<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 10-Q/A
AMENDMENT TO FORM 10-Q FOR QUARTERLY REPORTS
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM __________ TO __________.
COMMISSION FILE NUMBER 33-79532
_____________
LaRoche Industries Inc.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 13-3341472
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1100 JOHNSON FERRY ROAD N.E.
ATLANTA, GEORGIA 30342
(Address of principal executive offices)
(404) 851-0300
(Registrant's telephone number, including area code)
_______________
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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 at least the past 90 days. Yes. X No.
--- ---
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
<TABLE>
<CAPTION>
CLASS OUTSTANDING AS OF DECEMBER 31, 1997
----- -----------------------------------
<S> <C>
Common Stock, $.01 par value 437,019 Shares
</TABLE>
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<PAGE> 2
LAROCHE INDUSTRIES INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at November 30, 1997 and February 28, 1997 1
Condensed Consolidated Statements of Income for the three months and nine
months ended November 30, 1997 and November 30, 1996 3
Condensed Consolidated Statements of Cash Flows for the nine months ended
November 30, 1997 and November 30, 1996 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 10
Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 18
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) (NOTE 1)
LaRoche Industries Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28,
1997 1997
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 2,826 $ 1,165
Receivables:
Trade, net of allowances of $478 and $776 as of November 30, 1997
and February 28, 1997, respectively 46,839 43,393
Other 15,616 13,808
Inventories (Note 4) 32,622 39,924
Other current assets 3,223 2,513
--------- ---------
Total current assets 101,126 100,803
Investments and advances to affliates 54,906 17,886
Property, plant and equipment, at cost 291,314 271,504
Less accumulated depreciation (101,006) (90,417)
--------- ---------
Net property, plant and equipment 190,308 181,087
Other assets 18,408 12,589
--------- ---------
Total assets $ 364,748 $ 312,365
========= =========
</TABLE>
See accompanying notes.
1
<PAGE> 4
LaRoche Industries Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28,
1997 1997
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility (Note 5) $ -- $ 37,605
Accounts payable 30,138 35,992
Accrued compensation 7,234 8,595
Other accrued liabilities 6,726 8,944
Current portion of long-term debt (Note 5) 4,396 2,835
--------- ---------
Total current liabilities 48,494 93,971
Long-term debt (Note 5) 210,189 104,441
Deferred income taxes 22,717 22,335
Other noncurrent liabilities 40,779 36,535
Commitments and contingencies
Redeemable common stock 3,603 4,177
Stockholders' equity:
10% cumulative, voting preferred stock, $.01 par
value, 200,000 shares authorized, no shares outstanding -- --
Common stock, $.01 par value, 1,200,000 shares
authorized, 425,000 non-redeemable shares issued 4 4
Capital in excess of par value 630 630
Retained earnings 38,469 50,409
Minimum pension liability (137) (137)
--------- ---------
Total stockholders' equity 38,966 50,906
--------- ---------
$ 364,748 $ 312,365
========= =========
</TABLE>
See accompanying notes.
2
<PAGE> 5
LaRoche Industries Inc.
Condensed Consolidated Statements of Income (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net sales $ 85,383 $ 89,796 $ 279,721 $ 291,458
Cost of sales 69,781 69,091 230,042 237,524
-------- -------- --------- ---------
Gross profit 15,602 20,705 49,679 53,934
Selling, general and administrative
expenses 10,825 13,428 36,738 41,816
-------- -------- --------- ---------
Income from operations 4,777 7,277 12,941 12,118
Interest and amortization of debt
expense (4,489) (3,659) (12,225) (11,244)
Income from equity investments 112 1,408 2,216 3,636
Other income (expense), net (1,572) (8) (1,523) 19
-------- -------- --------- ---------
Income (loss) before income taxes (1,172) 5,018 1,409 4,529
Benefit (provision) for income
taxes 469 (2,057) (564) (1,799)
-------- -------- --------- ---------
Income (loss) before extraordinary
charges (703) 2,961 845 2,730
Extraordinary charges from debt
refinancing (12,018) -- (12,018) --
-------- -------- --------- ---------
Net income (loss) ($12,721) $ 2,961 ($ 11,173) $ 2,730
======== ======== ========= =========
</TABLE>
See accompanying notes.
3
<PAGE> 6
LaRoche Industries Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-------------------------------
NOVEMBER 30, NOVEMBER 30,
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $( 11,173) $ 2,730
Depreciation and amortization 17,184 16,358
Net change in operating assets and liabilities 4,156 7,948
Extraordinary charge 12,018 --
Equity income, net of distributions 596 212
Deferred income taxes 382 --
Loss (gain) on disposition of assets and other 1,679 (397)
--------- --------
Net cash provided by operating activities 24,842 26,851
INVESTING ACTIVITIES
Capital expenditures (23,227) (20,799)
Investments and advances in joint ventures (37,097) (1,242)
Plant turnarounds (2,247) (3,816)
Proceeds from sale of assets -- 4,068
--------- --------
Net cash used by investing activities (62,571) (21,789)
FINANCING ACTIVITIES
Net borrowings (repayments) under revolving credit facility (37,605) 7,440
Sale of redeemable common stock 176 3,136
Purchase of redeemable common stock (750) (7,516)
Additions to long-term debt 209,215 --
Repayments of long-term debt (101,919) (7,793)
Premium payments on the early extinguishment of debt (17,331) --
Costs of refinancing (11,629) --
Dividends paid (767) (690)
--------- --------
Net cash provided (used) by financing activities 39,390 (5,423)
--------- --------
Net increase (decrease) in cash 1,661 (361)
Cash at beginning of period 1,165 3,265
--------- --------
Cash at end of period $ 2,826 $ 2,904
========= ========
</TABLE>
See accompanying notes.
4
<PAGE> 7
LAROCHE INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOVEMBER 30, 1997
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. All
significant intercompany transactions and balances have been eliminated in
consolidation. Operating results for the three months and nine months ended
November 30, 1997 may not be indicative of the results that may be expected for
the full fiscal year. For further information, refer to the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended February 28, 1997.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Although these estimates are based on management's
knowledge of current events and actions it may undertake in the future, actual
results inevitably will differ from those estimates, and such differences may
be material to the financial statements.
EARNINGS PER SHARE
Earnings per share have not been presented since such data provides no
useful information as the shares of the Company are closely held.
ACCOUNTING POLICIES
Derivatives. The Company enters into financial instruments to reduce its
exposure to foreign currency risk from its net investment in its subsidiary in
France. The Company includes in income the gains and losses related to the
portion of these agreements which are not designated as accounting hedges based
upon the market values of the instrument. Gains and losses related to the
portion of these agreements designated as accounting hedges of the Company's
equity investment are accounted for as an offset to the translation adjustment.
