-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TH9+2+Zz0lwhVmxWMihp4NQHp6Bu7G9q66jRY4inGj4tR4nu7fNq43x1dozxzUkL tu/gvdfa9rN1AFAfWjK7aA== 0000950134-97-005967.txt : 19970813 0000950134-97-005967.hdr.sgml : 19970813 ACCESSION NUMBER: 0000950134-97-005967 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: CSX SROS: NYSE SROS: PHLX SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHEMFIRST INC CENTRAL INDEX KEY: 0001026601 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 640679456 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12547 FILM NUMBER: 97656928 BUSINESS ADDRESS: STREET 1: P O BOX 1249 CITY: JACKSON STATE: MS ZIP: 39215 BUSINESS PHONE: 6019480218 MAIL ADDRESS: STREET 1: P O BOX 1249 CITY: JACKSON STATE: MS ZIP: 39215-1249 10-Q 1 FORM 10-Q FOR QUARTER ENDED JUNE 30, 1997 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 (MARK ONE) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended June 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: 333-15789 ChemFirst Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Mississippi 64-0679456 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 700 North Street, Jackson, MS 39202-3095 - ------------------------------------------------------------------------------- (Address of principal (Zip Code) executive offices) Registrant's Telephone Number, including Area Code: 601/948-7550 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Class Outstanding at July 31, 1997 - -------------------------------- ------------------------------ Common Stock, $1 Par Value 20,386,477 2 Part I. Financial Information Item 1. Financial Statements ChemFirst Inc. Consolidated Balance Sheets (Unaudited) (In Thousands of Dollars)
June 30 Dec. 31 1997 1996 ---------------- -------------- Assets: Current assets Cash and cash equivalents $ 22,273 68,385 Accounts receivable 72,385 64,645 Inventories: Finished products 26,175 28,434 Work in process 18,952 22,772 Raw materials and supplies 18,273 18,815 ---------------- -------------- Total inventories 63,400 70,021 ---------------- -------------- Prepaid expenses and other current assets 8,258 10,786 ---------------- -------------- Total current assets 166,316 213,837 ---------------- -------------- Investments and other assets 58,097 56,171 Property, plant and equipment 315,789 293,627 Less: accumulated depreciation and amortization 131,394 140,545 ---------------- -------------- Property, plant and equipment, net 184,395 153,082 ---------------- -------------- $ 408,808 423,090 ================ ============== Liabilities and Stockholders' Equity: Current liabilities Current instalments of long-term debt $ 611 973 Deferred revenue 7,569 7,778 Accounts payable 32,892 37,236 Accrued expenses and other current liabilities 23,780 37,370 ---------------- -------------- Total current liabilities 64,852 83,357 ---------------- -------------- Long-term debt 1,764 2,122 Deferred revenue and other liabilities 15,397 15,661 Deferred income taxes 15,187 13,464 Stockholders' equity: Common stock 20,330 20,673 Additional paid-in capital 17,606 16,586 Retained earnings 273,672 271,227 ---------------- -------------- Total stockholders' equity 311,608 308,486 ---------------- -------------- $ 408,808 423,090 ================ ==============
The accompanying notes are an integral part of these financial statements. 3 ChemFirst Inc. Consolidated Statements of Operations (Unaudited) (In Thousands of Dollars and Shares, Except Per Share Amounts)
3 Months Ended 6 Months Ended June 30 June 30 --------------- ---------------- -------------- -------------- 1997 1996 1997 1996 --------------- ---------------- -------------- -------------- Revenues: Sales $ 111,179 98,068 221,899 195,205 Interest and other income 1,309 1,469 3,715 2,323 --------------- ---------------- -------------- -------------- 112,488 99,537 225,614 197,528 --------------- ---------------- -------------- -------------- Costs and expenses: Cost of sales 85,611 77,447 170,729 154,159 General, selling and administrative expenses 15,527 16,811 29,591 29,847 Other operating expenses 1,098 2,109 2,212 3,877 Restructuring costs and asset write-downs - 18,256 - 18,256 Interest expense 142 2,184 225 4,523 --------------- ---------------- -------------- -------------- 102,378 116,807 202,757 210,662 --------------- ---------------- -------------- -------------- Earnings (loss) before income taxes 10,110 (17,270) 22,857 (13,134) Income tax expense (benefit) 3,992 (6,588) 9,028 (4,656) Equity in net earnings of equity investees 1,757 104 2,165 284 --------------- ---------------- -------------- -------------- Earnings (loss) from continuing operations $ 7,875 (10,578) 15,994 (8,194) Earnings from discontinued operations,net - 8,288 - 17,522 Loss on disposal of business, net of taxes - (1,746) - (1,746) --------------- ---------------- -------------- -------------- Net earnings (loss) $ 7,875 (4,036) 15,994 7,582 =============== ================ ============== ============== Earnings (loss) per common share: Continuing operations $ 0.38 (0.51) 0.76 (0.40) Discontinued operations - 0.32 - 0.76 --------------- ---------------- -------------- -------------- Earnings (loss) per common share $ 0.38 (0.19) 0.76 0.36 =============== ================ ============== ============== Average shares outstanding 20,909 20,878 20,995 20,884 Cash dividend declared per share $ 0.10 0.10 0.20 0.20
