IMC FERTILIZER GROUP INC, 424B4, 1994-04-29

IMC FERTILIZER GROUP INC
424B4, 1994-04-29
AGRICULTURAL CHEMICALS

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<PAGE>

FILED PURSUANT TO RULE 424(b)4
REGISTRATION NO. 33-52377

PROSPECTUS
4,000,000 SHARES LOGO

IMC FERTILIZER GROUP, INC.

COMMON STOCK

------------------

Of the 4,000,000 shares (the "Shares") of common stock, $1.00 par value per
share (the "Common Stock"), of IMC Fertilizer Group, Inc. ("IFL"), offered
hereby, 3,200,000 shares are being offered in the United States (the "U.S.
Offering") by the U.S. Underwriters, and 800,000 shares are being offered
outside the United States (the "International Offering," and, together with
the U.S. Offering, the "Offering") by the International Managers. The price to
public and underwriting discount per share for the U.S. Offering and
International Offering are identical, and the closings of the U.S. Offering
and the International Offering are conditioned upon each other. See
"Underwriting."

The Common Stock is listed on the New York Stock Exchange ("NYSE") under the
symbol "IFL." On April 28, 1994, the closing price for the Common Stock as
reported on the NYSE was $39 1/4. See "Price Range of Common Stock and
Dividends."

------------------

SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK.

------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Price Discounts Proceeds to
to Public and Commissions (1) Company (2)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share............ $37.00 $1.35 $35.65
- ------------------------------------------------------------------------------
Total (3)............ $148,000,000 $5,400,000 $142,600,000
- ------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) IFL has agreed to indemnify the U.S. Underwriters and the International
Managers (collectively, the "Underwriters") against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting expenses payable by IFL estimated at $700,000.
(3) IFL has granted to the U.S. Underwriters and the International Managers
30-day options to purchase up to an aggregate additional 600,000 shares of
Common Stock on the same terms and conditions set forth above, solely to
cover over-allotments, if any. If such options are exercised in full, the
total Price to Public, Underwriting Discounts and Commissions and Proceeds
to Company, before deducting expenses, will be $170,200,000, $6,210,000
and $163,900,000, respectively. See "Underwriting."

------------------

The shares of Common Stock offered by this Prospectus are offered by the
U.S. Underwriters subject to prior sale, to withdrawal, cancellation or
modification of this offer without notice, to delivery to and acceptance by
the U.S. Underwriters and to certain further conditions. It is expected that
delivery of the Common Stock will be made at the offices of Lehman Brothers
Inc., New York, New York on or about May 5, 1994.

------------------

LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
LAZARD FRERES & CO.
J.P. MORGAN SECURITIES INC.

April 29, 1994
<PAGE>

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE CHICAGO STOCK
EXCHANGE, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.

AVAILABLE INFORMATION

IFL has filed with the Securities and Exchange Commission (the "Commission")
a Registration Statement on Form S-3 (including all amendments thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete. With
respect to each such contract, agreement or other document filed or
incorporated by reference as an exhibit to the Registration Statement,
reference is made to such exhibit for a more complete description of the matter
involved, and each such statement is qualified in its entirety by such
reference.

IFL is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy materials and other information with the Commission. Reports,
proxy material and other information concerning IFL can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 or at its regional offices at 500 West
Madison Street, Chicago, Illinois 60661 and 13th Floor, Seven World Trade
Center, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such reports, proxy material and
other information concerning IFL also may be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed by IFL under the Exchange Act with
the Commission are incorporated herein by reference:

(1) IFL's Annual Report on Form 10-K for the year ended June 30, 1993, as
amended on Forms 10-K/A dated September 30, 1993 and April 8, 1994.

(2) IFL's Current Reports on Form 8-K dated July 1, 1993, July 7, 1993,
July 16, 1993, as amended on Form 8-K/A filed July 20, 1993, July 29,
1993, August 27, 1993, September 3, 1993, October 12, 1993, November
30, 1993, January 7, 1994 and March 29, 1994.

(3) IFL's Quarterly Reports on Form 10-Q for the quarters ended (i)
September 30, 1993, as amended on Form 10-Q/A dated April 8, 1994 and
(ii) December 31, 1993, as amended on Form 10-Q/A dated April 8, 1994.

(4) The description of IFL's Common Stock and Preferred Share Purchase
Rights associated therewith contained in the Company's Registration
Statement on Form 8-A filed under Section 12 of the Exchange Act, dated
June 23, 1989.

All documents filed by IFL pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the termination
of the offering made hereby shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or superseded such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

IFL will provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the written or oral request of such person, a
copy of any and all of the documents referred to above which have been or may
be incorporated in this Prospectus by reference, other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference
therein. Requests for such copies should be directed to the Corporate
Secretary, IMC Fertilizer Group, Inc., 2100 Sanders Road, Northbrook, Illinois
60062, telephone number (708) 272-9200.

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in, or incorporated by reference into, this
Prospectus. Unless the context otherwise indicates, the term "IFL" refers to
IMC Fertilizer Group, Inc. and the term the "Company" includes IMC Fertilizer
Group, Inc. and its consolidated subsidiaries, including, subsequent to June
30, 1993, IMC-Agrico Company, the phosphate fertilizer joint venture
partnership ("IMC-Agrico" or the "Partnership") with Freeport-McMoRan Resource
Partners, Limited Partnership ("FRP") described herein. Unless otherwise
specified, references herein to years are to fiscal years ended June 30. All
financial and other information contained in, or incorporated by reference
into, this Prospectus relating to FRP and its phosphate fertilizer business
contributed to the Partnership has been supplied to IFL by FRP or obtained from
FRP's reports and other documents filed with the Commission, and neither IFL
nor the Underwriters has any independent knowledge of, nor takes any
responsibility for, any information regarding FRP or its phosphate fertilizer
business contributed to the Partnership contained, or incorporated by
reference, herein or therein.

THE COMPANY

GENERAL. The Company is one of the world's leading suppliers of food-
producing crop nutrients to agriculture. The Company is the United States'
largest miner of phosphate rock and potash, two basic fertilizer materials, and
the largest producer of phosphate chemicals. The Company also produces mixed
fertilizer products for retail distribution and, through interests in two joint
ventures, produces sulphur and oil & natural gas. The Company believes that it
is one of the lower cost North American producers of phosphate rock, phosphate
chemicals and potash.

Phosphorus, contained in phosphate chemicals, potassium, contained in potash,
and nitrogen constitute the three major nutrients required for plant growth.
Phosphorus plays a key role in the photosynthesis process. Potassium is an
important regulator of plants' physiological functions. Nitrogen is an
essential element for most organic compounds and plants. These elements are
naturally present in soil but need to be replaced through the use of
fertilizers as crops exhaust them. There are currently no viable substitutes in
the quantities required for phosphate chemicals, potash and nitrogen
fertilizers in the development and maintenance of high-yield crops.

On July 1, 1993, IMC Fertilizer, Inc. ("IMC"), a wholly owned subsidiary of
IFL, and FRP entered into a joint venture partnership pursuant to which IMC and
FRP contributed their respective phosphate fertilizer businesses to create IMC-
Agrico. The activities of IMC-Agrico, which is operated by IMC, include the
mining and sale of phosphate rock and the production, distribution and sale of
phosphate chemicals, uranium oxide and related products. IMC has a 56.5%
interest in the Partnership over the term of the Partnership. For the fiscal
year ended June 30, 1993, the assets contributed to the Partnership by IMC and
FRP accounted for sales of approximately $1.2 billion and at June 30, 1993,
such assets had an aggregate net book value of approximately $1.6 billion. The
Partnership is expected to take advantage of economies of scale to reduce
transportation and distribution costs (approximately $17 million), reduce
production costs through the sharing of operational technologies (approximately
$40 million) and reduce selling, general and administrative expenses through
reduced headcount (approximately $38 million). These savings are expected to
reach approximately $95 million per year and were intended to be shared equally
by IMC and FRP. The full effect of these anticipated savings is expected to be
realized in the second year of operations of IMC-Agrico. See "Business--IMC-
Agrico Company."

In the early fall of 1993, in response to reduced worldwide demand for, and
abundant inventories of, phosphate fertilizer products, U.S. phosphate
fertilizer producers reduced production levels by approximately 14% from year
earlier levels. By the end of March 1994, spot prices for diammonium phosphate
("DAP"), a major phosphate fertilizer product, had increased approximately 45%
from a low of approximately $100 per short ton (f.o.b. central Florida) during
the spring of 1993. However, there can be no assurance that prices will remain
at or increase from current levels. A significant decline in the market price
of phosphate fertilizer products could have a material adverse effect on the
Company.

3
<PAGE>

Summarized below is a description of the Company's principal products and
current operating information.

PHOSPHATE ROCK. IMC-Agrico is the leading U.S. phosphate rock miner in terms
of capacity and output. IMC-Agrico's central Florida phosphate mining
operations and production plants produce phosphate rock, which is the primary
raw material used in the manufacture of phosphate chemicals. IMC-Agrico sells
phosphate rock principally to other fertilizer manufacturers and distributors
throughout the world and uses it internally in the production of phosphate
chemicals. IMC-Agrico has 31.5 million tons of annual phosphate rock capacity.
Product shipments in 1993 by IMC's phosphate rock operations totalled 13.6
million tons. Product shipments in 1993 by FRP's phosphate rock operations
totalled 7.9 million tons. For the six months ended December 31, 1993 IMC-
Agrico shipped 10.0 million tons of phosphate rock. With permitted reserves of
nearly 361 million tons and highly efficient plants, the Company believes that
IMC-Agrico is well positioned to remain a leading, long-term world supplier of
phosphate rock.

PHOSPHATE CHEMICALS. IMC-Agrico is the largest U.S. producer of phosphate
chemicals. IMC-Agrico's New Wales phosphate chemicals complex in central
Florida is the largest phosphate chemicals plant in the world with an estimated
annual capacity of 1.76 million P/2/O/5/ tons. Phosphate chemicals are produced
by reacting phosphate rock with sulfuric acid and other materials. IMC-Agrico's
phosphate chemicals products are marketed worldwide to fertilizer
manufacturers, distributors and retailers. In 1993, IMC's phosphate chemicals
operations shipped approximately 1.9 million P/2/O/5/ tons of phosphate
chemicals. In 1993, FRP's phosphate chemicals operations shipped approximately
2.2 million P/2/O/5/ tons of phosphate chemicals. For the six months ended
December 31, 1993 IMC-Agrico shipped approximately 1.7 million P/2/O/5/ tons of
phosphate chemicals.

POTASH. The Company has three mines and refineries in Saskatchewan and New
Mexico and is one of the world's largest miners of potash, with a combined
capacity of over 5 million tons per year and 1993 shipments of 3.5 million
tons. For the six months ended December 31, 1993, the Company shipped
approximately 1.3 million tons of potash. The Company's potash products are
marketed worldwide to fertilizer manufacturers, distributors and retailers.
With reserves of 172 million tons of recoverable ore in New Mexico and 1.5
billion tons of recoverable ore in Saskatchewan, the Company believes that it
is well positioned to remain a strong, long-term supplier of potash to world
markets.

OTHER PRODUCTS. The Company manufactures retail fertilizer products which are
marketed under the Rainbow(R) brand name primarily in the southeastern United
States. The Company has a 25% participation interest in a joint venture which
in 1989 discovered proved and probable sulphur reserves totalling 67 million
long tons at Main Pass Block 299 ("Main Pass") in the Gulf of Mexico. By the
end of calendar 1993, Main Pass achieved full design operating rates of 5,500
long tons per day (approximately 2.0 million long tons per year, or
approximately 500,000 long tons net to IMC) and has since sustained production
at or above that level. The Company will use its share of the sulphur to
satisfy a portion of its obligations under the sulphur agreements relating to
the Partnership.

During the exploration for sulphur at Main Pass, the joint venture also
discovered oil & natural gas reserves, and in June 1990 the joint venture
partners acquired the rights to such reserves. A related joint venture began
producing natural gas in October 1991 and oil in November 1991. It is currently
estimated that the field contains proved and probable reserves of 20.8 million
barrels of oil and 2.5 billion cubic feet of natural gas. Through December 31,
1993, 17.9 million barrels of oil and 2.5 billion cubic feet of natural gas
have been produced by the related joint venture.

4
<PAGE>

costs, extensive customer service and efficient distribution and
transportation. The Partnership is expected to take advantage of economies of
scale, reducing aggregate transportation and distribution costs, production
costs and selling, general and administrative expenses by approximately $95
million per year. The full effect of these anticipated savings is expected to
be realized in the second year of operations of IMC-Agrico.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered in the U.S. Of-
fering............................. 3,200,000 shares(1)
Common Stock offered in the Interna- 800,000 shares(1)
tional Offering.................... -----------------
Total........................... 4,000,000 shares
Common Stock to be outstanding after
the Offering....................... 29,575,472 shares(1)
Use of Proceeds..................... Substantially all of the net proceeds from
the Offering will be used to reduce long-
term indebtedness of the Company. See "Use
of Proceeds."
NYSE symbol......................... IFL
</TABLE>
- --------
(1) Excludes 480,000 and 120,000 shares of Common Stock, respectively, subject
to the Underwriters' over-allotment options.

5
<PAGE>

RECENT DEVELOPMENTS

RECENT FINANCIAL RESULTS. On April 11, 1994 the Company released its
financial results for the three months and nine months ended March 31, 1994 as
follows:

<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
MARCH 31, MARCH 31,
-------------- -----------------
1994 1993 1994 1993
------ ------- -------- -------
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................... $410.5 $ 222.8 $1,005.9 $ 641.2
Gross margins............................... 77.7 19.7 118.9 101.3
Sterlington litigation settlement(a)........ 169.1 169.1
Operating earnings (loss)(b)................ 65.7 (163.7) 87.0 (102.1)
Interest earned and other non-operating (in-
come) and expense, net(c).................. 1.1 1.5 24.9 4.4
Interest charges............................ 19.9 10.3 62.7 31.0
------ ------- -------- -------
Earnings (loss) before minority interest and
items noted below.......................... 44.7 (175.5) (.6) (137.5)
Minority interest(d)........................ 23.0 28.3
------ ------- -------- -------
Earnings (loss) before items noted below.... 21.7 (175.5) (28.9) (137.5)
Provision (credit) for income taxes(e)...... 16.3 (60.7) (8.2) (44.2)
------ ------- -------- -------
Earnings (loss) before extraordinary item
and cumulative effect of accounting change. 5.4 (114.8) (20.7) (93.3)
Extraordinary loss-debt retirement(f)....... (23.8)
Cumulative effect on prior years of change
in accounting for postretirement benefits
other than pensions (net of income
taxes)(g).................................. (47.1)
------ ------- -------- -------
Net earnings (loss)......................... $ 5.4 $(114.8) $ (44.5) $(140.4)
====== ======= ======== =======
Earnings (loss) per share:
Earnings (loss) before extraordinary item
and cumulative effect of accounting change. $ .21 $ (5.20) $ (.85) $ (4.23)
Extraordinary loss-debt retirement.......... (.98)
Cumulative effect on prior years of change
in accounting.............................. (2.13)
------ ------- -------- -------
Net earnings (loss)......................... $ .21 $ (5.20) $ (1.83) $ (6.36)
====== ======= ======== =======
Weighted average number of shares and equiv-
alent shares outstanding................... 25.7 22.1 24.3 22.1
====== ======= ======== =======
</TABLE>
- --------
(a) Reflects the settlement of litigation resulting from the May 1991 explosion
at a facility managed by IMC in Sterlington, Louisiana.
(b) 1993 nine months included a gain of $8.1 million from the resolution of a
contract dispute with a major uranium oxide customer.
(c) 1994 nine months included a charge of $20.3 million resulting from the
write-down of the Company's investment in its oil and gas partnership.
(d) On July 1, 1993, IMC and FRP entered into the Partnership to which both
companies contributed their respective phosphate fertilizer businesses to
create IMC-Agrico. For financial reporting purposes, IMC-Agrico's results
of operations are consolidated with those of the Company, and FRP's 43.5
percent interest in the Partnership is included in the Company's statement
of operations as minority interest.
(e) 1994 nine months included a charge of $4.1 million for an adjustment to the
Company's net deferred tax liability resulting from changes in U.S.
corporate tax rates and 1994 three months included a charge of $5.0 million
which reflected a change in the annual effective tax rate due to an
improved earnings outlook.
(f) Consists of redemption premium incurred by the Company in connection with
the purchase of $220 million principal amount of IMC's 11.25% Notes and the
write-off of deferred finance costs associated with such 11.25% Notes, net
of income taxes.
(g) Reflects the cumulative effect of an accounting change for periods prior to
July 1, 1992, resulting from the adoption of Statement of Financial
Accounting Standards No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions."

The Company's improved third-quarter financial performance reflects increased
demand for its crop nutrient products and a corresponding improvement in prices
which, during the spring of 1993, had fallen to their lowest level in two
decades.

RECENT DEBT REDEMPTION. On March 31, 1994, the Company redeemed three
promissory notes held by Brewster Phosphates (the "Brewster Notes") with
outstanding principal balances totalling $22.8 million. The Brewster Notes
resulted from the financing of capitalized lease payments related to an
agreement with Brewster Phosphates, carried an average interest rate of 9.65
percent, and were due in equal installments through year 2002.

6
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following summary consolidated financial information (excluding Operating
Data) of the Company with respect to each of the years in the five-year period
ended June 30, 1993, is derived from the consolidated financial statements of
the Company. The consolidated financial statements of the Company for each of
the years in the three-year period ended June 30, 1993 (the "Consolidated
Financial Statements") appear elsewhere in this Prospectus. Such consolidated
financial statements have been audited by Ernst & Young, independent auditors.
The following summary consolidated financial information (excluding Operating
Data) as of and for each of the six-month periods ended December 31, 1993 and
1992 has been derived from the unaudited interim consolidated financial
statements of the Company which appear elsewhere in this Prospectus and, in the
opinion of management, reflect all adjustments (consisting only of normally
recurring accruals) necessary for a fair presentation of the results of such
periods. The results of operations for any interim period are not necessarily
indicative of results for a full year.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, FOR THE YEARS ENDED JUNE 30,
------------------ -----------------------------------------------
1993(8) 1992 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $ 595.4 $ 418.4 $ 897.1 $1,058.5 $1,131.2 $1,105.7 $1,221.7
Gross margins........... 41.2 81.6 124.9 229.5 240.9 230.0 335.7
Sterlington litigation
settlement(1).......... -- -- (169.1) -- -- -- --
Operating earnings
(loss)(2).............. 21.3 61.6 (129.7) 191.4 196.0 171.0 257.2
Interest earned and
other non-operating
(income) and expense,
net(3)................. 23.8 2.9 2.8 5.5 2.1 (3.9) (11.0)
Interest charges........ 42.8 20.7 44.8 44.5 41.1 47.3 53.3
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
minority interest and
items noted below...... (45.3) 38.0 (177.3) 141.4 152.8 127.6 214.9
Minority interest....... 5.3 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
items noted below...... (50.6) 38.0 (177.3) 141.4 152.8 127.6 214.9
Provision (credit) for
income taxes(4)........ (24.5) 16.5 (57.3) 50.5 57.0 45.0 77.6
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting changes..... (26.1) 21.5 (120.0) 90.9 95.8 82.6 137.3
Extraordinary loss-debt
retirement(5).......... (23.8) -- -- -- -- -- --
Cumulative effect on
prior years of changes
in accounting for
postretirement benefits
other than pensions
(net of income taxes)
in 1993 and income
taxes in 1992.......... -- (47.1) (47.1) (165.5) -- -- --
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss)..... $ (49.9) $ (25.6) $ (167.1) $ (74.6) $ 95.8 $ 82.6 $ 137.3
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per
share:
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting changes..... $ (1.11) $ .97 $ (5.44) $ 4.12 $ 3.85 $ 3.13 $ 5.27
Extraordinary loss-debt
retirement............. (1.01) -- -- -- -- -- --
Cumulative effect on
prior years of changes
in
accounting............. -- (2.13) (2.13) (7.50)
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss)..... $ (2.12) $ (1.16) $ (7.57) $ (3.38) $ 3.85 $ 3.13 $ 5.27
======== ======== ======== ======== ======== ======== ========
Weighted average number
of shares and equiva-
lent
shares outstanding..... 23.5 22.1 22.1 22.1 24.9 26.4 26.0
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital(6)...... $ 350.1 $ (191.2) $ 195.1 $ 80.2 $ 48.1 $ 33.9 $ 124.2
Total assets............ 2,826.3 1,904.4 2,055.6 1,838.4 1,739.3 1,584.7 1,677.9
Total debt.............. 894.0 703.9 926.7 642.8 630.6 406.5 561.8
Total shareholders' eq-
uity................... 493.7 577.9 430.4 615.4 698.6 819.7 765.3
OTHER FINANCIAL DATA:
Capital expenditures(7). $ 12.5 $ 75.3 $ 106.1 $ 177.7 $ 168.5 $ 94.3 $ 160.5
Capitalized interest.... .4 9.4 19.4 19.2 10.4 2.2 .5
Depreciation, depletion
and amortization....... 54.0 31.9 61.5 83.3 90.2 92.5 99.7
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, FOR THE YEARS ENDED JUNE 30,
------------- ----------------------------------
1993 1992 1993 1992 1991 1990 1989
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PRICES)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Phosphate rock:
External sales (tons)...... 4.6 3.9 7.3 8.7 9.9 11.4 11.1
Internal consumption
(tons).................... 5.4 3.1 6.3 6.2 6.3 6.0 5.4
Average price per ton...... $20 $23 $23 $23 $23 $22 $21
Phosphate chemicals:
Sales (P/2/O/5/ tons)...... 1.6 .8 1.9 1.7 1.7 1.6 1.6
Average price per product
ton....................... $110 $109 $102 $122 $133 $121 $144
Potash:
Sales (tons)............... 1.2 1.5 3.2 3.2 3.3 3.1 3.4
Average price per ton...... $68 $72 $68 $69 $70 $68 $74
Reserves (tons at end of pe-
riod):
Phosphate rock............. 361 292 283 299 295 304 320
Potash:
Saskatchewan............. 1,514 1,642 1,517 1,646 1,327 1,317 1,279
New Mexico............... 172 179 176 183 180 186 191
------ ------ ------ ------ ------ ------ ------
Total potash reserves.. 1,686 1,821 1,693 1,829 1,507 1,503 1,470
</TABLE>
- --------
(1) Represents a charge related to the settlement of litigation resulting from
the May 1991 explosion at a facility managed by IMC in Sterlington,
Louisiana.
(2) In 1993, nonrecurring items included charges of $32.4 million from the
settlement of a claim relating to losses arising out of a water inflow at
one of the Company's potash mines in Canada, and $3.0 million from the
settlement of an environmental issue. The six months ended December 31,
1992 and year ended June 30, 1993 also included a gain of $8.1 million from
the resolution of a contract dispute with a major uranium oxide customer.
In 1992, nonrecurring items included a gain of $34.2 million from the sale
of the Company's Sterlington, Louisiana ammonia production facility and a
charge of $5.3 million resulting from the temporary shutdown and
mothballing of the Company's uranium production facilities. Included in
1991 was a nonrecurring gain of $17.9 million from the sale of certain
potash reserve interests to the U.S. government. In 1990, nonrecurring
items included a gain of $6.1 million from the sale of such reserve
interests and a charge of $4.6 million for an increase in a plant
decommissioning reserve. Included in 1989 was a nonrecurring charge of $7.1
million from the announced shut-down of a production facility.
(3) The six months ended December 31, 1993 included a charge of $20.3 million
for the writedown of the Company's investment in an oil and gas joint
venture due to the current low price of crude oil.
(4) For the six months ended December 31, 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.
(5) In October 1993, the Company completed its purchase of $220 million
principal amount of IMC's 11.25% notes (the "Installment Notes") from The
Prudential Insurance Company of America ("Prudential") for $248.1 million.
The Installment Notes originally were scheduled to be due in annual
installments from 1995 to 2004. In connection with this purchase, the
Company recorded an extraordinary loss of $23.8 million for the redemption
premium incurred on the Installment Notes and the write-off of previously
deferred finance charges associated with the Installment Notes, net of
income taxes.
(6) In January 1990, the Company sold a $50 million undivided interest in
designated receivables, subject to limited recourse provisions, under an
agreement originally extending to 1995. On June 30, 1993, the Company
repurchased its receivable interests previously sold and cancelled the
agreement.

8
<PAGE>

(7) Capital expenditures includes capitalized interest.
(8) On July 1, 1993, IMC and FRP entered into the joint venture Partnership to
which both companies contributed their respective phosphate fertilizer
businesses to create IMC-Agrico Company, a Delaware general partnership.
The Partnership's results of operations for the six months ended December
31, 1993 were consolidated with those of the Company, and FRP's 43.5
percent interest in the Partnership was included in the Company's statement
of operations as minority interest. The following summary of the Company's
consolidated financial information for each of the six-month periods ended
December 31, 1993 and 1992 and at December 31, 1993 and June 30, 1993 is
presented for comparative purposes. For the six months ended December 31,
1992, unaudited pro forma statement of operations data give effect to the
formation of the Partnership as if the formation occurred on July 1, 1992.
June 30, 1993 unaudited pro forma balance sheet data give effect to the
formation of the Partnership as if the formation occurred on June 30, 1993.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED DECEMBER 31,
-------------------
(PRO FORMA)
1993 1992
------ -----------
(IN MILLIONS,
EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................................... $595.4 $710.5
Operating earnings................................. 21.3 41.6
Earnings (loss) before minority interest, income
taxes,
extraordinary item and accounting change.......... (45.3) 17.8
Minority interest.................................. 5.3 (4.4)
------ ------
Earnings (loss) before income taxes, extraordinary
item and accounting change........................ (50.6) 13.4
Earnings (loss) before extraordinary item and ac-
counting change................................... (26.1) 6.3
Extraordinary loss--debt retirement (See note 5
above)............................................ (23.8)
Cumulative effect of accounting change............. (47.1)
------ ------
Net loss........................................... $(49.9) $(40.8)
====== ======
Net loss per share:
Earnings (loss) before extraordinary item and cumu-
lative
effect of accounting change....................... $(1.11) $ .28
Extraordinary loss--debt retirement................ (1.01)
Cumulative effect of accounting change............. (2.13)
------ ------
Net loss........................................... $(2.12) $(1.85)
====== ======
</TABLE>

<TABLE>
<CAPTION>
(PRO FORMA)
DECEMBER 31, JUNE 30,
1993 1993
------------ -----------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital................................ $ 350.1 $ 315.1
Total assets................................... 2,826.3 2,913.2
Total debt..................................... 894.0 942.7
Minority interest.............................. 655.4 681.4
Total shareholders' equity..................... 493.7 430.4
</TABLE>

9
<PAGE>

INVESTMENT CONSIDERATIONS

In addition to the other information contained in, or incorporated by
reference into, this Prospectus, prospective investors should consider
carefully the following factors before investing in the Shares.

GENERAL FACTORS AFFECTING THE COMPANY'S BUSINESS

The following discussion sets forth certain factors which affect demand for
the Company's products, competition within the Company's industry and the
Company's costs of production. Because many of these factors are outside the
control of the Company, the Company may not be able to predict or respond on a
timely basis to the occurrence of some or all of the factors discussed.

Factors Affecting Demand

The Company's results of operations historically have reflected the effects
of several external factors which are beyond the Company's control and have
produced significant downward and upward swings in the Company's operating
results. See "Selected Consolidated Financial Information." The Company's
revenues are highly dependent upon conditions in the domestic agriculture
industry and can be affected by crop failure, changes in agricultural
production practices and agricultural policies, and weather, all of which are
beyond the Company's control. With an average of approximately 71% of its
revenues coming from the domestic agricultural market over the past five years,
the Company's results of operations are significantly affected by the
agricultural market in the United States--especially prices and acreage for
corn, wheat and soybeans. Furthermore, because of the high percentage of its
revenues coming from domestic sales, the Company's fertilizer business is
seasonal to the extent U.S. farmers and agricultural enterprises purchase more
fertilizer products during the spring and fall.

