þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-1026454 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Table of Contents | ||||
PART I. | FINANCIAL INFORMATION | |||
Item 1. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
PART II. | OTHER INFORMATION | |||
Item 1. | ||||
Item 2. | ||||
Item 4. | ||||
Item 6. | ||||
Three months ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net sales | $ | 1,674.0 | $ | 2,139.1 | |||
Cost of goods sold | 1,437.3 | 1,719.9 | |||||
Gross margin | 236.7 | 419.2 | |||||
Selling, general and administrative expenses | 89.8 | 100.4 | |||||
Other operating (income) expense | (16.5 | ) | 0.3 | ||||
Operating earnings | 163.4 | 318.5 | |||||
Interest expense, net | (26.1 | ) | (31.3 | ) | |||
Foreign currency transaction gain | 87.8 | 45.1 | |||||
Other income (expense) | 0.6 | (5.6 | ) | ||||
Earnings from consolidated companies before income taxes | 225.7 | 326.7 | |||||
(Benefit from) provision for income taxes | (28.7 | ) | 30.7 | ||||
Earnings from consolidated companies | 254.4 | 296.0 | |||||
Equity in net earnings (loss) of nonconsolidated companies | 2.5 | (1.4 | ) | ||||
Net earnings including noncontrolling interests | 256.9 | 294.6 | |||||
Less: Net earnings (loss) attributable to noncontrolling interests | 0.1 | (0.2 | ) | ||||
Net earnings attributable to Mosaic | $ | 256.8 | $ | 294.8 | |||
Basic net earnings per share attributable to Mosaic | $ | 0.73 | $ | 0.81 | |||
Basic weighted average number of shares outstanding | 351.3 | 366.0 | |||||
Diluted net earnings per share attributable to Mosaic | $ | 0.73 | $ | 0.80 | |||
Diluted weighted average number of shares outstanding | 353.2 | 367.9 |
Three months ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net earnings including noncontrolling interest | $ | 256.9 | $ | 294.6 | |||
Other comprehensive income (loss), net of tax | |||||||
Foreign currency translation, net of tax | 266.0 | (616.1 | ) | ||||
Net actuarial gain and prior service cost, net of tax | 1.6 | 3.3 | |||||
Amortization of loss on interest rate swap, net of tax | 0.8 | 0.7 | |||||
Other comprehensive income (loss) | 268.4 | (612.1 | ) | ||||
Comprehensive income (loss) | 525.3 | (317.5 | ) | ||||
Less: Comprehensive income (loss) attributable to noncontrolling interest | 1.2 | (2.8 | ) | ||||
Comprehensive income (loss) attributable to Mosaic | $ | 524.1 | $ | (314.7 | ) |
March 31, 2016 | December 31, 2015 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,057.7 | $ | 1,276.3 | ||||
Receivables, net | 677.2 | 675.0 | ||||||
Inventories | 1,566.0 | 1,563.5 | ||||||
Other current assets | 656.2 | 628.6 | ||||||
Total current assets | 3,957.1 | 4,143.4 | ||||||
Property, plant and equipment, net of accumulated depreciation of $5,326.2 million and $4,633.4 million, respectively | 9,020.4 | 8,721.0 | ||||||
Investments in nonconsolidated companies | 973.7 | 980.5 | ||||||
Goodwill | 1,661.1 | 1,595.3 | ||||||
Deferred income taxes | 697.6 | 691.9 | ||||||
Other assets | 1,317.2 | 1,257.4 | ||||||
Total assets | $ | 17,627.1 | $ | 17,389.5 | ||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Short-term debt | $ | 41.8 | $ | 25.5 | ||||
Current maturities of long-term debt | 42.0 | 41.7 | ||||||
Structured accounts payable arrangements | 354.2 | 481.7 | ||||||
Accounts payable | 517.7 | 520.6 | ||||||
Accrued liabilities | 858.6 | 977.5 | ||||||
Total current liabilities | 1,814.3 | 2,047.0 | ||||||
Long-term debt, less current maturities | 3,774.0 | 3,769.5 | ||||||
Deferred income taxes | 1,065.9 | 977.4 | ||||||
Other noncurrent liabilities | 941.9 | 1,030.6 | ||||||
Equity: | ||||||||
Preferred Stock, $0.01 par value, 15,000,000 shares authorized, none issued and outstanding as of March 31, 2016 and December 31, 2015 | — | — | ||||||
Class A Common Stock, $0.01 par value, 177,027,941 shares authorized, none issued and outstanding as of March 31, 2016, 194,203,987 shares authorized, none issued and outstanding as of December 31, 2015 | — | — | ||||||
Class B Common Stock, $0.01 par value, 87,008,602 shares authorized, none issued and outstanding as of March 31, 2016 and December 31, 2015 | — | — | ||||||
Common Stock, $0.01 par value, 1,000,000,000 shares authorized, 387,746,426 shares issued and 349,797,577 shares outstanding as of March 31, 2016, 387,697,547 shares issued and 352,515,256 shares outstanding as of December 31, 2015 | 3.5 | 3.5 | ||||||
Capital in excess of par value | 12.8 | 6.4 | ||||||
Retained earnings | 11,206.1 | 11,014.8 | ||||||
Accumulated other comprehensive income (loss) | (1,225.6 | ) | (1,492.9 | ) | ||||
Total Mosaic stockholders' equity | 9,996.8 | 9,531.8 | ||||||
Noncontrolling interests | 34.2 | 33.2 | ||||||
Total equity | 10,031.0 | 9,565.0 | ||||||
Total liabilities and equity | $ | 17,627.1 | $ | 17,389.5 |
Three months ended | ||||||||
March 31, 2016 | March 31, 2015 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net earnings including noncontrolling interests | $ | 256.9 | $ | 294.6 | ||||
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: | ||||||||
Depreciation, depletion and amortization | 183.7 | 182.8 | ||||||
Deferred and other income taxes | (53.4 | ) | (31.5 | ) | ||||
Equity in net earnings of nonconsolidated companies, net of dividends | 7.6 | 1.4 | ||||||
Accretion expense for asset retirement obligations | 9.4 | 7.8 | ||||||
Share-based compensation expense | 16.9 | 4.6 | ||||||
Unrealized (gain) loss on derivatives | (54.2 | ) | 45.4 | |||||
Other | 6.6 | 4.1 | ||||||
Changes in assets and liabilities, excluding effects of acquisition: | ||||||||
Receivables, net | 17.1 | 8.0 | ||||||
Inventories | 34.3 | 108.5 | ||||||
Other current and noncurrent assets | (22.0 | ) | (36.5 | ) | ||||
Accounts payable and accrued liabilities | (137.7 | ) | 157.4 | |||||
Other noncurrent liabilities | 0.7 | (17.7 | ) | |||||
Net cash provided by operating activities | 265.9 | 728.9 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (235.6 | ) | (229.5 | ) | ||||
Proceeds from adjustment to acquisition of business | — | 47.9 | ||||||
Investments in nonconsolidated companies | — | (3.0 | ) | |||||
Investments in affiliate | (38.5 | ) | — | |||||
Other | 0.2 | 1.7 | ||||||
Net cash used in investing activities | (273.9 | ) | (182.9 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Payments of short-term debt | (74.1 | ) | (32.7 | ) | ||||
Proceeds from issuance of short-term debt | 90.2 | 29.4 | ||||||
Payments of structured accounts payable arrangements | (224.3 | ) | (146.6 | ) | ||||
Proceeds from structured accounts payable arrangements | 95.8 | 73.2 | ||||||
Payments of long-term debt | (1.2 | ) | (0.6 | ) | ||||
Proceeds from settlement of swaps | 4.2 | — | ||||||
Proceeds from stock option exercises | 0.8 | 2.9 | ||||||
Repurchases of stock | (75.0 | ) | (134.4 | ) | ||||
Cash dividends paid | (96.2 | ) | (91.4 | ) | ||||
Other | (0.2 | ) | (0.2 | ) | ||||
Net cash used in financing activities | (280.0 | ) | (300.4 | ) | ||||
Effect of exchange rate changes on cash | 69.4 | (102.8 | ) | |||||
Net change in cash and cash equivalents | (218.6 | ) | 142.8 | |||||
Cash and cash equivalents - December 31 | 1,276.3 | 2,374.6 | ||||||
Cash and cash equivalents - March 31 | $ | 1,057.7 | $ | 2,517.4 |
Supplemental Disclosure of Cash Flow Information: | |||||||
Cash paid during the period for: | |||||||
Interest (net of amount capitalized of $9.1 and $7.7 for the three months ended March 31, 2016 and 2015, respectively) | $ | 3.3 | $ | 4.4 | |||
Income taxes (net of refunds) | 6.9 | 46.4 |
Mosaic Shareholders | ||||||||||||||||||||||||||
Shares | Dollars | |||||||||||||||||||||||||
Capital in Excess of Par Value | Accumulated Other Comprehensive Income | |||||||||||||||||||||||||
Common Stock | Common Stock | Retained Earnings | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||
Balance as of December 31, 2014 | 367.5 | $ | 3.7 | $ | 4.2 | $ | 11,168.9 | $ | (473.7 | ) | $ | 17.5 | $ | 10,720.6 | ||||||||||||
Total comprehensive income (loss) | — | — | — | 1,000.4 | (1,019.2 | ) | (3.5 | ) | (22.3 | ) | ||||||||||||||||
Stock option exercises | 0.6 | — | 5.3 | — | — | — | 5.3 | |||||||||||||||||||
Stock based compensation | — | — | 27.9 | — | — | — | 27.9 | |||||||||||||||||||
Repurchase of stock | (15.6 | ) | (0.2 | ) | (30.2 | ) | (667.9 | ) | — | — | (698.3 | ) | ||||||||||||||
Dividends ($1.075 per share) | — | — | — | (486.6 | ) | — | — | (486.6 | ) | |||||||||||||||||
Dividends for noncontrolling interests | — | — | — | — | — | (0.8 | ) | (0.8 | ) | |||||||||||||||||
Equity from noncontrolling interests | — | — | — | — | — | 20.0 | 20.0 | |||||||||||||||||||
Tax shortfall related to share based compensation | — | — | (0.8 | ) | — | — | — | (0.8 | ) | |||||||||||||||||
Balance as of December 31, 2015 | 352.5 | $ | 3.5 | $ | 6.4 | $ | 11,014.8 | $ | (1,492.9 | ) | $ | 33.2 | $ | 9,565.0 | ||||||||||||
Total comprehensive income (loss) | — | — | — | 256.8 | 267.3 | 1.2 | 525.3 | |||||||||||||||||||
Stock option exercises | 0.1 | — | 0.8 | — | — | — | 0.8 | |||||||||||||||||||
Amortization of stock based compensation | — | — | 15.1 | — | — | — | 15.1 | |||||||||||||||||||
Repurchases of stock | (2.8 | ) | — | (9.5 | ) | (65.5 | ) | — | — | (75.0 | ) | |||||||||||||||
Dividends for noncontrolling interests | — | — | — | — | — | (0.2 | ) | (0.2 | ) | |||||||||||||||||
Balance as of March 31, 2016 | 349.8 | $ | 3.5 | $ | 12.8 | $ | 11,206.1 | $ | (1,225.6 | ) | $ | 34.2 | $ | 10,031.0 |
• | Our Phosphates business segment owns and operates mines and production facilities in Florida which produce concentrated phosphate crop nutrients and phosphate-based animal feed ingredients, and processing plants in Louisiana which produce concentrated phosphate crop nutrients. Included in the Phosphates segment is our 35% economic interest in a joint venture that owns the Miski Mayo Phosphate Mine in Peru and our 25% interest in the Ma'aden Wa'ad Al Shamal Phosphate Company (the "MWSPC") to develop, own and operate integrated phosphate production facilities in the Kingdom of Saudi Arabia. Once operational, we will market approximately 25% of the MWSPC production. |
• | Our Potash business segment owns and operates potash mines and production facilities in Canada and the U.S. which produce potash-based crop nutrients, animal feed ingredients and industrial products. Potash sales include domestic and international sales. We are a member of Canpotex, Limited ("Canpotex"), an export association of Canadian potash producers through which we sell our Canadian potash outside the U.S. and Canada. |
• | Our International Distribution business segment consists of sales offices, crop nutrient blending and bagging facilities, port terminals and warehouses in several key non-U.S. countries, including Brazil, Paraguay, India and China. Our International Distribution segment serves as a distribution outlet for our Phosphates and Potash segments, but also purchases and markets products from other suppliers. |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
March 31, 2016 | December 31, 2015 | |||||||
Other current assets | ||||||||
Final price deferred(a) | $ | 153.7 | $ | 175.6 | ||||
Income and other taxes receivable | 245.5 | 249.4 | ||||||
Prepaid expenses | 149.3 | 123.1 | ||||||
Other | 107.7 | 80.5 | ||||||
$ | 656.2 | $ | 628.6 | |||||
Other assets | ||||||||
MRO inventory | 122.1 | 118.1 | ||||||
Restricted cash(b) | 851.9 | 851.4 | ||||||
Other | 343.2 | 287.9 | ||||||
$ | 1,317.2 | $ | 1,257.4 | |||||
Accrued liabilities | ||||||||
Non-income taxes | $ | 24.9 | $ | 24.9 | ||||
Payroll and employee benefits | 118.2 | 162.9 | ||||||
Asset retirement obligations | 103.1 | 91.9 | ||||||
Customer prepayments | 222.1 | 121.2 | ||||||
Future capital commitment(c) | 120.0 | 120.0 | ||||||
Other | 270.3 | 456.6 | ||||||
$ | 858.6 | $ | 977.5 | |||||
Other noncurrent liabilities | ||||||||
Asset retirement obligations | $ | 735.6 | $ | 749.7 | ||||
Accrued pension and postretirement benefits | 69.0 | 69.6 | ||||||
Unrecognized tax benefits | 8.3 | 79.2 | ||||||
Other | 129.0 | 132.1 | ||||||
$ | 941.9 | $ | 1,030.6 |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
Three months ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net earnings attributable to Mosaic | $ | 256.8 | $ | 294.8 | |||
Basic weighted average number of shares outstanding | 351.3 | 366.0 | |||||
Dilutive impact of share-based awards | 1.9 | 1.9 | |||||
Diluted weighted average number of shares outstanding | 353.2 | 367.9 | |||||
Basic net earnings per share attributable to Mosaic | $ | 0.73 | $ | 0.81 | |||
Diluted net earnings per share attributable to Mosaic | $ | 0.73 | $ | 0.80 |
March 31, 2016 | December 31, 2015 | |||||||
Raw materials | $ | 55.7 | $ | 68.1 | ||||
Work in process | 422.4 | 435.9 | ||||||
Finished goods | 1,018.0 | 991.0 | ||||||
Operating materials and supplies | 69.9 | 68.5 | ||||||
$ | 1,566.0 | $ | 1,563.5 |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
Phosphates | Potash | International Distribution | Total | ||||||||||||
Balance as of December 31, 2015 | $ | 492.4 | $ | 984.7 | $ | 118.2 | $ | 1,595.3 | |||||||
Foreign currency translation | — | 62.5 | 3.3 | 65.8 | |||||||||||
Balance as of March 31, 2016 | $ | 492.4 | $ | 1,047.2 | $ | 121.5 | $ | 1,661.1 |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
• | Payment of a cash penalty of approximately $8 million, in the aggregate. |
• | Payment of up to $2.2 million to fund specific environmental projects unrelated to our facilities. |
• | Modification of certain operating practices and undertaking certain capital improvement projects over a period of several years that are expected to result in capital expenditures likely to exceed $200 million in the aggregate. |