The accompanying notes are an integral part of these financial statements. 4 ChemFirst Inc. Consolidated Statements of Cash Flows (Unaudited) (In Thousands of Dollars)
June 30 -------------------------------- 1997 1996 -------------- -------------- Cash flows from operating activities: Net earnings $ 15,994 7,582 Adjustments to reconcile earnings to net cash provided by operating activities: Depreciation and amortization 10,659 8,663 Restructuring costs and asset write-downs - 18,256 Deferred taxes and other items (1,197) (1,555) Change in current assets and liabilities, net of effects of dispositions (18,346) (8,922) Net earnings of discontinued operations - (15,776) -------------- -------------- Net cash provided by continuing operations 7,110 8,248 Net cash provided by discontinued operations 7 13,797 -------------- -------------- Net cash provided by operations 7,117 22,045 -------------- -------------- Cash flows from investing activities: Capital expenditures (43,295) (19,998) Proceeds from sale of subsidiary 2,100 - Other investing activities 1,696 897 -------------- -------------- Net cash used in continuing operations (39,499) (19,101) Net cash used in discontinued operations - (35,587) -------------- -------------- Net cash used in investing activities (39,499) (54,688) -------------- -------------- Cash flows from financing activities: Principal repayments of long-term debt (471) (15,004) Proceeds from issuance of long-term debt - 11,000 Dividends (4,091) (4,122) Purchase of common stock (9,857) (12) Proceeds from issuance of common stock 689 1 -------------- -------------- Net cash used in financing activities (13,730) (8,137) -------------- -------------- Net decrease in cash and cash equivalents (46,112) (40,780) Cash and cash equivalents at beginning of period 68,385 46,083 -------------- -------------- Cash and cash equivalents at end of period $ 22,273 5,303 ============== ============== Supplemental disclosures of cash flow information Cash paid during the period for: Interest , net of amounts capitalized $ 258 4,652 ============== ============== Income taxes, net $ 7,061 6,193 ============== ==============
The accompanying notes are an integral part of these financial statements. 5 ChemFirst Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited. In Thousands of Dollars) NOTE 1 - GENERAL The financial statements included herein are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Securities and Exchange Commission regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments (of a normal and recurring nature) which are necessary to present fairly the financial position, results of operations and cash flows for the interim periods. These financial statements should be read in conjunction with the Annual Report of the Company and Form 10-K for the transition period ended December 31, 1996. NOTE 2 - DISCONTINUED OPERATIONS On December 23, 1996, First Mississippi Corporation completed the spinoff of ChemFirst Inc. (the "Company") and on December 24, 1996, First Mississippi and its fertilizer operations ("Fertilizer") were merged with a wholly-owned subsidiary of Mississippi Chemical Corporation. For financial reporting purposes, this transaction was accounted for as a disposal of the fertilizer business. The statements of operations for the three months and six months ended June 30, 1996, have been reclassified to separate discontinued and continuing operations. Revenues and net earnings of the discontinued fertilizer operations for those periods were as follows:
3 Months Ended Six Months Ended June 30, 1996 June 30, 1996 --------------- ---------------- Sales and revenues $53,758 112,469 ======= ======= Income from operations before taxes 12,776 27,428 Income tax expense 4,488 9,906 ------- ------- Earnings from discontinued operations, net $ 8,288 17,522 ======= =======
