,383 in 1995 and 20,126,093 in 1994.
In connection with the Shareholder Rights Plan adopted by the Company on
February 27, 1996, preferred stock purchase rights were distributed to
stockholders and are deemed to be attached to the outstanding shares of common
stock of the Company. Under certain conditions, each right may be exercised to
purchase one one-hundredth ( 1/100) of a share of a new series of preferred
stock, at an exercise price of $100 (subject to adjustment). The rights, which
do not have voting rights, expire in 2006 and may be redeemed by the Company at
a price of $0.01 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 10% or more owners, which rights are voided) will
entitle its holder to purchase shares of common stock with a value of twice the
then current exercise price.
F-18
<PAGE> 52
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company elected to accelerate dividend payments beginning in fiscal
year 1995. As a result, five dividend payments were made versus the usual four
during that particular year.
10. 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 for
all capital leases and those operating leases with initial or remaining
noncancelable terms in excess of one year, as of June 30, 1996:
<TABLE>
<CAPTION>
YEARS ENDING OPERATING CAPITAL
JUNE 30 LEASES LEASES
------------------------------------------------- --------- -------
<S> <C> <C>
1997............................................. $ 1,845 641
1998............................................. 1,659 641
1999............................................. 1,108 641
2000............................................. 736 632
2001............................................. 531 --
Later years...................................... 517 --
------- -------
Total minimum payments required.................. $ 6,396 2,555
=======
Less imputed interest............................ 195
-------
$ 2,360
=======
</TABLE>
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 $282 in 1996, $302 in 1995 and $258 in
1994), was approximately $4,634 in 1996, $5,087 in 1995 and $4,770 in 1994. 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 $6,649 at
June 30, 1996. Total purchases under this agreement were $17,860 in 1996,
$24,542 in 1995 and $13,989 in 1994. The present value of take-or-pay
obligations at June 30, 1996 was $6,283.
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
accrues for anticipated costs associated with investigatory and remediation
efforts relating to the environment. At June 30, 1996 the Company's accrued
liability for these matters totaled $1,500.
At June 30, 1996, the Company provided financial guarantees related to
discontinued coal and gold operations of $17,100 and $12,000, respectively. The
$12,000 guarantee related to gold operations was canceled in August 1996.
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 consolidated financial
statements.
F-19
<PAGE> 53
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. FORWARD PURCHASES
The key raw material in the manufacturing of anhydrous ammonia is natural
gas, which is typically purchased for delivery at market prices under short-term
contracts. To secure fixed prices for part of its natural gas requirements, the
Company periodically contracts for the future purchase of natural gas on the
NYMEX. Increases or decreases in the fair market value of the NYMEX contracts
generally offset changes in spot market prices. These activities have been
designated as hedging activities and are accounted for as such. At June 30,
1996, the Company had no natural gas future purchase contracts in place. At June
30, 1995, the net unrealized losses from these contracts was $363.
12. INTEREST AND OTHER INCOME
Interest and other income (expense) items are as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
--------------------------
1996 1995 1994
------ ----- -----
<S> <C> <C> <C>
Interest income............................................ $4,707 4,306 1,924
Royalty, license, rental and fee income (expense).......... 496 (31) 1,540
Gain (loss) on disposition of noncurrent assets............ 708 242 (292)
Other...................................................... (127) 778 158
------ ----- -----
$5,784 5,295 3,330
====== ===== =====
</TABLE>
13. INDUSTRY SEGMENT INFORMATION
As of June 30, 1996, the Company operated principally in the following
industry segments: Chemicals, Fertilizer 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 new products and production processes for specialty chemicals.
Operations in the fertilizer segment involve the sale of produced and purchased
urea and anhydrous ammonia. The combustion, thermal plasma and other segment
develops, markets and utilizes proprietary combustion and thermal plasma
equipment and services for environmental applications and manufacturing. At June
30, 1996, the classification Combustion, Thermal Plasma and Other, includes the
operations of Plasma Energy, Callidus Technologies, Plasma Processing, and
FirstMiss Steel.
The chemicals segment had unaffiliated major customer sales of $61,773,
$68,066 and $42,512 in 1996, 1995 and 1994, respectively.
