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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, 2003

OR

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

Of the Securities Exchange Act of 1934

For Quarter Ended March 31, 2003

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 [ ]

               Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

               The number of shares outstanding of each of the issuer's classes of common stock, as of May 15, 2003.

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

INDEX

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE YEAR ENDED JUNE 30, 2002

AND THE NINE MONTHS ENDED MARCH 31, 2003

(Unaudited)

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

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

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

MISSISSIPPI CHEMICAL CORPORATION

AND SUBSIDIARIES

NOTES TO CONSOLIDATED 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, 2003 and 2002, our financial position at March 31, 2003 and June 30, 2002, our consolidated statements of shareholders' equity for the nine months ended March 31, 2003 and the year ended June 30, 2002, and our cash flows for the nine months ended March 31, 2003 and 2002. 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 2002 Annual Report on Form 10-K and our consolidated financial statements and notes thereto included in our June 30, 2002, audited financial statements.

Our business is seasonal; therefore, the results of operations for the periods ended March 31, 2003, are not necessarily indicative of the operating results for the full fiscal year.

On May 15, 2003 (the "Petition Date"), Mississippi Chemical Corporation and nine of its subsidiaries, Mississippi Phosphates Corporation; Mississippi Potash, Inc.; Mississippi Nitrogen, Inc.; MissChem Nitrogen, L.L.C.; Triad Nitrogen, L.L.C.; Mississippi Chemical Company, L.P.; Mississippi Chemical Management Company; Eddy Potash, Inc.; and Melamine Chemicals, Inc. (collectively, the "Debtors"), filed voluntary petitions to reorganize under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Mississippi, Jackson, Mississippi (the "Court"), Joint Case Number 03-02984 WEE, collectively (the "Case"). The filings were made in order to facilitate the restructuring of the Debtors' obligations. The Debtors will operate their businesses as debtors-in-possession subsequent to the Petition Date. As debtors-in-possession, the Debtors are authorized to operate their businesses but may not engage in transactions outside the ordin ary course of business without the approval of the Court. On May 16, 2003, the Court rendered an Interim Order approving the Debtors' request for interim financing (see Note 3). The Court has set June 9, 2003, as the deadline for objections to the DIP Credit Facility and June 11, 2003, as the hearing date for such objections.

The Debtors sought relief under Chapter 11 of the Bankruptcy Code because of a lack of liquidity. The combination of the depression in the agricultural sector, several waves of unfairly traded imports, and the extreme increase in price level and price volatility of domestic natural gas, the Company's primary raw material, has resulted in substantial financial losses for the Company for the last five years.

The Debtors, subject to any required Court approval, may elect to assume or reject real estate leases, employment contracts, personal property leases, service contracts, and other unexpired executory pre-petition contracts. We cannot presently determine with certainty the ultimate aggregate liability that will result from the filing and settlement of claims related to any rejected contracts.

Pursuant to the provisions of the Bankruptcy Code, the Debtors are currently developing a plan of reorganization. The principal objective of the plan of reorganization will be to restructure the Debtors' obligations to creditors in a manner which permits the Company to continue as a viable business organization. The Bankruptcy Code allows the Debtors the exclusive right to file a plan of reorganization during the first 120 days of the Case, or such other time as the Court orders. Although management expects to file a plan of reorganization, there can be no assurance at this time as to whether or when a plan of reorganization will be proposed by the Debtors, how liabilities and equity interests will be treated in the plan, that the plan will be approved by the various classes of creditors and equity holders, or that it will be approved or confirmed by the Court. If the exclusivity period were to expire or be terminated, other interested parties, such as creditors, would have the right to propose altern ative plans of reorganization. The Debtors' plan of reorganization could substantially change the amounts and characterization of liabilities currently disclosed in the accompanying unaudited consolidated financial statements.

The ability of the Company to continue as a going concern is dependent upon, but not limited to, the development and confirmation of a plan of reorganization, continued access to adequate sources of capital, the continued compliance with all debt covenants under the debtor-in-possession credit facility, retention of key suppliers, customers and employees, and the ability to sustain positive cash flows sufficient to fund operations and repay debt. No assurance can be given that the Debtors will be successful in reorganizing their affairs within the Case. Because of the ongoing nature of the reorganization process, the outcome of which is not determinable until a plan of reorganization is confirmed and consummated, the accompanying unaudited Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of these uncertainties.

