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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
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1999
Commission file number 1-9164
Phosphate Resource Partners Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 72-1067072
(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
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Depositary Units 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
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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. X
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State the aggregate market value of the voting units held by non-
affiliates of the Registrant: $419,422,889 as of March 15, 2000. Market
value is based on the March 15, 2000 closing price of the Registrant's
depositary units as reported on the New York Stock Exchange Composite
Transactions for such date.
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Phosphate Resource Partners Limited Partnership
1999 FORM 10-K CONTENTS
Item Page
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Part I:
1. Business 1
Partnership Profile 1
Business Operations Information 1
Factors Affecting Demand 5
Other Matters 5
2. Properties 10
3. Legal Proceedings 10
4. Submission of Matters to a Vote of Security Holders 11
Part II:
5. Market for the Registrant's Partnership Units and Related
Unitholder Matters 11
6. Selected Financial Data 13
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
7a. Quantitative and Qualitative Disclosures about Market 18
Risk
8. Financial Statements and Supplementary Data 19
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 42
Part III:
10. Directors and Executive Officers of the Registrant 43
11. Executive Compensation 43
12. Security Ownership of Certain Beneficial Owners and 43
Management
13. Certain Relationships and Related Transactions 44
Part IV:
14. Exhibits, Financial Statement Schedules and Reports on 45
Form 8-K
Signatures S-1
Exhibit Index E-1
Index to Financial Statements F-1
PART I.
Item 1. Business.
PARTNERSHIP PROFILE
Phosphate Resource Partners Limited Partnership (PLP), through its
joint venture investment in IMC-Agrico Company (IMC-Agrico), is
one of the world's largest and lowest cost producers, marketers
and distributors of phosphate crop nutrients and animal feed
ingredients, with operations in central Florida and on the
Mississippi River in Louisiana.
IMC-Agrico's business includes the mining and sale of phosphate
rock and the production, marketing and distribution of phosphate
crop nutrients and animal feed ingredients. IMC-Agrico was formed
as a joint venture partnership in July 1993 when PLP and IMC
Global Inc. (IMC) contributed their respective phosphate crop
nutrients businesses to IMC-Agrico. IMC-Agrico is 41.5 percent
owned by PLP and 58.5 percent by IMC.
In December 1997, Freeport-McMoRan Inc. (FTX), the former
administrative managing general partner and owner of a 51.6
percent interest in PLP, merged into IMC (FTX Merger). In
connection with the FTX Merger, IMC became administrative managing
general partner (General Partner) of PLP.
PLP is a publicly traded Delaware limited partnership. As of
December 31, 1999, IMC held partnership units representing an
approximate 51.6 percent interest in PLP. The remaining interests
are publicly owned and traded on the New York Stock Exchange
(NYSE). See "Other Matters - Relationship Between PLP and IMC,"
for further detail.
All references herein to PLP refer to PLP's business activities as
executed through its ownership interest in IMC-Agrico. The dollar
amounts included throughout this Form 10-K are shown at PLP's
41.5% ownership percentage, unless otherwise noted.
BUSINESS OPERATIONS INFORMATION
In 1999, IMC 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, IMC initiated a plan to improve
profitability (Project Profit). The initiative of Project Profit
consisted primarily of a restructuring of operations at IMC-
Agrico.
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.
The following discussion of continuing business operations 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 10, "Operating
Segments," of Notes to Financial Statements included in Part II,
Item 8, "Financial Statements and Supplementary Data," of this
Annual Report on Form 10-K.
IMC-Agrico Company
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IMC is responsible for the operation of IMC-Agrico. Subject to
the terms of the IMC-Agrico Partnership Agreement (Partnership
Agreement), IMC has the sole authority to make certain decisions
affecting IMC-Agrico, including authorizing certain capital
expenditures for expansion; incurring certain indebtedness;
approving significant acquisitions and dispositions; and
determining certain other matters.
IMC-Agrico's net sales were $592.0 million, $687.1 million and
$683.8 million for the years ended December 31, 1999, 1998 and
1997, respectively. IMC-Agrico's operations consist of its
phosphate crop nutrients business (Phosphates) and its animal feed
ingredients business (Feed Ingredients).
Phosphates
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 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, Phosphates
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,
Phosphates' 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 IMC. Phosphates' remaining
sulphur requirements are provided by market contracts.
Additionally, in late 1999, IMC, 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. IMC-Agrico
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 IMC 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 %
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Domestic
Customers 2,552 38 2,373 32 2,065 29
Captive, to other business units 92 1 563 8 615 9
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2,644 39 2,936 40 2,680 38
Export 4,055 61 4,377 60 4,425 62
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Total shipments 6,699 100 7,313 100 7,105 100
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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
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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 IMC's 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.
FACTORS AFFECTING DEMAND
PLP's results of operations historically have reflected the
effects of several external factors which are beyond its 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, PLP's
business is seasonal to the extent North American farmers and
agricultural enterprises purchase more crop nutrient products
during the spring and fall.
PLP's export sales to foreign customers 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 Health and Safety Matters
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PLP's Program
IMC-Agrico has adopted the following Environmental, Health and
Safety (EHS) Policy (Policy):
As a key to IMC-Agrico's success, IMC-Agrico is
committed to the pursuit of excellence in health and
safety, and environmental stewardship. Every
employee will strive to continuously improve IMC-
Agrico's performance and to minimize adverse
environmental, health and safety impacts. IMC-Agrico
will proactively comply with all environmental,
health and safety laws and regulations.
This Policy is the cornerstone of IMC-Agrico's comprehensive EHS
plan (EHS Plan) to achieve sustainable, predictable, measurable
and verifiable EHS performance. Integral elements of the EHS Plan
include: (i) improving IMC-Agrico's EHS procedures and protocols;
(ii) upgrading its related facilities and staff; (iii) formulating
improvement plans in response to EHS audits conducted by the IMC
Global Inc. audit team; and (iv) assuring management
accountability. Each facility is in a different stage of plan
integration. IMC-Agrico uses its own internal audits as well as
the results of audits conducted by IMC to confirm that each
facility has implemented the EHS Plan and has achieved regulatory
compliance, continuous EHS improvement and integration of EHS
management systems into day-to-day business functions.
Through IMC-Agrico, PLP produces and distributes crop and animal
nutrients. These activities subject IMC-Agrico to an ever-evolving
myriad of international, federal, state, provincial and local EHS
laws, which regulate, or propose to regulate: (i) product content;
(ii) use of products by both IMC-Agrico and its customers; (iii)
conduct of mining and production operations, including safety
procedures used by employees; (iv) management and handling of raw
materials; (v) air and water quality impacts by facilities; (vi)
disposal of hazardous and solid wastes; and (vii) post-mining land
reclamation. For new regulatory programs, it is difficult to
ascertain future compliance obligations or estimate future costs
until implementing regulations have been finalized and definitive
regulatory interpretations have been adopted. IMC-Agrico intends
to respond to these regulatory requirements at the appropriate
time by implementing necessary physical or procedural
modifications.
PLP has expended, and anticipates that it will continue to expend,
substantial resources, both financial and managerial, to comply
with EHS standards. In 2000, PLP's share of IMC-Agrico's
environmental capital expenditures will total approximately $22.3
million, primarily related to: (i) modification or construction of
wastewater treatment areas in Florida; (ii) modification and
construction projects associated with phosphogypsum stacks at the
concentrates plants in Florida and Louisiana; and (iii)
remediation of contamination at current or former operations.
PLP's share of additional expenditures for land reclamation
activities will total approximately $6.4 million. In 2001, PLP
expects its share of IMC-Agrico's environmental capital
expenditures will be approximately $36.1 million and expenditures
for land reclamation activities to be approximately $5.6 million.
No assurance can be given that greater-than-anticipated EHS
capital expenditures will not be required in 2000 or in the
future. Based on current information, it is the opinion of
management that PLP's contingent liability arising from EHS
matters, taking into account established reserves, will not have a
material adverse effect on PLP's financial position or results of
operations.
Product Requirements and Impacts
IMC-Agrico's primary businesses include the production and sale of
crop and animal nutrients. International, federal, state and
provincial standards: (i) require registration of many IMC-Agrico
products before those products can be sold; (ii) impose labeling
requirements on those products; and (iii) require producers to
manufacture the products to formulations set forth on the labels.
Various environmental, natural resource and public health agencies
at all regulatory levels have begun evaluating alleged health and
environmental impacts that might arise from the handling and use
of products such as those manufactured by IMC-Agrico. Most of
these evaluations are in the initial stages. During 1999, the
United States Environmental Protection Agency (EPA), the state of
California, and The Fertilizer Institute each completed
independent assessments of potential risks posed by crop nutrient
materials. These assessments concluded that, based on available
data, crop nutrient materials generally do not pose harm to human
health or the environment. Despite these conclusions, some
agencies have implemented or are still considering standards that
may modify customers' use of IMC-Agrico's products because of the
alleged impacts. It is unclear whether any further evaluations
that may be conducted will result in additional regulatory
requirements for the producing industries, including IMC-Agrico or
its customers. At this preliminary stage, PLP cannot estimate the
potential impact of these standards on the market for IMC-Agrico
products or on the expenditures by PLP that may be necessary to
meet new requirements.
Operating Requirements and Impacts
Permitting
IMC-Agrico holds numerous environmental, mining, and other permits
or approvals authorizing operation at each of its facilities. A
decision by a government agency to deny or delay issuing an
application for a new or renewed permit or approval, or to revoke
or substantially modify an existing permit or approval, could have
a material adverse effect on IMC-Agrico's ability to continue
operations at the affected facility. Expansion of IMC-Agrico's
operations also is predicated upon securing the necessary
environmental or other permits or approvals. Recently, a number of
organizations and community groups in a variety of locations have
relied upon guidance and materials issued by the EPA to challenge
federally authorized permits that these groups believe might have
a disproportionate impact on minority or low-income communities.
A challenge of this type at one of IMC-Agrico's facilities, even
though unfounded, could impact the ability of that facility to
obtain timely permits.
In addition, over the next two to six years, IMC-Agrico will be
continuing its efforts to obtain permits in support of its
anticipated Florida mining operations at the Ona and Pine Level
properties. These properties contain in excess of 100.0 million
tons of phosphate rock reserves. For years, IMC-Agrico has
successfully permitted mining properties in Florida and
anticipates that it will be able to permit these properties.
Nevertheless, a denial of these permits or the issuance of permits
with cost-prohibitive conditions would adversely impact IMC-Agrico
by preventing it from mining at Ona or Pine Level.
Management of Residual Materials
Mining and processing of phosphate rock generates residual
materials that must be managed. Overburden and sand tailings from
rock mining are used in reclamation. Phosphate processing
generates phosphogypsum that is stored in phosphogypsum stack
systems. IMC-Agrico has incurred and will continue to incur
significant costs to manage its phosphate residual materials in
accordance with environmental laws, regulations and permit
requirements.
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 or pond is demonstrated to
cause an exceedance of Florida's groundwater quality standards.
IMC-Agrico has already begun closure activities at its unlined
gypsum stack at its New Wales facility in central Florida. IMC-
Agrico cannot predict at this time whether Florida law will
require closure of any of its other stack systems. The costs of
such closure and decommissioning could be significant. In
addition, IMC-Agrico currently operates an unlined cooling pond at
New Wales. Monitoring indicates that discharges from the unlined
cooling pond are within Florida groundwater standards. IMC-Agrico
received a permit in August 1999 to continue operating this pond
through March 25, 2001. Over the past several years, IMC-Agrico
has successfully permitted this pond and anticipates that it will
be able to obtain future permits. However, if IMC-Agrico does not
receive the permit, it will need to line or relocate the cooling
pond, which is estimated to cost approximately $45.0 million, of
which PLP's share would be $18.7 million.
Restructuring Charges
In connection with IMC's Rightsizing Program, IMC-Agrico has
discontinued mining or processing operations at a number of its
facilities including the Payne Creek and Noralyn mines and the
Nichols concentrates plant. Such discontinuation will trigger
decommissioning, closure and reclamation requirements under a
number of Florida regulations and IMC-Agrico permits. PLP's share
of these activities is estimated to cost $17.0 million, for which
reserves have been established. Although IMC-Agrico believes that
it has reasonably estimated these costs, additional expenditures
could be required to address unanticipated environmental
conditions as they arise. PLP's share of additional expenditures
can not currently be estimated.
Remedial Activities
Remediation at PLP Facilities
Many of IMC-Agrico's facilities have been in operation for a
number of years. The historical use and handling of regulated
chemical substances, crop and animal nutrients and additives, or
process tailings at these facilities by IMC-Agrico and predecessor
operators have resulted in soil and groundwater contamination. In
addition, through its own prior but discontinued operations, PLP
assumed responsibility for contamination at some crop nutrient or
oil and gas facilities. At many of these facilities, spills or
other unintended releases of regulated substances have occurred
previously and potentially could occur in the future, possibly
requiring PLP to undertake or fund cleanup efforts.
In some instances, PLP 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.
At other locations, PLP has entered into consent orders with
appropriate governmental agencies to perform required remedial
activities that will address identified site conditions.
Expenditures for these known conditions currently are not expected
to be material. However, material expenditures by PLP could be
required in the future to remediate the contamination at these or
at other current or former sites.
PLP believes that, pursuant to several indemnification agreements,
it is entitled to at least partial, and in many instances
complete, indemnification for the costs that they may expend to
remedy environmental issues at certain facilities. These
agreements address issues that resulted from activities occurring
prior to PLP's acquisition of facilities or businesses from
parties including ARCO; Conoco; The Williams Companies; Kerr-McGee
Inc.; and certain other private parties. PLP has already received
and anticipates receiving amounts pursuant to the indemnification
agreements for certain of its expenses incurred to date as well as
future anticipated expenditures.
Remediation at Third-Party Facilities
Along with impacting the sites at which PLP has operated, parties
have alleged that historic operations at PLP or IMC-Agrico sites
have resulted in contamination to neighboring off-site areas or
third-party facilities. In some instances, PLP or IMC-Agrico have
agreed, pursuant to consent orders with appropriate governmental
agencies, to undertake investigations, which currently are in
progress, to determine whether remedial action may be required to
address contamination. Remedial liability at these sites, either
alone or in the aggregate, currently is not expected to be
material to PLP. As more information is obtained regarding these
sites, this expectation could change.
In September 1999, four plaintiffs filed Moore et al. vs. Agrico
Chemical Company et al., a class-action lawsuit naming Agrico
Chemical Company, FTX, PLP and a number of unrelated defendants.
The suit seeks unspecified compensation for alleged property
damage, medical monitoring, remediation of an alleged public
health hazard and other appropriate damages purportedly arising
from operation of the neighboring fertilizer and crop protection
chemical facilities in Lakeland, Florida. Agrico Chemical Company
owned the Landia portion of these facilities for approximately 18
months during the mid-1970s. Because the litigation is in its
early stages, management cannot determine the magnitude of any
exposure to Agrico Chemical Company or PLP; however, Agrico and
PLP intend to vigorously contest this action and to seek any
indemnification to which they may be entitled. Concurrent with
this litigation, the EPA has undertaken on-site and off-site
investigations of these facilities to determine whether any
remediation of existing contamination may be necessary. Pursuant
to an indemnification agreement with Agrico Chemical Company and
PLP, The Williams Companies have assumed responsibility for any
costs that Agrico Chemical Company might incur for remediation as
a result of the EPA's actions.
Superfund
The Comprehensive Environmental Response Compensation and
Liability Act (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, PLP is involved or concluding involvement at less than
ten Superfund or equivalent state sites. PLP's remedial liability
at these sites, either alone or in the aggregate, is not currently
expected to be material. As more information is obtained
regarding these sites and the potentially responsible parties
involved, this expectation could change.
Employees
---------
PLP has no employees. Substantially all individuals who perform
services for IMC-Agrico are employed by IMC-Agrico MP, Inc. (MP
Co.). This includes former employees of PLP and IMC who were
transferred to MP Co. when IMC-Agrico was formed. As of December
31, 1999, IMC-Agrico had 3,788 employees. The work force
consisted of 877 salaried employees, 2,909 hourly employees and
two temporary or part-time employees.
Labor Relations
---------------
IMC-Agrico has three collective bargaining agreements with the
affiliated local chapters of the same international union. As of
December 31, 1999, approximately 89 percent of the hourly work
force were covered under collective bargaining agreements. No
agreements were negotiated during 1999. One agreement covering
approximately 59 percent of the union hourly work force will
expire in 2000. IMC-Agrico has not experienced a significant work
stoppage in recent years and considers its employee relations to
be good.
Relationship Between PLP and IMC
--------------------------------
Management and Ownership
IMC serves as General Partner of PLP and the management and
officers of IMC perform all PLP management functions and carry out
the activities of PLP. As of December 31, 1999, IMC held
partnership interests that represented an approximate 51.6 percent
interest in PLP. As a result of IMC's position as General Partner
and of its ownership interest, IMC has the ability to control all
matters relating to the management of PLP, including any
determination with respect to the acquisition or disposition of
PLP assets, future issuance of additional debt or other securities
of PLP and any distributions payable in respect of PLP's
partnership interests. In addition to such other obligations as
it may assume, IMC has a general duty to act in good faith and to
exercise its rights of control in a manner that is fair and
reasonable to the public unitholders of partnership interests.
During 1999, PLP distributed $0.43 per unit to the public
unitholders. On February 1, 2000, PLP announced that it would
make a cash distribution of $0.09 per unit to public unitholders
for the quarter ended December 31, 1999. Total unpaid cash
distributions due to IMC of $431.3 million existed as of December
31, 1999. PLP's distributable cash is shared ratably by PLP's
public unitholders and IMC, except that IMC is entitled to recover
its unpaid cash distributions on a quarterly basis from one half
of any excess of future quarterly distributions over $0.60 cents
per unit for all units.
Financing Arrangements
Reference is made to the information set forth in Note 7,
"Financing Arrangements," of Notes to Financial Statements in Part
II, Item 8, "Financial Statements and Supplementary Data," of this
Annual Report on Form 10-K.
Conflicts of Interest
The nature of the respective businesses of PLP and IMC and its
affiliates may give rise to conflicts of interest between PLP and
IMC. Conflicts could arise, for example, with respect to
transactions involving potential acquisitions of businesses or
mineral properties, the issuance of additional partnership
interests, the determination of distributions to be made by PLP,
the allocation of general and administrative expenses between IMC
and PLP and other business dealings between PLP and IMC and its
affiliates. Except in cases where a different standard may have
been provided for, IMC has a general duty to act in good faith and
to exercise rights of control in a manner that is fair and
reasonable to the public unitholders. In resolving conflicts of
interest, PLP's limited partnership agreement (PLP Agreement)
permits IMC to consider the relative interest of each party to a
potential conflict situation which, under certain circumstances,
could include the interest of IMC and its other affiliates.
Item 2. Properties.
Information regarding the plant and properties of PLP is included
in Part I, Item 1, "Business," of this Annual Report on Form 10-K.
Item 3. Legal Proceedings.
FTX Merger Litigation
---------------------
In August 1997, five identical class action lawsuits were filed in
Chancery Court in Delaware (Court) by unitholders of PLP. Each
case named the same defendants and broadly alleged that FTX and
FMRP Inc. (FMRP) had breached fiduciary duties owed to the public
unitholders of PLP. IMC 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, IMC and PLP (collectively, Plaintiffs) filed a
lawsuit (IMC Action) in 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 former 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 PLP's multi-year oil and
natural gas exploration program with MMR (Exploration Program),
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 the plaintiff has made no
substantial activity in this case within the past year. IMC and
PLP have recently been advised that the plaintiff intends to
withdraw the complaint without prejudice.
For information on environmental proceedings, see Note 9,
"Commitments and Contingencies," of Notes to Financial Statements
included in Part II, Item 8, "Financial Statements and
Supplementary Data," of this Annual Report on Form 10-K.
Other
-----
In the ordinary course of business, PLP is and will from time to
time be involved in other legal proceedings of a character
normally incident to its businesses. PLP 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 PLP. PLP, through IMC and IMC-Agrico,
maintains liability insurance to cover some, but not all,
potential liabilities normally incident to the ordinary course of
its businesses with such coverage limits as management of IMC
deems prudent.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II.
Item 5. Market for Registrant's Partnership Units and Related Unitholder
Matters.
PLP's partnership units trade on the NYSE under the symbol PLP.
The PLP unit price is reported daily in the financial press under
"PLP" in most listings of NYSE securities. At March 15, 2000 the
number of holders of record of the partnership's units was 7,749.
Under federal law, ownership of PLP units is limited to "United
States citizens." A United States citizen is defined as a person
who is eligible to own interests in federal mineral leases, which
generally includes: (i) United States citizens; (ii) domestic
entities owned by United States citizens; and (iii) domestic
corporations owned by United States citizens and/or certain
foreign persons. The following table sets forth, for the periods
indicated, the range of high and low sales prices, from the
composite tape for NYSE issues.
1999 1998
------------- ------------
High Low High Low
---- --- ---- ---
First Quarter $ 12.06 $ 10.63 $ 8.75 $ 6.63
Second Quarter $ 11.94 $ 10.50 $ 7.38 $ 5.44
Third Quarter $ 10.81 $ 9.75 $ 9.25 $ 6.25
Fourth Quarter $ 10.69 $ 9.75 $ 10.81 $ 7.88
Ownership at December 31, 1999 was as follows:
Units Percent
----------- ---------
Public unitholders 50,080,645 48.4
IMC 53,385,133(a) 51.6
----------- -----
103,465,778 100.0
=========== =====
(a) Includes 1,036,983 of partnership interests beneficially owned
by IMC.
Cash distributions declared and paid to public unitholders during
1999 totaled $0.43 per unit. Cash distributions to public
unitholders are determined by available distributable cash
resulting from operations of the partnership and the terms of the
PLP Agreement. Distributable cash is shared ratably by PLP's
public unitholders and IMC, except that IMC will be entitled to
receive the unpaid cash distributions, totaling $431.3 million as
of December 31, 1999, from one-half of the quarterly distributable
cash after the payment of $0.60 per unit to all unitholders. Cash
and property distributions paid during 1999 and 1998 are shown
below:
1999
-------------------------------------------------------------
Distribution Per Unit Record Date Payment Date
--------------------- ----------- ------------
$0.10 Feb. 8, 1999 Feb. 12, 1999
0.03 May 10, 1999 May 14, 1999
0.30 Aug. 6, 1999 Aug. 13, 1999
1998
-------------------------------------------------------------
Distribution Per Unit Record Date Payment Date
--------------------- ----------- ------------
$0.13 Aug. 7, 1998 Aug. 14, 1998
0.09 Nov. 5, 1998 Nov. 13, 1998
Item 6. Selected Financial Data.
Five Year Comparison
(Dollars in millions, except per unit amounts)
Years ended December 31
1999(a) 1998(b) 1997(c) 1996(d) 1995(e)
------- ------- ------- ------- -------
Statement of Operations Data:
Net sales $ 592.0 $ 687.1 $ 842.5 $ 957.0 $ 995.1
Gross margins $ 117.2 $ 171.8 $(207.5) $ 257.6 $ 262.7
Operating earnings(loss) $ 39.1 $ 90.7 $(283.3) $ 211.8 $ 194.6
Earnings(loss) from continuing
operations $ 6.3 $ 53.5 $(323.5) $ 177.3 $ 161.4
Total loss from discontinued
operations (27.4) (21.2) (17.1) - -
Extraordinary charge - debt
retirement - - (14.5) - -
Cumulative effect of a change
in accounting principle (2.6) - - - -
------- ------- ------- ------- -------
Earnings(loss) $ (23.7) $ 32.3 $(355.1) $ 177.3 $ 161.4
======= ======= ======= ======= =======
Earnings (loss) per unit:
Earnings (loss) from continuing
operations $ 0.06 $ 0.51 $ (3.12) $ 1.71 $ 1.56
Total loss from discontinued
operations (0.27) (0.20) (0.17) - -
Extraordinary charge - debt
retirement - - (0.14) - -
Cumulative effect of a change
in accounting principle (0.02) - - - -
------- ------- ------- ------- -------
Earnings(loss) per unit $ (0.23) $ 0.31 $ (3.43) $ 1.71 $ 1.56
======= ======= ======= ======= =======
Distributions per publicly held unit:
Cash $ 0.43 $ 0.22 $ 1.34 $ 2.44 $ 2.42
Property - - 1.21 - -
Average units outstanding 103.5 103.5 103.5 103.5 103.5
Balance Sheet Data (at end of period):
Property, plant and equipment,
net $ 434.0 $ 477.5 $ 432.5 $ 919.2 $ 949.1
Total assets $ 611.8 $ 719.8 $ 665.5 $1,199.8 $1,229.1
Long-term debt, including
current portion $ 547.3 $ 561.3 $ 519.8 $ 403.4 $ 384.6
Partners' capital(deficit) $(227.4) $(159.0) $(168.4)$ 359.7 $ 404.5
(a)Includes special charges of $55.4 million, or $0.54 per unit. See
"Special Charges," 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 for detail of the charges.
(b)Includes special charges of $62.6 million, or $0.61 per unit. See
"Special Charges," 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 for detail of the charges.
(c)Includes special charges totaling $406.0 million, or $3.92 per
unit. See "Special Charges," 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 for detail of the
charges. Also includes a $14.5 million extraordinary loss, or $0.14 per
unit, relating to early extinguishment of debt.
(d)Includes a gain of $11.9 million, or $0.12 per unit, resulting from the
increase in PLP's ownership of IMC-Agrico and special charges of $3.0
million, or $0.03 per unit, for asset valuations at IMC-Agrico.
(e)Includes special charges totaling $18.1 million, or $0.18 per unit,
primarily related to costs associated with stock appreciation rights
resulting from the significant rise in FTX's common stock price during
the year.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
INTRODUCTION
Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with PLP's
financial statements and the accompanying notes. PLP's continuing
business operations consist of its 41.5 percent joint venture
ownership interest in IMC-Agrico. All amounts included in this
discussion are shown at PLP's ownership interest.
Management's Discussion and Analysis of Financial Condition and
Results of Operations highlights the primary factors affecting
changes in the operating results of PLP's continuing operations
during the three year period, excluding the impact of certain
special charges, discussed below. In 1999, PLP incurred special
charges from continuing operations of $55.4 million, or $0.54 per
unit, comprised of: (i) a $52.3 million, or $0.51 per unit,
restructuring charge related to the Rightsizing Program; and (ii)
a $3.1 million, or $0.03 per unit, charge related to additional
asset write-offs. As a result of the special charges recorded in
1999, PLP expects to increase future annual earnings by an
estimated $20.0 million, or $0.20 per unit. The increase in
earnings is anticipated to result from rightsizing and cost
reduction initiatives including headcount reductions. In 1998,
PLP incurred special charges from continuing operations of $62.6
million, or $0.61 per unit, comprised of: (i) a $61.8 million, or
$0.60 per unit, restructuring charge related to Project Profit;
and (ii) $0.8 million, or $0.01 per unit, of other charges. As a
result of Project Profit, PLP is on target to achieve a reduction
in operating costs in excess of $41.5 million over the two-year
period ending December 31, 2000, with $27.0 million realized in
1999. The reduction in costs resulted from the simplification of
the business, shut down of high-cost operations, exit from low-
margin businesses and headcount reductions. In 1997, PLP incurred
special charges from continuing operations of $406.0 million, or
$3.92 per unit, related to: (i) $384.5 million, or $3.71 per unit,
for an impairment assessment of sulphur assets; and (ii) $21.5
million, or $0.21 per unit, related to the FTX Merger.
All of these special charges significantly impacted the results of
continuing operations of PLP and are referred to throughout
Management's Discussion and Analysis of Financial Condition and
Results of Operations. For additional detail on these charges,
see Note 4, "Restructuring and Other Charges," in Part II, Item 8,
"Financial Statements and Supplementary Data," of this Annual
Report on Form 10-K.
RESULTS OF OPERATIONS
Overview
1999 Compared to 1998
Net sales of $592.0 million decreased 14 percent from net sales of
$687.1 million in 1998. Gross margins for 1999 of $121.9 million,
excluding special charges of $4.7 million, decreased from
comparable 1998 margins of $179.8 million, excluding special
charges of $8.0 million.
Earnings from continuing operations in 1999 were $61.7 million, or
$0.60 per unit, excluding the special charges of $55.4 million, or
$0.54 per unit, discussed above. Earnings from continuing
operations in 1998 were $116.1 million, or $1.12 per unit,
excluding the special charges of $62.6 million, or $0.61 per unit,
discussed above.
Sales and earnings from continuing operations for 1999 reflected
significantly reduced phosphate pricing and lower phosphate
volumes. Partially offsetting the phosphate reductions were higher
sales and earnings, driven by higher volumes and lower raw
material costs, for Feed Ingredients.
PLP incurred a loss in 1999 of $23.7 million, or $0.23 per unit,
including: (i) the special charges of $55.4 million, or $0.54 per
unit, discussed above; (ii) a loss from discontinued operations of
$27.4 million, or $0.27 per unit; and (iii) a $2.6 million charge,
or $0.02 per unit, for the cumulative effect of a change in
accounting principle. PLP generated earnings in 1998 of $32.3
million, or $0.31 per unit, including: (i) the special charges of
$62.6 million, or $0.61 per unit, discussed above; and (ii) a loss
from discontinued operations of $21.2 million, or $0.20 per unit.
1998 Compared to 1997
Net sales of $687.1 million decreased 18 percent from net sales of
$842.5 million in 1997. Gross margins for 1998 of $179.8 million,
excluding special charges of $8.0 million, increased from
comparable 1997 margins of $177.0 million, excluding a special
charge of $384.5 million.
Earnings from continuing operations in 1998 were $116.1 million,
or $1.12 per unit, excluding the special charges of $62.6 million,
or $0.61 per unit, discussed above. Earnings from continuing
operations in 1997 were $82.5 million, or $0.80 per unit,
excluding special charges of $406.0 million, or $3.92 per unit,
discussed above.
The decrease in sales relative to 1997 was primarily driven by the
absence of PLP's sulphur business and its 58.3 percent interest in
Main Pass 299 oil & gas operations (Main Pass), both of which were
transferred to Freeport Sulphur Co. (FSC) as a result of the FTX
Merger in December 1997. The increase in earnings from continuing
operations, excluding special charges, was primarily a result of
the absence of certain general and administrative expenses as a
result of the FTX Merger.
PLP generated earnings in 1998 of $32.3 million, or $0.31 per
unit, including: (i) the special charges of $62.6 million, or
$0.61 per unit, discussed above; and (ii) a loss from discontinued
operations of $21.2 million, or $0.20 per unit. PLP incurred a
loss in 1997 of $355.1 million, or $3.43 per unit, including: (i)
the special charges of $406.0 million, or $3.92 per unit,
discussed above; (ii) losses from discontinued operations of $17.1
million, or $0.17 per unit; and (iii) an extraordinary charge of
$14.5 million, or $0.14 per unit, related to the early
extinguishment of high-cost debt.
IMC-Agrico
1999 Compared to 1998
IMC-Agrico's net sales of $592.0 million in 1999 decreased 14
percent from $687.1 million in 1998. Lower average sales
realizations of concentrated phosphates, particularly DAP,
unfavorably impacted net sales by $51.9 million. DAP prices
decreased throughout 1999 to a low, as of December 31, 1999, of
approximately $130 per short ton as a result of the depressed
agricultural economy. Decreased shipments of concentrated
phosphates unfavorably impacted net sales by an additional $45.5
million. The majority of the volume decline resulted from
decreased shipments of DAP and GTSP. The decrease in domestic DAP
and GTSP volumes was a result of lower agricultural commodity
prices and the depressed agricultural economy. Internationally,
decreased DAP volumes primarily resulted from reduced demand from
lower crop purchases as a result of low grain prices and higher
customer inventories. Partially offsetting these declines were
improved volumes of animal feed ingredients.
Gross margins in 1999 of $110.3 million, excluding special charges
of $4.7 million, fell 34 percent from $168.2 million in 1998,
excluding special charges of $8.0 million. The decrease was
primarily a result of the decreased prices and volumes discussed
above, partially offset by favorable raw material costs and
savings realized from Project Profit.
1998 Compared to 1997
IMC-Agrico's net sales of $687.1 million in 1998 remained
virtually unchanged from $683.8 million in 1997. Increased
shipments of concentrated phosphates contributed an additional
$23.9 million to net sales. The majority of the volume growth
came from increased domestic shipments of DAP and GMAP, partially
offset by decreased GTSP volumes. The increase in DAP and GMAP
was primarily a result of a strong spring season, an increase in
the number of supply contracts and spot sales to certain larger co-
ops. The volume decrease in GTSP was primarily a result of the
availability in the marketplace of aggressively priced imports.
International sales volumes rose slightly compared to 1997 as
increased shipments of GMAP and merchant acid were partially
offset by decreased shipments of DAP. In addition, average sales
realizations of concentrated phosphates, particularly DAP,
favorably impacted net sales by $8.5 million. Net sales were also
favorably impacted by $2.7 million due to higher domestic
phosphate rock sales volumes.
Gross margins of $168.2 million in 1998, excluding special charges
of $8.0 million, climbed 18 percent from $142.1 million in 1997,
primarily as a result of the increased volumes and prices
discussed above as well as favorable raw material costs.
Sulphur
There were no sulphur sales in 1999 or 1998 as a result of the
contribution of PLP's sulphur businesses to FSC in conjunction
with the FTX Merger. Sulphur sales in 1997 were $129.1 million
with negative margins of $4.4 million, excluding special charges
of $384.5 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $27.4 million,
$26.5 million and $53.2 million in 1999, 1998 and 1997,
respectively, excluding special charges of $22.6 million in 1997.
The decrease in 1998 as compared to 1997 was primarily a result of
the absence of the sulphur operations and allocated FTX general
and administrative expenses which were eliminated as a result of
the FTX Merger. See Note 2, "Mergers," in Part II, Item 8,
"Financial Statements and Supplementary Data," of this Annual
Report on Form 10-K.
Special Charges
Restructuring Charges
During the fourth quarter of 1999, PLP implemented the Rightsizing
Program which was designed to simplify and focus PLP's core
businesses. The key components of the Rightsizing Program are:
(i) the shutdown and permanent closure of the Nichols and Payne
Creek facilities at IMC-Agrico resulting from an optimization
program that will reduce rock and concentrate production costs
through higher utilization rates at the lowest-cost facilities;
and (ii) headcount reductions. In conjunction with the
Rightsizing Program, PLP recorded a special charge of $52.3
million, or $0.51 per unit, in the fourth quarter of 1999. For
more detail related to the Rightsizing Program, see Note 4,
"Restructuring and Other Charges," in Part II, Item 8, "Financial
Statements and Supplementary Data," of this Annual Report on Form
10-K.
During the fourth quarter of 1998, PLP developed and began
execution of Project Profit. Project Profit was comprised of four
major initiatives: (i) the combination of certain activities
within IMC's potash and phosphates business units in an effort to
realize certain operating and staff function synergies; (ii)
restructuring of the phosphate rock mining and concentrated
phosphate production/distribution operations and processes in an
effort to reduce costs; (iii) simplification of current business
activities by eliminating businesses not deemed part of PLP's core
competencies; and (iv) reduction of operational and corporate
headcount. In conjunction with Project Profit, PLP recorded a
special charge of $61.8 million, or $0.60 per unit, in the fourth
quarter of 1998. For more detail related to Project Profit, see
Note 4, "Restructuring and Other Charges," in Part II, Item 8,
"Financial Statements and Supplementary Data," of this Annual
Report on Form 10-K.
Other Charges
During the fourth quarter of 1999, and in connection with the
Rightsizing Program, PLP undertook a detailed review of its
accounting records and valuation of various assets and
liabilities. As a result, PLP recorded a special charge of $3.1
million, or $0.03 per unit, related to asset write-offs. This
entire charge was included in Cost of goods sold.
As a result of a review of its sulphur assets at September 30,
1997, PLP concluded that the carrying value of its Main Pass
sulphur mine assets exceeded the undiscounted estimated future net
cash flows, such that an impairment write-down of $375.5 million,
or $3.63 per unit, was required. A similar analysis of the
Culberson, Texas sulphur mine assets, based on a reassessment of
recoverable reserves utilizing recent production history, also
indicated an impairment write-down of $9.0 million, or $0.08 per
unit, was required. Also, in connection with the FTX Merger, PLP
recorded special charges of $21.5 million, or $0.21 per unit.
Interest Expense
The increase in interest expense in 1998 as compared to 1997 was
due to higher average borrowings for 1998 as compared to 1997.
These funds were utilized to fund oil and gas expenditures
primarily related to the Exploration Program.
CAPITAL RESOURCES AND LIQUIDITY
PLP generates cash through distributions from its joint venture
investment in IMC-Agrico and has sufficient borrowing capacity to
meet its operating and discretionary spending requirements. Net
cash provided by operating activities remained virtually unchanged
as 1999 totaled $81.3 million versus $79.5 million for 1998.
Net cash provided by investing activities for 1999 of $9.2 million
increased from net cash used in investing activities for 1998 by
$90.1 million. Capital expenditures decreased $42.4 million from
the prior year primarily due to the exiting of the Exploration
Program during the year. The dispositions of both the Exploration
Program and PLP's investment in MMR resulted in proceeds of $44.8
million.
Net cash used in financing activities for 1999 was $60.1 million
which increased $54.9 million as compared to 1998. This increase
was primarily the result of a $21.8 million increase in
distributions to unitholders and higher net debt payments of $33.1
million. Both of these were primarily due to decreased
Exploration Program funding requirements and the receipt of
proceeds from the dispositions of both the Exploration Program and
PLP's investment in MMR.
CONTINGENCIES
Reference is made to Note 9, "Commitments and Contingencies," of
Notes to Financial Statements in Part II, Item 8, "Financial
Statements and Supplementary Data," of this Annual Report on Form
10-K.
ENVIRONMENTAL
Reference is made to "Other Matters - Environmental, Health and
Safety Matters," in Part I, Item 1, of this Annual Report on Form
10-K.
YEAR 2000 DISCLOSURE
PLP completed its Year 2000 readiness initiatives and did not
experience any significant problems. PLP does not anticipate any
significant adverse business effects related to this issue. PLP's
share of cumulative costs of projects dedicated solely to Year
2000 remediation was approximately $1.0 million.
RECENTLY ISSUED ACCOUNTING GUIDANCE
PLP does not believe that Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which PLP is required to adopt on January
1, 2001, will have a material impact on PLP's financial
statements.
FORWARD-LOOKING STATEMENTS
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 PLP or its customers
operate; weather conditions; the impact of competitive products;
pressure on prices realized by PLP for its products; constraints
on supplies of raw materials used in manufacturing certain of
PLP'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 PLP; and other risk factors
reported from time to time in PLP's Securities and Exchange
Commission (SEC) reports.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk.
PLP is exposed to the impact of interest rate changes on
borrowings and the impact of fluctuations in the purchase price of
natural gas, ammonia and sulphur consumed in operations, as well
as changes in the market value of its financial instruments. PLP
periodically enters into natural gas forward purchase contracts
with maturities of typically one year or less in order to reduce
the effects of changing raw material prices, but not for trading
purposes. Gains and losses on these contracts are deferred until
settlement and recorded as a component of underlying inventory
costs when settled. The notional value of PLP's natural gas
forward purchase contracts was $4.3 million and $3.3 million as of
December 31, 1999 and 1998, respectively. The market value of
these contracts is estimated based on the amount that PLP would
receive or pay to terminate the contracts, and was not
significantly different from the notional value at December 31,
1999 and 1998. The impact of the settlement of these contracts
was immaterial to PLP in 1999, 1998 and 1997.
PLP conducted sensitivity analyses of its derivatives and other
financial instruments assuming the following: (i) a one percentage
point adverse change in interest rates; and (ii) a ten percent
adverse change in the purchase price of natural gas, ammonia and
sulphur all from their levels at December 31, 1999. Holding all
other variables constant, the hypothetical adverse changes would
not materially affect PLP's financial position. These analyses
did not consider the effects of the reduced level of economic
activity that could exist in such an environment and certain other
factors. Further, in the event of a change of such magnitude,
management would likely take actions to further mitigate its
exposure to possible changes. However, due to the uncertainty of
the specific actions that would be taken and their possible
effects, the sensitivity analyses assume no changes in PLP's
financial structure.
Item 8. Financial Statements and Supplementary Data.
Page
Report of Independent Auditors 20
Statement of Operations 21
Balance Sheet 22
Statement of Cash Flows 23
Statement of Partners' Capital (Deficit) 24
Notes to Financial Statements 25
REPORT OF INDEPENDENT AUDITORS
To the Partners of Phosphate Resource Partners Limited Partnership:
We have audited the accompanying balance sheet of Phosphate Resource
Partners Limited Partnership (Partnership), a Delaware Limited Partnership,
as of December 31, 1999 and 1998 and the related statements of operations,
cash flows and partners' capital for each of the three years in the period
ended December 31, 1999. Our audits also included the financial statement
schedules listed in the Index at Item 14(a). These financial statements
and schedules are the responsibility of the General Partner's management.
Our responsibility is to express an opinion on these financial statements
and schedules based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Partnership as of
December 31, 1999 and 1998 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedules,
when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
As discussed in Note 1 to the financial statements, the Partnership changed
its method of accounting for start-up activities in 1999 to conform with
SOP 98-5, "Reporting on the Costs of Start-Up Activities."
Ernst & Young LLP
Chicago, Illinois
January 31, 2000
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
Statement of Operations
(In millions, except per unit amounts)
Years Ended December 31
------------------------------
1999 1998 1997
---- ---- ----
Net sales $ 592.0 $ 687.1 $ 842.5
Cost of goods sold 474.8 515.3 1,050.0
------- -------- --------
Gross margins 117.2 171.8 (207.5)
Selling, general and administrative expenses 27.4 26.5 75.8
Restructuring charges 50.7 54.6 -
------- -------- --------
Operating earnings (loss) 39.1 90.7 (283.3)
Interest expense 40.1 40.2 35.7
Other (income) expense, net (7.3) (3.0) 4.5
------- -------- --------
Earnings (loss) from continuing operations 6.3 53.5 (323.5)
Discontinued operations:
Loss from discontinued operations (5.0) (21.2) (17.1)
Loss on disposal (22.4) - -
------- -------- --------
Total loss from discontinued operations $ (27.4) $ (21.2) $ (17.1)
======= ======== ========
Earnings (loss) before extraordinary item and
cumulative effect of a change in accounting
principle $ (21.1) $ 32.3 $ (340.6)
Extraordinary charge - debt retirement - - (14.5)
Cumulative effect of a change in accounting
principle (2.6) - -
------- -------- --------
Earnings (loss) $ (23.7) $ 32.3 $ (355.1)
======= ======== ========
Earnings (loss) per unit:
Earnings (loss) from continuing operations $ 0.06 $ 0.51 $ (3.12)
Total loss from discontinued operations (0.27) (0.20) (0.17)
Extraordinary charge - debt retirement - - (0.14)
Cumulative effect of a change in accounting
principle (0.02) - -
------- -------- --------
Earnings (loss) $ (0.23) $ 0.31 $ (3.43)
======= ======== ========
Average units outstanding 103.5 103.5 103.5
Distribution paid per publicly held unit:
Cash $ 0.43 $ 0.22 $ 1.34
Property $ - $ - $ 1.21
See Notes to Financial Statements
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
Balance Sheet
(In millions)
December 31
----------------------
1999 1998
---- ----
Assets
Current assets:
Cash and cash equivalents $ 41.2 $ 10.8
Receivables, net 23.8 65.0
Inventories, net 92.4 122.2
Other current assets 0.3 0.9
------- -------
Total current assets 157.7 198.9
Property, plant and equipment, net 434.0 477.5
Other assets 20.1 43.4
------- -------
Total assets $ 611.8 $ 719.8
======= =======
Liabilities and Partners' Deficit
Current liabilities:
Accounts payable and accrued liabilities $ 89.1 $ 59.5
Short-term debt and current maturities of
long-term debt 4.3 4.4
------- -------
Total current liabilities 93.4 63.9
Long-term debt, less current maturities 543.0 556.9
Other noncurrent liabilities 202.8 258.0
Partners' deficit (227.4) (159.0)
------- -------
Total liabilities and partners' deficit $ 611.8 $ 719.8
======= =======
See Notes to Financial Statements
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
Statement of Cash Flows
(In millions)
Years Ended December 31
----------------------------
1999 1998 1997
---- ---- ----
Cash flows from operating activities:
Earnings (loss) $ (23.7) $ 32.3 $(355.1)
Adjustments to reconcile earnings (loss) to
net cash provided by operating activities:
Restructuring charges 52.2 61.4 -
Sulphur asset impairment charge - - 384.5
Depreciation, depletion and amortization 20.5 25.2 43.1
Loss on sale of business 22.4 - -
Oil and gas exploration expenses - 14.7 15.8
Cash distributions from IMC-Agrico in excess
of interest in capital - - 34.3
Other (66.0) (2.4) 15.7
Changes in:
Receivables 41.5 (17.7) (14.8)
Inventories 23.5 (6.9) (16.9)
Other current assets 0.6 1.5 1.2
Accounts payable and accrued liabilities 10.3 (28.6) (4.4)
------- ------- -------
Net cash provided by operating activities 81.3 79.5 103.4
------- ------- -------
Cash flows from investing activities:
Capital expenditures (40.9) (83.3) (72.4)
Proceeds from sale of business 32.0 - -
Other 18.1 2.4 (8.2)
------- ------- -------
Net cash provided by (used in) investing
activities 9.2 (80.9) (80.6)
======= ======= =======
Cash flows from financing activities:
Cash distributions to unitholders (44.7) (22.9) (119.6)
Proceeds from issuance of long-term debt, net 0.4 53.5 560.5
Payments of long-term debt (15.8) (21.9) (442.4)
Change in short-term debt, net - (13.9) -
Cash transferred to FSC - - (23.3)
------- ------- -------
Net cash used in financing activities (60.1) (5.2) (24.8)
------- ------- -------
Net change in cash and cash equivalents 30.4 (6.6) (2.0)
Cash and cash equivalents at beginning of year 10.8 17.4 19.4
------- ------- -------
Cash and cash equivalents at end of year $ 41.2 $ 10.8 $ 17.4
======= ======= =======
Supplemental cash flow disclosure:
Interest paid $ 39.8 $ 41.0 $ 38.8
======= ======= =======
See Notes to Financial Statements
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
Statement of Partners' Capital (Deficit)
(In millions)
Units Outstanding Partners' Capital(Deficit)
---------------------- --------------------------
General Limited Total General Limited Total
------- ------- ----- ------- ------- -----
Balance at
December 31, 1996 53.4 50.1 103. 5 $ 185.6 $ 174.1 $ 359.7
Loss - - - (183.2) (171.9) (355.1)
Unitholder distributions - - - (52.5) (67.1) (119.6)
Distribution of FSC shares - - - (30.1) (28.3) (58.4)
Other - - - 2.5 2.5 5.0
Reallocation caused by disproportionate
distributions - - - (9.2) 9.2 -
---- ---- ------ ------- ------- -------
Balance at
December 31, 1997 53.4 50.1 103.5 (86.9) (81.5) (168.4)
Earnings - - - 16.7 15.6 32.3
Unitholder distributions - - - (11.9) (11.0) (22.9)
---- ---- ----- ------- ------- -------
Balance at
December 31, 1998 53.4 50.1 103.5 (82.1) (76.9) (159.0)
Loss - - - (12.2) (11.5) (23.7)
Unitholder distributions - - - (23.1) (21.6) (44.7)
---- ---- ----- ------- ------- -------
Balance at
December 31, 1999 53.4 50.1 103.5 $(117.4) $(110.0) $(227.4)
==== ==== ===== ======= ======= =======
See Notes to Financial Statements
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
Notes to Financial Statements
(Dollars in millions, except per unit amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Ownership
The financial statements of PLP, a Delaware limited partnership,
include all majority-owned subsidiaries. The investment in IMC-Agrico
is reflected using the proportionate consolidation method. The
activities of IMC-Agrico, 41.5 percent owned by PLP, include: (i) the
mining and sale of phosphate rock; and (ii) the production,
distribution and sale of concentrated phosphates, animal feed
ingredients, and related products. Prior to its disposition in the
fourth quarter of 1999, PLP's interest in the Exploration Program was
proportionately consolidated at a rate of 56.4 percent of the
exploration costs and 47.0 percent of the profits derived from oil and
gas producing properties. Certain prior year amounts have been
reclassified to conform to the current year presentation.
As discussed in more detail in Note 5, "Discontinued Operations," the
oil and gas operations have been presented as discontinued operations.
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.
Revenue Recognition
Revenue is recognized by PLP upon the transfer of title to the
customer, which is generally at the time product is shipped. For
certain export shipments, transfer of title occurs outside of the
United States.
Cash and Cash Equivalents
PLP 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. IMC-Agrico's cash and cash equivalents
are not available to PLP until a distribution is paid by IMC-Agrico.
Concentration of Credit Risk
Domestically, IMC-Agrico sells its products to manufacturers,
distributors and retailers primarily in the midwestern and southeastern
United States. Internationally, IMC-Agrico's products are sold
primarily through a United States export association. No single
customer or group of affiliated customers accounted for more than ten
percent of PLP's net sales.
Inventories
Inventories are valued at the lower-of-cost-or-market (net realizable
value). Cost for substantially all inventories is calculated on a
cumulative annual-average basis.
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, except for repair and maintenance overhauls
(Turnarounds), are charged to operations when incurred. Expenditures
for Turnarounds are deferred when incurred and amortized into cost of
goods sold on a straight-line basis, generally over an 18-month period.
Turnarounds are large-scale maintenance projects that are performed
regularly, usually every 18 to 24 months. Turnarounds are necessary to
maintain the operating capacity and efficiency rates of the production
plants. The deferred portion of Turnaround expenditures is classified
in Other assets.
Depreciation and depletion expenses for mining operations, including
mineral deposits, are determined using the units-of-production method
based on estimates of recoverable reserves. Other asset classes or
groups are depreciated or amortized on a straight-line basis over their
estimated useful lives as follows: buildings, 17 to 32 years; machinery
and equipment, five to 32 years; and leasehold improvements, over the
lesser of the remaining useful life of the asset or the remaining term
of the lease. Using the methodology prescribed in SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," PLP reviews long-lived assets and any
related intangible assets for impairment whenever events or changes in
circumstances indicate the carrying amounts of such assets may not be
recoverable. Once an indication of a potential impairment exists,
recoverability of the respective assets is determined by comparing the
forecasted undiscounted net cash flows of the operation to which the
assets relate, to the carrying amount, including associated intangible
assets, of such operation. If the operation is determined to be unable
to recover the carrying amount of its assets, then intangible assets
are written down first, followed by the other long-lived assets of the
operation, to fair value. Fair value is determined based on discounted
cash flows or appraised values, depending upon the nature of the
assets.
Accrued Environmental Costs
Through IMC-Agrico PLP produces and distributes crop and animal
nutrients. These activities subject IMC-Agrico to an ever-evolving
myriad of international, federal, state, provincial and local EHS
laws, which regulate, or propose to regulate: (i) product content;
(ii) use of products by both PLP and its customers; (iii) conduct of
mining and production operations, including safety procedures used by
employees; (iv) management and handling of raw materials; (v) air
and water quality impacts by PLP's facilities; (vi) disposal of hazardous
and solid wastes; and (vii) post-mining land reclamation. Compliance
with these laws often requires PLP to incur costs. PLP has contingent
environmental liabilities arising from three sources: facilities
currently or formerly owned by PLP or its predecessors;
facilities adjacent to currently or formerly owned facilities;
and third-party Superfund sites. At facilities currently or formerly
owned by PLP or its corporate predecessors, the historical use and
handling of regulated chemical substances, crop and animal nutrients
and additives have resulted in soil and groundwater contamination,
sometimes requiring PLP to undertake or fund cleanup efforts.
Of the environmental costs discussed above, the following environmental
costs are charged to operating expense: fines, penalties and certain
remedial actions to address violations of the law; remediation of
properties that are currently or were formerly owned or operated by
PLP, or its predecessors, when those properties do not contribute to
current or future revenue generation; and liability for remediation of
facilities adjacent to currently or formerly owned facilities or for
third-party Superfund sites. Contingent environmental liabilities are
recorded for environmental investigatory and non-capital remediation
costs at identified sites when litigation has commenced or a claim or
assessment has been asserted or is imminent and the likelihood of an
unfavorable outcome is probable. PLP cannot determine the cost of any
remedial action that ultimately may be required at unknown sites, sites
currently under investigation, sites for which investigations have not
been performed, or sites at which unanticipated conditions are
discovered.
Income Taxes
PLP is not a taxable entity; therefore, no income taxes are reported in
its financial statements.
Derivatives
PLP is exposed to the impact of interest rate changes on borrowings and
the impact of fluctuations in the purchase price of natural gas,
ammonia and sulphur consumed in operations, as well as changes in the
market value of its financial instruments. PLP periodically enters
into natural gas forward purchase contracts with maturities of
typically one year or less in order to reduce the effects of changing
raw materials prices, but not for trading purposes. Gains and losses
on these contracts are deferred until settlement and recorded as a
component of underlying inventory costs when settled. The notional
value of PLP's natural gas forward purchase contracts was $4.3 million
and $3.3 million as of December 31, 1999 and 1998, respectively. The
market value of these contracts is estimated based on the amount that
PLP would receive or pay to terminate the contracts, and was not
significatly different from the notional amount as of December 31, 1999
and 1998, respectively. The impact of the settlement of these
contracts was immaterial to PLP in 1999, 1998 and 1997.
Adoption of SOP 98-5
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-5, "Reporting on the Costs of
Start-Up Activities," which mandated that costs related to start-up
activities be expensed as incurred, effective January 1, 1999. Prior
to the adoption of SOP 98-5, PLP capitalized its start-up costs (i.e.,
pre-operating costs). PLP adopted the provisions of SOP 98-5 in its
financial statements beginning January 1, 1999 and, accordingly,
recorded a charge for the cumulative effect of an accounting change of
$2.6 million, or $0.02 per unit, in order to expense start-up costs
that had been previously capitalized. The future impact of SOP 98-5 is
not expected to be material to PLP's operating results.
Recently issued Accounting Standards
PLP does not believe that SFAS No. 133, which PLP is required to adopt
effective January 1, 2001, will have a material impact on PLP's
financial statements.
2. MERGERS
FTX
In December 1997, FTX, the General Partner and owner of a 51.6 percent
interest in PLP, merged into IMC, PLP's joint venture partner in IMC-
Agrico. The FTX Merger resulted in the dissolution of FTX with IMC
becoming the General Partner of PLP. In connection with the FTX
Merger, PLP's sulphur business and certain oil and gas operations,
including its 58.3 percent interest in Main Pass, together with IMC's
25.0 percent interest in Main Pass, were transferred to FSC, a newly
formed public entity whose common stock was distributed pro rata to
PLP's unitholders, including FTX.
MMR
In November 1998, McMoRan Oil & Gas Co. (MOXY) and FSC merged and
became wholly-owned subsidiaries of a newly formed holding company, MMR
(MMR Merger). MOXY stockholders received 0.2 MMR shares for each common
share of MOXY held at the time of the MMR Merger which resulted in PLP
owning 0.8 million shares, or approximately six percent, of outstanding
MMR common stock. Subsequently, in the second quarter of 1999, PLP
sold its entire investment in MMR stock. In connection with the sale,
PLP received proceeds of $12.8 million and recorded a loss of $0.7
million.
3. DISTRIBUTIONS
IMC-Agrico makes cash distributions to each partner based on formulas
and sharing ratios as defined in the Partnership Agreement. For the
year ended December 31, 1999, the total amount of cash generated for
distribution by IMC-Agrico was $171.2 million, of which $56.8 million
was distributed to PLP during the year and $14.0 million will be
distributed to PLP in 2000. PLP's distributable cash is shared ratably
by PLP's public unitholders and IMC, except that IMC will be entitled
to receive unpaid cash distributions from previous quarters ($431.3
million unpaid as of December 31, 1999) from one-half of the quarterly
distributable cash after the payment of $0.60 cents per unit to all PLP
unitholders.
4. RESTRUCTURING AND OTHER CHARGES
1999 Restructuring Plan
During the fourth quarter of 1999, PLP announced and began implementing
the Rightsizing Program which was designed to simplify and focus PLP's
core businesses. The key components of the Rightsizing Program are:
(i) the shutdown and permanent closure of the Nichols and Payne Creek
facilities of IMC-Agrico resulting from an optimization program that
will reduce rock and concentrate production costs through higher
utilization rates at the lowest-cost facilities; and (ii) headcount
reductions. In conjunction with the Rightsizing Program, PLP recorded
a special charge of $52.3 million, or $0.51 per unit, in the fourth
quarter of 1999.
The Rightsizing Program (shown below in tabular format) primarily
related to the following:
Asset Impairments
The Rightsizing Program included the disposal of property, plant and
equipment, as well as the write-down to fair value of assets as a
result of the decision to close certain facilities. In order to
determine the write-down of assets affected by the Rightsizing Program,
and in accordance with SFAS No. 121, PLP performed an assessment of
future cash flows and, accordingly, adjusted the assets to their
appropriate fair values.
The majority of the impairment occurred at PLP's Florida production
facilities where property, plant and equipment was written down by
approximately $16.1 million to reflect fair value. The phosphate mine
and plant closures resulted from a facilities optimization program that
will reduce rock and concentrate production costs through higher
utilization rates at the lowest-cost facilities. The write-down of
impaired assets primarily consisted of certain facilities and
associated production equipment.
Non-Employee Exit Costs
As a result of the decision to permanently close certain PLP facilities
described above, PLP recorded a charge of $18.7 million for closure
costs. The closure costs included approximately $16.8 million for
incremental environmental land reclamation of the surrounding mined-out
areas with the remainder for demolition costs. PLP expects the
demolition and closure activities to be essentially completed by the
end of 2005. Other various non-employee exit costs totaled $0.5
million.
Employee Headcount Reductions
As part of the Rightsizing Program, headcount reductions were
implemented throughout IMC-Agrico. The majority of these reductions
were a result of the closing and/or exiting of production operations,
as discussed above. Certain involuntary eliminations of positions,
which were communicated prior to December 31, 1999, were necessary in
order to achieve desired staffing levels. A total of 533 employees were
terminated and had left IMC-Agrico by the end of December 31, 1999.
PLP recorded a charge of $6.4 million for severance benefits related to
these employee headcount reductions. Virtually all severance payments
will be disbursed subsequent to December 31, 1999.
As a result of the employee terminations necessitated by the
Rightsizing Program, settlement, curtailment and special termination
charges of $3.9 million were recorded in accordance with SFAS No. 88,
"Employers' Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits." The related
liabilities have been classified in Other noncurrent liabilities. See
Note 8, "Pensions and Other Postretirement Benefits."
Inventories and Spare Parts of Exited Facilities
The Rightsizing Program included a major reduction in production
assets. This reduction was accomplished through the permanent shutdown
of two phosphate facilities. Given the reduction in facilities and the
resulting decrease in production, historical levels of spare parts
inventory that had been maintained at these facilities were no longer
necessary or warranted. Therefore, PLP recorded a charge of $5.1
million for the write-down of excess spare parts inventory which will
be disposed.
PLP recorded charges of approximately $1.6 million to reduce the
carrying value of finished goods inventories on-hand to net realizable
value at December 31, 1999, as a result of the facilities closures
discussed above.
Details of the restructuring charges were as follows:
1999 Remaining
Restructuring Accrual at
Charges Cash Paid Non-Cash 12/31/99
------------- --------- -------- ----------
Asset impairments:
Facilities closed prior to
December 31, 1999 $ 16.1 $ - $ 16.1 $ -
Non-employee exit costs:
Demolition and closure costs 18.7 0.2 - 18.5
Other 0.5 - - 0.5
Employee headcount reductions:
Severance benefits 6.4 0.2 - 6.2
Settlement, curtailment and
special termination benefits 3.9 - 3.9 -
Inventories and spare parts of exited businesses:
Spare parts inventories 5.1 - 5.1 -
Finished goods inventories 1.6 - 1.6 -
------ ------ ------ ------
Total $ 52.3 $ 0.4 $ 26.7 $ 25.2
====== ====== ====== ======
All restructuring charges have been recorded as a separate line item on
the Statement of Operations, except for the finished goods inventory
write-down of $1.6 million which was recorded in Cost of goods sold.
1998 Restructuring Charge
During the fourth quarter of 1998, PLP developed and began execution of
Project Profit. Project Profit was comprised of four major
initiatives: (i) the combination of certain activities within IMC's
potash and phosphate business units in an effort to realize certain
operating and staff function synergies; (ii) restructuring of the
phosphate rock mining and concentrated phosphate
production/distribution operations and processes in an effort to reduce
costs; (iii) simplification of the current business activities by
eliminating businesses not deemed part of PLP's core competencies; and
(iv) reduction of operational and administrative headcount. In
conjunction with Project Profit, PLP recorded a special charge of $61.8
million, or $0.60 per unit, in the fourth quarter of 1998.
Project Profit (shown below in tabular format) primarily related to the
following:
Asset impairments
Project Profit included the removal of property, plant and equipment,
as well as the write-down to fair value of those assets rendered
unusable due to the decision to close certain facilities and forgo or
abandon certain mineral properties. In order to determine the write-
down of assets affected by Project Profit, and in accordance with SFAS
No. 121, PLP performed an assessment of future cash flows and,
accordingly, adjusted the assets to their appropriate fair values.
The majority of the impairment occurred at PLP's Florida production
facilities where property, plant and equipment was written down by
approximately $20.3 million to fair value. PLP developed a new
strategic mine plan (Mine Plan) which identified asset reductions,
lower operating costs and optimal phosphate rock management as key
drivers in the restructuring of operations. The write-down of impaired
assets in connection with the Mine Plan primarily consisted of
facilities, production equipment, operating supplies, land and mineral
reserves.
The $20.3 million in asset impairment charges included $5.5 million
pertaining to assets which were utilized until their respective
disposal dates, primarily within the first nine months of 1999. The
estimated fair value of these assets, which was depreciated over their
respective remaining periods of service, reflected estimated operating
net cash flows until disposition. As of December 31, 1999, all of
these assets have been sold or abandoned.
Non-employee exit costs
In accordance with the objective of the Mine Plan, to optimize
phosphate rock management, PLP decided to permanently close a high-cost
phosphate rock mine. As a result of this decision, PLP recorded a
charge of $7.6 million for the demolition and other incremental costs
of closure of the mine. The closure costs included approximately $6.4
million for incremental environmental land reclamation of the
surrounding mined-out areas. The demolition and closure activities were
still in process at the end of 1999 with an estimate of completion
during 2001.
PLP also decided to close certain production operations in connection
with Project Profit, principally the uranium and urea operations of
PLP. This decision was based on an analysis of the future outlook for
these products, taking into consideration whether the operations were
part of PLP's core businesses. These operations were determined to be
non-core businesses and PLP recorded charges of approximately $5.3
million for demolition and/or closure, including environmental costs,
of the uranium and urea production facilities. PLP expects the
demolition and closure activities to be completed by the end of 2000.
In connection with Project Profit, PLP decided to discontinue its
transportation of ammonia from Louisiana to its phosphate operations in
Florida. This decision was based on current market conditions which
secured the availability of ammonia to PLP and which made the high-cost
transportation of ammonia from Louisiana to Florida unnecessary. As a
result, PLP recorded a charge of $5.5 million for the net present value
of costs associated with permanently idling leased equipment used in
the transportation of ammonia from Louisiana. Other various exit costs
totaled $2.7 million.
Employee headcount reductions
As part of Project Profit, IMC-Agrico implemented headcount reductions.
Certain of these reductions were a result of the closing and/or exiting
of production operations, as discussed above. To facilitate headcount
reductions, IMC-Agrico offered a voluntary retirement program for
eligible employees. In addition, certain involuntary eliminations of
positions, which were communicated prior to December 31, 1998, were
necessary in order to achieve desired staffing levels. A total of 168
employees accepted the voluntary retirement plan by December 31, 1998,
with 106 of those employees having left as of that date. At December
31, 1999, no voluntarily severed employees were remaining.
Additionally, a total of 396 employees were involuntarily terminated
and left PLP by the end of February 1999. PLP recorded a charge of
$6.0 million for severance benefits related to these headcount
reductions. Virtually all severance payments were disbursed prior to
December 31, 1999 with the remaining payments to be disbursed during
the first quarter of 2000.
As a result of the employee terminations necessitated by Project
Profit, settlement, curtailment and special termination charges of $3.6
million were recorded in accordance with SFAS No. 88. The related
liabilities were classified in Other noncurrent liabilities. See Note
8, "Pensions and Other Postretirement Benefits."
Inventories and spare parts of exited businesses
PLP recorded charges of approximately $7.2 million to reduce the
carrying value of finished goods inventories on-hand to net realizable
value at December 31, 1998, as a result of the decision to exit certain
businesses.
Project Profit included a major reduction in production assets. The
reduction was accomplished through the permanent shut-down of select
mining facilities as well as a cut-back in concentrate facilities.
Given the reduction in facilities and the resulting decrease in
production, historical levels of spare parts inventory that had been
maintained by PLP were no longer necessary or warranted. Therefore,
PLP recorded a charge of $3.6 million for the write-off of spare parts
inventory.
Activity related to accruals for Project Profit in 1999 was as follows:
Accrual at Accrual at
Jan. 1, 1999 Cash Paid Dec. 31, 1999
------------ --------- -------------
Non-employee exit costs:
Demolition and closure costs $ 12.9 $ 2.7 $ 10.2
Idled leased transportation
equipment 5.5 1.8 3.7
Other 1.9 1.3 0.6
Employee headcount reductions:
Severance benefits 5.9 5.8 0.1
------- ------- -------
Total $ 26.2 $ 11.6 $ 14.6
======= ======= =======
All restructuring charges were recorded as a separate line item on the
1998 Statement of Operations, except for the finished goods inventory
write-down of $7.2 million which was recorded in Cost of goods sold.
Other Charges
During the fourth quarter of 1999, and in connection with the
Rightsizing Program, PLP undertook a detailed review of its accounting
records and valuation of various assets and liabilities. As a result,
PLP recorded a special charge of $3.1 million, or $0.03 per unit,
related to asset write-offs. The entire charge was included in Cost of
goods sold.
1997 Sulphur Assets Write-Down
As a result of a review of its sulphur assets at September 30, 1997,
PLP concluded that the carrying value of its Main Pass sulphur mine
assets exceeded the undiscounted estimated future net cash flows, such
that an impairment write-down of $375.5 million was required. A
similar analysis of the Culberson, Texas sulphur mine assets, based on
a reassessment of recoverable reserves utilizing recent production
history, also indicated an impairment write-down of $9.0 million was
required.
5. DISCONTINUED OPERATIONS
In the fourth quarter of 1999, PLP decided to discontinue its oil and gas
business which primarily consisted of its interests in the Exploration
Program. PLP sold its interest in the Exploration Program for proceeds
of $32.0 million. A loss on disposal of $22.4 million was recorded in
the fourth quarter of 1999. The Statement of Operations has been
restated to report the operating results of the oil and gas business as
discontinued operations in accordance with Accounting Principles Board
Opinion No. 30, "Reporting the Results of Operations." For 1999 and
1998, the revenues from oil and gas operations were $7.0 million and
$1.3 million, respectively. The exploration and development costs were
accounted for using the successful efforts method of accounting.
6. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
Receivables:
1999 1998
---- ----
Trade $ 22.4 $ 57.7
Non-trade 3.5 8.7
25.9 66.4
Less: Allowances 2.1 1.4
-------- --------
Receivables, net $ 23.8 $ 65.0
======== ========
The carrying value of accounts receivable was equal to the estimated
fair value of such assets due to their short maturity.
Inventories:
1999 1998
---- ----
Products (principally finished) $ 74.1 $ 100.2
Operating materials and supplies 19.7 24.4
-------- --------
93.8 124.6
Less: Inventories allowances 1.4 2.4
-------- --------
Inventories, net $ 92.4 $ 122.2
======== ========
Property, plant and equipment:
1999 1998
---- ----
Land $ 27.5 $ 25.7
Mineral properties and rights 180.7 227.9
Buildings 63.4 76.4
Machinery and equipment 636.9 652.6
Construction in progress 39.4 19.8
-------- --------
947.9 1,002.4
Accumulated depreciation, depletion
and amortization (513.9) (524.9)
-------- --------
Property, plant and equipment, net $ 434.0 $ 477.5
======== ========
As of December 31, 1999, idle facilities of PLP included two
concentrated phosphate plants, which will remain closed subject to
improved market conditions. PLP's share of the net book value of these
facilities totaled $23.7 million. In the opinion of management, the net
book value of PLP's idle facilities is not in excess of net realizable
value.
Accounts payable and accrued liabilities:
1999 1998
---- ----
Accounts payable $ 51.2 $ 21.6
Restructuring 26.7 12.2
Interest 4.7 4.4
Taxes other than income taxes 4.2 5.6
Other 2.3 15.7
-------- --------
Accounts payable and accrued
liabilities $ 89.1 $ 59.5
======== ========
Other noncurrent liabilities:
1999 1998
---- ----
Employee and retiree benefits $ 141.3 $ 131.0
Environmental 41.5 37.9
Restructuring 13.1 14.0
Other 6.9 75.1
-------- --------
Other noncurrent liabilities $ 202.8 $ 258.0
======== ========
7.FINANCING ARRANGEMENTS
Long-term debt as of December 31 consisted of the following:
1999 1998
---- ----
Notes payable to IMC $300.7 $305.5
7.0% Senior notes due 2008 150.0 150.0
8.75% Senior subordinated notes due 2004 5.7 5.7
7.7% Industrial revenue bonds, due 2022 11.2 11.2
IMC-Agrico debt 79.7 88.9
------ ------
547.3 561.3
Less: Current maturities 4.3 4.4
------ ------
Total long-term debt, less current
maturities $543.0 $556.9
====== ======
In connection with the FTX Merger, PLP entered into two separate
agreements with IMC (IMC Agreements). One agreement is a variable
rate, based on LIBOR, 6.125% as of December 31, 1999, plus one percent,
demand note for up to $200.0 million, while the other agreement is an
8.75 percent demand note for up to $150.0 million. Interest under the
IMC Agreements is payable quarterly. IMC has no present intention of
demanding payment on the IMC Agreements, therefore these notes have
been classified as long-term.
In June and August 1998, PLP, through its interest in IMC-Agrico,
entered into two promissory notes payable to IMC for borrowings up to
$27.0 million (Note Payable) and $21.7 million (Promissory Note),
respectively. The Note Payable bears interest primarily based on the
LIBOR rate. The Promissory Note bears a fixed rate of 6.75 percent with
quarterly principal payments through December 2003.
On December 31, 1999, the estimated fair value of long-term debt
described above was approximately $15.0 million less than the carrying
amount of such debt. The fair value was calculated in accordance with
the requirements of SFAS No. 107, "Disclosures About the Fair Value of
Financial Instruments," and was estimated by discounting the future
cash flows using rates currently available to PLP for debt instruments
with similar terms and remaining maturities.
Scheduled maturities, excluding the IMC Agreements, are as follows:
2000 $ 4.3
2001 $ 4.4
2002 $ 4.2
2003 $ 3.9
2004 $ 5.7
Thereafter $ 224.1
8. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
Substantially all individuals who perform services for IMC-Agrico are
employed by MP Co. This includes former employees of PLP and IMC who
were transferred to MP Co. when IMC-Agrico was formed. As a result, on
July 1, 1993, MP Co. established non-contributory pension plans (Plans)
that cover substantially all of its employees who perform services for
IMC-Agrico. Benefits are based on a combination of years of service
and compensation levels, depending on the plan. Generally,
contributions to the Plans are made to meet minimum funding
requirements of the Employee Retirement Income Security Act of 1974.
The expense related to such Plans is charged by MP Co. to IMC-Agrico.
Certain employees whose pension benefits exceeded Internal Revenue Code
limitations are covered by supplementary non-qualified, unfunded
pension plans. The Plans' assets consist mainly of managed equity and
fixed income security accounts.
During 1997, MP Co. employees and certain IMC employees who provide
services to IMC-Agrico and PLP, were given the option to remain in the
current pension plan or transfer to a newly created defined
contribution plan, effective January 1, 1998. As a result, under the
provisions of SFAS No. 88, PLP recognized a $4.4 million curtailment
loss for the year ended December 31, 1997.
PLP provides certain health care benefit plans for certain retired
employees. Prior to the FTX Merger, FTX and FM Services Company
provided these benefits for retired employees. MP Co. also provides
certain health care benefit plans for retired employees. Certain plans
are contributory whereas certain other plans are 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. For those employees who provide
services to IMC-Agrico but were included in health care benefit plans
of IMC, the cost of providing such benefits is charged by IMC to MP
Co., and in turn, to IMC-Agrico.
Certain IMC employees also provide services to IMC-Agrico and PLP.
Until January 1, 1999, such employees were covered by pension and
postretirement health care benefit plans sponsored by IMC. The cost of
providing such services, as well as the related pension expense, was
charged to MP Co. and, in turn, to IMC-Agrico. Effective January 1,
1999, these employees are covered by pension and postretirement health
care benefit plans sponsored by MP Co. PLP's share of pension expense
for such employees totaled $2.3 million for 1999 of which $0.7 million
represents curtailment and settlement loss; $2.3 million for 1998 of
which $0.7 million represents curtailment and settlement loss; and $4.3
million for 1997 of which $2.3 million represents a curtailment loss.
The following table sets forth pension and postretirement obligations
for defined benefit plans, plan assets and benefit cost as of and for
the years ended December 31 based on a September 30 measurement date:
Pension Plans Other Benefits
-------------- --------------
1999 1998 1999 1998
---- ---- ---- ----
Change in benefit obligation
Benefit obligation as of January 1 $ 35.4 $ 40.4 $ 66.4 $ 63.9
Service cost 2.9 1.9 0.6 0.6
Interest cost 4.3 2.3 5.8 3.4
Plan amendment - 1.1 - -
Effect of settlements (2.5) (2.9) - -
Actuarial (gain) loss (4.7) 3.8 (2.8) 8.5
Benefits paid (1.3) (10.4) (5.7) (5.4)
Liability transfer 27.1 - 2.8 -
Other 1.0 - 1.8 (4.6)
Curtailments (4.6) (0.8) - -
------- ------- ------- -------
Benefit obligation as of December 31 $ 57.6 $ 35.4 $ 68.9 $ 66.4
======= ======= ======= =======
Change in plan assets
Fair value as of January 1 $ 15.3 $ 15.9 $ - $ -
Actual return 3.8 0.9 - -
Partnership contribution 2.7 13.4 5.7 5.4
Effect of settlements (3.6) (5.2) - -
Asset transfer 23.0 0.7 - -
Benefits paid (1.3) (10.4) (5.7) (5.4)
------- ------- ------- -------
Fair value as of December 31 $ 39.9 $ 15.3 $ - $ -
======= ======= ======= =======
Funded status of the plan $ (17.7) $ (20.1) $ (68.9) $ (66.4)
Unrecognized net (gain) loss (0.1) 6.5 (50.8) (47.9)
Unrecognized transition asset (0.1) - (0.6) (0.7)
Unrecognized prior service cost 5.2 4.2 (1.0) 0.1
------- ------- ------- -------
Accrued benefit cost $ (12.7) $ (9.4) $(121.3) $(114.9)
======= ======= ======= =======
Amounts recognized in the balance sheet
Prepaid benefit cost $ 1.6 $ 0.6 $ - $ -
Accrued benefit liability (14.3) (13.0) (121.3) (114.9)
Intangible asset - 3.0 - -
------- ------- ------- -------
Total recognized $ (12.7) $ (9.4) $(121.3) $(114.9)
======= ======= ======= =======
The curtailment and settlement amounts included in the tables above
were primarily recorded as part of the Rightsizing Program in 1999 and
Project Profit in 1998. See Note 4, "Restructuring and Other Charges."
Actuarial assumptions
Discount rate 7.8% 7.0% 7.8% 7.0%
Expected return on plan assets 9.5% 8.8% - -
Rate of compensation increase 5.0% 5.0% - -
For measurement purposes, a 6.8 percent annual rate of increase in the
per capita cost of covered pre-65 health care benefits was assumed for
1999 decreasing gradually to 4.7 percent in 2004 and thereafter; and a
7.1 percent annual rate of increase in the per capita cost of covered
post-65 health care benefits was assumed for 1999 decreasing gradually
to 5.0 percent in 2004 and thereafter.
Amounts applicable to the pension plans with accumulated benefit
obligations in excess of plan assets are as follows:
1999 1998
---- ----
Projected benefit obligation $ 57.6 $ 24.7
Accumulated benefit obligation $ 43.0 $ 18.5
Fair value of plan assets $ 39.9 $ 10.7
The components of net pension and other benefits expense were:
Pension Benefits Other Benefits
------------------- -------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
Service cost for benefits
earned during the year $ 2.9 $ 1.9 $ 2.5 $ 0.6 $ 0.6 $ 1.2
Interest cost on projected
benefit obligation 4.3 2.3 1.4 5.8 3.4 4.0
Return on plan assets (3.3) (1.4) (0.6) - - -
Net amortization and deferral 1.4 0.5 0.7 - - -
Curtailments and settlements 2.2 2.0 2.2 1.8 - -
----- ----- ----- ----- ----- -----
Net pension and other
benefits expense $ 7.5 $ 5.3 $ 6.2 $ 8.2 $ 4.0 $ 5.2
===== ===== ===== ===== ===== =====
The assumed health care cost trend rate has a significant effect on the
amounts reported. A one-percentage-point change in the assumed health
care cost trend rate would have the following effects:
One Percentage One Percentage
Point Increase Point Decrease
-------------- --------------
Effect on total service and interest
cost components $ 0.4 $ (0.3)
Effect on postretirement benefit
obligation $ 0.9 $ (0.9)
MP Co. has defined contribution and pre-tax savings plans (MP Plans)
for certain of its employees. The expense related to such MP Plans is
charged by MP Co. to IMC-Agrico. PLP's expense for such MP Plans
totaled $2.5 million, $2.9 million and $1.6 million for the years ended
December 31, 1999, 1998 and 1997.
In addition, MP Co. 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 the plan benefits are subject to change.
9. COMMITMENTS AND CONTINGENCIES
PLP purchases natural gas and ammonia from third parties under
contracts extending in some cases, for multiple years. Purchases under
these contracts are generally based on prevailing market prices. These
contracts generally range from one to three years. PLP has entered
into a third-party sulphur purchase commitment, the term of which is
indefinite. Therefore, the dollar value of the sulphur commitments has
been excluded from the schedule below after the year 2004.
PLP leases various types of properties, including buildings and
structures, railcars and various types of equipment through operating
leases. Lease terms generally range from three to five years, although
some have longer terms.
Summarized below is a schedule of PLP's future minimum long-term
purchase commitments and lease payments under non-cancelable operating
leases as of December 31, 1999:
Purchase Lease
Commitments Commitments
----------- ------------
2000 $ 116.7 $ 6.2
2001 59.5 5.6
2002 59.5 4.1
2003 59.5 2.6
2004 59.5 1.3
Subsequent years 5.1 2.0
-------- -------
$ 359.8 $ 21.8
======== =======
PLP's rental expense for 1999, 1998 and 1997 was $9.2 million, $11.3
million and $9.5 million, respectively.
PLP also sells phosphate rock and concentrated phosphates to customers
and IMC under contracts extending in some cases for multiple years.
Sales under these contracts, except for certain phosphate rock sales
which are at prices based on PLP's cost of production, are generally at
prevailing market prices.
In November 1998, Phosphate Chemicals Export Association, Inc.
(PhosChem), of which IMC-Agrico is a member, reached a two-year
agreement through the year 2000 to supply DAP to the China National
Chemicals Import and Export Corporation (Sinochem). This agreement
provides Sinochem with an option to extend the agreement to December
31, 2002. Sinochem is a state company with government authority for
the import of fertilizers into China. Under the contract's terms,
Sinochem will receive monthly shipments at prices reflecting the market
at the time of shipment.
In November 1999, IMC-Agrico amended its phosphate rock sales agreement
with U.S. Agri-Chemicals Corp., a wholly owned subsidiary of Sinochem.
The new agreement provides for the sale of phosphate rock until 2024.
FTX Merger Litigation
In August 1997, five identical class action lawsuits were filed in
Court by unitholders of PLP. Each case named the same defendants and
broadly alleged that FTX and FMRP had breached fiduciary duties owed to
the public unitholders of PLP. IMC 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 Plaintiffs filed the IMC Action in Court against the
Director Defendants, and MMR, a former affiliate of FTX. The
Plaintiffs alleged that the Director Defendants, as the directors of
PLP's former 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 Exploration Program,
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 the 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 the
plaintiff has made no substantial activity in this case within the past
year. IMC and PLP have recently been advised that the plaintiff
intends to withdraw the complaint without prejudice.
Pine Level Property Reserves
In October 1996, PLP signed an agreement with Consolidated Minerals,
Inc. (CMI) for the purchase of real property, Pine Level, containing
approximately 100.0 million tons of phosphate rock reserves. In
connection with the purchase, PLP has agreed to obtain all
environmental, regulatory and related permits necessary to commence
mining on the property.
Within five years from the date of this agreement, PLP is required to
provide notice to CMI regarding one of the following: (i) whether it
has obtained the permits necessary to commence mining any part of the
property; (ii) whether it wishes to extend the permitting period for an
additional three years (Extension Option); or (iii) whether it wishes
to decline to extend the permitting period. When the permits necessary
to commence mining the property have been obtained, PLP is obligated to
pay CMI its share of an initial royalty payment (Initial Royalty) of
$28.9 million. In addition to the Initial Royalty, PLP is required to
pay CMI a mining royalty on phosphate rock mined from the property to
the extent the permits are obtained.
PLP anticipates submitting permit applications by mid-2001. In the
event that the permits are not obtained by October 2001, PLP presently
intends to exercise the Extension Option, at a cost to PLP of $3.0
million (Extension Fee). This Extension Fee would be applied toward
the Initial Royalty.
Environmental Matters
PLP's contingent environmental liability arises from three sources:
facilities currently or formerly owned by PLP or its corporate
predecessors; facilities adjacent to currently or formerly owned
facilities; and third-party Superfund sites.
At facilities currently or formerly owned by PLP or its corporate
predecessors, the historical use and handling of regulated chemical
substances, crop and animal nutrients and additives, or process
tailings, have resulted in soil and groundwater contamination.
Spills or other unintended releases of regulated substances have
occurred previously at these facilities, and potentially could
occur in the future, possibly requiring PLP to undertake or fund
cleanup efforts. At some locations, PLP 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. At other locations, PLP has entered into consent orders
with appropriate governmental agencies to perform required remedial
activities that will address identified site conditions.
In a limited number of cases, PLP's current or former operations also
allegedly resulted in soil or groundwater contamination to neighboring
off-site areas or third-party facilities. In some instances, PLP has
agreed, pursuant to consent orders with appropriate governmental
agencies, to undertake investigations, which currently are in progress,
to determine whether remedial action may be required to address
contamination. Four plaintiffs filed a class action lawsuit, Moore et
al. vs. Agrico Chemical Company et al., which names Agrico Chemical
Company, FTX, PLP and a number of unrelated defendants. The suit seeks
unspecified compensation for alleged property damage, medical
monitoring, remediation of an alleged public health hazard and other
appropriate damages purportedly arising from operation of the
neighboring fertilizer and crop protection chemical facilities in
Lakeland, Florida. Agrico Chemical Company owned the Landia portion of
these facilities for approximately 18 months during the mid-1970s.
Because the litigation is in its early stages, management cannot
determine the magnitude of any exposure to Agrico Chemical Company or
PLP; however, Agrico Chemical Company and PLP intend to
vigorously contest this action and to seek any indemnification to which
it may be entitled. Concurrent with this litigation, the EPA has
undertaken on-site and off-site investigations of these facilities to
determine whether any remediation of existing contamination may be
necessary. Pursuant to an indemnification agreement with Agrico
Chemical Company and PLP, The Williams Companies have assumed
responsibility for any costs that Agrico Chemical Company might
incur for remediation as a result of the EPA's actions.
Superfund, and equivalent state statutes, impose 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, PLP
is involved or concluding involvement at less than ten Superfund or
equivalent state sites.
PLP believes that, pursuant to several indemnification agreements, it
is entitled to at least partial, and in many instances complete,
indemnification for the costs that may be expended by PLP to remedy
environmental issues at certain facilities. These agreements address
issues that resulted from activities occurring prior to PLP's
acquisition of facilities or businesses from parties including: ARCO;
Conoco; The Williams Companies; Kerr-McGee Inc.; and certain other
private parties. PLP has already received and anticipates receiving
amounts pursuant to the indemnification agreements for certain of its
expenses incurred to date as well as any future anticipated expenses.
Other
Most of PLP's export sales of phosphate crop nutrients are marketed
through a North American export association, PhosChem. As a member,
PLP is, subject to certain conditions, contractually obligated to
reimburse the export association for its pro rata share of any losses
or other liabilities incurred. There were no such operating losses or
other liabilities in 1999, 1998 and 1997.
PLP 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. PLP does not believe that
any of these contingent liabilities will have a material adverse impact
on PLP's financial position, results of operations or liquidity.
10.OPERATING SEGMENTS
PLP has one reportable segment, IMC-Agrico. In 1997, PLP had a second
reportable segment, Sulphur, but this segment was spun off as a result
of the FTX Merger.
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. PLP evaluates
performance based on operating earnings of the respective segments.
The Notes to Financial Statements include detail related to
discontinued operations and special charges and should be referred to
when viewing the segment information herein.
Segment information for the years 1999, 1998 and 1997 was as followsa:
1999
--------------------------------------
IMC-Agrico Sulphur Other(b) Total
---------- ------- -------- -----
Net sales from external customers $592.0 $ - $ - $592.0
Gross margins(c) 105.6 - 11.6 117.2
Operating earnings(d) 36.7 - 2.4 39.1
Depreciation, depletion and
amortization 32.1 - (11.6) 20.5
Total assets 704.1 - (92.3) 611.8
Capital expenditures 40.9 - - 40.9
1998
--------------------------------------
IMC-Agrico Sulphur Other(b) Total
---------- ------- -------- -----
Net sales from external customers $687.1 $ - $ - $687.1
Gross margins(e) 160.2 - 11.6 171.8
Operating earnings(f) 87.1 - 3.6 90.7
Depreciation, depletion and
amortization 36.6 - (11.6) 25.0
Total assets 778.8 - (59.0) 719.8
Capital expenditures 38.8 - - 38.8
1997
---------------------------------------
IMC-Agrico Sulphur Other(b) Total
---------- ------- -------- -----
Net sales from external customers $683.8 $129.1 $ 29.6 $842.5
Intersegment net sales - 47.5 - 47.5
Gross marginsg 142.1 (388.9) 39.3 (207.5)
Operating earningsh 121.5 (392.5) (12.3) (283.3)
Depreciation, depletion and
amortization 54.0 21.8 (32.7) 43.1
Total assets 766.1 - (100.6) 665.5
Capital expenditures 35.0 2.3 1.7 39.0
(a) The operating results of the oil and gas business, including the
Exploration Program, have not been included in the segment information
above as this business has been classified as discontinued operations.
However, the oil and gas business' assets have been included as part
of total assets in the Other column.
(b) Segment information below the quantitative thresholds are attributable
PLP corporate headquarters for each year and Main Pass oil and gas
activities in 1997. PLP corporate headquarters includes the
elimination of intersegment transactions.
(c) Includes special charges of $4.7 million.
(d) Includes special charges of $55.4 million.
(e) Includes special charges of $8.0 million.
(f) Includes special charges of $62.6 million.
(g) Includes a special charge of $384.5 million.
(h) Includes special charges of $407.1 million.
Financial information relating to PLP's operations by geographic area
was as follows:
Net Sales(i)
--------------------------------------
1999 1998 1997
---- ---- ----
United States $ 291.4 $ 330.7 $ 485.9
China 133.0 146.7 169.0
Other 167.6 209.7 187.6
------- ------- -------
Consolidated $ 592.0 $ 687.1 $ 842.5
======= ======= =======
(i) Net sales are attributed to countries based on location of customer.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(Dollars in millions, except per unit amounts)
Quarter
------------------------------------------
First Second Third Fourth(b) Year(b)
----- ------ ----- --------- -------
1999(a)
Net sales $ 165.8 $ 170.6 $ 134.8 $ 120.8 $ 592.0
Gross margins 42.7 39.7 23.7 11.1 117.2
Operating income (loss) 35.2 33.0 16.9 (46.0) 39.1
Earnings (loss) from continuing
operations 27.8 23.4 7.6 (52.5) 6.3
Total earnings (loss) from
discontinued operations (0.4) 0.8 (3.1) (24.7) (27.4)
Cumulative effect of a change in
accounting principle (2.6) - - - (2.6)
------- ------- ------- ------- -------
Earnings (loss) $ 24.8 $ 24.2 $ 4.5 $ (77.2) $ (23.7)
======= ======= ======= ======= =======
Earnings (loss) per unit:
Earnings (loss)from continuing
operations $ 0.26 $ 0.23 $ 0.07 $ (0.51 $ 0.06
Total loss from discontinued
operations - - (0.03) (0.24) (0.27)
Cumulative effect of a change in
accounting principle (0.02) - - - (0.02)
------- ------- ------- ------- -------
Earnings (loss) per unit $ 0.24 $ 0.23 $ 0.04 $ (0.75) $ (0.23)
======= ======= ======= ======= =======
First Second Third Fourth(c) Year(c)
1998(a) ----- ------ ----- --------- -------
Net sales $ 158.8 $ 195.9 $ 156.3 $ 176.1 $ 687.1
Gross margins 35.4 53.4 42.1 40.9 171.8
Operating income (loss) 27.2 45.7 37.6 (19.8) 90.7
Earnings (loss) from continuing
operations 18.3 36.3 27.9 (29.1) 53.5
Total loss from discontinued
operations (9.5) (9.4) (0.6) (1.7) (21.2)
------- ------- ------- ------- -------
Earnings (loss) $ 8.8 $ 26.9 $ 27.3 $ (30.8) $ 32.3
======= ======= ======= ======= =======
Earnings (loss) per unit:
Earnings (loss) from continuing
operations $ 0.18 $ 0.35 $ 0.27 $ (0.29) $ 0.51
Total loss from discontinued
operations (0.09) (0.09) (0.01) (0.01) (0.20)
------- ------- ------- ------- -------
Earnings (loss) per unit $ 0.09 $ 0.26 $ 0.26 $ (0.30) $ 0.31
====== ======= ======= ======= =======
=
(a) All quarterly amounts have been restated to reflect the oil and gas
operations as discontinued operations.
(b) 1999 operating results from continuing operations include special
charges of $55.4 million, $0.54 per unit.
(c) 1998 operating results from continuing operations include special
charges of $62.6 million, $0.61 per unit.
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.
As a limited partnership, PLP has no directors. IMC, the General
Partner of PLP, performs comparable functions for PLP. PLP does not
employ any executive officers; however, certain management functions
are provided to PLP by executive officers and other employees of
IMC.
Section 16(a) Beneficial Ownership Reporting Compliance
Because IMC is the General Partner of PLP, the directors of IMC and
certain officers of IMC who perform policy-making functions for PLP
are subject to the reporting requirements of Section 16 of the
Exchange Act of 1934, as amended. Based solely upon a review of
reports filed by such persons with the SEC pursuant to Section 16(a)
and furnished to PLP, PLP believes that all such persons filed all
reports required pursuant to Section 16(a) on a timely basis during
1999.
Item 11.Executive Compensation.
PLP does not employ any executive officers and no compensation was
provided by PLP to any executive officer for services rendered in
any capacity in 1999. Prior to the FTX Merger, the services of
executive officers of PLP were provided to PLP by FTX as provided in
the PLP Agreement, for which PLP reimbursed FTX at its cost,
including allocated overhead. Subsequent to the FTX Merger, IMC
provides services to PLP as provided in the PLP Agreement, for which
PLP reimburses IMC at its cost, including allocated overhead.
Certain services provided by the General Partner are provided by
executive officers and other employees of IMC. In accordance with
the PLP Agreement, IMC is reimbursed on a monthly basis for expenses
incurred on behalf of PLP. Reference is made to the information set
forth in Part I, Item 1, "Business - Other Matters - Relationship
between PLP and IMC," of this Annual Report on Form 10-K.
Item 12.Security Ownership of Certain Beneficial Owners and Management
The following table contains certain information concerning the
beneficial ownership of PLP units as of December 31, 1999 by each
person known by PLP to be the beneficial owner of more than five
percent of any class of PLP equity security, determined in
accordance with Rule 13d-3 of the SEC and based on information
furnished to PLP by each such person. Unless otherwise indicated,
the securities shown are held with sole voting and investment power.
Number of PLP Units Percent of
Name and Address of Beneficial Owner Beneficially Owned Class
------------------------------------ ------------------ ----------
IMC Global Inc. 53,385,133(a) 51.6%
2100 Sanders Road
Northbrook, Illinois 60062-6146
Alpine Capital, L.P. 28,005,500(b) 27.1%
Robert W. Bruce III
Algenpar, Inc.
J. Taylor Crandall
Susan C. Bruce
Keystone, Inc.
The Anne T. and Robert M. Bass
Foundation
Anne T. Bass
Robert M. Bass
201 Main Street Suite 3100
Fort Worth, Texas 76102
Wellington Management Company, LLP 5,386,800(c) 5.2%
75 State Street
Boston, Massachusetts 02109
(a) Consists of 198,234 PLP Depositary Units, 52,149,916 PLP Unit
Equivalents and 1,036,983 of partnership interests.
(b) Based solely on Amendment No. 18 to Schedule 13D dated
February 15, 2000 filed by such persons with the SEC:
- Alpine Capital, L.P. has sole voting power and dispositive power with
respect to 25,114,300 units. Algenpar, Inc. and Robert W. Bruce III are
the general partners of Alpine Capital, L.P. J. Taylor Crandall is
President and sole stockholder of Algenpar, Inc.
- The Anne T. and Robert M. Bass Foundation has sole voting and
dispositive power with respect to 588,800 units. J. Taylor Crandall, Anne
T. Bass and Robert M. Bass are the directors of the Anne T. and Robert M.
Bass Foundation. The Robert Bruce Management Co., Inc. has shared
investment discretion with respect to these units. Robert W. Bruce III is
a principal of The Robert Bruce Management Co.
- Keystone, Inc. has sole voting and dispositive power with respect to
2,210,300 units. Robert M. Bass is President and the sole director of
Keystone, Inc.
- Robert W. Bruce III has sole voting and dispositive power with respect
to 83,100 units.
- Susan C. Bruce has sole voting and dispositive power with respect to
9,000 units.
(c) Based solely on the Schedule 13G dated February 9, 2000 that
Wellington Management Company, LLP (Wellington) filed with the SEC,
Wellington has shared dispositive power and no voting power with
respect to the 5,386,800 units. Wellington is a parent holding
company which together with its affiliates, holds the units in its
capacity as investment adviser to various clients, including
Vanguard/Windsor Fund, Inc. Vanguard Windsor Fund, Inc. reported
on a Schedule 13G dated February 8, 2000 that it has sole voting
power and shared dispositive power with respect to these 5,386,800
units.
Item 13.Certain Relationships and Related Transactions.
Reference is made to the information set forth in Part I, Item 1,
"Business - Other Matters - Relationship between PLP and IMC" and
Item 11, "Executive Compensation," of this Annual Report on Form 10-
K.
PART IV.
Item 14.Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1) Financial Statements.
Reference is made to the Index to Financial Statements
appearing in Part II, Item 8, "Financial Statements and
Supplementary Data," of this Annual Report on Form 10-K.
(2) Financial Statement Schedules.
Reference is made to the Index to Financial Statements
Schedules appearing on page F-1 hereof.
(3) Exhibits.
Reference is made to the Exhibit Index beginning on page
E-1 hereof.
(b) Reports on Form 8-K.
PLP 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.
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.
PHOSPHATE RESOURCE PARTNERS
LIMITED PARTNERSHIP
By: IMC GLOBAL INC.
Its Administrative Managing
General Partner
By: /s/ Douglas A. Pertz
-----------------------------
Douglas A. Pertz
Chief Executive Officer and
President of IMC Global Inc.
Date: March 30, 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:
Signature Title Date
* Chairman and Director of IMC Global March 30, 2000
- --------------------- Inc.
Joseph P. Sullivan
/s/ Douglas A. Pertz Chief Executive Officer (principal March 30, 2000
- --------------------- executive officer), President
Douglas A. Pertz (principal operating officer) and
Director of IMC Global Inc.
/s/ J.Bradford James Executive Vice President and Chief March 30, 2000
- --------------------- Financial Officer of IMC Global Inc.
J.Bradford James (principal financial officer)
/s/ Anne M. Scavone Vice President and Controller of IMC March 30, 2000
- --------------------- Global Inc. (principal accounting
Anne M. Scavone officer)
* Director of IMC Global Inc. March 30, 2000
- ---------------------
Raymond F. Bentele
* Director of IMC Global Inc. March 30, 2000
- ---------------------
Rod F. Dammeyer
* Director of IMC Global Inc. March 30, 2000
- ---------------------
James M. Davidson
* Director of IMC Global Inc. March 30, 2000
- ---------------------
Harold H. MacKay
* Director of IMC Global Inc. March 30, 2000
- ---------------------
David B. Mathis
* Director of IMC Global Inc. March 30, 2000
- ---------------------
Donald F. Mazankowski
* Director of IMC Global Inc. March 30, 2000
- ---------------------
Richard L. Thomas
* Director of IMC Global Inc. March 30, 2000
- ---------------------
Pamela B. Strobel
*By: /s/ Rose Marie Williams
---------------------------
Rose Marie Williams
Attorney-in-fact
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
Exhibit Index
Filed
Incorporated with
Herein by Electronic
Exhibit No. Description Reference to Submission
- -------------------------------------------------------------------------------
3.i.(a) Amended and Restated Agreement of Exhibit B to the
Limited Partnership of PLP dated as Prospectus dated
of May 29, 1987 (PLP Partnership May 29, 1987
Agreement) among FTX, Freeport included in
Phosphate Rock Company and Geysers Registration
Geothermal Company, as general Statement No. 33-
partners, and Freeport Minerals 13513, as amended
Company (FMC), as general partner and
attorney-in-fact for the limited
partners, of PLP
3.i.(b) Amendment to the PLP Partnership Exhibit 3.2 to
Agreement dated as of December 16, the Annual Report
1988 effected by FMC, as on Form 10-K for
Administrative Managing General the Year Ended
Partner, and FTX, as General Partner December 31, 1994*
of PLP
3.i.(c) Amendment to the PLP Partnership Exhibit 19.2 to
Agreement dated as of March 29, 1990 the Quarterly
effected by FMC, as Administrative Report on Form
Managing General Partner, and FTX, as 10-Q for the
Managing General Partner, and FTX, as Quarterly Period
Managing General Partner, of PLP Ended March 31,
1990*
3.i.(d) Amendment to the PLP Partnership Exhibit 19.3 to
Agreement dated as of April 6, 1990 the Quarterly
effected by FTX, as Administrative Report on Form 10-
Managing General Partner of PLP Q for the
Quarterly Period
Ended March 31,
1990*
3.i.(e) Amendment to the PLP Partnership Exhibit 3.3 to
Agreement dated as of January 27, the Annual Report
1992 between FTX, as Administrative on Form 10-K for
Managing General Partner, and FMRP, the Year Ended
as Managing General Partner, of PLP December 31, 1991*
3.i.(f) Amendment to the PLP Partnership Exhibit 3.4 to
Agreement dated as of October 14, the Annual
1992 between FTX, as Administrative Report on Form
Managing General Partner, and FMRP, 10-K for the Year
as Managing General Partner, of PLP Ended December
31, 1992*
3.i.(g) Amended and Restated Certificate of Exhibit 3.3 to
Limited Partnership of PLP dated June Registration
12, 1986 (PLP Partnership Statement No. 33-
Certificate) 5561
3.i.(h) Amendment dated as of January 9, 1998 Exhibit 3.8 to
effected by IMC, as Administrative the Annual
Managing General Partner, and FMRP, Report on Form
as Managing General Partner of PLP 10-K for the
Year Ended
December 31,
1997*
3.i.(i) Certificate of Amendment to the PLP Exhibit 3.6 to
Partnership Certificate dated as of the Annual
January 12, 1989 Report on Form
10-K for the
Year Ended
December 31,
1997*
3.i.(j) Certificate of Amendment to the PLP Exhibit 19.1 to
Partnership Certificate dated as of the Quarterly
December 29, 1989 Report on Form 10-
Q for the
Quarterly Period
Ended March 31,
1990*
3.i.(k) Certificate of Amendment to the PLP Exhibit 19.4 to
Partnership Certificate dated as of the Quarterly
April 12, 1990 Report on Form
10-Q for the
Quarterly Period
Ended March 31,
1990*
3.i.(l) Certificate of Amendment to the PLP Exhibit 3.12 to
Partnership Certificate dated as of the Annual Report
January 9, 1998 on Form 10-K for
the Year Ended
December 31, 1998*
3.i.(m) Deposit Agreement dated as of June Exhibit 28.4 to
27, 1986 (Deposit Agreement) among the Current
PLP, The Chase Manhattan Bank, N.A. Report on Form 8-
(Chase) and Freeport Minerals Company K dated July 11,
as attorney-in-fact of those limited 1986*
partners and assignees holding
depositary receipts for units of
limited partnership interest in PLP
3.i.(n) Resignation dated December 26, 1991 Exhibit 4.5 to
of Chase as Depositary under the the Annual Report
Deposit Agreement and appointment on Form 10-K for
dated December 27, 1991 of Mellon the Year Ended
Bank, N.A. (Mellon) as successor December 31, 1991*
Depositary, effective January 1, 1992
3.i.(o) Service Agreement dated as of January Exhibit 4.6 to
1, 1992 between PLP and Mellon the Annual Report
pursuant to which Mellon serves as on Form 10-K for
Depositary under the Deposit the Year Ended
Agreement and Custodian under the December 31, 1991*
Custodial Agreement
3.i.(p) Amendment to the Deposit Agreement Exhibit 4.4 to
dated as of November 18, 1992 between the Annual Report
PLP and Mellon on Form 10-K for
the Year Ended
December 31, 1992*
3.i.(q) Form of Depositary Receipt Exhibit 4.5 to
the Annual Report
on Form 10-K for
the Year Ended
December 31, 1992*
4.ii.(a) Form of Senior Indenture (Senior Exhibit 4.1 to
Indenture) from PLP to Chemical Bank, the Current
as Trustee. Report on Form 8-
K dated February
13, 1996*
4.ii.(b) Form of Supplemental Indenture dated Exhibit 4.1 to
February 14, 1996 from PLP to the Current
Chemical Bank, as Trustee, to the Report on Form 8-
Senior Indenture providing for the K dated February
issuance of $150,000,000 aggregate 16, 1996*
principal amount of 7% Senior
Debentures due 2008
10.ii.(a) Amended and Restated Partnership Exhibit 10.3 to
Agreement dated as of May 26, 1995 the Annual Report
among IMC-Agrico GP Company, Agrico, on Form 10-K for
Limited Partnership and IMC-Agrico MP the Year Ended
Inc (Amended and Restated Partnership December 31, 1995*
Agreement)
10.ii.(b) Amendment and Agreement dated as of Exhibit 10.1 to
January 23, 1996 to the Amended and the Current
Restated Partnership Agreement dated Report on Form 8-K
May 26, 1995 by and among IMC-Agrico dated February
MP, Inc., IMC Global Operations, Inc. 13, 1996*
and IMC-Agrico Company
10.ii.(c) Amendment and Agreement dated as of Exhibit 10.5 to
December 22, 1997 to the Amended and the Annual Report
Restated Partnership Agreement dated on Form 10-K for
May 26, 1995 by and among IMC-Agrico the Year Ended
MP, Inc.; IMC Global Operations, December 31, 1998*
Inc.; and IMC-Agrico Company
10.ii.(d) Amended and Restated Parent Agreement Exhibit 10.5 to
dated as of May 26, 1995 among IMC the Annual
Global Operations, Inc.; PLP; FTX; Report on Form
and IMC-Agrico 10-K for the
Year Ended
December 31,
1995*
10.ii.(e) Promissory Demand Note between PLP, Exhibit 10.9 to
as borrower, and IMC, as lender, the Annual Report
dated December 22, 1997 in the on Form 10-K for
principal sum of $200,000,000 the Year Ended
December 31, 1997*
10.ii.(f) Promissory Demand Note between PLP, Exhibit 10.10 to
as borrower, and IMC, as lender, the Annual Report
dated December 22, 1997 in the on Form 10-K for
principal sum of $150,000,000 the Year Ended
December 31, 1997
21 Subsidiaries of the Registrant X
23 Consent of Ernst & Young LLP, X
Independent Auditors
24 Powers of Attorney pursuant to which X
this report has been signed on behalf
of certain directors of IMC Global
Inc.
27 PLP Financial Data Schedule X
*SEC File No. 1-9164
INDEX TO FINANCIAL STATEMENT SCHEDULES
The financial statement schedules listed below should be read in
conjunction with such financial statements contained in PLP's 1999 Annual
Report on Form 10-K.
Page
--------
I Condensed Financial Information of Registrant F-2 - F-4
II Valuation and Qualifying Accounts F-5
Schedules other than those listed above have been omitted since they are
either not required, not applicable or the required information is included
in the financial statements or notes thereto.
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF OPERATIONS
(In millions)
Years Ended December 31
---------------------------
1999 1998 1997
---- ---- ----
Net sales $ - $ - $ 158.7
Cost of goods sold - - 545.0
------- ------- -------
Gross margins - - (386.3)
Selling, general and administrative
expenses 9.2 7.9 56.1
------- ------- -------
Operating loss (9.2) (7.9) (442.4)
Interest expense 34.4 35.3 32.7
Equity in earnings of IMC-Agrico 47.0 95.5 154.7
Other (income) expense, net (0.3) (1.2) 3.1
------- ------- -------
Earnings (loss) from continuing operations 3.7 53.5 (323.5)
Loss from discontinued operations (27.4) (21.2) (17.1)
Earnings before extraordinary charge (23.7) 32.3 (340.6)
------- ------- -------
Extraordinary charge - debt retirement - - (14.5)
------- ------- -------
Earnings (loss) $ (23.7) $ 32.3 $(355.1)
======= ======= =======
See Notes to Financial Statements in PLP's Form 10-K for the year ended
December 31, 1999
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET
(In millions)
December 31
------------------
1999 1998
---- ----
Assets
Current assets:
Cash and cash equivalents $ 39.4 $ 12.4
Receivables, net 12.0 3.9
Other current assets 0.1 0.5
-------- --------
Total current assets 51.5 16.8
Property, plant and equipment, net - 50.7
Investment in IMC-Agrico 292.4 347.2
Investment in MOXY - 13.5
Other assets 1.2 1.2
-------- --------
Total assets $ 345.1 $ 429.4
======== ========
Liabilities and Partners' Deficit
Accounts payable and accrued liabilities $ 5.3 $ 10.3
Long-term debt 456.4 461.2
Other noncurrent liabilities 110.8 116.9
Partners' deficit (227.4) (159.0)
-------- --------
Total liabilities and partners' deficit $ 345.1 $ 429.4
======== ========
See Notes to Financial Statements in PLP's Form 10-K for the year ended
December 31, 1999
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
(In millions)
Years Ended December 31
--------------------------
1999 1998 1997
---- ---- ----
Cash flow from operating activities:
Earnings (loss) $ (23.7) $ 32.3 $(355.1)
Adjustments to reconcile earnings (loss)
to net cash provided by operating activities:
Sulphur asset impairment charge - - 384.5
Loss on sale of business 22.4 - -
Depreciation and amortization - 0.2 33.9
Oil and gas exploration expenses - 14.7 15.8
Equity in earnings of IMC-Agrico (47.0) (95.5) (154.7)
Cash distributions received from IMC-Agrico 101.8 127.1 187.0
Other (9.1) 2.5 (10.3)
Changes in:
Receivables (8.1) 1.5 1.4
Inventories - - 2.9
Other current assets 0.4 0.6 0.7
Accounts payable and accrued liabilities (5.0) (18.6) (8.2)
-------- -------- -------
Net cash provided by operating activities
31.7 64.8 97.9
-------- -------- -------
Cash flow from investing activities:
Capital expenditures - (44.4) (37.8)
Investment in IMC-Agrico - - (11.0)
Investment in MOXY - - (8.2)
Proceeds from sale of business 32.0 - -
Other 12.8 - -
-------- -------- -------
Net cash provided by (used in) investing
activities 44.8 (44.4) (57.0)
-------- -------- -------
Cash flow from financing activities:
Cash distributions to partners (44.7) (22.9) (119.6)
Proceeds from (repayment of) debt, net (4.8) 5.4 105.1
Cash transferred to FSC - - (23.3)
-------- -------- -------
Net cash used in financing activities (49.5) (17.5) (37.8)
-------- -------- -------
Net increase in cash and cash equivalents 27.0 2.9 3.1
Cash and cash equivalents at beginning of
year 12.4 9.5 6.4
-------- -------- -------
Cash and cash equivalents at end of year $ 39.4 $ 12.4 $ 9.5
======== ======== =======
See Notes to Financial Statements in PLP's Form 10-K for the year ended
December 31, 1999
PHOSPHATE RESOURCE PARTNERS LIMITED PARTNERSHIP
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(In millions)
Col. A Col. B Col. C Col. D Col. E
----------------- ----------- --------------------- -------- ---------
Additions
---------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other Other-Add End of
Description of Period Expenses Accounts (Deduct) Period
----------------- ---------- ---------- ---------- --------- ----------
Reclamation and mine shutdown reserves:
1999:
Phosphates $ 37.9 $ 8.1 $ 2.9 $ (7.4)(a) $ 41.5
1998:
Phosphates $ 38.3 $ 6.8 $ - $ (7.2)(b) $ 37.9
1997:
Sulphur $ 47.6 $ 9.4 $ 4.8(c) $ (61.8)(d) $ -
Phosphates 42.3 9.5 - (13.5)(e) 38.3
Oil & Gas 6.2 2.5 3.7(c) (12.4)(d) -
------- ------- ------- ------- -------
$ 96.1 $ 21.4 $ 8.5 $ (87.7)(f) $ 38.3
======= ======= ======= ======= =======
(a) Includes a reclassification to short-term payables of $6.1 million.
(b) Includes a reclassification to short-term payables of $7.2 million.
(c) Relates to the transfer of IMC's 25.0 percent interest in Main Pass
to PLP.
(d) Includes a reduction of $63.2 million for sulphur and oil & gas
reserves included in the net assets distributed to FSC.
(e) Includes a reclassification to short-term payables of $12.0 million.
(f) Includes expenditures of $26.6 million in 1997.