10-Q 1 q02qtr2d.htm FORM 10-Q FOR QUARTER ENDED DECEMBER 31, 2001 FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

          (Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d)

Of the Securities Exchange Act of 1934

For Quarter Ended December 31, 2001

 

OR

 

[ ] Transition Report Pursuant to Section 13 or 15(d)

Of the Securities Exchange Act of 1934

For Quarter Ended December 31, 2001

Commission File Number 001-12217

 

MISSISSIPPI CHEMICAL CORPORATION

 

Organized in the State of Mississippi

Tax Identification No. 64-0292638

P. O. Box 388, Yazoo City, Mississippi 39194

Telephone No. 662+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 [ ]

               The number of shares outstanding of each of the issuer's classes of common stock, as of December 31, 2001.

Class

Number of Shares

Common Stock, $0.01 par value

26,131,917

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

INDEX

 

     

Page

Number

PART I.

  

FINANCIAL INFORMATION:

 
 

Item 1.

Financial Statements

  
       
   

Consolidated Statements of Income

3
   

     Three months ended December 31, 2001 and 2000

 
   

     and Six months ended December 31, 2001 and 2000

  
       
   

Consolidated Balance Sheets

4 - 5
   

     December 31, 2001 and June 30, 2001

  
       
   

Consolidated Statements of Shareholders' Equity

6
   

     Fiscal Year ended June 30, 2001 and

  
   

     Six months ended December 31, 2001

  
       
   

Consolidated Statements of Cash Flows

7
   

     Six months ended December 31, 2001 and 2000

  
       
   

Notes to Consolidated Financial Statements

8 - 17
       
 

Item 2.

Management's Discussion and Analysis of Results

 
   

of Operations and Financial Condition

18 - 30
       
 

Item 3.

Quantitative and Qualitative Disclosure About

 
   

Market Risk

31
       
       

PART II.

  

OTHER INFORMATION:

  
       
 

Item 4.

Submission of Matters to a Vote of Security Holders

32
       
 

Item 6.

Exhibits and Reports on Form 8-K

32
       
 

Signatures

  

32

 

PART I.

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

<TABLE>

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

Three months ended

December 31,

  

Six months ended

December 31,
 

2001

  

2000

  

2001

  

2000
 

(In thousands, except per share data)
<s> <c>   <c>   <c>   <c>

Revenues:

 

  

 

  

 

  

 

   Net sales

$116,014 

  

$136,314 

  

$223,858 

  

$256,368 
               

Operating expenses:

              

   Cost of products sold

107,541 

  

135,118 

  

214,235 

  

257,680 

   Selling, general and

 

 

 

     administrative

6,485 

  

7,264 

  

13,633 

  

16,036 

   Other

    1,233 

  

    2,945 

  

    7,851 

  

    6,382 
 

 115,259 

  

 145,327 

  

 235,719 

  

 280,098 
               

Operating income (loss)

755 

  

(9,013)

  

(11,861)

  

(23,730)
               

Other (expense) income:

              

   Interest, net

(6,964)

  

(7,111)

  

(14,650)

  

(14,269)

   Other

      679 

  

      922 

  

    3,880 

  

    2,380 
               

Loss before income taxes

(5,530)

  

(15,202)

  

(22,631)

  

(35,619)
               

Income tax benefit

   (4,360)

  

   (5,991)

  

  (13,411)

  

  (14,162)
               

Net loss

$  (1,170)

  

$  (9,211)

  

$  (9,220)

  

$ (21,457)
               
Loss per share - basic and              

   diluted (see Note 2)

$   (0.04)

  

$   (0.35)

  

$   (0.35)

  

$   (0.82)

</TABLE>

<FN>

The accompanying notes are an integral part of these consolidated financial statements.

</FN>

<TABLE>

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS

 

   

December 31,

  

June 30,
   

2001

  

2001
   

(In thousands, except per share data)
<s>   <c>   <c>

Current assets:

        

   Cash and cash equivalents

  

$    2,040 

  

$  11,797 

   Accounts receivable, net

  

44,296 

  

54,196 
         

   Inventories:

        

     Finished products

  

44,585 

  

44,502 

     Raw materials and supplies

  

5,789 

  

6,230 

     Replacement parts

  

    35,008 

  

     36,380 

          Total inventories

  

85,382 

  

87,112 
         

   Prepaid expenses and other current assets

  

5,547 

  

2,364 

   Deferred income taxes

  

       5,140 

  

       7,280 
         

          Total current assets

  

142,405 

  

162,749 
         

Investments in affiliates

  

102,202 

  

96,064 
         

Other assets

  

5,378 

  

6,304 
         

Property, plant and equipment, at cost

  

836,698 

  

841,080 

  less accumulated depreciation, depletion 

        
  and amortization  

  (442,745)

  

 (430,788)

          Net property, plant and equipment

  

393,953 

  

410,292 
         

Goodwill, net of accumulated amortization

  

   102,731 

  

   104,198 
         
   

$ 746,669 

  

$ 779,607 
         

</TABLE>

<FN>

The accompanying notes are an integral part of these consolidated financial statements.

</FN>

<TABLE>

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Continued)

LIABILITIES AND SHAREHOLDERS' EQUITY

 

   

December 31,

  

June 30,
   

2001

  

2001
   

(In thousands, except per share data)
<s>   <c>   <c>

Current liabilities:

        

   Long-term debt due within one year

  

$157,514 

  

$    -      

   Accounts payable

  

40,571 

  

38,167 

   Accrued liabilities

  

     8,808 

  

    10,797 

         Total current liabilities

  

206,893 

  

48,964 
         

Long-term debt

  

214,189 

  

386,285 
         

Other long-term liabilities and deferred credits

  

11,049 

  

10,922 
         

Deferred income taxes

  

30,205 

  

43,679 
         

Shareholders' equity:

        

   Common stock ($.01 par, authorized 100,000

  

 

      shares; issued 27,976)  

280 

  

280 

   Additional paid-in capital

  

305,901 

  

305,901 

   Retained earnings

  

9,743 

  

18,963 

   Accumulated other comprehensive loss

  

(2,012)

  

(5,808)

   Treasury stock, at cost (1,844 shares)

  

    (29,579)

  

   (29,579)

       Total shareholders' equity

  

   284,333 

  

  289,757 
         
   

$ 746,669 

  

$ 779,607 

</TABLE>

 

<FN>

The accompanying notes are an integral part of these consolidated financial statements.

</FN>

<TABLE>

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

DECEMBER 31, 2001

(Unaudited)

 

 

 

Common

Stock

Additional

Paid-In

Capital

 

Retained

Earnings

Accumulated

Other

Comprehensive

Income (Loss)

 

Treasury

Stock

 

 

Total

(In thousands, except per share data)

          
<s> <c> <c> <c> <c> <c> <c>

Balances, July 1, 2000

$     280

$  305,901

$114,996 

$        -        

$(29,579)

$391,598 

  Comprehensive loss:

            

     Cumulative net

 

 

 

 

 

 
       unrealized gain on            
       hedges, net of tax of            
       $2,482

-    

-      

-      

4,149 

-       

4,149 

     Net loss

-    

-      

(95,249)

-       

-       

(95,249)

     Net change in 

           
       unrealized gain on            

       hedges, net of tax

            

       benefit of $5,966

       -    

        -      

      -       

        (9,957)

      -       

     (9,957)
             

          Comprehensive loss

-    

-      

(95,249)

(5,808)

-       

(101,057)
             

     Cash dividends paid

            

       ($0.03 per share)

       -    

        -      

     (784)

        -      

      -       

     (784)
             

Balances, June 30, 2001

280

305,901

18,963 

(5,808) 

(29,579)

289,757 

  Comprehensive loss:

            

     Net loss

-    

-   

(9,220)

-    

-    

(9,220)

     Net change in 

           
        unrealized loss on            

        hedges, net of tax

           

        expense of $2,277

      -    

        -   

       -      

       3,796  

      -    

    3,796 
             

          Comprehensive loss

      -  

        -   

   (9,220)

        3,796 

      -    

   (5,424)
             
Balances,            

  December 31, 2001

$      280

$  305,901

$    9,743

$     (2,012)

$(29,579)

$284,333 
             

</TABLE>

<FN>

The accompanying notes are an integral part of these consolidated financial statements.

</FN>

<TABLE>

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

   

Six months ended December 31,
   

2001

  

2000
   

(In thousands)
<s>   <c>   <c>

Cash flows from operating activities:

        

  Net loss

  

$    (9,220)

  

$   (21,457)

  Reconciliation of net loss to net cash provided by 

        
    operating activities:        

       Net change in operating assets and liabilities

  

11,645 

 

2,643 

       Depreciation, depletion and amortization

  

22,334 

  

23,702 

       Change in deferred loss on hedging activities, 

 

 

 

 

          net of tax  

619 

  

11,234 

       Deferred income taxes

  

(13,240)

  

(7,422)

       Equity earnings in unconsolidated affiliates

  

(7,318)

  

(5,277)

       Other

  

      (3,160)

  

         (76)
         

Net cash provided by operating activities

  

      1,660 

  

      3,347 
         

Cash flows from investing activities:

        

  Purchases of property, plant and equipment

  

(5,126)

  

(10,997)

  Proceeds from sale of assets

  

5,018 

  

12,581 

  Other

  

       3,300 

  

        750 
         

Net cash provided by investing activities

  

       3,192 

  

      2,334 
         

Cash flows from financing activities:

        

  Debt proceeds

  

115,345 

  

198,342 

  Debt payments

  

(129,954)

  

(203,151)

  Cash dividends paid

  

        -      

  

       (784)
         

Net cash used in financing activities

  

   (14,609)

  

      (5,593)
         

Net (decrease) increase in cash and cash 

        
   equivalents  

(9,757)

  

88 
         

Cash and cash equivalents - beginning of period

  

     11,797 

  

       2,190 
         

Cash and cash equivalents - end of period

  

$     2,040 

  

$      2,278 

</TABLE>

<FN>

The accompanying notes are an integral part of these consolidated financial statements.