In addition, the Company's revenues are also dependent upon the international
market for fertilizers. Over the past five years, the Company has obtained
approximately 29% of its revenues from exports from the United States and
Canada. Accordingly, the Company's results of operations can also be affected
by other factors beyond its control such as the relative value of the U.S.
dollar and its impact upon costs to the importers of fertilizer; foreign
agricultural policies; the existence of, or changes in, import or foreign
exchange barriers in certain foreign markets; changes in relative currency
values in, and the foreign exchange demands of, such countries as Morocco and
Jordan which produce phosphate rock; expropriation and other economic,
political and regulatory policies of local governments; and the laws and
policies of the United States affecting foreign trade and investment.

Competition

The Company's products are commodities that are available from other sources,
and the marketplace in which these products are sold, both domestic and
foreign, is highly competitive. Apart from competitive pricing, the Company's
principal method of competition is in service to customers. See "Business--
Fertilizer Industry Overview" for an overview of the world fertilizer
industries in which the Company operates.

Regulation

The Company is subject to various environmental laws of federal and local
governments in the United States and Canada. Although significant capital
expenditures and operating costs have been incurred and will continue to be
incurred on account of these laws and regulations, the Company does not believe
they have had or will have a material adverse effect on its business. However,
the Company cannot predict the impact of new or changed laws or regulations.
Moreover, while the Company believes it operates professionally and prudently,
and historically it has not encountered situations involving material
environmental problems, its business inherently exposes it to risks such as the
potential for escape of toxic gases into the atmosphere, waste water or rain
water run-off from open mines, or the disposal of waste products from mining or

10
<PAGE>

manufacturing. These or similar problems could cause injury to third parties or
require substantial expenditures to restore the areas on and around the
Company's properties.

The Company is the subject from time to time of investigations relating to
enforcement of various federal, state and provincial laws and regulations by
environmental authorities relating to properties the Company owns or has owned
and disposal of wastes. Although there can be no assurance in this regard, the
Company believes that none of the current investigations, individually or
collectively, will have a material adverse effect on the Company. See
"Business--Environmental Matters."

For the fiscal year ended June 30, 1993, environmental expenditures totaled
$22 million, of which $14 million was capitalized. A total of $18 million of
environmental expense was charged to operations during this period. For the six
months ended December 31, 1993, environmental expenditures totaled $14 million,
of which $6 million was capitalized. A total of $14 million of environmental
expense was charged to operations during this period.

CURRENT INDUSTRY AND COMPANY CONDITIONS

Worldwide fertilizer consumption has declined approximately 15% in the last
four years due primarily to a reduction in fertilizer use in the former Soviet
Union (the "FSU") and Eastern Europe, where fertilizer consumption has declined
by approximately 20 million tons, an amount approximating the annual fertilizer
use in the United States. U.S. fertilizer producers have seen a decline in
demand primarily as a result of a weakening export market. Specifically,
exports of diammonium phosphate ("DAP") dropped significantly. The decline
resulted from sharp cutbacks in fertilizer imports by China and India, the two
largest fertilizer importers in the world. In China, DAP imports from the
United States, after six years of rapid growth, were off 50% in 1993 from 1992
levels. In India, 1993 DAP imports also fell 50% from 1992 levels. These
reductions in demand were not met with corresponding cutbacks in production,
resulting in oversupply and reduced prices. Prices for some products fell to
their lowest levels in approximately 20 years. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Results of
Operations" for discussion of the effect of lower prices on the Company's gross
margins and results of operations. In the early fall of 1993, U.S. phosphate
producers reduced production by approximately 14% from year earlier levels. By
the end of March 1994, spot prices for DAP had increased approximately 45% from
a low of approximately $100 per short ton (f.o.b. central Florida) during the
spring of 1993. However, there can be no assurance that prices will remain at
or increase from current levels. A significant decline in the market price of
phosphate fertilizer products could have a material adverse effect on the
Company. See "Business--Fertilizer Industry Overview."

The weakness in the phosphate fertilizer market combined with high
inventories in July 1993 prompted IMC-Agrico to idle its Taft, Louisiana
production facility and reduce production at other of its phosphate production
facilities. Subsequently, in order to meet increased demand, IMC-Agrico has
steadily increased production at its operating plants and, in anticipation of
stronger second-half demand, particularly in North America, in mid-December
IMC-Agrico reopened the Taft facility. IMC-Agrico's phosphate chemical
production is currently at approximately 90% of capacity with only the Nichols,
Florida DAP facility remaining idle. IMC-Agrico plans to resume operations at
the Nichols plant on approximately May 1, 1994 due to lower finished goods
inventories and in order to meet anticipated international demand.

LEVERAGE AND LIQUIDITY

The Company is highly leveraged; the ratio of the Company's consolidated
indebtedness to total consolidated capitalization at December 31, 1993 was
64.4%. See "Use of Proceeds" and "Capitalization." The Company's high degree of
leverage will have important consequences to holders of the Shares, including
the following: (i) a substantial portion of the Company's cash flow from
operations will be required to be dedicated to debt service obligations; and
(ii) the Company may be more highly leveraged than other

11
<PAGE>

companies with which it competes, which may place it at a competitive
disadvantage. The Company estimates that its debt service requirements for the
year ending June 30, 1995 are approximately $108 million, of which
approximately $77 million is interest expense. The Company's debt service
requirements for the year ended June 30, 1995, on a pro forma basis giving
effect to the Offering, an assumed use of all of the net proceeds to reduce
indebtedness and the recent redemption of the Brewster Notes, would range from
$71 million to $96 million, of which approximately $64.5 million would be
interest expense. See "Use of Proceeds" and "Prospectus Summary--Recent
Developments--Recent Debt Redemption." If, and to the extent, the Company
requires additional financing in the future for working capital, capital
expenditures or other purposes, the Company's high degree of leverage may
impair its ability to obtain such additional financing. As of March 31, 1994,
IMC had $68 million in available borrowings under its revolving credit facility
(the "IMC Working Capital Facility") and the Partnership had $72.2 million of
available borrowings under its revolving credit facility (the "Partnership
Working Capital Facility").

The ongoing ability of the Company to meet its debt service and other
obligations, including compliance with covenants in its debt instruments, will
be dependent upon the future performance of the Company which will be subject
to financial, business and other factors, certain of which are beyond its
control, such as prevailing economic and industry conditions and prices for the
Company's products. The Company is currently in compliance with all of the
covenants in the indentures and other agreements governing its indebtedness.
The Company anticipates that its cash flow together with available borrowings
will be sufficient to meet its operating expenses and service its debt
requirements as they become due. See "Current Industry and Company Conditions"
above, "Restrictions in Financing Agreements" below and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Capital Resources and Liquidity."

CANADIAN POTASH OPERATIONS

The Company's two interconnected potash mines in Saskatchewan are owned and
operated by International Minerals & Chemical Corporation (Canada) Limited
("IMC-Canada"), a wholly owned subsidiary of IFL. A water inflow at the mines
has continued in greater or lesser degree since December 1985. As a result,
IMC-Canada has suffered property damage and business interruption losses and
has been forced to install substantial pumping capacity and to undertake other
substantial remedial efforts to stop the flooding and save the mine. IMC-Canada
has significantly reduced the inflow since the initial discovery and has been
able to meet all sales obligations and requirements to date from production at
the mines. Remedial efforts are ongoing, with C$377 million having been
expended through December 31, 1993, including contributions of C$81.3 million
by Potash Corporation of Saskatchewan ("PCS"), for which IMC-Canada mines and
refines potash. Total expenditures were approximately C$33 million in 1993 and
are estimated to be C$25 million in 1994. There can be no assurance that the
amounts required for remedial efforts in future years will not increase or that
inflows will not increase to a level which would cause the Company to abandon
the mine. If the Company was required to abandon the mine, there can be no
assurance that such action would not have a material adverse effect on the
Company. The Company does not presently have in place, nor can it reasonably
obtain, any insurance to cover damage to its underground potash operations.

Any attempts to solve the water inflow situation at the mines could result in
additional substantial expenditures and there can be no assurance that the
Company will have sufficient funds to make such expenditures.

STERLINGTON LITIGATION

In May 1991, an explosion occurred at a nitroparaffins plant (the "NP Plant")
in Sterlington, Louisiana, owned by Angus Chemical Company ("Angus") and
operated by IMC pursuant to a management agreement with Angus. As a result of
the explosion, the Company was involved in numerous lawsuits in Texas and
Louisiana for property damage and personal injuries allegedly suffered by
individuals. The Company agreed in February 1993 to pay $32.7 million to settle
all personal injury claims in the Texas litigation arising out of

12
<PAGE>

the explosion. Approximately 240 personal injury lawsuits, however, remain
unresolved in Louisiana courts. A Louisiana state appellate court has recently
reversed the trial judge's previous ruling which had denied certification of a
class or classes regarding these lawsuits. The Company has established a
reserve to cover the estimated cost of resolving the remaining Louisiana
litigation. Such reserve was calculated based upon the advice of the Company's
risk management department, its broker's claims department and outside counsel.
Such advice was based upon Angus' experience settling over 1,600 Louisiana
bodily injury and/or property damage claims, the nature of the injuries alleged
by non-IMC employees, the advice that, under Louisiana law, workers
compensation should be the exclusive remedy available to injured IMC employees
and the experience of Louisiana counsel and of Louisiana claims adjusters in
settling claims in the judicial district in which the claims are pending. In
addition, in the Texas litigation Angus and its insurer, Industrial Risk
Insurer ("IRI"), had made claims against the Company for the cost of rebuilding
the NP Plant, for business interruption losses allegedly suffered as a result
of the explosion and for punitive damages. On April 1, 1993, IFL and IMC
reached a settlement with Angus and IRI intended to resolve all claims and
litigation among the parties arising out of the explosion, except third party
claims against Angus in Louisiana or elsewhere. Under the terms of the
settlement of the Texas litigation, IFL and IMC agreed to the entry of a
judgment in favor of Angus and IRI in the amount of $220 million that will be
satisfied in full by the payment of $180 million in installments on or before
June 30, 1996, plus interest on the unpaid balance. Upon failure of IFL and IMC
to pay any installment when due or upon certain defaults under other of IFL's
or IMC's debt instruments, Angus and IRI would be entitled to require
accelerated payment of the unpaid balance of the full $220 million judgment. Of
the $180 million to be paid to Angus and IRI, $100 million was paid in
installments through December 31, 1993. See "Use of Proceeds." The Company
recorded a charge to operating earnings in the quarter ending March 31, 1993,
related to the matters discussed above, net of insurance recoveries and legal
fees, of $169.1 million. See "Description of Indebtedness--Angus/IRI
Indebtedness" for a discussion of certain terms of the indebtedness to Angus
and IRI.

The Company is pursuing additional recoveries from its insurance carriers.
The Company has received funds from three of its excess general liability
insurers and has reached a complete settlement with one of them and a partial
settlement with another. The third of these insurers has paid its policy
limits, but the Company has filed a lawsuit in Texas attempting to recover
additional amounts. The Company to date has received $85.7 million from these
three insurers and, under the terms of the partial settlement, is seeking to
recover additional amounts in arbitration from one excess insurer. In that
arbitration, the insurer has filed a counterclaim which seeks the return of the
$15 million paid to the Company by that insurer. The Company's property
insurance also might provide coverage for property damage claims of Angus and
IRI to the extent that the Company is unsuccessful in recovering such
additional amounts. The Company's property insurer has been put on notice of a
potential claim, for property damage claims by Angus or IRI, under that policy;
to date that insurer has neither confirmed nor denied coverage. The excess
insurers have not denied coverage for personal injury or property damage claims
by parties other than Angus or IRI.

On April 22, 1993, Angus filed a lawsuit in Louisiana naming IFL and IMC and
certain of their insurers as defendants and seeking damages allegedly in
addition to those settled in the Texas litigation. The Company has been
informed by counsel to Angus that the alleged damages relate to (i) direct
action claims against two of the Company's insurers, with one of which the
Company has agreed to an indemnity provision which such insurer might assert
requires IFL and IMC to indemnify such insurer, (ii) third-party claims against
Angus and (iii) sums already paid by Angus to third parties, which sums Angus
has indicated approximate $10 million to $12 million. With respect to the
potential impact on the Company of the direct action claims against its
insurers and the claims for sums already paid by Angus to third parties, the
Company believes that there are substantial defenses and the Company believes
that, in any event, the Company's exposure, if any, for such direct action
claims is approximately $30 million. This amount represents the difference
between the policy limits of one of the Company's excess liability policies and
the amount paid to the Company by the insurer under such policy. In connection
with settling the Company's insurance coverage dispute with such insurer, IFL
and IMC agreed to an indemnity provision which such insurer might assert
requires IFL and IMC to indemnify such insurer for any amounts in excess of the
settlement amount. The Company has not had the opportunity to analyze fully any
specific damage claims which might be made by Angus in such

13
<PAGE>

new lawsuit, or to make a definitive judgment as to potential liability
exposure, if any. However, on August 26, 1993 the Company filed in Texas a
lawsuit seeking a declaration that the direct action claims against the
Company's insurers and the claims for sums already paid by Angus to third
parties (items (i) and (iii), respectively, above) were disposed of in the
settlement of the previous Texas litigation. The trial judge has ruled that, on
the basis of the existing terms of the settlement agreement with Angus and the
related April 1993 final judgment, Angus is not barred from bringing direct
action claims in Louisiana against the Company's insurers, but did not rule as
to whether such claims have any merit under Louisiana law. Unless the judge
reverses herself on motion for reconsideration, the Company will likely appeal
this ruling. The judge also ruled that, under the same settlement agreement and
related final judgment, Angus did not release the Company from claims for sums
already paid by Angus to third parties. Remaining unresolved are the Company's
claims that the terms of these documents relating to the claims for sums
already paid by Angus to third parties were improperly procured by Angus. Also
unresolved is Angus' counterclaim relating to third party claims against Angus.
Trial of the latter two matters is now set for October 1994 and February 1995,
respectively.

POTASH ANTITRUST LITIGATION

The Company was named as a defendant, along with other Canadian and U.S.
potash producers, in a number of class action antitrust lawsuits filed in 1993
in courts in several states. These lawsuits were consolidated in Federal Court
in Minnesota. The plaintiffs are purchasers of potash who allege a price fixing
conspiracy among North American potash producers beginning in 1987 and
continuing until the filing of the complaints. Upon motion of the defendants,
the court has disqualified many of the plaintiff law firms on the grounds that
they received information used in the litigation from the former general
counsel of one of the defendants, in violation of his obligation to his client.
Following this ruling, some of the plaintiffs retained new counsel and filed
new complaints alleging many of the same facts. The court has now chosen
January 1996 as the target date for trial of these cases. Discovery is expected
to continue into at least the middle of calendar 1995. In March 1994, a class
action lawsuit with similar allegations was filed in state court in California.
While the Company believes that the allegations in the complaints are without
merit, until discovery is completed, the Company is unable to make a reliable
determination as to any potential liability exposure.

The Company has also received a subpoena issued by a Federal grand jury
sitting in Cleveland, Ohio, seeking various documents relating to the sale of
potash in the United States from 1986 to the present. The Company is
cooperating with the government in this investigation and is assembling the
documents to be produced. As in the civil matter described above, while the
Company does not believe that violations of the antitrust laws have occurred,
the Company is unable to predict the outcome of this investigation or to make a
reliable determination as to any potential exposure.

DIVIDEND SUSPENSION; RESTRICTIONS ON THE PAYMENT OF DIVIDENDS

In April 1993, the Company's Board of Directors voted to suspend cash
dividend payments on the Common Stock. This action was taken in light of the
financial demands of the then recent litigation settlement and the continued
weakness in fertilizer prices.

The IMC Working Capital Facility, the indentures (the "Senior Note
Indentures") governing the Company's 9 1/4% Senior Notes due 2000 (the "Seven-
Year Notes"), 10 1/8% Senior Notes due 2001 (the "Eight-Year Notes"), 10 3/4%
Senior Notes due 2003 (the "Ten-Year Notes," and, together with the Eight-Year
Notes, the "Senior Notes") and the Amended IRB Guaranty (as defined below)
contain provisions which limit IFL's ability to pay dividends on the Common
Stock. The most restrictive of these provisions limits the amount of dividends
payable by IFL to 25% of the cumulative net income of the Company earned
subsequent to June 30, 1993. The Company reported a net loss for the first nine
months of 1994 of $44.5 million. As a result, IFL is currently precluded from
paying cash dividends and will be precluded from paying cash dividends until
the Company earns more than the Company's cumulative net loss since June 30,
1993, which through March 31, 1994 was $44.5 million. See "Current Industry and
Company Conditions" above.

14
<PAGE>

At such time as the Company is no longer precluded from paying cash dividends,
the payment of such dividends will depend on the Company's capital
requirements, earnings, financial condition and such other factors as the Board
of Directors deems relevant at that time.

RESTRICTIONS IN FINANCING AGREEMENTS

The Senior Note Indentures and the amended guaranty of IFL with respect to
the IRBs (the "Amended IRB Guaranty") contain provisions which limit, among
other things: (i) the incurrence of additional debt by IFL and its
subsidiaries, (ii) the payment of dividends on and redemptions of capital stock
by IFL and its subsidiaries, (iii) transactions with affiliates, (iv) the
creation of liens and (v) sale and leaseback transactions. The Senior Note
Indentures and the Amended IRB Guaranty also restrict IFL's ability to
consolidate or merge with or into, or to transfer all or substantially all of
its assets to, another person. See "Description of Indebtedness."

The IMC Working Capital Facility contains provisions which, among other
things: (i) limit the use of proceeds from the sale of assets, (ii) limit the
payment of dividends by IFL and by IMC to IFL, (iii) limit capital expenditures
by IFL and its subsidiaries, including the Partnership, (iv) limit the creation
of liens, (v) require the Company to maintain a minimum tangible net worth,
(vi) require the Company to maintain a minimum interest coverage ratio, (vii)
require the Company to maintain a minimum fixed charge coverage ratio and
(viii) require the Company to maintain its debt to capitalization ratio below
certain levels. Under the IMC Working Capital Facility, the Company may not
make any capital expenditures, including capital expenditures in respect of the
Partnership, in excess of (a) $23.4 million through June 30, 1995 for capital
expenditures related to attempts to achieve the anticipated Partnership costs
savings plus (b) $80 million during any fiscal year. See "Description of
Indebtedness--IMC Working Capital Facility."

The Partnership Working Capital Facility (as defined below) has minimum net
Partners' capital, fixed charge and current ratio requirements, places
limitations on indebtedness of the Partnership and restricts the Partnership's
ability to make Restricted Payments (as defined) to the Partners in excess of
Distributable Cash (as defined below) or in the event of a default under the
Partnership Working Capital Facility. See "Description of Indebtedness--
Partnership Working Capital Facility."

The Senior Note Indentures and the indenture governing IFL's 6.25%
Convertible Subordinated Notes due 2001 (the "Convertible Subordinated Notes")
each contain a provision which gives each holder of such securities the right
to require IFL, in the event of a Change of Control (as defined), to make an
offer to purchase the Senior Notes, the Seven-Year Notes and the Convertible
Subordinated Notes. Such Change of Control provisions are not waivable by the
Company. Subject to the limitations described under "Description of
Indebtedness," IFL could, in the future, enter into certain transactions,
including certain recapitalizations of IFL, that would not constitute a Change
of Control for purposes of these provisions but would increase the amount of
indebtedness outstanding at such time. Moreover, if a Change of Control were to
occur, there can be no assurance that IFL would have sufficient funds to
purchase the Senior Notes, the Seven-Year Notes or the Convertible Subordinated
Notes. As of the date of this Prospectus, IFL would not have sufficient funds
available to purchase all of the outstanding Senior Notes, Seven-Year Notes and
Convertible Subordinated Notes, following a Change of Control. In the event
that IFL were required to repurchase any of such securities as a result of a
Change of Control, IFL expects that it would need to seek third-party financing
to the extent it does not have available funds to meet its repurchase
obligations. However, there can be no assurance that IFL would be able to
obtain such financing. In addition, IFL's ability to repurchase such securities
may be limited by other then-existing borrowing agreements or the Partnership
Agreement. Failure by IFL to purchase such securities when required by a Change
of Control would result in defaults with respect to such securities. See
"Description of Indebtedness."

In addition, pursuant to the terms of the Partnership Agreement relating to
the Partnership, upon the occurrence of certain events relating to IFL or IMC
(certain of which could also constitute a Change of Control under the terms of
the Senior Notes, the Seven-Year Notes and the Convertible Subordinated Notes,

15
<PAGE>

entitling the holders thereof to require the Company to repurchase their
respective securities), FRP may have the right to sell its partnership interest
in the Partnership to IMC or the Partnership. See "Business--IMC-Agrico
Company--Transfer or Encumbrance of Partnership Interests" and "Description of
Indebtedness."

The ability of the Company to comply with these or other covenants in such
agreements will be dependent upon the future operating results of the Company,
which may be affected by factors beyond its control. Any failure of the Company
to comply with such covenants could result in a default thereunder, which in
turn would result in the inability to borrow additional amounts under the IMC
Working Capital Facility and could cause the defaulted indebtedness (and by
reason of cross-default provisions, other indebtedness) to be declared
immediately due and payable. The ability of the Company to comply with these
provisions may be affected by events beyond its control.

The Company is currently in compliance with all of the covenants in the
indentures and other agreements governing its indebtedness.

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of IFL's Restated Certificate of Incorporation, By-laws
and preferred share purchase rights as well as certain provisions of the
Delaware General Corporation Law (the "DGCL") could inhibit changes in control
of IFL not approved by the Board of Directors of IFL. The Board of Directors of
IFL may issue preferred stock with voting and conversion rights which could
adversely affect the voting power of the holders of Common Stock, and which
could, among other things, have the effect of delaying, deferring or preventing
a change of control of IFL.

See "Description of Capital Stock--Common Stock--Certain Provisions of the
Restated Certificate of Incorporation and By-laws", "--Section 203" and "--
Rights Plan" for a more detailed description of the foregoing matters.

THE COMPANY

On July 1, 1993, IMC and FRP entered into a joint venture partnership
pursuant to which IMC and FRP contributed their respective phosphate fertilizer
businesses to create IMC-Agrico. The activities of IMC-Agrico, which is
operated by IMC, include the mining and sale of phosphate rock and the
production, distribution and sale of phosphate chemicals, uranium oxide and
related products. IMC has a 56.5% interest in the Partnership over the term of
the Partnership. For the fiscal year ended June 30, 1993, the assets
contributed to the Partnership by IMC and FRP accounted for sales of
approximately $1.2 billion and at June 30, 1993, such assets had an aggregate
net book value of approximately $1.6 billion. The Partnership is

16
<PAGE>

expected to take advantage of economies of scale to reduce transportation and
distribution costs (approximately $17 million), reduce production costs through
the sharing of operational technologies (approximately $40 million) and reduce
selling, general and administrative expenses through reduced headcount
(approximately $38 million). These savings are expected to reach approximately
$95 million per year and, through the determination of the sharing ratios for
the Partnership's Distributable Cash (as defined below), were intended to be
shared equally by IMC and FRP. The full effect of these anticipated savings is
expected to be realized in the second year of operations of IMC-Agrico. See
"Business--IMC-Agrico Company."

In the early fall of 1993, in response to reduced worldwide demand for, and
abundant inventories of, phosphate fertilizer products, U.S. phosphate
fertilizer producers reduced production levels by approximately 14% from year
earlier levels. By the end of March 1994, spot prices for DAP had increased
approximately 45% from a low of approximately $100 per short ton (f.o.b.
central Florida) during the spring of 1993. However, there can be no assurance
that prices will remain at or increase from current levels. A significant
decline in the market price of phosphate fertilizer products could have a
material adverse effect on the Company.

Summarized below is a description of the Company's principal products and
current operating information.

OTHER PRODUCTS. The Company manufactures retail fertilizer products which are
marketed under the Rainbow brand name primarily in the southeastern United
States. The Company has a 25% participation interest in a joint venture which
in 1989 discovered proved and probable sulphur reserves totalling 67 million
long tons at Main Pass in the Gulf of Mexico. By the end of calendar 1993, Main
Pass achieved full design

17
<PAGE>

operating rates of 5,500 long tons per day (approximately 2.0 million long tons
per year, or approximately 500,000 long tons net to IMC) and has since
sustained production at or above that level. The Company will use its share of
the sulphur to satisfy a portion of its obligations under the sulphur
agreements relating to the Partnership.

The Company's products are commodities that are generally available from
other sources, and the Company competes primarily on the basis of price. The
Company's strategy focuses on maintaining its worldwide and domestic position
as a leading fertilizer producer and supplier through competitive production
costs, extensive customer service and efficient distribution and
transportation. The Partnership is expected to take advantage of economies of
scale, reducing aggregate transportation and distribution costs, production
costs and selling, general and administrative expenses by approximately $95
million per year. The full effect of these anticipated savings is expected to
be realized in the second year of operations of IMC-Agrico.

USE OF PROCEEDS

The net proceeds to be received by IFL from the sale of the shares of Common
Stock offered hereby, after deducting estimated offering expenses payable by
IFL and the underwriting discounts and commissions, will be approximately
$141.9 million. IFL intends to use such net proceeds principally to reduce
long-term indebtedness, including the 8% Angus/IRI Note, the 10 3/4% Senior
Notes due 2003, the 10 1/8% Senior Notes due 2001 or the 9 1/4% Senior Notes
due 2000, or any combination thereof, with any remaining proceeds to be used
for general corporate purposes. The aggregate and specific amounts of such
indebtedness to be reduced will be determined based upon market and other
conditions at the time of the consummation of the Offering or thereafter. Such
reduction of long-term indebtedness will require the payment of a premium
related to any Senior Notes retired and could require the payment of a premium
related to any Seven-Year Notes retired ranging from an aggregate of $5.1
million to $12.9 million which, together with a write-off of any related
deferred financing charges, would result in an extraordinary after-tax charge
to results of operations ranging from $4.1 million to $10.4 million in the
period in which such indebtedness is retired. These ranges assume that all of
the net proceeds are used to reduce such indebtedness and assume the prepayment
of the 8% Angus/IRI Note, if any, at par, the redemption or purchase of any
Senior Notes at 110% of their principal amount and the redemption or purchase
of any Seven-Year Notes at 109% of their principal amount. Under the terms of
the indenture governing the Senior Notes, up to 35% of the principal amount of
each issue of the Senior Notes may be redeemed at a redemption price of 110% of
the principal amount thereof, plus accrued and unpaid interest to the
redemption date, with proceeds of the Offering. There can be no assurance that
the actual premium paid and the resulting after-tax charge will fall within the
ranges indicated above. The actual amount of such premium and the resulting
charge will depend upon the aggregate and specific amounts of the 8% Angus/IRI
Note prepaid, if any, and of Senior Notes or Seven-Year Notes redeemed or
purchased, and the prices paid upon any such prepayment, redemption or
purchase. See "Description of Indebtedness." Pending application of the net
proceeds from the Offering as described herein, such net proceeds may be
invested in short-term investments.

The 8% Angus/IRI Note was incurred in April 1993 in connection with the
settlement of certain litigation described in "Investment Considerations--
Sterlington Litigation." The Senior Notes were issued in June 1993 and the net
proceeds from the sale thereof were used as follows: (i) $60.6 million to pay a
portion of the amounts originally due under the 8% Angus/IRI Note, (ii) $100
million to repay then outstanding bank debt, (iii) $50 million to repurchase
receivables of the Company which had previously been sold to a financial
institution and (iv) the remainder to pay the fees and expenses associated with
entering into the IMC Working Capital Facility and amending the Installment
Notes and for general corporate purposes. The Seven-Year Notes were issued in
October 1993 and substantially all of the net proceeds from the sale thereof
were used in connection with the Company's retirement of the Installment Notes.

18
<PAGE>

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Common Stock is traded on the NYSE and the Chicago Stock Exchange under
the symbol "IFL." As of March 31, 1994, IFL had 25,575,472 shares of Common
Stock outstanding. See "Description of Capital Stock--Common Stock" for a
description of the Common Stock offered hereby. The following table sets forth
the high and low sales prices for the Common Stock as reported on the NYSE
Composite Tape and the cash dividends paid for the periods indicated.

