<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d)
Of The Securities Exchange Act of 1934
For Quarter Ended September 30, 1994
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1994
Commission File Number 2-7803
MISSISSIPPI CHEMICAL CORPORATION
Organized in the State of Mississippi
Identification No. 64-0292638
P. O. Box 388, Yazoo City, Mississippi 39194
Telephone No. 601+746-4131
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ x ] No [ ]
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date.
Class Number of Shares
Common Stock, $0.01 par value 22,855,164
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Consolidated Financial Statements
Consolidated Statements of Income
Three months ended September 30,
1994 and 1993
Consolidated Balance Sheets
September 30, 1994 and
June 30, 1994
Consolidated Statements of Stockholders' Equity
Fiscal Year Ended June 30, 1994
and Three months ended September 30, 1994
Consolidated Statements of Cash Flows
Three months ended September 30,
1994 and 1993
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial Condition
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K
- Exhibit #27 - Financial Data Schedule
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three months ended
September 30,
---------------------
1994 1993
--------- ---------
(Dollars in thousands)
Net sales $ 72,751 $ 45,220
Operating expenses:
Cost of products sold 51,415 34,001
Selling 5,630 5,802
General and administrative 4,830 3,389
--------- --------
61,875 43,192
--------- --------
Operating income 10,876 2,028
Other (expense) income:
Interest, net (800) (1,126)
Other (437) 80
--------- --------
Income from continuing operations before
income taxes and cumulative effect of
change in accounting principle 9,639 982
Income tax expense 3,863 183
--------- --------
Income from continuing operations before
cumulative effect of change in accounting
principle 5,776 799
Discontinued operations:
Income from discontinued operations (less
applicable income tax benefit of $1,923
in 1993) - 13,165
Cumulative effect to July 1, 1993, of change
in accounting for income taxes - (6,149)
-------- --------
Net income $ 5,776 $ 7,815
======== ========
Earnings per share (see Note 2) $ 0.27
========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, June 30,
1994 1994
------------ --------
(Dollars in thousands)
Current assets:
Cash and cash equivalents $ 25,924 $ 23,219
Accounts receivable 29,164 28,659
Inventories:
Finished products 12,946 7,518
Raw materials and supplies 4,178 2,851
Replacement parts 23,510 23,621
-------- --------
Total inventories 40,634 33,990
Prepaid expenses and other current
assets 4,957 3,981
Deferred income tax benefit 8,004 9,682
-------- -------
Total current assets 108,683 99,531
Investments and other assets:
National Bank for Cooperatives 6,882 7,441
Other 10,333 9,813
-------- -------
Total investments and
other assets 17,215 17,254
Properties held for sale 52,919 66,928
Property, plant and equipment,
at cost 369,724 366,992
Less accumulated depreciation,
depletion and amortization (256,145) (252,275)
--------- --------
Net property, plant and
equipment 113,579 114,717
--------- --------
$ 292,396 $ 298,430
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt due within one year $ 5,297 $ 2,948
Notes payable 7,800 7,030
Accounts payable 26,810 28,569
Accrued liabilities 7,022 11,297
Patronage refunds payable 14,756 14,756
--------- --------
Total current liabilities 61,685 64,600
Long-term debt 17,080 57,217
Other long-term liabilities and
deferred credits 13,720 24,704
Deferred income tax payable 10,883 8,953
Stockholders' equity 189,028 142,956
--------- --------
$ 292,396 $ 298,430
========= =========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Additional Capital Retained
Cooperative Common Paid-in Equity Earnings
Common Stock Stock Capital Credits (Deficit) Total
------------ ------ ---------- ------- -------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balances,
July 1, 1993 $ 27,933 $ - $ 65,692 $62,352 $(36,403) $119,574
Net income - - - - 36,523 36,523
Cash patronage refunds - - - - (14,756) (14,756)
Stock issued 459 - 1,156 - - 1,615
-------- ------ -------- ------- -------- --------
Balances,
June 30, 1994 28,392 - 66,848 62,352 (14,636) 142,956
Conversion of
cooperative stock (26,375) 155 26,220 - - -
Conversion of capital
equity credits and
allocated surplus
accounts - 41 42,987 (62,352) 19,324 -
Redemptions (2,017) (1) (4,376) - - (6,394)
-------- ------- --------- -------- -------- -------
Subtotal - 195 131,679 - 4,688 136,562
Stock issued - 34 46,656 - - 46,690
Net income - - - - 5,776 5,776
-------- ------- ------- ------- -------- -------
Balances,
September 30, 1994 $ - $ 229 $178,335 $ - $10,464 $189,028
======== ======= ======== ======= ======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
September 30,
---------------------
1994 1993
--------- ---------
(Dollars in thousands)
Cash flows from operating activities:
