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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
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THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the year ended December 31, 1997
Commission file number 1-9759
IMC GLOBAL INC.
(Exact name of Registrant as specified in its charter)
Delaware 36-3492467
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2100 Sanders Road
Northbrook, Illinois 60062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 272-9200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, par value $1 per share} New York and Chicago Stock Exchanges
Preferred Share Purchase Rights }
Warrants to Purchase Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X . No .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant: $4,166,739,474 as of February 27, 1998. Market value is based
on the February 27, 1998 closing price of Registrant's common stock as
reported on the New York Stock Exchange Composite Transactions for such date.
APPLICABLE ONLY TO CORPORATE REGISTRANTS: Indicate the number of shares
outstanding of each of the Registrant's classes of common stock: 114,048,651
shares, excluding 10,738,520 treasury shares as of February 27, 1998.
DOCUMENTS INCORPORATED BY REFERENCE, IN PART: Information required by Items
6, 7 and 8 of Part II is incorporated by reference to the sections of the
Registrant's 1997 Annual Report to Stockholders described in such Items.
Information required by Items 10, 11, 12 and 13 of Part III is incorporated
by reference to the sections of the Registrant's definitive proxy statement
for the Annual Meeting of Stockholders to be held on April 29, 1998.
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1997 FORM 10-K CONTENTS
Item Page
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Part I:
1. Business 1
Company Profile 1
Recent Developments 2
Business Unit Information 3
Factors Affecting Demand 13
Other Matters 13
Executive Officers of the Registrant 16
2. Properties 16
3. Legal Proceedings 17
4. Submission of Matters to a Vote of Security Holders 18
Part II:
5. Market for the Registrant's Common Stock and
Related Stockholder Matters 18
6. Selected Financial Data 19
7. Management's Discussion and Analysis of Results
of Operations and Financial Condition 19
8. Financial Statements and Supplementary Data 19
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 19
Part III:
10. Directors and Executive Officers of the Registrant 19
11. Executive Compensation 19
12. Security Ownership of Certain Beneficial Owners
and Management 19
13. Certain Relationships and Related Transactions 20
Part IV:
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 20
Signatures 30
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PART I.
Item 1. Business.(1)
COMPANY PROFILE
(Dollars in millions except per share amounts)
IMC Global Inc. (the Company or IMC) is one of the world's leading
producers of crop nutrients for the international agricultural
community and is one of the foremost distributors in the United States
of crop nutrients and related products through its retail and wholesale
distribution networks. The Company mines, processes and distributes
potash in the United States and Canada and is a joint venture partner
in IMC-Agrico Company (IMC-Agrico), a leading producer, marketer and
distributor of phosphate crop nutrients and animal feed ingredients.
IMC and Phosphate Resource Partners Limited Partnership (PLP), formerly
Freeport-McMoRan Resource Partners, Limited Partnership, have a 56.5
percent and 43.5 percent, respectively, direct economic interest in
IMC-Agrico over the term of the partnership. IMC owns 51.6 percent of
the outstanding PLP limited partner units. As a result, the Company's
total interest in IMC-Agrico is approximately 78.9 percent. See Note
2, "Freeport-McMoRan Inc. Merger," of Notes to Consolidated Financial
Statements included in Part II, Item 8, "Financial Statements and
Supplementary Data," of this Annual Report on Form 10-K. The Company
believes that it is one of the most efficient North American producers
of concentrated phosphates, potash and animal feed ingredients. The
Company's retail distribution network, which extends principally to
corn and soybean farmers in the eastern Midwest and to cotton, peanut
and vegetable farmers in the southeastern United States, is one of the
preeminent distributors of crop nutrients and related products. The
Company also manufactures nitrogen-based and other high-value crop
nutrients which are marketed on a dealer basis, principally in the
midwestern and southeastern United States. In addition, the Company
sells specialty lawn and garden, turf and nursery products on a
national basis and ice-melter products in the Midwest, the eastern
snowbelt states and Canada. During the second quarter, the Company
began to produce and market food-quality salt to food manufacturers,
retail grocers, agricultural, chemical, and water conditioning dealers.
Utilizing technological advances, the Company believes it is one of the
lowest-cost salt producers in the United States. In addition, as a
result of the merger with Freeport-McMoRan Inc. (FTX), the Company,
through its interest in PLP, participates in certain oil and gas
properties and in the exploration and production of oil and gas with
McMoRan Oil & Gas Co. (MOXY).
The three major nutrients required for plant growth are phosphorus,
contained in phosphate rock; potassium, contained in potash; and
nitrogen. Phosphorus plays a key role in the photosynthesis process.
Potassium is an important regulator of plants' physiological functions.
Nitrogen is an essential element for most organic compounds and plants.
These elements are naturally present in the soil but need to be
replaced through the use of crop nutrients as crops exhaust them.
Currently, no viable crop nutrient substitutes exist to replace the
role of phosphate, potash and nitrogen in the development and
maintenance of high-yield crops.
The Company's business strategy focuses on maintaining and growing
its leading position as a crop nutrient producer and distributor
through extensive customer service, efficient distribution and
transportation and supplying products worldwide at competitive prices
by taking advantage of economies of scale and state-of-the-art
technology to reduce costs. The Company intends to continue to expand
its product distribution and marketing throughout the world through
export associations and its international sales force.
In December 1997, the Company completed a merger with FTX (FTX
Merger), which held a 51.6 percent interest in PLP, providing for the
merger of FTX into the Company. The Company was the surviving entity
and the transaction was accounted for as a purchase. In connection
with the FTX Merger, each share of common stock of FTX was exchanged
for 0.90 share of the Company's common stock plus one-third of a
warrant, with each whole warrant entitling the holder to purchase one
share of the Company's common stock at a price equal to $44.50 per
share. Immediately prior to the FTX Merger, the sulphur and Main Pass
299 (Main Pass) businesses of PLP and the Company (see "Business Unit
Information - IMC-Agrico Crop Nutrients - Sulphur," in Part I, Item 1,
"Business," of this Annual Report on Form 10-K) were transferred to
Freeport-McMoRan Sulphur Inc. (FSC), a newly-formed subsidiary of PLP.
Shares of FSC were then distributed to all PLP unitholders, including
FTX, which in turn, distributed the FSC shares to its shareholders
immediately prior to the FTX Merger. As a result, the Company does not
own any of the outstanding shares of FSC.
In March 1996, the Company completed a merger (Vigoro Merger) with
The Vigoro Corporation (Vigoro), which resulted in Vigoro becoming a
subsidiary of the Company. The Vigoro Merger was accounted for as a
pooling of interests and, as a result, all appropriate periods were
restated to give effect to the merger. The Vigoro Merger enabled the
Company to, among other things, broaden its business mix and reduce the
relative importance of generally more price-volatile phosphate-based
crop nutrients to the Company's consolidated results. In addition, the
Vigoro Merger expanded the Company's potash customer base to include
industrial customers, whereas shipments of potash were previously made
primarily to agricultural users. Vigoro also had a significant retail
distribution network, giving it direct contact with farmers, the
principal consumers of crop nutrient products. Prior to the Vigoro
Merger, a limited amount of products were sold directly to farmers.
Following the Vigoro Merger, the Company restructured its operations
into five business units corresponding to its major product lines as
follows: IMC-Agrico Crop Nutrients (phosphates), IMC Kalium (potash),
IMC AgriBusiness (wholesale and retail distribution), IMC-Agrico Feed
Ingredients (animal feed) and IMC Vigoro (specialty products). All
information in this Annual Report on Form 10-K for periods prior to the
effective date of the Vigoro Merger has been restated.
RECENT DEVELOPMENTS
In December 1997, the Company entered into a definitive agreement
to acquire privately held Harris Chemical Group, Inc. and its
Australian affiliate, Penrice Soda Products Pty. Ltd. (HCG). Under the
agreement, the Company will purchase all of the equity of HCG for
$450.0 million in cash and assume approximately $950.0 million of debt.
HCG, with sales of $785.0 million, is a leading producer of salt, soda
ash, boron chemicals, and other inorganic chemicals including potash
crop nutrients. This acquisition is expected to be completed in the
first quarter of 1998.
In January 1998, the Company issued $150.0 million of 7.30 percent
debentures due 2028 and $150.0 million of 6.55 percent notes due 2005.
The proceeds of these issuances were used to refinance high-cost
indebtedness. In addition, in January 1998, the Company prepaid $120.0
million of unsecured term loans.
Currently, the Company is negotiating the sale of the IMC Vigoro
business unit. Any sale would be subject to certain conditions,
including the execution of a definitive agreement and the receipt of
certain approvals.
BUSINESS UNIT INFORMATION
The amounts and relative proportions of net sales and operating
earnings contributed by the business units of the Company have varied
from year to year and may continue to do so in the future as a result
of changing business, economic and competitive conditions as well as
technological developments.
The following business unit discussion should be read in
conjunction with the information contained in Part II, Item 7,
"Management's Discussion and Analysis of Results of Operations and
Financial Condition," of this Annual Report on Form 10-K.
IMC-Agrico Crop Nutrients
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Net sales for the IMC-Agrico Crop Nutrients (Crop Nutrients)
business unit were $1,484.8 million, $1,661.3 million and $1,711.6
million for the years ended December 31, 1997, 1996 and 1995,
respectively. Crop Nutrients is a leading United States miner of
phosphate rock, one of the primary raw materials used in the production
of concentrated phosphates, with 25 million tons of annual capacity.
Crop Nutrients 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. Crop Nutrients' concentrated phosphate products are
marketed worldwide to crop nutrient manufacturers, distributors and
retailers.
Crop Nutrients' concentrated phosphate production facilities are
located in central Florida and Louisiana. Its annual capacity
represents approximately 32 percent of total United States concentrated
phosphate production capacity and 10 percent of world capacity. The
Florida concentrated phosphate facilities consist of three plants: New
Wales, Nichols and South Pierce. The New Wales complex is the largest
concentrated phosphate plant in the world with an estimated annual
capacity of 1.8 million tons of phosphoric acid (P2O5 equivalent). New
Wales primarily produces four forms of concentrated phosphates:
diammonium phosphate (DAP), monoammonium phosphate (MAP), granular
triple superphosphate (GTSP) and merchant grade phosphoric acid. The
Nichols facility manufactures phosphoric acid, DAP and granular MAP
(GMAP). The South Pierce plant produces phosphoric acid and GTSP. The
Louisiana concentrated phosphate facilities consist of three plants:
Uncle Sam, Faustina and Taft. The Uncle Sam plant produces phosphoric
acid which is then shipped to the Faustina and Taft plants where it is
used to produce DAP and GMAP. The Faustina plant manufactures
phosphoric acid, DAP, GMAP, urea and ammonia. The Taft facility
manufactures only DAP. Concentrated phosphate operations are managed
to balance Crop Nutrients' output with customer needs. Crop Nutrients
resumed production at its Taft facility in December 1997 after having
been idled since September 1996. Subsequent to December 31, 1997, Crop
Nutrients suspended phosphoric acid production at its Nichols facility,
suspended production at its Taft facility, and is reducing production
of DAP at its Faustina and New Wales facilities in response to market
needs.