• | Provision of additional financial assurance for the estimated costs of closure and long term care ("Gypstack Closure Costs") of our phosphogypsum management systems ("Gypstacks"). For financial reporting purposes, we recognize our estimated asset retirement obligations ("ARO"), including Gypstack Closure Costs, at their present value. This present value determined for financial reporting purposes is reflected on our Consolidated Balance Sheets in accrued liabilities and other noncurrent liabilities. As of December 31, 2015, the undiscounted amount of our Gypstack Closure Costs ARO, determined using the assumptions used for financial reporting purposes, was approximately $1.7 billion and the present value of our Gypstack Closure Costs ARO reflected in our Consolidated Balance Sheet was approximately $535 million. After the 2015 Consent Decrees become effective, we will deposit cash, in the total amount of $630 million, into two trust funds which are expected to increase over time with reinvestment of earnings. The amount to be deposited corresponds to a material portion of our estimated Gypstack Closure Costs ARO. At December 31, 2015, amounts to be held in such trust funds (including reinvested earnings) are classified as restricted cash and are included in other assets on our Condensed Consolidated Balance Sheets. We will also issue a $50 million letter of credit in 2017 to further support our financial assurance obligations under the Florida 2015 Consent Decree. In addition, we have agreed to guarantee the difference between the amounts held in each trust fund (including earnings) and the estimated closure and long-term care costs. Our actual Gypstack Closure Costs are generally expected to be paid by us in the normal course of our Phosphates business over a period that may not end until three decades or more after a Gypstack has been closed. |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
(in millions of Units) | March 31, 2016 | December 31, 2015 | |||||||
Derivative Instrument | Derivative Category | Unit of Measure | |||||||
Foreign currency derivatives | Foreign currency | US Dollars | 1,084.3 | 1,230.6 | |||||
Interest rate derivatives | Interest rate | US Dollars | — | 175.0 | |||||
Natural gas derivatives | Commodity | MMbtu | 25.3 | 32.4 |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
March 31, 2016 | December 31, 2015 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Cash and cash equivalents | $ | 1,057.7 | $ | 1,057.7 | $ | 1,276.3 | $ | 1,276.3 | ||||||||
Receivables, net | 677.2 | 677.2 | 675.0 | 675.0 | ||||||||||||
Accounts payable | 517.7 | 517.7 | 520.6 | 520.6 | ||||||||||||
Structured accounts payable arrangements | 354.2 | 354.2 | 481.7 | 481.7 | ||||||||||||
Short-term debt | 41.8 | 41.8 | 25.5 | 25.5 | ||||||||||||
Long-term debt, including current portion | 3,816.0 | 3,968.1 | 3,811.2 | 3,860.4 |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
Settlement Date | Shares Delivered | Average Price Per Share | ASR Amount | ||||||
May 2015 ASR | July 28, 2015 | 11,106,847 | $45.02 | $500.0 million | |||||
February 2016 ASR | March 29, 2016 | 2,766,558 | $27.11 | $75.0 million |
Three months ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Transactions with non-consolidated companies included in net sales | $ | 147.2 | $ | 263.9 | |||
Transactions with non-consolidated companies included in cost of goods sold | 134.5 | 112.7 |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
Phosphates | Potash | International Distribution | Corporate, Eliminations and Other | Total | |||||||||||||||
Three months ended March 31, 2016 | |||||||||||||||||||
Net sales to external customers | $ | 807.0 | $ | 391.2 | $ | 466.6 | $ | 9.2 | $ | 1,674.0 | |||||||||
Intersegment net sales(a) | 102.4 | 3.0 | 0.2 | (105.6 | ) | — | |||||||||||||
Net sales | 909.4 | 394.2 | 466.8 | (96.4 | ) | 1,674.0 | |||||||||||||
Gross margin (excluding Canadian resource taxes) | 64.6 | 116.5 | 11.7 | 62.2 | 255.0 | ||||||||||||||
Canadian resource taxes | — | 18.3 | — | — | 18.3 | ||||||||||||||
Gross margin(a) | 64.6 | 98.2 | 11.7 | 62.2 | 236.7 | ||||||||||||||
Operating earnings (loss) | 17.7 | 85.7 | (4.4 | ) | 64.4 | 163.4 | |||||||||||||
Capital expenditures | 111.6 | 112.7 | 5.3 | 6.0 | 235.6 | ||||||||||||||
Depreciation, depletion and amortization expense | 98.5 | 75.3 | 3.5 | 6.4 | 183.7 | ||||||||||||||
Three months ended March 31, 2015 | |||||||||||||||||||
Net sales to external customers | $ | 1,040.6 | $ | 652.4 | $ | 438.4 | $ | 7.7 | $ | 2,139.1 | |||||||||
Intersegment net sales(a) | 131.7 | 0.4 | 0.5 | (132.6 | ) | — | |||||||||||||
Net sales | 1,172.3 | 652.8 | 438.9 | (124.9 | ) | 2,139.1 | |||||||||||||
Gross margin (excluding Canadian resource taxes) | 221.8 | 320.0 | 20.6 | (65.1 | ) | 497.3 | |||||||||||||
Canadian resource taxes | — | 78.1 | — | — | 78.1 | ||||||||||||||
Gross margin(a) | 221.8 | 241.9 | 20.6 | (65.1 | ) | 419.2 | |||||||||||||
Operating earnings (loss) | 190.3 | 204.1 | 2.9 | (78.8 | ) | 318.5 | |||||||||||||
Capital expenditures | 128.8 | 94.7 | 3.8 | 2.2 | 229.5 | ||||||||||||||
Depreciation, depletion and amortization expense | 94.2 | 79.3 | 2.8 | 6.5 | 182.8 | ||||||||||||||
Total Assets | |||||||||||||||||||
As of March 31, 2016 | $ | 8,198.0 | $ | 8,898.2 | $ | 1,595.0 | $ | (1,064.1 | ) | $ | 17,627.1 | ||||||||
As of December 31, 2015 | 8,369.8 | 8,363.9 | 1,695.6 | (1,039.8 | ) | 17,389.5 |
(a) | Certain intercompany sales within the Phosphates segment are recognized as revenue before the final price is determined. During the three months ended March 31, 2015 these transactions had the effect of increasing Phosphate segment revenues and gross margin by $87.7 million and $28.7 million, respectively. There were no intersegment sales of this type outstanding at March 31, 2016. Revenues and cost of goods sold on these Phosphates sales are eliminated in the "Corporate and Other" category similar to all other intercompany transactions. |
THE MOSAIC COMPANY | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |
Three months ended | ||||||||||||||
March 31, | 2016-2015 | |||||||||||||
(in millions, except per share data) | 2016 | 2015 | Change | Percent | ||||||||||
Net sales | $ | 1,674.0 | $ | 2,139.1 | $ | (465.1 | ) | (22 | )% | |||||
Cost of goods sold | 1,437.3 | 1,719.9 | (282.6 | ) | (16 | )% | ||||||||
Gross margin | 236.7 | 419.2 | (182.5 | ) | (44 | )% | ||||||||
Gross margin percentage | 14 | % | 20 | % | ||||||||||
Selling, general and administrative expenses | 89.8 | 100.4 | (10.6 | ) | (11 | )% | ||||||||
Other operating (income) expense | (16.5 | ) | 0.3 | (16.8 | ) | NM | ||||||||
Operating earnings | 163.4 | 318.5 | (155.1 | ) | (49 | )% | ||||||||
Interest expense, net | (26.1 | ) | (31.3 | ) | 5.2 | (17 | )% | |||||||
Foreign currency transaction gain | 87.8 | 45.1 | 42.7 | 95 | % | |||||||||
Other income (expense) | 0.6 | (5.6 | ) | 6.2 | NM | |||||||||
Earnings from consolidated companies before income taxes | 225.7 | 326.7 | (101.0 | ) | (31 | )% | ||||||||
(Benefit from) provision for income taxes | (28.7 | ) | 30.7 | (59.4 | ) | NM | ||||||||
Earnings from consolidated companies | 254.4 | 296.0 | (41.6 | ) | (14 | )% | ||||||||
Equity in net earnings (loss) of nonconsolidated companies | 2.5 | (1.4 | ) | 3.9 | NM | |||||||||
Net earnings including noncontrolling interests | 256.9 | 294.6 | (37.7 | ) | (13 | )% | ||||||||
Less: Net earnings (loss) attributable to noncontrolling interests | 0.1 | (0.2 | ) | 0.3 | NM | |||||||||
Net earnings attributable to Mosaic | $ | 256.8 | $ | 294.8 | $ | (38.0 | ) | (13 | )% | |||||
Diluted net earnings per share attributable to Mosaic | $ | 0.73 | $ | 0.80 | $ | (0.07 | ) | (9 | )% | |||||
Diluted weighted average number of shares outstanding | 353.2 | 367.9 |
• | We entered into an accelerated share repurchase transaction in February 2016 (the "2016 ASR") to repurchase shares of our Common Stock for a payment of $75 million under the $1.5 billion repurchase program authorized by our Board of Directors in May 2015 (the "2015 Repurchase Program"). The 2016 ASR was settled on March 29, 2016 and we received a total of 2,766,588 shares of Common Stock. The final average price per share was $27.11. |
• | We received insurance proceeds of $28 million related to the collapse of a warehouse roof at our Carlsbad, New Mexico location in 2014, which are included in other operating income. |
• | Our Board of Directors approved an increase in our annual dividend to $1.10 from $1.00 per share, which was effective in May 2015. |
• | We repurchased 2,560,277 shares of Common Stock in the open market for approximately $123.3 million under our $1 billion share repurchase program authorized in February 2014. |
Three months ended | ||||||||||||||
March 31, | 2016-2015 | |||||||||||||
(in millions, except price per tonne or unit) | 2016 | 2015 | Change | Percent | ||||||||||
Net sales: | ||||||||||||||
North America | $ | 597.6 | $ | 683.1 | $ | (85.5 | ) | (13 | )% | |||||
International | 311.8 | 489.2 | (177.4 | ) | (36 | )% | ||||||||
Total | 909.4 | 1,172.3 | (262.9 | ) | (22 | )% | ||||||||
Cost of goods sold | 844.8 | 950.5 | (105.7 | ) | (11 | )% | ||||||||
Gross margin | $ | 64.6 | $ | 221.8 | $ | (157.2 | ) | (71 | )% | |||||
Gross margin as a percentage of net sales | 7 | % | 19 | % | ||||||||||
Sales volume (in thousands of metric tonnes) | ||||||||||||||
Crop Nutrients | ||||||||||||||
North America - DAP/MAP (a) | 951 | 951 | — | 0 | % | |||||||||
International - DAP/MAP (a)(b) | 656 | 754 | (98 | ) | (13 | )% | ||||||||
MicroEssentials® (b) | 468 | 440 | 28 | 6 | % | |||||||||
Feed and Other (b) | 131 | 152 | (21 | ) | (14 | )% | ||||||||
Total Phosphates Segment Tonnes | 2,206 | 2,297 | (91 | ) | (4 | )% | ||||||||
Average selling price per tonne: | ||||||||||||||
DAP (FOB plant) | $ | 355 | $ | 458 | $ | (103 | ) | (22 | )% | |||||
Average cost per unit consumed in cost of goods sold: | ||||||||||||||
Ammonia (metric tonne) | $ | 370 | $ | 519 | $ | (149 | ) | (29 | )% | |||||
Sulfur (long ton) | 130 | 145 | (15 | ) | (10 | )% | ||||||||
Blended rock (metric tonne) | 60 | 61 | (1 | ) | (2 | )% | ||||||||
Production volume (in thousands of metric tonnes) | 2,205 | 2,299 | (94 | ) | (4 | )% |
Three months ended | ||||||||||||||
March 31, | 2016-2015 | |||||||||||||
(in millions, except price per tonne or unit) | 2016 | 2015 | Change | Percent | ||||||||||
Net sales: | ||||||||||||||
North America | $ | 241.8 | $ | 351.1 | $ | (109.3 | ) | (31 | )% | |||||
International | 152.4 | 301.7 | (149.3 | ) | (49 | )% | ||||||||
Total | 394.2 | 652.8 | (258.6 | ) | (40 | )% | ||||||||
Cost of goods sold | 296.0 | 410.9 | (114.9 | ) | (28 | )% | ||||||||
Gross margin | $ | 98.2 | $ | 241.9 | $ | (143.7 | ) | (59 | )% | |||||
Gross margin as a percentage of net sales | 25 | % | 37 | % | ||||||||||
Canadian resource taxes | 18.3 | 78.1 | (59.8 | ) | (77 | )% | ||||||||
Gross margin (excluding CRT)(a) | 116.5 | 320.0 | (203.5 | ) | (64 | )% | ||||||||
Gross margin (excluding CRT) as a percentage of net sales | 30 | % | 49 | % | ||||||||||
Sales volume (in thousands of metric tonnes) | ||||||||||||||
Crop Nutrients: | ||||||||||||||
North America | 650 | 572 | 78 | 14 | % | |||||||||
International(b) | 749 | 1,248 | (499 | ) | (40 | )% | ||||||||
Total | 1,399 | 1,820 | (421 | ) | (23 | )% | ||||||||
Non-agricultural | 147 | 207 | (60 | ) | (29 | )% | ||||||||
Total Potash Segment Tonnes | 1,546 | 2,027 | (481 | ) | (24 | )% | ||||||||
Average selling price per tonne (FOB plant): | ||||||||||||||
MOP - North America(c) | $ | 184 | $ | 362 | $ | (178 | ) | (49 | )% | |||||
MOP - International | 195 | 245 | (50 | ) | (20 | )% | ||||||||
MOP - Average(d) | 207 | 288 | (81 | ) | (28 | )% | ||||||||
Production volume (in thousands of metric tonnes) | 2,018 | 2,451 | (433 | ) | (18 | )% |
Three months ended | ||||||||||||||
March 31, | 2016-2015 | |||||||||||||
(in millions, except price per tonne or unit) | 2016 | 2015 | Change | Percent | ||||||||||
Net Sales | $ | 466.8 | $ | 438.9 | $ | 27.9 | 6 | % | ||||||
Cost of goods sold | 455.1 | 418.3 | 36.8 | 9 | % | |||||||||
Gross margin | $ | 11.7 | $ | 20.6 | $ | (8.9 | ) | (43 | )% | |||||
Gross margin as a percent of net sales | 3 | % | 5 | % | ||||||||||
Gross margin per sales tonne | $ | 9 | $ | 21 | ||||||||||
Sales volume (in thousands of metric tonnes) | ||||||||||||||
Total | 1,268 | 976 | 292 | 30 | % | |||||||||
Realized prices ($/tonne) | ||||||||||||||
Average price (FOB destination)(a) | $ | 365 | $ | 444 | $ | (79 | ) | (18 | )% | |||||
Purchases ('000 tonnes) | ||||||||||||||
DAP/MAP from Mosaic | 167 | 138 | 29 | 21 | % | |||||||||
MicroEssentials® from Mosaic | 101 | 125 | (24 | ) | (19 | )% | ||||||||
Potash from Mosaic/Canpotex | 360 | 249 | 111 | 45 | % |
Three months ended | ||||||||||||||
March 31, | 2016-2015 | |||||||||||||
(in millions) | 2016 | 2015 | Change | Percent | ||||||||||
Selling, general and administrative expenses | $ | 89.8 | $ | 100.4 | $ | (10.6 | ) | (11 | )% | |||||
Other operating (income) expense | (16.5 | ) | 0.3 | (16.8 | ) | NM | ||||||||
Interest (expense) | (31.8 | ) | (34.8 | ) | 3.0 | (9 | )% | |||||||
Interest income | 5.7 | 3.5 | 2.2 | 63 | % | |||||||||
Interest expense, net | (26.1 | ) | (31.3 | ) | 5.2 | (17 | )% | |||||||
Foreign currency transaction gain | 87.8 | 45.1 | 42.7 | 95 | % | |||||||||
Other income (expense) | 0.6 | (5.6 | ) | 6.2 | NM | |||||||||
(Benefit from) provision for income taxes | (28.7 | ) | 30.7 | (59.4 | ) | NM |
Three months ended | Effective Tax Rate | Provision for Income Taxes | ||||||
March 31, 2016 | (12.7 | )% | $ | (28.7 | ) | |||
March 31, 2015 | 9.4 | % | 30.7 |
Three months ended March 31, | ||||||||
(in millions) | 2016 | 2015 | ||||||
Sales | $ | 394.2 | $ | 652.8 | ||||
Gross margin | 98.2 | 241.9 | ||||||