</FN>

 

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - INTERIM FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared by us without audit, and include Mississippi Chemical Corporation and its subsidiaries. In our opinion, the financial statements reflect all adjustments necessary to present fairly our results of operations for the three-month and the six-month periods ended December 31, 2001 and 2000, our financial position at December 31, 2001 and June 30, 2001, our consolidated statements of shareholders' equity for the six months ended December 31, 2001 and the year ended June 30, 2001, and our cash flows for the six months ended December 31, 2001 and 2000. In our opinion, these adjustments are of a normal recurring nature which are necessary for a fair presentation of our financial position and results of operations for the interim periods. We have reclassified certain prior-year information to conform with the current year's presentation.

Certain notes and other information have been condensed or omitted in our interim financial statements presented in this quarterly report on Form 10-Q. Therefore, these financial statements should be read in conjunction with our 2001 Annual Report on Form 10-K and our consolidated financial statements and notes thereto included in our June 30, 2001, audited financial statements.

Our business is seasonal; therefore, the results of operations for the periods ended December 31, 2001, are not necessarily indicative of the operating results for the full fiscal year.

 

NOTE 2 - LONG-TERM DEBT DUE WITHIN ONE YEAR

We have a secured revolving credit facility (the "Facility") with Harris Trust and Savings Bank and a syndicate of eleven commercial banks totaling $200.0 million. The Facility matures on November 25, 2002, and bears interest at rates related to Prime Rate, the London Interbank Offered Rate or the Federal Funds Rate. At December 31, 2001, we had borrowings outstanding in the amount of $157.5 million.

Since the Facility matures in November 2002, it became a current liability on our balance sheet for financial reporting purposes in the quarter ended December 31, 2001. We are currently exploring refinancing alternatives and believe that we will be able to refinance the Facility at or prior to maturity. We have engaged Credit Suisse First Boston Corporation to help us evaluate such alternatives. However, we cannot guarantee that we will be able to obtain new financing or that such financing will contain terms, particularly interest rates, fees, or amounts, as favorable as the Facility's.

 

NOTE 3 - EARNINGS PER SHARE

The number of shares used in our basic and diluted earnings per share computation are as follows:

<TABLE>

   

Three months ended

  

Six months ended
   

December 31,

  

December 31,
   

2001

  

2000

  

2001

  

2000
   

(In thousands)
<s>   <c>   <c>   <c>   <c>

Weighted average common shares

  

 

  

 

  

 

  

 
   outstanding, net of treasury shares, for                
   basic earnings per share  

26,132

   26,132  

26,132

  

26,132

Common stock equivalents for employee

                

   stock options

  

    -     

  

    -     

  

   -    

  

    -   
                 

Weighted average common shares

                
   outstanding for diluted earnings per                

   share

  

26,132

  

26,132

  

26,132

  

26,132

Options outstanding were not included in our computations of diluted earnings per share for the three-month or six-month periods ended December 31, 2001 and 2000, because they were antidilutive.

 

NOTE 4 - SEGMENT INFORMATION

Our reportable operating segments, nitrogen, phosphate and potash, are strategic business units that offer different products. They are managed separately because each business unit requires different technology and marketing strategies. Our nitrogen segment produces ammonia, ammonium nitrate, urea, nitrogen solutions and nitric acid. We distribute these products to fertilizer dealers and distributors, and industrial users. Our phosphate segment produces diammonium phosphate fertilizer (commonly referred to as "DAP") that is marketed to agricultural users primarily in international markets through a separate export association. Our potash segment mines and produces granular and standard potash products and distributes them to agricultural and industrial users. Below is our segment information for the three-month and six-month periods ended December 31, 2001 and 2000. The Other caption includes corporate and consolidating eliminations.

<TABLE>
   

Three months ended December 31, 2001

(In thousands)

  

Nitrogen

Phosphate

Potash

Other

Total
<s>   <c> <c> <c> <c> <c>

Net sales - external customers

  

$  69,948 

$  27,972 

$ 18,094 

$   -      

$116,014 

Net sales - intersegment

  

4,957 

22 

-      

(4,979)

-       

Operating income (loss)

  

428 

954 

(1,395)

768 

755 

Depreciation, depletion and 

            
  amortization  

6,908

1,402 

1,694 

1,161 

11,165 

Capital expenditures

  

228

1,104 

895 

41 

2,268 

 

   

Three months ended December 31, 2000

(In thousands)

  

Nitrogen

Phosphate

Potash

Other

Total
<s>   <c> <c> <c> <c> <c>

Net sales - external customers

  

$ 98,222 

$  22,862 

$15,230 

$   -      

$136,314 

Net sales - intersegment

  

7,111 

17 

-      

(7,128)

-      

Operating (loss) income

  

(6,236)

(3,893)

180 

936 

(9,013)

Depreciation, depletion and

  

  amortization  

7,719 

1,350 

1,682 

913 

11,664 

Capital expenditures

  

3,797 

1,556 

1,121 

28 

6,502 

 
   

Six months ended December 31, 2001

(In thousands)

  

Nitrogen

Phosphate

Potash

Other

Total
<s>   <c> <c> <c> <c> <c>

Net sales - external customers

  

$134,199

$  52,537 

$37,122 

$   -      

$223,858 

Net sales - intersegment

  

10,864 

35 

-      

(10,899)

-      

Operating (loss) income

  

(8,628)

(333)

(3,677)

777 

(11,861)

Depreciation, depletion and

  

  amortization  

13,849 

2,797 

3,447 

2,241 

22,334 

Capital expenditures

  

2,279 

1,515 

1,209 

123 

5,126 

 
   

Six months ended December 31, 2000

(In thousands)

  

Nitrogen

Phosphate

Potash

Other

Total
<s>   <c> <c> <c> <c> <c>

Net sales - external customers

  

$169,548 

$  52,685 

$34,135 

$   -    

$256,368 

Net sales - intersegment

  

14,681 

32 

-      

(14,713)

-      

Operating (loss) income

  

(16,099)

(5,800)

(2,245)

414 

(23,730)

Depreciation, depletion and

  

  amortization  

15,666 

2,855 

3,289 

1,892 

23,702 

Capital expenditures

  

5,674 

1,849 

3,441 

33 

10,997 

</TABLE>

 

NOTE 5 - ACCUMULATED OTHER COMPREHENSIVE LOSS

Comprehensive loss is the total of net loss and all other non-owner changes in equity. The components of comprehensive loss that relate to us are net income or loss and unrealized gains or losses on our natural gas derivative transactions, and, as permitted under the provisions of SFAS No. 130, are presented in the Consolidated Statements of Shareholders' Equity. These derivative transactions may consist of futures contracts, commodity swaps, or similar derivative financial instruments related to the price of natural gas. The changes in the components of accumulated other comprehensive loss during the six months ended December 31, 2001, are included below.

<TABLE>

   

 

Before-Tax

Amount

  

Tax

(Expense)

Benefit

  

Net-of-Tax

Amount

Net unrealized loss on natural gas hedging     activities:

  

(In thousands)
<s>   <c>   <c>   <c>

    Balances, June 30, 2001

  

$  (9,292)

  

$  3,484 

  

$  (5,808)
             

       Net unrealized loss arising during period

  

(7,555)

  

2,833 

  

(4,722)

       Less: reclassification adjustment for net 

 

 

 

                losses realized in net income  

  13,628 

  

  (5,110)

  

   8,518 

    Balances, December 31, 2001

  

$  (3,219)

  

$  1,207 

  

$ (2,012)

</TABLE>

 

NOTE 6 - SETTLEMENT OF LITIGATION

In January 2002, we settled the defamation action we filed against Terra International, Inc. in August 1995. We will receive $11.0 million in our third fiscal quarter related to this settlement that will be recorded as a component of other income in our March 31, 2002, Statement of Operations. This settlement is with Zurich Specialties London, Ltd., which was Terra's liability carrier, and the settlement payment will conclude this litigation.

 

NOTE 7 - GUARANTOR SUBSIDIARIES

Payment obligations under our 7.25% Senior Notes, due November 15, 2017, issued pursuant to that certain indenture, dated as of November 25, 1997, are fully and unconditionally guaranteed on a joint and several basis by Mississippi Nitrogen, Inc., and MissChem Nitrogen, L.L.C. (the "Guarantor Subsidiaries"), our wholly owned direct subsidiary and our wholly owned indirect subsidiary, respectively. Condensed consolidating financial information regarding the parent company, Guarantor Subsidiaries and non-guarantor subsidiaries for December 31, 2001 and 2000 is presented below for purposes of complying with the reporting requirements of the Guarantor Subsidiaries.