Phosphate rock, sulphur and ammonia are the three principal raw
materials used in the production of concentrated phosphates:
Phosphate Rock
All seven of Crop Nutrients' phosphate mines and related mining
operations are located in central Florida. Crop Nutrients 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. Currently, five of Crop Nutrients'
phosphate mines are operational while one has been idle since 1986 and
one was idled in June 1997. Crop Nutrients' phosphate rock production
volume for the years ended December 31, 1997, 1996 and 1995 totaled
20.0 million, 22.5 million and 25.0 million tons, respectively.
Although Crop Nutrients 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
captively, primarily in the manufacture of concentrated phosphates,
totaled 14.1 million, 14.3 million and 14.6 million for the years ended
December 31, 1997, 1996 and 1995, respectively, representing 70
percent, 64 percent and 58 percent, respectively, of total tons
produced. Product shipments to customers totaled 4.6 million, 6.5
million and 9.7 million tons for the years ended December 31, 1997,
1996 and 1995, respectively. Customer shipments have been reduced in
order to maximize relative values of rock and concentrated phosphates
by utilizing high-quality reserves for internal upgrading.
Crop Nutrients estimates its reserves to be 561.0 million tons of
phosphate rock as of December 31, 1997. These reserves are controlled
by Crop Nutrients through ownership, long-term lease, royalty or
purchase option agreements. Reserve grades range from 58.0 percent to
78.0 percent bone phosphate of lime (BPL), with an average grade of
66.6 percent BPL. BPL is the standard industry term used to grade the
quality of phosphate rock. The phosphate rock mined by Crop Nutrients
in the last three years averaged 65.4 percent BPL, which is typical for
phosphate rock mined in Florida during this period. Crop Nutrients
estimates its reserves based upon the performance of exploration core
drilling and technical and economic analyses to determine that reserves
so classified can be economically mined at market prices estimated to
prevail during the next five years.
Crop Nutrients also owns or controls phosphate rock resources in
the southern extension of the central Florida phosphate district.
Resources are mineralized deposits which may be economically
recoverable; however, additional prospect data and analyses, including
further geological work, drilling, permitting and mining feasibility
studies, are required before they may be classified as reserves. Based
upon its preliminary analyses of these resources, Crop Nutrients
believes that these mineralized deposits differ in physical and
chemical characteristics from those historically mined by Crop
Nutrients but are similar to some of the reserves being mined by
current operations. These resources contain estimated recoverable
phosphate rock of approximately 211.0 million tons with an average
grade of approximately 64.0 percent BPL. 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.
Sulphur
A significant portion of Crop Nutrients' sulphur requirements is
provided by FSC, under a supply agreement with the Company, which is
based on variable market prices. In prior years, Crop Nutrients
received a significant portion of its sulphur requirements from the
Company's Main Pass interest. However, as a result of the FTX Merger,
the Company's interest in the Main Pass operations was transferred to
FSC. Consequently, Crop Nutrients entered the Company entered into an
agreement with FSC to supply a certain portion of its sulphur
requirements.
Ammonia
Crop Nutrients' ammonia needs are supplied by its Faustina ammonia
production facility and by world suppliers, primarily under 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 DAP, GMAP and urea.
Sales and Marketing
Domestically, Crop Nutrients sells its concentrated phosphates to
crop nutrient manufacturers, distributors and retailers. The Company
also uses concentrated phosphates internally for the production of
animal feed ingredients (see IMC-Agrico Feed Ingredients), high-value
crop nutrients (see IMC AgriBusiness) and consumer lawn and garden as
well as professional turf and nursery products (see IMC Vigoro).
Virtually all of Crop Nutrients' export sales of phosphate crop
nutrients are marketed through the Phosphate Chemicals Export
Association (PhosChem), a Webb-Pomerene Act organization, which the
Company administers on behalf of two other member companies. PhosChem
believes that its sales represent approximately 50 percent of total
United States exports of concentrated phosphates. Outside of the
United States, the countries which account for the largest amount of
Crop Nutrients' sales of concentrated phosphates include China, Japan,
Australia and Thailand.
The table below shows Crop Nutrients' shipments of concentrated
phosphates in thousands of dry product tons, primarily DAP:
1997 1996 1995
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Tons % Tons % Tons %
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Domestic
Customers 2,065 29% 2,350 32% 2,403 31%
Captive, to other
business units 615 9 581 8 683 9
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2,680 38 2,931 40 3,086 40
Export 4,425 62 4,451 60 4,719 60
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Total shipments 7,105 100% 7,382 100% 7,805 100%
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At December 31, 1997, Crop Nutrients had contractual commitments
from non-affiliated customers for the shipment of concentrated
phosphates amounting to approximately 3.1 million tons and phosphate
rock amounting to approximately 5.0 million tons in 1998.
Other
Crop Nutrients also manufactures and markets uranium oxide.
Phosphate rock is the source of uranium oxide, with the uranium content
varying from deposit to deposit. Uranium oxide production facilities
are located in Louisiana and Florida. In Louisiana, Crop Nutrients
owns and operates uranium oxide recovery and processing facilities
which are located adjacent to its Uncle Sam and Faustina concentrated
phosphate plants. In 1997, these facilities recovered 0.9 million
pounds of uranium oxide from phosphoric acid produced at these
facilities. Crop Nutrients also owns two uranium oxide recovery and
processing facilities in central Florida, one located adjacent to its
New Wales concentrated phosphate plant and another located adjacent to
a concentrated phosphate plant owned and operated by a subsidiary of CF
Industries, Inc. (CF). The New Wales and CF facilities have been
temporarily idled pending improvement of uranium market conditions.
Competition
Crop Nutrients 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.
Subsequent Event
In January 1998, Crop Nutrients exercised its option under an
agreement with Mississippi Chemical Corporation (MCC) to purchase land
in Florida for $57.0 million. The property, along with land previously
purchased from MCC, contains approximately 62.4 million tons of
phosphate rock reserves and 40.3 million tons of resources, and such
amounts are included in the respective estimates as of December 31,
1997.
IMC Kalium
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Net sales for the IMC Kalium business unit were $617.4 million,
$464.8 million and $489.3 million for the years ended December 31,
1997, 1996 and 1995, respectively.
IMC Kalium mines, processes and distributes potash in the United
States and Canada. IMC Kalium's products are marketed worldwide to
crop nutrient manufacturers, distributors and retailers and are also
used internally in the manufacture of mixed crop nutrients and, to a
lesser extent, animal feed ingredients (see IMC AgriBusiness and
IMC-Agrico Feed Ingredients, respectively). IMC Kalium's potash
products are also used by IMC Vigoro for consumer and professional lawn
and garden products as well as ice-melter (see IMC Vigoro). IMC Kalium
also sells potash to customers for industrial use. IMC Kalium operates
four potash mines in Canada and three potash mines in the United
States. With a total capacity in excess of nine million tons of
product per year, IMC Kalium is one of the leading private enterprise
potash producers in the world. In 1997, these operations accounted for
approximately 14 percent of world capacity.
The term "potash" applies generally to the common salts of
potassium. Since the amount of potassium in these salts varies, the
industry has established a common standard of measurement by defining a
product's potassium content in terms of equivalent percentages of
potassium oxide (K2O). A K2O equivalent of 60.0 percent, 50.0 percent
and 22.0 percent is the customary minimum standard for muriate of
potash, sulphate of potash and double sulphate of potash magnesia
products, respectively.
Canadian Operations
IMC Kalium's four mines in Canada produce muriate of potash
exclusively and are located in the province of Saskatchewan, Canada.
Two potash mines are interconnected at Esterhazy, one is located at
Belle Plaine and one is located at Colonsay. The combined annual
capacity of these four mines is approximately eight million tons.
Esterhazy and Colonsay utilize shaft mining while Belle Plaine utilizes
solution mining technology. Potash shaft mining takes place
underground at depths of over 3,000 feet where continuous mining
machines cut out the ore face and move jagged chunks of ore to conveyor
belts. The ore is then crushed and moved to storage bins where it
awaits hoisting to refineries above ground. In contrast, IMC Kalium's
solution mining process involves heated water which is pumped through a
"cluster" to dissolve the potash in the ore bed. A cluster consists of
a series of boreholes drilled into the potash ore by a portable,
all-weather electric drilling rig. A separate distribution center at
each cluster controls the brine flow. The solution containing
dissolved potash and salt is pumped to a refinery where sodium
chloride, a co-product of this process, is separated from the potash
through the use of evaporation and crystallization techniques.
Concurrently, solution is pumped into a 130-acre cooling pond where
additional crystallization occurs and the resulting product is
recovered via a floating dredge. Refined potash is dewatered, dried
and sized. The Canadian operations produce 26 different potash
products, including industrial grades, many through patented processes.
Potash Corporation of Saskatchewan Inc. (PCS) controls several
potash-producing properties in the province, including a property which
consists of reserves located in the vicinity of IMC Kalium's Esterhazy
mines. Under a long-term contract with PCS, the Company is obligated
to mine and refine these reserves for a fee plus a pro rata share of
production costs. The specified quantities of potash to be produced
for PCS may, at the option of PCS, amount to an annual maximum of
approximately one-fourth of the tons produced by Esterhazy but no more
than approximately 1.1 million tons. The current contract extends
through June 30, 2001 and is renewable at the option of PCS for five
additional five-year periods.
IMC Kalium controls the rights to mine 331,980 acres of
potash-bearing land in Saskatchewan. This land, of which 70,290 acres
have already been mined or abandoned, contains over 4.6 billion tons of
potash mineralization (calculated after estimated extraction losses) at
an average grade of about 21.0 percent. This ore is sufficient to
support current operations for more than a century and will yield more
than 1.4 billion tons of finished product with a K2O content of
approximately 61.0 percent.
IMC Kalium's mineral rights in Saskatchewan consist of 133,102
acres owned in fee, 175,241 acres leased from the province of
Saskatchewan and 23,637 acres leased from other parties. All leases
are renewable by the Company for successive terms of 21 years.
Royalties, established by regulation of the province of Saskatchewan,
amounted to approximately $8.2 million, $6.2 million and $7.2 million
in 1997, 1996 and 1995, respectively.
In August 1995, the Company was chosen by the Minister of State for
Mines and Energy for the Canadian province of New Brunswick to explore
the potash deposit near the town of Sussex. In October 1997, the
Company notified the Department of Natural Resources and Energy for the
Canadian province of New Brunswick that, based on its evaluation of
information provided by the Department, the Company was no longer
interested in evaluating the possible development of the deposit.
Since December 1985, IMC Kalium has experienced an inflow of water
into one of its two interconnected potash mines at Esterhazy. As a
result, IMC Kalium has incurred expenditures, certain of which due to
their nature have been capitalized while others have been charged to
expense, to control the inflow. Since the initial discovery of the
inflow, IMC Kalium has been able to meet all sales obligations from
production at the mines. The Company has considered, and continues to
evaluate, alternatives to the operational methods employed at
Esterhazy. However, the procedures utilized to control the water
inflow have proven successful to date, and the Company currently
intends to continue conventional shaft mining. Despite the relative
success of these modified measures, there can be no assurance that the
amounts required for remedial efforts will not increase in future years
or that the water inflow or remediation costs will not increase to a
level which would cause the Company to change its mining process or
abandon the mines.
Like other potash producers' shaft mines, IMC Kalium's Colonsay
mine is also subject to the risks of inflow of water as a result of its
shaft mining operations.
