-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EjZe/AHs74FxnzOTEuQzF/wLf0WYuQbxLghA5oj7uNlOiaqwuMdtfkPkK3BqvVM9 swVSw3SWRIKu6xqQpdf43g== 0000066895-97-000001.txt : 19970222 0000066895-97-000001.hdr.sgml : 19970222 ACCESSION NUMBER: 0000066895-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSISSIPPI CHEMICAL CORP /MS/ CENTRAL INDEX KEY: 0000066895 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 640292638 STATE OF INCORPORATION: MS FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12217 FILM NUMBER: 97536283 BUSINESS ADDRESS: STREET 1: HIGHWAY 49 EAST CITY: YAZOO CITY STATE: MS ZIP: 39194 BUSINESS PHONE: 6017464131 MAIL ADDRESS: STREET 1: P O BOX 388 CITY: YAZOO CITY STATE: MS ZIP: 39194 FORMER COMPANY: FORMER CONFORMED NAME: MISSISSIPPI CHEMICAL CORP DATE OF NAME CHANGE: 19920703 EX-27 1
5 This schedule contains second quarter summary financial information extracted from Mississippi Chemical Corporation fiscal 1997 second quarter Form 10-Q and is qualified in its entirety by reference to such Form 10-Q filing. 0000066895 MISSISSIPPI CHEMICAL CORPORATION 1,000 3-MOS JUN-30-1997 DEC-31-1996 3,803 0 64,388 1,488 75,233 152,333 670,991 336,271 809,040 87,833 0 0 0 280 422,660 809,040 113,196 114,735 80,488 94,596 0 195 280 19,859 7,766 12,093 0 0 0 12,093 0.56 0
10-Q 2 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) Of The Securities Exchange Act of 1934 For Quarter Ended December 31, 1996 OR [ ] Transition Report Pursuant to Section 13 or 15(d) Of the Securities Exchange Act of 1934 For Quarter Ended December 31, 1996 Commission File Number 2-7803 MISSISSIPPI CHEMICAL CORPORATION Organized in the State of Mississippi Identification No. 64-0292638 P. O. Box 388, Yazoo City, Mississippi 39194 Telephone No. 601+746-4131 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Number of Shares Common Stock, $0.01 par value 27,966,555 MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES INDEX Page Number PART I. FINANCIAL INFORMATION: Item 1. Consolidated Financial Statements Consolidated Statements of Income 3 Three months ended December 31, 1996 and 1995, and Six months ended December 31, 1996 and 1995 Consolidated Balance Sheets December 31, 1996 and June 30, 1996 4 - 5 Consolidated Statements of Shareholders' Equity 6 Fiscal Year Ended June 30, 1996 and Six months ended December 31, 1996 Consolidated Statements of Cash Flows 7 Six months ended December 31, 1996 and 1995 Notes to Consolidated Financial Statements 8 - 12 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 13 - 20 PART II. OTHER INFORMATION: Item 6(b).Reports on Form 8-K 21 Signatures 21 (TABLE) MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three months ended Six months ended December 31, December 31, --------------------- ------------------- 1996 1995 1996 1995 --------- --------- -------- --------- (In thousands, except per share data) MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS December 31, June 30, 1996 1996 ----------- -------- (Dollars in thousands) Current assets: Cash and cash equivalents $ 3,803 $ 60,214 Accounts receivable 62,900 34,630 Inventories: Finished products 34,006 10,278 Raw materials and supplies 6,525 5,096 Replacement parts 34,702 25,259 -------- -------- Total inventories 75,233 40,633 Prepaid expenses and other current assets 7,684 3,956 Deferred income taxes 2,713 2,216 -------- -------- Total current assets 152,333 141,649 -------- -------- Investments and other assets: Investment in affiliates 70,878 1,523 Other 17,774 26,144 -------- -------- Total investments and other assets 88,652 27,667 -------- -------- Properties held for sale 52,919 52,919 Property, plant and equipment, at cost 670,991 399,882 