10-Q 1 qtr32002.htm FORM 10-Q FOR QUARTER ENDED MARCH 31, 2002 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 March 31, 2002

OR

 

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

Of the Securities Exchange Act of 1934

For Quarter Ended March 31, 2002

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 March 31, 2002.

Class

Number of Shares

Common Stock, $0.01 par value

26,161,161

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

INDEX

 

     

Page

Number

PART I.

  

FINANCIAL INFORMATION:

 
 

Item 1.

Financial Statements

  
       
   

Consolidated Statements of Income

3
   

     Three months ended March 31, 2002 and 2001 and

 
   

      Nine months ended March 31, 2002 and 2001

  
       
   

Consolidated Balance Sheets

4 - 5
   

     March 31, 2002 and June 30, 2001

  
       
   

Consolidated Statements of Shareholders' Equity

6
   

     Fiscal Year ended June 30, 2001 and

  
   

     Nine months ended March 31, 2002

  
       
   

Consolidated Statements of Cash Flows

7
   

     Nine months ended March 31, 2002 and 2001

  
       
   

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 6.

Exhibits and Reports on Form 8-K

32
       
 

Signatures

  

32

 

PART I.

FINANCIAL INFORMATION
   

ITEM 1.

FINANCIAL STATEMENTS.

 

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

Three months ended

March 31,

  

Nine months ended

March 31,
 

2002

  

2001

  

2002

  

2001
 

(In thousands, except per share data)

Revenues:

              

Net sales

$ 94,694 

  

$147,512 

  

$318,552 

  

$403,880 
               

Operating expenses:

              

   Cost of products sold

95,610 

  

132,225 

  

309,844 

  

389,905 

   Selling, general and

              

      administrative

7,009 

  

7,463 

  

20,643 

  

23,499 

   Other

1,135 

  

6,647 

  

8,986 

  

13,029 
 

103,754 

  

146,335 

  

339,473 

  

426,433 
               

Operating (loss) income

(9,060)

  

1,177 

  

(20,921)

  

(22,553)
               

Other (expense) income:

              

   Interest, net

(6,799)

  

(7,009)

  

(21,448)

  

(21,278)

   Other

   11,304 

  

5, 457 

  

15,184 

  

7,837 
               

Loss before income taxes

(4,555)

  

(375)

  

(27,185)

  

(35,994)
               

Income tax expense (benefit)

    432 

  

120 

  

(12,979)

  

(14,042)
               

Net loss

$ (4,987)

  

$ (495)

  

$ (14,206)

  

$ (21,952)
               

Loss per share - basic and

              

   diluted (see Note 3)

$ (0.19)

  

$ (0.02)

  

$ (0.54)

  

$ (0.84)

 

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

 

 

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS

   

March 31,

  

June 30,
   

2002

  

2001
   

(In thousands, except per share data)

Current assets:

        

   Cash and cash equivalents

  

$ 1,157 

  

$ 11,797 

   Accounts receivable, net

  

42,355 

  

51,692 
         

   Inventories:

        

      Finished products

  

47,079 

  

44,502 

      Raw materials and supplies

  

5,025 

  

6,230 

      Replacement parts

  

     35,683 

  

     36,380 

         Total inventories

  

87,787 

  

87,112 
         

   Income tax receivable

  

10,264 

  

2,504 

   Prepaid expenses and other current assets

  

8,832 

  

2,364 

   Deferred income taxes

  

         226 

  

       7,280 
         

      Total current assets

  

150,621 

  

162,749 
         

Investments in affiliates

  

103,817 

  

96,064 
         

Other assets

  

4,736 

  

6,304 
         

Property, plant and equipment, at cost

  

839,425 

  

841,080 

  less accumulated depreciation, depletion 

        

  and amortization

  

  (452,178)

  

  (430,788)

      Net property, plant and equipment

  

387,247 

  

410,292 
         

Goodwill, net of accumulated amortization

  

   101,997 

  

   104,198 
         
   

$ 748,418 

  

$ 779,607 

 

 

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

 

 

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Continued)

LIABILITIES AND SHAREHOLDERS' EQUITY

   

March 31,

  

June 30,
   

2002

  

2001
   

(In thousands, except per share data)
         

Current liabilities:

        

   Long-term debt due within one year

  

$122,787 

  

$      -       

   Accounts payable

  

31,052 

  

38,167 

   Accrued liabilities

  

    14,543 

  

    10,797 

          Total current liabilities

  

168,382 

  

48,964 
         

Long-term debt

  

214,202 

  

386,285 
         

Other long-term liabilities and deferred credits

  

11,519 

  

10,922 
         

Deferred income taxes

  

66,553 

  

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

  

4,413 

  

18,963 

   Accumulated other comprehensive

       

      income (loss)

  

6,279 

  

(5,808)

   Treasury stock, at cost (1,815 shares)

  

   (29,111)

  

   (29,579)

          Total shareholders' equity

  

   287,762 

  

   289,757 
         
   

$ 748,418 

  

$ 779,607 

 

 

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

 

 

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

MARCH 31, 2002

(Unaudited)

 

 

 

 

Common

Stock

Additional

Paid-In

Capital

 

Retained

Earnings

Accumulated

Other

Comprehensive

Income (Loss)

 

Treasury

Stock

 

 

Total

(In thousands, except per share data)

          
             

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

-    

-      

(14,206)

-       

-       

(14,206)

     Net change in

           

        unrealized loss on

            

        hedges, net of tax

           

        expense of $7,252

       -    

        -      

       -      

     12,087 

       -       

   12,087 
             

          Comprehensive loss

       -    

        -      

(14,206)

    12,087 

       -       

   (2,119)
             

     Treasury stock, net

       -    

        -      

      (344)

