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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
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THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1996
Commission file number 1-9759
IMC GLOBAL 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, par value $1 per share New York Stock Exchange
Preferred Share Purchase Rights Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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 .
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of
the registrant: $3,601,843,400 as of August 30, 1996. Market value is
based on the August 30, 1996 closing price of Registrant's Common Stock
as reported on the New York Stock Exchange Composite Transactions for
such date.
APPLICABLE ONLY TO CORPORATE REGISTRANTS: Indicate the number of
shares outstanding of each of the registrant's classes of common stock:
92,419,558 shares, excluding 5,545,884 treasury shares as of August 30,
1996.
DOCUMENTS INCORPORATED BY REFERENCE, IN PART: Information required by
Items 6, 7 and 8 of Part II is incorporated by reference to the
sections of the Registrant's 1996 Annual Report to Stockholders
described in such Items. Information required by Items 10, 11, 12 and
13 of Part III is incorporated by reference to the sections of the
Registrant's definitive proxy statement for the Annual Meeting of
Stockholders to be held on October 17, 1996 described in such Items.
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<PAGE>
1996 FORM 10-K CONTENTS
Item Page
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Part I:
1. Business 1
Company Profile 1
Business Unit Information 2
Factors Affecting Demand 10
Other Matters 10
2. Properties 13
3. Legal Proceedings 13
4. Submission of Matters to a Vote of Security Holders 15
Executive Officers of the Registrant 15
Part II:
5. Market for the Registrant's Common Stock and Related
Stockholder Matters 16
6. Selected Financial Data 16
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
8. Financial Statements and Supplementary Data 16
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 17
Part III:
10. Directors and Executive Officers of the Registrant 17
11. Executive Compensation 17
12. Security Ownership of Certain Beneficial Owners
and Management 17
13. Certain Relationships and Related Transactions 17
Part IV:
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 17
Signatures 28
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<PAGE>
PART I.
Item 1. Business.
COMPANY PROFILE
IMC Global Inc. (the Company) is one of the world's leading
producers of crop nutrients for the international agricultural
community and is one of the foremost distributors in the United States
of crop nutrients and related products through its retail and wholesale
distribution networks. The Company mines, processes and distributes
potash in the United States and Canada and is a joint venture partner
in IMC-Agrico Company (IMC-Agrico), a leading producer, marketer and
distributor of phosphate crop nutrients and animal feed ingredients.
The Company believes that it is one of the most efficient North
American producers of concentrated phosphates and potash. The
Company's retail distribution network, which extends principally to
corn and soybean farmers in the eastern midwest and to cotton, peanut
and vegetable farmers in the southeastern United States, is one of the
preeminent distributors of crop nutrients and related products. The
Company also manufactures nitrogen-based and other high-value crop
nutrients which are marketed on a dealer basis, principally in the
midwestern and southeastern United States. In addition, the Company
sells specialty lawn and garden, turf and nursery products on a
national basis and ice-melter products in the midwest and eastern
snowbelt states.
Phosphorus, contained in phosphate rock, potassium, contained in
potash, and nitrogen constitute the three major nutrients required for
plant growth. Phosphorus plays a key role in the photosynthesis
process. Potassium is an important regulator of plants' physiological
functions. Nitrogen is an essential element for most organic compounds
and plants. These elements are naturally present in the soil but need
to be replaced through the use of crop nutrients as crops exhaust them.
Currently, no viable crop nutrient substitutes exist to promote the
development and maintenance of high-yield crops.
The Company's business strategy focuses on maintaining and growing
its leading position as a crop nutrient producer and supplier through
extensive customer service, efficient distribution and transportation
and supplying products worldwide at competitive prices by taking
advantage of economies of scale and state-of-the-art technology to
reduce costs. The Company intends to continue to expand its product
distribution and marketing throughout the world through export
associations and its international sales force.
On March 1, 1996, the Company completed a merger (Merger) with The
Vigoro Corporation (Vigoro), which resulted in Vigoro becoming a
subsidiary of the Company. The Merger enables the Company to, among
other things, broaden its business mix and reduce the relative
importance of generally more price-volatile phosphate-based crop
nutrients to the Company's consolidated results. In addition, the
Merger has expanded the Company's potash customer base to include
industrial customers, whereas shipments of potash were previously made
<PAGE>
primarily to agricultural users. Vigoro also has a significant retail
distribution network, giving it direct contact with farmers, the
principal consumers of crop nutrient products. Prior to the Merger, a
limited amount of products were sold directly to farmers. Following
the Merger, the Company restructured its operations into five business
units corresponding to its major product lines as follows: IMC-Agrico
Crop Nutrients (phosphates), IMC Kalium (potash), IMC AgriBusiness
(retail distribution), IMC-Agrico Feed Ingredients (animal feed) and
IMC Vigoro (specialty products).
On July 1, 1993, IMC Global Operations Inc., a wholly-owned
subsidiary of the Company, and Freeport-McMoRan Resource Partners,
Limited Partnership (FRP) entered into a joint venture partnership in
which both companies contributed their respective phosphate businesses,
including the mining and sale of phosphate rock and the production,
distribution and sale of concentrated phosphates, uranium oxide and
related products, to IMC-Agrico, a Delaware general partnership. The
Company has a 56.5 percent interest in IMC-Agrico over the term of the
partnership. IMC-Agrico is governed by a Policy Committee, which has
equal representation from the Company and FRP, and is operated by the
Company. In October 1995, IMC-Agrico acquired the animal feed
operations of Mallinckrodt Group Inc.
All information in this Annual Report on Form 10-K has been
adjusted to give effect to the Merger.
This Annual Report on Form 10-K contains certain forward-looking
statements concerning, among other things, the effects of the Merger,
various trends relating to the Company's economic performance and the
financial condition of the Company. Such statements are subject to
various risks and uncertainties which could cause the Company's actual
results to differ materially from those currently anticipated.
BUSINESS UNIT INFORMATION
The amounts and relative proportions of net sales and operating
earnings contributed by the business units of the Company have varied
from year to year and may continue to do so in the future as a result
of changing business, economic and competitive conditions as well as
technical developments.
The following business unit discussion should be read in
conjunction with the information contained under the heading
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" in the Company's 1996 Annual Report to
Stockholders which is incorporated herein by reference.
IMC-Agrico Crop Nutrients
Net sales for the IMC-Agrico Crop Nutrients business unit were
$1,747.8 million, $1,559.0 million and $1,131.0 million for the years
ended June 30, 1996, 1995 and 1994, respectively.
IMC-Agrico is a leading United States miner of phosphate rock with
25 million tons of annual capacity. IMC-Agrico's central Florida
<PAGE>
phosphate mining operations and plants produce phosphate rock, which is
one of the primary raw materials used in the production of concentrated
phosphates.
IMC-Agrico is also the leading United States producer of
concentrated phosphates with an annual capacity of approximately four
million tons of phosphoric acid (P2O5 equivalent). P2O5 is an industry
term indicating a product's phosphate content measured chemically in
units of phosphorous pentoxide. IMC-Agrico's concentrated phosphate
products are marketed worldwide to crop nutrient manufacturers,
distributors and retailers.
IMC-Agrico's concentrated phosphate production facilities are
located in central Florida and Louisiana. Its annual capacity
represents approximately 32 percent of total U. S. concentrated
phosphate production capacity and 11 percent of world capacity. The
Florida concentrated phosphate facilities consist of three plants: New
Wales, Nichols and South Pierce. The New Wales complex is the largest
concentrated phosphate plant in the world with an estimated annual
capacity of nearly 1.8 million tons of phosphoric acid
(P2O5equivalent). New Wales primarily produces four forms of
concentrated phosphates: diammonium (DAP) and monoammonium (MAP)
phosphate, granular triple superphosphate (GTSP) and merchant grade
phosphoric acid. The Nichols facility manufactures phosphoric acid and
DAP and the South Pierce plant produces phosphoric acid and GTSP. The
Louisiana concentrated phosphate facilities consist of three plants:
Uncle Sam, Faustina and Taft. The Uncle Sam plant produces phosphoric
acid which is then shipped to the Faustina and Taft plants where it is
used to produce DAP and granular MAP. The Faustina plant manufactures
DAP, granular MAP, urea and ammonia. The Taft facility manufactures
only DAP. Concentrated phosphate operations are managed to balance
IMC-Agrico's output with customer needs. Currently, the Nichols
complex is temporarily idled pending improvement of market conditions.
Phosphate rock, sulphur and ammonia are the three principal raw
materials used in the production of concentrated phosphates.
Phosphate Rock
IMC-Agrico's phosphate mining operations and beneficiation plants
are located in central Florida. IMC-Agrico extracts phosphate ore
through surface mining after removal of a 10 to 50 foot layer of sandy
overburden and then processes the ore at one of its six currently
operating beneficiation plants (one additional plant has been idle
since 1986) where the ore goes through washing, screening, sizing and
flotation procedures designed to separate it from sands, clays and
other foreign materials. IMC-Agrico's rock production volume for the
years ended June 30, 1996, 1995 and 1994 totaled 23.7 million, 24.4
million and 18.1 million tons, respectively. Although IMC-Agrico sells
phosphate rock to other crop nutrient manufacturers and distributors
throughout the world, it primarily uses phosphate rock internally in
the production of concentrated phosphates. Tons used captively,
primarily in the manufacture of concentrated phosphates, totaled 14.7
million, 14.3 million and 12.4 million for the years ended June 30,
1996, 1995 and 1994, respectively, representing 62 percent, 59 percent
<PAGE>
and 69 percent, respectively, of total tons produced. Product
shipments to customers totaled 7.6 million, 10.7 million and 8.8
million for the years ended June 30, 1996, 1995 and 1994, respectively.
IMC-Agrico estimates its proven reserves to be 404 million tons of
phosphate rock as of June 30, 1996. These reserves are controlled by
IMC-Agrico through ownership, long-term lease, royalty or purchase
option agreements. Reserve grades range from 58.0 percent to 78.0
percent bone phosphate of lime (BPL), with an average grade of 66.5
percent BPL. BPL is the standard industry term used to grade phosphate
rock. The phosphate rock mined by IMC-Agrico in the last three years
averaged 66.5 percent BPL, which is typical for phosphate rock mined in
Florida during this period. The Company estimates its proven reserves
based upon the performance of exploration drilling and technical and
economic analyses to determine that reserves so classified can be
economically mined at market prices estimated to prevail during the
next five years.
IMC-Agrico also owns or controls phosphate rock resources south of
its current operations in central Florida (South Florida Resources).
Resources are mineralized deposits which are believed to be
economically recoverable at market prices estimated to prevail within
the next five years, but for which additional prospect data and/or
analyses, including further geological work, drilling and economic and
mining feasibility studies, are required before they can be classified
as proven reserves. Based upon its preliminary analysis of these
resources, IMC-Agrico believes that these mineralized deposits differ
in physical and chemical characteristics from those historically mined
by IMC-Agrico but are similar to reserves being mined in the southern
part of its current operations. The South Florida Resources contain
estimated recoverable phosphate rock of approximately 330 million tons
with an average grade of approximately 66.0 percent BPL. Some of these
resources are located in what may be classified as unmineable wetland
areas under standards set forth in current state and federal dredge and
fill regulations.
Sulphur
The Company owns a 25 percent interest in a joint venture which
began mining sulphur reserves at Main Pass 299 (Main Pass) offshore
Louisiana in April 1992. In fiscal 1996, FRP, the joint venture
operator, produced 2.1 million long tons of sulphur. Using a hot-water
injection process, Main Pass is one of the most thermally efficient
sulphur mines in the industry. The Company and FRP have an agreement
to supply virtually all of IMC-Agrico's sulphur requirements. FRP
supplies its portion of the requirements through its sulphur division,
and the Company supplies its portion of the requirements through its
share of Main Pass production and purchases from FRP and third parties.
Ammonia
IMC-Agrico's ammonia needs are supplied by its Faustina ammonia
production facility and by domestic suppliers, primarily under long-
term contracts. Production from the Faustina plant, which has an
<PAGE>
estimated annual capacity of 560,000 tons of anhydrous ammonia, is
primarily used internally to produce DAP and urea.
Sales and Marketing
IMC-Agrico sells its concentrated phosphates to crop nutrient
manufacturers, distributors and retailers in the spot market and under
long-term contracts. The Company also uses concentrated phosphates
internally for the production of animal feed ingredients (see
IMC-Agrico Feed Ingredients), high-value crop nutrients (see IMC
AgriBusiness) and consumer lawn and garden as well as professional turf
and nursery products (see IMC Vigoro). Virtually all of IMC-Agrico's
export sales of phosphate crop nutrients are marketed through the
Phosphate Chemicals Export Association, a Webb-Pomerene Act
organization. Outside of the United States, the countries which
account for the largest amount of IMC-Agrico's sales of concentrated
phosphates include China, India, Japan and Australia. The table below
shows IMC-Agrico Crop Nutrients' shipments in thousands of tons of
P2O5equivalent:
1996 1995 1994
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Tons % Tons % Tons %
--------------------------------------------
Domestic
Customers 1,383 34% 1,319 33% 1,449 42%
Captive, to other
business units 487 12 504 13 440 13
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1,870 46 1,823 46 1,889 55
Export 2,187 54 2,138 54 1,564 45
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Total shipments 4,057 100% 3,961 100% 3,453 100%
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Other
IMC-Agrico Crop Nutrients also manufactures and markets uranium
oxide. Phosphate rock is the source of uranium oxide, with the uranium
content varying from deposit to deposit. Uranium oxide production
facilities are located in Louisiana and Florida. In Louisiana,
IMC-Agrico owns and operates uranium oxide recovery and processing
facilities which are located adjacent to its Uncle Sam and Faustina
concentrated phosphate plants. In 1996, these facilities recovered 1.0
million pounds of uranium oxide from phosphoric acid produced at these
facilities. IMC-Agrico also owns uranium oxide recovery and processing
facilities in central Florida, one located adjacent to its New Wales
concentrated phosphate plant and one located adjacent to a concentrated
phosphate plant owned and operated by a subsidiary of CF Industries
(CF). The New Wales and CF facilities are temporarily idled. It is
expected that New Wales production will resume in early calendar year
1997, so long as uranium market prices continue to warrant resumption
of operations.
<PAGE>
Competition
IMC-Agrico operates in a highly competitive global market. Among
the competitors in the global phosphate crop nutrient market are
domestic and foreign companies, as well as foreign government-supported
producers. Phosphate crop nutrient producers compete primarily based
on price, and to a lesser extent based on product quality and
innovation.
IMC Kalium
Net sales for the IMC Kalium business unit were $455.6 million,
$472.0 million and $354.7 million for the years ended June 30, 1996,
1995 and 1994, respectively.
IMC Kalium mines, processes and distributes potash in the United
States and Canada. The Company's products are marketed worldwide to
crop nutrient manufacturers, distributors and retailers and are also
used internally in the manufacture of mixed crop nutrients and, to a
lesser extent, animal feed ingredients (see IMC AgriBusiness and
IMC-Agrico Feed Ingredients). IMC Kalium's potash products are also
used by IMC Vigoro for consumer and professional lawn and garden
products as well as ice-melter. The Company also sells white potash to
customers for industrial use. IMC Kalium operates four potash mines in
Canada and two potash mines in the United States. In addition to the
Company, there are eight North American producers -- five in the United
States and three in Canada. With a total capacity of approximately
nine million product tons per year, the Company is one of the leading
private enterprise potash producers in the world. In 1996, these
operations accounted for approximately 13 percent of world capacity.
The term "potash" applies generally to the common salts of
potassium. Since the amount of potassium in these salts varies, the
industry has established a common standard of measurement by defining a
product's potassium content in terms of equivalent percentages of
potassium oxide (K2O). A K2O equivalent of 60 percent is the customary
minimum standard for muriate of potash products.
Canadian Operations
The Company's four potash mines in Canada are located in the
province of Saskatchewan, Canada. Two potash mines are interconnected
at Esterhazy, one is located at Belle Plaine and one is located at
Colonsay. The combined annual capacity of these four mines is
approximately eight million tons. Esterhazy and Colonsay utilize shaft
mining while Belle Plaine utilizes solution mining technology. Potash
shaft mining takes place underground at depths of over 3,000 feet where
continuous mining machines cut out the ore face and move jagged chunks
of salt to conveyor belts. The ore is then crushed and moved to
storage bins where it awaits hoisting to refineries above ground. In
contrast, the Company's solution mining process involves heated water
which is pumped through a "cluster" to dissolve the potash in the ore
bed. A cluster consists of a series of boreholes drilled into the
<PAGE>
potash ore by a portable, all-weather electric drilling rig. A
separate distribution center at each cluster controls the brine flow.
The solution containing dissolved potash is pumped to a refinery where
sodium chloride, a by-product of this process, is separated from the
potash through the use of computer-controlled evaporation and
crystallization techniques. Concurrently, solution is pumped into a
130-acre cooling pond where additional crystallization occurs and the
resulting product is recovered at a low cost via a floating dredge.
Refined potash is dewatered, dried and sized. The Canadian operations
produce 26 different potash products, many through patented processes,
including industrial grade products.
Potash Corporation of Saskatchewan Inc. (PCS) controls several
potash-producing properties in the province, including a property which
consists of reserves located in the vicinity of the Company's Esterhazy
mines. Under a long-term contract with PCS, the Company is obligated
to mine and refine these reserves for a fee plus a pro rata share of
production costs. The specified quantities of potash to be produced
for PCS may, at the option of PCS, amount to an annual maximum of
approximately one-fourth of the tons produced by Esterhazy, but no more
than approximately 1.1 million tons. The current contract extends
through June 30, 2001 and is renewable at the option of PCS for five
additional five-year periods.
The Company presently controls the rights to mine 207,644 acres of
potash-bearing land in Saskatchewan. This land, of which 52,208 acres
have already been mined or abandoned, contains over 1.4 billion tons of
potash mineralization (calculated after estimated extraction losses) at
an average grade of 24.5 percent K2O. This ore is sufficient to
support current operations for more than a century and will yield more
than 500 million tons of finished product with a K2O content of
approximately 61.0 percent.
IMC Kalium's mineral rights in Saskatchewan consist of 113,954
acres owned in fee, 70,613 acres leased from the province of
Saskatchewan and 23,077 acres leased from other parties. All leases
are renewable by the Company for successive terms of 21 years.
Royalties, established by regulation of the province of Saskatchewan,
amounted to approximately $2.4 million and $2.8 million in 1996 and
1995, respectively.
In August 1995, the Company was chosen by the Minister of State for
Mines and Energy for the Canadian province of New Brunswick to explore
potash deposits near the town of Sussex. The Company has agreed to
enter into a three-year agreement under which it will perform a
geological reassessment of the property and feasibility study to
determine whether to develop the potash deposits.
Since December 1985, the Company has experienced an inflow of water
into one of its two interconnected potash mines at Esterhazy. As a
result, the Company has incurred additional costs to control the
flooding. The Company has significantly reduced the water inflow since
the initial discovery and has been able to meet all sales obligations
and requirements from production at the mines. Despite the relative
success of such measures, there can be no assurance that the amounts
<PAGE>
required for remedial efforts in future years will not increase or that
inflows or remediation costs will not increase to a level which would
cause the Company to change its mining process or to abandon the mines.
The long-term outlook of the water inflow has caused the Company to
consider alternatives to its current mining operations at Esterhazy.
Any solution to the water inflow situation at the mines may result in
substantial capital expenditures and/or charges to operations.
Like other potash producers' shaft mines, the Company's Colonsay
mine is also subject to the risks of inflow of water as a result of its
shaft mining operations.
The Saskatchewan potash mining industry generally has been unable
to secure insurance to cover other risks associated with underground
operations. Therefore, the Company's underground mine operations are
not presently insured against, and are not insurable against, business
interruption or risk from catastrophic perils, including collapse,
floods and other water inflow.
In January 1988, the U. S. Department of Commerce (Commerce) signed
an agreement with all of the potash producers in Canada, suspending an
investigation by Commerce to determine whether Canadian potash was, or
was likely to be, sold in the United States at less than "fair value."
The agreement stipulated that each such producer's minimum price for
potash sold in the United States, compared with its potash prices in
Canada, would be based upon a formula to assure that such product was
sold in the United States at a price no less than "fair value." In
January 1993, this agreement was extended by Commerce for an indefinite
period.
United States Operations
The Company's two U. S. potash mines are located in Carlsbad, New
Mexico, and Hersey, Michigan. The Carlsbad mine has an annual
production capacity of over one million tons of finished product. The
ore mined is of three types: (1) sylvinite, a mixture of potassium
chloride and sodium chloride, the same as the ore mined in
Saskatchewan; (2) langbeinite, a double sulphate of potassium and
magnesium; and (3) a mixed ore, containing both potassium chloride and
langbeinite.
Continuous and conventional shaft mining methods are utilized for
ore extraction at Carlsbad. In the continuous mining sections, drum
type mining machines are used to cut sylvinite ore from the face.
Mining heights are as low as four feet. In the conventional areas, a
wide ore face is undercut and holes drilled to accept explosive
charges. Ore from both continuous and conventional sections is loaded
onto conveyors and transported to storage areas where it is hoisted
above ground for further processing at the refinery.
Three types of potash are produced at the Carlsbad refinery:
muriate of potash, which is the primary source of potassium for the
crop nutrient industry; a double sulphate of potash magnesia, marketed
under the brand name Sul-Po-Mag(registered trademark), containing
<PAGE>
significant amounts of sulphur, potassium and magnesium, with low
levels of chlorine; and
sulphate of potash, supplying sulphur and a high concentration of
potassium with low levels of chlorine. IMC Kalium believes it is the
larger of the two U. S. producers of double sulphate of potash magnesia
and the largest of several U. S. producers of sulphate of potash.
At Carlsbad, the Company mines and refines potash from 43,239 acres
of reserves which the Company controls under long-term leases. These
reserves contain an estimated total of 155 million tons of potash
mineralization (calculated after estimated extraction losses) in four
mining beds evaluated at thicknesses ranging from five to 12 feet. At
average refinery rates, these ore reserves are estimated to be
sufficient to yield 11.1 million tons of concentrate from sylvinite
with an average grade of 60 percent K2O and 27.6 million tons of
langbeinite concentrate with an average grade of approximately 22
percent K2O. At current rates of production, the Company's reserves of
sylvinite and langbeinite are estimated to be sufficient to support
operations for more than 22 years.
Since October 1989, the Company has mined a small amount of potash
at Hersey, Michigan, using solution mining technology. The objective
of this pilot plant was to test the feasibility of solution mining in
the Hersey area and to test new technologies which could be applied to
improve efficiencies at both the Belle Plaine and Hersey facilities.
In June 1995, the Company announced its intention to invest
approximately $43.0 million over the following two years to continue
the planned development of the Hersey mine. Under the program, the
plant's current annual potash production of approximately 50,000 tons
would be increased to approximately 160,000 tons by April 1997. In
addition, to enhance the potash recovery process, the mine would also
begin producing roughly 300,000 tons of salt each year. The Company
believes that this project is an important step forward in its strategy
to increase potash sales and earnings in multiple markets. Through
June 1996, $18.1 million has been expended on this development project,
and $25.5 million of expenditures are expected in the next year.
Sales and Marketing
Potash is sold throughout the world, with the Company's largest
amount of sales outside of the United States made in China, Japan,
Malaysia, Korea, Australia, New Zealand and Latin America. Potash is
also used internally in the manufacture of high-value crop nutrients,
and by IMC Vigoro as a major ingredient in its ice-melter product as
well as one of the primary nutrients in the consumer lawn and garden
and professional turf and nursery products. The Company's exports from
Canada, except to the United States, are made through Canpotex Limited,
an export association of Saskatchewan potash producers. Exports from
Carlsbad are sold through the Sulfate of Potash Magnesia Association,
formed by the Company under the Webb-Pomerene Act. In 1996, 84 percent
of the potash produced by the Company was sold as crop nutrients, while
16 percent was sold for non-agricultural uses. The table below shows
IMC Kalium's shipments of potash in thousands of tons:
<PAGE>
1996 1995 1994
------------- ------------- -------------
Tons % Tons % Tons %
--------------------------------------------
Domestic (includes Canada)
Wholesale 4,112 57% 4,014 55% 3,487 61%
Captive, to other
business units 1,244 17 1,058 14 833 15
----- --- ----- --- ----- ---
5,356 74 5,072 69 4,320 76
Export 1,864 26 2,281 31 1,351 24
----- --- ----- --- ----- ---
Total shipments 7,220 100% 7,353 100% 5,671 100%
===== === ===== === ===== ===
IMC Kalium has contractual commitments from outside customers for
the shipment of potash amounting to approximately 1.8 million tons in
fiscal 1997.
Competition
Potash is a commodity available from many sources, and the market
is highly competitive. The Company competes with numerous other global
potash producers, some of which may have greater production capacity
than the Company. The Company, through its participation in Canpotex,
competes outside of North America with various independent potash
producers and consortia and other export organizations, including state-
owned organizations. The Company's principal methods of competition,
with respect to the sale of potash, are offering consistent, high-
quality products and superior service, as well as developing new
industrial and consumer uses for potash.
IMC AgriBusiness
Net sales for the IMC AgriBusiness business unit were $802.9
million, $760.8 million and $664.2 million for the years ended June 30,
1996, 1995 and 1994, respectively.
Retail Operations
The Company believes it is one of the largest retail fertilizer
distributors in the United States. It operates a network of
approximately 250 FARMARKET(registererd trademark)s, each of which
carries a broad array of the Company's crop nutrients and related
products. Substantially all of the FARMARKETs are located in the
eastern midwest and southeastern regions of the United States, and are
generally located in rural areas, primarily serving farmers located
within a 15-20 mile radius. The FARMARKETs are clustered near and are
partially supplied by the Company's production plants and terminals,
many of which are located on major rivers and have storage facilities
for liquid or dry crop nutrient materials.
<PAGE>
Each FARMARKET custom and bulk-blends crop nutrients to meet the
needs of individual farmers for the specific crops grown in their
areas. Pesticides, herbicides and seed are also purchased by the
Company and sold through its FARMARKETs. One of the most successful
FARMARKET programs is the Balanced Fertility Program which is designed
to improve crop production through increased yields per acre. Key
elements of this program include soil testing and programs to correct
soil deficiencies. FARMARKETs also offer farmers the option of having
the Company's employees apply crop nutrient and crop protection
chemicals, saving time, labor costs and the cost of investment in
specialized equipment required for such applications.
FARMARKETs are generally staffed by a manager, one or two
salespeople and hourly employees, some of whom are seasonal employees.
The Company extensively trains its full-time FARMARKET employees in
crop nutrient application and agronomics, business management and
environmental compliance. This training is deemed to be essential to
customer service. The majority of the Company's salaried FARMARKET
employees have obtained certification from the Certified Crop Advisors
Program as Certified Crop Advisors.
Approximately 15 percent of the Company's FARMARKETs are owned and
operated by independent dealers who purchase the Company's products on
consignment. Blending and storage are performed at the dealer's place
of business and the dealer is paid a commission determined by a sliding
scale based on the volume and profit margin of the products sold. The
Company recommends prices, approves credit extended by these dealers,
owns the FARMARKET's working capital and often owns its blending
equipment.
FARMARKET sales, as well as wholesale sales discussed below, are
largely concentrated in the spring planting season. Weather has a
significant impact on the timing and length of the planting season and
therefore can have a significant effect on crop-nutrient prices.
Other Operations
The Company sells agricultural crop nutrient products on a
wholesale basis to independent dealers and distributors including those
that perform services similar to those offered by FARMARKETs. These
products are sold under the brand names Rainbow(registered trademark)
and Super Rainbow(registered trademark) in the southeastern region of
the United States and under various brand names in the midwestern
region of the United States.
IMC AgriBusiness operates several granulation plants throughout the
United States which are used by both the retail and wholesale
operations. In addition, the business unit operates numerous smaller
facilities, which are used for bulk-blending and/or warehousing in
connection with its retail and wholesale operations.
Products
The Company produces a broad range of nitrogen-based crop nutrients
and related products including anhydrous ammonia, ammonium nitrate
<PAGE>
solutions, liquid urea, urea prills and other nitrogen-based solutions.
These products are sold alone or mixed with phosphates, potash,
micronutrients, non-liquid ammonium nitrate and other materials to
produce a variety of bulk-blend fertilizers in either dry or liquid
form. Most, if not all, of the potash and phosphate raw materials used
by IMC AgriBusiness are supplied by the Company's IMC Kalium and IMC-
Agrico Crop Nutrients business units, respectively. Certain of these
products are marketed under the CERTIFIED HARVEST KING(trademark)
brand. Liquid and dry products are blended according to the specific
needs of the farmer. In addition to the standard urea prill, the
Company produces a urea prill containing dicyandiamide (DCD) which
gives the urea slow-release nitrogen characteristics. The Company also
mixes DCD with nitrogen solutions. Products containing DCD, marketed
by the Company under the name N TECH SR(trademark), provide farmers
with a more efficient and environmentally-sensitive nitrogen source.
The slow release DCD increases absorption of nitrogen by crops, thereby
reducing the amount of nitrogen released into the environment. The
Company has a year-to-year renewable purchase agreement with the
world's largest producer of DCD.
The Company also produces nitric acid, aqua ammonia and refrigerant-
grade ammonia. Nitric acid is sold in various formulations to a wide
variety of industrial users for use in metal platings, coatings and
water treatment. The Company also produces food-grade carbon dioxide
as a by-product of its ammonia production process. Food-grade carbon
dioxide is used in carbonated beverages and as a refrigerant in food
processing.
Competition
The marketing of crop nutrients to farmers on a national basis is
highly fragmented, with success of individual retail outlets correlated
to their market shares within a 15-20 mile radius of such outlets.
Since crop nutrients are a basic commodity, the principal means of
differentiating competing products is by offering personal services and
agronomically efficient products which allow maximum yields while being
sensitive to environmental concerns. The Company's FARMARKETs were
developed to enhance the personal service concept and thereby
differentiate the Company's products from those of competitors. Most
of the Company's FARMARKETs have a substantial share of their
respective local markets. The Company believes its nitrogen-based crop
nutrients and related products are well positioned in both the retail
and wholesale agricultural market sectors and in the industrial market
sector. The Company's principal competitors in the agricultural crop
nutrients market include cooperatives, which have the largest market
share in a majority of the locations served by the Company, national
producers, major grain companies and independent distributors and
brokers.
<PAGE>
IMC-Agrico Feed Ingredients
In October 1995, IMC-Agrico acquired the animal feed ingredients
business of Mallinckrodt Group Inc. This business is one of the
world's foremost producers and marketers of phosphate-based animal feed
ingredients with an annual capacity in excess of 700,000 tons,
supplying poultry and livestock feed ingredients to markets in North
America, Latin America and Asia. In 1996, since acquisition,
IMC-Agrico Feed Ingredients produced 486,000 tons of animal feed
ingredients. The principal production facilities of IMC-Agrico Feed
Ingredients are located adjacent to IMC-Agrico's concentrated phosphate
complex at New Wales in central Florida. IMC-Agrico Feed Ingredients
also markets potassium-based feed products produced at the Company's
potash facilities. The Company has a strong brand position in the $1
billion global market with products such as Biofos(registered
trademark), Dynafos(registered trademark), Multifos(registered
trademark), Dyna-K(registered trademark) and Dynamate(registered
trademark).
IMC Vigoro
Through its IMC Vigoro business unit, the Company sells specialty
crop nutrient products consisting of lawn and garden and turf and
nursery products. The lawn and garden products are sold throughout the
United States primarily to major national retail chains under private
label and Vigoro brands, and the turf and nursery products are sold to
golf courses, nurseries, landscape contractors and institutions
directly and through independent distributors. IMC Vigoro also sells
environmentally-sensitive potassium-based ice-melter products under
various brands throughout the midwest and eastern snowbelt states.
FACTORS AFFECTING DEMAND
The Company's results of operations historically have reflected the
effects of several external factors which are beyond the Company's
control and have in the past produced significant downward and upward
swings in the Company's operating results. The Company's revenues,
approximately 71 percent of which have come from North American sales
over the past five years, are highly dependent upon conditions in the
North American agriculture industry and can be affected by crop
failure, changes in agricultural production practices, government
policies and weather. Furthermore, because of the high percentage of
its revenues coming from North American sales, the Company's crop
nutrients business is seasonal to the extent U. S. farmers and
agricultural enterprises purchase more crop nutrient products during
the spring and fall.
Approximately 29 percent of the Company's revenues has come from
sales outside North America over the past five years. The Company's
foreign operations and investments and any future international
expansion by the Company are subject to numerous risks, including
fluctuations in foreign currency exchange rates and controls,
expropriation and other economic, political and regulatory policies of
<PAGE>
local governments and laws and policies of the United States and Canada
affecting foreign trade and investment. Due to economic and political
factors, customer needs can change dramatically from year to year. See
also Note 20 - Operations by Geographic Area of Notes to Consolidated
Financial Statements, incorporated herein by reference, for additional
information.
In 1996, sales of concentrated phosphates and potash to China
accounted for approximately 17 percent of the Company's net sales. No
single customer or group of affiliated customers accounted for more
than ten percent of the Company's net sales.
OTHER MATTERS
Environmental Matters
General
In the normal course of its business, the Company mines phosphate
and potash, manufactures and blends crop nutrients, and blends crop
nutrients with pesticide products. These operations are subject to
federal, state, provincial and local environmental, health and safety
laws in the United States and Canada, including laws related to air and
water quality; management of hazardous and solid wastes; management and
handling of raw materials and products; and land reclamation. The
Company has expended, and anticipates that it will continue to expend,
substantial resources, both financial and managerial, to comply with
environmental regulations, permitting and reclamation requirements, and
health and safety standards. Additionally, although the Company
believes that its operations generally satisfy environmental standards,
there can be no assurance that costs, penalties or liabilities will not
be incurred. The Company does not believe that its expenditures for
environmental, health or safety compliance have had a material adverse
effect on its operations or financial condition.
For fiscal year 1996, environmental capital expenditures totaled
approximately $21.2 million and were primarily related to air emissions
permitting and control, ground and surface water protection, wastewater
treatment and control and solid waste management. Additional
expenditures for land reclamation activities totaled $19.2 million.
For fiscal year 1997, the Company expects environmental capital
expenditures to be approximately $46.0 million and expenditures for
land reclamation activities to be approximately $24.0 million.
Environmental capital is expected to increase in 1997 as a result of
phosphogypsum stack and settling area expansion projects as well as
spending for air emissions control. No assurance can be given that
greater environmental expenditures will not be required for fiscal year
1997 or that environmental expenditures in future years will not
increase.
Environmental, health and safety laws and regulations in the United
States and Canada have changed substantially and rapidly in recent
years, and the Company anticipates that these changes will continue.
It is the Company's policy to comply with all applicable environmental,
<PAGE>
health and safety laws and regulations. It is difficult to estimate
future compliance costs, however, if implementing regulations have not
yet been finalized or are subject to varying and conflicting
interpretations. Nevertheless, because new environmental standards
generally are more restrictive than current requirements, the costs of
complying with such regulations will likely increase.
Permitting
The Company holds numerous environmental and other permits
authorizing operations at each of its facilities. A decision by a
government agency to deny an application for a new or renewed permit,
or to revoke or substantially modify an existing permit, could have a
material adverse effect on the Company's ability to continue operations
at the affected facility. Expansion of Company operations also is
predicated upon securing the necessary environmental and other permits.
Air Quality
The 1990 Amendments to the Clean Air Act require certain sources to
increase controls on emissions of conventional and hazardous air
pollutants. During 1996, several of the Company's facilities have
applied for, or will apply for, such operating permits. In addition,
by the year 2000 the United States Environmental Protection Agency is
expected to promulgate control standards for hazardous air pollutants
applicable to certain of the Company's operations. Capital
expenditures, which could be significant, might be necessary to meet
the regulatory or permit requirements. Because the operating permits
have not been issued and the regulatory requirements have not been
finalized, the Company cannot estimate the extent of these
expenditures.
Process Safety Management and Risk Management Planning
Several of the Company's facilities are subject to Process Safety
Management (PSM) standards under the Occupational Safety and Health Act
and to the recently promulgated Risk Management Planning (RMP)
requirements under the Clean Air Act. PSM standards require covered
facilities with processes that handle certain chemicals to implement
written safety management plans, procedures and employee training. RMP
rules require covered facilities to establish plans for preventing and
responding to accidental releases. Under RMP, facilities also must
release to the public information about regulated processes and release
prevention programs, the potential for accidental releases and the
facility's "worst case" release scenarios and their potential effects
on nearby populations. The Company continues to implement the required
programs and prepare for compliance with the new RMP rule. As
compliance efforts proceed, the anticipated costs to complete these
planning processes could be substantial.
Management of Residual Materials
Phosphate and potash mining and processing produce tailings or
other residual materials that must be managed. Phosphate residuals,
consisting primarily of phosphogypsum, typically are stored in
<PAGE>
phosphogypsum stack systems. Potash producers generally store
tailings, which contain primarily salt, iron and clay, in surface
disposal sites. The Company has incurred and will continue to incur
significant costs to manage its phosphate and potash residual materials
in accordance with environmental laws, regulations and permit
requirements.