Less accumulated depreciation, depletion and amortization (336,271) (281,111) -------- -------- Net property, plant and equipment 334,720 118,771 Goodwill, net of accumulated amortization 180,416 - -------- -------- $809,040 $341,006 ======== ======== The accompanying notes are an integral part of these financial statements. MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued) LIABILITIES AND SHAREHOLDERS' EQUITY December 31, June 30, 1996 1996 ------------ --------- (Dollars in thousands) Current liabilities: Long-term debt due within one year $ 139 $ 78 Accounts payable 72,635 46,013 Accrued liabilities 11,355 8,707 Income taxes payable 3,705 5,238 ---------- ---------- Total current liabilities 87,834 60,036 ---------- ---------- Long-term debt 221,794 - Other long-term liabilities and deferred credits 18,323 18,218 Deferred income taxes 58,149 14,927 Shareholders' equity: Common stock ($.01 par; authorized 100,000,000 shares; issued 27,966,555 in fiscal 1997 and 22,903,450 in fiscal 1996) 280 229 Additional paid-in capital 305,698 178,364 Retained earnings 116,962 99,814 Treasury stock, at cost (1,550,000 shares in fiscal 1996) - (30,582) -------- -------- 422,940 247,825 -------- -------- $809,040 $341,006 ======== ======== The accompanying notes are an integral part of these financial statements.
MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY DECEMBER 31, 1996 Additional Common Paid-In Retained Treasury Stock Capital Earnings Stock Total ------- --------- -------- -------- -------- (Dollars in thousands) Balances, July 1, 1995 $ 229 $178,332 $53,520 $ (4,774)$227,307 Net income - - 54,178 - 54,178 Cash dividends paid - - (7,884) - (7,884) Treasury stock, net - 32 - (25,808) (25,776) ------- -------- -------- -------- -------- Balances, June 30, 1996 229 178,364 99,814 (30,582) 247,825 Net income - - 21,388 - 21,388 Cash dividends paid - - (4,240) - (4,240) Treasury stock, net - 56 - (6,174) (6,118) Stock issued for business acquired 51 127,278 - 36,756 164,085 ------- -------- -------- -------- -------- Balances, December 31, 1996 $ 280 $305,698 $116,962 $ - $422,940 ======= ======== ======== ======== ======== The accompanying notes are an integral part of these financial statements.
MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended December 31, 1996 1995 --------- --------- (Dollars in thousands) Cash flows from operating activities: Net income $ 21,388 $ 21,578 Reconciliation of net income to net cash (used)provided by operating activities: Net change in operating assets and liabilities (28,973) 9,490 Depreciation, depletion and amortization 10,316 8,662 Deferred income taxes 668 872 Transaction costs for business acquired (2,675) - Other (1,390) 208 -------- --------- Net cash (used) provided by operating activities (666) 40,810 -------- --------- Cash flows from investing activities: Purchase of property, plant and equipment (74,391) (9,769) Proceeds received from option 1,000 2,000 Investment in Farmland MissChem Limited (43,167) (631) Other 6 53 -------- --------- Net cash used by investing activities (116,552) (8,347) -------- --------- Cash flows from financing activities: Debt payments (150,769) (3,086) Debt proceeds 222,122 - Cash dividends paid (4,240) (3,547) Purchase of treasury stock (6,306) (9,449) -------- -------- Net cash provided (used) by financing activities 60,807 (16,082) -------- -------- Net (decrease) increase in cash and cash equivalents (56,411) 16,381 Cash and cash equivalents - beginning of period 60,214 29,617 -------- -------- Cash and cash equivalents - end of period $ 3,803 $ 45,998 ======== ======== The accompanying notes are an integral part of these financial statements.
MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - INTERIM FINANCIAL STATEMENTS The accompanying consolidated financial statements of Mississippi Chemical Corporation and its subsidiaries ("the Company") have been prepared by the Company, without audit. In the opinion of the Company's management, the financial statements reflect all adjustments necessary to present fairly the results of operations for the three-month and the six-month periods ended December 31, 1996 and 1995, the Company's financial position at December 31, 1996 and June 30, 1996, the cash flows for the six-month periods ended December 31, 1996 and 1995, and the consolidated statements of shareholders' equity as of December 31, 1996. These adjustments are of a normal recurring nature, and are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods. Certain notes and other information have been condensed or omitted from the interim financial statements presented in the Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company's 1996 Form 10-K and the consolidated financial statements and notes thereto included in the Company's June 30, 1996, audited financial statements. Due to the seasonal nature of the Company's business, the results of operations for the period ended December 31, 1996, are not necessarily indicative of the operating results for the full fiscal year. NOTE 2 - EARNINGS PER SHARE The number of shares used in the earnings per share computation are the weighted average number of common shares outstanding plus dilutive common share equivalents as follows: Three months ended Six months ended December 31, December 31, 1996 1995 1996 1995 ---------- ----------- ---------- ---------- Weighted average common shares outstanding, net of treasury shares 21,528,083 22,137,200 21,406,812 22,220,508 Common stock equivalents for employee stock options 92,124 72,657 70,826 68,087 ---------- ---------- ---------- ---------- 21,620,207 22,209,857 21,477,638 22,288,595 ========== ========== ========== ==========
In October 1996, the Company's board of directors declared a regular quarterly cash dividend of $0.10 per common share outstanding. This dividend was paid on November 12, 1996, to shareholders of record as of October 28, 1996. In January 1997, the Company's board of directors declared a regular quarterly cash dividend of $0.10 per common share outstanding. This dividend was paid on February 7, 1997, to holders of record on January 27, 1997. NOTE 3 - COMMITMENTS AND CONTINGENCIES During 1990, the Company entered into an agreement granting a third party the exclusive option, for a period of four years, to purchase the Company's undeveloped phosphate rock property of approximately 12,000 acres in Hardee County, Florida. As of July 12, 1994, the Company and the option holder entered into new agreements with respect to this property whereby the Company conveyed a portion of the property to the third party and granted to the third party the exclusive option to purchase the remaining portion of the property. In addition, the Company was granted a put option whereby the Company has the right and option to sell the remaining portion of the property to the third party if the third party does not exercise its option to purchase the remaining property and was granted an exclusive option to repurchase the previously conveyed portion in the event the third party does not exercise its option and the Company does not exercise its put option. The third party's option will expire on January 16, 1998. The Company's put option will expire six months after the third party's option expires, and its repurchase option will expire one year after the Company's put option expires. These properties are classified as property held for sale at December 31, 1996 and June 30, 1996. The Company has entered into a 50-50 joint venture ("Farmland MissChem Limited") with Farmland Industries, Inc. to construct and operate a 2,040 short-ton-per-day anhydrous ammonia plant to be located near Point Lisas, The Republic of Trinidad and Tobago. The project is expected to cost approximately $330 million. Startup of the facility is scheduled for mid-1998. The Company is accounting for this investment using the equity method In late fiscal 1996, the Company began an expansion at its nitrogen fertilizer manufacturing facilities at Yazoo City. The project includes the addition of a 650 ton-per-day nitric acid plant, a new 500 ton-per-day ammonia plant and modifications to its ammonium nitrate plant to increase production from approximately 750,000 to approximately 950,000 tons-per-year. The Company estimates total cost of the expansion to be $130 million. The expansion is scheduled to be fully operational during the first half of 1998. NOTE 4 - CHANGE IN TRADING MARKETS Effective October 10, 1996, the Company's common stock began trading on