MISSISSIPPI CHEMICAL CORP /MS/, S-1/A, 1994-08-17

MISSISSIPPI CHEMICAL CORP /MS/
S-1/A, 1994-08-17
AGRICULTURAL CHEMICALS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 17, 1994
REGISTRATION NO. 33-54573
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MISSISSIPPI CHEMICAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
MISSISSIPPI 2898 64-0292638
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
P.O. BOX 388
YAZOO CITY, MISSISSIPPI 39194
(601) 746-4131
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
ROBERT E. JONES
VICE PRESIDENT AND GENERAL COUNSEL
MISSISSIPPI CHEMICAL CORPORATION
P.O. BOX 388
YAZOO CITY, MISSISSIPPI 39194
(601) 746-4131
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
FREDERICK W. AXLEY, P.C. LEONARD M. LEIMAN, ESQ.
MCDERMOTT, WILL & EMERY FULBRIGHT & JAWORSKI L.L.P.
227 WEST MONROE STREET 666 FIFTH AVENUE
CHICAGO, ILLINOIS 60606-5096 NEW YORK, NEW YORK 10103
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock (par value 5,800,000
$.01 per share)................. shares $15.50 $89,900,000 $31,000(3)
Preferred Share Purchase Rights
which are attached to and trade 5,800,000
with the Common Stock........... Rights -- -- --
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</TABLE>
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(1) Includes 720,000 shares subject to an over-allotment option granted to the
Underwriters.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).

(3) $29,504 of this fee has been previously paid.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED AUGUST 17, 1994

5,080,000 SHARES

LOGO

COMMON STOCK
($.01 PAR VALUE)

Of the 5,080,000 shares of Common Stock offered hereby, 3,200,000 are being
issued and sold by the Company and 1,880,000 are being sold by the Selling
Shareholders. The Company will not receive any of the proceeds from the sale of
shares of Common Stock by the Selling Shareholders. See "Principal and Selling
Shareholders." It is currently estimated that the public offering price will be
between $13.50 and $15.50 per share. See "Underwriting" for information
relating to the method of determining the public offering price.

Prior to this offering there has been no established trading market for the
Common Stock. Application has been made to approve the Common Stock for
quotation in the Nasdaq Stock Market's National Market (the "Nasdaq National
Market") under the symbol "MISS."

FOR INFORMATION CONCERNING CERTAIN FACTORS RELATING TO THIS OFFERING, SEE
"INVESTMENT CONSIDERATIONS."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO COMMISSIONS PROCEEDS TO SELLING
PUBLIC (1) COMPANY (2) SHAREHOLDERS
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<S> <C> <C> <C> <C>
Per Share......... $ $ $ $
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Total (3)......... $ $ $ $
</TABLE>
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(1) See "Underwriting" for indemnification arrangements.

(2) Before deducting estimated expenses of $500,000 payable by the Company.

(3) The Company and certain Selling Shareholders have granted to the
Underwriters a 30-day option to purchase up to an additional 720,000 shares
of Common Stock at the Price to Public, less the Underwriting Discounts and
Commissions shown above, solely to cover over-allotments, if any. If this
option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company and Proceeds to Selling
Shareholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."

The shares of Common Stock offered hereby are being offered by the several
Underwriters named herein, subject to prior sale and acceptance by the
Underwriters and subject to their right to reject any order in whole or in
part. It is expected that the Common Stock will be available for delivery on or
about August , 1994 at the offices of Wertheim Schroder & Co. Incorporated,
New York, New York.

Wertheim Schroder & Co. The Robinson-Humphrey
INCORPORATED Company, Inc.

August , 1994
<PAGE>

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY SECURITY OTHER THAN THE SECURITIES COVERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH AN OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS
FURNISHED OR THE DATE HEREOF.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-1 (together with all
amendments, schedules and exhibits thereto, the "Registration Statement") under
the Securities Act with respect to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports, proxy statements and other information with the Commission. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement. Statements made in
this Prospectus as to the contents of any contract, agreement or other document
are not necessarily complete; with respect to each such contract, agreement or
other document filed as an exhibit to the Registration Statement, reference is
made to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference. Reports and proxy and other information statements filed by the
Company and the Registration Statement and the exhibits thereto may be
inspected, without charge, at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661, and 7 World
Trade Center, Suite 1300, New York, NY 10048. Copies of such material can also
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................ 3
Investment Considerations......... 7
The Company....................... 10
The Reorganization................ 11
Disposition of NSI................ 12
Use of Proceeds................... 13
Dilution.......................... 14
Capitalization.................... 15
Dividend Policy................... 15
Selected Financial Data........... 16
Pro Forma Balance Sheet........... 18
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 20
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fertilizer Industry Overview........ 27
Business............................ 29
Management.......................... 40
Certain Relationships and Related
Transactions....................... 45
Principal and Selling Shareholders.. 47
Description of Capital Stock........ 49
Shares Eligible for Future Sale..... 52
Underwriting........................ 53
Legal Matters....................... 54
Experts............................. 54
Index to Financial Statements....... F-1
</TABLE>

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto, appearing elsewhere
in this Prospectus. Except as otherwise noted, all information in this
Prospectus assumes no exercise of the Underwriters' over-allotment option.
Fiscal year references refer to years ending June 30.

THE COMPANY

Mississippi Chemical Corporation (the "Company") is a major producer and
supplier of nitrogen fertilizers in the southern United States, and believes it
is one of the nation's lowest-cost nitrogen fertilizer producers. The Company
also manufactures phosphate and potash fertilizers, making it a full product
line fertilizer supplier. The Company sells its nitrogen and potash fertilizer
products to farmers, fertilizer dealers and distributors for ultimate use
primarily in the southern farming regions of the United States and areas served
by the Mississippi River system. The Company's phosphate fertilizers are sold
primarily in international markets.

Nitrogen, phosphorous (contained in phosphate fertilizer) and potassium
(contained in potash fertilizer) constitute the three major nutrients required
for plant growth. Nitrogen is an essential nutrient for most plants.
Phosphorous aids in the photosynthesis process, and potassium is an important
regulator of the physiological functions of plants. These elements are all
naturally present in soil but need to be replaced through the use of
fertilizers as crops exhaust them. There are no viable substitutes for
nitrogen, phosphate or potash fertilizers in the development and maintenance of
high-yield crops.

Nitrogen Fertilizer. The Company produces nitrogen fertilizers at facilities
located in Yazoo City, Mississippi, and Donaldsonville, Louisiana. In fiscal
1994, the Company sold over 1.6 million tons of nitrogen fertilizers to
farmers, fertilizer dealers and distributors located primarily in the southern
United States. Sales of nitrogen products by the Company in fiscal 1994 were
$199.9 million, which represented approximately 65% of net sales. Nitrogen
products manufactured by the Company include anhydrous ammonia, fertilizer-
grade ammonium nitrate, urea/ammonium nitrate ("UAN") solutions and urea. The
Company is the largest U.S. manufacturer of ammonium nitrate fertilizer, which
is marketed under the trade name Amtrate(R). Amtrate(R) has established
significant brand name recognition and a reputation as a high-quality product.

Phosphate Fertilizer. The Company produces diammonium phosphate fertilizer
("DAP") at its facility in Pascagoula, Mississippi. In fiscal 1994, the Company
sold approximately 638,000 tons of DAP, which is the most widely used phosphate
fertilizer. Sales of DAP by the Company in fiscal 1994 were $83.4 million,
which represented approximately 27% of net sales. Substantially all of the
Company's phosphate fertilizer sales are made through Atlantic Fertilizer &
Chemical Corporation ("Atlantic"), which was appointed the Company's exclusive
distributor of DAP when the Company started production of DAP in December 1991.
In fiscal 1994, approximately two-thirds of the Company's DAP production was
sold into international markets, primarily to customers in India, China and
Mexico. Phosphate rock, the primary raw material for the production of
phosphate fertilizer, is provided under a long-term contract with Office
Cherifien des Phosphates ("OCP"), the national phosphate company of Morocco,
which is the world's largest producer of phosphate rock. The continued
viability and competitiveness of the Company's phosphate operations are
dependent on this strategic alliance with OCP. See "Business--Raw Materials."

Potash Fertilizer. The Company produces potash fertilizer at its facility
located near Carlsbad, New Mexico. In fiscal 1994, the Company sold
approximately 330,000 tons of granular 60% K/2/O muriate of potash. Sales of
potash fertilizer by the Company in fiscal 1994 were $24.1 million, which
represented approximately 8% of net sales. In May 1994, the Company completed
an expansion of its Carlsbad facility, which has increased granular potash
production capacity from approximately 300,000 tons to approximately 420,000
tons per year. The Company controls the single largest reserve of potash in the
U.S., with an estimated remaining life, at current production rates, of
approximately 140 years.

3
<PAGE>

Business Strategy. The Company's products are global commodities which are
available from multiple sources; therefore, the Company competes primarily on
the basis of price. As a result, the Company stresses low cost and high
efficiency in every aspect of its operations. Unlike many of its competitors,
the Company maintains a large and experienced field sales force strategically
located throughout its trade area. Through its sales force, the Company
provides extensive, cost-effective services to its customers to differentiate
its products, enhance competitiveness and establish the Company as a preferred
supplier. The Company's marketing efforts are focused on geographically
proximate markets where lower transportation and distribution costs increase
"net backs" (sales less distribution and delivery expenses) and result in
improved margins. The Company's recent change in corporate status from a
cooperative to a regular business corporation should present additional
opportunities to improve net backs and enhance profit margins. Finally, the
Company continuously monitors opportunities to expand its operations through
capacity additions, acquisitions, joint ventures and strategic alliances in the
fertilizer business.

THE REORGANIZATION

The Company is the successor by merger, effective July 1, 1994, to a business
which was formed in 1948 as the first fertilizer cooperative in the United
States (the "Cooperative"). The principal business of the Cooperative was to
provide fertilizer products to its shareholders pursuant to preferred patronage
rights which gave the shareholders the right to purchase fertilizer products
and receive a patronage refund on fertilizer purchases. On June 28, 1994, the
shareholders of the Cooperative approved a plan of reorganization (the
"Reorganization"), pursuant to which the Cooperative was merged into the
Company. Pursuant to the Reorganization, the capital stock of the Cooperative
was converted into Common Stock and/or cash. In addition, holders of Capital
Equity Credits and Allocated Surplus Accounts of the Cooperative (the "Special
Accounts") were offered the right to exchange the Special Accounts for Common
Stock. Since July 1, 1994, the Company has operated as a regular business
corporation. References in this Prospectus to the Company's operations prior to
July 1, 1994, refer to the Cooperative's operations.

The Board of Directors of the Cooperative decided to implement the
Reorganization because it believed that the Company needed greater flexibility
in marketing its products than was possible under its cooperative structure.
Following the Reorganization, the Company believes that it will be able to be
more responsive to its customers' needs and be better able to promote its
position as a preferred supplier of fertilizer products in its core markets in
the southern U.S. The Company also believes that its new corporate structure
will increase opportunities for market expansion and growth of operations. The
Company expects to retain the majority of the Cooperative's customer base and
expects that its sales and profitability will not be adversely affected by the
Reorganization. In addition, following the Reorganization, the Company expects
to have enhanced access to capital markets and increased options in connection
with potential business combinations. See "The Reorganization."

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the 3,200,000 shares
Company...........................
Common Stock offered by the Selling 1,880,000 shares
Shareholders......................
Common Stock to be outstanding 22,654,354 shares (1)
after the Offering................
Use of proceeds.................... To retire indebtedness and for general
corporate purposes. See "Use of Proceeds."
Proposed Nasdaq National Market MISS
symbol............................
Dividend policy.................... The Company expects to pay a quarterly cash
dividend of $0.08 per share, commencing
with a payment in February 1995 with
respect to the quarter ending December 31,
1994. See "Dividend Policy."
</TABLE>
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(1)Assumes conversion of all Special Accounts into shares of Common Stock. Up
to an additional 128,880 shares may be issued if certain small shareholders of
the Cooperative elect not to receive cash in the Reorganization.

4
<PAGE>

SUMMARY FINANCIAL DATA

For the periods presented, the Company operated as a cooperative. The
following table, which sets forth certain financial information, in summary
form, with respect to the Cooperative, including certain assumptions to show
the effect on results if the Company had operated as a regular business
corporation, is qualified in its entirety by, and should be read in conjunction
with, the consolidated financial statements and related notes appearing
elsewhere herein.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.................... $309,360 $289,125 $239,657 $214,990 $180,316
Operating expenses:
Cost of products sold...... 217,809 213,715 152,324 112,622 110,832
Provision for closure of
gypsum disposal
area (1).................. 6,055 -- -- -- --
Selling, general and
administrative............ 47,591 46,230 46,529 47,395 38,536
-------- -------- -------- -------- --------
271,455 259,945 198,853 160,017 149,368
-------- -------- -------- -------- --------
Operating income............. 37,905 29,180 40,804 54,973 30,948
Other (expense) income:
Interest, net.............. (3,991) (3,569) (3,930) (4,307) (4,246)
Restructuring (2).......... (1,402) -- -- -- --
Other...................... 421 767 (531) 777 2,062
-------- -------- -------- -------- --------
Margins from continuing
operations before income
taxes....................... 32,933 26,378 36,343 51,443 28,764
Income tax expense (credit).. 6,021 3,697 4,994 3,406 (294)
-------- -------- -------- -------- --------
Margins from continuing
operations.................. $ 26,912 $ 22,681 $ 31,349 $ 48,037 $ 29,058
======== ======== ======== ======== ========
Income from continuing
operations assuming
conversion from a
cooperative to a regular
business corporation as of
July 1, 1989 (3)............ $ 21,415 $ 17,533 $ 22,821 $ 33,999 $ 20,826
======== ======== ======== ======== ========
Earnings per share (4)....... $ 1.10 $ 0.92 $ 1.23 $ 1.90 $ 1.18
======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
JUNE 30, 1994
-------------
<S> <C>
PRO FORMA INCOME STATEMENT DATA:
Operating income.................................................. $ 37,905
Interest expense, net (5)......................................... (460)
Other income...................................................... 421
--------
Income from continuing operations before income taxes............. 37,866
Income tax expense (6)............................................ 13,056
--------
Income from continuing operations................................. $ 24,810
========
Earnings per share (7)............................................ $ 1.10
========
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING DATA:
Net sales:
Nitrogen........................................ $199,918 $189,127 $176,835
DAP............................................. 83,367 78,906 36,034(8)
Potash.......................................... 24,084 20,149 25,482
Other........................................... 1,991 943 1,306
-------- -------- --------
Net sales..................................... $309,360 $289,125 $239,657
======== ======== ========
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Tons sold:
Nitrogen........................................ 1,643 1,602 1,544
DAP............................................. 638 692 262(8)
Potash.......................................... 330 283 339
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1994
----------------------
ACTUAL PRO FORMA (9)
-------- -------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................... $ 34,931 $ 28,695
Total assets............................................ 298,430 298,430
Long-term debt, excluding long-term debt due within one
year................................................... 57,217 15,965
Shareholders' equity.................................... 142,956 177,972
</TABLE>
- --------

(1) During fiscal 1994, the Company recorded a non-cash charge of approximately
$6.1 million relating to the estimated cost of the closure of the gypsum
disposal facility located at its Pascagoula facility. This charge relates
to the portion of the disposal facility utilized to date and it is
estimated that future charges aggregating approximately $3.0 million will
be accrued over the six-year estimated remaining life of the disposal
facility.

(2) Reflects expenses of the Reorganization.

(3) For the periods presented, the Company operated as a cooperative and
realized deductions for income taxes for amounts paid in cash as patronage
refunds to its shareholder-members. If the conversion from a cooperative to
a regular business corporation had occurred as of July 1, 1989, income
taxes would have been increased by the following approximate amounts: $5.5
million, $5.1 million, $8.5 million, $14.0 million and $8.2 million for
fiscal 1994, 1993, 1992, 1991 and 1990, respectively.

(4) Earnings per share reflect the Reorganization as if it had occurred July 1,
1989. Weighted average shares outstanding would have been 19,454,354,
19,035,276, 18,521,287, 17,885,416 and 17,723,107 for fiscal 1994, 1993,
1992, 1991 and 1990, respectively.

(5) Interest expense, net, reflects a reduction in interest expense of $3.5
million related to the reduction in long-term debt from the net proceeds of
the Offering.

(6) Reflects taxation as a C corporation as a result of the Reorganization, as
well as the reduction in interest expense from the application of the net
proceeds from the Offering.

(7) Earnings per share is calculated based on the weighted average shares
outstanding assuming the Reorganization had occurred prior to the periods
presented (see Note 4 above), plus the estimated number of shares to be
sold by the Company in the Offering.

(8) The Company began production of DAP in December 1991.

(9) Reflects the Reorganization and the sale by the Company of 3,200,000 shares
of Common Stock in the Offering, assuming a public offering price of $14.50
per share, and the application of the net proceeds thereof. See "The
Reorganization," "Use of Proceeds" and "Pro Forma Balance Sheet," including
the notes thereto.

6
<PAGE>

INVESTMENT CONSIDERATIONS

In addition to the other information set forth in this Prospectus, the
following investment considerations should be considered carefully in
evaluating the Company and its business before purchasing any shares of Common
Stock offered hereby.

Effect of Reorganization on Operations. Until July 1, 1994, the Company
operated as a cooperative. As a cooperative, the substantial majority of the
Cooperative's sales of nitrogen fertilizers were made to its shareholders, who
purchased products pursuant to preferred patronage rights and received
patronage refunds with respect to their purchases. The Cooperative paid to its
shareholder-customers a patronage refund consisting of the excess of the sales
price of products over the cost of manufacturing, distributing and selling the
products ("patronage refunds"). It is expected that the Company will maintain
its nitrogen fertilizer customer base even though the Company will no longer
grant preferred patronage rights or pay patronage refunds, although there can
be no assurance that the Reorganization will not have a material adverse effect
on the Company's results of operations. DAP and virtually all potash fertilizer
have historically been sold by the Company outside the cooperative structure.

Factors Affecting Fertilizer Demand and Prices. With virtually all of its
nitrogen fertilizer net sales and approximately 82% of its total net sales in
fiscal 1994 derived from domestic markets, the Company's operating results are
highly dependent upon conditions in the U.S. agricultural industry. A variety
of factors beyond the Company's control can materially affect domestic
fertilizer demand and pricing. These factors include U.S. planted acreage,
government agricultural policies (including subsidy and acreage set-aside
programs), projected grain stocks, crop failure, weather and changes in
agricultural production methods.

International market conditions also significantly influence the Company's
business. The market for fertilizers is influenced by such factors as the
relative value of the U.S. dollar and its impact upon the cost of importing
fertilizers, foreign agricultural policies, the existence of, or changes in,
import or foreign currency exchange barriers in certain foreign markets,
changes in the hard currency demands of certain countries, such as the former
Soviet Union ("FSU"), and other regulatory policies of foreign governments, as
well as the laws and policies of the U.S. affecting foreign trade and
investment. The Company is also subject to the risks of doing business abroad,
including risks associated with economic or political instability, risks
associated with the value of the U.S. dollar and potential import restrictions
or quotas.

In the recent past, fertilizer prices have been extremely volatile, with
significant price changes from one growing season to the next. The Company
believes that world supply and demand for nitrogen fertilizers are currently in
a more favorable balance than in certain prior years. However, nitrogen
fertilizer is a global commodity and can be subject to intense price
competition from domestic and foreign sources. Between 1987 and 1993, phosphate
fertilizer prices declined to their lowest levels since 1977 as a result of an
acute supply surplus. During late 1993, the price of phosphate fertilizer
increased significantly, primarily in response to increased purchases by China
and India, the primary export markets for the U.S. phosphate fertilizer
industry. Potash fertilizer prices have remained relatively stable since 1988.
No assurance can be given, however, that average realized prices paid for the
Company's fertilizer products will continue at current levels.

Seasonality. The usage of fertilizer is highly seasonal, and the Company's
quarterly results reflect the fact that, in the Company's markets,
significantly more fertilizer is purchased in the spring. Significant portions
of the Company's net sales and operating income are generated in the last four
months of the Company's fiscal year (March through June). Since interim period
operating results reflect the seasonal nature of the Company's business, they
are not indicative of results expected for the full fiscal year. In addition,
quarterly results can vary significantly from one year to the next due
primarily to weather-related shifts in planting schedules and purchase
patterns. The Company incurs substantial expenditures for fixed costs
throughout the year and substantial expenditures for inventory in advance of
the spring planting season.

7
<PAGE>

Dependence on Natural Gas. Natural gas is the primary raw material used in
the manufacture of nitrogen fertilizer products. Natural gas is used as both a
chemical feedstock and a fuel to produce anhydrous ammonia, which is then used
in the production of all other nitrogen fertilizers. Anhydrous ammonia is also
a raw material in the production of DAP. Accordingly, the Company's
profitability may be affected by the price and availability of natural gas. A
significant increase in the price of natural gas that is not recovered through
an increase in the price of the Company's fertilizer products, or an extended
interruption in the supply of natural gas to the Company's production
facilities, could have a material adverse effect on the Company's results of
operations and financial condition. Natural gas is currently available in ample
quantities; however, the excess deliverability ("gas bubble") that existed
several years ago has dissipated. In recent years, natural gas prices have
become increasingly subject to seasonal volatility.

Environmental Regulations. The Company is subject to various environmental
laws and regulations of U.S. federal, state and local governments. Significant
capital expenditures and operating costs have been incurred and will continue
to be incurred as a result of these laws and regulations. The Company cannot
predict or quantify the impact of new or changed laws or regulations. In the
normal course of business, the Company is exposed to risks such as possible
release of hazardous substances into the environment. Such releases could cause
substantial damage or injuries. See "Business--Compliance With Environmental
Regulations."

Dependence on Phosphate Rock Supplier. Phosphate rock is the principal raw
material used in the manufacture of DAP. The Company has a long-term
requirements contract with OCP, the world's leading phosphate rock supplier.
The continued viability and competitiveness of the Company's phosphate
fertilizer operations are dependent upon the continuance of this supply
contract. See "Business--Raw Materials--Phosphate Rock."

Competition. Fertilizer products are global commodities and customers base
their purchasing decisions principally on the delivered price of the product.
As a result, markets for the Company's products are highly competitive. A
number of U.S. producers compete with the Company in domestic and export
markets, and producers in other countries, including state-owned and
government-subsidized entities, compete with the Company in the U.S. and in
foreign markets to which the Company exports. Many of the Company's competitors
are significantly larger and have greater financial resources than the Company.

Shares Eligible for Future Sale. Sales of substantial amounts of Common Stock
in the public market following the Offering could adversely affect the market
price of the Common Stock. Prior to the Reorganization, the Cooperative's
common stock lacked liquidity due to certain transfer and sales restrictions.
The shares of Common Stock issued in the Reorganization are freely transferable
and available for sale in the public market. All shares of Common Stock that
will be outstanding following the Offering will be freely tradable. The
Company, as well as holders of 5,948,346 shares of Common Stock (following the
Offering), including the Selling Shareholders and all officers and directors of
the Company, have agreed that they will not offer to sell, contract to sell or
dispose of shares of Common Stock for a period of 180 days after the date of
this Prospectus, without the prior written consent of Wertheim Schroder & Co.
Incorporated.

No Prior Public Market; Volatility. Prior to the Offering, there has been no
established trading market for the Common Stock. Although the Company has
applied to have the Common Stock approved for quotation on the Nasdaq National
Market, there can be no assurance that an active trading market will develop or
be sustained following the Offering. The public offering price of the Common
Stock offered hereby has been determined in negotiations among the Company, the
Selling Shareholders and the Representatives of the Underwriters. The trading
price of the Common Stock could be subject to significant fluctuations in
response to variations in quarterly operating results and other factors. In
addition, in recent years the stock market in general, and the market for
shares of newly registered stocks in particular, has experienced price
fluctuations which have often been unrelated to the operating performance of
the affected companies. General market price declines or market volatility in
the future could affect the market price of the Common Stock and the public
offering price may not be indicative of future market prices.

8
<PAGE>

Anti-takeover Provisions. Certain provisions of the Company's Articles of
Incorporation and Mississippi corporate law could have the effect of
discouraging, delaying or making more difficult a change in control of the
Company not approved by the Board of Directors of the Company. Among other
things, the Articles of Incorporation provide for a classified Board of
Directors, require a supermajority vote of the directors or the shareholders on
major transactions, and allow the Board of Directors to issue up to 500,000
shares of Preferred Stock and fix the rights, privileges and preferences of
those shares without any further vote or action by the shareholders. The rights
of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be
issued in the future. While the Company has no present intention to issue
shares of Preferred Stock, any issuance of Preferred Stock could have the
effect of making it more difficult for a third party to acquire a majority of
the outstanding voting stock of the Company. In addition, the Company, in its
Articles of Incorporation, has chosen to be subject to the Mississippi Control
Share Act, which allows shareholders to decide whether a potential acquiror's
shares may exercise voting rights when such a potential acquiror reaches
certain thresholds of stock ownership, and has chosen to be subject to the
Mississippi Shareholder Protection Act, which prevents business combinations
with 20% or greater shareholders unless certain conditions are met. The Company
has also adopted a Preferred Stock Rights Plan which may have anti-takeover
effects. See "Description of Capital Stock--Certain Statutory Provisions," "--
Certain Charter Provisions," and "--Rights to Purchase Preferred Stock."

9
<PAGE>

THE COMPANY

The Company is a major producer and supplier of nitrogen fertilizers in the
southern United States, and believes it is one of the nation's lowest-cost
nitrogen fertilizer producers. The Company also manufactures phosphate and
potash fertilizers, making it a full product line fertilizer supplier. The
Company sells its nitrogen and potash fertilizer products to farmers,
fertilizer dealers and distributors for ultimate use primarily in the southern
farming regions of the United States and areas served by the Mississippi River
system. The Company's phosphate fertilizers are sold primarily in
international markets.

Nitrogen Fertilizer. The Company produces nitrogen fertilizers at facilities
located in Yazoo City, Mississippi, and Donaldsonville, Louisiana. In fiscal
1994, the Company sold over 1.6 million tons of nitrogen fertilizers to
farmers, fertilizer dealers and distributors located primarily in the southern
United States. Sales of nitrogen products by the Company in fiscal 1994 were
$199.9 million, which represented approximately 65% of net sales. Nitrogen
products manufactured by the Company include anhydrous ammonia, fertilizer-
grade ammonium nitrate, UAN solutions and urea. The Company is the largest
U.S. manufacturer of ammonium nitrate fertilizer which is marketed under the
trade name Amtrate(R). Amtrate(R) has established significant brand name
recognition and a reputation as a high-quality product.

Phosphate Fertilizer. The Company produces DAP at its facility in
Pascagoula, Mississippi. In fiscal 1994, the Company sold approximately
638,000 tons of DAP, which is the most widely used phosphate fertilizer. Sales
of DAP by the Company in fiscal 1994 were $83.4 million, which represented
approximately 27% of net sales. Substantially all of the Company's phosphate
fertilizer sales are made through Atlantic, which was appointed the Company's
exclusive distributor of DAP when the Company started production of DAP in
December 1991. In fiscal 1994, approximately two-thirds of the Company's DAP
production was sold into international markets, primarily to customers in
India, China and Mexico. Phosphate rock, the primary raw material for the
production of phosphate fertilizer, is provided under a long-term contract
with OCP, the national phosphate company of Morocco, which is the world's
largest producer of phosphate rock. The continued viability and
competitiveness of the Company's phosphate operations are dependent on this
strategic alliance with OCP. See "Business--Raw Materials."

