<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
IMC Fertilizer Group, Inc.
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Quarterly
Report on Form 10-Q for the quarter ended December 31, 1993, as set
forth in the pages attached hereto:
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
IMC Fertilizer Group, Inc.
ROBERT C. BRAUNEKER
-------------------------------
Robert C. Brauneker
Executive Vice President
and Chief Financial Officer
April 8, 1994
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The accompanying interim consolidated financial statements of IMC
Fertilizer Group, Inc. (the Company) do not include all disclosures
normally provided in annual financial statements. These financial
statements, which should be read in conjunction with the consolidated
financial statements contained in the Company's 1993 Annual Report to
Shareholders, are unaudited but include all adjustments which the
Company's management considers necessary for a fair presentation.
These adjustments consist of normal recurring accruals except as
discussed in Notes 1 and 2 of Notes to Consolidated Financial
Statements. Certain 1992 amounts have been reclassified to conform to
the 1993 presentation. Interim results are not necessarily indicative
of the results expected for the fiscal year.
CONSOLIDATED STATEMENT OF OPERATIONS
(In millions except per share amounts)
Quarter Ended Six Months Ended
December 31, December 31,
1993 1992 1993 1992
-----------------------------------------------------------------
Net sales $329.0 $197.5 $595.4 $418.4
Cost of goods sold 295.2 166.4 554.2 336.8
------ ------ ------ ------
Gross margins 33.8 31.1 41.2 81.6
Selling, general and
administrative expenses 15.7 14.2 29.6 30.8
Other operating (income) and
expense, net (Note 1) (3.1) (.8) (9.7) (10.8)
------ ------ ------ ------
Operating earnings 21.2 17.7 21.3 61.6
Equity in (earnings) loss of
oil and gas joint venture
(Note 2) 20.6 (.4) 20.5 (3.6)
Interest earned and other
non-operating (income) and
expense, net .1 2.9 3.3 6.5
Interest charges 20.3 10.0 42.8 20.7
------ ------ ------ ------
Earnings (loss) before
minority interest and items
noted below (19.8) 5.2 (45.3) 38.0
Minority interest (Note 3) 6.5 5.3
------ ------ ------ ------
Earnings (loss) before items
noted below (26.3) 5.2 (50.6) 38.0
Provision (credit) for
income taxes (Note 4) (22.7) 2.3 (24.5) 16.5
------ ------ ------ ------
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting change (3.6) 2.9 (26.1) 21.5
Extraordinary loss-debt
retirement (Note 6) (23.8)
Cumulative effect of
accounting change (Note 7) 47.1)
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------ ------ ------ ------
Net earnings (loss) $ (3.6) $ 2.9 $ (49.9)$ (25.6)
====== ====== ====== ======
Earnings (loss) per share
(Note 5):
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting change $ (.14)$ .13 $(1.11)$ .97
Extraordinary loss-debt
retirement (Note 6) (1.01)
Cumulative effect of
accounting change
(Note 7) (2.13)
------ ------ ------ ------
Net earnings (loss) $ (.14)$ .13 $(2.12)$(1.16)
====== ====== ====== ======
(See Notes to Consolidated Financial Statements on Page 5)
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CONSOLIDATED BALANCE SHEET
(Dollars in millions except per share amounts)
December 31,June 30,
Assets 1993 1993
------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 87.1 $ 111.6
Receivables, net 163.0 145.1
Inventories:
Products (principally finished) 228.5 120.1
Operating materials and supplies 65.8 44.2
-------- --------
294.3 164.3
Prepaid expenses 11.8 12.4
-------- --------
Total current assets 556.2 433.4
Investment in oil and gas joint
venture (Note 2) 23.7 55.0
Property, plant and equipment 3,365.4 2,422.0
Accumulated depreciation and depletion (1,416.8) (1,095.5)
-------- --------
Net property, plant and equipment 1,948.6 1,326.5
Deferred income taxes 224.6 187.5
Other assets 73.2 53.2
-------- --------
$2,826.3 $2,055.6
======== ========
Liabilities and Stockholders' Equity
-----------------------------------------------------------------
Current liabilities:
Accounts payable $ 70.6 $ 75.9
Income taxes 10.0
Dividend payable to IMCERA (Note 8) 51.9
Accrued liabilities 88.7 67.2
Current maturities of long-term debt 46.8 33.3
-------- --------
Total current liabilities 206.1 238.3
Long-term debt, less current
maturities (Note 6) 847.2 893.4
Deferred income taxes 336.1 317.5
Accrued postretirement employee benefits 90.8 82.8
Accrued reclamation costs 85.5 51.4