        -       

        468 

         124 
             

Balances,

            

   March 31, 2002

$    280

$305,901

$    4,413

$   6,279 

$(29,111)

$287,762 
             

 

 

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

 

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

   

Nine months ended March 31,
   

2002

  

2001
   

(In thousands)

Cash flows from operating activities:

        

Net loss

  

$   (14,206)

  

$   (21,952)

Reconciliation of net loss to net cash provided by

        

   (used in) operating activities:

        

       Net change in operating assets and liabilities

  

(1,772)

  

(26,778)

       Depreciation, depletion and amortization

  

33,494 

  

35,157 

       Change in deferred loss on hedging activities,

        

          net of tax

  

6,015 

  

1,872 

       Collection of prior year taxes paid

  

26,446 

  

-      

       Deferred income taxes

  

(161)

  

(13,079)

       Equity earnings in unconsolidated affiliates

  

(9,024)

  

(5,149)

       Other

  

      (2,545)

  

     (2,512)
         

Net cash provided by (used in) operating activities

  

     38,247 

  

   (32,441)
         

Cash flows from investing activities:

        

  Purchases of property, plant and equipment

  

(7,868)

  

(13,997)

  Proceeds from sale of assets

  

5,017 

  

15,583 

  Other

  

       3,300 

  

         750 
         

Net cash provided by investing activities

  

          449 

  

      2,336 
         

Cash flows from financing activities:

        

  Debt proceeds

  

167,904 

  

334,331 

  Debt payments

  

(217,240)

  

(304,703)

  Cash dividends paid

  

         -      

  

        (784)
         

Net cash (used in) provided by financing activities

  

   (49,336)

  

     28,844 
         

Net decrease in cash and cash equivalents

  

(10,640)

  

(1,261)
         

Cash and cash equivalents - beginning of period

  

     11,797 

  

      2,190 
         

Cash and cash equivalents - end of period

  

$     1,157 

  

$       929 

 

 

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

 

 

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 nine-month periods ended March 31, 2002 and 2001, our financial position at March 31, 2002 and June 30, 2001, our consolidated statements of shareholders' equity for the nine months ended March 31, 2002 and the year ended June 30, 2001, and our cash flows for the nine months ended March 31, 2002 and 2001. 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 March 31, 2002, 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 the Prime Rate, the London Interbank Offered Rate or the Federal Funds Rate. At March 31, 2002, we had borrowings outstanding under the Facility in the amount of $122.8 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 the same amount, and that such financing is likely to will contain terms, particularly interest rates and fees, not 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:

   

Three months ended

  

Nine months ended
   

March 31,

  

March 31,
   

2002

  

2001

  

2002

  

2001
   

(In thousands)

Weighted average common shares

                

   outstanding, net of treasury shares, for

                

   basic earnings per share

  

26,139

  

26,132

  

26,135

  

26,132

Common stock equivalents for employee

                

  stock options

  

    -     

  

    -     

  

     -    

  

    -     
                 

Weighted average common shares

                

  outstanding for diluted earnings per share

  

26,139

  

26,132

  

26,135

  

26,132

Options outstanding were not included in our computations of diluted earnings per share for the three-month or nine-month periods ended March 31, 2002 and 2001, 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 nine-month periods ended March 31, 2002 and 2001. The Other caption includes corporate and consolidating eliminations.

   

Three months ended March 31, 2002

(In thousands)

  

Nitrogen

Phosphate

Potash

Other

Total
             

Net sales - external customers

  

$  50,631 

$  24,555 

$ 19,508 

$    -      

$ 94,694 

Net sales - intersegment

  

4,086 

17 

-      

(4,103)

-      

Operating (loss) income

  

(10,214)

1,667 

(798)

285 

(9,060)

Depreciation, depletion and

            

  amortization

  

6,687

1,409 

1,900 

1,164 

11,160 

Capital expenditures

  

367

1,872 

488 

15 

2,742 

 

   

Three months ended March 31, 2001

(In thousands)

  

Nitrogen

Phosphate

Potash

Other

Total
             

Net sales - external customers

  

$101,400 

$  25,439 

$20,673 

$    -      

$147,512 

Net sales - intersegment

  

11,762 

16 

-      

(11,778)

-      

Operating income (loss)

  

3,523 

(2,695)

(630)

979 

1,177 

Depreciation, depletion and

            

  amortization

  

7,486 

1,366 

1,683 

920 

11,455 

Capital expenditures

  

1,898 

302 

652 

148 

3,000 

 
   

Nine months ended March 31, 2002

(In thousands)

  

Nitrogen

Phosphate

Potash

Other

Total
             

Net sales - external customers

  

$184,830

$  77,092 

$56,630 

$   -       

$318,552 

Net sales - intersegment

  

14,950 

52 

-      

(15,002)

-      

Operating (loss) income

  

(18,842)

1,334 

(4,475)

1,062 

(20,921)

Depreciation, depletion and

            

  amortization

  

20,536 

4,206 

5,347 

3,405 

33,494 

Capital expenditures

  

2,646 

3,387 

1,697 

138 

7,868 

 
   

Nine months ended March 31, 2001

(In thousands)

  

Nitrogen

Phosphate

Potash

Other

Total
             

Net sales - external customers

  

$270,948 

$  78,124 

$54,808 

$   -      

$403,880 

Net sales - intersegment

  

26,443 

48 

-      

(26,491)

-      

Operating (loss) income

  

(12,576)

(8,495)

(2,875)

1,393 

(22,553)

Depreciation, depletion and

            

 amortization

  

23,152 

4,221 

4,972 

2,812 

35,157 

Capital expenditures

  

7,572 

2,151 

4,093 

181 

13,997 

 

NOTE 5 - ACCUMULATED OTHER COMPREHENSIVE INCOME ( 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 income (loss) during the nine months ended March 31, 2002, are included below.