6 A pretax loss of $2,700 was recorded during the quarter ended June 30, 1996, related to previously discontinued businesses and is included in loss on disposal of business, net of applicable income tax benefits of $954, in the accompanying financial statements. NOTE 3 - RESTRUCTURING COSTS AND ASSET WRITE-DOWNS On May 21, 1996, the Board of Directors of First Mississippi authorized a plan to close its aluminum dross processing facility at Millwood, West Virginia, which was operated by its wholly owned subsidiary Plasma Processing Corporation ("PPC"). Charges associated with the plan included write-downs to reduce carrying values to estimated net realizable values (estimated fair values less costs to sell) of $12,271 for property, plant and equipment, $570 for spare parts, $350 for inventory and $5,065 in accruals for other estimated costs to be incurred related to the closure. On January 14, 1997, the Company sold the aluminum dross processing business for $4,100. Based on the terms of the disposition agreement, the Company recorded an additional $2,146 loss in the quarter ended December 31, 1996. The loss included $1,100 related to the sale of assets and $1,046 of additional accruals related to inventory disposal and severance costs. For the six-month period July 1 to December 31, 1996, and the three month and six month periods ended June 30, 1997, the Company recorded $3,293, $337 and $1,158, respectively, in cash expenditures against its accrual reserves, primarily for inventory processing costs and severance payments. PPC's operations were part of the Company's Combustion and Thermal Plasma segment. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - Six months ended June 30, 1997 compared to the six months ended June 30, 1996 Consolidated Results Earnings from continuing operations for the six months ended June 30, 1997, were $16.0 million versus a loss of $8.2 million for the same period of the prior year. The improvement over the prior year was primarily due to an $18.3 million ($11.7 million after tax) provision in June 1996 for the shutdown of aluminum processing operations that were sold in January 1997. In addition, current year operations reflect higher profits in Chemicals and Combustion and Thermal Plasma operations, a $1.9 million increase in earnings from equity investees and $4.3 million decrease in interest expense versus the prior year. Earnings from equity investees for the current year include the Company's share of a $1.5 million net gain on a technology exchange agreement made by Melamine Chemicals, Inc. Interest expense declined due to the extinguishment of substantially all debt of the Company with the disposition of Fertilizer operations in December 1996. Earnings from discontinued operations for the prior year include the results of the disposed fertilizer operations. Segment Operations Industry Segment Information (In Thousands of Dollars)
6 Months Ended June 30 ------- 1997 1996 ---- ---- Sales Chemicals $ 146,491 122,758 Combustion and Thermal Plasma 37,590 32,842 Steel 37,818 39,607 ----------- -------- Total $ 221,899 195,207 =========== ======== Operating profit (loss) before income taxes Chemicals 25,097 62,749 Combustion and Thermal Plasma 1,301 (28,101) Steel (150) 424 ----------- -------- 26,248 (4,928) Unallocated corporate expenses (5,271) (5,422) Interest income (expense), net 1,792 (2,821) Other income, net 88 37 ----------- -------- Total $ 22,857 (13,134) =========== ========
8 Chemicals pretax operating profits were up 10% over the prior year primarily due to higher custom manufacturing earnings. Sales grew 19% over the prior year primarily due to increased custom manufacturing and aniline sales volume. Aniline purchased for resale was the primary cause of the aniline sales gain. Combustion and Thermal Plasma pretax operating profits for the current year were $1.3 million versus losses of $28.1 million last year. Prior year Combustion and Thermal Plasma results include $18.3 million in write-downs and $5.2 million in operating losses related to the aluminum dross processing business. In addition, results for the current year reflect improvement in combustion operations where prior year results were hurt by cost overruns in several large projects. Sales were up 14% over the prior year on increased sales of combustion equipment and services. Steel results for the current year were down $0.6 million versus the prior year on a 5% decline in sales as lower volume more than offset a 9% increase in average unit sales price. Net interest income for the current year includes $2.0 million of interest income offset by $0.2 million of interest expense. Prior year's net interest expense included $4.5 million of interest expense offset by $1.7 million of interest income. The lower interest expense is due to the extinguishment of substantially all debt of the Company with the disposition of Fertilizer operations in December 1996. Results