To address concerns about potash tailings management, the
Saskatchewan Department of Environmental and Resource Management (the
Department) published regulations in 1994 requiring all potash mine
operators: (i) to submit facility decommissioning and reclamation
plans for approval; and (ii) to provide assurances that the plans will
be carried out. The decommissioning and reclamation plans and related
assurances cover all facilities at a mine, including surface disposal
sites for potash tailings. The Company has filed or will file its
decommissioning plans during calendar 1996. Implementation of the
plans probably will be deferred until an affected facility is closed,
which the Company does not anticipate in the foreseeable future. Until
all of the decommissioning plans have been prepared and approved, the
Company, like all members of the Saskatchewan potash industry, is
unable to predict with certainty the financial impact of the
regulations on the Company.
With regard to phosphate processing, Florida law may require IMC-
Agrico to close one or more of its unlined phosphogypsum stacks and/or
associated cooling ponds after March 25, 2001, if the stack system is
demonstrated to cause a violation of Florida's water quality standards.
IMC-Agrico has already filed an application with Florida's Department
of Environmental Protection to close the unlined gypsum stack at its
New Wales facility in central Florida. Closure activities would begin
on July 1, 1998 and would cost approximately $2.5 million, net of
recorded accruals, for construction activities over a period of five
years. IMC-Agrico cannot predict at this time whether Florida will
require closure of any of its stack systems. The costs of such closure
could be significant.
IMC-Agrico continues to address elevated sulfate levels in
groundwater at its New Wales facility. In 1992, elevated sulfate
levels were detected in groundwater beneath the cooling pond. In
response, the Central Florida Regional Planning Council required
IMC-Agrico to plug former recharge wells (believed to be the source of
the elevated sulfate levels) and either to show, by September 1997,
that groundwater sulfate levels have returned to acceptable levels or
to line or relocate the cooling pond. Recent monitoring data has
evidenced a downward trend in the sulfate levels. If the downward
trend continues, IMC-Agrico likely will meet the 1997 deadline. If
sulfate levels do not reach acceptable levels, IMC-Agrico will request
an extension of the 1997 deadline. The estimated cost to line or
relocate the cooling pond could be in the range of $50.0 million.
Remedial Activities
The historical use and handling of regulated chemical substances
and crop nutrient products in the normal course of the Company's
business has resulted in contamination at facilities presently or
<PAGE>
previously owned or operated by the Company. The Company has also
purchased facilities that were contaminated by previous owners through
their use and handling of regulated chemical substances. Spills or
other unintended releases of regulated substances have occurred in the
past, and potentially could occur in the future, possibly requiring the
Company to undertake or fund cleanup efforts. The Company cannot
estimate the level of expenditures that may be required in the future
to clean up contamination from the handling of regulated chemical
substances or crop nutrients.
At some locations, the Company has agreed, pursuant to consent
orders with the appropriate governmental agencies, to undertake certain
investigations (which currently are in progress) to determine whether
remedial action may be required to address contamination. The cost of
any remedial actions that ultimately may be required at these sites
currently cannot be determined.
The Company believes that it is entitled to at least partial
indemnification for a portion of the costs that may be expended by the
Company to remedy environmental issues at certain facilities and
operations pursuant to indemnification agreements. These agreements
address issues that resulted from activities occurring prior to the
Company's acquisition of facilities from parties including PPG
Industries, Inc., Kaiser Aluminum & Chemical Corporation, Beatrice
Companies, Inc., Estech, Inc. and certain private parties. The Company
has already received and anticipates receiving amounts pursuant to the
indemnification agreements for certain of its expenses incurred to
date.
Superfund
The Comprehensive Environmental Response Compensation Liability Act
(CERCLA), also known as "Superfund," imposes liability without regard
to fault or to the legality of a party's conduct on certain categories
of persons that are considered to have contributed to the release of
"hazardous substances" into the environment. Currently, the Company is
involved in or concluding involvement at a number of Superfund sites.
With one possible exception, discussed below, at none of these sites
alone, nor in the aggregate, is the Company's liability currently
expected to be material. As more information is obtained regarding the
sites and the potentially responsible parties (PRPs) involved, this
expectation may change.
IMC-Agrico is one of 70 PRPs participating in investigation of the
Petroleum Products Site in Florida. To date, the PRP group has spent
approximately $2.7 million to address waste oil remaining on site and
expects to spend up to an additional $3.3 million on these activities.
Remedial cost estimates to clean up on-site soils and structures range
from $2.0 million to $40.0 million. Cost estimates have not yet been
developed for groundwater remediation. IMC-Agrico tentatively has
been placed 27th on the list of 70 members within the PRP group. The
group also has identified approximately 1,000 additional PRPs. Because
investigation of the site is incomplete and the required remedy has not
been selected, a reliable estimate of cleanup costs, and IMC-Agrico's
contribution to those costs, cannot be made at this time.
<PAGE>
Employees
The Company had approximately 9,200 employees at June 30, 1996.
The work force consisted of 3,614 salaried, 5,523 hourly and 63
temporary or part-time employees.
Labor Relations
The Company has 18 collective bargaining agreements with eight
international unions or their affiliated local chapters. Nine
agreements covering 40 percent of the hourly work force were negotiated
during calendar 1995, and three agreements covering two percent of the
hourly work force have been negotiated to date in calendar 1996.
Resulting wage and benefit increases were consistent with competitive
industry and community standards. One agreement covering less than one
percent of the hourly work force will expire during the remainder of
calendar 1996. The Company has not experienced a significant work
stoppage in recent years and considers its employee relations to be
good.
Item 2. Properties.
Information regarding the plant and properties of the Company is
included in Item 1, "Business."
Item 3. Legal Proceedings.
ENVIRONMENTAL PROCEEDINGS
Information regarding environmental proceedings is included in Item
1, "Business-Other Matters."
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 $75.0 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 $100.0 million and the $15.0
million that ACE previously paid to the Company. The Company may have
obligations to indemnify certain of the insurers if Angus is successful
<PAGE>
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 March 1997 in Texas state court with respect to Angus' 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 March 1997, 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
A number of class action suits have been filed in United States
federal courts, two California state courts and an Illinois state court
against most of the North American potash producers, including the
Company. The complaints essentially allege that the North American
potash producers acted together to fix the price of potash sold in the
United States. The complaints do not specify the amount of damages
sought by the plaintiffs. All of the complaints seek treble damages
and attorneys' fees and ask that the court find the defendants jointly
and severally liable.
Suits filed in federal courts in Minnesota, Illinois and Virginia
have been consolidated in Minnesota. All of the claims in these suits
are asserted on behalf of a purported group of direct purchasers of
potash in the United States, which class has been certified by the
court. Discovery is now concluded in the case. The federal magistrate
overseeing the case has formally recommended dismissal of the suit by
summary judgment.
In addition to the direct purchaser actions filed in the United
States District Courts, two complaints have been filed in California
state courts on behalf of indirect purchasers residing in California.
The Company has answered both of the California complaints and has
denied all material allegations. These cases are still in a
preliminary stage and no discovery has been conducted.
The case filed in Illinois state court has been dismissed for
failure to state a claim. Plaintiffs have appealed the dismissal.
The Company is not able to estimate the amount of damages that
could ultimately be sought in the civil suits. Based upon available
information, management of the Company believes that the Company has
not acted in concert with others to fix prices in violation of the
United States antitrust laws or any other laws. There can be no
assurance, however, that these cases will ultimately be decided in a
manner favorable to the Company. In connection with the Company's
<PAGE>
Colonsay mine, affiliates of Noranda Inc. (Noranda), from whom the
Company purchased the mine in January 1995, are also named as
defendants in the civil suits. The Company did not agree to assume any
liabilities of Noranda or such affiliates with respect to operations at
Colonsay prior to the closing of the purchase which may arise out of
such antitrust litigation, and the Company is entitled to be
indemnified by Noranda against such liabilities should they arise.
The Antitrust Division of the United States Department of Justice
had been conducting a grand jury investigation into allegations similar
to those made in the civil actions. In June 1996, the Company was
advised that the investigation was concluded and a spokesperson for the
Antitrust Division has stated that no action will be taken.
FTC Phosphate Operations Inquiry
The Company was notified on October 2, 1995 by the Federal Trade
Commission (FTC) that the FTC is conducting an investigation to
determine whether manufacturers of concentrated phosphates may have
violated Section 5 of the Federal Trade Commission Act, as amended, by
agreeing to restrict output or raise prices. The FTC has requested
that the Company provide certain information and documents regarding
the Company's phosphate operations. The Company has submitted
responsive information and documents to the FTC. The FTC has stated
that neither its request for information and documents nor the fact it
has commenced an investigation should be construed as indicating that a
violation has occurred or is occurring.
Other
In the ordinary course of its business, the Company is involved in
routine litigation.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the three
months ended June 30, 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT
The ages and five-year employment history of the Company's
executive officers at August 30, 1996 were as follows:
Wendell F. Bueche
Age 65. Chairman and Chief Executive Officer of the Company; President
of the Company from 1993 until 1994; joined the Company in 1993;
retired from full time employment from 1989 until 1993; member of the
Board of Directors of the Company since 1991.
<PAGE>
Robert E. Fowler, Jr.
Age 60. President and Chief Operating Officer of the Company; joined
the Company in March 1996; President of The Vigoro Corporation from
July 1993 through February 1996; Chief Executive Officer of The Vigoro
Corporation from September 1994 through February 1996; also served as
Chief Operating Officer of The Vigoro Corporation; President and Chief
Executive Officer of BCC Industrial Services from June 1991 to June
1993; member of the Board of Directors of the Company since 1996.
C. Steven Hoffman
Age 47. Senior Vice President of the Company; Senior Vice President,
Marketing from 1993 until 1994; Senior Vice President, Sales from 1992
until 1993; Senior Vice President, Wholesale Marketing from 1990 until
1992; joined the Company in 1974.
B. Russell Lockridge
Age 46. Senior Vice President, Human Resources of the Company; joined
the Company in July 1996; Corporate Director, Executive Compensation
and Development at FMC Corporation from 1983 to 1996.
Anne M. Scavone
Age 33. Controller of the Company; joined the Company in April 1993;
Director, Joint Venture Finances from April 1995 to April 1996; Joint
Venture Financial Coordinator from April 1993 to April 1995; Manager,
Ernst & Young from July 1990 to April 1993.
Brian J. Smith
Age 52. Executive Vice President, Chief Financial Officer and
Treasurer of the Company; joined the Company in February 1996;
Executive Vice President and Chief Financial Officer at W. R. Grace &
Co. from 1989 to 1995.
Marschall I. Smith
Age 51. Senior Vice President and General Counsel of the Company;
joined the Company in 1993; Senior Vice President and General Counsel
of American Medical International from 1992 until 1993; Associate
General Counsel of Baxter International from 1980 to 1992.
All of the Company's executive officers are elected annually, with
the terms of the officers listed above to expire in October 1996. No
"family relationships," as that term is defined in Item 401(d) of
Regulation S-K, exist among any of the listed officers.
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
<PAGE>
COMMON STOCK PRICES AND DIVIDENDS
Quarter
-------------------------------------
Fiscal 1996 First Second Third Fourth
- ----------------------------------------------------------------------
Dividends per common share $ 0.05 0.08 0.08 0.08
Common stock prices:
High $33.313 40.875 43.250 39.875
Low $27.000 30.313 33.625 32.250
Quarter
-------------------------------------
Fiscal 1995 First Second Third Fourth
- ----------------------------------------------------------------------
Dividends per common share - $0.05 0.05 0.05
Common stock prices:
High $22.313 22.375 26.250 27.313
Low $17.063 18.125 20.625 22.250
The Company's common stock is traded on the New York and Chicago
Stock Exchanges under the symbol IGL. As of August 30, 1996, the
Company had 92,419,558 shares of common stock outstanding, excluding
5,545,884 treasury shares. Common stock prices are from the composite
tape for New York Stock Exchange issues as reported in The Wall Street
Journal. Data in the table above have been restated to reflect a 2-for-
1 stock split, effected in the form of a 100 percent stock dividend
distributed on November 30, 1995.
As of August 30, 1996, the number of registered holders of common
stock as reported by the Company's registrar was 479. However, an
indeterminable number of shareholders beneficially own shares of the
Company's common stock through investment funds and brokers.
For the year ended June 30, 1996, the Company paid $35.5 million of
cash dividends. The Company's debt instruments contain provisions
which limit the Company's ability to pay dividends on its common stock.
See "Management's Discussion and Analysis of Results of Operations and
Financial Condition - Capital Resources and Liquidity" incorporated
herein by reference.
Item 6. Selected Financial Data.
The information for the years 1992 through 1996 contained under the
heading "Five Year Comparison" appearing on page 72 of the Company's
1996 Annual Report to Stockholders is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The information contained under the heading "Management's
Discussion and Analysis of Results of Operations and Financial
Condition" appearing on pages 34 through 47 of the Company's 1996
Annual Report to Stockholders is incorporated herein by reference.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
The Company's Consolidated Financial Statements and Notes thereto
appearing on pages 50 through 71 of the Company's 1996 Annual Report to
Stockholders, together with the report thereon of Ernst & Young LLP
dated July 31, 1996, appearing on page 48 of such Annual Report and the
information contained under the heading "Quarterly Results (unaudited)"
appearing on page 73 of such Annual Report, are incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable.
PART III.
Item 10. Directors and Executive Officers of the Registrant.
The information contained under the headings "The Annual Meeting--
Election of Directors" and "Beneficial Ownership of Common Stock--
Section 16(a) Beneficial Ownership Reporting Compliance" included in
the Company's definitive Proxy Statement for the 1996 Annual Meeting of
Stockholders and the information contained under the heading "Executive
Officers" in Part I hereof is incorporated herein by reference.
Item 11. Executive Compensation.
The information under the heading "Executive Compensation" included
in the Company's definitive Proxy Statement for the 1996 Annual Meeting
of Stockholders is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information under the heading "Beneficial Ownership of Common
Stock" included in the Company's definitive Proxy Statement for the
1996 Annual Meeting of Stockholders is incorporated herein by
reference. The Company knows of no contractual arrangements which may,
at a subsequent date, result in a change in control of the Company.
Item 13. Certain Relationships and Related Transactions.
The information under the headings "Executive Compensation" and
"Transactions with Principal Stockholders, Directors and Executive
Officers" included in the Company's definitive Proxy Statement for the
1996 Annual Meeting of Stockholders is incorporated herein by
reference.
<PAGE>
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-
K.
(a) (1)The financial statements and other financial data of IMC
Global, listed below and included in the
Company's 1996 Annual Report to Stockholders, are incorporated
herein by reference:
Report of Independent Auditors.
Consolidated Statement of Earnings - Years ended June 30, 1996,
June 30, 1995 and June 30, 1994.
Consolidated Balance Sheet - At June 30, 1996 and June 30,
1995.
Consolidated Statement of Cash Flows - Years ended June 30,
1996, June 30, 1995 and June 30, 1994.
Consolidated Statement of Changes in Stockholders' Equity -
Years ended June 30, 1996, June 30, 1995 and June 30, 1994.
Notes to Consolidated Financial Statements.
(a)(2) All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or
are inapplicable, and therefore have been omitted.
(a)(3) The exhibits listed in the following index have previously been
filed with the Securities and Exchange Commission or are being
filed as part of this report.
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
3.1 Restated Certificate of Company's Report on
Incorporation, as amended Form 8-K dated
November 1, 1994
3.2 By-Laws, amended as of July Company's Report on
2, 1991, and as currently in Form 8-K dated July
effect 2, 1991
3.3 Rights Agreement dated June Company's Report on
21, 1989, amended as of Form 8-A/A dated
August 17, 1995, with The September 7, 1995.
First National Bank of
Chicago (including the
Shareholder Rights Plan).
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
3.4 Certificate of Amendment to Exhibit 3.2 to the
Restated Certificate of Company's
Incorporation, dated October Registration
23, 1995 Statement on Form 8-
A/A-1 dated January
12, 1996
3.6 By-Laws, amended as of March Exhibit 4.4 to the
4, 1996, and as currently in Company's Post-
effect Effective Amendment
No. 1 on Form S-8
to Form S-4
(No. 333-0439)
4.1 Indenture dated as of Exhibit 4.4 to the
December 1, 1991 between the Company's Form SE
Registrant and The Bank of filed on December
New York, as Trustee, 3, 1991
relating to $100,000,000
aggregate principal amount
of 9.45% Senior Debentures
due 2011
4.2 Form of Senior Debentures Exhibit 4.5 to the
due 2011 Company's Form SE
filed on December
3, 1991
4.3 Indenture dated as of Exhibit 4.6 to the
December 1, 1991 between the Company's Form SE
Registrant and The Bank of filed on December
New York, as Trustee, 3, 1991
relating to $115,000,000
aggregate principal amount
of 6 1/4% Convertible
Subordinated Notes due 2001
4.4 Form of Convertible Exhibit 4.7 to the
Subordinated Notes due 2001 Company's Form SE
filed on December
3, 1991
4.5 Supplemental Indenture, Exhibit 4.5 to the
dated as of June 29, 1993, Company's
between the Registrant and Registration
The Bank of New York, as Statement on Form S-
Trustee, relating to the 4, (No. 33-49795)
Senior Debentures
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
4.6 Supplemental Indenture, Exhibit 4.6 to the
dated as of June 29, 1993, Company's
between the Registrant and Registration
The Bank of New York, as Statement on Form S-
Trustee, relating to the 4, (No. 33-49795)
Convertible Subordinated
Notes
4.7 Indenture, dated as of June Exhibit 4.7 to the
15, 1993, between IMC Global Company's
Inc. and NationsBank of Registration
Georgia, National Statement on Form S-
Association, as Trustee 4, (No. 33-49795)
4.8 First Supplemental Exhibit 4.1 to the
Indenture, dated as of Company's Report on
October 13, 1993, between Form 8-K dated
IMC Global Inc. and October 12, 1993
NationsBank of Georgia,
National Association, as
Trustee
4.9 First Supplemental
Indenture, dated as of
September 5, 1996, between
IMC Global Inc. and The Bank
Of New York, as successor
trustee to NationsBank of
Georgia, which amends and
supplements the Indenture
dated as of June 15, 1993,
between IMC Global Inc. and
the trustee relating to the
issuance of 10 1/8% Senior
Notes due 2001 and 10 1/8 %
Series B Senior Notes Due
2001 X
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
4.10 Second Supplemental
Indenture, dated as of
September 3, 1996, between
IMC Global Inc. and The Bank
Of New York, as successor
trustee to NationsBank of
Georgia, which amends and
supplements the Indenture
dated as of October 1, 1993,
between IMC Global Inc. and
the trustee and the
Supplemental Indenture dated
as of October 1, 1993
between IMC Global Inc. and
the trustee, relating to the
issuance of a series of
Senior Debt Securities known
as the 9 1/4% Senior Notes
due 2000. X
10.1 Intercorporate Agreement Exhibit 10.1 to the
dated as of July 1, 1987, by Company's
and between Mallinckrodt and Registration
IMC Global Operations Inc. Statement on Form S-
with Exhibits, including the 1, (Amendment No.
Restated Certificate of 2)
Incorporation of IMC Global (No. 33-17091)
Inc., as amended; By-Laws of
IMC Global Inc.; Preliminary
Agreement for K-2 Advances;
Registration Rights
Agreement; Services
Agreement; Management
Services Agreement;
Agreement regarding
Pollution Control and
Industrial Revenue Bonds;
License Agreement; office
lease and sublease;
management agreements;
supply agreements; and
transportation service
agreements
10.2 Supply agreements (Included Exhibit 10.1 to the
in Exhibit 10.1) Company's
Registration
Statement on Form S-
1, (No. 33-17091)
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.3 Agreement dated June 27, Exhibit 10.6 to the
1985, supplementing, Company's
amending and continuing Registration
Potash Resource Payment Statement on Form S-
Agreement dated October 15, 1, (Amendment No.
1979, between Mallinckrodt 2)
and the Province of (No. 33-22914)
Saskatchewan
10.4 Mining and Processing Exhibit 10.7 to the
Agreement dated January 31, Company's
1978, between Potash Registration
Corporation of Saskatchewan Statement on Form S-
Inc. and International 1, (No. 33-17091)
Minerals & Chemical (Canada)
Global Limited
10.5 * Management Incentive Exhibit 10.5 to the
Compensation Program, as 1995 Annual Report
amended through July 1, on Form 10-K
1995, and as currently in
effect
10.6 * 1991 Long-Term Performance Exhibit 10.7 to the
Incentive Plan, as amended Company's
through July 2, 1991, and as Registration
currently in effect Statement on Form S-
1
(No. 33-17091)
10.7 * 1988 Stock Option & Award Exhibit 10.7 to the
Plan, as amended through Company's
July 2, 1991, and as Registration
currently in effect Statement on Form S-
1
(No. 33-17091)
10.8 * 1994 Stock Option Plan for Exhibit 4(a) to the
Non-Employee Directors Company's
Registration
Statement on Form S-
8
(No. 33-56911)
10.9 * Retirement Plan for Salaried Exhibit 10.9 to the
Employees, as amended 1995 Annual Report
through November 1, 1994, on Form 10-K
and as currently in effect
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.10* Supplemental Benefit Plan Exhibit 10.12 to
the Company's
Registration
Statement on Form S-
1
(No. 33-17091)
10.11* Supplemental Executive Exhibit 10.7 to the
Retirement Plan, as amended Company's
through June 30, 1992, and Registration
as currently in effect Statement on Form S-
1
(No. 33-17091)
10.12* Investment Plan for Salaried Exhibit 10.12 to
Employees, as amended the 1995 Annual
through July 1, 1994, and as Report on Form 10-K
currently in effect
10.13 Suspension Agreement Exhibit 10.17 to
concerning Potassium the Company's
Chloride from Canada among Registration
the U.S. Department of Statement on Form S-
Commerce and the signatory 1
purchasers/exporters of (No. 33-17091)
potassium chloride from
Canada dated January 7, 1988
10.14 Settlement Agreement dated Exhibit 10.18 to
as of November 3, 1987, by the Company's
and among the Board of Registration
Trustees of the Internal Statement on Form S-
Improvement Trust Fund of 1
the State of Florida, the (No. 33-17091)
Department of Natural
Resources of the State of
Florida and Mallinckrodt
10.15* Management Compensation and Exhibit 10.17 to
Benefit Assurance Program, the Company's
as amended through June 30, Registration
1992, and as currently in Statement on Form S-
effect 1
(No. 33-17091)
10.16* Corporate Staff Employee Exhibit 10.32 to
Severance & Benefit the 1989 Annual
Assurance Policy Report on Form 10-K
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.17* Form of Trust Agreement with Exhibit 10.33 to
Wachovia Bank & Trust Co., the 1992 Annual
N.A., as amended through Report on Form 10-K
August 15, 1991
10.18* Form of Contingent Exhibit 10.18 to
Employment Agreement dated the 1995 Annual
September 1, 1995, with Report on Form 10-K
Officers of Corporation
10.19* Directors Retirement Service Exhibit 10.36 to
Plan the 1989 Annual
Report on Form 10-K
10.20* Form of "Gross Up" Agreement Exhibit 10.20 to
dated September 1, 1995, the 1995 Annual
with Officers of Report on Form 10-K
Corporation, as amended
10.21 Sulphur Joint Operating Exhibit 10.40 to
Agreement dated as of May 1, the 1990 Annual
1988, among Freeport-McMoRan Report on Form 10-K
Resource Partners, IMC
Global Operations Inc. and
Felmont Oil Corporation
10.22 Oil/Gas Operating Agreement Exhibit 10.41 to
dated as of June 5, 1990, the 1990 Annual
among Freeport-McMoRan Report on Form 10-K
Resource Partners, IMC
Global Operations Inc. and
Felmont Oil Corporation
10.23 Agreement in Principle dated Exhibit 10.43 to
September 7, 1990, with the 1990 Annual
Mallinckrodt Report on Form 10-K
10.24 Agreement dated as of Exhibit 10.44 to
September 12, 1990, with the 1990 Annual
Mallinckrodt Report on Form 10-K
10.25 Memorandum of Agreement as Exhibit 10.51 to
of December 21, 1990, the 1991 Annual
amending Mining and Report on Form 10-K
Processing Agreement of
January 31, 1978, between
Potash Corporation of
Saskatchewan Inc. and
International Minerals &
Chemical (Canada) Global
Limited
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.26 Division of Proceeds Exhibit 10.52 to
Agreement dated December 21, the 1991 Annual
1990, between Potash Report on Form 10-K
Corporation of Saskatchewan
Inc. and International
Minerals & Chemical (Canada)
Global Limited
10.27 Directors' Retirement Exhibit 10.54 to
Services Plan Effective July the 1992 Annual
1, 1989 Report on Form 10-K
10.28 Contribution Agreement dated Exhibit 10.55 to
April 5, 1993 between the Company's March
Freeport-McMoRan Resource 31, 1993 Form 10-
Partners, Limited Q/A (Amendment No.
Partnership and IMC Global 1) filed on May 19,
Operations Inc. 1993
10.29 Form of Partnership Exhibit 10.29 to
Agreement, dated as of July the 1995 Annual
1, 1993, as further amended Report on Form 10-K
and restated as of May 26,
1995, between IMC-Agrico GP
Company, Agrico L.P. and IMC-
Agrico MP Inc., including
definitions
10.30 Form of Parent Agreement, Exhibit 10.30 to
dated as of July 1, 1993, as the 1995 Annual
further amended and restated Report on Form 10-K
as of May 26, 1995, between
IMC Global Operations Inc.,
Freeport-McMoRan Resource
partners, Limited
Partnership, Freeport-
McMoRan Inc. and IMC-Agrico
Company
10.31 Amendment, Waiver and Exhibit 10.31 to
Consent, dated May 26, 1995, the 1995 Annual
among IMC Global Inc., IMC Report on Form 10-K
Global Operations Inc., IMC-
Agrico GP Company, IMC-
Agrico MP, Inc., IMC-Agrico
Company, Freeport-McMoRan
Inc., Freeport-McMoRan
Resource Partners, Limited
Partnership, and Agrico,
Limited Partnership
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.32 Agreement and Plan of Exhibit 10.32 to
Complete Liquidation and the 1995 Annual
Dissolution, dated May 26, Report on Form 10-K
1995, among IMC Global
Operations Inc., IMC-Agrico
GP Company, and IMC-Agrico
MP, Inc.
10.33 Sterlington Settlement Exhibit 10.58 to
Agreement between IMC Global the Company's March
Inc., Angus Chemical Company 31, 1993 Form
and Industrial Risk Insurers 10-Q/A (Amendment
dated April 1, 1993 No. 1) filed on May
19, 1993
10.34 First Amendment to Exhibit 10.59 to
Contribution Agreement, the Company's
dated as of July 1, 1993, Report on Form 8-K
between Freeport-McMoRan dated July 16, 1993
Resource Partners, Limited
Partnership and IMC Global
Operations Inc.
10.35 Credit Agreement, dated as Exhibit 10.63 to
of June 29, 1993, between the Company's
IMC Global Operations Inc., Registration
IMC Global Inc. and the Statement on Form S-
Banks Listed Therein 4, (No. 33-49795)
10.36 Loan Agreement, dated as of Exhibit 10.64 to
December 1, 1991, between the Company's
IMC Global Operations Inc. Registration
and the Polk County Statement on Form S-
Industrial Development 4, (No. 33-49795)
Authority (Florida)
10.37 Amended and Restated Exhibit 10.65 to
Unconditional Guaranty, the Company's
dated as of December 1, 1991 Registration
of IMC Global Inc. with Statement on Form S-
respect to Polk County 4, (No. 33-49795)
Industrial Development
Authority (Florida)
Industrial Development
Revenue Bonds (IMC Global
Operations Inc. Project)
1991 Tax-Exempt Series A and
1992 Tax-Exempt Series A
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.38 Supplemental Loan Agreement, Exhibit 10.66 to
dated as of January 1, 1992, the Company's
between IMC Global Registration
Operations Inc. and the Polk Statement on Form S-
County Industrial 4, (No. 33-49795)
Development Authority
(Florida)
10.39 Second Supplemental Loan Exhibit 10.67 to
Agreement, dated as of June the Company's
30, 1993, between IMC Global Registration
Operations Inc. and the Polk Statement on Form S-
County Industrial 4, (No. 33-49795)
Development Authority
(Florida)
10.40 Amendment to Guaranty, dated Exhibit 10.68 to
June 30, 1993, with respect the Company's
to Polk County Industrial Registration
Development Authority Statement on Form S-
(Florida) Industrial 4, (No. 33-49795)
Development Revenue Bonds
(IMC Global Operations Inc.
Project) 1991 Tax-Exempt
Series A and 1992 Tax-Exempt
Series A
10.41 Indenture of Trust, dated as Exhibit 10.69 to
of December 1, 1991, between the Company's
Polk County Industrial Registration
Development Authority (the Statement on Form S-
"Authority") and The Bank of 4, (No. 33-49795)
New York, as Trustee (the
"IRB Trustee") relating to
the Industrial Development
Revenue Bonds (IMC Global
Operations Inc. Project)
1991 Tax-Exempt Series A
(the "Series 1991 Bonds")
10.42 Supplemental Indenture of Exhibit 10.70 to
Trust, dated as of January the Company's
1, 1992, between the Registration
Authority and the IRB Statement on Form S-
Trustee, relating to the 4, (No. 33-49795)
Industrial Development
Revenue Bonds (IMC Global
Operations Inc. Project)
1992 Tax-Exempt Series A
(the "Series 1992 Bonds")
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.43 Second Supplemental Exhibit 10.71 to
Indenture of Trust, dated as the Company's
of June 30, 1993, between Registration
the Authority and the IRB Statement on Form S-
Trustee, relating to the 4, (No. 33-49795)
Series 1991 Bonds and the
Series 1992 Bonds
10.44 Amendment Number 2 to Exhibit 10.44 to
Investment Plan for Salaried the Company's
Employees effective March 1, Registration
1988 and restated effective Statement on Form S-
January 1, 1992 4, (No. 33-49795)
10.45* First Amendment, dated July Exhibit 10.45 to
2, 1991, to form of the Company's
Contingent Employment Registration
Agreement with Officers of Statement on Form S-
Corporation 4, (No. 33-49795)
10.46* Amendment, dated July 2, Exhibit 10.46 to
1991, to Form of "Gross Up" the Company's
Agreement with Officers of Registration
Corporation Statement on Form S-
4, (No. 33-49795)
10.47* Employment Agreement, dated Exhibit 10.47 to
April 15, 1993, between The Company's
Wendell F. Bueche and IMC Registration
Global Inc. Statement on Form S-
4, (No. 33-49795)
10.48* Consulting Agreement, dated Exhibit 10.48 to
July 19, 1993, between the Company's
Wendell F. Bueche and IMC Registration
Global Inc. Statement on Form S-
4, (No. 33-49795)
10.49* Amendment and Extension Exhibit 10.49 to
Agreement, dated as of June the 1995 Annual
15, 1995, to Employment Report on Form 10-K
Agreement dated as of April
15, 1993 and Consulting
Agreement dated as of July
19, 1993, between Wendell F.
Bueche and IMC Global Inc.
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.50* Consulting Agreement, dated Exhibit 10.49 to
March 1, 1993, between the Company's
Billie B. Turner and IMC Registration
Global Inc. Statement on Form S-
4, (No. 33-49795)
10.51 Amendment No. 1 and Waiver Exhibit 10.51 to
No. 1, dated as of June 30, the 1993 Annual
1993, to Credit Agreement Report on Form 10-K
dated as of June 29, 1993
among IMC Global Operations
Inc., IMC Global Inc. and
the Banks Listed Therein
10.52 Amendment No. 2, Waiver No. Exhibit 10.52 to
2 and Consent No. 1, dated the 1993 Annual
as of September 3, 1993, to Report on Form 10-K
Credit Agreement dated as of
June 29, 1993 among IMC
Global Operations Inc., IMC
Global Inc. and the Banks
Listed Therein
10.53 Amendment No. 1, dated as of Exhibit 10.53 to
June 24, 1994 to Credit the 1995 Annual
Agreement, dated as of Report on Form 10-K
February 9, 1994 between IMC-
Agrico Company, NationsBank
of Georgia and the Banks
Listed Therein
10.54 Amendment No. 2, dated as of Exhibit 10.54 to
February 24, 1995 to Credit the 1995 Annual
Agreement, dated as of Report on Form 10-K
February 9, 1994 between IMC-
Agrico Company, NationsBank
of Georgia and the Banks
Listed Therein
10.55 Credit Agreement, dated as Exhibit 99.1 to the
of February 9, 1994, between Company's
IMC-Agrico Company, Registration
NationsBank of Georgia, and Statement on Form S-
the Banks Listed Therein 3, (Amendment No.
1) (No. 33-52377)
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.56 Amendment No. 3, dated as of Exhibit 10.52 to
December 30, 1993, to Credit the 1994 Annual
Agreement dated as of June Report on Form 10-K
29, 1993 among IMC Global
Operations Inc., IMC Global
Inc. and the Banks Listed
Therein
10.57 Amendment No. 4, dated as of Exhibit 10.53 to
March 10, 1994, to Credit the 1994 Annual
Agreement dated as of June Report on Form 10-K
29, 1993 among IMC Global
Operations Inc., IMC Global
Inc. and the Banks Listed
Therein
10.58 Amendment No. 5, dated as of Exhibit 10.54 to
June 30, 1994, to Credit the 1994 Annual
Agreement dated as of June Report on Form 10-K
29, 1993 among IMC Global
Operations Inc., IMC Global
Inc. and the Banks Listed
Therein
10.59 Amendment No. 6, dated as of Exhibit 10.55 to
November 30, 1994, to Credit the Company's
Agreement dated as of June December 31, 1994
29, 1993 among IMC Global Form 10-Q filed
Operations Inc., IMC Global February 13, 1995
Inc. and the Banks Listed
Therein
10.60 Transfer and Administration Exhibit 10.60 to
Agreement, dated as of the 1995 Annual
October 31, 1994, between Report of Form 10-K
Enterprise Funding
Corporation and IMC-Agrico
Company
10.61 Amended and Restated Credit Exhibit 10.61 to
Agreement, dated as of July the 1995 Annual
31, 1995, between IMC Global Report on Form 10-K
Operations Inc., IMC Global
Inc. and the Banks Listed
Therein
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.62 Amendment No. 1 to Transfer Exhibit 10.62 to
and Administration the Company's
Agreement, dated as of December 31, 1995
October 30, 1995, between Form 10-Q
Enterprise Funding
Corporation and IMC-Agrico
Company
10.63 Agreement Under the Parent Exhibit 10.63 to
Agreement, dated as of the Company's
January 23, 1996, among IMC December 31, 1995
Global Inc., IMC Global Form 10-Q
Operations Inc., Freeport-
McMoRan Resource Partners
Limited Partnership,
Freeport-McMoRan Inc. and
IMC-Agrico Company, a
Delaware general partnership
10.64 Amendment and Agreement Exhibit 10.64 to
Under the Partnership the Company's
Agreement, dated as of December 31, 1995
January 23, 1996, by and Form 10-Q
among IMC-Agrico GP Company,
Agrico, Limited Partnership,
IMC-Agrico MP, Inc., IMC
Global Operations Inc. and
IMC-Agrico Company
10.65 Credit Agreement, dated as Exhibit 10.65 to
of February 28, 1996, among the Company's
IMC Global Inc., IMC Global Report on Form 8-K
Operations Inc., dated March 15,
International Minerals & 1996
Chemical (Canada) Global
Limited, Kalium Canada Ltd.,
Central Canada Potash, Inc.
and the Banks Listed Therein
10.66 Second Amended and Restated Exhibit 10.66 to
Note Purchase Agreement, the Company's
dated as of February 28, Report on Form 8-K
1996, to the Amended and dated March 15,
Restated Note Purchase and 1996
Private Shelf Agreement
dated as of December 22,
1994, among IMC Global Inc.,
The Vigoro Corporation and
The Prudential Insurance
Company of America
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.67 Second Amended and Restated Exhibit 10.67 to
Note Purchase Agreement, the Company's
dated as of February 28, Report on Form 8-K
1996, to the Amended and dated March 15,
Restated Note Purchase and 1996
Private Shelf Agreement
dated as of December 22,
1994, between Kalium Canada,
Ltd. and The Prudential
Insurance Company of America
10.68 Fourth Amendment and Waiver Exhibit 10.68 to
Agreement dated as of May the Company's March
14, 1996 to the Credit 31, 1996 Form 10-Q
Agreement, by and among
IMC-Agrico Company, a
Delaware general
partnership, the Banks
identified therein, and
NationsBank, N.A. (successor
in interest to NationsBank,
N.A. and NationsBank of
North Carolina, N.A., as
Agent)
10.69 Agreement and Plan of Merger Exhibit 99.2 to the
dated as of November 13, Company's September
1995 among IMC Global Inc., 30, 1995 Form 10-Q
Bull Merger Company and The
Vigoro Corporation
10.70 Registration Rights Exhibit 99.6 to the
Agreement dated as of March Company's March
1, 1996 among IMC Global 31,1996 Form 10-Q
Inc. and certain former
stockholders of The Vigoro
Corporation
10.71* Non-competition Agreement
dated as of March 1, 1996
between IMC Global Inc., IMC
Global Operations Inc. and
C. Steven Hoffman X
10.72* Non-competition Agreement
dated as of February 29,
1996 between IMC Global Inc.
and Robert E. Fowler, Jr. X
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
- --------------------------------------------------------------------
10.73 Transition Bonus Agreement
dated as of March 1, 1996
between IMC Global Inc., IMC X
Global Operations Inc. and
Marschall I. Smith
10.74 The Vigoro Corporation
Severance Plan, as amended X
10.75* The IMC Global Inc.
