<PAGE> 1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Quarter Ended September 30, 1996
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number: 1-7488
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First Mississippi Corporation
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(Exact name of registrant as specified in its charter)
Mississippi 64-0354930
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 North Street, Jackson, MS 39202-3095
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(Address of principal (Zip Code)
executive offices)
Registrant's Telephone Number, including Area Code: 601/948-7550
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Indicate by check mark whether the registrant 1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Class Outstanding at October 31, 1996
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Common Stock, $1 Par Value 20,621,736
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Part I. Financial Information
Item 1. Financial Statements
First Mississippi Corporation
Consolidated Balance Sheets (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Sept. 30 June 30
1996 1996
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<S> <C> <C>
Assets:
Current assets
Cash and short-term investments $ 11,268 5,303
Accounts receivable 93,542 88,574
Inventories:
Finished products 28,510 25,822
Work in process 24,904 28,494
Raw materials and supplies 24,996 22,047
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Total inventories 78,410 76,363
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Prepaid expenses and other current assets 10,372 10,864
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Total current assets 193,592 181,104
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Investments and other assets 76,955 76,380
Property, plant and equipment 363,864 347,530
Less: accumulated depreciation,
depletion and amortization 172,877 167,706
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190,987 179,824
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$ 461,534 437,308
========= =======
Liabilities and Stockholders' Equity:
Current liabilities
Current instalments of long-term debt $ 14,426 14,534
Deferred revenue 4,560 2,097
Accounts payable 57,052 50,629
Accrued expenses and other current liabilities 30,388 26,244
Net current liabilities of discontinued operations 724 682
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Total current liabilities 107,150 94,186
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Long-term debt 76,732 79,909
Deferred revenue and other liabilities 14,254 13,864
Deferred taxes 21,190 19,082
Stockholders' equity:
Common stock 20,614 20,614
Additional paid-in capital 15,446 14,234
Retained earnings 206,148 195,419
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Total stockholders' equity 242,208 230,267
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$ 461,534 437,308
========= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
First Mississippi Corporation
Consolidated Statements of Operations (Unaudited)
(In Thousands of Dollars and Shares, Except Per Share Amounts)
<TABLE>
<CAPTION>
3 Months ended
Sept. 30
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1996 1995
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<S> <C> <C>
Revenues:
Sales $ 154,207 142,230
Interest and other income 4,291 2,368
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158,498 144,598
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Costs and expenses:
Cost of sales 118,214 102,627
General, selling and
administrative expenses 16,634 16,039
Other operating expenses 1,353 1,643
Interest expense 1,766 2,369
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137,967 122,678
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Earnings before income taxes 20,531 21,920
Income tax expense 8,000 8,550
Equity in net earnings of equity investees 258 193
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Earnings from continuing operations $ 12,789 13,563
Earnings (loss) from discontinued operations,net - (1,083)
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Net earnings $ 12,789 12,480
========= =======
Earnings (loss) per common share:
Continuing operations $ 0.61 0.64
Discontinued operations - (0.05)
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Earnings per common share $ 0.61 0.59
========= =======
Average shares outstanding 20,894 21,048
Cash dividend declared
per share $ 0.1000 0.1000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
First Mississippi Corporation
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Sept. 30
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1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 12,789 12,480
Adjustments to reconcile earnings to
net cash provided by operating activities:
Depreciation, depletion and amortization 5,541 5,618
Deferred taxes and other items 2,153 1,020
Change in current assets and liabilities, net
of effects of dispositions 7,064 6,045
Net loss of discontinued operations - 1,083
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Net cash provided by operating activities 27,547 26,246
Net cash provided by (used in) discontinued operations 2 (2,973)
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Net cash provided by operations 27,549 23,273
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Cash flows from investing activities:
Capital expenditures (16,216) (4,783)
Investment in equity investees, net - (3,664)
Other investing activities (21) 92
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Net cash used in investing activities of continuing operations (16,237) (8,355)
Net cash used in investing activities of discontinued operations - (3,176)
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Net cash used in investing activities (16,237) (11,531)
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Cash flows from financing activities:
Principal repayments of long-term debt (3,286) (270)
Dividends (2,061) (2,057)
Proceeds from issuance of common stock - 1,302
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Net cash used in financing activities (5,347) (1,025)
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Net increase in cash and cash equivalents 5,965 10,717
Cash and cash equivalents at beginning of period 5,303 40,523
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Cash and cash equivalents at end of period $ 11,268 51,240
========= ======
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest , net of amounts capitalized $ 1,776 2,658
========= ======
Income taxes (refunds), net $ (4,845) 99
========= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
First Mississippi Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited. In Thousands of Dollars)
NOTE 1 - GENERAL
The financial statements included herein are unaudited and have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting and Securities and Exchange Commission regulations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, the financial statements reflect all adjustments (of a
normal and recurring nature) which are necessary to present fairly the
financial position, results of operations and cash flows for the interim
periods. These financial statements should be read in conjunction with the
Annual Report of the Company and Form 10-K for the year ended June 30, 1996.
NOTE 2 - DISCONTINUED OPERATIONS
On September 24, 1995, the board of directors of First Mississippi
Corporation ("the Company") approved the distribution of its 14,750,000 common
shares of Getchell Gold Corporation to its shareholders through a spinoff. The
distribution occurred October 20, 1995.