   

Before-Tax

Amount

  

Tax

Effect

  

Net-of-Tax

Amount
   

(In thousands)

Net unrealized loss on natural gas hedging 

            

    activities at June 30, 2001

  

$  (9,292)

  

$  3,484 

  

$  (5,808)
             

       Net unrealized gain arising during period

  

1,760 

  

(659)

  

1,101 

       Reclassification adjustment for net

            

           losses realized in net income

  

   17,578 

  

    (6,592)

  

  10,986 
             

Net unrealized gain on natural gas hedging 

            

   activities at March 31, 2002

  

$ 10,046 

  

$ (3,767)

  

$  6,279 

 

NOTE 6 - SETTLEMENT OF LITIGATION

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

In April 2002, we received approximately $4.3 million in net proceeds from the conclusion of litigation related to defective equipment purchased at our Yazoo City, Mississippi, nitrogen production facility. The problems arising from this equipment occurred during periods prior to this fiscal year. This amount will be recorded as a component of other income in our fourth fiscal quarter Statement of Operations.

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 March 31, 2002 and 2001 is presented below for purposes of complying with the reporting requirements of the Guarantor Subsidiaries.

CONDENSED CONSOLIDATING STATEMENT OF INCOME
   

Three months ended March 31, 2002

 

(In thousands)

  

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

Consolidated

Revenues:

            

  Net sales

  

$      -             

$ 30,851 

$ 95,917 

$ (32,074)

$ 94,694 
             

Operating expenses:

            

  Cost of products sold

  

-       

36,022 

90,522 

(30,934)

95,610 

  Selling, general and

            

     administrative

  

(293)

1,337 

5,965 

-       

7,009 

  Other

  

      -      

       853 

       282 

        -       

      1,135 
   

    (293)

  38,212 

  96,769 

 (30,934)

 103,754 

Operating income (loss)

  

293 

(7,361)

(852)

(1,140)

(9,060)
             

Other (expense) income:

            

  Interest, net

  

(3,552)

(2,140)

(1,107)

-       

(6,799)

  Other

  

   3,215 

    1,480 

       142 

    6,467 

   11,304 
             

(Loss) income before

            

   income taxes

  

(44)

(8,021)

(1,817)

5,327 

(4,555)

Income tax expense

           

   (benefit)

  

    4,943 

      3,455 

   (2,895)

    (5,071)

         432 
             

Net (loss) income

  

$ (4,987)

$ (11,476)

$   1,078 

$  10,398 

$  (4,987)

 

 

CONDENSED CONSOLIDATING STATEMENT OF INCOME
   

Three months ended March 31, 2001

 

(In thousands)

  

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

Consolidated

Revenues:

            

  Net sales

  

$     -    

$     53,395 

$ 148,666  

$  (54,549)

$ 147,512

             

Operating expenses:

            

  Cost of products sold

  

-      

53,600 

129,875  

(51,250)

132,225 

  Selling, general and

            

    administrative

  

(988)

1,518 

6,933  

-       

7,463 

  Other

  

       -      

         749 

      5,898  

        -       

      6,647 
   

     (988)

    55,867 

  142,706  

  (51,250)

 146,335 

Operating income (loss)

  

988 

(2,472)

5,960  

(3,299)

1,177 
             

Other (expense) income:

            

  Interest, net

  

(7,301)

(3,795)

4,087 

-       

(7,009)

  Other

  

     3,145 

     13,794 

      4,307 

   (15,789)

      5,457 
             

(Loss) income before

            

   income taxes

  

(3,168)

7,527 

14,354 

(19,088)

(375)
             

Income tax (benefit)

           

   expense

  

  (2,673)

     4,299 

      (222)

     (1,284)

        120 
             

Net (loss) income

  

$   (495)

$   3,228 

$  14,576

$ (17,804)

$    (495)

 

 

CONDENSED CONSOLIDATED STATEMENT OF INCOME
   

Nine months ended March 31, 2002

 

(In thousands)

  

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

Consolidated

Revenues:

            

   Net sales

  

$      -       

$ 104,162 

$ 320,911 

$(106,521)

$ 318,552 
             

Operating expenses:

            

  Cost of products sold

  

      -       

116,172 

300,563 

(106,891)

309,844 

  Selling, general and

            

     administrative

  

(1,082)

3,810 

17,915 

-       

20,643 

  Other

  

       -       

     5,539 

      3,447 

          -       

       8,986 
   

   (1,082)

 125,521 

 321,925 

 (106,891)

  339,473 

Operating income (loss)

  

1,082 

(21,359)

(1,014)

370 

(20,921)
             

Other (expense) income:

            

  Interest, net

  

(18,211)

(7,904)

(4,284)

8,951 

(21,448)

  Other

  

   11,288 

     6,409 

      3,812 

     (6,325)

    15,184 
             

(Loss) income before

           

   income taxes

  

(5,841)

(22,854)

(1,486)

2,996 

(27,185)
             

Income tax expense

           

   (benefit)

  

     8,365 

  (10,145)

    (8,731)

    (2,468)

   (12,979)
             

Net (loss) income

  

$(14,206)

$ (12,709)

$   7,245 

$   5,464 

$ (14,206)

 

 

CONDENSED CONSOLIDATING STATEMENT OF INCOME
   

Nine months ended March 31, 2001

 

(In thousands)

  

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

Consolidated

Revenues:

            

  Net sales

  

$     -    

$    131,654 

$ 406,703  

$ (134,477)

$ 403,880

             

Operating expenses:

            

  Cost of products sold

  

-      

142,484 

381,029  

(133,608)

