-----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, FMJnKhlmBZmpyDYLU0ELyHh3GDtRzPCUBuAxIAhmXyRrzLn4rl+k1/6OSzTtQ01y vCdd6+pOQ3M2z5cjmcpdZQ== 0000950134-97-008294.txt : 19971114 0000950134-97-008294.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950134-97-008294 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 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: SEC FILE NUMBER: 001-12547 FILM NUMBER: 97713716 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 SEPTEMBER 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 September 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 October 31, 1997 - -------------------------- ------------------------------- Common Stock, $1 Par Value 20,259,840 2 Part I. Financial lnformation Item 1. Financial Statements ChemFirst Inc. Consolidated Balance Sheets (Unaudited) (In Thousands of Dollars)
Sept. 30 Dec. 31 1997 1996 -------- -------- Assets: Current assets Cash and cash equivalents $ 13,094 68,385 Accounts receivable 64,757 64,645 Inventories: Finished products 26,523 28,434 Work in process 19,588 22,772 Raw materials and supplies 20,975 18,815 -------- -------- Total inventories 67,086 70,021 -------- -------- Prepaid expenses and other current assets 12,156 10,786 -------- -------- Total current assets 157,093 213,837 -------- -------- Investments and other assets 58,647 56,171 Property, plant and equipment 338,340 293,627 Less: accumulated depreciation and amortization 136,037 140,545 -------- -------- Property, plant and equipment, net 202,303 153,082 -------- -------- $418,043 423,090 ======== ======== Liabilities and Stockholders' Equity: Current liabilities Notes payable to banks $ 5,000 -- Current instalments of long-term debt 872 973 Deferred revenue 3,461 7,778 Accounts payable 33,489 37,236 Accrued expenses and other current liabilities 22,379 37,370 -------- -------- Total current liabilities 65,201 83,357 -------- -------- Long-term debt 1,328 2,122 Deferred revenue and other liabilities 18,234 15,661 Deferred income taxes 18,051 13,464 Stockholders' equity: Common stock 20,316 20,673 Additional paid-in capital 18,717 16,586 Retained earnings 276,196 271,227 -------- -------- Total stockholders' equity 315,229 308,486 -------- -------- $418,043 423,090 ======== ========
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 9 Months Ended Sept. 30 Sept. 30 ---------------------- ---------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Revenues: Sales $106,088 95,432 327,987 290,639 Interest and other income 1,578 2,775 5,293 5,096 -------- -------- -------- -------- 107,666 98,207 333,280 295,735 -------- -------- -------- -------- Costs and expenses: Cost of sales 79,370 72,540 250,099 226,699 General, selling and administrative expenses 16,326 15,831 45,917 45,678 Other operating expenses 976 1,353 3,188 5,230 Restructuring costs and asset write-downs -- -- -- 18,256 Interest expense 90 1,765 315 6,288 -------- -------- -------- -------- 96,762 91,489 299,519 302,151 -------- -------- -------- -------- Earnings (loss) before income taxes 10,904 6,718 33,761 (6,416) Income tax expense (benefit) 4,307 2,886 13,335 (1,770) Equity in net earnings of equity investees 203 258 2,368 542 -------- -------- -------- -------- Earnings (loss) from continuing operations $ 6,800 4,090 22,794 (4,104) Earnings from discontinued operations, net of taxes -- 8,699 -- 26,221 Loss on disposal of business, net of taxes -- -- -- (1,746) -------- -------- -------- -------- Net earnings $ 6,800 12,789 22,794 20,371 ======== ======== ======== ======== Earnings (loss) per common share: Continuing operations $ 0.33 0.20 1.09 (0.20) Discontinued operations -- 0.41 -- 1.18 -------- -------- -------- -------- Earnings per common share $ 0.33 0.61 1.09 0.98 ======== ======== ======== ======== Average shares outstanding 20,839 20,894 20,943 20,887 Cash dividend declared per share $ 0.10 0.10 0.30 0.30
The accompanying notes are an integral part of these financial statements. 4 ChemFirst Inc. Consolidated Statements of Cash Flows (Unaudited) (In Thousands of Dollars)
Sept. 30 ----------------------- 1997 1996 -------- -------- Cash flows from operating activities: Net earnings $ 22,794 20,371 Adjustments to reconcile earnings to net cash provided by operating activities: Depreciation and amortization 15,623 13,516 Restructuring costs and asset write-downs -- 18,256 Deferred taxes and other items (1,873) (3,144) Change in current assets and liabilities, net of effects of dispositions (17,096) 800 Net earnings of discontinued operations -- (24,475) -------- -------- Net cash provided by continuing operations 19,448 25,324 Net cash provided by discontinued operations 2 24,271 -------- -------- Net cash provided by operations 19,450 49,595 -------- -------- Cash flows from investing activities: Capital expenditures (65,863) (33,069) Proceeds from sale of subsidiary 2,100 -- Other investing activities 1,610 876 -------- -------- Net cash used in continuing operations (62,153) (32,193) Net cash used in discontinued operations -- (38,732) -------- -------- Net cash used in investing activities (62,153) (70,925) -------- -------- Cash flows from financing activities: Proceeds of revolving credit agreement borrowings 5,000 -- Principal repayments of long-term debt (619) (18,290) Proceeds from issuance of long-term debt -- 11,000 Dividends (6,132) (6,183) Purchase of common stock (12,179) (12) Proceeds from issuance of common stock 1,342 -- -------- -------- Net cash used in financing activities (12,588) (13,485) -------- -------- Net decrease in cash and cash equivalents (55,291) (34,815) Cash and cash equivalents at beginning of period 68,385 46,083 -------- -------- Cash and cash equivalents at end of period $ 13,094 11,268 ======== ======== Supplemental disclosures of cash flow information Cash paid during the period for: Interest, net of amounts capitalized $ 357 6,428 ======== ======== Income taxes, net $ 7,467 1,348 ======== ========