<TABLE>

CONDENSED CONSOLIDATING STATEMENT OF INCOME
   

Three months ended December 31, 2001

(In thousands)

  

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

Consolidated
<s>   <c> <c> <c> <c> <c>

Revenues:

            

  Net sales

  

$     -      

$  39,480 

$ 116,465 

$   (39,931)

$ 116,014 
             

Operating expenses:

            

  Cost of products sold

  

     -      

 44,589 

104,036 

(41,084)

107,541 

  Selling, general and

  

(770)

1,258 

5,997 

-       

6,485 
    administrative            

  Other

  

       -      

     1,058 

         175 

          -       

       1,233 
   

     (770)

   46,905 

 110,208 

   (41,084)

   115,259 

Operating income (loss)

  

770 

(7,425)

6,257 

1,153 

755 
             

Other (expense) income:

            

  Interest, net

  

(6,985)

(2,909)

(6,021)

8,951 

(6,964)

  Other

  

    8,816 

    6,517 

     489 

   (15,143)

      679 
             

Income (loss) before

           
   income taxes  

2,601 

(3,817)

725 

(5,039)

(5,530)
             

Income tax expense

 

  (benefit)  

    3,771 

   (7,098)

   (4,785)

    3,752 

   (4,360)
             

Net (loss) income

  

$   (1,170)

$   3,281 

$   5,510 

$  (8,791)

$  (1,170)

</TABLE>

 

<TABLE>

 

CONDENSED CONSOLIDATING STATEMENT OF INCOME
   

Three months ended December 31, 2000

 

(In thousands)

  

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

Consolidated
<s>   <c> <c> <c> <c> <c>

Revenues:

            

  Net sales

  

$     -    

$   44,376 

$ 113,224 

$  (21,286)

$ 136,314
             

Operating expenses:

            

  Cost of products sold

  

-    

47,747 

110,611 

(23,240)

135,118 

  Selling, general and  

            
    administrative  

(949)

1,490 

6,723  

-       

7,264 

  Other

  

      -    

     1,083 

    1,862  

       -       

      2,945 
   

      (949)

    50,320 

 119,196  

    (23,240)

   145,327 

Operating income (loss)

  

949 

(5,944)

(5,972) 

1,954 

(9,013)
             

Other (expense) income:

            

  Interest, net

  

(7,607)

(3,723)

4,219 

-       

(7,111)

  Other

  

    (3,014)

      1,883 

        98 

     1,955 

       922 
             

Loss before income taxes

  

(9,672)

(7,784)

(1,655) 

3,909 

(15,202)
             

Income tax benefit

  

     (461)

       (185)

    (5,315)

       (30)

    (5,991)
             

Net (loss) income

  

$  (9,211)

$    (7,599)

$     3,660

$   3,939 

$   (9,211)

</TABLE>

 

<TABLE>

CONDENSED CONSOLIDATED STATEMENT OF INCOME
   

Six months ended December 31, 2001

 

(In thousands)

  

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

Consolidated
<s>   <c> <c> <c> <c> <c>

Revenues:

            

  Net sales

  

$    -   

$  73,311 

$ 224,994 

$ (74,447)

$ 223,858 
             

Operating expenses:

            

  Cost of products sold

  

-     

80,150 

210,042 

(75,957)

214,235 

  Selling, general and  

            
    administrative  

(789)

 2,473 

11,949 

-      

13,633 

  Other

  

        -     

     4,686 

      3,165 

          -      

       7,851 
   

     (789)

   87,309 

  225,156 

   (75,957)

   235,719 

Operating income (loss)

  

789 

(13,998)

(162)

1,510 

(11,861)
             

Other (expense) income:

            

  Interest, net

  

(14,659)

(5,764)

(3,178)

8,951 

(14,650)

  Other

  

    8,072 

     4,929 

      3,670 

    (12,791)

      3,880 
             

(Loss) income before   

     

 

    
    income taxes  

(5,798)

(14,833)

330 

(2,330)

(22,631)
             

Income tax expense  

           
   (benefit)  

    3,422 

  (13,600)

   (5,836)

     2,603 

  (13,411)
             

Net (loss) income

  

$  (9,220)

$  (1,233)

$   6,166 

$   (4,933)

$   (9,220)

</TABLE>

 

<TABLE>

CONDENSED CONSOLIDATING STATEMENT OF INCOME
   

Six months ended December 31, 2000

 

(In thousands)

  

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

Consolidated
<s>   <c> <c> <c> <c> <c>

Revenues:

            

  Net sales

  

$     -   

$    78,259 

$ 258,037  

$  (79,928)

$ 256,368

             

Operating expenses:

            

  Cost of products sold

  

-    

88,884 

251,154  

(82,358)

257,680 

  Selling, general and   

  

     administrative  

(436)

2,963 

13,509  

-       

16,036 

  Other

  

       -      

       2,683 

      3,699  

         -       

       6,382 
   

      (436)

     94,530 

    268,362  

  (82,358)

   280,098 

Operating income (loss)

  

436 

(16,271)

(10,325) 

2,430 

(23,730)
             

Other (expense) income:

            

  Interest, net

  

(15,181)

(7,211)

8,123 

-       

(14,269)

  Other

  

    (8,116)

        5,032 

         306 

     5,158 

     2,380 
             

Loss before income taxes

  

(22,861)

(18,450)

(1,896) 

7,588 

(35,619)
             

Income tax benefit

  

    (1,404)

      (2,245)

      (9,849)

     (664)

  (14,162)
             

Net (loss) income

  

$ (21,457)

$  (16,205)

$      7,953

$    8,252 

$ (21,457)

</TABLE>

 

<TABLE>

CONDENSED CONSOLIDATING BALANCE SHEET

 
 

December 31, 2001

 

(In thousands)

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

 

Consolidated
<s> <c> <c> <c> <c> <c>

Assets

          

Current assets:

          

   Cash and cash equivalents

$   1,967 

$      16 

$      57 

$       -       

$   2,040 

   Receivables, net

1,265 

12,608 

60,175 

(29,752)

44,296 

   Inventories

-       

19,976 

63,852 

1,554 

85,382 

   Prepaid expenses and other 

          
    current assets

    5,998 

    1,622 

    5,151 

    (2,084)

   10,687 
           

        Total current assets

9,230 

34,222 

129,235 

(30,282)

142,405 
           

Investments in affiliates

374,270 

300,214 

86,971 

(659,253)

102,202 

Other assets

339,637 

-       

64,173 

(398,432)

5,378 

PP&E, net

8,640 

132,792 

252,521 

-       

393,953 

Goodwill, net

         -       

          -       

  102,731 

              -       

  102,731 
           

        Total assets

$ 731,777 

$ 467,228 

$ 635,631 

$(1,087,967)

$ 746,669 
           
           

Liabilities and Shareholders' Equity

          

Current liabilities:

          

  Long-term debt due within

         
      one year

$ 157,514 

$     -       

$     -       

$      -        

$ 157,514 

   Accounts payable

20,305 

9,962 

52,365 

(42,061)

40,571 

   Accrued liabilities

    4,331 

    2,187 

     4,750 

     (2,460)

     8,808 
           

        Total current liabilities

182,150 

12,149 

57,115 

(44,521)

206,893 
           

Long-term debt

263,595 

156,157 

140,833 

(346,396)

214,189 

Other long-term liabilities and

          

   deferred credits

1,699 

33,180 

55,807 

(49,432)

41,254 
           

Shareholders' equity:

          

   Common stock

280 

1 

58,940 

(58,941)

280 

   Additional paid-in capital

305,901 

324,715 

335,618 

(660,333)

305,901 

   Retained earnings

9,743 

(58,974)

(12,682)

71,656 

9,743 

   Accumulated other

          

      comprehensive loss

(2,012)

-       

-       

-       

(2,012)

   Treasury stock, at cost

   (29,579)

         -       

         -       

            -       

  (29,579)
           

   Total shareholders' equity

  284,333 

  265,742 

  381,876 

   (647,618)

  284,333 
           

        Total liabilities and

          

          shareholders' equity

$ 731,777 

$ 467,228 

$ 635,631 

$(1,087,967)

$ 746,669 
           

</TABLE>

 

<TABLE>

CONDENSED CONSOLIDATING BALANCE SHEET

 
 

June 30, 2001

 

(In thousands)

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

 

Consolidated
<s> <c> <c> <c> <c> <c>

Assets

          

Current assets:

          

   Cash and cash equivalents

$ 11,728 

$      16 

$        53

$           -       

$   11,797 

   Receivables, net

10,785 

11,062 

83,052

(50,703)

54,196 

   Inventories

-      

22,620 

64,421

71 

87,112 

   Prepaid expenses and other 

    current assets

   5,382 

    1,445 

      7,427

        (4,610)

      9,644 
           

       Total current assets

27,895 

35,143 

154,953

(55,242)

162,749 
           

Investments in affiliates

620,945 

296,171 

80,003

(901,055)

96,064 

Other assets

180,201 

-       

277,126

(451,023)

6,304 

Property, plant and equipment, net

9,315 

138,201 

262,776

-       

410,292 

Goodwill, net

          -      

         -       

  104,198

             -       

  104,198 
           

       Total assets

$838,356 

$469,515 

$879,056

$(1,407,320)

$779,607 
           

Liabilities and Shareholders' Equity

          

Current liabilities:

          

   Accounts payable

$ 42,171 

$ 15,131 

$ 45,916

$    (65,051)

