-----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, GXDqei811LO4Bv2qeDh8Zqya3i0gxyg+51qp3VWP9/vpC4iOQlim4OU7FiljMi2h V+sZp2tfQo7NC0RcvIBxBQ== 0000950134-98-008912.txt : 20020501 0000950134-98-008912.hdr.sgml : 20020501 ACCESSION NUMBER: 0000950134-98-008912 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 DATE AS OF CHANGE: 20020501 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: 98749256 BUSINESS ADDRESS: STREET 1: P O BOX 1249 CITY: JACKSON STATE: MS ZIP: 39202 BUSINESS PHONE: 6019487550 MAIL ADDRESS: STREET 1: P O BOX 1249 CITY: JACKSON STATE: MS ZIP: 39202 10-Q 1 FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 1998 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, 1998 ----------------------- 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, 1998 -------------------------- ------------------------------- Common Stock, $1 Par Value 18,804,302 2 Part I. Financial lnfo Item 1. Financial Statements ChemFirst Inc. Consolidated Balance Sheets (Unaudited) (In Thousands of Dollars)
September 30 December 31 1998 1997 ------------ ----------- Assets: Current assets Cash and cash equivalents $ 11,712 7,766 Accounts receivable 55,045 63,252 Inventories: Finished products 35,773 22,281 Work in process 19,970 15,760 Raw materials and supplies 11,201 11,481 ----------- ------- Total inventories 66,944 49,522 ----------- ------- Prepaid expenses and other current assets 11,534 11,188 Net current assets of discontinued operations 26,837 27,997 ----------- ------- Total current assets 172,072 159,725 ----------- ------- Investments and other assets 50,090 56,955 Property, plant and equipment 367,178 335,190 Less: accumulated depreciation and amortization 140,651 123,629 ----------- ------- Property, plant and equipment, net 226,527 211,561 Noncurrent assets of discontinued operations - 17,416 ----------- ------- $ 448,689 445,657 ----------- ------- Liabilities and Stockholders' Equity: Current liabilities Notes payable $ - 20,700 Current installments of long-term debt 250 277 Deferred revenue 3,080 2,964 Accounts payable 17,506 34,097 Accrued expenses and other current liabilities 24,234 23,629 ----------- ------- Total current liabilities 45,070 81,667 ----------- ------- Long-term debt 68,895 3,941 Deferred revenue and other liabilities 26,575 19,076 Deferred income taxes 17,019 18,352 Noncurrent liabilities of discontinued operations - 924 Minority interest 700 - Stockholders' equity: Common stock 18,813 20,031 Additional paid-in capital 21,852 18,869 Retained earnings 249,765 282,797 ----------- ------- Total stockholders' equity 290,430 321,697 ----------- ------- $ 448,689 445,657 =========== =======
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 September 30 September 30 ---------------------- --------------------- 1998 1997 1998 1997 -------- ------ ------- ------- Revenues: Sales $ 91,589 87,842 278,105 271,923 Interest and other income 3,096 1,573 13,756 5,278 -------- ------ ------- ------- 94,685 89,415 291,861 277,201 -------- ------ ------- ------- Costs and expenses: Cost of sales 66,485 61,235 204,226 195,558 General, selling and administrative expenses 14,507 15,165 45,306 42,350 Other operating expenses 3,923 1,420 9,847 4,463 Interest expense 800 63 1,271 223 -------- ------ ------- ------- 85,715 77,883 260,650 242,594 -------- ------ ------- ------- Earnings before income taxes 8,970 11,532 31,211 34,607 Income tax expense 3,495 4,556 12,170 13,669 Equity in net earnings of equity investees - 203 - 2,368 Earnings from continuing operations 5,475 7,179 19,041 23,306 Loss from discontinued operations, net of tax benefit (1,212) (382) (1,071) (512) Loss on disposal, net of tax benefit (11,950) - (11,950) - -------- ------ ------- ------- Net earnings (loss) $ (7,687) 6,797 6,020 22,794 -------- ------ ------- ------- Earnings (loss) per common share: Continuing operations 0.29 0.35 0.98 1.14 Discontinued operations (0.07) (0.02) (0.06) (0.03) Net loss on disposal of business (0.63) - (0.61) - -------- ------ ------- ------- Net earnings (loss) $ (0.41) 0.33 0.31 1.11 -------- ------ ------- ------- Average shares outstanding 18,926 20,354 19,435 20,459 Earnings (loss) per common share, assuming dilution: Continuing operations 0.29 0.35 0.97 1.11 Discontinued operations (0.06) (0.02) (0.05) (0.02) Net loss on disposal of business (0.63) - (0.61) - -------- ------ ------- ------- Net earnings (loss) $ (0.40) 0.33 0.31 1.09 ======== ====== ======= ======= Average shares outstanding 19,088 20,839 19,695 20,943 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)
