-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Um/Supl5X2HAV73/RUOKnu7JLHawWbQwF3SY8iZZBO0BDsgufHh4PuKTdf9wCYYO VAvC8i6587phTObIH2tlfQ== 0000950134-94-001142.txt : 19940930 0000950134-94-001142.hdr.sgml : 19940930 ACCESSION NUMBER: 0000950134-94-001142 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940928 SROS: MSE SROS: NYSE SROS: PHLX SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST MISSISSIPPI CORP CENTRAL INDEX KEY: 0000036537 STANDARD INDUSTRIAL CLASSIFICATION: 2860 IRS NUMBER: 640354930 STATE OF INCORPORATION: MS FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07488 FILM NUMBER: 94550520 BUSINESS ADDRESS: STREET 1: 700 NORTH ST/PO BOX 1249 CITY: JACKSON STATE: MS ZIP: 39215 BUSINESS PHONE: 6019487550 MAIL ADDRESS: STREET 2: 700 NORTH ST PO BOX 1249 CITY: JACKSON STATE: MS ZIP: 39202 10-K 1 FORM 10-K 1 - - - -------------------------------------------------------------------------------- - - - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1994 COMMISSION FILE NUMBER 1-7488 FIRST MISSISSIPPI CORPORATION (Exact name of Registrant as specified in its charter) MISSISSIPPI 64-0354930 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 700 NORTH STREET, P. O. BOX 1249 39215-1249 JACKSON, MISSISSIPPI (Zip Code) (Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (601) 948-7550 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED --------------------------- ----------------------------------------- COMMON STOCK, PAR VALUE $1 NEW YORK STOCK EXCHANGE PHILADELPHIA STOCK EXCHANGE COMMON STOCK PURCHASE RIGHTS MIDWEST STOCK EXCHANGE PACIFIC STOCK EXCHANGE
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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Aggregate market value of the voting stock held by non-affiliates of the Registrant, September 1, 1994. $312,817,585 Common stock outstanding September 1, 1994. 20,153,990 --------------------- DOCUMENTS INCORPORATED BY REFERENCE 1. Portions of the Annual Report to Stockholders for fiscal year ended June 30, 1994, are incorporated by reference into Part I and Part II of Form 10-K. 2. Portions of the Proxy Statement, which will be mailed to the SEC by October 3, 1994, are incorporated by reference into Part III of Form 10-K. - - - -------------------------------------------------------------------------------- - - - -------------------------------------------------------------------------------- 2 FIRST MISSISSIPPI CORPORATION SECURITIES AND EXCHANGE COMMISSION FORM 10-K CROSS REFERENCE SHEET LOCATION IN ANNUAL REPORT TO STOCKHOLDERS AND DEFINITIVE PROXY STATEMENT OF ITEMS OF FORM 10-K
ANNUAL REPORT DEFINITIVE ITEM FORM 10-K TO STOCKHOLDERS PROXY STATEMENT - - - ---- --------------------------------------------------- --------------------- --------------------- PART I. 1. Businesses......................................... pp. 23-24; 31-33 PART II. 5. Market for Registrant's Common Equity and Related Stockholder Matters.............................. p. 36 6. Selected Financial Data............................ p. 14 7. Management's Discussion and Analysis of Financial Condition and Results of Operation............... pp. 15-17 8. Financial Statements and Supplementary Data........ pp. 18-34 PART III. 10. Directors and Executive Officers of the Registrant....................................... pp. 3-6; 14 11. Executive Compensation............................. pp. 15-18 12. Security Ownership of Certain Beneficial Owners and Management....................................... pp. 1; 6-12 13. Certain Relationships and Related Transactions..... pp.3-6; 11-12
2 3 PART I ITEM 1. BUSINESSES First Mississippi Corporation (the "Company") was incorporated in Mississippi in 1957. Principal activities as of June 30, 1994, are in the following industry segments: Chemicals, Fertilizer, Gold, and Combustion, Thermal Plasma and Other. In December 1992, the Company adopted plans for discontinuing its coal operations which were conducted through Pyramid Mining, Inc. ("PMI") based in Owensboro, Kentucky. The disposition of PMI was completed in October 1993. On June 29, 1993, the Company sold its oil and gas operations, which were begun in the mid-1970's. These operations were conducted primarily through First Energy Corporation of Houston, Texas. At year-end 1994, the Company had 1,215 employees, which includes employees of the parent company, all wholly owned subsidiaries and proportionate shares of all employees at other subsidiaries and joint ventures, depending on ownership interest. In February 1990, the Company, which holds approximately 81% of the stock of FirstMiss Gold Inc. ("FirstMiss Gold"), announced plans to distribute this stock to its shareholders. The spin-off was subject to a favorable tax ruling from the Internal Revenue Service and a favorable operating and financial outlook. The required ruling was received in December 1990. However, in the interim, gold prices had fallen and the spin-off was put on hold. In July 1994, a new ruling was requested to permit a tax-free spin-off. Upon receipt of a favorable ruling, the spin-off will be contingent on FirstMiss Gold's ability to succeed as a viable, stand-alone company. CHEMICALS Production Facilities and Businesses Production facilities are located in Pascagoula, Mississippi; Tyrone, Pennsylvania; Dayton, Ohio; Hayward, California; and East Kilbride, Scotland, U.K. First Chemical Corporation ("FCC"), located in Pascagoula, Mississippi, operates facilities for the continuous production of aniline, nitrobenzene, nitrotoluenes, toluidine and other nitrated and aromatic chemicals, plus related storage, rail and barge distribution facilities and quality control laboratories. The plant also includes a research laboratory, a pilot plant, semi-works equipment and batch facilities for the production of specialty chemicals. The Pascagoula facilities' total nitrated aromatic production capacity is approximately 450 million pounds per year. Actual fiscal 1994 production was 369 million pounds, approximately 82% of average annual capacity. The Pascagoula complex is one of the largest aniline production facilities in the United States. FCC is among the largest merchant marketers of aniline in the United States. The Company conducts research and development to improve existing products and to produce new specialty chemicals. Approximately $4.3 million, $3.7 million and $3.4 million was spent on research and development in fiscal 1994, 1993 and 1992, respectively. Research facilities include laboratories, pilot plant and semi-works for process research and development with gram to multi-pound sample production capabilities. The Company's first specialty chemical was produced in June 1982 at the Pascagoula plant. Since then, 27 new products have been introduced at FCC and 16 at Quality Chemicals, Inc. ("QCI"), a subsidiary. In addition, research and development efforts during fiscal 1994 resulted in custom manufacturing agreements with several new customers. The Company also sponsors applied research at several leading universities in the United States and Europe. These closely directed programs have led to the development and introduction of patented technology in EKC Technology, Inc.'s ("EKC") line of performance chemicals and in the FIRSTCURE(TM) line of performance polymer products. The Company plans to spend approximately $12.0 million during fiscal 1995 to add facilities for the production of new specialty chemicals. 3 4 The Company acquired QCI, located in Tyrone, Pennsylvania, in July 1986. Facilities include multi-step batch processing to custom produce complex fine chemicals used by chemical and pharmaceutical companies. Following capacity additions and plant modifications in fiscal 1993, annual production capacity is now between 2.5 million and 3.5 million pounds depending on the products being produced and the type of custom processing required. Fiscal 1994 production was approximately 2.1 million pounds. In August 1992, FCC acquired a production facility in Dayton, Ohio, from Monsanto Company. The facility is being operated by QCI and includes equipment for multi-step batch processing to custom produce complex fine chemicals used by chemical and pharmaceutical companies. Annual production capacity is between approximately 1.5 million and 2.0 million pounds, depending on the products being produced and the type of custom processing required. Fiscal 1994 production was approximately 0.4 million pounds. FCC acquired EKC, located in Hayward, California, in September 1989. EKC is a manufacturer of performance chemicals for the semiconductor industry and has facilities in California and Scotland. EKC's California operations include bulk storage and mixing vessels and an advanced quality control analytical lab. The California facility is currently utilizing 95% of production capability on a single shift basis. Raw Materials Primary raw materials for chemical production are benzene, toluene, natural gas, ethanol and ammonia. The Company uses natural gas and ammonia, respectively, to produce on site 98% of the hydrogen and 90% of the nitric acid used in its chemical production. All raw materials are generally available in adequate quantities from several suppliers, subject to market variation in supply and price. Marketing and Sales Chemicals are marketed domestically and internationally. Approximately 15% of FCC's sales are exports. Products are sold in drums and in bulk as intermediates into the construction, transportation, agricultural chemical, dye, photographic, specialty polymer and human health care markets. Most exported product is shipped in ocean-going tankers. Domestic shipments are by barge, rail or tank trucks. QCI's specialty chemical products are sold in drums into pharmaceutical, electronic chemical, agricultural chemical and specialty polymer markets. EKC's products are sold to the semiconductor industry with approximately 39% representing exports. Performance chemicals are sold in gallon and drum containers. Competitive Conditions FCC is one of five major United States producers of aniline with approximately 17% of domestic capacity and an estimated 6% of world capacity. FCC is the only United States producer of nitrotoluenes with an estimated 15% of world capacity. Major competitors are large chemical companies. Competition is based on price, service, quality, marketing and research and development support capabilities. Based on market share, QCI is among the top 10 custom chemical manufacturing companies in the United States. Major competitors are both smaller and larger companies. Competition is based on service, quality, manufacturing expertise in chemistries and processes, and research and development capabilities. EKC is one of the largest producers of organic photoresist strippers. Although there are approximately 15 companies participating in this market worldwide, only EKC and three others specialize in organic stripping solutions. Competition is based on service, quality and product development capabilities. Performance chemicals are sold on function rather than chemical specifications. Seasonality of Business Generally, chemical sales are not seasonal and working capital requirements do not vary significantly from period to period. 4 5 FERTILIZER Production Facilities The Company produces and sells anhydrous ammonia ("ammonia") and urea. Two production facilities are located in Donaldsonville, Louisiana, and are owned by Triad Chemical ("Triad"), an unincorporated 50% joint venture, and by AMPRO Fertilizer, Inc. ("AMPRO"), a wholly owned subsidiary. The 50/50 joint venturers of Triad participate equally in management and each markets one-half of production. Each joint venturer shares equal responsibility for all obligations of Triad. The AMPRO facility was formerly owned by a partnership, which was 50% owned by the Company. In February 1989, the Company completed purchase of the remaining 50% interest. Marketing and administration are conducted by FirstMiss Fertilizer, Inc., in Jackson, Mississippi. Triad facilities include a Kellogg process ammonia plant with annual production design capacity of 420,000 tons and a urea plant with annual production design capacity of 520,000 tons. Actual fiscal 1994 production was approximately 478,000 tons of ammonia and approximately 510,000 tons of urea, compared to 429,000 tons of ammonia and 541,000 tons of urea in fiscal 1993. Ammonia production was up in fiscal 1994, primarily due to prior year outages caused by Hurricane Andrew. Urea production was down in fiscal 1994, primarily because of a maintenance turnaround. Ammonia production exceeded production design capacity due to above average on-stream operating rate. Triad's facilities include storage for 30,000 tons of ammonia and 40,000 tons of urea. The Donaldsonville production complex, in which both Triad and AMPRO are located, includes facilities for rail shipments, transmission via pipeline, bulk and tank truck loading and direct loading of barges and ocean-going vessels on the Mississippi River for transportation to domestic and export markets. AMPRO facilities include a Kellogg process ammonia plant with annual production design capacity of 446,000 tons and storage for 30,000 tons. Actual fiscal 1994 production was approximately 500,000 tons, 33,000 tons more than fiscal 1993. Fiscal 1994 production was up due to downtime in fiscal 1993 caused by high natural gas prices and Hurricane Andrew. Fiscal 1994 production exceeded design capacity primarily due to above average on-stream operating rate. Raw Materials Natural gas is the raw material in ammonia production. Ammonia and carbon dioxide are the raw materials in urea production. A reliable supply of natural gas at competitive prices and in sufficient quantities is currently available to the Company. Both Triad and AMPRO purchase natural gas from several pipelines at market price on short-term contracts. Additionally, the Company periodically hedges anticipated purchases of natural gas. Sixty-one percent of the ammonia produced by Triad in fiscal 1994 was used as a raw material in the production of urea. Carbon dioxide needed for Triad's urea plant production is supplied by Triad's ammonia plant, with a back-up supply available from AMPRO's ammonia plant. Marketing The Company sells ammonia and urea for agricultural and industrial uses in domestic and international markets. Domestic agricultural customers are primarily large national accounts with extensive dealer and retail distribution operations, cooperatives and other fertilizer producers, who operate as wholesalers. The Company's domestic industrial customers use ammonia and urea as raw materials in their production operations, including adhesives, pharmaceuticals, fibers, resins, plastics and explosives. Approximately 10% of sales volume was attributed to international markets, unchanged from last year. Captive production accounted for 64% of sales, up from 62% last year. The balance of sales was brokerage transactions that involved the purchase and resale of products produced by others. Competitive Conditions Competitive factors include distribution, price, availability, service and quality. Ammonia and urea are essentially undifferentiated commodities, both physically and chemically. The Company believes it is among 5 6 the most efficient U.S. producers with ideal geographic location for competitively priced feedstock and distribution. Competitors include many large domestic and foreign producers. No material part of the Company's business is dependent on government contracts, a single customer or a few customers. Ammonia and urea are commodities subject to wide fluctuations in price. In early 1994, intermittent shortages of ammonia developed, resulting in a sharp increase in domestic prices. Factors contributing to this shortage were increased corn acreage due to prior year flooding in the midwest, excellent early planting weather, strong industrial demand, several unplanned short-term plant outages, and less merchant ammonia due to plant upgrades. International supplies were also a factor due to continued disruptions of production and shipments out of Russia and Ukraine, including an accident in the Bosphorous Straits that temporarily blocked passage of ammonia vessels leaving the Black Sea. Because prices are subject to a variety of factors beyond the Company's control, there can be no assurance that prices experienced in fiscal 1994 will continue. Total U.S. ammonia imports increased 15% during fiscal 1994 due to increased U.S. demand as noted above. Total U.S. ammonia exports increased 13% primarily due to supply shortages in the world market in early fiscal 1994. Total U.S. urea imports were up 32% due to a weak world market. Total U.S. urea exports increased 21% due primarily to a weakening of the U.S. market late in fiscal 1994, caused, in part, by excessive imports during the first half of the fiscal year. Seasonality and Cyclicality of Business Fertilizer sales vary seasonally with geographic location, agronomic considerations and weather. Domestic demand typically peaks in the spring, drops off in the summer, increases in the fall and drops again in the winter. Prices fluctuate with seasonal and longer cyclical variations due to industry supply and demand balances. Cash and working capital requirements generally correlate with the seasonality of the business. GOLD Properties and Production The Company began a minerals exploration program in 1980 and acquired the Getchell gold property (the "Getchell Property") in July 1983. In 1987, the Getchell Property and other mineral related assets were assigned to a wholly owned subsidiary, FirstMiss Gold Inc. FirstMiss Gold was incorporated for the principal purpose of financing, developing and operating a gold mining project and conducting mineral exploration. Subsequently, a public offering of 3,250,000 shares of FirstMiss Gold stock was completed in May 1988. The Company currently owns approximately 81% of the outstanding stock of FirstMiss Gold. The Getchell Property is located in the Potosi Mining District on the eastern side of the Osgood Mountain Range, 35 miles northeast of the town of Winnemucca, Nevada. (See map on page 13.) The Getchell Property consists of approximately 18,900 acres of unpatented lode and mill site mining claims and 14,100 acres of fee land owned by the Company. Exploration activities on the Getchell Property include drilling, geological mapping, geophysical and geochemical surveys, aerial photo interpretation and soil and rock testing programs. The Getchell mill and ancillary facilities consist of an ore processing plant using a pressure oxidation system (autoclaves), ancillary facilities for milling refractory sulfide ores and open pit mining located on the Getchell Property. The Getchell gold mill was designed to process an average daily nominal throughput of 3,000 tons at an average recovery rate of 89%. Since September 1991, liquid oxygen has been purchased to supplement oxygen produced by an on-site plant. This additional oxygen has helped to increase average daily throughput above nominal capacity. In fiscal 1994, the average daily mill throughput was 3,268 tons. Gold recovery was 89%. Production from approximately 65% of the Getchell Property (all of the current production and proven and probable reserves) is subject to a 2% net smelter royalty owned by a third party. The Getchell mill and ancillary facilities were financed by proceeds from a gold loan and the sale of FirstMiss Gold stock. FirstMiss Gold and FMG Inc. ("FMG"), a wholly owned subsidiary, entered into a limited recourse loan facility, as well as a gold production purchase agreement, to provide a major portion of the necessary financing and initial working capital requirements. The gold loan and production purchase agreement expired on June 30, 1994. 6 7 There are currently three open pit mines in operation on the Getchell Property: the Main Pit, which produces sulfide mill feed, the Turquoise Ridge Pit, which produces oxide ore for the heap leach operation and the recently reactivated Hansen Creek Pit, which will also produce oxide ore for heap leaching. Mining of the North Pit sulfide ore body was completed during the year. FirstMiss Gold heap leach operations consist of three active pads, five ponds and a processing plant. A new leach pad is currently under construction. In fiscal 1994, oxide ore for heap leaching was mined from the Turquoise Ridge Pit, North Pit and Main Pit and old dumps and stockpiles. Heap leach recovery has averaged 75% of the cyanide soluble gold for the last three years. An underground sulfide operation is now nearing its operational phase. This is FirstMiss Gold's first underground mine. Access to the underground workings is via a 950 foot decline. Underground stope testing has begun and small tonnages of development ore have been mined and milled. The mineralogy of the underground ore is similar to that previously mined in the Main Pit, but carries a higher gold grade averaging in excess of 0.300 ounces per ton. The underground reserves are located immediately west and below the main pit, in tabular zones sub-parallel to the Getchell Fault. The underground operation will initially utilize a conventional drift-and-fill method but will switch to open stoping when ground conditions permit. Both methods are widely used for the mining of gold and other minerals. Underground mining is inherently more difficult, more costly and more hazardous than surface mining. Mining costs are higher than those of a surface pit operation because smaller, less efficient mobile equipment is required by the limited size of underground openings. Unanticipated changes in ore thickness, orientation and stability can also add difficulty, affect production rates and contribute to higher costs. Mining in the Main Pit will be complete by mid-fiscal 1995 as underground production commences. Portions of the remaining Main Pit ore will be stockpiled and subsequently used, along with lower grade stockpiles, to supplement higher grade underground ore for mill feedstock. All mining is performed by independent contractors who also provide and maintain substantially all of the mining equipment. Both open pit and underground mining operations are performed under the direction of FirstMiss Gold employees, who are responsible for mine design, planning, scheduling, surveying, sampling and ore control. Fiscal 1994 production was as follows:
SULFIDE ORE ---------------------------------------------- TOTAL TOTAL NORTH PIT MAIN PIT UNDERGROUND SULFIDE OXIDE ORE --------- -------- ----------- --------- --------- Tons Processed............................. 283,946 896,368 12,553 1,192,867 1,285,614 Grade...................................... 0.321 0.164 0.319 0.203 0.030 Recovery................................... 89.1% 88.9% 88.9% 88.9% 74% Ounces produced............................ 81,212 130,591 3,560 215,363 28,463 Strip Ratio 1994........................... 12.3:1 17.3:1 N/A N/A 4.5:1*
- - - --------------- * Turquoise Ridge Pit Ancillary Facilities and Raw Materials Oxygen for the mill is produced by an on-site plant owned and operated by an independent contractor who also provides supplemental liquid oxygen. Electricity is provided by an independent utility company under an electric services agreement. The mill uses reclaimed water pumped from the tailings pond and from the dewatering of the pits and is supplemented by two existing wells on the Getchell Property. Other materials necessary in the milling process are available for purchase from more than one supplier and are hauled by truck to the Getchell Property. These materials may be subject to shortages from time to time resulting in higher costs. 7 8 Sales and Marketing Gold is traded on numerous commodity exchanges around the world with daily adjustments to a market clearing price. Prices typically fluctuate over a wide range in response to numerous factors, all of which are beyond FirstMiss Gold's control, including expectations of inflation, interest rates, political and monetary policies of various national governments, the needs of industrial and jewelry manufacturers, trends in worldwide mine output and currency exchange rates. The aggregate effect of the above factors on gold prices is impossible to predict. FirstMiss Gold's revenues, cash flow and operating results are all materially impacted by gold prices. A prolonged downturn in gold prices could also adversely affect the carrying value of various assets and FirstMiss Gold's reserve position. FirstMiss Gold has arrangements with two refineries for refining its dore. FirstMiss Gold's dore can be sold to a large number of refiners or trading companies throughout the world on a competitive basis. Gold is normally sold to the refineries on the spot market. FirstMiss Gold periodically employs hedging techniques to reduce the impact of gold price fluctuations on earnings and cash flow. In August 1993, the Company began selling gold using spot deferred forward contracts which allows FirstMiss Gold to establish a forward price and delivery date, but also roll any contracted delivery ahead to a new date and higher price while selling at the spot price if the spot price is higher than the contract price on the scheduled date of delivery. The new forward price equals the original contract price plus the "contango," which is the difference between market interest rates and gold loan borrowing rates. The contango compounds each time a contract is rolled forward. The current hedging program is designed to cover 60% to 70% of the ensuing 18 months' scheduled gold production. At June 30, 1994, 225,000 ounces were hedged for fiscal 1995 delivery at an average price of $391 per ounce, and 92,000 ounces were hedged for fiscal 1996 delivery at an average price of $392 per ounce. See Note 11 to the Consolidated Financial Statements. Working Capital Requirements and Seasonality of Business Changes in ore inventory will typically have the most effect on working capital requirements. Ore inventory tonnages fluctuate in response to various factors including milling rates, ore availability, weather conditions and mining rates. Winter weather extremes may affect gold production, particularly heap leach operations. COMBUSTION, THERMAL PLASMA AND OTHER Combustion, Thermal Plasma and Other, identified in prior years as Other -- Technology, principally includes the development and marketing of proprietary equipment and systems for environmental applications and manufacturing processes. These include design and manufacture of burner, flare and incinerator equipment and technology to reduce industrial emissions; thermal plasma equipment and processes; aluminum recovery systems; and production of steel ingots and billets. Raw materials and components for these operations are available from numerous vendors. The businesses are not considered materially seasonal, with working capital requirements remaining generally level throughout the year. BURNER, FLARE AND INCINERATOR EQUIPMENT AND TECHNOLOGY Business, Properties and Products. Callidus Technologies Inc. ("CTI"), a wholly owned subsidiary headquartered in Tulsa, Oklahoma, was organized in fiscal 1990. CTI's principal products and services are custom designed and fabricated gas/liquid incinerators, flares, solid waste systems, vapor recovery units, burners and predictive emissions monitoring and process optimization software. CTI also provides engineering and consulting services for environmental and combustion applications. CTI leases office space in Tulsa and owns a manufacturing and test facility in Beggs, Oklahoma, and has offices in Belgium, England, Italy and France. 