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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
IMC Fertilizer Group, Inc.
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Quarterly Report
on Form 10-Q for the quarter ended September 30, 1993, as set forth in
the pages attached hereto:
PART I. FINANCIAL INFORMATION
---------------------
Item Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
IMC Fertilizer Group, Inc.
ROBERT C. BRAUNEKER
------------------------------
Robert C. Brauneker
Executive Vice President
and Chief Financial Officer
April 8, 1994
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The accompanying interim consolidated financial statements of IMC
Fertilizer Group, Inc. (the Company) do not include all disclosures
normally provided in annual financial statements. These financial
statements, which should be read in conjunction with the consolidated
financial statements contained in the Company's 1993 Annual Report to
Shareholders, are unaudited but include all adjustments which the
Company's management considers necessary for a fair presentation.
These adjustments consist of normal recurring accruals except as
discussed in Note 1 of Notes to Consolidated Financial Statements.
Certain 1992 amounts have been reclassified to conform to the 1993
presentation. Interim results are not necessarily indicative of the
results expected for the fiscal year.
CONSOLIDATED STATEMENT OF OPERATIONS
(In millions except per share amounts)
Three months ended
September 30,
1993 1992
------------------------------------------------------------------
Net sales $266.4 $220.9
Cost of goods sold 259.0 170.4
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Gross margins 7.4 50.5
Selling, administrative and general expenses 13.9 16.6
Other operating (income) and expense,
net (Note 1) (6.8) (13.1)
------ ------
Operating earnings .3 47.0
Interest earned and other non-operating
(income) and expense, net 3.3 3.5
Interest charges 22.5 10.7
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Earnings (loss) before minority
interest and items noted below (25.5) 32.8
Minority interest (Note 2) (1.2)
------ ------
Earnings (loss) before items noted below (24.3) 32.8
Provision (credit) for income taxes (Note 3) (1.8) 14.2
------ ------
Earnings (loss) before extraordinary
item and cumulative effect of accounting
change (22.5) 18.6
Extraordinary loss - debt retirement (Note 5) (23.8)
Cumulative effect of accounting change
(Note 6) (47.1)
------ ------
Net loss $ (46.3) $ (28.5)
====== ======
Earnings (loss) per share: (Note 4)
Earnings (loss) before extraordinary
item and cumulative effect of accounting
change $ (1.02) $ .84
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Extraordinary loss - debt retirement (Note 5) (1.08)
Cumulative effect of accounting change
(Note 6) (2.13)
------ ------
Net loss $ (2.10) $ (1.29)
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(See Notes to Consolidated Financial Statements on Page 5)
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CONSOLIDATED BALANCE SHEET
(Dollars in millions except per share amounts)
September 30, June 30,
Assets 1993 1993
----------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 65.8 $ 111.6
Receivables, net (Note 8) 145.9 145.1
Inventories:
Products (principally finished) 240.1 120.1
Operating materials and supplies 67.6 44.2
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307.7 164.3
Prepaid expenses 15.4 12.4
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Total current assets 534.8 433.4
Investment in oil and gas joint venture 49.6 55.0
Property, plant and equipment 3,374.7 2,422.0
Accumulated depreciation and depletion (1,396.4) (1,095.5)
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Net property, plant and equipment 1,978.3 1,326.5
Deferred income taxes 208.7 187.5
Other assets 52.6 53.2
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$2,824.0 $2,055.6
======== ========
Liabilities and Shareholders' Equity
-----------------------------------------------------------------
Current liabilities:
Accounts payable $ 105.9 $ 75.9
Income taxes 3.2 10.0
Dividend payable to IMCERA (Note 7) 51.9
Accrued liabilities 112.5 67.2
Current maturities of long-term debt 40.6 33.3
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Total current liabilities 262.2 238.3
Long-term debt, less current maturities
(Note 5) 908.0 893.4
Deferred income taxes 328.9 317.5
Accrued postretirement employee benefits 87.8 82.8
Accrued reclamation costs 70.4 51.4
Other noncurrent liabilities 57.7 41.8
Deferred gain (Note 2) 65.2
Minority interest (Note 2) 660.0
Shareholders' equity:
Common stock, $1 par value, authorized
50,000,000 shares; issued 32,157,400
shares and 32,156,920 shares at
September 30 and June 30, respectively 32.2 32.2