Net income $ 5,776 $ 7,815
Income from discontinued operations - (13,165)
-------- --------
Net income (loss) from continuing operations 5,776 (5,350)
Reconciliation of net income (loss) from
continuing operations to net cash provided
(used) by operating activities:
Net change in operating assets
and liabilities (7,978) (9,675)
Depreciation, depletion and amortization 3,921 3,943
Deferred income tax payable 3,608 6,204
Other (213) (275)
-------- --------
Net cash provided (used) by operating
activities 5,114 (5,153)
Cash flows from investing activities:
Purchase of property, plant and equipment (2,819) (3,229)
Disposition of Newsprint South, Inc. (8,751) -
Proceeds received from option 3,000 -
Other 265 (877)
-------- --------
Net cash used by investing activities (8,305) (4,106)
Cash flows from financing activities:
Debt payments (91,643) (15,465)
Debt proceeds 54,625 19,805
Proceeds from issuance of common stock 47,401 -
Redemption of common stock (4,487) -
------- --------
Net cash provided by financing activities 5,896 4,340
-------- --------
Net increase (decrease) in cash and cash
equivalents 2,705 (4,919)
Cash and cash equivalents -
beginning of period 23,219 22,014
-------- --------
Cash and cash equivalents - end of period $ 25,924 $ 17,095
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements of
Mississippi Chemical Corporation and its subsidiaries ("the
Company") have been prepared by the Company, without audit. In
the opinion of the Company's management, the financial statements
reflect all adjustments necessary to present fairly the results
of operations for the three-month periods ended September 30,
1994 and 1993, the Company's financial position at September 30,
1994 and June 30, 1994, the cash flows for the three-month
periods ended September 30, 1994 and 1993, and the consolidated
statements of stockholders' equity as of September 30, 1994.
These adjustments are of a normal recurring nature, which are, in
the opinion of management, necessary for a fair presentation of
the financial position and results of operations for the interim
periods.
Certain notes and other information have been condensed or
omitted from the interim financial statements presented in the
Quarterly Report on Form 10-Q. Therefore, these financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's
June 30, 1994, audited financial statements.
Due to the seasonal nature of the Company's business, the
results for the first quarter of 1994 are not necessarily
indicative of the operating results for the full fiscal year.
NOTE 2 - EARNINGS PER SHARE
The number of shares used in the earnings per share
computation are the weighted average number of common shares
outstanding plus dilutive common share equivalents as follows:
September 30,
1994
------------
Common shares outstanding 21,106,717
Common stock equivalents for
employee stock options 18,469
----------
21,125,186
==========
Earnings per share for the period ended September 30, 1993,
are not meaningful and are not presented since the Company
operated as a cooperative in the prior fiscal year.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
<PAGE>
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 September 30, 1994 and June 30, 1994.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion and analysis should be read in
conjunction with the attached consolidated financial statements
and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended June 30,
1994.
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. The Company incurs substantial expenditures for fixed
costs throughout the year and substantial expenditures for
inventory in advance of the spring planting season. Sales
volumes during the quarter ended September 30, 1994, were
particularly strong causing a reduction in inventories which may
indicate a shift of a greater portion of annual sales volumes to
the first quarter.
The Company's results of operations for the three-month
period ended September 30, 1994, were favorably impacted by
increasing global demand for fertilizer products, excellent
weather for fall fertilizer applications in the Company's primary
trade territory and improved prices for the Company's products.
During the quarter, anhydrous ammonia prices rose to a high of
approximately $230.00 due to a tight supply/demand balance. The
Company converts significantly all of the ammonia it produces
into upgraded nitrogen products. Upgraded nitrogen product
prices, particularly urea, ended the quarter on a positive note
and are beginning to reflect the recent increases in ammonia
prices. The current favorable supply/demand balance for nitrogen
fertilizers is expected to continue through the current fiscal
year. During the quarter, declining natural gas prices
contributed to improved margins on nitrogen products. During the
first quarter, DAP prices remained relatively stable; however,
margins were pressured due to the rise in the price of ammonia, a
raw material in the manufacture of DAP.