of Operations - Three months ended June 30, 1997 compared to the three months ended June 30, 1996 Consolidated Results Earnings from continuing operations for the three months ended June 30, 1997, were $7.9 million versus a loss of $10.6 million for the same period of the prior year. The improvement over the prior year was primarily due to an $11.7 million after tax provision for the shutdown of aluminum processing operations, improved Chemicals and Combustion and Thermal Plasma operations, a $1.7 million increase in earnings from equity investees and $2.0 million decrease in interest expense versus the prior year. Earnings from equity investees for the current year include the Company's share of a $1.5 million net gain on a technology exchange agreement made by Melamine Chemicals, Inc. Interest expense declined due to the extinguishment of substantially all debt of the Company with the disposition of Fertilizer operations. 9 Segment Operations Industry Segment Information (In Thousands of Dollars)
3 Months Ended June 30 ------- 1997 1996 ---- ---- Sales Chemicals $ 72,018 63,210 Combustion and Thermal Plasma 19,606 15,697 Steel 19,555 19,163 ----------- ------ Total $ 111,179 98,070 =========== ====== Operating profit (loss) before income taxes Chemicals $ 11,517 10,557 Combustion and Thermal Plasma 852 (23,525) Steel 3 56 ----------- ------ 12,372 (12,912) Unallocated corporate expenses (3,003) (2,869) Interest income (expense), net 753 (1,443) Other income, net (12) (46) ----------- ------ Total $10,110 (17,270) =========== ======
Chemicals pretax operating profits were up 9% over the prior year, primarily due to higher sales of hydroxylamine (HDA(TM) )-based electronic chemicals. Sales grew 14% for the period, primarily due to the increased HDA(TM) as well as intermediate and specialty chemical volume. Combustion and Thermal Plasma pretax operating profits were $0.9 million versus losses of $23.5 million last year while Steel results remained near break-even despite a 3% increase in average unit price. Prior year Combustion and Thermal Plasma results include $18.3 million in write-downs and $2.6 million in operating losses related to the aluminum dross processing business which was sold in January 1997. In addition, the profitability of Combustion and Thermal Plasma operations for the current year reflects improvement in combustion operations where prior year results were hurt by cost overruns in several large projects. Combustion and Thermal Plasma sales were up 25% over the prior year on increased sales of combustion equipment and services. Net interest income for the current year includes $0.9 million of interest income offset by $0.1 million of interest expense. Prior year's net interest expense included $2.2 million of interest expense offset by $0.8 million of interest income. The lower interest expense is due to the extinguishment of substantially all debt of the Company with the disposition of Fertilizer operations. 10 Capital Resources and Liquidity Net cash provided by continuing operations for the current year was down $1.1 million versus the prior year despite higher earnings primarily due to the reduction of accruals related to the disposition of Fertilizer and aluminum recovery operations. The net cash flow used in investing activities for the current year reflects increased capital expenditures in chemicals and the receipt of $2.1 million in proceeds from the sale of aluminum recovery operations. Cash flow used in financing activities for the current year included $9.9 million for the purchase of 417,800 shares of ChemFirst common stock, which represents approximately 50% of the $20.0 million repurchase authorization announced in January 1997. 11 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 - Financial Data Schedules (b) Reports on Form 8-K No report on Form 8-K was filed by the Registrant during the three months ended June 30, 1997. 12 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. CHEMFIRST INC. August 12, 1997 /s/ J. Kelley Williams - -------------------------- ------------------------------------------- Date J. Kelley Williams Chairman and Chief Executive Officer August 12, 1997 /s/ R. Michael Summerford - -------------------------- ------------------------------------------- Date R. Michael Summerford Vice President & Chief Financial Officer 13 EXHIBIT INDEX EXHIBITS 27 - Financial Data Schedules EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1997 APR-01-1997 JUN-30-1997 22,273 0 73,081 696 63,400 166,316 315,789 131,394 408,808 64,852 1,764 0 0 20,330 291,278 408,808 111,179 112,488 85,611 85,611 1,098 600 142 10,110 3,992 7,875 0 0 0 7,875 0.38 0.00
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