Capital in excess of par value 768.3 768.4
Retained earnings (deficit) (23.8) 22.5
Treasury stock, at cost, 10,105,008
shares and 10,097,808 shares of
common stock at September 30 and
June 30, respectively (392.9) (392.7)
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Total shareholders' equity 383.8 430.4
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$2,824.0 $2,055.6
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======== ========
(See Notes to Consolidated Financial Statements on Page 5)
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CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
Three months ended
September 30,
1993 1992
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Cash Flows from Operating Activities
------------------------------------
Net loss $ (46.3) $ (28.5)
Adjustments to reconcile net loss to net
cash (used) provided by operating activities:
Depreciation, depletion and amortization 25.4 16.4
Debt retirement (Note 5) 39.0
Deferred income taxes (9.8) (23.9)
Cash distributions in excess of equity in
earnings of oil and gas joint venture 5.3 7.6
Minority interest (1.2)
Postretirement employee benefits 77.6
Other non-cash charges and credits, net (12.1) 5.9
Changes in:
Receivables 44.4 (15.7)
Inventories 1.4 (20.8)
Prepaid expenses (3.0) .7
Accounts payable, accrued liabilities
and income taxes (78.5) 10.1
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Net cash (used) provided by operating
activities (35.4) 29.4
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Cash Flows from Investing Activities
------------------------------------
Capital expenditures (11.8) (35.0)
Other 3.5 (.4)
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Net cash used by investing activities (8.3) (35.4)
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Net cash used before financing activities (43.7) (6.0)
Cash Flows from Financing Activities
------------------------------------
Joint venture cash distribution to FRP (17.2)
Joint venture cash contribution from FRP 9.3
Proceeds from issuance of long-term debt 5.8 23.0
Cash dividends paid (5.9)
------ ------
Net cash (used) provided by financing
activities (2.1) 17.1
------ ------
Net increase (decrease) in cash and
cash equivalents (45.8) 11.1
Cash and cash equivalents-beginning of period 111.6 32.6
------ ------
Cash and cash equivalents-end of period $ 65.8 $ 43.7
====== ======
Supplemental cash flow disclosures:
Interest paid $ 6.5 $ 17.6
Income taxes (refunded) paid $ (7.5) $ 9.0
Supplemental schedule of non-cash investing and financing activities:
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Acquisition of interest in joint venture -
Net assets acquired $730.3
Minority interest 661.2
------
$ 69.1
(See Notes to Consolidated Financial Statements on Page 5)
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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In millions except per share amounts)
Three months ended
September 30,
1993 1992
------------------------------------------------------------------
Common stock:
Balance at June 30 and September 30 $ 32.2 $ 32.1
Capital in excess of par value:
Balance at June 30 768.4 768.0
Restricted stock award (.1)
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Balance at September 30 768.3 768.0
Retained earnings:
Balance at June 30 22.5 207.4
Net loss (46.3) (28.5)
Dividends ($.27 a share in 1992) (5.9)
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Balance at September 30 (23.8) 173.0
Treasury stock:
Balance at June 30 (392.7) (392.1)
Acquisition of shares (.2)
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Balance at September 30 (392.9) (392.1)
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Total shareholders' equity $383.8 $581.0
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(See Notes to Consolidated Financial Statements on Page 5)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Resolution of Contract Dispute
------------------------------
In 1992, other operating (income) and expense, net, included a gain
of $8.1 million from the resolution of a contract dispute with a major
uranium oxide customer.
2. Joint Venture Partnership
-------------------------
On July 1, 1993, the Company and Freeport-McMoRan Resource
Partners, Limited Partnership (FRP) entered into a joint venture
partnership in which both companies contributed their respective
phosphate fertilizer businesses to create IMC-Agrico Company
(IMC-Agrico) in return for a 56.5 percent and 43.5 percent economic
interest, respectively, in the partnership. The activities of IMC-
Agrico, which is operated by the Company, include the mining and sale
of phosphate rock, and the production, distribution and sale of
phosphate chemicals, uranium oxide and related products.