Severance Plan X
10.76* Letter Agreement dated March
5, 1996, between the Company
and Brian J. Smith X
11.1 Fully diluted earnings
(loss) per share for the
years ended June 30, 1996,
1995 and 1994 X
13 The portions of the
Company's 1996 Annual Report
to Stockholders which are
specifically incorporated by
reference. X
13.1 Report of Arthur Andersen
LLP X
21.1 Subsidiaries of the
Registrant X
23.1 Consent of Ernst & Young LLP X
23.2 Consent of Arthur Andersen
LLP X
27.1 Financial Data Schedule X
* Denotes management contract or compensatory plan.
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed by the Company during
the last quarter of fiscal 1996.
(c) EXHIBITS
See exhibit index listed at Item 14(a)(3) hereof.
<PAGE>
(d) Financial statements and schedules and summarized financial
information of 50 percent or less owned persons are omitted as
none of such persons are individually or in the aggregate
significant under the tests specified in Regulation S-X under
Article 3.09 of general instructions to the financial
statements.
SIGNATURES
Pursuant to the requirements of 13 or 15(d) 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.
(Registrant)
/s/ Wendell F. Bueche
Wendell F. Bueche
Chairman and Chief Executive Officer
Date: September 27, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Wendell F. Bueche Chairman and Chief September 27, 1996
Wendell F. Bueche executive officer
(principal executive
officer) and Director
/s/ Robert E. Fowler, Jr. President (principal September 27, 1996
Robert E. Fowler, Jr. operating officer)
and Director
/s/ Brian J. Smith Chief Financial Officer September 27, 1996
Brian J. Smith (principal financial
officer)
/s/ Anne M. Scavone Controller (principal September 27 , 1996
Anne M. Scavone accounting officer)
/s/ Raymond F. Bentele Director September 27, 1996
Raymond F. Bentele
/s/ Frank W. Considine Director September 27, 1996
Frank W. Considine
/s/ Rod F. Dammeyer Director September 27, 1996
Rod F. Dammeyer
<PAGE>
/s/ Dr. James M. Davidson Director September 27, 1996
Dr. James M. Davidson
/s/ Richard A. Lenon Director September 27, 1996
Richard A. Lenon
/s/ Harold H. MacKay Director September 27, 1996
Harold H. MacKay
/s/ David B. Mathis Director September 27, 1996
David B. Mathis
/s/ Thomas H. Roberts, Jr. Director September 27, 1996
Thomas H. Roberts, Jr.
/s/ Joseph P. Sullivan Director September 27, 1996
Joseph P. Sullivan
/s/ Richard L. Thomas Director September 27, 1996
Richard L. Thomas
/s/ Billie B. Turner Director September 27, 1996
Billie B. Turner
/s/ Clayton K. Yeutter Director September 27, 1996
Clayton K. Yeutter
<PAGE>
EXHIBIT 4.9
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of September 5,
1996, between IMC GLOBAL INC., formerly known as IMC Fertilizer Group,
Inc., a Delaware corporation (hereinafter called the "Company"), having
its principal executive offices at 2100 Sanders Road, Northbrook, IL
60062, and THE BANK OF NEW YORK, a corporation duly organized and
existing under the laws of the United States of America, as successor
trustee to NationsBank of Georgia (the "Trustee"), amends and
supplements the Indenture providing for the issuance of Senior Debt
Securities in series, dated as of June 15, 1993, between the Company
and the Trustee (the "Original Indenture") and to the extent
inconsistent therewith, supersedes the Original Indenture.
RECITALS
WHEREAS, the Company and the Trustee entered into the
Original Indenture to provide for the issuance of 10 1/8% Senior Notes
due 2001 and 10 1/8% Series B Senior Notes Due 2001 (collectively, the
"10 1/8% Notes"); and
WHEREAS, holders of more than a majority of the outstanding
principal amount of the 10 1/8% Notes have consented to the execution
by the Company and the Trustee of this First Supplemental Indenture
pursuant to which certain covenants in the Original Indenture shall be
deleted and certain other provisions shall be amended; and
WHEREAS, Section 9.2 of the Original Indenture provides that
the Company and the Trustee may enter into one or more Supplemental
Indentures to amend the Original Indenture with the written consent of
the holders of a majority of the principal amount of the then
outstanding securities of such series.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MUTUAL COVENANTS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. Definitions, References. Unless otherwise
specifically defined herein, each term used herein which is defined in
the Original Indenture shall have the meaning assigned to such term in
the Original Indenture. Except as amended and supplanted hereby, all
of the terms of the Original Indenture shall remain in full force and
effect and are hereby confirmed in all respects. Each reference to
"hereof," "hereunder," "herein," and "hereby" and each other similar
reference, and each reference to "this Agreement" and each other
similar reference, contained in the Original Indenture shall from and
after the date hereof refer to the Original Indenture as amended by
this First Supplemental Indenture.
SECTION 2. Amendment to Article Four of the Original
Indenture. Sections 4.3, 4.4, 4.5, 4.6, 4.7, 4.9, 4.10, 4.11, 4.12,
4.13, 4.14, 4.15, 4.17, and 4.18 of the Original Indenture are hereby
deleted in their entirety.
SECTION 3. Amendment to Article Five of the Original
Indenture. Section 5.1 of the Original Indenture is hereby deleted in
its entirety.
<PAGE>
SECTION 4. Amendment to Article Six of the Original
Indenture. Section 6.1 of the Original Indenture is hereby amended by
deleting paragraphs (c),(d), (e), and (f) in their entirety.
Paragraphs (g) and (h) of Section 6.1 of the Original Indenture are
hereby redesignated paragraphs (c) and (d).
SECTION 5. Ratification of Provisions of Original Indenture.
All provisions of the Original Indenture not specifically herein
supplemented or modified are hereby ratified and reaffirmed by the
Company and the Trustee.
SECTION 6. Applicability of First Supplemental Indenture.
The covenants and agreements set forth in this First Supplemental
Indenture shall, unless otherwise determined by the Company and set
forth in an amendment to the Original Indenture, be applicable solely
to the 10 1/8% Notes.
SECTION 7. Counterparts. This First Supplemental Indenture
may be executed in counterparts by the parties hereto.
SECTION 8. Section Headings. The Section headings in this
First Supplemental Indenture are inserted for convenience only and
shall not be part of this instrument.
SECTION 9. Governing Law. This First Supplemental Indenture
shall be governed by and construed in accordance with the laws of the
State of New York.
SECTION 10. Entire Agreement. This First Supplemental
Indenture and the Original Indenture as amended hereby constitute the
entire agreement and understanding between the parties hereto and
supersede any and all prior agreements and understandings relating to
the subject matter hereof.
<PAGE>
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all of the day and
year first above written.
IMC GLOBAL INC.
By: M. I. Smith
-----------------------------
Title: Senior Vice President
and General Counsel
Attest: Rose Marie Williams
-------------------------
Title: Corporate Secretary
THE BANK OF NEW YORK
By:
-----------------------------
Title:
Attest:
-------------------------
Title:
<PAGE>
EXHIBIT 4.10
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of September 3,
1996, between IMC GLOBAL INC., formerly known as IMC Fertilizer Group,
Inc., a Delaware corporation (hereinafter called the "Company"), having
its principal executive offices at 2100 Sanders Road, Northbrook, IL
60062, and THE BANK OF NEW YORK, a corporation duly organized and
existing under the laws of the United States of America, as successor
trustee to NationsBank of Georgia (hereinafter called the "Trustee"),
amends and supplements the Indenture providing for the issuance of
Senior Debt Securities in Series, dated as of October 1, 1993, between
the Company and the Trustee (the "Original Indenture") and the
Supplemental Indenture dated as of October 1, 1993 between the Company
and the Trustee (the "First Supplemental Indenture"), and to the extent
inconsistent therewith, supersedes the Original Indenture and the First
Supplemental Indenture.
RECITALS
WHEREAS, the Company and the Trustee entered into the
Original Indenture to provide for the issuance of the Company's Senior
Debt Securities in series; and
WHEREAS, the Company and the Trustee entered into the First
Supplemental Indenture which provided for the issuance of a series of
Senior Debt Securities pursuant to the Original Indenture known as the
9 1/4% Senior Notes due 2000 (the "Notes"); and
WHEREAS, holders of more than a majority of the aggregate
outstanding principal amount of the Notes have consented to the
execution by the Company and the Trustee of a supplemental indenture
pursuant to which certain covenants in the Original Indenture and First
Supplemental Indenture shall be deleted and certain other provisions
thereof shall be amended; and
WHEREAS, Section 9.2 of the Original Indenture provides that
the Company and the Trustee may enter into one or more Supplemental
Indentures to amend the Original Indenture with the written consent of
the holders of a majority of the principal amount of the then
outstanding securities of such series.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MUTUAL COVENANTS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. Definitions, References. Unless otherwise
specifically defined herein, each term used herein which is defined in
the Original Indenture or the First Supplemental Indenture shall have
the meaning assigned to such term in the Original Indenture or the
First Supplemental Indenture, as applicable. Except as amended and
supplanted hereby, all of the terms of the Original Indenture and the
First Supplemental Indenture shall remain in full force and effect and
are hereby confirmed in all respects. Each reference to "hereof,"
"hereunder," "herein," and "hereby" and each other similar reference,
and each reference to "this Agreement" and each other similar
<PAGE>
reference, contained in the Original Indenture or the First
Supplemental Indenture shall from and after the date hereof refer to
the Original Indenture as amended by the First Supplemental Indenture
and this Second Supplemental Indenture.
SECTION 2. Amendment to Article Four of the Original
Indenture. Sections 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, and 4.12
of the Original Indenture are hereby deleted in their entirety.
SECTION 3. Amendment to Article Five of the Original
Indenture. Section 5.1 of the Original Indenture is hereby deleted in
its entirety.
SECTION 4. Amendment to Article Six of the Original
Indenture. Section 6.1 of the Original Indenture is hereby amended by
deleting paragraphs (c), (d), (e), and (f) in their entirety.
Paragraphs (g) and (h) of Section 6.1 of the Original Indenture are
hereby redesignated paragraphs (c) and (d).
SECTION 5. Amendment to Article Two of the First
Supplemental Indenture. Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, and 2.7
of the First Supplemental Indenture are hereby deleted in their
entirety.
SECTION 6. Amendment to Article Three of the First
Supplemental Indenture. Section 3.1 of the First Supplemental
Indenture is hereby deleted in its entirety.
SECTION 7. Ratification of Provisions of Original Indenture
and First Supplemental Indenture. All provisions of the Original
Indenture and the First Supplemental Indenture not specifically herein
supplemented or modified are hereby ratified and reaffirmed by the
Company and the Trustee.
SECTION 8. Applicability of Second Supplemental Indenture.
The covenants and agreements set forth in this Second Supplemental
Indenture shall, unless otherwise determined by the Company and set
forth in an amendment hereto, be applicable solely to the Notes.
SECTION 9. Counterparts. This Second Supplemental Indenture
may be executed in counterparts by the parties hereto.
SECTION 10. Section Headings. The Section headings in this
Second Supplement Indenture are inserted for convenience only and shall
not be part of this instrument.
SECTION 11. Governing Law. This Second Supplemental
Indenture shall be governed by and construed in accordance with the
laws of the State of New York.
SECTION 12. Entire Agreement. This Second Supplemental
Indenture, the First Supplemental Indenture, and the Original Indenture
as amended hereby constitute the entire agreement and understanding
<PAGE>
between the parties hereto and supersede any and all prior agreements
and understandings relating to the subject matter hereof.
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Second Supplemental Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all of the day and
year first above written.
IMC GLOBAL INC.
By: M. I. Smith
-----------------------------
Title: Senior Vice President
and General Counsel
Attest: Rose Marie Williams
-------------------------
Title: Corporate Secretary
THE BANK OF NEW YORK
By:
-----------------------------
Title:
Attest:
-------------------------
Title:
<PAGE>
EXHIBIT 10.71
NON-COMPETITION
AGREEMENT
This Agreement made as of the lst day of March, 1996, between
IMC GLOBAL INC., a Delaware Corporation ("Company"), IMC Global
Operations Inc. and C. Steven Hoffman ("Employee").
WHEREAS, the Company and The Vigoro Corporation, a Delaware
corporation, ('Vigoro") on the date stated above, have completed a
transaction whereby Vigoro has become a wholly-owned subsidiary of the
Company; and
WHEREAS, the Company desires to have the use of and access to
and to protect valuable confidential information relating to the
businesses of the Controlled Group in Employee's possession and other
confidential information which Employee may acquire during employment
by any Employer; and
WHEREAS, the Company has concluded that it is therefore in
the best interest of the Company to provide incentives for Employee to
continue to be employed in the Controlled Group and to secure
Employee's agreement to limitations on Employee's future business
activities in order to protect the Controlled Group from injury that
would occur if the confidential information became available to and
could be used by a competitor of any member of the Controlled Group;
NOW, THEREFORE, for valuable consideration which the parties
acknowledge and in consideration of the mutual covenants and agreements
contained herein, the Employee and the Company agree as follows:
1. Definitions. Each term defined herein shall be given
its defined meaning wherever used in this Agreement, unless the context
requires otherwise.
"Vigoro" means Vigoro and its Subsidiaries, as they may exist
from time to time, during Employee's employment with Vigoro or with the
Company or its affiliates in the Controlled Group.
"Cause" means (i) the engaging by the Employee in willful and
intentional conduct which has caused demonstrable and serious injury to
the Company, monetary or otherwise; (ii) conviction of, or plea of nolo
contendere by, the Employee for any felony; (iii) criminal conviction
of, or plea of nolo contendere by, the Employee for any other offense
involving dishonesty, breach of trust or moral turpitude; (iv) a breach
of fiduciary duty by the Employee involving personal profit; or (v)
willful refusal by the Employee to perform his duties, or
responsibilities (unless significantly changed without the Employee's
consent), or gross negligence by the Employee in the performance of
such duties; provided, however, that the Employee shall have 30 days,
or such longer period as the Company may determine to be appropriate,
after written notice by the Company, to cure any conduct or act, if
curable, alleged in such notice to provide grounds for termination of
the Employee's employment for Cause.
<PAGE>
"Controlled Group" means the Company and all affiliates of
the Company determined under Sections 414(b),(c),(m) and (o) of the
Internal Revenue Code of 1986, as amended.
"Effective Date" means the date first set forth above.
"Employer" means the Company and any Subsidiary or other
member of the Controlled Group which employs Employee on or after the
Effective Date.
"Good Reason" for termination of employment by an Employee
shall mean any of the following:
(a) the failure by the Employer to (i) maintain the
Employee's Base Salary at an annual rate equal to the rate in
effect immediately prior to the Effective Date, or as may be
increased from time to time by the Employer in accordance
with regular practices of the Company thereafter with respect
to employees with comparable duties; provided, however, that
Good Reason shall not exist as the result of any decrease in
Base Salary if such decrease is incident to a general
reduction applied to all senior corporate officers and other
key employees of all members of the Controlled Group on a
proportionate and nondiscriminatory basis; (ii) provide for
continued participation on a comparable basis by the Employee
in an annual bonus plan maintained by the Company or its
Subsidiaries in which employees with comparable duties
participate; (iii) provide for participation in stock option
and other equity incentive plans or programs maintained by
the Company or its Subsidiaries or any other member of the
Controlled Group from time to time in which employees with
comparable duties participate; (iv) provide for participation
in all Company or Subsidiary sponsored group or executive
medical, dental, life, disability, retirement, profit-
sharing, thrift, nonqualified and deferred compensation, and
other plans maintained by the Company or its, Subsidiaries to
the same extent as employees with comparable duties
participate; (v) provide vacation and perquisites
substantially equivalent to those provided by the Company or
Subsidiaries to employees with comparable duties; or (vi)
obtain the express unconditional assumption of this Agreement
as required by Section 9; or
(b) any Employer changes the Employee's primary employment
location to a location that is more than 50 miles from the
primary location of such Employee's employment as in effect
immediately prior to the Effective Date; provided, however,
that the relocation of Employee on a nondiscriminatory basis
for bona fide business reasons shall not constitute Good
Reason hereunder; or
(c) a significant adverse change, without the Employee's
written consent, in working conditions or status, including
but not limited to (i) a significant adverse change in the
nature or scope of the Employee's authority, powers,
<PAGE>
functions, duties or responsibilities; provided, however, a
change in the Company's status such that it no longer has any
equity securities registered under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934, as amended, or that it
is a subsidiary of another entity and directly results in
changes in the nature or scope of the Employee's authority,
powers, functions,, duties or responsibilities shall not in
and of itself constitute Good Reason hereunder, or (ii) a
reduction in the level of support services, staff,
secretarial and other assistance, office space and
accouterments available to a level below that reasonably
necessary for the performance of such duties.
"Non-Competition Period" shall commence on the date
Employee's employment is terminated and continue for a period of
(a) Three years, if a Severance Event occurs on or before
the first anniversary of the Effective Date;
(b) Two years, if a Severance Event occurs after the first
anniversary of the Effective Date and on or before the second
anniversary thereof; and
(c) One year, if a Severance Event occurs after the second
anniversary of the Effective Date and on or before the third
anniversary thereof or if Employee's employment is terminated for a
reason other than a Severance Event.
"Severance Event" shall be deemed to have occurred if, and
only if, as of or after the Effective Date, but prior to the expiration
of the Severance Period, termination of Employee's employment with the
Company occurs, and such termination is:
(a) Employer-initiated for reasons other than
Cause;
(b) Employee-initiated within ninety (90)
days after the Employee first has or should have
knowledge that Good Reason exists.
"Severance Period" means a period of three (3) years from and
after the Effective Date.
"Subsidiary" means any corporation of which the securities
having a majority of the ordinary voting power in electing the board of
directors are, at the time of such determination, owned by the Company
or another Subsidiary.
2. Proprietary Rights.
(a) Employee acknowledges that each Employer and other
members of the Controlled Group has exclusive ownership of all
information useful in its business (including its dealings with
suppliers, customers and other third parties, whether or not a true
"trade secret"), which at the time or times concerned is not generally
known to persons outside of the Controlled Group engaged in businesses
<PAGE>
similar to those conducted by such entities, and which has been or is
from time to time disclosed to, discovered by, or otherwise known by
Employee as a consequence of his employment by the Employer (including
Information conceived, discovered or developed by Employee during his
employment) (collectively, "Confidential Information"). Confidential
Information includes, but is not limited to the following especially
sensitive types of information:
(i) The identity, purchase and payment patterns of, and
special relations with, customers;
(ii) The identity, net prices and credit terms of, and
special relations with, the suppliers;
(iii) Inventory selection and management techniques;
(iv) Product development and marketing plans; and
(v) Finances except to the extent publicly disclosed.
(b) The term "Proprietary Materials" shall mean all business
records, documents, drawings, writings, software, programs and other
tangible things which were or are created or received by or for the
Employer and other members of the Controlled Group in furtherance of
its business, including, but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include,
but are not limited to, the following especially sensitive types of
materials: applications software, the data bases of Confidential
Information maintained in connection with such software, and printouts
generated from such data base,; market studies and strategic plans;
customer, supplier and employee lists; contracts and correspondence
with customers and suppliers; documents evidencing transactions with
customers and suppliers, sales calls reports, appointment books,
calendars, expense statements and the like, reflecting conversations
with any company, customer or supplier; architectural and engineering
plans; and purchasing, sales and policy manuals. Proprietary Materials
also include, but are not limited to, any such things which are created
by Employee or with Employee's assistance and all notes, memoranda and
the like prepared using the Proprietary Materials and/or Confidential
Information.
(c) While some of the information contained in Proprietary
Materials may have been known to Employee prior to employment with an
Employer, or may now or in the future be in the public domain, Employee
acknowledges that the compilation of that information contained in the
Proprietary Materials has or will cost the Employer and other members
of the Controlled Group a great effort and expense, and affords persons
to whom Proprietary Materials are disclosed, including Employee, a
competitive advantage over persons who do not know the information or
have the compilation of the Proprietary Materials. Employee further
acknowledges that Confidential Information and Proprietary Materials
include commercially valuable trade secrets and automatically become
the Company's exclusive property when they are conceived, created or
received.
<PAGE>
3. Confidentiality Duties. Employee shall, except as may
be required by law, while an employee of the Company and thereafter for
the longest time permitted by applicable law.
(a) Comply with all instructions of the Company and the
Employer (whether oral or written) for preserving the confidentiality
of Confidential Information and Proprietary Materials.
(b) Use Confidential Information and Proprietary Materials
only at places designated by the Company or the Employer, in
furtherance of businesses of the Employer and other members of the
Controlled Group, and pursuant to directions of the Company or the
Employer.
(c) Exercise appropriate care to advise other employees of
the Company and the Employer (and, as appropriate, subcontractors) of
the sensitive nature of Confidential Information and Proprietary
Materials prior to their disclosure, and to disclose the same only on a
need-to-know basis.
(d) Not copy all or any part of Proprietary Materials,
except as the Company or the Employer directs.
(e) Not sell, give, loan or otherwise transfer any copy of
all or any part of Proprietary Materials to any person who is not an
employee of or otherwise engaged to provide services to the Company or
the Employer, except as the Company directs.
(f) Not publish, lecture on or otherwise disclose to any
person who is not an employee of the Company, except as the Company or
the Employer directs, all or any part of Confidential Information or
Proprietary Materials.
(g) Not use all or any part of any Confidential Information
or Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of employment for whatever reason, Employee (or in
the event of death, Employee's personal representative) shall promptly
surrender to the Company the original and all copies of Proprietary
Materials (including all notes, memoranda and the like concerning or
derived therefrom), whether prepared by Employee or others, which are
then in Employee's possession or control. Records of payments made by
the Company or any Employer to of for the benefit of Employee,
Employee's copy of this Agreement and other such things, lawfully
possessed by Employee which relate solely to taxes payable by Employee,
employee benefits due to Employee or the terms of Employee's employment
with the Company or any Employer, shall not be deemed Proprietary
Materials for purposes of this Section 3.
4. Non-Competition.
<PAGE>
(a) During Employee's employment with the Company, or any
other members of the Controlled Group, Employee shall not, in any way,
directly or indirectly, manage, operate, control (or participate in any
of the foregoing), accept employment or a consulting position with or
otherwise advise or assist or be connected with or directly or
indirectly own or have any other interest in or right with respect to
(other than through ownership of not more than 5% of the outstanding
shares of a corporation's stock which is listed on a national
securities exchange) any enterprise (other than for the company or any
other member of the Controlled Group) which competes with Company or
its affiliates in the Controlled Group.
(b) During the Non-Competition Period, Employee shall not
render employment or consulting services to any business (except to the
company or any member of its Controlled group) within a location within
50 miles of the company facility at which Employee was employed at the
time of the Severance Event in a capacity in which Employee will
directly supervise a business which is directly competitive with the
business which Employee supervised during the six-month period
preceding the Severance Event.
(c) Employee recognizes that the foregoing limitations are
reasonable and properly required for the adequate protection of the
business of the Company, the Employers and the members of the
Controlled Group. If any such limitations are deemed to be
unreasonable by a court having jurisdiction of the matter and parties,
Employee hereby agrees and submits to the reduction of any such
limitations to such territory or time as to such court shall appear
reasonable.
(d) Employee agrees that the remedy at law for any breach of
the provisions of Sections 2 or 3 or this Section 4 shall be inadequate
and that the Company and any Employer shall be entitled to injunctive
relief in addition to any other remedies it may have.
5. Severance Payments
(a) If Employee's employment is terminated because of a
Severance Event, the Employer shall pay the Employee:
(i) If the Severance Event occurs on or before the
first anniversary of the Effective Date, $764,000, in thirty-six (36)
monthly installments;
(ii) If the Severance Event occurs after the first
anniversary of the Effective Date and on or before the second
anniversary, $382,000, in twenty-four (24) monthly installments; and
(iii) If the Severance Event occurs after the second
anniversary of the Effective Date and on or before the third
anniversary, $191,000, in twelve (12) monthly installments.
In each case the first installment shall be due on the first day of the
month following the month in which the Severance Event occurs and
<PAGE>
subsequent installments shall be due on the first day of each
succeeding month until all installments have been paid.
(b) The Company has assessed the reasonableness of the
Severance Payments provided for herein and believes that the amounts
provided are both reasonable in the light of the benefits secured for
the Company by this Agreement and related to the business of the
Company.
6. Obligation of Employer. The Company agrees to cause
Employee's Employer at the time of the Severance Event to make all
payments required hereunder to be made to Employee, and agrees that the
liability for making such payments and providing such benefits shall be
the sole and exclusive obligation of such Employer, provided, however,
that the foregoing notwithstanding, in the event that such benefits are
not so paid by the Employer, then such benefits shall be paid or caused
to be paid by the Company.
7. Enforcement. In the event the Company or the Employer
shall fail to pay to an Employee or successor any amounts due under
this Plan or under any of the plans, programs or arrangements referred
to herein as they come due, the Company and the Subsidiaries shall pay
interest on such amounts at the prime rate of interest as from time to
time published in The Wall Street Journal (Midwest Edition) until paid.
8. Non-assignment. Except as may be required by applicable
law, the payments which may become due to Employee shall not at any
time be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment,
execution, or levy of any kind, either voluntary or involuntary,
including any such liability which is for alimony or other payments for
the support of a spouse or former spouse, or for any other relative of
the Employee, prior to actually being received by Employee; and any
attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, charge or otherwise dispose of any right to benefits payable
hereunder shall be void.
9. Assumption. This Agreement shall inure to the benefit
of, and be binding upon, the successors and assignees of the Company
and each Employer. The Company and each Employer shall require any
successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or
assets of the Company or any Employer, expressly and unconditionally to
assume and agree to perform the Company's obligations or such
Employer's obligations under this Agreement.
10. Enforcement. The provisions of this Agreement shall be
regarded as divisible, and if any of the provision or any part of the
Agreement is declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of the
provisions or parts of the Agreement and the applicability thereof
shall not be affected.
11. Amendment. This Agreement may not be amended or
modified at any time except by written instruction executed by the
Company and the Employee.
<PAGE>
12. Withholding. The Employer shall be entitled to withhold
from amounts to be paid to the Employee hereunder any federal, state or
local withholding or other taxes or charges which it is from time to
time required to withhold. The Company shall be entitled to rely on an
opinion of counsel if any question as to the amount or requirement of
any such withholding shall arise.
13. Governing Law: Arbitration. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Illinois. Any dispute arising
out of this Agreement shall be determined by arbitration under the
commercial arbitration rules of the American Arbitration Association
then in effect and judgment upon any award pursuant to such arbitration
may be enforced in any court having jurisdiction thereof. The place of
arbitration shall be in the city with population of 100,000 or more
nearest to the Employee's place of employment immediately prior to the
Severance Event or in the nearest state or provincial capital if it is
closer to such place of employment than is such city.
14. Notice. Notices given pursuant to this Agreement shall
be in writing and shall be deemed given when received and if mailed,
shall be mailed by registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Employer to IMC
Global Inc., or if to the Employee, at the address set forth below the
Employee's signature line of this Agreement, or to such other address
as to the party to be notified shall have given to the other.
15. No waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provision or condition at the
same time or any prior or subsequent time.
16. Certain Rules of Construction. No party shall be
considered as being responsible for the drafting of this Agreement for
the purpose of applying any rule construing ambiguities against the
drafter or otherwise. No draft of this Agreement shall be taken into
account in construing this Agreement. The headings in this Agreement
are for reference only and shall not affect the meaning or
interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this agreement
as the day and year first written above.
EMPLOYER IMC GLOBAL INC.
IMC Global Operations Inc.
By: /s/ James D. Speir By: A. C. Miller
Name: James D. Speir Name: A. C. Miller
Title: President and Title: Senior Vice President,
Chief Operating Human Resources Officer
<PAGE>
Attest: /s/ Lila Fredenberg Attest: /s/ Lila Fredenberg
Name: Lila Fredenberg Name: Lila Fredenberg
Title: Asst. Secretary Title: Asst. Secretary
/s/ C. Steven Hoffman 12 Exmoor Lane
[Employee] C. Steven Hoffman Lincolnshire, IL 60069
[Address]
<PAGE>
EXHIBIT 10.72
NON-COMPETITION
AGREEMENT
This Agreement made February 29, 1996, between IMC Global
Inc., a Delaware corporation ("Company") and Robert E. Fowler, Jr.
("Employee").
WHEREAS, the Company and The Vigoro Corporation, a Delaware
corporation, ("Vigoro") expect to complete a transaction on March 1,
1996 whereby Vigoro will become a wholly-owned subsidiary of the
Company; and
WHEREAS, the Company desires to have the use of and access to
and to protect valuable confidential information relating to the
businesses of the Controlled Group in Employee's possession and other
confidential information which Employee may acquire during employment
by any Employer; and
WHEREAS, the Company has concluded that it is therefore in
the best interest of the Company to provide incentives for Employee to
become employed in the Controlled Group and to secure Employee's
agreement to limitations on Employee's future business activities in
order to protect the Controlled Group from injury that would occur if
the confidential information became available to and could be used by a
competitor of any member of the Controlled Group;
NOW, THEREFORE, for valuable consideration which the parties
acknowledge and in consideration of the mutual covenants and agreements
contained herein, the Employee and the Company agree as follows:
1. Definitions. Each term defined herein shall be given its
defined meaning wherever used in this Agreement, unless the context
requires otherwise.
"Vigoro" means Vigoro and its Subsidiaries, as they may exist
from time to time, during Employee's employment with Vigoro or with the
Company or its affiliates in the Controlled Group.
"Cause" means (i) the engaging by the Employee in willful and
intentional conduct which has caused demonstrable and serious injury to
the Company, monetary or otherwise; (ii) conviction of, or plea of nolo
contendere by, the Employee for any felony; (iii) criminal conviction
of, or plea of nolo contendere by, the Employee for any other offense
involving dishonesty, breach of trust or moral turpitude; (iv) a breach
of fiduciary duty by the Employee involving personal profit; or (v)
willful refusal by the Employee to perform his duties or
responsibilities (unless significantly changed without the Employee's
consent), or gross negligence by the Employee in the
performance of such duties; provided, however, that the Employee shall
have 30 days, or such longer period as the Company may determine to be
appropriate, after written notice by the Company, to cure any conduct
or act, if curable, alleged in such notice to provide grounds for
termination of the Employee's employment for Cause.
<PAGE>
"Controlled Group" means the Company and all affiliates of
the Company determined under Sections 414(b),(c),(m) and (o) of the
Internal Revenue Code of 1986, as amended.
"Effective Date" means the date first set forth above.
"Employer" means the Company and Subsidiary or other member
of the Controlled Group which employs Employee on or after the
Effective Date.
"Good Reason" for termination of employment by an Employee
shall mean any of the following:
(a) the failure by the Employer to (i) maintain the
Employee's Base Salary at an annual rate equal to the
rate in effect immediately prior to the Effective Date,
or as may be increased from time to time by the Employer
in accordance with regular practices of the Company
thereafter with respect to employees with comparable
duties; provided, however, that Good Reason shall not
exist as the result of any decrease in Base Salary if
such decrease is incident to a general reduction applied
to all senior corporate officers and other key employees
of all members of the Controlled Group on a
proportionate and nondiscriminatory basis; (ii) provide
for continued participation on a comparable basis by the
Employee in an annual bonus plan maintained by the
Company or its Subsidiaries in which employees with
comparable duties participate; (iii) provide for
participation in stock option and other equity incentive
plans or programs maintained by the Company or its
Subsidiaries or any other member of the Controlled Group
from time to time in which employees with comparable
duties participate; (iv) provide for participation in
all Company or Subsidiary sponsored group or executive
medical, dental, life, disability, retirement, profit-
sharing, thrift, nonqualified and deferred compensation,
and other plans maintained by the Company or its
Subsidiaries to the same extent as employees with
comparable duties participate; (v) provide vacation and
perquisites substantially equivalent to those provided
by the Company or Subsidiaries to employees with
comparable duties; or (vi) obtain the express
unconditional assumption of this Agreement as required
by Section 9; or
(b) any Employer changes the Employee's primary
employment location to a location that is more than 50
miles from 225 North Michigan Avenue, Chicago, Illinois;
provided, however, that the relocation of Employee on a
nondiscriminatory basis for bona fide business reasons
shall not constitute Good Reason hereunder; or
<PAGE>
(c) a significant adverse change, without the
Employee's written consent, in working conditions or
status, including but not limited to (i) a significant
adverse change in the nature or scope of the Employee's
authority, powers, functions, duties or
responsibilities; provided, however, a change in the
Company's status such that it no longer has any equity
securities registered under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934, as amended, or that
it is a subsidiary of another entity and directly
results in changes in the nature or scope of the
Employee's authority, powers, functions, duties or
responsibilities shall not in and of itself constitute
Good Reason hereunder, or (ii) a reduction in the level
of support services, staff, secretarial and other
assistance, office space and accouterments available to
a level below that reasonably necessary for the
performance of such duties.
"Non-Competition Period" shall commence on the date
Employee's employment is terminated after the Effective Date and
continue for a period of
(a) Three years, if a Severance Event Occurs on or before
the first anniversary of the Effective Date;
(b) Two years, if a Severance Event occurs after the first
anniversary of the Effective Date and on or before the second
anniversary thereof; and
(c) One year, if a Severance Event occurs after the second
anniversary of the Effective Date and on or before the third
anniversary thereof or if Employee's employment is terminated for
a reason other than a Severance Event.
(d) If Employee is not hired by the Company within thirty
(30) days after the completion of the transaction whereby Vigoro
has become a wholly-owned subsidiary of the Company, the "Non-
Competition Period" shall commence on the Effective Date and
continue for a period of three years.
"Severance Event" shall be deemed to have occurred if, and
only if, as of or after the Effective Date, but prior to the expiration
of the Severance Period, termination of Employee's employment with the
Company occurs, and such termination is:
(a) Employer-initiated for reasons other than Cause;
(b) Employee-initiated within ninety (90) days after the
Employee first has or should have knowledge that Good
Reason exists; or
(c) Employee-initiated on or after Employee has attained age
sixty (60).
<PAGE>
"Severance Period" means a period of three (3) years from and
after the Effective Date.
"Subsidiary" means any corporation of which the securities
having a majority of the ordinary voting power in electing the board of
directors are, at the time of such determination, owned by the Company
or another Subsidiary.
2. Proprietary Rights.
(a) Employee acknowledges that each employer and other members of
the Controlled Group has exclusive ownership of all information useful
in its business (including its dealings with suppliers, customers and
other third parties, whether or not a true "trade secret"), which at
the time or times concerned is not generally known to persons outside
of the Controlled Group engaged in businesses similar to those
conducted by such entities, and which has been or is from time to time
disclosed to, discovered by, or otherwise known by Employee as a
consequence of his employment by the Employer (including information
conceived, discovered or developed by Employee during his employment)
(collectively, "Confidential Information"). Confidential Information
includes, but is not limited to the following especially sensitive
types of information:
(i) The identity, purchase and payment patterns of, and
special relations with, customers;
(ii) The identity, net prices and credit terms of, and
special relations with, the suppliers;
(iii)Inventory selection and management techniques;
(iv) Product development and marketing plans; and
(v) Finances except to the extent publicly disclosed.
(b) The term "Proprietary Materials" shall mean all business
records, documents, drawings, writings, software, programs and other
tangible things which were or are created or received by or for the
Employer and other members of the Controlled Group in furtherance of
its business, including, but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include,
but are not limited to, the following especially sensitive types of
materials: applications software, the data bases of Confidential
Information maintained in connection with such software, and printouts
generated from such data bases; market studies and strategic plans;
customer, supplier and employee lists; contracts and correspondence
with customers and suppliers; documents evidencing transactions with
customers and suppliers, sales calls reports, appointment books,
calendars, expense statements and the like, reflecting conversations
with any company, customer or supplier; architectural and engineering
<PAGE>
plans; and purchasing, sales and policy manuals. Propriety Materials
also include, but are not limited to, any such things which are created
by Employee or with Employee's assistance and all notes, memoranda and
the like prepared using the Proprietary Materials and/or Confidential
Information.
(c) While some of the information contained in Proprietary
Materials may have been known to Employee prior to employment with an
Employer, or may now or in the future be in the public domain, Employee
acknowledges that the compilation of that information contained in the
Proprietary Materials has or will cost the Employer and other members
of the Controlled Group a great effort and expense, and affords persons
to whom Proprietary Materials are disclosed, including Employee, a
competitive advantage over persons who do not know the information or
have the compilation of the Proprietary Materials. Employee further
acknowledges that Confidential Information and Proprietary Materials
include commercially valuable trade secrets and automatically become
the Company's exclusive property when they are conceived, created or
received.
