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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
---
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
---TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---------- to ----------
Commission file number 1-9759
IMC GLOBAL INC.
(Formerly IMC Fertilizer Group, Inc.)
(Exact name of registrant as specified in its charter)
Delaware 36-3492467
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2100 Sanders Road
Northbrook, Illinois 60062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 272-9200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X . No .
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock as of the
latest practicable date: 59,548,618 shares, excluding 5,552,840
treasury shares as of January 31, 1996.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The accompanying interim condensed consolidated financial
statements of IMC Global 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 1995
Annual Report to Stockholders, 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 the following Notes to Condensed
Consolidated Financial Statements. Certain 1994 amounts have been
reclassified to conform to the 1995 presentation. Interim results are
not necessarily indicative of the results expected for the fiscal year.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In millions except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
- ----------------------------------------------------------------------
Net sales $ 549.6 $ 451.8 $1,034.5 $ 872.6
Cost of goods sold 400.5 337.9 771.6 682.0
-------- -------- -------- --------
Gross margins 149.1 113.9 262.9 190.6
Selling, general and admin-
istrative expenses(Note 1) 21.6 21.6 39.1 35.9
Other operating (income) and
expense, net (4.0) .2 (5.6) (5.9)
-------- -------- -------- --------
Operating earnings (Note 2) 131.5 92.1 229.4 160.6
Interest earned and other
non-operating (income) and
expense, net (.6) (.7) (2.0) (3.4)
Interest charges 11.1 13.3 22.5 28.3
-------- -------- -------- --------
Earnings before minority
interest and items noted
below 121.0 79.5 208.9 135.7
Minority interest 50.3 34.0 88.6 55.5
-------- -------- -------- --------
Earnings before items noted
below 70.7 45.5 120.3 80.2
Provision for income taxes 27.1 17.6 46.5 30.5
-------- -------- -------- --------
Earnings before cumulative
effect of accounting change
and extraordinary item 43.6 27.9 73.8 49.7
Cumulative effect of accounting
change (Note 3) (5.9)
Extraordinary loss-debt
retirement (Note 4) (1.8) (3.0)
-------- -------- -------- --------
Net earnings $ 43.6 $ 26.1 $ 73.8 $ 40.8
======== ======== ======== ========
Earnings per share (Note 5):
Primary -
Earnings before cumula-
tive effect of accounting
change and extraordinary
item $ .73 $ .47 $ 1.23 $ .84
Cumulative effect of
accounting change (Note 3) (.10)
Extraordinary loss-debt
retirement (Note 4) (.03) (.05)
-------- -------- -------- --------
Net earnings per share $ .73 $ .44 $ 1.23 $ .69
======== ======== ======== ========
Fully diluted (Note 6) -
Earnings before cumula-
tive effect of accounting
change and extraordinary
item $ .70 $ .46 $ 1.20 $ .83
Cumulative effect of
accounting change (Note 3) (.09)
Extraordinary loss-debt
retirement (Note 4) (.03) (.05)
-------- -------- -------- --------
Net earnings per share $ .70 $ .43 $ 1.20 $ .69
======== ======== ======== ========
Primary weighted average
number of shares and equiva-
lent shares outstanding 60.1 59.1 59.9 59.1
======== ======== ======== ========
Fully diluted weighted
average number of shares
and equivalent shares
outstanding 63.8 62.8 63.7 62.8
======== ======== ======== ========
(See Notes to Condensed Consolidated Financial Statements on Page 6)
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions except per share amounts)
December 31, June 30,
Assets 1995 1995
- -------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 128.4 $ 196.1
Receivables, net 148.3 48.6
Inventories:
Products (principally finished) 228.2 185.6
Operating materials and supplies 72.7 68.8
-------- --------
300.9 254.4
Deferred income taxes 70.0 70.8
Prepaid expenses 7.5 5.3
-------- --------
Total current assets 655.1 575.2
Property, plant and equipment 3,552.1 3,455.2
Accumulated depreciation and depletion (1,626.2) (1,587.0)
-------- --------
Net property, plant and equipment 1,925.9 1,868.2
Other assets 103.1 79.4
-------- --------
Total assets $2,684.1 $2,522.8
======== ========
Liabilities and Stockholders' Equity
- -------------------------------------------------------------------
Current liabilities:
Accounts payable $ 111.6 $ 106.0
Accrued liabilities 142.1 137.2
Current maturities of long-term debt 8.8 8.8
-------- --------
Total current liabilities 262.5 252.0
Long-term debt, less current maturities 515.8 515.5
Deferred income taxes 252.0 228.8
Other noncurrent liabilities 284.6 283.7
Minority interest 529.1 479.9
Stockholders' equity:
Common stock, $1 par value, authorized
100,000,000 shares; issued 65,079,555
shares and 64,604,058 shares at December
31 and June 30, respectively (Note 5) 65.1 64.6
Capital in excess of par value (Note 5) 716.7 706.1
Retained earnings 165.7 99.6
Treasury stock, at cost, 5,552,840
shares (Note 5) (107.4) (107.4)
-------- --------
Total stockholders' equity 840.1 762.9
-------- --------
Total liabilities and stockholders'
equity $2,684.1 $2,522.8
======== ========
(See Notes to Condensed Consolidated Financial Statements on Page 6)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
Six months ended
December 31,
1995 1994
- ------------------------------------------------------------------
Cash Flows from Operating Activities
- ------------------------------------
Net earnings $ 73.8 $ 40.8
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Minority interest 88.4 55.5
Depreciation, depletion and amortization 62.9 66.7
Postemployment employee benefits 9.6
Other non-cash charges and credits, net 16.8 (5.9)
Changes in:
Receivables (81.6) (20.8)
Inventories (21.0) (2.0)
Prepaid expenses (2.1) (2.2)
Accounts payable and accrued liabilities (2.6) (1.0)
------- -------
Net cash provided by operating activities 134.6 140.7
------- -------
Cash Flows from Investing Activities
- ------------------------------------
Acquisition of Feed Ingredients (67.5)
Capital expenditures (36.0) (27.2)
Other (.6) 4.8
------- -------
Net cash used in investing activities (104.1) (22.4)
------- -------
Net cash provided before financing
activities 30.5 118.3
------- -------
Cash Flows from Financing Activities
- ------------------------------------
Joint venture cash distributions to FRP (100.8) (106.7)
Cash dividends paid (7.7)
Proceeds from issuance of long-term debt, net .3 10.9
Payments of long-term debt (114.9)
Other 10.0
------- -------
Net cash used in financing activities (98.2) (210.7)
------- -------
Net decrease in cash and cash equivalents (67.7) (92.4)
Cash and cash equivalents-beginning of period 196.1 169.0
------- -------
Cash and cash equivalents-end of period $ 128.4 $ 76.6
======= =======
Supplemental cash flow disclosures:
Interest paid $ 21.9 $ 29.2
Income taxes paid $ 49.9 $ 32.4
(See Notes to Condensed Consolidated Financial Statements on Page 6)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions except per share amounts)
Six months ended
December 31,
1995 1994
- -------------------------------------------------------------------
Common stock:
Balance at June 30 $ 32.3 $ 32.2
2-for-1 stock split 32.5 32.2
Stock options exercised .3
------ ------
Balance at December 31 65.1 64.4
Capital in excess of par value:
Balance at June 30 738.4 736.2
2-for-1 stock split (32.5) (32.2)
Stock options exercised 10.7
Restricted stock awards .1 .4
------ ------
Balance at December 31 716.7 704.4
Retained earnings (deficit):
Balance at June 30 99.6 (6.3)
Net earnings 73.8 40.8
Dividends ($.13 a share and $.05 a share
in 1995 and 1994, respectively) (7.7) (2.9)
------ ------
Balance at December 31 165.7 31.6
Treasury stock:
Balance at June 30 and December 31 (107.4) (107.1)
------ ------
Total stockholders' equity $840.1 $693.3
====== ======
(See Notes to Condensed Consolidated Financial Statements on Page 6)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Restructuring Charges
---------------------
Selling, general and administrative expenses included restructuring
charges totaling $5.0 million ($4.1 million net of minority interest)
for the three and six months ended December 31, 1994 resulting from
shifting the marketing and administrative functions of Phosphate
Chemicals Export Association, Inc. (PhosChem) to its member companies.