For financial reporting purposes, the acquisition of 56.5 percent
of FRP's phosphate fertilizer business net assets is being accounted
for using the purchase method. This transaction resulted in a deferred
gain of $69.1 million which is recognized in the consolidated statement
of operations as the related FRP assets are being used in operations,
generally over 20 years. Other operating (income) and expense, net for
the three months ended September 30, 1993 included $3.9 million of such
gain. IMC-Agrico's results of operations for the three months ended
September 30, 1993 were consolidated with those of the Company, and
FRP's 43.5 percent interest in the joint venture partnership was
included in the Company's statement of operations as minority interest.
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The following summary of the Company's Consolidated Statement of
Operations for the quarter ended September 30, 1993 and 1992 is
presented for comparative purposes. For the quarter ended September
30, 1992, unaudited pro forma Statement of Operations data give effect
to formation of the joint venture partnership as if the formation
occurred on July 1, 1992.
Quarter Ended
September 30,
(Pro forma)
(In millions except per share amounts) 1993 1992
-------------------------------------------------------------
Net sales $266.4 $360.6
Operating earnings .1 41.5
Earnings (loss) before minority interest,
incometaxes, extraordinary item and
cumulative effect of accounting change (25.5) 27.5
Minority interest (1.2) (8.1)
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Earnings (loss) before income taxes,
extraordinary item and cumulative
effect of accounting change (24.3) 19.4
Earnings (loss) before extraordinary
item and cumulative effect of
accounting change (22.5) 10.4
Extraordinary loss - debt retirement
(See note 5) (23.8)
Cumulative effect of accounting change (47.1)
------ ------
Net loss $(46.3) $(36.7)
====== ======
Net loss per share:
Earnings (loss) before extraordinary
item and cumulative effect of
accounting change $(1.02) $ .47
Extraordinary loss - debt retirement (1.08)
Cumulative effect of accounting change (2.13)
------ ------
Net loss $(2.10) $(1.66)
====== ======
3. Income Taxes
------------
Provisions (credits) for income taxes were based on the estimated
annual effective tax rate for each fiscal year. Deferred income taxes
reflect the net tax effects of temporary differences between the
amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. In 1993, the provision
(credit) for income taxes included a charge of $4.1 million for an
adjustment to the Company's net deferred tax liability for the effect
of changes in U.S. corporate tax rates.
4. Earnings (Loss) Per Share
-------------------------
Earnings (loss) per share were based on the weighted average number
of shares and equivalent shares outstanding. Shares used in the
calculations totaled 22,050,147 shares and 22,094,617 shares for the
quarters ended September 30, 1993 and 1992, respectively.
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5. Extraordinary Loss - Debt Retirement
------------------------------------
On October 13, 1993, the Company completed its purchase of $220
million principal amount of its 11.25 percent notes from The Prudential
Insurance Company of America for $248.1 million pursuant to an
agreement dated September 3, 1993. The notes originally were scheduled
to be due in annual installments from 1995 to 2004. The notes were
redeemed with the proceeds from the sale, on the same date, of $160
million of 9.25 percent senior notes due 2000 and 3,450,000 shares of
common stock. In connection with this purchase, the Company recorded
an extraordinary loss on September 30, 1993 for the redemption premium
incurred on the Company's 11.25 percent notes and the write-off of
previously deferred finance charges associated with such notes, net of
taxes.
6. Accounting for Postretirement Benefits
--------------------------------------
In fiscal 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." As a result, results for
the quarter ended September 30, 1992 reflected a charge, net of taxes,
for the cumulative effect of the adoption of SFAS No. 106 as of July 1,
1992.