3. Confidentiality Duties. Employee shall, except as may be
required by law, while an employee of the Company and thereafter for
the longest time permitted by applicable law.
(a) Comply with all instructions of the Company and the
Employer (whether oral or written) for preserving the confidentiality
of Confidential Information and Proprietary Materials.
(b) Use Confidential Information and Proprietary Materials
only at places designated by the Company or the Employer, in
furtherance of businesses of the Employer and other members of the
Controlled Group, and pursuant to directions of the Company or the
Employer.
(c) Exercise appropriate care to advise other employees of
the Company and the Employer (and, as appropriate, subcontractors) of
the sensitive nature of Confidential Information and Proprietary
Materials prior to their disclosure, and to disclose the same only on a
need-to-know basis.
(d) Not copy all or any part of Proprietary Materials, except
as the Company or the Employer directs.
(e) Not sell, give, loan or otherwise transfer any copy of
all or any part of Proprietary Materials to any person who is not an
employee of or otherwise engaged to provide services to the Company or
the Employer, except as the Company directs.
(f) Not publish, lecture on or otherwise employee of the
Company, except as the Company or the Employer directs, all or any part
of Confidential Information or Proprietary Materials.
(g) Not use all or any part of any Confidential Information
or Proprietary Materials for the benefit of any third party without the
Company's written consent.
<PAGE>
Upon the termination of employment for whatever reason, Employee (or in
the event of death, Employee's personal representative) shall promptly
surrender to the Company the original and all copies of Proprietary
Materials (including all notes, memoranda and the like concerning or
derived therefrom), whether prepared by Employee or others, which are
then in Employee's possession or control. Records of payments made by
the Company or any Employer to or for the benefit of Employee,
Employee's copy of this Agreement and other such things, lawfully
possessed by Employee which relate solely to taxes payable by Employee,
employee benefits due to Employee or the terms of Employee's employment
with the Company or any Employer, shall not be deemed Proprietary
Materials for purposes of this Section 3.
4. Non-Competition.
(a) During Employee's employment with the Company, or any
other members of the Controlled Group, Employee shall not, in any way,
directly or indirectly, manage, operate, control (or participate in any
of the foregoing), accept employment or a consulting position with or
otherwise advise or assist or be connected with or directly or
indirectly own or have any other interest in or right with respect to
(other than through ownership of more than 5% of the outstanding shares
of a corporation's stock which is listed on a national securities
exchange) any enterprise (other than for the Company or any other
member of the Controlled Group) which competes with Company or its
affiliates in the Controlled Group.
(b) During the Non-competition Period, Employee shall not
render employment or consulting services to any business enterprise in
North America (except to the Company or any member of its Controlled
Group) in a capacity in which Employee will directly supervise a
business which is directly competitive with the business which Employee
supervised during the one year period preceding the Severance Event.
(c) Employee recognizes that the foregoing limitation are
reasonable and properly required for the adequate protection of the
business of the Company, the Employers and the members of the
Controlled Group. If any such limitation are deemed to be unreasonable
by a court having jurisdiction of the matter and parties, Employee
hereby agrees and submits to the reduction of any such limitations to
such territory or time as to such court shall appear reasonable.
(d) Employee agrees that the remedy at law for any breach of
the provisions of Sections 2 or 3 or this Section 4 shall be inadequate
and that the Company and any Employer shall be entitled to injunctive
relief in addition to any other remedies it may have.
5. Payments
(a) If Employee's employment is terminated because of a
Severance Event, the Employer shall pay the Employee:
<PAGE>
(i) If the Severance Event occurs on or before the first
anniversary of the Effective Date, $2,370,000, in thirty-six (36)
monthly installments;
(ii) If the Severance Event occurs after the first
anniversary of the Effective Date and on or before the second
anniversary, $1,580,000, in twenty-four (24) monthly installments; and
(iii) If the Severance Event occurs after the second
anniversary of the Effective Date and on or before the third
anniversary, $790,000, in twelve (12) monthly installments.
In each case the first installment shall be due or the first day of the
month following the month in which the Severance Event occurs and
subsequent installments shall be due on the first day of each
succeeding month until all installments have been paid.
(b) The Company has assessed the reasonableness of the
payments provided for herein and believes that the amounts provided are
both reasonable in the light of the benefits secured for the Company by
this Agreement and related to the business of the Company.
(c) In the event that Employee is not hired by the Company
within thirty (30) days after the completion of the transaction whereby
Vigoro has become a wholly-owned subsidiary of the Company ("the
Transaction"), the Company shall pay the Employee the amount provided
in Section 5(a)(i) in installments as provided therein. The first
installment shall be due on the first day of the first month beginning
more than thirty (30) days following the completion of the Transaction
and subsequent installments shall be due on the first day of each
succeeding month until all installments have been paid.
6. Obligation of Employer. The Company agrees to cause
Employee's Employer at the time of the Severance Event to make all
payments required hereunder to be made to Employee, and agrees that the
liability for making such payments and providing such benefits shall be
the sole and exclusive obligation of such Employer, provided, however,
that the foregoing notwithstanding, in the event that such benefits are
not so paid by the Employer and in the case of payments made pursuant
to Section 5(c), such payments shall be paid or caused to be paid by
the Company.
7. Enforcement. In the event the Company or the Employer
shall fail to pay to an Employee or successor any amounts due under
this Plan or under any of the plans, programs or arrangements referred
to herein as they come due, the Company and the Subsidiaries shall pay
interest on such amount at the prime rate of interest as from time to
time published in The Wall Street Journal ("Midwest Edition) until
paid.
8. Non-assignment. Except as may be required by applicable
law, the payments which may become due to Employee shall not at any
time be subject in any manner to anticipation, alienation, sale,
<PAGE>
transfer, assignment, pledge, encumbrance, charge, garnishment,
execution, or levy of any kind, either voluntary or involuntary,
including any such liability which is for alimony or other payments for
the support of a spouse or former spouse, or for any other relative of
the Employee, prior to actually being received by Employee; and any
attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, charge or otherwise dispose of any right to benefits payable
hereunder shall be void.
9. Assumption. This Agreement shall inure to the benefit
of, and be binding upon, the successors and assignees of the Company
and each Employer. The Company and each Employer shall require any
successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or
assets of the Company or any Employer, expressly and unconditionally to
assume and agree to perform the Company's obligations of such
Employer's obligations under this Agreement.
10. Enforcement. The provisions of this Agreement shall be
regarded as divisible, and if any of the provision or any part of the
Agreement is declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of the
provisions or parts of the Agreement and the applicability thereof
shall not be affected.
11. Amendment. This Agreement may not be amended or
modified at anytime except by written instrument executed by the
Company and the Employee.
12. Withholding. The Employer shall be entitled to withhold
from amounts to be paid to the Employee hereunder any federal, state or
local withholding or other taxes or charges which it is from time to
time required to withhold. The Company shall be entitled to rely on an
opinion of counsel if any question as to the amount or requirement of
any such withholding shall arise.
13. Governing Law: Arbitration. It is Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Illinois. Any dispute arising
out of this Agreement shall be determined by arbitration under the
commercial arbitration rules of the American Arbitration Association
then in effect and judgment upon any award pursuant to such arbitration
may be enforced in any court having jurisdiction thereof. The place of
arbitration shall be in the city with population of 100,000 or more
nearest to the Employee's place of employment immediately prior to the
Severance Event, or in the nearest state or provincial capital if it is
closer to such place of employment than is such city; provided that, in
the case of payments claimed to be due under Section 5(c), the place of
arbitration shall be in Chicago, Illinois.
14. Notice. Notices given pursuant to this Agreement shall
be in writing and shall be deemed given when received and if mailed,
shall be mailed by registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Employer to IMC
<PAGE>
Global Inc., 2100 Sanders Road, Northbrook, Illinois 60062, Attention
Marshall I. Smith, Senior Vice President and General Counsel, or if to
the Employee, at the address set forth below the Employee's signature
line of this Agreement, or to such other address as to the party to be
notified shall have given to the other.
15. No waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provision or condition at the
same time or any prior or subsequent time.
16. Certain Rules of Construction. No party shall be
considered as being responsible for the drafting of this Agreement for
the purpose of applying any rule construing ambiguities against the
drafter or otherwise. No draft of this Agreement shall be taken into
account in construing this Agreement. The headings in this Agreement
are for reference only and shall not affect the meaning or
interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this agreement
as the day and year first written above.
/s/ Robert E. Fowler, Jr. IMC GLOBAL INC.
Robert E. Fowler, Jr.
Address: By: /s/ Marschall I. Smith
1242 N. Lake Shore Drive, Name: Marschall I. Smith
Apt. 28 Title: Senior Vice
Chicago, Illinois 60610 President and
General Counsel
Attest: /s/ Thomas S. Finke
Name: Thomas S. Finke
Title: Attorney-in-Fact
<PAGE>
EXHIBIT 10.73
TRANSITION BONUS AGREEMENT
This Agreement made as of the lst day of March, 1996, between
IMC Global Inc., a Delaware corporation ("Parent"), and IMC Global
Operations Inc., a Delaware corporation, and Marschall I. Smith
("Employee").
WHEREAS, on the date hereof, Parent and The Vigoro
Corporation, a Delaware corporation, have completed a merger whereby
The Vigoro Corporation, a Delaware corporation, has become a wholly-
owned subsidiary of Parent;
WHEREAS, on the date hereof, Employer is, directly or
indirectly, a whollyowned subsidiary or an Affiliate;
WHEREAS, it is in the best interest of Parent and the
Employer that Employee continue to concentrate on the conduct of the
business of the Parent, Employer and members of the Controlled Group,
and perform all duties in their best interests and be encouraged to
maintain the employment relationship with the Employer at least for
such time as will allow an orderly transition following such merger;
WHEREAS, Parent, the Employer and Employee desire to provide
appropriate incentives for the Employee to continue to perform the
Employee's duties and responsibilities with respect to Employer,
thereby promoting the stability of the business of the Employer both
before and after the occurrence of the merger.
NOW, THEREFORE, for valuable consideration, which the parties
hereby acknowledge, Parent, Employer and Employee agree that upon the
effective date of the merger ("Effective Date"):
1. Definitions. The following terms shall have the
respective meanings set forth below wherever used in this Agreement and
capitalized, unless the context requires otherwise.
a. "Base Salary" means Employee's annualized base
salary determined as of the Transition Bonus Event, or if
greater, as of the Effective Date.
b. "Board" means the Board of Directors of the Parent,
as constituted from time to time.
c. "Bonus Base" with respect to the Employee, means the
sum of the following:
(i) the highest annual bonus (annualized if the
Employee was employed for less than a complete bonus
year) earned by the Employee for one of the three
consecutive complete bonus years ending immediately
preceding the Transition Bonus Event; provided, however,
that for purposes of this paragraph (i) the bonus for
the last six (6) months of calendar year 1995 multiplied
<PAGE>
by two (2) shall be treated as an annual bonus, for a
complete bonus year if such amount is larger than the
annual bonus for the complete bonus year ending June 30,
1995; and
(ii) the number obtained by dividing all long-term
bonuses or other incentives (other than any annual bonus
or stock option, contingent stock unit or restricted
stock award) earned by the Employee for the most recent
complete bonus period ended before the Transition Bonus
event by the number of years (including fractions of
years if appropriate) included in such bonus periods;
provided, however, that if either the terms of any such
bonus or incentive plan or agreement or the Employer's
practice of granting awards would permit the Employee to
be included concurrently in two or more long-term
performance periods, appropriate adjustments shall be
made to the number obtained pursuant to this paragraph
(ii), it being the intent of this definition to
determine the amount of bonus that the Employee would
earn, under optimal conditions of individual, divisional
and Employer performance, financial or otherwise, during
a complete year of service to the Employer.
d. "Cause" for termination by Employer of the
Employee's employment shall mean (i) the engaging by the
Employee in willful and intentional conduct which has caused
demonstrable and serious injury to the Employer, Parent,
Affiliate, Subsidiary or any member of Parent's Controlled
Group monetary or otherwise; (ii) conviction of, or plea of
nolo contedere by, the Employee for any felony; (iii)
criminal conviction of, or plea of nolo contendere by, the
Employee for any other offense involving dishonesty, breach
of trust or moral turpitude; (iv) a breach of fiduciary duty
by the Employee involving personal profit; or (v) willful
refusal by the Employee to perform the Employee's duties or
responsibilities (unless significantly changed without the
Employee's consent), or gross negligence by the Employee in
the performance of such duties; provided, however, that the
Employee shall have 30 days, or such longer period as the
Employer may determine to be appropriate, after written
notice by the Employer to cure any conduct or act, if
curable, alleged in such notice to provide grounds for
termination of the Employee's employment for Cause.
e. "Code" means the Internal Revenue Code of 1986, as
amended.
f. "Controlled Group" means Parent and all subsidiaries
and affiliates of Parent determined under Sections
414(b),(c),(m) and (o) of the Code.
g. "Disability" means the inability of Employee, by
reason of physical or mental illness or injury (regardless of
whether such illness or injury is jobrelated), to perform
<PAGE>
the Employee's duties on a full-time basis, under
circumstances in which the Employee is eligible to receive
benefits under any long-term disability plan or arrangement
of Company or any Employer, or would have been so eligible
but for a determination made by the Employee not to
participate in such plan or arrangement.
h. "Employer" means the Parent and any Subsidiary or
other member of the Controlled Group which employs the
Employee on or after the effective Date.
i. "Good Reason" for termination of employment by the
Employee shall mean any of the following:
(i.) the failure by Employer to (1) maintain the
Employee's Base Salary at an annual rate equal to the rate in
effect immediately prior to the Effective Date, or as may be
increased from time to time by the Employer in accordance
with regular practices of Parent thereafter with respect to
employees with comparable duties; provided, however, that
Good Reason shall not exist as the result of any decrease in
Base Salary if such decrease is incident to a general
reduction applied to all senior corporate officers and other
key employees of all members of the Controlled Group on a
proportionate and nondiscriminatory basis; (2) provide for
continued participation on a comparable basis by the Employee
in an annual bonus plan maintained by the Parent or
Controlled Group in which employees of the Employer with
comparable duties participate; (3) provide for participation
in stock option and other equity incentive plans or programs
maintained by Parent, any member of the Controlled Group from
time to time in which employees with comparable duties
participate; (4) provide for participation in all Parent or
Controlled Group sponsored group or executive medical,
dental, life, disability, retirement, profit-sharing, thrift,
nonqualified and deferred compensation, and other plans
maintained by the Parent or Controlled Group, in which
employees of the Employer with comparable duties and pay
participate; (5) provide vacation and perquisites
substantially equivalent to those provided by the Parent or
Controlled Group to the same extent as employees of the
Employer with comparable duties; or (6) obtain the express
unconditional assumption of this Agreement as required by
Section 10; or
(ii.) any Employer changes the Employee's
primary employment location to a location that is more than
50 miles from the primary location of such Employee's
employment as in effect immediately prior to the Effective
Date; provided, however, that the relocation of the Employee
on a nondiscriminatory basis for bona fide business reasons
Shall not constitute Good Reason hereunder; or.
(iii.) a significant adverse change, without the
Employee's written consent in working conditions or status,
<PAGE>
including but not limited to (1) a significant adverse change
in the nature or scope of the Employee's authority, powers,
functions, duties or responsibilities; provided, however, a
change in Parent status such that it no longer has any equity
securities registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, or that it is
the subsidiary of another entity and directly results in
changes in the nature and scope of the Employee's authority,
powers, functions, duties or responsibilities shall not in
and of itself constitute Good Reason hereunder; or (2) a
reduction in the level of support services, staff,
secretarial and other assistance, office space and
accouterments available to a level below that reasonably
necessary for the performance of such duties.
j. "Severance Plan" means The Vigoro Corporation
Severance Plan or the IMC Global Inc. Severance Plan,
depending upon which of such plans provides severance
benefits to the Employee.
k. "Subsidiary" means any corporation of which the
securities having a majority of the ordinary voting power in
electing the board of directors are, at the time of such
determination, owned by Parent or another Subsidiary.
1. "Transition Benefits" means the benefits provided
pursuant to Section 5.
m. "Transition Bonus" means one hundred fifty percent
(150%) of the sum of the Base Salary and Bonus Base.
n. "Transition Bonus Event" shall be deemed to have
occurred if:
(i.) on or after the Effective Date, but prior to
the expiration of the Transition Period, the termination of
an Eligible Employee's employment with the Employer occurs,
and such termination is:
(1) Employer-initiated for reasons other than
Cause; or
(2) Employee initiated within ninety
(90) days after the Employee first has or should
have knowledge that Good Reason exists; or
(ii.) the Employer fails to make an offer of
continued employment with compensation, authority and status
at least equivalent to the compensation, authority and status
of the Employee immediately prior to the Effective Date.
o. "Transition Benefits Period" means a period of one
(1) year from and after the Effective Date.
<PAGE>
2. Transition Bonus. The Employee shall be entitled to the
Transition Bonus if a Transition Bonus Event occurs with respect to the
Employee during the Transition Period, the requirements of Section 3
are satisfied and none of the exclusions listed in Section 4 apply.
3. Requirements for Transition Bonus. The Employee will not
be entitled to a Transition Bonus unless:
a. the Employee's employment with all Employers is
terminated in circumstances that constitute a Transition
Bonus Event; and
b. the Employee executes a release of claims and an
employment-related covenant substantially in the form, in the
manner and within the time required as set forth in the Severance
Plan.
4. Transition Bonus Exclusions. Notwithstanding the
foregoing, the Employee shall not be entitled to a Transition Bonus if:
a. the Employee leaves employment voluntarily, by
resignation (other than in circumstances that constitute a
Transition Bonus Event); or
b. the employment of the Employee is terminated as a
result of the Employee's death or Disability.
5. Payment of Transition Benefits. The Transition
Benefits provided by
this Agreement shall consist of the payment of the Transition Bonus of
the Employee determined at the time of the Transition Bonus Event in
(18) eighteen equal monthly
installments. The amount of each payment shall be one eighteenth of
the Transition Bonus, and payment shall begin on the last day of the
month in which the Employee has executed and delivered the release of
claims required by Section 3.b, any applicable period for revocation
thereof has expired and the Employee has executed and delivered the
employment-related covenant required by Section 3.b. Such monthly
payments shall continue until the Employee (or the Employee's
beneficiary) has received such eighteen monthly installments.
At the option of Parent, the present value of the Transition Benefits,
determined pursuant to Section 280G(d)(4) of the Code, may be paid in a
single lump sum on the date on which the first installment would
otherwise be required to be paid. The Employee shall not be required
to mitigate the amount of such payments by securing other employment or
otherwise, nor shall such payments be reduced by reason of the
Employee's securing other employment or for any other reason.
Transition Benefits shall not be paid, and if commenced, shall
terminate if Employee breaches any of the covenants relating to
employment executed pursuant to the Severance Plan. Transition
Benefits shall not reduce or affect any payment under any noncompete or
employment agreement or severance plan or arrangement, including, but
not limited to, any severance payment under Severance Plan, except that
Transition Benefits shall be offset by the amount or value of any
<PAGE>
benefits paid or provided to the Employee pursuant to any employment
severance or similar agreement between Parent and Employee on account
of the employees' termination of employment after a Change in Control
of Parent, as defined in Parent's 1995 Proxy Statement. Each qualified
or nonqualified retirement or other plan benefits for which the
Employee may be eligible shall be governed by specific conditions set
forth in the applicable plan.
6. No Guarantee of Employment. Nothing contained in the
Agreement shall be construed as giving or conferring an Employee the
right to continued employment, or as a limitation on the right of an
Employer to terminate the employment of Employee, with or without
cause. Nor shall anything contained in the Agreement affect the
eligibility requirements under any plans maintained by an Employer, nor
give Employee a right to coverage under any plan.
7. Non-alienation of Assets and Benefits. Except as may be
required by applicable law, the benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment,
execution, or levy of any kind, either voluntary or involuntary,
including any such liability which is for alimony or other payments for
the support of a spouse or former spouse, or for any other relative of
the Employee, prior to actually being received by the person entitled
to the benefit under the terms of the Agreement; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge
or otherwise dispose of any right to benefits payable hereunder shall
be void.
8. Funding. Transition Benefits shall be paid out of the
general assets of the Employer, and the status of Employee shall be
that of a general unsecured creditor. None of Parent, the Company or
any other Employer shall be required to fund or otherwise provide for
the payment of benefits in any manner.
9. Obligation of Employer. The Parent shall cause Employee's
Employer at the time of the Transition Bonus Event to make all payments
required hereunder to be made to the Employee and agrees that the
liability for making such payments and providing such benefits shall be
the joint obligation of the Parent and the Employer. In the event that
such benefits are not so paid by the Employer, then such benefits shall
be paid or caused to be paid by the Parent.
10. Successors. This Agreement shall inure to the benefit
of, and be binding upon, the successors and assignees of the Parent and
the Employer. The Parent and the Employer shall require any successor
or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or
assets of the Parent or the Employer, expressly and unconditionally to
assume and agree to perform the Parent's or the Employer's obligations
under this Agreement.
11. Withholding. The Employer shall be entitled to withhold
from amounts to be paid to the Employee under this Agreement any
federal, state or local withholding, employment or other taxes or
<PAGE>
charges which it is from time to time required to withhold. The
Employer shall be entitled to rely on an opinion of counsel if any
question as to the amount or requirement of any such withholding shall
arise.
12. Arbitration. Either of the Parent, or any Employer, and
the Employee or any successor, shall have the right and option to have
any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, settled exclusively by arbitration, conducted
before an arbitrator in accordance with the commercial arbitration
rules of the American Arbitration Association then in effect. Judgment
on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The place of arbitration shall be in the
city with population of 100,000 or more nearest to the Employee's place
of employment immediately prior to the Transition Bonus, Event or in
the nearest state or provincial capital if it is closer to such place
of employment than is such city.
13. Legal Fees. If a dispute arises with respect to the
enforcement of the Employee's rights under the Agreement or if any
legal or arbitration proceeding shall be brought to enforce or
interpret any provision contained herein, or to recover damages for
breach hereof, the party that has substantially prevailed in the
dispute shall recover from the other party any reasonable attorneys'
fees and necessary costs and disbursement incurred as a result of such
dispute, legal or arbitration proceeding.
14. Enforcement. In the event Parent, or any Employer shall
fail to pay to Employee or successor any amounts due under this
Agreement as they come due, the Parent and Employer shall pay interest
on such amounts at the prime rate of interest as from time to time
published in The Wall Street Journal (Midwest Edition) until paid.
15. Notice. The Parent or Employer and the Employee or the
Employee's successor shall provide written notice ("initial notice") at
least fifteen (15) business days prior to the commencement of any
action under this Agreement, which initial notice shall indicate
whether such party is invoking arbitration pursuant to Section 12
above. If such party is not electing to invoke arbitration, then the
other party may by written notice within ten (10) business days
following receipt of the initial notice elect to invoke arbitration
pursuant to said Section 12.
16. Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois (other than Illinois
law applying conflicts of law rules).
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day and year first above written.
IMC GLOBAL INC. EMPLOYEE
Parent
By: /s/ A. C. Miller /s/ Marschall I. Smith
Its: Senior Vice President,
Human Resources
IMC Global Operations Inc.
Employer
By: /s/ J. D. Speir
Its: President and Chief Operating
Officer
<PAGE>
EXHIBIT 10.74
THE VIGORO CORPORATION
SEVERANCE PLAN
ARTICLE I
GENERAL
1.1 Purpose. The Company believes that it is in the best
interests of its stockholders to retain well-qualified key executive
personnel to assure itself of continuity of management. Accordingly,
the Board has considered and has determined it to be in the best
interests of the Company and its stockholders to create and maintain
The Vigoro Corporation Severance Plan to provide Eligible Employees
with economic security through the provision of income and other
benefits in the event of a termination of employment, thus enabling
such Eligible Employees to serve the Company's best interests.
1.2 Effective Date. The Plan shall become effective on November
13, 1995.
1.3 Definitions. Each term defined herein shall be given its
defined meaning wherever used in this Plan, unless the context requires
otherwise.
"Base Compensation" means the sum of the Base Salary and Bonus
Base.
"Base Salary" means the Employee's annualized base salary
determined as of the Severance Event, or if greater, as of the
Effective Date.
"Benefits Period" means a period that begins on the date of the
Severance Event and ends one (1) year thereafter.
"Board" means the Board of Directors of the Company, as
constituted from time to time.
"Bonus Base", with respect to an Employee, means the sum of the
following:
(a) the highest annual bonus (annualized if the Employee was
employed for less than the complete bonus year) earned by the
Employee for the three consecutive complete bonus years ending
immediately preceding the Severance Event; provided, however, that
for purposes of this paragraph (a), the bonus for the last six (6)
months of 1995 multiplied by two (2) shall be treated as an annual
bonus for a complete bonus year if such amount is larger than the
annual bonus for the complete bonus year ending June 30, 1995; and
(b) the number obtained by dividing all long-term bonus or
other incentives (other than any annual bonus or stock option or
restricted stock award), including but not limited to the 1994
<PAGE>
Shareholder Value Plan of the Company earned by the Employee for
the most recent complete bonus period completed ended before the
Severance Event by the number of years (including fractions of
years if appropriate) included in such bonus periods; provided,
however, that if either the terms of any such bonus or incentive
plan or agreement or the Company's practice of granting awards
would permit the Employee to be included concurrently in two or
more long-term performance periods, appropriate adjustments shall
be made to the number obtained pursuant to this paragraph (b), it
being the intent of this definition to determine the amount of
bonus that the Employee would earn, under optimal conditions of
individual, divisional and Company performance, financial or
otherwise, during a complete year of service to the Company.
"Cause" for termination by the Company of an Employee's employment
shall be limited to (i) the engaging by the Employee in willful and
intentional conduct which has caused demonstrable and serious injury to
the Company, monetary or otherwise; (ii) conviction of, or plea of nolo
contendere by, the Employee for any felony; (iii) criminal conviction
of, or plea of nolo contendere by, the Employee for any other offense
involving dishonesty, breach of trust or moral turpitude; (iv) a breach
of fiduciary duty by the Employee involving personal profit; or (v)
willful refusal by the Employee to perform his duties or
responsibilities (unless significantly changed without the Employee's
consent), or gross negligence by the Employee in the performance of
such duties; provided, however, that the Employee shall have 30 days,
or such longer period as the Company may determine to be appropriate,
after written notice by the Company, to cure any conduct or act, if
curable, alleged in such notice to provide grounds for termination of
the Employee's employment for Cause.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means The Vigoro Corporation, a Delaware corporation,
and any successor thereto as described in Section 6.3.
"Controlled Group" means the Company and all affiliates of the
Company determined under Sections 414(b), (c), (m) and (o) of the Code.
"Disability" means the inability of the Employee, by reason of
physical or mental illness or injury (regardless of whether such
illness or injury is job-related), to perform his duties on a full-time
basis, under circumstances in which the Employee is eligible to receive
benefits under any long-term disability plan or arrangement of the
Company or any Employer, or would have been so eligible but for a
determination made by the Employee not to participate in such plan or
arrangement.
"Effective Date" means November 13, 1995.
"Eligible Employee" means an Employee who has satisfied all of the
conditions of eligibility set forth in Section 2.1, is not excluded
pursuant to Section 2.2 and is listed in Appendix A attached hereto.
<PAGE>
"Employee" means an individual who provides services to the
Company or any Subsidiary as an employee for remuneration.
"Employer" means the Company and any Subsidiary or other member of
the Controlled Group which employs an Employee on or after the
Effective Date.
"Good Reason" for termination of employment by an Employee shall
mean any of the following:
(a) the failure by the Employer to (i) maintain the
Employee's Base Salary at an annual rate equal to the rate in
effect immediately prior to the Effective Date, or as may be
increased from time to time by the Employer in accordance with
regular practices of the Company thereafter with respect to
employees with comparable duties; provided, however, that Good
Reason shall not exist as the result of any decrease in Base
Salary if such decrease is incident to a general reduction applied
to all senior corporate officers and other key employees of all
members of the Controlled Group on a proportionate and
nondiscriminatory basis; (ii) provide for continued participation
on a comparable basis by the Employee in an annual bonus plan
maintained by the Company or its Subsidiaries in which employees
with comparable duties participate; (iii) provide for
participation in stock option and other equity incentive plans or
programs maintained by the Company or its Subsidiaries or any
other member of the Controlled Group from time to time in which
employees with comparable duties participate; (iv) provide for
participation in all Company or Subsidiary sponsored group or
executive medical, dental, life, disability, retirement, profit-
sharing, thrift, nonqualified and deferred compensation, and other
plans maintained by the Company or its Subsidiaries to the same
extent as employees with comparable duties participate; (v)
provide vacation and perquisites substantially equivalent to those
provided by the Company or Subsidiaries to employees with
comparable duties; or (vi) obtain the express unconditional
assumption of this Plan as required by Section 6.3; or
(b) any Employer changes the Employee's primary employment
location to a location that is more than 50 miles from the primary
location of such Employee's employment as in effect immediately
prior to the Effective Date; provided, however, that the
relocation of an Employee on a nondiscriminatory basis for bona
fide business reasons shall not constitute Good Reason hereunder;
or
(c) a significant adverse change, without the Employee's
written consent, in working conditions or status, including but
not limited to (i) a significant adverse change in the nature or
scope of the Employee's authority, powers, functions, duties or
responsibilities; provided, however, a change in the Company's
status such that it no longer has any equity securities registered
under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended, or that it is a subsidiary of another entity and
directly results in changes in the nature or scope of the
<PAGE>
Employee's authority, powers, functions, duties or
responsibilities shall not in and of itself constitute Good Reason
hereunder; or (ii) a reduction in the level of support services,
staff, secretarial and other assistance, office space and
accoutrements available to a level below that reasonably necessary
for the performance of such duties.
"Plan Administrator" means the Company or such other person or
entity designated to administer the Plan and be the named fiduciary
thereof, whether or not the Plan Administrator is an individual who
would be an Eligible Employee upon the occurrence of a Severance Event.
The Plan Administrator shall interpret the Plan in good faith and in a
reasonable manner.
"Plan" means The Vigoro Corporation Severance Plan.
"Severance Benefits" means the benefits provided pursuant to
Section 2.3.
"Severance Event" shall be deemed to have occurred if, and only
if, as of or after the Effective Date, but prior to the expiration of
the Severance Period, the termination of an Eligible Employee's
employment with the Employer occurs, and such termination is:
(a) Employer-initiated for reasons other than Cause;
(b) Employee-initiated within ninety (90) days after the
Employee first has or should have knowledge that Good
Reason exists; or
(c) Employee-initiated on or after Employee has attained age
sixty (60).
"Severance Period" means a period of three (3) years from and
after the Effective Date.
"Subsidiary" means any corporation of which the securities having
a majority of the ordinary voting power in electing the board of
directors are, at the time of such determination, owned by the Company
or another Subsidiary.
ARTICLE II
ELIGIBILITY AND BENEFITS
2.1 Eligibility. Except as provided in Section 2.2 and subject
to all other exclusions contained in this Plan, an Employee shall be an
Eligible Employee entitled to receive Severance Benefits and to
benefits pursuant to Sections 2.3 and 2.4(b) and (c), if and only if:
(a) his employment with all Employers is terminated in circumstances
that constitute a Severance Event; (b) within sixty (60) days after the
Employee has received a release of claims for execution, he executes
and delivers such release of claims as set forth in Appendix B; and (c)
within sixty (60) days after the Employee has received an employment-
related covenant for execution, he executes and delivers such
<PAGE>
employment-related covenant as set forth in Appendix C. The Employee
may deliver the release of claims and the employment-related covenant
either by hand delivery or United States mail postage prepaid to either
the Employee's normal place of employment or such other company
location as directed by the Employer. Delivery of the executed release
of claims and employment-related covenant shall be deemed to have been
accomplished, if hand delivered, on the day delivered, and if mailed,
on the date mailed. The Employer shall deliver the form of release of
claims and employment-related covenant together with a prominent
explanation concerning the sixty (60) day requirement contained in this
Section 2.1 and its significance.
2.2 Eligibility Exclusions. Notwithstanding the foregoing, an
Employee shall not be an Eligible Employee hereunder if:
(a) The Employee leaves employment voluntarily, by
resignation (other than in circumstances that constitute a
Severance Event); or
(b) The employment of the Employee is terminated as a result
of his death or Disability.
2.3 Severance Benefits. The Severance Benefits provided by this
Plan shall consist of the payment of the Base Compensation of the
Eligible Employee determined at the time of the Severance Event in
twelve (12) equal monthly installments. The amount of each payment
shall be one-twelfth of such Base Compensation, and payment shall begin
on the last day of the month in which the Eligible Employee has
executed and delivered the release of claims required by Section
2.1(b), any applicable period for revocation thereof has expired and
the Eligible Employee has executed and delivered the employment-related
covenant required by Section 2.1(c). Such monthly payments shall
continue until the Eligible Employee (or his beneficiary) has received
twelve monthly installments. Severance Benefits shall be subject to
all applicable federal and state deductions and withholding. At the
option of the Company, the present value of the Severance Benefits,
determined pursuant to Section 280G(d)(4) of the Code, may be paid in a
single lump sum on the date on which the first installment would
otherwise be required to be paid. The Eligible Employee shall not be
required to mitigate the amount of such payments by securing other
employment or otherwise, nor shall such payments be reduced by reason
of the Eligible Employee's securing other employment or for any other
reason. Severance Benefits shall not be paid, and if commenced, shall
terminate if the Employee breaches any of the covenants relating to
employment executed pursuant to Section 2.1(c) or breaches any other
noncompete covenant in any agreement entered into with an Employer.
The Severance Benefits shall be paid in lieu of any severance pay due
to the Eligible Employee pursuant to any other severance payment plan
of the Company, but shall not be reduced by or affect the payment of
any payment under any non-compete agreement or any payment under any
other severance or employment agreement, including, but not limited to,
any Transition Bonus Agreement.
<PAGE>
2.4 Other Benefits.
(a) Salary and Vacation. Any earned but unpaid salary and
any earned but unused vacation for which an Employee is eligible
at the time of the Severance Event or other termination of
employment will be paid in a lump sum at the time of the Severance
Event.
(b) Bonus. Eligible Employees shall also receive a pro rata
bonus or other incentive compensation payment with respect to the
annual and/or other bonus or incentive compensation period in
which the Severance Event occurred, based upon the target or other
incentive payout made to employees with comparable duties and the
number of full and partial months completed in such period by the
Eligible Employee. Such payment, if any, shall be made at such
time as the bonus or incentive payouts are made under the bonus or
incentive plan or other arrangement applicable to the Eligible
Employee.
(c) Benefits Continuation. The Company shall maintain in
full force and effect for the continued benefit of the Eligible
Employee (and, to the extent applicable, his dependents), the
medical, dental, life and disability benefits referred to in
paragraph (a)(iv) in the definition of Good Reason in Section 1.3,
to which he would have been entitled under such employee benefit
plans, programs and arrangements maintained by the Employer if he
had remained actively employed until the expiration of the
Benefits Period or, if earlier, until the date on which the
Employee has obtained new employment and thereby becomes eligible
for comparable benefits. If any such continuation is not possible
under the terms or provisions of such plans, programs or
arrangements, the Company shall arrange to provide benefits to the
Eligible Employee (and, if applicable, dependents) substantially
similar to those required to be provided to such persons pursuant
to this Section 2.4(c).
(d) General Limitations. Except as provided in Section 2.3,
the Severance Benefits and other benefits referred to in Section
2.1 and available to Eligible Employees are limited to the
provisions herein and are in lieu of any other severance or
similar benefits arising out of the termination of the Employee's
employment. All qualified or non-qualified retirement or other
plan benefits for which the Eligible Employee may be eligible
shall be governed by the specific conditions set forth in the
applicable plan.
<PAGE>
ARTICLE III
CLAIMS
3.1 Claims Procedure
(a) Any Employee who believes that he is entitled to a
benefit under the Plan in an amount greater than he has received
may file a claim for such benefit by writing to the Plan
Administrator.
(b) Every claim which is properly filed shall be answered in
writing by the Plan Administrator within ninety (90) days (or one
hundred eighty (180) days if special circumstances require an
extension of time for processing the claim) of receipt stating
whether the claim is granted or denied. If the claim is denied,
the claimant shall be provided specific reasons for denial;
specific reference to the pertinent Plan provisions on which the
denial is based; a description of any information necessary for
the claimant to perfect a claim including an explanation of why
such information is necessary; and an explanation of the Plan's
claim appeal procedure including steps to be taken to submit the
claim for review.
(c) Within sixty (60) days after notice that a claim is
denied, the claimant may file a written appeal with the Plan
Administrator which shall include any comments, statements or
documents the claimant may wish to provide. Notice of the
decision on appeal shall be sent to the claimant within sixty (60)
days of its receipt (or one hundred twenty (120) days if special
circumstances require an extension of time for processing the
appeal). In the event the claim is denied upon appeal, the notice
shall set forth the reasons for denial written in a manner
calculated to be understood by the claimant and specific reference
to the pertinent provisions of the Plan on which the denial is
based. Any reasonable request from a claimant for documents or
information relevant to his claim prior to his filing an appeal
shall also be allowed.