8 9 Marketing. CTI markets worldwide to refining, petrochemical and other industries requiring disposal of gas, liquid and solid wastes. Marketing is primarily through a combination of manufacturers' representatives and company personnel. The market is well established but growing through advancements of existing technology, driven primarily by increasingly strict environmental regulations both in the United States and abroad. Competition is based on a wide variety of factors, with the most prominent being technological innovation, price and delivery schedule. CTI competes with the John Zink Company, which has a significant market share of the burner, flare and vapor recovery markets. Numerous competitors exist in the solid waste systems market. CTI offers predictive emissions monitoring and processing optimization software and has an exclusive licensing agreement to market this software for applications to furnaces in the refining and petrochemical industries. CTI is affected by a variety of factors beyond its control, including governmental control of environmental standards and compliance deadlines, competitor pricing strategies and changing technology, any of which could impact CTI's operating results. THERMAL PLASMA Business and Properties. Plasma Energy Corporation ("PEC"), a wholly owned subsidiary formed in January 1983, develops, manufactures, sells and services thermal plasma heating systems and processes for use in steel manufacturing, aluminum recovery, vacuum melting of titanium and various environmental uses, including ash treatment and minimization. PEC owns an assembly and testing facility and leases a separate administrative office, both located in Raleigh, North Carolina. Technology and Products. Thermal plasma heating systems convert electrical energy into high temperature thermal energy using an ionized gas or "plasma." These high temperatures are produced instantly with no combustion or combustion by-products. A thermal plasma heating system typically consists of a torch, power supply, cooling system and control panel. The torch usually operates within a furnace or heating vessel, in which it can be inserted or retracted according to operational requirements. PEC holds more than 20 patents in 10 countries, including several in steel, vacuum melting and waste applications. Sales and Marketing. PEC has sold large-scale systems for tundish heating in steel making, recovery of aluminum from dross, vacuum melting of titanium and treatment of ash from incinerators. Marketing is principally performed directly by PEC or through representatives overseas. Plasma heating systems have been sold in both the domestic and international markets. PEC has two principal domestic competitors and four foreign competitors involved in various applications of thermal plasma heating systems. Price competition is intense and competitors' pricing strategies may impact PEC's operating results. ALUMINUM RECOVERY Business and Properties. Plasma Processing Corporation ("PPC"), with its principal offices near Nashville, Tennessee, was formed during fiscal 1990 to commercialize patented technology developed by PEC and Alcan International Limited ("Alcan") of Canada. PPC and Alcan entered into a cross license agreement for recovery of aluminum from dross using thermal plasma energy. The most recently issued applicable patents expire in 2007. PPC uses the technology to recover aluminum from dross, a by-product of aluminum processing and recycling. The conventional salt-flux process uses salt additives for recovering aluminum from dross, creating a saltcake by-product which requires disposal in landfills. PPC's aluminum dross recovery process does not use salt additives and creates no known hazardous by-products, a major advantage over existing processes. Recovered aluminum is returned to the customer. The process also produces a co-product that potentially can be utilized in the metallurgical, refractory, abrasives and ceramics industries. Markets for the co-product are in the early stages of development. Annual North American production of aluminum dross is estimated at approximately one million tons. Dross typically contains 30% to 80% aluminum by weight. In June 1991, PPC completed construction of its dross processing plant located in Millwood, West Virginia. The plant is designed to process 73 million pounds of aluminum dross per year. Fiscal 1994 throughput was 54 million pounds. Production was limited primarily due to depressed aluminum industry conditions. 9 10 Marketing. It is anticipated that the current baseload contract will utilize 30% of the Millwood plant's processing capacity. Although PPC will compete against numerous other dross processors in the United States, none of these competitors currently use plasma technology. Markets are very fragmented and freight-sensitive. Except in aluminum plants in which Alcan has an equity interest, PPC has the exclusive right to use the patented technology in the United States and Canada. Alcan has the exclusive right to use the same technology in Europe. Until mid-year 2000, PPC has the exclusive right to license the patented technology to third parties worldwide, except in Europe. Beginning in mid-year 2000, both parties have the right to license the technology anywhere in the world. Pursuant to the arrangement with Alcan, revenues from licensing or sublicensing to third parties will be shared. STEEL The Company also operates a steel melting and production facility through its wholly owned subsidiary FirstMiss Steel, Inc. ("FMS") in Hollsopple, Pennsylvania. The approximately 400,000 square foot facility is located about 100 miles east of Pittsburgh. In late fiscal 1990, a horizontal billet caster and a thermal plasma heating system were installed. Start-up of the caster occurred during fiscal 1991. Annual capacity of the operation includes 125,000 tons of carbon, alloy and specialty grade bottom-poured ingots and 50,000 tons of high-grade steel billets through the caster. Horizontally cast billets are produced for sale to the specialty remelt and reroll markets. Production during fiscal 1994 totaled 102,000 tons consisting primarily of cast ingots and value-added products. The value-added product line was introduced in fiscal 1992 and includes specialty stainless and tool steel ingots or billets which are converted into forged billets, bars and plate by outside processors. A new unit, FirstMiss Alloys, was formed during fiscal 1993 to produce small quantities of cobalt, nickel, copper and iron-based alloys in bars and wire produced from two small horizontal continuous casters, small bottom-poured forging ingots, and remelt sand ingots. Raw materials consist of steel scrap and various alloys, of which there is an adequate supply in the North American market. Carbon and alloy steel ingots and billets are sold directly to the forging industry, integrated steel producers and mini-mill and tool steel producers. FMS competes primarily with three other steel companies in this market and, within the group, ranks second in total steel production capacity. Specialty steel products are sold primarily to steel service centers and forgers. FirstMiss Alloy products are sold as feedstock directly to forgers, extruders and investment casters. There are numerous competitors, both domestic and foreign, that compete with FMS in the specialty steel and ferrous and non-ferrous metals markets. Competitive factors include price, quality and service. Carbon ingots and billets are commodities and are extremely price competitive. FMS emphasizes those grades that are technically difficult to produce on vertical casters. See pages 31-33, Note 14 of the 1994 Annual Report for additional Industry Segment Information. OTHER OPERATIONS The Company owns 50% of Power Sources, Inc. ("PSI") of Charlotte, North Carolina, which burns wood waste in industrial boilers to create steam energy. The steam is sold under long-term contracts to industrial users. PSI operates four plants in North Carolina and South Carolina. A fifth plant is currently under construction in Tennessee. ------------------------ ENVIRONMENTAL Company operations are subject to a wide variety of environmental laws and regulations governing emissions to the air, discharges to water sources, and the handling, storage, treatment and disposal of waste materials, as well as other laws and regulations concerning health and safety conditions. The Company holds a number of environmental permits and licenses regulating air emissions, water discharges and hazardous waste disposal and, to the best of its knowledge, is in material compliance with such requirements at all locations. The Company makes capital and other expenditures in a continuing effort to comply with environmental laws 10 11 and regulations, or changing interpretations of existing laws and regulations. Environmental capital expenditures for fiscal 1994 were $1.3 million. Projected capital expenditures for fiscal 1995 are $4.9 million. These projected capital expenditures are primarily related to the chemicals and gold segments. While these expenditures are necessary to comply with environmental laws and regulations, they may also reduce operating expenses and improve efficiencies. The Company monitors and participates in the environmental regulatory development process which assists it in evaluating new laws and regulations. The Company does not anticipate a material increase in expenses related to current environmental regulations, but because federal and state environmental laws and regulations are constantly changing, the Company is unable to predict their future impact. Federal legislation has recently been proposed by both the U.S. Senate and House of Representatives that would place extensive new environmental and permitting restrictions on the mining industry. Other federal legislation has been proposed which, if enacted, would extend federal regulation of surface and groundwater quality and laws related to endangered species. Substantial stiffening of applicable mine waste management requirements or the imposition of substantially different environmental control regulations could have a material adverse impact on the Company. The Company's domestic competitors are subject to the same environmental laws and regulations, but foreign competitors are not, which may give foreign competitors an advantage. The Company has received notices from the EPA or a similar state agency that it is a potentially responsible party ("PRP") under Superfund or a comparable state statute and, thus, may be liable for a share of the costs associated with cleaning up various hazardous waste sites. The EPA or state agency has designated the Company as a PRP at seven sites. The Company currently estimates its potential liability in these matters to be $0.5 million. This estimate is affected by several uncertainties such as, but not limited to, the method and extent of remediation, the percentage of material attributable to the Company at the sites relative to that attributable to other parties, and the financial capabilities of the other PRPs at most sites. This estimate is not offset by any amounts projected to be received from insurance companies or other third parties. The current owner of a fertilizer manufacturing facility, previously operated under lease by a subsidiary of the Company, is involved in developing a closure plan and assessment at that site. Another previous owner has indicated the Company may have some financial responsibility for the closure activities. Any ultimate responsibilities and obligations of the parties are unknown due to the early nature of the investigation and assessment. In accordance with the State of Nevada Division of Environmental Protection ("NDEP"), FirstMiss Gold has submitted a plan to the NDEP for the eventual closure and reclamation of the Getchell Property and is awaiting approval and permitting. As of June 30, 1994, FirstMiss Gold had accrued a total of $3.0 million for reclamation and closure costs. FirstMiss Gold has begun reclamation of surface mining disturbances and anticipates an ongoing program of additional reclamation over the next several years. Activities have included regrading, revegetation and soil stabilization. The Company continues as guarantor on $29.2 million of reclamation bonds related to the disposed coal operations until bonding is obtained by the purchaser, which is not to be later than June 1996. The total reclamation liability covered by the bonding is currently estimated at $5.5 million. ITEM 2. PROPERTIES A. General A description of properties and the segments to which they relate is also included in the Business discussion located on pages 3 through 12 of this Form 10-K. The Company believes that its properties are suitable and adequate for the purposes for which they are used. 11 12 B. Gold Ore Reserves The following table sets forth the proven and probable mineable ore reserves on the Getchell Property. PROVEN AND PROBABLE MINEABLE RESERVES CONFIRMED BY MINE DEVELOPMENT ASSOCIATES AS OF JULY 1, 1994
CONTAINED ORE TONS GRADE GOLD OUNCES -------- ------------------ ----------- (WEIGHTED AVERAGE) Sulfide..................................... 6,725,400 0.225 1,511,800 Oxide....................................... 2,860,800 0.028 79,900 --------- ----- --------- Total....................................... 9,586,200 0.166 1,591,700
Sulfide reserves assume a 0.100 ounce per ton cutoff for open pit reserves and a 0.200 ounce per ton cutoff for underground reserves. Oxide reserves are based on a 0.010 cyanide soluble cutoff grade. Included in sulfide reserves are low-grade stockpiles containing 2,080,500 tons at an average grade of 0.115 ounces per ton, or 238,400 contained ounces. Also included in sulfide reserves are 3,733,700 tons of underground ore at an average grade of 0.302 ounces per ton, or 1,127,700 contained ounces. The proven and probable mineable ore reserve ounces are "contained" ounces. Actual ounces expected to be recovered during milling and heap leach processing will be less due to recovery process inefficiencies. Proven and probable mineable ore reserves reflect estimates of quantities and grades of ore which can be economically recovered based on assumptions of a $400 per ounce future gold price and projected future mining and milling costs. Although FirstMiss Gold has carefully prepared and verified these reserves, such figures are estimates. Prolonged decreases in gold prices may render uneconomic the mining of various ore reserves containing low grades of mineralization. During the year, proven and probable mineable sulfide ore reserves increased 22% to 1,511,800 ounces at year-end and the average sulfide grade increased 9% to 0.225 ounces per ton in 6,725,400 ore tons. Exploration added 558,700 new contained ounces of reserves during the year, while ore containing 280,000 ounces was processed through the mill and heap leach. Oxide proven and probable mineable ore reserves increased slightly to 79,900 ounces from 76,600 ounces. Oxide reserves consist of 2,860,800 tons at an average grade of 0.028 ounces per ton. Gold mineralization on the Getchell Property occurs in a series of discrete zones associated with the north-trending Getchell Fault and with the northeast-trending Turquoise Ridge Fault. Both systems cut through a thick sequence of interbedded early paleozoic sedimentary and volcanic units. The northwest-dipping Turquoise Ridge Fault and the eastward-dipping Getchell Fault intersect in the Main Pit. Gold sulfide mineral deposits are found at depth along the Getchell Fault and in sedimentary units in contact with the Getchell Fault. Recent drilling has identified similar gold sulfide mineral deposits in various sedimentary and volcanic units in contact with the Turquoise Ridge Fault northeast of its intersection with the Getchell Fault. Oxidized gold mineral deposits are also associated with the Getchell and Turquoise Ridge fault zones, typically occurring as discrete zones at depths shallower than the sulfide mineralization. A mineral deposit is a naturally occurring concentration of minerals that may or may not be economically mineable. A mineable reserve is that part of a mineral deposit that has been sufficiently drilled to define the tonnage and grade, which may be extracted at a profit. Mineral deposits do not qualify as commercially mineable ore bodies (proven and probable mineable reserves) under Securities and Exchange Commission rules until a final and comprehensive economic, technical and legal feasibility study based upon adequate test results is concluded. 12 13 (MAP) GETCHELL MINE AREA HUMBOLDT COUNTY, NEVADA (See Appendix for narrative description of map to be included on this page.) 13 14 ITEM 3. LEGAL PROCEEDINGS On July 15, 1986, the first of seventeen lawsuits was filed in the Twenty-First Judicial District Court, Livingston Parish, Louisiana, against approximately ninety defendants, including Triad Chemical. The plaintiffs' multi-billion dollar claims are based on alleged personal injuries and property damage as a result of exposure to hazardous waste allegedly contributed by the defendants to the Combustion Inc. site, which was operated as a waste and used oil reclamation and reprocessing facility in Livingston Parish. The pending litigation has been consolidated into a class action and removed to federal district court for the Middle District of Louisiana. On April 20, 1993, one of the defendants filed a third party claim against AMPRO Fertilizer, Inc. and 210 other entities seeking to have the new defendants pay a share of the claims made by the plaintiffs and clean-up costs for the site. Triad and AMPRO are each vigorously defending their positions and the Company considers their defenses meritorious. Despite assertions by certain third parties that Triad and AMPRO sent waste to the Combustion site, neither company's records reflect that any waste was sent to the site. Triad has received and responded to letters issued by the EPA under Section 104 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") relative to the possibility that Triad waste was disposed at the Combustion site. Under CERCLA, generators of waste may be held responsible for investigation and site cleanup costs. Triad is involved in discussions regarding a possible de minimis settlement from cleanup liability. Based upon facts known to date, the Company is of the opinion that the ultimate disposition of the litigation and any site cleanup obligations should not have a material effect upon the financial position or results of operation of the Company. Additionally, the Company has pending several claims incurred in the normal course of business which, in the opinion of management and legal counsel, can be disposed of without material effect on the Company's financial statements. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEMS 5-8. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, SELECTED FINANCIAL DATA, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION, AND FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by Part II, Items 5-8, has been included in the Registrant's Annual Report to Stockholders for the year ended June 30, 1994, which has been furnished to the Commission. See the Cross Reference Sheet on Page 2 hereof for the locations of such information. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 14 15 PART III ITEMS 10-13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, EXECUTIVE COMPENSATION, SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information called for by Part III, Items 10-13, has been included in the Registrant's definitive Proxy Statement, which will be mailed to the Commission by October 3, 1994, pursuant to Regulation 14A, and is incorporated herein by reference. See the Cross Reference Sheet on Page 2 hereof for the location of such information. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Financial Statements and Supplementary Data
PAGES IN 1994 ANNUAL REPORT TO STOCKHOLDERS INCORPORATED HEREIN BY REFERENCE --------------------------- Consolidated Balance Sheets as of June 30, 1994 and 1993..... 18 Consolidated Statements of Operations, years ended June 30, 1994, 1993 and 1992........................................ 19 Consolidated Statements of Stockholders' Equity, years ended June 30, 1994, 1993 and 1992............................... 20 Consolidated Statements of Cash Flows, years ended June 30, 1994, 1993 and 1992........................................ 21 Notes to Consolidated Financial Statements................... 22-33 Report of Independent Auditors............................... 34 Quarterly Financial Data (Unaudited)......................... 33
(a)(2) Financial Statement Schedules
PAGE OF THIS FORM 10-K --------------------------- Independent Auditors' Report on Schedules.................... 21 Schedule V -- Property, Plant and Equipment for Years Ended June 30, 1994, 1993 and 1992............................... 22 Schedule VI -- Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment for Years Ended June 30, 1994, 1993 and 1992......................... 23 Schedule VIII -- Valuation and Qualifying Accounts for Years Ended June 30, 1994, 1993 and 1992......................... 24 Schedule IX -- Consolidated Short-Term Borrowings for Years Ended June 30, 1994, 1993 and 1992......................... 25 Schedule X -- Supplementary Income Statement Information for Years Ended June 30, 1994, 1993 and 1992................... 26
15 16 Schedules other than those listed above are omitted because they are not required, are not applicable or the information required has been included elsewhere herein. (a)(3) Exhibits 3(a) -- Restated and Amended Charter of Incorporation of the Company was filed as Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, and is incorporated by reference. 3(b) -- Bylaws of the Company, as amended November 12, 1993. 4(a) -- Articles IV, VIII, IX and X of the Company's Charter of Incorporation and the Statements of Resolution establishing the Company's 1982-A, 1982-B, 1982-C, 1982-D, 1983-A, 1984-A, 1984-B, 1985-A, 1986-A, 1987-A, 1988-A, 1988-1, 1989-A, 1989-1, 1989-2, 1990-1, 1990-2, 1991-1, 1991-2 and 1992-1 Series Convertible Preferred Stock and the Company's Series X Junior Participating Preferred Stock are included in Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, and are incorporated by reference. 4(b) -- Articles II, V and VI of the Company's Bylaws are included in Exhibit 3(b) attached hereto. 4(c) -- First Mississippi Corporation 401(K) Thrift Plan, as amended and restated on February 13, 1986, was filed as Exhibit 4.3 to post-effective amendment No. 2 to the Company's Registration Statement on Form S-8 (Registration No. 2-93585) and is incorporated by reference. 4(d) -- First Amendment to the First Mississippi Corporation 401(K) Thrift Plan, as previously amended and restated, dated May 22, 1987, was filed on May 29, 1987, as Exhibit 4.4 to post-effective Amendment No. 3 to the Company's Registration Statement on Form S-8 (Registration No. 2-93585) and is incorporated by reference. 4(e) -- Second Amendment to the First Mississippi Corporation 401(K) Thrift Plan, as previously amended and restated, dated September 22, 1988, was filed as Exhibit 4(e) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1988, and is incorporated by reference. 4(f) -- Third Amendment to the First Mississippi Corporation 401(K) Thrift Plan, as previously amended and restated, dated November 14, 1991, was filed as Exhibit 4(b) to Item 7 to the Company's Form 8-K dated November 14, 1991, and is incorporated by reference. 4(g) -- Fourth Amendment to the First Mississippi Corporation 401(K) Thrift Plan, as previously amended and restated, dated May 12, 1992, was filed as Exhibit 4(g) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, and is incorporated by reference. 4(h) -- The First Mississippi Corporation 401(K) Savings Plan, as amended and restated, effective July 1, 1989, was filed as Exhibit 4 to the Company's Form 8-K dated June 13, 1994, and is incorporated by reference. 4(i) -- Amended and Restated Rights Agreement between the Company and Ameritrust Company National Association, whose name has now been changed to Society National Bank, was filed as an Exhibit to Item 7 to the Company's Form 8-K dated February 28, 1989, and is incorporated by reference.
16 17 4(j) -- Amended and Restated Gold Loan Agreement, dated as of January 26, 1988, between MASE WESTPAC, INC. and FMG Inc., was filed as Exhibit 10.15 to the Amendment No. 2 to the Registration Statement on Form S-1 (Registration No. 33-18249) of FirstMiss Gold Inc. and is incorporated by reference. 4(k) -- Loan Agreement between the Company and FirstMiss Gold Inc., dated March 29, 1990, was filed as Exhibit 4(p) to the Annual Report on Form 10-K for FirstMiss Gold Inc. for the fiscal year ended June 30, 1991, and is incorporated by reference. 4(l) -- Amendment to Loan Agreement between the Company and FirstMiss Gold Inc., dated August 27, 1991, was filed as Exhibit 4(q) to the Annual Report on Form 10-K for FirstMiss Gold Inc. for the fiscal year ended June 30, 1991, and is incorporated by reference. 4(m) -- Credit Agreement, dated as of December 30, 1987, by and among FMG Inc., FirstMiss Gold Inc., and Westpac Banking Corporation, was filed as Exhibit 10.17 to Amendment No. 1 to the Registration Statement on Form S-1 (Registration No. 33-18249) of FirstMiss Gold Inc. and is incorporated by reference. 4(n) -- First Amendment to the Credit Agreement, dated as of January 26, 1988, by and among FMG Inc., FirstMiss Gold Inc., and Westpac Banking Corporation, was filed as Exhibit 10.23 to Amendment No. 2 to the Registration Statement on Form S-1 (Registration No. 33-18249) of FirstMiss Gold Inc. and is incorporated by reference. 4(o) -- Second Amendment to the Credit Agreement, dated as of April 14, 1988, by and among FMG Inc., FirstMiss Gold Inc., and Westpac Banking Corporation, was filed as Exhibit 10.24 to Amendment No. 4 to the Registration Statement on Form S-1 (Registration No. 33-18249) of FirstMiss Gold Inc. and is incorporated by reference. 4(p) -- Third Amendment to the Credit Agreement, dated as of March 30, 1989, by and among FMG, Inc., First Miss Gold Inc., and Westpac Banking Corporation, was filed as Exhibit 4(h) to the Annual Report on Form 10-K of FirstMiss Gold Inc. for fiscal year ended June 30, 1989, and is incorporated by reference. 4(q) -- Fourth Amendment to the Credit Agreement, dated as of July 2, 1990, by and among FMG, Inc., FirstMiss Gold Inc., and Westpac Banking Corporation, was filed as Exhibit 4(m) to the Annual Report on Form 10-K of FirstMiss Gold Inc. for fiscal year ended June 30, 1991, and is incorporated by reference. 4(r) -- Senior Note Purchase Agreement (composite conformed copy with substantially all exhibits conformed as executed), dated as of June 1, 1992, between the Company and Connecticut General Life Insurance Company, United Companies Life Insurance Company, Principal Mutual Life Insurance Company, John Hancock Mutual Life Insurance Company, The Ohio National Life Insurance Company, The Union Central Life Insurance Company, The Manhattan Life Insurance Company and Modern Woodmen of America, was filed as Exhibit 4(y) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1992, and is incorporated by reference. 4(s) -- Credit Agreement, dated as of February 9, 1993, between the Company, the Banks party thereto and The Chase Manhattan Bank (National Association), as Agent, was filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1992, and is incorporated herein by reference.
17 18 4(t) -- Amendment No. 1, dated as of August 1, 1993, to the Credit Agreement between the Company, the Banks party thereto and The Chase Manhattan Bank (National Association), as Agent, was filed as Exhibit 4(s) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, and is incorporated by reference. 4(u) -- Extension of commitment termination date, dated as of December 30, 1993, in accordance with the provisions of Section 2.04 of the Credit Agreement dated as of February 9, 1993, between the Company, the Banks party thereto and The Chase Manhattan Bank (National Association), as Agent. 10(a)* -- Termination Agreement, dated July 1, 1989, between the Company and its Chief Executive Officer, was filed as Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1990, and is incorporated by reference. 10(b)* -- Form of Termination Agreement, dated July 1, 1989, between the Company and each of the following executive officers of the Company: J. Steve Chustz, C. R. Gibson, Charles M. McAuley, R. Michael Summerford and O. E. Wall (Company's Termination Agreement with each such officer contains terms identical to those contained in the form of Agreement filed), was filed as Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1990, and is incorporated by reference. 10(c)* -- First Mississippi Corporation 1980 Long-Term Incentive Plan, as amended, was filed as Exhibit 10(a) to Item 7 of the Company's Form 8-K dated November 14, 1991, and is incorporated by reference. 10(d)* -- First Mississippi Corporation 1988 Long-Term Incentive Plan, as amended, was filed as Exhibit 10(b) to Item 7 of the Company's Form 8-K dated November 14, 1991, and is incorporated by reference. 10(e)* -- The descriptions of certain arrangements for directors and executive officers are described under the captions "Director Compensation" and "Summary Compensation Table" of the Company's Proxy Statement for its November 11, 1994 Annual Meeting of Stockholders, and are incorporated by reference. 10(f)* -- 1991 Restatement of the First Mississippi Corporation Directors' Retirement Plan, as revised and restated on May 14, 1991, was filed as Exhibit 10(f) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1991, and is incorporated by reference. 10(g)* -- First Mississippi Corporation 1989 Deferred Compensation Plan for Outside Directors, as amended on May 14, 1991, was filed as Exhibit 10(g) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1991, and is incorporated by reference. 10(h) -- Amended and Restated Gold Loan Agreement, dated as of January 26, 1988, is listed as Exhibit 4(j). 10(i) -- Gold Production Purchase Agreement between MASE WESTPAC, INC. and FMG Inc. was filed as Exhibit 10.16 to Amendment No. 1 to the Registration Statement on Form S-1 (Registration No. 33-18249) of FirstMiss Gold Inc., and is incorporated by reference. 10(j) -- Amendment No. 1 to the Gold Production Purchase Agreement, dated as of January 26, 1988, between MASE WESTPAC, INC. and FMG Inc. was filed as Exhibit 10.22 to Amendment No. 2 to the Registration Statement on Form S-1 (Registration No. 33-18249) of FirstMiss Gold Inc., and is incorporated by reference.