Gross margin as a percentage of net sales | 24.9 | % | 37.1 | % | ||||
Canadian resource taxes | 18.3 | 78.1 | ||||||
Gross margin, (excluding CRT) | $ | 116.5 | $ | 320.0 | ||||
Gross margin (excluding CRT) as a percentage of net sales | 29.6 | % | 49.0 | % |
(in millions) | Three months ended | |||||||||||||
March 31, | 2016-2015 | |||||||||||||
Cash Flow | 2016 | 2015 | Change | Percent | ||||||||||
Net cash provided by operating activities | $ | 265.9 | $ | 728.9 | $ | (463.0 | ) | (64 | )% | |||||
Net cash used in investing activities | (273.9 | ) | (182.9 | ) | (91.0 | ) | 50 | % | ||||||
Net cash used in financing activities | (280.0 | ) | (300.4 | ) | 20.4 | (7 | )% |
• | business and economic conditions and governmental policies affecting the agricultural industry where we or our customers operate, including price and demand volatility resulting from periodic imbalances of supply and demand; |
• | changes in farmers’ application rates for crop nutrients; |
• | changes in the operation of world phosphate or potash markets, including continuing consolidation in the crop nutrient industry, particularly if we do not participate in the consolidation; |
• | pressure on prices realized by us for our products; |
• | the expansion or contraction of production capacity or selling efforts by competitors or new entrants in the industries in which we operate, including the effects of proving runs by members of Canpotex, Limited (“Canpotex”) to prove the production capacity of potash expansion projects; |
• | the expected cost of MWSPC and our expected investment in it, the amount, terms, availability and sufficiency of funding for MWSPC from us, Saudi Arabian Mining Company, Saudi Basic Industries Corporation and existing or future external sources, the ability of MWSPC to obtain additional planned funding in acceptable amounts and upon acceptable terms, the timely development and commencement of operations of production facilities in the Kingdom of Saudi Arabia, political and economic instability in the region, and in general the future success of current plans for the joint venture and any future changes in those plans; |
• | build-up of inventories in the distribution channels for our products that can adversely affect our sales volumes and selling prices; |
• | the effect of future product innovations or development of new technologies on demand for our products; |
• | seasonality in our business that results in the need to carry significant amounts of inventory and seasonal peaks in working capital requirements, and may result in excess inventory or product shortages; |
• | changes in the costs, or constraints on supplies, of raw materials or energy used in manufacturing our products, or in the costs or availability of transportation for our products; |
• | declines in our selling prices or significant increases in costs that can require us to write down our inventories to the lower of cost or market, or require us to impair goodwill or other long-lived assets, or establish a valuation allowance against deferred tax assets; |
• | the effects on our customers of holding high cost inventories of crop nutrients in periods of rapidly declining market prices for crop nutrients; |
• | the lag in realizing the benefit of falling market prices for the raw materials we use to produce our products that can occur while we consume raw materials that we purchased or committed to purchase in the past at higher prices; |
• | customer expectations about future trends in the selling prices and availability of our products and in farmer economics; |
• | disruptions to existing transportation or terminaling facilities, including those of Canpotex or any joint venture in which we participate; |
• | shortages or other unavailability of railcars, tugs, barges and ships for carrying our products and raw materials; |
• | the effects of and change in trade, monetary, environmental, tax and fiscal policies, laws and regulations; |
• | foreign exchange rates and fluctuations in those rates; |
• | tax regulations, currency exchange controls and other restrictions that may affect our ability to optimize the use of our liquidity; |
• | other risks associated with our international operations, including any potential adverse effects related to our joint venture interest in the Miski Mayo mine in the event that protests against natural resource companies in Peru were to extend to or impact the Miski Mayo mine; |
• | adverse weather conditions affecting our operations, including the impact of potential hurricanes, excessive heat, cold, snow or rainfall, or drought; |
• | difficulties or delays in receiving, challenges to, increased costs of obtaining or satisfying conditions of, or revocation or withdrawal of required governmental and regulatory approvals, including permitting activities; |
• | changes in the environmental and other governmental regulation that applies to our operations, including federal legislation or regulatory action expanding the types and extent of water resources regulated under federal law and the possibility of further federal or state legislation or regulatory action affecting greenhouse gas emissions or of restrictions or liabilities related to elevated levels of naturally-occurring radiation that arise from disturbing the ground in the course of mining activities or possible efforts to reduce the flow of nutrients into the Gulf of Mexico, the Mississippi River basin or elsewhere; |
• | the potential costs and effects of implementation of federal or state water quality standards for the discharge of nitrogen and/or phosphorus into Florida waterways; |
• | the financial resources of our competitors, including state-owned and government-subsidized entities in other countries; |
• | the possibility of defaults by our customers on trade credit that we extend to them or on indebtedness that they incur to purchase our products and that we guarantee, particularly when we are exiting our business operations or locations that produced or sold the products to that customer; |
• | any significant reduction in customers’ liquidity or access to credit that they need to purchase our products; |
• | the effectiveness of our risk management strategy; |
• | the effectiveness of the processes we put in place to manage our significant strategic priorities, including the expansion of our Potash business and our investment in MWSPC, and to successfully integrate and grow acquired businesses; |
• | actual costs of various items differing from management’s current estimates, including, among others, asset retirement, environmental remediation, reclamation or other environmental obligations and Canadian resource taxes and royalties, or the costs of MWSPC, its existing or future funding and our commitments in support of such funding; |
• | the costs and effects of legal and administrative proceedings and regulatory matters affecting us, including environmental, tax or administrative proceedings, complaints that our operations are adversely impacting nearby farms, businesses, other property uses or properties, settlements thereof and actions taken by courts with respect to approvals of settlements, resolution of global tax audit activity, and other further developments in legal proceedings and regulatory matters; |
• | the success of our efforts to attract and retain highly qualified and motivated employees; |
• | strikes, labor stoppages or slowdowns by our work force or increased costs resulting from unsuccessful labor contract negotiations; |
• | brine inflows at our Esterhazy, Saskatchewan potash mine as well as potential inflows at our other shaft mines; |
• | accidents involving our operations, including potential fires, explosions, seismic events, unsuccessful tailings management or releases of hazardous or volatile chemicals; |
• | terrorism or other malicious intentional acts, including cybersecurity risks such as attempts to gain unauthorized access to, or disable, our information technology systems, or our costs of addressing malicious intentional acts; |
• | other disruptions of operations at any of our key production and distribution facilities, particularly when they are operating at high operating rates; |
• | changes in antitrust and competition laws or their enforcement; |
• | actions by the holders of controlling equity interests in businesses in which we hold a noncontrolling interest; |
• | changes in our relationships with other members of Canpotex or any joint venture in which we participate or their or our exit from participation in Canpotex or any such export association or joint venture, and other changes in our commercial arrangements with unrelated third parties; |
• | the adequacy of our property, business interruption and casualty insurance policies to cover potential hazards and risks incident to our business, and our willingness and ability to maintain current levels of insurance coverage as a result of market conditions, our loss experience and other factors; |
• | difficulties in realizing the benefits of our long-term natural gas based pricing ammonia supply agreement with CF Industries, Inc., which will commence in 2017, including the risks that the cost savings initially anticipated from the agreement may not be fully realized over its term or that the price of natural gas or the market price for ammonia during the agreement's term are at levels at which the agreement’s natural gas based pricing is disadvantageous to us, compared with purchases in the spot market; and |
• | other risk factors reported from time to time in our Securities and Exchange Commission reports. |
(in millions US$) | As of March 31, 2016 | As of December 31, 2015 | |||||||||||||||||||||
Expected Maturity Date | Fair Value | Expected Maturity Date | Fair Value | ||||||||||||||||||||
Years ending December 31, | Year ending December 31, | ||||||||||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||||||||||
Foreign Currency Exchange Forwards | |||||||||||||||||||||||
Canadian Dollar | $ | 14.1 | $ | (48.4 | ) | ||||||||||||||||||
Notional (million US$) - long Canadian dollars | $ | 555.2 | $ | 95.8 | $ | 668.1 | $ | 78.4 | |||||||||||||||
Weighted Average Rate - Canadian dollar to U.S. dollar | 1.3238 | 1.3568 | 1.2873 | 1.3388 | |||||||||||||||||||
Foreign Currency Exchange Collars | |||||||||||||||||||||||
Canadian Dollar | $ | 0.1 | $ | (3.8 | ) | ||||||||||||||||||
Notional (million US$) | $ | 42.1 | — | $ | 63.3 | — | |||||||||||||||||
Weighted Average Participation Rate - Canadian dollar to U.S. dollar | 1.3574 | — | 1.3090 | — | |||||||||||||||||||
Weighted Average Protection Rate - Canadian dollar to U.S. dollar | 1.2580 | — | 1.2219 | — | |||||||||||||||||||
Foreign Currency Exchange Non-Deliverable Forwards | |||||||||||||||||||||||
Brazilian Real | $ | (7.5 | ) | $ | (1.3 | ) | |||||||||||||||||
Notional (million US$) - short Brazilian real | $ | 185.1 | $ | — | $ | 211.3 | $ | — | |||||||||||||||
Weighted Average Rate - Brazilian real to U.S. dollar | 3.8747 | — | 3.9130 | — | |||||||||||||||||||
Notional (million US$) - long Brazilian real | $ | 54.4 | $ | 5.2 | $ | 59.5 | $ | — | |||||||||||||||
Weighted Average Rate - Brazilian real to U.S. dollar | 4.0638 | 4.2104 | 3.6386 | — | |||||||||||||||||||
Indian Rupee | $ | (3.8 | ) | $ | (0.5 | ) | |||||||||||||||||
Notional (million US$) - short Indian rupee | $ | 135.5 | $ | — | $ | 136.0 | $ | — | |||||||||||||||
Weighted Average Rate - Indian rupee to U.S. dollar | 68.7062 | — | 67.0696 | — | |||||||||||||||||||
Chinese Renminbi | 0.2 | — | |||||||||||||||||||||
Notional (million US$) - short Renminbi | $ | 11.0 | — | — | — | ||||||||||||||||||
Weighted Average Rate - Chinese Renminbi to U.S. Dollar | 6.6042 | — | — | — | $ | — | |||||||||||||||||
Total Fair Value | $ | 3.1 | $ | (54.0 | ) |
(in millions) | As of March 31, 2016 | As of December 31, 2015 | |||||||||||||||||||||
Expected Maturity Date | Expected Maturity Date | ||||||||||||||||||||||
Years ending December 31, | Years ending December 31, | ||||||||||||||||||||||
2016 | 2017 | Fair Value | 2016 | 2017 | Fair Value | ||||||||||||||||||
Natural Gas Swaps | $ | (20.5 | ) | $ | (16.3 | ) | |||||||||||||||||
Notional (million MMBtu) - long | 16.4 | 8.9 | 23.5 | 8.9 | |||||||||||||||||||
Weighted Average Rate (US$/MMBtu) | $ | 2.83 | $ | 2.81 | $ | 2.76 | $ | 2.75 | |||||||||||||||
Total Fair Value | $ | (20.5 | ) | $ | (16.3 | ) |
(a) | Evaluation of Disclosure Controls and Procedures |
(b) | Changes in Internal Control Over Financial Reporting |
• | Nutrient Discharges into the Gulf of Mexico and Mississippi River Basin. On March 13, 2012, the Gulf Restoration Network, the Missouri Coalition for the Environment, the Iowa Environmental Council, the Tennessee Clean Water Network, the Minnesota Center for Environmental Advocacy, Sierra Club, the Waterkeeper Alliance, Inc., the Prairie Rivers Network, the Kentucky Waterways Alliance, the Environmental Law & Policy Center and the Natural Resources Defense Council, Inc. brought a lawsuit in the U.S. District Court for the Eastern District of Louisiana (the "Louisiana District Court") against EPA, seeking to require it to establish numeric nutrient criteria for nitrogen and phosphorous in the Mississippi River basin. In July 2011, EPA had denied the plaintiffs’ July 2008 petition seeking such standards. On May 30, 2012, the Louisiana District Court granted our motion to intervene in this lawsuit. |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of a publicly announced program | Maximum approximate dollar value that may be yet purchased under the program(a) | ||||
Common Stock | ||||||||
January 1, 2016 - January 31, 2016.............. | — | — | — | $925,067,864 | ||||
February 1, 2016 - February 29, 2016............ | 2,561,912 | (a) | 2,561,912 | $850,067,864 | ||||