The following is a breakdown by industry segment of the Company's
consolidated financial statements at June 30, 1996, 1995 and 1994, and for each
of the years then ended:
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Chemicals.......................................... $227,837 209,472 161,045
Fertilizer......................................... 224,390 239,549 163,984
Combustion, Thermal Plasma and Other............... 142,710 122,249 88,046
Transfers between business segments:
Fertilizer......................................... 11,280 10,570 9,007
Combustion, Thermal Plasma and Other............... 812 -- --
Intercompany eliminations.......................... (12,092) (10,570) (9,007)
-------- ------- -------
Total...................................... $594,937 571,270 413,075
======== ======= =======
</TABLE>
F-20
<PAGE> 54
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Operating profit (loss) before income taxes, investee
earnings (loss) and cumulative effect of change in
accounting principle:
Chemicals.......................................... $ 44,058 40,019 30,295
Fertilizer......................................... 65,838 86,292 24,760
Combustion, Thermal Plasma and Other............... (29,612) (6,203) (12,763)
-------- ------- -------
80,284 120,108 42,292
Unallocated corporate expenses....................... (15,015) (10,661) (8,435)
Interest expense, net................................ (4,563) (5,256) (8,139)
Other income (expense), net.......................... (140) 7 (149)
-------- ------- -------
Total...................................... $ 60,566 104,198 25,569
======== ======= =======
Depreciation and amortization:
Chemicals.......................................... $ 12,888 11,577 10,723
Fertilizer......................................... 2,745 2,763 2,552
Combustion, Thermal Plasma and Other............... 4,898 5,298 4,570
Corporate.......................................... 424 449 469
-------- ------- -------
Total...................................... $ 20,955 20,087 18,314
======== ======= =======
Identifiable assets:
Chemicals.......................................... $178,381 150,199 132,739
Fertilizer......................................... 96,341 49,195 44,794
Combustion, Thermal Plasma and Other............... 104,723 104,726 86,043
-------- ------- -------
379,445 304,120 263,576
Corporate assets and investments..................... 57,863 66,014 30,099
Discontinued operations.............................. -- 74,583 75,722
-------- ------- -------
Total...................................... $437,308 444,717 369,397
======== ======= =======
Capital expenditures:
Chemicals.......................................... $ 30,032 19,460 11,735
Fertilizer......................................... 27,928 1,865 329
Combustion, Thermal Plasma and Other............... 5,417 6,384 7,357
Corporate.......................................... 460 316 683
-------- ------- -------
Total...................................... $ 63,837 28,025 20,104
======== ======= =======
Export sales to unaffiliated customers:
North, Central, and South America.................. $ 8,331 9,301 5,134
Europe and Asia.................................... 55,703 36,828 23,790
Africa and Australia............................... 837 189 8,194
-------- ------- -------
Total...................................... $ 64,871 46,318 37,118
======== ======= =======
</TABLE>
Total segment research and development expenses were $6,278 in 1996, $7,227
in 1995 and $5,401 in 1994. Certain corporate expenses, primarily those related
to the overall management of the Company, were not allocated to the operating
segments.
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 and investments are principally cash and
short-term investments, nontrade receivables and certain other investments.
F-21
<PAGE> 55
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 diversified, thereby reducing
potential credit risk, and that adequate allowances are maintained for any
uncollectible trade receivables.
The Company has revenue-producing operations in foreign countries. These
operations and related foreign currency translation adjustments are not
material.
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data follow:
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------- YEAR ENDED
SEPTEMBER 30 DECEMBER 31 MARCH 31 JUNE 30 JUNE 30
------------ ----------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
1996:
Sales.................................... $142,230 142,339 156,792 153,576 594,937
======== ========= ======= ======= ========
Gross profit............................. $ 39,603 40,600 35,752 34,461 150,416
======== ========= ======= ======= ========
Net earnings (loss) from continuing
operations............................ $ 13,563 15,158 11,618 (2,290) 38,049
======== ========= ======= ======= ========
Net earnings (loss)...................... $ 12,480 15,158 11,618 (4,036) 35,220
======== ========= ======= ======= ========
Earnings (loss) per share:
Continuing operations................. $ .64 .72 .56 (.11) 1.81
======== ========= ======= ======= ========
Net earnings (loss)................... $ .59 .72 .56 (.19) 1.68
======== ========= ======= ======= ========
1995:
Sales.................................... $134,954 126,125 157,825 152,366 571,270
======== ========= ======= ======= ========
Gross profit............................. $ 38,208 37,513 45,059 45,554 166,334
======== ========= ======= ======= ========
Net earnings from continuing
operations............................ $ 14,457 13,932 18,522 17,796 64,707
======== ========= ======= ======= ========
Net earnings............................. $ 15,023 12,942 19,654 10,175 57,794
======== ========= ======= ======= ========
Earnings per share:
Continuing operations................. $ .71 .68 .89 .86 3.14
======== ========= ======= ======= ========
Net earnings.......................... $ .74 .63 .95 .49 2.80
======== ========= ======= ======= ========
</TABLE>
The above quarterly earnings per share calculations are based on the
weighted average shares outstanding during each quarter whereas the annual
earnings per share calculations are based on the weighted average shares
outstanding during the year.