(d) If notice of the denial of the claim or appeal is not
furnished in the time limits set forth above, the claim or appeal
shall be deemed denied.
ARTICLEIV
LIMITATIONS AND LIABILITIES
4.1 No Guarantee of Employment. Nothing contained in the Plan
shall be construed as an agreement of employment, or as giving or
conferring on any Employee the right to continued employment, or as a
limitation on the right of an Employer to terminate the employment of
an Employee, with or without cause. Nor shall anything contained in
the Plan affect the eligibility requirements under any other plans
<PAGE>
maintained by an Employer, nor give any Employee a right to coverage
under any other plan.
4.2 Non-alienation of Assets and Benefits. Except as may be
required by applicable law, the benefits payable under the Plan shall
not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment,
execution, or levy of any kind, either voluntary or involuntary,
including any such liability which is for alimony or other payments for
the support of a spouse or former spouse, or for any other relative of
the Employee, prior to actually being received by the person entitled
to the benefit under the terms of the Plan; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge
or otherwise dispose of any right to benefits payable hereunder shall
be void.
4.3 Indemnification. The Company and each Employer shall, to the
extent permitted by its Certificate of Incorporation and Bylaws, and by
the laws of the State in which it is incorporated, indemnify the Plan
Administrator, and any employee, officer or director of an Employer,
against any and all liabilities arising by reason of any act or
omission made in good faith pursuant to the provisions of the Plan,
including expenses reasonably incurred in the defense of any claim
relating thereto.
ARTICLE V
FUNDING
5.1 Funding. Benefits shall be paid out of the general assets of
the Company or applicable Employer and the status of an Eligible
Employee shall be that of a general unsecured creditor. Neither the
Company nor any other Employer shall be required to establish a fund
for the payment of benefits or otherwise provide for the payment of
benefits prior to benefit becoming payable in any manner.
ARTICLE VI
EMPLOYERS AND SUCCESSORS
6.1 Obligation of Employers. Each Employer agrees to make all
payments required hereunder to be made to Eligible Employees of such
Employer, and agrees that the liability for making such payments and
providing such benefits shall be the sole and exclusive obligation of
such Employer; provided, however, that the foregoing notwithstanding,
in the event that such benefits are not so paid by the Employer, then
such benefits shall be paid or caused to be paid by the Company.
6.2 Cooperation by Each Employer. To enable the Plan
Administrator to perform its functions, an Employer shall supply full
and timely information to the Plan Administrator on all matters
relating to Base Compensation of all Employees and cause for
termination of employment, and any other pertinent facts or information
as the Plan Administrator, in its sole discretion, may require.
<PAGE>
6.3 Successors. This Plan shall inure to the benefit of, and be
binding upon, the successors and assignees of the Company and each
Employer. The Company and each Employer shall require any successor or
assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or
assets of the Company or any Employer, expressly and unconditionally to
assume and agree to perform the Company's or such Employer's
obligations under this Plan.
ARTICLE VII
AMENDMENT AND TERMINATION
7.1 General. The Company reserves the right to amend or
terminate the Plan at any time, prospectively or retroactively, and for
any reason; provided, however, that on and after the Effective Date,
any such amendment or termination which adversely affects any Employee
shall not be effective unless such Employee has consented thereto in
writing.
7.2 Amendments. Any and all amendments shall be made in writing
and shall be approved by resolution of the Board, or by an instrument
duly executed by the person or persons designated by it to carry out
its duties or powers under the terms of this Plan.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Withholding. The Employer shall be entitled to withhold from
amounts to be paid to the Executive under this Plan any federal, state
or local withholding or other taxes or charges which it is from time to
time required to withhold. The Employer shall be entitled to rely on
an opinion of counsel if any question as to the amount or requirement
of any such withholding shall arise.
8.2 Applicable Law. This Plan shall be construed in accordance
with federal law under the Employee Retirement Income Security Act of
1974, as amended; provided, that nothing in this Section 8.2 shall be
construed as placing any restriction upon the right of an Employer
acting pursuant to the Plan to take any action or to incur any
liability which it is authorized to take or incur under its Certificate
of Incorporation or Bylaws, or under the laws of the State in which it
is incorporated, except to the extent that the same are preempted by
applicable federal law.
8.3 Exclusive Benefit of Participants. This Plan is for the
exclusive benefit of Eligible Employees and their beneficiaries.
8.4 Indemnification. All rights to indemnification which an
Employee may now or hereafter have under the charter or bylaws of the
Company or any Subsidiary, under any insurance contract maintained by
the Company or any Subsidiary, or any agreement between an Employee and
the Company or any Subsidiary, shall continue in full force and effect
<PAGE>
and the same shall not be altered or diminished by this Plan or the
receipt by an Eligible Employee of Severance Benefits hereunder.
8.5 Enforcement. In the event the Company or any Subsidiary
shall fail to pay to an Employee or successor any amounts due under
this Plan or under any of the plans, programs or arrangements referred
to herein as they come due, the Company and the Subsidiaries shall pay
interest on such amounts at the prime rate of interest as from time to
time published in The Wall Street Journal (Midwest Edition) until paid.
8.6 Arbitration. Each of the Company or any Subsidiary, and the
Employee or any successor, shall have the right and option to have any
controversy or claim arising out of or relating to this Plan or the
plans, programs or arrangements referred to herein, or the breach
thereof, settled exclusively by arbitration, conducted before an
arbitrator in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. Judgment on the award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The place of arbitration shall be in the city
with population of 100,000 or more nearest to the Employee's place of
employment immediately prior to the Severance Event or in the nearest
state or provincial capital if it is closer to such place of employment
than is such city.
8.7 Legal Fees. If a dispute arises with respect to the
enforcement of the Employee's rights under the Plan or if any legal or
arbitration proceeding shall be brought to enforce or interpret any
provision contained herein, or to recover damages for breach hereof,
the party that has substantially prevailed in the dispute shall recover
from the other party any reasonable attorneys' fees and necessary costs
and disbursements incurred as a result of such dispute, legal or
arbitration proceeding.
8.8 Notice. Each of the Company or a Subsidiary and the Employee
or successor shall provide written notice ("initial notice") at least
fifteen (15) business days prior to the commencement of any action
under this Plan or any plan, program or arrangement referred to herein,
which initial notice shall indicate whether such party is invoking
arbitration pursuant to Section 8.6 above. If such party is not
electing to invoke arbitration, then the other party may by written
notice within ten (10) business days following receipt of the initial
notice elect to invoke arbitration pursuant to said Section 8.6.
8.9 Agent for Service of Process. The Plan Administrator shall
be the agent for service of process.
<PAGE>
Appendix A
LIST OF ELIGIBLE EMPLOYEES
Albert Allen
Jo Ann Doherty
William Bahl
James Bausch
Thomas Bell
Paul Collins
Jay Ferguson
Robert E. Fowler, Jr.
Lawrence Fuller
Ronald Gagne
Elmar Goldsmith
Kenneth Holbrook
Glenn Holler
John Huber
Kelly Jordan
Karen N. Latham
Colin MacKay
Carolyn Merritt
James Patterson
Ronald G. Register
Bobby Rehberg
Joseph Rocco
Larry Shoemake
Robert Turner
Robert van Patten
Dale Ward
Brian Warren
Rose Marie Williams
<PAGE>
Appendix B
RELEASE AND SEVERANCE AGREEMENT
THIS RELEASE AND SEVERANCE AGREEMENT is made and entered into this
day of , by and among The Vigoro
Corporation, a Delaware corporation (the "Company") and (the
"Employee").
The Employee's employment with the Company terminated ; and
the Employee has voluntarily agreed to the terms of this Release and
Severance Agreement in exchange for Severance Benefits under The Vigoro
Corporation Severance Plan (the "Plan") to which the Employee otherwise
would not be entitled.
NOW THEREFORE, in consideration of the Severance Benefits provided
under the Plan, the Employee, on behalf of the Employee and the
Employee's spouse, heirs, executors, administrators, children, and
assigns, does hereby fully release and discharge the Company, its
officers, directors, employees, agents, subsidiaries and divisions,
benefit plans and their administrators, fiduciaries and insurers,
successors, and assigns from any and all claims or demands for wages,
back pay, front pay, attorneys' fees and other sums of money,
insurance, benefits, contracts, controversies, agreements, promises,
damages, costs, actions or causes of action and liabilities of any kind
or character whatsoever, whether known or unknown, from the beginning
of time to the date of these presents, relating to the Employee's
employment or termination of employment by the Company, including but
not limited to any claims, actions or causes of action arising under
the statutory, common law or other rules, orders or regulations of the
United States or any State or political subdivision thereof, including
the Age Discrimination in Employment Act and the Older Workers Benefit
Protection Act.
The Employee acknowledges that the Employee's obligations pursuant
to applicable policies of the Company, copies of which have been
provided to the Employee, and under applicable law relating to the use
or disclosure of confidential information, shall continue to apply to
the Employee.
This Release and Severance Agreement supersedes any and all other
agreements between the Employee and the Company except agreements
relating to proprietary or confidential information belonging to the
Company, and any other agreements, promises or representations relating
to severance pay or other terms and conditions of employment are null
and void.
This release does not affect the Employee's right to any benefits
to which the Employee may be entitled pursuant to any noncompete
agreement or any other written agreement to which the Employer is a
party, under any employee benefit plan sponsored by the Company,
including but not limited to the Plan and the plans referred to therein
and rights any former Employee may have with respect to any stock
option plan of the Company.
<PAGE>
The Employee and the Company acknowledge that it is their mutual
interest that the Age Discrimination in Employment Act waiver contained
herein fully complies with the Older Workers Benefit Protection
Act. Accordingly, the Employee acknowledges and agrees that:
(a) The Severance Benefits exceed the nature and scope of
that to which the Employee would otherwise have been legally
entitled to receive;
(b) The execution of this Agreement, including the Age
Discrimination in Employment Act waiver herein, is the Employee's
knowing and voluntary act;
(c) The Employee has been advised by the Company to consult
with the Employee's personal attorney regarding the terms of this
Agreement, including the aforementioned waiver;
(d) The Employee has had at least [forty-five (45) or twenty-
one (21)] calendar days within which to consider this Agreement;
(e) The Employee has the right to revoke this Agreement in
full within (7) calendar days of execution, and none of the terms
and provisions of this Agreement shall become effective or be
enforceable until such revocation period has expired;
[(f) The Employee has been informed in writing of (i) the
eligibility factors under the Plan, (ii) the group of employees,
including the job title and age of each, eligible to receive
Severance Benefits, (iii) the ages of all individuals in the same
job classification or organizational unit who are not eligible to
receive Severance Benefits, and (iv) any time limit applicable to
the Plan;]
(g) The Employee has read and fully understands the terms of
this Agreement; and
(h) Nothing contained in this Agreement purports to release
any of the Employee's rights or claims under the Age
Discrimination in Employment Act that may arise after the date of
execution.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date indicated above.
THE VIGORO CORPORATION, EMPLOYEE
for itself and its Subsidiaries
By:
Its:
<PAGE>
Appendix C
COVENANTS RELATING TO EMPLOYMENT
THIS AGREEMENT is made and entered into this day of
, , by and between The Vigoro Corporation, a Delaware
corporation (the "Company") and (the "Employee").
WHEREAS, the Employee's employment with the Company terminated on
, , and the Employee has agreed to the terms of this Agreement
in exchange for Severance Benefits under The Vigoro Corporation
Severance Plan (the "Plan") to which the Employee otherwise would not
be entitled.
NOW, THEREFORE, in consideration of the premises, and for other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
Defined Terms. All capitalized terms not otherwise defined
herein shall have the meanings assigned to such terms in the Plan.
Severance Benefit Entitlement. The Company acknowledges and
agrees that, subject to compliance with the provisions of subparagraphs
(b) and (c) of Section 2.1 of the Plan and upon the expiration of the
seven-day period for revocation of the release of claims required by
Section 2.1(b) of the Plan, the Employee has met all of the
requirements for the receipt of Severance Benefits pursuant to Section
2.3 of the Plan and the Company will pay and provide for such Severance
Benefits and all other benefits required by the Plan.
Covenant of Employee. The Employee agrees that, for a period
of one year from and after the Severance Event, the Employee will not,
directly or indirectly, as a sole proprietor, member of a partnership,
or stockholder, investor, officer or director of a corporation, or as
an employee, agent, associate of or consultant to any individual,
partnership, joint venture, association, trust, corporation or other
entity (including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) solicit any employee of
the Company or a Subsidiary to terminate the Employee's employment or
hire, retain, employ or otherwise engage the services of any such
employee.
Confidential Information. The Employee shall hold in
confidence and not directly or indirectly disclose, use, copy or make
lists of any confidential information or proprietary data of the
Company, except to the extent authorized in writing by the Board or
required by any court or administrative agency. Confidential
information shall not include any information known generally to the
public (except to the extent that the Employee was responsible for
causing such information to be known to the public, without the consent
of the Board, in violation of this Section 4) or any information of a
type not otherwise considered confidential by persons engaged in the
same business or a business similar to that of the Company. All
<PAGE>
records, files, documents and materials or copies thereof, relating to
the Company's business which the Employee shall have prepared, or used,
or come into contact with, shall be and remain the sole property of the
Company and shall be promptly returned to the Company.
Remedies. In the event of a breach or threatened breach by
the Employee of this Agreement, the Company shall be entitled to an
injunction or such other equitable relief as a court may determine to
prevent such a breach or threatened breach. No provision of this
Agreement shall be construed as prohibiting the Company from pursuing
any other remedies for such breach or threatened breach.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
THE VIGORO CORPORATION, EMPLOYEE
for itself and its Subsidiaries
By:
Its:
<PAGE>
EXHIBIT 10.75
THE IMC GLOBAL INC.
SEVERANCE PLAN
ARTICLE I
GENERAL
1.1 Purpose. The Company believes that it is in the best
interests of its stockholders to retain well-qualified key executive
personnel to assure itself of continuity of management. Accordingly,
the Board has considered and has determined it to be in the best
interests of the Company and its stockholders to create and maintain
The IMC Global Inc. Severance Plan to provide Eligible Employees with
economic security through the provision of income and other benefits in
the event of a termination of employment, thus enabling such Eligible
Employees to serve the Company's best interests.
1.2 Effective Date. The Plan shall become effective on
December 21, 1995.
1.3 Definitions. Each term defined herein shall be given
its defined meaning wherever used in this Plan, unless the context
requires otherwise.
"Affiliate" means IMC-Agrico MP, Inc.
"Base Compensation" means the sum of the Base Salary and
Bonus Base.
"Base Salary" means the Employee's annualized base salary
determined as of the Severance event, or if greater, as of the
Effective Date.
"Benefits Period" means a period that begins on the date of
the Severance event and ends one (1) year thereafter.
"Board" means the Board of Directors of the Company, as
constituted from time to time.
"Bonus Base", with respect to an Employee, means:
The highest annual bonus (annualized if the Employee was
employed for less than the complete year) earned by the
Employee for the three consecutive complete bonus years
ending immediately preceding the Severance Event.
"Cause" for termination by the Company of an Employee's
employment shall be limited to (i) the engaging by the Employee in
willful and intentional conduct which has caused demonstrable and
serious injury to the Company, monetary or otherwise; (ii) conviction
of, or plea of nolo contendere by, the Employee for any felony; (iii)
criminal conviction of, or plea of nolo contendere by the Employee for
any other offense involving dishonesty, breach of trust or moral
<PAGE>
turpitude; (iv) a breach of fiduciary duty by the Employee involving
personal profit; or (v) willful refusal by the Employee to perform his
duties or responsibilities, (unless significantly changed without the
Employee's consent), or gross negligence by the Employee in the
performance of such duties; provided, however, that the Employee shall
have 30 days, or such longer period as the Company may determine to be
appropriate, after written notice by the Company, to cure any conduct
or act, if curable, alleged in such notice to provide grounds for
termination of the Employee's employment for Cause.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means IMC Global Inc., a Delaware corporation, and
successor thereto as described in Section 6.3.
"Controlled Group" means the Company and all affiliates of
the Company determined under Sections 414(b),(c),(m) and (o) of the
Code.
"Disability" means the inability of the Employee, by reason
of physical or mental illness or injury (regardless of whether such
illness or injury is job-related), to perform his duties, on a full-
time basis, under circumstances in which the Employee is eligible to
receive benefits under any long-term disability plan or arrangement of
the Company of any Employer, or would have been so eligible but for a
determination made by the Employee not to participate in such plan or
arrangement, as determined by the Plan Administrator.
"Effective Date" means December 21, 1995.
"Eligible Employee" means an Employee who has satisfied all
of the conditions of eligibility set forth in Section 2.1 is not
excluded pursuant to Section 2.2 and is listed in Appendix A attached
hereto.
"Employee" means an individual who provides services to the
Company or any Subsidiary or any Affiliate as an employee for
remuneration.
"Employer" means the Company and any Subsidiary or other
member of the Controlled group or any Affiliate hereof which employs an
Employee on or after the Effective Date.
"Good Reason" for termination of employment by an Employee
shall mean any of the following:
(a) the failure by the Employer to (i) maintain the
Employee's Base Salary at an annual rate equal to the rate in
effect immediately prior to the Effective Date, or as may be
increased thereafter from time to time by the Employer in
accordance with regular practices of the Company thereafter
with respect to employees with comparable duties, provided,
however, that Good Reason shall not exist as the result of
any decrease in Base Salary if such decrease is incident to a
general reduction applied to all senior corporate officers
and other key employees of all members of any Controlled
<PAGE>
Group of which the Company is a member or any Affiliate on a
proportionate and nondiscriminatory basis; (ii) provide for
continued participation on a comparable basis by the Employee
in an annual bonus plan maintained by the Company or its
Subsidiaries or Affiliates in which employees with comparable
duties participate; (iii) provide for participation in stock
option and other equity incentive plans or programs
maintained by the Company or its Subsidiaries or any other
member of the Controlled Group or any Affiliate from time to
time in which employees with comparable duties participate;
(iv) provide for participation in all Company or Subsidiary
or Affiliate sponsored group or executive medical, dental,
life, disability, retirement, profit-sharing, thrift,
nonqualified and deferred compensation, and other plans
maintained by the Company or its Subsidiaries or its
Affiliates to the same extent as employees with comparable
duties participate; (v) provide vacation and perquisites
substantially equivalent to those provided by the Company or
Subsidiaries or Affiliate to employees with comparable
duties, or (vi) obtain the express unconditional assumption
of this Plan as required by Section 6.3; or
(b) any Employer changes the Employee's primary
employment location to a location that is more than 50 miles
from the primary location of such Employee's employment as in
effect immediately prior to the Effective Date; provided,
however, that the relocation of an Employee on a
nondiscriminatory basis for bona fide business reasons shall
not constitute Good Reason hereunder; or
(c) a significant adverse change, without the
Employee's written consent, in working conditions or status,
including but not limited to (i) a significant adverse change
in the nature or scope of the Employee's authority, powers,
functions, duties or responsibilities; provided, however, a
change in the Company's status such that it no longer has any
equity securities registered under Section 1(b) or 12(g) of
the Securities Exchange Act of 1934, as amended, or that it
is a subsidiary of another entity and directly results in
changes in the nature or scope of the Employee's authority,
powers, functions, duties or responsibilities shall not in
and of itself constitute Good Reason hereunder; or (ii) a
reduction in the level of support services, staff,
secretarial and other assistance, office space and
accouterments available to a level below that reasonably
necessary for the performance of such duties.
"Plan Administrator" means the Company or such other person
or entity designated to administer the Plan and be the named fiduciary
thereof, whether or not the Plan Administrator is an individual who
would be an Eligible Employee upon the occurrence of a Severance Event.
"Plan" means The IMC Global Inc. Severance Plan.
<PAGE>
"Severance Benefits" means the benefits provided pursuant to
Section 2.3.
"Severance Event" shall be deemed to have occurred if, and
only if, as of or after the Effective Date, but prior to the expiration
of the Severance Period, the termination of an Eligible Employee's
employment with the Employer occurs, and such termination is:
(a) Employer-initiated for reasons other than Cause;
(b) Employee-initiated within ninety (90) days after
Good Reason shall first exist.
"Severance Period" means a period that begins on the
Effective Date and ends three (3) years thereafter.
"Subsidiary" means any corporation of which the securities
having a majority of the ordinary voting power in electing the board of
directors are, at the time of such determination, owned by the Company
or another Subsidiary.
ARTICLE II
ELIGIBILITY AND BENEFITS
2.1 Eligibility. Except as provided in Section 2.2 and
subject to all other exclusions contained in this Plan, an Employee
shall be an Eligible Employee entitled to receive Severance benefits
and to benefits pursuant to Section 2.3 and 2.4(b) and (c), if and only
if: (a) his employment with all Employers is terminated in
circumstances that constitute a Severance event; (b) within 45 days,
(or such other period as may be prescribed by applicable law) after the
Severance Event he executes and delivers to the Company a release of
claims as set forth in Appendix B; and (c) within the period prescribed
in (b) above he executes and delivers to the Company an employment
related covenant as set forth in Appendix C.
2.2. Eligibility Exclusions. Notwithstanding the foregoing,
an Employee shall not be an Eligible Employee hereunder if:
(a) The Employee leaves employment voluntarily, either
by resignation (other than in circumstances that constitute a
Severance Event) or retirement;
(b) The Employee is on or commences a leave of absence
or other interruption of employment which does not constitute
a termination of employment, provided that this exclusion
will not apply if the Employee otherwise incurs a Severance
Event;
(c) Except as provided in paragraph (b) of the
definition of Good Reason in Section 1.3, the Employee is
transferred to another facility or location of the Company or
<PAGE>
Subsidiary or Affiliate at the same or another position with
comparable compensation and declines to accept such position;
(d) The employment of the Employee is terminated as
result of the sale of assets or stock of an Employer, and the
Employee is offered the same or another position with the
successor in interest with comparable compensation (which, for
this purpose, must include coverage under a plan which provides
Severance Benefits upon a Severance Event comparable to that to
which the Employee would have been entitled under this Plan had
such sale of assets or stock not occurred; or
(e) The employment of the Employee is terminated as a
result of his death or Disability.
2.3. Severance Benefits: The Severance Benefits, provided
by this Plan shall consist of the payment of the Base compensation of
the eligible Employee determined at the time of the Severance event in
twelve (12) equal monthly installments. The amount of each payment
shall be one-twelfth of such Base Compensation, and payment shall begin
on the last day of the month in which the Eligible Employee has
executed the release of claims required by Section 2.1(b), any
applicable period for revocation thereof has expired and the Eligible
Employee has executed the employment-related covenant required by
Section 2.1(c). Such monthly payments shall continue until the
Eligible Employee (or his beneficiary) has received twelve monthly
installments. Severance Benefits shall be subject to all applicable
federal and state deductions and withholding. At the option of the
Company, the present value of the Severance Benefits, determined
pursuant to Section 280G(d)(4) of the Code, may be paid in a single
lump sum on the date on which the first installment would otherwise be
required to be paid. The Eligible Employee shall not be required to
mitigate the amount of such payments by securing other employment or
otherwise, nor shall such payments be reduced by reason of the Eligible
Employee securing other employment or for any other reason. Severance
Benefits shall not be paid, and if commenced, shall terminate with
respect to any Employee who breaches any of the covenants relating to
employment executed pursuant to Section 2.1(c) or breaches any other
noncompete covenant in any agreement entered into with the Company.
The Severance benefits shall be paid in lieu of any severance pay due
to the Eligible Employee pursuant to any other severance payment plan
of the Company, but shall not be reduced by or affect the payment of
any payment under any non-compete agreement or any payment under any
other severance or employment agreement, including but not limited to,
any Transition Bonus Agreement.
2.4 Other Benefits.
(a) Salary and Vacation. Any earned but unpaid salary and
any earned but unused vacation for which an Employee is eligible at the
time of the Severance Event or other termination of employment will be
paid in a lump sum at the time of the Severance Event.
<PAGE>
(b) Bonus. Eligible Employees shall also receive a pro rata
bonus with respect to the annual and/or other bonus or incentive
compensation period in which the Severance Event occurred, based upon
the target payout made to employees with comparable duties and the
number of full and partial months completed in such period by the
Eligible Employee. Such payment, if any, shall be made at such time as
the bonus payout is made under the bonus plan to the Eligible Employee.
(c) Benefits Continuation. The Company shall maintain in
full force and effect for the continued benefit of the Eligible
Employee (and, to the extent applicable, his dependents), the medical,
dental, life and disability benefits referred to in paragraph (a)(iv)
in the definition of Good Reason in Section 1.3, to which he would have
been entitled under such employee benefit plans, programs and
arrangements maintained by the Employer if he had remained actively
employed until the expiration of the Benefits Period or, if earlier,
until the date on which the Employee has obtained new employment and
thereby becomes eligible for comparable benefits. If any such
continuation is not possible under the terms or provisions of such
plans, programs or arrangements, the Company shall arrange to provide
benefits to the Eligible Employee (and, if applicable, dependents)
substantially similar to those required to be provided to such persons
pursuant to this Section 2.4(c).
(d) General Limitations. Except as provided in Section 2.3,
the Severance Benefits and other benefits referred to in Section 2.1
and available to Eligible Employees are limited to the provisions
herein and are in lieu of any other severance or similar benefits
arising out of the termination of the Employee's employment. All
qualified or non-qualified retirement or other plan benefits for which
the Eligible Employee may be eligible shall be governed by the specific
conditions set forth in the applicable plan.
ARTICLE III
ADMINISTRATION AND CLAIMS
3.1 Administration.
(a) The Plan Administration shall be the "administrator" of
the plan within the meaning of such term as used in ERISA.
(b) The Plan Administrator shall have the duty and authority
to interpret and construe the Plan in regard to all questions of
eligibility and the status and rights of persons under the Plan.
3.2. Claims Procedure.
(a) Any Employee who believes that he is entitled to a
benefit under the Plan in an amount greater than he has received may
file a claim for such benefit by writing to the Plan Administrator.
<PAGE>
(b) Every claim which is properly filed shall be answered in
writing by the Plan Administrator within ninety (90) days (or one
hundred eighty (180) days if special circumstances require an extension
of time for processing the claim) of receipt stating whether the claim
is granted or denied. If the claim is denied, the claimant shall be
provided specific reasons for denial; specific reference to the
pertinent Plan provisions on which the denial is based; a description
of any information necessary for the claimant to perfect a claim
including an explanation of why such information is necessary; and an
explanation of the Plan's claim appeal procedure including steps to be
taken to submit the claim for review.
(c) within sixty (60) days after notice that a claim is
denied, the claimant may file a written appeal with the Plan
Administrator which shall include any comments, statements or
documents the claimant may wish to provide. Notice of the decision on
appeal shall be sent to the claimant within sixty (60) days of its
receipt (or one hundred twenty (120) days if special circumstances
require an extension of time for processing the appeal). In the event
the claim is denied upon appeal, the notice shall set forth the reasons
for denial written in a manner calculated to be understood by the
claimant and specific reference to the pertinent provisions of the Plan
on which the denial is based. Any reasonable request from a claimant
for documents or information relevant to his claim prior to his filing
an appeal shall also be allowed.
(d) If notice of denial of the claim or appeal is not
furnished in the time limits set forth above, the claim or appeal shall
be deemed denied.
ARTICLE IV
LIMITATIONS AND LIABILITIES
4.1 No Guarantee of Employment. Nothing contained in the
Plan shall be construed as an agreement of employment, or as giving or
conferring on any Employee the right to continued employment, or as a
limitation on the right of an Employer to terminate the employment of
an Employee, with or without cause. Nor shall anything contained in
the Plan affect the eligibility requirements under any other plans
maintained by an Employer, nor give any Employee a right to coverage
under any other plan.
4.2 Non-alienation of Assets and Benefits. Except as may be
required by applicable law, the benefits payable under the Plan shall
not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment,
execution, or levy of any kind, either voluntary or involuntary,
including any such liability which is for alimony or other payments for
the support of a spouse or former spouse, or for any other relative of
the Employee, prior to actually being received by the person entitled
to the benefit under the terms of the Plan; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge
or otherwise dispose of any right to benefits, payable hereunder shall
be void.
<PAGE>
4.3 Indemnification. The Company and each Employer shall,
to the extent permitted by its Certificate of Incorporation and Bylaws,
and by the laws of the State in which it is incorporated, indemnify the
Plan Administrator, and any employee, officer or director of an
Employer, against any and all liabilities arising by reason of any act
or omission made in good faith pursuant to the provisions of the Plan,
including expenses reasonably incurred in the defense of any claim
relating thereto.
ARTICLE V
FUNDING
5.1 Fund. Benefits shall be paid out of the general assets
of the Company or applicable Employer, and the status of an Eligible
Employee shall be that of a general unsecured creditor. Neither the
Company nor any other employer shall be required to establish a fund
for the payment of benefits or otherwise provide for the payment of
benefits prior to benefit becoming payable in any manner.
ARTICLE VI
EMPLOYERS AND SUCCESSORS
6.1 Obligation of Employers. Each Employer agrees to make
all payments required hereunder to be made on behalf of Eligible
Employees of such Employer, and agrees that the liability for making
such payments and providing such benefits shall be the sole and
exclusive obligation of such Employer; provided, however, that the
foregoing notwithstanding, in the event that such benefits are not so
paid by the Employer, then such benefits shall be paid or caused to be
paid by the Company.
6.2 Cooperation by Each Employer. To enable the Plan
Administrator to perform its functions, an Employer shall supply full
and timely information to the Plan Administrator on all matters
relating to Base Compensation of all Employees and cause for
termination of employment, and any other pertinent facts or information
as the Plan Administrator, in its sole discretion, may require.
6.3 Successors. This Plan shall inure to the benefit of,
and be binding upon, the successors and assignees of the Company and
each Employer. The Company and each Employer shall require any
successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or
assets of the Company or any Employer, expressly and unconditionally to
assume and agree to perform the Company's or such Employer's
obligations under this Plan.
<PAGE>
ARTICLE VII
AMENDMENT AND TERMINATION
7.1 General. This Plan Shall terminate and be of no further
force and effect at the end of the day on which the Severance Period
ends. The Company reserves the right to amend or terminate the Plan at
any time, prospectively or retroactively, and for any reason; provided,
however, that on and after the Effective Date, any such amendment or
termination which adversely affects any Employee shall not be effective
unless such Employee has consented thereto in writing.
7.2 Amendments. Any and all amendments shall be made in
writing and shall be approved by resolution of the Board; or by an
instrument duly executed by the person or persons designated by it to
carry out its duties or powers under the terms of this Plan.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Withholding. The Employer shall be entitled to withhold
from amounts to be paid to the Executive under this Plan any federal,
state or local withholding or other taxes or charges which it is from
time to time required to withhold. The Employer shall be entitled to
rely on an opinion of counsel if any question as to the amount or
requirement of any such withholding shall arise.
8.2 Applicable Law. This Plan shall be construed in
accordance with federal law under the Employee Retirement Income
Security Act of 1974, as amended; provided, that nothing in this
Section 8.2 shall be construed as placing any restriction upon the
right of an Employer acting pursuant to the Plan to take any action or
to incur any liability which it is authorized to take or incur under
its Certificate of Incorporation or Bylaws, or under the laws of the
State in which it is incorporated, except to the extent that the same
are preempted by applicable federal law.
8.3 Exclusive Benefit of Participants. This Plan is for the
exclusive benefit of Eligible Employees and their beneficiaries.
8.4 Indemnification. All rights to indemnification which an
Employee may now or hereafter have under the Charter or bylaws of the
Company or any Subsidiary or Affiliate under any insurance contract
maintained by the Company or any Subsidiary or Affiliate or any
agreement between an Employer and the Company or any Subsidiary or
Affiliate, shall continue in full force and effect and the same shall
not be altered or diminished by this Plan or the receipt by an Eligible
Employee of Severance Benefits hereunder.
8.5 Enforcement. In the event the Company or any Subsidiary
or Affiliate shall fail to pay to an Employee or successor any amounts
due under this Plan or under any of the plans, programs or arrangements
referred to herein as they come due, the Company and the Subsidiary or
Affiliate shall pay interest on such amounts at the prime rate of
<PAGE>
interest as from time to time published in The Wall Street Journal
(Midwest Edition) until paid.
8.6 Arbitration. Each of the Company or any Subsidiary or
Affiliate, and the Employee or any successor, shall have the right and
option to have any controversy or claim arising out of or relating to
this Plan or the plans, programs or arrangements referred to herein, or
the breach thereof, settled exclusively by arbitration, conducted
before an arbitrator in accordance with the commercial arbitration
rules of the American Arbitration Association then in effect. Judgment
on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Any such arbitration shall be held in
Chicago, Illinois.
8.7 Legal Fees. If a dispute arises with respect to the
enforcement of the Employee's rights under the Plan or if any legal or
arbitration proceeding shall be brought to enforce or interpret any
provision contained herein, or to recover damages for breach hereof,
the party that has substantially prevailed in the dispute shall recover
from the other party any reasonable attorneys' fees and necessary costs
and disbursements incurred as a result of such dispute, legal or
arbitration proceeding.
8.8 Notice. Each of the Company or Subsidiary or Affiliate
and the Employee or successor shall provide written notice ("initial
notice") at least fifteen (15) business days prior to the commencement
of any action under this Plan or any plan, program or arrangement
referred to herein, which initial notice shall indicate whether such
party is invoking arbitration pursuant to Section 8.6 above. If such
party is not electing to invoke arbitration, then the other party may
by written notice within ten (10) business days following receipt of
the initial notice elect to invoke arbitration pursuant to said Section
8.6.
8.9 Agent for Service of Process. The Plan Administrator
shall be the agent for service of process.
IN WITNESS WHEREOF, IMC Global Inc. has caused this plan to
be executed by its duly authorized officer and its corporate seal to be
affixed as of December 28, 1995.
IMC GLOBAL INC.
(corporate seal) By_____________________________________
Its ____________________________________
Attest: ________________________
Assistant Secretary
<PAGE>
RELEASE AND SEVERANCE AGREEMENT
THIS RELEASE AND SEVERANCE AGREEMENT is made and entered into
this day of ______________, _______________ by and among
___________________ (IMC Global Inc. or IMC-Agrico MP, Inc.), a
Delaware corporation by and on behalf of its subsidiaries and
affiliates (the "Company") and (the "Employee").
The Employee's employment with the Company terminated
________; and the Employee has voluntarily agreed to the terms of this
Release and Severance Agreement in exchange for Severance benefits
under the IMC Global Inc. Severance Plan (the "Plan"') to which the
Employee otherwise would not be entitled.
NOW THEREFORE, in consideration of the Severance Benefits
provided under the Plan, the Employee, on behalf of the Employee and
the Employee's spouse, heirs, executors, administrators, children, and
assigns, does hereby fully release and discharge the Company, its
officers, directors, employees, agents, subsidiaries, affiliates and
divisions, benefit plans and their administrators, fiduciaries and
insurers, successors, and assigns from any and all claims or demands
for wages, back pay, front pay, attorneys' fees and other sums of
money, insurance, benefits, contracts, controversies, agreements,
promises, damages, costs, actions or causes of action and liabilities
of any kind or character whatsoever, whether known or unknown, from the
beginning of time to the date of these presents, relating to the
Employee's employment or termination of employment by the Company,
including but not limited to any claims, actions or causes of action
arising under the statutory, common law or other rules, orders or
regulations of the United States or any State or political subdivision
thereof, including the Age Discrimination in Employment Act and the
Older Workers Benefit Protection Act.
The Employee acknowledges that the Employee's obligations
pursuant to applicable policies of the Company, copies of which have
been provided to the Employee, and under applicable law relating to the
use or disclosure of confidential information, shall continue to apply
to the Employee.
This Release and Severance Agreement supersedes any and all
other agreements between the Employee and the Company except agreements
relating to proprietary or confidential information belonging to the
Company, and any other agreements, promises or representations relating
to severance pay or other terms and conditions of employment are null
and void.
This release does not affect the Employee's right to any
benefits to which the Employee may be entitled pursuant to any
noncompete agreement or any other written agreement to which the
Employer is a party, under any employee benefit plan sponsored by the
Company, including but not limited to the Plan and the plans referred
to therein and rights any former Employee may have with respect to any
stock option plan of the Company.
<PAGE>
The Employee and the Company acknowledge that it is their
mutual interest that the Age Discrimination in Employment Act waiver
contained herein fully complies with the Older Workers Benefit
Protection Act. Accordingly, the Employee acknowledges and agrees
that:
(a) The Severance Benefits exceed the nature and scope
of that to which the Employee would otherwise have been
legally entitled to receive;
(b) The execution of this Agreement, including the Age
Discrimination in Employment Act waiver herein, is the
Employee's knowing and voluntary act;
(c) The Employee has been advised by the Company to
consult with the Employee's personal attorney regarding the
terms of this Agreement, including the aforementioned waiver;
(d) The Employee has had at least twenty-one (21)
calendar days within which to consider this Agreement;
(e) The Employee has the right to revoke this Agreement
in full within (7) calendar days of execution, and none of
the terms and provisions of this Agreement shall become
effective or be enforceable until such revocation period has
expired.