DEBTOR-IN-POSSESSION FINANCING FACILITY

On May 16, 2003, in conjunction with the Case, we entered into a debtor-in-possession financing facility with Harris Trust and Savings Bank and a syndicate of six other lenders (the "DIP Lenders") to provide up to $37.5 million of financing (the "DIP Credit Facility"). As of the date of this filing, the DIP Lenders are also lenders under the Pre-Petition Harris Facility (as defined below under the heading "The Pre-Petition Harris Facility"), which consists of 13 lenders as of the date of this filing (the "Pre-Petition Lenders"). The DIP Credit Facility is a revolving credit facility under which Mississippi Chemical Corporation is the borrower and its subsidiaries that are included in the Case are guarantors. The DIP Credit Facility terminates upon the earliest to occur of (a) August 16, 2004, (b) the date that a plan of reorganization confirmed by the Court becomes effective, or (c) the date on which the DIP Lenders terminate the DIP Credit Facility in connection with an event of default under the faci lity. On May 16, 2003, the Court rendered an Interim Order approving the Debtors' request on an interim basis to enter into the DIP Credit Facility. The Court has set June 9, 2003, as the deadline for objections to the DIP Credit Facility, and June 11, 2003, as the hearing date for such objections. The provisions of the DIP Credit Facility generally described below are more particularly described in the Post-Petition Credit Agreement filed as an exhibit to this Form 10-Q.

The DIP Credit Facility provides for maximum borrowings (the "DIP Commitment"), at any time, up to the lesser of (a) $37.5 million during the months of September, October and November 2003, and February and March 2004, and $35 million at all other times, or (b) a borrowing base equal to the sum of (i) 85% of eligible accounts receivable plus (ii) 65% of eligible inventory, minus (iii) a scheduled excess collateral availability requirement, minus (iv) from June 15, 2003, an amount equal to twice the amount of all the then accrued and unpaid charges owed to warehousemen and other third parties having inventory in their possession that have not executed and delivered to the lenders a warehouseman's waiver, minus (v) from June 15, 2003, an amount equal to six months' rent for all leased facilities where inventory is kept for which the landlord has not executed and delivered to the lenders a landlord's waiver. The commitments of the DIP Lenders are subject to certain mandatory reductions described below.

The loans under the DIP Credit Facility bear interest at rates equal to the prime commercial rate from time to time in effect plus 4%. Upon entry of the Interim Order, we paid a commitment fee equal to 1% of the full DIP Commitment to the DIP Lenders and an administrative fee of $75,000 to Harris Trust and Savings Bank, as "DIP Agent." Upon entry of the Final Order, we will be obligated to pay an additional commitment fee of 1% to the DIP Lenders and an additional administrative fee of $75,000 to the DIP Agent. The DIP Credit Facility also has a facility fee equal to 0.5% per annum of the average daily unused amount of the DIP Commitment.

Pursuant to the Interim Order, the DIP Lenders have been granted superpriority claim status in the Case that is collateralized by first liens on substantially all of our assets and the assets of the other subsidiaries included in the Case (including all of the proceeds of inventory and accounts receivable and cash collateral). Our use of proceeds of inventory and accounts receivable and all cash collateral generated in the ordinary course of business is limited to the payment of certain expenses and application to the DIP Credit Facility prior to its termination and, following such termination, to the Pre-Petition Harris Facility. All of our subsidiaries that are included in the Case have guaranteed the DIP Credit Facility (the "DIP Guarantors"). As adequate protection for the use of pre-petition cash collateral, the Pre-Petition Lenders have been granted a replacement lien on substantially all of our assets and the assets of the DIP Guarantors, subject only to the lien of the DIP Lenders and certain l iens permitted under the DIP Credit Facility.

The DIP Credit Facility (a) restricts our ability to incur debt, (b) requires us to generate certain minimum levels of EBITDA, (c) limits our expenditures to the types set forth in a budget, subject to permitted deviations, (d) provides for mandatory prepayments and commitment reductions from all or part of the net proceeds of certain liquidity events such as asset dispositions outside the ordinary course of business, (e) permits the voluntary prepayment of loans under the DIP Credit Facility without penalty, and (f) contains representations, warranties, other affirmative and negative covenants, and events of default that are customary for debtor-in-possession revolving credit facilities.