September 30 ---------------------- 1998 1997 -------- ------- Cash flows from operations: Net earnings $ 6,020 22,794 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 18,708 13,711 Loss on disposal of subsidiary 11,950 - Gain on sale of equity investee (8,269) - Undistributed earnings of affiliates - (3,907) Deferred taxes and other items 2,969 1,907 Change in current assets and liabilities, net of effects of dispositions (18,394) (17,043) Net losses from discontinued operations 1,071 512 -------- ------- Net cash provided by continuing operations 14,055 17,974 Net cash provided by (used in) discontinued operations (1,094) 1,476 -------- ------- Net cash provided by operating activities 12,961 19,450 -------- ------- Cash flows from investing activities: Capital expenditures (32,421) (63,948) Proceeds from sale of equity investee 18,986 - Proceeds from sale of subsidiary - 2,100 Other investing activities 905 1,535 -------- ------- Net cash used in investing activities, continuing operations (12,530) (60,313) Net cash used in investing activities, discontinued operations (745) (1,840) -------- ------- Net cash used in investing activities (13,275) (62,153) -------- ------- Cash flows from financing activities: Net borrowings - notes payable to banks 45,000 5,000 Principal repayments of long-term debt (17) (16) Dividends (5,791) (6,132) Purchase of common stock (35,370) (12,179) Proceeds from issuance of common stock 1,579 1,342 Other financing activities (700) - -------- ------- Net cash provided by (used in) financing activities, continuing operations 4,701 (11,985) Net cash used in financing activities, discontinued operations (441) (603) -------- ------- Net cash provided by (used in) financing activities 4,260 (12,588) -------- ------- Net increase (decrease) in cash and cash equivalents 3,946 (55,291) Cash and cash equivalents at beginning of period 7,766 68,385 -------- ------- Cash and cash equivalents at end of period $ 11,712 13,094 -------- ------- Supplemental disclosures of cash flow information Cash paid during the period for: Interest, net of amounts capitalized $ 1,211 357 -------- ------- Income taxes, net $ 6,065 7,467 ======== =======
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 prior year amounts have been reclassified to conform to the 1998 presentation. 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 year ended December 31, 1997. Note 2 - Discontinued Operations The assets and liabilities of the discontinued steel operations have been segregated in the consolidated financial statements along with other (net current discontinued assets of $400 and $176 at September 30, 1998 and December 31, 1997, respectively) discontinued operations. Based on the steel disposal plan, the net assets of the steel business are classified as current at September 30, 1998. The following is the composition of those steel assets and liabilities at September 30, 1998 and December 31, 1997:
September 30 December 31 1998 1997 -------- -------- Receivables $ 10,607 14,274 Inventories 13,319 26,191 Prepaid expenses and other current assets 15,000 1,045 Current instalments of long-term debt (1,084) (601) Accounts payable (5,853) (12,132) Accrued expenses and other current liabilities (5,552) (956) -------- -------- Net current assets of discontinued operations $ 26,437 27,821 ======== ======== Noncurrent assets of discontinued operations $ 0 17,416 ======== ======== Long-term liabilities of discontinued operations $ 0 924 ======== ========
2 6 The statements of operations have been reclassified to separate discontinued and continuing operations. Operating losses from discontinued operations include interest expense allocations, based on the ratio of net assets of discontinued operations to consolidated net assets plus debt, of $59 and $10 for the three-month, and $127 and $36 for the nine-month periods ending September 30, 1998 and 1997, respectively (capitalized interest allocated was $25 and $87 for the three-month and nine-month periods ending September 30, 1998, with no capitalized interest allocated for 1997). Revenues and net losses of discontinued operations for the three and nine month periods ended September 30, 1998 and 1997 were as follows:
Three months Nine months September 30 September 30 1998 1997 1998 1997 -------- ------ ------ ------ Sales and revenues $ 13,790 18,252 54,620 56,079 ======== ====== ====== ====== Losses from operations before taxes $ (1,902) (631) (1,671) (846) Income tax benefit 690 249 600 334 -------- ------ ------ ------ Losses from discontinued operations, net $ (1,212) (382) (1,071) (512) ======== ====== ====== ======