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 statement of operations for the three months and nine months ended September 30, 1996, have been reclassified to separate discontinued and continuing operations. Revenues and net earnings of the discontinued fertilizer operations for that period were as follows:
3 Months Ended 9 Months Ended September 30, 1996 September 30, 1996 ------------------ ------------------ Sales and revenues $60,267 172,736 ======= ======= Income from operations before taxes 13,813 41,241 Income tax expense 5,114 15,020 ------- ------- Earnings from discontinued operation, net $ 8,699 26,221 ======= =======
6 A pretax loss of $2,700 was recorded during the nine months ended September 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 During the quarter ended June 30, 1996, the company recorded charges of $18,256 related to a plan to close its aluminum dross processing facility at Millwood, West Virginia. On January 14, 1997, the Company sold all its aluminum dross processing assets for $4,100. For the six-month period from July 1 to December 31, 1996, and the three month and nine month periods ended September 30, 1997, the Company recorded $3,293, $590 and $1,748, respectively, in cash expenditures against its accrual reserves. NOTE 4 - INDUSTRY SEGMENT INFORMATION During the quarter ended September 30, 1997, the Company changed the name of its Combustion and Thermal Plasma segment to Engineered Products and Services to more accurately describe the nature of its operations. NOTE 5 - EFFECT OF ADOPTING ACCOUNTING STANDARDS CHANGE The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 - Earnings per Share, in February 1997. This Statement's objective is to simplify the computation of earnings per share (EPS) previously found in APB Opinion No. 15, "Earnings per Share", and to make the U.S. standard for computing EPS more compatible with the EPS standards of other countries and with that of the International Accounting Standards Committee. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS pursuant to Opinion 15. This Statement is effective for financial statements issued for periods ending after December 15, 1997, including interim periods; earlier application is not allowed. It requires restatement of all prior-period EPS data presented. Adoption of this Statement is expected to have an immaterial effect on the Company's future and restated EPS. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - Nine months ended September 30, 1997 compared to the nine months ended September 30, 1996 Consolidated Results Earnings from continuing operations for the nine months ended September 30, 1997, were $22.8 million versus a loss of $4.1 million for the same period of the prior year. Prior year results include $23.6 million ($15.1 million after tax) in write-downs and operating losses related to the Company's aluminum processing operations that were sold in January 1997. In addition, current year operations reflect higher profits in Chemicals and Engineered Products and Services, a $1.8 million increase in earnings from equity investees and a $6.4 million decrease in net interest expense versus the prior year. Earnings from equity investees for the current year include 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)
9 Months Ended September 30 ------------------------------- 1997 1996 --------- ------- Sales Chemicals $ 216,234 187,109 Engineered Products and Services 55,689 47,718 Steel 56,064 55,812 --------- ------- Total $ 327,987 290,639 ========= ======= Operating profit (loss) before income taxes Chemicals $ 38,005 35,630 Engineered Products and Services 2,220 (28,456) Steel (754) (157) --------- ------- Unallocated corporate expenses (8,351) (9,558) Interest income (expense), net 2,345 (4,076) Other income, net 296 201 --------- ------- Total $ 33,761 (6,416) ========= =======
8 Chemicals pretax operating profits were up 7% over the prior year primarily due to higher custom manufacturing sales. Total chemicals sales grew 16% over the prior year on increased sales volume. Engineered Products and Services pretax operating profits for the current year were $2.2 million versus losses of $28.5 million last year. Prior year Engineered Products and Services results include $23.6 million in write-downs and 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 17% over the prior year. Steel results for the current year were down $0.6 million versus the prior year which included a gain on asset sales. Net interest income for the current year included $2.7 million of interest income offset by $0.3 million of interest expense. Prior year's net interest expense included $6.3 million of interest expense offset by $2.2 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. Unallocated corporate expense declined from the prior year primarily due to lower professional service cost. Results of Operations - Three months ended September 30, 1997 compared to the three months ended September 30, 1996 Consolidated Results Earnings from continuing operations for the three months ended September 30, 1997, were $6.8 million versus $4.1 million for the same period of the prior year. Results improved on better performance from Engineered Products and Services and lower corporate and interest expense. 9 Segment Operations Industry Segment Information (In Thousands of Dollars)