Potash Fertilizer. The Company produces potash fertilizer at its facility
located near Carlsbad, New Mexico. In fiscal 1994, the Company sold
approximately 330,000 tons of granular 60% K/2/O muriate of potash. Sales of
potash fertilizer by the Company in fiscal 1994 were $24.1 million, which
represented approximately 8% of net sales. In May 1994, the Company completed
an expansion of its Carlsbad facility at a cost of approximately $1.6 million,
which has increased granular potash production capacity from approximately
300,000 tons to approximately 420,000 tons per year. The Company controls the
single largest reserve of potash in the U.S., with an estimated remaining
life, at current production rates, of approximately 140 years.

The Company was incorporated in Mississippi on May 23, 1994, and is the
successor to the Cooperative, which was incorporated in 1948 as the first
fertilizer cooperative in the U.S. The address of its principal executive
office is Owen Cooper Administration Building, Highway 49 East, Yazoo City,
Mississippi 39194, and its telephone number is (601) 746-4131. As used in this
Prospectus, the term "Company" includes Mississippi Chemical Corporation and
its wholly-owned subsidiaries, Mississippi Phosphates Corporation and
Mississippi Potash, Inc. References in this Prospectus to the Company's
operations prior to July 1, 1994, refer to the Cooperative's operations.

10
<PAGE>

THE REORGANIZATION

The Cooperative was incorporated in Mississippi in September 1948 and
operated as a cooperative in accordance with the applicable provisions of the
Internal Revenue Code. The principal business of the Cooperative was to provide
fertilizer products to its shareholders pursuant to preferred patronage rights
which gave the shareholders the right to purchase fertilizer products and
receive a patronage refund on fertilizer purchases.

On June 28, 1994, the shareholders of the Cooperative approved the
Reorganization, pursuant to which the Cooperative was merged, effective July 1,
1994, into the Company, a wholly-owned subsidiary of the Cooperative. Pursuant
to the Reorganization, the issued and outstanding shares of capital stock of
the Cooperative were converted into shares of Common Stock and/or cash and
holders of Special Accounts were offered the right to exchange those Special
Accounts for Common Stock. As of July 1, 1994, an aggregate of 18,773,212
shares of Common Stock had been issued pursuant to the Reorganization and it is
estimated that approximately $7.6 million of cash will be paid pursuant to the
Reorganization. Up to an additional 681,142 shares of Common Stock may be
issued upon the exchange of Special Accounts, including Special Accounts
arising from 1994 patronage and up to a further 128,880 shares may be issued if
certain small shareholders of the Cooperative elect not to receive cash in the
Reorganization. As a result of the Reorganization, the Company no longer
operates as a cooperative, but as a regular business corporation.

REASONS FOR THE REORGANIZATION

The Cooperative was formed during a period of severe fertilizer shortages
following World War II in order to provide farmers with a reliable source of
quality nitrogen fertilizer products at reasonable prices. Farmers and
fertilizer dealers purchased stock from the Cooperative in order to secure
preferred rights to obtain fertilizer. Shareholders received a patronage refund
on fertilizer purchases to the extent of any excess of the sales price over the
cost to manufacture, distribute and sell the fertilizer. The cooperative
structure initially served the Cooperative and its shareholders well, with the
Cooperative providing high-quality fertilizer products at competitive prices.
The value of the Cooperative's stock in the hands of fertilizer users was
primarily a function of the prevailing supply/demand relationship for
fertilizer and the Cooperative's net cost of producing, distributing and
selling its products.

Worldwide fertilizer production expansions in the late 1970's and early
1980's resulted in an oversupply of fertilizer products. With competitively
priced fertilizer products readily available, fertilizer users no longer had
the incentive to purchase the Cooperative's stock in order to obtain fertilizer
supplies. During the 1980's and 1990's, the business environment for fertilizer
manufacturers changed as a result of intensified foreign competition from
government-controlled entities, supply/demand imbalances, increased
environmental regulations, industry consolidation resulting in fewer, but
better capitalized competitors and increases in the cost of capital equipment.
Over the years, the needs of the Cooperative's shareholders were also changing,
with a resulting divergence in the stock ownership and customer base of the
Cooperative. The restrictions on ownership of the Cooperative's stock made
transfers of shares difficult for a shareholder no longer requiring fertilizer
and depressed the value of those shares.

The Cooperative believed it needed to grow in order to adjust to changing
markets, but the cooperative structure provided little flexibility for growth
or expansion. The Cooperative's ability to raise capital was limited because it
could only sell stock to those who used its products. The Cooperative needed
access to capital markets in order to modernize and expand production
facilities, take advantage of technological developments and respond to growth
opportunities.

The Cooperative's Board of Directors believed that conversion from a
cooperative would address these business needs, while also providing its
shareholders with a broader and more liquid market for their shares. Although
the Cooperative believed it was one of the most successful fertilizer
cooperatives, a year-long study convinced the Board that the rigid, highly
regulated cooperative structure limited its ability to operate in the most
effective manner. As part of its study, the Board investigated the Company's
ability to operate as a

11
<PAGE>

regular business corporation and to sell its products without patronage
refunds. The Cooperative had developed an excellent reputation with its
customers, suppliers and competitors as a high-quality, dependable supplier of
nitrogen, phosphate and potash fertilizers at competitive prices. Field surveys
by Company personnel indicated that sales volumes would not be adversely
affected by the change from the cooperative structure. The Company anticipates
that the strong relationships that the Cooperative developed with its customer-
shareholders will help the Company retain a substantial portion of its existing
customer base. In addition, the Company will also be able to sell its products
to new customers and in new markets. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--General."

The Company believes that access to broader based capital markets will assist
it in expanding its operations, financing required capital expenditures and
remaining competitive in its markets. The ability to issue securities not
subject to the restrictions of a cooperative should also provide the Company
with greater flexibility in connection with potential acquisitions,
partnerships and alliances in the fertilizer industry.

DISPOSITION OF NSI

GENERAL

On June 30, 1994, the Cooperative divested a majority of its interest in
Newsprint South, Inc. ("NSI"), its newsprint manufacturing subsidiary. As a
result of NSI's significant losses, which were expected to continue, and
continuing negative newsprint industry trends, the Cooperative's Board of
Directors authorized the disposition of NSI. NSI, which was organized in 1986,
completed the construction of a 225,000 ton-per-year newsprint mill near
Grenada, Mississippi, in 1989. NSI markets its products to newspapers and
commercial printers located primarily in the southern United States.

BACKGROUND

The Cooperative's involvement with newsprint production began in the late
1970's, when the Cooperative's founder and former president identified the need
for a timber-based industry in north Mississippi, an area abundant in timber
resources. Due to a lack of local pulp and paper mills, timber prices realized
by north Mississippi growers lagged those prevailing in other regions. Since
many farmers in the Cooperative's market were also timber growers, the
Cooperative and its shareholders became interested in a proposed project to
build a newsprint mill in north Mississippi. After thorough analysis, the
Cooperative concluded that the project could materially benefit its
shareholders and that the project could be financed with a modest equity
investment and non-recourse debt.

OPERATIONS

For the three fiscal years prior to the disposition, NSI's sales were $97.0
million for 1993; $95.5 million for 1992; and $106.1 million for 1991. During
the last three fiscal years, NSI incurred losses of $17.9 million for 1993;
$18.3 million for 1992; and $8.7 million for 1991. For fiscal 1994, NSI's sales
were $94.6 million and it incurred a loss of $24.0 million.

NSI's losses are directly attributable to depressed conditions in the
newsprint industry, since per-unit volume production costs have been
continually reduced as a result of increased production volume and improved
mill performance. The construction and start-up of NSI's facility coincided
with a massive capacity build-up in newsprint during the late 1980's and early
1990's. Concurrently, the 1991-1992 recession produced an unprecedented decline
in newsprint consumption. The resulting supply/demand imbalance caused a
collapse in the price of newsprint. Newsprint prices fell by over 30% during
the period from 1988 to mid-1992, causing record losses for the newsprint
industry. Following a brief, modest improvement in prices during late 1992 and
early 1993, prices returned to mid-1992 levels and remain at depressed levels.

12
<PAGE>

THE DISPOSITION OF NSI

On June 24, 1994, the Cooperative and the principal parties (the mill owner
and the primary lender) to the leveraged lease transaction pursuant to which
the NSI facilities are financed concluded a restructuring of NSI, which
involved a transfer by the Cooperative on June 30, 1994 of 70% of the
outstanding stock of NSI. The Cooperative retained a 30% nonvoting interest in
NSI. Under the terms of the restructuring, (i) the Cooperative paid $19.0
million to NSI in various forms, including a capital contribution, payments in
liquidation of the Cooperative's obligations under a newsprint purchase
contract and certain tax-compensating payments pursuant to a tax-sharing
agreement, (ii) loans of approximately $13.7 million made by the Cooperative to
NSI were converted to capital, and (iii) the Cooperative purchased from NSI its
National Bank for Cooperatives ("CoBank") stock for $4.0 million. The CoBank
stock is scheduled for redemption at the face amount by CoBank during the next
five years. The Company has also agreed to continue to provide management
services to NSI for a fee during a transition period of up to nine months. The
Cooperative was released from its obligations under all contracts to which it
was a party related to the NSI project and the leveraged lease financing of the
NSI project.

EFFECT OF DISPOSITION

Although NSI's debts were non-recourse to the Cooperative and the Cooperative
was not responsible for NSI's continuing losses, since it was a wholly owned
subsidiary, NSI's financial results were consolidated with those of the
Cooperative. As a result of the divestiture, NSI's financial results will no
longer be consolidated with those of the Company. With respect to periods prior
to the disposition, NSI's results will be reflected as discontinued operations.
Subsequent to the disposition, the Company will account for its continuing
interest in NSI using the cost method of accounting for investments. In
connection therewith, the Company will write up to zero its investment in NSI
as it will have no continuing obligation to fund any of NSI's future losses.

USE OF PROCEEDS

The net proceeds from the sale of 3,200,000 shares of Common Stock offered by
the Company (after deducting estimated underwriting discounts and estimated
offering expenses) are expected to be approximately $42.7 million ($45.3
million if the Underwriters' over-allotment option is exercised in full),
assuming a public offering price of $14.50 per share. The Company will not
receive any proceeds from the sale of the shares by the Selling Shareholders.

The net proceeds will be used to repay amounts outstanding under the
Company's revolving line of credit with NationsBank Corporation due June 30,
1997, its term loan agreement with CoBank due June 30, 1997 and its 9.5%
Subordinated Notes due July 1, 1999 (the "Subordinated Notes"). The revolving
line of credit bears interest at an adjustable rate, equal to 7.25% per annum
on June 30, 1994, the term loan bears interest at an adjustable rate, equal to
9.75% per annum on June 30, 1994. The Company expects to use the remaining
proceeds from the Offering, expected to be approximately $5.0 million, and its
credit availability under the revolving line of credit for working capital and
general corporate purposes, including expansion and efficiency enhancements of
the Company's operations. Pending such uses, the net proceeds of the Offering
will be invested in investment-grade, short-term, interest-bearing obligations.

13
<PAGE>

DILUTION

The pro forma net tangible book value of the Company at June 30, 1994, was
approximately $6.90 per share of Common Stock, assuming the Reorganization had
occurred as of such date. After giving effect to the sale of 3,200,000 shares
of Common Stock offered by the Company hereby at an assumed public offering
price of $14.50 per share, and the application by the Company of the estimated
net proceeds therefrom, the pro forma net tangible book value of the Company as
of June 30, 1994, would have been $7.81 per share. This represents an immediate
increase in pro forma net tangible book value of $0.91 per share to existing
shareholders and an immediate dilution of $6.69 per share to new investors
purchasing shares of Common Stock in the Offering. The following table
illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed public offering price per share........................ $14.50
Pro forma net tangible book value per share before the
Offering.................................................... $6.90
Increase in net tangible book value per share attributable to
price paid by investors in the Offering..................... 0.91
-----
Pro forma net tangible book value per share after the Offering. 7.81
------
Dilution in net tangible book value per share to investors in
the Offering.................................................. $ 6.69
======
</TABLE>

14
<PAGE>

CAPITALIZATION

The following table sets forth as of June 30, 1994, (i) the capitalization of
the Company, adjusted to reflect the Reorganization, and (ii) the
capitalization of the Company adjusted to reflect the Reorganization and the
sale by the Company of 3,200,000 shares of Common Stock in the Offering,
assuming a public offering price of $14.50 per share and the application of the
net proceeds therefrom. See "The Reorganization," "Use of Proceeds," and "Pro
Forma Balance Sheet," including the notes thereto. This table should be read in
conjunction with the consolidated financial statements of the Company,
including the notes thereto, appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
ADJUSTED ADJUSTED FOR THE
FOR THE REORGANIZATION
REORGANIZATION AND THE OFFERING
-------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt due within one year............. $ 2,948 $ 1,548
Notes payable.................................. 7,030 7,030
-------- --------
$ 9,978 $ 8,578
======== ========
Long-term debt (excluding amounts due within
one year)..................................... $ 57,217 $ 15,965
Shareholders' equity:
Preferred stock, $.01 par value, 500,000
shares authorized; none outstanding......... -- --
Common stock, $.01 par value, 100,000,000
shares authorized; 19,454,354 Adjusted for
the Reorganization; 22,654,354 (estimated)
shares issued and outstanding following the
Offering.................................... 194 226
Additional paid-in capital................... 130,061 172,681
Retained earnings............................ 5,065 5,065
-------- --------
Total shareholders' equity................. 135,320 177,972
-------- --------
Total capitalization..................... $192,537 $193,937
======== ========
</TABLE>

DIVIDEND POLICY

The Company currently anticipates that it will pay regular quarterly
dividends following the Offering, commencing with a payment that is expected to
be made in February 1995, with respect to the quarter ending December 31, 1994.
It is currently expected that the initial quarterly dividend will be $0.08 per
share. However, the amount and timing of the payment of any dividends will be
based on a number of factors, including the future earnings and capital
requirements of the Company, the financial condition of the Company, the
dividend policies of similar publicly traded companies and other factors the
Board of Directors considers relevant. There can be no assurance that dividends
will be paid in any minimum amounts or at any particular times. In the future,
it is possible that agreements with lenders may restrict or prohibit the
Company's ability to pay dividends and/or limit the amount of dividends that
may be paid.

15
<PAGE>

SELECTED FINANCIAL DATA

The following tables present certain selected consolidated financial data
with respect to the Company for each of the fiscal years in the five-year
period ended June 30, 1994. The selected consolidated financial data in the
table are derived from the consolidated financial statements of the Company,
which, in the case of fiscal 1994, 1993, 1992 and 1991, have been audited by
Arthur Andersen & Co., independent public accountants, as indicated in their
report included elsewhere herein. These tables should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Pro Forma Balance Sheet," including the notes thereto, "Use of
Proceeds," and the consolidated financial statements of the Company, including
the notes thereto, all appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................... $309,360 $289,125 $239,657 $214,990 $180,316
Operating expenses:
Cost of products sold..... 217,809 213,715 152,324 112,622 110,832
Provision for closure of
gypsum disposal area (1). 6,055 -- -- -- --
Selling................... 29,339 28,940 27,731 28,036 25,038
General and
administrative........... 18,252 17,290 18,798 19,359 13,498
-------- -------- -------- -------- --------
271,455 259,945 198,853 160,017 149,368
-------- -------- -------- -------- --------
Operating income............ 37,905 29,180 40,804 54,973 30,948
Other (expense) income:
Interest, net............. (3,991) (3,569) (3,930) (4,307) (4,246)
Restructuring (2)......... (1,402) -- -- -- --
Other..................... 421 767 (531) 777 2,062
-------- -------- -------- -------- --------
Margins from continuing
operations before income
taxes and cumulative effect
of change in accounting
principle.................. 32,933 26,378 36,343 51,443 28,764
Income tax expense (credit). 6,021 3,697 4,994 3,406 (294)
-------- -------- -------- -------- --------
Margins from continuing
operations before
cumulative effect of change
in accounting principle.... 26,912 22,681 31,349 48,037 29,058
Loss from discontinued
operations, net of income
taxes...................... (23,987) (17,891) (18,346) (8,653) (21,833)
Gain on disposal of
discontinued operations
(including applicable
income tax credits of
$4,030).................... 39,747 -- -- -- --
Cumulative effect to July 1,
1993, of change in
accounting for income
taxes...................... (6,149) -- -- -- --
-------- -------- -------- -------- --------
Net margins................. $ 36,523 $ 4,790 $ 13,003 $ 39,384 $ 7,225
======== ======== ======== ======== ========
Income from continuing
operations assuming
conversion from a
cooperative to a regular
business corporation as of
July 1, 1989 (3)........... $ 21,415 $ 17,533 $ 22,821 $ 33,999 $ 20,826
======== ======== ======== ======== ========
Earnings per share (4)...... $ 1.10 $ 0.92 $ 1.23 $ 1.90 $ 1.18
======== ======== ======== ======== ========
</TABLE>

16
<PAGE>

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JUNE 30, 1994
-----------------
<S> <C>
PRO FORMA INCOME DATA:
Operating income.............................................. $37,905
Interest expense, net (5)..................................... (460)
Other income.................................................. 421
-------
Income from continuing operations before income taxes......... 37,866
Income tax expense (6)........................................ 13,056
-------
Income from continuing operations............................. $24,810
=======
Earnings per share (7)........................................ $ 1.10
=======
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1994 JUNE 30,
---------------------- -----------------------------------
ACTUAL PRO FORMA (8) 1993 1992 1991 1990
-------- ------------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 34,931 $ 28,695 $ 22,802 $ 35,225 $ 54,926 $ 57,845
Total assets............ 298,430 298,430 296,053 303,158 287,835 248,235
Long-term debt,
excluding long-term
debt due within one
year................... 57,217 15,965 52,357 59,333 67,489 64,332
Shareholders' equity.... 142,956 177,972 119,574 128,195 138,762 138,255
</TABLE>
- --------

(2) Reflects expenses of the Reorganization.

(4) Earnings per share reflects the Reorganization as if it had occurred July
1, 1989. Weighted average shares outstanding would have been 19,454,354,
19,035,276, 18,521,287, 17,885,416 and 17,723,107 for fiscal 1994, 1993,
1992, 1991 and 1990, respectively.

(5) Interest expense, net, reflects a reduction in interest expense of $3.5
million related to the reduction in long-term debt from the net proceeds
from the Offering.

(6) Reflects taxation as a C corporation as a result of the Reorganization, as
well as the reduction in interest expense from the application of the net
proceeds from the Offering.

(8) Reflects the Reorganization and the sale by the Company of 3,200,000 shares
of Common Stock in the Offering, assuming a public offering price of $14.50
per share and the application of the net proceeds thereof. See "The
Reorganization," "Use of Proceeds" and "Pro Forma Balance Sheet," including
the notes thereto.

17
<PAGE>

PRO FORMA BALANCE SHEET

JUNE 30, 1994

<TABLE>
<CAPTION>
REORGANIZATION OFFERING PRO
ACTUAL ADJUSTMENTS SUBTOTAL ADJUSTMENTS FORMA
-------- -------------- -------- ----------- --------
(IN THOUSANDS)
ASSETS

<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents........... $ 23,219 $ $ 23,219 $ 42,652 (7) $ 23,219
(42,652)(8)
Accounts receivable.... 28,659 28,659 28,659
Inventories............ 33,990 33,990 33,990
Prepaid expenses and
other current assets.. 3,981 3,981 3,981
Deferred income tax
benefit............... 9,682 9,682 9,682
-------- -------- -------- -------- --------
Total current assets. 99,531 99,531 99,531
Investments and other
assets:
National Bank for
Cooperatives.......... 7,441 7,441 7,441
Other.................. 9,813 9,813 9,813
-------- -------- -------- -------- --------
Total investments and
other assets........ 17,254 17,254 17,254
Properties held for
sale................... 66,928 66,928 66,928
Property, plant and
equipment, at cost,
less accumulated
depreciation, depletion
and amortization....... 114,717 114,717 114,717
-------- -------- -------- -------- --------
Total assets............ $298,430 $ -- $298,430 $ -- $298,430
======== ======== ======== ======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Long-term debt due
within one year....... $ 2,948 $ $ 2,948 $ (1,400)(8) $ 1,548
Notes payable.......... 7,030 7,030 7,030
Accounts payable....... 28,569 28,569 28,569
Accrued liabilities.... 11,297 1,460 (1) 18,933 18,933
3,424 (2)
2,752 (3)
Dividends payable...... 14,756 14,756 14,756
-------- -------- -------- -------- --------
Total current
liabilities......... 64,600 7,636 72,236 (1,400) 70,836
Long-term debt.......... 57,217 57,217 (41,252)(8) 15,965
Other long-term
liabilities and
deferred credits....... 24,704 24,704 24,704
Deferred income tax
payable................ 8,953 8,953 8,953
-------- -------- -------- -------- --------
Total liabilities.... 155,474 7,636 163,110 (42,652) 120,458
Shareholders' equity:
Preferred stock, $.01
par value, 500,000
shares authorized;
none outstanding......
Cooperative capital
stock................. 28,392 (26,375)(4)
(1,460)(1)
(557)(3)
Common stock, $.01 par
value, 100,000,000
shares authorized;
22,654,000
(estimated) shares
issued and
outstanding........... 155 (4) 194 32 (7) 226
28 (5)
13 (6)
(2)(2)
-------- -------- -------- -------- --------
Total stock.......... 28,392 (28,198) 194 32 226
Additional paid-in
capital............... 66,848 26,220 (4) 130,061 42,620 (7) 172,681
(2,195)(3)
42,623 (5)
(3,422)(2)
(13)(6)
Capital equity
credits............... 62,352 (62,352)(5)
Retained earnings
(deficit)............. (14,636) 19,701 (5) 5,065 5,065
-------- -------- -------- -------- --------
Total shareholders'
equity.............. 142,956 (7,636) 135,320 42,652 177,972
-------- -------- -------- -------- --------
Total liabilities and
shareholders' equity... $298,430 $ -- $298,430 $ -- $298,430
======== ======== ======== ======== ========
</TABLE>

18
<PAGE>

PRO FORMA BALANCE SHEET SUMMARY OF GENERAL ASSUMPTIONS AND ACCOUNTING POLICIES

The pro forma balance sheet has been prepared on the assumption that as of
June 30, 1994, the Reorganization had occurred and the Offering contemplated
hereby had been completed. Adjustments have been made to reflect the merger of
the Cooperative into the Company and the exchange of Capital Equity Credits and
Allocated Surplus Accounts and to reflect the other assumptions described in
the ensuing notes.

The significant accounting policies followed by the Cooperative have been
used in the preparation of the Company's Pro Forma Balance Sheet. These
policies, together with additional information, are included in the Notes to
Consolidated Financial Statements (see the Index to Financial Statements on F-
1) and should be read in conjunction with the accompanying pro forma balance
sheet.

NOTES

(1) Reflects the conversion of the Cooperative's outstanding shares of Mixed
Series IV and Mixed Series V Capital Stock into cash pursuant to the
Reorganization.

(2) Reflects the redemption of Common Stock at $15.00 per share from
shareholders who own fractional shares and who own fewer than 100 shares
after the Reorganization.

(3) Reflects the conversion of the Cooperative's outstanding shares of Potash
Series VI Capital Stock into cash pursuant to the Reorganization.

(4) Reflects the conversion of the Cooperative's outstanding shares of
Nitrogen Series I, Nitrogen Series II and Nitrogen Series III Stock into
Common Stock, pursuant to the Reorganization.

(5) Reflects the assumption that all holders of Capital Equity Credits elect to
convert those Capital Equity Credits into Common Stock at a rate of one
share for each $15.00 in present value of the Capital Equity Credits.

(6) Reflects the assumption that all holders of Allocated Surplus Accounts
elect to convert 1992, 1993 and 1994 Allocated Surplus Accounts into Common
Stock at a rate of one share for each $15.00 in present value of the
Allocated Surplus Accounts.

(7) Reflects net proceeds from the issuance of 3,200,000 shares of Common Stock
in the Offering at an assumed public offering price of $14.50 per share.

(8) Reflects the reduction in long-term debt and long-term debt due within one
year from the application of the net proceeds from the Offering.

19
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company's results of operations have historically been influenced by a
number of factors beyond the Company's control which have, at times, had a
significant effect on the Company's operating results. Fertilizer demand and
prices are highly dependent upon conditions in the agricultural industry and
can be affected by a variety of factors, including planted acreage, United
States government agricultural policies (including subsidy and acreage set-
aside programs), projected grain stocks, weather and changes in agricultural
production methods. The Company's results can be affected by such factors as
the relative value of the U.S. dollar, foreign agricultural policies (in
particular the policies of the governments of India and China regarding
subsidies of fertilizer imports) and the hard currency demands of countries
such as the FSU, whose fertilizer export activities have proved disruptive to
world fertilizer pricing in recent years. See "Fertilizer Industry Overview."

The Company realized a significant improvement in results of operations in
fiscal 1994 with net sales increasing 7.0% to $309.4 million from $289.1
million in fiscal 1993 and operating income increasing 29.9% to $37.9 million
from $29.2 million in fiscal 1993. Before taking into account the $6.1 million
non-cash charge for the closure of the gypsum disposal facility, operating
income for fiscal 1994 would have increased 50.7% to $44.0 million. The Company
experienced strong demand and improved prices for its nitrogen fertilizer
products in fiscal 1994. The average sales price per ton of nitrogen fertilizer
increased to $122 in fiscal 1994 from $118 in fiscal 1993. After declining to
extremely depressed levels in early fiscal 1994, DAP prices recovered
materially in the second half of the year in response to production cutbacks by
major U.S. producers, reduced phosphate fertilizer exports from the FSU, and
the reinstitution of subsidies and increased demand in China and India. For
fiscal 1994, the average sales price of DAP was $131 per ton as compared to
$114 per ton for fiscal 1993. The DAP operations realized positive operating
income in fiscal 1994.

From fiscal 1991 through fiscal 1993, the Company experienced a 34.5%
increase in net sales from $215.0 million to $289.1 million. However, over the
same period, operating income fell from $55.0 million to $29.2 million. This
decline in operating income between fiscal 1991 and fiscal 1993 was primarily
caused by fluctuations in nitrogen fertilizer prices and lower DAP prices.
Nitrogen fertilizer prices "spiked" during the fall of 1990 and the spring of
1991 due to the invasion of Kuwait and subsequent war in the Persian Gulf,
which caused concerns about fertilizer shortages. This spike in nitrogen
fertilizer prices caused fiscal 1991 to be a particularly strong year for the
Company. In fiscal 1991, the Company's average selling price for nitrogen
fertilizer was $120 per ton compared to average selling prices of $110 per ton
and $115 per ton in fiscal 1990 and 1992, respectively. In December 1991, the
Company started production of DAP at its Pascagoula plant. Fiscal 1993 was the
first full year of DAP production after the restart of the plant. Although DAP
production significantly increased the Company's net sales between fiscal 1991
and fiscal 1993, the DAP operations experienced operating losses in fiscal 1992
and 1993 because the Company's entry into the DAP market coincided with a
significant fall in DAP prices, primarily as a result of an increase in DAP
exports by the FSU and a sharp fall in demand from the world's two largest
fertilizer importers, India and China. The Company's average selling price for
DAP was $137 per ton and $114 per ton in fiscal 1992 and 1993, respectively.