7. Dividend Payable to IMCERA
--------------------------
In May 1993, the Company reached a settlement with its insurance
carriers in connection with a claim filed resulting from an inflow of
water into one of the Company's two inter-connected potash mines in
Saskatchewan, Canada. From the settlement proceeds, all of which were
received by July 29, 1993, the Company reimbursed Potash Corporation of
Saskatchewan Inc. (PCS) $23 million (Canadian) for amounts that PCS had
previously contributed under an agreement with the Company. Also, the
Company paid a previously declared dividend to IMCERA Group Inc.
(IMCERA) of $51.9 million relating to amounts IMCERA paid for water
inflow control prior to its disposition of the Company.
Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
---------------------
The Company incurred a net loss of $46.3 million, or $2.10 per
share, for the quarter, compared to a net loss of $28.5 million, or
$1.29 per share, a year ago. In 1993, the loss included an
extraordinary charge of $23.8 million, or $1.08 per share, related to
the early extinguishment of $220 million of debt held by The Prudential
Insurance Company of America. In 1992, the loss included a one-time
charge of $47.1 million, or $2.13 per share, related to the Company's
adoption of Statement of Financial Accounting Standards No. 106 as of
July 1, 1992, to reflect a change in accounting for postretirement
benefits. See Notes 5 and 6 of Notes to Consolidated Financial
Statements for more information regarding these non-recurring items.
IMC-Agrico, a joint venture partnership between the Company and
Freeport-McMoRan Resource Partners, Limited Partnership, began
operations July 1, 1993 and is consolidated for financial reporting
<PAGE>
purposes. Comparisons between the quarters ended September 30, 1993
and September 30, 1992 have been made, where applicable, on a pro forma
basis assuming the acquisition of a 56.5 percent interest in IMC-Agrico
was effective July 1, 1992.
Sales for the quarter were $266.4 million, compared with $220.9
million for the same period a year ago. On a pro forma basis, sales
for the period a year ago would have been $360.6 million.
Gross margins decreased $43.1 million from the same period a year
ago. On a pro forma basis, gross margins would have decreased $47.2
million, primarily due to lower margins for phosphate fertilizers, a
$32 million decrease on a pro forma basis, potash, a $10 million
decrease, and sulphur, a $4 million decrease.
Market conditions for the first quarter, primarily for phosphate
chemicals, reflected continued weakness in price and volume, both of
which remained below year-earlier levels throughout the period. Prices
for DAP, the major product in the Company's phosphate chemical
business, decreased 14 percent when compared to the same period a year
ago. However, prices are showing signs of improving after falling to
20 year lows during fiscal 1993. China, the Company's largest
customer, has recently increased its imported fertilizer purchases to
more traditional levels; and it is anticipated that domestic demand for
the Company's products will improve, at least in the near term. In
July 1993, phosphate chemical production was cut back when the Company
temporarily shut down its Taft diammonium phosphate plant. This plant
joined the already idled Nichols plant which temporarily closed in May
1993, due to depressed market conditions. Potash margins decreased due
to depressed demand in both the domestic and export market ($6
million), a three percent decrease in prices ($3 million) and increased
production costs ($1 million). Production continued to increase at the
Main Pass sulphur mine, with full production anticipated to be reached
in the second half of calendar 1994. As a result of such production
increases, on July 1, 1993, these activities became operational for
accounting purposes and costs, which were previously capitalized, began
to be charged to operations.
The following table summarizes the Company's sales of fertilizer
products and average selling prices for the three months ended
September 30, 1993 and 1992. Where applicable, sales tons and prices
for 1992 have been reported on a pro forma basis assuming the joint
venture partnership began operations on July 1, 1992.
(Tons in millions of short tons)
1993 1992
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Phosphate fertilizers
Diammonium phosphate
--------------------
Sales tons:
Florida .475
Louisiana .382
Warehouse .075
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Total sales tons .932 1.217
Average price per ton:
Florida $100.94
Louisiana $112.03
Warehouse $109.43
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Average price per ton $106.17 $122.93
Monoammonium phosphate
----------------------
Sales tons:
Granular .126 .111
Powdered .048 .045
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Total sales tons .174 .156
Average price per ton:
Granular $115.33 $131.06
Powdered $ 93.94 $107.30
Granular triple superphosphate
------------------------------
Sales tons .196 .289
Average price per ton $ 86.68 $ 98.12
Phosphate rock
Sales tons 2.209 2.133
Average price per ton $ 20.01 $ 23.67
Potash
Sales tons .590 .802
Average price per ton $ 67.82 $ 69.60
Mixed goods
Sales tons .054 .053
Average price per ton $130.32 $137.46
Selling, administrative and general expenses decreased $2.7 million
due primarily to lower product marketing and employee overhead costs.