<TABLE>
<CAPTION>
PRICE RANGE
--------------- CASH
FISCAL YEAR HIGH LOW DIVIDENDS
----------- ------- ------- ---------
<S> <C> <C> <C>
1992
First Quarter................................. $ 60 $44 7/8 $.27
Second Quarter................................ 57 1/2 45 3/8 .27
Third Quarter................................. 68 51 5/8 .27
Fourth Quarter................................ 54 1/8 42 3/8 .27
1993
First Quarter................................. 45 7/8 37 1/2 .27
Second Quarter................................ 45 3/8 37 1/4 .27
Third Quarter................................. 45 5/8 31 .27
Fourth Quarter (1)............................ 36 5/8 24 3/8 --
1994
First Quarter................................. 34 1/4 26 --
Second Quarter................................ 47 1/4 33 --
Third Quarter................................. 49 1/4 38 1/2 --
Fourth Quarter (through April 28, 1994)....... 44 1/4 38 1/4 --
</TABLE>
- --------
(1) In April 1993, the Company's Board of Directors voted to suspend cash
dividend payments on the Common Stock.

See the cover page of this Prospectus for a recent closing price of the
Common Stock on the NYSE.

The IMC Working Capital Facility, the Senior Note Indentures and the Amended
IRB Guaranty contain provisions which limit IFL's ability to pay dividends on
the Common Stock. The most restrictive of these provisions limits the amount of
dividends payable by IFL to 25% of the cumulative net income of the Company
earned subsequent to June 30, 1993. The Company reported a net loss for the
first nine months of 1994 of $44.5 million. See "Investment Considerations--
Current Industry and Company Conditions." As a result, IFL is currently
precluded from paying cash dividends and will be precluded from paying cash
dividends until the Company earns more than the Company's cumulative net loss
since June 30, 1993, which through March 31, 1994 was $44.5 million. At such
time as the Company is no longer precluded from paying cash dividends, the
payment of such dividends will depend on the Company's capital requirements,
earnings, financial condition and such other factors as the Board of Directors
deems relevant at that time. See "Investment Considerations--Restrictions in
Financing Agreements" and "--Current Industry and Company Conditions."

Since substantially all of IFL's operations are conducted through
subsidiaries, IFL's cash flow and consequently its future ability to pay
dividends, will be dependent upon the earnings of its subsidiaries and the
payment of funds by those subsidiaries to IFL in the form of loans, dividends
or otherwise. The subsidiaries are separate and distinct legal entities and
have no obligation, contingent or otherwise, to make any funds available
therefor, whether by dividends, loans or other payments. In certain
circumstances, cash distributions from the Partnership may be delayed,
restricted or reduced. See "Business--IMC-Agrico Company."

19
<PAGE>

CAPITALIZATION

The following table sets forth the consolidated capitalization of the Company
as of December 31, 1993, and as adjusted to reflect (i) the Offering, (ii) an
assumed application of all of the net proceeds of the Offering to reduce the
indebtedness of the Company described in "Use of Proceeds", in each case
assuming no exercise of the Underwriters' over-allotment options, and (iii) the
recent redemption of the Brewster Notes. See "Prospectus Summary--Recent
Developments--Recent Debt Redemption." The As Adjusted column excludes the
effect of any payment of a premium above par value to reduce the Company's
indebtedness, the write-off of any related deferred financing charges and the
resulting extraordinary charge to results of operations.

<TABLE>
<CAPTION>
DECEMBER 31, AS
1993 ADJUSTED
------------ --------
(IN MILLIONS)
<S> <C> <C>
Net proceeds from Offering............................ $ -- $ 141.9
======== ========
Current maturities of long-term debt.................. $ 46.8 $ (a)
Long-term debt, less current maturities:
IMC debt:
Working Capital Facility.......................... -- --
8% Angus/IRI Note................................. 42.5 (a)
7.525% Industrial Revenue Bonds due 2015.......... 75.0 75.0
Other notes payable, pollution control and
industrial revenue bonds and capital lease
obligations...................................... 94.7 71.9
IFL debt:
9.25% Senior Notes due 2000....................... 160.0 (a)
10.125% Senior Notes due 2001..................... 135.0 (a)
10.75% Senior Notes due 2003...................... 125.0 (a)
9.45% Senior Debentures due 2011.................. 100.0 100.0
6.25% Convertible Subordinated Notes due 2001..... 115.0 115.0
-------- --------
Total long-term debt (including current maturi-
ties)--net of net proceeds of Offering......... 894.0 729.3(b)
Shareholders' equity:
Common Stock, $1.00 par value; 50,000,000 shares au-
thorized; 32,158,240 shares issued................. 32.2 32.2
Capital in excess of par value...................... 747.7 734.1
Retained earnings (deficit)......................... (27.4) (27.4)
Less: treasury stock; 6,655,008 shares; 2,655,008
shares, as adjusted................................ (258.8) (103.3)
-------- --------
Total shareholders' equity...................... 493.7 635.6(b)
-------- --------
Total capitalization............................ $1,387.7 $1,364.9
======== ========
</TABLE>
- --------
(a) The as adjusted amount of the current maturities of long-term debt, 8%
Angus/IRI Notes, 9.25% Senior Notes due 2000, 10.125% Senior Notes due 2001
and 10.75% Senior Notes due 2003 will depend on the amount of the 8%
Angus/IRI Notes, Seven-Year Notes and/or Senior Notes reduced with the net
proceeds of the Offering. See "Use of Proceeds."
(b) The reduction of any Senior Notes will, and the reduction of any Seven-Year
Notes could, require the payment of a premium, resulting in an
extraordinary after-tax charge to results of operations in the period in
which such indebtedness is retired, as described in "Use of Proceeds". As a
result, the actual amount of Total long-term debt (including current
maturities)--net of net proceeds of Offering, as adjusted, would exceed the
amount shown in the table by the amount of such premium. The amount of any
such premium and the resulting charge depends upon the amount of Senior
Notes and/or Seven-Year Notes so reduced and the effect of any such premium
and charge is not reflected in the table. See "Use of Proceeds" and
"Description of Indebtedness."

20
<PAGE>

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following selected consolidated financial information (excluding
Operating Data) of the Company with respect to each year in the five-year
period ended June 30, 1993, is derived from the consolidated financial
statements of the Company. The Consolidated Financial Statements of the Company
for each of the years in the three-year period ended June 30, 1993 appear
elsewhere in this Prospectus Supplement. Such consolidated financial statements
have been audited by Ernst & Young, independent auditors. The following
selected consolidated financial information (excluding Operating Data) as of
and for each of the six-month periods ended December 31, 1993 and 1992 has been
derived from the unaudited interim consolidated financial statements of the
Company which appear elsewhere in this Prospectus and, in the opinion of
management, reflect all adjustments (consisting only of normally recurring
accruals) necessary for a fair presentation of the results of such periods. The
results of operations for any interim period are not necessarily indicative of
results for a full year.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED DECEMBER 31, FOR THE YEARS ENDED JUNE 30,
-------------------- -----------------------------------------------
1993(8) 1992 1993 1992 1991 1990 1989
---------- --------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $ 595.4 $ 418.4 $ 897.1 $1,058.5 $1,131.2 $1,105.7 $1,221.7
Gross margins........... 41.2 81.6 124.9 229.5 240.9 230.0 335.7
Sterlington litigation
settlement (1)......... -- -- (169.1) -- -- -- --
Operating earnings
(loss) (2)............. 21.3 61.6 (129.7) 191.4 196.0 171.0 257.2
Interest earned and
other non-operating
(income) and expense,
net (3)................ 23.8 2.9 2.8 5.5 2.1 (3.9) (11.0)
Interest charges........ 42.8 20.7 44.8 44.5 41.1 47.3 53.3
--------- --------- -------- -------- -------- -------- --------
Earnings (loss) before
income taxes and ac-
counting changes....... (45.3) 38.0 (177.3) 141.4 152.8 127.6 214.9
Minority interest....... 5.3 -- -- -- -- -- --
--------- --------- -------- -------- -------- -------- --------
Earnings (loss) before
items noted below...... (50.6) 38.0 (177.3) 141.4 152.8 127.6 214.9
Provision (credit) for
income taxes (4)....... (24.5) 16.5 (57.3) 50.5 57.0 45.0 77.6
--------- --------- -------- -------- -------- -------- --------
Earnings (loss) before
cumulative effect of
accounting changes..... (26.1) 21.5 (120.0) 90.9 95.8 82.6 137.3
Extraordinary loss--debt
retirement (5) ........ (23.8) -- -- -- -- -- --
Cumulative effect on
prior years of changes
in accounting for
postretirement benefits
other than pensions
(net of income taxes)
in 1993 and income
taxes in 1992.......... -- (47.1) (47.1) (165.5) -- -- --
--------- --------- -------- -------- -------- -------- --------
Net earnings (loss)..... $ (49.9) $ (25.6) $ (167.1) $ (74.6) $ 95.8 $ 82.6 $ 137.3
========= ========= ======== ======== ======== ======== ========
Earnings (loss) per
share:
Earnings (loss) before
cumulative effect of
accounting changes..... $ (1.11) $ .97 $ (5.44) $ 4.12 $ 3.85 $ 3.13 $ 5.27
Extraordinary loss--debt
retirement ............ (1.01) -- -- -- -- -- --
Cumulative effect on
prior years of changes
in accounting.......... -- (2.13) (2.13) (7.50)
--------- --------- -------- -------- -------- -------- --------
Net earnings (loss)..... $ (2.12) $ (1.16) $ (7.57) $ (3.38) $ 3.85 $ 3.13 $ 5.27
========= ========= ======== ======== ======== ======== ========
Weighted average number
of shares and equiva-
lent shares outstand-
ing.................... 23.5 22.1 22.1 22.1 24.9 26.4 26.0
========= ========= ======== ======== ======== ======== ========
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital (6)..... $ 350.1 $ (191.2) $ 195.1 $ 80.2 $ 48.1 $ 33.9 $ 124.2
Total assets............ 2,826.3 1,904.4 2,055.6 1,838.4 1,739.3 1,584.7 1,677.9
Total debt.............. 894.0 703.9 926.7 642.8 630.6 406.5 561.8
Total shareholders' eq-
uity................... 493.7 577.9 430.4 615.4 698.6 819.7 765.3
OTHER FINANCIAL DATA:
Capital expenditures
(7).................... $ 12.5 $ 75.3 $ 106.1 $ 177.7 $ 168.5 $ 94.3 $ 160.5
Capitalized interest.... .4 9.4 19.4 19.2 10.4 2.2 .5
Depreciation, depletion
and amortization....... 54.0 31.9 61.5 83.3 90.2 92.5 99.7
</TABLE>

21
<PAGE>

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED DECEMBER 31, FOR THE YEARS ENDED JUNE 30,
------------------- --------------------------------------------
1993 1992 1993 1992 1991 1990 1989
--------- --------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PRICES)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Phosphate rock:
External sales (tons).. 4.6 3.9 7.3 8.7 9.9 11.4 11.1
Internal consumption
(tons)................ 5.4 3.1 6.3 6.2 6.3 6.0 5.4
Average price per ton.. $20 $23 $23 $23 $23 $22 $21
Phosphate chemicals:
Sales (P/2/O/5/ tons).. 1.6 .8 1.9 1.7 1.7 1.6 1.6
Average price per
product ton........... $110 $109 $102 $122 $133 $121 $144
Potash:
Sales (tons)........... 1.2 1.5 3.2 3.2 3.3 3.1 3.4
Average price per ton.. $68 $72 $68 $69 $70 $68 $74
Reserves (tons at end of
period):
Phosphate rock......... 361 292 283 299 295 304 320
Potash:
Saskatchewan......... 1,514 1,642 1,517 1,646 1,327 1,317 1,279
New Mexico........... 172 179 176 183 180 186 191
--------- --------- -------- -------- -------- -------- --------
Total potash re-
serves............ 1,686 1,821 1,693 1,829 1,507 1,503 1,470
</TABLE>
- --------
(1) Represents a charge related to the settlement of litigation resulting from
the May 1991 explosion at a facility managed by IMC in Sterlington,
Louisiana.
(2) In 1993, nonrecurring items included charges of $32.4 million from the
settlement of a claim relating to losses arising out of a water inflow at
one of the Company's potash mines in Canada, and $3.0 million from the
settlement of an environmental issue. The six months ended December 31,
1992 and the year ended June 30, 1993 also included a gain of $8.1 million
from the resolution of a contract dispute with a major uranium oxide
customer. In 1992, nonrecurring items included a gain of $34.2 million from
the sale of the Company's Sterlington, Louisiana ammonia production
facility and a charge of $5.3 million resulting from the temporary shutdown
and mothballing of the Company's uranium production facilities. Included in
1991 was a nonrecurring gain of $17.9 million from the sale of certain
potash reserve interests to the U.S. government. In 1990, nonrecurring
items included a gain of $6.1 million from the sale of such reserve
interests and a charge of $4.6 million for an increase in a plant
decommissioning reserve. Included in 1989 was a nonrecurring charge of $7.1
million from the announced shut-down of a production facility.
(3) The six months ended December 31, 1993 included a charge of $20.3 million
for the writedown of the Company's investment in an oil and gas joint
venture due to the current low price of crude oil.

(4) For the six months ended December 31, 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.

(5) In October 1993, the Company completed its purchase of $220 million
principal amount of IMC's Installment Notes from Prudential for $248.1
million. The Installment Notes originally were scheduled to be due in
annual installments from 1995 to 2004. In connection with this purchase,
the Company recorded an extraordinary loss of $23.8 million for the
redemption premium incurred on the Installment Notes and the write-off of
previously deferred finance charges associated with the Installment Notes,
net of income taxes.

(6) In January 1990, the Company sold a $50 million undivided interest in
designated receivables, subject to limited recourse provisions, under an
agreement originally extending to 1995. On June 30, 1993, the Company
repurchased its receivable interests previously sold and cancelled the
agreement.
(7) Capital expenditures includes capitalized interest.
(8) On July 1, 1993, IMC and FRP entered into the joint venture Partnership to
which both companies contributed their respective phosphate fertilizer
businesses to create IMC-Agrico Company, a Delaware general partnership.
The Partnership's results of operations for the six months ended December
31, 1993 were

22
<PAGE>

consolidated with those of the Company, and FRP's 43.5 percent interest in
the Partnership was included in the Company's statement of operations as
minority interest. The following summary of the Company's consolidated
financial information for each of the six-month periods ended December 31,
1993 and 1992 and at December 31, 1993 and June 30, 1993 is presented for
comparative purposes. For the six months ended December 31, 1992, unaudited
pro forma statement of operations data give effect to the formation of the
Partnership as if the formation occurred on July 1, 1992. June 30, 1993
unaudited pro forma balance sheet data give effect to the formation of the
Partnership as if the formation occurred on June 30, 1993.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED DECEMBER 31,
-------------------
(IN MILLIONS
EXCEPT PER SHARE
AMOUNTS)
(PRO FORMA)
1993 1992
------ -----------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................................... $595.4 $710.5
Operating earnings................................. 21.3 41.6
Earnings (loss) before minority interest, income
taxes, extraordinary item and accounting change... (45.3) 17.8
Minority interest.................................. 5.3 (4.4)
------ ------
Earnings (loss) before income taxes, extraordinary
item and accounting change........................ (50.6) 13.4
Earnings (loss) before extraordinary item and ac-
counting change................................... (26.1) 6.3
Extraordinary loss--debt retirement (see note 5
above)............................................ (23.8)
Cumulative effect of accounting change............. (47.1)
------ ------
Net loss........................................... $(49.9) $(40.8)
====== ======
Net loss per share:
Earnings (loss) before extraordinary item and cumu-
lative effect of accounting change................ $(1.11) $ .28
Extraordinary loss--debt retirement................ (1.01)
Cumulative effect of accounting change............. (2.13)
------ ------
Net loss........................................... $(2.12) $(1.85)
====== ======
</TABLE>

<TABLE>
<CAPTION>
(PRO FORMA)
DECEMBER JUNE 30,
31, 1993 1993
-------- -----------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.................................... $ 350.1 $ 315.1
Total assets....................................... 2,826.3 2,913.2
Total debt......................................... 894.0 942.7
Minority interest.................................. 655.4 681.4
Total shareholders' equity......................... 493.7 430.4
</TABLE>

23
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Recent financial results

See "Prospectus Summary--Recent Developments--Recent Financial Results" for a
discussion of the Company's recently announced results for the three months and
nine months ended March 31, 1994.

Six months ended December 31, 1993 vs. six months ended December 31, 1992

The Company incurred a net loss of $49.9 million, or $2.12 per share, for the
six months ended December 31, 1993, compared to a net loss of $25.6 million, or
$1.16 per share, a year ago. In 1993, the loss included an extraordinary charge
of $23.8 million, or $1.01 per share, related to the early extinguishment of
$220 million of debt held by Prudential. 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 SFAS No. 106 as of July 1, 1992, to reflect a change in accounting for
postretirement benefits other than pensions. See Notes 6 and 7 of Notes to
Interim Consolidated Financial Statements for more information regarding these
non-recurring items.

IMC-Agrico, a joint venture partnership between the Company and FRP, began
operations July 1, 1993 and is consolidated for financial reporting purposes.
Comparisons between the six months ended December 31, 1993 and December 31,
1992 have been made where applicable, on a pro forma basis assuming the
Partnership had begun operations on July 1, 1992.

Sales for the six months ended December 31, 1993 were $595.4 million,
compared to $418.4 million last year. On a pro forma basis, sales for the six-
month period a year ago would have been $710.5 million. Sales in 1993 as
compared to 1992 on a pro forma basis declined primarily as a result of IMC-
Agrico's decision to reduce production at its phosphate chemical facilities.

Gross margins decreased $40.4 million from the same period a year ago. On a
pro forma basis, gross margins would have decreased $64.7 million, primarily
due to lower margins for phosphate fertilizers, a $43 million decrease on a pro
forma basis, potash, an $11 million decrease, sulphur, a $7 million decrease,
and mixed fertilizers, a $1 million decrease.

The weakness in the phosphate fertilizer market combined with high
inventories in July 1993 prompted IMC-Agrico to idle its Taft, Louisiana,
production facility and reduce production at other of its phosphate production
facilities. By the end of March 1994, spot prices for DAP had increased
approximately 45% from a low of approximately $100 per short ton (f.o.b.
central Florida) during the spring of 1993. However, there can be no assurance
that prices will remain at or increase from current levels. A significant
decline in the market price of phosphate fertilizer products could have a
material adverse effect on the Company.

In order to meet increased demand, IMC-Agrico has steadily increased
production at its operating plants and, in anticipation of stronger second-half
demand, particularly in North America, in mid-December IMC-Agrico reopened the
Taft facility. IMC-Agrico's phosphate chemical production is currently at
approximately 90% of capacity with only the Nichols, Florida DAP facility
remaining idle. IMC-Agrico plans to resume operations at the Nichols plant on
approximately May 1, 1994 due to lower finished goods inventories and in order
to meet anticipated international demand. Potash margins decreased primarily
due to lower domestic and export demand ($7 million) and a five percent
decrease in prices ($6 million), partially offset by a one percent decrease in
production costs ($2 million). It is anticipated that potash demand will return
to more normal levels during the second half of 1994. Sulphur production at
Main Pass increased significantly since July 1993 and reached design capacity
of 5,500 long tons per day in December 1993. The mine has since sustained
production at or above that level. As a result of the production increases,
Main Pass sulphur became operational for accounting purposes beginning July 1,
1993 and costs were no longer capitalized. Mixed fertilizer margins declined
primarily as a result of lower prices.

24
<PAGE>

Other operating income and expense decreased $1.1 million primarily due to a
gain in 1993 of $7.7 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, offset by a gain of $8.1 million (in 1992) from the
resolution of a contract dispute.

The Company's share of operating results from its interest in an oil and gas
joint venture decreased primarily due to a write-down to market of the
Company's investment resulting from a recent decline in oil prices discussed in
Note 2 of Notes to Interim Consolidated Financial Statements.

Interest costs were $22.1 million higher than last year primarily as a result
of costs incurred on increased debt levels and the discontinuation of
capitalization of interest on the Main Pass sulphur project.

Year ended June 30, 1993 vs. year ended June 30, 1992

The Company incurred a net loss of $167.1 million, or $7.57 per share, in
1993. This compares to a 1992 net loss of $74.6 million, or $3.38 per share.
Included in 1993 results is a one-time charge of $47.1 million, or $2.13 per
share, for the cumulative effect on prior years of a change in accounting for
postretirement benefits as a result of the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 106, as of July 1, 1992. Included in 1992
results is a one-time charge of $165.5 million, or $7.50 per share, for the
cumulative effect on prior years of a change in accounting for income taxes as
a result of the adoption of SFAS No. 109, as of July 1, 1991.

Included in 1993 results is a pre-tax charge of $169.1 million related to the
settlement of litigation resulting from the May 1991 explosion at a
Sterlington, Louisiana, nitroparaffins plant owned by Angus but operated by
IMC. See Note 3 of Notes to Consolidated Financial Statements for a further
discussion of this matter.

Also included in 1993 results is a pre-tax charge of $32.4 million related to
the settlement of a dispute over an insurance claim receivable resulting from a
water inflow at potash mines in Canada owned by IMC-Canada and a gain of $8.1
million from the resolution of a contract dispute with a major uranium oxide
customer. Included in 1992 results is a pre-tax gain of $34.2 million from the
sale of the Company's ammonia production facility at Sterlington, Louisiana,
and a pre-tax charge of $5.3 million from the temporary shutdown and
mothballing of the Company's uranium production facilities. These items are
included in the Consolidated Statement of Operations under "Other operating
income and expense, net." See Notes 4 and 7 of Notes to Consolidated Financial
Statements for a further discussion of these matters.

Net sales in 1993 were $897.1 million, a 15% decrease from 1992 when net
sales were $1.059 billion. The Company continued to experience severe price
declines and decreased demand for its products throughout the year,
particularly phosphate chemicals where prices fell to their lowest level in 20
years, due primarily to economic and political uncertainties in key foreign
markets, especially China and India. Information regarding sales by product
line is included under "Business--General."

Gross margins decreased $105 million from 1992, primarily due to lower
margins for phosphate chemicals ($53 million), phosphate rock ($19 million),
and potash ($4 million). Also affecting margins was the impact of the sale of
the Company's ammonia business and, after the sales contracts which supported
the facilities expired, the temporary shutdown and mothballing of the Company's
uranium production facilities. These actions resulted in lost margins for
ammonia and uranium of $7 million and $21 million, respectively.

Phosphate chemicals margins were lower primarily as a result of a 21 percent
decrease in the price of DAP, the major product of the Company's phosphate
chemicals business and the product that indicates

25
<PAGE>

trends in phosphate chemicals prices. The DAP decrease, along with decreases in
the other phosphate chemicals products, accounted for a $75 million decrease in
margins. Partially offsetting this decrease were lower overall production costs
which decreased four percent, mainly due to lower raw material costs ($17
million), and increased shipping volume ($5 million). Phosphate rock margins
decreased primarily due to lower shipping volume ($12 million) and a five
percent increase in production costs ($7 million) primarily resulting from
lower production volumes. Potash margins were lower as a result of a two
percent decrease in prices ($6 million), partially offset by a one percent
reduction in production costs ($2 million).

Administrative costs decreased $8 million principally as a result of reduced
management compensation awards in 1993 ($4 million) and lower rent expense due
to equipment leases which were cancelled and bought out in 1992 ($3 million).

See Note 14 of Notes to Consolidated Financial Statements for information on
income taxes.

Year ended June 30, 1992 vs. year ended June 30, 1991

In 1992, earnings totaled $90.9 million, or $4.12 per share on average
outstanding shares of 22.1 million. This compares with 1991 earnings of $95.8
million, or $3.85 per share, on average outstanding shares of 24.9 million.
1992 earnings are before the recording of a one-time charge of $165.5 million
for the cumulative effect on prior years of a change in accounting for income
taxes as a result of adopting SFAS No. 109 as of July 1, 1991. The recording of
that one-time charge resulted in a net loss of $74.6 million, or $3.38 per
share, for the year ended June 30, 1992.

Included in 1992 results is a pre-tax gain of $34.2 million from the sale of
the Company's ammonia production facility in Sterlington, Louisiana. 1992 also
included a charge of $5.3 million resulting from the temporary shutdown and
mothballing of the Company's uranium production facilities. In 1991, operating
results included a pre-tax gain of $17.9 million from the sale of certain
potash reserve interests in New Mexico. These items are included in the
Consolidated Statement of Operations under "Other operating income and expense,
net."

Net sales in 1992 were $1.059 billion, a 6% decrease from 1991 when net sales
were $1.131 billion. Continued depressed prices, particularly for phosphate
chemicals, was the primary reason for this decrease. Information regarding
sales by product line is included under "Business--General."

Gross margins decreased $11 million from 1991. Major product lines
contributing to this decrease were uranium, an $11 million decrease, and
ammonia, a $7 million decrease. Phosphate chemicals increased $5 million while
phosphate rock and potash only changed slightly from 1991.

Uranium margins decreased primarily from lower prices compared to 1991 ($18
million), as the Company resumed shipping product to a major contract customer,
at agreed-upon lower prices, pending the resolution of a contract pricing
dispute. Partially offsetting this decrease was higher sales volume ($7
million), resulting from the resumption of such shipments. On June 30, 1992,
the Company's uranium contracts expired. Because the market price of uranium
oxide did not justify continued operation of the uranium production facilities,
a temporary shutdown and mothballing of these facilities took place. Since the
facilities are fully depreciated, the temporary shutdown is not expected to
have a material impact on future operations, other than the loss of related
margins. In fiscal 1992, uranium contributed approximately $21 million to the
Company's total margins. Ammonia margins declined principally from lower sales
volume, as a result of the sale of the ammonia production facility in February
1992. Phosphate chemical margins increased as a result of significantly lower
production costs ($43 million), primarily due to favorable sulphur costs and
the $4.4 million benefit of the extension of the estimated useful lives of the
New Wales phosphate chemical assets (see Note 8 of Notes to Consolidated
Financial Statements), largely offset by an eight percent decrease in the price
of DAP, the major product in the Company's phosphate chemicals business, and
decreases in other phosphate chemicals products ($38 million). Phosphate rock
margins reflected a modest one percent increase in prices

26
<PAGE>

($7 million). However, this improvement was totally offset by reduced sales
volume. Potash margins remained flat when favorable production costs ($3
million), reflecting lower water spending, were totally offset by lower sales
volume.

Administrative costs increased $3 million, primarily due to a reserve
recorded for the cancellation and buy out of equipment leases.

Interest earned and other non-operating income and expense was $5 million
lower as a result of the negative effects of foreign currency translation
losses.

Interest charges were $3 million higher than last year as a result of costs
incurred on higher debt balances ($12 million), offset by higher capitalized
interest ($9 million).

See Note 14 of Notes to Consolidated Financial Statements for information on
income taxes.

SUPPLY CONTRACTS

The Company purchases sulphur, ammonia (beginning in 1992 after the sale of
its ammonia production facility) and natural gas from third parties and sells
phosphate rock and chemicals to third parties under contracts extending in some
cases for multiple years. Purchases and sales under these contracts are
generally at prevailing market prices, except for certain phosphate rock sales
which are at prices based on the Company's cost of production and certain
natural gas purchases which are at fixed prices. On July 1, 1993, these
contracts were contributed to the Partnership.

CAPITAL RESOURCES AND LIQUIDITY

In October 1993, in order to reduce its debt service obligations and
strengthen its balance sheet, the Company completed its purchase of $220
million principal amount of IMC's Installment Notes from Prudential for $248.1
million. The Installment Notes were originally scheduled to be due in annual
installments from 1995 to 2004. The Installment Notes were redeemed with the
proceeds from the sale, on the same date, of $160 million of IFL's 9 1/4%
Senior Notes due 2000 and 3,450,000 shares of Common Stock, thereby reducing
its annual interest costs by approximately $7 million in 1994 and by
approximately $10 million thereafter.

Since June 30, 1993, cash and cash equivalents have decreased $24.5 million.
Primary uses of cash included $63.9 million used in operating activities, $17.2
million to complete a joint venture formation post-closing adjustment with FRP
and $12.5 million of capital expenditures. Partially offsetting this cash
outflow was $64.7 million which remained after the Company completed its
financing activities.

Working capital at December 31, 1993 was $350.1 million compared with $195.1
million at June 30, 1993. The increase was due primarily to working capital
contributions by FRP to the Partnership partially offset by reimbursements of
insurance proceeds related to the May 1993 settlement of an insurance claim
receivable discussed in Note 8 of Notes to Consolidated Financial Statements.
The working capital ratio at December 31, 1993 was 2.7 to 1 compared to 1.8 to
1 at June 30, 1993.