The Saskatchewan potash mining industry generally has been unable
to secure insurance to cover other risks associated with underground
operations. Therefore, IMC Kalium's underground mine operations are
not presently insured against, and are not insurable against, business
interruption or risk from catastrophic perils, including collapse,
floods and other water inflow.
In January 1988, the U. S. Department of Commerce (Commerce) signed
an agreement with all of the potash producers in Canada, suspending an
investigation by Commerce to determine whether Canadian potash was, or
was likely to be, sold in the United States at less than "fair value."
The agreement stipulated that each such producer's minimum price for
potash sold in the United States, compared with its potash prices in
Canada, would be based upon a formula to assure that such product was
sold in the United States at a price no less than "fair value." This
agreement will remain in place until terminated by Commerce in
accordance with applicable law; Commerce will undertake a review of the
agreement no later than early 1999.
The Saskatchewan Department of Environmental and Resource
Management (Saskatchewan Department) published regulations requiring
all potash mine operators to submit facility decommissioning and
reclamation plans for approval by the Saskatchewan Department and to
provide assurances that the plans will be carried out when the facility
is closed. See "Other Matters - Environmental Matters - Management of
Residual Materials" for further detail.
United States Operations
IMC Kalium has three United States potash mines; the Carlsbad
facility and the Western Ag facility located in Carlsbad, New Mexico,
and the Hersey facility located in Hersey, Michigan.
The IMC Kalium Carlsbad mine has an annual production capacity of
over one million tons of finished product. The ore reserves are of
three types: (1) sylvinite, a mixture of potassium chloride and sodium
chloride, the same as the ore mined in Saskatchewan; (2) langbeinite, a
double sulphate of potassium and magnesium; and (3) a mixed ore,
containing both potassium chloride and langbeinite. At this time only
the sylvinite and langbeinite ores are mined.
Continuous and conventional underground mining methods are utilized
for ore extraction at Carlsbad. In the continuous mining sections,
drum type mining machines are used to cut sylvinite ore from the face.
Mining heights are as low as four feet. In the conventional areas, a
wide ore face is undercut and holes drilled to accept explosive
charges. Ore from both continuous and conventional sections is loaded
onto conveyors, transported to storage areas and then hoisted above
ground for further processing at the refinery.
Three types of potash are produced at the Carlsbad refinery:
muriate of potash, which is the primary source of potassium for the
crop nutrient industry; double sulphate of potash magnesia, marketed
under the brand name K-Mag(registered trademark), containing
significant amounts of sulphur, potassium and magnesium, with low
levels of chloride; and sulphate of potash, supplying sulphur and a
high concentration of potassium with low levels of chloride.
At the Carlsbad facility, IMC Kalium mines and refines potash from
43,877 acres of reserves which are controlled under long-term leases.
These reserves contain an estimated total of 164 million tons of potash
mineralization (calculated after estimated extraction losses) in four
mining beds evaluated at thicknesses ranging from four to 12 feet. At
average refinery rates, these ore reserves are estimated to be
sufficient to yield 12.9 million tons of concentrate from sylvinite
with an average grade of 60.0 percent K2O and 26.1 million tons of
langbeinite concentrate with an average grade of approximately 22.0
percent K2O. At current rates of production, IMC Kalium's reserves of
sylvinite and langbeinite are estimated to be sufficient to support
operations for more than 18 years and for more than 30 years,
respectively. Pursuant to potassium mineral lease arrangements with
the federal government, the State of New Mexico and other third
parties, the Company paid royalties of $3.3 million, $3.1 million and
$3.4 million in 1997, 1996 and 1995, respectively.
IMC Kalium is currently constructing a 400,000 ton per year K-Mag
granulation facility at Carlsbad. This facility will convert standard
grade K-Mag into premium granular grade which has expanded sales
opportunities. The approximate $25.0 million project is scheduled to
commence production in the first quarter of 1998.
In September 1997, the Company acquired Western Ag-Minerals Company
(Western Ag), a subsidiary of Toronto-based Rayrock Yellowknife
Resources Inc., for $53.0 million. The Western Ag facility is located
in Carlsbad, New Mexico, adjacent to the IMC Kalium Carlsbad facility
and has an annual capacity of 400,000 tons of double sulfate of potash
magnesia which is marketed under the brand name K-Mag. The Western Ag
facility mines and refines potash from 16,487 acres of reserves which
are controlled under long-term leases. The reserves contain an
estimated 95 million tons of potash mineralization in two mining beds
in thicknesses ranging from 8 to ten feet. At average refinery rates,
these ore reserves are estimated to be sufficient to yield 13.4 million
tons of concentrate from langbeinite with an average ore grade of 22.0
percent K2O and 9.9 million tons of sylvinite concentrate with an
average ore grade of 60.0 percent K2O. At current rates of production,
the Western Ag facility's langbeinite reserves are estimated to be
sufficient to support operations for approximately 29 years. The
sylvinite reserves, which would be processed at the adjacent Carlsbad
facility's refinery, are estimated to be sufficient to support
operations for approximately 14 years at the current rate of
production.
As a result of the Western Ag facility acquisition, IMC Kalium
intends to construct a new state-of-the-art, world class langbeinite
refinery at Carlsbad at an estimated cost of approximately $56.0
million. The new refinery will replace the current refineries at the
adjacent Carlsbad and Western Ag facility locations and will reduce
costs and improve processing efficiency. The new refinery is expected
to be operational in 1999.
At Hersey, IMC Kalium's mineral rights consist of 1,093 acres owned
in fee and 10,537 acres controlled under long-term leases. These lands
contain an estimated 300 million tons of potash mineralization
contained in two beds ranging in thickness from 14 to 30 feet. These
reserves are estimated to be sufficient to yield 62 million tons of
concentrate from sylvinite with an average grade of 60.0 percent K2O.
At current rates of production, these reserves are estimated to be
sufficient to support operations for more than 300 years.
During 1997, IMC Kalium completed the construction phase of its
$60.0 million expansion of the Hersey, Michigan, facility and full
operations commenced. The plant's current annual potash production
capacity is approximately 160,000 tons, and salt capacity is
approximately 300,000 tons per year. The Company believes that the
commencement of operations at the Hersey plant is an important step
forward in its strategy to increase sales and earnings with multiple
products.
In December 1997, IMC Global entered into a definitive agreement to
purchase HCG for $1.4 billion, including the assumption of $950.0
million in debt. HCG's major lines of business include soda ash,
salt, potash and boron chemicals. For the fiscal year ended March 29,
1997, HCG had total revenues of $785.0 million. See "Recent
Developments," in Part I, Item I, "Business," of this Annual Report on
Form 10-K.
Sales and Marketing
IMC Kalium's domestic sales are made through the Company's own
sales force. Domestic agricultural sales are primarily to independent
accounts, co-operatives and large regional buyers while
non-agricultural sales are primarily to large industrial accounts and
the animal feed industry.
Potash is sold throughout the world, with IMC Kalium's largest
amount of sales outside of the United States made to China, Japan,
Malaysia, Korea, Australia, New Zealand and Latin America. Potash is
also used internally in the manufacture of high-value crop nutrients by
IMC AgriBusiness and by IMC Vigoro as a major ingredient in its
ice-melter product as well as one of the primary nutrients in the
consumer lawn and garden and professional turf and nursery products.
IMC Kalium's exports from Canada, except to the United States, are made
through Canpotex Limited (Canpotex), an export association of
Saskatchewan potash producers. Exports from Carlsbad are sold through
the Company's own sales force. In 1997, 84 percent of the potash
produced by IMC Kalium was sold as crop nutrients, while 16 percent was
sold for non-agricultural uses.
The table below shows IMC Kalium's shipments of potash in thousands
of tons:
1997 1996 1995
---- ---- ----
Tons % Tons % Tons %
-------------------------------------------
Domestic (includes
Canada)
Wholesale 5,097 57% 4,076 56% 4,298 56%
Captive, to other
business units 1,306 15 1,176 16 1,141 15
----- ---- ----- ---- ----- ----
6,403 72 5,252 72 5,439 71
Export 2,538 28 2,038 28 2,273 29
----- ---- ----- ---- ----- ----
Total shipments 8,941 100% 7,290 100% 7,712 100%
===== ==== ===== ==== ===== ====
At December 31, 1997, IMC Kalium had contractual commitments from
non-affiliated customers for the shipment of potash amounting to
approximately 1.8 million tons in 1998.
Competition
Potash is a commodity available from many sources and the market is
highly competitive. In addition to IMC Kalium, there are four North
American producers -- two in the United States and two in Canada, some
of which may have greater production capacity than IMC Kalium. Through
its participation in Canpotex, IMC Kalium competes outside of North
America with various independent potash producers and consortia and
other export organizations, including state-owned organizations. IMC
Kalium's principal methods of competition, with respect to the sale of
potash, include pricing; offering consistent, high-quality products and
superior service; as well as developing new industrial and consumer
uses for potash.
IMC AgriBusiness
- ----------------
Net sales for the IMC AgriBusiness business unit were $872.6
million, $797.7 million and $807.7 million for 1997, 1996 and 1995,
respectively. IMC AgriBusiness operates approximately 260 facilities
consisting of retail distribution centers, manufacturing plants as well
as terminals and warehouses. For 1997, approximately 53 percent, 45
percent and two percent of AgriBusiness' net sales were from
agricultural retail, agricultural wholesale and industrial operations,
respectively. Principal markets served include the midwest
agricultural regions east of the Mississippi River, the southeastern
states, including Florida, and certain large national accounts and
brokers.
Retail Operations
IMC AgriBusiness believes it is one of the largest retail crop
nutrient distributors in the United States. It operates a network of
approximately 215 FARMARKET(registered trademark)s, each of which
offers a broad array of IMC AgriBusiness' crop nutrients and related
products and services. Approximately 70 percent of the FARMARKETs are
located in the eastern Midwest and the remaining in the southeastern
regions of the United States, and are generally located in rural areas,
primarily serving farmers located within a 15-20 mile radius. The
FARMARKETs are clustered near and are partially supplied by IMC
AgriBusiness' production facilities and terminals, many of which are
located on major rivers and have storage facilities for liquid or dry
crop nutrient materials. In addition, IMC AgriBusiness leases
strategically located warehouse and terminal facilities which when
combined with owned facilities, provides reliable product delivery
points during the highly concentrated spring shipping season.
Each FARMARKET custom blends and bulk blends crop nutrients to meet
the needs of individual farmers for the specific crops grown in their
areas. In addition, crop protection products and seed are purchased
and marketed through its FARMARKETs. One of the most successful
FARMARKET programs is the Start to Finish balanced fertility program
which is designed to improve crop production through increased yields
per acre. Key elements of this program include soil testing and
programs to correct soil deficiencies. FARMARKETs also offer farmers
the option of having IMC AgriBusiness' employees apply crop nutrient
and crop protection products, thereby saving the farmer time, labor
costs and the cost of investment in specialized equipment required for
such applications.
IMC AgriBusiness also offers high technology agricultural advisory
services to its customers through its FARMARKETs and Top Soil Precision
Ag (Top- Soil) operations. FARMARKETs and Top- Soil offer soil
sampling via global positioning; yield monitor mapping and
interpretation; statistical analysis for yield variation and other crop
management services.