389,905 

  Selling, general and

            

    administrative

  

(1,424)

4,481 

20,442  

-       

23,499 

  Other

  

        -      

       3,432 

      9,597  

         -       

     13,029 
   

   (1,424)

    150,397 

  411,068  

 (133,608)

  426,433 

Operating income (loss)

  

1,424 

(18,743)

(4,365) 

(869)

(22,553)
             

Other (expense) income:

            

  Interest, net

  

(22,482)

(11,006)

12,210 

-       

(21,278)

  Other

  

    (4,971)

     18,826 

       4,613 

   (10,631)

     7,837 
             

(Loss) income before

            

   income taxes

  

(26,029)

(10,923)

12,458 

(11,500)

(35,994)
             

Income tax (benefit)

            

   expense

  

    (4,077)

        2,054 

    (10,071)

    (1,948)

  (14,042)
             

Net (loss) income

  

$ (21,952)

$  (12,977)

$     22,529

$   (9,552)

$ (21,952)

 

 

 CONDENSED CONSOLIDATING BALANCE SHEET
 

March 31, 2002

 

(In thousands)

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

 

Consolidated

Assets

          

Current assets:

          

   Cash and cash equivalents

$ 1,090 

$         16 

$         51 

$            -       

$    1,157 

   Receivables, net

21,255 

10,718 

51,064 

(30,418)

52,619 

   Inventories

-      

19,703 

67,672 

412 

87,787 

   Prepaid expenses and other

         

     current assets

   6,695 

      1,550 

     5,836 

         (5,023)

     9,058 
           

          Total current assets

29,040 

31,987 

124,623 

(35,029)

150,621 
           

Investments in affiliates

366,402 

301,686 

88,516 

(652,787)

103,817 

Other assets

304,165 

-      

70,108 

(369,537)

4,736 

PP&E, net

8,282 

129,862 

249,103 

-       

387,247 

Goodwill, net

         -      

          -      

  101,997 

             -       

  101,997 
           

          Total assets

$707,889 

$ 463,535 

$ 634,347 

$(1,057,353)

$748,418 
           
           
Liabilities and Shareholders'          

   Equity

          

Current liabilities:

          

   Long-term debt due within

         

     one year

$122,787 

$        -      

$       -       

$           -       

$ 122,787 

   Accounts payable

14,215 

12,387 

47,175 

(42,725)

31,052 

   Accrued liabilities and other

    11,521 

       2,638 

      5,785 

        (5,401)

     14,543 
           

        Total current liabilities

148,523 

15,025 

52,960 

(48,126)

168,382 
           

Long-term debt

269,546 

160,206 

142,920 

(358,470)

214,202 

Other long-term liabilities and

          

   deferred credits

2,058 

34,038 

55,512 

(13,536)

78,072 
           

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

4,413 

(70,450)

(11,603)

82,053 

4,413 

   Accumulated other 

          

      comprehensive income

6,279 

-      

-      

-      

6,279 

   Treasury stock, at cost

  (29,111)

          -      

          -      

              -      

  (29,111)
           

   Total shareholders' equity

 287,762 

  254,266 

  382,955 

     (637,221)

  287,762 
           

          Total liabilities and

          

             shareholders' equity

$707,889 

$ 463,535 

$634,347 

$(1,057,353)

$748,418 
           

 

 

CONDENSED CONSOLIDATING BALANCE SHEET

 
 

June 30, 2001

 

(In thousands)

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

 

Consolidated

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 
           

 

 

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

 
 

Nine months ended March 31, 2002

 

(In thousands)

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

 

Consolidated
           
Cash flows from operating          

  activities:

          

    Net (loss) income

$(14,206)

$ (12,709)

$   7,245 

$     5,464 

$  (14,206)

   Reconciliation of net (loss) 

          

     income to net cash (used in) 

          

     provided by operating 

          
    activities:          

         Net change in operating 

          

             assets and liabilities

(36,979)

118 

33,768 

1,321 

(1,772)

          Depreciation, depletion and

          

             amortization

3,404 

9,472 

20,618 

-      

33,494 

          Change in deferred loss on

         
             hedging activities, net          

             of tax

6,015 

-      

-      

-      

6,015 

          Equity earnings in

         

             unconsolidated affiliates

8,685 

(6,505)

(8,523)

(2,681)

(9,024)

          Deferred income taxes and

         

             other

  32,450 

        142 

     (4,748)

     (4,104)

    23,740 

Net cash (used in) provided by

          

   operating activities

     (631)

   (9,482)

     48,360 

          -      

   38,247 
           
Cash flows from investing          

   activities:

          

     Purchases of property, plant 

          

       and equipment

(139)

(1,374)

(6,355)

-      

(7,868)

     Proceeds from sale of assets

42 

120 

4,855 

-      

5,017 

     Other

        -      

         990 

      2,310 

         -      

      3,300 

Net cash (used in) provided by

          

   investing activities

        (97)

       (264)

         810 

         -      

         449 
           
Cash flows from financing          

   activities:

          

     Debt proceeds

167,904 

-      

-      

-      

167,904 

     Debt payments

(217,240)

-      

-      

-      

(217,240)

     Net change in affiliate notes

    39,426 

     9,746 

    (49,172)

         -      

           -      

Net cash (used in) provided by

          

   financing activities

    (9,910)

    9,746 

    (49,172)

         -      

   (49,336)
           

Net decrease in cash and cash

          

   equivalents

(10,638)

-      

(2)

-      

(10,640)
           

Cash and cash equivalents -

          

   beginning of period

    11,728

          16 

            53 

         -      

    11,797 
           

Cash and cash equivalents -

          

   end of period

$    1,090

$        16 

$          51 

$      -      

$    1,157 

 