18 19 10(k) -- Form of Indemnification Agreement between the Company and the following Directors or Officers of the Company (Company's Indemnification Agreements with each such individual contains identical provisions to those contained in the form): Richard P. Anderson, Paul A. Becker, James W. Crook, Charles R. Gibson, Robert P. Guyton, Charles P. Moreton, Paul W. Murrill, William A. Percy, II, Maurice T. Reed, Jr., Frank G. Smith, Leland R. Speed, R. Gerald Turner, J. Kelley Williams, R. Michael Summerford, O. E. Wall, Charles M. McAuley and J. Steve Chustz was filed as Exhibit 10(t) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1988, and is incorporated by reference. 10(l)* -- FirstMiss Gold Inc. Amended and Restated Long-Term Incentive Plan was filed as Exhibit 10(i) to the Annual Report on Form 10-K for FirstMiss Gold Inc. for the fiscal year ended June 30, 1993, and is incorporated by reference. 10(m) -- Purchase and Sale Agreement between the Company, First Energy Corporation, FRM, Inc., FEC Marketing, Inc. and JN Exploration & Production Limited Partnership, dated June 16, 1993, relating to the sale of the Company's oil and gas reserves and related assets, was filed as Exhibit 10(n) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, and is incorporated by reference. 13 -- Annual Report to Stockholders for the year ended June 30, 1994. (Such Annual Report is not, except for those portions thereof which are expressly incorporated by reference, to be deemed "filed" as part of this Form 10-K). 21 -- List of the subsidiaries of the Company. 23 -- Auditor's Consent regarding incorporation of reports into Registration Statement Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512, 33-9106, 33-17483, 33-24413, 33-24414, 33-26895, 33-31343, 33-33135, 33-37084, 33-39137, 33-43586, 33-43600, 33-45344 and 33-56026 is contained on Page 27 of this report. 27 -- Financial Data Schedule.
- - - --------------- * Indicates management contract or compensatory plan or arrangement. Certain debt instruments have not been filed. The Company agrees to furnish a copy of such agreement(s) to the Commission upon request. (Note: The exhibits filed with the Commission are not included in this copy of the Form 10-K. A copy of the exhibits will be provided upon payment of a reasonable fee, to be specified at the time a request is made). (b) A Form 8-K dated June 13, 1994, was filed by the Company relating to the First Mississippi Corporation 401(K) Savings Plan, as amended and restated, effective July 1, 1989. (Please see Item 4(h) in (a)(3) above.) (c) Please see (a)(3) above. (d) Please see (a)(2) above. 19 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. FIRST MISSISSIPPI CORPORATION Date: September 23, 1994 By: /s/ J. KELLEY WILLIAMS J. Kelley Williams, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - - - --------------------------------------------- ---------------------------- ------------------- /s/ J. KELLEY WILLIAMS Chairman of the Board of September 23, 1994 J. Kelley Williams Directors, President, Chief Executive Officer (Principal Executive Officer) and Director /s/ R. MICHAEL SUMMERFORD Vice President and Chief September 23, 1994 R. Michael Summerford Financial Officer (Principal Financial Officer) /s/ TROY B. BROWNING Controller (Principal September 23, 1994 Troy B. Browning Accounting Officer) /s/ RICHARD P. ANDERSON Director September 23, 1994 Richard P. Anderson /s/ PAUL A. BECKER Director September 23, 1994 Paul A. Becker /s/ JAMES W. CROOK Director September 23, 1994 James W. Crook /s/ ROBERT P. GUYTON Director September 23, 1994 Robert P. Guyton /s/ CHARLES P. MORETON Director September 23, 1994 Charles P. Moreton /s/ PAUL W. MURRILL Director September 23, 1994 Paul W. Murrill /s/ WILLIAM A. PERCY, II Director September 23, 1994 William A. Percy, II /s/ MAURICE T. REED, JR. Director September 23, 1994 Maurice T. Reed, Jr. /s/ LELAND R. SPEED Director September 23, 1994 Leland R. Speed /s/ R. GERALD TURNER Director September 23, 1994 R. Gerald Turner
20 21 INDEPENDENT AUDITORS' REPORT ON SCHEDULES The Board of Directors and Stockholders First Mississippi Corporation: Under date of September 9, 1994, we reported on the consolidated balance sheets of First Mississippi Corporation and subsidiaries as of June 30, 1994 and 1993, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended June 30, 1994, as contained in the 1994 Annual Report to Stockholders. These financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1994. In connection with our audits of the aforementioned consolidated financial statements, we have audited the financial statement schedules listed in Item 14(a)(2) of Form 10-K. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. KPMG PEAT MARWICK LLP Jackson, Mississippi September 9, 1994 21 22 SCHEDULE V FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES PROPERTY, PLANT AND EQUIPMENT YEARS ENDED JUNE 30, 1994, 1993 AND 1992 (IN THOUSANDS OF DOLLARS)
TRANSFERS BETWEEN CLASSIFICATIONS AND OTHER ASSET BALANCE AT CATEGORIES BEGINNING RETIREMENTS INCREASE BALANCE AT CLASSIFICATIONS OF YEAR ADDITIONS OR SALES (DECREASE) END OF YEAR - - - -------------------------------------- ---------- --------- ----------- --------------- ----------- YEAR ENDED JUNE 30, 1994: Land and land improvements.......... $ 13,440 1,837 169 (1,587) $ 13,521 Buildings........................... 19,434 630 0 161 20,225 Chemical plant facilities and equipment........................ 159,836 10,840 25 0 170,651 Gold properties..................... 110,586 8,849 140 (10,604) 108,691 Other facilities and equipment...... 56,719 13,107 2,393 1,727 69,160 Under capital leases: Land and land improvements....... 509 0 0 0 509 Buildings........................ 216 0 0 0 216 Other equipment.................. 8,958 0 0 0 8,958 --------- ------- -------- ---------- --------- TOTAL....................... $ 369,698 35,263 2,727 (10,303)(A) $ 391,931 ========= ======= ======== ========== ========= Year ended June 30, 1993: Land and land improvements.......... $ 9,844 3,596 0 0 $ 13,440 Buildings........................... 19,244 190 0 0 19,434 Chemical plant facilities and equipment........................ 145,178 14,658 0 0 159,836 Gold properties..................... 95,447 15,514 375 0 110,586 Other facilities and equipment...... 50,703 6,704 747 59 56,719 Under capital leases: Land and land improvements....... 509 0 0 0 509 Buildings........................ 216 0 0 0 216 Other equipment.................. 9,017 0 0 (59) 8,958 --------- ------- -------- ---------- --------- TOTAL....................... $ 330,158 40,662 1,122 0 $ 369,698 ========= ======= ======== ========== ========= Year ended June 30, 1992: Land and land improvements.......... $ 9,574 645 0 (375) $ 9,844 Buildings........................... 18,835 336 0 73 19,244 Chemical plant facilities and equipment........................ 137,283 8,848 1,689 736 145,178 Gold properties..................... 92,519 2,961(b) 33 95,447 Other facilities and equipment...... 47,236 7,565 3,651 (447) 50,703 Under capital leases: Land and land improvements....... 509 0 0 0 509 Buildings........................ 216 0 0 0 216 Other equipment.................. 9,004 0 0 13 9,017 --------- ------- -------- ---------- --------- TOTAL....................... $ 315,176 20,355 5,373 0 $ 330,158 ========= ======= ======== ========== =========
- - - --------------- (a) Includes $9,846 of deferred stripping costs reclassified to amortization expense and $457 of certain spare parts reclassified to inventory. (b) Includes capital project refund of $1,161 which reduced the cost basis of certain property assets. 22 23 SCHEDULE VI FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT YEARS ENDED JUNE 30, 1994, 1993 AND 1992 (IN THOUSANDS OF DOLLARS)
TRANSFERS BETWEEN CLASSIFICATIONS AND OTHER ASSET BALANCE AT CATEGORIES BEGINNING RETIREMENTS INCREASE BALANCE AT CLASSIFICATIONS OF YEAR ADDITIONS OR SALES (DECREASE) END OF YEAR - - - -------------------------------------- ---------- --------- ----------- --------------- ----------- YEAR ENDED JUNE 30, 1994: Land and land improvements.......... $ 3,486 953 0 0 $ 4,439 Buildings........................... 7,851 1,675 0 0 9,526 Chemical plant facilities and equipment........................ 83,510 10,680 25 0 94,165 Gold properties..................... 46,662 11,040 276 57,426 Other facilities and equipment...... 19,693 4,243 2,386 21,556 Under capital leases: Land and land improvements....... 22 5 0 0 27 Buildings........................ 47 11 0 0 58 Other equipment.................. 2,316 527 0 0 2,843 --------- ------- -------- ---------- --------- TOTAL....................... $ 163,587 29,134 2,687 0 $ 190,040 ========= ======= ======== ========== ========= Year ended June 30, 1993: Land and land improvements.......... $ 2,725 761 0 0 $ 3,486 Buildings........................... 6,127 1,724 0 0 7,851 Chemical plant facilities and equipment........................ 73,794 9,716 0 0 83,510 Gold properties..................... 35,551 11,191 80 0 46,662 Other facilities and equipment...... 16,118 3,918 343 0 19,693 Under capital leases: Land and land improvements....... 17 5 0 0 22 Buildings........................ 36 11 0 0 47 Other equipment.................. 1,789 527 0 0 2,316 --------- ------- -------- ---------- --------- TOTAL....................... $ 136,157 27,853 423 0 $ 163,587 ========= ======= ======== ========== ========= Year ended June 30, 1992: Land and land improvements.......... $ 1,857 888 0 (20) $ 2,725 Buildings........................... 4,094 1,995 0 38 6,127 Chemical plant facilities and equipment........................ 65,945 9,148 1,365 66 73,794 Gold properties..................... 23,061 12,510 20 0 35,551 Other facilities and equipment...... 14,385 3,161 1,344 (84) 16,118 Under capital leases: Land and land improvements....... 12 5 0 0 17 Buildings........................ 25 11 0 0 36 Other equipment.................. 1,242 547 0 0 1,789 --------- ------- -------- ---------- --------- TOTAL....................... $ 110,621 28,265 2,729 0 $ 136,157 ========= ======= ======== ========== =========
23 24 SCHEDULE VIII FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED JUNE 30, 1994, 1993 AND 1992 (IN THOUSANDS OF DOLLARS)
OTHER BALANCE AT CHARGED TO ADDITIONS BALANCE BEGINNING COSTS AND (DEDUCTIONS), AT END DESCRIPTION OF YEAR EXPENSES NET OF YEAR - - - ----------------------------------------------- ---------- ---------- ------------- ------- YEAR ENDED JUNE 30, 1994: Allowance for doubtful accounts.............. $ 4,565 $ 561 $ (4,405) $ 721 Allowance for restructuring costs............ $ 21,535 $ 0 $ (19,075) $ 2,460 Year ended June 30, 1993: Allowance for doubtful accounts.............. $ 2,084 $ 2,589 $ (108) $ 4,565 Allowance for restructuring costs............ $ 0 $ 39,578 $ (18,043) $21,535 Year ended June 30, 1992: Allowance for doubtful accounts.............. $ 360 $ 2,276 $ (552) $ 2,084
24 25 SCHEDULE IX FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED SHORT-TERM BORROWINGS THREE YEARS ENDED JUNE 30, 1994 (IN MILLIONS OF DOLLARS)
MAXIMUM AVERAGE WEIGHTED AMOUNT AMOUNT AVERAGE BALANCE WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE CATEGORY OF AGGREGATE AT END AVERAGE AT ANY DURING THE DURING THE SHORT-TERM BORROWINGS OF PERIOD INTEREST RATE MONTH END PERIOD(1) PERIOD(2) - - - --------------------------------- --------- ------------- ----------- ----------- ------------- 1994 Notes payable, banks........... $ 0 N/A $ 4.9 $ 1.6 4% 1993 Notes payable, banks........... $ 0 N/A $27.4 $10.7 4% 1992 Notes payable, banks........... $10 5% $18.8 $14.0 6%
- - - --------------- (1) Average of daily balances for 366 days in 1992 and 365 days in 1993 and 1994. (2) Total interest accrued divided by average daily balance. 25 26 SCHEDULE X FIRST MISSISSIPPI CORPORATION AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTARY INCOME STATEMENT INFORMATION YEARS ENDED JUNE 30, 1994, 1993 AND 1992 (IN THOUSANDS OF DOLLARS)
1994 1993 1992 ------ ------ ------ Taxes, other than payroll and income taxes........................ $5,220 $5,157 $4,379
26 27 INDEPENDENT AUDITORS' CONSENT The Board of Directors First Mississippi Corporation: We consent to incorporation by reference in the Registration Statements on Form S-8 (Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512, 33-9106, 33-17483, 33-24413, 33-24414, 33-26895, 33-31343, 33-33135, 33-37084, 33-39137, 33-43586, 33-43600, 33-45344 and 33-56026) of our reports dated September 9, 1994, relating to the consolidated financial statements and financial statement schedules of First Mississippi Corporation and subsidiaries as of June 30, 1994 and 1993 and for each of the years in the three-year period ended June 30, 1994, which reports appear or are incorporated by reference in the June 30, 1994 annual report on Form 10-K of First Mississippi Corporation. Our report on the consolidated financial statements refers to a change in the method of accounting for income taxes. KPMG PEAT MARWICK LLP Jackson, Mississippi September 27, 1994 27 28 EXHIBITS INDEX TO EXHIBITS
EXHIBIT NUMBER - - - ----------- 3(b) -- Bylaws, as amended November 12, 1993 4(u) -- Extension of commitment termination date, dated as of December 30, 1993, in accordance with the provisions of Section 2.04 of the Credit Agreement dated as of February 9, 1993, between the Company, the Banks party thereto, and The Chase Manhattan Bank (National Association), as Agent 13 -- Annual Report to Stockholders for year ended June 30, 1994. (Such Annual Report is not, except for those portions thereof which are expressly incorporated by reference herein, to be deemed "filed" as part of this Form 10-K) 21 -- List of the subsidiaries of the Registrant 23 -- Auditor's Consent regarding incorporation of reports into registration statement Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512, 33-9106, 33-17483, 33-24413, 33-24414, 33-26895, 33-31343, 33-33135, 33-37084, 33-39137, 33-43586, 33-43600, 33-45344 and 33-56026 is contained on Page 27 of this report 27 -- Financial Data Schedule (Note: The exhibits filed with the Commission are not included in this copy of the Form 10-K. A copy of the exhibits will be provided upon payment of a reasonable fee, to be specified at the time a request is made).
28 29 APPENDIX 1. In the top right corner of Page 13 is an outline map of the state of Nevada showing the location of the Getchell Property and the towns of Winnemucca and Reno. In the bottom left portion of the page is an outline map of the Getchell Property showing property boundaries and the location of the underground mine, pits, ridges, facilities and nearby competitors' operations. 29 EX-3.B 2 BYLAWS 1 BYLAWS OF FIRST MISSISSIPPI CORPORATION (With all Amendments through November 12, 1993) ARTICLE I. NAME AND OFFICES 1.1 The name of this corporation shall be FIRST MISSISSIPPI CORPORATION. 1.2 The principal or home office shall be in the City of Jackson, County of Hinds, State of Mississippi. 1.3 The corporation may also have offices at such other places as the board of directors may from time to time appoint or as the business of the corporation may require. ARTICLE II. STOCKHOLDERS' MEETINGS 2.1 The place of all meetings of the stockholders shall be the principal office of the corporation in the City of Jackson, County of Hinds, State of Mississippi, or such other place within or without the State of Mississippi as shall be determined from time to time by the board of directors, and the place at which such meeting shall be held shall be stated in the call and notice of the meeting. 2.2 The annual meeting of the stockholders of the corporation for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held each year upon such date as may be determined by the board of directors. If the annual meeting of the stockholders is not held as herein prescribed, or the election of directors shall not be had at such meeting or an adjournment thereof, the election of directors may be held at any meeting thereafter called pursuant to these bylaws. 2.3 The voting at all meetings of the stockholders may be viva voce, but twenty five percent (25%) of the stockholders present in person and by proxy may demand a stock vote whereupon such stock vote shall be taken. Persons voting proxies certified to by the secretary or assistant secretary of the corporation may vote the proxies as a whole. Persons voting proxies not certified by the secretary or assistant secretary shall state the name for whom the proxy is held and the number of shares voted by proxy. Exhibit 3(b) 2 2.4 Every stockholder shall have the right to vote in person or by proxy the number of shares of stock owned by him for as many persons as there are directors to be elected or to cumulate said shares so as to give one candidate as many votes as the number of directors multiplied by the number of his shares of stock shall equal or distribute them on the same principle among as many candidates as he shall see fit. 2.5 At any meeting of the stockholders, every stockholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than eleven months prior to said meeting, unless said instrument provides for a longer period. Each stockholder shall have one vote for each share of stock having voting power, registered in his name on the books of the corporation, and except where the transfer books of the corporation shall have been closed or a date has been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock shall be voted at the annual meeting of the stockholders which shall have been transferred on the books of the corporation within twenty days next preceding such meeting. If more than one proxy shall be presented from the same stockholder, the last one executed shall govern. The date shown thereon shall be prima facie correct; but if any is found by the board of directors or by the inspectors of election or by a committee appointed by the board of directors to have been postdated, the same shall be void. In case of any conflict the action of the board of directors thereon shall govern. 2.6 A complete list of the stockholders entitled to vote at the annual meeting, arranged in alphabetical order, and the number of voting shares held by each, shall be prepared by the Secretary, who shall have charge of the stock ledger, and filed in the principal office of the Company or in the office where the meeting is to be held, at least ten (10) days before every annual meeting, and shall, during the usual hours for business, and during the whole time of said meeting, be open to the examination of any stockholder. 2.7 Special meetings of the stockholders may be called by the chairman of the board of directors or by the president or by majority of the board of directors and shall be called at any time by the chairman of the board of directors, the president or any vice president, or the secretary or the treasurer, upon the written request of stockholders owning one-tenth (1/10) of the outstanding stock of the corporation entitled to vote at such meeting. The purpose or purposes for which a special meeting is called shall be stated in the written or printed notice of the meeting. 2.8 Notice of the time and place of the annual meeting of stockholders shall be given by mailing written or printed notice of the same at least twenty (20) days, and not more than sixty (60) days, prior to the meeting, and notice of the time and place of special meetings shall be given by written or printed notice of the 2 3 same at least ten (10) days and not more than sixty (60) days prior to the meeting, with postage prepaid, to each stockholder of record of the corporation entitled to vote at such meeting, and addressed to the address appearing on the stock transfer books of the corporation. The board of directors may fix in advance a date, not exceeding seventy (70) days preceding the date of any annual meeting of stockholders, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting. No notice need be given of any adjourned meeting of the stockholders except in the instance named in Section 2.10. 2.9 A quorum at any annual or special meeting of stockholders shall consist of stockholders representing, either in person or by proxy, a majority of the outstanding capital stock of the corporation entitled to vote at such meeting. 2.10 If a quorum is not present at an annual or a properly called stockholders' meeting, the meeting may be adjourned by those present, and if a notice for at least ten (10) days of such adjourned meeting shall be mailed to all stockholders entitled to vote thereat, containing the time and place of holding such adjourned meeting and a statement of the purpose of the meeting (if it is a special meeting), that the previous meeting failed for lack of a quorum, and that under the provisions of this section it is proposed to hold the adjourned meeting with a quorum of those present, then, at such adjourned meeting, one-third (1/3) of the shares entitled to vote thereat, represented by person or by proxy, shall constitute a quorum, and the votes of a majority in interest of those present at such meeting shall be sufficient to transact business unless a greater vote is required by these bylaws, the charter of incorporation or by law. 2.11 At each meeting of stockholders the board of directors or the presiding officer shall have the right, at their sole option, to appoint one or more inspectors of election. The inspectors shall receive all proxies and ballots, determine all challenges and questions arising in connection with the right to vote, and count and tabulate all votes, ballots or consents and determine the result. If for any reason the board of directors or the presiding officer fails to appoint at least one inspector, then in that event the secretary of the corporation or any other corporate official designated by the presiding officer shall be empowered with all of the responsibilities and authority of the inspectors of election. 2.12 At the annual meeting of shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be specified in the Notice of Meeting given by or at the direction of the board of directors, otherwise properly brought before the meeting by or at the direction of the board of directors or otherwise properly brought before the meeting by a shareholder. For business to be properly brought before the annual meeting by a shareholder, including the nomination of a 3 4 director, the shareholder must have given timely notice thereof in writing to the Secretary-Treasurer of the Company. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Company not more than five (5) business days after the giving of the notice of the date and place of the meeting to the shareholders as required in Section 2.8 of these bylaws. A shareholder's notice to the Secretary-Treasurer shall inform as to each matter the shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the shareholder proposing such business, (iii) the class and numbers of shares of the Company which are beneficially owned by the shareholder and (iv) any material interest of the shareholder in such business. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 2.12. The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2.12, and if he should so determine, he shall so declare to the meeting and any such business not properly before the meeting shall not be transacted. ARTICLE III. BOARD OF DIRECTORS 3.1 The management of the affairs, property, and business of the corporation shall be vested in a board of directors, who shall be chosen as hereinafter set forth and who shall hold office until their successors are elected and qualify. Directors shall be stockholders and a transfer by a director of all of his stock in the corporation shall operate as a resignation of his office. In addition to the powers and authorities by these bylaws and the charter of incorporation expressly conferred upon it, the board of directors may exercise all such powers of the corporation and do all such lawful acts and things as are not by law or by the charter or by these bylaws required to be exercised or done by the stockholders. 3.2 The board of directors shall consist of eleven (11) persons. No person shall be elected to serve on the board of directors after attaining sixty-nine (69) years of age. 3.3 The first board of directors shall consist of three groups, the terms of office thereof expiring as follows: The first group at the annual stockholders' meeting in 1958; the second group at such meeting in 1959 and the third group at such meeting in 1960. Thereafter, the directors of the corporation shall be divided into three groups which shall be as nearly equal as may be possible. At each annual stockholders' meeting held thereafter, 4 5 the successors of the group of directors whose terms expire in that year shall be elected to hold office for a full term of three years, so that the term of office of one group of directors shall expire each year; provided, however, that the term of office of the directors of each group shall continue until the election and qualification of the successors to the directors of such group. After the division of directors into groups, any additional directors who may be elected as herein provided shall be assigned to the various groups so as to maintain the number in each group as nearly equal as possible. 3.4 The board of directors shall by resolution entered on its minutes determine and fix the authority and duties of officers and employees with respect to the signing on behalf of the Company of all checks, drafts, deeds, leases, contracts, assignments, and other instruments, documents and papers of every kind and character whatsoever. 3.5 All vacancies in the board of directors, whether caused by resignation, death, increase in the number of directors, or otherwise, shall be filled by election by the board of directors. If the term of the replacement or new director extends beyond the next meeting of stockholders, then the balance of the term beyond that stockholders' meeting is subject to confirmation by a vote of the stockholders. Each such director elected shall hold office until his successor is elected and qualifies. 3.6 Regular or special meetings of the board of directors may be held at the principal office of the corporation or at such other place or places, within or without the State of Mississippi, as the board of directors may from time to time designate, and at such meetings any and all business of the corporation may be transacted without the necessity of stating in the call the matters to be considered. 3.7 Special meetings of the board of directors may be called at any time by the chairman of the board or president or by two-thirds (2/3) of the number of directors specified in Section 3.2, to be held at the principal office of the corporation or at such other place within the State of Mississippi, as may be designated in such call, and at such meetings any and all business of the corporation may be transacted without the necessity of stating in the call the matters to be considered. 3.8 Notice of all meetings of the board of directors (except the first meeting and the annual meetings as provided in Section 3.6 (above) shall be given in writing to each director by not less than two (2) days service of the same by telegram or in person or by not less than five (5) days service of the same by letter. Provided, that by unanimous consent of the directors executed before or after such meeting, meetings at any time or place may be held without notice. And, provided further, that if, in the opinion of the chairman of the board, chairman of the executive committee or the president, there exists a reason to do 5 6 so, the board may meet by a telephone conference hookup upon eight (8) hours advance notice unless waived by unanimous consent of the directors executed before or after such meeting. Such telephone meetings of the board shall be valid and the action taken shall be binding if a reasonable effort was made to have all directors on the telephone meeting and a quorum of directors participate in the telephone meeting. All business presented and discussed at said telephone meeting shall be set forth in the minutes of said meeting, and the minutes shall be mailed to all directors as soon as possible following said meeting. 