Note 3 - Sale Of Equity Investment On January 22, 1998, the Company sold its fifty percent interest in Power Sources, Inc. generating pretax cash proceeds of approximately $19,000. An after tax gain of $5,000 was recognized during the first quarter and a potential after tax gain of approximately $2,000 was deferred, pending resolution of contingencies related to the contract. Note 4 - Effect Of Adopting Accounting Changes The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 130 - "Reporting Comprehensive Income", in June 1997, effective for fiscal years beginning after December 15, 1997. The statement requires reporting comprehensive income (components include net income plus all changes to equity except those resulting from investments and distributions) directly in the financial statements and deals only with reporting and display issues versus recognition and measurement issues. Accordingly, there is no effect on the results of operations. The Company has immaterial transactions that meet the definition of other comprehensive income and, as such, has elected to omit disclosure as allowed by the statement under these circumstances. 3 7 SFAS No. 131 - "Disclosures about Segments of an Enterprise and Related Information," was also issued in June 1997, effective for fiscal years beginning after December 15, 1997. The statement requires a "management approach," based on the way management organizes segments internally for making operating decisions and assessing performance, to provide selected reporting information. The Company has not yet completed its analysis of SFAS No. 131 and accordingly has not yet determined what effect, if any, it may have on future financial statement disclosure. In March 1998, the Accounting Standards Executive Committee ("AcSEC") released Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." The SOP identifies the characteristics of internal-use software and provides guidance for accounting treatment of costs for computer software developed or obtained for internal use as related to capitalization or expense decisions. The statement is effective for fiscal years beginning after December 15, 1998. In April 1998, AcSEC released SOP 98-5, "Reporting on the Costs of Start-Up Activities." The SOP broadly defines start-up activities and provides guidance on the financial reporting of start-up costs and organization costs. It requires costs of start-up activities and organization costs to be expensed as incurred. The statement is effective for fiscal years beginning after December 15, 1998. Adoption of these statements is not expected to have a material impact on the Company's financial statements. SFAS No. 133 - "Accounting for Derivative Instruments and Hedging Activities," was issued in June 1998, effective for fiscal years beginning after June 15, 1999. The statement establishes accounting and reporting standards for derivative instruments and for hedging activities. All derivatives are required to be recognized as either assets or liabilities in the statement of financial position and measured at fair value. Changes in fair value will be reported either in earnings or outside earnings depending on the intended use of the derivative and the resulting designation. Entities applying hedge accounting are required to establish at the inception of the hedge the method used to assess the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. The Company currently hedges certain foreign currency transactions by entering into forward exchange contracts. Gains and losses associated with currency rate changes on forward contracts hedging foreign currency transactions are recorded in income and generally offset the transaction losses or gains on the foreign currency cash flows that they are intended to hedge. The Company has not completed its analysis of SFAS No. 133 and accordingly has not determined what additional effect, if any, it may have on future operations and financial statement disclosure. 4 8 Note 5 - Earnings Per Share In February 1997, the Financial Accounting Standards Board issued SFAS No. 128 - "Earnings Per Share." The statement requires companies to adopt its provisions in financial statements issued for periods ending after December 15, 1997, and requires restatement of all prior earnings per share ("EPS") data presented. Basic EPS is based on the average number of common shares outstanding during each period. Diluted EPS includes the effect of outstanding common stock equivalents ("CSEs").