In connection with entering into the DIP Credit Facility, we entered into an agreement with the Pre-Petition Lenders pursuant to which such lenders agreed not to take any action to enforce their rights under the guaranty by Mississippi Chemical Holdings, Inc. ("MCHI"), of our obligations under the Pre-Petition Harris Facility. Upon the termination of the DIP Credit Facility or upon certain defaults, the Pre-Petition Lenders may enforce the MCHI guaranty. In the event that MCHI receives proceeds from a refinancing or disposition event with respect to Farmland MissChem Limited ("Farmland MissChem"), MCHI has agreed to apply such proceeds to the Pre-Petition Harris Facility.

PRE-PETITION - HARRIS FACILITY

On November 15, 2002, we amended and restated our $200.0 million secured revolving credit facility with Harris Trust and Savings Bank and a syndicate of other lenders (twelve as of the date of this filing) to extend the facility's maturity from November 25, 2002, to November 10, 2003, reduce the commitment to $165.0 million, and provide for other amendments that were less favorable to us (the "Pre-Petition Harris Facility"). Since that date, the commitment was automatically reduced to $163.4 million in accordance with the Pre-Petition Harris Facility due to sales of non-core assets. Our bankruptcy filing was an event of default under the Pre-Petition Harris Facility, and as a result, we can no longer borrow under this facility. The borrowings under the facility are reflected as a current liability on our balance sheet. The provisions of the Pre-Petition Harris Facility generally described below are more particularly described in the amended and restated credit agreement (the "Pre-Petition Credit Agreement") filed as an exhibit to our September 30, 2002 Form 10-Q.

The Pre-Petition Harris Facility consists of "A Loans" and "B Loans" (collectively, the "Loans") that are guaranteed by each of the Company's wholly owned domestic subsidiaries and a foreign subsidiary as provided below. The B Loans constitute a continuation of the $105 million principal amount of B Loans outstanding as of November 15, 2002. Loans which are not B Loans are A Loans. The Loans and the commitments of the lenders under the Pre-Petition Harris Facility are subject to mandatory prepayments and mandatory commitment reductions as described below. The Loans bear interest at rates equal to the sum of (i) the greater of (a) the Prime Rate or (b) the Federal Funds Rate plus 1/2%, plus (ii) an "Applicable Margin." The Applicable Margin is 5% on the first $105 million outstanding under the Pre-Petition Harris Facility and 1% on all amounts outstanding in excess of $105 million; provided, that once the amount of mandatory prepayments and commitment reductions on the Pre-Petition Harris Facility equ als or exceeds $52.5 million, the Applicable Margin will reduce to 3%. Pursuant to the DIP Credit Facility, interest on the loans and fees accrue at the default rate of an additional 2%. The portion of post-petition interest and fees equal to the non-default rate shall be paid pursuant to the terms of the Pre-Petition Harris Facility, and the difference between interest and fees at the default rate and interest and fees at the non-default rate will be due and payable on the termination of the DIP Credit Facility.

We incurred approximately $4.0 million in costs and fees to close the Pre-Petition Harris Facility. We are obligated to pay a facility fee equal to 0.5% per annum of the commitment ($825,000) payable quarterly in arrears (see Note 8).

Our weighted average interest rate under the Pre-Petition Harris Facility was 8.2% for the quarter and 8.1% at March 31, 2003. We had letters of credit outstanding as of March 31, 2003, and May 15, 2003, in the amount of $900,000 that lowered our borrowing availability. We had borrowings outstanding of $158.3 million on May 15, 2003. As a result of the Case, no additional borrowings are available under the Pre-Petition Harris Facility. The A Loans are secured by a first priority lien on our inventory, accounts receivable, spare parts, and substantially all remaining assets which are not Principal Properties (as defined below in this paragraph) (collectively, the "Non-Principal Properties"). The B Loans are secured by (a) a first priority lien on our four domestic operating facilities and related real estate, the equity of the subsidiaries that own such facilities, and similar after-acquired properties and securities (collectively, the "Principal Properties") to the extent permitted by the Indenture go verning our Senior Notes (see the heading "Liquidity and Capital Resources - Financing Activities - The Senior Notes," in Part 1, Item 2 of this report) and (b) a second priority lien on the Non-Principal Properties. The Loans are guaranteed by all of our domestic subsidiaries and a foreign subsidiary, MCHI. MCHI indirectly owns our equity interest in Farmland MissChem. For information regarding the tax effect of this foreign subsidiary guarantee, see the discussion in Part I, Item 2, of this Form 10-Q under the headings "Critical Accounting Policies - Deferred Taxes," and "Results of Operations - Nine Months Ended March 31, 2003 Compared to the Nine Months Ended March 31, 2002 - Income Tax Benefit."