Net earnings declined in the third quarter of fiscal 1996 primarily due to
lower margins in fertilizer operations, and in the fourth quarter of fiscal 1996
due to losses related to the shutdown of PPC's operations (see Note 5).
Net earnings declined in the fourth quarter of fiscal 1995 due to losses at
discontinued gold operations resulting from impairment and abandonment charges.
15. SUBSEQUENT EVENT
On August 27, 1996, the Company entered into a definitive merger agreement
with Mississippi Chemical Corporation ("MCC"), under which MCC will acquire all
the fertilizer interests of the Company. The transaction will occur in two
steps: first, the spinoff to the Company's shareholders of the Company's
chemicals and related businesses in the form of a new publicly traded company;
and second, the merger of the Company's fertilizer operations with a subsidiary
of MCC. The spinoff and the merger are intended to be tax
F-22
<PAGE> 56
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
free. In the merger, the Company's stockholders will receive, subject to some
adjustment, approximately 6,900,000 shares of MCC stock, or 0.335 shares of MCC
stock for each share of the Company's stock. At closing the Company's debt will
be refinanced and increased to approximately $150,000. The debt will become
MCC's in the merger. An estimated loss of approximately $6,000 will be incurred
in the refinancing. After this refinancing and the payment of certain expenses,
cash on hand, currently estimated at approximately $50,000, will be transferred
to the spun-off chemical company, which will be essentially debt free when spun
off. The transaction is subject to, among other things, approval by the
stockholders of both the Company and MCC and customary regulatory approvals. It
is expected that the transaction will be consummated by December 31, 1996.
Unaudited condensed pro forma financial information showing the estimated
impact of these transactions is as follows:
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL (UNAUDITED)
---------- -----------
<S> <C> <C>
June 30, 1996:
Current assets.............................................. $ 181,104 203,709
Investments and other assets................................ 76,380 52,447
Net property, plant and equipment........................... 179,824 139,647
--------- -------
$ 437,308 395,803
========= =======
Current liabilities......................................... $ 94,186 61,409
Long-term debt and other liabilities........................ 112,855 31,855
Equity...................................................... 230,267 302,539
--------- -------
$ 437,308 395,803
========= =======
Year ended June 30, 1996:
Revenues.................................................... $ 600,721 376,704
========= =======
Earnings from continuing operations......................... $ 38,049 1,978
========= =======
Earnings per common share from continuing operations........ $ 1.81 .09
========= =======
</TABLE>
16. VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
OTHER
BALANCE AT CHARGED TO ADDITIONS BALANCE
BEGINNING COSTS AND (DEDUCTIONS), AT END
OF YEAR EXPENSES NET OF YEAR
---------- ---------- ------------- -------
<S> <C> <C> <C> <C>
Year ended June 30, 1996:
Allowance for doubtful accounts....... $ 1,029 728 (744) 1,013
Allowance for restructuring costs..... $ 582 -- -- 582
Year ended June 30, 1995:
Allowance for doubtful accounts....... $ 721 196 112 1,029
Allowance for restructuring costs..... $ 2,460 -- (1,878) 582
Year ended June 30, 1994:
Allowance for doubtful accounts....... $ 4,565 561 (4,405) 721
Allowance for restructuring costs..... $ 21,535 -- (19,075) 2,460
</TABLE>
F-23
<PAGE> 57
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
17. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments not discussed
in note 6 approximate their fair values.
18. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Details of accrued expenses and other current liabilities are as follows:
<TABLE>
<CAPTION>
JUNE 30
-------------------
1996 1995
-------- -------
<S> <C> <C>
Accrued costs for exiting aluminum business (note 5)...................... $ 5,065 --
Other accruals, individually less than 5% of current liabilities.......... 21,179 19,928
-------- ------
$ 26,244 19,928
======== ======
</TABLE>
F-24