The Company and The Vigoro Corporation (Vigoro) expect to incur
employee-related and other restructuring charges as a result of the
merger described in Note 8. As of February 14, 1996, the amount of
such charges were not determinable.
2. Environmental Matters
---------------------
Operating earnings included provisions totaling $1.4 million and
$9.0 million ($.8 million and $5.1 million net of minority interest)
for the three and six months ended December 31, 1994 to provide for
remediation costs associated with a sinkhole beneath a phosphogypsum
storage stack at IMC-Agrico Company's (IMC-Agrico) New Wales
concentrated phosphate production facility in Florida and repair and
cleanup costs related to earthen dam breaches at IMC-Agrico's Payne
Creek and Hopewell phosphate mining facilities in Florida. These
charges were partially offset by a gain of $5.0 million from the sale
of land in Florida in September 1994.
3. Accounting for Postemployment Benefits
--------------------------------------
Effective July 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 112, "Employers' Accounting for
Postemployment Benefits." Accordingly, results for the six months
ended December 31, 1994 reflected a charge of $5.9 million, net of
taxes, for the cumulative effect of the adoption.
4. Extraordinary Loss-Debt Retirement
----------------------------------
In connection with the purchase of portions of the Company's Senior
Notes during the three and six months ended December 31, 1994, the
Company recorded extraordinary charges, net of taxes, of $1.8 and $3.0
million, respectively, for redemption premium incurred and write-off of
previously deferred finance charges associated with such Notes.
5. Stock Split
-----------
On October 19, 1995, the Company's stockholders approved an
amendment to the Restated Certificate of Incorporation increasing the
number of authorized shares of common stock from 50,000,000 shares to
100,000,000 shares.
Also on that date, the Company's Board of Directors declared a
2-for-1 stock split effected in the form of a 100 percent stock
dividend which was distributed on November 30, 1995. After the stock
split, the common stock par value remains unchanged. Accordingly, all
issued share and per share data appearing in these Condensed
Consolidated Financial Statements have been restated to give
retroactive effect to the stock split, including the transfer of par
value for additional shares issued from capital in excess of par value
to common stock.
6. Earnings Per Share
------------------
Fully diluted earnings per share assumed the conversion of the
Company's 6.25 percent convertible subordinated notes at $31.75 per
share and the issuance of common stock to satisfy the conversion
requirements.
7. Feed Ingredients Acquisition
----------------------------
On October 16, 1995, the Company acquired the animal feed
ingredients business (Feed Ingredients) of Mallinckrodt Group Inc. and
subsequently contributed the business to IMC-Agrico. The Company's
portion of the purchase price was $67.5 million and was paid out of
operating cash. The acquisition was accounted for under the purchase
method of accounting. Operating results of Feed Ingredients (net of
minority interest) have been included in the Company's Condensed
Consolidated Statement of Earnings since the date of acquisition.
8. The Vigoro Corporation Merger
-----------------------------
On November 13, 1995, the Company and Vigoro announced the signing
of a definitive merger agreement. The merger agreement provides that,
upon consummation of the merger, each share of Vigoro common stock will
be converted into the right to receive 1.60 shares of the Company's
common stock, subject to adjustment, based on the average of the per
share daily closing prices on the New York Stock Exchange of the
Company's common stock during the 20 consecutive trading days ending on
the fifth trading day prior to the date that the Vigoro stockholder
meeting to vote upon the merger is held. Upon consummation of the
merger, Vigoro will become a subsidiary of the Company.
The transaction, which is intended to qualify as a tax-free exchange
and to be accounted for as a pooling-of-interests, has been approved by
the boards of directors of both companies and is subject to approval by
the stockholders of both companies and necessary regulatory approvals.
The waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 expired on December 17, 1995. On January 15, 1996, the
Director of Investigation and Research of the Canadian Bureau of
Competition Policy requested that the Company and Vigoro provide
additional information to assist in the evaluation of the merger, and
on January 29, 1996, the Canadian Minister of Industry extended the
review period under the Investment Canada Act by up to 30 days or such
further period as may be agreed to by the Company. The Company's
special meeting of stockholders is scheduled for March 1, 1996, and the
Vigoro special meeting of stockholders is scheduled for February 29,
1996. Proxy statements relating to the merger were mailed to
stockholders of the Company and Vigoro on January 30, 1996. The
Company and Vigoro expect to incur employee-related and other
restructuring charges as a result of the merger. As of February 14,
1996, the amount of such charges were not determinable.
9. Amendment to Partnership Agreement
----------------------------------
Pursuant to certain amendments to the IMC-Agrico Partnership
Agreement which will become effective only if the merger described in
Note 8 is consummated, there will be a shift of 0.85 percent of
Distributable Cash (as defined) interest of IMC-Agrico from the Company
to Freeport-McMoRan Resource Partners, Limited Partnership (FRP)
following the merger. If the shift of Distributable Cash from the
Company to FRP contemplated by the amendments to the IMC-Agrico
partnership agreement had been effective as of July 1, 1994, cash
distributions to FRP for the fiscal year ended June 30, 1995 (which
aggregated $254.9 million) would have been increased by $4.0 million.
See "Item 5. Other Information."
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Three months ended December 31, 1995 vs. three months ended December
31, 1994
- ---------------------------------------------------------------------
Net earnings for the three months ended December 31, 1995 totaled
$43.6 million, or $.73 per share, up from the same period in 1994 when
the Company reported net earnings of $26.1 million, or $.44 per share.
Included in the 1994 operating results was an extraordinary charge of
$1.8 million, or $.03 per share, related to the early extinguishment of
debt.
Net sales for the three months ended December 31, 1995 were $549.6
million, a 22 percent increase over second quarter 1994 when sales were
$451.8 million. Second quarter results reflected significant
improvement in concentrated phosphate prices and the addition of Feed
Ingredients as described in Note 7 of Notes to Condensed Consolidated
Financial Statements.
Gross margins increased $35.2 million from the second quarter of
1994 primarily due to higher margins for concentrated phosphates of $29
million and the addition of Feed Ingredients margins of $9 million,
partially offset by lower potash margins of $3 million.
Concentrated phosphate margins increased primarily as a result of
higher prices ($58 million) as average diammonium phosphate (DAP)
prices increased 21 percent over 1994 second quarter levels. Other
related concentrated phosphate products showed similar price
improvements. Sales volume increased ($7 million) as domestic and
export shipping demand increased 12 percent over 1994's second quarter.
Partially offsetting these increases were higher production costs ($36
million) primarily due to higher raw material costs.
Potash sales margins decreased primarily as a result of lower prices
($2 million) as average potash prices declined 5 percent from 1994
second quarter levels. In addition, higher production costs ($2
million) also contributed to lower margins. Partially offsetting the
lower prices and higher production costs was an increase in sales
volume ($1 million) over second quarter 1994.