2. NEW ACCOUNTING STANDARDS
In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position 96-1, Environmental Remediation Liabilities ("SOP
96-1"). SOP 96-1 provides guidance with respect to the recognition,
measurement and disclosure of environmental remediation liabilities. The
Company adopted SOP 96-1 effective March 1, 1997. The adoption of SOP 96-1 did
not have a material effect on the Company's operating results or financial
condition.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS No. 131"). SFAS No. 131 establishes
standards for disclosures of segment information about products and services,
geographic areas, major customers and certain interim disclosures of segment
information which are not required by accounting standards currently applied by
the Company. The Company will be required to adopt SFAS No. 131 in the first
quarter of
5
<PAGE> 8
LAROCHE INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(continued)
fiscal 1999. Currently, the Company is evaluating this standard and the timing
of adoption and is uncertain as to the impact it will have on the Company's
consolidated financial statements.
3. ACQUISITIONS
On October 17, 1997, the Company, through a subsidiary, acquired a 50%
interest in ChlorAlp S.A.S. ("ChlorAlp"), a joint venture company with
Rhone-Poulenc Chimie S.A. ("RPC"), a subsidiary of Rhone-Poulenc, S.A., for
approximately $37.7 million. ChlorAlp is a joint venture that owns and
operates, among other things, a chlorine, caustic soda and bleach manufacturing
and distribution facility in Pont-de-Claix, France. In connection with such
transactions, the Company, through a subsidiary, and RPC entered into a Put and
Call agreement providing for certain rights of each party to require the other
to buy or sell its respective interest in ChlorAlp under certain circumstances.
The acquisition was accounted for as a purchase; accordingly, the third
quarter consolidated statement of income includes the Company's share of the
results of operations of the joint venture since the acquisition date using the
equity method of accounting. The Company funded the purchase with funds drawn
from the Term Loan (as defined) portion of its Credit Facility (as defined).
In connection with the ChlorAlp acquisition, the Company entered into a
cross-currency interest rate swap agreement to hedge the Company's investment
for a notional amount of 372 million French francs. The agreement provides for
quarterly interest settlements based on current market rates and matures
October 2002. See Note 1 regarding accounting policies and Note 9 regarding
pro forma information.
4. INVENTORIES
Components of inventory are as follows (in thousands):
<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28,
1997 1997
------------ ------------
<S> <C> <C>
Finished goods and in-progress................. $19,514 $21,019
Inventory purchased for resale................. 5,477 11,931
Raw materials.................................. 911 637
Supplies and catalysts......................... 7,480 7,483
------- -------
33,382 41,070
Less LIFO reserve.............................. (760) (1,146)
------- -------
$32,622 $39,924
======= =======
</TABLE>
An actual valuation of inventory under the LIFO method can be made only at
the end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on
management's estimates of expected year-end inventory levels and costs and are
subject to change based on the final year-end LIFO inventory valuation.
6
<PAGE> 9
LAROCHE INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(continued)
5. BORROWING ARRANGEMENTS
The Company's borrowings include the following (in thousands):
<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28,
1997 1997
------------ ------------
<S> <C> <C>
Revolving credit facilities...... $ 0 $ 37,605
======== ========
Term debt:
9 1/2% senior subordinated
notes......................... $174,229 $ 0
13% senior subordinated notes... 915 100,000
Term loan....................... 35,000 0
Other notes payable............. 4,441 7,276
-------- --------
Total.......................... 214,585 107,276
Less current portion............. (4,396) (2,835)
-------- --------
Long term debt................... $210,189 $104,441
======== ========
</TABLE>
The Company's 13% Senior Subordinated Notes due 2004 (the "13% Notes")
are unsecured obligations of the Company. In September 1997, the Company
completed a tender offer and repurchased $99.1 million of its 13% Notes. The
Company repurchased the 13% Notes out of the proceeds of the issuance of $175.0
million principal amount of 9 1/2% Senior Subordinated Notes due 2007 (the
"Notes") issued on September 23, 1997. Semi-annual interest only payments on the
Notes are due March 15 and September 15 each year. The Notes are redeemable at
the option of the Company, in whole or in part, at any time on or after
September 15, 2002 at redemption prices set out in the Indenture governing the
Notes (the "Indenture"). The Notes are unsecured obligations of the Company and
the Indenture contains, among other things, limitations on stock redemptions,
dividends, borrowings and investments, and restricts the Company from entering
into certain transactions, all as set forth therein. Debt issuance costs are
being amortized over the life of the Notes. A portion of the remaining proceeds
of the Notes were used to repay the outstanding borrowings under the Credit
Facility (as defined) and to pay fees and expenses in connection with the Notes,
tender offer and consent solicitation. In connection with issuing the Notes and
redeeming the 13% Notes, the Company paid call and prepayment premiums and
incurred other costs of $17.3 million and expensed unamortized issuance costs
associated with the 13% Notes of $2.7 million. The total loss recognized as a
result of this early extinguishment of debt amounted to $12.0 million (net of
income tax benefit of $8.0 million) and is reflected in the Company's
consolidated statement of income as an extraordinary charge.
On August 26, 1997, the Company entered into a six year, $160.0 million
senior secured credit facility ("Credit Facility"), which provides for a $100.0
million revolving credit facility ("Revolving Credit Facility") (the
commitments under the Revolving Credit Facility were subsequently increased to
$125.0 million in September 1997) and $60.0 million term loan ("Term Loan")
(the commitments under the Term Loan were subsequently reduced to $35.0 million
upon issuance of the Notes in September 1997). The Credit Facility is secured
by security interests in substantially all of the domestic assets of the
Company and each of its domestic subsidiaries. Interest is based on either the
prime rate or LIBOR, plus up to 2.00%. Availability under the Credit
7
<PAGE> 10
LAROCHE INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(continued)
Facility is subject to limitations as outlined in the agreement. At November
30, 1997, no amounts were outstanding under the Revolving Credit Facility. On
October 17, 1997, the Company borrowed $35.0 million under the Term Loan to fund
the ChlorAlp acquisition. Principal and interest payments are due quarterly in
varying amounts until October 17, 2002, as defined in the agreement. The
weighted average borrowing rate was approximately 5.70% at November 30, 1997,
including the effect of the cross-currency interest rate swap entered into in
connection with the ChlorAlp acquisition as discussed in Note 3. Under terms
of the Credit Agreement, the Company pays commitment fees, on a quarterly basis
ranging from 0.25% to 0.50% per annum of average unused balances. The Company
is required, among other things, to maintain certain working capital, debt to
equity, and net worth levels under the agreement. At February 28, 1997,
$37,605,000 was outstanding under the previously existing $40.0 million credit
facility and the weighted average borrowing rate was 7.63% at February 28, 1997.
