<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[Mark One]
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
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 33-11634
TRANS-RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2729497
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9 West 57th Street, New York, New York 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 888-3044
-----
Indicate by check mark whether 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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
At August 9, 1996, there were outstanding 3,000 shares of common stock, par
value of $.01 per share, all of which were owned by TPR Investment Associates,
Inc., a privately-held Delaware corporation.
<PAGE> 2
Form 10-Q
TRANS-RESOURCES, INC.
Form 10-Q Index
June 30, 1996
<TABLE>
<CAPTION>
Page
PART I Number
-------
<S> <C> <C>
Item 1. - Financial Statements (Unaudited):
Consolidated Statements of Operations . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Stockholder's Equity . . . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . 6
Notes to Unaudited Consolidated Financial Statements . . . . . . . . 7
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II
Item 1. - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 6. - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . 15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
2
<PAGE> 3
Form 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period Six Month Period
Ended June 30, Ended June 30,
------------------------ -----------------------
(000's)
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES .................................... $122,422 $107,342 $240,664 $199,731
COSTS AND EXPENSES:
Cost of goods sold ...................... 100,030 89,263 196,292 166,973
General and administrative .............. 11,440 10,454 23,085 20,213
-------- -------- -------- --------
OPERATING INCOME ............................ 10,952 7,625 21,287 12,545
Interest expense ........................ (8,335) (8,712) (17,048) (16,746)
Interest and other income - net ......... 398 3,262 928 4,023
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM .................... 3,015 2,175 5,167 (178)
-------- -------- -------- --------
INCOME TAX PROVISION:
Current ................................. 744 1,297 1,426 2,135
Deferred ................................ 807 (340) 1,134 (62)
-------- -------- -------- --------
1,551 957 2,560 2,073
-------- -------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM .................................... 1,464 1,218 2,607 (2,251)
EXTRAORDINARY ITEM .......................... (160) -- (553) --
-------- -------- -------- --------
NET INCOME (LOSS) ........................... $ 1,304 $ 1,218 $ 2,054 $ (2,251)
======== ======== ======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE> 4
Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- ------------
(Unaudited)
(000's)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 17,269 $ 32,872
Accounts receivable ......................................... 106,051 75,630
Inventories:
Finished goods ......................................... 47,867 46,030
Raw materials .......................................... 14,924 20,444
Other current assets ........................................ 26,903 19,364
Prepaid expenses ............................................ 19,954 19,316
-------- --------
Total Current Assets ................................... 232,968 213,656
PROPERTY, PLANT AND EQUIPMENT - NET ............................. 215,784 220,191
OTHER ASSETS .................................................... 31,370 33,255
-------- --------
Total .................................................. $480,122 $467,102
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ........................ $ 23,837 $ 40,703
Short-term debt ............................................. 14,727 6,145
Accounts payable ............................................ 57,372 51,383
Accrued expenses and other current liabilities .............. 31,070 33,414
-------- --------
Total Current Liabilities .............................. 127,006 131,645
-------- --------
LONG-TERM DEBT - NET:
Senior indebtedness, notes payable and other obligations .... 188,992 174,506
Senior subordinated indebtedness - net ...................... 114,123 114,074
-------- --------
Long-Term Debt - net ................................... 303,115 288,580
-------- --------
OTHER LIABILITIES ............................................... 28,769 26,202
-------- --------
STOCKHOLDER'S EQUITY:
Preferred stock, $1.00 par value, 100,000 shares
authorized, issued and outstanding ..................... 7,960 7,960
Common stock, $.01 par value, 3,000 shares authorized,
issued and outstanding ................................. -- --
Additional paid-in capital .................................. 8,682 8,682
Retained earnings ........................................... 4,737 4,764
Cumulative translation adjustment ........................... (430) (594)
Unrealized gains (losses) on marketable securities .......... 283 (137)
-------- --------
Total Stockholder's Equity ............................. 21,232 20,675
-------- --------
Total .................................................. $480,122 $467,102