With world grain stocks predicted to be at a 20-year record low
level of 13 percent of annual usage, or 229 million metric tons, crop
nutrient demand from both domestic and international customers is
expected to further strengthen. Domestically, industry sales volume
for all crop nutrients is expected to continue to rise in the spring as
United States farmers attempt to restore the world's depleted grain
stocks. Planted acreage is projected to increase about 4 percent with
corn acreage up 14 percent over the year-earlier level. Consequently,
domestic consumption of concentrated phosphates and potash is projected
to increase at least 5 percent. Internationally, the Company's largest
export customer, China, made a major potash purchase that is expected
to require shipments until the spring of 1996. In addition, in
November 1995 China signed a sales agreement with IMC-Agrico (through
PhosChem) which is expected to require shipments of DAP during calendar
1996.
Phosphate rock margins in the three months ended December 31, 1995
remained relatively constant with second quarter levels in the 1994
period. Higher prices ($5 million), an 18 percent improvement over
1994's second quarter, were completely offset by higher production
costs ($5 million). Higher production costs were mainly attributable
to increased maintenance and reclamation activities.
The following table summarizes the Company's sales of crop nutrient
products and average selling prices for the three months ended December
31, 1995 and 1994.
(Tons in millions of short tons)
1995 1994
---------- -----------
Concentrated phosphates
Total dry product sales tons
(primarily DAP) 2.0 1.8
Average DAP price per ton* $189.29 $156.50
* Average DAP prices represent sales made FOB Florida, Louisiana and
regional warehouses.
Phosphate rock
Sales tons 2.0 2.9
Average price per ton $ 23.92 $ 20.35
Potash
Sales tons .9 .8
Average price per ton $ 66.91 $ 70.67
Selling, general and administrative expenses remained unchanged
compared to second quarter 1994. Increased advertising, legal and
consulting expenses and higher charges associated with long-term
compensation plans during the three months ended December 31, 1995
nearly equaled charges which were incurred in shifting the marketing
and administrative functions of PhosChem to its member companies during
the same period in 1994.
Other operating income and expense for the three months ended
December 31, 1995 included $2.8 million of income primarily resulting
from the sale of property and investments.
Interest charges for the three months ended December 31, 1995 were
$2.2 million lower than 1994's second quarter as the Company reduced a
portion of its high-cost long-term indebtedness during the prior fiscal
year.
Six months ended December 31, 1995 vs. six months ended December 31,
1994
- -----------------------------------------------------------------------
Net earnings for the six months ended December 31, 1995 totaled
$73.8 million, or $1.23 per share, up from the same period in 1994 when
the Company reported net earnings of $40.8 million, or $.69 per share.
Operating results for 1994 included a one-time charge of $5.9
million, or $.10 per share, for the cumulative effect on prior years of
a change in accounting for postemployment benefits resulting from the
adoption of SFAS No. 112 on July 1, 1994 and an extraordinary charge of
$3.0 million, or $.05 per share, related to the early extinguishment of
debt. See Notes to Condensed Consolidated Financial Statements for
further discussion of these non-recurring items.
Net sales for the six months ended December 31, 1995 were $1,034.5
million, a 19 percent increase over 1994 when sales were $872.6
million. Significant improvement in concentrated phosphate prices and
the addition of Feed Ingredients as described in Note 7 of Notes to
Condensed Consolidated Financial Statements contributed to this
increase.
Gross margins increased $72.3 million when compared to the first
half of 1994 primarily due to higher margins for concentrated
phosphates and phosphate rock of $56 million and $5 million,
respectively, and the addition of Feed Ingredients margins of $9
million, partially offset by lower potash margins of $5 million.
Concentrated phosphate margins increased primarily as a result of
higher prices ($106 million) as average DAP prices increased 18 percent
over first half levels a year ago. Other related concentrated
phosphate products showed similar price improvements. Sales volume
increased ($11 million) as domestic and export shipping demand
increased 10 percent over 1994's first half. Partially offsetting
these increases were higher production costs ($61 million) primarily
due to higher raw material costs.
Phosphate rock margins increased due primarily to higher prices ($8
million) as average phosphate rock prices increased 13 percent over
1994. Increased production costs ($3 million) partially offset the
increase in margins. Higher production costs were mainly attributable
to increased maintenance and reclamation activities.
Potash sales margins decreased primarily as a result of lower sales
volume ($3 million) as domestic and export shipping demand was down 9
percent compared to the first half of 1994. The Company's largest
export customer, China, made a major potash purchase that is expected
to require shipments until the spring of 1996. Increased production
costs ($2 million) during the first half of 1995 also contributed to
the decrease in gross margins.
The following table summarizes the Company's sales of crop nutrient
products and average selling prices for the six months ended December
31, 1995 and 1994.
(Tons in millions of short tons)
1995 1994
---------- -----------
Concentrated phosphates
Total dry product sales tons
(primarily DAP) 4.0 3.6
Average DAP price per ton* $181.13 $154.11
* Average DAP prices represent sales made FOB Florida, Louisiana and
regional warehouses.
Phosphate rock
Sales tons 4.4 5.3
Average price per ton $ 22.57 $ 20.05
Potash
Sales tons 1.5 1.7
Average price per ton $ 67.12 $ 66.27
Selling, general and administrative expenses increased $3.2 million
over 1994 primarily due to increased advertising, legal and consulting
expenses and higher charges associated with long-term compensation
plans. Second quarter 1994 included charges related to shifting the
marketing and administrative functions of PhosChem to its member
companies and reduced the impact of the first half 1995 increased
expenditures on a comparative basis.
Other operating income and expense included $3.6 million of income
primarily resulting from the sale of property and investments during
the first half of 1995. In 1994, other operating income and expense
included a gain of $5.0 million from the sale of land in Florida.
Interest charges for the six months ended December 31, 1995 were
$5.8 lower than the same period a year ago as the Company reduced a
portion of its high-cost long-term indebtedness during the prior fiscal
year.
Financial Condition
Since June 30, 1995, cash and cash equivalents have decreased $67.7
million. Primary uses of cash included $100.8 million of cash sharing
distributions to FRP, $67.5 million to purchase Feed Ingredients and
$36.0 million of capital expenditures. These cash outflows were
partially offset by $134.6 million generated from operating activities.
The Company's working capital ratio at December 31, 1995 was 2.5
versus 2.3 at June 30, 1995. Debt to capitalization improved to 38.4
percent at December 31, 1995 compared to 45.8 percent a year ago and
40.7 percent at June 30, 1995.
In July 1995, the Company entered into an amended and restated
unsecured revolving credit facility (the Working Capital Facility)
which extended the termination date and credit limit of the previous
working capital facility. Under the revised terms of the Working
Capital Facility, the Company may borrow up to $150 million for general
corporate purposes until July 31, 2000. At December 31, 1995, $29.6
million was drawn down under the Working Capital Facility as letters of
credit principally to support industrial revenue bonds and other debt
and credit risk guarantees. There were no other borrowings under the
Working Capital Facility at December 31, 1995.
IMC-Agrico also has an agreement with a group of banks to provide it
with a $75 million unsecured revolving credit facility (the IMC-Agrico
Working Capital Facility) initially until February 1997. At December
31, 1995, $13.6 million was drawn down as letters of credit. There
were no other borrowings under the IMC-Agrico Working Capital Facility
at December 31, 1995.