$ 38,167 

   Accrued liabilities

   6,493 

   2,924 

   5,841

         (4,461)

  10,797 
           

       Total current liabilities

48,664 

18,055 

51,757

(69,512)

48,964 
           

Long-term debt

498,166 

150,460 

148,288

(410,629)

386,285 

Other long-term liabilities and

          

   deferred credits

1,769 

34,025 

57,713

(38,906)

54,601 
           

Shareholders' equity:

          

   Common stock

280 

1 

58,941

(58,942)

280 

   Additional paid-in capital

305,901 

324,715 

535,866

(860,581)

305,901 

   Retained earnings

18,963 

(57,741)

26,491

31,250 

18,963 

   Accumulated other

         

      comprehensive loss

(5,808)

-       

-      

-       

(5,808)

   Treasury stock, at cost

  (29,579)

          -       

         -      

            -       

  (29,579)
           

        Total shareholders' equity

  289,757 

  266,975

  621,298

   (888,273)

  289,757 
           

        Total liabilities and

          

          shareholders' equity

$ 838,356 

$ 469,515

$ 879,056

$(1,407,320)

$779,607 
           

</TABLE>

 

<TABLE>

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

 

 

Six months ended December 31, 2001

 

(In thousands)

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

 

Consolidated
<s> <c> <c> <c> <c> <c>

Cash flows from operating activities:

          

   Net (loss) income

$  (9,220)

$   (1,233)

$     6,166 

$   (4,933)

$    (9,220)

   Reconciliation of net (loss) income

          

      to net cash (used in) provided by

          

      operating activities:

          

        Net change in operating assets

          

          and liabilities

(17,059)

(4,951)

33,476 

179 

11,645 

        Depreciation, depletion and

          

          amortization

2,239 

6,313 

13,782 

-      

22,334 

        Change in deferred loss on

         

          hedging activities, net of tax

619 

-       

-       

-       

619 

        Equity earnings in

         

          unconsolidated affiliates

907 

(5,033)

(6,978)

3,786 

(7,318)

        Deferred income taxes and

         

          other

  (12,181)

     (760)

    (4,427)

      968 

  (16,400)

Net cash (used in) provided by

          

   operating activities

  (34,695)

   (5,664)

    42,019 

     -       

      1,660 
           

Cash flows from investing activities:

          

  Purchases of property, plant and

          

    equipment

(123)

(1,143)

(3,860)

-       

(5,126)

   Proceeds from sale of assets

42 

120 

4,856 

-       

5,018 

   Other

         -    

         990 

       2,310 

      -       

     3,300 

Net cash (used in) provided by

          

   investing activities

       (81)

         (33)

      3,306 

      -       

     3,192 
           

Cash flows from financing activities:

          

   Debt proceeds

115,345 

-       

-       

-       

115,345 

   Debt payments

(129,954)

-       

-       

-       

(129,954)

   Net change in affiliate notes

    39,624 

      5,697 

   (45,321)

      -       

         -       

Net cash provided by (used in)

          

  financing activities

   25,015 

     5,697 

   (45,321)

      -       

  (14,609)
           

Net (decrease) increase in cash and

          

  cash equivalents

(9,761)

-       

4 

-       

(9,757)
           

Cash and cash equivalents -

          

   beginning of period

   11,728 

           16 

            53 

      -       

   11,797 
           

Cash and cash equivalents -

          

   end of period

$   1,967 

$         16 

$         57 

$    -       

$   2,040 

</TABLE>

 

<TABLE>

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

 
 

Six months ended December 31, 2000

 

(In thousands)

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

 

Consolidated
<s> <c> <c> <c> <c> <c>

Cash flows from operating activities:

          

  Net (loss) income

$ (21,457)

$  (16,205)

$     7,953 

$    8,252 

$   (21,457)

  Reconciliation of net (loss) income

         

    to net cash (used in) provided by

          

    operating activities:

          

        Net change in operating assets

          

          and liabilities

11,112 

(1,089)

(1,355)

(6,025)

2,643 

        Depreciation, depletion and

          

          amortization

1,891 

6,436 

15,375 

-       

23,702 

        Deferred gain on futures

         

          contracts, net of tax

11,234 

-       

-       

-       

11,234 

        Equity earnings in

         

          unconsolidated affiliates

9,698 

(4,973)

(4,844)

(5,158)

(5,277)

        Deferred income taxes and

         

           other

  (11,110)

      1,771 

     (1,090)

     2,931 

    (7,498)

Net cash provided by (used in)

         

   operating activities

      1,368 

   (14,060)

      16,039 

       -       

     3,347 
           

Cash flows from investing activities:

          

  Purchases of property, plant and

          

    equipment

(33)

(1,549)

(9,415)

-       

(10,997)

  Proceeds from sale of assets

4,733 

-       

7,848 

-       

12,581 

  Other

        -       

        742 

              8 

       -       

       750 
           

Net cash provided by (used in)

     investing activities

    4,700 

      (807)

      (1,559)

        -      

     2,334 
           

Cash flows from financing activities:

          

   Debt proceeds

198,342 

-      

-        

-       

198,342 

   Debt payments

(203,151)

-      

-        

-       

(203,151)

   Cash dividends paid

(784)

-      

-        

-       

(784)

   Net change in affiliate notes

     (358)

   14,867 

    (14,509)

        -       

     -     
           

Net cash (used in) provided by

          

  financing activities

     (5,951)

    14,867 

    (14,509)

         -      

    (5,593)
           

Net increase (decrease) in cash and

         

  cash equivalents

117 

-       

(29)

-       

88 
           

Cash and cash equivalents -

          

  beginning of period

     2,085

         17 

           88 

         -       

     2,190 
           

Cash and cash equivalents -

          

  end of period

$   2,202 

$        17 

$          59 

$      -       

$    2,278 

</TABLE>

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

GENERAL. The following is management's discussion and analysis of results of operations and financial condition, which should be read in conjunction with our audited financial statements and related notes for the fiscal year ended June 30, 2001, in our most recent Annual Report on Form 10-K which is on file with the Securities and Exchange Commission.

SEGMENTS. Our operations are organized into three strategic business units: nitrogen, phosphate and potash. Our nitrogen business unit produces nitrogen products for distribution to fertilizer dealers and distributors, and industrial users located primarily in the southern region of the United States. Our phosphate business unit produces diammonium phosphate fertilizer (commonly referred to as "DAP") and exports the majority of this production through Phosphate Chemicals Export Association, Inc., a Webb-Pomerene corporation known as "PhosChem." Our potash business unit mines and produces agricultural and industrial potash products for sale to farmers, fertilizer dealers and distributors, and industrial users for use primarily in the southern and western regions of the United States.

SEASONALITY. Consistent with the historical nature of our business, the usage of fertilizer in our trade territory is highly seasonal, and our quarterly results reflect the fact that significantly more fertilizer is traditionally sold during the last four months of our fiscal year (March through June). Since interim period operating results reflect the seasonal nature of our business, they may not necessarily be indicative of results expected for the full fiscal year. We incur substantial expenditures for fixed costs and inventory throughout the year.

OTHER FACTORS. Our products and primary raw materials are commodities, the prices for which may vary significantly from quarter-to-quarter. These prices and the global supply/demand balance for our products do not necessarily change in relation to one another and may impact our performance in different ways. In addition, quarterly results can vary significantly from year to year due to a number of other factors as detailed under "Forward Looking Statements" in this quarterly report and under the heading "Certain Business Factors" and elsewhere in our most recent Annual Report on Form 10-K which is on file with the Securities and Exchange Commission.

 

RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 2001 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2000

OVERVIEW. For the quarter ended December 31, 2001, we incurred a net loss of $1.2 million (or $0.04 per diluted share) compared to a net loss of $9.2 million (or $0.35 per diluted share) for the same quarter during the prior year. Net sales decreased to $116.0 million for the quarter ended December 31, 2001, from $136.3 million for the quarter ended December 31, 2000. We incurred operating income of $755,000 for the quarter ended December 31, 2001, compared to an operating loss of $9.0 million for the quarter ended December 31, 2000. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the quarter ended December 31, 2001, were $12.6 million compared to $3.6 million for the quarter ended December 31, 2000.

NET SALES

OVERVIEW. Our net sales decreased 15% to $116.0 million for the quarter ended December 31, 2001, from $136.3 million for the quarter ended December 31, 2000. This decrease was primarily the result of lower sales prices for our nitrogen, DAP and potash products and lower sales volumes for our nitrogen products. These decreases were partially offset by higher sales volumes for our DAP and potash products.