March 1, 2016 - March 31, 2016................ | 204,646 | (a) | 204,646 | $850,067,864 | ||||
Total................................. | 2,766,558 | $27.11 | 2,766,558 | $850,067,864 |
THE MOSAIC COMPANY | |||
by: | /S/ ANTHONY T. BRAUSEN | ||
Anthony T. Brausen | |||
Senior Vice President – Finance and Chief | |||
Accounting Officer (on behalf of the registrant and as principal accounting officer) |
Exhibit Index | ||||||
Exhibit No | Description | Incorporated Herein by Reference to | Filed with Electronic Submission | |||
3.ii | Amended and Restated Bylaws | Exhibit 3.1 to Current Report on Form 8-K of Mosaic dated March 3, 2016 and filed on March 4, 2016 | ||||
10.iii.a | Form of Non-Qualified Stock Option under The Mosaic Company 2014 Stock and Incentive Plan (the "2014 Plan"), approved March 2, 2016 | X | ||||
10.iii.b | Form of Executive TSR Performance Unit Award Agreement under the 2014 Plan, approved March 2, 2016 | X | ||||
10.iii.c | Form of Executive ROIC Performance Unit Award Agreement under the 2014 Plan, approved March 2, 2016 | X | ||||
10.iii.d | Form of Employee ROIC Performance Unit Award Agreement under the 2014 Plan, approved March 2, 2016 | X | ||||
10.iii.e | Form of Employee Restricted Stock Unit Award Agreement under the 2014 Plan, approved March 2, 2016 | X | ||||
31.1 | Certification Required by Rule 13a-14(a). | X | ||||
31.2 | Certification Required by Rule 13a-14(a). | X | ||||
32.1 | Certification Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. | X | ||||
32.2 | Certification Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. | X | ||||
95 | Mine Safety Disclosures | X | ||||
101 | Interactive Data Files | X |
On or After Each of the Following Dates | Number of Shares with respect to which the Option is Exercisable | |
_______, ____ | ||
_______, ____ | ||
_______, ____ | ||
5. | Change in Control |
6. | Miscellaneous |
THE MOSAIC COMPANY By: Name: Title: |
THE MOSAIC COMPANY | |
By: | |
Name: | |
Title: |
Cumulative ROIC Over WACC | Cumulative Three -Year Spread | Payout Percentage |
WACC plus 9.0% | 900 basis points | 200% |
WACC plus 6.0% | 600 basis points | 150% |
WACC plus 4.5% | 450 basis points | 125% |
WACC plus 3.0% | 300 basis points | 100% |
WACC plus 1.5% | 150 basis points | 75% |
WACC | 0 basis points | 50% |
WACC minus 1.5% | ‑150 basis points | 25% |
THE MOSAIC COMPANY By: Name: Title: |
Cumulative ROIC Over WACC | Cumulative Three –Year Spread | Payout Percentage |
WACC plus 9.0% | 900 basis points | 200% |
WACC plus 6.0% | 600 basis points | 150% |
WACC plus 4.5% | 450 basis points | 125% |
WACC plus 3.0% | 300 basis points | 100% |
WACC plus 1.5% | 150 basis points | 75% |
WACC | 0 basis points | 50% |
WACC minus 1.5% | -150 basis points | 25% |
On Each of the Following Dates | Number of RSUs Vested | |
_________, ____ | ||
1. | I have reviewed this quarterly report on Form 10-Q of The Mosaic Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 4, 2016 |
/s/ James "Joc" C. O'Rourke |
James "Joc" C. O'Rourke |
Chief Executive Officer and President |
The Mosaic Company |
1. | I have reviewed this quarterly report on Form 10-Q of The Mosaic Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 4, 2016 |
/s/ Richard L. Mack |
Richard L. Mack |
Executive Vice President and Chief Financial Officer |
The Mosaic Company |
May 4, 2016 |
/s/ James "Joc" C. O'Rourke |
James "Joc" C. O'Rourke |
Chief Executive Officer and President |
The Mosaic Company |
May 4, 2016 |
/s/ Richard L. Mack |
Richard L. Mack |
Executive Vice President and Chief Financial Officer |
The Mosaic Company |
Potash Mine | Florida Phosphate Rock Mines | |||||||||||||||||||||
Three Months Ended March 31, 2016 | Carlsbad, New Mexico | Four Corners | South Fort Meade | Wingate | South Pasture | |||||||||||||||||
Section 104 citations for violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard (#) | 0 | 2 | 1 | 1 | 1 | |||||||||||||||||
Section 104(b) orders (#) | — | — | — | — | — | |||||||||||||||||
Section 104(d) citations and orders (#) | — | — | — | — | — | |||||||||||||||||
Section 110(b)(2) violations (#) | — | — | — | — | — | |||||||||||||||||
Section 107(a) orders (#) | — | — | — | — | — | |||||||||||||||||
Proposed assessments under MSHA (whole dollars) | $ | 2,584 | $ | — | $ | 1,062 | $ | — | $ | — | ||||||||||||
Mining-related fatalities (#) | — | — | — | — | — | |||||||||||||||||
Section 104(e) notice | No | No | No | No | No | |||||||||||||||||
Notice of the potential for a pattern of violations under Section 104(e) | No | No | No | No | No | |||||||||||||||||
Legal actions before the Federal Mine Safety and Health Review Commission (“FMSHRC”) initiated (#) | — | — | — | — | — | |||||||||||||||||
Legal actions before the FMSHRC resolved (#) | — | 1 | — | — | — | |||||||||||||||||
Legal actions pending before the FMSHRC, end of period: | ||||||||||||||||||||||
Contests of citations and orders referenced in Subpart B of 29 CFR Part 2700 (#) | — | — | — | — | — | |||||||||||||||||
Contests of proposed penalties referenced in Subpart C of 29 CFR Part 2700 (#) | — | — | — | — | — | |||||||||||||||||
Complaints for compensation referenced in Subpart D of 29 CFR Part 2700 (#) | — | — | — | — | — | |||||||||||||||||
Complaints of discharge, discrimination or interference referenced in Subpart E of 29 CFR Part 2700 (#) | — | — | — | — | — | |||||||||||||||||
Applications for temporary relief referenced in Subpart F of 29 CFR Part 2700 (#) | — | — | — | — | — | |||||||||||||||||
Appeals of judges’ decisions or orders referenced in Subpart H of 29 CFR Part 2700 (#) | — | — | — | — | — | |||||||||||||||||
Total pending legal actions (#) | — | — | — | — | — |
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Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2016 |
Apr. 29, 2016 |
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Document Information [Line Items] | ||
Entity registrant name | MOSAIC CO | |
Trading symbol | MOS | |
Document type | 10-Q | |
Entity central index key | 0001285785 | |
Amendment flag | false | |
Entity current reporting status | Yes | |
Entity voluntary filers | No | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Document period end date | Mar. 31, 2016 | |
Current fiscal year end date | --12-31 | |
Entity filer category | Large Accelerated Filer | |
Entity well known seasoned issuer | Yes | |
No class common stock [Member] | ||
Document Information [Line Items] | ||
Entity common stock shares outstanding | 349,816,363 | |
Class A common stock | ||
Document Information [Line Items] | ||
Entity common stock shares outstanding | 0 | |
Class B Common Stock [Member] | ||
Document Information [Line Items] | ||
Entity common stock shares outstanding | 0 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Statement of Comprehensive Income [Abstract] | ||
Net earnings including noncontrolling interest | $ 256.9 | $ 294.6 |
Other comprehensive income (loss), net of tax | ||
Foreign currency translation, net of tax | 266.0 | (616.1) |
Net actuarial gain and prior service cost, net of tax | 1.6 | 3.3 |
Amortization of loss on interest rate swap, net of tax | 0.8 | 0.7 |
Other comprehensive income (loss) | 268.4 | (612.1) |
Comprehensive income (loss) | 525.3 | (317.5) |
Less: Comprehensive income (loss) attributable to noncontrolling interest | 1.2 | (2.8) |
Comprehensive income (loss) attributable to Mosaic | $ 524.1 | $ (314.7) |
Condensed Consolidated Statements of Cash Flow Parenthetical - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Statement of Cash Flows [Abstract] | ||
Capitalized interest costs | $ 9.1 | $ 7.7 |
Condensed Consolidated Statements of Shareholders Equity (Unaudited) (Parentheticals) |
12 Months Ended |
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Dec. 31, 2015
$ / shares
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Statement of Stockholders' Equity [Abstract] | |
Dividends per share | $ 1.075 |
Organization and Nature of Business |
3 Months Ended | ||||||||||||
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Mar. 31, 2016 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Organization and Nature of Business | Organization and Nature of Business The Mosaic Company ("Mosaic", and, with its consolidated subsidiaries, "we", "us", "our", or the "Company") produces and markets concentrated phosphate and potash crop nutrients. We conduct our business through wholly and majority owned subsidiaries as well as businesses in which we own less than a majority or a noncontrolling interest, including consolidated variable interest entities and investments accounted for by the equity method. We are organized into the following business segments:
Intersegment eliminations, unrealized mark-to-market gains/losses on derivatives, and debt expenses are included within Corporate, Eliminations and Other. See Note 14 of our Condensed Consolidated Financial Statements in this report for segment results. |
Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Statement Presentation and Basis of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements of Mosaic have been prepared on the accrual basis of accounting and in accordance with the requirements of the Securities and Exchange Commission ("SEC") for interim financial reporting. As permitted under these rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States ("GAAP") can be condensed or omitted. The Condensed Consolidated Financial Statements included in this document reflect, in the opinion of our management, all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of the results for the interim periods presented. The following notes should be read in conjunction with the accounting policies and other disclosures in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC for the calendar year ended December 31, 2015 (the "10-K Report"). Sales, expenses, cash flows, assets and liabilities can and do vary during the year as a result of seasonality and other factors. Therefore, interim results are not necessarily indicative of the results to be expected for the full fiscal year. The accompanying Condensed Consolidated Financial Statements include the accounts of Mosaic and its majority owned subsidiaries. Certain investments in companies where we do not have control but have the ability to exercise significant influence are accounted for by the equity method. Accounting Estimates Preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. The most significant estimates made by management relate to the estimates of fair value of acquired assets and liabilities, the recoverability of non-current assets including goodwill, the useful lives and net realizable values of long-lived assets, environmental and reclamation liabilities including asset retirement obligations ("ARO"), the costs of our employee benefit obligations for pension plans and postretirement benefits, income tax related accounts, including the valuation allowance against deferred income tax assets, inventory valuation and accruals for pending legal and environmental matters. Actual results could differ from these estimates. Structured Accounts Payable Arrangements In Brazil, we finance some of our potash-based fertilizer and other raw material product purchases through third-party financing arrangements. These arrangements provide that the third-party intermediary advance the amount of the scheduled payment to the vendor, less an appropriate discount, at a scheduled payment date and Mosaic makes payment to the third-party intermediary at a later date, stipulated in accordance with the commercial terms negotiated. At March 31, 2016 and December 31, 2015, these structured accounts payable arrangement liabilities were $354.2 million and $481.7 million, respectively. We have corrected the presentation of certain previously-reported balances related to the structured accounts payable arrangements in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows. The error resulted in an understatement of net cash provided by operating activities and a corresponding understatement of net cash used in financing activities of $73.4 million for the three months ended March 31, 2015. We evaluated the effects of these errors in the previously issued consolidated financial statements for both the annual and interim periods of the prior years and concluded, based on the relevant quantitative and qualitative factors that the errors were not material, individually or in the aggregate, in relation to the consolidated financial statements taken as a whole. |
Recently Issued Accounting Guidance |
3 Months Ended |