<PAGE>
Results of Operations
---------------------
Following are summaries of the Company's sales results by
product categories:
Quarter Ended
September 30
--------------------
1994 1993
-------- --------
(in thousands)
Net Sales:
Nitrogen $ 39,322 $ 31,725
DAP 27,352 10,596
Potash 5,692 2,510
Other 385 389
--------- --------
Net Sales $ 72,751 $ 45,220
======== ========
Quarter Ended
September 30
--------------------
1994 1993
-------- --------
(in thousands)
Tons Sold:
Nitrogen 340 273
DAP 182 101
Potash 78 35
Quarter Ended
September 30
--------------------
1994 1993
-------- --------
Average Price Per Ton:
Nitrogen $ 116 $ 116
DAP $ 150 $ 105
Potash $ 73 $ 72
Net Sales. Net sales increased 60.9% from $45.2 million for
the quarter ended September 30, 1993, to $72.8 million for the
quarter ended September 30, 1994, primarily as a result of
increased sales volumes for nitrogen, potash and DAP fertilizers
and higher sales prices for DAP. Nitrogen fertilizer sales
increased 24.0% as a result of a 24.9% increase in tons sold
offset by a .8% decrease in the average price per ton. Sales of
DAP increased 158.1% as a result of an 80.3% increase in tons
sold and a 43.2% increase in the average price per ton. Potash
sales increased 126.8% as a result of a 122.5% increase in tons
sold and a 1.9% increase in the average price per ton.
<PAGE>
Cost of Products Sold. Cost of products sold increased from
$34.0 million for the quarter ended September 30, 1993, to $51.4
million for the quarter ended September 30, 1994. As a
percentage of net sales, cost of products sold decreased from
75.2% to 70.7%. This decrease, as a percentage of net sales,
reflects increased sales prices and a reduction in the cost per
ton of nitrogen fertilizers and potash which was more than offset
by an increase in the cost per ton of DAP. Nitrogen fertilizer
cost per ton decreased due to lower maintenance and labor costs
and lower prices paid for natural gas during the current year
quarter. Maintenance and labor costs were higher in the quarter
ended September 30, 1993, due to a scheduled biennial maintenance
turnaround at the Company's
Yazoo City facility in that quarter. DAP costs per ton increased
as a result of higher raw materials costs. Potash costs per ton
decreased as a result of increased production volume for the
quarter ended September 30, 1994.
Selling Expenses. Selling expenses decreased from $5.8
million for the quarter ended September 30, 1993, to $5.6 million
for the quarter ended September 30, 1994. As a percentage of net
sales, selling expenses decreased from 12.8% to 7.7%. Factors
causing this decrease were increased sales prices,
proportionately higher DAP sales which bear no delivery expense,
and the utilization of more economic methods of transporting
nitrogen products. Also during the current quarter, the Company
sold more of its nitrogen products directly from production
facilities, thereby eliminating delivery expense on those sales.
General and Administrative Expenses. General and
administrative expenses increased from $3.4 million for the
quarter ended September 30, 1993, to $4.8 million for the quarter
ended September 30, 1994. As a percentage of net sales, general
and administrative expenses decreased from 7.5% to 6.6%. During
the current quarter, the Company accrued employee incentives
related to income levels. These incentives were accrued in later
quarters during the prior fiscal year. The Company also
experienced increases in retirement expense and property and use
taxes. Additionally, a greater portion of payroll overhead costs
were transferred to cost of products sold during the prior year
quarter.
Operating income. As a result of the above factors,
operating income increased from $2.0 million for the quarter
ended September 30, 1993, to $10.9 million for the quarter ended
September 30, 1994, a 436% increase.
Interest, Net. Net interest decreased from $1.1 million for
the quarter ended September 30, 1993, to $.8 million for the
quarter ended September 30, 1994, reflecting lower levels of
borrowings due to the repayment of debt from the proceeds of a
stock offering in August 1994, partially offset by higher
<PAGE>
interest rates paid.