Although the Company is still highly leveraged, consolidated indebtedness
decreased to $894 million at December 31, 1993 from $926.7 million at June 30,
1993, due primarily to the Company's debt restructuring discussed above. The
ratio of indebtedness to total capitalization correspondingly decreased to 64.4
percent at December 31, 1993 from 68.3 percent at June 30, 1993.

The Company estimates that its debt service requirements for the year ending
June 30, 1995 are approximately $108 million, of which approximately $77
million is interest expense. The Company's debt service requirements for the
year ending June 30, 1995, on a pro forma basis giving effect to the Offering,
an assumed use of all of the net proceeds to reduce indebtedness and the recent
redemption of the

27
<PAGE>

Brewster Notes, would range from $71 million to $96 million, of which
approximately $64.5 million would be interest expense. See "Use of Proceeds"
and "Prospectus Summary--Recent Developments--Recent Debt Redemption."

Under the IMC Working Capital Facility, the Company can borrow up to $100
million for general corporate purposes until June 30, 1996. At December 31,
1993, $32 million was drawn down under the letter of credit subfacility
principally to support the Company's industrial revenue bonds. Borrowings under
the IMC Working Capital Facility (other than under the letter of credit
subfacility) are limited to $25 million during a specified period in any year,
which provision has been satisfied for 1994. There were no other borrowings
outstanding under the IMC Working Capital Facility at March 31, 1994; available
borrowings at March 31, 1994 under the IMC Working Capital Facility were $68
million. See "Description of Indebtedness--IMC Working Capital Facility."

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 IMC
Working Capital Facility also contains financial ratios and other tests which
must be met in accordance with the agreement. The Company is currently in
compliance with all of the covenants in the indentures and other agreements
governing its indebtedness. See "Investment Considerations--Restrictions in
Financing Agreements" and "Description of Indebtedness."

In February 1994, IMC-Agrico entered into the $75 million Partnership Working
Capital Facility with a group of banks. The Partnership Working Capital
Facility, which has a $25 million letter of credit subfacility, provides for a
three-year maturity. Borrowings under the Partnership Working Capital Facility
are unsecured, with a negative pledge on substantially all of IMC-Agrico's
assets. The Partnership Working Capital Facility has minimum net Partners'
capital, fixed charge and current ratio requirements, places limitations on
indebtedness of the Partnership and restricts the Partnership's ability to make
Restricted Payments (as defined) to the Partners in excess of Distributable
Cash (as defined below) or in the event of a default under the Partnership
Working Capital Facility. IMC-Agrico has drawn down $2.8 million under the
letter of credit subfacility and has no borrowings under the remainder of the
Partnership Working Capital Facility. Available borrowings at March 31, 1994
under the Partnership Working Capital Facility were $72.2 million. See
"Description of Indebtedness--Partnership Working Capital Facility."

The Partnership makes cash distributions to each partner based on formulas
and sharing ratios as defined in the Partnership Agreement. For the quarter
ended December 31, 1993, the total amount of distributable cash generated by
the Partnership was $52.8 million, of which $30.9 million was distributed to
FRP in early February 1994. There was no distributable cash for the quarter
ended September 30, 1993. See "Business--IMC-Agrico Company--Distribution of
Distributable Cash and Capital Proceeds."

Capital expenditures for the fiscal year ending June 30, 1994 are estimated
to total $42 million (including $32 million by the Partnership). The Company
expects to finance these expenditures (including its portion of the
Partnership's capital expenditures) from operations.

28
<PAGE>

result, IFL is currently precluded from paying cash dividends and will be
precluded from paying cash dividends until the Company earns more than the
Company's cumulative net loss since June 30, 1993, which through March 31, 1994
was $44.5 million. At such time as the Company is no longer precluded from
paying cash dividends, the payment of such dividends will depend on the
Company's capital requirements, earnings, financial condition and such other
factors as the Board of Directors deems relevant at that time. See "Investment
Considerations--Restrictions in Financing Agreements" and "--Current Industry
and Company Conditions."

The Company does not consider the impact of inflation to be significant in
the business in which it operates.

IMC-AGRICO COMPANY

On July 1, 1993, IMC and FRP contributed their respective phosphate
fertilizer businesses, including the mining and sale of phosphate rock and the
production, distribution and sale of phosphate chemicals, uranium oxide and
related products, to the Partnership in return for a 56.5% and 43.5% economic
interest, respectively, in IMC-Agrico over the term of the Partnership. The
Partnership is governed by a Policy Committee which has equal representation
from each company and is being operated by IMC. The Partnership Agreement
contains a cash sharing arrangement under which Distributable Cash (as defined
in the Partnership Agreement) will be shared in 1994 at a ratio of 41.4% and
58.6% to IMC and FRP, respectively, adjusting thereafter until 1998 when the
sharing ratio will be fixed at 59.4% and 40.6% to IMC and FRP, respectively.
See "Business--IMC-Agrico Company--Distribution of Distributable Cash and
Capital Proceeds." The formation of IMC-Agrico continues the Company's strategy
of pursuing competitive cost positions in its markets. As a result of this
transaction, the Partnership is expected to save approximately $17 million
annually in the area of transportation and distribution by reducing the unit
cost to transport product between the various Partnership plant locations, by
taking advantage of multiple shipping locations to reduce the cost to transport
product to customers, and by reducing per unit warehousing costs through
opportunities created by the size of the Partnership as compared to the two
Partners. The Partnership is expected to be able to reduce production costs by
approximately $40 million annually through headcount reduction by eliminating
duplicative plant administrative functions, applying operational technologies
that have proven successful at each of the Partner's respective plant locations
to the other Partner's contributed plants and by being able to more efficiently
utilize in-process product at plants that have previously had underutilized
upgrading capacity. IMC's and FRP's selling, general and administrative
expenses have been reduced approximately $38 million through reduced headcount
that was achieved by eliminating duplicative headquarters functions and
consolidating the Partners' sales forces. The total of these savings of
approximately $95 million is expected to be achieved in the second year of
operations of IMC-Agrico and, through the determination of the sharing ratios
of the Partnership's Distributable Cash (as defined below), were intended to be
shared equally by IMC and FRP. Approximately $80 million of such savings are
expected to be realized in 1994.

SULPHUR AND OIL & NATURAL GAS VENTURES

The Company has a 25% participation interest in a joint venture which in 1989
discovered proved and probable sulphur reserves totalling 67 million long tons
at Main Pass in the Gulf of Mexico. FRP is the operator of the joint venture
and Felmont Oil Corporation is the other joint venture partner. By the end of
calendar 1993 Main Pass achieved full design operating rates of 5,500 long tons
per day (approximately 2.0 million long tons per year, or approximately 500,000
long tons net to IMC) and has since sustained production at or above that
level. The Company will use its share of the sulphur to satisfy a portion of
its obligations under the sulphur agreements relating to the Partnership. The
Company has capitalized interest and costs associated with heating the sulphur
deposit through June 30, 1993, but began expensing such interest and costs on
July 1, 1993. Costs capitalized during 1993 totaled $32 million (including
capitalized interest of $19 million).

29
<PAGE>

During the exploration for sulphur at Main Pass, the joint venture also
discovered oil & natural gas reserves which were located in the same immediate
area. Production began in 1991. At December 31, 1993, the field contained
proved and probable reserves estimated at 20.8 million barrels of oil and 2.5
billion cubic feet of natural gas.

OTHER MATTERS

The Company is subject to various environmental laws of federal and local
governments in the United States and Canada. Although significant capital
expenditures, as well as operating costs, have been incurred and will continue
to be incurred on account of these laws and regulations, the Company does not
believe they have had or will have a material adverse effect on its business.
However, the Company cannot predict the impact of new or changed laws or
regulations. See "Business--Environmental Matters."

Environmental capital expenditures were primarily related to air emission
control, wastewater purification, land reclamation and solid waste disposal.
For the fiscal year ended June 30, 1993, environmental expenditures totaled $22
million, of which $14 million was capitalized. A total of $18 million of
environmental expense was charged to operations during this period. For the six
months ended December 31, 1993, environmental expenditures totaled $14 million,
of which $6 million was capitalized. A total of $14 million of environmental
expense was charged to operations during this period. The Company expects
environmental capital expenditures (including its portion of IMC-Agrico's
expenditures) over the next two years will average between $10 million and $15
million per year. See "Business--Environmental Matters" for a discussion of
certain matters which could result in additional environmental capital
expenditures.

BUSINESS

FERTILIZER INDUSTRY OVERVIEW

Long-term fertilizer demand is driven primarily by worldwide grain production
which is closely correlated to world population growth. World population is
currently growing at an average annual rate of 1.7% or 90 million people. This
translates into an annual additional demand of 30 million tons of grain in
order to maintain current per capita consumption levels.

North America, China and Europe are the major grain producers in the world
and account for the largest share of world fertilizer consumption, which
exceeded 125 million metric tons in calendar 1993. World fertilizer consumption
has declined in the last four years due to decreased demand in developed
countries, primarily the FSU and Eastern Europe. This decrease was partially
offset by increased demand in developing countries.

Fertilizer demand in Western Europe has been declining in response to
heightened environmental concerns which have resulted in lower application
rates. Fertilizer consumption in the FSU and Eastern Europe has dropped nearly
55% as a result of deteriorating economic and political conditions. During the
last four years, the FSU and Eastern Europe have reduced their fertilizer
consumption by an amount approximating annual fertilizer use in the United
States. However, efforts by the FSU to convert to a market economy have also
resulted in lower fertilizer production as older, less competitive capacity has
been shut down.

Fertilizer consumption in developing countries has nearly doubled since 1980,
growing at an average rate of 5.5% per year. More recently, however, the
termination of state subsidies in both China and India, the two largest
fertilizer importers in the world, has significantly reduced fertilizer demand
from this part of the world, severely affecting world fertilizer markets, and
particularly the market for DAP. In 1993, DAP imports declined approximately
50% in each of China and India versus 1992 levels.

Initially, the reduction in consumption was not met by a corresponding
decrease in fertilizer production. Consequently, fertilizer oversupply resulted
in reduced prices with some products' prices falling to their

30
<PAGE>

lowest level in approximately 20 years. In the early fall of 1993, U.S.
phosphate producers reduced production by approximately 14% from year earlier
levels. By the end of March 1994, spot prices for DAP had increased
approximately 45% from a low of approximately $100 per short ton (f.o.b.
central Florida) during the spring of 1993. However, there can be no assurance
that prices will remain at or increase from current levels. A significant
decline in the market price of phosphate fertilizer products could have a
material adverse effect on the Company. The Company expects further recovery in
fertilizer consumption to be gradual as foreign governments are confronted with
failed agricultural policies. This process appears to have already begun in
Eastern Europe where some countries recently initiated measures to increase
fertilizer use. Preferential credit terms for fertilizer purchases, direct
subsidies and reduced fertilizer exports are methods being adopted to increase
fertilizer consumption.

BUSINESS STRATEGY

The Company's business strategy is to supply fertilizer products worldwide at
competitive prices by taking advantage of economies of scale and state-of-the-
art technology to reduce costs and to differentiate itself from its competitors
through its customer service. The Company also enhances its long-term viability
by maintaining substantial reserves of both phosphate rock and potash.

. The Company maintains relationships with export markets through IMC-
Agrico's membership in the Phosphate Rock Export Association,
representing U.S. phosphate rock exporters, the Phosphate Chemicals
Export Association, representing certain domestic phosphate chemicals
exporters, and through the Company's membership in Canpotex, representing
Saskatchewan potash exporters and Sulfate of Potash Magnesia Export
Association, representing the New Mexico producers of double sulphate of
potash magnesia.

. The inherent economies of large-tonnage capacities, combined with
efficient facilities and operating practices, enable the Company to be
one of the lowest-cost producers in the industry. IMC-Agrico's New Wales
phosphate chemicals complex is the largest in the world. The Partnership
is expected to take advantage of economies of scale, reducing aggregate
transportation and distribution costs, production costs and selling,
general and administrative expenses by approximately $95 million per
year, which cost savings were intended to be shared equally by IMC and
FRP. The full effect of these anticipated savings is expected to be
realized in the second year of operations of IMC-Agrico.

. The Company's ability to realize the full benefits from its modern mining
and processing operations is contingent upon the sustained availability
of economically recoverable raw materials. Current phosphate reserves
will support production operations in excess of 25 years. The Company has
potash reserves to support its Canadian operations for more than 100
years, and its New Mexico potash operations for more than 30 years.

. The Company will satisfy a portion of its obligations under the sulphur
agreements relating to the Partnership through its 25% ownership in the
Main Pass joint venture which has recoverable reserves of 67 million long
tons and is the largest known sulphur deposit in North America. The
integration of sulphur is an important factor in the Company's strategy
to maintain low phosphate chemicals cost.

. The Company's strategic focus is further complemented by its extensive
distribution systems which provide timely product delivery and
transportation economies. Each year millions of tons of product are
transported from Company mines and processing facilities to world
markets. This is accomplished through the Company's extensive rail and
water distribution network. The Company maintains more than 3,000 leased
or owned railcars and operates its own railcar repair facility. The
Company also operates its own shipping terminals at Port Sutton and Big
Bend near Tampa on the Florida Gulf coast. Additional bulk distribution
centers are located in the ports of Vancouver, British Columbia and
Houston, Texas. In-market warehousing permits uninterrupted supply,
particularly during busy seasons, by maintaining inventories in close
proximity to customers and the Company's transportation

31
<PAGE>

infrastructure. The Company's distribution systems make extensive use of
computer technology to track shipments and manage product to meet changing
market demands.

. Customer service continues to be the Company's cornerstone for
differentiation in both world and domestic markets. Built on agronomic
information, the Company's marketing activities address such issues as
food safety and the environmental impact of modern farming practices.
Marketing efforts target customers and lawmakers, as well as non-farm
audiences.

GENERAL

The Company's results of operations historically have reflected the effects
of several external factors, which are beyond the Company's control and have
produced significant downward and upward swings in the Company's operating
results. See "Selected Consolidated Financial Information." The Company's
revenues are highly dependent upon conditions in the domestic agriculture
industry, and can be affected by crop failure, changes in agricultural
productivity and agricultural policies, and weather, all of which are beyond
the Company's control. With an average of approximately 71% of its revenues
coming from the domestic agricultural market over the past five years, the
Company's results of operations are significantly affected by the health of the
agricultural market in the United States--especially prices and acreage for
corn, wheat and soybeans.

In addition, the Company's revenues are also dependent upon the international
market for fertilizers. Over the past five years, the Company has obtained
approximately 29% of its revenues from exports from the United States and
Canada. As a result, the Company's results of operations can also be affected
by other factors beyond its control such as the relative value of the U.S.
dollar and its impact upon costs to the importers of fertilizer; the status of
domestic and foreign political subsidies of agriculture; the existence of, or
changes in, import or foreign exchange barriers in certain foreign markets;
changes in relative currency values in, and the foreign exchange demands of,
such countries as Morocco and Jordan which produce phosphate rock;
expropriation and other economic, political and regulatory policies of local
governments; and laws and policies of the United States affecting foreign trade
and investment.

See "Investment Considerations--Current Industry and Company Conditions" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for a discussion of current conditions affecting the fertilizer
industry and the Company.

The table below shows the Company's (including for the six months ended
December 31, 1993 IMC-Agrico's) sales by product line for the periods
indicated:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED DECEMBER 31, FOR THE YEARS ENDED JUNE 30,
------------------- ------------------------------------------
1993 1992 1993 1992 1991 1990 1989
--------- --------- ------ -------- -------- -------- --------
(IN MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
Phosphate rock.......... $ 92.1 $ 89.0 $167.0 $ 202.0 $ 224.2 $ 245.7 $ 230.5
Phosphate chemicals..... 369.7 187.7 387.1 423.1 447.8 401.3 475.2
Potash.................. 81.9 108.6 221.8 224.1 231.3 219.1 255.9
Mixed fertilizers....... 19.5 21.4 97.9 103.3 96.6 100.9 106.8
Uranium................. 3.2 3.9 6.7 63.9 70.9 85.7 74.8
Ammonia................. -- -- -- 34.3 52.1 40.8 59.9
Other................... 29.0 7.8 16.6 7.8 8.3 12.2 18.6
--------- --------- ------ -------- -------- -------- --------
Total net sales....... $ 595.4 $ 418.4 $897.1 $1,058.5 $1,131.2 $1,105.7 $1,221.7
========= ========= ====== ======== ======== ======== ========
</TABLE>

32
<PAGE>

IMC-AGRICO COMPANY

Formation and Governance

On July 1, 1993, IMC and FRP formed IMC-Agrico as a Delaware general
partnership and contributed to it their respective phosphate fertilizer
businesses, including the mining and sale of phosphate rock and the production,
distribution and sale of phosphate chemicals, uranium oxide and related
products (the "Business"). For the fiscal year ended June 30, 1993, the assets
contributed to the Partnership by IMC and FRP accounted for sales of
approximately $1.2 billion and at June 30, 1993, such assets had an aggregate
net book value of approximately $1.6 billion. The formation of the Partnership
continues the Company's strategy of pursuing competitive cost positions in its
markets. As a result of this transaction, the Partnership is expected to save
approximately $17 million annually in the area of transportation and
distribution by reducing the unit cost to transport product between the various
Partnership plant locations, by taking advantage of multiple shipping locations
to reduce the cost to transport product to customers, and by reducing per unit
warehousing costs through opportunities created by the size of the Partnership
as compared to the two Partners. The Partnership is expected to be able to
reduce production costs by approximately $40 million annually through headcount
reduction by eliminating duplicative plant administrative functions, applying
operational technologies that have proven successful at each of the Partner's
respective plant locations to the other Partner's contributed plants and by
being able to more efficiently utilize in-process product at plants that have
previously had underutilized upgrading capacity. IMC's and FRP's selling,
general and administrative expenses have been reduced approximately $38 million
through reduced headcount that was achieved by eliminating duplicative
headquarters functions and consolidating the Partners' sales forces. The total
of these savings of approximately $95 million is expected to be achieved in the
second year of operations of IMC-Agrico and, through the determination of the
sharing ratios for the Partnership's Distributable Cash (as defined below),
were intended to be shared equally by IMC and FRP. Approximately $80 million of
such savings are expected to be realized in 1994.

Since the closing of the joint venture transaction, each of IMC and FRP is
engaged in the phosphate rock mining, phosphate chemicals production and
uranium oxide extraction businesses only through their respective interests in
the Partnership. The Partnership assumed from IMC and FRP responsibility for
certain liabilities related to their respective Businesses including certain
past, present and future environmental liabilities (with the remediation
activities relating to excluded environmental liabilities continuing to be
managed by the party retaining such liabilities). None of the liabilities
associated with the nitroparaffins plant in Sterlington, Louisiana owned by
Angus and previously operated by IMC were assumed by the Partnership.
Similarly, the assets and liabilities associated with the Company's potash
operations, including IMC-Canada's mines in Saskatchewan, were not contributed
to or assumed by the Partnership. IMC Partner, FRP Partner and the Managing
Partner (each as defined below) entered into a Partnership Agreement (as
amended and restated, the "Partnership Agreement") providing for the formation
of the Partnership to continue in existence until June 30, 2076. The
descriptions below of the Contribution Agreement dated as of April 5, 1993
between IMC and FRP (as amended, the "Contribution Agreement"), the Partnership
Agreement (as defined below) and the Parent Agreement (as defined below) are
summaries of such agreements and are qualified in their entirety by reference
to such agreements, copies of which have been filed with the Commission and are
available upon request.

The parties have established the capital structure of the Partners (as
defined below) in a manner designed to isolate the Partnership's assets from
financial difficulties of any person controlling such Partners, including IMC,
IFL, FRP or Freeport McMoRan, Inc., FRP's Administrative Managing General
Partner ("FTX"). Pursuant to the terms of the Contribution Agreement, IMC holds
its interest in the Partnership through a special purpose Delaware corporation
("IMC Partner"), and FRP holds its interest in the Partnership through a
special purpose Delaware limited partnership ("FRP Partner"). The managing
partner of the Partnership (the "Managing Partner") is a Delaware corporation
which is jointly owned by IMC Partner and FRP Partner, but as to which IMC
Partner, as the Operating Partner, has the right to elect a majority of the
directors, subject to the occurrence of a Material Breach Event (as defined
below). Both IMC Partner

33
<PAGE>

and FRP Partner act, together with the Managing Partner, as general partners
(the "Partners") of the Partnership.

As a general partner of the Partnership, IMC Partner may by law be subject to
liability for any obligations of the Partnership. Notwithstanding the
assumption of certain liabilities and obligations by the Partnership, IMC
Partner may by law or agreement continue as the primary obligor of certain of
these liabilities. Although the Partnership will indemnify IMC and its
affiliates, such as IMC Partner, for the liabilities assumed by the
Partnership, IMC Partner could be liable with respect to any such liabilities
if the Partnership is unable to satisfy its indemnification obligations.
Furthermore, IMC Partner may be liable as a general partner with respect to any
obligations of the Partnership attributable to FRP Partner to the extent FRP
(or FTX, pursuant to its guaranty of FRP's obligations under the Contribution
Agreement) or FRP Partner cannot satisfy such obligations. Although IMC Partner
assumed, pursuant to the terms of the Partnership Agreement, all of the
obligations of IMC under the Contribution Agreement, the Contribution Agreement
expressly provides that such assumption will not constitute a release of IMC
(or IFL, pursuant to its guaranty of IMC's obligations under the Contribution
Agreement) from its obligations under the Contribution Agreement.

A policy committee (the "Policy Committee"), with equal representation from
IMC Partner and FRP Partner, governs the Partnership and has the sole
authority, subject to the authority of the Chief Executive Officers of IMC
Partner and FRP Partner (the "CEOs") to resolve certain disputes, to make
certain "Major Decisions", including, among others, the creation of certain
indebtedness; the making or committing to make certain capital expenditures
required for the expansion of the business of the Partnership; the making of ,
or committing to make, certain dispositions of assets of the Partnership (a
"Material Asset Sale"); and the incurrence of certain liabilities or
obligations for expansion of the business.

The Partnership will pay to the Managing Partner an annual fee ($34.3 million
for fiscal 1994, subsequently adjusted annually for inflation and by the Policy
Committee upon a request by a Partner) intended to compensate the Managing
Partner for selling and administrative expenses, one-twelfth of which will be
payable monthly.

Upon (i) a material failure by the Managing Partner to perform its duties or
responsibilities as Managing Partner under the Partnership Agreement and
expiration of the relevant Cure Period (as defined in the Partnership
Agreement) or (ii) the commencement of a voluntary case seeking relief in
bankruptcy or reorganization or the entry of an order for relief in an
involuntary case against the Operating Partner or any of its direct or indirect
parent entities and expiration of the relevant Cure Period, or (iii) the
occurrence of an event that would have constituted a Triggering Event (as
defined below) but for the fact that such event arose out of the foreclosure of
a lien covering the Partnership interest of IMC Partner or FRP Partner or the
capital stock or partnership interests, as the case may be, of IMC Partner or
FRP Partner or of their respective parent entities (each, a "Material Breach
Event"), then the class of common stock of the Managing Partner held by the
non-Operating Partner will be entitled, at the option of such non-Operating
Partner (exercisable until such Material Breach is cured), to elect three
directors of the Managing Partner and such non-Operating Partner may thereby
become the Operating Partner. If such option is exercised, the Partner that was
the Operating Partner prior to the occurrence of such Material Breach Event
will thereafter be the non-Operating Partner, entitled to elect two directors
of the Managing Partner (subject to the occurrence of a subsequent Material
Breach Event). The vote of a majority of directors of the Managing Partner is
generally sufficient to approve any matter presented to the board, but
unanimous approval of all directors is required for certain specified matters.

The Managing Partner will be liable to the Partnership or any other Partner
for all damages (including lost profits) proximately caused by the Managing
Partner's gross negligence, wilful misconduct, wilful breach of the Partnership
Agreement or failure to follow a specific instruction from the Policy
Committee, but will not be so liable for any further lost profits or other
damages that are the further consequence of such lost profits or other damages
that were proximately caused. At the election of the non-Operating Partner
(initially

34
<PAGE>

FRP Partner), the Operating Partner (initially IMC Partner) will be solely
responsible for all of the Managing Partner's obligations during the period it
is the Operating Partner.

Distribution of Distributable Cash and Capital Proceeds

The Partnership will distribute to the Partners quarterly (a) Current
Interest Cash in accordance with the Partners' Current Interests and (b)
Capital Interest Cash in accordance with the Partners' Capital Interests (as
such terms are defined in the Partnership Agreement). However, the proceeds
from any Material Asset Sale will be distributed, reinvested or retained by the
Partnership as determined by the Policy Committee at the time of approval of
such disposition. Proceeds ("Capital Proceeds") in respect of all other
dispositions of assets of the Partnership having an anticipated useful life in
excess of one year and other than in the ordinary course of business ("Capital
Transactions") will be distributed to the Partners pursuant to the provisions
of the Partnership Agreement unless the Managing Partner elects to use such
Capital Proceeds to replace the capital asset in respect of which such Capital
Proceeds were generated or otherwise to maintain (but not expand) the business
of the Partnership. The sharing ratios for Distributable Cash (as defined
below) vary from year to year for the first five years and resulted from
negotiations between FRP and IMC. The ratios were based on the parties'
projections of their respective contributions to the cash flow of the
Partnership and on an equal sharing of the anticipated synergistic savings.

The "Current Interests" of the Partners with respect to each fiscal year are
as follows:

<TABLE>
<CAPTION>
FISCAL
YEAR
ENDING IMC FRP MANAGING
JUNE 30 PARTNER PARTNER PARTNER
------- -------- -------- --------
<S> <C> <C> <C>
1994.......................................... 41.3995% 58.5995% 0.001%
1995.......................................... 44.9995% 54.9995% 0.001%
1996.......................................... 46.8995% 53.0995% 0.001%
1997.......................................... 46.4995% 53.4995% 0.001%
1998 and thereafter........................... 59.3995% 40.5995% 0.001%
</TABLE>

The "Capital Interests" of the Partners with respect to each fiscal year are
as follows:

<TABLE>
<CAPTION>
FISCAL
YEAR
ENDING IMC FRP MANAGING
JUNE 30 PARTNER PARTNER PARTNER
------- -------- -------- --------
<S> <C> <C> <C>
1994.......................................... 53.4995% 46.4995% 0.001%
1995.......................................... 54.8995% 45.0995% 0.001%
1996.......................................... 56.3995% 43.5995% 0.001%
1997.......................................... 57.7995% 42.1995% 0.001%
1998 and thereafter........................... 59.3995% 40.5995% 0.001%
</TABLE>

"Distributable Cash" means, with respect to any Partner for any period, the
sum of (i) "Current Interest Cash" for such period multiplied by such Partner's
Current Interest as of the last day of such period, plus (ii) "Capital Interest
Cash" for such period multiplied by such Partner's Capital Interest as of the
last day of such period, except that the Capital Proceeds from a Capital
Transaction occurring in a prior period will be calculated using the Capital
Interest in effect as of the last day of the period in which the Capital
Transaction which generated such Capital Proceeds was deemed to have occurred.

In addition to the suspension and repayment that is to occur under the
circumstances described under "Cash Contributions" below, if either IMC or FRP
fails to pay any claim (a "Contribution Agreement Claim") by the Partnership or
another Partner or any of its respective affiliates (the "Non-Defaulting
Partner") under the Contribution Agreement or if either the IMC Partner or the
FRP Partner fails to make any payment due under the Partnership Agreement
(including, without limitation, any cash contribution described under "Cash
Contributions" below) then the Partnership shall suspend all payments and
distributions otherwise due hereunder to the Partner that has so defaulted or
whose parent entity has so defaulted (the "Defaulting Partner") and such
payments and distributions will instead be recouped and applied to what would
otherwise have been distributed to such Defaulting Partner to reduce the claim
of the

35
<PAGE>

Non-Defaulting Partner, until such time as the Contribution Agreement Claim or
such defaulted payment, as the case may be, together with interest on the
unpaid amount thereof at the rate per annum equal to the lower of the maximum
rate allowed by law or five percentage points over the prime lending rate
announced publicly from time to time by Citibank, N.A. (the "Prime Rate"), has
been paid in full.