Other operating income and expense decreased $6.3 million primarily
due to the resolution of a contract dispute for $8.1 million (in 1992),
discussed in Note 1 of Notes to Consolidated Financial Statements, $3
million of lower earnings from the Company's equity interest in an oil
and gas venture, partially offset by a gain in 1993 of $3.9 million
from the amortization of a deferred gain resulting from the exchange of
the Company's phosphate business for a 56.5 percent interest in
IMC-Agrico.
Interest costs were $11.8 million higher than last year primarily
as a result of costs incurred on increased debt levels.
Financial Condition
-------------------
The Company's primary sources of liquidity are from cash generated
by operating activities and external debt. Since June 30, 1993, cash
and cash equivalents have decreased $45.8 million. Primary uses of
cash included $24.9 million for reimbursements to Potash Corporation of
Saskatchewan Inc. and IMCERA Group Inc. from water claim proceeds
received in June 1993 from the Company's insurance carriers, capital
expenditures of $11.8 million and $10.5 million used by operating
activities. Partially offsetting this cash outflow was $5.8 million of
proceeds from the issuance of long-term debt.
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Working capital at September 30, 1993 was $272.6 million compared
with $195.1 million at June 30, 1993. The increase was due primarily
to working capital contributions by FRP to the joint venture
partnership offset by reimbursements of insurance proceeds related to
the May, 1993 settlement of an insurance claim receivable discussed
above. The working capital ratio at September 30, 1993 was 2.0 to 1
compared to 1.8 to 1 at June 30, 1993.
The Company is still highly leveraged. Consolidated indebtedness
increased to $948.6 million at September 30, 1993 from $926.7 million
at June 30, 1993, due to additional indebtedness contributed by FRP to
the joint venture partnership. The ratio of indebtedness to total
capitalization correspondingly increased to 71.2 percent at September
30, 1993 from 68.3 percent at June 30, 1993.
In October 1993, the Company completed its purchase of $220 million
principal amount of its 11.25 percent notes from The Prudential
Insurance Company of America for $248.1 million. The notes originally
were scheduled to be due in annual installments from 1995 to 2004.
However, the notes were redeemed with the proceeds from the sale, on
the same date, of $160 million of 9.25 percent senior notes due 2000
and 3,450,000 shares of common stock.
In June 1993, the Company entered into an agreement with a group of
banks to provide the Company with an unsecured revolving credit
facility under which the company can borrow up to $100 million for
general corporate purposes until June 30, 1996. At September 30, 1993,
$32 million was drawn down in the form of standby letters of credit
principally to support the Company's industrial revenue bonds.
Borrowings under the revolving credit facility are limited to $25
million during a specified period in any year. There were no other
borrowings outstanding under the revolving credit facility at September
30, 1993.
Certain debt agreements contain provisions which restrict the
Company's ability to make capital expenditures and dispose of assets,
limit the payment of dividends or other distributions to shareholders,
and prohibit the incurrence of additional indebtedness except under
certain conditions. The Company's revolving credit facility also
contains financial ratios and tests which must be met in accordance
with the agreement. At September 30, 1993, the Company was in
compliance with its debt instrument covenants.
The estimate of capital expenditures for the fiscal year ending
June 30, 1994 is $66 million (including $54 million by the joint
venture partnership). The Company expects to finance these
expenditures (including its portion of the partnership's capital
expenditures) from operations.
There were no other material changes in the Company's financial
condition, capital resources, or liquidity from that described in the
Company's Annual Report on Form 10-K for the year ended June 30, 1993.