 

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 

Nine months ended March 31, 2001

 

(In thousands)

Parent

Company

Guarantor

Subsidiaries

Non-Guarantor

Subsidiaries

Eliminations

 

Consolidated
           
Cash flows from operating          

   activities:

          

     Net (loss) income

$ (21,952)

$  (12,977)

$     22,529 

$    (9,552)

$   (21,952)

     Reconciliation of net (loss) 

         

      income to net cash used in

          

      operating activities:

          

          Net change in operating 

          

             assets and liabilities

13,367 

7,108 

(42,812)

(4,441)

(26,778)

          Depreciation, depletion 

          

             and amortization

2,807 

9,596 

22,754 

-       

35,157 

          Change in deferred loss on

         
             hedging activities, net          

             of tax

1,872 

-      

-      

-       

1,872 

          Equity earnings in

         

             unconsolidated affiliates

6,534 

(17,954)

(4,360)

10,631 

(5,149)

          Deferred income taxes and

         

             other

   (16,743)

      (3,195)

         985 

      3,362 

    (15,591)

Net cash used in operating

          

   activities

  (14,115)

   (17,422)

       (904)

         -      

    (32,441)
           
Cash flows from investing          

   activities:

          

     Purchases of property, plant 

          

       and equipment

(181)

(1,954)

(11,862)

-       

(13,997)

     Proceeds from sale of assets

4,759 

6 

10,818 

-       

15,583 

    Other

          -      

          742 

              8 

         -       

          750 
           
Net cash provided by (used in)          

   investing activities

      4,578 

     (1,206)

     (1,036)

         -       

      2,336 
           
Cash flows from financing          

   activities:

          

     Debt proceeds

334,331 

-       

-       

-       

334,331 

     Debt payments

(304,703)

-       

-       

-       

(304,703)

     Cash dividends paid

(784)

-       

-       

-       

(784)

     Net change in affiliate notes

   (20,537)

    18,628 

      1,909 

        -       

          -       
           

Net cash provided by financing

          

   activities

      8,307 

    18,628 

       1,909

         -       

    28,844 
           

Net decrease in cash and

         

   cash equivalents

(1,230)

-      

(31)

-       

(1,261)
           

Cash and cash equivalents -

          

   beginning of period

       2,085

            17 

           88 

        -       

       2,190 
           

Cash and cash equivalents -

          

   end of period

$      855 

$          17 

$         57 

$      -       

$        929 

 

 

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 (particularly natural gas) 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 MARCH 31, 2002 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2001

OVERVIEW. For the quarter ended March 31, 2002, we incurred a net loss of $5.0 million (or $0.19 per diluted share) compared to a net loss of $495,000 (or $0.02 per diluted share) for the same quarter during the prior year. Net sales decreased to $94.7 million for the quarter ended March 31, 2002, from $147.5 million for the quarter ended March 31, 2001. We incurred an operating loss of $9.1 million for the quarter ended March 31, 2002, compared to operating income of $1.2 million for the quarter ended March 31, 2001. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the quarter ended March 31, 2002, were $13.4 million compared to $18.1 million for the quarter ended March 31, 2001.

NET SALES

OVERVIEW. Our net sales decreased 36% to $94.7 million for the quarter ended March 31, 2002, from $147.5 million for the quarter ended March 31, 2001. 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.

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

       

%
   

2002

2001

Inc. (Dec.)

Net Sales (in thousands):

        

   Nitrogen

  

$ 50,469

$101,246

(50%)

   DAP

  

24,538

25,430

(4%)

   Potash

  

19,508

20,672

(6%)

   Other

  

        179

        164

     9% 
         

       Net Sales

  

$ 94,694

$147,512

   (36%)

 

       

%
   

2002

2001

Inc. (Dec.)

Tons Sold (in thousands):

        

   Nitrogen:

        

       Ammonia

  

162

238

(32%)

       Ammonium nitrate

  

142

124

15% 

       Urea

  

96

86

12% 

       Nitrogen solutions

  

109

116

(6%)

       Nitric acid

  

        2

      19

    (89%)

            Total Nitrogen

  

511

583

(12%)
         

   DAP

  

186

185

1% 

   Potash

  

226

223

1% 

 

       

%
   

2002

2001

Inc. (Dec.)

Average Sales Price Per Ton:

        

   Nitrogen

  

$       99

$     174

(43%)

   DAP

  

$     132

$     137

(4%)

   Potash

  

$       86

$       93

(7%)
         

 

NITROGEN. Our nitrogen sales decreased 50% as a result of a 43% decrease in sales prices and a 12% decrease in sales volumes. Prices for all of our nitrogen products declined due to market concerns that higher production levels brought on by reduced gas costs would negatively affect future supply/demand balances. During the quarter ended March 31, 2001, nitrogen product prices were unusually strong due to capacity shutdowns by domestic producers amid industry-wide cost pressure caused by record high natural gas prices. Additionally, as a result of low demand for nitrogen and high import levels last spring in the US, product inventory was carried over into this year and has negatively influenced product prices.

Ammonia sales prices decreased 51%, and sales volumes decreased 32%. We operated our domestic ammonia plants at approximately 81% of capacity during the quarter ended March 31, 2002, as compared to 56% in the quarter ended March 31, 2001. Sales prices and volumes were also negatively affected by reduced demand from industrial customers. Increased production rates during the quarter ended March 31, 2002, replaced approximately 150,000 tons of ammonia purchased from third parties during the quarter ended March 31, 2001.

Ammonium nitrate sales prices decreased 28%, while sales volumes increased 15%. The increase in sales volumes was primarily due to recaptured market share; however, unusually cold and wet weather conditions in our southeast US trade area negatively impacted demand. We operated our ammonium nitrate facilities at approximately 87% of capacity during the quarter ended March 31, 2002, as compared to 83% during the quarter ended March 31, 2001.

