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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 7, 1999
IMC GLOBAL INC.
(Exact name of Registrant as specified in its charter)
Commission File Number: 1-9759
Delaware 36-3492467
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
2100 Sanders Road 60062
Northbrook, Illinois (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (847)272-9200
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Item 5. Other Events.
The following is the text of a press release issued by IMC
Global Inc. on December 7, 1999.
IMC Global to Record Estimated Fourth Quarter After-tax
Special Charges Totaling $825 Million; Estimated Pre-tax
Savings of $70 Million to Benefit Earnings Per Share by
About $0.40 Annually.
NORTHBROOK, IL, December 7, 1999 -- IMC Global (NYSE: IGL)
announced today that it will record estimated after-tax
special charges totaling $825 million in the fourth quarter
of 1999. The charges result primarily from: the rightsizing
and restructuring of business unit operations and corporate
headquarters; a goodwill write-off of approximately $525
million; and, the exit of non-core businesses, as part of a
major financial improvement program previously disclosed.
The after-tax cash cost of special charges is projected to
be about $100 million, with approximately $70 million
affecting 2000.
The sweeping program will provide estimated annual pre-tax
savings of about $70 million, or $0.40 per share.
Approximately 70 percent of the savings will be generated
from rightsizing and cost reduction initiatives. These
include a Company-wide job reduction of about 850 positions,
the implementation of which begins today and will generate
over half of the total annual savings.
After giving effect to the minority interest of Phosphate
Resource Partners Limited Partnership (NYSE: PLP) in the
phosphate business and oil and gas program, IMC Global's net
special charges are estimated at $780 million after-tax, or
$6.81 per share, with a first-year after-tax cash cost of
$65 million. IMC Global is the administrative managing
general partner and 51.6 percent owner of PLP.
"We are delivering on our commitment to simplify and focus
our Company on four core businesses, rightsize and
restructure for current and future industry conditions
through significant cost and asset reductions, and bolster
our ongoing earnings, return on assets, and free cash flow,"
said Douglas A. Pertz, President and Chief Executive Officer
of IMC Global. "This comprehensive and aggressive program
is very strong and necessary medicine to take during this
difficult industry climate, including a weak North American
farm economy and significantly depressed phosphate selling
prices.
"Importantly, because of our leaner organizational structure
and smaller asset base, IMC Global will now be more strongly
leveraged to maximize our earnings and returns, and increase
shareholder value as market conditions begin to improve,"
Pertz stressed. "At the same time, we are implementing
Company-wide continuous improvement programs and systems to
increase the efficiency and productivity of our reduced
workforce and foster a climate driven for excellence, action
and innovation, and focused results."
The expected 1999 fourth quarter special charges are
outlined below in three primary categories:
1. Business Unit and Corporate Rightsizing and Other Charges
A pre-tax charge of approximately $230 million, or $150
million after-tax, will be recorded for rightsizing and
restructuring actions in the IMC Phosphates, IMC Potash,
IMC Salt and IMC Chemicals business units and at corporate
headquarters. Approximately two-thirds of this charge
relates to IMC Phosphates. The charge reflects: (a) asset
write-offs including those associated with previously
announced closures of three phosphate facilities, the
write-off of resulting excess and scrap inventory and
redundant tangible assets; (b) costs for job eliminations,
facility demolitions and closures, and environmental
remediation; and (c) other charges. The phosphate mine
and plant closures result from a facilities optimization
program that will reduce rock and concentrate production
costs through higher utilization rates at the lowest-cost
facilities.
2. Goodwill Writedown from Recent Transactions
IMC Global has elected to change its method of accounting
for evaluating the recovery of goodwill that resulted
primarily from the merger with Freeport-McMoRan Inc. in
December 1997 and the acquisition of Harris Chemicals
Group in April 1998. This change, from an undiscounted
cash flow basis to a discounted cash flow basis, will
result in a total non-cash charge of approximately $525
million, with no tax benefit. This charge will
significantly improve IMC Global's return on assets while
benefiting annual earnings per share by about $0.11.
About 80 percent of the $525 million goodwill writedown
relates to the Freeport-McMoRan merger, with the balance
associated with the impairment of the goodwill associated
with the IMC Potash solar evaporation operation in Ogden,
Utah acquired in the Harris Chemicals Group transaction.
3. Exiting Non-Core Businesses
The Company's previously announced plan to sell or spin
off its IMC Chemicals soda ash unit and exit the oil and
gas business will result in a total after-tax charge
estimated at $150 million. Effective with the fourth
quarter of 1999, IMC Chemicals and the Company's oil and
gas operations will be classified as discontinued
businesses. As a result, the Company's quarterly and full-
year results will be restated.
In addition to the annual savings from the restructuring
program described above, Pertz noted that IMC Global will
continue to generate operating cost benefits from its
Project Profit phosphate initiative that is on target to
achieve at least $100 million in cost savings over the two-
year period ending December 31, 2000, with more than $50
million to be realized in 1999.
Pertz added that IMC Global recently announced further
significant production cutbacks in its phosphate business in
response to continued low industry demand and a reduction of
potash production rates in the fourth quarter in an ongoing
program to balance global supply and demand.
Consistent with a key objective to increase free cash flow
even during a challenging business climate, Pertz said IMC
Global has reduced net capital expenditures in 1999 to about
$260 million from $328 million in 1998 and will do so by a
similar or greater year-over-year amount in 2000.
"We are seizing opportunities to increase shareholder value
by streamlining and enhancing our operations and increasing
our free cash flow, areas which we can control even during
major downturns in the agricultural and phosphate cycles,"
Pertz concluded. "We have quickened the pace of change,
taking forceful and positive actions consistent with our
strategic objectives to be the low-cost producer, achieve
world-class customer service and become truly global."
IMC Global is one of the world's leading producers and
suppliers of agricultural products and salt. With 1998
revenues and EBITDA of $2.7 billion and $826 million,
respectively, the Company is among the world's largest
producers and marketers of phosphate and potash crop
nutrients, salt and animal feed ingredients. For more
information, visit IMC Global's Web site at
www.imcglobal.com.
This news release contains forward-looking statements that
involve risks and uncertainties. These statements are based
on current expectations; actual results may differ
materially. Among the factors that could cause actual
results to differ materially are general business and
economic conditions in localities where the Company
operates; weather conditions; the impact of competitive
products; pressure on prices realized by the Company for its
products; constraints on supplies or raw materials used in
manufacturing certain of the Company's products; capacity
constraints limiting the production of certain products;
difficulties or delays in the development, production,
testing and marketing of products; difficulties or delays in
receiving required governmental and regulatory approvals;
market acceptance issues, including the failure of products
to generate anticipated sales levels; difficulties
rationalizing acquired businesses and in realizing related
cost savings and other benefits; the effects of and changes
in trade, monetary and fiscal policies, laws and
regulations; foreign exchange rates and fluctuations in
those rates; the costs and effects of legal, including
environmental, and administrative proceedings involving the
Company; the completion of the Company's Year 2000 Program;
and the other risk factors reported from time to time in the
Company's SEC reports.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
IMC GLOBAL INC.
/s/ J. Bradford James
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J. Bradford James
Executive Vice President and
Chief Financial Officer
Date: December 22, 1999