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
4
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Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
Six Month Period Ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Additional Cumulative Unrealized
Preferred Common Paid-In Retained Translation Gains(Losses)
Stock Stock Capital Earnings Adjustment on Securities Total
--------- ------- ---------- -------- ------------ ------------- -----
(000's)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996 .......... $ 7,960 $-- $8,682 $ 4,764 $(594) $(137) $20,675
Net income ...................... 2,054 2,054
Dividends paid:
Common stock .............. (1,869) (1,869)
Preferred stock ........... (212) (212)
Net change during period ........ 164 420 584
------- --- ------ ------- ----- ----- -------
BALANCE June 30, 1996 ............. $ 7,960 $-- $8,682 $ 4,737 $(430) $ 283 $21,232
======= === ====== ======= ===== ===== =======
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE> 6
Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Month Period
Ended June 30,
---------------------------------
1996 1995
-------- ---------
(000's)
<S> <C> <C>
OPERATING ACTIVITIES AND WORKING CAPITAL
MANAGEMENT:
Operations:
Net income (loss) .......................................... $ 2,054 $ (2,251)
Items not requiring (providing) cash:
Depreciation and amortization .......................... 12,054 10,704
Increase in other liabilities .......................... 156 223
Deferred taxes and other - net ......................... 511 1,315
-------- ---------
Total ............................................... 14,775 9,991
Working capital management:
Accounts receivable and other current assets ............... (34,750) (5,975)
Inventories ................................................ 3,683 3,593
Prepaid expenses ........................................... (638) 370
Accounts payable ........................................... 5,989 (5,651)
Accrued expenses and other current liabilities ............. (3,744) (8,517)
-------- ---------
Cash used by operations and working
capital management ................................... (14,685) (6,189)
-------- ---------
INVESTMENT ACTIVITIES:
Additions to property, plant and equipment ........................ (6,921) (25,810)
Purchases of marketable securities and other short-term investments (3,833) (4,339)
Sales of marketable securities and other short-term investments ... 623 130,488
Other - net ....................................................... 7,682 (4,832)
-------- ---------
Cash provided (used) by investment activities ............ (2,449) 95,507
-------- ---------
FINANCING ACTIVITIES:
Increase (decrease) in short-term debt ............................ 8,582 (5,994)
Increase in long-term debt ........................................ 47,522 42,500
Repurchases, payments and current maturities of long-term debt .... (52,492) (110,279)
Distributions to stockholder ...................................... (2,081) (1,063)
-------- ---------
Cash provided (used) by financing activities ............. 1,531 (74,836)
-------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................... (15,603) 14,482
CASH AND CASH EQUIVALENTS:
Beginning of period ............................................... 32,872 15,571
-------- ---------
End of period ..................................................... $ 17,269 $ 30,053
======== =========
</TABLE>
See notes to unaudited consolidated financial statements.
6
<PAGE> 7
Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation and Other Matters
The consolidated financial statements of Trans-Resources, Inc. (the
"Company") include the Company and its direct and indirect subsidiaries, after
elimination of intercompany accounts and transactions. The Company's principal
subsidiaries are Cedar Chemical Corporation ("Cedar"), and Cedar's two
wholly-owned subsidiaries, New Mexico Potash Corporation ("NMPC") and Vicksburg
Chemical Company ("Vicksburg"); Na-Churs Plant Food Company ("Na-Churs"); Eddy
Potash, Inc. ("Eddy"); and Haifa Chemicals Ltd., an Israeli corporation ("HCL"),
and HCL's wholly-owned subsidiary, Haifa Chemicals South Ltd. The Company is a
wholly-owned subsidiary of TPR Investment Associates, Inc., a privately-held
corporation. Effective March 31, 1995, the Company acquired the assets of
Na-Churs, a company headquartered in Ohio and engaged in the specialty plant
nutrient business.
On May 21, 1996, NMPC and Eddy, which conduct the Company's potash
mining and production operations, entered into an Asset Purchase Agreement with
Mississippi Chemical Corporation ("MCC") and two indirectly wholly-owned
subsidiaries of MCC pursuant to which such subsidiaries would acquire
substantially all of the assets of NMPC and Eddy for $45 million, plus a working
capital adjustment and the assumption of specified liabilities. It is
anticipated that the sale will close later in August, subject to customary
closing conditions. During the year ended December 31, 1995 and the six month
periods ended June 30, 1995 and June 30, 1996, the potash operations contributed
approximately $54,000,000 (14%), $29,000,000 (15%) and $29,000,000 (12%),
respectively, to the Company's revenues, excluding intercompany sales.