The following tables summarize our sales results by product categories for the three months ended December 31:

<TABLE>

   

 

2001

 

2000

%

Inc. (Dec.)
<s>   <c> <c> <c>

Net Sales (in thousands):

        

   Nitrogen

  

$ 69,433

$ 98,087

(29%)

   DAP

  

27,863

22,556

24% 

   Potash

  

18,094

15,230

19% 

   Other

  

        624

        441

    42% 
         

       Net Sales

  

$116,014

$136,314

   (15%)

</TABLE>

 

<TABLE>

   

 

2001

 

2000

%

Inc. (Dec.)
<s>   <c> <c> <c>

Tons Sold (in thousands):

        

  Nitrogen:

        

    Ammonia

  

216

219

(1%)

    Ammonium nitrate

  

217

204

6% 

    Urea

  

136

154

(12%)

    Nitrogen solutions

  

61

108

(44%)

    Nitric acid

  

       9

      13

   (31%)

        Total Nitrogen

  

639

698

(9%)
         

   DAP

  

224

163

37% 

   Potash

  

214

165

30% 

</TABLE>

 

<TABLE>

   

 

2001

 

2000

%

Inc. (Dec.)
<s>   <c> <c> <c>

Average Sales Price Per Ton:

        

   Nitrogen

  

$  109

$  140

(22%)

   DAP

  

$  125

$  138

(9%)

   Potash

  

$   85

$   92

(8%)
         

</TABLE>

 

NITROGEN. Our nitrogen sales decreased 29% as a result of a 22% decrease in sales prices and a 9% decrease in sales volumes. Prices for all nitrogen products declined due to a change in market perceptions of future supply/demand balances brought on by reduced natural gas cost and its impact on production levels. During the quarter ended December 31, 2000, nitrogen product prices had been strengthened by a concern for future availability of product induced by record high natural gas prices and corresponding shutdowns by domestic producers.

Ammonia sales prices decreased 32%, and sales volumes decreased 1%. We operated our domestic ammonia plants at approximately 92% of capacity during the quarter ended December 31, 2001, as compared to 62% in the quarter ended December 31, 2000. This increase in production rate replaced approximately 176,000 tons of ammonia purchased from third parties in the prior-year quarter. Prices were also negatively affected by reduced demand from industrial customers due to a slowdown in economies worldwide.

Ammonium nitrate sales prices decreased 10%, while sales volumes increased 6%. Because ammonium nitrate serves a niche market, such as low-till crops and pastures, sales prices decreased to a lesser extent than our other nitrogen product prices. Sales volumes increased as a result of better movement to winter pastures and our dealer fill programs. We operated our ammonium nitrate facilities at approximately 90% of capacity compared to 75% in the quarter ended December 31, 2000, which increased the amount of product available for sale.

Urea sales prices decreased 25%, and sales volumes decreased 12%. Sales volumes decreased as a result of decreased granular urea sales, partially offset by increased production and sales of prilled urea. During the quarter ended December 31, 2000, we sold approximately 47,000 tons of granular urea from a facility we disposed of on September 20, 2001. U.S. market prices for urea have been negatively influenced by higher industry production levels, which were up 7% in the June 2001 to December 2001 period as compared to the same period in the prior year, according to estimates from The Fertilizer Institute. Our urea facility operated at 99% of capacity during the quarter ended December 31, 2001, compared to 72% of capacity during the quarter ended December 31, 2000. In January 2002, Melamine Chemicals, Inc. ("MCI"), which owns and operates melamine crystal manufacturing facilities on property leased from us at Donaldsonville, LA., announced an indefinite shutdown of its operations. We sold MCI approximately 166,000 and 155,000 tons of urea melt during fiscal 2001 and 2000, respectively. Urea melt is an intermediate stage urea product. If the MCI facilities remain idle, lost urea melt sales may be partially offset by increased sales of ammonia and increased production and sales of prilled urea as compared to prior-year levels.

Nitrogen solutions sales prices decreased 22%, and sales volumes decreased 44%. Sales prices decreased as a result of higher producer inventory levels and increased import levels during the June 2001 to November 2001 period. Reduced customer concern about product availability in the future, and soft market conditions during the quarter, caused a delay in the decision of our customers to fix product prices and take delivery under our dealer fill program. This resulted in lower sales volumes for the quarter ended December 31, 2001.

PHOSPHATES. Our DAP sales increased 24% as a result of a 37% increase in sales volumes, partially offset by a 9% decrease in sales prices. Sales volumes increased as a result of increased exports. While sales prices were lower as compared to the quarter ended December 31, 2000, prices increased 7% from the quarter ended September 30, 2001. World market conditions have continued to improve as China re-entered the market during our quarter ended December 31, 2001.

POTASH. Our potash sales increased 19% as a result of a 30% increase in sales volumes, partially offset by an 8% decrease in sales prices. The change in sales prices and volumes resulted from an increase in export sales, which typically have lower sales prices than domestic sales. Additionally, high North American potash inventories at the beginning of the December 31, 2001, quarter placed downward pressure on market prices.

 

COST OF PRODUCTS SOLD

OVERVIEW. Our cost of products sold decreased to $107.5 million for the quarter ended December 31, 2001, from $135.1 million for the quarter ended December 31, 2000. As a percentage of net sales, cost of products sold decreased to 93% for the quarter ended December 31, 2001, from 99% for the quarter ended December 31, 2000. This decrease was primarily the result of lower nitrogen and DAP costs per ton partially offset by lower sales prices for our nitrogen, DAP and potash products. Our corporate average natural gas price decreased 31% to $3.07 per MMBtu for the quarter ended December 31, 2001.

NITROGEN. Our nitrogen costs per ton decreased 28% primarily as a result of lower natural gas costs at our domestic production facilities. The average price of natural gas, net of futures gains and losses, at our domestic nitrogen production facilities decreased approximately 30% to $3.09 per MMBtu. In addition, because of higher utilization rates at our ammonia facilities, we had lower costs related to our third-party purchases of ammonia. We also had lower maintenance and labor costs during the quarter ended December 31, 2001, as a result of a maintenance shutdown at our No. 1 ammonia plant at our Donaldsonville, Louisiana, facility during the quarter ended December 31, 2000. During the quarter ended December 31, 2001, we had higher equity earnings at our joint venture ammonia plant in Trinidad, Farmland MissChem Limited ("Farmland MissChem") that contributed to the decrease in our nitrogen costs per ton. Our portion of the earnings from Farmland MissChem was $3.5 million as compared to $2.4 million for the quarter ended December 31, 2000.

PHOSPHATES. Our DAP costs per ton decreased 25% for the quarter ended December 31, 2001. This decrease was primarily the result of lower raw material costs for sulfur, ammonia, phosphate rock and sulfuric acid.

POTASH. Our potash costs per ton increased 2% for the quarter ended December 31, 2001. This increase was primarily the result of higher per-ton costs for labor and maintenance as a result of lower production caused by mechanical problems. We also incurred higher electricity costs during the quarter ended December 31, 2001. These higher costs were partially offset by lower natural gas costs.

 

SELLING, GENERAL AND ADMINISTRATIVE

Our selling, general and administrative expenses decreased to $6.5 million for the quarter ended December 31, 2001, from $7.3 million for the quarter ended December 31, 2000. This decrease was primarily the result of reduced goodwill amortization, property taxes, and labor costs during the quarter. As a percentage of net sales, selling, general and administrative expenses increased to 6% for the quarter ended December 31, 2001, as compared to 5% for the quarter ended December 31, 2000.

OTHER OPERATING EXPENSES

Our other operating expenses decreased to $1.2 million for the quarter ended December 31, 2001, from $2.9 million for the quarter ended December 31, 2000. This decrease is the result of reduced idle plant costs at our nitrogen facilities. Portions of our ammonia and nitric acid production capacities were idled for various periods during the quarters ended December 31, 2001 and December 31, 2000, primarily due to the unfavorable relationship between product prices and natural gas prices. However, the return of natural gas prices to historically normal levels during the December 31, 2001 quarter, permitted us to run our nitrogen facilities at a higher utilization rate than during the quarter ended December 31, 2000.

INTEREST, NET

Our net interest expense for the quarter ended December 31, 2001, decreased to $7.0 million from $7.1 million. This decrease was the result of lower average interest rates under our revolving credit facility more than offsetting higher average debt balances during the quarter.

 

OTHER INCOME

Other income decreased to $679,000 from $922,000, primarily as a result of recognizing gains on the sale of non-core assets in the prior-year quarter.

 

INCOME TAX BENEFIT

For the quarter ended December 31, 2001, our income tax benefit was $4.4 million, as compared to an income tax benefit of $6.0 million for the quarter ended December 31, 2000. These income tax benefits are primarily the result of our net losses and permanently reinvested foreign earnings from our investment in Farmland MissChem, partially offset by non-deductible goodwill amortization. Our income tax benefit is based on an estimated annual effective tax rate of approximately 59%.

RESULTS OF OPERATIONS - SIX MONTHS ENDED DECEMBER 31, 2001 COMPARED TO THE SIX MONTHS ENDED DECEMBER 31, 2000

OVERVIEW. For the six-month period ended December 31, 2001, we incurred a net loss of $9.2 million (or $0.35 per diluted share) compared to a net loss of $21.5 million (or $0.82 per diluted share) for the same period during the prior year. Net sales decreased to $223.9 million for the six-month period ended December 31, 2001, from $256.4 million for the six-month period ended December 31, 2000. We incurred an operating loss of $11.9 million for the six-month period ended December 31, 2001, compared to an operating loss of $23.7 million for the six-month period ended December 31, 2000. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the six-month period ended December 31, 2001, were $14.4 million, compared to $2.4 million for the six-month period ended December 31, 2000.

 

NET SALES

OVERVIEW. Our net sales decreased 13% to $223.9 million for the six-month period ended December 31, 2001, from $256.4 million for the six-month period ended December 31, 2000. This decrease was primarily the result of lower sales prices for our nitrogen, DAP and potash products and lower sales volumes for nitrogen. These decreases were partially offset by higher sales volumes for our DAP and potash products.