Three Months Ended September 30 1998 1997 -------------------- ------------------- Shares EPS Shares EPS ------ ------- ------ ------ (Millions, except per share amounts) Earnings per Common Share: Basic 18.93 $ (0.41) 20.35 $ 0.33 Dilutive effect of CSEs 0.16 0.01 0.49 - ----- ------- ----- ------ Diluted 19.09 $ (0.40) 20.84 $ 0.33 ===== ======= ===== ======
Three Months Ended September 30 1998 1997 -------------------- ------------------- Shares EPS Shares EPS ------ ------- ------ ------ (Millions, except per share amounts) Earnings per Common Share: Basic 19.44 $ 0.31 20.46 $ 1.11 Dilutive effect of CSEs 0.26 - 0.48 (0.02) ----- ------- ----- ------ Diluted 19.70 $ 0.31 20.94 $ 1.09 ===== ======= ===== ======
5 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - Nine months ended September 30, 1998 compared to the nine months ended September 30, 1997 Consolidated Results Earnings from continuing operations for the nine months ending September 30, 1998 were $19.0 million versus $23.3 million for the same period of the prior year. Current year earnings reflect a $5.0 million gain from the January 1998 sale of Power Sources, Inc. (PSI). With the PSI sale, and the Melamine Chemicals, Inc. sale in November 1997, the company has no current equity affiliate earnings. Excluding all income related to the operation and sale of equity affiliates, earnings from continuing operations for the current year were down 33%, primarily due to lower gross margins in chemicals operations, expenses for chemical mechanical planarization (CMP) product development and lower net interest income. Chemicals' gross margin percentage declined primarily due to lower aniline production and higher maintenance expenses at the Pascagoula, Mississippi plant and weaker custom manufacturing demand. Segment Operations Industry Segment Information (In Thousands of Dollars)
Nine Months Ended September 30 ------------------------ 1998 1997 --------- --------- Sales Chemicals $ 227,025 216,234 Engineered Products and Services 51,080 55,689 --------- --------- Total Sales $ 278,105 271,923 ========= ========= Operating profit: Chemicals $ 28,313 38,005 Engineered Products and Services 1,411 2,220 --------- --------- 29,724 40,225 Unallocated corporate expenses (7,059) (8,351) Interest income, net 381 2,437 Other income, net 8,165 296 --------- --------- $ 31,211 34,607 ========= =========
6 10 Chemicals pretax operating profits were down 26% from the prior year as lower results from Pascagoula aniline operations, adverse markets for some custom manufacturing customers and lower prices for nitrobenzene and some specialty chemicals more than offset earnings from the Company's Baytown, Texas aniline facility which started up in March 1998. Pascagoula operations were hurt by a decline in aniline production and increased expenses, primarily the result of plant maintenance during the first and second quarter and Hurricane Georges late in the third quarter. Also affecting current year chemicals operating profits were development expenses for chemical mechanical planarization (CMP) products. Sales for the current year were up 5% as the addition of acylation derivatives and Baytown aniline sales and higher revenue from electronic chemicals more than offset lower custom manufacturing revenue and Pascagoula aniline sales volume. Engineered Products and Services pretax operating profits for the current year were $1.4 million versus $2.2 million in the prior year. Results include a $1.1 million gain for the sale of a small product line. Excluding the gain, results were down from the prior year primarily due to lower sales and to losses in some international markets. Net interest income was down $2.1 million due to a lower net cash position and increased interest expense, while net other income increased on the $8.3 million pretax gain from the Power Sources sale. Unallocated corporate expenses were down $1.3 million due to a reduction in benefit plan accruals tied to the price of the Company's stock. Results of Operations - Three months ended September 30, 1998 compared to the three months ended September 30, 1997 Consolidated Results Earnings from continuing operations for the three months ended September 30, 1998, were $5.5 million versus $7.2 million for the same period of the prior year. As a result of the Power Sources sale in January 1998 and the Melamine Chemicals sale in November 1997, there is no equity affiliate income in the current year. Excluding from the same quarter of the prior year $0.2 million in income related to equity affiliates, earnings from continuing operations for the current quarter were down 22%, primarily due to a lower gross margins in chemicals operations, expenses for chemical mechanical planarization (CMP) product development and lower net interest income. The gross margin percentage declined primarily due to lost aniline production and expenses associated with Hurricane Georges at the Pascagoula, Mississippi plant and weaker custom manufacturing demand. 7 11 Results of Operations - Three months ended September 30, 1998 compared to the three months ended September 30, 1997 Segment Operations Industry Segment Information (In Thousands of Dollars)