Other noncurrent liabilities 55.5 41.8
Deferred gain (Note 3) 56.0
Minority interest (Note 3) 655.4
Stockholders' equity:
Common stock, $1 par value, authorized
50,000,000 shares; issued 32,158,240
shares and 32,156,920 shares at
December 31 and June 30, respectively 32.2 32.2
Capital in excess of par value 747.7 768.4
Retained earnings (deficit) (27.4) 22.5
Treasury stock, at cost, 6,655,008
shares and 10,097,808 shares of
common stock at December 31 and
June 30, respectively (258.8) (392.7)
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-------- --------
Total stockholders' equity 493.7 430.4
======== ========
$2,826.3 $2,055.6
======== ========
(See Notes to Consolidated Financial Statements on Page 5)
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CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
Six months ended
December 31,
1993 1992
------------------------------------------------------------------
Cash Flows from Operating Activities
------------------------------------
Net loss $ (49.9) $ (25.6)
Adjustments to reconcile net loss to
net cash (used) provided by operating
activities:
Depreciation, depletion and amortization 54.0 31.9
Cash distributions in excess of equity
in operating results of oil and gas
joint venture 31.3 13.8
Deferred income taxes (18.5) (24.3)
Minority interest 5.3
Postretirement employee benefits 3.3 79.3
Other non-cash charges and credits, net (13.7) 5.6
Changes in:
Receivables 27.2 (31.5)
Inventories 11.7 (45.3)
Prepaid expenses .6 2.9
Accounts payable, accrued liabilities
and income taxes (115.2) (9.7)
------ ------
Net cash used by operating activities (63.9) (2.9)
------ ------
Cash Flows from Investing Activities
------------------------------------
Capital expenditures (12.5) (75.3)
Other 4.4 (1.0)
------ ------
Net cash used by investing activities (8.1) (76.3)
------ ------
Net cash used before financing
activities (72.0) (79.2)
------ ------
Cash Flows from Financing Activities
------------------------------------
Payments of long-term debt (220.4)
Proceeds from issuance of long-term
debt, net 171.6 61.1
Issuance of common stock from treasury 113.5
Joint venture cash distribution to FRP (17.2)
Cash dividends paid (11.9)
------ ------
Net cash provided by financing
activities 47.5 49.2
------ ------
Net decrease in cash and cash equivalents (24.5) (30.0)
------ ------
Cash and cash equivalents-beginning of period 111.6 32.6
------ ------
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Cash and cash equivalents-end of period $ 87.1 $ 2.6
====== ======
Supplemental cash flow disclosures:
Interest paid $ 37.1 $ 27.3
Income taxes (refunded) paid $ (4.1) $ 13.0
Supplemental schedule of non-cash investing
and financing activities:
Acquisition of interest in joint venture -
Net assets acquired $713.0
Minority interest 649.3
------
$ 63.7
(See Notes to Consolidated Financial Statements on Page 5)
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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions except per share amounts)
Six months ended
December 30,
1993 1992
------------------------------------------------------------------
Common stock:
Balance at June 30 and December 31 $ 32.2 $ 32.1
Capital in excess of par value:
Balance at June 30 768.4 768.0
Issuance of common stock (Note 6) (20.6)
Restricted stock award (.1)
------ ------
Balance at December 31 747.7 768.0
Retained earnings:
Balance at June 30 22.5 207.4
Net loss (49.9) (25.6)
Dividends ($.54 a share in 1992) (11.9)
------ ------
Balance at December 31 (27.4) 169.9
Treasury stock:
Balance at June 30 (392.7) (392.1)
Issuance of common stock from
treasury (Note 6) 134.1
Acquisition of shares (.2)
------ ------
Balance at December 31 (258.8) (392.1)
------ ------
Total stockholders' equity $493.7 $577.9
====== ======
(See Notes to Consolidated Financial Statements on Page 5)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Resolution of Contract Dispute
------------------------------
Other operating (income) and expense, net, for the six months ended
December 31, 1992, included a gain of $8.1 million from the resolution
of a contract dispute with a major uranium oxide customer.
2. Write-Down of Investment in Oil and Gas Joint Venture
-----------------------------------------------------
The Company's investment in its oil and gas joint venture is subject
to a ceiling limitation test based on a computed value of the Company's
share of future net revenues from proved reserves using current prices.
Due to the current low price of crude oil, the Company was required to
reduce the carrying value of its investment in its oil and gas joint
venture at December 31, 1993. As a result, the Company recorded a
charge of $20.3 million for the quarter and six months ended December
31, 1993 to reflect this reduction.
3. Joint Venture Partnership
-------------------------
On July 1, 1993, the Company and Freeport-McMoRan Resource Partners,
Limited Partnership (FRP) entered into a joint venture partnership in
which both companies contributed their respective phosphate fertilizer
businesses to create IMC-Agrico Company, a Delaware general partnership
(the Partnership), in return for a 56.5 percent and 43.5 percent
economic interest, respectively, in the Partnership. The activities of
the Partnership, which is operated by the Company, include the mining
and sale of phosphate rock, and the production, distribution and sale
of phosphate chemicals, uranium oxide and related products.
For financial reporting purposes, the acquisition of 56.5 percent of
FRP's phosphate fertilizer business net assets is being accounted for
using the purchase method. This transaction resulted in a deferred gain
of $63.7 million which is recognized in the statement of operations as
the related FRP assets are being used in operations, generally over 20
years. Other operating (income) and expense, net for the six months
ended December 31, 1993 included $7.7 million of such gain. 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 joint venture partnership was included in the
Company's statement of operations as minority interest.
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.
<PAGE>
The following summary of the Company's Consolidated Statement of
Operations for the quarter and six months ended December 31, 1993 and
1992 is presented for comparative purposes. For the quarter and six
months ended December 31, 1992, unaudited pro forma Statement of
Operations data give effect to formation of the joint venture
partnership as if the formation occurred on July 1, 1992.
Quarter Ended Six Months Ended
December 31, December 31,
(Pro forma) (Pro forma)
(In millions except per share amounts)1993 1992 1993 1992
---------------------------------------------------------------------
Net sales $329.0 $349.9 $595.4 $710.5
Operating earnings 21.2 .1 21.3 41.6
Earnings (loss) before minority
interest, income taxes,
extraordinary item and
cumulative effect of accounting
change (19.8) (9.7) (45.3) 17.8
Minority interest 6.5 3.7 5.3 (4.4)
------ ------ ------ ------
Earnings (loss) before
income taxes, extraordinary
item and cumulative effect
of accounting change (26.3) (6.0) (50.6) 13.4
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting change (3.6) (4.1) (26.1) 6.3
Extraordinary loss - debt
retirement (See note 6) (23.8)
Cumulative effect of
accounting change (47.1)
------ ------ ------ ------
Net loss $ (3.6) $ (4.1)$(49.9) $(40.8)
====== ====== ====== ======
Net loss per share:
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting change $ (.14) $ (.19) $(1.11) $ .28
Extraordinary loss -
debt retirement (1.01)
Cumulative effect of
accounting change (2.13)
------ ------ ------ ------
Net loss $ (.14) $ (.19) $(2.12)$ (1.85)
====== ====== ====== ======
4. Income Taxes
------------
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. Earnings (Loss) Per Share
<PAGE>
-------------------------
Earnings (loss) per share were based on the weighted average number
of shares and equivalent shares outstanding. Shares used in the
calculations were 25.1 and 23.5 million shares for the quarter and six
months ended December 31, 1993 and 22.1 million shares for the quarter
and six months ended December 31, 1992.
6. Extraordinary Loss-Debt Retirement
----------------------------------
In October 1993, the Company completed its purchase of $220 million
principal amount of its 11.25 percent notes from The Prudential
Insurance Company of America for $248.1 million. The notes originally
were scheduled to be due in annual installments from 1995 to 2004. The
notes were redeemed with the proceeds from the sale, on the same date,
of $160 million of 9.25 percent senior notes due 2000 and 3,450,000
shares of common stock. In connection with this purchase, the Company
recorded an extraordinary loss on September 30, 1993 for the redemption
premium incurred on the Company's 11.25 percent notes and the write-off
of previously deferred finance charges associated with such notes, net
of income taxes.
7. Accounting For Postretirement Benefits
--------------------------------------
In fiscal 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." As a result, results for
the six months ended December 31, 1992 reflected a charge, net of taxes,
for the cumulative effect of the adoption of SFAS No. 106 as of July 1,
1992.