(f) The Employee has been informed in writing of (i)
the eligibility factors under the Plan, (ii) the group of
employees, including the job title and age of each, eligible
to receive Severance benefits, (iii) the ages of all
individuals in the same job classification or organizational
unit who are not eligible to receive Severance Benefits, and
(iv) any time limit applicable to the Plan;
(g) The employee has read and fully understands the
terms of this Agreement; and
(h) Nothing contained in this Agreement purports to
release any of the Employee's rights or claims under the Age
Discrimination in Employment Act that may arise after the
date of execution.
IMC Global Inc. EMPLOYEE
or
IMC-Agrico MP, Inc.
for itself, its Subsidiaries and Affiliates
By:_________________________________
Its:_________________________________
<PAGE>
COVENANTS RELATING TO EMPLOYMENT
THIS AGREEMENT is made and entered into this _____ day of
______________________, by and between ______________ (IMC Global Inc.)
or (IMC-Agrico MP, Inc.), a Delaware corporation (the "Company") by and
on behalf of its subsidiaries and affiliates and (the "Employee").
WHEREAS, the Employee's employment with the Company
terminated on _______________________________, _____ and the Employee
has agreed to the terms of this Agreement in exchange for Severance
Benefits under the IMC Global Inc. Severance Plan (the "Plan") to
which the Employee otherwise would not be entitled.
NOW, THEREFORE, in consideration of the premises, and for
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto intending to be
legally bound, hereby agree as follows:
1. Defined Terms, All capitalized terms not otherwise
defined herein shall have the meanings assigned to such terms in the
Plan.
2. Severance Benefit Entitlement. The Company acknowledges
and agrees that, subject to compliance with the provisions of
subparagraphs (b) and (c) of Section 2.1 of the Plan and upon the
expiration of the seven-day period for revocation of the release of
claims required by Section 2.1(b) of the Plan, the Employee has met all
of the requirements for the receipt of Severance Benefits pursuant to
Section 2.3 of the Plan and the Company will pay and provide for such
Severance Benefits and all other benefits required by the Plan.
3. Covenant of Employee. The Employee agrees that, for a
period of one year from and after the Severance Event, the Employee
will not, directly or indirectly, as a sole proprietor, member of a
partnership, or stockholder, investor, officer or director of a
corporation, or as an employee, agent, associate of or consultant in
any individual, partnership, joint venture, association, trust,
corporation or other entity (including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) solicit
any employee of the Company or a Subsidiary or Affiliate to terminate
the Employee's employment or hire, retain, employ or otherwise engage
the services of any such employee.
4. Confidential Information. The Employee shall hold in
confidence and not directly or indirectly disclose, use, copy or make
lists of any confidential information or proprietary data of the
Company, except to the extent authorized in writing by the Board or
required by any court or administrative agency.
Confidential information shall not include any information known
generally to the public (except to the extent that the Employee was
responsible for causing such information to be known to the public,
without the consent of the Board, in violation of this Section 4) or
any information of a type not otherwise considered confidential by
persons engaged in the same business or a business similar to that of
the Company. All records, files, documents and materials or copies
<PAGE>
thereof, relating to the Company's business which the Employee shall
have prepared, or used, or come into contact with, shall be and remain
the sole property of the Company and shall be promptly returned to the
Company.
5. Remedies. In the event of a breach or threatened breach
by the Employee of this Agreement, the Company shall be entitled to an
injunction or such other equitable relief as a court may determine to
prevent such a breach or threatened breach. No provision of this
Agreement shall be construed as prohibiting the Company from pursuing
any other remedies for such breach or threatened breach.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day and year first above written.
____________________________________ EMPLOYEE
for itself and its Subsidiaries and _ ________________________
Affiliates
By:_________________________________
Its:_________________________________
<PAGE>
APPENDIX A
LIST OF ELIGIBLE EMPLOYEES
James D. Speir
Robert C. Brauneker
Marschall I. Smith
Robert M. Felsenthal
Allen C. Miller
C. Steven Hoffman
Brian S. Turner
Peter Hong
Julian F. Kopchynski
Eric A. Beaumont
Martin G. Reading
Donald R. Hood
Walter E. Thayer
Vernon D. Willhoit
Keith M. Wagner
Larry D. Graham
Kermit E. McCormack
John A. Brafford
Edward M. Newberg
Lee F. Thurner
Gregory D. Loughrie
Larry E. Akeson
Richard R. Roch
Don R. McCombs
Hermann H. Wittje
Lila D. Fredenburg
Roy C. Hahnfeld
Louis Spillone, Jr.
<PAGE>
EXHIBIT 10.76
September 11, 1996
Mr. Brian J. Smith
c/o IMC Global Inc.
2100 Sanders Road
Northbrook, IL 60062
Dear Brian:
This Letter Agreement between IMC Global Inc., a Delaware
corporation (the "Company"), and you as Executive Vice President and
Chief Financial Officer of the Company, is effective as of the 1st day
of March, 1996.
This Letter Agreement provides you with the assurance that in
the event that your employment is terminated, as defined below, not
later than February 28, 1999, you will be entitled to receive the sum
of two times your annualized salary as of the termination date and two
times the highest annual bonus (annualized if you are employed for less
than a complete bonus year) earned by you for one of the two
consecutive complete bonus years ending immediately preceding the
termination. Payments shall be made semi-monthly or in a lump sum, at
the option of the Company.
"Termination of Employment" shall mean termination, prior to
February 28, 1999 of your employment with the Company for any reason
other than death, disability (as described below), cause (as described
below), or voluntary resignation (as described below):
(a) The term "disability" means physical or mental
incapacity qualifying you for long-term disability under the
Company's long-term disability plan.
(b) The term "cause" means (i) your willful and continued
failure substantially to perform your duties with the Company
(other than any failure due to physical or mental incapacity)
after a demand for substantial performance is delivered to you by
the Board of Directors which specifically identifies the manner in
which the Board believes you have not substantially performed your
duties or (ii) willful misconduct materially and demonstrably
injurious to the Company. No act or failure to act by you shall
be considered "willful" unless done or omitted to be done by you
not in good faith and without reasonable belief that your action
or omission was in the best interest of the Company. You shall
not be deemed to have been terminated for cause for purposes of
this Agreement unless and until there shall have been delivered to
you a copy of a resolution, duly adopted by a vote of three-
quarters of the entire Board of Directors of the Company at a
meeting of the Board.
<PAGE>
(c) Your resignation shall be deemed "voluntary" if it is
for any reason other than your resignation is requested by the
Company other than for cause.
In exchange for the severance arrangement contained herein,
you agree that you will not divulge, either before or after
February 28, 1999, or appropriate to your own use, or the use of others
any secret or confidential information pertaining to the Company or any
of its subsidiaries obtained during your employment with the Company.
This Agreement shall be binding upon and inure to the benefit
of the Company, its successors or assigns, by operation of law or
otherwise, including without limitation any corporation or other entity
which shall succeed (whether direct or indirect by purchase, merger,
consolidation, or otherwise) to all or substantially all of the
business and/or assets of the Company.
Except to the extent required to be governed by the law of
the State of Delaware because the Company is incorporated under the
laws of that state, the validity, interpretation, and enforcement of
this agreement shall be governed by the law of the State of Illinois.
Very truly yours,
Agreed and Accepted
_________________________
Brian J. smith
Date:
<PAGE>
Exhibit 11.1
EARNINGS (LOSS) PER SHARE
FULLY DILUTED COMPUTATION
FOR THE YEARS ENDED JUNE 30, 1996, 1995 and 1994
(IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS)
At June 30,
-------------------------------------
1996 1995 1994
---- ---- ----
Basis for computation of fully
diluted earnings per share:
Earnings before extraordinary
item and cumulative effect
of accounting change, as
reported $ 144.3 $ 193.3 $ 44.4
Add interest charges on
convertible debt 7.2 7.2 7.2
Less provision for taxes (2.8) (2.8) (2.8)
---------- ---------- ----------
Earnings before extraordinary
item and cumulative effect
of accounting change, as
adjusted 148.7 197.7 48.8
Extraordinary loss - debt
retirement (6.5) (25.2)
Cumulative effect of
accounting change (5.9)
---------- ---------- ----------
Net earnings applicable
to common stock $ 148.7 $ 185.3 $ 23.6
========== ========== ==========
Number of shares:
Weighted average shares
outstanding 92,796,630 91,486,778 82,303,383
Conversion of convertible
subordinated notes into
common stock 3,621,012 3,622,048 3,622,048
---------- ---------- ----------
Total common and common
equivalent shares assuming
full dilution 96,417,642 95,108,826 85,925,431
========== ========== ==========
Fully diluted earnings per share:
Earnings before extraordinary
item and cumulative effect
of accounting change $ 1.54 $ 2.08 $ .57
Extraordinary loss - debt
retirement (.07) (.29)
Cumulative effect of
accounting change (.06)
---------- ---------- ----------
Net earnings $ 1.54 $ 1.95 $ .27
========== ========== ==========
<PAGE>
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.
<PAGE>
EXHIBIT 13
Management's Discussion and Analysis of Results of Operations and
Finacial Condition
RESULTS OF OPERATIONS
IMC Global Inc. is one of the world's leading producers and marketers
of phosphate crop nutrients (IMC-Agrico Crop Nutrients) and animal feed
ingredients (IMC-Agrico Feed Ingredients) through its IMC-Agrico joint
venture with Freeport-McMoRan Resource Partners, Limited Partnership
(FRP). The Company is also a world leading producer and marketer of
potash crop nutrients and industrial grade potash through various
operations in the United States and Canada (collectively IMC Kalium).
In addition, IMC is one of the nationOs leading distributors of crop
nutrients, including nitrogen, and related products, through its
FARMARKET (registered trademark) and Rainbow (registered trademark)
distribution networks (collectively IMC AgriBusiness). The Company also
manufactures and distributes consumer lawn and garden products;
produces and markets professional products for turf, nursery and
horticulture markets; and produces and distributes potassium-based ice
melter products (collectively IMC Vigoro). The Company also produces
sulphur and oil and gas through other joint venture operations.
The Company's fiscal year ends June 30 and all yearly references herein
refer to fiscal years unless otherwise noted. Shares and per share
amounts have been restated to reflect a 2-for-1 stock split, effected
in the form of a 100 percent stock dividend distributed on November 30,
1995.
Merger
The Company completed its merger with The Vigoro Corporation (Vigoro)
on March 1, 1996 (the Merger), which resulted in Vigoro becoming a
subsidiary of the Company. In connection with the Merger, the Company
issued approximately 32.4 million shares of common stock in exchange
for all of the outstanding common stock of Vigoro. The Merger has been
accounted for as a pooling of interests. Accordingly, the Company's
results of operations for all periods presented reflect the Merger. The
following comparisons assume that the Merger had occurred on July 1,
1993.The Merger is expected to result in total cost reductions of
$120.0 million over the next three years.
Acquisitions
The Company's results of operations have been impacted by several
acquisitions consummated during 1994, 1995 and 1996:
During 1994, the Company acquired several retail and wholesale
businesses operated under various corporations (collectively Mid-Ohio).
In January 1995, the Company acquired substantially all of the assets
of the Central Canada Potash division (CCP) of Noranda, Inc. (Noranda)
for $121.1 million, plus $16.2 million for working capital.
<PAGE>
In October 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. In addition, during
1996 the Company completed several smaller acquisitions, including the
operations of several retail distribution operations (Agri-Supply) and
seed operations (Madison Seed).
These acquisitions were accounted for under the purchase method of
accounting, and accordingly, results of operations for the acquired
companies have been included in the Company's results of operations
from their respective dates of acquisition.
1996 COMPARED TO 1995
Overview
Net sales for 1996 were $2,981.0 million. Gross margins, before special
one-time charges, for 1996 were $777.2 million and net earnings, before
special one-time charges, were $213.9 million, or $2.31 per share.
Special one-time charges of $69.6 million, or $0.75 per share, reduced
earnings for 1996 to $144.3 million, or $1.56 per share. These charges,
totaling $98.6 million before tax benefits, covered costs related to
the Merger, as well as costs associated with, among other things, a
corporate restructuring, other asset valuations and environmental
issues.
The special one-time charges of $98.6 million consisted primarily of
the following: (i) $20.2 million primarily for consulting, legal and
accounting services in connection with the Merger, (ii) $23.1 million
as a result of the Company's adoption of a plan, immediately following
the Merger, to restructure its business operations into a decentralized
organizational structure with five stand-alone business units
(consisting of $10.6 million for severance and related benefits from
staff reductions, $6.5 million for lease terminations resulting from
office consolidations and $6.0 million for other related actions), and
(iii) $58.3 million ($55.3 million net of minority interest) as a
result of the Company's detailed review of its accounting records and
valuation of various assets and liabilities, in connection with the
restructuring plan identified in (ii) above. The $58.3 million was
comprised of $26.3 million of charges to cost of goods sold, primarily
related to the write-off of certain idle plant facilities and other
obsolete assets, $2.4 million of charges to general and administrative
expenses for the write-off of miscellaneous assets, $16.6 million of
charges to other operating income and expense to reduce certain
long-term assets to net realizable value and other provisions, and
$13.0 million of charges to minority interest for the transfer of 0.85
percent of IMC-Agrico Distributable Cash (as defined in the Partnership
Agreement) from the Company to FRP. (See Note 4, "Merger and
Restructuring Charges," of Notes to Consolidated Financial Statements
for further detail.)
Net sales for 1995 were $2,736.1 million and gross margins were $690.0
million while net earnings, before extraordinary charges and the
cumulative effect of an accounting change, for 1995 were $193.3
<PAGE>
million, or $2.12 per share. A charge of $5.9 million, or $0.06 per
share, for the cumulative effect on prior years of a change in
accounting for postemployment benefits resulting from the adoption of
Statement of Financial Accounting Standards (SFAS) No. 112 ,
"Employers' Accounting for Postemployment Benefits," on July 1, 1994
and an extraordinary charge of $6.5 million, or $0.07 per share,
related to the early extinguishment of debt reduced net earnings to
$180.9 million, or $1.99 per share.
Net sales for 1996 increased 9 percent over 1995 and gross margins,
before special one-time charges, for 1996 increased 13 percent as
compared to 1995. Net earnings, before special one-time charges, in
1996 increased 11 percent as compared to 1995. These increases
reflected improved operating results from the Company's three largest
business units and the net impact of various other operating and non-
operating factors discussed below.
IMC-Agrico Crop Nutrients Operations
IMC-Agrico Crop Nutrients net sales in 1996 increased 12 percent to
$1,747.8 million as compared to $1,559.0 million for 1995. This
increase was primarily the result of higher concentrated phosphate
prices in 1996, favorably impacting sales by $185.0 million, primarily
due to higher world demand. During 1996, the company successfully
negotiated a first-ever calendar year concentrated phosphate sales
contract with China. Increased concentrated phosphate sales volumes
primarily as a result of strong sales to India, Australia, Japan, New
Zealand, Pakistan and Brazil were partially offset by lower phosphate
rock shipments. The decrease in rock shipments reflected managementOs
efforts to begin phasing out phosphate rock export sales during 1996.
Gross margins, before special one-time charges of $6.9 million,
increased $101.3 million, or 30 percent, to $436.7 million for 1996 as
compared to $335.4 million in 1995. This increase was primarily due to
the higher sales realizations for concentrated phosphates discussed
above, as well as improvements in phosphate rock sales prices. The
favorable impact of price improvements, however, was partially offset
by higher phosphate rock production costs, due in large part to higher
electricity and maintenance costs, as well as higher fuel costs.
Concentrated phosphate operations are managed to balance output with
customer needs. In May 1996, the Nichols complex in central Florida was
temporarily idled pending improvement of market conditions.
IMC Kalium Operations
IMC Kalium net sales decreased four percent to $455.6 million in 1996
from $472.0 million in 1995. This decrease was primarily a result of
lower potash export sales volumes, impacting net sales $27.0 million,
due to reduced sales to China, the largest potash export customer, and
lower average domestic potash sales prices, impacting revenues $13.1
million, due to excess producer inventories. These decreases were
partially offset by the impact of higher potash export sales prices as
well as increased domestic shipments, collectively improving net sales
<PAGE>
$23.7 million. Results for 1996 reflected the impact of the inclusion
of a full year of net sales for CCP.
Gross margins, before special one-time charges of $7.9 million,
decreased $48.7 million, or 24 percent, to $155.7 million for 1996 as
compared to $204.4 million in 1995. This decrease reflected the impact
of lower export sales volumes and lower domestic sales prices discussed
above. The decrease in domestic prices reflected the intense pressure
to lower inventory levels that had risen due to unusually wet spring
weather in the midwestern United States. These adverse conditions
ultimately necessitated a reduction in potash production to balance
output with market requirements. Accordingly, the Company temporarily
reduced potash output at four of its six mines by accelerating
maintenance schedules and summer vacation shutdowns, beginning in early
June 1996 and concluding in mid-August 1996.
IMC AgriBusiness Operations
IMC AgriBusiness net sales increased six percent to $802.9 million in
1996 as compared to $760.8 million in 1995. The increase in net sales
reflected the impact of a four percent increase in average sales
prices, which favorably impacted revenues by $27.7 million. The
increase in sales realizations was the result of improved pricing on
select products as well as a change in the mix of products sold.
Increased sales volumes, which favorably impacted 1996 net sales by
$14.4 million, were primarily the result of the inclusion of sales from
the Agri-Supply and Madison Seed operations which were acquired during
1996.
Gross margins, before special one-time charges of $5.5 million,
increased $11.7 million, or nine percent, to $146.5 million for 1996 as
compared to $134.8 million in 1995. The increase in gross margins was
primarily the result of increases in sales prices and sales volumes due
to factors discussed above. These increases were partially offset by
the impact of higher purchased product and raw material costs.
Other
The remaining increases in sales and margins were primarily the result
of the Feed Ingredients acquisition in October 1995.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $27.4 million to
$223.4 million in 1996 as compared to $196.0 million in 1995 primarily
due to higher expenses associated with: (i) the inclusion of a full
year of operations of CCP which was acquired during 1995; (ii) a
partial year of operations of the businesses acquired through the Feed
Ingredients, Agri-Supply and Madison Seed acquisitions in 1996; and,
(iii) the impact of one-time restructuring charges in 1996. (See Note
4, "Merger and Restructuring Charges," of Notes to Consolidated
Financial Statements for further detail.)
<PAGE>
Merger and Restructuring Charges
See Note 4, "Merger and Restructuring Charges," of Notes to
Consolidated Financial Statements for further detail.
Other Operating Income and Expense, Net
Other operating income and expense, net in 1996 was $4.1 million, a
$5.0 million decrease as compared to $9.1 million in 1995. Results for
1996 included gains on the sale of investments, properties and by-
products of $17.6 million offset by merger and restructuring charges of
$16.6 million. (See Note 4, "Merger and Restructuring Charges," of
Notes to Consolidated Financial Statements for further detail.) In
1995, other operating income and expense, net included a gain of $5.0
million from the sale of land in Florida. Both 1996 and 1995 included
approximately $3.0 million of amortization of a deferred gain resulting
from the formation of IMC-Agrico. (See Note 6, "Joint Venture
Partnership," of Notes to Consolidated Financial Statements for further
detail.)
Interest Charges
Interest charges in 1996 were $64.8 million, $5.4 million lower than
1995 interest charges of $70.2 million as the Company reduced a portion
of its high-cost, long-term indebtedness during the prior fiscal year.
Partially offsetting this decrease were interest charges resulting from
long-term debt increases used to fund the acquisition of CCP and other
acquisitions during 1995.
Income Taxes
The effective tax rate for 1996, before benefits of the special one-
time charge, was 36.5 percent, compared to an effective tax rate for
1995 of 37.4 percent. The effective rate decreased in 1996 as a result
of post-merger planning and restructuring efforts. The effective rate
for 1996, including the special one-time charge, was 39.5 percent.
1995 COMPARED TO 1994
Overview
Net sales for 1995 were $2,736.1 million and gross margins were $690.0
million. Net earnings for 1995 were $193.3 million, or $2.12 per share,
before a charge of $5.9 million, or $0.06 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 $6.5 million, or $0.07 per share,
related to the early extinguishment of debt. After these items, net
earnings were $180.9 million, or $1.99 per share.
Net sales for 1994 were $2,125.3 million and gross margins were $382.7
million while net earnings, before an extraordinary charge, were $44.4
million, or $0.54 per share. For 1994, operating results included an
extraordinary charge of $25.2 million, or $0.31 per share, related to
<PAGE>
the early extinguishment of debt. Net earnings for 1994, after this
item, were $19.2 million, or $0.23 per share.
Net sales in 1995 increased 29 percent over 1994 levels and gross
margins in 1995 increased 80 percent as compared to results in 1994.
Net earnings before the extraordinary charge and the cumulative effect
of an accounting change in 1995 increased substantially to $193.3
million, compared to $44.4 million before an extraordinary charge in
1994. These increases reflected improved operating results from the
Company's three largest business units and the net impact of various
other operating and non-operating factors discussed below.
IMC-Agrico Crop Nutrients Operations
IMC-Agrico Crop Nutrients 1995 net sales were $1,559.0 million compared
to $1,131.0 million in 1994. This 38 percent increase was the result of
strong concentrated phosphate demand and record purchases of
concentrated phosphates by China. Average concentrated phosphate sales
realizations in 1995, as a result of increased world demand, improved
20 percent over 1994 levels and shipping volume, largely due to
increased purchases by China, increased 18 percent over 1994. These
positive conditions favorably impacted revenues by $375.1 million.
Domestic sales volumes in 1995 for concentrated phosphates were
slightly lower, which was attributed to abnormally wet weather
conditions in the spring, which delayed field work and planting and, as
a result, decreased concentrated phosphate shipments. However, record
purchases by China in 1995 resulted in a 38 percent increase in export
volume as compared to 1994. The increase in export volume contributed
to increased demand in the marketplace and resulted in higher sales
realizations. The balance of the improvement in 1995 net sales
reflected the impact of higher phosphate rock shipments primarily due
to the addition of a long-term domestic customer supply contract in
1995.
Gross margins increased $179.8 million to $335.4 million for 1995 as
compared to $155.6 million for 1994. This significant increase was, as
discussed above, primarily a result of higher prices stemming from
increased world demand and higher sales volume for concentrated
phosphates. Partially offsetting these price and volume increases were
higher production costs caused by higher raw material costs and, to a
lesser degree, remediation costs associated with a sinkhole at
IMC-Agrico's New Wales concentrated phosphate production facility in
Florida. (See Environmental Matters and Note 7, "Non-Recurring Items,"
of Notes to Consolidated Financial Statements for a further discussion
of the sinkhole.)
IMC Kalium Operations
IMC Kalium net sales increased $117.3 million or 33 percent to $472.0
million in 1995 as compared to $354.7 million for 1994. This increase
was primarily a result of the inclusion of a partial year of CCP
shipments and record purchases of potash by China in 1995 which
resulted in higher export volume when compared to 1994, favorably
impacting net sales by $98.7 million. In addition, potash export sales
prices increased approximately 13 percent and domestic prices increased
<PAGE>
one percent, accounting for additional revenues of $18.6 million, as
producer inventory levels were below normal.
IMC Kalium gross margins increased $70.4 million, or 53 percent, to
$204.4 million in 1995 as compared to $134.0 million for 1994 primarily
as a result of higher sales volumes and prices discussed above. Gross
margins in 1995 also reflected improvements associated with lower
production costs versus 1994, reflecting higher production rates and
lower water inflow control spending at the Esterhazy, Saskatchewan
potash mine.
IMC AgriBusiness Operations
IMC AgriBusiness net sales increased 15 percent to $760.8 million in
1995 as compared to $664.2 million in 1994. The increase in net sales
reflected the impact of a nine percent increase in sales prices, as
well as a six percent increase in sales volume, favorably impacting
revenues by $59.3 million and $37.3 million, respectively. The increase
in sales prices and volume primarily reflected the impact of tight
supplies of nitrogen products in the U.S. due to agricultural demand
exceeding capacity. Sales volumes in 1995 reflected the sale of 17
FARMARKETs(registered trademark) in August 1994.
Gross margins increased $24.8 million or 23 percent to $134.8 million
for 1995 as compared to $110.0 million in 1994. The increase in gross
margins reflected the impact of higher sales prices and increased sales
volume discussed above. These price and volume increases were partially
offset by higher raw material and product costs in 1995.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $30.2 million to
$196.0 million in 1995 as compared to $165.8 million in 1994 primarily
due to the acquisition of CCP, higher volume-related expenses, higher
legal expenses and charges related to shifting the marketing and
administrative functions of the Phosphate Chemicals Export Association
to its member companies.
Other Operating Income and Expense, Net
Other operating income and expense, net in 1995 of $9.1 million
included $5.0 million from the sale of land in Florida and $3.0 million
from the amortization of a deferred gain resulting from the exchange of
the Company's phosphate business in 1994 for a 56.5 percent interest in
IMC-Agrico. In 1994, other operating income and expense, net of $27.7
million included $16.0 million (including $12.7 million related to
finished goods inventory) of such deferred gain amortization as well as
a gain of $5.5 million resulting from the sale by IMC-Agrico of a
Florida cattle ranch.
Interest Earned and Other Non-Operating Income and Expense, Net
Interest earned and other non-operating income and expense, net
included a charge of $20.3 million related to the write-down of the
carrying value of the Company's investment in its oil and gas joint
<PAGE>
venture in 1994. (See Note 7, "Non-Recurring Items," of Notes to
Consolidated Financial Statements for further detail.)
Interest Charges
Interest charges in 1995 were $70.2 million, $21.0 million lower than
1994 interest charges of $91.2 million as the Company purchased and
retired a significant portion of its high-cost, long-term indebtedness
throughout the year. Partially offsetting this decrease were interest
charges resulting from long-term debt increases used to fund the
acquisition of CCP and other acquisitions of the Company in 1995.
Income Taxes
The effective tax rate for 1995 was 37.4 percent, compared to an
effective tax rate for 1994 of 43.9 percent. The effective rate
decreased primarily as a result of a deferred tax adjustment resulting
from an increase in U.S. corporate income tax rates.
CAPITAL RESOURCES AND LIQUIDITY
Liquidity and Operating Cash Flow
Cash and cash equivalents as of June 30, 1996 were $9.6 million as
compared to $203.7 million at June 30, 1995. Cash inflows in 1996 of
$342.0 million generated from operating activities partially funded
$242.0 million of cash sharing distributions to FRP, $172.7 million of
capital expenditures, $93.2 million of long-term debt payments, $74.6
million to purchase Feed Ingredients and other acquisitions and $35.5
million of common stock dividend payments. The Company believes that
internally generated cash flow will continue to be its primary source
of funds for such purposes.
The Company's working capital ratio at June 30, 1996 was 2.5:1 versus
2.1:1 at June 30, 1995. Debt to total capitalization improved to 39.8
percent at June 30, 1996 compared to 45.0 percent one year ago. This
decrease was primarily due to a reduction in high-cost, long-term
indebtedness.
Net cash provided by operating activities was $342.0 million, $554.5
million and $165.5 million in 1996, 1995 and 1994, respectively. These
results reflected increased earnings (before special one-time charges
in 1996) over the three year period. The decrease in operating cash
flow in 1996 primarily reflected the impact of increased working
capital levels, largely related to higher receivables and inventories
as a result of prolonged wet weather in the spring. Operating cash flow
for 1994 included the Sterlington litigation settlement payment of
$80.0 million.
Net cash used in investing activities was $234.5 million, $242.7
million and $42.7 million in 1996, 1995 and 1994, respectively. Results
for 1996 reflected the impact of the Feed Ingredients and Madison Seed
acquisitions, as well as higher capital spending, and 1995 results
reflected the impact of the acquisition of CCP. (See also Capital
Spending.)
<PAGE>
Net cash used in financing activities was $301.6 million, $283.7
million and $63.5 million for 1996, 1995 and 1994, respectively. Net
debt repayments in 1996, 1995 and 1994 were $60.1 million, $33.0
million and $158.3 million, respectively. Results in 1994 reflected the
Company's purchase of high-cost, long-term indebtedness in an effort to
reduce interest costs. In addition, as a result of improved earnings
generated by IMC-Agrico, distributions to FRP increased over the
three-year period. Distributions included in net cash used in financing
activities were $242.0 million, $228.1 million and $146.8 million for
1996, 1995 and 1994, respectively. Dividends paid for 1996, 1995 and
1994 were $35.5 million, $24.6 million and $14.2 million, respectively.
Also, during 1996 the Company received $25.8 million of cash related to
the exercise of stock options. In addition, in 1994 the Company issued
common stock, providing $255.6 million of cash from financing
activities.
Capital Spending
Capital expenditures for 1996 were $172.7 million, an increase of $57.8
million over 1995 expenditures of $114.9 million due largely to the
previously announced expansion at the Hersey, MI potash mine, a full
year of capital spending at CCP and purchase and refurbishing of a
currently non-operational ammonia plant. The Company estimates that its
capital expenditures for 1997 will approximate $250.0 million. The
Company expects to finance these expenditures primarily from
operations. Capital expenditures are expected to increase in 1997 as a
result of phosphogypsum stack and settling area expansion projects as
well as purchases of mineral reserves. Pursuant to the Partnership
Agreement, IMC-Agrico is required to obtain the approval of the Policy
Committee of IMC-Agrico (which consists of two representatives each
from the Company and FRP) prior to making capital expenditures for
expansion of its business in any fiscal year in excess of $5.0 million
(adjusted annually for inflation). In the event that the Policy
Committee fails to approve future capital expenditures, IMC-Agrico's
ability to expand its business could be adversely affected. (See
Environmental Matters for a discussion of environmental capital
expenditures.)
Financing
On February 28, 1996, the Company entered into an unsecured credit
facility (Credit Facility) with a group of banks. Under the terms of
the Credit Facility, the Company and certain of its subsidiaries may
borrow up to $450.0 million under a revolving credit facility which
matures on March 1, 1999 and $50.0 million under a long-term credit
facility which matures on March 2, 2001. At August 23, 1996, the
Company and its subsidiaries had borrowed $7.0 million under the
revolving credit facility and $50.0 million under the long-term
facility. Additionally, $33.4 million was drawn under the Credit
Facility as letters of credit principally to support industrial revenue
bonds and other debt and credit risk guarantees.
Simultaneously with the execution of the Credit Facility, the Company
and one of its subsidiaries assumed, and amended certain terms of,
unsecured term loans of Vigoro and one of its subsidiaries. The $120.0
<PAGE>
million unsecured term loans (Term Loans) bear interest at rates
between 7.37 percent and 7.43 percent and mature at various times
between 2000 and 2005.
IMC-Agrico also has an agreement with a group of banks to provide it
with a $75.0 million unsecured revolving credit facility (Initial
Facility) until February 1997. At August 23, 1996, $30.0 million was
outstanding under the Initial Facility. In addition, in May 1996
IMC-Agrico entered into two additional unsecured revolving credit
facilities under which it may borrow up to $75.0 million until February
1997 (collectively with the Initial Facility, IMC-Agrico Working
Capital Facility). On August 23, 1996, $25.0 million was borrowed under
these additional facilities.
The Credit Facility and Term Loans contain provisions which (i)
restrict the Company's ability to make capital expenditures and dispose
of assets, (ii) limit the payment of dividends or other distributions
to stockholders, and (iii) limit the incurrence of additional
indebtedness. These debt instruments also contain various financial
ratios and covenants. The IMC-Agrico Working Capital Facility also
contains various financial ratios and covenants, places limitations on
indebtedness of IMC-Agrico and restricts the ability of IMC-Agrico to
make cash distributions in excess of Distributable Cash (as defined in
the Partnership Agreement). 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
$5.0 million (adjusted annually for inflation) in indebtedness
(excluding a total of $125.0 million of indebtedness under the
IMC-Agrico Working Capital Facility).
Under an 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 $65.0 million. At June
30, 1996 IMC-Agrico had sold $59.5 million of such receivable
interests.
On July 25, 1996, the Company commenced tender offers to purchase all
of its outstanding 9.25 percent senior notes due 2000, 10.125 percent
senior notes due 2001 and 10.75 percent senior notes due 2003
(collectively, Senior Notes). At July 25, 1996 the principal amount of
the Senior Notes was $176.3 million. The purchase of the Senior Notes
will be financed with lower cost borrowings at floating rates under the
Company's Credit Facility. The Company expects to record an
extraordinary loss of approximately $12.0 million, net of taxes, in the
first quarter of 1997 if all of the Senior Notes are purchased.
Joint Venture Partnership
On July 1, 1993, the Company and FRP contributed their respective
phosphate businesses, including the mining and sale of phosphate rock
and the production, distribution and sale of concentrated phosphates,
uranium oxide and related products, to a joint venture partnership in
return for a 56.5 percent and 43.5 percent economic interest,
respectively, in IMC-Agrico, over the term of the partnership.
IMC-Agrico is governed by the Policy Committee and is being operated by
<PAGE>
an affiliate of the Company. The Partnership Agreement contains a cash
sharing arrangement under which Distributable Cash, as defined in the
agreement, was shared at a ratio of 46.9 percent and 53.1 percent in
1996 (until March 1, 1996) to the Company and FRP, respectively.On
January 23, 1996, the Company and FRP entered into certain amendments
to the Partnership Agreement in part to reflect possible changes in the
nature of the business of the Company resulting from the Merger. These
amendments provide for (i) a shift of 0.85 percent of Distributable
Cash interest of IMC-Agrico from the Company to FRP beginning March 1,
1996, (ii) changes to certain IMC-Agrico governance procedures,
including the establishment of a new office of President for IMC-
Agrico, who is 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(registered trademark) distribution network, and (iv) the
establishment of criteria under which certain acquisitions by the
Company's Rainbow(registered trademark) or FARMARKET networks would not
be required to be offered to IMC-Agrico.
For 1996, the total amount of Distributable Cash generated by
IMC-Agrico was $465.3 million, of which $248.0 million was distributed
to FRP, including $57.7 million distributed in August 1996.
Distributable Cash sharing percentages will be adjusted until July 1,
1997, when the sharing ratios will be fixed at 58.5 percent and 41.5
percent to the Company and FRP, respectively.
Derivatives
The Company periodically enters into DAP futures contracts and options
to purchase natural gas to manage its exposure to price fluctuations.
The Company also has periodically entered into forward exchange
contracts to hedge the effect of Canadian dollar exchange rate changes.
Net hedging gains and losses are recognized as part of the transactions
hedged and were not material during 1996. The Company monitors its
market risk on an ongoing basis and currently considers such risk to be
minimal.
Contingencies
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
<PAGE>
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 $75.0 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 $100.0 million and the $15.0 million that ACE 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 October 1996 in Texas state court with respect to Angus'
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 October 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
A number of class action suits have been filed in United States federal
courts, two California state courts and an Illinois state court against
most of the North American potash producers, including the Company. The
complaints essentially allege that the North American potash producers
acted together to fix the price of potash sold in the United States.
The complaints do not specify the amount of damages sought by the
plaintiffs. All of the complaints seek treble damages and attorneys'
fees and ask that the court find the defendants jointly and severally
liable.
Suits filed in federal courts in Minnesota, Illinois and Virginia have
been consolidated in Minnesota. All of the claims in these suits are
asserted on behalf of a purported group of direct purchasers of potash
in the United States, which class has been certified by the court.
Discovery is now concluded in the case and defendantsO motions for
summary judgment have been filed.
In addition to the direct purchaser actions filed in the United States
District Courts, two complaints have been filed in California state
courts on behalf of indirect purchasers residing in California. The
Company has answered both of the California complaints and has denied
all material allegations. These cases are still in a preliminary stage
and no discovery has been conducted.
The case filed in Illinois state court has been dismissed for failure
to state a claim. Plaintiffs have appealed the dismissal.
<PAGE>
The Company is not able to estimate the amount of damages that could
ultimately be sought in the civil suits. Based upon available
information, management of the Company believes that the Company has
not acted in concert with others to fix prices in violation of the
United States antitrust laws or any other laws. There can be no
assurance, however, that these cases will ultimately be decided in a
manner favorable to the Company. In connection with the Company's
Colonsay mine, affiliates of Noranda, from whom the Company purchased
the mine in January 1995, are also named as defendants in the civil
suits. The Company did not agree to assume any liabilities of Noranda
or such affiliates with respect to operations at Colonsay prior to the
closing of the purchase which may arise out of such antitrust
litigation, and the Company is entitled to be indemnified by Noranda
against such liabilities should they arise.
The Antitrust Division of the United States Department of Justice had
been conducting a grand jury investigation into allegations similar to
those made in the civil actions. The Company was advised that the
investigation was concluded and a spokesperson for the Antitrust
Division has stated that no action will be taken.
FTC Phosphate Operations Inquiry
The Company was notified on October 2, 1995 by the Federal Trade
Commission (FTC) that the FTC is conducting an investigation to
determine whether manufacturers of concentrated phosphates may have
violated Section 5 of the Federal Trade Commission Act, as amended, by
agreeing to restrict output or raise prices. The FTC has requested that
the Company provide certain information and documents regarding the
Company's phosphate operations. The Company has submitted responsive
information and documents to the FTC. The FTC has stated that neither
its request for information and documents nor the fact it has commenced
an investigation should be construed as indicating that a violation has
occurred or is occurring.
Other
Since December 1985, the Company has experienced an inflow of water
into one of its two interconnected potash mines at Esterhazy. As a
result, the Company has incurred additional costs to control the
flooding. The Company has significantly reduced the water inflow since
the initial discovery and has been able to meet all sales obligations
and requirements from production at the mines. Despite the relative
success of such measures, there can be no assurance that the amounts
required for remedial efforts in future years will not increase or that
inflow or remediation costs will not increase to a level which would
cause the Company to change its mining process or abandon the mines.
The long-term outlook of the water inflow has caused the Company to
consider alternatives to its current mining operations at Esterhazy.
Any solution to the water inflow situation at the mines may result in
substantial capital expenditures and/or charges to operations.
Like other potash producers' shaft mines, the Company's Colonsay mine
is also subject to the risks of inflow of water as a result of its
shaft mining operations.
<PAGE>
The Saskatchewan potash mining industry generally has been unable to
secure insurance to cover other risks associated with underground
operations. Therefore, the Company's underground mine operations are
not presently insured against, and are not insurable against, business
interruption or risk from catastrophic perils, including collapse,
floods and other water inflow.
The Company does not consider the impact of inflation to be significant
in the business in which it operates.
ENVIRONMENTAL MATTERS
General
In the normal course of its business, the Company mines phosphate and
potash, manufactures and blends crop nutrients, and blends crop
nutrients with pesticide products. These operations are subject to
federal, state, provincial and local environmental, health and safety
laws in the United States and Canada, including laws related to air and
water quality; management of hazardous and solid wastes; management and
handling of raw materials and products; and land reclamation. The
Company has expended, and anticipates that it will continue to expend,
substantial resources, both financial and managerial, to comply with
environmental regulations, permitting and reclamation requirements, and
health and safety standards. Additionally, although the Company
believes that its operations generally satisfy environmental standards,
there can be no assurance that costs, penalties or liabilities will not
be incurred. The Company does not believe that its expenditures for
environmental, health or safety compliance have had a material adverse
effect on its operations or financial condition.
For fiscal year 1996, environmental capital expenditures totaled
approximately $21.2 million, and were primarily related to air
emissions permitting and control, ground and surface water protection,
wastewater treatment and control, and solid waste management.
Additional expenditures for land reclamation activities totaled $19.2
million. For fiscal year 1997, the Company expects environmental
capital expenditures to be approximately $46.0 million and expenditures
for land reclamation activities to be approximately $24.0 million.
Environmental capital is expected to increase in 1997 as a result of
phosphogypsum stack and settling area expansion projects as well as
spending for air emissions control. No assurance can be given that
greater environmental expenditures will not be required for fiscal year
1997, or that environmental expenditures in future years will not
increase.
Environmental, health and safety laws and regulations in the United
States and Canada have changed substantially and rapidly in recent
years, and the Company anticipates that these changes will continue. It
is the Company's policy to comply with all applicable environmental,
health and safety laws and regulations. It is difficult to estimate
future compliance costs, however, if implementing regulations have not
yet been finalized or are subject to varying and conflicting
interpretations. Nevertheless, because new environmental standards
<PAGE>
generally are more restrictive than current requirements, the costs of
complying with such regulations will likely increase.
Permitting
The Company holds numerous environmental and other permits authorizing
operations at each of its facilities. A decision by a government agency
to deny an application for a new or renewed permit, or to revoke or
substantially modify an existing permit, could have a material adverse
effect on the Company's ability to continue operations at the affected
facility. Expansion of Company operations also is predicated upon
securing the necessary environmental and other permits.
Air Quality
The 1990 Amendments to the Clean Air Act require certain sources to
increase controls on emissions of conventional and hazardous air
pollutants. During 1996, several of the Company's facilities have
applied for, or will apply for, such operating permits. In addition, by
the year 2000 the United States Environmental Protection Agency is
expected to promulgate control standards for hazardous air pollutants
applicable to certain of the Company's operations. Capital
expenditures, which could be significant, might be necessary to meet
the regulatory or permit requirements. Because the operating permits
have not been issued and the regulatory requirements have not been
finalized, the Company cannot estimate the extent of these
expenditures.
Process Safety Management and Risk Management Planning
Several of the Company's facilities handle certain chemicals above the
regulatory threshold. These facilities are subject to Process Safety
Management (PSM) standards under the Occupational Safety and Health Act
and to the recently promulgated Risk Management Planning (RMP)
requirements under the Clean Air Act. PSM standards require covered
facilities with processes that handle certain chemicals to implement
written safety management plans, procedures and employee training. RMP
rules require covered facilities to establish plans for preventing and
responding to accidental releases. Under RMP, facilities also must
release to the public information about regulated processes and release
prevention programs, the potential for accidental releases and the
facility's "worst case" release scenarios and their potential effects
on nearby populations. The Company continues to implement the required
programs and prepare for compliance with the new RMP rule. As
compliance efforts proceed, the anticipated costs to complete these
planning processes could be substantial.
Management of Residual Materials
Phosphate and potash mining and processing produce tailings or other
residual materials that must be managed. Phosphate residuals,
consisting primarily of phosphogypsum, typically are stored in
phosphogypsum stack systems. Potash producers generally store tailings,
which contain primarily salt, iron and clay, in surface disposal sites.
The Company has incurred and will continue to incur significant costs
<PAGE>
to manage its phosphate and potash residual materials in accordance
with environmental laws, regulations and permit requirements.
To address concerns about potash tailings management, the Saskatchewan
Department of Environmental and Resource Management (the Department)
published regulations in 1994 requiring all potash mine operators: (i)
to submit facility decommissioning and reclamation plans for approval;
and (ii) to provide assurances that the plans will be carried out. The
decommissioning and reclamation plans and related assurances cover all
facilities at a mine, including surface disposal sites for potash
tailings. The Company has filed or will file its decommissioning plans
during calendar 1996. Implementation of the plans probably will be
deferred until an affected facility is closed, which the Company does
not anticipate in the foreseeable future. Until all of the
decommissioning plans have been prepared, the Company, like all members
of the Saskatchewan potash industry, is unable to predict with
certainty the financial impact of the regulation on the Company.
With regard to phosphate processing, Florida law may require IMC-Agrico
to close one or more of its unlined phosphogypsum stacks and/or
associated cooling ponds after March 25, 2001, if the stack system is
demonstrated to cause a violation of FloridaOs water quality standards.
IMC-Agrico has already filed an application with FloridaOs Department
of Environmental Protection to close the unlined gypsum stack at its
New Wales facility in central Florida. Closure activities would begin
on July 1, 1998 and would cost approximately $2.5 million, net of
recorded accruals, for construction activities over a period of five
years. IMC-Agrico cannot predict at this time whether Florida will
require closure of any of its stack systems. The costs of such closure
could be significant.
IMC-Agrico continues to address elevated sulfate levels in groundwater
at its New Wales facility. In 1992, elevated sulfate levels were
detected in groundwater beneath the cooling pond. In response, the
Central Florida Regional Planning Council required IMC-Agrico to plug
former recharge wells (believed to be the source of the elevated
sulfate levels) and either to show, by September 1997, that groundwater
sulfate levels have returned to acceptable levels or to line or
relocate the cooling pond. Recent monitoring data has evidenced a
downward trend in the sulfate levels. If the downward trend continues,
IMC-Agrico likely will meet the 1997 deadline. If sulfate levels do not
reach acceptable levels, IMC-Agrico will request an extension of the
1997 deadline. The estimated cost to line or relocate the cooling pond
would be between $35.0 million and $68.0 million.
Remedial Activities
The historical use and handling of regulated chemical substances and
crop nutrient products in the normal course of the Company's business
has resulted in contamination at facilities presently or previously
owned or operated by the Company. The Company has also purchased
facilities that were contaminated by previous owners through their use
and handling of regulated chemical substances. Spills or other
unintended releases of regulated substances have occurred in the past,
and potentially could occur in the future, possibly requiring the
<PAGE>
Company to undertake or fund cleanup efforts. The Company cannot
estimate the level of expenditures that may be required in the future
to clean up contamination from the handling of regulated chemical
substances or crop nutrients.
At some locations, the Company has agreed, pursuant to consent orders
with the appropriate governmental agencies, to undertake certain
investigations (which currently are in progress) to determine whether
remedial action may be required to address contamination. The cost of
any remedial actions that ultimately may be required at these sites
currently cannot be determined.
The Company believes that it is entitled to at least partial
indemnification for a portion of the costs that may be expended by the
Company to remedy environmental issues at certain facilities and
operations pursuant to indemnification agreements. These agreements
address issues that resulted from activities occurring prior to the
Company's acquisition of facilities from parties including: PPG
Industries, Inc., Kaiser Aluminum & Chemical Corporation, Beatrice
Companies, Inc., Estech, Inc., and certain private parties. The Company
has already received and anticipates receiving amounts pursuant to the
indemnification agreements for certain of its expenses incurred to
date.
Superfund
The Comprehensive Environmental Response Compensation Liability Act
(CERCLA), also known as "Superfund," imposes liability, without regard
to fault or to the legality of a party's conduct, on certain categories
of persons that are considered to have contributed to the release of
"hazardous substances" into the environment. Currently, the Company is
involved in or concluding involvement at a number of Superfund sites.
With one possible exception, discussed below, at none of these sites
alone, nor in the aggregate, is the Company's liability currently
expected to be material. As more information is obtained regarding the
sites and the potentially responsible parties (PRPs) involved, this
expectation may change.
IMC-Agrico is one of 70 PRPs participating in investigation of the
Petroleum Products Site. To date, the PRP group has spent approximately
$2.7 million to address waste oil remaining on site, and expects to
spend up to $6.0 million on these activities. Remedial cost estimates
to clean up on-site soils and structures range from $2.0 million to
$40.0 million. Cost estimates have not yet been developed for
groundwater remediation. IMC-Agrico tentatively has been allocated
20,774 gallons of waste oil based on ledger entries, which places
IMC-Agrico 27th on the list of 70 members within the PRP group. The
group also has identified approximately 1,000 additional PRPs. Because
investigation of the site is incomplete and the required remedy has not
been selected, a reliable estimate of cleanup costs, and IMC-Agrico's
contribution to those costs, cannot be made at this time.
<PAGE>
To the Board of Directors and Stockholders of IMC Global Inc.
We have audited the accompanying consolidated balance sheet of IMC
Global Inc. (formed as a result of the consolidation of IMC Global Inc.
and The Vigoro Corporation) as of June 30, 1996 and 1995 and the
related consolidated statements of earnings, cash flows and changes in
stockholders' equity for each of the three years in the period ended
June 30, 1996. The consolidated financial statements give retroactive
effect to the merger of IMC Global Inc. and The Vigoro Corporation on
March 1,1996, which has been accounted for using the pooling of
interests method as described in the notes to the consolidated
financial statements. These consolidated financial statements are the
responsibility of the management of IMC Global Inc. Our responsibility
is to express an opinion on these consolidated financial statements
based on our audits. We did not audit the 1995 and 1994 financial
statements of The Vigoro Corporation which statements reflect total
assets of 24% and net sales of approximately 34% of the related
consolidated financial statement totals as of June 30, 1995 and for the
two years then ended. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it
relates to data included for The Vigoro Corporation, is based solely on
the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors,
the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of IMC
Global Inc. at June 30, 1996 and 1995, and the consolidated results of
its operations and its cash flows for each of the three years in the
period ended June 30, 1996, after giving retroactive effect to the
merger of The Vigoro Corporation, as described in notes to the
consolidated financial statements, in conformity with generally
accepted accounting principles.
As discussed in the notes to consolidated financial statements, the
Company changed its method of accounting for postemployment benefits in
1995.
Ernst & Young LLP
Chicago, Illinois
July 31, 1996
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
Years ended June 30,
---------------------
(In millions except per share amounts) 1996 1995 1994
- -----------------------------------------------------------------------
Net sales $2,981.0 $2,736.1 $2,125.3
Cost of goods sold 2,230.1 2,046.1 1,742.6
Gross margins 750.9 690.0 382.7
Selling, general and administrative
expenses 223.4 196.0 165.8
Merger and restructuring charges 43.3
Other operating (income) and
expense, net (4.1) (9.1) (27.7)
-------- -------- --------
Operating earnings 488.3 503.1 244.6
Interest earned and other non-operating
(income) and expense, net (6.4) (6.3) 18.6
Interest charges 64.8 70.2 91.2
-------- -------- --------
Earnings before minority interest
and items noted below 429.9 439.2 134.8
Minority interest 191.5 130.4 55.6
-------- -------- --------
Earnings before items noted below 238.4 308.8 79.2
Provision for income taxes 94.1 115.5 34.8
-------- -------- --------
Earnings before extraordinary item
and cumulative effect of accounting
change 144.3 193.3 44.4
Extraordinary loss - debt retirement (6.5) (25.2)
Cumulative effect on prior years of
change in accounting for
postemployment benefits (5.9)
-------- -------- --------
Net earnings $ 144.3 $ 180.9 $ 19.2
======== ======== ========
EARNINGS PER SHARE:
Earnings before extraordinary item
and cumulative effect of
accounting change $ 1.56 $ 2.12 $ .54
Extraordinary loss - debt retirement (.07) (.31)
Cumulative effect of accounting
change (.06)
-------- -------- --------
Net earnings $ 1.56 $ 1.99 $ .23
======== ======== ========
Weighted average number of shares
and equivalent shares outstanding 92.7 91.0 82.3
(See Notes to Consolidated Financial Statements)
<PAGE>
CONSOLIDATED BALANCE SHEET
(Dollars in millions except per share amounts) At June 30,
----------------------
ASSETS 1996 1995
- ----------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 9.6 $ 203.7
Receivables, net 350.2 236.5
Inventories
Products (principally finished) 375.6 303.6
Operating materials and supplies 101.1 89.3
-------- --------
476.7 392.9
Deferred income taxes 61.4 79.5
Other current assets 20.3 13.6
-------- --------
Total current assets 918.2 926.2
Property, plant and equipment 4,123.6 3,971.3
Accumulated depreciation and depletion (1,772.3) (1,714.1)
-------- --------
Net property, plant and equipment 2,351.3 2,257.2
Other assets 167.3 139.8
-------- --------
Total assets $3,436.8 $3,323.2
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 193.5 $ 197.2
Accrued liabilities 145.1 170.7
Short-term debt and current maturities of
long-term debt 27.8 74.1
-------- --------
Total current liabilities 366.4 442.0
Long-term debt, less current maturities 736.7 750.2
Deferred income taxes 315.7 306.2
Other noncurrent liabilities 352.0 306.8
Minority interest 509.7 510.2
STOCKHOLDERS' EQUITY:
Common stock, $1 par value, authorized
250,000,000 shares; issued 97,863,784 and
96,408,200 shares in 1996 and 1995,
respectively 97.9 96.4
Capital in excess of par value 821.7 782.6
Retained earnings 359.1 246.1
Treasury stock, at cost, 5,545,884 and
5,552,840 shares in 1996 and 1995,
respectively (107.3) (107.4)
Foreign currency translation adjustment (15.1) (9.9)
-------- --------
Total stockholders' equity 1,156.3 1,007.8
-------- --------
Total liabilities and stockholders' equity $3,436.8 $3,323.2
======== ========
(See Notes to Consolidated Financial Statements)
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended June 30,
------------------------------
(In millions) 1996 1995 1994
- ----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 144.3 $ 180.9 $ 19.2
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Minority interest 179.2 130.4 55.6
Depreciation, depletion and
amortization 168.6 166.4 147.1
Merger and restructuring charges 67.3
Deferred income taxes .3 16.9 (4.5)
Postemployment employee benefits 9.5
Sterlington litigation settlement (80.0)
Other charges and credits, net (3.5) (11.2) (29.3)
Changes in:
Receivables, net (96.0) 49.3 60.7
Inventories (55.4) (27.7) 92.0
Other current assets (7.2) .3 9.3
Accounts payable (20.2) 14.1 (81.8)
Accrued liabilities (35.4) 25.6 (22.8)
------- ------- -------
Net cash provided by operating
activities 342.0 554.5 165.5
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (172.7) (114.9) (76.0)
Acquisitions of businesses, net of
cash acquired (74.6) (142.4)
Sale of investment 11.6
Sales of property, plant and equipment 1.2 14.6 33.3
------- ------- -------
Net cash used in investing
activities (234.5) (242.7) (42.7)
------- ------- -------
Net cash provided before
financing activities 107.5 311.8 122.8
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Joint venture cash distributions to FRP (242.0) (228.1) (146.8)
Payments of long-term debt (93.2) (182.0) (437.2)
Proceeds from issuance of long-term
debt, net 75.6 131.5 276.0
Changes in short-term debt, net (42.5) 17.5 2.9
Cash dividends paid (35.5) (24.6) (14.2)
Stock options exercised 25.8 2.0 .2
Issuances of common stock from treasury 255.6
Other 10.2
------- ------- -------
Net cash used in financing
activities (301.6) (283.7) (63.5)
------- ------- -------
<PAGE>
Net change in cash and cash equivalents (194.1) 28.1 59.3
Cash and cash equivalents-beginning
of year 203.7 175.6 116.3
------- ------- -------
Cash and cash equivalents-end of year $ 9.6 $ 203.7 $ 175.6
======= ======= =======
Supplemental cash flow disclosures:
Interest paid $ 67.0 $ 70.6 $ 86.9
Income taxes paid, net of refunds $ 125.3 $ 84.7 $ 12.8
Supplemental schedule of non-cash
investing and financing activities:
Issuance of common stock for
acquisitions $ 14.9 $ 4.5 $ 47.2
(See Notes to Consolidated Financial Statements)
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCHOLDERS' EQUITY
Foreign
Capital in Currency
Common Excess of Retained Treasury Translation
(In millions except Stock Par Value Earnings Stock Adjustment
per share amounts)
- ----------------------------------------------------------------------
Balance at June 30, 1993$ 96.3 $813.1 $ 85.6 $(392.7) --
Net earnings 19.2
Sale of common stock (34.1) 289.7
Dividends ($.15 per
share) (14.6)
Restricted stock awards .2 1.5 (4.1)
Stock options exercised
and other (.5) (3.3)
------ ------ ------ ------ ------
Balance at June 30, 1994 96.0 777.2 90.2 (107.1) --
Net earnings 180.9
Dividends ($.26 per
share) (25.0)
Restricted stock awards .3
Stock options exercised
and other .4 5.1 (.3)
Foreign currency trans-
lation adjustment $ (9.9)
------ ------ ------ ------ ------
Balance at June 30, 1995 96.4 782.6 246.1 (107.4) (9.9)
Net earnings 144.3
Dividends ($.33 per
share) (31.3)
Stock options exercised
and other 1.1 24.6 (.1)
Issuance of common stock
pursuant to acquisitions .4 14.5 .2
Foreign currency trans-
lation adjustment (5.2)
------ ------ ------ ------ ------
Balance at June 30, 1996$ 97.9 $821.7 $359.1 $(107.3) $(15.1)
====== ====== ====== ====== ======
(See Notes to Consolidated Financial Statements)
<PAGE>
1. BUSINESS OF THE COMPANY
IMC Global Inc. (the Company), which operates in a single industry
segment, is the parent corporation of several subsidiaries and joint
venture operations which together comprise one of the world's leading
producers of phosphate and potash crop nutrients as well as animal feed
ingredients. The Company mines and processes potash in the United
States and Canada and has a 56.5 percent interest in IMC-Agrico Company
(IMC-Agrico), the nation's leading producer, marketer and distributor
of phosphate crop nutrients and animal feed ingredients. The Company
also markets and distributes crop nutrients and related products on a
wholesale basis through independent dealers and cooperatives, and on a
retail basis through its farm service outlets. In addition, the
Company sells potash and certain other products to industrial users in
the United States and Canada. Through its interests in other joint
ventures, the Company also produces sulphur and oil and natural gas.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the
Company and all subsidiaries which are more than 50 percent owned and
controlled; the Company proportionately consolidates its 25 percent
interest in the sulphur joint venture. All significant intercompany
accounts and transactions are eliminated in consolidation. Certain
amounts in the consolidated financial statements for periods prior to
June 30, 1996 have been reclassified to conform to the current
presentation. The Company's fiscal year ends June 30.
Use of Estimates
Management is required to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents which are
reflected at their approximate fair value. The effect of foreign
currency exchange rate fluctuations on the total cash and cash
equivalents balance was not significant.
Concentration of Credit Risk
Domestically, the Company sells its products to farmers primarily in
the midwestern and southeastern United States. Internationally, the
Company's products are sold primarily through one Canadian and three
U.S. export associations. In 1996, sales of phosphate crop nutrients
to China accounted for approximately 16 percent of the Company's net
sales. No single customer accounted for more than 10 percent of the
Company's net sales.
Inventories
Inventories are valued at the lower of cost or market (net realizable
value). Cost for substantially all of the Company's inventories is
calculated on a cumulative annual average cost basis. Cost for the
remaining portion of inventories, primarily for products sold through
the Company's retail farm service outlets, is determined using the
first-in, first-out method.
<PAGE>
Property, Plant and Equipment
Property (including mineral deposits), plant and equipment are carried
at cost. Cost of significant assets includes capitalized interest
incurred during the construction and development period. Expenditures
for replacements and improvements are capitalized; maintenance and
repair expenditures are charged to operations when incurred.
Depreciation and depletion expenses for mining and production
operations, including mineral interests, are determined using the
unit-of-production method based on estimates of recoverable reserves.
Other asset classes or groups are depreciated or amortized on a
straightDline basis over their estimated useful lives as follows:
buildings, 17 to 45 years; machinery and equipment, 3 to 25 years.
Goodwill
Goodwill, representing the excess of purchase cost over the fair value
of net assets of acquired companies, is generally amortized using the
straight-line method over periods not exceeding 40 years. At June 30,
1996 and 1995, goodwill, included in other assets in the Consolidated
Balance Sheet, totaled $68.1 million and $32.9 million, respectively.
Postemployment Benefits
The Company provides benefits such as workers' compensation and
disabled employee medical care to certain former or inactive employees
after employment but before retirement. Effective July 1, 1994, the
Company adopted Statement of Financial Accounting Standards (SFAS) No.
112, "Employers' Accounting for Postemployment Benefits," which
requires the Company to accrue the cost of providing such
postemployment benefits when the event occurs giving rise to the
obligation.
Stock-Based Compensation Plans
In December 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation," which establishes a
fair value-based method of accounting for stock-based compensation
plans. Under SFAS No. 123, the Company has the option of either
accounting for its stock-based compensation plans under the fair value
method or continuing under the accounting provisions of Accounting
Principles Board Opinion No. 25 (APB No. 25). The Company intends to
continue accounting for its stock-based compensation plans under the
provisions of APB No. 25 and, accordingly, no compensation cost has
been charged to operations for options granted.
Accrued Environmental Costs
The Company's activities include the mining of phosphate and potash,
the manufacturing and blending of crop nutrients, and the blending of
crop nutrients with pesticide products. These operations are subject to
extensive federal, state, provincial and local environmental
regulations in the United States and Canada, including laws related to
air and water quality; management of hazardous and solid wastes;
management and handling of raw materials and products; and the
restoration of lands disturbed by mining and production activities.
Expenditures that relate to an existing condition caused by past
operations of the Company or prior land owners, and which do not
contribute to current or future revenue generation, are charged to
<PAGE>
operations. Liabilities are recorded when environmental remedial
efforts are probable and the cost of such efforts can be reasonably
estimated. Revisions to current estimates are made when costs of
required remedial efforts change.
Provincial Resource Taxes
The Company's Canadian potash mining operations are subject to certain
royalty and production taxes (provincial resource taxes). Accordingly,
provincial resource taxes have been included in cost of goods sold in
the Consolidated Statement of Earnings.
Derivatives
The Company periodically enters into DAP futures contracts and options
to purchase natural gas to manage its exposure to price fluctuations.
In addition, the Company has entered into forward exchange contracts to
hedge the effect of Canadian dollar exchange rate changes. Net hedging
gains and losses are recognized as a part of the transactions hedged
and were not significant in the years ended June 30, 1996, 1995 and
1994. The Company monitors its market risk on an ongoing basis and
considers such risk to be minimal.
Foreign Currencies
Effective July 1, 1994, the functional currency of one of the Company's
Canadian subsidiaries was changed to the Canadian dollar and on March
1, 1996, the Company determined the functional currency to be the
Canadian dollar for all of its Canadian operations. As of June 30,
1996, the Company's cumulative foreign currency translation adjustment
resulted in a reduction of stockholders' equity of $15.1 million, which
was offset principally by a decrease to property, plant and equipment,
net, and an increase in deferred income taxes.
Earnings Per Share
All share and per share information appearing in the consolidated
financial statements and notes herein give effect to the Company's
2-for-1 stock split effected in the form of a 100 percent stock
dividend which was distributed on November 30, 1995.
Earnings per share are based on the weighted average number of shares
and equivalent shares outstanding. Fully diluted earnings per share
are not significantly different from primary earnings per share and,
accordingly, are not presented.
3. VIGORO MERGER
On March 1, 1996, the Company completed a merger with The Vigoro
Corporation (Vigoro) that resulted in Vigoro becoming a subsidiary of
the Company (the Merger). Upon consummation of the Merger, the Company
issued approximately 32.4 million shares of its common stock in
exchange for all of the outstanding shares of Vigoro. The Merger was
structured to qualify as a taxDfree reorganization for income tax
purposes and was accounted for as a pooling of interests. Accordingly,
the Company's financial statements have been restated for all periods
to reflect the Merger.
<PAGE>
Summarized operating results of the Company and Vigoro for the eight
months ended February 29, 1996 and the years ended June 30, 1995 and
1994 were as follows:
Eight months
ended
February 29, Years ended June 30,
------------ --------------------
1996 1995 1994
- ----------------------------------------------------------------------
IMC GLOBAL INC.
Net sales $1,413.5 $1,924.0 $1,441.5
Extraordinary item (6.5) (25.2)
Accounting change (5.9)
Net earnings (loss) 102.8 114.7 (28.8)
THE VIGORO CORPORATION
Net sales $ 406.5 $ 871.4 $ 719.6
Net earnings 12.7 66.2 48.0
INTERCOMPANY SALES ELIMINATION $ (41.1) $ (59.3) $ (35.8)
COMBINED
Net sales $1,778.9 $2,736.1 $2,125.3
Extraordinary item (6.5) (25.2)
Accounting change (5.9)
Net earnings 115.5 180.9 19.2
4. MERGER AND RESTRUCTURING CHARGES
In connection with the Merger, the Company recorded charges totaling
$20.2 million, primarily for consulting, legal and accounting services.
Immediately following the Merger, the Company adopted a plan to
restructure its business operations into a decentralized organizational
structure with five stand-alone business units. As a result, the
Company recorded restructuring charges totaling $23.1 million. The
charges consisted of: (i) $10.6 million for severance and related
benefits from staff reductions resulting from the termination of
approximately 120 employees, primarily middle management personnel;
(ii) $6.5 million for lease terminations resulting from office
consolidations, and (iii) $6.0 million for other related actions. As
of June 30, 1996, the following amounts were paid: (i) $20.2 million
for charges relating to the Merger, (ii) $5.7 million relating to the
termination of approximately 89 employees (the remaining $4.9 million
relating to the other 31 employees is expected to be paid out during
fiscal 1997), and (iii) $0.4 million related to other actions.
In connection with the restructuring plan, the Company undertook a
detailed review of its accounting records and valuation of various
assets and liabilities. As a result, the Company recorded charges
totaling $58.3 million ($55.3 million net of minority interest)
comprised of (i) $26.3 million ($23.3 million net of minority interest)
to cost of goods sold of which $17.5 million was primarily related to
the write-off of certain idle plant facilities and other obsolete
assets, $5.0 million for environmental matters and $3.8 million for
other matters; (ii) $2.4 million of general and administrative expenses
for the write-off of miscellaneous assets; (iii) $16.6 million to other
operating income and expense to reduce certain long-term assets to net
<PAGE>
realizable value and other provisions, and (iv) $13.0 million to
minority interest for the transfer of 0.85 percent of IMC-Agrico
Distributable Cash (as defined) interest from the Company to Freeport-
McMoRan Resource Partners, Limited Partnership (FRP) pursuant to
certain amendments to the IMC-Agrico Partnership Agreement. During the
year ended June 30, 1996, $24.0 million of assets were written off.
5. ACQUISITIONS
In January 1995, the Company acquired substantially all of the assets
of the Central Canada Potash division (CCP) of Noranda, Inc. (Noranda)
for $121.1 million, plus $16.2 million for working capital. The
Company used proceeds borrowed under a credit facility to finance the
purchase price, while using operating cash to acquire the working
capital. The CCP potash mine, located in Colonsay, Saskatchewan,
utilizes shaft mining technology and has a current annual capacity of
1.5 million tons and estimated recoverable reserves of 120 years at
current production levels.
In October 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.
The CCP and Feed Ingredients acquisitions were accounted for under the
purchase method of accounting. Operating results of CCP and Feed
Ingredients (net of minority interest) have been included in the
Company's Consolidated Statement of Earnings since the respective dates
of acquisition.
Pro forma consolidated operating results reflecting these acquisitions
would not have been materially different from reported amounts.
6. JOINT VENTURE PARTNERSHIP
On July 1, 1993, the Company and FRP entered into a joint venture
partnership in which both companies contributed their respective
phosphate businesses to create IMC-Agrico, a Delaware general
partnership, in return for a 56.5 percent and a 43.5 percent economic
interest, respectively, in IMC-Agrico. The activities of IMC-Agrico,
which is operated by the Company, include the mining and sale of
phosphate rock, and the production, distribution and sale of phosphate
crop nutrients, animal feed ingredients, uranium oxide and related
products.
For financial reporting purposes, the acquisition of 56.5 percent of
FRP's phosphate business net assets was accounted for as a purchase and
resulted in a deferred gain which is recognized in the Consolidated
Statement of Earnings as the related FRP assets are being used in
operations, generally over 20 years. Other operating income and
expense, net included $3.1 million from the amortization of such gain
for the year ended June 30, 1996, $3.0 million in 1995 and $16.0
million (including $12.7 million related to finished goods inventory)
in 1994. FRP's 43.5 percent interest in IMC-Agrico has been reported
as minority interest in the Company's Consolidated Balance Sheet, and
the earnings therefrom have been reported as minority interest in the
Company's Consolidated Statement of Earnings.
<PAGE>
IMC-Agrico makes cash distributions to each partner based on formulas
and sharing ratios as defined in the Partnership Agreement. For the
year ended June 30, 1996, the total amount of Distributable Cash
generated by IMC-Agrico was $465.3 million, of which $248.0 million was
distributed to FRP, including $57.7 million distributed in August 1996.
On January 23, 1996, the Company and FRP entered into certain
amendments to the Partnership Agreement. Effective March 1, 1996,
there was a shift of 0.85 percent of Distributable Cash interest of
IMC-Agrico from the Company to FRP.
7. NON-RECURRING ITEMS
Non-recurring items included the following:
Sale of Investments and Land
In 1996, the Company realized a gain of $11.6 million from the sale of
the Company's 50 percent interest in Chinhae Chemical Company, a
producer of crop nutrients located in South Korea. In 1995, a gain of
$5.0 million was realized from the sale of land in Florida. In 1994,
the Company realized a gain of $7.6 million from the sale of 18
FARMARKETs(registered trademark) and three satellite locations and a
gain of $5.5 million ($3.1 million net of minority interest) from
IMC-Agrico's sale of a Florida cattle ranch. These amounts were
included in other operating income.
Remediation
In 1995, provisions totaling $10.3 million ($5.8 million net of
minority interest) were included in cost of goods sold for remediation
costs associated with a sinkhole beneath a phosphogypsum storage stack
at IMC-Agrico's New Wales crop nutrient production facility in Florida
and for repair and cleanup costs related to earthen dam breaches at IMC-
Agrico's Payne Creek and Hopewell phosphate mining facilities in
Florida.
Revaluation of Carrying Value of Investments
In 1994, the Company recorded a charge to non-operating expense of
$20.3 million to reduce the carrying value of the Company's investment
in its oil and gas joint venture resulting from the low price of crude
oil at the time and the resulting effect on estimated future net
revenues from proved reserves. Also included in 1994 was a charge to
other operating expense of $5.6 million, which consisted principally of
a provision to adjust the carrying values of certain investments of the
Company's FARMARKETs(registered trademark) in Florida to estimated net
realizable values.
<PAGE>
8. RECEIVABLES, NET
Accounts receivable at June 30 were as follows:
1996 1995
- -----------------------------------------------------------------------
Trade accounts $380.6 $259.9
Non-trade receivables 37.0 33.1
------ ------
417.6 293.0
Less:
Allowances 7.9 6.5
Receivable interests sold 59.5 50.0
------ ------
$350.2 $236.5
====== ======
The carrying value of accounts receivable was equal to the estimated
fair value of such assets due to their short maturity.
In October 1994, IMC-Agrico entered into a one-year agreement with a
financial institution to sell, on an ongoing basis, an undivided
percentage interest in a designated pool of receivables, subject to
limited recourse provisions, in an amount not to exceed $75.0 million.
In October 1995, this agreement was renewed for an additional one-year
period and the limit on the designated pool of receivables was reduced
to $65.0 million. Related costs, charged to interest earned and other
non-operating income and expense, totaled $3.6 million in 1996 and $2.5
million in 1995. The Company's portion of the proceeds from the
initial sale of receivable interests ($32.5 million) was used primarily
to retire long-term debt.
9. PROPERTY, PLANT AND EQUIPMENT
The Company's investment in property, plant and equipment at June 30 is
summarized as follows:
1996 1995
- -----------------------------------------------------------------------
Land $ 104.9 $ 96.2
Mineral properties and rights 658.9 656.9
Buildings and leasehold improvements 483.5 459.9
Machinery and equipment 2,755.3 2,668.2
Construction in progress 121.0 90.1
-------- --------
4,123.6 3,971.3
Accumulated depreciation and depletion 1,772.3 1,714.1
-------- --------
Net property, plant and equipment $2,351.3 $2,257.2
======== ========
<PAGE>
10. ACCRUED LIABILITIES
Accrued liabilities at June 30 were as follows:
1996 1995
- -----------------------------------------------------------------------
Salaries, wages and bonuses $ 38.3 $ 40.4
Taxes other than income taxes 28.1 33.2
Restructuring charges 14.9
Environmental 14.1 15.5
Income taxes 11.8 35.0
Interest 11.7 9.8
Other 26.2 36.8
------ ------
$145.1 $170.7
====== ======
11. FINANCING ARRANGEMENTS
Short-term borrowings of $22.7 million and $65.1 million as of June 30,
1996 and 1995, respectively, primarily consisted of revolving credit
facilities with various financial institutions and vendor financing
arrangements.
The weighted-average interest rate on short-term borrowings was 6.3
percent for both 1996 and 1995.
Long-term debt at June 30 consisted of the following:
1996 1995
- -----------------------------------------------------------------------
Revolving and long-term credit facilities,
variable rates $ 95.4 $131.8
Term loans, maturing through 2005 120.0 90.0
9.25% Senior notes, due 2000 61.6 61.6
10.125% Senior notes, due 2001 60.4 60.4
10.75% Senior notes, due 2003 54.3 54.3
6.25% Convertible subordinated notes, due 2001 114.9 115.0
9.45% Senior debentures, due 2011 100.0 100.0
7.525% Industrial revenue bonds, due 2015 75.0 75.0
7.7% Industrial revenue bonds, due 2022 27.1 26.8
Other debt 33.1 44.3
------ ------
741.8 759.2
Less current maturities 5.1 9.0
------ ------
$736.7 $750.2
====== ======
On June 30, 1996, the estimated fair value of long-term debt described
above was approximately the same as the carrying amount of such debt in
the Consolidated Balance Sheet. The fair value was calculated in
accordance with the requirements of SFAS No. 107, "Disclosures of Fair
Value of Financial Instruments" and was estimated by discounting the
future cash flows using rates currently available to the Company for
debt instruments with similar terms and remaining maturities.
In 1995, the Company purchased $165.0 million principal amount of its
9.25 percent senior notes due 2000, 10.125 percent senior notes due
<PAGE>
2001 and 10.75 percent senior notes due 2003 (collectively, Senior
Notes) prior to maturity in an effort to reduce higher cost
indebtedness. As a result, the Company recorded an extraordinary loss
of $6.5 million, net of taxes, for the redemption premium and write-off
of previously deferred finance charges. In 1994, the Company recorded
an extraordinary loss of $25.2 million, net of taxes, in connection
with the purchase of $220.0 million principal amount of its 11.25
percent notes and $78.6 million principal amount of its Senior Notes.
On February 28, 1996, the Company entered into an unsecured credit
facility (Credit Facility) with a group of banks. Under the terms of
the Credit Facility, the Company and certain of its subsidiaries may
borrow up to $450.0 million under a revolving credit facility which
matures on March 1, 1999 and $50.0 million under a long-term credit
facility which matures on March 2, 2001. On June 30, 1996, the Company
and its subsidiaries had borrowed $12.0 million under the revolving
credit facility and $50.0 million under the long-term facility.
Additionally, $35.9 million was drawn under the Credit Facility as
letters of credit to support industrial revenue bonds and other debt
and credit risk guarantees.