3.9 A quorum at all meetings of the board of directors shall consist of a majority of the whole board. The act of the majority of the directors at a meeting at which a quorum is present shall be the act of the board of directors, except for the following: (a) the affirmative vote of not less than two-thirds (2/3) of all directors shall be required to approve any plan of merger, consolidation or reorganization and to recommend to the stockholders any merger, consolidation or reorganization of the Company into or with any other corporation, domestic or foreign, (b) the affirmative vote of not less than two-thirds (2/3) of all directors shall be required to modify, add to or delete from these bylaws, and (c) the affirmative vote of not less than four-fifths (4/5) of all directors shall be required to amend, modify or delete Section 3.2 or Section 3.3 of these bylaws. 3.10 Standing or temporary committees may be appointed from its own number by the board of directors from time to time, and the board of directors may from time to time invest such committees with such powers as it may see fit, subject to such conditions as may be prescribed by such board. An executive committee may be appointed by resolution passed by a majority of the whole board; it shall have all the powers vested in the board; provided, however, that the executive committee shall not have the authority of the board of directors in reference to amending the articles of incorporation, adopting a plan of merger or consolidation, recommending to the stockholders the sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all the property and assets of the corporation other than in the usual and regular course of business, recommending to the stockholders a voluntary dissolution of the corporation or a revocation thereof, or amending the bylaws of the corporation. 3.11 Directors shall be paid such compensation as shall be fixed by resolution of the board of directors. In addition, a fixed per diem plus expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the board or for attending committee meetings. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. 6 7 ARTICLE IV. OFFICERS 4.1 The officers of the Company shall be a chairman of the board of directors, a president, such vice presidents as may be designated by the board, a secretary, a treasurer, and a general counsel, each of whom shall be elected by the affirmative vote of two-thirds (2/3) of all directors, and who shall hold office for a term of one year and thereafter until their successors are elected and qualify. The board of directors may also choose such additional officers, including an executive vice- president, as they may deem desirable. The chairman of the board and the president must be a member of the board of directors. By resolution adopted by the board of directors, any two offices may be united in one person except the offices of president and secretary. Any officer may be removed by the affirmative vote of two-thirds (2/3) of all directors. 4.2 The Chairman of the board shall preside at all meetings of the directors, and shall be ex-officio member of all standing committees of the board. He shall perform all such other duties as are incident to his office or properly required of him by the board of directors. 4.3 The president shall preside at all meetings of the stockholders and shall have general supervision of the affairs of the corporation. He shall make reports to the board of directors and stockholders, and shall perform all such other duties as are incident to his office or are properly required of him by the board of directors. 4.4 The vice-presidents, in the order designated by the board of directors, shall exercise the functions of the president during the absence or disability of the president. Each vice-president, including an executive vice-president, shall have such powers and discharge such duties as may be assigned to him from time to time by the board of directors. 4.5 The secretary shall issue notices for all meetings, except that the notice for special meetings of directors called at the request of the required two-thirds (2/3) members as provided in Section 3.7 may be issued by such directors, shall keep minutes of all meetings, shall have charge of the seal and the corporate books, and shall make such reports and perform such other duties as are incident to his office, or are properly required of him by the board of directors. 4.6 The treasurer shall have the custody of all monies and securities of the corporation and shall keep regular books of account. Except as may be otherwise provided by the board of directors under Section 6.2, he shall disburse the funds of the corporation, or as may be ordered by the board of directors, taking proper voucher for disbursement, and shall render to the board of 7 8 directors, from time to time as may be required of him, an account of all transactions as treasurer and of the financial condition of the corporation. He shall perform all duties incident to his office or which are properly required of him by the board of directors. 4.7 The general counsel, subject to the supervision of the board of directors, shall be responsible for all matters of legal import. 4.8 In the case of absence or inability or failure to act of any officer of the corporation and of any person herein authorized to act in his place, the board of directors may from time to time delegate the powers or duties of such officer to any other officer, or any director or other person whom it may select. 4.9 Vacancies in any office arising from any cause may be filled by the directors at any regular or special meetings. 4.10 The board of directors may appoint such other officers and agents as it shall deem necessary or expedient, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors. 4.11 The salaries of all officers and agents of the corporation shall be fixed by the board of directors. 4.12 The board of directors may by resolution require and all of the officers to give bonds to the corporation with sufficient surety or sureties, conditioned for the faithful performance of the duties of their respective offices, and to comply with such other conditions as may from time to time be required by the board of directors. The premiums and other cost of such bonds may be paid by the corporation. ARTICLE V. STOCK 5.1 Certificates of common stock shall be issued in numerical order and each stockholder shall be entitled to a certificate certifying to the number of shares owned by him. Such certificates shall be executed by such officers or agents (which may include a registrar and transfer agents) as the board of directors may by resolution entered upon its minutes determine, and the board may determine which, if any, of the signatures thereon may be facsimile. 5.2 In case any officer who has signed, or whose facsimile signature has been used on, a certificate, has ceased to be an officer before the certificate has been delivered, such certificates may, nevertheless, be adopted and issued and delivered 8 9 by the corporation as though the officer who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, had not ceased to be such officer of the corporation. 5.3 Transfer of stock shall be made only upon the transfer books of the corporation, kept at the office of the corporation or at the office of any transfer agents or registrar and before a new certificate is issued, the old certificate shall be surrendered for cancellation. 5.4 Registered stockholders only shall be entitled to be treated by the corporation as the holders in fact of the stock standing in their respective names, and the corporation shall not be bound to recognize any equitable or other claim to or interest in any shares on the part of any other person, whether or not it shall have express or other notice thereof. 5.5 In case of loss or destruction of any certificate of stock, another may be issued in its place upon proof of such loss or destruction, and upon the giving of a satisfactory bond of indemnity to the corporation in such sum as the board of directors may provide. 5.6 The board of directors shall have power and authority to make all rules and regulations as it may deem expedient concerning the issue, transfer, conversion, and registration of certificates for share of the capital stock of the corporation, not inconsistent with the laws of Mississippi, the charter of the corporation and these bylaws. 5.7 The board of directors shall have power to close the stock transfer books of the corporation for a period not exceeding fifty (50) days preceding the date of any meeting of stockholders, or the date when any redemption or purchase of capital stock shall go into effect, or for a period of not exceeding fifty (50) days in connection with obtaining the consent of stockholders for any purpose, provided, however, that in lieu of closing the stock transfer books as aforesaid, the board of directors may fix in advance a date, not exceeding fifty (50) days preceding the date of any meeting of stockholders, or the date when any redemption or purchase of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting, and any adjournment thereof, or to exercise the rights in respect of any such redemption or purchase of capital stock, or to give such consent, and in such case such stockholders of record on the date so fixed shall be entitled to such notice of and to vote at such meeting, and any adjournment thereof, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of stock on the books of the corporation after any such record date fixed as aforesaid. 9 10 5.8 The common stock of the corporation shall be issued in such amounts and shall be sold at such price or prices, not less than par, as the board of director may from time to time and at any time determine. 5.9 Dividends upon common stock shall be payable as and when declared by the board of directors at its discretion. ARTICLE VI. MISCELLANEOUS 6.1 Any part of or all of the cash dividends payable upon capital common stock may be applied, in the discretion of the board of directors, to the payment of any indebtedness of such stockholder to the corporation. 6.2 The monies of the corporation shall be deposited in the name of the corporation in such bank or banks or trust company or trust companies as the board of directors shall designate, and shall be drawn out only by check signed by persons designated by resolution by the board of directors. 6.3 The fiscal year of the corporation shall be determined by the board of directors. 6.4 With the notice of the annual meeting of the stockholders there shall be mailed a general report of the business of the corporation and a report of the general financial condition of the corporation and its property. 6.5 The affirmative vote of at least 80% of the outstanding voting stock of the Company is required in order to authorize or approve (a) a merger or consolidation with or into (b) the disposition of all or substantially all of the assets of the Company or (c) the issuance of voting securities of the Company in exchange or payment for the securities or assets of, any other person or entity unless any such transaction has been approved by the affirmative vote of not less than two-thirds (2/3) of all directors. ARTICLE VII. BOOKS AND RECORDS 7.1 The books, accounts and records of the corporation shall be kept at the home office of the corporation except as the board of directors may from time to time appoint. The board of director shall determine whether and to what extent the accounts and books of the corporation, or any of them, other than the stock ledger, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or 10 11 document of the corporation except as conferred by law or by resolution of the stockholders or directors. ARTICLE VIII. NOTICES 8.1 Whenever the provisions of the charter of these bylaws require notice to be given to any director, officer, or stockholder, such notice may be given in writing by handing a copy thereof to such person or by depositing a copy thereof in a post office or letter box in postpaid, sealed envelope, addressed to such director, officer, or stockholder at his or her address as the same appears in the books of the corporation, and the time when the same shall be mailed shall be deemed to be the time of the giving of such notice. Any such notice may be contained in any periodic publication of the corporation or any house organ thereof which is mailed as provided in this article. 8.2 A waiver of any notice in writing, signed by a stockholder, director, or officer, whether before or after the time stated in said waiver for holding a meeting, shall be deemed equivalent to a notice required to be given to any director, officer or stockholder. ARTICLE IX. SEAL 9.1 The corporate seal of the corporation shall consist of two concentric circles, between which shall be the name of the corporation and the year of its incorporation and in the center shall be inscribed the word "Seal". 11 EX-4.U 3 EXTENSION OF CREDIT AGREEMENT 1 THE CHASE MANHATTAN BANK, N.A. NICHOLAS J. CHIREKOS 1 Chase Manhattan Plaza, 4th Floor Vice President New York, New York 10081 (LOGO) CHASE December 30, 1993 Mr. R. Michael Summerford Chief Financial Officer First Mississippi Corporation 700 North Street Jackson, Mississippi 39205 Dear Mike: In accordance with the provisions of Section 2.04 of the Credit Agreement dated February 9, 1993 between First Mississippi Corporation and The Chase Manhattan Bank, N.A., as Agent, we hereby inform you that as a Bank, Chase has extended its Tranche A Commitment Termination Date to February 9, 1997. Sincerely, /s/ NICHOLAS J. CHIREKOS Exhibit 4(u) 2 DEPOSIT GUARANTY NATIONAL BANK (LOGO) One Deposit Guaranty Plaza Post Office Box 1200 Jackson, Mississippi 39215-1200 Phone 601 968-4936 Telefax 601 354-8412 LOUIS B. FOURNET Vice President December 30, 1993 Mr. Nicholas J. Chirekos Vice President Chase Manhattan Bank, N.A. 1 Chase Manhattan Plaza New York, NY 10081 RE: First Mississippi Corporation request for Extension. Dear John: As per Mike Summerford's written request for a one year extension to our portion of Tranche A of the Credit Agreement dated February 9, 1993; Deposit Guaranty National Bank has approved a one year extension of the termination date to February 9, 1997 as provided for in the Loan Agreement Section 2.04. Sincerely, /s/ LOUIS B. FOURNET Louis B. Fournet Vice President LBF:det cc. Mr. Mike Summerford 3 MICHAEL J. MCKENNEY Vice President Portfolio Management (LOGO) CONTINENTAL BANK December 30, 1993 Chase Manhattan Bank, N.A. Primary Industries - 4th Floor One Chase Manhattan Plaza New York, NY 10081 Attention: Mr. Nicholas J. Chirekos Dear Nick: In accordance with the provisions of Section 2.04 of the Credit Agreement dated February 9, 1993, between FIRST MISSISSIPPI CORPORATION and THE CHASE MANHATTAN BANK, N.A., we hereby consent to the request that the Tranche A Commitment Termination Date be extended for an additional year, to February 9, 1997. Sincerely, /s/ MICHAEL J. MCKENNEY EX-13 4 ANNUAL REPORT 1 First Mississippi Corporation 1994 Annual Report 2 First Mississippi Corporation First Mississippi Corporation produces -- Chemicals for industry and agriculture -- Gold -- Combustion and thermal plasma equipment and services First Mississippi has taken steps to prove its commitment to quality. During the year, three of our Chemicals facilities, EKC Technology in Hayward, California, and Glasgow, Scotland, and Quality Chemicals in Tyrone, Pennsylvania, received ISO 9002 certification under the International Standards Organization quality standards. In addition, QCI in Dayton, Ohio, has implemented Good Manufacturing Practices for the planned production of pharmaceutical intermediates. Our goal is to have all of our Chemicals operations certified by the international benchmark during fiscal 1995. Financial Highlights 1 To Our Stockholders 2 Chemicals 4 Fertilizer 7 Combustion and Thermal Plasma 10 Gold 12 Financial Review 14 Directors and Officers 35 Corporate Information 36 Subsidiaries Inside Back Cover
(TOTAL ASSETS, CAPITAL EXPENDITURES AND CASH FLOWS PROVIDED BY OPERATING ACTIVITIES GRAPHS) 3 FIRST MISSISSIPPI CORPORATION FINANCIAL HIGHLIGHTS
(In Thousands of Dollars, Except Per Share Amounts) ----------------------------------------- Years ended June 30 ----------------------------------------- 1994 1993 1992 - - - -------------------------------------------------------------------------------------------------- Sales $ 508,225 429,940 453,242 Earnings from continuing operations $ 17,663 2,683 16,116 Loss from discontinued operations, net of taxes -- (26,052) (11,889) Cumulative effect of change in accounting principle 4,200 -- -- --------- --------- --------- Net earnings (loss) $ 21,863 (23,369) 4,227 ========= ========= ========= Earnings (loss) per common share: Continuing operations $ .88 .13 .81 Discontinued operations -- (1.30) (.60) Cumulative effect of change in accounting principle .21 -- -- --------- --------- --------- Total earnings (loss) per common share $ 1.09 (1.17) .21 ========= ========= ========= Net working capital $ 78,874 50,121 59,865 Long-term debt (including gold loan) $ 104,287 113,531 154,092 Total assets $ 377,576 383,619 461,534 Stockholders' equity $ 177,687 160,774 188,378 Return on average equity - continuing operations 10.4% 1.5% 8.6% By business segment Sales: Chemicals $ 161,045 143,497 130,331 Fertilizer 163,984 141,642 184,108 Gold 95,150 78,773 83,048 Combustion, Thermal Plasma and Other 88,046 66,028 55,755 --------- --------- --------- Total $ 508,225 429,940 453,242 ========= ========= ========= Operating profit (loss) before income taxes, minority interests and investee earnings (loss): Chemicals $ 30,295 24,434 15,333 Fertilizer 24,760 13,218 24,196 Gold 7,225 (1,305) 7,874 Combustion, Thermal Plasma and Other (12,763) (12,187) (5,656) --------- --------- --------- Total $ 49,517 24,160 41,747 ========= ========= =========
1 4 FIRST MISSISSIPPI CORPORATION TO OUR STOCKHOLDERS Fiscal 1994 earnings were $21.9 million, or $1.09 per share, including $4.2 million, or 21 cents per share, from a required change in accounting for deferred income taxes. Operating earnings of $17.7 million, or 88 cents per share, were the best since 1981. Fiscal 1993 results were a loss of $23.4 million, or $1.17 per share, including a restructuring loss of $26.1 million, or $1.30 per share. RESTRUCTURING The improvement was due in part to restructuring begun in 1992 including the disposition of oil and gas and coal operations and the sale or shutdown of several start-up businesses. Higher ammonia prices and better operating results in Chemicals and Gold also drove FY 94 earnings. Total return to stockholders from dividends and higher stock price in FY 94 was 62%. The average for the S&P 500 was 1.4%. Return on equity from continuing operations of 10% was the best in six years. We have a target of 20% ROE and expect to show further improvement in FY 95. Total debt at year end was $106 million, down from $180 million two years ago. A ruling to permit the tax-free spin-off of FirstMiss Gold was requested from the Internal Revenue Service in July. A response is expected within four to six months. Assuming a favorable ruling, the spin-off hinges on FirstMiss Gold's viability as a stand-alone company. Prospects improved this year with better operating results, a 21% increase in reserves, and final payment on the original 150,000-ounce gold loan. SUMMARY OF BUSINESS ACTIVITIES Operating results reflect better balance and focus in the current business mix. Chemicals operating profits were up 24% to $30.3 million, the second best year for this business segment. Improvement was primarily due to higher specialty chemicals earnings. Specialties include fine and performance chemicals, which have grown rapidly in recent years. Contribution from specialties increased 25% in FY 94 and now represents 60% of total Chemicals contribution. Contribution from other chemicals also grew 4%. Fine chemicals and custom manufacturing are benefitting from the trend by major chemical and pharmaceutical companies to focus on R&D and marketing, and to farm out production to efficient, independent chemical manufacturers. We are well-positioned to take advantage of this trend. Growth in personal computers, cellular telephones, and other devices using integrated circuits is driving demand for our proprietary HDA (trademark) hydroxylamine chemistries. These products, first introduced in 1992, are now the fastest growing performance products in the history of the company. Two patents were granted during the year for HDA (trademark) products. Other patent applications have been filed. These products are helping us penetrate Japanese and Pacific Rim markets, which produce roughly half of all computer chips. (SALES BY INDUSTRY SEGMENT GRAPH) The outlook for our Chemicals segment is for continued growth and improvement. Anhydrous ammonia and urea have been a part of our business mix for nearly 30 years. These nitrogen chemicals are used as fertilizers and industrial feedstocks. These commodities are produced in world-scale, low-cost facilities which have been maintained and upgraded to enable us to survive in tough times and prosper in good times. We have been through some tough times in recent years. Times are better now. Operating profits from ammonia and urea increased 87% to $24.8 million, primarily due to higher ammonia prices which peaked at $225 per ton in April. Ammonia margins are the best since the mid-1970s helped by the low price of natural gas feedstock as well as high ammonia prices. About 80% of our production is sold as ammonia, while the balance is upgraded to urea. The outlook is for further improvement. The world ammonia supply-demand balance is tight. Production from plants in Russia and Ukraine has been curtailed due to deteriorating infrastructure and internal political conflicts following break-up of the Soviet Union. Market forces are also beginning to come into play there. Operating losses from Combustion, Thermal Plasma and Other were a disappointing $12.8 million. Results were hurt by low prices and margins, and unusual items including a 15-day unplanned production outage at FirstMiss Steel and heavy legal expenses for successful patent defense in our burner business. Despite the poor bottom line results, there was progress. Sales of combustion equipment and services were up more than 30%, and year-end backlog increased nearly 80%. We received an order for five plasma tundish heating systems from one of China's largest steel makers. This was the fourth contract in China and the largest order in the company's history. We have the dominant position in this fast growing market. Aluminum dross throughput increased 30%, and sales were up nearly 90% during one of the most severe depressions ever in the aluminum industry. And at FirstMiss Steel, we regained volume lost last year following bankruptcy of a major customer, sales increased 28% on better product mix, and year-end backlog more than doubled. Our proprietary combustion and thermal plasma businesses are approaching full-scale commercial viability. Interest in our products and services is high and industry conditions are improving. 2 5 FIRST MISSISSIPPI CORPORATION Results should be better in FY 95. Gold operating profits were $7.2 million, up from a loss of $1.3 million last year due to higher mill feed grade, higher realized price, and record production. Proven and probable mineable reserves increased 21% to 1.6 million ounces due in part to a 54% increase in exploration expenditures. Other mineral deposits containing nearly 1 million additonal ounces were also identified on the Getchell property. Underground mine development below the Getchell Main Pit began, and initial production is expected in early FY 95. Underground mining is expected to reach 2,000 tons per day by fiscal year end. Grade should improve as underground production increases. Recent exploration results suggest further reserve additons are possible. Restructuring, higher ammonia prices, and better operating results in Chemicals and Gold increased 1994 earnings. Total return to stockholders was 62%. MANAGEMENT CHANGE In August Charles M. McAuley retired as president and chief executive officer of FirstMiss Gold. He had served as a director of FirstMiss Gold for seven years and as president and chief executive officer since February 1992. Charlie was succeeded by G.W. (Bill) Thompson, who has more than 25 years experience in the mining industry. His knowledge and experience should help ensure a smooth transition to underground operations. CONSOLIDATED OUTLOOK The outlook for FY 95 is favorable but is subject to unexpected events. Fertilizer should benefit from higher ammonia prices. Chemicals growth should continue with a healthy economy. Higher grade ore from underground production and increased exploration efforts should help Gold. And, prospects for Combustion and Thermal Plasma are better with high year-end backlogs. J. Kelley Williams Chairman of the Board September 9, 1994 3 6 FIRST MISSISSIPPI CORPORATION CHEMICALS Operations include production and sale of specialty chemicals and organic chemical intermediates, and research and development for specialty chemicals and production processes. Objectives include innovative development and efficient production of high-value specialty chemicals and low-cost production of chemical intermediates. CHEMICALS RESULTS Pretax operating profits were $30.3 million, up 24% from $24.4 million last year, due to increased sales of specialties, primarily fine chemicals for agriculture and performance chemicals for the semiconductor industry. Contribution from specialty chemicals increased 25% from last year on higher agricultural and electronic chemicals sales. Specialties share of total contribution increased to nearly 60% from 55% last year. Contribution from chemical intermediates increased 4% on good construction, automotive, and agricultural demand. Total sales were up 12% to $161.0 million. Exports accounted for 12% of total sales, about the same as last year. SPECIALTY CHEMICALS The company manufactures specialty chemicals, including fine and performance chemicals for use in agricultural, pharmaceutical, and photosensitive chemicals, and for manufacture of semiconductor chips. Innovative research and development, efficient production in continuous and batch processes, and proprietary waste treatment technology give the company a competitive advantage. The demand for custom manufacturing is presently growing as major chemical companies concentrate on research and marketing and farm out production to high quality custom manufacturers that can efficiently scale up laboratory processes to commercial production. Custom plants located in Tyrone, Pennsylvania, and Dayton, Ohio, manufacture ne chemicals used primarily in agricultural and pharmaceutical products. The company's technical expertise, timely response, economic capacity, and support services also provide competitive advantage. Custom manufactured chemicals are generally sold as raw materials in drums and in bulk for further processing. (CHEMICAL CONTRIBUTION INDEX BY PRODUCT GROUP GRAPH) Acquisition of the Dayton facility in 1992 nearly doubled the company's custom manufacturing capacity. Current custom manufacturing contracts at Dayton include development work for Monsanto Agriculture, a long-term resins project, intermediates for production at Tyrone, and initial development quantities of new products. In addition, the company has implemented "Good Man ufacturing Practices," a prerequisite for the planned production of bulk or intermediate pharmaceutical chemicals. Innovative