Effects of the Reorganization. Effective July 1, 1994, the Company converted
from a cooperative into a regular business corporation pursuant to the
Reorganization. The substantial majority of the Cooperative's sales of nitrogen
fertilizers were made to its shareholders who purchased such products pursuant
to preferred patronage rights based on their stock ownership and who received
patronage refunds with respect to such purchases based on the difference
between the sales price and the cost of manufacturing, distributing and selling
the product. Although the Company will no longer grant preferred patronage
rights or pay patronage refunds, it is expected that the Company will retain
the majority of its current customer base and that nitrogen fertilizer sales
volumes and profitability will not be adversely affected by the Reorganization.

20
<PAGE>

The Company generally absorbs much of the cost of distributing its nitrogen
and potash fertilizer products to its customers. The Company's cost of
distributing its products is affected by the location of its customers.
Therefore, profitability is optimized by achieving the highest net back for its
products. As a cooperative, the Company sold substantially all of its nitrogen
fertilizer products to its shareholders pursuant to preferred patronage rights.
After the Reorganization, the Company will be able to increase its focus on
more geographically proximate markets where higher net backs should be
realized.

After the Reorganization, the Company will not be eligible for new financing
from CoBank, which was a traditional source of financing for the Cooperative.
To replace this historic financing, the Company has significantly increased its
credit facility with NationsBank, which prior to the Reorganization had been a
lender to the Cooperative. See "Liquidity and Capital Resources." In addition,
as a cooperative, the Company had few options for raising capital. The
Reorganization should provide the Company with greater access to capital
markets than was previously available.

After the 1994 fiscal year, the Company will no longer distribute its
earnings on business done with shareholders as patronage refunds. As a
cooperative, these distributions were deductible for income tax purposes. The
Company will now be taxed as a regular business corporation and income tax
expense should increase.

Change in Accounting Principle. Effective July 1, 1993, the Company adopted
SFAS No. 109, "Accounting for Income Taxes." The cumulative effect of this
change in accounting principle decreased current period margins by $6.1
million.

RESULTS OF OPERATIONS

Following are summaries of the Company's sales results by product categories:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales:
Nitrogen........................................ $199,918 $189,127 $176,835
DAP............................................. 83,367 78,906 36,034
Potash.......................................... 24,084 20,149 25,482
Other........................................... 1,991 943 1,306
-------- -------- --------
Net sales..................................... $309,360 $289,125 $239,657
======== ======== ========
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Tons sold:
Nitrogen........................................ 1,643 1,602 1,544
DAP............................................. 638 692 262
Potash.......................................... 330 283 339
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Average price per ton:
Nitrogen........................................ $122 $118 $115
DAP............................................. $131 $114 $137
Potash.......................................... $ 73 $ 71 $ 75
</TABLE>

21
<PAGE>

Fiscal 1994 Compared to Fiscal 1993

Net Sales. Net sales increased 7.0% from $289.1 million for fiscal 1993, to
$309.4 million for fiscal 1994, primarily as a result of higher sales prices
for nitrogen and DAP fertilizers and increased sales volumes of potash.
Nitrogen fertilizer sales increased 5.7% as a result of a 2.6% increase in tons
sold and a 3.1% increase in prices. Sales of DAP increased 5.7% as a result of
a 14.6% increase in prices offset by a 7.8% decrease in tons sold. Potash sales
increased 19.5% as a result of a 16.5% increase in tons sold and a 2.6%
increase in prices.

Cost of Products Sold. Cost of products sold increased from $213.7 million
for fiscal 1993, to $217.8 million for fiscal 1994. As a percentage of net
sales, cost of products sold decreased from 73.9% to 70.4%. This decrease
reflects an increase in the cost per ton of nitrogen fertilizers, offset by
decreases in the cost per ton of both DAP and potash. Nitrogen fertilizer costs
increased partially as a result of increased maintenance and labor costs
related to a scheduled biennial maintenance turnaround at the Company's Yazoo
City nitrogen production facility during September 1993. Also contributing to
the increase in costs were higher natural gas costs and increased depreciation
expense related to a new nitric acid plant at Yazoo City which began operating
in January 1993. DAP costs per ton declined as a result of lower raw material
costs. Potash production costs per ton decreased as a result of increased
production volume for fiscal 1994.

During fiscal 1994, the Company recorded a non-cash charge of $6.1 million
relating to the estimated cost of the closure of the gypsum disposal facility
located at its Pascagoula facility. This charge relates to the portion of the
disposal facility utilized to date and it is estimated that future charges of
approximately $3.0 million will be accrued over the estimated six year
remaining life of the facility. See "Business--Compliance with Environmental
Regulations."

Selling Expenses. Selling expenses increased from $28.9 million for fiscal
1993, to $29.3 million for fiscal 1994, reflecting higher sales volumes. As a
percentage of net sales, however, selling expenses decreased from 10.0% to 9.5%
primarily as a result of lower delivery costs per ton.

General and Administrative Expenses. General and administrative expenses
increased from $17.3 million for fiscal 1993, to $18.3 million for fiscal 1994,
primarily as a result of increases in legal fees and information processing
costs. General and administrative expenses decreased from 6.0% of net sales to
5.9% of net sales.

Operating Income. As a result of the above factors, operating income
increased from $29.2 million for fiscal 1993, to $37.9 million for fiscal 1994.
Before the effect of the non-cash charge for gypsum disposal costs, operating
income for fiscal 1994 was $44.0 million, a 50.7% increase over fiscal 1993.

Interest, Net. Net interest increased from $3.6 million for fiscal 1993, to
$4.0 million for fiscal 1994, reflecting a $1.0 million decrease in capitalized
interest related to the construction of a new nitric acid plant at the Yazoo
City facility in fiscal 1993. Also increasing net interest expense in the
current period was lower interest income due to lower levels of cash. Partially
offsetting this increase were lower levels of borrowings and lower interest
rates paid.

Restructuring. Fiscal 1994 results include $1.4 million of Reorganization
expenses.

Income Tax Expense. Income tax expense increased from $3.7 million for fiscal
1993, to $6.0 million for fiscal 1994. The increase in income tax expense in
the current year was due to increased non-member income.

Margins from Continuing Operations Before Cumulative Effect of Change in
Accounting Principle. As a result of the foregoing, margins from continuing
operations before the cumulative effect of a change in accounting principle
increased from $22.7 million for fiscal 1993, to $26.9 million for fiscal 1994.
Before the effect of the non-cash charge for gypsum disposal costs and the
restructuring expense, margins from continuing operations before cumulative
effect of a change in accounting principle for the period were $34.2 million.

22
<PAGE>

Effect of Reorganization. If the Company had not operated as a cooperative,
income taxes would have been $11.5 million for fiscal 1994, and $8.8 million
for fiscal 1993. Income from continuing operations before cumulative effect of
a change in accounting principle assuming conversion from a cooperative to a
regular business corporation would have been $21.4 million for fiscal 1994, and
$17.5 million for fiscal 1993. Before the effect of the non-cash charge for
gypsum disposal costs and the restructuring expense, income from continuing
operations before the cumulative effect of the change in accounting principle
would have been $28.7 million for the period.

Fiscal 1993 Compared to Fiscal 1992

Net Sales. Net sales increased 20.6% from $239.7 million for fiscal 1992 to
$289.1 million for fiscal 1993, as a result of increased sales of nitrogen
fertilizer and the operation of the Pascagoula DAP facility for all of fiscal
1993. The Pascagoula facility began production of DAP in December 1991.
Nitrogen fertilizer sales increased 7.0% as a result of a 3.8% increase in tons
sold and a 3.1% increase in prices. Sales of DAP increased 119.0% as a result
of a 163.7% increase in tons sold partially offset by a 17.0% decrease in
prices. Potash sales decreased 20.9% as a result of a 16.5% decrease in tons
sold and a 5.3% decrease in prices.

Cost of Products Sold. Cost of products sold increased from $152.3 million
for fiscal 1992 to $213.7 million for fiscal 1993. Cost of products sold
increased from 63.6% to 73.9% of net sales. This increase reflects an increase
in the cost per ton of nitrogen fertilizers, a decrease in the cost per ton of
DAP and an increase in the cost per ton of potash. Nitrogen fertilizer costs
increased due to increased depreciation resulting from a newly constructed
nitric acid plant, and higher natural gas costs. DAP production costs per ton
declined due to higher production volumes and lower raw material costs. Potash
costs per ton increased due to higher labor costs and lower production volumes
in fiscal 1993.

Selling Expenses. Selling expenses increased from $27.7 million for fiscal
1992 to $28.9 million for fiscal 1993 due to increased delivery expenses
resulting from higher volumes of nitrogen fertilizer sold. As a percentage of
net sales, however, selling expenses decreased from 11.6% to 10.0% as a result
of a higher percentage of DAP sales in fiscal 1993 for which the Company did
not absorb delivery expense.

General and Administrative Expenses. General and administrative expenses
decreased from $18.8 million for fiscal 1992 to $17.3 million for fiscal 1993.
The decrease was due to the inclusion of overhead costs for the Company's DAP
plant for a portion of fiscal 1992 before the facility had reached full
operation. For fiscal 1993, these costs were included in cost of products sold.
As a percentage of net sales, general and administrative expenses decreased
from 7.8% to 6.0%.

Operating Income. As a result of the above factors, operating income
decreased from $40.8 million for fiscal 1992 to $29.2 million for fiscal 1993.

Interest, Net. Net interest decreased from $3.9 million for fiscal 1992 to
$3.6 million for fiscal 1993, reflecting a $363,000 increase in capitalized
interest related to the construction of a new nitric acid plant. Net interest
expense also decreased in the current period as a result of lower interest
rates partially offset by higher levels of borrowings and lower interest
income.

Income Tax Expense. Income tax expense decreased from $5.0 million for fiscal
1992 to $3.7 million for fiscal 1993.

Margins from Continuing Operations Before Cumulative Effect of Change in
Accounting Principle. As a result of the foregoing, margins from continuing
operations before cumulative effect of change in accounting principle decreased
from $31.3 million for fiscal 1992 to $22.7 million for fiscal 1993.

Effect of Reorganization. If the Company had not operated as a cooperative,
income taxes would have been $8.8 million for fiscal 1993 and $13.5 million for
fiscal 1992. Income from continuing operations before cumulative effect of
change in accounting principle assuming conversion from a cooperative to a
regular business corporation would have been $17.5 million for fiscal 1993 and
$22.8 million for fiscal 1992.

23
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company has traditionally financed its operations with retained patronage
earnings through the issuance of Capital Equity Credits and Allocated Surplus
Accounts, and borrowings from CoBank and commercial banks.

At June 30, 1994, the Company had cash and cash equivalents of $23.2 million,
compared to $22.0 million at June 30, 1993, an increase of $1.2 million. At
June 30, 1993, cash and cash equivalents had decreased $24.6 million from June
30, 1992, primarily as a result of the repayment of borrowings.

Operating Activities. For fiscal 1994 and fiscal 1993, net cash provided by
operating activities was $39.8 million and $41.1 million, respectively. This
decrease was primarily due to an increase in accounts receivable and a decrease
in accounts payable, partially offset by higher non-cash charges for
depreciation, deferred taxes and the accrual for closure of the gypsum disposal
area. For fiscal 1992, net cash provided by operating activities was $47.2
million. Net cash provided by operating activities declined in 1993 because of
lower margins from continuing operations, partially offset by increased
depreciation.

Investing Activities. Net cash used by investing activities was $25.4
million, $29.6 million and $27.3 million, respectively, for fiscal 1994, 1993
and 1992, primarily reflecting capital expenditures in those periods. In
addition to capital expenditures, cash flow from investing activities in the
above periods also included an aggregate of $11.8 million for payments required
under a newsprint purchase contract with NSI. As a result of the disposition of
NSI, the Company is no longer obligated to make these payments. Also included
in cash flow from investing activities were $10.8 million in payments to settle
certain obligations in connection with the disposition of NSI. See "Disposition
of NSI."

Capital expenditures were $11.4 million during fiscal 1994. These
expenditures were for improvements and modifications to the Company's
facilities, including expenditures for an emission control system for its
ammonium nitrate prill towers at its Yazoo City nitrogen production facility
and the purchase of a new computer system.

Financing Activities. Net cash used by financing activities was $13.2
million, $36.2 million and $28.1 million, respectively, for fiscal 1994, 1993
and 1992 . The amounts used by financing activities included cash patronage
payments of $13.4 million, $22.5 million and $27.1 million, respectively, in
fiscal 1994, 1993 and 1992. In December 1992, the Company prepaid $8.9 million
of 9.5% secured notes which had maturities scheduled through fiscal 1997.
During fiscal 1994, the Company prepaid $12.2 million of long-term debt with
CoBank which had maturities through fiscal 1998. In addition, the Company paid
$11.2 million and $10.9 million, respectively, on long-term debt that matured
during fiscal 1994 and 1993.

The Company and its subsidiaries have commitments from various banks for
short-term borrowings up to $55.0 million, which includes $35.0 million from
CoBank. The lines of credit available through CoBank expire in October 1994,
and will not be renewed. Short-term borrowings outstanding at June 30, 1994,
1993 and 1992, were $7.0 million, $4.6 million and $13.5 million, respectively.

In addition to its short-term lines, the Company also has a loan agreement
with NationsBank which was increased from $20.0 million to $50.0 million on
June 17, 1994. This agreement is a long-term revolving credit facility that
bears interest at the prime rate (7.25% at July 1, 1994) or for fixed periods
at interest rates related to the London Interbank Offered Rates ("LIBOR") or
U.S. Treasury notes. At June 30, 1994, the balance outstanding on this loan was
$25.0 million. The amounts borrowed under the Company's credit lines vary based
on the Company's seasonal requirements. The maximum combined amount outstanding
under the short-term lines and the revolving credit facility at any month-end
for fiscal 1994 was $25.0 million.

The Company believes that existing cash, cash generated from operations, the
proceeds of the Offering and available lines of credit will be sufficient to
satisfy its financing needs for the foreseeable future.

24
<PAGE>

QUARTERLY RESULTS

The usage of fertilizer is highly seasonal, and the Company's quarterly
results reflect the fact that in the Company's markets significantly more
fertilizer is purchased in the spring. Significant portions of the Company's
net sales and operating income are generated in the last four months of the
Company's fiscal year (March through June). Since interim period operating
results reflect the seasonal nature of the Company's business, they are not
indicative of results expected for the full fiscal year. In addition, quarterly
results can vary significantly from one year to the next primarily as a result
of weather-related shifts in planting schedules and purchase patterns. Portions
of the Company's primary market area have experienced abnormally high rainfall
levels during June and July 1994. If these rainfall levels were to continue for
the remainder of the summer of 1994, the Company's results of operations for
the quarter ending September 30, 1994 could be adversely affected. The Company
incurs substantial expenditures for fixed costs throughout the year and
substantial expenditures for inventory in advance of the spring planting
season. The following table presents selected unaudited quarterly results of
operations for fiscal 1994 and fiscal 1993.

<TABLE>
<CAPTION>
FISCAL 1994 QUARTER ENDED
---------------------------------------------
JUNE
SEPTEMBER 30 DECEMBER 31 MARCH 31(1) 30(1)
------------ ----------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................ $45,220 $61,105 $104,158 $ 98,877
======= ======= ======== ========
Operating income................. $ 2,071 $ 4,044 $ 11,707 $ 20,083
======= ======= ======== ========
Margins from continuing
operations before cumulative
effect of change in accounting
principle....................... $ 799 $ 1,660 $ 9,467 $ 14,986
======= ======= ======== ========
Income from continuing operations
assuming conversion to a regular
business corporation for the
periods presented (2)........... $ 639 $ 1,878 $ 7,235 $ 11,663
======= ======= ======== ========
Earnings per share (3)........... $ 0.03 $ 0.10 $ 0.37 $ 0.60
======= ======= ======== ========
<CAPTION>
FISCAL 1993 QUARTER ENDED
---------------------------------------------
SEPTEMBER 30 DECEMBER 31 MARCH 31 JUNE 30
------------ ----------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................ $55,157 $54,653 $ 79,261 $100,054
======= ======= ======== ========
Operating income................. $ 3,828 $ 3,359 $ 10,708 $ 11,285
======= ======= ======== ========
Margins from continuing
operations...................... $ 2,757 $ 2,694 $ 10,041 $ 7,189
======= ======= ======== ========
Income from continuing operations
assuming conversion to a regular
business corporation for the
periods presented (2)........... $ 1,958 $ 1,975 $ 6,526 $ 7,074
======= ======= ======== ========
Earnings per share (3)........... $ 0.10 $ 0.10 $ 0.34 $ 0.37
======= ======= ======== ========
</TABLE>
- --------

(1) Includes a non-cash charge of $5.9 million in the quarter ended March 31,
1994 and $133,000 in the quarter ended June 30, 1994 relating to the
estimated cost of the closure of the gypsum disposal facility at the
Company's Pascagoula facility. The quarter ended June 30, 1994 also
includes a restructuring charge of $1.4 million.

(2) For periods presented, the Company operated as a cooperative and realized
deductions for income taxes for amounts paid in cash as patronage refunds
to its shareholder-members. This reflects the Company's quarterly results
as if it had operated as a regular business corporation.

(3) Earnings per share reflect the Reorganization. Weighted average shares
outstanding for each of the quarters is assumed to be equal to the weighted
average shares outstanding for the applicable year, 19,454,354 and
19,035,276 for fiscal 1994 and 1993, respectively.

25
<PAGE>

DISCONTINUED OPERATIONS

On June 30, 1994, the Company disposed of a majority of its interest in NSI.
This action was taken due to substantial losses incurred to date by NSI and the
expectation of continuing losses. The transaction involved a transfer by the
Company of 70% of its economic interest in NSI to various individuals
designated by the lessor of the newsprint facility leveraged lease. The Company
will not retain any voting interest in NSI. The disposition of NSI will also
allow the Company to focus its attention on its core fertilizer business.

Under the terms of the transaction, the Company paid $19.0 million to NSI in
various forms including capital contributions, payments in liquidation of the
Company's obligations under a newsprint purchase contract and certain tax-
compensating payments pursuant to a tax-sharing agreement. Prior loans in the
amount of approximately $13.7 million made by the Company to NSI pursuant to a
newsprint purchase contract between the Company and NSI were converted to
capital. Pursuant to the transaction, the Company also purchased from NSI its
CoBank stock for $4.0 million. This stock is scheduled for redemption at the
face amount by CoBank during the next five years.

Subsequent to this transaction, the Company is accounting for its continuing
interest in NSI using the cost method of accounting for investments. In
connection therewith, the Company wrote up to zero its negative investment in
NSI of $39.7 million as it will have no continuing obligation to fund any of
NSI's future losses.

26
<PAGE>

FERTILIZER INDUSTRY OVERVIEW

GENERAL

Fertilizer products are primarily used by the agricultural industry to
enhance the natural fertility of soil. Nitrogen, phosphorous (contained in
phosphate fertilizer) and potassium (contained in potash fertilizer) constitute
the three major nutrients required for plant growth. These elements are all
naturally present in soil but need to be replaced through the use of
fertilizers as crops exhaust them. There are no viable substitutes for
nitrogen, phosphate or potash in the development and maintenance of high-yield
crops.

The primary determinants of fertilizer demand in the U.S. are total planted
acres, fertilizer application rates and crop mix, which in turn are influenced
by government agricultural policies (including subsidy and acreage set-aside
programs), projected grain stocks, crop failure, weather and changes in
agricultural production methods. Worldwide supply/demand relationships are
impacted by currency exchange rates, prevailing import and currency exchange
barriers, changes in hard currency demand and economic, political and
regulatory policies of foreign governments, decisions relating to production of
fertilizer by foreign state-owned and/or state-subsidized entities, and the
laws and policies of the U.S. affecting foreign trade and investment. The
supply/demand balance for fertilizer can have a dramatic effect on the market
price of fertilizers.

NITROGEN FERTILIZER

Nitrogen is one of three primary nutrients essential for plant growth.
Nitrogen fertilizer needs to be reapplied each year in areas of extensive
agricultural usage because of absorption by crops and its tendency to evaporate
from the soil. There are no substitutes for nitrogen fertilizer in the
cultivation of high-yield crops. Ammonia is the simplest form of nitrogen
fertilizer and is the primary raw material for the production of upgraded
nitrogen fertilizers. Ammonia is a gas under normal conditions and requires
special handling and application equipment and procedures. Ammonia is reacted
with other compounds to produce solid and liquid fertilizers, primarily urea,
ammonium nitrate and nitrogen solutions, which are easier to transport, store
and apply than ammonia. The type of nitrogen fertilizer applied is dependent on
the crop, soil type, weather conditions, available application equipment,
regional farming practices and fertilizer prices.

From 1980 through 1992 total nitrogen consumption in the U.S. varied from
10.5 million tons to 11.9 million tons. The Company has forecast total nitrogen
consumption in the U.S. to range between 11.4 million tons and 11.6 million
tons per year for the years 1994 to 1998. Over the same period, the acreage
dedicated to the principal crops that are dependent on nitrogen fertilizer
(corn, sorghum, wheat, rice and cotton) is expected to range between 234
million and 240 million acres. In contrast to the relative stability of
nitrogen fertilizer usage, total U.S. nitrogen production capacity has declined
by approximately 17% since 1980 due to plant shutdowns and conversions to other
products. Substantial construction lead time, capital demands and environmental
regulations have deterred the construction of new nitrogen fertilizer
production facilities. The Company does not believe that any new nitrogen
fertilizer facilities are presently planned for North America.

Imports supplied approximately 19% of U.S. demand for nitrogen fertilizers in
1993. The Company believes a favorable world nitrogen fertilizer supply/demand
balance has developed in recent years. With world consumption expected to grow
in line with world population growth at a rate of approximately 1.6% per year
for the next several years, an oversupply is not expected to occur in the near
term. In western Europe, ammonia capacity and production have been on the
decline since 1970, and imports of nitrogen fertilizers have risen. Exports
from the FSU have declined recently as a result of political instability,
reduced production capacity, higher natural gas and transportation costs and
increased local consumption. Despite a continuing need for hard currency, FSU
exporting activities are expected to remain at depressed levels for several
years because of internal demand for fertilizers and because of production and
delivery costs that are not competitive with U.S. and certain other producers.

Except in limited periods, nitrogen fertilizer prices have been relatively
stable in the past ten years. During the fall of 1990, nitrogen fertilizer
prices temporarily surged as a result of the invasion of Kuwait and

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the subsequent Gulf War. During early 1994, shortages of ammonia developed and
ammonia prices increased by approximately 60%. Once spring seasonal demand
pressures subsided, the market price of ammonia declined but remains
substantially above 1993 levels.

PHOSPHATE FERTILIZER

Phosphate plays a direct role in many of the physiological processes of
plants, such as the utilization of sugar and starch, photosynthesis, and the
transfer of energy. It increases the strength of cereal straw, stimulates root
development, promotes flower formation, and hastens the maturity of crops grown
in soils low in phosphorus. Phosphate fertilizers are manufactured from
phosphate rock obtained from surface mining operations. DAP is the most widely
used form of phosphate fertilizer.

From 1975 through 1989, worldwide phosphate fertilizer consumption increased
from approximately 28 million tons to approximately 42 million tons per year.
This increase was primarily a result of significant increases in demand from
the developing world, particularly China and India. Between 1989 and 1993,
worldwide phosphate demand fell sharply. In addition, starting in 1990, the
FSU, which historically had been a significant importer of phosphate
fertilizer, became a major exporter resulting in a material disruptive impact
on world phosphate trade. More recently, purchases by India and China, the
world's largest phosphate fertilizer importing nations, have dropped
dramatically in response to the termination of state fertilizer subsidies in
both countries. As a result of these factors, phosphate fertilizer consumption
in 1993 declined to less than 31 million tons, the lowest level since 1977.
While consumption was falling, DAP production remained relatively consistent.
As a result, an acute supply imbalance developed and DAP prices fell to their
lowest levels since 1977.

During the spring of 1994, industry conditions improved markedly. The
supply/demand relationship has responded to (i) production cutbacks by major
U.S. producers, (ii) reduced phosphate fertilizer exports from the FSU, and
(iii) the reinstitution of subsidies and increased demand in China and India.
DAP prices in the world market have risen significantly since the first half of
1993.

For the longer term, worldwide phosphate fertilizer consumption has been
projected by industry sources to approach 40 million tons per year by the year
2000. These projections are based on an assumed partial recovery of internal
demand in the FSU, as well as growth in demand of approximately 5% per year in
Africa, Asia and Latin America. Demand in the U.S. and western Europe is
expected to be flat or to decline slightly.

POTASH FERTILIZER

Potash, as a source of potassium, is a vital plant nutrient. Plants cannot
achieve maximum growth and yield without potash, nor can the functions that
potash performs be carried out by other nutrients. Potash is essential for
protein synthesis, overcoming effects of diseases, tolerance of water stress
and winter hardiness. Nearly every aspect of plant growth, development, yield
and quality is dependent upon an adequate potash supply. Potash ore, the source
of potash fertilizer, is extracted from both below surface and surface mines.
Potash is also precipitated from potassium rich brines.

In recent years, potash fertilizer markets worldwide have generally been
characterized by excess capacity and falling usage. From a base of 57 million
tons in 1988, worldwide consumption fell to approximately 39 million tons in
1993. In 1992 and 1993, demand was dampened by reduced usage in the developing
world, particularly in India, China and Brazil. Concurrently, exports from the
FSU increased, driven by hard currency demands and falling internal
consumption.

Potash fertilizer usage, both domestically and abroad, increased in the 1994
crop season and, as a result, prices have increased. Industry reports have
forecasted significant growth in potash fertilizer consumption in developing
countries over the next ten years as economic reforms in China, India and Latin
America boost crop production.

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BUSINESS

GENERAL

The Company is a major producer and supplier of nitrogen fertilizers in the
southern United States and believes it is one of the nation's lowest-cost
nitrogen fertilizer producers. The Company also manufactures phosphate and
potash fertilizers, making it a full product line fertilizer supplier. The
Company sells its nitrogen and potash fertilizer products to farmers,
fertilizer dealers and distributors for ultimate use primarily in the southern
farming regions of the United States and areas served by the Mississippi River
system. Phosphate fertilizers are sold primarily in international markets.

The Company's operations are managed from its corporate headquarters in Yazoo
City, Mississippi. The Company produces nitrogen fertilizers at its production
facility in Yazoo City, Mississippi, and through a 50%-owned production
facility at Donaldsonville, Louisiana. The Louisiana facility ("Triad") is
operated as a joint venture by the Company and First Mississippi Corporation.
The Company produces DAP fertilizer at its Pascagoula, Mississippi, facility.
Potash fertilizer is mined and processed at the Company's facility near
Carlsbad, New Mexico.

EFFECTS OF THE REORGANIZATION

The Company is the successor by merger to the Cooperative, which was formed
in 1948 as the first fertilizer cooperative in the United States. Effective
July 1, 1994, the Cooperative was merged into the Company and cooperative
operations ceased. The primary business of the Cooperative was to provide
nitrogen fertilizer to its shareholders. The Cooperative built an excellent
reputation with its customers, suppliers and competitors as a high-quality,
dependable source of fertilizers. Field surveys conducted by Company personnel
have indicated that sales volumes should not be adversely affected by the
change from the cooperative structure. Further, the Company anticipates that
the strong relationships that the Cooperative developed with its customer-
shareholders will have a positive carryover effect and enable the Company to
retain a substantial portion of its existing customer base, while also being
able to sell its products to new customers and in new markets.

While the Cooperative had few options for raising capital, the Company
believes the Reorganization will provide it with access to broader-based
capital markets. This access will assist it in expanding operations, financing
required capital expenditures and becoming even more competitive in its
markets. The ability to issue securities not subject to the restrictions of the
cooperative structure should also provide the Company with greater flexibility
in connection with the financing of potential acquisitions, partnerships and
alliances in the fertilizer industry.