While the Company anticipates a gain on the sale, the amount of such
gain will be determined based on audits of NMPC and Eddy as of the closing date.
Approximately 50% of the net proceeds will be applied to prepay debt secured by
the assets of NMPC or Eddy. In connection with the sale, Vicksburg will enter
into a five year potash supply agreement, at prevailing market rates during the
period (subject to certain adjustments), with one of the MCC subsidiary
purchasers.
7
<PAGE> 8
In the opinion of management, the unaudited consolidated financial
statements for the six month periods ended June 30, 1996 and 1995, respectively,
include all adjustments, which comprise only normal recurring accruals,
necessary for a fair presentation of the results for such periods. The results
of operations for the six month period ended June 30, 1996 are not necessarily
indicative of results that may be expected for any other interim period or the
full fiscal year. It is suggested that these unaudited consolidated financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (the "Form 10-K") which has been filed with the Securities and
Exchange Commission.
8
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth, as a percentage of revenues and the
percentage dollar change of those items as compared to the prior period, certain
items appearing in the unaudited consolidated financial statements of the
Company.
<TABLE>
<CAPTION>
Percentage Period Percentage Period
of Revenues to of Revenues to
Three Month Period Six Month Period
Period Ended Changes Period Ended Changes
June 30, --------- June 30, ----------
---------------- Increase --------------- Increase
1996 1995 (Decrease) 1996 1995 (Decrease)
------ ------ -------- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . 100.0% 100.0% 14.1% 100.0% 100.0% 20.5%
Costs and expenses:
Cost of goods sold . . . . . . . . . 81.7 83.2 12.1 81.6 83.6 17.6
General and administrative . . . . . . . 9.3 9.7 9.4 9.5 10.1 14.2
----- ----- ----- -----
Operating income . . . . . . . . . . . . 9.0 7.1 43.6 8.9 6.3 69.7
Interest expense . . . . . . . . . . (6.8) (8.1) (4.3) (7.1) (8.4) 1.8
Interest and other income - net . . . 0.3 3.0 (87.8) 0.4 2.0 (76.9)
----- ----- ----- -----
Income (loss) before income taxes
and extraordinary item . . . . . . . 2.5 2.0 38.6 2.2 (.1) 3,002.8
Income tax provision . . . . . . . . . . 1.3 .9 62.1 1.1 1.0 23.5
----- ----- ----- -----
Income (loss) before extraordinary item . 1.2 1.1 20.2 1.1 (1.1) 215.8
Extraordinary item . . . . . . . . . . . (0.1) - (100.0) (0.2) - (100.0)
----- ----- ----- -----
Net income (loss) . . . . . . . . . . . . 1.1% 1.1% 7.1% 0.9% (1.1)% 191.3%
===== ===== ==== ===== ===== ====
</TABLE>
9
<PAGE> 10
Form 10-Q
RESULTS OF OPERATIONS
Three month period ended June 30, 1996 compared with the three month
period ended June 30, 1995:
Revenues increased by 14.1% to $122,422,000 in 1996 from $107,342,000
in 1995, an increase of $15,080,000, resulting from increased sales of specialty
plant nutrients and industrial chemicals ($14,600,000) and potash ($700,000),
which were partially offset by slightly lower sales of organic chemicals
($200,000).
Cost of goods sold as a percentage of revenues decreased by 1.5% during
the period (81.7% in 1996 compared with 83.2% in 1995). Gross profit was
$22,392,000 in 1996 compared with $18,079,000 in 1995 (18.3% of revenues in 1996
compared with 16.8% of revenues in 1995), an increase of $4,313,000. The primary
factors resulting in the increased 1996 gross profit were (i) more favorable
currency rates and (ii) higher quantities of potassium nitrate sold. These items
were partially offset by lower potash margins in the 1996 period. General and
administrative expense increased to $11,440,000 in 1996 from $10,454,000 in
1995, but declined as a percentage of revenues (9.3% of revenues in 1996
compared with 9.7% of revenues in 1995). During the 1995 period the Company
recorded a $750,000 reimbursement of certain general and administrative expenses
incurred in prior years on behalf of an entity in which the Company has an
investment.