8. Dividend Payable to IMCERA
--------------------------
In May 1993, the Company reached a settlement with its insurance
carriers in connection with a claim filed resulting from an inflow of
water into one of the Company's two inter-connected potash mines in
Saskatchewan, Canada. From the settlement proceeds, all of which were
received by late July 1993, the Company reimbursed Potash Corporation of
Saskatchewan Inc. (PCS) $23 million (Canadian) for amounts that PCS had
previously contributed under an agreement with the Company and also paid
a previously declared dividend to IMCERA Group Inc. (IMCERA) of $51.9
million relating to amounts IMCERA paid for water inflow control prior
to its disposition of the Company.
Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
---------------------
Three months ended December 31, 1993 vs. three months ended December 31,
1992
------------------------------------------------------------------------
The Company incurred a net loss of $3.6 million, or $.14 per share,
for the quarter, compared to net earnings of $2.9 million, or $.13 per
share, a year ago. The second quarter loss included a charge of $20.3
million, ($12.4 million after taxes), or $.49 per share, related to the
<PAGE>
write-down of the Company's investment in an oil and gas joint venture
resulting from the current low market price for crude oil. See Note 2
of Notes to Consolidated Financial Statements for further discussion of
this matter.
IMC-Agrico, a joint venture partnership between the Company and
Freeport-McMoRan Resource Partners, Limited Partnership, began
operations July 1, 1993 and is consolidated for financial reporting
purposes. Comparisons between the quarters 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 quarter were $329 million, compared to $197.5 million
for the quarter a year ago. On a pro forma basis, sales for the quarter
a year ago would have been $349.9 million.
Gross margins increased $2.7 million from the same period a year
ago. On a pro forma basis, gross margins would have decreased $17.5
million, primarily due to lower margins for phosphate fertilizers, a $12
million decrease on a pro forma basis, sulphur, a $3 million decrease,
and potash, a $1 million decrease.
Second quarter market conditions continued to improve, primarily for
phosphate chemicals, as prices continued to rise from the record low
levels experienced in the spring of 1993 and as China and India,
traditionally the world's largest importers of crop nutrients, returned
to the market place. From the Company's ongoing cost reduction programs
and the realization of efficiencies and cost savings of the IMC-Agrico
Company joint venture, the Company began to benefit from lower
production costs. However, despite these developments, phosphate
fertilizer margins for the quarter were still lower than a year ago.
Production continued to increase at the Main Pass sulphur mine which
reached its design capacity of 5,500 tons per day in December 1993, and
has since sustained production at or above that level. Potash margins
decreased primarily due to an eight percent decrease in prices ($3
million), lower production costs ($3 million) and reduced demand ($1
million).
The following table summarizes the Company's sales of fertilizer
products and average selling prices for the three months ended December
31, 1993 and 1992. Where applicable, sales tons and prices for 1992
have been reported on a pro forma basis assuming the joint venture
partnership began operations on July 1, 1992.
(Tons in millions of short tons)
1993 1992
-------- --------
Phosphate fertilizers
Diammonium phosphate
--------------------
Sales tons:
Florida .553
Louisiana .471
Warehouse .116
-------- --------
Total sales tons 1.140 1.177
<PAGE>
Average price per ton:
Florida $114.65
Louisiana $125.70
Warehouse $129.87
-------- --------
Average price per ton $120.76 $119.26
Monoammonium phosphate
----------------------
Sales tons:
Granular .120 .126
Powdered .060 .032
-------- --------
Total sales tons .180 .158
Average price per ton:
Granular $135.87 $128.89
Powdered $107.75 $102.96
Granular triple superphosphate
------------------------------
Sales tons .283 .234
Average price per ton $ 93.90 $ 95.42
Phosphate rock
Sales tons 2.460 2.108
Average price per ton $ 19.47 $ 23.40
Potash
Sales tons .610 .700
Average price per ton $ 68.02 $ 74.09
Mixed fertilizers
Sales tons .098 .108
Average price per ton $126.19 $131.59
Selling, general and administrative expenses increased $1.5 million
due to higher legal and cost of risk expenses.
Other operating income and expense increased $2.3 million primarily
due to the amortization of a deferred gain in 1993 resulting from the
exchange of the Company's phosphate business for a 56.5 percent interest
in IMC-Agrico.
Interest costs were $10.3 million higher than last year primarily as
a result of costs incurred on increased debt levels.
As a result of an improved earnings outlook, the Company revised its
expected annual effective tax rate in the second quarter of 1993. The
revised effective tax rate resulted in a $10.6 million positive tax
benefit for the quarter ended September 30, 1993 which was included in
the second quarter tax benefit.
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 quarter, 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
<PAGE>
the early extinguishment of $220 million of debt held by The Prudential
Insurance Company of America. In 1992, the loss included a one-time
charge of $47.1 million, or $2.13 per share, related to the Company's
adoption of 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 Consolidated Financial Statements for more information
regarding these non-recurring items.
IMC-Agrico, a joint venture partnership between the Company and
Freeport-McMoRan Resource Partners, Limited Partnership, began
operations July 1, 1993 and is consolidated for financial reporting
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 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 percent 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 percent of capacity with
only the Nichols, Florida, DAP facility remaining idle. In March 1994,
IMC-Agrico announced that it planned 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 m ore
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
<PAGE>
capitalized. Mixed fertilizer margins declined primarily as a result of
lower prices.
The following table summarizes the Company's sales of fertilizer
products and average selling prices for the six months ended December
31, 1993 and 1992. Where applicable, sales tons and prices for 1992
have been reported on a pro forma basis assuming the joint venture
partnership began operations on July 1, 1992.
(Tons in millions of short tons)
1993 1992
-------- --------
Phosphate fertilizers
Diammonium phosphate
--------------------
Sales tons:
Florida 1.028
Louisiana .853
Warehouse .192
-------- --------
Total sales tons 2.073 2.394
Average price per ton:
Florida $108.32
Louisiana $119.59
Warehouse $121.82
-------- --------
Average price per ton $114.20 $121.12
Monoammonium phosphate
----------------------
Sales tons:
Granular .246 .237
Powdered .108 .077
-------- --------
Total sales tons .354 .314
Average price per ton:
Granular $125.33 $129.91
Powdered $101.58 $105.50
Granular triple superphosphate
------------------------------
Sales tons .484 .523
Average price per ton $ 90.78 $ 96.91
Phosphate rock
Sales tons 4.669 4.241
Average price per ton $ 19.73 $ 23.54
Potash
Sales tons 1.200 1.502
Average price per ton $ 67.92 $ 71.69
Mixed fertilizers
Sales tons .153 .161
Average price per ton $127.65 $133.51
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
<PAGE>
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 earnings from its equity 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 Consolidated Financial
Statements.
Interest costs were $22.1 million higher than last year primarily as
a result of costs incurred on increased debt levels.
Financial Condition
-------------------
In October 1993, the Company completed its purchase of $220 million
principal amount of its 11.25 percent notes from The Prudential
Insurance Company of America for $248.1 million. The notes were
originally scheduled to be due in annual installments from 1995 to 2004.
However, the notes were redeemed with the proceeds from the sale, on the
same date, of $160 million of 9.25 percent senior notes due 2000 and
3,450,000 shares of common stock.
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 distribution
settlement with FRP and $12.5 million of capital expenditures.
Partially offsetting this cash outflow was $64.7 million of net proceeds
from the completion of the Company's 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 joint venture 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.
In June 1993, the Company entered into an agreement with a group of
banks to provide the Company with an unsecured revolving credit facility
under which the Company can borrow up to $100 million for general
corporate purposes until June 30, 1996. At December 31, 1993, $32
million was drawn down in the form of standby letters of credit
principally to support the Company's industrial revenue bonds.
Borrowings under the revolving credit facility are limited to $25
million during a specified period in any year. There were no other
borrowings outstanding under the revolving credit facility at December
31, 1993.
<PAGE>
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 stockholders,
and prohibit the incurrence of additional indebtedness except under
certain conditions. The Company's revolving credit facility also
contains financial ratios and other tests which must be met in
accordance with the agreement. At December 31, 1993, the Company was in
compliance with its debt instrument covenants.
In February 1994, IMC-Agrico entered into a $75 million Revolving
Credit Facility (the Facility) with a group of banks. The Facility,
which has a $25 million Letter of Credit sub facility, provides for a
three year maturity with IMC-Agrico having the right to request one year
extensions of the revolving period. Borrowings under the Facility are
unsecured, with a negative pledge on substantially all of IMC-Agrico's
assets. The Facility has provisions which require minimum net partners'
capital, fixed charge and minimum current ratio requirements, and also
places limitations on indebtedness.
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.
Capital expenditures for the fiscal year ending June 30, 1994 are
estimated to total $59 million (including $48 million by the
Partnership). The Company expects to finance these expenditures
(including its portion of the Partnership's capital expenditures) from
operations.
There were no other material changes in the Company's financial
condition, capital resources, or liquidity from that described in the
Company's Annual Report on Form 10-K for the year ended June 30, 1993.