the New York Stock Exchange under the symbol "GRO." The Company's shares had previously traded on the NASDAQ Stock Market's National Market under the symbol "MISS". NOTE 5 - ACQUISITIONS ACCOUNTED FOR BY THE PURCHASE METHOD OF ACCOUNTING FIRST MISSISSIPPI CORPORATION ACQUISITION: In August 1996, the Company entered into an agreement to acquire the fertilizer businesses of First Mississippi Corporation ("First Mississippi") in an all-stock merger transaction. On December 24, 1996, this transaction was completed for an approximate value of $315 million which is subject to certain adjustments. The transaction was accounted for by the purchase method of accounting and is reflected in the Company's consolidated balance sheet at December 31, 1996. According to the terms of the merger, the Company issued approximately 6.9 million shares of its common stock to former First Mississippi shareholders. Additionally, at closing First Mississippi's fertilizer businesses had approximately $150.5 million of outstanding debt. The fertilizer operations of First Mississippi include AMPRO Fertilizer, Inc. and a 50% interest in Triad Chemical. The Company already held the remaining 50% interest in Triad Chemical, which owns and operates an anhydrous ammonia plant with an annual production of approximately 465,000 tons, and a urea plant with an annual production of approximately 560,000 tons. AMPRO owns and operates an anhydrous ammonia plant with annual production of approximately 615,000 tons. AMPRO and Triad are located on adjacent sites in Donaldsonville, Louisiana, and share dock facilities capable of receiving ocean-going vessels. In the transaction, the Company also acquired a 50% interest in an ammonia storage terminal in Pasadena, Texas, and a 50% interest in a company which owns and operates eleven ammonia barges. Since closing, the Company has contributed to the capital of First Mississippi its 50% interest in Triad Chemical and the name of First Mississippi has been changed to Triad Nitrogen, Inc. ("Triad Nitrogen"). The following recap reflects the allocation of the purchase price (subject to adjustment) on the Company's consolidated balance sheet as of December 31, 1996: (a) Property, plant and equipment $151,688 (b) Goodwill 180,416 (c) Other assets/liabilities acquired, net 24,537 (d) Deferred taxes (42,057) -------- $314,584 ========
Goodwill will be amortized over a period of forty years using the straight-line method. Triad Nitrogen's results of operations for the period December 24, 1996, through December 31, 1996, are included in the Company's current year consolidated statements of income. To facilitate analysis, the accompanying summarized unaudited pro forma financial information includes Triad Nitrogen's results of operations, assuming the acquisition had occurred on July 1, 1996, and July 1, 1995, respectively. These pro forma results of operations are not necessarily indicative of what would have occurred had the acquisition actually been consummated at the beginning of the periods presented, or of future results of the combined companies. Six months ended December 31, -------------------- (In thousands, except per share data) 1996 1995 -------- -------- Net sales $320,420 $299,730 ======== ======== Net income $ 33,672 $ 38,316 ======== ======== Earnings per share $ 1.19 $ 1.31 ======== ========
POTASH ACQUISITIONS: In August 1996, the Company, through its wholly owned subsidiary, Mississippi Potash, Inc., completed its acquisition of substantially all of the assets of New Mexico Potash Corporation and Eddy Potash, Inc. from Trans- Resources, Inc. for $45 million, plus an adjustment for current working capital of approximately $11 million. The two mines, located near Carlsbad, New Mexico, have a combined annual production capacity of approximately 870,000 tons of potash. Eddy Potash, Inc. is now a wholly owned subsidiary of Mississippi Potash, Inc. New Mexico Potash Corporation has been merged into Mississippi Potash, Inc. Prior to this acquisition, Mississippi Potash, Inc. produced approximately 420,000 tons of potash per year. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following discussion and analysis should be read in conjunction with the attached consolidated financial statements and notes thereto, and with the Company's audited financial statements and notes thereto for the fiscal year ended June 30, 1996. The usage of fertilizer in the Company's trade territory is highly seasonal, and the Company's quarterly results reflect the fact that in the Company's markets significantly more fertilizer is purchased in the spring. Significant portions of the Company's net sales and operating income are generated in the last four months of the Company's fiscal year (March through June). Since interim period operating results reflect the seasonal nature of the