<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10-Q
------------
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
--------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-6202-2
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Nord Resources Corporation
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 85-0212139
----------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
8150 Washington Village Drive, Dayton Ohio 45458
- ------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (513) 433-6307
--------------
Not Applicable
-------------------------------------------------
Former name, former address and former fiscal
year, if changed since last report
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 twelve 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
--- ---
Common shares outstanding as of March 31, 1995: 15,838,408
<PAGE>
NORD RESOURCES CORPORATION
AND SUBSIDIARIES
INDEX
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION:
ITEM 1. Condensed Financial Statements:
Balance Sheets - March 31,
1995 and December 31, 1994 1
Statements of Operations - Quarters ended
March 31, 1995 and 1994 2
Statements of Cash Flows -
Quarters ended March 31, 1995 and 1994 3
Notes to Condensed Financial Statements 4-9
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 10-13
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings 14
ITEM 2-5. Inapplicable 14
ITEM 6. Exhibits and Reports on Form 8-K 14
<PAGE>
NORD RESOURCES CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
ASSETS
------
MARCH 31, DECEMBER 31,
1995 1994
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 9,464 $ 8,946
Restricted Cash - SRL 2,945 2,934
Accounts Receivable 7,997 8,199
Accounts Receivable - related party 106 2,094
Inventories - at lower of cost (first-in, first-out) or market:
Finished and Semi-Finished 1,408 1,342
Supplies 2,074 1,736
-------- --------
3,482 3,078
Prepaid Expenses 2,356 1,985
-------- --------
TOTAL CURRENT ASSETS 26,350 27,236
RESTRICTED CASH AND INVESTMENTS 2,766 2,797
INVESTMENTS IN AND ADVANCES TO AFFILIATES 7,936 8,142
INVESTMENT IN RUTILE SEGMENT 60,871 64,353
PROPERTY, PLANT AND EQUIPMENT, net 36,250 36,804
OTHER ASSETS 6,912 6,783
------- -------
$ 141,085 $ 146,115
--------- ---------
--------- ---------
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 3,567 $ 3,059
Accounts Payable - related party 5,338 4,310
Accrued Expenses 1,940 2,444
Obligations in Default 22,762 23,234
Current Maturities of Long-Term Debt 628 644
------- ------
TOTAL CURRENT LIABILITIES 34,235 33,691
LONG-TERM DEBT 4,576 4,701
OTHER LONG-TERM LIABILITIES 5,947 5,732
MINORITY INTEREST 4,098 4,457
STOCKHOLDERS' EQUITY:
Common Stock 158 158
Additional Paid-in Capital 58,137 58,137
Retained Earnings 33,787 39,092
Cumulative Foreign Currency
Translation Adjustment 282 282
Minimum Pension Liability (135) (135)
--------- ---------
92,229 97,534
--------- ---------
$ 141,085 $ 146,115
----------- -----------
----------- -----------
</TABLE>
See notes to condensed financial statements
1
<PAGE>
NORD RESOURCES CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
QUARTERS ENDED
March 31
--------------
1995 1994
---- ----
<S> <C> <C>
REVENUES:
Sales $ 10,277 $ 17,316
Other Revenues 9 31
------ -------
TOTAL REVENUES 10,286 17,347
COSTS AND EXPENSES:
Cost of Sales 10,017 15,408
Selling, General & Administrative Expenses 2,709 2,843
------- -------
TOTAL OPERATING COSTS & EXPENSES 12,726 18,251
-------- --------
(LOSS) FROM OPERATIONS (2,440) (904)
OTHER INCOME (EXPENSE)
Interest Income 132 234
Interest Expense (147) (476)
Provision for Impairment of Investment in Rutile Segment (3,000)
Litigation Recoveries 50
Equity in Net Earnings (Loss) of Affiliate (209) 414
Minority Interest 359 339
------ ------
TOTAL OTHER INCOME (EXPENSE) (2,865) 561
-------- -------
(LOSS) BEFORE INCOME TAX (EXPENSE) (5,305) (343)
INCOME TAX (EXPENSE) (340)
------ ------
NET (LOSS) $ (5,305) $ (683)
---------- -------
---------- -------
NET (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE $ (.33) $ (.05)
------- -------
------- -------
AVERAGE SHARES 15,838 15,140
------ -------
------ ------
</TABLE>
See notes to condensed financial statements
2
<PAGE>
NORD RESOURCES CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF
CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
QUARTERS ENDED
MARCH 31
-----------------
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)
Rutile $ $ 948
Domestic (5,305) (1,631)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Changes in Assets and Liabilities:
Rutile (300)
Domestic 2,663 387
Minority Interest - Domestic (359) (339)
Depreciation, depletion and amortization:
Rutile 1,510
Domestic 916 995
Provision for Impairment - Investment in SRL 3,000
Other Non-Cash Items:
Rutile 73
Domestic 209 (414)
------ ------
Net Cash Provided By Operating Activities 1,124 1,229
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures:
Rutile (2,370)
Domestic (218) (33)
Additions to Other Assets:
Rutile (27)
Domestic (274) (217)