BUSINESS STRATEGY

The Company's business and operating strategy is to supply quality fertilizer
products at competitive prices while increasing the Company's long-term
profitability. This strategy focuses on the following elements:

Low Cost/High Efficiency Operations. The Company stresses low cost and high
efficiency in every aspect of its operations. The Company's products are global
commodities that are available from multiple sources; therefore, the Company
competes primarily on the basis of price. Accordingly, the Company is committed
to maintaining its position as one of the lowest-cost U.S. nitrogen fertilizer
producers. The Company maintains an experienced technical staff that
aggressively seeks cost-reduction opportunities in its production processes.

Customer Service and Product Quality. Unlike many of its competitors, the
Company maintains a large and experienced field sales force strategically
located throughout its market area. This sales force provides extensive, cost-
effective, value-added services and programs to the Company's customers. These
efforts help to differentiate the Company's products, enhance competitiveness
and establish the Company as a preferred supplier of fertilizer products.
Improvements to product quality are also continually addressed to assure that
products offered by the Company remain well-accepted in the marketplace.

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Distribution System. The Company has strategically located production and
distribution facilities throughout the United States' mid-South. All of the
Company's warehouses and terminals are accessible by either rail or water. The
flexibility to ship its products by these low-cost modes of transportation
enhances the Company's competitive position.

Increase in Net Backs. The Company seeks to achieve the greatest return for
each sale based on the net back to the Company. The Company's marketing efforts
are focused on geographically proximate markets where lower transportation and
distribution costs increase net backs and improve margins.

Implementation of Advantages of the Reorganization. The Company believes that
its new corporate status will increase opportunities for the growth of its
operations. In addition to enhancing its ability to improve net backs, the
greater flexibility of operations and access to capital markets resulting from
the Reorganization will assist the Company in expanding its operations,
financing capital expenditures and seeking opportunities for acquisitions,
joint ventures and other strategic alliances in the fertilizer business.

NITROGEN FERTILIZER

Products

The Company produces nitrogen fertilizers at its Yazoo City, Mississippi,
production facility and at the Triad facility. In fiscal 1994, the Company sold
over 1.6 million tons of nitrogen fertilizers to farmers, fertilizer dealers
and distributors located primarily in the southern United States. Sales of
nitrogen fertilizer products by the Company in fiscal 1994 were $199.9 million,
which represented approximately 65% of net sales.

The Company's principal nitrogen products include ammonia, fertilizer-grade
ammonium nitrate, which is sold under the Company's trade name Amtrate(R), UAN
solutions, which are sold under the Company's trade name N-Sol, and urea.

Although, to some extent, the various nitrogen fertilizers are
interchangeable, each has its own distinct characteristics which produce
agronomic preferences among end users. Farmers decide which type of nitrogen
fertilizer to apply based on the crop planted, soil and weather conditions,
regional farming practices and relative nitrogen fertilizer prices.

Ammonia. The basic nitrogen product is anhydrous ammonia, which is the
simplest form of nitrogen fertilizer. Anhydrous ammonia, which is 82% nitrogen,
is the most concentrated form of nitrogen fertilizer available. It is
synthesized as a gas under high temperature and pressure. The raw materials
used to produce anhydrous ammonia are natural gas, atmospheric nitrogen and
steam.

In fiscal 1994, the Company produced approximately 719,000 tons of anhydrous
ammonia at its Yazoo City and Triad facilities and purchased approximately
45,000 tons. The Company sold approximately 45,500 tons of anhydrous ammonia as
direct-application fertilizer and used the balance as a raw material to
manufacture its other nitrogen fertilizer products.

In the Company's markets, ammonia is used primarily as a preemergent
fertilizer for most row crops. Although anhydrous ammonia is the least
expensive form of nitrogen, its use as a primary fertilizer has gradually
declined because of the difficulties of application and the high cost of
application equipment.

Ammonium Nitrate. The Company is the largest manufacturer and marketer of
ammonium nitrate fertilizer in the United States and believes it is one of the
lowest-cost U.S. producers. Ammonium nitrate, which is 34% nitrogen, is
produced by reacting anhydrous ammonia and nitric acid. Ammonium nitrate is
less subject to volatilization (evaporation) losses than other nitrogen
fertilizer forms. Due to its stable nature, ammonium nitrate is the product of
choice for such uses as pastures and no-till row crops where fertilizer is
spread upon the surface and is subject to volatilization losses. Although the
consumption of ammonium

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nitrate in the U.S. has been stable in recent years, the use of conservation
tillage, which reduces soil erosion, is increasing in the U.S. and should have
a positive impact on ammonium nitrate demand.

In fiscal 1994, the Company sold approximately 768,000 tons of solid ammonium
nitrate fertilizer, which it produces at its Yazoo City facility. The Company's
ammonium nitrate is sold under the registered trade name Amtrate(R). Due to its
superior shipping and storage characteristics, Amtrate(R) has established
excellent brand name recognition and a reputation as a high-quality product.

N-Sol. In fiscal 1994, the Company sold approximately 563,000 tons of N-Sol,
which it produces at its Yazoo City facility. N-Sol is a 32% nitrogen product
that is made by mixing urea liquor and ammonium nitrate liquor. N-Sol is used
in direct application to cotton, corn, grains and pastures as well as for use
in liquid fertilizer blends. Over the past 20 years, there has been a
substantial shift in product preference from directly applied ammonia to UAN
solutions because of the difficulties of applying and the high cost of
application equipment for ammonia.

Urea. In fiscal 1994, the Company sold approximately 200,500 tons of prilled
urea and approximately 66,000 tons of urea melt which it produces primarily at
its Triad facility. Under a long-term contract with Melamine Chemicals, Inc.
("Melamine"), the Company is obligated to sell up to 75,000 tons per year of
urea melt at prevailing market prices to Melamine's facility located adjacent
to the Triad facility. Urea is synthesized by the reaction of ammonia and
carbon dioxide and then solidified in prill form. At 46% nitrogen by weight,
urea is the most concentrated form of dry nitrogen. Because urea undergoes a
complex series of changes within the soil before the nitrogen it contains is
ultimately converted into a form which can be used by plants, it is considered
a long-lasting form of nitrogen. As a fertilizer product, urea is acceptable as
both a direct-application material and as an ingredient in fertilizer blends.
Urea consumption has increased modestly in recent years. In the Company's trade
area, prilled urea is the nitrogen product of choice for topdressing rice. Most
of the Company's prilled urea is aerially broadcast on rice crops in Arkansas,
Louisiana, Mississippi and Texas.

Production and Properties

Yazoo City, Mississippi. The Yazoo City facility is a closely integrated,
multi-plant nitrogen fertilizer production complex located on approximately
1,180 acres. The complex includes an anhydrous ammonia plant, four nitric acid
plants, an ammonium nitrate plant and a UAN solutions plant. In 1993, the
Company spent $32 million to expand its nitrogen production capacity at its
Yazoo City facility, which increased nitric acid production capacity by
approximately 300 tons per day and ammonium nitrate capacity by approximately
375 tons per day.

The Yazoo City ammonia plant has been continuously retrofitted to incorporate
energy-saving technology and improve efficiencies. The Yazoo City facility
includes a 20.5 megawatt cogeneration facility, which produces significant
savings by sequentially using steam for electricity generation and process
heat. The Yazoo City plant has direct access to water, rail and truck
transportation and is strategically located for the purchase of competitively
priced natural gas. See "--Raw Materials--Natural Gas."

Donaldsonville, Louisiana. The Triad facility is a closely integrated, multi-
plant nitrogen fertilizer complex located on approximately 46 acres fronting
the Mississippi River. At the Triad plant, the Company produces anhydrous
ammonia and urea. The Company is entitled to one-half of the production from
the Donaldsonville facility as the co-owner of Triad with First Mississippi
Corporation. The Triad ammonia plant has been retrofitted on several occasions
to increase production and enhance operating efficiency.

Triad has ready access to rail and truck transportation. The plant is also
equipped with a deep-water port facility on the Mississippi River, allowing
access to economical barge and ship transport for its urea and ammonia
products. The Triad facility is well positioned for the purchase of natural
gas. See "--Raw Materials--Natural Gas."

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Marketing and Distribution

Prior to the Reorganization, over 90% of the Cooperative's sales of nitrogen
fertilizers were made to its shareholders who purchased products pursuant to a
quantity entitlement based on their stock ownership and who received patronage
refunds on such purchases. Competitive factors in the sale of nitrogen
fertilizers include price, proximity to markets and customer service. The
Company believes that it can successfully compete based on these criteria and
anticipates that its nitrogen customer base will be substantially similar to
that of the Cooperative. See "The Reorganization--Reasons for the
Reorganization."

The Company sells its nitrogen fertilizer products to farmers, dealers and
distributors located primarily in the southern farming regions of the United
States where its facilities are located. In the three-tiered fertilizer
distribution chain, distributors operate as wholesalers supplying dealers who,
in turn, sell directly to farmers. Larger customers (distributors and large
multi-location dealers) arrange for distribution, storage and financing of
nitrogen fertilizer. The majority of the Company's sales are made to
distributors and large dealers.

The ten states which make up the Company's primary trade area are
Mississippi, Alabama, Arkansas, Texas, Louisiana, Missouri, Georgia, Florida,
Tennessee and Kentucky. Based on published fertilizer consumption figures, the
Company believes that its sales of nitrogen fertilizers in Mississippi,
Alabama, Arkansas and Louisiana substantially exceed those of any other
producer.

The Company maintains a large and experienced field sales force strategically
located throughout the southern United States. This sales force maintains close
communications with the customer base and plays an important role in the
marketing and distribution of the Company's products. Through regular, personal
contact with its customers, the Company is able to ascertain local demand for
fertilizer products and arrange to have those products available from the most
cost-effective source. The Company's field sales force is also able to identify
specific customer service needs which the Company can provide. Customer service
helps differentiate the Company's products and enhance its position as a
preferred supplier.

The Company transports its nitrogen products by water, rail and truck. The
Company's distribution network is complemented by 23 owned or leased warehouses
and terminals strategically placed in high-consumption areas.

PHOSPHATE FERTILIZER

Products

The Company produces DAP at its Pascagoula, Mississippi, facility. In fiscal
1994, the Company sold approximately 638,000 tons of DAP, primarily into
international markets. Sales of DAP by the Company in fiscal 1994 were $83.4
million, which represented approximately 27% of net sales.

DAP is the most common form of phosphate fertilizer. DAP is produced by
reacting phosphate rock with sulfuric acid to produce phosphoric acid, which is
then combined with ammonia. DAP contains 18% nitrogen and 46% phosphate
(P/2/0/5/) by weight. DAP is an important fertilizer product for both direct
application and for use in blended fertilizers applied to all major types of
row crops.

Production and Properties

The Company returned the Pascagoula facility to full operation and began
producing DAP in December 1991 after entering into its phosphate rock supply
contract with OCP. In April 1988, the Company sold its Pascagoula, Mississippi,
fertilizer manufacturing facility where it produced mixed fertilizer products.
The purchaser operated the facility for approximately two years, after which it
filed a voluntary Chapter 7 bankruptcy petition and the U.S. bankruptcy trustee
took control of the facility for liquidation. On December 7, 1990, the trustee
conveyed the Pascagoula facility to the Company in lieu of foreclosure of the
Company's security interest in the facility.

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The Company's phosphate production complex is located on approximately 1,500
acres. The Pascagoula facility is a closely integrated, multi-plant phosphatic
fertilizer complex where the primary facilities are a phosphoric acid plant,
two sulfuric acid plants and a DAP granulation plant. The plant has storage
facilities for finished product (45,000 tons), as well as for the primary raw
materials, phosphate rock (80,000 tons), sulfur (10,000 tons) and ammonia
(25,000 tons). All of the phosphate rock used by the Company is purchased
pursuant to a single supply contract. See "--Raw Materials--Phosphate Rock."

The plant site fronts a deep-water channel that provides direct access to the
Gulf of Mexico. The complex contains docks and off-loading facilities for
receiving shipload quantities of phosphate rock, sulfur and ammonia, and for
outloading DAP. The plant's location on deep water provides the Company with an
outbound freight cost advantage over central Florida DAP producers with respect
to international shipments and domestic shipments along the Mississippi River
system.

Marketing and Distribution

The Company sells substantially all of its DAP to Atlantic, the exclusive
distributor of its DAP products. Atlantic maintains a network of sales agents
in the major phosphate fertilizer consuming nations around the world. Sales to
Atlantic are made on an FOB Pascagoula basis at a price which reflects the
price Atlantic charges its customers, adjusted to reflect Atlantic's
commission. Sales to Atlantic for the export market are backed by standby
letters of credit.

In fiscal 1994, approximately two-thirds of the Company's DAP was sold into
international markets. The three largest export markets in fiscal 1994 were
India, China and Mexico. Most domestic sales are made in barge-lot quantities
to major fertilizer distributors and dealers located on the Mississippi River
system. The vast majority of the Company's product is transported by ship and
barge, although truck and rail access is also available.

POTASH FERTILIZER

Products

The Company produces potash at its mine and related facilities near Carlsbad,
New Mexico. In fiscal 1994, the Company sold approximately 330,000 tons of
granular potash primarily to customers located west of the Mississippi River.
In May 1994, the Company completed an expansion of its Carlsbad facility for
$1.6 million, bringing its capacity for granular product to approximately
420,000 tons per year. Sales of potash fertilizer by the Company in fiscal 1994
were $24.1 million, which represented approximately 8% of net sales.

The Company's potash is mined from subterranean salt deposits containing a
mixture of potassium chloride and sodium chloride. The Carlsbad, New Mexico,
potash deposits are located from 800 to 1,200 feet below the surface. Potash is
produced in a refining process whereby the potassium chloride is separated from
the sodium chloride.

The Company produces red granular potash. The three principal grades of
potash fertilizer are granular, coarse and standard, with granular being the
largest particle size. Granular potash is used as a direct-application
fertilizer and, among the various grades, is particularly well suited for use
in fertilizer blends. Potash is an important fertilizer product for both direct
application and for use in blended fertilizer applied to all major types of row
crops.

Production and Properties

The Company's potash mine and refinery are located approximately 25 miles
east of Carlsbad, New Mexico. The Company recently completed a $5 million
project to modernize its mining equipment, enabling it to extract a higher
grade of ore that will improve overall facility efficiencies. The mine supplies
ore to an above ground refinery which separates the potassium chloride from the
ore. The run-of-mine refined product

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is then transported to the Company's nearby compaction plant for conversion to
granular form. The Company recently increased compaction capacity from
approximately 300,000 tons to approximately 420,000 tons per year. Located
contiguous to the compaction facility are storage and shipping facilities from
which the finished product is transported by rail and truck into domestic and
export markets.

The Company's potash reserves are controlled under long-term federal and
state potassium leases on approximately 60,000 acres. In addition, the Company
holds mineral title to approximately 4,400 acres and fee title to approximately
10,000 acres. Revised estimates of potash ore reserves underlying the Carlsbad
properties were compiled in 1981 and 1983. According to these estimates, the
Company's reserves were estimated to contain 346.2 million tons of in situ ore
with an average grade of 15.25% K/2/0 or 297.9 million tons of recoverable ore
with an average grade of 14.88% K/2/0. Since these estimates were made, ore
extracted would indicate remaining reserves of 334.4 million tons of in situ
ore with an average grade of 15.25% K/2/O or 297.9 million tons of recoverable
ore with an average grade of 14.88% K/2/O. This reserve base is estimated to be
equivalent to 57.2 million tons of muriate of potash. At current production
rates, the Company's reserves have a remaining life of approximately 140 years.

Marketing and Distribution

The substantial majority of the Company's potash sales are in domestic
markets in the southern states west of the Mississippi River where it and other
Carlsbad potash producers enjoy freight cost advantages over Canadian and
overseas potash producers. Consistent with the Company's strategy to maximize
net backs and increase profit margins, domestic sales are targeted for
locations along the freight route of the Santa Fe Railroad. Domestic potash
marketing is performed by the Company's sales staff. The Company's export sales
are made through Potash Corporation of Saskatchewan Sales Limited. The primary
export markets for the Company's potash are Mexico and Brazil. Potash for
export is transported by rail to terminal facilities in Houston.

RAW MATERIALS

Natural Gas

Natural gas is the primary raw material used by the Company in the
manufacture of nitrogen fertilizer products. Natural gas is used both as a
chemical feedstock and as a fuel to produce anhydrous ammonia which is then
upgraded into other nitrogen fertilizer products. During fiscal 1994, the cost
of natural gas represented approximately 74% of the Company's cost of producing
ammonia. Because there are no commercially feasible alternatives for natural
gas in the production of ammonia, the economic viability of the Company's
nitrogen business depends upon the availability of competitively priced natural
gas.

In today's natural gas market, the Company's total natural gas cost generally
consists of two components--the market price of the natural gas in the
producing area at the point of delivery into a pipeline and the fee charged by
the pipeline for transporting the natural gas to the Company's plants. The cost
of the transportation component can vary substantially depending on whether or
not the pipeline has to compete for the business. Therefore, it is extremely
important to the Company's competitiveness that it have access to multiple
natural gas transportation services. In addition to the impact on transmission
costs, access alternatives enable the Company to benefit from natural gas price
differences that may exist from time to time in the various natural gas-
producing areas. In recent years, the Company has improved the natural gas
purchasing logistics of its nitrogen facilities.

The natural gas requirements of the Yazoo City facility (approximately 54,000
Mcf per day) are supplied in part by Shell Western E&P Inc. ("SWEPI"), a
subsidiary of Shell Oil Company ("Shell"). In 1972, the Company and Shell
entered into a gas purchase and sale agreement whereby Shell agreed to supply
natural gas to the Yazoo City plant from its natural gas reserves located in
Rankin County, Mississippi. To facilitate this agreement, Shell constructed a
60-mile pipeline (the "Thomasville Line") from its reserves directly to

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the Yazoo City facility. The original Shell contract was superseded by a new
contract with SWEPI on January 1, 1986. The 1986 contract provided for the
delivery of 30,000 Mcf per day under arrangements providing for fixed prices on
certain quantities and market-related prices on other specified quantities. The
arrangements with SWEPI provided the Company with natural gas supplies priced
below the prevailing market. The primary term of the SWEPI contract expired on
March 31, 1994. SWEPI continues to furnish gas for a 180-day "renegotiation
period" to allow for the opportunity for structuring a new contract. The
Company anticipates that it will reach an agreement with SWEPI to continue
purchasing the output of the Rankin County reserves, which is presently
approximately 20,000 Mcf per day. The Company expects that the gas will be
subject to market-sensitive pricing. Although the expiration of the SWEPI
contract has resulted in higher natural gas costs, the Company believes that it
remains one of the lowest-cost nitrogen producers in the U.S.

The balance of the requirements of the Yazoo City facility are presently
being furnished by an intrastate pipeline that is connected to the plant by the
Thomasville Line and by various producers and marketers who sell gas to the
Company at various points along the pipeline systems that are directly
connected to the Yazoo City plant. The Yazoo City plant is also directly
connected to the interstate pipeline system of Southern Natural Gas Company
("Southern"). The Company and Southern have entered into a long-term,
interruptible transportation agreement. Although the Southern contract provides
for interruptible service, the Company believes that curtailment of supply is
unlikely because of the plant's location on the system. In addition to being
connected to Southern, the plant is located within a mile of the Texas Eastern
Transmission Corporation pipeline system. The Company has also secured long-
term transportation capacity in the Thomasville Line, which provides the plant
with access to an additional interstate pipeline and a large intrastate
gathering and transmission system in southern Mississippi. As a result of this
multiple source access, the Company benefits from competition for the
transportation and its supply of natural gas.

The natural gas requirements of the Triad facility are approximately 51,000
Mcf per day. The Triad facility is located in one of the primary gas-producing
regions of the United States. The facility is presently connected to five
intrastate pipeline systems and benefits from intense competition among those
suppliers. Currently, the plant's requirements are being supplied by three of
the intrastate lines under various pricing arrangements. Generally, these
contracts impose firm delivery obligations at market-sensitive prices. In
addition, the Company purchases gas for Triad on the spot market pursuant to
30- to 90-day fixed-price contracts. As a result of Triad's favorable access to
natural gas supplies, the Company believes that the loss of any particular
supplier would not have a material impact on plant operations. There have been
no significant supply interruptions at the Triad facility.

Natural gas is currently available in ample quantities, but the excess
deliverability ("gas bubble") which existed in the late 1980's and early 1990's
has dissipated. Producer deliveries are now approaching full capacity. As a
result of the narrowing gap between supply and demand, natural gas prices have
become increasingly volatile and subject to seasonal volatility. The Company
uses natural gas futures contracts to hedge against the risk of short-term
market fluctuations in the cost of natural gas.

Phosphate Rock

Phosphate rock is one of the primary raw materials for the manufacture of
DAP. The Pascagoula facility's requirements for phosphate rock are
approximately 1.1 million tons per year. As of September 15, 1991, the Company
entered into a ten-year contract with OCP to supply all of the phosphate rock
requirements of the Pascagoula facility. This contract was recently amended and
its term extended to June 30, 2003. OCP, the national phosphate company of
Morocco, is the world's largest producer and exporter of phosphate rock and
upgraded phosphates as a company. The contract price for phosphate rock is
based on phosphate rock costs incurred by certain domestic competitors of the
Company and on the long-term financial performance of the Company's phosphate
operations. Under this formula, the Company realizes favorable phosphate rock
prices and is afforded significant protection during periods when market
conditions are

35
<PAGE>

depressed and its DAP operations are not profitable. As a result, the Company
was able to sustain its operations since reopening the Pascagoula facility in
December 1991, despite historically low prices for phosphate products.
Conversely, in favorable markets, when the Company's DAP operations are
profitable, the contract price of phosphate rock will escalate based on the
profitability of its DAP operations. Pursuant to this contract, the Company and
OCP are required to negotiate further adjustments as needed to maintain the
viability and economic competitiveness of the Pascagoula plant. The strategic
alliance with OCP has functioned effectively since inception, and the Company
considers its relations with OCP to be good.

Sulfur

Sulfur is used in the manufacture of sulfuric acid at the Pascagoula plant.
Sulfur is in adequate supply and is available on the open market in quantities
sufficient to satisfy the Company's current requirements of 300,000 tons per
year.

Ammonia

Until recently, ammonia has been in adequate supply at depressed prices. In
early 1994, intermittent shortages of ammonia, which caused a surge in ammonia
prices, developed as a result of increased consumption in agricultural and
industrial markets, several unplanned plant outages and reduced imports from
the FSU. However, in the past few months, ammonia prices have returned to more
moderate levels.

COMPETITION

Since fertilizers are global commodities which are available from multiple
sources, the primary competitive factor is price. Other competitive factors
include product quality, customer service and availability of product. In each
product category, the Company competes with a broad range of domestic
producers, including farmer cooperatives, subsidiaries of larger companies,
integrated energy companies and independent fertilizer companies. Many of the
Company's domestic competitors have larger financial resources and sales than
the Company. The Company also competes with foreign producers. Foreign
competitors are often owned or subsidized by their governments and, as a
result, may have cost advantages over domestic companies. Additionally, foreign
competitors are frequently motivated by non-market factors such as the need for
hard currency.

The Company produces and sells nitrogen fertilizer products primarily in the
southern United States. Because competition is based largely on price,
maintaining low production costs is critical to competitiveness. The Company
believes it is one of the lowest-cost producers of nitrogen fertilizers in the
United States. Natural gas comprises the majority of the raw materials cost of
nitrogen fertilizers. Competitive natural gas purchasing is essential to
maintaining of the Company's low-cost position. Equally important is efficient
use of this gas because of the energy-intensive nature of the nitrogen
fertilizer business. Therefore, cost-competitive production facilities that
allow flexible upgrading of ammonia to other finished products are critical to
a low-cost competitive position. In the highly fragmented nitrogen fertilizer
market, product quality and customer service can also be sources of product
differentiation.

Through Atlantic, the Company sells approximately two-thirds of its DAP in
international markets. The United States phosphate industry has become more
concentrated as a result of recent consolidations and joint ventures, and the
Company is significantly smaller than most of its competitors in terms of
resources and sales. Most of the Company's principal competitors have captive
sources of some or all of the raw materials and this may provide them with cost
advantages. The Company's long-term phosphate rock contract with its flexible
pricing mechanism is a key element to the Company's ability to compete.

Most potash consumed in the United States is provided by large Canadian
producers, who have economies of scale and lower variable costs than their U.S.
counterparts. Over 80% of United States potash production capacity is located
in the Carlsbad, New Mexico, area. While the Carlsbad producers have higher

36
<PAGE>

mining costs than the Canadian producers, this disadvantage is offset by
logistical and freight advantages in certain markets in the United States
southwest and the lower United States corn belt. The Company competes in these
markets primarily with three other Carlsbad potash producers. The Company
believes that its reserve position gives it a competitive edge and that it will
be a long-term participant in the United States potash industry.

OTHER PROPERTIES

The Company owns an administration building in Yazoo City which contains
approximately 65,000 square feet of office space.

The Company has a total systemwide storage capacity of approximately 393,000
tons. In addition to the fertilizer storage facilities in Yazoo City and
Pascagoula, Mississippi, Carlsbad, New Mexico, and Donaldsonville, Louisiana,
the Company also owns or leases 23 fertilizer storage and distribution
facilities at other locations in Alabama, Arkansas, Florida, Georgia,
Louisiana, Mississippi, Missouri, Tennessee and Texas.

In 1980, the Company completed the purchase of phosphate rock property in
Hardee County, Florida. This property, containing approximately 12,000 acres,
is estimated by the Company to contain approximately 62 million recoverable
tons of phosphate rock of commercial quality. During 1990, the Company entered
into an agreement granting a third party the exclusive option, for a period of
four years, to purchase this undeveloped phosphate rock property. The Company
received an aggregate of $14 million in option payments during this period. As
of July 12, 1994, the Company and the option holder entered into new agreements
with respect to this property whereby (i) the Company conveyed approximately
2,500 acres of this property to the third party; (ii) for aggregate additional
option payments of $7 million to be paid during the option period, the Company
granted to the third party the exclusive option, for a period of three and one-
half years, to purchase the remaining 9,500 acres; (iii) the Company was
granted a put option pursuant to which the Company has the right to sell the
9,500 acres to the third party if the third party does not exercise its prior
option to purchase the property; and (iv) the Company was granted an exclusive
option to repurchase the previously conveyed 2,500 acres in the event the third
party does not exercise its option to purchase the 9,500 acres and the Company
does not exercise its put option on the 9,500 acres.

RESEARCH AND DEVELOPMENT

The Company has a research and development staff of 13 full-time professional
employees whose activities relate primarily to the improvement of existing
products. The expenditures on research activities sponsored by the Company
during fiscal 1994, 1993 and 1992 were approximately $1.4 million, $1.4 million
and $1.7 million, respectively.

EMPLOYEES

As of June 30, 1994, the Company employed approximately 960 persons at all
locations. The Company considers its employee relations to be satisfactory.

COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

The Company's operations are subject to federal, state and local laws and
regulations pertaining to the environment, among which are: the Clean Air Act,
the Clean Water Act, the Resource Conservation and Recovery Act, the
Comprehensive Emergency Response Compensation and Liability Act, the Toxic
Substances Control Act and the Mississippi State Pollution Prevention Act. The
Company's facilities require operating permits that are subject to review by
governmental agencies. The Company believes that its policies and procedures
now in effect are generally in compliance with applicable laws and with the
permits relating to the facilities.