FARMARKETs are generally staffed by a manager, one or two
salespeople and two to three hourly employees, some of whom are
seasonal employees. IMC AgriBusiness extensively trains its full-time
FARMARKET employees in crop nutrient application and agronomics,
business management and environmental compliance. This training is
deemed to be essential to customer service. The majority of IMC
AgriBusiness' salaried FARMARKET employees have obtained certification
from the Certified Crop Advisors Program as Certified Crop Advisors.
Approximately ten percent of IMC AgriBusiness' FARMARKETs are owned
and operated by independent dealers who purchase IMC AgriBusiness'
products on consignment. Blending and storage are performed at the
dealer's place of business, and the dealer is paid a commission
determined by a sliding scale based on the volume and profit margin of
the products sold. IMC AgriBusiness recommends prices, approves credit
extended by these dealers, owns the FARMARKETs' working capital and
often owns its blending equipment.
FARMARKET sales, as well as wholesale sales discussed below, are
largely concentrated in the spring planting, and to a lesser extent,
fall seasons. Weather has a significant impact on the timing and
length of the planting season and, therefore, can have a significant
effect on crop nutrient and crop protection sales prices and volumes.
Wholesale Operations
IMC AgriBusiness sells agricultural crop nutrient and crop
protection products on a wholesale basis through the IMC Nitrogen
Division to independent dealers and distributors, including those that
perform services similar to those offered by FARMARKETs. Wholesale
shipments are also made to national accounts and to the cooperative
market. Wholesale shipments are primarily distributed from IMC
AgriBusiness-owned production plants or terminals as well as leased
terminals and warehouses. While shipments are heavily concentrated
during the spring planting, and to a lesser extent, fall seasons,
leased terminals and warehouses are utilized to supplement storage at
owned facilities allowing for year-long production from the plants and
a broader distribution base.
The wholesale sales in the southeastern region of the United States
include products sold under the brand names RAINBOW(registered
trademark) and SUPER RAINBOW(registered trademark) which are produced
from granulation plants in Americus, Georgia; Florence, Alabama;
Winston Salem, North Carolina and Hartsville, South Carolina. The
combined annual production from these plants approximates 650,000 tons.
IMC AgriBusiness sells nitrogen-based products, which include
anhydrous ammonia, nitrogen solutions and urea, on a wholesale basis in
the eastern midwest region of the United States. A portion of these
sales are produced from the IMC AgriBusiness' nitrogen plant in East
Dubuque, Illinois, which annually produces approximately 300,000 tons
of anhydrous ammonia, 220,000 tons of nitrogen solutions and 50,000
tons of granular urea.
In addition, IMC AgriBusiness markets potash and concentrated
phosphates produced by the Company's IMC Kalium and IMC-Agrico Crop
Nutrients business units, respectively, on a wholesale basis to
independent dealers and distributors in the eastern midwest and
southeastern regions of the United States.
Seed, Industrial and Other Operations
IMC AgriBusiness sells corn, soybean and wheat planting seed
through its FARMARKET system and through its Ohio based Farmer-Dealer
system. The FARMARKETs sell Vigoro(registered trademark) brand seeds
as well as most national brands and the Farmer-Dealer system sells
Green Land(registered trademark) brand seeds. IMC AgriBusiness is also
actively involved in the breeding and production of identity-preserved
crops and is a supplier of proprietary soybeans to Japanese food
producers through a partnership with Honda Trading America Corporation.
IMC AgriBusiness' primary products sold in the industrial market
include nitric acid, liquid ammonium nitrate and food-grade carbon
dioxide produced from its nitric acid plant in Cincinnati, Ohio, and
the nitrogen plant in East Dubuque, Illinois. Its nitric acid plant
produces approximately 90,000 tons of nitric acid and 60,000 tons of
liquid ammonium nitrate, while its nitrogen plant produces
approximately 180,000 tons of food-grade carbon dioxide. Nitric acid
is sold in various formulations to a wide variety of industrial users
for use in metal platings, coatings and water treatment. Food-grade
carbon dioxide is used in carbonated beverages and as a refrigerant in
food processing.
IMC AgriBusiness operates a granulation plant in Columbus, Ohio,
and several liquid and dry terminal facilities in southern Illinois,
southern Indiana and Kentucky along with numerous facilities throughout
the Southeast and Florida, which are used for bulk-blending and/or
warehousing in connection with its retail and wholesale operations.
Raw Materials
Substantially all of the potash and phosphate raw materials used by
IMC AgriBusiness are supplied by the Company's IMC Kalium and
IMC-Agrico Crop Nutrients business units, respectively. IMC
AgriBusiness' nitrogen-based products are produced at its plant in East
Dubuque and/or purchased from domestic suppliers under long-term
contracts based on current market prices.
Products
IMC AgriBusiness produces a broad range of nitrogen-based crop
nutrients and related products, including anhydrous ammonia, ammonium
nitrate solutions, liquid urea, urea granules and other nitrogen-based
solutions. These products are sold alone or mixed with phosphates,
potash, micronutrients, non-liquid ammonium nitrate and other materials
to produce a variety of bulk-blend fertilizers in either dry or liquid
form. Certain of these products are marketed under the CERTIFIED
HARVEST KING(registered trademark) brand. Liquid and dry products are
blended according to the specific needs of the farmer. IMC
AgriBusiness also mixes dicyandiamide (DCD) with nitrogen solutions
under the name N TECH SR (trademark), providing farmers with a more
efficient and environmentally-sensitive nitrogen source. The slow
release DCD increases absorption of nitrogen by crops, thereby reducing
the amount of nitrogen released into the environment. IMC AgriBusiness
has a year-to-year renewable purchase agreement with the world's
largest producer of DCD.
Competition
The marketing of crop nutrients to farmers on a national basis is
highly fragmented. Since crop nutrients are a basic commodity, the
principal means of differentiating competing products is through
competitive pricing coupled with offering personal services and
agronomically-efficient products which allow maximum yields while being
sensitive to environmental concerns. FARMARKETs were developed to
enhance the personal service concept and thereby differentiate IMC
AgriBusiness' products from those of competitors. Most of the
FARMARKETs are leaders in their respective area of operation. IMC
AgriBusiness believes its nitrogen-based crop nutrients and related
products are well positioned in both the retail and wholesale
agricultural market sectors and in the industrial market sector.
Principal competitors in the agricultural crop nutrients market include
cooperatives, which have the largest market share in a majority of the
locations served by IMC AgriBusiness, national producers, major grain
companies and independent distributors and brokers.
IMC-Agrico Feed Ingredients
- ----------------------------
Net sales for the IMC-Agrico Feed Ingredients business unit were
$163.5 million, $154.6 million and $34.2 million for the years ended
December 31, 1997, 1996 and the partial year 1995, respectively.
In October 1995, the Company acquired the animal feed ingredients
business of Mallinckrodt Group Inc. and subsequently contributed it to
IMC-Agrico. IMC-Agrico Feed Ingredients is one of the world's foremost
producers and marketers of phosphate-based animal feed ingredients with
an annual capacity in excess of 700,000 tons. In the first quarter of
1998, IMC-Agrico Feed Ingredients will start construction on the
expansion of its deflourinated phosphate (Multifos(registered
trademark)) capacity at its manufacturing operations in New Wales,
Florida. The project will increase the annual capacity for Multifos to
200,000 tons and will increase IMC-Agrico Feed Ingredients total annual
production to approximately 770,000 tons. IMC-Agrico Feed Ingredients
supplies phosphate and potassium-based feed ingredients for poultry and
livestock to markets in North America, Latin America and Asia. The
principal production facilities of IMC-Agrico Feed Ingredients are
located adjacent to, and utilize raw materials from, Crop Nutrient's
concentrated phosphate complex at New Wales in central Florida.
IMC-Agrico Feed Ingredients also markets potassium-based feed products
produced at the Company's potash facilities. IMC-Agrico Feed
Ingredients has a strong brand position in the $1.0 billion global
market with products such as Biofos(registered trademark),
Dynafos(registered trademark), Multifos, Dyna-K(registered trademark)
and Dynamate(registered trademark).
IMC-Agrico 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 quality, service and
price.
IMC Vigoro
- ----------
Net sales for the IMC Vigoro business unit were $100.6 million,
$95.3 million and $87.6 million for the years ended December 31, 1997,
1996 and 1995, respectively.
IMC Vigoro manufactures and sells specialty crop nutrient products
consisting of lawn and garden, and turf and nursery products as well as
potassium-based ice melter products. The lawn and garden products are
sold throughout North America, primarily to major national retail
chains under private label and Vigoro brands. The turf and nursery
products are sold to golf courses, nurseries, landscape contractors and
institutions through independent distributors. Many of the turf and
nursery products incorporate timed-release IBDU(registered trademark)
(a slow release nitrogen) and V-Cote(registered trademark) nutrients.
The environmentally-friendly, potassium-based ice melter products are
sold under various brands throughout the Midwest, the eastern snow-belt
states and Canada.
FACTORS AFFECTING DEMAND
The Company's results of operations historically have reflected the
effects of several external factors which are beyond the Company's
control and have in the past produced significant downward and upward
swings in the Company's operating results. The Company's revenues are
highly dependent upon conditions in the North American agriculture
industry and can be affected by crop failure, changes in agricultural
production practices, government policies and weather. Furthermore,
the Company's crop nutrients business is seasonal to the extent United
States farmers and agricultural enterprises purchase more crop nutrient
products during the spring and fall.
The Company's foreign operations and investments and any future
international expansion by the Company are subject to numerous risks,
including fluctuations in foreign currency exchange rates and controls,
expropriation and other economic, political and regulatory policies of
local governments and laws and policies of the United States and Canada
affecting foreign trade and investment. Due to economic and political
factors, customer needs can change dramatically from year to year.
While management does not believe the current economic conditions in
Asia will have a material adverse effect on the Company's results,
there can be no assurance that a continuation of the economic crisis
would not have a material impact on sales to customers in this region.
See Note 22, "Operating Segments," of Notes to Consolidated Financial
Statements in Part II, Item 8, "Financial Statements and Supplementary
Data," of this Annual Report on Form 10-K for further detail.
In 1997, sales of concentrated phosphates and potash to China
accounted for approximately 15 percent of the Company's net sales. No
single customer or group of affiliated customers accounted for more
than ten percent of the Company's net sales.
OTHER MATTERS
Environmental Matters
- ---------------------
General
As a producer and distributor of crop nutrients, the Company is
subject to a myriad of federal, state, provincial and local
environmental, health and safety laws in the United States and Canada.
These standards regulate the management and handling of raw materials
and products, air and water quality, disposal of hazardous and solid
wastes, and post-mining land reclamation. It is the Company's policy
to comply with all applicable environmental, health and safety (EHS)
standards. Through its active EHS management program, the Company is
confident that it generally satisfies these requirements.
Nevertheless, there can be no assurance that unexpected or additional
costs, penalties, or liabilities will not be incurred. Moreover, EHS
standards applicable to the Company's operations, and the industry in
general, continue to evolve. Until implementing regulations have been
finalized and definitive regulatory interpretations have been adopted,
it is difficult to ascertain future compliance obligations or estimate
future costs.
The Company has expended, and anticipates that it will continue to
expend, substantial resources, both financial and managerial, to comply
with EHS standards. For 1998, environmental capital expenditures will
total approximately $24.0 million, primarily related to air permitting
and control; ground and surface water protection; solid waste
management and remediation of contamination at current or former
operations. Additional expenditures for land reclamation activities
will total approximately $25.0 million. For 1999, the Company expects
environmental capital expenditures to be approximately $46.0 million
and expenditures for land reclamation activities to be approximately
$24.0 million. Environmental capital is expected to increase in 1999
as a result of additional expenditures that may be necessary at
acquired facilities. Based on current information, it is the opinion
of management that the ultimate liability arising from EHS matters,
taking into account established accruals, should not have a material
adverse effect on the Company's financial position. However, no
assurance can be given that greater-than-anticipated environmental
expenditures will not be required in 1998 or in the future.
Product Requirements
As part of its wholesale and retail activities, the Company blends
plantcrop nutrients and sometimes adds pesticides produced by other
manufacturers. Federal and state standards require registration of all
products containing pesticides before those products can be sold,
impose labeling requirements on those products, and require producers
to manufacture the products to formulations set forth on the label.
Recently, various federal, state, and local environmental and public
health agencies have begun to reconsider appropriate regulatory
controls to address the handling and use of fertilizer products and
fertilizer additives. Because this evaluation is in its initial
stages, it is unclear whether the evaluation will result in additional
federal, state, or local regulatory requirements that the industry,
including the Company, will be required to meet. Until the results of
the initial evaluations have been completed, the Company cannot
estimate the extent of expenditures that may be necessary to meet
additional standards, if any.
Permitting
The Company holds numerous environmental and other permits
authorizing operations at each of its facilities. A decision by a
government agency to deny an application for a new or renewed permit,
or to revoke or substantially modify an existing permit, could have a
material adverse effect on the Company's ability to continue operations
at the affected facility. Expansion of Company operations also is
predicated upon securing the necessary environmental or other permits.
In particular, over the next several years, IMC-Agrico will be
undertaking efforts to obtain a number of permits related to its
Florida mining operations. IMC-Agrico signed an agreement with
Consolidated Minerals, Inc. (CMI) for the purchase of real property
(Pine Level) containing approximately 100 million tons of phosphate
rock reserves in Florida. In connection with the purchase, IMC-Agrico
has agreed to obtain all environmental, regulatory, and related permits
necessary to commence mining on the property. Successful achievement
of such permitting remains to be accomplished over the next five to
eight years. Although the Company has successfully permitted mining
properties in Florida, if permits were denied or if compliance with
permit conditions becomes cost prohibitive, a complete or substantial
inability to mine this property may result and would adversely impact
the Company.
Risk Management Planning
Several of the Company's facilities are subject to the Clean Air
Act's Risk Management Planning (RMP) requirements, which mandate that
covered facilities establish comprehensive plans for preventing and
responding to accidental releases to the air. Under RMP, facilities
also must present information to the public about their "worst-case"
release scenarios from regulated processes, the potential effects of
such a release on nearby populations, and the Company's release
prevention programs. The Company continues to implement the required
RMP programs on schedule to meet a June 1999 deadline. Costs to
complete these planning processes could be substantial.
Mining Operations
The Company's phosphate and potash mining activities are subject to
a number of EHS standards. In Florida, IMC-Agrico received a number of
permits from the U.S. Army Corps of Engineers (Corps) that authorize
phosphate mining in certain wetland areas. In October 1997, the
Company received three notices from the Corps alleging that the Company
had violated its permits. Upon reviewing these notices, the Company
ascertained that it had inadvertently disturbed, without permits,
additional wetlands over which the Corps had asserted jurisdiction. The
Company has had informal discussions with the Corps to resolve these
issues and additional meetings are expected in 1998. Although the
Company is unable to predict the outcome of these proceedings, it does
not expect that these proceedings will have a material adverse effect
on the Company's financial condition or operations.
In 1997, the National Institute for Occupational Safety and Health
(NIOSH) informed the Company that it will be conducting a study to
determine whether health effects arise from exhaust generated by diesel
equipment used in mining operations. This study will involve a review
of the Company's IMC Kalium Carlsbad and Western Ag facilities in
Carlsbad, New Mexico, as well as other facilities in the non-metal
mining industry. Because study results have not yet been obtained, the
Company cannot estimate the extent of expenditures that may be
necessary to address conclusions of the study or additional standards
that may arise.
Management of Residual Materials
Potash and phosphate mining and processing produce residual
materials that must be managed. Potash tailings, which contain
primarily sodium chloride, iron and clay, are stored in surface
disposal sites. Phosphate residuals, consisting primarily of
phosphogypsum, typically are stored in phosphogypsum stack systems.
Other phosphate mining residuals, clay and sand tailings are used in
reclamation. The Company has incurred and will continue to incur
significant costs to manage its potash and phosphate residual materials
in accordance with environmental laws, regulations, and permit
requirements.
In 1994, the Saskatchewan Department of Environmental and Resource
Management (Department) published regulations requiring all potash mine
operators to submit for approval facility decommissioning and
reclamation plans covering all facilities at a mine, including surface
disposal sites for potash tailings. The Department also requires
operators to provide financial assurance that the plans will be carried
out. The Company filed its decommissioning plans for its four
Saskatchewan potash mines in 1997. Recently, the Company's plans, as
well as the plans for other mining companies in Saskatchewan, were
disapproved by the Department. The Company is evaluating the
Department's objections and will be working with the Department to
prepare revised plans. Costs for decommissioning are likely to be
significant. The Company does not anticipate expending such funds for
the decommissioning of salt piles and tailing management areas until
agreement with the Department over a decommissioning plan has been
reached. By contrast, the decommissioning of surface facilities and
active mining areas will not occur until those facilities are closed.
The Company's locations have sufficient potash reserves to continue
operating for more than 100 years. Like all members of the
Saskatchewan potash industry, the Company is unable to predict with
certainty the financial impact of the regulation on the Company due to
the anticipated life of each mine, potential advances in tailings
management technology, and changes from time to time in rules and
regulations.
With regard to phosphate processing, Florida law may require
IMC-Agrico to close one or more of its unlined phosphogypsum stacks
and/or associated cooling ponds after March 25, 2001 if the stack
system is demonstrated to cause a violation of Florida's water quality
standards. IMC-Agrico has already filed an application with Florida's
Department of Environmental Protection to close the unlined gypsum
stack at its New Wales facility in central Florida. Closure activities
would begin on July 1, 1998 if the plan is accepted and would cost
approximately $1.7 million, net of recorded accruals, for construction
activities over a period of five years. IMC-Agrico cannot predict at
this time whether Florida will require closure of any of its other
stack systems. The costs of such closure could be significant.
IMC-Agrico continues to address elevated levels of sulfate and
sodium indicators in groundwater at its New Wales facility. In 1992,
elevated sulfate levels were detected in groundwater beneath an unlined
cooling pond. In response, the Central Florida Regional Planning
Council required IMC-Agrico to plug former recharge wells and either
show that groundwater sulfate levels have returned to acceptable levels
or line or relocate the cooling pond. Recent monitoring data have
evidenced an improving trend in the sulfate and sodium indicator
levels. Based on this trend, IMC-Agrico received a permit to continue
operating the cooling pond until July 1998, at which time the permit
must be renewed. If indicators do not reach acceptable levels, options
will be pursued to meet the operating needs of the facility. The cost
to line or relocate the cooling pond, if necessary, is estimated to be
approximately $50.0 million.
Remedial Activities
Many of the Company's currently and formerly owned facilities have
been in operation for many years. The historical use and handling of
regulated chemical substances and crop nutrient products at these
facilities by the Company and predecessor operators has resulted in
soil and groundwater contamination. The Company also has purchased
facilities that were contaminated by previous owners through their use
and handling of regulated chemical substances. In addition, through
the FTX Merger, the Company has assumed responsibility for
contamination at facilities that were operated by FTX or its
predecessors.
Spills or other unintended releases of regulated substances have
occurred previously at these facilities, and potentially could occur in
the future, possibly requiring the Company to undertake or fund cleanup
efforts. At some locations, the Company has agreed, pursuant to
consent orders with the appropriate governmental agencies, to undertake
certain investigations (which currently are in progress) to determine
whether remedial action may be required to address contamination.
Material expenditures may be required by the Company in the future
to remediate the contamination at these current or former sites. With
regard to known unindemnified FTX sites, the Company expects that
remedial expenditures of approximately $2.0 million may be necessary.
The cost of any remedial actions that ultimately may be required at
other sites that are currently under investigation or for which
investigations have not been performed cannot be determined. It is the
Company's policy to accrue environmental investigatory and noncapital
remediation costs for identified sites when: (i) litigation has
commenced or (ii) a claim, or assessment has been asserted or is
probable and the likelihood of an unfavorable outcome is probable.
The Company believes that, pursuant to several indemnification
agreements, it is entitled to at least partial, and in many instances
complete, indemnification for a portion of the costs that may be
expended by the Company to remedy environmental issues at certain
facilities. These agreements address issues that resulted from
activities occurring prior to the Company's acquisition of facilities
or businesses from parties including Kaiser Aluminum & Chemical
Corporation, Beatrice Companies, Inc., Estech, Inc. and certain other
public and private entities. The Company has already received and
anticipates receiving amounts pursuant to the indemnification
agreements for certain of its expenses incurred to date.
Superfund
The Comprehensive Environmental Response Compensation and Liability
Act (CERCLA), also known as "Superfund," imposes liability without
regard to fault or to the legality of a party's conduct, on certain
categories of persons that are considered to have contributed to the
release of "hazardous substances" into the environment. Currently, the
Company is involved or concluding involvement at less than ten
Superfund sites. At none of these sites alone, nor in the aggregate,
is the Company's liability currently expected to be material. As more
information is obtained regarding the sites and the potentially
responsible parties involved, this expectation may change.
Employees
- ---------
The Company had approximately 8,950 employees at December 31, 1997.
The work force consisted of 3,788 salaried, 5,120 hourly and 41
temporary or part-time employees.
Labor Relations
- ---------------
The Company has 21 collective bargaining agreements with ten
international unions or their affiliated local chapters. At December
31, 1997, approximately 52 percent of the hourly work force were
covered under collective bargaining agreements. Five agreements
covering 44 percent of the hourly work force were negotiated during
1997. Resulting wage and benefit increases were consistent with
competitive industry and community standards. Six agreements covering
approximately 35 percent of the hourly work force will expire during
1998. The Company has not experienced a significant work stoppage in
recent years and considers its employee relations to be good.
EXECUTIVE OFFICERS OF THE REGISTRANT
The ages and five-year employment history of the Company's
executive officers at February 27, 1998 is as follows:
Wendell F. Bueche
Age 67. Chairman of the Board of the Company. Mr. Bueche served as
Chairman and Chief Executive Officer from August 1994 through June
1997. From February 1993 until August 1994, he served as President and
Chief Executive Officer. Mr. Bueche was Chairman of the Board, Chief
Executive Officer and President of Allis-Chalmers Corporation from 1986
through 1988. He retired from full-time employment from 1989 until
February 1993. Mr. Bueche is also a director of Marshall & Ilsley
Corporation, M&I Marshall & Ilsley Bank, WICOR, Inc., Wisconsin Gas
Company and Executive Association, American Industrial Partners, L. P.
Mr. Bueche has served as an IMC Global Director since July 1991, and
his term expires in April 1999. Mr. Bueche currently serves on the
Executive Committee and is a non-voting member of the Committee on
Directors and Board Affairs.
Robert E. Fowler, Jr.
Age 62. President and Chief Executive Officer of the Company. Mr.
Fowler served as President and Chief Operating Officer from March 1996
through June 1997. He served as President and Chief Executive Officer
of Vigoro from September 1994 through February 1996 and as President
and Chief Operating Officer from July 1993 to September 1994.
Mr. Fowler served as President and Chief Executive Officer of BCC
Industrial Services from June 1991 to June 1993. He is a director of
Anixter International, Inc. Mr. Fowler previously served as a director
of Vigoro from August 1993 through February 1996 and has served as an
IMC Global Director since March 1996. His term expires in April 2000.
Mr. Fowler currently serves on the Executive Committee and is a non-
voting member of the Committee on Directors and Board Affairs.
C. Steven Hoffman
Age 48. Senior Vice President of the Company. Mr. Hoffman served as
Senior Vice President, Marketing from 1993 until 1994; Senior Vice
President, Sales from 1992 until 1993; Senior Vice President, Wholesale
Marketing from 1990 until 1992.
John U. Huber
Age 59 . Senior Vice President of the Company and President of the IMC
Kalium business unit. Mr. Huber has served as President of the IMC
Kalium business unit since joining the Company in March 1996. Prior to
joining the Company, Mr. Huber served as Executive Vice President of
The Vigoro Corporation from June 1993 to March 1996. Prior thereto he
served as President of Kalium Chemicals, Ltd. (now known as IMC Kalium
Ltd.) and as President of Kalium Canada, Ltd. (now known as IMC Kalium
Canada Ltd.) from August 1991 to March 1996.
J. Bradford James
Age 51. Senior Vice President and Chief Financial Officer of the
Company since joining the Company in February 1998. Prior to joining
IMC, Mr. James served as Executive Vice President of USG Corporation
from 1995 through 1997 and Senior Vice President and Chief Financial
Officer of USG Corporation from 1991 through 1994.
B. Russell Lockridge
Age 47. Senior Vice President, Human Resources of the Company since
joining the Company in July 1996. Mr. Lockridge served as Corporate
Director, Executive Compensation and Development at FMC Corporation
from 1992 to 1996 and as Human Resource Director for FMC's Chemical
Business from 1986 to 1992.
Anne M. Scavone
Age 34. Vice President and Controller of the Company. Ms. Scavone
served as Director, Joint Venture Finances from April 1995 to April
1996 and as Joint Venture Financial Coordinator from April 1993 to
April 1995. Prior to joining the Company, Ms. Scavone was a Manager at
Ernst & Young from July 1990 to April 1993.
Marschall I. Smith
Age 52. Senior Vice President and General Counsel of the Company since
joining the Company in 1993. Mr. Smith was Senior Vice President and
General Counsel of American Medical International Inc. from 1992 until
1993 and Associate General Counsel of Baxter International Inc. from
1980 to 1992.
Robert M. Van Patten
Age 52. Senior Vice President of the Company and President of the IMC
AgriBusiness business unit. Mr. Van Patten has served as President of
the IMC AgriBusiness business unit since joining the Company in March
1996. Prior to joining the Company, Mr. Van Patten served as Executive
Vice President of The Vigoro Corporation and as President of Vigoro
Industries, Inc. (now known as IMC AgriBusiness Inc.) from June 1993 to
March 1996. Prior thereto he served as President of the Agribusiness
Division of Vigoro Industries, Inc.
Lynn F. White
Age 45. Senior Vice President, Corporate Development since October
1997. Mr. White also served as acting Chief Financial Officer of the
Company from October 1997 until February 1998; and Vice President,
Corporate Development from February 1997 until October 1997. Prior to
joining the Company, Mr. White served in a wide array of domestic and
international assignments for FMC Corporation, including General
Manager of FMC Corporation's worldwide Food Ingredients Division.
All of the Company's executive officers are elected annually, with
the terms of the officers listed above to expire in April 1998. No
"family relationships," as that term is defined in Item 401(d) of
Regulation S-K, exist among any of the listed officers.
Item 2. Properties.
Information regarding the plant and properties of the Company is
included in Part I, Item 1, "Business," of this Annual Report on Form
10-K.
Item 3. Legal Proceedings.(1)
Sterlington Litigation
- ----------------------
In early 1998, the Company entered into a Preliminary Settlement
Agreement with the plaintiffs in connection with the Louisiana class
action arising out of a May 1991 explosion at a nitroparaffins plant
located in Sterlington, Louisiana. The agreement settles all claims
that members of the class have against the Company and releases the
Company from further potential liabilities based on the claims of the
members of the class. The Preliminary Settlement Agreement must be
approved by the court at a fairness hearing. The Company also has
settled all the known claims of individuals and entities who opted out
of the Louisiana class action. Settlement of the Louisiana third-party
claims is intended to resolve the Company's known potential future
liabilities in connection with the Sterlington explosion. In addition,
the settlement is intended to protect the Company from the remaining
claims filed by ANGUS Chemical Company with respect to the Sterlington
explosion.
Potash Antitrust Litigation
- ---------------------------
The Company was a defendant, along with other Canadian and United
States potash producers, in a class action antitrust lawsuit filed in
federal court in 1993. The plaintiffs alleged a price-fixing
conspiracy among North American potash producers beginning in 1987 and
continuing until the filing of the complaint. The class action
complaint against all defendants, including the Company, was dismissed
by summary judgment in January 1997. The summary judgment dismissing
the case is currently on appeal by the plaintiffs to the United States
Court of Appeals for the Eighth Circuit. The Court of Appeals is
expected to rule during calendar 1998.
In addition, in 1993 and 1994, class action antitrust lawsuits with
allegations similar to those made in the federal case were filed
against the Company and other Canadian and United States potash
producers in state courts in Illinois and California. The Illinois
case was dismissed for failure to state a claim. In the California
case, merits discovery has been stayed and the case is currently
inactive.
FTX Merger Litigation
- ---------------------
In August 1997, five identical class action lawsuits were filed in
Chancery Court in Delaware by unitholders of PLP. Each case named the
same defendants and broadly alleged that FTX and FMRP Inc. (FMRP) had
breached fiduciary duties owed to the public unitholders of PLP. The
Company was alleged to have aided and abetted these breaches of
fiduciary duty.
In November 1997, an amended class action complaint was filed with
respect to all cases. The amended complaint named the same defendants
and raised the same broad allegations of breaches of fiduciary duty
against FTX and FMRP for allegedly favoring the interests of FTX and
FTX's common stockholders in connection with the FTX Merger. The
plaintiffs claimed specifically that, by virtue of the FTX Merger, the
public unitholders' interests in PLP's ownership of IMC-Agrico would
become even more subject to the dominant interest of the Company. The
amended complaint seeks certification as a class action and an
injunction against the proposed FTX Merger or, in the alternative,
rescissionary damages. The defendants' time to answer or otherwise
plead to the amended complaint has been extended indefinitely by
agreement.
Other
- -----
In the ordinary course of its business, the Company is involved in
routine litigation.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) A special meeting of the stockholders was held on December
22, 1997 (Special Meeting of Stockholders).
(b) Not applicable.
(c) The following matters were voted upon at the Special Meeting of
Stockholders:
1. Approval of the Issuance of Shares Pursuant to Merger
The proposal to approve and adopt the Agreement and Plan of
Merger (as defined in the Joint Proxy and Prospectus dated
November 17, 1997) dated as of August 26, 1997 between IMC and
FTX, a Delaware corporation, (including the issuance of shares
of common stock, par value $1.00 per share, of IMC
contemplated thereby) was ratified by the affirmative vote of
an aggregate of 69,785,392 shares of common stock. A total of
5,255,786 shares of common stock voted against the proposal.
Holders of 50,269 shares of common stock abstained from
voting.
2. Approval of Stock Amendment to the Restated
Certificate of Incorporation
The adoption of the amendment to the Restated Certificate of
Incorporation (as defined in the Joint Proxy and Prospectus
dated November 17, 1997) to increase to 300,000,000 the
authorized number of shares of common stock was ratified by
the affirmative vote of an aggregate of 78,796,372 shares of
common stock. A total of 3,403,507 shares of common stock
voted against adoption. Holders of 53,130 shares of common
stock abstained from voting.
3. Approval of Charter Amendment to the Restated
Certificate of Incorporation
The adoption of an amendment to the Restated Certificate of
Incorporation to increase the range of the number of directors
that may from time to time comprise the Board of Directors of
IMC to not less than five nor more than 18 was ratified by the
affirmative vote of an aggregate of 80,893,648 shares of
common stock. A total of 1,296,211 shares of common stock
voted against adoption. Holders of 63,148 shares of common
stock abstained from voting.
(d) Not applicable.
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
COMMON STOCK PRICES AND DIVIDENDS
Quarter
----------------------------------------
1997 First Second Third Fourth
- ----------------------------------------------------------------------
Dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.08
Common stock prices:
High $42.500 $39.375 $37.250 $37.625
Low 33.125 33.125 31.375 29.625
Quarter
-----------------------------------------
1996 First Second Third Fourth
- ----------------------------------------------------------------------
Dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.08
Common stock prices:
High $43.250 $39.875 $44.500 $41.000
Low 33.625 32.250 35.125 33.875
The Company's common stock is traded on the New York and Chicago
Stock Exchanges under the symbol IGL. As of February 27, 1998, the
Company had 114,048,651 shares of common
stock outstanding, excluding
10,738,520 treasury shares. Common stock prices are from the composite
tape for New York Stock Exchange issues as reported in The Wall Street
Journal. As of February 27, 1998, the number of registered holders of
common stock as reported by the Company's registrar was
12,728. However, an indeterminable number of stockholders
beneficially own shares of the Company's common stock through
investment funds and brokers. For the year ended December 31, 1997,
the Company paid cash dividends of $29.7 million.
Item 6. Selected Financial Data.
For information related to the years 1993 through 1997 contained
under the heading "Five Year Comparison," reference is made to page 74
of the Company's 1997 Annual Report to Stockholders.
Item 7. Management's Discussion and Analysis of Results of Operations
and Financial Condition.
Reference is made to "Management's Discussion and Analysis of
Results of Operations and Financial Condition" appearing on pages 28
through 41 of the Company's 1997 Annual Report to Stockholders.
Item 8. Financial Statements and Supplementary Data.
Reference is made to the Company's Consolidated Financial
Statements and Notes thereto appearing on pages 44 through 71 of the
Company's 1997 Annual Report to Stockholders, together with the report
thereon of Ernst & Young LLP dated January 26, 1998, appearing on page
43 of such Annual Report and the information contained under the
heading "Quarterly Results (unaudited)" appearing on pages 72 and 73 of
such Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable.
PART III.
Item 10. Directors and Executive Officers of the Registrant.
The information contained under the headings "The Annual Meeting--
Election of Directors" and "Beneficial Ownership of Common Stock--
Section 16(a) Beneficial Ownership Reporting Compliance" included in
the Company's definitive Proxy Statement for the 1998 Annual Meeting of
Stockholders and the information contained under the heading "Executive
Officers of the Registrant" in Part I, Item 1 hereof is incorporated
herein by reference.
Item 11. Executive Compensation.
The information under the heading "Executive Compensation" included
in the Company's definitive Proxy Statement for the 1998 Annual Meeting
of Stockholders is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information under the heading "Beneficial Ownership of Common
Stock" included in the Company's definitive Proxy Statement for the
1998 Annual Meeting of Stockholders is incorporated herein by
reference. The Company knows of no contractual arrangements which may,
at a subsequent date, result in a change in control of the Company.
Item 13. Certain Relationships and Related Transactions.
The information under the headings "Executive Compensation" and
"Transactions with Principal Stockholders, Directors and Executive
Officers" included in the Company's definitive Proxy Statement for the
1998 Annual Meeting of Stockholders is incorporated herein by
reference.
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-
K.
(a)(1) Consolidated financial statements filed as part of this
report are listed under Part II, Item 8 of this Annual Report
on Form 10-K.
(a)(2) All schedules for which provision is made in the
applicable accounting regulations of the Securities
and Exchange Commission are not required under the
related instructions or are inapplicable, and
therefore have been omitted.
(a)(3) The exhibits listed in the following index have previously
been filed with the Securities and Exchange Commission or are
being filed as part of this report.
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
3.1 Restated Certificate of Company's Report on
Incorporation, as amended Form 8-K dated
November 1, 1994
3.2 Certificate of Amendment to Exhibit 3.2 to the
Restated Certificate of 1997 Annual Report
Incorporation, dated October on Form 10-K
20, 1994
3.3 Certificate of Amendment to Exhibit 3.2 to the
Restated Certificate of Company's
Incorporation, dated October Registration
23, 1995 Statement on Form 8-
A/A-1 dated January
12, 1996
3.4 Certificate of Amendment to Exhibit 3.4 to the
Restated Certificate of 1997 Annual Report
Incorporation, dated March on Form 10-K
1, 1996
3.5 Certificate of Amendment to Certificate of X
Restated Certificate of Merger
IncorporationMerger dated
December 22, 1997
3.6 Amended and Restated By-Laws X
3.7 Rights Agreement dated June Company's Report on
21, 1989, amended as of Form 8-A/A dated
August 17, 1995, with The September 7, 1995.
First National Bank of
Chicago (including the
Shareholder Rights Plan).
4.1 Indenture, dated as of July Exhibit 4.1 to the
17, 1997, between IMC Global Company's Report on
Inc. and The Bank of New Form 8-K dated July
York, relating to the 23, 1997
issuance of 6.875% Senior
Debentures due July 15,
2007, 7.30% Senior
Debentures due January 15,
20208, and 6.55 % Senior
Notes due
January 15, 2005
10.1 Agreement dated June 27, Exhibit 10.6 to the
1985, supplementing, Company's
amending and continuing Registration
Potash Resource Payment Statement on Form S-
Agreement dated October 15, 1, (Amendment No.
1979, between Mallinckrodt 2),
and the Province of (No. 33-22914)
Saskatchewan
10.2 Mining and Processing Exhibit 10.7 to the
Agreement dated January 31, Company's
1978, between Potash Registration
Corporation of Saskatchewan Statement on Form S-
Inc. and International 1, (No. 33-17091)
Minerals & Chemical (Canada)
Global Limited
10.3 * Management Incentive Exhibit 10.17 to
Compensation Program, as the Company's
amended through July 1, 1996 Registration
Statement on Form S-
1, (No. 33-17091)
10.4 * Amendment to Management Exhibit 10.6 to the
Incentive Compensation 1997 Annual Report
Program on Form 10-K
10.5 * 1996 Long-Term Performance Exhibit 10.77 to
Incentive Plan the Company's
September 30, 1996
Form 10-Q
10.6 * 1988 Stock Option & Award Exhibit 10.8 to the
Plan, as amended and 1997 Annual Report
restated on Form 10-K
10.7 * 1994 Stock Option Plan for Exhibit 4(a) to the
Non-Employee Directors Company's
Registration
Statement on Form S-
8, (No. 33-56911)
10.8 * Retirement Plan for Salaried Exhibit 10.9 to the
Employees, as amended 1995 Annual Report
through November 1, 1994, on Form 10-K
and as currently in effect
10.9 * Supplemental Benefit Plan Exhibit 10.12 to
the Company's
Registration
Statement on Form S-
1, (No. 33-17091)
10.10* Supplemental Executive Exhibit 10.7 to the
Retirement Plan, as amended Company's
through June 30, 1992, and Registration
as currently in effect Statement on Form S-
1, (No. 33-17091)
10.11* Investment Plan for Salaried Exhibit 10.12 to
Employees, as amended the 1995 Annual
through July 1, 1994, and as Report on Form 10-K
currently in effect
10.12* Management Compensation and Exhibit 10.14 to
Benefit Assurance Program, the 1996 Annual
as amended through Report on Form 10-K
August 17, 1995
10.13* Form of Trust Agreement with Exhibit 10.33 to
Wachovia Bank & Trust Co., the 1992 Annual
N.A., as amended through Report on Form 10-K
August 15, 1991
10.14* Form of Contingent Exhibit 10.18 to
Employment Agreement dated the 1995 Annual
September 1, 1995, with Report on Form 10-K
Officers of Corporation
10.15* Form of "Gross Up" Exhibit 10.20 to
Agreement dated September 1, the 1995 Annual
1995, with Officers of Report on Form 10-K
Corporation, as amended
10.16* Directors' Retirement Exhibit 10.54 to
Service Plan Effective July the 1992 Annual
1, 1989 Report on Form 10-K
10.17* Amendment Number 2 to Exhibit 10.44 to
Investment Plan for Salaried the Company's
Employees effective March 1, Registration
1988 and restated effective Statement on Form S-
January 1, 1992 4, (No. 33-49795)
10.18* First Amendment, dated July Exhibit 10.45 to
2, 1991, to form of the Company's
Contingent Employment Registration
Agreement with Officers of Statement on Form S-
Corporation 4, (No. 33-49795)
10.19* Amendment, dated July 2, Exhibit 10.46 to
1991, to Form of "Gross Up" the Company's
Agreement with Officers of Registration
Corporation Statement on Form S-
4, (No. 33-49795)
10.20* Consulting Agreement, dated Exhibit 10.48 to
July 19, 1993, between the Company's
Wendell F. Bueche and IMC Registration
Global Inc. Statement on Form S-
4, (No. 33-49795)
10.21* Amendment and Extension Exhibit 10.49 to
Agreement, dated as of June the 1995 Annual
15, 1995, to Employment Report on Form 10-K
Agreement dated as of April
15, 1993 and Consulting
Agreement dated as of July
19, 1993, between Wendell F.
Bueche and IMC Global Inc.
10.22* Non-competition Agreement Exhibit 10.71 to
dated as of March 1, 1996 the 1996 Annual
between IMC Global Inc., IMC Report on Form 10-K
Global Operations Inc. and
C. Steven Hoffman
10.23* Non-competition Agreement Exhibit 10.72 to
dated as of February 29, the 1996 Annual
1996 between IMC Global Inc. Report on Form 10-K
and Robert E. Fowler, Jr.
10.24* Non-competition Agreement Exhibit 10.26 to X
dated as of March 1, 1996 the 1997 Annual
between IMC Global Inc. and Report on Form 10-K
John U. Huber
10.25* Non-competition Agreement Exhibit 10.27 to X
dated as of March 1, 1996 the 1997 Annual
between IMC Global Inc. and Report on Form 10-K
Robert M. Van Patten
10.26* Transition Bonus Agreement Exhibit 10.73 to
dated as of March 1, 1996 the 1996 Annual
between IMC Global Inc., IMC Report on Form 10-K
Global Operations Inc. and
Marschall I. Smith
10.27* The Vigoro Corporation Exhibit 10.74 to
Severance Plan, as amended the 1996 Annual
Report on Form 10-K
10.28* The IMC Global Inc. Exhibit 10.75 to
Severance Plan the 1996 Annual
Report on Form 10-K
10.29 Suspension Agreement Exhibit 10.17 to
concerning Potassium the Company's
Chloride from Canada among Registration
the U.S. Department of Statement on Form S-
Commerce and the signatory 1, (No. 33-17091)
purchasers/exporters of
potassium chloride from
Canada dated January 7, 1988
10.30 Settlement Agreement dated Exhibit 10.18 to
as of November 3, 1987, by the Company's
and among the Board of Registration
Trustees of the Internal Statement on Form S-
Improvement Trust Fund of 1, (No. 33-17091)
the State of Florida, the
Department of Natural
Resources of the State of
Florida and Mallinckrodt
10.31 Sulphur Joint Operating Exhibit 10.40 to
Agreement dated as of May 1, the 1990 Annual
1988, among Freeport-McMoRan Report on Form 10-K
Resource Partners, IMC
Global Operations Inc. and
Felmont Oil Corporation
10.32 Oil/Gas Operating Agreement Exhibit 10.41 to
dated as of June 5, 1990, the 1990 Annual
among Freeport-McMoRan Report on Form 10-K
Resource Partners, IMC
Global Operations Inc. and
Felmont Oil Corporation
10.33 Agreement in Principle dated Exhibit 10.43 to
September 7, 1990, with the 1990 Annual
Mallinckrodt Report on Form 10-K
10.34 Agreement dated as of Exhibit 10.44 to
September 12, 1990, with the 1990 Annual
Mallinckrodt Report on Form 10-K
10.35 Memorandum of Agreement as Exhibit 10.51 to
of December 21, 1990, the 1991 Annual
amending Mining and Report on Form 10-K
Processing Agreement of
January 31, 1978, between
Potash Corporation of
Saskatchewan Inc. and
International Minerals &
Chemical (Canada) Global
Limited
10.36 Division of Proceeds Exhibit 10.52 to
Agreement dated December 21, the 1991 Annual
1990, between Potash Report on Form 10-K
Corporation of Saskatchewan
Inc. and International
Minerals & Chemical (Canada)
Global Limited
10.37 Contribution Agreement dated Exhibit 10.55 to
April 5, 1993 between the Company's March
Freeport-McMoRan Resource 31, 1993 Form 10-
Partners, Limited Q/A (Amendment No.
Partnership and IMC Global 1) filed on May 19,
Operations Inc. 1993
10.38 Form of Partnership Exhibit 10.29 to
Agreement, dated as of July the 1995 Annual
1, 1993, as further amended Report on Form 10-K
and restated as of May 26,
1995, between IMC-Agrico GP
Company, Agrico Limited
Partnership and IMC-Agrico
MP Inc., including
definitions
10.39 Form of Parent Agreement, Exhibit 10.30 to
dated as of July 1, 1993, as the 1995 Annual
further amended and restated Report on Form 10-K
as of May 26, 1995, between
IMC Global Operations Inc.,
Freeport-McMoRan Resource
Partners, Limited
Partnership, Freeport-
McMoRan Inc. and IMC-Agrico
Company
10.40 Amendment, Waiver and Exhibit 10.31 to
Consent, dated May 26, 1995, the 1995 Annual
among IMC Global Inc.; IMC Report on Form 10-K
Global Operations Inc.; IMC-
Agrico GP Company; IMC-
Agrico MP, Inc.; IMC-Agrico
Company; Freeport-McMoRan
Inc.; Freeport-McMoRan
Resource Partners, Limited
Partnership; and Agrico,
Limited Partnership
10.41 Agreement and Plan of Exhibit 10.32 to
Complete Liquidation and the 1995 Annual
Dissolution, dated May 26, Report on Form 10-K
1995, among IMC Global
Operations Inc., IMC-Agrico
GP Company, and IMC-Agrico
MP, Inc.
10.42 Sterlington Settlement Exhibit 10.58 to
Agreement between IMC Global the Company's March
Inc., ANGUS Chemical Company 31, 1993 Form 10-
and Industrial Risk Insurers Q/A (Amendment No.
dated April 1, 1993 1) filed on May 19,
1993
10.43 First Amendment to Exhibit 10.59 to
Contribution Agreement, the Company's
dated as of July 1, 1993, Report on Form 8-K
between Freeport-McMoRan dated July 16, 1993
Resource Partners, Limited
Partnership and IMC Global
Operations Inc.
10.44 Loan Agreement, dated as of Exhibit 10.64 to
December 1, 1991, between the Company's
IMC Global Operations Inc. Registration
and the Polk County Statement on Form S-
Industrial Development 4, (No. 33-49795)
Authority (Florida)
10.45 Amended and Restated Exhibit 10.65 to
Unconditional Guaranty, the Company's
dated as of December 1, 1991 Registration
of IMC Global Inc. with Statement on Form S-
respect to Polk County 4, (No. 33-49795)
Industrial Development
Authority (Florida)
Industrial Development
Revenue Bonds (IMC Global
Operations Inc. Project)
1991 Tax-Exempt Series A and
1992 Tax-Exempt Series A
10.46 Supplemental Loan Agreement, Exhibit 10.66 to
dated as of January 1, 1992, the Company's
between IMC Global Registration
Operations Inc. and the Polk Statement on Form S-
County Industrial 4, (No. 33-49795)
Development Authority
(Florida)
10.47 Second Supplemental Loan Exhibit 10.67 to
Agreement, dated as of June the Company's
30, 1993, between IMC Global Registration
Operations Inc. and the Polk Statement on Form S-
County Industrial 4, (No. 33-49795)
Development Authority
(Florida)
10.48 Amendment to Guaranty, dated Exhibit 10.68 to
June 30, 1993, with respect the Company's
to Polk County Industrial Registration
Development Authority Statement on Form S-
(Florida) Industrial 4, (No. 33-49795)
Development Revenue Bonds
(IMC Global Operations Inc.
Project) 1991 Tax-Exempt
Series A and 1992 Tax-Exempt
Series A
10.49 Indenture of Trust, dated as Exhibit 10.69 to
of December 1, 1991, between the Company's
Polk County Industrial Registration
Development Authority (the Statement on Form S-
"Authority") and The Bank of 4, (No. 33-49795)
New York, as Trustee (the
"IRB Trustee") relating to
the Industrial Development
Revenue Bonds (IMC Global
Operations Inc. Project)
1991 Tax-Exempt Series A
(the "Series 1991 Bonds")
10.50 Supplemental Indenture of Exhibit 10.70 to
Trust, dated as of January the Company's
1, 1992, between the Registration
Authority and the IRB Statement on Form S-
Trustee, relating to the 4, (No. 33-49795)
Industrial Development
Revenue Bonds (IMC Global
Operations Inc. Project)
1992 Tax-Exempt Series A
(the "Series 1992 Bonds")
10.51 Second Supplemental Exhibit 10.71 to
Indenture of Trust, dated as the Company's
of June 30, 1993, between Registration
the Authority and the IRB Statement on Form S-
Trustee, relating to the 4, (No. 33-49795)
Series 1991 Bonds and the
Series 1992 Bonds
10.52 Agreement Under the Parent Exhibit 10.63 to
Agreement, dated as of the Company's
January 23, 1996, among IMC December 31, 1995
Global Inc.; IMC Global Form 10-Q
Operations Inc.; Freeport-
McMoRan Resource Partners,
Limited Partnership;
Freeport-McMoRan Inc.; and
IMC-Agrico Company, a
Delaware general partnership
10.53 Amendment and Agreement Exhibit 10.64 to
Under the Partnership the Company's
Agreement, dated as of December 31, 1995
January 23, 1996, by and Form 10-Q
among IMC-Agrico GP Company;
Agrico, Limited Partnership;
IMC-Agrico MP, Inc.; IMC
Global Operations Inc. and
IMC-Agrico Company
10.54 Second Amended and Restated Exhibit 10.67 to X
Related Party Guaranty, the 1997 Annual
dated as of February 28, Report on Form 10-K
1996 by IMC Global Inc. and
The Vigoro Corporation, a
Delaware corporation, in
favor of The Prudential
Insurance Company of America
10.55 Five-Year Credit Agreement, Exhibit 10.1 to the
dated as of December 15, Company's Report on
1997 among IMC Global Inc., Form 8-K dated
a Delaware corporation, as December 22, 1997
borrower, the financial
institutions parties
thereto, Morgan Guaranty
Trust Company of New York,
as Administrative Agent,
Royal Bank of Canada, as
Documentation Agent, The
Chase Manhattan Bank and
NationsBank, N.A., as Co-
Syndication Agents, J.P.
Morgan Securities Inc., as
Arranger, and NationsBanc
Montgomery Securities, Inc.
and Royal Bank of Canada, as
Co-Arrangers
10.56 364-Day Credit Agreement, Exhibit 10.2 to the
dated as of December 15, Company's Report on
1997 among IMC Global Inc., Form 8-K dated
a Delaware corporation, as December 22, 1997
borrower, the financial
institutions parties
thereto, Morgan Guaranty
Trust Company of New York,
as Administrative Agent,
Royal Bank of Canada as
Documentation Agent, The
Chase Manhattan Bank and
NationsBank, N.A., as Co-
Syndication Agents, J.P.
Morgan Securities Inc., as
Arranger, and NationsBanc
Montgomery Securities, Inc.
and Royal Bank of Canada, as
Co-Arrangers
10.57 Five-Year Credit Agreement, X
dated as of December 22,
1997 among International
Minerals & Chemical (Canada)
Global Limited and IMC
Kalium Canada Ltd., as
borrowers, the Company, and
Royal Bank of Canada, as
Agent
10.58 Transfer and Administration Exhibit 10.72 to X
Agreement, dated as of June the 1997 Annual
27, 1997, among IMC-Agrico Report on Form 10-K
Receivables Company L.L.C.,
IMC-Agrico Company and
Enterprise Funding
Corporation, a Delaware
corporation
10.59 Receivables Purchase Exhibit 10.73 to X
Agreement between IMC-Agrico the 1997 Annual
Company as Seller and Report on Form 10-K
IMC-Agrico Receivables
Company L.L.C. as Purchaser,
dated as of June 27, 1997
10.60 Amendment Number 1 to X
Transfer and Administration
Agreement and Receivables
Purchase Agreement among
IMC-Agrico Receivables
Company L.L.C., IMC-Agrico
Company and Enterprise
Funding Corporation, a
Delaware corporation
10.61 Registration Rights Exhibit 99.6 to the
Agreement dated as of March Company's March
1, 1996 among IMC Global 31,1996 Form 10-Q
Inc. and certain former
stockholders of The Vigoro
Corporation
10.62* Employment Agreement dated X
as of January 29, 1998
between the Company and
Robert E. Fowler, Jr.
12 Ratio of Earnings to Fixed X
Charges
13 The portions of the X
Company's 1997 Annual Report
to Stockholders which are
specifically incorporated by
reference.
21.1 Subsidiaries of the X
Registrant
23.1 Consent of Ernst & Young LLP X
24 Power of Attorney X
27.1 Financial Data Schedule X
* Denotes management contract or compensatory plan.
(b) REPORTS ON FORM 8-K
During the fourth quarter and through the date of this filing,
the following reports were filed:
A report under Item 5 Dated December 8, 1997
A report under Item 5 Dated December 12, 1997
A report under Items 2, 5 and 7 Dated December 22, 1997
A report under Items 5 and 7 Dated January 14, 1998
(c) EXHIBITS
See exhibit index listed at Item 14(a)(3) hereof.
(d) Financial statements and schedules and summarized financial
information of 50 percent or less owned persons are omitted as none of
such persons are individually or in the aggregate significant under the
tests specified in Regulation S-X under Article 3.09 of general
instructions to the financial statements.
SIGNATURES
Pursuant to the requirements of 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
IMC GLOBAL INC.
(Registrant)
/s/ Robert E. Fowler, Jr.
------------------------------
Robert E. Fowler, Jr.
Chief Executive Officer and
President
Date: March 11, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
Signature Title Date
- ----------------------------------------------------------------------
/s/ Robert E. Fowler, Jr. Chief Executive Officer March 11, 1998
Robert E. Fowler, Jr. (principal executive
officer), President
(principal operating
officer) and Director
/s/ J. Bradford James Senior Vice President March 11, 1998
- ------------------------ and Chief Financial
J. Bradford James Officer (principal
financial officer)
/s/ Anne M. Scavone Vice President and March 11, 1998
- ------------------------ Controller (principal
Anne M. Scavone accounting officer)
* Chairman and Director March 11, 1998
- ------------------------
Wendell F. Bueche
* Director March 11, 1998
- ------------------------
Raymond F. Bentele
* Director March 11, 1998
- ------------------------
Robert W. Bruce III
* Director March 11, 1998
- ------------------------
Rod F. Dammeyer
* Director March 11, 1998
- ------------------------
James M. Davidson
* Director March 11, 1998
- ------------------------
Rene' L. Latiolais
* Director March 11, 1998
- ------------------------
Harold H. MacKay
* Director March 11, 1998
- ------------------------
David B. Mathis
* Director March 11, 1998
- ------------------------
Donald F. Mazankowski
* Director March 11, 1998
- ------------------------
James R. Moffett
* Director March 11, 1998
- ------------------------
Thomas H. Roberts, Jr.
* Director March 11, 1998
- ------------------------
Joseph P. Sullivan
* Director March 11, 1998
- ------------------------
Richard L. Thomas
* Director March 11, 1998
- ------------------------
Billie B. Turner
* By: /s/ Marschall I. Smith
----------------------
Marschall I. Smith
Attorney-in-fact
- ---------------------------------------------------------------------
(1) Except for statements of historical fact contained herein, the
statements appearing under Part I, Item 1, "Business;" Part I, Item 3,
"Legal Proceedings;" and Part II, Item 7, "Management's Discussion and
Analysis of Results of Operations and Financial Condition," presented
herein 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: the effect of general business and
economic conditions; conditions in and policies of the agriculture
industry; risks associated with investments and operations in foreign
jurisdictions and any future international expansion, including those
related to economic, political and regulatory policies of local
governments and laws or policies of the United States and Canada;
changes in governmental laws and regulations affecting environmental
compliance, taxes and other matters impacting the Company; the risks
attendant with mining operations; the potential impacts of increased
competition in the markets the Company operates within; risks attendant
with supply of and demand for oil and gas; the Company's ability to
integrate certain acquired businesses and realize certain expected
acquisition-related synergies and the risk factors reported from time
to time in the reports filed by the Company with the SEC.