Three Months Ended September 30 ---------------------- 1998 1997 -------- -------- Sales Chemicals $ 74,753 69,743 Engineered Products and Services 16,836 18,099 -------- -------- Total $ 91,589 87,842 ======== ======== Operating profit: Chemicals $ 10,437 12,908 Engineered Products and Services 793 919 -------- -------- 11,230 13,827 Unallocated corporate expenses (1,957) (3,080) Interest income (expense), net (271) 577 Other income (expense), net (32) 208 -------- -------- $ 8,970 11,532 ======== ========
Chemicals pretax operating profits were down 19% from the prior year as lower results from Pascagoula aniline operations, lower earnings from custom manufacturing and lower prices for nitrobenzene and some specialty chemicals more than offset the addition of earnings from the Company's new Baytown, Texas aniline facility. In addition, Pascagoula operations were hurt by Hurricane Georges, which hit on September 28, 1998. The hurricane losses are covered by insurance subject to a $1.0 million deductible, which was recorded in the third quarter. Also affecting current year chemicals operating profits were development expenses for chemical mechanical planarization (CMP) products. Sales for the current quarter were up 7%, primarily due to the addition of Baytown aniline production. Engineered Products and Services pretax operating profits for the quarter were $0.8 million, down from $0.9 million in the prior year. Results include a $1.1 million gain for the sale of a small product line. Excluding the gain, results were down from the prior year primarily due to lower sales and to losses in some international markets. 8 12 Net interest income was down $0.8 million due to a lower net cash position and increased interest expense. Unallocated corporate expenses were down $1.1 million due to a reduction in compensation plan accruals tied to the price of the Company's stock. Capital Resources and Liquidity Cash flow provided by continuing operations activities for the first nine months of the current year was $14.1 million, down from $18.0 million for the same period in the prior year, primarily due to lower operating earnings. Net cash provided by investing activities in 1998 includes $19.0 million in pretax proceeds from the Company's sale of its interest in Power Sources, Inc. Cash flow used in financing activities includes $35.4 million for the purchase of 1,458,900 shares of ChemFirst common stock. In 1997, $12.2 million was used in the purchase of 508,000 shares. Discontinued Operations During the year, the U. S. steel industry has been hurt by imports from Japan, Korea and other countries with weak currencies and little domestic market for their products. This has led to a sharp decline in steel orders and margins for the Company. Steel's pretax operating loss of $1.9 million ($1.2 million after tax) for the third quarter of 1998 came on a 32% reduction in volume and a 22% decline in unit contribution versus the same period of the prior year. During the third quarter of the current year, the Company finalized plans to dispose of its steel operations by the end of 1999 and reclassified this business as discontinued. In October 1998, the Company announced it had reached an understanding of principal terms for the sale of the steel business to a strategic buyer. Since that time, negotiations with this potential buyer have ceased. The Company is continuing, however, with its plan to dispose of its steel operations by the end of 1999. An anticipated loss on disposal of $12.0 million, net of applicable income taxes of $6.0 million, was recorded at September 30, 1998 and was primarily related to the write down of assets to their estimated fair market value. Proceeds from the disposition are currently estimated at $32 million. Year 2000 The advent of the Year 2000 poses significant risks to many companies because of calculation limitations imposed by some equipment and systems limited to storing a year as a two-digit field (e.g. 1998 as "98"), which may lead to computational errors when the years 2000 or later are used in calculations. In 1996, the Company began a study which led to the purchase in 1997 of a company-wide Enterprise Resource Planning ("ERP") system to integrate the 9 13 Company's information systems, replacing small, stand-alone purchased systems which are fully depreciated. The ERP system will be Year 2000 compliant, with the material portion of the system planned for completion by the middle of 1999. Installation is being completed in stages, with the first sites scheduled for conversion by the end of this year. In 1997, the Company expended $3.0 million, and is projecting to spend approximately $6.0 million in 1998 and $3.0 million in 1999 