6. ENVIRONMENTAL AND LEGAL MATTERS
The Company is subject to numerous federal, state and local environmental
laws and regulations and is currently involved in the assessment, removal
and/or mitigation of chemical substances at various sites.
The Company is named as a defendant in a suit alleging the Company's
contractor struck and damaged a gasoline pipeline owned by the plaintiff while
the contractor was performing work on an adjacent Company-owned facility. The
pipeline later ruptured, resulting in the release of gasoline into the Blind
River and surrounding area near Gramercy. In addition, the Company has been
named in a class-action petition and in one other individual suit filed on
behalf of persons allegedly harmed by the rupture of the pipeline. The Company
is continuing a diligent investigation of the situation in order to evaluate
the allegations and the relative responsibility of the parties involved. The
Company is also responding to inquiries from regulatory authorities of the
State of Louisiana related to the gasoline release. Management believes the
Company has meritorious defenses to these claims and is vigorously defending
itself against them. Because the matter is in a preliminary stage, it is not
yet possible to predict whether the Company will incur any liability for the
rupture and release or to reasonably estimate the cost of any possible
liability. Accordingly, the Company has not recorded any losses related to such
claims.
In addition to the matters discussed above, the Company is involved in
certain other legal actions and claims arising in the ordinary course of
business. The amounts asserted in these matters are material to the Company's
financial statements, and certain claimants have not yet asserted an amount.
Although it is inherently impossible to predict with any degree of certainty
the outcome of such legal actions and claims, in the opinion of management
(based on advice of the Company's corporate and other legal counsel) such
litigation and claims are likely to be resolved without material adverse effect
on the Company's financial position and results of operations. It is possible,
however, that the resolution of certain matters could be material to the
results of operations of any single fiscal quarter.
7. SEASONALITY
A portion of the Company's nitrogen business serves the agricultural
fertilizer market. The business is seasonal with greater sales of such
products occurring in the spring and, to a lesser extent, the fall planting
seasons.
8. SUBSEQUENT EVENTS
On December 31, 1997, the Company, through a subsidiary, purchased
chlor-alkali and chlorinated methane compound manufacturing facilities (the
"Facilities") located in Hochst near Frankfurt, Germany from Celanese GmbH,
Frankfurt, a wholly-owned subsidiary of Hoechst AG. The Facilities produce
chlorine, caustic soda and
8
<PAGE> 11
LAROCHE INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(continued)
chlorinated methane compounds. The Company intends to continue to use the
Facilities to manufacture such chemical products. The Company funded the
purchase with funds drawn from the Revolving Credit Facility.
9. PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information gives effect to
the acquisition of ChlorAlp (Note 3) and the issuance of the Notes (Note 5) as
if each had occurred at the beginning of the periods presented below. The
unaudited pro forma financial information is provided for informational
purposes only. It is based on historical information and does not necessarily
reflect the actual results of operations that would have occurred had such
transactions actually occurred at the beginning of such periods nor is it
necessarily indicative of future results of operations of the combined company
(in thousands):
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
NOVEMBER 30, FEBRUARY 28,
1997 1997
------------ ------------
(unaudited)
<S> <C> <C>
Net sales................................ $279,721 $379,285
Income (loss) before extraordinary charge (4,020) (1,674)
Net income (loss)........................ (16,038) (13,692)
</TABLE>
9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the unaudited consolidated financial statements and notes thereto included in
this Quarterly Report on Form 10-Q and with the Company's audited financial
statements and notes thereto for the fiscal year ended February 28, 1997.
SIGNIFICANT DEVELOPMENTS
The Company historically has expanded its business through acquisitions of
other related businesses and investments in joint venture arrangements, and the
Company continues to evaluate acquisition and joint venture opportunities.
Accordingly, in October 1997, the Company purchased a 50% interest in ChlorAlp.
The Company's purchase of its interest in the joint venture cost approximately
$37.7 million. In connection with the ChlorAlp acquisition, the Company
entered into a cross-currency interest rate swap agreement to hedge the
Company's investment. The Company includes in income the gains and losses
related to the portion of this agreement which is not designated as an
accounting hedge based upon the market values of the instrument. Gains and
losses related to the portion of this agreement designated as an accounting
hedge of the Company's equity investment are accounted for as an offset to the
translation adjustment.
During September 1997, the Company completed the refinancing of its senior
subordinated debt through the issuance of $175.0 million principal amount of 9
1/2% Senior Subordinated Notes due 2007 (the "Notes"). In connection with the
refinancing, the Company completed a tender offer and repurchased $99.1 million
of its 13% Senior Subordinated Notes due 2004 (the "13% Notes"). The Notes are
unsecured obligations of the Company and the Indenture contains, among other
things, limitations on stock redemptions, dividends, borrowings and
investments, and restricts the Company from entering into certain transactions,
all as set forth therein. Debt issuance costs associated with the refinancing
are being amortized over the life of the Notes. A portion of the proceeds of
the Notes were used to repay the outstanding borrowings under the six year,
$160.0 million senior secured credit facility ("Credit Facility"), which
provides for a $100.0 million revolving credit facility ("Revolving Credit
Facility") (the commitments under the Revolving Credit Facility were
subsequently increased to $125.0 million in September 1997) and $60.0 million
term loan ("Term Loan") (the commitments under the Term Loan were subsequently
reduced to $35.0 million upon issuance of the Notes in September 1997) and to
pay fees and expenses in connection with the Notes, tender offer and consent
solicitation. In connection with issuing the Notes and redeeming the 13%
Notes, the Company paid call and prepayment premiums and incurred other costs,
the total loss recognized as a result of this early extinguishment of debt
amounted to $12.0 million (net of income tax benefit of $8.0 million) and is
reflected in the Company's consolidated statement of income as an extraordinary
charge.
On December 31, 1997, the Company, through a newly formed German
subsidiary, purchased chlor-alkali and chlorinated methane compounds
manufacturing facilities located near Frankfurt, Germany from Celanese GmbH,
Frankfurt, a wholly-owned subsidiary of Hoechst AG.
10
<PAGE> 13
SEGMENT INFORMATION
The following table presents business segment information for the three
months and nine months ended November 30, 1997 and 1996, respectively:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------------------------- -----------------------------------------------
NOVEMBER 30, 1997 NOVEMBER 30, 1996 NOVEMBER 30, 1997 NOVEMBER 30, 1996
-------------------- ---------------------- ---------------------- -----------------------
PERCENT PERCENT OF PERCENT OF PERCENT OF
AMOUNT OF TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL
------- -------- ------ ---------- --------- ---------- ------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES:
Nitrogen products $52,250 61.2% $56,901 63.4% $183,977 65.7% $184,606 63.3%
Electrochemical
products 22,988 26.9 24,068 26.8 67,002 24.0 75,513 25.9
Alumina chemicals 10,145 11.9 8,827 9.8 28,742 10.3 31,339 10.8
------- ----- ------- ----- -------- ----- -------- -----
Total $85,383 100.0% $89,796 100.0% $279,721 100.0% $291,458 100.0%
======= ===== ======= ===== ======== ===== ======== =====
INCOME (LOSS) FROM OPERATIONS:
Nitrogen products $ 3,371 70.6% $ 4,403 60.5% $ 12,778 98.7% $ 7,779 64.2%
Electrochemical
products 1,032 21.6 5,063 69.6 3,270 25.3 8,868 73.2
Alumina chemicals 923 19.3 (1,024) (14.1) 455 3.5 (543) (4.5)
Corporate (549) (11.5) (1,165) (16.0) (3,562) (27.5) (3,986) (32.9)
------- ----- ------- ----- -------- ----- -------- -----
Total $ 4,777 100.0% $ 7,277 100.0% $ 12,941 100.0% $ 12,118 100.0%
======= ===== ======= ===== ======== ===== ======== =====
</TABLE>
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED NOVEMBER 30, 1997 AND NOVEMBER 30, 1996
Net Sales. Net sales for the quarter ended November 30, 1997 decreased
$4.4 million (4.9%) to $85.4 million from $89.8 million for the quarter ended
November 30, 1996.
The Nitrogen Products segment's net sales for the quarter ended November
30, 1997 decreased $4.7 million (8.2%) compared to the corresponding quarter in
the preceding year. The decrease in net sales was primarily due to decreased
sales prices of $5.7 million due to increased ammonia production capacity in
agricultural markets and decreased sales volume of $1.6 million experienced in
blasting grade ammonium nitrate as a result of unexpected outages at the Geneva
and Seneca facilities. Such decreases were partially offset by increased sales
volume from the Company's warehousing facilities of $1.7 million due to better
regional market opportunities and improved prices of $0.9 million in blasting
grade ammonium nitrate due to stronger market conditions.
The Electrochemical Products segment's net sales for the quarter ended
November 30, 1997 decreased $1.1 million (4.5%) compared to the corresponding
quarter in the preceding year. The decrease reflects reductions of caustic
soda and chlorine net sales of $0.6 million and fluorocarbon net sales of $0.5
million. Caustic soda and chlorine net sales decreased $0.6 million primarily
as a result of a decrease in ECU prices of $0.8 million due to competitive
market conditions. Fluorocarbons net sales decreased $0.5 million primarily
due to decreased sales volume of $0.7 million as a result of poor market
conditions.
The Alumina Chemicals segment's net sales for the quarter ended November
30, 1997 increased $1.3 million (14.9%) compared to the corresponding quarter
in the preceding year. The increase in the quarter was primarily due to
increased sales volume of $1.7 million in active and Versal(R) alumina products
due to increased production.
Income (Loss) from Operations. Income (loss) from operations for the
quarter ended November 30, 1997 decreased $2.5 million (34.4%) to $4.8 million
from $7.3 million for the quarter ended November 30, 1996.
The Nitrogen Products segment's income from operations decreased by $1.0
million (23.4%) for the quarter ended November 30, 1997 as compared to the
corresponding quarter in the prior year. This decrease was primarily due to
(i) decreased margins of $1.4 million in agricultural markets and industrial
ammonia driven by decreased
11
<PAGE> 14
ammonia prices due to increased ammonia supply, (ii) reduced volumes of $0.9
million in the agricultural plants as a result of a reduction in production
requirements, (iii) decreased volume of $0.6 million in blasting primarily as a
result of unexpected outages at the Geneva and Seneca facilities and (iv)
increased cost of $0.5 million on natural gas. Such decrease was partially
offset by decreased labor, maintenance and other costs of $1.8 million.
The Electrochemical Products segment's income from operations decreased by
$4.0 million (79.6%) for the quarter ended November 30, 1997 as compared to the
in the prior year. This decline was a result of decreased income from
operations in chlorine and caustic soda of $1.1 million and fluorocarbons of
$2.9 million. The decrease in chlorine and caustic soda income from operations
was primarily the result of the decline in ECU prices of $0.8 million due to
competitive market conditions and higher costs, primarily energy, of $1.4
million. The offsetting increase in income from operations in chlorine and
caustic soda of $0.3 million resulted primarily from decreased maintenance and
other costs as compared to the corresponding quarter in the prior year when
production problems adversely impacted sales volume and profitability. The
decrease in income from operations in fluorocarbons was primarily the result of
higher raw material costs and research and development of $1.2 million and
decreased margins resulting primarily from the federally-mandated withdrawal
from production of certain fluorocarbon products.
The Alumina Chemicals segment's income from operations increased by $1.9
million (190.1%) for the quarter ended November 30, 1997 as compared to the
corresponding quarter in the prior year. This increase was primarily due to
increased income from operations of Versal(R) alumina products of $1.2 million
primarily due to sales increases and the sale of the calcined and tabular
alumina production facilities to C-E on April 1, 1996 which resulted in a
decreased loss of approximately $0.8 million in income from operations. The
offsetting increase in income from operation is the result of decreased sales
of active alumina products of $0.5 million due to inventory fluctuations and
increased hydrate pricing.
Corporate Expenses. Corporate expenses for the quarter ended November 30,
1997 decreased $0.6 million (52.9%) for the quarter ended November 30, 1996.
For the quarters ended November 30, 1997 and 1996, as a percentage of net
sales, these corporate expenses were 0.6% and 1.3%, respectively. The decrease
in corporate expenses for the quarter reflects a reduction in certain corporate
accruals, primarily a reduction in the reserve for the Company's employee
profit sharing program and for certain environmental matters.
Income From Equity Investments. Income from equity investments for the
quarter ended November 30, 1997 totaled $0.1 million compared to $1.4 million
for the quarter ended November 30, 1996. Income from equity investments
reflects equity income attributable to several joint ventures. The decrease in
equity income was primarily due to a decline in income earned from the Kaiser
LaRoche Hydrate Partnership as a result of increased costs incurred by the
partnership and a net loss incurred from the ChlorAlp joint venture which
primarily resulted from certain start up costs as a result of the Company's
investment in October 1997.
Other Expense, Net. For the quarter ended November 30, 1997, other
expense, net was ($1.6 million) compared to other expense, net of ($8,000) for
the quarter ended November 30, 1996. This decrease was primarily due to the
loss on the foreign currency transaction discussed above.
Interest and Amortization of Debt Expense. For the quarter ended November
30, 1997, interest and amortization of debt expense was $4.5 million compared
to interest and amortization of debt expense of $3.7 million for the quarter
ended November 30, 1996. The increase was primarily due to the Company's
refinancing of its senior indebtedness discussed above.
(Provision) Benefit for Income Taxes. Benefit for income taxes for the
quarter ended November 30, 1997 was $0.5 million compared to a provision for
income taxes of $2.1 million for the quarter ended November 30, 1996. The
benefit reflects the decrease in income before income taxes as compared to the
corresponding quarter in the prior year. The Company's effective tax rate was
40.0% and 41.0% for the quarters ended November 30, 1997 and November 30, 1996,
respectively.
Extraordinary charge. In the quarter ended November 30, 1997, net loss
included an extraordinary loss of $12.0 million (net of income tax benefit of
$8.0 million) resulting from the refinancing of the Company's senior
indebtedness. The early debt redemptions required the payment of premiums and
the recognition of unamortized deferred costs. This refinancing was undertaken
in part to reduce the interest rate on the Company's senior
12
<PAGE> 15
indebtedness. The Company believes that this refinancing will add operating
and financial flexibility necessary to implement its business strategy most
effectively.
Net Income (Loss). As a result of the factors described above, net income
(loss) for the quarter ended November 30, 1997 was ($12.7 million) as compared
to $3.0 million in the quarter ended November 30, 1996.
COMPARISON OF NINE MONTHS ENDED NOVEMBER 30, 1997 AND NOVEMBER 30, 1996
Net Sales. Net sales for the nine months ended November 30, 1997
decreased $11.7 million (4.0%) to $279.7 million from $291.5 million for the
nine months ended November 30, 1996.
The Nitrogen Products segment's net sales for the nine months ended
November 30, 1997 decreased $0.6 million (0.3%) compared to the corresponding
nine months in the preceding year. The decrease in net sales was primarily due
to decreased sales prices of $7.6 million in agricultural markets due to
increased ammonia supply and decreased sales volume of $6.5 million due to (i)
the idling of the blasting grade ammonium nitrate plant at the Crystal City
facility in the spring of 1996 and (ii) a delay in start up of the Phase II
expansion at the Cherokee facility. The project was completed in February 1997
and has increased the ammonium nitrate production capacity of the facility.
Such decreases were partially offset by (i) increased selling prices (other
than at the Crystal City facility, see above) of $5.7 million in blasting grade
ammonium nitrate due to better market conditions, (ii) increased sales volume
of $7.1 million from the Company's warehousing facilities due to regional
marketing conditions and (iii) increased sales volume of industrial ammonia of
$0.8 million.
The Electrochemical Products segment's net sales for the nine months ended
November 30, 1997 decreased $8.5 million (11.3%) compared to the corresponding
nine months in the preceding year. The decrease reflects reductions of caustic
soda and chlorine net sales of $5.9 million and fluorocarbon net sales of $2.6
million. Caustic soda and chlorine net sales decreased primarily as a result
of a decrease in ECU prices due to competitive market conditions which resulted
in a decrease in net sales of $7.3 million. The impact of the decrease in ECU
prices was partially offset by increased sales volumes in caustic and chlorine
products of $1.0 million due to increased market demand and the correction of
production problems experienced in the prior year. The fluorocarbon net sales
decrease was due primarily to decreased net sales of CFCs R-11 and R-12 of $4.3
million resulting from the federally-mandated withdrawal from production of
certain fluorocarbon products as of January 1, 1996 and decreased selling
prices in R-141b of $1.4 million due to competitive market conditions. The
impact of these decreases was partially offset by increased sales volume in
R-141b of $2.4 million due to higher sales tonnages to key customers and
increased sales volume at LaRoche Air Systems Inc. of $0.8 million due to
broader marketing of their products.
The Alumina Chemicals segment's net sales for the nine months ended
November 30, 1997 decreased $2.6 million (8.3%) compared to the corresponding
nine months in the preceding year. The decline during the nine months was
primarily due to reduced net sales of calcined and tabular alumina products of
$2.9 million as a result of the sale of those production facilities to C-E on
April 1, 1996 and decreased sales volume of $1.7 million of active alumina
products. These decreases were partially offset by increased sales volume of
$1.0 million of Versal(R) alumina products and increased selling prices of $1.0
million in both active and Versal(R) alumina products.
Income from Operations. Income from operations for the nine months ended
November 30, 1997 increased $0.8 million (6.8%) to $12.9 million from $12.1
million for the nine months ended November 30, 1996.
The Nitrogen Products segment's income from operations increased by $5.0
million (64.3%) for the nine months ended November 30, 1997 as compared to the
corresponding nine months in the prior year. This increase was partially due
to (i) decreased labor, maintenance and other costs, including environmental
remediation and legal charges, of $7.2 million and (ii) improved margins of
$1.2 million in industrial ammonia. In addition, the Nitrogen Products segment
experienced increased income from operations as a result of increased margins
of $0.6 million of blasting grade ammonium nitrate as compared to the prior
year primarily as a result of better market conditions and increased
agricultural products sold of $0.7 million at the Company's warehousing
facilities as a result of better regional conditions. Such increases were
partially offset by reduced volume of $3.1 million at the plants primarily due
to idling of the blasting grade ammonium nitrate plant at the Crystal City
facility in the spring of 1996 and due to a delay in start up of the Phase II
expansion at the Cherokee facility (as discussed above) and increased cost of
13
<PAGE> 16
$1.1 million on natural gas. The Nitrogen Products segment's income from
operations for the nine months ended November 30, 1997 also includes
approximately $900,000 as a result of an insurance recovery related to
previously disclosed production problems during fiscal year 1997 and a loss on
the disposal of certain assets of $1.7 million.
The Electrochemical Products segment's income from operations decreased by
$5.6 million (63.1%) for the nine months ended November 30, 1997 as compared to
the corresponding nine months in the prior year. This decline was a result of
decreased income from operations in chlorine and caustic soda of $3.0 million
and fluorocarbons of $2.6 million. Income from operations in chlorine and
caustic soda includes a decrease of $7.3 million as compared to the prior year
which resulted from a decline in ECU prices due to competitive market
conditions. The offsetting increase in income from operations in chlorine and
caustic soda of $4.3 million resulted primarily from decreased maintenance and
other costs (as discussed above). The income from operations in fluorocarbons
includes (i) decreased net sales of CFCs R-11 and R-12 of $2.7 million and (ii)
decreased selling prices of $0.9 million of R-141b due to competitive market
conditions partially offset by increased profits from volumes due to higher
sales to key customers. The offsetting increase in income from operation in
fluorocarbons of $1.0 million was also attributable to decreased maintenance
and other costs incurred as compared to the prior year.
The Alumina Chemicals segment's income from operations increased by $1.0
million (183.8%) for the nine months ended November 30, 1997 as compared to the
corresponding nine months in the prior year. This increase is (i) due to the
sale of the calcined and tabular alumina production facilities to C-E on April
1, 1996 which resulted in a decreased loss of approximately $1.6 million in
income from operations, (ii) increased income from operations of $1.1 million
on Versal(R) alumina products primarily due to sales increases and increased
CRILAR purchased volume and (iii) increased selling prices of $1.0 million on
active and Versal(R) alumina products. Such increase was offset partially by
increased repair and maintenance and other costs of $1.8 million and decreased
income from operations of $1.0 million on active alumina products primarily due
to sales decreases and increased hydrate pricing.
Corporate Expenses. Corporate expenses for the nine months ended November
30, 1997 decreased $0.4 million (10.6%) to $3.6 million from $4.0 million for
the nine months ended November 30, 1996. For the nine months ended November
30, 1997 and 1996, as a percentage of net sales, these corporate expenses were
1.3% and 1.4%, respectively.
Income From Equity Investments. Income from equity investments for the
nine months ended November 30, 1997 totaled $2.2 million compared to $3.6
million for the nine months ended November 30, 1996. Income from equity
investments reflects equity income attributable to several joint ventures. The
decrease in equity income was primarily due to a decline in income earned from
the Kaiser LaRoche Hydrate Partnership as a result of increased costs incurred
by the partnership and a net loss incurred from the ChlorAlp joint venture
which primarily resulted from certain start up costs as a result of the
Company's investment in October 1997.
Other Income (Expense), Net. For the nine months ended November 30, 1997,
other income (expense), net was ($1.5 million) compared to other income
(expense), net of $19,000 for the nine months ended November 30, 1996. This
decrease was primarily due to the loss on the foreign currency transaction
discussed above.
Interest and Amortization of Debt Expense. For the nine months ended
November 30, 1997, interest and amortization of debt expense was $12.2 million
compared to interest and amortization of debt expense of $11.2 million for the
nine months ended November 30, 1996. The increase was primarily due to the
Company's refinancing of its senior indebtedness discussed above.
Provision for Income Taxes. Provision for income taxes for the nine
months ended November 30, 1997 was $0.6 million, a $1.2 million decrease from
the nine months ended November 30, 1996. The decrease reflects the decrease in
income before income taxes as compared to the corresponding nine months in the
prior year. The Company's effective tax rate was 40.0% and 39.7% for the nine
months ended November 30, 1997 and November 30, 1996, respectively.
Extraordinary charge. In the quarter ended November 30, 1997, net loss
included an extraordinary loss of $12.0 million (net of income tax benefit of
$8.0 million) as a result of the refinancing of the Company's senior
indebtedness as discussed above.
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<PAGE> 17
Net Income (Loss). As a result of the factors described above, net income
(loss) for the nine months ended November 30, 1997 was ($11.2 million) as
compared to $2.7 million in the nine months ended November 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities. Net cash provided by operating activities was $24.8
million and $26.9 million for the nine months ended November 30, 1997 and 1996,
respectively. The decrease was primarily the result of decreased net income
before depreciation and amortization and other non-cash charges and less
significant reductions in working capital than in the corresponding nine months
in the prior year offset partially by the extraordinary charge related to the
refinancing.
Investing and Financing Activities. Net cash used in investing activities
was $62.6 million for the nine months ended November 30, 1997 compared to $21.8
million in the nine months ended November 30, 1996. The primary uses of cash
for the nine months ended November 30, 1997 were (i) capital expenditures of
$23.2 million, (ii) plant turnarounds of $2.2 million and (iii) the investment
in the ChlorAlp joint venture of $36.3 million. Major capital expenditures
included $1.8 million for the Phase II Cherokee expansion which was completed in
February 1997 (as discussed above), $3.7 million for projects to improve the
electrical systems at the Gramercy powerhouse and $4.6 million for the Company's
ongoing software implementation project. For the nine months ended November 30,
1996, capital expenditures of $20.8 million and plant turnarounds of $3.8
million, partially offset by proceeds of $4.1 million from the sale to C-E of
certain calcined and tabular alumina production equipment and other assets,
accounted for the majority of net cash used by investing activities. Major
capital expenditures during the nine months ended November 30, 1996 included
$4.6 million for the Cherokee facility expansion projects and $1.8 million for
the Gramercy powerhouse improvement projects. Phases I and II of the Cherokee
facility projects have been completed and are expected to improve ammonium
nitrate prill production and reduce emissions. The powerhouse projects are
expected to increase the reliability and efficiency of the powerhouse operations
at the Gramercy chlorine and caustic soda facility and are expected to be
substantially completed during fiscal year 1998. The software implementation
project will be designed as Year 2000 compliant. Currently, the Company is
addressing the issue as it relates to its operations and its outside business
partners and has not determined the effect on the Company. The Company intends
to use cash flows from operations, the proceeds from the Notes and borrowings
under the Credit Facility as the source of funds for the projects mentioned
above.
Net cash provided (used) by financing activities was $39.4 million and
($5.4 million) for the nine months ended November 30, 1997 and 1996,
respectively. Cash provided by financing activities of $39.4 million for the
nine months ended November 30, 1997 included additions of $209.2 million to
long-term debt, partially offset by (i) repayments of $101.9 million to
long-term debt, (ii) net repayments of $37.6 million of outstanding indebtedness
under the Company's Revolving Credit Facility, (iii) premium payments of $17.3
million on the early extinguishment of debt and (iv) costs of refinancing of
$11.6 million, due to the refinancing and the draw on the Term Loan for
investment purposes. During the nine months ended November 30, 1997, the
Company made its final payment on the USX Notes. Cash used by financing
activities of $5.4 million for the nine months ended November 30, 1996 included
the $7.5 million repurchase of common stock with put rights, net borrowings of
$7.4 million of outstanding indebtedness under the Company's revolving credit
facility, repayments of $7.8 million of long-term debt, partially offset by the
receipt of $3.1 million on the sale of redeemable common stock.
Dividend payments of an aggregate of $767,000 were paid during the nine
months ended November 30, 1997. On January 13, 1998, the Company's Board
approved dividend payments of $328,000 to all shareholders of record as of
January 15, 1998. The Board may or may not declare additional dividends in the
future depending upon the financial condition of the Company and restrictions
pursuant to the Company's debt instruments.
Management anticipates that the Company's existing capital resources and
cash flow generated from future operations and drawings under the Credit
Facility will enable it to maintain its planned operations, capital
expenditures, acquisitions and debt service for the foreseeable future.
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<PAGE> 18
RECENTLY ISSUED ACCOUNTING STANDARD
In June 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 131, Disclosures about Segments of an Enterprise and
Related Information ("SFAS No. 131"). SFAS No. 131 establishes standards for
disclosures of segment information about products and services, geographic
areas, major customers and certain interim disclosures of segment information
which are not required by accounting standards currently applied by the
Company. The Company will be required to adopt SFAS No. 131 in the first
quarter of fiscal 1999. Currently, the Company is evaluating this standard and
the timing of adoption and is uncertain as to the impact it will have on the
Company's consolidated financial statements.
SEASONALITY
Demand for the Company's fertilizer products is seasonal. Such
seasonality of demand requires the Company to build its inventory in
anticipation of periods of peak demand and may adversely affect the Company's
cash flow. The Company typically realizes higher prices and margins for
fertilizer during the spring and, to a lesser extent, the fall planting
seasons. Demand for the Company's fertilizer is primarily dependent on United
States agricultural conditions, which can be volatile as a result of a number
of factors, the most important of which are weather patterns and conditions,
current and projected grain stocks and prices, and the United States
government's agricultural policy. Due to fertilizer seasonality, interim
results of operations may not be indicative of the results expected for the
full fiscal year. In addition, the Company periodically performs extended
major maintenance on its manufacturing facilities that results in periods of
reduced production at such facilities. Due to the timing of these activities
and other factors, interim results of operations may not be indicative of the
results expected for the full fiscal year.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Part II - Item 1. of the Company's Quarterly Report on Form 10-Q for
the period ended August 31, 1997.
ITEM 2. CHANGES IN SECURITIES
(a) Commencing August 12, 1997, the Company initiated a tender offer (the
"Tender Offer") to repurchase its then-outstanding $100.0 million of 13% Senior
Subordinated Notes due 2004 (the "13% Notes"). Concurrent with the Tender
Offer, the Company solicited consent (the "Consent Solicitation") of the
holders of the 13% Notes to certain amendments (the "Amendments") to the
Indenture under which the 13% Notes were issued (the "13% Indenture"). Under
the 13% Indenture, consent from a majority of the 13% Notes was required to
amend the 13% Indenture for the Amendments. The requested Amendments would
eliminate substantially all of the restrictive covenants contained in the 13%
Indenture. On September 18, 1997, the Tender Offer and Consent Solicitation
were completed, in which holders of approximately 99.1% of the 13% Notes
tendered their notes for repurchase and consented to the Amendments to the 13%
Indenture. As a result, the 13% Indenture governing the remaining 13% Notes
not tendered and repurchased in the Tender Offer lacks substantially all the
restrictive operating and financial covenants previously contained therein.
(b) On September 23, 1997, the Company issued $175.0 million of 9 1/2%
Senior Subordinated Notes due 2007 (the "Notes"). The Notes are ranked pari
passu in right of repayment with the 13% Notes. Consequently, the Notes added
a significant amount of equally-ranked debt obligations which dilute the 13%
Notes' repayment position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Commencing August 12, 1997 and ending September 18, 1997, pursuant to the
Consent Solicitation, the Company solicited the consent of the holders of its
then-outstanding 13% Notes to the Amendments to the 13% Indenture. Under the
13% Indenture, consent from a majority of the 13% Notes was required to amend
the 13% Indenture for the Amendments. As of the close of the Consent
Solicitation, the Company had received consents to the Amendments from holders
of approximately 99.1% of the 13% Notes, and thus the 13% Indenture was amended
by the Amendments. The Amendments eliminated substantially all of the
restrictive operating and financial covenants contained in the 13% Indenture.
ITEM 5. OTHER INFORMATION
On December 31, 1997, the Company, through a subsidiary, purchased
chlor-alkali and chlorinated methane compounds manufacturing facilities (the
"Facilities") located in Hochst near Frankfurt, Germany from Celanese GmbH,
Frankfurt, a wholly-owned subsidiary of Hoechst AG. The Facilities produce
chlorine, caustic soda and chlorinated methane compounds. The Company intends
to continue to use the Facilities to manufacture such chemical products. The
Company funded the purchase with funds drawn from the Revolving Credit Facility
with The Chase Manhattan Bank as agent.
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<PAGE> 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
- ------- ---------------------------------------------------------------------------------------------
<S> <C>
4.1 Indenture, dated as of August 17, 1994, between NationsBank of Georgia, National Association,
as Trustee, and the Company. (4)
4.2 Form of Note (included in Exhibit 4.1). (4)
4.3 Indenture, dated as of September 23, 1997, by and between the Company and State Street Bank
and Trust Company, as Trustee. (10)
4.4 Form of Note (included in Exhibit 4.3). (10)
10.1 Stock Purchase Agreement (and amendments thereto), dated August 1, 1997, by and among the
Company, LII Europe S.A.R.L., Rhone-Poulenc Chimie S.A. and Rhone L S.A.S. (10)
10.2 Exchange and Registration Rights Agreement, dated September 23, 1997, by and among the
Company, Chase Securities Inc. and Donaldson, Lufkin & Jenrette. (10)
10.3 Purchase Agreement, dated September 18, 1997, by and among the Company and Chase Securities
Inc. and Donaldson, Lufkin & Jenrette. (10)
10.4 Shareholders Agreement (and amendment thereto), dated August 1, 1997, by and among the
Company, LII Europe S.A.R.L., Rhone-Poulenc Chimie S.A. and Rhone L S.A.S. (110)
10.5 Put and Call Agreement (and amendment thereto), dated August 1, 1997, by and among the
Company, LII Europe S.A.R.L., Rhone-Poulenc Chimie S.A. and Rhone L S.A.S. (10)
10.6 Agreement for Purchase and Supply of Electricity, Steam and Other Products, dated October 17,
1997, by and among ChlorAlp S.A.S., CEVCO G.I.E., and Rhone-Poulenc Chimie S.A. (11)
10.7 Supply and Purchase Agreement (Chlorine), dated October 17, 1997, by and between
Rhone-Poulenc Chimie and ChlorAlp S.A.S. (11)