Cash Contributions

The Policy Committee (or the CEOs), but not the Managing Partner, will
determine the amount of any cash contributions to be made to the Partnership by
the Partners. If either IMC Partner or FRP Partner fails to contribute such
cash to the Partnership, the contributing Partner will have the right to
advance additional cash to the Partnership equal to the amount such other
Partner failed to contribute. Such advance, together with a proportionate
amount of the corresponding cash contribution of the contributing Partner to
the Partnership, will be deemed a Partner loan, bearing interest at the lower
of the maximum rate permitted by law or five percentage points over the Prime
Rate. Such loan will be recouped and otherwise paid from all funds which would
otherwise have been available to make distributions to the Partners, all of
which will be paid by the Partnership to the contributing Partner and applied
to the payment of the Partner loan and all interest thereon, until the same has
been paid in full.

Partnership Working Capital Facility

For a description of the Partnership Working Capital Facility, see
"Description of Indebtedness--Partnership Working Capital Facility."

Transfer or Encumbrance of Partnership Interests

Before IMC Partner or FRP Partner may sell, or solicit bids from third
parties to purchase, any portion of its Partnership interest, such Partner (the
"Soliciting Partner") must notify the other Partner (the "Notified Partner") of
its intent to sell or solicit and must not commence or continue any discussions
with any person other than the Notified Partner for a "no-shop" period of 30
days. If the Notified Partner makes a bona fide offer to purchase the
Partnership interest of the Soliciting Partner, the Notified Partner and
Soliciting Partner shall negotiate in good faith for the purchase and sale of
the Partnership interest of the Soliciting Partner for a "negotiation period"
of an additional 15 days. The Soliciting Partner shall have the right, in its
sole discretion, to accept or reject any offer of the Notified Partner. If the
Notified Partner fails to make a bona fide offer before the expiration of the
no-shop period or if the Soliciting Partner and the Notified Partner fail to
execute a letter of intent for such purchase and sale or terminate negotiations
prior to the end of the negotiation period, then the Soliciting Partner may
enter into discussions with and/or sell to third parties any portion of its
interest in the Partnership, subject to (i) the execution of definitive
agreements within 220 days of the expiration of the negotiation period, (ii)
the cash value of the consideration received being at least equal to 95% of the
cash value of such offer made by the Notified Partner, and (iii) the transferee
agreeing in writing to be bound by the terms of the Partnership Agreement.

Upon the occurrence of a transaction (a "Triggering Event") which results in
(i) the ultimate parent of the Operating Partner owning less than a 35%
beneficial interest in the Partnership or (ii) 65% or more of the issued and
outstanding voting stock of the ultimate parent of the Operating Partner being
owned by an affiliated group, subject to certain limited exceptions stated in
the Partnership Agreement, the Operating Partner (the "Triggering Partner")
shall give the non-Triggering Partner notice of such event and the non-
Triggering Partner shall have the right to sell, within a certain period
following receipt of such notice, and the Triggering Partner shall have the
obligation to purchase, all but not less than all of the non-Triggering
Partner's interest in the Partnership at its fair market value as determined in
accordance with the terms of the Partnership Agreement. If the transaction that
gave rise to the Triggering Event involves the sale of all or a portion of the
Triggering Partner's interest in the Partnership, the non-Triggering Partner
shall instead have the right to sell all, but not less than all, of its
interest in the Partnership to the purchaser of the Triggering Partner's
interest or to the Partnership.

36
<PAGE>

Parent Agreement

The Parent Agreement (the "Parent Agreement"), to which IMC, FRP, FTX and the
Partnership (and with respect to the provisions with respect to competing
businesses and standstill, IFL) are parties, provides for the agreement by such
parties to a number of the specific terms of the Partnership Agreement or the
Contribution Agreement on terms which are parallel to such terms. The Parent
Agreement contains covenants (which reflect the provisions of the Partnership
Agreement) which prohibit the Partners and their affiliates from owning,
managing, operating, controlling or investing in any business engaged in the
Business (subject to certain exceptions) without first offering the opportunity
to the Partnership in compliance with the provisions of the Partnership
Agreement.

General

Following the formation of the joint venture Partnership, IMC continues to
operate its potash mining and mixed fertilizer production businesses and
retains its interest in the Main Pass joint ventures.

The following discussion describes the Company's operations, including those
of IMC's and FRP's phosphate fertilizer businesses contributed to the
Partnership. Unless specified to the contrary, the historical financial
information and other historical statistical information and data included in
this "Business" discussion, however, relate only to the Company's operations
prior to formation of the Partnership. For certain pro forma information
relating to the Partnership, see "Selected Consolidated Financial Information"
and "Management Discussion and Analysis of Financial Condition and Results of
Operations."

PHOSPHATE ROCK

Phosphorus is one of the key crop nutrients because of its role in
photosynthesis. Abundant phosphorus stimulates root growth and reproduction
processes in plants. While phosphorus is found in soil, it is found in
insufficient amounts to sustain long-term crop growth. The only practical way
to replenish phosphorus or improve nutrient levels is to apply commercial
fertilizer containing phosphorus. About 87% of U.S. phosphate rock is produced
in Florida and North Carolina. Varying in thickness from 5 to 25 feet,
phosphate rock deposits are covered by a 10 to 50 foot layer of sandy
overburden. The ore is extracted through surface mining after removal of the
overburden and is then processed at one of IMC-Agrico's ten plants (four of
which are closed at the present time) where it goes through washing, screening,
sizing and flotation procedures designed to separate it from sands, clays and
other foreign materials.

The Partnership sells phosphate rock to fertilizer manufacturers in the
United States, to foreign distributors and manufacturers and to animal feed
manufacturers for the production of feed phosphates. The Partnership also uses
phosphate rock internally in the production of phosphate chemicals at its New
Wales, Nichols (currently idled) and South Pierce phosphate chemicals
production facilities located in central Florida and its Faustina and Uncle Sam
phosphate chemicals facilities located in Louisiana. Phosphate rock is
generally mixed with sulfuric acid to produce phosphoric acid from which
various phosphate chemicals can be produced.

Phosphate Rock Production

The Partnership's production capacity is approximately 31.5 million tons
annually. However, production has been at less than capacity because of reduced
demand and actions to control inventory. The Kingsford mine, located in central
Florida, which was idled beginning May 1, 1993 due to weak market conditions,
reopened in February 1994. In addition, IMC suspended operations at
substantially all of its phosphate mining operations for the month of June
1993. An estimated 1,500 employees were affected. Effective July 12, 1993, IMC-
Agrico temporarily reduced its phosphate rock mining operations at its largest
mine in conjunction with its temporary reduction in DAP output. See "Phosphate
Chemicals" below. In September 1991, IMC shut down all operations at its Clear
Springs mine for an indefinite period due to economic reasons

37
<PAGE>

and in August 1993 announced that it would reopen its Clear Springs mine and
idle its Payne Creek mine (contributed to the Partnership by FRP) in October
1993 for operational reasons. The related costs are expected to be immaterial.
The Company's results of operations have not been materially affected by the
idling of the Kingsford and Payne Creek phosphate rock mines because the
product previously produced at these mines has been produced at other mines and
depreciation at Payne Creek (which is being continued during the period at a
reduced rate) along with other idle plant costs are not expected to be
material.

The following table compares IMC's (and for the six months ended December 31,
1993 IMC-Agrico's) production with total U.S. production, as reported by the
U.S. Department of the Interior:

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED JUNE
DECEMBER 31, 30,
------------ ------------------------
1993 1992 1993 1992 1991 1990 1989
------ ------ ---- ---- ---- ---- ----
(IN MILLIONS OF TONS, EXCEPT
PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
IMC's phosphate rock mined............ 8.5 7.8 13.5 15.5 16.6 16.7 17.6
Total U.S. phosphate rock mined....... 22.1 24.7 44.8 53.7 51.5 50.9 54.8
</TABLE>

The phosphate rock mines contributed by FRP to the Partnership produced 8.8
million tons of phosphate rock in 1993.

Phosphate Rock Reserves

The table below shows IMC's (and for the six months ended December 31, 1993,
IMC-Agrico's) phosphate rock reserves and phosphate rock mined for the periods
indicated and includes the reserve tonnage covered under lease agreements with
Brewster Phosphates described below:

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED JUNE
DECEMBER 31, 30,
------------ ----------------------------
1993 1992 1993 1992 1991 1990 1989
------ ------ ---- ---- ---- ---- ----
(IN MILLIONS OF TONS, EXCEPT
PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
Reserves at end period (1).. 361 292 283 299 295 304 320
Bone phosphate of lime (2).. 68% 68% 68% 68% 68% 68% 68%
Reserves acquired........... 87 -- -- 27 14 13 67
Reserve revaluation......... -- 1 (3) (8) (7) (13) (2)
</TABLE>
- --------
(1) Reserve estimates included here and elsewhere in this Prospectus have taken
into account shrinkage attributable to mining and refining processes. In
determining reserve estimates, the Company develops a rate of extraction
per acre based on current mining results and engineering estimates.
Adjustments in reserve estimates due to changes in the rate of extraction
per acre are shown as reserve revaluations. Reserves are ore bodies which
are believed to be economically recoverable at current costs and prices.
(2) Bone phosphate of lime ("BPL") is the standard industry term used to grade
phosphate rock.

IMC contributed to the Partnership its lease, under a long-term contract, of
two phosphate rock processing plants from Brewster Phosphates. The annual
capacity of these two plants is approximately five million tons. Currently,
both plants are closed indefinitely subject to improved market conditions. IMC
contributed to the Partnership approximately 30,200 acres of phosphate deposits
in Manatee, DeSoto and Hardee Counties, Florida, about 40 miles south of
current mining operations, which are called the South Florida deposits.
(Deposits are ore bodies which require additional economic and mining
feasibility studies before they can be classified as reserves.) These deposits
differ substantially in their physical and chemical characteristics from the
reserves currently being mined in Polk, Hillsborough and Manatee Counties,
Florida. The South Florida deposits contain estimated recoverable phosphate
rock of approximately 243 million tons with an average grade of approximately
65% BPL. Some of these deposits are located in what may be classified as
unmineable wetland areas under standards set forth in current state and federal
dredge and fill regulations.

38
<PAGE>

Through June 30, 1993, FRP owned or controlled the mineral rights to
approximately 136,500 acres of land in St. Johns, Hardee, Polk and Manatee
Counties, Florida, from which it mined phosphate rock. FRP owned and operated
two mines, Fort Green and Payne Creek, with a combined annual production
capacity of approximately 8.5 million tons and estimated reserves of 87 million
tons. These mineral rights and mines were contributed to the Partnership.

After the formation of the Partnership, IMC-Agrico's annual phosphate rock
capacity is approximately 31.5 million tons per year. IMC-Agrico has proved and
probable reserves of approximately 361 million tons, plus an additional 533
million tons of phosphate rock deposits, of which 289 million tons are
available under option arrangements. Certain mining setback restrictions
imposed by Hillsborough County, Florida authorities have impaired IMC's ability
to mine approximately 13 million tons of phosphate rock reserves at IMC-
Agrico's Four Corners Mine, which restrictions are being challenged by IMC-
Agrico. See "Litigation Matters" below.

Phosphate Rock Markets

IMC-Agrico sells its phosphate rock under long-term contracts and in the spot
market. IMC-Agrico also consumes a significant portion of its phosphate rock in
the production of phosphate chemicals at its New Wales, Nichols (scheduled to
reopen on approximately May 1, 1994), South Pierce, Faustina and Uncle Sam
facilities.

Much of IMC-Agrico's export sales are made through the Phosphate Rock Export
Association, formed under the Webb-Pomerene Act by IMC and certain other
Florida phosphate rock producers. Under that Act, members of an industry may
form associations to negotiate prices and other terms for the export sales of
their products in order to compete more effectively in foreign markets. Export
markets for phosphate rock are highly competitive, with the nationally
controlled mines of Morocco and other countries being significant factors in
terms of supply and price.

IMC's (and for the six months ended December 31, 1993 IMC-Agrico's) phosphate
rock shipments and average prices for the periods indicated were as follows:

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED JUNE
DECEMBER 31, 30,
------------- ------------------------
1993 1992 1993 1992 1991 1990 1989
------ ------ ---- ---- ---- ---- ----
(IN MILLIONS OF TONS, EXCEPT DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
Major long-term contracts into 1996. 3.2 2.7 5.3 5.9 6.5 7.5 7.1
Spot market......................... .2 .3 .6 .9 1.3 1.0 .7
Export.............................. 1.2 .9 1.4 1.9 2.1 2.9 3.3
Captive............................. 5.4 3.1 6.3 6.2 6.3 6.0 5.4
------ ----- ---- ---- ---- ---- ----
Total shipments................... 10.0 7.0 13.6 14.9 16.2 17.4 16.5
====== ===== ==== ==== ==== ==== ====
Average price per ton............... $ 20 $ 23 $ 23 $ 23 $ 23 $ 22 $ 21
</TABLE>

IMC-Agrico and U.S. Agri-Chemicals Corporation have entered into an agreement
whereby beginning in the fourth quarter of calendar 1994, IMC-Agrico will
supply U.S. Agri-Chemicals Corporation between 1.3 and 1.8 million tons of
phosphate rock per year over a period of 10 years at a price (dependent upon
the actual quantity taken) which will be escalated based on IMC-Agrico's actual
cost of production.

The phosphate rock business contributed by FRP to the Partnership shipped 7.9
million tons of phosphate rock in 1993, 900,000 tons of which was exported and
7 million tons of which was used by FRP's phosphate chemicals operations.

39
<PAGE>

PHOSPHATE CHEMICALS

Once phosphate rock is mined, it can then be processed into phosphate
chemicals. The phosphate chemicals facilities contributed to the Partnership by
IMC primarily manufacture four forms of phosphate chemicals: DAP, monoammonium
phosphate ("MAP"), granular triple superphosphate ("GTSP"), and merchant grade
phosphoric acid. The New Wales phosphate chemicals complex, located near
Mulberry, Florida, is the largest phosphate chemicals plant in the world with
an estimated annual capacity of 1.76 million tons of phosphoric acid (P/2/O/5/
equivalent). "P/2/O/5/" is an industry term indicating a product's phosphate
content measured chemically in units of phosphorous pentoxide. On December 31,
1992, IMC completed its acquisition of a DAP plant near Nichols, Florida,
formerly owned by Conserv, Inc. In May 1993, IMC idled the Nichols plant, which
represented approximately 20% of IMC's DAP production capacity, in response to
severe price erosion. IMC-Agrico plans to resume operations at the Nichols
plant on approximately May 1, 1994 due to lower finished goods inventories and
in order to meet anticipated international demand. The Nichols plant has an
estimated capacity of 600,000 tons of DAP a year. Total production from both
plants in 1993 was 1.8 million tons of phosphoric acid (P/2/O/5/ equivalent).

FRP's phosphate chemicals facilities contributed to the Partnership produce
fertilizer products, including sulfuric acid, phosphoric acid, granulated
phosphate chemicals, anhydrous ammonia and urea. The South Pierce plant,
located at Bartow, Florida, has facilities for the production of sulfuric acid,
phosphoric acid, GTSP, and technical grade DAP and MAP for industrial uses. The
Faustina plant, located at Donaldsonville, Louisiana, has facilities for the
production of anhydrous ammonia, urea, sulfuric acid, phosphoric acid, DAP and
MAP. The Uncle Sam plant, located at Uncle Sam, Louisiana, has facilities for
the production of sulfuric acid and phosphoric acid. These plants have an
estimated annual capacity to produce 530,000 tons of anhydrous ammonia, 260,000
tons of urea, approximately 5.4 million tons of sulfuric acid and approximately
1.99 million tons of phosphoric acid. The Taft plant, located at Taft,
Louisiana, has facilities which upgrade phosphoric acid into 1.0 million tons
of DAP and MAP.

After the formation of the Partnership, IMC-Agrico's annual phosphate
chemicals production capacity is approximately 4.0 million tons of phosphoric
acid (P/2/O/5/ equivalent).

As a result of the then current oversupply of, and reduced demand for, DAP,
effective July 12, 1993, IMC-Agrico reduced temporarily its DAP output by
approximately 40% of capacity by, among other things, idling the Taft plant and
reducing operations at New Wales. Subsequently, IMC-Agrico has gradually
increased operations at New Wales and, in December 1993, the Taft plant resumed
operations.

Phosphate rock, sulphur and ammonia are the three principal raw materials
used in the production of phosphate chemicals. Phosphate rock is supplied by
IMC-Agrico's nearby Florida mines. Sulphur, until recently, was purchased
exclusively from domestic suppliers. FRP and IMC both have interests in a joint
venture which began mining sulphur reserves at Main Pass in April 1992. FRP
continues to operate the Main Pass joint venture through its Sulphur Division.
By the end of calendar 1993 Main Pass achieved full design operating rates of
5,500 long tons per day (approximately 2.0 million long tons per year, or
approximately 500,000 long tons net to IMC) and has since sustained production
at or above that level. IMC and FRP have entered into an agreement to supply
IMC-Agrico with its sulphur requirements. FRP will supply its share of the
requirements through its Sulphur Division and IMC will supply its share of the
requirements through its share of Main Pass production and purchases from third
parties. See "Other Products--Sulphur and Oil & Natural Gas" below. Nearly all
of IMC's ammonia needs were supplied by IMC's Louisiana production facilities
until February 1992, when the operations were sold. Since then, IMC's ammonia
needs primarily have been fulfilled by domestic suppliers under long-term
contracts.

Phosphate Chemicals Markets

IMC-Agrico sells its phosphate chemicals in the spot market and under long-
term contracts. Virtually all of IMC's and FRP's export sales were, and
virtually all of IMC-Agrico's export sales are, marketed through the Phosphate
Chemicals Export Association, a Webb-Pomerene Act organization.

40
<PAGE>

The table below shows IMC's (and for the six months ended December 31, 1993
IMC-Agrico's) shipments of phosphate chemicals in P/2/O/5/ tons and average
prices for the periods indicated.

<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
DECEMBER
31, FOR THE YEARS ENDED JUNE 30,
---------- -----------------------------
1993 1992 1993 1992 1991 1990 1989
----- ---- ----- ----- ----- ----- -----
(IN THOUSANDS OF P/2/O/5/ TONS, EXCEPT
DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
Domestic:
Spot market....................... 722 323 755 700 693 664 663
Contracts expiring in 1996........ 57 49 107 114 120 121 121
Pitman-Moore...................... 139 139 276 281 271 247 240
Captive........................... 42 26 50 44 44 49 49
----- ---- ----- ----- ----- ----- -----
960 587 1,188 1,139 1,128 1,081 1,073
Export.............................. 705 321 682 580 554 568 575
----- ---- ----- ----- ----- ----- -----
Total shipments................. 1,665 858 1,870 1,719 1,682 1,649 1,648
===== ==== ===== ===== ===== ===== =====
Average price per ton............... $ 110 $109 $ 102 $ 122 $ 133 $ 121 $ 144
</TABLE>

In 1993, FRP sold 1.2 million P/2/O/5/ tons of phosphate chemicals
domestically and 1.0 million P/2/O/5/ tons of phosphate chemicals for export.

Animal Feed Ingredient Agreements

IMC has a management agreement with Pitman-Moore, Inc. ("Pitman-Moore") (now
known as Mallinckrodt Veterinary Inc.), a wholly owned subsidiary of IMCERA
Group Inc. ("IMCERA") (now known as Mallinckrodt Group Inc.), under which IMC
operates certain Pitman-Moore facilities at the New Wales phosphate chemicals
complex, which manufacture animal feed-grade phosphate products, and supplies
utilities for the operation of such facilities until at least June 30, 1997.
There is also a similar management agreement under which IMC operates a
limestone mine for IMCERA to obtain limestone for use in the animal feed plant.
Under the management agreement, charges for the conversion of raw materials,
described below, into finished products, as well as for supplying utilities to
the plant, are based on IMC's actual cost.

In addition, IMC entered into supply agreements with Pitman-Moore under which
IMC would supply Pitman-Moore's requirements of raw materials for its animal
feed plant. Under these agreements, IMC agreed to supply phosphoric acid
through at least June 30, 1997 and anhydrous ammonia on a year-to-year basis
unless terminated by either party. In addition, IMC entered into an agreement
to supply Pitman-Moore 85,000 to 105,000 tons of phosphate rock annually, but
not beyond June 30, 1998. This contract extends year-to-year unless terminated
by either party. IMC also supplied Pitman-Moore with railcars for transporting
its product. These supply agreements were transferred to the Partnership upon
its formation. IMC has also agreed to supply Pitman-Moore with its requirements
of animal feed-grade potassium products from IMC's Carlsbad, New Mexico, potash
operations.

POTASH

Potassium is a key regulator of plant growth and facilitates transport of
sugars, water and nutrients within the plant, activates starch formation and
assists in various enzyme reactions. Although potassium is found in varying
amounts in soils, modern, high-yield crop management programs require
supplemental application on a regular basis to replace lost nutrients and to
build nutrient levels to where they will support more aggressive production
goals. The two major sources of potassium are muriate of potash and sulphate of
potash. The Company mines both forms of potash at three underground mines in
the U.S. and Canada. Two of the mines are located near Esterhazy, Saskatchewan.
The remaining mine is located near Carlsbad, New Mexico. Adjacent to the mines
are refineries for processing the mined ore. With a combined capacity of over
five million tons per year, the Company is one of the largest potash producers
in the world.

41
<PAGE>

The term potash applies generally to the common salts of potassium. Since the
amount of potassium in these salts varies, the industry has established a
common standard of measurement by defining a product's potassium content in
terms of equivalent percentages of potassium oxide (K/2/O). A K/2/O equivalent
of 60% is the customary minimum standard for muriate of potash products.

The Company's potash is sold throughout the world, with the largest markets
being in the United States, China, Japan, Malaysia, Korea and Latin America.
Potash is also used internally in the manufacture of mixed fertilizers. The
Company's exports from Canada, except to the United States, are made through
Canpotex Limited, an export association of Saskatchewan potash producers.

See "Investment Considerations--Potash Antitrust Litigation" for a
description of certain antitrust lawsuits filed against, and a Federal grand
jury antitrust investigation of, North American potash producers.

Saskatchewan Potash Operations

The Company's two interconnected potash mines in Saskatchewan are owned and
operated by IMC-Canada. The total annual production capacity of IMC-Canada's
refinery facilities is estimated to be 4.2 million tons of finished product.

Potash mining in Saskatchewan takes place underground at depths of over 3,000
feet where continuous mining machines cut out the ore face and move jagged
chunks of salt to conveyor belts. The ore is then crushed and moved to storage
bins where it awaits hoisting to refineries above ground. IMC-Canada produces
six different potash products, some through patented processes. Product grades
produced are Standard, Special Standard, Coarse, Granular and White Muriate,
and Refined KCL.

PCS controls approximately 47% of Saskatchewan's potash production capacity.
One of PCS's properties consists of reserves that are in the vicinity of IMC-
Canada's potash operations. Under a long-term contract with PCS, IMC-Canada is
obligated to mine and refine these reserves for a fee plus a pro rata share of
production costs (including the water inflow expenditures described below). The
specified quantities of potash to be produced for PCS may, at the option of
PCS, amount to an annual maximum of approximately one-fourth of the tons
produced by IMC-Canada, but not to exceed 1,050,000 tons. The current contract
continues in effect until June 30, 1996, and, at the option of PCS, can be
renewed on the same terms for six additional five-year periods.

A water inflow at the mines has continued in greater or lesser degree since
December 1985. As a result, IMC-Canada has suffered property damage and
business interruption losses and has been forced to install substantial pumping
capacity and to undertake other substantial remedial efforts to stop the
flooding and save the mine. IMC-Canada has significantly reduced the inflow
since the initial discovery and has been able to meet all sales obligations and
requirements to date from production at the mines. Remedial efforts are ongoing
with C$377 million having been expended through December 31, 1993, including
contributions of C$81.3 million by PCS. Total expenditures were approximately
C$33 million in 1993 and are estimated to be C$25 million in 1994. There can be
no assurance that the amounts required for remedial efforts in future years
will not increase or that inflows will not increase to a level which would
cause the Company to abandon the mine. If the Company was required to abandon
the mine, there can be no assurance that such action would not have a material
adverse effect on the Company. The Company does not presently have in place,
nor can it reasonably obtain, any insurance to cover damage to its underground
potash operations.

42
<PAGE>

Saskatchewan Potash Production

The table below shows IMC-Canada's ore and product output for the periods
indicated and the average K/2/O content.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED JUNE
DECEMBER 31, 30,
-------------- ----------------------------
1993 1992 1993 1992 1991 1990 1989
------ ------ ---- ---- ---- ---- ----
(IN MILLIONS OF TONS, EXCEPT
PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
Ore mined (for IMC-Canada).... 3 3 7 7 7 6 7
Average K/2/O content of ore
mined........................ 24.3% 24.7% 24.9% 24.4% 24.2% 24.6% 24.2%
Potash produced:
IMC-Canada.................... 1.0 1.2 2.4 2.4 2.4 2.3 2.6
PCS........................... .2 .3 .5 .5 .5 .5 .9
------ ------ ---- ---- ---- ---- ----
Total potash produced....... 1.2 1.5 2.9 2.9 2.9 2.8 3.5
====== ====== ==== ==== ==== ==== ====
Average K/2/O content of fin-
ished product................ 61.4% 61.2% 61.3% 61.2% 61.1% 61.2% 61.1%
</TABLE>

Saskatchewan Potash Reserves

IMC-Canada presently controls the rights to mine 207,726 acres of potash-
bearing land in southeastern Saskatchewan. This land, of which 43,441 acres
have already been mined or abandoned, contains over 1.5 billion tons of
recoverable ore at an average grade of 24.5% K/2/O--enough to support current
operations for more than a century. This ore will yield approximately 533
million tons of finished product with a K/2/O content of approximately 61%.

The table below shows IMC-Canada's reserves for the periods indicated:

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED
DECEMBER
31, FOR THE YEARS ENDED JUNE 30,
----------- ---------------------------------
1993 1992 1993 1992 1991 1990 1989
----- ----- ----- ----- ----- ----- -----
(IN MILLIONS OF TONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Reserves at end of period
(1)........................ 1,514 1,642 1,517 1,646 1,327 1,317 1,279
Reserves acquired........... -- -- 1 395 19 50 25
Reserve revaluation......... -- -- (122) (68) (2) (6) (8)
</TABLE>
- --------
(1) See Note 1 to the reserve table found under "Phosphate Rock--Phosphate
Rock Reserves" above.

Carlsbad Potash Operations

At its Carlsbad, New Mexico operations, IMC mines potash at levels 700 to
900 feet underground with an annual production capacity of over one million
tons of finished product a year. The ore mined is of three types: (1)
sylvinite, a mixture of potassium chloride and sodium chloride, the same as
the ore mined in Saskatchewan; (2) langbeinite, a double sulphate of potassium
and magnesium; and (3) a mixed ore, containing both potassium chloride and
langbeinite.

Conventional mining methods are utilized for ore extraction. A wide ore face
is undercut and holes drilled to accept explosive charges. After detonation,
the loose ore is loaded and transported to storage areas where it is hoisted
above ground for further processing at the refinery.

Three types of potash are produced at the refinery: muriate of potash, which
is the primary source of potassium for the fertilizer industry, a double
sulphate of potash magnesia, marketed under the brand name Sul-Po-Mag(R),
containing significant amounts of sulphur, potassium and magnesium, with low
levels of

43
<PAGE>

chlorine, and sulphate of potash, supplying sulphur and a high concentration
of potassium with low levels of chlorine. The Company believes it is the
larger of the two U.S. producers of double sulphate of potash magnesia and the
largest of several U.S. producers of sulphate of potash.

Carlsbad Potash Production

The following table shows Carlsbad production figures for the periods
indicated:

Carlsbad Potash Reserves

The Company mines and refines potash from 43,200 acres of reserves which IMC
controls under long-term leases. These reserves contain an estimated total of
172 million tons of recoverable ore in four mining beds at thicknesses ranging
from 5.5 to 8.5 feet. At average refinery rates, these ore reserves are
estimated to be sufficient to yield 13.2 million tons of concentrate from
sylvinite with an average grade of 60% K/2/O and 30.2 million tons of
langbeinite concentrate with an average grade of approximately 22% K/2/O.