Urea sales volumes increased 12%, while the average selling price decreased 37%. During the quarter ended March 31, 2002, there was a more favorable relationship between natural gas prices and prilled urea prices than during the quarter ended March 31, 2001. As a result, we had higher production rates and corresponding increases in sales volumes. Nevertheless, this increase in sales volumes was partially offset by the absence of industrial sales of urea melt during the quarter as a result of the closure of Melamine Chemical Inc.'s facility in our Donaldsonville, Louisiana, complex. During the quarter ended March 31, 2001, we sold approximately 29,000 tons of urea melt. Our urea facility operated at 66% of capacity as compared to 51% in the quarter ended March 31, 2001.

Nitrogen solutions sales prices decreased 35%, and sales volumes decreased 6%. In addition to the impact of general market conditions, nitrogen solutions sales prices were negatively impacted by an oversupply in the market caused by high levels of low priced imports, primarily from certain former Soviet Union countries. To manage inventory levels, production was curtailed to 39% of capacity during the quarter ended March 31, 2002, as compared to 91% during the quarter ended March 31, 2001.

PHOSPHATES. Our DAP sales decreased 4% as a result of a 4% decrease in sales prices. While sales prices were lower as compared to the quarter ended March 31, 2001, the average sales price increased 6% from the quarter ended December 31, 2001, as the world supply/demand balance continued its improvement from late summer 2001 conditions. Near the end of the March 31, 2002 quarter, DAP sales prices leveled off from the increases experienced during the preceding six months.

POTASH. Our potash sales decreased 6% as a result of a 7% decrease in sales prices partially offset by a 1% increase in sales volumes. Sales volumes were negatively impacted during the quarters ended March 31, 2002 and 2001, by wet weather conditions.

 

COST OF PRODUCTS SOLD

OVERVIEW. Our cost of products sold decreased to $95.6 million for the quarter ended March 31, 2002, from $132.2 million for the quarter ended March 31, 2001. As a percentage of net sales, cost of products sold increased to 101% for the quarter ended March 31, 2002, from 90% for the quarter ended March 31, 2001. This increase was primarily the result of lower sales prices for our nitrogen, DAP and potash products partially offset by lower costs per ton for all products. Our average domestic natural gas price for all operations, net of futures gains and losses, decreased 48% to $2.72 per MMBtu for the quarter ended March 31, 2002.

NITROGEN. Our nitrogen costs per ton decreased 27% 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 46% to $2.73 per MMBtu. In addition, we had lower costs related to third-party purchases of ammonia. During the quarter ended March 31, 2002, we also 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 $1.5 million as compared to a loss of $488,000 during the quarter ended March 31, 2001.

PHOSPHATES. Our DAP costs per ton decreased 19% for the quarter ended March 31, 2002. This decrease was primarily the result of lower raw material costs for ammonia and sulfur.

POTASH. Our potash costs per ton decreased 7% for the quarter ended March 31, 2002. This decrease was primarily the result of lower natural gas and electricity costs.

 

SELLING, GENERAL AND ADMINISTRATIVE

Our selling, general and administrative expenses decreased to $7.0 million for the quarter ended March 31, 2002, from $7.5 million for the quarter ended March 31, 2001. This decrease was primarily the result of reduced goodwill amortization during the quarter. As a percentage of net sales, selling, general and administrative expenses increased to 7% for the quarter ended March 31, 2002, as compared to 5% for the quarter ended March 31, 2001.

OTHER OPERATING EXPENSES

Our other operating expenses decreased to $1.1 million for the quarter ended March 31, 2002, from $6.6 million for the quarter ended March 31, 2001. This decrease is the result of reduced idle plant costs at our nitrogen facilities. Portions of our ammonia, nitric acid and urea production capacities were idled for various periods during the quarters ended March 31, 2002 and March 31, 2001, primarily due to the unfavorable relationship between product prices and natural gas prices. However, significantly reduced natural gas prices during the March 31, 2002 quarter, permitted us to run our nitrogen facilities at a higher utilization rate than during the quarter ended March 31, 2001.

INTEREST, NET

Our net interest expense for the quarter ended March 31, 2002, decreased to $6.8 million from $7.0 million. This decrease was the result of lower average interest rates under our revolving credit facility more than offsetting higher average debt balances and lower interest income during the quarter.

OTHER INCOME

Other income increased to $11.3 million from $5.5 million, primarily as a result of settling the defamation action we filed against Terra International, Inc. in August 1995. We received $11.0 million from Terra's liability carrier during the quarter ended March 31, 2002. During the prior-year quarter ended March 31, 2001, other income primarily consisted of gains on the sale of non-core real estate assets.

INCOME TAX EXPENSE (BENEFIT)

For the quarter ended March 31, 2002, our income tax expense was $432,000, as compared to $120,000 for the quarter ended March 31, 2001. Our income taxes for the quarter ended March 31, 2002 include the effect of lowering our estimated annual effective tax rate from 59% to 48%.

 

RESULTS OF OPERATIONS - NINE MONTHS ENDED MARCH 31, 2002 COMPARED TO THE NINE MONTHS ENDED MARCH 31, 2001

OVERVIEW. For the nine-month period ended March 31, 2002, we incurred a net loss of $14.2 million (or $0.54 per diluted share) compared to a net loss of $22.0 million (or $0.84 per diluted share) for the same period during the prior year. Net sales decreased to $318.6 million for the nine-month period ended March 31, 2002, from $403.9 million for the nine-month period ended March 31, 2001. We incurred an operating loss of $20.9 million for the nine-month period ended March 31, 2002, compared to an operating loss of $22.6 million for the nine-month period ended March 31, 2001. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the nine-month period ended March 31, 2002, were $27.8 million, compared to $20.4 million for the nine-month period ended March 31, 2001.