The Working Capital Facility and certain note obligations contain
provisions which restrict the Company's ability to dispose of assets,
limit the payment of dividends or other distributions to stockholders
and limit the incurrence of additional indebtedness. The Working
Capital Facility also contains financial ratios and tests which must be
met with respect to interest, tangible net worth and debt to total
capitalization. In addition, the IMC-Agrico Working Capital Facility
contains financial ratios and tests with respect to fixed charge
coverage, current ratio and minimum net partners' capital requirements.
The IMC-Agrico Working Capital Facility also places limitations on
indebtedness of IMC-Agrico and restricts the ability of IMC-Agrico to
make cash distributions in excess of Distributable Cash. In addition,
pursuant to the Partnership Agreement, IMC-Agrico is required to obtain
the approval of the Policy Committee of IMC-Agrico prior to incurring
more than an aggregate of $5 million of indebtedness (excluding
indebtedness under the IMC-Agrico Working Capital Facility). The
Company and IMC-Agrico are currently in compliance with all of the
covenants in the indentures and other agreements governing their
indebtedness.
Under a current agreement with a financial institution, IMC-Agrico
may sell, on an ongoing basis, an undivided percentage interest in a
designated pool of receivables in an amount not to exceed $65 million.
At December 31, 1995, IMC-Agrico had sold $65.0 million of such
receivable interests.
Capital expenditures for the year ending June 30, 1996 are estimated
to total $92 million (including $70 million by IMC-Agrico). Pursuant
to the Partnership Agreement, IMC-Agrico is required to obtain the
approval of the Policy Committee of IMC-Agrico prior to making capital
expenditures in any fiscal year in excess of $5 million (adjusted
annually for inflation) for expansion of its business. In the event
that the Policy Committee (which consists of two representatives from
each of the Company and FRP) fails to approve future capital
expenditures, IMC-Agrico's ability to expand its business could be
adversely effected.
IMC-Agrico makes cash distributions to each partner based on
formulas and sharing ratios as defined in the Partnership Agreement.
For the six months ended December 31, 1995, the total amount of
Distributable Cash generated by IMC-Agrico was $220.9 million, of which
$117.2 million was distributed to FRP, including $68.0 million in
February 1996.
The Company periodically enters into DAP futures contracts and
options to purchase natural gas to manage its exposure to price
fluctuations. Net hedging gains and losses were recognized as a part
of the transactions hedged and were not significant during the six
months ended December 31, 1995. The Company monitors its risk on an
ongoing basis and considers its risk to be minimal.
The Company believes that its current liquidity position and cash
flow from operations should be sufficient to meet its working capital
needs and expansion of its operations.
There were no other material changes to 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, 1995.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
In the ordinary course of its business, the Company is and will
from time to time be involved in routine litigation. Except for the
matters discussed in the Company's 1995 Annual Report on Form 10-K,
none of the litigation pending or known to be threatened at this time
is regarded by the Company as potentially material.
Sterlington Litigation
- ----------------------
Angus Chemical Company (Angus) and the Company are involved in
various litigation arising out of a May 1991 explosion at a
nitroparaffins plant located in Sterlington, Louisiana. Angus wants
the Company to assume responsibility for a class action lawsuit
currently pending in Louisiana against the Company, Angus and other
defendants for injuries arising out of the explosion, and to reimburse
Angus for amounts that Angus has paid for settled claims in connection
with the Sterlington explosion. With respect to the settled demands,
Angus, in pleadings filed in Louisiana and Texas, states that it is
seeking approximately $9.5 million, plus interest, fees and costs. In
addition, Angus is seeking direct payment from the Company's insurers,
X. L. Insurance Company, Ltd. (XL) and A.C.E. Insurance Company, Ltd.
(ACE) for certain damages in an action pending in Louisiana state
court. Angus has not specified how much it is seeking from the
Company's insurers. Angus may be asserting claims against XL for the
difference between the limits of the XL policy of $75 million and the
$45.7 million that XL has paid to the Company under the policy. In
addition, Angus may be asserting claims against ACE for the difference
between the limit of the ACE policy of $100 million and the $15 million
that ACE has previously paid to the Company. The Company may have
obligations to indemnify certain of the insurers if Angus is successful
in this case. The Company is unable to estimate the magnitude of its
exposure at this time.
The Company continues to vigorously litigate each of the matters
arising out of the Sterlington explosion. A jury trial is scheduled to
commence in late summer or fall of 1996 in Texas state court with
respect to Angus's and the Company's claims for contribution and
indemnity for the settled demands. Discovery is still not complete
with respect to the lawsuits scheduled for trial in late summer or fall
of 1996, and all of the other lawsuits are in early stages. In
addition, Angus has filed an action in federal court in Louisiana
seeking reimbursement for amounts allegedly expended to remediate
certain environmental sites at the Sterlington plant. In its pleadings
filed with the Louisiana federal court, Angus states that it is seeking
approximately $1.8 million for amounts expended, plus interest, fees,
costs and reimbursement for any future expenses. The Company is unable
to estimate the magnitude of its exposure at this time.
Potash Antitrust Litigation
- ---------------------------
In the previously disclosed potash antitrust action filed in
federal courts consolidated in Minnesota, a trial date has been set for
August 26, 1996. While the Company believes that the allegations in
the complaints are without merit, it is unable to make a reliable
determination as to the potential liability exposure, if any.
Federal Trade Commission Inquiry
- --------------------------------
Reference is made to the Company's Current Report on Form 10-Q for
the quarter ended September 30, 1995 for information concerning a
request by the Federal Trade Commission that the Company provide
certain information and documents regarding the Company's phosphate
operations. The Company has submitted responsive information and
documents to the Federal Trade Commission.
Item 5. Other Information.
On January 23, 1996, the Company and FRP entered into certain
amendments to the IMC-Agrico Partnership Agreement in part to reflect
possible changes in the nature of the business of the Company resulting
from the Vigoro merger as described in Note 8 of Notes to Condensed
Consolidated Financial Statements. These amendments, which will become
effective only if the Vigoro merger is consummated, provide for (i) a
shift of 0.85 percent of Distributable Cash interest of IMC-Agrico from
the Company to FRP following the merger, (ii) changes to certain IMC-
Agrico governance procedures, including the establishment of a new
office of President for IMC-Agrico, who would be appointed by the
Company subject to the approval of the Policy Committee, and a related
clarification of management and reporting responsibilities, (iii) the
modification of certain product pricing and sourcing provisions with
respect to transactions between IMC-Agrico and affiliates of the
Company, including the FARMARKET network of Vigoro and (iv) the
establishment of criteria under which certain acquisitions by the
Company's Rainbow Division or Vigoro's FARMARKET network would not be
required to be offered to IMC-Agrico. See Note 9 of Notes to Condensed
Consolidated Financial Statements.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit
No. Description
--------------------------------------------------------
10.62 Amendment No. 1 to Transfer and Administration
Agreement, dated as of October 30, 1995, between
Enterprise Funding Corporation and IMC-Agrico Company
10.63 Agreement Under the Parent Agreement, dated as of
January 23, 1996, among IMC Global Inc., IMC Global
Operations Inc., Freeport-McMoRan Resource Partners
Limited Partnership, Freeport-McMoRan Inc. and
IMC-Agrico Company, a Delaware general partnership
10.64 Amendment and Agreement Under the Partnership Agreement,
dated as of January 23, 1996, by and among IMC-Agrico
GP Company, Agrico, Limited Partnership, IMC-Agrico MP,
Inc., IMC Global Operations Inc. and IMC-Agrico Company
11.3 Fully diluted earnings per share computation for the
three and six months ended December 31, 1995
21.1 Subsidiaries of the Registrant
27.2 Financial Data Schedule - Interim Period
(b) Reports on Form 8-K.