The following tables summarize our sales results by product categories for the six-month periods ended December 31:

<TABLE>

 
   

 

2001

2000

%

Inc. (Dec.)
<s>   <c> <c> <c>

Net Sales (in thousands):

        

   Nitrogen

  

$133,516

$169,268

(21%)

   DAP

  

52,420

51,936

1% 

   Potash

  

37,122

34,135

9% 

   Other

  

      800

    1,029

   (22%)
         

       Net Sales

  

$223,858

$256,368

   (13%)

</TABLE>

 

<TABLE>

 

 

  

 

2001

2000

%

Inc. (Dec.)
<s>   <c> <c> <c>

Tons Sold (in thousands):

        

   Nitrogen:

        

       Ammonia

  

406

434

(7%)

       Ammonium nitrate

  

340

308

10% 

       Urea

  

263

297

(11%)

       Nitrogen solutions

  

141

154

(8%)

       Nitric acid

  

      27

      27

   -   

            Total Nitrogen

  

1,177

1,220

(4%)
         

   DAP

  

434

386

12% 

   Potash

  

436

380

15% 

</TABLE>

 

<TABLE>

 
   

 

2001

2000

%

Inc. (Dec.)
<s>   <c> <c> <c>

Average Sales Price Per Ton:

        

   Nitrogen

  

$     113

$     139

(19%)

   DAP

  

$     121

$     135

(10%)

   Potash

  

$       85

$       90

(6%)
         

</TABLE>

 

NITROGEN. Our nitrogen sales decreased 21% as a result of a 19% decrease in sales prices and a 4% decrease in sales volumes. Sales prices decreased primarily as a result of the reduction in natural gas prices and its impact on production levels and market perceptions of sufficient near-term product supply. During the prior year, nitrogen product prices increased due to a concern of lack of availability of product in the face of record high natural gas prices and the corresponding shutdown by many domestic producers.

Our ammonia sales prices decreased 24% and sales volumes decreased 7%. Sales volumes decreased because we purchased fewer ammonia tons from third parties for resale during the quarter ended December 31, 2001, as a result of higher utilization rates at our ammonia facilities, and lower demand from industrial customers, due to a slowdown in economies worldwide.

Ammonium nitrate sales prices decreased 7%, while sales volumes increased 10%. Sales volumes increased as a result of late season movement to cotton, better movement to winter pastures, and our dealer fill program. We also had higher production rates that increased the amount of product available for sale.

Urea sales prices decreased 16%, and sales volumes decreased 11%. Sales prices were decreased partly as a result of higher industry production levels, as well as excess industry inventories carried over from Spring 2001. Sales volumes decreased as a result of decreased granular urea sales partially offset by increased production and sales of prilled urea. During the six-month period ended December 31, 2000, we sold approximately 62,000 tons of granular urea produced at a facility we disposed of on September 20, 2001.

Nitrogen solutions sales prices decreased 20%, and sales volumes decreased 8%. Sales prices decreased partly as a result of higher producer inventory levels and increased import levels for the June 2001 to November 2001 period. Sales volumes decreased as a result of reduced customer concern about product availability during the quarter ended December 31, 2001. These factors caused a delay in the decision of our customers to fix product prices and take delivery from our dealer fill program.

PHOSPHATES. Our DAP sales increased 1% as a result of a 12% increase in sales volumes, partially offset by a 10% decrease in sales prices. Sales volumes increased primarily as a result of increased movement to the domestic market. While prices were down, world market conditions have continued to improve from low points reached during the 2001 Summer on the basis of increased purchases by domestic customers.

POTASH. Our potash sales increased 9% as a result of a 15% increase in sales volumes, partially offset by a 6% decrease in sales prices. The change in sales prices and volumes resulted from an increase in export sales, which typically have lower sales prices than domestic sales.

 

COST OF PRODUCTS SOLD

OVERVIEW. Our cost of products sold decreased to $214.2 million for the six-month period ended December 31, 2001, from $257.7 million for the six-month period ended December 31, 2000. As a percentage of net sales, cost of products sold decreased to 96% for the six-month period ended December 31, 2001, from 101% for the six-month period ended December 31, 2000. This decrease is primarily the result of lower nitrogen and DAP costs per ton partially offset by lower sales prices for our nitrogen, DAP and potash products. Our corporate average natural gas price decreased 25% to $3.16 per MMBtu for the six-month period ended December 31, 2001.

NITROGEN. During the six-month period ended December 31, 2001, our nitrogen costs per ton decreased 23%, primarily as a result of lower natural gas costs at our domestic production facilities. The average price of natural gas, net of futures gains and losses, at our domestic nitrogen production facilities decreased approximately 24% to $3.18 per MMBtu. In addition, we had lower costs related to third-party purchases of ammonia and lower maintenance and labor costs than those incurred during the six-month period ended December 31, 2000, associated with maintenance shutdowns at our Yazoo City, Mississippi, and Donaldsonville, Louisiana, facilities. During the six-month period ended December 31, 2001, we also had higher equity earnings at Farmland MissChem that contributed to the decrease in our nitrogen costs per ton. Our portion of the earnings was $7.0 million as compared to $4.8 million for the six-month period ended December 31, 2000.

PHOSPHATES. Our DAP costs per ton decreased 18% for the six-month period ended December 31, 2001. This decrease was primarily the result of lower raw material costs for sulfur, ammonia, phosphate rock and sulfuric acid.

POTASH. Our potash costs per ton decreased 2% for the six-month period ended December 31, 2001. This decrease was primarily the result of lower natural gas costs. These lower costs were partially offset by higher electricity costs and higher per-ton costs for labor and maintenance as a result of lower production.

 

SELLING, GENERAL AND ADMINISTRATIVE

Our selling, general and administrative expenses decreased to $13.6 million for the six-month period ended December 31, 2001, from $16.0 million for the six-month period ended December 31, 2000. This decrease was primarily the result of reduced goodwill amortization, property taxes, and labor costs. In addition, the prior year included approximately $787,000 in charges related to an early retirement program and severance costs related to a reduction in force. As a percentage of net sales, selling, general and administrative expenses were 6% for the six-month period ended December 31, 2001 and 2000.

OTHER OPERATING EXPENSES

Our other operating expenses increased to $7.9 million for the six-month period ended December 31, 2001, from $6.4 million for the six-month period ended December 31, 2000. This increase is the result of higher idle plant costs at our ammonia, urea and nitric acid facilities, primarily during the quarter ended September 30, 2001, because of the unfavorable relationship between product prices and natural gas prices.

INTEREST, NET

Our net interest expense for the six-month period ended December 31, 2001, increased to $14.7 million from $14.3 million. This increase was primarily the result of higher average debt balances and costs associated with the amendment of our revolving credit facility. These increases were partially offset by lower average interest rates under our revolving credit facility.

OTHER INCOME

Other income increased to $3.9 million from $2.4 million, primarily as a result of gains on the sale of non-core assets.

INCOME TAX BENEFIT

For the six-month period ended December 31, 2001, our income tax benefit was $13.4 million, as compared to an income tax benefit of $14.2 million for the six-month period ended December 31, 2000. These income tax benefits are primarily the result of our net losses and permanently reinvested foreign earnings from our investment in Farmland MissChem, partially offset by non-deductible goodwill amortization. Our income tax benefit is based on an estimated annual effective tax rate of approximately 59%.

 

LIQUIDITY AND CAPITAL RESOURCES

We have a secured revolving credit facility (the "Facility") with Harris Trust and Savings Bank and a syndicate of eleven commercial banks totaling $200.0 million. This Facility matures on November 25, 2002. It became a current liability on our balance sheet for financial reporting purposes in the quarter ended December 31, 2001. We are currently exploring refinancing alternatives and believe that we will be able to refinance the Facility at or prior to maturity. We have engaged Credit Suisse First Boston Corporation to help us evaluate such alternatives. However, we cannot guarantee that we will be able to obtain new financing or that such financing will contain terms, particularly interest rates, fees, or amounts, as favorable as the Facility's.

At December 31, 2001, we had cash and cash equivalents of $2.0 million, compared to $11.8 million at June 30, 2001, a decrease of approximately $9.8 million.

OPERATING ACTIVITIES

For the six-month period ended December 31, 2001, our net cash provided by operating activities was $1.7 million compared to $3.3 million for the six-month period ended December 31, 2000.

INVESTING ACTIVITIES

Our net cash provided by investing activities was $3.2 million for the six-month period ended December 31, 2001, and included $5.0 million in proceeds from the sale of non-core assets and $3.3 million in other miscellaneous activities. These proceeds were partially offset by $5.1 million in capital expenditures that were for normal improvements and modifications to our facilities. Our net cash provided by investing activities was $2.3 million for the six-month period ended December 31, 2000, and included $12.6 million in proceeds from the sale of non-core assets partially offset by capital expenditures of $11.0 million.

FINANCING ACTIVITIES

Our net cash used in financing activities was $14.6 million for the six-month period ended December 31, 2001, which reflected net debt payments. Our net cash used in financing activities was $5.6 million for the six-month period ended December 31, 2000, which reflected net debt payments of $4.8 million and $784,000 in cash dividends.

Our $200.0 million Facility matures on November 25, 2002, and bears interest at rates related to the Prime Rate, the London Interbank Offered Rate or the Federal Funds Rate. At December 31, 2001, we had borrowings outstanding in the amount of $157.5 million, and letters of credit outstanding in the amount of $5.2 million that lowered our availability under the Facility. We had $30.7 million available under the Facility at December 31, 2001, in addition to cash on hand of $2.0 million. Amounts outstanding under the Facility are subject to a requirement that the total amount outstanding under the Facility not exceed a certain asset value calculation.