3 Months Ended September 30 ------------------------------- 1997 1996 --------- ------ Sales Chemicals $ 69,743 64,351 Engineered Products and Services 18,099 14,875 Steel 18,246 16,206 --------- ------ Total $ 106,088 95,432 ========= ====== Operating profit (loss) before income taxes Chemicals $ 12,908 12,881 Engineered Products and Services 919 (356) Steel (604) (581) --------- ------ 13,223 11,944 Unallocated corporate expenses (3,080) (4,136) Interest income (expense), net 553 (1,255) Other income, net 208 165 --------- ------ Total $ 10,904 6,718 ========= ======
Chemicals pretax operating profits were $12.9 million, unchanged from the prior year, which included license proceeds from a major electronic chemicals competitor. Sales grew 8% for the period, primarily due to increased electronic and specialty chemical volume. Engineered Products and Services pretax operating profits were $0.9 million versus losses of $0.4 million last year as sales grew 22%. Steel sales were up 13% over the prior year on higher volume, however, operating results were unchanged. Net interest income for the current year included $0.6 million of interest income offset by $0.1 million of interest expense. Prior year's net interest expense included $1.8 million of interest expense offset by $0.5 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. Unallocated corporate expense declined from the prior year primarily due to lower professional service cost. 10 Capital Resources and Liquidity Net cash provided by continuing operations for the current year was down $5.9 million versus the prior year 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 includes $12.2 million for the purchase of 507,989 shares of ChemFirst common stock. At period end, $7.8 million of the $20.0 million repurchase authorization announced in January 1997 had not been spent. Proposed Sale of Melamine Chemicals, Inc. On October 9, 1997, Borden Chemical, Inc. announced plans to acquire Melamine Chemicals, Inc. for $20.50 per share in a cash tender offer. The company owns 1,275,000 Melamine shares and has agreed to support the acquisition. If completed, the sale would result in an after tax gain of approximately $8.9 million and net after tax proceeds of $16.8 million. 11 Part II. Other Information Item 2. Changes in Securities and Use of Proceeds (c) Sales of Unregistered Securities Pursuant to February 1997 Amendments to the Registrant's Benefits Restoration Plan (the "BRP"), Deferred Income Plan for Directors, Officers and Key Employees ("Plan A") and Deferred Compensation Plan for Outside Directors ("Plan B"), participants in each of these plans were given the opportunity to have any future amounts deferred under these plans, as well as any existing cash balances under these plans, invested in phantom share units ("Share Units"). Participants in the BRP and Plan B were entitled, effective July 1, 1997, to purchase Share Units at a price equal to 85% of the fair market value of a share of the Registrant's Common Stock on the date of purchase or conversion, as the case may be, provided, however, that initial conversions of existing cash balances into Share Units were priced at the fair market value of a share of the Registrant's Common Stock on July 1, 1997. Participants in Plan A were entitled to purchase Share Units at a price equal to the fair market value of a share of the Registrant's Common Stock on the date of purchase or conversion, as the case may be, provided, however, that initial conversions of existing cash balances into Share Units were priced at the fair market value of a share of the Registrant's Common Stock on September 15, 1997. Accordingly, during the three months ended September 30, 1997, participants in the above referenced plans acquired 193,437 Share Units for an aggregate purchase price of $4,651,143. The above referenced Share Units issued by the Registrant during the three months ending September 30, 1997 were not registered under the Securities Act of 1933 in reliance upon the registration exemption set forth in Regulation D under the Securities Act of 1933, which exemption was made available to the Registrant due to the limited number of participants in each of the above referenced plans and the Registrant's compliance with all other requirements of such exemption. 12 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 September 30, 1997. 13 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. November 11, 1997 /s/ J. Kelley Williams - -------------------------- --------------------------------------- Date J. Kelley Williams Chairman and Chief Executive Officer November 11, 1997 /s/ R. Michael Summerford - -------------------------- --------------------------------------- Date R. Michael Summerford Vice President & Chief Financial Officer 14 EXHIBIT INDEX EXHIBITS 27 - Financial Data Schedules EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 13,094 0 65,704 947 67,086 157,093 338,340 136,037 418,043 65,201 1,328 0 0 20,316 294,913 418,043 327,987 333,280 250,099 250,099 3,188 887 315 33,761 13,335 22,794 0 0 0 22,794 1.09 1.09
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