Simultaneously with the execution of the Credit Facility, the Company
and one of its subsidiaries refinanced certain of its unsecured term
loans. The new $120.0 million unsecured term loans (Term Loans) bear
interest at rates between 7.37 and 7.43 percent and mature at various
times between 2000 and 2005.
The Credit Facility, Term Loans and Senior Notes contain provisions
which (i) restrict the Company's ability to make capital expenditures
and dispose of assets, (ii) limit the payment of dividends or other
distributions to stockholders, and (iii) limit the incurrence of
additional indebtedness. These debt instruments also contain various
financial ratios and covenants.
IMC-Agrico has an agreement with a group of banks to provide it with a
$75.0 million unsecured revolving credit facility until February 1997
(Initial Facility). In addition, in May 1996 IMC-Agrico entered into
two additional unsecured revolving credit facilities under which it may
borrow up to $75.0 million until February 1997 (collectively with the
Initial Facility, IMC-Agrico Working Capital Facility). Borrowings
under the IMC-Agrico Working Capital Facility are unsecured and bear
interest at rates based on a base rate or an adjusted Eurodollar rate.
At June 30, 1996, $9.7 million was drawn under the letter of credit
subfacility. Additionally, at June 30, 1996, $45.4 million was
borrowed under the IMC-Agrico Working Capital Facility at interest
rates between 5.94 and 6.25 percent. This amount has been classified
as long-term debt in the Consolidated Balance Sheet at June 30, 1996 as
IMC-Agrico has the intent and ability to refinance this amount on a
long-term basis.
The IMC-Agrico Working Capital Facility contains various financial
ratios and covenants, places limitations on the 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 (which consists of two
<PAGE>
representatives each from the Company and FRP) prior to incurring more
than an aggregate of $5.0 million (adjusted annually for inflation) in
indebtedness (excluding a total of $125.0 million of indebtedness under
the IMC-Agrico Working Capital Facility).
The convertible subordinated notes are exchangeable for approximately
3.6 million shares of the Company's common stock at $31.75 per share.
Scheduled maturities for the next five years are as follows:
- -----------------------------------------------------------------------
1997 $ 5.1
1998 13.1
1999 5.2
2000 4.1
2001 190.4
On July 25, 1996, the Company commenced tender offers to purchase all
of its outstanding Senior Notes with principal amounts outstanding
totaling $176.3 million. The purchase of the Senior Notes will be
financed with lower cost borrowings at floating rates under the
Company's Credit Facility. The Company expects to record an
extraordinary loss of approximately $12.0 million, net of taxes, in the
first quarter of 1997 if all of the Senior Notes are purchased.
12. OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities at June 30 were as follows:
1996 1995
- -----------------------------------------------------------------------
Employee and retiree benefits $127.2 $122.3
Environmental 102.3 86.8
Deferred gain 40.6 43.7
Restructuring charges 33.4
Other 48.5 54.0
------ ------
$352.0 $306.8
====== ======
13. PENSION PLANS
The Company has non-contributory pension plans that cover approximately
78 percent of its employees. Benefits are based on a combination of
years of service and compensation levels, depending on the plan.
Generally, contributions to the U.S. plans are made to meet minimum
funding requirements of the Employee Retirement Income Security Act of
1974 (ERISA), while contributions to Canadian plans are made in
accordance with Pension Benefits Acts, instituted by the provinces of
Saskatchewan and Ontario. Certain other employees are covered by
defined contribution pension plans.
Employees in the United States and Canada whose pension benefits exceed
Internal Revenue Code and Revenue Canada limitations, respectively, are
covered by supplementary non-qualified, unfunded pension plans.
<PAGE>
The components of net pension expense, computed actuarially, were as
follows:
1996 1995 1994
- -----------------------------------------------------------------------
Service cost for benefits earned during
the year $10.0 $9.0 $8.9
Interest cost on projected benefit
obligation 15.8 14.7 13.1
Return on plan assets (28.8) (11.8) (7.3)
Net amortization and deferral 17.5 (.1) (4.4)
----- ----- -----
Net pension expense $14.5 $11.8 $10.3
----- ----- -----
The plans' assets consist mainly of corporate equity and U.S.
government and corporate debt securities, and units of participation in
a collective short-term investment fund.
In a number of these plans, the plan assets exceed the accumulated
benefit obligations (overfunded plans) and in the remainder of the
plans, the accumulated benefit obligations exceed the plan assets
(underfunded plans).
The funded status, based on an April 1 measurement date, of the
Company's pension plans and amounts recognized in the Consolidated
Balance Sheet as of June 30 were as follows:
Overfunded Underfunded
Plans Plans
---------------- ----------------
1996 1995 1996 1995
- -------------------------------------------------- ----------------
Plans' assets at fair value $163.8 $133.0 $ 28.9 $ 26.2
Actuarial present value of
projected benefit obligations:
Vested benefits 124.2 111.5 34.8 31.4
Non-vested benefits 16.1 .8 3.0 .4
------ ------ ------ ------
Accumulated benefit obligations 140.3 112.3 37.8 31.8
Projected future salary
increases 54.6 37.3 3.8 11.9
------ ------ ------ ------
Total projected benefit
obligations 194.9 149.6 41.6 43.7
------ ------ ------ ------
Plans' assets less than projected
benefit obligations 31.1 16.6 12.7 17.5
Items not yet recognized in earnings:
Unrecognized net gain (20.0) (8.2) (2.0) (1.3)
Unrecognized transition
liability (asset) .9 .9 (.2) (.2)
Unrecognized prior service cost (10.4) (7.0) (9.5) (12.3)
Additional minimum liability 11.0 7.4
Fourth quarter contributions (.6) (.9) (.5) (.4)
------ ------ ------ ------
Accrued pension liability $ 1.0 $ 1.4 $ 11.5 $ 10.7
====== ====== ====== ======
<PAGE>
Significant actuarial assumptions were as follows:
1996 1995 1994
- -----------------------------------------------------------------------
Discount rate 7.6% 8.2% 8.4%
Long-term rate of return on assets 7.0% 7.8% 7.9%
Rate of increase in compensation levels 5.2% 5.2% 5.3%
The Company also has defined contribution pension and investment plans
(Plans) for certain of its employees. Under each of the Plans,
participants are permitted to defer a portion of their compensation
whereas Company contributions to the Plans are based on a percentage of
wages earned by the eligible employees. The Company's contributions to
the Plans totaled $9.7 million, $9.7 million and $4.6 million for the
years ended June 30, 1996, 1995 and 1994, respectively.
14. POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT PLANS
The Company provides certain health care benefit plans for certain
retired employees. The plans may be either contributory or
non-contributory and contain certain other cost-sharing features such
as deductibles and coinsurance. The plans are unfunded. Employees are
not vested and such benefits are subject to change.
The components of postretirement benefits other than pensions (OPEBS)
expense for years ending June 30 were as follows:
1996 1995 1994
- -----------------------------------------------------------------------
Service cost $1.7 $1.5 $1.5
Interest cost 5.3 5.3 5.2
Net amortization and deferral (1.8) (1.5) (1.6)
---- ---- ----
$5.2 $5.3 $5.1
==== ==== ====
The significant assumptions used in determining OPEBS costs were as
follows:
1996 1995 1994
- -----------------------------------------------------------------------
Discount rate 7.5% 8.2% 8.4%
Health care trend rate:
Under age 65 9.2% (1) 9.8% (1) 10.4% (1)
Over age 65 6.0% (2) 6.3% (2) 7.0% (2)
(1) Decreasing gradually to 5.5% in 2003 and thereafter.
(2) Decreasing gradually to 5.5% in 1999 and thereafter.
If the health care trend rate assumptions were increased by 1.0
percent, the accumulated postretirement benefit obligation would
increase by 3.7 percent as of June 30, 1996. This would have the
effect of a 5.7 percent increase on OPEBS expense in 1996.
<PAGE>
The components of the Company's OPEBS liability at June 30 were as
follows:
1996 1995
- -----------------------------------------------------------------------
Retirees $35.1 $33.1
Actives:
Fully eligible 13.0 12.0
Not fully eligible 26.6 24.3
----- -----
Total 74.7 69.4
Items not yet recognized in earnings:
Unrecognized prior service cost 12.1 13.2
Unrecognized net gain 10.5 11.6
----- -----
Accrued postretirement benefits liability $97.3 $94.2
===== =====
The Company also provides benefits such as workers' compensation and
disability to certain former or inactive employees after employment but
before retirement. The plans are unfunded. Employees are not vested
and plan benefits are subject to change.
Effective July 1, 1994, the Company adopted SFAS No. 112 to account for
disability benefits of certain employees. Prior to July 1, 1994, the
Company recognized the cost of providing certain of these benefits on a
cash basis. SFAS No. 112 requires the cost of providing these benefits
be recognized when it becomes probable that such benefits will be paid
and when sufficient information exists to make reasonable estimates of
the amounts to be paid. Consequently, the Company recognized a $13.3
million liability for postemployment benefits as of July 1, 1994 and
recorded a charge of $5.9 million, net of taxes, for the cumulative
effect of the Company's unfunded obligation prior to July 1, 1994. The
effect of the adoption of SFAS No. 112 on 1995 earnings before the
cumulative effect of the accounting change was not material.
15. INCOME TAXES
Two of the Company's three potash operations that are subject to
Canadian taxes are included in the consolidated United States federal
income tax return filed by the Company.
Deferred income taxes reflect the net tax effects of temporary
differences between the amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
<PAGE>
Significant components of the Company's deferred tax liabilities and
assets at June 30 were as follows:
1996 1995
- -----------------------------------------------------------------------
Deferred tax liabilities
Property, plant and equipment $437.4 $410.4
Taxes on undistributed foreign earnings 19.6 28.6
Other liabilities 50.0 38.7
------ ------
Total deferred tax liabilities 507.0 477.7
------ ------
Deferred tax assets
Alternative minimum tax credit carryforwards 82.8 34.4
Postretirement and postemployment benefits 39.6 35.7
Sterlington litigation settlement 31.1 31.5
Foreign tax credit carryforward 27.5
Reclamation and decommissioning accruals 27.4 26.2
Restructuring accruals 25.3
Net operating loss carryforwards 78.2
Other assets 46.5 45.0
Valuation allowance (27.5)
------ ------
Total deferred tax assets 252.7 251.0
------ ------
Net deferred tax liabilities $254.3 $226.7
====== ======
At June 30, 1996, the Company had alternative minimum tax credit
carryforwards of approximately $82.8 million, which can be carried
forward indefinitely. In addition, the Company has a foreign tax
credit carryforward of approximately $27.5 million. The foreign tax
credit carryforward will expire in 2001 to the extent it is not
utilized. The realization of the foreign tax credit carryforward is
dependent upon the Company's future foreign earnings and taxes. Due to
the uncertainty of its ultimate realization, the Company has
established a full valuation allowance against this carryforward
benefit.
<PAGE>
The provision for income taxes consisted of the following:
1996 1995 1994
- -----------------------------------------------------------------------
CURRENT
Federal $ 74.0 $ 33.6 $(10.2)
State and local 2.8 8.6 4.8
Foreign 14.9 52.9 22.1
------ ------ ------
91.7 95.1 16.7
DEFERRED
Federal (7.4) 8.1 14.5
State and local 4.4 (.9) (4.2)
Foreign 5.4 13.2 7.8
------ ------ ------
2.4 20.4 18.1
------ ------ ------
$ 94.1 $115.5 $ 34.8
====== ====== ======
The components of earnings before income taxes, extraordinary loss and
cumulative effect of accounting change, and the effects of significant
adjustments to tax computed at the federal statutory rate were as
follows:
1996 1995 1994
- -----------------------------------------------------------------------
Domestic $195.7 $193.6 $ 24.1
Foreign 42.7 115.2 55.1
------ ------ ------
Earnings before income taxes,
extraordinary loss and cumulative
effect of accounting change $238.4 $308.8 $ 79.2
====== ====== ======
Computed tax at the federal statutory
rate of 35% $ 83.4 $108.1 $ 27.7
Foreign income and withholding taxes 12.7 19.5 9.2
Percentage depletion in excess of basis (10.4) (18.1) (11.3)
Merger expenses not deductible for
tax purposes 7.1
State income taxes, net of federal
income tax benefit 4.8 4.9 .4
Benefit of foreign sales corporation (4.3) (2.3) .1
Deferred tax adjustment for the effect
of changes in U.S. corporate tax rates 4.5
Federal taxes on undistributed foreign
earnings 4.4 2.9
Other items (none in excess of 5% of
computed tax) .8 (1.0) 1.3
------ ------ ------
Provision for income taxes $ 94.1 $115.5 $ 34.8
====== ====== ======
Effective tax rate 39.5% 37.4% 43.9%
====== ====== ======
<PAGE>
U.S. income and foreign withholding taxes are provided on the earnings
of foreign subsidiaries that are expected to be remitted to the extent
that taxes on the distribution of such earnings would not be offset by
foreign tax credits. The Company has no present intention of remitting
undistributed earnings of foreign subsidiaries aggregating $196.4
million at June 30, 1996 and, accordingly, no deferred tax liability
has been established relative to these earnings. If these amounts were
not considered permanently reinvested, a deferred tax liability of
$41.0 million would have been required.
16. CAPITAL STOCK
Changes in the number of shares of common stock issued and in treasury
were as follows:
1996 1995
- -----------------------------------------------------------------------
Common stock issued
Balance, beginning of year 96,408,200 96,011,235
Common stock issued 442,653 204,293
Stock options exercised 1,009,466 172,992
Conversion of convertible debt 2,265
Award of restricted shares 1,200 19,680
---------- ----------
Balance, end of year 97,863,784 96,408,200
Treasury common stock
Balance, beginning of year 5,552,840 5,540,518
Common stock issued (9,396)
Purchases 2,440 12,322
---------- ----------
Balance, end of year 5,545,884 5,552,840
---------- ----------
Common stock outstanding, end of year 92,317,900 90,855,360
========== ==========
Pursuant to a Shareholders Rights Plan adopted by the Company in June
1989, a dividend of one preferred stock purchase right (a Right) for
each outstanding share of common stock of the Company was issued on
July 12, 1989 to shareholders of record on that date. Under certain
conditions, each Right may be exercised to purchase one two-hundredth
of a share of Junior Participating Preferred Stock, Series C, par value
$1 per share, at a price of $75, subject to adjustment. This preferred
stock is designed to participate in dividends and vote on essentially
equivalent terms with a whole share of common stock. The Rights
generally become exercisable apart from the common stock only if a
person or group acquires 15 percent or more of the common stock or
makes a tender offer for 15 percent or more of the outstanding common
stock. Upon the acquisition by a person or group of 15 percent or more
of the common stock, each Right will entitle the holder to purchase, at
the then-current exercise price of the Right, a number of shares of
common stock having a market value at that time of twice the exercise
price. The Rights may be redeemed at a price of $.005 per Right under
certain circumstances prior to their expiration on June 21, 1999. No
event during 1996 made the Rights exercisable.
<PAGE>
17. STOCK PLANS
The Company has various stock option plans (Stock Plans) under which it
may grant nonDqualified stock options, stock appreciation rights (SARs)
and restricted stock to officers and key managers of the Company. The
Stock Plans, as amended, provide for the issuance of a maximum of 9.2
million shares of common stock of the Company which may be authorized
but unissued shares or treasury shares.
Under the terms of the Stock Plans, the option price per share may not
be less than 100 percent of the fair market value on the date of the
grant. Stock options and SARs granted under the Stock Plans extend for
10 years and generally become exercisable either 50 percent one year
after the date of the grant and 100 percent two years after the date of
the grant, or in oneDthird increments: one-third one year after the
date of the grant, two-thirds two years after the date of the grant,
and 100 percent three years after the date of the grant.
The Company also adopted a long-term incentive plan in fiscal 1994
under which officers and key managers were awarded shares of restricted
common stock of the Company along with contingent stock units. Based
on performance objectives, these shares and units were intended to vest
in whole or in part during and at the end of a threeDyear performance
period ending June 30, 1997. On June 30, 1996, the long-term incentive
plan was deemed to be fully vested, one year prior to the completion of
the performance period, and 141,480 shares of common stock were
distributed. Restricted stock is valued on the issuance date, and the
related expense is amortized over the vesting period.
SARs granted totaled 65,250 shares and 34,450 shares in fiscal 1996 and
1995, respectively. Market prices for the SARs were $38.00 and $23.97
in fiscal 1996 and 1995, respectively. A total of 69,375 shares and
7,600 shares were exercised in fiscal 1996 and 1995, respectively.
Stock option activities were as follows:
Number of Shares
-------------------------------
1996 1995
- -----------------------------------------------------------------------
Outstanding at July 1 3,592,669 2,547,523
Granted 771,511 1,275,152
Exercised (1,006,866) (168,504)
Cancelled (141,422) (61,502)
--------- ---------
Outstanding at June 30 3,215,892 3,592,669
========= =========
Exercisable at June 30 1,732,273 1,640,527
========= =========
Available for future grant at June 30 3,255,342 1,885,431
========= =========
Restricted stock outstanding at June 30 -- 141,480
========= =========
<PAGE>
PRICE RANGE OF OPTIONS
Outstanding at June 30 $11.00 - $39.31 $11.00 - $25.56
Granted during the year $32.43 - $39.31 $17.50 - $24.79
Exercised during the year $11.00 - $32.42 $11.00 - $25.56
Another stock option plan provides for the granting of awards of up to
100,000 shares of common stock to directors of the Company who were
directors prior to the Merger and who were not also employees of the
Company. Options may be exercised at any time the director holding the
option remains a director of the Company and within two years after the
director ceases to be a director of the Company. Under the terms of
the plan, options granted are exercisable over 10 years beginning with
the grant date of the option. Options were granted to purchase 14,000
shares of common stock in 1996 and 1995 at an option price of $29.75
and $19.06 per share, respectively. A total of 2,600 shares and 4,488
shares were exercised in 1996 and 1995, respectively.
18. COMMITMENTS
The Company purchases sulphur, natural gas and ammonia from third
parties under contracts extending, in some cases, for multiple years.
Purchases under these contracts are generally at prevailing market
prices. These contracts generally range from one to four years.
The Company and FRP have an agreement to supply a portion of the
Company's sulphur requirements to IMC-Agrico over the life of the joint
venture partnership. Since the term of the sulphur purchase commitment
is indeterminable, the dollar value of such commitments has been
excluded from the schedule below after the year 2001.
The Company leases plants, warehouses, terminals, office facilities,
railcars and various types of equipment under operating leases. Lease
terms generally range from three to five years, although some leases
have longer terms.
Summarized below is a schedule of future minimum long-term purchase
commitments and minimum lease payments under nonDcancelable operating
leases as of June 30, 1996:
Purchase Lease
Commitments Commitments
- ----------------------------------------------------------------------
1997 $211.9 $ 22.4
1998 157.8 19.4
1999 136.6 15.8
2000 112.7 9.8
2001 112.4 8.6
Subsequent years 10.2 22.4
------ ------
$741.6 $ 98.4
====== ======
Rental expense for 1996, 1995 and 1994 amounted to $45.6 million, $39.7
million and $34.9 million, respectively.
<PAGE>
International Minerals & Chemical (Canada) Global Limited is committed
under a service agreement with Potash Corporation of Saskatchewan Inc.
(PCS) to produce annually from mineral reserves specified quantities of
potash for a fixed fee plus a pro rata share of total production and
capital costs at the potash mines located in Esterhazy, Saskatchewan.
The agreement extends through June 30, 2001 and is renewable at the
option of PCS for five additional five-year periods. Potash produced
for PCS may, at PCS's option, amount to an annual maximum of
approximately one-fourth of the Esterhazy mines' production capacity.
During 1996, production of potash for PCS amounted to 500,000 tons, or
16 percent of the Esterhazy mines' total tons produced.
19. CONTINGENCIES
Mining Risks
Since December 1985, the Company has experienced an inflow of water
into one of its two interconnected potash mines located in Esterhazy,
Saskatchewan. In recent years, the trend of the water inflow has
stabilized and the Company has successfully reduced the per ton
spending required to contain the inflow. However, the long-term
outlook of the water inflow has caused the Company to consider
alternatives to its current mining operations and studies are under way
in this regard. Any solution to the water inflow situation at the
mines could result in substantial capital expenditures and/or charges
to operations.
Sterlington Litigation
Angus Chemical Company (Angus) and the Company are involved in various
litigation arising out of the 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 $75.0 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 $100.0 million and the $15.0 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.
<PAGE>
The Company continues to vigorously litigate each of the matters
arising out of the Sterlington explosion. A jury trial is scheduled to
commence in October 1996 in Texas state court with respect to Angus'
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 October 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.
Antitrust Litigation
A number of class action suits have been filed in United States federal
courts, two California state courts and an Illinois state court against
most of the North American potash producers, including the Company.
The complaints essentially allege that the North American potash
producers acted together to fix the price of potash sold in the United
States. The complaints do not specify the amount of damages sought by
the plaintiffs. All of the complaints seek treble damages and
attorneys' fees and ask that the court find the defendants jointly and
severally liable.
Suits filed in federal courts in Minnesota, Illinois and Virginia have
been consolidated in Minnesota. All of the claims in these suits are
asserted on behalf of a purported group of direct purchasers of potash
in the United States, which class has been certified by the court.
Discovery is now concluded in the case and defendants' motions for
summary judgment have been filed.
In addition to the direct purchaser actions filed in the United States
District Courts, two complaints have been filed in California state
courts on behalf of indirect purchasers residing in California. The
Company has answered both of the California complaints and has denied
all material allegations. These cases are still in a preliminary stage
and no discovery has been conducted.
The case filed in Illinois state court has been dismissed for failure
to state a claim. Plaintiffs have appealed the dismissal.
The Company is not able to estimate the amount of damages that could
ultimately be sought in the civil suits. Based upon available
information, management of the Company believes that the Company has
not acted in concert with others to fix prices in violation of the
United States antitrust laws or any other laws. There can be no
assurance, however, that these cases will ultimately be decided in a
manner favorable to the Company. In connection with the Company's
Colonsay mine, affiliates of Noranda from whom the Company purchased
the mine in January 1995, are also named as defendants in the civil
<PAGE>
suits. The Company did not agree to assume any liabilities of Noranda
or such affiliates with respect to operations at Colonsay prior to the
closing of the purchase which may arise out of such antitrust
litigation, and the Company is entitled to be indemnified by Noranda
against such liabilities should they arise.
The Antitrust Division of the United States Department of Justice had
been conducting a grand jury investigation into allegations similar to
those made in the civil actions. The Company was advised that the
investigation was concluded and a spokesperson for the Antitrust
Division has stated that no action will be taken.
FTC Phosphate Operations Inquiry
The Company was notified on October 2, 1995 by the Federal Trade
Commission (FTC) that the FTC is conducting an investigation to
determine whether manufacturers of concentrated phosphates may have
violated Section 5 of the Federal Trade Commission Act, as amended, by
agreeing to restrict output or raise prices. The FTC has requested
that the Company provide certain information and documents regarding
the Company's phosphate operations. The Company has submitted
responsive information and documents to the FTC. The FTC has stated
that neither its request for information and documents nor the fact it
has commenced an investigation should be construed as indicating that a
violation has occurred or is occurring.
Hoover
The Company is a defendant or third party defendant in 36 New Jersey
state court lawsuits, in each case in connection with the sale of an
agricultural crop nutrient solution to Hoover Treated Wood Products,
Inc. and its predecessor (collectively, Hoover) used by Hoover to treat
wood. The pending cases are included in a New Jersey court-sponsored
mediation program. The Special Master assisting the Court in the
mediation effort reports that the claimants in the 36 remaining
lawsuits have either settled or committed to a settlement model which
should result in a settlement.
In May 1993, the Company executed two agreements with Hoover and
certain interested parties relating to the Hoover litigation. Under
those agreements, the Company paid Hoover $2.0 million, a substantial
portion of which was paid by the Company's insurance carriers. In
return, Hoover released the Company from all present and future
asserted claims arising from the sale and distribution of wood treated
by Hoover and agreed to indemnify and hold the Company harmless from
all present and future asserted claims arising from the sale and
distribution of the wood treated by Hoover and agreed to indemnify and
hold the Company harmless from all present and future asserted claims
by other parties related to such wood. While the Company cannot assure
that Hoover will be able to meet its obligation to indemnify and hold
the Company harmless, the Company believes the agreements with Hoover,
coupled with the Company's existing insurance coverage and substantial
meritorious defenses, should result in the resolution of all pending
claims without any material adverse effect on the financial condition
or results of operations of the Company.
<PAGE>
Environmental Matters
The historical use and handling of regulated chemical substances and
crop nutrient products in the normal course of the Company's business
has resulted in contamination at facilities presently or previously
owned or operated by the Company. The Company has also purchased
facilities that were contaminated by previous owners through their use
and handling of regulated chemical substances. Spills or other
unintended releases of regulated substances have occurred in the past,
and potentially could occur in the future, possibly requiring the
Company to undertake or fund cleanup efforts. The Company cannot
estimate the level of expenditures that may be required in the future
to clean up contamination from the handling of regulated chemical
substances or crop nutrients.
At some locations, the Company has agreed, pursuant to consent orders
with the appropriate governmental agencies, to undertake certain
investigations (which currently are in progress) to determine whether
remedial action may be required to address contamination. The cost of
any remedial actions that ultimately may be required at these sites
currently cannot be determined.
The Company believes that it is entitled to at least partial
indemnification for a portion of the costs that may be expended by the
Company to remedy environmental issues at certain facilities and
operations pursuant to indemnification agreements. These agreements
address issues that resulted from activities occurring prior to the
Company's acquisition of facilities from parties including: PPG
Industries, Inc., Kaiser Aluminum & Chemical Corporation, Beatrice
Companies, Inc., Estech, Inc. and certain private parties. The Company
has already received and anticipates receiving amounts pursuant to the
indemnification agreements for certain of its expenses incurred to
date.
The Company also has certain other contingent liabilities with respect
to litigation, claims and guarantees of debt obligations to third
parties arising in the ordinary course of business. The Company does
not believe that any of these contingent liabilities will have a
material adverse impact on the Company's financial position.
20. OPERATIONS BY GEOGRAPHIC AREA
Financial information relating to the Company's operations in various
geographic areas was as follows:
Net Sales
-----------------------------
1996 1995 1994
- -----------------------------------------------------------------------
United States $2,910.8 $2,589.0 $2,055.6
Canada 326.9 388.6 244.9
Other 20.9 11.7 1.3
Transfers between geographic areas
(principally from Canada) (277.6) (253.2) (176.5)
-------- -------- --------
Consolidated $2,981.0 $2,736.1 $2,125.3
======== ======== ========
<PAGE>
<TABLE>
<CAPTION>
Operating Earnings Identifiable Assets
------------------------- ---------------------------
1996 1995 1994 1996 1995 1995
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> C>
United States $ 449.6$ 361.1$ 176.6$2,828.0$2,854.9$2,871.0
Canada 29.0 130.2 59.6 845.7 734.9 434.1
Other 18.9 10.2 (.4) 7.8 8.2 8.1
Eliminations (9.2) 1.6 8.8 (244.7) (274.8)(140.9)
------- ------- ------- ------- ------- -------
Consolidated $ 488.3$ 503.1$ 244.6$3,436.8$3,323.2$3,172.3
======= ======= ======= ======= ======= =======
</TABLE>
Transfers of product between geographic areas were at prices
approximating those charged to unaffiliated customers.
Net sales from the United States, as shown in the preceding table,
included sales to unaffiliated customers in other geographic areas as
follows:
1996 1995 1994
- -----------------------------------------------------------------------
Far East $753.5 $643.9 $377.1
Latin America 190.3 121.7 113.0
Europe 10.5 27.1 6.6
------ ------ ------
$954.3 $792.7 $496.7
====== ====== ======
<PAGE>
Five Year Comparison(1)
Years ended June 30,
----------------------------------------
(Dollars in millions except 1996(2) 1995(2) 1994(2) 1993(3)
1992(4)
per share amounts)
- -----------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA:
Net sales $2,981.0$2,736.1 $2,125.3 $1,438.1 $1,621.1
Sterlington litigation
settlement, net (169.1)
Earnings (loss) before
income taxes, extra-
ordinary item and cumu-
lative effect of
accounting changes 238.4 308.8 79.2 (117.0) 202.7
Provision (credit) for
income taxes 94.1 115.5 34.8 (39.1) 71.3
------- ------- ------- ------- -------
Earnings (loss) before
extraordinary item
and cumulative effect
of accounting changes 144.3 193.3 44.4 (77.9) 131.4
Extraordinary loss - debt
retirement (6.5) (25.2) (2.0)
Cumulative effect of
accounting changes (5.9) (47.1) (197.5)
Net earnings (loss) $ 144.3$ 180.9 $ 19.2 $ (127.0) $ (66.1)
======= ======= ======= ======= =======
Earnings (loss) per share:
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting changes $ 1.56 $ 2.12 $ .54 $ (1.02)$ 1.73
Extraordinary loss -
debt retirement (.07) (.31) (.03)
Cumulative effect of
accounting changes (.06) (.62) (2.60)
------- ------- ------- ------- -------
Net earnings (loss) $ 1.56 $ 1.99 $ .23 $ (1.67) $ (.87)
======= ======= ======= ======= =======
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets $3,436.8$3,323.2 $3,172.3 $2,343.3 $2,207.8
Working capital 551.8 484.2 499.3 322.7 192.6
Working capital ratio 2.5:1 2.1:1 2.4:1 1.9:1 1.7:1
Long-term debt, less current
maturities $ 736.7$ 750.2 $ 801.6 $ 994.6 $ 740.9
Total debt 764.5 824.3 847.7 1,063.2 782.3
Stockholders' equity 1,156.3 1,007.8 856.3 602.3 760.7
Total capitalization 1,920.8 1,832.1 1,704.0 1,665.5 1,543.0
Debt/total capitalization 39.8% 45.0% 49.7% 63.8% 50.7%
<PAGE>
OTHER FINANCIAL DATA:
Cash provided by operating
activities $ 342.0$ 554.5 $ 165.5 $ 73.4 $ 176.8
Capital expenditures 172.7 114.9 76.0 137.1 204.8
Cash dividends paid 35.5 24.6 14.2 30.7 32.8
Dividends per share .33 .26 .15 .32 .37
Book value per share 12.52 11.09 9.46 7.91 10.00
- -----------------------------------------------------------------------
(1) Restated for all periods to reflect the Merger which was accounted
for as a pooling of interests.
(2) See Notes to Consolidated Financial Statements for a description
of acquisitions, non-recurring items and an accounting change.
Beginning in 1994, operating results reflect the consolidation of the
joint venture partnership formed on July 1, 1993 with FRP.
(3) Includes charges of $32.4 million from the settlement of a claim
relating to losses arising out of a water inflow at one of the
Company's potash mines in Canada and $3.0 million from the settlement
of an environmental issue, partially offset by a gain of $8.1 million
from the resolution of a contract dispute with a major uranium
customer. Also includes charges of $169.1 million, net of insurance
recoveries and legal fees, which reflects the settlement of a lawsuit
for damages arising out of an explosion at a nitroparaffins plant in
Sterlington, Louisiana and $47.1 million for the cumulative effect on
prior years of adopting SFAS No. 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions," on July 1, 1992.
(4) Includes a gain of $34.2 million from the Company's sale of its
Sterlington, Louisiana ammonia production facility, a charge of $5.3
million from the temporary shutdown and mothballing of the Company's
uranium production facilities and a charge of $197.5 million for the
cumulative effect on prior years of adopting SFAS No. 109, "Accounting
for Income Taxes," on July 1, 1991.
<PAGE>
Quarterly Results (unaudited)
Quarter
--------------------------------
First Second Third Fourth Year
- -----------------------------------------------------------------------
FISCAL 1996
Net sales $ 599.4 $ 709.5 $ 717.0 $ 955.1 $2,981.0
Gross margins 148.7 199.5 184.0 218.7 750.9
Earnings before income taxes 51.7 83.2 2.6 100.9 238.4
Net earnings (loss) 32.1 54.1 (8.3) 66.4 144.3
Earnings (loss) per share$ .35 $ .58 $ (.09) $ .71 $ 1.56
- -----------------------------------------------------------------------
FISCAL 1995
Net sales $ 517.2 $ 587.5 $ 729.9 $ 901.5 $2,736.1
Gross margins 107.4 158.4 208.1 216.1 690.0
Earnings before income taxes,
extraordinary item and
cumulative effect of
accounting change 36.9 58.3 96.3 117.3 308.8
Earnings before extraordinary
item and cumulative effect
of accounting change 24.0 36.5 59.6 73.2 193.3
Net earnings 16.9 34.7 58.9 70.4 180.9
Earnings per share:
Earnings before extra-
ordinary item and cumu-
lative effect of
accounting change $ .26 $ .40 $ .66 $ .80 $ 2.12
Net earnings .19 .38 .65 .77 1.99
- -----------------------------------------------------------------------
The quarterly results reflected above give retroactive effect to the
Merger discussed in Note 3 of Notes to Consolidated Financial
Statements and, accordingly, the amounts have been restated for all
periods prior to the acquisition to include the accounts and operations
of Vigoro.
FISCAL 1996
Second, third and fourth quarter operating results reflected the
acquisition of Feed Ingredients in October 1995.
Third quarter operating results included an after-tax charge of $69.6
million, or $0.75 per share, from charges related to the Merger, as
well as costs associated with, among other things, a corporate
restructuring, other asset valuations and environmental issues.
FISCAL 1995
First quarter results reflected a charge of $5.9 million, or $0.06 per
share, for the cumulative effect on prior years of adopting SFAS No.
112 as discussed in Note 14 of Notes to Consolidated Financial
Statements.
Third and fourth quarter operating results reflected the acquisition of
CCP in January 1995.
<PAGE>
Exhibit 13.1
To the Board of Directors and Shareholders of The Vigoro Corporation:
We have audited the accompanying consolidated balance sheet of The
Vigoro Corporation (a Delaware corporation) and subsidiaries as of June
30, 1995, and the consolidated statements of income, changes in
shareholders' equity and cash flows for the years ended June 30, 1995
and 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audits. We did not audit the financial statements of Central
Canada Potash, Inc. which statements reflect total assets and net sales
of 20 percent and 6 percent, respectively, in 1995 of the consolidated
totals. Those statements were audited by other auditors whose report
has been furnished to us and our opinion, insofar as it relates to the
amounts included for that entity, is based solely on the report of the
other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors,
the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of The Vigoro
Corporation and subsidiaries as of June 30, 1995, and the results of
its operations and cash flows for the years ended June 30, 1995 and
1994 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Chicago, Illinois
January 22, 1996
<PAGE>
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 53.5%
IMC Global Potash Holdings Inc. Delaware 100%
International Minerals & Chemical
(Canada) Global Limited Canada 100%
The Vigoro Corporation Delaware 100%
IMC AgriBusiness Inc. Delaware 100%
KCL Holdings, Inc. Delaware 100%
IMC Kalium Ltd. Delaware 100%
IMC Central Canada Potash Inc. Delaware 100%
VNH, Inc. Delaware 100%
IMC Nitrogen Company Delaware 100%
IMC Kalium Carlsbad Potash Company Delaware 100%
IMC Kalium Canada Ltd. Canada 100%
A number of subsidiaries are not shown, but even as a whole they
do not constitute a significant subsidiary.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following
registration statements and related prospectuses filed by IMC Global
Inc. under the Securities Act of 1933 of our report dated July 31,
1996, with respect to the consolidated financial statements of IMC
Global Inc. included in this Annual Report (Form 10-K) for the year
ended June 30, 1996.
Commission File No.
--------------------
Form S-8, No. 33-22079
Form S-8, No. 33-22080
Form S-8, No. 33-38423
Form S-8, No. 33-42074
Form S-8, No. 33-56911
Amendment No. 1 to Form S-4, No. 333-00439
Form S-8, No. 333-189
Form S-3, No. 333-04831
ERNST & YOUNG LLP
Ernst & Young LLP
Chicago, Illinois
September 27, 1996
Docket No. 112996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form 10-K of our report dated
January 22, 1996, included in Registration Statement No. 333-00439 on
Form S-4, Registration Statement No. 333-189 on Form S-8 and
Registration Statement No. 333-04831 on Form S-3. It should be noted
that we have not audited any financial statements of the company
subsequent to June 30, 1995 or performed any audit procedures
subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Chicago, IL
September 27, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> (4,700)
<SECURITIES> 14,300
<RECEIVABLES> 380,600
<ALLOWANCES> 3,600
<INVENTORY> 476,700
<CURRENT-ASSETS> 918,200
<PP&E> 4,123,600
<DEPRECIATION> 1,772,300
<TOTAL-ASSETS> 3,436,800
<CURRENT-LIABILITIES> 366,400
<BONDS> 736,700
<COMMON> 97,900
0
0
<OTHER-SE> 1,058,400
<TOTAL-LIABILITY-AND-EQUITY> 3,436,800
<SALES> 2,981,000
<TOTAL-REVENUES> 2,997,800
<CGS> 2,230,100
<TOTAL-COSTS> 2,509,500
<OTHER-EXPENSES> 185,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64,800
<INCOME-PRETAX> 238,400
<INCOME-TAX> 94,100
<INCOME-CONTINUING> 144,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 144,300
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.54
</TABLE>