At current elevated rates of production, IMC's reserves of sylvinite and
langbeinite are estimated to be sufficient to support operations for more than
25 years. The table below shows Carlsbad's reserves for the periods indicated.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED JUNE
DECEMBER 31, 30,
-------------- ------------------------
1993 1992 1993 1992 1991 1990 1989
------ ------ ---- ---- ---- ---- ----
(IN MILLIONS OF TONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Reserves at end of period (1)...... 172 179 176 183 180 186 191
Reserves acquired.................. -- -- -- 9 -- -- --
</TABLE>
- --------
(1)See Note 1 to the reserve table found under "Phosphate Rock--Phosphate Rock
Reserves" above.

Total Company Potash Production

In addition to the Company, there are 13 North American potash producers,
eight in the United States and five in Canada. The following table compares
the Company's combined U.S. and Canadian production with total North American
production.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, FOR THE YEARS ENDED JUNE 30,
------------------ ----------------------------------
1993 1992 1993 1992 1991 1990 1989
-------- -------- ------ ------ ------ ------ ------
(IN MILLIONS OF K/2/O TONS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
Company:
Saskatchewan (1)...... .6 .7 1.5 1.5 1.5 1.4 1.6
Carlsbad.............. .2 .2 .5 .4 .5 .4 .4
-------- -------- ----- ----- ------ ----- ------
Total Company pro-
duction............ .8 .9 2.0 1.9 2.0 1.8 2.0
Total North American
production............. 4.1 4.7 9.8 9.7 10.1 9.3 10.5
</TABLE>
- --------
(1)Production for PCS excluded.

44
<PAGE>

Total Company Potash Shipments

The following table summarizes the Company's shipments and average prices of
potash for the periods indicated:

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, FOR THE YEARS ENDED JUNE 30,
------------- -----------------------------
1993 1992 1993 1992 1991 1990 1989
------ ------ ----- ----- ----- ----- -----
(IN THOUSANDS OF TONS, EXCEPT DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
Shipments:
Domestic (U.S. and Canada).... 824 1,025 2,297 2,220 2,241 2,252 2,292
Foreign....................... 376 476 943 966 1,060 897 1,120
Captive (principally for mixed
fertilizers)................. 136 127 269 256 230 247 255
------ ------ ----- ----- ----- ----- -----
Total shipments............. 1,336 1,628 3,509 3,442 3,531 3,396 3,667
====== ====== ===== ===== ===== ===== =====
Average price per ton........... $ 68 $ 72 $ 68 $ 69 $ 70 $ 68 $ 74
</TABLE>

Total Company Potash Reserves

The following table summarizes the Company's total potash reserves for the
periods indicated.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, FOR THE YEARS ENDED JUNE 30,
------------- -----------------------------
1993 1992 1993 1992 1991 1990 1989
------ ------ ----- ----- ----- ----- -----
(IN MILLIONS OF TONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Saskatchewan (1)................. 1,514 1,642 1,517 1,646 1,327 1,317 1,279
Carlsbad (1)..................... 172 179 176 183 180 186 191
------ ------ ----- ----- ----- ----- -----
Total potash reserves.......... 1,686 1,821 1,693 1,829 1,507 1,503 1,470
====== ====== ===== ===== ===== ===== =====
</TABLE>
- --------
(1)See Note 1 to the reserve table found under "Phosphate Rock--Phosphate Rock
Reserves" above.

OTHER PRODUCTS

Mixed Fertilizers. The Company operates four large granulation plants and 15
smaller facilities, primarily in the southeastern United States, for bulk-
blending and/or warehousing. Most of the fertilizer raw materials used by these
operations are supplied by the Company's mines and plants. IMC makes mixed
fertilizers through granulation and bulk-blending. Granulation is a process in
which various dry and liquid raw materials are chemically combined and then
pelletized. Bulk-blending is a simple physical mixing or blending of suitable
fertilizer materials. IMC's total mixed fertilizer shipments for 1993 and 1992
were approximately 727,000 and 706,000 tons, respectively.

IMC's mixed fertilizers are marketed in the U.S. and sold principally to
independent dealers, distributors and farmers, with some sales made directly to
other fertilizer manufacturers. Sales are largely concentrated in the spring
planting season. Weather has some impact on the time and length of the planting
season and can have a significant effect on mixed fertilizer prices.

Uranium Oxide. Until the formation of the Partnership, IMC owned four plants
in central Florida for the extraction and processing of uranium oxide
(U/3/O/8/) as a by-product of phosphoric acid. Three of these plants are
primary recovery units and the fourth is a final processing refinery. Phosphate
rock is a source of uranium, with the uranium content varying from deposit to
deposit. When central Florida rock is converted into phosphoric acid, there is
about a pound of uranium oxide in each ton of the acid (P/2/O/5/ equivalent).

45
<PAGE>

One of the primary recovery units and the final processing refinery adjoin
the New Wales phosphate chemicals plant. That primary recovery unit produced a
minimal amount of uranium oxide in 1993 and approximately 1.17 million pounds
of uranium oxide in 1992. Uranium oxide is extracted from the phosphoric acid
manufactured at the New Wales plant.

Two other primary recovery units are adjacent to phosphate chemicals plants
owned and operated by two subsidiaries of CF Industries, Inc. ("CF") located at
Bartow and Plant City, Florida. The Bartow recovery unit has not operated since
July 1985, is being dismantled, and was not contributed to the Partnership. In
1989, a permanent shutdown of this facility was negotiated for economic
reasons, at which time title to part of this facility was transferred to CF.
The other recovery unit at Plant City extracts uranium oxide from CF's
phosphoric acid production at that plant. The oxide is then transported to the
Company's refinery for final processing. There was no production of uranium
oxide from the Plant City unit in 1993 compared to approximately 900,000 pounds
in 1992. IMC extracted and purchased CF's uranium oxide under a contract that
ran through December 31, 1992. However, due to the expiration of its long-term
sales contracts at June 30, 1992 and the depressed market price of uranium
oxide, IMC reached an agreement with CF to suspend production six months early.

Most of the production was sold under seven contracts which expired June 30,
1992 to supply uranium oxide for nuclear power plants. Shipments under the
above mentioned contracts were delivered at a price in 1992 which was
substantially above market prices. In 1992, net sales of uranium oxide
accounted for 6% of the Company's net sales and 9% of gross margins. Because of
the depressed market price of uranium oxide, IMC has been unable to secure
contracts with pricing terms favorable enough, in relationship to production
cost, to warrant continued operation of the uranium oxide plants. Therefore, in
addition to the agreement with CF to suspend production at Plant City, uranium
oxide production at New Wales was suspended during the second quarter of fiscal
1993. The suspension of production at New Wales and Plant City is expected to
be temporary, and production will resume when uranium oxide prices warrant
renewed operation.

In connection with the formation of the Partnership, IMC's uranium oxide
recovery facilities, except for its Bartow recovery unit, were contributed to
the Partnership. FRP also contributed to the Partnership its uranium oxide
extraction facilities which are located adjacent to the phosphate chemical
plants at Uncle Sam and Donaldsonville, Louisiana.

FRP also contributed to the Partnership its interests in a joint venture
agreement for the production and marketing of uranium oxide. Under the
agreement, Denison Mines Ltd. is responsible for marketing uranium oxide
produced from FRP's production facilities contributed to the Partnership under
long-term contracts which currently yield prices significantly above spot
market prices.

Sulphur and Oil & Natural Gas. IMC has a 25% participation interest in a
joint venture which, in 1989, discovered proved and probable sulphur reserves
totalling 67 million long tons at Main Pass, offshore Louisiana. FRP operates
the joint venture and has a 58.33% interest therein. By the end of calendar
1993 Main Pass achieved full design operating rates of 5,500 long tons per day
(approximately 2.0 million long tons per year, or approximately 500,000 long
tons net to IMC) and has since sustained production at or above that level. IMC
will use its share of the sulphur to satisfy a portion of its obligations under
the sulphur agreements relating to the Partnership. IMC previously purchased
all of its sulphur requirements from third parties. As of June 30, 1993, IMC
had expended approximately $198.6 million for its share of the sulphur project.

46
<PAGE>

INTERNATIONAL OPERATIONS

Outside the U.S., the Company's products are sold primarily through one
Canadian and three U.S. export associations. Due to economic and political
factors, customers can change dramatically from year to year. In 1993,
principal customer countries included China, India, Japan, Korea, Australia and
several Latin American and European countries. The Company maintains an
international marketing sales force which works with and provides a variety of
agronomic and technical services to foreign customers such as government
agencies to help improve economic yields and agricultural technology.

ENVIRONMENTAL MATTERS

In connection with the development order received from Polk County, Florida
authorities in July 1990 for the New Wales gypsum stack expansion at its New
Wales phosphate chemicals facility, the Company agreed to sample groundwater
through monitoring wells on a quarterly basis. Under the terms of the
development order, if the samples indicated groundwater contamination in excess
of specified levels, the Company would have two years to take out of service
the cooling pond relating to the gypsum stack.

Beginning in July 1992, water samples taken at New Wales indicated
substantially elevated levels of sulphate concentrations, a non-toxic
contaminant, above permitted levels. The Company immediately began an
investigation and believes, based on available information and the advice of
outside experts, that the likely sources of contamination are one or more of
the 12 former recharge wells located within the cooling pond. By the end of
September 1993, all of the recharge wells had been located and plugged. The
aggregate cost of locating and plugging the 12 recharge wells was approximately
$2.3 million. Pursuant to an amended development order and related action plan,
which had been approved by the Central Florida Regional Planning Council (the
"CFRPC") and by Polk County authorities, (i) the Company had until April 30,
1994 to locate and plug the 12 recharge wells and has until October 30, 1994
for levels of contamination to return to permitted levels, and (ii) if either
of such deadlines is not met, the Company will have until September 1997 to
obtain permits for and to accomplish the lining or relocation of the cooling
pond. The cost of such lining or relocation, if necessary, is currently
estimated to be between $35 million and $68 million, with the bulk of any such
expenditures expected to take place in 1996 and 1997. The Company has been
advised by its outside experts that plugging the recharge wells should reduce
the contamination to permitted levels, but there can be no assurance in this
regard. Test results show that the levels of contamination have slowly declined
but have not reached permitted levels and there can be no assurance the
permitted levels will be reached by October 30, 1994. If the permitted levels
are not reached by October 30, 1994 but the trend has continued downward, the
Company would likely seek from the CFRPC and the Polk County Authorities an
extension of the deadline, although there can be no assurance that such
extension would be granted. Pursuant

47
<PAGE>

to the agreement for the formation of the Partnership discussed above, any
expenditures relating to these, or any other, actions with respect to this
contamination would be a liability retained by IMC, provided that the first $5
million aggregate amount of expenditures incurred subsequent to the formation
of the Partnership that related to this contamination or certain other
environmental liabilities identified in the agreement for the formation of the
Partnership would be a liability assumed by the Partnership.

The Wisconsin Department of Natural Resources ("DNR") conducted tests which
indicated there may be herbicide and nitrate contamination of soil at a former
Company-owned farm center at Edmund, Wisconsin, and of drinking water wells
near that farm center. No connection between the contamination of the wells and
the operations at the former Company-owned farm center has been established.
The Company cleaned the soil at the site to the satisfaction of the DNR. The
Company is currently conducting discussions with the DNR to determine the
extent to which groundwater remediation may be required. The magnitude of any
liability the Company may have has not yet been determined, but it is not
expected to be material to the Company.

The U.S. Environmental Protection Agency ("EPA") has designated a site in
Reading, Ohio, to be on the U.S. Superfund list; the site has become commonly
known as the Pristine Site. The Company owned a fertilizer plant on a portion
of the Pristine Site for many years ending in 1970. The EPA has reached
agreement with numerous potentially responsible parties ("PRPs"), under which
the PRPs will undertake investigation and remediation of that site. The PRPs
presently estimate the costs of that effort to be $30 million. On March 12,
1993, the Company reached an agreement in principle with the trustees under the
trust fund established by the PRPs to settle this matter by the payment of
$2.975 million ($1.845 million after taxes) by the Company. In August 1993, the
Company paid $2.975 million to settle this matter.

The EPA has been investigating the Company's operations in Florida concerning
possible exceedences of waste water discharge levels under applicable permits.
On November 4, 1993, Company representatives were informed by EPA
representatives that approval had been obtained for the filing of a civil
action against the Company in Federal district court seeking civil penalties
and other relief. The EPA has offered to settle this matter for $3 million in
some combination of penalty payments and implementation of supplemental
projects to settle the matter. The Company has taken action to bring itself
into compliance with the Federal waste water discharge permits and has
responded to the EPA allegations and suggested a settlement range. There can be
no assurance that this matter will be disposed of by settlement, for $3 million
or otherwise. Pursuant to the terms of the Contribution Agreement, all
liabilities incurred in connection with this matter were retained by IMC and
not transferred to the Partnership.

The Company was recently notified by the EPA that it is alleged to be a PRP
for pollution of a site in Woodstock, Illinois designated to be on the U.S.
Superfund list. The Company has not had the opportunity to investigate the
basis, if any, for this allegation.

For a discussion of the Company's environmental capital expenditures, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Other Matters."

LITIGATION MATTERS

In the ordinary course of its business, the Company is and will from time to
time be involved in routine litigation. Except for the matter discussed below
and the matters discussed under "Investment Considerations--Sterlington
Litigation" and "--Potash Antitrust Litigation," the Company believes that none
of the litigation pending or known to be threatened at this time is material to
the Company.

IMC-Agrico has filed two petitions against the Board of Commissioners of
Hillsborough County, Florida (the "Board") in the Civil Division of the Circuit
Court in Hillsborough County, Florida, challenging mining setback restrictions
imposed by the Board that impair IMC-Agrico's ability to fully mine its Mining
Unit No. 7 of the IMC-Agrico Four Corners Mine. IMC-Agrico estimates that 13
million tons of phosphate rock

48
<PAGE>

reserves in Mining Unit No. 7 are affected by the setback requirements. This
litigation raises administrative and constitutional challenges to the Board's
decisions to apply the setback restrictions to Mining Unit No. 7 and also
challenges the constitutionality of the ordinances that establish the
restrictions. The Company is unable to predict the outcome of this litigation.

Recently Dismissed Purported Louisiana Class Action

A lawsuit was filed in the first half of 1994 alleging that IMC and FRP
affiliates discharged contaminants into the Mississippi River which made their
way into the New Orleans water supply and thereby injured New Orleans
residents. The plaintiff in this lawsuit has voluntarily dismissed this
purported class action lawsuit without payment by the defendants.

DESCRIPTION OF INDEBTEDNESS

The following is a summary of the terms of certain indebtedness of IFL, IMC
and the Partnership, as amended to date, and is qualified in its entirety by
reference to the agreements governing such indebtedness. Copies of such
agreements have been filed with the Commission and are available upon request.

IMC WORKING CAPITAL FACILITY

On June 29, 1993, IMC obtained a revolving credit facility from a group of
banks (the "Lenders") pursuant to which IMC may borrow up to $100,000,000 for
general corporate purposes, including financing of seasonal working capital
needs. The IMC Working Capital Facility includes a $38,000,000 sub-facility for
standby letters of credit. Borrowings under the IMC Working Capital Facility
will be guaranteed by IFL. The IMC Working Capital Facility expires on June 30,
1996. As of December 31, 1993, $32 million was drawn down in the form of
standby letters of credit principally to support tax free revenue bonds and
pollution control bonds.

The IMC Working Capital Facility provides that IMC will be required to have
no outstanding borrowings thereunder in excess of $25,000,000 for (a) at least
30 consecutive days during the period commencing July 1, 1993 and ending on
April 30, 1994 and (b) at least 60 consecutive days in each 12-month period
commencing May 1, 1994 and each anniversary thereof. In addition, the IMC
Working Capital Facility provides for mandatory prepayments from the net
proceeds (which, in the case of sales of Partnership assets, shall include only
IMC's share of the net proceeds distributed to the Partners) of the sale of
assets by IMC and its subsidiaries (other than sales of inventory in the
ordinary course of business).

Under the IMC Working Capital Facility, the rate of interest payable on
outstanding amounts will be, at the election of IMC, the Applicable Margin (as
defined below) above Citibank's (i) Base Rate or (ii) LIBOR Rate. The
Applicable Margin means, so long as the Series 1992 IRBs (as defined below) are
rated at least Ba3/BB- by either Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Corporation ("S&P"), 1.0% with respect to Base Rate
borrowings and 2.75% with respect to LIBOR borrowings. The Applicable Margin
will increase 0.5% for every rating decrease, and decrease 0.5% for every
rating increase, below Ba3/BB- by either Moody's or S&P, whichever is lower,
and will decrease 0.25% for every rating increase, and increase 0.25% for every
rating decrease, above Ba3/BB- by either Moody's or S&P, whichever is lower.
The ratings with respect to the Series 1992 IRBs are currently B3/B which would
result in an Applicable Margin of 2.5% with respect to Base Rate borrowings and
4.25% with respect to LIBOR borrowings. Under the IMC Working Capital Facility,
IMC will pay a commitment fee of 1/2 of 1% on the unused portion of the IMC
Working Capital Facility.

The IMC Working Capital Facility provides, among other things, that:

(i) The Company (including the Partnership) may not dispose of assets
other than (a) sales of inventory in the ordinary course of business; (b)
sales for cash and for fair value of specified assets; and

49
<PAGE>

(c) sales for cash and fair value of other assets the fair value of which
is not in excess of $15,000,000 in the aggregate, provided that the net
proceeds (which, in the case of sales of Partnership assets, shall include
only IMC's share of the net proceeds distributed to the Partners) from the
sales referred to in (b) and (c) above are used first to pay down
outstanding debt under the IMC Working Capital Facility;

(ii) IFL may pay dividends and make other distributions to shareholders
only to the extent of 25% of cumulative net income of the Company earned
subsequent to June 30, 1993;

(iii) IMC may declare and pay cash dividends to IFL solely out of net
income and retained earnings of IMC, and then only to the extent necessary
to pay interest and principal on the Senior Notes, on the Seven-Year Notes
or on other indebtedness of IFL existing on the effective date of the IMC
Working Capital Facility and solely to the extent IMC has not paid interest
and principal on the subordinated intercompany notes described below in an
amount sufficient to pay such interest and principal; provided, that IMC
may not pay dividends to IFL during the occurrence and continuance of a
payment default or a bankruptcy default under the IMC Working Capital
Facility;

(iv) The Partnership may make partnership distributions so long as all
advances due to IMC or IFL by any Partner of the Partnership have been paid
in full and then only out of net income of the Partnership;

(v) The Company may not make any capital expenditures, including capital
expenditures in respect of the Partnership, in excess of (a) $23,400,000
through June 30, 1995 for capital expenditures related to attempts to
achieve the anticipated Partnership cost savings plus (b) $80 million
during any fiscal year;

(vi) The Company may not create or permit to exist any liens on any of
its assets, subject to specified exceptions; and

(vii) The Company may not incur any indebtedness for borrowed money other
than (a) indebtedness incurred by the Partnership pursuant to the
Partnership Working Capital Facility in a principal amount up to $75
million; (b) indebtedness of IMC to IFL pursuant to subordinated
intercompany notes; provided that IMC may pay interest on such subordinated
intercompany notes and the principal thereof when due solely to the extent
necessary to pay interest and principal on the Senior Notes, the Seven-Year
Notes and other indebtedness of IFL existing on the effective date of the
IMC Working Capital Facility and solely to the extent that IMC has not
declared or paid cash dividends in an amount sufficient to pay such
interest and principal on the Senior Notes, the Seven-Year Notes or such
other permitted indebtedness of IFL; provided, further that IMC may not pay
interest on such subordinated intercompany notes or the principal thereof
during the occurrence and continuance of a payment default or a bankruptcy
default under the IMC Working Capital Facility; and (c) the Seven-Year
Notes.

The IMC Working Capital Facility also provides that the following
financial ratios and tests must be met:

(i) The Company must maintain a minimum consolidated current ratio of 1.2
to 1.0;

(ii) The Company must maintain net worth of $325,000,000 through March
31, 1994; $335,000,000 for the period from April 1, 1994 through December
31, 1994; $355,000,000 for the period from January 1, 1995 through March
31, 1995; and $385,000,000 for the period from April 1, 1995 through March
31, 1996;

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<PAGE>

(iii) The Company must maintain a minimum Interest Coverage Ratio and
Fixed Charge Coverage Ratio (as defined below) as follows:

<TABLE>
<CAPTION>
FOUR FISCAL INTEREST FIXED CHARGE
QUARTERS ENDED COVERAGE RATIO COVERAGE RATIO
-------------- -------------- --------------
<S> <C> <C>
December 31, 1993........................... .70 .15
March 31, 1994.............................. .95 .50
June 30, 1994............................... 1.50 .80
September 30, 1994.......................... 2.10 1.25
December 31, 1994........................... 2.50 1.40
March 31, 1995.............................. 2.60 1.30
June 30, 1995............................... 2.75 1.50
September 30, 1995.......................... 2.85 1.50
December 31, 1995........................... 3.00 1.50
March 31, 1996.............................. 3.10 1.50
</TABLE>

For the four quarters ended December 31, 1993, the Interest Coverage Ratio was
1.19 and the Fixed Charge Coverage Ratio was .62.

"Interest Coverage Ratio" means the ratio of consolidated EBITDA (as defined
in the IMC Working Capital Facility) of the Company to the cash interest
payable on all debt of the Company, in each case for the immediately preceding
four fiscal quarters;

"Fixed Charge Coverage Ratio" means the ratio of consolidated EBITDA (as
defined in the IMC Working Capital Facility) of the Company less capital
expenditures to the sum of (1) cash interest payable on, and amortization of
debt discounts in respect of, all debt of the Company plus (2) regularly
scheduled principal repayments of the Company excluding amounts paid or payable
to Angus/IRI on or before June 30, 1993; and

(iv) IFL's Funded Debt/Capitalization Ratio may not exceed at the
following dates:

<TABLE>
<CAPTION>
DATE RATIO
---- -----
<S> <C>
December 31, 1993.................................................. 75%
March 31, 1994..................................................... 75
June 30, 1994...................................................... 74
September 30, 1994................................................. 74
December 31, 1994.................................................. 73
March 31, 1995..................................................... 72
June 30, 1995...................................................... 67
September 30, 1995................................................. 65
December 31, 1995.................................................. 63
March 31, 1996..................................................... 59
June 30, 1996...................................................... 57
</TABLE>

IFL's Funded Debt/Capitalization Ratio was 66% at December 31, 1993.

PARTNERSHIP WORKING CAPITAL FACILITY

In February 1994, IMC-Agrico entered into the $75 million Partnership Working
Capital Facility with a group of banks. The Partnership Working Capital
Facility, which has a letter of credit subfacility for up to $25 million,
provides for a three year maturity. Borrowings under the Partnership Working
Capital Facility are unsecured, with a negative pledge on substantially all of
IMC-Agrico's assets. The Partnership Working Capital Facility has minimum net
Partners' capital, fixed charge and current ratio requirements, places
limitations on indebtedness of the Partnership and restricts the Partnership's
ability to make Restricted Payments (as defined) to the Partners in excess of
Distributable Cash or in the event of a default under the

51
<PAGE>

Partnership Working Capital Facility. IMC-Agrico has drawn down $2.8 million
under the letter of credit subfacility and has no borrowings under the
remainder of the Partnership Working Capital Facility.

ANGUS/IRI INDEBTEDNESS

In connection with the settlement of the claims and litigation between IFL
and IMC, on the one hand, and Angus and IRI, on the other hand, described in
"Investment Considerations--Sterlington Litigation," IFL and IMC agreed to the
entry of a judgment in favor of Angus and IRI in the amount of $220 million. So
long as the Company makes certain specified installment payments aggregating
$180 million (the "Payment Amount") on a timely basis, the entire judgment will
be deemed satisfied. The last installment is due on June 30, 1996, though the
Company has the right to prepay at any time the Payment Amount, in whole or in
part, without penalty. See "Use of Proceeds." Any amounts (net of attorneys'
fees and certain other specified amounts) that the Company receives with
respect to insurance coverage by, or actions against, its insurance carriers
must be first used to prepay the Payment Amount. The unpaid portion of the
Payment Amount bears interest at the rate of 8% per annum, payable quarterly.
As of the date of this Prospectus, the Company has timely paid the first three
installments aggregating $100 million. In settlement of the remaining Payment
Amount of $80 million, the Company has agreed to pay pursuant to the Angus/IRI
Note $25 million on June 30, 1994 and quarterly payments of $6.25 million and
$7.50 million for the fiscal years ended June 30, 1995 and 1996, respectively.

Upon the failure by IFL and IMC to make payment of any installment when due,
Angus and IRI would have the right to fully execute on the unpaid balance of
the $220 million judgment. Angus and IRI would also have the right to fully
execute on the unpaid balance of the $220 million judgment upon the occurrence
of any of the following events: (i) the commission by the Company of a monetary
default under any of the agreements governing the IMC Working Capital Facility,
the Senior Debentures (as defined below) and the Convertible Subordinated Notes
(collectively, including any and all renewals or replacements thereof,
additions thereto, and new debt facilities entered into after April 1, 1993,
including the Senior Notes and the Seven-Year Notes, the "Funded Debt
Agreements"); (ii) acceleration of any Funded Debt Agreement; (iii) the
commission by the Company of a non-monetary default under a Funded Debt
Agreement which default has not been cured within 30 days or, in the case of
the IMC Working Capital Facility, 60 days of its noted occurrence; and (iv)
certain acts of bankruptcy.

So long as any portion of the Payment Amount remains outstanding, IFL and IMC
may not grant a security interest in any of their property without prior notice
to Angus and IRI and the granting to Angus and IRI of an equal and ratable
security interest securing the Payment Amount, provided that IFL and IMC may
grant a security interest of no more than $50 million in the aggregate in order
to obtain new working capital financing.

POLK COUNTY IRBS

In December 1991, the Polk County Industrial Development Authority (the
"Authority") issued $50,675,000 aggregate principal amount of Industrial
Development Revenue Bonds (IMC Fertilizer, Inc. Project) 1991 Tax Exempt Series
A (the "Series 1991 IRBs") and in January 1992 the Authority issued $24,325,000
aggregate principal amount of Industrial Development Revenue Bonds (IMC
Fertilizer, Inc. Project) 1992 Tax-Exempt Series A (the "Series 1992 IRBs,"
and, together with the Series 1991 IRBs, the "IRBs"). The proceeds from the
IRBs were loaned to IMC pursuant to a loan agreement dated as of December 1,
1991 and a supplemental loan agreement dated as of January 1, 1992
(collectively, the "Loan Agreement") to provide IMC with funds to finance the
construction of a solid waste disposal facility (the "Project") located in Polk
County, Florida. The IRBs are obligations of IMC, fully guaranteed by IFL, are
not secured by the Project or otherwise and do not constitute a general debt,
liability or obligation of the Authority or a debt, obligation or liability of
the State of Florida. The IRBs bore interest payable semi-annually on January 1
and July 1, at the rate, through July 31, 1993, of 7.25% per annum with respect
to all of the Series 1991 IRBs and 7.0% per annum with respect to all of the
Series 1992 IRBs. As described below,

52
<PAGE>

such rates were increased to 7.60% per annum for the period from August 1, 1993
through December 31, 1993 and to 7.525% per annum thereafter in respect of
substantially all of the Series 1991 Bonds and the Series 1992 Bonds. The
Series 1991 IRBs are subject to redemption, in whole or in part, at the option
of IMC on or after January 1, 2001 on any interest payment date, initially at a
redemption price of 102% of the principal amount thereof, declining to 100% in
2003, in each case plus accrued interest to the redemption date. The Series
1992 IRBs have substantially identical redemption provisions, except that they
are redeemable on or after January 1, 2002, initially at a redemption price of
102% of the principal amount thereof, declining to 100% in 2004, in each case
plus accrued interest to the redemption date. The IRBs are also subject to
mandatory redemption prior to their stated dates of maturity, in whole on any
date or in part on any interest payment date, at par plus accrued interest to
the date fixed for redemption, upon the occurrence of any one or more of the
following conditions: (a) in whole, if the Loan Agreement, the Notes, the
Guaranty, the Indenture (as such terms are defined in the Loan Agreement) or
any of the IRBs become void, unenforceable or impossible of performance; (b) in
whole or in part, if the Project or the Project Site (as defined in the Loan
Agreement), or any part thereof is damaged or destroyed or taken, acquired or
damaged by any public authority in the exercise of or under the threat of the
exercise of its power of eminent domain, and with respect to the Project or
Project Site IMC fails to elect within 90 days after the deposit of funds
related thereto with the trustee with respect to the IRBs (the "IRB Trustee"),
to repair, rebuild, replace or restore such property and the Authority elects
to require redemption as provided in the Loan Agreement; or (c) in whole, upon
a determination of federal taxability of the IRBs.