As a result of the matters described above, the Company's operating
income increased by $3,327,000 to $10,952,000 in 1996 as compared with
$7,625,000 in 1995.
Interest expense decreased by $377,000 ($8,335,000 in 1996 compared
with $8,712,000 in 1995) primarily as a result of the repurchase of certain of
the Company's outstanding Senior Subordinated Reset Notes. Interest and other
income - net decreased in 1996 by $2,864,000, principally as the result of (i)
the 1995 period including a gain relating to the February, 1994 fire at HCL
($1,700,000), (ii) the net change in adjustments relating to the
marking-to-market of forward exchange contracts which do not qualify as hedges
($500,000) and (iii) the 1995 period including interest income relating to a
prior year tax refund ($800,000). As a result of the above factors, income
before income taxes and extraordinary item increased by $840,000 in 1996. The
Company's provisions for income taxes are impacted by the mix between domestic
and foreign earnings and vary from the U.S. Federal statutory rate principally
due to the impact of foreign operations and certain losses for which there is no
current tax benefit.
10
<PAGE> 11
In the 1996 period the Company acquired $7,885,000 principal amount of
its Senior Subordinated Reset Notes due September 1, 1996, which resulted in a
loss of $160,000. Such loss (which has no current tax benefit) is classified as
an extraordinary item in the accompanying Consolidated Statements of Operations.
No such debt was acquired in the 1995 period.
Six month period ended June 30, 1996 compared with the six month period
ended June 30, 1995:
Revenues increased by 20.5% to $240,664,000 in 1996 from $199,731,000
in 1995, an increase of $40,933,000, resulting from increased sales of specialty
plant nutrients and industrial chemicals ($39,600,000), organic chemicals
($900,000) and potash ($400,000).
Cost of goods sold as a percentage of revenues decreased by 2.0% during
the period (81.6% in 1996 compared with 83.6% in 1995). Gross profit was
$44,372,000 in 1996 compared with $32,758,000 in 1995 (18.4% of revenues in 1996
compared with 16.4% of revenues in 1995), an increase of $11,614,000. The
primary factors resulting in the increased 1996 gross profit were (i) more
favorable currency rates, (ii) higher quantities of potassium nitrate sold and
(iii) the inclusion of the results of Na-Churs for the full 1996 period as
compared with only three months in 1995. These items were partially offset by
lower potash and organic chemicals margins in the 1996 period. General and
administrative expense increased to $23,085,000 in 1996 from $20,213,000 in
1995, but declined as a percentage of revenues (9.5% of revenues in 1996
compared with 10.1% of revenues in 1995). During the 1995 period the Company
recorded a $750,000 reimbursement of certain general and administrative expenses
incurred in prior years on behalf of an entity in which the Company has an
investment.
As a result of the matters described above, the Company's operating
income increased by $8,742,000 to $21,287,000 in 1996 as compared with
$12,545,000 in 1995.
Interest expense increased by $302,000 ($17,048,000 in 1996 compared
with $16,746,000 in 1995) primarily as a result of interest on the long-term
debt that financed the construction of the Company's K3 Plant in Israel,
partially offset by reduced interest expense resulting from the repurchase of
certain of the Company's outstanding Senior Subordinated Reset Notes. Interest
and other income - net decreased in 1996 by $3,095,000, principally as the
result of (i) the 1995 period including a gain relating to the February, 1994
fire at HCL ($1,700,000) and (ii) the net change in adjustments relating to the
marking-to-market of forward exchange contracts which do not qualify as hedges
($1,500,000). As a result of the above factors, income before income taxes and
extraordinary item increased by
11
<PAGE> 12
$5,345,000 in 1996. The Company's provisions for income taxes are impacted by
the mix between domestic and foreign earnings and vary from the U.S. Federal
statutory rate principally due to the impact of foreign operations and certain
losses for which there is no current tax benefit.