on this project. If difficulties are encountered which delay the ERP system implementation, contingency plans provide for the purchase of select, Year 2000 compliant personal computer software products, the cost of which should not be material. A corporate wide survey of other information technology ("IT") and non-IT equipment and systems utilizing date or time functions has been undertaken. An initial assessment, which is subject to further review, indicates a cost to remediate of less than $600,000, most of which will be incurred in 1999. Final assessment should be completed by the end of 1998. Remediation, including verification testing, of most non-compliant systems, equipment and software is targeted for completion by April 30, 1999, however, some remediations at the Pascagoula facility will occur in the fourth quarter of 1999 to coincide with the next scheduled plant maintenance turnaround. Contingency plans are currently being developed in the event the remediations do not occur or are delayed. Severe delay or widespread failure affecting both the remediation effort and the contingency plans, although not expected, could have a material effect on the Company's financial condition and results of operations. Key customers, as well as service and raw material suppliers, are being surveyed about their Year 2000 readiness. Depending on their responses, contingency plans will be developed as appropriate. It is anticipated that this process will be completed no later than September 30, 1999. Although the Company cannot quantify the precise effect, significant or prolonged disruptions of key customers or suppliers could have a material effect on the Company's financial condition and results of operations. For example, the majority of aniline produced by the Company is sold through long-term contracts to a few customers. Their inability to utilize the Company's aniline could have a material adverse effect. Forward-Looking Statements Certain statements included in this Form 10-Q which relate to the Year 2000, the discontinuance of steel operations, possible additional gains from the sale of Power Sources, Inc. and insurance recoveries related to recent hurricane damage, as well as other statements in this Form 10-Q that are not historical in nature, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, as well as other forward-looking statements made from time to time by the Company, or in the Company's press releases and filings with the U.S. Securities and Exchange Commission, are based on certain underlying assumptions and expectations of management. These forward-looking statements are subject to risks and uncertainties which could cause actual 10 14 results to differ materially from those expressed in such forward-looking statements. Such risks and uncertainties include, but are not limited to, general economic conditions, availability and pricing of raw materials, supply/demand balance for key products, new product development, manufacturing efficiencies, conditions of and product demand by key customers, the timely completion and start up of construction projects, pricing pressure as a result of the downturn in Asian or other foreign markets, successful installation of the Company's new ERP system, the inability of the Company to either resolve the Company's Year 2000 issues or to accurately estimate the costs associated with Year 2000 compliance, the resolution of contingencies related to the sale of Power Sources, Inc., insurance coverage related to hurricane damage to the Company's Pascagoula facility and other factors as may be discussed in the company's Form 10-K for the fiscal year ended December 31, 1997. 11 15 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27.1 - Financial Data Schedule Exhibit 27.2 - Financial Data Schedule (b) Reports on Form 8-K No report on Form 8-K was filed by the Registrant during the three months ended September 30, 1998. 12 16 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, 1998 /s/ J. Kelley Williams - ----------------------------------- ------------------------------------ Date J. Kelley Williams Chairman and Chief Executive Officer November 11, 1998 /s/ Troy B. Browning - ----------------------------------- ------------------------------------ Date Troy B. Browning Controller (Principal Accounting Officer) 13 17 EXHIBIT INDEX EXHIBITS 27.1 - Financial Data Schedules 27.2 - Financial Data Schedules EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 11,712 0 55,628 583 66,944 172,072 367,178 140,651 448,689 45,070 68,895 0 0 18,813 271,617 448,689 278,105 291,861 204,226 204,226 9,874 73 1,271 31,211 12,170 19,041 (13,021) 0 0 6,020 0.31 0.31
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 13,094 0 51,854 666 42,578 145,418 307,101 121,868 406,368 53,526 254 0 0 20,316 294,913 406,368 271,923 277,201 195,558 195,558 4,463 760 223 34,607 13,669 23,306 (512) 0 0 22,794 1.11 1.09
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