Up to the date of this report, the following report on Form
8-K was filed:
A report under Item 5 dated October 17, 1995. No financial
statements were filed as a part of the report.
* * * * * * * * * * * * * * * *
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
IMC GLOBAL INC.
Robert C. Brauneker
--------------------------
Robert C. Brauneker
Executive Vice President
and Chief Financial Officer
Date: February 14, 1996
EXHIBIT 10.62
ENTERPRISE FUNDING CORPORATION
c/o MERRILL LYNCH MONEY MARKETS, INC.
World Financial Center - South Tower
225 Liberty Street
New York, New York 10281
October 30, 1995
Mr. Peter Hong
Vice President & Treasurer
IMC-Agrico Company
2100 Sanders Road
Northbrook, Illinois 60062-6146
Dear Peter:
At your request, Enterprise Funding Corporation (the "Company") hereby
agrees to amend the Transfer and Administration Agreement between the
Company and IMC-Agrico Company dated as of October 31, 1994
(incorporating all amendments to date, the "Agreement") as follows:
.In Section 1.1 of the Agreement, the definition of "Termination Date"
shall be amended such that the reference to the date appearing in
such definition shall be amended to read "October 31, 1996".
.In Section 1.1 of the Agreement, the definition of "Maximum Net
Investment" shall be amended such that the reference to "$75,000,000"
shall be deleted and replaced with "$65,000,000."
The Transferor hereby represents and warrants that the representations
and warranties of the Transferor set forth in Section 3.1 of the
Agreement are true and correct as of the date hereof (except those
representations and warranties set forth herein which specifically
relate to an earlier date).
All other terms and conditions of the Agreement not amended by this
letter agreement shall remain unchanged and in full force and effect.
This letter agreement shall be effective as of the date hereof.
Please signify your concurrence with this amendment to the Agreement by
signing the enclosed duplicate original of this letter and returning it
to Michelle M. Heath, NationsBank, N.A. (Carolinas), NationsBank
Corporate Center-10th Floor, 100 N. Tryon St., Charlotte, NC 28255.
Sincerely,
ENTERPRISE FUNDING CORPORATION
By: THOMAS S. DUNSTAN
-----------------
Name: Thomas S. Dunstan
Title: Vice President
IMC-Agrico Company
October 30, 1995
Page Two
ACCEPTED AND AGREED THIS 27 OF, OCTOBER 1995
----- --------
IMC-AGRICO COMPANY
as Transferor and Collection Agent
By: IMC-AGRICO MP, INC.
a general partner
By: PETER HONG
------------
Name: Peter Hong
Title: Treasurer
EXHIBIT 10.63
AGREEMENT UNDER THE PARENT AGREEMENT
This Agreement Under The Parent Agreement (this "Agreement"),
dated as of January 23, 1996 among IMC Global Inc., a Delaware
corporation ("IMC"), IMC Global Operations Inc., a Delaware corporation
("Operations"), Freeport-McMoRan Resource Partners Limited Partnership,
a Delaware limited partnership ("FRP"), Freeport-McMoRan Inc., a
Delaware corporation ("FTX"), and IMC-Agrico Company, a Delaware
general partnership (the "Partnership").
WHEREAS, Operations, FRP, FTX and the Partnership, as well as
IMC with respect to certain provisions, are parties to an Amended and
Restated Parent Agreement (the "Parent Agreement"), dated as of July 1,
1993 and amended and restated as of May 26, 1995;
WHEREAS, IMC, Bull Merger Company, a wholly-owned subsidiary
of IMC ("Merger Sub"), and The Vigoro Corporation ("Vigoro"), a
Delaware corporation, have entered into an Agreement and Plan of Merger
dated as of November 13, 1995 (the "Merger Agreement") which provides
for the merger (the "Merger") of Merger Sub with and into Vigoro, with
Vigoro surviving as a subsidiary of IMC, all of the outstanding common
stock of which will be owned by IMC; and
WHEREAS, Operations, FRP, FTX, the Partnership and IMC desire
to, among other things, supplement the Parent Agreement as hereinafter
provided.
NOW, THEREFORE, in consideration of the covenants and
agreements herein set forth and of other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Except as otherwise defined or amended herein,
capitalized terms used in this Agreement shall have the meaning
ascribed to such terms in the Parent Agreement.
Section 2. Between the date of the consummation of the
Merger and the date of the termination of the Partnership, IMC agrees
to consult with the FRP Representatives prior to instituting changes in
IMC management personnel that affect the direct reporting
responsibility of the general manager of the Partnership; provided,
however, that any such changes instituted by IMC shall not require the
consent or approval of any of the Partnership, the Policy Committee or
the FRP Partner.
Section 3. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to
the conflicts of law rules of such state.
Section 4. This Agreement may be signed in counterparts.
Any single counterpart or set of counterparts signed, in either case,
by all the parties hereto shall constitute a full and original
agreement for all purposes.
Section 5. This Agreement is solely for the benefit of the
parties hereto and no provision of this Agreement shall be deemed to
confer upon third parties any remedy, claim, liability, reimbursement,
cause of action or other right in excess of those existing without
reference to this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement on
the date first written above.
IMC GLOBAL OPERATIONS INC.
By: MARSCHALL I. SMITH
Name Printed: Marschall I. Smith
Title: Senior Vice President,
Secretary and General Counsel
FREEPORT-MCMORAN RESOURCE PARTNERS, LIMITED
PARTNERSHIP
By: FREEPORT MCMORAN INC., its general
partner
By: RENE L. LATIOLAIS
Name Printed: Rene L. Latiolais
Title: President and
Chief Executive Officer
FREEPORT-MCMORAN INC.
By: RENE L. LATIOLAIS
Name Printed: Rene L. Latiolais
Title: President and
Chief Executive Officer
IMC-AGRICO COMPANY
By: IMC-AGRICO MP, INC., its general
partner
By: MARSCHALL I. SMITH
Name Printed: Marschall I. Smith
Title: Senior Vice President,
Secretary and General Counsel
By: IMC-AGRICO
GP, COMPANY, its general
partner
By: MARSCHALL I. SMITH
Name Printed: Marschall I. Smith
Title: Senior Vice President,
Secretary and General Counsel
By: AGRICO, LIMITED
PARTNERSHIP
By: Freeport-McMoRan Inc., its general
partner
By: RENE L. LATIOLAIS
Name Printed: Rene L. Latiolais
Title: President and
Chief Executive Officer
IMC GLOBAL INC.
By: MARSCHALL I. SMITH
Name Printed: Marschall I. Smith
Title: Senior Vice President,
Secretary and General Counsel
0104637.03 02/14/96 2:43 PM
EXHIBIT 10.64
AMENDMENT AND AGREEMENT
UNDER THE PARTNERSHIP AGREEMENT
This Amendment and Agreement Under the Partnership Agreement
(this "Agreement") dated as of January 23, 1996 by and among (i) IMC-
Agrico GP Company ("IMC GPCo"), a Delaware corporation and a subsidiary
of IMC Global Operations Inc., a Delaware corporation ("Operations"),
(ii) Agrico, Limited Partnership (the "FRP Partner"), a Delaware
limited partnership of which Freeport-McMoRan Resource Partners,
Limited Partnership, a Delaware limited partnership ("FRP"), owns a
99.8% limited partnership interest and Agrico, Inc., a Delaware
corporation ("FRP GPCo"), owns a 0.2% general partnership interest,
(iii) IMC-Agrico MP, Inc. (the "Managing Partner"), a Delaware
corporation, (iv) Operations, and (v) IMC-Agrico Company, a Delaware
general partnership (the "Partnership").