 

NET SALES

OVERVIEW. Our net sales decreased 21% to $318.6 million for the nine-month period ended March 31, 2002, from $403.9 million for the nine-month period ended March 31, 2001. 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 nine-month periods ended March 31:

       

%
   

2002

2001

Inc. (Dec.)

Net Sales (in thousands):

        

   Nitrogen

  

$183,985

$270,513

(32%)

   DAP

  

76,958

77,366

(1%)

   Potash

  

56,630

54,807

3% 

   Other

  

        979

     1,194

    (18%)
         

       Net Sales

  

$318,552

$403,880

   (21%)

 

       

%

 

  

2002

2001

Inc. (Dec.)

Tons Sold (in thousands):

        

   Nitrogen:

        

       Ammonia

  

567

672

(16%)

       Ammonium nitrate

  

482

432

12% 

       Urea

  

358

382

(6%)

       Nitrogen solutions

  

250

270

(7%)

       Nitric acid

  

      31

      46

    (33%)

            Total Nitrogen

  

1,688

1,802

(6%)
         

   DAP

  

620

571

9% 

   Potash

  

663

603

10% 

 

 

       

%
   

2002

2001

Inc. (Dec.)

Average Sales Price Per Ton:

        

   Nitrogen

  

$     109

$     150

(27%)

   DAP

  

$     124

$     136

(9%)

   Potash

  

$       85

$       91

(7%)
         

 

NITROGEN. Our nitrogen sales decreased 32% as a result of a 27% decrease in sales prices and a 6% decrease in sales volumes. Sales prices for all of our nitrogen products declined due to market concerns that higher production levels brought on by reduced gas costs would negatively affect future supply/demand balances. During the prior year, nitrogen product prices were unusually strong due to capacity shutdowns by domestic producers amid industry-wide cost pressure caused by record high natural gas prices.

Our ammonia sales prices decreased 35% and sales volumes decreased 16%. Sales volumes decreased because of lower demand from industrial customers due to a slowdown in economies worldwide.

Ammonium nitrate sales prices decreased 14%, while sales volumes increased 12%. Sales volumes increased primarily due to recaptured market share.

Urea sales prices decreased 21%, and sales volumes decreased 6%. Sales prices decreased as a result of higher industry production levels during fiscal 2002, as well as excess industry inventories carried over from spring 2001. Sales volumes decreased as a result of decreased granular urea sales due to our transfer of our granular urea facility back to its prior owner during the period, as well as decreased urea melt sales caused by Melamine Chemical, Inc.'s closure of its plant at our Donaldsonville, Louisiana, complex. The decrease in sales volumes was partially offset by increased production and sales of prilled urea.

Nitrogen solutions sales prices decreased 27%, and sales volumes decreased 7%. Sales prices and sales volumes decreased primarily as a result of higher producer inventory levels and increased import levels at low prices, primarily from certain former Soviet Union countries.

PHOSPHATES. Our DAP sales prices decreased 9%, while our DAP sales volumes increased 9%. While prices were down, world market conditions improved from late summer 2001 conditions and leveled off near the end of the nine-month period.

POTASH. Our potash sales increased 3% as a result of a 10% increase in sales volumes, partially offset by a 7% decrease in sales prices. The change in sales prices and volumes partially resulted from an increase in export sales, which typically have lower sales prices than domestic sales. Domestic market conditions also negatively impacted prices.

 

COST OF PRODUCTS SOLD

OVERVIEW. Our cost of products sold decreased to $309.8 million for the nine-month period ended March 31, 2002, from $389.9 million for the nine-month period ended March 31, 2001. As a percentage of net sales, cost of products sold was 97% for the nine-month periods ended March 31, 2002 and March 31, 2001. For all of our products, lower costs per ton were offset by lower sales prices. Our average domestic natural gas price for all operations, net of futures gains and losses, decreased 33% to $3.02 per MMBtu for the nine-month period ended March 31, 2002.

NITROGEN. Our nitrogen costs per ton decreased 24%, 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 32% to $3.03 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 nine-month period ended March 31, 2001, associated with maintenance shutdowns at our Yazoo City, Mississippi, and Donaldsonville, Louisiana, facilities. During the nine-month period ended March 31, 2002, 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 $8.5 million as compared to $4.4 million for the nine-month period ended March 31, 2001.

PHOSPHATES. Our DAP costs per ton decreased 19% for the nine-month period ended March 31, 2002. This decrease was primarily the result of lower raw material costs for ammonia and sulfur.

POTASH. Our potash costs per ton decreased 3% for the nine-month period ended March 31, 2002. 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 $20.6 million for the nine-month period ended March 31, 2002, from $23.5 million for the nine-month period ended March 31, 2001. This decrease was primarily the result of reduced goodwill amortization during the nine-month period ended March 31, 2002. In addition, the prior year included costs related to benefits paid under 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 nine-month periods ended March 31, 2002 and 2001.

OTHER OPERATING EXPENSES

Our other operating expenses decreased to $9.0 million for the nine-month period ended March 31, 2002, from $13.0 million for the nine-month period ended March 31, 2001. This decrease is the result of reduced idle plant costs at our nitrogen facilities. Portions of our ammonia, urea and nitric acid production capacities were idled for various periods during the nine-month periods ended March 31, 2002 and 2001, primarily due to the unfavorable relationship between product prices and natural gas prices.