On August 15, 2001, we amended the Facility to provide us with more flexibility under the Facility's covenants in light of the volatile conditions in our industry and the natural gas markets at that time. Our borrowing spreads on loans for the September 30, 2001 quarter under the amended Facility increased by 100 basis points over the borrowing spreads in effect prior to fiscal 2002. Since we were in compliance with all covenants as of September 30, 2001, this borrowing spread was reduced by 50 basis points for the December 31, 2001, quarter and all quarters thereafter as long as we continue to meet certain covenants. We were in compliance with all covenants as of December 31, 2001. The specific covenants are more particularly described in the amendment to the Facility filed as an exhibit to our August 20, 2001, Form 8-K and our most recent Annual Report on Form 10-K, each of which is on file with the Securities and Exchange Commission.

In August 1997, we issued $14.5 million in industrial revenue bonds, a portion of which were tax-exempt, to finance the development of our new phosphogypsum disposal facility at our Pascagoula, Mississippi, DAP manufacturing plant. On April 1, 1998, we issued $14.5 million in tax-exempt industrial revenue bonds, the proceeds of which were used to redeem the initial industrial revenue bonds issued in August 1997. The bonds issued on April 1, 1998, mature on March 1, 2022, and carry a 5.8% fixed rate. The bonds may be redeemed at our option at a premium from March 1, 2008, to February 28, 2010, and may be redeemed at face value at any time after February 28, 2010, through the maturity date. The bonds are the obligation of our subsidiary, Mississippi Phosphates Corporation, but are guaranteed by Mississippi Chemical Corporation.

On November 25, 1997, we issued $200.0 million of 7.25% Senior Notes (the "Senior Notes") due November 15, 2017. The holders may elect to have the Senior Notes repaid on November 15, 2007. The Senior Notes were issued under a $300.0 million shelf registration statement filed with the Securities and Exchange Commission in November 1997.

Based on natural gas and product market prices as of the date of this filing, and our current natural gas hedge positions, we believe that our existing cash, cash generated from operations, cash generated from non-core asset dispositions and cash available under the Facility will be sufficient to satisfy our financing requirements for operations and capital projects through fiscal 2002. Although natural gas prices have returned to a historical normal range as of the filing date of this report, they remain volatile. If natural gas prices increase without corresponding increases in the market prices for our products, our natural gas costs will have a material adverse impact on our liquidity and results of operations.

 

OUTLOOK

Despite the decline in worldwide grain inventories, there has been only minor price improvement in farm commodities. Low farm commodity prices have translated into several consecutive years of reductions in the number of worldwide acres planted, which has contributed to lower consumption of nitrogen, phosphate, and potash products. Nevertheless, we believe that world nitrogen demand growth will exceed supply growth over the next several years as a result of projected increases in world demand and fewer new production facilities announced to come online in the next four years. However, to maximize results in the current environment, we continue to determine operating levels for our plants based on our commitments to customers and the relationship between nitrogen product prices and natural gas prices. We continue to believe that significantly higher natural gas storage levels, compared to fiscal 2001, will help moderate natural gas pricing through the Spring, and reduce the volatility from levels experienced during the prior fiscal year. While this should significantly improve our nitrogen production cost compared to fiscal 2001, nitrogen product prices are currently at low levels as reflected in our results for the December 31, 2001 quarter. Additionally, if natural gas prices increase, it will have a material adverse impact on our performance if nitrogen product prices do not experience corresponding increases.

We expect the current firming of international phosphate markets to continue. Since approximately two-thirds of our DAP is sold into export markets by PhosChem, the announcement by PhosChem in October 2001, that it had concluded new contracts with China for major sales through calendar 2002 will be positive for our phosphate segment for the remainder of our fiscal year. In the long-term, the accession of China to the World Trade Organization is positive for the DAP industry. As experienced during our second fiscal quarter, we anticipate increased domestic demand for DAP in the near-term. During the last two growing seasons, farmers have reduced the application rates of phosphate as well as potash fertilizers and "mined" the soil due to low farm commodity prices. Since agronomic best practices indicate that phosphate and potash fertilizer are necessary soil nutrients that must be replenished, we expect increased domestic application rates. Finally, the performance of our potash segment will depend on energy costs, improving ore grades, and improved potash pricing.

Our third fiscal quarter results will be positively impacted by the January 2002 $11 million settlement of the defamation action we filed against Terra International, Inc., in August 1995. This amount will be recorded as a component of other income in our March 31, 2002, Statement of Operations. The settlement is with Zurich Specialties London, Ltd., which was Terra's liability carrier, and the settlement payment will conclude this litigation.

Other variables can affect our results of operations as stated elsewhere in the discussion under the headings titled "Results of Operations" and "Forward-Looking Statements," as well as under the heading "Certain Business Factors" and elsewhere in our most recent Annual Report on Form 10-K which is on file with the Securities and Exchange Commission.

 

FORWARD-LOOKING STATEMENTS

Except for the historical statements and discussion contained herein, statements set forth in this report constitute "forward-looking statements." Since these forward-looking statements rely on a number of assumptions concerning future events, risks and other uncertainties that are beyond our ability to control, readers are cautioned that actual results may differ materially from such forward-looking statements. Future events, risks and uncertainties that could cause a material difference in such results include, but are not limited to, (i) changes in matters which affect the global supply and demand of fertilizer products, (ii) the volatility of the natural gas market, (iii) a variety of conditions in the agricultural industry such as grain prices, planted acreage, projected grain stock, U.S. government policies, weather, and changes in agricultural production methods, (iv) availability and cost of capital; (v) possible unscheduled plant outages and other operating difficulties, (vi) price competition and capacity expansions and reductions from both domestic and international competitors, (vii) foreign government agricultural policies (in particular, the policies of the governments of India and China regarding fertilizer imports), (viii) the relative unpredictability of international and local economic conditions, (ix) the relative value of the U.S. dollar, (x) regulations regarding the environment and the sale and transportation of fertilizer products, and (xi) other important factors affecting the fertilizer industry and us as detailed under the heading "Certain Business Factors" and elsewhere in our most recent Annual Report on Form 10-K which is on file with the Securities and Exchange Commission.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

We are exposed to market risk, including changes in natural gas prices and interest rates. For more information about how we manage specific risk exposures, see Note 13 - Hedging Activities, and Note 6 - Credit Agreements and Long-Term Debt, in our Notes to Consolidated Financial Statements contained in our most recent Annual Report on Form 10-K.

To manage our natural gas price risks, we enter into derivative transactions as the opportunity arises. These derivative transactions may consist of futures contracts, commodity swaps, or similar derivative financial instruments that mature at various dates and are related to the price of natural gas. We do not hold or issue derivative financial instruments for trading purposes. We maintain formal policies with respect to entering into and monitoring derivative transactions. Our derivative transactions are intended to hedge our future natural gas costs. The volume of natural gas hedged varies from time to time based on management's judgment of market conditions, particularly natural gas prices and nitrogen product prices.

We prepared a sensitivity analysis to estimate our market risk exposure arising from our open natural gas derivative instruments. At December 31, 2001, the fair value of open positions was calculated by valuing each position using quoted market prices on the New York Mercantile Exchange ("NYMEX"). We define market risk as the potential loss in fair value as a result of a 10% adverse change in market prices of our open natural gas derivative instruments. We estimate that this adverse change in prices would have reduced the fair value of our open positions by approximately $1.4 million at December 31, 2001 (see Note 5 to our consolidated financial statements included in this report).

 

PART II. OTHER INFORMATION

Item 4.

Submission of Matters to a Vote of Security Holders
   
 

At our annual meeting of shareholders on December 7, 2001, our shareholders 
 

reelected Reuben V. Anderson, Frank R. Burnside, Jr., Charles O. Dunn, and 
 

George Penick to serve on our Board of Directors until our 2004 annual meeting of 

 

shareholders.  Voting tabulations for elections of the above directors were:
   
 

Name

For

Against

Withheld
 

Reuben V. Anderson

19,629,634

-0-

502,562
 

Frank R. Burnside

19,442,527

-0-

689,670
 

Charles O. Dunn

19,482,968

-0-

649,229
 

George Penick

19,483,475

-0-

648,722
   
 

Broker non-votes and abstentions were -0- and -0-, respectively.
   
 

Directors continuing to serve until our 2003 annual meeting of shareholders are

 

Coley L. Bailey (Chairman), Woods E. Eastland, John Sharp Howie (Vice 

 

Chairman), and W. A. Percy, II. Directors continuing to serve until our 2002 annual 

 

meeting of shareholders are Haley Barbour, W. R. Dyess, David M. Ratcliffe, and 
  Wayne Thames.
   

Item 6.

Exhibits and Reports on Form 8-K.
   
 

(a)   Exhibits.
   
 

        See Index of Exhibits on page 33.
   
 

(b) No reports on Form 8-K have been filed for 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 13, 2002       

By: /s/ Timothy A. Dawson

 

Timothy A. Dawson
 

Senior Vice President and CFO
 

(Principal Financial Officer and
 

Chief Accounting Officer)

 

 

INDEX OF EXHIBITS

EXHIBIT NUMBER

DESCRIPTION

PAGE NO.
     