technology and continuous process improvement provide flexibility and enable the company to meet increased customer demand with limited additional capital expenditures. Expansion of the specialty nitration plant at Pascagoula, Mississippi, was completed during the year. Modifications to the facility increased capacity to manufacture specialty chemicals primarily for pharmaceutical, personal care, and agricultural products. In June 1994, Rohm & Haas acquired Monsanto's herbicide product line, which includes Dimension (Registration Mark) turf grass herbicide. The active ingredient for Dimension (Registration Mark) is manufactured at the Tyrone facility. Performance chemicals such as organic photoresist removers for semiconductor manufacturing produced in Hayward, California, and Glasgow, Scotland, are sold on product function, cleanness, and purity. The company works closely with semiconductor manufacturers to formulate these special, complex products which provide solutions to customers' manufacturing problems. New technology developed through combined R&D efforts at Hayward and at Pascagoula have expanded the photoresist product line to include silicon wafer cleaners based on HDA (trademark) hydroxylamine chemistries for the improvement of semiconductor manufacture. The HDA (trademark) products remove polymer residues formed during dry etching of silicon wafers to increase yields and improve chip performance. The company has been granted two patents for this series of products. Other patent applications are pending. (SALES, IDENTIFIABLE ASSETS, CAPITAL EXPENDITURES AND EMPLOYEES GRAPHS) 4 7 FIRST MISSISSIPPI CORPORATION The company currently has 20% of the worldwide market and and 40% of the U.S. market for photoresist removers. The company is the largest supplier of photoresist removers in the United States and the second largest in the world. The HDA (trademark) product line is the fastest growing performance product in the history of the company. It has solved a major industry problem and established the company as a technical leader in this rapidly expanding market. CHEMICAL INTERMEDIATES Chemical intermediates include aniline and other nitrated aromatic amines produced in low-cost, continuous process facilities in Pascagoula. These products are primarily sold in large volumes to industrial customers for further processing in pharmaceutical, automotive, agricultural, construction, pigment, and photochemical applications. Primary markets for aniline include manufacture of polyurethane foam for insulation in commercial and residential construction and urethane elastomers used in automobile body components. Other markets include tire and agricultural chemicals. Nitrated aromatics and aromatic amines produced by the company are used in pharmaceuticals, optical brighteners, and tire manufacture. The company is one of the largest U.S. merchant marketers of aniline, with approximately 17% of domestic capacity and 6% of world capacity. Efficient production, favorable logistics, and readily available raw materials make the company a competitive, low-cost producer. The Pascagoula facility has ready access to barges and ocean-going tankers on the Gulf of Mexico for receipt of raw materials and for export shipments. Rail car and tank truck facilities are also available for domestic shipments. Benzene, one of the major raw materials in aniline, is transported via pipeline from a neighboring renery in Pascagoula. An on-site plant supplies nitric acid for production of nitrated aromatics using anhydrous ammonia produced at company operations near Baton Rouge, Louisiana. This year the company entered into a multi-year contract to supply nitrobenzene to a major customer that will fully utilize existing nitrobenzene capacity through 1999. High operating rates and near capacity utilization enable the company to accomplish efficient, low-cost production of chemical intermediates. RESEARCH AND DEVELOPMENT (TWO PHOTO'S OF RESEARCH AND DEVELOPMENT FACILITIES) R&D facilities include laboratories, pilot plant, and semi-works with gram to multi-pound sample production capabilities. Facilities and support services are available to scale up customer laboratory processes to initial or full-scale commercial production. R&D activities identify new market opportunities, new process technologies, and improvements to existing technologies. A third addition to the Pascagoula R&D facility was recently completed. Facilities include laboratories, pilot plant, and semi-works for process R&D with gram to multi-pound sample production capabilities. Continued on page 6 5 8 FIRST MISSISSIPPI CORPORATION Continued from page 5 Cooperative university programs complement in-house efforts. The company sponsors applied research at several leading universities in the United States and Europe. These closely directed programs have led to the development and introduction of patented semiconductor wafer cleaning products and performance polymers. Since 1989, R&D spending has increased 99%, and 19 new specialty products have been introduced. ENVIRONMENT AND SAFETY Environmental and community responsibility and protection of employee health and safety is top priority. The company strives to reduce waste and emissions through new technology, careful maintenance of equipment and facilities, and process improvements. In Pascagoula, an on-site hazardous waste incinerator eliminates transportation of wastes and provides economic and environmentally safe disposal. The Pascagoula plant is the third in the nation to be accepted in the Credit for Early Reduction provision under Title III of the Clean Air Act. This provision rewards companies for voluntarily achieving a 90% reduction in toxic air emissions prior to full implementation of the Clean Air Act regulations. Participants may defer subsequent modifications until 2001 to avoid unnecessary investment. The company endorses and is actively implementing the Chemical Manufacturers Association's Responsible Care Registration Mark initiative, a multi-step, continuous improvement process to implement codes of management practices and exhibit responsibility in the following areas: community awareness and emergency response, pollution prevention, process safety, distribution, employee health and safety, and product stewardship. This means setting and meeting strict internal health, safety, and environmental criteria for raw materials, manufacturing processes, finished products, and waste handling. The Pascagoula plant was recently named "The Industrial EMS System of the Year" by Industrial Fire World for support of the local Emergency Medical Service district. The plant has provided facilities and training for emergency medical technicians in the area over the past three years. Pascagoula was one of 90 major industrial sites in the U.S. nominated for the award. Facilities at Hayward, Glasgow, and Tyrone have been certified under the International Organization for Standardization ISO 9002 program. These facilities were inspected by independent auditors for high standards of quality management systems in the areas of purchasing, production, packaging, handling, storage, and delivery. The ISO 9000 benchmark is rapidly becoming a world standard and in some cases a requirement for securing new business. During fiscal 1995, the company hopes to complete the quality certication process for all Chemicals locations. CHEMICALS OUTLOOK The outlook continues favorable. Specialty chemicals growth should continue based on new custom manufacturing contracts and growing market share for proprietary electronic chemicals. Chemical intermediates should benefit from demand for commercial and residential construction, automobiles, and agriculture. (Before and After Photo) BEFORE These photos, enlarged 10,000 times, show the effectiveness of the company's proprietary HDA (trademark) hydroxylamine products in removing residue formed by dry etching during silicon wafer fabrication. AFTER 6 9 FIRST MISSISSIPPI CORPORATION FERTILIZER Operations include production and sale of anhydrous ammonia and urea for agriculture and industry in domestic and world markets. Activities also include the purchase and resale of fertilizers. Objectives are to be a low-cost producer and efficient marketer. Two world class production and storage facilities are located on the Mississippi River at Donaldsonville, Louisiana. AMPRO Fertilizer, Inc., a wholly owned subsidiary with 446,000 tons annual capacity, produces anhydrous ammonia. Triad Chemical, a 50% joint venture, produces both anhydrous ammonia and urea, with annual capacity of 420,000 tons ammonia and 520,000 tons urea. About 61% of Triad's 1994 ammonia production was used in the production of urea. Facilities can load ocean-going vessels for export shipments and trucks, rail cars, and barges for domestic shipments. Anhydrous ammonia can also be shipped by pipeline to midwestern markets. Marketing and administration are headquartered in Jackson, Mississippi. OPERATING RESULTS Fertilizer pretax operating profits were up 87% to $24.8 million versus $13.2 million last year primarily due to higher ammonia prices. U.S. Gulf ammonia prices increased from a low of $85 per ton in the first quarter to a 20-year high of $225 in April as a result of increased domestic consumption and reduced exports from Russia and Ukraine. Average ammonia price for the year was $130 per ton, up nearly 30% from last year. Average unit cost increased 11% due to higher cost for brokered product. Unit margins increased $18 per ton and were the highest since the mid-1970s. Average urea price for the year was $126 per ton versus $133 last year. Unit margins were down 30% due to lower prices and $4 per ton higher cost. Total fertilizer volume was down slightly from last year to 1.2 million tons. Captive production accounted for 64% of volume. Exports were 10% of total, about the same as last year. (PHOTO OF CORN FIELD) Greater domestic corn acreage this year resulted in increased demand for anhydrous ammonia. The company is a major U.S. producer of ammonia for direct application as a crop fertilizer. Continued on page 8 7 10 FIRST MISSISSIPPI CORPORATION Continued from page 7 FERTILIZER TRADE Domestic ammonia demand was strong in 1994. Beginning corn inventories were at an 18-year low due to severe flooding in the Midwest last year. Corn acreage increased 7%. Favorable weather conditions encouraged direct application of anhydrous ammonia. Industrial demand for ammonia for production of plastics, resins, fibers, and explosives also improved. Ammonia prices jumped on strong demand and tight supplies. U.S. capacity has decreased in recent years as marginal production facilities have been shut down or converted to other uses. Several U.S. producers have added capacity to upgrade ammonia to urea and nitrogen solutions. This has reduced "free" U.S. ammonia capacity 6% below 1992 levels. A further 3-4% reduction in free ammonia is expected in the next two years due to planned upgrading projects. Exports from Russia and Ukraine were also lower this year due to production and distribution problems and political instability and conflicts among the independent states. Urea prices fell slightly as China reduced purchases due to foreign exchange constraints. Privatization of fertilizer plants in Latin America, Mexico, and central Europe, and shutdown of noneconomic operations continues. FERTILIZER SALES VOLUME GRAPH OPERATIONS Both AMPRO and Triad ammonia plants had record production. AMPRO produced 499,718 tons of ammonia versus 466,798 last year and had an on-stream rate of 99.7%. Triad ammonia production was 478,186 tons versus 428,818 tons last year. The ammonia plant on-stream rate was 98.5%, up from 88.9% last year primarily due to prior year outages caused by Hurricane Andrew. The WORLD MAP OF FERTILIZER PRODUCTION SALES, IDENTIFIABLE ASSETS, CAPITAL EXPENDITURES AND EMPLOYEES GRAPH 8 11 FIRST MISSISSIPPI CORPORATION urea plant on-stream rate fell to 91.3% versus 95.7% last year because of schedled maintenance. The company receives one-half of Triad production. ENVIRONMENT AND SAFETY The company is committed to safe working conditions for employees and environmentally responsible operations for the community. Triad received its fourth "Award of Merit" from the National Safety Council and has completed over 1.8 million man-hours without an Occupational Safety and Health Administration (OSHA) lost-time accident. AMPRO has operated 14 years without a lost-time accident and has qualified for exemption from OSHA programmed inspections. From 1987 through 1993, Triad reduced ammonia air emissions 87% and total water emissions 54%. AMPRO reduced ammonia air emissions 98% and total water emissions 78% during the same period. Population growth and rising living standards, coupled with reduced exports from Russia and Ukraine and closure of some noneconomic production facilities, have tightened the ammonia supply/demand balance causing higher prices. FERTILIZER OUTLOOK The near term outlook for ammonia is good. Lower exports from Russia and Ukraine, limited capacity additions in other parts of the world, and the response of newly privatized operations to real world market factors should keep ammonia supplies tight. Urea may continue to suffer from oversupply until China imports return to previous levels. Use of ethanol, produced from corn and now required as an oxygenate in reformulated gasolines, may also be a factor. Natural gas prices, weather, and political and economic developments in Russia, Asia, and Europe continue to have important and unpredictable influence on operating results. 9 12 FIRST MISSISSIPPI CORPORATION COMBUSTION, THERMAL PLASMA AND OTHER The company develops and markets proprietary combustion and thermal plasma equipment and services primarily for environmental applications and manufacturing. Products include low-emission burners, flares, and incinerators, thermal plasma equipment for waste treatment and steel production, and thermal plasma systems for aluminum recovery. Objectives are to develop proprietary products for high growth environmental and industrial applications. RESULTS OF OPERATIONS Results were a pretax operating loss of $12.8 million versus a loss of $12.2 million last year. Sales were up 33% over last year to $88.0 million. Results were hurt by low prices and margins, and unusual items including a 15-day unplanned production outage at FirstMiss Steel and heavy legal expenses for patent defense. Combustion technology sales grew 31% despite patent litigation with a major competitor which was successfully settled at year end. Thermal plasma sales almost doubled over last year primarily due to demand for tundish heating systems in China and other developing countries. Steel demand and prices were up, but margins were squeezed by high scrap metal prices, and production was hurt by severe winter weather and an accident late in the fourth quarter. OUTLOOK Growing environmental concerns and stricter regulations are creating opportunities for environmental processes and applications utilizing thermal plasma and low-emission combustion equipment. Backlogs are at an all-time high. Margins are increasing on most products. Operating results should improve on better margins and higher sales. COMBUSTION EQUIPMENT AND SERVICES Products for environmental and combustion applications include: / low-emission burners for process heaters and refinery / petrochemical combustion applications; / flare systems for destruction of hydrocarbon emissions from refineries, petrochemical and chemical plants, and marine loading terminals; / gas, liquid, and solid waste incinerators; emissions monitoring and process optimization software for refineries and chemical plants. The company's proprietary low-emission burners signicantly reduce nitrogen oxide (NOx) emissions from process heaters in refineries and petrochemical plants. California's mandate to reduce NOx emissions is spreading to other states, particularly in the Gulf Coast region. Flare systems for marine terminals destroy vapors generated during loading of refined products and light crudes. Vapor recovery systems collect gasoline and petrochemical vapors at loading facilities for return to storage. These systems meet current air pollution regulations for the shipment and transfer of gasoline and other petrochemical products. Incineration systems dispose of gas, liquid, and solid wastes. Rotary kiln system applications include treatment of contaminated soils for site remediation, liquid and solid chemical hazardous wastes, sludge and wastewater, and disposal of munitions. Combustion equipment is developed and demonstrated in modern test facilities under variable conditions of fuel, temperature, and excess air to meet customer needs. Computerized data acquisition systems permit fast, accurate analysis of test results. The company offers Continuous Emissions Monitoring services for refineries and chemical plants based on an exclusive software license. This predictive model calculates emissions from process operating data and is more accurate, less expensive, and more reliable than stack gas analyzers. Marketing efforts are currently directed at U.S., European, and Pacic Rim industries that require reduced- or low-emission burners, flares and incinerators, rotary kilns, and hydrocarbon recovery equipment. Year-end backlog was up 85%, and was the highest in the company's history. THERMAL PLASMA Thermal plasma torches convert electricity into thermal energy using an ionized gas, or "plasma," generating much higher temperatures than fossil fuel combustion. Different ionizing gases are used to meet specic process requirements. Other advantages include energy efficiency, precision, and rapid response temperature and process control. Torches range from small 96 kilowatt convertible torches that may run in transferred or non-transferred mode for use in research laboratories, up to 4 megawatt systems for large commercial applications. Plasma torches are ideal for waste treatment and reduction. In (PHOTO OF THERMAL PLASMA TORCH) Thermal plasma torches convert electricity into thermal energy, providing efficient, precise, and rapid response temperature and process control for a variety of industrial and waste trestment applications. (SALES, INDENTIFIABLE ASSETS, CAPITAL EXPENDITURES AND EMPLOYEES GRAPHS) 10 13 FIRST MISSISSIPPI CORPORATION Japan, the company's plasma systems have been installed in the newest and largest installations for vitrication of ash residues from municipal waste incinerators. Vitrication reduces ash volume and creates a slag that does not leach or require special disposal and which may be used as a raw material for bricks and ceramic products. Other potential applications include treatment of medical, low-level radioactive, and industrial chemical wastes. Industrial applications include ladle and tundish heating for steel production to improve quality and increase productivity in continuous casters. Systems for steel production have been sold in the United States, Japan, China, Germany, and Australia. ALUMINUM RECOVERY The company, in cooperation with Alcan International Limited, Canada's largest primary aluminum producer, developed patented thermal plasma technology for recovering aluminum metal from aluminum dross. The plasma process creates no hazardous waste by-product and is cleaner, safer, and more energy efficient than competing processes. Dross is a by-product of aluminum processing, containing 30% to 80% aluminum. Since it is more economical to recover aluminum from dross than to produce primary aluminum, almost all of the 2 billion pounds of dross produced each year in North America is processed to recover aluminum. In addition to recovering 90% of the available aluminum, this total recycle process produces marketable by-products for refractories, ceramics, abrasives, and steel production. Competing processes create a saltcake by-product that requires landfill disposal, a source of concern in the industry. The company has exclusive worldwide rights to use and license the plasma technology except in Europe and within Alcan. OTHER OPERATIONS The company operates a steel melting and production facility near Johnstown, Pennsylvania, that utilizes proprietary plasma heating and horizontal continuous casting. The 400,000-square-foot plant has annual capacity of 50,000 tons of cast high-grade steel billets and 125,000 tons of carbon, alloy, and specialty grade bottom-poured ingots. Volume in fiscal 1994 decreased slightly from last year to 96,575 tons. Some ingots are upgraded, using outside processors, for sale as bar, billet, plate, and wire rod. A 4-metric-ton furnace and plasma ladle reheat facility is used for specialty metal refining and casting through an existing horizontal bar caster to meet demand for small quantities of special steel grades. The company also participates in the growing waste-to-energy field through 50% ownership in five plants in the southeastern United States that burn wood scrap and other wastes to produce steam for industrial users under long-term contracts. (PHOTO OF COMBUSTION EQUIPMENT) (PHOTO OF TEST FACILITY) Combustion equipment is developed and fabricated to meet specific customer requirements. Effectiveness and efficiency are demonstrated in modern test facilities under simulated operating conditions. 11 14 FIRST MISSISSIPPI CORPORATION GOLD The company owns approximately 81% of the shares of FirstMiss Gold Inc., a gold exploration, mining, and production company with headquarters in Reno, Nevada. Shares in FirstMiss Gold are traded over the counter and listed on The NASDAQ Stock Market as "FRMG." The principal property is the Getchell mine in north central Nevada acquired by the company in 1983. Getchell has been the site of intermittent gold production since 1938 and at one time was the largest gold producer in Nevada. Approximately 1 million ounces of gold were produced on the property prior to FirstMiss Gold's operation. The company produced 1 million ounces in nine years. (PHOTO OF TURQUOISE RIDGE) Much of this year's exploration expenditures targeted Turquoise Ridge, where multiple core holes intercepted high grade sulfide mineralization similar to that found in the underground mine. Additional exploration drilling is planned to define this deposit. If results indicate a potential economic ore body, engineering studies will be conducted to determine the feasibility of opening a new underground mine. Operations include open pit and underground mining, heap leaching, and milling using pressure oxidation. Dore bars are sold to refiners at world market prices. Exploration is focused on 33,000 acres at Getchell to increase proven and probable mineable gold reserves.The company owns approximately 14,100 acres, or 43% of the property, while the remaining 18,900 acres are controlled by unpatented mining claims located on public land. Objectives are to be a low-cost gold producer and to increase reserves through exploration. OPERATING RESULTS Pretax operating profits were $7.2 million, up from a loss of $1.3 million prior year due to higher mill feed grade, higher realized price, and increased production. Results last year suffered from severe winter weather and mill mechanical problems. Sales increased 21% to $95.2 million on record gold production of 243,826 ounces. Average realized price was $390 per ounce versus $374 last year. Average realized price was higher than the average market price of $379 per ounce due to hedged sales and gold loan repayments. Sales included 20,625 ounces of gold loan repayments at $475 per ounce and hedged sales of 47,000 ounces at $400 per ounce. The original gold loan of 150,000 ounces was paid in full in June 1994. HEDGING The company periodically sells gold production forward using spot deferred contracts. When these contracts mature, delivery may be rolled forward to take advantage of higher spot market prices. As of June 30, 1994, 225,000 ounces were hedged for fiscal 1995 at an average price of $391 per ounce, and 92,000 ounces were hedged for fiscal 1996 at $392 per ounce. MILL OPERATIONS Mill throughput was 1.2 million tons, down slightly from last year. Recovery was 88.9% versus 88.5% last year. Gold production increased 15% to 215,363 ounces as average mill feed grade increased to 0.203 ounces per ton from 0.169 with the return to normal mining following the severe winter last year and the addition of North Pit ore to the mill feed. Mill cash cost was unchanged at $290 per ounce. HEAP LEACH OPERATIONS Low grade oxide ore is processed using conventional heap leach methods. Production increased 20% to 28,463 ounces versus 23,666 ounces last year on 175,000 tons more ore volume. Cash production cost decreased 9% to $183 per ounce. An additional pad was completed in September with capacity to leach an additional 1.5 million tons of ore. MINING Mine operations include open pit and underground mining. Company mining engineers plan and manage mining by independent contractors. More than 26.6 million tons of material were mined this year, including 3.8 million tons from the North Pit, 21.3 (SALES, IDENTIFIABLE ASSETS, CAPITAL EXPENDITURES AND EMPLOYEES GRAPHS) 12 15 FIRST MISSISSIPPI CORPORATION million tons from the Main Pit, and 1.6 million tons from Turquoise Ridge to recover 1.7 million tons of sulfide and oxide ore. Development work is proceeding on five levels in the Getchell Main Underground mine. Access is via a 950-foot decline which links production levels extending north along the footwall of the Getchell fault zone, below and to the west of the Main Pit. Production is scheduled to begin during the second quarter of fiscal 1995 using drift and fill mining and should reach about 2,000 tons per day by fiscal year end. Average ore grade from the underground is expected to exceed 0.300 ounces per ton. Remaining open pit ore from the Main Pit will be mined by mid-fiscal 1995. A portion of this ore will be stockpiled and blended with higher grade underground ore to maintain grade and throughput at levels similar to the last three quarters. EXPLORATION Exploration objectives are to add reserves and increase ore grade to improve economics and extend mine life. In fiscal 1994, exploration efforts were accelerated and total expenditures increased 54% to $5.7 million. Exploration expenditures in fiscal 1995 will be about the same. Total drilling to date has identified approximately 4 million tons of sulfide mineral deposits containing an estimated 1 million ounces of gold not included in proven and probable mineable reserves. These mineral deposits include an estimated 400,000 ounces located below the Getchell Main Underground mine, 300,000 ounces at Turquoise Ridge, and 140,000 ounces in two other locations on the property. Further drilling and economic evaluation is required to determine if these deposits may be classied as proven and probable mineable reserves. RESERVES Proven and probable gold reserves at year end were up 21% to 1,591,700 ounces versus last year. Over 80% of current reserves are underground at Getchell. (PHOTO OF UNDERGROUND MINE) Development of the Getchell Main Underground mine was initiated during the year for economic mining of high grade sulfide ore below the Main Pit. The underground ore body is open laterally and at depth. Proven and Probable Mineable Reserves
Contained Gold Tons Grade Ounces Sulfide 6,725,400 0.225 1,511,800 Oxide 2,860,800 0.028 79,900 Total 9,586,200 0.166 1,591,700
GOLD OUTLOOK Grade should continue to improve with the addition of underground ore. Exploration efforts should increase reserves and extend mine life. 13 16 FIRST MISSISSIPPI CORPORATION SELECTED FINANCIAL DATA
Years ended June 30 (In Thousands of Dollars Except Per Share Amounts) ------------------------------------------------------------------------------------------- 1994 1993 1992 1991 1990 ------------------------------------------------------------------------------------------- % % % % % - - - -------------------------------------------------------------------------------------------------------------------------------- Sales to unaffiliated customers: Chemicals $161,045 32 143,497 33 130,331 29 130,494 29 135,096 34 Fertilizer 163,984 32 141,642 33 184,108 41 196,128 44 159,810 40 Gold 95,150 19 78,773 18 83,048 18 73,464 17 62,042 16 Combustion, Thermal Plasma and Other 88,046 17 66,028 15 55,755 12 43,273 10 37,725 10 -------- --- ------- --- ------- --- ------- --- ------- --- Total sales 508,225 100 429,940 99 453,242 100 443,359 100 394,673 100 Other revenues 1,750 -- 1,635 1 1,669 -- (97) -- 1,698 -- -------- --- ------- --- ------- --- ------- --- ------- --- Total revenues $509,975 100 431,575 100 454,911 100 443,262 100 396,371 100 ======== === ======= === ======= === ======= === ======= === Operating profit (loss) from continuing operations: Chemicals $ 30,295 61 24,434 100 15,333 36 16,214 50 27,192 134 Fertilizer 24,760 50 13,218 55 24,196 58 20,127 63 (4,221) (20) Gold 7,225 15 (1,305) (5) 7,874 19 2,540 8 1,707 8 Combustion, Thermal Plasma and Other (12,763) (26) (12,187) (50) (5,656) (13) (6,818) (21) (4,480) (22) -------- --- ------- --- ------- --- ------- --- ------- --- 49,517 100 24,160 100 41,747 100 32,063 100 20,198 100 === === === === === Unallocated corporate expenses (8,435) (7,069) (7,461) (7,005) (7,544) Interest expense, net (9,782) (12,445) (9,005) (12,531) (11,442) Other income (expense), net (132) (271) 1,410 (577) 386 -------- ------- ------- ------- ------- 31,168 4,375 26,691 11,950 1,598 Income taxes 12,150 1,719 9,872 4,788 577 Minority interests in net (earnings) loss of consolidated subsidiaries (1,049) 458 (769) (16) (28) Equity in net earnings (loss) of equity investees (306) (431) 66 810 1,301 -------- ------- ------- ------- ------- Earnings from continuing operations 17,663 2,683 16,116 7,956 2,294 Earnings (loss) from discontinued operations, net of taxes -- (26,052) (11,889) (2,647) 2,080 Cumulative effect of change in accounting principle 4,200 -- -- -- -- -------- ------- ------- ------- ------- Net earnings (loss) $ 21,863 (23,369) 4,227 5,309 4,374 ======== ======= ======= ======= ======= Earnings (loss) per common share: Continuing operations $ .88 .13 .81 .40 .12 Discontinued operations -- (1.30) (.60) (.13) .10 Cumulative effect of change in accounting principle .21 -- -- -- -- -------- ------- ------- ------- ------- Total earnings (loss) per common share $ 1.09 (1.17) .21 .27 .22 ======== ======= ======= ======= ======= Net working capital $ 78,874 50,121 59,865 32,476 53,269 Long-term debt (including gold loan) $104,287 113,531 154,092 142,107 165,067 Total assets $377,576 383,619 461,534 462,260 498,071 Stockholders' equity $177,687 160,774 188,378 187,928 189,591 Dividend payout rate 27 * 140 111 135 Return on average equity - continuing operations 10 2 9 4 1 Return on sales - continuing operations 3 1 4 2 1 Long-term debt/equity ratio .59 .71 .82 .76 .87 Current ratio 2.32 1.62 1.86 1.41 1.64 Dividends per share $ .30 .30 .30 .30 .30 Book value per share $ 8.85 8.05 9.50 9.56 9.65
*Computation not applicable due to loss 14 17 FIRST MISSISSIPPI CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1994 VERSUS 1993 CONSOLIDATED RESULTS Results for 1994 were up sharply reflecting higher earnings from continuing operations and a $4.2 million benefit from an accounting change. In addition, prior year results included $26.1 million in after-tax losses related to discontinued operations. Earnings from continuing operations increased on improvement in segment operations and lower interest expense. Interest expense declined due to lower average outstanding debt following the disposition of oil and gas operations in June 1993. Effective July 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which resulted in a $4.2 million benefit. In addition, $0.6 million in tax expense was recorded during the first quarter, as required by this new accounting principle, to adjust deferred taxes to reflect the increase in federal tax rates which occurred in August 1993 (See Note 8 to Financial Statements). Results of equity investees improved slightly for the year, primarily due to a nonrecurring technology sale by Melamine Chemicals, Inc. Minority interest results reflect the earnings at 81% owned FirstMiss Gold versus a loss in the prior year. SEGMENT OPERATIONS Segment pretax operating profits were $49.5 million, more than double the previous year, reflecting improvement in chemicals, fertilizer and gold operations. Sales were up 18% and increased in all segments. Chemicals pretax operating results were up 24% over 1993. The improvement was due to increased specialty chemicals sales, primarily fine chemicals for agriculture and performance chemicals for the semiconductor industry. Contribution from specialties increased 25% and represented 60% of total contribution versus 55% last year. Contribution from intermediate chemicals rose slightly. Chemicals sales increased 12%, primarily on higher specialty sales. Fertilizer pretax operating results for 1994 were up 87% and sales increased 16%, primarily due to higher ammonia prices. Average ammonia price for the year was $130 a ton, up 29% from the prior year. Volume remained about the same. Urea price declined 5% due to an increase in imports and volume declined 10% due to lower production caused by a 26-day routine maintenance turnaround in the second quarter. Fourth quarter results for fertilizer accounted for 60% of fertilizer's profits for the current year. Ammonia prices rose to a high of $225 per ton during the quarter and averaged $192 per ton versus $101 fourth quarter prior year. Prices rose on strong demand driven by increased corn acreage due to prior year flooding in the Midwest, excellent early planting weather and strong industrial demand. Supplies were also tight due to several unplanned short-term plant outages by other producers, less merchant ammonia due to plant upgrades, and disruptions of production and shipments out of Russia and Ukraine, including an accident in the Bosphorous Straits that temporarily blocked passage of ammonia vessels leaving the Black Sea. As fiscal 1995 begins, ammonia prices have remained at relatively high levels. Unit production cost was virtually unchanged in 1994 versus 1993 as a 9% increase in average natural gas cost was offset by lower fixed costs. Gas cost for 1994 and 1993 included $0.7 million and $3.3 million, respectively, in futures contracts gains (See Note 1(k) to Financial Statements). At June 30, 1994, the Company had entered into futures contracts for approximately 38% of anticipated purchases of natural gas for the period July 1994 to June 1995 at an average price of $2.22 per MMBTU. Gold pretax operating results were up $8.5 million from 1993, primarily due to higher ore grade and higher prices. Average ore grade for 1994 increased to 0.203 ounces per ton from 0.169 in 1993 due to the milling of high grade North Pit ore during the third and early fourth quarters. The grade for 1993 was 8% below 1992 and 1991 average grades, however, due to the use of low grade ore stockpiles as severe winter weather disrupted normal mining operations. Production for the year was up 16% to 243,826 ounces due to the higher ore grade, which more than offset a 4% decline in mill throughput which averaged 3,268 tons per day. Sales for the year were up 21% due to the increase in production and an increase in average realized price from $374 to $390 per ounce. Sales for 1994 and 1993 included gold loan payments of 20,625 ounces and 28,125 ounces, respectively, at $475 per ounce. In addition, in 1994 and 1993, the Company exercised options for the sale of 47,000 ounces and 40,000 ounces, respectively, at $400 per ounce. The above gold loan payments and options were the final payments and options related to the 1988 gold loan. Exploration expense for the year increased $1.2 million with activities concentrated on the Turquoise Ridge Fault zone. Proven and probable reserves increased 21% for the year to 1.6 million ounces at June 30, 1994. In August 1993, the Company began selling gold forward using spot deferred contracts. As of June 30, 1994, approximately 74% of planned production has been sold for delivery over the next one and one-half years using spot deferred contracts at prices ranging between $381 and $399 per ounce. Under these contracts, if prices rise the Company may roll delivery dates forward and sell into the spot market. Development work is continuing on the underground mine. Initial production from the first underground level is expected to be established in the second quarter of fiscal 1995 with mining costs and grades anticipated to be higher than open pit ore. In February 1990, the Company, which holds approximately Continued on page 16 15 18 FIRST MISSISSIPPI CORPORATION Continued from page 15 Management's Discussion and Analysis of Financial Condition and Results of Operations continued 81% of the stock of FirstMiss Gold Inc. ("FRMG"), announced plans to distribute this stock to shareholders. The spin-off was subject to a favorable tax ruling from the Internal Revenue Service and a favorable operating and financial outlook. The required favorable ruling was received in December 1990. However, in the interim, gold prices had fallen and the spin-off was put on hold. In July 1994, a new ruling was requested to permit a tax-free spin-off. Upon receipt of a favorable ruling, the spin-off will be contingent on FRMG's ability to succeed as a viable, stand-alone company. Combustion, thermal plasma and other pretax operating losses increased 5% primarily due to lower margins and increased legal expenses related to combustion products. Margins on combustion products declined on lower sales prices for burners, flares and vapor recovery systems due to competitive market pressure. Margins are projected to improve in 1995, however, on improved product mix and technological advances. Legal expenses were related to defense of a patent claim, which has been settled. Losses from aluminum recovery operations were slightly lower than prior year. Tolling volume increased 31% for the year, however unit toll prices declined 7%. Total group sales for the year increased 33%, primarily due to increased sales of combustion products and higher priced value-added steel products. Steel volume remained the same, but margins declined due to higher raw material and fixed costs. Steel margins were also hurt by a 15-day production outage in the fourth quarter following a plant accident. Prior year results included a $2.4 million receivable loss. Margins on thermal plasma systems improved for the year as sales increased over the prior year. Unallocated corporate expenses were up 19% for the year, primarily due to $1.3 million in additional interest related to a deferred compensation plan begun in 1986. Interest expense, net, for 1994 declined $2.7 million due to lower average outstanding debt. 1993 VERSUS 1992 CONSOLIDATED RESULTS Results for 1993 were down from 1992, reflecting losses on the disposal of businesses and an 83% decline in results of continuing operations. Continuing operations declined on lower margins in gold and fertilizer, increased losses in start-up businesses and higher interest expense. Interest expense increased 34% in 1993 primarily due to higher average interest rates following the Company's issuance of senior long-term debt in June of 1992. The loss on investments in 1993 was due to the write-down of System Industries, Inc. ("SII") stock following a 58% decline in SII stock price. Results for 1992 reflect net gains from the sale of stock investments. Interest and other income for 1993 increased $1.1 million over 1992 on increased license and fee income in chemicals and fertilizer operations. Results for 1992 included a $0.8 million gain from the sale of FRM Agricultural Sciences Partnership (See Note 13 to Financial Statements). Results of equity investees for 1993 declined from 1992, primarily due to increased losses at MCI. Higher losses at MCI resulted from 15% lower selling prices, the result of worldwide over-capacity and weak demand. Minority interest results reflect the loss at 81% owned FirstMiss Gold for 1993 versus earnings in 1992. SEGMENT OPERATIONS Segment operating profits decreased in 1993 as lower results in fertilizer, gold and combustion, thermal plasma and other operations offset improvement in chemicals. Sales for 1993 declined 5%, primarily due to lower fertilizer volume. Chemicals pretax operating profits for 1993 were up 59% and sales were up 10%, primarily due to increased sales and contribution from specialty products. Specialty contribution increased 39% on new product sales and custom manufacturing contracts. In August 1992, the Company acquired a Dayton, Ohio, facility from Monsanto, increasing custom manufacturing capacity, and entered into a three-year production agreement with Monsanto's Agricultural Group. Contribution from chemical intermediates, which includes aniline, improved nearly 9%, reflecting good demand from agricultural and construction markets. Fertilizer pretax operating profits for 1993 declined 45%, primarily due to higher natural gas prices. Sales declined on 24% lower ammonia brokerage volume as a result of the June 30, 1992, termination of an ammonia purchase agreement. Total captive production remained about the same and accounted for 62% of sales. Average ammonia price for 1993 was $101 per ton versus $99 in 1992. Average unit production cost increased nearly 30% on a 32% increase in average natural gas price, net of $3.3 million in natural gas futures contracts gains. Unit margins declined $7 per ton. Average urea price for the 1993 was $133 per ton versus $130 per ton for 1992. Average unit cost was up 20% and unit margins were down $13 per ton. Gold pretax operating results for 1993 declined $9.2 million, primarily due to higher unit cost, lower production and increased exploration expenses. Total unit costs increased from $328 per ounce to $357 per ounce as mill feed grade decreased 8% to 0.169 ounces per ton. This resulted primarily from the unscheduled use of low grade ore stockpiles to supplement mill feed as severe winter weather disrupted normal mining operations. Remaining stockpiled inventory was written down $1.5 million during the year due to an increase in estimated cost to process the ore. Total production for 1993 declined 4% to 210,465 ounces due to the low mill feed grade, despite a 4% increase in average daily throughput to 3,397 tons per day. Heap leach production, however, was up due to an increase in tons processed. Sales in 1993 and 1992 included gold loan repayments of 28,125 ounces and 37,500 ounces, respectively, at $475 per ounce. Also included were hedged sales at $400 per ounce of 40,000 ounces in 1993 and 1992. Sales for 1993 16 19 decreased 5% due to lower production and a 2% reduction in the average realized sales price. Exploration expenses for 1993 increased $1.7 million, reflecting increased exploration activity at the Getchell Property. Deferred stripping charges for 1993 were $11.2 million versus $2.3 million in the prior year. Combustion, thermal plasma and other pretax operating results for 1993 declined $6.5 million from 1992 as increased losses from aluminum recovery, steel production and the sale of thermal plasma systems offset improvement in combustion technology. Sales for this group increased 18% due to increased combustion technology and steel sales. Aluminum recovery losses, which accounted for almost half of this group's losses, reflected low throughput and cancellation of a baseload contract during the second quarter. This contract was renegotiated and shipments resumed on July 1, 1993. The decline in steel results was due to lower unit margins and a $2.4 million receivable write-off. A $1.7 million bad debt allowance was established for this customer in 1992 following their bankruptcy. Under terms of the bankruptcy proceedings, the Company provided additional trade credit, but the customer's operating results deteriorated further, and during the fourth quarter of fiscal 1993 they ceased operations. Steel sales for 1993 increased as unit sale price and volume increased 8% each. Margins declined, however, due to increased scrap steel cost. Combustion technology was profitable for 1993 and improved over 1992 due to increased sales. Growth in combustion operations accounted for most of the increase in consolidated general, selling and administrative expense in 1993. Losses related to thermal plasma systems reflected lower orders for the year. DISCONTINUED OPERATIONS In December 1992, a plan was approved to discontinue o perations in coal mining, industrial insulation and certain other operations. An after tax write-down of $16.3 million was recorded in the second quarter of 1993 for these dispositions. An additional $3.3 million estimated after tax write-down was recorded in the fourth quarter of 1993 following a review of the plan assumptions at year end. Also in the fourth quarter of 1993, the Company discontinued oil and gas operations with the sale of assets and reserves for cash proceeds of $52.0 million. A $3.5 million after tax loss was recorded on this transaction. Losses in coal operations and $8.2 million in after tax write-downs of oil and gas assets in the third quarter of 1992 accounted for the majority of discontinued operations results for 1993 and 1992. The oil and gas write-down was required under full-cost accounting rules. In October 1993, the Company completed the disposition of the coal operations. The Company continues as guarantor on $29.2 million in reclamation bonds until bonding is obtained by the purchaser, which is not to be later than June 1996. The total reclamation liability covered by the bonding is currently estimated at $5.5 million. The Company believes all of the requisite bonds will be obtained by the purchaser (See Note 2 to Financial Statements). CAPITAL RESOURCES AND LIQUIDITY As of June 30, 1994, the Company's total debt was $105.7 million, down $19.0 million from the prior year end, when including the gold loan. Total debt as a percentage of total debt and equity was 37%, down from 44% prior year, and the lowest since 1988. The lower total debt reflects strong cash flow from operations and $16.0 million in proceeds from the disposition of coal operations and other assets. Depreciation, depletion and amortization expense increased 6% as additional expense related to amortization of deferred mining costs at gold operations more than offset the loss of depreciation from discontinued operations. Working capital was up over the prior year end as higher sales resulted in increases in receivables and inventory at chemicals, steel and gold, more than offsetting the liquidation of working capital related to discontinued operations. During the year the Company completed the disposition of coal operations. This disposition generated cash proceeds of $8.4 million in addition to the liquidation of related working capital. Also, during the year the Company borrowed $7.6 million against life insurance policies to which the Company is owner and beneficiary. Capital expenditures declined 20% for the year, primarily due to lower chemicals capital expenditures. Capital expenditures are projected to be $56.0 million in 1995, up 80% due to increased expenditures for chemicals projects and underground mine development in gold. Deferred stripping costs were lower in 1994 versus 1993 as the stripping ratios related to open pit mining declined during the year. Environmental capital expenditures for fiscal 1994 were $1.3 million. Projected environmental capital expenditures for 1995 are $3.0 million and are primarily related to the chemicals segment. At June 30, 1994, the Company had access to an additional $60.0 million under its committed long-term credit facility. The Company believes its access to this facility, plus cash flow from operations, is adequate to meet current and future capital requirements. A spin-off of FRMG is not projected to have a material effect on the Company's liquidity or capital resources. Creditor consents, or restructuring of credit facilities, however, would be required. In November 1992, the Financial Accounting Standards Board ("FASB") issued Statement No. 112, "Employers' Accounting for Postemployment Benefits." This Statement established accounting standards for employers who provide benefits to former or inactive employees after employment but before retirement. This Statement is effective for fiscal years beginning after December 15, 1993. The adoption of this standard in fiscal 1995 is not project ed to have a material impact on the Company. In May 1993, the FASB issued Statement No. 115 "Accounting for Certain Investments in Debt and Equity Securities." Statement No. 115 is required to be implemented for fiscal years beginning after December 15, 1993. The effects of implementing Statement No. 115 will not have a material effect on the Company based on current investments. 17 20 FIRST MISSISSIPPI CORPORATION CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars) ------------------- June 30 ------------------- 1994 1993 - - - ---------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents (note 7) $ 4,952 15,878 Receivables: Trade, less allowance for doubtful accounts of $721 in 1994 and $4,565 in 1993 49,629 39,500 Equity investees (note 3) 1,229 1,312 Other (note 8) 7,982 200 -------- ------- Total receivables 58,840 41,012 -------- ------- Inventories: Finished products 25,334 22,203 Work in process 19,828 13,187 Raw materials and supplies 22,041 17,821 Product exchange agreements 933 925 -------- ------- Total inventories 68,136 54,136 -------- ------- Prepaid expenses and other current assets (note 8) 6,907 1,957 Net current assets of discontinued operations (note 2) -- 17,877 -------- ------- Total current assets 138,835 130,860 -------- ------- Investments and other assets: Investments in equity investees (note 3) 19,974 20,461 Other investments (note 3) 1,300 8,820 Intangible and other assets, at cost less applicable amortization (note 4) 15,576 17,367 -------- ------- Total investments and other assets 36,850 46,648 -------- ------- Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization (notes 5, 6 and 7) 201,891 206,111 -------- ------- $377,576 383,619 ======== ======= Liabilities and Stockholders' Equity Current liabilities: Current installments of long-term debt (note 6) $ 1,433 1,428 Deferred revenue (note 7) 1,477 16,533 Accounts payable: Trade (including book overdrafts of $5,948 in 1994 and $9,796 in 1993) 36,781 43,359 Equity investees (note 3) 4,510 2,999 -------- ------- Total accounts payable 41,291 46,358 -------- ------- Accrued expenses and other current liabilities (note 8) 13,300 16,420 Net current liabilities of discontinued operations (note 2) 2,460 -- -------- ------- Total current liabilities 59,961 80,739 -------- ------- Long-term debt, excluding current installments (note 6) 104,287 113,531 Other long-term liabilities 12,491 9,439 Long-term liabilities of discontinued operations (note 2) -- 4,205 Deferred taxes (note 8) 13,922 6,752 Minority interests 9,228 8,179 Stockholders' equity (notes 6, 9 and 10): Serial preferred stock. Authorized 20,000,000 shares; none issued -- -- Common stock of $1 par value. Authorized 100,000,000 shares; outstanding 20,086,090 shares in 1994 and 19,980,440 shares in 1993 20,086 19,980 Additional paid-in capital 3,378 2,424 Retained earnings 154,223 138,370 -------- ------- Total stockholders' equity 177,687 160,774 -------- ------- Commitments and contingent liabilities (notes 7, 8, 9, 11 and 12) $377,576 383,619 ======== =======
See accompanying notes to consolidated financial statements. 18 21 FIRST MISSISSIPPI CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars, Except Per Share Amounts) ----------------------------------- Years ended June 30 ----------------------------------- 1994 1993 1992 --------- ------- ------- Revenues: Sales (note 14) $ 508,225 429,940 453,242 Gain (loss) on investments, net (note 3) (286) (670) 500 Interest and other income (note 13) 2,036 2,305 1,169 --------- ------- ------- 509,975 431,575 454,911 --------- ------- ------- Costs and expenses: Cost of sales 413,148 363,818 375,752 General, selling and administrative expenses 46,042 42,350 37,460 Other operating expenses 9,508 8,273 5,473 Interest expense (note 6) 10,109 12,759 9,535 --------- ------- ------- 478,807 427,200 428,220 --------- ------- ------- Earnings from continuing operations before income taxes, minority interests, investee earnings (loss) and cumulative effect of change in accounting principle 31,168 4,375 26,691 Income taxes (note 8) 12,150 1,719 9,872 Minority interests in net (earnings) loss of consolidated subsidiaries (1,049) 458 (769) Equity in net earnings (loss) of equity investees (note 3) (306) (431) 66 --------- ------- ------- Earnings from continuing operations before cumulative effect of change in accounting principle 17,663 2,683 16,116 Loss from discontinued operations, net of taxes (note 2) -- (2,911) (11,889) Loss on disposal of businesses, net of taxes (note 2) -- (23,141) -- Cumulative effect of change in accounting principle (note 8) 4,200 -- -- --------- ------- ------- Net earnings (loss) $ 21,863 (23,369) 4,227 ========= ======= ======= Earnings (loss) per common share (note 10): Continuing operations $ .88 .13 .81 Discontinued operations -- (1.30) (.60) Cumulative effect of change in accounting principle .21 -- -- --------- ------- ------- Total earnings (loss) per common share $ 1.09 (1.17) .21 ========= ======= =======
See accompanying notes to consolidated financial statements. 19 22 FIRST MISSISSIPPI CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands of Dollars, Except Per Share Amounts) ----------------------------------------------------------------- Years ended June 30, 1994, 1993 and 1992 ----------------------------------------------------------------- Unrealized loss on Common stock Additional marketable ----------------------- paid-in Retained equity Shares Amount capital earnings securities - - - --------------------------------------------------------------------------------------------------------------- Balance, June 30, 1991 19,648,540 $ 19,648 -- 169,426 (1,146) Net earnings -- -- -- 4,227 -- Dividends declared - $.30 per share -- -- -- (5,920) -- Common stock issued: Employee stock options 28,562 29 199 -- -- Convertible debentures 147,200 147 978 -- -- Change in unrealized loss on marketable equity securities -- -- -- -- 790 ---------- ---------- ----- ------- ------ Balance, June 30, 1992 19,824,302 19,824 1,177 167,733 (356) Net loss -- -- -- (23,369) -- Dividends declared - $.30 per share -- -- -- (5,994) -- Common stock issued: Employee stock options 15,038 15 80 -- -- Convertible debentures 141,100 141 764 -- -- Income tax benefit on exercise of convertible debentures -- -- 403 -- -- Change in unrealized loss on marketable equity securities -- -- -- -- 356 ---------- ---------- ----- ------- ------ Balance, June 30, 1993 19,980,440 19,980 2,424 138,370 -- Net earnings -- -- -- 21,863 -- Dividends declared - $.30 per share -- -- -- (6,010) -- Common stock issued: Employee stock options 39,350 39 351 -- -- Convertible debentures 66,300 67 561 -- -- Income tax benefit on exercise of stock options and convertible debentures -- -- 42 -- -- ---------- ---------- ----- ------- ------ Balance, June 30, 1994 20,086,090 $ 20,086 3,378 154,223 -- ========== ========== ===== ======= ======
See accompanying notes to consolidated financial statements. 20 23 FIRST MISSISSIPPI CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars) --------------------------------- Years ended June 30 --------------------------------- 1994 1993 1992 - - - ------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net earnings (loss) $ 21,863 (23,369) 4,227 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation, depletion and amortization 42,248 39,748 53,016 Provision for losses on receivables 561 2,589 2,276 Deferred taxes 3,703 (23,791) (5,068) Gain on sale of subsidiary -- -- (842) (Gain) loss on sale of property, plant and equipment (80) 20,237 74 Investment income (153) (1,619) (1,560) (Gain) loss on disposition of investments and other assets 286 4,616 (244) Undistributed (earnings) loss of affiliates 487 685 (9) Minority interests in net earnings (loss) of consolidated subsidiaries 1,049 (458) 769 Changes in current assets and liabilities, net of effects of dispositions: (Increase) decrease in receivables (4,465) 2,069 (3,053) (Increase) decrease in inventories (13,200) (5,346) 2,190 (Increase) decrease in prepaid expenses (1,723) 1,823 (1,066) Increase (decrease) in accounts payable (7,522) 15,200 (12,560) Increase (decrease) in accrued expenses and other current liabilities (6,385) 10,676 1,162 Deferred revenue (2,488) 10,980 (134) Other, net 170 507 (487) -------- ------- ------- Net cash provided by operating activities 34,351 54,547 38,691 -------- ------- ------- Cash flows from investing activities: Proceeds from sale of subsidiaries 8,448 -- 2,006 Capital expenditures (31,113) (39,070) (33,646) Deferred stripping costs (4,612) (11,244) (2,315) Proceeds from sale of property, plant and equipment 442 54,739 1,935 Proceeds from disposition of investments and other assets 7,594 335 5,820 Acquisition of investments and other assets (1,476) (1,923) (4,407) Investment in equity investees, net -- -- 232 -------- ------- ------- Net cash provided by (used in) investing activities (20,717) 2,837 (30,375) -------- ------- ------- Cash flows from financing activities: Net borrowings (repayments) of notes payable to banks -- (10,000) 3,000 Principal repayments of long-term debt (11,400) (32,127) (71,736) Proceeds from issuance of long-term debt 1,706 20 94,279 Purchase of gold for repayment of gold loan (9,800) (13,363) (17,818) Dividends (6,010) (5,994) (5,920) Proceeds from issuance of common stock 944 896 764 -------- ------- ------- Net cash provided by (used in) financing activities (24,560) (60,568) 2,569 -------- ------- ------- Net increase (decrease) in cash and cash equivalents (10,926) (3,184) 10,885 Cash and cash equivalents at beginning of year 15,878 19,062 8,177 -------- ------- ------- Cash and cash equivalents at end of year $ 4,952 15,878 19,062 ======== ======= ======= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest, net of amounts capitalized $ 10,182 12,302 10,059 ======== ======= ======= Income taxes, net $ 15,581 1,748 11,455 ======== ======= =======
See accompanying notes to consolidated financial statements. 21 24 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1994, 1993 and 1992 (In Thousands of Dollars, Except Amounts Per Share and Per Ounce) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Principles of Consolidation The consolidated financial statements include the accounts of the parent company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Investments in joint ventures, partnerships and other equity investments are accounted for by the equity method. (b) Recognition of Revenue Revenues generally are recorded when title and risk of ownership pass, except for long-term construction type contracts, which are accounted for under the percentage of completion method. Revenues from shipments using forward sales agreements are recorded at the settlement date of the agreements. (c) Inventories Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out and weighted average methods for purchased inventories of finished product, and using the average cost method with respect to all other inventories. (d) Depreciation, Depletion and Amortization Depreciation of plant and equipment and depreciable investments is based on cost and the estimated useful lives of the separate units of property. Except for the gold segment, where the units-of-production method is also used, the straight-line and accelerated methods are primarily used in determining the amount of depreciation charged to expense. Goodwill of businesses acquired is amortized generally over 20 years using the straight-line method. Other intangibles are amortized over their estimated useful lives (5-17 years) using the straight-line method. Amortization of deferred stripping costs is based on the tons of ore mined in the period and the estimated average stripping ratio for the life of each individual open pit. Loan costs are amortized over the terms of related loans using the interest method. (e) Gold Properties Mine development expenditures for commercially feasible mining properties not yet producing are capitalized. Estimated reserves for mine reclamation costs have been established by charges to earnings over estimated mine lives for restoring certain disturbed mining and milling areas to comply with existing reclamation standards of various government agencies. (f) Income Taxes Effective July 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," (SFAS No. 109) which requires the recognition of deferred tax liabilities and assets for differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Prior to July 1993, the deferred income tax provision was based on the differences in the timing of recognizing transactions for financial and tax reporting as required by APB Opinion No. 11. (g) Pension Plans Pension cost is determined using the "projected unit credit" actuarial method for reporting purposes. The Company's funding policy is to contribute annually at amounts not less than the minimum requirements of the Employee Retirement Income Security Act of 1974. (h) Stock Options All stock options are nonqualified or incentive options and require no charges against income upon grant or exercise. The Company receives a tax benefit from dispositions that result in ordinary income to option recipients that is reflected in stockholders' equity. (i) Cash and Cash Equivalents The Company considers all short-term investments with original maturities of three months or less to be cash equivalents. (j) Investments Realized gains and losses on investments are determined on the basis of specific costs and included in gain (loss) on investments, net. Unrealized gains and losses on noncurrent marketable equity securities were included in stockholders' equity. All investments were carried at the lower of aggregate cost or market. Future equity investments will be carried at fair value in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." 22 25 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (k) Futures Contracts The fertilizer segment periodically purchases contracts for the future delivery of natural gas, its key raw material, on the New York Mercantile Exchange. Gains and losses on these contracts are treated as inventory adjustments and recognized in income when finished product is sold. Unrealized gains and losses are deferred and reflected in the balance sheet. The gold segment enters into spot deferred sales contracts for a portion of planned production. Under such contracts, the Company has the option to roll forward delivery dates and sell current production into the spot market. Unrealized gains and losses on such contracts are deferred until settlement of the contract. (l) Reclassifications Certain consolidated financial statement amounts have been reclassified for consistent presentation. 2. DISCONTINUED OPERATIONS In December 1992, the Board of Directors of the Company approved a plan to discontinue operations in coal mining and certain other ventures effective December 31, 1992. Cash proceeds of approximately $4,400 and noncash proceeds of $416 were received from the sale of assets of the above operations in 1993. In October 1993, the Company completed the coal discontinuance with the sale of Pyramid Mining Inc. Proceeds of the transaction included cash of $6,000 and an 18-month promissory note for $4,000. In addition, the Company has liquidated all working capital associated with the coal operations. In April 1994, $3,000 of the promissory note was prepaid with the balance rescheduled over the remaining original term. An overriding royalty with a potential value of $3,000 was also received related to the disposition, but not accrued due to its contingent nature. While the sale effectively completes the disposition of the coal operations and transfers the liability for reclamation to the purchaser, the Company continues as guarantor on $29,200 of reclamation bonds until bonding is obtained by the purchaser, which is not to be later than June 1996. The total reclamation liability covered by the bonding is currently estimated at $5,500. In June 1993, the Company sold the reserves and related assets of its oil and gas segment for $52,000 cash, effective May 1, 1993. A pretax loss of $39,578 was recorded in 1993 related to the above transactions, and is included in loss on disposal of businesses, net of applicable income tax benefit of $16,437, in the accompanying consolidated financial statements. The tax benefit includes $3,173 of income realized on the reversal of deferred income taxes related to oil and gas operations that were originally recorded at tax rates higher than the current provisions of enacted tax laws. The pretax loss at June 30, 1993 included the following:
Coal Oil and Gas Other Total ------------------------------------------------------------------- Loss on property, plant and equipment $ 12,715 6,515 834 20,064 Loss on investment and other assets 925 -- 3,027 3,952 Severance 1,115 970 172 2,257 Reclamation 6,705 -- -- 6,705 Commitments and other accruals 2,675 2,333 1,592 6,600 -------- -------- -------- -------- $ 24,135 9,818 5,625 39,578 ======== ======== ======== ========
The net assets and liabilities of the discontinued businesses have been segregated in the accompanying consolidated financial statements. The following is the composition of these net assets and liabilities:
June 30 ------------------ 1994 1993 ------------------------------------------------------------------- Receivables $ 105 13,911 Inventories -- 2,657 Prepaid expenses and other current assets 44 1,009 Investments and other assets -- 2,751 Property, plant and equipment, net 121 10,564 Current installments of long-term debt (50) (300) Accounts payable (41) (4,322) Accrued expenses and other current liabilities (2,639) (8,393) ------- ------- Net current assets (liabilities) of discontinued operations $(2,460) 17,877 ======= ======= Long-term reclamation and other liabilities $ -- 4,155 Long-term debt, excluding current installments -- 50 ------- ------- Long-term liabilities of discontinued operations $ -- 4,205 ======= =======
23 26 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The statements of operations have been reclassified to separate discontinued and continuing operations. Revenues and net loss of the discontinued operations for the period of 1993 prior to discontinuance and for the year ended June 30, 1992 were as follows:
1993 1992 --------------------------------------------------------------- Revenues $ 50,837 71,522 ========= ========= Loss before income taxes $ (4,438) (18,871) Income tax benefit 1,527 6,982 --------- --------- Loss from discontinued operations, net of taxes $ (2,911) (11,889) ========= =========
3. INVESTMENTS The following is a summary of financial information related to affiliated companies:
Years ended June 30 --------------------------- 1994 1993 1992 ---------------------------------------------------------------------- After tax equity in net earnings (loss): Melamine Chemicals, Inc. $ (468) (574) (143) Triad Chemical (57) (74) (8) Power Sources, Inc. 219 217 219 Other -- -- (2) ------ ------ ------ $ (306) (431) 66 ====== ====== ======
June 30 ---------------------- 1994 1993 ---------------------------------------------------------- Investments, at equity: Melamine Chemicals, Inc. $ 6,729 7,471 Triad Chemical 9,127 9,219 Power Sources, Inc. 4,118 3,771 --------- --------- $ 19,974 20,461 ========= ========= Net assets per books of affiliates: Current assets $ 29,801 35,055 Noncurrent assets 44,880 43,975 Current liabilities (11,015) (12,215) Noncurrent liabilities (8,415) (9,568) --------- --------- $ 55,251 57,247 ========= =========
The Company has a 50% ownership interest in Power Sources, Inc. which burns wood waste to create steam for industrial users. The Company also has a 50% ownership interest in Triad Chemical, an unincorporated joint venture. The Company is entitled to purchase, at cost of production, one-half of all anhydrous ammonia and urea produced by the Triad plant. Purchases were $33,563 in 1994, $31,308 in 1993 and $25,975 in 1992. The Company sells raw materials to and purchases production by-products from Melamine Chemicals, Inc. (MCI), a 23.4% owned investment. Sales were $8,747 in 1994, $9,886 in 1993 and $8,511 in 1992. Purchases were $2,490 in 1994, $2,346 in 1993 and $1,973 in 1992. The MCI investment had a quoted market value of approximately $7,849 and $6,694 at June 30, 1994 and 1993, respectively. Included in other investments at June 30, 1993 were noncurrent marketable equity securities with an aggregate cost of $225 and a market value of approximately $225. The Company wrote off these investments in 1994. The portfolio of noncurrent marketable equity securities included gross unrealized losses of $356 in 1992, which is reflected in stockholders' equity in the accompanying consolidated financial statements. Gain (loss) on investments, net, includes realized gains on sales of marketable equity securities of $500 in 1992. The 1994 and 1993 loss on investments resulted from write-downs of $286 and $670, respectively, on securities whose decline in value was deemed to be other than temporary. 4. INTANGIBLE AND OTHER ASSETS The major classes of intangible and other assets are summarized below:
June 30 ----------------- 1994 1993 ------------------------------------------------- Goodwill $16,868 17,962 Other 12,553 10,704 ------- ------ 29,421 28,666 Less accumulated amortization 13,845 11,299 ------- ------ $15,576 17,367 ======= ======
24 27 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The net carrying value of goodwill at June 30, 1994 and 1993 was $11,966 and $13,713, respectively, and is all related to the chemical segment. Amortization expense, exclusive of discontinued operations, related to the above amounted to $2,757 in 1994, $2,889 in 1993 and $2,665 in 1992. 5. PROPERTY, PLANT AND EQUIPMENT A summary of property, plant and equipment follows:
June 30 ------------------- 1994 1993 -------------------------------------------------------------- Land and land improvements $ 13,521 13,440 Buildings 20,225 19,434 Chemical plant facilities and equipment 170,651 159,836 Gold properties and equipment 108,691 110,586 Other facilities and equipment 69,160 56,719 Under capital leases: Land and land improvements 509 509 Buildings 216 216 Other facilities and equipment 8,958 8,958 -------- ------- 391,931 369,698 Less accumulated depreciation, depletion and amortization 190,040 163,587 -------- ------- $201,891 206,111 ======== =======
Included in the gold properties and equipment caption above are deferred stripping costs of $8,325 and $13,559 at June 30, 1994 and June 30, 1993, respectively. Through December 1991, gold mining costs associated with waste rock removal were charged to operating costs using an annualized stripping ratio. During the year ended June 30, 1992, the Company began a significant waste removal effort which will benefit future years. To properly match waste removal costs with revenues from gold sales, in January 1992, the Company began accounting for mining costs associated with waste rock removal on the basis of the average stripping ratio for the life of each individual open pit. The average stripping ratio is calculated as a ratio of the tons of waste rock material estimated to be removed to the estimated recoverable ore tons. If this change in accounting estimate had not been made, 1992 pretax earnings from continuing operations would have been $1,719 less. Construction in progress included in the above property captions at June 30, 1994 and 1993 amounted to $8,108 and $9,889, respectively. Depreciation, depletion and amortization expense related to the above, exclusive of discontinued operations, amounted to $38,979 in 1994, $27,853 in 1993 and $28,265 in 1992. Maintenance and repairs, exclusive of discontinued operations, amounted to $16,740 in 1994, $18,312 in 1993 and $15,440 in 1992. Interest capitalized amounted to $618 in 1994, $252 in 1993 and $183 in 1992. 6. NOTES PAYABLE AND LONG-TERM DEBT A summary of long-term debt follows:
June 30 -------------------- 1994 1993 ---------------------------------------------------------------------- Unsecured: 9.42% senior notes payable to institutional investors, due in annual installments of $13,286 from June 1996 to June 2002 $ 93,000 93,000 Notes payable under revolving credit facility, payable February 1997 5,000 10,000 Other notes 3,588 2,418 Secured: Capital lease obligations, interest ranging from 4.0% to 8.75%, due in monthly installments through May 2000 3,409 8,705 Other notes 723 836 -------- ------- 105,720 114,959 Less current installments of long-term debt 1,433 1,428 -------- ------- Long-term debt, excluding current installments $104,287 113,531 ======== =======
Under loan agreements in effect at June 30, 1994, there were no compensating balance requirements. The above obligations mature in various amounts through 2002, including approximately $1,433 in 1995, $15,280 in 1996, $18,923 in 1997, $14,003 in 1998 and $14,549 in 1999. In February 1993, the Company entered a new bank revolving credit facility totaling $80,000. Facility funds of $65,000 were committed for a period of three years, with two one-year options for renewal. The $15,000 balance of the facility, originally committed for a period of 364 days, was canceled by the Company in August 1993. 25 28 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) In December 1993, the Company exercised its first one-year option which extended the facility until February 1997. Borrowings under the facility are priced at the London Interbank Offered Rate plus .75% to 1.25%, prime rate, or prime plus .25%, based on the Company's debt-to-equity ratio. A commitment fee of 3/8 of 1% per annum is charged on the daily average unused commitment under the revolving credit facility. Commitment fees for the twelve months ended June 30, 1994, 1993 and 1992 totaled $189, $90 and $22, respectively. The senior notes and bank credit agreements contain various restrictions related to working capital, funded debt, net worth, fixed charged coverage, distributions, repurchase of stock and dispositions of assets. At June 30, 1994, the Company was in compliance with these covenants. At June 30, 1994, the fair value of the 9.42% senior notes payable to institutional investors was $92,866. The fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings for the same remaining maturities. The recorded amounts for all other long-term debt of the Company approximate fair values. Total interest costs incurred for the years ended June 30, 1994, 1993 and 1992 were $10,727, $13,011 and $9,718, respectively. 7. GOLD LOAN FirstMiss Gold's wholly owned subsidiary, FMG Inc. (FMG), had agreements with certain lenders who provided a limited-recourse gold loan facility and a limited-recourse credit agreement (the loan agreements) for the purpose of mill construction, mine development, financing costs and working capital requirements. Under the gold loan, FMG borrowed a total of 150,000 ounces of gold which provided $71,270. Proceeds from the gold loan were accounted for as deferred revenue and recognized in income at the rate of $475 per ounce of gold as shipments were made to repay the loan. During 1994, 1993 and 1992, FMG repaid 20,625, 28,125 and 37,500 ounces, respectively. Total ounces of gold sold were 243,826, 210,644 and 218,821 for 1994, 1993 and 1992, respectively. Current deferred revenue under the gold loan included in the accompanying consolidated balance sheets was $9,800 at June 30, 1993. Final payment of the gold loan was made on June 30, 1994. During the loan agreement period the loan was secured by substantially all the assets of FMG related to the Getchell mine and mill. Cash and cash equivalents of FMG were restricted by the loan agreements for payments of accounts payable for FMG expenditures. Pursuant to the loan agreements, the lenders provided a letter of credit to secure FMG's obligation relating to the gold loan. The fee for this letter of credit was 1.50% per year until the Getchell mine and mill achieved completion and 1.25% per year thereafter. Prior to repayment of the gold loan on June 30, 1994, the lenders provided a $10,000 standby letter of credit to secure the gold production purchase agreement and letters of credit for the benefit of vendors to FMG. Total fees for letters of credit amounted to $96, $205 and $403 in 1994, 1993 and 1992, respectively. Also, in accordance with the loan agreements, FMG was required to enter into a gold production purchase agreement, which was a forward sales arrangement, covering 202,600 ounces of gold. Under this agreement, during 1994, 1993 and 1992, FMG sold 47,000, 40,000 and 40,000 ounces, respectively, at $400 per ounce. All commitments under the agreement were fulfilled at June 30, 1994. 8. INCOME TAXES The Company adopted SFAS No. 109, "Accounting for Income Taxes" as of July 1, 1993. Statement No. 109 has as its basic objective the recognition of current and deferred income tax assets and liabilities based upon all events that have been recognized in the consolidated financial statements as measured by the provisions of the enacted tax laws. Prior years' financial statements have not been restated to apply the provisions of SFAS No. 109. The cumulative effect of this change in accounting for income taxes resulted in a benefit of $4,200 and is reported as a cumulative effect of a change in accounting principle in the accompanying consolidated financial statements. Consolidated income tax expense (benefit) differs from the statutory federal rate (35% for the year ended June 30, 1994, and 34% for the years ended June 30, 1993 and 1992) applied to earnings from continuing operations before income taxes, minority interests, investee earnings (loss) and cumulative effect of change in accounting principle as follows: 26 29 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Years ended June 30 -------------------------------- 1994 1993 1992 -------------------------------------------------------------------- Computed "expected" tax expense $ 10,909 1,488 9,075 State income taxes, net of federal income tax benefit 1,013 676 700 Excess of percentage depletion over cost depletion, net (1,080) -- (284) Loss from operations of foreign subsidiaries 423 299 -- Amortization of goodwill 423 399 293 Exempt earnings of Foreign Sales Corporation (147) (238) (296) Net cash surrender value increase of life insurance (232) (207) (187) Tax provision adjustment for pending Internal Revenue Service (IRS) matters -- (900) 100 Reversal of deferred taxes on disposed operations -- 228 -- Adjustment to deferred tax assets and liabilities for enacted change in tax law and rates 603 -- -- Other, net 238 (26) 471 -------- -------- -------- Actual tax expense - continuing operations 12,150 1,719 9,872 Actual tax benefit - discontinued operations -- (17,964) (6,982) -------- -------- -------- $ 12,150 (16,245) 2,890 ======== ======== ========
Components of income tax expense (benefit) are as follows:
Years ended June 30 -------------------------------- 1994 1993 1992 ---------------------------------------------- Current: Federal $ 9,072 6,761 6,739 State 1,781 1,015 1,066 Foreign (205) (21) (72) -------- -------- -------- 10,648 7,755 7,733 ======== ======== ======== Deferred: Federal 1,725 (24,010) (4,837) State (223) 10 (6) -------- -------- -------- 1,502 (24,000) (4,843) ======== ======== ======== Total: Federal 10,797 (17,249) 1,902 State 1,558 1,025 1,060 Foreign (205) (21) (72) -------- -------- -------- $ 12,150 (16,245) 2,890 ======== ======== ========
The significant components of deferred income tax expense attributable to income from continuing operations for the year ended June 30, 1994 are as follows: Deferred tax expense from changes in temporary differences $ 899 Adjustment to deferred tax assets and liabilities for enacted change in tax law and rates 603 ------ $1,502 ======
For the years ended June 30, 1993 and 1992, deferred income tax expense (benefit) resulted from timing differences in the recognition of revenues and expenses for tax and financial reporting purposes. The sources of these differences and the tax effect of each are as follows: 27 30 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Years ended June 30 ----------------------- 1993 1992 ------------------------------------------------------------------------ Capitalized exploration and development costs, net of related amortiza- tion: Oil and gas $ 1,443 (354) Gold 3,776 556 Coal (60) 1,113 Depreciation (397) 3,823 Loss accruals (10,705) 48 Mining reclamation 309 276 Write-down of assets (1,463) (4,941) Alternative minimum tax (AMT) (2,005) (2,769) Costs capitalized to self-constructed assets (357) (157) Deferred compensation (268) (293) Pension expense (510) (445) Sale of assets (11,710) (1,717) Capitalized expenses, net of amortization 325 779 Bad debts (1,015) (660) Other, net (1,363) (102) -------- -------- $(24,000) (4,843) ======== ========
The tax effects of temporary differences that give rise to signicant portions of the deferred tax assets and the deferred tax liabilities at June 30, 1994 are as follows: Deferred tax assets: Accounts receivable, principally due to allowance for doubtful accounts $ 266 Deferred compensation 2,381 Accrued reclamation costs 3,388 Accrual for discontinuance losses, net 910 State net operating loss (NOL) carryforward 3,287 Alternative minimum tax credit carryforward 17,021 Accrued vacation costs 591 Accrued pension costs 1,150 Deferred stripping costs 2,256 Other, net 8,920 --------- Total gross deferred tax assets 40,170 Less: valuation allowance (3,074) --------- Net deferred tax assets 37,096 --------- Deferred tax liabilities: Plant and equipment, principally due to differences in depreciation (22,664) Capitalized exploration and development costs and related amortization (11,860) Investment in affiliated companies, principally due to undistributed earnings (8,705) State income taxes (1,475) Other, net (2,847) --------- Total gross deferred tax liabilities (47,551) --------- Net deferred tax liability $ (10,455) =========
The net deferred tax liability at June 30, 1994 consists of a long-term deferred tax liability of $13,922 and a current deferred tax asset of $3,467. This current deferred tax asset is included in the "Prepaid expenses and other current assets" section of the June 30, 1994, consolidated balance sheet. The valuation allowance for the gross deferred tax assets as of July 1, 1993 was $2,625. The net change in the total valuation allowance for the year ended June 30, 1994 was an increase of $449. The valuation allowance is related to certain state net operating losses, which the Company believes are less than likely to be recognized. Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets will be reported in the consolidated statements of operations. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, recoverable taxes paid, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income, the reversal of existing deferred tax liabilities and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowance at June 30, 1994. 28 31 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The Company has AMT credit carryforwards of $17,021 for income tax reporting purposes at June 30, 1994. Refundable income taxes of $7,304 at June 30, 1994 and income taxes payable of $2,816 at June 30, 1993 are included in other current receivables and other current liabilities, respectively, in the accompanying consolidated financial statements. The Company has received final audit reports from the IRS for its tax years ended June 30, 1983 through June 30, 1988. The settlement of these years resulted in a net refund to the Company. On August 15, 1994, the Company received a revised audit report from the IRS for its June 30, 1989 and 1990 years, proposing tax deficiencies of $3,465, plus interest, which will be appealed by the Company. In addition, the Company received an audit report in 1990 from the Kentucky Revenue Cabinet for its June 30, 1985 through 1988 years, proposing tax deficiencies of $807, which has been disputed by the Company. Management is of the opinion that these issues, once resolved, will not result in a material liability to the Company. 9. PENSION, 401(K) THRIFT AND INCENTIVE PLANS The Company has noncontributory pension plans covering substantially all full-time permanent employees. The benefits are based on years of service and participants' compensation during the last five years of employment. Net annual pension expense for the years ended June 30, 1994, 1993 and 1992 included the following components:
Years ended June 30 ----------------------------- 1994 1993 1992 ------------------------------------------------------------- Service cost $ 1,876 1,777 1,715 Interest cost 1,503 1,323 1,141 Actual return on plan assets (481) (2,638) (1,755) Net amortization and deferral (1,697) 759 30 ------- ------- ------- Net annual pension expense $ 1,201 1,221 1,131 ======= ======= =======
The assumptions used in calculating the expense for 1994, 1993 and 1992 included a discount rate of 7.75%, a rate of increase in compensation levels of 4.5% and a 9% expected long-term rate of return on assets. Net annual pension expense included above and allocated to discontinued operations was $4, $197 and $243 for 1994, 1993 and 1992, respectively. Plan assets are invested primarily in equity securities and U.S. bonds. The following table sets forth the funded status of the plans at June 30, 1994 and 1993:
1994 1993 -------------------------------------------------------------------- Actuarial present value of benefit obligations: Vested benefit obligations $ 13,447 12,386 ======== ======== Accumulated benefit obligations $ 15,672 14,623 ======== ======== Projected benefit obligation $ 21,635 20,027 Plan assets at fair value 21,253 20,837 -------- -------- Plan assets in excess of (less than) projected benefit obligation (382) 810 Unrecognized net gain from past experience (499) (251) Unrecognized prior service cost 869 638 Unrecognized transition credit, net (3,261) (3,573) -------- -------- Pension liability $ (3,273) (2,376) ======== ========
The Company has a non-qualied supplemental pension plan. This plan provides for incremental pension payments from the Company's funds to restore those pension benefits earned, but reduced due to income tax regulations. The total accrual at June 30, 1994 and 1993, relating to this unfunded plan was $746 and $616, respectively. Expenses of the plan were $82 in 1994, $98 in 1993 and $113 in 1992. The Company has a contributory 401(k) thrift plan covering substantially all eligible employees who have completed six months of service. Total expense under the plan amounted to approximately $1,250 in 1994, $1,137 in 1993 and $1,003 in 1992. 29 32 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Directors, officers and certain key employees of the Company participate in the long-term incentive plans (the Plans) under which the Company has reserved shares of common stock for issuance. Awards under the Plans include stock options, options to purchase debentures convertible into preferred stock and then convertible into common stock of the Company, stock appreciation rights, performance units, restricted stock, supplemental cash and such other forms as the Board of Directors may direct. Options under all plans are granted at the market price of the shares on the date of the grants. As of June 30, 1994, 384,500 shares remained available for granting. Additional information follows:
Stock options Debenture options --------------------- ---------------------- Average Average Number option price Number option price of shares per share of shares per share ----------------------------------------------------------------- Balance, June 30, 1991 113,550 $ 10.83 899,800 $ 11.79 Options granted -- -- 166,000 9.78 Options exercised (28,562) 7.54 (76,200) 7.70 -------- ------- -------- ------- Balance, June 30, 1992 84,988 11.80 989,600 11.77 Options granted 96,000 9.31 11,000 7.81 Options exercised (15,038) 6.31 (126,600) 6.30 Options forfeited (2,200) 11.00 (11,000) 13.86 -------- ------- -------- ------- Balance, June 30, 1993 163,750 10.86 863,000 12.49 Options granted 113,000 9.41 -- -- Options exercised (39,350) 9.90 (177,800) 12.71 Options forfeited (45,800) 12.98 (58,000) 13.73 -------- ------- -------- ------- BALANCE, JUNE 30, 1994 191,600 $ 9.69 627,200 $ 12.31 ======== ======= ======== ======= EXERCISABLE, JUNE 30, 1994 191,600 627,200 ======== ========
10. STOCKHOLDERS' EQUITY Earnings per share calculations are based on the weighted average number of common shares and common share equivalents outstanding during each year, 20,126,093 in 1994, 20,003,190 in 1993 and 19,852,958 in 1992. In connection with the Shareholder Rights Plan adopted by the Company on May 12, 1986, and amended February 14, 1989, one preferred stock purchase right was distributed on each outstanding share of common stock. Under certain conditions, each right may be exercised to purchase 1/100 of a share of a new series of preferred stock, at an exercise price of $30 (subject to adjustment). The rights, which do not have voting rights, expire in 1996 and may be redeemed by the Company at a price of $.05 per right prior to a specified period of time after the occurrence of certain events. In certain events, each right (except certain rights beneficially owned by 20% or more owners, which rights are voided) will entitle its holder to purchase Company common shares with a value of twice the then current exercise price. 11. COMMITMENTS AND CONTINGENT LIABILITIES The Company has entered into various capital and operating leases for transportation equipment (primarily railroad tank cars), chemical and fertilizer pipelines and storage facilities, office buildings and land and other miscellaneous items of equipment. The following is a schedule by years of future minimum rental payments under leases that have initial or remaining noncancelable terms in excess of one year as of June 30, 1994:
Years ending Operating Capital June 30 leases leases - - - ------------------------------------------------------------------ 1995 $1,413 641 1996 1,285 641 1997 871 641 1998 558 641 1999 401 641 Later years 40 632 ------ ------ Total minimum payments required $4,568 3,837 ====== Less imputed interest 428 ------ $3,409 ======
30 33 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Provisions applicable to certain transportation equipment leases provide for mileage credits computed on the basis of usage. No recognition has been given to the effect of such credits in the amounts presented above. Rental expense, including short-term rentals (net of mileage credits and short-term subleases of approximately $258 in 1994, $267 in 1993 and $61 in 1992), was approximately $5,187 in 1994, $3,300 in 1993 and $3,079 in 1992. In most cases, management expects that, in the normal course of business, leases will be renewed or replaced by other leases. The Company's fertilizer segment has entered into an agreement to purchase anhydrous ammonia. The purchase price under this contract is based on a market price formula. Take-or-pay obligations under this purchase commitment are based on a specific component of the seller's cost of production. Estimated take-or-pay obligations based on current market conditions are approximately $6,145 in 1995. Total purchases under this agreement were $13,989 in 1994, $10,133 in 1993 and $11,335 in 1992. The present value of take-or-pay obligations at June 30, 1994 was $5,897. At June 30, 1994, the Company had entered contracts representing approximately 38% of anticipated purchases of natural gas related to fertilizer operations for the period July 1994 to June 1995. The unrealized loss on these contracts at June 30, 1994 was $171. FirstMiss Gold and its wholly owned subsidiary, FMG, have an agreement with an independent contractor to own and operate an oxygen plant to provide oxygen for the mill. The agreement requires, among other things, that FirstMiss Gold must generally pay the independent contractor at a rate of approximately $275 a month in 1995 (subject to adjustment for inflation) and that FirstMiss Gold pay a termination fee, if the contract is terminated prior to January 2004, of approximately $3,600 in 1995, decreasing each year thereafter to approximately $400 in the last year of the contract. At June 30, 1994, the Company had commitments under spot deferred sales contracts for delivery of 225,000 ounces of gold at an average price of $391 in 1995 and 92,000 ounces at an average price of $392 in 1996. The net unrealized loss on these contracts at June 30, 1994, was $1,637. 12. LITIGATION The Company has pending several claims incurred in the normal course of business which, in the opinion of management and legal counsel, can be disposed of without material effect on the accompanying financial statements. 13. INTEREST AND OTHER INCOME Interest and other income (expense) items are as follows:
Years ended June 30 ----------------------------- 1994 1993 1992 ---------------------------------------------------------------- Interest income $ 327 314 530 Royalty, license, rental and fee income (expense) 1,506 1,592 (271) Gain (loss) on disposition of noncurrent assets (19) (282) 597 Other 222 681 313 ------- ------- ------- $ 2,036 2,305 1,169 ======= ======= =======
14. INDUSTRY SEGMENT INFORMATION As of June 30, 1994, the Company operated principally in the following industry segments: Chemicals, Fertilizer, Gold and Combustion, Thermal Plasma and Other. Operations in the chemicals segment include production and sale of specialty chemicals and organic chemical intermediates, and research and development for specialty chemicals. Operations in the fertilizer segment involve the sale of produced and purchased urea and anhydrous ammonia. The gold segment concentrates on gold mining, exploration and production. At June 30, 1994, the classification Combustion, Thermal Plasma and Other, in prior years identified as Technology - Other, includes the operations of Plasma Energy, Callidus Technologies, Plasma Processing, and FirstMiss Steel. Sales to unaffiliated major customers in 1994, 1993 and 1992 were $84,699, $52,280 and $51,064, respectively, by the gold segment. 31 34 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following is a breakdown by industry segment of the Company's consolidated financial statements for the three years ended June 30, 1994:
Years ended June 30 ----------------------------------- 1994 1993 1992 -------------------------------------------------------------------------- Sales to unaffiliated customers: Chemicals $ 161,045 143,497 130,331 Fertilizer 163,984 141,642 184,108 Gold 95,150 78,773 83,048 Combustion, Thermal Plasma and Other 88,046 66,028 55,755 Transfers between business segments: Fertilizer 9,007 3,288 2,946 Intercompany eliminations (9,007) (3,288) (2,946) --------- --------- --------- Total $ 508,225 429,940 453,242 ========= ========= =========
Years ended June 30 -------------------------------- 1994 1993 1992 ------------------------------------------------------------------- Operating profit (loss) before income taxes, minority interests, investee earnings (loss) and cumulative effect of change in accounting principle: Chemicals $ 30,295 24,434 15,333 Fertilizer 24,760 13,218 24,196 Gold 7,225 (1,305) 7,874 Combustion, Thermal Plasma and Other (12,763) (12,187) (5,656) -------- -------- -------- 49,517 24,160 41,747 Unallocated corporate expenses (8,435) (7,069) (7,461) Interest expense, net (9,782) (12,445) (9,005) Other income (expense), net (132) (271) 1,410 -------- -------- -------- Total $ 31,168 4,375 26,691 ======== ======== ========
Years ended June 30 ------------------------------ 1994 1993 1992 ---------------------------------------------------------------------- Identifiable assets: Chemicals $132,739 124,458 112,151 Fertilizer 44,794 43,323 53,230 Gold 81,936 90,614 93,356 Combustion, Thermal Plasma and Other 86,043 72,473 60,932 -------- -------- -------- 345,512 330,868 319,669 Corporate assets and investments 32,064 34,874 37,325 Discontinued operations -- 17,877 104,540 -------- -------- -------- Total $377,576 383,619 461,534 ======== ======== ======== Depreciation, depletion and amortization: Chemicals $ 10,723 9,708 8,924 Fertilizer 2,552 2,613 2,682 Gold 23,380 13,728 15,657 Combustion, Thermal Plasma and Other 4,570 4,051 3,053 Corporate 642 642 614 Discontinued operations 381 9,006 22,086 -------- -------- -------- Total $ 42,248 39,748 53,016 ======== ======== ======== Capital expenditures: Chemicals $ 11,735 17,567 9,025 Fertilizer 329 43 1,228 Gold 10,451 5,555 2,035 Combustion, Thermal Plasma and Other 7,357 5,514 5,678 Corporate 682 438 192 Discontinued operations 559 9,953 15,488 -------- -------- -------- Total $ 31,113 39,070 33,646 ======== ======== ======== Export sales to unaffiliated customers: North, Central and South America $ 5,134 3,435 33,433 Europe and Asia 30,353 44,126 34,656 Africa and Australia 8,194 11,390 12,184 -------- -------- -------- Total $ 43,681 58,951 80,273 ======== ======== ========
32 35 FIRST MISSISSIPPI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Certain corporate expenses, primarily those related to the overall management of the Company, were not allocated to the operating segments. Total research and development expenses were $5,401 in 1994, $5,342 in 1993 and $4,081 in 1992. During the first quarter of 1992, the Company, in separate transactions, sold the stock of two wholly owned subsidiaries - FMC of Delaware, Inc. and Industrial Insulations, Inc. Proceeds from the transactions included cash of $2,006 and $550 in stock of one of the acquiring companies. A pretax gain of $842 was recognized on the transactions. Identifiable assets by industry segment are those assets used in the Company's operations in each industry and include investments in joint ventures and partnerships. Corporate assets are principally cash and short-term investments excluding nontrade receivables and certain other investments. Corporate assets excluded cash and short-term investments held by gold in 1993 and 1992 prior to the gold loan repayment. The Company's trade receivables are primarily concentrated with the chemicals and fertilizer segments. The Company performs ongoing credit evaluations of its customers and generally does not require collateral on trade receivables. The Company believes that consolidated trade receivables are well diversied, thereby reducing potential credit risk, and that adequate allowances for any uncollectible trade receivables are maintained. 15. QUARTERLY FINANCIAL DATA (UNAUDITED) Selected quarterly financial data follow:
Quarters ended -------------------------------------------- Years ended September 30 December 31 March 31 June 30 June 30 ------------------------------------------------------------------------------ 1994: Sales $ 113,340 115,920 129,581 149,384 508,225 ============== ======= ======= ======= ======= Gross profit $ 17,834 19,995 24,475 32,773 95,077 ============== ======= ======= ======= ======= Net earnings from continuing operations $ 802 3,068 4,854 8,939 17,663 ============== ======= ======= ======= ======= Net earnings $ 5,002 3,068 4,854 8,939 21,863 ============== ======= ======= ======= ======= Earnings per share: Continuing operations $ .04 .15 .24 .44 .88 ============== ======= ======= ======= ======= Net earnings $ .25 .15 .24 .44 1.09 ============== ======= ======= ======= =======
Quarters ended -------------------------------------------- Years ended September 30 December 31 March 31 June 30 June 30 - - - ------------------------------------------------------------------------------------ 1993: Sales $ 102,666 104,547 103,595 119,132 429,940 ========== ======= ======= ======= ======== Gross profit $ 18,205 13,940 13,313 20,664 66,122 ========== ======= ======= ======= ======== Net earnings (loss) from continuing operations $ 1,739 (645) (65) 1,654 2,683 ========== ======= ======= ======= ======== Net loss $ (12) (17,741) (129) (5,487) (23,369) ========== ======= ======= ======= ======== Earnings (loss) per share: Continuing operations $ .09 (.03) (.01) .08 .13 ========== ======= ======= ======= ======== Net loss -- (.89) (.01) (.27) (1.17) ========== ======= ======= ======= ========
Included in net earnings (loss) are the cumulative effect of change in accounting principle in the first quarter of 1994 and the discontinued operations in the second and fourth quarters of 1993 as discussed in footnotes 8 and 2, respectively. The above quarterly earnings (loss) per share calculations are based on the weighted average shares outstanding during each quarter whereas the annual earnings (loss) per share calculations are based on the weighted average shares outstanding during the year. 33 36 FIRST MISSISSIPPI CORPORATION INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders First Mississippi Corporation: We have audited the accompanying consolidated balance sheets of First Mississippi Corporation and consolidated subsidiaries as of June 30, 1994 and 1993, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended June 30, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Mississippi Corporation and consolidated subsidiaries as of June 30, 1994 and 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 1994, in conformity with generally accepted accounting principles. As discussed in notes 1 and 8, the Company changed its method of accounting for income taxes as of July 1, 1993 to adopt the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." KPMG PEAT MARWICK LLP Jackson, Mississippi September 9, 1994 34 37 FIRST MISSISSIPPI CORPORATION DIRECTORS Richard P. Anderson(2),(3) Maumee, Ohio President and Chief Executive Officer, The Andersons Management Corporation Agribusiness Paul A. Becker(1) New York, New York Managing Director, Mitchell Hutchins Asset Management, Inc. James W. Crook(3),(4) Yazoo City, Mississippi Chairman of the Board, Melamine Chemicals, Inc. Robert P. Guyton(1) Atlanta, Georgia Vice President and Financial Consultant, Raymond James & Associates, Inc. Asset Management and Investment Banking Company Charles P. Moreton(2) Houston, Texas Private Investor, Oil and Gas Business Director, Tanglewood Bancshares Dr. Paul W. Murrill(1) Baton Rouge, Louisiana Professional Engineer William A. Percy, II(1),(4) Greenville, Mississippi Managing Partner, Trail Lake Enterprises President, Greenville Compress Company Chairman of the Board, Staple Cotton Cooperative Association Maurice T. Reed, Jr.(2) Jackson, Mississippi Private Investor Leland R. Speed(3),(4) Jackson, Mississippi Chairman and Chief Executive Officer, The Eastover Group of Companies Real Estate Investment Trust Dr. R. Gerald Turner(3),(4) University, Mississippi Chancellor, University of Mississippi J. Kelley Williams Jackson, Mississippi Chairman and Chief Executive Officer, First Mississippi Corporation TRANSFER AGENTS FOR COMMON STOCK (1) Audit Committee (2) Compensation and Human Resources Committee (3) Committee on Director Affairs (4) First Mississippi Corp. Foundation Advisory Committee OFFICERS J. Kelley Williams Chairman and Chief Executive Officer R. Michael Summerford Vice President and Chief Financial Officer J. Steve Chustz General Counsel James L. McArthur Secretary and Manager, Investor Relations 35 38 FIRST MISSISSIPPI CORPORATION CORPORATE INFORMATION Society National Bank P.O. Box 6477 Cleveland, Ohio 44101-1477 (216) 737-5745 First Mississippi Corporation Stock Transfer Department P.O. Box 1249 Jackson, Mississippi 39215-1249 (601) 948-7550 COMMON STOCK REGISTRARS Society National Bank P.O. Box 6477 Cleveland, Ohio 44101-1477 Deposit Guaranty National Bank One Deposit Guaranty Plaza Jackson, Mississippi 39205-1200 STOCK LISTINGS New York Stock Exchange Philadelphia Stock Exchange Pacific Stock Exchange Midwest Stock Exchange TRADING SYMBOL: FRM Note: The Wall Street Journal and many other major daily newspapers list the stock as FstMiss. STOCKHOLDER REPORTS Stockholders with stock in brokerage accounts who wish to receive quarterly stockholder reports and other information directly from the Company, may do so by writing or calling the Company's Investor Relations Department. INVESTOR RELATIONS If you have questions concerning First Mississippi Corporation or your investment in the Company, we will be pleased to assist you. Contact: James L. McArthur Secretary and Manager, Investor Relations First Mississippi Corporation P.O. Box 1249 Jackson, Mississippi 39215-1249 (601) 949-0285 or (601) 948-7550 INDEPENDENT PUBLIC ACCOUNTANTS KPMG Peat Marwick LLP 1100 One Jackson Place Jackson, Mississippi 39201-9988 FORM 10-K Stockholders may obtain without charge a copy of the First Mississippi Corporation Form 10-K filed with the Securities and Exchange Commission by calling or writing the Company's Investor Relations Department. DIVIDEND INVESTMENT PLAN The Company offers its stockholders a convenient and economical way to increase their investment in First Mississippi Corporation common stock. The Automatic Dividend Investment and Cash Payment Plan, administered by Society National Bank, allows stockholders to purchase additional shares with quarterly dividends or optional cash payments. For information about the Plan, contact the Company's Investor Relations Department. ANNUAL MEETING The Annual Meeting of Stockholders will be held November 11, 1994, at 2:00 p.m., in the Garden Room at Dennery's, 330 Greymont Avenue, Jackson, Mississippi. Stockholders are cordially invited to attend and participate in the business of the meeting. Those who are unable to attend are requested to return their proxy cards to the Registrar in the envelope that accompanies the proxy. STOCK MARKET INFORMATION The high and low recorded prices of the Company's common stock and cash dividends declared during fiscal years 1994 and 1993 are presented in the table below. There were approximately 6,052 stockholders of record as of September 6, 1994.
1994 1993 - - - ----------------------------------------------------------------- Dividend Dividend High Low Rate High Low Rate - - - ----------------------------------------------------------------- 1st Quarter $ 11.00 $ 8.50 $ .075 $ 11.75 $ 7.88 $ .075 2nd Quarter 13.25 8.50 .075 9.75 7.25 .075 3rd Quarter 17.00 12.75 .075 10.13 8.38 .075 4th Quarter 16.88 $ 14.00 .075 11.00 9.00 .075 For the Year 17.00 8.50 .30 11.75 7.25 .30
36 39 FIRST MISSISSIPPI CORPORATION SUBSIDIARIES CHEMICALS First Chemical Corporation (Industrial and Specialty Chemicals) P.O. Box 7005 Pascagoula, Mississippi 39568-7005 O. Edward Wall, President Quality Chemicals, Inc. (Fine Chemicals, Custom Manufacturing) P.O. Box 216 Tyrone, Pennsylvania 16686-0216 -and- 1515 Nicholas Road Dayton, Ohio 45418 Robert B. Barker, President EKC Technology, Inc. (Performance Chemicals) 2520 Barrington Court Hayward, California 94545-3703 P. Jerry Coder, President FERTILIZER FirstMiss Fertilizer, Inc. (Fertilizer Marketing) P.O. Box 1249 Jackson, Mississippi 39215-1249 Charles R. Gibson, President AMPRO Fertilizer, Inc. (Ammonia Production) P.O. Box 392 Donaldsonville, Louisiana 70346-0392 B. K. Shackelford, Vice President and Complex Manager Triad Chemical (Ammonia and Urea Production) (50% Joint Venture) P.O. Box 310 Donaldsonville, Louisiana 70346-0310 B. K. Shackelford, Complex Manager GOLD FirstMiss Gold Inc. (Gold Exploration, Mining, and Production) (81.4% Owned Subsidiary) 5190 Neil Road, Suite 310 Reno, Nevada 89502-6503 G.W. (Bill) Thompson, President COMBUSTION THERMAL PLASMA AND OTHER Callidus Technologies Inc. (Burners, Flares, and Incinerators) 7130 South Lewis, Suite 635 Tulsa, Oklahoma 74136-5488 William P. Bartlett, President FirstMiss Steel, Inc. (Steel Melting and Casting) P.O. Box 509 Hollsopple, Pennsylvania 15935-0509 Frank D. Winter, Chairman Plasma Energy Corporation (Thermal Plasma Technology) 7516 Precision Drive Raleigh, North Carolina 27613-4715 Samir A. Hakooz, President Plasma Processing Corporation (Aluminum Dross Processing) 109 Westpark Drive, Suite 180 Brentwood, Tennessee 37027 Terry L. Moore, President EQUITY AFFILIATE Power Sources, Inc. (Waste-to-Energy Steam Generation) (50% Owned Subsidiary) 9140 Arrow Point Boulevard, Suite 370 Charlotte, North Carolina 28273-8118 Gerald W. Caughman, President 40 (BACK COVER) FIRST MISSISSIPPI CORPORATION Post Office Box 1249 Jackson, Mississippi 39215-1249 41 APPENDIX
Page In Annual Report --------------------- GRAPH 1 INSIDE FRONT COVER GRAPH 2 2 GRAPH 3 4 GRAPH 4 4 PHOTO 1 5 PHOTO 2 5 PHOTO 3 6 PHOTO 4 7 GRAPH 5 8 GRAPH 6 8 GRAPH 7 8 PHOTO 5 10 GRAPH 8 10 PHOTO 6 11 PHOTO 7 11 PHOTO 8 12 GRAPH 9 12 PHOTO 9 13
EX-21 5 SUBSIDIARIES 1 SUBSIDIARIES OF FIRST MISSISSIPPI CORPORATION
State of Company Name Incorporation ------------ ------------- AMPRO Fertilizer, Inc. Louisiana Burmar Chemical, Inc. California Callidus Technologies Inc. Oklahoma Callidus Technologies International, Inc. Delaware Dew Resources, Inc. Florida EKC Technology, Inc. California EKC Technology, Ltd. Scotland FCC Acquisition Corporation California FEC Marketing, Inc. Texas First Chemical Corporation Mississippi First Energy Corporation Mississippi FirstMiss Fertilizer, Inc. Mississippi FirstMiss, Inc. Iowa FirstMiss Gold Inc. Nevada FirstMiss Seed, Inc. Delaware FirstMiss Steel, Inc. Pennsylvania First Mississippi Corporation Foundation, Inc. Mississippi FMG Inc. Nevada FRM, Inc. Mississippi FRM Industries, Inc. Delaware FRM International, Inc. U.S. Virgin Islands
Exhibit 21 2
State of Company Name Incorporation ------------ ------------- Industrial Insulations of Texas, Inc. Texas Maxadyne Corporation California Maxadyne Corporation of Louisiana Louisiana Micropel, Inc. California Mycosil, Inc. California OMNIRAD, INC. Mississippi Plasma Energy Corporation North Carolina Plasma Energy Technologies Corporation North Carolina Plasma Processing Corporation Delaware Power Sources, Inc. North Carolina Quality Chemicals, Inc. Pennsylvania Star Corrosion & Refractory, Inc. Louisiana SCE Technologies, Inc. Delaware Triad Chemical (Partnership) Louisiana
EX-23 6 INDEPENDENT AUDITOR'S CONSENT 1 INDEPENDENT AUDITORS' CONSENT The Board of Directors First Mississippi Corporation: We consent to incorporation by reference in the Registration Statements on Form S-8 (Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512, 33-9106, 33-17483, 33-24413, 33-24414, 33-26895, 33-31343, 33-33135, 33-37084, 33-39137, 33-43586, 33-43600, 33-45344 and 33-56026) of our reports dated September 9, 1994, relating to the consolidated financial statements and financial statement schedules of First Mississippi Corporation and subsidiaries as of June 30, 1994 and 1993 and for each of the years in the three-year period ended June 30, 1994, which reports appear or are incorporated by reference in the June 30, 1994 annual report on Form 10-K of First Mississippi Corporation. Our report on the consolidated financial statements refers to a change in the method of accounting for income taxes. Jackson, Mississippi September 27, 1994 KPMG Peat Marwick LLP Exhibit 23 EX-27 7 FINANCIAL DATA SCHEDULE
5 1,000 YEAR JUN-30-1994 JUL-01-1993 JUN-30-1994 4,952 0 50,350 721 68,136 138,835 391,931 190,040 377,576 59,961 104,287 20,086 0 0 157,601 377,576 508,225 509,975 413,148 413,148 54,989 561 10,109 31,168 12,150 17,663 0 0 4,200 21,863 1.09 1.09
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