37
<PAGE>

In the past, significant capital and operating costs related to environmental
laws have been incurred. The majority of the Company's environmental capital
expenditures have been in response to the requirements of the Clean Air Act and
the Clean Water Act. Since 1967, the Company has spent approximately $50.0
million on its fertilizer production facilities in order to meet applicable
federal and state pollution standards. The Company is involved in certain
litigation involving a Louisiana waste disposal site. See "--Legal
Proceedings--Combustion, Inc. Litigation."

Capital expenditures related to environmental obligations for the past three
fiscal years were approximately as follows: 1994--$619,000; 1993--$7.0 million;
and 1992--$10.0 million. Included in the foregoing expenditures for fiscal 1993
and 1992 is a portion of the cost of a new nitric acid plant and related
facilities in Yazoo City. which was completed in early 1993. This facility
increased capacity and also replaced existing production from other plants that
were closed. Enhanced environmental protection under the Clean Air Act was a
primary factor in the Company's decision to construct the plant.

Environmental capital expenditures are expected to be approximately $6.0
million for fiscal 1995. A portion of this amount will be used for a recently
approved expenditure of approximately $7.0 million relating to the replacement
of a scrubber system at Yazoo City that will reduce particulate emissions from
fertilizer prill towers, and a portion of this amount will be used for a
recently approved $1.3 million expenditure relating to the relocation of the
discharge point of the Yazoo City facility's combined storm and process water
to the Yazoo River.

During fiscal 1994, the Company charged to its earnings approximately $6.1
million relating to the estimated cost of the future closure of the gypsum
disposal facility located at Pascagoula. This charge relates to the portion of
the disposal facility utilized to date, and it is estimated that future charges
of approximately $3.0 million will be accrued over the estimated six-year
remaining life of the disposal facility.

In the normal course of its business, the Company is exposed to risks
relating to possible releases of hazardous substances into the environment.
Such releases could cause substantial damage or injuries. Environmental
expenditures have been and will continue to be significant. It is impossible to
predict or quantify the impact of future environmental laws and regulations.

LEGAL PROCEEDINGS

Combustion, Inc. Litigation. On July 15, 1986, the first of 17 lawsuits was
filed by numerous plaintiffs in the Twenty-first Judicial District Court,
Parish of Livingston, State of Louisiana, against Triad, the Company and
approximately 90 other named defendants. Additionally, approximately 200
parties have been added as third-party defendants. The plaintiffs' claims are
based on alleged personal injuries and property damages as a result of exposure
to hazardous waste from the Combustion, Inc. waste disposal site in Livingston
Parish, Louisiana.

These cases were removed to the U.S. District Court for the Middle District
of Louisiana, then remanded to State Court, and have now been removed once
again to Federal Court. The plaintiffs have filed a motion to have the cases
remanded to State Court.

The plaintiffs moved for certification of a class for the purpose of
consolidating the pending litigation as one class action suit, and in January
1991, a state class was certified by the District Court judge. The Louisiana
First Circuit Court of Appeal affirmed the certification of the class, but
reversed the definition of the class and remanded the issue to the trial court
for further determination.

Triad and the Company are vigorously defending their position in these
proceedings and consider their defense meritorious.

CERCLA Sites. Triad has received and responded to letters issued by the
United States Environmental Protection Agency ("EPA") under Section 104 of the
Comprehensive Environmental Response

38
<PAGE>

Compensation and Liability Act ("CERCLA") relative to the possible disposition
of Triad waste at the Combustion, Inc. site and the Cleve Reber disposal site
in Ascension Parish, Louisiana. Under CERCLA, generators of waste may be held
responsible for investigation and site cleanup costs.

Potash Litigation. In actions filed in April 1993, the Company was named as a
defendant, along with other United States and Canadian potash producers, in
several complaints that alleged a conspiracy among the defendants to fix the
price of potash in violation of the United States antitrust laws. Following the
disqualification of certain of the plaintiff's counsel, amended complaints were
filed, none of which name the Company as a defendant. With respect to two of
the plaintiffs, the Company has entered into an agreement whereby any
applicable statute of limitation is tolled from the date of the agreement
through September 30, 1994.

Potash Investigation. On November 24, 1993, the Antitrust Division of the
Department of Justice served the Company with a grand jury subpoena in
connection with its investigation of allegations of price fixing by United
States and Canadian potash producers. The subpoena requests that the Company
produce certain documents relating to its potash business in the United States
and Canada. The Company is in the process of assembling these documents for
production.

Other Legal Proceedings. In addition to the foregoing, the Company, in the
ordinary course of business, is the subject of, or a party to, other various
pending or threatened legal proceedings. The Company believes that any ultimate
liability arising from these actions would not have a material effect on its
financial position or results of operations.

39
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
----------------------- --- -------------------------------------------------
<S> <C> <C>
Charles O. Dunn (1) 46 President, Chief Executive Officer and Director
William F. Hawkins 63 Senior Vice President--Finance and Administration
David W. Arnold 57 Senior Vice President--Technical Group
C. E. McCraw 46 Senior Vice President--Operations
Robert E. Jones 46 Vice President and General Counsel
John J. Duffy 60 Vice President--Sales and Marketing
Rosalyn B. Glascoe 49 Corporate Secretary
Coley L. Bailey (1) 43 Chairman of the Board
John Sharp Howie (1)(2) 54 Vice Chairman of the Board
John W. Anderson (1)(3) 59 Director
Frank R. Burnside, Jr.
(2) 45 Director
Woods E. Eastland (2) 49 Director
Robert P. Dixon (1)(2) 51 Director
W. R. Dyess (3)(4) 55 Director
G. David Jobe (3) 51 Director
George D. Penick, Jr.
(4) 46 Director
David M. Ratcliffe (3) 46 Director
Wayne Thames (4) 58 Director
Tom C. Parry (4) 66 Director Emeritus
</TABLE>
- --------
(1) Member of Executive Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee

(4) Member of Director Affairs Committee

Charles O. Dunn has been employed by the Company since 1978, was elected
President and Chief Executive Officer of the Company in April 1993 and has
served as a director of the Company since 1993. Prior to becoming President,
Mr. Dunn served in various positions within the Company, including Attorney and
Executive Vice President.

William F. Hawkins has been employed by the Company since 1966. He was
appointed Senior Vice President--Finance and Administration in 1987. Prior to
1987, Mr. Hawkins served in various positions with the Company, including
Senior Vice President--Finance and Vice President--Finance.

David W. Arnold has been employed by the Company since 1966. He was appointed
as Senior Vice President--Technical Group in July 1991. Mr. Arnold served as
Senior Vice President--Engineering from 1981 to 1987 and as Senior Vice
President--Research & Engineering from 1987 to 1991.

C. E. McCraw has been employed by the Company since 1974. He was appointed
Senior Vice President--Operations in 1991. Prior to 1991, Mr. McCraw served as
Vice President--Operations, Vice President--Nitrogen Development and in various
other positions with the Company.

40
<PAGE>

Robert E. Jones has been employed by the Company since 1974. He was appointed
Vice President and General Counsel in 1989. Prior to 1989, Mr. Jones served in
various positions with the Company, including Associate General Counsel and
General Counsel.

John J. Duffy has been employed by the Company since 1988. He was appointed
Vice President--Sales and Marketing in 1994. Prior to 1994, Mr. Duffy served as
Director of Sales and Marketing.

Rosalyn B. Glascoe has been employed by the Company since 1981. She was
appointed Corporate Secretary in 1986. Prior to 1986, Ms. Glascoe served as
Stock Department Manager and Assistant Secretary.

Coley L. Bailey has been a director of the Company since 1978 and has served
as Chairman of the Board since 1988. For more than the past five years, he has
been engaged in farming activities in Yalobousha County, Mississippi.

John Sharp Howie has been a director of the Company since 1966 and has served
as Vice Chairman of the Board since 1988. For more than the past five years, he
has been engaged in farming activities in Yazoo County, Mississippi.

John W. Anderson has been a director of the Company since 1989. In May 1989,
he was named Chief Executive Officer of Alabama Farmers Cooperative, Inc. Prior
to 1989, Mr. Anderson was Manager of the Anderson's Peanuts Division of Alabama
Farmers Cooperative, Inc. He had been affiliated with Anderson's Peanut
Division since 1984.

Frank R. Burnside, Jr. has been a director of the Company since 1985. For
more than the past five years, he has been a farm supply dealer and Vice
President and Manager of Newellton Elevator Company, Inc., Newellton,
Louisiana.

Robert P. Dixon has been a director of the Company since 1986. For more than
the past five years, he has been the President and Chief Executive Officer of
SF Services, Inc., a North Little Rock, Arkansas, agricultural cooperative.

W. R. Dyess has been a director of the Company since 1991. Since 1972, he has
served as President of Dyess Farm Center, Inc., in Bardwell, Texas, and ABC Ag
Center, Inc., in Corsicana, Texas.

Woods E. Eastland has been a director of the Company since July 1994. Since
1986, he has been President and Chief Executive Officer of Staplcotn &
Stapldiscount, a cotton marketing and financing cooperative located in
Greenwood, Mississippi.

G. David Jobe has been a director of the Company since 1989. Since 1981 he
has been affiliated with, and currently serves as Senior Vice President of
Corporate Operations of, MFA Incorporated, a regional agricultural cooperative.

George D. Penick, Jr. has been a director of the Company since July 1994. He
is President of the Foundation for the Mid South, a private philanthropic
foundation, and has served in that position since 1990. From 1986 until 1990,
he was the first executive director of the Jessie Ball duPont Fund.

David M. Ratcliffe has been a director of the Company since July 1994. Since
1991, he has served as President and Chief Executive Officer of Mississippi
Power Company, an electric utility. From 1989 until 1991, he was Executive Vice
President of Southern Company Services, Inc.

Wayne Thames has been a director of the Company since 1973. For more than the
past five years, he has been a cattleman in Evergreen, Alabama.

Tom C. Parry was President of the Company and a member of the Board of
Directors from 1972 until 1993. Mr. Parry was appointed in 1994 by the Board of
Directors as Director Emeritus.

41
<PAGE>

TERM OF OFFICE

The Board of Directors is classified into three classes, the first class
serving until the annual meeting of shareholders to be held in 1995 ("Class I
Directors"), the second class serving until the annual meeting of shareholders
to be held in 1996 ("Class II Directors") and the third class serving until the
annual meeting of shareholders to be held in 1997 ("Class III Directors").
Messrs. Burnside, Anderson, Dixon and Penick serve as Class I Directors,
Messrs. Thames, Dyess, Jobe and Ratcliffe serve as Class II Directors and
Messrs. Dunn, Bailey, Howie and Eastland serve as Class III Directors. All
officers serve at the pleasure of the Board of Directors.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Articles of Incorporation contain provisions eliminating the
personal liability of its directors for monetary damages resulting from
breaches of their fiduciary duty to the extent permitted by the Mississippi
Business Corporation Act. Each director will continue to be subject to
liability for the amount of financial benefit received by a director to which
he or she is not entitled, for any intentional infliction of harm on the
Company or its shareholders, for improper distributions to shareholders and for
intentional violations of criminal law. This provision does not affect a
director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.

BOARD COMMITTEES

The Board of Directors has established four standing committees: the Audit
Committee, the Compensation Committee, the Director Affairs Committee and the
Executive Committee. The Audit Committee recommends the appointment of
independent auditors and oversees the accounting and audit functions of the
Company. The Compensation Committee determines executive officers' salaries and
bonuses. No member of the Compensation Committee or the Audit Committee is or
has been an employee of the Company. The Director Affairs Committee operates as
a nominating committee for the slate of directors and officers, recommends
directors' compensation to the full Board and periodically reviews the
performance of the Board. The Executive Committee has the authority to take all
actions which the Board of Directors as a whole would be able to take, to the
extent permitted by law.

DIRECTOR COMPENSATION

All directors, other than Coley L. Bailey, John Sharp Howie and Charles O.
Dunn, are paid an annual retainer of $12,000 and $1,000 per meeting, plus
expenses. Coley L. Bailey, as Chairman of the Board, receives a salary of
$40,000 a year, plus expenses. John Sharp Howie, as Vice Chairman of the Board,
receives an annual retainer of $18,000 and $1,000 per meeting, plus expenses.
Charles O. Dunn, as President and Chief Executive Officer, receives no
additional remuneration for serving as a director.

42
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth information with respect to all compensation
paid or earned for services rendered to the Company in fiscal 1994, 1993 and
1992 by the Company's Chief Executive Officer and the Company's four highest
paid executive officers other than the Chief Executive Officer (together, the
"Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------------
(A) (B) (C) (D) (E)
OTHER ANNUAL
NAME AND PRINCIPAL SALARY BONUS COMPENSATION
POSITION YEAR ($) ($) ($)(1)
- ------------------ ---- ------- ------- ------------
<S> <C> <C> <C> <C>
Charles O. Dunn 1994 280,008 89,603 4,562
President and Chief 1993 243,319 64,612 4,427
Executive Officer 1992 216,600 65,846 4,303
William F. Hawkins 1994 223,260 47,331 4,562
Senior Vice President-- 1993 212,628 45,077 4,427
Finance and Administration 1992 198,720 55,344 4,303
C. E. McCraw 1994 209,760 47,406 4,562
Senior Vice President-- 1993 195,132 41,758 4,427
Operations 1992 175,008 46,377 4,303
Robert E. Jones 1994 174,840 111,683 4,562
Vice President and 1993 162,648 32,123 4,427
General Counsel 1992 152,016 34,584 4,303
David W. Arnold 1994 168,312 30,666 4,562
Senior Vice President-- 1993 159,540 30,711 4,427
Technical Group 1992 149,100 33,920 4,303
</TABLE>
- --------
(1) The amounts disclosed in column (e) of the Summary Compensation Table
represent employee salary deferrals under the Company's 401(k) plan which
would otherwise be payable during the relevant fiscal year.

BASE SALARIES

Base salaries of the President and other executive officers are based on
internal equity and external competitiveness. The Company has retained W.M.S.
Management Consultants, a compensation consulting firm, to assist in the
establishment of salary ranges for each executive officer. Individual salaries
are set within the established range based on subjective individual performance
evaluations. It is the objective of the Compensation Committee of the Company
to develop salary programs that attract and maintain qualified key employees.

ANNUAL BONUSES

Annual bonuses for executive officers are intended to reward key employees
who have a material impact on the Company's operating results. Bonuses are not
paid unless the Company's financial performance, as measured by specified
ratios, ranks in the top 50% of an industry survey. The Chief Executive
Officer's bonus is based on corporate performance. Other executive officers'
bonuses are based in part on corporate performance, as measured by specific
financial measurements, and in part on management's evaluation of each
executive officer's performance. These criteria are reviewed and approved by
the Compensation Committee. Under this plan, the Chief Executive Officer's
bonus can range as high as 33% of base salary.

43
<PAGE>

Other executive officers can achieve bonuses up to a maximum percentage
established by the Compensation Committee. For 1994, maximum bonus potential
for the Company's four most highly compensated executive officers, other than
the Chief Executive Officer, ranged between 15% and 21%. In addition, executive
officers participate in a bonus plan in which all Company employees
participate. This plan is effective only in years in which 7.5% of Company
profits exceed 3% of base payroll. The exact individual pay out percentage is
determined by the ratio that 7.5% of profits has to total base payroll, to a
minimum of 3% but not to exceed 10%. In 1994 the plan will pay the full 10%
bonus to all employees.

STOCK INCENTIVE PLAN

The Company recently adopted the Mississippi Chemical Corporation 1994 Stock
Incentive Plan (the "Stock Plan"). On August 2, 1994, the Compensation
Committee granted options to acquire an aggregate of 201,941 shares of Common
Stock to eleven executive officers and key employees. All options were granted
at an exercise price per share to be equal to the price per share of the Common
Stock offered hereby and vest within a period of eight years in accordance with
a formula based on the price performance of the Common Stock. A total of
1,800,000 shares of Common Stock are reserved for issuance under the Stock Plan
pursuant to options, stock appreciation rights and stock awards. Benefits under
the Stock Plan may be granted to officers and key employees of the Company
selected by the Compensation Committee based on the special importance of their
services to the Company. Under the terms of the Stock Plan, participants may
receive incentive stock options or non-qualified stock options in such amounts,
with such vesting provisions and with such exercise prices (not less, however,
than the fair market value of the Common Stock on the date of grant) as may be
established by the Compensation Committee. The terms of options will not exceed
ten years. To the extent permitted by the Compensation Committee, the exercise
price of an option may be paid in shares of Common Stock valued at their then
fair market value. Stock appreciation rights may be granted independently or in
conjunction with options. A stock appreciation right entitles the recipient to
receive, in cash or Common Stock, the excess of the fair market value of a
share of Common Stock on the exercise date over the fair market value on the
date of grant. Stock awards consist of Common Stock transferred to participants
without payment therefor as additional compensation. Stock awards may be
subject to forfeiture or vesting based upon the achievement of Company
performance goals established by the Compensation Committee. At this time, the
Company does not plan to grant stock appreciation rights or stock awards.

PENSION PLAN

The Company provides a "Defined Benefit" retirement plan for all regular
employees meeting established age and employment service requirements. Benefits
are determined based on average pay and years of credited service. Annual
Company contributions on behalf of individual specified participants cannot be
calculated by plan actuaries. Only an employee's "base pay" is covered by the
plan. Plan compensation does not include bonuses, overtime or shift
differentials. The following table shows estimated annual benefits payable at
age 65 to newly hired persons in specified compensation and years of service
categories. Listed benefits are not subject to deductions for social security
or other offset amounts.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------
REMUNERATION 15 20 25 30 35
------------ ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 25,000.......................... $ 4,688 $ 6,250 $ 7,813 $ 9,375 $ 10,938
50,000.......................... 10,005 12,500 15,625 18,750 21,875
100,000.......................... 25,005 32,440 39,763 47,175 54,880
150,000.......................... 40,005 52,440 64,763 77,175 89,880
200,000.......................... 55,005 72,440 89,763 104,077 104,077
250,000 and above................ 65,757 86,776 104,077 104,077 104,077
</TABLE>

Years of service for the Named Executive Officers are: Charles O. Dunn--16;
William F. Hawkins--28; C. E. McCraw--20; Robert E. Jones--20; and David W.
Arnold--28.

44
<PAGE>

SUPPLEMENTAL BENEFIT PLAN

In fiscal 1984, the Company established a nonqualified "Defined Benefit"
Supplemental Benefit Plan for any employee who is a participant in the Pension
Plan and whose benefits from that Plan will, at his retirement, be limited by
the operation of Section 415 of the Internal Revenue Code and/or, effective for
fiscal 1991, Section 407(a)(17) of the Code. The purpose of the supplemental
plan is to make up the difference between the defined pension benefit permitted
under Section 415 of the Code and what would otherwise be payable but for the
Section 415 limit.

Benefits from this Plan will be payable to any participant designated by the
Plan Administrator on a monthly basis beginning at the time and under the terms
that would have applied if such benefits had been payable from the Pension
Plan.

The following table shows estimated annual benefits payable under the
Supplemental Benefit Plan to persons in specified compensation and years of
service categories. (The actual benefit paid under the supplemental plan is the
supplemental benefit minus the allowable pension plan benefit.)

SUPPLEMENTAL BENEFIT PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------
REMUNERATION 15 20 25 30 35
------------ ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000 or less.................. $ -- $ -- $ -- $ -- $ --
200,000.......................... -- -- -- 3,098 20,803
250,000.......................... 4,248 5,664 10,686 33,098 55,803
300,000.......................... 19,248 25,664 35,686 63,098 90,803
350,000.......................... 34,248 45,664 60,686 93,098 125,803
400,000.......................... 49,248 65,664 85,686 123,098 160,803
450,000.......................... 64,248 85,664 110,686 153,098 195,803
</TABLE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN RELATIONSHIPS WITH CUSTOMERS

The primary business of the Cooperative was to provide fertilizer products to
its shareholders pursuant to preferred patronage rights to purchase fertilizer
products in proportion to the type and amount of Common Stock they owned.
Certain directors of the Company were either direct customers of the
Cooperative or were affiliated in some capacity with direct customers of the
Cooperative. All sales of product to directors and their affiliates have been
and are made in the ordinary course of business at prices and terms which are
determined based on prevailing competitive conditions and which are no less
favorable to the Company than the prices and terms of transactions with other
customers and shareholders.

During fiscal 1994 and 1993, sales to SF Services, Inc. ("SFS"), were
approximately $34.0 million and $33.0 million representing approximately 10.8%
and 11.4% of the Company's net sales and approximately 8.7% and 8.6% of SFS's
consolidated gross revenues, respectively. Robert P. Dixon, a director of the
Company, is an executive officer of SFS. During fiscal 1994 and 1993, sales to
Alabama Farmers Cooperative, Inc. ("AFC"), were approximately $13.7 million and
$14.0 million, respectively. These sales represent 6.5% and 6.6%, respectively,
of the gross revenues of AFC. John W. Anderson, a director of the Company, is
an executive officer of AFC. Sales to SFS and AFC were on terms and conditions
comparable to transactions with other shareholders.

The Cooperative paid its shareholders patronage refunds. In fiscal 1993, the
Cooperative paid its largest shareholder, SFS, patronage refunds in the
aggregate amount of $1.9 million and paid AFC $1.7 million. As

45
<PAGE>

a result of the Reorganization, the Company will not pay patronage refunds
after fiscal 1994. It is currently expected that patronage refunds with respect
to fiscal 1994 will be calculated and paid in October 1994.

OTHER TRANSACTIONS

SFS has agreed to buy the Company's storage facility located in North Little
Rock, Arkansas, for approximately $600,000. Robert P. Dixon, a director of the
Company, is an executive officer of SFS.

On August 30, 1993, the Company sold a storage facility located in Decatur,
Alabama, to AFC for $115,000. John W. Anderson, a director of the Company, is
the President and Chief Executive Officer of AFC.

In the opinion of the Company, the transactions described are on terms as
favorable to the Company as if transacted with unaffiliated third parties.

46
<PAGE>

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information as of July 1, 1994,
regarding the beneficial ownership of the Common Stock by (i) the Selling
Shareholders, (ii) each shareholder known by the Company to be the beneficial
owner of more than five percent of the outstanding shares of the Company's
Common Stock, (iii) each director of the Company, (iv) each Named Executive
Officer of the Company and (v) all directors and executive officers of the
Company as a group. Except as otherwise indicated, the Company believes that
the beneficial owners of the Common Stock listed below, based on information
provided by the named persons, have sole investment and sole voting power with
respect to such shares, subject to community property laws where applicable.
Except as set forth in the following table, the address of each of the
shareholders named below is the Company's principal executive office.

<TABLE>
<CAPTION>
NUMBER OF
OWNERSHIP PRIOR TO SHARES OWNERSHIP AFTER
OFFERING BEING OFFERED THE OFFERING(1)
-------------------- ------------- --------------------
SHARES OF SHARES OF SHARES OF
NAME OF BENEFICIAL OWNER COMMON STOCK PERCENT COMMON STOCK COMMON STOCK PERCENT
- ------------------------ ------------ ------- ------------- ------------ -------
<S> <C> <C> <C> <C> <C>
SF Services, Inc.
824 North Palm Street
North Little Rock,
Arkansas 72119......... 2,956,175 15.2% 598,000 2,358,175 10.4%
Alabama Farmers
Cooperative Inc.
121 Somerville Road,
N.E.
Decatur, Alabama 35601. 1,098,660 5.6 55,000 1,043,660 4.6
Mapco Inc.
1717 South Boulder
Avenue
Tulsa, Oklahoma 74119.. 192,701 1.0 68,000 124,701 *
Missouri Farmers
Association, Inc.
615 Locust Street
Columbia, Missouri
65201.................. 726,108 3.7 376,309 349,799 1.5
Voluntary Purchasing
Groups, Inc.
Highway 82 West
Bonham, Texas 75418.... 334,011 1.7 169,988 164,023 *
Gold Kist, Inc.
244 Perimeter Center
Parkway
Atlanta, Georgia 30346. 235,203 1.2 235,203 0 --
Jimmy Sanders Seed
Company
North Sharpe Avenue
Cleveland, Mississippi
38732.................. 154,933 * 77,500 77,433 *
Delta Purchasing
Federation (AAL)
1206 Carnegie Street
Industrial Park
Greenwood, Mississippi
38930.................. 301,264 1.5 300,000 1,264 *
Charles O. Dunn......... -- -- -- -- --
William F. Hawkins...... -- -- -- -- --
David W. Arnold......... -- -- -- -- --
C. E. McCraw............ -- -- -- -- --
Robert E. Jones......... -- -- -- -- --
Coley L. Bailey......... 4,663 * -- 4,663 *
John Sharp Howie (2).... 3,857 * -- 3,857 *
John W. Anderson........ 448 * -- 448 *
Frank R. Burnside, Jr.
(3).................... 21,015 * -- 21,105 *
Robert P. Dixon (4)..... 380 * -- 380 *
W. R. Dyess (5)......... 43,932 * -- 43,932 *
Woods E. Eastland (6)... 3,440 * -- 3,440 *
G. David Jobe........... -- -- -- -- --
George D. Penick, Jr. .. -- -- -- -- --
David M. Ratcliffe...... -- -- -- -- --
Wayne Thames............ 4,825 * -- 4,825 *
All directors and
executive officers
as a group (18
persons)............... 82,750 * -- 82,750 *
</TABLE>
- --------
*Less than 1%.

47
<PAGE>

(1) Assumes no exercise of the over-allotment option. If the over-allotment
option is exercised in full, 197,928 additional shares will be sold by the
Company and the following Selling Shareholders will sell the following
additional shares: Alabama Farmers Cooperative Inc.--8,250 shares; Missouri
Farmers Association, Inc.--349,799 shares; and Voluntary Purchasing Groups,
Inc.--164,023 shares.
(2) Mr. Howie owns 1,971 shares individually and is the beneficial owner of
1,886 shares owned by Pauline W. Howie and John Sharp Howie d/b/a Cedar
Grove Plantation.
(3) Mr. Burnside owns 3,187 shares individually and is the beneficial owner of
17,828 shares owned by Newellton Elevator Company, Inc.
(4) Mr. Dixon owns 26 shares individually and is the beneficial owner of 354
shares owned by Robert P. Dixon d/b/a Benchmark Farms.
(5) Mr. Dyess owns 474 shares individually and is the beneficial owner of
29,238 shares owned by Dyess Farm Center, Inc., and 14,220 shares owned by
ABC Ag Center, Inc.
(6) Mr. Eastland is the beneficial owner of 3,440 shares owned by the Elizabeth
C. Eastland Trust.

48
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 100,500,000 shares,
of which 100,000,000 shares are Common Stock, par value $.01 per share, and
500,000 shares are Preferred Stock, par value $.01 per share. At July 1, 1994,
there were 18,773,212 shares of Common Stock outstanding and held of record by
14,217 shareholders and no shares of Preferred Stock outstanding. Up to an
additional 681,142 shares of Common Stock may be issued upon the conversion of
Special Accounts, including Special Accounts arising from 1994 patronage and up
to a further 128,880 shares may be issued if certain small shareholders of the
Cooperative elect not to receive cash in the Reorganization.

COMMON STOCK

The issued and outstanding shares of Common Stock are, and the shares being
offered hereby will, upon payment therefor, be validly issued, fully paid and
nonassessable. Subject to the rights of holders of Preferred Stock, the holders
of outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the
Board of Directors may from time to time determine. See "Dividend Policy." The
shares of Common Stock are neither redeemable nor convertible, and the holders
thereof have no preemptive or subscription rights to purchase any securities of
the Company. Upon liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive, pro rata, the assets of the
Company that are legally available for distribution, after payment of all debts
and other liabilities, including Special Accounts which, pursuant to the
Articles of Incorporation of the Company, may be established by the Company's
Board of Directors only to represent capital allocations to shareholders of the
Company of a portion of earnings on business done with such shareholders made
by the Cooperative, and subject to the prior rights of any holders of Preferred
Stock then outstanding. Each outstanding share of Common Stock is entitled to
one vote on all matters submitted to a vote of shareholders. There is no
cumulative voting in the election of Directors.

Each of the items described in "--Preferred Stock," "--Certain Statutory
Provisions" and "--Certain Charter Provisions" hereafter, could result in the
Company being less attractive to a potential acquiror and could result in
shareholders receiving less for their shares of Common Stock than otherwise
might be available in the event of a takeover attempt.

PREFERRED STOCK

The Company's Articles of Incorporation authorize the Board of Directors to
issue the Preferred Stock in classes or series and to establish the
designations, preferences, qualifications, limitations or restrictions of any
class or series with respect to the rate and nature of dividends, the price and
terms and conditions on which shares may be redeemed, the terms and conditions
for conversion or exchange into any other class or series of the stock, voting
rights and other terms. The Company may issue, without the approval of the
holders of Common Stock, Preferred Stock that has voting, dividend or
liquidation rights superior to the Common Stock and that may adversely affect
the rights of holders of Common Stock. The issuance of Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting
power of the holders of Common Stock and could have the effect of delaying,
deferring or preventing a change in control of the Company.

RIGHTS TO PURCHASE PREFERRED STOCK

The Company declared a dividend of one preferred share purchase right (a
"Right") payable on August 15, 1994 to shareholders of record as of August 5,
1994 for each share of Common Stock. Each Right entitles its holder to purchase
one one-hundredth of a share of the Company's Preferred Stock, Series A, $0.01
par value per share (the "Series Preferred Stock"), at an exercise price of
$50.00 per share (the "Purchase Price"). The Rights will expire on August 15,
2004, unless earlier redeemed or exchanged by the Company.

49
<PAGE>

The Rights are exercisable upon the earlier to occur of (i) 10 days following
the date of public disclosure that a person or group, together with persons
affiliated or associated with it (an "Acquiring Person"), has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Common Stock and (ii) 10 days following commencement of or
disclosure of an intention to commence a tender offer or exchange offer if,
upon consummation of the offer, such person or group, together with persons
affiliated or associated with it, could acquire beneficial ownership of 25% or
more of the outstanding Common Stock (the earlier of such dates being called
"Separation Date").

If the Company is acquired in a merger or other business combination in which
the Common Stock does not remain outstanding or is changed or 50% or more of
the Company's consolidated assets or earning power is sold, leased, pledged or
otherwise transferred or disposed of, the Rights will "flip over" and entitle
each holder of a Right to purchase at the then-current Purchase Price, common
stock of the acquiring company with a market value of two times the Purchase
Price.

If (i) a person acquires 20% of the Common Stock, (ii) the Company is the
surviving corporation in a merger with an Acquiring Person and the Common Stock
remains outstanding and unchanged, or (iii) an Acquiring Person engages in one
of certain "self-dealing" transactions, the Rights will "flip in" and entitle
each holder to purchase at the then-current Purchase Price, Common Stock with a
market value of two times the Purchase Price. Any of these events is a
"Triggering Event." Any Rights owned by an Acquiring Person become null and
void upon the occurrence of the earlier of the Board of Directors' decision to
"exchange" the Rights and a Triggering Event. Under certain circumstances, the
disinterested directors can approve a transaction with a specific shareholder
that would otherwise be a Triggering Event, and freeze the Rights in connection
with that specific transaction.

At any time any person becomes an Acquiring Person and prior to such time as
such person, together with its affiliates, becomes the beneficial holder of at
least 50% of the Company's outstanding Common Stock, the Company may, provided
that all necessary regulatory approvals have been obtained, exchange the Rights
(other than Rights owned by such Acquiring Person which become null and void),
in whole or in part, at a ratio of one share of Common Stock per Right, subject
to adjustment.

Prior to ten days after it has become public that an Acquiring Person has
become such (with the possibility for the Board of Directors to extend that
period for an additional ten days), the Company may redeem the Rights at a
price of $0.01 per Right. The Company may, without the approval of any holder
of the Rights, but only if at that time the Board of Directors consists of a
majority of disinterested directors, supplement or amend any provision of the
Rights Agreement, except the redemption window, the Purchase Price or the
redemption price.

Series Preferred Stock issued upon exercise of the Rights will not be
redeemable. Each share of Series Preferred Stock will be entitled to a minimum
preferential quarterly dividend of $25.00 per share, but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of Common
Stock, if it is greater. In the event of liquidation, the holders of the Series
Preferred Stock will be entitled to a minimum preferential liquidation payment
of $100.00 per share, but will be entitled to an aggregate payment of 100 times
the payment made per share of Common Stock, if it is greater. In the event of
any merger or other business combination in which Common Stock is exchanged,
each share of Series Preferred Stock will be entitled to receive 100 times the
amount received per share of Common Stock.

The Rights have certain anti-takeover effects. The Rights may deter takeover
attempts because they may cause substantial dilution to a person or group that
attempts to acquire the Company on terms not approved by the Company's Board of
Directors, except pursuant to an offer conditioned upon a substantial number of
Rights being acquired. The Rights should not interfere with any merger or
business combination approved by the Board of Directors because the Rights are
redeemable.

50
<PAGE>

While the Company has no knowledge that any person or group intends to
acquire the Company, the Company believes that the advantages arising from the
issuance of Rights, particularly during the period following the Offering,
outweigh any discouragement of certain business combinations.

This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.

CERTAIN STATUTORY PROVISIONS

Mississippi Control Share Act

The Company has chosen to be subject to the Mississippi Control Share Act,
which provides, in the case of a public company which has more than 500 of its
shareholders resident in Mississippi or more than 10 percent of its shares
owned by Mississippi residents, that once a potential acquiror notifies a
company of the intention to purchase 20%, 33 1/3% or more than 50% of the
company's shares and requests a special meeting, a shareholders' meeting must
be held within 50 days, at the acquiror's expense, to vote on whether the
control shares (those held by the acquiring entity) may exercise voting rights.
If a request is not made, shareholders will vote on whether to restore voting
rights at the next shareholder's meeting. Without the approval of a majority of
the outstanding shares, excluding shares owned by the acquiror and company
officers and employee-directors, the control shares do not receive voting
rights until three years have passed.

Mississippi Shareholder Protection Act

The Company has chosen to be subject to the Mississippi Shareholder
Protection Act. By the terms of the act, a corporation may not enter into any
business combination with a 20%-shareholder unless: (a) 80% of the outstanding
shares and two-thirds of the shares not owned by the 20%-shareholder approve
the combination; (b) 80% of the continuing directors approve the combination;
or (c) the aggregate amount of the offer meets certain fair price criteria.

CERTAIN CHARTER PROVISIONS

The Articles of Incorporation provide for the Board of Directors to be
divided into three classes, with staggered three-year terms. As a result, only
one class of directors will be elected at each annual meeting of shareholders
of the Company, with the other classes continuing for the remainder of their
respective terms.

The Articles of Incorporation also provide that directors may be removed from
office only for cause and only at a shareholders' meeting called for the
purpose of removing such directors with notice stating such purpose. Vacancies
on the Board of Directors, including those resulting from an increase in the
number of directors, may be filled by the remaining directors or by the
shareholders and the term of any director filling a vacancy shall be for the
balance of the term of the retiring director's class.

Certain provisions contained in the Articles of Incorporation, including
those relating to the size and classification of the Board of Directors, the
indemnification of directors, the removal of directors, the election to be
subject to the Mississippi Shareholders Protection Act and the Mississippi
Control Share Act, the power of the Board of Directors to increase the
percentage of voting shares necessary to call a special meeting of shareholders
and the required vote necessary to approve the transactions may only be amended
by the affirmative vote of the holders of at least two-thirds of the total
outstanding voting power of the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Harris Trust and
Savings Bank.

51
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

All of the outstanding shares of Common Stock, including the 3,200,000 shares
to be sold by the Company in this Offering, and all of the shares which may be
issued upon the conversion of Special Accounts, will be freely tradable without
restriction or further registration under the Securities Act, unless acquired
by "affiliates" (as defined in Rule 144 of the Securities Act) in which case
their shares will be subject to the resale limitations of Rule 144.

The Company, its officers, directors, the Selling Shareholders and certain
other shareholders, holding an aggregate 5,948,346 shares of Common Stock after
the Offering (26.3% of the shares of Common Stock then outstanding) have agreed
not to offer, sell or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock for
a period of 180 days after the date of this Prospectus without the prior
consent of Wertheim Schroder & Co. Incorporated.

Prior to the Offering, there has been no established trading market for the
Common Stock. The Company can make no prediction as to the effect, if any, that
sales of shares of its Common Stock, or the availability of shares for future
sale, will have on the market price of the Common Stock prevailing from time to
time. Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales could occur, could depress the prevailing market
price for the Common Stock.

52
<PAGE>

UNDERWRITING

The Underwriters named below have severally agreed, subject to certain
conditions, to purchase from the Company and the Selling Shareholders the
aggregate number of shares of Common Stock set forth below opposite their
respective names:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Wertheim Schroder & Co. Incorporated...........................
The Robinson-Humphrey Company, Inc.............................
---------
Total...................................................... 5,080,000
=========
</TABLE>

The Underwriting Agreement provides that the several Underwriters are
obligated to purchase all the 5,080,000 shares of Common Stock offered hereby,
if any are purchased. Wertheim Schroder & Co. Incorporated and The Robinson-
Humphrey Company, Inc., as representatives (the "Representatives") of the
several Underwriters, have advised the Company and the Selling Shareholders
that the Underwriters propose to offer the shares to the public initially at
the public offering price set forth on the cover page of this Prospectus; that
the Underwriters propose initially to allow a concession not in excess of $
per share to certain dealers, including the Underwriters; that the Underwriters
and such dealers may initially allow a discount not in excess of $ per share
to other dealers; and that the public offering price and the concession and
discount to dealers may be changed by the Representatives after the initial
public offering.

The Company and certain Selling Shareholders have granted to the Underwriters
an option, expiring at the close of business on the 30th day after the date of
the Underwriting Agreement, to purchase up to an additional 720,000 shares of
Common Stock, at the public offering price less underwriting discounts and
commissions, all as set forth on the cover page of this Prospectus. Of the
shares subject to the over-allotment option, 197,928 shares will be Company
shares and 522,072 shares will be shares owned by certain Selling Shareholders.
The Underwriters may exercise the option only to cover over-allotments, if any,
in the sale of shares of Common Stock in the Offering. To the extent that the
Underwriters exercise this option, each Underwriter will be committed, subject
to certain conditions, to purchase a number of the additional shares
proportionate to such Underwriter's initial commitment.

The Company, the Selling Shareholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

The Company, its officers and directors, the Selling Shareholders and certain
other shareholders have agreed not to sell or otherwise dispose of any shares
of Common Stock for a period of 180 days after the date of this Prospectus
without the prior written consent of Wertheim Schroder & Co. Incorporated.
Following the Offering, an aggregate of 5,948,346 shares, 26.3% of the total
shares outstanding, will be subject to these restrictions.

53
<PAGE>

Prior to the Offering, there has been no established public market for the
Common Stock. Consequently, the initial public offering price of the Common
Stock has been determined by negotiations among the Company, the Selling
Shareholders and the Representatives. Among the factors considered in such
negotiations were the Company's results of operations and financial condition,
the prospects for the Company and for the industry in which the Company
operates, the Company's capital structure and prevailing conditions in the
securities market. The estimated offering price set forth on the cover of this
Prospectus is subject to change as a result of market conditions and other
factors.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed upon
for the Company by McDermott, Will & Emery, Chicago, Illinois. Certain legal
matters will be passed upon for the Underwriters by Fulbright & Jaworski
L.L.P., New York, New York.

EXPERTS

The consolidated financial statements, including the related notes and
schedules thereto as of June 30, 1994 and 1993 and for each of the three years
in the period ended June 30, 1994, included in this Prospectus and elsewhere in
the registration statement of which this Prospectus is a part have been audited
by Arthur Andersen & Co., independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.

54
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................................. F-2
Consolidated Balance Sheets as of June 30, 1994 and 1993.................. F-3
Consolidated Statements of Operations for the Years Ended June 30, 1994,
1993 and 1992............................................................ F-4
Consolidated Statements of Shareholder-Members' Equity as of June 30,
1992, 1993 and 1994...................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended June 30, 1994,
1993 and 1992............................................................ F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and
the Shareholders of
Mississippi Chemical Corporation:

We have audited the accompanying consolidated balance sheets of Mississippi
Chemical Corporation (a Mississippi corporation) and subsidiaries as of June
30, 1994 and 1993, and the related consolidated statements of operations,
shareholder-members' equity and cash flows for each of the three years ended
June 30, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
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 financial statements referred to above present fairly, in
all material respects, the financial position of Mississippi Chemical
Corporation and subsidiaries as of June 30, 1994 and 1993, and the results of
their operations and their cash flows for each of the three years ended June
30, 1994, in conformity with generally accepted accounting principles.

As further explained in Note 1 to the consolidated financial statements, the
Company has given cumulative effect to the change in accounting for income
taxes under Statement of Financial Accounting Standards No. 109.

Arthur Andersen & Co.

Memphis, Tennessee,
July 29, 1994.

F-2
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30
-----------------
1994 1993
-------- --------
(DOLLARS IN
ASSETS THOUSANDS)
<S> <C> <C>
Current assets:
Cash and cash equivalents...................................... $ 23,219 $ 22,014
Accounts receivable............................................ 28,659 26,394
Inventories.................................................... 33,990 34,744
Prepaid expenses and other current assets...................... 3,981 3,686
Deferred income tax benefit.................................... 9,682 --
-------- --------
Total current assets......................................... 99,531 86,838
Investments and other assets:
National Bank for Cooperatives................................. 7,441 4,813
Other.......................................................... 9,813 16,960
-------- --------
Total investments and other assets........................... 17,254 21,773
Properties held for sale......................................... 66,928 66,928
Property, plant and equipment, at cost, less accumulated
depreciation, depletion and amortization........................ 114,717 120,514
-------- --------
$298,430 $296,053
======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDER-MEMBERS' EQUITY
<S> <C> <C>
Current liabilities:
Long-term debt due within one year............................. $ 2,948 $ 11,237
Notes payable.................................................. 7,030 4,625
Accounts payable............................................... 28,569 24,225
Accrued liabilities............................................ 11,297 10,129
Patronage refunds payable...................................... 14,756 13,820
-------- --------
Total current liabilities.................................... 64,600 64,036
Long-term debt................................................... 57,217 52,357
Other long-term liabilities and deferred credits................. 24,704 18,623
Deferred income tax payable...................................... 8,953 --
Net liabilities of discontinued operations....................... -- 41,463
Commitments and contingencies (see Note 12)...................... -- --
Shareholder-members' equity...................................... 142,956 119,574
-------- --------
$298,430 $296,053
======== ========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.

F-3
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
----------------------------
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales........................................ $309,360 $289,125 $239,657
Operating expenses:
Cost of products sold.......................... 217,809 213,715 152,324
Provision for closure of gypsum disposal area.. 6,055 -- --
Selling........................................ 29,339 28,940 27,731
General and administrative..................... 18,252 17,290 18,798
-------- -------- --------
271,455 259,945 198,853
-------- -------- --------
Operating income................................. 37,905 29,180 40,804
Other (expense) income:
Interest, net.................................. (3,991) (3,569) (3,930)
Restructuring.................................. (1,402) -- --
Other.......................................... 421 767 (531)
-------- -------- --------
Margins from continuing operations before income
taxes and cumulative effect of change in
accounting principle............................ 32,933 26,378 36,343
Income tax expense............................... 6,021 3,697 4,994
-------- -------- --------
Margins from continuing operations before
cumulative effect of change in accounting
principle....................................... 26,912 22,681 31,349
Discontinued operations:
Loss from discontinued operations (less
applicable income tax credits of $5,314,
$4,555 and $5,898 for fiscal 1994, 1993 and
1992)......................................... (23,987) (17,891) (18,346)
Gain on disposal of discontinued operations
(including applicable income tax credits of
$4,030)....................................... 39,747 -- --
Cumulative effect to July 1, 1993, of change in
accounting for income taxes..................... (6,149) -- --
-------- -------- --------
Net margins...................................... $ 36,523 $ 4,790 $ 13,003
======== ======== ========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these financial statements.

F-4
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER-MEMBERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
---------------------- ADDITIONAL CAPITAL
NITROGEN MIXED POTASH PAID-IN EQUITY RETAINED
SERIES SERIES SERIES CAPITAL CREDITS DEFICIT TOTAL
-------- ------ ------ ---------- ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
June 30, 1991.......... $26,015 $1,460 $568 $65,731 $62,469 $(17,481) $138,762
Net margins............ -- -- -- -- -- 13,003 13,003
Cash patronage refunds. -- -- -- -- -- (22,895) (22,895)
Stock issued........... 161 -- -- 511 -- -- 672
Stock retired.......... -- -- (369) (861) -- -- (1,230)
Other.................. -- -- -- -- (117) -- (117)
------- ------ ---- ------- ------- -------- --------
Balances,
June 30, 1992.......... 26,176 1,460 199 65,381 62,352 (27,373) 128,195
Net margins............ -- -- -- -- -- 4,790 4,790
Cash patronage refunds. -- -- -- -- -- (13,820) (13,820)
Stock issued........... 100 -- -- 315 -- -- 415
Stock retired.......... -- -- (2) (4) -- -- (6)
------- ------ ---- ------- ------- -------- --------
Balances,
June 30, 1993.......... 26,276 1,460 197 65,692 62,352 (36,403) 119,574
Net margins............ -- -- -- -- -- 36,523 36,523
Cash patronage refunds. -- -- -- -- -- (14,756) (14,756)
Stock issued........... 99 -- 360 1,156 -- -- 1,615
------- ------ ---- ------- ------- -------- --------
Balances,
June 30, 1994.......... $26,375 $1,460 $557 $66,848 $62,352 $(14,636) $142,956
======= ====== ==== ======= ======= ======== ========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these financial statements.

F-5
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------------
1994 1993 1992
-------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net margins..................................... $ 36,523 $ 4,790 $13,003
Loss from discontinued operations............... 23,987 17,891 18,346
Gain on disposal of discontinued operations..... (39,747) -- --
-------- -------- -------
Net margins from continuing operations.......... 20,763 22,681 31,349
Reconciliation of net margins from continuing
operations to net cash provided by operating
activities:
Depreciation, depletion and amortization...... 16,967 14,444 12,094
(Gain) loss on sale of property, plant and
equipment.................................... 43 (277) (440)
Deferred raw material cost.................... 23 1,977 --
Accrual for closure of gypsum disposal area... 6,055 -- --
Deferred income tax payable................... 3,302 -- --
Net change in operating assets and
liabilities.................................. (5,820) 2,702 6,205
Other......................................... (1,521) (378) (2,035)
-------- -------- -------
Net cash provided by operating activities......... 39,812 41,149 47,173
Cash flows from investing activities:
Payments for newsprint contract obligations..... (4,338) (4,350) (3,138)
Purchase of property, plant and equipment....... (11,232) (26,448) (24,045)
Proceeds from sale of property, plant and
equipment...................................... 341 543 838
Disposition of Newsprint South, Inc............. (10,848) -- --
Other........................................... 698 646 (943)
-------- -------- -------
Net cash used by investing activities............. (25,379) (29,609) (27,288)
Cash flows from financing activities:
Debt payments................................... (162,183) (111,606) (20,541)
Debt proceeds................................... 161,160 97,933 28,580
Payment of patronage refunds.................... (13,405) (22,480) (27,120)
Redemption of capital equity credits............ -- -- (7,785)
Proceeds from issuance of common stock.......... 1,200 -- --
Purchase of common stock........................ -- -- (1,230)
-------- -------- -------
Net cash used by financing activities............. (13,228) (36,153) (28,096)
-------- -------- -------
Net increase (decrease) in cash and cash
equivalents...................................... 1,205 (24,613) (8,211)
Cash and cash equivalents--beginning of period.... 22,014 46,627 54,838
-------- -------- -------
Cash and cash equivalents--end of period.......... $23,219 $22,014 $46,627
======== ======== =======
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these financial statements.

F-6
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1994

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Financial Statements

The accompanying consolidated financial statements include the accounts of
Mississippi Chemical Corporation, its subsidiaries and its proportionate share
of the assets and liabilities of Triad Chemical, a 50% owned, unincorporated
joint venture (collectively, the "Company"). All material intercompany
transactions and balances have been eliminated.

Prior to July 1, 1994, Mississippi Chemical Corporation was organized and
operated as a cooperative to manufacture and distribute chemical fertilizer
primarily to its shareholder-members. The chemical fertilizer products are
primarily used as agricultural fertilizers. Effective July 1, 1994, the Company
will no longer operate as a cooperative (see Note 2).

The Company has the right to withdraw, at cost, one-half of the production of
the Triad facilities and is obligated to withdraw certain minimum quantities as
specified by the Production Withdrawal Agreement. The venture's assets
constitute approximately 2.6% of total assets at June 30, 1994, and 2.8% at
June 30, 1993.

On June 30, 1994, the Company disposed of a majority of its interest in
Newsprint South, Inc. ("NSI"), the Company's newsprint manufacturing
subsidiary.

Inventories

Inventories are stated at the lower of cost or market. Cost has been
determined under an average cost method for finished products and raw materials
and under a moving average method for replacement parts.

Investment

Investment in the National Bank for Cooperatives is stated at its net present
value determined by applying a discount factor to an assumed redemption
schedule. The value of this investment will be realized over a period of
approximately five years since the National Bank for Cooperatives redeems its
equity in the normal course of its operations.

Property Held for Sale

Assets are classified as property held for sale if the Company is actively
engaged in trying to dispose of the assets. These assets are valued at the
lower of cost or net realizable value.

Property, Plant and Equipment

Depreciation of property, plant and equipment is provided over the estimated
useful lives of the related assets using primarily the declining-balance
method.

Interest costs attributable to major construction and other projects under
development are capitalized in the appropriate property account and amortized
over the life of the related asset.

The Company is obligated under certain leases which for accounting purposes
are considered to be equivalent to installment purchases. The costs of such
properties are included in property, plant and

F-7
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

equipment. The related lease obligations, less amounts due within one year, are
set forth separately in long-term debt.

Income Taxes

The provision for income taxes relates to margins from non-member business
and such other earnings as may not be currently taxable to members. A provision
for income taxes is made on margins from member business as they relate to
nonqualified capital equity credits and reserves. No provision for income taxes
has been made on margins from member business distributed as cash patronage
refunds which are deductible in determining taxable income.

In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 109, "Accounting for Income Taxes", which
the Company adopted effective July 1, 1993. The cumulative effect of this
change in accounting principle decreased margins by $6,149,000 for fiscal 1994.

Hedging Activities

From time to time, the Company enters into futures contracts to protect
against price fluctuations of natural gas and diammonium phosphate. At the time
the futures contracts are closed and the related natural gas is purchased or
diammonium phosphate is sold, the Company records the change in market value of
such contracts.

Reclassifications

The Company has reclassified the presentation of certain prior year
information to conform with the current year's presentation.

NOTE 2--EFFECTS OF REORGANIZATION:

On June 28, 1994, the shareholder-members of the Company voted to adopt a
plan of reorganization (the "Reorganization") which became effective July 1,
1994. Pursuant to the Reorganization, the Company was merged into a newly
created wholly owned subsidiary ("New Company") which is a noncooperative
Mississippi business corporation. In the merger, the common stock of the
Company was converted into New Company common stock and/or cash. In addition,
holders of Capital Equity Credits and Allocated Surplus Accounts of the Company
were offered the right to exchange those interests for New Company common
stock. Pursuant to the Reorganization, New Company changed its name to
Mississippi Chemical Corporation.

NOTE 3--INVENTORIES:

Inventories consisted of the following:

<TABLE>
<CAPTION>
JUNE 30
---------------
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Finished products........................................ $ 7,518 $ 8,596
Raw materials and supplies............................... 2,851 3,281
Replacement parts........................................ 23,621 22,867
------- -------
$33,990 $34,744
======= =======
</TABLE>

F-8
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 4--PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consisted of the following:

<TABLE>
<CAPTION>
JUNE 30
--------------------
1994 1993
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Mineral properties................................. $ 18,574 $ 18,574
Land............................................... 8,092 8,094
Buildings.......................................... 23,089 23,835
Machinery and equipment............................ 311,698 301,633
Construction in progress........................... 5,539 5,887
--------- ---------
366,992 358,023
Less accumulated depreciation, depletion and
amortization...................................... (252,275) (237,509)
--------- ---------
$ 114,717 $ 120,514
========= =========
</TABLE>

The Company leases certain machinery and equipment with a cost of
approximately $9,967,000 and accumulated depreciation of $9,668,000 for periods
ranging from 5 to 25 years. These leases have been capitalized and the
amortization of these assets is included in depreciation expense. These assets
were financed primarily by industrial revenue bond issues. At the expiration of
the leases, the Company has the option to buy the property or renew the leases
at nominal amounts.

NOTE 5--CREDIT AGREEMENTS AND LONG-TERM DEBT:

The Company has commitments from various banks which allow the Company to
borrow up to $55,000,000 on a short-term basis. Outstanding borrowings under
these commitments were $7,030,000 at June 30, 1994 and $4,625,000 at June 30,
1993. Lines of credit totaling $35,000,000 available through the National Bank
for Cooperatives will expire in October 1994, and will not be renewed since the
Company is no longer an eligible borrower.

The Company also has a $50,000,000 revolving credit facility with
NationsBank, a portion of which converts to term debt on June 30, 1996. Any
outstanding balance on this facility bears interest at the prime rate or for
fixed periods at interest rates related to the London Interbank Offered Rates
("LIBOR") or U.S. Treasury notes. Outstanding borrowings under this commitment
were $25,000,000 at June 30, 1994 and $5,000,000 at June 30, 1993.

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
JUNE 30
----------------
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C> <C>
NationsBank Revolving Facility (7.3%).......... $25,000 $ 5,000
National Bank for Cooperatives Term Loan
(9.8%)........................................ 12,500 32,800
Capitalized lease obligations (7.0%)........... 15,917 17,607
Subordinated debentures (9.5%)................. 3,148 3,148
Other notes payable............................ 3,600 5,039
------- -------
60,165 63,594
Long-term debt due within one year............. (2,948) (11,237)
------- -------
$57,217 $52,357
======= =======
</TABLE>

F-9
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Substantially all of the assets of the Company are pledged as collateral
under various loan and lease agreements.

The various loan agreements have covenants that require, among other things,
that the Company maintain specified levels of tangible assets to long-term
debt, long-term debt to equity and current assets to current liabilities. The
Company is in compliance with all covenants under its various loan agreements.

Maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
LONG-TERM CAPITALIZED LEASES
YEAR ENDING JUNE 30 OBLIGATIONS (INCLUDING INTEREST)
------------------- ----------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
1995..................................... $ 1,400 $ 2,568
1996..................................... 6,600 2,478
1997..................................... 31,300 2,161
1998..................................... 600 1,997
1999..................................... 600 1,919
Thereafter............................... 3,748 10,721
------- -------
44,248 21,844
Less interest............................ -- (5,927)
------- -------
$44,248 $15,917
======= =======
</TABLE>

NOTE 6--SHAREHOLDER-MEMBERS' EQUITY:

Common stock authorized consisted of the following at June 30, 1994:

<TABLE>
<CAPTION>
COMMON STOCK PAR VALUE AUTHORIZED SHARES
------------ --------- -----------------
<S> <C> <C>
Nitrogen Series I............................. $30 50,000
Nitrogen Series II............................ 15 2,500,000
Nitrogen Series III........................... 2 2,750,000
Mixed Series IV............................... 15 1,500,000
Mixed Series V................................ 15 1,000,000
Potash Series VI.............................. 15 150,000
Potash Series VII (None Issued)............... 15 450,000
</TABLE>

Common stock issued and outstanding consisted of the following:

<TABLE>
<CAPTION>
POTASH
NITROGEN SERIES MIXED SERIES SERIES
--------------------------- ------------ -------
I II III IV V VI
------ --------- --------- ------ ----- -------
<S> <C> <C> <C> <C> <C> <C>
Shares outstanding, June 30,
1991....................... 12,159 1,369,812 2,551,301 94,537 2,773 37,878
Retirements................ -- -- -- -- -- (24,601)
Issues..................... -- 10,768 -- -- -- --
Transfers.................. (649) -- 9,735 -- -- --
------ --------- --------- ------ ----- -------
Shares outstanding, June 30,
1992....................... 11,510 1,380,580 2,561,036 94,537 2,773 13,277
Retirements................ -- -- -- -- -- (122)
Issues..................... -- 6,634 -- -- -- --
Transfers.................. (609) -- 9,135 -- -- --
------ --------- --------- ------ ----- -------
Shares outstanding, June 30,
1993....................... 10,901 1,387,214 2,570,171 94,537 2,773 13,155
Issues..................... -- 6,642 -- -- -- 24,001
Transfers.................. (751) -- 11,265 -- -- --
------ --------- --------- ------ ----- -------
Shares outstanding, June 30,
1994....................... 10,150 1,393,856 2,581,436 94,537 2,773 37,156
====== ========= ========= ====== ===== =======
</TABLE>

F-10
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

During June 1994 and 1993, the Board of Directors voted to reserve 40% and
50%, respectively, of the earnings from business with shareholders. These
reserves are reflected in "Allocated Surplus Accounts" maintained by the
Company, and amounts set aside in these accounts are allocated to individual
shareholders in the same proportion that the earnings from business with such
shareholders bears to total earnings from business with all shareholders. The
holders of Allocated Surplus Accounts, which totalled $38,920,000 and
$29,083,000 at June 30, 1994 and 1993, respectively, were offered the right to
exchange those accounts for common shares in the Reorganization (see Note 2).
The allocated surplus is a component of retained deficit which is included in
the consolidated statements of shareholder-members' equity.

Nonqualified capital equity credits issued in 1981 were redeemed in fiscal
1992. The redemption of capital equity credits was at the discretion of the
Board of Directors and was based on the financial condition and capital
requirements of the Company, the availability of funds under restrictive
covenants in the Company's financing arrangements, tax considerations and other
factors. The Board of Directors did not elect to redeem capital equity credits
in fiscal 1993 or fiscal 1994. The holders of Capital Equity Credits were
offered the right to exchange those interests for common shares in the
Reorganization (see Note 2).

NOTE 7--RETIREMENT PLANS:

The Company maintains non-contributory defined benefit pension plans which
provide benefits to substantially all full-time employees. Under the plans,
retirement benefits are primarily a function of both the average annual
compensation and number of years of credited service. The plans are funded
annually by the Company, subject to the full funding limitation.

Net periodic pension (credit) expense includes the following components:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------------
1994 1993 1992
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the period.. $ 1,532 $ 1,489 $ 1,354
Interest cost on projected benefit obligations... 4,035 3,767 3,515
Actual gain on plan assets....................... (3,059) (5,824) (5,119)
Net amortization and deferral of transition
assets.......................................... (750) (390) (335)
Unrecognized gain (loss) on plan assets.......... (1,982) 1,176 807
------- ------- -------
Net periodic pension (credit) expense............ $ (224) $ 218 $ 222
======= ======= =======
</TABLE>

F-11
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table sets forth the plans' funded status and the amounts
included in the Company's consolidated balance sheets:

<TABLE>
<CAPTION>
JUNE 30
----------------
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation............................... $49,017 $45,988
Non-vested benefit obligation........................... 56 72
------- -------
Accumulated benefit obligation.......................... 49,073 46,060
Increase in benefits due to future compensation
increases.............................................. 11,588 8,991
------- -------
Projected benefit obligation.............................. 60,661 55,051
Estimated fair value of plan assets....................... 61,281 60,304
------- -------
Plan assets in excess of projected benefit obligation..... 620 5,253
Contributions after measurement date...................... 303 --
Remaining unrecognized transition assets.................. (4,232) (4,761)
Unrecognized net loss..................................... 9,850 4,394
------- -------
Prepaid pension cost at end of period..................... $ 6,541 $ 4,886
======= =======
</TABLE>

The following assumptions were used to measure net periodic pension cost for
the plans for fiscal 1994, 1993 and 1992:

<TABLE>
<S> <C>
Discount rate........................................................ 7.5%
Expected long-term rate of return on assets.......................... 8.5%
Average increase in compensation levels.............................. 6.5%
</TABLE>

The plans' assets consist primarily of guaranteed investment contracts and
marketable equity securities.

The Company also has contributory thrift plans covering substantially all
employees who have completed minimum service requirements. Company
contributions totalled approximately $811,000 in 1994, $670,000 in 1993, and
$590,000 in 1992.

The Company has no material post-retirement benefit obligations.

NOTE 8--LEASE COMMITMENTS:

The Company has commitments under operating leases for plant rolling stock
items and storage warehouses.

F-12
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following is a schedule of the future minimum rental payments required
under operating leases that have noncancellable lease terms in excess of one
year as of June 30, 1994:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Year Ending June 30:
1995............................................. $ 771
1996............................................. 276
1997............................................. 93
1998............................................. 6
1999............................................. 6
Thereafter....................................... 93
------
$1,245
======
</TABLE>

Rental expense for all operating leases was $1,218,000 for 1994, $1,144,000
for 1993, and $1,036,000 for 1992.

NOTE 9--INCOME TAXES:

The following is a summary of the components of the provision for income
taxes:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------
1994 1993 1992
------ ------ ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C>
Current:
Federal........................................... $8,862 $3,408 $4,697
State and local................................... 223 289 297
------ ------ ------
$9,085 3,697 4,994
Deferred:
Federal........................................... (3,423) -- --
State and local................................... 359 -- --
------ ------ ------
(3,064) -- --
------ ------ ------
$6,021 $3,697 $4,994
====== ====== ======
</TABLE>

The tax effects of the significant temporary differences and tax credit
carryforwards at June 30, 1994 follows:

<TABLE>
<CAPTION>
CURRENT NON-CURRENT
------- -----------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Federal and state net operating loss carryforwards....... $1,842 $ 400
Alternative minimum tax credit........................... 2,542 1,647
Employee benefit obligations............................. 1,666 --
Accrual for closure of gypsum disposal area.............. -- 2,301
Settlement of future newsprint contract obligations...... 3,326 --
Other.................................................... 306 656
------ -------
Deferred tax assets.................................... 9,682 5,004
Depreciation and amortization............................ -- (12,135)
Pension.................................................. -- (1,822)
------ -------
Deferred tax liabilities............................... -- (13,957)
------ -------
Net deferred tax asset (liability)................... $9,682 $(8,953)
====== =======
</TABLE>

F-13
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

A reconciliation, as of June 30, of the benefit for income taxes and the
effective tax rate with the amount computed by applying the statutory federal
income tax rate follows:

<TABLE>
<CAPTION>
1994 1993 1992
----------------- ---------------- -----------------
% OF % OF % OF
EARNINGS EARNINGS EARNINGS
BEFORE BEFORE BEFORE
AMOUNT TAXES AMOUNT TAXES AMOUNT TAXES
------- -------- ------ -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income taxes computed at
statutory rate.......... $11,427 34.7% $8,969 34.0% $12,357 34.0%
Increase (decrease) in
taxes resulting from:
Deduction for cash
patronage refunds..... (5,017) (15.2) (4,873) (18.5) (7,784) (21.4)
State taxes, net....... (582) (1.8) 194 0.7 211 0.6
Other, net............. 193 0.6 (435) (1.6) 10 --
------- ----- ------ ----- ------- -----
6,021 18.3 3,855 14.6 4,794 13.2
Non-deductible loss of
subsidiaries.......... -- -- (158) (0.6) 200 0.6
------- ----- ------ ----- ------- -----
$ 6,021 18.3% $3,697 14.0% $ 4,994 13.8%
======= ===== ====== ===== ======= =====
</TABLE>

In connection with an Internal Revenue Service audit of fiscal years 1985
through 1987, the Company, on June 11, 1990, received an Examination Report
which proposed adjustments totalling approximately $3,300,000 to the Company's
tax liability for tax years 1983, 1984 and 1985. Interest on the proposed
deficiencies would be approximately $3,503,000 through June 30, 1994. It is the
Service's position that Section 277 of the Internal Revenue Code prohibits non-
exempt cooperatives from carrying back losses incurred on patronage business.
It is the Company's position that, as a matter of law, Section 277 does not
apply to the Company. On July 9, 1990, the Company filed with the District
Director of the Internal Revenue Service its protest of the proposed
deficiency. The Company believes it has meritorious defenses against the
claimed assessments and intends to vigorously defend its position in this
matter. If the Company is unsuccessful, the relevant losses may be carried
forward to succeeding tax years.

NOTE 10--RAW MATERIAL CONTRACTS:

During 1987, the Company entered into a contract to purchase natural gas for
the Yazoo City plant. Payments for gas deliveries under the contract were based
on certain fixed and market-related components. On March 31, 1994, this
contract expired; however, the supplier continues to furnish natural gas under
the terms of the contract for a 180-day "renegotiation period" to allow the
opportunity for structuring a new contract. The Company and the supplier are
currently discussing a new arrangement for the supply of gas to the Yazoo City
plant.

Mississippi Phosphates Corporation ("MPC"), a wholly owned subsidiary of the
Company, has entered into a contract to purchase from a third party its full
requirement of phosphate rock. The contract will expire on June 30, 2003. The
purchase price for phosphate rock is based on the phosphate rock costs incurred
by certain domestic phosphate producers and the operating performance of MPC.

NOTE 11--MAJOR CUSTOMERS AND EXPORT SALES:

Sales to the Company's three largest customers were approximately
$83,366,000, $33,513,000 and $13,696,000 for 1994; $79,150,000, $32,957,000 and
$13,860,000 for 1993; and $36,034,000, $32,080,000 and $13,879,000 for 1992.
Export sales were less than 10% of sales in 1994, 1993 and 1992.

F-14
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Substantially all of MPC's sales are made to a third party which has been
appointed the exclusive distributor of diammonium phosphate fertilizer produced
by MPC. Sales to the distributor are recorded net of the distributor's
commission. The distributor sells primarily in international markets.

NOTE 12--COMMITMENTS AND CONTINGENCIES:

A significant portion of the Company's trade receivables are due from
entities which operate in the chemical fertilizer and farm supply industry. A
severe downturn in the agricultural economy could have an adverse impact on the
collectibility of those receivables.

During 1990, the Company entered into an agreement granting a third party the
exclusive option, for a period of four years, to purchase the Company's
undeveloped phosphate rock property of approximately 12,000 acres. As of July
12, 1994, the Company and the option holder entered into new agreements with
respect to this property whereby the Company conveyed a portion of the property
to the third party and granted to the third party the exclusive option to
purchase the remaining portion of the property. In addition, the Company was
granted a put option whereby the Company has the right and option to sell the
remaining portion of the property to the third party if the third party does
not exercise its option to purchase the remaining property and was granted an
exclusive option to repurchase the previously conveyed portion in the event the
third party does not exercise its option and the Company does not exercise its
put option. These properties are classified as property held for sale at June
30, 1994 and 1993.

On July 15, 1986, the first of 17 lawsuits was filed in the Twenty-first
Judicial District Court, Parish of Livingston, State of Louisiana, against
Triad Chemical and approximately 90 other named defendants by numerous
plaintiffs. The plaintiffs' claims are based on alleged personal injuries and
property damages as a result of exposure to hazardous waste allegedly
contributed by the defendants to the Combustion, Inc. site in Livingston
Parish, Louisiana. Triad is vigorously defending its position in these
proceedings and considers its defenses meritorious. No provision for claims
being made is included in the accompanying financial statements because
management is of the opinion that the ultimate disposition of this matter will
not involve a material loss to the Company.

Additionally, the Company, in the ordinary course of its business, is the
subject of, or a party to, other various pending or threatened legal actions.
The Company believes that any ultimate liability arising from these actions
will not have a significant impact on the future earnings of the Company.

NOTE 13--SUPPLEMENTAL CASH FLOW INFORMATION:

The Company considers its holdings of highly liquid money market debt
instruments to be cash equivalents if the securities mature within 90 days from
the date of acquisition. These short-term investments were $21,500,000 at June
30, 1994, and $18,347,000 at June 30, 1993.

Net refunds of income taxes were $149,000 in 1994, $180,000 in 1993 and
$480,000 in 1992. Payments of interest (net of amounts capitalized) were
$4,705,000 in 1994, $5,266,000 in 1993 and $5,755,000 in 1992.

F-15
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The increase in cash due to the changes in operating assets and liabilities
consisted of the following:

<TABLE>
<CAPTION>
JUNE 30
-------------------------
1994 1993 1992
-------- ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Accounts receivable............................... $ (2,265) $(2,052) $1,914
Inventories....................................... 754 740 (7,736)
Prepaid expenses and other current assets......... (295) 1,949 3,386
Accounts payable.................................. (6,407) 3,764 7,983
Accrued interest.................................. (284) (483) (130)
Accrued liabilities............................... 2,677 (1,216) 788
-------- ------- ------
$(5,820) $ 2,702 $6,205
======== ======= ======
</TABLE>

Supplemental disclosures regarding non-cash financing and investing
activities include the following:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------
1994 1993 1992
------ ------- ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C>
Capital expenditures made from restricted funds....... $1,000 $ 1,000 $7,790
Net option proceeds deposited in restricted funds..... $1,000 $ 1,000 $2,000
Capital expenditures financed by issuance of long-term
debt.................................................. -- -- $ 980
Stock issued for consideration other than cash........ $ 99 $ 411 $ 672
Note payable converted to long-term debt.............. -- $10,000 --
Accrued liability transferred to long-term liability.. $1,258 -- --
Long-term liability transferred to accounts payable... $2,000 -- --
</TABLE>

NOTE 14--OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS:

Other long-term liabilities and deferred credits are comprised of the
following:

<TABLE>
<CAPTION>
JUNE 30
---------------
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Option proceeds.......................................... $13,967 $12,967
Accrual for closure of gypsum disposal area.............. 6,055 --
Other.................................................... 4,682 5,656
------- -------
$24,704 $18,623
======= =======
</TABLE>

During fiscal 1994, MPC charged to earnings $6,055,000 relating to the
estimated cost of the future closure of the phosphogypsum disposal facility
located at Pascagoula. In future years, MPC expects to record additional
charges of approximately $3,000,000 related to the future closure of the
facility. The current charge of $6,055,000 relates to the portion of the
disposal facility utilized to date, and the estimated future charges of
approximately $3,000,000 will be accrued over the estimated six-year remaining
life of the facility.

NOTE 15--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:

F-16
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Cash and Cash Equivalents

The carrying amount approximates fair value because of the short maturity of
those instruments.

Accounts Receivable and Payable

The carrying amounts approximate fair value because of the short settlement
periods of these instruments.

Long-Term Debt

The fair value of the Company's long-term debt is estimated based on the
current rates offered to the Company for debt of the same remaining maturities.

The estimated fair value of the Company's long-term debt instruments at June
30, 1994 is $56,130. The carrying amount of the long-term debt is $57,217.

NOTE 16--INTEREST EXPENSE, NET:

Interest expense, net of interest income, consisted of the following:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
----------------------
1994 1993 1992
------ ------ ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C>
Interest expense.................................. $6,356 $5,994 $6,523
Interest capitalized.............................. (2) (1,027) (664)
Interest income................................... (2,363) (1,398) (1,929)
------ ------ ------
$3,991 $3,569 $3,930
====== ====== ======
</TABLE>

NOTE 17--DISCONTINUED OPERATIONS:

Under the terms of the transaction, the Company paid $19,000,000 to NSI in
various forms including capital contributions, payments in liquidation of the
Company's obligations under a newsprint purchase contract and certain tax-
compensating payments pursuant to a tax-sharing agreement. Prior loans in the
amount of approximately $13,700,000 made by the Company to NSI pursuant to a
newsprint purchase contract between the Company and NSI were converted to
capital. Pursuant to the transaction, the Company also purchased from NSI its
CoBank common stock for $4,000,000. This stock is scheduled for redemption at
the face amount by CoBank during the next five years.

The disposition of NSI will allow the Company to focus its attention on its
core fertilizer business.

Prior to the disposition, the Company had consolidated the financial results
of NSI which had a capital deficit of $39,747,000 at the time of disposition.
Since the Company has no further obligations with respect

F-17
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

to NSI, the previously recorded deficit was eliminated which resulted in a gain
on disposition of $39,747,000. Subsequent to the disposition, the remaining 30%
economic interest will be accounted for at cost which is zero at June 30, 1994.

To facilitate analysis, the accompanying summarized financial information of
NSI for fiscal 1994, 1993 and 1992 was as follows:

<TABLE>
<CAPTION>
1994 1993 1992
-------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance sheets:
Current assets............................. $ 27,735 $ 20,416 $ 18,698
======== ========= =========
Total assets............................... $ 49,950 $ 33,938 $ 32,753
======== ========= =========
Current liabilities........................ $ 33,551 $ 15,048 $ 13,896
======== ========= =========
Total liabilities.......................... $ 95,301 $ 75,401 $ 56,325
======== ========= =========
Net deficit................................ $(45,351) $(41,463) $(23,572)
======== ========= =========
Statements of operations:
Net sales.................................. $ 94,617 $ 96,963 $ 95,472
======== ========= =========
Net loss................................... $(23,987) $(17,891) $(18,346)
======== ========= =========
</TABLE>

F-18
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
1. Underwriting Agreement.
3.1 Articles of Incorporation of the Company.
3.2 By-laws of the Company.
4.7 Specimen of the Company's 9 1/2% Subordinated Note Due
July 1, 1999 (incorporated herein by reference to Exhibit
4.7 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1993, File No. 2-7803).
4.8 Term Loan Agreement Number 6420 dated August 25, 1987, be-
tween the Company's subsidiary, Newsprint South, Inc., and
Jackson Bank for Cooperatives (now National Bank for Coop-
eratives) in an amount not to exceed $4,700,000, as
amended and restated by Amendment to Loan Agreement Number
6420(A) dated February 2, 1989 (incorporated herein by
reference to Exhibit 4.8 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1993, File
No. 2-7803).
4.9 Line of Credit Agreement Number 6899 dated December 13,
1991, between the Company's subsidiary, Newsprint South,
Inc., and National Bank for Cooperatives, for a revolving
line of credit in an amount equal to the lesser of the
Borrowing Base (as defined in Section 6 thereof) or
$10,680,000, as amended by Amendment Number 6899(A) dated
June 12, 1992, and Amendment Number 6899(B) dated December
18, 1992, which increased the line of credit to
$10,992,000 (incorporated herein by reference to Exhibit
4.9 to the Company's Annual Report on Form 10-K for the
fiscal year ended on June 30, 1993, File No. 2-7803).
4.10 Term Loan Agreement Number 6939 dated October 19, 1992,
between the Company's subsidiary, Mississippi Phosphates
Corporation, and National Bank for Cooperatives and the
Company as co-maker in an aggregate principal amount not
to exceed $10,000,000 (incorporated herein by reference to
Exhibit 4.10 to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993, File No. 2-7803).
4.11 Line of Credit Agreement Number 6871 dated September 30,
1991, between the Company and National Bank for Coopera-
tives for a revolving line of credit in the amount of
$10,000,000, as amended by Amendment Number 6871(A) dated
October 20, 1992, which increases the line of credit to
$15,000,000 (incorporated herein by reference to Exhibit
4.11 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1993, File No. 2-7803).
4.12 Amendment Number 6392(A) dated November 2, 1987, and
Amendment Number 6392(B) dated April 20, 1988, to Loan
Agreement Number 6392 dated as of April 24, 1987, between
the Company and the Jackson Bank for Cooperatives (now the
National Bank for Cooperatives) (incorporated herein by
reference to Exhibit 4.12 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1993, File
No. 2-7803).
</TABLE>

II-1
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
4.13 Loan Agreement Number 6392 dated as of April 24, 1987, be-
tween the Company and Jackson Bank for Cooperatives (now
the National Bank for Cooperatives) in a principal amount
not to exceed $35,000,000 (incorporated herein by refer-
ence to Exhibit 4.13 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1987, File
No. 2-7803).
4.14 Revolving Credit/Term Loan Agreement dated August 6, 1992,
between the Company and NationsBank of Tennessee, pur-
chaser of the Company's Series I Secured Note, Due June
30, 1999, in the aggregate principal amount of
$20,000,000; filed as Exhibit 4.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30,
1992, File No. 2-7803, and incorporated herein by refer-
ence thereto.
4.15 Note Purchase Agreement dated as of December 26, 1989, be-
tween the Company and John Hancock Variable Life Insurance
Company, purchaser of the Company's 9.97% Secured Notes,
Series H, Due 1999, in the aggregate principal amount of
$6,000,000; filed as an exhibit to Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990, File No. 2-7803, and incorporated
herein by reference thereto.
4.16 Twelfth Supplemental Indenture dated as of August 6, 1992,
between the Company and Deposit Guaranty National Bank;
filed as Exhibit 4.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1992, File
No. 2-7803, and incorporated herein by reference thereto.
4.17 Eleventh Supplemental Indenture dated as of July 16, 1990,
between the Company and Deposit Guaranty National Bank,
together with Exhibit A thereto, being an Agreement for
Real Estate Purchase Option dated July 16, 1990, for the
sale of the Company's Hardee County, Florida, property and
underlying phosphate reserves; filed as Exhibit 4.2 to
Amendment No. 1 of the Company's Report on Form 8 dated
November 7, 1990, File No. 2-7803, and incorporated herein
by reference thereto.
4.18 Tenth Supplemental Indenture dated as of December 26,
1989, between the Company and Deposit Guaranty National
Bank, together with Exhibit A thereto, being a Note Pur-
chase Agreement dated as of December 26, 1989, between the
Company and John Hancock Variable Life Insurance Company,
purchaser of the Company's 9.97% Secured Notes, Series H,
Due 1999, in the aggregate principal amount of $6,000,000;
filed as Exhibit 4.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1990, File
No. 2-7803, and incorporated herein by reference thereto.
4.19 Ninth Supplemental Indenture dated as of February 23,
1988, between the Company and Deposit Guaranty National
Bank; filed as Exhibit 4.1 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1988, File
No. 2-7803, and incorporated herein by reference thereto.
4.20 Eighth Supplemental Indenture dated as of May 15, 1983,
between the Company and Deposit Guaranty National Bank;
filed as Exhibit 4.1 to Post-Effective Amendment No. 3 to
Registration Statement No. 2-71827 and incorporated herein
by reference thereto.
4.21 Seventh Supplemental Indenture dated as of October 1,
1979, between the Company and Deposit Guaranty National
Bank; filed as Exhibit 2 to Post-Effective Amendment No. 3
to Registration Statement No. 2-57390 and incorporated
herein by reference thereto.
4.22 Sixth Supplemental Indenture dated as of September 1,
1979, between the Company and Deposit Guaranty National
Bank, filed as Exhibit 3 to Post-Effective Amendment No. 3
to Registration Statement No. 2-57390 and incorporated
herein by reference thereto.
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
4.23 Fifth Supplemental Indenture dated as of June 1, 1978, be-
tween the Company and Deposit Guaranty National Bank;
filed as Exhibit 7 to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1979, File No. 2-
7803, and incorporated herein by reference thereto.
4.24 Fourth Supplemental Indenture dated as of May 1, 1978, be-
tween the Company and Deposit Guaranty National Bank;
filed as Exhibit 9 to Post-Effective Amendment No. 2 to
Registration Statement No. 2-57390 and incorporated herein
by reference thereto.
4.25 Third Supplemental Indenture dated as of June 28, 1977,
between the Company and Deposit Guaranty National Bank;
filed as Exhibit 6 to Post-Effective Amendment No. 1 to
Registration Statement No. 2-57390 and incorporated herein
by reference thereto.
4.26 Second Supplemental Indenture dated as of September 30,
1976, among the Company, New Orleans Bank for Coopera-
tives, John H. Farrelly and Deposit Guaranty National
Bank; filed as Exhibit 6 to Registration Statement No. 2-
57390 and incorporated herein by reference thereto.
4.27 First Supplemental Indenture, dated as of September 7,
1976, among the Company, New Orleans Bank for Coopera-
tives, John H. Farrelly and Deposit Guaranty National
Bank; filed as Exhibit 3 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1976, File
No. 2-7803, and incorporated herein by reference thereto.
4.28 Note Purchase Agreement effective as of September 1, 1976,
between the Company and the Purchasers of the Company's 9
1/2% Secured Notes, Series B, Due 1996, in the aggregate
principal amount of $35,000,000, together with Exhibits A
and B thereto; filed as Exhibit 2 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30,
1976, File No. 2-7803, and incorporated herein by refer-
ence thereto.
4.29 Indenture dated as of May 1, 1989, between the Company and
Sunburst Bank, as Trustee, for the issuance by the Company
and 9 1/2% subordinated notes, due July 1, 1999, in the
aggregate principal amount of $11,061,000; filed as Ex-
hibit 4.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1989, File No. 7-2803, and
incorporated herein by reference thereto.
4.30 Mississippi Chemical Corporation 1994 Stock Incentive
Plan.
4.31 Rights Agreement dated as of August 8, 1994 between the
Company and Harris Trust and Savings Bank as Rights Agent
(incorporated herein by reference to Exhibit 1 to the
Company's Registration Statement on Form 8-A filed August
15, 1994).
5. Opinion re Legality.
10.1 First Supplement to Lease Agreement dated as of June 30,
1992, to the Lease Agreement dated as of September 28,
1989, among Newsprint South, Inc., The First National Bank
of Boston, and G. Patrick McEnroe, as Trustees (incorpo-
rated herein by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended June
30, 1993, File No. 2-7803).
10.2 Second Supplement to Lease Agreement dated as of July 15,
1992, to the Lease Agreement dated as of September 28,
1989, among Newsprint South, Inc., The First National Bank
of Boston, and G. Patrick McEnroe, as Trustees (incorpo-
rated herein by reference to Exhibit 10.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended June
30, 1993, File No. 2-7803).
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
10.3 Amendment of Agreement, effective as of July 1, 1993, to
the Agreement entered into as of October 1, 1991, by the
Company's subsidiary, Mississippi Phosphates Corporation,
for the exclusive distribution of diammonium phosphate
produced by Mississippi Phosphates Corporation (incorpo-
rated herein by reference to Exhibit 10.3 to the Company's
Annual Report on Form 10-K for the fiscal year ended June
30, 1993, File No. 2-7803).(1)
10.4 Amendment to Joint Venture Agreement entered into by the
Company and First Mississippi Corporation effective as of
May 28, 1993 (incorporated herein by reference to Exhibit
10.4 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1993, File No. 2-7803).
10.5 Amendment to Products Withdrawal Agreement entered into by
the Company and First Mississippi Corporation effective as
of May 28, 1993 (incorporated herein by reference to Ex-
hibit 10.5 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993, File No. 2-7803).
10.6 Agreement effective as of October 1, 1991, by the
Company's subsidiary, Mississippi Phosphates Corporation
for the exclusive distribution of diammonium phosphate
produced by Mississippi Phosphates Corporation; filed as
Exhibit 10.1 to Amendment No. 1 to the Company's Report on
Form 8 dated January 7, 1993, File No. 2-7803, and incor-
porated herein by reference thereto.(2)
10.7 Agreement made and entered into as of September 15, 1991,
between Office Cherifien des Phosphates and Mississippi
Phosphates Corporation for the sale and purchase of phos-
phate rock; filed as Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30,
1991, File No. 2-7803, and incorporated herein by refer-
ence thereto.(3)
10.8 Lease Agreement dated as of September 28, 1989, among
Newsprint South, Inc., The First National Bank of Boston,
and G. Patrick McEnroe, as Trustees; filed as Exhibit 10.1
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1990, File No. 2-7803, and incorpo-
rated herein by reference thereto.
10.9 Agreement for Real Estate Purchase Option dated July 16,
1990, for the sale of the Company's Hardee County, Flori-
da, property and underlying phosphate reserves; filed as
an exhibit to Exhibit 4.2 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1990, File
No. 2-7803, and incorporated herein by reference there-
to.(4)
10.10 Power Contract dated as of June 27, 1988, between the
Company's subsidiary, Newsprint South, Inc., and Tennessee
Valley Authority, as supplemented by letter agreement
dated June 27, 1988, filed as Exhibit 10.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1989, File No. 2-7803, and incorporated
herein by reference thereto.
10.11 Gas Purchase and Sale Contract between the Company and
Shell Western E&P Inc., dated as of January 1, 1986; filed
as Exhibit 10.6 to Amendment No. 1 of the Company's Report
on Form 8 dated January 7, 1993, File No. 2-7803, and in-
corporated herein by reference thereto.(5)
10.12 Triad Chemical Joint Venture Agreement; filed as Exhibit
G1 to Post-Effective Amendment No. 6 to Registration
Statement No. 2-25041 and incorporated herein by reference
thereto.
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
10.13 Products Withdrawal Agreement dated June 3, 1968, between
First Mississippi Corporation and MisCoa covering with-
drawal of product from Triad Chemical; filed as Exhibit H
to Post-Effective Amendment No. 7 to Registration State-
ment No. 2-25041 and incorporated herein by reference
thereto.
18.1 Preferability letter dated July 31, 1992, issued by Arthur
Andersen & Co. to the Company to fulfill the requirements
of Regulation S-K in connection with the Company's change
in the method of reporting patronage refunds; filed as Ex-
hibit 18.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993, File No. 2-7803, and
incorporated herein by reference thereto.
21.1 List of subsidiaries of the Company, filed as Exhibit 21.1
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1993, File No. 2-7803, and incorpo-
rated herein by reference thereto.
23.1 Consent of McDermott, Will & Emery (included in Exhibit
5).
23.2 Consent of Arthur Andersen & Co.
24 Power of Attorney.
</TABLE>
- --------
(1) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.3 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(2) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.6 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(3) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.7 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(4) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.9 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(5) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.11 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.