The Pre-Petition Harris Facility provides for maximum borrowings up to the lesser of: $163.4 million (the "Loan Limit"), or the "Borrowing Base" that is equal to (a) the sum of (i) 85% of eligible accounts receivable, (ii) 65% of eligible inventory (subject to a $45 million limit), (iii) 50% of eligible spare parts, plus 75% of the appraised orderly liquidation value of Non-Principal Properties not included in items (a)(i)-(iii) above (subject to a combined $15 million limit), and (iv) $105 million (subject to reduction for mandatory prepayments); minus (b) $12.5 million through March 31, 2003, and $15 million thereafter (the "Block Amount"). To borrow the Loan Limit, the Borrowing Base (including the Block Amount) must equal or exceed $163.4 million. If the Borrowing Base is less than the Loan Limit, the Loans shall not exceed the Borrowing Base. The Pre-Petition Harris Facility also permits up to $20 million of letters of credit, which lower borrowing availability.

The Pre-Petition Harris Facility (a) requires us to generate certain minimum levels of EBITDA (as defined in the Pre-Petition Credit Agreement), (b) limits our capital expenditures, (c) prohibits the repurchase of our outstanding shares and the payment of dividends, (d) obligates us to actively and continuously market our equity interest in Farmland MissChem, (e) provides for certain commitment reductions equal to 50% of our Excess Cash Flow (as defined in the Pre-Petition Credit Agreement), (f) provides for mandatory prepayments and commitment reductions from all or part of the net proceeds of certain liquidity events such as asset dispositions, tax refunds, and equity issues, (g) permits the voluntary prepayment of the Loans at any time without penalty, and (h) contains representations, warranties, other affirmative and negative covenants, and events of default that are customary for revolving credit facilities of this type.

NOTE 3 - LONG-TERM DEBT DUE WITHIN ONE YEAR (Continued)

THE INDUSTRIAL REVENUE BONDS

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. We were in compliance with the terms and conditions related to the bonds as of March 31, 2003. However, our bankruptcy filing was an event of default under the industrial revenue bonds.

THE SENIOR NOTES

On November 15, 1997, we issued $200.0 million of 7.25% Senior Notes (the "Senior Notes") due November 15, 2017, pursuant to a $300.0 million shelf registration statement filed with the Securities and Exchange Commission. Semi-annual interest payments of approximately $7.3 million are due on each May 15 and November 15. The holders may elect to have the Senior Notes repaid on November 15, 2007. We were in compliance with the terms and conditions related to the Senior Notes as of March 31, 2003. However, as a result of our bankruptcy filing, we did not make the semi-annual interest payment due with respect to the Senior Notes on May 15, 2003. In addition, our bankruptcy filing constitutes an event of default under the Senior Notes.

On January 9, 2003, Trustmark National Bank, the Trustee under the Indenture governing the Senior Notes, delivered a notice of resignation to us. On March 21, 2003, BancorpSouth Bank, a national banking association, became the Trustee under the Indenture.

The number of weighted average common shares outstanding, net of treasury shares, used in our diluted earnings per share computations for the three months ended March 31, 2003 and 2002 were 26,208,000 and 26,139,000, respectively. The number of weighted average common shares outstanding, net of treasury shares, used in our diluted earnings per share computations for the nine months ended March 31, 2003 and 2002 were 26,184,000 and 26,135,000, respectively. Options outstanding at March 31, 2003 and 2002, were not included in our computations of diluted loss per share as a result of incurring a net loss in each of the three-month and nine-month periods, which renders the options anti-dilutive.