WHEREAS, IMC GPCo, the FRP Partner, the Managing Partner and
Operations are parties to an Amended and Restated Partnership Agreement
(the "Partnership Agreement") dated as of July 1, 1993 and further
amended and restated as of May 26, 1995;
WHEREAS, IMC Global Inc., a Delaware corporation ("IMC"),
Bull Merger Company, a wholly-owned subsidiary of IMC ("Merger Sub"),
and The Vigoro Corporation, a Delaware corporation ("Vigoro"), have
entered into an Agreement and Plan of Merger dated as of November 13,
1995 (the "Merger Agreement") which provides for the merger (the
"Merger") of Merger Sub with and into Vigoro, with Vigoro surviving as
a subsidiary of IMC, all of the outstanding common stock of which will
be owned by IMC;
WHEREAS, the date on which the Merger is consummated is
referred to herein as the "Merger Date"; and
WHEREAS, IMC GPCo, the FRP Partner, the Managing Partner and
the Partnership believe that certain amendments to the Partnership
Agreement are appropriate due to the change in the nature of the
business of the IMC Partner and its Affiliates (each as defined in the
Partnership Agreement) resulting from the Merger;
NOW, THEREFORE, in consideration of the covenants and
agreements herein set forth and of other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Except as otherwise defined or amended herein,
capitalized terms used in this Agreement shall have the meaning
ascribed to such terms in Exhibit A to the Partnership Agreement.
Section 2. (a) Effective as of the Merger Date, the Current
Interests and Capital Interests of the FRP Partner and the IMC Partner
set out in Section 4.01(a) of the Partnership Agreement shall be
modified as follows:
"In the quarter subsequent to the Merger Date, the Current
Interest of the FRP Partner shall be increased and the
Current Interest of the IMC Partner shall be decreased, by
0.85%. In the quarter in which the Merger Date occurs, the
Current Interest of the FRP Partner shall be increased and
the Current Interest of the IMC Partner shall be decreased by
0.85% multiplied by a fraction, the numerator of which will
be the number of days from the Merger Date to the end of the
quarter, and the denominator of which will be the total
number of days in the quarter. The Capital Interest of the
FRP Partner shall be increased and the Capital Interest of
the IMC Partner shall be decreased, by 0.85% on the July 1
subsequent to the Merger Date.
During the IMC GPCo Liquidation Period, the Current Interests
of Operations and IMC GPCo shall be equal to eighty percent
(80%) and twenty percent (20%), respectively, of the Current
Interests of the IMC Partner set forth above. During the IMC
GPCo Liquidation Period, the Capital Interests of Operations
and IMC GPCo shall be equal to eighty percent (80%) and
twenty percent (20%), respectively, of the Capital Interests
of the IMC Partner set forth above."
Section 3. Effective as of the date hereof, the second
sentence of Section 6.04(b) of the Partnership Agreement shall be
amended and restated to read in its entirety as follows:
"One IMC Representative and one FRP Representative shall
serve as Co-Chairmen of the Policy Committee."
Section 4. Effective as of the date hereof, Article VI of
the Partnership Agreement shall be amended to add a new Section 6.09
which shall read in its entirety as follows:
"During such time as the IMC Partner is the Operating
Partner, and subject to the other provisions of this Article
VI, the management of the Partnership shall be organized as
follows. The IMC group executive responsible on behalf of IMC
for the Partnership (the "IMC Group Executive") shall,
subject to the approval of the Policy Committee, appoint and
terminate the President of the Partnership (who shall be the
chief executive officer of the Partnership) and his
successors. The President shall be an employee of the
Managing Partner. The President shall report to the IMC
Group Executive and shall be responsible for the profit and
loss of the Partnership. The President shall direct and
manage all of the Partnership's business affairs (except the
Animal Feed Ingredient Division), including, but not limited
to, the mining, processing, marketing, sales, distribution,
growth and business development functions and financial
issues that affect profit and loss; managers of those IMC
functions who provide services for the Partnership will be
accountable to the President with respect to their
responsibilities to the Partnership. The President shall
hire, terminate and replace the managers in the Partnership.
The President's authority, reporting and coordination
responsibilities with his superiors within IMC shall be
consistent with his responsibilities to the Partnership and
shall reflect practices customary in United States public
companies. Nothing in this provision shall limit the
Operating Partner from changing or reorganizing its business
in any respect (except that changes in the President's
reporting responsibility or relationship shall be made only
upon consent of the Policy Committee).
The management objectives and compensation structure of the
President and those reporting to him shall reflect their duty
to manage the business of the Partnership in the best
interests of the Partnership, and shall be reviewed and
approved by the Policy Committee annually. The President's
performance against those objectives shall be evaluated by
the IMC Group Executive, who shall regularly review such
evaluation with the Policy Committee. The achievement of
incentive compensation targets and award of incentive
compensation to the President shall be determined by the IMC
Group Executive and reviewed and approved by the Policy
Committee prior to the making of any award. The achievement
of incentive compensation targets and award of incentive
compensation to the managers reporting to the President shall
be determined by him and reviewed with the IMC Group
Executive.
The Animal Feed Ingredient Division of the Partnership will
report to the IMC Group Executive, who shall be responsible
to the Policy Committee and to IMC management for ensuring
the effective interaction and coordination between the
general manager of the Partnership's Animal Feed Ingredient
Division and the other businesses of the Partnership. The
President shall review with the Policy Committee on an annual
basis management evaluation and succession planning issues
relating to the Partnership. Except as set forth herein,
nothing in this Section 6.09 shall be construed as (i)
changing any of the IMC Partner's responsibilities as
Operating Partner, or (ii) otherwise amending the Partnership
Agreement."
Section 5. Effective as of the Merger Date, Section 9.12 of
the Partnership Agreement shall be amended and restated to read in its
entirety as follows:
"9.12 Transactions with Affiliates. Except with
respect to items (i)(B) and (ii) referred to in the
parenthetical phrase in the following sentence, any
transaction, agreement, arrangement or understanding between
or on behalf of the Partnership, on the one hand, and the
Operating Partner or any Affiliate of the Operating Partner,
on the other hand, must be on terms no less favorable to the
Partnership than those which could be obtained from an
independent third party providing similar goods or services
of like quality. All such transactions, agreements,
arrangements and understandings in an aggregate amount in any
Fiscal Year in excess of the Base Affiliate Transaction
Amount for such Fiscal Year (other than (i) during any period
during which the IMC Partner is Operating Partner, (A) any
transactions, agreements, arrangements or understandings with
Operations' railcar repair business located at Fitzgerald,
Georgia on terms no less favorable to the Partnership than
those which could be obtained from an independent third party
providing similar goods or services of like quality and (B)
any transactions, agreements, arrangements and understandings
with the Rainbow Division of Operations or International
Minerals & Chemical (Canada) Global Limited ("IMC Canada
Ltd.", formerly International Minerals & Chemical Corporation
(Canada) Limited) on the terms set forth on Schedule 9.12 and
(ii) (A) the Marketing and Administrative Services Agreement,
(B) the Leasing Agreement, (C) the Materials Purchase and
Cost Sharing Agreement, (D) the Employee Cost Sharing
Agreement and (E) the Limestone Cost Sharing Agreement) shall
be subject to the approval of the Policy Committee or the
CEOs, as the case may be, in accordance with Section 6.07(a)
or (b). Partnership sales to the Farmarkets Division shall
be on the terms set forth in Schedule 9.12. Nothing in this
Section 9.12 shall in any way restrict or affect the right of
the Partnership to enter into transactions with Affiliates of
the Non-Operating Partner.
The Operating Partner will, and will cause its
Affiliates to (i) give the Non-Operating Partner and its
auditors and other authorized representatives such access to
the offices, properties, books and records of such party,
(ii) furnish to the Non-Operating Partner and its auditors
and other authorized representatives such financial and
operating data and other information as such Persons may
reasonably request and (iii) instruct its employees and
auditors to cooperate with the Non-Operating Partner and its
auditors and other authorized representatives, in each case
as may be reasonably requested by the Non-Operating Partner
to evaluate any transactions, agreements, arrangements or
understandings between the Partnership or the Managing
Partner on the one hand, and the Operating Partner and its
Affiliates, on the other hand; provided that any
investigation pursuant to this Section shall be conducted in
such a manner as not to interfere unreasonably with the
conduct of business of the Operating Partner and its
Affiliates."
Section 6. Effective as of July 1, 1995, Schedule 9.12 of
the Partnership Agreement shall be amended and restated to read in its
entirety as follows:
"A. Sales to IMC Canada Ltd. of GTSP, DAP, GMAP 11-52-0,
GMAP 10-50-0 and PFS ("Canada Products") shall be invoiced to
Operations by IMC-Agrico Company at the estimated IMC-Agrico
Company quarterly weighted average domestic sales realization
F.O.B. plant, subject to the limitation described in Section D
below, ("Quarterly Market Price") for each of Florida, Louisiana,
or Offsites, depending upon the source of the Canada Products,
less 10%, so long as the aggregate volume for the Canada Products
does not exceed 57,619 P2O5 tons for the fiscal year beginning
July 1. Sales of the Canada Products in any annual period in
excess of 57,619 P2O5 tons shall be invoiced at 100% of the
Quarterly Market Price for Florida, Louisiana or Offsites,
depending upon the source of the product.
Sales to IMC Canada Ltd. of any products other than those
listed above shall be invoiced to Operations by IMC-Agrico Company
at the Quarterly Market Price for Florida, Louisiana or Offsites,
depending upon the source of the product.
B. Sales to Operations' Rainbow Division ("IMC Rainbow") of
GTSP, DAP, MAP, GMAP 11-52-0, GMAP 10-50-0 and PFS ("Rainbow
Product(s)") shall be invoiced to Operations by IMC-Agrico Company
at the Quarterly Market Price for Florida, Louisiana or Offsites,
depending upon the source of the Rainbow Products, less 10%, but
not less than full production cost, so long as the aggregate
volume for the Rainbow Products does not exceed 95,200 P2O5 tons
for the fiscal year beginning July 1. Sales of the Rainbow
Products in any annual period in excess of 95,200 P2O5 tons shall
be invoiced at 100% of the Quarterly Market Price for Florida,
Louisiana or Offsites, depending upon the source of the product
(except that beginning on the Merger Date, sales of the Rainbow
Products in any annual period in excess of 95,200 P2O5 tons shall
be invoiced at 100% of the Quarterly Market Price for Florida,
Louisiana or Offsites, depending upon the source of the product,
plus $2 per ton of product).
Sales to IMC Rainbow of any products other than those listed
above shall be invoiced to Operations by IMC-Agrico Company at the
Quarterly Market Price for Florida, Louisiana or Offsites,
depending upon the source of the product.
C. Sales to the Farmarkets Division of GTSP, DAP, MAP, GMAP
10-52-0, GMAP 10-50-0 and PFS shall be invoiced at 100% of the
Quarterly Market Price for Florida, Louisiana or Offsite,
depending upon the source of the product.
D. The weighted average domestic sales realization, F.O.B.
plant, shall be utilized to determine the Quarterly Market Price
of a given product with respect to any quarter so long as the
total tons sold by domestic wholesale to non-Affiliates of IMC are
at least 75% of the aggregate tons sold to IMC Canada, Ltd., IMC
Rainbow and Farmarkets, collectively, during such quarter. If the
total tons sold by domestic wholesale of a given product to non-
Affiliates of IMC with respect to any quarter are less than 75% of
the aggregate tons sold to IMC Canada, Ltd., IMC Rainbow and
Farmarkets, collectively, during such quarter, the Policy
Committee shall determine an appropriate benchmark for determining
such quarterly market price.
E. Any transfer of sales responsibility from IMC's
wholesale division to IMC Rainbow or Farmarkets must be approved
by the Policy Committee.
F. Estimated prices invoiced by IMC-Agrico Company to IMC
Canada Ltd., IMC Rainbow or the Farmarkets Division shall be
adjusted to actual quarterly sales prices at the end of each
quarter. Final price adjustments shall be made within 20 days of
the end of each fiscal quarter and within 45 days of the end of
each fiscal year."
Section 7. (a) Effective as of the Merger Date, Section
2.08(b) of the Partnership Agreement shall be amended by modifying
clause (ii) of the first sentence as follows:
"(ii) subject to the last sentence of this Section
2.08(b), the conduct of the business of the Rainbow and
Farmarkets Divisions of IMC substantially as currently
conducted shall not constitute a breach or violation of this
Section 2.08(b)."
(b) Effective as of the Merger Date, Section 2.08(b) of the
Partnership Agreement shall be amended to add at the end thereof the
following:
"Notwithstanding any provision to the contrary contained
in this Section 2.08(b), the IMC Partner must present to the
FRP Partner any opportunity the IMC Partner may have to own,
manage, operate, control or invest in a business that is
engaged in the Phosphate Chemicals Business proposed to be
acquired by the IMC Partner or an Affiliate thereof which,
upon such acquisition, would become part of the Rainbow
Division or the Farmarkets Division, unless all of the
following conditions are satisfied (and if such conditions
are satisfied there shall be no obligation to present such
business to the FRP Partner):
(a) the business is not a major competitor of the
Partnership (a business shall not be deemed to be a
major competitor for purposes of this Section 2.08(b) if
(A) the revenues derived by such business from the (i)
production and wholesale sales of phosphate-based
fertilizers such as DAP, MAP, GTSP, GMAP, PFS and P2O5
in unmixed form, plus (ii) production of nitrogen-based
fertilizers such as ammonia, urea, UAN, ammonium nitrate
and ammonium sulfate in unmixed form, did not account
for more than 10% of the total revenues of such business
during the thirty-six months ending on the last day of
the month preceding the date on which the acquisition of
such business is consummated, and (B) the revenues
described in the foregoing clause (A) of this sentence,
plus revenues derived from the wholesale sale of
nitrogen-based fertilizers, did not account for more
than 20% of the total revenues of the business during
the thirty-six month period); for purposes of this
provision wholesale sales shall mean sales made for
resale;
(b) the revenue produced by such business
represents (and can reasonably be expected to represent)
less than 25% of the sales of Rainbow (if the business
will become part of the Rainbow Division upon
consummation of the acquisition) or less than 25% of the
sales of Farmarkets (if the business will become part of
the Farmarkets Division upon consummation of the
acquisition);
(c) the location of the business is such that
distribution, warehousing and other similar functions of
the Rainbow Division or the Farmarkets Division, as the
case may be, existing as of the date of the acquisition
would support and complement the operations of such
business after the consummation of the acquisition; and
(d) the common stock or other securities of the
business are not listed on any national securities
exchange registered under the Securities Exchange Act of
1934 or National Market System of a national securities
association registered under the Securities Exchange Act
of 1934;
provided, however, that it shall be the intent of Operations (but
without implying any supply obligation on the part of the
Partnership) that the additional phosphate products purchased by
the Rainbow Division or the Farmarkets Division as a result of the
acquisition of such business shall be acquired (subject to the
expiration of any existing contracts of such business for the
purchase of phosphate products) from the Partnership to the extent
that such acquisition of additional phosphate products from the
Partnership will not place the Rainbow Division or the Farmarkets
Division at a competitive disadvantage or result in the impairment
of beneficial commercial relations of the Rainbow Division or the
Farmarkets Division; provided further, that any such additional
phosphate products supplied by the Partnership shall be supplied
at a price equal to the lesser of (x) the price (as described in
Schedule 9.12, but not including the 10% discount to the Rainbow
Division) at which the Partnership then sells phosphate products
to the Rainbow Division or the Farmarkets Division, as the case
may be, and (y) the price at which such business may purchase
phosphate products from a source other than the Partnership."