Increase in Investments in and Advances to Affiliates - Domestic (3) (244)
------ ------
Net Cash (Used In) Investing Activities (495) (2,891)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of Indebtedness:
Rutile (416)
Domestic (142) (157)
Restricted Cash and Investments:
Rutile 226
Domestic 31 307
------ ------
Net Cash (Used In) Financing Activities (111) (40)
------ ------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 518 (1,702)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 8,946 20,555
------ --------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 9,464 $18,853
------- --------
------- --------
</TABLE>
See notes to condensed financial statements
3
<PAGE>
NORD RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
QUARTERS ENDED MARCH 31, 1995 AND 1994
1. FINANCIAL STATEMENTS
The balance sheet at December 31, 1994 is condensed financial information
taken from the financial statements, which are audited, but the
independent auditors report included a disclaimer of opinion for an
uncertainty relating to the ability of the Company to continue as a going
concern. The interim financial statements are unaudited. In the
opinion of management, all adjustments, which consist of normal recurring
adjustments except for the $3 million provision for impairment recorded
against the Company's investment in SRL, necessary to present fairly the
financial position and results of operations for the interim periods
presented have been made. The results shown for the first quarter of 1995
are not necessarily indicative of the results that may be expected for the
entire year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1994
annual report to shareholders.
2. ACCOUNTING POLICIES
On an interim basis, all costs subject to recurring year-end adjustments
have been estimated and allocated ratably to the quarters. Income taxes
have been provided based on the estimated tax rate for the respective
years after excluding infrequently occurring items whose specific tax
effect is reported during the same interim period as the related
transaction.
The financial statements include the accounts of Nord Resources
Corporation, its majority-owned subsidiaries and its 50% interest in a
rutile mining operation ("SRL")(the "Company"). As a result of the
situation described in Note 3, the Company's 50% investment in SRL is
carried at the cost basis of accounting (which includes original cost plus
undistributed earnings through December 31, 1994, except for certain SRL
indebtedness with effective recourse to the Company, which is reported as
a separate liability, and related restricted cash) in the balance sheets.
All significant intercompany transactions and balances are eliminated.
The accompanying condensed financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of
4
<PAGE>
liabilities in the normal course of business. The financial statements do
not contain any adjustments that might be necessary should the Company be
unable to continue as a going concern.
Investment in 20% to 40%-owned affiliates and joint ventures and in
affiliates or joint ventures in which the Company's investment may
temporarily be in excess of 40% are carried using the equity method.
3. INVESTMENT IN RUTILE SEGMENT
Prior to December 31, 1994, the Company proportionately consolidated its
share of the assets, liabilities and operations of SRL. As of December
31, 1994, the Company adopted the cost basis of accounting because the
Company no longer controlled SRL's operations in Sierra Leone, Africa
following an attack by non-government forces and the subsequent suspension
of mining operations in January 1995. The statements of operations and
cash flows include the Company's proportionate share of operations of SRL
for the first quarter of 1994. The Company intends to resume proportional
consolidation when it regains control of the mine.
There continues to be considerable uncertainty surrounding the future of
SRL in Sierra Leone, given the continuing civil unrest and uncertain
political environment. Management of SRL intends to resume operations
upon restoration of political stability in Sierra Leone, but at the
present time it is not possible to estimate when this might be achieved or
the extent of damage and deterioration to SRL's facilities which might
occur during the period of suspension of operations. While the security
situation in Sierra Leone has not improved to allow SRL personnel to
perform an on-site inspection of the mine facilities, SRL has received
reports from various sources, believed to be reliable, which would
indicate that a loss in value of certain assets has occurred. The Company
has evaluated the available information which has been provided by SRL
management and as of March 31, 1995 has recorded an impairment of $3.0
million on its investment in SRL. The impairment recorded by the Company
is based on reports currently available; however, the actual amount of
impairment could exceed this once an on-site inspection is performed or if
SRL is further delayed in its efforts to regain control of the minesite.