Company's business, they are not indicative of results expected for the full fiscal year. In addition, quarterly results can vary significantly from year to year primarily as a result of weather-related shifts in planting schedules and purchase patterns. The Company incurs substantial expenditures for fixed costs throughout the year and substantial expenditures for inventory in advance of the spring planting season. The Company's results of operations for the six month period ended December 31, 1996, reflect higher sales prices for most of the Company's products, partially offset by higher natural gas costs and lower sales volumes for nitrogen products and DAP. Nitrogen sales volumes were higher in the first six months of the prior year due to the effect of slow product movement in May and June of 1995, which was caused by adverse weather conditions. This slow product movement resulted in strong carryover product demand during early fiscal 1996. Higher potash volumes reflect the sale of tonnages available from the Company's potash facilities acquired in August 1996. Significantly higher natural gas prices adversely impacted the Company's results in the current period. Natural gas prices remain relatively high and subject to pronounced near-term fluctuations. In May 1995, the Board of Directors authorized the purchase of up to 1,500,000 shares of the Company's common stock in the open market or in privately negotiated transactions. On March 29, 1996, the Board of Directors authorized the Company to repurchase up to 1,500,000 additional shares of the Company's common stock in open market or privately negotiated transactions. As of December 31, 1996, the Company had repurchased a total of 1,850,000 shares pursuant to those authorizations; however, in December, the Company reissued these shares as part of its acquisition of First Mississippi. The unused authorization to repurchase 1,150,000 shares remains available to be utilized by the Company. RESULTS OF OPERATIONS Following are summaries of the Company's sales results by product categories: Three months ended Six months ended December 31, December 31, ------------------- -------------------- 1996 1995 1996 1995 -------- --------- -------- -------- (in thousands) Net Sales: Nitrogen $ 55,812 $ 58,241 $104,557 $114,843 DAP 35,485 36,540 66,507 68,996 Potash 21,361 4,674 32,219 11,655 Other 538 402 1,203 933 -------- -------- -------- -------- Net Sales $113,196 $ 99,857 $204,486 $196,427 ======== ======== ======== ======== Three months ended Six months ended December 31, December 31, ------------------ ----------------- 1996 1995 1996 1995 ------- -------- ----- ----- (in thousands) Tons Sold: Nitrogen 384 416 727 844 DAP 201 192 372 382 Potash 273 65 416 167 Three months ended Six months ended December 31, December 31, ------------------- --------------- 1996 1995 1996 1995 ------ ------ ----- ------ Average Sales Price Per Ton: Nitrogen $ 145 $ 140 $ 144 $ 136 DAP $ 176 $ 190 $ 179 $ 181 Potash $ 78 $ 72 $ 78 $ 70
NET SALES. Net sales increased 13.4% to $113.2 million for the quarter ended December 31, 1996, from $99.9 million for the quarter ended December 31, 1995, primarily as a result of increased sales volumes for potash. Potash sales increased 357.0% as a result of a 318.7% increase in tons sold and a 9.1% increase in the average price per ton. This increase in volume is the result of increased tonnage available due to the Company's recent potash acquisitions. Nitrogen fertilizer sales decreased 4.2% due to a 7.8% decrease in tons sold partially offset by a 4.0% increase in sales prices. Sales of DAP decreased 2.9% as a result of a 7.3% decrease in the average price per ton offset by a 4.8% increase in tons sold. For the six months ended December 31, 1996, net sales increased 4.1% to $204.5 million, from $196.4 million for the six months ended December 31, 1995. This increase was primarily the result of increased sales volumes for potash and higher sales prices for potash and nitrogen, partially offset by lower sales volumes for nitrogen. Nitrogen fertilizer sales decreased 9.0% due to a 13.8% decrease in tons sold partially offset by a 5.7% increase in sales prices. Sales of DAP decreased 3.6% as a result of a 2.4% decrease in tons sold and a 1.2% decrease in the average price per ton. Potash sales increased 176.5% as a result of a 148.4% increase in tons sold and an 11.3% increase in the average sales price. This increase in volume is the result of increased tonnage available due to the Company's potash acquisitions completed during August 1996. COST OF PRODUCTS SOLD. Cost of products sold increased to $80.5 million for the quarter ended December 31, 1996, from $69.6 million for quarter ended December 31, 1995. As a percentage of net sales, cost of products sold increased to 71.1% from 69.7%. This increase in cost of