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 anhydrous ammonia, ammonium nitrate, urea, nitrogen solutions and nitric acid. However, on December 19, 2002, we announced plans to close our urea facility located in Donaldsonville, Louisiana. Urea production ended on January 31, 2003 (see Note 9). We distribute these products to fertilizer dealers, distributors, and industrial users. Our phosphate segment produces diammonium phosphate fertilizer (commonly referred to as "DAP"). The majority of our DAP is marketed to agricultural users in international markets through a separate export association. Our potash segment mines and produces agricultural and industrial potash products that are sold to fertilizer dealers, distributors, and industrial accounts, primarily for use in the sou thern and western regions of the United States, and into export markets. Below is our segment information for the three-month and nine-month periods ended March 31, 2003 and 2002. The Other caption includes corporate and consolidating eliminations.

Comprehensive income is the total of net income (loss) and all other non-owner changes in equity. The components of comprehensive income 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, "Reporting Comprehensive Income," are presented in the Consolidated Statements of Shareholders' Equity. These derivative transactions may consist of futures contracts, options, swaps, or similar derivative instruments related to the price of natural gas. The changes in the components of accumulated other comprehensive income during the nine months ended March 31, 2003, are included below.

In August 2002, we received a $14.9 million refund of federal taxes pursuant to the Job Creation and Workforce Assistance Act of 2002.

As of March 31, 2003, our prepaid expenses and other current assets had increased approximately $5.3 million from June 30, 2002. This increase was primarily related to increased financing fees in connection with the Pre-Petition Harris Facility, the prepayment for natural gas (our primary raw material), and increased insurance premiums that we pre-pay and amortize over the year. These increases were partially offset by decreased net unrealized gains associated with our natural gas hedging activities at March 31, 2003, as more particularly described in Note 6 - Accumulated Other Comprehensive Income of these Notes to Consolidated Financial Statements.

On December 19, 2002, we announced plans to close our urea facility located in Donaldsonville, Louisiana, and on February 26, 2003, we announced plans to close our No. 2 anhydrous ammonia plant, also located in Donaldsonville, Louisiana (the "No. 2 AA Plant"). Both closures were due to continued negative operating results from unfavorable natural gas prices and market conditions. While we continued to evaluate alternative uses for these assets, we concluded, at that time, that the long-lived assets associated with the prilling section of the urea plant and the assets associated with the No. 2 AA Plant would be idled indefinitely. These assets were determined to be impaired and will not contribute to our ongoing operations. The long-lived assets associated with our total urea operation had a book value of approximately $23.3 million as of December 31, 2002. The carrying value of the impaired prilled urea assets was approximately $12.5 million as of December 31, 2002. This amount has been writt en off and recorded as a component of operating expenses. Urea production ended on January 31, 2003. Approximately 40 employees were impacted by this change in production and are being provided severance benefits based upon their years of service. Total severance cost was approximately $960,000 and has been accrued in accordance with SFAS No. 146. The long-lived assets associated with the No. 2 AA Plant had a book value of approximately $68.0 million as of February 28, 2003. This amount has been written down to estimated salvage value and the impairment has been recorded as a component of operating expenses. Production from the No. 2 AA Plant has been down since early January 2003. Approximately 24 employees were impacted by this change in production and are being provided severance benefits based upon their years of service. Total severance cost was approximately $438,000 and has been accrued in accordance with SFAS No. 146.

At March 31, 2003, we had a stock option plan for certain officers and key employees, as well as a stock option plan for non-employee directors. On May 14, 2003, the Board of Directors voted to terminate the stock option plan for certain officers and key employees. These plans are described more fully in Note 9 - Stock Options in our Notes to Consolidated Financial Statements appearing in Item 8 of our most recent Annual Report on Form 10-K, which is on file with the Securities and Exchange Commission. Prior to July 1, 2002, we had applied the recognition and measurement provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees". Under these provisions, we were not required to record any stock based compensation expense.

Effective July 1, 2002, we adopted the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation," prospectively to all new awards granted on or after July 1, 2002. Awards under the plans vest over periods ranging from six months to six years.