On June 30, 1993, the registered owners of more than 51% in aggregate
principal amount of the IRBs consented to the transfer of the Project to the
Partnership and, in connection therewith, both the Authority and the IRB
Trustee also consented to such transfer. In connection with such consents, the
Authority and IMC entered into a Second Supplemental Loan Agreement amending
the Loan Agreement (as amended, the "Amended IRB Agreement"), the Authority and
the IRB Trustee entered into a Second Supplemental Indenture of Trust amending
the indenture governing the IRBs (as amended, the "Amended IRB Indenture") and
IFL, the Authority and the IRB Trustee entered into an Amendment to the
guaranty of IFL with respect to the IRBs (as amended, the "Amended IRB
Guaranty").

As a result of the execution of such Second Supplemental Loan Agreement,
Second Supplemental Indenture and Amendment to the Guaranty the terms and
provisions summarized below are included in the Amended IRB Agreement, the
Amended IRB Indenture or the Amended IRB Guaranty, as the case may be. Such
summaries do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, the provisions of the Amended IRB Agreement,
the Amended IRB Indenture and the Amended IRB Guaranty (including the
definitions therein of certain terms), copies of which have been filed by the
Company with the Commission and are available upon request.

As a result of the execution of the amendment to the Guaranty, IFL and IMC
are bound, pursuant to the terms of the Amended IRB Guaranty, by certain
additional covenants and other provisions (and their related defined terms)
contained in the indenture governing the Senior Notes, but incorporated into
the Amended IRB Guaranty for the benefit of holders of IRBs (with certain
modifications to make such covenants and provisions applicable to the Amended
IRB Guaranty and for the benefit of holders of IRBs), including, among others,
those described under "Senior Notes--Certain Covenants--Limitations on
Restricted Payments and Restricted Investments" and "--Limitation on Additional
Indebtedness," "--Limitation on Transactions with Affiliates," and "--
Limitation on Sale and Leaseback Transactions" below. In addition, as a result
of the execution of the amendment to the Guaranty, the Amended IRB Guaranty
provides that, so long as any IRBs are outstanding under the Amended IRB
Indenture, IFL covenants for the benefit of the Authority, the IRB Trustee and
the registered owners of the IRBs that: (i) without the consent of the IRB
Trustee, the Authority and the holders of 51% or more in aggregate principal
amount of the IRBs outstanding (a) IFL will not, and will not permit IMC to,
transfer, convey or sell, in whole or in part, its interest in IMC Partner,
except to another subsidiary of IFL 100% of the common stock of which is owned,
directly or indirectly, by IMC; (b) IFL will not, and will not permit IMC or
IMC Partner to, transfer, convey or sell, in whole or in part, IMC Partner's
interest in the Partnership; and (c) IFL will

53
<PAGE>

not, and will not permit any of its Restricted Subsidiaries (as defined under
the indenture governing the Senior Notes) to, create, incur or otherwise cause
or suffer to exist or become effective any Liens (as defined in the indenture
governing the Senior Notes) of any kind, except for Permitted Liens (as defined
in the indenture governing the Senior Notes), upon any property or asset of IFL
or any Restricted Subsidiary or any shares of stock or debt of any Restricted
Subsidiary which owns property or assets, now owned or hereafter acquired, in
favor of the agent, co-agent or any bank or party to the IMC Working Capital
Facility and any refundings, refinancings, replacements or extensions thereof
or the holders of any of the Installment Notes and any refundings,
refinancings, replacements or extensions thereof (including the Seven-Year
Notes), unless all payments due with respect to such IRBs are secured on an
equal and ratable basis with the obligations under the IMC Working Capital
Facility or the Installment Notes (or, in each case, such refundings,
refinancings, replacements or extensions thereof, including the Seven-Year
Notes) secured by such Liens until such time as such obligations are no longer
secured by a Lien (except for Permitted Liens (as defined in the indenture
governing the Senior Notes)); and (ii) IFL will cause IMC Partner to declare
and pay dividends to IMC, out of all of its funds then legally available
therefor, as soon as practicable after receipt by IMC Partner of any
distributions from the Partnership. The Amended IRB Guaranty now also provides
that, in addition to the "Events of Default" described therein, the following
shall also constitute "Events of Default" under the Amended IRB Guaranty: (a)
failure by IMC to perform or observe any term, covenant or condition on its
part to be performed or observed under (i) the IMC Working Capital Facility or
any refundings, refinancings, replacements or extensions thereof, when required
to be performed or observed, with such failure continuing after the applicable
grace period, if any, specified in the IMC Working Capital Facility or (ii) the
Installment Notes or any refundings, refinancings, replacements or extensions
thereof (including the Seven-Year Notes) when required to be performed or
observed, with such failure continuing after the applicable grace period, if
any, specified therein, in the case of either (i) or (ii), if such failure to
perform or observe results in the acceleration of the maturity of the amounts
due thereunder; and (b) failure by IFL to observe and perform any covenant,
condition or agreement on its part to be observed or performed pursuant to
certain reporting and other affirmative covenants incorporated into the Amended
IRB Guaranty pursuant to the terms of the amendment to the Guaranty, with such
failure continuing for a period of 60 days after the date on which written
notice of such Default has been given to IFL by the IRB Trustee or to IFL and
to the IRB Trustee by the holders of not less than 25% of the principal amount
of the IRBs then outstanding under the Amended IRB Indenture.

In connection with the consent of the holders of the IRBs to the transfer of
the Project to the Partnership, on July 9, 1993, the Authority and IMC
commenced an offer (the "Offer") pursuant to which (i) the Authority offered to
increase the interest rate payable on the IRBs with respect to which the
holders thereof accepted the Offer to a rate of 7.60% per annum for the period
from August 1, 1993 through December 31, 1993 and 7.525% per annum thereafter
and (ii) IMC offered to pay to the holders of IRBs accepting the Offer a fee
equal to 1% of the outstanding principal amount of the IRBs in respect of which
the Offer was accepted. The holders of $49,475,000 aggregate principal amount
of the Series 1991 IRBs (approximately 97.6%) and $22,955,000 aggregate
principal amount of the Series 1992 IRBs (approximately 94.4%) accepted the
Offer, which expired on July 30, 1993.

SENIOR NOTES

General

In June 1993, IFL issued $135,000,000 aggregate principal amount of Eight-
Year Notes and $125,000,000 aggregate principal amount of Ten-Year Notes. The
Senior Notes are senior unsecured obligations of IFL ranking on a parity in
right of payment with all other senior unsecured obligations of IFL. Interest
on the Eight-Year Notes and Ten-Year Notes is payable semi-annually on each
June 15 and December 15 at a rate of 10 1/8% per annum and 10 3/4% per annum,
respectively.

Redemption

Except as set forth in the second succeeding sentence, the Eight-Year Notes
are not redeemable. The Ten-Year Notes are redeemable at the option of IFL, in
whole or in part, at any time on and after June 15,

54
<PAGE>

1998 initially at a redemption price of 104.0% of the principal amount thereof,
declining to 100% in 2001, in each case, plus accrued and unpaid interest to
the redemption date. IFL may, at its option, redeem prior to June 15, 1995, up
to 35% of the initially outstanding principal amount of the Eight-Year Notes
and Ten- Year Notes at 110% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date, with the net proceeds of certain
offerings of its capital stock, including the Offering. See "Use of Proceeds."

Change of Control

Upon a Change of Control (as defined in the indenture governing the Senior
Notes) of IFL, each holder of Senior Notes will have the option to require IFL
to purchase all or any of the holder's Senior Notes as of the date 35 business
days after such Change of Control for cash in an amount equal to 101% of the
principal amount thereof, plus accrued and unpaid interest to the repurchase
date.

Certain Covenants

The indenture governing the Senior Notes contains several restrictive
covenants, certain of which are summarized below. Reference is made to such
indenture, a copy of which has been filed with the Commission and is available
upon request, for a complete description of all of the restrictive covenants
contained therein and for the definition of certain terms used below.

Limitations on Restricted Payments and Restricted Investments--Subject to
certain specified exceptions, IFL may not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly:

(i) declare or pay any dividend or any other distribution on its Capital
Stock (except for, among other things, dividends by a Restricted Subsidiary
to IFL);

(ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of IFL;

(iii) make any principal payments on, or purchase, defease, repurchase,
redeem or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness which is subordinated to the Senior Notes; or

(iv) make any Investment in any Person other than Permitted Investments
(the foregoing actions set forth in clauses (i) through (iv) being referred
to as "Restricted Payments")

if (a) at the time of or after giving effect to such Restricted Payment, a
Default or Event of Default with respect to the Senior Notes shall have
occurred and be continuing, (b) at the time of or immediately after giving
effect to such Restricted Payment, IFL would not be entitled to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) under the
Consolidated Fixed Charge Coverage Ratio test set forth below under "--
Limitation on Additional Indebtedness"; or (c) immediately after giving effect
to such Restricted Payment, the sum of the aggregate amount expended for all
Restricted Payments declared or made after June 29, 1993 would exceed the sum
of (1) 50% of the Consolidated Net Income of IFL (or, in the event the
Consolidated Net Income as so determined on a cumulative basis shall be a
deficit, minus 100% of such deficit) from July 1, 1993 through the last day of
IFL's last fiscal quarter ending prior to the date of such Restricted Payment
(taken as one accounting period) plus (2), except as set forth in (3) below,
100% of the net proceeds received, after June 29, 1993, by IFL from certain
issuances of Capital Stock of IFL plus (3) 50% of the aggregate principal
amount of Convertible Subordinated Notes that have been converted after June
29, 1993. Notwithstanding the limitations set forth in clauses (b) and (c)
above, and in addition to the amount (if any) of Restricted Payments permitted
to be made as described above, IFL and its Restricted Subsidiaries may make
Restricted Payments not to exceed $10 million.

Limitation on Additional Indebtedness--Subject to certain specified
exceptions, IFL may not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, incur any Indebtedness (including Acquired
Indebtedness), unless (a) at the time of the incurrence of such Indebtedness
and after giving effect

55
<PAGE>

thereto (including the use of proceeds thereof), on a pro forma basis, the
Consolidated Fixed Charge Coverage Ratio for the four fiscal quarters
immediately preceding such incurrence, taken as one period and calculated on
the assumption that such Indebtedness had been incurred on the first day of
such four-quarter period and, in the case of Acquired Indebtedness, on the
assumption that the related acquisition or investment (whether by means or
purchase, merger or otherwise) also had occurred on such date with the
appropriate adjustments with respect to such acquisition being included in such
pro forma calculation, would have been greater than 1.75 to 1 if such
Indebtedness is incurred on or prior to July 1, 1995 or 2.00 to 1 if such
Indebtedness is incurred thereafter, and (b) no Default or Event of Default
shall have occurred and be continuing at the time or as a consequence of the
incurrence of such Indebtedness. Notwithstanding the foregoing, IFL and its
Restricted Subsidiaries may incur Permitted Indebtedness.

"Permitted Indebtedness" includes, among other things, (i) Indebtedness of
IFL and its Restricted Subsidiaries under the IMC Working Capital Facility in
an aggregate principal amount not to exceed $100 million; (ii) Indebtedness of
IFL and its Restricted Subsidiaries outstanding on June 29, 1993; (iii)
Indebtedness to IFL to any Restricted Subsidiary and Indebtedness of any
Restricted Subsidiary to IFL or another Restricted Subsidiary; (iv) hedging
obligations required by the terms of the IMC Working Capital Facility and the
Partnership Working Capital Facility; (v) Indebtedness of the Partnership under
the Partnership Working Capital Facility in an aggregate principal amount not
to exceed $75 million; (vi) Indebtedness of IFL and its Restricted Subsidiaries
in an aggregate principal amount not to exceed $50 million; (vii) certain
Indebtedness to be assumed by the Partnership pursuant to the terms of the
Contribution Agreement in an amount not to exceed $35 million; and (viii)
Refinancing Indebtedness.

Limitation on Transactions with Affiliates--Subject to certain specified
exceptions, IFL may not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, enter into or suffer to exist any transaction or
series of related transactions with any Affiliate or holder of 5% or more of
IFL's Common Stock unless: (i) such transactions are between or among IFL and
its Wholly-Owned Subsidiaries, (ii) such transactions are in the ordinary
course of business and consistent with past practice; or (iii) the terms of
such transactions are fair and reasonable to IFL or such Restricted Subsidiary,
as the case may be, and are at least as favorable as the terms which could be
obtained by IFL or such Restricted Subsidiary, as the case may be, in a
comparable transaction made on an arm's-length basis between unaffiliated
parties.

Limitations on Liens--IFL may not, and will not permit any of its Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind upon any property or asset of IFL or any
Restricted Subsidiary or any shares of stock or debt of any Restricted
Subsidiary which owns property or assets, now owned or hereafter acquired,
unless all payments due under the Indenture governing the Senior Notes and the
Senior Notes are secured on an equal and ratable basis with the obligations so
secured until such time as such obligation is no longer secured by a Lien,
except for Permitted Liens.

Limitation on Sale and Leaseback Transactions--IFL may not, and will not
permit any of its Restricted Subsidiaries to, enter into after June 29, 1993
any arrangement with any Person providing for the leasing by IFL or any such
Restricted Subsidiary of any real or tangible person property (except for
leases between or among IFL and any of its Restricted Subsidiaries), which
property has been or is to be sold or transferred by IFL or such Restricted
Subsidiary to such Person in contemplation of such leasing (a "Sale/Leaseback
Transaction"), unless (a) IFL or such Restricted Subsidiary would be entitled,
under the covenant described above under "--Limitation on Additional
Indebtedness," to incur Indebtedness in an amount equal to the Attributable
Indebtedness with respect to such arrangement, and (b) the gross proceeds of
any such sale are at least equal to the fair market value of such property and
IFL or such Restricted Subsidiary applies the net cash proceeds of such sale as
provided under the covenant set forth below under "--Limitation on Certain
Asset Sales."

Limitation on Certain Asset Sales--IFL will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) IFL or its
Restricted Subsidiaries, as the case may be, receives

56
<PAGE>

consideration at the time of such sale or other disposition at least equal to
the fair market value thereof (as determined in good faith by IFL's Board of
Directors and evidenced by a resolution of such Board); (ii) not less than 80%
of the consideration received by IFL or its Restricted Subsidiaries, as the
case may be, is in the form of cash; and (iii) the Net Proceeds received by IFL
or such Restricted Subsidiary are applied in accordance with the following
paragraph.

IFL may, within 180 days following the receipt of the Net Proceeds from any
Asset Sale, cause such Net Proceeds to be applied (i) to the repayment of
Indebtedness of a Restricted Subsidiary, or to the repayment of any
Indebtedness of IFL which is on a parity with the Senior Notes or (ii) as an
investment in the business or business conducted by IFL or its Restricted
Subsidiaries. If, after such 180-day period, the aggregate of the Available
Asset Sale Proceeds with respect to all Asset Sales occurring in the 180-day
period ending on the last day of the month during which such Asset Sale was
consummated exceeds $5 million, IFL shall apply an amount equal to such
Available Asset Sale Proceeds to an offer to repurchase the Eight-Year Notes
and the Ten-Year Notes, on a pro-rata basis, at a purchase price in cash equal
to 100% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of repurchase.

SEVEN-YEAR NOTES

General

In October 1993, IFL issued $160 million aggregate principal amount of Seven-
Year Notes due 2000. The Seven-Year Notes are senior unsecured obligations of
IFL ranking on a parity in right of payment with all other senior unsecured
obligations of IFL. Interest on the Seven-Year Notes is payable on April 1 and
October 1 of each year at the rate of 9 1/4% per annum.

Redemption

The Seven-Year Notes are not redeemable prior to maturity except that IFL
may, at its option, redeem up to 35% of the initially outstanding principal
amount of Seven-Year Notes at any time on or before October 1, 1995 at 109% of
the principal amount thereof, plus accrued and unpaid interest to the
redemption date, with the proceeds of certain offerings of its capital stock,
including the Offering.

Change of Control

Upon a Change of Control (as defined in the indenture governing the Seven-
Year Notes) of IFL, each holder of Seven-Year Notes will have the option to
require IFL to purchase all or any of the holder's Seven-Year Notes as of the
date 35 business days after such Change of Control for cash in an amount equal
to 101% of the principal amount thereof, plus accrued and unpaid interest to
the repurchase date.

Certain Covenants

The indenture governing the Seven-Year Notes contains restrictive covenants
substantially identical to the restrictive covenants contained in the indenture
governing the Senior Notes and which are described above. Reference is made to
the indenture governing the Seven-Year Notes, a copy of which has been filed
with the Commission and is available upon request, for a complete description
of all of the restrictive covenants contained therein.

9.45% SENIOR DEBENTURES DUE 2011

In December 1991, IFL issued $100 million aggregate principal amount of 9.45%
Senior Debentures due December 15, 2011 (the "Senior Debentures"). The Senior
Debentures are senior unsecured obligations of IFL ranking on a parity in right
of payment with all other senior unsecured obligations of IFL. The Senior
Debentures bear interest, payable semi-annually on each June 15 and December
15, at the rate of 9.45% per

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<PAGE>

annum. The Senior Debentures are not redeemable prior to maturity. The
indenture governing the Senior Debentures imposes certain limitations on the
ability of IFL and its Restricted Subsidiaries (as defined in such indenture)
to incur secured debt without equally and ratably securing the Senior
Debentures, subject to certain exceptions. Such indenture also imposes certain
limitations on the ability of IFL and its Restricted Subsidiaries to engage in
sale-leaseback transactions with respect to Principal Properties (as defined in
such indenture) without either retiring indebtedness for money borrowed with a
maturity of more than 12 months or acquiring additional real property, subject
to certain exceptions. The indenture governing the Senior Debentures does not
restrict the ability of IFL or its subsidiaries to incur additional unsecured
indebtedness.

6.25% CONVERTIBLE SUBORDINATED NOTES DUE 2001

In December 1991, IFL issued $115 million aggregate principal amount of its
6.25% Convertible Subordinated Notes due December 1, 2001 (the "Convertible
Subordinated Notes"). The Convertible Subordinated Notes are subordinated to
all existing and future Senior Indebtedness (as defined in the indenture
governing the Convertible Subordinated Notes) of IFL, including the Senior
Notes, the Seven-Year Notes and the Senior Debentures. The Convertible
Subordinated Notes bear interest, payable semi-annually on each June 1 and
December 1, at the rate of 6.25% per annum. The Convertible Subordinated Notes
are convertible into Common Stock of IFL at a conversion price of $63.50 per
share, subject to adjustment in certain events. The Convertible Subordinated
Notes are redeemable, in whole or in part, on and after December 1, 1994 at
IFL's option initially at a redemption price of 103.571% of the principal
amount thereof, declining to 100% in 1998, in each case plus interest accrued
to the redemption date.

Upon a Change of Control (as defined in the indenture governing the
Convertible Subordinated Notes) of IFL, each holder of Convertible Subordinated
Notes will have the option to require IFL to purchase all or any part of the
holder's Convertible Subordinated Notes as of the date 35 business days after
such Change in Control for cash in an amount equal to 100% of the principal
amount thereof, plus accrued interest to the purchase date.

The indenture governing the Convertible Subordinated Notes does not restrict
the ability of IFL or its subsidiaries to incur additional indebtedness.

DESCRIPTION OF CAPITAL STOCK

The total amount of the authorized capital stock of IFL consists of (i)
50,000,000 shares, $1.00 par value per share of Common Stock and (ii)
12,000,000 shares of Series Preferred Stock, par value $1.00 per share (the
"Series Preferred Stock"), of which 25,503,232 shares of Common Stock and
3,000,000 shares of Series C Preferred Stock (issued in connection with the
Rights Plan described below) were issued and outstanding as of December 31,
1993. The Board of Directors of IFL is authorized to create and issue one or
more series of Series Preferred Stock and to determine the rights and
preferences of each Series, to the extent permitted by the Restated Certificate
of Incorporation.

The following summaries do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, the following documents: (i)
IFL's Restated Certificate of Incorporation (the "Restated Certificate of
Incorporation"), (ii) IFL's By-laws, as amended to date (the "By-laws"), and
(iii) Rights Agreement, as amended (the "Rights Agreement"), between IFL and
The First National Bank of Chicago, pursuant to which shares of Series C
Preferred Stock are issuable. A copy of each of the Restated Certificate of
Incorporation, By-laws and the Rights Agreement are incorporated by reference
as exhibits to the Registration Statement of which this Prospectus is a part.

COMMON STOCK

General. The holders of outstanding shares of the Common Stock are entitled
to receive dividends, subject to the prior rights of any outstanding Series
Preferred Stock, out of assets legally available therefor at

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<PAGE>

such times and in such amounts as the Board of Directors may from time to time
determine. See "Description of Indebtedness" for a discussion of certain
restrictions on the ability of IFL to pay dividends on the Common Stock. The
shares of Common Stock are neither redeemable nor convertible, and the holders
thereof have no preemptive or subscription rights to purchase any securities of
IFL. All the outstanding shares of Common Stock are, and all of the shares of
Common Stock to be issued in the Offering will be, upon consummation of the
Offering, fully paid and non-assessable.

Each outstanding share of Common Stock is entitled to one vote on all matters
submitted to a vote of stockholders. There is no cumulative voting. The Board
of Directors is expressly authorized to adopt, amend or repeal the By-laws in
any manner not inconsistent with the laws of the State of Delaware or the
Restated Certificate of Incorporation, subject to the power of the stockholders
to adopt, amend or repeal the By-laws, and IFL may in its By-laws confer powers
and authorities upon its Board of Directors in addition to those conferred upon
it by statute.

Upon any liquidation, dissolution or winding up of IFL, whether voluntary or
involuntary, remaining net assets, if any, of IFL shall be distributed pro rata
to the holders of the Common Stock.

Certain Provisions of the Restated Certificate of Incorporation and By-laws.
The Restated Certificate of Incorporation provides that IFL shall indemnify
each officer and director of IFL to the fullest extent permitted by applicable
law, except as otherwise may be provided by the By-laws. In furtherance
thereof, the Board of Directors is expressly authorized to amend the By-laws to
give full effect thereto, notwithstanding possible self-interest of the
directors in the action being taken. The Restated Certificate of Incorporation
also provides that, to the fullest extent permitted by the Delaware General
Corporation Law, a director of IFL shall not be liable to IFL or its
stockholders for monetary damages for breach of fiduciary duty as a director.

The Restated Certificate of Incorporation and By-laws contain certain
provisions that are intended to enhance the likelihood of continuity and
stability in the composition of IFL's Board of Directors and which may have the
effect of delaying, deferring or preventing a future takeover or change in
control of IFL unless such takeover or change of control is approved by IFL's
Board of Directors. Such provisions may also render the removal of the current
Board of Directors and of management more difficult. The Restated Certificate
of Incorporation provides that before IFL may purchase outstanding shares of
IFL's Common Stock from a selling stockholder at a price known by IFL to exceed
the market price of the Common Stock, a majority of the stockholders of IFL
must have approved such purchase unless the purchase is made by IFL on the same
terms and as a result of an offer to purchase any and all of IFL's outstanding
Common Stock.

Pursuant to the Restated Certificate of Incorporation, the Board of Directors
of IFL is divided into three classes serving staggered three-year terms.
Directors can be removed from office only for cause and only by the affirmative
vote of the holders of a majority of the voting power of the then outstanding
shares of stock of IFL entitled to vote generally in the election of directors
(the "Voting Stock"), voting together as a single class. Vacancies on the Board
of Directors may only be filled by the remaining directors and not by the
stockholders, except in the case of newly created directorships, if the
remaining directors fail to fill any such vacancy, the stockholders may do so
at the next annual or special meeting called for that purpose.

The By-laws establish an advance notice procedure with regard to the
nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors and with regard to certain matters to be
brought before an annual meeting of stockholders of IFL. In general, notice
must be received by IFL not less than 60 days prior to the meeting and must
contain certain specified information concerning the person to be nominated or
the matter to be brought before the meeting and concerning the stockholder
submitting the proposal.

The Restated Certificate of Incorporation also provides that in the case of
certain mergers, sales of assets, issuances of securities, liquidations or
dissolutions, or reclassifications or recapitalizations involving holders of
stock representing 20% or more of the voting power of the then outstanding
shares of Voting Stock, such

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<PAGE>

transactions must be approved by 80% of the combined voting power of the then
outstanding Voting Stock, unless such transactions are approved by a majority
of the Disinterested Directors (as defined in the Restated Certificate of
Incorporation) of IFL unless certain minimum price, form of consideration and
procedural requirements are satisfied. The Restated Certificate of
Incorporation provides that the affirmative vote of the holders of 80% of the
total votes eligible to be cast in the election of directors is required to
amend, alter, change or repeal such provisions.

The requirement of a supermajority vote to approve certain corporate
transactions and certain amendments to the Restated Certificate of
Incorporation of IFL could enable a minority of IFL's stockholders to exercise
veto powers over such transactions and amendments.

Special meetings of stockholders may be called only by the Chairman of the
Board of IFL, the President of IFL or a majority of the Board of Directors. The
Restated Certificate of Incorporation provides that stockholders may act only
at an annual or special meeting and stockholders may not act by written
consent.

Section 203. IFL is subject to Section 203 of the Delaware General
Corporation Law. In general, Section 203 prevents an interested stockholder
(defined generally as any person owning 15% or more of IFL's outstanding voting
stock) from engaging in a business combination (as defined therein) with IFL
for a period of three years from the date such person becomes an interested
stockholder, unless (i) before such person became an interested stockholder,
the board of directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the
business combination; (ii) upon consummation of the transaction that resulted
in the interested stockholder's becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding stock
held by directors who are also officers of the corporation and by employee
stock plans that do not provide employees with the rights to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer); or (iii) following the transaction in which such
person became an interested stockholder, the business combination is approved
by the board of directors of the corporation and authorized at a meeting of
stockholders by the affirmative vote of the holders of at least two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. Under Section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of one of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors, if such extraordinary transaction is approved or not opposed by a
majority of the directors who were directors prior to any person becoming an
interested stockholder during the previous three years or who were recommended
for election or elected to succeed such directors by a majority of such
directors. By restricting the ability of IFL to engage in business combinations
with an interested person, the application of Section 203 to IFL may provide a
barrier to hostile or unwanted takeovers.

Rights Plan. On June 21, 1989, the Board of Directors of IFL declared a
dividend of one preferred share purchase right (a "Right") for each outstanding
share of Common Stock of IFL. The dividend was payable on July 12, 1989 (the
"Record Date") to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from IFL one one-hundredth of a share of
Junior Participating Preferred Stock, Series C, par value $1.00 per share (the
"Preferred Shares"), of IFL, at a price of $150.00 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in the Rights Agreement.

Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 20% or more of the outstanding
shares of Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the

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<PAGE>

consummation of which would result in the beneficial ownership by a person or
group of 20% or more of such outstanding Common Stock (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced by
such Common Stock certificate with a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificate for
Common Stock outstanding as of the Record Date, even without such notation,
will also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of
the Close of Business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.

The Rights are not exercisable until the Distribution Date. The Rights will
expire on June 21, 1999 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by IFL,
in each case, as described below.

The purchase price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price
less than the then current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to above).

The number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.

Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a quarterly dividend
payment of 100 times the dividend declared per Common Stock. In the event of
liquidation, the holders of the Preferred Shares will be entitled to an
aggregate payment of 100 times the aggregate payment made per share of Common
Stock. Each Preferred Share will have 100 votes, voting together with the
Common Stock. In the event of any merger, consolidation or other transaction in
which shares of Common Stock are exchanged, each Preferred Share will be
entitled to receive 100 times the amount received per share of Common Stock.
These rights are protected by customary antidilution provisions.

Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
share of Common Stock.