Section 8. Effective as of the Merger Date, Exhibit A of the
Partnership Agreement shall be amended as follows:
(i) A definition of "Farmarkets Division" shall be added as
follows: "'Farmarkets Division' shall mean the business of the
Farmarkets Division as operated by The Vigoro Corporation as of
the date of the consummation of the merger of The Vigoro
Corporation with and into Bull Merger Company, a wholly-owned
subsidiary of Global."
(ii) The definition of "Phosphate Chemicals Business"
shall be amended (a) to add at the end of the first sentence
the following: "and (x) the animal feed business" and (b) to
delete the last sentence thereof and replace it with the
following: "Notwithstanding the foregoing, "Phosphate
Chemicals Business" shall not include the mixed fertilizer
business."
Section 9. (a) Effective as of the date hereof, the IMC
Partner hereby appoints Wendell F. Bueche to serve as an IMC
Representative, and an IMC Representative shall resign as IMC
Representative.
(b) Effective as of the date hereof, the IMC Partner hereby
appoints Wendell F. Bueche as the IMC Representative to serve as a Co-
Chairman of the Policy Committee, and the FRP Partner hereby appoints
Rene Latiolais as the FRP Representative to serve as a Co-Chairman of
the Policy Committee.
(c) Effective as of the date hereof, the Managing Partner
shall, subject to approval of the Policy Committee of the Partnership,
appoint a President of the Partnership.
Section 10. This Agreement is solely for the benefit of the
parties hereto and no provision of this Agreement shall be deemed to
confer upon third parties, any remedy, claim, liability, reimbursement,
cause of action or other right in excess of those existing without
reference to this Agreement.
Section 11. This Agreement may be signed in counterparts.
Any single counterpart or set of counterparts signed, in either case,
by all the parties hereto shall constitute a full and original
agreement for all purposes.
IN WITNESS WHEREOF, the parties have signed this Agreement as
of the date first written above.
IMC-Agrico GP Company
By: MARSCHALL I. SMITH
Name Printed: Marschall I. Smith
Title: Senior Vice President,
Secretary and General Counsel
Agrico, Limited Partnership
By: Freeport-McMoRan Inc., its general partner
By: RENE L. LATIOLAIS
Name Printed: Rene L. Latiolais
Title: President and
Chief Executive Officer
IMC-Agrico MP, Inc.
By: MARSCHALL I. SMITH
Name Printed: Marschall I. Smith
Title: Senior Vice President,
Secretary and General Counsel
IMC Global Operations Inc.
(formerly IMC Fertilizer, Inc.)
By: MARSCHALL I. SMITH
Name Printed: Marschall I. Smith
Title: Senior Vice President,
Secretary and General Counsel
IMC-Agrico Company
By: IMC-Agrico MP, Inc.
By: MARSCHALL I. SMITH
Name Printed: Marschall I. Smith
Title: Senior Vice President,
Secretary and General Counsel
0115367.01 02/14/96 2:43 PM
EXHIBIT 11.3
EARNINGS (LOSS) PER SHARE
FULLY DILUTED COMPUTATION
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
(IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS)
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- ----------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Basis for computation of
fully diluted earnings
per share:
Earnings before extra-
ordinary item and
cumulative effect of
accounting change,
as reported $ 43.6 $ 27.9 $ 73.8 $ 49.7
Add interest charges
on convertible debt 1.8 1.8 3.6 3.6
Less provision for taxes (.7) (.7) (1.4) (1.4)
---------- ---------- ---------- ----------
Earnings before cumu-
lative effect of
accounting change and
extraordinary item,
as adjusted 44.7 29.0 76.0 51.9
Cumulative effect of
accounting change (5.9)
Extraordinary loss
- debt retirement (1.8) (3.0)
---------- ---------- ---------- ----------
Net earnings applicable
to common stock $ 44.7 $ 27.2 $ 76.0 $ 43.0
========== ========== ========== ==========
Number of shares:
Weighted average
shares outstanding 60,169,301 59,201,812 60,033,321 59,195,764
Conversion of
convertible sub-
ordinated notes
into common stock 3,621,849 3,622,048 3,621,945 3,622,048
---------- ---------- ---------- ----------
Total common and
common equivalent
shares assuming
full dilution 63,791,150 62,823,860 63,655,266 62,817,812
========== ========== ========== ==========
Fully diluted earnings
per share:
Earnings before
cumulative effect
of accounting
change and extra-
ordinary item $ .70 $ .46 $ 1.20 $ .83
Cumulative effect of
accounting change (.09)
Extraordinary loss
- debt retirement (.03) (.05)
---------- ---------- ---------- ----------
Net earnings $ .70 $ .43 $ 1.20 $ .69
========== ========== ========== ==========
This calculation is submitted in accordance with Regulation S-K item
601(b)(11). However, under APB Opinion No. 15, calculation of fully
diluted earnings per share would exclude the conversion of convertible
securities which would have an antidilutive effect on earnings per
share for each period.
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
Certain of IMC Global Inc.'s subsidiaries are listed below. These
subsidiaries are all included in the Company's consolidated financial
statements, and collectively, together with IMC Global Inc., account
for more than 90 percent of consolidated net sales, earnings (loss)
before income taxes, extraordinary items and cumulative effect of a
change in accounting principal, and total assets.
Jurisdiction of Percent
Incorporation Ownership
--------------- ----------
IMC Global Operations Inc. Delaware 100%
IMC-Agrico Company Delaware 56.5%
International Minerals & Chemical
Canada Global Limited Canada 100%
A number of subsidiaries are not shown, but even as a whole they
do not constitute a significant subsidiary.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1995
<CASH> (9,900)
<SECURITIES> 138,300
<RECEIVABLES> 152,900
<ALLOWANCES> 4,600
<INVENTORY> 300,900
<CURRENT-ASSETS> 655,100
<PP&E> 3,552,100
<DEPRECIATION> 1,626,200
<TOTAL-ASSETS> 2,684,100
<CURRENT-LIABILITIES> 262,500
<BONDS> 515,800
<COMMON> 65,100
0
0
<OTHER-SE> 775,000
<TOTAL-LIABILITY-AND-EQUITY> 2,684,100
<SALES> 1,034,500
<TOTAL-REVENUES> 1,040,400
<CGS> 771,600
<TOTAL-COSTS> 811,000
<OTHER-EXPENSES> 86,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,500
<INCOME-PRETAX> 120,300
<INCOME-TAX> 46,500
<INCOME-CONTINUING> 73,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,800
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.20
</TABLE>