3.1

Articles of Incorporation of the Company; filed as Exhibit 3.1 to the Company's Amendment No. 1 to Form S-1 Registration Statement filed August 2, 1994, SEC File No. 33-53119, and incorporated herein by reference.

 

*

3.2

Bylaws of the Company; filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997, SEC File No. 0-20411, and incorporated herein by reference.

 

*

4.1

Shareholder Rights Plan; filed as Exhibit 1 to the Company's Form 8-A Registration Statement dated August 15, 1994, SEC File No. 2-7803, and incorporated herein by reference.

 

*

4.2

Agreement of Substitution and Amendment of Common Shares Rights Agreement dated as of August 1, 2001, among the Company, Harris Trust and Savings Bank, and American Stock Transfer and Trust Company; filed as Exhibit 4.1 to the Company's Report on Form 8-A/A (Amendment No. 1), SEC File No. 001-12217, and incorporated herein by reference.

 

*

4.3

Indenture dated as of November 25, 1997, between the Company and Harris Trust and Savings Bank, as Trustee, governing the Company's 7 1/4% debt securities due November 15, 2017; filed as Exhibit 4(a) to the Company's Current Report on Form 8-K filed November 25, 1997, SEC File No. 001-12217, and incorporated herein by reference.

 

*

4.4

First Supplemental Indenture dated as of July 1, 1999, among the Company, Mississippi Nitrogen, Inc., MissChem Nitrogen, L.L.C., and Harris Trust and Savings Bank, as Trustee, supplementing the Indenture dated as of November 25, 1997, between the Company and Harris Trust and Savings Bank, as Trustee, governing the Company's 7 1/4% debt securities due November 15, 2017; filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2001, SEC File No. 001-12217, and incorporated herein by reference.

*

 

EXHIBIT NUMBER

DESCRIPTION

PAGE NO.
     

4.5

Instrument of Resignation, Appointment and Acceptance dated as of February 18, 2000, among the Company, Harris Trust and Savings Bank as the Resigning Trustee, and Trustmark National Bank as the Successor Trustee, under the Indenture dated as of November 25, 1997, between the Company and Harris Trust and Savings Bank, as Trustee, governing the Company's 7 1/4% debt securities due November 15, 2017; filed as Exhibit 4.4 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2001, and incorporated herein by reference.

 

*

4.6

Indenture of Trust dated as of March 1, 1998, between Mississippi Business Finance Corporation and Deposit Guaranty National Bank, for the issuance of bonds in the aggregate principal amount of $14.5 million to assist the Company in financing and refinancing the cost of construction and equipping of solid waste disposal facilities at its Pascagoula, Mississippi, facility; filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, SEC File No. 0-20411, and incorporated herein by reference.

 

*

10.1

Agreement made and entered into as of September 15, 1991, between Office Cherifien des Phosphates and the Company for the sale and purchase of phosphate rock; filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 001-12217, and incorporated herein by reference. (1)

*
     

10.2

Amendment No. 1, effective as of July 1, 1992, to the Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company for the sale and purchase of phosphate rock; filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2001, SEC File No. 001-12217, and incorporated herein by reference.

*

______________________

          (1) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from the first, second and third paragraphs of Article IV, Article VII, Article VIII, and from the second and third paragraphs of Article IX, and an application for confidential business treatment has been filed separately with the Commission.

 

EXHIBIT NUMBER

DESCRIPTION

PAGE NO.
     

10.3

Amendment No. 2, effective as of July 1, 1993, to the Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company for the sale and purchase of phosphate rock; filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995, SEC File No. 2-7803, and incorporated herein by reference. (2)

 

*

10.4

Amendment No. 3, effective as of January 1, 1995, to the Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company for the sale and purchase of phosphate rock; filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995, SEC File No. 2-7803, and incorporated herein by reference. (3)

 

*

10.5

Amendment No. 4, effective as of January 1, 1997, to the Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company for the sale and purchase of phosphate rock; filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997, SEC File No. 0-20411, and incorporated herein by reference.

*
     

10.6

Amendment No. 5, effective as of July 1, 2000, to the Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company for the sale and purchase of phosphate rock; filed as Exhibit 10.6 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2001, SEC File No. 001-12217, and incorporated herein by reference.

*
     

__________________________

          (2) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from paragraphs numbered 5 and 8 of Amendment No. 2; from the first paragraph, paragraph numbered 1, paragraph numbered 2, and paragraph numbered 3 of Schedule 1, Exhibit A; from Schedule 2, Exhibit B; from Schedule 3, Exhibit C, and from Schedule 4, Exhibit D; and an application for confidential treatment has been filed separately with the Commission.

          (3) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from Schedule 1 to Amendment No. 3, Exhibit B, and an application for confidential treatment has been filed separately with the Commission.

 

EXHIBIT NUMBER

DESCRIPTION

PAGE NO.
     

10.7

Amendment No. 6, effective as of July 1, 2001, to the Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company for the sale and purchase of phosphate rock; filed as Exhibit 10.7 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2001, 2001, SEC File No. 001-12217, and incorporated herein by reference.

*
     

10.8

Credit Agreement dated as of November 25, 1997, among the Company; the Lenders Party Thereto; Harris Trust and Savings Bank, as Administrative Agent; Bank of Montreal, Chicago Branch, as Syndication Agent; and Credit Agricole Indosuez, as Co-Agent, establishing the Company's $200 million revolving line of credit; filed as Exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, SEC File No. 0-20411, and incorporated herein by reference.

 

*

10.9

First Amendment, effective as of June 10, 1999, to Credit Agreement dated as of November 25, 1997, among the Company; the Lenders Party Thereto; Harris Trust and Savings Bank, as Administrative Agent; Bank of Montreal, Chicago Branch, as Syndication Agent; and Credit Agricole Indosuez, as Co-Agent, establishing the Company's $200 million revolving line of credit; filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, SEC File No. 001-12217 and incorporated herein by reference.

*
     

10.10

Second Amendment, effective as of September 17, 1999, to Credit Agreement dated as of November 25, 1997, among the Company, the Lenders Party Thereto; Harris Trust and Savings Bank, as Administrative Agent; Bank of Montreal, Chicago Branch, as Syndication Agent; and Credit Agricole Indosuez, as Co-Agent, establishing the Company's $200 million revolving line of credit, filed as Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, SEC File No. 001-12217, and incorporated herein by reference.

*
   

EXHIBIT NUMBER

DESCRIPTION

PAGE NO.
     

10.11

Third Amendment, effective as of February 24, 2000, to Credit Agreement dated as of November 25, 1997, among the Company, the Lenders Party Thereto; Harris Trust and Savings Bank, as Administrative Agent; Bank of Montreal, Chicago Branch, as Syndication Agent; and Credit Agricole Indosuez, as Co-Agent, establishing the Company's $200 million revolving line of credit, filed as Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, SEC File No. 001-12217, and incorporated herein by reference.

*
     

10.12

Fourth Amendment, effective as of August 15, 2001, among Harris Trust and Savings Bank, individually and in its capacity as Administrative Agent thereunder, Bank of Montreal, Chicago Branch, in its capacity as Syndication Agent thereunder, and Credit Agricole Indosuez (formerly known as Caisse Nationale de Credit Agricole) in its capacity as Co-Agent thereunder, and the member banks party thereto; filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed August 20, 2001, SEC File No. 001-12217, and incorporated herein by reference.

 

  

10.13

Form of Severance Agreement dated July 29, 1996, by and between the Company and each of its Executive Officers; filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996, SEC File No. 2-7803, and incorporated herein by reference.

*
     

10.14

Mississippi Chemical Corporation Officer and Key Employee Incentive Plan; filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, SEC File No. 0-20411, and incorporated herein by reference.

*
     

10.15

Mississippi Chemical Corporation Executive Deferred Compensation Plan, as amended and restated, effective January 1, 2000; filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1999, SEC File No. 001-12217, and incorporated herein by reference.

*
     
     
     

 

EXHIBIT NUMBER

DESCRIPTION

PAGE NO.
     

10.16

Mississippi Chemical Corporation Nonemployee Directors' Deferred Compensation Plan; filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, SEC File No. 0-20411, and incorporated herein by reference.

*
     

10.17

Mississippi Chemical Corporation Supplemental Benefit Plan, as amended and restated as of July 1, 1996; filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, SEC File No. 0-20411, and incorporated herein by reference.

*
     

10.18

Mississippi Chemical Corporation 1994 Stock Incentive Plan; filed as Exhibit 4.2 to the Company's Form S-8 Registration Statement filed December 21, 1995, SEC File No. 33-65209, and incorporated herein by reference.

 

*

10.19

Mississippi Chemical Corporation Amended and Restated 1995 Stock Option Plan for Nonemployee Directors effective November 7, 2000; filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1999, SEC File No. 001-12217, and as Exhibit 4.2 to the Company's Form S-8 Registration Statement filed March 8, 2001, SEC File No. 333-56726, and incorporated herein by reference.

*
     

10.20

Mississippi Chemical Corporation 1995 Restricted Stock Purchase Plan for Nonemployee Directors; filed as Exhibit 4.4 to the Company's Form S-8 Registration Statement filed December 21, 1995, SEC File No. 33-65209, and incorporated herein by reference.

*

* Incorporated by reference.