The following table illustrates the effect on net loss and loss per share if the fair value method had been applied to outstanding and unvested awards in each period:

For the nine-month period ended March 31, 2003, our income tax benefit was $28.0 million, as compared to an income tax benefit of $13.0 million for the nine-month period ended March 31, 2002. This income tax benefit is primarily the result of our net losses, partially offset by U.S. tax expense on cumulative foreign earnings triggered by the guarantee of our debt under the Pre-Petition Harris Facility by one of our foreign subsidiaries.

Under the Pre-Petition Harris Facility, our wholly owned subsidiary, MCHI, provided a guarantee of the debt. MCHI indirectly owns our 50% joint venture interest in Farmland MissChem, which operates an anhydrous ammonia facility in Point Lisas, Trinidad. Under U.S. tax laws, this guarantee resulted in a deemed non-cash distribution to us of earnings from MCHI (and effectively our portion of the earnings from Farmland MissChem). As of March 31, 2003, these cumulative earnings approximated $38.7 million. No U.S. taxes are currently payable on these earnings due to significant book and tax accounting differences, primarily with respect to depreciation. We have recorded non-current deferred tax liabilities on these earnings of approximately $14.8 million. While the guarantee remains in place, we expect to record U.S. tax expenses on future earnings from MCHI and Farmland MissChem.

In addition to the U.S. tax expense resulting from the MCHI guarantee, we are providing tax benefits based on an estimated annual effective tax rate of approximately 35%. This rate reflects our anticipation of establishing valuation allowances for all deferred state tax assets generated during the year.

Effective July 1, 2002, we adopted SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses financial accounting and reporting for obligations associated with the retirement of tangible, long-lived assets and the associated asset retirement costs. As of March 31, 2003, estimated closure costs of approximately $11.4 million have been accrued to close our West and East phosphogypsum disposal facilities at our Pascagoula, Mississippi, facility. This amount was reduced by $400,000 during the quarter ended March 31, 2003, as certain costs came in under our initial estimate. Currently, we are in the process of closing our West Facility. We discontinued the use of this storage facility during the second quarter of fiscal 2003. The East Facility that was completed in 1998 is currently in full operation. During the nine-month period ended March 31, 2003, we recorded an asset and a liability in the amount of $3.9 million as the estimated asset retirement obligation for the East Facilit y in accordance with SFAS No. 143. The asset recorded will be depreciated over its estimated useful life. The liability will be accreted based on the effective interest method and the useful life of the facility. As required by SFAS No. 143, we will make periodic assessments as to the reasonableness of our closure cost estimates. Accordingly, adjustments will be made to the estimated costs of closure as needed. The respective asset and liability balance will be adjusted on our consolidated balance sheet, which will correspondingly increase or decrease the amounts expensed in future periods.

As of March 31, 2003, estimated closure costs of approximately $2.4 million have been accrued to close our potash mining facilities. Of this amount, approximately $2.3 million is attributable to our Eddy Potash, Inc. ("Eddy") facility that was idled in 1997. We estimate that we have fully accrued closure costs for Eddy. Our remaining potash facilities have estimated useful lives spanning several decades. Our current estimates of closure costs for these facilities are not material to our operations at this time. We will continue to evaluate our estimates and make adjustments accordingly.

Our 50-50 joint venture, Farmland MissChem, owns and operates a 2,040 short-ton-per-day anhydrous ammonia plant located near Point Lisas, The Republic of Trinidad and Tobago. Farmland MissChem's financial statements are summarized as follows:

Summarized balance sheet information:

Summarized statements of operation information:

On May 15, 2003, the filing of the Case resulted in an event of default under the Ex-Im Bank loan documents and our anhydrous ammonia offtake agreement with Farmland MissChem, which requires us to purchase one-half of the output of Farmland MissChem. As of the date of this filing, Ex-Im Bank has not provided notice to Farmland MissChem that it intends to accelerate the repayment of its loan.

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, 2003 and 2002 is presented below for purposes of complying with the reporting requirements of the Guarantor Subsidiaries.

CONDENSED CONSOLIDATING STATEMENT OF INCOME

CONDENSED CONSOLIDATING STATEMENT OF INCOME

CONDENSED CONSOLIDATING BALANCE SHEET

CONDENSED CONSOLIDATING BALANCE SHEET

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS