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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended December 31, 1999
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 60062
Northbrook, Illinois (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (847) 272-9200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Common Stock, par value $1 per share New York and Chicago Stock Exchanges
Preferred Share Purchase Rights New York and Chicago Stock Exchanges
Warrants to Purchase Common Stock New York 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
------- -------
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. [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the Registrant: $1,820,529,072 as of February 15, 2000. Market value
is based on the February 15, 2000 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:
114,477,296 shares, excluding 10,686,276 treasury shares as of March 15,
2000.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1999 (Parts I, Item 1 and Part II, Items 6, 7, 7a
and 8)
2. Portions of the Registrant's definitive proxy statement dated March 17,
2000 issued in conjunction with the Annual Meeting of Stockholders
(Part III, Items 10, 11, 12 and 13)
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1999 FORM 10-K CONTENTS
Item Page
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Part I:
1. Business
Company Profile 1
Business Unit Information 2
Factors Affecting Demand 12
Other Matters 12
Executive Officers of the Registrant 13
2. Properties 14
3. Legal Proceedings 15
4. Submission of Matters to a Vote of Security Holders 16
Part II:
5. Market for the Registrant's Common Stock and Related 16
Stockholder Matters
6. Selected Financial Data 17
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17
7a. Quantitative and Qualitative Disclosures about 17
Market Risk
8. Financial Statements and Supplementary Data 17
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 17
Management
13. Certain Relationships and Related Transactions 18
Part IV:
14. Exhibits, Financial Statement Schedules and Reports 18
on Form 8-K
Signatures 24
PART I.
Item 1.Business.(1)
COMPANY PROFILE
IMC Global Inc. (Company or IMC) is one of the world's leading
producers and distributors of crop nutrients to the international
agricultural community and one of the foremost manufacturers and
distributors of animal feed ingredients to the worldwide industry.
The Company mines, processes and distributes potash in the United
States and Canada and is the majority 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 also mines, processes and distributes salt products in
the United States, Canada and Europe to the following markets: water
conditioning, agricultural, industrial, consumer deicing and food
and road deicing salt. The Company's current operational structure
consists of four continuing business units corresponding to its
major product lines, as follows: IMC Phosphates (Phosphates), IMC
Potash (Potash), IMC Salt (Salt) and IMC Feed Ingredients (Feed
Ingredients). As a result of the planned divestiture of IMC
Chemicals (Chemicals), all financial information for Chemicals is
reflected as discontinued operations. In early 2000, the Company
decided to explore strategic options, including divestiture or a
joint venture, for the Salt business unit and a production facility
located in Ogden, Utah.
IMC and Phosphate Resource Partners Limited Partnership (PLP), have
a 56.5 percent and 43.5 percent, respectively, direct economic
interest in IMC-Agrico over the term of the joint venture. IMC owns
51.6 percent of the outstanding PLP limited partnership units. As a
result, the Company's total interest in IMC-Agrico is approximately
78.9 percent.
The three major nutrients required for plant growth are phosphorus,
contained in phosphate rock; potassium, contained in potash; and
nitrogen. 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 in plants. These elements occur naturally in the
soil but need to be replaced as crops remove them from the soil.
Currently, no viable substitutes exist to replace the role of
phosphate, potash and nitrogen in the development and maintenance of
high-yield crops. Salt serves several high volume applications where
there is either no substitute or no economical substitute. It is an
essential nutrient for animal health and is used universally as a
food seasoning, as a food preservative and as an additive to
livestock feed products. It also is the primary material used to
provide safe highways, walkways and parking lots. It is used
extensively in manufacturing many chemicals where it is the most
economical source of both sodium and chlorine. Another large volume
application is for both industrial and consumer water conditioning
where it removes other minerals and hence "softens" or conditions
water.
The Company believes that it is one of the most efficient North
American producers of concentrated phosphates, potash, animal feed
ingredients and salt. IMC's business strategy focuses on
maintaining and growing its leading position as a crop nutrient and
animal feed producer and distributor through extensive customer
service, efficient distribution and transportation as well as
supplying products worldwide at competitive prices, largely by
capitalizing on economies of scale and state-of-the-art technology
to reduce costs.
For additional information on the Company's business structure, see
Note 4, "Discontinued Operations," Note 5, "Other Divestitures,"
Note 6, "Acquisitions" and Note 18, "Subsequent Events," of Notes to
Consolidated Financial Statements included in Part II, Item 8,
"Financial Statements and Supplementary Data," of this Annual Report
on Form 10-K, which is incorporated herein by reference.
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, competitive and weather
conditions as well as technological developments.
In 1999, the Company implemented a Company-wide rightsizing program
(Rightsizing Program) which was designed to simplify and focus the
core businesses through a facilities optimization and asset
rightsizing program. In 1998, the Company initiated a plan to
improve profitability (Project Profit). The initiative of Project
Profit consisted primarily of a restructuring of operations at the
Phosphates business unit.
For additional information on the Rightsizing Program and Project
Profit, see Part II, Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," of this Annual
Report on Form 10-K, which is incorporated herein by reference.
The following business unit discussion should be read in conjunction
with the information contained in Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and Note 17, "Operating Segments," of Notes to
Consolidated Financial Statements included in Part II, Item 8, of
this Annual Report on Form 10-K, which is incorporated herein by
reference.
Phosphates
----------
Net sales for Phosphates were $1,332.4 million, $1,572.8 million and
$1,484.8 million for the years ended December 31, 1999, 1998 and
1997, respectively. Phosphates is a leading United States miner of
phosphate rock, one of the primary raw materials used in the
production of concentrated phosphates, with 18.0 million tons of
annual capacity. Phosphates is also a leading United States
producer of concentrated phosphates with an annual capacity of
approximately four million tons of phosphoric acid (P2O5). P2O5 is
an industry term indicating a product's phosphate content measured
chemically in units of phosphorous pentoxide. Phosphates'
concentrated phosphate products are marketed worldwide to crop
nutrient manufacturers, distributors and retailers.
Phosphates' facilities, which produce concentrated phosphates, are
located in central Florida and Louisiana. Its annual capacity
represents approximately 31 percent of total United States
concentrated phosphate production capacity and approximately ten
percent of world capacity. The Florida concentrated phosphate
facilities consist of two plants: New Wales and South Pierce. The
New Wales complex is the largest concentrated phosphate plant in the
world with an estimated annual capacity of 1.9 million tons of
phosphoric acid (P2O5 equivalent). New Wales primarily produces
three forms of concentrated phosphates: diammonium phosphate (DAP),
monoammonium phosphate (MAP) and merchant grade phosphoric acid.
The South Pierce plant produces phosphoric acid and granular triple
superphosphate (GTSP). A third facility, Nichols, which
manufactured phosphoric acid, DAP and granular MAP (GMAP), was
permanently closed as part of the Rightsizing Program and will be
dismantled.
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 GMAP. The Faustina plant
manufactures phosphoric acid, DAP, GMAP and ammonia. The Taft
facility manufactures DAP and GMAP. Concentrated phosphate
operations are managed in order to balance Phosphates' output with
customer needs. Phosphates suspended phosphoric acid production at
its Faustina facility in November 1999 and suspended production at
its Taft facility in July 1999 in response to reduced market
demands.
Summarized below are descriptions of the principal raw materials
used in the production of concentrated phosphates: phosphate rock,
sulphur and ammonia.
Phosphate Rock
All of the Company's phosphate mines and related mining operations
are located in central Florida. Phosphates extracts phosphate ore
through surface mining after removal of a ten to 50 foot layer of
sandy overburden and then processes the ore at one of its
beneficiation plants where the ore goes through washing, screening,
sizing and flotation procedures designed to separate it from sands,
clays and other foreign materials. In conjunction with the
Rightsizing Program and Project Profit, the Company permanently
closed two phosphate mines during 1999, Payne Creek and Noralyn,
respectively. As a result of the permanent mine closures,
Phosphates currently maintains four operational mines. The
Rightsizing Program and Project Profit, as they pertain to the
facilities optimization program and strategic mining plan, were
developed to maximize available resources, lower the cost of
producing rock and enhance the management of phosphate rock
inventory.
Phosphates' rock production volume was 16.4 million tons for the
year ended December 31, 1999 and 20.0 million tons for each of the
years ended December 31, 1998 and 1997. Anticipated production in
2000 will be less than the average of the prior three years.
Although Phosphates sells phosphate rock to other crop nutrient and
animal feed ingredient manufacturers, it primarily uses phosphate
rock internally in the production of concentrated phosphates. Tons
used internally, primarily in the manufacture of concentrated
phosphates, totaled 13.4 million, 14.8 million and 14.1 million for
the years ended December 31, 1999, 1998 and 1997, respectively,
representing 82 percent, 74 percent and 70 percent, respectively, of
total tons produced. Rock shipments to customers totaled 4.8
million, 5.0 million and 4.6 million tons for the years ended
December 31, 1999, 1998 and 1997, respectively.
Phosphates estimates its proven reserves to be 493.3 million tons of
phosphate rock as of December 31, 1999. Phosphates controls these
reserves through ownership, long-term lease, royalty or purchase
option agreements. Reserve grades range from 58 percent to 78
percent bone phosphate of lime (BPL), with an average grade of 66
percent BPL. BPL is the standard industry term used to grade the
quality of phosphate rock. The phosphate rock mined by Phosphates
in the last three years averaged 65 percent BPL, which management
believes is typical for phosphate rock mined in Florida during this
period. Phosphates estimates its reserves based upon the
performance of exploration core drilling as well as 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.
Phosphates also owns or controls phosphate rock resources in the
southern extension of the central Florida phosphate district
(Resources). Resources are mineralized deposits that may be
economically recoverable; however, additional geostatistical
analyses, including further explorations, permitting and mining
feasibility studies, are required before such deposits may be
classified as reserves. Based upon its preliminary analyses of
these Resources, Phosphates believes that these mineralized deposits
differ in physical and chemical characteristics from those
historically mined by Phosphates but are similar to certain of the
reserves being mined in current operations. These Resources contain
estimated recoverable phosphate rock of approximately 113.0 million
tons. Some of these Resources are located in what may be classified
as preservational wetland areas under standards set forth in current
county, state and federal environmental protection laws and
regulations, and consequently, the Company's ability to mine these
Resources may be restricted.
Sulphur
A significant portion of Phosphates' sulphur requirements is
provided by the sulphur subsidiary of McMoRan Exploration Company
(MMR) under a supply agreement with the Company. Phosphates'
remaining sulphur requirements are provided by market contracts.
Additionally, in late 1999, the Company, CF Industries, Inc. and
Cargill Fertilizer executed a letter of intent to form a joint
venture that will remelt sulphur for use at their respective Florida
phosphate fertilizer operations.
Ammonia
Phosphates' ammonia needs are supplied by its Faustina ammonia
production facility and by world suppliers, primarily under annual
and multi-year contracts. Production from the Faustina plant, which
has an estimated annual capacity of 560,000 tons of anhydrous
ammonia, is used internally to produce certain concentrated
phosphates.
Sales and Marketing
Domestically, Phosphates sells its concentrated phosphates to crop
nutrient manufacturers, distributors and retailers. The Company
also uses concentrated phosphates internally for the production of
animal feed ingredients (see Feed Ingredients). Virtually all of
Phosphates' export sales of phosphate crop nutrients are marketed
through the Phosphate Chemicals Export Association (PhosChem), a
Webb-Pomerene Act organization, which the Company administers on
behalf of itself and three other member companies. PhosChem
believes that its sales represent approximately 51 percent of total
United States exports of concentrated phosphates. The countries that
account for the largest amount of PhosChem's sales of concentrated
phosphates include China, Australia, India, Japan and Brazil. In
1999, Phosphates' exports to Asia were 44 percent of total
shipments, with China representing 29 percent of those shipments.
The table below shows Phosphates' shipments of concentrated
phosphates in thousands of dry product tons, primarily DAP:
1999 1998 1997
Tons % Tons % Tons %
---- --- ---- --- ---- ---
Domestic
Customers 2,552 38 2,373 32 2,065 29
Captive, to other business
units 92 1 563 8 615 9
----- --- ----- --- ----- ---
2,644 39 2,936 40 2,680 38
Export 4,055 61 4,377 60 4,425 62
----- --- ----- --- ----- ---
Total shipments 6,699 100 7,313 100 7,105 100
===== === ===== === ===== ===
As of December 31, 1999, Phosphates had contractual commitments from
non-affiliated customers for the shipment of concentrated phosphates
and phosphate rock amounting to approximately 2.7 million tons and
4.7 million tons, respectively, in 2000. Captive sales have
decreased in 1999 as a result of the sale of the IMC AgriBusiness
business unit (AgriBusiness) in April 1999. However, since April
1999, sales to AgriBusiness have been reflected as sales to
customers.
Competition
Phosphates 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, product quality
and innovation.
Feed Ingredients
----------------
Net sales for Feed Ingredients were $173.5 million, $164.4 million
and $163.5 million for the years ended December 31, 1999, 1998 and
1997, respectively.
Feed Ingredients is one of the world's foremost producers and
marketers of phosphate-based animal feed ingredients with a total
annual capacity approaching 800,000 tons. In the fourth quarter of
1999, Feed Ingredients completed construction of an expansion of its
deflourinated phosphate (Multifos(Registered Trademark)) capacity.
The expansion increases capacity for Multifos(Registered Trademark)
to 200,000 tons annually, which is approximately 25 percent of total
capacity. The principal production facilities of Feed Ingredients
are located adjacent to, and utilize raw materials from, Phosphates'
concentrated phosphate complex at New Wales.
Sales and Marketing
Feed Ingredients supplies phosphate and potassium-based feed
ingredients for poultry and livestock to markets in North America,
Latin America and Asia. Feed Ingredients sources phosphate and
potassium raw materials from the Company's respective production
facilities. Feed Ingredients has a strong brand position in a $1.0
billion global market with products such as Biofos(Registered
Trademark), Dynafos(Registered Trademark), Multifos(Registered
Trademark), Dyna-K(Registered Trademark) and Dynamate(Registered
Trademark).
The table below shows Feed Ingredients' shipments of phosphate and
potassium-based feed ingredients in thousands of tons:
1999 1998 1997
Tons % Tons % Tons %
---- --- ---- --- ---- ---
Domestic 767 84 724 85 708 86
Export 147 16 129 15 116 14
--- --- --- --- --- ---
Total shipments 914 100 853 100 824 100
=== === === === === ===
As of December 31, 1999, Feed Ingredients had contractual
commitments from non-affiliated customers for the shipment of
phosphate feed and feed grade potassium products amounting to
approximately 0.6 million tons in 2000.
Competition
Feed Ingredients operates in a competitive global market. Major
integrated producers of feed phosphates and feed grade potassium are
located in the United States and Europe. Many smaller producers are
located in emerging markets around the world. Many of these smaller
producers are not manufacturers of phosphoric acid and are required
to purchase this raw material on the open market. Competition in
this global market is driven by price, quality and service.
Potash
------
Net sales for the Potash business unit were $692.1 million, $700.1
million and $617.4 million for the years ended December 31, 1999,
1998 and 1997, respectively.
Potash mines, processes and distributes potash in the United States
and Canada. The term "potash" applies generally to the common salts
of potassium. Potash's products are marketed worldwide to crop
nutrient manufacturers, distributors and retailers and are also used
in the manufacture of mixed crop nutrients and, to a lesser extent,
animal feed ingredients (see Feed Ingredients). Potash's products
are also used for icemelter and water softener regenerant (see
Salt). Potash also sells potash to customers for industrial use.
Potash operates four potash mines in Canada as well as three potash
mines and a solar evaporation facility in the United States. In
early 2000, the Company decided to explore strategic options,
including divestiture or a joint venture, for the solar evaporation
facility. With a total capacity in excess of ten million tons of
product per year, management believes that Potash is one of the
leading private-enterprise potash producers in the world. In 1999,
these operations accounted for approximately nine percent of world
capacity on a K2O basis(2).
Canadian Operations
Potash's four mines in Canada produce muriate of potash exclusively
and 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. Traditional 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 ore
to conveyor belts. The ore is then crushed, moved to storage bins
and then hoisted to refineries above ground. In contrast, Potash'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 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 and salt is pumped to a
refinery where sodium chloride, a co-product of this process, is
separated from the potash through the use of evaporation and
crystallization techniques. Concurrently, solution is pumped into a
130 acre cooling pond where additional crystallization occurs and
the resulting product is recovered via a floating dredge. Refined
potash is dewatered, dried and sized. The Canadian operations
produce 26 different potash products, including industrial grades,
many through proprietary processes.
Potash Corporation of Saskatchewan Inc. (PCS) controls several
potash-producing properties located in the vicinity of Potash's
Esterhazy mines. Under a long-term contract with PCS, the Company
mines and refines 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
1,050,000 tons and the minimum is 500,000 tons per year. The
current contract extends through June 30, 2001 and is renewable at
the option of PCS for five additional five-year periods.
Potash controls the rights to mine 323,070 acres of potash-bearing
land in Saskatchewan. This land, of which 72,964 acres have already
been mined or abandoned, contains over 4.6 billion tons of potash
mineralization (calculated after estimated extraction losses) at an
average grade of approximately 21 percent K2O. The Company believes
that this ore is sufficient to support current operations for more
than a century and will yield more than 1.4 billion tons of finished
product with a K2O content of approximately 61 percent.
Potash's mineral rights in Saskatchewan consist of 123,953 acres
owned in fee, 175,959 acres leased from the province of Saskatchewan
and 23,158 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 $9.1 million, $9.8 million
and $8.2 million in 1999, 1998 and 1997, respectively.
Since December 1985, the Company has experienced an inflow of water
into one of its two interconnected potash mines at Esterhazy,
Saskatchewan. As a result, the Company has incurred expenditures,
certain of which, due to their nature, have been capitalized while
others have been charged to expense, to control the inflow. Since
the initial discovery of the inflow, the Company has been able to
meet all sales obligations from production at the mines. The
Company has considered alternatives to the operational methods
employed at Esterhazy. However, the procedures utilized to control
the water inflow have proven successful to date, and the Company
currently intends to continue conventional shaft mining. Despite
the relative success of these measures, there can be no assurance
that the amounts required for remedial efforts will not increase in
future years or that the water inflow, risk to employees or
remediation costs will not increase to a level which would cause the
Company to change its mining process or abandon the mines.
Potash's underground mine operations are presently insured against
business interruption and risk from catastrophic perils, including
collapse, floods and other property damage with the exception of
flood coverage at Esterhazy. Due to the ongoing water inflow
problem at Esterhazy, underground operations at this facility are
currently not insurable for water incursion problems. Like other
potash producers' shaft mines, the Colonsay mine is also subject to
the risks of inflow of water as a result of its shaft mining
operations.
The Saskatchewan Department of Environmental and Resource Management
(Saskatchewan Department) has published regulations requiring all
potash mine operators to submit facility decommissioning and
reclamation plans for approval by the Saskatchewan Department and to
provide assurances that the plans will be carried out when the
facility is closed. See "Other Matters - Environmental Matters,"
for further detail.
United States Operations
Potash has three United States potash facilities: the Carlsbad shaft
mine located in Carlsbad, New Mexico; the Hersey solution mine
located in Hersey, Michigan; and the solar evaporation facility
located in Ogden, Utah.
The Carlsbad mine has an annual production capacity of over 1.7
million tons of finished product. The reserves are 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. At this time, only the
sylvinite and langbeinite ores are mined.
Continuous underground mining methods are utilized for 95 percent of
the ore extraction with conventional underground mining methods used
for the remaining five percent. In the continuous mining sections,
drum type mining machines are used to cut sylvinite and langbeinite
ore from the face. Mining heights are as low as four and one-half
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, transported to
storage areas and then 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; double sulphate of potash magnesia, marketed
under the brand name K-Mag(Registered Trademark), containing
significant amounts of sulphur, potassium and magnesium, with low
levels of chloride; and sulphate of potash, supplying a high
concentration of potassium with low levels of chloride.
At the Carlsbad facility, potash is mined and refined from 60,364
acres of reserves that are controlled under long-term leases. These
reserves contain an estimated total of 223.3 million tons of potash
mineralization (calculated after estimated extraction losses) in
four mining beds evaluated at thicknesses ranging from four and one-
half feet to in excess of 11 feet. At average refinery rates, these
ore reserves are estimated to be sufficient to yield 16.0 million
tons of concentrate from sylvinite with an average grade of 60
percent K2O and 41.1 million tons of langbeinite concentrate with an
average grade of approximately 22 percent K2O. At projected rates
of production, management estimates that Potash's reserves of
sylvinite and langbeinite are sufficient to support operations for
more than 25 years and 27 years, respectively. Pursuant to
potassium mineral lease arrangements with the federal government,
the State of New Mexico and other third parties, the Company paid
royalties of $3.4 million, $3.5 million and $3.3 million in 1999,
1998 and 1997, respectively.
Potash made mine modifications and constructed a new state-of-the-
art, world class langbeinite refinery at Carlsbad at a cost of
approximately $77.0 million which began production during 1999. The
production capacity at the Carlsbad facility was increased by 35
percent as a result of constructing the new K-Mag(Registered
Trademark) processing plant.
Production was discontinued at the Western Ag facility during 1999.
This facility, which is adjacent to Carlsbad, was acquired in 1997.
Western Ag had an annual capacity of 400,000 tons of double sulfate
of potash magnesia that was marketed under the brand name K-
Mag(Registered Trademark). The underground mine was connected to
Carlsbad during the year with the ore directed to the new refinery.
By consolidating the process operations of Western Ag and Carlsbad,
substantial cost reductions were realized as well as improved
process efficiency.
At Hersey, Michigan, Potash operates a solution mining facility with
annual potash production capacity of approximately 160,000 tons, and
annual salt capacity of approximately 300,000 tons. The salt from
this facility is marketed by Salt (see Salt). At Hersey, Potash's
mineral rights consist of 1,093 acres owned in fee and 10,537 acres
controlled under long-term leases. These lands contain an estimated
300.0 million tons of potash mineralization contained in two beds
ranging in thickness from 14 to 30 feet. Management estimates that
these reserves are sufficient to yield 62.0 million tons of
concentrate from sylvinite with an average grade of 60 percent K2O.
At current rates of production, management estimates that these
reserves are sufficient to support operations for more than 300
years.
The solar evaporation facility, located west of Ogden, Utah,
utilizes solar energy and nearly 60,000 acres of evaporation ponds
to manufacture sulfate of potash, sodium chloride (salt) and
magnesium chloride from the brines of the Great Salt Lake. This
facility has the capacity to annually produce approximately 450,000
tons of sulfate of potash, in excess of 300,000 tons of magnesium
chloride and over one million tons of salt. Sulfate of potash and
solid magnesium chloride hexahydrate for industrial applications is
marketed by Potash's sales force while the salt and liquid magnesium
chloride, which is primarily used for dust control, ice control and
some industrial uses, is marketed by the Salt sales force (see
Salt). At the Ogden facility, Potash's mineral rights consist of
1,499 acres owned in fee and 117,244 acres controlled under long-
term leases with the State of Utah. The leases continue in effect
so long as the salts are produced or the State of Utah receives a
minimum royalty and rent. Management estimates that reserves are
adequate to support current capacity for more than a century and
yield more than 49.0 million tons of sulfate of potash product with
a K2O content of approximately 50 percent.
Sales and Marketing
Potash's North American potash sales are made through Potash's sales
force. North American agricultural sales are primarily to
independent accounts, co-operatives and large regional fertilizer
buyers while non-agricultural sales are primarily to large
industrial accounts and the animal feed industry. Additionally,
potash is used as an ingredient in icemelter and as a water softener
regenerant.
Potash is sold throughout the world, with Potash's largest amount of
sales outside of North America made to China, Japan, Malaysia,
Korea, Australia, New Zealand and Latin America. Potash is also
used internally by the Salt business unit as a major ingredient in
its icemelter products. The Salt business unit also markets potash
as a water softener regenerant along with its traditional salt
products (see Salt). Potash's exports from Canada, except to the
United States, are made through Canpotex Limited (Canpotex), an
export association of Saskatchewan potash producers. In general,
Canpotex sales are allocated among the producer members based on
production capacity. The Company currently supplies approximately
35 percent of Canpotex's requirements. Potash exports from Carlsbad
are sold through the Company's sales force. In 1999, 83 percent of
the potash produced by Potash was sold as crop nutrients, while 17
percent was sold for non-agricultural uses.
The table below shows Potash's shipments of potash in thousands of
tons:
1999 1998 1997
Tons % Tons % Tons %
---- --- ---- --- ---- ---
Domestic
Customers 4,938 61 4,623 55 5,097 57
Captive, to other business
units 416 5 1,116 13 1,306 15
----- --- ----- --- ----- ---
5,354 66 5,739 68 6,403 72
Export 2,756 34 2,663 32 2,538 28
----- --- ----- --- ----- ---
Total shipments 8,110 100 8,402 100 8,941 100
====== === ===== === ===== ===
As of December 31, 1999, Potash had contractual commitments from non-
affiliated customers for the shipment of potash amounting to
approximately 2.9 million tons in 2000. Captive sales have
decreased in 1999 as a result of the sale of AgriBusiness in April
1999. However, since April 1999, sales to AgriBusiness have been
reflected as sales to customers.
Competition
Potash is a commodity available from many sources and consequently,
the market is highly competitive. In addition to the Potash
business unit, there are four North American producers: two in the
United States and two in Canada, one of which may have greater
production capacity than Potash. Through its participation in
Canpotex, the Potash business unit competes outside of North America
with various independent potash producers and consortia and other
export organizations, including state-owned organizations. Potash's
principal methods of competition, with respect to the sale of potash
include: pricing; offering consistent, high-quality products and
superior service; as well as developing new industrial and consumer
uses for potash.
Salt
----
Concurrent with the Harris Chemical Group, Inc. (Harris) acquisition
in April 1998 (Harris Acquisition), the Company established the Salt
business unit. Net sales for Salt were $321.7 million and $177.4
million for the year ended December 31, 1999 and the nine months
ended December 31, 1998, respectively.
The Salt business unit mines, produces, processes and distributes
salt in North America and Europe. The products are marketed
primarily in the United States, Canada and the United Kingdom. Salt
is used in a variety of applications, including as a deicer for both
highway and consumer use; an ingredient in the production of
chemicals for paper bleaching and plastic production; a flavor
enhancer and preservative in food; an ingredient and nutrient in
animal feeds; and an essential component in both industrial and
consumer water softeners. The demand for salt has historically
remained relatively stable during economic cycles due to its
relatively low cost and high value in a large variety of uses.
However, demand in the highway deicing market is affected by changes
in winter weather. Approximately 50 percent of Salt's annual
revenues are generated from December through March when highway
deicing is at its peak.
Production Operations
Salt has a production capacity of approximately 15.0 million tons of
salt. Production activities are currently conducted at fourteen
facilities, five located in the United States, seven located in
Canada and two located in the United Kingdom.
Summarized below are the three processing methods used to produce
salt. Salt utilizes all three methods.
Rock Salt Mining
The Company employs a drill and blast mining technique at its rock
salt mines. Mining machinery moves salt from the salt face to
conveyor belts where it is then crushed and screened. Salt is then
hoisted to the surface where it is loaded onto shipping vessels.
Mechanical Evaporation
The mechanical evaporation method involves subjecting salt-saturated
brine to vacuum pressure and heat to precipitate salt. The salt
brine is obtained from underground salt deposits through a series of
wells. The resulting product has both a high purity and a uniform
physical shape.
Solar Evaporation
The solar evaporation method is used in areas of the world where
high salinity brines are available and where weather conditions
provide for a high natural evaporation rate. The brine is pumped
into a series of large open ponds where sun and wind evaporate the
water and crystallize the salt, which is then mechanically
harvested.
United States Operations
Salt's central and midwestern United States general trade customer
base is served by mechanical evaporation plants in Kansas and
Tennessee. Additionally, salt is produced as a co-product by Potash
in its Michigan operations. The Cote Blanche, Louisiana rock salt
mine serves chemical customers in the southern and western United
States as well as highway deicing customers through a series of
depots located along the Mississippi and Ohio Rivers. The
evaporation plants, rock salt mine and co-product production have a
combined annual production capacity of 3.3 million tons. Salt's
solar evaporation facility located in Ogden, Utah is the largest
solar salt production site in the United States. This facility
principally serves the western general trade markets, but also
provides salt for chemical applications and highway deicing.
Production capacity is currently only limited by demand. The
Company also owns and operates two salt packaging facilities in
Illinois and Wisconsin which also serve customers in the central and
midwestern United States as well as parts of the northeastern United
States.
Canadian Operations
Salt is produced at seven different locations in Canada.
Mechanically evaporated salt is produced at three facilities
strategically located throughout Canada: Amherst, Nova Scotia in
eastern Canada; Goderich, Ontario in central Canada; and Unity,
Saskatchewan in western Canada. From the Goderich, Ontario rock
salt mine, Salt also serves the highway deicing market in Canada and
the Great Lakes region of the United States. The Company also
produces salt as a co-product from its Esterhazy, Colonsay and Belle
Plaine potash facilities which serve both the general trade and the
highway deicing markets. The evaporation plants, the rock salt mine
and other production facilities have a combined annual capacity of
7.4 million tons.
United Kingdom Operations
Salt's United Kingdom customer base is served by two facilities with
a combined annual production capacity of 2.9 million tons. Highway
deicing customers throughout the United Kingdom are served by the
Winsford rock salt mine in west central England. Also, in west
central England is the Weston Point mechanical evaporation plant
servicing the general trade and chemical customers in the United
Kingdom as well as continental Europe.
Sales and Marketing
The Company separates sales of salt into three major market seg
ments: general trade, highway deicing and chemical. The general
trade segment is Salt's largest segment and accounted for
approximately 50 percent of 1999 sales. This segment includes
consumer applications such as table salt, water conditioning,
consumer ice control, food and meat processing, agricultural
applications, including feed mixes, as well as a variety of
industrial applications such as oil refining and drilling, metal
processing and tanning.
Salt has maintained a significant presence in the general trade
business over recent years due to its strong focus on: (i) the
midwestern region of the United States; (ii) all of Canada and the
United Kingdom; (iii) its distribution network to the grocery trade;
and (iv) its relationships with large distributors of water
conditioning salt. In order to continue to expand its volume and
profitability in the general trade segment, Salt has focused its
efforts on improving its marketing programs. These programs
include: (i) differentiating various brand names through promotional
activities; (ii) developing an exclusive distributor network in the
United States; and (iii) consolidating the product offerings to
customers with products available from the Potash business unit.
The general trade market is driven by strong customer relationships.
Sales in the general trade segment occur through retail channels
such as grocery; building supply and hardware stores; automotive
stores; feed suppliers; as well as industrial manufacturers in
various industries. Distribution in the general trade segment is
channeled through a direct sales force located in various parts of
Salt's service territories, who sell products to distributors,
dealers and end-users. The Company also maintains a network of
brokers who sell table salt, consumer deicing and water conditioning
products. These brokers service wholesalers, chain grocers and
retailers as well as the food service industry.
Highway deicing constitutes Salt's second largest segment,
accounting for approximately 40 percent of 1999 salt sales.
Principal customers are states, provinces, counties, municipalities
and road maintenance contractors that purchase bulk salt for ice
control on public roadways. Highway salt is sold mostly via a
tendered bid contract system with price, product quality and
delivery being the primary market factors when purchasers are
selecting a supplier. Supply contracts generally are awarded
annually on the basis of tendered bids once the purchaser is assured
that the minimum requirements for purity, service and delivery can
be met. The bidding process eliminates the need to invest
significant time and effort in marketing and advertising. Location
of the source of salt and distribution outlets also play a
significant role in determining a supplier. Salt's North American
operations have an extensive network of approximately 80 depots for
storage and distribution of highway deicing salt. The majority of
these depots are located on the Great Lakes and the Mississippi
River system.
Winter weather variability is the most significant factor affecting
salt sales for deicing applications because mild winters reduce the
need for salt used in ice and snow control. Unusually mild or harsh
weather can significantly affect Salt's sales and earnings. The
vast majority of North American deicing sales are made in Canada and
the northern United States where winter weather is generally harsher
than in other parts of North America.
The chemical segment accounted for approximately ten percent of
Salt's 1999 salt sales. Principal customers are producers of
intermediate chemical products used in pulp bleaching and plastic
production that do not have a captive source of brine. Distribution
into the chemical market is made primarily through long-term supply
agreements, which are negotiated privately. Price, service and
product quality are the major market requirements.
The table below shows Salt's shipments of salt in thousands of tons:
1999 1998(a) 1997(a)
Tons % Tons % Tons %
---- --- ---- --- ---- ---
Domestic
Customers 9,872 86 4,893 85 - -
Captive, to other business units 11 - 6 - - -
------ --- ----- --- ----- ---
9,883 86 4,899 85 - -
Export/Foreign 1,628 14 862 15 - -
------ --- ----- --- ----- ---
Total shipments 11,511 100 5,761 100 - -
====== === ===== === ===== ===
(a)Acquired as part of the Harris Acquisition in April 1998.
Competition
Salt has significant competition in each of the markets in which it
operates. In North America, three other large, nationally recognized
companies compete against Salt in production and marketing of rock,
evaporated and solar salt. In addition, there are several smaller
regional producers of evaporated and solar salt. In spite of the
high relative cost of transportation in the distribution of salt,
there are also several importers of salt. Most of these imports
impact the eastern seaboard where IMC has a minimum position. In
the United Kingdom, there is one other large domestic producer of
evaporated salt, several small local producers as well as some
imports from continental Europe. There are two other companies that
produce rock salt - one in northern England and the other in
Ireland. There are no significant imports of rock salt into the
United Kingdom. Salt also exports salt from the United Kingdom to
Scandinavia and continental Europe and competes with many other
European producers.
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 operating results. Revenues 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, the
Company's crop nutrients business is seasonal to the extent North
American farmers and agricultural enterprises purchase more crop
nutrient products during the spring and fall. The Company's salt
business is seasonal and it can be significantly affected by the
severity of winter weather in North America and the United Kingdom.
A high percentage of Salt's income is derived in the first and the
fourth quarter of each year when sales of salt for deicing is the
greatest.
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 local governments; and laws and policies affecting
foreign trade and investment. Due to economic and political
factors, customer needs can change dramatically from year to year.
OTHER MATTERS
Environmental Matters
---------------------
Information regarding environmental matters of the Company is
included in Part II, Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," of this Annual
Report on Form 10-K, which is incorporated herein by reference.
Employees
---------
The Company had 8,976 employees as of December 31, 1999. The work
force consisted of 2,802 salaried, 6,167 hourly and seven temporary
or part-time employees.
Labor Relations
---------------
Within North America, the Company has 15 collective bargaining
agreements with the affiliated local chapters of four international
unions. As of December 31, 1999, approximately 90 percent of the
hourly work force was covered under collective bargaining
agreements. Two plant closure negotiations were successfully
completed in 1999 at the Hutchinson, Kansas and Western Ag/Carlsbad,
New Mexico facilities. Eight agreements covering 56 percent of the
union hourly workforce will expire in 2000. The Company has not
experienced a significant work stoppage in recent years and
considers its labor relations to be good.
EXECUTIVE OFFICERS OF THE REGISTRANT
The ages and five-year employment history of the Company's executive
officers as of March 15, 2000 was as follows:
Robert F. Clark
---------------
Age 57. Senior Vice President of the Company since April 1999 and
President of Salt since joining the Company in April 1998 as a
result of the Harris Acquisition. From 1993 to 1998 Mr. Clark
served as President of Great Salt Lake Minerals, a division of
Harris Chemical Group, Inc.
Steven J. Demetriou
-------------------
Age 41. Senior Vice President of the Company since October 1999 and
President of Phosphates since June 1999, when he joined the Company.
Prior to joining the Company, Mr. Demetriou served as Vice
President, Global Specialty Resins and President, Cytec Asia-Pacific
of Cytec Industries, Inc., a manufacturer of specialty materials,
principally aerospace materials, from December 1997 to June 1999.
From July 1996 to December 1997, Mr. Demetriou served as Vice
President, Global Adhesives Business, for Exxon Chemical Company, a
manufacturer of basic petrochemicals, including olefins and
aromatics, and a supplier of specialty rubbers and of additives for
fuels and lubricants. From July 1993 to July 1996, Mr. Demetriou
was Director, Europe Olefins and Aromatics Marketing, for Exxon
Chemical Company.
E. Paul Dunn, Jr.
-----------------
Age 46. Vice President and Treasurer of the Company since joining
the Company in May 1998. Prior to joining the Company, Mr. Dunn
served as Vice President, Finance and Information Technology for
GATX Terminals Corporation, a provider of storage, handling and
transportation of petroleum and chemical commodities, from 1995 to
1998. He also served as Treasurer of GATX Corporation from 1990 to
1995.
C. Steven Hoffman
-----------------
Age 51. Senior Vice President of the Company since 1990 and
President, International since September 1998. From 1995 to August
1998, Mr. Hoffman served as Senior Vice President, International of
the Company.
John U. Huber
-------------
Age 61. Executive Vice President of the Company since October 1999
and President of Potash since joining the Company in March 1996.
Mr. Huber also served as President of IMC Phosphates from September
1998 to May 1999. Prior to joining the Company, Mr. Huber served as
Executive Vice President of The Vigoro Corporation from June 1993 to
March 1996.
Mary Ann Hynes
--------------
Age 52. Senior Vice President and General Counsel of the Company
since joining the Company in July 1999. Prior to joining the
Company, Ms. Hynes served as Vice President, General Counsel and
Secretary of Sundstrand Corporation, a designer and manufacturer of
aerospace and industrial technology-based components, from 1998 to
July 1999. From 1997 to 1998 Ms. Hynes served as General Counsel
and Assistant Secretary of Wolters Kluwer U.S. Corporation, the
parent company of numerous technical print and electronic
publishers. From 1980 to 1996 Ms. Hynes served as General Counsel of
CCH Incorporated, a global provider of tax and business law
information through publications and software.
J. Bradford James
-----------------
Age 53. Executive Vice President and Chief Financial Officer of the
Company since October 1999. Mr. James served as Senior Vice
President and Chief Financial Officer of the Company from February
1998 to September 1999. Prior to joining the Company in February
1998, Mr. James served as Executive Vice President of USG
Corporation, a manufacturer and distributor of residential and
industrial building materials, from 1995 through 1997.
Stephen P. Malia
----------------
Age 45. Senior Vice President, Human Resources of the Company since
joining the Company in January 2000. Prior to joining the Company,
Mr. Malia served as Vice President, Human Resources-Exterior Systems
Business for Owens Corning, a manufacturer of consumer and
industrial building materials and composite systems, from 1997
through 1999 and Vice President, Human Resources-Planning, Staffing
and Development from 1995 through 1997.
Carolyn W. Merritt
------------------
Age 53. Senior Vice President, Environment, Health and Safety of
the Company since August 1998. Ms. Merritt served as Vice
President, Environment, Health and Safety from March 1996 to August
1998. Prior to joining the Company, Ms. Merritt served as Vice
President, Environmental Affairs for The Vigoro Corporation from
July 1994 to March 1996.
Douglas A. Pertz
----------------
Age 45. President and Chief Executive Officer of the Company since
October 1999. From October 1998 to October 1999, Mr. Pertz served
as President and Chief Operating Officer of the Company. From 1995
to 1998, Mr. Pertz served as President and Chief Executive Officer
and as a director of Culligan Water Technologies, Inc., a leading
manufacturer and distributor of water purification and treatment
products. From 1994 until January 1995, he was Corporate Vice
President and Group Executive of the Danaher Corporation (Danaher),
a manufacturer of products in the tool, process/environmental
controls and transportation industries and was also President, Chief
Executive Officer and a director of Danaher's subsidiaries, Matco
Tools, a manufacturer of hand tools, and Hennessy Industries, a
manufacturer of transportation equipment.
Anne M. Scavone
---------------
Age 36. Vice President and Controller of the Company since April
1996. Ms. Scavone served as Director, Joint Venture Finances from
April 1995 to April 1996 and as Joint Venture Financial Coordinator
from April 1993 to April 1995.
All of the Company's executive officers are elected annually, with
the terms of the officers listed above to expire in April 2000. No
"family relationships," as that term is defined in Item 401(d) of
Regulation S-K, exist among any of the listed officers.
Item 2.Properties.
Information regarding the plant and properties of the Company is
included in Part I, Item 1, "Business," of this Annual Report on
Form 10-K.
Item 3.Legal Proceedings.(1)
Potash Antitrust Litigation
---------------------------
The Company was a defendant, along with other Canadian and United
States potash producers, in a class action antitrust lawsuit filed
in federal court in 1993. The plaintiffs alleged a price-fixing
conspiracy among North American potash producers beginning in 1987
and continuing until the filing of the complaint. The class action
complaint against all defendants, including the Company, was
dismissed by summary judgment in January 1997. The summary judgment
dismissing the case was appealed by the plaintiffs to the United
States Court of Appeals for the Eighth Circuit (Court of Appeals).
The Court of Appeals in a divided opinion (2 to 1) rendered its
decision reversing the grant of summary judgment as to certain
defendants, including the Company, and affirming as to certain other
defendants. The dissent strongly disagreed with the majority
opinion, stating that the majority had erred in not affirming the
dismissal of the case as to all defendants. According to the
dissent, all of the defendants were entitled to summary judgment.
The Company, along with the other defendants remaining in the case,
obtained a rehearing of the case from the entire Court of Appeals
and the decision of the Court of Appeals was vacated. The case was
reargued before the entire Court of Appeals on September 13, 1999,
and the Court of Appeals found that the class had failed to present
evidence of collusion sufficient to create a genuine issue of
material fact and affirmed the dismissal of the complaint by summary
judgment.
In addition, in 1993 and 1994, class action antitrust lawsuits with
allegations similar to those made in the federal case were filed
against the Company and other Canadian and United States potash
producers in state courts in Illinois and California. The Illinois
case was dismissed for failure to state a claim. In the California
litigation, all proceedings have been stayed pending the decision of
the Court of Appeals.
FTX Merger Litigation
---------------------
In August 1997, five identical class action lawsuits were filed in
Chancery Court in Delaware by unitholders of PLP. Each case named
the same defendants and broadly alleged that Freeport-McMoRan, Inc.
(FTX) and FMRP Inc. (FMRP) had breached fiduciary duties owed to the
public unitholders of PLP. The Company was alleged to have aided
and abetted these breaches of fiduciary duty. In November 1997, an
amended class action complaint was filed with respect to all cases.
The amended complaint named the same defendants and raised the same
broad allegations. The defendants' moved the court to dismiss the
amended complaint in November 1998, and the cases were dismissed in
May 1999.
In May 1998, the Company and PLP (collectively, Plaintiffs) filed a
lawsuit (IMC Action) in Delaware Chancery Court against certain
former directors of FTX (Director Defendants), and MMR, a former
affiliate of FTX. The Plaintiffs alleged that the Director
Defendants, as the directors of PLP's administrative managing
general partner FTX, owed duties of loyalty to PLP and its limited
partnership unitholders. The Plaintiffs further alleged that the
Director Defendants breached their duties by causing PLP to enter
into a series of interrelated non-arm's-length transactions with
MMR. The Plaintiffs also alleged that MMR knowingly aided and
abetted and conspired with the Director Defendants to breach their
fiduciary duties. On behalf of the PLP public unitholders, the
Plaintiffs sought to reform or rescind the contracts that PLP
entered into with MMR and to recoup the monies expended as a result
of PLP's participation in those agreements. On November 10, 1999,
the Plaintiffs and MMR announced a settlement of the IMC Action
pursuant to which MMR agreed to purchase PLP's 47.0 percent interest
in the Company's multi-year oil and natural gas exploration program
with MMR, which includes three producing oil and gas fields plus an
inventory of exploration prospects and leases, for a total of $32.0
million.
In May 1998, Jacob Gottlieb filed an action (Gottlieb Action) on
behalf of himself and all other PLP unitholders against the Director
Defendants, MMR and IMC asserting the same claims that IMC asserted
in the IMC Action. Because IMC and PLP had already asserted these
claims, in July 1998 IMC filed a motion to dismiss the Gottlieb
Action. The court has not set a briefing schedule for IMC's motion
to dismiss, and plaintiff has made no substantial activity in this
case within the past year. IMC has recently been advised that the
plaintiff intends to withdraw the complaint without prejudice.
For information on environmental proceedings, see Note 16,
"Contingencies," of Notes to Consolidated Financial Statements
included in Part II, Item 8, of this Annual Report on Form 10-K,
which is incorporated herein by reference.
Other
-----
In the ordinary course of its business, the Company is and will from
time to time be involved in other legal proceedings of a character
normally incident to its business. The Company believes that its
potential liability in any such pending or threatened proceedings
will not have a material adverse effect on the financial condition
or results of operations of the Company.
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 December 31, 1999.
PART II.
Item 5.Market for the Registrant's Common Stock and Related Stockholder
Matters.
Common Stock Prices and Dividends
Quarter
--------------------------------------
1999 First Second Third Fourth
--------------------------------------------------------------
Dividends per common
share $ 0.08 $ 0.08 $ 0.08 $ 0.08
Common stock prices:
High $22.313 $27.125 $20.125 $17.063
Low 18.000 17.375 14.313 12.750
Quarter
---------------------------------------
1998 First Second Third Fourth
---------------------------------------------------------------
Dividends per common
share $ 0.08 $ 0.08 $ 0.08 $ 0.08
Common stock prices:
High $39.500 $39.125 $30.375 $27.312
Low 28.562 29.375 17.812 18.125
The Company's common stock is traded on the New York Stock Exchange
and the Chicago Stock Exchange under the symbol IGL. As of March
15, 2000, the Company had 114,477,296 shares of common stock
outstanding, excluding 10,686,276 treasury shares. Common stock
prices are from the composite tape for New York Stock Exchange
issues as reported in The Wall Street Journal. As of March 15,
2000, the number of registered holders of common stock as reported
by the Company's registrar was 10,399. However, an indeterminable
number of stockholders beneficially own shares of the Company's
common stock through investment funds and brokers. For the year
ended December 31, 1999, the Company paid cash dividends of $36.6
million.
Item 6.Selected Financial Data.
For information related to the years 1995 through 1999 contained
under the heading "Five Year Comparison," reference is made to page
73 of the Company's 1999 Annual Report to Stockholders incorporated
herein by reference.
Item 7.Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Reference is made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations," appearing on pages
27 through 40 of the Company's 1999 Annual Report to Stockholders
incorporated herein by reference.
Item 7a.Quantitative and Qualitative Disclosures about Market Risk.
Reference is made to "Market Risk," of "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
appearing on page 35 of the Company's 1999 Annual Report to
Stockholders incorporated herein by reference.
Item 8.Financial Statements and Supplementary Data.
Reference is made to the Company's Consolidated Financial Statements
and Notes thereto appearing on pages 42 through 71 of the Company's
1999 Annual Report to Stockholders, together with the report thereon
of Ernst & Young LLP dated January 31, 2000, appearing on page 41 of
such Annual Report and the information contained under the heading
"Quarterly Results (unaudited)," appearing on page 72 of such Annual
Report incorporated herein by reference.
Item 9.Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
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 2000 Annual
Meeting of Stockholders and the information contained under the
heading "Executive Officers of the Registrant," in Part I, Item 1,
hereof is incorporated herein by reference.
Item 11.Executive Compensation.
The information under the heading "Policies Relating to the Board of
Directors - Compensation of Directors" and "Executive Compensation,"
included in the Company's definitive Proxy Statement for the 2000
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
2000 Annual Meeting of Stockholders is incorporated herein by
reference.
Item 13.Certain Relationships and Related Transactions.
The information under the heading "Executive Compensation," included
in the Company's definitive Proxy Statement for the 2000 Annual
Meeting of Stockholders is incorporated herein by reference.
PART IV.
Item 14.Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) Consolidated financial statements filed as part of this
report are listed under Part II, Item 8, of this Annual
Report on Form 10-K.
(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.
(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
Incorporated with
Herein by Electronic
Exhibit No. Description Reference to Submission
- ------------------------------------------------------------------------------
3.i.(a) Restated Certificate of X
Incorporation, as amended and
restated through January 6, 1998
3.i.(b) Certificate of Designations for the Exhibit A to
Series D Junior Participating Exhibit 3 to the
Preferred Stock Current Report on
Form 8-K dated
May 27, 1999*
3.ii. Amended and Restated By-Laws Exhibit 3 to the
Current Report on
Form 8-K dated
May 27, 1999*
3.iii. Rights Agreement dated May 27, Exhibit 4 to the
1999, with The First National Bank Current Report on
of Chicago (including the Form 8-K dated
Shareholder Rights Plan) May 27, 1999*
4.ii.(a) Indenture, dated as of July 17, Exhibit 4.1 to
1997, between IMC Global Inc. and the Company's
The Bank of New York, relating to Report on Form 8-
the issuance of 6.875% Senior K dated July 23,
Debentures due July 15, 2007; 1997*
7.30% Senior Debentures due
January 15, 2028; and 6.55% Senior
Notes due January 15, 2005
4.ii.(b) Indenture, dated as of August 1, Exhibit 4.10 to
1998, between IMC Global Inc. and the Registration
The Bank of New York, relating to Statement No. 333-
the issuance of 6.625% Notes due 63503
2001; 7.40% Notes due 2002; 7.625%
Notes due 2005; 6.50% Notes due
2003; and 7.375% Debentures due
2018
4.ii.(c) Amended and Restated Five-Year X
Credit Agreement, dated as of
December 8, 1999 among IMC Global
Inc., a Delaware corporation, as
borrower, the financial
institutions parties thereto, and
Bank of America, N.A., as
Administrative Agent
10.i.(a) Agreement dated June 27, 1985, Exhibit 10.6
supplementing, amending and Amendment No. 2
continuing Potash Resource Payment to Registration
Agreement dated October 15, 1979, Statement No. 33-
between Mallinckrodt and the 22914
Province of Saskatchewan
10.i.(b) Mining and Processing Agreement Exhibit 10.7 to
dated January 31, 1978, between Registration
Potash Corporation of Saskatchewan Statement No. 33-
Inc. and International Minerals & 17091
Chemical (Canada) Global Limited
10.i.(c) Memorandum of Agreement as of Exhibit 10.51 to
December 21, 1990, amending Mining the Annual Report
and Processing Agreement of on Form 10-K for
January 31, 1978, between Potash the Fiscal Year
Corporation of Saskatchewan Inc. Ended June 30,
and International Minerals & 1991*
Chemical (Canada) Global Limited
10.i.(d) Division of Proceeds Agreement Exhibit 10.52 to
dated December 21, 1990, between the Annual Report
Potash Corporation of Saskatchewan on Form 10-K for
Inc. and International Minerals & the Fiscal Year
Chemical (Canada) Global Limited Ended June 30,
1991
10.i.(e) Form of Partnership Agreement, Exhibit 10.29 to
dated as of July 1, 1993, as the Company's
further amended and restated as of Annual Report on
May 26, 1995, between IMC-Agrico Form 10-K for the
GP Company, Agrico Limited Fiscal Year Ended
Partnership and IMC-Agrico MP June 20, 1995*
Inc., including definitions
10.i.(f) Form of Parent Agreement, dated as Exhibit 10.30 to
of July 1, 1993, as further the Company's
amended and restated as of May 26, Annual Report on
1995, between IMC Global Form 10-K for the
Operations Inc., Freeport-McMoRan Fiscal Year Ended
Resource Partners, Limited June 30, 1995*
Partnership, Freeport-McMoRan Inc.
and IMC-Agrico Company
10.i.(g) Amendment, Waiver and Consent, Exhibit 10.31 to
dated May 26, 1995, among IMC the Company's
Global Inc.; IMC Global Operations Annual Report on
Inc.; IMC-Agrico GP Company; IMC- Form 10-K for the
Agrico MP, Inc.; IMC-Agrico Fiscal Year Ended
Company; Freeport-McMoRan Inc.; June 30, 1995*
Freeport-McMoRan Resource
Partners, Limited Partnership; and
Agrico, Limited Partnership
10.i.(h) Agreement and Plan of Complete Exhibit 10.32 to
Liquidation and Dissolution, dated the Company's
May 26, 1995, among IMC Global Annual Report on
Operations Inc., IMC-Agrico GP Form 10-K for the
Company, and IMC-Agrico MP, Inc. Fiscal Year Ended
June 30, 1995*
10.i.(i) Agreement Under the Parent Exhibit 10.63 to
Agreement, dated as of January 23, the Company's
1996, among IMC Global Inc.; IMC Quarterly Report
Global Operations Inc.; Freeport- on Form 10-Q for
McMoRan Resource Partners, Limited the Quarterly
Partnership; Freeport-McMoRan Period Ended
Inc.; and IMC-Agrico Company, a December 31,
Delaware general partnership 1995*
10.i.(j) Amendment and Agreement Under the Exhibit 10.64 to
Partnership Agreement, dated as of the Company's
January 23, 1996, by and among IMC- Quarterly Report
Agrico GP Company; Agrico, Limited on Form 10-Q for
Partnership; IMC-Agrico MP, Inc.; the Quarterly
IMC Global Operations Inc. and IMC- Period Ended
Agrico Company December 31,
1995*
10.i.(k) Registration Rights Agreement Exhibit 99.6 to
dated as of March 1, 1996 among the Company's
IMC Global Inc. and certain former Quarterly Report
stockholders of The Vigoro on Form 10-Q for
Corporation the Quarterly
Period Ended
March 31, 1996*
10.iii.(a)** 1996 Long-Term Performance Exhibit 10.77 to
Incentive Plan the Company's
Quarterly Report
on Form 10-Q for
the Quarterly
Period Ended
September 30,
1996*
10.iii.(b)** 1988 Stock Option & Award Plan, as Exhibit B to
amended and restated Proxy Statement
dated March 25,
1999*
10.iii.(c)** 1994 Stock Option Plan for Non- Exhibit 4(a) to
Employee Directors Registration
Statement No. 33-
56911
10.iii.(d)** Supplemental Benefit Plan Exhibit 10.12 to
Registration
Statement No. 33-
17091
10.iii.(e)** Supplemental Defined Benefit Exhibit 10.7 to
Executive Retirement Plan, as Registration
amended through June 30, 1992 Statement No. 33-
17091
10.iii.(f)** Management Compensation and Exhibit 10.14 to
Benefit Assurance Program, as the Company's
amended through August 17, 1995 Annual Report on
Form 10-K for the
Fiscal Year Ended
June 30, 1996*
10.iii.(g)** Form of Trust Agreement with Exhibit 10.33 to
Wachovia Bank & Trust Co., N.A., the Company's
as amended through August 15, 1991 Annual Report on
Form 10-K for the
Fiscal Year Ended
June 30, 1992*
10.iii.(h)** Employment Agreement dated as of Exhibit 10.62 to
January 29, 1998 between IMC the Company's
Global Inc. and Robert E. Fowler, Annual Report on
Jr. Form 10-K for the
Year Ended
December 31, 1997*
10.iii.(i)** Employment Agreement dated as of Exhibit 10.1 to
September 15, 1998 between IMC the Company's
Global Inc. and Douglas A. Pertz Quarterly Report
on Form 10-Q for
the Quarterly
Period Ended
September 30,
1998*
10.iii.(j)** 1998 Stock Option Plan for Non- Exhibit 10.7 to
Employee Directors the Company's
Current Report on
Form 8-K dated
May 14, 1998*
10.iii.(k)** Non-competition Agreement dated as Exhibit 10.81 to
of August 1, 1998 between IMC the Company's
Global Inc. and Robert M. Van Annual Report on
Patten Form 10-K for the
Year Ended
December 31, 1998*
10.iii.(l)** Severance Agreement dated as of Exhibit 10.83 to
August 1, 1998 between IMC Global the Company's
Inc. and Robert M. Van Patten Annual Report on
Form 10-K for the
Year Ended
December 31, 1998*
10.iii.(m)** Form of IMC Global Inc. and IMC- X
Agrico MP, Inc. 1998 Defined
Contribution Supplemental
Executive Retirement Plan
10.iii.(n)** Form of IMC Global Inc. and IMC- X
Agrico MP, Inc. 1998 Supplemental
Retirement Plan, Restoration Plan
and Excess Benefit Plan Trust
10.iii.(o)** Retirement Agreement dated October Exhibit 10.1 to
7, 1999 between IMC Global Inc. the Company's
and Robert E. Fowler, Jr. Quarterly Report
on Form 10-Q for
the Quarterly
Period Ended
September 30,
1999*
10.iii.(p)** Form of Executive Severance X
Agreement between IMC Global Inc.
and S.J. Demetriou, C.S. Hoffman,
M.A. Hynes, J.B. James, S.P. Malia
and C.W. Merritt
10.iii.(q)** Employment Agreement dated July X
13, 1999 between IMC Global Inc.
and E. Paul Dunn
10.iii.(r)** "Gross-up" Agreement dated July X
13, 1999 between IMC Global Inc.
and E. Paul Dunn
10.iii.(s)** IMC Global Inc. Deferred X
Compensation Plan for Non-Employee
Directors
10.iii.(t)** Form of IMC Global Inc. and IMC- X
Agrico MP, Inc. Restoration Plan
10.iii.(u)** IMC Global Inc. Voluntary Non- X
Qualified Deferred Compensation
Plan
10.iii.(v)** First amendment to the IMC Global X
Inc. 1998 Restoration Plan
12 Ratio of Earnings to Fixed Charges X
13 The portions of IMC Global Inc.'s X
1999 Annual Report to Stockholders
which are specifically
incorporated by reference
18 Letter Regarding Change in X
Accounting Principle
21 Subsidiaries of the Registrant X
23 Consent of Ernst & Young LLP, X
Independent Auditors
24 Power of Attorney X
27 Financial Data Schedule X
* SEC File No. 1-9759.
** Denotes management contract or compensatory plan.
(b) Reports on Form 8-K.
The Company filed a Current Report on Form 8-K for December 7, 1999,
to report, under "Item 5, Other Events," the issuance of a press
release on December 7, 1999.
(c) Exhibits
See exhibit index listed at Item 14(a)(3) hereof.
(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 Section 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/ Douglas A. Pertz
--------------------------
Douglas A. Pertz
Chief Executive Officer
and President
Date: March 28, 2000
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:
* Chairman and Director March 28, 2000
- ---------------------
Joseph P. Sullivan
/s/ Douglas A. Pertz Chief Executive Officer (principal March 28, 2000
- --------------------- executive officer), President
Douglas A. Pertz (principal operating officer) and
Director
/s/ J. Bradford James Executive Vice President and Chief March 28, 2000
- --------------------- Financial Officer (principal
J. Bradford James financial officer)
/s/ Anne M. Scavone Vice President and Controller March 28, 2000
- --------------------- (principal accounting officer)
Anne M. Scavone
* Director March 28, 2000
- ---------------------
Raymond F. Bentele
* Director March 28, 2000
- ---------------------
Rod F. Dammeyer
* Director March 28, 2000
- ---------------------
James M. Davidson
* Director March 28, 2000
- ---------------------
Harold H. MacKay
* Director March 28, 2000
- ---------------------
David B. Mathis
* Director March 28, 2000
- ---------------------
Donald F. Mazankowski
* Director March 28, 2000
- ---------------------
Richard L. Thomas
* Director March 28, 2000
- ---------------------
Pamela B. Strobel
*By: /s/ Rose Marie Williams
------------------------
Rose Marie Williams
Attorney-in-fact
- -------------------------------
(1)All statements, other than statements of historical fact contained
within this Form 10-K constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Factors that could cause actual results to differ materially from those
expressed or implied by the forward-looking statements include, but are
not limited to, the following: general business and economic conditions
and governmental policies affecting the agricultural industry in
localities where the Company or its customers operate; weather
conditions; the impact of competitive products; pressure on prices
realized by the Company for its products; constraints on supplies of
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 in integrating acquired businesses and in realizing
related cost savings and other benefits; the effects of and change in
trade, monetary, environmental and fiscal policies, laws and
regulations; foreign exchange rates and fluctuations in those rates;
the costs and effects of legal proceedings, including environmental,
and administrative proceedings involving the Company; success in
implementing the Company's various initiatives including the
divestiture of Chemicals and achieving successful strategic
alternatives for the Salt business unit and a production facility
located in Ogden, Utah; and other risk factors reported from time to
time in the Company's Securities and Exchange Commission reports.
(2)Since the amount of potassium in the common salts of potassium varies,
the industry has established a common standard of measurement by
defining a product's potassium content, or grade, in terms of
equivalent percentages of potassium oxide (K2O). A K2O equivalent of
60 percent, 50 percent and 22 percent is the customary minimum standard
for muriate of potash, sulphate of potash and double sulphate of potash
magnesia products, respectively.