Income Tax Expense. Income tax expense increased from $.2
million for the quarter ended September 30, 1993, to $3.9 million
for the quarter ended September 30, 1994. This increase is
primarily due to higher earnings during the current quarter and
an increase in the Company's effective tax rate resulting from
the conversion from a cooperative to a regular business
corporation on July 1, 1994.
Income from Continuing Operations Before Cumulative Effect
of Change in Accounting Principle. As a result of the foregoing,
income from continuing operations before the cumulative effect of
a change in accounting principle increased from $.8 million for
the quarter ended September 30, 1993, to $5.8 million for the
quarter ended September 30, 1994.
Liquidity and Capital Resources
-------------------------------
At September 30, 1993, the Company had cash and cash
equivalents of $25.9 million, compared to $23.2 million at June
30, 1994, an increase of $2.7 million.
Operating Activities. For the quarter ended September 30,
1994, net cash provided by operating activities was $5.1 million
as compared to net cash used by operating activities of $5.2
million for the quarter ended September 30, 1993. During the
current period, the Company's income from continuing operations,
non-cash charges for depreciation and deferred taxes, and the
effects of a reduction in accounts receivable, more than offset
the effects of higher inventories and lower accounts payable and
accrued liabilities.
Investing Activities. Net cash used by investing activities
was $8.3 million for the quarter ended September 30, 1994, and
$4.1 million for the quarter ended September 30, 1993. This
increase is primarily attributable to final payments of $8.8
million in the current year quarter related to the disposition of
Newsprint South, Inc. These payments were partially offset by
the receipt of option payments relating to the Company's Florida
phosphate rock properties.
Capital expenditures were $2.8 million during the quarter
ended September 30, 1994. These expenditures were for
improvements and modifications to the Company's facilities,
including expenditures for the purchase of a new computer system.
Financing Activities. Net cash provided by financing
activities was $5.9 million and $4.2 million, respectively, for
the quarters ended September 30, 1994, and September 30, 1993.
During the current year quarter, the amounts provided by
financing activities included $47.4 million proceeds received
<PAGE>
from a stock offering in August 1994. These proceeds were
subsequently used to prepay a portion of the Company's long-term
debt. Also during the current quarter, the Company paid $4.5
million to its stockholders related to the reorganization of the
Company.
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 the National Bank for
Cooperatives ("CoBank"). The lines of credit available through
CoBank expire in October 1994, and will not be renewed. Short-
term borrowings outstanding at September 30, 1994, were $7.8
million compared to $7.0 million at June 30, 1994, an increase of
$.8 million.
In addition to its short-term lines, the Company also has a
$50.0 million long-term revolving credit facility with
NationsBank that 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. At September 30, 1994,
there was no balance outstanding on this facility. 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 the quarter ended September 30,
1994 was $16.2 million.
The Company believes that existing cash, cash generated from
operations and available lines of credit will be sufficient to
satisfy its financing needs for the foreseeable future.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits (numbered in accordance with Item 601 of
Regulation S-K
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
MISSISSIPPI CHEMICAL CORPORATION
Date: November 1, 1994 /s/ William F. Hawkins
William F. Hawkins
Senior Vice President -
Finance and Administration
Date: November 1, 1994 /s/ Rosalyn B. Glascoe
Rosalyn B. Glascoe
Corporate Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains first quarter summary financial information extracted
from Mississippi Chemical Corporation 1995 first quarter Form 10-Q and is
qualified in its entirety by reference to such Form 10-Q filing.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 25,924
<SECURITIES> 0
<RECEIVABLES> 29,664
<ALLOWANCES> (500)
<INVENTORY> 40,634
<CURRENT-ASSETS> 108,683
<PP&E> 369,724
<DEPRECIATION> (256,145)
<TOTAL-ASSETS> 292,396
<CURRENT-LIABILITIES> 61,685
<BONDS> 0
<COMMON> 229
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 292,396
<SALES> 72,751
<TOTAL-REVENUES> 72,751
<CGS> 51,415
<TOTAL-COSTS> 61,875
<OTHER-EXPENSES> 437
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 800
<INCOME-PRETAX> 9,639
<INCOME-TAX> 3,863
<INCOME-CONTINUING> 5,776
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,776
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0
</TABLE>