products sold, as a percentage of net sales, is the result of the Company's current year sales including a higher proportion of potash tons sold which have a higher percentage of cost to sales. This increase was partially offset by lower costs per ton for DAP. For the quarter ended December 31, 1996, nitrogen fertilizer cost per ton did not change significantly. Higher natural gas costs were offset by reduced purchases of ammonia and lower maintenance and labor costs during the current year quarter. During the prior year quarter, the Company incurred higher maintenance and labor costs and increased purchases of ammonia due to a scheduled biennial maintenance turnaround at the Company's Yazoo City facility. For the quarter ended December 31, 1996, DAP costs per ton decreased as a result of lower costs for phosphate rock and sulfur, partially offset by higher ammonia costs. Phosphate rock costs decreased due to the Company's phosphate rock supply contract which bases the price of this raw material on the phosphate rock costs incurred by certain domestic phosphate producers and the financial performance of the Company's phosphate operations. For the six months ended December 31, 1996, cost of products sold increased to $143.9 million from $136.4 million for the six months ended December 31, 1995. As a percentage of net sales, cost of products sold increased to 70.4% from 69.4%. This increase in cost of products sold, as a percentage of net sales, is the result of the Company's current year sales including a higher proportion of potash sales. This increase was partially offset by higher sales prices for nitrogen and potash. For the six months ended December 31, 1996, nitrogen fertilizer cost per ton did not change significantly. Increases in natural gas costs were substantially offset by reduced purchases of ammonia and lower maintenance and labor costs during the current year. During the prior year, the Company incurred higher maintenance and labor costs and increased purchases of ammonia due to a scheduled biennial maintenance turnaround at the Company's Yazoo City facility. For the six months ended December 31, 1996, DAP costs per ton did not change significantly. SELLING EXPENSES. Selling expenses increased to $6.4 million for the quarter ended December 31, 1996, from $6.1 million for the quarter ended December 31, 1995. As a percentage of net sales, selling expenses decreased to 5.7% for the quarter ended December 31, 1996, from 6.1% for the quarter ended December 31, 1995. This decrease was the result of the Company's sales including a higher proportion of potash for which the customer generally incurs the delivery expense. For the six months ended December 31, 1996, selling expenses decreased to $12.8 million from $13.0 million for the six months ended December 31, 1995. As a percentage of net sales, selling expenses decreased to 6.2% for the six months ended December 31, 1996, from 6.6% for the six months ended December 31, 1995. This decrease was primarily the result of the Company's sales including less tonnage sold on a delivered basis and higher sales prices for nitrogen and potash. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses increased to $7.7 million for the quarter ended December 31, 1996, from $5.7 million for the quarter ended December 31, 1995. As a percentage of net sales, general and administrative expenses increased to 6.8% from 5.7%. For the six months ended December 31, 1996, general and administrative expenses increased to $14.5 million from $11.7 million for the six months ended December 31, 1995. As a percentage of net sales, general and administrative expenses increased to 7.1% from 6.0%. These increases for both the current year quarter and the six months ended December 31, 1996, were primarily the result of increased royalties and other administrative costs of the potash companies acquired in August 1996. The Company also incurred costs associated with its change in trading markets during the current year. OPERATING INCOME. As a result of the above factors, operating income increased to $18.6 million for the quarter ended December 31, 1996, from $18.4 million for the quarter ended December 31, 1995, a 1.1% increase. For the six months ended December 31, operating income decreased to $33.3 million in 1996 from $35.3 million in 1995, a 5.5% decrease. INTEREST, NET. For the quarter ended December 31, 1996, net interest expense was $280,000 compared to net interest income of $701,000 for the quarter ended December 31, 1995. For the six months ended December 31, 1996, net interest income was $142,000 compared to $756,000 for the six months ended December 31, 1995. The increases in net interest expense were primarily the reflection of higher interest expense resulting from higher levels of borrowings during the current year periods and lower