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Mar. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance Recently Adopted Accounting Pronouncements In April 2015, the Financial Accounting Standards Board ("FASB") issued guidance which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, consistent with the presentation of a debt discount. In August 2015, the FASB issued additional guidance which clarified that an entity may defer and present debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortize those costs ratably over the term of the arrangement, regardless of whether there are any outstanding borrowings on it. This guidance became effective for us beginning January 1, 2016 and has been implemented retroactively. Accordingly, we reclassified $22.9 million of deferred financing fees against outstanding long-term debt accounts within the December 31, 2015 balance sheet. Our deferred financing fees of $2.9 million related to our revolving credit facility will remain recorded as an asset. Pronouncements Issued But Not Yet Adopted In May 2014, the FASB issued guidance addressing how revenue is recognized from contracts with customers and related disclosures. This standard supersedes existing revenue recognition requirements and most industry-specific guidance. This standard was initially expected to be effective for us beginning January 1, 2017, and provides for either full retrospective adoption or a modified retrospective adoption by which the cumulative effect of the change is recognized in retained earnings at the date of initial application. In July 2015, the FASB approved the deferral of the effective date of this standard by one year, and allows for adoption either at January 1, 2017 or January 1, 2018. We intend to utilize the full retrospective adoption method and to elect the deferred adoption date of January 1, 2018. We are currently evaluating the requirements of this guidance, and have not yet determined the impact on our consolidated financial statements. In January 2016, the FASB issued guidance which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for us beginning January 1, 2018, and early adoption is not permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In February 2016, the FASB issued guidance which requires recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for us beginning January 1, 2019, with early adoption permitted. The provisions of this guidance are to be applied using a modified retrospective approach, which requires application of the guidance for all periods presented. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In March 2016, the FASB issued guidance which simplifies several aspects of the accounting for share-based payment transactions, including certain income tax consequences, classifications on the statement of cash flows, and accounting for forfeitures. The guidance is effective for us beginning January 1, 2017, and early application is permitted. We are currently evaluating the adoption date and the effects this standard will have on our consolidated financial statements. |
Other Financial Statement Data |
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Other Financial Statement Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Statement Data | Other Financial Statement Data The following provides additional information concerning selected balance sheet accounts:
(a) Final price deferred is product that has shipped to customers, but the price has not yet been agreed upon. This has not been included in inventory as risk of loss has passed to our customers. Amounts in this account are based on inventory cost. (b) Included in restricted cash, as of March 31, 2016 and December 31, 2015, is $630 million, that is committed to be placed in trust following the effectiveness of the consent decrees discussed under "EPA RCRA Initiative" in Note 9 of our Notes to Condensed Consolidated Financial Statements, as financial assurance to support certain estimated future asset retirement obligations. (c) Future capital commitment for the MWSPC due after the first quarter of 2016. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The numerator for basic and diluted earnings per share ("EPS") is net earnings attributable to Mosaic. The denominator for basic EPS is the weighted average number of shares outstanding during the period. The denominator for diluted EPS also includes the weighted average number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued, unless the shares are anti-dilutive. The following is a reconciliation of the numerator and denominator for the basic and diluted EPS computations:
A total of 3.2 million shares of Common Stock subject to issuance upon exercise of stock options for the three months ended March 31, 2016 and 1.3 million shares for the three months ended March 31, 2015, respectively, have been excluded from the calculation of diluted EPS as the effect would have been anti-dilutive. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the three months ended March 31, 2016, gross unrecognized tax benefits decreased by $89.8 million to $8.8 million as a result of the resolution of audit activity. If recognized, approximately $2.0 million of the $8.8 million in unrecognized tax benefits would affect our effective tax rate and net earnings in future periods. We recognize interest and penalties related to unrecognized tax benefits as a component of our income tax provision. We had accrued interest and penalties totaling $0.2 million and $17.1 million as of March 31, 2016 and December 31, 2015, respectively, that were included in other noncurrent liabilities in the Condensed Consolidated Balance Sheets. For the three months ended March 31, 2016, tax expense specific to the period included a benefit of $63.9 million, which includes a domestic benefit of $85.8 million related to the resolution of an Advanced Pricing Agreement, which is a tax treaty-based process, partially offset by a $16.5 million expense related to distributions from certain non-U.S. subsidiaries and $5.4 million of expense primarily related to changes in estimates from prior periods. For the three months ended March 31, 2015, tax expense specific to the period included a benefit of $28.3 million, which is primarily related to the resolution of certain tax matters, resulting in a benefit of $18.4 million, and a reduction in the tax rate change for one of our equity method investments, resulting in a benefit of $9.7 million. |
Inventories |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consist of the following:
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Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill The changes in the carrying amount of goodwill, by reporting unit, are as follows:
We review goodwill for impairment annually in October or at any time events or circumstances indicate that the carrying value may not be fully recoverable, which is based on our accounting policy and GAAP. |
Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||
Contingencies | Contingencies We have described below judicial and administrative proceedings to which we are subject. We have contingent environmental liabilities that arise principally from three sources: (i) facilities currently or formerly owned by our subsidiaries or their predecessors; (ii) facilities adjacent to currently or formerly owned facilities; and (iii) third-party Superfund or state equivalent sites. At facilities currently or formerly owned by our subsidiaries or their predecessors, the historical use and handling of regulated chemical substances, crop and animal nutrients and additives and by-product or process tailings have resulted in soil, surface water and/or groundwater contamination. Spills or other releases of regulated substances, subsidence from mining operations and other incidents arising out of operations, including accidents, have occurred previously at these facilities, and potentially could occur in the future, possibly requiring us to undertake or fund cleanup or result in monetary damage awards, fines, penalties, other liabilities, injunctions or other court or administrative rulings. In some instances, pursuant to consent orders or agreements with governmental agencies, we are undertaking certain remedial actions or investigations to determine whether remedial action may be required to address contamination. At other locations, we have entered into consent orders or agreements with appropriate governmental agencies to perform required remedial activities that will address identified site conditions. Taking into consideration established accruals of approximately $24.4 million and $25.6 million as of March 31, 2016 and December 31, 2015, respectively, expenditures for these known conditions currently are not expected, individually or in the aggregate, to have a material effect on our business or financial condition. However, material expenditures could be required in the future to remediate the contamination at known sites or at other current or former sites or as a result of other environmental, health and safety matters. Below is a discussion of the more significant environmental matters. EPA RCRA Initiative. In 2003, the U.S. Environmental Protection Agency ("EPA") Office of Enforcement and Compliance Assurance announced that it would be targeting facilities in mineral processing industries, including phosphoric acid producers, for a thorough review under the U.S. Resource Conservation and Recovery Act ("RCRA") and related state laws. Mining and processing of phosphate rock generates residual materials that must be managed both during the operation of a facility and upon a facility’s closure. Certain solid wastes generated by our phosphate operations may be subject to regulation under RCRA and related state laws. EPA rules exempt “extraction” and “beneficiation” wastes, as well as 20 specified “mineral processing” wastes, from the hazardous waste management requirements of RCRA. Accordingly, certain of the residual materials which our phosphate operations generate, as well as process wastewater from phosphoric acid production, are exempt from regulation as hazardous wastes under RCRA. However, the generation and management of other solid wastes from phosphate operations may be subject to hazardous waste regulation if the waste is deemed to exhibit a “hazardous waste characteristic.” As part of its initiative, we understand that EPA has inspected all or nearly all facilities in the U.S. phosphoric acid production sector, including ours, to ensure compliance with applicable RCRA regulations and to address any “imminent and substantial endangerment” found by EPA under RCRA. In addition to EPA’s inspections, our phosphates concentrates facilities have entered into consent orders to perform analyses of existing environmental data, to perform further environmental sampling as may be necessary, and to assess whether the facilities pose a risk of harm to human health or the surrounding environment. We received Notices of Violation ("NOVs") from EPA related to the handling of hazardous waste at our Riverview (September 2005), New Wales (October 2005), Mulberry (June 2006), Green Bay (August 2006) and Bartow (September 2006) facilities in Florida. EPA issued similar NOVs to our competitors, including with respect to the Plant City facility acquired in our March 2014 acquisition of the Florida phosphate assets and assumption of certain liabilities (the "CF Phosphate Assets Acquisition") of CF Industries, Inc. ("CF"), and referred the NOVs to the U.S. Department of Justice ("DOJ") for further enforcement. Following negotiations with the DOJ, EPA and state agencies, on September 30, 2015, we and our wholly owned subsidiary, Mosaic Fertilizer, LLC, entered into two separate consent decrees (collectively, the "2015 Consent Decrees") with EPA, the DOJ, the Florida Department of Environmental Protection ("FDEP") and the Louisiana Department of Environmental Quality (the "LDEQ") that, when effective, will resolve claims relating to our management of certain waste materials onsite at our Riverview, New Wales, Mulberry, Green Bay, South Pierce and Bartow fertilizer manufacturing facilities in Florida and our Faustina and Uncle Sam facilities in Louisiana. The 2015 Consent Decrees do not cover the Plant City, Florida phosphate concentrates facility that we acquired as part of the CF Phosphate Assets Acquisition (the "Plant City Facility"). As discussed below, a separate consent decree was previously entered into with EPA and the FDEP with respect to RCRA compliance at Plant City. On September 30, 2015, the 2015 Consent Decrees were lodged with the United States District Court for the Middle District of Florida and the United States District Court for the Eastern District of Louisiana, respectively. The public comment period relating to the 2015 Consent Decrees was extended to and ended in December 2015. A number of comments were submitted to the Department of Justice, and we understand they are under review. Each 2015 Consent Decree is subject to approval by the appropriate court following filing of a request for such approval by the DOJ. Under the 2015 Consent Decrees, we have committed to terms, including the following:
In light of the amount of restricted cash referenced above, together with our strong operating cash flows, liquidity and capital resources, we believe that we have sufficient liquidity and capital resources to be able to fund the capital expenditures, financial assurance requirements and civil penalties provided for in the 2015 Consent Decrees. As part of the CF Phosphate Assets Acquisition, we assumed certain ARO related to Gypstack Closure Costs at both the Plant City Facility and a closed Florida phosphate concentrates facility in Bartow, Florida (the “Bonnie Facility”) that we acquired. Associated with these assets are two related financial assurance arrangements for which we became responsible and that hold in trust the estimated Gypstack Closure Costs for these facilities, pursuant to federal or state law, which the government can draw against in the event we cannot perform such closure activities. One is a trust (the “Plant City Trust”) established to meet the requirements under a consent decree with EPA and the FDEP with respect to RCRA compliance at Plant City that also satisfies Florida financial assurance requirements at that site. The other is a trust fund (the “Bonnie Facility Trust”) established to meet the requirements under Florida financial assurance regulations (the “Florida Financial Assurance Requirement”) that apply to the Bonnie Facility. In the CF Phosphate Assets Acquisition, we deposited $189.2 million into the Plant City Trust as a substitute for funds that CF had deposited into trust. Based on our updated closure cost estimates, an additional $7 million was added to the Plant City Trust in the fourth quarter of 2014 and an additional $1.7 million was deposited in the third quarter of 2015 to correspond to that site's then estimated Gypstack Closure Costs. In addition, in July 2014, the FDEP approved our funding of $14.5 million into the Bonnie Facility Trust, which substituted funds that CF had deposited into an escrow account. We deposited an additional $3 million in the Bonnie Facility Trust in the second quarter of 2015. Both financial assurance funding obligations require estimates of future expenditures that could be impacted by refinements in scope, technological developments, cost inflation, changes in regulations, discount rates and the timing of activities. Under our current approach to satisfying applicable financial assurance requirements, additional funding would be required in the future if increases in cost estimates exceed the amounts held in the Plant City Trust or the Bonnie Facility Trust. At March 31, 2016, the aggregate amount of AROs associated with the Plant City Facility and the Bonnie Facility included in our consolidated balance sheet was $91.7 million. The aggregate amount held in the Plant City Trust and the Bonnie Facility Trust exceeds the aggregate amount of AROs associated with the Plant City Facility and the Bonnie Facility because the amount required to be held in the Plant City Trust represents the aggregate undiscounted estimated amount to be paid by us in the normal course of our Phosphates business over a period that may not end until three decades or more after the Gypstack has been closed, while the ARO included in our Consolidated Balance Sheet reflect the discounted present value of those estimated amounts. As part of the acquisition, we also assumed ARO related to land reclamation. EPA EPCRA Initiative. In July 2008, DOJ sent a letter to major U.S. phosphoric acid manufacturers, including us, stating that EPA’s ongoing investigation indicates apparent violations of Section 313 of the Emergency Planning and Community Right-to-Know Act ("EPCRA") at their phosphoric acid manufacturing facilities. Section 313 of EPCRA requires annual reports to be submitted with respect to the use or presence of certain toxic chemicals. DOJ and EPA also stated that they believe that a number of these facilities have violated Section 304 of EPCRA and Section 103 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") by failing to provide required notifications relating to the release of hydrogen fluoride from the facilities. The letter did not identify any specific violations by us or assert a demand for penalties against us. We cannot predict at this time whether EPA and DOJ will initiate an enforcement action over this matter, what its scope would be, or what the range of outcomes of such a potential enforcement action might be. Florida Sulfuric Acid Plants. On April 8, 2010, EPA Region 4 submitted an administrative subpoena to us under Section 114 of the Federal Clean Air Act (the "CAA") regarding compliance of our Florida sulfuric acid plants with the “New Source Review” requirements of the CAA. The request received by Mosaic appears to be part of a broader EPA national enforcement initiative focusing on sulfuric acid plants. On June 16, 2010, EPA issued an NOV to CF (the “CF NOV”) with respect to "New Source Review" compliance at the Plant City Facility's sulfuric acid plants and the allegations in that NOV were not resolved before our 2014 acquisition of the Plant City Facility. CF has agreed to indemnify us with respect to any penalty EPA may assess as a result of the allegations in that NOV. In discussions with EPA following the acquisition, EPA asked us to consider a settlement that would resolve both the violations alleged in the CF NOV, and violations which EPA may contend, but have not asserted, exist at the sulfuric acid plants at our other facilities in Florida. While we are engaged in discussions with EPA to determine if a negotiated resolution can be reached, we cannot predict at this time whether EPA and DOJ will initiate an enforcement action with respect to “New Source Review” compliance at our Florida sulfuric acid plants other than the Plant City Facility or what its scope would be, or what the range of outcomes might be with respect to such a potential enforcement action or with respect to the Plant City NOV. Other Environmental Matters. Superfund and equivalent state statutes impose liability without regard to fault or to the legality of a party’s conduct on certain categories of persons who are considered to have contributed to the release of “hazardous substances” into the environment. Under Superfund, or its various state analogues, one party may, under certain circumstances, be required to bear more than its proportionate share of cleanup costs at a site where it has liability if payments cannot be obtained from other responsible parties. Currently, certain of our subsidiaries are involved or concluding involvement at several Superfund or equivalent state sites. Our remedial liability from these sites, alone or in the aggregate, currently is not expected to have a material effect on our business or financial condition. As more information is obtained regarding these sites and the potentially responsible parties involved, this expectation could change. We believe that, pursuant to several indemnification agreements, our subsidiaries are entitled to at least partial, and in many instances complete, indemnification for the costs that may be expended by us or our subsidiaries to remedy environmental issues at certain facilities. These agreements address issues that resulted from activities occurring prior to our acquisition of facilities or businesses from parties including, but not limited to, ARCO (BP); Beatrice Fund for Environmental Liabilities; Conoco; Conserv; Estech, Inc.; Kaiser Aluminum & Chemical Corporation; Kerr-McGee Inc.; PPG Industries, Inc.; The Williams Companies; CF; and certain other private parties. Our subsidiaries have already received and anticipate receiving amounts pursuant to the indemnification agreements for certain of their expenses incurred to date as well as future anticipated expenditures. We record potential indemnifications as an offset to the established accruals when they are realizable or realized. MicroEssentials® Patent Lawsuit On January 9, 2009, John Sanders and Specialty Fertilizer Products, LLC filed a complaint against Mosaic, Mosaic Fertilizer, LLC, Cargill, Incorporated and Cargill Fertilizer, Inc. in the United States District Court for the Western District of Missouri (the "Missouri District Court"). The complaint alleges that our production of MicroEssentials® SZ, one of several types of the MicroEssentials® value-added ammoniated phosphate crop nutrient products that we produce, infringes on a patent held by the plaintiffs since 2001 and which would expire in 2018. Plaintiffs have since asserted that other MicroEssentials® products also infringe the patent. Plaintiffs seek to enjoin the alleged infringement and to recover an unspecified amount of damages and attorneys’ fees for past infringement. Our answer to the complaint responds that the plaintiffs’ patent is not infringed, is invalid and is unenforceable because the plaintiffs engaged in inequitable conduct during the prosecution of the patent. Through an order entered by the court on September 25, 2014, Cargill was dismissed as a defendant, and the two original plaintiffs were replaced by a single plaintiff, JLSMN LLC, an entity to whom the patents were transferred. The Missouri District Court stayed the lawsuit pending an ex parte reexamination of plaintiff's current patent claims by the U.S. Patent and Trademark Office (the "PTO"). That ex parte reexamination has now ended. On September 12, 2012, however, Shell Oil Company ("Shell") filed an additional reexamination request which in part asserted that the claims as amended and added in connection with the ex parte reexamination are unpatentable. On October 4, 2012, the PTO issued an Ex Parte Reexamination Certificate in which certain claims of the plaintiff's patent were cancelled, disclaimed and amended, and new claims were added. Following the PTO’s grant of Shell’s request for an inter parties reexamination, on December 11, 2012, the PTO issued an initial rejection of all of plaintiff's remaining patent claims. On September 12, 2013, the PTO reversed its initial rejection of the plaintiff's remaining patent claims and allowed them to stand. Shell appealed the PTO’s decision, and on July 28, 2015, the Patent Trial and Appeal Board, the highest appellate authority within the PTO, issued a decision holding that all claims initially allowed to the plaintiff by the PTO examiner should instead have been found invalid. Although additional appeal and other procedural challenges still remain available for the plaintiff, this decision, if sustained, would result in no remaining claims against us. The Board referred the patent application back to the PTO examiner, who may consider whether any patent claims that might be sought by plaintiff are permissible when considered against the reasoning of the Board decision rejecting the plaintiff's current claims. Both parties have filed requests for reconsideration of the Board's decision. Shell's request is merely to correct some numerical inconsistencies in the Board's decision, and plaintiff's request is to reverse the overall decision itself. Although no appeal from the Board's decision has yet been filed, such an appeal may occur, resulting in further delays. The stay in the Missouri District Court litigation is expected to remain in place during further PTO and any appeal proceedings. We believe that the plaintiff's allegations are without merit and intend to defend vigorously against them. At this stage of the proceedings, we cannot predict the outcome of this litigation, estimate the potential amount or range of loss or determine whether it will have a material effect on our results of operations, liquidity or capital resources. Brazil Tax Contingencies Our Brazilian subsidiary is engaged in a number of judicial and administrative proceedings relating to various non-income tax matters. We estimate that our maximum potential liability with respect to these matters is approximately $87 million. Approximately $60 million of the maximum potential liability relates to a Brazilian federal value added tax, PIS and Cofins, tax credit cases for the period from 2004 to 2011; while the majority of the remaining amount relates to various other non-income tax cases such as value-added taxes. Based on Brazil legislation and the current status of similar tax cases involving unrelated taxpayers, we believe we have recorded adequate accruals, which are immaterial, for the probable liability with respect to these Brazilian judicial and administrative proceedings. Other Claims We also have certain other contingent liabilities with respect to judicial, administrative and arbitration proceedings and claims of third parties, including tax matters, arising in the ordinary course of business. We do not believe that any of these contingent liabilities will have a material adverse impact on our business or financial condition, results of operations, and cash flows. |
Accounting for Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting for Derivative Instruments and Hedging Activities | Accounting for Derivative Instruments and Hedging Activities We periodically enter into derivatives to mitigate our exposure to foreign currency risks and the effects of changing commodity prices. We record all derivatives on the Condensed Consolidated Balance Sheets at fair value. The fair value of these instruments is determined by using quoted market prices, third party comparables, or internal estimates. We net our derivative asset and liability positions when we have a master netting arrangement in place. Changes in the fair value of the foreign currency and commodity derivatives are immediately recognized in earnings because we do not apply hedge accounting treatment to these instruments. As of March 31, 2016 and December 31, 2015, the gross asset position of our derivative instruments was $28.6 million and $6.8 million, respectively, and the gross liability position of our liability instruments was $47.7 million and $79.3 million, respectively. Unrealized gains and (losses) on foreign currency exchange contracts used to hedge cash flows related to the production of our products are included in cost of goods sold in the Condensed Consolidated Statements of Earnings. Unrealized gains and (losses) on commodities contracts are also recorded in cost of goods sold in the Condensed Consolidated Statements of Earnings. Unrealized gains or (losses) on foreign currency exchange contracts used to hedge cash flows that are not related to the production of our products are included in the foreign currency transaction gain/(loss) line in the Condensed Consolidated Statements of Earnings. As of March 31, 2016 and December 31, 2015, the following is the total absolute notional volume associated with our outstanding derivative instruments:
Credit-Risk-Related Contingent Features Certain of our derivative instruments contain provisions that are governed by International Swap and Derivatives Association agreements with the counterparties. These agreements contain provisions that allow us to settle for the net amount between payments and receipts, and also state that if our debt were to be rated below investment grade, certain counterparties could request full collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position as of March 31, 2016 and December 31, 2015, was $25.5 million and $53.4 million, respectively. We have no cash collateral posted in association with these contracts. If the credit-risk-related contingent features underlying these agreements were triggered on March 31, 2016, we would have been required to post $24.1 million of collateral assets, which are either cash or U.S. Treasury instruments, to the counterparties. Counterparty Credit Risk We enter into foreign exchange and certain commodity and interest rate derivatives, primarily with a diversified group of highly rated counterparties. We continually monitor our positions and the credit ratings of the counterparties involved and limit the amount of credit exposure to any one party. While we may be exposed to potential losses due to the credit risk of non-performance by these counterparties, material losses are not anticipated. We closely monitor the credit risk associated with our counterparties and customers and to date have not experienced material losses. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Following is a summary of the valuation techniques for assets and liabilities recorded in our Consolidated Balance Sheets at fair value on a recurring basis: Foreign Currency Derivatives-The foreign currency derivative instruments that we currently use are forward contracts and zero-cost collars, which typically expire within eighteen months. Most of the valuations are adjusted by a forward yield curve or interest rates. In such cases, these derivative contracts are classified within Level 2. Some valuations are based on exchange-quoted prices, which are classified as Level 1. Changes in the fair market values of these contracts are recognized in the Condensed Consolidated Financial Statements as a component of cost of goods sold in our Corporate, Eliminations and Other segment, or foreign currency transaction (gain) loss. As of March 31, 2016 and December 31, 2015, the gross asset position of our foreign currency derivative instruments was $28.1 million and $5.7 million, respectively, and the gross liability position of our foreign currency derivative instruments was $25.0 million and $59.6 million, respectively. Commodity Derivatives-The commodity contracts primarily relate to natural gas. The commodity derivative instruments that we currently use are forward purchase contracts, swaps, and three-way collars. The natural gas contracts settle using NYMEX futures or AECO price indexes, which represent fair value at any given time. The contracts’ maturities are for future months and settlements are scheduled to coincide with anticipated gas purchases during those future periods. Quoted market prices from NYMEX and AECO are used to determine the fair value of these instruments. These market prices are adjusted by a forward yield curve and are classified within Level 2. Changes in the fair market values of these contracts are recognized in the Condensed Consolidated Financial Statements as a component of cost of goods sold in our Corporate, Eliminations and Other segment. As of March 31, 2016 and December 31, 2015, the gross asset position of our commodity derivative instruments was $0.5 million and $1.0 million, respectively, and the gross liability position of our commodity instruments was $20.9 million and $16.7 million, respectively. Financial Instruments The carrying amounts and estimated fair values of our financial instruments are as follows:
For cash and cash equivalents, receivables, net, accounts payable, structured accounts payable arrangements, and short-term debt, the carrying amount approximates fair value because of the short-term maturity of those instruments. The fair value of long-term debt, including the current portion, is estimated using quoted market prices for the publicly registered notes and debentures, classified as Level 1 and Level 2, respectively, within the fair value hierarchy, depending on the market liquidity of the debt. |
Share Repurchases |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Share Repurchases | Share Repurchases In February of 2014, our Board of Directors authorized a $1 billion share repurchase program ("2014 Repurchase Program"), allowing the Company to repurchase Class A Shares or shares of our Common Stock ("Common Stock"), through direct buybacks or in open market transactions. During the three months ended March 31, 2015, under the 2014 Repurchase Program, 2,560,277 shares of Common Stock were repurchased in the open market for an aggregate of approximately $123.3 million. In total, 18,339,060 shares of stock were repurchased under the 2014 Repurchase program for an aggregate total of $850.6 million. The remaining authorized amount of $149.4 million was terminated in connection with the authorization of the 2015 Repurchase Program discussed below. On May 14, 2015, our Board of Directors authorized a new $1.5 billion share repurchase program ("2015 Repurchase Program"), with no set expiration date, allowing the Company to repurchase shares of our Common Stock, through open market purchases, accelerated share repurchase arrangements, privately negotiated transactions or otherwise. During 2015, we repurchased 1,891,620 shares of Common Stock in the open market under the 2015 Repurchase Program for approximately $74.9 million. In May 2015 and February 2016, under the 2015 Repurchase Program, we entered into separate accelerated share repurchase transactions ("ASRs") with financial institutions to repurchase shares of our Common Stock for up-front payments of $500 million and $75 million, respectively. For each ASR, the total number of shares ultimately delivered, and therefore the average price paid per share, were determined at the end of the ASR’s purchase period based on the volume-weighted average price of our Common Stock during that period, less an agreed discount. The shares received were retired in the period they were delivered, and each up-front payment is accounted for as a reduction to shareholders’ equity in our Condensed Consolidated Balance Sheet in the period the payment was made. Neither ASR was dilutive to our earnings per share calculation from its execution date through its settlement date. The unsettled portion of each ASR during that period met the criteria to be accounted for as a forward contract indexed to our Common Stock and qualified as an equity transaction. Additional information relating to each ASR is shown below:
As of March 31, 2016, 15,765,025 shares of Common Stock have been repurchased under the 2015 Repurchase Program for an aggregate total of approximately $650 million, bringing the remaining amount that could be repurchased under this program to $850 million. The extent to which we repurchase our shares and the timing of any such repurchases depend on a number of factors, including market and business conditions, the price of our shares, and corporate, regulatory and other considerations. |
Related Party Transactions |
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Related Party Transactions | Related Party Transactions We enter into transactions and agreements with certain of our non-consolidated companies from time to time. As of March 31, 2016 and December 31, 2015, the net amount due to our non-consolidated companies totaled $67.9 million and $26.4 million, respectively. The Condensed Consolidated Statements of Earnings included the following transactions with our non-consolidated companies:
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Business Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments The reportable segments are determined by management based upon factors such as products and services, production processes, technologies, market dynamics, and for which segment financial information is available for our chief operating decision maker. For a description of our business segments see Note 1 to the Condensed Consolidated Financial Statements in this report. We evaluate performance based on the operating earnings of the respective business segments, which includes certain allocations of corporate selling, general and administrative expenses. The segment results may not represent the actual results that would be expected if they were independent, stand-alone businesses. Intersegment eliminations, including profit on intersegment sales, mark-to-market gains/losses on derivatives, debt expenses and our legacy Argentina and Chile results are included within Corporate, Eliminations and Other. Segment information for the three months ended March 31, 2016 and 2015 was as follows:
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Guarantee |
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Mar. 31, 2016 | |
Guarantees [Abstract] | |
Guarantee | Guarantee Guarantee of Payments Mosaic entered into an agreement (the “Bridge Loan”) to provide up to $75 million in bridge loans to Gulf Marine Solutions, LLC (“GMS”) to finance the purchase and construction of two articulated tug and barge units (the “ATBs”) that will be constructed to transport anhydrous ammonia, primarily for Mosaic’s operations. GMS is a wholly owned subsidiary of Gulf Sulphur Services Ltd., LLLP (“Gulf Sulphur Services”), an entity in which Mosaic owns a 50% equity interest and which is operated by Mosaic’s joint venture partner. Mosaic’s joint venture partner is arranging for construction of the ATBs and will charter them to GMS, which will enter into a long-term ammonia transportation contract with a subsidiary of Mosaic. At March 31, 2016, $45.5 million was outstanding under the Bridge Loan, and GMS had received additional loans from Gulf Sulphur Services in the aggregate amount of $53.6 million, which are included in long-term debt in our Condensed Consolidated Balance Sheets. These loans obtained by GMS from Mosaic under the Bridge Loan were in turn lent to Mosaic’s joint venture partner for use in constructing the ATBs. The parties are seeking third-party financing for the ATB project and the aggregate amount of all outstanding Bridge Loans and all loans from Gulf Sulphur Services are expected to be repaid out of the proceeds of any such financing. In connection with the ATB project, Mosaic has also agreed to guarantee up to $100 million of payment obligations to the entity that is constructing the barges. The guarantee will remain in effect until final payment under the construction agreement. Beginning in the quarter ended December 31, 2015, we determined we are the primary beneficiary of GMS, a variable interest entity, and have consolidated its balance sheet and statement of earnings within our consolidated financial statements in our Phosphates segment. |
Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | Statement Presentation and Basis of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements of Mosaic have been prepared on the accrual basis of accounting and in accordance with the requirements of the Securities and Exchange Commission ("SEC") for interim financial reporting. As permitted under these rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States ("GAAP") can be condensed or omitted. The Condensed Consolidated Financial Statements included in this document reflect, in the opinion of our management, all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of the results for the interim periods presented. The following notes should be read in conjunction with the accounting policies and other disclosures in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC for the calendar year ended December 31, 2015 (the "10-K Report"). Sales, expenses, cash flows, assets and liabilities can and do vary during the year as a result of seasonality and other factors. Therefore, interim results are not necessarily indicative of the results to be expected for the full fiscal year. The accompanying Condensed Consolidated Financial Statements include the accounts of Mosaic and its majority owned subsidiaries. Certain investments in companies where we do not have control but have the ability to exercise significant influence are accounted for by the equity method. |
Accounting Estimates | Accounting Estimates Preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. The most significant estimates made by management relate to the estimates of fair value of acquired assets and liabilities, the recoverability of non-current assets including goodwill, the useful lives and net realizable values of long-lived assets, environmental and reclamation liabilities including asset retirement obligations ("ARO"), the costs of our employee benefit obligations for pension plans and postretirement benefits, income tax related accounts, including the valuation allowance against deferred income tax assets, inventory valuation and accruals for pending legal and environmental matters. Actual results could differ from these estimates. |
Structured Accounts Payable Arrangements | Structured Accounts Payable Arrangements In Brazil, we finance some of our potash-based fertilizer and other raw material product purchases through third-party financing arrangements. These arrangements provide that the third-party intermediary advance the amount of the scheduled payment to the vendor, less an appropriate discount, at a scheduled payment date and Mosaic makes payment to the third-party intermediary at a later date, stipulated in accordance with the commercial terms negotiated. |
Earnings Per Share | The numerator for basic and diluted earnings per share ("EPS") is net earnings attributable to Mosaic. The denominator for basic EPS is the weighted average number of shares outstanding during the period. The denominator for diluted EPS also includes the weighted average number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued, unless the shares are anti-dilutive. |
Income Taxes | We recognize interest and penalties related to unrecognized tax benefits as a component of our income tax provision. |
Goodwill | We review goodwill for impairment annually in October or at any time events or circumstances indicate that the carrying value may not be fully recoverable, which is based on our accounting policy and GAAP. |