The impairment does not include any accrual for start-up costs which SRL
is likely to incur to reestablish its operations in Sierra Leone. The
extent of the potential loss which SRL may have incurred is not
estimateable at this time. The Company has an insurance policy to cover
risk of loss due to damage to SRL's property resulting from political
violence, with a policy limit of $15.7 million. The Company has not yet
made a claim under this policy but intends to make a claim once more
information relative to the status of SRL's assets becomes available. The
Company cannot estimate the amount or timing of recoveries which may
ultimately be available from
5
<PAGE>
this policy nor if the amount of recoveries, if received, would be
sufficient to fund all of the Company's portion of cash required by SRL.
Summarized financial data for the Company's 50% share of SRL's operations
are as follows:
<TABLE>
Quarters Ended
March 31,
--------------
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Revenues $1,474 $7,622
Less Costs and Expenses:
Cost of Sales 1,632 5,956
Selling, General and Administrative 281 179
Costs Incurred Since Mine Shutdown 3,090
Provision for Impairment 3,000
Other Expense 307 199
Income Tax Expense 58 340
------ ------
Net Income (Loss) $(6,894) $ 948
-------- --------
-------- --------
</TABLE>
Since the Company began accounting for its investment in SRL on the cost
basis as of December 31, 1994, it will not recognize its share of SRL's
results in its statement of operations, beginning in 1995. During the
quarter ended March 31, 1995, the Company recorded an impairment of $3
million on its investment in SRL. The Company's statement of operations
for 1994 includes SRL's results as noted above. Costs incurred since mine
shutdown are comprised of all operating costs since the mine was shutdown
including the costs of security, evacuation of minesite personnel and
their subsequent severance costs. When the Company is able to resume
proportional consolidation of the rutile segment, it is likely to record a
provision to adjust its investment to a current value, the amount of which
is not determinable at this time.
4. MINORITY INTEREST
The minority investor in Norplex, Inc. (`Norplex'), which owns 100% of NKC,
has an option to purchase an additional 31% interest in Norplex from the
Company at a price which increases from $27,000,000 during 1995 to
$36,000,000 during 1997, after which it expires if unexercised. Under this
option, the price received by the Company would be reduced by an amount,
determined at exercise date, equal to the cumulative amount of temporary
tax differences of Norplex plus operating losses used by the Company
multiplied by Norplex's marginal tax rate and the percentage of Norplex
owned by the investor after exercise. This amount is
6
<PAGE>
estimated to be $5,066,000 at December 31, 1994, if the investor had
exercised the 31% option at that date.
Related party transactions with the minority investor in Norplex include
the following (in thousands):
<TABLE>
Quarters Ended
March 31,
--------------
1995 1994
---- ----
<S> <C> <C>
Sales $2,433
Raw material purchases $3,536 $2,674
</TABLE>
5. INDEBTEDNESS
As a result of the suspension of its mining operations resulting from civil
disturbances in January 1995, SRL is not in compliance with certain
financial and operational covenants under its financing agreements. The
lenders agreed through May 15, 1995 to forebear from accelerating payment
of the loans to allow SRL to assess the situation in Sierra Leone. SRL has
held discussions with these lenders regarding an extension of this
forebearance period beyond May 15, 1995. No extension has been agreed
upon; however, further discussions are anticipated regarding terms for a
further period of forebearance with respect to the loan obligations. If
the lenders request acceleration of payment of the indebtedness by SRL,
funds for which are required to be provided by the Company and the other
50% owner of SRL, the Company will likely have to seek additional funds, if
available, from as yet undetermined sources, as the Company does not
presently have funds necessary to repay its share of the SRL indebtedness.
As of March 31, 1995 and December 31, 1994, all debt in default has been
classified in the balance sheet as a current liability.
Payments under lease agreements at NKC are guaranteed by the Company.
Under the terms of the guaranty, the Company is required to maintain
minimum levels of tangible net worth compared to total liabilities and of
cash flow relative to current maturities of long-term debt. The Company's
ability to comply with the
7
<PAGE>
financial covenants will more than likely be adversely impacted by the
suspension of SRL's operations. Should the Company fail to comply with
the covenants or provide a letter of credit as noted below, the lessors
would have certain rights under the lease including the ability to require
liquidating damages ($16.3 million at March 31, 1995) and could also elect
to retain ownership of the leased equipment. If a default occurs, the
Company would initiate discussions with the lessors to seek appropriate
modifications of the lease terms. However, the Company cannot determine
the willingness of the lessors to agree to any modifications, if necessary,
on terms which would be acceptable to the Company. The Company is in
compliance with these covenants at March 31, 1995. If a covenant violation
occurs, the Company has the right through September 11, 1995 to cure a
default by securing a letter of credit, within 30 days of the event of
default, in the name of the lessors which, at March 31, 1995 would have
been in the amount of $20.5 million. The lease agreements also place
restrictions on the amount of cash which NKC may transfer to its owners and
limitations on the repayment of advances previously made by the Company to
NKC.
The Company did not require any additional borrowings and repaid $142,000
of debt during the first quarter of 1995.
6. INCOME TAX
Income tax expense consists of the following:
<TABLE>
Quarter Ended
March 31, 1994
--------------
(In Thousands)
<S> <C>
Foreign:
Currently payable $ 272
Long-term deferred (benefit) 68
----
Total $ 340
-----
-----
</TABLE>
No tax benefit has been recorded for the operating losses in 1995.
7. NET (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Net (loss) per common share and common equivalent share is computed by
dividing net earnings by the weighted average number of common shares
outstanding during the period adjusted for the dilutive effect of common
share equivalents when applicable.
8
<PAGE>
8. EQUITY IN NET EARNINGS (LOSS) OF AFFILIATE
The Company has a 35% interest in Nord Pacific Limited at March 31, 1995
(47% until February 15, 1994). Summary financial data for the operations
of Nord Pacific Limited for the periods are as follows:
<TABLE>
Quarters Ended
March 31,
--------------------
(In Thousands)
1995 1994
---- ----
<S> <C> <C>
Revenues $ 3,191 $ 3,369
Costs and Expenses (3,082) (3,070)
Gain (Loss) on Foreign
Currency Contracts (798) 764
-------- ---------
Net Earnings (Loss) $ (689) $1,063
-------- ---------
-------- ---------
</TABLE>
The Company's share of the net earnings (loss) for the quarter ended March
31, 1995 and 1994 was $(243,000) and $385,000, respectively.
9. LITIGATION
The Company has reached settlements with all principal defendants in SRL's
action against those allegedly responsible for certain allegedly improper
and fraudulent transactions against SRL, except for one remaining
defendant and certain related parties thereto. The settling defendants
have agreed to pay $7.85 million to the Company, of which $6.6 million has
already been collected and recognized as revenue. The financial
statements of the Company for the quarter ended March 31, 1994 include
$50,000 of other revenue in connection with these settlements. The
remainder of the settlements will be included in earnings upon perfection
of collateral or assurance of collectibility.
9
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash increased from $8.9 million at December 31, 1994 to $9.5 million at March
31, 1995. The Company's operating activities provided $1.1 million in cash
during the first quarter of 1995. Cash of $492,000 was used for additions to
property, plant and equipment and other assets and $142,000 was used to repay
indebtedness.
The Company's cash flow from operating activities for the first quarter of 1995
benefitted from the receipt of $2.0 million as the final payment relating to the
sale of 50% of SRL. The Company anticipates that its operations will utilize
cash in 1995, which will require use of a portion of the Company's available
cash balances, until such time as the Company's kaolin operation is able to
generate operating cash flow to fund its operations and to repay funds
previously advanced by the Company.
Due to civil disturbances in Sierra Leone, the Company's rutile mining operation
was suspended in January 1995 and as a result SRL is not in compliance with
certain financial and operational covenants under its financing agreements at
March 31, 1995. The lenders agreed to forbear through May 15, 1995 from calling
a default and accelerating payment of indebtedness, to enable SRL to assess the
situation in Sierra Leone. SRL has held discussions with these lenders
regarding an extension of this forebearance period beyond May 15,1995. No
extension has been agreed upon; however, further discussions are anticipated
regarding terms for a further period of forebearance with respect to the loan
obligations. If the lenders request acceleration of payment of the indebtedness
by SRL, funds for which are required to be provided by the Company and the other
50% owner of SRL, the Company will likely have to seek additional funds, if
available, from as yet undetermined sources. At March 31, 1995, the Company's
share of SRL's debt outstanding is $22.8 million, which is partially secured by
$2.9 million required to be carried by SRL in a restricted cash account.
The Company may not have an adequate amount of funds currently available to
repay its share of SRL's debt if payment is demanded by the lenders or to
sustain SRL, including funds required to reestablish its operations. As a
result, it may need to seek funds through additional financing or from other
undetermined sources. One source of funds which may be available to the Company
is proceeds from foreign political risk insurance policies. One policy provides
up to $15.7 million of insurance to the Company for loss of property due to
political violence. However, the amount of recoveries, if any, is not yet
determinable and may not be sufficient to fund all of the Company's portion of
cash required by SRL. The Company is unable to determine the amount of funds
which could be required by SRL or if adequate funds will be available from the
above or other undetermined sources on conditions acceptable to the Company.
10
<PAGE>
Payments under lease agreements at NKC are guaranteed by the Company. Under the
terms of the guaranty, the Company is required to maintain minimum levels of
tangible net worth compared to total liabilities and of cash flow relative to
current maturities of long-term debt. The Company's ability to comply with the
financial covenants will more than likely be adversely impacted by the
suspension of SRL's operations. Should the Company fail to comply with the
covenants or provide a letter of credit as noted below, the lessors would have
certain rights under the lease including the ability to require liquidating
damages ($16.3 million at March 31, 1995) and could also elect to retain
ownership of the leased equipment. If a default occurs, the Company would
initiate discussions with the lessors to seek appropriate modifications of the
lease terms. However, the Company cannot determine the willingness of the
lessors to agree to any modifications, if necessary, on terms which would be
acceptable to the Company. The Company is in compliance with these covenants at
March 31, 1995. If a covenant violation occurs, the Company has the right
through September 11, 1995 to cure a default by securing a letter of credit,
within 30 days of the event of default, in the name of the lessors which, at
March 31, 1995 would have been in the amount of $20.5 million. The lease
agreements also place restrictions on the amount of cash which NKC may transfer
to its owners and limitations on the repayment of advances previously made by
the Company to NKC.
RESULTS OF OPERATIONS
Net loss for the quarters ended March 31, 1995 and 1994 was $5.3 million and
$683,000, respectively. Since the Company has adopted the cost basis of
accounting for its investment in the rutile segment, the results for 1995 do not
include any amounts relating to its operations; however, the Company has
recorded a $3.0 million impairment against its investment in the rutile segment
in 1995. The Company's share of the net earnings from the rutile segment was
$948,000 for the first quarter of 1994. Sales volume at the kaolin segment
improved in 1995 compared to 1994 but, as a result of the mix of products sold,
its operating loss in 1995 was comparable to that reported in 1994. The Company
recorded $209,000 as its share of loss from Nord Pacific for the first quarter
of 1995 compared to earnings of $414,000 for the first quarter of 1994.
Interest expense decreased by $330,000 in the first quarter of 1995 compared to
the same period in 1994 as no amounts relating to SRL operations are recorded in
the first quarter of 1995. The rutile segment reported $280,000 of interest
expense in the first quarter of 1994. The Company has no foreign tax provision
in the first quarter of 1995 while income taxes of $340,000 were provided on
foreign earnings in 1994.
An analysis of the changes in revenues, cost of sales and operating earnings
(before interest and income taxes) on a segment basis is contained below.
11
<PAGE>
RUTILE
At December 31, 1994 the Company began accounting for its investment in the
rutile segment on the cost basis due to the forced suspension of mining
operations in Sierra Leone. Therefore, there are no operating results to report
for this segment in 1995. The amounts disclosed below for the first quarter of
1994 reflect the Company's 50% ownership of the rutile segment. Revenues during
this period were $7.7 million, cost of sales as a percentage of sales was 78%
and operating earnings from this segment were $1.6 million.
KAOLIN
Revenues increased to $10.2 million in the quarter ended March 31, 1995 compared
to $9.6 million during the same period of 1994. Revenues for the quarter ended
March 31, 1995 and 1994 include $7.6 million and $6.5 million, respectively,
from sales of the Company's Norplex - Registered Trademark - and Norcal -
Registered Trademark - products. During the first quarter of 1995, revenues
from Norplex - Registered Trademark - increased by 40% compared to 1994 as tons
sold increased and average selling prices increased by 16% due to the mix of
products sold. Sales of Norcal - Registered Trademark - products decreased to
3,700 tons in 1995 compared to 6,200 tons sold in 1994 at average prices
approximately the same as those received in 1994. Sales of conventional
products decreased by 15% in 1995, at prices slightly lower than those received
in 1994.
Cost of sales as a percentage of sales was 97% for the first quarter of 1995
compared to 98% for the same period in 1994, due primarily to the aforementioned
increase in sales revenue and the mix of products sold.
An operating loss of $1,212,000 was incurred during the first quarter of 1995
compared to $1,248,000 during the same period of 1994. While revenues from the
Company's Norplex - Registered Trademark - line of products increased in the
first quarter of 1995 compared to 1994, lower sales volume of the Company's
Norcal - Registered Trademark - and conventional products resulted in the 1995
operating loss being comparable to that of 1994. Although this segment has
incurred operating losses during the past few years, the Company anticipates
that continued improvement in new product sales volume and product mix will have
a favorable impact on gross margin and operating results in future periods.
NKC has incurred annual operating losses beginning in 1989 due primarily to the
costs associated with development and market introduction of its Norplex -
Registered Trademark - products and a longer than anticipated new product
introduction period. In addition, in the early 1990's lower demand and prices
for certain of its products as a result of the recession contributed to NKC's
operating losses. As a result of the above circumstances, NKC had not been able
to generate sufficient sales volume at adequate prices to recover its fixed and
variable costs of production during this period. This situation has improved
during 1994 and 1995
12
<PAGE>
and the sales volume and prices of Norplex - Registered Trademark - and Norcal -
Registered Trademark - products have reached levels sufficient to recover the
fixed and variable production costs and to begin to fund the selling, general
and administrative costs of NKC. However, until the level of Norplex -
Registered Trademark - sales volume and prices improve, NKC expects to continue
to experience operating losses. The Company cannot precisely estimate when or
if adequate sales levels of Norplex - Registered Trademark - products will be
achieved or the level of operating losses which will be incurred during the
future periods. Based upon recent conversions of customers to the Norplex -
Registered Trademark - products and probable future testing and conversion at a
number of different customer locations, the Company believes the above noted
improvement in sales levels and operating results is likely to occur.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company's Form 10-K for the fiscal year ended December 31, 1994 ("Form
10-K") describes (i) an Arbitration award in favor of Sierra Rutile Limited
("SRL"), a 50% affiliate of the Company, against Brinc, Ltd., formerly known as
Bomar Resources, Inc., (ii) a proceeding in the United States District Court
for the Southern District of New York captioned SIERRA RUTILE LIMITED v. BOMAR
RESOURCES, INC., 90 Civ. 835, in which arbitration of SRL's disputes with Brinc
were compelled and (iii) an action in the United States District Court for the
Southern District of New York captioned SIERRA RUTILE LIMITED v. SHIMON Y. KATZ,
ET AL., 90 Civ. 4913 (JFK). No material changes have occurred with respect to
the Arbitration award or any of the proceedings disclosed in the Form 10-K,
except that in the SRL Lawsuit, the application filed by one of the defendants
seeking to void or modify the terms of SRL's October 1992 settlement with
several other defendants was denied by the District Judge.
ITEMS 2-5.
Inapplicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K.
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
(b) The Company filed a report on Form 8-K dated January 20, 1995 reporting a
military attack from non-government forces on the Company's 50% owned
rutile mining operation located in Sierra Leone and the subsequent
suspension of mining operations.
14
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORD RESOURCES CORPORATION
(Registrant)
s/Terence H. Lang
----------------------
Terence H. Lang
Senior Vice President - Finance
(Principal Financial Officer and
Authorized Officer)
DATE: May 16, 1995
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NORD
RESOURCES CORPORATION FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 9,464
<SECURITIES> 0
<RECEIVABLES> 8,213
<ALLOWANCES> 110
<INVENTORY> 3,482
<CURRENT-ASSETS> 26,350
<PP&E> 64,770
<DEPRECIATION> 28,520
<TOTAL-ASSETS> 141,085
<CURRENT-LIABILITIES> 34,235
<BONDS> 4,576
<COMMON> 158
0
0
<OTHER-SE> 97,376
<TOTAL-LIABILITY-AND-EQUITY> 141,085
<SALES> 10,277
<TOTAL-REVENUES> 10,286
<CGS> 10,017
<TOTAL-COSTS> 12,726
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (35)
<INTEREST-EXPENSE> 147
<INCOME-PRETAX> (5,305)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,305)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,305)
<EPS-PRIMARY> (.33)
<EPS-DILUTED> 0
</TABLE>