In the 1996 period the Company acquired $19,122,000 principal amount of
its Senior Subordinated Reset Notes due September 1, 1996, which resulted in a
loss of $553,000. Such loss (which has no current tax benefit) is classified as
an extraordinary item in the accompanying Consolidated Statement of Operations.
No such debt was acquired in the 1995 period.
CAPITAL RESOURCES AND LIQUIDITY
The Company's consolidated working capital at June 30, 1996 and
December 31, 1995 was $105,962,000 and $82,011,000, respectively.
Operations for the six month periods ended June 30, 1996 and 1995,
after adding back non-cash items, provided cash of approximately $14,800,000 and
$10,000,000, respectively. During such periods other changes in working capital
used cash of approximately $29,500,000 and $16,200,000, respectively, resulting
in net cash being used by operating activities and working capital management of
approximately $14,700,000 and $6,200,000, respectively.
Investment activities during the six month periods ended June 30, 1996
and 1995 provided (used) cash of approximately ($2,400,000) and $95,500,000,
respectively, including additions to property in 1996 and 1995 of approximately
$6,900,000 and $25,800,000, respectively, net purchases of marketable securities
and other short-term investments of approximately $3,800,000 and $4,300,000,
respectively, and sales of marketable securities and other short-term
investments of approximately $600,000 and $130,500,000, respectively. No major
property additions occurred in 1996. The 1995 property additions principally
relate to (i) the construction of the K3 Plant, (ii) the replacement of the HCL
production unit damaged in a fire in February, 1994 and (iii) the construction
of a new potassium carbonate manufacturing facility. The 1995 sales of
marketable securities and short-term investments relate principally to the
purchase in 1994, and the liquidation in 1995, of the pledged certificates of
deposit ("CD's") relating to the Loan Agreement described below.
Financing activities during the six month periods ended June 30, 1996
and 1995, provided (used) cash of approximately $1,500,000 and ($74,800,000),
respectively (principally relating to the increase of certain long-term debt in
1994 and the prepayment of such debt in 1995, which is described below).
12
<PAGE> 13
On June 30, 1994, the Company entered into the Loan Agreement with a
bank and borrowed $40,000,000 (repayable quarterly over a four year period) and
utilized a portion of the proceeds to prepay approximately $19,000,000 then owed
to such bank. Pursuant to the Loan Agreement, the Company also borrowed an
additional $100,000,000, repayable in January, 1996. Under certain specified
circumstances prior to such date, the Company could have converted such loan
into a term loan maturing five years from the date of conversion. The Company
pledged CD's with a principal amount of $100,000,000 as collateral for such loan
(such CD's were included in "other current assets" in the December 31, 1994
Consolidated Balance Sheet). In addition, the Company pledged 79% of the capital
stock of HCL to secure its obligations under the Loan Agreement. On January 5,
1995, the Company liquidated the pledged CD's and prepaid the $100,000,000 loan.
As of June 30, 1996, the Company had outstanding long-term debt
(excluding current maturities) of $303,115,000. The Company's primary source of
liquidity is cash flow generated from operations and its unused credit lines.
Approximately 90% of HCL's sales are made outside of Israel in various
currencies, of which approximately 38% are in U.S. dollars, with the remainder
principally in Western European currencies. In order to mitigate the impact of
currency fluctuations against the U.S. dollar, the Company has a policy of
hedging a significant portion of its foreign sales denominated in Western
European currencies by entering into forward exchange contracts. A portion of
these contracts qualify as hedges pursuant to Statement of Financial Accounting
Standards No. 52 and accordingly, unrealized gains and losses arising therefrom
are deferred and accounted for in the subsequent year as part of sales.
Unrealized gains and losses for the remainder of the forward exchange contracts
are recognized in income currently. If the Company had not followed such a
policy of entering into forward exchange contracts in order to hedge its foreign
sales, and instead recognized income based on the then prevailing foreign
currency rates, the Company's income before income taxes for the six month
periods ended June 30, 1996 and 1995, would have (decreased) increased by
approximately ($3,200,000) and $8,600,000, respectively.
The principal purpose of the Company's hedging program (which is for
other than trading purposes) is to mitigate the impact of fluctuations against
the U.S. dollar, as well as to protect against significant adverse changes in
exchange rates. Accordingly, the gains and losses recognized relating to the
hedging program in any particular period and the impact on revenues had the
Company not had such a program are not necessarily indicative of its
effectiveness.
13
<PAGE> 14
CAPITAL EXPENDITURES
During the six month period ended June 30, 1996 the Company invested
approximately $6,900,000 in capital expenditures. The Company currently
anticipates that capital expenditures for the year ending December 31, 1996 will
aggregate approximately $20,000,000. The Company's capital expenditures will be
used primarily for increasing certain production capacity and efficiency,
product diversification and for ecological matters.
INFLATION
Inasmuch as only approximately $45,000,000 of HCL's annual operating
costs are denominated in New Israeli Shekels ("NIS"), HCL is exposed to
inflation in Israel to a limited extent. The combination of price increases
coupled with devaluation of the NIS have in the past generally enabled HCL to
avoid a material adverse impact from inflation in Israel. However, HCL's
earnings increase or decrease to the extent that the rate of future NIS
devaluation differs from the rate of Israeli inflation. For the years ended
December 31, 1995 and 1994, the inflation rate of the NIS as compared to the
U.S. Dollar exceeded the devaluation rate in Israel by 4.2% and 13.4%,
respectively.
ENVIRONMENTAL MATTERS
See Item 1 - "Business - Environmental Matters" and Note O of Notes to
Consolidated Financial Statements included in the Company's Form 10-K for
information regarding environmental matters relating to the Company's various
facilities.
14
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously disclosed (most recently in the Form 10-K), a number of
antitrust class action lawsuits were filed in several United States District
Courts, and consolidated for pretrial purposes in the United States District
Court for Minnesota, against the major United States potash producers, including
Eddy and NMPC. Oral arguments on defendants' motions for summary judgment were
held on April 18, 1996. The motions are still pending. The trial is now
scheduled to commence on October 31, 1996.
Also as previously disclosed, on or about November 26, 1993, Eddy and
NMPC (and other major United States potash producers) were served with subpoenas
issued by the United States District Court for the Northern District of Ohio to
produce documents to a grand jury authorized by the U.S. Department of Justice
Antitrust Division ("DOJ") to investigate possible violations of the antitrust
laws in connection with the allegations made in the civil actions described
above. In June 1996, the DOJ notified counsel that the investigation had been
closed by the DOJ without any action being taken by the DOJ.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which this
report is filed.
15
<PAGE> 16
Form 10-Q
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.
TRANS-RESOURCES, INC.
-----------------------------
(Registrant)
Date: August 9, 1996 Lester W. Youner
-----------------------------
Vice President, Treasurer and
Chief Financial Officer
16
<PAGE> 17
TRANS-RESOURCES, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description Page No.
- ------- ----------- --------
<S> <C> <C>
27 Financial Data Schedule. 18
</TABLE>
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 17,269
<SECURITIES> 0
<RECEIVABLES> 106,051
<ALLOWANCES> 0
<INVENTORY> 62,791
<CURRENT-ASSETS> 232,968
<PP&E> 355,216
<DEPRECIATION> 139,432
<TOTAL-ASSETS> 480,122
<CURRENT-LIABILITIES> 127,006
<BONDS> 303,115
0
7,960
<COMMON> 0
<OTHER-SE> 13,272
<TOTAL-LIABILITY-AND-EQUITY> 480,122
<SALES> 240,664
<TOTAL-REVENUES> 240,664
<CGS> 196,292
<TOTAL-COSTS> 196,292
<OTHER-EXPENSES> 23,085
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,048
<INCOME-PRETAX> 5,167
<INCOME-TAX> 2,560
<INCOME-CONTINUING> 2,607
<DISCONTINUED> 0
<EXTRAORDINARY> (553)
<CHANGES> 0
<NET-INCOME> 2,054
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