INTEREST, NET

Our net interest expense for the nine-month period ended March 31, 2002, increased to $21.4 million from $21.3 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 $15.2 million from $7.8 million, primarily as a result of settling the defamation action we filed against Terra International, Inc. in August 1995. We received $11.0 million from Terra's liability carrier during the nine-month period ended March 31, 2002. During the nine-month period ended March 31, 2001, other income primarily consisted of gains on the sale of non-core real estate assets.

INCOME TAX EXPENSE (BENEFIT)

For the nine-month period ended March 31, 2002, our income tax benefit was $13.0 million, as compared to an income tax benefit of $14.0 million for the nine-month period ended March 31, 2001. 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 current income tax benefit is based on an estimated annual effective tax rate of approximately 48%.

 

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 the same amount, and such financing is likely to contain terms, particularly interest rates and fees, not as favorable as the Facility's.

At March 31, 2002, we had cash and cash equivalents of $1.2 million, compared to $11.8 million at June 30, 2001, a decrease of approximately $10.6 million.

OPERATING ACTIVITIES

For the nine-month period ended March 31, 2002, our net cash provided by operating activities was $38.2 million, and included a $26.4 million refund of federal taxes pursuant to the recently enacted Job Creation and Workforce Assistance Act of 2002. Net cash used in operating activities was $32.4 million for the nine-month period ended March 31, 2001.

INVESTING ACTIVITIES

Our net cash provided by investing activities was $449,000 for the nine-month period ended March 31, 2002, and included $5.0 million in proceeds from the sale of non-core assets and $3.3 million primarily related to the collection of a note for the sale of non-core real estate. These proceeds were partially offset by $7.9 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 nine-month period ended March 31, 2001, and included $15.6 million in proceeds from the sale of non-core assets partially offset by capital expenditures of $14.0 million that were for normal improvements and modifications to our facilities.

FINANCING ACTIVITIES

Our net cash used in financing activities was $49.3 million for the nine-month period ended March 31, 2002, which reflected net debt payments. The $11.0 million cash settlement from the Terra lawsuit, plus the receipt of $26.4 million during the quarter from a refund of previously paid federal taxes pursuant to the recently enacted Job Creation and Workforce Assistance Act of 2002, allowed us to repay debt in the quarter. Our net cash provided by financing activities was $28.8 million for the nine-month period ended March 31, 2001, which reflected net debt proceeds of $29.6 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 March 31, 2002, we had borrowings outstanding in the amount of $122.8 million, and letters of credit outstanding in the amount of $1.9 million that lowered our availability under the Facility. We had $66.8 million available under the Facility at March 31, 2002, in addition to cash on hand of $1.2 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 March 31, 2002, and anticipate being in compliance with all covenants at June 30, 2002. Our weighted average interest rate under the Facility was 5.40% for the quarter ended March 31, 2002, and 6.26% for the nine-month period ended March 31, 2002. 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 the maturity of our Facility in November 2002, by which time we anticipate having our Facility refinanced as mentioned above in this section. Natural gas prices remain volatile, and if they 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 low worldwide grain inventories, compared to normal historical levels, 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. In the fourth quarter of fiscal 2002, we expect to recapture a portion of the sales volumes delayed during the third fiscal quarter due to the adverse effect of weather conditions in our trade area. Nitrogen product prices will be impacted by the progression of the planting season in the US and the amount of US nitrogen production that remains curtailed due to market conditions. In the recent weeks prior to the filing of this report, several US nitrogen plants scaled back operations in response to rising natural gas prices, slow demand and low product prices. Natural gas prices will continue to play a major role in determining how we operate our nitrogen plants as we try to match production to market conditions.

The planting intention report from the USDA on March 31, 2002, showed increased corn plantings in the US this spring, which should help increase nitrogen demand. Corn is a large user of nitrogen fertilizer, accounting for approximately 45% of all nitrogen consumed by crops in the US each year. However, the absence of a new federal farm bill may affect stated planting intentions due to the lack of certainty regarding government support payments. 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 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.

Significantly higher natural gas storage levels, compared to fiscal 2001, should help moderate natural gas pricing as the year progresses, and this should improve our nitrogen production cost compared to fiscal 2001. Although nitrogen product prices have increased slightly since March 31, 2002, they are currently at low levels as reflected in our results for the March 31, 2002 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.

On April 19, 2002, the Nitrogen Solutions Fair Trade Committee (the "Committee"), a coalition of U.S. producers of nitrogen solutions consisting of Mississippi Chemical Corporation, Terra Industries Inc., and CF Industries, Inc., filed an antidumping petition against nitrogen solutions from Belarus, Lithuania, the Russian Federation, and Ukraine. The Committee filed the antidumping petition with the U.S. International Trade Commission and the U.S. Department of Commerce after developing facts that led the Committee to believe that nitrogen solutions from these four countries is being sold in the U.S. at unfairly low prices and is materially injuring the domestic nitrogen solutions industry. The Committee has asked the United States government to move quickly with the case to limit further damage to the domestic nitrogen solutions industry.

Although we expect the firming of international phosphate markets to continue, prices have leveled off from the increases experienced since January 2002. Since a majority of our DAP is sold into export markets by PhosChem, the PhosChem contracts with China for major sales through calendar 2002 will be positive for our phosphate segment. In the long-term, the accession of China to the World Trade Organization is positive for the DAP industry. 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 for these nutrients. Finally, the performance of our potash segment will depend on increases of currently low potash sales prices and the continued improvement of energy costs and ore grades experienced during our third fiscal quarter.

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 stocks, 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, which is on file with the Securities and Exchange Commission.

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 March 31, 2002, 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 $1.8 million at March 31, 2002 (see Note 5 to our consolidated financial statements included in this report).

 

PART II. OTHER INFORMATION

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:  April 30, 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 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.

*
     

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.