The revenues and net loss of these discontinued operations for the three
months ended September 30, 1995, were as follows:
<TABLE>
<CAPTION>
3 Months Ended
September 30
1995
--------------
<S> <C>
Revenues $ 17,961
========
Loss before taxes (2,118)
Income tax benefit 750
Minority interest 285
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Loss from discontinued operations, net $ (1,083)
========
</TABLE>
<PAGE> 6
NOTE 3 - DISPOSITION OF FERTILIZER ASSETS
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 other non-fertilizer businesses in the form of a new publicly
traded company named ChemFirst Inc.; 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 free. In the merger, the Company's stockholders will receive,
subject to some adjustment, approximately 6.9 million shares of MCC stock, or
0.335 shares of MCC stock for each share of the Company's stock. Just prior to
closing the Company's debt will be refinanced and increased to approximately
$150,000. 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
company to be spun-off, 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.
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
During the fourth quarter of 1996, the Company recorded $13,191 in asset
write-downs and $5,065 in accruals related to the closure of aluminum dross
processing operations. Through September 30, 1996, the Company had recorded
$1,941 in cash costs against this reserve, including $1,312 to meet contractual
obligations, $322 for severance and $307 in other costs.
In September 1996, the Company executed a letter of intent for the sale of
substantially all of Plasma Processing Corporation's ("PPC") assets. The letter
of intent expired on November 1, 1996; however, the Company continues to
negotiate with the party to the letter of intent. Assets that are not part of
this transaction will be liquidated by the Company. Based on the status of
current negotiations, the Company does not anticipate any material gain or loss
related to these dispositions. The book value of PPC's net assets at September
30, 1996, was $4,900.
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Item 2. Management's Discussion and Analysis of Operations
Results of Operations
Three months ended September 30, 1996 compared to the three months ended
September 30, 1995
CONSOLIDATED RESULTS
Earnings from continuing operations for the three months ended September
30, 1996, were down 6% versus the same period last year, despite an 8% increase
in sales, as the gross margin percentage declined from 28% to 23% due to lower
fertilizer unit margins. Prior year results of discontinued gold operations
were a net loss of $1,083.
SEGMENT OPERATIONS
First Mississippi Corporation
Industry Segment Information
(In Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months Ended
September 30
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1996 1995
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<S> <C> <C>
Sales
Chemicals $ 64,351 54,344
Fertilizer 58,775 53,485
Combustion, Thermal Plasma and Other 31,081 34,401
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Total 154,207 142,230
========= =========
Operating profit (loss) before income taxes
Chemicals 12,881 10,457
Fertilizer 14,020 18,662
Combustion, Thermal Plasma and Other (937) (802)
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25,964 28,317
Unallocated corporate expenses (4,136) (5,685)
Interest income (expense), net (1,257) (685)
Other income (expense), net (40) (27)
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Total $ 20,531 21,920
========= =========
</TABLE>
<PAGE> 8
Chemicals pretax operating results were up 23% over the same period in the
prior year due to license proceeds from an electronic chemicals competitor and
an 18% increase in sales. Sales grew on increased aniline, custom manufacturing
and HDA(TM)- based electronic chemicals volume.
Fertilizer pretax operating profits were down 25% on higher production
cost and lower average fertilizer prices. Production cost increased on a 52%
increase in natural gas cost. Sales rose 10%, despite the lower prices, on a
19% increase in volume due to higher brokerage sales and increased AMPRO
ammonia production, which was up 20% over last year due to a 15-day outage last
year.
Combustion, Thermal Plasma and Other pretax operating losses increased
slightly as lower Steel and Combustion results more than offset the elimination
of aluminum dross processing losses following the shutdown of operations in the
fourth quarter of the prior year. Sales decreased 10% on lower Steel and Thermal
Plasma volume.
Unallocated corporate expenses were down 27%, primarily due to last year's
higher long-term incentives tied to stock price appreciation. Net interest
expense increased over the prior year due to lower interest income.
CAPITAL RESOURCES AND LIQUIDITY
Cash flow from operations for the three months ended September 30, 1996,
was up 18% over the same period in the prior year which included cash used in
discontinued gold operations. Investing activities increased over the prior year
due to an $8,400 increase in Chemicals capital expenditures. Financing
activities in the current year included a $3,000 reduction in borrowings under
the Company's long-term revolving credit facility.
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Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedules
(b) Reports on Form 8-K
Registrant filed a current Report on Form 8-K on September 9,
1996, regarding the definitive merger agreement of its
fertilizer operations with Mississippi Chemical Corporation.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST MISSISSIPPI CORPORATION
/s/ J. Kelley Williams
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Date J. Kelley Williams
Chairman and Chief Executive Officer
/s/ R. Michael Summerford
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Date R. Michael Summerford
Vice President & Chief Financial Officer
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EXHIBIT INDEX
EXHIBITS
27 - Financial Data Schedules
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 11,268
<SECURITIES> 0
<RECEIVABLES> 94,699
<ALLOWANCES> 1,157
<INVENTORY> 78,410
<CURRENT-ASSETS> 193,592
<PP&E> 363,864
<DEPRECIATION> 172,877
<TOTAL-ASSETS> 461,534
<CURRENT-LIABILITIES> 107,150
<BONDS> 76,732
0
0
<COMMON> 20,614
<OTHER-SE> 221,594
<TOTAL-LIABILITY-AND-EQUITY> 461,534
<SALES> 154,207
<TOTAL-REVENUES> 158,498
<CGS> 118,214
<TOTAL-COSTS> 118,214
<OTHER-EXPENSES> 1,353
<LOSS-PROVISION> 136
<INTEREST-EXPENSE> 1,766
<INCOME-PRETAX> 20,531
<INCOME-TAX> 8,000
<INCOME-CONTINUING> 12,789
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,789
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0.61
</TABLE>