Fair Value | Following is a summary of the valuation techniques for assets and liabilities recorded in our Consolidated Balance Sheets at fair value on a recurring basis: Foreign Currency Derivatives - The foreign currency derivative instruments that we currently use are forward contracts and zero-cost collars, which typically expire within eighteen months. Most of the valuations are adjusted by a forward yield curve or interest rates. In such cases, these derivative contracts are classified within Level 2. Some valuations are based on exchange-quoted prices, which are classified as Level 1. Commodity Derivatives - The commodity contracts primarily relate to natural gas. The commodity derivative instruments that we currently use are forward purchase contracts, swaps, and three-way collars. The natural gas contracts settle using NYMEX futures or AECO price indexes, which represent fair value at any given time. The contracts’ maturities are for future months and settlements are scheduled to coincide with anticipated gas purchases during those future periods. Quoted market prices from NYMEX and AECO are used to determine the fair value of these instruments. These market prices are adjusted by a forward yield curve and are classified within Level 2. For cash and cash equivalents, receivables, net, accounts payable, structured accounts payable arrangements, and short-term debt, the carrying amount approximates fair value because of the short-term maturity of those instruments. The fair value of long-term debt, including the current portion, is estimated using quoted market prices for the publicly registered notes and debentures, classified as Level 1 and Level 2, respectively, within the fair value hierarchy, depending on the market liquidity of the debt. |
Business Segments | The reportable segments are determined by management based upon factors such as products and services, production processes, technologies, market dynamics, and for which segment financial information is available for our chief operating decision maker. We evaluate performance based on the operating earnings of the respective business segments, which includes certain allocations of corporate selling, general and administrative expenses. The segment results may not represent the actual results that would be expected if they were independent, stand-alone businesses. Intersegment eliminations, including profit on intersegment sales, mark-to-market gains/losses on derivatives, debt expenses and our legacy Argentina and Chile results are included within Corporate, Eliminations and Other. |
Other Financial Statement Data (Tables) |
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Statement Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Financial Statement Data | The following provides additional information concerning selected balance sheet accounts:
(a) Final price deferred is product that has shipped to customers, but the price has not yet been agreed upon. This has not been included in inventory as risk of loss has passed to our customers. Amounts in this account are based on inventory cost. (b) Included in restricted cash, as of March 31, 2016 and December 31, 2015, is $630 million, that is committed to be placed in trust following the effectiveness of the consent decrees discussed under "EPA RCRA Initiative" in Note 9 of our Notes to Condensed Consolidated Financial Statements, as financial assurance to support certain estimated future asset retirement obligations. (c) Future capital commitment for the MWSPC due after the first quarter of 2016. |
Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | The following is a reconciliation of the numerator and denominator for the basic and diluted EPS computations:
|
Inventories (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories consist of the following:
|
Goodwill (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The changes in the carrying amount of goodwill, by reporting unit, are as follows:
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Accounting for Derivative Notional Amounts (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Derivative Instruments Notional Amounts | As of March 31, 2016 and December 31, 2015, the following is the total absolute notional volume associated with our outstanding derivative instruments:
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Fair Value Measurements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The carrying amounts and estimated fair values of our financial instruments are as follows:
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Share Repuchases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accelerated share repurchases | Additional information relating to each ASR is shown below:
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Related Party Transactions (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party transactions | The Condensed Consolidated Statements of Earnings included the following transactions with our non-consolidated companies:
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Business Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information | Segment information for the three months ended March 31, 2016 and 2015 was as follows:
|
Organization and Nature of Business (Details) |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Miski Mayo Joint Venture | |
Schedule of Equity Method Investments [Line Items] | |
Mosaic's ownership percentage | 35.00% |
MWSPC Joint Venture | |
Schedule of Equity Method Investments [Line Items] | |
Mosaic's ownership percentage | 25.00% |
Percent of joint venture production Mosaic expects to market | 25.00% |
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2015 |
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Accounts Payable and Accrued Liabilities, Current [Abstract] | |||
Structured accounts payable arrangements | $ 354.2 | $ 481.7 | |
Prior Period Adjustment [Abstract] | |||
Understated amount in net cash provided by operating activities and cash used in financing activities in prior period | $ 73.4 |
Recently Issued Accounting Guidance (Details) $ in Millions |
Dec. 31, 2015
USD ($)
|
---|---|
Long-term Debt [Member] | |
Deferred financing fees reclassified to long term debt | $ 22.9 |
Other Noncurrent Assets [Member] | |
Deferred financing fees recorded as other assets | $ 2.9 |
Other Financial Statement Data (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
|||||||
---|---|---|---|---|---|---|---|---|---|
Other current assets | |||||||||
Final price deferred | [1] | $ 153.7 | $ 175.6 | ||||||
Income and other taxes receivable | 245.5 | 249.4 | |||||||
Prepaid expenses | 149.3 | 123.1 | |||||||
Other | 107.7 | 80.5 | |||||||
Total other current assets | 656.2 | 628.6 | |||||||
Other assets | |||||||||
MRO Inventory | 122.1 | 118.1 | |||||||
Restricted cash | [2] | 851.9 | 851.4 | ||||||
Other | 343.2 | 287.9 | |||||||
Total other assets | 1,317.2 | 1,257.4 | |||||||
Accrued liabilities | |||||||||
Non-income taxes | 24.9 | 24.9 | |||||||
Payroll and employee benefits | 118.2 | 162.9 | |||||||
Asset retirement obligations | 103.1 | 91.9 | |||||||
Customer prepayments | 222.1 | 121.2 | |||||||
Future capital commitment | [3] | 120.0 | 120.0 | ||||||
Other | 270.3 | 456.6 | |||||||
Total accrued liabilities, current | 858.6 | 977.5 | |||||||
Other noncurrent liabilities | |||||||||
Asset retirement obligations | 735.6 | 749.7 | |||||||
Accrued pension and postretirement benefits | 69.0 | 69.6 | |||||||
Unrecognized tax benefits | 8.3 | 79.2 | |||||||
Other | 129.0 | 132.1 | |||||||
Total other noncurrent liabilities | 941.9 | 1,030.6 | |||||||
Additional restricted cash information | |||||||||
Restricted cash related to asset retirement obligation | $ 630.0 | $ 630.0 | |||||||
|
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Earnings Per Share [Abstract] | ||
Net earnings attributable to Mosaic | $ 256.8 | $ 294.8 |
Basic weighted average number of shares outstanding | 351.3 | 366.0 |
Dilutive impact of share-based awards | 1.9 | 1.9 |
Diluted weighted average number of shares outstanding | 353.2 | 367.9 |
Basic net earnings per share attributable to Mosaic | $ 0.73 | $ 0.81 |
Diluted net earnings per share attributable to Mosaic | $ 0.73 | $ 0.80 |
Shares subject to issuance upon exercise of stock options excluded from the calculation of diluted earnings per share | 3.2 | 1.3 |
Inventories (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 55.7 | $ 68.1 |
Work in process | 422.4 | 435.9 |
Finished goods | 1,018.0 | 991.0 |
Operating materials and supplies | 69.9 | 68.5 |
Total Inventory | $ 1,566.0 | $ 1,563.5 |
Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Goodwill [Line Items] | |
Beginning Balance | $ 1,595.3 |
Foreign currency translation | 65.8 |
Ending Balance | 1,661.1 |
Phosphates Segment | |
Goodwill [Line Items] | |
Beginning Balance | 492.4 |
Foreign currency translation | 0.0 |
Ending Balance | 492.4 |
Potash Segment | |
Goodwill [Line Items] | |
Beginning Balance | 984.7 |
Foreign currency translation | 62.5 |
Ending Balance | 1,047.2 |
International Distribution | |
Goodwill [Line Items] | |
Beginning Balance | 118.2 |
Foreign currency translation | 3.3 |
Ending Balance | $ 121.5 |
Contingencies Other Commitments (Details) - USD ($) $ in Millions |
3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 |
Jun. 30, 2015 |
Dec. 31, 2014 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Jul. 31, 2014 |
|||
Other Commitments [Line Items] | ||||||||
Restricted cash | [1] | $ 851.9 | $ 851.4 | |||||
Asset retirement obligations | 735.6 | $ 749.7 | ||||||
C F Asset Retirement Obligations | ||||||||
Other Commitments [Line Items] | ||||||||
Asset retirement obligations | $ 91.7 | |||||||
Plant City Trust | ||||||||
Other Commitments [Line Items] | ||||||||
Restricted cash | $ 189.2 | |||||||
Increase in Restricted Cash | $ 1.7 | $ 7.0 | ||||||
Bonnie Facility Trust | ||||||||
Other Commitments [Line Items] | ||||||||
Restricted cash | $ 14.5 | |||||||
Increase in Restricted Cash | $ 3.0 | |||||||
|
Derivative Instruments - Gross Asset and Liability Positions (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross asset position | $ 28.6 | $ 6.8 |
Gross liability position | $ 47.7 | $ 79.3 |
Derivative Notional Amounts (Details) MMBTU in Millions, $ in Millions |
Mar. 31, 2016
USD ($)
MMBTU
|
Dec. 31, 2015
USD ($)
MMBTU
|
---|---|---|
Foreign Exchange Contract | ||
Notional Disclosures [Abstract] | ||
Derivative, notional amount | $ 1,084.3 | $ 1,230.6 |
Interest Rate Swap | ||
Notional Disclosures [Abstract] | ||
Derivative, notional amount | $ 0.0 | $ 175.0 |
Commodity Contract (MMbtu) | ||
Notional Disclosures [Abstract] | ||
Nonmonetary derivative notional amount | MMBTU | 25.3 | 32.4 |
Credit Risk Related Contingent Features (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivative, Credit Risk Related Contingent Features [Abstract] | ||
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position | $ 25.5 | $ 53.4 |
Required collateral assets to be posted if the credit-risk contingent features of these underlying agreements were triggered | $ 24.1 |
Fair Value Measurements (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Fair Value, Assets, Liabilities and Stockholders' Equity Measured on Recurring Basis [Abstract] | ||
Gross asset position | $ 28.6 | $ 6.8 |
Gross liability position | $ 47.7 | 79.3 |
Fair Value, Measurements, Recurring [Member] | Foreign Exchange Contract | ||
Fair Value, Assets, Liabilities and Stockholders' Equity Measured on Recurring Basis [Abstract] | ||
Average maturity of foreign currency derivative instruments | 18 months | |
Gross asset position | $ 28.1 | 5.7 |
Gross liability position | 25.0 | 59.6 |
Fair Value, Measurements, Recurring [Member] | Commodity Contract | ||
Fair Value, Assets, Liabilities and Stockholders' Equity Measured on Recurring Basis [Abstract] | ||
Gross asset position | 0.5 | 1.0 |
Gross liability position | $ 20.9 | $ 16.7 |
Fair Value Financial Instruments (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Carrying Amount [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 1,057.7 | $ 1,276.3 |
Receivables, net | 677.2 | 675.0 |
Accounts payable | 517.7 | 520.6 |
Structured accounts payable arrangements | 354.2 | 481.7 |
Short-term debt | 41.8 | 25.5 |
Long-term debt, including current portion | 3,816.0 | 3,811.2 |
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 1,057.7 | 1,276.3 |
Receivables, net | 677.2 | 675.0 |
Accounts payable | 517.7 | 520.6 |
Structured accounts payable arrangements | 354.2 | 481.7 |
Short-term debt | 41.8 | 25.5 |
Long-term debt, including current portion | $ 3,968.1 | $ 3,860.4 |
Related Party Transactions (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Related Party Transactions [Abstract] | |||
Net amount owed to our non-consolidated companies | $ 67.9 | $ 26.4 | |
Transactions with non-consolidated companies included in net sales | 147.2 | $ 263.9 | |
Transactions with non-consolidated companies included in cost of goods sold | $ 134.5 | $ 112.7 |
Guarantee (Details) $ in Millions |
Mar. 31, 2016
USD ($)
|
---|---|
Guarantor Obligations [Line Items] | |
Number of vessels to be constructed | 2 |
Equity Method Investee Gulf Sulphur Services | |
Guarantor Obligations [Line Items] | |
Mosaic's ownership percentage | 50.00% |
Affiliated Entity Gulf Marine Solutions (GMS) | |
Guarantor Obligations [Line Items] | |
Maximum amount of bridge loans Mosaic will provide to GMS | $ 75.0 |
Amount of bridge loan outstanding | 45.5 |
Additional loan outstanding owed by GMS to Gulf Sulphur Services | 53.6 |
Guarantee obligations maximum exposure | $ 100.0 |
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