interest income earned due to lower levels of investments during the current year periods. Also, during the current year quarter and six month periods, the Company capitalized $.9 million and $1.3 million, respectively, of its interest costs. During the prior year six month period, the Company incurred costs in association with prepaying a portion of its debt. INCOME TAX EXPENSE. Income tax expense did not change for the quarter ended December 31, 1996, compared to the quarter ended December 31, 1995. For the six months ended December 31, 1996, income tax expense decreased to $13.7 million from $15.0 million for the six months ended December 31, 1995. This decrease is the result of changes in earnings during the current year and an adjustment to the deferred tax rate made during the prior year. NET INCOME. As a result of the foregoing, net income increased to $12.1 million for the quarter ended December 31, 1996, from $11.9 million for the quarter ended December 31, 1995. For the six months ended December 31, 1996, net income decreased to $21.4 million from $21.6 million in 1995. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1996, the Company had cash and cash equivalents of $3.8 million, compared to $60.2 million at June 30, 1996, a decrease of $56.4 million. OPERATING ACTIVITIES. For the six months ended December 31, 1996, net cash used by operating activities was $.7 million. For the six months ended December 31, 1995, net cash provided by operating activities was $40.8 million. INVESTING ACTIVITIES. Net cash used by investing activities was $116.6 million for the six months ended December 31, 1996, and $8.3 million for the six months ended December 31, 1995, primarily reflecting capital expenditures in those periods. During the current year period, capital expenditures were $74.4 million compared to $9.8 million during the prior year. The current year expenditures consisted of $45.0 million spent for the purchase of the two new potash mines in August 1996, and $12.4 million related to the Company's nitrogen expansion project at its Yazoo City facilities. The remaining $17.0 million was for normal improvements and modifications to the Company's facilities and other items. The current year period also includes $43.2 million related to the Company's investment in Farmland MissChem Limited compared to $.6 million during the prior year period. These expenditures were partially offset by the receipt of option payments relating to the Company's Florida phosphate rock properties. FINANCING ACTIVITIES. Net cash provided by financing activities was $60.8 million for the six months ended December 31, 1996, and net cash used by financing activities was $16.1 million for the six months ended December 31, 1995. During the current year, the amounts provided by financing activities included $222.1 million in debt proceeds partially offset by $150.8 million in debt payments, $6.3 million for the purchase of treasury stock and $4.2 million in cash dividends. During the prior year, the amounts used by financing activities included $9.4 million for the purchase of treasury stock and $3.5 million in cash dividends. The Company also paid $3.1 million in debt payments which included $2.4 million in prepayments. At December 31, 1996, the Company and its subsidiaries had credit facilities with Harris Trust and Savings Bank (`Harris'') and a syndicate of other commercial banks totaling $300 million. These facilities are five-year facilities and replace all previous credit facilities with NationsBank. The new facilities will bear interest at the Prime Rate or at rates related to the London Interbank Offered Rate. At December 31, 1996, the Company had $221.6 million outstanding under these facilities which represented the maximum amount outstanding at any month end during the current year. The Company also has a separate $5 million short-term line of credit with another financial institution. Prior to the completion of the Harris facilities, the Company had a $125 million credit facility with NationsBank as agent for a syndicate of commercial banks. The Company believes that existing cash, cash generated from operations, and current and anticipated lines of credit will be sufficient to satisfy its financing requirements through fiscal 1998. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits filed as part of this report are listed below. SEC Exhibit Reference No. Description 27 Financial Data Schedule. (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MISSISSIPPI CHEMICAL CORPORATION Date: February 14, 1997 /S/ Timothy A. Dawson ----------------- -------------------------------- Timothy A. Dawson Vice President - Finance Date: February 14, 1997 /s/ Rosalyn B. Glascoe ----------------- -------------------------------- Rosalyn B. Glascoe Secretary -----END PRIVACY-ENHANCED MESSAGE-----