(b) FINANCIAL STATEMENT SCHEDULES.

Report of Independent Public Accountants

<TABLE>
<C> <S>
Schedule V Property, Plant and Equipment
Schedule VI Accumulated Depreciation, Depletion and Amortization of
Property, Plant and Equipment
Schedule IX Short-Term Borrowings
Schedule X Supplementary Income Statement Information
</TABLE>

II-5
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF YAZOO CITY, STATE OF
MISSISSIPPI ON AUGUST 17, 1994.

Mississippi Chemical Corporation

/s/ Charles O. Dunn
By __________________________________
Charles O. Dunn, President and
Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
/s/ Charles O. Dunn President, Chief Executive August 17, 1994
____________________________________ Officer and Director (Principal
Charles O. Dunn Executive Officer)

/s/ William F. Hawkins* Senior Vice President--Finance August 17, 1994
____________________________________ and Administration (Principal
William F. Hawkins Financial Officer and Principal
Accounting Officer)

/s/ Coley L. Bailey* Chairman of the Board and August 17, 1994
____________________________________ Director
Coley L. Bailey

/s/ John Sharp Howie* Vice Chairman of the Board and August 17, 1994
____________________________________ Director
John Sharp Howie

/s/ John W. Anderson* Director August 17, 1994
____________________________________
John W. Anderson

/s/ Frank R. Burnside, Jr.* Director August 17, 1994
____________________________________
Frank R. Burnside, Jr.

/s/ W. R. Dyess* Director August 17, 1994
____________________________________
W. R. Dyess

/s/ Woods E. Eastland* Director August 17, 1994
____________________________________
Woods E. Eastland

/s/ G. David Jobe* Director August 17, 1994
____________________________________
G. David Jobe

</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
/s/ George Penick* Director August 17, 1994
____________________________________
George Penick
/s/ David M. Ratcliffe* Director August 17, 1994
____________________________________
David M. Ratcliffe
/s/ Wayne Thames* Director August 17, 1994
____________________________________
Wayne Thames
</TABLE>

/s/ Charles O. Dunn
*By: __________________________ August 17, 1994
Charles O. Dunn,
Attorney-in-Fact

II-7
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Mississippi Chemical Corporation:

We have audited in accordance with generally accepted auditing standards, the
accompanying financial statements included in this Form S-1, and have issued
our report thereon dated July 29, 1994. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The schedules on pages
II-9 through II-12 are the responsibility of the Company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audit
of the basic financial statements, and in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

Arthur Andersen & Co.

Memphis, Tennessee,
July 29, 1994.

II-8
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES

SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

THREE YEARS ENDED JUNE 30, 1994

<TABLE>
<CAPTION>
BALANCE OTHER BALANCE
AT CHARGES-- AT END
BEGINNING ADDITIONS RETIREMENTS ADD OF
CLASSIFICATION OF PERIOD AT COST OR SALES (DEDUCT) PERIOD
-------------- --------- --------- ----------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1992: (1)
Mineral properties..... $ 18,735 $ -- $ 161 $ -- $ 18,574
Land................... 7,237 566 -- -- 7,803
Buildings.............. 22,289 42 3 249 (2) 22,577
Machinery and
equipment............. 250,093 6,661 2,583 5,462 (2) 259,633
Construction in
progress.............. 2,941 25,443 4 (5,711)(2) 22,669
-------- ------- ------- ------- --------
$301,295 $32,712 $ 2,751 $ -- $331,256
======== ======= ======= ======= ========
1993: (1)
Mineral properties..... $ 18,574 $ -- $ -- $ -- $ 18,574
Land................... 7,803 350 59 -- 8,094
Buildings.............. 22,577 18 -- 1,240 (2) 23,835
Machinery and
equipment............. 259,633 3,767 622 38,855 (2) 301,633
Construction in
progress ............. 22,669 23,313 -- (40,095)(2) 5,887
-------- ------- ------- ------- --------
$331,256 $27,448 $ 681 $ -- $358,023
======== ======= ======= ======= ========
1994:
Mineral properties..... $ 18,574 $ -- $ -- $ -- $ 18,574
Land................... 8,094 15 17 -- 8,092
Buildings.............. 23,835 7 1,016 263 (2) 23,089
Machinery and
equipment............. 301,633 2,989 1,425 8,501 (2) 311,698
Construction in
progress.............. 5,887 8,416 -- (8,764)(2) 5,539
-------- ------- ------- ------- --------
$358,023 $11,427 $ 2,458 $ -- $366,992
======== ======= ======= ======= ========
</TABLE>

DEPRECIATION AND AMORTIZATION

The annual provisions to depreciation have been computed based on the
following estimated useful lives:

<TABLE>
<S> <C>
Buildings............................. 12-33 years
Machinery and equipment............... 3-20 years
</TABLE>
- --------
(1) Amounts have been restated to exclude discontinued operations.
(2) Transfer construction in progress.

II-9
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES

SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT

THREE YEARS ENDED JUNE 30, 1994

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED OTHER BALANCE
AT TO COSTS CHARGES-- AT END
BEGINNING AND ADD OF
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS (DEDUCT) PERIOD
----------- --------- --------- ----------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1992: (1)
Mineral properties......... $ 1,729 $ 118 $ 119 $ -- $ 1,728
Buildings.................. 15,547 775 3 -- 16,319
Machinery and equipment.... 196,650 11,139 2,230 -- 205,559
-------- ------- ------ ------ --------
$213,926 $12,032 $2,352 $ -- $223,606
======== ======= ====== ====== ========
1993: (1)
Mineral properties......... $ 1,728 $ 117 $ 8 $ -- $ 1,837
Buildings.................. 16,319 662 -- -- 16,981
Machinery and equipment.... 205,559 13,547 415 -- 218,691
-------- ------- ------ ------ --------
$223,606 $14,326 $ 423 $ -- $237,509
======== ======= ====== ====== ========
1994:
Mineral properties......... $ 1,837 $ 126 $ -- $ -- $ 1,963
Buildings.................. 16,981 669 899 -- 16,751
Machinery and equipment ... 218,691 16,046 1,177 1 233,561
-------- ------- ------ ------ --------
$237,509 $16,841 $2,076 $ 1 $252,275
======== ======= ====== ====== ========
</TABLE>
- --------
(1) Amounts have been restated to exclude discontinued operations.

II-10
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES

SCHEDULE IX--SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
BALANCE WEIGHTED AMOUNT AMOUNT AVERAGE
AT END AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE OF INTEREST AT ANY DURING THE DURING THE
SHORT-TERM BORROWINGS PERIOD RATE MONTH END PERIOD (2) PERIOD (3)
--------------------- ------- -------- ----------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
June 30, 1992 (1)
Notes payable to banks
(4).................. $13,500 6.63% $15,565 $7,012 6.61%
June 30, 1993 (1)
Notes payable to banks
(4).................. $ 4,625 4.30% $13,500 $8,402 5.20%
June 30, 1994
Notes payable to banks
(4).................. $ 7,030 5.45% $10,000 $6,002 4.45%
</TABLE>
- --------
(1) Amounts have been restated to exclude discontinued operations.
(2) Average amount outstanding during the period is computed by dividing the
total of daily outstanding principle balances by 365.
(3) Weighted average interest rate during the period is computed by dividing
the actual short-term interest expense by the average short-term debt
outstanding during the period.

(4) Notes payable were related to borrowings for the Company's wholly owned
subsidiary, Mississippi Phosphates Corporation.

II-11
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES

SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION

<TABLE>
<CAPTION>
COLUMN A COLUMN B
-------- -----------------------
CHARGED TO COSTS AND
EXPENSES
FISCAL YEAR ENDED
-----------------------
1993 1992
ITEM 1994 (1) (1)
---- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Maintenance and repairs................................ $18,230 $18,548 $17,150
Depreciation, depletion and amortization of property,
plant and equipment and other intangible assets....... $16,967 $14,444 $12,094
Property taxes......................................... $ 1,865 $ 1,555 $ 1,523
Other taxes--other than income taxes and payroll taxes
...................................................... $ 1,267 $ 1,218 $ 1,190
</TABLE>
- --------
(1) Amounts have been restated to exclude discontinued operations.

II-12
<PAGE>

MISSISSIPPI CHEMICAL CORPORATION

EXHIBIT INDEX
TO
AMENDMENT NO. 1
TO
FORM S-1

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
1 Underwriting Agreement.*
3.1 Articles of Incorporation of the Company.*
3.2 By-laws of the Company.*
4.7 Specimen of the Company's 9 1/2% Subordinated Note Due July
1, 1999, (incorporated herein by reference to Exhibit 4.7 to
the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1993, File No. 2-7803)
4.8 Term Loan Agreement Number 6420 dated August 25, 1987, be-
tween the Company's subsidiary, Newsprint South, Inc., and
Jackson Bank for Cooperatives (now National Bank for Coopera-
tives) in an amount not to exceed $ 4,700,000, as amended and
restated by Amendment to Loan Agreement Number 6420(A) dated
February 2, 1989, (incorporated herein by reference to Ex-
hibit 4.8 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1993, File No. 2-7803).
4.9 Line of Credit Agreement Number 6899 dated December 13, 1991,
between the Company's subsidiary, Newsprint South, Inc., and
National Bank for Cooperatives, for a revolving line of
credit in an amount equal to the lesser of the Borrowing Base
(as defined in Section 6 thereof) or $10,680,000, as amended
by Amendment Number 6899(A) dated June 12, 1992, and Amend-
ment Number 6899(B) dated December 18, 1992, which increased
the line of credit to $10,992,000, (incorporated herein by
reference to Exhibit 4.9 to the Company's Annual Report on
Form 10-K for the fiscal year ended on June 30, 1993, File
No. 2-7803).
4.10 Term Loan Agreement Number 6939 dated October 19, 1992, be-
tween the Company's subsidiary, Mississippi Phosphates Corpo-
ration, and National Bank for Cooperatives and the Company as
co-maker in an aggregate principal amount not to exceed
$10,000,000, (incorporated herein by reference to Exhibit
4.10 to the Company's Annual Report on Form 10-K for the fis-
cal year ended June 30, 1993, File No. 2-7803).
4.11 Line of Credit Agreement Number 6871 dated September 30,
1991, between the Company and National Bank for Cooperatives
for a revolving line of credit in the amount of $10,000,000,
as amended by Amendment Number 6871(A) dated October 20,
1992, which increases the line of credit to $15,000,000, (in-
corporated herein by reference to Exhibit 4.11 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1993, File No. 2-7803).
4.12 Amendment Number 6392(A) dated November 2, 1987, and Amend-
ment Number 6392(B) dated April 20, 1988, to Loan Agreement
Number 6392 dated as of April 24, 1987, between the Company
and the Jackson Bank for Cooperatives (now the National Bank
for Cooperatives), (incorporated herein by reference to Ex-
hibit 4.12 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993, File No. 2-7803).
4.13 Loan Agreement Number 6392 dated as of April 24, 1987, be-
tween the Company and Jackson Bank for Cooperatives (now the
National Bank for Cooperatives) in a principal amount not to
exceed $35,000,000; (incorporated herein by reference to Ex-
hibit 4.13 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1987, File No. 2-7803).
</TABLE>

E-1
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
4.14 Revolving Credit/Term Loan Agreement dated August 6, 1992,
between the Company and NationsBank of Tennessee, purchaser
of the Company's Series I Secured Note, Due June 30, 1999, in
the aggregate principal amount of $20,000,000; filed as Ex-
hibit 4.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1992, File No. 2-7803, and incor-
porated herein by reference thereto.
4.15 Note Purchase Agreement dated as of December 26, 1989, be-
tween the Company and John Hancock Variable Life Insurance
Company, purchaser of the Company's 9.97% Secured Notes, Se-
ries H, Due 1999, in the aggregate principal amount of
$6,000,000; filed as an exhibit to Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990, File No. 2-7803, and incorporated herein
by reference thereto.
4.16 Twelfth Supplemental Indenture dated as of August 6, 1992,
between the Company and Deposit Guaranty National Bank; filed
as Exhibit 4.3 to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1992, File No. 2-7803, and
incorporated herein by reference thereto.
4.17 Eleventh Supplemental Indenture dated as of July 16, 1990,
between the Company and Deposit Guaranty National Bank, to-
gether with Exhibit A thereto, being an Agreement for Real
Estate Purchase Option dated July 16, 1990, for the sale of
the Company's Hardee County, Florida, property and underlying
phosphate reserves; filed as Exhibit 4.2 to Amendment No. 1
of the Company's Report on Form 8 dated November 7, 1990,
File No. 2-7803, and incorporated herein by reference there-
to.
4.18 Tenth Supplemental Indenture dated as of December 26, 1989,
between the Company and Deposit Guaranty National Bank, to-
gether with Exhibit A thereto, being a Note Purchase Agree-
ment dated as of December 26, 1989, between the Company and
John Hancock Variable Life Insurance Company, purchaser of
the Company's 9.97% Secured Notes, Series H, Due 1999, in the
aggregate principal amount of $6,000,000; filed as Exhibit
4.3 to the Company's Annual Report on Form 10-K for the fis-
cal year ended June 30, 1990, File No. 2-7803, and incorpo-
rated herein by reference thereto.
4.19 Ninth Supplemental Indenture dated as of February 23, 1988,
between the Company and Deposit Guaranty National Bank; filed
as Exhibit 4.1 to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1988, File No. 2-7803, and
incorporated herein by reference thereto.
4.20 Eighth Supplemental Indenture dated as of May 15, 1983, be-
tween the Company and Deposit Guaranty National Bank; filed
as Exhibit 4.1 to Post-Effective Amendment No. 3 to Registra-
tion Statement No. 2-71827 and incorporated herein by refer-
ence thereto.
4.21 Seventh Supplemental Indenture dated as of October 1, 1979,
between the Company and Deposit Guaranty National Bank; filed
as Exhibit 2 to Post-Effective Amendment No. 3 to Registra-
tion Statement No. 2-57390 and incorporated herein by refer-
ence thereto.
4.22 Sixth Supplemental Indenture dated as of September 1, 1979,
between the Company and Deposit Guaranty National Bank, filed
as Exhibit 3 to Post-Effective Amendment No. 3 to Registra-
tion Statement No. 2-57390 and incorporated herein by refer-
ence thereto.
4.23 Fifth Supplemental Indenture dated as of June 1, 1978, be-
tween the Company and Deposit Guaranty National Bank; filed
as Exhibit 7 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1979, File No. 2-7803, and in-
corporated herein by reference thereto.
</TABLE>

E-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
4.24 Fourth Supplemental Indenture dated as of May 1, 1978, be-
tween the Company and Deposit Guaranty National Bank; filed
as Exhibit 9 to Post-Effective Amendment No. 2 to Registra-
tion Statement No. 2-57390 and incorporated herein by refer-
ence thereto.
4.25 Third Supplemental Indenture dated as of June 28, 1977, be-
tween the Company and Deposit Guaranty National Bank; filed
as Exhibit 6 to Post-Effective Amendment No. 1 to Registra-
tion Statement No. 2-57390 and incorporated herein by refer-
ence thereto.
4.26 Second Supplemental Indenture dated as of September 30, 1976,
among the Company, New Orleans Bank for Cooperatives, John H.
Farrelly and Deposit Guaranty National Bank; filed as Exhibit
6 to Registration Statement No. 2-57390 and incorporated
herein by reference thereto.
4.27 First Supplemental Indenture, dated as of September 7, 1976,
among the Company, New Orleans Bank for Cooperatives, John H.
Farrelly and Deposit Guaranty National Bank; filed as Exhibit
3 to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1976, File No. 2-7803, and incorporated
herein by reference thereto.
4.28 Note Purchase Agreement effective as of September 1, 1976,
between the Company and the Purchasers of the Company's 9
1/2% Secured Notes, Series B, Due 1996, in the aggregate
principal amount of $35,000,000, together with Exhibits A and
B thereto; filed as Exhibit 2 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1976, File
No. 2-7803, and incorporated herein by reference thereto.
4.29 Indenture dated as of May 1, 1989, between the Company and
Sunburst Bank, as Trustee, for the issuance by the Company
and 9 1/2% subordinated notes, due July 1, 1999, in the ag-
gregate principal amount of $11,061,000; filed as Exhibit 4.1
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1989, File No. 7-2803, and incorporated
herein by reference thereto.
4.30 Mississippi Chemical Corporation 1994 Stock Incentive Plan.*
4.31 Rights Agreement dated as of August 8, 1994 between the Com-
pany and Harris Trust and Savings Bank as Rights Agent (in-
corporated herein by reference to Exhibit 1 to the Company's
Registration Statement on Form 8-A filed August 15, 1994).
5 Opinion re Legality. [ ]
10.1 First Supplement to Lease Agreement dated as of June 30,
1992, to the Lease Agreement dated as of September 28, 1989,
among Newsprint South, Inc., The First National Bank of Bos-
ton, and G. Patrick McEnroe, as Trustees, (incorporated
herein by reference to Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1993,
File No. 2-7803).
10.2 Second Supplement to Lease Agreement dated as of July 15,
1992, to the Lease Agreement dated as of September 28, 1989,
among Newsprint South, Inc., The First National Bank of Bos-
ton, and G. Patrick McEnroe, as Trustees, (incorporated
herein by reference to Exhibit 10.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1993,
File No. 2-7803).
10.3 Amendment of Agreement, effective as of July 1, 1993, to the
Agreement entered into as of October 1, 1991, by the
Company's subsidiary, Mississippi Phosphates Corporation, for
the exclusive distribution of diammonium phosphate produced
by Mississippi Phosphates Corporation, (incorporated herein
by reference to Exhibit 10.3 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1993, File
No. 2-7803).(1)
</TABLE>

E-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
10.4 Amendment to Joint Venture Agreement entered into by the Com-
pany and First Mississippi Corporation effective as of May
28, 1993, (incorporated herein by reference to Exhibit 10.4
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1993, File No. 2-7803).
10.5 Amendment to Products Withdrawal Agreement entered into by
the Company and First Mississippi Corporation effective as of
May 28, 1993, (incorporated herein by reference to Exhibit
10.5 to the Company's Annual Report on Form 10-K for the fis-
cal year ended June 30, 1993, File No. 2-7803).
10.6 Agreement effective as of October 1, 1991, by the Company's
subsidiary, Mississippi Phosphates Corporation for the exclu-
sive distribution of diammonium phosphate produced by Missis-
sippi Phosphates Corporation; filed as Exhibit 10.1 to Amend-
ment No. 1 to the Company's Report on Form 8 dated January 7,
1993, File No. 2-7803, and incorporated herein by reference
thereto.(2)
10.7 Agreement made and entered into as of September 15, 1991, be-
tween Office Cherifien des Phosphates and Mississippi Phos-
phates Corporation for the sale and purchase of phosphate
rock; filed as Exhibit 10.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1991, File No.
2-7803, and incorporated herein by reference thereto.(3)
10.8 Lease Agreement dated as of September 28, 1989, among News-
print South, Inc., The First National Bank of Boston, and G.
Patrick McEnroe, as Trustees; filed as Exhibit 10.1 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990, File No. 2-7803, and incorporated herein
by reference thereto.
10.9 Agreement for Real Estate Purchase Option dated July 16,
1990, for the sale of the Company's Hardee County, Florida,
property and underlying phosphate reserves; filed as an ex-
hibit to Exhibit 4.2 to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1990, File No. 2-
7803, and incorporated herein by reference thereto.(4)
10.10 Power Contract dated as of June 27, 1988, between the
Company's subsidiary, Newsprint South, Inc., and Tennessee
Valley Authority, as supplemented by letter agreement dated
June 27, 1988, filed as Exhibit 10.3 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1990,
File No. 2-7803, and incorporated herein by reference there-
to.
10.11 Gas Purchase and Sale Contract between the Company and Shell
Western E&P Inc., dated as of January 1, 1986; filed as Ex-
hibit 10.6 to Amendment No. 1 of the Company's Report on Form
8 dated January 7, 1993, File No. 2-7803, and incorporated
herein by reference thereto.(5)
10.12 Triad Chemical Joint Venture Agreement; filed as Exhibit G1
to Post-Effective Amendment No. 6 to Registration Statement
No. 2-25041 and incorporated herein by reference thereto.
10.13 Products Withdrawal Agreement dated June 3, 1968, between
First Mississippi Corporation and MisCoa covering withdrawal
of product from Triad Chemical; filed as Exhibit H to Post-
Effective Amendment No. 7 to Registration Statement No. 2-
25041 and incorporated herein by reference thereto.
18.1 Preferability letter dated July 31, 1992, issued by Arthur
Andersen & Co. to the Company to fulfill the requirements of
Regulation S-K in connection with the Company's change in the
method of reporting patronage refunds; filed as Exhibit 18.1
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1992, File No. 2-7803, and incorporated
herein by reference thereto.
</TABLE>

E-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
21.1 List of subsidiaries of the Company, filed as Exhibit 21.1 to
the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1993, File No. 2-7803, and incorporated herein
by reference thereto.
23.1 Consent of McDermott, Will & Emery (included in Exhibit 5). [ ]
23.2 Consent of Arthur Andersen & Co. [ ]
24 Power of Attorney*
</TABLE>
- --------
(1) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.3 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(2) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.6 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(3) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.7 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(4) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.9 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(5) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.11 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
*Previously Filed.

E-5
<PAGE>

GRAPHICS APPENDIX

1. Item 1 is a map of Southern United States, titled "Facilities Locations,"
with solid triangles and circles indicating the locations of the production
facilities of the Company (specifically those at Carlsbad, Donaldsonville,
Pascagoula and Yazoo City) and the locations of the distribution facilities
of the Company, respectively.

2. Item 2 is a flowchart, titled "Products and Markets," with four columns
showing the interrelationship between fertilizer types and the locations of
the Company's production facilities (first column titled "Fertilizer Types
and Plant Locations"), the principle raw materials used at those plants
("second column titled "Principal Raw Materials"), the products formed by
combination of the raw materials and the tonnage of products sold (third
column titled "Products"), and the principal markets where these products
are applied (fourth column titled "Principal End Markets").

<PAGE>

EXHIBIT 5
[MWE Letterhead]

August 17, 1994

Mississippi Chemical Corporation
P.O. Box 388
Yazoo City, Mississippi 39194

Re: Mississippi Chemical Corporation
Registration Statement on Form S-1
File No. 33-54573
----------------------------------

Ladies and Gentlemen:

This opinion is rendered in connection with the filing by Mississippi
Chemical Corporation (the "Company") of its Registration Statement on Form
S-1 (the "Registration Statement") with the Securities and Exchange Commission
with respect to the registration under the Securities Act of 1933, as amended,
of 5,800,000 shares of its common stock, $.01 par value (the "Registered
Stock"). Of the Registered Stock, 3,200,000 shares are being offered for sale by
the Company, 1,880,000 shares are being offered for sale by certain shareholders
of the Company and 720,000 shares are subject to an over-allotment option
granted to the Underwriters by the Company and certain shareholders.

In arriving at the opinion expressed below, we have examined the
Registration Statement and such other documents as we have deemed necessary to
enable us to express the opinion hereinafter set forth. In addition, we have
examined and relied upon, to the extent we deemed proper, certificates of
officers of the Company as to factual matters, and on the originals or copies,
certified or otherwise identified to our satisfaction, of all such corporate
records of the Company and such other instruments and certificates of public
officials and other persons as we have deemed appropriate. In our examination,
we have assumed the authenticity of all documents submitted to us as originals,
the conformity to the original documents of all documents submitted to us as
copies, the genuineness of all signatures on documents reviewed by us and the
legal capacity of natural persons.

Our opinion herein is limited to United States Federal law, the
internal laws of the State of Illinois and New York and

<PAGE>

Mississippi Chemical Corporation
August 17, 1994
Page 2

the Mississippi Business Corporation Act. We express no opinion with respect to
the applicability thereto, or the effect thereon, of any other laws.

Based upon and subject to the foregoing, we are of the opinion that
the Registered Stock, upon issuance and sale in accordance with the terms
and conditions set forth in the Registration Statement, will be validly issued,
fully paid and non-assessable.

We hereby consent to the reference to our firm under the caption
"Legal Matters" in the Registration Statement and to the use of this opinion as
an exhibit to the Registration Statement.

Very truly yours,

/s/ McDermott, Will & Emery

FWA/LMK

<PAGE>

EXHIBIT 23.2

Consent of Independent Public Accountants

As independent public accountants, we hereby consent to the use of our reports
included herein and to all references to our Firm included in or made a part of
this registration statement.

/s/ ARTHUR ANDERSEN & CO.

Memphis, Tennessee,
August 17, 1994.