10.8 Chlorine Side Letter, dated October 17, 1997, by and between ChlorAlp S.A.S., Rhone-Poulenc
Chimie and the Company. (11)
10.9 Supply and Purchase Agreement (Caustic Soda), dated October 17, 1997, by and between
Rhone-Poulenc Chimie and ChlorAlp S.A.S. (11)
10.10 Supply and Purchase Agreement (Hydrochloric Acid), dated October 17, 1997, by and between
Rhone-Poulenc Chimie and ChlorAlp S.A.S. (11)
10.11 Supply and Purchase Agreement (Hydrogene), dated October 17, 1997, by and between
Rhone-Poulenc Chimie and ChlorAlp S.A.S. (11)
10.12 Supply and Purchase Agreement (Sulfuric Acid), dated October 17, 1997, by and between
Rhone-Poulenc Chimie and ChlorAlp S.A.S. (11)
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
- ------- ---------------------------------------------------------------------------------------------
<S> <C>
10.13 Supply and Purchase Agreement (Sodium Hypochlorite), dated October 17, 1997, by and between
Rhone-Poulenc Agro Chimie and ChlorAlp S.A.S. (11)
10.14 Supply and Purchase Agreement (Gazeous Chlorine-Caustic Soda), dated October 17, 1997, by and
between Rhone-Poulenc Agro Chimie and ChlorAlp S.A.S. (11)
10.15* Employment Agreement, dated as of June 1993, between LHI and Grant O. Reed. (1)
10.16 Credit Agreement, dated as of August 17, 1994, among the Company, Bank South, N.A. (now known
as NationsBank, N.A. South), as Agent, and the Lenders listed therein. (4)
10.17 First Amendment to Credit Agreement dated as of May 17, 1995 and effective as of March 1,
1995 among the Company, Bank South, N.A. (now known as NationsBank, N.A. South), as Agent,
and the lenders listed therein. (7)
10.18 Letter Agreement dated as of July 17, 1995 extending the Credit Agreement dated as of August
17, 1994 among the Company, Bank South (formerly known as Bank South, N.A.), as Agent, and
the lenders listed therein. (7)
10.19 Letter Agreement dated as of December 16, 1996 amending the Credit Agreement dated as of
August 17, 1994 among the Company, NationsBank N.A., South (successor to Bank South), as
Agent, and the lenders listed therein. (6)
10.20 Second Amendment to Credit Agreement and Waiver dated March 14, 1997 among the Company,
NationsBank, N.A. (South), as Agent, and the lenders listed therein. (8)
10.21 Credit Agreement, dated as of August 26, 1997, among the Company, the Lenders party hereto
and the Chase Manhattan Bank, as Administrative Agent. (9)
10.22 First Amendment, dated September 30, 1997 to Credit Agreement, dated as of August 26, 1997,
among the Company, the Lenders party hereto and the Chase Manhattan Bank, as Administrative
Agent. (10)
10.23* Salary Continuation Agreement, dated as of July 1988, as amended with the approval of his
widow on January 27, 1992 and June 2, 1992, between the Company and William W. LaRoche, Jr.
(1)
10.24* Consulting Agreement, dated as of June 30, 1997, between the Company and Johnnie Lou LaRoche.
(9)
10.25* LaRoche Chemicals Inc. 1989 Key Management Stock Appreciation Bonus Plan. (1)
10.26* LaRoche Holdings Inc. Supplemental Employee Retirement Plan. (1)
10.27* LaRoche Executive Management Health Program. (1)
10.28* Management Stock Purchase Plan and forms of related agreements with executive officers. (3)
10.29* LaRoche Industries Inc. 1995 Board of Directors Stock Purchase Plan and form of agreement. (5)
</TABLE>
19
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
- ------- ---------------------------------------------------------------------------------------------
<S> <C>
10.30 Hydrate Partnership Agreement, dated as of January 1, 1993, between Kaiser and LCI. (1)
10.31 Amended and Restated Hydrate Sales Agreement, dated as of May 27, 1997 and effective as of
August 1, 1995, between Kaiser and the Hydrate Partnership. (8)
10.32 Powerhouse Operating Agreement, dated as of July 26, 1988, between Kaiser and LCI, as amended
January 8, 1994. (1)
10.33 Powerhouse Lease, dated as of July 26, 1988, between Kaiser and LCI. (1)
10.34 Specialty Aluminas Sales Agreement, dated as of July 26, 1988, between Kaiser and LCI. (1)
10.35 Amendment No. 1 to Specialty Aluminas Sales Agreement, dated as of February 1, 1993, between
Kaiser and LCI. (1)
10.36 Salt Agreement, dated as of May 3, 1957, between Texaco and Kaiser, as amended May 15, 1968.
(1)
10.37 Supply Agreement, dated as of April 1994, between AlliedSignal Inc. and LCI (portions
redacted pursuant to a confidentiality request). (1)
10.38 Joint Venture Agreement, dated as of July 26, 1994, between Cytec Ammonia, Inc. and LaRoche
Fortier Inc. (2)
27+ Financial Data Schedule (for SEC use only).
</TABLE>
* Denotes a management contract or compensatory plan required to be filed
pursuant to Item 601(b)(10)(iii) of Regulation S-K.
(1) Previously filed as an exhibit to Registration Statement No. 33-79532
filed May 31, 1994 and incorporated herein by reference.
(2) Previously filed as an exhibit to Amendment No. 3 to Registration
Statement No. 33-79532 filed August 3, 1994 and incorporated herein by
reference.
(3) Previously filed as an exhibit to Amendment No. 4 to Registration
Statement No. 33-79532 filed August 9, 1994 and incorporated herein by
reference.
(4) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended August 31, 1994 and incorporated herein by
reference.
(5) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended August 31, 1995 and incorporated herein by
reference.
(6) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended November 30, 1996 and incorporated herein by
reference.
(7) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the period ended February 28, 1997 and incorporated herein by
reference.
(8) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended May 31, 1997 and incorporated herein by
reference.
(9) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended August 31, 1997 and incorporated herein by
reference.
(10) Previously filed as an exhibit to Registration Statement No. 333-39507
filed November 4, 1997 and incorporated herein by reference.
+ Previously filed.
20
<PAGE> 23
(11) Previously filed as an exhibit to Amendment No. 1 to Registration
Statement No. 333-39507 filed November 20, 1997 and incorporated herein by
reference.
(B) REPORTS ON FORM 8-K
On October 17, 1997, the Company filed a Current Report on Form 8-K
reporting the acquisition of an interest in ChlorAlp S.A.S., a joint venture
company with Rhone-Poulenc Chimie, S.A. A Form 8-K/A amendment to such filing
was filed on December 31, 1997.
21
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LAROCHE INDUSTRIES INC.
(Registrant)
Date: January 23, 1998 By: /s/ Grant O. Reed
---------------- ---------------------------------------
Grant O. Reed
President, Chief Executive Officer
(Principal Executive Officer)
Date: January 23, 1998 By: /s/ Harold W. Ingalls
---------------- ---------------------------------------
Harold W. Ingalls
Vice President, Chief Financial Officer
(Principal Accounting Officer)
22