In the event that, after the Distribution Date, IFL is acquired in a merger
or other business combination transaction or 50% or more of its consolidated
assets or earning power are sold, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, that number of shares
of common stock of the acquiring company which at the time of such transaction
will have a market value of two times the exercise price of the Right. In the
event that any person becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by
the Acquiring Person and its affiliates and associates (which will thereafter
be void), will thereafter have the right to receive upon exercise that number
of shares of Common Stock having a market value of two times the exercise price
of the Right. If IFL does not have sufficient shares of Common Stock to satisfy
such obligation to issue Common Stock, or if the Board of Directors so elects,
IFL shall deliver upon payment of the exercise price of a Right an amount of
cash or

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<PAGE>

securities equivalent in value to the Common Stock issuable upon exercise of a
Right; provided that, if IFL fails to meet such obligation within 30 days
following the later of (x) the first occurrence of an event triggering the
right to purchase Common Stock and (y) the date on which IFL's right to redeem
the Rights expires, IFL must deliver, upon exercise of a Right but without
requiring payment of the exercise price then in effect, Common Stock (to the
extent available) and cash equal in value to the difference between the value
of the Common Stock otherwise issuable upon the exercise of a Right and the
exercise price then in effect. The Board of Directors may extend the 30-day
period described above for up to an additional 60 days to permit the taking of
action that may be necessary to authorize sufficient additional Common Stock to
permit the issuance of Common Stock upon the exercise in full of the Rights.

At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
Common Stock and prior to the acquisition by such person or group of 50% or
more of the outstanding Common Stock, the Board of Directors of IFL may
exchange the Rights (other than Rights owned by such person or group which have
become void), in whole or in part, at an exchange ratio of one-half of the
number of shares of Common Stock which each holder of a Right would have a
right to receive upon exercise of a Right after giving effect to the adjustment
set forth in Section 11(a)(ii) of the Rights Agreement, or one one-hundredth of
a Preferred Share (or of a share of a class or series of IFL's preferred stock
having equivalent rights, preferences and privileges), per Right (subject to
adjustment).

At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
Common Stock, the Board of Directors of IFL may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be
to receive the Redemption Price.

The terms of the Rights may be amended by the Board of Directors of IFL
without the consent of the holders of the Rights, except that from and after
such time as any person becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights (other than the
Acquiring Person and its affiliates and associates).

Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of IFL, including, without limitation, the right to vote or to
receive dividends.

PREFERRED STOCK

General. Under the Restated Certificate of Incorporation, IFL's Board of
Directors is authorized to create and issue up to 12,000,000 shares of Series
Preferred Stock in one or more series and to determine the rights and
preferences of each series, including the specific title and stated value,
dividend, liquidation, redemption, voting and other rights with respect to such
series of Series Preferred Stock, to the extent permitted by the Restated
Certificate of Incorporation. As of December 31, 1993, 3,000,000 shares of
Series C Preferred Stock (issued in connection with the Rights Plan described
below) were issued and outstanding.

No holder of Series Preferred Stock, solely by virtue of such holdings, has
or will have any pre-emptive right to subscribe for or purchase any shares of
any class of stock which is now or may hereafter be authorized or issued. All
of the outstanding shares of Series Preferred Stock of IFL are fully paid and
non-assessable.

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<PAGE>

CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS

The following is a discussion of the principal United States federal income
and estate tax consequences of the ownership and disposition of the Common
Stock applicable to Non-United States Holders of such Common Stock and is based
upon the opinion of Mayer, Brown & Platt, counsel to the Company. For the
purpose of this discussion, a "Non-United States Holder" is a holder of Common
Stock that is not (i) an individual who is a citizen or resident of the United
States, (ii) a corporation or partnership created or organized in the United
States or under the law of the United States or any state or (iii) an estate or
trust, the income of which is includable in gross income for United States
federal income tax purposes regardless of its source. This discussion does not
deal with all aspects of United States federal income and estate taxation and
does not deal with state, local and non-United States tax consequences that may
be relevant to Non-United States Holders in light of their particular
circumstances. Furthermore, the following discussion is based on current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and
administrative and judicial interpretations as of the date hereof, all of which
are subject to change.

Prospective investors are urged to consult their tax advisors regarding the
United States federal, state and local, and non-United States, income and other
tax consequences of owning and disposing of Common Stock.

DIVIDENDS

Generally, any dividend paid to a Non-United States Holder of Common Stock
will be subject to United States withholding tax at a rate of 30% of the gross
amount of the dividend or, if a Form 1001 is timely filed, at a lesser
applicable tax treaty rate. Dividends received by a Non-United States Holder
that are effectively connected with a United States trade or business conducted
by such Non-United States Holder are exempt from such withholding tax. However,
in general, such effectively connected dividends, net of certain deductions and
credits, are taxed at the same graduated rates applicable to United States
persons, and, in the case of a Non-United States Holder that is a corporation,
the after-tax amount of such dividends may also be subject to a branch-profits
tax at a rate of 30% (unless such branch-profits tax is reduced or eliminated
under an applicable tax treaty).

Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of such
country for purposes of the withholding discussed above and, under the current
Internal Revenue Service ("IRS") position, for purposes of determining the
applicability of treaty benefits. However, under proposed United States
Treasury regulations not currently in effect, a Non-United States Holder of
Common Stock who wishes to claim the benefit of an applicable tax treaty would
be required to satisfy certain certification and other requirements. To claim
exemption from withholding under the effectively connected income exception, a
Non-United States Holder must file an IRS Form 4224 with IFL or its paying
agent.

A Non-United States Holder of Common Stock eligible for a reduced rate of
United States withholding tax pursuant to a tax treaty may obtain a refund of
any excess amounts currently withheld by filing an appropriate claim for refund
with the IRS.

DISPOSITION OF COMMON STOCK

A Non-United States Holder generally will not be subject to United States
federal income tax (and no tax generally will be withheld) with respect to gain
realized upon the sale or other disposition of such holder's Common Stock
unless (i) such gain is effectively connected with a United States trade or
business of the Non-United States Holder, (ii) in the case of an individual
Non-United States Holder, such holder is present in the United States for a
period or periods aggregating 183 days or more during the taxable year in which
such disposition occurs and certain other conditions are met or (iii) IFL is or
has been a "U.S. real property holding

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<PAGE>

corporation" for federal income tax purposes (a "USRPHC") at any time during
the shorter of the taxpayer's holding period in the Common Stock or the five-
year period ending on the date of disposition and the Non-United States Holder
held, directly or indirectly, more than 5% of the Common Stock at any time
during such period. Because, among other things, the values of the Company's
various assets may be difficult to determine, the Company is unable to
determine with certainty whether it is currently a USRPHC, or whether it will
become one in the future.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Under Treasury regulations, IFL must report annually to the IRS the amount of
dividends paid to each Non-United States Holder and the federal income tax, if
any, withheld with respect to such dividends. Such information may be made
available by the IRS to the tax authorities of another country under the
provisions of an applicable tax treaty or information exchange agreement.

Payments of dividends to a Non-United States Holder at an address outside the
United States will generally not be subject to United States federal income tax
backup withholding. The payment of the proceeds of the disposition of Common
Stock to or through the United States office of a broker is subject to backup
withholding at a rate of 31% and to information reporting unless the owner
certifies its Non-United States Holder status under penalties of perjury or
otherwise establishes an exemption. The payment of the proceeds of the
disposition by a Non-United States Holder of Common Stock to or through a
foreign office of a broker will not be subject to backup withholding. However,
information reporting will apply to such payments of proceeds to or through a
foreign office of a broker that is (i) a United States person, (ii) a
"controlled foreign corporation" for United States federal income tax purposes,
or (iii) a foreign person 50% or more of whose gross income is derived from a
United States trade or business unless such broker has documentary evidence in
its files of the owner's Non-United States Holder status (and the broker has no
actual knowledge to the contrary) or the owner otherwise establishes an
exemption.

These backup withholding and information reporting rules are currently under
review by the United States Treasury Department and their application to the
Common Stock could be changed by future regulations. In particular, proposed
United States Treasury regulations not currently in effect provide, among other
things, that payments of dividends to a Non-United States Holder would
generally be subject to backup withholding unless such Non-United States Holder
satisfies certain certification requirements or otherwise establishes an
exemption.

Amounts withheld under the backup withholding rules do not constitute a
separate United States federal income tax. Rather, such amounts withheld from a
payment to a Non-United States Holder will be allowed as a credit against such
Non-United States Holder's federal income tax liability and any amounts
withheld in excess of such federal income tax liability may be refunded to such
Non-United States Holder.

ESTATE TAX

Common Stock owned, or treated as owned, by an individual who is a Non-United
States Holder at the time of his or her death will be included in such holder's
gross estate for United States federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.

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UNDERWRITING

Lehman Brothers Inc., Donaldson, Lufkin & Jenrette Securities Corporation,
Lazard Freres & Co. and J.P. Morgan Securities Inc. (the "U.S. Underwriters")
have severally agreed, subject to the terms and conditions of the U.S.
Underwriting Agreement among IFL, IMC, IMC-Canada and the U.S. Underwriters,
the form of which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part (the "Registration Statement"), to purchase from
IFL, and IFL has agreed to sell to the U.S. Underwriters, the aggregate number
of Shares set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITERS OF SHARES
----------------- ---------
<S> <C>
Lehman Brothers Inc. ........................................... 800,000
Donaldson, Lufkin & Jenrette Securities Corporation............. 800,000
Lazard Freres & Co. ............................................ 800,000
J.P. Morgan Securities Inc. .................................... 800,000
---------
Total....................................................... 3,200,000
=========
</TABLE>

The managers of the International Offering (the "International Managers"),
for whom Lehman Brothers International (Europe), Donaldson, Lufkin & Jenrette
Securities Corporation, Lazard Brothers & Co., Limited and J.P. Morgan
Securities Ltd. are acting as lead managers (the "Lead Managers"), have
severally agreed, subject to the terms and conditions of the International
Underwriting Agreement among IFL, IMC, IMC-Canada and the International
Managers, the form of which is filed as an exhibit to the Registration
Statement, to purchase from IFL, and IFL has agreed to sell to the
International Managers, the aggregate number of Shares set forth opposite their
respective names below:

<TABLE>
<CAPTION>
NUMBER
OF
INTERNATIONAL MANAGERS SHARES
---------------------- -------
<S> <C>
Lehman Brothers International (Europe)............................ 177,000
Donaldson, Lufkin & Jenrette Securities Corporation............... 177,000
Lazard Brothers & Co., Limited.................................... 177,000
J.P. Morgan Securities Ltd. ...................................... 177,000
ABN AMRO Bank N.V................................................. 23,000
James Capel & Co. Limited......................................... 23,000
Credit Lyonnais Securities........................................ 23,000
Enskilda Corporate Skandinaviska Enskilda Banken.................. 23,000
-------
Total......................................................... 800,000
=======
</TABLE>

The U.S. Underwriting Agreement and the International Underwriting Agreement
provide that the obligations of the U.S. Underwriters and the International
Managers to purchase the Shares are subject to certain conditions, including
the delivery of certain legal opinions by their joint counsel, and that, if any
of the foregoing Shares are purchased by the U.S. Underwriters pursuant to the
U.S. Underwriting Agreement or by the International Managers pursuant to the
International Underwriting Agreement, all of the Shares agreed to be purchased
by the U.S. Underwriters or the International Managers, as the case may be,
pursuant to their respective underwriting agreements must be so purchased. The
price to public and underwriting discount for the U.S. Offering and the
International Offering are identical. The closing under the International
Underwriting Agreement is a condition to the closing under the U.S.
Underwriting Agreement, and the closing under the U.S. Underwriting Agreement
is a condition to the closing under the International Underwriting Agreement.

The U.S. Underwriters and International Managers have advised IFL that sales
of Shares to certain selected dealers may be made at a selling concession not
in excess of $.85 per share, and that the U.S. Underwriters and International
Managers may allow, and such dealers may reallow, discounts not in excess of
$.10 per share on sales to certain other dealers. After the initial public
offering, the price to public, concession and reallowance may be changed by the
U.S. Underwriters and the International Managers.

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<PAGE>

IFL granted to the U.S. Underwriters and the International Managers options
to purchase up to an aggregate additional 600,000 shares of Common Stock
exercisable solely to cover over-allotments, at the initial offering price to
public, less the underwriting discount, shown on the cover page of this
Prospectus.

The U.S. Underwriters and the International Managers have entered into an
Agreement Between U.S. Underwriters and International Managers, pursuant to
which each U.S. Underwriter has agreed that as part of the distribution of the
3,200,000 Shares (plus the 480,000 shares of Common Stock to cover over-
allotments) offered in the U.S. Offering, (i) it is not purchasing any such
Common Stock for the account of anyone other than a U.S. Person (as defined
below) and (ii) it has not offered or sold, and will not offer, sell, resell or
deliver, directly or indirectly, any such shares outside the United States or
to anyone other than a U.S. Person. In addition, pursuant to such agreement the
International Managers have agreed that, as part of the distribution of the
800,000 Shares (plus the 120,000 shares of Common Stock to cover over-
allotments) offered in the International Offering, (i) they are not purchasing
any such Common Stock for the account of a U.S. Person and (ii) they have not
offered or sold, and will not offer, sell, resell or deliver, directly or
indirectly, any of such Common Stock in the United States or to any U.S.
Person. The foregoing limitations do not apply to stabilization transactions or
to certain other transactions specified in the underwriting agreements and the
Agreement Between U.S. Underwriters and International Managers, including (i)
certain purchases and sales between the U.S. Underwriters and the International
Managers, (ii) certain offers, sales, resales, deliveries or distributions to
or through investment advisors or other persons exercising investment
discretion, (iii) purchases, offers or sales by a U.S. Underwriter who is also
acting as an International Manager or by an International Manager who is also
acting as a U.S. Underwriter and (iv) other transactions specifically approved
by the U.S. Underwriters and the International Managers. As used herein, (a)
the term "United States" means the United States of America (including the
District of Columbia) and its territories, its possessions and other areas
subject to its jurisdiction and (b) the term "U.S. Person" means any resident
or citizen of the United States, any corporation or other entity created or
organized in or under the laws of the United States or any estate or trust, the
income of which is subject to United States income taxation regardless of the
source of its income.

Pursuant to the Agreement Between U.S. Underwriters and International
Managers, sales may be made between the U.S. Underwriters and the International
Managers of such number of Shares as may be mutually agreed upon. The price of
any Shares sold shall be the price to public then in effect for Shares being
sold by the U.S. Underwriters and the International Managers less the selling
concession, unless otherwise determined by mutual agreement. To the extent that
there are sales between U.S. Underwriters and the International Managers, the
number of shares of Common Stock initially available for sale by the U.S.
Underwriters or by the International Managers may be more or less than the
amounts appearing on the cover page of this Prospectus.

The International Managers have represented and agreed that (i) they have not
offered or sold, and will not offer or sell, in the United Kingdom, by means of
any document, any Shares other than to persons whose ordinary business it is to
buy or sell shares, whether as principal or agent (except under circumstances
which do not constitute an offer to the public within the meaning of the
Companies Act 1985); (ii) they have complied and will comply with all
applicable provisions of the Financial Services Act 1986 (the "1986 Act") with
respect to anything done by it in relation to the Common Stock in, from or
otherwise involving the United Kingdom; and (iii) they have only issued or
passed on, and will only issue or pass on, to any person in the United Kingdom,
any investment advertisement (within the meaning of the 1986 Act) relating to
the Common Stock if that person falls within Article 9(3) of the 1986 Act
(Investment Advertisement) (Exceptions) Order 1988.

Purchasers of the Shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the price to public set forth on the cover page hereof.

66
<PAGE>

IFL has agreed that, for a period of 90 days after the date of this
Prospectus, it will not, without the prior written consent of the U.S.
Underwriters, offer, sell, contract to sell or otherwise dispose of any shares
of Common Stock (or any securities convertible into, or exercisable or
exchangeable for, Common Stock), and IFL has also agreed that it will not,
during the same period, grant any options or warrants to purchase Common Stock,
other than pursuant to its employee stock option plans.

The underwriting agreements provide that IFL, IMC and IMC-Canada will
indemnify the U.S. Underwriters and the International Managers against certain
liabilities, including liabilities under the Securities Act, or will contribute
to payments the U.S. Underwriters and the International Managers may be
required to make in respect thereof.

Lehman Brothers Inc. has provided investment banking services to the Company,
FRP and related entities from time to time and has been a financial advisor to
the Company with respect to, and has provided a fairness opinion to IFL's Board
of Directors in connection with, the formation of the Partnership, for which
services it has received customary compensation. As of March 31, 1994, certain
investment management affiliates of J.P. Morgan Securities Inc. held in the
aggregate 754,697 shares of Common Stock.

LEGAL MATTERS

Certain legal matters relating to the Offering will be passed upon for IFL by
Mayer, Brown & Platt, Chicago, Illinois and for the Underwriters by Skadden,
Arps, Slate, Meagher & Flom, Chicago, Illinois.

EXPERTS

The Consolidated Financial Statements of IMC Fertilizer Group, Inc. at June
30, 1993 and 1992, and for each of the three years in the period ended June 30,
1993, included in this Prospectus have been audited by Ernst & Young,
independent auditors, as set forth in their report thereon included herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

67
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Annual Financial Statements:
Report of Independent Auditors.......................................... F-2
Consolidated Statement of Operations for the years ended June 30, 1993,
1992 and 1991.......................................................... F-3
Consolidated Balance Sheet at June 30, 1993 and 1992.................... F-4
Consolidated Statement of Cash Flows for the years ended June 30, 1993,
1992 and 1991.......................................................... F-5
Consolidated Statement of Changes in Shareholders' Equity for the years
ended June 30, 1993, 1992 and 1991..................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
Interim Financial Statements (unaudited):
Consolidated Statement of Operations for the six months ended December
31, 1993 and 1992...................................................... F-23
Consolidated Balance Sheet as of December 31, 1993 and June 30, 1992.... F-24
Consolidated Statement of Cash Flows for the six months ended December
31, 1993 and 1992...................................................... F-25
Consolidated Statement of Changes in Shareholders' Equity for the six
months ended December 31, 1993 and 1992................................ F-26
Notes to Interim Consolidated Financial Statements...................... F-27
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of IMC Fertilizer Group, Inc.

We have audited the accompanying consolidated balance sheet of IMC Fertilizer
Group, Inc. as of June 30, 1993 and 1992, and the related consolidated
statements of operations, cash flows, and changes in shareholders' equity for
each of the three years in the period ended June 30, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IMC Fertilizer
Group, Inc. at June 30, 1993 and 1992, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
June 30, 1993 in conformity with generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, the Company
changed its method of accounting for postretirement benefits other than
pensions in 1993 and income taxes in 1992.

Ernst & Young

Chicago, Illinois
September 3, 1993

F-2
<PAGE>

CONSOLIDATED STATEMENT OF OPERATIONS

(IN MILLIONS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------
1993 1992 1991
------- -------- --------
<S> <C> <C> <C>
Net sales........................................ $ 897.1 $1,058.5 $1,131.2
Cost of goods sold............................... 772.2 829.0 890.3
------- -------- --------
Gross margins................................ 124.9 229.5 240.9
Selling, administrative and general expenses..... 60.4 68.1 65.1
Sterlington litigation settlement................ 169.1
Other operating (income) and expense, net........ 25.1 (30.0) (20.2)
------- -------- --------
Operating earnings (loss).................... (129.7) 191.4 196.0
Interest earned and other non-operating (income)
and expense, net................................ 2.8 5.5 2.1
Interest charges................................. 44.8 44.5 41.1
------- -------- --------
Earnings (loss) before income taxes and account-
ing changes..................................... (177.3) 141.4 152.8
Provision (credit) for income taxes.............. (57.3) 50.5 57.0
------- -------- --------
Earnings (loss) before cumulative effect of ac-
counting changes................................ (120.0) 90.9 95.8
Cumulative effect on prior years of changes in
accounting for postretirement benefits other
than pensions (net of income taxes) in 1993 and
income taxes in 1992............................ (47.1) (165.5)
------- -------- --------
Net earnings (loss).......................... $(167.1) $ (74.6) $ 95.8
======= ======== ========
Earnings (loss) per share:
Earnings (loss) before cumulative effect of ac-
counting changes.............................. $ (5.44) $ 4.12 $ 3.85
Cumulative effect on prior years of changes in
accounting.................................... (2.13) (7.50)
------- -------- --------
Net earnings (loss).......................... $ (7.57) $ (3.38) $ 3.85
======= ======== ========
</TABLE>

(See Notes to Consolidated Financial Statements)

F-3
<PAGE>

CONSOLIDATED BALANCE SHEET

(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
AT JUNE 30,
--------------------
ASSETS 1993 1992
------ --------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................... $ 111.6 $ 32.6
Receivables, net............................................ 145.1 55.3
Inventories
Products (principally finished)........................... 120.1 123.6
Operating materials and supplies.......................... 44.2 44.2
--------- ---------
164.3 167.8
Prepaid expenses............................................ 12.4 10.1
--------- ---------
Total current assets.................................... 433.4 265.8
Insurance claim receivable, net............................... 140.2
Investment in oil and gas joint venture....................... 55.0 70.3
Property, plant and equipment................................. 2,422.0 2,325.6
Accumulated depreciation and depletion........................ (1,095.5) (1,055.6)
--------- ---------
Net property, plant and equipment........................... 1,326.5 1,270.0
Deferred income taxes......................................... 187.5 60.4
Other assets.................................................. 53.2 31.7
--------- ---------
$ 2,055.6 $ 1,838.4
========= =========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable............................................ $ 75.9 $ 73.3
Income taxes................................................ 10.0 13.5
Dividend payable to IMCERA.................................. 51.9
Accrued liabilities......................................... 67.2 86.6
Current maturities of long-term debt........................ 33.3 12.2
--------- ---------
Total current liabilities............................... 238.3 185.6
Long-term debt, less current maturities....................... 893.4 630.6
Deferred income taxes......................................... 317.5 273.6
Accrued postretirement employee benefits...................... 82.8
Accrued reclamation costs..................................... 51.4 43.7
Dividend payable to IMCERA.................................... 51.9
Other noncurrent liabilities.................................. 41.8 37.6
Shareholders' equity:
Common stock, $1 par value, authorized 50,000,000 shares;
issued 32,156,920 and 32,130,080 shares in 1993 and 1992,
respectively............................................... 32.2 32.1
Capital in excess of par value.............................. 768.4 768.0
Retained earnings........................................... 22.5 207.4
Treasury stock, at cost, 10,097,808 and 10,082,779 shares in
1993 and 1992, respectively................................ (392.7) (392.1)
--------- ---------
Total shareholders' equity.............................. 430.4 615.4
--------- ---------
$ 2,055.6 $ 1,838.4
========= =========
</TABLE>

(See Notes to Consolidated Financial Statements)

F-4
<PAGE>

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN MILLIONS)

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)................................. $(167.1) $ (74.6) $ 95.8
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and depletion........................ 61.5 83.3 90.2
Deferred income taxes............................. (78.4) 170.2 13.7
Sterlington litigation settlement................. 180.0
Payment of Sterlington litigation settlement...... (100.0)
Postretirement employee benefits.................. 82.8
Cash distributions in excess of equity in earnings
of oil and gas joint venture..................... 18.6 9.2
Loss on insurance claim settlement................ 11.4
Gain on sale of ammonia production facility....... (34.2)
Other non-cash charges and credits, net........... 8.0 (3.9) (18.9)
Changes in:
Receivables, net................................ 22.3 17.5 (17.9)
Inventories..................................... 3.5 8.8 (21.7)
Prepaid expenses................................ (2.3) (2.7) (1.3)
Accounts payable................................ (18.9) (34.8) 18.0
Accrued liabilities............................. (7.3) (4.8) 13.6
Income taxes.................................... 12.1 (11.6) 2.9
------- ------- -------
Net cash provided by operating activities..... 26.2 122.4 174.4
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures................................ (106.1) (177.7) (168.5)
Sales of property, plant and equipment (including
$81.1 from sale of ammonia production facility in
1992).............................................. .5 81.7 1.0
Investment in oil and gas joint venture............. (3.3) (21.0) (20.3)
Sale of mineral reserve interests................... 17.9
------- ------- -------
Net cash used by investing activities......... (108.9) (117.0) (169.9)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt, net....... 246.4 324.3 315.0
Payments of long-term debt.......................... (66.9) (312.1) (90.9)
Cash dividends paid................................. (17.8) (23.8) (28.0)
Purchase of common stock............................ (388.0)
Proceeds from issuance of common stock.............. 196.6
------- ------- -------
Net cash provided (used) by financing activi-
ties......................................... 161.7 (11.6) 4.7
------- ------- -------
Net increase (decrease) in cash and cash equiva-
lents.............................................. 79.0 (6.2) 9.2
------- ------- -------
Cash and cash equivalents--beginning of year........ 32.6 38.8 29.6
------- ------- -------
Cash and cash equivalents--end of year.............. $ 111.6 $ 32.6 $ 38.8
======= ======= =======
Supplemental cash flow disclosures:
Interest paid..................................... $ 73.0 $ 67.2 $ 49.4
Income taxes paid................................. $ 8.8 $ 53.8 $ 39.8
Supplemental schedule of non-cash investing and fi-
nancing activities:
Issuances of common stock for compensation awards. $ 8.9
</TABLE>

(See Notes to Consolidated Financial Statements)

F-5
<PAGE>

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(IN MILLIONS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
CAPITAL
COMMON IN EXCESS RETAINED TREASURY
STOCK OF PAR VALUE EARNINGS STOCK
------ ------------ -------- --------
<S> <C> <C> <C> <C>
Balance at June 30, 1990................. $26.4 $558.0 $238.0 $ (2.7)
Net earnings........................... 95.8
Sale of common stock................... 5.3 191.3
Dividends ($1.08 per share)............ (28.0)
Stock options exercised................ 2.5
Acquisition of shares.................. (388.0)
----- ------ ------ -------
Balance at June 30, 1991................. 31.7 751.8 305.8 (390.7)
Net loss............................... (74.6)
Dividends ($1.08 per share)............ (23.8)
Restricted stock awards................ .2 10.8 (.8)
Stock options exercised................ .2 5.4 (.3)
Acquisition of shares.................. (.3)
----- ------ ------ -------
Balance at June 30, 1992................. 32.1 768.0 207.4 (392.1)
Net loss............................... (167.1)
Dividends ($.81 per share)............. (17.8)
Restricted stock awards................ .1 .3 (.6)
Stock options exercised................ .1
----- ------ ------ -------
Balance at June 30, 1993................. $32.2 $768.4 $ 22.5 $(392.7)
===== ====== ====== =======
</TABLE>

(See Notes to Consolidated Financial Statements)

F-6
<PAGE>

IMC FERTILIZER GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN MILLIONS EXCEPT AS OTHERWISE INDICATED)

1. BUSINESS OF THE COMPANY

IMC Fertilizer Group, Inc. (the Company), which operates in a single industry
segment, is engaged in the mining, processing, production and sale of phosphate
rock and potash, two basic inorganic fertilizer materials, and in the
production and sale of phosphate chemicals. The Company also produces mixed
fertilizer products for retail distribution and, through interests in two joint
ventures, produces sulphur and oil & natural gas.

2. ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of IMC Fertilizer
Group, Inc. and all subsidiaries which are more than 50 percent owned and
controlled. The Company also consolidates its proportionate share of the assets
and liabilities of the Company's sulphur venture, while its 25 percent
investment in its oil and natural gas venture is accounted for using the equity
method. Intercompany transactions are eliminated.

Reclassifications

Certain prior year amounts have been reclassified to conform to the 1993
presentation.

Cash Equivalents

The Company considers all highly liquid investments with a maturity date of
three months or less when purchased to be cash equivalents which are reflected
at their approximate fair value. The effect of foreign currency exchange rate
fluctuations on the total cash and cash equivalents balance was not
significant.

Inventories

Inventories are valued at the lower of cost or market (net realizable value).
Cost for substantially all inventories is determined on a cumulative annual
average basis.

Property, Plant and Equipment

Property, plant and equipment are carried at cost. Cost of significant assets
includes capitalized interest incurred during the construction and development
period. Expenditures for replacements and improvements are capitalized;
maintenance and repair expenditures are charged to operations when incurred.

Depreciation and depletion expenses for mining and production operations,
including mineral interests, are determined using the unit-of-production method
based on estimates of recoverable reserves. Other asset classes or groups are
depreciated or amortized on a straight-line basis over their estimated useful
lives as follows: buildings, 17 to 50 years; machinery and equipment, five to
25 years.